SOURCE: The St. Petersburg Times
DATE: Issue #1191 (57), Tuesday, August 1, 2006
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TITLE: New Law Redefines Extremist Activity
AUTHOR: By Anastasiya Lebedev
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Vladimir Putin on Friday signed off on controversial changes to the law on extremist activity that critics say could be used to silence opposition politicians and the press. 
The revised law expands the definition of extremist activity to include public slander of a government official related to his duties, using or threatening violence against a government official or his family, and publicly justifying or excusing terrorism.
Supporters of the revised law argue that it will allow the state to combat racist and nationalist groups more effectively. Russia has seen a rise in hate crimes and xenophobia in recent years.
But critics of the legislation, which sailed through both houses of parliament this month, say it could be used to stifle opposition political parties during the election cycle that begins next year. A related bill, passed by the State Duma in a first reading July 8, bars parties from contesting an election if one or more of their members are convicted of extremism.
The revised law aroused fierce criticism both here and abroad. Opposition politicians, human rights activists and even Central Election Commission chief Alexander Veshnyakov all criticized the expanded definition of extremism contained in the law. Leaders of the Group of Eight nations urged Putin not to sign the law during the recent summit in St. Petersburg, Ekho Moskvy reported.
Leonid Gozman, deputy chairman of the Union of Right Forces, said Putin’s decision to ignore the criticism and approve the amendments was part of a “dangerous trend.”
“Almost any sort of political activity could be construed to fit the expanded definition of extremism, as was the case with ‘Trotskyism’ and ‘anti-Soviet activity’ in the Soviet era,” Gozman said.
Gozman said his party believed the revised law was intended to tighten the Kremlin’s control over the political process, not to combat extremist activity.
“It’s obviously a crackdown,” said Dmitry Oreshkin, head of the Mercator think-tank. Oreshkin said it was no coincidence that the Duma was considering Kremlin-sponsored changes to the country’s election laws immediately after broadening the definition of extremism. While this new one-two punch provides Putin with a powerful new weapon against possible rivals, Oreshkin said the president would not rush to use it.
“The new laws will be triggered as necessary,” Oreshkin said. 
“It’s a gentle form of coercion designed to restrict the rights of dangerous political opponents.” 
If the new laws were interpreted to allow for extremism by association, former Prime Minister Mikhail Kasyanov — who has already declared his intention to run for president in 2008 — might be implicated, Oreshkin said. Earlier this month, Kasyanov took part in “The Other Russia” conference along with National Bolshevik Party leader Eduard Limonov and Viktor Anpilov, head of the Working Russia party, both of whom could well fall under the new definition of extremism, he said.
The new law also criminalizes incitement to extremist activity and public statements that legitimize or excuse such activity, whether these are made in person, in print or on audiotape or videotape. If these materials are “intended for public use,” the people who produce them can be found guilty of extremist activity. This provision in the law could have a chilling effect on the independent media as they gear up for the 2007 and 2008 election season. If a prominent politician or party were convicted of extremism, the media would have to walk an extremely fine line in their coverage.
The law’s public slander provision could also make objective coverage of the government more difficult — and risky. Yury Dzhibladze, president of the Center for the Development of Democracy and Human Rights, said the law would curtail freedom of speech because criticism of government officials could be interpreted as slander and punished as extremism under the new law. Protesters and demonstrators could be charged with extremism for resisting arrest, thus limiting freedom of assembly, he added. The law will also result in increased self-censorship in the mass media, Dzhibladze said. 
Putin signed the revised law almost as soon as it landed on his desk because he was concerned about the rise of extremism and nationalism in Russia, said Sergei Markov, a Kremlin-connected political analyst. 
Markov said the law would help prevent extremist parties from exploiting public resentment against unpopular reforms to their own ends, citing the replacement of welfare and other benefits with cash payments in 2005 as an example. The reform prompted angry demonstrations across the country.
Although the law is somewhat vague, it would not affect the upcoming parliamentary and presidential elections or freedom of the press, he said.

TITLE: Israel Rejects Pressure to End War in Lebanon
AUTHOR: By Andrew Marshall
PUBLISHER: Reuters
TEXT: BEIRUT — Israel on Monday rejected mounting international pressure to end its 20-day-old war against Hezbollah guerrillas in Lebanon, but Washington said a ceasefire could be achieved this week.
Civilians fled battered villages in southern Lebanon after Israel agreed to partially halt air strikes for 48 hours, and aid convoys headed into the area to deliver supplies.
Rescue workers found 25 bodies buried for days in destroyed buildings in three south Lebanon villages, the Red Cross said. 
U.S. Secretary of State Condoleezza Rice said a ceasefire could be forged this week. But Israel said the war was not over despite an international outcry following the deaths of at least 54 civilians, most of them children, in an Israeli air strike on the Lebanese village of Qana on Sunday.
“If an immediate ceasefire is declared, the extremists will rear their heads anew,” Defense Minister Amir Peretz told a heated parliamentary debate in which four Israeli Arab lawmakers were escorted out for heckling. One called Peretz a murderer.
Despite its 48-hour truce, which started early on Monday, Israel said it may still use aerial strikes to target Hezbollah leaders and rocket launchers and to back up ground operations.
Israeli jets fired two bombs to support ground troops battling Hezbollah inside Lebanon and artillery shells hit two southern frontier villages. A Lebanese soldier died and three were wounded when another Israeli air strike destroyed their vehicle. Hezbollah fired two shells into the northern Israeli border town of Kiryat Shmona on Monday, but nobody was wounded. 
It was the first Hezbollah bombardment of Israel since Sunday evening — a distinct lull compared to the scores of rockets the guerrillas had previously fired daily.
President Bush reiterated that he wants a sustainable end to the violence rather than a quick ceasefire.
“I assured the people here that we will work toward a plan in the United Nations Security Council that addresses the root causes of the problem,” he told reporters.
Israel launched its onslaught on Lebanon after Hezbollah captured two Israeli soldiers in a cross-border raid on July 12.
At least 574 people have been killed in Lebanon, although the health minister puts the toll at 750 including bodies still buried under rubble. Fifty-one Israelis have been killed.
After the Qana raid Lebanon called off planned talks with Rice, telling her to secure an unconditional ceasefire first.
“This morning, as I head back to Washington, I take with me an emerging consensus on what is necessary for both an urgent ceasefire and lasting settlement. I am convinced we can achieve both this week,” Rice told reporters in Jerusalem.
Senior Israeli officials said the government wants to pursue its military offensive until an international force arrives because Hezbollah could exploit any pause to regroup.
If approved by the U.N. Security Council later this week, the first contingent of a stabilization force could be dispatched to south Lebanon within days, possibly as soon as next week, Israeli officials and Western diplomats estimated.
Countries that may contribute to an international force were due to meet at the United Nations later on Monday.
French Prime Minister Dominique de Villepin welcomed Israel’s air strike freeze, but said it was not enough. Paris, which is seen as a potential leader of an international force in south Lebanon, has repeatedly called for an immediate ceasefire.
As well as partially suspending air strikes, Israel gave 24-hours for residents to leave and to get aid to the worst-hit villages. Two U.N. aid convoys left Beirut for Tyre and Qana. 
Civilians drove toward the southern port city of Tyre, 20 kilometers north of the border, white flags fluttering from their cars, buses and pickup trucks.
The United States has refused to call for an immediate halt to the conflict in Lebanon, which, like Israel, it blames on Hezbollah and its allies, Syria and Iran.
Russia criticized the delay in calling for a truce and France signaled that Iran should be brought into efforts to bring peace to Lebanon.
In clashes near the border three Israeli soldiers were wounded when a missile hit their tank as they tried to rescue an armored troop carrier struck earlier by a Hezbollah anti-tank missile, the army said.
Hezbollah said it had destroyed two Israeli tanks and damaged a third. It also said it had lost two fighters.

TITLE: In Wake of Hate Murder, Students Speak Out About Racism
AUTHOR: By Ben Judah
PUBLISHER: Special to The St. Petersburg Times
TEXT: Jacques, is a 19-year old medical student from Senagal who studies at St. Petersburg State University. He is not somebody who makes enemies easily. Friendly and easy talk to, Jacques, who like other foreign students interviewed in the wake of the acquital last week of suspects in the race-hate murder of a Congolese student, asked for his full name to not to be published. 
Jacques will never forget his first few days in St. Petersburg. Traveling home late on the metro, a group of skinheads began shouting racial slurs as he mounted the escalator. Then they physically assaulted him. Jacques ran for his life. He says this is not the only time this has happened to him.
Amnesty International has described racism in Russia “as out of control.” Nineteen people have been killed in racially motivated attacks this year, according to the Sova Center, a group that monitors extremist activity, and another 166 people have suffered serious injuries.
The news that a St. Petersburg jury last week cleared four suspects of the murder of  Congolese student Roland Epassak, the second time in four months that a court has acquitted suspects of hate crimes, came as no surprise to Jacques or many other foreign students from Africa and Asia contacted to this article. For him, “the verdict just shows what we experience every day. That this is an inherently racist country.” 
“Back in [the Senegalese capital] Dakar,” he recalls, “I was thrilled when I knew I was coming to St. Petersburg. Russia had been a great friend to Africa in the past and the chance to study in a European university seemed fantastic. I had no idea that racist feeling was so strong here.” 
Now he wishes he’d never come. 
“No black man should come to this country,” he said. “They’d have to be crazy. I am scared to walk the streets alone, especially after the recent murders.” 
African students at the university dormitory on Korableistratelny Ulitsa said that they had experienced violent aggression in St. Petersburg more than once. 
Samba, 20, who studies environmental management and is from also from Senegal puts it bluntly: “Russians look at me like dirt. They talk to me like a child. The police treat me as if I’m a drug dealer. And everyone will stab you in the back if you’re black.”
Chatting to Samba in the dormitory lift, it  immediately became clear that discrimination is a a daily occurance for balck people in St. Petersburg. As the doors opened on the fourth floor, and a group of young Russian women refused to get in, with one saying loudly “I’m not getting in a lift with a nigger!” 
On the sixth floor two, visibly drunk young men, got in. Turning to Samba, they spat on the floor before walking straight out again. “You see? Racism is a fact of life for us,” Samba said.
It is not only black Africans who relate such experiences of life in St. Petersburg. Jee Rao, 21, a South Korean exchange student and fluent Russian speaker, has had similar experiences. 
“They treat people who look like us differently,” he said. “I have found it very hard to make Russian friends, though many are very kind. Still even some young people, look at me with disdain as an Asian.”
According to Hu Lee from Beijing racist feelings lurk only just below the surface here. 
“Russians do not like people from China. They may be polite, but they do not treat us with the respect and friendliness they would give us if we were white,” he said.
Even some Jewish and Armenian students here for a semester from North America have reported difficulties. Yitzhak, 20, from San Francisco feels nervous. 
“I don’t tell people I’m Jewish. I just don’t feel comfortable. The atmosphere here is one of intolerance and open xenophobia,” Yitzhak said.
Pointing at the anti-Semitic graffiti that abounds around Petrogradskaya metro station, Yitzhak just shrugs. 
Talking about the issue with Russian students, reveals a great deal of antipathy to the issues raised by xenophobia — and denial. Katya, 18, said “racism does not exist here.” 
As attacks have becoming increasingly vicious in character according to the Sova Center, foreign students from Asia and Africa in St. Petersburg are living on edge.

TITLE: UN Tells Iraq it Must Halt Nuclear Activities
AUTHOR: By Evelyn Leopold
PUBLISHER: Reuters
TEXT: UNITED NATIONS — The UN Security Council was poised on Monday to adopt a resolution demanding Iran suspend its nuclear activities by the end of August or face the threat of sanctions. 
Barring last-minute delays, the council has scheduled a vote on the document that demands Iran “suspend all enrichment-related and reprocessing activities, including research and development.”
If Tehran does not comply by August 31, the council would consider adopting “appropriate measures” under Article 41 of Chapter 7 of the UN Charter, which pertains to economic sanctions, says the draft.
The resolution is the first on Iran with legally binding demands and a threat to consider sanctions. The United States and its allies suspect Iran is developing a nuclear bomb and accuse it of hiding research over 18 years.
On the eve of the anticipated vote, Iranian President Mahmoud Ahmadinejad told a news conference the resolution was unacceptable and his country had the right “to take advantage of peaceful nuclear technology.”
Foreign Ministry spokesman Hamid Reza Asefi also warned on Sunday the resolution would create what he called a deeper crisis in the Middle East, but he did not elaborate.
Germany and the council’s five permanent members with veto power — the United States, Russia, China, France and Britain — reached broad agreement on Friday and no major changes were made over the weekend.
But Russia and China are reluctant to impose sanctions and Moscow’s U.N. ambassador, Valery Churkin, told reporters on Friday the sanctions provision meant the council would have “a discussion” only on punitive measures.
Churkin also said the Aug. 31 date was to meet Iran’s request that it be given until Aug. 22 to respond to an offer in June from the six nations of an energy, commercial and technological package if Tehran suspended its nuclear work.

TITLE: Uranium Should Be Guarded, Says Group
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Environmentalists at the local branch of Greenpeace have discovered six containers near St. Petersburg stocked with radioactive material that the ecologists claim is emitting radiation well over the accepted safety level. 
But representatives of the Atomic Energy Ministry argue the cargo, stationed at the Kapitolovo stain station, 6 kilometers away from St. Petesburg, poses no danger. 
The material is not guarded.
Sergei Novikov, head of the Atomic Energy Ministry’s press office, said Friday that the radiation level of the containers does not exceed the norms set by the International Atomic Energy Agency (IAEA). The material is owned by the state-controled nuclear energy company Izotop.
The ministry’s statement caused an outburst of protest from environmentalists. The containers bearing the labels Uranium-235 and Uranium-236 emitted radiation levels of 1,900 micro-roentgen per hour, which is 100 times more than acceptable norms, according to Greenpeace. The environmentalists registered radiation 40 times greater than what is considered safe on the nearest passenger platform in Kapitolovo.
“You can find that much radiation 300 meters away from the sarcophagus of the Chernobyl Nuclear Power Station,” said Dmitry Artamonov, head of the St. Petersburg chapter of Greenpeace. “The longer one spends at the platform, and the greater the exposure to additional radiation, the higher the risks. Nobody can predict how one’s body may react to this overdose.”
Greenpeace activists were able examine radiation levels unnoticed for longer than half an hour last week. The experts were alarmed by the absense of guards.
“This kind of transportation would make a perfect gift  for terrorists, both in the sense of accessibility of radioactive material and as a most vulnerable potential object for attack,” said Artamonov. “Destroying these containers does not seem very difficult. Furthermore, it does not even need a terrorist attack. An ordinary traffic accident would easily do it.”
The Atomic Energy Ministry’s Novikov said this type of cargo does not require round-the-clock protection. 
“The type of containers used for this transportation does not entitle the cargo to be accompanied by guards,” he said.
Greenpeace has previously found 37 containers marked as “radioactve material” and stationed in Kapitolovo. That was in May, 2006 and the material was again left unguarded.
“It has not been a month since leaders of the prestigious Group of Eight were discussing energy security issues in St. Petersburg, and here we go with a bunch of unprotected of radioactive containers at a passenger railway station,” Artamonov said. “If this is the kind of energy security Russia is able to provide for the dozens new nuclear power stations slated to be built in the country within the coming decades, then our citizens have every reason to feel threatened.”

TITLE: FSB Claims Rebels Courted Hamas
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW — Top Chechen rebels have tried without success to convince Hamas and Hezbollah to send fighters to the North Caucasus and might have had a hand in the killing of four Russian diplomats in Iraq in June, a senior Federal Security Service official said.
Warlords Shamil Basayev and Khattab “actively tried to convince” the leadership of Hamas, based in the Palestinian territories, and Hezbollah, based in Lebanon, to rotate fighters through the North Caucasus in exchange for military assistance from Chechen rebels, General Yury Sapunov, director of the Federal Security Service’s international terrorism department, told Rossiiskaya Gazeta in comments published Friday. 
Basayev was No. 1 on Russia’s most-wanted list until his death in early July. Jordanian-born Khattab was fatally poisoned by Russian security forces in March 2002.
“Representatives of the Chechen rebels offered to help [Hamas and Hezbollah] in the fight against Israel during the winter months, when fighting in Chechnya becomes difficult,” Sapunov said. “In exchange, they wanted Hamas and Hezbollah to send fighters to Chechnya in the summer.”
Both Hamas and Hezbollah rejected the Chechen offer, Sapunov said. Hamas has repeatedly denied having any links with the Chechen separatists. When a Hamas delegation visited Russia in March, the delegation’s political chief, Khaled Mashaal, described the conflict in Chechnya as an internal problem.
Sapunov also said the FSB did not rule out the possibility that Basayev was involved in the killing of four Russian diplomats in Iraq, adding that the rebels’ new leader, Doku Umarov, their London-based envoy, Akhmed Zakayev, and Abu Khavs, leader of the Arab fighters in Chechnya, “might have played a role.”
Both Basayev and Zakayev thanked the killers in a statement posted on the rebel web site Chechen Press, Sapunov said. 
An extensive search of the site yielded only a note of thanks from Basayev dated July 10, however. Basayev died the same day.
The four diplomats were kidnapped in Baghdad on June 3. A fifth employee was also killed. The kidnappers demanded that the Kremlin pull federal troops out of Chechnya.
A group called the Mujahedin Shura Council claimed responsibility for the slayings, but Sapunov said the FSB had “no verifiable information that such an organization exists.” As a result, the council does not appear on Russia’s official list of terrorist organizations.
Neither Hamas nor Hezbollah appears on the list. The FSB asks the Supreme Court to add an organization to the list if it seeks to overthrow the constitutional order in Russia by violent means, has ties to militant and extremist organizations operating in the North Caucasus, and has ties with internationally recognized terrorist organizations, Sapunov explained.
Hamas and Hezbollah are not on Russia’s list because they do not meet the first two criteria, Sapunov said. Hamas is classified as a terrorist organization both by the United States and Israel.
Ivan Safranchuk, head of the Moscow office of the Washington-based Center for Defense Information, said that the FSB’s criteria were flawed. Russia itself has successfully lobbied the United States to classify several groups operating in the North Caucasus as terrorist even though they have not targeted the United States, he said.
“Sapunov’s argument for the criteria is a weak one and vulnerable to criticism,” Safranchuk said, noting that Russia’s new terrorism law does not specify whether an organization has to target Russia in order to be placed on the terrorism list. 
Sapunov said the FSB used information supplied by the Interior Ministry, Foreign Intelligence Service, Main Intelligence Directorate of the General Staff of the Armed Forces and the Foreign Ministry when preparing a file on an organization. 
The FSB alone has the right to request that the Supreme Court place an organization on the official terrorism list, he said.

TITLE: Bureaucrats Told to Speed Up
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: Bureaucrats will be forced to quickly process applications for new businesses, newly purchased property and driver’s licenses under a pilot program that targets corruption.
The Economic Development and Trade Ministry intends to spend $44.5 million this year to apply “customer charters” to 19 federal agencies and their counterparts in 29 regions. 
The ministry hopes to curb bribery and other forms of corruption with the program, which will be applied to officials who register businesses, real estate and cars, offer driver’s licenses, issue passports and approve state subsidies for utilities’ costs and welfare payments, said a statement posted on the ministry’s web site late last week. 
The charters spell out, among other things, the maximum amount of time bureaucrats are allowed to spend processing documents or requests. 
Under the new rules, a customer cannot wait in line for more than 30 minutes and a request for a specific document cannot be processed longer than 15 days.
The program is part of an ongoing administrative reform launched in 2004 to optimize the structure and performance of federal agencies.
Andrei Sharov, head of the ministry’s department for state regulation of the economy, which is largely responsible for overseeing the administrative reform, said the customer charter would make it more difficult for bureaucrats to demand bribes. 
“Corruption among officials will decline, because the charter and not the official will decide how long it takes to process documents,” Sharov said, in comments published in Vedomosti on Friday.
If the program is successful, all federal and municipal agencies will be required to follow it, Sharov said.
It was unclear Friday how the rules would be enforced, and ministry officials could not be reached for comment.
Several studies have shown an increase in corruption amid President Vladimir Putin’s efforts to streamline bureaucracy. Corruption watchdog Transparency International ranks Russia with Sierra Leone, Niger and Albania when it comes to corruption.

TITLE: IN BRIEF
TEXT: G8 Opinions 
MOSCOW (SPT) — The summit of heads of governments held in St. Petersburg in July 15-17 was mostly beneficial to Russia, said 37 percent of respondents of a survey from All-Russia Center of Public Opinion Study (VCIOM), Interfax reported on Monday.
According to the survey, carried out between July 22-23 throughout the country, only 2 percent of respondents believe the summit’s consequences will harm Russia. 
The most optimistic assessment of the event came from people in Moscow and St. Petersburg, Interfax quoted the report as saying with 60 percent of respondents in the cities assuming the summit’s outcome will bring benefits to the country. 
Among respondents with positive views, almost half believed that the boosting Russia’s international image of was the most important result of the summit.
According to the VCIOM’s data, 10 percent of Russia’s public watched the summit closely, another 45 percent “heard something about the event,” and a further 45 percent did not follow it at all. 

Sand Sculptures
ST. PETERSBURG (SPT) — The fifth international sand sculpture festival is under way at the Peter and Paul Fortress through Sept. 1.
A sculpture of “the tree of life” represents the main theme of the festival and symbolizes man’s connection with space, the festival’s artistic director Alexander Kim was qoted by Interfax as saying.
According to the festival’s rules, international teams have a week to build their sculptures on these themes with more than 100 tons of specially selected sand. 
The festival is a part of a bigger beach arts event, Alexey Balakhonsky, the general director of the fortress to told Interfax Prizes will be awarded on Friday. 

Pilot Killed in Crash
ST. PETERSBURG (SPT) — An SP-23 two seater sport training plane crashed in Leningrad Oblast on Sunday  resulting in the death of the pilot Oleg Vaseloy, 42, Interfax reported. 
The otherpilot, Oleg Zolotukhin, was taken to  Dzhanelidze’s NII Skoroi Pomoshi hospital and remains in intensive care. 
“The doctors are doing all they can to save the pilot, the body of which has large burn areas and serious injuries,” a hospital source was quoted by the Interfax as saying. 
Nevsky Aeroclub plane crashed in close proximity of Kovalevo railway station soon after its taking off from the Rzhevka airport, Interfax reported Monday. The cause of the crash remained unknown, Interfax said Monday.
Blood donations are urgently needed to save Zolotukhin’s life.

TITLE: Russians in War-Torn Lebanon Choose to Stay
AUTHOR: By Vadim Nikitin
PUBLISHER: Special to The St. Petersburg Times
TEXT: Russians living in Lebanon spoke of bodies in freezers, bombed-out buildings and a growing scarcity of food, but not all felt certain that it was time to leave.
“There are lots of bodies everywhere. Bodies wrapped in garbage bags and plastic sheeting and put in fridges. People have brought their fridges and freezers to the basement, to put the bodies into,” Katya Hubeidi, the Russian wife of a young Lebanese doctor, said by telephone, describing her neighborhood in a suburb of the port city of Tyre late last week.
Hubeidi said adults “were hiding all this from the children.”
“We don’t let them come close to the fridges, to the plastic bags,” she said.
Hundreds of Russian citizens have fled Lebanon since Israel began a military offensive there two weeks ago. But some 500 remain, many of them doctors and other medical workers “who do not want to leave their hospitals, ... despite grave threats to their safety,” said Vladimir Cherepanov, a spokesman for the Russian Embassy in Beirut.
Two doctors’ families spoke by telephone about why they had stayed behind and how they were coping.
“I sent my wife and children to Russia, ... but I am staying here,” said Wahid Saliami, a Lebanese-born Russian citizen who studied medicine in Moscow. “My patients need me. That is my duty as a surgeon; that is what they taught us in Russia.”
 Saliami, who helps run an association of Soviet university alumni with 5,000 members, said: “I have lived here through the occupation and civil war, but I have never seen such horror and destruction.”
In the distant city of Tver, Saliami’s wife, Marina, and their two children, Anastasia, 14 and Sadi, 4, fear for his life. “We are in constant contact, but of course they are very concerned about me,” he said.
When he spoke by telephone Thursday, he had just learned that contact was lost with three Russian-trained Lebanese medics in the village of Bint Jbeil. The medics had taken refuge in the basement of a Christian school after their hospital was destroyed. “The UN cannot go in and rescue them because Israel will not allow anyone to enter the village,” Saliami said. “I plead with you to inform readers of their plight; maybe someone can help.”
The whereabouts of the medics were unclear Sunday.
Saliami said his hospital in Tyre was overwhelmed with patients and that he was spending most of his time there, seldom risking the walk back to his apartment.
“There have been wounded people trying to reach the hospital on foot but they were shot at from planes,” he said. “The Israelis shoot even the ambulances. Yesterday, they shot at an ambulance not far from here, and the driver was killed. Shoot at Hezbollah if you must, but why shoot at ambulances?”
He recounted how six wounded people recently arrived at the hospital. “They were part of a convoy of civilians going to the port, where a ship was taking refugees, when they were hit. Three of the victims were American, a mother and two children severely wounded in the face and neck,” he said, his voice tensing. “Luckily, we managed to pull them through.”
Such good news is rare in Tyre, however. “A dead 13-year-old girl is still lying on the ninth floor of a bombed-out building because there is no equipment to get her out,” he said. “Many, many children have died. They die in their homes, with their families, believing that residential buildings will not be targeted, that the strikes are accurate.”
No Russians are known to have been killed or injured. Saliami gave much of the credit for this to the Russian Embassy. “We are extremely grateful to the embassy staff here. They do everything they can to help everyone from the former U.S.S.R., as well as Lebanese people,” he said. “They call hundreds of people every day, checking up on them, letting them know the latest.”
Cherepanov, an embassy spokesman, said mass evacuations had ended but that people were still being sent to safety. “Of the 500 who chose to remain, many of them may reconsider if the conflict escalates tomorrow,” he added.
The heavy fighting is beginning to take a toll on Katya Hubeidi, a nurse from Igorsk in the Moscow region, and her husband, Salim, a 35-year-old general practitioner who studied at Moscow’s People’s Friendship University.
“This cursed war!” Salim Hubeidi exclaimed. “I don’t know what decision to make anymore, whether to stay or to go. The fighting is escalating but our apartment, everything we have, is here.”
His wife added: “We have nowhere to go if we go to Russia. We sold everything we had to come here and settle down. We can only leave if the Russian government helps us find somewhere to live, but no one has told us if this help is available.”
Katya Hubeidi said she grew up an orphan and had lost touch with the only family she knew in Russia, a distant aunt. She said her in-laws had never accepted the couple’s adopted son, and this had made it impossible for her to join them when they fled over the border to Syria.
The couple, their son, Ruslan, 16, and daughter, Fatima, 9, are among the last people still living in a suburb of Tyre that was once home to many families with ties to the former Soviet Union. “We feel very alone. My husband is a doctor, and people respect him, but I am still a foreigner here,” said Katya Hubeidi, struggling to speak over a loud hum. She said an unmanned Israeli drone was flying close to their house.
“All day, the Israeli drones fly by, filming everything, and as soon as night falls, the helicopters come in and drop explosives,” she said. “The explosives look like toys, so we don’t let our children go outside.”
She said daily life had become a fight for survival. “The Israelis have bombed the bakery, so there is no more bread. They have bombed the pharmacy and the supermarket. Everything necessary for people to live has been destroyed.”
A local mosque distributes bread every week, but the rations are so small that in the previous week the Hubeidis received only 10 loaves, she said. They have run out of bottled water and rely on tap water, which now flows yellow.
“My husband no longer goes to work in the hospital because he does not want to leave us alone for long. So he moves around the neighborhood, taking calls and treating wounded people nearby,” she said.
The family sleeps in the basement of their four-story apartment building. A week ago, a nearby apartment building similar to theirs was bombed. “There is an empty space there now, as if there was never any building at all,” Katya Hubeidi said.
Some 5,000 homes have been damaged or destroyed in Lebanon, the BBC reported.
Like thousands of other civilians caught in the fighting, the Hubeidis say they cannot understand what is happening.
“Hezbollah has left for the hills, there are no fighters here. Yet they are still bombing our homes,” Salim Hubeidi said.
Appealing to President Vladimir Putin, he added: “Russia is still a great and mighty country. Only Putin can stand up to the Americans and pressure them to stop Israel.”
Even if they decide to leave, it is becoming harder for the Hubeidis and others like them to evacuate safely with each passing day. After a recent raid, a family friend panicked and decided to drive out of town, Katya Hubeidi said. His car was almost immediately hit by a rocket.
“Everyone ran outside, crying, trying to drag him out, but he burned to death,” she said, her voice growing frantic.
“We used to eat together, and now he is dead. Please help us! Please do something to pressure the government to get us out and find us shelter in Russia.”

TITLE: Names on Sept. 11 Monument Questioned
PUBLISHER: The Associated Press
TEXT: BAYONNE, New Jersey — Controversy is continuing to follow Zurab Tsereteli’s 30-meter-tall bronze sculpture that evokes the twin towers of the World Trade Center, with some questioning whether all the names etched into the base are of people who died in the 2001 terrorist attacks.
The memorial lists 3,024 names, Tsereteli’s lawyer said. That’s 45 more than the official list, which includes six people killed in the World Trade Center bombing in 1993 and the 2,973 killed on Sept. 11, 2001, in New York, Washington and Pennsylvania.
“We tried so hard to make it right,” said the lawyer, Emily Madoff. “If we erred, we erred on the side of inclusion.”
New York officials removed 43 names in 2003 and 2004 from the list of the dead at the trade center, saying some people had tried to fake their own deaths, while others had been falsely reported missing or their deaths could not be proven to have occurred at ground zero.
Madoff said that after trying to determine the correct list of names from several sources, she asked for confirmation from Kenneth Feinberg, the former special master of a federal Sept. 11 victim compensation fund, who referred her to a book published by The New York Times in 2003.
She said she stood by her list of names as being “the most accurate one we could possibly find.”
Jagged lines divide the massive monument into two tower-like pieces, and a 12-meter steel teardrop gently hangs in the open center, like a bell.
Tsereteli said through a translator that the tear symbolized “sadness over grief that will become happiness in the future when terrorism is defeated.”
On the fifth anniversary of the Sept. 11 attacks, Tsereteli will dedicate his 175-ton work, which sits across the Hudson River from Manhattan, where the twin towers once soared.
The sculpture, “To the Struggle Against World Terrorism,” will be the centerpiece of a 0.8-hectare park nearing completion in Bayonne, whose officials are happy to have the public art.
Like the 72-year-old artist, known for grand statues that some critics have called more kitsch than art, the sculpture is not without controversy. The first plan had the sculpture located on the Jersey City waterfront, but city officials there rejected it.
Mayor Jerramiah Healy said leaders did not realize the monument’s height and thought it would impede views of the Hudson and New York skyline. “We’re happy that Bayonne is happy, and we’re happy that Mr. Tsereteli is happy,” he said.
Bayonne is not paying for the memorial but agreed to pay $1.25 million to create the first phase of the waterfront park, said Mayor Joe Doria.
It’s unclear how the monument is being funded, but Tsereteli calls it “his gift.”
Tsereteli’s lawyer said the cost of materials, shipping, labor and creating the base was about $12 million.
The monument has also been billed as a gift from “President Vladimir Putin, the people of Russia and the artist” to the people of the United States, in the spirit of France’s gift of the Statue of Liberty.
The segments of the monument arrived in New Jersey from Russia last September, shortly before Putin attended a groundbreaking in Bayonne when he traveled to New York for meetings at the United Nations.

TITLE: Clapton’s Concert Canceled
PUBLISHER: The Associated Press
TEXT: MOSCOW — Eric Clapton’s concert in Red Square has been canceled after authorities abruptly withdrew their permission, the rock singer and guitarist’s publicist said.
Clapton’s Russian promoter had received an official permit Thursday for him to perform in Red Square, but officials withdrew that Friday, Clapton’s publicist Kristen Foster said in a statement.
“Eric Clapton is extremely sorry to disappoint his numerous Russian fans but the circumstances of the cancellation are completely beyond his control,” she said.
President Vladimir Putin’s press service sent a request for information to the Kremlin administrative department, which could not be reached for comment.
Yevgeny Safronov, the director of InterMedia, which organized the concert, said the event appeared to be in jeopardy but would not make further comment. Moscow box offices on Saturday suspended the sale of tickets, which cost up to 10,000 rubles (more than $370).

TITLE: Indian Woman Falls to Her Death
AUTHOR: By Anatoly Medetsky and Carl Schreck
PUBLISHER: Staff Writer
TEXT: MOSCOW — An Indian woman fell to her death from a 10th-floor apartment in southern Moscow last week, and her relatives are pressing the police to investigate whether the death is linked to a $10,700 dowry dispute.
Indian police are refusing to investigate, saying the case — which is making headlines in India — is out of their jurisdiction. Moscow police believe the fall was an accident.
Ambika Sharma was found severely injured Tuesday on the ground below her apartment in a diplomatic building on Simferopolsky Bulvar, near the Nakhimovsky Prospekt metro station, a duty officer at the local police precinct said Sunday.
Sharma, 25, was rushed to the hospital and died at 8:20 p.m., about 90 minutes after the fall, according to a police report seen by The Moscow Times.
The family had been observing a traditional Indian fast, and Sharma had complained of dizziness, her husband, Sajjan Sharma, a tea importer, told police, according to the report.
He said his wife had served him a meal and then went to the kitchen when a friend came to visit, the report said. Hearing a noise in the kitchen, he said, he went there, found a window open and closed it. Moments later, he heard women’s shrieks outside, so he reopened the window and saw his wife on the ground. He went to her, and she tried to talk to him, but in vain, the report said.
 Police concluded that the death was accidental after questioning the husband, the friend, a building guard and several neighbors, a source familiar with the investigation said. Neighbors said the couple had not quarreled that day, said the source, who spoke on condition of anonymity because he was not authorized to release the information.
Police will close the case after they receive an autopsy report, which could take two more weeks, the source said.
Ambika Sharma’s family in Ranchi, the capital of the Indian state of Jharkahand, learned of her death the same night when a Moscow neighbor called them.
The next day, the family went to Ranchi police and tried to file a complaint, claiming that the young woman had been pushed to her death over an unpaid dowry of around 500,000 rupees ($10,700), R.K. Mallick, senior superintendent of the Ranchi police, said by telephone.
Her family claimed Sajjan Sharma and his in-laws took her to Moscow earlier this year with “foul intentions” after the money was not paid, Mallick said.
He said his office had no jurisdiction to open an investigation outside national borders. “But we might look into a harassment case in Calcutta,” he said.
Reached on his cell phone Friday, Sajjan Sharma called the allegations by his wife’s family “false and baseless.”
He declined to comment further.
But he was quoted by Calcutta’s Telegraph newspaper as saying that his wife “must have slipped and fallen.”
“It is a crystal clear case and has nothing to do with murder,” he said, the newspaper reported Thursday.
The Telegraph reported that the couple was married three years ago in an arranged marriage. She had been living with her husband and twin children in Moscow for the past two months, the newspaper said.
Ambika Sharma’s mother, Sharda Devi, claimed that her daughter called her 10 days before her death to say she was being abused by her husband’s family and to seek advice, the Hindustan Times reported Friday.
“She said that she was being beaten up badly everyday, and her husband was using abusive language,” she was quoted as saying. “We used to think that they will mend their ways, but all went in vain.”
“They were putting pressure on Ambika to get [the dowry money] from us as they wanted to purchase a flat in Moscow,” Ambika Sharma’s brother, Basant Lal, told the newspaper.
Indian media reported that the husband’s family lived in his Moscow apartment.
Lal said the second man in the apartment was the woman’s father-in-law, Mohal Lal Sharma.
The source familiar with the investigation said the second man was neither a relative nor a colleague of the husband’s. He did not elaborate.
An Indian Embassy spokesman said he was “aware of this unfortunate incident.” He said he could not give any details or provide further comment.
The embassy counts around 15,000 Indian citizens living in Moscow.
Thousands of dowry deaths are thought to occur every year. Nearly 7,000 were reported in 2000, the Hindustan Times said.
Though prohibited by law in 1961, the extraction of a dowry from the bride’s family still occurs, the paper said.
When the dowry amount is not considered sufficient or is not forthcoming, the wife is often harassed and abused. The abuse can escalate to the point where the husband or his family burn the wife, often by pouring kerosene on her and lighting it, usually resulting in death. The official records of these incidents are low because they are often reported as accidents or suicides by the family. In Delhi, a woman is burned to death almost every 12 hours.
Apart from the dowry deaths, 45,778 incidents of torture by husbands or in-laws were reported in 2000.

TITLE: Georgian Troops Taken Out of Abkhazia Gorge
AUTHOR: By Misha Dzhindzhikhashvili
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — The Georgian government over the weekend pulled out some of its troops from a gorge on the edge of the breakaway province of Abkhazia following an operation to quell a rebel militia.
A Russian peacekeepers’ chief said Georgia retained a sizable force in the area, however.
Georgian television stations broadcast the footage of troops leaving the Kodori Gorge, the only part of Abkhazia that remains under nominal Georgian control. Imedi television said 100 troops pulled out from the gorge Saturday. 
Major-General Sergei Chaban, in charge of Russian peacekeepers in Abkhazia, said Georgia only pulled out about 8 percent of its forces from the gorge, Interfax reported. 
Georgia’s Interior Ministry said Friday that its forces had taken firm control of the gorge and were hunting down some 70 holdout militia members, and that 25 other militia members or supporters of militia leader Emzar Kvitsiani had been seized. Kvitsiani remained at large Sunday, and Interior Minister Vano Merabishvili said he had fled to Russia. 
Georgian President Mikheil Saakashvili said unspecified foreign secret services had backed Kvitsiani in the hope of destabilizing Georgia. 
“Those who staged this provocation hoped to set up an alternative government in Georgia,” he said in televised remarks late Saturday. 
He ordered Merabishvili to strengthen counterintelligence operations. “It would be good to hit these secret services in the nose here in Georgia,” he said.
Merabishvili reported to Saakashvili that the situation in the gorge had stabilized after the operation and the government had begun ferrying food supplies to local residents. He said authorities had arrested 11 wanted criminals, confiscated large weapons arsenals and freed several slave laborers in the area.
On Sunday, the Tbilisi City Court upheld prosecutors’ request to keep Irakli Batiashvili, the former security minister who now leads the opposition party Forward Georgia, in custody for two months. Batiashvili, who was arrested Saturday, rejected the official treason charges based on a telephone conversation with Kvitsiani. 
“The charges against me are absurd and based on an illegally tapped phone conversation that was doctored,” Batiashvili said in court.
The rest of Abkhazia has run its own affairs without international recognition after separatists drove out Georgian government troops in a war in the 1990s. 
Saakashvili ordered a permanent headquarters for a “legitimate government of Abkhazia” to be set up in the Kodori Gorge, saying that construction work would start in a few days.
Separatist authorities in Abkhazia denounced the plan as a “provocation.” They urged the United Nations to condemn the Georgian deployment to the gorge.

TITLE: Euroset Gets a Hold Of Ultra Convenient Brand
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: The largest national mobile retailer Euroset has bought St. Petersburg-based mobile retailer Ultra in an effort to diversify its range and conquer new market segments. With Euroset’s financial impetus, 100 new Ultra salons will open across Russia by the end of 2006, the company said Monday in a statement.
The new owner, Euroset Holding, will provide investment and logistic infrastructure for the new Ultra salons, which will develop independently, under its own brand, retaining the existing style, technologies and personnel.
By the end of the year Ultra will enter the highly competitive Moscow market. Its assortment will expand to include digital equipment such as cameras, CD players, MP3 players, smart-phones, communicators and notebooks.
“Ultra is a convenient means of promoting complicated digital equipment to the market. People, technologies and store locations are well chosen, so it needs only new challenging goals and investment,” Yevgeny Chichvarkin, Euroset chairman, said in a statement.
“In some countries we will operate under the Ultra brand only,” he said.
Ultra has been in operation since 1995. At the moment the chain consists of 205 salons in St. Petersburg, Rostov-na-Donu, Samara, Novosibirsk, Kazan and Yekaterinburg.
Ultra officially distributes Nokia, Samsung, Benq-Siemens, SonyEricsson and LG in Russia. The company employs 2,500 people.
“In 11 years we created a national chain with an annual turnover of $400 million and a record level of sales per salon. These achievements have enabled us become one of the five largest mobile retailers in Russia,” said Temur Amidzhanov, Ultra Star president.
“In transferring shares to Euroset we are sure of this project’s success,” he said.
By the end of the year Ultra will have 300 salons in Russia. It will start signing franchise agreements and entering new regional markets.
The companies did not disclose the cost of the deal, however, industry analysts estimated it is rather high.
“Actually the deal involves the sale of the salons’ rental agreements and its back-office. As far as I know, the deal was worth about $5 million,” said Eldar Murtazin, leading analyst of Mobile Research Group.
“Such a high price could be explained by the fact that Ultra occupies a large part of the St. Petersburg market — it possesses over 200 stores. Many salons are well located. Previously we saw sales of companies with small or decreasing market shares,” he said.
The average price worked out at $24,000 for every Ultra store, Murtazin said, while other mobile retailers usually priced their salons between $10,000 to $15,000.
“Euroset is planning to develop a franchise project using the Ultra chain as a basis. In the future it will become a chain of technology-markets. Investment into this project will be comparable to investment into Euroset’s development in general,” Murtazin said.
At the moment Euroset operates 3,960 salons in Russia and the CIS.

TITLE: Nervy Market Reacts To Druzhba Oil Leak
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s Druzhba oil pipeline, the supplier of an eighth of Europe’s imports, has resumed shipments after a leak near the Belarus border had disrupted supplies and sent oil prices higher in London.
The leak near Bryansk, western Russia was repaired Monday and the Soviet-built Druzhba-1 pipeline restarted pumping at 12:07 p.m. Moscow time, Viktor Beltsov, a spokesman at the Emergency Ministry, said Monday by phone from Moscow.
Lithuania’s AB Mazeikiu Nafta cut output at its refinery after Russian supplies were cut. Crude rose as high as $74 a barrel.
“Any disruption is very sensitive given the general nervousness of the market,” said Valery Nesterov, an oil and gas analyst at Troika Dialog, a Moscow-based investment bank.
The breach will take “days” at most to repair, he said. Continuing tension in the Middle East has increased concern about strains on the export network of Russia, the world’s second-biggest oil exporter. European leaders said this month that Russia, which is planning a new $11.5 billion oil link to China, may not be investing enough in output and pipelines to ensure reliable supplies.
Crude for September delivery jumped as much as 50 cents in electronic trading on the New York Mercantile Exchange. The contract traded at $73.62 at 11:13 a.m. in London.
Lithuania’s Economy Ministry said the country’s supplies were disrupted, blaming a leak in Belarus.
Sergei Grigoryev, deputy chief executive officer for pipeline operator OAO Transneft, couldn’t be immediately reached for comment.
Mazeikiu, which runs the only refinery in the Baltic states, hasn’t received supplies from Russia since July 29 because of leakages from Druzhba. The company couldn’t say when supplies will reach Lithuania through Druzhba, which runs through the Belarus region of Polotsk on its way to the Baltic Sea coast.
“Pipeline repairs were concluded over the weekend and supplies of crude toward Novopolotsk have been renewed in small capacity,” Mazeikiu said Monday in a statement.
The Druzhba system splits into two branches in the Bryansk region, one of which heads through Ukraine and Belarus to Poland and Germany, with the other linked to Lithuania, according to maps of the network on Transneft’s Web site.
Mazeikiu can process as much as 160,000 barrels a day of crude. The company’s Butinge terminal is scheduled to load 130,000 barrels a day of crude for export in August, up from 106,000 a day.
Russia’s Emergency Ministry said the leak occurred July 29 and was a low-level incident that spilled 2 tons of crude.
“This a local level accident, which wasn’t even included in our report for federal-level accidents,” Viktor Beltsov, a spokesman at the Emergency Ministry, said today by phone from Moscow.

TITLE: Local Hotels Caught By Pegasus Net
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: One of the world’s largest hotel reservation systems, Pegasus, is to promote St. Petersburg to western tourists by including local hotels in its network. Small independent hotels will gain the most from the move, the company president said Friday at the Interfax press center.
Pegasus links the databases of hotels and airlines and lets tourists book accommodation in advance. A total of 1,200 web sites allow online access to Pegasus, including popular reservation sites, like Expedia and Orbitz.
“Without this technology you could not quickly sell a room when a client suddenly cancels their reservation in the high season. Nor could you stimulate sales in the low season,” said Mikhail Ushakov, general director of Nota Bene, Pegasus partner in St. Petersburg.
According to official statistics, 331 hotels operate in St. Petersburg, however only about 25 hotels have high-quality web sites and allow online reservations, local experts said.
“In order to compete with Sheraton you need technology,” said John Davis, president of Pegasus Solutions.
Pegasus Solutions serves around 65,000 hotels and has access to four airline booking systems. Until recently the company worked primarily with hotel chains. However, since 88 hotels from top-100 hotel chains already cooperate with Pegasus, the company now focuses on small independent hotels, Davis said.
Around 75 percent of independent hotels are based outside the United States, he said, indicating that Russia and Eastern Europe offer attractive opportunities for Pegasus to increase its presence in this market segment.
Sergei Korneyev, vice-president of the Russian Union of Tourism Operators (RST), said that, according to UNESCO, 30 million people would like to visit St. Petersburg, however only two million to three million tourists actually visit the city annually.
“St. Petersburg falls considerably behind Europe in terms of the development of technologies. The internet has caused radical changes in the travel market,” Korneyev said.
Foreigners usually consider St. Petersburg as an appropriate location for business events and conferences, he said, but “by the time they receive a confirmation from one of our hotels they have already booked somewhere else.”
Another expert agreed. “We need to promote local hotels in a way that is comprehensible to western partners. At the moment there is no standard. Even the name of the city varies on different web sites,” Ushakov said.
Pegasus Solutions charges $5 for each transaction made through the system. Last year Pegasus processed over 20 million reservations amounting to over $12 billion.

TITLE: Mobile Firms Asked to Explain
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Federal Anti-Monopoly Service has asked the three leading domestic cell phone operators to explain the reasons for their recent connection-fee hikes.
The anti-monopoly service sent letters on Thursday to Mobile TeleSystems, VimpelCom and MegaFon asking them to clarify why they introduced new charges for connecting subscribers’ telephone calls and for announcing the changes at roughly the same time, a spokeswoman for the service said.
“The [mobile] operators must respond by August 10,” she said.
To offset an estimated $1 billion in annual costs from implementing the Calling Party Pays system, which made incoming calls to mobile phones free to subscribers starting in July, operators have been renegotiating interconnection fees.
MTS, VimpelCom and MegaFon plan to charge 95 kopeks (3.5 cents) for connecting one another’s calls. However, the three market leaders would charge 1.10 rubles (4 cents) for connecting calls from any other operators’ subscribers, the anti-monopoly body said in a statement Thursday. The watchdog had already sent letters to the three operators asking them to explain this discrepancy.
After the service receives and analyzes the mobile operators’ responses, it will decide whether their actions violate anti-monopoly legislation, it said.
MTS, VimpelCom and MegaFon control 88 percent of the country’s mobile market, worth $3 billion at the end of the first quarter, according to J’Son and Partners consultancy. Smaller players, including Tele2, Uralsvyazinform and SMARTS, account for 12 percent.

TITLE: IN BRIEF
TEXT: Northwest Trade
ST. PETERSBURG (SPT) — Trade turnover for the Northwest increased by 36 percent up to $40 billion in the first half of the year, Interfax reported Friday. 
Exports increased by 37 percent up to $28 billion, imports — by 34 percent up to $12 billion. The Northwest Customs Department collected 287 billion rubles ($10.7 billion) in taxes to the federal budget.

5,000 Ruble Returns
ST. PETERSBURG (SPT) — A 5,000-ruble banknote was put into circulation by the Russian Central Bank on Monday. The banknote is more protected against counterfeit than the other ruble banknotes currently in circulation. As well as Central Bank reserves, it will be used in eight regions where the average salary is high, Interfax reported Monday.  The last time the 5,000-ruble banknote was printed was in 1997, before the 1998 default.

Telecom Profits
ST. PETERSBURG (SPT) — Landline telephone operator Northwest Telecom increased net profits by 16.6 percent up to 1.35 billion rubles ($50.3 million) in the first half of the year, according to Russian accounting standards, Interfax reported Monday.
At the same time, revenue decreased by 1.4 percent to 9.7 billion rubles ($361.5 million), expenses decreased by 7.3 percent to 6.9 billion rubles ($258.5 million).

TITLE: EU Energy Charter Setback
AUTHOR: By Jeff Mason
PUBLISHER: Reuters
TEXT: BRUSSELS — Talks between Russia and the European Union over a pact on energy transit have hit a setback, the Russian ambassador to the EU said, casting doubt on EU hopes that Moscow would eventually ratify an Energy Charter Treaty. 
The EU, which relies on Russia for about 25 percent of its gas, has pressed Moscow to ratify the charter, which governs energy activity across the Eurasian continent. 
But Russia has resisted, citing several problems including the separate “Transit Protocol” to the charter, which would effectively require Russia to allow third-party access to gas monopoly Gazprom’s jealously guarded export pipeline network. Russia has said previously that it will not ratify the charter without a satisfactory agreement on the protocol.
At this month’s meeting of Group of Eight leaders in St. Petersburg, Russia supported a list of energy principles like market transparency that are largely contained in the charter, a step many in Europe hoped would lead to future ratification. 
But Vladimir Chizhov, Russia’s ambassador to the EU, said negotiations on the Transit Protocol had stalled recently after officials from the bloc’s executive European Commission stepped back from earlier progress. 
“[The talks] have suffered a setback,” he said in an interview. “A certain degree of progress had been reached, but at the last meeting our EU or Commission partners actually backtracked on their position, citing the legal services of the Commission,” he said. “It’s, figuratively speaking, back to square one.” 
A Commission source said the talks on the issue were of an informal nature and that no specific agreements had been reached. 
The protocol sets out rules for transit of energy, including tariffs and certain obligations for countries through which resources like oil or gas must pass en route to customer nations. 
Transit countries are required to provide maintenance of infrastructure and make pipelines and electricity wires available, Chizhov said.
He said Russia believed the protocol was unfair in its current form because of provisions over what constitutes a transit country. Russia would have to follow the transit rules for oil moving from Kazakhstan through Russia to Europe, but Poland — which joined the EU in 2004 — would not be considered a transit country for Russian oil moving through Poland to fellow EU member Germany. 
“We believe that this system is unbalanced,” he said, adding that talks would nevertheless continue. “It’s not going to be an easy issue nor is it going to be a quick fix.” 
The Commission source said because the EU had an internal market, member states were not considered to be transit countries for energy. But Russia could fight any barriers or price problems that a member state might set up at the European Court of Justice, he said. 
Russia wants the Energy Charter Treaty to cover nuclear fuel and provide better investment guarantees, he said, adding that the charter itself was not helpful during the January pricing dispute with Ukraine. 
“The value of the Energy Charter Treaty is doubtful because it failed the test of time, the test of real problems,” he said. “Negotiations continue at expert level and then we’ll see.”

TITLE: Deripaska Snaps Up British Vanmaker
PUBLISHER: Reuters
TEXT: MOSCOW/LONDON  — Russian auto maker GAZ Group agreed to buy British vanmaker LDV on Monday, securing production and 850 jobs at the firm’s plant in central England.
The company, controlled by metals tycoon Oleg Deripaska, said it planned to boost production at the LDV plant in Birmingham and also start making LDV vans in Nizhny Novgorod, Russia, aiming to make 20,000 vans per year from 2008.
LDV plans to produce 10,000 Maxus vans in 2006. The company currently loses 4 million pounds a month.
GAZ President Erik Eberhardson told reporters he expected the business to break even next year and increase production by 50 percent. GAZ planned to keep LDV’s 850 workers, Eberhardson added.
GAZ did not disclose how much it paid for LDV.
LDV was one of the last surviving British-owned vehicle makers until December last year when it was bought out of administration by U.S. private equity investor Sun Capital.
Unions welcomed the deal as a rare piece of good news for Britain’s shrinking automotive industry.
“When we seem to hear nothing else but vehicle makers and manufacturers pulling out of the UK, today’s news, which bucks that trend, is welcome,” said Tony Woodley, general secretary of the Transport & General Workers Union.
PSA Peugeot Citroen announced plans in April to close its central England plant, eliminating 2,300 jobs, while General Motors plans to cut 900 jobs at its English plant.
It followed the collapse of British carmaker MG Rover last year, resulting in more than 5,000 job losses.
GAZ said it had appointed former Ford Europe executive Martin Leach and former A.T. Kearney executive Steve Young to run the business.
“GAZ plans to expand production at LDV’s Birmingham plant by adding new product lines and entering new markets in the EU and elsewhere,” it said in a statement.
Last year GAZ Group emerged as a diversified automaker by merging its car, truck and bus making business. It announced last week that it would invest up to $500 million to produce new engines for its light and heavy commercial vehicles.

TITLE: Alrosa Launches Appeal Against De Beers Ruling
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: Alrosa, the world’s second-largest diamond producer, has lodged a complaint with the European Court of Justice to dispute a ruling that bans it from trading with industry leader De Beers.
The Russian diamond monopoly confirmed Friday that it was challenging February’s decision by the European Commission to force the company to scale-down and by 2009 stop all diamond trade with South Africa’s De Beers.
“The company is defending its interests, which it believes have been damaged by the EC’s ruling,” a source close to Alrosa said on condition of anonymity due to the legal bind surrounding the court proceedings.
The EC, seeking to “challenge De Beer’s long-running primacy,” struck a deal with the miner to end its purchases of rough diamonds from Alrosa after a two-year investigation of the industry. 
Together, De Beers and Alrosa mine 60 percent of the world’s rough diamonds. However, the South African giant sells more than it mines, and until now Alrosa has been heavily dependent on De Beers to buy the bulk of its gems.
Alrosa filed a complaint against the agreement with the European court on June 29, the court’s spokesman said by telephone Friday. The EC is currently preparing its defense in response to the complaint and an court hearing is likely by this time next year, the spokesman said. The whole process usually takes 20 months to 24 months, he said.
The Luxembourg-based court is the judicial branch of the EU and interprets its legislation and decisions.
An appeal against an EC decision “happens quite rarely,” a commission press secretary said, declining to be named as she is not authorized to give official comments.
Should Alrosa win the case, “we would have to review the case,” she said.
Alrosa has kept a low profile in the proceedings, not wanting to stir an emotional response to the case, Sergei Ulin, vice president of Alrosa, said Friday in an interview.
But he said even if the monopoly lost the appeal, it would find ways to restructure its business. 
“If we are barred from cooperation [with De Beers], the company will not die,” Ulin said.
Richard Wake-Walker, a London-based independent diamond expert, agreed. “If Alrosa market themselves and sell as well as they have done in the last couple of months, they could do very well,” Wake-Walker said, adding that the EC decision hurt De Beers much more than Alrosa.
He doubted the ruling would be overturned. “Once the EC has made a decision like this, it’s nigh impossible to have it reversed,” Wake-Walker said.

TITLE: TMK Reveals Plans For Venezuelan Pipe Plant
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: MOSCOW — TMK, the country’s biggest pipemaker, said Friday that it might build a pipe plant in Venezuela with an eye on supplying Latin American and Caribbean markets.
Dmitry Pumpyansky, the majority owner of the pipe company, met with Venezuelan President Hugo Chavez on Wednesday during his three-day visit to Russia, and on Thursday the company signed a letter of intent with Venezuela’s mining ministry on future cooperation, TMK said in a statement.
“The signed agreement proposes the development of a project to build a seamless pipe plant in Venezuela’s Bolivar region,” TMK said. The pipes would “supply Venezuela’s oil and gas industry as well as other regions of Latin America and the Caribbean,” it said. 
The company did not disclose any more details about the project. 
TMK produced 2.84 million tons of pipes and nearly 7 percent of the world’s seamless steel pipes last year. The pipemaker plans to invest $1.5 billion by 2010 in its four Russian and two Romanian plants in order to expand production. 
Earlier this month, business daily Vedomosti reported that the company was ready to float between 15 percent and 20 percent of its shares in an initial public offering in London, possibly in November. Analysts calculated the pipemaker could raise more than $500 million in an IPO for a 20 percent stake.
TMK did not officially confirm the floatation plans, although the pipe-maker’s board is “due to meet on Aug. 4 to discuss a new share issue,” TMK spokesman Sergei Ilyin said Friday.
TMK’s deal follows a similar agreement signed last week between SUAL, the country’s second-largest aluminum company, and Venezuela’s state-owned metals and mining company Corporacion Venezolana de Guayana. 
SUAL is considering setting up bauxite mining and processing facilities and building an aluminum smelter in Latin America, provided it is satisfied with the results of a feasibility study, said Alexei Prokhorov, a spokesman for SUAL.

TITLE: Comstar Get Ex-MTS Exec
PUBLISHER: Bloomberg
TEXT: Comstar on Friday named Eric Franke chief executive officer in a bid to improve the company’s operational efficiency.  
Franke, 50, former first vice president of Mobile TeleSystems, Eastern Europe’s biggest mobile phone operator, replaces Semyon Rabovsky, who has been appointed deputy chief executive officer of Sistema’s telecommunications unit, Comstar said in a statement Friday.
Sistema billionaire Vladimir Yevtushenkov’s holding company controls both Comstar and Mobile TeleSystems. 
Comstar had more than 3.62 million fixed-line phone customers at the start of April.  Franke will help the company use the funds it raised during its IPO  and fulfill a program to modernize the network operated by Moscow City Telephone, Comstar chairman Sergei Shchebetov said Thursday.

TITLE: Promoting Bank Transparency with Baha’i Faith
AUTHOR: By William Bland
PUBLISHER: Staff Writer
TEXT: In August 1982, Richard Hainsworth and his wife took a three-day train journey from Ostend, Belgium to Moscow. Representatives of Mir Publishing met the British couple at the Belorussky train station and escorted them to a designated flat. They have been living in Moscow ever since. 
During Russia’s transition to capitalism, Hainsworth — the founder and general director of bank rating agency RusRating — has tried to promote his Baha’i faith while exploring the business opportunities that have opened up. 
Reluctant to give interviews about himself or list his achievements, Hainsworth was raised a Baha’i. It was the Baha’i faith that brought him to Russia: When he was a child he was shown a Baha’i map of the world, and he remembers seeing a red dot to indicate every country with a substantial community of Baha’is. Two unmarked countries attracted his attention — China and Russia. Hainsworth wanted to help put a red dot over Russia.
In the late 1970s, as he came to the end of his chemical engineering degree at Imperial College, London, he asked his supervisor if there was any chance of doing research in Russia. The answer was “No.” Several days later, however, his supervisor received a letter from the Center of East European Studies at Birmingham University, which was looking for someone to do a doctorate on the Soviet chemical industry.
Hainsworth jumped on the post even though it was more suited to a social scientist. Funding was soon cut, however, and the department couldn’t finance his doctorate. His supervisor allowed him instead to use the remaining funds to go on a six-week Russian course in Kiev. 
He had a sense of urgency while he was in Kiev; he knew that he had to find a job. People there told him he might be able to find work rewriting convoluted English translations of Soviet texts. He went from publisher to publisher looking for someone who could use his skills. 
Eventually, he found out that Mir, the Soviet Union’s main publisher of scientific literature, employed foreigners as style editors. Back in London, he sent off his resume and rang the publisher every week for 18 months until an apartment and a visa were arranged. Finally, Hainsworth and his wife made the journey to Moscow.
He rewrote English translations of scientific literature until the work tailed off in 1985. Around that time, as the state’s attitude to religion softened, Hainsworth was able to profess his faith openly and he became one of Russia’s representatives at the Baha’i international council. 
Perestroika brought Hainsworth “many opportunities to become very rich,” he said, but to do so he would have had to “lower his business standards.” 
There were various offers to form joint ventures, including one with Vladimir Zhirinovsky, his colleague at Mir Publishing and now leader of the Liberal Democratic Party. Hainsworth passed over the opportunity. “This was not the kind of person I wanted to do business with,” he said.
The businesses he did enter into included a trade magazine called “Perspectives,” distributed by the state distribution agency and funded by foreign advertisers. “It was a weird situation. I had one of the state institutions distributing a market-oriented magazine,” he said.
Hainsworth sold out with zero but said he “learnt a lot about working on where the value is added.” He also tried importing personal computers, like many other entrepreneurs at the time.
Hainsworth began studying banking in 1992, and in 1996 a Baha’i acquaintance recommended him for a position at Thomson BankWatch in Moscow. As the agency’s Moscow representative, Hainsworth sought to make its research relevant to a Russian audience. In 2000, however, Thomson BankWatch became part of Fitch, which moved the Moscow operations to its London office. Hainsworth decided to set up his own ratings agency, and in 2001 RusRating was born. Citibank employed him part time as vice president in the Credit Risk Department and offered him an upfront payment for a three-year a subscription to RusRating’s research. His wife became RusRating’s financial director.
At first, RusRating rated banks for free, and all the company’s income came from subscribers to its research. Now, one-third of RusRating’s income comes from banks paying to have their credit worthiness rated.
Hainsworth, who is a CFA Chartered Analyst and president of Russia’s CFA Association, said he did not set up RusRating just to make money. A ratings agency promotes transparency in an economy, he said, adding that the Baha’i faith and ratings agencies both prize honesty. “All prosperity is based on trustworthiness. … Doing what you say you will is the basis of contract law,” Hainsworth said.
“It is very difficult to be transparent in this environment,” he added. “That’s really one of the things that attracts me to this work. It gives us an opportunity to provide conditions in which transparency has a marked, economic, short-term value.”

TITLE: Rich Russians Rush To Redesign Their Interiors
AUTHOR: By Christopher Mason
PUBLISHER: The New York Times
TEXT: ST. PETERSBURG — There are two popular sayings in Russia: “Remodeling your apartment is a way of life” and “Remodeling your apartment is worse than a fire.” As she spoke, Marina Albee, sitting near the makeshift stove in her St. Petersburg living room, looked dolefully toward the kitchen, where a group of Uzbek workmen were hammering noisily, as they had been, in one spot or another, for the past several weeks.
“Everyone I know is undergoing renovations,” said Albee, an American-born philology teacher who is married to Alexei Haas, a prominent Russian decorator. “People clasp their head in their hands and start moaning” whenever the subject comes up, she continued. “So many marriages have split up, so many fortunes have been lost.”
After a decade in which moneyed, status-conscious Russians have succumbed to one acquisitive fad after another — designer clothing, then limited-edition watches, then Bentleys and Maseratis, then fine art — interior design has become the latest all-consuming craze. Among the millionaires and billionaires who control the country’s industries, and even among members of Russia’s burgeoning middle class, renovation, or remont, is a constant subject of conversation at dinner parties, beauty salons and athletic clubs.
The new wealth in Russia has created a gold rush for European and American interior designers — people like Juan Pablo Molyneux, 59, a New York decorator who is working on a 120,000-square-foot palace for an industrialist outside Moscow and visits the site every 10 days. And where “five years ago there was only a handful of Russian decorators,” said Brigitte Saby, a 50-year-old interior designer based in Paris who was one of the first Westerners to flock to the country in the early 1990s, “now there are thousands” (or at least hundreds, by the estimates of more conservative observers).
There are 23 interior design schools in Moscow, almost all of them founded in the last three years, and 46 Russian interior design and architecture magazines, most less than four years old, said Karina Dobrotvorskaya, the founding editor of Russian Architectural Digest, which was introduced in 2002.
“Decorating is a very fashionable job now,” said Dobrotvorskaya, 39. “All the blonde Russian escort girls love to call themselves interior designers.”
She remembers when attitudes were different. Even in the waning days of communism, she said, for some people “material culture was considered bourgeois and very shameful.”
When Saby arrived in Moscow to decorate the apartment of a businessman in 1993, two years after the collapse of the Soviet Union, “nobody understood the word ‘decorator’ or ‘interior designer,’ “ she said. “Most people, the apparatchiks”— the party’s midlevel bureaucrat class — “had the same sofas and armchairs. It was awful, heavy Soviet stuff.”
Those who could afford to soon moved beyond apparatchik style, with mixed results. The grim grays of Soviet uniformity were widely supplanted in the mid-1990s by a look that many designers now recall with horror: “Euro remont.”
The phrase elicits an expression of disgust from Saby, who regularly encounters vestiges of Euro remont, a Russian take on Western style characterized by gaudy materials and finishes and often visibly cheap construction.
“Euro remont was tacky and vulgar,” she said. “They put spotlights and columns everywhere, with everything shiny and new. The motto was, ‘It’s got to be new or it’s not good.’”
Andrei Dmitriev, one of the country’s most celebrated designers, described the look as “a barbarian’s understanding of what’s beautiful.”
In the years since, well-off Russians have begun to develop a more complex relationship with “material culture.” Where certain status-enhancing consumer products were once enough to confer a sense that the owner had arrived, many Russians now crave more: not just evidence of their buying power but an understanding of how best to wield it.
“The major difference between Russian clients then” — in the 1990s — “and now is that they travel a lot,” said Kirill Istomin, a 30-year-old interior designer in Moscow who trained at the Parsons School of Design in New York. “They stay in the best hotels, they’re very much into A-plus comfort and their eye becomes educated.
“I’m not saying they know the difference between a berg_re and an armchair,” he said. “But they realize that decorating is an important part of the social scene. It’s not enough to have an $1,800 alligator bag.”
The world has also come to Russia, with events like the Moscow World Fine Art Fair, an annual show of artwork and collectible European furniture. 
In the midst of all this, decorators — particularly those with international experience — have come to be seen as shamans of good taste, with the power to help their clients remake themselves for the post-communist world.
“I’m like a psychologist for my clients,” said Mira Apraxine, a Moscow-based interior designer. “I explain the future for my client, how he has to position himself. The d_cor explains his personality. That’s why I have a lot of success.”

TITLE: City Makes Room for Ambition
AUTHOR: By Yelena Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: Over the last few years, St. Petersburg has become an attractive proposition for foreign and local investors and hotel operators. Among the ambitious projects that are currently being realized in the city is the construction of two new four star hotels — the Sheraton airport hotel near Pulkovo airport and the Sokos Hotel Vasilievsky on Vasilievsky Island. 
The Sheraton project is planned to be a part of a 25-story mixed-use building consisting of a hotel, offices, underground parking and over 150 executive apartments and penthouses. It is to be situated on the corner of Dunaysky Prospect and Pulkovskoye Shosse. 
“It will be a mixed-use building and the first time in the city that executive apartments are being sold with hotel room service provided,” said Alexei Gnesin, vice-president of the Adamant holding company that runs the project. “Such trendy apartments have been in popular demand in Moscow and abroad and we are the ones who will bring it to St. Petersburg.”
The building, with a total area of 80,000 square meters, will include around 300 hotel rooms, 25 thousand square meters of office spaces and 8,000 to 9,000 square meters of apartments. The total volume of investment is estimated at around $110 million, with a pay-back period of eight years. 
“The main creditor is the federal chain Sberbank, which has already sufficiently collaborated with us during the construction of the Varshavsky Express shopping and leisure center (opened in the former building of the Varshavsky railway station in May 2006),” said Gnesin.
“BBG’s American design was adapted to local standards by the Freifeld design office and will optimize the facilities’ convenience with luxury European design,” said Mikhail Bazhenov, vice president of the Adamant holding company. “It will be a small business town near the airport.”
Besides the separate office space, the Sheraton hotel will include several conference and exhibition halls, restaurants and other business-oriented facilities. 
Although located near the airport and aimed to lure muscovites and foreigners coming to St. Petersburg by plane, the Sheraton is also targeting local businessmen as potential clients, Gnesin said. 
“It is very convenient to live and work in one building. A mixed-use building of a similar conception is being built in Moscow City business center right now and the spaces there are in extraodinary demand,” he said. Among the main advantages of the planned Sheraton complex Gnesin named the ecology of the local environment, in contrast to the city center, an effective system of internal security, enough space for parking and an absence of transport problems due to the close location of the complex to the ring road. 
The project is now at the stage of architectural design. The construction works will start at the beginning of 2007 and be finished in mid-2009. 
Sokos Hotel Vasilievsky, designed by the architect Raphael Dayanov, is due to open on 8 Liniya, 11-13, sooner than the Sheraton hotel — in the summer of 2007. The new hotel, owned by the Estonian company Manutent, is being built on the site of a 19th century building, conserving the historic facade. Sokos, the biggest and best-known Finnish hotel chain with 38 hotels in Finland and Estonia, was chosen to run the hotel. The total cost of the project is $25 million.
Located within walking distance of the main tourist attractions and close to the LenExpo exhibition halls, Sokos Hotel Vasilievsky is focused on both business and leisure travellers mainly from Finland, Scandinavia, Russia, Germany, France, Italy, Spain, U.K., Japan and U.S.. “We belive that tourists from Finland who are particularly familiar with our hotels will increase the volume of family toursim and refine the image of the city as a tourist destination,” said Satu-Johanna Oksanen, sales and marketing makger at Sokos Hotels.
The growing economy, growing tourism potential, lack of 3-4-star hotels and positive investment climate were named by Oksanen among the main reasons that their company chose St. Petersburg for building a new Sokos hotel. According to her, the seven-story and 255-room Sokos Hotel Vasilievsky with a total area of 15,000 square meters, will include three restaurants, a garage and different meeting facilities and combine high-standard four-star hotel service with moderate prices. 
“We want it to have a relaxed atmosphere familiar to our existing clients. We hope that not only our hotel guests but also people who live nearby will get in the habit of coming to our restaurants and pub,” said Oksanen.

TITLE: Putin’s Russia Needs to Stand and Deliver
AUTHOR: By Christopher Weafer
TEXT: In many respects the Group of Eight summit in St. Petersburg earlier this month marked the end of the first phase of Russia’s emergence from the wreckage left by the collapse of the Soviet Union. Russia has put behind it the reputation of being a dangerously unstable and bankrupt country, and — despite the fact that membership in the World Trade Organization remains elusive — has been admitted to the top tier of global economic and political powers. 
But that admission ticket comes with conditions, or rather with expectations. If history is to judge the economic and political progress made under President Vladimir Putin as the groundwork for a new phase of growth and expansion in the economy and a more important geopolitical role for the country, then over the next few years the government must deliver on the expectations it has given rise to at home and abroad. Otherwise history may regard this period as an opportunity missed, and Russia as another victim of the curse, and complacency, of high oil prices.
Russia was able to defy its critics and assume the G8 presidency in 2006 in part because of the expectation that it would extend its current role as the world’s biggest energy supplier — Russia’s combined oil and natural gas exports exceed the total exports of Saudi Arabia — and that it would become an even bigger, more reliable energy partner for its G8 partners. The G8 countries account for nearly half of the world’s daily oil and gas consumption. 
Russia also created the expectation, perhaps not overtly but certainly by implication, that it can use its influence in countries like Iran and Syria to contain global instability.
So far, progress in extending the energy partnership has been very limited and mired in political controversy. Poorly handled PR and Russia’s lack of a clear strategy for expanding this partnership are probably as much to blame for the slow progress as anything else. But it is clear that progress on issues such as increasing Russia’s gas exports to the European Union and initiating the Shtokman project with U.S. participation are important steps toward maintaining the good will built up over the past few years.
Energy importing countries have become used to the OPEC model, in which exporters use oil and gas revenue to purchase consumer goods, military hardware and infrastructure from the importing countries. Russia clearly does not wish to follow that model. It is intent on “bartering” its energy exports to help achieve a number of key economic and political goals. The clear danger is that unless progress can be made on these issues, frustration on both sides will inevitably increase and the idealistic model of energy partnership could soon become a destructive element in Russia’s relationship with its G8 partners.
While Russia and the United States failed to reach a compromise on WTO membership at the G8 summit, the comments from both sides suggest that a deal is close. There are undoubtedly a number of political and energy-related issues blocking a deal, and the hope is that these can be resolved in the upcoming weeks or months. If not, then the start of the political campaign season in Russia later this year will only complicate negotiations and limit the Kremlin’s ability to compromise. 
Similarly, the EU will want some hard evidence that last winter’s gas shortages can be avoided in early 2007. Gazprom’s declared intention to buy as much as 19.9 percent of rival producer Novatek at least suggests that a deal is taking shape.
Another key test of Russia’s ability to deliver on increased expectations is the current conflict in the Middle East. Russia has dealings with the Syrian and Iranian governments and was one of the few to offer assistance to the newly elected Hamas government. That is a unique position among the G8 countries. If Russia is unable to help broker a solution to the current conflict, its role within the G8 may diminish — especially if energy deals also remain elusive. 
Probably of much greater importance to investors in Russia, both portfolio and strategic, is how successful the government will be in delivering on expectations that it has raised domestically. Over the past seven years, living standards in the country have grown steadily, and disposable income continues to grow at more than 10 percent in real terms annually. Surveys show that people expect to see economic growth and their own standard of living rising almost indefinitely. 
Headlines proclaiming that Russia has the world’s fourth-largest financial reserves — third-largest if the stabilization fund is included — and is paying off more than $20 billion of Paris Club debt early only serve to reinforce those expectations. The enormous wealth gap in the country is acknowledged as a concern, but it is tempered by the expectation of continued rising living standards. That is also one of the key reasons why public support for the government remains high and why Putin’s chosen successor will almost certainly become the next president. 
The government is already taking too great a share of oil revenues in taxes, however. And while the country’s fiscal health is improving rapidly, the very real danger is that a lack of state investment will soon begin to have a negative impact on growth. The next government could easily be faced with a less favorable and more speculative economic climate, in which current expectations could not be met and the two critical factors for controlling investment risk in any emerging economy — internal stability and economic predictability — would surely be eroded.
It is easy to forget, especially after the G8 summit, that Russia is still an emerging economy and that only eight years have passed since it nearly went bankrupt. In the intervening period, the Russia story has been the most compelling financial soap opera in history because of the rapid changes that have taken place on the back of the $600 billion earned from oil and gas exports and the greater stability since the start of Putin’s presidency. 
In reality, for investors there are two Russias. There is the brash and confident Russia that is the world’s most important energy supplier and has all the trappings of wealth to show for it. But there is also the other Russia, where the majority of people earn $400 per month and who expect to see that rising by a steady 10 percent or more above inflation every year. 
The important issue for investors looking at Russia as it starts the second phase of its post-Soviet existence is whether all of the current expectations can be met. The critical factor is whether the government can reach consensus, between now and March 2008, on a political and economic model that makes best use of the countries natural and financial resources to sustain growth and to keep Russia in the top tier of the global economy. 
Given the rapid improvement in the economy under Putin, it might seem ungracious to be highlighting the potential negatives. But Russia has raised expectations, and these are at the core of why investors are coming to Russia today.

Christopher Weafer is chief strategist at Alfa Bank.

TITLE: IT Tax Incentives: in Search of an Economic Miracle
AUTHOR: By Ruslan Vasutin and Ekaterina Kosheleva
TEXT: The IT-sector  began receiving attention at  the highest governmental level back in the beginning of 2005. The government has set rather ambitious national goals.  According to its concept of IT development, by 2010, Russia, along with India and China should be the three world leaders of IT outsourcing with export volumes over US$ 3 billion. 
Today, the IT sector in Russia is truly one of the most dynamic.  According to some statistical data, the growth  of the IT sector has been 15 percent to 20 percent per year, with sales volumes reaching US $12 billion.  In this situation, the state measures in support of the IT sector take on extra significance.
State efforts to stimulate the development of the IT sector on the legislative level had already started in and around St. Petersburg and Moscow   with creation of specific “research and development” type  Special Economic Zones (hereinafter, SEZ). According to SEZ law, software developers registered as residents of such zones enjoy the following tax concessions: regressive unified social tax rate cut from 26 percent to 14 percent; abolishment of property and land tax (during 5 years from the moment the assets are recorded in the accountant’s books; unlimited tax deduction of R&D costs.
Notwithstanding such attractive arrangements  it is anticipated that this tax regime, since it only extends its application to new greenfield sites, will not be overly beneficial to existing  IT industry in Russia. The SEZ tax regime is not feasible for companies who have already established their presence through renting offices or the purchase of property  in a particular location.  Given the absence of necessary technological or residential infrastructure in the SEZs, this effectively means that the hidden costs of moving to such zones for IT-companies will outweigh any tax incentives involved.
In an effort to overcome the territorial limitations of a SEZ, the State Duma has considered a  bill that would introduce another special tax regime for IT companies.  A draft law  passed  its third reading and is currently at the final stage of consideration (waiting to be signed by the President).  The bill stipulates that IT companies will receive considerable unified social tax benefits, bringing down the effective rate from 23 percent to 13 percent for an IT company with an average payroll of US$ 1,000 a month in relation to each employee.  IT companies will also have the right to deduct as a period expense the cost of hardware components and computers.  Such deductions will result in a decrease in property tax payments.  The tax incentives granted under the new law are so great, that they make this regime comparable with taxation operations in the SEZ.  An important benefit is that no relocation will be necessary, which will result in large savings for  IT companies.  
To qualify for the tax incentives established by the new law,  IT companies will have to satisfy the following legislative requirements:
•  over 50 individuals on staff;
• at least 90 percent of gross income is a result of software development and other IT-related services, and  70 percent of total income  relates to services provided to foreign customers.
• to acquire state accreditation, which does not have the mechanism and procedure set up as of yet.  
Under the latest legislative initiatives,     first in line for support is the offshore software development sector, i.e. IT-companies operating in Russia and focused on servicing foreign clients. Provision of such tax incentives is also aimed at spurring  large international IT-companies to locate their software development centers in Russia. 
The software development in Russia may become especially lucrative in St. Petersburg. In addition to other advantages, such as the large number of technical universities  (which, potentially, can serve as a base for R&D centers) and young specialists, as well as the lower cost of business operations, compared to Moscow, the authorities of the northern capital provide additional incentives specifically for IT-companies investing in infrastructure. According to St. Petersburg city law “On tax incentives” IT companies with 80 percent of earnings coming from the sale of software products and which, within one calendar year, made specific investments amounting to approximately US$ 1.8 million in the territory of St. Petersburg, are entitled to a  reduction in profits  tax  from 24 percent to 20 percent.  If an IT-company invests over US$ 5.6 million in qualifying assets,  it will be entitled to a reduction in property tax  rate from 2.2 percent to 1.1percent.
As always in Russia, the use of these tax incentives is associated with practical problems due to various “grey” areas in the law.  Not all IT-services will qualify for the above treatment.  Software developers will have to pay  close attention to the subject matter of their cross-border service agreements and very carefully document the nature of their IT services.  Transactions involving the export of software products on disks and clearing them at customs, done by IT companies in the past to reclaim input VAT will  inevitably be phased out. VAT will remain a major aspect to keep in mind. As proposed in a letter from the Ministry of Finance in May, 2006, tax treatment for cross-border IT services in the context of VAT rules will very much depend on the nature of legal rights and the nature of the specific IT services produced by the software developer.  
Despite all the difficulties, things have been put into motion. At last, the Russian authorities have moved from allegation to action and Russia has a fighting chance in a World Software Outsourcing Rally with St. Petersburg as its leading force.

Ruslan Vasutin is a partner and Ekaterina Kosheleva an associate at DLA Piper St. Petersburg.

TITLE: The Strange, Awful Life That Might Have Been
AUTHOR: By Gary Shteyngart
TEXT: Dacha is Russian for “country house,” but as spoken by my parents it might as well have meant “the loving grace of God.” When the warm season finally broke the grip of the lifeless Leningrad winter, my parents schlepped me around to an endless series of dachas in the Soviet Union: a mushroom-ridden village near Daugavpils, Latvia; beautifully wooded Sestroretsk, not far from the Gulf of Finland; the infamous Yalta in the Crimea (Stalin, Churchill and Roosevelt signed some kind of real estate deal here); Sukhumi, a wrecked Black Sea resort in what is today a restive part of Georgia.
At these many dachas, I was taught to pros-trate myself before the sun, giver of life, grower of bananas, and thank it for every cruel, burning ray. My mother’s favorite diminutive for me? Solnyshko.
Little sun.
Photographs from this era show a group of tired women in bathing suits and a sad-looking boy in a kind of Warsaw Pact Speedo (that would be me) staring ahead into the limitless future while the Black Sea gently tickles our feet.
Soviet vacationing was a rough, exhausting business. In the Crimea, we would wake up early to join a line for yogurt, cherries and other edibles. All around us KGB colonels and party officials would be living it up in their relatively luxurious waterfront digs, while the rest of us stood weary-eyed beneath the miserable sun waiting to snag a loaf of bread.
I was 5 years old that summer and I had a pet, a gaily colored wind-up rooster that I would show off to everyone in the food line. “His name is Pyotr Petrovich Roosterovich,” I would declare with uncharacteristic swagger. “As you can see he has a limp, because he was injured in the Great Patriotic War.”
My mother, fearful that there would be anti-Semites queuing for cherries (they have to eat too, you know) and that these anti-Semites would not be amused by a talkative Jewish boy no matter how patriotic, would whisper for me to be quiet or I wouldn’t get my Little Red Riding Hood chocolate candy for dessert. Pyotr Petrovich Roosterovich, that avian invalid, kept getting me into trouble. He was a constant reminder of my life back in Leningrad, which was mostly spent slowly suffocating from winter asthma, but which left me plenty of time for reading war novels and dreaming that Pyotr and I were killing our share of Germans at Stalingrad.
The rooster was, put simply, my best and only friend, and no one could come between us.
When the kind, elderly owner of the Crimean dacha picked up Pyotr and stroked his hobbled leg, muttering, “I wonder if we could fix this fellow,” I grabbed the rooster from him and screamed, “You louse, you blackguard, you thief!”
We were promptly kicked off the premises and had to live in a kind of underground hut, where a 3-year-old Ukrainian boy tried to play with my rooster, with similar consequences.
Hence, the only words I know in Ukrainian: “This here boy is hitting me.” We didn’t last too long in the underground hut either. I suppose I was a tightly wound kid that summer, both excited and confounded by the sun-drenched southern landscape before me and by the sight of healthier, stronger bodies in their full Slavic splendor bouncing around me and my broken rooster.
Unbeknownst to me, my mother, flustered and distracted, was in the throes of a crisis herself, wondering whether to stay with my ailing grandmother in Russia or leave her behind forever and emigrate to the United States.
The decision was made for her in a greasy Crimean cafeteria. Over a bowl of tomato soup, a stout Siberian woman told my mother of the senseless beating her 19-year-old son had endured after his conscription by the Red Army, which had led him to cough up a kidney, or something of the sort. The woman wiped away her tears and took out a photo of her boy. He resembled a moose of great stature crossbred with an equally colossal ox.
My mother took one look at this fallen giant and then at her tiny, wheezing son and soon enough we were on a plane bound for New York.
Roosterovich, with his sad limp and beautiful red wattle, remained the only victim of the Soviet military. One night before we left for the United States he clucked to me that he did not want to emigrate from the motherland he had so valiantly defended, and so, sadly, I left him behind in Leningrad.
Once we got to New York my parents started looking for a new dacha. In the 1980s, Russian grandparents and grandchildren colonized large swaths of the Catskill Mountains in southeast New York state. The generation in the middle, which seemed to be composed entirely of mechanical engineers and the women who loved them, worked in the city and drove up for weekends, where they were free to strip down to their underwear and gorge on abundant cherries and freshly caught perch, with nary a food line in sight.
From when I was about eight until I was 14 we shared our particular mountain with a fading hotel named the Tamarack Lodge and a settlement of free-range Hasidim who would descend on our humble barrack-style bungalows, trying to induct us into their hirsute ways.
I spent my days hiding from the sun and the Hasidim beneath an oak tree, reading Isaac Asimov’s Science Fiction Magazine, sneezing from the rich American pollen and dreaming of distant, allergen-free planets. When not reading and sneezing, I learned to swim and discovered that girls were beautiful.
I suppose those quiet, lazy summers were larded with happiness, but every now and then I felt myself alien and incomplete in these warm and gregarious New World surroundings, where even the things you didn’t need would soon end up in your lap.
Sure, there were fresh, long-limbed beauties and chlorinated dips in the tiny pool and movie theaters showing “Flashdance” for two bucks a pop in the neighboring village, but sometimes an invalid boy missed his invalid rooster, his first confidant and companion, and wondered about the strange, awful life that might have been.

Gary Shteyngart is the author of “Absurdistan.” This comment appeared in The New York Times.

TITLE: Be Careful What You Say
AUTHOR: By Masha Gessen
TEXT: Russia’s chief health inspector, Gennady Onishchenko, the man who has left us wine-less, brandy-less and Borzhomi-less, has shut down the cafeteria at the Moscow Regional Arbitration Court. He said it was the “height of disregard for the most elementary of health standards,” adding that he could “say with certainty that it was the worst dining establishment in Moscow.” Onishchenko concluded that it was “pure luck” that none of the judges who eat there had gotten food poisoning. That almost sounded like a threat.
You might wonder how a man as busy and as powerful as Onishchenko came to micromanage the closure of a single cafeteria in Moscow, one that is not even open to the general public. Does he take such pains to protect the health of all Russians, especially public servants? Guess again. The Moscow Regional Arbitration Court had taken up a complaint against Onishchenko’s ban on Moldovan and Georgian wines filed by the importers of these wines. Remarkably, Kommersant seems to be the only paper to have reported on the case, so inconsequential have such court proceedings apparently become.
And yes, what Onishchenko said was indeed a threat. He mentioned that the leadership of the court was not “taking measures to normalize” the feeding of judges and that it had refused to allow Onishchenko’s staff to inspect labor conditions at the court. Want to know what that was about?
A half dozen years ago I worked at Itogi, a weekly magazine that, together with NTV television, became one of the first two victims of Putin’s attack on independent media. The tax people came first, and had to admit that the magazine’s payroll and other financial records were in good order. Then the fire inspectors came, and the magazine banned smoking on the premises, posted inane evacuation instructions on every wall, and appointed the managing editor emergency fire chief. Finally the health inspectors came and claimed that one of the typefaces used in the magazine lacked a requisite sanitation certificate and might therefore be harmful to readers’ eyes. I think that was when we knew that we had lost.
Onishchenko will clearly not be able to shut down the arbitration court as easily as he put the wine importers out of business, but his agency may be able to declare the entire court building a health hazard, forcing it to suspend operations until the Health Code violations have been addressed. If you were a judge, you might think twice about offending a man who had just shut down your cafeteria and was threatening you with indefinite leave. Just imagine the enormous backlog of cases you would face when you came back to work.
So Onishchenko is threatening a court the way bureaucrats usually threaten private businesses. This is a curious fact but, to my mind, not the moral of the story. The moral of the story is that we should never forget how spiteful and small-minded these people are. It seems extremely unlikely any decision of the arbitration court could reverse Onishchenko’s actions, but the all-powerful doctor punished the court for thinking it could butt in at all.
This is a useful lesson to keep in mind whenever you wonder why things happen the way they do in Russia. Why was businessman Bill Browder, one of the most shameless promoters of investment in this country, denied an entry visa? He has been making inquiries through official channels, and recently received an answer that said, in essence: Yes, you were denied entry. It must have been something he said.
Why was Mikhail Khodorkovsky arrested and sent to rot in a colony near the Chinese border? I had a chance to ask his wife about this recently. “Politics,” she answered, “and personal ambitions.” Whose personal ambitions? “The opposite side’s.” 
Is this country really ruled by people who are prepared to take away someone’s property and freedom just because they feel somehow slighted? I’m afraid so.

This article first appeared in The Moscow Times on Thursday. Masha Gessen is a Moscow journalist.

TITLE: Beyond Belief
AUTHOR: By Chris Floyd
TEXT: The history of almost every religion is a tragedy of betrayal: the betrayal of the radical, egalitarian vision of its founders by generations of powerful elites, who twist and pervert the original principles in order to augment their own status, wealth and dominion. It has always been thus, but is nowhere more marked than among the “People of the Book” — Christians, Muslims and Jews — whose elites have for centuries led their followers away from the sparks of light that shone in the beginning, dragging them deeper into darkness and error, until today the world finds itself mired in a new Jahiliyyah, or time of ignorance.
We are not suggesting a precise equivalence here, of course. The blood-curdling depredations of those who claim to be Christians have, in sheer numbers over the course of history, far outweighed the atrocities committed by those who claim to be Muslims. And the number of crimes committed in the names of both of these sects dwarf by several magnitudes the outrages perpetrated by those who claim to follow the paths of Rabbinic Judaism — although the latter are certainly making a game bid to catch up.
The degeneration of these faiths into aggressive obscurantism should of course be a matter solely for their adherents; why should anyone else be concerned with the feverish hair-splitting, manic control-freakery and sexual obsessions of rabid fundamentalists? Unfortunately, these now-degraded sects dominate the lives of billions of people. Professed believers — or, even worse, sincere believers — from the three “Abrahamic faiths” control the governments of many nations, with bristling nuclear arsenals under Christian, Jewish and Muslim command. The fundamentalists’ stunted, ignorant and at times demented interpretations of ancient texts, dubious traditions and their own blood-soaked histories cannot be ignored. They are the driving force behind every conflict today that threatens to wrap the earth in flames of literal hellfire.
But what these modern-day “believers” believe — and do — has almost no connection to the religions they profess. Karen Armstrong provides clear evidence of this in “The Great Transformation,” her sweeping new scholarly study of the “Axial Age,” the tremendous, centuries-long, worldwide eruption of human consciousness (roughly 900-200 BCE) that gave rise to the major traditions still existing today: Hinduism, Buddhism, Confucianism, Daoism, Greek rationalist thought and the monotheism of Israel, from which later sprang the three sibling faiths whose family quarrels have so poisoned the last two millennia.
As Armstrong notes, the “Axial sages” — prophets, mystics, philosophers, poets — achieved a remarkable consensus across centuries and cultures in the essence of their teachings. “All the sages preached a spirituality of empathy and compassion; they insisted that people abandon their egotism and greed, their violence and unkindness,” and that this radical compassion “must somehow extend to the entire world.” Indeed, “as far as the Axial sages were concerned, respect for the sacred rights of all beings — not orthodox belief — was religion.”
The contrast with the hidebound ignorance of our day could hardly be greater. Or, as Bob Dylan once put it: “Easy to see without looking too far / That not much is really sacred.” Certainly not the rights, or lives, of individual human beings, now being shredded everywhere you look by self-declared lovers of God. The fundamentalists have been steeped in murk for so long that they mistake their darkness for the light. 
No doubt every well-wadded, White House-connected televangelist justifying aggressive war, pimping for tax cuts and frothing with anxiety about homosexuals thinks he’s walking in the footsteps of the backwoods preacher from Galilee, who spent his entire ministry serving the poor and the despised, the powerless and the discarded, the sexual outcasts and the victims of wealth, and was finally killed by the satraps of what was then the world’s only hyperpower.
No doubt every Kalashnikov-toting enforcer of Islamic “virtue” — schooled in a hatemongering madrasa funded by cynical Saudi potentates glutted with U.S. oil money — who beats “unruly” women and slaughters ice cream vendors and CD hawkers because “they didn’t have such things in the Prophet’s time” thinks he’s following the example of Muhammad, who forbade the imposition of Islam on others, continually refined his thought and married an independent female merchant who hired him as an agent for her caravan business, then proposed to him, in defiance of ancient custom. 
No doubt every “settler rabbi” issuing edicts approving the killing of Arab civilians or blessing a cruise missile bound for a Beirut apartment complex believes he is a worthy heir of Rabbi Hillel, the great Pharisee who, when challenged to reduce God’s law to a single statement, replied: “What is hateful to yourself, do not do to others. That is the whole law; the rest is commentary. Go and study.” This formulation, the Golden Rule later adapted by Jesus, was in fact a powerful distillation — and revival — of the Axial sages’ core teaching. 
But this core been lost once again, washed away in the blood being shed by the People of the Book in their global war of terror: state terror, sectarian terror, death squads, black ops, “asymmetrical attacks” and “disproportionate force” — an orgy of egotism and greed, violence and unkindness, with the name of God being invoked at every turn.
What the sages knew thousands of years ago — in the mud of the Ganges, in the cattle yards of Qufu, by the waters of Babylon — we no longer know. We only know the grunt of ignorant bluster and the frenzied call to war: holy war, culture war, “long war.” We are strangling on the blood clot of betrayal.

TITLE: Monumental Oddities
AUTHOR: By Michele A. Berdy
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW — On Tuesday, the All-Russia Exhibition Center, or VVTs, celebrates its 67th anniversary. But what’s there today has only a faint resemblance to the Stalinist wonderland that opened its doors on Aug. 1, 1939. Back then, it was conceived as a one-time state fair that would sell peasants on the wonders of collectivization. This was a hard sell, so the leaders sweetened the pot by offering prizes for winning exhibitions, including grand prizes of 10,000 rubles and a car. Over a quarter of a million applications were received to display prize pigs, giant apples and wilt-resistant cucumbers. These and thousands of other agricultural success stories were exhibited in buildings and extensive gardens, with Vera Mukhina’s iconic sculpture “The Worker and Peasant” towering above it all.
The fair was such a hit that it became an annual event, and — following an interruption caused by World War II — a permanent exhibition with a triumphal new entry arch, spectacular fountains and dozens of new pavilions. It also began highlighting industry and technology as well as agriculture. For the rest of the Soviet era, it was one of the city’s main pleasure parks and a hands-on refresher institute for farmers and workers. Foreign tourists plodded through pavilions to view ball bearings under glass, demonstration vacuum cleaners and sad-sack pigs who looked as if they’d welcome being turned into bacon. All the while, tour guides extolled the wonders of the Soviet system.
After the collapse of communism, no one was singing the praises of the Soviet economy, and the exhibition grounds began their decline into a rather shoddy market for consumer goods and honky-tonk amusement park. The murals of Lenin and statues of robust workers and peasants became a political embarrassment. Some of the socialist backdrop was dismantled, got covered up by trading booths or fell into disrepair.
But the wheel of history keeps turning, and right now VVTs is in the middle of an upswing. The Mukhina monument is being repaired, and there are plans to reconstruct the old pavilions and build several new exhibition halls and science museums. In the meantime, the sprawling exhibition center remains a one-of-a-kind snapshot of Moscow’s past, present and future, with plenty of offbeat amusements that deliver an unexpectedly good time. 

Back in the U.S.S.R.
VVTs is the best place in Moscow to see the art of Socialist Realism. You can start your tour at the spire-topped Central Pavilion, which now houses a museum of the People’s Gifts to Leonid Yakubovich, host of the popular television quiz show “Field of Dreams,” in a bizarre and apparently unintentional parody of the old Soviet exhibitions of People’s Gifts to Comrade Stalin. Behind this pavilion are two magnificent fountains: the Friendship of Nations Fountain, with its golden collective-farm maidens representing the 15 Soviet republics dancing under 800 jets of water, and the fairy-tale Stone Flower Fountain. Around this main square are some of the best preserved pavilions; be sure to glance up to find remnants of the socialist past, like the paeans to Soviet metallurgy on the walls of Pavilion 11. 
Straight back is another grand square with the rocket that launched Yury Gagarin into space and two Aeroflot planes open to clamoring kids. If you keep walking, on the far side of this square you’ll find an eerie no man’s land of decaying pavilions, with trees sprouting out of the glass dome of the former Machine-Building Pavilion, and the empty Meat Industry Pavilion still supported by columns of cow caryatids.

360 Degrees of Kitsch
For the full Soviet experience, stop in Pavilion 96 to see a film-in-the-round. Most of the 20-minute films, which were shot on synchronized cameras to form a 360-degree view, were made in the ‘60s and ‘70s. In the faded but fascinating “On the Road” from 1969, you can see Novy Arbat without casinos, neon signs or even Zhuguli cars. The last scene is a wedding in sunny, happy, affluent Abkhazia, where men in traditional costumes blur in a dizzying dance around the 11 screens lining the walls of the movie theater. 
The building is near the front entrance; turn left between pavilions 2 and 4 and then right just before the South Gate. Films are shown at noon, 1 p.m., 2:30 p.m., 4 p.m. and 5:30 p.m. on Tuesday, Thursday, Saturday and Sunday, although the theater management can only afford to screen them when there are at least four visitors. Call 181-9525 for details.

Fun for the Whole Family
VVTs is packed with two amusement parks, a petting zoo, pony rides, go-karts, ping pong, a toy train that tours the grounds, theatrical performances, trade fairs and exhibitions. Bring your own Rollerblades or bicycle, or rent them near the Friendship of Nations fountain. The grounds farthest from the entrance are quiet and beautifully landscaped, good for strolling or rollerblading. There you can rent a boat to paddle about Golden Sheaf pond and admire the fountain, even if it isn’t spouting water. 
VVTs also has surprisingly good shopping hidden among the dross of typical consumer goods markets. The best selection of gifts and souvenirs is in the Culture Pavilion, No. 66, although Pavilion 71 has treasures like chased silver, a souvenir-packed army supply store and superb olive oil from a Greek monastery. When you need a break, stop in the Armenia Pavilion, No. 68, to enjoy cognac and pastries in the setting of a gentlemen’s club. And don’t forget to pick up a pet: There are always three or four cat shows selling Moscow’s “in” breed, the British Shorthair. 

Like Shooting Fish 
in a Barrel
In the shady and quaint Fisherman’s Village, near the Likhoborsky Entrance, you can rent fishing tackle to catch carp, trout or several kinds of sturgeon and catfish — and have it immediately cooked for your meal. While you’re enjoying lunch and a sauna, the kids can work out their sibling rivalry in a game of paintball. 
See the facility’s web site (www.fishing-moscow.ru) for more information, and definitely call ahead since it is frequently closed for corporate retreats. Apparently paintball tournaments are good for team-building — or eliminating departmental rivals.

Furry Rhinos 
and Space dogs
Go to the Ice Age Museum in Pavilion 71 to see a family of woolly mammoths, a furry rhinoceros and skeletons of very large, scary creatures. There is also an extraordinary exhibition of carved ivory, including a breathtaking throne. 
Just outside the VVTs grounds you can fast-forward from Ice Age to Space Age in the Museum of Cosmonauts, located in the base of the space-rocket obelisk (open Tuesday to Sunday, from 10 a.m. to 6 p.m.). The one-hall museum displays equipment, capsules and space suits from the earliest Soviet space flights, all of which give you great appreciation for the heroism of those first cosmonauts. You can also see the first dogs who took a round trip to the stars: The space pooches Belka and Strelka have been stuffed for posterity and are displayed next to a canine space suit. 

Futurama
After a visit to the museum, if you feel inspired to leave the earth, take a ride on the monorail, Moscow’s foray into 21st-century public transportation. Trains leave every half-hour to Timiryazevskaya metro station. Although the elevated line remains controversial, the folks who run it are true believers: They say that building a monorail costs two or three times less than building a metro line, and they point out that with underground Moscow already cluttered with parking lots, metro lines and shopping malls, the only way to go is up. Besides, it’s fun, and the views are great. 

VVTs is located at 119 Prospekt Mira. Metro VDNKh. Grounds are open daily from 8 a.m. to 10 p.m., pavilions from 10 a.m. to 7 p.m. For details on events and exhibitions, see www.vvcentre.ru

TITLE: Big Trouble in Little Moscow
AUTHOR: By Anna Malpas
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW — It could make a great dollhouse, or it could be blown up in a low-budget action flick; it would also look good in the lair of a James Bond villain. Moscow — or, more precisely, a 19-meter-wide diorama of the city center — is now on sale at the very reasonable price of $380,000.
Called the Moscow Panorama, the work is currently housed in a desolate shopping mall in the south of the city. It was made in 1977 to celebrate the 60th anniversary of the October Revolution, and later shown in the United States and other countries. After a period in storage, it made a comeback in 1997 for the 850th anniversary of the founding of Moscow. But the owners have now decided that the space could be better used as a supermarket.
Last week, a janitor flicked his feather duster at the Kremlin for television cameras, hastily putting back one of the turrets after it fell off. The still-impressive diorama had clearly seen better days, as its painted sky had a fold line, and many of the tiny pedestrian figures were now lying on their backs. 
Nevertheless, the owners of the Russky Souvenir shopping mall hope that they can find a buyer in time for the auction on Friday. What’s up for sale is a fossilized view of Brezhnev-era Moscow, with red flags over the Kremlin and only one visible advertisement, for Soviet car exports. Both the Intourist and Moskva hotels are still intact, while the Rossiya takes pride of place in the foreground.
Scale models depict buildings in the city center, such as the Kremlin and Gostiny Dvor, while a highly detailed painted backdrop shows faraway apartment blocks on the outskirts. A lighting system changes the time of day from dawn to daylight and finally night, when windows in the buildings are illuminated. The streets are decorated with cars, trucks and buses in what may have passed for a traffic jam in 1977.
The auctioneers have received 40 responses to letters sent to companies and collectors’ clubs in the United States and Japan, but only 10 from those sent to Russian companies, said Andrei Shurukhin, president of BMG Rus, the company organizing the sale, in an interview last week. So far, there have been no definite bids for the diorama.
“It will be a pity, of course, if it goes away somewhere abroad,” Shurukhin said. “But maybe that would be for the best, because if the auction in August doesn’t take place, it will simply need to be taken apart and put in boxes.”
The 10,300,000 ruble ($380,000) starting price was set by an expert committee from the Moscow Service for the Protection of Cultural Treasures, Shurukhin said. He said the auctioneers had contacted the city government and the presidential administration for bids, receiving no answer and a “not interested” response, respectively.
When contacted for comment, however, Svetlana Bachurina, a city official responsible for architecture and construction who was involved in reopening the panorama in 1997, said she had never heard of the auction, and asked a reporter to send information. Asked whether her department would be interested in taking part in the auction, she said, “That’s a very interesting question.”
The diorama was made by Yefim Deshalyt, one of the most respected artists in the then-fashionable genre. He also made a similar work, depicting the 1905 revolution, that can still be seen at the Krasnaya Presnya Museum.
When the Moscow Panorama returned from touring abroad, it was simply stored at the VDNKh exhibition center. By the early 1990s, it was set to be thrown away, seen as a waste of warehouse space.
At that point, it was saved by film producer Mira Todorovskaya, who was tipped off by some of the craftsmen who had worked on it. She stored the diorama, finally seeing it displayed at the mall in 1997, and handed over ownership to the mall owners a year ago. In a telephone interview, she described her purchase of the diorama as “a very stupid thing to do.”
The Moscow Panorama “was not needed by the city government in any shape or form,” Todorovskaya said. She had hoped that the authorities would buy it after the 1997 reopening, but after the “ceremonial opening,” there was a revival of “the old policy that it’s not needed by anyone,” she said. 
The diorama’s large size makes it unattractive for foreign buyers, Todorovskaya believes. She said that a casino in Las Vegas and a bank in Japan had both expressed interest but then backed out. “I don’t think anything will come of this,” she concluded of next month’s auction.

The Moscow Panorama can be seen Monday through Friday in Russky Souvenir shopping mall, at 3 Ulitsa Namyotkina in Moscow. Metro Noviye Cheryomushki. For information on the auction, see www.buy-moscow.ru

TITLE: Israel Continues With Air Raids
AUTHOR: By Thomas Wagner and Kathy Gannon
PUBLISHER: The Associated Press
TEXT: JERUSALEM — The Israeli air force carried out strikes Monday in southern Lebanon despite an agreement to halt raids for 48 hours after nearly 60 Lebanese civilians were killed in an Israeli bombing, the army said.
The airstrikes near the village of Taibe were meant to protect ground forces operating in the area and were not targeting anyone or anything specific, the army said.
Meanwhile, Hezbollah guerrillas attacked an Israeli tank in southern Lebanon, wounding three soldiers, the military said. The attack occurred near the villages of Kila and Taibe on border, where Israeli ground forces have been fighting Hezbollah guerrillas for nearly two weeks.
Israel Radio also reported that Hezbollah rockets hit the northern town of Kiryat Shemona. No casualties were reported in the rocket attacks, the radio said.
Hours before the fighting started up again, U.S. Secretary of State Condoleezza Rice urged the U.N. Security Council to arrange for a cease-fire agreement by week’s end that would include the formation of an international force to help Lebanese forces control southern Lebanon.
But Israeli Defense Minister Amir Peretz made clear in a speech to parliament that Israel would not agree to an immediate cease-fire and had plans to expand its operation in Lebanon.
“It’s forbidden to agree to an immediate cease-fire,” Peretz told parliament, as several Arab legislators heckled him and demanded an immediate halt to the offensive. “Israel will expand and strengthen its activities against the Hezbollah.”
Israel’s top ministers were to discuss expanding the army’s ground operation at a meeting later Monday, while thousands of reserve soldiers trained for the possibility that they will be sent into Lebanon to participate in the battle, now 20 days old.
It was unclear whether the senior ministers would approve a broader ground assault at their meeting, defense officials said on condition of anonymity because they were not authorized to speak to the media.
Israel had announced the suspension of airstrikes for 48 hours starting at 2 a.m. Monday. But Hezbollah legislator Hassan Fadlallah had questioned Israel’s motivation, telling Lebanese television it was just “an attempt to absorb international indignation over the Qana massacre.”
The bombing of the Lebanese village of Qana on Sunday led to demands around the world for an immediate cease-fire.
Israeli Prime Minister Ehud Olmert told Rice over the weekend that Israel would need 10 to 14 more days to finish its offensive, and Justice Minister Haim Ramon told Army Radio on Monday that he did not think the fighting was over yet.
“I’m convinced that we won’t finish this war until it’s clear that Hezbollah has no more abilities to attack Israel from south Lebanon. This is what we are striving for,” Ramon said.
The stunning bloodshed in Qana increased international pressure on Washington to back an immediate end to the fighting and prompted Rice to cut short her Mideast mission to return home Monday.
In a nationally televised speech before leaving Israel, Rice said she will seek international consensus for a cease-fire and a “lasting settlement” in the conflict between Lebanon and Israel through a U.N. Security Council resolution this week.
“I am convinced that only by achieving both will the Lebanese people be able to control their country and their future, and the people of Israel finally be able to live free of attack from terrorist groups in Lebanon,” Rice said.
An Israeli army spokesman left open the possibility that Israel might still hit targets to stop imminent attacks on the country, despite the airstrike suspension. He also made it clear the Israelis could end the suspension depending on “operational developments” in Lebanon.
The army said that the temporary cessation of aerial activity would allow the opening of corridors for Lebanese civilians who want to leave south Lebanon for the north and would maintain land, sea and air corridors for humanitarian assistance.
By early afternoon Monday, roads from villages into the port city of Tyre and heading north along the coast were packed with thousands of refugees in pick-up trucks and cars. With many of the main roads too shattered for use, cars took to dirt side roads, still waving white flags out their windows or covering the vehicles roofs with white sheets.
Lebanese Red Cross teams escorted by U.N. observers went to the village of Srifa to dig up more than 50 bodies believed still buried under rubble since Israeli strikes wiped out an entire neighborhood on July 19. The bodies have began decomposing, the Red Cross said.
The largest death toll from a single Israeli strike before Sunday was around a dozen, and the Qana attack, where at least 34 children and 12 women died, stunned Lebanese. Heightening the anger were memories of a 1996 Israeli artillery bombardment that hit a U.N. base in Qana, killing more than 100 Lebanese who had taken refuge there from fighting. That attack sparked an international outcry that forced a halt to an Israeli offensive.
Hezbollah vowed retaliation on its Al-Manar television, saying: “The massacre at Qana will not go unanswered.” It hit northern Israel on Sunday with 157 rockets — the highest one-day total during the offensive — with one Israeli moderately wounded and 12 others lightly hurt, medics said.

TITLE: NATO Takes Control Of South Afghanistan
AUTHOR: By Jeremy Laurence
PUBLISHER: Reuters
TEXT: KANDAHAR, Afghanistan — A bomb in a police car killed at least eight people in Afghanistan on Monday as NATO forces took control of security in the south of the country to begin one of the biggest ground operations in the alliance’s history.
“NATO is here for the long term, for as long as the government and people of Afghanistan require our assistance,” Lieutenant-General David Richards, the British NATO commander responsible for the south, said in a statement.
The car bomb attack occurred in the city of Jalalabad in the east — the only part of Afghanistan where U.S.-led coalition forces remain in charge following Monday’s transfer of command in the south.
Afghanistan is going through its bloodiest phase since the Taliban government was ousted in 2001, and the guerrilla insurgency is concentrated in the south and east.
More than 1,700 people have been killed since the start of the year in attacks by Taliban guerrillas, drug gangs and U.S.-led coalition operations.
The bomb in Jalalabad targeted the convoy of Gul Afgha Sherzai, the governor of Nangarhar, as it drove away from a mosque where thousands of people had gathered to offer prayers for a former mujahideen commander, who died last week.
Sherzai escaped unhurt, but officials said five police and three children were killed while 16 other people were wounded.
“I was the target and it was the work of Afghanistan’s enemies,” Sherzai told Reuters, using a term usually taken to mean Taliban insurgents and their al Qaeda allies.
Basir Solangi, police chief of Jalalabad, told Reuters that the bomb was concealed in a police car and was triggered remotely.
Meantime, NATO and U.S. coalition commanders gathered for a transfer of command ceremony at a base in the southern city of Kandahar, where many recent Taliban attacks have taken place.
Until now, NATO has been in charge of security in the capital, Kabul, and the safer north and west of the country, and the mission covering six southern provinces could become the most dangerous in the alliance’s 57-year history.
“Hundreds of our suicide bombers are awaiting NATO forces... we will continue our offensive until we force the foreign troops to leave our country,” Mullah Dadullah, a Taliban commander, told Reuters by satellite phone from an undisclosed location.
NATO peacekeeping troops, mostly from Britain, Canada and the Netherlands, have been taking up positions in the south for the past few months and have already been engaged in heavy fighting with Taliban guerrillas, in some cases allied with drug runners.
NATO’s secretary-general stressed on Monday that NATO could not solve all problems and needed world powers to live up to commitments made at the end of January to bring more aid to Afghanistan — something they have failed to do so far, he said.
“I tell people ... NATO will do its job but you have to do yours as well in assisting the Afghan people and government, but also in preventing the country from becoming a stronghold for terrorists,” Jaap de Hoop Scheffer said in an interview with the Financial Times.
The alliance will boost its presence in Afghanistan by about 7,000 troops to 16,000. Of more than 70 foreign troops killed this year, at least six of have been involved in NATO-led operations.
NATO hopes to take control of eastern Afghanistan by the end of the year, putting it in overall control of security for the whole country.

TITLE: Chief Sri Lanka Rebel Says War is Back On
AUTHOR: By Simon Gardner
PUBLISHER: Reuters
TEXT: COLOMBO — Sri Lanka’s two-decade civil war is back on, a top Tamil Tiger said, as seven soldiers and three rebels were killed on Monday in the first army advance on rebel-held territory since a 2002 ceasefire.
S. Elilan, head of the Tigers’ political wing in the restive eastern district of Trincomalee, said army troops had resumed a bid to advance toward land they control in the east and had fired artillery and mortars at their territory in the north.
“The ceasefire agreement has become null and void at the moment,” Elilan told Reuters by telephone from Trincomalee, adding government troops were continuing an advance toward their forward defense line in the east in a water supply dispute.
“The war is on and we are ready,” added Elilan. “The war has begun. It is the government which has started the war... Militarily, we have decided to fight back if the Sri Lankan army enters our area.”
Elilan is not the Tigers’ main spokesman, but he is one of their top officials and their political head in Trincomalee. He has repeatedly warned of a return to war.
The Tigers dismissed army reports that dozens of their fighters were killed, saying three had died in a multi-barrel rocket attack. The military said seven soldiers were killed and several injured during a ground battle in the east.
“Fighting is going on,” said army spokesman Brigadier Prasad Samarasinge. “Troops are consolidating the area. We have air strikes, artillery and mortar fire.”
The Colombo stock market closed 1.37 percent lower in afternoon trade in the wake of the Tiger statement and fresh violence, analysts said.
The rebels, angry at President Mahinda Rajapakse’s outright rejection of their demand for a separate homeland for ethnic Tamils in the north and east, have pulled out of peace talks indefinitely and have been cranking up the rhetoric for months.
The army advance through minefields and booby traps is aimed at reaching a sluice they accuse the Tigers of blocking to choke water supplies to Sinhalese farmers in government territory.
The government says troops are trying to clear mines in their first open advance on rebel-held areas since the 2002 ceasefire, and face intermittent firefights. They say they have purely humanitarian goals but the Tigers have simply gone too far.
“Under international law, denial of water is a crime and people have gone to the gallows for less,” said head of the government peace secretariat Palitha Kohona. “The government says categorically that it is totally committed to the ceasefire. But the most important thing is to provide water for 50,000 people.”
The head of the island’s Nordic truce monitoring mission, Ulf Henricsson, a retired Swedish Major General, said on Saturday the truce was dead in all but name after 800 people were killed in violence this year.
But he said he expected low intensity fighting rather than a full-blown return to a conflict that has killed more than 65,000 people.

TITLE: Mexican Leftist Candidate Urges Blockades in Capital
AUTHOR: By Mark Stevenson
PUBLISHER: The Associated Press
TEXT: MEXICO CITY — Leftist candidate Andres Manuel Lopez Obrador called Sunday for hundreds of thousands of his supporters to erect permanent protest camps to cripple Mexico’s capital until a disputed presidential election.
Addressing what organizers said was a gathering of 2 million in the city’s historic central plaza and spilling down fashionable Reforma boulevard, Lopez Obrador said, “I propose we stay here permanently until the court resolves this ... that we stay here day and night.”
If Lopez Obrador supporters heed his call, blockades could have a catastrophic effect on already chaotic city traffic, hurting downtown commerce.
The leftist asked his followers not to “invade public spaces” and demonstrators said they wouldn’t block streets, but Lopez Obrador also apologized in advance for “any inconvenience our movement might cause.”
“We will take drastic measures. We will blockade airports, we will take over embassies,” marcher Sara Zepeda, 32, said as she pushed her 2-month-old son in a baby carriage.
The former Mexico City mayor finished slightly behind his conservative opponent, ex-Energy Secretary Felipe Calderon, in the July 2 election, and says a vote-by-vote recount will expose fraud that tilted the election.
An official count gave Calderon less than 0.6 percent over Lopez Obrador, about 240,000 votes out of some 41 million cast. The Federal Electoral Tribunal has until Sept. 6 to either declare a winner or annul the election.

TITLE: Shumi Opens F1 Title Race
PUBLISHER: Reuters
TEXT: HOCKENHEIM, Germany — Ferrari’s Michael Schumacher blasted the Formula One title race wide open on Sunday with a commanding one-two victory in his home German Grand Prix. 
While the 37-year-old celebrated the 89th victory of his incredible career, serenaded by air-horns and his jubilant army of red-shirted fans, Renault’s world champion Fernando Alonso limped home fifth.
The Spaniard’s overall lead was slashed from 17 points to 11, leaving his championship hopes on a knife-edge with six races remaining and barely time to breathe before the next clash in Hungary in a week’s time.
“The next races won’t present any problems for us,” said Schumacher.
“If we can keep this up, the championship will be really, really exciting. We hope to have our nose in front at the end.”
Renault’s lead over Ferrari was cut to 10 points in the constructors’ championship.
In what could be his final race appearance in Germany, with his manager Willi Weber advising him to retire if he wins the title, Schumacher took the lead after 10 laps when McLaren’s Kimi Raikkonen pitted.
The rest was straightforward. Schumacher’s third win in a row, and fifth of the season, was one of his most important on what the seven-times champion could only describe as a “superb weekend.”
On a blazingly hot afternoon, Schumacher and Brazilian team mate Felipe Massa were in a race of their own as they anchored the team’s second one-two finish in three starts and tire partner Bridgestone’s 100th grand prix success.
They crossed the line in close formation, just 0.7 seconds apart, with Schumacher becoming the first driver to win the German Grand Prix four times. 
“We have the edge on the other guys for three races,” declared Schumacher. “We have to keep this advantage for as long as we can.”
“The numbers are very important but at the moment, probably the most important is 11. And it’s 11 points left in terms of the championship lead for Fernando.”
“We had a superb weekend, our car just functioned really great,” he said.
“It’s the right moment in time, where we need to have such a performance in order to bring down the gap in the championship and keep pressure on.”
Raikkonen, who had started on pole, was out of sight in third place and 13.2 seconds behind as he ended a jinx and finished at engine partner Mercedes’s home track for the first time in six attempts.
“Bridgestone has a slight advantage, but you could say we’re up there,” said Mercedes motorsport director Norbert Haug.
“We’re going on the right way. We were clearly behind Renault before and now we’re clearly in front of them. We’ll see what happens now.”

TITLE: Haas Beats Tursunov In Los Angeles
PUBLISHER: Agence France Presse
TEXT: LOS ANGELES, California — Germany’s Tommy Haas rallied to defeat eighth seed Dmitry Tursunov 4-6, 7-5, 6-3 in Sunday’s final and clinch his second title in three years at the Los Angeles ATP tournament.
Haas broke Tursunov’s serve two times and blasted 12 aces to the Russian’s 10 in the two hour, four minute match in front of a crowd of 3,500 at the University of California Los Angeles main stadium.
The 2000 Sydney Olympics silver medallist also captured his third title of 2006.
“This is an awesome feeling and the end of a great week for me,” said the 28-year-old Haas, who won his 10th career singles title in his 11-year ATP career. “This is the second time I have won a tournament twice. I won again in Memphis this year.”
The 23-year-old Tursunov is also playing some of the best tennis of his career.
This was his first ATP final and while he may have missed out on an opportunity to win a crown he couldn’t have been happier with his play this week.
“I am going to get wasted,” Tursunov joked after the match.
Tursunov came out with more fire, winning the first set on the strength of his powerful serve and laser-like forehand.
But Haas seized control of the match when he broke Tursunov’s serve two consecutive times — late in the second and early in the third set to take a 2-0 lead.
“At the end of the second set [Tursunov] was going for it a little more,  maybe thinking this would be his first title,” Haas said. “I kept telling myself to hold my serve and wait for opportunities.”
“After I won the second set I had the momentum going into the third set.”
Haas has won all three career meetings against Tursunov, beating him the first time in Houston two years ago 6-2, 6-0 and in Memphis earlier this year 6-7 (7/9), 6-4, 6-4.
Tursunov beat third seed Fernando Gonzalez 6-4, 6-2 in Friday’s semi-finals while Haas defeated Slovakia’s Dominik Hrbaty 6-2, 7-5 to reach his 18th career final.
“I lost three times to Gonzalez and beat him the fourth time so it will be the same for Tommy. I lost three times to him so I will beat him the fourth time,” Tursunov said.
Haas shot back, “We will see about the fourth time.”
On a more serious note, Haas dedicated his victory to his former coach, travelling companion and hitting partner Colombian Raul Ordonez. Ordonez is suffering from amyotrophic lateral sclerosis which is also called Lou Gehrig’s disease.
“I dedicated this win to him. He is fighting for his life,” Haas said.
In May 2002, Haas reached No. 2 in the world rankings but then a shoulder problem surfaced and he missed the entire 2003 season after undergoing surgery.
But lately the injuries appear to have cleared up and coach Thomas Hogstedt has Haas in top form.
“After the second surgery I treated it like my first career was over and this is my second one,” Haas said.

TITLE: Landis Waits for 2nd Doping Result to Clear His Name
PUBLISHER: Reuters
TEXT: PARIS — Tour de France winner Floyd Landis, who tested positive for testosterone on his way to victory in cycling’s showpiece event, should find out shortly if the counter-analysis he has requested confirms the result. 
A source close to the anti-doping laboratory testing the B-sample said the result would be known soon.
If the positive test were confirmed, the American would be stripped of his Tour victory and Oscar Pereiro of Spain, who finished second overall in this month’s race, would be declared the winner.
It would be the first time in the history of the sport’s showpiece event that a Tour winner has been disqualified for doping.
His Phonak team said Landis would be dismissed if the B result was also positive.
The American, who has denied any wrongdoing and said his body naturally produced high levels of testosterone, has said he intends to continue racing once he has had an operation on his hip.
The 30-year-old tested positive for the male sex hormone after an astounding comeback in the last mountain stage of this year’s Tour in the French Alps, just a day after a very poor performance which all but knocked him out of contention.
If the positive test is confirmed, USA Cycling, the American federation, would have a month to make a ruling, the most likely decision being a two-year ban.
Landis’s lawyers could then take the matter to the Court of Arbitration for Sport (CAS) and a long procedure would begin. 
Positive doping tests by Olympic 100 meters champion Justin Gatlin and Landis are destroying the credibility of American sport, the 2004 Olympics U.S. men’s athletics coach said on Saturday. 
“They are destroying it big-time,” George Williams said.
“It is affecting sports everywhere. It is affecting the credibility of young kids,” Williams added.
“Justin is a hero. He is a hero for track and field. He is an American hero.”
Williams said he did not believe Gatlin used performance-enhancing substances.
“Anybody that gets caught if they are doing something wrong, that’s a good sign,” he said.
“But if they are not doing something wrong, that’s a bad sign.”