SOURCE: The St. Petersburg Times
DATE: Issue #1175 (41), Tuesday, June 6, 2006
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TITLE: Putin Sidesteps Criticism on Media Freedom
AUTHOR: By Judith Ingram
PUBLISHER: The Associated Press
TEXT: MOSCOW — President Vladimir Putin on Monday sidestepped harsh criticism of the level of media freedom in Russia, telling an international media meeting that Russia could not have made the huge transition from the Soviet era were it not for the press. 
“Without a free press, the great transformations of the 1990s would have been simply impossible, and today I would like once again to underline the not only special but irreplaceable role of the written word in the making of the new Russia,” Putin said at the World Newspaper Congress. 
Putin said that many in the world still fail to acknowledge the “grandiosity” of the changes Russia has gone through since the Soviet collapse and, with a hint of sarcasm, thanked delegates to the World Newspaper Congress for not allowing themselves to be “scared off” by dire reports of a lack of media freedom in Russia. 
Putin was responding to an address to more than 1,700 delegates by Gavin O’Reilly, president of the World Association of Newspapers, who appealed personally to Putin to “take vital new measures ... to help your great country develop the strong independent press that it merits.” 
After Putin arrived at the dais in the Kremlin Palace, two young people stood up, unfurled a red-and-white flag with a hammer and sickle on it and chanted, “Putin is the executioner of freedom!” 
Security agents bundled the two, apparently members of the radical National Bolshevik Party, out of the hall. 
Critics at home and abroad have accused Putin of stifling media freedom as part of a broader effort to increase the Kremlin’s control over Russian politics and society since he came to power more than six years ago. 
The three main nationwide television channels are controlled by the state and do not criticize the president, a situation rights activists say is reminiscent of the Soviet era. In addition to television and radio stations, many newspapers and magazines remain highly dependent on local and regional authorities. 
Putin’s reference to the changes of the 1990s was telling for its omission: He took over as prime minister only in 1999, and became president the following year. He did not directly address any of the criticism O’Reilly made of the worsening media climate during his six years in office. 
O’Reilly told Putin that many of the organization’s members had disagreed with the decision to hold the congress in Russia, saying they saw the state as “reluctant to forego control and influence over the media.” He said that while the government had taken some steps in the tax sphere to ease the lot of newspapers, they “must be accompanied by dramatic improvement in the political environment in which the press operates.” 
He said the state encouraged self-censorship and suggested that the former domination of the media by the so-called oligarchs — politically connected tycoons — had been replaced by state control. Putin challenged that, saying that state ownership in media was decreasing while the number of media outlets was increasing. 
“Our belief is that history will judge your legacy as president, whether in Russia or in the rest of the world, as much by the fate of the media — perhaps more — than by any other measure,” O’Reilly said. 
Putin pointed to the venue, where the Soviet Communist Party used to hold its congresses, as proof of the distance Russia has come. 
“Today we are discussing problems of a free press and, in a pretty critical vein, we, the hosts, are listening to our guests. It would have been impossible even to conceive of this 15 years ago,” Putin said. 
“Though it’s true, we couldn’t get away from the Bolsheviks,” he said, referring with a smile to the demonstrators. 
Putin arrived too late to witness the presentation of the 2006 Golden Pen of Freedom award to Iranian dissident Akbar Ganji, but he did watch a video summary of media freedom violations all over the world, including in Russia’s allies Belarus, Uzbekistan and Turkmenistan. 
According to the World Association of Newspapers, media organization leaders from 110 countries are attending the annual event. 
n 
Larry Kilman, director of communications for the World Association of Newspapers (WAN), who was quoted in the report “Journalists Shut Out of World Press Event” by Martin Burlund, published last Friday, would like to make it clear that “no foreign journalists have been prevented from attending the WAN events taking place” in Moscow this week.
In an e-mail to The St. Petersburg Times, Kilman said he felt the report, which detailed how some foreign correspondents are denied visas to Russia, was “misleading” and “paraphrased the reasons... that the events were being held in Moscow.”
Kilman also wrote that he felt that the report “exaggerated what I said about the number of people who opposed coming to Russia — as the massive participation shows, most people have no objection to coming at all.”
(SPT)

TITLE: G8 Activists Claim Police Are Exerting ‘Pressure’
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Less than six weeks before the G8 heads of government summit in St. Petersburg, opposition activists have said the police have begun to apply pressure on them to “keep quiet” when it is held on July 15-17. 
Members of both left- and right-wing opposition groups have been summoned to police offices en masse for “informal talks” and in at least one case even an elderly relative of an activist was questioned by the police.
Seventy-eight-year-old Iosif Abramson, a veteran anti-fascist campaigner and one of the leaders of the St. Petersburg Marxist Association received an unexpected call last week from Ilya Galchuk, an investigator with the Moskovsky District police. 
“The young man introduced himself politely and said he had been instructed to invite me to his office for a talk, as part of an anti-extremist crime-prevention campaign,” Abramson said in a telephone interview with The St. Petersburg Times on Monday. 
“I was stunned. For a moment I was bewildered and lost for words. My organization is fighting against extremism and xenophobia, and I was more than surprised to be held as a potential suspect,” Abramson said.
Vladimir Soloveichik is a left-wing St. Petersburg politician and one of the organizers of the Second Russian Social Forum. 
The Forum is an umbrella event organized by Russian members of the international antiglobalist network with support from opposition movements to serve as an “alternative summit” to the G8 meeting.
Soloveichik said the police started contacting oppositional groups after May 31.
“They do not send official summons as they know very well that this is against the law for the police to question people about their political beliefs,” he said. 
“The main purpose of these conversations is to tell us to keep quiet during the summit. The police say that openly. They also ask us in detail about our ideological beliefs, financial means and even what websites we browse.”
The police officers either telephone the activists at home or simply show up at their door, as was the case with Soloveichik and a fellow activist Yevgeny Kozlov.
“I was not at home, so the officer questioned my 67-year-old mother who is so sick she has not been able to venture outside her apartment for the past several years,” Soloveichik said. 
“They asked the old  woman whether she ever belonged to any political party and whether she attends any political gatherings or owns a car,” Soloveichik said.
Abramson said the activists are preparing an appeal to the Russia’s ombudsman Vladimir Lukin and will file a complaint with the city prosecutor’s office. 
Although St. Petersburg is hosting the international meeting of ombudsmen this week, the city doesn’t have its own representative. 
The St. Petersburg Legislative Assembly has not been able to elect a city ombudsman for the past eight years.
Maxim Reznik, the leader of the St. Petersburg branch of Yabloko, an opposition party, said he is aware of the fact that his name is on the list to be questioned.
“Maybe they find it embarrassing: I head the local office of a major political party,” Reznik said. 
“I am sure there will be provocations — at least the whole attitude of the law enforcement strongly suggests that — and should the opposition give the police the slightest excuse, the response is certain to be repressive.”
As the meeting of the leaders of the world’s top eight industrialised economies nears, the police have launched a much-advertised massive anti-extremist campaign.
In May, the city prosecutor’s office trumpeted successes in the campaign when members of the Mad Crowd nationalist-extremist group were detained for possible ties to the killing of an African student as well as murder in the June 2004 fatal shooting of prominent racial issues expert Nikolai Girenko, 64, as revenge for Girenko’s testimony in court against another extremist group, Schultz-88.
The police went on to give a personal warning to many politically active St. Petersburgers whose politics differ from those of the government.
“The police are contacting members of the opposition as if they were involved in extremist activities,” Soloveichik said. 
“One worker from the Nevsky District was not even a member of any political party or movement.
“He was called in for questioning simply because he had attended public meetings of human rights groups from time to time, and his face grew familiar.
“This is how being a socially active citizen makes you ‘an unreliable element’.” 
Human rights advocates say law enforcement or security service representatives often send a cameraman to film meetings, who aims the camera at the participants’ faces.
“Some people, especially the younger ones, the newcomers, try to protect their identities by pulling scarves over their faces,” said Yekaterina Varguina, an activist with the St. Petersburg Antiwar Committee. 
“But of course this is naive. No piece of cloth can save you from the piercing eye of security agents,” Varguina said.

TITLE: Lawmaker Accused of Extorting $300,000
AUTHOR: By Mike Eckel
PUBLISHER: The Associated Press
TEXT: MOSCOW — A regional lawmaker faced expulsion from Russia’s upper house of parliament Monday after federal security agents allegedly caught him accepting $300,000 in extorted money — a sting operation. 
Levon Chakhmakhchyan was the latest lawmaker to be targeted in what appears to be a widening crackdown on corruption and a further tightening of Kremlin control over Russia’s far-flung regions. During his state-of-the-nation address last month, President Vladimir Putin said endemic corruption was hampering the nation’s development. 
State-run television prominently broadcast footage Monday of Chakhmakhchyan, from the southern region of Kalmykia, being questioned on Friday after agents from the Federal Security Service detained two associates allegedly in possession of a black briefcase containing marked bills. 
Chakhmakhchyan, who was at the Moscow offices of an airline with his associates, was released because of his parliamentary immunity, the Prosecutor General’s office said in a statement. 
Prosecutors said that the two associates of Chakhmakhchyan — one of whom was his son-in-law — had sought to blackmail a businessman to avoid a negative report on his company’s activities by Russia’s main financial watchdog, the Audit Chamber. 
Chakhmakhchyan denounced the operation as a provocation, the RIA-Novosti news agency reported. 
Sergei Mironov, speaker of the parliament’s upper house — the Federation Council — asked the Kalmykia regional legislature to recall Chakhmakhchyan as its representative to the council, spokesman Vladimir Yeremenko said — stripping him of parliamentary immunity. 
Chakhmakhchyan is the latest regional politician to be targeted for alleged corruption. Prosecutors on Monday charged Mayor Yevgeny Ishchenko from the southern city of Volgograd with alleged abuse of office and illegal business activities; state-run television broadcast footage of his arrival at a Volgograd courthouse. 
A week earlier, Governor Alexei Barinov of the far-northern Nenets autonomous region was detained on suspicion of fraud, a move that followed the regional legislature’s refusal to recall Nenets’ representative to Federation Council. The Nenets representative, one of four senators who have recently been forced out, later stepped down voluntarily. 
Since coming to office in 2000, President Vladimir Putin has sought to consolidate central control over Russia’s often unruly regions. He pushed legislation depriving provincial governors of their seats in the upper house, and replaced them with representatives named by provincial legislatures on the Kremlin’s blessing. 
Following a series of terrorist attacks, Putin backed sweeping legislation that abolished the direct election of regional governors, effectively making them Kremlin appointees. 
Analysts said the anti-corruption campaign also appeared to be part of the jockeying for power by political clans — from the Kremlin down to the regions — in the run-up to the 2008 election. 
Christopher Weafer, an analyst with Moscow-based Alfa Bank, said the fight against corruption and bureaucracy would likely be a prominent issue in the election, which Putin has promised not to run in. 
Nikolai Petrov, an analyst with the Moscow Carnegie Center, also said that, because of the lack of transparency or public accountability in government, the corruption campaign was unlikely to root out its core causes. 
“It’s naive to think that, at least as far as (corruption) is concerned, anything will change because of this,” Petrov said.

TITLE: Lawyer Describes Horrifying Attack
AUTHOR: By Christopher Hamilton
PUBLISHER: Special to The St. Petersburg Times
TEXT: Resting with a concussion under observation in the hospital, human rights lawyer Ivan Pavlov has had time to reflect on who was behind the attack last Wednesday morning near his home.
“I was putting my briefcase in the backseat of my car when some guy asked me if I had a screwdriver,” said Pavlov. “I said I didn’t and proceeded to open the driver’s side door... With my back turned to him I was about to get into my car when he hit me in the back of the head with a hard, sharp object. I fell to the ground and did my best to cover my head. He was then joined by 2-3 more men who jumped out of the car parked behind mine. The men continued kicking me in the head and torso. After a while they left without taking anything [and] sped off in a silver Lada. Covered in blood I went back upstairs and called for an ambulance and was rushed to the hospital.” 
According to Pavlov, the police came and took a report, but they didn’t open a case. “The police are too busy planting flowers in preparation for the G8 summit,” he added sarcastically.
Pavlov received several stitches across the back of his head, was diagnosed with a concussion and was held under observation. He was released Monday evening. 
“The doctors said that if I had passed out when they attacked me it would have been much worse,” he explained. 
Pavlov is the director of the Institute for Information Freedom Development (IIFD), an NGO that actively takes different governmental organizations and state-run enterprises to court in order to force them to publicly release information that according to the Russian law or the Russian Constitution should be made freely available to the public. 
On the same day of the attack, Yelena Golubeva, another lawyer who works at the IIFD, said she avoided what could have been another altercation by not answerng the door of her office to two suspicious-looking men.
“My experience tells me that attacks like these are usually connected to serious commercial interests. I have ruled out political motives, the government tends to work by using the legal system. They are able to pressure legal framework, the courts, lawyers, in high profile cases like the one that sent [Mikhail] Khodorkovsky to jail,” Pavlov said. 
“More likely this is connected to a case that we won this February against the Federal Agency for Technical Regulation and Metrology, or Rostechregulirovanie. My colleague Yury Skobin is the plaintiff in the case. By having Yury file the case we were able to have the case heard in St. Petersburg’s Krasnogvardesky District Court. Had the Institute filed the case we would have gone to Basmanny District Court in Moscow where Rostechregulirovaniye is headquartered,” Pavlov said.

TITLE: Kiosks to Close to Battle Piracy
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: St. Petersburg retailers have until the end of this month to close kiosks at metro stations in compliance with a decree signed by Governor Valentina Matviyenko to try to halt the sale of counterfeit goods — including pirated CDs and DVDs that a report released last Thursday says account for 95 percent of all those sold.
“Criminality in business related to intellectual property has reached such a scale that it significantly affects all parts of the national economy,” Interfax quoted Yury Samokhvalov, deputy head of the department for economic safety at Interior Ministry, as saying last Thursday.
According to Matviyenko’s decree, by the end of June all retail outlets will be removed from metro stations, with the exception of newspaper outlets and box-offices. The action is said to be aimed at sales of counterfeit CDs and DVDs in particular.
According to statistics from the Russian Anti-Counterfeit Society, only 5 percent of videotapes and CDs sold in St. Petersburg are licensed.
Pirated goods are distributed through both irregular markets and legitimate shops. In the largest retail chains 10 percent of CDs and between 30 percent and 40 percent of DVDs are counterfeit, according to the research.
Other popular items that are copied are industrial products and cosmetics. About 70 percent of medicines sold in St. Petersburg are thought to have been counterfeited.
In the first five months of this year law enforcement bodies confiscated counterfeit products worth 389 million rubles ($14.5 million).
As part of a national campaign, investigators probed 18,000 companies making products based on intellectual property, started 446 criminal cases and suspended the operations of 230 illegal plants.
Eighteen licensed producers were accused of making counterfeit CDs in the Moscow region, St. Petersburg, Kazan, Tver and Penza.
Counterfeit alcohol accounts for over 50 percent of the alcohol market, which is estimated at about $2 billion.
Maxim Chernigovsky, executive director of the St. Petersburg Club of Alcohol Market Professionals, said that the share of counterfeit alcohol varies between 20 percent and 30 percent of the market, according to different sources.
“Practically the same picture is seen throughout Russia,” he said.
But Chernigovsky pointed out that presence of counterfeit alcohol on the market is not the same phenomenon as it was several years ago.
“Alcohol produced in cellars is a thing of the past. Now the counterfeit goods are high-quality alcoholic drinks produced at regular plants during midnight shifts and without paying excise duties to avoid taxes,” Chernigovsky said.
However he was optimistic about the future. “With the introduction of more strict requirements related to excise duties, the share of counterfeit products on the market has already decreased,” Chernigovsky said.
According to a report on the software and computer market, released by IDC last Thursday, counterfeit products accounted for 83 percent of the Russian market last year. The total share of counterfeit goods slightly decreased, but losses of legal producers increased from $1.36 billion in 2004 to $1.63 billion last year.
“According to the Business Software Alliance (BSA), about 90 percent of software used in Russia is counterfeit. St. Petersburg is not an exception,” said Sergei Razumovsky, director for infrastructure solutions at Digital Design.
The share of counterfeit goods decreased by 4 percent recently because of corporate buyers, he added, referring to BSA data.
“Many medium-sized and large companies, state bodies started using licensed software, at least in part. Vendors expanded their presence in the Russian market in 2005, undertaking large scale marketing campaigns,” Razumovsky said.
Software producers expect positive changes not from law enforcement bodies but from buyers.
“The reality of having licensed software increases in line with aspirations toward openness and transparency. Licenses of SAP, Oracle and other such vendors directly affect company capitalization and the market price of its shares. Companies preparing for IPO are interested in buying the necessary licenses to demonstrate a high level of technology and management,” Razumovsky said.
Viktor Sushchev, development director at DocsVision, estimated the share of counterfeit software at 80 percent of the market.
Among the main reasons for buying licensed software Sushchev indicated the “status of the end-user, prestige considerations, fear of disgrace or criminal liabilities.”
“On the other hand, there is the risk of inauthentic pirate copies, and the lack of proper technical support and consulting,” he said.

TITLE: Web Site Sets Music Industry on Edge
AUTHOR: By Alex Nicholson
PUBLISHER: The Associated Press
TEXT: MOSCOW — A Russian web site that lets visitors download albums for less than $1 is a smash hit with music fans — but not with U.S. trade and music industry officials. 	
The site is a pirate, they allege, and say Russia’s failure to close it down presents a direct obstacle to the country’s negotiations to join the World Trade Organization. 
The site, they allege, amounts to a haven for music pirates. Russia is already the second-biggest source of pirated music film and software in the world after China — costing U.S. companies nearly $1.8 billion last year, according to anti-piracy groups. 
The web site — Allofmp3.com — just adds to the dispute. 	The site’s knockdown prices make it a strong draw. 
Apple Computer’s iTunes Music Store, which is the world’s most popular online store licensed by the industry, charges 99 cents per song, but the Russian site offers tracks for a tenth of that price. 
Songs from new albums by popular rock groups cost between 10 and 16 cents. The whole of one top new album can be had for $1.40.
According to a report by the Britain-based IXN data company, which compared traffic volumes of web sites offering music downloads, Allofmp3 leapfrogged U.S. online music store Napster over the first half of the year to make it the second most popular music site in the U.K. after iTunes. 
But popular or not, the site is already under criminal investigation by Russian prosecutors and has been picked out by the U.S. Trade Representatives Office as an example of Russia’s bad record on tackling piracy. 
“The United States is seriously concerned about the growth of Internet piracy on Russian web sites,” Neena Moorjani, chief spokeswoman for the Office of the United States Trade Representative, said Friday. 
She called Allofmp3 “the world’s largest server-based pirate web site.” “Russia’s legal framework for intellectual property rights protection must meet WTO requirements ... In that context, we continue to call on Russia to shut down web sites that offer pirate music, software and films for downloading,” she said. 
The site warns users to check to make sure they are not violating the laws of their country before downloading songs and insists its mother company — MediaServices — is fully licensed to operate under Russian law. 
“MediaServices pays license fees for all materials downloaded from the site subject to the Law of the Russian Federation,” the site says, citing an agreement with the Russian Multimedia and Internet Society. 
That group, which goes by the acronym ROMS, says it collects and distributes royalties for online use of copyrighted music. 
It claims that under Russian copyright law, it does not need permission from copyright holders to license the sale of music on the Internet. “What can I say — this has to be decided by a court and no court has said this is illegitimate,” ROMS general director Oleg Nezus told The Associated Press. 
“... Believe me — I’m a lawyer, you have to understand the law as a whole.”
But Igor Pozhitkov of the International Federation of the Phonographic Industry, which represents Western recording companies such as Universal, Sony and EMI, says Nezus is reading the law selectively.
According to IFPI’s lawyers, agencies such as ROMS do not need to seek permission from rightholders if they are licensing the broadcast, performance or transmission of works by cable — but they do if it concerns their sale over the Internet. 	
“They [ROMS managers] are using this as a money machine,” Pozhitkov said. “Hopefully they will defend it for a while and then disappear.” 
Allofmp3.com provides no phone numbers, and questions emailed to addresses listed on the site went unanswered.

TITLE: Lion Kills Man in Kiev
PUBLISHER: Combined Reports
TEXT: KIEV — A man shouting that God would keep him safe was mauled to death by a lioness in the Kiev Zoo after he crept into an enclosure, a zoo official said Monday. 
“The man shouted ‘God will save me, if he exists,’ lowered himself by a rope into the enclosure, took his shoes off and went up to the lions,” the official said. 
“A lioness went straight for him, knocked him down and severed his carotid artery.”
Police identified the man as a 45-year-old ethnic Azeri with Ukrainian citizenship.
Four lions live in the enclosure.
The incident, on Sunday evening when the zoo was packed with visitors, was the first of its kind at the attraction. Lions and tigers are kept in an “animal island” protected by thick concrete blocks. 
Kiev Zoo, one of the biggest in the former Soviet Union, is home to more than 2,000 animals, birds and reptiles and receives about 280,000 visitors every year.		
 (Reuters, SPT)

TITLE: Firing Deals a Powerful Blow to the ‘Siloviki’ Clan
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW — The firing of Prosecutor General Vladimir Ustinov has considerably weakened the siloviki clan in the Kremlin, which favors extending President Vladimir Putin’s powers beyond 2008, and strengthens the hand of the faction that favors a managed presidential succession.
Kremlin insiders have long viewed Ustinov as a loyal lieutenant of Putin aides Igor Sechin and Viktor Ivanov, who both hail from the KGB and know Putin from his years in St. Petersburg. 
The ties binding Sechin, widely seen as the leader of the siloviki clan, to the prosecutor general were cemented by the marriage of his daughter to Ustinov’s son. 
Prime Minister Mikhail Fradkov — who was reportedly recommended to Putin for his job by Sechin — is also thought to be associated with this clan.
The Kremlin siloviki clan has gained extra political clout recently, and it should come as no surprise that Putin has decided to weaken it, experts said.
“Putin’s interference was inevitable, as he wants to remain above the fight –  to continue being a powerbroker – which is possible only when there are several clans roughly equal to each other in influence and strength,” Nikolai Petrov, scholar-in-residence at the Carnegie Moscow Center, said Friday. 
 The Sechin-Ivanov clan has made significant inroads into other groups’ home turf, managing to wrest control of the Federal Customs Service, which accounts for some 40 percent of government revenues, from Economic Trade and Development Minister German Gref. Gref is associated with the loosely allied clan of St. Petersburg liberals, which also includes Finance Minister Alexei Kudrin and First Deputy Prime Minister Dmitry Medvedev. 
It was Medvedev who lobbied for the ouster of Ustinov, according to Stanislav Belkovsky, head of the Center for National Strategies. The strengthening of Medvedev and the liberal economists from St. Petersburg sends a positive signal to the West ahead of the 2008 presidential elections. Medvedev and his fellow deputy prime minister, Defense Minister Sergei Ivanov, are vying to become Putin’s heir apparent. Under the Constitution, Putin is barred from seeking a third consecutive term. Ivanov, while also a KGB veteran, has preferred to act independently of the siloviki. 
One of the options considered by the siloviki has been to convince Putin to have the State Duma and Federation Council amend the Constitution to allow a third term for Putin. Any weakening of their influence would help to restore the system of informal checks and balances in the Byzantine world of Putin’s inner circle and undermine the position of the advocates of the third term.
“Both Medvedev and [Sergei] Ivanov gain from this, and since the two have been named as possible successors, the idea of succession has gained more weight versus the idea of a third term,” Alexei Makarkin, of the Center for Political Technologies, said Friday.
Petrov said that the political context in which Ustinov was fired reminded him of when President Boris Yeltsin fired two of his senior siloviki officials in 1996, Presidential Security Service chief Alexander Korzhakov and FSB director Mikhail Barsukov, who were calling for upcoming presidential elections to be canceled. 
The latest poll by the independent Levada polling agency shows the two would-be successors, Medevedev and Sergei Ivanov, running neck and neck. While Ivanov has the support of 19 percent of Russians and Medvedev 18 percent, as many as 44 percent would not vote for either as a successor to Putin. The poll, which was conducted in April and published May 2, had a margin of error of less than 3 percent.
Belkovsky, however, said the siloviki had dropped the idea of a third term and were instead touting the possibility of having Ustinov compete with Ivanov and Medvedev for Putin’s blessing. 
Petrov disagreed, arguing that Fradkov would be the siloviki’s candidate. 
Putin had been looking to oust Ustinov since the beginning of this year, but Sechin had until now protected him, said Olga Kryshtanovskaya, a researcher at the Russian Academy of Sciences. “This dismissal will set off a massive reshuffle at the very top, which will last for quite a long time until Putin finds a configuration that suits him,” Kryshtanovskaya said.
What the new configuration of competing clans looks like will only be clear after Putin announces Ustinov’s replacement and where the former prosecutor general will be next, Belkovsky and other experts said.
Ustinov is unlikely to be promoted to a post that would give him as much clout with apparatchiks as his previous job, given that his departure was so abrupt and without fanfare, Petrov said.
Petrov and Makarkin named Putin aide Dmitry Kozak as the best choice to preserve the newly established balance of power, as he is largely an independent figure, even though he has been associated with the St. Petersburg liberals. Unlike Ustinov, Kozak is unlikely to tolerate prosecutors getting involved in inter-clan fighting. Under Ustinov, prosecutors have at times used their positions to attack political opponents by barring them from elections and investigating companies that finance opposition candidates.

TITLE: Presidential Envoy Kozak Is Tipped to Take Ustinov’s Job
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Vladimir Putin’s close aide Dmitry Kozak has emerged as a likely frontrunner to succeed Prosecutor General Vladimir Ustinov — six years after being passed over for the job.
Kozak, who crafted a series of legal reforms during Putin’s first term in office, serves as Putin’s envoy to the Southern Federal District. He was thought to be the leading candidate for prosecutor general in spring 2000, after Putin was elected and before the president nominated Ustinov.
Another contender being tipped as Ustinov’s successor is Alexander Konovalov, a former Bashkortostan chief prosecutor recently appointed as Putin’s envoy to the Volga Federal District.
Kozak told his staffers Friday there was no substance to the speculation, Interfax reported.
Kozak’s spokesman Fyodor Shcherbakov said he came to Moscow on Friday but that the trip was not linked to any possible new appointment.
“This is a routine trip that was scheduled two weeks ago,” Shcherbakov said, Interfax reported.
No one at Kozak’s office answered the telephone Sunday. 
Kommersant on Saturday cited a source in his office as saying Kozak would accept the post if he were offered it. 
As prosecutor general Kozak may resurrect his previous plan to hand over investigative powers from law enforcement agencies, including the Prosecutor General’s Office, to a separate investigation service. The prosecutor’s office would supervise compliance of law enforcement and other government agencies with the law, according to the plan.
 A former Kremlin first deputy chief of staff and Cabinet chief of staff, Kozak has also been touted as a possible presidential candidate, though last year he said he was not planning to run in 2008.
Arguably the most inventive and energetic, if not the most effective, administrator on Putin’s team, Kozak has been behind many major reforms.
Putin appointed Kozak as his envoy to the Southern Federal District shortly after the Beslan hostage crisis in September 2004 in an effort to strengthen regional governments in the North Caucasus.
Konovalov, the other main candidate tipped to succeed Ustinov, is less well known to the public.
Stanislav Belkovsky, director of the Council for National Strategy think tank, said Konovalov had the backing of First Deputy Prime Minister Dmitry Medvedev, who is widely viewed as a possible presidential candidate.

TITLE: The Unpredictable Rise and Fall of a Chief Prosecutor
AUTHOR: By Carl Schreck
PUBLISHER: Staff Writer
TEXT: MOSCOW — Vladimir Ustinov’s rise to the nation’s top law enforcement post, like President Vladimir Putin’s own career trajectory, was hardly inevitable.
When a man resembling Prosecutor General Yury Skuratov was captured on film in April 1999 with two prostitutes and subsequently suspended, Deputy Prosecutor Yury Chaika became chief. 
In July of that year, Chaika took an unannounced two-week vacation, and in August, Ustinov, who had recently been named interim deputy, took over.
The following spring, Putin, fresh from winning his first term, was expected to name Dmitry Kozak, an old St. Petersburg ally, to the top job, when then-chief of staff Alexander Voloshin prevailed on the president in a last-minute meeting to tap Ustinov.
Ustinov was raised in the Krasnodar region and served in the regional prosecutor’s office there before being named Sochi’s prosecutor in 1992 and eventually ascending to federal prosecutor for the North Caucasus. His father and brother had been prosecutors.
Kremlin aides were so rushed in the days leading up to the appointment of the new prosecutor general that they failed to fill out properly the forms requesting that the Federation Council back Ustinov. He was approved by the council, 114 to 10. 
 Apartment Scandal. Within months of becoming prosecutor general, Ustinov was in the middle of a high-profile flap. In July 2000, security agents raided NTV television’s offices in response to a report on the channel’s political show “Itogi” that said Ustinov had received a plush Tverskaya Ulitsa apartment from former Kremlin property manager Pavel Borodin.
In January 2001, the Moscow City Court ruled in Ustinov’s favor, ordering NTV to apologize for the original report. The next month, Putin ordered Kremlin auditors to investigate how Ustinov obtained the apartment. No wrongdoing on Ustinov’s part was discovered.
The Kursk Disaster. That August, the Kursk nuclear submarine disaster happened, leaving all 118 sailors on board dead. And in the fall Ustinov led the investigation into what went wrong. 
“What happened inside these compartments was hell,” Ustinov said at an October presentation of a seven-minute videotape showing the inside of the vessel’s charred wreckage. 
The presentation was aired on national television and apparently boosted his popularity. According to the independent Levada Center, Ustinov’s approval rating jumped 7 percent, from 35 percent to 42 percent, in a poll taken a month after the broadcast. In a poll sponsored by Nezavisimaya Gazeta and published in December 2001, Ustinov jumped from No. 42 to No. 13 on the list of the 100 most-influential political leaders. That was partly due to his role in the Kursk investigation but mostly to his anti-corruption work. “If he continues at this pace, in three months Vladimir Ustinov will overtake the president’s level of influence,” the paper wrote. Ustinov ended the Kursk investigation in July 2002, saying no one was to blame for the explosion that sank the submarine.
Oligarchs and Extraditions. Ustinov was less successful at prosecuting some of the country’s most notorious oligarchs. In 2000, Vladimir Gusinsky and Boris Berezovsky fled Russia. Ustinov oversaw investigations of both, but his efforts were stymied: Britain, Israel, Greece and Latvia refused to extradite Gusinsky and Berezovsky despite requests from Russian prosecutors.
Gusinky was briefly arrested when Putin was visiting Spain in June 2000. The arrest cast an embarrassing spotlight on Russia’s struggle to bring law and order to its nascent market economy.
Ustinov’s office also unsuccessfully sought extradition of Chechen separatists accused of terrorism. The United States turned down a request for Ilyas Akhmadov; Britain rejected a request for Akhmed Zakayev.
The Lawyer. In November 2001, Ustinov became the first prosecutor general in post-Soviet Russia to practice law in a courtroom when he led the charge against Chechen rebel leader Salman Raduyev. 
That same month, a planned attempt to assassinate Ustinov was made public. After the Federal Security Service, or FSB, detained three men on Dagestan’s border with Chechnya, one of the men, a former soldier thought to have converted to Islam, said the three had been sent to Dagestan by Chechen warlord Khattab to kill Ustinov. 
The next month, Raduyev was convicted of spearheading a 1996 attack on a Dagestani hospital that left 78 people dead. He was sentenced to life in prison and died in a penal colony, amid murky circumstances, a year later.
Health Scare. The portly Ustinov, who said he smoked for 34 years before quitting cigarettes and alcohol in 2000, suffered cardiac trouble due to high blood pressure while on a train from Moscow to Saransk in August 2002.
The health scare prompted an unplanned visit to a rural hospital in the tiny town of Shilovo, about 100 kilometers east of Ryazan. 
But before he could reach the hospital, he had to weather another storm when a group of teenagers pelted the train with rocks, breaking 21 windows. Prosecutors said that Ustinov’s armored car was not damaged and that the incident did not affect his health.
The Assault on Yukos. The following year, Ustinov led the Kremlin-orchestrated assault on oil giant Yukos and its founder, Mikhail Khodorkovsky. 
Under Ustinov, 35 people — Yukos owners, employees and subcontractors — were charged, arrested or convicted, according to Khodorkovsky’s online press center. Company co-owners Leonid Nevzlin and Yuly Dubov fled to Israel and Britain, respectively.
Authorities have demanded that Yukos pay $30 billion in back taxes and penalties. Last year, Khodorkovsky was sentenced to eight years in prison after being convicted of fraud and tax evasion, charges seen as politically motivated.
After the Parliamentary Assembly of the Council of Europe accused Russian law enforcement agencies of “intimidating action” and “serious procedural violations,” Ustinov in January 2005 issued a sharp rebuttal, calling PACE’s conclusions “illegitimate.”
The Family. Also in 2003, Ustinov’s son, Dmitry, an FSB school cadet, married the daughter of Igor Sechin, deputy head of the presidential administration. Inga Ustinov gave birth to a baby boy in July 2005.
Beslan. After the September 2004 Beslan school attack, Ustinov called for tougher measures to crack down on terrorists. Speaking to the State Duma in November of that year, he argued that authorities should be permitted to detain relatives of terrorists as a “counter-hostage-taking” measure. 
The proposal prompted harsh criticism from political leaders, including Kremlin loyalist and Duma First Deputy Speaker Lyubov Sliska. “This raises the question of whether Mr. Ustinov is the right person for the job,” she said.
Church and State. Ustinov was never shy about touting religion. After his April 2005 re-appointment, Ustinov told senators that the Prosecutor General’s Office would help nurture prosecutors’ spiritual sensibilities. 
Ustinov also called for rooms to be set aside in prosecutors’ offices across the country where staff could pray. 
In November 2005, Ustinov waxed religious while offering support for small businessmen. At the meeting with Opora, a small-business lobbying group, Ustinov said many of Russia’s woes stemmed from a lack of spirituality. Citing the Old Testament and Russian philosophers, he said businesses should do their utmost to obey the law.
The Adamov Investigation. In May 2005, the Prosecutor General’s Office filed embezzlement charges against former Nuclear Power Minister Yevgeny Adamov. This followed Adamov’s arrest in Switzerland at the request of U.S. officials; the Americans had suspected Adamov of misappropriating U.S. funds.
A Swiss court ultimately complied with a Russian request that Adamov be extradited, assuaging fears in Moscow that Adamov might have revealed national security secrets to U.S. officials.
Confiscations. Ustinov had also pushed for a return to property confiscations as an alternate means of punishment. The State Duma this April passed in the first reading a series of amendments to reintroduce confiscations but postponed a second reading after numerous protests. 
The Klebnikov Case. Ustinov’s prosecutors lost a number of jury trials, failing in many cases to present enough evidence to persuade jurors to convict. In one of their most recent losses, a jury acquitted suspects last month in the killing of U.S. journalist Paul Klebnikov, the former editor of the Russian edition of Forbes.

Staff Writer Anatoly Medetsky contributed to this report.

TITLE: Rosneft IPO Slated For Run Up to G8
AUTHOR: By Dmitry Zhdannikov
PUBLISHER: Reuters
TEXT: MOSCOW — The Kremlin will float a stake of $8 billion-$13 billion in state oil firm Rosneft just days before it hosts a Group of Eight summit, as it wants to present the IPO as its input to global energy security, bankers said on Monday. 
“Rosneft will publish its intention to float on June 12-13. Then it will seek to float around mid-July. Doing this just before the G8 summit is not a wish, it is an order [from the Kremlin],” one banker said. 
Another banker said Rosneft was insisting on a valuation of $80-$120 billion, a premium of up to 70 percent to Russian major LUKOIL, as it expects to grow quickly and soon acquire the remaining assets of stricken oil firm Yukos. 
“We agree that it will be a huge growth story, but will still seek a big discount to what they want,” the banker said. 
Russia hosts its first summit of the leaders of the world’s most powerful nations in St. Petersburg from July 15-17 and has put global energy security at the top of the agenda. 
The gathering comes as Europe questions its dependence on Russia after gas exports were disrupted earlier this year due to a pricing dispute with Ukraine, which also prompted U.S. Vice President Dick Cheney to accuse Moscow of energy “blackmail”. 
The bankers said that, at a time when countries like Bolivia and Venezuela are nationalizing oil and gas fields operated by foreign energy firms, the Rosneft IPO would send a signal that Russia still welcomes foreign investors. 
“The ultimate task is to close the IPO just before the G8, which will allow them (the Kremlin) to say — we have just made public our best energy company. Why are you complaining about energy security?” said a second banker. 
Rosneft needs proceeds from the IPO to pay back a $7.5 billion loan to the state, but is pushing to raise much more, close to $13 billion, to fund its huge investment needs. 
“There is lot of bargaining going on and we will see the final figures closer to the road show,” one banker said. 
Announcement of its intention to float will mark the end to an information blackout during which neither Rosneft nor the banks involved are allowed to comment on the deal. 
“You will see a much more positive coverage. There will be a huge number of reports,” one banker said. 
He said the number of Western banks involved in the IPO has expanded to around 20 plus another eight banks from Russia. 
Rosneft developed from a mid-sized player into a heavyweight when it acquired the key unit of Yukos, Yugansk, in late 2004 and managed to put itself on a par with LUKOIL and Anglo-Russian venture TNK-BP in terms of production. 
The destruction of Yukos and the rise of Rosneft are widely seen as a broader Kremlin plan to regain control over the strategic sectors of the economy lost in the mid-1990s. 
Analysts expect Rosneft to take over the remaining assets of Yukos, two production units and five refineries, as part of the ongoing bankruptcy procedure. This as well as major legal risks arising from former Yukos’s owners has prompted some analysts to suggest that the IPO might be delayed. 
But bankers said Rosneft wanted to go ahead with the IPO amid supportive oil prices, which may not last in the future, favorable stock market conditions, which have recovered after a recent slump, and political risks. 
“The closer you get to December, the bigger becomes the elections factor,” one banker said. 
Russia holds a parliamentary election in December 2007 and a presidential poll in March 2008, when by law Vladimir Putin should step down to make way for a successor. 
Yukos has promised a lifetime of litigation against Russia and some funds have said they would stay clear of the IPO. 
But others say it will be difficult to resist. “Greed will take over as opposed to fear,” one said.

TITLE: Experts See New Law Boosting Property
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: With the aid of an amended law on land distribution, experts from the construction industry hope to stimulate the residential market, which faces both a deficit of new projects and surging real estate prices.
At a round table at Interfax news agency last Thursday, experts said that local construction companies slowed down residential construction compared to the same period last year.
According to the St. Petersburg Union of Construction Companies, the offering of new apartments in the city this year decreased by 10 to 15 percent compared to its 2005 level.
From December through March, the average price increased from $1,034 to $1,134 per sq. m. The shortage in new residential premises will increase in line with the price growth, experts said.
“The current price growth is related not only to an increase in demand but also to the market’s shrinking,” Yevgeny Kaplan, vice president of Soyuzpetrostroi, said in a report on the construction market released Friday.
Since October of 2005, land for residential construction has been distributed through auctions which require comprehensive documentation. “During that six months, only 12 land plots were sold through auctions, which is 10 percent of the residential construction market’s needs,” Kaplan said.
Out of 36 land plots located in areas without housing infrastructure and offered for sale, only 8 were actually sold.
“The next two years will be very difficult for the residential market. The offering of new apartments could decrease by 30 percent to 40 percent. Prices, in the best case, will increase up to $2,000 per sq. m. This is already unavoidable,” he said.
At the round table at Interfax, experts and local authorities discussed the procedure of land distribution and its potential to improve the situation at the residential market.
On May 10 City Hall approved amendments to the law which defines the order of construction and reconstruction of city-owned property. On May 21 the law came into effect.
“The law as amended should considerably improve the efficiency of tenders organized in the city to distribute real estate sites,” Soyuzpetrostroi experts said in a statement.
According to the initial law, only the investment department at City Hall could initiate the preparation of documents to offer a particular site for tender.
The amendments allow potential investors to choose sites and prepare documents for tender themselves, which should increase the number of sites offered for tender and simplify obtaining land for construction.
The law also lists reasons for an application’s rejection.
Unlike the investment department, the St. Petersburg Property Fund as an institution, which has a greater interest in efficient land distribution, will be responsible for choosing a company with the best tender documents. 
The law also increased compensation for preparing the tender documents from 5 percent to 10 percent of the land cost.
At the round table, City Hall deputy Vladimir Golman admitted that the St. Petersburg construction industry in general suffers from the slow pace of the land distribution process. 
He agreed that the current procedure for land distribution is inefficient. “Small companies that are running one or two projects at the moment will complete them and simply quit the market,” Interfax quoted Golman as saying.
However, the proposed solution will not necessarily be effective, given the scarcity of new apartments and price growth.
“Construction companies postpone the sale of new apartments on purpose. If the price is constantly growing, it is, of course, more profitable for the constructor to sell the flat two weeks later for $1,500 per square meter than right now for $1,400 per square meter,” said Nikolai Krutov, deputy chairman for the construction committee at City Hall.
Golman described the situation more dramatically. “Few people are ready to pay $1,500 per square meter. There is no affordable residential real estate market. And if action isn’t taken, it will not appear,” he said.

TITLE: IN BRIEF
TEXT: Oil Fund at $71Bln

MOSCOW (Bloomberg) — Russia’s fund for revenue from oil sales surged 7.2 percent in May, as the world’s largest energy supplier benefited from rising energy prices.
Revenue in the Stabilization Fund grew to 1.9 trillion rubles ($71 billion) at the end of last month, from 1.8 trillion rubles at the end of April, Finance Ministry spokeswoman Irina Ershova said in a phone interview in Moscow on Monday.
Russia, the world’s biggest oil exporter after Saudi Arabia, holds above-target oil revenue in the fund, which the Finance Ministry set up in January 2004 to help curb inflation and cushion the economy should crude prices decline. 
Rosneft Starts at $747

MOSCOW (Bloomberg) — Oil giant Rosneft, which is planning to begin
trading on the London Stock Exchange, is preparing to accept share orders from Russian citizens for a minimum of 20,000 rubles ($747), Vedomosti reported, citing people familiar with the plan.
The stock of the Moscow-based company will be offered at Sberbank, the country’s largest bank, at the end of June, Vedomosti reported in its edition on Monday.
Buyers will identify the sum they are willing to spend, which can be no less than 20,000 rubles, and not the number of shares they are willing to purchase as the company is not yet valued, the newspaper said.
Repsol’s Arctic Plans

MOSCOW (Bloomberg) — Natural-gas export monopoly Gazprom recommended to Spain’s Repsol that it not invest in a $5-billion, independently led Arctic gas project, Vedomosti reported.
Gazprom disagrees with the way Yamal-LNG, a vehicle to attract investment from Repsol, Royal Dutch Shell and Petro-Canada, acquired a license for the project, the Moscow-based newspaper said Monday, citing Gazprom deputy chief executive officer Alexander Ryazanov.
Yamal-LNG received its license from Tambeyneftegaz, in which Gazprom holds 25.1 percent and companies close to businessman Nikolai Bogachev own the rest, Vedomosti said.

TITLE: Medvedev Says State Is Not the Best Manager
PUBLISHER: Reuters
TEXT: First Deputy Prime Minister Dmitry Medvedev said late Friday that the state was not the best manager of assets but that it must preserve control in key strategic sectors. 
Medvedev, 40, is chairman of state-controlled gas giant Gazprom and considered by some as a possible successor to President Vladimir Putin, who must by law step down in 2008.
“The state on the whole is by far not the most effective owner but must be present in a certain set of critically important companies,” Medvedev told reporters. 
He said the state needed to preserve control of assets such as Gazprom and the nuclear and defense industries. “Everything else can be bought and sold as one likes,” he said. 
Putin’s drive to strengthen state control while removing key barriers for investment has made the role of the state in the economy a key issue ahead of 2008, as investors seek any clues to the thinking of possible successors. 
Moscow political salons are awash with rumors about who will succeed Putin and nervousness about the possibility of a battle emerging between competing clans for the Kremlin’s crown. 
Medvedev’s competitors, analysts say, could include Defense Minister Sergei Ivanov, also a deputy prime minister, and Russian Railways chief Vladimir Yakunin. 
A lawyer who studied in the same department as Putin at Leningrad State University, Medvedev declined to comment on whether he would take part in the 2008 elections and steered clear of political questions. 
Putin has put Medvedev in charge of four priority “national projects” on health care, education, housing and agriculture. But Medvedev has complained that officials have been dragging their feet. 
The Kremlin’s drive to boost state control over the oil and gas sector, seen by senior officials as one of Russia’s few remaining tickets to the top table of world politics, has raised concerns that Putin has turned away from market reforms. 
Foreign companies have faced problems getting a foothold in the oil, gas and engineering sectors, while the state has taken control of automobile and media companies. 
“I hope that such processes carry an explainable and predictable character. And it does not mean that those assets that have become state property cannot be sold in three to five years,” Medvedev said. 
The government said Friday that the Cabinet would study how the activities of major Western companies affected national security. 
A Cabinet meeting on Thursday ordered the economy and energy ministries and the Russian Academy of Sciences to submit a report on the issue in the third quarter of 2006, the government said in a statement.

TITLE: Uncertainty Over Gref’s Position
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW — Economic Development and Trade Minister German Gref could be on his way out, media speculated Friday, in the wake of hints by Prime Minister Mikhail Fradkov that the ministry could lose its trade portfolio.
Gref’s press service refused to comment on the reports Friday, news agencies reported.
Kremlin officials are discussing a possible split of the ministry into two, one responsible for economic policy and the other for trade, but President Vladimir Putin has yet to make a final decision, Vedomosti reported Friday.
During Thursday’s Cabinet meeting Fradkov commented vaguely about the possibility of creating a separate trade ministry. The remarks came after speculation that Gref had offered to resign last month, following Putin’s decision to make the Federal Customs Service directly responsible to Fradkov rather than to Gref’s ministry.
Finance Minister Alexei Kudrin said he was not aware that Gref had offered to resign, Interfax reported Friday.
Fradkov and Gref do not appear to get along particularly well, at least in public. Fradkov has repeatedly blamed the liberal minister for failing to fulfill Putin’s goal to double gross domestic product by 2010, while Gref has snapped back at Fradkov over economic policy. Gref has long been seen as a token liberal within the Cabinet as the government seeks to show the West that it is pursuing economic reforms.
“Gref isn’t keeping up with his work responsibilities,” Vedomosti quoted an unnamed Kremlin official as saying Friday. 
It was unclear, however, whether any changes would take place in Gref’s ministry ahead of the Group of Eight summit in St. Petersburg in July.
The trade portfolio was added to Gref’s ministry in 2000 in a move that effectively left Fradkov, then trade minister, without a job.
At a time when Russia is pushing hard to join the World Trade Organization, a former senior ministry official said that trade issues were not receiving enough attention.

TITLE: Steelmakers Told to Join Forces and Raise Quality
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: MOSCOW — Steel experts Friday urged Russian steelmakers to seek greater consolidation and lift the quality of their produce by upgrading to high-end technology if they are to avoid a head-on battle with China’s red-hot steel industry.
Domestic steel mills should invest more in research and focus on high-profit finishing products, thermal technologies and advanced smelting methods to compete successfully with China, which is emerging as a net exporter of the metal, said Luigi Iperti, industrial plants and machinery president at Italy’s Techint steel and oil group.
“Russian producers need to get into high-end products to get higher margins to avoid a direct fight with China,” Iperti said at a Moscow conference. 
With steel-plant construction in China 60 percent cheaper than anywhere else in the world, Russian steelmakers need to battle on the grounds of quality and not quantity, said Peter Marcus, managing partner of research agency World Steel Dynamics.
China largely produces the lower-margin crude steel and semifinished products. Last year, Chinese steelmakers produced 349.4 million tons of steel, three times as much as nearest rival Japan, and 30 percent of the world’s output, according to International Iron and Steel Institute data. Russia produced 65 million steel tons in 2005, a figure much unchanged from the last 2 to 3 years.
In February, China’s steel exports grew larger than the country’s imports, although the Beijing government has hinted it may curb exports to feed booming demand at home.
Although domestic steelmakers enjoy the highest profitability worldwide alongside Brazilian firms, their efficiency could be reduced after Russia enters the World Trade Organization, Iperti said. 
“The price of production factors, especially energy, could increase,” minimizing Russia’s advantage from having a low-cost and large gas supply, Iperti said.
To gather greater profits, domestic steel firms will need to invest in their own rolling mills to process semifinished products and introduce the latest smelting techniques, experts said.
Despite increased competition, however, the Chinese growth factor may yet play to Russia’s advantage, Marcus said. Cash-rich Russian steelmakers have looked to expand abroad, with top producer Severstal’s bid to merge with European giant Arcelor the latest and biggest example of their ambitions.
“Within a couple of years, Chinese mills are going to be participating in the global consolidation,” Marcus said. Given that the top 6 Chinese steel firms produce nearly double that of Russia’s top 6 players, the latter would need to consolidate to pose as potential takeover bidders, he said.
Arcelor senior executive vice president Roland Junck said Thursday that he expected a merged Severstal and Arcelor to lead global consolidation, with a particular focus on China.

TITLE: Sharonov Promises Better State Services
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW — The government on Thursday kicked off a campaign to breathe new life into stalled administrative reforms by pledging to introduce stringent regulations governing the quality of government services.
The proposed measures, which include setting time limits on waiting in lines for state services and restricting the number and nature of documents that can be requested by bureaucrats, are expected to speed up key services, including the issuance of passports, as soon as in the next few months.
“The report of the administrative reform’s death was an exaggeration,” Deputy Economic Development and Trade Minister Andrei Sharonov said Thursday at a news conference. “We are moving to the point when the reform will no longer be just an obscure restructuring but will affect individuals in their interaction with the state,” he said.
According to Andrei Sharov, a senior ministry official in charge of the administrative reform, the first procedures to be streamlined will be the issuance of passports, work permits for foreigners and property registration documents.
The government earlier this week allocated 470 million rubles ($17.5 million) to fund pilot projects across the country aimed at improving government services.

TITLE: Eatery Boss Proves Smiles Win Out in the End
AUTHOR: By Kathrina Szymborski
PUBLISHER: Staff Writer
TEXT: MOSCOW — When Henrik Winther came to Russia 15 years ago, grabbing a bite to eat was no easy task. 
“At the time, there were really only two restaurants in the whole country,” said Winther, Rosinter Restaurants senior vice president and Rostik’s-KFC CEO, in an interview in his bright, spacious Moscow office. “I thought, ‘this is exciting!’”
Even though two restaurants may be an underestimation of the Russian restaurant scene in 1991, nobody can deny the sector has come a long way since then.
Today, Moscow’s streets are dotted with restaurants, and Rosinter’s 11 chains — including TGI Friday’s, American Bar and Grill, Planet Sushi and others — add up to the largest restaurant company in Russia and the CIS, with 248 restaurants in 17 cities.
In January, Winther was appointed CEO and president of the new Rostik’s-KFC co-brand. Previously the chief operating officer of Rosinter, Winther helped propel the company to success based largely on a simple yet novel idea: the power of a smile.
“Yes, we’re selling food and beverages, but really we’re selling smiles and a good time,” Winther said. “We sell emotions. To sell emotions, you need to know how to produce emotions in large quantities.” 
U.S.-born Winther, 43, came to Russia in 1991 from France, where he had managed his family’s resort on the French Riviera. At first, his personable approach to the business was seen as unorthodox, if not radical. 
 “It was very difficult in the beginning,” he said of the reactions that his friendly style provoked. “People said, ‘Russia is different; if you smile you’re perceived as being of low intelligence.’”
Creating a new business culture in a foreign country might have seemed risky, but for Winther, taking risks — both professional and personal — comes naturally. Born in Dallas, Texas, to Danish parents, he moved to Denmark at the age of two and to France at 13, where his parents opened a resort including a hotel and restaurant. Winther cites these moves, and his parents’ accompanying career changes, as evidence of a genetic “adventurous streak.”
“My parents sold swimming pools in Denmark,” he said. “Moving to France, the country of gastronomy, was a drastic change of career.”
It was in this “country of gastronomy,” helping his parents run their restaurant, that Winther honed his own gastronomic sense. Although he was just a teenager, he helped with virtually every aspect of the family business, offering advice on everything from remodeling to management concepts. 
“I’m still surprised how much they listened to me,” he said, laughing. 
When he was in his early 20s he returned to the United States, where he gained experience working for Marriott and various independent fine-dining restaurants all over the country, hopping from Texas to New Mexico to California. Until completing Harvard Business School’s three-month advanced management program last year, Winther had never received a university degree, although he briefly attended colleges in both France and the United States.
“I didn’t finish [at that time] because I was traveling so much,” he said. “Instead, I was self-taught.”
In the late 1980s, his parents decided to retire and Winther moved back to France to take charge of the family business. 
But on a quiet winter evening in late 1990, Winther came across an advertisement that piqued his interest. 
“It was just a three-line ad for a director of a restaurant in Russia,” he said. “There had been ads for Africa, South America, Asia, everywhere, but there had never been ads for restaurants in the Soviet Union.” So Winther called the given phone number, out of “pure curiosity.”
After months of correspondence with the Moscow-based Rosinter, Winther agreed to a three-day visit to Russia. 
“Intuitively, I thought it was a great opportunity to move forward,” he said.
Upon returning from his brief trip, Winther invited his parents over for a lunch of vodka and caviar and announced his decision: He was moving to Moscow to accept a position as general manager of a Swiss/French restaurant called Le Chalet, operated by Rosinter.
“That was the beginning of the first steps of this 15-year adventure,” he said of his “bombshell” decision, which forced his parents to come out of retirement. “I’ve been part of all the changes the country’s gone through, seeing it, being here, through coups, political crises, economic meltdowns, you name it.”
Luck happens to everyone, Winther said, “like a train.” 
“Get on the train, and if it’s not the right direction, get off and grab another,” he said. “Don’t be hesitant in taking risks.”

TITLE: 3D Animation Group Sets Sights on LA
AUTHOR: By Yelena Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: Anton Tsailinger, president at ALS group and Stanislav Svarichevsky, the group’s general director, have always planned to build a big corporation. Having started their business from scratch five years ago, now they run one of the leading Russian IT companies that produce 3D graphics for computer games and animation for major foreign companies.
Born in 1966 in Leningrad, Tsailinger first did not plan any business career. He started taking pair figure skating lessons when he was four years old. He attained the title of “master of sports”, though he was not satisfied with his sporting achievements. Of Austrian descent on one side of his family, his family had been persecuted during the Soviet Era and he was given few chances in sports. “I was not a promising sportsman because I was officially banned from going abroad, even to take part in the championships. It was so annoying!” he said. He hoped that Gorbachev’s perestroika would change the situation. Having been recruited by the army, where he served for two years, he decided to become a professional sailor, but was again prevented from leaving the country. “It was the last straw and, in 1990, I emigrated to Austria,” Tsailinger said.
In Austria, Tsailinger began working as a figure skating coach, then enrolled at Salzburg University, but soon switched to Graze University where he studied marketing and management. Having graduated in 1996, Tsailinger was hired by a consulting agency that rendered services in consulting, advertising and crisis management. In 1999, he came back to Russia for personal reasons, though he didn’t plan on staying long. “My Russian fiancÎe wanted to finish her studies at graduate school in St. Petersburg and then we planned to move to Austria,” he said. During his temporary stay of over a year, Tsailinger, who was always interested in computers, took training courses as a system administrator and started looking for interesting business ideas.
It was in the spring of 2001 that he met Svarichevsky, who had already run a small IT company specializing in web site development and programming as well as a non-commercial informative web resource at www.render.ru. Born in 1975, Svarichevsky graduated from the St. Petersburg State Bonch-Bruevich University of Telecommunications and started his own computer business when he was 24. “When we first met each other we wished it had happened earlier,” Svarichevsky said. “It turned out that we had both looked for interesting business partners for a long time and, eventually, we succeeded.” 
Tsailinger says that at that time Svarichevsky had a variety of interesting business ideas to share but they both understood that, in order to succeed, they had to change the company’s focus. “It was just after the big collapse in the IT sector in 2000, when we started doing business together,” Tsailinger said. “At that moment, it became unprofitable to do programming and we decided to switch to computer graphics. And our Internet resource has helped us a lot in developing the new business line.” 
They were among the first companies in the world to start integrating 3D technology into the panoramic IPX photos. The new technology soon became popular and, in 2002, they signed their first big contract with the RBI construction company. The order was to make a presentation for RBI’s upcoming “New Star” project and include a virtual tourof the buildings that the company planned to construct. 
Having gained work experience, in 2003, Tsailinger and Svarichevsky decided to start collaborating with the Western companies that produced computer games. They soon succeeded in making 3D graphics for the first and second versions of “Spellforce” by Phenomic games. Then the realization of 3D production projects for such well-known computer games as “Legend of Kay”, “Emergency 3”, “Nightshift” and others followed. 
However, they were still looking for a unique and as-yet unoccupied business niche and soon their search paid dividends. They decided to start producing casino slot machine games and signed a contract with Atronic Austria, a subsidiary company of Gauselmann AG. 
Having produced different computer games, Tsailinger and Svarichevsky said that they always dreamed of animation production. “It was much more than just a dream — we want to go to Hollywood,” said Svarichevsky. “And that’s not a joke. We set that as a strategic aim at the very beginning and planned to reach it in seven to ten years. However, our turnover grew rapidly and made it possible to realize it sooner. Now we are very close to fulfilling our dream and producing a full-length animation film,” said Tsailinger.
Over the last five years, ALS Group has grown from a staff of three in 2001 to over 50 employees. With such rapid rates of growth, one of the major problems the company faces is a shortage of 3D graphics designers. “It is a very serious problem that we need to solve,” Tsailinger said. “There are just no educational institutions to prepare specialists working with 3D graphics. Moreover, it is hard to find good drawers even among professionals. Many of the arts school and academy graduates are just not able to draw well.” 
In their desire to find a solution to the employment problem, the ALS Group management tried to make an association of 3D graphics studios to train personnel in the field. “We got no response from our colleagues at other companies. They all think that competitors cannot join in a professional association,” said Tsailinger. 
“It’s amazing that they don’t understand that we really only compete on the labor market,” he said. 
To resolve the problem, ALS Group is in the process of creating its own educational and informational center which will open in autumn. There they plan to run courses on 3D graphics that will last from one to six months and provide students with an opportunity to take educational bank loans for the period of three to five years. “We need to get young people interested in the promising and interesting field that 3D graphics is. With, an average salary of 28 thousand to 42 thousand rubles ($1,000-$1,500) per month, they have unlimited opportunities and stimulus for the development of their professional and creative abilities.”
As successful businessmen, Tsailinger and Svarichevsky think that one of the most difficult things for them was to find  like-minded partners. “If you want to succeed in business, you should be able to work hard and always take the challenge of scaling new business peaks,” Tsailinger said.

TITLE: VimpelCom Drops Out Of $5 Billion Kyivstar Bid
AUTHOR: By Maria Levitov
PUBLISHER: Staff Writer
TEXT: MOSCOW — VimpelCom is now looking to focus on Ukrainian Radio Systems, or URS, CEO Alexander Izosimov said Thursday.
The country’s No. 2 mobile operator,VimpelCom, on Thursday withdrew its $5 billion offer to buy Ukraine’s largest mobile operator, Kyivstar.
Negotiations between two of the three parties involved in the Kyivstar talks — Norwegian telecoms giant Telenor and Alfa Group’s telecom arm Altimo — have reached a stalemate, VimpelCom CEO Alexander Izosimov said Thursday. “We regrettably had to withdraw today our offer to buy Kyivstar,” Izosimov said. 
Telenor owns 56.5 percent of Kyivstar, while Alfa holds 43.5 percent. The two also hold stakes in VimpelCom, with 29.9 percent under Telenor’s control and 32.9 percent under Alfa’s.
Telenor and Altimo failed to see to eye-to-eye on a divorce provision put forward by Telenor as a prerequisite for the deal.
VimpelCom will focus on expanding in Ukraine through Ukrainian RadioSystems, or URS, which the company acquired in November, Izosimov said. 
“It’s better to have a sparrow in your hands than a large pelican somewhere in the bushes,” Izosimov explained.
VimpelCom would gladly return to the negotiating table, he said, once Altimo and Telenor make some progress regarding their positions.
Analysts said, however, that the fellow shareholders would be unlikely to budge soon.
 In March, Telenor said it would sell Kyivstar to VimpelCom, provided that Alfa agreed to a “market-based separation” to allow either Alfa or Telenor to buy the other out of VimpelCom. The “market-based separation,” which could be triggered by either Alfa or Telenor at any time, would give control of VimpelCom to the highest bidder.
“Telenor demanded a number of unacceptable conditions for the deal, thus breaking up the negotiations,” Altimo spokesman Kirill Babayev said in a written response Thursday. 
Altimo would continue the Kyivstar talks if Telenor put forth “reasonable” conditions, he said.
Telenor, however, showed no signs of giving way.
“Our offer has been and remains on the table,” Kjell Morten Johnsen, head of Telenor Russia, told reporters at a news conference Thursday.
“We will not do this without a separation agreement,” he said.
Johnsen insisted that the agreement was “not a vehicle for [Telenor] to take control,” but analysts said it was more advantageous for Telenor. 
The Norwegian company would have an easier time outbidding Altimo for VimpelCom after getting $5 billion for Kyivstar, said Yelena Bazhenova, a telecoms analyst at Aton.

TITLE: Yukos Presents Plan to Avoid Bankruptcy
AUTHOR: By Tom Miles
PUBLISHER: Reuters
TEXT: MOSCOW — Stricken oil firm Yukos has, as ordered by a U.S. judge, presented its survival plan to the Russian bankruptcy official who could make a recommendation for the breaking up of the company. 
Yukos said it was prepared to sell off non-core assets and shareholdings worth at least $8.9 billion to create a cash pool to pay off creditors, as well as contributing any litigation income and its cash flow of $3-3.5 billion a year. 
And it would offer Russian state oil firm Rosneft, which contributed to Yukos’s demise by buying its biggest operating unit, equity of at least 12.5 percent. 
Analysts have long said YUKOS is doomed and Rosneft is likely to grab its other assets. 
Russian authorities have virtually destroyed Yukos with back-tax claims of around $33 billion and a legal onslaught against company assets and officials. 
The firm says the attack is a politically motivated attempt to destroy it. 
The threat of bankruptcy has hung over Yukos since March, when a Russian court appointed a supervisory manager, Eduard Rebgun, to protect creditors’ interests and to form a committee which would advise the court whether to bankrupt the firm. 
But Yukos, once Russia’s biggest company, won a rare victory last month when U.S. bankruptcy court judge Robert D. Drain dismissed Rebgun’s arguments and let it sell its biggest foreign asset, a Lithuanian refinery, to Poland’s PKN Orlen. 
Drain ordered Yukos chief executive Steven Theede to send Rebgun the financial recovery plan last week. 
He ordered Rebgun to submit it to creditors ahead of a meeting on June 16 and then report back to him with a status report by July 31. 
“Unfortunately, it appears that Mr Rebgun has not proceeded as agreed and required,” Theede said in a statement on Monday.

TITLE: An Energized Assertiveness
AUTHOR: By Andrei Piontkovsky
TEXT: In the early summer of 2006, Russia’s political class is in a euphoric state of extreme self-satisfaction.
The keyword most frequently heard in contemporary Western discourse about Russia is “assertiveness,” referring to the immense self-confidence of Russia’s leaders, who are energetically expressing and demonstrating their virtually unconcealed hostility toward the West, and the United States in particular.
These are the same people who, at the beginning of 2005, were suffering from what, in psychological terms, could only be described as a sever anxiety attack. After the tragedy of Beslan, their fiascoes in Ukraine and Abkhazia and demonstrations by pensioners against the replacement of social privileges with cash payments, they were paralyzed by the imagined threat of colored revolutions creeping towards Russia’s frontiers. That was when they began claiming that, as President Vladimir Putin himself said, standing behind the terrorists in the Caucasus were more powerful and dangerous traditional enemies, enemies that still saw a nuclear Russia as a threat, and want to weaken and dismember it. They believed deeply and passionately in the truth of such absurd statements.
But having spent a little time in analysis, the patient reassured itself that no colored revolutions were imminent and that the would-be dismemberers of Russia and their henchmen were encountering numerous difficulties of their own — the war in Iraq, the London bombings, social unrest in Paris, Hurricane Katrina, the governmental crisis in Ukraine and so on. It was emboldened by the events and gradually, step by step, moved from the depressive to the manic phase of its illness.
By the end of the year, it had proclaimed itself an energy superpower and begun tentatively to flex muscles now pumped up by the steroids of exorbitant oil and gas prices. There was no lessening of the deep-seeded animosity toward the West. Indeed, it became gleefully exultant when it was sure of its own strength and began to conclude that the West was a sinking ship.
Speaking from the mouth of a government minister, the patient announced that it could not “side with anyone in the worldwide clash of civilizations” that was being unleashed, just as its genetic predecessor, the Stalin regime, stated in 1939 that the Soviet Union could not side with anyone in the World War unleashed by the Anglo-French imperialists.
The only problem was that, no matter how much deep sympathy, affinity and solidarity the Kremlin exuded toward the enemies of the West, no matter how many Khaled Mashaals and Mahmoud Ahmadinejads it cozied up to, in the eyes of these enemies Russia remained a part of the West – its most vulnerable part, moreover, and therefore first in line for expansionist targeting.
The 15 to 20 people who run Russia today do not only rule it, they also own it – its oil and gas resources in particular. The disgraceful deal that gave Roman Abramovich $13 billion for control of Sibneft and the forthcoming Rosneft IPO make further debate on the corrupt nature of the regime futile. The reality is now blatantly obvious.
The patient’s newfound energy hasn’t been channeled toward the furtherance of Russia’s national interests. Instead, it is assertively exhibiting its anti-Western neuroses and an aggressive prosecution of selfish business interests. Having firmly grabbed hold of the candy in the form of Gazprom and Rosneft, the St. Petersburg brigade and its leader, formerly the little lad from the courtyards of the northern capital but now a political big boy, are trading like crazy.
Meanwhile, the image of the West as an enemy has become the sole ideological justification of Putinism, that threadbare philosophy of former members of the FSB and the St. Petersburg city government who have gone crazy with the advent of sky-high oil prices.
The “capitalist ministers,” who remember the oil-price collapses of the 1980s and 1990s, cannot afford to be passive observers of the vicissitudes of the oil markets. Too much in their present lifestyle of absolute power, vast wealth, global influence and personal prestige depends on a single number: the number of dollars per barrel.
This is a new, important factor that has been added to the traditional anti-Western neuroses and phobias and is influencing the Kremlin’s behavior in the international arena. It is quite clear (in private conversations Kremlin advisers make no attempt to conceal the fact) that Russia’s entire policy towards Iran is aimed at prolonging the crisis surrounding Iran’s nuclear program for as long as possible, and thereby keeping oil prices high.
The delivery of Tor-M1 air defense missiles, if it goes ahead, will render an Israeli preventive strike almost inevitable. It is not hard to imagine the level world prices will hit after such a development leads to the severe disruption of oil exports from the Middle East.
How will the West react to this new assertiveness on the part of the Putin regime? It is not my place to give advice to Western politicians, the more so since the West as an entity is very heterogeneous. It’s much more important that more people both in Russia and in the West understand that:
• The Putin regime is leading Russia into de-modernization and blocking its progress toward the formation of a post-industrial society;
• “Energy superpower” is a saccharine euphemism for the less euphonious “petro-state;”
• The exultant malice of the Putin team and its spin doctors over the failures and misfortunes of the West, as well as their flirtation with its enemies, is irresponsible in view of Russia’s national security interests;
• In civilizational terms, Russia is part of the greater West, or rather the “greater North”;
• Russia and the West simply cannot afford to drift apart in a 21st century in which they face numerous existential challenges. This is not a question of geopolitical preferences but of their very future.

And finally, that the Putins, Alexander Sechins, Sergei Bogdanchikovs, Alexei Millers and Roman Abramoviches come and go, but Russia and the Russian people remain.

Andrei Piontkovsky is an independent political analyst and the former director of the Center for Strategic Studies in Moscow.

TITLE: Putin’s Double Vision
PUBLISHER: Financial Times
TEXT: There are many reasons to express doubts about the move by Arcelor, the Luxembourg-based steel group, to buy Severstal of Russia in order to sidestep the hostile bid by Mittal Steel. One is the way the Arcelor board is presenting the takeover as a done deal, which only an absolute majority of all shareholders will be able to reject. A second is the opportunity for yet another oligarch’s fortune to leave Russia, with Alexei Mordashov picking up nearly one-third of Arcelor in return for his 90 percent of Severstal.
But the reason to welcome this deal, which will have been cleared in advance with the Kremlin, is that Vladimir Putin, the president, is evidently showing none of the neurosis about one of his country’s top two steelmakers coming under foreign control that he displays about foreign ownership in Russia’s energy sector. If only his evidently relaxed view on Severstal could become the template for a more general Russian openness to foreign investment. But only last week, at his summit with the European Union, Putin was touchily describing the energy sector as “the holy of holies of our economy” and demanding reciprocity for any EU investment in it.
This touchiness was underlined last week by a report from the Academy of Natural Science that got some support from Moscow’s natural resources ministry. This called for Russia to renegotiate its production-sharing agreements with foreign oil companies to give Russian companies more of a role in the two offshore projects at Sakhalin and one in northern Russia. In fact, the ministry’s support for renegotiation was then firmly overruled by the senior energy minister, Viktor Khristenko, who said Russia would stick to the PSA terms. Nonetheless, these deals are causing growing Russian frustration. As their name suggests, PSAs allow foreign companies to sidestep the regular tax system and to pay the government out of shared oil or gas production, but only after the companies have recovered all their development costs. Therefore, in the case of Sakhalin 2, where Shell has incurred enormous cost overruns, Moscow is understandably concerned at seeing the prospect of payment receding into the future.
Yet the price of contract sanctity is something the Russian government can pay, because with only three PSAs ever granted the problem is essentially limited. It is also something it must pay in order to avoid further damage to a contractual reputation badly dented by its savage victimization and break-up of the Yukos oil group of Mikhail Khodorkovsky, now in a Siberian jail.
A big chunk of Yukos was snapped up by state-owned Rosneft. The government intends to sell Rosneft shares on western exchanges this summer, but some western investors have called for a boycott of what is seen as the resale of stolen property. In these circumstances, Moscow cannot afford not to honour the PSAs.

TITLE: In Defense of Gazprom
AUTHOR: By Thomas Catan
PUBLISHER: Financial Times
TEXT: On January 1, 2005, Europeans came to realize just how important to them Gazprom has become.
On that day, a dispute with Ukraine over the price it pays for gas ended up briefly interrupting supplies to Europe, which depends on Russia for a quarter of its gas.
The incident tarnished Russia’s hard-won reputation as a reliable energy supplier, built up during more than two decades of uninterrupted supplies.
It also pushed energy security to the top of the EU’s agenda.
Suspicions that Russia had decided to use its energy reserves as a foreign policy tool were then bolstered by veiled threats by Gazprom’s chief executive, Alexei Miller, and the Russian president Vladimir Putin.
Both suggested that if Europe blocked Gazprom’s expansion plans, they would shift their investment focus to new markets in Asia and the US instead. The incidents prompted Dick Cheney, US vice-president, to accuse Russia of using its vast energy supplies to blackmail its neighbours.
Alexander Medvedev, Gazprom’s deputy chief executive, thinks the Russian energy giant has been misunderstood by both Cheney and the western media. In an interview with the FT, he said the company’s actions were commercially, not politically motivated.
“The tone of the press is really surprising to me,” he says.
“When Cheney is saying that Russia is using blackmail ... that is nothing to do with our normal business practice.
“I was always educated that western free press is giving the possibility to express different views. We didn’t see it.”
Medvedev says it was Ukraine, not Russia, that had attempted to use blackmail to keep receiving cut-price gas.
“We tried to find a solution with Ukraine till the very end of the year,” he says. “Ukraine left the negotiating table voluntarily three days before the end of the year. They probably believed they could blackmail not only Gazprom but the whole [of] Europe, making them the centre of the universe.”
As for the supposed threats made by Miller to EU ambassadors, Medvedev says his comments were broadly misinterpreted.
Miller was referring to the destination of future supplies, he says – not existing contracts. Analysts have said that Moscow is aiming to play Europe and China, Russia’s largest potential customer, off against each other.
But Medvedev says it simply must make a commercial decision on where to send new gas supplies in the coming decades.
“Obviously we should make our investment decision today for the future supply,” he says. “If Europe says to us: ‘Look guys, we don’t want  your gas’, to increase the share of Russian gas beyond a certain limit then we should invest in supply of gas to China.”
The EU has called on Gazprom to open its pipeline network to third parties – both to independent producers and other gas-producing countries such as Kazakhstan or Turkmenistan.
But Medvedev derides the idea of sharing its pipeline network – the longest in the world – as “a pure Communist approach, that it should be divided equally”.
He says there is simply no room in its pipelines to transport other people’s gas if Gazprom is to fulfil its existing contracts.
“Our system is fully planned and managed in accordance, not only with the situation today, but also for the next 20, 25 years of our export portfolio,” he says. “Obviously, we are not intending to be in breach of our contracts because Cheney would like to give access to somebody in central Asia.
“For us, our contracts are like a Holy Bible.”
US has also been pushing for an alternative pipeline that would take Kazakh gas through Azerbaijan to Turkey and into Europe, bypassing Russia altogether.
But Medvedev derides that project as “unrealistic.” Kazakhstan would not have enough gas to supply it and Europe would not have enough demand to justify it, he says. “You could speak about hundreds of projects, but [none] of them will be executed,” he says. “I’m rather sure that without Russian gas, no projects in new supply will fly. For a very simple reason: no gas, no market.”
“Today, due to the absence of the additional markets for this gas in Europe, it is absolutely unrealistic,” he says.

TITLE: UEFA’s Own Goal
AUTHOR: By Chris Heaton-Harris
TEXT: The upper echelon of football is a massive moneymaker. German player Michael Ballack recently signed with the British team Chelsea, and will earn more in two weeks than British Prime Minister Tony Blair earns in a year. FIFA, football’s global governing body, will make a mint off this summer’s World Cup in Germany: The proceeds from advertising and sponsors, ticket sales and television broadcasts will total hundreds of millions of dollars.
But with big money come big problems. Betting scandals and match-fixing investigations in Italy and Germany have recently made the front pages. In addition, Europe’s football clubs not only have to live with the FIFA rules of the game but also with European law, which is more incomprehensible – and often more nonsensical – than even the current offside rule. In response to this, 18 of Europe’s biggest clubs are now lobbying for a bigger say in running the game and for a bigger slice of the financial cake. This is not unlike Microsoft asking for a bigger share of the software market and for more influence in regulating it.
Two weeks ago, former Portuguese sports minister Jose Luis Arnaut published the “Independent Football Review,” commissioned by the recent British presidency of the European Union. Football is “not in good health,” Arnaut concluded. Among other problems, he noted bribery, the lack of regulations for soccer agents, racism among fans, and insufficient checks on club owners to prevent dirty money from entering the game.
Not all of the cures he prescribes are as bad as the media have reported. For instance, ensuring that a minimum number of players come from the club’s own training camps and giving fans more ownership, and thus control over their football clubs, make sense. But some of the recommendations are truly dreadful. One “big idea” is to cap the salaries of top players, as clubs would be able to spend only a fixed percentage of their revenues on players’ wages. This is ideologically rather unsavory. For the EU to set the parameters of how much people should earn would mean a radical departure from the free-market principles European law is based on.
If you like socialism, though, this might sound like a good idea. It would seem to bring the spending power of clubs like Chelsea into line with those of its big rivals and, as Arnaut claims, restore a “competitive balance” in European football leagues.
But hold on a moment. I don’t remember seeing Chelsea play in the recent Champions League final. It might have spent a fortune assembling a team of superstars, but it didn’t dominate European football this season. So why does Arnault want to call in EU regulators to correct a “competitive imbalance” that doesn’t exist?
What’s more, it may actually have the opposite effect and cement the dominance of big clubs that are rich enough to pay the higher salaries that football stars command. Smaller clubs could no longer try to punch above their weight by spending relatively more of their disposable resources on talented players than richer clubs. If this proposal ever sees the light of day, the few remaining underdogs will go out of business.
Enforcing this rule would be a nightmare. Foreign players already often avoid inflated tax bills by having some of their earnings paid in their home country. And the current fashion of players being paid for their “image rights” via marketing companies they partly own would surely be extended to other areas of indirect remuneration.
But perhaps the report’s worst conclusion is the call for “appropriate” EU laws to govern the game. In the future, all decisions concerning professional football, such as the selling of television rights, would no longer be made by football’s governing bodies, but instead by the European Commission. Forgive me for being blunt, but it was the EU’s previous interventions that got the game into the mess that has Arnaut so worried. Many in the game say the 1996 Bosman ruling by the European Court of Justice was the point at which wages for top players ascended into the stratosphere. The ruling basically put an end to the transfer fees clubs usually asked for a player at the end of his contract. This started a bidding war among clubs for the most valuable players, who suddenly had huge bargaining power. And when the European Commission decided last year to break up the broadcast monopoly for English Premiership matches, it led to higher, not lower, fees for British consumers. Now two broadcasters share the television rights, and fans have to pay for two television subscriptions to watch all the games.
In welcoming the report, Europe’s football’s governing body, UEFA, is playing a dangerous game. The tactics are simple: UEFA wants to obtain an iron-clad exemption from the provisions of the European treaties, to avoid the game’s being hijacked by the interpretations of EU law in the European courts. UEFA should beware. It is likely to get bad law from people who have good intentions, but no understanding of the game.

Chris Heaton-Harris is a British Conservative member of the European Parliament, chairman of the Friends of Football Group and a qualified Association Football referee.

TITLE: The Power of RosUkrEnergo
AUTHOR: By Yulia Latynina
TEXT: A month ago, at the residence of Austrian Ambassador Martin Vukovich, Gazprom head Alexei Miller gave European Union ambassadors a dressing down over Britain’s reluctance to allow Gazprom to buy into Centrica, the Britain’s largest gas supplier. Miller stated outright that Gazprom’s strategy in Europe was to control the distribution network market. “Europeans have to accept this,” Miller said. And then, he threatened to sell gas to China if Europe didn’t toe the line.
Last Thursday, at a meeting in Sochi with EU leaders, President Vladimir Putin softened the stance significantly, saying that the Russian and EU positions on major issues were “the same or similar,” and that Russia “would fulfill all its long-term contracts to supply gas, regardless of whether or not there is agreement on the Energy Charter.”
This was an extraordinary about-face. A month ago, Russia was already talking like it had the tentacles of its gas pipelines around Europe’s neck. Now there is a retreat on all fronts: no mention of the “energy superpower,” and no threat to shift supplies of gas to China.
What happened?
Here’s what happened: Right after Miller’s aggressive statement, the United States began to investigate the ownership of the mysterious RosUkrEnergo company, the gas trader with a monopoly on Russian sales to Ukraine. It was revealed that the nominal owners of 50 percent of RosUkrEnergo were Dmitry Firtash (with 90 percent of that stake) and Ivan Fursin (10 percent). You wouldn’t call Firtash a major oligarch. He is known mostly as the representative of EuralTransGas, the predecessor of RosUkrEnergo, which was registered by four individuals in the Hungarian village of Chabdy, and as the head of a branch of Highrock Properties Ltd., a subsidiary of Israel’s Highrock Holdings. The financial director at Highrock is Igor Fisherman, an associate of Semyon Mogilevich, a reputed Ukrainian crime figure wanted by the FBI on racketeering and fraud charges.
 Isn’t this amazing? Is it really possible that Firtash’s misfortune is powerful enough to have contributed to the Kremlin’s decision to make a 180-degree turn in its foreign energy policy? Is it just as possible that the Kremlin was worried that investigation would reveal bigger fish standing behind Firtash — perhaps some people a little closer to home?
To be fair, it might not just be the misfortune of a major gas trader, Firtash, that led to such a radical change in the energy superpower’s foreign policy.
Europe is also interested in the telecoms company MegaFon, which has a history painfully similar to that of RosUkrEnergo. A Swiss tribunal ruled that the owner of a controversial stake in MegaFon was IT and Communications Minister Leonid Reiman, countering claims by Jeffrey Galmond, a Danish lawyer who has been doing business in Russia since the 1990s, that the stake was his. 
But gas, which is everything to Russia, is more important. Putin cites precise numbers for gas prices to Ukraine and Belarus and at the pipeline gates in Baumgarten, Austria. He cites precise volume figures with an ease that I, for one, have never heard coming out of Firtash.
There are two reasons why Russia cannot blackmail the West with gas. The first is purely economic. Yes, Europe depends on Russian gas, but accounts for just 12 percent of the world’s gross domestic product. Only 4.6 percent of post-industrial Europe’s GDP goes to energy resources, and just 25 percent of that is supplied by Russia. It’s not much. During the reign of Ivan the Terrible, when Russia exported linen and hemp, the world economy was more dependent in Russian hemp than it is on Russian gas today.
A second historical comparison might be simpler. In the Soviet era, nobody would have suggested that the Politburo was depositing receipts from sale of tanks in the accounts of a potential adversary.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

TITLE: Lesson Plan
AUTHOR: By Chris Floyd
TEXT: Many observers have compared the methodical murder of 24 innocent civilians by U.S. Marines in the Iraqi town of Haditha — now confirmed by Pentagon and congressional sources — to the infamous My Lai massacre in Vietnam, when U.S. troops slaughtered hundreds of civilians in a bloody rampage. But this is a false equation, one that gravely distorts the overall reality of the coalition effort in Iraq.
For it is not the small-scale Haditha atrocity that should be compared to My Lai. It is the entire Iraq War itself. The whole operation — from its inception in high-level mendacity to its execution in blood-soaked arrogance, folly and greed — is a war crime of almost unfathomable proportions, a My Lai writ large, a My Lai every single day, year after year after year.
Details of the Haditha killings are finally emerging after months of official cover-up and heated denunciations of anyone who questioned the shifting, conflicting stories issued by the Pentagon following the November 2005 incident. The horror speaks for itself: A unit of Marines from Kilo Company, thirsting for revenge after a roadside bomb killed a comrade, broke into homes near the blast area and systematically executed the civilians they found there, along with five men who happened to be passing by in a taxi, Time magazine reports.
Photos taken afterward by U.S. military intelligence document the carnage. “One portrays an Iraqi mother and young child, kneeling on the floor, as if in prayer,” the Sunday Times reports. “They have been shot dead at close range. The pictures show other victims, shot execution-style in the head and chest in their homes.” The victims “included a 76-year-old amputee and a four-year-old boy,” the Observer reports. “In one house an entire family, including seven children, were attacked with guns and grenades. Only a 13-year-old girl survived.” A U.S. government official told the Sunday Times that the attackers had “suffered a total breakdown in morality and leadership.”
Take special note of that last statement: It may be the first time that a Bush administration spokesman has ever told the truth about the war. There has indeed been a total breakdown in morality and leadership in Iraq; but it’s not confined to the Haditha killers. They are just the inevitable end product of the culture of lawlessness, brutality and aggression deliberately manufactured by the White House to serve its predatory geopolitical ambitions and its dirty war-profiteering schemes. 
This fish has rotted from the head, and the corruption has eaten through the entire body politic. It was bound to find its most extreme manifestations in those whom Bush has armed with lies — a majority of U.S. soldiers believe that Iraq was involved in Sept. 11, polls show — and sent off to kill and be killed in an illegal war of aggression based on knowingly false and tricked-up evidence. If atrocity is the foundation of your enterprise, if atrocity is the atmosphere you breathe, why then, you are bound to produce atrocities, over and over, despite the many individual soldiers and honorable officers who struggle against the infected tide.
These massacres aren’t just momentary outbursts of revenging anger; they’re learned behavior. The Marines who killed at Haditha were veterans of the much larger atrocity at Fallujah the year before. There they took part in one of the most savage demolitions of a city since World War II. Eight weeks of relentless bombing was followed by a cut-off of the city’s water, electricity and food supplies. More than two-thirds of the residents fled the coming inferno; those who remained were considered fair game in the house-by-house ravaging that followed. Among the Americans’ first targets were the city’s medical centers, as U.S. officers freely admitted to The New York Times. They were destroyed or shut down, with medical staff killed or imprisoned, to prevent bad publicity about civilian casualties from reaching the outside world, the officers said. Later, an investigation by the U.S.-backed Iraqi government found strong evidence of the use of chemical weapons against the city. Up to 6,000 people were killed in the attack, most of them civilians. 
The few hundred Fallujah-based insurgents who had been the ostensible target of the assault had escaped long before the onslaught began. Thus there was no real military purpose to the city’s destruction, which had been ordered by the White House; it was instead an act of reprisal, a collective punishment against the Iraqi people as a whole, noncombatants included, for the armed resistance to the coalition conquest. The Marines of Kilo Company simply took what they were taught by their eminently respectable superiors in Fallujah and applied it in Haditha.
No doubt these lessons are being applied throughout Iraq. In March, we reported here on an eerily similar incident in the Isahaqi region, when 11 civilians, including five children under the age of five, were killed during a house raid by U.S. troops. Photos confirmed the attack and the 11 deaths. Local police said the victims had been shot execution-style, although none of them were connected to the insurgency. Pentagon officials, despite the photographic evidence, would confirm only four civilian deaths: unfortunate collateral damage of a firefight with an al-Qaeda operative, they said. The idea that U.S. troops could execute civilians in cold blood was preposterous, they said.
Like Abu Ghraib, Haditha is not an aberration but the emblem of a wider, systemic crime, the natural fruit of an outlaw regime that has made aggressive war, torture, indefinite detention, “extrajudicial killing,” rendition and concentration camps official national policy. This moral rot is Bush’s true historical legacy.

TITLE: Officers and Their Families Find That They Can’t Return Home
AUTHOR: By Anastasiya Lebedev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Nadya, her husband and their 2-year-old son share a room big enough for an inflatable mattress and a television set in a nondescript military dormitory in Moscow.
They are one of 20 families on the floor. Outside each door is a trash can and slippers. Everyone shares two bathrooms with walls that are peeling and stained from flooding. In the morning, children stand in line and anxiously wait to use the facilities. The women prefer to cook at night, when it’s easier to find a free burner in the common kitchen.
Nadya’s family is one of 157,800 families of current or retired army officers across the country stuck in housing purgatory: As they wait for the Defense Ministry to provide them with the adequate apartments they are entitled to or, at least, housing certificates, they must live in temporary and crowded quarters.
Residents enjoy little privacy. Some servicemen are unable to rent rooms of their own, making it impossible for families to stay together. Like the Moscow region facility that burned down last week, killing eight, the dormitories reek of neglect. 
Nadya’s dorm, for instance, was built in 1936. While there have been cosmetic improvements over the years, the building is long overdue for a serious upgrade. One resident said he had heard the building would soon be renovated — or razed.
The army needs about 215,000 apartments beyond the 205,000 it already owns to take care of all of its officers now in uniform, said Vladimir Galaiko, a spokesman for the Defense Ministry’s billeting department.
In December 2005, President Vladimir Putin trained the spotlight on the military-housing crunch when he dubbed the program designed to relocate officers a “swindle.”
According to the program’s terms, officers are awarded housing certificates worth a fraction of market values in lieu of actual apartments.
To rectify this, Putin pledged to allocate another 30 billion rubles ($1.1 billion) in 2006-07 to ease housing pressure in the five areas with the most expensive housing: Moscow, the Moscow region, St. Petersburg, the Leningrad region and the Kaliningrad region. 
In Moscow, the housing certificates were expected to rise to about 29,000 rubles ($1,072) per square meter from the previous value, 13,400 rubles ($495). 
The increased figure would still have been below Moscow prices, which are rising quickly: In January, according to figures provided by the IRN.ru real estate consulting group, the average square foot of Moscow real-estate was at $2,354; today, it is $3,222.
But the increases promised by the president have yet to materialize.
Igor Kurochkin, deputy chairman of the All-Russian Servicemen’s Union, a support group for servicemen and veterans, said officers in Moscow and the Moscow region were actually receiving certificates good for 16,320 rubles ($620) per square meter. 
“None of these statements corresponds with reality,” Kurochkin said of the president’s pledge. “They have not been realized.”
The Defense Ministry adopted the certificate program in 1998. The goal was to stop giving away housing to retired officers, who are entitled by law to own their homes after serving for 20 years.
Recently, the union began advising retired officers not to accept the certificates and insist on apartments, Kurochkin said, given that the certificates were undervalued and that housing prices, at least in some places, were rapidly rising.
Not all retired officers find their homes via housing certificates. The military has bought homes for retired officers, and some of the 30 billion rubles ($1.12 billion) pledged by Putin in December is slated for 18,000 apartments over the next two years in the five troubled regions, Defense Minister Sergei Ivanov said recently. 
The problem is that retired officers no longer have the option to own these apartments.
As of March 2005, when the State Duma approved a new Housing Code, retired officers only have the option of renting apartments at below-market rates from the state.
The Housing Code conflicts with another law governing servicemen’s rights. That law states that retired servicemen are guaranteed ownership of an apartment.
Given the conflicting statutes, Kurochkin advises military personnel, current and retired, to file for ownership and, if need be, sue in court.
But filing for ownership — and eventually acquiring a property — can be a long and tortuous trek.
Anatoly Skripnichenko and his wife, Nadezhda, filed for ownership, or privatization, of their Murmansk apartment in November 2004, seven years after Anatoly retired with more than 20 years of service in the Northern Fleet under his belt.
In February, the Skripnichenkos, who have a 23-year-old daughter, discovered that the apartment’s legal status was unclear, delaying the ownership process.
As a result of this confusion, the Skripnichenkos lost the right to acquire the apartment after the new Housing Code took effect. Now they can only extend their rental agreement.
The Skripnichenkos have lost one court case and are waiting for their appeal. In the meantime, they have filed for a housing certificate in case they lose, but the Navy’s housing authorities have said the Skripnichenkos must prove in court they qualify for the program.
Many families like the Skripnichenkos that are waiting for the certificates are rejected for arbitrary reasons, said Alexander Artemyev, the director of Egida, a Murmansk NGO devoted to protecting servicemen’s rights.
Artemyev cited the case of Ivan Kozlov, who served in the Northern Fleet for 23 years. Kozlov’s recent housing certificate application was turned down because he was once on a waiting list for an apartment in his hometown of Sevastopol – when it was still in the Soviet Union and not the independent state of Ukraine.
“The authorities give out rejections because they’re covering their backs against their superiors or following old procedures,” said Kozlov, who ultimately prevailed in court. 
Igor Grigorov, a retired officer who is now a real estate agent at Lyubimy Gorod 1 in Moscow, said that many retired servicemen took part in illegal schemes that involved selling housing certificates to real estate firms.
In the Primorye region, only 43 of 180 apartments bought with housing certificates that had been checked by the All-Russian Servicemen’s Union had gone to retired servicemen, said Yury Tarlavin, the union’s regional chairman. Tarlavin’s comments came at a recent union meeting in Moscow.
Oleg Agapkin, who retired after 20 years in the army, is a typical example of a former serviceman who has cashed in his housing certificates hoping to buy properties that would normally be off limits.
Agapkin had wanted to move his family closer to Moscow, cutting the three-hour trip to work from the military town in the Moscow region’s Ruzsky district, where he lives.
A few years back, he cashed in his certificate, worth $400 per square meter, and invested the money in an unfinished apartment. 
Unfortunately for Agapkin, the apartment was never built. The head of the construction firm in charge of the project, Sotsialnaya Initsiativa, was charged in January with fraud.
“Instead of an apartment, they gave me a piece of paper, and I had to go through all these schemes to get the money, which couldn’t buy anything,” said Agapkin, who will soon be evicted with his family from his military-owned apartment.
While many military officers and their families are angry, they often sound more despondent.
Nadya, the Moscow dormitory resident, said her husband, a student at a nearby military institute, had searched for their home for a year before they moved there. 
“We were lucky,” Nadya  said. “It was a coincidence. He had to walk around the dorm and ask if anyone was moving out.”

TITLE: Peru Backs ‘Disgraced’ Garcia
AUTHOR: By Rick Vecchio
PUBLISHER: The Associated Press
TEXT: LIMA, Peru — Former President Alan Garcia staged a remarkable political comeback in Peru’s runoff election, beating a retired army lieutenant to regain control of the country 16 years after his first term ended in economic ruin and rebel violence. 
Garcia’s victory Sunday was a blow to Venezuelan President Hugo Chavez, who had endorsed Ollanta Humala, a political upstart many Peruvians saw as dangerous to democracy.
“I want our party this time to demonstrate to the Peruvian people, who have called it to the highest responsibilities, that it will not convert the state into booty,” said Garcia, referring to the widespread corruption that marked his first term from 1985-90, when tens of thousands of party members landed state jobs.
Garcia said voters had sent an overwhelming message to Chavez that they rejected the “strategy of expansion of a militaristic, retrograde model that he has tried to impose in South America.”
Chavez extended his regional influence last year with the election of a loyal ally, Evo Morales, as Bolivia’s president. Like Morales, Humala had pledged to punish a corrupt political establishment and redistribute wealth to his country’s poor Indian and mestizo majority.
Garcia, 57, held an insurmountable lead of 55.5 percent against 44.5 percent for Humala with 77.3 percent of the vote counted, said the head of the electoral agency, Magdalena Chu.
The margin was expected to shrink, however, as Humala’s support is strongest in rural areas where vote reporting is slower. Unofficial partial ballot counts by two respected polling companies and a citizens’ watchdog group all gave Garcia more than 52 percent of the vote.
Humala, 43, who burst onto the political scene in 2000 while leading a small-scale military rebellion against then-president Alberto Fujimori’s foundering corruption-riddled regime, appeared to accept defeat Sunday night. He said his fledging nationalist movement, formed in December, recognized the partial results and “saluted” Garcia and his party.
But his spokeswoman, Cynthia Montes, insisted that he had not acknowledged Garcia’s victory and was waiting for final official results.
Humala won a first round of voting on April 9 among 20 candidates. Garcia qualified with a razor-thin victory over the third-place candidate.
Garcia left office in disgrace in 1990 with Peru nearly bankrupt and battered by the devastating Shining Path insurgency. He fled into exile two years later when Fujimori tried to arrest him, returning in 2001 after the Supreme Court ruled that the statute of limitations on corruption charges against him had expired.
Garcia then made a spectacular run for the presidency in Peru’s previous election, winning a spot in the runoff and narrowly losing to current President Alejandro Toledo, who is barred legally from seeking a consecutive term.
Seething ethnic and class resentments deeply divide this Andean nation, and Garcia acknowledged that one of his main challenges will be to rid the political class of corruption.
Garcia won majorities in the capital, Lima, where a third of Peru’s 16 million voters live, and along the more developed northern coast.
But he lost badly in almost all of Peru’s southern and central highland states and in the country’s jungle interior — populated by poor Quechua-speaking Indians and mixed-race mestizos, long neglected by the nation’s political elite.
Many Peruvians feel they have not benefited from economic growth that averaged 5.5 percent over the past four years, when the poverty rate dropped just two percentage points to 52 percent.

TITLE: Canada’s Police Arrest 17 In Terrorism Plot Sting
AUTHOR: By Beth Duff-Brown
PUBLISHER: The Associated Press
TEXT: MISSISSAUGA, Ontario — The Royal Canadian Mounted Police itself delivered three tons of potential bomb-making material to a group that authorities said wanted to launch a string of attacks inspired by al-Qaida, according to a news report Sunday. 
The Toronto Star said the sting unfolded when investigators delivered the ammonium nitrate to the group of Muslim Canadians, then moved in quickly on what officials called a homegrown terror ring.
The newspaper said that investigators learned of the group’s alleged plan to bomb targets around Ontario, then controlled the sale and transport of the fertilizer.
Authorities refused to discuss the Star’s story and have revealed few details of the purported plot, or how the sting developed.
Police arrested 12 adults, aged 19 to 43, and five suspects younger than 18 on Friday and Saturday on charges including plotting attacks with explosives on Canadian targets.
The oldest, Qayyum Abdul Jamal, led prayers at a storefront mosque attended by some 40 to 50 families down the street from his home in a middle-class neighborhood of Mississauga, west of Toronto.
Imam Qamrul Khanson said the language of Jamal’s Friday night prayers had a more strident tone than other prayer leaders’, but there was never any talk of terrorism or violence.
Khanson said at least three of the suspects regularly prayed at the Al-Rahman Islamic Center for Islamic Education.
“Here we always preach peace and moderation,” Khanson said at the one-room mosque.
“I have faith that they have done a thorough investigation,” Khanson said of authorities. “But just the possession of ammonium nitrate doesn’t prove that they have done anything wrong.”
Officials said the operation involved some 400 intelligence and law-enforcement officers and was the largest counterterrorism operation in Canada since the adoption of Canada’s Anti-Terrorism Act following the Sept. 11, 2001 attacks on the United States.
Citing an unnamed Canadian federal official, The Canadian Press reported that web surfing and e-mail among the suspects led to the start of the probe in 2004.
“The Internet was, according to the police, a very important part of their activities,” Canada’s ambassador to Washington, Michael Wilson, said in an interview on CNN’s “Late Edition.”
U.S. Secretary of State Condoleezza Rice said the operation was “obviously a great success for the Canadians.”
The 17 suspects represent a spectrum of Canadian society, from the unemployed to the college-educated. The 12 adults live in Toronto, Mississauga and Kingston, Ontario.
Police said the suspects, all citizens or residents of Canada, had trained together.
Corporal Michele Paradis, a spokeswoman for the Mounties, said no more arrests were expected in coming days.
“Once we analyze and sort through everything that was seized as a result there may be [more arrests],” she said. “At this point we are confident that we have the majority of people.” 
Rocco Galati, a lawyer for two of the men from Mississauga, said: “Both of their families are very well-established professionals, well-established families, no criminal pasts whatsoever.” 
He described Ahmad Ghany, 21, as a Canada-born health sciences graduate of McMaster University whose father, a physician, emigrated from Trinidad and Tobago in 1955. 
His other client, Shareef Abdelhaleen, 30, is an unmarried computer programmer who emigrated from Egypt at age 10 with his father, Galati said. 
Two suspects, Mohammed Dirie, 22, and Yasim Abdi Mohamed, 24, already are in an Ontario prison serving two-year terms for possession of illegal weapons. 
Neighbors said the oldest suspect, Jamal, was often home and did not seem to work regularly, although his wife drove a schoolbus. The couple has three small children, neighbors said.

TITLE: Chinese Protestors Arrested At Tiananmen Anniversary
PUBLISHER: The Associated Press
TEXT: BEIJING – Chinese police tore up a protestor’s poster and detained at least two people on Beijing’s Tiananmen Square on Sunday as the country marked 17 years since local troops crushed a pro-democracy demonstration in the public space. 
An elderly woman tried to pull out a poster with apparently political material written on it, but police ripped it up and then took her away in a van.
A farmer tried to stage a protest apparently unrelated to the 1989 crackdown, but he also was taken away in a van.
After dawn, a group of tourists tried to open a banner while posing for a photo, catching the attention of police, who quickly forced them to put the nonpolitical material away. They were not detained.
Discussion of the crackdown is still taboo in China outside of the semiautonomous regions of Hong Kong and Macau. Chinese television news and major newspapers did not mention the anniversary.
In Hong Kong, several hundred people holding candles gathered at Victoria Park, creating a sea of lights covering four soccer fields. They observed a brief silence and organizers laid wreaths at a makeshift shrine dedicated to “martyrs of democracy.”
The crowd also sang the pro-democracy song, “Freedom Flower,” with the lyrics: “No matter how heavy the rain beats, freedom will blossom.”
Organizers claimed 44,000 attended the commemoration, but police put the figure at 19,000. The crowd size was likely hurt by rainy weather in recent days and the lack of major political disputes.
“I hope the Chinese government will recognize this dark history,” Eric Lau, 14, said.
Wang Dan, one of the 1989 protest leaders who was jailed and then exiled to the United States, said in a taped video message: “We don’t want China to plunge into chaos nor do we want the ruling party to give up power. We only want the Chinese people to live freely and with dignity.”

TITLE: Gay Marriage Ban Tops Bush Agenda
PUBLISHER: The Associated Press
TEXT: WASHINGTON — U.S. President George W. Bush and congressional Republicans are aiming the political spotlight this week on efforts to ban gay marriage, with events at both ends of Pennsylvania Avenue – all for a constitutional amendment with scant chance of passage but wide appeal among social conservatives. 
“Ages of experience have taught us that the commitment of a husband and wife to love and to serve one another promotes the welfare of children and the stability of society,” Bush said in his weekly radio address Saturday. “Government, by recognizing and protecting marriage, serves the interests of all.”
The Senate opened three days of debate on the matter Monday.
All but one of the Senate Democrats – the exception is Ben Nelson of Nebraska – oppose the measure and, with moderate Republicans, are expected to block an up-or-down vote, killing the measure for the year.
Democrats say the amendment is a divisive bow to religious conservatives, and point out that it conflicts with the Republican party’s opposition to big government interference.
“A vote for this amendment is a vote for bigotry pure and simple,” said Democratic Senator Edward Kennedy of Massachusetts, where the state Supreme Court legalized gay marriages in 2003.
Mayor Gavin Newsom of San Francisco, which in 2004 began issuing marriage licenses to gay couples, on Monday denounced Bush’s move as predictable and “stale rhetoric” aimed at rallying conservatives for this year’s midterm elections.
“It’s politics. It’s pandering and it’s placating a core constituency, the evangelicals,” Newsom said on ABC.
Fueled by election-year politics, the gay marriage issue is the most volatile Congress will consider as it returns from a weeklong Memorial Day recess.
Other legislation has better chances for success, particularly a record-size emergency spending bill to continue U.S. military operations in Iraq and Afghanistan and provide hurricane relief along the Gulf Coast.
The Pentagon says it needs its money — about $66 billion — right away or delays could begin to affect the conduct of the war in Iraq. The Senate added new relief for farmers and other aid to the package, swelling its cost to more than $100 billion. Bush is demanding that the price tag stick within his $92.2 billion request, plus $2.3 billion to combat avian flu.
An agreement could be passed this week.
The House is expected to consider a $32 billion spending bill that would give the Homeland Security Department $1.8 billion more in 2007 than this year. It also is likely to send Bush a Senate-approved bill to raise indecency fines tenfold, to $325,000 per violation, for television and radio broadcasters.
An election-year debate on the constitutional amendment to define marriage as a union between a man and a woman was never in doubt, however doomed the legislation. As Republicans geared up to defend their majorities in the House and Senate, conservative groups earlier this year let them know that they were dissatisfied with the Republicans’ efforts on several social issues, including gay marriage.
Senate Majority Leader Bill Frist, a possible presidential candidate in 2008, promptly placed the amendment on the floor schedule, with Bush’s promotion central to the plan.

TITLE: 50 Abducted in Increased Iraq Chaos
AUTHOR: By Mohammed al-Ramahi and Ahmed Rasheed
PUBLISHER: Reuters
TEXT: BAGHDAD — Gunmen in police uniforms abducted up to 50 employees of Baghdad transport companies in broad daylight on Monday, police and Interior Ministry sources said. 
They carried out what appeared to be a coordinated operation along a street that is home to several firms offering transport to Syria and Jordan, police said.
The motive was unclear but businesses are sometimes hit by a wave of kidnappings.
The abductions came a day after Iraqi leaders failed to agree on nominees for the interior and defense posts which were left vacant when a national unity government was sworn in on May 20.
Iraq’s political blocs were expected to agree on names to be presented to parliament on Sunday but a deal fell through and the assembly session was postponed, dealing a blow to new Prime Minister Nuri al-Maliki.
Political sources said Maliki’s rivals in his Shi’ite Alliance had objected to his choice for interior minister.
Maliki now faces a deep political crisis over the top security posts as he tries to show Iraqis he means business about stabilizing the country.
Last week he launched a state of emergency in the southern city of Basra to crack down on gangs and feuding Shi’ite factions threatening oil exports vital to saving the economy.
But a car bomb killed at least 28 people in Basra on Saturday and Sunni politicians accused his security forces of killing nine unarmed worshippers at a mosque hours later. Police said they were fired on from the mosque.
And violence kept raging across Iraq.
Gunmen dragged 24 people, mostly teenage students, from vehicles and shot them dead in a small town north of Baghdad on Sunday, police said.
The abductions in Baghdad showed how far Maliki has to go to establish law and order three years after a U.S.-led invasion toppled Saddam Hussein.
A Baghdad court sentenced an Iraqi man to life imprisonment on Monday in connection with the 2004 abduction and killing of Iraqi-British aid worker Margaret Hassan a few hours after his trial started.
A court official said that Mustafa Salman had been charged with aiding and abetting the kidnappers. Two other defendants in the case were freed.
The judge said Salman had received a plastic bag from an associate who asked him to hold on to it. Four months later Iraqi security forces raided Salman’s home and found Hassan’s purse and documents in the bag.
It was one of the first, if not the very first, known trial for the abduction or killing of a foreign-born civilian in Iraq.
Hassan, an Iraqi-British national who had lived in Iraq for more than three decades after marrying an Iraqi engineer, was head of the Iraqi operation of the CARE International charity. 
She was abducted while traveling to work in Baghdad in October 2004, and was killed about a month later after appealing in video messages made by her abductors for British forces to withdraw from Iraq. 
No group claimed responsibility for the abduction or the killing, and her body has not been found.
Kidnappings are still a major part of the security crisis. 
Gunmen killed a Russian embassy employee on Saturday and kidnapped four others in Baghdad. 
In Baghdad’s heavily guarded Green Zone, ousted Iraqi president Saddam Hussein and seven co-accused returned to court to face charges of crimes against humanity in the killings of 149 Shi’ites in the early 1980s.

TITLE: IN BRIEF
TEXT: Budget Airline Blair
LONDON (AFP) — British Prime Minister Tony Blair, avoiding criticism for using Queen Elizabeth II’s planes, returned with his family from a vacation in Italy on a budget airline’s scheduled flight, newspapers said Monday. 
The Blair family flew from Rome-Ciampino to London-Stansted airport aboard Ryanair Flight FR 3009 with tickets costing 49 pounds ($92 dollars) each, The Daily Telegraph reported.
Blair’s office neither denied nor confirmed the report, citing policy about not commenting on the travels of the prime minister, who spent one week’s holiday in Tuscany.

Montenegro Split
PODGORICA, Montenegro (AP) — Montenegro’s parliament declared independence from Serbia for the tiny Balkan republic Saturday, forming Europe’s newest country and dissolving the last vestiges of the former Yugoslavia. 
The assembly adopted a declaration of independence, verifying the results of a May 21 referendum in which Montenegrins supported a split from Serbia by a slim margin. The document envisages Montenegro as a “multiethnic, multicultural and multireligious society ... based on the rule of law and market economy.”
The authorities then raised a red-and-gold Montenegrin flag over the parliament building, but only a few hundred people celebrated in the capital’s streets because of a downpour.

Two Dead in Balloon
LUTZ, Florida (AP) — Two college students were found dead inside a large, deflated helium balloon after apparently pulling it down and crawling inside it, officials said. 
The deaths of Jason Ackerman and Sara Rydman, both 21, appear to be accidental, Hillsborough County Sheriff Major Bob Schrader said.
Their bodies were found Saturday partially inside a deflated helium balloon at the entrance of a condominium complex a few miles north of Tampa. The 8-foot-diameter balloon was used to advertise the complex.
“It was more a fun thing they thought they were doing,” said Linda Rydman, whose daughter was found dead. “You know how you blow up the balloon and suck the helium.”

Go To Hell on 666
HELL, Michigan (AP) — They’re planning a hot time in Hell on Tuesday. The day bears the date of 06-06-06, or abbreviated as 666 — a number that carries hellish significance. And there’s not a snowball’s chance in Hell that the day will go unnoticed in the unincorporated hamlet 60 miles west of Detroit. 
“We’re all about having fun here. I don’t think we’re going to get the cult crowd, the devil worshippers or anything like that,” said Mike “Smitty” Hickey, owner of the Dam Site Inn, whose bar’s signature concoction is the Bloody Devil, a variant of the Bloody Mary.
The 666 revelry is just the latest chapter in the town’s storied history of publicity stunts, said Jason LeTeff, one of its 72 year-round residents – or, as the mayor calls them, Hellions or Hell-billies. 
“Now, here I am living in Hell, taking my kids to church and trying to teach them the right things and the town where we live is having a 6-6-6 party,” he said.

TITLE: Nadal Downs Hewitt to Reach Quarters
PUBLISHER: The Associated Press
TEXT: PARIS — Rafael Nadal remained undefeated at Roland Garros by finally beating Lleyton Hewitt. 
The defending French Open champion, Nadal moved into the quarterfinals and extended his record clay-court winning streak to 57 matches by eliminating Hewitt 6-2 5-7 6-4 6-2 Monday. 
Hewitt had won their three previous meetings, but those were all on hard courts, the most recent in January 2005. 
It was a different story at Roland Garros, where Nadal improved to 11-0 and moved closer to a showdown in the final Sunday against top-ranked Roger Federer. 
Martina Hingis earned the last berth in the women’s quarterfinals, beating Shahar Peer 6-3 2-6 6-3 in the completion of a match suspended overnight. Ivan Ljubicic and Julien Benneteau advanced on the men’s side. 
With a sun-splashed center-court crowd backing Hewitt’s upset bid, the Aussie played Nadal on even terms for 2 1/2 hours, winning 11 consecutive points during one stretch. But at 4-all in the third set, Nadal broke serve with a typically inventive shot — a backhand slice that barely cleared the net, landed on the sideline and bounced sideways as Hewitt chased it off the court in vain. 
Nadal held at love to close the set and broke three times in the final set, repeatedly feasting on Hewitt’s second serve. 
The Spaniard was coming off a grueling victory that took nearly five hours Saturday. But he looked like the fresher player at the finish, advancing in 3 hours, 17 minutes on the warmest day of the tournament. 
And not once did Nadal choke on a banana — a problem that forced an interruption for a visit from a doctor during his third-round marathon. 
Joining Nadal on the men’s schedule Wednesday will be the unseeded Benneteau, who earned his first berth in a Grand Slam quarterfinal when Alberto Martin retired with a back injury trailing 5-1. 
The No. 4-seeded Ljubicic beat unseeded Ruben Ramirez Hidalgo 6-3 3-6 6-3 6-2, giving Croatia two men’s quarterfinalists at Roland Garros for the first time. Compatriot Mario Ancic advanced Sunday and was due to face Federer on Tuesday. 
Hingis’ opponent Tuesday is two-time runner-up Kim Clijsters. It’s a rematch of the Australian Open quarterfinals, which Clijsters won shortly after Hingis’ return from a three-year injury layoff. 
“I’ve made a lot of improvement since Australia,” Hingis said. “We’ll see. Just got to come up with the best.” 
A five-time Grand Slam champion, the No. 12-seeded Hingis is playing at Roland Garros for the first time since 2001. It’s the only major event she has yet to win. 
The 19-year-old Peer fell short in her bid to become the first Israeli, male or female, to reach a Grand Slam quarterfinal. But she gave Hingis some anxious moments. 
After taking a 5-2 lead, Hingis hit a handful of shaky shots trying to seal the victory but did so when Peer hit errant backhands on the last three points. 
“To be really scared of losing, she would have to be closer to be really totally scared,” Hingis said. 
She took charge by pinning Peer behind the baseline with deep groundstrokes, then moving to the net to close out points. Hingis won 24 of 29 points at the net, including eight of nine in the final set. 
The match was suspended because of darkness after two sets Sunday, and resumed under a hazy sky to start the final week of the tournament. The first game was a 14-minute marathon, going to deuce five times before Hingis converted her third break-point chance. 
Peer promptly broke back. Hingis regained the lead for good with a break at love for 3-2, and won 13 of 15 points for a 5-2 lead. 
Martin stopped the match for seven minutes in the fifth game against Benneteau and received treatment from a trainer. He resumed play but was in obvious pain, hitting serves stiffly and not chasing shots by Benneteau, and finally conceded. 
Martin said he has had back trouble in the past, and he aggravated the injury on a serve. 
“I barely can walk,” he said. “I wish this would have happened in another tournament.” 
Martin had reached the fourth round at a Grand Slam tournament for the first time in 31 major events. The unseeded Spaniard advanced in the first round when fifth-seeded Andy Roddick retired with an ankle injury. 
Benneteau, ranked 95th, became the first Frenchman to reach the quarterfinals at Roland Garros since Sebastien Grosjean in 2002. 
“On the spur of the moment, it’s difficult to believe that the match is over and you’ve won,” Benneteau said.

TITLE: Local Hero Retains WBA Title
AUTHOR: By Roy Kammerer
PUBLISHER: The Associated Press
TEXT: HANOVER, Germany (AP) — St. Petersburg’s Nikolai Valuyev retained his WBA heavyweight title Saturday, stopping Jamaican challenger Owen Beck with a right uppercut in the third round. 
The biggest heavyweight in history at 7 feet and 321 pounds, Valuyev sent Beck backward stiff-legged to the canvas with 1:16 left following a second-round knockdown in the one-sided fight. 
A woozy Beck climbed back onto this feet, but the referee stopped the bout seconds later as he looked helpless against another flurry of punches by Valuyev, 44-0 (32 knockouts). Many spectators called out for the bout to be stopped. 
“My family wanted me to knock him out today, that’s why I did it,” Valuyev said. “It was the right hand today.” 
Valuyev took the title from John Ruiz on a controversial decision in December. Afterward, he said he hadn’t thrown the right enough as he stood outside and jabbed the American with his left. 
This time, Valuyev buckled the knees of Beck (25-3, 18 knockouts) in the first round with the right, doing repeated damage with the hand. He threw punches non-stop once he had Beck in trouble. 
Valuyev said he is trying to live up to being the first Russian heavyweight champion. 
“There is a lot more pressure on me now,” Valuyev said. 
Many thought Beck — who had lost to the only Top 10 fighters on his record and was 1-2 in his last three fights — hadn’t earned a title shot. He gave up nearly 11 inches and 80 pounds to the towering Russian. 
“I didn’t expect him to do the things he did tonight — I didn’t see that in the tapes,” said Beck, who lives in Nashville, Tennessee. “I wanted to go home with the WBA title, but at least I came out still walking, I didn’t go into the ambulance.” 
Valuyev was fighting in small shows in his homeland until German promoter Wilfried Sauerland spotted him in 2003. After the fight, his camp was touting his constant improvement. 
“People underestimate Valuyev. When he finishes learning combinations, like you saw tonight, he will be awesome,” said Don King, who has a piece of the 32-year-old Russian. “He will unify the division.”

TITLE: WORLD CUP IN BRIEF
TEXT: Iran Leader to Visit
FRIEDRICHSHAFEN, Germany (Reuters) — Iran President Mahmoud Ahmadinejad will come to Germany if the team reach the World Cup second round, coach Branko Ivankovic said on Monday. 
“If we go to the second stage for sure he will come to see the team,” Ivankovic told Reuters before the side’s friendly against a Lake Constance regional squad. 
“That will show to my players and to the world that football is very important in Iran. Football is important everywhere in the world.” 

Becks: ‘Slightly Injured’
BRUSSELS (AFP) — England captain David Beckham missed his squad’s final training session before they flew out to Germany on Monday with a slight ankle injury.
Injuries to John Terry’s knee and Ashley Cole’s thigh also allowed them to skip the session, although England officials insisted all three players were not involved purely on a precautionary basis.
Gary Neville, who missed Saturday’s 6-0 win over Jamaica with a hamstring injury, and Wayne Rooney, battling to recover from a broken foot, both trained with the England physiotherapists.

U.S. Squad Made to Wait
HAMBURG (Reuters) — U.S. midfielder DaMarcus Beasley wants coach Bruce Arena to cut short the “irritating” wait before naming his opening team. 
Even though the versatile PSV Eindhoven was one of the key players in helping the United States qualify for the World Cup finals, Beasley said he still does not know whether he will be on the left, right, center or even the beach. 
“It’s irritating not to know,” Beasley told a group of journalists at the U.S. base in the northern port city of Hamburg before a closed-door runout against Angola later on Monday. 

Paraguay Ticket Probe
MUNICH (AFP) — FIFA is investigating claims that the Paraguayan football federation broke the rules by selling some of its allocation of World Cup tickets to foreign agencies, FIFA Secretary-General Urs Linsi has said.
British newspaper The Observer reported on Sunday that Paraguay had sold at least 1,500 tickets — more than half its 3,300 allocation — for its World Cup opening match against England in Frankfurt on Saturday to ticket agencies in Britain.
Linsi said FIFA had asked independent auditors Ernst and Young to investigate the accusations.

Nothing to Lose
BAD BRUECKENAU, Germany (Reuters) — Croatia is already looking beyond its opener against World Cup holder Brazil and concentrating on its final two group matches — games the Croatian coach believe they can and must win. 
“We are focusing on the games against Japan and Australia,” Zlatko Kranjcar told a news conference on Monday. 
“Brazil are five-times champions. We have nothing to lose against them but the key game will be against Japan.” 
Croatia open their Group F campaign against Brazil on June 13, then face Japan five days later and Australia on June 22. 

Shev Will Be Ready

KIEV (Reuters) — Strikers Andriy Shevchenko and Serhiy Rebrov should be fit to start in Ukraine’s final tune-up friendly match this week against Luxembourg, coach Oleg Blokhin said in an interview published on Monday. 
Neither player is likely to start in the match scheduled for Monday against Libya in the eastern Swiss town of Gossau. 
“If everything goes well, he will be able to play in the warm-up match against Luxembourg on Thursday,”Blokhin told the Russian daily Sport-Express, referring to Shevchenko. “I hope Rebrov will also be in proper shape by then.”
Shevchenko is recovering from a knee injury sustained while playing for AC Milan and has in the meantime completed a transfer to English premier league side Chelsea. Rebrov is nursing a hip injury initially deemed not serious by doctors.