SOURCE: The St. Petersburg Times
DATE: Issue #1233 (99), Tuesday, December 26, 2006
**************************************************************************


TITLE: Fed Judges Inspect New HQ
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Amid continued debate about the fate of the Constitutional Court, a large group of the court’s judges was taken on a tour of St. Petersburg on Saturday to familiarize themselves with their future headquarters in the historic buildings of the Senate and Synod.
Yury Sharandin, head of the Constitutional Legislation Committee of the Federation Council said Monday the committee will recommend rejecting the law on the relocation of the Constitutional Court from Moscow to St. Petersburg. In Sharandin’s opinion, the transfer conditions stipulated by the law, are illegitimate and unacceptable.
The main obstacle is the controversial amendment that enables the Constitutional Court to hold an unlimited number of its sessions in cities other than St. Petersburg. The amendment had been approved by the State Duma during the law’s second hearing on Dec. 15 but subsequently turned down at the third, final hearing on Wednesday.
Vatanyar Yagya, a United Russia lawmaker at the St. Petersburg Legislative Assembly, said the maneuvers around the relocation illustrate that that stakes are high. 
“The issue here is that the transfer is set to become the first step in Moscow relieving itself of some of its federal duties — for the benefit of other towns and the country in general. Moscow’s readiness and willingness to share is being tested now.”
The buildings of the Senate and Synod, designed by the Russo-Italian architect Carlo Rossi and located at 1-3 Ploshchad Dekabristov, date back to 1829-1836.
Local real estate experts estimate that the complete renovation of a historic building of this rank would cost up to $2,000 per square meter. According to Kozhin, the court’s relocation will take 18 months to complete with a 221 million rubles ($7.95 million) price tag.
As terms of the move are still being negotiated, construction is in full swing on Krestovsky Island, where brand-new elite mansions and cottages are being erected to accommodate the court’s judges and other staff.
Sharandin also criticized an amendment passed by the Duma that allows the court to open a branch in Moscow.
“It does not take an amendent to give the court the right to create branches,” he said. “The Constitutional Court already has an indisputable right to create as many branches as it needs, and these issues are decided at a session by the judges themselves, not by the parliament.”
During the excursion to the buildings of the Senate and Synod on Saturday, the officials were in high spirits.
“Even though the buildings are in an obvious need of massive renovations, they are splendid,” said presidential property manager Vladimir Kozhin.
Valery Zorkin, chairman of the Constitutional Court, spoke about the imposing headquarters with fascination.
“Having been to a number of foreign courts, including the finest Western European Palaces of Justice this is undoubtedly one of the grandest Palaces of Justice in the world,” Zorkin said. 
However gorgeous the exteriors may be, the relocation itself — in its suggested form — is still perceived by many critics, including Zorkin himself, as a step that undermines the independence of the court.
“The parliament cannot dictate to the court where to hold its sessions,” Zorkin said. “This is a direct intervention.”
Sharandin supports this point of view. 
“The law in its present shape diminishes the court’s rights and therefore contradicts the Russian Constitution, which declares the independence of the courts in the country.”
The law is due to be revised by the Federation Council later this week and subsequently signed — or rejected — by President Vladimir Putin.

TITLE: Lavrov Hails UN Sanctions
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia’s foreign minister on Monday hailed the UN Security Council’s resolution that imposed sanctions on Iran as a reasonable compromise that wouldn’t hurt Moscow’s commercial contacts with Tehran. 
Sergei Lavrov said the resolution approved unanimously over the weekend was also a compromise that would allow diplomatic efforts to continue.
“The resolution fully reflects economic interests of Russia and other partners of Iran,” Lavrov said at a Cabinet session chaired by President Vladimir Putin, according to the ITAR-Tass, Interfax and RIA Novosti news agencies.
He emphasized that the resolution allowed the fulfillment of all contracts signed prior to its passage. Russia is building a nuclear power plant in the Iranian port of Bushehr, which is set to come on line next fall. Russia demanded that both the plant and the nuclear fuel intended for it be exempt from sanctions.
The resolution orders all countries to stop supplying Iran with materials and technology that could contribute to its nuclear and missile programs. It also freezes assets of related Iranian companies and individuals.
The U.S. administration had pushed for tougher penalties, but Russia and China, which both have strong commercial ties to Tehran, balked. To get their votes, the resolution dropped a ban on international travel by Iranian officials involved in nuclear and missile development and specified the banned items and technologies. 
Iran insists its nuclear program is aimed solely at the peaceful production of nuclear energy, but the U.S. and European nations suspect that it serves as a cover to produce nuclear weapons.
Meanwhile in Baghdad, Iraq, U.S. troops detained two Iranians who were in Iraq at the invitation of Iraqi President Jalal Talabani, a presidential spokesman said Monday. 
The detentions come as the Iranian president, Mahmoud Ahmadinejad, tries to expand Iran’s role in Iraq as a counter to U.S. influence in the Gulf region, and as the Bush administration has resisted pressure for a diplomatic push that would involve all of Iraq’s neighbors — including Iran and Syria.
The New York Times reported Monday that U.S. forces were holding four Iranians, including some seized at the compound of Abdul-Aziz al-Hakim, the leader of the largest Shiite bloc in Iraq’s parliament, who met with President Bush earlier this month at the White House. The Times said U.S. forces also stopped an Iranian embassy car last week and detained two Iranian diplomats, their Iranian guards and an Iraqi driver. The diplomats were later released by Iraq, it said.
“Two Iranians who are in Iraq at the invitation of the president have been apprehended by the Americans,” said Hiwa Osman, Talabani’s media adviser. “The president is unhappy about it.”
Osman had no further details. The U.S. military said it had no comment.
The United States has accused Iran of supplying money, weapons components and training to Shiite militia in Iraq, as well as technology for roadside bombs, the biggest killer of American forces in Iraq. Iran says it only has political and religious links with Iraqi Shiites.
Late last month, Talabani visited Iran for two days of talks with government officials to seek their support in quelling the raging sectarian violence in Iraq. Iran, a Shiite Muslim country, has considerable influence among Iraq’s Shiite majority — elements of which have been blamed for the bulk of the recent attacks.
Talabani is a member of Iraq’s Kurdish minority, but he had close ties with Iranian officials before Saddam Hussein was overthrown by the U.S.-led invasion in 2003.

TITLE: The Spy Who Was Left in the Cold
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: When prosecutors went to search Boris Berezovsky’s Moscow mansion in 1995 to investigate the murder of an executive at state-controlled ORT television, a determined armed guard barred the door.
The guard was Alexander Litvinenko, then an officer in an FSB counter-terrorism unit. Litvinenko was protecting Berezovsky, who consolidated his hold over the channel after the executive, Vladislav Listyev, was shot to death.
“He said he would shoot if anyone tried to enter,” said former Prosecutor General Yury Skuratov, who later took over the case. “As a result, there was no real search.
“If there had been a search, I think we could have made real progress in this investigation.”
It was a key moment in the career of Litvinenko, the former agent whose death last month in London from radiation poisoning horrified the world and provoked fears of a new Cold War-style standoff between Russia and the West.
Many in the West see Litvinenko as a modern-day dissident standing up to the Kremlin. 
But before he fled to Britain in 2000, Litvinenko’s career was far from that of a political activist against a powerful regime.
In the tussle for power in the 1990s, he was by his own account a special agent who helped Berezovsky, then a powerful Kremlin insider who is now accused of looting the national airline, Aeroflot, and the country’s largest carmaker, AvtoVAZ.
Berezovsky denies the charges.
Litvinenko’s climb from a KGB informant to a mid-ranking officer in the Federal Security Service, the KGB’s successor agency, as he shielded Berezovsky, tells much of the tangled relationship between business, power and the secret services in the 1990s. After the Soviet Union collapsed, Berezovsky was among a handful of oligarchs who carved up the country’s wealth and took power for themselves.
But when another former KGB agent, Vladimir Putin, became president in 2000, he banished to jail or exile those oligarchs who challenged his rule and set about reasserting the might of the state.
Litvinenko’s tale tells much of the bitter rift that continues to rack the security services: a standoff between agents who helped Yeltsin-era oligarchs and those who blanched as the power of the state collapsed. Tellingly, when Putin became director of the FSB in 1998, he moved almost immediately against Litvinenko, jailing him for nine months on a slew of charges of abuse of authority.
Litvinenko’s death looks like an escalation of that conflict. To many in Russia, his excruciating death by poisoning with the radioactive isotope polonium-210 appears to be a plot by oligarchs exiled in the West to undermine Putin’s international image. Berezovsky has in recent years vowed to overthrow Putin’s regime.
Oppositionists, including Litvinenko himself, have accused elements within the security services, acting with or without Putin’s backing, of seeking revenge. The tension looks set to heighten further as the country heads toward the presidential election in early 2008.

‘KRYSHA FOR OLIGARCHS’
Litvinenko first met Berezovsky in 1994 when he was sent to investigate a car bombing in Moscow that nearly killed the oligarch.
Litvinenko’s continued association with Berezovsky — as he moved from counter-terrorism units tracking weapons smugglers to surveillance of major organized-crime rings — prompted allegations that he was little more than a bagman for Berezovsky.
“They didn’t catch anyone,” said Alexander Lebedev, a former foreign intelligence agent who is now a billionaire businessman and a State Duma deputy with United Russia. “They were just krysha [protection] for oligarchs,” he said of Litvinenko and other officers who worked in his unit.
Berezovsky refused to comment for this article.
When Litvinenko fled to Britain via Turkey in 2000, he was armed with a stack of inside information that he said showed a litany of crimes by the FSB. But even as he made the break for the West — and freedom from the clutches of his new bosses in the FSB — his subsequent disclosures raised questions about whether he had been part of those misdeeds too.
“The twilight we naively took to be dawn turned out in fact to be the beginning of a long cold night,” Litvinenko’s friend Alex Goldfarb wrote in the introduction to the book.
Goldfarb, who now runs the New York-based Foundation for Civil Liberties, a Berezovsky-backed group that doles out grants to Russian political activists, was a leading refusenik in the United States in the last days of the Soviet Union.
But other allies say Litvinenko’s revelations, which were made in a series of interviews in the book, made him a political dissident and whistleblower against the authorities. “He disclosed their criminal methods and he did this publicly. He was totally convinced that until that structure was destroyed or reformed, there could be no positive change in Russia,” said Chechen rebel envoy Akhmed Zakayev, who was Litvinenko’s neighbor and a close friend in London. “After Solzhenitsyn, he is the first person who had his books officially banned for disclosing state secrets.”
By Litvinenko’s own account, he was forced to form an alliance with Berezovsky to avoid carrying out orders that would have put him in breach of the law. “I never killed anyone. I did not kidnap. I was not in partnership with bandits,” he said in the book.
Indeed, by publishing the book, Litvinenko was following in the footsteps of his father, who he said was fired from his post as an Interior Ministry doctor after he exposed the conditions at a prison camp on Sakhalin Island. In a letter to Soviet leader Leonid Brezhnev, Walter Litvinenko said the conditions were little better than in Nazi concentration camps. His father went to live with his family in the North Caucasus town of Nalchik, in Kabardino-Balkaria, where Litvinenko was educated. After school, Litvinenko was sent to the army, and there the KGB recruited him to guard against theft among army units transporting arms abroad.
At that time, Litvinenko recalled, he did not think of the KGB’s history of political repression. “I was a young lieutenant. I was fighting against bandits. I didn’t even think of politics,” he said.

IN BEREZOVSKY’S CIRCLE
As the Soviet Union collapsed, Litvinenko continued to work in the security services. The KGB’s name was changed to the Federal Security Service and Litvinenko became part of an anti-terrorist unit. He hunted down weapons smugglers, took part in operations to free hostages in the Chechen town of Pervomaisk and questioned the wife of Chechen leader Dzhokar Dudayev.
But his most fateful assignment came before all that. In 1994, Litvinenko said, he was brought in to investigate an attempt on Berezovsky’s life, and the oligarch began questioning him about life in the FSB. Somehow, he said, he became a frequent visitor at Berezovsky’s mansion and was pulled into an eclectic circle of friends that included President Boris Yeltsin’s chief of staff Valentin Yumashev and his chief bodyguard, Alexander Korzhakov.
Even though Litvinenko only reached the rank of lieutenant colonel, he was nevertheless very useful to Berezovsky, former agents and law enforcement officers said. “Litvinenko was his guy in the FSB. This was his most loyal guy. He was ready to sacrifice his career for him,” Skuratov said. “Sometimes it’s better to have someone at mid-level than at the top. He was paid. I have no doubt of that.”
Litvinenko, however, denied he was on Berezovsky’s payroll. When he barred the doors to prosecutors during the Listyev investigation, Litvinenko claimed he was protecting Berezovsky against a provocation by security service clans that were trying to pin the murder on him. 
In 1997, Litvinenko was transferred to a unit charged with keeping an eye on major organized-crime figures. Later that year, he claimed, he was ordered to form Special Division No. 7, a unit that had been licensed to mete out punishments, and even to kill, without the sanction of a court. In later interviews, he never admitted to killing anyone himself, but he seemed to almost boast of the power his unit had wielded then.
“He owned up to doing some terrible things,” said James Heartfield, a researcher at London’s University of Westminster, who interviewed Litvinenko earlier this year. “He never implicated himself in killing. ... But he took a kind of pleasure in emphasizing his role: on how he would recruit killers and what was the technique.”
While Russian officials have denied that such a unit for “liquidations” existed, others interviewed for this article indicated such practices may have been used.
“The division he was in had special methods of its own,” Skuratov said, refusing, however, to say what those special methods entailed.
Alexei Kondaurov, a close friend of Litvinenko’s boss in the FSB, Yevgeny Khokholkov, also refused to discuss what Litvinenko’s unit did.
“That was a different era,” said Kondaurov, a former KGB general who went on to work as an adviser to now-jailed Yukos tycoon Mikhail Khodorkovsky.
Khokholkov could not be reached for comment.
Alexander Khinshtein, a United Russia deputy and journalist believed to be close to the security services, said it was Litvinenko and his associates who had asked to form the special division.
In November 1998, Litvinenko and his closest cohorts in the anti-organized crime unit went public with a spectacular claim. At a news conference, Litvinenko backed up a claim by Berezovsky that the FSB was plotting to kill him.
But now even some anti-Kremlin former secret service officers dispute that claim. “They were absolutely bluffing,” Kondaurov said. “No one at that time would think of attacking Berezovsky. He was far too powerful.”
Berezovsky, who was then executive secretary of the Commonwealth of Independent States, was considered the second- or third-most powerful person in the Kremlin.
Khinshtein claimed the Litvinenko news conference was a ploy to draw the media’s fire away from an attempt by Berezovsky to form his own “hit squad.”
But in the meantime, a backlash against all oligarchs was gradually mounting. Even though Berezovsky appeared to still enjoy good relations with Putin, one of Putin’s first acts as the new head of the FSB was to throw Litvinenko in jail.
Khinshtein said that, at the time, he had gathered compelling evidence against Litvinenko that showed he had beaten suspects and planted weapons on them. But Litvinenko always maintained that his arrest and subsequent jailing had nothing to do with those allegations. Every time he was questioned, investigators would openly criticize him for going public with the Berezovsky assassination claim, he asserted.

INVESTIGATIONS IN EXILE
By the time Litvinenko fled for Turkey in October 2000, he had thrown his lot in squarely with Berezovsky. He had little other option but to leave, friends said. His patron, after being questioned by prosecutors in Moscow a few days earlier, had already left the country.
Berezovsky had openly fallen out with Putin, whom he had helped to anoint as Yeltsin’s successor, and left the country as a criminal investigation into his business dealings mounted.
When Berezovsky called up Goldfarb with an urgent request — to use his experience in helping Soviet-era dissidents to help Litvinenko get from Turkey to the United States — Goldfarb responded immediately. He could not resist revisiting the thrill of his old dissident days, he said.
But matters turned out to be more complicated for Litvinenko than in the black-and-white days of the Soviet-era refuseniks Goldfarb had helped. U.S. Embassy officials in Ankara said they had little interest in annoying Russia by giving protection to an agent who had knowledge of organized crime but not of foreign espionage, Goldfarb said.
“They left us out in the cold, so to speak,” he said.
As a result, Litvinenko, his wife, Marina, and their son, Anatoly, flew with Goldfarb to Britain instead. Taking advantage of the lack of the need for a visa on transit flights, the Litvinenkos landed at Heathrow Airport and immediately requested political asylum, Goldfarb said. “We decided that instead of going to the spooks we would have to take the legal route,” he said. “The British intelligence services were not interested in this at all.”
In London, with the help of a grant from Goldfarb’s institute, Litvinenko played a key role in the group of emigre oppositionists clustered around Berezovsky who waged a public campaign against Putin’s regime. In a book written with historian Yury Felshtinsky, called “Blowing Up Russia: Terror From Within,” Litvinenko accused the FSB of being behind a series of apartment bombings in Moscow and Vologodonsk in September 1999 that killed 246 people. The resulting outrage at the attacks, officially blamed on Chechen rebels, helped to propel Putin into the presidency as he launched a second war in Chechnya.
A commission to investigate the bombings was set up in Russia with the help of funding from Berezovsky. But the probe was wound down after two of its leaders died. First, liberal Duma Deputy Sergei Yushenkov was shot dead on a Moscow street in April 2003. Then, crusading Duma deputy Yury Shchekochikhin died two months later after suffering a mysterious allergic reaction.
While Litvinenko’s work on the apartment bombings won him widespread credibility in the West, despite resounding official denials from Moscow, his later claims of corruption seemed less well researched.
“He could not have gotten any decent information in London. His game had long been played out,” Kondaurov said.
But as Litvinenko continued to make claims against the Putin administration, Berezovsky continued to fund him.
The grant Litvinenko received was enough to buy him a modest apartment in the middle-class suburb of Muswell Hill, north London, where he and his family lived across the road from Zakayev, the Chechen rebel envoy, who had also been a recipient of a Goldfarb grant. Litvinenko’s grant “was a substantial amount of money to maintain a family for a couple of years,” Goldfarb said. 
But as the grant money dwindled, Litvinenko began to seek other sources of income. He sought business from Western information-gathering agencies like Erinys, a security agency specializing in sending guards to Iraq. He visited the London offices of Erinys on Nov. 1, the day he fell ill.
Erinys officials declined to comment for this article.
“When he started in business of his own, he made more money than he ever did when he was working for Berezovsky,” said Yury Shvets, a former KGB Washington station chief who defected to the United States in the early 1990s. Shvets said by telephone that he had recently helped Litvinenko draft business proposals.
One of those proposals, Shvets said, could have landed Litvinenko in hot water. In an interview broadcast on the BBC’s Radio 4 on Saturday, Shvets claimed that Litvinenko had been killed because of an eight-page dossier he had compiled on a “very highly placed member of Putin’s administration” as part of a due diligence report for a British company considering a multimillion-dollar investment in Russia.
Shvets said Litvinenko had shown the report to Andrei Lugovoi, a former Berezovsky security officer, as an example of how due diligence reports should be written, mistakenly trusting him as a friend — a move that triggered his killing, he said.
Lugovoi was one of two former FSB officers who met with Litvinenko on Nov. 1, and he has denied any involvement in the death.
Yet, even Shvets said that sometimes Litvinenko “had difficulty distinguishing fact from fiction.”
Others said they doubted the veracity of many of Litvinenko’s claims.
One of Litvinenko’s last accusations was that the Putin administration was behind the Oct. 7 killing of crusading journalist Anna Politkovskaya. Proof of this, Litvinenko told an audience at the Frontline press club in London on Oct. 19, were threats from the Kremlin that he said were passed on to Politkovskaya by Irina Khakamada, a former liberal presidential candidate, following Kremlin meetings. Khakamada, however, dismissed Litvinenko’s claims as “absurd.”
Far more likely, according to some of Litvinenko’s friends and associates, was that he had stumbled into a spider’s web of oligarchs, organized crime and Kremlin agents.
“This is a continuation of the Cold War, but there’s a big difference,” Goldfarb said. “No. 1 is that back in those days, nothing could happen without the explicit permission of the Politburo. Today, that has fractured, so you can come up with many different scenarios.”

TITLE: Commission Files Report on Beslan
AUTHOR: By C. J. Chivers
PUBLISHER: The New York Times
TEXT: MOSCOW — A Russian parliamentary commission on Friday issued its final report on the terrorist seizure of a public school in Beslan in 2004. The report briefly highlighted law enforcement mistakes but placed blame for the hundreds of deaths on the terrorists alone.
The report’s long-awaited conclusion, read aloud by the commission’s chairman during a session of Parliament’s upper house, ended more than two years of investigation into the worst terrorist act in post-Soviet Russian history.
It suggested a hardening of the Kremlin’s position on one of the most painful public episodes of President Vladimir Putin’s administration, brushing aside lingering questions about the events and insisting that the authorities, in spite of many well-documented problems, had done an adequate job.
The Kremlin had pledged that the special commission, stacked with politicians loyal to Putin and working almost entirely out of public view, would establish the facts and report the truth.
But the delivery of the report did little to satisfy embittered survivors and bereaved families, some of whom labeled it a whitewash meant to shield the Kremlin from responsibility for government negligence and disregard for hostages’ lives.
More than 1,100 people were taken hostage at the school on the first day of the 2004 academic year in Beslan, a town in southwestern Russia. The terrorists had been sent by Shamil Basayev, the fugitive leader of a group that sought independence for Chechnya, a small Muslim region in the North Caucasus area of Russia. Beslan is also in the North Caucasus, west of Chechnya.
Basayev was killed in July of this year.
The captors demanded that Russian forces withdraw from Chechen soil, where they have fought two wars against the separatists since 1994. In his remarks in parliament, the chairman of the special commission, Alexandr Torshin, called some of the terrorists‚ requests “non-executable demands.”
In the three-day siege, 333 people died, almost all of them after two explosions in the gymnasium where the hostages were held led to a chaotic battle. Torshin said the terrorists had started the battle by intentionally detonating bombs among the hostages, to the surprise of Russian negotiators and commanders.
“It has been established that one of the gang members, acting according to the previously developed plan, actuated a homemade explosive device in the gym,” he said.
That statement went beyond previous government accounts, which have typically said the bombs exploded in an unexplained catastrophe, perhaps by accident, as many hostages said immediately after the siege.
The evidence for the new claim was not clear.  Torshin said last year that his commission was waiting for forensic evidence and expert examinations of the blast sites. He made no mention of such evidence on Friday.
Torshin dismissed as politically motivated the theory, presented in the fall by a dissenting commission member, that the explosions had begun when Russian forces fired rockets into the gymnasium. The evidence for that theory is incomplete and unclear.
Torshin’s summary, read from a several-page text, offered the only publicly available insights into the report and the commission’s work. Copies of the full report were given to the Kremlin and parliamentary leaders but were not released to the public or the news media, making it nearly impossible to evaluate the evidence on which its conclusions were based.
After giving his speech, Torshin said the commission had been disbanded, a quiet and unceremonious end to a project once presented as a means to answer the long list of questions about the siege.
Many of those questions remain matters of vigorous dispute, including how many terrorists were involved, whether they had stashed weapons and ammunition in the school before the siege and whether some had escaped or had been captured without acknowledgment by the Russian government.
Questions of the government’s management of the crisis have also persisted. Those include questions about the nature and content of negotiations with the terrorists, why firefighters were not prepared to battle the blaze that consumed the gymnasium and why so few ambulances were available to transport the hundreds of injured victims.
Ella Kesayeva, who leads the Voice of Beslan support group, suggested that the report was meant as a signal that  Putin and his circle were no longer interested in having a discussion about the details. “We personally didn’t expect anything different from Torshin,” said Kesayeva, who lost a teenage son in the siege.
On certain points Torshin’s report did not seem to square with witnesses’ accounts.
He said, for example, that the commission had concluded that tanks from Russia’s 58th Army had not fired into the school while hostages were in the building, as witnesses and survivors had said. Witnesses and journalists saw two T-72 tanks advance on the school that afternoon, at least one of which fired several times.
In a brief series of points near the end of his speech, Torshin did criticize the authorities.
The command post, he said, was not properly trained. He said intelligence agencies had not adequately penetrated or gathered timely information about Chechen terrorist groups, which made preventing the attack difficult.
He also criticized the local police, saying they had ignored warnings of imminent attacks and did not have an adequate presence on the roads or near the school that day. And he said some of the terrorists had been arrested and charged with other crimes before the school was seized, but had inexplicably been set free.
Each of those findings, while critical on the surface, were in many ways self-evident and already well known. They offered little new insight into the public understanding of the event.

TITLE: Tax Authorities File Suit Against PwC Overs Audits for Oil Giant
PUBLISHER: Reuters
TEXT: MOSCOW — Russian tax authorities have filed a suit against the local branch of PricewaterhouseCoopers (PwC) accusing it of producing a false audit for fallen oil company Yukos, the auditor said on Monday.
PwC said it acted strictly in line with Russia’s legislation and was ready to defend its position in court.
The report in question dated from 2002, prior to the demise of Yukos, once Russia’s largest and most profitable oil firm.
Yukos was hit with billions of dollars of tax evasion claims in 2003, but many analysts linked the firm’s fall to Kremlin forces exacting punishment for the political ambitions of its key owners, now serving prison terms in Siberia.
PwC confirmed an earlier report by Vedomosti newspaper which said the Moscow arbitration court had filed a suit saying the firm had compiled two audits — one for internal use, warning of illegal actions by Yukos, and a second one for shareholders.
PwC said in a statement that it had produced two reports but denied it was pursuing double standards, adding that it was following normal professional standards.
“Responsibility of a company management cannot be shifted onto an auditor,” PwC in a statement.
The tax inspectorate is demanding cancellation of a contract between the two firms and the payment of $145,000, which Yukos paid for the audit of its 2002 results, to state coffers, Vedomosti said.

TITLE: Turkmenistan Mourns Loss of ‘Father’ Leader
AUTHOR: By Benjamin Harvey
PUBLISHER: The Associated Press
TEXT: KIPCHAK, Turkmenistan — Saparmurat Niyazov was buried Sunday near a golden-domed mosque he built and named for himself in this impoverished Central Asian nation, an elaborate funeral marking the last grand gesture for a man who devoted much of his two decades in power to his own glorification.
The mourning ceremonies started with a long line of Turkmen mixed with foreign dignitaries streaming solemnly past the man who styled himself as Turkmenbashi, or Father of all Turkmen, as he lay in state in the spectacular marble rotunda of the presidential palace.
“He was everything to us,” one woman wept, refusing to give her name.
At 66, the president-for-life outlived his country’s average life expectancy by five years, but he left no successor. Now that Turkmenbashi is dead, it was unclear how long his cult of personality would persist.
Most signs indicate that it will, at least for the near future. For the 21 years that he controlled this vast nation and its considerable oil and gas wealth, Niyazov dominated his countrymen’s minds as much as he restricted their actions.
His smiling, black-haired visage peers down upon his five million subjects from every town, his book of musings is daily required reading for every schoolchild, and studying it is said to be a direct ticket to heaven.
The secretive acting government has issued only periodic announcements in the days following Niyazov’s death.
But all have been variations on the same theme: Any successor will “stand guard on the achievements founded by Saparmurat Turkmenbashi the Great and vigilantly preserve the calm and happy life of our people and support stable conditions within the country,” as Security Minister Geldimukhammed Ashirmukhammedov vowed in a statement printed in Turkmen official newspapers on Saturday.
Ordinary Turkmen have publicly expressed nothing but undying love and admiration for their deceased leader, and many cried as they filed past Niyazov’s body while it lay in the palace in Ashgabat.
Reporters could talk to locals only surreptitiously, and high-ranking government officials were generally inaccessible even to most of the delegations that attended the funeral, a sign that an era of free expression is not imminent in this insular country with no independent news media and only one political party.
One of the officials who ensured that visiting journalists were kept on a tight leash addressed the matter obliquely, even apologetically, on Saturday as reporters gazed at the plethora of golden Niyazov monuments in the capital of the ex-Soviet republic.
“You know, this is the first president of Turkmenistan,” he said. “This is a stage in our history.”
And one of the most celebrated features of this stage is Turkmenistan’s commitment to neutrality — a policy plank so fundamental that the country’s state Russian-language newspaper is called “Neutral Turkmenistan.”
Turkmenistan has firmly resisted becoming a pawn in a new version of a “Great Game.” The country is of great interest to the West, Russia, China and Iran because of its vast natural gas reserves and its geographical position.
“This region is not so stable, you know,” the government official said, pointing at one spot on the horizon. “This side is Iran,” then he gestured in the other direction. “This side is Afghanistan. That’s why we have our neutrality.”
Neutrality for Turkmenistan, in the future as under Niyazov, implies an obsession with its own stability. That, in turn, would indicate that political pluralism, free expression and assertion of individual rights are unlikely to flourish anytime soon.
U.S. Assistant Secretary of State Richard Boucher, the senior member of the U.S. delegation, said he hoped otherwise.
“We are certainly hoping for a peaceful and stable transition, a transition to a government that will try to provide justice, democracy that the people of Turkmenistan deserve,” he told journalists in Ashgabat after the funeral on Sunday.
In the meantime, independent Turkmenistan is looking to a future without the only leader it has ever known.
“Turkmenbashi had no equal,” said Recep, a man in his 70s. “He was a great man. He needed to be able to live a little longer.”
“He’s our president. If I didn’t love him, whom would I love?” asked a 34-year-old taxi driver named Aman.

TITLE: Consul: Russian-British Ties Strong
AUTHOR: By Evgenia Ivanova
PUBLISHER: Staff Writer
TEXT: The new British Consul-General in St. Petersburg defines his mission as to “learn and adapt” and “to build on [work done by his predecessors].”
William Elliott, who succeeded George Edgar, began his tenure last month just as British diplomatic relations with Russia took a blow from the poisoning murder in London of former FSB agent Alexander Litvinenko. Although many experts say the scandal might significantly worsen the relationship between Russia and the U.K., Elliott sees the relationship as solid.
“Of course there are ups and downs in every relationship, but what matters most is the underlying relationships and these are very strong,” Elliott said, pointing out that the number of British visas the Consulate issues to Russians grows each year. “It is certainly stronger than twenty years ago — we’ve got to know each other a lot better.”  
A diplomat, Elliott chose his words carefully during his interview with the St. Petersburg Times and was more willing to talk about his impressions of the city.
“It’s really remarkable to find yourself walking down the Moika, where Dostoevsky and other great writers used to walk. I think St. Petersburg is one of the most famous cities in Europe from a literature and historical perspective,” he said.
Elliott, who studied English Literature at the University of York before he joined the Foreign and Commonwealth Office in 1994, considers reading as one of his main hobbies.
Although the envoy, who previously served in Warsaw (1996-9), Kabul (2001-2) and Tallinn (2002-6), has spent only few months in St. Petersburg and he is “not a normal British person” according to the circle of people he has been mixing with, he has already picked up on similarities and some “very, very big differences” between Britain and St. Petersburg. 
Unlike the Japanese Consul-General in St. Petersburg, Takuo Kidokoro, who in a July 2005 interview with The St. Petersburg Times considered his main diplomatic goal to understand why people of another nation act or live differently, Elliott said his “job is not to notice differences.”
“But I guess the way people look at the future is quite different,” he admitted.
“British people are more secure, which is better way of saying ‘complacent.’ They are also more relaxed and lazy. Whereas Russians tend to be more ambitious, more aggressive and in a constant hurry — it is like every moment counts,” he said.
The consul is to be based in St. Petersburg for three years, or possibly more, and then, together with wife Daria and two children Zofia, 3, and Thomas, 2, will move to pastures new.
And if life out of a suitcase is relatively easy for children so young (“they are too young to notice the differences between places”), always being on-the move is sometimes hard for Daria, who works in economics and banking, the consul said. 
“For [the Consul’s] wife, life is harder…mainly from the point of view of developing a career. It is quite difficult if you are changing and also you don’t know where you going to be next.” 
But the couple have found a compromise, Elliott said.
“I am going to work another 15 years and then I retire and she could have a prosperous career and earn lots of money — and I will enjoy a very luxurious and relaxed lifestyle.”

TITLE: Three Kazakhs Released From Guantanamo Prison
PUBLISHER: The Associated Press
TEXT: ALMATY, Kazakhstan — Three Kazakhs released from the U.S. military prison in Guantanamo Bay have returned home, an official said Thursday.
The three men were among 18 Guantanamo detainees repatriated by the U.S. military over the weekend to Afghanistan, Yemen, Kazakhstan, Libya and Bangladesh, the Pentagon said.
The three Kazakhs arrived in their homeland Saturday and were met by relatives who took them home, Foreign Ministry spokesman Ilyas Omarov said.
Omarov said the three would not face investigation and charges “because their release means that they had been cleared of all suspicions of having terror links.” He gave no further details.
Omarov said the Kazakh government was working on the release of the fourth and last Kazakh citizen who has been held at Guantanamo after being captured in Afghanistan during the U.S.-led anti-terror operations there.
About 50 percent of Kazakhstan’s population are Muslims. Unlike its Central Asian neighbors, which are poorer and have predominantly Muslim populations, Kazakhstan has been little affected by a rise of radical Islam in the region since the 1991 Soviet collapse.
Three other ex-Soviet Central Asian countries, Uzbekistan, Tajikistan and Turkmenistan, border Afghanistan.
The region’s most radical Islamic group, the Islamic Movement of Uzbekistan, was linked to al-Qaida and had training camps in Afghanistan. The IMU is believed to have been broken as an organized force during U.S.-led coalition bombings of Afghanistan in 2001.
Among 759 people who have been held over the years at Guantanamo, there also were 12 Tajiks and seven Uzbeks, according to U.S. Defense Department documents.

TITLE: Apartment Under Siege in Cherkessk
AUTHOR: By Fatima Tlisova
PUBLISHER: The Associated Press
TEXT: CHERKESSK, Russia — Russian security forces battled a group of suspected militants holed up in an apartment building in a troubled southern province Monday, officials and witnesses said.
The early morning siege in the city of Cherkessk was the latest in a string of similar police operations across southern Russia.
The country’s North Caucasus region has been hit by an increasing wave of violence, much of it blamed on criminal gangs and Islamic militants, but also on fighting spilling over from Chechnya.
Authorities surrounded the apartment building where the four alleged militants were believed to be hiding and used heavy gun fire and grenades in a bid to force their surrender, regional police said.
Authorities cordoned off nearby streets and closed a school in the neighborhood, but had been unable to evacuate all residents in the building, witnesses said.

TITLE: Enriching the Stake in Tourism
AUTHOR: By Nikita Savoyarov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Last week saw the final conference in the European Commission’s Project “Tourism Development in North-West Russia,” jointly organized by the EC and the North-West regional branch of the Russian Travel Industry Union (RTIU).
The total cost of the project amounted to $2.7 million, with some of the best European experts investing their experience and skills into the Russian travel industry. Although partly hailed as a success, participants did not refrain from enouncing the difficulties encountered and the work still to be done. 
Julia Rybakova, Executive Director of RTIU, emphasized the breakthrough in understanding between authorities on a local, regional and federal scale and between business and nonprofit organizations. At the same time, the project’s vast scale means it needs another year for it to go through the relevant legislative and budgetary process.
Similarly, Erik Holm-Petersen, one of the project’s key experts, reported difficulties in organization as a result of the vast size of territory and inequalities in regional levels of development. 
In order to tackle this problem, and make sure that tourism develops over the entire region, the North-West Tourism Marketing Agency (NW TMA) elaborated a business plan. This agency will consist of representatives from regional governments, the private sector and RTIU and will be responsible for the marketing of the entire region under the united brand “New Windows on Russia,” one of the project’s more visible successes.
This year the brand has already been present at two international travel exhibitions — INWETEX in St. Petersburg and World Travel Mart in London. 
In order to secure effective implementation of the project during its transitional period, the Temporary Council of NW TMA was formed under the chairmanship of Sergey Korneev – Vice President of RTIU.
John Marrow, the project’s Team Leader, and Julia Fedina, one of its content managers, presented the completed tourist portal of North-West Russia, www.tdnwr.ru. 
Many of the project’s ideas can be found at the aforementioned portal, including the training measures and special support allotted to Small and Medium-sized Enterprises mentioned by Peter Saabye Simonsen, another of the project’s key experts.  
Maxim Balanev – a local expert of the Project on SMEs presented a web-hand-book for newcomers to the travel industry entitled “How to start one’s own business.”
Some of the participants expressed their anxiety about how quickly a suitable marketing strategy could be developed, not least because the private sector in the regions remains so very weak. 
Evgeny Kotkin, a deputy Economic Minister in the Republic of Karelia proposed applying for European Union funding to cover the transitional period (one year) in order to then ensure the TMA’s independence thenceforth.
Tourism enriches. This is the slogan used by the UN World Tourism Organization as it attempts to explain that tourism is an engine of the world economy leading to the improvement of human life. 
Tourism is the biggest growing industry in the world. It is very important, therefore, for every business and local authority in North-West Russia to participate, developing and reinforcing the position established for them by the project.  They must also invest their own money to keep going forward. Only then will tourism enrich.

TITLE: Turkey, Georgia to Share Giant Caspian Field Gas
PUBLISHER: The Associated Press
TEXT: TBILISI — Turkey has agreed to give up some of its share of a giant Caspian gas field to Georgia, allowing the small Caucasus nation to reduce its need for expensive Russian gas, the Georgian energy minister said Sunday.
Nika Gilauri said in televised comments that Turkey had agreed to transfer to Georgia next year 800 million cubic meters of natural gas it was entitled to from the giant Shah Deniz field off Azerbaijan’s Caspian coast.
The minister said that the price remained to be fixed. Georgia has faced a doubling of the price it pays for Russian natural gas and is seeking alternative sources of supply.
Russian state-controlled gas monopoly Gazprom said Friday that Georgia had agreed to buy 1.1 billion cubic meters of gas next year at $235 per 1,000 cubic meters _ an amount that falls short about 700 million cubic meters short the country’s expected demand for 2007.
Georgia now pays $110 for its Russian gas.
Shah Deniz’s operator, BP PLC, Friday said that output had been halted at the offshore field because of unspecified technical problems. Production began just under two weeks ago.
But output is expected to increase considerably over 2007 at Shah Deniz, which eventually should have a peak capacity of 300 billion cubic feet of gas and 2 million tons of gas condensate per year.
Turkey has been in talks on reallocating quotas from Shah Deniz with both Georgia and Azerbaijan, former Soviet republics, which are eager to avoid importing expensive Russian gas.
Energy supplies from Azerbaijan’s Caspian fields are playing an increasingly important role in the region, as Russia has dramatically raised prices for its natural gas.
Gilauri, together with Georgian Prime Minister Zurab Nogaideli, will leave for the Azerbaijani capital, Baku, on Monday to coordinate all technical details of additional gas deliveries from the Shah Deniz field to Georgia in 2007.

TITLE: Moscow Court Increases Yukos Tax Bill by $1.4 Billion
AUTHOR: By Yuriy Humber
PUBLISHER: Bloomberg
TEXT: MOSCOW — Yukos Oil, once Russia’s largest oil exporter, had its tax bill increased by 38 billion rubles ($1.4 billion), bolstering the government’s power to choose who gains the bankrupt company’s oil fields and refineries if it is liquidated next year as planned. 
The Moscow Arbitration Court today upheld a claim by the Federal Tax Service, already Yukos’s biggest creditor, for unpaid taxes for 2005, said Nikolai Lashkevich, a spokesman for Yukos’s court-appointed external manager. 
Yukos was declared bankrupt in August, after President Vladimir Putin’s government jailed former Chief Executive Officer Mikhail Khodorkovsky on fraud charges and used $30 billion in tax claims to seize the company’s biggest asset. State-run OAO Rosneft and OAO Gazprom may snap up what’s left of Yukos, ending a process that returned to the Kremlin control over 60 percent of the world’s energy industry. 
The court today also rejected a claim from Yukos unit OAO Samaraneftegaz for 1.2 billion rubles and postponed a decision on one from Poland’s PKN Orlen SA. 
“Orlen’s claim should round off the courts process,’’ Lashkevich said. 
The review of PKN Orlen SA’s claim for 2.9 billion rubles for undelivered crude was deferred to Jan. 25, because of negotiations with former Yukos shareholders and the bankrupt company’s external manager, Lashkevich said. 
Yukos shares fell 2.1 percent to 47.1 cents on the Russian Trading System as of 3:43 p.m. in Moscow.

TITLE: Russia Plays Rough, Wins Bruising Fight
AUTHOR: By Sebastian Smith
PUBLISHER: AGENCE FRANCE PRESS
TEXT: MOSCOW — Moscow has savoured victory after state giant Gazprom ousted Royal Dutch Shell from control of the Sakhalin-2 energy project, ending a struggle highlighting changing rules in Russia’s bare-knuckle business environment. 
The announcement late on Thursday that Gazprom would take the controlling stake in the $22 billion natural gas development was a milestone in President Vladimir Putin’s campaign to restore state control over the energy industry.
The terms of the changes in the project off Sakhalin island on Russia’s far eastern coast also halved smaller shareholdings by Japanese companies Mitsui and Mitsubishi.
Analysts highlighted the Kremlin’s toughness in campaigning to make Shell surrender its control over the vast and potenially lucrative development, which is intended to provide liquified natural gas to Asia, especially Japan, from 2008.
Under the deal, Gazprom will buy 50 percent of shares, plus one, for $7.45 billion, while Shell’s share is cut from 55 percent to 27.5 percent. Mitsui which had 25 percent retains 12.5 percent and Mitsubishi which had 20 percent retains 10.0 percent.
The deal was couched in business terms, but politics played a big role, with the Russian state widely accused of using environmental probes as a weapon to force Shell’s hand.
The Vedomosti business daily said that Moscow first used allegations of environmental damage on Sakhalin to undermine Shell’s position in negotiations with Gazprom. Then the same allegations were used to knock down the price when Shell agreed to sell at.
“The Putin Discount,” read the headline on the newspaper’s front page. “The ecology was what Gazprom used as a main argument to get a discount,” the newspaper said.
According to Vedomosti, the $7.45 billion paid should have been as high as $8 billion to $10 billion.
And no sooner was Gazprom’s takeover confirmed than worries over the ecological damage — estimated by the state environmental watchdog at anything from $10 billion to $50 billion  — as well as Shell’s controversial cost overruns, seemed to evaporate, the Russian press reported.
“Gazprom’s entry into the world’s biggest offshore project immediately removed the intrigue around the costs of the project,” RBK business daily wrote.
The strong-arm tactics have raised concern internationally over the potential difficulties of doing business with Russia, the world’s biggest gas producer and number two oil producer after Saudi Arabia.
In Tokyo on Friday, Chief Cabinet Secretary Yasuhisa Shiozaki urged Russia to “take responsible policies.”
Shiozaki, who is the government spokesman, said: “Our country relies on energy resources from abroad. It is important to see the project go ahead smoothly to secure energy resources and provide stable supply.”
The head of analytical research at Alfa Bank in Moscow, Ronald Smith, said that the Russian government felt strong because of high energy prices — self-confidence that contrasts with the weak position of the state in the 1990s, when the original deal with Shell was struck.
“In this age of resource scarcity all the bargaining power lies with the owner of the assets, so you’d expect the government to have the upper hand,” Smith said. The Kremlin also feels little sympathy for Shell, given the British-Dutch giant’s abrupt revelation in 2005 that costs had doubled from $10 billion to $20 billion.
Under the terms of Shell’s original deal with the Russian state, that change would have meant huge delays for Moscow to receive any income from Sakhalin-2. 
“They doubled the cost and didn’t let the Russians know directly. Instead they had to find out through the press. The Russians felt they really got taken advantage of,” Smith said. 
Besides, “people who come to emerging markets already have a high appetite for risk,” Smith added. “Any shrinking violet tends to get run out of town on the first down-dip.”

TITLE: TNK-BP Told to Let Gazprom In
PUBLISHER: Reuters
TEXT: MOSCOW — TNK-BP must accommodate Gazprom into its giant Kovykta gas project or face new sanctions for licensing noncompliance, an official said Thursday. 
TNK-BP is the main shareholder in Rusia Petroleum, which has the license to operate Kovykta. Under the licensing agreement, the firm should produce 9 billion cubic meters of gas next year.
TNK-BP wants to export gas from Kovykta, in Siberia, to China. But its plans have stalled because Gazprom has refused to let the $10 billion project build a pipeline to the border and restricts it to supplying a local market that needs no more than 2.5 bcm. 
“This is not an objective reason to change the licensing agreement. ... I very much hope that TNK-BP and Gazprom reach an agreement. They have no choice,” said Anatoly Ledovskikh, head of the Natural Resources Ministry’s Subsoil Resource Use Agency. He added that the ministry’s environmental watchdog had started checks at the project and that the agencies were going to discuss compliance with Kovykta’s license as soon as the checks were completed in January.
The environmental watchdog earlier said TNK-BP violated environmental laws when it built a local gas pipeline at Kovykta and requested prosecutors to investigate. They threatened to withdraw the license.
BP CEO John Browne said two years ago that he was hopeful Gazprom would soon join Kovykta to help unlock the project. Gazprom has said the field will not be needed for exports until 2015.

TITLE: Vodafone Aims to Acquire Hutchison
AUTHOR: Vodafone Aims to Acquire Hutchison
PUBLISHER: Bloomberg
TEXT: LONDON — Vodafone Group, the world’s largest mobile phone company, said Friday that it was considering making an offer for a controlling stake of Hutchison Essar, based in Mumbai, to gain direct access to India, the world’s fastest-growing wireless market.
The process is “at an early stage,” Vodafone, based in Britain, said. Hutchison Telecommunications International, controlled by the Hong Kong billionaire Li Ka-shing, said “various potentially interested parties” have approached it about its Hutchison Essar shares.
Vodafone wants Hutchison Essar to add more than 20 million subscribers in a growing market. Blackstone Group, a U.S. buyout firm, and Reliance Communications, another Indian phone company, have asked banks for $15 billion to finance a buyout of Hutchison Essar, bankers with direct knowledge of the deal said.
India is the world’s fastest-growing wireless market and only 17 percent of its 1.1 billion people have either a mobile or a fixed-line phone, according to the country’s phone regulator.
Shares of Vodafone fell 2 pence to close at 142 pence, or $2.79, in London. They are up 13.2 percent this year. 
Arun Sarin, chief executive of Vodafone, is leaving saturated markets where Vodafone does not have majority stakes. Vodafone this year sold its 25 percent stake in Proximus in Belgium. This past week, Vodafone agreed to sell its quarter stake in Swisscom’s mobile unit. It has stakes, ownership and partnerships with companies in emerging markets like Turkey, Egypt, South Africa, China and Romania.
Hutchison Essar, founded in 1994, would be the largest purchase for Sarin. Under him, Vodafone acquired a 10 percent stake in Bharti Airtel, a mobile phone company in India, for $1.5 billion in December 2005 and Telsim Mobil Telekomunikasyon Hizmetleri in Turkey for $4.55 billion in May.
Vodafone said the talks might not lead to a transaction. Buying into Hutchison Essar would be consistent with its “stated strategy of seeking selective acquisition opportunities in developing markets,” Vodafone said.

TITLE: Sonae’s Takeover Bid Gets Approval
PUBLISHER: The Associated Press
TEXT: LISBON, Portugal — SonaeCom’s $14.6 billion hostile bid to acquire state-owned Portugal Telecom got regulatory approval from the country’s competition authority on Friday.
Shares in SonaeCom rose nearly 1 percent to close at $6.81 while shares of Portugal Telecom dipped nearly 1 percent to close $12.86. 
The decision came after markets had closed.
“This decision will allow for the restructuring of the telecommunications sector in Portugal,” Abel Mateus said.  
According to him the decision was an historic one.
If it buys PT, SonaeCom, owned by Portuguese company Sonae, will have to sell either its fixed-line or cable networks and give up one of the two mobile licenses it would own if the deal is closed, the regulator ruled.
SonaeCom now has 10 days to register its bid with the country’s stock market regulator.
The country’s Socialist government can still veto any deal and PT’s own board has rebuffed the offer saying it undervalued the company.

TITLE: Terms Set For 3G Licences In Russia
PUBLISHER: Reuters
TEXT: MOSCOW — Russia has outlined terms for 3G licences, saying companies will have to pay a fee of about $50,000, answer questions and convert frequencies for civil use, Vedomosti business daily reported on Monday. 
In October, Russia allocated frequencies for the third generation standard. Vedomosti quoted Russian Telecoms Agency head Andrei Beskorovainy as saying they were sufficient for three firms only. 
There are three large cell phone operators in Russia — Mobile TeleSystems (MTS) , Vimpelcom and MegaFon — and several small ones. 
The report said only Russian firms would be allowed to enter bids, which must be submitted within 30 working days from Jan. 16. 
Each applicant will have to fill in several questionnaires saying how long and in which regions it has been operating, how many licences it has and for which activities, how long it will take the firm to build a 3G network and where it will work. 
Each answer will get a score. The winner will be the company with the highest score. 
Winners will have to pay a fee of 1.29 million roubles ($49,070), and agree to convert frequencies, freed by the military, into civilian use.

TITLE: Labels Sue Music Site
PUBLISHER: The Associated Press
TEXT: LOS ANGELES — Several major record labels sued the operator of the Russian music web site AllofMP3.com, claiming the company has been profiting by selling copies of music without their permission.
The lawsuit was filed Wednesday in federal court in New York against Moscow-based Mediaservices, which owns AllofMP3 and another music site, allTunes.com.
A slate of major record labels, including Arista Records LLC, Warner Bros. Records Inc., Capitol Records Inc. and UMG Recordings Inc., are behind the lawsuit.
The labels claim Mediaservices’ sites sell millions of songs by their artists without paying them “a dime” for the right to do so. “Defendant’s entire business ... amounts to nothing more than a massive infringement of plaintiffs’ exclusive rights under the Copyright Act and New York law,” according to the lawsuit.
The music companies are seeking a court order against Mediaservices and unspecified compensatory and punitive damages.
A call and an e-mail seeking comment from the Washington D.C.-based spokesman for Mediaservices were not immediately returned.
AllofMP3 typically charges under $1 for an entire album and just cents per track. By contrast, an album at Apple Computer Inc.’s iTunes Music Store and other licensed services typically costs about $10 and a song 99 cents.
Mediaservices has maintained that by paying royalties to a Russian licensing group, the web site is in compliance with Russian laws. The music industry contends that the Russian licensing group doesn’t have the authority to collect and distribute royalties.

TITLE: Sistema Reports 50% Rise in Third Quarter Earnings, Says Merger Likely
PUBLISHER: Reuters
TEXT: MOSCOW — Russian services conglomerate AFK Sistema reported a more than 50 percent rise in third quarter core earnings and its president said a merger of its telecoms business with a large foreign operator was likely.
Sistema said in a statement on Thursday its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 56 percent to $1.4 billion as the performance picked up of its key asset, Russia’s top cellphone operator Mobile TeleSystems (MTS). 
Revenue increased 39 percent from the third quarter of 2005 to $2.9 billion.
Company President Alexander Goncharuk said that as Russia prepares to join the World Trade Organisation next year Sistema needed to enlarge its telecoms assets to tackle competition.
“We have two to three years to merge with a south-east Asian or western operator. If we do not do it, we will be crushed by the hurricane,” Goncharuk told a news conference.
“There is a real chance of becoming the second or third operator (in the world) at least by number of clients ... We are talking to a huge number of groups. Deals with western European operators are less likely.”

TITLE: Big Costs and Little Security
AUTHOR: By Vladislav Inozemtsev
TEXT: When the Soviet Union collapsed, there was much talk about the “peace dividend” the end of the Cold War would bring. It was all about turning swords into ploughshares. But 15 years later, the new Russia brings to mind more than ever the communist empire of the past.
True, there is a new ruling elite, the old ideology is gone, and the country has adopted a market economy that is open to the world. Under closer scrutiny, however, it turns out the foundation of the Soviet-era economic system remains: Just as it did before, Russia lives off of the income from its natural resources, which have been redistributed for the benefit of its “strong-arm oligarchy.”
Russia lost the ruinous arms race with the United States at the end of the 1980s. According to estimates, the country expended about 17 percent of its GNP sustaining the armed forces and military parity with the United States. In a country with a population of 270 million, four million adult men were under arms. This was partially justified by the standoff between NATO and the Warsaw Pact, and the presence of U.S. military bases near Russia’s borders, as well as the unsettled situation in Eastern Europe. But whatever logic the leadership used, the results we see now speak for themselves.
Today, those in power focus their concern more on domestic than international issues. And although the Russian economy has yet to regain the size it had attained in 1990, it is nevertheless burdened with a crushing weight of managers and “controllers.” The number of state employees has reached 1.45 million people, topping the number of bureaucrats who served during the Soviet era.
And even though reductions have been made, there were still 1.2 million soldiers serving in the armed forces in 2005, with an additional 900,000 civilians in support roles. There are 820,000 people serving in the Interior Ministry, with another 140,000 employed as support personnel. We don’t even have a ballpark figure for the numbers in the Federal Security Service, but it is probably no less than 200,000. Including the Prosecutor General’s Office, the Federal Guard Service and the Federal Migration Service adds another 200,000 people to the rolls.
This means that a civil service of almost 5 million people has been created, in which more than 15 percent of the male adult workforce is directly engaged in serving the government in one manner or another.
You would think that with this massive apparatus at the state’s disposal it would be possible to ensure strict observance of the law and provide people with effective protection of their lives and property. But statistics indicate that this is not the case at all. Crime rates are actually increasing: For the first five years of this decade, the murder rate was 10.6 percent higher than the average for 1992 to 1999. Robberies, meanwhile, were up by 38.2 percent and drug-related crimes by 71.7 percent.
As a result, people who can afford to pay for their own protection are doing so in greater numbers than ever: There are more than 3,000 security firms currently registered in Russia, and almost 10,000 companies maintain private security staffs. The real cost of the 380,000 people working for the private security firms and the 300,000 security personnel at the corporations isn’t immediately apparent.
Russia has now become something of a security economy that is only able to extract raw materials from the earth and guard the system created for their distribution. It’s hard, actually, to see how it could be otherwise, given that, according to one study, 78 percent of the country’s senior officials have worked at one time or another in the KGB, FSB or Interior Ministries of the Soviet Union or Russia.
And yet, this “strong-arm oligarchy” does not contribute to the economy in any significant way, as it is unable to protect people’s lives or property effectively, cannot improve the efficiency of the judicial system and has been unable to eradicate corruption and arbitrary rule. Maintaining this apparatus has, meanwhile, become increasingly costly: The funding for all of these services and personnel are growing at a rate of 20 percent to 25 percent per year, and now account for 40 percent of the federal budget and 7.9 percent of gross domestic product.
Can the Russian economy bear such a burden over the long term? This question is difficult to answer, but one thing is clear: The general economic structure that has been created and which is being developed further is abnormal, especially in the absence of the kind of threats to the country’s internal stability and external security that the Soviet Union faced.

Vladislav Inozemtsev is a professor of economics, director of the Moscow-based Center for Post-Industrial Studies and editor of the Russian edition of Le Monde Diplomatique.

TITLE: New Taxpaying Realities - Unjustified Benefits
AUTHOR: By Ivan Smirnov
TEXT: For a long time the payment of taxes has been a sticking point in the relationship between the state and its citizens. In any country throughout history taxpayers have tried to avoid or minimize the tax burden. At the same time, the state tries to bolster its budget by increasing tax rates, introducing new taxes and improving old ones. Russia has not proved the exception in this unending fight. 
Almost eight years have passed since the RF Constitutional Court introduced the concept of good and bad faith taxpayers. Over this period, the tax authorities have been eager to block fictitious transactions entered into by taxpayers only to avoid paying tax or to unlawfully claim a VAT refund. The arbitration courts have consequently sought to establish a number of criteria, which in addition with the concept of bad faith, have allowed a more effective fight against tax scheming.
This year the Russian Federal Supreme Arbitration Court (SAC) has been trying to summarize all the criteria developed by the arbitration courts and to establish general rules used by the arbitration courts to assess the circumstances that lead to doubts concerning a taxpayer’s good faith.  
On Oct. 12 2006 the Plenum of the RF SAC approved the Decree No 53 “On arbitration courts’ evaluation of the justification of obtaining tax benefits by a taxpayer.” The RF SAC rejected the bad faith concept stated previously by the RF Constitutional Court and established a brand new concept of unjustified tax benefit.
First of all, it should be noted that both terms have no exhaustive legislative determination — this causes significant risks for taxpayers in the voluntary application of these terms by arbitration courts and tax authorities. Court practice over the last few years is a vivid example of voluntary application of the bad faith concept. It is reasonable to expect the same from the application of the new concept.
Despite the fact that in practice the bad faith concept was a bit ambiguous for taxpayer and tax authority alike, at least it had one unquestionable benefit — the good faith taxpayer could always defend itself in court. Now the rules of the game have changed dramatically. The tax authorities are armed with direct recommendations from the RF SAC, which may not only be used against bad faith taxpayers. Currently it seems that the principle targets of the tax authorities are good faith taxpayers, who may be accused of tax optimization or utilization of tax planning schemes or interaction with bad faith taxpayers.
With a lack of legislative definition, the RF SAC defines the term “tax benefit” as any reduction in the amount of tax liability resulting, in particular, in a reduction of the tax base, the obtaining of tax concessions, a lower tax rate or tax refunds from the budget. The revolutionary approach of the RF SAC is not only in the unrestricted definition of the term, but in the absence of respective powers, relative to the RF Constitutional court, to introduce into tax practice any definitions or terms unspecified in RF tax legislation. 
Another point of concern for good faith taxpayers is that any incomplete, inaccurate or inconsistent information in primary or supportive documents may mean a tax benefit is unjustified. It is obvious that under such circumstances, the tax authorities will only win more cases against taxpayers. 
Furthermore, a taxpayer must justify a business rationale for the questioned operation and its consistency with true economic intent. 
Based on civil concepts of reasonable diligence and prudence, the RF SAC implements the concept of responsibility of taxpayers for the behavior of third parties. It is unclear how good faith taxpayers bearing no responsibility toward their partners’ payment of taxes, could investigate the duly and timely payment of taxes by unaffiliated third parties.
Briefly evaluating this Decree, the following should be noted:
In practice, the RF SAC has shifted the burden of the fight against ‘shady’ business onto good faith taxpayers by warning them that any tax benefit related to transactions with shady business may be recognized as unjustified.
The bad faith concept will continue to be used by the arbitration court in line with the new unjustified tax benefits concept. The RF SAC clearly reserves the arbitration court’s freedom to act by implementing the business purpose concept.
Further, the RF SAC has formalized the terms and conditions using which a tax benefit may not be recognized as justified. This significantly simplifies the tasks of tax authorities.
Also the RF SAC has listed the circumstances that may be used as evidence of an unjustified tax benefit. 
Among a few of the Decree’s more positive effects include clarifications concerning the issue of tax neutrality in the methods of taxpayers’ capital formation and the fact that an individual unjustified tax benefit should not have any negative impact on the taxpayers’ other activities. 
Briefly analyzing the Decree, we should recommend that taxpayers review in detail all transactions and activities that may attract the attention of tax authorities.  Special attention should be paid to the presence of a business purpose in the transaction, duly reflected in an agreement or other primary documents.  We may also recommend that taxpayers carefully choose the transactions’ contactors, for their actions may result in proving an unjustified tax benefit for good-faith taxpayers.
Generally, we note that Russia’s period of “tax freedom” is over and that we now expect the judiciary system to show less indulgence toward taxpayers. 

Ivan Smirnov is Senior Associate, Head of Litigation practice at DLA Piper in St. Petersburg.

TITLE: Future of Total Oil Field Again Called Into Question
AUTHOR: By Yuriy Humber and Torrey Clark
PUBLISHER: Bloomberg
TEXT: MOSCOW — Total’s license to extract oil at its Kharyaga field, its biggest Russian project, was reviewed Friday by the country’s subsoil resources agency as the government tightens pressure on foreign-led projects.
Total’s reserves at the field are not backed up by expert assessments, Pyotr Sadovnik, the deputy head of the agency, told reporters Thursday. The French company must prove its reserves “during 2007” rather than at end of this year as previously required, Sadovnik said.
The findings from the review will be sent to the Industry and Energy Ministry, which oversees the country’s three production sharing agreements, including Total’s, Sadovnik said. 
The agency can only revoke the license if the government first cancels the PSA.
Total, Shell and ExxonMobil face calls from Russia to cede some of the privileges, such as tax breaks, that they enjoy under production sharing agreements granted in the 1990s when Russia needed foreign capital. The foreign-led ventures have become anomalies in Russia as President Vladimir Putin increases state control over the energy industry.
Putin told French President Jacques Chirac in September that threats to Total’s license were “exaggerated.”
Kharyaga, with an output of about 22,000 barrels per day, is Total’s foothold in the Russian oil and gas industry. 
Total in October lost a bid to join state-run Gazprom’s $20 billion Shtokman gas field and lost a court case to secure 52 percent of state-run Rosneft’s $3 billion Vankor oil and gas fields in eastern Siberia.
In 2004, Total failed in a bid to buy 25 percent of Novatek, the country’s second-biggest gas producer.
Government officials have criticized production-sharing agreements for benefiting foreign companies at the expense of the Russian state, which shares in the profit only after investors recoup their costs.

TITLE: VTB IPO Approval
PUBLISHER: Reuters
TEXT: MOSCOW — The government approved plans by the country’s second-largest bank, Vneshtorgbank, to hold an initial public offering next May and promised a decision soon on the largest bank, Sberbank’s, planned $7.6 billion share issue.
Economic Development and Trade Minister German Gref told a government meeting that VTB aimed to raise up to 120 billion rubles ($4.6 billion), allowing it to grow until 2010 without further share issues.
“We plan to place up to 50 percent in Russia, the rest on international bourses during the IPO in May,” Gref said Thursday.
However, VTB’s IPO may clash with a $7.6 billion share issue planned by Sberbank which, analysts say, could result in shares of the country’s two banking giants flooding the market at the same time and pushing down valuations.
Finance Minister Alexei Kudrin said Thursday that the supervisory council of Sberbank had approved an additional share issue worth up to 200 billion rubles ($7.6 billion).
Kudrin, a member of Sberbank’s supervisory council, said during a lecture at Moscow’s Higher School of Economics, that the placement was planned for the end of February 2007. 
“Today Sberbank made a decision about the additional share issue worth up to 200 billion rubles, approximately. We plan to place these shares at the start of next year, we expect at the end of February,” Kudrin said.
VTB would place a stake of no more than 25 percent with the state share declining to 50 percent plus one share after 2010. 
Gref said state-owned VTB had to go public because it was on the verge of breaking capital adequacy rules imposed by the Central Bank.
The State Duma passed a law this year requiring banks whose capital base has fallen below 8 percent of total assets to boost capital within three months or lose their license.

TITLE: Fiat, 
Severstal Agree On Engine Deal
PUBLISHER: Combined Reports
TEXT: ROME — Italian automaker Fiat said Thursday that it had signed a memorandum of understanding to set up a joint venture with Severstal-Avto to produce diesel engines. 
The engines will be produced at Severstal-Avto’s plant near Nizhny Novgorod, Russia’s third largest city, Fiat said in a statement. 
They will be installed in the Fiat Ducato LCV van as well as in Severstal-Avto’s new UAZ Patriot sport utility vehicle, it said.
The company did not disclose the terms of the deal, but said it aimed to finalize the agreement by the end of the first quarter of 2007. 
“This agreement is another big step forward in our clearly defined strategy: expand our presence in the markets with the highest growth potential, through alliances with strategic partners,” said Alfredo Altavilla, CEO of Fiat’s Powertrain sector. 
Earlier this year, Fiat and Severstal-Avto signed an industrial agreement to assemble two Fiat models in the Volga Federal District. 
Fiat CEO Sergio Marchionne has unveiled a series of commercial alliances this year, including with SAIC of China, a unit of Shanghai Automotive, and India’s Tata Motors. 
The partnerships have helped the Turin-based auto giant share costs and gain entry into new markets. 
Combined with the success of its flagship compact, the Grande Punto, the strategy is helping Fiat reverse years of declining fortunes. 

(AP, Bloomberg)

TITLE: Fortum to Buy Nuclear Fuel
PUBLISHER: Bloomberg
TEXT: MOSCOW — Fortum, the Nordic region’s No. 2 utility, will buy “hundreds of millions of euros” of nuclear fuel from Russia to supply the Loviisa power plant in Finland.
Fortum will buy between 20 and 21 tons of low-enriched uranium for its two reactors at Loviisa, said Ossi Koskivirta, the utility’s purchase manager for nuclear fuel. 
The contract with Russian nuclear-fuel company Tvel will start in fall 2008 and last until the end of the plant’s operating life, the companies said Thursday in a joint statement.
“The offer from Tvel was the best one,’’ Koskivirta said Thursday. The contract is worth “hundreds of millions of euros,’’ he said.
Power companies are boosting their use of nuclear fuel after oil and gas costs surged over the past five years. Russia is reorganizing its nuclear industry to take advantage of the renewed interest.
Tvel is already contracted to sell fuel to Loviisa’s second reactor until 2007, with British Nuclear Fuels supplying the first. The tender for a long-term contact for both reactors took place in 2005, Fortum said Thursday in a statement.

TITLE: Vedomosti Suit
TEXT: MOSCOW (SPT) — A Moscow appeals court on Wednesday upheld a lawsuit filed by Vedomosti against news agency RosBusinessConsulting for breach of copyright, the newspaper said in a statement Thursday.
The compensation awarded, 282,000 rubles ($10,700), was one-thousandth the amount demanded, the statement said. 
The trial began in December 2005, when Vedomosti sued RBC for the unauthorized use of more than 100 articles from the paper’s archives on its web site.

TITLE: Nordic Power Risk
TEXT: HELSINKI (Bloomberg) — Plans to supply Russian power to Nordic companies including Boliden and Stora Enso are in jeopardy after Finland rejected an application for a cable linking the country with Russia’s power grid.
The $6 billion supply contract was signed last year between an industry group comprised of 15 Nordic companies and Russian-controlled United Power. On Dec. 19, Finland turned down the application on the grounds that Russian supplies were unreliable.

TITLE: The Smoky Bomb Threat
AUTHOR: By Vladislav Inozemtsev and Peter D. Zimmerman
TEXT: The apparent exotic murder-by-polonium of the former KGB agent Alexander Litvinenko has embroiled Russia, Britain and Germany in a diplomatic scuffle and a hunt for more traces of the lethal substance. But it also throws into question most of the previous analyses of “dirty bombs,” terrorist attacks using radioactive isotopes wrapped in explosives (or using other dispersion techniques) to spread radioactive material in crowded areas.
Essentially all analysts, myself included, played down the possibility of using alpha radiation — fast-moving helium nuclei ejected during the radioactive decay of certain isotopes, such as of polonium-210, the substance that killed Litvinenko — as a source of dirty bombs. We concentrated instead on isotopes that emitted penetrating gamma rays, which are basically super-powered packets of light, hard to shield and effective at a meter or more.
The alpha radiation from polonium can be easily shielded — by a layer of aluminum foil, a sheet or two of paper, or the dead outer layer of skin. And so, the reasoning went, alpha radiation could not hurt you as long as the source stayed outside your body. Exactly. Litvinenko was apparently killed by polonium that he ate, drank or inhaled. That source was so physically small that it was hard to see, perhaps the size of a couple of grains of salt and weighing just a few millionths of a gram.
Dirty bombs based on gamma emitters, analysts have learned, can’t kill very many people. Litvinenko’s death tells us that “smoky bombs” based on alpha emitters very well could.
Polonium-210 is surprisingly common. It is used by industry in devices that eliminate static electricity, in low-powered brushes used to ionize the air next to photographic film so dust can be swept off easily, and in quite large machines placed end-to-end across a web of fabric moving over rollers in a textile mill. It is even used to control dust in clean rooms where computer chips and hard drives are made.
It may be difficult to get people to eat polonium; it isn’t hard to force them to breathe it. The problem for a radiological terrorist is to get his “hot” material inside people’s bodies where it will do the most harm. If the terrorist can solve that problem, then alpha radiation is the most devastating choice he can make. Precisely because alphas emit their nuclei so quickly, they deposit all of their energy in a relatively small number of cells, killing them or causing them to mutate, increasing the long-term risk of cancer.
The terrorist’s solution lies in getting very finely divided polonium into the air where people can breathe it. Without giving away any information damaging to national security, I see several fairly simple ways to accomplish this: burn the material, blow it up, dissolve it in a lot of water or pulverize it to a size so small that the particles can float in the air and lodge in the lungs.
It would be unwise for me to dwell on the details of just how one goes about getting a hot enough fire or breaking polonium into extremely fine “dust.” In the end, however, the radioactive material will appear like the dust from an explosion, or the smoke from a fire. My point is to demonstrate the urgent need for new thinking in the regulatory arena, not to give away important information.
Air containing such radioactive debris would appear smoky or dusty, and be dangerous to breathe. A few breaths might easily be enough to sicken a victim, and in some cases to kill. A smoky bomb detonated in a packed arena or on a crowded street could kill dozens or hundreds. It would set off a radiological emergency of a kind that the number of people requiring life support or palliative care until death would overwhelm the number of beds now available for treating victims of radiation. First responders dashing unprotected into the cloud from a smoky bomb might be among the worst wounded. Fire and police departments would need alpha radiation detectors, since the counters they carry now cannot see alphas.
Some of the steps involved in making a good smoky bomb from polonium would be dangerous for the terrorists involved, and might cost them their lives. That, unfortunately, no longer seems like a very high barrier.
What can we do to stop them? We must make it far less easy for them to acquiring polonium in deadly amounts. Polonium sources with about 10 percent of a lethal dose are readily available — even in a product sold on Amazon.com. Only modest restraints inhibit purchase of significantly larger amounts of polonium: As of next year, anyone in the United States purchasing more than 16 curies of polonium-210 — enough to make up 5,000 lethal doses — must register it with a tracking system run by the U.S. Nuclear Regulatory Commission. But this is vastly too high — almost no purchases on that scale are made by any industry.
The commission (and the International Atomic Energy Agency as well) is said to be considering tighter regulations to make a repeat of the Litvinenko affair less probable. There is talk that it might tighten the polonium-reporting requirement by a factor of 10, to 1.6 curies. That’s better, but still not strict enough.
The biggest problem is that the regulatory commission’s regulations do not restrict the quantity of polonium used in industry. This may make it quite easy for terrorists to purchase large amounts of one of the earth’s deadliest substances. A near-term goal should to require specific licensing of any person or company seeking to purchase alpha sources stronger than one millicurie, about one-third of a lethal dose. A longer-term goal ought to be eliminating nearly all use of polonium in industry through other technologies.
That is a technical challenge and would cost some money, but it would certainly be less expensive than coping with the devastation of a smoky bomb.

Peter D. Zimmerman, a nuclear physicist, is a professor of science and security in the Department of War Studies at King’s College London. This comment was published in The New York Times.

TITLE: A Textbook Case
AUTHOR: By Yulia Latynina
TEXT: Royal-Dutch Shell is going to end up handing half of its shares in the Sakhalin-2 oil and gas project to Gazprom. When Gazprom first said it wanted a stake, it could not reach agreement with Shell on a price. That is when Oleg Mitvol, the head of the Natural Resources Ministry’s environmental inspectorate, appeared. Mitvol’s presence influenced Shell in the same manner that thugs influence a stubborn street vendor to sell his business on the cheap.
The prospect of the sale of the shares in Sakhalin-2 to Gazprom could have signalled the end of the policy of cooperation with the West on oil and gas projects, were it not for one thing: At the same time Shell and Gazprom were engaged in “constructive talks,” President Vladimir Putin said in an interview that the subject of cooperation between Western companies and Gazprom on development of the Shtokman Arctic oil fields in exchange for “access to the end users of natural gas in the United States and Europe” was “not completely closed.”
“The subject could again be considered should there be an interesting offer from overseas partners,” Putin said.
It sounds a little strange. This group of people is trying to take control of a gas deposit away from Shell, which has already invested serious money in it, while at the same time calling on foreigners to invest in Russian oil fields. What’s more, such a deal is conditional upon Russia gaining access to networks of gas consumers in Europe.
Russia’s energy strategy is reminiscent of the poisoning of Kremlin critic Alexander Litvinenko.
Scotland Yard has already used the phrase “state-sponsored terrorism” and a trail of polonium-210 has been traced across Europe. Prosecutor General Yury Chaika, meanwhile, says with a straight face that he needs to question Chechen rebel envoy Akhmed Zakayev and self-exiled tycoon Boris Berezovsky, both of whom have political refugee status in Britain, about the poisoning of Litvinenko’s business associate, Dmitry Kovtun. Chaika continues his invaluable services with the same equanimity as the Kremlin in its attempts to marry off the Shtokman field.
The people who currently govern Russia studied the West in the 1970s from Soviet textbooks. These explained that “so-called” democracies engaged in political assassination, that their international corporations traded in banditry and that the West was prepared to put up with any unsavory leader as long as he was loyal to its side.
So the Kremlin behaves as democratic leaders should behave, according to 1970s authors of Russian textbooks. They are all like that! The Jews poisoned former Palestinian leader Yasser Arafat, Georgian President Mikheil Saakashvili killed his prime minister, Zurab Zhvania, and a friend of U.S. President George W. Bush personally sentenced Saddam Hussein to death. All those companies like Shell rob Latin America and instigate revolutions in Africa. It’s the only way they earn a profit!
Given this, those in the Kremlin don’t see anything wrong with taking a controlling stake in Sakhalin-2 while suggesting that investors sink even more of their money into Russia. For the same reason, they wouldn’t see any problem with exposing Litvinenko to polonium-210 while asking for a chance to interrogate Berezovsky.
And as for Shell, I wonder whether Dmitry Kovtun won’t end up playing as much of a role in Shell’s decision to sell as Oleg Mitvol. Who really knows with Russians anyway? What’s to stop them from putting polonium-210 in the Shell president’s tea during negotiations, and then offering to help in the ensuing investigation?

Yulia Latynina is host of a political talk show on Ekho Moskvy radio.

TITLE: Looking Back to Find Lessons in Iran’s Past
AUTHOR: By Yevgeny Kiselyov
TEXT: Everybody is talking about Iran of late so, since I got my degree in the modern history of Iran and the Farsi language, so will I. But I want to talk not about the Iran of today, but about the lessons of 30 years ago, when I spent a year working as a translator in Tehran from late 1977 through late 1978.
It was an unusual year, as the shah’s regime, which had seemed one of the region’s most successful and stable, collapsed like a house of cards.
Using enormous revenues from oil exports in the 1960s and 1970s, Shah Mohammed Reza Pahlavi began a broad program of economic reform to modernize the country according to the Western model.
When I first saw Tehran in 1977, it was entirely different from today. It was strikingly European in appearance. Abounding in picturesque green boulevards, the capital outshone Cairo and Beirut in its claim to be the Paris of the Middle East. Tehran’s central streets sparkled with super-modern hotels, business centers and restaurants. The latest Hollywood films were shown in the theaters.
You could buy English, French and German-language newspapers and magazines at the newsstands the same day they went on sale in the West. Iranian beauties in European fashions flitted about the boutiques. Veiled women were a rarity, and usually found only in the old, poorer quarter on the southern edge of town. Men with traditional Muslim beards and open collars were also the exception. In the business quarter the men were clean shaven and wore expensive suits and ties. The streets were jammed with late-model cars.
But it was only the semblance of well-being.
The crises began to build by the end of the 1970s. Economic growth came solely on the back of higher oil output and prices. Most other sectors of the economy stagnated. State capitalism and control over the economy was accompanied by monstrous corruption. The rift between the rich and the poor, between urban and rural society, and between highly and poorly paid workers grew at a tremendous rate. Social mobility was minimal.
If not dictatorial, the regime was at least very authoritarian. Some opposition parties were banned and others were marginalized. Official political activity was only permitted where it showed complete support for the regime. In the mid-1970s, the government abandoned even the facade of a multi-party landscape, shifting to a single party system. The secret police, or SAVAK, persecuted the most active members of the opposition, and there were attempts on the lives of emigre opposition leaders in London and Paris.
But the West winked at this because Iran was one of the most important U.S. allies in the region and a stable source of oil. Even U.S. President Jimmy Carter, who won election on a platform calling for the protection of human rights worldwide, turned a blind eye to the Shah’s activities.
Then, in late 1977, the student protests began. They were supported by traditional groups and strata in society — tradespeople, craftsmen, workers in small businesses and the clergy. The West’s reaction was anything but immediate. This was partly because it had been blinded by the showcase of the modern Iran and partly because the West had little information about opposition activities and the mood in anti-government circles. Foreign diplomats avoided speaking to even moderate critics of the Shah, afraid of upsetting the Iranian leadership. As a result, statements from opposition leaders were not taken seriously at first in Washington or European capitals. They thought the Shah’s position was extremely solid. By the time the crisis erupted in 1978, it was already too late.
After the Islamic revolution, power was at first divided among liberal mullahs and moderate, pro-Western opposition figures. Two years later, not one remained in power. A radical, theocratic and anti-American regime was established, with a platform of exporting Islamic revolution in the region, undermining Israel’s security and support of extremism terrorism. The regime trampled human rights no Shah had ever dreamed of violating.
Historical parallels, of course, are rarely 100 percent accurate. Russia is clearly not Iran. But Russian society is substantially traditional in many ways, and the level of traditionalism, especially in the regions, the outskirts of the big cities and the poorest parts of the population, is underestimated. In much the same way, I believe, that those in Iran underestimated the strength of aversion in some quarters, including the youth, toward the Western values accompanying modernization. Efforts to overcome the development gap with the West cause the same upsurge in anti-American and anti-Western feelings now as they did 30 years ago in Iran.
President Vladimir Putin’s increasingly anti-Western, nationalistic and xenophobic rhetoric could inflame these sentiments. In the Shah’s Iran, nationalistic slogans were commonplace, trumpeting the need to revive its former imperial greatness and become a major regional power. It was to the accompaniment of just such slogans that the Shah began his nuclear program. Combined with the idea of exporting the Islamic revolution, this makes for a potentially explosive mix.
Today, Russia is witnessing the development of adverse social conditions on a scale never seen in Iran. Paradoxically, the greatest pressure is building up in Moscow, where the greatest prosperity can be found. The rift is growing between the rich and the poor, as the 10 percent of the population at the top of the income scale nationally earn 15 times more than the bottom 10 percent. In Moscow the top segment earns 52 times more than the bottom.
Millionaires spring up in Russia like mushrooms after rain, while at least one-quarter of the population lives below the poverty line — a poverty line that is set low in Russia to begin with.
A novel by Russian Booker Prize-nominated author Zakhar Prilepin, a member of the unregistered National Bolshevik Party, sheds some light on embittered youth who have lost faith in the future and who hate authority and wealth.
“Nowadays, if you were born where I was born — in the Ryazan, or perhaps the Lipetsk or Nizhny Novgorod regions, you have only one chance, which is to die in the same village — to become a drunk and smoke yourself to death — because no kind of social conveyor from the Russian hinterland, which probably makes up three or four-fifths of the country ... — nothing is going to pull you out of that place. It is simply the absolute bottom from which it is impossible to escape.”
In 2002, we saw how embittered youth from among the millions in the suburbs trashed the center of Moscow after Russia lost to Japan in the football World Cup. There was no underlying political reason for the disorders. But if such reasons were to appear, nobody could brush them aside.
Some might accuse me of painting it on too thick. But there is another example from history. In 1913, during the celebration of the 300th anniversary of the Romanov dynasty, Russia was on the upswing and the economy, science and arts were blossoming. The inveterate opponents of the regime had been crushed and an end put to terrorism. Political life had entered the long-awaited period of stability. Nobody would have guessed in their worst nightmares that, in just five years, the regime would fall and Russia would be awash in the blood of red terror and civil war.

Yevgeny Kiselyov is a political analyst.

TITLE: Federer Aims to Stay Dominant in 2007
PUBLISHER: Reuters
TEXT: CHENNAI, India — World number one Roger Federer says he hopes to extend his seemingly invincible reign over men’s tennis into the new season. 
The nine-times grand slam winner was virtually unstoppable in 2006, reaching the final in all but one of the 17 tournaments he contested and winning three of the four majors.
“I am basically living my dream. I hope I can keep it up,” the 25-year-old Swiss said over the weekend.“Motivation is never a problem and won't be a problem for the next few years.”
The Swiss ace will kick off 2007 at the AAMI Classic in Kooyong in Australia on Jan. 8, before starting the defense of his Australian Open title the following week.
Federer on Saturday concluded a two-day field trip of the tsunami-hit southern Indian state of Tamil Nadu in his role of a UNICEF goodwill ambassador.
“[Winning the] French Open will definitely be a dream come true,” he said of the only grand slam that has eluded him.
“But on top of the list there is always Wimbledon and staying number one in the world because these are the ones that changed my life and made me the player and person I am today.” 
The Swiss became the first player to pocket more than $8 million in prize money in one season and accumulated an unprecedented 8,370 ranking points.
Such is his dominance that even if he puts his feet up until the end of February, he has hoarded enough points to break Jimmy Connors’s record of 160 consecutive weeks as world number one.
But Federer also stressed the importance of having high-level competition that can push him to greater glories.
“You need the competition, some get more lucky, some get more unlucky. But we have a great set of players at the moment ... like [Rafael] Nadal, [Andy] Roddick, [Lleyton] Hewitt, [Marat] Safin, [David] Nalbandian and new ones coming like [Ivan] Ljubicic and [Nikolai] Davydenko.
“[Andre] Agassi has just retired, we had a fantastic 2006 and an interesting 2007 lying ahead.”
Along with the French Open, Federer has set his eyes on two other crowns in the coming years.
“The Davis Cup will be nice and the Olympics in 2008 will be a big goal for me as well. These are the ones I haven't won yet,” he said.

TITLE: Gloomy Christmas For Bethlehem
AUTHOR: By Jonathan Saul
PUBLISHER: Reuters
TEXT: BETHLEHEM, West Bank — Hundreds of pilgrims celebrated Christmas in Bethlehem on Monday but Palestinian residents said there was little cause for holiday cheer in the town Christians revere as the birthplace of Jesus. 
Palestinian President Mahmoud Abbas attended the traditional midnight mass along with a few hundred worshippers in the Church of the Nativity, and morning saw Manger Square awash with the soft sounds of hymns and church bells.
“We need peace even more now,” said Hanna abu Eita, a 60-year-old Christian. “We only want a chance to live.”
Local officials said some 8,000 to 10,000 pilgrims would visit Bethlehem this Christmas, compared with 2,000 last year.
But residents and merchants said the estimate appeared high and that Israeli Arabs, rather than overseas pilgrims, made up the bulk of visitors.
Israel’s army eased travel restrictions to allow foreigners as well as Israeli and Palestinian Christians from the West Bank and Gaza to visit the town over Christmas.
But residents said military checkpoints and the Israeli barrier cutting into land that Palestinians want for a state were constant reminders they had little cause for celebration.
A concrete wall, with an iron gate, blocks off the entrance to Bethlehem along the road from nearby Jerusalem.
Israel says the barrier, a mix of wire fencing and concrete walls, stops suicide bombers from reaching its cities.
Hundreds of pilgrims gathered in Manger Square, decorated with colored lights and Christmas trees. Worshippers also flocked to the grotto of the Church of the Nativity.
But six years after the start of a Palestinian uprising, and nearly a year after election victory by the Islamic militant group Hamas, hardship across the occupied West Bank has deepened.
Bethlehem’s own Palestinian Christian community is dwindling under pressure from the conflict with Israel and Western economic sanctions against the Hamas-led Palestinian government.

TITLE: Ethiopia’s Air Attacks Escalate Somali War
AUTHOR: By Guled Mohamed
PUBLISHER: Reuters
TEXT: MOGADISHU — Ethiopian warplanes attacked two Islamist-held airfields in Somalia on Monday, witnesses said, in the most dramatic strikes yet of a war threatening to engulf the Horn of Africa. 
The attacks — one on the capital Mogadishu — came hours after neighboring Ethiopia formally declared war, saying it was protecting its sovereignty against a movement run by terrorists.
Fighting raged for a seventh day near Daynunay, close to the government seat, Baidoa. Witnesses reported truck-loads of Ethiopian wounded being evacuated, and Islamist soldiers were said to be reciting the Koran as they went into battle.
A MiG fighter struck Mogadishu’s international airport with machinegun fire soon after dawn, airport managing director Abdirahim Adan told Reuters. Three jets later attacked Somalia’s biggest military airfield at Baledogle, 100 kilometers west of Mogadishu.
“They are targeting the runway and I can see it being hit,” said an Islamist fighter who asked not to be named.
The week of intense fighting between Islamists and the Ethiopian- and Western- backed secular interim government has turned long-running hostilities into open war.
Analysts say Ethiopia seems to have halted the initial Islamist assault and saved the government from being overrun.
The Somalia Islamic Courts Council’s (SICC) Web site hailed “mujahideen” troops who, it said, chanted passages from the Koran as they went into battle against militarily superior Ethiopian “crusaders.”
Addis Ababa and Washington say the Islamists, who hold most of southern Somalia after seizing Mogadishu in June, are terrorists backed by Ethiopia’s enemy, Eritrea, and by al Qaeda.
Ethiopia has vowed to protect the government, which is virtually encircled by Islamist fighters in the town of Baidoa, halfway between Mogadishu and the Ethiopian border.
A government spokesman said the administration approved of Ethiopian use of air power. “Anywhere terrorists use to bring in arms and ammunition deserves to be hit,” said Abdirahman Dinari.
The government said it had closed all borders — a largely symbolic measure given that it has little power beyond Baidoa.
Ethiopia said it had attacked the capital’s airport to stop “illegal flights” following the closure of Somalia’s borders.
“It was also reported some of the extremists were waiting for an airlift out of Mogadishu,” an Ethiopian spokesman said.
Aid agencies, struggling to get help to more than a million Somalis afflicted by conflict and weeks of floods in one of the world’s poorest countries, said they had not been told about the closure of borders.
The Islamists accused Ethiopia of targeting civilians, and repeated a threat to attack its capital. “We shall strike Addis Ababa the way they hit Mogadishu,” SICC spokesman Abdirahman Ali Mudey said. “These air strikes will not continue ... even if it means getting weapons from outside.”
Government Prime Minister Ali Mohamed Gedi told Reuters 8,000 foreign fighters had poured into Somalia to back the SICC. He agreed with a recent U.S. accusation that the movement’s top ranks were controlled by al Qaeda. 
Both sides say they have killed hundreds of opponents in days of battles with mortars, rockets, machineguns and tanks, but there has been no independent verification. 
Residents said Ethiopian troops took control of Baladwayne town on Monday after a day of bombing to uproot the Islamists. To the south, locals in Baidoa saw Ethiopian military trucks ferrying wounded troops to the airport. 
“I can see seven big trucks carrying wounded Ethiopian soldiers lying on blood-stained mattresses,” taxi driver Abdullahi Hassan told Reuters by telephone. 
The Islamists claim broad popular support and say their main aim is to restore order to Somalia under sharia law after years of anarchy since the 1991 ouster of dictator Siad Barre.

TITLE: Chelsea  To Halt Spending
PUBLISHER: The Associated Press
TEXT: LONDON — Chelsea owner Roman Abramovich has signaled an end to his days of extravagant spending in the transfer market.
The Russian billionaire also denied he’ll lose interest in his Premier League club any time soon.
Since Abramovich took over Chelsea in 2003, the club has spent some $540 million on transfers. This year alone, Chelsea has signed striker Andriy Shevchenko on a British-record transfer fee of $59 million and agreed to pay midfielder Michael Ballack one of the highest wages in world soccer.
“Our strategy is to bring up our own players through the academy, which we have invested a lot in, and we hope that will give results,” Abramovich said in his first interview in three years, with The Observer newspaper published Sunday. “We will be spending less in the transfer market in future years.”
Abramovich dismissed talk that his influence threatened to turn soccer into an elitist sport and denied he wanted Chelsea to play in a European “Super League.”
“I don’t see the risk of that,” he said. “Money plays an important role in football but it is not the dominating factor.
“I don’t have an opinion about Chelsea playing in a Super League,” Abramovich added. “My feeling would be that you lose something of the beauty of the Premiership by joining something not defined at the moment.
“When Chelsea play a Carling Cup (League Cup) game in a small city and it could result in a draw — the excitement, the spirit, the atmosphere — that’s the real beauty of football in England.”
Abramovich made his fortune from oil when Russia’s public utilities were privatized in the 1990s. In inflating soccer’s transfer market, Chelsea’s methods have also been questioned. Last year the club was found guilty of illegally approaching defender Ashley Cole while he was still under contract with Arsenal. Cole moved to Chelsea in August.
When asked if his business practices were too aggressive, Abramovich replied: “It’s difficult to say.”
Abramovich’s influence has turned defending champion Chelsea into the club people love to hate.
“Everyone likes the situation where the leader loses,” Abramovich said. “We don’t have financial problems — that’s probably also a factor. But you need to give credit: the number of Chelsea fans has increased substantially. There are two groups: ones who love the team and those who don’t like it.”
Abramovich said he was not involved in team selection, including that of his friend Shevchenko who is still struggling to settle.
“I cannot say I’m completely not involved in buying a player, but my role would be significantly lower than that of the manager’s,” he said. “You cannot compare them.”
Abramovich said he did not have “friendly relations” with manager Jose Mourinho, but added they were “warm enough.”
“Generally speaking, I treat him with great respect and not only because of his football achievements,” he said.
Abramovich also denied he would lose his interest in soccer after a few years.
“People who know me said I will win one or two Premierships and will not be interested after that,” he said. “The reality is that we’ve won two Premierships but I’m more excited about this particular season than last year or the year before.”

TITLE: Worship God, Not Technology, Pope Preaches
PUBLISHER: Reuters
TEXT: VATICAN CITY — Mankind, which has reached other planets and decoded the genetic instructions for life, should not presume it can live without God, Pope Benedict said in his Christmas message on Monday. 
In an age of unbridled consumerism it was shameful many remained deaf to the “heart-rending cry” of those dying of hunger, thirst, disease, poverty, war and terrorism, he said.
“Does a ‘Saviour’ still have any value and meaning for the men and women of the third millennium?” he asked in his “Urbi et Orbi” (to the city and the world) message to the faithful in St. Peter’s Square, broadcast live to millions in 40 countries.
“Is a ‘Saviour’ still needed by a humanity which has reached the moon and Mars and is prepared to conquer the universe; for a humanity which knows no limits in its pursuit of nature’s secrets and which has succeeded even in deciphering the marvelous codes of the human genome?”
He appealed for peace and justice in the Middle East, an end to the brutal violence in Iraq and to the fratricidal conflict in Darfur and other parts of Africa, and expressed his hope for “a democratic Lebanon.”

TITLE: Ruthless Boxer Has Ambition Beyond Brutality in The Ring
AUTHOR: By Adam Goldman
PUBLISHER: The Associated Press
TEXT: NEW YORK — Some advice for young, promising fighters: Avoid getting in the ring with Miguel Cotto. It could be hazardous to one’s career. 
Cotto is a 26-year-old Puerto Rican who delivers vicious body punches and nasty hooks. His latest victory came Dec. 2 in Atlantic City, New Jersey, where he pummeled tough welterweight Carlos Quintana and won in five rounds. 
The victory gave Cotto a second world title and his first million-dollar payday. It also was considered his coming-of-age moment. 
Now, Cotto (28-0, 23 K.O.s) is hoping to cash in, with the goal of one day supplanting Floyd Mayweather as boxing’s best pound-for-pound fighter. 
“All the good boxers, I know I can fight with them,” Cotto said in an interview from his home in Caguas, Puerto Rico. “I know I can beat them. I have no doubts.” 
Cotto doesn’t like to simply beat opponents, he likes to destroy them. But he is modest and soft-spoken, going about his work without the hyperbolic rhetoric of a Bernard Hopkins or James Toney. 
“I don’t like to talk,” said Cotto, who starting boxing at age 11 to lose weight. Cotto fights with a punishing style that disfigures the faces of foes. He declines to compare himself to any one boxer, although his relentless ring stalking and trademark body shots make him more Tony Zale than Marvin Hagler. 
Like Zale, a middleweight champion in the 1940s, Cotto prefers attacking the body. He’s knocked out about a half dozen fighters digging to the body like a backhoe. 
He has dispatched everybody in front of him in a stretch of impressive wins over the previous two years. 
But Cotto points to three recent victories that have helped him mature into a seasoned boxer. 
Against Ricard Torres last year, Cotto was knocked down and staggered but recovered to win when the fight was stopped in the seventh. 
“I had two or three bad moments,” Cotto said. “I survived and won the fight.” 
In June, he beat the loquacious and speedy Paulie Malignaggi of Brooklyn. Cotto said he had to tune out Malignaggi, who tried to distract him with verbal jabs. 
“I had to keep my focus,” Cotto said. 
Malignaggi managed to go all 12 rounds but Cotto easily outpointed him and fractured the undefeated fighter’s face, sending him to the hospital. Malignaggi said Cotto was the hardest puncher he ever faced. 
His last fight against Quintana, a fellow Puerto Rican and left-hander, was risky. Cotto moved up to 147 pounds to battle Quintana for the WBA welterweight title. 
The fight basically ended when Cotto delivered his signature shot to Quintana’s liver. A battered Quintana refused to leave his corner as his trainer pleaded with him to go another round. 
“I can’t do it,” Quintana said. “I can’t do it. I’m dead.” 
Cotto said he felt much stronger fighting Quintana. He no longer had to conserve his stamina as he did at 140. He could let loose with his fists from start to finish. 
“Now, you’re seeing the real Miguel Cotto,” said Cotto’s promoter Bob Arum, chief executive of Top Rank Inc. “He’s found a natural weight.” 
Cotto’s next bout is against Oktay Urkal (37-3) in March in Puerto Rico. Most boxing commentators believe he’ll beat the German. Then there are possible fights down the road with Antonio Margarito and Shane Mosley — perhaps at Madison Square Garden, where Cotto has fought twice before on the eve of the Puerto Rican Day Parade. 
If Cotto can get past these very skilled fighters, it could set up a showdown with Mayweather, who fights Oscar De La Hoya in May. 
Arum hopes the two meet. 
“We think he’d break Mayweather in two,” Arum said. “There is nobody in boxing who hits harder. It’s a lot harder to move the body than the head.” 
HBO boxing analyst Max Kellerman isn’t ready to call Cotto the next Felix Trinidad, arguably one of Puerto Rico’s best fighters, along with Wilfredo Gomez. He says Cotto has a slugger’s chance against Mayweather but he’d be a definite underdog. 
Cotto also has to improve his English if he wants to cement his crossover appeal and evolve into one of the sport’s superstars. Top Rank says Cotto is taking English classes. 
But if he can do that, Cotto could go far in any of three divisions that are bulging with talented fighters, Kellerman says.
“He could be the centerpiece of a truly remarkable era,” Kellerman said. “He’s the right guy, at the right place, at the right time.”

TITLE: Schwazenegger Breaks His Leg During Ski Vacation
PUBLISHER: The Associated Press
TEXT: SAN FRANCISCO — California Governor Arnold Schwarzenegger planned to stay through Christmas at his home in Idaho as he recovers from breaking his leg, a spokeswoman said.
Schwarzenegger, 59, was recuperating Monday in Sun Valley, Idaho, a resort town where he often vacations. He broke his leg there while skiing Saturday.
The governor was “continuing to do well today and looking forward to spending time with his family,” spokeswoman Julie Soderlund said.
Doctors at the Sun Valley hospital who examined Schwarzenegger told him he needed surgery to repair his fractured right femur, which extends from the hip to the knee. An operation has not been scheduled but will take place in Los Angeles, Soderlund said. The governor’s staff would not release details about how he was hurt. Soderlund said that he was not fitted with a cast and that she did not know whether he was using a wheelchair or crutches.
Schwarzenegger does not intend to delay his second inauguration, scheduled for Jan. 5, Soderlund said.
Though one of the strongest bones in the human body, the femur is commonly broken in skiing accidents, said Dr. Marc Safran, director of sports medicine at the University of California, San Francisco, Medical Center.
Depending on the location and extent of the break, the governor’s surgery could include inserting a rod into his leg, securing the injured section with a plate and screws, or even a partial hip replacement if the injury was near the hip, Safran said.
Recovery can take six weeks or longer, but the governor could be walking in time for the inauguration, likely needing crutches or a cane, Safran said.

TITLE: Italian Linked to Litvinenko Held in Arms Dealing Probe
AUTHOR: By Phil Stewart
PUBLISHER: Reuters
TEXT: ROME — Mario Scaramella, the Italian contact of the dead ex-Russian spy Alexander Litvinenko, flew home for Christmas on Sunday but was arrested in connection with an investigation into arms trafficking, a judicial source said. 
The source said Scaramella was arrested at Naples airport as he arrived on a flight from London, where he was hospitalized this month for treatment for suspected radiation poisoning.
He was one of the last people to have met with Litvinenko, who died last month of radiation poisoning.
Scaramella, an Italian KGB expert who was a consultant to a parliamentary commission that investigated spying in Europe during the Cold War, was arrested in connection with an investigation into arms trafficking and violating state secrets.
Scaramella, whose family lives in the Naples area, was later driven to the Regina Coeli jail in central Rome.
Scaramella met Litvinenko at a London sushi bar on Nov. 1, the day the former Russian spy fell ill.
Both Russian and British authorities have started murder investigations into Litvinenko’s death from poisoning by a lethal dose of polonium-210.
The attention surrounding Scaramella has thrown the spotlight onto Italian judicial investigations that involve him, including one into arms trafficking.
In a telephone interview with Reuters earlier this month, Scaramella said: “I need to come back to Italy as soon as I can and to clarify with authorities,” he said.
Litvinenko, in a statement released after his death on Nov. 23, accused Russian President Vladimir Putin of masterminding his poisoning.
The Kremlin has denied involvement in the case, which has sparked conspiracy theories, revived memories of Cold War spying and strained relations between Russia and Britain.

TITLE: Warne, McGrath Exits Could Dull Ashes Win
AUTHOR: By Julian Linden
PUBLISHER: Reuters
TEXT: SYDNEY — The emotion and hype surrounding Shane Warne and Glenn McGrath’s pending farewells is threatening to distract Australia in the build-up to the fourth Ashes test at the Melbourne Cricket Ground.
With the series already decided, Australia’s players could be forgiven for taking it easy in the final two tests but coach John Buchanan and captain Ricky Ponting have warned the team not to lose sight of the big picture.
Motivated by the taunts of English fans after losing their 16-year grip on the Ashes last year, Australia are determined to reinforce their domination over their rivals with a 5-0 series clean sweep, emulating the feat of Warwick Armstrong’s 1920-21 Australians. 
“Our mission here is not only to win the Ashes but also establish a huge gap between us and England,” Buchanan told reporters.
“We really want to finish these next two test matches on a high note.”
Australia regained the Ashes in record time with two matches to spare after winning the first three matches of the series, but say they will not be satisfied with anything less than English humiliation.
Ponting said the Australians had to be careful not to get caught up in the inevitable hype surrounding the pending retirements of Warne and McGrath but could think of no better way to send them off than with a series whitewash. 
“There is a strong feeling in the team that the job is only half finished and I’d be very disappointed if we lost a game from here,” Ponting said.
“We want to win the next two games and it would be a fitting end for Shane and Glenn.
“We can actually use that as some sort of motivation to make sure we send off two of the all-time greats of the game on the right note.”
Warne ended the third test tantalisingly perched on 699 career wickets and is poised to become the first player to crack the once-unimaginable 700 milestone at his home ground.
With tickets for the match sold out in the 100,000-capacity stadium, Cricket Australia officials are expecting a world record attendance of over 400,000 if the match goes the full distance.
The MCG is Australia’s grandest and most famous sporting stadium and was the centrepiece for the 1956 Olympics and this year’s Commonwealth Games.
The match has been given added significance because it will be the 100th test at the ground.

TITLE: Legendary ‘Godfather of Soul’ James Brown Dies at 73
AUTHOR: By Greg Bluestein
PUBLISHER: The Associated Press
TEXT: ATLANTA — James Brown, the dynamic, pompadoured “Godfather of Soul,” whose rasping vocals and revolutionary rhythms made him a founder of rap, funk and disco as well, died early Monday, his agent said. He was 73. 
Brown was hospitalized with pneumonia at Emory Crawford Long Hospital on Sunday and died around 1:45 a.m. Monday, said his agent, Frank Copsidas of Intrigue Music. Longtime friend Charles Bobbit was by his side, he said.
Copsidas said the cause of death was uncertain. “We really don’t know at this point what he died of,” he said.
Along with Elvis Presley, Bob Dylan and a handful of others, Brown was one of the major musical influences of the past 50 years. At least one generation idolized him, and sometimes openly copied him. His rapid-footed dancing inspired Mick Jagger and Michael Jackson among others. Songs such as David Bowie’s “Fame,” Prince’s “Kiss,” George Clinton’s “Atomic Dog” and Sly and the Family Stone’s “Sing a Simple Song” were clearly based on Brown’s rhythms and vocal style.
If Brown’s claim to the invention of soul can be challenged by fans of Ray Charles and Sam Cooke, then his rights to the genres of rap, disco and funk are beyond question. He was to rhythm and dance music what Dylan was to lyrics: the unchallenged popular innovator.
“James presented obviously the best grooves,” rapper Chuck D of Public Enemy once told The Associated Press. “To this day, there has been no one near as funky. No one’s coming even close.”
His hit singles include such classics as “Out of Sight,” “(Get Up I Feel Like Being a) Sex Machine,” “I Got You (I Feel Good)” and “Say It Loud — I’m Black and I’m Proud,” a landmark 1968 statement of racial pride.
“I clearly remember we were calling ourselves colored, and after the song, we were calling ourselves black,” Brown said in a 2003 Associated Press interview. “The song showed even people to that day that lyrics and music and a song can change society.”
He won a Grammy award for lifetime achievement in 1992, as well as Grammys in 1965 for “Papa’s Got a Brand New Bag” (best R&B recording) and for “Living In America” in 1987 (best R&B vocal performance, male.) He was one of the initial artists inducted into the Rock and Roll Hall of Fame in 1986, along with Presley, Chuck Berry and other founding fathers.
He triumphed despite an often unhappy personal life. Brown, who lived in Beech Island near the Georgia line, spent more than two years in a South Carolina prison for aggravated assault and failing to stop for a police officer. After his release on in 1991, Brown said he wanted to “try to straighten out” rock music.
From the 1950s, when Brown had his first R&B hit, “Please, Please, Please” in 1956, through the mid-1970s, Brown went on a frenzy of cross-country tours, concerts and new songs. He earned the nickname “The Hardest Working Man in Show Business” and often tried to prove it to his fans, said Jay Ross, his lawyer of 15 years.
Brown would routinely lose two or three pounds each time he performed and kept his furious concert schedule in his later years even as he fought prostate cancer, Ross said.
“He’d always give it his all to give his fans the type of show they expected,” he said.
With his tight pants, shimmering feet, eye makeup and outrageous hair, Brown set the stage for younger stars such as Michael Jackson and Prince.
In 1986, he was inducted in the Rock and Roll Hall of Fame. And rap stars of recent years overwhelmingly have borrowed his lyrics with a digital technique called sampling.
Brown’s work has been replayed by the Fat Boys, Ice-T, Public Enemy and a host of other rappers. “The music out there is only as good as my last record,” Brown joked in a 1989 interview with Rolling Stone magazine.
“Disco is James Brown, hip-hop is James Brown, rap is James Brown; you know what I’m saying? You hear all the rappers, 90 percent of their music is me,” he told the AP in 2003.
Born in poverty in Barnwell, S.C., in 1933, he was abandoned as a 4-year-old to the care of relatives and friends and grew up on the streets of Augusta, Ga., in an “ill-repute area,” as he once called it. There he learned to wheel and deal. 
“I wanted to be somebody,” Brown said. 
By the eighth grade in 1949, Brown had served 3 1/2 years in Alto Reform School near Toccoa, Georgia, for breaking into cars. 
While there, he met Bobby Byrd, whose family took Brown into their home. Byrd also took Brown into his group, the Gospel Starlighters. Soon they changed their name to the Famous Flames and their style to hard R&B. 
In January 1956, King Records of Cincinnati signed the group, and four months later “Please, Please, Please” was in the R&B Top Ten. 
Pete Allman, a radio personality in Las Vegas who had been friends with Brown for 15 years, credited Brown with jump-starting his career and motivating him personally and professionally. 
“He was a very positive person. There was no question he was the hardest working man in show business,” Allman said. “I remember Mr. Brown as someone who always motivated me, got me reading the Bible.” 
While most of Brown’s life was glitz and glitter — he was the singing preacher in 1980’s “The Blues Brothers” — he was plagued with charges of abusing drugs and alcohol and of hitting his third wife, Adrienne. 
In September 1988, Brown, high on PCP and carrying a shotgun, entered an insurance seminar next to his Augusta office. Police said he asked seminar participants if they were using his private restroom. 
Police chased Brown for a half-hour from Augusta into South Carolina and back to Georgia. The chase ended when police shot out the tires of his truck. 
Brown received a six-year prison sentence. He spent 15 months in a South Carolina prison and 10 months in a work release program before being paroled in February 1991. In 2003, the South Carolina parole board granted him a pardon for his crimes in that state. 
Soon after his release, Brown was on stage again with an audience that included millions of cable television viewers nationwide who watched the three-hour, pay-per-view concert at Wiltern Theatre in Los Angeles. 
Adrienne Brown died in 1996 in Los Angeles at age 47. She took PCP and several prescription drugs while she had a bad heart and was weak from cosmetic surgery two days earlier, the coroner said. 
More recently, he married his fourth wife, Tomi Raye Hynie, one of his backup singers. The couple had a son, James Jr. 
Two years later, Brown spent a week in a private Columbia hospital, recovering from what his agent said was dependency on painkillers. Brown’s attorney, Albert “Buddy” Dallas, said the singer was exhausted from six years of road shows. 
Brown was performing to the end, and giving back to his community. 
Three days before his death, he joined volunteers at his annual toy giveaway in Augusta, and he planned to perform on New Year’s Eve at B.B. King Blues Club in New York. 
“He was dramatic to the end — dying on Christmas Day,” said the Reverend Jesse Jackson, a friend of Brown’s since 1955. “Almost a dramatic, poetic moment. He’ll be all over the news all over the world today. He would have it no other way.”

TITLE: Harry Potter  Book Named
PUBLISHER: The Associated Press
TEXT: NEW YORK — We now have a title for Harry Potter VII. But if you want to find out for yourself, visit J.K. Rowling’s web site and play a little game of hangman. 
Rowling’s U.S. publisher, Scholastic Inc., released a brief statement Thursday announcing the name of the world’s most anticipated children’s book, the finale to her phenomenally popular fantasy series.
No publication date or other details were offered. Rowling is still working on the book, she explained on her web site in an entry posted early Thursday.
“I’m now writing scenes that have been planned, in some cases, for a dozen years or even more,” she wrote. “I don’t think anyone who has not been in a similar situation can possibly know how this feels: I am alternately elated and overwrought. I both want, and don’t want, to finish this book (don’t worry, I will.)”
Meanwhile, she set up a test for her Potter fans. If you go to jkrowling.com, click on the eraser and you will be taken to a room — you’ll see a window, a door and a mirror. Eventually you figure out the title yourself by playing a game of hangman.
Or you can just take Scholastic’s word for it: “Harry Potter and the Deathly Hallows.”

TITLE: Minnesota Force 11th OT Triumph
PUBLISHER: The Associated Press
TEXT: ST. PAUL, Minnesota — Minnesota didn’t panic after Detroit took a late lead. The Wild kept their composure, quickly tied the score and then got their league-leading 11th overtime win. 
Pierre-Marc Bouchard beat Chris Osgood on a breakaway 45 seconds into the extra session to give the Wild a 3-2 win over the Red Wings on Saturday night. 
Tied 1-1 with less than 4 minutes to play in regulation, the teams traded goals just 16 seconds apart. Kris Draper gave the Red Wings their first lead, lifting his own rebound over Manny Fernandez’s left leg pad. After the ensuing faceoff, Wild forward Mark Parrish deflected Keith Carney’s shot that was heading wide past Osgood. 
“We knew if we stuck with it, even with only a few minutes left, we’d have a chance to tie the game and win the game,” Parrish said. 
In overtime, Bouchard grabbed a turnover by Pavel Datsyuk at the blue line, then lifted a backhand shot over Osgood’s glove. 
“I came in at an angle to give myself more options,” said Bouchard. “I faked the shot, then came with my backhand and it worked.” 
Fernandez had 29 saves in the win, while Osgood stopped 32 shots in his first overtime loss of the season. 
“It was a tough game and we didn’t have as much energy as them coming out,” Wings coach Mike Babcock said. 
“Teams score against you sometimes but they’ve got to earn it. We had the turnover in overtime and that was about it.” After 43 minutes of scoreless hockey, Minnesota got on the board with a short-handed goal. Mikko Koivu started and finished a 2-on-1 break, beating Red Wings defenseman Brett Lebda at the blue line, and then snapping the puck past Osgood for his ninth goal of the season at 3:25 of the third. 
The Red Wings won 3-1 on Friday night in Detroit and host the Wild again on Wednesday night.

TITLE: Muslim Dubai Celebrates Christmas With Cheer
PUBLISHER: The Associated Press
TEXT: DUBAI, United Arab Emirates — With Santa Clauses in trendy malls, giant Christmas trees in hotels and holiday treats on supermarket shelves, Christmas cheer is can’t be missed in this Muslim city. In fact, the holiday kitsch is at an all-time high in Dubai where many residents reveal in the commercial hype of the Christian holiday.
Though winter temperatures feel more like summer here, it hasn’t stopped people from purchasing Christmas trees, which are shipped in from colder, northern countries, and taking pictures with Santa amid fake falling snow inside a local mall.
Despite a growing rift between some Muslims and Christians, it’s no surprise that the commercial side of Christmas is all the rage in Dubai, home of other over-the-top, flashy attractions including an indoor snow skiing park and man-made islands created in the shape of palm trees.
The majority of the 800,000 citizens of the oil-rich United Arab Emirates are Muslim. But an estimated 3.7 million foreigners also live there. Though most are guest workers from other Arab and Muslim countries, many come from predominantly Christian countries including Britain.
Anger toward the West and Christians by some Muslims has escalated over the past year after cartoons depicting the Prophet Muhammad were first published in a Danish newspaper and following the explosive comments made by Roman Catholic Pope Benedict XVI in September about violence and the prophet.
But unlike conservative Islamic Gulf countries like Saudi Arabia, which bans celebrating non-Muslim holidays, and Kuwait, where debates spring up about whether it’s un-Islamic to wish people Merry Christmas, Dubai has long been the liberal bastion of the Arabian Peninsula where people from all countries and religions seeking to reap the benefits of its booming economy live.
The commercialized Christmas shopping spirit is most prominent in Dubai’s vast malls, which feature displays of fake snowmen, furry polar bears and fuzzy reindeer wagging their heads as they pull sleighs full of presents.
A snow storm erupts every hour at the Emirates mall, where for $11, children can visit Santa and receive a gift. Across town at the Ibn Batutta Mall, fake Santas strum electric guitars, singing “Jingle Bell Rock.”
At the Wafi City mall, an Egyptian-themed shopping center built around a fake pyramid, children played among gingerbread houses and shoppers listened to Christmas carols.
“It’s lovely,” said Donna Ralf, 43, from England, while shopping with her granddaughter. 
“It definitely makes home seem closer.”
Dubai’s legions of hotels and clubs also seem to be competing to outdo each other to attract well-heeled residents to luxurious Christmas dinners. Many have sent teenagers to slip fliers under apartment and office doors in neighborhoods favored by expatriates.
One hotel, the Mina a-Salaam, even boasts a giant, brightly lit Christmas tree that floats on a raft in an artificial lake.
The Christmas frenzy has spilled over to residential neighborhoods. At one apartment complex, fliers are posted inviting residents of all denominations to Christmas parties, and the greeting “Happy Christmas” is in vogue here, even among non-Christians.
Newspapers also have jumped on the Christmas bandwagon, with the top headline of the Khaleej Times, an Arabic daily newspaper, on Sunday reading: “Look, it’s Christmas” above a picture of a mother and daughter wearing Santa’s hats.
Emirati resident Loloa al-Khalifa, dressed in the traditional black cloak or abaya, said she welcomed the Christmas cheer while taking photographs of her one-year-old son in front of holiday decorations at one of the malls recently.
“I’m very proud of our traditions but happy that my son is growing up in such a cosmopolitan city,” al-Khalifa, a Muslim, said.

TITLE: English Premiership Hots Up Over Holidays, Man U Hold On
PUBLISHER: Reuters
TEXT: LONDON — Leaders Manchester United began their holiday fixtures with a resounding 3-0 victory at Aston Villa as the goals flowed in the Premier League on Saturday.
A double from an inspired Cristiano Ronaldo and a thumping Paul Scholes volley, all in the second half, briefly gave United a five-point lead before champions Chelsea responded with a last-gasp 3-2 win at Wigan Athletic to slice it to two again.
At the halfway point of the season United have 47 points from 19 games while Chelsea have 45. 
Liverpool remained a distant third at the halfway stage, 13 points behind United after Craig Bellamy and Xabi Alonso sealed a 2-0 home win over bottom club Watford.
Arsenal stayed in the last Champions League qualifying spot with a 6-2 thrashing of free-falling Blackburn Rovers.
Arsenal were shocked into action after three minutes when Shabani Nonda scored a penalty, but the rampant Gunners replied three times before halftime with Gilberto Silva, Alexandr Hleb and Emmanuel Adebayor’s penalty.
Nonda scored again after the break as Rovers threatened a comeback only for Robin van Persie to score a late double before Matthieu Flamini completed the rout in added time.
Wayne Rooney was left on the bench for United’s trip to Villa Park having missed training due to a family bereavement, but his sidekick Cristiano Ronaldo took centre stage.
The Portuguese cut through the Villa defence to break the deadlock after 59 minutes and then grabbed the killer third goal either side of Scholes’ thumping volley that went in off the underside of the crossbar.
“After 11 games in a row it was a good time to give (Rooney) a rest,” United manager Alex Ferguson told Sky Sports.
“But Ronaldo was fantastic, he’s having a great season for us,” added Ferguson who celebrated the 2,000th United goal under his command when Ronaldo scored the opener. 
“Maybe I’ll give him a bottle of wine,” he joked.
Chelsea’s victory took the day’s goal tally to 32, but they looked to have blown victory when Emile Heskey’s brace cancelled out goals from Frank Lampard and Salomon Kalou.
However, in the third minute of stoppage time Robben cut in from the right to fire the winner that keeps Chelsea breathing down United’s neck.
Earlier at St James’ Park, Newcastle United won 3-1 against a Tottenham Hotspur side looking for a sixth straight victory in all competitions.
Keiron Dyer and in-form striker Obafemi Martins gave the hosts a two-goal lead, Danny Murphy pulled one back for Spurs before Scott Parker struck again all before halftime.
Nicolas Anelka scored both goals for Bolton Wanderers as they consolidated fifth place with a 2-0 victory at Manchester City, who had Joey Barton sent off late on.
Portsmouth, who are also flying high, came from behind to beat Sheffield United 3-1 and stay sixth. Everton striker Andy Johnson, accused of diving by Chelsea manager Jose Mourinho last week, responded with a goal in Everton’s 2-0 win at Reading.
Charlton Athletic completed a miserable week to increase the pressure on manager Les Reed. 
Thrashed by Liverpool last Saturday and beaten by fourth division Wycombe Wanderers in the League Cup on Tuesday, second-bottom Charlton lost 2-0 at Middlesbrough in a relegation battle.
Charlton have now gone 24 away matches without a victory.
Middlesbrough’s win left West Ham United in the bottom three despite a battling 0-0 draw at Fulham. The struggling east London side, without an away goal since August, had Paul Konchesky sent off five minutes from time.

TITLE: Runner Fails Doping Test
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russian steeplechase champion Lyubov Ivanova was banned for two years by her country’s track and field federation after testing positive for an unspecified steroid. 
Ivanova won the European 3,000-meter steeplechase title in 2003. She tested positive after finishing fourth at the World Athletics Final in Stuttgart, Germany, in September. 
Her ban took effect Friday and must be ratified by the International Association of Athletics Federations. The ban was confirmed Sunday by Rostislav Orlov, spokesman for the Russian Athletics Federation. 
Nine Russian athletes had failed tests this season.