SOURCE: The St. Petersburg Times
DATE: Issue #1110 (76), Tuesday, October 4, 2005
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TITLE: Tourist Arrives In Space
AUTHOR: By Mike Eckel
PUBLISHER: The Associated Press
TEXT: KOROLYOV, Central Russia — A Russian spacecraft docked flawlessly and ahead of schedule at the international space station Monday, delivering an American space tourist and a new two-man Russian-American crew. 
Applause erupted from the family of U.S. millionaire scientist Gregory Olsen at Russian Mission Control in Korolyov outside Moscow when the Soyuz TMA-7 capsule’s docking was announced about 5 minutes before the target.
When Krista Dibsie, Olsen’s 31-year-old daughter, was asked how her father felt, she said: “He’s never felt better. He actually talked to the doctor and said he felt excellent.”
“I can’t wait to see him back on Earth,” she said as her 4-year-old son Justin sat on her lap, holding his crayon drawings of rockets.
The docking was conducted automatically; in the past, technical problems have forced capsule pilots to manually dock, a tense procedure that risks damage to the station.
The crews opened the air locks about three hours later and the Soyuz passengers met face-to-face with cosmonaut Sergei Krikalev and American astronaut John Phillips, who have inhabited the orbiting station since April.
Astronaut William McArthur and cosmonaut Valery Tokarev will man the station for the next six-month stint. Olsen will return to Earth Oct. 11 with Krikalev and Phillips on another Soyuz spacecraft.
At least two spacewalks are scheduled during Tokarev’s and McArthur’s six-month mission as well as many scientific experiments, including medical checks and tests on different metals and building materials.
The ITAR-Tass news agency said McArthur, Tokarev and Olsen were greeted with the traditional Russian welcome of bread and salt.
Footage broadcast on Russian television showed Olsen carrying a video camera as he floated into the station, where he bumped his head on the ceiling. Later, the five men were shown posing for photographs, waving and smiling.
ITAR-Tass said Olsen spoke briefly to his daughter and grandson after boarding the station.
Since the 2003 Columbia disaster grounded the U.S. shuttle fleet, the United States has depended on Russian Soyuz and Progress craft to ferry its astronauts and supplies to the orbiting space station. Discovery visited the station in July, but problems with the foam insulation on its external fuel tank cast doubt on when the shuttle would fly again.
On the eve of the Soyuz blast off from the Baikonur cosmodrome in Kazakhstan, Russian space officials warned that they could not guarantee McArthur’s return next spring unless NASA paid for the flight.
But a U.S. law passed in 2000 penalizes countries that sell unconventional weapons and missile technology to Iran — and Russia is helping Iran build an $800 million atomic power plant, despite concerns Tehran will build nuclear weapons.
The U.S. Senate has agreed to amend the measure and lift a ban on NASA purchases of Soyuz seats until 2012. The House has yet to act on it.
NASA’s international space station program manager, William Gersteinmaier, said Monday that McArthur would get home one way or another.
“We have a way home for him either on the shuttle or on the Soyuz,” he told reporters at Russian Mission Control, but would not say whether the astronaut would be able to return to Earth on schedule in April.
The European Space Agency, which has had astronauts on the station in the past, could send up another craft to the station as early as the end of 2006, said Anatoly Perminov, chief of the Russian space agency. 
The cash-strapped Russian agency has turned to space tourism to generate money. Olsen is the third non-astronaut to visit the orbiting station, reportedly paying about $20 million. The first two space tourists were California businessman Dennis Tito and South African Mark Shuttleworth a year later. 
Olsen has said he preferred the term “space flight participant” to “space tourist.”

TITLE: EU Talks Focus On Visa Deal
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russia and the European Union will try to hammer out a deal on easing visa regulations at a summit in London on Tuesday, which will likely be dominated by strained relations on a series of issues.
British Prime Minister Tony Blair, whose country holds the rotating six-month EU presidency until the end of the year, will host President Vladimir Putin for the one-day summit, which is aimed at building on a landmark agreement achieved in May to reinforce political and economic ties.
EU officials said the London talks would cover economics, trade, the environment, energy and human rights, while Russia was expected to renew calls for Britain to extradite Chechen rebel envoy Akhmed Zakhayev and for the EU to back Russia’s accession to the World Trade Organization.
Human rights, economic and political cooperation were also on the agenda in talks Monday between Putin and Belgian Prime Minister Guy Verhofstadt, during a stopover by Putin in Brussels on his way to the London summit. Putin also had lunch with the Belgian king, Albert II.
Among other issues likely to ruffle feathers at the summit is a tax investigation begun last Friday by prosecutors into the British Council, the cultural department of the British Embassy, in St. Petersburg. 
Putin and Foreign Minister Sergei Lavrov will lead the Russian delegation, while Blair, European Commission President Manuel Barroso and External Relations Commissioner Benita Ferrero-Waldner will represent the 25-nation bloc.
EU officials are expected to express concern on human rights in Russia, and in Chechnya in particular, while Russia will likely complain about what it sees as discrimination against Russian-speaking minorities in new EU members Latvia, Lithuania and Estonia.
London-based rights group Amnesty International on Friday accused federal forces of carrying out abductions and “systematic” abuse as a way to subdue separatists in Chechnya, allegations the Kremlin has denied.
Putin promised last week in a nationwide call-in show that he would combat the problem of abductions in Chechnya, but added that the authorities had been unable to determine whether “bandits in disguise, or abuses by law enforcement bodies” were to blame.
“We will continue the search for missing people and those guilty of these crimes,” Putin said.
As well as renewing calls for Zakayev’s extradition, Russia is likely to ask EU leaders to soften their criticism of Russia’s human rights record in Chechnya.
Moscow will also push for a deal on easing visa regulations for Russian citizens traveling to EU countries, said a spokesman for Sergei Yastrzhembsky, the Putin aide responsible for Russia’s relations with the EU.
The spokesman said Monday that Russia was optimistic a visa agreement “could be reached by the end of the year,” but did not elaborate.
Brussels has said it wants Moscow to take back illegal immigrants who entered the EU from Russia, regardless of whether they are Russian citizens.
Russia has been opposed to readmitting illegal migrants, saying it would be very expensive to implement and could violate migrants’ rights.
Russia’s permanent representative to the EU, Vladimir Chizhov, said Sunday he was hopeful a deal could be reached during the London summit.
“It’s just a matter of finalizing the text,” Chizhov said, Reuters reported. “The whole situation has been aggravated, because we used to have a visa-free regime with many of the new EU members.” 
In Moscow in May, Russia and the EU signed a wide-ranging cooperation agreement, but failed to reach a deal on visas.
Ahead of Tuesday’s summit, an EU-Russia energy forum met in London on Monday to discuss expanding cooperation. The EU is Russia’s biggest oil and gas customer.
Moscow is expected to call for EU support in its bid to join the WTO by next year, when Russia will hold the presidency of the Group of Eight nations. The EU has pledged to back Russia’s bid, but Russian officials have expressed disappointment after 11 years of negotiations.
Russian and EU officials are also expected to discuss disagreements over Iran’s nuclear program, which Russia and Iran say is only intended to produce nuclear power. Russia and China have opposed EU and U.S. efforts to refer Tehran to the UN Security Council over fears that the program is aimed at building nuclear weapons.
Putin will hold talks with Blair on Wednesday, when he is to present awards to the British team that helped to rescue the crew of the Russian mini-sub trapped off Kamchatka in August.
The Kremlin could try to use the investigation by St. Petersburg prosecutors into tax payments by the city’s British Council office as a bargaining chip at the summit, Kommersant speculated Monday.
The prosecutor on duty at the St. Petersburg prosecutor’s office, Georgy Khavslavsky, said Monday that he would not immediately comment on the investigation, and said he would only consider replying to a faxed question.
Sources in the tax service claimed the British Council had not paid taxes on English-language courses.
“According to our figures, in 2001 alone the British Council failed to pay millions of rubles of taxes,” a tax service official said, Kommersant reported.
Melissa Cook, an assistant director of communications for the British Council, denied the allegation, and said the organization had “fairly cooperated with all requests from the tax authorities.”
“We registered for taxes in Moscow in May and in St. Petersburg in August. All the demands for back tax payments have been met,” Cook said by telephone Monday.
In its front-page story, Kommersant commented that the case against the British Council was “a scandal sparked by the Kremlin.”
But Foreign Ministry sources denied this was the case Monday, state-run RIA Novosti news agency  reported.

TITLE: Adamov Faces Extradition to United States
AUTHOR: By Daniel Friedli
PUBLISHER: The Associated Press
TEXT: BERN, Switzerland — Switzerland has decided to extradite Russia’s former nuclear minister to the United States on charges of stealing up to $9 million that was intended to improve security of nuclear plants, the Justice Ministry said Monday. 
Russia has been fighting the U.S. extradition request for Yevgeny Adamov out of fear that he could reveal nuclear secrets while facing the charges in the United States.
Adamov has accepted extradition only to Russia and has 30 days to appeal to the Swiss supreme court, the ministry said. He announced he was going on a hunger strike to press for extradition to Russia or his release.
“Not recognizing a single charge brought against me, and having no other way to protest against my actually unlimited confinement, I declare a hunger strike until the [Swiss] Federal Office of Justice decides on my extradition or release,” Adamov said in a statement published by the Russian daily Izvestia. The Swiss ministry said only that he had begun a hunger strike.
Swiss authorities arrested the nuclear physicist on a U.S. warrant on May 2, while he was visiting his daughter in Bern. A federal grand jury in Pittsburgh has since indicted him on charges of conspiracy to transfer stolen money and securities, conspiracy to defraud the United States, money laundering and tax evasion.
U.S. authorities suspect Adamov of embezzling U.S. Energy Department funds and diverting them into private projects in the U.S., Ukraine and Russia.
The U.S. extradition request was given priority over the Russian one because, “had priority been given to Russia, Adamov’s Russian citizenship would have meant that he could not subsequently have been extradited onward to the [United States],” the ministry said.

TITLE: Bodies of Missing Boys Found
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The bodies of two young boys who went missing in July have been discovered in the Moscow region, police said.
The bodies of Pavel Sokolov, 11, and Alexander Yelshin, 10, were discovered Friday evening near a forest close to the town of Kryukovo, Interfax reported, citing a police source. The cause of death has yet to be established, the source said.
The boys left their homes in the Moscow region town of Dedovsk on the afternoon of July 19, and their parents reported them missing the next day.
The badly decomposed body of Yelshin’s brother, Mikhail, 12, was found by day laborers near the village of Luzhki on July 29. Police have established that Alexander Yelshin and Sokolov took a commuter train to a pond near the village of Snegiri on July 19, and that Mikhail Yelshin left his home a few hours later.
Moskovsky Komsomolets, without citing any sources, suggested they might have died of alcohol poisoning.

TITLE: Boy’s Suicide Blamed on School
PUBLISHER: The St. Petersburg Times
TEXT: The death of a 14-year-old boy who threw himself under a speeding commuter train outside St. Petersburg with a suicide note in his pocket that said he could not bear to be humiliated by his teacher anymore, has raised questions about child welfare.
“Like everybody I am shocked with this event,” Governor Valentina Matviyenko said at a news conference on Friday.
Investigators said last Thursday that they were trying to determine whether the teacher had driven the boy to suicide over his grandmother’s inability to contribute money toward classroom repairs.
“The suicide of a teenager is an extreme case, but I think that it is necessary to work on this occurrence calmly. The police, in cooperation with the prosecutor’s office, should investigate this school and what is happening there in reality,” Matviyenko said.
Roman Lebedev, 14, was found dead on train tracks just outside St. Petersburg on Sept. 21.
“In the note, he said he couldn’t take the humiliation from his teacher,” Tatyana Peskovskaya, a spokeswoman for the St. Petersburg transportation police, said.
The teacher is suspected of hounding the boy to pay 300 rubles (about $10) for the repairs and of forcing him to clean the classroom after school to make up for the debt.
Many public schools turn to parents for help with upkeep as they struggle to get by on meager funding.
“This case will make us to analyse seriously what is happening in education yet again. Unfortunately, there is a pressing problem of social inequality between children,” Matviyenko said. “I know that instances of extortion do happen at schools. This occurrence is a serious signal for the city authorities, and we must draw adequate conclusions from it.”
A spokesman for the St. Petersburg Prosecutor’s Office said an investigation had been opened into a violation of Article 110 of the Criminal Code, the crime of driving someone to suicide. A conviction carries a sentence of up to five years in prison.
The teacher, who has been identified by only her first name and patronymic, Vera Arkadiyevna, has denied wrongdoing, the police spokeswoman said. 
Tatyana Lebedeva, the boy’s grandmother and legal guardian since his mother’s death, said she did not have the money for school repairs.
“[The teacher] said that all the children had paid up through the end of the year,” Lebedeva said on Channel One television. 
“And [she said], ‘You have your mother’s pension.’”
“Does his mother have a ministerial pension?” she said, referring to herself. “I get 2,500 rubles.”
Lebedeva said her grandson had been embarrassed to be kept after class. “Everyone was going home, and she would say, ‘Roma, get the cloth and broom.’ ... But he was a 14-year-old boy. He had some pride.”
Twenty parents gathered at School No. 262 last Thursday, some to demand the resignation of the teacher and others to defend her, NTV television reported.
The school refused to comment Thursday.
A classmate, Marina Blagonravova, said Lebedev was a good person. “He studied badly, but nobody said anything bad about him. He wasn’t a hooligan,” she said on Channel One.
The suicide has drawn attention to the control that teachers have over children in their charge. It comes just after a mother in Omsk complained that her 8-year-old daughter’s gymnastics teacher had forced the girl to stand naked on a table with one leg held in a vertical position above her head as punishment for allegedly stealing candy from another student.
Three years ago, a 15-year-old student hanged himself in Khabarovsk after being scolded by his teacher for skipping class, Gazeta reported. 
In March 2003, a fifth-grade student tried to kill herself by swallowing needles after a teacher caught her smoking and forced her to eat cigarettes.
In June, Vladimir Tastanbekov, the principal of a school in the village of Kosh-Agach, in the Altai region, beat an 11-year-old for cheating and stuck a sock up his nose. Tastanbekov was sentenced to 16 months of corrective labor, Gazeta reported. 
He was not barred from teaching.

Staff writer Kevin O’ Flynn contributed to this report.

TITLE: Tymoshenko’s Daughter Marries Singer
PUBLISHER: The Associated Press
TEXT: KIEV — A British heavy metal singer married the daughter of Ukrainian former Prime Minister Yulia Tymoshenko on Sunday in a ceremony that attracted a swarm of journalists and at least 100 well-wishers eager for a glimpse of the famous mother-in-law. 
Sean Carr, 36, lead singer of the Death Valley Screamers, and Evhenya Tymoshenko, 25, emerged from the walled Vydubitskiy Monastery to a salute of ringing bells and Scottish bagpipes — and the flash of dozens of cameras. 
The well-wishers — mainly elderly Ukrainian women — shouted “Happiness” in Ukrainian and English. The couple posed briefly for dozens of waiting photographers, and sipped from tall champagne flutes. 
Carr smashed his glass down on the pavement in a toast for happiness, prompting applause from Yulia Tymoshenko, who abandoned her traditional halo braid and wore her long blonde hair loose over her bare shoulders. 
Ukrainian media reported that the newlyweds had been reluctant to appear before the media, but the charismatic and media-savvy Yulia Tymoshenko persuaded them to pose for photographs. 
The newlyweds were driven away in a white, Soviet-era luxury car bedecked with flowers, while guests — many covered in tattoos and piercings — watched. The couple hosted some 150 guests at a private reception. 
Evhenya Tymoshenko, a student at the London School of Economics, met her future husband in a bar at an Egyptian resort, but the romance only began several months later at a British bikers’ festival.

TITLE: Amnesty Calls For Pressure
PUBLISHER: The Associated Press
TEXT: BRUSSELS — Amnesty International appealed on Friday for European Union leaders to take a tough line on Russia’s human rights record when they meet President Vladimir Putin on Tuesday. 
The London-based rights group released a report alleging “systematic” abuses by federal forces in the North Caucasus region. 
“There is no end to gross human rights violations in Chechnya and Ingushetia, with the Russian authorities implicated in the torture, abduction and secret detention of civilians,” it said. 
British Prime Minister Tony Blair is to host the EU-Russia summit Tuesday in London, leading an EU delegation that includes British Foreign Secretary Jack Straw, European Commission President Manuel Barroso (see story, page one).

TITLE: Radisson Hotel Swaps Owner
PUBLISHER: The St. Petersburg Times
TEXT: St. Petersburg’s Radisson SAS Royal Hotel changed its owners last week as 100 percent stakeholders in the hotel, Delta Private Equity Partners, sold its shares to the Norwegian holding Wenaas, the equity fund said Monday in a statement.
Experts estimated the sale to be worth about $30 million.
The 5-star Radisson hotel, on the Nevsky Prospekt, will continue to be managed by Rezidor SAS Hospitality, Paul Price, managing director of Delta Private Equity Partners said in a statement. The deal is at present awaiting its authorization by the anti-monopoly commission.
The Norwegian holding had tried to enter the St. Petersburg hotel market earlier this year. In April Wenaas Holding took part in an auction for 74 percent of hotel Moskva, which was eventually won by the Center for Investments with a $40 million bid.
The Norwegians had more luck on the secondary property market after the holding reached an agreement with U.S.-backed equity fund Delta Private Equity Partners. The deal will be the first of several the Norwegian holding hope to complete in Russia.
“With our plans for further expansion within hotel properties in St. Petersburg and Russia, it is very important for us to have succeeded with the purchase on Nevsky Prospekt,” Lars Wenaas, managing director of Wenaasgruppen, said in a statement.
“This investment shows that we have both determination and ability to make investments in centrally located hotel properties and gives us advantageous experience for future investments,” he said.
Delta Private Equity Partners had been looking to sell their stake since the start of the year. The fund had come as an investor in St. Petersburg’s Radisson in 1997, as the hotel’s main owner at the time, Hotel Corporations, was facing major financial difficulties.
The cash injection from the equity fund, together with support from the city administration, helped Radisson’s historical building be renovated in 1998, ready for a reopening in July 2001.
Marko Hytonen, area vice president of the hotel’s managing company Rezidor SAS, said he was encouraged by the sale to the Norwegian holding.
“Rezidor SAS welcomes the fact that the investors have shown such strong interest in purchasing our managed property in St. Petersburg,” he said Monday in a statement.
The head of St. Petersburg’s office of Colliers International, Boris Yushenkov estimated the sale of the hotel’s property at $20 million to $30 million. A representative of local developing firm Caspian, Roman Lvov, said the deal could have been worth as much as $50 million.
Yushenkov said that the appearance of strategic investors focused on long-term investments, like Wenaas, on the St. Petersburg market will help to make developers proposed projects that are more transparent and more liquid.
“Developers, starting a project, will think not only how to get things going, but how they will sell at a profit,” he said.

(Material from an article by Andrei Musatov in Vedomosti business daily was used for the report.)

TITLE: Knauf Invests $71M In Building Plant in Kolpino
AUTHOR: Yevgenya Ivanova
PUBLISHER: Staff Writer
TEXT: German building materials maker Knauf will invest 60 million euros ($71.4 million) in the construction of a plasterboard plant in the south of St. Petersburg, the company said Monday.
Knauf’s Russian subsidiary, Knauf Gips St. Petersburg, will start the plant’s construction in the Kolpino district this Tuesday, to be ready for production by the second half of 2006, the company said in a statement.
“Knauf will boost its efforts to develop the market for building and finishing materials in the Northwest region of Russia,” the statement said. “Setting up the production unit in Kolpino will create new work places and increase tax payments into the budget.”
The arrival of the new enterprise will annually add 350 million rubles ($12.2 million) to the regional budget, said Andrei Korotkov, head project management at the city’s committee for economic development, manufacturing and trade. The figure is an estimate based on an expected 1.7 billion ruble sales volume ($60 million), he said.
“Products made by Knauf are highly marketable, especially given the fact that our construction and renovation markets are currently on the rise,” Korotkov said.
Despite the German manufacture’s strong sales position in Russia, Gairat Salimov, analyst with Troika Dialog brokerage, saw Knauf’s move as an attempt to secure its market presence. 
“In the plasterboard segment, Knauf already has a very strong position from their exports. The fact that they are building a new production facility anyway shows that the company is trying to protect its market share,” Salimov said.
Knauf’s new facility could notably lower costs for local construction firms.
Igor Kovalyk, purchasing director at Sodruzhestvo construction holding, said his company currently buys building materials directly from Knauf. After the German company opens its St. Petersburg plant Kovalyk said his company could count on a 15 percent cost savings.
“Even if they won’t give us a lower price, we will save on delivery,” Kovalyk said. “At the moment we have to deliver [Knauf’s plasterboards] from Moscow, with the cost of one lorry load reaching 15, 000 rubles ($526).”
Sodruzhestvo uses 90,000 square meters of plasterboard a year, which means a potential 1million ruble ($350,000) drop in costs a year, Kovalyk said.
Construction firm Peterburgstroi Skanska, which buys Knauf’s plasterboards through suppliers, said the benefits would be as much in quality as cost-cutting.
“I regard the launch of a new factory as very positive due to two reasons. Firstly, it’s an investment into St. Petersburg’s economy, taxes into the budget, new technologies. Secondly, these building materials will be produced on a very high technological level … providing competition to the ones currently stocked by suppliers,” said Vitaly Votolevsky, general director of Peterburgstroi Skanska. “We, as consumers, will only win from the competition.”

TITLE: IN BRIEF
TEXT: Ford to Make Volvo
ST. PETERSBURG TIMES (SPT) — Ford’s Russian plant could start producing Volvo and Land Rover cars, the vice governor of the Leningrad Oblast, Grigory Dvas, said Monday at a meeting with Japanese businessmen.
“I do not dismiss the possibility of production facilities expansion due to local assembling of Volvo and Land Rover cars. [Ford’s] training center is already teaching specialists [to produce] those vehicle brands,” Interfax news agency cited Dvas as saying.
Ford’s Vsevolozhsk factory has a 200,000-vehicle annual production capacity, Dvas said. “By 2006 the production of Ford brand cars could reach 100,000 vehicles a year,” he said.

Lenenergo Splits in 3
ST. PETERSBURG TIMES (SPT) — St. Petersburg power monopoly Lenenergo has completed its restructuring last weekend. Since Oct. 1 Lenenergo is operating as three firms, the company said in a statement.
Lenenergo’s shareholders approved the reorganization scheme in April to separate the distribution, generating and network managing divisions of the monopoly into individual firms.
Other power monopolists, Kolenergo and Vologodenergo, which operate on the Kolsky peninsular and in the Vologodsky region, are also dividing into several companies.
The companies freed from the splitting of Lenenergo, Kolenergo and Vologodenergo will form into a single power company TGK-1.

Ford Gets New Boss
ST. PETERSBURG TIMES (SPT) — Ford Motor Company on Monday appointed a new general director for its Russian plant. Theo Streit took over from Murray Gilbert on Oct. 1, the company said in a statement.
Gilbert has not been appointed to a new position, but he will stay with the company, said Henrik Nenzen, president of Ford Motor Company in Russia.
Gilbert had managed the St. Petersburg plant since the construction started in 1999. He has stepped down after his contract expired.
Last year Ford produced 29,000 cars in Russia, an increase from 16,000 cars in 2003. Ford’s total sales in Russia recently reached 39 million cars.

Insurers Drawn to Tender
ST. PETERSBURG TIMES (SPT) — St. Petersburg regional fund for compulsory health insurance will hold a tender for private insurance companies to manage the fund’s assets in 2005-2006, Interfax reported Monday.
“It will be a single tender for companies to manage the health insurance fund for all citizens,” Interfax quoted the fund’s executive director Yury Mikhailov as saying.
The tender participants will face technical, financial and operating experience requirements. Should the winning companies be judged as not able to operate the fund efficiently, it can be dismissed unilaterally.

TITLE: IN BRIEF
TEXT: St. Petersburg Port Sale 
MOSCOW (Bloomberg) — Russia will sell a 48.79 percent stake in Sea Port St. Petersburg, part of the country’s largest port complex on the Baltic Sea, for at least 802.5 million rubles ($28.2 million) in an auction on Nov. 10.
Russia will accept applications to bid from Monday to Nov. 7, the Federal Property Fund said Friday in a statement. The auction will offer the federal government’s 20 percent stake and a 28.79 percent holding that is owned by the city of St. Petersburg.
The port, the biggest transport terminal in northwest Russia, increased shipping last year by 17 percent to 14.6 million tons of cargoes, the property fund said.

Abramovich Suit
LONDON (Bloomberg) — Roman Abramovich, who sold his stake in oil company Sibneft for $13 billion, faces a legal challenge to the deal by jailed Mikhail Khodorkovsky, the man whom Abramovich replaced as Russia’s richest, the Observer reported, citing an official at Group Menatep.
Khodorkovsky will claim the sale of Sibneft violates a legally binding agreement between the two men to merge Yukos and Sibneft, the report said, citing Tim Osborne, director of Menatep, the biggest shareholder of Yukos. 
The proposal to merge Sibneft and Yukos was abandoned after Khodorkovsky was arrested on fraud charges, the Observer said.

Ruble to Trade Freely
MOSCOW (Bloomberg) — Russia may let the ruble trade freely in three to five years, ending the Central Bank’s policy of buying and selling rubles to determine the exchange rate, Central Bank First Deputy Chairman Alexei Ulyukayev said Friday in Moscow.
The currency will become totally convertible, with no restrictions on capital operations, as of 2007, Ulyukayev said at a press conference.
The Central Bank buys and sells rubles in the domestic market to smooth out changes in the exchange rate and help fight inflation. President Vladimir Putin’s government is struggling to keep the annual rate below last year’s 11.7 percent.

Auto Cuts Jobs
MOSCOW (Bloomberg) — Severstal-Avto, Russia’s third-largest automaker, will cut 4,000 jobs this year to reduce costs, Interfax said, citing Chief Financial Officer Nikolai Sobolev.
Severstal-Avto employs 38,600 people at three production units, Interfax cited Sobolev as saying.
Car production at Severstal-Avto, including vehicle producer Ulyanovsky Avtomobilny Zavod and engine maker Zavolzhsky Motorny Zavod, fell 11 percent last year.
Severstal raised $135 million in April in an initial public offering of Severstal-Avto, less than the steelmaker expected, as investors expressed concern about the prospects for carmaking in Russia.

Severstal ‘05 Sales to Rise
YEKATERINBURG (Reuters) — Steel major Severstal forecasts 2005 revenues of $4.7 billion to $4.8 billion, compared with $4.6 billion last year, a company spokeswoman said on Friday.
She quoted General Director Anatoly Kruchinin as saying that Severstal expected earnings before interest, tax, depreciation and amortization, or EBITDA, to be up to $1.75 billion this year.
The numbers were to Russian Accounting Standards, which can differ from International Financial Reporting Standards, or IFRS, that Severstal also uses.
According to IFRS, Severstal’s 2004 EBITDA was $2.4 billion, with a margin of 37 percent. The company did not provide comparative 2004 figures to Russian Accounting Standards.
The spokeswoman also quoted Kruchinin as saying that the company planned to spend about 24 billion rubles ($842 million) next year on various investment projects linked to development of its key production unit in north-western Russia.
Last year’s investment was also around that level.

Norilsk 2005 Output
MOSCOW (Bloomberg) — Norilsk Nickel, the world’s biggest nickel miner, expects 2005 output of the metal to total 245,000 metric tons.
Copper production will be about 440,000 tons for the year, Norilsk deputy chief executive Denis Morozov said Friday at an investment conference in Moscow organized by Brunswick UBS.
Norilsk in July said it had produced 120,000 tons of nickel and 225,000 tons of copper in the first half of 2005.
Norilsk, whose smelters are inside the Arctic Circle, produces more than half the world’s palladium and a fifth of its nickel.

Mechel Investment 
MOSCOW (Bloomberg) — Metals and mining company Mechel expects to invest a total of $350 million this year as the company seeks to revive its flagging steel business.
Mechel’s steel business “is not very effective” and the company is “not fully up to speed” in this part of its operations, Chief Executive Vladimir Iorich said Friday at an investment conference in Moscow. Mechel expects to generate “real returns” from steel next year.
Mechel will invest a total of $200 million in the course of 2005 and 2006 in its Chelyabinsk Metal Factory, Iorich said. The company will invest $100 million to $120 million this year to improve coal production.

MMK Profit to Drop
MOSCOW (Bloomberg) — Steelmaker Magnitogorsky Metallurgichesky Kombinat, or MMK, expects profit to decline to $932 million this year, after posting a record profit of $1.2 billion in 2004 as prices for the metal peaked.
Sales for the year will probably reach $5.4 billion under International Financial Reporting Standards, said Mikhail Buryakov, head of integration policy at the Urals-based company. Revenue rose 58 percent last year to $4.8 billion.
European export prices for benchmark hot-rolled coil have fallen about a third in the last six months, according to Metal Bulletin. While steelmakers such as Demand in Russia is “still strong,” Buryakov said at an investment conference in Moscow Friday. Magnitogorsky currently sells about half its production on the domestic market and that figure is expected to grow, he said.

Aeroflot Plans Buys
MOSCOW (Reuters) — Aeroflot plans to acquire 12 Airbus 320 planes and two to five Boeing 767 aircraft as the state-controlled airline seeks to update its fleet, it said on Friday.
“In a year and a half we’ll take 12 additional planes of the A-320 family,” Aeroflot Deputy General Director Sergei Kharitonov told an investment conference in Moscow. He said the Boeing planes were likely to be acquired in about a year.
Kharitonov said Aeroflot also planned to replace outdated Tu-134 planes with foreign-made used aircrafts. Starting from 2008, Aeroflot intends to buy 30 planes used for regional routes. It will choose from either An-148s or RRJs, he said.

Russia Buying Sugar 
SINGAPORE (Blomberg) — Russia, the world’s biggest sugar importer, may buy 5 percent more of the sweetener than forecast last month as sugar-beet farmers struggle to meet rising consumption, a U.S. agricultural attache report said.
Imports may reach the equivalent of 4.2 million metric tons of raw sugar in the next 12 months, the Foreign Agricultural Service in Moscow said in a report Friday. That compares with a U.S. government forecast of 4 million tons on Sept. 12 and imports of 4.3 million tons in the year ended Sept. 30, 2005.

Ilyushin Exec Resigns
MOSCOW (SPT) — The general director of VASO plant, which makes long-haul Ilyushin-96-300 passenger liners, resigned Friday, Prime-Tass reported.
Vyacheslav Salikov, general director at state-controlled Voronezh Aviation Production Association, VASO had been in the position since 1998.
VASO chief engineer Mikhail Shushpanov was appointed acting general director, Prime-Tass reported.
Salikov’s resignation came the day after Prime Minister Mikhail Fradkov thrashed aviation industry officials for mismanagement and threatened to fire general directors of aircraft manufacturers.
VASO makes the Il-96-300 airplanes that were grounded in August due to problems with its braking system.

TITLE: Anti-Monopoly Rule Breaking Rockets
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — Violations of anti-monopoly law are poised to hit record levels this year, with state entities outpacing the private sector in terms of growth, the head of the state competition regulator said Friday.
The regulator expects state violations of anti-monopoly law to increase to 1985 this year, a rise of around 500 percent on the number of cases a decade ago, Igor Artemyev, the head of the Federal Anti-Monopoly Service, or FAS, said Friday.
Last year the competition regulator registered 1598 cases of the state abusing anti-monopoly law, slightly lower than in 2002 when the number of cases peaked at 1667, according to a transcript of Artemyev’s speech posted on the FAS web site.
In the past decade, violations in the private sector are up by around 10 percent, with 1432 cases expected by the FAS in 2005.
Economists also said the rise of detected violations could partly be attributed to an increased efficiency of the antitrust watchdog.
“The organization is becoming much more effective,” said Peter Westin, chief economist at Aton brokerage on the FAS.
The private sector might also be complaining more to the authority, economists said.
The types of cases have changed dramatically since 2000, said Artemyev.
More and more businesses are using tactics such as holding goods off the market in order to create a shortage, allowing them to then charge higher prices.
With the numbers of violations on the increase, the FAS is expecting the money it brings in through fines to increase to 224.5 million rubles ($7.8 million) this year. 
Between 2002 and 2004, total fines — which include profits resulting from uncompetitive behavior — came in at around 79 million rubles.
The level of fines is much lower than in the European Union. 
The data showing the growing number of anti-monopoly violations by the state comes on the heels of recent surveys in which entrepreneurs have complained about the state.
“ Our surveys suggest that average Russian businesses face more competitive pressures in recent years than in the past,” said John Litwack, the World Bank’s chief economist in Russia.
FAS marked the 15th anniversary of its founding Friday.

TITLE: Siemens’ Project With RZD Stalls Once More
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russian Railways, or RZD, has cast new doubt over a loudly trumpeted $1.8 billion project to develop high-speed trains with Germany’s Siemens. 
Last month RZD said it would review a contract with Siemens that was meant to be signed in June.
“The return on this project supercedes its lifespan,” the firm’s new president, Vladimir Yakunin, told reporters Friday.
While Siemens had formally provided documents on the train’s design, Yakunin complained that RZD would not receive any rights to it. He said that RZD had already paid some 49 million euros on the project.
In an interview with Kommersant published earlier that day, 
Yakunin said that RZD was potentially interested in developing a high-speed rail project with Finland. 
The paper quoted RZD vice president Valentin Gapanovich as saying that the company was now only looking to buy six high-speed trains — down from the 60 agreed on during a visit to Germany by President Vladimir Putin in April.
During a meeting with Putin on Saturday, Yakunin said that while talks on the project continue with Siemens, RZD was also in talks with two Italian companies, Interfax reported. 
Siemens is trying to downplay the statements from RZD.
“Until now we have had no reason to be disappointed,” said Siemens spokesman Bernd Edelmann on Friday, speaking by telephone from Munich.
“Today we finished the development contract. The next step will be the delivery contract that we are still negotiating. We will see at the end how many [trains] we will deliver.” 
Under a preliminary agreement Siemens was to develop and deliver high-speed trains to shuttle between Moscow and St. Petersburg from 2008.
But after his appointment in June, Yakunin put the brakes on the project.
If the project is derailed, it would be the second setback for Siemens this year in Russia. The Federal Anti-Monopoly Service in April rejected the German company’s bid for a controlling stake in engineering giant Siloviye Mashiny, or Power Machines, over concern it would jeopardize its defense production.

n  RZD will spend $614 million in the next three years to upgrade and expand its sole oil link to China, Bloomberg reported, citing RIA Novosti.
The company will spend $158 million next year, $263 million in 2007 and $193 million in 2008, the news service said.

TITLE: Hotel Boss Rates Work As Traveling Without Moving
AUTHOR: By Yekaterina Dtanitsyna
PUBLISHER: Staff Writer
TEXT: If you believe Marko Hytonen, then being a general manager of a hotel means that you generally are able to manage any hotel, in any country, irrespective of local exoticism.
On the other hand, Hytonen, general manager for Radisson SAS Royal Hotel in St. Petersburg and also area vice president for Rezidor SAS Hospitality, has always enjoyed fresh challenges.
“It is not such a big difference to manage a hotel in South Africa or Russia. People often think that it is, but it is not,” Hytonen said. Changing the country in which one works does not mean a complete transfer into the other. Despite culture and language difference, people can easily identify with a familiar management style, Hytonen said.
As the phrase goes — it’s a small world. Although during Hytonen’s 15 years with Rezidor SAS hotel management chain, working in locations as disparate as Oman, Kuwait, Russia, Norway, Finland, Switzerland, and South Africa, he has happened to bump into the same business travelers more than once.
But it might have been all quite different. As a teenager, Hytonen had thought of going on to study economics.
“I had already bought the books for the university entrance exams, but then I found out about hotel management schools in Switzerland. And the economics books went flying into the corner,” he said.
Hytonen’s career has been involved with hotels and travel ever since. A Finnish native, Hytonen rarely visits his homeland, but since joining Rezidor SAS in 1991, he has explored many locations — a part of the job he revels in.
“Look at it this way. You get a chance to see different cultures and places. It is really exciting to know what is going on in different countries at the same time,” Hytonen said.
“Of course it is also a challenge. Very often these moves happen quite fast and at short notice. So, you have to be flexible and like what you are doing,” he said.
Ever since the hotelier sector attracted the young Hytonen, his goal was to become a hotel manager. He succeeded relatively early on, in ’97 becoming the general manager of Radisson SAS Lazurnaya Hotel in Sochi, a Russian seaside resort on the Black Sea.
The next step, to an area vice president, required more strategic thinking and skillful medium-term planning. Overall, Hytonen says combining the two positions of the general manager and his regional duties is both a challenge and a very rewarding experience.
In part, this is due to the weight each individual hotel carries in the Rezidor’s chain, he said. The hotels and their general managers are given more authority, as the company’s structure tends toward decentralization.
“There is much less reporting in our company than in any average hotel chain. This gives us the possibility to focus on the customer, and not on the paper work,” Hytonen said.
Nonetheless, at Radisson in St. Petersburg, each morning starts with a morning briefing to the hotel team and the day continues, full of operational meetings with customers and other hotel stakeholders. The regional responsibilities often mean Hytonen has less time to spend on personally running the hotel.
Hytonen’s colleagues say the Finnish manager balances his two duties well. “Marko somehow manages to take incredible amounts of information in a very short space of time,” said Charles Otter, executive assistant manager at Radisson SAS Royal Hotel.
“He has a strong capacity to keep on top of all operational tasks, keep in constant communication with his department heads, provide support and, more importantly, have time to help them,” Otter said.
Recently, Rezidor SAS has restructured its regional divisions. Beside the Baltics and Russia, Hytonen was appointed to look after Turkey, Finland, Ukraine and the CIS countries. In parallel to his professional expansion, Hytonen says the company will increase the number of hotels in his region by at least five hotels a year to keep pace with the business development targets.
Rezidor SAS has five hotels in operation under the Radisson SAS brand name in Russia, one each in St Petersburg and Moscow, plus three properties in Sochi. The chain is currently in the process of expanding its presence on the Russian market, particularly in the 3-star segment under the Park Inn brand.
The first Park Inn hotel will open in Yekaterinburg this year and the construction of Park Inn hotels in Moscow, Kazan, Kaliningrad and Ryazan is expected to start within the next few months, Hytonen said.
Taking care of such a large geographical area leaves Hytonen with limited free time. However, he says he enjoys discovering for himself the city he and his family now live in. 
Before coming to St Petersburg in 2004, Hytonen knew very little about the city and he expected to get to know it easily. But even now, more than one year on, he confesses, he is only starting to really learn about St Petersburg having visited its major attractions: the Russian Museum, the State Hermitage, the Catherine Palace and other popular spots.
How long the Finnish manager will have to enjoy the northern capital is not completely certain, although Rezidor SAS managers usually spend a minimum of three years in a particular location.
“It takes one year to know the destination, another year to get to know the contacts and particularities of the place and then during the third year you start enjoying it all too much,” Hytonen adds with a smile.

TITLE: Charm and Consumerism Work Wonders
AUTHOR: By Roland Nash
TEXT: Anybody watching President Vladimir Putin sipping from a teacup during three hours of questions last week could not have failed to be struck by his composure and confidence. Here was a president in full control of his brief, whether it was a softball question on living standards or a more delicate inquiry over military conscription. Putin, the man in control, was defending Russia’s territorial integrity in the Kuril Islands one moment and fixing the plumbing for pensioners in Stavropol the next. 
The television broadcast was just the latest episode in Putin’s six-month charm offensive. Since the state-of-the-nation address in April, Putin has looked sternly competent in question-and-answer sessions with the international business community, the domestic business community, academia and now the general public. The question is — where is it all heading? When he is not shaking hands and looking professional, what is Putin’s actual game plan for Russia in the final two years of his presidency?
Only nine months ago, Putin faced a rising tide of domestic and international criticism. Ukraine’s Orange Revolution looked like a painful sign of Russia’s inability to project its influence even onto its closest neighbors. Pensioners, that least flappable of voting groups, were out on the streets protesting over the muddled benefits reform. Businesses were voting with their bank balances, shutting down domestic investment projects. And the Yukos affair was rumbling along, generating considerable quantities of slickly spun Western media criticism of Russia, which eventually proved pretty ineffective.
It has been a remarkable turnaround, and one that reflects well on the political professionalism of the president and his spin doctors. But it should not divert attention from the two themes that have underpinned the first six years of Putin’s presidency and will likely characterize his final two. From his inaugural speech as president in 2000 through to Tuesday’s call-in show, Putin has focused on generating economic growth and increasing the authority of the state. The president who promised to double the gross domestic product is the same president who has put such effort into gaining control over the strategic heights of the economy. 
Unfortunately, these two themes are not readily consistent with one another. A successful market-based economy does need a certain amount of stability in which to operate, and Putin can take credit for much of the pickup in growth during the early years of his presidency. But too much control takes the “free” out of “free market” and leaves businesses confused over whether they should be looking first to market signals or the Kremlin for direction.
Herein lies the dilemma of the Putin presidency. Over the last few months, we’ve seen the president promise to raise living standards further and to open up Russia more to foreign investment. It is pretty much inevitable that at some point over the next two years we will see a president who wants to ensure that Russia’s natural resource companies recognize the suzerainty of the state.
If the private market is not delivering growth in living standards in line with the Kremlin’s expectations, then we may well see intervention to fix the problem. Until recently, the Finance Ministry has proven remarkably successful at resisting lobbying pressure to spend some of Russia’s petrodollar windfall. Now, however, the political imperative appears to have won out. On top of the $4 billion first promised by Putin on Sept. 5, there is $6 billion extra oil money built into next year’s budget and lots of talk about publicly funded investment projects. 
This is not to say that Russia’s social infrastructure doesn’t need upgrading — it patently does. But the tension between control and market is evident when one judges the value of increasing spending without administrative reform to create a bureaucracy capable of implementing policy. Rather than improving infrastructure and stimulating growth, it could well result in inflation and, eventually, the opposite of the growth boost originally intended. 
On the other hand, we are unlikely to see any reforms that risk rocking the boat by pulling the state out of the economy. The sort of bold economic reform agenda of Putin’s first term is likely to be deemed too risky for the final years of his second. Land reform, pension reform and the marvelously simple 13 percent flat-rate income tax put power into the hands of the private market. It is unlikely that the same risk will be taken with liberalization of the electricity market, administrative reform or further changes to benefits entitlement, all reforms originally planned for Putin’s second term.
Perhaps the most important task for Putin to complete over the next two years is managing his succession. Putin has repeatedly emphasized the need to ensure stability during the transfer of power in 2008. With democratic institutions as young and fragile as they are in Russia, a simple vote is unlikely to be trusted by the Kremlin as enough of a guarantee of stability. Putin will want to help pick his successor, guide him through the electoral minefield and, as he hinted on Tuesday, assume a role in the next administration. 
On May 16, the senior judge in the case against Mikhail Khodorkovsky began reading out the verdict of the trial. On that day, the Russia’s equity market index, the RTS, marked a low of 630 points. Since then, the market has gained over 50 percent and on Wednesday broke through the historic 1,000-point barrier. That implies that the market capitalization of Russian industry grew from $300 billion to $450 billion in four months. Part of that rise can be attributed to rising oil prices. But equally, part of it is a direct result of Putin turning on the charm and drawing a veil over the Yukos factor by presenting Russia’s bright side to both international and domestic audiences. Powerful charm indeed. Sentiment toward Russia can change remarkably quickly, and it must have been well noted that any deterioration caused by a shift back toward greater state control to better manage the risks ahead of the 2008 presidential elections can be rapidly reversed by the right charm offensive.
Perhaps, however, the most important trend emphasized by Putin’s conversation with the nation is how little attention it drew from the majority of Russians. The decline in political opposition and public debate is often blamed on the successful engineering of Putin’s popularity and his parliamentary parties. But it is also a result of an increasing proportion of voters focusing first and foremost on their own well-being. Ironically, given the apolitical nature of a consumerist free market, the middle class’ apathy towards Putin is becoming the biggest barrier to any reversal of the promises made in his charm offensive. 

Roland Nash, chief strategist at Renaissance Capital, contributed this comment to The St. Petersburg Times.

TITLE: Business Loves a Boring Tax System
AUTHOR: By Natalya Shcherbakova
TEXT: Creating an attractive investment environment demands a number of ingredients and unlike in life, where we are more prone to accept uncertainties, businesses looking to expand particularly in the international arena want things to be simple and predictable. Along with political and economic stability, a developing market, and the availability of an educated labor force investors, whether they are foreign or local, look for a fair tax burden, clear corporate legislation and an impartial tax administration system.
Despite significant progress in the development of an attractive tax system in Russia over the last 15 years or so, the events of recent times have left some potential investors somewhat fearful of Russian taxation. The fear is often more the result of an emotional rather than an objective assessment, and many business opportunities that Russia has get ignored in the process. But the fear is not entirely unreasonable.

WHO’S AFRAID OF THE BIG, BAD TAX?
The domestic Tax Code has been in force for a relatively short period of time and there are still some misconceptions in regard to its application. Companies often try to be good taxpayers, but meanwhile feel that they have to be protective over what they pay out, so as to ensure that the payments are not distorted due to incongruous interpretations of tax legislation by the tax authorities.
It’s surprising the number of investors who either are not aware of or do not believe that the Tax Code is on their side: It is stated by law that any ambiguity in the Tax Code should be resolved in favor of the taxpayer. Of course, this cannot deter certain tax inspectors from taking disputes to the courts. However, statistics speak for themselves: Over 70 percent of tax disputes in Russia are decided in favor of the taxpayer.
But court success is not always enough of a consolation. Only the taxpayers can truly estimate the financial burden that comes with taking matters as far as the courts. That cost includes the distraction of senior management away from the business — which restricts development and consequently the amount of tax the company will pay into the budget — not to mention the financial costs of employing advisors.
The sad part of it is that a lot of disputes could be resolved without going to Court were the tax authorities to pay a little more attention to previous court rulings. Equally, the taxpayers could take more preventative measures to mitigate future misunderstandings over tax. Having said that, one has to be realistic and accept that tax disputes are not all about little misunderstandings.

NEW SHOES
Any relatively new legislation is going to cause some difficulties. What is perhaps seen as unacceptable by taxpayers is when there appears to be a lack of consistency in the interpretation and application of legislation by tax inspectors.
In addition, there is the practical inconvenience of tax audits. Currently tax audits include desk reviews — designed to check for the correct completion of tax returns — and documentary reviews, carried out by the tax authorities on the taxpayers’ premises to examine the company’s accounting and tax recording systems, as well as supporting primary documentation.
In practice, desk audits can be more burdensome for the taxpayer than having tax inspectors on the company’s premises carrying out a documentary audit. This is because the list of documents that can be required by tax authorities in the course of a desk audit has no limit, and nor is there one for the length of time a desk audit can take. Moreover, there are also no rules that require the procedure to be registered.
Which is not to say that having tax inspectors at your company’s premises for long periods of time, disrupting daily business practise, is in any way welcome.

CASTING SOME LIGHT
At present, business in Russia can take some stock from upcoming amendments to the Tax Code which regulate tax administration. Draft amendments to the first part of the Tax Code have already been submitted by the government to the State Duma. The first reading, scheduled for this month, will address some of the issues raised above, however clearly a lot more is required to help create an environment convenient for both the investors and the authorities.
In the draft there are a number of positive initiatives. These include the official list of documents that will be required during a desk audit. Tax inspectors will have to issue a formal act of inspection upon the desk audit that will give taxpayers the opportunity to object to the authorities’ findings, while keeping the main period of the tax audit (two months) the same. The time-scale will apply to the whole process: including all the actions of the tax authorities, as well as the submission of disagreements on documentary audits to specialized divisions not involved in such audits.
Since it is certainty that the taxpayer wants and needs, such moves by the government towards making the rules of the game clearer could only have a positive effect not only on the investment climate but on the country’s economic well-being as a whole.

Natalya Shcherbakova is a senior tax manager at PricewaterhouseCoopers in St. Petersburg.

TITLE: Captain Courageous
AUTHOR: By Chris Floyd
TEXT: Quietly, firmly, relentlessly, the good captain laid out the list of atrocities committed at the order of the enemies of freedom: “Death threats, beatings, broken bones, murder, exposure to elements, extreme forced physical exertion, hostage-taking, stripping, sleep deprivation and degrading treatment.” A catalogue of depravity, all of it designed — with diabolical sophistry -— by self-exalted men cloaking their violent perversions with sham piety and righteous sputum. This was terrorism on a grand scale, chewing up the innocent and guilty alike.
The good man is of course Captain Ian Fishback, the born-again U.S. Army officer who has blown the whistle on the systematic abuse of captives rounded up in President George W. Bush’s War on Terror, The New York Times reports. Fishback, frustrated after 17 months of trying to get the atrocities investigated through official channels, finally turned to Human Rights Watch — and top Republican senators — seeking redress for the bloody dishonor that Bush has brought upon America. 
In one sense, Fishback’s revelations — corroborated by other soldiers, now lying low to ward off the inevitable reprisals by Bush minions — are not news. For example, this column has been detailing the use of torture in Bush’s global gulag since January 2002. It was no secret; at first, the Bushists even bragged about it. “The gloves are coming off” was a favorite phrase of the deskbound tough guys cracking foxy to an enthralled media. 
They also boasted of “unleashing” the CIA, which set up its own “shadow army” of non-uniformed combatants operating outside the law — i.e., “terrorists,” according to Bush’s own definition — while creating secret prisons all over the world. As one CIA op enthused to The Boston Globe: “‘We are doing things I never believed we would do — and I mean killing people!” A senior Bush official proudly pointed to the ultimate authority for this deadly system: “If the commander in chief didn’t think it was appropriate, we wouldn’t be doing it.”
We now know that in the very first weeks of the War on Terror, White House legal lackeys began concocting weasel-worded “findings” to justify a range of Torquemadan techniques while shielding Bush honchos from prosecution for the clear breaches of U.S. and international law they were already planning. Bush and his top officials signed off on very specific torture parameters, including physical assault and psychological torment; even beating a captive to death was countenanced, as long the killer proclaimed that he had no murder in his heart when he commenced to whupping, The New York Review of Books reports. Indeed, the lackeys went so far as to establish a new principle of Executive Transcendence: The president, they claimed, could not be constrained by any law whatsoever in his conduct of the War on Terror.
Fishback saw the fruits of this vile labor in the vast Bushist holding pens in Iraq, where thousands upon thousands of Iraqis were herded, beaten and tortured — even though 70 to 90 percent of them were innocent of any crime, the International Red Cross reported in 2004. The incidents he and the other soldiers detailed took place before, during — and after — the photographic revelations of torture at Abu Ghraib. The mayhem “happened every day,” said the soldiers, and it was committed “under orders from military intelligence personnel to soften up detainees.”
“They wanted intel,” said a sergeant, one of the ordinary, untrained grunts pressed into duty as interrogation muscle. “As long as no [captives] came up dead, it happened. We kept it to broken arms and legs” — sometimes with baseball bats, and occasionally augmented by scalding naked prisoners with burning chemicals. The soldiers learned their “stress techniques” from CIA interrogators, dropping into Iraq from their “unleashed” torture centers in Afghanistan, Diego Garcia and points unknown.
But of course they didn’t always “keep it” to broken arms and legs. Fishback, who had been trying desperately to get his superiors to act on the atrocities he’d witnessed himself, discovered that a captive had been “interrogated” to death. From that point on, while still urging official action, he also began gathering evidence and testimony from fellow officers about the nightmarish regimen, the Los Angeles Times reports. When at long last he began to realize “that the Army is deliberately misleading the American people about detainee treatment within our custody,” he stepped out of the system — and into the storm.
What will come of the good captain’s moral courage? Nothing much. A Pentagon investigation has been belatedly launched; no doubt a few more bad eggs will be fried, just as the hapless Lynndie England, poster girl for Abu Ghraib, was convicted this week for “aberrations” that, as Fishback confirms, were countenanced and encouraged throughout Iraq. Fishback himself will be certainly slimed in one of Karl Rove’s patented smear campaigns. By next week, the upright, Bible-believing West Point grad — a veteran of both the Afghan and Iraqi wars — will be transformed by Fox News and the war-porn bloggers into a cowardly, anti-American terrorist sympathizer under the hypnotic control of Michael Moore.
Meanwhile, one of the Republican senators Fishback approached, Senate Majority Leader Bill Frist, has already put the kibosh on legislation setting clear legal guidelines for prisoner treatment. Frist, a goonish errand boy now under investigation for insider trading, killed the bill after hearing Fishback’s evidence. His White House masters don’t want any legal clarity for their dark deeds; they can only thrive in the murk of moral chaos.
One thing is certain: The true architects of these atrocities will never face justice. They’ll go on to peaceful, prosperous retirements, heedless of the broken bodies and broken nations — including their own — left behind in their foul wake.

TITLE: Russia’s Rich Drive Roaring Luxury Car Trade
AUTHOR: By Alexander Duncan
TEXT: Special to The Moscow Times
MOSCOW — The businessman in the white linen pants and flashy designer shirt ran his fingers over the 300,000 euro Lamborghini Murcielago, eyeing it as a new stablemate for his Bentley and Ferrari. He then hopped in and let a professional driver take him for a spin at a recent invitation-only test drive at Moscow’s Luzhniki Stadium.
“I would like to add one to my collection,” said the beaming businessman, who only gave his name as Vladimir. “I never thought about owning such cars growing up in the Soviet Union. ... Now that we see how the rest of the world lives, we want the same standard of luxury too.”
As Russia roars through its seventh straight year of robust economic growth, the market for foreign cars is expanding at a dizzying pace. But as an increasing number of Russians can afford to buy Mercedes and BMWs, the country’s super-rich are scouring Western Europe for ever more exclusive brands.
Unfazed by customs duties of up to 50 percent and a limited number of good roads — and seasons — to show off their wheels, Russia’s millionaires are forcing luxury car dealers to exceed sales quotas and raid other European showrooms to make up for the shortfall.
Sales of Bentley cars, which start at 220,000 euros ($264,000), are beating all expectations.
In 2003, when the British automaker opened its Moscow dealership, it sold 40 cars, double its quota for the country. The following year, Bentley raised its quota to 60 but ended up selling 95 cars. In the first half of 2005 alone, 140 models have been sold, suggesting that this year’s Russia quota of 230 will again be broken.
Ferrari has already reached its 2005 quota of 23 cars and is already taking orders for 2006, while Maserati is on track to reach its 2005 quota of 40 vehicles. Lamborghini, which has a 2006 quota of 20 cars, plans to join Ferrari and Maserati in Russia by opening a Moscow dealership in February.
In a country where just owning a Lada was considered a luxury 20 years ago, expensive foreign cars hold a special allure.
“Even since the early ‘90s, when people first got some money, the first thing they bought was a luxury car,” said Ilya Berezin, head of the auto division of the Mercury Group, which imports everything from luxury cars to designer jewelry and runs Moscow’s Tretyakovsky Proezd and TsUM.
“You could live in an old Khrushchev-type apartment and own one jacket and one suit. But the nice car — at the time it was Mercedes-Benz — was a must if you wanted to be recognized as a successful businessman.”
While the German troika of Mercedes, BMW and Audi have been making their mark on Russian roads for more than a decade, exclusive, limited-edition carmakers are newcomers.
“I think it’s a logical step to go to cars from clothes, watches, and jewelry,” Berezin said. “The cars we sell are not cars. They are luxury, fashion and pieces of art.”
Mercury’s first automotive project was the Bentley dealership, which opened in February 2003 as the country’s first luxury car showroom. Mercury made the initial investment and does the marketing for most of the brands it sells. Mercury declined to provide details of the company’s finances.
Russians are prepared to pay more than Europeans for luxury cars, since transportation and duties can increase the price of a Lamborghini by more than 50 percent, Berezin said.
As a result, a Lamborghini Murcielago, which retails at 195,000 euros in Europe, sells for more than 300,000 euros in Russia. Christian Mastro, the carmaker’s European area manager, laughed off the hefty price hike.
“For New Russians, luxury cars are just toys,” he said. “I see the same buying patterns in New Russians as in Saudi Princes. Russians really want the maximum. They get so emotional when they see cars.”
Although sales in Russia are still relatively small compared to Europe — last year, Lamborghini sold more than 600 cars there — luxury carmakers cannot afford to marginalize their clientele.
“Russia is important because the Russian customers are all across Europe. Many have two cars — they have one in Moscow and one in Monaco or London,” said Mastro. 
The obsession of rich and powerful Russians with expensive foreign cars can be traced back to the early days of the automobile.
Tsar Nicholas II’s imperial garage housed a fleet of more than 30 luxury automobiles, including Mercedes, Rolls-Royce, Packard and Delaunay-Belleville limousines. Government ministers regularly chastised the expense of acquiring cars abroad and maintaining the imperial garage.
For all their love of the working class, Soviet leaders were no different. Lenin traveled in a used Rolls-Royce, and Stalin founded the Zil limousine as the Soviet answer to Western limousines. Leonid Brezhnev had a collection of more than 50 cars, including Rolls-Royce, Cadillac, Porsche, Jaguar and Maserati models. Of course, none of the cars technically belonged to Brezhnev, but to the Soviet state.
Ordinary citizens had to content themselves with more humble Ladas and Moskviches that sometimes took years to acquire.
“In the USSR, it was hard to buy a car because of [shortages] and insufficient distribution. If you had a car, it meant you had the right connections, so in that sense it was a luxury even if it was a [Lada] Zhiguli,” said Tatyana Kapustina, retail and automotive analyst at brokerage Aton.
Ironically, many Russians are again putting their names on waiting lists for cars. DaimlerChrysler started taking orders for its 500,000 euro Maybach limousine in 2003 and the 580,000 euro SLR McLaren coupe in 2004. Porsche began selling its 590,000 euro Carrera GT last year. Rolls-Royce, Spyker, Lotus, Cadillac, and Hummer have all opened Moscow offices in the past two years.
Mercury plans to open a second Ferrari and Maserati showroom this fall and is in final negotiations with Bugatti to represent the French carmaker in Moscow.
While luxury automakers put down roots in Russia, no millionaire’s cash can do away with a short driving season and a dismal roads network.
That’s why dealers see luxury SUVs as a way to tap fully into the Russian market.
“Maybe in the next three years we can have a Lamborghini SUV here,” said Mastro. 
“We could sell upwards of 200 a year in this market.”
Bentley’s sales and the success of Porsche, Lexus, and Hummer have made Mastro optimistic.
Seventy-six percent of Lexus’ first-half sales this year were SUVs; and since opening its first Russian dealership last year, Hummer now has five locations.
The Porsche Cayenne SUV, which starts at 56,050 euros, accounted for a full 85 percent of Porsche’s Russian sales last year.
Oksana Khartonuk, marketing manager for Porsche Russland, said that the Cayenne’s success was letting Porsche expand into the regions. Porsche already has six dealerships outside Moscow and plans to open another four outside the capital — in Krasnodar, Novosibirsk, Kemerovo and Volgograd — by the end of next year.

TITLE: Bush Picks Loyalist For 2nd Court Spot
PUBLISHER: The Associated Press
TEXT: WASHINGTON — President Bush on Monday nominated White House counsel Harriet Miers to replace retiring Justice Sandra Day O'Connor on the Supreme Court, reaching into his loyal inner circle for a pick that could reshape the nation's judiciary for years to come. 
"She has devoted her life to the rule of law and the cause of justice," Bush said, announcing his choice from the Oval Office with Miers at his side. "She will be an outstanding addition to the Supreme Court of the United States."
If confirmed by the Republican-controlled Senate, Miers, 60, would join Justice Ruth Bader Ginsburg as the second woman on the nation's highest court and the third to serve there. Miers, who has never been a judge, was the first woman to serve as president of the Texas State Bar and the Dallas Bar Association.
Bush was among those invited Monday to witness John Roberts become the nation’s 17th chief justice.
A third vacancy on the aging court was possible before Bush’s term ends in 2007.
Following tradition, Roberts donned his robe and took the center seat on the bench before the opening gavel Monday. He replaces William H. Rehnquist, who died last month at age 80 after 33 years on the high court, 19 as chief justice.
In choosing Roberts, Bush passed over Justice Antonin Scalia, a conservative who had been considered a prospect for the job. Scalia was out of town last week and was the only justice absent from Roberts’ first swearing-in ceremony at the White House.
Roberts is the court’s newest and youngest member, but also its leader.
“It will take some time to figure out what the dynamics of the court are,” said Andrew Koppelman, a law professor at Northwestern University. “It will take them awhile to get to know each other.”
Complicating matters for the term is the uncertain status of O’Connor, who had expected to be off the court by now so she would have more time to care for her ill husband. She announced her retirement July 1, but the chief justice’s death delayed the plans.
Her retirement starts the day her successor is confirmed, which is expected to take at least two months, if not longer if the choice of Miers is contested.
O’Connor, a 75-year-old moderate and key swing voter, will continue participating in cases. Because rulings take months to prepare, her votes would not count if she retires before they are done.
“O’Connor could be on the court all term and end up casting deciding votes,” Koppelman said.
The Supreme Court meets for nine months. Its first week will be shorter than usual.
On Monday, the justices were due to hear two cases, one that asks if companies must pay for workers’ time spent changing into uniforms, and a second that questions whether states may tax fuel that is sold on Indian reservations.
Justices are not meeting on Tuesday because of the Jewish holiday Rosh Hashanah. Cases Wednesday include a Bush administration appeal over Oregon’s physician assisted-suicide law and a case that will clarify how parents of disabled children can contest education services.

TITLE: Europeans Spellbound by Eclipse
PUBLISHER: The Associated Press
TEXT: MADRID — Thousands of people across Portugal and Spain donned protective eyeglasses Monday to watch a rare and spectacular type of eclipse, which dimmed the Iberian peninsula beginning around 10 a.m. local time.
In Madrid, entire families and groups of enthusiasts met at the city’s planetarium beneath a cloudless sky to watch the eclipse directly or on a giant television screen. The event began with the moon taking a bite off the top of the sun.
During an annular eclipse, the moon masks the sun like a black plate, leaving a bright, fiery rim. The moon was too small to blot out the sun completely, as in a total eclipse, because its elliptical orbit has taken it too far from the earth.
However, the moon dims the daylight and drops temperatures slightly.
The rim of fire that appears around the moon glows brighter than the corona that is seen during a total eclipse.
“It’s quite spectacular,” said Dr. Stephen Maran, an astronomer with the American Astrological Society in Washington D.C.
The eclipse’s three-and-a-half-hour path first traverses Portugal and Spain.
The Iberian peninsula hasn’t witnessed an annular eclipse since April 1, 1764, and won’t see another one until 2028. The last total eclipse seen in Iberia was in 1912.
The eclipse’s narrow corridor will also travel across mostly deserted parts of Africa, encompassing Algeria, Tunisia, Libya, Chad, Sudan, Ethiopia, Kenya and Somalia.
Outside that band, a partial eclipse will be visible through protective eyewear over most of Europe, the Middle East, India and a large chunk of Africa, though some cloud cover is forecast on that continent.
Authorities reminded the public to avoid looking at the sun without eye protection.
In Spain, where the event stirred keen anticipation, opticians selling 1 million special protective glasses said Friday they had virtually sold out.
In Portugal, the General Directorate for Health distributed free glasses with daily papers.

TITLE: Merkel Gains Dresden Seat
AUTHOR: By Frank Ellmers
PUBLISHER: The Associated Press
TEXT: DRESDEN, Germany — Conservative challenger Angela Merkel’s party gained a seat Sunday in the last remaining district in parliamentary balloting, boosting her chances of becoming Germany’s first female chancellor and giving the party extra momentum in coalition talks to form a new government.
With all 260 electoral districts reporting, Andreas Laemmel from Merkel’s Christian Democrats won the contest for a seat in Dresden with 37 percent of the vote. He defeated Marlies Volkmer from Chancellor Gerhard Schroeder’s party, who had 32.1 percent.
While the outcome of the Dresden vote does not significantly alter the results of the Sept. 18 election, the strength of an extra seat in parliament is expected to give the conservatives a psychological advantage heading into coalition talks, which have been stalled because both Merkel and Schroeder claim a mandate to be chancellor.
Roland Koch, the conservative governor of Hesse state, said the vote confirmed the Christian Democrats and their Bavaria-only sister party, the Christian Social Union, as the strongest bloc in parliament.
“I see it as a step toward stability that we need to explain to the Social Democrats to stick to the rules,” Koch said before final results were announced. “I see it as a signal for Angela Merkel.”
The result Sunday increased the narrow edge held in parliament by Merkel’s party and its sister party, Bavaria-only Christian Social Union, from three seats to four, 226-222 over the Social Democrats in the 614-seat lower house.

TITLE: Bad Boy Doherty Held in Drugs Sweep
PUBLISHER: The Associated Press
TEXT: LONDON — Pete Doherty, the rock musician boyfriend of Kate Moss, was detained by British police in a drug sweep, his spokesman said Sunday. 
“I know that he has been held overnight by police in Shrewsbury” in central England, said spokesman Tony Linkin, who didn’t know whether Doherty had been arrested or charged.
A West Mercia Police spokesman refused to confirm whether the Babyshambles frontman was detained in a drug raid after the band’s concert at Shrewsbury Music Hall late Saturday. British newspapers reported last week that Moss checked into the Meadows rehab clinic outside Phoenix. Pictures of Moss, 31, apparently snorting cocaine in a London music studio were published in the Daily Mirror tabloid last month. She has since lost modeling contracts with H&M, Burberry and Chanel.
In a statement, the model said she is addressing her problems and takes “full responsibility” for her actions.
Babyshambles canceled Sunday’s sold-out show at the University of East Anglia. “I’ve been told that two of the band members aren’t available to play tonight,” said Nick Rayns, entertainment manager for the UEA Students Union.

TITLE: Bali Rocked by Suicide Bombs
AUTHOR: By Chris Brummitt
PUBLISHER: The Associated Press
TEXT: BALI, Indonesia — Investigators hunting for the masterminds of three suicide bombings on the popular resort island of Bali hoped to identify the bombers Monday using photographs of their severed heads circulating in newspapers nationwide. 
Police also sought three accomplices believed to still be on the Indonesian resort island, and officials enlisted a former operative of Southeast Asia’s top terror group to help track down the plotters of Saturday’s attack, which killed at least 19 people and wounded about 100.
The suspects in the near-simultaneous bombings on three crowded restaurants were believed to have been fitted with explosive belts that blew apart their torsos. But their heads were intact, swollen and bruised but remarkably well-preserved, said Indonesian anti-terror official Major General Ansyaad Mbai.
The heads — and a chilling video capturing a suspected bomber strolling past diners at one of the cafes moments before it was blown up — could provide a tremendous boost to the investigation.
Mbai said results could come within days. He said police think at least three other people were involved in the attacks and probably were still at large on Bali.
“If the past is any precedent, they have planned safe houses and lying low, letting the first dragnet pass over head,” said Ken Conboy, a Jakarta-based security consultant and author of an upcoming book on terrorism in Southeast Asia.
Mbai did not say whether the suspected accomplices included Azahari bin Husin and Noordin Mohamed Top, Malaysian fugitives whom police allege may have masterminded the attack — and the 2002 bombings on the same island three years ago that killed 202 people, many of them foreign tourists.
Mbai also said police believe the bombs, which were packed with ball bearings to inflict maximum damage over a wide area, were detonated by mobile phone.
Police were going from room to room interviewing survivors at Bali hospitals. Australian police were also assisting in the investigation, sorting through the wreckage for clues.
Nobody has claimed responsibility for the attacks at two seafood cafes on Jimbaran beach and at the Raja Cafe in the bustling tourist center of Kuta, all packed with diners on the busiest night of the week.
But suspicion immediately fell on Jemaah Islamiyah, whose members were convicted in the 2002 Bali nightclub bombings, and two other deadly terror attacks in the world’s most populous Muslim country in 2003 and 2004, both in the capital Jakarta.
Authorities have enlisted the help of a former Jemaah Islamiyah operative to help track down the masterminds in Saturday’s bombings. Nasir Abbas, who has testified against former colleagues in trials, arrived on Bali two hours after the blasts, working as an informant for police.
“Police are using him to help find which group is behind this operation. Former terrorists can help give details,” Mbai said.
Twelve Indonesians, two Australians and one Japanese man were among the 26 people killed on Saturday. Officials were trying to identify the nationalities of the other corpses in the morgue, a hospital statement said.
The 101 wounded included 49 Indonesians, 17 Australians, six Americans, six Koreans, four Japanese, officials said.
Death tolls have varied because the blasts dismembered the bodies, making them hard to count. Sanglah, the main hospital treating the victims, posted a death toll of 29. A police spokesman, Major General Aryanto Budihardjo, told reporters in the capital that 22 had been killed, including the three bombers.
Australian tourist Vicky Griffiths was dining with her husband, Kim, when the bombers struck at a packed seafood restaurant, throwing her over a table and to the ground. She told the Australian Broadcasting Corp. television on Sunday that she was able to get up and walk away.
“But I didn’t realize I had the ball bearings in my back until they X-rayed me. I’ve had a lot of pain. I thought it was a broken rib, but I’ve got ball bearings from the blast,” she said. 
In one neighborhood in Bali, residents erected a banner reading: “What has my Bali done to deserve this?” 
Drinks vendor Carsen was among many Balinese residents whose shock over the carnage has started turning to anger after attackers again targeted the tropical resort island, which relies heavily on tourism.

TITLE: Tour Boat Sinks, 21 Lost
AUTHOR: By Chris Carola
PUBLISHER: The Associated Press
TEXT: LAKE GEORGE, New York — A seemingly ideal day of sailing along a calm but busy mountain lake turned abruptly tragic Sunday when a tour boat carrying a group of senior citizens overturned, killing 21 people and injuring dozens more. 
The glass-enclosed Ethan Allen was carrying tourists from Michigan on a fall foliage tour when it capsized shortly before 3 p.m. The accident on Lake George may have occurred when the boat was hit by the wake of a larger vessel, Warren County Sheriff Larry Cleveland said.
“We haven’t ruled anything out yet,” Cleveland said.
The 40-foot boat was carrying a tour group from the Trenton, Michigan, area, and was sailing just north of the village of Lake George, a popular tourist destination about 50 miles north of Albany in the Adirondack Mountains. With calm waters, clear skies and temperatures in the ‘70s, it seemed perfect boating weather.
U.S. Representative John Sweeney, who talked with survivors at the hospital, said the boat flipped in about 30 seconds, giving victims no time to react. The sheriff said none of the passengers was able to put on a life jacket.
Adult boat passengers are not required to wear life jackets in New York, but boats must carry at least one life jacket per person.
Patrol boats that reached the scene within minutes found other boaters already pulling people from the water. All passengers had been accounted for within two hours.
Twenty-seven people were taken to a hospital in nearby Glens Falls. Some suffered broken ribs and others complained of shortness of breath. Seven survivors were admitted, hospital spokesman Jason White said.
Dorothy Warren, a resident who said she brought blankets and chairs to shore for survivors, said one passenger told her “she saw a big boat coming close and she said, ‘Whoop-dee-doo. I love a rocking boat.’”
Warren said the woman did not know how she got out of the water but said her mother was killed.

TITLE: Chelsea Holds 37-Match Winning Streak
AUTHOR: By Stephen Wade
PUBLISHER: The Associated Press
TEXT: LONDON — Chelsea kept its Premier League record perfect with an emphatic 4-1 victory over Liverpool at Anfield on Sunday on goals from Frank Lampard, Damien Duff, Joe Cole and Geremi. 
The Blues have won their first eight league games — allowing only two goals. They are unbeaten in 37 straight league matches. 
It was also the seventh match between the two clubs in a year — and their second in four days. After a drab 0-0 draw Wednesday in the Champions League, this one was attacking and entertaining — and Chelsea left no doubt about its superiority. 
Lampard converted a penalty in the 27th minute after Djimi Traore brought down Didier Drogba in the area. Steven Gerrard equalized in the 36th, driving home a sharp-angled shot from 10 meters after the ball bounced through the area off a corner. 
Chelsea regained the lead in the 43rd. Drogba cut back a ball from the left wing, with Duff stretching to score from six meters.
Cole made it 3-1 in the 63rd, and again Drogba was in the mix. The Ivory Coast international broke down the left side and, as Liverpool goalkeeper Jose Manuel Reina came out, Drogba slipped the ball through to Cole, who chipped it home from close range. 
Geremi scored in the 82nd, seconds after coming on as a substitute. 
The loss offered a minor moral victory for Liverpool; the Reds managed to dominate possession at times, and scored only the second goal this season against Chelsea in league play. 
Chelsea is unscored on in two other official matches this season — both in the Champions League. 
The two clubs have played seven times in the past year, and have overshadowed the longtime rivalry between Arsenal and Manchester United. Chelsea is 4-2-1 in those seven games. The lone loss came in the semifinals of last season’s Champions League — ousting Chelsea. 
Liverpool went on to win its fifth Champions Cup title, beating AC Milan on penalties in the finals. 
Arsenal, Manchester City, Wigan and Middlesbrough also picked up key victories. 
Arsenal sneaked a 1-0 victory over Birmingham at Highbury, taking advantage of Stephen Clemence’s own-goal in the 81st minute. 
Second-half goals from Danny Mills and Darius Vassell lifted Manchester City to a 2-0 victory over Everton. Wigan defeated Bolton 2-1, and Middlesbrough beat Aston Villa 3-2. 
Arsenal struggled in the match at Highbury, despite playing with a man advantage from the 24th minute, when Kenny Cunningham was sent off with a red card. 
The Gunners should have put the game away in the first half, but Birmingham goalkeeper Maik Taylor foiled Jose Antonio Reyes several times, and then stopped a penalty by Robert Pires. 
“We were very lucky,” Arsenal’s Robin van Persie said. “It wasn’t a good match. It was very hard playing against them.” 
Arsenal improved to 13 points in seven games. Birmingham has only six points from eight games. 
In Man City’s victory, Mills scored on a dramatic strike in the 72nd minute, beating goalkeeper Nigel Martyn on a right-footed drive from 25 meters. Vassell added his in injury time. 
Man City’s victory moved the club into sixth place, with 14 points from eight games. 
For Everton, which finished fourth last season in the Premier League, the loss left the club in last place with only one goal through seven games. It was Everton’s fifth straight league loss. 
Only Arsenal has played longer than Everton in the top-flight of English soccer without being demoted. But the Toffees are in real danger this season. 
“You should find out more about people in adversity, but I have been saying that for three or four weeks now,” Everton manager David Moyes said. 
Newly promoted Wigan continued to be the surprise of the league, improving to 13 points from seven games. Henri Camara and Lee McCullouch gave Wigan a 2-0 lead after 63 minutes with Radhi Jaidi pulling Bolton closer in the 68th. 
In Middlesbrough’s 3-2 victory over Villa, Aiyegbeni Yakubu scored twice for the winner — in the 33rd to open the scoring and in an 88th-minute penalty to make it 3-1. George Boateng scored Boro’s other goal.

TITLE: Greco-Roman Gold Awarded At World Championships
PUBLISHER: The Associated Press
TEXT: BUDAPEST, Hungary — Olympic champion Armen Nazarian of Bulgaria won the gold medal Sunday in the 132-pound Greco-Roman division on the last day of the World Wrestling Championships. 
Justin Ruiz of the United States won a bronze medal in the 212-pound category after Margulan Assembekov of Kazakhstan was disqualified for three cautions by the referee. 
“This is the biggest accomplishment I have had in wrestling,” said Ruiz, a two-time U.S. national champion. “I feel great winning a world medal. It is one of my goals. I had a setback last year not making the Olympic team.” 
Ruiz said the new scoring rules, which seemed to confuse some wrestlers and coaches as much as referees and the public, contributed to his victory. 
“I think [Assembekov] didn’t know what was going on,” he said. 
Hungary took the Greco-Roman team title with 41 points, ahead of Russia (27) and Turkey (26). 
Turkey’s Hamza Yerlikaya defeated Hungary’s Lajos Virag to win the 212-pound category, while the title at 265 pounds went to Cuba’s Mijail Lopez, who beat Hungary’s Mihaly Deak-Bardos. 
Nazarian defeated Iran’s Ali Ashkani Agboloag in winning his third world title. He was elected to wrestling’s Hall of Fame on Sunday. 
“I want to continue because you can never have too much success,” he said. 
Yerlikaya, a two-time Olympic champion, also took home his third world crown, although the previous two were at 181 pounds, in 1993 and 1995. 
“Losing didn’t even cross my mind,” Yerlikaya said. “I feel I’ve managed to get settled in this weight category, where I’d like to remain.”
Lopez, a five-time winner at the Pan American Games, easily beat Bardos. Bardos was competing in his fourth consecutive worlds final and fifth overall, but has had to settle for silver each time. 
“It’s been a long time since I felt so much pressure,” Lopez said. “The home venue, the large crowd, everything favored the Hungarian.”

TITLE: Sports Watch
TEXT: Low Scoring Weekend
ST. PETERSBURG (SPT) — FC Zenit St. Petersburg failed to score against Saturn at Petrovsky Staudium on Sunday in an exceptionally low-scoring weekend in Russia’s championship.
Champions Lokomotiv Moscow stayed top, two points ahead of bitter rivals CSKA after both sides also fought out goalless draws. 
Lokomotiv were held at Dynamo Moscow while CSKA drew 0-0 with FC Moscow. Two other games finished 0-0 as the 16 first division teams managed only six goals between them. 

Swimmer Injured
 WARSAW (Reuters) — Otylia Jedrzejczak, Poland’s Olympic gold-medal-winning swimmer, is expected to recover from a car crash Saturday in which her brother was killed, doctors said on Sunday. 
“She is in good condition, is now being moved to a hospital in Warsaw and should recover after three or four months of physiotherapy,”  Dr Wlodzimierz Nowatorski, chief surgeon at the hospital in Plock to which she was rushed, told a news conference carried by Poland’s private news channel TVN24. 
Jedrzejczak’s brother Szymon, 19 and also a swimmer, who had just enrolled at Warsaw’s Physical Education Academy, was killed on impact when the car crashed into a tree. 
A world record holder who won butterfly gold at the 2004 Athens Olympics and this year’s World Swimming Championships in Montreal, Jedrzejczak, 22, ranks among Poland’s best-loved sport personalities.

Murray Tests Federer
BANGKOK, Thailand (AP) — Top-seeded Roger Federer successfully defended his Thailand Open title Sunday by defeating British teenager Andy Murray 6-3 7-5.
The world No. 1 has now won 24 consecutive ATP finals including seven the season.
“I had to work hard to get to this point. There are tough challengers, but not this week,” said Federer. “I’m amazed with myself, and hopefully I’ll keep doing this in the future.”
After the match, Federer spoke about his young opponent: “He’s got a repertoire of shots, he has slice, and his volley is alright. He reads games well. … He has potential to become a good player. Consistency is what’s missing in his game, and he’s not 100 percent sure of his game.”

UEFA Cup Successes
ST. PETERSBURG (SPT) — Three Russian Premier League teams advanced to the group stage of the UEFA Cup on Thursday, including the tournament’s defending champ, CSKA. 
In play in the second leg of the first round, FC Zenit St. Petersburg beat AEK Athens 1-0, Lokomotiv Moscow beat Norway’s SK Brann 3-2, and the capital’s CSKA beat FC Midtjylland 3-1, vaulting all three Russian teams into the tournament’s next stage. 
The country’s fourth UEFA Cup hopeful, Krylya Sovietov, fell in the Netherlands to AZ Alkmaar 3-1, allowing the Dutch side to advance on away goals, each side having scored six goals across the teams’ two meetings.
CSKA beat Sporting Lisbon of Portugal in May for the UEFA Cup title, becoming the first Russian team to clinch a European championship.

TITLE: Gadgets For Spies, Flights And Dating Isles
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: When you book flight tickets, does the question of who will sit next to you on the plane make you anxious? Do you get distracted at work trying to remember if you switched off the iron? Or do you just want to find a decent friend? Worry no more. Browsing the latest hi-tech innovations, its seems IT firms are scrambling to offer solutions to very personal problems — from loneliness, to nervousness, to envy.

U.K. software developer Visible Technologies has developed an IT solution that transmits pictures taken by a video camera to a mobile phone. Presenting the product at a telecommunications conference in St. Petersburg last week, Tony McDonagh, the CEO of Visible Technologies, said that the system was invented to deal with security issues.
Called I-ONit, the system was designed to inform mobile phone subscribers when their home was being broken into by intruders. “However, it’s not every day, or twice a day, that we face a burglary,” McDonagh said.
He added that the service might be useful for anxious parents and pet owners eager to keep an eye on the situation inside their home while at work or out shopping. On the other hand for the more cynical or paranoid among us, the service could also help to keep tabs on a housebound spouse.
If the U.K. firm’s innovation has people separated by distance, the latest invention from DataArt, a Russian-American software outsourcing company, focuses on human relations up close.
The company has launched a web-based service called AirTroductions, an in-flight registration and networking platform that could allow passengers to “find the perfect seatmate by matching up like-minded flyers,” said the author of the idea, Peter Shankman.
The solution promises to sort passengers looking for business contacts, for a date or just for a quiet, fuss-free seatmate in harmonious pairs. People about to fly can enter their personal profile at the airtroductions.com web site, and the service will then match them up with another traveler who has similarly left their data online. The pair can then arrange to meet at the airport and ask the check-in assistant to seat them together, DataArt said.
Launched earlier this year, the service has already attracted over 1,000 registered users.
For those interested in match-making to find friends or romance on a more permanent basis, a spate of mobile phone content providers have in the last year set up special offline communities.
Using either SMS or Web Access Portals as its base, Russia’s leading content provider i-Free created an off-line community project called Jamango.
The project creates a virtual island which subscribers access through their mobile phone. Using interactive icons, Jamango community users pick dating and informational services, interactive games, music downloads, horoscopes, and anecdotes.
Since its launch last year, Jamango has attracted 1.2 million subscribers, while i-Free say the potential for the off-line community is as much as 60 million mobile phone users.
Jamango functions similarly to an Internet communication service, while being available to mobile phone subscribers no matter what handset they use.
Kirill Petrov, the managing director of i-Free, even saw this as a step towards the “evolution of the mobile services market.” Rival company Nikita seemed to agree. 
This year, the competitor launched its own version of a mobile phone community called Gorod Znakomstv (The City of Dating).
In high contrast, U.K. software developer Codant aims to conquer Russian and Ukrainian consumers by laying hope on people losing their mobile phones altogether.
Codant has worked out an IT solution that backs up on the computer all the data contained in a person’s mobile phone in case of theft or loss, Jamal Berber, the head of Codant, said last week at a telecommunications conference organized by the Russo-British Chamber of Commerce.
In addition, Codant’s software allows those that have an account with web chat applications ICQ and MSN to access them from a mobile phone.
Eldar Murtazin, leading expert at Mobile Research Group, notes that software innovations largely come from IT firms and not from mobile network operators, since the latter are only interested in traffic and not what stimulates the traffic.
"Telecom companies try to use GPRS and other similar schemes so as to minimize the involvement of mobile network operators in producing and delivering mobile content," Murtazin said. "So in a way, they are doing the work of the operators, and earning from it."
 According to Mobile Research Group, the annual market for mobile software is worth $25 million. Only seven percent of that is spent on truly innovative, sophisticated services, Murtazin said.

TITLE: IT Parks: Placebo or Panacea
AUTHOR: By Alexander Yankevich
PUBLISHER: Special to The St. Petersburg Times
TEXT: Probably the biggest event for the industry of Information Technology in Russia this year was the government’s decision to set up five IT parks in the country. Though met with some skepticism at home, the idea of gathering different IT companies in one space has prospered for  more than 40 years, stimulating industry growth in the U.S., India, Finland, and elsewhere. How has it worked abroad and what could it potentially do for Russia?

An IT park is a territory with adequate infrastructure on which a concentration of companies in the technology sphere work side by side. IT parks come in two types: “incubator” projects, suitable for start-up firms, and large business-center style constructions housing recognizable market players. The first type especially relies on the nearby presence of a higher education establishment, where new ideas for projects that could turn commercially viable, originate.
An ideal model for IT parks connects the research facilities with the production process, placing together all the links in the chain that take a scientific idea and make it into a commercial product. Aside from universities and companies, parks rely on support from the local authorities and beneficial federal legislation.

THE WORD FROM ABROAD
The most prominent IT parks in the world today include India’s Bangalore and the French Sophia Antipolis project. However, the world’s first park originated in the U.S., literally in a green field. In the early ’50s, Stanford University in California started to rent space in its “back yard” to technology companies, which worked on state and military orders.
After 30 years of slowly developing the space into a science park, the territory grew to be known as Silicon Valley. More than 160 IT parks operate in the U.S. today.
In Europe IT parks appeared only in the early ’70s. Some of the first were the research park in Edinburgh, ran by the Heriot-Watt university, the science part on the grounds of Trinity College in Cambridge, the Louvain la Neuve in Belgium, and a zone for scientific and technological innovations and production (ZIRST) in Grenoble, France.
Sophia Antipolis appeared more than 30 years ago, and in the last 10 years alone has created more than 10,500 jobs. 
The IT park occupies 2 hectares of space, where offices of about 1,000 European and American firms are located, including the headquarters of the European Telecommunications Standards Institute.
Although the main support for the French project has come from the European Union, rather than French government itself, more than 400 million francs were pumped into the park in the ’70s to start it up, with a similar amount invested since in expansion and the building of residential quarters. The private sector has contributed about 300 million francs to set up construction facilities and purchase equipment.
The other star on the global map of IT parks is Bangalore in India, which developed as a result of massive investment from the government to kick-start a local IT outsourcing industry. Currently, India runs three kinds of IT parks: software technology parks, export processing zones, and export-oriented units.
The Bangalore project began work in 1984 after sealing a contract with U.S. firm Texas Instruments. Today, the park accommodates more than 80,000 IT specialists, working in close contact with a network of about 55 universities and colleges.
Even if India has only 13 IT parks in the whole country, the volume of the sector is enormous, making the country the global leader in IT outsourcing. India’s parks employ nearly half a million people working in 1,300 companies altogether.
Other countries demonstrating a high tempo of development, such as China and the Philippines, have also latched onto the IT park idea. China has a long-term IT park program that is supported by the government. The crux of the support lies in tax breaks for companies working in China’s 50 parks; for the first few years the tax rate may be set at zero.
A leader among Far Eastern countries in technological regard, Japan was one of the first to initiate an IT park scheme in the region. In 1983 Japan’s government passed a special law that supported a development of domestic IT parks by building new towns.
According to the Japanese model, the new towns, or technopolises, have been set up in 19 special zones spread evenly between the country’s four islands. Each techno-polis must be no more than 30 minutes ride on public transport from its “parent-city” that has a population of at least 200,000. And each polis is no bigger than 500 square miles in size.
The brightest example of a Japanese IT park may be the town of Tsukuba, 35 kilometers from Tokyo. It houses 11,500 people, working in 50 governmental research institutes and two universities. 
Thirty of the country’s 98 state research facilities are found in Tsukuba, although the private sector is not as strongly represented there.
Examples closer to home show that Finland, which with a population of 5 million — almost that of St. Petersburg — has about 20 IT parks. Next year, even Cyprus plans its own IT park. The island country has met with strong industrial competition from Asian producers, pushing Cyprus to push ahead with the project in record time. 
Technical and financial feasibility studies for the park will complete this year, while meeting with investors and design and planning will begin in 2006. The government has agreed to sponsor all infrastructure works, leaving the rest of the expenditure to be covered by local authorities and businesses. 

FORGOTTEN TOWNS
As much as it seems that Russia is lagging behind in the construction of IT parks, examples of earlier progress at once inspire and frustrate. In the ’50s the Soviet government had supported the building of three academic towns: near Novosibirsk, Yekaterinburg, and Vladivastok. All three were research towns with all the infrastructure and financial backing necessary.
The town near Novosibirsk, for example, combined 40 research and education facilities. After the perestroika era financing for the towns was severely reduced, with only recently some attempts made to reverse the situation.
This year the Russian government has finally addressed the need to stimulate the domestic IT industry since President Vladimir Putin’s January speech in Novosibirsk promised several key reforms. 
The president’s visit to Bangalore the previous December had not been in vain, it seems. 
The first step in the process has been to set up a law for Special Economic Zones, worked out by the Economy and Trade Ministry. The law has been updated from an earlier draft of 2003 to provide beneficial tax conditions and ease of customs duties, among other benefits, for companies operating in the special economic zones. The zones will divide into manufacturing and research centers.
The second step has been to designate five cities as homes to specialized IT parks: Novosibirsk, Nizhny Novgorod, the Moscow region’s towns of Dubna and Chernogolovka, and St. Petersburg. The five will act as pilot projects for further development of the IT park model in the country.

WHO WILL PAY?
The IT parks program has been estimated by the government to cost about 123 billion rubles ($4.3 billion). Of this, about 20 billion rubles, or 16 percent, will come from the federal budget, a further 15 billion rubles, or 12 percent is expected from private Russian investors, and the other 88 billion, or 72 percent, will come from “non-budget sources,” the Deputy Minister for IT and Telecoms, Dmitry Milovantsev, said in August.
In addition a $100 million state venture fund will be set up to generate investments into the IT industry, Milovantsev said after a round table on the IT parks project in St. Petersburg.
As a result of the IT park project, the Ministry for IT and Telecoms expects the value of the IT sector in Russia to reach 1 trillion rubles ($35 billion) by 2010. Should the program not be successful, the annual growth of Russia’s IT outsourcing market could drop to 11 percent from 2007, which would damage domestic companies’ competitiveness on the global market, representative of the ministry said.

TITLE: Problems With Calling Mr. Putin
AUTHOR: By Yelena Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: As President Vladimir Putin hosted his now annual Questions & Answers phone-in session last week, thousands of people jammed the telephone lines, eager for direct contact with the country’s top politician. The event may not have left everyone satisfied, but the reasons are not only political. Experts in the field of information technology and telecoms say a culture in which the public is able to contact businesses or government structures via the telephone is just emerging in Russia. Some Russian telecoms companies, however, say call centers are already a core part of their business.

The country’s third-largest mobile operator, MegaFon daily processes more than 43,500 phone calls in the Northwest region through its customer support network of call centers. Based in St. Petersburg, the call center network operates more than 100 lines — the biggest such operation in the region.
In 1995, the company started with just five operator lines, but in 10 years the communication link has grown in practical importance and in terms of image, spawning additional call centers in Murmansk, Arkhangelsk, and Cherepovets, which work together with the St. Petersburg center.
“We’ve always thought that the call center operators personify the whole image of the company,” said Nikolai Demenchuk, deputy director and commercial director at the North-West branch of MegaFon. The company trains its call center personnel in general, as well as technical, knowledge to ease the communication with clients.
Olga Belova, head of customized research department at ACNielsen marketing information agency, sees the greater trust Russian companies have in call centers as a trend that takes root from the methods employed by Western businesses. No longer set up in small offices with dated equipment, “the market for call centers in Russia is upgrading,” she said.
For the moment, the pioneers of call center technology in Russia remain firms involved in mobile and fixed-line telecommunications, banks, insurance companies, and publishing houses. However, taking into account Western experience, the technology and operational techniques of Russian call centers approach those found abroad, said Yury Pesnya, general director at Telecom Design.
Specializing in call center servicing, consulting on center business planning and economics, as well as personnel training programs, Telecom Design works with many firms on the domestic market, although the majority of Russian companies prefer to organize call centers without outside help, Pesnya said.
In the last few years the demand for new call centers “has significantly grown, but it is still many years behind [the West],” he said. 
Despite the shift towards using service centers as a way of communicating more with clients at companies like MegaFon, PeterStar, or outsourcing provider Spic, the main hurdle to surmount in installing a more general phone-in culture is the political situation of the country, Pesnya said.
In the U.S., governmental services use call centers as the main source of feedback from the population as well as to provide information concerning all state activities and legislation, Pesnya said. In Russia, this approach does not even exist.
“It was during the monetarization of social security benefits this year when they made a hot line to answer people’s questions,” he said. “Unfortunately, it didn’t work out. People either couldn’t get through or just didn’t get answers to their questions.
“Neither on a federal nor on a regional level have any attempts to set up call centers for governmental structures been made,” Pesnya said. “People have lots of questions about their rights and duties but they just don’t know where they can learn about it.”
The creation of Russia’s phone-in culture may well be left up to businesses. Even if the country’s biggest call centers do not yet exceed 200 or 300 staff, while those in Asia, North and South America and Europe at times employ thousands, the sector could become a significant jobs solution for Russia’s more remote towns and settlements.
“Some call centers abroad, for example, in England provide thousands of workplaces. One call center can give jobs to nearly all citizens of a small town,” said Pesnya.
Although most of services in a call center are fully automatic, human staff will remain a vital requirement for business.
“It can be psychologically wrong to make all the services automatic, because people just feel better speaking to a human than to an answering machine,” said MegaFon’s call center manager, Ludmila Shadrina. “Besides, a machine cannot solve many of the problems our subscribers face,” she said.

TITLE: Portal Combat
AUTHOR: By Ilya Shatilin
PUBLISHER: Special to The St. Petersburg Times
TEXT: In terms of new technology, wars mean some perfectly good systems die out, while others — more efficient, or perhaps better promoted — monopolize the field. It happened in video when VHS defeated rival systems Betamax and Phillip’s Video 2000. It happened with computer operating systems when Microsoft squeezed competitors into oblivion. The latest technology battle is taking place over cell phone content channels. Welcome to WAP versus i-mode.

Those looking for new mobile phone handsets may be a little disappointed this fall. Since last month’s seizures of illegally imported cell phones worth more than $10 million, the market for handsets has gone rather quiet. On the other hand, the war for ways to provide mobile phone content has shifted another gear after the country’s largest mobile network operator, Mobile TeleSystems, or MTS, launched i-mode.
I-mode, a portal to extra mobile services such as entertainment and information sites, has been launched for MTS phones thanks to a strategic partnership between the Russian company and Japan’s No. 1 mobile phone operator NTT DoCoMo, which set up the portal in 2003. With this MTS has become the Japanese operator’s eleventh strategic partner around the world to support i-mode.
The portal requires the subscriber’s mobile phone to have an i-mode key. For this reason the five mobile phone “newbies” on sale as of this fall — Samsung S342i, Samsung S410i, NEC N343i, NEC N411i and LG L342I — share the common trait of being “copies” of previously available mobile handsets with the addition of i-mode browsing capabilities.
For the moment, the sale of the new handsets has been limited to the country’s second-largest mobile retail chain Svyaznoi and the offices of MTS. What’s more only users in Moscow and St. Petersburg can actually use the i-mode service.
MTS signed the contract with NTT DoCoMo to be valid for Russia, Ukraine, Belarus, and Uzbekistan, but it will be another year before the i-mode reaches into CIS countries.

THE BENEFITS
Beside Internet access, each i-mode subscriber is given a personal e-mail address that is accessed and managed on the mobile phone (number@imode.mts.ru).
Despite differing claims from MTS, the service is in many ways similar to the good old web access portal feature, or WAP, which has been available on mobile phones for at least five years. Of course, the web sites supported by i-mode are better designed and more colorful than their WAP equivalents, but this has much more to do with the restrictions of older telephone handsets that wish to use WAP. It is now more than possible to make a flashy WAP site.
The key difference between i-mode and WAP is the element of subscription.
For a fee of about $2 or $3 the mobile network subscriber buys access to a particular i-mode site. If it is an information site, the subscriber gains access to articles or stories. If it is a site with java games, melodies or pictures, the subscriber pays to download a certain number of them a month. With melodies, for example, this works out to about 20-30 melodies a month.
At the end of the month, the subscription is automatically renewed. The user pays another $2 or $3 per site and continues to download. And yet, the very same articles, games, and extra services are also available on WAP sites, even if the subscriber chooses to access them through the i-mode portal.
From a user point of view, the subscription would benefit only active mobile phone users.
For example, of course it works out much cheaper to download 20 or 30 melodies every month for $3 than pay a content provider $1 per melody download.
THE RIVALS
Russia’s other major mobile networks, Vimpelcom, which operates under the Beeline brand, and MegaFon, have been rather skeptical of MTS’s big-money launch.
“All the very same services that will be available through i-mode are either already open to our subscribers” through a WAP-based extra services package called Chameleon, said Yevgenya Aleshko, spokeswoman for Vimpelcom in St. Petersburg.
At present, nationwide Vimpelcom has about 2 million subscribers that use WAP services. The company plans to set up its own WAP portal in the near future to widen the choice of services, Aleshko said.
“What we are doing is pretty much the equivalent to i-mode, with the main difference being that our services do not require users to have a phone that supports i-mode. Handsets that have i-mode buttons built in are generally more expensive than standard cell phones with WAP access,” she said.
The country’s third-largest operator MegaFon promotes its extra services portals under the MegaFon.Pro brand. It offers two ways to access the Internet through a mobile phone, a WAP-Portal and a SIM-Portal, both of which do not require the purchase of a special handset and hence appeal to a wider audience, said Margarita Gorbachova, spokeswoman for MegaFon in St. Petersburg.
“The target audience for information and entertainment services is younger people. They will think twice before going out to buy a new handset, which in all other respects [apart from having i-mode] is quite average,” Gorbachova said.
“WAP has recently gained a new wave of popularity in Russia. In addition, there are many WAP sites with Russian language content, including sites created by independent companies, something that [i-mode] cannot as yet boast about,” she said.

THE FUTURE
Going one step ahead, MegaFon recently launched Mobile Television. Owners of smartphones with decent resolution on the display of their mobile, are now able to tune in to 10 channels, including MTV, Rambler, and the business news channel RBK-TV.
Of course, to screen TV channels the phone uses a lot of Internet traffic. However, the mobile operator has decided not to charge for the traffic used by the phone, but to set up a monthly subscription fee for the service, of not more than $15.
MTS plans to launch a mobile TV service in Moscow at the start of 2006.

TITLE: Father of Java Blessed Under the Sun
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: James Gosling created the Java programming language in 1991, a code that today is used by about 5 million programmers, more than 600 million desktop computers, 800 million cell phones, and which has served as a base for nearly all games designed for mobile phones. For his achievements the inventor, who also designed the NeWS windowing system and Gosling Emacs, was elected to the U.S. National Academy of Engineering.
Since 1984, Gosling has worked for global software programming and services giant Sun Microsystems. Currently, he is the company’s Chief Technical Officer.

ON JAVA:
How did you come up with the name Java? Does it stand for anything?
It’s not an acronym, it doesn’t relate to anything. It’s almost a randomly chosen word. The name which I originally produced was Oak. When we wanted to release it we had to make a trademark check to make sure it did not violate anyone else’s trademark. And of course it did, there’s very few words that don’t. So the whole name choice was dominated by the lawyers and the trademark selection. We had this one get-together of a dozen engineers, when we sat and shouted random words across the room. Afterwards, we passed on the list to lawyers and said: Go top to bottom and the first name that clears the trademark process we take. And [Java] was it.
Also we liked the name because of the connection it had with caffeine.
How did Java start?
Java got started in a research project, where we were looking to the impact of digital systems outside the conventional computer industry. The Jave language evolved from looking at how practice was impacted by software engineering and how this collision was influenced by computer networking.
It got launched as a product at about the time that the Internet got started and had a meteoric rise during the Internet boom. But when the Internet bust happened, Java’s technology was hardly affected at all. You find Java used all over the world: Internet, smart cards, financial systems, cell phones. It’s really the dominant computer platform today.
Can it be challenged by a new programming language?
I hope that there will be some new language, whether it comes from us at Sun Microsystems, or from another company. There’s some bits of languages about at the moment, but nothing that gets me excited.

ON THE FUTURE:
What is the future of technology?
Forecasts are a slippery thing. New technology may be moved by artificial intelligence. Personally, I think the dominant platform for the next few years will be the cell phone. A mobile handset today has the power of a desktop PC of a few years ago. The interesting question for me is how is that going to shift the interaction people have. Ten years ago most people used desktops and web browsers. Now people are using cellphones to interact.
In Spain they have developed a cell phone platform that keeps all the financial and trade tools in the handset. So you can take a long siesta, but not be out of touch with the office news. In Japan people sit on the subway with a monocle in their eye that’s almost glued to their cell phone. The monocle allows the mobile phone screen to show widescreen TV. I think last year more than half of Brazil paid their taxes using a mobile phone.
So I am interested in how far it will go, but there is a limit to how many cellphones we can sell, that being the world’s population. In Brazil, with the government subsidizing phones, that penetration is already 100 percent.
Do you think the totally online future will mean more control over people? And will this control threaten a world that can be ruined by an unfriendly virus?
If that happens – it will be evil. I am happy to say that with Java we have developed a system that has never suffered a virus. One of the things that the folks at Microsoft like to say is that there are all viruses and there are Microsoft viruses, because they are such a big target. But in actual fact, if you ask the criminal what they will go after, they will say money. And if you look, most of the world’s biggest transaction systems are Java based. And there have been no failures due to Java coding systems. There are a couple of Symbian viruses that exist for cellphones, but they have no connection to Java – they take advantage of a few weaknesses in the defense of Bluetooth. What’s more Symbian phones all use Microsoft Windows systems.

ON BUSINESS:
What kind of corporate culture does your company have?
Sun Microsystems is a fairly unusual company in that we stand on innovation: We give engineers and developers a little bit more freedom than most companies do, give them time to explore things. We have a fairly distributed innovation model. Not everything gets done in the central lab. Mainly, that is because we tend to hire very senior, very talented engineers throughout the company.
What is your company’s stand on corporate blogs?
It is certainly a tool that we use to reach customers and programmers. There are some rules, but no one at the company has to have their blogs approved as such. Naturally, you are not allowed to do anything illegal on your blog, like divulge any corporate secrets, but Sun has almost no secrets so it’s easy.
Considering the sensitivity of technological innovations, does Sun Microsystems follow a strict corporate discipline?
Yeah, I haven’t actually detected any corporate discipline at Sun. One of the great joys and one of the great frustrations about working at Sun is that it’s a free-flowing and chaotic model. Sun is a very de-centralized company. We do have a hierarchy, but fundamentally things work by people sending an e-mail around. Individuals have a lot of weight in the decision process.
Who are your competitors globally and especially in Russia?
For software platforms we compete with Microsoft. We have competitions around tools, and Microsoft and IBM are the big tools vendors. All our big competition around hardware, and here it is the usual suspects: Hewlett Packard, Dell, and IBM.
Microsoft and Sun Microsystems: friends or foes?
Yeah, we’ve had a lot of history… [laughs] and court cases. There was a period about 10 years ago when we had good cooperative relations. But when the top management at Microsoft decided that this cooperation was to the detriment of the company’s financial gains, and it waned.
We still have a contract with Microsoft. Mainly we continue to cooperate heavily around the evolution and implementation of web services. And we have access to all their internal specifications … Basically, we build products that are about compatibility with Windows.
Applemac versus PC: do you have a preference?
About three years ago I would have said the desktop computer had no future full stop. But I’m really happy with what Apple has done with desktops, they have really made them neat and attractive.

ON RUSSIA:
Why has Sun Microsystems picked St. Petersburg as one of its four global centers to focus on in the next few years?
Unique minds. St. Petersburg has a mass of underemployed talent, which is vital for us, because we demand a very complex set of IT decisions. It’s possible for financial firms to give their standard tasks to India to get done in six months. That’s pretty standard slog work. What we do at our software development centers is quite different.
Russia seems to have put faith in the IT parks model. Do you see it as beneficial?
It’s not necessary to collate everyone in an IT park … I think we would consider it, but we have just moved to a new building in St. Petersburg and could not switch immediately. I find that the biggest problem with Russia are the visas. It must be the messiest legislation in the world.

ON GOSLING:
Do you continue to develop new software today?
I certainly enjoy software developing the most. However, nowadays that is a very small part what I do. My job now means a lot of traveling to talk to clients, programmers – not for promotions or more sales, but to communicate and work out what our clients need so as to have guidance to develop future products.
Any plans to retire?
Hmm… What does it mean to retire? For some that comes after having children, when you lose the ability to work 16 hour days, which in some places is a requirement for software engineers. The limiting factor as far as I am concerned is: Does your brain stay sharp and can you learn new things?