SOURCE: The St. Petersburg Times
DATE: Issue #1199 (65), Tuesday, August 29, 2006
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TITLE: Funerals Held For Crash Victims
PUBLISHER: Combined Reports
TEXT: A memorial service was held Monday in the Kazan Cathedral to commemorate a local couple that was killed when a Pulkovo Airlines Tu-154 jet crashed in Ukraine after encountering rough weather, killing all 170 people registered aboard.
Funerals are being held at various cemeteries this week through Wednesday, when the crew of the ill-fated flight will be buried at the Cemetery In Memory of Victims of January 9, 1905, Pulkovo’s press office announced.
Relatives of pilot Ivan Korogodin told Regnum news agency that they will arrange for him to be buried at a cemetery in Pushkin. 
Relatives of many of the victims seek to avoid publicity and media attention. They requested times and places of the funerals and memorial services to be withheld from the press and the general public.
The first funerals were held Saturday.
Meanwhile, the identified remains of 66 victims were sent Friday and Saturday to St. Petersburg, where most of the passengers lived, the Emergency Situations Ministry said. 
Eighty-six bodies have been identified; 74 were from St. Petersburg, Interfax reported, citing city figures.
In the Black Sea resort city of Anapa, where the plane had taken off on a flight to St. Petersburg, friends and loved ones buried Natalya Kuznetsova. Rossia state television said the St. Petersburg resident had grown up in Anapa and was vacationing with her husband and son before flying back home alone to return to work while they continued their vacation.
At a village in the Krasnodar region, where Anapa is located, a funeral was held for a 19-year-old man who had been returning to St. Petersburg to start his second year at a university, Itar-Tass reported.
In St. Petersburg, a funeral was held for Anna Gabitova, 26, and her 1-year-old daughter, Alexandra.
The plane slammed into a field north of Donetsk after its crew sent distress signals as a storm raged in the area. Terrorism had been ruled out as a cause of the crash. The general consensus remained that the storm over eastern Ukraine was to blame.
The plane issued a first distress call over eastern Ukraine at an altitude of 11,000 meters to 13,500. It issued a second call at an altitude of 3,000 meters. 
Izvestia reported Friday that the plane might have been forced to fly through the storm by Ukrainian air traffic controllers. It said controllers, under whose authority the plane was flying in the minutes before the crash, forbade the pilot from leaving a 20-kilometer-wide corridor. Leaving the corridor would have allowed the pilot to steer the plane around the storm, rather than attempt to fly through or above it.
Transportation Minister Igor Levitin said Friday that relatives had made preliminary identifications of 52 bodies. 
The relatives have been asked to give blood samples for cases where DNA analysis is required, and Channel One state television reported that some were too grief-stricken to identify remains in person, preferring to rely on DNA. 
Meeting with President Vladimir Putin in Sochi, the Black Sea resort where he spends part of the summer at a presidential residence, St. Petersburg Governor Valentina Matviyenko said that 96 of the victims were from the city and promised that its authorities would do their best to help victims’ families. 
She said the city would provide relatives of victims with 100,000 rubles ($3,700) and indicated there would also be compensation from the airlines and the federal government. 
Putin, on state-run television, urged city authorities to consider each case individually, noting that financial and other circumstances vary. 
Levitin said five foreign nationals were on the flight: two each from the Netherlands and Finland, and one German. Earlier reports said the five foreigners were two Germans and citizens from Finland, the Netherlands and France.
Authorities have said they found 171 bodies, but have noted some of the remains were very broken. The official flight list registered 160 passengers and 10 crew. The two flight recorders, which also have been found, are being studied in Russia, and initial results are not expected for about a month.	

(AP, SPT)

TITLE: Cathedral Broke Fire Rules
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: St. Petersburg’s fire chief Maxim Biryukov said Monday that the Troitse-Izmailovsky Cathedral, which was largely destroyed by fire on Friday, was in violation of the fire code after an inspection in 2005 but no improvements were made due to shortage of money.
The blue-domed cathedral, St. Petersburg’s fourth-highest building, boasted arguably Europe’s largest wooden cupolas. The central dome collapsed and one of four smaller cupolas surrounding it was also destroyed by the blaze. 
The fire broke out at approximately 5.30 p.m. more than 30 meters above the ground. 
The cathedral’s head cleric, Father Konstantin, told reporters that a service was being held when the visitors noticed the fire. 
The cathedral was undergoing renovation and the wooden domes were clad in wooden scaffolding. The flames spread instantly over the scaffolding surrounding the cupolas.
“Despite the growing fire, the parishioners stayed to help carry icons, utensils and other devotional objects out of the cathedral engulfed in flames,” the priest told reporters Saturday.
Parishioners have placed a box for donations outside the half-destroyed cathedral.
Governor Valentina Matviyenko said City Hall will fully fund the cathedral’s restoration and vowed it will be completed in a year. She also expressed outrage at the fire.
“Accidents like this are a direct result of blatant irresponsibility of organizations that should maintain control over the restoration of historical monuments,” Matviyenko said.
The fire covered 1,800 square meters, said Leonid Belyayev, head of the St. Petersburg branch of the Emergency Situations Ministry. 
The height of the outbreak of the fire on the 80-meter building made it difficult for firefighters to put it out. Firefighters requested a helicopter but it arrived too late to save the central dome. 
Helicopter flights over the city center are generally banned, and permission is needed for any specific flight. 
The cathedral has been under renovation for the past several years, and its large wooden domes were especially vulnerable to fire. 
St. Petersburg’s Prosecutor’s Office has opened a criminal case and an investigation is in progress. The cause of the accident remains unknown but it is believed the fire was caused by violation of fire-safety rules.
Boris Boyarskov, head of the Board For the Preservation of Cultural Valuables, said the team of restorers leading the repairs at the cathedral is not going to be replaced. 
“Their experience would be most helpful in the cathedral’s restoration,” Boyarskov told reporters in Moscow on Monday.
On Monday, Nikolai Burov, head of City Hall’s Culture Committee, ordered for fire safety conditions to be checked in all architectural monuments that are being restored in the city. He asked in particular for the Peter and Paul Fortress, the city’s highest building, to be closely examined.
Vera Dementiyeva, head of the City Hall’s Committee for the Preservation and Protection of Historical Monuments, said the fire resulted in 160 million rubles in damage for the exterior of the cathedral alone. 
She said all icons and devotional objects have been removed by church staff, parishioners and emergency workers.
“The most precious item inside the church was a 15th century icon presented to the cathedral by President Vladimir Putin,” Dementiyeva said. “This icon, along with seven other valuable ones, has been sent into temporary storage. The rest of the items were handed over — also temporarily — to the Alexander-Nevsky Lavra.” All the relocated valuables have been marked and photographed, Dementiyeva said.
The Troitse-Izmailovsky Cathedral, sometimes known as Trinity Cathedral, was designed by architect Vasily Stasov and built in 1835. It was named after the Izmailovsky Regiment in Russia’s Imperial Army.
After the 1917 Bolshevik Revolution the cathedral was closed for religious services and turned into a warehouse.
It remained a warehouse throughout the Soviet period until the cathedral was returned to the Russian Orthodox Church, and religious activities were resumed in 1990.

TITLE: Shamil Basayev’s Secret Bride Disappears
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: A Chechen woman believed to be the last wife of Shamil Basayev is being held by law enforcement agents, who are pumping her for information on her infamous late husband, human rights activists say.
Elina Ersenoyeva, 26, disappeared in Grozny on Aug. 17. News of her marriage to Basayev — Russia’s No. 1 terrorist until his death in an explosion on July 9 — first appeared last Wednesday on the web site of the Chechen Council of Nongovernmental Organizations.
Ersenoyeva married Basayev in secret and against her will in November 2005, Tatyana Lokshina, an expert with the International Helsinki Federation for Human Rights and chair of its Center Demos research group, said by telephone Friday.
Ersenoyeva’s mother confirmed this information to The New York Times. “She was a smart girl, but she was used,” Rita Ersenoyeva said in an interview in the village of Stariye Atagi. “Now she is gone. I have lost hope. I have lost a golden child.” 
Law enforcement agents abducted her with the aim of getting their hands on $7 million in cash ostensibly stashed away by Basayev and on the fighter’s personal archive, said Taisa Isayeva, spokeswoman for the Chechen Council of Nongovernmental Organizations, in comments published by Kommersant on Friday.
“They clearly want some information from her,” Lokshina said.
Starting in March, kadyrovtsy, or security personnel loyal to Chechen Prime Minister Ramzan Kadyrov, began harassing Ersenoyeva and her family, Ersenoyeva wrote in an undated letter to the International Helsinki Federation for Human Rights and to the rights group Center Demos.
Before being abducted, Ersenoyeva worked part-time with Info-MOST, which promotes AIDS awareness in Chechnya, and as a freelance journalist.
Kadyrov’s forces are widely believed to kidnap the relatives of fighters in order to gain leverage over them.
In her letter, Ersenoyeva wrote that her husband had been killed a month before, but the persecution of her family had not stopped. “The enforcement agencies are threatening us with violence and death because my late husband was a rebel,” she wrote, without identifying her husband.
“During that whole time, which is less than a year, they took my mother away several times and subjected her to severe beatings, threats and extortion,” Ersenoyeva wrote. 
Ersenoyeva’s letter reached Lokshina two days before the kidnapping. 
The abduction occurred at 9:00 a.m. on Aug. 17, when several armed men in camouflage clothing and balaclavas forced Ersenoyeva and her aunt Rovzan into two separate cars, put bags over their heads and drove away, said an open letter from the International Helsinki Federation for Human Rights that was released Aug. 18. Ersenoyeva’s aunt was released later that morning.
Around noon, Ersenoyeva called her aunt from her mobile phone, saying that she had been allowed to make a single call, the open letter states. At 7:00 that evening, Ersenoyeva called her mother directly and assured her that she would soon be released.
The open letter was faxed to Chechnya’s chief prosecutor, Valery Kuznetsov.
On Aug. 21, Ersenoyeva’s mother filed a missing person’s report with the local prosecutor’s office and said her daughter had been kidnapped. The Chechen prosecutor’s office and the police both told Interfax on Friday that no report had been filed.
The prosecutor’s office did not open an inquiry into the Ersenoyeva case until Friday, Interfax reported.
In a follow-up to its Aug. 18 open letter, the International Helsinki Federation for Human Rights and two other organizations stressed that Ersenoyeva’s “family connection” to Basayev did not “justify abduction.” 
“We reiterate our hope that the Prosecutor’s Office of the Chechen Republic will conduct a thorough investigation into the abduction of Ersenoyeva and that she will be found,” the organizations stated. “Then, if there are allegations that she is guilty of any crime, she should be tried by an independent and impartial court of law.”
Isayeva told Kommersant that Basayev — who had already had at least three wives — treated Ersenoyeva more like an assistant than a wife. Ersenoyeva is rumored to have posted statements from Basayev on rebel web sites, Isayeva said. It is doubtful, however, that Ersenoyeva knew where Basayev kept his money, Isayeva said.
Ersenoyeva’s mother told The New York Times that her daughter was first taken to Basayev in November 2005, after being told that she would have to marry a fighter. Ersenoyeva agreed. On Nov. 29 she was driven to a building in Grozny and told her fiance was waiting. When she entered, she found Basayev.
“He told her, ‘Do not be afraid,’” Rita Ersenoyeva said. “I will not do anything bad to you if you do what I say. I do not need you to kill anyone. I need your brains and your head.”
Lokshina said Ersenoyeva had apparently been “cooperating” with a rebel web site in addition to her work at Info-MOST and writing occasional articles for the independent newspaper Chechenskoye Obshchestvo, or Chechen Society. 
The newspaper’s editor, Timur Aliyev, also a contributor to The Moscow Times, said in a written statement Friday that no one at the newspaper suspected that Ersenoyeva had been married to Basayev.

TITLE: IN BRIEF
TEXT: Letter to Church
PITTSBURGH (AP) — The Russian Orthodox Church, which suspended ties with the U.S. Episcopal Church over its consecration of an openly gay bishop, has offered to restore ties with conservative Episcopal dioceses in the United States. 
In a letter delivered last week to Pittsburgh diocesan officials, the Russian Orthodox Church’s head of external relations, Metropolitan Kirill, said his church “supports your act and expresses willingness to restore relations with your diocese.”

Turkmen Convictions
ASHGABAT, Turkmenistan (AP) — A court in the Turkmen capital has sentenced three humans rights defenders to jail terms of six to seven years, an international human rights groups said.

TITLE: Chechnya Regional Attacks on the Increase
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: Chechen attacks against Russians in neighboring provinces are skyrocketing as law enforcement agencies in Chechnya crack down on rebels, forcing them to look elsewhere for targets.
There were 18 attacks in Ingushetia and 11 in North Ossetia from January through July of this year, 50 percent more than during the same period in 2005, Nikolai Patrushev, director of the Federal Security Service, or FSB, and chairman of the National Anti-Terrorist Committee, or NAC, said at a NAC session Friday in Rostov-on-Don.
Meanwhile, on Saturday, three riot police were killed and another was seriously wounded in Ingushetia after gunmen attacked their vehicle, The Associated Press reported.
Also on Saturday, in Dagestan’s capital of Makhachkala, police and suspected militants exchanged fire, leaving four of the suspected militants dead and one wounded, the AP reported.
The early-morning gun battle was the latest in a long string of similar police operations in the predominantly Muslim region, where attacks targeting police and government officials are common.
On Thursday, assailants shot and gravely wounded a member of an anti-terrorism unit as he was driving out of his backyard in the village of Nestervoskaya in Ingushetia, the AP reported.
The sharp spike in attacks outside Chechnya is due to the elimination of many Chechen rebel leaders, including Shamil Basayev, Abdul-Khalim Sadulayev and several less senior figures, Patrushev said.
The crackdown on Chechen leaders in Chechnya “has allowed us to significantly reduce the activities of the bandits operating underground in the territory of Chechnya,” Patrushev was quoted by Interfax as saying. At the same time, he continued, “the terrorists have shifted their focus to the territory of the republics that neighbor Chechnya.”
Ingushetia, Dagestan and other republics in the North Caucasus have been infiltrated by Chechen-based groups in the past, but these provinces have also seen indigenous insurgency movements emerge. These movements are comprised mostly of militant Islamists and individuals seeking revenge for abuse by local authorities.
Patrushev voiced concern about the growing number of crimes committed with firearms in the North Caucasus, noting that such offenses had more than doubled in North Ossetia in the first seven months of the year. 
The FSB chief called on law enforcement to identify the causes of this increase in an effort to prevent future escalation of these crimes. 
Patrushev also said the nation’s law enforcement community, and authorities in general, must shift their focus from interdiction of individual terrorist attacks to “early warnings of the emergence and the spread of terrorism in society,” Interfax reported.
Dmitry Kozak, President Vladimir Putin’s envoy in southern Russia, agreed with Patrushev. “The prevention of terrorism should be the main subject of discussion for all government agencies” in the Southern Federal District, the envoy said at Friday’s NAC meeting.

TITLE: Former Ukrainian PM Jailed for Nine Years
AUTHOR: By Adam Tanner
PUBLISHER: Reuters
TEXT: SAN FRANCISCO — Former Ukrainian Prime Minister Pavlo Lazarenko was sentenced to nine years in prison and fined $10 million in a U.S. court on Friday after being convicted in 2004 of extortion and money laundering. 
“A significant sentence is appropriate,” U.S. District Judge Martin Jenkins said. 
Lazarenko, 53, became a multimillionaire while in power during the chaotic early post-Soviet days of the 1990s. He is the first foreign leader to be sentenced in a U.S. court since Panamanian leader Manuel Noriega in 1992. 
Dressed in a suit and looking nervous prior to the hearing, Lazarenko did not show any visible reaction and took notes as he listened to a Russian-language translation of the judge through headphones. “I await the appeal,” he said as he left the court. “Over the past year and a half, we have been fully preparing for the appeal, going over all the transcripts and the details.” 
U.S. prosecutors had sought a sentence of more than 18 years, plus restitution of more than $43 million and forfeiture of nearly $23 million. Jenkins said he would rule in the next 90 days on the restitution and forfeiture issues. 
Lazarenko has been kept under house arrest in a one-bedroom San Francisco apartment since 2003. Defense lawyers asked that he not be subject to any more detention. 
Lazarenko’s lawyers said he would get at least 3 1/2 years credit for time spent in detention from 1999 to 2003, and would likely serve about five more years in prison if an appeals court did not overturn the verdict. 
“I think it could have been higher,” said Martha Boersch, who led the government prosecution of the case from 1998 to 2004. But “it’s a pretty significant sentence. I hope it serves as a lesson to people,” said Boersch, who is now in private practice. “When a public official abuses his office to steal — in his case, you know, millions of dollars from his people — it’s one of the most serious crimes there is. And if you bring that money to the United States and launder it through U.S. banks, I think the lesson is you’re looking at spending a significant amount of time in jail.” 
A jury convicted Lazarenko, Ukraine’s prime minister from 1996 to 1997, on 29 counts of extortion, laundering money through California banks, fraud, and transportation of stolen property. 
Lazarenko’s lawyer tried unsuccessfully to convince a jury that it was acceptable in the Ukraine for a politician to earn millions on the side in the free-wheeling post-Communist era. 
“We believe no American crime was committed,” the lawyer, Doron Weinberg, said Friday. “We expect that will be the result of the appeal.”
In Ukraine, analysts and politicians praised the sentence as a victory over corruption but lamented that Ukrainian authorities had not done enough to tackle the problem, The Associated Press reported. 
“The role of U.S. justice turned out to be positive. Ukraine has not had court hearings of the kind,” political analyst Mykhailo Pohrebinsky said. “It has a symbolic meaning: Corruption can be punishable — even if not in Ukraine, but outside.”
Lawmaker Serhiy Teryokhin said Lazarenko got what he deserved. He said, however, it was “strange that it’s the United States that punishes for crimes committed in Ukraine.” 
Yehor Khmelko, a Kiev businessman, said Lazarenko’s fate was less the result of his financial dealings than of political missteps. “He shouldn’t have fled Ukraine,” Khmelko added. “All those who made huge money by state-scale fraud are in power now.”

TITLE: Moscow Mulls Lebanon Force
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW — As the United Nations cobbles together a peacekeeping force for Lebanon, debate is heating up in Moscow about whether to send troops to the Middle East.
A growing consensus of Defense Ministry officials and military analysts oppose sending ground forces. But a handful of political observers counter that the situation offers Russia an opportunity to restore some of its Soviet-era prestige.
“We are examining the situation,” Defense Minister Sergei Ivanov said Friday, Interfax reported. “The peacekeepers’ status and their rights are not clear, as well as what they will do there and what kind of mandate they will have.”
Ivanov, who was in Magadan, added: “No decisions about any Russian military contingent have been made yet. I think it would be premature to do so.”
Ivanov’s comments appeared to conflict with a report Friday in Kommersant that the Defense Ministry was prepared to send a 2,000-man brigade stationed in Samara to Lebanon.
A Defense Ministry spokesman declined to comment about the report Friday.
Mikhail Margelov, head of the Federation Council’s Foreign Affairs Committee, voiced skepticism about sending troops. “That a number of nations have refused to participate in this operation is an alarm signal for me,” Margelov said, according to Interfax. 
And Valery Manilov, a former deputy chief of staff of the General Staff of the Armed Forces, said sending troops now would be premature. “As the confrontation unfolds according to Washington’s specifications, and as Israel continues to ignore UN resolutions, the presence of our peacekeepers, with their status and duties still unclear, is hardly warranted,” he said.
Margelov warned that if President Vladimir Putin decided to send troops to Lebanon, it would prompt heated debate in the Federation Council. By law, the president must get the approval of the upper house of the parliament to send troops abroad. 
During last month’s Group of Eight summit in St. Petersburg, Putin said Russia might participate in a Lebanese operation if the UN Security Council opted to send a peacekeeping mission there. Since then, the president has not said anything about Lebanon.
The UN-sponsored cease-fire took effect Aug. 14 after 34 days of fighting, which claimed the lives of nearly 1,200 people in Lebanon and about 150 Israelis.

TITLE: IN BRIEF
TEXT: Women Traffic Cops
MOSCOW (Reuters) — Russia is to create its first women-only traffic police unit because commanders believe they are less corrupt than men, Izvestie newspaper reported on Monday.
The male-dominated traffic police routinely forgive traffic violations in exchange for bribes. Many believe this culture helps make Russia’s roads among the world’s most dangerous: about 35,000 people are killed in accidents each year.
“The first female platoon of 26 traffic officers will patrol the centre of Volgograd [in southern Russia],” Izvestia daily quoted regional police chief Mikhail Tsukruk as saying.
“There is research which proves that women are not inclined to bribe-taking,” the paper quoted him as saying.  A few women already serve in the traffic police.

Ivanov Denies ’08 Story
MOSCOW (AP) — Defense Minister Sergei Ivanov on Saturday denied a Fontanka.ru report that he could be put forward as a presidential candidate by a group of parties that may join forces, but his comments were unlikely to quash speculation that he could run to replace President Vladimir Putin in 2008. 
Ivanov used sarcastic wording to suggest that he was too busy to think about a presidential bid.
“When you are the defense minister and deputy prime minister — I have so much free time that … I am ready happily to take this on, too. I just have nothing else to occupy myself with. That’s my entire comment,” Ivanov said in televised remarks after being asked about the report. “It’s nonsense, of course,” he added, using a colloquial phrase that literally means “dog’s nonsense” — and then broke into a smile.

Rodina, Life Merger
MOSCOW (SPT) — Rodina and the Party of Life will announce in a few days which party will be swallowed by the other, Vedomosti reported Friday.
The newspaper suggested that the Party of Life, which is led by Federation Council Speaker Sergei Mironov, would most likely incorporate Rodina.

Doctor Gets Jail Time
MOSCOW (SPT) — Anesthesiologist Alexander Rekunov was sentenced Friday to two years in a penal colony for a mistake that led to the death of a 3-year-old girl, RIA-Novosti reported.
The presiding court determined that the girl, Yekaterina Gulko, had died because the doctor had failed to collect information about her medical history.

Public Chamber Writes
MOSCOW (SPT) — Public Chamber head Yevgeny Velikhov has sent letters to 23 federal agencies asking them to set up public councils that would be mini-versions of the chamber, Vedomosti reported Friday. 
President Vladimir Putin recently signed an order for public councils to be set up in all federal agencies. 

Cabinet TV is Cut
MOSCOW (SPT) — Weekly Cabinet sessions are no longer being broadcast in full on an internal White House network for journalists to watch, Vedomosti reported Friday. 
Pool reporters are limited to watching only selected parts of the Cabinet sessions on Thursdays, whereas full sessions had been broadcast since Mikhail Fradkov became prime minister in early 2004, the newspaper said. 

Market Toll Hits 11
MOSCOW (SPT) — The death toll from last week’s bombing of Moscow’s Cherkizovsky market grew to 11 when a Tajik victim died in hospital from injuries, the City Prosecutor’s Office said Friday. 
Three university students who were purported members of nationalist groups have been charged over last Monday’s blast.

TITLE: Zenit to Reach New Heights
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: City Hall has chosen a Japanese-designed “space-ship” as the new home of local soccer team Zenit. 
The $225-million stadium, which will be funded from the tax payments Gazprom makes to the city budget, is to be built on the site of the 1950s Kirovsky stadium on Krestovsky island.
From a short-list of five architects, City Hall “unanimously” approved the plans laid out by Kisho Kurokawa, Interfax cited Maxim Sokolov, head of the committee for investment and strategic projects, as saying Wednesday.
Governor Valentina Matviyenko stressed the project’s combination of functionality and extensive territorial development.
“The stadium is the most suitable for football, and it will naturally fit into Krestovsky island,” Interfax cited Matviyenko as saying.
Among other requirements, the project cited a structure with a capacity of 60,000 spectators, built in accordance with the standards of the governing bodies of European and World football, UEFA and FIFA, as well as the development of the western part of Krestovsky island.
“The goal of the project is to create an attraction, which uses the high-tech and progressive design of a suspended roof to the maximum,” Kisho Kurokawa said in a project description note.
Kurokawa’s project — “Space Ship” — comes complete with sliding roof, a pitch that can be slid outside the stadium and a system of warm currents that will keep the roof clear of snow.
Kisho Kurokawa has designed several stadiums in Japan as well as the international airport in Astana, Kazakhstan. He has designed and completed over 80 projects all over the world.
In St. Petersburg the 62,167-spectator stadium will be 56.6 meters high and, according to Kurokawa, cost an estimated $225.15 million to build. The stadium will have covered and open parking lots — each accommodating 1,720 cars at a time.
Stadiums are usually considered a part of the social infrastructure and such terms as pay-back period are not applicable to them, a real estate expert said.
“A stadium is a social rather than commercial project — that’s why it requires the investment of sponsors as well as city funding,” said Dmitry Zolin, managing partner of London Consulting and Management Company.
Kurokawa’s project is reasonably conservative in terms of its size and cost. The costs of projects proposed by competitors varied between $190.5 million and $243.16 million, the building height — between 45 meters and 74.6 meters. Most of the tender’s participants proposed the use of natural grass.
The rejected projects included “Golden Eye” by city based Lenniiproekt in cooperation with Braun & Schlockermann ARCADIS Planungsgesellschaft from Germany. They proposed a stadium that looked like a transparent cup, with see-through walls into and out of the building.
German company, Von Gerkan, Marg und Partner Architects International, designed the stadium as a “triangular sea buoy.”
The Moscow-based Mosproekt-4 also applied the sea theme, designing a multi-tier ship-like structure.
Tomas Taveira — Projectos, Estudos Urbanos e Socio-Economicos from Portugal proposed a “Crown” project. Beside its brightly colored facades, one of the building’s special features was a helicopter site for VIP guests.
The stadium’s location offers interesting development opportunities as well as problems.
“Krestovsky island is historically a center of elite housing in St. Petersburg. At the same time the island is of rather limited area and has considerable problems in terms of access,” Zolin of LCMC said.
“The most promising option for the territory would be the construction of hotels and the development of street retailing,” he said.
Kurokawa’s project includes the construction of a new ring road, a sightseeing terrace, beach pavilion, centers renting out sports equipment, cafes, restaurants, a warehouse and three parks near the stadium.
Construction companies will compete for the project up until December.
Construction is planned to be completed by 2009, Interfax cited Gazprom chairman Alexei Miller as saying. “It will be ready for the beginning of the 2009 football season,” he said.

TITLE: Latvian Port Losing Traffic
AUTHOR: By Aaron Eglitis
PUBLISHER: Bloomberg
TEXT: RIGA — Latvia’s Ventspils Nafta, the country’s largest port, said annual profit slumped 45 percent in the first half after it lost traffic to Russian competitors.
Net income fell to 4.2 million lati ($7.7 million) in the first half this year versus a year ago, the company said in a statement to the Riga Stock Exchange. Sales fell 9 percent to 38.6 million lati from 42.4 million lati a year ago.
Ventspils Nafta said profit fell as Russian transport tariffs rose, cutting Russian rail traffic to the Latvian port. Ventspils has also seen profit fall since a 2002 decision by Transneft, Russia’s state oil-pipeline operator, halted pipeline shipments of crude to the Latvian port. Shipments of crude and gas oil fell to 8.1 million tons in 2005, down from 22.3 million tons in 2001.
The Latvian company loaded 3.3 million tons of crude and petroleum products in the first half of 2006.
Latvia wants to sell its 38.62 percent share in Ventspils to investors in early October on the Riga Stock Exchange, should it be approved by a major shareholder and the state assets-sales agency, said Martins Jaunarajs, an investment banker at Parex Banka, a Latvian lender managing the sale.
Under the Parex plan, packets of 19,415 shares will be sold, raising at least 73 million lati ($134 million) at a minimum share price of 1.81 lati. Parex, which is underwriting the sale, will buy any shares left unsold.
Bidders for the oil terminal may include PKN Orlen SA, Poland’s biggest oil refinery, KazMunaiGas, the state-owned Kazak oil company and Rosneft, Russia’s state-owned oil company, Economy Ministry spokesman Oskars Balodis said Aug.8. A group of Austrians represented by Citigroup Inc. may also bid. 
Latvijas Naftas Tranzits owns 49 percent of Ventspils Nafta, with the remaining shares held by small investors or traded on the bourse.

TITLE: AES, SUAL Sign Deal On Kazakhan Smelter
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s second largest aluminum producer, SUAL, said it has signed a preliminary deal with U.S. energy company AES Corp. on power supplies for a smelter it is planning to build in Kazakhstan.
“The annual demand of the new smelter, which has a prospective capacity of 500,000 tonnes of primary aluminum per annum, is estimated to be approximately 7.48 billion kilowatt hours,” SUAL said in a statement on Monday.
SUAL, controlled by Viktor Vekselberg, ranked Russia’s fifth-richest man by Forbes magazine in May, and Len Blavatnik, a U.S. business figure of Russian origin, aims to raise its output to 2.2 million tonnes of aluminum by 2012 from 1.05 million produced last year.
The memorandum of understanding, signed between SUAL and AES’s Kazakh subsidiary Nurenergoservice LLP, cements the “principal understanding” between the parties on future power supplies to the new aluminum smelter from the Kazakh Ekibastuz GRES-1 power station for a period of 20-30 years, SUAL said.
AES is undertaking to supply SUAL with energy at economically viable prices, a key consideration before the construction of aluminum smelters, due to their high power consumption.
SUAL will shortly launch a pre-feasibility study on the construction of the smelter, which would be Kazakhstan’s first. This study is expected to be finished within six months.
Depending on the study’s results, SUAL and AES plan to conclude a legally binding agreement, start preparing a feasibility study and begin building the smelter.
Kazakhstan produces alumina, the raw material for making aluminum, but has no smelting facilities. 
The country’s only alumina producer, Alyumini Kazakhstan, plans to raise output to 1.525 million tonnes of alumina this year from 1.500 million tonnes in 2005.
Earlier this month Kommersant business daily said SUAL planned to merge with Russia’s RUSAL to form the world’s top aluminum firm. 
Both companies declined to comment.

TITLE: Central Bank on The Cusp of Raising Rate
AUTHOR: By Douglas Busvine
PUBLISHER: Reuters
TEXT: MOSCOW— The Central Bank said Friday it was ready to raise interest rates and tighten banking reserve requirements to curb inflation, but was still confident of meeting its 2006 price and exchange rate targets. 
First deputy chairman Alexei Ulyukayev also told reporters the Central Bank had submitted for parliamentary review its monetary policy guidelines for 2007 — which foresee a reduction in inflation — without significant changes. 
“We are sticking to our inflation target for this year — the figure of 8.5 percent remains unchanged,” Ulyukayev told a news conference. 
Inflation was 9.3 percent in the 12 months to July, but Ulyukayev forecast a fall of 0.1 percent in consumer prices in the month of August. The Central Bank’s full-year inflation goal is below the government’s own 9.0 percent forecast. He said the Central Bank was also keeping its 9.0 percent target for the ruble’s real effective appreciation — a measure of competitiveness that accounts for differences in inflation with Russia’s trading partners. 
The twin policy targets, criticized by many economists as contradictory, have come under pressure this year as Russia, now the world’s largest petroleum producer, harvests a massive windfall from near-record oil prices. 
The Central Bank regularly intervenes on the currency market to take out some of Russia’s half a billion dollars a day in oil export revenues, seeking to prevent a sharp rise in the ruble that would hurt the competitiveness of domestic businesses. 
But the dollar-buying intervention floods the money market with ruble liquidity and, with the banking system still unable to channel that cash into investment, much of it goes into pumping up the prices of goods, services and assets. 
Next year’s monetary policy guidelines, which see inflation at between 6.0 percent and 8.5 percent and allow for real effective ruble appreciation of zero to 10 percent, give the Central Bank more wiggle room on the exchange rate. 
“Growth in the nominal effective exchange rate is a lesser evil than high inflation,” said Ulyukayev, adding the Central Bank considered fighting inflation its primary task. 
The ruble has risen by about 4 percent in nominal terms this year against a currency basket comprising $0.6 and 0.4 euros, an operational guide that irons out volatility in the currency pair. 
Ulyukayev said there were no plans for now to alter the composition of the basket. “We are examining the theoretical possibility of changing the basket, but in general we are happy with the current composition,” he told reporters. 
The Central Bank has come under fire from politicians — most recently President Vladimir Putin — for allowing the ruble to rise. That has forced it to experiment with other measures to contend with inflation. It has raised its short-term deposit rates three times this year to between 2.0 percent and 2.5 percent.

TITLE: Pre-Election Boost in Spending
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW — Pensions and salaries for state employees and the military are set to rise next year, as the government makes social spending a priority ahead of elections. 
“There has not been any similar in scale increase in social spending in any previous year,” Deputy Prime Minister Alexander Zhukov said of the budget increases on Sunday, Interfax reported.
The base-rate hikes of 15 percent to about 25 percent will take effect ahead of State Duma elections due in late 2007 and the presidential election due in early 2008, according to the budget proposal submitted to the Duma on Saturday.
Prime Minister Mikhail Fradkov signed off Saturday on the 7,076-page budget proposal, which is so bulky it has to be moved around on a trolley.
In the years following the August 1998 financial meltdown, successive governments have been extremely cautious about boosting social spending. But the country’s windfall oil revenues, coupled with the post-crisis economic recovery, have allowed the Kremlin the freedom to splash out, particularly in a pre-election year.
The 2006 budget saw a record 40 percent year-on-year hike in spending. So far, the budget proposal for 2007 sees a 28 percent increase in spending compared with this year.
Zhukov says state employees are to receive a 15 percent salary hike at some point in 2007, while military personnel will get two hikes — a 15 percent increase at the start of the year, and a further 11 percent boost in the fall. As of Sept. 1, 2007, the base rates according to which pensions are calculated will also be increased by 20 percent.
Overall, Zhukov said, the government expects average real income, or income adjusted for inflation, to grow by 10 percent next year.
Zhukov also said the government planned to boost expenditures on the multibillion-dollar national projects unveiled by Putin a year ago. The projects are aimed at improving healthcare, education, housing and agriculture.
The government is to spend some 206 billion rubles ($7.7 billion) on the national projects in 2007, compared to around $4 billion that have been earmarked for the projects this year.
In 2007 the healthcare project will get 107.7 billion rubles, a 70 percent increase on last year’s funding. Education is to get a 66 percent boost, to 48.6 billion rubles; housing construction a 30 percent boost, to 30 billion rubles; and agriculture a 69 percent boost, to 23.6 billion rubles.
Additionally, funding of 32.6 billion rubles has been allocated to help provide incentives to improve birth rates. In his state-of-the-nation address in May, Putin called for measures to improve the demographic situation, including additional payments to mothers and investment into reproductive care.
Zhukov also said Sunday that significant investment into the country’s infrastructure was planned, including the construction of new roads and upgrades to the electrical grid.
Despite the spending increases, the budget proposal still assumes a 4.8 percent surplus. 
Total revenues are set at 6.965 trillion rubles ($252 billion), or 22.3 percent of gross domestic product, while expenditures are projected to be 5.464 trillion rubles.
The budget proposal predicts that the economy will grow by 6 percent in 2007 and that inflation will be kept to 8 percent. 
According to the latest estimates by the Economic Development and Trade Ministry, GDP this year will grow by 6.6 percent, while the government aims to restrict inflation to a maximum of 9 percent.
The proposal is calculated on an average ruble-dollar exchange rate of 26.7 in 2007, Interfax reported, citing government figures.
The budget proposal now faces four readings in the State Duma, before going to the Federation Council and then the president for final approval.

TITLE: Motorola Will Not Seek Compensation
PUBLISHER: The Associated Press
TEXT: MOSCOW — The head of Motorola’s Russian division said Friday the company would not seek compensation for the destruction of mobile phones worth $2 million after a murky five-month contraband case was finally closed this month. 
Tens of thousands of the world’s No. 2 handset-maker’s mobile phones were confiscated by police in March on the grounds that they had been brought into the country illegally. The case was closed this month and the phones have been returned, the company said — with the exception of about 50,000 handsets that police destroyed in April on the grounds that they presented a health hazard. 
The case has been cited by investors as an example of apparent corruption and meddling by authorities, which continues to cause difficulties for foreign companies despite Russia’s relative economic stability under President Vladimir Putin. Representatives of the Prosecutor General’s Office and police could not be reached for comment Friday. 
Country director Sergei Kozlov said the company did not intend to seek damages for the destroyed phones and welcomed the decision by Russian prosecutors to drop the case. 
“Our main objective is to put this all behind us, and to move forward and cooperate with Russian authorities to avoid such incidents in the future,” he said in an e-mail. 
In a statement released Thursday, Motorola’s executive vice president Ron Garriques said the company would “continue to increase investments and develop partnerships in Russia.” 
In March, a total of 167,000 Motorola mobile phones — worth about $17 million — were impounded by police at Sheremetyevo Airport as evidence in a contraband case. 
The case soon took a more dramatic turn: In mid-April police charged that the phones posed a danger to consumers’ health and promptly destroyed 49,991 handsets. Motorola denied the charge and said it had received no formal claim or evidence that the phones were a danger. 
Against this backdrop, Motorola was also facing charges of peddling counterfeit goods. A company called RussGPS has asked prosecutors to open a criminal case against the company on the grounds that it violated a patent RussGPS bought in 2003. 
No case has been opened, Motorola spokesman Tom Blackwell said Friday, and the company has begun suing RussGPS for defamation. 
The next hearing is scheduled for Sept. 13.

TITLE: Court Approves $9.9M Euro Cement Settlement
PUBLISHER: Bloomberg
TEXT: MOSCOW — A Moscow court validated the settlement of an antitrust case between Euro Cement Group, Russia’s biggest cement maker, and the federal government, which may help provide affordable new apartments in Russia.
The city court approved a Federal Anti-Monopoly Service order for Euro Cement to pay the government a fine of 267 million rubles ($9.9 million), the service’s lawyers said by e-mail Friday.
Euro Cement must also tell regulators if it raises cement prices by more than 5 percent in three months or buys more than 15 percent of a cement maker, the company’s lawyers said. 
In return, the service ended a freeze on Euro Cement’s prices through year’s end that formed part of the original July 4 settlement between the company and the government.
The court’s approval of the settlement “will bring more investment and technological improvement into the Russian cement industry, which is badly needed for more housing construction,” said Dmitry Afanasyev, chairman of Egorov, Puginsky, Afanasyev & Partners, the law firm that represented Euro Cement.

TITLE: U.S. Peanut Farmers Place Hope in Russia
PUBLISHER: The Associated Press
TEXT: ALBANY, Georgia — Annoyed by four years of tumbling exports, U.S. peanut industry officials are encouraged by what they hope will become a growing market in Russia, a trend that would benefit peanut farmers and rural communities throughout the southern United States, where the crop is grown. 
Canada is the leading importer of U.S. peanuts, buying 70,374 tons last year, followed by the Netherlands with 27,835 tons and Mexico with 21,740 tons. 
Russia climbed to 10th place in 2005, importing just 1,522 tons. But Russia has already nearly doubled that in the first half of this year, with imports totaling 2,652 tons. 
“I think it’s a golden opportunity if we can keep it going,” said Tyron Spearman of Tifton, publisher of a peanut industry newsletter. “It’s significant that they’ve moved up. They were off the radar screen before that.” 
Argentina, a major competitor in the world peanut market, had a short crop last year and that may have prompted Russians to buy more U.S. peanuts, said Sally Klusaritz, a spokeswoman with the U.S. Agriculture Department in Washington. 
But Patrick Archer, president of the American Peanut Council, said it was an indication of a growing market for higher-quality snacks, including American-style potato chips and candy bars loaded with U.S. peanuts. 
“Several multinational companies now have a presence in Russia, which has raised the overall quality of Russian snack foods,” Archer said. “With that rise in quality, there’s been an increased demand for high-quality U.S. peanuts.”

TITLE: City Dwellers Feel Countryside’s Culinary Pull
AUTHOR: By Andrei Musatov and Vladimir Biryukov
PUBLISHER: Vedomosti
TEXT: As their wealthier clients head out of town for the summer, St. Petersburg’s restaurants are following suit, thereby dealing with the seasonal decline in demand for their services in the city. 
Nevertheless, to attract guests to the country, restaurateurs have had to incorporate an added element of entertainment — perhaps a beach, swimming pool or concert pavilion — on top of worthwhile cuisine.
The opening of restaurants out of town on the bay of Finland, with an average bill of $50 to $70, is a recent phenomenon — St. Petersburg’s Committee for Economic Development, Industrial Policy and Trade dated the trend from last year. 
According to Kurortny district data, two new restaurants — Russian fishing and Dacha 415 — have been opened in the district this year, in addition to the three — Golden horde, Atlantis, and Mackerel — that opened last year.
Leonid Garbar, Director General of Svoi v gorode, believes that over the last two years around 20 new restaurants were opened in the suburbs of St. Petersburg and another five are in the process of being built. The district administration knows of upcoming openings in Sestroretsk, Komarovo, Repino.
Krestovsky Garden, which owns, in particular, the restaurants Karl and Friedrich and Russian fishing on Krestovsky Island, has this year invested  $5 million into the building of Russian fishing in Komarovo, said the company’s Director General and joint owner, Mikhail Feigelman. 
“The summer was good last year and there were not enough places to take advantage of it,” he explains. The two rooms will hold an estimated 1,000 guests.  In a nearby pond one can catch fish, which will be cooked on the spot. According to Feigelman, the pay back period for such a project is three to four years.
Fine Food’s Director General, Mikhail Volochkov, said that last year his company spent around $1 million building the Golden Horde restaurant. If one confines oneself to temporary constructions or the renovation of existing buildings, the cost of opening a restaurant can be kept between $150,000 to 300,000, he said, considering the optimum amount as between $500,000 and $1 million, excluding advertising.
Modul-Pro invested $150,000 in the opening of the Pacha club on the Finnish Gulf. The sum was mainly spent on temporary constructions, a 1.7-meter deep swimming pool, an open air Jacuzzi and improvements to the beach, said the company’s joint owner, Yevgeny Krivtsov. 
The cost of opening a new restaurant is similar to the cost of building within the city — $1,000 to $1,500 per square meter, said the Director General of the St. Petersburg association of restaurateurs, Rashid Magdeyev. Director General of the Triton group, Konstantin Bely, said it required a minimum of $1,200 per square meter, without taking into account the cost of the land. 
“In general the low cost of land makes suburban projects somewhat cheaper than their city equivalents,” Bely said. “But because of lower population densities one can assume a smaller client base, which is why pay-back periods are comparable to city projects, averaging between two to three years,” he said.
Bely noted the growing attraction of this segment but said the Triton group has no plans to enter the market within the next year. Magdeyev explained the growth in country restaurants by the seasonal decrease in city eatery turnover. According to him, over the holiday period the earnings of many city restaurants decrease by 20 to 30 percent, and even the trade of tourists can’t compensate for these losses. 
It makes sense for large companies to consider a country restaurant in order to compensate for the slow down in the city, said Magdeyev. Moreover, in summer they can take their best staff away from the city and use them to support any country expansion. 
The most interesting place to open a country restaurant, according to Magdeyev, is on the Finnish Gulf. Similarly, the president of the restaurant holding Eurasia, Alexei Fursov, said that solvent demand for high quality public catering is confined to Repino, Komarovo and Solnechnoye. According to him this is what holds back Eurasia from large-scale entry into the country restaurant market. Eurasia has enterprises in Petrodvorets and in the mountain-ski resort of Korobitsino. The latter is open from October through May, with maintenance costs that, according to Fursov, are about 10 percent higher than in the city, as staff has to be ferried to and from St. Petersburg.
Restaurants situated on theFinnish Gulf, on the contrary, work at full capacity from May through October. 
“In summer, given a good standard of food and nice weather, country restaurants function in the evening at close to 100 percent. In winter, there are only a few customers a day and over this period it is difficult to make any sort of profit whatsoever,” said Magdeyev. 
It is clearly more difficult to attract customers to a country restaurant than to a city one. “Nobody will drive out to Repino or Komarovo just to have a snack — that’s why it’s necessary to combine catering with some kind of entertainment complex,” said Koligin. 
The addition of a hotel, proximity to water, or simply surrounding natural beauty, can make a restaurant much more attractive, said the Director General of Restcon, Andrei Petrakov.

TITLE: Targeting Inflation is Right on the Money
AUTHOR: By Oleg Zamulin
TEXT: If the government’s general outline for monetary policy in 2007 is any indication, next year could turn out to be pivotal from an economic standpoint. The Central Bank has finally realized that it can’t serve two masters at once — that it can’t try to reduce inflation while dampening growth in the value of the ruble at the same time. The Central Bank’s decision to concentrate on battling inflation is absolutely rational. In fact, the Central Bank has no choice, as it doesn’t have any effective instrument for influencing the strength of the ruble in the long term.
The real value of the ruble is determined by the relative price of goods and services in Russia in relation to their prices in other countries. Between 1999 and 2005, the real value of ruble rose by 80 percent. This means that a certain basket of Russian goods sold at the end of 2005 would bring in enough foreign currency to purchase a basket of foreign goods worth 80 percent more than in 1999. What’s behind strong real ruble appreciation and the rise in value of Russian goods? The answer is simple: As is the case with all other goods, the real value of the ruble is determined by supply and demand.
The strongest factor underpinning growth in the ruble’s value has been a significant rise in export revenues, largely the result of high world energy prices and increased oil exports. According to Central Bank figures, the total value of exports in 1999 was $75 billion, while the figure for 2005 was more than three times higher, at $240 billion. The influx of petrodollars has bolstered incomes, meaning that people are looking to spend more money. State Statistics Agency figures show that the average income rose from $79 per month in 1999 to $300 in 2005. This, in turn, has meant increases in Russian production costs and demand for goods and services. The value of imported goods, however, is determined on the world market, which the Russian economy is too small to influence significantly. So the growth in prices has been strongest in sectors where imports are not an option, such as real estate and services. Between 1999 and 2006, the overall price index has doubled, while prices for services have grown six-fold. This is not simply the result of hikes in state-regulated utilities and service charges, but also in the service and housing sectors.
So the chief results of the real ruble appreciation caused by high export revenues have been higher prices in the service sector and climbing labor costs.
Many economists like to focus on increases in the prices charged by national monopolies in natural gas, electricity, transport and residential services. This doesn’t make any sense, as it suggests that there should be a reduction of the population’s disposable income, which is not what we have witnessed. If anything, the rise in these charges is a result of the same factors fueling the jump in other service sectors: increased demand and incomes.
What is clear from this analysis is that the strengthening of the ruble in recent years is the result of factors not related to monetary policy. The Central Bank cannot influence the influx of petrodollars or the productivity of labor — nor should it.
All the same, we regularly hear that the Central Bank should continue to buy foreign currency to dampen real ruble appreciation. This, in fact, has been the course the bank has followed, but it has meant printing rubles in a manner that has further fueled inflation. The extra funds could just as easily be mopped up through taxation — which is the point of the stabilization fund — without spurring inflation.
From 1999 to 2005, about 16 percent of all foreign currency revenues were diverted out of the economy, first into Central Bank reserves, and later into the stabilization fund. This has had the effect of reducing the real value of the ruble by about 8.5 percent. This relatively insignificant decrease has been achieved at the expense of double-digit inflation. Moreover, the gains from buying up this foreign currency end up mostly in the pockets of the exporter themselves; the oil, gas and metals companies. They receive the newly printed rubles and are able to spend them before the inflationary effects kick in. Everyone else pays for this as inflation reduces the value of their savings.
Taxing these export revenues and siphoning them off into the stabilization fund has an altogether different effect. Here, the growth in the value of the ruble is dampened without creating inflation or subsidizing the resource sector. These activities have nothing to do with the Central Bank.
This discussion is nothing new for economists. At the beginning of the 1970s, U.S. President Richard Nixon was convinced that unemployment could be reduced by fueling inflation. The logic was in keeping with contemporary economic theory: that an increase in the monetary supply would stimulate demand and, as a result, both production and inflation. Thus, it was argued, employment levels could be raised by feeding inflation (statistics even seemed to point to a direct relation between inflation rates and employment levels). The U.S. Federal Reserve began printing money.
Only half of Nixon’s plan worked. Inflation did, indeed, rise but the unemployment figure did not budge. The reasons for this fiasco were identified by a number of economists, beginning with Nobel laureates Milton Friedman and Robert Lucas. What Nixon wanted to do can only work once, and then only if it is unsuspected. The problem is that when producers are ready for inflation they simply raise their prices, without increasing output. As a result of the negative experience in the 1970s, economists came to the conclusion that the only way long-term monetary policy can be effective is in battling inflation. This is why so many countries today maintain target inflation rates as the sole long-term goals for their central banks.
This same concept can be applied to the real value of the ruble today. Without any reaction on the part of the government, the unexpected influx of petrodollars should result in a stronger ruble. The Central Bank can only soak up these excess dollars by printing rubles, which will lead to a rise in inflation (meaning that the strengthening of the ruble is not prevented, but only postponed until after prices have risen). You can get away with this once, but it won’t work forever. The policy of increasing foreign currency reserves has had the same effect as Nixon’s policies: Inflation has remained in double digits and the ruble has increased in real value by 80 percent anyway. Fortunately, the government’s monetary policy guidelines for 2007 seem to indicate that the lesson may finally have been learned.

Oleg Zamulin is a professor at the Russian School of Economics. This comment was published in Vedomosti.

TITLE: Is Yanukovych Really Free to Fight ?
PUBLISHER: Vedomosti
TEXT: Ukraine celebrated 15 years of sovereignty Thursday – an incessant struggle between supporters of rapprochement with Russia and those wanting greater distance from Russia.
The Yushchenko-Yanukovych and East-West dilemmas don’t seem like dilemmas any more. Ukraine is united again, and everyone’s attention is riveted on what is happening in Ukraine itself. The Orange Revolution was proof of Ukraine’s desire for sovereignty and the latest configuration of state power confirms it. On the other hand, there is a difference between desire and ability. The last 15 years proved beyond the shadow of doubt that Ukraine’s economic dependance on Russia is much greater than political. 
There is more to it than the simple fact that Ukraine cannot boast of having much oil and gas on its own territory. There is also the Soviet structure of national industry to consider. Ukrainian industry is extremely energy-inefficient, while all its markets are in Russia. The “cheap energy in return for cheap commodities” arrangement was all right in a single state but when applied to two sovereign states at political odds with each other every now and then, it inevitably crumbles. Russia is putting Ukraine under pressure from two directions at once nowadays. It closes its markets to Ukrainian goods and commodities (pipe export duties, problems with dairy products) and ups gas prices. All this effectively undermines Russia-oriented Ukrainian industry whose principal centers are located in the eastern part of the country. Prime minister Yulia Tymoshenko did her best to try to alleviate the situation. Tymoshenko thought that cheap energy was available elsewhere and that this diversification of gas imports would lessen dependence on Russia. She counted on Turkmenistan a a potential supplier of gas but Moscow’s influence with the Turkmenbashi proved strong enough to disrupt the plans of the Ukrainian prime minister. Gazprom had bought all gas Turkmenistan had for sale for years to come. Ukraine began getting its gas courtesy of Russia via Rosukrenergo. The task of fighting dependance on Russia is in the lap of Prime Minister Viktor Yanukovych now. Believing that his Regions Party is a pro-Russian political force is a mistake. Major Ukrainian businesses have their interests - and lobbyists - in the party in question. Like Ukraine in general, these businesses need the risks they are running differentiated. Sure, the new government will certainly undertake to regain the lost benefits like an easy export regime and affordable energy prices but “political independence” is not going to be a lot at the auction.
If Russia refuses to have the old arrangement without the political aspect restored (and Russia will refuse), it will make the Ukrainian national economy all the more determined to start looking for new partners and markets in Europe. All of it will be immeasurably more complicated than the simple Soviet-type arrangement of the past. Ukraine will buy expensive energy from Russia, charge a lot for its transit to Europe, and offer to the West and in the West what it used to sell to and in Russia. All existing transit accords will have to be revised along with the documents concerning Ukraine’s future membership of the World Trade Organization. What really counts, however, is that the Ukrainian economy will have to be whipped up into shape and made competitive. All these are nearly impossible tasks. Russia’s reluctance to be cooperative in the talks with Ukraine will only broaden the rift between the two countries. Ukraine is celebrating sovereignty. Sovereignty from whom? Ukraine bartered independence from Russia for dependence on Gazprom. This is what Yanukovych the freedom fighter should be thinking about.

TITLE: Alonso In Lead After Massa Win
AUTHOR: By Alan Baldwin
PUBLISHER: Reuters
TEXT: ISTANBUL — Michael Schumacher’s self-belief remained intact on Sunday despite the Ferrari driver falling 12 points behind Fernando Alonso in the Formula One title battle with four races remaining.
“Today I have lost two points in the drivers’ championship, but I still believe I can win the title,” said the seven times world champion after finishing third in a Turkish Grand Prix won by Brazilian teammate Felipe Massa.
Renault’s Alonso, the world champion, was second to end a run of races that had seen Schumacher reduce the Spaniard’s lead from 25 points. 
Ferrari did close the gap to Renault in the constructors’ championship to two points, however.
“We remain confident,” said technical director Ross Brawn. 
“All the elements are in place for us to win both titles and we will fight right to the very end to achieve that.”
The next race is Ferrari’s home Italian Grand Prix at Monza on Sept. 10.
“In Monza, and at the three races outside Europe, we will have many changes on the car and thanks to the great work being done by our technical partners... we will be in the best possible shape to try and win both championships,” added team boss Jean Todt.
Massa’s victory was the first in Formula One for the driver whose usual role at the Italian team is to support Schumacher and contribute to the constructors’ championship. 
Had Schumacher been behind him for longer than the 13 laps before the safety car was called out, Massa would undoubtedly have let the German through to take the victory and the precious extra points.

TITLE: Considering the Social Good
AUTHOR: By Mikhail Delyagin
TEXT: Efficacy is a factor in any judgment of economic policy. But when trying to understand the nature of a particular phenomenon, the analysis is often refined to the point of losing what the very essence of the question was in the first place.
There is a commercial fetish when it comes to defining what efficacy is, with the definition determined exclusively from an economic standpoint. The possibility of considerations outside of these bounds is ignored to a degree that is excessive, even making allowance for professional myopia.
The main corporate goal of maximizing profits (although maximizing the incomes of top management is more often closer to the truth) does not take into consideration the interests of society as a whole and, even if we believe that maximizing profits across society is positive, this is often opposed to the general good.
But this difference of interests is often blurred by the basic belief that the interests of corporations are objectively closest to those of the country (and anyone who thinks differently is branded a totalitarian communist). This idea forms the basis for liberal opposition to any kind of state regulation. The apotheosis of this approach is the old assertion: “What’s good for General Motors is good for America.” Although the president of the company, Charles Wilson, himself regretted uttering the phrase half a century ago, many today believe that the same type of statement can be made concerning what is good for Russia.
The error inherent in this approach has been magnified by globalization: Corporations now move not only capital but also production around the world, thus never tying themselves to any one society. So only the strongest governments, like in the United States, are able to offer their corporations significant support and work as equal partners with a clear mutual consideration of interests.
The difference of interests between all of the players in an economy means that how the efficacy of any policy is judged depends on the criteria chosen. Thus, the person making the judgment not only influences the process itself, but also the measure of its most important characteristic: its efficacy.
The problem is that, for a developing country (assuming that it is not just going to export all of its wealth or squander it on luxuries), any determination of efficacy will include a social element that accompanies economic growth: higher wages and taxes and the reduction of expenditures devoted to battling the social results of underdevelopment, such as crime.
Many commercially ineffective projects are socially effective. A primary example is the development of new technology and national infrastructure (other than mobile telephone networks, the Internet and — sometimes — highways). This kind of technological progress will also often have a positive effect on economic efficacy, but it is usually relatively insignificant.
Thus, two-way traffic on the main branch of the Trans-Siberian Railway (from Chelyabinsk to Irkutsk) was opened in 1909, but did not cover its construction costs until the 1930s. Even today, a project like the tunnel under the English Channel, which was developed as a commercial endeavor, remains tottering on the bring of bankruptcy and looking for state help.
In developed countries, the realization that economic efficacy often does not equal social efficacy led to the development of non-profit organizations. In Russia, the focus has been on commercial criteria, leading, for example to, the long delay of development projects for regions like Yamal and the birth of destructive reforms to electricity companies (characteristically focusing on “attractiveness for investors,” meaning price hikes that were destructive for the economy and left the state financing electricity networks all the same).
Ideally, any criterion for judging the efficacy of a process should not be determined from the position of the observer, but from the scale and importance of the process itself. Undertakings like the national projects in healthcare, education, housing and agriculture should be evaluated from the point of view of society as a whole, taking into account the entire range of related results they will foster.
When a project that is effective from a business point of view but not from a social standpoint (the drug trade is an obvious example, while McDonald’s and alcohol and tobacco advertising are more arguable cases) the state should block it. Alternatively, if business shows no interest in a project that is socially effective, the state should, without worrying that it will be branded as “socialist,” make it worthwhile for business or carry out the project itself.

Mikhail Delyagin is the director of the Institute for Globalization Studies. This comment was published in Vedomosti.

TITLE: Time to Grow Up
AUTHOR: By Alexei Bayer
TEXT: Even while Russia’s homegrown film industry strives to imitate Hollywood blockbusters (with limited success, it should be noted), intellectuals and die-hard Stalinists alike bemoan the flood of trash that Tinseltown foists upon the world.
It is a gripe the French have perfected. America is all about making money, they complain. Its food, movies and culture focus on sales volumes, not quality. Catering to the least sophisticated expands the market. Fast food appeals to the young — because they don’t yet know any better. In much the same way, U.S. movies feature comic strip characters and formulaic action with an obligatory happy ending and bear no relevance to real life.
Whatever those American cinematic offerings do to the hearts and minds of foreigners, there certainly seems to have been damage at home. A public weaned on “King Kong,” “Spiderman” and “Pirates of the Caribbean” is probably incapable of electing grown-up leaders. Indeed, the country’s political scene increasingly seems to have spilled off a movie screen. Not “All the Presidents’ Men,” mind you, but some silly juvenile flick. Or rather, several.
U.S. President George W. Bush is like a perennial fraternity brat from the 1978 classic “Animal House.” A reporter riding a bicycle with the leader Bush describes him yelling “air assault!” while taking on a hill and talking wistfully of being 16 again — all during a major crisis in the Middle East.
U.S. Vice President Dick Cheney, with his re-worked innards and ominous demeanor, seems to have emerged from another iconic drama, the “Star Wars” series. The difference between Darth Cheney and Darth Vader, however, is that the latter has little patience with failure. No sooner does one of his lieutenants get tricked by the rebels than he is writhing in agony at the Dark Lord’s feet. Alas, Defense Secretary Donald Rumsfeld has been screwing up Iraq for years, to considerable acclaim from his bosses.
And then there is the U.S. Congress. First comes “Revenge of the Nerds,” as lawmakers punish France by renaming “French fries” in their cafeteria “freedom fries.” Now, since Washington and Paris have hammered out a UN resolution on Lebanon, they restored the original name. Time to change “Arabic numerals” to “freedom numerals?”
The only criticism of Israel’s Lebanon misadventure in mainstream U.S. media came via actor-director Mel Gibson — as a loutish anti-Semitic outburst.
It used to be that what Westerners referred to as the “lesser” races — Blacks, Arabs, even Italians — were thought of as children. Lawrence of Arabia described Arabs as susceptible to sudden passions, which often worked to their own detriment.
The Arab street is still ruled by passions — dancing in the streets at the collapse of the World Trade Center and chanting “Death to America” at the slightest provocation. But in Lebanon the Israelis have learned differently. Going in to fight a typical ragtag Arab gang, they were surprised by Hezbollah’s skill, discipline and composure. Hezbollah provided more accurate information from the battlefield, making the Israelis look like malicious kids instead. And then there is Osama bin Laden. Measured against Bush’s immature buffoonery — “Wanted: Dead or Alive,” “Bring it on,” “Mission Accomplished” — the world’s No. 1 terrorist looks almost presidential. He has eluded the most extensive, costly and technologically sophisticated manhunt in history. While the United States piles one foreign policy disaster upon another, squandering treasure and international goodwill, he keeps on plotting horrific, large-scale terrorist actions.
Tolstoy’s “War and Peace” casts Russian General Kutuzov and French Emperor Napoleon in a struggle between good and evil — something Bush wants the war on terror to be. Unfortunately, he and the U.S. political establishment don’t measure up. The United States may actually lose this war — unless it grows up.

Alexei Bayer, a native Muscovite, is a New York-based economist.

TITLE: Russians Thirst For Grand Slam
AUTHOR: By Gennady Fyodorov
PUBLISHER: Reuters
TEXT: MOSCOW — After a phenomenal year in 2004 when they won three out of the four grand slam tournaments, it looked as if the Russians would take over women’s tennis. 
That year Anastasia Myskina became the first Russian woman to win a grand slam title when she beat compatriot Yelena Dementyeva in the French Open final. 
Maria Sharapova, then 17, soon followed that by lifting the Wimbledon crown before Svetlana Kuznetsova prevailed over Dementyeva in yet another all-Russian final at the U.S. Open. 
Many tennis experts predicted that Russians, with four players in the year-end top 10 rankings and almost a dozen in the first 50, would soon monopolise the WTA standings. 
Russian tennis chief Shamil Tarpishchev boldly predicted a “Russian tsunami” would sweep through the women’s game. The threat has failed to materialise, however. 
Although Russian women have had some isolated successes, they have now not won a grand slam title for almost two years. 
Even reaching a final has been a huge stumbling block since 2004. Kuznetsova finally broke the jinx at this year’s French Open before losing to Belgian Justine Henin-Hardenne. 
Tarpishchev says there is no need to panic. 
“Objectively, [Amelie] Mauresmo, [Kim] Clijsters and Henin — the three players who head the world rankings — are there for a reason,” Tarpishchev, who also heads Russia’s Davis and Fed Cup teams, said. 
“Right now they are more consistent than any of our girls but it’s only a matter of time before we start winning again. 
“Just look at the rankings. We have four players in the top 10 and probably another five or six who are capable of moving there,” he said. 
“So by sheer numbers we have a much better chance of winning any of the major tournaments than any other nation.” 
Tarpishchev said time was on the Russians’ side. 
“Most of our top players are much younger than the top three [Mauresmo, Clijsters and Henin-Hardenne] and if you take into account that [Lindsay] Davenport and both of the Williams sisters are near retirement age, then our chances are looking even better.” 
Tarpishchev identified Sharapova, Kuznetsova and Petrova as the players most likely to break Russia’s title drought. 
“All of them have the game and the talent to be a dominant force in women’s tennis for many years to come,” he said. 
“Whether or not they are able to achieve that depends solely on their hard work, dedication and mental toughness. 
“Some of our other players, especially the younger ones, need a bit more time to mature,” he added. 
“But certainly, I wouldn’t be surprised if any of them were to win a grand slam. They all have a chance. In any case, the future of Russian tennis looks as bright as ever.”

TITLE: Cricket Authorities Deny Umpire’s Pay-Off Claim
PUBLISHER: Reuters
TEXT: NEW DELHI — The International Cricket Council (ICC) has said it never discussed a financial offer with umpire Darrell Hair following the Pakistan ball-tampering row.
Hair, from Australia, at the center of last week’s controversy when Pakistan forfeited the final test against England after being penalised for alleged ball tampering, said on Sunday he was encouraged by the ICC to make an offer to quit.
Hair was responding after ICC chief executive Malcolm Speed said he requested $500,000 as a one-off payment to quit the ruling body’s elite panel of umpires during discussions with ICC umpires’ manager Doug Cowie.
The ICC, responding to Hair’s statement, confirmed that Hair only discussed the future of his umpiring career with Cowie before sending him an email on Tuesday. “There were many informal discussions between Mr Hair and Mr. Cowie between the end of the Oval Test and Mr. Hair’s first email on Tuesday, including a discussion on the potential impact on Mr. Hair’s umpiring career,” an ICC spokesman said in a statement released late on Sunday. 
“Mr. Cowie’s role was to support and counsel Mr. Hair, as his manager, at a difficult time and it is our understanding that at no stage during their conversations was there any discussion of a pay-off, nor secrecy, nor deadlines, nor misleading the public regarding reasons for retirement, all of which were subsequently laid out in Mr. Hair’s email.”
The spokesman said no other ICC staff member discussed any of these issues with Hair during the period in question.
“We have no desire to be in conflict with Mr. Hair,” the spokesman said.
Hair has been heavily criticised, particularly in the sub-continent due to his past conflicts with Asian teams. Pakistan have demanded that he should not officiate in any of their future matches.

TITLE: Woods to Join U.S. Team
AUTHOR: By Mark Lamport-Stokes
PUBLISHER: Reuters
TEXT: AKRON, Ohio — Straight after duelling for the WGC-Bridgestone Invitational at Firestone Country Club on Sunday, Tiger Woods and Stewart Cink joined their 10 Ryder Cup team mates on a charter plane bound for Ireland. U.S. captain Tom Lehman has organised a two-day reconnaissance of the K Club, with Woods and Phil Mickelson late additions after rearranging commitments with sponsors.
Cink, one of two wildcard picks by Lehman, believes the presence of the world’s two best players in Ireland will send a strong signal to their European counterparts. 
“I think it says a lot about everyone’s commitment to the team and the fact that we had originally 10 players going and now we have 12,” Cink told reporters after losing out to Woods at the fourth extra hole.
“I think that says an awful lot about everyone’s desire to go back and compete really good in this Ryder Cup and give it our best shot.
“If we come out with eight cylinders pumping and put our hearts into it, I think we win the Ryder Cup by a big margin.”
The U.S. will attempt to end a run of four European victories in the last five matches when the sides contest the 36th Ryder Cup from Sept. 22-24.
As far as Woods is concerned, the American bid to wrest back the trophy for the first time since 1999 will depend entirely on execution.
“Our whole deal is to come together, gain experience, gain some knowledge on the golf course and be ready to play come time for the Cup,” he said of early K Club trip.
“As we all know, it’s not about sending messages; it’s all about making putts and executing and making twos, threes and fours, nothing higher.”
The U.S. team will return from Ireland on Wednesday for the Deutsche Bank Championship.