SOURCE: The St. Petersburg Times
DATE: Issue #1205 (71), Tuesday, September 19, 2006
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TITLE: Awaiting Another Kondopoga
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Stoking fears of escalating xenophobia, a man died in a brawl involving ethnic Armenians in the Saratov region last week and three people were hospitalized after an attack on an anti-migration rally in St. Petersburg on Sunday (see story, this page).State Duma deputies sounded the alarm about a surge in violence. But they also approved legislation that would increase penalties for those who employ illegal migrants — a populist vote, critics said, that tapped into widespread xenophobia.
The country is on edge after clashes and riots targeting Chechens in the Karelian town of Kondopoga killed two people earlier this month.
Local residents clashed with four ethnic Armenians in a cafe in the town of Volsk on Sept. 10, Saratov regional police said Friday. Three ethnic Russians suffered knife wounds, and one later died in the hospital.
Police and the local Armenian diaspora downplayed suggestions that the fight was racially motivated. But Ekho Moskvy radio reported the fight was followed the next day by an attack on ethnic Armenians at a Volsk technical college that injured one student. Police denied the report and said two ethnic Armenians involved in the cafe fight had been placed on a national wanted list.
On Sunday, masked people attacked a rally by the radical Movement Against Illegal Immigration in St. Petersburg, sparking a fight that led to three people being hospitalized, Interfax reported.
About 30 activists were attending the rally to demand the expulsion of Caucasus natives from Kondopoga, where people raided and destroyed small businesses run by Caucasus natives after two locals were stabbed to death in a fight with Chechen migrants.
The Movement Against Illegal Immigration also organized a rally Thursday in Moscow to protest Caucasus natives in Russian universities. Police tried to prevent the rally by detaining about 200 young men near the Dobryninskaya metro station.
Also Thursday, several dozen young men, some of them described by witnesses as skinheads, participated in a fight inside the Oktyabrskaya metro station. No one was detained.
In the Duma on Friday, nationalist Liberal Democratic Party Deputy Sergei Ivanov likened the situation around the Moscow rally and metro fight to that in Kondopoga. He said many of those detained at the rally were carrying knives. As for the metro fight, Ivanov said, "This was not a routine clash, and it happened in the capital," Interfax reported.
United Russia Deputy Alexander Khinshtein deplored a clash between Chechen youths and police in the city of Saratov on Aug. 29 that killed one officer and injured three others.
"Police are afraid to bring these people to justice," he said, accusing the youths of being "closely related to the Chechen authorities." The fight occurred after the officers quarreled with three Chechen youths in a cafe, Saratov press reported. The three left the cafe and later returned with a dozen friends, armed with knives and baseball bats. Three suspects have been detained.
Several nationalist web sites reported Friday that revenge attacks were being carried out in Volsk after the Sept. 10 fight. A spokesman for the Saratov regional police, Alexei Yegorov, said police were worried and had dispatched more street patrols in Volsk. But he denied any escalation in ethnic tensions. "There have not been any pogroms in Volsk after that drunken brawl, no friction whatsoever between the locals and members of the Caucasus diaspora," he said.
Araik Kosyan, vice president of KRUNK, the biggest Armenian diaspora organization in the region, said he was not aware of any revenge attacks. "I've talked to representatives of other diasporas, the Azeris and the Chechens, and they also do not confirm any attacks against their people," he said.
Politicians might be overreacting to incidents involving Caucasus natives after Kondopoga, said Boris Makarenko, an analyst with the Center for Political Technologies. "Now the voices of the 'hawks' will be much better received by the public than those of sober-minded politicians and media," he said.
The public seems to be ready for ethnic violence: Over 57 percent of Russians believe violence could break out in their towns, according to a survey this month by the state-controlled VTsIOM pollster. Russians' belief that their town could be affected grew in proportion with the size of the town, reaching 89 percent in Moscow and St. Petersburg.
Human rights activists said the authorities needed to intervene to prevent routine clashes from escalating into Kondopoga-style violence. "Authorities need to state clearly that any calls to expel natives of the Caucasus will never be met because they are against the law," said Galina Kozhevnikova of Sova, which tracks ethnic violence.
Alexei Mukhin, an analyst with the Center of Political Information, suggested that the flare-up in xenophobia might be used by the government to push through stricter anti-migrant laws.

TITLE: Poisonous Gas Emergency on Space Station
AUTHOR: By Irene Klotz
PUBLISHER: Reuters
TEXT: CAPE CANAVERAL, Florida — A spill of toxic liquids aboard International Space Station on Monday set off a short-lived emergency and fears of a fire aboard the outpost.The station crew was cleaning up from one group of visitors and preparing for their next guests when they smelled toxic fumes, flight engineer Jeff Williams and commander Pavel Vinogradov reported to ground control teams in Houston and Moscow.
"The situation is stable right now. There's an obvious smell. There was never any smoke. It was perhaps wrongly assumed to be a fire initially," Williams said.
The leak occurred near a Russian oxygen-generator, known as an Elektron, which works by splitting water into oxygen for breathing and hydrogen that is dumped overboard.
The leaked substance is believed to be potassium hydroxide, an irritant that is not life-threatening, said space station manager Mike Suffredini.
The crew also activated the station's emergency system, which shut down ventilation and contained the toxic spill to the Zvezda service module where the Elektron is located.
The crew reported a toxic smell in the Destiny science laboratory, so some fumes did spread, Suffredini said.
Vinogradov, Williams and Europe's Thomas Reiter donned surgical masks, gloves and goggles for protection then set up a filtering system to clean the air.
The cause of the spill has not been determined, Suffredini said.
Vinogradov and Williams are nearing the end of a six-month stay in space. Their replacements, Michael Lopez-Alegria and Mikhail Tyurin, blasted off aboard a Russian Soyuz rocket at 7:09 a.m., Moscow Time, on Monday from the Baikonur Cosmodrome in Kazakhstan.
Also aboard is an Iranian-born American entrepreneur Anousheh Ansari, the first female space tourist. Ansari will return to Earth with Vinogradov and Williams next week.
Reiter's replacement will fly to the station with the next space shuttle mission, scheduled for December.
Suffredini said the emergency aboard the station will not affect plans for the Soyuz docking on Wednesday.
Interfax news agency quoted a spokesman for Russia's Roskosmos space agency, Igor Panarin, as saying that "According to preliminary information the situation at the ISS causes no big concerns."
The shuttle Atlantis crew departed the station on Sunday after a weeklong stay to install a new power system aboard the outpost. They spent the day inspecting their ship's heat shield for any signs of micrometeoroid dents before packing up equipment in preparation for a Wednesday landing at the Kennedy Space Center in Florida.
While NASA says the chances of such damage are low, the heat shield inspections are now part of shuttle life due to safety procedures put in place after the 2003 Columbia disaster.
Columbia broke apart while returning to Earth on Feb. 1, 2003, due to heat shield damage suffered at launch that went undetected. The seven astronauts on board were killed.
NASA has spent more than $1 billion on safety upgrades and implemented procedures such as the heat shield inspections to avoid another shuttle disaster.

TITLE: Putin Pushes For Restraint On Religion
PUBLISHER: The Associated Press
TEXT: MOSCOW — President Vladimir Putin on Sunday urged world religious leaders to show "responsibility and restraint" — an apparent reference to Pope Benedict XVI's recent remarks about Islam and the ensuing anger among Muslims.Putin said he hoped that "the leaders of the main world faiths will have sufficient strength and wisdom to avoid any extremes in relations between faiths.
"We understand perfectly how sensitive this sphere is. I think it would be right if we call for responsibility and restraint from the leaders of all world faiths," he said in televised comments during a meeting in Sochi with parliamentary leaders from Group of Eight nations.
Putin suggested he was speaking as president of the country that currently leads the G8, and the remarks appeared aimed at casting himself and Russia as promoters of peace between people of different religions.
He pointed out that Russia had hosted in July what was billed as a religious summit ahead of the G8 summit in St. Petersburg. "We did everything we could to promote dialogue between civilizations," he said.
There was no indication that Putin was referring directly to the uproar over the pope's comments, but Putin has sought to position Russia as a voice of reason between the Christian and Muslim worlds.
The pope sparked outrage in the Islamic world with a speech given on Tuesday to university professors in Germany. The Pope cited the words of a Byzantine emperor who characterized some of the teachings of the Prophet Muhammad as "evil and inhuman."
Mainstream Russian Muslim leaders were among those who criticized the pope for his comments, but they did not spark a violent reaction.

TITLE: Arrests, Violence Mar Street Demonstrations
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Groups organizing street protests at the weekend with different agendas — from pro-democracy opposition activists to radical anti-immigrant demonstrators — had their meetings disrupted by arrests and violence resulting in dozens of arrests and at least three people in hospital.At a demonstration on Saturday, local police detained twenty-nine opposition activists who took to the streets to speak out against violations of human rights in the city.
The meeting, held on Proletarskaya Ploshchad, close to City Hall, attracted about fifty opposition activists.
"Human rights are being oppressed on an everyday basis: small businesses are being wiped out, thus affecting the right to work and uncontrolled in-fill construction damages people's living conditions," said Olga Kurnosova, one of the leaders of the United Civil Front, at a news conference last week.
"The right to receive information is also violated. The remaining handful of independent media are suffocating, and freedom of speech is nominal."
The meeting was organized by the United Civil Front — an umbrella group of local democratic parties and organizations, supported by the National Bolshevik party and Communists of St. Petersburg organization.
Pavel Smolyak, spokesman of the St. Petersburg Peoples' Democratic Youth Union, that supported the meeting, said that despite the fact that the meeting's organizers had given the authorities two-weeks' notice, the police clamped down on the meeting.
"When we arrived at the scene and opened up our posters and flags, the police made the necessary calls, and the special police task force, OMON, arrived within minutes," he said on Monday.
"They detained most of the meeting's participants," Smolyak said.
The detainees included Andrei Dmitriyev, the leader of the local branch of the National Bolshevik party and Civil Front's Olga Kurnosova, who said the arrested activists are facing charges of resisting the police, which means they could spend the next 15 days behind bars.
Smolyak said the detainees spent their first night at detention centers in three different police stations, Nos. 27, 76 and 79. They were held in cells containing 4-5 people each, without access to water and warm clothes, Smolyak said.
More violence broke out on Sunday, when a gathering of members of the Movement Against Illegal Immigration was disrupted by a group of masked attackers on Pionerskaya Ploshchad outside the Theater For Young Spectators .
Sunday's meeting was permitted by the city authorities. Its participants discussed the recent events in the Karelian town of Kondopoga (see story, page 1).
Just minutes after the meeting began at 3.30 p.m. on Sunday, its participants were attacked by a gang of at least twenty people, some of them armed with knives.
The fight resulted in three people being hospitalized — one with a severe injury to the head and two with knife wounds — and twenty-one people detained by the police.
A police spokeswoman said on Monday that the attack appeared to have been a premeditated and well-planned action and that some of the attackers admitted to belonging to the antifascist movement. The St. Petersburg Prosecutor's Office has opened a criminal case as a result of the incident and is investigating the fight.

TITLE: U.S., Russian Sign Plutonium Protocol
AUTHOR: By H. Josef Hebert
PUBLISHER: The Associated Press
TEXT: WASHINGTON — The United States and Russia have resolved a major hurdle in their negotiations to dispose of tons of excess plutonium, announcing an agreement on a severe liability issue that has stymied the program for years.The two countries signed a protocol that provides a framework for dealing with the issue of liability, the U.S. Energy Department announced Friday.
Other issues remain to be worked out, including details of how Russia will dispose of 34 tons of plutonium from its weapons stockpile under the agreement.
At the same time, the future of the U.S. disposition program also has become clouded.
The Energy Department said it was ready to break ground this fall on a plant in South Carolina that would convert its 34 tons of excess plutonium into a mixed oxide, or MOX, fuel to be burned in a commercial power reactor. The U.S. House of Representatives, however, has eliminated money for the program from spending plans for the budget year beginning Oct. 1.
Future financing for the MOX conversion plant to be built at South Carolina's Savannah River complex will depend on whether Congress will restore money in the coming weeks.
The program has been described as a major nonproliferation effort as it would remove 68 tons of plutonium in the two countries and not make it susceptible to potential future diversion.
But the program, praised six years ago as a breakthrough in safeguarding Russia's nuclear materials, has stalled not only over the liability issue but also over disagreement about how Russia could get rid of its share of the plutonium.
"This agreement demonstrates that both countries continue to be committed to this important nonproliferation program," U.S. Energy Secretary Samuel Bodman said in a statement Friday.
The two countries have been at odds since 2003 over liability. The administration of U.S. President George W. Bush wants language that would absolve the United States and U.S. contractors in the event of an accident related to work on the Russian program, including construction of disposal facilities.

TITLE: IN BRIEF
TEXT: Tbilisi Backs Talksn TBILISI, Georgia (AP) — Georgian authorities on Friday proposed a new format for talks on the breakaway South Ossetia region that would cut out Russia, which Georgian officials accuse of backing the separatists.
Georgia's minister for conflict resolution, Merab Antadze, said the Joint Control Commission's format had "become obsolete," and called for bilateral talks between Georgia and South Ossetia. The four-party commission also includes representatives of Russia and North Ossetia.
Russia and South Ossetia swiftly rejected the idea, and accused Georgia of hampering efforts to resolve the conflict.Putin on Irann MOSCOW (AP) — President Vladimir Putin on Sunday emphasized that Russia and the Western powers are working together to resolve the conflict with Iran over its nuclear program.
Speaking to leading Group of Eight lawmakers, Putin said that a summit he hosted in July "affirmed the readiness of the G8 to continue active and coordinated efforts in the sphere of nonproliferation."
"Today this is reflected in the [process of] resolution of the issue of Iran's nuclear program," he said at the meeting in Sochi.
Foreign Minister Sergei Lavrov said Friday that sanctions should be used only in extreme cases.U.S. Holds Uzbekn MOSCOW (SPT) — An Uzbek native has been detained for threatening to immolate himself after being denied a visa at the U.S. Embassy in Moscow, Interfax reported.
Police received a call Thursday that the man, who was not identified, was threatening to immolate himself on embassy property after learning his visa application had been rejected.
An embassy spokeswoman said the man did not enter the embassy and was not detained on its territory. She declined to elaborate.Russia Protestsn MOSCOW (Reuters) — The Foreign Ministry accused the United States late last week of allowing anti-Russian actions by permitting a North Caucasus conference that a Chechen rebel representative attended to be held in the United States .
The conference, held in Washington and attended by Chechen rebel envoy Mairbek Vachagayev, was organized by the Jamestown Foundation.Anti-Semitism Trialn MOSCOOW (SPT) — Five teenagers will go on trial in Yekaterinburg on charges of killing a 21-year-old Jewish man with a graveyard cross, Interfax reported Friday, citing the local prosecutor's office.
Four young men and a 17-year-old girl are accused to killing the man, identified only as Andrei, in a local cemetery in 2005. The suspects were not identified.
The case has been sent to the Sverdlovsk Region Court. If convicted of racially motivated murder, the suspects face up to life in prison.Experts to Lebanonn MOSCOW (AP) — An engineer battalion will spend no more than three months in Lebanon helping repair the damage from the war, an official said Saturday.
Senior Defense Ministry official Lieutenant General Ivan Tsygankov said the battalion would be sent to Lebanon in early October. He said that the battalion would carry its own supplies which would allow it to rebuild six facilities.Rally in Minskn MINSK (AP) — About 5,000 opposition supporters rallied Saturday against President Alexander Lukashenko, demanding the release of political prisoners.
Organizers had permission to hold the rally in downtown Minsk. Police deployed around the rally site did not intervene but about 10 activists who attempted to stage an improvised march across town were detained.
"Dictatorships fall only when people take to the streets," opposition leader Alexander Milinkevich told the rally.Belarus on U.S.n MINSK (Reuters) — Belarus told its nationals on Friday not to take part in summer work programs in the United States because it was too dangerous.
The U.S. Embassy dismissed the allegations and said Belarussians — and other foreigners — were safe in the United States.
A Foreign Ministry spokesman said two Belarussian students had been killed while taking part in the U.S. State Department's Summer Work and Travel program. A third participant in the program, offering a four-month stay in the United States, had been robbed.President on P.M.n KIEV (AP) — Ukrainian President Viktor Yushchenko on Friday criticized his prime minister for saying that Ukraine's bid to join NATO would be put on hold.
Yanukovych's position is "a mistaken point of view and does not correspond to national interests and must be corrected," Yushchenko said after a meeting with Prime Minister Viktor Yanukovych.

TITLE: Transdnestr Voters Tout Russia
AUTHOR: By Mara Bellaby
PUBLISHER: The Associated Press
TEXT: TIRASPOL, Moldova — Transdnestr voters praised Russia on Sunday, as they cast ballots in a referendum on whether to continue pursuing the breakaway region's goal of joining Russia.The first of the Moldovan region's 390,000 registered voters began trickling to the 262 polling stations early Sunday as loudspeakers throughout the center of the main city, Tiraspol, blared Soviet-era music and reminders to vote.
They stood patiently behind registration tables set up by street — Lenin Street, Marx Street — and many clutched now-useless Soviet passports.
"Union with Russia would bring stability and give us something to look forward to tomorrow," said Natasha Solovyova, 20, as an orchestra warmed up to entertain voters at polling station No. 230.
"Moldova has given us nothing," said Valentina Starkova, 58, who cast her ballot with the hope of someday being part of Russia. "It is Russia that protected our right to live on our land, use our language and preserve our traditions."
The plebiscite's outcome will be determined by a simple majority of votes. Turnout reached 58.8 percent by mid-afternoon, clearing the 50 percent threshold required for the vote to be considered valid, the Central Election Commission said. Preliminary results were expected Monday.
The Organization for Security and Cooperation in Europe, however, said the vote would be neither free nor fair, and should not be recognized. It refused to send observers. Critics warn that the vote could set a precedent for pro-Russian separatists in other former Soviet republics. Moscow has supported the region's right to hold the plebiscite but has given no indication that it wants to absorb this economically depressed area that does not border Russia.
Transdnestr leader Igor Smirnov defended the vote. "Why aren't you surprised that many other former Soviet republics define their own future and don't ask their people — such as Ukraine and Moldova, which declare 'We are going to NATO and the European Union' without even asking their voters," he said after casting his vote into a glass box.
The separatists here were inspired by Montenegro's May referendum, in which residents voted for independence from Serbia. But the Montenegro referendum was authorized by the central government. "The situation in Transdnestr shares no similarities ... with Montenegro," Moldovan President Vladimir Voronin said Saturday.

TITLE: World Bank Ranks Russia
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russia is comparable to Swaziland, Zambia and Kazakhstan in how it governs, according to a World Bank report released Friday.The report, titled "Governance Matters: A Decade of Measuring the Quality of Governance," ranked Russia 151st among 208 countries in terms of voice and accountability, political stability, effectiveness of the government, the quality of regulatory bodies, the rule of law and control over corruption.
The indicators were crucial, the report said, in determining a country's level of economic development.
Ahead of Russia were Zambia (148), Uganda (149) and Swaziland (150), while Niger (152), Kazakhstan (153) and East Timor (154) were just behind.
Scandinavian countries and Finland topped the list as having the best governance, while at the bottom were Iraq, Somalia, Zimbabwe and the Democratic Republic of Congo.
Possibly anticipating a backlash, the report said margins for error were substantial, and warned that caution should be taken when comparing governance in listed countries.
Voice and accountability, the report said, deals with a country's freedom to choose its own government and the possibility to express individual opinion and other social liberties, including freedom of the media. In that category, Russia ranked among countries such as Qatar, Lebanon and many African nations, including Gambia, Congo and Algeria.
Russia fell into a similar percentile as the Philippines, Kyrgyzstan and Israel in terms of political stability. The bank defined political stability as the perceived likelihood that a country's government will be destabilized or overthrown by unconstitutional or violent means, including domestic violence and terrorism.
Iceland, in the top percentile, was seen as being entirely politically stable, whereas Iraq registered a zero on the scale.
For effectiveness of government — the quality of public services and credibility of the state's commitment to policy formation and implementation — Russia was lumped together with Pakistan, San Marino and Tanzania. For quality of regulation, it was ranked on a similar level to Ukraine, Madagascar and Senegal.
Rule of law in Russia was as effective as in Ecuador, Indonesia and Bangladesh. Rule of law was defined as the "extent to which agents have confidence in, and abide by, the rules of society and, in particular, the quality of contract enforcement, the police, and the courts," as well as the likelihood of crime and violence.
Switzerland, Iceland and the Scandinavian countries were judged as having the most effective rule of law. Afghanistan, Iraq and Sudan were perceived as being among countries with practically no rule of law.
Nicaragua, East Timor and China showed a similar ability to control corruption as Russia.
The United States ranked 28th in overall quality of governance, and Britain ranked 17th.

TITLE: 26 Foreign NGOs Are Registered
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — With an Oct. 18 deadline looming, the Federal Registration Service has registered 26 of the roughly 500 foreign nongovernmental organizations operating in Russia, and applications from about 50 others are under consideration, an official said Friday.Alexander Zhafyarov, who heads the NGO department of the Federal Registration Service, told reporters that the American Chamber of Commerce was among the groups whose applications were being reviewed and that its papers appeared to be in order.
But other NGOs are having difficulty meeting the stipulations of the new law on NGOs, Zhafyarov said. "They are not used to the requirements for the quality of documents that we put forward," he said.
The American Chamber of Commerce said it was pursuing registration. "AmCham is finalizing now its own set of registration documents and will advise members on the outcome," it said.
Zhafyarov would not disclose which other NGOs had applied or been registered. The registration requirement, part of the controversial law on NGOs that came into force in April, does not apply to Russian NGOs. However, Russian NGOs will have to present annual reports on their activities next April.
The Federal Registration Service is also checking political parties and has ordered three parties to close or register as NGOs: Russian Party of Peace, Freedom and People's Power and Nature and Society. The agency plans to review all parties by mid-November.

TITLE: Duma Ratifies Nuclear Treaty
PUBLISHER: Combined Reports
TEXT: MOSCOW — The State Duma on Friday ratified a global treaty intended to prevent nuclear terrorism, a year after President Vladimir Putin became the first leader to sign the pact.
Lawmakers voted 424-0 in favor of ratification, following remarks by Foreign Minister Sergei Lavrov.
"Ratification of this document answers the interests of Russia and the entire international community," Lavrov said.
The Convention for the Suppression of Acts of Nuclear Terrorism makes it a crime to possess radioactive material or weapons with the intent of committing a terrorist act, or to damage a nuclear facility with the intent of killing or seriously injuring someone, or substantially damaging the environment.
Russia sponsored the seven-year effort leading to the treaty's adoption by the United Nations General Assembly in April 2005, and Putin was the first leader to sign the treaty last September, followed swiftly by U.S. President George W. Bush, in a display of solidarity amid persistent fears that terrorists could acquire nuclear weapons.
Lavrov said five countries had ratified the treaty, signed by 107 nations, and that ratification by a total of 22 was needed for it to go into force.
Russia's backing of the Convention for the Suppression of Acts of Nuclear Terrorism highlights the importance of the global struggle to keep nuclear weapons out of terrorists' hands, said Matthew Bunn, nuclear security scholar at Harvard University's Belfer Center for Science and International Affairs.
Bunn added, however, that the convention should be complemented by "a fast-pace global effort to ensure that every nuclear weapon and every kilogram of potential nuclear bomb material worldwide is secured and accounted for."
Groups based in Chechnya have actively sought weapons of mass destruction and technology needed to stage acts of catastrophic terrorism in the past.
During the first Chechen war they acquired radioactive materials, threatened to attack domestic nuclear facilities, plotted to hijack a nuclear submarine and attempted to put pressure on the national leadership by planting a device containing radioactive materials in Moscow and threatening to detonate it.
Since armed conflict resumed in Chechnya in 1999, the rebels have scouted nuclear facilities and tried to contact an insider at one such facility.
Many scholars argue that groups of militant Islamists and other ideologically driven extremists based in the North Caucasus crossed the moral threshold between conventional and catastrophic terrorism when they seized School No. 1 in Beslan in 2004, leading to the deaths of more than 300 people.

(AP, SPT)

TITLE: Insurers Hit Out at Liberalization
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: The liberalization of the cost of compulsory auto third-party liability insurance policies will provoke mass fraud and unfair competition, insurers said last week at a briefing at the Rosbalt news agency.The local experts said that instead of decreasing premiums for compulsory auto third-party liability insurance policies — known by the Russian acronym OSAGO — the proposed liberalization of the market will not help drivers and spoke out against the reform.
OSAGO laws currently define premiums by the type of the car the holder drives, but Igor Artemiyev, head of the Federal Antimonopoly Agency, has proposed abolishing fixed tariffs from 2007.
Artemiyev has suggested that premiums would decrease by 20 percent if insurers were allowed to vary the price above the minimum level sufficient to cover current payments and accumulate reserves, as is the case in other European countries.
However market players listed a number of hurdles the proposal would need to overcome to lead to decreased premiums.
"In Europe, the insured person gets compensation from his insurance company, while in Russia he has to apply to the insurer of the offender. Unless this contradiction is removed, we should not introduce price liberalization," Alexander Baklushin, director of Asol insurance company said.
Otherwise this "exotic situation" will lead to price dumping, he said.
As a result many insurers will go bust, and the Russian Car Insurers Union will have to cover their liabilities. To do that the Union will have to increase member fees, which will inevitably increase premiums, Baklushin said.
Baklushin indicated that in France compulsory insurance costs between 700 and 800 euros, which is about seven times more than in Russia. He said that insurers already face losses in some regions and have to close branches.
Between 160 and 170 insurers in Russia are licensed to provide OSAGO policies, although some of them cannot carry liabilities, said Andrei Znamensky, head of the OSAGO department at Russky Mir insurance company.
According to the Russian Car Insurers Union, 49.5 percent of insured car owners make claims against policies.
Among negative factors for the industry Znamensky indicated the growing number of car accidents, drivers using more expensive cars, and the increasing cost of technical servicing and repairs.
"At the moment, OSAGO earns profit within the allowed level, but very soon we could be unable to pay compensation from the accumulated reserves," Znamensky said.
Price liberalization is premature, said Dmitry Sinishev, director for car insurance at Rosgosstrakh Northwest insurance company.
Sinishev said that it will take at least two years to complete consolidation of the insurance market so as to make it efficient.
"If liberalization is introduced now, many small companies that are preparing for sale could collect lots of policies, get momentary benefit and then sell the business," Sinishev said.
"Some companies already offer unreasonable discounts, and cheated clients have already appeared," he added.
While prudent companies keep thier OSAGO business within 25 percent to 30 percent of their total insurance portfolio, Baklushin said, some insurers increase its share up to 90 percent.
"Today, no company could sustain decreasing the price by 20 percent," Znamensky stated.
However, Dmitry Troyan, chairman of the Motorists Association in St. Petersburg and Leningrad Oblast, doubted if the concerns indicated by insurers were true handicaps to price liberalization.
"Admission to the insurance market is strictly regulated by the Russian Motor Insurers Union. 'One-day' companies simply could not operate there," he said.
As for complaints about low premiums, he indicated ironically that "OSAGO advertisements on television appear more frequently than those for beer and hygiene products for women."
"Insurers carry huge expenses just to remain in this 'unprofitable' market," Troyan said.
"In fact, some companies will have to quit the market. But it would be for the better. OSAGO is a business for large companies. It was planned as a social type of insurance. Who said that OSAGO should be the most profitable type of insurance?" he asked.

TITLE: EADSWon't Bend Rules for Russia
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — European aerospace group EADS said Thursday that it would not bend its rules to give Russia a say in how the company was run.The tough statement from the France-based maker of Airbus jets came days after a Kremlin aide indicated that the government was interested in increasing its stake from a newly acquired 5 percent. President Vladimir Putin visits France next week for talks that are expected to include cooperation with EADS.
"The existing corporate governance rules and structure have proven their efficiency for all shareholders," EADS said in a statement Thursday. "It would not be in the interest of the company to change corporate governance or enlarge the group of industrial shareholders."
EADS also sought to sweeten the pill by saying it welcomed cooperation with Russia.
"We welcome any investment in our share base as a manifestation of interest and confidence in the long-term success of EADS as an important player in the global aerospace industry," said the statement by the company's two co-chairmen, Arnaud Lagardere and Manfred Bischoff.
The chairmen also represent EADS's core industrial shareholders — French media firm Lagardere and German carmaker DaimlerChrysler.
State-run Vneshtorgbank recently acquired a 5.02 percent stake in EADS. Putin's foreign policy aide Sergei Prikhodko said this week that Russia would be interested in acquiring a blocking stake to be able to make strategic decisions.
Putin is expected to discuss cooperation with EADS during a summit with French President Jacques Chirac and German Chancellor Angela Merkel on Sept. 23.

TITLE: Mordashov Alone In Call for Merger
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: MOSCOW — Three of the country's five top steel companies said Thursday that they had little desire for mergers, leaving it to Severstal Group head Alexei Mordashov to push for industry consolidation."We'd even welcome a change in our shareholder base through consolidation," Mordashov said at an investment conference.
Mordashov spoke after the chairmen of Evraz and Novolipetsk Steel, the country's No. 1 and No. 4 steel companies by volume, talked up organic growth as opposed to domestic mergers.
Asked how he could persuade his domestic rivals to merge assets, Mordashov said: "Consider consolidation as a normal transaction." Domestic steel magnates have been reluctant to dilute their control over the companies.
Mordashov said he was prepared to relinquish control of the merged company. "I'd like to have control ... but it's not sacred," he said.

TITLE: Iraqi, Soviet Debt Tackled by Ministry
PUBLISHER: Combined Reports
TEXT: MOSCOW — The government will sign an agreement formalizing forgiveness of the bulk of Iraq's multibillion-dollar debt within a few months, news agencies quoted Finance Minister Alexei Kudrin as saying Sunday, days after the ministry said it had begun swapping a second tranche of Soviet-era debt into Eurobonds.Kudrin, speaking in Singapore after a meeting with his Iraqi counterpart, said officials were working out details of the agreement, Itar-Tass and Interfax said.
"This work will be finished, and the signing will take place in the coming months," they quoted him as saying.
Kudrin also said that once the deal was signed, Iraq would owe about $1 billion, according to the reports.
In a final step in restructuring the Soviet-era debt, the ministry said Friday that it had started swapping the tranche for Eurobonds due in 2010 and 2030.
Holders of the debt that originated in the last years of the Soviet Union welcomed the offer but said many claims had been left out.
"The bulk of our claims have been included but we still have a significant remnant, about which we have no certainty yet," said Saleh Daher, managing director at New York-based Turan.
The ministry said that, as of last Wednesday, claims worth $720 million were eligible to participate in the second tranche of the debt exchange.
"With the conclusion of this offer, Russia will have completed the restructuring of a substantial part of the former Soviet Union's commercial trade debt," the ministry said in a statement.
Kudrin said he expected the economy to grow in a 6.5 percent to 6.7 percent range in 2006. Following a committee meeting of the International Monetary Fund, Kudrin said the fiscal surplus in 2006 should exceed 8 percent of GDP, while public spending growth would be contained.
(Reuters, AP)

TITLE: Shuvalov Says State To Sell Off Rosneft
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW — Kremlin aide Igor Shuvalov on Sunday said state-controlled oil firm Rosneft would be "fully privatized" within the next three to 10 years.His comments appeared to contradict previous statements by officials, who have said the company would definitely remain under state control.
"Within three to 10 years [Rosneft] will become completely privately owned," Shuvalov said, Interfax reported. He added that Rosneft shares would be sold through public equity offerings.
Rosneft will become a "public company owned by portfolio and strategic investors with stakes not larger than 10 percent each," he said, adding that he was voicing his "own expert opinion."
"The nationalization story will turn into complete privatization," he said.
The comments by Shuvalov, Russia's envoy to the Group of Eight, appeared to be at odds with the Kremlin's policy of boosting state control of the oil industry.
Rosneft this summer held the country's biggest-ever initial public offering, selling 15 percent of its stock for $10.6 billion. Nearly half of the stock went to four strategic investors — foreign oil majors BP, Malaysia's Petronas, China's CNPC and a mystery buyer.
Some two-thirds of Rosneft's production comes from Yukos' former main production unit, which was acquired for a bargain price in December 2004 amid a legal onslaught on Yukos and its founder, Mikhail Khodorkovsky.
The sale was followed nine months later by the purchase of Sibneft by Gazprom, boosting the state's share of oil production to about one-third.
Following this trend, proposals in a bill on subsoil resources use and regulations on state control of strategic sectors suggest that the Kremlin would be unlikely to relinquish majority control of Rosneft, said Chris Weafer, chief strategist at Alfa Bank.
Rosneft CFO Peter O'Brien last week dismissed speculation that more shares in the company would be sold anytime soon. Rosneft would seek other options for attracting funds, O'Brien told reporters.
The government, however, appears not to be united in its view of the state's role in key industries. Economic Development and Trade Minister German Gref and other liberal officials and politicians have long argued against growing state control in oil and other key sectors.
Meanwhile, some officials in the Kremlin, including President Vladimir Putin's deputy chief of staff, Igor Sechin, who also serves as Rosneft board chairman, have pushed for a stronger role for the state and more direct access to the oil sector for themselves.
Last week, Kommersant reported that Federal Security Service director Nikolai Patrushev's son Andrei had been appointed an adviser to Sechin at Rosneft. The FSB and Rosneft did not confirm or deny the report.
It was not clear Sunday whether Shuvalov's comments were aimed at further stirring debate among Kremlin factions over the fate of Rosneft and the state's role in the oil sector.
"It seems that Shuvalov's statements are more of a case of wishful thinking," Weafer said Sunday, adding that it would take Russia considerable time to become that open to investors.

TITLE: Telecom Firms Battle Over Territory in Neighbor States
AUTHOR: By Maria Levitov
PUBLISHER: Staff Writer
TEXT: MOSCOW — Telecoms firms are vying with each other for market share in neighboring countries as the domestic mobile market reaches saturation point.No. 2 mobile operator VimpelCom plans to cover the entire Commonwealth of Independent States within two years, while market leader MobileTeleSystems is considering a bid for Bosnia-Herzegovina's telecoms company, Telekom Srpske. MegaFon, the top-three firm with the smallest geographical reach, is also considering expansion.
The need to outbid foreign mobile giants is a big hurdle for acquisitions abroad, but the country's top mobile firms must find new markets to grow, analysts said.
"I think that within two years, all the CIS countries will be involved," VimpelCom CEO Alexander Izosimov said Friday at an investor conference organized by UBS.
VimpelCom and MTS have already expanded into less-developed mobile markets, as mobile-service penetration reached 100 percent in Russia last month, according to AC&M consultancy's latest estimates.
Through subsidiaries, VimpelCom is present in Kazakhstan, Tajikistan, Uzbekistan, Ukraine and Georgia, while MTS has is in Ukraine, Uzbekistan, Turkmenistan, Belarus and Kyrgyzstan.
"Future competition will require us to be bigger," MTS CEO Leonid Melamed told the conference.
The rate of profit growth in Russia is slowing for each of the three largest mobile operators, according to research firm J'Son and Partners.
MegaFon, which operates in Russia and Tajikistan, has "no set targets for acquisition," but is eyeing Armenia, Uzbekistan, Azerbaijan and other countries for expansion, the company's acting CFO, Raymond Ho, said on the sidelines of Friday's conference.
MTS, VimpelCom and MegaFon all have spare cash for acquisitions, but finding attractive CIS assets is increasingly difficult, said Yelena Bazhenova, telecoms analyst at MDM Bank.

TITLE: A Strange Soul in Another Country, Another Culture
AUTHOR: By Tatiana Lebedeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: You are going on a long business trip for a year, maybe longer. You love your work and want to go, you are eager to see this new place and meet new people. Besides, it is good for your career. When you come home you'll be a big fish! Your family will be proud of you.Your family! This is the problem that clouds your excitement. You wish you could take them with you, but it is basically impossible. Your partner has a job with very good prospects.
"It is only a year," you try to persuade yourself, "We have phones and e-mail, it won't really be any problem at all."
You comfort yourself and everything seems to go well.
So, the day comes, you get on a plane and leave for somewhere you have never been. Your adventure has just begun. What and who is waiting for you on the other side?
Excitement is mixed with a little anxiety. You don't know the language or culture. Of course you have some stereotypes about these people, but are they really to be believed? Who knows.
The flight seems to take an eternity.
Finally, you hear the pilot's voice, "Ladies and gentlemen, we have successfully landed..." You breathe a sigh of relief. So far everything is just wonderful! You are met and taken to the hotel.
You liked the people who met you, they were nice and invited you to dinner in a restaurant. OK — there is not even time to miss your family.
So many interesting things, so many questions: how do they dress for work, to go out to a restaurant? When do they get up and how long is their working day? Is it necessary to do overtime? What is their attitude to small talk?
And how should I behave? Be direct and straightforward, or more diplomatic?
You wish you knew all this in advance.
Your first day at work goes quite well. Your colleague took you to the office and showed you what to do so that you can get to work on your own.
The whole working week also went well.
You were taken care of in every way. Your colleagues showed you the wonderful city you will live in over the course of the year. They took you to a restaurant and even invited you to a nightclub.
You thought this would last forever, but it won't.
Slowly things have undergone change. Something has imperceptibly disappeared.
After the working day your colleagues hurry home to their families or somewhere else, all of them have their own lives. Now it's time for you to take care of yourself.
What should you do?
Maybe you should stay a little bit longer at the office and finish some work? Maybe go out somewhere? You went to the philharmonic hall yesterday. A few days ago you saw a ballet. Concerts and ballets are some of the few things that don't need translation.
You can also watch a movie on DVD and you do so from time to time, but you do it alone. How great it would be if your family and your friends were here with you.
It already seems so long ago that you could spend your time as you wished. You miss your home, your country, your language, your traditions and familiar habits.
Yes, this country is good and interesting and the local people are nice. But still this world around you is strange: strange people, a strange way of life, strange customs and traditions, even nature and the climate are strange.
You are getting tired of misunderstandings between you and your colleagues.
"Why did he say that?' 'What did she mean when she said that?" "One colleague has invited me to his place for dinner — should I accept his invitation?"
The day after tomorrow is my boss's birthday, should I give her a present? If so then what kind of present should it be?'
You are tired of learning the new culture — there is too much new information. You just want to relax and feel comfortable. You need to share your situation with somebody else.
If you are a stranger in a strange country you may feel something similar to the above. Did any of it sound familiar? Have you asked yourself the same types of questions? What can be done to make the whole process easier to manage?
People living abroad for a long time may feel natural stress because of cultural differences, constant misunderstandings, and of course, because of a lack of people close to you and the inability to belong.
In such situations people often need to be listened to and helped.
It can be done by a professional consultant or therapist. During the consultation you will have an opportunity to share your feelings of misunderstanding, loneliness, insecurity and mistrust.
Once emotion is verbalized it loses its power over you.
Of course therapy embraces much more personal material, not only the stress of being in another country. Wherever you are, you always have something inside to investigate and to integrate.

Tatiana Lebedeva is linguist therapist at St. Petersburg-based EgoRound, a company specialising in interculutral communication.
To contact the author, please write to: info@@egorund.ru

TITLE: Foreign Lenders Expanding at Unprecedented Rate
AUTHOR: By Maria Levitov
PUBLISHER: Staff Writer
TEXT: At first glance, it appears to be a foreign-bank bonanza. Austrian Raiffeisen Bank and Hungarian banking giant OTP snapped up second-tier banks Impexbank and Investsberbank, respectively, earlier this year.Societe Generale bought 10 percent of Rosbank, and Commerzbank is planning to buy 15 percent of Promsvyazbank, pending official approval this fall.
On top of all that, the market now is abuzz with talk that British banking giant HSBC will finally announce the launch of its retail banking business by year's end.
Foreign banks are expanding at an unprecedented clip as they try to take advantage of skyrocketing retail lending, which is fueled by continuing real-income growth.
But high entry costs and the murkiness of the country's banking system are keeping foreign lenders from stepping up their shopping sprees. That means foreigners' share in the sector — currently at 11 percent — is unlikely to top 20 percent by the end of next year. About 40 percent is still controlled by the state.
"You are not going to see any rapid growth in the share of foreign banks," said James Watson, director of financial institutions at Fitch Ratings.
Some global banking heavyweights, including HSBC and even the world's largest insurer, AIG, have not rushed into developing local retail banking, despite the sector's strong forecasts.
Personal loans will grow at an average of 42 percent per year, while corporate loans will grow 21 percent per year from 2006 to 2010, according to research by MDM Bank.
HSBC's 70-some Russia-based staff are currently only involved in institutional investment banking. A bank spokesman in London said Wednesday that he could not comment on the bank's plans in Russia.
AIG operates as an insurer but is in talks with Russian regulators regarding opening a bank, news agency Interfax reported Wednesday, citing an unidentified official familiar with the situation.
The fragmented market, its lack of transparency and the high asking prices for larger private banks, of which there are few, are persuading more conservative foreign lenders to view buying into Russian banks with caution.
"There are over 1,200 banks in Russia, but only about 200 of them are really in the banking business," said Natalya Orlova, finance sector analyst at Alfa Bank.
Very small regional players and the so-called pocket banks, created for the sole purpose of servicing one particular business group, still make up most of the country's banking sector.
"There are not a lot of banks with a 1 percent market share out there to be bought," Watson said.
With many of the larger banks under state control — including the top three lenders, Sberbank, Vneshtorgbank and Gazprombank — few well-developed banks are attractive for foreign acquisition.
The state is not expected to cede control of the banks it controls any time soon, even though it has indicated it was looking to reduce its stakes in Sberbank and in Vneshtorgbank, or VTB, to 50 percent plus one share.
VTB is 99.9 percent state-controlled, while the Central Bank holds 61 percent of Sberbank's total capital and 63.76 percent of its common shares.
"WTO negotiations are a good indication of this lack of desire to give up control," Orlova said.
One of the key issues that has stalled negotiations with the United States for Russia's accession to the World Trade Organization is permission for foreign banks to have direct access to the Russian market.
Foreign banks are only allowed to operate through subsidiaries, and Russian negotiators have stressed their unwillingness to budge on this issue.
Control over the banking sector remains an important macroeconomic lever for the government, Orlova said.
During the mini-banking crisis of 2004, state intervention played a positive role in preventing the situation from spinning out of control, said Alex Kantarovich, co-head of research at MDM Bank.
The state is firmly entrenched in the sector, and the number of private banks ripe for acquisition is low. Foreign lenders look for banks with a wide network of branches and a developed retail lending business to tap Russia's banking boom.
No more than 30 banks fit this description, analysts said.
Suspicion from both buyers and sellers, as well as high asking prices from Russian bank owners, are containing the expansion of foreign lenders.
"Russia is a difficult market for foreigners," Kantarovich said.
He said foreign equity participation in Russian banking would reach 25 percent to 35 percent by 2011, far below the 60 percent to 70 percent share in Eastern Europe, where the market is "less suspicious of foreigners."
"It's not easy to find a sufficiently transparent bank to make shareholders comfortable with an acquisition," said Vladlen Kuznetsov, a banking analyst with Moody's rating agency.
Banking remains one of Russia's least transparent sectors, according to the Standard & Poor's annual transparency and disclosure surveys.
Part of the reason is that a vast majority of banks, with a notable exception of state-run behemoth Sberbank, are privately held, so they are not required to reveal as much information as listed companies.
Also, banks' expansion of their client base hinges on opaque personal relationships, making the process difficult for foreign bankers to analyze and understand.
"A step-by-step entrance is a way to minimize risks," Kuznetsov said.
Given the market's insufficient transparency, foreign banks are opting to buy minority stakes, with an eye toward increasing their share should the partnership prove a success, he said.
Germany's Commerzbank said in a recent statement that a "step-by-step increase to a majority position is being examined."
The bank, which is buying an initial 15 percent stake in No. 14 Promsvyazbank, declined to elaborate. France's Societe Generale in June bought a 10 percent stake in Rosbank, Russia's No. 7 bank by assets, for $317 million, with an option to increase the stake to 20 percent.
"We used to say a couple of years ago that the risks were too high," Watson, of Fitch, said of the banking sector. "Now, the high multiples being asked by sellers are also a sticking point for many transactions."
In July, Hungary-based OTP's $477 million purchase of Investsberbank valued Russia's retail lender at four times its book value at the end of 2005, according to Orlova's estimates.
Austria's Raiffeisen forked over $550 million for Impexbank in February, in a deal that Raiffeisen CEO Herbert Stepic called "one of the rare occasions where there was love at first sight."
While Russian banks stand to gain from Western strategy and technology, Orlova said, they are not starved for capital. Many banks are controlled by industrial groups that serve as the banks' "lenders of last resort," she said.
As the market develops, more global banks will come to Russia.

TITLE: Catching Up Comes First
AUTHOR: By Aleh Tsyvinski
TEXT: Discussions about industrial policy and the need to strengthen state interference in the economy invariably call up a plethora of black-and-white images from the past: the glorious days of industrialization, giant factories, five-year plans and the conquest of virgin lands.The reality is not so simple, of course. Debates about the role of the state in the economy are not simply about the choice between unlimited market freedom and heavy state paternalism in all spheres of life. There is no consensus today in global academic circles on priorities for growth policy, but some reliable pointers can be found.
A body of theoretical work by a group of influential economists including Daron Asemoglu of MIT, Harvard's Philippe Aghion and Fabrizio Zilibotti of the London School of Economics has determined the optimal level of state involvement in the economy in association with how far it is behind the current cutting edge of technology. Another pointer is a book coming out in the near future by economist Barry Eichengreen of the University of California, Berkeley, entitled "Coordinated Capitalism and Beyond," which examines Europe's post-war economic history. These works should be required reading for those determining economic strategy in Russia.
Long-term growth policy can be divided into two separate but equally important parts. The first — "chasing the leader" — is when a country achieves world levels of technological development by adopting and copying global best economic practice and know-how. Many Asian countries are applying this strategy. The second part — "joining the leaders" — involves breaking through current technological boundaries. It involves the drafting of a longer-term policy to stimulate innovation and research. Here we'll focus on the first part of the strategy.
In many respects, Russia is running into the same problems as 1950s Europe — technological backwardness, underdeveloped market institutions and obstacles to the free functioning of markets.
To close the technological gap with the global leader of the time — the United States in the 1950s-70s, Europe made a basic choice in favor of state intervention, using tools varying from direct subsidies and cheap loans to individual elements of state planning. In France, for example, Jean Monnet created the General Commissariat for the Plan, which was chiefly charged with stimulating investment. Italy's Institute for Industrial Reconstruction maintained direct control over industrial enterprises. By any standards, growth in the 1950s-1970s was outstanding, averaging 4 percent per year across the 12 leading countries in Western Europe.
Years of experience, backed up by neo-classical theory, have shown that state interference is successful only in very rare cases. What is Brazil's chief export to the United States? Aircraft. The aircraft industry in Brazil is one of the most successful products of industrial policy in economic history. The main lessons of Brazil's success are blindingly obvious — formulate a goal and stick to it. In this case, the goal was to create an airplane with certain characteristics at a certain price. Compare this, for example, with the goal of developing a soft drink market. It is unlikely that the state would be able to formulate and support the development of a new Coke or other soda using a goal-oriented policy, as there are millions of different recipes. The result of such a policy would be store shelves full of the Buratino brand and a couple of other similar drinks.
The second condition for successful state intervention is "market failure," i.e., cases when the market has failed to coordinate entrepreneurial efforts. Often, and particularly in less-developed market economies, the coordination and development of a number of sectors is essential to fuel growth. Consider a case of successful state intervention, described by Dani Rodrik of the Kennedy School of Government at Harvard: salmon farming in Chile. Salmon is Chile's third most-important export product, behind only copper and grapes. Raising the fish required simultaneous development of technical knowledge to adapt them to local conditions as well as the construction of the fish farms themselves. In a developed economy, a private company could take on both tasks at once. But in Chile, given significant fixed expenses to carry out both tasks and the need to coordinate efforts between them, state intervention was effective.
Here's why. In these examples, the country's main aim was to reduce the technological lag behind the leader. At this stage, the role of innovation and the free market is small, as a rule. In conditions in which firms are busy imitating the leader's technologies, the simplest way to achieve rapid economic growth is to reduce barriers to investment. This can be achieved either by coordinating the efforts of individual firms, or by reducing the expenses associated with weak financial markets and institutions.
At this stage of development, picking the right managers, fine-tuning the investment climate and stimulating growth of production and innovation — basically those areas in which the market is usually more effective — play a less significant role. So the most important principle in reducing a technology gap is to find those sectors where the market is working poorly.
The second basic principle is that state support should only be provided for a defined period at a fixed level. Export subsidies, for example, should be limited to five years. This condition is crucial, as state policy often leads to the redistribution of profits in favor of individual market participants, which gives them an incentive to lobby for longer periods of state support when it is no longer economically justified. This can lead to a growth trap, in which industrial protectionism leads to slower economic growth.
A good example of this is European trade unions. In the 1950s-1970s, by allowing companies to make use of a significant part of their profits for further investment in a coordinated fashion, rather than to increase workers' salaries as would likely have happened in free-market conditions, powerful trade unions were essential to rapid economic growth. Today, however, growth based on innovation, lowering costs and raising productivity is much more difficult because of the activities of those same unions.
Rodrik offers a more comprehensive approach to forming industrial policy. He suggests that industrial policy has played a key role in the successful development of almost every export sector in developing countries. He also suggests a principle that seems the most appropriate for Russia: the centralization of industrial policy. Success here depends on one person being made responsible for the implementation and management of the policy. Too many cooks will clearly spoil the broth.
Finally, it is essential to remember that industrial policy is only a temporary solution in beating technological backwardness. The strategy of targeted state programs that allowed economies in postwar Europe and some Latin American countries to develop quickly ran into serious problems as soon as the focus shifted to stimulating long-term economic growth based on technology and innovation. At this point a strategy to stimulate technological developments has to come to the fore if Russia is to achieve the living standards of developed countries. But closing the present gap has to come first.

Aleh Tsyvinski is assistant professor of economics at Harvard University and faculty research fellow at the National Bureau of Economic Research in Cambridge, Massachusetts. This comment was published in Vedomosti.

TITLE: Same Old Project Approach
AUTHOR: By Georgy Bovt
TEXT: The word "project" sounds very similar in both English and Russian. But there is a difference between the way the word is generally employed in the two languages.The English project is something much more practical, and often already in existence — hence the phrase "project management" in business practice.
It is not simply a plan, but an undertaking that has a defined aim and the funding to achieve it. There are usually already people managing and working on the project.
In the Russian understanding, a project is something closer to a plan or to what is called a prozhekt — something idealized but impracticable.
There is also an immediate association with the Soviet-era phenomenon of the project-construction bureau, where the technical intelligentsia sketched out something concerning the bright Soviet future, but few of these plans, or projects, ever became reality.
Either the money was not there, something else was substituted for the already finished plans or the system itself proved incapable of accomplishing the most optimistic plans.
This was, in essence, much like the fantasies that defined the landowner Manilov in NikolaiGogol's "Dead Souls" — his poor housekeeping reduced him to a state of permanent neglect, but instead of creating at least some basic order he spent all his time dreaming of building a beautiful bridge across his overgrown, slimy pond.
Of course, he never got around to building it.
It seems to me that when President Vladimir Putin announced the current set of national projects, he was talking about something along the English model. What we have ended up with, however, is somehow Soviet, almost Manilovian.
For more than a year, the national projects have been overseen by First Deputy Prime Minister Dmitry Medvedev, whose post was created especially for the task.
In this short time, it would have been unreasonable to expect any great, positive shifts in healthcare, education, housing, agriculture or anything else, even with the mammoth sums that have been committed.
Moreover, Medvedev himself, whom many in the country's political elite are touting as Putin's successor in 2008, is on prime-time television almost every day, managing one national project or another.
Surprisingly, not even all of this positive spin has given people the feeling that they have been told as much about the national projects as they should have been.
Most people are pretty skeptical about the prospects for the projects and have little faith that anything will change for the better in the sectors that have been targeted.
After a year of talking about the national projects, only 11 percent of those asked in a VTsIOM poll said they expected serious improvement. Only 1 percent to 3 percent said the projects would be a definite success.
Twenty-three percent said the healthcare project would "most likely" be a success, while the figures for education, housing and agriculture were 22 percent, 12 percent, and 11 percent, respectively.
The combined figures for the options "most likely unsuccessful" and "definitely unsuccessful" were 36 percent, 35 percent, 47 percent and 44 percent, respectively.
Even with the financial support they have received, the national projects remain a long way short of becoming real business projects.
Almost all of the proposals so far involve patching up things that already exist. There are also no plans in evidence to involve civil society or the business community.
The supposition is that the wise state, under the stewardship of the wise successor to the wise president, will provide everyone with a little something to be happy about in each of these sectors.
State paternalism goes hand in hand with social dependency, both of which have their roots in the Soviet era.
So we will likely see the same thing happen to the current selection of national projects that happened to the many Soviet projects.
There was a "Food Plan" and a "Living Space Program" back then, too.
By 2000, every Soviet family was meant to be living in its own well-equipped apartment, and the number of times the Communist Party tried to improve Soviet agriculture or improve the nation's health is beyond measure.
Back then, though, the succession problem was not what it is today, when the chosen person will have to endure national elections. That is, of course, as long as they don't feel that all of the positive coverage isn't working for Medvedev.
And assuming that the realization doesn't push Putin into choosing a solution providing further evidence of Russia's inexorable backsliding into the Soviet social and political model.

Georgy Bovt is editor of Profil.

TITLE: President Calls for a Cleanup of Russian Banking
AUTHOR: By Anna Smolchenko and Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Vladimir Putin called Friday for urgent action to clean up the banking system in the aftermath of the assassination of Central Bank First Deputy Chairman Andrei Kozlov.Kozlov, who died of gunshot wounds early Thursday, oversaw the Central Bank's effort to shut down hundreds of banks that laundered money and serviced corrupt companies.
"Unfortunately, banking institutions continue to be used for criminal ends," Putin told senior government officials during an emergency meeting in Sochi devoted to economic crimes.
"We are seeing the laundering of billions of rubles every month within the country," Putin said in comments posted on the presidential web site. "We are seeing the movement of enormous financial resources abroad."
Central Bank Chairman Sergei Ignatyev assured Putin that the crackdown on dirty banks would continue.
The meeting with Putin was also attended by Prosecutor General Yury Chaika, Interior Minister Rashid Nurgaliyev and Alexander Bortnikov, the deputy head of the Department of Economic Security of the Federal Security Service.
Putin said the murder of Kozlov — the highest-profile killing during his presidency — was a result of the "intensifying situation in the battle against criminal activity in the economic sphere."
The president said the money laundered through dirty banks was used not only to pay salaries under the table, but also to "pay for the services of government officials," that is, for "enormous bribes."
Laundered money is also used to fund terrorist activity and the drug trade, Putin said.
Putin called for tightening the regulations that govern bank-client relations
The President also called for the creation of an interagency working group on economic crimes that would include officials from the Central Bank, the Prosecutor General's Office, the Federal Tax Service, the Interior Ministry, the FSB and financial intelligence agencies.
Finance Minister Alexei Kudrin said Saturday that the Central Bank had revoked the licenses of 79 banks since the beginning of 2005, most on suspicion of money laundering or supporting terrorism, RIA-Novosti reported.
Most recently, a bank allowed a client to withdraw funds in late August after its license had been revoked, Kudrin said, adding that Kozlov had personally overseen the closure of that bank.
Kozlov, 41, and his driver, Alexander Semyonov, 54, were shot on Wednesday evening. The driver died on the spot. Kozlov was rushed to a hospital, where he died after a lengthy operation.
Viktor Bashkirov, director of retail banking at Alfa Bank, said Thursday that he was shocked that such an outlandish murder — reminiscent of the 1990s — could happen today.
"I thought those days were gone for good, but it turns out they're not," Bashkirov said.
Hundreds of Kozlov's friends and colleagues gathered for the wake at Moscow's Central Clinical Hospital on Saturday.
Those present included Ignatyev, Economic Development and Trade Minister German Gref, Deputy Finance Minister Sergei Shatalov and Arkady Dvorkovich, the head of the Presidential Experts' Council.
"[Kozlov's] service to the state undoubtedly upset the plans of many people who made their money in the illegal economy," Gref said in comments reported by Reuters.
Ignatyev apologized to the gathering for allowing the murder to happen, Mayak radio reported. Kozlov was buried at the Troyekurovskoye cemetery in western Moscow.
Chaika said in televised remarks that the Prosecutor General's Office was working overtime on a number of scenarios, although he said the assassination was mostly likely linked to Kozlov's role at the Central Bank.
Some 20 prosecutors are working on the case, Kommersant reported Saturday.
The City Prosecutor's Office on Friday declined to comment on its investigation. Interfax, citing an unnamed law enforcement source, reported Friday that a number of senior Central Bank officials had been questioned.
Kozlov was killed outside the Spartak sports complex, where he had taken part in a friendly football match with other bankers.
A law enforcement source told Trud, however, that until last week the matches had been played at the Dynamo complex.
Another law enforcement source told Kommersant that Kozlov's attackers had used unreliable weapons for such a high-profile hit.
Police said that one weapon found near the scene was an air pistol converted to fire standard bullets. Kommersant reported Saturday that a silencer had fallen off one of the guns.
A short, heated exchange between Kozlov and his attackers preceded the shooting, the source told Kommersant, indicating that they were inexperienced or attempting to rob him.
Kozlov's assassination led to a flurry of speculation in the media. Izvestia opined in its Friday edition that the killing might have been linked to the closure of Sodbiznesbank and Kredittrust, which the Central Bank accused of money laundering.
Valery Miroshnikov, first deputy head of the Deposit Insurance Agency, a state-owned corporation, dismissed Izvestia's theory that an outraged account holder in one of the banks was behind the murder as "nonsense."
"A lot of depositors were hurt, but they were relatively small," Miroshnikov said Friday. "And it was two and a half years ago." Miroshnikov said that in his experience, account holders' anger usually died down within six months to a year after the loss of their savings.
Natalia Orlova, chief economist at Alfa Bank, agreed with Miroshnikov. "Two years is a lot of time to pass before an event like this," she said. "Sodbiznesbank and Kredittrust were simply the most public and well-known cases in which Kozlov was involved."
Individuals have yet to recover some 800 million rubles ($30 million) that they lost when Sodbiznesbank was shut down, Miroshnikov said, adding that the largest single commercial account at the bank contained about 110 million rubles.
Sodbiznesbank was a small bank compared to some of the 83 banks that the Deposit Insurance Agency is currently liquidating, he added.
"Either very big money or very serious revenge" was behind the killing, Miroshnikov said.
Recent changes introduced by the Central Bank made it unprofitable to acquire a bank for money-laundering purposes, Miroshnikov said.
A bank found guilty of money laundering now loses its license within one month, whereas previously it could have stayed in business for six months, he said.
Kozlov was working to tighten up regulations further. Most recently, he proposed barring for life those found guilty of money laundering from working in the banking industry.
Kommersant ventured that banks involved in illegal import schemes might be behind the killing.
The newspaper reported that the Central Bank had revoked 33 bank licenses this summer, most of them allegedly involved in such schemes, which entail underreporting the value of goods in order to minimize customs fees and value-added taxes.
The illegal transactions performed by the banks could have been worth at least $16.2 billion in the last two years, Kommersant reported.
Svetlana Petrenko, a spokeswoman for the City Prosecutor's Office, declined to comment on Kommersant's claim that someone close to Kozlov told the murderers about his schedule.
"I will not comment on what journalists have dreamed up," she said. "I can only say that the investigation is under way, and that several scenarios — including one related to his professional activities — are being pursued."
Petrenko also refused to comment on Izvestia's theory involving Sodbiznesbank and Kredittrast.

Staff Writers Miriam Elder, Maria Levitov and Anatoly Medetsky contributed to this report.

TITLE: 'I Buy' Glossy Magazine Prepares Launch in City
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: One of the largest shopping guides in Russia, Ya Pokupayu ("I Buy"), will launch a regional edition in St. Petersburg in October. The publishers hope to attract 10 percent of local advertisers, currently shared between glossy publications, the company said in a statement last week.Ya Pokupayu has been published since 1996 targeting premium class advertisers. About 240,000 copies of the guide are distributed monthly in 17 of the largest Russian cities. The St. Petersburg guide will have a circulation of 40,000 copies and contain between 140 and 150 pages.
"According to thee Ekro-RG research agency, about 500 companies in the city annually spend over $80,000 on advertisement. We are planning on taking 10 percent of the glossy advertisement market. We will take one of the leading positions in the city," Alexandra Savina, head of marketing at Ya Pokupayu, said in a statement.
According to the Federal Agency for Press and Mass Communications, most Russian glossies — 92 percent of their total number and 98 percent of their total circulation — are distributed in Moscow and St. Petersburg.
Research by Ya Pokupayu showed that the city audience needs detailed information about goods and services, especially in the premium segment, which makes the shopping guide a promising market niche.
The research also claims that "the city has very few really strong free glossies with large circulations and good distribution."
"The main publications are leisure magazines, specialist and corporate publications, one-off projects published for particular events and the foreign-language publications that are traditional in St. Petersburg," the statement said.
The publishers recognize that launching the publication in St. Petersburg will be problematic.
"Of 300 titles published in the city, only 35 to 40 publications are more or less stable and familiar to citizens. We constantly face the distrust that advertisers have for new projects," said Oksana Vinogradova, head of the St. Petersburg project at Ya Pokupayu.
She indicated that 15 to 20 glossies are launched in the city annually, and half of them collapse because of "an inadequate concept, launch planning and insufficient investment into the brand."
"The concept is interesting. However success will depend on distribution, promotion and sales — not on content only. It's hard to say if they will achieve the declared goals without knowing all the details," said Mikhail Podushko, marketing director at the Comcon-Spb agency.
According to Video International, the advertisement market for printed media in St. Petersburg is worth about $80 million, Podushko said. He said that the Express-Service publishing house and its publications Na Nevskom ("On Nevsky"), Free Time and Pod Kluch ("Turnkey") is a leader among glossies distributed free of charge in the city.
Statistics show that advertisement in printed media is growing at a slower pace than that of the Russian advertising market in general — last year it increased by 14 percent as opposed to 27 percent growth across the entire market.
The forecast for this year is growth of 22 percent for the advertising market in general and only 12 percent for printed media, Podushko said. However, magazines are demonstrating a better performance. Last year, the magazine advertising segment grew by 25 percent. This year it is expected to grow by 20 percent.
Podushko emphasized the importance of targeting the right advertisers — companies that are interested in glossies rather than simply all the companies with sufficient budgets.
"Despite having huge budgets, large companies operating in the low price segment will be indifferent to glossies. And there are many such companies in our market — both locally and in Moscow," Podushko said.

TITLE: Madonna's Cross to Bear
AUTHOR: By Masha Gessen
TEXT: I went to Madonna's concert last Tuesday night. I have never been a huge fan, but I recently read a study that showed that people really only like the music they heard while they were in college. Once they are out of their mid-20s, they start losing the ability to appreciate new music, and then by the age of 40 they are pretty much stuck on a couple of albums. This is the understanding on which virtually all U.S. FM radio stations base their programming. I was a freshman in college in the United States when Madonna became a star, so I am stuck with her.It was a great concert. It was so poorly organized as to embarrass, I think, even the spectators. Seven thousand police and military succeeded in squeezing the viewers into tight spaces but could not keep nearly the entire dance floor from smoking. The stadium was half-empty, presumably because of the change of venue, confused publicity and the efforts of scalpers. And on the way out, for reasons none of the conscripts or officers present could explain to me, people had to squeeze through a narrow corridor formed by police, some of them on horseback.
But most big public events in this country provide a showcase for the stupidity and pointlessness of the police force. What I find more important is the amount of effort the Russian Orthodox Church put into trying to keep people from attending the concert. They campaigned in the media, with one church spokesman calling Madonna "a 50-year-old whore." They demonstrated. They threatened.
Twenty-three religious protesters were arrested on the day of the concert. As my friends and I made our way to the stadium, through police cordons that stretched for kilometers, some of them were still handing out leaflets. An elderly woman approached us and explained that "a ritual would be performed" that would do irreparable damage to us. She handed me a laser-printed page with a litany of objections to Western culture in general and Madonna in particular. It pointed to Madonna's "desire to mock the Savior's suffering on the cross."
Thanks to the Russian Orthodox Church, most of the public was aware that one of the songs in the concert would be performed with the singer suspended on a giant luminescent cross. What I — and, I assume, most casual observers — did not know was what the song would be and what the point would be. The song was "Live to Tell," her 1986 hit, and the point was not subtle. Flashing behind her (and the cross) on a giant video screen were the faces of children and some statistics: the number of children orphaned by AIDS in Africa and the fact that without help they will all die before the age of 2. And then there was a long quote from "The Sheep and the Goats" story from the New Testament.
"I was hungry and you gave me food, I was thirsty and you gave me something to drink" — I think the words are familiar to most of us, even those of us who are not Christians, right through the "as you did it to one of the least of these who are members of my family, you did it to me." The point of this passage is that Christianity is measured not by faith alone but by good deeds. It was not a point that Madonna made subtly, or in good taste, but it is the sort of thing that ought to disarm any protest, simply because at the end of the song she makes an appeal for donations to help the children.
In the Russian Orthodox Church's view, that was a satanic ritual. Which serves to prove, yet again, that the Russian Orthodox Church is as dogmatic as is a 40-year-old when it comes to new music. It is as crude as its spokesman's "whore" remarks. And most of all, it is mean.

Masha Gessen is a Moscow journalist.

TITLE: Oil Means Big Things for Small Town
AUTHOR: By Lynn Berry
TEXT: If Khanty-Mansiisk were a country, it would be the second-largest oil producer in the world after Saudi Arabia. The autonomous district in western Siberia, whose name conjures up images of reindeer herders if it conjures up anything at all, produces more oil than the rest of Russia combined.Less than a decade ago, the district capital, also called Khanty-Mansiisk, was a town of two-story wooden buildings and not much else. Today, it looks like Scandinavia. There are new brightly colored schools, a university, scientific research institute, ethnological museum, art gallery, state-of-the-art concert hall, skating arena and ski center. Modern apartment complexes have been built all around town and many more are under construction.
The population of the region is increasing, in stark contrast to the country as a whole. At the tremendous rate of 7.2 percent a year, it is on track to double in a decade. Salaries are three times higher than the national average, people seem content and the district administration beams with confidence.
But should this seemingly model town, now home to 60,000 people, be rising in the middle of the boggy taiga 3,000 kilometers from Moscow? Is it an economically sound use of oil wealth that by rights belongs to all of Russia?
And what was the role of Yukos in Khanty-Mansiisk's development? The ghost of Mikhail Khodorkovsky still lingers in the town and also in Yukos' former oil fields, the largest in west Siberia and now owned by Rosneft.
These are some of the questions that arose during a two-day visit to the region two weeks ago with the Valdai Discussion Club, a group of Russian and foreign academics and journalists. The foreign visitors met with President Vladimir Putin before heading home.
In Khanty-Mansiisk, Governor Alexander Filipenko and three of his deputies were our hosts. They seemed braced for the questions about Khodorkovsky, whom at least some of them knew well, and their answer was short and to the point: Khodorkovsky blew it. He spent much less on social services than the other oil companies operating in the region. By the time he understood his mistake it was too late. He had let them down.
The protracted destruction of Yukos has been a boon to the region, the officials said, because of the message it sent to all the oil companies. They began to pay their taxes in full and to sign up for "social partnerships," a commitment to cover half the cost of a given project, such as the construction of a kindergarten or school. Some of the paintings in Khanty-Mansiisk's impressive art gallery were donated by executives of major oil companies, including Yukos. One also wonders about the trio of Steinway pianos, including a concert grand, that we saw in a school for gifted children.
In addition, the region received $3.5 billion last year as its share of almost $20 billion that Yukos paid in back taxes for 2000-03, increasing its revenues for 2005 by more than 50 percent, according to the regional tax department.
The region is now counting on Rosneft, the new owner of Yuganskneftegaz, a production unit that the state seized from Yukos as partial payment for back taxes and then sold at a greatly reduced price. Vladimir Karasyov, the deputy governor in charge of oil and gas, said it was too early to say whether Rosneft, which is state-owned, would be a better corporate citizen than Yukos because the company was just now getting on its feet.
Rosneft gets 70 percent of its oil from Yuganskneftegaz, whose rich Priobskoye oil field is situated along the Ob River, a three-hour boat trip from the town of Khanty-Mansiisk. From what we could see, not much has changed so far under the new Rosneft management. Many of the facilities are still painted in Yukos' green and yellow colors. On some of the white hard hats handed out to visitors, the Rosneft logo could be peeled back to reveal Yukos' logo underneath. Yuganskneftegaz general director Vladimir Bulba said he brought five people with him when he took over on Dec. 31, 2004, but otherwise there was no major turnover among the company's 1,000 employees.
The gross regional product for Khanty-Mansiisk was 1.58 trillion rubles in 2005, which works out at almost $37,000 for each of the region's 1.5 million people. For the rest of the country, the per capita gross domestic product was less than $5,500. Although the region keeps only a small portion of its tax revenues, it is still awash with cash.
The average salary, Karasyov said, is 24,000 rubles, almost $900, three times the national average. Teachers receive about 20,000 rubles, about twice as much as in Moscow, said Yelena Chepurnykh, the deputy governor in charge of education. She was a deputy education minister for eight years ending with the government shake-up of 2004.
Chepurnykh and Natalya Zapadnova, the deputy governor who oversees social policy, described programs to encourage families to settle in the region and to have more children. For instance, the region provides mortgage grants of 300,000 rubles for the birth of each child. Khanty-Mansiisk has the third-highest birth rate in the country, after Chechnya and Dagestan.
But is it wise to be spending so much money on improving life in the remote Siberian region?
In "The Siberian Curse," Clifford Gaddy and Fiona Hill argue it is not. The Brookings Institution scholars say the cities in Siberia, which were created by the Soviet government for reasons other than maximizing wealth and efficiency, burden Russia with enormous problems associated with the costs of keeping people warm and transporting goods over great distances.
Gaddy and Hill advise the Russian government to reexamine its approach to developing Siberia's resources and shift to temporary work arrangements that do not require a large permanent population or extensive urban infrastructure.
"This implies a federation-wide policy that aims to break the grip of regional leaders and oligarchs over resources and political and economic decisions in Siberia and the North — in places where people should not be, from a market point of view," they write in the 2003 book.
Filipenko, who has led the region since 1989, has a different idea. The governor said he is already looking ahead to when the oil runs out and developing a plan to replace half of the economy with high-tech industry. A key part of this plan is improving education and building research potential, he said.
The day after returning from Khanty-Mansiisk, the group met with a handful of oil company executives, and one of the questions was whether it was good economic policy to be encouraging people to move to Khanty-Mansiisk.
Transneft president Semyon Vainshtok was quick to respond: "I lived in Khanty-Mansiisk for 20 years and I am convinced that you would not be asking the same question about Calgary. One of the main tasks is to improve life in Siberia."
Indeed, economic considerations may not be the only ones that matter. There is something to be said for a region that values education and culture and works hard to make life better for all of its citizens. There are plenty of Russian regions, even some with plenty of money to spend, who would do well to follow Khanty-Mansiisk's example.
Still, it is hard to escape the feeling that the money being spent to improve life in Khanty-Mansiisk — by the administration and the oil companies — would be better spent in other parts of the country.

Lynn Berry is the former editor of The Moscow Times.

TITLE: Chukotka Administration Makes Three Proposals on Surviving Post-Abramovich
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: ANADYR, Chukotka Region — The next governor of Chukotka will not need to be wealthy to keep the region afloat. He will just need to be able to read.Chukotka's administration plans to put together a manual on how to run the remote Far East region so that it and its 50,600 inhabitants will be able to survive after billionaire Governor Roman Abramovich leaves for good.
"We want to create a product and leave a manual for others to follow," one administration official after another told a group of reporters during a weeklong media tour of the region. They attributed the quote to Deputy Governor Andrei Gorodilov.
The manual will be based on three proposals for the region's future that the administration has submitted to the federal government.
The first proposal would be to convert Chukotka into a national park. This would mean relocating most of the non-native population to more developed parts of Russia and maintaining minimal infrastructure, mainly to assist the natives.
Under the second proposal, things would be left as they are now and federal subsidies would be increased to cover the costs of maintaining existing infrastructure. Subsidies accounted for 30 percent of the region's budget of 13.5 billion rubles ($5.05 billion) last year.
The third option — by far the most ambitious and the one preferred by the regional administration — would be to secure a wave of investment that would be used to explore Chukotka's under-researched natural reserves and build its underdeveloped infrastructure.
"After comparing all three, we have concluded that the third one is the most attractive and beneficial for both the region and the country as a whole, because it would allow federal funding for the region to be limited to only 30 percent of the region's needs," Deputy Governor Mikhail Sobolev said.
"It would also allow the region to develop — to raise living standards and minimize the state's need to secure supplies to the region," Sobolev said.
Chukotka's natural reserves could be vast. The region has a gold industry that dates back to Soviet times and is now springing back with the help of Western investors.
Land oil and gas reserves, however, appear relatively small. The Western Ozyornoye gas field near the regional capital, Anadyr, has been developed by Sibneft over the past few years, but is only suitable to feed a new gas power station in Anadyr — a state-of-the-art Abramovich project that has yet to become operational.
Considerably larger hydrocarbons reserves — 14 billion tons of oil equivalent — are thought to be present on the shelf of the Chukchi Sea.
The reserves, however, are located beyond the 12-nautical-mile zone controlled by the regional administration and therefore would be under the jurisdiction of the federal government if explored and developed.
The region could benefit by serving as a launching pad for the enormous shelf project.
The amount of coal in the region also exceeds local needs, and could be exported to other regions and even abroad, possibly to Asian countries and Mexico.
"It's hard to say now which scenario would be picked by the federal government, but I think that the third one involving the aggressive development of industry is the most appropriate," Sobolev said.
The plan, which would run through 2020, would require 100 billion rubles of investment and no change to the current budget.
Some 60 billion rubles would be required to close down activities in Chukotka and relocate people if the territory were to be turned into a national park.
Maintaining Chukotka at its current pace of life would essentially require the federal government to match the amount of money that Abramovich is spending here now — about 6 billion rubles per year — and what the region has lost in tax revenues as a result of Sibneft's departure earlier this year — another 6 billion rubles per year.
"The plans are drafted specifically so they can be followed by others. We hope that our initiative is going to survive," Sobolev said.
The federal government is to consider the various scenarios for Chukotka's future sometime this fall. Sobolev refused to speculate about which option the government might pick.
"Since the territory is huge and different in its composition, the implementation of all three in different parts of Chukotka is also possible," he said.
No matter which plan the government ultimately picks, the Chukotka administration is toying with another idea that could drum up some money: tourism.
Chukotka's top tourism official, Sergei Kislyakov, said the area would be a haven for those interested in extreme tourism, nature or native cultures. There are some 17,000 native people living in Chukotka, of whom 12,000 live in small settlements.
"It would be very good if those people were employed in traditional activities," Kislyakov said, suggesting they could sell handicrafts and put on folk shows.
The region also has preliminary plans to build an ethnic village next to Anadyr, complete with deer, dogs and other entertainment for visitors.
There are 60 folklore singing and dancing groups in the region's 53 towns, villages and settlements.
The barriers for tourism, however, are abundant — starting with the fact that all 730,000 square kilometers of the region are closed to visitors. Entering any place in Chukotka, including Anadyr, is allowed only with a special permit from the Federal Border Service, which is part of the Federal Security Service. Each permit lists the locations to which the visitor is permitted to travel.
Another major problem is a near-complete lack of infrastructure. Chukotka's airports do not work on weekends, except for an extra fee, and practically no hotels or restaurants exist outside Anadyr. Chukotka itself is so remote and large that just getting here and then traveling about can be a costly adventure. Roads are far and few between, and chartering a helicopter costs an astounding 83,000 rubles ($3,075) per hour.
Tourism could grow, but the number of visitors is unlikely to ever be large, partially because Chukotka has a big rival across the Bering Strait: Alaska. Some 4 million tourists visit Alaska between May and September every year. The U.S. state has, of course, a well-developed infrastructure. It also enjoys a better climate — Chukotka is surrounded by cold currents, while Alaska's shore waters are much warmer.
Apart from Anadyr, most areas of Chukotka are terribly dilapidated, and the sight could be shocking for foreign tourists, said Joth Singh, a London-based environmentalist with the International Fund for Animal Welfare.
Jean-Luc Albouy of Grand Nord Le Voyages Polaires, a French company specializing in extreme tourism, said a Chukotka tour could easily cost $10,000.
He ticked off other problems: "There also are infrastructural problems that do not allow precise planning. The need to get special permission for visitors is also a major barrier, particularly since they do not leave any chance for late cancellations or replacements in the group."
After a pause, he added somewhat diplomatically: "But the place is quite beautiful. It's good for people who like nature observation and getting acquainted with the lifestyle of native peoples."
No matter what happens after Abramovich leaves by 2009, he is likely to have earned enough appreciation to last him a lifetime.
"Abramovich is mentioned in almost every sentence and with affection. He is much adored here," Singh said.
Locals' accounts of their meetings with Abramovich sound almost like legends. "He has very kind eyes. When you talk to him, it is clear that he understands our problems," said Mikhail Zelensky, the head of the administration of Chukotka's Chukotka district.
There has been a small surge in the number of newborn boys named Roman. The number peaked in 2002 at 12, compared to five the previous year. A total of 350 boys were born in 2002 and 328 in 2001.
Locals do not mind that Abramovich, who lives in London, has barely shown up in Anadyr over the past couple of years, particularly since his team of senior bureaucrats — most of whom do not live in Chukotka permanently — fly in regularly.
Some native Chukotka artists have started mythologizing the tycoon. On display at the local history and culture museum in Anadyr is a walrus tusk depicting various stories with Abramovich, including one of him with his signature three-day-old stubble outside a helicopter. Carved on the bone by Tatyana Pechetegina in 2001, the tale is titled "A New Life at the Beginning of the Century."
The only other modern figure who has been carved on a tusk and displayed at Anadyr's museum is Vladimir Lenin. Engraved in 1963 by Galina Tynatval, the tusk depicts Lenin's spirit leaving the mausoleum on Red Square and traveling to the Chukchis to teach them to read and use electricity.

TITLE: Venezuela, Iran Cement Anti-American Position
AUTHOR: By Saul Hudson
PUBLISHER: Reuters
TEXT: CARACAS, Venezuela — President Mahmoud Ahmadinejad shored up opposition to a U.S. drive to curb Iran's nuclear program on a visit to Venezuela on Sunday that cemented an anti-American front with President Hugo Chavez.Ahmadinejad's first trip to Venezuela highlighted Iran's backing for the fellow OPEC country's bid for a UN Security Council seat that Chavez would use to challenge Washington's campaign for international sanctions against Tehran.
Chavez, who Washington calls a destabilizing, anti-democratic force, cast the visit as two countries jointly defying what he says is the imperialist aggression of the world's only superpower.
"It is a union that seeks a balance in the world and to save the future of your children, my children and our grandchildren," he told a state-owned TV network.
Buoyed by high oil prices that underpin their popularity at home and tapping into anti-American sentiment around the world, both presidents are awkward foes for the United States.
Iranian-Venezuelan ties have previously focused cooperation as major oil exporters, but the leaders emphasized their new bond in standing up to America.
"Nowadays, we have common goals and interests," said Ahmadinejad, who repeatedly called his counterpart by his first name. "We have to be united."
"I salute all the revolutionaries who oppose world hegemony," he added in an apparent reference to the United States.
Iran established an Islamic republic after a 1979 revolution that ousted a U.S.-backed leader, and Chavez says he presides over a revolution to end U.S. influence in Venezuela.
Chavez, who welcomed Ahmadinejad at the capital's airport walking with his arm across his visitor's shoulders, said: "Two revolutions are giving each other a hand."
"[The Iranians] are threatened by the American empire. The empire does not want any nation to develop," he said.
Chavez has offered unspecified help to Iran should the United States attack its nuclear programs.
That option could loom for Washington if it fails to curb Tehran's ambitions through negotiations, according to many diplomats and atomic experts.
Chavez has expressed interest in working on technology with Iran if Venezuela ever developed a nuclear program.
But the presidents did not focus on the atomic issue on Sunday, preferring to stress economic cooperation including a joint $1.5 billion petrochemical investment.

TITLE: Padres Propelled to Top in NLWest
PUBLISHER: Reuters
TEXT: LOS ANGELES — Pinch-hitter Terrmel Sledge singled home the go-ahead run in the ninth inning to propel the San Diego Padres to a 2-1 win over the Los Angeles Dodgers and top spot in the NL West standings on Sunday.The Padres lead the West by a half-game and the Dodgers replace San Diego at the top of the NL wildcard standings, one game clear of the charging Philadelphia Phillies who beat the Houston Astros 6-4.
"It couldn't have been much sweeter than this," Sledge told MLB.com. "I grew up watching the Dodgers... I've been coming here since I was about eight years old."
The Padres' win was set up by a superb pitching performance from Chris Young (7-3) who allowed just one hit over six shutout innings before turning the game over to Cla Meredith.
Meredith served up a solo homer to Russell Martin in the seventh to tie the game at 1-1 but the Padres' bullpen slammed the door.
Scott Linebrink tossed a scoreless eighth and Trevor Hoffman came on in the ninth to get the final three outs and his 39th save of the season.
It was also Hoffman's 475th career save, leaving him just three shy of the all-time record of 478 held by Lee Smith.
"The last thing on my mind is the record," said Hoffman. "It's all about propelling this team to the playoffs."
Russell Branyan broke open a scoreless contest with a solo home run in the sixth off Dodgers starter Derek Lowe.
Lowe provided Los Angeles with a solid effort, yielding just one run on seven hits but did not figure in the decision, Jonathan Broxton (3-1) giving up the winning run on two hits in one inning of relief.
In Houston, Ryan Howard belted his major league-leading 57th home run of the season and Mike Lieberthal connected on a pair of solo shots to power the Phillies past the Houston Astros and cap a three-game sweep.
Jimmy Rollins also homered for the surging Phillies, who have underlined their post-season ambitions by winning five of their last six games to climb within one of Los Angeles and the wildcard lead.
"We have a good chance to win," said Lieberthal, assessing the Phillies chances of securing the NL wild card. "I think we will win. We're pitching really well, and I think that's the key to success. We're just playing good baseball."
With the Phillies' bats booming, Randy Wolf (4-0) did just enough to earn the win, allowing three runs on five hits with five strikeouts and a pair of walks in 5 2/3 innings of work.
In Pittsburgh, Zach Duke pitched eight shutout innings and Freddy Sanchez drove in a pair of runs as the Pirates played the party pooper for the third straight day by blanking New York 3-0 to keep the Mets from clinching the NL East title.
The Mets arrived in Pittsburgh for the three-game series needing one victory to claim their first division crown since 1988.
They head back to Shea Stadium for a four-game series against the Florida Marlins day still searching for the victory.

n

In New York on Sunday, Torii Hunter drove in two runs and scored twice as the Minnesota Twins eased past the Cleveland Indians 6-1 to trim Detroit's lead atop the AL Central to a single game.
The Twins' eighth victory in 10 games increased the pressure on the faltering Tigers, who lost 12-8 to the Baltimore Orioles.
The Twins also increased their lead in the AL wildcard race to four games after the World Series champion Chicago White Sox lost 5-4 to the Oakland Athletics.
"It was a good series," Twins manager Ron Gardenhire told MLB.com. "We took three of four, and we could have gotten all of them.
"I've been saying all along, we need guys to step up. That's been happening."
Minnesota's win was anchored by a strong pitching performance from Scott Baker (5-8), who delivered six sharp innings allowing just one run on six hits with three strikeouts and two walks.

TITLE: Security Scare Shuts U.S. Capitol
PUBLISHER: The Associated Press
TEXT: WASHINGTON, D.C. — A man crashed his vehicle into a security barricade at the U.S. Capitol on Monday, ran into the building and was arrested, forcing the complex to briefly be locked down, authorities said.Police shut down the complex as they investigated the incident, and to ensure that all people there were authorized to be there. The incident happened shortly before 8 a.m., local time, witnesses said. The Capitol complex was reopened within the hour.
Hill staffers were briefly instructed to remain in their offices while police searched to ensure there were no other interlopers.
Construction workers and police said the man drove his SUV through a barricade at the Capitol, where a major visitors' center is under construction. His vehicle also crashed into a water fountain on the plaza in the middle of the construction area.
Witnesses said the man, wearing a blue ballcap, ran into the Capitol near the Rotunda and was pursued by police. A construction supervisor said the man was apprehended in a construction area on the third floor of the building.
In the summer of 1998, two Capitol Police officers were shot to death when a man with a history of mental illness opened fire in the building. The man was wounded and captured.

TITLE: Five College Basketball Stars Shot in Mystifying Attack
PUBLISHER: The Associated Press
TEXT: PITTSBURGH, Pennsylvania — More than 300 students gathered at a Mass following the shooting of five basketball players, trying to understand how the violence could have come to their tranquil, close-knit campus."We're shocked because an event of this sort has never happened," Duquesne President Charles Dougherty said. "It's a safe campus and known to be a safe campus."
Police searched for the gunman, and the downtown school stepped up its round-the-clock police protection with armed university police officers guarding dormitories and other buildings.
Two players had been walking near a dormitory when they met a man who apparently had been disruptive at a student union dance, authorities said. The players attempted to pacify him and walked away but were shot. Players who rushed to their aid were also shot.
In critical condition was forward Sam Ashaolu of Toronto, a transfer from Lake Region State College and a cousin of former Houston Rockets star Hakeem Olajuwon. In serious condition was Stuard Baldonado of Colombia, a transfer from Miami Dade College who was considered the school's best recruit.
Taken to another hospital was Kojo Mensah, a guard from New York City who averaged nearly 17 points last season at Siena College before transferring, authorities said. His condition was not released.
Treated and released were Shawn James of New York City, the nation's leading shot blocker last season at Northeastern University before he transferred to Duquesne; and Aaron Jackson of Hartford, Connecticut, a guard who is one of only two returning players from Duquesne's 3-24 team last season.
James, an NBA prospect expected to be Duquesne's top player when he becomes eligible in the 2007-08 season, was shot in the foot but no bones were broken. Mensah was believed shot in the shoulder. Jackson was shot in the hand.
Crisis counselors were available for students, the university posted a letter from Dougherty on its Web site and was fielding phone calls from parents, spokeswoman Bridget Fare said. Officials will decide Monday whether to set up a specific phone line for parents seeking information, she said.
Duquesne coach Ron Everhart, formerly at Northeastern, had rebuilt the school's program after being hired in March by bringing in 10 recruits — one of the most sweeping upheavals of any Division I program in recent years.
Dougherty said several witnesses saw the gunman leave campus after a half-dozen to a dozen shots were fired. He said witnesses reported seeing two guns — the second on someone in a group with the gunman — but he couldn't confirm whether both were fired.
Dougherty, who said the gunman and the others with him were not students, said he did not know what sparked the violence.
"What motive can there be for unloading a pistol into a group of students?" Dougherty said.
At the Mass, the Reverend Raymond French, director of campus ministry, asked students to pray "for courage in these difficult days." The Reverend Timothy Hickey reminded students they are part of a community.

TITLE: Chelsea, Arsenal Win in Clash of Titans
AUTHOR: By Trevor Huggins
PUBLISHER: Reuters
TEXT: LONDON — A superb strike by Didier Drogba earned 10-man champions Chelsea a 1-0 victory over Liverpool, while Arsenal shattered Manchester United's 100 percent record with a late 1-0 win at Old Trafford on Sunday.Chelsea, which had Germany midfielder Michael Ballack dismissed for stamping after 51 minutes, ground out their win after Drogba swivelled and struck an unstoppable shot from the edge of the area just before halftime at Stamford Bridge.
The day's other showcase game was decided in the 85th minute of a pulsating encounter when Arsenal's Togo striker Emmanuel Adebayor steered the ball home off a defence-splitting pass by Spain midfielder Cesc Fabregas.
United had won all four of its previous league games, while Arsenal, which missed an early penalty taken by Gilberto, kick-started its campaign with a first win of the season.
Blackburn Rovers beat Manchester City 4-2, Tottenham Hotspur was held 0-0 at home by Fulham and Glenn Roeder's Newcastle United was a 2-0 winner over his former club West Ham United in the day's other games. The weekend's action left Harry Redknapp's Portsmouth as unlikely Premier League leader with 13 points, one clear of both Manchester United and Chelsea, which are third on goal difference.
Though there was only one goal at Stamford Bridge, Ivory Coast striker Drogba's effort will be an early candidate for goal of the season.
Drogba, on the edge of the area, collected a Frank Lampard pass with his back to goal and turned round to smash a blistering half-volley past Liverpool keeper Jose Reina four minutes before halftime. The match began to swing Liverpool's way soon after the re-start when Ballack brought his boot down on the thigh of Liverpool's Mali international midfielder Momo Sissoko.
But despite the red card for Germany's World Cup captain, playing only his fifth game since a close season move from Bayern Munich, Chelsea stuck to its task.
Penalty appeals were waved away at both ends, while Liverpool skipper Steven Gerrard missed a golden opportunity to equalize, drilling the ball straight at keeper Petr Cech from close range.
"It was a fantastic goal, a fantastic victory, incredible spirit and unbelievable desire," Chelsea coach Jose Mourinho told Sky Sports News. "For the spirit I think we deserved the three points." Liverpool coach Rafael Benitez, whose team are 15th with only four points from four games, told his club's website: "It's clear that we need more points, but it's only the beginning of the season and it's a long race.
"We need to get going."
There was no waiting around in Manchester, where Polish keeper Tomasz Kuszczak made a memorable debut by tripping Adebayor in the area after 10 minutes but then saving the resulting penalty. Gilberto, wearing the captain's armband, slipped as he struck the spot-kick and his team were no luckier a minute later when a goal-line clearance by Paul Scholes denied William Gallas a simple tap-in.
Arsenal, without injured Thierry Henry, had squandered several scoring chances before Adebayor stole in to prod Fabregas's inviting through-ball beneath the advancing Kuszczak.
The strike moved Arsenal from 17th before the weekend to 10th place and will give Arsene Wenger's side a much-needed lift.
Wenger told Sky Sports News: "This team has big potential, and a great spirit — they've shown that again today. I strongly believe in the quality of the players."
United manager Alex Ferguson said: "In the second half, we looked tired. You can't deny Arsenal deserved to win the match...in the last 25 minutes they were stronger."

TITLE: JFK's Sister, Hollywood Wife, Dies Aged 82
AUTHOR: By Mark Pratt
PUBLISHER: The Associated Press
TEXT: BOSTON, Massachusetts — Patricia Kennedy Lawford, the sister of President Kennedy who forged a marriage between politics and Hollywood with her wedding to actor Peter Lawford, has died in her New York home. She was 82.Lawford died Sunday of complications from pneumonia, said a spokeswoman for Senator Edward M. Kennedy.
"My sister Pat is irreplaceable," Kennedy said in a statement. "Everyone who knew Pat adored her. She was admired for her great style, for her love and support of the arts, her wit and generosity — and for the singular sense of wonder and joy she brought into our lives."
In his 2005 best-seller, "Symptoms of Withdrawal," her actor son, Christopher Lawford, wrote of his mother that "her lightheartedness and vibrancy made her my grandfather's favorite." But he said she also felt resentment toward her father "at not being allowed fully to live up to her potential."
She met the handsome British-born actor Peter Lawford through her brother, the future president, in 1949. They were married in 1954 and had four children.
Lawford is best known for roles in such musicals as "Easter Parade" (1948) and "Royal Wedding" (1951), both with Fred Astaire, the 1954 Judy Holliday comedy, "It Should Happen to You," and "Exodus" (1960), with Paul Newman.
In the late '50s and early '60s, he was a member of Frank Sinatra's circle of friends dubbed the Rat Pack, appearing in the original version of "Ocean's Eleven" in 1960. It was a link that brought a touch of Hollywood glamour to Senator Kennedy's presidential campaign that year.
But as chronicled in many books on the family, including her son's book, the Lawford-Kennedy marriage was troubled and ended in a bitter divorce in 1965.
Patricia Kennedy was the sixth child and fourth daughter among Rose and Joseph Kennedy's nine children.
While always a tireless supporter of her brother's political campaigns, she was inspired by her father's career in the movie industry and set her sights on Hollywood at a young age soon after her graduation from Rosemont College.
She began working as an assistant in NBC's New York production department and then moved to Los Angeles with the goal of becoming a producer and director. She worked as an assistant for Kate Smith's radio program, and for Father Peyton's Family Theater and Family Rosary Crusade, according to the web site for the John F. Kennedy Library and Museum.
Patricia Lawford traveled the country in support of her brother's presidential campaign in 1960 and was involved in the political campaigns of brothers Robert and Edward.
After her divorce, she moved to New York City, where she became a supporter of the city's arts scene. She founded the National Committee for the Literary Arts and worked with the National Center on Addiction and the Kennedy Library.
"Throughout her life, Pat was constantly inspiring and helping others," the family statement said. "Whether it was campaigning for her brothers, or championing literacy and the arts, her purest gift was her beautiful heart."
Besides her son and brother, Lawford is survived by daughters Sydney, Victoria and Robin; 10 grandchildren; and sisters Eunice Kennedy Shriver and Jean Kennedy Smith. Memorial and funeral arrangements were pending.

TITLE: Metallurg Moves Against Malkin
PUBLISHER: The Associated Press
TEXT: PITTSBURGH — A Russian arbitration panel ruled Pittsburgh Penguins rookie Evgeni Malkin violated his contract by leaving his Russian pro team to play in the NHL.The ruling issued Friday appears to be meaningless unless Malkin's former team, Metallurg Magnitogorsk, can find a U.S. court to uphold the decision. The Russian Super League club also could sue the NHL or the Penguins.
Malkin, who was not represented at the Russian Ice Hockey Federation arbitration hearing, has one week to appeal the ruling to Russia's arbitration court for sports.
Neither the Penguins nor the NHL would comment on the arbitration panel ruling. Malkin declined to talk about it.
Malkin, 20, who starred for Russia during the Turin Olympics in February, said he was pressured into signing a one-year contract with Magnitogorsk this summer despite his avowed intention to play in the NHL. The forward was the No. 2 pick in the June 2004 NHL draft by Pittsburgh.
Days after agreeing to the Magnitogorsk deal, Malkin skipped out on the team when it arrived in Finland for training camp last month and turned up a few days later in Los Angeles. He worked out there for several weeks before arriving in Pittsburgh for training camp nearly two weeks ago.
Malkin's agents, J.P. Barry and Pat Brisson, contend the forward followed Russian law by giving two weeks notice and resigning from his job. The NHL has allowed teams to sign players who exercise this legal option.
Because Malkin left Russia and is in the Penguins' camp, Magnitogorsk team officials have said they are resigned to losing him, but they apparently want to be compensated.
The NHL and the Russian hockey federation have been unable to reach a transfer agreement that would pay Russian teams when their players leave for the NHL.
The transfer agreement between the NHL and Europe's hockey federations calls for teams to receive $200,000 when they lose a player. Magnitogorsk argues Malkin's rights are worth at least 10 times that much.
The Penguins, Malkin's agents and the NHL are awaiting Magnitogorsk's next legal move.
The Russian team could ask a U.S. court to uphold the arbitration panel ruling or sue either the Penguins, the NHL or both for compensation.
Magnitogorsk has hired New York-based lawyer Alexander Berkovich to handle its case.

TITLE: Bush Sets Out Middle East Vision at UN
AUTHOR: By Nedra Pickler
PUBLISHER: The Associated Press
TEXT: WASHINGTON — The spotlight returns to Iraq and other problem areas of the Middle East as President Bush heads to the United Nations to address a host of global issues facing his administration.The president's three-day trip includes bilateral meetings with six foreign leaders, including the presidents of Iraq and the Palestinian Authority, and a speech to the UN General Assembly that will focus on the Middle East.
The three days of diplomacy come as the president prepares for a busy political schedule. Bush, who lately has been trying to turn the election-year debate away from the unpopular war in Iraq and toward a broader war on terrorism, plans to spend much of the next seven weeks campaigning for fellow Republicans.
And he isn't leaving politics behind while he's in New York: Monday night he headlines a fundraiser for the Republican National Committee at the Manhattan home of billionaire financier Henry Kravis.
At the United Nations, Bush will try to highlight his goal of spreading democracy. To that end, Bush was to spend his first day meeting with leaders of Malaysia, a democracy with a moderate Islamic government; El Salvador and Honduras, two Central American nations that have moved from military dictatorships to democracies; and the African democracy of Tanzania.
More closely watched will be meetings Tuesday and Wednesday, beginning with French President Jacques Chirac, the only other member of the coalition of nations working with the U.S. to stop Iran's nuclear ambitions.
Iran has accelerated its nuclear program and defied UN demands, and the U.S. had hoped to have a resolution to apply sanctions on the government by this week's meeting. Administration officials say they don't expect Bush to deliver a breakthrough with other leaders absent, but sanctions should come soon.
Iranian President Mahmoud Ahmadinejad also planned to be at the UN, but last week Bush ruled out any discussions with him until Iran suspends nuclear enrichment. Bush's aides said lower-level officials also will not make any contacts with the Iranians.
On Tuesday afternoon, Bush is scheduled to meet with Iraqi President Jalal Talabani to discuss Iraq's progress toward democracy amid continuing violence. Nearly 200 people have been killed in attacks or tortured and dumped in rivers and on Baghdad streets since Wednesday, and politicians are arguing over a proposal to transform Iraq into a federate state.
Bush said last week that he was disappointed the number of U.S. troops in Iraq was climbing rather than falling. He said hopes for troop withdrawals were dashed by violence in Baghdad.
Polls show the war is unpopular among Americans, and Republicans worry it could cost them votes in November's elections. Bush has been trying to shift the focus to the broader war on terror in recent weeks, introducing legislation that has sparked debate on Capitol Hill about how to treat terrorism suspects.
Before he heads back to Washington on Wednesday, Bush plans to meet with Palestinian President Mahmoud Abbas, who is struggling to get the militant Hamas to soften its anti-Israel ideology. The U.S. and other nations have halted aid to the Palestinian government until Hamas agrees to renounce violence, recognize Israel and accept past peace agreements. Hamas caved in to pressure last week and announced it would form a coalition government with Abbas' more moderate Fatah Party.

TITLE: Kuznetsova Wins Third Bali Trophy
PUBLISHER: Reuters
TEXT: DENPASAR, Indonesia — St. Petersburg tennis ace Svetlana Kuznetsova won her second title of the season Sunday when she defeated Marion Bartoli of France 7-5 6-2 to win her third Bali International title.The top-seeded Russian, who won in 2002 and 2004, is undefeated in 13 matches at the event. Kuznetsova, who won in Miami in March and finished as runner-up at the French Open and at Warsaw, withstood an aggressive performance from her sixth-seeded opponent, matching her in the fiercely contested rallies.
Bartoli, who injured her left arm in the warm-up, showed no ill effects as she held a break point in the opening game. Kuznetsova, though, held and broke in the next game to lead 2-0. But she promptly dropped the next 10 points, tamely conceding her serve with a double-fault.
Games in the baseline battle then went with serve, with Kuznetsova failing to convert two set points on Bartoli's serve at 5-4, surviving a break point at 5-5 with an ace, but then breaking for the set when Bartoli double-faulted.
Kuznetsova struggled to hold serve to begin the second set, fighting off a break point before holding on to her fifth game point, but she closed out her next service game with consecutive aces.
An easy putaway at the net earned her a 3-1 lead, and although Bartoli broke Kuznetsova to love — the Russian hitting her ninth double-fault on break point — Kuznetsova in turn broke Bartoli to love to lead 4-2. Kuznetsova's 10th ace gave her a 5-2 lead as Bartoli, who suffered from cramps in her semifinal win over Patty Schnyder, flexed her left leg, and a further break gave her the title.

TITLE: Sudan Under Pressure Over Darfur Crisis
PUBLISHER: Combined Reports
TEXT: Sudan was expected to agree to an extended African Union peacekeeping mandate in Darfur as African foreign ministers met in New York on Monday, a presidential adviser said.Sudanese President Omar Hassan al-Bashir is under pressure to accept UN peacekeepers in war-torn Darfur when the AU mandate in western Sudan expires on Sept. 30.
Britain's Guardian newspaper quoted presidential adviser Ghazi Salahuddin Atabani as saying Sudan may allow AU troops to remain in Darfur past the deadline with more help from the West.
"It is likely we will arrive at an extension of the African Union mandate when the ministers meet in New York. There seems to be a common interest. It will give time for all sides to find a way out of this," Atabani said.
Atabani said Sudan wanted to explore what it called "African Union Plus," whereby AU peacekeepers remain in Darfur but get help in the form of helicopters and surveillance technology from Western states.
The 7,000 under-funded and badly equipped AU troops have failed to stop the violence that has killed an estimated 200,000 people and created one of the world's worst humanitarian crises.
The United Nations wants to take control of the mission with 20,000 UN peacekeepers who would more aggressively enforce the oft-violated ceasefire in the region.
But Bashir, as recently as Saturday, said under no circumstances would he allow the UN troops into Darfur.
UN Secretary-General Kofi Annan warned last week of "yet more death and suffering, perhaps on a catastrophic scale" if the government in Khartoum does not allow international peacekeepers into the region.
On Sunday, thousands of people rallied in New York demanding Sudan allow the deployment of UN peacekeeping troops to stop the bloody civil war in Darfur.
The event was part of a worldwide day of protest, with meetings and rallies held in nearly 50 cities across the globe.
The Global Day for Darfur was organized to coincide with the start of the United Nations General Assembly debate this week and to mark the first anniversary of the signing of the 2005 UN World Summit Outcome Document.
According to the Save Darfur Coalition, which organized the New York rally, more than 30,000 people took part.
"We are very excited about the people that turned out here and everywhere in the world for this important cause. The world cares about Darfur," the group's spokesman, Jeff Kovick, said.
The rally brought together musicians, celebrities, activists and religious leaders, among others, to call for "immediate and clear action" to end the "ongoing genocide" in Darfur. Madeleine Albright, former U.S. secretary of state, was among the speakers.

(Reuters, AFP)

TITLE: Merkel Given Wake-Up Call by German Far-Right
PUBLISHER: Reuters
TEXT: SCHWERIN, Germany — A far-right anti-foreigner party has embarrassed German Chancellor Angela Merkel in a regional election in her home state and delivered a wake-up call to her 10-month-old government.The government has compared the National Democratic Party (NPD) to Hitler's Nazis, and analysts and columnists said the NPD's performance in Sunday's ballot was a rebuke for the grand coalition's fumbled first year.
The NPD polled 7.3 percent in Mecklenburg-Vorpommern, Germany's poorest state on the Baltic near Poland, claiming six seats in the 71-seat state parliament.
"In view of German history this is a disaster," said Christian Wulff, conservative state premier in neighboring Lower Saxony, referring to the country's Nazi past.
Several leading newspapers said the NPD's performance in a state that relies heavily on tourism was a clear warning to Merkel, whose right-left coalition took power in November and has yet to deliver on some of its promised reforms.
The state, suffering from a shrinking population and a jobless rate near 20 percent, is the third in the ex-communist east to vote the far right into parliament, joining Brandenburg and Saxony.
The far right was in Saxony-Anhalt from 1998-2002.
"Wake Up Grand Coalition!" wrote Bild columnist Rolf Kleine.

TITLE: Torpedo Coach Quits After Loss
PUBLISHER: Reuters
TEXT: MOSCOW — Sergei Petrenko has quit as coach of Torpedo Moscow, the Russian premier league side said on Sunday.Petrenko announced his resignation following Saturday's 2-0 home defeat by Rostov, which plunged the struggling Torpedo side further into the relegation zone. They remained second from bottom with 15 points from 20 matches.
It was the second resignation in Russia's top flight within a week. Oleg Dolmatov left fellow strugglers Shinnik Yaroslavl five days ago.
Petrenko had been one of the longest serving managers in the premier league after taking charge of Torpedo in July 2002.
The once mighty club, which was a part of the famous ZIL car factory winning three league titles and six cup trophies during the Soviet era, has struggled in recent years.
Torpedo owner Vladimir Alyoshin has been trying to sell the club to several prospective buyers, including Chelsea's billionaire owner Roman Abramovich.

TITLE: Social Democrats Ejected By Swedes in Historic Election
PUBLISHER: Reuters
TEXT: STOCKHOLM — Center-right leader Fredrik Reinfeldt starts work on forming a coalition government in Sweden on Monday after ending 12 years of Social Democrat rule with vows to cut taxes and trim the welfare state.Reinfeldt, 41, will become prime minister after leading a four-party alliance to what he called an historic election victory on Sunday. He said it created "a new Sweden" that broke the Social Democrats' long domination of Swedish politics.
Reinfeldt will take over from Social Democrat Goran Persson, 57, who oversaw strong economic growth in 10 years as prime minister but failed to overcome voter fatigue and accusations that he had lost touch with ordinary people.
"The alliance has redrawn the map," liberal newspaper Dagens Nyheter said.
Aftonbladet, the biggest selling daily, added: "Sweden is today waking up to a new political landscape."
The coalition was due to start discussions on the distribution of government portfolios on Monday although the cabinet will not be presented to parliament until Oct. 6.
Sweden's strong economy is likely to give him leeway for the reforms he wants to carry out. He has vowed to make the welfare state more work friendly by cutting benefits that decrease the incentive to get a job, and reduce taxes that make it less profitable to work.
The four-party bloc led by Reinfeldt's Moderate Party won 48.1 percent of votes on Sunday against 46.2 percent for Persson and his allies.
Reinfeldt and his partners in the Folk Liberal Party, the Center Party and the Christian Democrats have 178 seats in the 349-seat parliament, a slim majority of seven seats.
It was the first time in 25 years the center-right had won a majority and the best performance by the Moderates since 1928.
The Swedish crown firmed in early trade to 9.18 to the euro from 9.21 on Friday, while shares in companies where the center-right has vowed to sell stakes rose on the bourse.
The vote for Reinfeldt is not seen as a rejection by people of the "Swedish Model" of a strong welfare state with a dose of capitalism, rather an acceptance that it needs to be fine tuned.
Reinfeldt has said there are many good things in the Swedish model, but that a mesh of benefits has sapped the will to work. He puts the real level of unemployment at 20 percent, almost four times the official rate, despite economic growth of 5.5 percent in the second quarter, its fastest for six years.

TITLE: Yuzhny:'I Can Beat Roddick in Moscow'
AUTHOR: By Gennady Fyodorov
PUBLISHER: Reuters
TEXT: MOSCOW — Mikhail Yuzhny hopes to teach Andy Roddick a lesson in clay court tennis when Russia hosts the United States in the Davis Cup semi-final this week in Moscow.Yuzhny said he would love to avenge his defeat to the big-serving American in the U.S. Open semi-finals earlier this month.
"Hopefully, if we meet again the outcome would be totally different," the Russian said in an interview ahead of the three-day tie on clay at the Olympic Sports Complex.
"It will be a totally different match, having little resemblance to our last meeting.
"It was on his terms as it was played on a hard court in New York, now we're going to meet on clay and in Moscow."
Yuzhny said he felt tired playing in his first career Grand Slam semi-final against Roddick following his shock win over world No. 2 Rafael Nadal in the quarter-finals to pull off another upset victory.
"I wasn't fresh enough in the third and fourth sets," he said of his 6-7 6-0 7-6 6-3 defeat.
"Roddick was getting a lot of free points off his serve while I had to work very hard for every point. That was the difference."
Russia's Davis Cup captain Shamil Tarpishchev said Yuzhny had a lot more variety to his game than Roddick.
"He is a smart player, he uses his head to construct a rally, to win a point," Tarpishchev said.
"He can hit every shot in the book, he can slice it, spin it, forehand, backhand, you name it."
Yuzhny said playing on a slower surface should give him the edge. "Obviously, serve is Roddick's biggest weapon but it's not as effective on clay as, say, on grass or hard courts," he said.
"Hopefully, the atmosphere will also be different with the home crowd on our side. Besides, Davis Cup matches are totally different to all others, even to a Grand Slam."
Yuzhny has been regarded as a national hero ever since he won an epic fifth rubber against France's Paul-Henri Mathieu in the 2002 Davis Cup final in Paris, coming back from two sets down to clinch Russia's first title.
"That was a long time ago, so I try not to dwell on that achievement," the 24-year-old said. "I try to look ahead to hopefully having many more great matches for me in the future."
Many in the Russian media have predicted an easy victory for the home side, but Yuzhny warned against overconfidence.
"Some say Roddick is hugely over-rated, that he has only a big serve, but I regard him as one of the top players," Youzhny said. "It's true that in the past he could not win anywhere else but in the U.S., but he has matured a lot in recent years.
"He has also improved his baseline play, his backhand has got better too, so he is a complete player now. He is a former world No. 1 and you don't become No. 1 for nothing."
Russia also named world No. 5 Nikolai Davydenko, former world No. 1 Marat Safin and Dmitry Tursunov in their squad while the Americans, in addition to Roddick, will rely on eighth-ranked James Blake and twin brothers Bob and Mike Bryan.

TITLE: Al Qaida Declares War on Pope
PUBLISHER: Reuters
TEXT: VATICAN CITY — Al Qaida militants in Iraq vowed war on "worshippers of the cross" and protesters burned a papal effigy on Monday over Pope Benedict's comments on Islam, while Western churchmen and statesmen tried to calm passions.The statement by an umbrella group led by Iraq's branch of al Qaida came after the Pontiff said on Sunday he was deeply sorry Muslims had been offended by his use of a medieval quotation on Islam and holy war.
"We tell the worshipper of the cross [the Pope] that you and the West will be defeated, as is the case in Iraq, Afghanistan, Chechnya," said a web statement by the Mujahideen Shura Council.
"We shall break the cross and spill the wine ... God will [help] Muslims to conquer Rome ... [May] God enable us to slit their throats, and make their money and descendants the bounty of the mujahideen," said the statement, posted on Sunday on an Internet site often used by al Qaida and other militant groups.
In Iraq's southern city of Basra, up to 150 demonstrators chanted slogans and burned a white effigy of the Pope.
"No to aggression!," "We gagged the Pope!," they chanted in front of the governor's office in the Shi'ite city. The protesters also burned German, U.S., and Israeli flags.
A speech by Pope Benedict last Tuesday was seen as portraying Islam as a religion tainted by violence, causing dismay among Muslim states where some religious leaders called it the start of a new Christian crusade against Islam.
The Vatican has instructed its envoys in Muslim countries to explain Pope Benedict's words on Islam.
Benedict's new Secretary of State, Cardinal Tarcisio Bertone, said the Holy See's nuncios (ambassadors) in Muslim countries would be visiting government and religious leaders.
French President Jacques Chirac refused on Monday to criticize the 79-year-old Pontiff, but called for a more diplomatic use of language.
"It is not my role or my intention to comment on the Pope's statements. I simply want to say, on a general level ... that we must avoid anything that excites tensions between peoples or between religions," Chirac said on Europe 1 radio.
"We must avoid making any link between Islam, which is a great, respected and respectable religion, and radical Islamism, which is a totally different activity and one of a political nature," Chirac added.
The head of the world's Anglican church, Archbishop of Canterbury Rowan Williams, defended Benedict.
"The Pope has already issued an apology and I think his views on this need to be judged against his entire record, where he has spoken very positively about dialogue," said Williams, the spiritual leader of 77 million Anglicans worldwide.
Williams told the BBC that all faiths could be distorted, and the Pope was simply giving an example of that.
"There are elements in Islam that can be used to justify violence, just as there are in Christianity and Judaism."
In Iran, a government spokesman said on Monday, Pope Benedict's regret was a "good gesture" but not enough.
The Pope had referred to criticism of the Prophet Mohammad by 14th century Byzantine Emperor Manuel II Palaeologus, who said everything the Prophet brought was evil "such as his command to spread by the sword the faith he preached."
The Pope, head of the world's 1.1 billion Roman Catholics, said the quotation did not represent his personal views, but failed to satisfy some Islamic groups seeking a full apology.
In Somalia, an Italian nun was killed on Sunday in an attack one Islamist source said could be linked to the dispute.
A Vatican spokesman hoped the killing was "an isolated event."
About 100 Indonesian Muslims protested peacefully over the Pope's remarks outside the Vatican embassy in Jakarta on Monday.