SOURCE: The St. Petersburg Times
DATE: Issue #1102 (68), Tuesday, September 6, 2005
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TITLE: Rasputin’s Notoriety Dismays Relative
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: “He is either demonized or deified and my mission is to try and make his image look more human, more normal, if you like,” says Laurence Huot-Solovieff, 62, one of the four great-grandchildren of Grigory Rasputin to come from his legal marriage, and the only of his surviving descendants to have traveled to Russia.
Interviewed in St. Petersburg’s Astoria hotel on Monday, Huot-Solovieff, who grew up in France, put the wild-eyed mystic who some felt ruled the country during World War I in a positive light.
Rasputin had gained the confidence of Tsarina Alexandra because he could soothe the ailing Tsarevich Alexis. This ability gained him access to and influence with the family of the last tsar, Nicholas II.
It also generated hatred among courtiers, who plotted his demise and eventually murdered him.
On this, her fifth trip to Russia since she first visited in 1992, Rasputin’s great granddaughter traveled for the first time to her notorious ancestor’s home village of Pokrovskoye in Siberia.
“It is only now that I have been there that things finally came together with what my grandmother was telling me about him: I have heard the locals call him a simple man with big heart and strong spiritual power, who loved Russia, the God and the tsar,” Huot-Solovieff said. “This was exactly what I was told at home by my grandmother Matryona.”
Matryona, a dancer with the Barnum circus, was the only descendant of the doomed man to use his family name. It helped boost her artistic career in Los Angeles.
“I don’t think it would be a right thing for us to use his name now and in our circumstance: I find it too provocative,” Huot-Solovieff said. “There is too much hatred of his name and too many people would see red if they heard it.”
Rasputin’s name is surrounded by numerous myths, legends and speculations. International experts still debate his healing powers and political weight, producing controversial reports.
Huot-Solovieff has never questioned that Rasputin had the power of healing. “If he was no help to tsarevich Alexei to cure his hemophilia, he would have never been able to be so welcomed by the tsar,” she said. “This is pure logic but there is also enough evidence.”
Huot-Solovieff feels very close to St. Petersburg, but said some places are too painful for her to visit.
She will no longer visit Rasputin’s former apartment on Gorokhovaya Ulitsa. “I can’t bear seeing how people make money out of his tragic fate, it is too sad and too upsetting,” she said, referring to the tenants, who charge an entry fee to the apartment.
In St. Petersburg, the Rasputin connection, as well as speculation around it, stretches from sublime to ridiculous.
Huot-Solovieff has not visited and has no plans to visit the Erotic Museum of the Prostatology Center, whose director Igor Knyazkin claims to have Rasputin’s sex organ preserved in a jar.
“I have seen men’s private parts before, and I don’t care if it is original or not,” she said. “As for the idea of cutting out genitalia and putting it on display, human greed is no surprise to me either. I have seen people do worse for money.”
During Huot-Solovieff’s childhood, she and her two brothers heard no mention at home of Russia, let alone the name of Grigory Rasputin.
Huot-Solovieff discovered she had Russian ancestry from a friend at the age of 12. 
“Your mother’s name is Tatyana, then you must be Russian, she told me, and then advised to watch out for Bolsheviks,” she recalled. “Our mother wanted to protect us from the burden of the knowledge, but I have eventually learned who my ancestor was, and I am happy to face it.”
“I never hide from truth; I am not the kind of person who would prefer not to know if they have cancer,” she said. “I always face the truth and learn to deal with it.”
For Huot-Solovieff, the Yusupov Palace, where Count Felix Yusupov attempted to poison and then shot Rasputin, is a difficult place. 
Looking at a wax figure of her ancestor doesn’t help her know him better, she said. 
“I don’t like reconstructions of any kind for one simple reason — they are fake,” she said. “It doesn’t give me much.”
Huot-Solovieff said she often asks herself why Rasputin was murdered and why his name is still surrounded with myths and speculations. Her answer is that he was a very convenient scapegoat.
“He was an extraordinary man who clearly possessed what we now called supernatural powers,” she said. “It was easy and convenient for weaker and cowardly men to accuse him of all sins imaginable.”
This view is shared by Olga Utochkina, a historian and senior researcher with the Yusupov Palace, who has studied Rasputin for 17 years. She describes the man as a victim of black PR.
“Various forces had various reasons to make him look low and unworthy, and made every effort to compromise him,” Utochkina said Monday in a telephone interview. “By contrast, in Rasputin’s home village of Pokrovskoye he is very fondly remembered, and nobody speaks of him as a drunkard, horse-thief or profligate.” 
Rasputin’s descendants in France don’t own any documents that might shed more light on Rasputin as a historical figure.
Huot-Solovieff doesn’t rely on archival material and uses an easy conversational vocabulary telling human stories she once heard at home from her grandmother.
“She once said the family had a room with a big table piled with fruit and all kind of food for the guests at any time, should they come,” Huot-Solovieff said. “I asked her, amazed, how they could have had that when so many people were starving. 
“And then she told me that Grigory taught all his children to never leave the house with empty pockets but to always have something in them to give to the poor. He can’t be as bad as he is often portrayed.”
Rasputin’s drinking habits and alleged infidelity to his wife do not make him a beast. “He started drinking because he was upset by the war but very few people wouldn’t,” she said. “If he was unfaithful to his wife, it is much too common to turn it into something very special.”
Utochkina admitted little is known about the real Rasputin. “All available information has to be re-assessed, new diggings done, more evidence considered and the legends put aside,” she said. “Then we will be much closer to the truth.”

TITLE: First Day Of School In Beslan
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: BESLAN, North Ossetia — The boys were wearing formal black suits, the girls their best blue uniforms, snow-white aprons and hair ribbons. Many brought flowers for their teachers.
It could have been the first day of school in any provincial Russian town — but for the metal detectors, and the hordes of policemen and television journalists. Those guarding Beslan’s schools and recording the day almost outnumbered the few former students of School No. 1 who bravely turned up on Monday.
Only about 150 of the 600 children on the rolls were at the brand new school on Ulitsa Kominterna, one of two schools the Moscow city government built in about seven months for the children of Beslan.
For many in this town, the first day of school will never be a celebration again. They are still haunted by the memories of last year’s attack on School No. 1, where 331 people died, 186 of them children.
“My daughter did not want to go to school this morning,” said Fatima Murtazova, who was sitting next to her daughter Madina, a second grader at the school that took most of the students from School No. 1. “I had to talk to her and to convince her that what happened last year is not going to happen anymore. She is still so frightened that she wants me to sit next to her. She is constantly holding my hand and doesn’t let go.”
Madina and Fatima survived the three-day school seizure last September, but for Madina going to school has become synonymous with violence.
“Last year was her first-ever day at school. She doesn’t know what it means to start and finish a year at school as a normal child,” Fatima said.
Like Madina, Boris Rubayev, 8, did not want to go to school Monday.
“He was crying this morning,” said Valentina Khasonova, his aunt, “He did not want to come here.”
Boris, who lost his mother in the attack, did not speak. Second-grader Angela Sikoyeva, whose mother died in the attack, was also unhappy to go to school, her father, Tolik, said.
“It’s very difficult to get rid of this fear. My legs were shaking this morning when I got close to the school,” said Fatima Avsanova, 53, who worked for 25 years at School No. 1 as a lab technician.
Avsanova and her daughter Bella, 17, were held hostage in the school last year. Bella was injured and now cannot walk.
Fifth-grader Timur Ganiyev, 10, said he liked the new school, but added that School No. 1 “was much better.”
“It was so beautiful. What I like in this new school is that terrorists never came here,” he said.
A few minutes’ away from School No. 1, the new school has huge corridors, comfortable classrooms, a large theater and a sports complex with a swimming pool nearby. Most of the children who survived last year’s attack at School No. 1 are enrolled here, but on Monday morning the halls were almost empty and eerily devoid of the children’s chatter normally heard on the first day back after summer.
“What these people have been through is difficult to forget,” said Natalya Kolmanovskaya, a psychologist with the Moscow-based Our Life center, who since October has been helping the town’s children recover. “Many said they didn’t want to come for the first day, but they will come in two or three days. Others are still mourning, while some children have decided to go to another school.” 
“Every single person in this town needs help,” she said.
So far, the new school has no name. Local officials want to call it School No. 9, but on Monday parents, teachers and students were collecting signatures for it to take over the name of the school destroyed a year ago. 
“We don’t want to forget what happened in School No.1,” said Alla Kokayeva, whose daughter is in the seventh grade. “We want this school to be named after that school, because memories should never die. We survived the attack and we want to show people that we’re still alive.” 
School No. 8 on Ulitsa Lenina, 10 minutes’ walk from School No. 1, is almost a carbon copy of the school on Ulitsa Kominterna. Also built by the Moscow city government, the school has a large indoor swimming pool.
As on Ulitsa Kominterna, visitors must pass through metal detectors and show their documents to police.
About 200 children from School No. 1 decided to come here, but as on Ulitsa Kominterna, very few of them attended Monday.
Meanwhile, at School No. 6, a dilapidated Soviet-era building also a few minutes’ walk away from School No. 1, security appeared far more relaxed, with children running freely along wooden-floored corridors.
School No. 6 was where many children from School No. 1 came after Beslan’s schools restarted in mid-September last year. The school was also used as an emergency first aid center during the school seizure.
Kolmanovskaya, the psychologist, said that children in this school also needed a lot of help.
“This school has lived through all the tragedy this town has gone through. When children see horrible things, they perceive them as though they happened to them,” Kolmanovskaya said.
She said that School No. 6 should be renovated, so that the children there feel that someone is taking care of them as well.
“It is not fair that there are two beautiful schools in this town, while this one, where children suffered so much, is so dilapidated,” she said.

TITLE: UN Report: Chernobyl Harm Exaggerated
AUTHOR: By Susanna Loof
PUBLISHER: The Associated Press
TEXT: VIENNA, Austria — Only 56 deaths have been directly attributed to radiation released in the 1986 Chernobyl nuclear power plant accident, and the final toll could be thousands fewer than originally feared, the U.N. nuclear watchdog agency said Monday. 
However, anxiety caused by fear of death and illness from radiation poisoning is causing major mental health problems among the affected population and such worries “show no signs of diminishing and may even be spreading,” the agency said, citing a new report compiled by 100 scientists. 
The final death toll attributed to radiation could reach 4,000, said the report, compiled on behalf of the Chernobyl Forum, a group that includes the Vienna-based International Atomic Energy Agency, seven other U.N. agencies and the governments of Ukraine — where Chernobyl is located — Belarus and Russia. 
Ukraine has previously said it had already registered 4,400 deaths related to the April 26, 1986, accident, and early speculation following the radiation release predicted tens of thousands would die. 
Chernobyl Forum Chairman Burton Bennett said previous death tolls had been inflated, perhaps “to attract attention to the accident, to attract sympathy.” 
The report and a two-day scientific meeting to discuss it starting Tuesday aim to “reach a consensus on the various issues so that we can go forward in a more positive way,” Bennett said Monday at a news conference. 
Environmental organization Greenpeace condemned the report and accused the UN agency of “whitewashing” the impacts of the accident. 
“Denying the real implications is not only insulting the thousands of victims — who are told to be sick because of stress and irrational fear — but it also leads to dangerous recommendations, to relocate people in contaminated areas,” said Jan Vande Putte, Greenpeace International nuclear campaigner. 
The 600-page UN report says a lack of accurate information about the accident’s consequences has made the mental health impact “the largest public health problem created by the accident.” 
“These problems manifest as negative self-assessments of health, belief in a shortened life expectancy, lack of initiative and dependency on assistance from the state,” the agency said in a statement. 
“Persistent myths and misperceptions about the threat of radiation have resulted in ‘paralyzing fatalism’ among residents of affected areas.” 
Teachers and others with influence must receive better information so they can counter false fears by replacing mythology with facts, said Kalman Mizsei of the United Nations Development Program. 
“The health and environmental effects ... have been relatively and surprisingly minor,” Mizsei said. 
Residents in the region have received no understandable information about the accident’s effects, Mizsei said, adding that “people still don’t know what the effect is.” 
Mizsei advocated that support programs to Chernobyl victims be altered to concentrate only on the groups affected by high levels of radiation. As of now, 5 million to 7 million people receive handouts, while only 200,000 people were exposed to higher levels of radiation. 
Belarus in 1991 spent 22 percent of its national budget on Chernobyl-related expenses; the figure has since fallen to 6 percent, according to UNDP statistics. Ukraine spends 5 percent to 7 percent of its budget on costs related to the accident. 
“Pushing millions of people into this dependency is not helpful,” he said. 
By moving away from the illusion that the accident still has a ruinous effect, people can begin improving their lives, Mizsei said. 
The survival rate of the about 4,000 cases of thyroid cancer caused by the accident has been almost 99 percent, the report said. Nine of the 56 deaths recorded so far were children who succumbed to thyroid cancer. 
Thyroid cancer patients and thousands of workers exposed to high levels of radiation in the days following the accident suffered “major health consequences,” Bennett said. 
“The majority of workers and population received fairly low doses,” he said.

TITLE: IN BRIEF
TEXT: Matviyenko Oversees
ST. PETERSBURG (SPT) — St. Petersburg Governor Valentina Matviyenko has taken personal control over the investigation of the murder of a pedestrian who was beaten to death with a baseball bat, Interfax said Monday.
“This terrible crime received public resonance and it should not go unpunished,” Matviyenko said.
The occupants of a Hyundai car without numberplates had driven on to the sidewalk to escape a traffic jam caused by a collision on Ulitsa Ziny Portnovoi in the city’s Kirov district on Aug. 22. They got out and attacked two pedestrians, resulting in the death of Anton Sobolyov, 22.
Preliminary evidence suggests that the attack occured because the young man posed an obstacle to the car.
Police have not yet identified the attackers or found the car or its owner.

Suvorov College Is 50
ST. PETERSBURG (SPT) — St. Petersburg governor Valentina Matviyenko congratulated Suvorov Military College, which is marking its 50th anniversary, with the jubilee.
The Suvorov Military College is the pride of St. Petersburg, and for the last 50 years it done much to train future officers, Matviyenko said, Interfax reported Friday.

Beslan Remembered
ST. PETERSBURG (SPT) — Bells specially fixed on the Strelka of Vasilyevsky Island marked the first anniversary of the Beslan tragedy in St. Petersburg on Saturday.
The bell chimed 331 times, once for each of the civilians who died in Beslan’s school No. 1 during last year’s terrorist attack, Interfax reported Saturday. 
At the same time video from Beslan’s tragedy was shown on a big screen on Konyushennaya Square. Participants of the commemoration also lit candles and released 50 pigeons into the sky. A minute of silence was held at 1:05 pm.

Markova Hospitalized
ST. PETERSBURG (SPT) — Former vice-governor of St. Petersburg Anna Markova was hospitalized after a car accident Friday, Interfax reported.
Markova was hospitalized from Prospekt Morisa Tereza around 3 p.m.
Markova ran unsuccessfully for governor in 2003.

Smuggled Nokia Phones
ST. PETERSBURG (SPT) — St. Petersburg’s Baltiiskaya Customs House and Federal Security Service, or FSB, confiscated a consignment of smuggled Nokia cell phones valued at 600,000 euros over the weekend in St. Petersburg.
Five thousand smuggled cell phones, with a market price of $1 million, were found and confiscated from on board the Biryuchki motor ship which arrived to St. Petersburg from Finland, said Alexander Yablokov, spokesman for the Customs House, on Monday.
Boxes with cell phones were found in the ship’s shower room, drying-room, and two other subsidiary rooms, Yablokov said.

Monastery Restoration
ST. PETERSBURG (SPT) — The facades and interiors of the city’s Voskresensky Novodevichy Monastery will be restored in St. Petersburg in the next three or four years, Governor Valentina Matviyenko said Saturday.
City Hall understands how the monastery should be restored and that it would allocate all essential money for that purpose, Interfax quoted her saying.
At least 100 million rubles ($3.6 million) is needed to restore the facade of the monastery, the report said.

Murderous Doc Jailed
ST. PETERSBURG (SPT) — A St. Petersburg’s X-ray doctor was sentenced to eight years in jail for killing her female rival in a three-sided love affair, Interfax reported Monday.
The 55-year-old woman could not cope with the fact that her lover simultaneously lived with another woman — the 57-year-old chair of the board of one of the city’s universities, the report said.
On Dec. 31 of 2002 the body of the 57-year-old woman was found in the village of Olgino. For a long time the X-ray doctor denied her guilt but the investigation proved she was the murderer.

Sympathy for Thieves
MOSCOW (SPT) — Russians are lenient towards petty thieves, sociologists at the Public Opinion Foundation have found, Interfax reported Sunday.
Every fifth respondent said they felt lenient towards petty thefts. Every third respondent even said that such thefts are justifiable.
Respondents explained their leniency toward such thefts by people’s poverty. Almost half of respondents were sure that thieves are poorer than themselves, the report said.

Rimmer Changes Mind
ST. PETERSBURG (SPT) — A member of St. Petersburg’s Legislative Assembly who came up with the initiative to introduce amendments to the Constitution that would allow a third presidential term has withdrawn his proposal.
Only two terms are currently allowed.
Igor Rimmer said Friday at a news conference that Monday he would withdraw his legislative initiative to prolong the presidential term.
His friends and relatives had not liked the proposal and had persuaded him to withdraw it, he said.

TITLE: City Hall to Begin Tourist Bus Checks
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The Commission on Safety Traffic supervised by the city’s governor will this month begin large-scale inspections of the city’s tourist buses.
The city administration decided to start the inspections after a collision a month ago in which a 69-year-old German woman died and 19 other German and Dutch tourists, who were with her in a tourist bus touring St. Petersburg, were injured.
“We must check all the tourist firms involved in transportation of tourists,” Delovoi Peterburg quoted Leonid Bogdanov, chairman of the city’s legality, law and safety committee, as saying Friday.
The checks are to include inspection of transport licenses, technical conditions, and other aspects.
Yet, heads of the city’s tourist companies fear that such inspections might merely result in extra bribery of road police by tourist buses.
“I’m afraid that such checks will provoke more extortion of money by road police,” Irina Sizova, head of Neptun Travel tourist company, said Monday.
Instead of organizing such checks the city should take better care of the city’s roads and put more thought into the location of traffic lights, she said.
“The poor condition of the city roads leads to fast aging of the city’s vehicles, while traffic lights are often located not in the places where they are needed,” Sizova said.
Road policemen in their turn are often absent at the intersections where they are needed, but instead watch for drivers, who break rules in safer areas, just to fine them, Sizova said.
Most of St. Petersburg’s tourist firms do not have their own transport for driving tourists and hire buses from the city’s transportation companies.
“In such cases we are naturally interested in the good condition and work of such transport, and transport companies are interested in giving us such transport, too.  Otherwise we wouldn’t continue contracts with them,” Sizova said.
Valery Fridman, director of Mir tourist company, said Monday extra police checks will hardly help if the city does not improve traffic conditions in St. Petersburg.
“For instance, the spot where the car accident took place already has reputation of a death spot, and urgently needs a traffic light and ultimately an overpass,” Fridman said.
The turnoff from Pulkovskoye Shosse to the suburb of Pushkin, where the accident took place, is known for frequent car accidents and traffic problems.
The intersection is unregulated. At least three serious car accidents have taken place there in the last year.
Fridman said human factors were also to blame for the crash.
According to a preliminary investigation the driver of the tourist bus was as fault because he did not yield to the truck, which was driving along the main road.  
But, before the car accident the bus was in good technical condition, Fridman said.
About 1,000 excursion buses work daily in St. Petersburg, Delovoi Peterburg reported.

TITLE: New Navy Chief Vows to Boost Effort
AUTHOR: By Guy Faulconbridge
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s new naval chief vowed on Monday to boost discipline and provide better leadership in the accident-prone navy, a day after his appointment by President Vladimir Putin. 
Admiral Vladimir Masorin was appointed Sunday after the dismissal of the previous chief, who presided over a host of accidents including the sinking of the Kursk nuclear submarine in 2000 and last month’s mini-submarine accident. 
The navy faced a storm of criticism for last month’s accident, which illustrated to many the post-Soviet decline of Russia’s armed forces. Seven sailors spent three days trapped in a mini-submarine off Russia’s Pacific coast before being rescued by the British navy. 
“One thing is clear — to continue in the condition which we are in and do nothing is simply not possible,” Masorin, 58, said in a hall at the Admiralty. 
“I have been given the task of stopping the navy shaking public opinion,” Masorin said. 
Masorin, who presented the results of the navy’s inquiry into the accident, said a host of officials had failed to carry out their duties properly and slammed “deception” by admirals at the scene of the accident. “The biggest deception was that people were afraid to inform Moscow. It is lucky that those 12 hours which we lost because of that did not influence the final operation.” 
He said Rear Admiral Alexander Zaika, the deputy commander of north-eastern forces, who supervised the Russian operation to save the sailors, had been dismissed. A host of top officials in the Pacific Fleet had been reprimanded, including Admiral Viktor Fyodorov, commander of the Pacific Fleet. 
“There are a great many guilty people,” Masorin said beside seven large files from the inquiry. “We need to teach people to inform their bosses properly, so that they are not afraid of telling their bosses the truth.” 
Masorin, a career admiral, was longtime  favorite to succeed Admiral Vladimir Kuroyedov as navy chief, with local media reporting he had the support of Defence Minister Sergei Ivanov. 
Some analysts expect Masorin to shake up the Admiralty, which is reeling from a series of accidents that have hammered the navy’s image at home and abroad. 
“I am not experiencing euphoria at being appointed head of the navy,” Masorin said. “I understand the level of responsibility on my shoulders.” 
He railed against what he said was Russia’s technological “lag” behind other major powers and promised to work on making discipline better, to make the navy “one family”. 
“We are lagging behind perhaps not just a little but rather a lot,” Masorin said, promising to direct the navy’s resources towards nuclear forces. 
“Perhaps it is a secret, but the fundamental part of our strength we are directing towards strategic nuclear naval forces,” he said. 
Russia has one of the two largest submarine fleets in the world, with about 12 submarines carrying inter-continental ballistic missiles, making it the nearest competitor to the United States.

TITLE: Youth Initiative Eyes Beaches
AUTHOR: By Alexandra Fiebig
PUBLISHER: Special to The St. Petersburg Times
TEXT: An initiative to mobilize the enthusiasm of young people to clean up litter-strewn beaches in the Leningrad Oblast was marred by official stubbornness and bad weather but was still a success to make some beaches cleaner.
Two activists Rostislav Popov and Nikolai Yevdokimov developed the idea of getting young people to clean up the beaches hoping to attract a large crowd of young people to clean up the beaches accompanied by music and sunshine. 
They promoted the clean-up as a Positive Subbotnik.  Their motto was: work first, relax together afterwards.
“We want to unite people in to clean up the beaches and to install new recreation areas, in so doing being a constructive part of this society with a general solidarity feeling and as a result positive thoughts as a reward for useful work,” Popov said in an interview.
The word subbotnik, derived from the Russian for Saturday, harks back to a Soviet-era tradition of community spring cleaning by the same name. Citizens were asked to volunteer time to clear away the winter’s grime on the Saturday preceding Lenin’s birthday on April 22. Many resented that the supposed “volunteering” was enforced by the Communist regime.
After battling with oblast officials for permission, their first venture on Aug. 27 saw about 200 people aged 15 to 35 equipped with trash bags and working gloves, collecting trash, cigarette butts and endless bottle lids on the beaches of Zelenogorsk, Komarovo, Repino and Solnechnaya.
Yevdokimov and Popov’s idea was born mid-summer and was immediately confronted with bureaucratic hurdles, Yevdokimov said.
Oblast officials refused permission from the very start, and were not prepared to negotiate. 
But despite all difficulty, Popov and Yevdokimov said they were satisfied with the outcome of their first Positive Subbotnik. 
The beaches are clean and the participants performed work that benefits the society in which they live. The activists hope they have set a positive example how to make the world a little better, they said. 
They plan to continue in spring.

TITLE: Putin Pledges New Beslan Probe
AUTHOR: By Anatoly Medetsky and Carl Schreck
PUBLISHER: Staff Writer
TEXT: MOSCOW — At a meeting on Friday with mothers of children killed in the Beslan school a year ago, President Vladimir Putin promised a thorough investigation into how the crisis was handled, but told them Russia was unable to protect its citizens against terrorism.
He noted that the United States, Britain and Spain also had failed to prevent terrorist attacks, and said Russia was in a much more vulnerable position, which he blamed on the consequences of the Soviet collapse.
Members of the Beslan delegation, who have been fiercely critical of the investigation and the Kremlin’s reluctance to assign blame for the botched handling of the crisis, expressed satisfaction at finally meeting with the president.
On Sunday, however, they said they had expected him to publicly apologize Saturday for the deaths of 331 hostages, more than half of them children.
Putin, wearing a black suit, was visibly nervous Friday, shifting in his chair several times as he addressed the eight-person, black-clad delegation from Beslan at a large oval table. 
“It’s difficult to start this conversation. I won’t make a secret of that,” he said in televised remarks at the start of the meeting. The location of the meeting was not announced. Kommersant reported that it took place at “one of the government residences” in Moscow. 
“The feelings that you are experiencing are understandable for any mother, any father, any normal person,” Putin said. 
Of the eight people, four were from the Beslan Mothers’ Committee. They were joined by three men who had lost relatives in the school and North Ossetian President Teimuraz Mamsurov, two of whose children were among the hostages and were wounded. Dmitry Kozak, Putin’s envoy to the Southern Federal District, was also present.
None of the people from Beslan was shown speaking on camera. The broadcast lasted about two minutes and was limited to Putin’s opening remarks. 
“I must say immediately: I agree with those who believe that the state is not in a condition to provide for the security of its citizens to the extent necessary,” Putin said. 
He then attempted to deflect the blame by saying no government could fully protect its people from terrorism, pointing to Sept. 11, 2001, and the terrorist acts in Madrid and London.
“Developed, powerful governments with functioning economies and well-performing intelligence services are currently unable to prevent terrorist acts,” he said. “To say nothing about our country, which sustained enormous losses during the collapse of the Soviet Union, economically and in the social sphere.”
He added that the military and intelligence services had been “knocked out” and were “in a state of partial paralysis” after the Soviet collapse and the first war in Chechnya. 
However, this is no justification for anyone failing to carry out their official duties, he said. “All of the circumstances must be thoroughly investigated, and the entire public will be informed [of the results],” he said. “We are striving for this, and we will certainly achieve this.”
Putin also responded to criticism of his choice of Friday for the long-sought meeting with the mothers, who had to interrupt their mourning during the Sept. 1-3 anniversary to come to Moscow. Putin said he wanted to wait for the investigation into the attack to produce sufficient information before meeting with them. 
Putin wrapped up his opening remarks saying, “I am ready to answer all your questions.” At that point, the broadcast ended.
After the closed-door meeting, which lasted for about three hours, the relatives said it became clear to them that the information that had been given to Putin contradicted first-hand accounts.
“We became convinced that there was misinformation on many issues,” Susanna Dudiyeva, chairwoman of the Beslan Mothers’ Committee, told reporters after the meeting.
She and others, however, expressed satisfaction at the chance to speak out. “I think we said everything that we wanted to say,” Dudiyeva said. “We spoke about responsibility, the fate of children that survived; we spoke about the dead, those who didn’t live to grow old; we spoke about irresponsibility and negligence.”
Dudiyeva said the president promised they would see the results of their conversation in the near future.
Mamsurov said the meeting was frank. “The level of openness astonished me,” he said. Mamsurov said he was certain that investigators would now give more weight to what the victims had to say.
Viktor Yesiyev, one of the three men at the meeting, said Putin had answered all their questions. “We think that the president will pay attention to the issues that were raised, and the shortcomings of the investigation will be removed,” said Yesiyev, 66, who lost a son last year.
Speaking to reporters following Friday’s meeting, Kozak said Dudiyeva concluded the meeting by telling Putin, “We are with you, Vladimir Vladimirovich.”
Members of the Beslan delegation later said Kozak had taken Dudiyeva’s comment out of context.
Ekho Moskvy radio on Sunday cited members of the delegation as saying that they had assured the president that the Russian people would be with him if he apologized. They said Putin told them that he would “find the right words” and that they had expected to hear his apology Saturday.
Speaking to reporters late Friday after returning to Beslan, Dudiyeva said  that Putin admitted his share of responsibility.
“He feels guilty. ... He answered all our questions, and he promised us action to find out the truth,” Dudiyeva said. “He is interested in getting the truth.”
At a Security Council meeting Saturday, Putin announced that a group of investigators would be sent to Beslan from the Prosecutor General’s Office to revitalize the investigation, according to a statement on the Kremlin web site. 

Staff Writer Francesca Mereu contributed to this report from Beslan, North Ossetia.

TITLE: Victims Remembered But Anguish Remains
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: BESLAN, North Ossetia — Inside the gym, next to a carpet of fresh carnations, roses and lilies, the black-clad women wept, their faces showing exhaustion from three tearful days of keeping vigil at the place where their children died.
Their anguished sobs were the only sounds to pierce the silence that engulfed Beslan and all of North Ossetia at 1:05 p.m. on Saturday. Exactly a year before, the first explosion rang out from the gym, beginning the bloody conclusion to the attack on the school.
After the minute of silence, a bell tolled and children released 331 white balloons, one for each of the dead, into the gray sky. 
Later, at the cemetery on the outskirts of town, officials unveiled a 9-meter-high bronze sculpture titled “The Tree of Sorrow,” and released 331 doves into the air.
A group of Cossacks, wearing light blue uniforms and fur hats, attended the ceremonies at the school and cemetery. Feofan, Patriarch of Vladikavkaz and Stavropol, prayed for the souls of the dead.
By early morning, tens of thousands of people had filled the school’s yard and the cemetery as the small town of 30,000 commemorated a final day of public grieving.
More than 5,000 people, all of them in black, waited patiently in line, many for nearly an hour, to enter the crowded gym. There they placed flowers, toys, candy and bottles of water.
“Why did they kill you? Why?” screamed Irina Dzhibilova, looking at portraits of her daughter-in-law Emma, 440, and her grandchildren Boris, 9, and Alana, 12, who died in the attack. “What did you do to deserve this?”
“They were my family. I brought them up,” she said, as she wiped away her tears and took a sedative from the hands of a Red Cross nurse.
On the other side of the gym, a woman leaning on a young man and a young woman was calling out to her dead husband, Sergei, who was shot by the terrorists on the first day of the school seizure.
Several women collapsed and were given first aid at a mobile medical unit near the school. 
A group of more than 20 mothers held a three-day vigil in the gym, spending the nights covered only by light blankets. Their children also spent two terrible nights there in the hands of the terrorists, they said.
During the minute of silence, people in School No. 1 could not stop weeping.
“Who’s responsible for this tragedy? Why has no one been punished? Look what those bastards managed to do,” said one man, pointing to a school wall near the gym that was half-destroyed in the fighting.
“We’ll never get justice. Nobody in this country cares about our children,” said an old woman, wiping her eyes.
No speeches or statements were made during the ceremony in the schoolyard.
Around 2 p.m., thousands of people left the school for the cemetery at the edge of town. More than 12,000 people came to the cemetery, where gravestones were carved out of red granite donated by the Kazakh government.
The names of all the victims were read out in a recorded announcement that lasted 20 minutes. 
Then officials pulled a white cloth off “The Tree of Sorrow,” showing grieving mothers with outstretched arms forming the trunk of the tree, supporting children with angels’ wings in the branches. Beslan residents selected the design used for the monument, which was made by artist Zaur Dzanagov and sculptor Alan Kornayev.
The 331 doves, released into the air to symbolize the souls of the dead, were brought from Moscow, said Murat Yezeyev, a spokesman for the Vladikavkaz mayor’s office.
Nadezhda Melnik wept at the grave of her son-in-law, Sergei Dryukov, 29. She put a small stuffed bunny on his grave and took away a small threadbare teddy bear.
“He loved toys so much, my daughter even called him zayats,” or hare, she said.
Many families in Beslan held memorial gatherings with relatives, neighbors and friends on Saturday and Sunday. More memorials will be held in Beslan throughout the month.

TITLE: Bitter Orphan Custody Battles Linger On
AUTHOR: By Oliver Bullough
PUBLISHER: Reuters
TEXT: BESLAN — Borik Rubayev had lived with his aunt, whom he calls mama, for five years before his parents died in the Beslan school tragedy. 
On Friday, court marshals, acting on behalf of his grandparents, came to take him away. 
“Mama! Mama! I don’t want to go, I don’t want to go with them,” the 8-year-old screamed, his words barely comprehensible through his sobs. 
The court marshals failed to force him to leave Friday, but his aunt, Valentina Khosonova, had no doubt they would return.  “They will keep trying to take him. There is nothing I can do about it,” she said, tears streaming down her face. 
Borik’s grandfather Bekmurza Rubayev declined to say why he had allowed the custody battle for the orphan to turn so bitter. 
But other members of Borik’s family had no doubts. 
“There is money coming in from the whole world for these orphans, and if Borik stays here, then his grandparents will get nothing, that’s why,” Aslan Khosonov, a 20-year-old cousin, said with a grimace. He has shared a bedroom with Borik for years. 
Beslan has received huge amounts of humanitarian aid since last September’s school seizure, and residents  thank any nonlocal or foreigner for the kindness the world showed to the relatives of the 331 people who died. 
But officials say the money — 1.45 billion rubles ($51 million) in total — has split many families in this town of 30,000 people. 
Some point the finger at relatives and complain that they have not received their fair share. Others accuse the authorities of pocketing funds earmarked for victims.

TITLE: Beslan Children’s Photos Show Their View of Town
AUTHOR: By John Varoli
TEXT: UNICEF
A UNICEF photography workshop for the children of Beslan turned into an extraordinary period of rehabilitation and rejuvenation. The children’s photographs were of such high quality that the Beslan authorities opened an exhibition of their work as part of the commemoration of the first anniversary of the siege of School No. 1.

BESLAN, Northern Ossetia — Several months before the first anniversary of the Beslan school tragedy, UNICEF decided to commemorate the event with a photo exhibition that would be something very different — a bold and more insightful perspective than that offered by a professional photographer. The answer: why not give cameras to the children of Beslan and let them photograph their hometown? Thirteen children from Beslan were selected, five of whom had been hostages during the siege at the school.
First, they’d have to be instructed at least in the basics. Enter Italian photographer, Pirozzi Pirozzi. He had been to Beslan before, to chronicle the tragedy that befell this small Ossetian town last year, but this time his task was more unusual. In less than a week he had to teach 13 children how to become photographers — good enough to put together an exhibition. It’s a risky experiment, and many wondered whether it would work.
July 22, 2005 was day 1 of the Children of Beslan Photo Workshop. Under the curious gaze of 13 slightly apprehensive teenagers, Pirozzi put his laptop on the table in the auditorium of the Ossetia sanatorium on the outskirts of Vladikavkaz, the region’s capital city. He hooked his laptop up to the overhead projector, and introduced himself.  
Pirozzi, smiling and convivial, quickly got down to business and engaged the children with questions about their photography experience and their understanding of its purpose and essence. Answers came in from around the table: “it’s fun,” “it’s useful to help remember things from the past,” “to help recall past emotions,” “to inform people”. Pirozzi was impressed. He had a sharp group. 
Even so, day 1, and part of day 2, were not easy. Pirozzi, though he provided a lively explanation of photo basics with the help of an interpreter, had to cram into a few days what generally requires a three-month photography course. Prolonged discussion of the technical aspects tends to put heads down on the table, but the enthusiasm of the children to pick up these new skills never wanes. On Day 3, when the children are given the cameras and let loose on Beslan, the fantastic results exceed everyone’s expectations. 
“There was some worry in UNICEF about how well this workshop might turn out,” Pirozzi confided at the end of the workshop. “But what happened here was much more than anyone expected, and there has been an incredible and enthusiastic response from the children. I’m happy to have been able to contribute to the healing process here.”
“We never expected that the workshop would turn out to be genuine art therapy, and the results were incredible,” said Amir Tagiev, a psychologist from Moscow who has spent months working with the children of Beslan, and who attended the workshop. “It was extremely important that the children felt responsible for their performance, and that they were treated with respect themselves.”
Pirozzi showed the children many of his own photos — from AIDS sufferers in Africa, to tsunami survivors in Asia — to point out proper technique, and asked the children for their opinions, leading to lively discussion. One boy, Misha Dzarasov, 13, took shots with his mobile phone of the African and Asian photos. 
“He showed us very beautiful photos, but these were photos where the children saw suffering elsewhere in the world, how people suffer for not just three days but for years and how children often die in horrible circumstances; and for the Beslan children this was dramatic,’’ Tagiev said. “It was very important that the children saw this — people dying from and living with AIDS, and that they saw through these photos how people could still smile.”

Visiting School No. 1
After the mini-photo tour of the world, the workshop focus moved closer to home. The children knew Pirozzi had photos of Beslan and asked to see them. As soon as they came up on the screen, an icy silence covered the room. For the first time, the children’s attention was 100 per cent. It was a compelling prelude to what was to come once they were sent to Beslan.
On days 3 and 4, the children were finally given small Canon digital cameras. First stop, a heart-rending visit to the ruins of Beslan’s School No. 1 where the memories of those children who were hostages began to flow rapidly. Next, the cemetery where the victims lie in peace, followed by visits to victims’ families, stops at children’s playgrounds, the psychological Rehabilitation Center in Vladikavkaz, as well as encounters with random people on Beslan’s streets.
While some may doubt the wisdom of letting the children visit the school and cemetery, it was the children themselves who chose to do so. Indeed, there was concern at first among the workshop organizers about the idea. But the children insisted. This was the point when it became clear that the workshop was more than a lesson in photography. It was a form of art therapy. During those two days in Beslan, the children began to look at the tragedy with new eyes, from behind a camera lens. Most were then able to better cope with the pain that had persisted for almost one year. And they performed the task with greater professionalism, sensitivity, insight, and understanding than any professional photographer could have done. 
Two days in the field netted over 1,000 shots. Pirozzi then worked into the early morning hours with the children to select about 400 truly excellent photos, listing them according to various categories: the School; the Cemetery; Visits to families who lost loved ones; Joy and Love (shots of Beslan life); and the Children’s Rehabilitation Center in Vladikavkaz. 
“Most important, we wanted to show that life continues in Beslan, and the children really wanted this to come out,” Pirozzi added. “The photos are so beautiful and so full of colors, especially the section on Joy and Love.”
By the end, it was clear the workshop had left an indelible impression on the children. 
“Honestly, I didn’t like it much in the beginning,” admitted an outspoken Soslan Dzugaev, 13, who won the workshop prize for best photo.  
“Visiting the family who had lost a child at the school was the toughest part,” added Soslan, who was the one who suggested the group visit the school ruins. “It was also tough to go to the school and to the cemetery, to see the graves of my neighbors who died; but seeing the faces of the smiling children was one of the better moments.”
Indeed, most of the photos show smiling children. This is perhaps the message the children of Beslan are now trying to get across — that one year later, though the pain still cuts deep, life and hope are returning to their town.

More articles about UNICEF’s work in Beslan can be read at
http://www.unicef.org/russia/

TITLE: Japanese School Network to Spread to Russia
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: Geos corporation, one of Japan’s largest private language schools with 510 branches in Japan alone, plans to enter the St. Petersburg market as part of a general expansion into Russia, the company said Friday.
The corporation opened a marketing office, Geos International Russia, in Moscow last month and plan to launch another office “soon,” Kaoru Yamashita, spokeswoman for Geos in Tokyo, said in an e-mail. The offices will “promote our overseas schools in Russia,” she said.
A source close to the company added that Geos are looking to set up several branches in St. Petersburg and Moscow on the platform of their international English-language school model. Geos top management concluded a research trip to Russia last month, the source said.
“We are interested in opening language schools in Russia, including St. Petersburg,” Yamashita confirmed. “This is still in the planning stage.... At present, we can not provide any more information.”
Geos, which stands for Global Educational Opportunities and Services, was founded in 1973. It is Japan’s third-largest language-learning company in a country where foreign language teaching has turned into a multi-million dollar industry. Outside Japan, the company runs 50 international schools, mainly in the U.S., Australia, and northwest Europe.
Geos’ entry into the Russian market would be unlikely to affect Moscow’s schools, but could considerably alter the private education sector in St. Petersburg — a sector that annually grows by between 10 and 20 percent, industry insiders said.
“The St. Petersburg market is ready to accept another major player. And this will only be a positive step for the industry,” said Stanislav Smirnov, communications manager at the British Council, which manages the largest English-language school in the city.
The British Council enrolls between 500 and 1,000 students each quarter, although it is the city’s most expensive education provider, with each three-month semester course priced at 13,000 rubles ($465).
“English is very much in demand in Russia, so there’s definitely room for global players. It could also lift the local standards,” and stimulate market maturity, said Walter Denz, owner and manager of Liden & Denz Language Centers in Moscow and St. Petersburg.
Although there is no shortage of schools offering English as a foreign language, industry insiders rate that there are not more than 10 serious players on the St. Petersburg market, and Alexandra Kashleva, owner of the recently opened Language Studio narrows that figure to just five.
“Often we are not even competing with other schools, but with individual tutors who may hire a classroom at a business center once a week,” Kashleva said.
She added that the average language school in St. Petersburg may manage only six classes simultaneously, which would mean a turnover of 50 students a day — a quarter of the volume European language schools enjoy.
“Most schools in the city are very similar, sharing few ideas between them. They don’t expand or develop new directions, relying on steady clients,” Kashleva said. “If Geos can offer a new working approach [in Russia], it could motivate the market.”
Khusan Tursunov, advertising manager of English First, or EF, disagreed that Geos could make a strong impact on St. Petersburg, although he said the demand for English-learning in the city has been annually increasing by 20 percent.
“They’ll need about three years to gather the clients,” Tursunov said. “We’ve been working in Russia for 10 years, and have about 30 branches here, more than half of those in Moscow. New schools can get their niche if they market themselves right, but in the end it’s still word of mouth that gets the clients.”
Yulia Fyodorova, program director at Liden & Denz, estimated that “more than half the students come on a recommendation.” She said that a typical client was aged 20 to 30, “already working and needing the language to advance a career.”
“The trend of the bored housewife dropping by for a lesson has definitely passed,” she said.

TITLE: Gazprom To Sign Baltic Pipeline Deal
PUBLISHER: Reuters
TEXT: FRANKFURT — Gas firm Gazprom, German utility E.On and Wintershall, a unit of German chemical maker BASF, will sign a deal on Thursday to build a Baltic Sea pipeline, sources said.
The deal will be signed during the visit of Russian President Vladimir Putin to Berlin, a person familiar with the situation said Monday, information which was confirmed by another source.
The total project cost will be around 2 billion euros ($2.51 billion), with Gazprom taking a majority and the remaining stake split equally between its partners.
The contract will allow for the possibility of a third foreign partner. If none is found, BASF and E.On will split the minority stake equally between them, the sources said.
Putin meets German Chancellor Gerhard Schroeder on Sept. 8 and sources familiar with the deal have said that E.On and Wintershall might publish interim results of negotiations on the long-planned pipeline supplying Germany with Siberian gas.
The pipeline, which would run under the Baltic sea, bypassing Poland and Ukraine, has added to fears in eastern Europe that Berlin and Moscow might put their own interests ahead of those of their less powerful neighbors.
BASF and Gazprom agreed in April to explore a large Siberian gas field together and invest in a Baltic Sea pipeline.

TITLE: 25% of Communal Services To Go Corporate by Year End
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: By the end of the year the communal services of a quarter of St. Petersburg housing stock will pass into the hands of private companies, City Governor Valentina Matviyenko said Saturday, Interfax reported.
“Our goal is to create Property Owners Associations. They push the quality of property [management] to a substantially different level,” Matviyenko said. She added that after the introduction of associations in the Moskovsky district of the city complaints about housing services decreased by 30 percent.
According to the Housing Code, the communal services of all residential housing should be handed over to private firms by March next year, which is no easy feat, said Vladimir Gryaznevich, a political analyst with Expert Severo-Zapad magazine.
The obligation of the Code may well be fudged, since the state companies that provided the services have turned into private firms, but their operations have essentially stayed the same, he said. Former state companies have won 80 percent of the organized tenders so far, while authorities insist that the competitions have been fair.
The advantage of passing communal services through a tender is that “people will be able to reject inefficiently managed companies, whereas before they could only complain,” Gryaznevich said.
Currently, private companies account for only 10 percent of the city’s communal services market, said Genrikh Ken, spokesman for Piter Dussmann, a private company that serves 80 houses in the Admiralteisky district.
“Such service companies are still in their infancy,” Ken said. Although 70 communal services firms operate in St. Petersburg, less than 20 of them could be considered sizeable market players, he said. While in Europe an average company serves houses of up to 500,000 square meters, in Russia the average firm limits its work to 200,000 sq. m areas.
Gryaznevich sees the problems the sector faces in Russia as directly connected to the market’s immaturity, the unwillingness and apathy of people to “exercise their will and rights for property management.”
However, some moves towards a pro-active stance regarding property rights issues have been made. The city’s state property committee published a recent report saying 80 percent of citizens would prefer to hand over their communal service contract to a private company.
The market could even work by combining private, state and mixed companies, Ken said, since there is “enough property for everyone.”
Mainly, young servicing companies restrict their activities to new houses due to lower maintenance expenses, but there is profit to be made by attending to older housing also, he said.
“Energy saving technologies alone could provide a 25 percent to 30 percent profit,” Ken said. He estimates that the communal services market will take about three years to develop in Russia.

TITLE: Siemens Train Deal Put on Hold
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: Russian Railways Co. is postponing the signing of a 1.5 billion-euro contract with Siemens on a joint high-speed rail project, presenting the German engineering giant with its second major setback in Russia this year.
Both Russian Railways, or RZD, and Siemens confirmed on Monday that plans blessed by President Vladimir Putin and Chancellor Gerhard Schroder earlier this year were being reviewed.
The news comes after Russia’s anti-monopoly watchdog nixed Siemens’ bid for a controlling stake in turbine giant Siloviye Mashiny, or Power Machines, in April - and only days before Putin is scheduled to visit Schroder in Germany.
“I had to suspend the project of high speed trains between Moscow and St. Petersburg the way it was conceived. We expect to realize the project without multi-billion loans,” Vladimir Yakunin, RZD’s new president, said in an interview with Itogi magazine on Monday.
RZD has said in the past it was in talks with the European Bank for Reconstruction and Development for a half-billion dollar loan to help cover the project.
Under a preliminary agreement signed during Putin’s visit to the Hannover Trade Fair in April, Siemens was set to develop and deliver 60 high-speed trains. The first trains were planned to begin running between Moscow and St. Petersburg in 2008.
The actual contract between the two sides was to be signed in June, but the deal was delayed when Yakunin replaced Gennady Fadeyev as head of RZD.
A Sept. 1 deadline for Siemens to submit a preliminary design for the new train has also been pushed back.
“We are negotiating a new deadline for the draft design,” said an RZD spokeswoman, who requested anonymity because of the sensitivity of the talks.
The spokeswoman said that RZD’s technical requirements and cost expectations proved too stringent.
“We do not rule out that the train will turn out to be too expensive,” she said. “In that case we would talk about how to make the project cheaper and maybe buy fewer trains.”
Nikita Kukushkin, a Siemens spokesman in Moscow, confirmed the delays. “The agreement is being reviewed without our participation,” he said.
For Siemens, the delays are the second setback in less than a year. “From the image point of view, it does not make us look good. We are trying to convince a world-famous company that we are interested in foreign investments but our actions don’t match our words,” said Igor Nikolayev, head of strategic analysis at FBK consultancy, which counts RZD among its clients.

TITLE: UES Worries Over Allocating Its Power Shares
PUBLISHER: Reuters
TEXT: Reforms to create a competitive marketplace for Russian electricity are on track but key decisions still have to be taken on allocating shares in new power companies, a top executive said Monday.
Sergei Dubinin, chief financial officer at state-controlled power monopoly Unified Energy Systems, said the process of creating the regional power companies that should replace UES by 2007 was going according to plan.
But final decisions on how shares in over 20 generating companies would be allocated might not be reached until next year, he told Vedomosti.
“I think that during 2005 and 2006 the formation of all wholesale generating companies will move forward significantly,” Dubinin said in an interview.
Ownership of the companies should be converted in 2006 to a single share, he said, adding: “After this we have to make a decision which we have not reached yet.
“Either an auction will be held of shares in the wholesale generators belonging to UES — either for cash or shares in UES — or the allocation of shares will mirror (UES’s ownership structure), in which case the state’s holding in the wholesale generators would fall significantly,” he said.

TITLE: State Infrastructure Fund Beginning to Take Shape
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW — The government is close to completing the legal framework for the state investment fund, designed to finance infrastructure projects, a senior government official said Thursday. 
According to the new version, still to be reviewed by the government, the fund’s money will be used to provide state guarantees on loans taken out by private companies for infrastructure projects. Companies bidding for projects would also have to come up with at least 25 percent of the project’s cost upfront.
It remains unclear whether the government plans to provide financial support for projects in the form of grants.
The brainchild of the Economic Development and Trade Ministry, the investment fund is to divert some of the oil revenue flowing into the stabilization fund. Although the fund’s creation has yet to receive the final stamp of approval from the Cabinet, the new cash-collecting tool is due to become operational next year.
“I hope that at the beginning of next week we will receive the expert opinion of the Justice Ministry and after that will submit the draft to the Cabinet,” Alexander Ustinov, deputy director of the socioeconomic reform department of the Economic Development and Trade Ministry said Thursday, Interfax reported.
In choosing to use the money to back loans, the government is aiming for better management of the funds. Allocating money in grants is open to misuse and corruption.
But some analysts say this method does not lend itself to projects where there is no return on investment.
“It remains unclear who is going to work on such major projects as transnational highways, the reconstruction of the Baikal-Amur railway or the refurbishment of ailing housing complexes,” said Natalia Orlova, Alfa Bank chief economist.
Over the past few months, a number of projects have been cited as potential beneficiaries of the investment fund, from road and bridge construction projects to cutting-edge research projects.
Greater attention is being paid to mechanisms of money distribution rather than on setting clear goals, she said. But specifics on target projects are limited, Orlova said. The government’s apparent reluctance to define goals could, however, be a ploy on the part of the Economic Development and Trade Ministry to avoid lobbying pressure from big industrial groups and local governors, said Yaroslav Lissovolik, chief economist at United Financial Group.
Limiting the number of applications for funding would allow the ministry to establish tight control over the fund, Lissovolik added.
“I think that at least during the first year or so the scale and the number of the projects would be limited, so a track record of good management and effectiveness could be established,” he said.
If the plan succeeds, Lissovolik said, the Economic Development and Trade Ministry might decide to phase out its so-called federal programs, a system of funding currently in place generally considered to be inefficient. “The bright side of the creation of this fund is that it could provide a rules-based instrument that could make government expenditure more rational,” Lissovolik said.
According to a government plan, the state investment fund is to reach about 70 billion rubles ($2,46 billion) in 2006, 72.9 billion rubles in 2007, and 73.2 billion in 2008. The stabilization fund of surplus oil revenues was created as a safety cushion during times of financial instability. Operational since 2002, the fund is expected to reach 1.5 trillion rubles ($52 billion) by the end of 2005.

TITLE: Gazprom Buys Chas Pik Weekly
AUTHOR: By Gleb Krampets
PUBLISHER: Vedomosti
TEXT: Gazprom-Media has bought St. Petersburg weekly newspaper Chas Pik through its subsidiary firm Aura, Alexei Turchenko, the new head of Gazprom-Media said last week.
Without revealing the purchasing price, Turchenko vowed the move was aimed at making the newspaper profitable, but market players warned that the deal may have been politically motivated.
Chas Pik was founded in 1990 by Natalia Chaplina, a journalist and wife of the former KGB chief for St. Petersburg and the Leningrad Oblast, Victor Cherkesov.
The newspaper came has a weekly print run of 30,000 copies, with monthly turnover at $20,000 to $30,000, a member of the newspaper’s editorial said.
Under the deal, Gazprom-Media acquired a 70 percent stake in the company, while the rest the media holding plans to control through Aura.
Gazprom-Media already has a big portfolio of companies: NTV, TNT, and cable channel NTV-Plus, as well as five radio stations, the national daily Izvestia and the NTV-Media purchasing group. Gazprom-Media’s revenues surpassed $400 million in 2004.
The deal has worked out well for Gazprom-Media, the holding’s press secretary Daria Litvina said. “There is room to grow for a company on the St. Petersburg’s printed press market.” Tuchenko added that the new owners planned to make the paper break even within three years and then look for profit.
Nikolaev, however, judged the purchase to be motivated purely by political reasons. “If Gazprom-Media wanted to strengthen their market position, they would have looked at buying other publications. Chas Pik is an outsider.”
The buy is well-timed before the 2008 presidential elections, an analyst said.

TITLE: Russian IT Firms Turn to Financial Market for Clients
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Just a few years ago the very idea of Russia-based software engineers developing integrated systems for international investment funds seemed unbelievable.
Conservative fund managers did not trust outsourcing IT solutions for their business to offshore ?rms, feeling they had little competence in the ?nancial ?eld.
Alexei Miller, Executive Vice President at St. Petersburg-based DataArt, says that thinking has changed. Financiers in London and New York have turned to Russian software developers as out?ts that can deliver tailor-made programs to manage complex money ?ows.
For hedge funds–?nancial instruments that often combine several billion dollars of assets–IT software can allow the total management workload to be carried by about 25 staff, thus reducing the company’s overheads. “[The calculation] forces hedge fund managing ?rms to use technology in order to reduce expenses,” Miller said.
DataArt was one of the industry pioneers in developing software for western clients, but the ?rst contract from the ?nancial sector–from a New York based investment fund with $2 billion in assets–came in only about three years ago. Since then, the hedge fund has ordered software development services to the cost of more than $3 million.
Among other clients, DataArt counts a top ?ve U.K. bank, several American and British investment funds and banks, and most recently a New York technology ?rm that signed up for a $1 million order: a set of programs to manage standard hedge funds.
Within three years, DataArt has picked up half a dozen regular hedge fund clients. Nearly half the company’s staff is now engaged in developing ?nancial projects that account for 30 percent to 50 percent of total pro?ts, Miller said.
“We reached a point when we had to de?ne further strategy. And we chose an expertise-based outsourcing strategy,” Eugene Goland, president of DataArt, said in an interview at the ?rm’s of?ce.
Miller added that “in ?nance the customer won’t deal with someone who doesn’t know his business in detail.”
Narrow focus–Wide rewards
Each of the roughly 9,000 hedge funds operating across the globe spends up to $500,000 on securities trading support systems annually. “In speci?c narrow markets the cost of even standard software is rather high,” Miller said.
What most ?nanciers look for is advanced “bespoke software,” which in Western countries costs up to $1 million. Bene?ting from Russia’s cheaper staff costs, DataArt competes by developing “affordable bespoke” software solutions for broader range of clients, Miller said. About 80 percent of the ?rm’s clients are U.S. ?rms, the rest coming from Europe, but not Russia.
“The problem with hedge funds is that standard software rarely ?ts their needs completely. They have a broader set of strategies than other ?nancial institutions and demand more sophisticated trading tools,” Artyom Artemyev, the head of the ?nancial engineering division, said in an interview.
The St. Petersburg company’s range of services includes software development for accounting, portfolio and security management, investment data collection and analysis, and investor relation management. DataArt’s custom software solutions unite several trading programs that are integrated with MS Of?ce, Reuters and Bloomberg terminals.
Jari Petri Angesleva, who took part in the International Finance Corporation’s information and computer technology project, said that Russian ?rms like DataArt have every chance of winning the con?dence of global ?nancial ?rms.
“Financial software has made its breakthrough years ago and the future surely looks sunny. If we take out of the equation the large global players like SAP, Oracle and Siebel, there is a lot of room for smaller ?rms that can do different levels of integration,” Angesleva said in a telephone interview.
“Most of ?nancial ?rms use several systems and this creates a nice playground for tailor-made solutions to existing systems. This is de?nitely an area Russian software companies can enter,” he said.
Quite noticeably, DataArt does not work with domestic clients, a factor that drags back the development of this sector of the software business. Working with Russian clients demands “other ideas and investment strategies” that may not be as lucrative, said Andrei Fyodorov, director of St. Petersburg-based software development company Digital Design.
On the Russian market software designers have to sell business solutions, whereas “offshore software outsourcing is based on the difference between wages in developed and developing countries,” Fyodorov said. “DataArt’s geographical focus makes for a very logical market strategy.”
Fyodorov warned, however, that outsourcing contracts for ?nancial institutions may not prove to be a stable business direction, being closely tied to the economic situation.
For the moment, DataArt says it has found a good middle ground–less expensive than Western ?rms and more competent than Eastern competitors. In 2004, the company announced 100 percent growth in revenue–over $4 million.

TITLE: Investment in City Real Estate Picks Up as Rules Lax
AUTHOR: By Lev Pushchansky
PUBLISHER: Special to The St. Petersburg Times
TEXT: St. Petersburg is proving to be an increasingly interesting center of investment activity. Investments in commercial and industrial real estate in 2004 totaled $1.54 billion. It is important to emphasize that the city’s real estate market is not as overheated as in Moscow. It should also be mentioned that the location of St. Petersburg — Russia’s gateway to Europe — is an important factor as it is crucial in attracting investment in warehouses, logistics centers and, in a number of cases, industrial premises.
The most active investors so far have proved to be development groups (mainly Russian) that are looking to optimize existing real estate portfolios. They are also the ones who reconstruct or create new properties and sub-units of banks, financial and mineral and fossil fuel companies (mainly Russian). They are groups that diversify their business by investing in commercial real estate. 
The latter group has appeared and become active only in the last two years. These companies adhere to a more conservative investment strategy than the former group. Professional institutional investors (Russian and foreign real estate investment funds) are barely represented in the market.
Of course, one cannot discuss investors without mentioning end users — the companies that purchase commercial real estate in order to place their office there or for any other purpose. This group is also very active in St. Petersburg. Particularly there is a marked tendency for many Russian and foreign companies that are already operating in Moscow to open their own offices in the city.
In general, the following principal tendencies of the St. Petersburg commercial real estate market predetermine the main course of investment activity:
• The transfer of industrial facilities to the outskirts of St. Petersburg and the rapid redevelopment of the so called “gray belt,” an industrial area between the historic center and dormitory areas;
• the construction of the Ring Road and other highways, rapid development of areas adjoining them;
• the transfer of certain institutions from the capital to St. Petersburg, which is resulting in a number of companies moving their head-offices there.
Among the most significant latest events on the city’s commercial real estate market, the following should be especially singled out for notice:
• White Days investment fund has declared its intention to enter the Russian commercial real estate market. For this purpose the fund has allocated about $200 million for the first three years of its activity. White Days Development, a company affiliated with the fund, will be undertaking the development projects in St. Petersburg. Currently the company is engaged in the purchase of two incomplete four-star hotel construction projects in the center of St. Petersburg, three business centers and a cottage settlement in the Kurortny district. White Days Development plans to invest up to $60 million in implementing these projects.
• Finnish development company SRV International and Okhta Group have established a new corporation, SRV Okhta in order to raise over 200 million euros ($248 million) for the District 700 development. District 700 is a development project for a 4.5-hectare site located on Krasnogvardeyskaya Ploshchad across the river Neva from the Smolny convent. The project will comprise a commercial center of over 200,000 square meters, including a shopping and entertainment center, a 25,000 square meter Class A business center, a 355 room hotel and parking for 2,500 vehicles.
• SP Len-Uton Corporation plans to invest 4 million euros ($4.96 million) in the second stage of the Nevsky 30 business-center development. An Austrian development company, S+B Plan & Bau, will be involved in the project. This will be a project of a Class A standard.
• International hotel operator Accor plans to take several hotels in St. Petersburg under its management. Three addresses have so far been announced: Novotel, located at 102 Nevsky Prospekt (total investment estimated at $18 million to $21 million), a hotel at 54 Ligovsky Prospekt ($18 million of investment, opening scheduled for March 2006), and the Ibis hotel, located on the corner of Moskovsky Prospekt and the Fontanka embankment.
• Estonian operator Reval Hotels plans to open its first 4-star hotel in St. Petersburg in 2007 at the 8th Line of Vasilyevsky Island 11-13.
• Four-star hotel Moika 22 opened in July 2005. The hotel is managed by international hotel operator Kempinski. The investor is Petersburg Real Estate Agency.
• Stockmann has bought from German company SPAG a group of buildings at 114 Nevsky Prospekt, with a total area of 17,300 square meters. After reconstruction, planned to be completed in 2008, the total area of the shopping mall will be increased to 45,000 square meters. The company plans to invest 80 million to 110 million euros ($99.1 and $136.3) in the project.
• A third Metro cash and carry hypermarket of 14,000 square meters opened in May on Pulkovskoye Shosse. Investments in the project amounted to 20 million euros ($24.7 million).
• A Maltese company, International Hotel Investments, has begun construction of Nevskaya Plaza shopping and business center at 55 Nevsky Prospekt. The total area of the center will be 14,000 square meters and the project will include shopping and office premises, as well as 103 extra executive-class rooms at 59 Nevsky Prospekt for the 5-star Corinthia Nevsky Palace hotel.
• Italian company Promocentro Italia plans to construct a complex of shopping malls named Severny Moll (Northern Mall) on a 50-hectare site at the junction of Prospekt Kultury and the Ring Road. Investments will amount to 180 million to 200 million euros. Completion of the first stage is scheduled for summer 2006. The first stage includes the construction of a shopping mall with a total area of 35,000 square meters, 17,000 square meters of which will be occupied by the hypermarket chain Real. The first stage of construction will cost about 50 million euros, 30 million of which will be invested by Real. The second stage of the Northern Mall development includes the construction of additional shopping malls, which are expected to be completed by mid 2007.
• Swedish company IKEA has announced plans to build Mega shopping malls in St. Petersburg similar to those already operating in Moscow. The total area of the first Mega mall will be 210,000 square meters, and investments amount to around 250 million euros. The start of construction was scheduled for summer this year and the opening is planned for October 2006. The shopping center will be located on a 60-hectare site near the IKEA shopping center already operating on Murmanskoye Shosse. Simultaneously the company plans to start construction of a second shopping center in the north of the city, on a site of around 30 hectares. The anchor tenant will be hypermarket chain Auchan.
• Toyota has signed an investment contract with the St. Petersburg government to construct a car assembly plant in the Shushary industrial zone. The plant will occupy 220 hectares and investments amount to around $130 million.
• Ford has started reconstructing its plant in the Leningrad region in order to upgrade it. In January 2006 the company plans to increase the capacity to 60,000 vehicles annually, which will double the plant’s existing output. Ford is investing $30 million in the project.
• Daimler-Chrysler Concern is planning to construct a plant in the Shushary industrial zone for assembling class C and E Mercedes Benz cars, and possibly some economy Chrysler models.
The following large-scale investment should also be mentioned:
• The Baltiiskaya Zhemchuzhina (Baltic Pearl) multifunctional complex: the project envisages the integrated development of a 180-hectare area on the south-western edge of the city. The intention is to build more than 1 million square meters of housing with extensive social infrastructure. The business area will include office space, hotels and shopping centers.
• New Holland island development: the 7.6-hectare island is occupied by 26 premises with a total area of 68,000 square meters. Since it is part of the historical center of St. Petersburg the complex of the island will be reconstructed in a sympathetic architectural style.
As for the expected returns on investments, in Moscow average yields in the office sector are 13 to 14 percent and the rates have been tending to decrease to around 12 to 13 percent. Currently the St. Petersburg office sector offers average yields of 16 to 18 percent. In the retail sector yields in Moscow are 14 to 16 percent, as opposed to as much as 20 to 22 percent in St. Petersburg. Yields on investments in logistics centers and warehouses also vary from 20 to 22 percent.
One of the most serious problems hindering the growth of the investment market is a lack of funding sources. A significant shortage of investment grade buildings in all sectors of the commercial real estate market is another important factor. Among possible specific drawbacks of investing in particular projects are an insufficient level of basic infrastructure (for example, poor soil quality which makes it very expensive and therefore inefficient to provide a site slated for redevelopment with the necessary facilities) and traffic problems (traffic jams, inadequate connections with major roads). But the city government regards solving traffic problems as a priority and is undertaking a number of steps to solve them, in particular the construction of a Ring Road, and several major tunnels including one underneath Vasilyevsky Island.
The city authorities have been making a systematic effort to encourage investment activity. In particular, a law simplifying the procedure of making properties available for investors has been passed, a law on tax breaks that provides for reductions in property tax rates was reformed, a list of priority strategic projects was compiled, assistance has been provided in supplying facilities supporting logistic, industrial and warehousing projects, including land development and legal assistance.

Lev Pushchansky is an investment specialist at ICB-Invest Group.

TITLE: Tax Promises Leave Business Catching Soap Bubbles
AUTHOR: By Ruslan Vasyutin
TEXT: The title of a 1904 publication by the first Soviet leader Vladimir Lenin, “One step forward, two steps back,” very well reflects the situation in today’s Russian tax system. Reform of the tax system, launched in 1999, led to the establishment of a codified legislation — the Tax Code — and a more clear hierarchy of laws and by-law acts in the tax sphere.
However, the main problem, faced by taxpayers before, as well as after, the adoption of the Tax Code, has not been the legislation per se, but its interpretation and application. Moreover, the selective application of tax rules for one, yet not another market player has aroused strong concerns in the business community.

ONE WORD MATTERS
Let’s take, for instance, the recent changes to the value added tax, which will come into force on January 1, 2006. For all the best intentions, the changes have suffered from the same old woes.
It appeared that the Federal Tax Service announced plans to stop VAT refunds for export companies. However, at fault was a word error: the wrong technical term was used on a list of documents for new VAT legislation. The documents were supposed to justify applying a zero VAT rate on regular export operations. In doing so, the government wanted to add companies working with residents of special economic zones to an already existing list of exporters that are allowed to work in a zero VAT regime.
As it turned out, however, the legislature put out by the government stated that no company could even theoretically submit a full list of necessary application documents to get zero VAT. Therefore, instead of stimulating the country’s economic situation by creating favorable conditions in the special economic zones, the end result may well be a reduction in Russia’s exports — already mostly tied to raw materials.

RUSSIAN ROULETTE
So, how might the situation develop in practice? Should the Tax Code not be corrected, one “creative” interpretation of the law by tax officials could lead to a situation where certain exporters will enjoy the right to benefit from VAT recovery, while the rest will be viewed as potential victims for tax fines.
Examples of such selective behavior by the tax authorities are commonplace. There’s the Constitutional Court’s Definition 169-0, issued in April 2004, on the basis of which tax authorities did not allow VAT refund on costs financed by loans. That definition had as varied a practical application as the human mind can invent.
As a result, in the course of less than a year the arbitration courts examined more than 2,000 cases between the tax authorities and companies, until the Constitutional Court itself annulled the Definition in November 2004.
The Constitutional Court’s action is not just a retreat. In no other developed country is VAT recovery connected to the fact of loan payment. It’s important to note that in Russia the majority of foreign investments are made in the way of debt financing. If an investor is not granted the right to a VAT refund on export operations, as well as on the costs that have been financed by loans, the result is not just two steps but ten steps back. All the way back to 1993, the presidency of Boris Yeltin, when Act No.2270 introduced a VAT taxation on loans, taxation of company turnover and — Russia’s own, particular invention — a tax on excess wages.

THE WARY AND WISE
After considering the history, the Federal Tax Service’s announcement that it will abolish from 2006 its notorious strategy of drawing up a plan for tax and fines collection seems rather doubtful.
Despite of the fact that in 2005 the volumes of taxes collected is expected to exceeded that of the previous year by 40 percent overall, this increase is mainly thanks to the booming oil sector, which is largely concentrated in Moscow. Tax inspectorates of other regions live in a very different reality.
The very fact that the decrease in the social tax rate from 35.6 percent to 26 percent has led not to a growth in salaries, and on the contrary has meant that less tax has been paid into the federal budget — 100 billion rubles less — means that taxpayers are not in any hurry to give up under-the-table salaries, which evade contributions to personal income tax and social tax.
Keeping all this in mind, the government’s recently announced plans to conduct a tax amnesty for individuals in 2006 look naive and are unlikely to work. It has been more than 10 years since the launch of the first tax amnesty of 1993, but one hardly saw a long line of taxpayers outside the tax inspectorate offices willing to declare their previously unreported income.
The business community is simply reluctant to entrust its savings with the state. The attitude reflects the confusion over the incoherence of the existing federal tax policy. Sadly, reasonable proposals to reduce the tax burden time and again have come up against the bureaucracy of the decision-making process and the double standards in the interpreting of the legislation. Will 2006 bring real, noticeable changes? As they say, seeing is believing.

Ruslan Vasyutin is a partner at DLA Piper Rudnick Gray Cary in St. Petersburg. He contributed this comment to The St. Petersburg Times.

TITLE: Courts Learn How to Deal With Customs Disputes
AUTHOR: By Oleg Lovtsov
TEXT: At the end of July, the Supreme Arbitration Court adopted a resolution that sought to clarify disputes connected with the determination of the customs value of goods. The resolution gave the arbitration courts some clarification on how to handle disputed decisions from the customs authorities. Specifically, in such disputes the customs officials do not agree with the declarer’s determination of the customs value of imported goods using the transaction price of the goods.
The Customs Code requires that the declarer independently determines the customs value of imported goods and declares it in the customs declaration. The customs value of goods is based on the “methods for determining customs value established by laws of the Russian Federation.” Such methods are precisely set out in the law on customs tariff. The main method used is the “transaction price with imported goods.” In other words, the customs value of goods imported to Russia is the transaction price actually paid or to be paid for imported goods at the time they cross the Russian customs border (before the port or other place of import).
The declarer must base the transaction value it declares on reliable, quantifiable and documented information. The declarer must also remember that the customs tariff law contains a list of cases in which the main method cannot be used (for example, if the sale and price of the transaction depend on the observance of certain non-quantifiable conditions, or the parties are related, as defined in the law). The customs authorities are entitled to check the declared customs value and, on the basis of documents and information provided by the declarer, may agree or disagree with the declarer’s choice of the main method. In the end, they may dispute the declared customs value of the goods. 
The customs authorities may question the declared customs value and ask the declarer to correct it using other methods set forth by the customs tariff law. If the declarer does not comply, the customs authorities will choose the method and correct the customs value themselves. This could occur if the declarer is unable to present documents supporting the correct determination of the declared customs value, or if the customs authorities suspect that the documents and information provided by the declarer are not reliable and/or sufficient.
Practice shows that the Russian customs authorities often abuse their right to control the correct customs valuation of goods. Many court cases involving foreign trade participants and the customs authorities focus on disputes over decisions of the customs authorities over the declarer’s use of the transaction value. The court’s Resolution provides the following clarifications to arbitration courts for uniform handling of such disputes:

• Insufficient proof of the transaction value means lack of documents proving the transaction was legal and duly concluded; missing information in the documents, such as price and description of the goods, delivery and payment terms; information proving that such information is not reliable.

• A significant difference between the transaction price and the pricing information contained in databases of the customs authorities for transactions with identical or similar goods imported to Russia under comparable conditions may point to the unreliability of information on the transaction price. In the absence of information on the goods in databases, other recognized sources of information, such as manufacturers and official distributors or catalogues containing prices, may be used in the absence of reliable information from the declarer.

• The declarer is entitled to present proof of the declared customs value of the goods by using information of other persons, including persons involved in production, transportation and sales of the goods.

• The customs authorities may independently determine the customs value of the goods (i.e., correct the value) if the declarer does not provide the explanations and documents requested by the customs authorities, or if such explanations and documents do not contain a sufficient explanation of the declared customs value of the goods, and the declarer refuses to determine the customs value using different methods at the request of the customs authorities.

• In court the customs authorities bear the burden of proving that the declared customs value was not correct.

• The declarer may not use the main method of determining the customs value of the goods without explanations and documents justifying the declared customs value.

Although the Resolution does not resolve all the issues of determining the customs value of goods (for example, it does not clarify the issues of related participants or transaction price components), its adoption should help to develop a clearer practice of applying the provisions of customs laws. Hopefully, the customs authorities will welcome the clarifications of the Supreme Arbitration Court as guidance in their work.

Oleg Lovtsov is an associate with Salans  in St. Petersburg.

TITLE: Putin Calls For Prudent Fiscal Policy
PUBLISHER: Reuters
TEXT: President Vladimir Putin said on Monday Russia must pursue a prudent fiscal policy, amid calls from some quarters for the government to spend yet more of its record oil windfall.
Russia’s rulers are walking a tight rope between the need to save money against any future drop in crude prices and the desire to be seen to be redistributing wealth around a country where the average wage is still only $300 a month.
Intense pressure from parliament has already forced the government to pencil in more than $10 billion in extra outlays in its draft 2006 budget, approved last month by the cabinet, which even so expects a surplus of 3.2 percent of GDP.
“I ask you to refrain from poorly thought out decisions,” Putin told a meeting of politicians and officials before the parliament starts debating the draft budget this autumn.
“We can spend as much as we earn, but if we start to spend more, then a change in the external environment would force us either to climb into debt or to cut spending.”
Russia redeemed $15 billion in debts to the Paris Club of sovereign lenders ahead of schedule earlier this year and has no plans to tap international markets in the near future.
Putin’s most visible contribution to budget planning was to demand that public sector workers’ pay rose by 50 percent in real terms between 2005 and 2007 — with elections to choose his successor due in 2008.
“The aim of our work should be a considerable increase in living standards,” Putin said.

TITLE: IN BRIEF
TEXT: 5,000 Phones Seized
ST. PETERSBURG (AP) — Customs and security agents seized a seaborne consignment of smuggled Nokia cell phones from Finland over the weekend in the latest sting operation targeting illegal mobile phone imports, customs officials said Monday. Five thousand cell phones — worth some $753,000 — were confiscated from a ship that had arrived in St. Petersburg from Finland without the necessary customs documents, according to Alexander Yablokov, a spokesman for the Baltiiskaya Customs House. 
Prosecutors are considering opening a criminal smuggling case, he said. 
An operation in August in which 200,000 handsets were confiscated has fueled a sharp price spike, analysts said, as police continue their crackdown on a widely practiced customs dodge.

Port Investment
LONDON (Bloomberg) — Russia plans to spend $2.5 billion on the Arctic port of Murmansk by 2015 to increase oil and dry cargo exports from the deep-water terminal, which is ice-free all year.
The port will be able to load 40 million tons of crude and oil products and 38 million tons of other cargoes a year when upgraded, said Arcticshelfneftegaz, which is leading the petroleum terminal project. 
The Kola Peninsular-based port planned to load at least 8 million tons of fuel this year, Sergei Didenko, the first deputy head of the port administration, said in January.

TNK-BP Estimates
MOSCOW (Bloomberg) — TNK-BP estimates it may cost more than $6 billion to develop the Verkhnechonsk oil and gas condensate field in Siberia, Interfax said, citing an official from the subsidiary in charge of the field.
The sum includes the cost of building an oil pipeline to the field in the Irkutsk region in central Siberia, the news service reported, citing Mikhail Shelepugin, a spokesman for Verkhnechonskneftegaz, a unit of Moscow-based TNK-BP. BP owns 50 percent of TNK-BP.
The field contains an estimated 201 million metric tons of oil, 95.5 billion cubic meters of gas and 3.36 million metric tons of gas condensate, Interfax reported. 

Menatep Eyeing Ukraine 
MOSCOW (Bloomberg) — Group Menatep, the biggest shareholder of Yukos, may buy Ukraine’s Optima Telecom, Kommersant reported, citing an owner of group Menatep, Mikhail Brudno and Optima director Velvel Lozinski.
The market value of Optima Telecom, which provides services to about 300,000 telephones, is $100 million to $120 million, Kommersant said. Russia’s Golden Telecom recently stopped talks to buy Optima, the newspaper reported.
The purchase fits into Menatep’s strategy of investing in Eastern European countries other than Russia and in Israel, Kommersant said, citing Brudno.

Nissan Sales Soar
MOSCOW (SPT) — Japanese carmaker Nissan sold more cars in Russia in the first eight months of this year than in all of 2004, Nissan said Monday. 
Russians bought 28,869 Nissan cars between January and August, which is more than 40 percent above last year’s figure of 16,447 for total car sales in Russia.
In August, Nissan sold 3,755 models in Russia, which compares to 2,770 cars sold last August, the company said.

Mazda Triples in ‘05
MOSCOW (SPT) — Mazda plans to almost triple its sales in Russia this year up to 25,000, the company told news agency Interfax.
Last year, Russians bought 8,565 Mazda models from official dealers, compared to 1,861 cars sold the year before.
Japan’s Mazda now plans to set up a distribution company in Russia to handle the import of its cars into the country, Interfax said Monday.
Dealerships in Russia currently bring cars into the country directly, Interfax said.

Consumer Prices Fall
MOSCOW (Reuters) — Russian consumer prices unexpectedly fell in August from July, led by a seasonal drop in prices of fruits and vegetables, the first decline in consumer prices since August 2003.
Consumer prices fell 0.1 percent, after rising 0.5 percent in July, Economy Ministry spokeswoman Galina Bronnikova said Monday in Moscow. 
“Inflation was lower thanks to lower prices of fruit and vegetables,’’ said Natalia Orlova, the chief economist at Alfa Bank in Moscow, before the release. 

Kyrgyzstan Talks
MOSCOW (AP) — Russian President Vladimir Putin and Kyrgyz President Kurmanbek Bakiyev said Monday that they had agreed to boost cooperation in investment, electricity generation, natural gas and mining. 
After their Kremlin talks, officials from both sides signed agreements on paying off Kyrgyzstan’s debt to Russia and protecting intellectual property in joint defense projects.
Bakiyev’s Moscow visit was his first working trip abroad since being inaugurated last month. The former Kyrgyz opposition leader rose to power in a popular uprising a few months ago and won a landslide victory in a July election.

Novatek’s Q2 Net
MOSCOW (Bloomberg) — Natural gas producer Novatek said profit in the second quarter rose six-fold to a record, as the company sold some assets and got more revenue from supplying more gas.
Net income soared to 5.61 billion rubles ($199 million) from 884 million rubles ($31 million) a year ago, Moscow-based Novatek said Monday.
Novatek, which last year pumped enough gas to supply Spain, is Russia’s second-biggest natural-gas producer, trailing Gazprom, the world’s biggest supplier of the fuel. 

Baer Bites at UBS
NEW YORK (Bloomberg) — Julius Baer Holding AG, a 115-year-old Swiss bank, agreed to buy four asset-management business from UBS AG for 5.6 billion Swiss francs ($4.6 billion) in Switzerland’s biggest banking combination in seven years.
UBS, Europe’s biggest bank, will get 3.8 billion francs in cash and become the largest shareholder of Julius Baer with a 21.5 percent stake, valued at 1.8 billion francs, the banks said Monday.
The purchase of Ehinger & Armand von Ernst, Ferrier Lullin, Banco di Lugano and the GAM hedge-fund business will increase Julius Baer’s managed assets by about 80 percent to 270 billion francs. The founding Baer family gave up control in April, prompting speculation the Zurich-based bank would combine with a rival.

TITLE: Matviyenko Goes Too Far For Investors
TEXT: The first time it seemed like a neat joke or perhaps a cordial welcome. As more foreign investors sign up for factories and offices in St. Petersburg, however, Governor Valentina Matviyenko’s unsubtle endorsement of the arriving companies’ products has turned absurd.
When Toyota held a press conference to announce they will build an assembly plant in Shushary, the governor signed off her welcome speech with a promise that all the city officials will switch to using Toyota vehicles.
“As soon as Toyota starts production here, all of the city administration will switch to buying their cars, I can assure you of that,” the governor said at a press conference in April.
Last week, at the planting of the first tree — the German equivalent of laying of the first stone — at the site of a factory that’s being built by household appliances maker BSH Bosch und Siemens, the governor’s sales skills were on show again. “Every St. Petersburgers should have in their home a household appliance made by Bosch,” Matviyenko said.
Naturally, it is to the city’s advantage for its foreign investors to stay, to be profitable, and to continue paying taxes into the budget. Marketing and promotion, however, is each company’s business. 
What does it say for the relationship between business and the administration when Matviyenko states that she “will take personal care of the [BSH] project?”
Why does the governor feel the need to plug company brands when she has a position that is outside corporate rivalry? And what will she do when another company working in the same market niche wants to establish itself in St. Petersburg?
That Matviyenko has not been as forthcoming with domestic investors may yet be explained by the fact that few Russian firms have laid out the same millions as for example as the Chinese developers in charge of the Baltic Pearl, or Toyota. 
What puzzles most is how the governor will gladden DaimlerChrystler, should the U.S.-German automaker confirm its intentions to open an assembly plant in the city. St. Petersburg officials will already be driving their Toyota cars. 
Will it mean that the task of keeping the newest investor profitable will fall on the ordinary citizen? Of course, they would not mind driving Mercedes, but they need the incomes to pay for them.
By picking favorites and determining who should be awarded large state contracts rather than leaving these matters to competition and market forces, the governor is acting against the possibility that the economy might improve that much.

TITLE: Our Children, Our Responsibility
AUTHOR: By Grigory Yavlinsky
TEXT: From now on, every Sept. 1 our thoughts will turn to Beslan and those children all dressed up for the first day of school. The ominous thought occurs that not just the children but Sept. 1 itself was taken hostage in Beslan last year. Just the day before, a suicide bomber had killed 10 people outside the Rizhskaya metro station in northern Moscow. And one week earlier, suicide bombers blew up two passenger jets, claiming 90 lives. But the seizure of School No. 1 sums up all these events.
This is what we get for constantly saying that children are our future and nothing could be more precious. Children live in the same country as the rest of us. And human life in this particular country has never counted for much, and it still does not. There’s no point pretending otherwise. 
Any hostage is helpless, frightened and hopes to be rescued. Especially children. There’s a school of thought that says you do not negotiate with terrorists. There’s another school of thought that you should engage them in political games and cunning ploys. But all of this goes out the window when children are involved because their safety outweighs all other concerns. When you think of what they endured in that gym — their fear, hunger, thirst, horror and humiliation — nothing else matters.
The children were not protected, and they were not rescued.
The seven sailors aboard the Priz mini-submarine were rescued, thank God. But think of the other tragedies that lacked a happy outcome: the Nord Ost hostage-taking, the sinking of the Kursk submarine. It is as if the authorities wield arbitrary powers of life and death, allocating quotas for people to be saved.
As we remember Beslan, there is good reason to subject the calculations of the authorities to criticism. But if we do nothing more than let off a little steam, we will be letting ourselves off lightly. 
Does anyone really count on this government when push comes to shove? The answer is no. We count on our friends, on dumb luck, on fate, when you get right down to it.
A lot of people felt a strong urge to do something after Beslan: to give blood, or at least to donate money. But life goes on and the urge recedes. A year has passed. It may be painful to watch footage of those terrible days, to look at the faces of the mourners. But that pain will subside, and we will take this agitation of the soul for genuine emotion.
The anniversary of Beslan and our response to it is like a mirror held up to our soul that reveals us to be pain-proof.
We’ve gotten used to it. And that means we’re ready to reconcile ourselves to whatever hits us.
The events of last year, and particularly Beslan, were clearly directed at us, but we turn away. We do not want to change anything. We consent to the lie. We have not even learned the most obvious lesson: These are our children and our responsibility. We do not heed the warnings. What kind of people do not protect their children and do not rescue them at any cost? What kind of nation still does not want to know the truth a year later?
Anyone can see that human life is the primary reason for the existence of the state and society, their eternal and indisputable goal. Anyone can sense the fragility of the person next to him. And without recognizing these basic truths the state does not possess strength, prestige or ideology.
And no goal, no matter how well formulated, can be achieved.

Grigory Yavlinsky is head of the Yabloko party. He contributed this comment to The St. Petersburg Times.

TITLE: City Hall’s Investment Sweet Talk Is Dangerous
AUTHOR: By Vladimir Gryaznevich
TEXT: Under the administration of St. Petersburg former governor Vladimir Yakovlev, the city was run not so much according to laws, but according to a series of “understandings.” The results of such a management style are well known. For understandable reasons, when Valentina Matviyenko’s team took over at City Hall, they immediately began to deal with this evil and declared themselves to favor a modern, meaning liberal, open management style. And indeed in the early days they generally did so. However, as time past the style underwent some noticeable changes — back toward management by understanding.
A powerful, although far from the only, stimulus for this restoration was City Hall’s selection of investment priorities — administrative support for strategic investors, those who realize projects valued at 3 billion rubles ($105 million) or more. This support comes in two forms. Firstly, the procedure for obtaining permits for such investors are simplified, which can only be welcomed. But the second form of support — providing weighty organizational and material privileges — raises a lot of questions. 
The “strategic” investors receive land and buildings without having to go through competitive tenders. In addition, City Hall usually reduces the fees for the right to conclude an investment agreement and lowers the rental rates for land plots. All this is justified by the strategic advantages that the city will gain from these projects. However, if one looks closely there is an impression that City Hall’s main goal is to create the maximum propaganda effect from strategic projects. Not enough attention is paid to economic efficiency from the city’s point of view.
At times, political decisions leave behind a detailed economic analysis of projects that would clearly define the mutual obligations and the value of a project for the city. The closed and nontransparent nature of preliminary agreements does not so much reflect attractive economic relations, as it allows a ceremonial signing of memorandums and protocols by the prospective partners.
The granting of privileges to one group of investors has clearly had a negative effect on Matviyenko’s administration and its administrative culture. Most importantly, the special treatment given strategic projects — releasing them from the obligation to go through many procedures and reach standards that ordinary investors have to reach — creates the temptation of a return to working “by understandings” and in their regular operations with ordinary investors, entrepreneurs and the population the bureaucrats are retreating from their own declared liberal principles.
Examples of this behavior are growing. For instance, there are the small ventures that sell produce at bus stops around the city, which face liquidation. Those businesses put $3 million in taxes into the city budget and employ several thousand citizens. There was the odious tender for the licenses to operate bus routes, which only served to shore up the monopoly enjoyed by the city-owned enterprise Passazhiravtotrans at the expense of a score of mid-sized firms. And there is the absolutely scandalous tale about how a businessman received without a tender 40 sites to build tennis courts. The primitive, crude behavior by City Hall in relation to the City Charter Court shows that the bureaucrats have lost sight of what they are there for. 
To sum up — the administration’s management style presents a danger to the city and to Matviyenko’s reputation. 
The governor herself usually takes her fair share of the glory when there are successes with politically motivated strategic projects. But this PR has a reverse side — the absence of regular, clear and — importantly — public agreements with investors puts the governor in an extremely vulnerable situation. To present all new privileges to an investor can reduce the efficiency of a project in terms of the benefits it brings to the city. This may mean the benefits become minimal or even negative. Then it will not only be Matviyenko’s reputation that suffers, but the health of the city.
To avert all this unpleasantness, City Hall should renew its love for the small guys — “ordinary” investors, entrepreneurs and regular citizens. That is, they should return to their own liberal principles, the consequences of which, as international experience shows, is the best way of winning over voters.

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: Dream Weaver
AUTHOR: By Chris Floyd
TEXT: It was the one great fear that trumped all the others, the nightmare scenario that overrode reason, skepticism, and all political debate, stampeding the nation into war: the thought of terrorists wielding weapons of mass destruction — “dirty bombs” packed with cancerous nukestuff and gene-warping chemical poisons that would kill, maim and deform the innocent.
This was the horror that President George W. Bush and his supporters held up — and still hold up — before the American people as the moral imperative behind his invasion of Iraq, and the justification for any so-called “abuses” that might be committed in his desperate, noble, no-holds-barred defense of the realm against this ungodly terror.
And despite all the critics and nay-sayers, the president has indeed proven to be a prophet: The nightmare has come true. There are weapons of mass destruction in Iraq — dirty bombs and poison shells — and they are being used by terrorist leaders to kill and maim Americans, including newborn children. But the “liberal media” are completely burying the story, in a shameless act of treasonous complicity with these enemies of civilization.
In fact, the U.S. media elite spent the last weekend of August fawning over the radical extremist who unleashed these deadly weapons, gathering for an “intimate dinner” at his secluded desert redoubt, The Washington Post reports. While they noshed and joshed with the man of blood, his poisons were deforming the babies of American soldiers, irradiating the bones and organs of thousands of innocent civilians, and bonding chemical toxins to the very DNA of his victims, laying the foundation for generations of anguish and early death, as the In These Times web site reports.
This WMD attack was no piecemeal effort cobbled together by an isolated band of cranks, but a sustained, relentless onslaught delivered by a highly sophisticated military machine: more than 2,700 tons of radioactive weaponry exploding in every part of the country, its deadly residue raining on plowed fields and playgrounds, swirling in the dust of close-packed cities, winging through vast rural expanses, settling in lungs, coursing through veins, biting into the ground, floating on the water.
The country, of course, is Iraq, where the radical extremist George W. Bush has used more than 3,000 tons of depleted uranium — the radioactive residue of atomic weapons production and nuclear plants — in everything from missiles and bombs to rifle and pistol shells. As ITT notes, each DU explosion releases clouds of poison particles that disperse over a wide area and stay radioactive for billions of years. This dispersal pattern means that the American soldiers handling and firing DU ammo — or just walking through areas blasted by the shells — are just as poisoned as the thousands upon thousands of Iraqi civilians stricken by Bush’s WMD.
Yes, Bush is now committing the same war crime that he himself cites as the prime example of Saddam Hussein’s bottomless evil: using chemical weapons against his own people. 
And make no mistake: DU ammo is a chemical weapon of fearsome properties. After Daddy Bush dumped 300 tons of DU on Iraq in the first Gulf War, the Pentagon’s own studies showed it to be an uncontrollable hazard, an indiscriminate tormentor of civilians and combatants alike. But the military brass love those malignancy-spawning munitions, which can cut through stone and steel like paper. So they ignored the studies, denounced their own experts — and expanded the DU arsenal instead.
While insisting, without any field tests, that DU radiation is as safe as mother’s milk — assuming Mother hasn’t been irradiated, of course — the Pentagon conveniently ignores the indisputable chemical toxicity of the highly poisonous heavy metal. Medical scientists say that uranium has “an affinity for bonding with DNA, where even trace amounts can cause cancers and fetal abnormalities,” ITT reports. Doctors conducting in-depth tests on National Guard troops now stumbling home from Little Bush’s botch-up in Babylon are finding widespread symptoms of uranium poisoning, along with radiation-related deformities in soldiers’ children. Meanwhile, the ghastly effect that DU is having on civilians in Iraq — where treatment is nonexistent in the ruins of the health care system that Bush’s war has destroyed — can scarcely be imagined.
But apart from a few honorable exceptions — such as the “downmarket” New York Daily News, which has provided medical help for the poisoned Guard troops shunted aside by the Pentagon — the major U.S. media have maintained a craven silence about this ongoing atrocity. Certainly no one brought it up last weekend when the White House press corps was invited to Bush’s fake ranch for free chow and a personal chin-wag with ole DU Dubya himself — off the record, of course. It wouldn’t do for the American people to know what their betters talk about when they take their ease at poolside amongst the courtiers. The Post reports that the fierce watchdogs of the Fourth Estate were “following [Bush] around in packs every time he moved.” But what else could they do? You can’t lick somebody’s boots unless you get in really close.
And so the dirty bombs will keep falling — weapons of terror, the stuff of nightmares, a war crime whose virulent harvest will be reaped in the pain of children yet unborn. While Bush partied with the press, while he pranced around before hand-picked crowds of mindless adorers at cheerleading rallies, a harsh chemical death was slowly eating its way into the flesh of the citizen-soldiers and innocent Iraqis he has sacrificed in his vainglorious crusade for profit and power. His ostensible enemies in the “war on terror” can only dream of inflicting such wanton destruction; they will never match the ghoulish reality of the master.

For annotational references, see Opinion at www.sptimesrussia.com

TITLE: Trade Dispute Mars EU-China Summit
AUTHOR: By Katherine Baldwin
PUBLISHER: Reuters
TEXT: BEIJING — British Prime Minister Tony Blair said the European Union’s economic and political ties with Beijing were vital on Monday at the start of an EU-China summit marred by wrangling over textiles exports.
The annual summit will produce deals on climate change, trade and investment, including the signing of a contract by European plane maker Airbus to sell aircraft to China.
EU and British business leaders, many accompanying Blair on a four-day tour of China and India, are keen to expand sales to a country that is projected to be the world’s second-largest economy within the next decade.
But the row over export quotas on Chinese garments illustrates the challenge of managing the emergence of a powerhouse with cheap labour and a manufacturing prowess feared by many of the EU’s 25 members and the United States.
“The strategic partnership between China and the EU is of immense importance, not just in terms of trade but also in terms of our cooperation on the major political issues the world faces,” Blair said as he met Chinese President Hu Jintao at the Great Hall of the People.
Talks are also expected to cover human rights and China’s role in managing the nuclear threat from Iran and North Korea.
But behind the scenes, EU officials scrambled to resolve a textiles trade war that has left millions of Chinese garments held up at EU ports because they exceed import quotas agreed in June to manage a surge of shipments.
Blair, whose country holds the six-month rotating presidency of the EU, will also host a U.K.-China summit on Tuesday before traveling to India for meetings there at both EU and U.K. level.
Contracts worth some $3.68 billion will be signed between British firms and China and India on the four-day whistle-stop tour, officials say.
That sum includes part of the Airbus deal that Blair’s spokesman said involved a “not insubstantial” amount of money.
The summit is also expected to agree on a plan to help China manage greenhouse gas emissions.
The EU is China’s No. 1 trading partner and China is the bloc’s second largest after the United States, while British exports to China are growing at the fastest rate in the EU.
The summit will yield no progress on lifting the EU’s 16-year-old arms embargo on China, imposed after the 1989 suppression of China’s pro-democracy movement at Tiananmen Square, officials say.
Strong U.S. and Japanese pressure to keep the ban and Chinese threats against self-ruled Taiwan, which Beijing considers its own, have stopped plans to lift the embargo in their tracks.
But officials say Blair will seek to inject political momentum into China’s quest for market economy status — a label that would give it greater protection from EU suits against exports sold under market price, or “dumped”.
Talks may produce a roadmap of steps China must take to achieve the tag but the EU remains reluctant to award China market economy status, insisting it must show it is fully open to imports, banks and service providers from the bloc. 

Alan Wheatley in Beijing contributed to this report.

TITLE: Indonesian Air Crash Kills at Least 117
PUBLISHER: The Associated Press
TEXT: JAKARTA, Indonesia — An Indonesian jetliner crashed into a crowded residential neighborhood in the city of Medan shortly after takeoff Monday, killing all 117 on board and an unknown number on the ground, officials said. 
The Mandala Airlines Boeing 737 was heading to Jakarta when it crashed one minute after takeoff and burst into flames, said Transport Minister Hatta Radjasa.
It was carrying at least 117 passengers and crew, said the airline’s acting president, Maj. Gen. Hasril Hamzah Tanjung.
“They have all died,” Edi Sofyan, a government spokesman in Medan, said by telephone. There were also casualties on the ground, he said, though he did not know how many.
Smoke billowed from the burning debris and dozens of houses and at least 10 cars were in flames or damaged. Hundreds of policemen, paramedics and residents were trying to evacuate victims.
Syahrial Anas, a doctor overseeing the removal of charred bodies, said flames were hampering their efforts. Officials said one of the dead included the governor of the North Sumatra province, who was heading to the capital for a meeting with the president.
“We’re having a hard time getting to the bodies, because of the heat,” Anas said.
Medan, the country’s third largest city, has been a major staging point for tsunami relief operations in Aceh province, which occupies the northern tip of Sumatran island. The international airport is close to the center of town and is surrounded by densely populated residential areas.
Mandala Airlines is a Jakarta-based domestic carrier founded in 1969 by a military-run foundation. Its 15-plane fleet consists mainly of 1970s-vintage Boeing 737-200 jets. In recent years, the financially troubled airline has been forced to cut services and fares to remain competitive.
Tanjung said an investigation was being carried out into the cause of the crash.
The plane was nearly 25 years old, he said, and received its last comprehensive service in June. It had flown more than 50,000 hours and was due to be retired in 2016.
Monday’s crash follows five major airline accidents in August, the deadliest month for plane disasters since May 2002. Some 334 people died in accidents in Peru, Venezuela, Greece and Tunisia last month. A plane also overshot a runway in Toronto and caught fire; no one died.
Indonesia’s last crash involving a jetliner occurred in February 2005, when 26 people were killed when a plane operated by Lion Air, a low-cost carrier, skidded off the runway on Java Island, killing 26 people.

TITLE: Paris Suffers 3rd Fatal Blaze
AUTHOR: By Laure Bretton
PUBLISHER: Reuters
TEXT: PARIS — A fire killed 14 people in a suspected arson attack in a high-rise apartment block in Paris on Sunday, the third major blaze in the French capital in just over a week, police said.
Two children were among the victims, most of whom were killed by smoke and fumes, and at least 13 people were hurt in the low-cost 18-story building in the southern suburbs of the capital, a police spokesman said.
“The official toll is 14 dead but the toll is unfortunately going to rise,” he said.
Local officials said they suspected the fire was started deliberately in a mailbox in the entrance of the building, and were looking for four young people whom witnesses saw in the hallway just before the blaze started.
“The first indications point to a fire caused by a criminal act,” said Patrick Seve, Mayor of the L’Hay-les-Roses district where the fire broke out around 1 a.m. local time.
Many victims were choked or suffocated by the fumes in extremely high temperatures after opening their doors. People who stayed in their apartments were safe.
“The people who stayed inside were fine. It’s the people who rushed out and ran into temperatures of 300 degrees Celsius, smoke and asphyxia, that gave rise to the terrible toll,” said deputy fire chief Alain Antonini.
Unlike the two other fires in the past 10 days, Sunday’s blaze did not sweep through rundown housing for immigrants but was in a low cost social apartment block known as an HLM housing about 800 people in 110 flats.

TITLE: Climber’s Remains Recovered
AUTHOR: By Sadaqat Jan
PUBLISHER: The Associated Press
TEXT: ISLAMABAD, Pakistan — A famed Italian mountaineer retrieved his brother’s lost remains from Pakistan’s perilous Nanga Parbat mountain, 35 years after their conquest of the peak ended in tragedy. 
Fellow members of the 1970 expedition have accused Reinhold Messner of having abandoned his younger brother Gunther, then 24, after reaching the summit of the world’s ninth highest peak, when Gunther was suffering altitude sickness.
The climb was to prove a turning point in Messner’s career. The Italian went on to make a solo ascent of Mount Everest, and became the first man to scale the world’s 14 tallest peaks without using bottled oxygen.
“On Nanga Parbat I suffered my biggest tragedy, losing my brother,” Messner, 61, said Sunday at a news conference, after a weekslong trek around the mountain.
Messner, who has also been a member of the European Parliament, showed reporters a leather mountaineer’s shoe, with holes in the front but largely intact, that he said belonged to his brother.
He said villagers found it July 17 near the base of the 7,924.8-meter-high peak, along with human remains apparently churned down its steep slopes over the years by glaciers and snows.
“Today nobody [is] using leather shoes. Only in this expedition we used this shoe,” Messner said.
Messner said he and Gunther had reached the summit on June 28, 1970 — the first conquest on the mountain’s cliff-like southern side.
The next day, bad weather struck, and the brothers lost contact with fellow expedition members. Messner said that because Gunther was suffering from altitude sickness, he decided they would descend on the less-difficult western side.
Messner, who lost seven toes and parts of finger tips to frostbite in the expedition, said he was ahead of Gunther on the descent when an avalanche struck and buried his brother.
He claims the location where the remains were found support his account of what happened.
Messner has sued two members of the 1970 Nanga Parbat expedition, Hans Saler and Max-Engelhardt von Kienlin, for alleging in books that he had sacrificed his brother’s life so he could reach the summit.
They alleged that Messner sent Gunther down a more dangerous route, although the two brothers had both nearly died on the way up it, while Messner himself took a safer route for his descent.
On Sunday, Messner rejected their account as “lying, lying and again lying.” Saler and von Kienlin could not immediately be reached for comment.

TITLE: Typhoon Hits South Japan
PUBLISHER: Reuters
TEXT: TOKYO — A powerful Category 4 typhoon bore down on southwestern Japan on Monday, threatening the country’s heavily populated main islands with torrential rain and strong winds and disrupting transport and oil refineries.
Weather officials in South Korea also warned of flooding, while eastern China braced for possible effects from Typhoon Nabi after the region’s previous storm killed at least 84 people in the east of the country, newspapers said.
The Tropical Storm Risk Web site classified Nabi as a Category 4 storm on a scale of 1 to 5, the same category as Hurricane Katrina, which hit the U.S. Gulf Coast last week.
Typhoon Nabi, whose name means “butterfly” in Korean, was traveling north-northwest at a speed of 15 kilometers an hour, heading directly for the densely populated southern island of Kyushu.
The Meteorological Agency expected Typhoon Nabi to swerve to the east, putting it on course to batter much of Japan and southern and eastern parts of South Korea, but said it could weaken slightly as it passes over cooler water.

TITLE: Defiant Iran Faces Sanctions
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — Iran will continue uranium reprocessing despite Europe’s threat to refer it to the UN Security Council for possible sanctions if it does not freeze the work within two weeks, a Foreign Ministry official said Sunday. 
The Iranian defiance is the latest in its highly charged dispute with the international community over its contentious nuclear program, which the United States alleges is aimed at building nuclear weapons, claims which Tehran denies.
International attention is focused on the Uranium Conversion Facility in Isfahan in central Iran, where Tehran last month resumed activities related to the conversion of uranium concentrate ore — known as yellowcake — into hexaflouride gas, the feedstock for enrichment.
Uranium enrichment is an activity of even higher concern for the international community. Enriched to a low level, uranium can be used to produce nuclear fuel used to generate electricity. Further enrichment makes it suitable for use in nuclear weapons.
“The issue of Isfahan is a thing of the past,” Foreign Ministry spokesman Hamid Reza Asefi said Sunday. “The era of threats to force Iran to give up its rights is over. We have said it and say it again, that threat and resorting to two-sided language won’t help Europe.”

TITLE: Top Judge Rehnquist Dies At 80
PUBLISHER: The Associated Press
TEXT: WASHINGTON — As Chief Justice William Rehnquist’s family made funeral plans, President George W. Bush and the Republican-controlled Senate considered how to deal with the first dual vacancy on the nation’s highest court in more than three decades. 
The president said he plans to move quickly to replace Rehnquist, who died Saturday night after a long fight with cancer.
Meanwhile, senators were moving toward honoring the late chief justice by not holding a confirmation hearing for John Roberts, Bush’s nominee to replace retiring Justice Sandra Day O’Connor on the Supreme Court, on Wednesday — the day of Rehnquist’s funeral and burial — said two congressional sources who spoke on condition of anonymity.
By late Sunday, senators had not decided whether to start Roberts’ hearing by the Judiciary Committee on Tuesday or wait until Thursday — although Tuesday seemed to be preferred, said the sources, one Republican and one Democrat.
“There are now two vacancies on the Supreme Court, and it will serve the best interests of the nation to fill those vacancies promptly,” Bush said in a televised speech from the White House on Sunday. “I will choose in a timely manner a highly qualified nominee to succeed Chief Justice Rehnquist.”
It is the first time since 1971 that there have been two vacancies on the Supreme Court at roughly the same time.
Rehnquist, 80 at his death, served on the Supreme Court for 33 years and was its leader for 19 years.
Rehnquist, a World War II Army Air Corps veteran, will be buried in a private ceremony at Arlington National Cemetery alongside his wife.

TITLE: Looters Shot Amid New Orleans’ Suffering
AUTHOR: By Mark Egan
PUBLISHER: Reuters
TEXT: NEW ORLEANS — New Orleans police killed four looters who had opened fire on them Sunday as rescue teams scoured homes and toxic waters flooding streets to find survivors and recover thousands of bloated corpses.
A fifth looter was in critical condition but no more details were available about the incident in a city where authorities are slowly regaining control after a wave of looting, murders and rapes in the wake of Hurricane Katrina.
“Five men who were looting exchanged gunfire with police. The officers engaged the looters when they were fired upon,” said New Orleans superintendent of police, Steven Nichols.
U.S. Army Corps of Engineers contractors working on a levee breach were fired on by gunmen but no one was hurt, said the Corps’ Mike Rogers. It was not clear if the two incidents were connected.
Six days after Katrina ripped up the Gulf Coast and sent floodwaters pouring into New Orleans, no one knows how many people were killed, but government officials say the number is in the thousands.
“When we remove the water from New Orleans, we’re going to uncover people who died hiding in houses, who got caught by the flood, people whose remains will be found in the street,” Homeland Security Secretary Michael Chertoff said. “It is going to be about as ugly a scene as you can imagine.”
Under fire for its slow response to the flooding, the Bush administration tried to save face on Sunday by sending top officials down to the disaster zone and pledging to do whatever it takes to clean up New Orleans and help its refugees.
President George W. Bush was to visit relief efforts in Baton Rouge, Louisiana, and Poplarville, Mississippi, on Monday — his second trip to the devastated region in less than a week.
Battered and sickened survivors made no attempt to disguise their anger: “We have been abandoned by our own country,” Aaron Broussard, president of Jefferson Parish just south of New Orleans, told NBC’s Meet the Press.
“For God sakes, shut up and send somebody,” a tearful and anguished Broussard said of promises not kept by Washington, adding that “bureaucracy has committed murder” in New Orleans. 
But in a sign that a return to normality, while still far off, was at least a possibility, lights began to go back on in parts of the beleaguered city, as Electric company Entergy Corp. started to restore power.
After a nightmare confluence of natural disaster and political ineptitude that al Qaida-linked web sites called the “wrath of God” striking America, National Guard troops and U.S. marshals patrolled streets stricken in the days after the hurricane by anarchic violence and looting.
Coast Guard helicopters hovered over devastated neighborhoods and continued to pluck survivors from roofs. Some brave residents joined the rescue efforts and spoke of horrors in the deep and muddy waters.
In New Orleans’ notoriously poor 9th district, police launched search missions with small speedboats to find both the living and the dead.
The tips of roofs poked out from the water, which bubbled from burst gas mains, and, in one spot, a swelling corpse floated on floodwaters. Law enforcement officials advised reporters not to go close.
“It’s about to pop at any minute. And you don’t want to be there when that happens,” one officer said.
Officials said they had assembled facilities capable of handling 1,000 bodies immediately and were expanding them.
Louis Cataldie, Louisiana’s emergency response medical director, declined to speculate on how high the death toll might go. “It’s not about numbers,” she said. “Each death is enough. This is horrific.”
Louisiana’s official death toll stood at just 59 Sunday but officials said it would rise dramatically.
In a rare admission of error, Bush conceded the relief efforts were unacceptable, and this weekend ordered 7,200 extra active-duty troops to the disaster zone.
Most of Katrina’s victims were black and poor, and some black leaders have said the federal government would have moved much more quickly if rich, white people were suffering.
Secretary of State Condoleezza Rice rejected the claim on a tour of Mobile, Alabama. “Nobody, especially the president, would have left people unattended on the basis of race.”
But it looked different from the disaster zone.
“For those who were alone in the water, alone on the roof, you might ask ‘What did we do to deserve this?”’ Rev. Lowell Case told his congregation at St. Francis Xavier Church in Baton Rouge. “A lot of us think being black may have had something to do with it, being poor and black in New Orleans.”

TITLE: Slick Schroeder Bests Merkel in TV Debate
AUTHOR: By Geir Moulson
PUBLISHER: The Associated Press
TEXT: BERLIN — Chancellor Gerhard Schroeder reminded Germans of his opposition to the U.S.-led war in Iraq and his challenger Angela Merkel focused on unemployment, as the two squared off Sunday in a key televised debate two weeks ahead of elections. 
The 90-minute debate, broadcast live during prime time, offered the beleaguered Schroeder an opportunity to showcase his strong television skills as polls give Merkel’s conservative Christian Democrats a double-digit advantage over his Social Democrats.
Polls found that the media-savvy Schroeder performed better — an outcome that had been widely predicted.
The chancellor started off with a defense of his welfare-state and labor-market reforms, and also sought to score points with his popular opposition to the Iraq war.
“I am asking for confidence in the policies that I have carried out, policies aimed at readjusting the social security systems that were neglected in the 90s” under a previous conservative government, Schroeder said. “We are the ones who tackled the structural problems.”
He also claimed credit for “a foreign policy that has positioned Germany abroad as a middle-sized power for peace — which contributed, and I had to take some criticism for that, to keeping Germany out of the Iraq war, for example.”
Merkel shot back with a barb at Schroeder’s struggles over the past two years to overcome resistance within his Social Democrats to his limited reform drive, which she proposes extending.
“Germany can only be a strong, reliable partner in the world if we are also economically strong, and that is where we are lacking — and, unlike the chancellor, I can be sure with my party colleagues that we will support this course of modernization together,” she said.
“We must do everything to say: priority for jobs,” Merkel said.
Merkel has centered her campaign firmly on the German economy’s stagnation and the country’s persistently high unemployment rate — currently 11.4 percent.
She underscored during Sunday’s debate her opposition to Turkish membership of the EU, arguing that “the EU does not have the capacity of integration to take in Turkey as a full member.” Merkel proposes offering Turkey a “privileged partnership” instead.
“It would be entirely irresponsible now to awake in Turkey expectations of full membership ... and then be unable to implement that,” she said.
Schroeder accused her of making “a major foreign policy mistake.”
“You do not understand what geostrategic, what geopolitical significance linking Turkey to the EU has,” he said.
Although Merkel’s party is well ahead in support, it is less clear whether it and the pro-business Free Democrats will muster enough votes to form her preferred coalition. If they fall short, Merkel could be forced into a so-called “grand coalition” with Schroeder’s party.
Experts argue that Sunday’s debate — the only one-on-one encounter of the campaign — could help determine what coalition emerges from the election.

TITLE: Alonso, Raikkonen Duel For Schumacher’s Crown
PUBLISHER: The Associated Press
TEXT: MONZA, Italy — Michael Schumacher’s five-year reign as Formula One’s champion is over. 
Schumacher’s 10th-place finish in Sunday’s Italian Grand Prix mathematically eliminated him from the championship race. Meanwhile, Fernando Alonso’s second-place finish set up the possibility that the 24-year-old Spaniard could clinch this season’s title at the Belgian GP next Sunday. 
“The championship was obviously lost a while ago, but we have had a lot of good years before this one,” said Schumacher, whose slim chances of staying in the championship hunt evaporated when he drove off track near the end of the race, causing damage to his car. 
Alonso holds a 27-point lead over rival Kimi Raikkonen with four races remaining. Wins are worth 10 points each. 
“With some good luck and some strong races, I hope to get the championship very soon,” Alonso said. 
Almost lost in it all was Juan Pablo Montoya’s victory from the pole. 
Montoya’s race was mostly uneventful, although a problem developed with his rear left tire on the final laps and Alonso started gaining on him. The race finished just in time for Montoya, and the Colombian won in 1 hour, 14 minutes, 28.659 seconds. 
“I controlled it in the mirror,” Montoya said, referring to his deteriorating tire. “I was not afraid.” 
Alonso, who seemed to be paying more attention to Raikkonen behind him than Montoya in front, finished 2.4 seconds back. Teammate Giancarlo Fisichella took third at a gap of 17.9 seconds, and Raikkonen finished 22.7 seconds behind. 
“Alonso could have attacked Montoya at the end, but he could have also lost everything,” Renault director Flavio Briatore said. “We haven’t won anything yet.” 
It was the sixth victory of Montoya’s career and second at Monza, where he won his first Grand Prix in 2001. Montoya also won the British GP in July for his only other victory this season. 
With Rubens Barrichello placing 12th after suffering a mid-race tire puncture, Ferrari gained no points for the second straight race. 
Last year, Barrichello led Schumacher in an all-Ferrari 1-2 finish at its home race. 
“We are very disappointed for our fans and our staff who were here in the grandstand,” Ferrari team director Jean Todt said. “The main problem afflicting us is a lack of [tire] grip and all we can do is continue to work with our partners at Bridgestone to fix it.” 
Only 93,000 fans showed up for the weekend, far down from the record 160,000 in 2000 when Schumacher won the first season title for Ferrari in 21 years. 
Spain is replacing Italy as Formula One’s hotbed. On Friday, Spanish GP organizers announced they were adding 8,000 more seats for next year’s race in Barcelona, responding to a sold-out crowd of 115,900 earlier this season. 
A Grand Prix in Finland might also sell well these days the way Raikkonen has performed lately. 
The Finn’s audacious climb up from an 11th-place start to finish fourth was the highlight of Sunday’s race. 
Due to an engine change penalty, Raikkonen was relegated to a sixth-row start after posting the fastest qualifying time. 
Still, he had the fastest car and started with more fuel than the other top cars, enabling a one pit-stop strategy. The plan may have been good enough to place him on the podium had he not suffered from two unscheduled stops. 
Raikkonen made his only scheduled pit stop on the 26th lap of the 53-lap race. On the 29th lap, Raikkonen returned to the pits to change his rear left tire. 
On the 45th lap, Raikkonen spun out and came to a brief but complete stop on the gravel, letting Jarno Trulli overtake him into fourth place. Three laps later, Raikkonen passed Trulli and returned to fourth position but the time lost prevented the Finn from challenging Giancarlo Fisichella for third.

TITLE: Sports Watch
TEXT: Hockey Loss to Sweden
ST. PETERSBURG (SPT) — Mika Hannula scored the game-winner with 32 seconds remaining in regulation time as Sweden edged Russia 2-1 in the Ceksa Pojistovna Cup ice hockey event held in St. Petersburg on Thursday night at the Yubileiny Sports Palace. 
“Unfortunately one of our new young players, Andrei Kuteikin, who made it debut with the [Russian National] team, made a critical mistake in the third period which cost us the game,” said Team Russia Head Coach Vladimir Kirkunov. 
St. Petersburg native Maxim Sushinsky opened the scoring at 7:57 in the first period. Russia dominated play in the first two periods, but Jonas Nordqvist evened the game at one at 8:38 in the second period. 
Both teams played cautiously in the third period, and the game seemed destined for overtime until Hannula’s goal. 
Looking ahead to the Winter Olympic Games in Turin, Italy, in 2006, Kirkunov said Russia’s roster will be filled mainly with Russians playing in the NHL. 
“Only Sushinsky and [Alexander] Kharitonov have a solid chance of making [that] roster.”

World Cup Qualifiers
LONDON — Russia stayed in the hunt for a Group 3 playoff place after a 2-0 win over Liechtenstein in Moscow while France, England, Poland, Croatia, Portugal, Romania and the Netherlands picked up key victories on Saturday night — and Italy settled for a draw — as they chase places in the 32-team World Cup finals. Israel earned a tie to keep alive its bid to qualify for the first time since 1970.
On a dramatic night of 22 qualifying games across Europe, Ukraine advanced despite slipping to a 1-1 draw at Georgia. Twenty-four more games are on tap next Wednesday, with the final two rounds of European qualifying matches next month.

Menchov Takes Lead
LLORET DE MAR, Spain (AP) — Russia’s Denis Menchov won a 30-mile time trial Sunday to take the overall lead at the Spanish Vuelta from defending champion Roberto Heras before the race enters the Pyrenees. 
Menchov captured the ninth stage in 1 hour, 54 seconds after a climb to the top of Alto de Tossa, an 853-foot peak. Heras, a Spaniard who won the Vuelta in 2000, 2003 and 2004, finished the stage in fifth place. 

Lebedeva’s $1M Jackpot
BERLIN (Reuters) — Russian triple jumper Tatyana Lebedeva secured the Golden League’s $1 million jackpot with victory in the season’s final meeting on Sunday.
The 29-year-old was the sole un-beaten competitor after six European meets. Lebedeva won $1 million with a leap of 14.85 meters, beating Yamile Aldama of Sudan into second place. A two-time world champion, Lebedeva skipped the world championships in Helsinki to focus on the Golden League and the sport’s biggest prize.

Ref’s Decision Queried
TASHKENT (Reuters) — Uzbekistan has called for a FIFA probe after a referee controversially disallowed a penalty in their World Cup qualifier with Bahrain on Saturday.

TITLE: Saddam Trial Set For October
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq — Saddam Hussein’s defense team complained Sunday it will not have enough time to prepare for his trial as the government officially set Oct. 19 for the start of proceedings that could end with the execution of Iraq’s former dictator. 
Meanwhile, U.S. troops killed seven insurgents Sunday in Tal Afar, including six who fired at the Americans from a mosque, the U.S. command said. Iraqi officers said well-armed insurgents controlled the center of Tal Afar and their ranks included fighters from Yemen, Syria, Saudi Arabia and other Arab countries.
A legal adviser to Saddam’s family, Abdel-Haq Alani, said that starting the trial next month would “undercut the defense capability to review the case.”
He was reacting to an announcement by the chief government spokesman, Laith Kubba, that Saddam and seven former henchmen would be tried on Oct. 19 in the 1982 massacre of 143 Shiite Muslims in Dujail, a town north of Baghdad.
Kubba’s announcement confirmed unofficial reports that the first trial of Saddam and key lieutenants would begin just days after the Oct. 15 national referendum on Iraq’s constitution.
Trying Saddam so soon after the referendum could further enflame sectarian tensions among Saddam’s fellow Sunni Arabs, many of whom oppose the draft charter.

TITLE: Chirac in Hospital For Tests
PUBLISHER: The Associated Press
TEXT: PARIS — President Jacques Chirac, hospitalized after suffering a small blood vessel problem that hindered his vision, is in good condition, walking and discussing the issues of the day, the French prime minister said. 
The president’s hospitalization came as his party held its annual summer meeting, with the party leader, Interior Minister Nicolas Sarkozy, pressing ahead with his quest to succeed the 72-year-old president.
But Prime Minister Dominique de Villepin said Sunday any speculation that health problems could stop Chirac from seeking a third term as president in 2007 is “irrelevant and disconnected from today’s reality.”
Chirac was taken to the hospital late Friday after noticing a problem with his eyesight, Villepin said during a radio interview Sunday night, “and the doctors proposed he stay for complementary tests.”
Villepin, who spoke with Chirac on Sunday, said that during a Saturday visit to the hospital he saw Chirac “standing, walking in his room and talking about the major issues,” including French aid to the United States to help cope with the aftermath of Hurricane Katrina.
Chirac’s wife, Bernadette, was seen leaving the hospital Sunday afternoon. French radio reports said she had returned only on Sunday from a holiday in southeastern France, appearing to indicate that she was not overly concerned.