SOURCE: The St. Petersburg Times
DATE: Issue #1108 (74), Tuesday, September 27, 2005
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TITLE: Ecologists Divided on New Plant’s Advantages
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: Although the Southwest Wastewater Treatment Plant or SWTP was opened with great solemnity on Thursday, the city’s ecologists say the arrival of the new facility has its disadvantages as well as advantages. 
“On the one hand, it’s a great project, which will indeed allow us to purify 85 percent of the city’s wastewater, but on the other hand it may have dangerous consequences for the city,” said Dmitry Artamonov, head of St. Petersburg’s Greenpeace office, in a telephone interview on Friday.
He said the SWTP project’s biggest drawback derives from the fact that it plans to burn the sediment left by wastewater.  The construction of the facility for this burning process is to be completed in 2007.
“This section is both a silly and harmful idea,” he said.
“It is silly, because such sediment, after certain technological treatments, can serve as a great natural resource for either agricultural needs or as bio fuel.  That’s the way it’s used in Europe, which has stopped using this process long ago,” Artamonov said.
The process will be particularly harmful, Artamonov said, because much of the sediment produced in St. Petersburg derives from industrial work, providing about 25 percent of the wastewater to be treated by the plant.
Domestic and industrial wastewater are not separated in St. Petersburg, and fumes from the burning of such sediment increases the risk of cancer, and has a negative impact on human reproductive and immune systems. 
St. Petersburg has one of the highest rates for cancer sufferers in the country, and the city authorities should have considered the other ways of dealing with the sediment, Artamonov said.
Alexander Nikitin, ecologist at the St. Petersburg branch of the Norwegian environmental group Bellona, also mentioned the pros and cons of the SWTP project.
“The SWTP is a very good project, but it should have been completed much earlier.  If it had been, we would have caused much less harm to the Baltic Sea,” Nikitin said.
At the same time, Nikitin said he regretted that Finland and Sweden had effectively been “blackmailed” into financially helping St. Petersburg deal with its own ecological problem, as they too have to suffer the consequences of the pollution of the Baltic Sea.
The SWTP is one of the biggest investment projects in Europe, with a significance not only for St. Petersburg but for all the countries of the Baltic region.
The capacity of the SWTP will allow the discharge of untreated wastewater into the Gulf of Finland to be reduced by about 330,000 cubic meters a day.  It will treat wastewater generated by more than 700,000 people.
The SWTP will reduce the annual flow of basic suspended solids into the Gulf of Finland by 21,000 tons, with total phosphorus decreasing by 520 tons, and total nitrogen by 3,200 tons.

TITLE: Parties To Submit Governor Candidates
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — A senior aide to President Vladimir Putin confirmed Monday that the Kremlin was considering allowing parties that win regional parliamentary elections to submit candidates for governor.
But Igor Shuvalov, Putin’s economic adviser, failed to say whether the plan had advanced any further than when Putin mentioned it in his address to the Federal Assembly in April.
“We need to develop the political system so that party leaders can claim a governor’s post. This is a serious question that needs much discussion,” Shuvalov said, at a congress of regional authorities in Kemerovo, Siberia.
Nominating leaders who topped winning party lists would enhance the role of parties in running the regions and make them “politically more responsible,” Shuvalov told the meeting, which was held under the auspices of the Council of Europe’s Congress of Local and Regional Authorities. 
Opposition parties and analysts said the reform, while aimed at getting political parties to shoulder responsibility for running the regions, was unlikely to make the appointment of governors any more democratic.
Putin also discussed the idea in a meeting with the leaders of the four parties represented in the State Duma in May, but did not say then whether he would reserve the right to reject parties’ candidates.
United Russia, which has won many regional elections this year, and the ultranationalist Liberal Democratic Party have welcomed the proposal, saying it would make the selection process more democratic. 
Since January, Putin has had the power to appoint regional leaders under a law that scrapped direct gubernatorial elections. 
Sergei Butin, a spokesman for the nationalist Rodina party, said that the proposal was “unlikely to make the process of nominating governors more democratic.”
“The reform is being made to suit United Russia,” said Yury Korgunyuk, an analyst with the Indem think tank. “Shuvalov forgot to say that only its candidates would be nominated as governors.” 
Nikolai Petrov, scholar in residence at the Carnegie Moscow Center, said Putin was afraid of being held responsible for the governors he had nominated.
“If something goes wrong in the regions, people are likely to blame the Kremlin. To avoid this scenario, the Kremlin has come up with the idea of getting the parties involved in hiring the governors,” Petrov said.
The Kremlin press service declined to comment on the issue Monday.

TITLE: Politicians Warm Up for City Budget Debate
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: With the City Hall expected to submit a draft of the St. Petersburg 2006 budget to the Legislative Assembly this week, politicians are gearing up to debate where the $5 billion in predicted revenue for the coming year is to be spent.
According to the City Hall’s Finance Committee, the city budget’s revenues increased from 75.7 billion rubles ($2.5 billion) in 2003 to 93.3 billion rubles ($3.2 billion) in 2004, with 144.2 billion rubles ($5 billion) expected this year.
Most of the revenues for next year’s budget are expected to come from taxes, excise duties on alcohol and oil, and rent of land and office space. According to extracts from the draft of the budget released to the press last week, the budget’s spending is expected to amount to 153 billion rubles next year, 23 billion rubles higher than this year’s figures.
The 2006 budget will be the third consecutive budget to show growth of revenues but also the third consequtive budget to have a deficit. The budget deficit is projected to be slightly reduced from 9.5 to 8.8 billion rubles.
“The budget reflects the rapid growth of the city’s revenues, which is a positive tendency,” said Vatanyar Yagya, lawmaker in Party of Life faction, in a telephone interview on Friday. “It also shows that the governor is sticking to her electoral promise of doubling the revenues within two years’ time.”
With their expenses and living costs also set to rise, many locals, however, are unlikely to benefit from what would, at first glance, appear to be a positive trend. 
Vice-governor Mikhail Oseyevsky told reporters last week that the cost of living will increase next year. St. Petersburgers will have to pay more for transport, and possibly for heating and hot-water supply.
Stating that the budget deficit has a stimulating effect on the city, Yagya stressed that the new budget plans for substantial increases in salaries for doctors, teachers and social workers, as well as in funding of social programs.
In a city where every fourth citizen has reached the retirement age, the social sphere traditionally takes up the lion’s share of St. Petersburg’s annual spending.
Next year, the government plans to spend 28.4 billion rubles on healthcare programs, with another 19.9 billion rubles being spent in the social sector. The budget’s draft also proposes a detailed investment program with a total funding of 26.8 billion rubles.
The government is also proposing the allocation of 5.6 billion rubles for road repairs and construction, 3.3 billion rubles for the construction of two new underground metro stations, and 672 million rubles for general repairs to public transport and the purchase of new vehicles.
Vladimir Barkanov, head of the Bugdet and Finance Commission at the Legislative Assembly, even also sees the deficit as a positive sign. “It gives the city an impulse to develop, and besides, all the biggest cities in the world have a budget deficit: take, for instance, New York or Barcelona,” Barkanov told Zaks.ru, the assembly’s online publication.
Yagya said St. Petersburg is suffering from the current system of revenues management, whereby every subject of the federation is obliged to send percentage of its revenues to the federal government, where the money is accumulated and then reallocated where needed.
“Half of the city’s revenues are taken by the federal budget, but much less comes back,” Yagya said.
St. Petersburg is one of the biggest donors in this system, Yagya stressed.
“It would have been vital for the city to be able to manage all its revenues and maintain all its infrastructure independently,” he said. “Now, if a building is federal property, the city doesn’t have a legal right to repair it. This is absurd.”
The government is also proposing that its spending on security programs be increased by almost 25% over last year to 4.2 billion rubles.
Ulvi Strelchuk, deputy head of the justice and law enforcement committee, said last month that this will allow cameras to be installed where thefts and pickpocketing are most frequent, including several central metro stations.
Strelchuk, who was speaking at a meeting of the city branch of the Russian Travel Industry Union, or RST, said part of the crime-prevention plan foresees language training for police officers. A 24-hour police telephone hotline to help foreign victims of crime is also to be established next year as part of the plan.

TITLE: Former Ukrainian PM Faces Russian Charges
AUTHOR: By Judith Ingram
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russian prosecutors said Monday they had canceled an arrest warrant for former Ukrainian Prime Minister Yulia Tymoshenko after she appeared in Moscow over the weekend and was questioned. 
Tymoshenko had been accused of bribing Russian defense officials while she headed Ukraine’s main gas distributor, the now-defunct United Energy Systems. Tymoshenko has denied the Russian charges, saying they were politically motivated. 
Russia’s main military prosecutor’s office canceled the international arrest warrant it had issued a year ago because Tymoshenko had provided investigators with necessary “explanations” over the weekend and agreed to show up for questioning in the future, the prosecutor-general’s press service said in a brief statement. 
Tymoshenko, who was ousted from the prime minister’s job Sept. 8, had been protected by the immunity that all high officials enjoy. But after her ouster, she lost that immunity. There was no suggestion that her former ally, President Viktor Yushchenko, would consider handing over Tymoshenko, but her position, nevertheless, became more vulnerable. 
Tymoshenko’s spokesman, Petro Yakobchuk, said the former prime minister had been in Moscow Sunday and was questioned by prosecutors. 
“Common sense prevailed over absurdity,” said Valentyn Zubov, a lawmaker from Tymoshenko’s parliamentary faction, of Russia’s decision to cancel the arrest warrant. 
“All the accusations against Tymoshenko were groundless.” 
Zubov said that the Kremlin’s attitude toward Tymoshenko had hurt the ethnic Russian population in Ukraine and damaged relations between Moscow and Kiev. 
Tymoshenko did not travel to Russia during her seven months at the head of Ukraine’s government — once canceling a planned visit earlier this year, a day after Russian prosecutors said they would not drop the charges, although they did say they would respect her immunity as an official. 
At the time, she said the visit’s cancellation was due to Yushchenko’s order to all Ukrainian officials with responsibilities for agriculture to concentrate on the spring sowing campaign. 
For many Ukrainians, Tymoshenko symbolized their “Orange Revolution,” rallying hundreds of thousands in Kiev last year to denounce fraud by the former government in the presidential election and force a new vote, which Yushchenko won.

TITLE: Chubais Case Suspects Charged
PUBLISHER: The Associated Press
TEXT: MOSCOW — Prosecutors have indicted three former servicemen in connection with the attempted assassination of Russia’s former privatization czar, Anatoly Chubais, officials said Monday. 
The Prosecutor General’s office said it had completed an investigation into the attack and filed formal charges against Vladimir Kvachkov, a retired military intelligence colonel, and former paratroopers Robert Yashin and Alexander Naidyonov. The trio were charged with the attempted murder and illegal possession and production of weapons and will remain in custody pending their trial, it said in a statement. 
All three have maintained their innocence. 
Chubais, the head of the state-controlled Unified Energy Systems power grid, was ambushed on his way to work near his country home outside Moscow on March 17 by assailants who detonated a bomb and raked his armored car with automatic weapons fire. No one was hurt. 
The Prosecutor General’s office did not comment on the suspects’ motives, but some Russian media said that investigators believed that the suspects had targeted Chubais because of their political views. 
Chubais is widely reviled by Russians for presiding over the controversial sellout of state assets in the 1990s, when a handful of government-linked businessmen snapped up huge state-run enterprises at cut-rate prices.

TITLE: Calls Made for Crack Down on Vice
AUTHOR: By Henry Meyer
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia must take urgent measures to stem a rapid growth in child pornography on the Internet and child sex trafficking that makes the country a major supplier for the global pedophilia market, Russian and international experts warned on Monday. 
Russia’s parliament toughened the law in December 2003 by making it a crime for someone to produce, store and distribute child pornography. Until then, the law did not distinguish between pornography that involved adults and minors. 
The Interior Ministry says around 50 criminal cases have since been launched, resulting in several convictions for distributing pornographic images of children. But a top Russian expert in the field, Yelena Mizulina, criticized what she termed the “pathetically short jail terms” that threaten offenders. 
In two recent convictions, a Moscow court sentenced a man identified only as Kuznetsov to three years for distributing child pornography, including sex acts involving minors, while another man in the Urals city of Yekaterinburg got a three-year suspended sentence for a similar offense. 
“In the U.S, people can get 25 to 30 years for this kind of thing,” remarked Terry Kinney, a prosecutor from Chicago who is resident legal adviser at the U.S. embassy and organized a three-day conference in Moscow aimed at highlighting the problem. 
The U.S. deputy chief of mission, Daniel Russell, acknowledged that U.S. pedophiles provided a lucrative market for sexual images of Russian children, but said action was needed to shut down Russian-based Web sites. 
“The U.S. is fueling demand for child pornography Web sites but we need your help to stop this. Only through the collective efforts of our law enforcement agencies can we close down child pornography Web sites,” he said. 
The Internet child pornography industry is flourishing, despite high-profile examples of joint cooperation such as the U.S.-Russian investigation that in 2001 busted a global pornographic ring called Blue Orchid, which had distributed pedophile videotapes from Moscow. 
In just a 10-day period earlier this year, the U.S. Department of Justice logged 350 reports of child pornography, Russell said. He pointed out that victims were getting younger, with infants abused, and the use of violence was growing. 
With each child pornography Web site estimated to earn up to $30,000 a month, Russia has seen a huge growth in this criminal activity. 
At a click of the mouse, under the Russian search engine Yandex dozens of sites featuring explicit pedophile sex scenes can be accessed, Mizulina pointed out. 
Mizulina, a deputy head of the legal department of the Russian lower house of parliament, accused the Russian authorities of doing little to tackle the criminal industry. 
“The reason why child pornography is spreading in Russia is because law enforcement agencies are doing a bad job at keeping it in check,” she said. 
Last year, a man was filmed online having sex with an underage girl in a drab Moscow apartment. But despite police managing to trace the criminals, the suspects had already fled when officers arrived, said Mizulina, who hinted that corrupt law enforcement officials may have tipped them off. 
UNICEF’s representative in Russia, Carel de Rooy, agreed tougher measures must be taken. 
“Many people involved in the sexual exploitation of children in Russia go unpunished. The penalties are still low, they have to be much harsher,” the U.N official said. 
Many of the victims in Russia are believed to come from the growing ranks of homeless children, who are estimated to number at least 750,000. According to a Ministry of Education survey in 2002, almost 8 percent of Russian homeless children said they had been paid for sex. 
Kinney of the U.S. embassy said Russia needed to develop witness protection programs and involve non-governmental organizations to persuade fearful victims to testify. 
Boris Gavrilov, deputy chief of the Interior Ministry’s investigative committee, conceded that major work lay ahead. 
“We have only begun to address this problem in the last two to three years,” he said.

TITLE: Migration Card To Be Changed
AUTHOR: By Stephen Boykewich
PUBLISHER: Staff Writer
TEXT: MOSCOW — Migration cards will soon be replaced with a Russian-only version that promises to create headaches for travelers and flight attendants and perhaps ultimately discourage foreign investment, the Association of European Businesses said Sunday.
The new cards will replace the current ones, which are in Russian and English, as of next Saturday, said Andreas Romanos, the head of the lobbying group. Romanos learned of the move late Friday, when employees of foreign airlines at Sheremetyevo Airport received samples of the new cards from customs officials. 
“It caused quite a scandal there,” Romanos said. “There was no joy in this announcement.”
The new card, like the current bilingual card, requires travelers entering Russia to fill out their name, date of birth, sex, nationality, passport information, purpose of visit, host organization and length of stay. Foreign visitors must fill out the cards to enter the country.
Customs officials could not tell the airline employees how foreign travelers who do not understand Russian were meant to fill out the cards, or whether travelers would need to fill out the cards in Russian.
“We will approach the Federal Migration Service on Monday to try to get some clarification on this,” Romanos said. He said his organization might also contact the State Duma, which passed a law requiring the change.

TITLE: Canadian Defense Lawyer Forced To Leave
AUTHOR: By Tim Wall and Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW — Mikhail Khodorkovsky’s Canadian-born lawyer was expelled from Russia on Friday and prosecutors demanded that three of his Russian lawyers be disbarred for “dragging out” his appeal.
Five men went to Robert Amsterdam’s hotel room at the Hyatt Ararat in central Moscow at about 1 a.m. and confiscated his passport, said the lawyer, who holds dual U.S. and Canadian citizenship. Two hours later, the passport was returned with its visa revoked, and Amsterdam was told to leave the country within 24 hours or face arrest.
The expulsion came just hours after the Moscow City Court rejected Khodorkovsky’s appeal in a marathon 11-hour hearing Thursday. The ruling ended the jailed oil tycoon’s bid for a State Duma seat in a December by-election.
Amsterdam said the men identified themselves as being from the Federal Migration Service’s visa and passport department.
“Five guys showed up at 1 a.m., banging on the door, screaming, ‘Police! Police!’ and asked for my passport,” Amsterdam said by telephone Friday afternoon as he headed for Sheremetyevo Airport, where he caught a 5 p.m. flight to London. When told they only wanted to ask him questions, Amsterdam at first refused. “I told them, ‘I’ve seen that movie before,’” he said. 
After calling the U.S. and Canadian embassies, Amsterdam said he decided to hand over his passport, realizing that “resistance was futile.”
“I told them, ‘This is political.’ I laughed and they laughed, and at that point everyone knew this was a game.”
Amsterdam said he saw his expulsion as motivated by the role he had played in publicizing Khodorkovsky’s case in the West.
The Interior Ministry’s visa and passport department on Friday denied it had revoked the visa, while a spokesman for the FSB also denied any involvement. 
“No visa has been canceled for any lawyer or any person involved in the legal profession in Russia,” said Konstantin Romodanovsky, head of the Federal Migration Service, Interfax reported. “It is true that the visas of some people in commerce have been annulled, but they were not Khodorkovsky’s lawyers.”
Another lawyer on Khodorkovsky’s team, Karina Moskalenko, said Friday that the men who took Amsterdam’s passport claimed it had been revoked because he failed to turn up at the Russian company that sent him the invitation for an entry visa.
Throughout Khodorkovsky’s trial, Amsterdam acted as the defense team’s main spokesman for the Western media. He is expected to take a lead role in any appeal to the European Court of Human Rights.
The Prosecutor General’s Office on Friday called for Khodorkovsky’s lawyers to be disbarred for “breaching lawyers’ ethics” by disobeying a court order to represent Khodorkovsky in his appeal earlier in the week, when chief defense lawyer Genrikh Padva was hospitalized.
“We sent a letter to the Justice Ministry requesting the removal of lawyer status from all of Khodorkovsky’s lawyers,” Vishnyakova told reporters. “All of them made serious efforts to drag out the process.”
The Moscow Bar Association on Friday was considering whether to disbar Anton Drel, Denis Dyatlov and Yelena Levina, Interfax reported. Judges told the three lawyers to represent Khodorkovsky in court last Monday, but they refused, saying they were not authorized to act on his behalf and that they were unfamiliar with the details of the appeal.
The appeal was delayed for a week as Khodorkovsky refused to appoint a replacement for Padva, saying that he was the only one of his lawyers who had studied the entire 600-page trial record.
The delay infuriated prosecutors and the judges, who accused Khodorkovsky and his lawyers of deliberately delaying the appeal.
Drel accused the authorities of vindictiveness. “This is the petty revenge of the politicians that make such decisions and ... an attempt to remove lawyers’ livelihood,” Drel said, Reuters reported. “This is also aimed at depriving Khodorkovsky of his legal team as, if we can’t practice, then we can’t represent him.”
Vishnyakova said that Thursday’s ruling, which also reduced the sentences for Khodorkovsky and his business partner Platon Lebedev from nine years to eight, placed a “full stop” over the case.
She declined to say whether any new charges would be brought. Khodorkovsky and Lebedev are to be transferred to a prison colony within the next 10 days, Interfax reported.
In May, prosecutors said Khodorkovsky would probably be charged with money laundering.
“We will definitely announce all that is necessary regarding this question, but let’s not rush,” Vishnyakova said.
Vishnyakova sought to downplay the significance of the two-year-long case, which has raised questions about the investment climate and property rights. 
“There’s no need to make the crime of the century ... out of a banal criminal case of theft,” Vishnyakova said.
Lawyers for Khodorkovsky said he and Lebedev would be making appeals to the Supreme Court and also to the European Court of Human Rights in Strasbourg, France.

TITLE: Medem Picks Up European Award
PUBLISHER: The St. Petersburg Times
TEXT: St. Petersburg’s Medem International Clinic & Hospital this month became the first Russian medical facility to win a top European quality award, the clinic said Monday in a statement.
The city-based clinic was presented with a “European Quality” award by the European Business Assembly at a Sept. 12 ceremony in Oxford, U.K.
The award is presented annually to companies from different fields of activity for innovations in daily medical practice and for “aspiring to achieve the highest quality in accordance with European standards,” the statement said.
“The academic area of Russian medicine has always been exceptional, but unfortunately, the clinical or practical side has left much to be desired. Now Russian clinical medicine has received validation that it can and is developing in accordance with the world’s standards of medicine,” said Alexander Strelnikov, general director of Medem.

TITLE: Tensions Simmer Over Su-27 Plane Crash
AUTHOR: By Aiste Skarzinskaite and Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — Lithuania said Friday that the crash of a Russian fighter jet in the NATO member country was almost certainly an accident. 
However, in a sign that the heated diplomatic dispute between the two countries was far from over, it sharply criticized the state of the Russian military, saying similar incidents posed security threats to the whole Baltic region.
“Based on the latest information, the version that the accident was a deliberate violation of the Lithuanian airspace can almost certainly be discarded,” Lithuanian Defense Minister Gediminas Kirkilas said. 
He warned that similar accidents “clearly threatened the security of Lithuania, the European Union and NATO.”
Kirkilas stressed that he was speaking strictly in his political capacity. 
Russian officials had no immediate reaction to Kirkilas’ remarks, which came eight days after the crash.
In a further development, the Associated Press reported on Monday that Lithuania’s air force commander has been fired in connection with the investigation.
Colonel Jonas Marcinkus was criticized by Lithuanian media for reacting too slowly to the Sept. 15 crash of the Russian Su-27 fighter bomber. Kirkilas said he could not elaborate on why he fired Marcinkus, except that it was connected to the crash. 
The Lithuanian Prosecutor General’s Office, which is investigating the Sept. 15 accident along with two other commissions, has yet to present its final conclusions and has not ruled out the possibility that the Su-27 jet deliberately violated the country’s airspace. 
A group of seven Air Force planes was flying over the neutral waters of the Baltic Sea from the St. Petersburg area to the Kaliningrad exclave when the Su-27, armed with four air-to-air missiles, tailed off and strayed into Lithuania’s airspace. Shortly after, it crashed near the village of Ploksciai, about 190 kilometers northwest of Vilnius.
The pilot, Valery Troyanov, 36, ejected safely. He has been charged with violating Lithuanian airspace and is being held in detention in Vilnius during the investigation.
The incident sparked a standoff with Russia when Vilnius rejected Moscow’s demands to hand over the pilot and the flight recorder immediately after the crash — demands that Lithuania saw as impinging on its sovereignty. Russia, in return, sharply criticized Lithuania’s decision to carry out an independent investigation into the accident, accusing it of failing to adopt a good-neighbor approach.
Russian military planes have frequently been accused of violating the airspace of neighboring countries, including Georgia and Finland. Russia has always maintained that no violations occurred.
Lithuanian media suggested that the breach of its airspace this month could have been a provocation meant to test the country’s air defense systems. Russia, however, insists that the jet’s departure from its agreed route was caused by a navigation system glitch and has offered to pay 3,000 euros ($3,610) to cover damages.
Russian and Lithuanian analysts said that even though the incident was unlikely to damage ties between NATO and Russia, it served as a stark reminder that the balance of power in the Baltic region remains very delicate.
“There is but one conclusion: Russia poses a danger. I think that’s the logic that Lithuania will push,” said Ivan Safranchuk, a defense analyst with the Washington-based Center for Defense Information’s Moscow office. 
The Lithuanian authorities, who have accused Russia of fueling an information war, denied that they were pursuing a political agenda and said that the main aim of the investigation was to prevent similar violations in the future.
“This is not the first time that Russian military jets have violated Lithuanian airspace. The Russian side simply does not pay enough attention to safety regulations,” Renatas Norkus, an undersecretary at the Lithuanian Defense Ministry, said by telephone from Vilnius on Friday. “Given good relations between Russia and NATO, politically too, we see a problem when armed Russian military jets violate our airspace.
“If their navigation systems break down, if their ground control is chaotic or nonexistent, if an aircraft runs short of fuel within minutes after swerving from its course — such a situation ... worries us a lot,” Kirkilas said.
The number of violations has dropped since Lithuania’s admission to NATO in March 2004, Lithuanian defense sources said.
This year, however, NATO F-4 fighters policing Lithuanian territory have been scrambled at least eight times from their base near the town of Siauliai after receiving the alert that Russian military planes had violated national airspace, Lithuanian media reported, citing local authorities. 
“There’s little room in the Baltic sky, especially over the Kaliningrad region, and it’s easy to go into foreign airspace,” said Alexander Khramchikhin, a specialist with the Institute of Political and Military Analysis in Moscow. “As a rule, [the incursions] last for one or two minutes.”
Lithuanian media reported that the Su-27 spent over 20 minutes circling in the country’s airspace before going down.
The four NATO planes that patrol Lithuania’s airspace follow commands from a center in Germany. On Sept. 15, the fighters responded eight minutes after being alerted — less than the 15 minutes required by NATO protocol — but the Su-27 had already crashed by the time they arrived.
Safranchuk said the accident underscored the weakness of the air defenses of the Baltic states.
NATO had provided only token protection for the new member, insisting that Russia was not a threat, but now the attitude could change, Safranchuk said. “It’s not ruled out that NATO will increase its contingent there,” he said.
However, NATO experts said the reaction time of the NATO planes was of no significance. “That’s all a matter of updating the state of alertness, and our state of alertness in NATO, including Lithuania, is extremely low because Russia is not considered an actual threat,” said Ole Kvaernoe, director of the Institute for Strategy at the Danish Royal Defense College.
Lithuanian media reported that local radar systems recorded the violation, but holes in their coverage left them unable to follow the plane’s full course. Those reports, together with NATO’s sluggish and low-key official reaction, threaten to undermine Lithuanian trust in the alliance, said Aleksandras Matonis, an independent political observer in Vilnius. “This incident has significantly undermined NATO’s image in Lithuania,” he said. 
The first official reaction from NATO headquarters arrived only a week after the incident, when it welcomed Lithuania’s investigation. 
The alliance’s preliminary conclusion is that the crash was a pure accident, NATO spokesman James Appathurai said Friday. “It seems to be increasingly clear that it was an accident,” he said by telephone from Brussels.

TITLE: Questions Collected For Show
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW — Social problems are the main theme of the questions that are being telephoned and e-mailed to a call center set up for President Vladimir Putin’s televised call-in show Tuesday, a Kremlin web site said Monday.
Putin will answer the questions and take others by phone during the video-link conference, which will start at noon and be broadcast on state-run Channel One and Rossia.
Based on the thousands of questions already sent to the call center, which has been collecting and screening questions since Friday, the issues that look set to dominate the session are housing problems, the slow growth of wages and pensions, and Putin’s plans for life after the 2008 presidential elections.
The Kremlin web site created for the event, www.president-line.ru, said the most frequently asked questions involve social problems such as affordable mortgage programs and the slow indexation of the wages of state-paid workers such as teachers and doctors. 
A lot of callers are asking the president to clarify his Sept. 5 announcement that an extra 115 billion rubles ($4 billion) will be spent on health care, education, housing and agriculture over the next few years. Putin promised that general practitioners and nurses employed in municipal clinics would get hefty salary hikes next year but did not say anything about other doctors, creating some controversy over the promised raises.
Callers also are asking why the government’s multibillion-dollar stabilization fund is not being spent and whether Putin will do anything to control rising gasoline prices.
In addition, callers want to know whether Putin has decided who will be his preferred successor and what he plans to do after the presidential election in 2008.
The call-in show, the fourth in Putin’s five years in office, have become the president’s way of connecting with ordinary people. This year, Kazakh President Nursultan Nazarbayev and Ukrainian President Viktor Yushchenko hosted call-in shows of their own.
People will be able to ask questions via video link from a dozen locations across the nation. Event coordinators at the Kremlin’s press office on Monday refused to disclose the locations of the cameras until Tuesday, citing security reasons.
Rossiiskaya Gazeta wrote that Putin would also take SMS questions sent during the show.
The Kremlin web site said that a final question that many people are asking concerns Russia’s tough migration policies and rights of ethnic Russians in the Baltic countries and other former Soviet republics.
Perhaps, for that reason, Kremlin organizers were planning to place one camera in the Latvian capital, Riga, home to a large community of Russians. City leaders, however, refused to allow the video link to be set up, Izvestia and Kommersant reported.

TITLE: Locals Raise Money for Katrina
PUBLISHER: The St. Petersburg Times
TEXT: A charity concert for the victims of Hurricane Katrina featuring New Orleans jazz, traditional zydeco music and cajun food will be held on Friday.
The event aims to raise funds for charities assisting Americans affected by the massive storm that hit the U.S. Gulf Coast, including New Orleans, a month ago. 
St. Petersburg jazz trombonist Alexei Kanunikov and New Orleans artist David Bienne are scheduled to perform.
The charge for admission has been set as a donation of 500 rubles, or proof of a donation to another hurricane relief organization, and the price includes a buffet dinner.
The fundraiser is at 7 p.m. at City Bar, 10 Millionaya Ulitsa.

TITLE: Oligarch to Appoint Second
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Mikhail Khodorkovsky’s campaign team said Monday that they would name another candidate later this week for a State Duma by-election in Moscow’s Universitetsky District in December.
Khodorkovsky, the jailed Yukos billionaire, was barred from running for the seat after the Moscow City Court on Thursday rejected his appeal to a lower court’s conviction on fraud and tax evasion charges. 
“We will decide on the back-up candidate by the end of the week,” Khodorkovsky’s campaign chief, Ivan Starikov, said at a news conference. “But I can say that several potential candidates are sitting at the table with me.”
Seated at the table were well-known journalists Sergei Dorenko and Vladimir Kara-Murza, lawyer Vadim Prokhorov, writer and human rights activist Alla Gerber and two little-known activists from the liberal Union of Right Forces party, or SPS. 
Starikov, who is a member of SPS, said that at Khodorkovsky’s request, the campaign headquarters had ditched a plan to hold an alternative vote in which 4,000 campaigners would set up ballot boxes outside polling stations and ask voters to pick Khodorkovsky.
“He asked us not to hold it for fear that there would be repressions against the activists,” Starikov said.
The campaign team said Khodorkovsky would have won the Duma seat if he had run. Gerber said that 80 percent of residents of her apartment building in the Universitetsky District had told her that they would vote for him.
Kara-Murza praised Khodorkovsky’s incarceration as a victory in supporters’ attempts to make him into a national politician. “By backing his bid, we did not try to change the face of State Duma — that would be senseless,” he said. “We wanted to help him to become a politician, and this happened. By sending him to jail, the authorities have acknowledged him as a political figure.”
Khodorkovsky has been sentenced to eight years in prison in a case that is widely seen as Kremlin punishment for his political and business ambitions.

TITLE: Cult Preys On Beslan’s Bereaved
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — At least 11 mothers of children who perished in last year’s Beslan school attack have turned to a cult that promises to resurrect the dead for money.
Some Beslan families fear that the mothers’ quest will discredit their efforts to establish the truth about the attack, which killed 331 people, including 186 children. 
Police say their hands are tied because no one has filed a complaint.
Susanna Dudiyeva and Anneta Gadiyeva, who complained to President Vladimir Putin at a Sept. 2 meeting about the handling of the hostage-taking crisis, joined nine other mothers at the Kosmos hotel on Sept. 17 for a gathering of 400 followers of Grigory Grabovoi.
“I believe in the miracle of resurrection,” Dudiyeva said, her voice trembling, as she stood next to Grabovoi on the podium.
“I used to read fairy tales to my children. I told them to believe in them and to believe in God,” she said, in footage shown on NTV television. “We will follow this path until the very end for the sake of our children.”
Grabovoi, who covered the mothers’ travel expenses, called the meeting the sixth congress of the “DRUGG political party.” DRUGG, which sounds like the Russian word for “friend,” is the Russian acronym for the Voluntary Dissemination of Grigory Grabovoi Teaching.
Grabovoi promised attendees that Beslan children would be resurrected in October, Izvestia reported.
According to DRUGG literature and previous lectures by Grabovoi, he offers people the chance to learn how to resurrect their loved ones on their own. Grabovoi, however, does not accept responsibility for failure, saying the dead sometimes refuse to be resurrected, or are resurrected in other parts of the world or in the bodies of other people.
But Zalina Guburova, who lost her 9-year-old son in the attack, was ready to accept his terms. “I want my child back, and I will believe in anything to get him,” she told NTV.
At the Sept. 17 gathering, a woman stood up and loudly accused Grabovoi of being a charlatan. She was led away by two of his guards.
“Many people told us that we would be cheated and drawn into something here,” Dudiyeva then said, Komsomolskaya Pravda reported. “But we are just mothers whose souls are in pain.”
Representatives of various cults started surfacing in Beslan shortly after the Sept. 1-3 tragedy to offer their counsel, local residents said. Grabovoi’s group, which bluntly offers to resurrect dead children, seems to have made the biggest impact on the grieving parents.
“Many cults remain low-profile until a suitable moment suddenly comes and people in the cult say the needed words,” said Alexander Dvorkin, the country’s leading expert on cults. 
Fascination in the supernatural, of course, goes back centuries in Russia. Interest flourished when religion was officially banned in Soviet times, and it skyrocketed after the demise of the Soviet Union, when an ideological vacuum became filled with whatever was on offer. During the 1990s, psychics were even allowed on national television to cast spells at millions of viewers.
Repeated attempts to contact Grabovoi last week were unsuccessful. A secretary at his office said Grabovoi had never visited the building. The office arranges meetings with him at a cost of 1,000 rubles ($35) per person for a group meeting and up to 40,000 rubles ($1,350) for an individual interview.
Before the Beslan tragedy, Grabovoi, 40, was one of many self-proclaimed miracle workers who offered a standard list of paranormal services, including promises to heal cancer and “optimize events.”
He was first mentioned in the national media in late 2002, when he offered to resurrect those who died in Moscow’s Dubrovka theater hostage-taking.
His web site makes no mention of any successful Dubrovka resurrections, but it does include a statement by Grabovoi that if he became president in 2008, his first decree would be to ban death and criminally punish violators. 
The web site also features dozens of scanned images of Grabovoi’s diplomas and other credentials, including a presidential administration identification card.
Many organizations named on the web site denied ever dealing with Grabovoi, according to media reports. 
The Emergency Situations Ministry acknowledged, however, that it had asked Grabovoi to examine airplanes for hidden defects as part of a government-financed study into the paranormal in the mid-1990s. At the time, the government sponsored several studies of the paranormal, most of them related to whether the supernatural could be harnessed to control public behavior.
Dudiyeva, who heads the Beslan Mothers’ Committee, could not be reached for comment this week.
But Ella Kesayeva, an activist with the committee, suggested that her peers had been drawn to the cult because the authorities hoped to discredit the committee, which is widely respected for its tireless efforts to learn what really happened at the school.
“Most of us do not share those ravings about resurrection, and we believe that this filthy story was invented to cast our committee in a bad light,” she said by telephone. “We believe in God. We don’t need charlatans. We are past the most painful times, and we don’t want to turn into zombies.”
Kesayeva accused Grabovoi of taking advantage of the mothers and said he should be punished.
Moscow City Prosecutor’s Office spokesman Sergei Marchenko said Thursday that prosecutors had tried to investigate Grabovoi’s activities in the past and were now reviewing their records of those attempts. However, no action has been taken against Grabovoi because no one has filed a complaint, he said. 
Yana Voitova, a North Ossetia-based journalist, said she knew of at least two Beslan mothers who were collecting the 40,000-ruble fee in hope of seeing their children again. 
Mairbek Tuayev, a Beslan resident who lost his daughter, said several Grabovoi representatives came to the town late last year to distribute literature. “They are hitting at the most painful spots,” he said. “They told my wife that it would be easier to bring back my daughter because her twin sister was alive.”
Tuayev said one father whose daughter died was telling friends that a way had been invented to pass between the worlds of the dead and the living but that the government was hiding it from people.
Dvorkin said cults preyed on people in emotional shock. “Then it is easier to make them believe in anything,” he said.
The Prosecutor General’s Office has begun looking into the activities of Grigory Grabovoi, a spokeswoman said Friday.

TITLE: City’s English Church Welcomes New Pastor
AUTHOR: By Greg Sandstrom
PUBLISHER: Special to The St. Petersburg Times
TEXT: Canon Guy Smith was officially licensed by the Church of England to lead the institution’s local English-speaking congregation in St. Petersburg in a move that the local Anglican community is describing as a new era in its history. 
In attendance for the Sept. 18 event was the Archdeacon of Eastern Europe, Patrick Curran, who performed the rite of passage and heard the oaths of obedience during the weekly Sunday service, held at the St. Catherine’s Swedish Lutheran Church.
Smith, a former naval chaplain, will be serving in his new position and living in St. Petersburg for the next year. Smith said he welcomes the opportunity and that “it is a good step toward putting the Anglican Chaplaincy more firmly in the Diocese of Europe,” which could lead to finding someone more permanent. 
In the past, locum chaplains had been appointed for periods ranging from three to nine months. “There’s plenty of work to do,” Smith said. 
During the era of Peter the Great, when many foreigners were invited to Russia to help construct the new capital, many English-speaking architects, builders, traders and other workers living in the city came to the Anglican Church as their English-speaking home. 
The English Church operated until the Bolshevik Revolution, when the building was confiscated. After the collapse of the Soviet Union, a small community began to form in St. Petersburg in 1993.
More recently, an Inter-Church Council has been created to improve dialogue and relations between the Orthodox, Anglican and other Christian churches in the city.
Smith is now affirmed to lead public prayers and to administer the sacraments to regular parishioners and guests. “It’s very reassuring,” said Michael Simmons, a regular member of the Anglican congregation.
The licensing service was witnessed by diplomatic residents of the English-speaking community in St. Petersburg, with members of both the British and American Consulates attending to welcome the new pastor to St. Petersburg.

TITLE: Kremlin Readies Power-Stripping Legislation
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — Dmitry Kozak, the presidential envoy to the Southern Federal District, said Friday that his office had finished drafting a bill that would allow federal authorities to confiscate powers from provincial leaders who fail to raise standards in their regions.
Under the reform, leaders of regions whose budgets are heavily subsidized by the federal government would lose their authority to appoint regional officials and decide how regional funds are spent. 
Five impoverished regions in the North Caucasus — Chechnya, Dagestan, Ingushetia, Kabardino-Balkaria and Karachayevo-Cherkessia — received more than 70 percent of their budgets from the federal government last year, while two Siberian regions, Tuva and the Koryak autonomous district, received similar levels of assistance.
The reform would trim the powers of regional leaders and mayors in regions and cities where subsidies account for more than 30 percent of the budget. Dozens of the country’s 89 regions receive federal subsidies of more than 30 percent.
President Vladimir Putin complained on Friday that huge cash subsidies from the federal budget had not led to any positive changes in the southern regions. “In the past four years, they have risen to nearly 3.5 times what they were per capita,” he said. “But the rift between economic indicators of the region and Russia on the whole has not narrowed.” 
Putin also harshly criticized authorities in the North Caucasus regions, saying nepotism and corruption were hurting their economies and creating a fertile ground for terrorism.
“Administrative involvement is excessive,” Putin told a meeting of leaders from 13 southern regions, including Chechnya. “The authorities are often used as instruments for unfair advantage and, to put it bluntly, are getting corrupt.” 
Kozak said the reform did not imply “introducing federal rule” in the regions.
“We are speaking about symbolic measures,” he said, without elaborating, Interfax reported.
Kozak suggested that decisions on removing and returning powers should be made once a year, saying the worst-off regions should be financially managed from Moscow for at least a year.
“It is necessary to make the [regional] power structures more responsible for the final results of their work,” he said.
The bill will need to be approved by the State Duma and Federation Council before Putin can sign it into law.
Alexander Tkachyov, governor of the southern Krasnodar region, praised the reform. “I treat my municipal districts this way,” Tkachyov said, Interfax reported.
Kozak, meanwhile, sharply criticized law enforcement agencies in the North Caucasus and said the immediate task was to fight corruption in their ranks and introduce order. Only after that, he said, would it be possible to attract investment to the impoverished region. 
“If people don’t feel safe, they are unlikely to invest,” he said. 
Separately, Kozak said he was not planning to run for president in 2008. “I’d like for all those fortune tellers ... to leave my name off the list of possible candidates,” he said.

TITLE: Customs-Friendly Logistics Center to Launch in ’06
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: City-based Eurosib group will launch the biggest logistics center in the Northwest by the start of 2006, the company said last week.
Market analysts said the biggest draw of the center is not likely to be its size, however, but the working relationship Eurosib aims to establish through the project with the customs service.
The $15 million logistics project is also set up to work in a “single information space with the customs authorities,” which should make the process of transporting goods across the border more transparent and efficient, Eurosib group‘s CEO, Dmitry Nikitin told reporters on Thursday at a briefing.
The logistics center, called Predportovy, will mainly process freight passing through St. Petersburg Seaport, six kilometers away. It also has a railway terminal and easy access to the ring road as well as the Kiyevskoye and Moskovskoye highways, Nikitin said.
The center includes 4,500 square meters of A-Class warehouse space and a 25,000-sq. m. area to accommodate 70 containers at any one time. Alexander Gorodetsky, terminal department head at Eurosib, said the company expects a return in investments in eight years.
In addition, the new logistics terminal will share the informational space with customs authorities, which effectively means that all operations and arriving goods will be recorded on videotape and then passed onto the customs offices along with the declaration.
Andrei Kuzmin, senior manager of the consulting department at Deloitte, said this scheme was widely practiced abroad, but will make its first appearance in Russia with the Predportovy project.
“Customs registration is one of the weakest areas of Russian ports. The main problems are delays with freight transportation and absence of guarantees for in-time delivery,” Kuzmin said.
“If [Eurosib] come to an agreement with the customs and reduce freight registration time, it will become a huge competitive advantage,” he said.
Konstantin Kovalyov, deputy director of Okhta Group developing firm, added that the logistics center could win out through installing the latest technology, something that many logistics centers in the Northwest lack.
“Old warehouses of Soviet time and re-equipped industrial facilities prevail in the market, while producers and distributors demand modern logistic centers with a convenient location, good engineering and technical equipment,” Kovalyov said.
Meanwhile, the market is ready to swallow several logistics centers the size of Predportovy, experts said.
Container turnover at St. Petersburg’s ports reached 750,000 TEU last year — each TEU standing for one 20-foot container unit, according to Deloitte statistics. The consultancy expects the cargo volume to increase by 25 percent to 30 percent in 2005 and keep growing for the next three years.
“Freight turnover in the region has reached such a scale that it can provide work for several terminals similar to Eurosib’s,” Kuzmin said.
Kovalyov added that a location at the transit hub and upcoming launch of ring road will increase freight flow from Finland to Russia and hence a demand for logistic centers. Industrial facilities constructed in the region by foreign investors will also mean a higher inflow of component supplies.
According to Okhta Group, the profitability of logistics projects aimed at business clients reaches 30 percent. Several foreign operators are planning to open logistic centers within a year, Kovalyov said.
Eurosib group’s sales reached $367 million last year.

TITLE: Swedwood Mulls Plant Closure
AUTHOR: Yevgeniya Ivanova
PUBLISHER: Staff Writer
TEXT: Swedwood, an industrial division of Swedish furniture retailer Ikea, said it is considering closing its factory in the Leningrad Oblast because of increasing bureaucratic complications and the mounting costs they incur.
The company is experiencing major problems with certification of timber, which could lead to future financial losses and result in a close-down of the Russian manufacturing unit, vice president of Swedwood, Nils Skaerbaek, said Monday in a telephone interview.
Set up to produce furniture components, the factory also exports wood byproducts to the European Union, which requires the material to undergo sanitation control that checks the health of the timber and whether it has been populated by insects or not.
Last month, the government changed the procedures for obtaining the sanitation certificates, extending the period in which they could be issued.
Previously, the process took a couple of days and cost around 30 rubles ($1.1) per document, Skaerbaek said. Since August, direct applications can take as long as 15 to 30 days, which forces many to use private certification companies to receive the kind of service that the federal authorities used to provide, he said.
Private firms like Lesnoi Karantinny Broker perform the certification process alongside the Federal Service for Veterenary and Fytosanitary Control, but charge between 10 and 20 times more, Skaerbaek said. Information about the availability of private certification came only in the last month, unofficially the one of the firm’s drivers, Skaerbaek said.
Lesnoi Karantinny Broker could not be reached for comment on Monday.
Swedwood applies for 600 to 800 such certificates per month, and said the sudden jump in costs going from a federal body to little-known private firms would substantially decrease the profitability of their business, as well as make little sense.
Skaerbaek said it was questionable whether private firms could give out certificates legally. “Even if they can, why can’t we do it directly [through the federal agency]?” he said.
Export of wood byproducts contributes to up to 50 percent of the profit of Swedwood’s business, which enjoys annual revenues of 40 million euros ($48.2 million), business daily Vedomosti reported Friday.

TITLE: Tobacco Firms Smell the Profits
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Despite a quiet stability on the Russian cigarette market for the last three years, last week all major foreign tobacco manufacturers announced heavy investments in domestic facilities. The producers say the competition for premium-class clients is just beginning.
Last week British America Tobacco Russia said it would pour $170 million into the company’s three Russian plants before 2009. The move will lift the annual production volume from 80 billion to 115 billion cigarettes, equipping the plants will the latest technology.
Philip Morris said last Wednesday it is close to completing a $240 million investment program for its Izhora plant in the Leningrad Oblast, which should boost production up to 70 billion cigarettes a year. The company’s other facility in Kuban adds another 30 billion cigarettes to the manufacturing capacity.
Japan Tobacco International, which owns St. Petersburg’s Petro plant, has recently invested $14 million in the acquisition of another city-based factory, the CRES-NEVA.
Analoly Vereshchagin, a spokesman for JTI Russia, said the company’s production levels last year hit 54.8 billion cigarettes, compared to the 48.8-billion cigarette level in 2003. The figure is expected to increased once again this year, Vereshchagin said.
Yet, in contrast to these bolstering production statistics, cigarette consumption in Russia has stayed practically unchanged for three years. The country’s market volume has kept at about 300 billion cigarettes a year since 2002, varying within three percentage points, market insiders said.
Tobacco manufacturers say the proposed new investments are aimed at developing production facilities, not boosting production volumes.
“We sense not a market growth, but a changing in the consumption structure. People are switching to more expensive, premium-class cigarettes. And [the money goes into] developing such brands,” said Vladimir Aksyonov, corporate affairs director at BAT Russia.
Practically all the main tobacco producers claim to follow this strategy, claiming “a rising demand for more high-status brands.”
Another strategy to boost profits could be through exports. BAT Russia is likely to increase export volume threefold next year. At the moment it counts for five to ten percent of the production volume. Last year BAT Russia exported 2 billion cigarettes and next year plans to set 6 billion as a sales target.
Philip Morris, which annually exports five billions cigarettes, disagreed that it was a viable future option for tobacco manufacturers working in Russia. “The majority of cigarettes that we manufacture in Russia are sold locally” and the volume will not rise next year, said Marina Balabanova, corporate affairs manager at Phillip Morris Northwest.
Besides “foreign markets are more competitive and grow at a lesser pace,” added Andrei Shamshurin, head of transaction advisory practice in Northwest region at Ernst & Young.
With “the growth of real income and consumption of Russian citizens,” Shamshurin said the Russian market still remains an attractive option, where a shift towards more expensive brands will mean new financial rewards.

TITLE: 20% of Russian Banks To Lose Their Retail Licence
AUTHOR: By Maria Levitov
PUBLISHER: Staff Writer
TEXT: MOSCOW — One out of five Russian lenders has failed to qualify for the national deposit insurance scheme and starting Tuesday will be phased out of retail banking.
Of the more than 1,100 banks that applied, 927 lenders — managing 2.4 trillion rubles ($84.4 billion), or 99.2 percent of total individual deposits — have passed an important milestone in the country’s banking reform, Alexander Zagryadsky, spokesman for the Central Bank’s Deposit Insurance Agency, said Monday.
Some 200 banks did not make the cut, making it illegal for them to accept new individual clients or extend contracts with individuals beginning Tuesday.
The Central Bank considered factors such as liquidity, risk management and ownership transparency when auditing banks for admittance to the deposit insurance scheme.
Now, if a member bank folds or gets its license revoked by the Central Bank, the bank’s individual clients will recover their deposits in the amount of up to 100,000 rubles ($3,517) each.
Market watchers were upbeat about the insurance system but said that it was too early to make projections about how smoothly it would function.
The fact that 20 percent of banks were rejected from joining the scheme “exceeds expectations,” said Natalya Orlova, an analyst with Alfa Bank. It shows that the Central Bank was serious about barring weaker banks from working with individuals, Orlova said.
The weaknesses of Russia’s banking system were highlighted by a mini-banking crisis in 2004, when panic ensued after the Central Bank revoked licenses of several second-tier banks. 
“Few have even heard about deposit insurance, so [Tuesday’s deadline] is unlikely to produce market changes,” said Sergei Donskoi of Troika Dialog.

TITLE: Stance on Subsoil Law Eased
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Russia should approve foreign investment in the development of natural resource deposits on a case-by-case basis rather than draw up a list of off-limits fields, a senior government official said Monday.
“Criteria will be put in place so as not to have a concrete list but to be able to qualify a deposit as strategic in the future,” said Deputy Economic Development and Trade Minister Andrei Sharonov, Interfax reported.
The announcement sheds light on a continuing debate within the government over which deposits foreigners should be allowed to develop. President Vladimir Putin has instructed ministers to present a plan to him by Nov. 1 — a deadline that unsure foreign investors are anxiously awaiting.
“The government must be able to issue orders on specific projects, which could become strategic in the future,” Sharonov, casting doubt on the appearance of a definitive list of so-called strategic reserves.
Sharonov said setting up criteria should be a one-time measure and not close the door on foreign investments.

TITLE: Retailers Say Beauty Lies in Size
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: As companies from the retail, development and construction sectors lined up for their annual industry awards, two general trends stood out: In commercial real estate bigger means better, and the Northwest region has emerged as the country’s leader in innovation.
This month Hyperestate International group presented its annual assessment of companies involved in the commercial sector in Russia and the CIS, awarding prizes in 63 categories.
The Hyperestate awards saw a spate of St. Petersburg companies among the national winners, including Adamant holding, Lenta and O’Key grocery chains, and Maxidom DIY outlets.
Oleg Pronin, president of Hyperestate International, said the success was due to the uniqueness of the region’s businesses and their quality.
“The St. Petersburg retail market is more professional than the one in Moscow, with many of its local retailers the only chains of their kind in Russia,” Pronin said Friday in a telephone interview.
Nationwide the development of the retail sector was rather varied, but the in this regard the “St. Petersburg market is not inferior to Moscow,” Pronin said.
The Hyperestate awards were given out on the basis of market analysis, commentaries from consultants, suppliers, the regional authorities and business owners, he said.
At the Moscow ceremony earlier this month national chains Benetton (clothes for young people), Perekrestok (supermarket), Detsky Mir (children goods), Snezhnaya Koroleva (leather and fur) and Krasny Kub (presents) were judged as the largest players in their field.
Meanwhile, in the Hyperestate awards for the Northwest region, German chain Metro Cash & Carry won the prize for being the biggest local investor in retail. Grand Canyon was picked out as the region’s largest mall. Further honors in “the biggest” ranking went to Vanity Grand Opera (luxury-class shopping center), Sennaya (shopping and entertainment center), and Gulliver (children entertainment center).
Svetlana Shalayeva, research and consulting department director at Colliers International real estate agency, said that the questionable objectivity of such awards greatly differs from their effect.
National and regional prizes can “seriously affect a company’s image,” as well as reflect a “correct and professional business approach,” Shalayeva said.
“The retail sector is developing quickly, new operators are entering the market, existing ones are expanding their chains,” Shalayeva said. With the build up of competition, awards play a role in aiding the company’s promotional campaign and in a way can raise the prestige of the business within the industry.
A top manager from St. Petersburg developer Solomon, which manages the Grand Canyon mall project, saw the success of the region’s firms as partly due to the lower costs of construction locally.
“Vacant market niches represent the main advantage of the Northwest region. Also construction costs and rent rates are lower here than in Moscow,” said Mussa Ekzekov, general director of Solomon.
Russia, on the whole, has a strong consumer base, and families spend more than 70 percent of their budget on goods, Shalayeva said. Reducing the costs of construction while utilizing the eagerness of local consumers to spend means “shopping centers are an area of commercial real estate that’s very attractive to investors,” Shalayeva said.
Hyperestate’s Pronin said the domestic opportunities put Russia in a better position that its neighbors.
“In Kazakhstan retail is under-developed but there’s lots of money [for new development]. In Ukraine, on the contrary, the retail market is growing, but there is no money due to the small size of national banks,” Pronin said. 
Russia benefits from both factors — market growth and sufficient financial resources, he said.
The focus of the Hyperstatus awards was mostly on the largest firms in their field. Awards organizers say this is partly because biggest is best when it comes to the commercial sector, as it brings in the largest profits.
As an example, Grand Canyon, to open this December, will occupy 75,000 square meters. Nearby electronics and home furnishings hypermarkets, a billiard club and a fitness center will boost the center’s area to 150,000 sq. m.
“It is the optimal size for this particular area,” Ekzekov said. About 2.5 million people live within 30 minutes of Grand Canyon, he said.
Beside Grand Canyon two more large-scale malls, the Raduga and Mega centers, will offer visitors a shopping arena over 30,000 sq. m.
According to Colliers International, the larger retail centers will become the trend in the Northwest region in the near future. “We can expect to see the appearance of department stores, which are popular in the West, as the shopping centers’ anchor tenants,” Shalayeva said.

TITLE: Elite Housing Profits Win Back Investors
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Over the last three years, St. Petersburg constructors and developers have turned to work largely on the commercial real estate market, spurning residential projects as low-profit. Realtors, however, say it’s too early to write off the residential market as dead: Elite housing is starting to bring the constructors back to apartments.
Last week, St. Petersburg-based RBI construction holding said it would commit most of its future projects to shopping and logistic center projects, joining a long row of builders turning their strategic focus to the commercial sector.
The company’s statement, however, came as it unveiled its latest elite housing project, Novaya Zvezda — a $30 million development that has already sold all but five of its 78 apartments, although the flats have yet to receive the final interior planning and design.
While the CEO of RBI, Edward Tiktinsky, would not disclose the profitability of Novaya Zvezda project, he said it was “a financially sound investment.” Just in March the company started construction of Dom Le Grand on the Nevsky Prospekt, a boutique center with several floors of premium-class apartments and top-floor suites overlooking the thoroughfare.
While Vitaly Votolevsky, general director of Peterburgstroi Skanska construction firm, notes that “in 2005 developers completed less residential projects than in any of the previous three years,” the trend has not been simply away from residential and into commercial real estate. It has been away from cheaper, standard housing of medium-class and lower.
Victoria Kulibanova, development manager for Astera real estate agency, said falling profits on “standard, medium-class and lower residential housing” have aggravated constructors’ interest in housing at a time when “the number of flats on the market far outweighs demand.” 
The total area of new residential space appearing each year has jumped from 3.8 million to 5.6 million square meters, according to statistics from Peterburgstroi Skanska.
It makes sense, with tougher competition and few profits, for constructors to turn eyes to the booming commercial sector, Kulibanova said. Construction firms Peterburgskaya Nedvizhimost, Nevsky Sindikat, Vozrozhdeniye, LEK, IVI-93 among others have followed the trend to move into commercial property building. About 60 projects of shopping and entertainment centers are underway in the city at present, Kulibanova said.

A PRETTY PENNY
The profitability of standard real estate projects is about 10 percent, while shopping centers provide double the returns: about 18 percent to 20 percent, Kulibanova said.
Which means that “only elite residential projects may rival commercial real estate in profitability with about 25 percent,” Kulibanova said.
A similar forecast, between 20 percent to 25 percent, was given by Igor Luchkov, head of the assessment and analytical department at Becar real estate agency.
Constructors and developers can earn well on real estate if they provide “special features” and spend more, Luchkov said. The market has shown that the lower the investment, the smaller the profits, he said.
Half of elite housing project Novaya Zvezda’s 30,000 square meter space is occupied by extra facilities: a swimming poll, gym, rest rooms, among others.
Such extensive infrastructure often allows higher returns, which otherwise may be as low as 15 percent on apartment building, Luchkov said.
The relatively low incomes come as a result of the stabilizing of prices on the real estate market in the summer of 2004, Votolevsky said. “The price even fell by up to 2 percent. At the same time, construction costs have steadily increased,” he said.
With unpredictable new laws regulating construction, Votolevsky believes the best prospects on the Russian market lie firmly with commercial real estate, which “from the large institutional investors’ point of view is very attractive.”

U-TURN IF YOU WANT TO
Market insiders, however, denied that constructors and developers have turned from residential real estate.
“It is impossible and dangerous to focus on a single market segment. Looking at Western companies we see that most of them transform into holdings sooner or later,” said Andrei Urtiyev, senior manager at the St. Petersburg Union of Construction Companies.
“I’m sure that new elite projects will emerge. Demand may decrease or increase but it can’t disappear completely. You’ll always find people ready to buy expensive property,” Urtiyev said.
The number of elite residential projects in the city backs the interest housing still has for investors, he said.
Among the top elite housing projects, experts and market insiders named the Fifth Element (developed by Stroimontazh construction firm), U Rosstralnykh Kolonn (by Lenspetssmu) and several projects carried out by Vozrozhdeniye construction company on the Nevsky Prospekt and Shpalernaya Ulitsa.
“We saw some alarming trends on the housing market earlier, but the situation has stabilized. Companies have found out a solution,” Luchkov said. “Why would they quit a [residential] market that shows signs of life?”

TITLE: Fortunes Go to Kremlin Favorites
AUTHOR: By Catherine Belton
TEXT: With Gazprom’s securement of a record $12 billion loan now appearing to be a mere formality, the gas giant looks set to buy out Roman Abramovich’s stake in Sibneft — the biggest state buyout in post-Soviet history.
The deal would apparently let Abramovich walk out of Sibneft with nearly $9 billion in profit on an acquisition he made in the controversial loans-for-shares auctions of the mid-1990s. 
Gazprom’s buyout of his stake would also mark a stark delineation between Abramovich and his erstwhile partner Mikhail Khodorkovsky, whose conviction on fraud and tax evasion was upheld by an appeals court on Thursday.
Sources familiar with the negotiations between Gazprom and a syndicate of Western banks said that the loan was “imminent” and would be signed once remaining formalities were settled. 
Earlier this week, Gazprom deputy CEO Alexander Medvedev said that the gas giant could complete the acquisition of Sibneft by the end of the year.
The deal would put almost $9 billion in cash into the pocket of Abramovich, who along with his one-time partner Boris Berezovsky forked out a little more than $100 million for the oil firm in 1995-96.
It is difficult not to compare Abramovich’s fortunes to those of Khodorkovsky, who now faces an eight-year prison sentence after a highly politicized trial and whose Yukos oil empire has been crushed under a $28 billion back tax claim. The legal onslaught was widely seen as retribution for the threat that Khodorkovsky posed to Kremlin power.
Even though the Audit Chamber has found that Sibneft underpaid its taxes by 10 billion rubles ($360 million) in 2001 and 2002, no legal action has been taken against the firm. Sibneft has denied any wrongdoing.
Meanwhile, Sibneft’s effective tax rate in 2001 was just 9 percent, below Yukos’ 13 percent in 2002 and much lower than the statutory rate of 24 percent.
Furthermore, lingering questions over Sibneft’s murky ownership have raised speculation that Abramovich has the backing of the Kremlin.
In the summer, President Vladimir Putin publicly said that he was aware of talks between Sibneft and Gazprom — and that the state should treat it as any other deal.
Berezovsky, who has fallen out of favor with the Kremlin and is living in exile in London, said in a telephone interview Thursday that he had evidence that Putin was seeking personal gain in allowing the Sibneft sale to go through unhindered.
In July, Berezovsky said he was preparing to sue Abramovich in a London court on charges of forcing him out of his stakes in Sibneft and other major assets at a knockdown price after relationship with Putin’s Kremlin soured in 2000.
“I have been saying for a long time that Putin is a business partner of Abramovich,” he said. “I have no doubt that the profits from the sale of Sibneft will be shared between Abramovich and Putin, as well as among several other individuals.”
The difference in treatment between Khodorkovsky and Abramovich underlines Putin’s interest, he said. 
“It’s now clear they just took away Yukos because it was not owned by any of their gang. Proof of this is exactly what’s happening with Sibneft now. Putin has said he personally supports the deal.”
Kremlin spokesman Dmitry Peskov declined to comment on Berezovsky’s remarks. “A person who is under an international arrest warrant cannot accuse anyone of anything,” he said. “It would not be correct to make any comment on his remarks.” 
Russian prosecutors have charged Berezovsky with widespread fraud.
Berezovsky claimed he had seen direct evidence of Putin’s collusion with Abramovich in Sibneft when Abramovich forced him to sell the 50 percent stake in Sibneft he jointly owned with partner Badri Patarkatsishvili for $1.3 billion in 2000. 
Abramovich said he was speaking in Putin’s name when he told him he had better sell or watch the stake be taken from him anyway, Berezovsky said. “This was done for the benefit of Putin. I can’t rule out that during the investigation in England and during the court proceedings, Putin will be called to the court to give evidence.”
Berezovsky also claimed he had documentary evidence of Putin’s interest in Sibneft, but declined to elaborate on what his records might reveal, saying he did not want to give his enemies time to prepare for his legal attack.
Berezovsky said his suit would likely be filed in October, rather than the September date he had given earlier.
Sibneft spokesman John Mann denied that Abramovich had any special ties to Putin. 
“It is clear to anyone that the relationship between Abramovich and Putin is the same the president has with any regional governor in the country,” he said. Abramovich is governor of the Chukotka region in the Far East.
Mann declined to disclose the exact shareholder breakdown of Sibneft, saying only that 72 percent of Sibneft was managed by the Millhouse holding company on behalf of core shareholders, who “include Abramovich and a group of current and former Sibneft managers.” 
Mann declined to say whether the core shareholder group included any other individuals.
Sibneft’s ownership structure has often posed a conundrum for financiers and even bankers extending loans to the firm.
“Documents on the ownership of Millhouse are pretty meaningless. If you look at them, you pretty soon run into a dead end,” said one banker, speaking on condition of anonymity.
The banker added that a rigorous look at the company’s ownership had not been a requirement in previous loan deals secured by oil exports.
Other market observers have suggested that Abramovich may at the least have to share some of his winnings with other state officials.
“One oligarch has said to me he doesn’t think for a minute that Abramovich will keep all that cash. He owes a lot of people a lot of money, and a lot of it will make its way back to the Family,” said a source close to a natural resources tycoon, referring to the clique of businessmen and powerbrokers who surrounded former President Boris Yeltsin.
Analysts said any lawsuit launched by Berezovsky was unlikely to affect Gazprom’s title to the oil firm. Yet, another legal battle could give the gas giant and its big Western lenders some reason to pause.
Sibneft’s former partner, Sibir Energy, is suing the oil company in Russia and the British Virgin Islands, alleging that it was pushed out of a joint venture to develop the Sibneft-Yugra field.
Hearings as to whether the British Virgin Islands court had jurisdiction over the case began Thursday, a spokesman for Sibir Energy said.
The spokesman said he could not comment further because the hearings were closed. If jurisdiction is granted, proceedings could take months, he said.
“The outcome of this could impact the value of Sibneft,” said Chris Weafer, chief strategist at Alfa Bank. 
Sibneft-Yugra produces some 8 percent of Sibneft’s total oil output, according to Valery Nesterov, an oil and gas analyst at Troika Dialog, who said that the field could be excluded from the deal.
Gazprom has been so open and active in seeking to buy out Sibneft that the gas giant would suffer a serious blow should rivals Rosneft or Surgutneftegaz snap it up at the last moment.
“This has become a question of image after Gazprom’s lack of success in merging with Rosneft,” Nesterov said, referring to the failed merger between the two energy giants earlier this year.
“It would not be good for them to get into the same situation again. It’s become a question of reputation and of how much you can trust the company’s management.”
“You still can’t say it’s a cinch,” Weafer said. “As we saw in Rosneft, anything is possible right up to the point where the ink is still drying on the page.”

Catherine Belton is a staff writer at The Moscow Times.

TITLE: Lock, Stock And Finances
TEXT: With the Western financial boom of the ’80s, an investment banker, as an image and a profession, emerged as trendy, exciting, and a must-have for all truly fashionable American girls. It doesn’t take Candace Bushnell, or the countless paperbacks orientated to female readers, to work out why, though they do it well.
In the West, an investment banker as a boyfriend is presented as a wealthy and a prestigious partner. He invites one to the best restaurants, wears Hermes ties, uses complicated terms like “yield to maturity” accurately and is a great lover.
Though as his sword he wields the mighty Visa Gold card, one should mention that an affair with an investment banker is often as short and unstable as the credit rating of junk bonds, while chances of marrying him are as low as the ruble exchange rate in the autumn of 1998.
Like the superman of finances, a Western investment banker can suddenly evaporate after a fabulous date explaining that “the Australian market is opening right now,” and not call for weeks while he is “closing a very important deal.”
These rude adventurers are the Wall Street’s avant-garde, yuppies for some, for others the cream of the white-collar legion. They can make fortunes overnight and lose them in an instant; they are risky and smart, and often play on the edge of market rules. How could a girl resist?
In Russia, investment banking is a pretty young, but already respected sector. In practical terms, it provides the fast-developing economy with good financing, just like in the West. As for the romantic flare, the man who often calls himself an investment banker in Russia is of a slightly different breed.
Let’s not forget, more than a decade ago these heroes of the newly formed Russian economy were plain gangsters. They still attracted the girls, just like the investment bankers from Wall Street, but instead of suits they wore leather jackets, their cars were not luxury saloons but bulky off-roaders like the Hummer.
The speech of Russia’s “highway financiers” was as short as their haircut; they shirked ties, but often carried a gun. Their role in Russia’s emerging market economy was even more risky than the role of investment bankers in Western countries. It was rare that a merger went through without their participation. They could loan money or mediate conflicts.
The arguments those adventurers used often veered away from the law, but the effect was spectacular, as were their commissions. So the girls, who always sense where the money and the power lies, were happy and proud to go out with them — despite the risk of not knowing if they would see the boyfriends again. We are not talking only of infidelity — the crew cut’s opponents also had guns.
Those who survived the Wild East and were clever enough to have invested their millions in legal businesses or real estate are now sitting pretty. As the times are growing more stable, perhaps even quieter, the old adventurers have started to look for professional financial advisers, to meet with global corporations and foreign investors. Now the former wild men of finance are sat at the same table with the economics school educated boys in Hermes ties. The circle has closed.

P.S. This article has not been clinically tested on investment bankers or gangsters. None of the above-mentioned characters have been hurt or injured during the writing.

Anna Shcherbakova is the St. Petersburg bureau chief of business daily Vedomosti.

TITLE: IN BRIEF
TEXT: Gref Talks of WTO
MOSCOW (Bloomberg) — Economic Development and Trade Minister German Gref arrived in Washington on Monday to step up talks with the U.S. as Russia seeks American approval for its bid to join the World Trade Organization this year.
Gref will visit the U.S. from Sept. 26 to Sept. 28, said Alla Borisenkova, head of the press service at the Economy Ministry.
“The talks will be pretty complicated, because there are so many issues that are yet to be solved,’’ said Natalia Orlova, chief economist at Alfa Bank. “There is still no final agreement on some principal issues, such as Russia’s subsidies to agriculture companies and U.S. companies’ access to Russia’s aviation market.”

August GDP up 5.9%
MOSCOW (Reuters) — Russia’s economy grew 5.9 percent, year-on-year, in August while gross domestic product rose 5.8 percent in the first eight months of the year compared to a year earlier, the Economy Development and Trade Ministry said on Monday. 
It also said in its monthly report that it expected consumer price growth to slow to 0.3 percent in September, month-on-month, compared to 0.4 percent in September 2004. 

Kudrin on Spending
MOSCOW (Bloomberg) — Finance Minister Alexei Kudrin said the government must curb increases in spending on infrastructure projects to achieve the 6 percent annual economic growth rate it forecast through 2008.
President Vladimir Putin’s Cabinet must use windfall revenue from record oil prices to bolster foreign exchange reserves and pay off debt, Kudrin said. Excessive spending may strengthen the ruble, hurting exporters and holding back growth, he said.
“This pessimistic scenario anticipates that the high capital inflow amid record oil prices isn’t accumulated by the economy, leading to higher inflation and a stronger ruble,’’ Kudrin said in a Sept. 24 interview in Washington. 
“I back a stricter financial policy than the easing in spending planned for next year.”

Transneft’s Profit Up
MOSCOW (Reuters) — Pipeline monopoly Transneft said on Monday its net profits rose 23 percent in the first half of 2005 as revenues were driven by higher tariffs, larger volumes and exceptional crude oil sales. 
The company, which transports crude oil inside Russia and to export markets, said in a statement its net profit rose to 26.7 billion rubles ($936 million) from 21.6 billion rubles in the first half of 2004.
The results to international accounting standards also showed that revenues rose by 29 percent and costs rose by 31 percent as the company continued to expand its system to boost exports of Russia’s main commodity. 
The company has doubled capacity at its flagship export port of Primorsk on the Baltic Sea over the past few years and it said its revenues from transportation of export crude jumped by 36 percent over the period. 

ExxonMobil Contracts
MOSCOW (Bloomberg) — ExxonMobil and its partners signed contracts to supply 1 billion cubic meters of natural gas a year to customers in Russia’s Far East when they begin production next month off Sakhalin Island.
The first buyers, Khabarovskenergo, the Khabarovsk regional power utility, and Khabarovskkraigaz, a regional gas retailer, will ship gas from Sakhalin Island through pipelines belonging to units of the state-owned oil company Rosneft, Exxon Neftegas, the Sakhalin-1 project operator, said on Monday. Rosneft holds a 20 percent stake in the project.
By late next year, the Sakhalin-1 project’s Chayvo field will produce about 8 billion cubic meters of gas a year and 250,000 barrels of oil a day, Exxon Neftegas said. 

Gazprom to Sell Stake
MOSCOW (Bloomberg) — Gazprombank, owned by Gazprom, plans to sell its 26 percent stake in Hungarian bank Altalanos Ertekforgalmi Bank, or AEB, for at least $80 million, Vedomosti reported.
Gazprom’s board on Sept. 28 will probably approve the sale of the stake to Firthlion, a unit of Hungary’s Kafijat, which owns the rest of AEB, the newspaper said, citing an unidentified Gazprom official.

UES to Buy Armenian 
MOSCOW (Bloomberg) — Unified Energy System, the national power utility, will buy Armenia’s electricity network from Midland Resources Holding for an undisclosed sum, RIA Novosti reported.
Armenia’s government approved Midland’s request to sell its 100 percent stake in Armenian Electricity Networks to Interenergo, an offshore venture UES has with Russian nuclear energy monopoly Rosenergoatom, RIA reported.
Interenergo agreed in June to pay $73 million to “borrow” Midland’s shares for 99 years, the Russian newswire said.
The Guernsey-based company paid $40 million for the stock, RIA reported, without giving details of that transaction.
Alcoa Continues Buyout
n NEW YORK (Reuters) — Alcoa on Monday said it is continuing its offer to buy the remaining stake in a Russian facility that it had not bought in January. 
Alcoa, which owns 82 percent of OJSC Belaya Kalitva metallurgical plant, is seeking to buy the rest from minority shareholders in a tender that expires Oct. 12, the aluminum producer said in a statement. 
It said it does not intend to make any additional offers for minority shares after Oct. 12. 

Hungary Drugmaker
MOSCOW (Bloomberg) — Gedeon Richter, Hungary’s biggest drugmaker, expects to increase its sales in Russia by as much as 15 percent next year as it will probably be able to keep its highest-volume products on a government subsidy list.
“Our chances are not bad,” Chief Executive Erik Bogsch said at a news conference in Budapest on Monday. “We have done all the necessary steps. There is a chance for next year to reach the same level of subsidies as this year.”
Richter expects sales to increase as Russia raises the wages of state employees and stable oil prices continue to propel the economy, Bogsch said. 

Grain Harvest Forecast
MOSCOW (Reuters) — Russia’s total area for the 2005 grain harvest is estimated as of Sept. 1 at 43.3 million hectares, up 4.3 percent from last year’s 41.5 million, the agriculture ministry said on Monday. 
The total area sown with winter and spring grains for the 2005 crop was 44.39 million hectares, up from 43.44 in the previous season due to an increase in winter grain, mainly wheat and rye, and lower winter-kill losses.

TITLE: Time For a Change, Not a Revolution
AUTHOR: By Ednan Agayev
TEXT: All but invisible to the wider world, a crisis is developing within Azerbaijan that could threaten regional stability and the future development of Caspian basin oil and gas.
Though largely self-created, by a combination of endemic corruption and institutional underdevelopment, the emerging calamity is being greatly aided by opportunistic measures by others, including Russia, the United States and especially Iran. 
In many ways, this is developing into a 21st-century version of the Great Game — that epochal struggle between the British and Russian empires, which dominated the lives of all sorts of tiny Eurasian countries throughout the 19th century and well into the 20th century. 
But Azerbaijan is not Afghanistan, which has had the misfortune of historically always having been someone else’s buffer state or strategic beachhead. 
Azerbaijan is a prize in its own right. It can claim one-fifth of the oil and gas of the Caspian Basin, one of the world’s last great pools of hydrocarbon wealth. Led by BP, the Baku-Tblisi-Ceyhan pipeline has just opened, creating a new gateway to world markets for Azeri oil. With gross national product growth increasing at about 11 percent annually, this should be the most economically successful of the former Soviet states. Should be, and in some ways is — but not in nearly enough ways to make Azerbaijan the happy and stable place it ought to be. 
Instead, it is a place that is starting to come unglued. Run until recently by an authoritarian, but politically astute, former KGB general named Heidar Aliyev, Azerbaijan is now run by a fractious group of his ministers, ruling in the name of Heidar’s son, Ilham. 
Ilham Aliyev is an intelligent, quite well-educated man of 44 whose instincts do not appear to run to strong-arm tactics or dictatorship. But he is surrounded by ministers and minders for whom there is much to lose in the event of a regime change. Billions of dollars, in fact.
This is because Azerbaijan, under the elder Aliyev, functioned as a giant franchising operation, with nearly all aspects of Azeri national life hived off as vertically integrated businesses. If you want to pass a university exam, you pay the instructor $50, a large part of which he pays to his supervisor, who then pays part to his superior, and so on all the way to the top. To be named police chief in a medium-sized town costs about $10,000, most of which winds up with whoever’s signature is required for such an appointment.
This was a relatively stable and predictable situation under Heidar Aliyev, because he was imaginative enough to control its excesses and tough enough to be able to do so. 
There is room to doubt that Ilham Aliyev has that kind of authority. He has in fact replaced few of his father’s lieutenants and has remarkably few allies of his own in government from his own generation or cohort. Increasingly, he appears to be more dependent on his father’s aging cronies than they are on him.
Apart from the personalities at the top, the world around them has changed utterly. Part of the change occurred in the streets of Tbilisi, in neighboring Georgia, where just a month before Heidar Aliyev’s death in 2003, the Rose Revolution replaced another former KGB chieftain’s regime. 
Understandably, a lot of people have been sticking colored pins in their wall maps of the former Soviet Union ever since, trying to guess in which state the next so-called color revolution might happen: Tbilisi, Kiev, Bishkek — and now Baku? With parliamentary elections set for Nov. 6, the Azeri opposition parties are playing up that trend for all it is worth. But many of the opposition leaders in Azerbaijan are every bit as corrupt and as much a part of the old guard as the men they wish to replace. Many were involved in an ill-fated 1992-93 government, almost universally condemned for chaos, corruption and incompetence. 
But the color revolutions have had an important influence, if not domestically then externally. 
For one thing, they have made it more difficult for Russia, still the leading power in the region, and the United States, the remaining world superpower, to collaborate, even when it is practical to do so.
The United States now faces a dilemma in dealing with the former Soviet states with which it is friendly, including Azerbaijan. For commercial and geopolitical reasons, Washington would obviously prefer stability over chaos. But it can also no longer afford to be seen to be propping up an unreformable kleptocracy. 
Meanwhile, Moscow also would prefer stability instead of another revolution in its own backyard. 
For both, there are other complications. Iran, along the southern Azeri border, is chief among them. There are 20 million to 25 million ethnic Azeris in Iran, and the dominant religion in both nations is Shiite Islam. Fundamentalism has started to surface in Azerbaijan’s border areas, and there are reports that some theological schools across the country are leaning toward Iranian-style militancy. In an otherwise secular state, these are disturbing developments.
This must be disturbing Washington too. Rumors abound that it is looking to redeploy military contingents from Uzbekistan, which has asked the U.S. Army to vacate a military base there, to Azerbaijan, including to one site close to the Iranian border.
Rumors also abound that Russia is redeploying troops formerly based in Georgia to regions of Armenia that border Azerbaijan. Apart from the historic enmity between Armenia and Azerbaijan over the disputed territory of Nagorno-Karabakh, such movements could redraw the military map of the entire region.
But is a U.S.-Russian rivalry in the area inevitable? The truth is that Moscow and Washington have more interests in common than they have in conflict, particularly with respect to Iran, which is a source of even bigger worry to Russia than to the United States. 
Intriguingly, in recent weeks, some members of the Russian media have been playing up the disruptive influences in Azerbaijan of Wahhabi militants. But Wahhabism is used as a catch-all term for all forms of radical Islam, whether Sunni or Shiite. 
There may well be some Wahhabi activists in Azerbaijan, especially in the north, where Chechen and Dagestani refugees have settled. But the real fundamentalist threat is overwhelmingly from the south, from Iran. The Kremlin certainly knows this, but, for complex and remarkably narrow commercial reasons — the sale of nuclear reactor technology — it cannot bring itself to say so publicly. 
And that, almost literally, is what is keeping Russia and the United States from collaborating in Azerbaijan. In nearly all other matters of consequence, their interests in Azerbaijan coincide: stability, moderate reform, and even curbing corruption — since even Russian companies like LUKoil must be finding the spiraling cost of graft hard to manage. 
There does not need to be a color revolution in Azerbaijan. There does need to be fundamental change, bringing new young modernizers into power and giving the rising middle class its say in the country’s future. 
But with Moscow eyeing the Americans with suspicion, and Washington unable to rely on the Russians while facing Iran, Azerbaijan appears headed unstoppably toward a less-than-promising future. 

Ednan Agayev, an Azeri-born former senior Russian diplomat and executive vice president of the Russian-American Business Council, contributed this comment to The St. Petersburg Times.

TITLE: Unearthing Cultural Treasures
AUTHOR: By Vladimir Gryaznevich
TEXT: Let us turn, once again, to the problem of preserving cultural monuments, specifically the protection of archaeological monuments during construction. It’s an issue that’s particularly pressing in cities, towns and villages with centuries, if not millennia, of history under their belts, such as Novgorod, Pskov, and Staraya Ladoga. As the prosperity of Russians rises, the pace of housing and commercial construction picks up dramatically, and the foundation ditches and trenches for engineering communications almost inevitably cut straight through this rich archaeological layer of history and culture.
In order that these monuments be preserved, building works must be preceded by archaeological digs. A federal law on the protection of monuments, adopted in 2002, obliges developers preparing plots of land for construction to finance these digs. That pushes up the time periods for the construction works, and pushes up their eventual cost. The developer’s desire to minimize these expenses is understandable — keep the costs low, and get the archaeological digs over with in the shortest possible time frame. 
That brings the developer into conflict with the archaeologists, who want to carry out the digs as carefully as possible and, as a result, want as much time as they can get. In practice, the conflicts are resolved in a number of different ways, each dependent on the specific plot of land being developed. Nevertheless, whichever way it goes, one of the two parties is always left feeling hard done by.
In order to regulate these relations between developers, archaeologists and the local authorities, there should be a system drawn up detailing the demands made on developers. With that system in place, it would be easier to find resources to carry out the digs, and to train up personnel capable of carrying out those digs and preserving whatever is found of cultural significance. 
Various proposals on such a system have already been put forward. The idea from Sergei Troyanovsky, deputy chairman of the Novgorod Oblast Culture, Film and Tourism Committee and head of the State Department for the Control, Preservation and Use of Historical and Cultural Monuments, seems to make a lot of sense. Troyanovsky suggests that, before putting a plot of land up for tender, the mayor of Novgorod could commission archaeological digs. The expenses incurred could then be covered when the plot goes up for sale. That should also make the tender process a lot smoother, meaning that such a plot could be sold at a good price — it’s no secret that investors like plots of land where the archaeological digs have already been carried out. 
An “archaeological development” of this kind could be carried out on a planned, systematic basis, and that means that the corresponding expenditures in the local budget could also be planned in advance. Various credit mechanisms could be put in place for projects of this kind, with their guaranteed profitability, and that means that the local budget wouldn’t be hit too hard, if at all. 
In effect, this mechanism would create a new market — commercial archaeological services, with a volume of work known in advance, a demand for qualified personnel and financing at the ready. The growing demand for new real estate sites on the historic territories of the North-West region makes for excellent prospects for this new market. As the demand can be fairly accurately predicted, any personnel issues can be cleared up (the higher education institutions of the North-West can open new archaeological faculties or expand those they already have), and that will allow digs to begin when and where developers need them.
Sergei Troyanovsky’s proposal, which, incidentally, received the support of one of Russia’s most authoritative archaeologists, the head of the Novgorod archaeological expedition, Valentin Yanin, is also attractive because, on the one hand, it takes into account the interests of all the parties concerned (including the authorities and the general public), and on the other forces all those parties to make certain sacrifices. Thankfully, those sacrifices are made for all the right reasons — to preserve these historic and cultural treasures. 
Both the federal and the oblast authorities, however, appear to be in no hurry to take up Troyanovsky’s idea. And they don’t appear to be in any hurry to adopt any other proposals either. Life goes on, however, and builders are working at an ever faster pace. If nothing is done, the interests of business, as the most powerful and effective in the sector, will no doubt win out, and in view of the current weakness of the state, it is our historic heritage that will be hardest hit. 

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: Available Light
AUTHOR: By Chris Floyd
TEXT: The sea was pink with sunset, the last light draining as high tide slowly reclaimed the beach. A huge harvest moon, flecked with clouds, was hanging just above the horizon in a sky still barely blue. On the distant line where the world curved away, you could see the white speck of the Channel ferry, bound for Calais. 
Standing on the high seawall — with no one around, no sound but the insistent boundless roar of the waves — you could watch and wait, wait for a hint of wind to rake the clouds away from the moon. The pink sea shaded into gray. 
First one and then another of the seawall steps were covered by the swarming tide; the waves and the darkness were advancing together. A horsehead cloud flashed black against the vast yellow presence, then bowed its neck, drifted on — and the moon emerged.
A rapier of light appeared on the surface of the water, a restless, shifting dazzlement, reaching all the way to the foot of the seawall, the edge of the tide. Wherever you stepped it followed, a pointillist blade aimed straight for your eyes. Imperceptibly but swiftly, the moon rose higher, grew harder and smaller, while the band of light, paradoxically, widened: Now a broadsword, now a road, now a river of diamonds pouring through the middle of the waves.
Astonishing, unlooked-for, this eruption of beauty, so perfect in its meaninglessness. It was just there, portending nothing, without signification. There was no goddess in the moon, no spirit in the sea: just form, line, curve, light — combining, dissolving, recombining at every moment. A truth emptied of all utility, all contention, all continuity, of everything except the eternal imprint of reality.
How far removed from this realm of ordinary miracle is the sordid world of politics and power. There, meaning and agency, instrumentality and exploitation rule the day. There, the wordless roar of the sea gives way to the ceaseless howl of lies. To deal with politics is nothing more or less than waste management, a necessary evil to preserve public health, trying to keep the corruption down to a reasonable, endurable level.
Of course, corruption is just another word for greed; and greed, or being self-serving, is endemic to human nature. No political system is antiseptic in this regard — nor should it be. 
A little corruption is not fatal; some built-in slack for human failure keeps a system from becoming merciless and inhumane. But when the level of graft rises too high, when it overflows and breaks down the levees of law itself, when it swarms the land, rips out communities and families, when it kills and crushes, when it exalts the mighty few beyond all reason and justice — then it must be resisted, exposed and condemned. Then, in order to carve out some space for meaningless beauty and reality’s truth to flourish, we must plunge into the muck again.
And so: President George W. Bush’s plan to reconstruct the Gulf Coast is the biggest crony cash-cow in U.S. history (aside from the pork-orgy he’s throwing for his pals in Iraq). Bush is using his emergency powers to strip American citizens of their legal protections against exploitation, handing out no-bid contracts to his pals and paymasters and allowing them to pay coolie wages to build their new commercial empires on the bones and blood of the hurricane’s victims.
All of this is aimed at “changing the demographics” of the region, especially New Orleans, as the city’s wealthy white elite have openly admitted to The Wall Street Journal. They want to scatter the poor — especially the black poor — to the four winds and rebuild New Orleans as a playground for the rich, a malevolent corporate fantasyland patrolled by heat-packing private goons.
Bush now has a honey-pot of some $200 billion to dole out to his cronies and his caporegimes. Despite the crocodile, or rather, alligator tears he’s shed for the poor flood victims — some of whom were eaten by the gators that poured into the city through the breached levees that he underfunded — Bush showed his true contempt for the “reconstruction” effort by putting his porcine political fixer, Karl Rove, in charge of it. A more brazen act of sneering cynicism can hardly be imagined. Rove has zero experience in organizing government relief efforts, but he is the master of our age when it comes to servicing cronies — and knee-capping opponents — for his witless boss in the White House.
Like the war in Iraq, the “reconstruction” of the Gulf Coast is just another monstrous flood of sewage and corruption, churning through lives and communities for one purpose only: the aggrandizement of the Bush faction and its elitist kind. The suffering of many thousands — and the goodwill and hard work of many others — will be ruthlessly turned to the advantage of the mighty few. The political filth will rise, blocking out the pointless beauty, the river of light that should be our reality.

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

TITLE: Pilgrims Flock to Buddhist Center to See Their Lama
AUTHOR: By Stephen Boykewich
PUBLISHER: Staff Writer
TEXT: IVOLGINSK, Buryatia — The road to the heart of Russian Buddhism starts in Ulan-Ude, 100 kilometers due east of Lake Baikal. From the Buryat capital, the road winds past bare wooden homes with brightly colored shutters and a lone Yukos gasoline station, where traffic stops to let a Buryat cowboy drive his herd across the street.
Thirty kilometers west of Ulan-Ude, the road reaches the gates of Ivolginsky Datsan, which was one of only two approved centers of Buddhist worship in the Soviet Union when construction began there in 1946. Josef Stalin had ordered the destruction of 46 other Buddhist centers and sent thousands of monks to their death during the Great Terror of the 1930s. Today, Ivolginsky Datsan is a complex of temples and residences that includes an accredited university.
It also houses what many call a miracle.
The body of the 12th Pandito Khambo Lama, Dasha-Dorzho Itigilov, who served as the spiritual leader of Russian Buddhism from 1911 to 1917, was publicly unveiled for the first time in September 2002, 75 years after his death in 1927. Three years later, his body remains in a state of preservation that has baffled scientists — and drawn believers by the thousands.
This Sept. 7, when the third anniversary of the holiday was celebrated according to the Buddhist calendar, minibuses from the capital arrived steadily all morning, bearing the first of the pilgrims. 
They had come in part for the day’s festivities: song and dance performances in the afternoon, followed by competitions in archery, wrestling and horseracing, with five new Zhigulis for the winners.
They had also come to see the miracle with their own eyes.
“My wife and I drove here from Irkutsk to see it last week, but the monks told us we had to come back this week,” said Vyacheslav Simonov, 53. “It’s a long drive, but we had to come back.”
By decision of the current Khambo Lama, Damba Ayusheyev, Itigilov’s body is exhibited only seven days a year, during Buddhist holidays.
Itigilov Institute director Yanzhima Vasilyeva, a small woman brimming over with enthusiasm, told the lama’s story while the line of pilgrims grew.
Itigilov was born in 1852 and began his religious education at the age of 16. In 1911, he was appointed Khambo Lama, a post he used to institute a Buddhist revival among Buryats. He was a guest of Tsar Nicholas II during the 300th anniversary celebrations of the Romanov dynasty in 1913, and he remained an influential figure after stepping down from his post in 1917.
Ten years later, Vasilyeva said, Itigilov warned his students about the coming terror and advised them to flee to Tibet. 
“He then sat down to meditate and passed into another state, leaving his body behind,” she said. “He was 75 years old, and he promised to return to his followers after another 75 years.”
The Khambo Lama’s body was buried sitting upright in the lotus position. It was exhumed twice after fierce storms his followers took as signs: once in 1955, and again in 1973. Both times they found the body perfectly preserved, said Vasilyeva, who is also Itigilov’s great-niece.
“His limbs were still flexible and his skin was elastic,” Vasilyeva said. “The most amazing thing is that he was still sitting upright. Scientists say that after two weeks a dead body cannot stay upright on its own.”
As Vasilyeva spoke near the entrance to the temple where Itigilov’s body was being shown, a circle of pilgrims gathered around her, nodding and whispering. “Think how much you have to love people to leave them your body,” Vasilyeva said. 
After the first two exhumations, Itigilov was reburied. On Sept. 11, 2002, he was exhumed again and brought to Ivolginsky Datsan, where Ayusheyev, the current Khambo Lama, decided to exhibit Itiligov’s body to help spread the faith.
“There is a great moral crisis in Russia today,” Vasilyeva said. “Itigilov’s return presents a great opportunity to help people believe.”
Professor Viktor Zvyagin of the Federal Center of Forensic Medicine examined Itigilov’s body in Ivolginsk last November, and conducted analyses of hair, skin and nail specimens after his return to Moscow. He concluded that Itigilov’s body was in the condition of someone who had died 36 hours ago.
“In my years of practice I have encountered quite a few instances of preserved bodies, but those were either the result of mummification” or extreme environmental conditions, Zvyagin said by telephone on Wednesday. “But this is something different, and for me, incomprehensible. It’s a phenomenon that calls for the most detailed research.”
Pilgrims began their visit by walking a clockwise path around the datsan, or monastery, placing coins in collection boxes and spinning mounted prayer wheels of all shapes and sizes. 
They then lined up and waited for more than an hour to enter the main temple. Wheelchairs and crutches were common sights, as many believe the touch of Itigilov’s scarf has healing powers.
Inside, the temple is a riot of colors, with painted dragons spiraling up columns, and hundreds of portraits and statues of the Buddha in various incarnations. Itigilov sits in a glass case in the front of the temple, dressed in bright gold and orange robes. His body is slumped slightly forward, and his eyes and nose are sunken in.
Monks hurried awed observers past, leaving them only a moment to touch their forehead to Itigilov’s scarf, which extends through the bottom of the case. Believers lingered in the temple as long as they could, backing away from Itigilov’s case with tiny steps, eyes locked on him, palms pressed together in prayer.
Back outside, the afternoon was blindingly bright. Archers with sneakers and track pants showing under their velvety national costumes strung their bows. Pairs of wrestlers circled each other, getting loose for their chance at one of the boxy Zhiguli cars donated by Rosgosstrakh, the formerly state-owned insurance company. 
Anatoly Zhalsarayev, a member of the republic’s committee on community affairs and religious organizations, stood by the datsan’s gates and greeted many pilgrims by name. He said that the importance of the Itigilov phenomenon transcended the Buddhist faith.
“At critical moments in Russian history, certain miraculous events have reminded us that everything in life is relative, that we all need to seek a higher goal,” he said.
“We shouldn’t believe in Bush or Putin, we should believe in God. There are different religions, but there’s just one God.”
Simonov seemed proof that the phenomenon’s appeal was not limited by creed. The man who had made the drive from Irkutsk twice in seven days sat perched on his heels amid food and souvenir vendors while his wife ate a plate of steaming pozy — the spiced beef dumplings that are a staple of Buryat cuisine. 
“I’m not a Buddhist, I’m a Jew. But I still thought it was important to see things with my own eyes,” he said. “I don’t know if it’s a miracle, but I know he was a holy man.”

TITLE: Poles Oust Ex-Communists, Turn to Center-Right Parties
AUTHOR: By Vanessa Gera
PUBLISHER: The Associated Press
TEXT: WARSAW — Exit polls and early returns indicated Polish voters ousted the nation’s scandal-prone government of ex-communists in parliamentary elections Sunday, giving a broad majority to two center-right parties that have promised tax cuts and clean government. 
Prime Minister Marek Belka’s defeated government had said it would withdraw Poland’s troops from Iraq by Dec. 31, though it might keep some officers there as advisers. The challengers said they might be open to keeping them there longer if a “new contract” can be negotiated with the United States.
The results showed voters eager for change in choosing the two right-wing parties, both of which have roots in the Solidarity trade union movement that toppled communism in 1989-90. However, the turnout of less than 40 percent was the lowest since then.
Projections based on exit polls by state television showed the socially conservative Law and Justice Party with 27.8 percent and the free-market Civic Platform with 24.1 percent. The governing Democratic Left Alliance, which has been plagued by Europe’s highest unemployment rate and scandals, lagged behind with 11.2 percent.
An exit poll for private TVN-24 showed similar results, with Law and Justice polling 28.3 percent, Civic Platform 26.3 percent and the Democratic Left Alliance 11.1 percent.
Polish voters — like Germans did a week ago — sought to put the brakes on all-out cuts to welfare state benefits, giving first place to Law and Justice — a party that mingles free-market economics with concern for social equality and government programs.
After the release of the exit polls, Law and Justice leader Jaroslaw Kaczynski said he had a mandate to become prime minister, citing a deal with Civic Platform.
“The agreement was that whoever wins the election has the prime minister post, and then this applies to me as the head of the winning party,” Kaczynski said.

TITLE: IN BRIEF
TEXT: Cheney ‘Doing Well’
WASHINGTON (Reuters) — U.S. Vice President Dick Cheney was released from a Washington hospital on Sunday, one day after he underwent surgery to treat aneurysms behind both knees, a spokeswoman said.
“The vice president left the hospital at 10 a.m. He will work from home tomorrow. He is doing well,” said Cheney spokeswoman Jennifer Mayfield.
Cheney shook hands with doctors and walked to a car as he left the hospital.
Doctors at George Washington University Hospital operated on Cheney for six hours on Saturday, implanting tubes to help blood flow through a weakened artery.
Cheney has suffered four heart attacks, the first in 1978 at age 37.

Killer Croc on the Lose
CANBERRA (Reuters) — Australian authorities are hunting a large saltwater crocodile in the country’s remote far north that is believed to have killed a British man while he was snorkeling.
BHP Billiton said the victim was technical services superintendent Russell Harris, 37, who had worked at the company’s Gemco mine on Groote Eylandt — an island off Australia’s Northern Territory — for the past five months.
Harris went missing on Saturday while snorkeling with another man off Groote Eylandt while their partners remained on the beach. Police found his body on Sunday about 1.5 kilometers from where he was last seen.
Harris’s body was being flown to the tropical northern city of Darwin on Monday for a post mortem, but police said his injuries were consistent with a crocodile attack and that a 4-meter crocodile had been seen in the area.

Peru Shaken by Quake
LIMA, Peru (AP) — A powerful earthquake hit northern Peru late Sunday, causing power outages and cutting phone service throughout much of the region. At least one person was killed, officials said. 
The U.S. Geological Survey said the quake had a magnitude of 7.5 and struck at 8:55 p.m. It was centered 50 miles northeast of the jungle city of Moyobamba, or about 445 miles north of the capital Lima.

Demi, Ashton Hitched
LOS ANGELES (Reuters) — Actors Demi Moore and Ashton Kutcher were married on Saturday, capping their celebrated two-year-long older woman, younger man relationship, two celebrity magazines reported on Sunday.
Representatives for Kutcher, 27, and Moore, 42, could not be immediately reached for comment, but both Us Weekly and People magazine reported on their Web sites that the couple were married in Los Angeles area on Saturday.
Us Weekly, which first reported the wedding, said about 100 of the couple’s friends, including Moore’s second husband Bruce Willis, attended it. Also at the wedding were actress Lucy Liu and Moore’s three daughters from her marriage to Willis.

Swiss Open to New EU
ZURICH (Reuters) — Switzerland on Sunday voted by a clear margin to open its job market to workers from the European Union’s 10 new member states, mostly eastern European countries, cementing relations with its European neighbors.
Despite right-wing warnings of floods of cheap labor, 56 percent of Switzerland’s electorate endorsed government plans to extend an agreement with Brussels on the free movement of people to the new states, according to the Swiss state television SF1.
The clear endorsement is seen as a victory for the Swiss government.

Bin Laden ‘Isolated’
ISLAMABAD, Pakistan (AP) — Osama bin Laden is hiding out with a small core of mainly Arab supporters, and the al-Qaida leader now only sends messages by courier because his communications network has been destroyed, senior Pakistani military and intelligence officials said Sunday.
There have been no fresh clues to bin Laden’s whereabouts, but he generally is believed to be in the border region between Pakistan and Afghanistan.
“In our opinion, the reports on the whereabouts of Osama bin Laden are more speculative stories rather than based on accurate intelligence,” said Major General Shaukat Sultan, chief spokesman for Pakistan’s army.

TITLE: Residents Evade Danger as Rita Hits U.S.
PUBLISHER: The Associated Press
TEXT: PERRY, Louisiana — People checking their hurricane-hit homes and towns returned with stories of flooding to the rooftops, coffins and refrigerators bobbing in the water, and stilts where their houses once stood. 
Yet as the misery wrought by Hurricane Rita came into clearer view — particularly in the marshy towns along the Texas-Louisiana line — officials credited the epic evacuation of 3 million people for countless lives saved.
“As bad as it could have been, we came out of this in pretty good shape,” said Texas Governor Rick Perry, who called the lack of widespread fatalities “miraculous.” By Sunday night, just two deaths had been blamed directly on Rita.
Authorities had trouble keeping people from southern Louisiana from traveling through floodwaters in their boats to discover whether Rita wrecked their homes and livelihoods.
“I’ve been through quite a few of them, and we’ve never had water like this,” said L.E. Nix, whose home on the edge of a bayou in Louisiana’s Calcasieu Parish was swamped with 3 feet of water. “I had a little piece of paradise, and now I guess it’s gone.”
In Houston, which was spared the brunt of Rita, officials set up a voluntary, staggered plan for an “orderly migration” with different areas going home Sunday, Monday and Tuesday to avoid the massive gridlock that accompanied the exodus out.
By Sunday night, a seemingly endless stream of charter buses, cars and sport utility vehicles clogged the southbound lanes of Interstate 45 into Houston.
Coming on the heels of Hurricane Katrina, where many chose to ride out the storm with deadly consequences, the news coming from the aftermath of Rita was for the most part positive.
Petrochemical plants that supply a quarter of the nation’s gasoline suffered only a glancing blow, with just one major plant facing weeks of repairs.
The reflooding in New Orleans from levee breaks was isolated mostly to areas already destroyed and deserted. And contrary to dire forecasts, Rita and its heavy rains moved quickly north instead of parking over the South for days and dumping a predicted 25 inches of rain.
Along the central Louisiana coastline, where Rita’s heavy rains and storm-surge flooding pushed water up to 9 feet in homes and into fields of sugarcane and rice, weary evacuees slowly returned to see the damage.
Staring at the ground, shoulders stooped, clearly exhausted, many came back with stories of deer stuck on levees and cows swimming through seawater miles from the Gulf of Mexico.
“All I got now is my kids and my motorhome,” said Tracy Savage, 33, whose house in rural Vermilion Parish was four feet underwater.
More than 100 boats gassed up at an Abbeville car dealership Sunday before venturing out on search-and-rescue missions. Helicopters helped with house-to-house searches.
An estimated 1,000 people were rescued in Vermilion Parish, said Chief Sheriff’s Deputy Kirk Frith. About 50 people remained on a 911 checklist, and Frith said authorities would probably conclude rescue operations by Monday and begin damage assessment.
Some bayou residents who arrived with boats in hopes of getting back into their property were turned away by state officials, but many ignored warnings to stay away.
“How are you going to stop them from going to their home to check on their dog or something like that?” Frith asked.
In Cameron Parish, just across the state line from Texas and in the path of Rita’s harshest winds, fishing communities were reduced to splinters, with concrete slabs the only evidence that homes once stood there. Debris was strewn for miles by water or wind. Holly Beach, a popular vacation and fishing spot, was gone. Only the stilts that held houses off the ground remained. 
A line of shrimp boats steamed through an oil sheen to reach Hackberry, only to find homes and camps had been flattened. In one area, there was a flooded high school football field, its bleachers and goal posts jutting from what had become part of the Gulf of Mexico. 
“In Cameron, there’s really hardly anything left. Everything is just obliterated,” said Louisiana Governor Kathleen Blanco, who has asked the federal government for $34 billion to aid in storm recovery. 
After a briefing with Blanco in Baton Rouge, President Bush said: “I know the people of this state have been through a lot. We ask for God’s blessings on them and their families.” 
Just across the state line, Texas’ Perry toured the badly hit refinery towns of Beaumont and Port Arthur area by air Sunday. 
“Look at that,” he said, pointing to a private aircraft hangar with a roof that was half collapsed and half strewn across the surrounding field. “It looks like a blender just went over the top of it.” 
Among the deaths attributed to Rita was a person killed in north-central Mississippi when a tornado spawned by the hurricane overturned a mobile home, and an east Texas man struck by a fallen tree. Two dozen evacuees were killed before the storm hit in a fatal bus fire near Dallas. 
In the Houston area, John Willy, the top elected official in Brazoria County southwest of the city, said he would ignore the state’s staggered return plan. “Our people are tired of the state’s plan! They have a plan too and it’s real simple. They plan to come home when they want,” he said. 
In New Orleans, the U.S. Corps of Engineers moved rocks and sandbags into the holes that broke open in the Industrial Canal levee as Rita closed in, flooding the already devastated Lower Ninth Ward. Workers believe that once the breaches are closed, the Ninth Ward can be pumped dry in a week. 
Mayor Ray Nagin immediately renewed his plan to allow some residents to return to drier parts of the city. Those areas — including the once-raucous French Quarter — could eventually support a population of at least half of its pre-Katrina population of about 500,000 residents.

TITLE: Influential Lebanese TV Journalist Blown Up
AUTHOR: By Zeina Karam
PUBLISHER: The Associated Press
TEXT: BEIRUT, Lebanon — A bomb rigged to the car of a prominent journalist for an anti-Syrian television station exploded Sunday, severing the woman’s arm and leg in the latest in a string of targeted explosions in Lebanon. 
May Chidiac, a political talk show host with the private Lebanese Broadcasting Corporation, was inside her car when the bomb exploded in Ghadir, a town near the Christian port city of Jounieh, north of the capital, Lebanese security officials and the TV station said.
Late Sunday, Hotel Dieu Hospital in Beirut reported that Chidiac’s left arm and leg were severed in the blast and her right leg and pelvis were broken. A hospital statement said she was suffering from various injuries and burns all over her body, adding that her vital organs were “stable” but would need careful monitoring over the next few days.
A series of bombings has occurred in the Lebanese capital since a massive bomb killed former Prime Minister Rafik Hariri and 20 other people on Feb. 14.
Opponents of Syria’s role in Lebanon have accused Damascus and its allies in the Lebanese security services of involvement in the killing of Hariri. Syria denies any role in the assassination, which prompted a wave of anti-Syrian protests here and helped end Syria’s almost three-decade domination of Lebanon.
Lebanon has been rife with speculation of more attacks as chief U.N. investigator Detlev Mehlis prepares to issue his report into the assassination in late October.
Prime Minister Fuad Saniora, speaking to reporters outside the hospital in Jounieh, said the bomb, like other recent explosions, was related to the Hariri investigation.
“There is no doubt it is all related, we don’t want to deny that,” Saniora said.
Saniora said he had asked the U.S. ambassador for technical assistance. No further details were immediately available.
President Emile Lahoud condemned the attack and called for unity among the Lebanese, while student unions were due to hold sit-in protests at universities and in downtown Beirut on Monday.
A security official, speaking on condition of anonymity because he was not authorized to speak to the press, said the bomb was made up of less than two pounds of plastic explosives, placed under the driver’s seat. Television footage from the scene showed part of the car’s left door was blown off while the front of the vehicle was a twisted wreck.
Chidiac, in her 40s, is one of several hosts of a daily political talk show that is seen widely in the Arab world. She was hosting the show Sunday morning with a political analyst from the leading An-Nahar newspaper.
LBC, a Christian TV station, is among the most prominent of anti-Syrian media outlets.
On June 2, the anti-Syrian journalist Samir Kassir was killed by a bomb placed under the seat of his car.

TITLE: U.S. Joy as Americans Win Presidents Cup
AUTHOR: By Joseph White
PUBLISHER: The Associated Press
TEXT: GAINESVILLE, Virgina — In the mayhem of hugs, cheers, chants and fist-pumps that followed his winning putt on the 18th green, Chris DiMarco found four words that summed up the growing stature and passion surrounding the Presidents Cup. 
“We needed this cup,” he said. 
Not wanted. Needed. 
The Americans have won only one of the last five Ryder Cups. They had won only one of the last three Presidents Cups. They had not won either competition in five years. After a while, pride sets in, even in an event that’s only been around since 1994. 
That explains Tiger Woods and David Toms rushing to bear-hug DiMarco, and the chants of “U-S-A!” and “M-V-P!” from the gallery following DiMarco’s 15-foot birdie putt Sunday that ended his match against Stuart Appleby and gave the Americans the deciding point in an 18 1/2 -15 1/2 victory over the International team. 
“I think that we’re the only ones that know that we care more about this than anything,” DiMarco said. “And unfortunately everybody thinks the Americans don’t care. Well, I can promise you that’s not true at all. We care a lot, and this is big. We wanted this bad.” 
They also wanted to win for Jack Nicklaus, team captain for the third and probably final time. Nicklaus already said farewell to the majors this year during the British Open. The feelings for Nicklaus overflowed at an emotional team dinner Saturday night. 
“It feels a lot better to have a win, there’s no question about that,” said Nicklaus, whose team lost badly in Australia in 1998 and tied in South Africa two years ago. “As far as being something special, I may never captain another team, I may never play another round of golf, and if I end my career this way, it’s a pretty good way to end it.” 
Even so, Nicklaus cited the importance of his players ending their own winless streak, more so than his. 
“I don’t know why in the world they want to care about winning one for an old man,” said the 65-year-old Nicklaus. “They need to win one for themselves. I mean, American golf has not won in international competition for a few years.” 
The Presidents Cup itself got a boost by a thrilling finish on U.S. soil, with Americans making three clutch birdies at the 18th and producing moments that will be replayed many times over. 
Fred Couples, soon to turn 46, holed a 20-foot putt to beat Vijay Singh, a flashback to Couples’ 35-foot birdie putt that beat Singh and clinched the Presidents Cup for the U.S. team in 1996. 
“I figure if I beat him, there might be a small golden rainbow out there,” Couples said. “And I did.” 
Soon afterward, Phil Mickelson made a 4-footer to square his match with Angel Cabrera. Mickelson thought the match was over, but a rule implemented this year said that every match had to go extra holes until one team had enough points to claim the cup. The look on Mickelson’s stunned face was priceless when he was told by European tour rules official Andy McFee that the match was headed to a playoff. 
“I thought that we had won,” Mickelson said, “because I’m an idiot and didn’t read the rules of the game.” Mickelson went to the first hole for the playoff, but he didn’t have to finish it because DiMarco came along to the 18th and settled the competition for good. 
Playing from the right rough, with his feet in a bunker, DiMarco managed a clean approach that settled 15 feet from the cup. With teammates and Nicklaus settled nervously around the green, DiMarco then had to make one of the biggest putts of his career. 
“Every piece of my body was shaking,” DiMarco said. “My caddie says before I hit the putt, ‘This is the moment you’ve waited for your whole life, so go ahead and do it.’ And you know, I did.”
DiMarco knew it was good as the ball was still a few feet from the hole. He charged toward the cup, and then into the arms of Nicklaus as the players hugged everyone they could find. DiMarco went 4-0-1 for the week. 
“For Chris to win it was so fitting this week,” Mickelson said. “It’s a memory that we’ll have a lifetime, and we’ll never forget.” 
The Americans won without a Sunday victory from Woods, who had been 3-0 in Presidents Cup singles before losing to Retief Goosen. Davis Love III, Jim Furyk, Justin Leonard, Kenny Perry and Toms won their matches, with Perry and Toms getting their first points of the week. 
It was another tough loss for the Internationals, who battled the Americans to a tie in team matches over the first three days and fought back from early deficits throughout the 12 singles matches. The International team has yet to win the cup in four tries at the Robert Trent Jones Golf Club. 
“Jack and I, we stood on the first tee today,” International captain Gary Player said. “We both sincerely said, ‘Gee, I’d like to win, you’d like to win. But if we could have this go down to the last two matches — close, just real close — we’ll both be very happy.’”
It was that kind of spirit that left the Americans comparing the Presidents Cup favorably with the more contentious Ryder Cup, if not stating an outright preference for the former. 
“I like that there’s a genuine respect for both teams,” DiMarco said, “and it’s more about the game of golf and not necessarily somebody being ugly and somebody not being ugly.”
Of course, it also helps they finally got a win.

TITLE: St. Petersburg’s White Knights Lose Out to Dragons
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — Fluent passing, a dashing winger and brute force helped the Moscow Dragons run off with rugby’s Capitals’ Cup in Moscow on Saturday.
In an all-Russian final against the White Knights of St. Petersburg, the Dragons prevailed 19-0 to retake the crown they won when they last hosted the Cup in 2000 and reclaim the city’s place at the top of the Central and Eastern European expatriate rugby scene.
Dragons president Kevin Moloney, who was acting manager with head coach Peter Hamilton agonizingly stuck in Britain with visa trouble, felt relieved after the final whistle.
“Being the host team, I was more afraid that we wouldn’t win,” he said.
British Lions legendary lock forward Martin Bayfield was on hand to present the Dragons with the trophy.
The Capitals’ Cup, a round-robin tournament that this year involved the two Russian teams, Vienna, Budapest and Prague, takes place in a different city each year, giving players and coaches the chance to test their skills against their European counterparts while promoting the sport of rugby union in host countries.
The two teams with the most points from the round-robin matches meet in the final.
The Dragons were rarely threatened en route to the final, beating Budapest 19-0, Vienna 10-8, Prague 26-0 and St. Petersburg 14-0.
The loss to the Dragons apart, the White Knights also impressed on their journey to the final, beating Prague 17-5, Budapest 36-0 and Vienna 13-3.
The final saw a war of attrition until near the end of the first half, when the Dragons strung a series of rapid passes together to release Anton Belashov on the left flank. 
Avoiding desperate lunges, he sprinted to touch down for the first points of the game.
The second half was still in its infancy when St. Petersburg failed to deal with a lofted kick deep behind its 22-meter line. 
Moscow’s South African player Jacques Strydom took advantage and ran the ball into the left corner to double the hosts’ lead.
The White Knights had barely recovered when Moscow’s captain, David Dgebuadze, bulldozed through two tackles down the right flank, and then dodged a third to seal the Dragons’ win with the best try of the day.
Moloney was full of praise for his forward line, which he said gave his team the winning edge.
“Our forwards were fantastic. In fact, the forward play was extremely strong all day,” he said.
At 2 meters, 8 centimeters, Bayfield towered above the enthusiastic crowd of about 200 supporters standing next to the touchline.
He described the Dragons as “very physical, very committed,” as he watched a ladies’ game that took place as the prelude to the final.
Of the standard of rugby on display, Bayfield remarked, “It’s pretty good,” before the final, where he predicted a win for the Dragons. 
“There are definitely a few guys out there who can really play, who really know what they’re doing.”
He reserved particular praise for St. Petersburg center Timur Abramov, who was named player of the tournament, and Dragons winger Belashov.
The Dragons will defend their title next year when the Capitals’ Cup travels to Budapest.

TITLE: Sports Watch
TEXT: Russia Coach Quits
BELGRADE, Serbia-Montenegro (SPT) — After being knocked out of medal contention with a quarterfinal loss to Greece on Friday, the Russian national team lost its final two games of the European basketball championships, resulting in the resignation of its head coach after the team failed to secure a spot in next year’s World Championships in Japan.
Playing without star forward Andrei Kirilenko, who had his nose broken late in the second half of the 66-61 loss to Greece, Russia fell 92-74 to Croatia on Sunday afternoon to finish in eighth place in the 16-team tournament after finishing atop the Group A table in the opening round.

Kirilenko’s China Win
BEIJING (AP) — Russia’s Maria Kirilenko won the China Open on Sunday for her first WTA singles title, defeating Germany’s Anna-Lena Groenefeld 6-3, 6-4. 
Kirilenko, ranked No. 45, had advanced to the final when top-ranked Maria Sharapova withdrew during their semifinal because of a chest injury. Kirilenko didn’t drop a set on her way to the title. 
Kirilenko returned hard against the 30th-ranked German, slamming shots down the line. The Russian lifted her arms in jubilation as Groenefeld’s final shot sailed wide. 

Croatia Beats Russia
SPLIT, Croatia (SPT) — Croatia advanced to its first Davis Cup final Sunday when Ivan Ljubicic beat Nikolai Davydenko 6-3 7-6 6-4 in the first reverse singles for an unassailable 3-1 lead over Russia. 
Dmitriy Tursunov claimed the dead rubber against Ivo Karlovic 6-4, 6-4 to narrow the final margin to 3-2. 
The 26-year-old Ljubicic has won all three of his games in this tie for his 11th consecutive Davis Cup win. Russia was the 2002 Davis Cup champion. 


Kitschko in Contention
ATLANTIC CITY, New Jersey (AP) — The last time Wladimir Klitschko fought Chris Byrd, Klitschko beat him. Now, the two might be headed for a rematch, thanks to Klitschko’s victory over Samuel Peter in an IBF elimination bout. 
Klitschko became the mandatory challenger to IBF champion Byrd with a unanimous decision over Peter on Saturday night in a fight he hopes removed any doubt about his toughness. 
Whether his next outing is against Byrd or with WBO champion Lamon Brewster remains to be seen. 
“My goal is to become a champion again,” said the 29-year-old Klitschko, the brother of WBC champion Vitali Klitschko. “Actually it’s a goal for my brother and myself to be at the same time heavyweight champions.” 

Alonso is New F1 King
SAO PAULO (Reuters) — Spain’s Fernando Alonso became Formula One’s youngest champion at the age of 24 on Sunday after finishing third for Renault in the Brazilian Grand Prix. 
McLaren’s Juan Pablo Montoya won the race for the second year in a row while team mate Kimi Raikkonen, the only man who could have put off Alonso’s title celebrations, finished runner-up.