SOURCE: The St. Petersburg Times
DATE: Issue #1239 (5), Tuesday, January 23, 2007
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TITLE: Migration Law Leads To Havoc
AUTHOR: By Evgenia Ivanova
PUBLISHER: Staff Writer
TEXT: With more than 100,000 illegal immigrants working in St. Petersburg at the end of 2006, according to Fontanka.ru, amendments to the immigration law that came into effect on Jan. 15 were aimed at tightening the responsibility for companies employing them.  
But more than a week after the new regulations were introduced, confusion surrounds the amendments.
“The lines are seemingly endless, it is impossible to move here or even get a copy of the application form,” a woman who spoke on condition of anonymity at the St. Petersburg office of the Federal Migration Service, or FMS, told the St. Petersburg Times on Monday.
The new law is intended to make it easier for migrants from CIS countries (excluding citizens of Georgia and Turkmenistan) and their potential employers to receive work permits. 
According to the authorities, the process takes no longer than 10 days, if the candidate submits the appropriate documents together with the application forms.
But getting hold of a copy of the application form has so far proved to be difficult. No information about the new law has been posted on the official FMS website.
Employees of the FMS’s city office Monday, although helpful and accommodating, did not appear to know much about the change in law.
Lines at the office on Monday stretched to 200 people submitting applications, picking up permits, simply receiving the right form or just needing more information. 
They lined up for hours in sub-zero temperatures between narrow flights of stairs in the old city center building.
Although the majority of seemed to be confused, stressed, angry and tired, the atmosphere was far from hysterical with people joking and remaining optimistic.   
“Apart from [the lines] everything is O.K.,” the woman who spoke on Monday added. Although the office opens its doors at 10 a.m., she said the line started to form as early as 4 a.m. 
The only way to get information was during frantic appearances by a staff member running up and down the stairs to distribute the forms. 
“Please shut up and listen,” she shouted at the top of her voice. Some in the line found that they were wasting their time as they didn’t have the appropriate documents. 
“I’m starting to feel sick and tired as we’ve been lining up here literally for weeks,” said Ramiya, who declined to disclose her surname but said she represented the restaurant where she works.
“The entire process should be organized in a more civilized way. At the moment the line here reminds me the lines for a scarce item like carpets during the days of the U.S.S.R. You can’t get an appointment, you just have to line up for days,” she said.

TITLE: Putin Vows To Resolve Transit Problems
AUTHOR: By Miriam Elder
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Vladimir Putin said Sunday that he would seek to speed up the construction of pipelines delivering oil and gas directly to European customers in a bid to ease concerns over the country’s ability to act as a dependable energy supplier.
“We will in the most active way possible develop our transport network in order to have the opportunity to deliver our resources to our main consumers directly,” Putin said after two hours of talks with German Chancellor Angela Merkel in the Black Sea resort of Sochi.
Putin’s comments reinforced the Kremlin line that Russia’s former Soviet neighbors Ukraine and Belarus were to blame for pipeline cutoffs that caused oil and gas shipments to Europe to dip twice in the past 12 months.
Merkel, in her first visit to Russia since taking over the presidencies of the European Union and Group of Eight on Jan. 1, criticized Putin for failing to inform EU leaders that their energy supplies would be affected by spats with neighboring transit countries.
“Communication on certain issues must be better to avoid irritations,” Merkel said at a joint news conference after talks at Putin’s Bocharov Ruchei residence.
Germany faced a drop in oil supplies earlier this month when a key pipeline was shut during a conflict with Belarus over oil tariffs, and its gas supply dipped last year during Gazprom’s pricing dispute with Ukraine.
“We are open to constructive work in the framework of the energy dialogue with the European Union,” Putin said. “There should be no doubts that Russia has been and will remain a reliable fuel supplier.”
Yet European concerns remain high. Poland has used its veto to block the start of negotiations on a new EU-Russia cooperation treaty in part to register its concerns over Russia’s role as a dependable supplier of oil and gas.
All 27 EU members must agree to start the talks, and Poland has refused to lift its veto until Moscow removes a yearlong ban on a range of Polish agricultural products. It has also voiced concerns over Russia’s refusal to ratify the Energy Charter Treaty and its accompanying Transit Protocol, which would open the country’s pipelines to third-party competition.
EU leaders had hoped to reach an agreement with Poland and Russia before Merkel’s visit. Agriculture Minister Alexei Gordeyev failed to clinch a deal during talks in Berlin on Saturday with his Polish counterpart, Andrzej Lepper, and European Health and Consumer Protection Commissioner Markos Kyprianou.
A team of Russian and EU experts are scheduled to carry out a joint inspection of Polish meat producing facilities in the next two weeks, Lepper said, The Associated Press reported.
Lepper said a series of talks was planned for the next month, indicating that the start of talks on a new Partnership and Cooperation Agreement could drag on well into 2007.
Putin’s comments on the issue remained opaque. “Let’s agree — we aren’t against agreeing,” he told reporters, adding that Russian officials should hold direct talks with Polish meat producers.
Merkel will tread a fine line in her presidency in attempting to engage Russia while supporting the cause of new member states like Poland, analysts said. Poland, the largest of 10 mainly former communist countries that joined the EU in 2004, has historically been mistrustful of Russia. Bulgaria and Romania joined the EU on Jan. 1.
Warsaw has loudly objected to Germany’s plans to build a gas pipeline with Russia under the Baltic Sea, which will exclude Poland and Ukraine as transit countries. Polish Defense Minister Radoslaw Sikorski has compared the agreement to the 1939 Molotov-Ribbentrop pact, the secret deal between the Soviet and Nazi foreign ministers that divided up Poland.
“Merkel’s challenge is to prove to the other EU members, particularly the new ones, that Germany will make sure their needs are taken care of,” said Angela Stent, the director of Georgetown University’s Center for Eurasian, Russian and East European Studies.
“She doesn’t want to focus too much on the separate Germany-Russia relationship, reviving the nightmare of the East Europeans that all deals will be made to their disadvantage,” she said.
Even if Russia follows through on Putin’s promise to speed up work on oil pipelines to the Pacific and export routes to the West, there are few signs that domestic energy production will be high enough to fill them, Stent said.
Clifford Kupchan, director for Europe and Eurasia at Eurasia Group, a New York-based risk consultancy, said Putin’s comments were unlikely to allay European fears.
“In any strategic, meaningful way, emphasis on cutting out transit states is not going to assure Merkel or other European leaders,” Kupchan said.
“Progress on the Energy Charter, progress on forging rules of the game that the Russians will follow is the only way there is going to be a long-term easing of tensions,” he said.
The two leaders did not indicate when they thought talks on the new EU-Russia agreement would begin. The southern city of Samara is set to host the next EU-Russia summit on May 18, while Italian Prime Minister Romano Prodi meets with Putin in Sochi on Tuesday.
 Putin and Merkel told reporters they would work together within the so-called Middle East Quartet to revive the stalled Middle East peace process. Representatives of the Quartet — the United States, the EU, Russia and the United Nations — are scheduled to meet in Washington this month.
 Putin told reporters that proposals on resolving Kosovo’s status must be acceptable to Serbia, where national elections were taking place Sunday.
“Russia thinks it is unacceptable to impose from outside a decision on the status of Kosovo. A long-term solution of the problem can be achieved only if it suits both Belgrade and Pristina,” Putin said.
Merkel, meanwhile, lent her support to pro-Western reformers in the election, saying: “I hope that the democratic forces in Serbia are strengthened by the election.”

TITLE: Russia Frowns on U.S. Anti-Missile Plan
AUTHOR: By Steve Gutterman
PUBLISHER: The Associated Press
TEXT: MOSCOW — A U.S. proposal to install part of its missile defense system in former Warsaw Pact nations is a “clear threat” to Russia, a leading Russian general said Monday.
Colonel General Vladimir Popovkin, chief of the military’s Space Forces, which is responsible for missile detection, spoke two days after the Czech prime minister said the U.S. had asked to put a high-power radar base in his country as part of its global missile defense system.
“Our analysis shows that the placement of a radar station in the Czech Republic and an anti-missile position in Poland would create a clear threat for Russia,” the RIA-Novosti and Interfax news agencies quoted Popovkin as saying.
The U.S. has been negotiating with Poland and the Czech Republic, both former communist states now in NATO, as it explores setting up missile defense sites in eastern Europe.
Washington’s request to build only an X-band radar facility in the Czech Republic could indicate U.S. officials are considering putting launchers for anti-missile missiles in Poland.
The U.S. has declined to discuss specifics of the plan, but the U.S. Embassy in Poland said Monday that Washington had asked to open formal negotiations with the Poles over basing part of the missile defense system on Polish territory.
Andrew Schilling, the U.S. Embassy spokesman in Warsaw, said the possible component in Poland would consist of a “small number of ground-based interceptors,” while a radar system would be placed in the Czech Republic.
Polish Defense Minister Radek Sikorski indicated the government was willing to talk.
“Our most important ally is asking us for something and naturally, as an ally, we reply that as on any important issue, we will want to talk with the U.S.,” Sikorski said on TVN24 television.
U.S. efforts to deploy part of the defense system in former Soviet satellite states that are now NATO members has drawn repeated opposition from Russia, adding to strains between the two Cold War superpowers.
U.S. officials contend the system could defend Europe against intercontinental missiles fired by states such as Iran and North Korea, but Russian authorities have warned that the military balance in Europe could be at stake and said the development risked a new arms race.
Following the Czech prime minister’s statement Saturday, Andrei Kokoshin, a former Russian Security Council chief who now heads parliament’s committee for ties with former Soviet bloc nations, warned that lawmakers would recommend “retaliatory measures.”
The ground-based U.S. defense system is intended to begin tracking missiles early during their boost phase and then guide intercepter rockets to destroy the threatening missiles in flight. Independent experts say the system is years from being able to protect against long-range missile attacks.
The United States has missile interceptor bases in Alaska and California. It also activated a powerful X-band radar site in northern Japan as part of the system last September, but so far has no anti-missile weapons based outside U.S. territory.
Russia’s criticism of the U.S. move came just days after the United States and other allies raised concerns over the rising militarization of space after reports of a successful test by China of an anti-satellite weapon.
While China did not confirm the test, the U.S. said it detected the weapon destroying an old Chinese weather satellite. Aviation Week, which first reported the test, said the satellite was hit by a kinetic kill vehicle launched from a ballistic missile.
Analysts said the test represented an indirect threat to U.S. defense systems by raising the possibility that its spy satellites could be shot down. The threat wouldn’t affect the anti-missile system, which relies only on ground-based radar.
The U.S. military has had the capability to shoot down satellites since the 1980s. 
In October, President Bush signed an order asserting the United States’ right to deny adversaries access to space for hostile purposes.

TITLE: Russian Ambassador to Return to Georgia
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russia’s ambassador to Georgia, Vyacheslav Kovalenko, was scheduled to return to Tbilisi on Monday, three months after he was recalled in response to the detention of several Russian military officers on suspicion of espionage.
While the decision suggests an easing of tensions between the two countries, its impact could be dampened by Tbilisi’s plan to raise the issue of Russian sanctions against Georgia in the Parliamentary Assembly of the Council of Europe this week.
Kovalenko was expected to fly to Tbilisi via Yerevan, since direct flights between Russia and Georgia remain suspended, Kommersant reported Saturday.
Givi Targamadze, chairman of the Georgian parliament’s defense committee, sounded a triumphant note in response to the ambassador’s return.
“We definitely didn’t lose, and this prompted [President Vladimir] Putin’s decision,” Targamadze told Kommersant in an interview published Saturday. “Russia found that it was the loser. Europeans previously loyal to the Russian leadership have spoken out in our support.”
A delegation of Georgian lawmakers arrived in Strasbourg on Sunday to request that the assembly hold a hearing on the sanctions and human rights violations against Georgian citizens, RIA-Novosti reported.
Following the detention of the Russian officers last September, Moscow severed trade and transportation links with Georgia and began to crack down on Georgian-owned businesses. Large numbers of Georgian citizens were deported. Moscow also hinted that it might recognize the independence of the breakaway regions of Abkhazia and South Ossetia.
The Parliamentary Assembly convenes Tuesday.
“We have found a number of like-minded people [in the assembly], but don’t forget that the Russian delegation is made up of 18 people, while we have only five,” Yelena Tevtoradze, head of the human rights committee in the Georgian parliament, said on Sunday.
“We don’t know what the Russian delegates have been doing in preparation for the session,” she said.
Kremlin spokesman Dmitry Peskov said Sunday that the request for a hearing in Strasbourg was “definitely not a step toward normalizing relations” between Moscow and Tbilisi.
“This should be a two-way street. And in fact President Vladimir Putin and Georgian President Mikheil Saakashvili have already reached an agreement on the steps that should be taken,” he said.
Peskov added that Tbilisi would have to take “certain steps to normalize relations” before Moscow would consider revoking the “measures” imposed against Georgia. He declined to specify what “measures” Moscow might be willing to revoke.
Georgian parliamentary Speaker Nino Burdzhanadze on Saturday that she expected Moscow to do more to improve relations.

TITLE: Frenkel: Central Bank Dirty
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — Alexei Frenkel, charged last week with organizing the murder of Central Bank official Andrei Kozlov, claims that the bank is plagued by corruption and involved in shady financial transactions.
In an open letter published Friday on the Kommersant web site, Frenkel accused the Central Bank of being complicit in allowing customers of suspect banks to make cash withdrawals after it had cited those banks for illegal activities.
Kozlov spearheaded the Central Bank’s campaign to clean up the banking sector. Frenkel is the CEO of VIP Bank and a co-founder of Sodbiznesbank, whose licenses Kozlov revoked on suspicion of money laundering and other crimes.
In its crackdown on bad banks, the Central Bank relies largely on the federal law on money laundering.
In his letter, however, Frenkel points out that money laundering is in fact relatively rare in Russia, where most often banks convert various forms of easily traced noncash assets into cash, which is much harder to trace.
Frenkel also said the Central Bank made willingness to assist in such operations a condition for admission to the federal deposit insurance program for many small and medium-sized banks.
The Central Bank on Friday declined to comment on Frenkel’s allegations.
First Deputy Prosecutor General Alexander Buksman told Interfax that the publication of the letter was intended to distract investigators from building a murder case against Frenkel.
Frenkel’s lawyer, Igor Trunov, told Kommersant that had nothing to do with the publication of Frenkel’s letter, adding that he would have advised his client not to make it public because the accusations contained in it were “too serious.”
Trunov could not be reached for further comment Sunday.

TITLE: Polonium Traces Indicate Earlier Poisoning Attempt
PUBLISHER: Reuters
TEXT: LONDON — Former Russian agent Alexander Litvinenko may have survived a first attempt to poison him with radioactive polonium-210 more than two weeks before receiving the dose that killed him, the BBC reported on Monday.
“How to poison a spy”, a documentary by the BBC’s Panorama program, said a first attempt may have occurred on Oct. 16 last year at the Itsu sushi restaurant in London’s Piccadilly.
Itsu first came to attention in the investigation into Litvinenko’s murder because of a meeting he held there with Italian contact Mario Scaramella on Nov. 1, the day the Russian fell violently ill.
But the BBC said radioactive contamination discovered there by investigators was in a different part of the restaurant from where Litvinenko and Scaramella were sitting.
It said the traces were “most likely” at the seats where Litvinenko had met two Russian businessmen, Andrei Lugovoi and Dmitry Kovtun, at Itsu on Oct. 16.
Scaramella told the Panorama program, due to be broadcast on Monday evening: “I know they closed [the restaurant] because they found the polonium, but [it] seems it was not in the place where we [were] seated. So lots of things must be clarified. Where we [were] seated there is no polonium.”
The murder of Litvinenko, a former security agent who had become an outspoken dissident and Kremlin critic in exile, has developed into the most mysterious and gripping espionage case since the Cold War.
The case has strained relations between Britain and Russia, with the Kremlin dismissing as ridiculous a deathbed statement by Litvinenko blaming President Vladimir Putin for his murder.
Lugovoi and Kovtun also met Litvinenko at London’s Millennium Hotel on Nov. 1. Traces of radiation have been found there too, and eight staff and at least three guests of the hotel have tested positive for small doses of polonium.
Both the Russians strongly deny involvement in Litvinenko’s death and have themselves received treatment at a Moscow hospital, although details of their state of health are unclear.
In the Panorama program, Litvinenko’s wife, Marina, became the latest of several people close to him to voice their suspicions he received the fatal polonium dose in a cup of tea he drank with his Russian contacts in a room at the Millennium.
The Times newspaper on Saturday quoted Litvinenko’s friend, former KGB agent Oleg Gordievsky, as saying the tea was made by a man introduced to Litvinenko as Vladislav.
Litvinenko believed “the water from the kettle was only lukewarm and that the polonium-210 was added, which heated the drink through radiation so he had a hot cup of tea. The poison would have showed up in a cold drink,” Gordievsky said.
The Times said British police suspected “Vladislav” of being the killer. It said he arrived in London from Hamburg on Nov. 1 on the same flight as Kovtun, and his image had been recorded by security cameras at Heathrow airport on arrival.
Scotland Yard police declined to comment, saying they would not discuss details of the investigation.

TITLE: Bill to Ban Marches is Criticized
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — A group of mostly United Russia deputies has submitted a bill to the State Duma that would allow authorities to bar public gatherings and marches two weeks before and after elections.
Public Chamber members sharply criticized the bill Friday, and presidential administration deputy head Vyacheslav Surkov promised later in the day that the bill would be softened.
The bill apparently is the latest attempt to make sure that Russia will not follow in the path of Georgia and Ukraine, which saw regime changes brought on by massive protests over fraudulent elections.
Under the bill — a copy of which was posted on the Duma’s web site Thursday — authorities would be able to ban a rally or march if they had “sufficient and preliminarily confirmed” information about planned illegal actions that might take place during the event.
The bill says authorities must first seek court confirmation that any violations of the law are being planned.
Italy, Germany, Denmark and the Baltic countries have similar clauses in their laws, the bill notes.
It also calls for people convicted of extremism or officially warned by the authorities for extremist activities to be prohibited from holding public gathering.
The bill, submitted to the Duma on Wednesday, is authored by four United Russia deputies, Igor Lebedev from the Liberal Democratic Party and Gennady Seleznyov, an independent.
The head of the Public Chamber’s commission for tolerance and freedom of conscience, Valery Tishkov, demanded on Friday that the bill be sent to the chamber for evaluation. “It is not at all clear why there is such a rush with a bill that clearly touches all of society,” he told Interfax.
Anatoly Kucherena, a lawyer who heads the chamber’s commission for public oversight over law enforcement bodies, questioned the wording of the bill. “Such terms like ‘sufficient and preliminarily confirmed information’ cannot be the basis for a decision by executive bodies to ban rallies or marches,” he told reporters.
Surkov, believed to be the Kremlin’s chief political strategist, told Gazeta.ru late Friday that the bill would be made softer, without elaborating. Surkov spoke after discussing the Duma’s plans for the spring session with Speaker Boris Gryzlov and the deputy speakers from United Russia, Vyacheslav Volodin and Oleg Morozov.
Since the regime changes in Georgia in 2003 and Ukraine in 2004, the Duma has adopted a raft of legislation that critics say undercuts the opposition and makes it more difficult to stage protests.
Two political analysts said the latest bill is excessive, given the lack of political activism in Russia and the weakness of the opposition.
“This creativity of United Russia’s lawmakers looks more like an attempt to win another pat on the head from the Kremlin for nothing,” said Yury Korgunyuk of the Indem think tank.
“This is a clear indication that the Kremlin is also nervous before elections,” said Sergei Mikheyev of the Center for Political Technologies.
Duma elections are slated for December, and the presidential vote is scheduled for March 2008.
Eduard Limonov, leader of the unregistered opposition National Bolshevik Party, known for staging theatrical public protests, said Friday that the legislation could not stop his followers.
“We will be on the streets in December this year and next March, ban or no ban,” he said.

TITLE: Anguished Pop Singer Leaps to His Death
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Pop singer Murat Nasyrov died Friday night after jumping from his fifth-floor apartment in northern Moscow. Police said he was under the influence of drugs.
Nasyrov, 37, perhaps best-known for the 1990s hit “Malchik Khochet v Tambov,” donned a colorful outfit, hung a camera around his neck to take a self-portrait and then leaped from the balcony, RIA-Novosti reported Saturday, citing investigators. He died on the spot.
Earlier Friday, Nasyrov called his neighbors and friends to say he had had a vision of God and of his friend Baglan Sadvakasov, the front man of the pop group A-Studio who died in a traffic accident in August, RIA-Novosti said.
A police source told the news agency that Nasyrov was under the influence of unspecified drugs when he died. The source said Nasyrov had been treated for a drug addiction in a Moscow clinic last year.
Nasyrov’s widow, Natalya Boiko, denied that drugs had played a role in her husband’s death, NTV television reported.
Pop diva Alla Pugachyova said Nasyrov, who had composed several songs for her, had suffered a creativity crisis in recent years.

TITLE: Most Polonium Made Near the Volga River
AUTHOR: By Peter Finn
PUBLISHER: The Washington Post
TEXT: Ninety-seven percent of the legal production of one of the world’s rarest industrial products — the intensely radioactive isotope polonium-210 — takes place at a closely guarded nuclear reactor near the Volga River, 700 kilometers southeast of Moscow.
In an average year, about 85 grams of the substance is made at the Avangard facility, a former nuclear weapons plant, and then sold under strict controls to Russian and foreign companies that prize it for its abilities to reduce static electricity.
Last fall, a microscopic quantity of polonium-210, from somewhere, found its way into the body of Alexander Litvinenko. He died an agonizing death in a hospital 22 days later.
Now an international investigation is trying to track that dose back to its source. Detectives from Scotland Yard have said little about where the trail of evidence may be leading; Russian officials have been more willing to talk, saying Avangard is tightly audited and that illicit production of polonium-210 is technically possible at many of the world’s reactors.
Still, Russia’s near total domination of the world’s legal trade in the substance has focused new international attention on the country’s production system and controls. Russia is the main source of polonium in part because it offers high quality and the best price for commercial users, said Nick Priest, professor of radiation toxicology at Middlesex University and a former head of biomedical research at the United Kingdom Atomic Energy Authority. No polonium is produced in Britain, and officials in Russia said none had been exported commercially to Britain for at least five years.
Polonium-210 is produced in reactors by irradiating bismuth-209. Specialists say that around the world, reactors capable of this operation belong either to state agencies or universities and so are highly regulated. “Everything connected with polonium production and application is controlled by governments,” said Boris Zhuikov, head of the radioisotope laboratory in the Nuclear Studies Institute of the Russian Academy of Sciences. “You cannot just put any target inside a reactor. It is regulated and checked by many, many people. It would be discovered.”
The Avangard plant operates under close government scrutiny. Officials said four organizations were licensed to handle the material made there: the chemistry faculty of Moscow State University; the Federal Nuclear Center in Samara, also on the Volga; Tenex, the state-controlled uranium supplier; and one private company, Nuclon, which uses it for medical devices and transports isotopes to customers.
The controls have proved effective, officials contend. “I can say with complete certainty that no deviations from the rules of storage and transportation of nuclear materials, including polonium, have been discovered at any structures of our fuel and nuclear complex,” said Konstantin Pulikovsky, head of the Federal Service for Ecological, Technological and Atomic Inspection, RIA-Novosti reported.
Worldwide, polonium has been lost or stolen in at least 15 known incidents before 2006, most of them in the United States, according to the International Atomic Energy Agency, or IAEA.
Priest said he believed that in Russia, audit safeguards could be circumvented if there was demand for polonium from officials with strong influence. Audits could also be an unreliable gauge of pilfering because during production, much more polonium is made than is actually needed, with the surplus never entering the officially recognized supply.
Other theories suggest that the polonium that killed Litvinenko may have been obtained from an officially tracked commercial supply after it reached its final customer.
The substance’s great giveaway is that once discovered, its telltale traces are easily tracked. Out of its box, polonium smears everything. After Litvinenko’s death, it was discovered in planes, cars, hotels and offices — all places that the victim and people he met had visited around the time of the poisoning.
If it enters the body in tiny amounts, death is certain. The devastating effects were studied in the 1960s at a Moscow institute where the isotope was administered to dogs, rabbits and rats, Zhuikov said. He said scientists wanted to understand polonium’s potential in case humans were exposed to it, because the isotope was used in various applications in Soviet nuclear and space programs.
The IAEA is considering tighter controls on polonium. An IAEA diplomat, who was not authorized to speak on the record, said that in the wake of the Litvinenko case, concerns have risen at the agency about a mass poisoning through the introduction of polonium into the food chain or drinking water.

POLONIUM-210 AND ITS DANGERS
Characteristics
 Polonium-210 is a silvery-gray metal that eludes normal radiation detection because it emits alpha rays rather than the gamma rays that devices look for.
 Alpha particles do not travel far — only a few centimeters in the air. They are stopped by a sheet of paper or by human skin.

Dangers
 Polonium-210 becomes dangerous when it enters the body by ingestion of food or water or inhalation of particles. Other radioactive materials are absorbed through the skin.
 One-millionth of a gram can be fatal, and one gram could theoretically kill tens of millions of people.

Production
 Polonium-210 is produced in nuclear reactors by irradiating bismuth-209.
 Russia dominates polonium production. Only one facility, the Avangard plant, produces it, making about 85 grams per year, some of which is exported.

Uses
 Polonium is commonly used in static eliminators in printing plants, photography labs and textile mills. In these applications, it is bound in extremely small quantities with other metals.
Source: WP

TITLE: The Ideal Poison for Espionage
AUTHOR: By Karen Kaplan and Thomas H. Maugh II
PUBLISHER: LOS ANGELES TIMES
TEXT: The first signs of contamination were the traces of radiation on the laboratory desk of Israeli physicist Dror Sadeh, who was experimenting with an exotic radioisotope called polonium-210.
Sadeh, part of Israel’s nuclear program in the 1950s, had taken what he thought were adequate precautions against the hyperactive element. But it wasn’t enough: Radiation was discovered “in my private home, and on my hands too and on everything that I touched,” he wrote in his diary.
Within a month, one student who worked in Sadeh’s lab at the Weizmann Institute of Science was dead from leukemia. When the lab’s supervisor died a few years later, Sadeh suspected that he, too, had been contaminated by the leaky polonium-210.
In the century since its discovery by famed French scientists Marie and Pierre Curie, polonium-210 has left a distinctive trail of death. The Curies’ daughter, Irene Joliot-Curie, succumbed to leukemia in 1956, 10 years after a sealed capsule of polonium-210 accidentally was broken in her laboratory at the Radium Institute in Paris.
Its latest victim is retired KGB agent Alexander Litvinenko.
For most of polonium’s history, death has been a consequence of ignorance. Scientists suspected its radioactivity presented a health risk, but they failed to understand its intricacies.
Engineers have struggled to find a use for the isotope, incorporating it for a time in spark plugs, nuclear warhead triggers and spacecraft power supplies. It plays a small role today as an anti-static agent for printing presses.
Assassins finally may have hit upon its most effective use. “The scientific community is intrigued [by Litvinenko’s murder],” said radiation biologist David Dooley, who studied exposure levels in workers who produced polonium for the Manhattan Project to develop the atomic bomb. “It’s pretty clever they came up with this.”
In many ways, polonium-210 is an ideal poison for espionage — deadly and undetectable. Pound for pound, polonium-210 is at least 1 million times more toxic than hydrogen cyanide, the poison used to execute prisoners in gas chambers, according to medical toxicology books. Radiation safety experts calculate that a single gram of polonium could sicken 100 million people, killing half. But it is extremely hard to get. Only about 100 grams are produced each year, primarily by Russia. While most radioactive elements emit gamma rays, which register on radiation detectors, polonium-210 instead emits an alpha particle — composed of two protons and two neutrons — as it decays.
Unlike other radioactive elements, polonium-210 is relatively safe to transport. Although highly lethal gamma rays pass through most substances, alpha particles can be blocked by a sheet of paper or the thin layer of dead cells on the surface of the skin. To kill, polonium must be inhaled or ingested so that it is in direct contact with healthy tissue. “I could put it in a tiny Ziploc bag, and I would be fine,” said Dooley, president and chief executive officer of MJW Corporation in New York.
The first death occurred in 1927. The victim was Nobus Yamada, a Japanese researcher who had joined Marie Curie’s lab. In 1924, he worked with Curie’s daughter Irene to prepare polonium sources. After returning home the next year, Yamada fell ill. “There was a poisoning from the emanations,” he wrote Irene, according to Susan Quinn, author of “Marie Curie: A Life.”
Marie and Pierre Curie discovered polonium while they were searching for the cause of excess radiation in a uranium-rich ore called pitchblende.
In 1898, they traced the radiation to a substance that they dubbed radium-F. When Marie Curie determined that it was a unique element, she named it polonium to bring attention to the plight of her homeland, Poland, which had been partitioned among Russia, Prussia and Austria.
There are 25 different isotopes of the element, but polonium-210 is the most stable. After 138 days, half of it decays into a nonradioactive isotope of lead. It takes 10 half-lives — about three years — for all of it to be converted into lead.
In the process, it emits a significant amount of heat. A one-gram lump will reach more than 260 degrees Celsius.
As a product, polonium-210 has been mediocre at best.
Its first use was in automobile spark plugs. The alpha particles emitted during its decay supposedly helped produce a stronger spark, according to a 1929 patent issued to J.H. Dillon of Firestone Tire and Rubber. The company began marketing the plugs in 1940, but their benefits were never proved.
Polonium-210 played a key role in World War II. Manhattan Project engineers alloyed the isotope with beryllium and used it to produce the neutrons that triggered the atomic bomb’s chain reaction. Because of polonium’s short half-life, the nuclear triggers lost their effectiveness in two years and had to be continually replaced. By the 1970s, engineers abandoned it in favor of the hydrogen isotope tritium, with a half-life of 12.3 years.
Polonium was considered as a power source for U.S. satellites, but its short half-life again limited its utility, and plutonium was used instead. The Soviet Union, however, did employ polonium to keep its Lunokhod moon rovers running in the 1970s.
Engineers finally found a viable use for it in printing plants and textile mills, capitalizing on its electron-grabbing ability to neutralize the static electricity generated by moving sheets of paper or fabric. It also is used in photo labs, embedded into the bristles of cleaning brushes to counter the static electricity that causes dust to cling to pictures.

TITLE: Gazprom, Rosneft to Split Russian Offshore Fields
PUBLISHER: Reuters
TEXT: MOSCOW — Russia will equally split all new offshore oil and gas fields between state firms Rosneft and Gazprom, further limiting foreign and private access to its energy, a newspaper said on Monday.
Vedomosti business daily quoted government sources as saying the decision was taken at a meeting of President Vladimir Putin and government officials last week.
Gazprom and Rosneft declined to make immediate comments.
The newspaper said Russian officials had decided that all undistributed offshore fields would be offered only at closed auctions, which reduce the chances of collecting maximum money to state coffers but guarantee no surprise winner.
Analysts told Vedomosti the move was largely expected as it was part of a wider Kremlin drive to increase control over natural resources, which started with the demise of oil firm YUKOS and a virtual re-nationalisation of a third of Russian oil production.
State officials have repeatedly favored state firms for offshore fields, which are due to replace West and East Siberia in the second half of this century to support Russian oil and gas output growth.
Russia has also been seeking to regain control over existing offshore projects, such as Sakhalin-2, with Gazprom buying half of it from Royal Dutch/Shell and its Japanese partners for $7.45 billion after months of pressure from state ecological officials.

TITLE: Russia, Algeria Get
Together on Energy
AUTHOR: By Ahmed Rouaba and Maher Chmaytelli
PUBLISHER: Bloomberg
TEXT: ALGIERS — Russia and Algeria, Europe’s two biggest suppliers of natural gas, signed an energy cooperation agreement that the European Union has pledged to monitor because of concerns it may develop into a cartel-like alliance. 
Russia, the world’s largest gas producer, supplies a quarter of Europe’s gas and Algeria almost 10 percent. The cooperation between the two countries will be “at all levels, from exploration to marketing,’’ Algerian Energy Minister Chakib Khelil told Bloomberg after the signing ceremony with his Russian counterpart Viktor Khristenko in the Algerian capital Algiers. 
The 12-nation Organization of Petroleum Exporting Countries, of which Algeria is already a member, controls two-fifths of global oil supplies and sets production quotas in a bid to control prices. A similar alliance in natural gas would increase concern among consumers about higher prices. 
“Russia and Algeria both know they can squeeze the Europeans with any suggestion of creating an OPEC for gas,’’ Jon Marks, managing director of U.K-based political and commercial risk consultant Cross-border Information Ltd., said Monday. 
“I get the sense that some major oil companies are quietly panicking about this,’’ since they buy the gas from Algeria and Russia. 
Khelil said the alliance with Russia won’t become a cartel, seeking to ease EU concern. “Russia and Algeria are reliable suppliers of energy,’’ Khristenko said, according to the state- run Algerie Presse Service. 
European nations from Poland to Italy are turning increasingly to North African states such as Algeria and Libya to limit their dependence on Russian gas supply. 
Russian deliveries to countries including Germany declined a year ago after Gazprom cut off supplies to Ukraine, through which the fuel transits, in a dispute over prices. A similar disagreement with Belarus, another transit state, was defused this month. 
The EU will keep close tabs on any energy agreement between Russia and Algeria, “as this relates to energy security,’’ EU Energy Commissioner Andris Piebalgs said in November after talks with Khelil. 
Representatives of Gazprom, Russia’s biggest gas company, and Lukoil, its largest oil producer, are in the Russian delegation visiting Algiers. On Aug. 4, 2006, Gazprom and Lukoil agreed to consider producing and processing fuels with Algerian state-owned energy group Sonatrach. 
“A Gazprom-Sonatrach alliance would make a lot of political sense, as both Russian President Vladimir Putin and Algerian President Abdelaziz Bouteflika are asserting state control over oil wealth,’’ Marks said by telephone from Hastings, England.

TITLE: GV Gold Reveals Offer Price
PUBLISHER: Reuters
TEXT: MOSCOW — GV Gold, Russia’s eighth-largest gold miner, on Monday set an offer price for a planned share float that values the company at between $428 million and $515 million.
GV Gold set an offer price of $85.5 to $103.0 per share and $8.55 to $10.30 per Global Depositary Receipt for the initial public offering planned next month in London and Moscow.
Credit Suisse is the sole global coordinator and bookrunner for the IPO.
GV Gold said shares would be sold by existing shareholders and that the company would issue an additional 209,000 new shares. It said it intended to use the IPO proceeds to fund a capital spending programme and for general corporate purposes.
Six Russian citizens, including Chairman Sergei Dokuchayev and CEO Sergei Vasilyev, own more than 90 percent of GV Gold, which last year produced 2.705 tonnes (86,967 ounces) of gold at its Golets Vysochaishy mine in the Irkutsk region of Siberia.
GV Gold was founded in 1998 by Lenzoloto — now part of Russia’s largest gold miner, Polyus Gold and Lanta-Bank.

TITLE: Steady Stream
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — The total number of transactions using UNIStream reached $1.85 billion last year compared to $750 million in 2005, the company said last week in a statement.
In the CIS, the money transfer market grew 70 percent last year and UNIStream estimates its share at 25 percent. In the U.K., UNIStream’s volume of transactions increased from $34.8 million to $85.7 million in 2006.

TITLE: Riding High
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — Karusel increased sales more than fourfold to $360.6 million last year, RBC reported Monday.
In 2005 Karusel reported sales of $84.3 million. The company opened 13 new supermarkets. This year the company expects to increase sales up to $1 billion. Karusel will open 10 new supermarkets this year.

TITLE: Safe as Houses
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — The National Reserve Bank’s St. Petersburg office doubled the number of mortgages it lent in 2006, Interfax reported Monday.
The St. Petersburg office issued mortgages worth a total of $14.4 million. Since 2004 the bank has granted 460 mortgages to city residents worth a total of $25 million.

TITLE: Sky’s the Limit
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — Pulkovo airport increased passenger turnover by 9.6 percent last year up to 5.1 million passengers, Interfax reported Friday.
According to the airport’s statement, Pulkovo dealt with over 2.4 million passengers taking internal flights, about 2.3 million on international flights and over 360,000 passengers on flights between cities in the CIS.

TITLE: Surplus Sums
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — St. Petersburg’s budget surplus accounted for 14.8 percent of all profits in 2006, Interfax cited vice-governor Mikhail Oseyevskiy as saying Friday.
The city earned 215.2 billion rubles ($8.1 billion) and spent 183.4 billion rubles. The budget surplus accounted for 31.8 billion rubles.
Profit tax on companies provided 32.1 percent of profits, individuals’ profit tax — 24 percent, excises — 10 percent and city property provided 13.3 percent of earnings.
Foreign investment accounted for $3 billion compared to around $1 billion in 2005.

TITLE: All at Sea
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — Freight turnover at the St. Petersburg Sea Port group of companies decreased by 10 percent last year to 11.8 million tons, Interfax reported Monday.
The company provided 22 percent of the total freight turnover in the port. The company reported a significant decrease in the turnover of coal, timber and fertilizer. At the same time, tax payments increased by 29 percent up to 851.3 million rubles.

TITLE: Containing Novelty
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG — Eurosib-Terminal, a logistic affiliate of the St. Petersburg-based group Eurosib, launched a new service — transportation of export and import cargoes in container block trains between First Container Terminal and Eurosib-Predportovy logistic terminal, the company said Monday in a statement.

TITLE: Japan and Russia To Tackle
Weakness
AUTHOR: By Mariko Sanchanta
PUBLISHER: Financial Times
TEXT: TOKYO — Japan and Russia will on Tuesday begin their first high-level talks in four years as Tokyo aims to build a stable, long-term energy relationship with Moscow.
The two countries are also set to discuss the contentious issue of four Russian controlled islands that are claimed by Japan, an unresolved dispute that has kept the two governments from formally concluding their second world war clash with a peace treaty.
Shotaro Yachi, Japan’s vice foreign minister, will arrive in Moscow on Tuesday for the first round of “strategic dialogue.” Mr Yachi is to meet Andrei Denisov, the first deputy minister for foreign affairs — the first time since 2003 that such a senior Russian official has met his Japanese counterpart in direct talks.
The negotiations are aimed at buttressing ties between Russia and Japan that are “conspicuously weak” in the words of one Japanese government official, as compared with Japan’s links with other G8 nations.
Return of the disputed islands, which were occupied while Japan was under attack in 1945, is a cause celebre of the Japanese right and a long-standing goal of Japan’s foreign ministry. Shinzo Abe, prime minister, is a strong proponent of stepping up diplomatic efforts to press for the islands’ return.
Japan’s main economic interest in Russia is its supplies of oil and natural gas. Tokyo is desperate to reduce its dependence on oil from the Middle East, which supplies more than 90 per cent of Japan’s petroleum. It is estimated that the East Siberian oil fields could one day provide Japan with as much as 15 per cent of its petroleum.
Japanese businesses are keen to transfer technology to Russian companies in exchange for partnerships and tie-ups in oil and natural gas projects.
Energy co-operation suffered a blow last year when, under pressure from the Russian government, trading houses Mitsui and Mitsubishi agreed, alongside Royal Dutch Shell, to halve their stakes in the $20bn Sakhalin-2 liquefied natural gas project to allow state-owned Gazprom to take control in a $7.45bn deal.
Talks between Mr Yachi and Mr Denisov will be based on an action plan agreed by Junichiro Koizumi, Japan’s former prime minister, and Vladimir Putin, Russia’s president, in January 2003. They resolved to focus on six main areas including political relations, a peace treaty and trade and economics.
Harufumi Mochizuki, head of Japan’s Agency for Natural Resources and Energy, will visit Moscow on Wednesday for meetings with Gazprom officials. Mr Mochizuki is also expected to discuss trade and investment opportunities.

TITLE: Gazprom Warning Over Deals
PUBLISHER: The Associated Press
TEXT: GELSENKIRCHEN, Germany — A top Gazprom executive on Saturday warned Europe against energy-market reforms that would disrupt long-term supply agreements or infringe on companies’ rights to control their own pipeline infrastructure.
Long-term contracts covering decades should not give way to short-term trading by “speculative firms of the Enron type,” deputy CEO Alexander Medvedev said, referring to the high-flying U.S. energy trader that went bankrupt. 
“You all know how that turned out,” he said. 
The European Union is working on a new energy policy aimed at improving the security of supply and increasing competition, including a proposal to split big energy companies from their distribution networks. Gazprom, the world’s largest gas company, which supplies one-quarter of Europe’s needs, produces gas from its Arctic and Siberian gas fields and also owns a distribution pipe network in Germany through its Wingas partnership with BASF’s Wintershall division.
“We are prepared to conduct business to the letter of the law,” Medvedev said. “But I think it would be a mistake not to take into account the opinion of gas producers.” 
He added that 60 percent of Wingas’ contracts with Gazprom were of one-year duration. “That means Wingas has to show its competitiveness on the market every year,” he said. 
Much of Gazprom’s business, however, is long-term contracts with buyers obligated years in advance to pay whether they use the gas or not, the so-called “take or pay” practice. Medvedev defended the practice as a guarantor of steady supplies. 
He also said any liberalization should not deprive companies of control of their pipelines. One form of liberalization sometimes discussed would be to give competitors access to utility companies’ pipelines. 
“Access to infrastructure is a condition of reliable gas supply,” said Medvedev, who spoke to reports in Gelsenkirchen before a soccer match between FC Schalke and Zenit St. Petersburg. Gazprom sponsors both teams.

TITLE: RusAl in Papua New Guinea
PUBLISHER: Combined Reports
TEXT: MOSCOW — RusAl, which produces about 10 percent of the world’s aluminum, will explore natural gas resources in Papua New Guinea as a potential source of power for aluminum projects in the region.
RusAl said Friday that it had signed a memorandum with Papua New Guinea’s Ministry of Petroleum and Energy to explore jointly the potential for energy and aluminum developments based on the country’s natural gas resources. 
The Papua New Guinea projects form part of the Russian company’s plans to turn itself into an energy and metals corporation that can expand into other nonferrous metals, such as zinc and copper.
“We’d like to tap into energy resources that would supply us with fuel for a power plant,’’ said Vera Kurochkina, spokeswoman for RusAl. “At the same time, the Papua government is keen to establish an aluminum complex in the county.”
Papua New Guinea had 15.1 trillion cubic feet of gas reserves as of the end of 2005, according to BP data.
RusAl may also “develop electricity projects” in Australia, the company said on its web site.
	(Bloomberg, Reuters)

TITLE: Trader Has Banner Year
PUBLISHER: Bloomberg
TEXT: MOSCOW — State-owned arms dealer Rosoboronexport exported a record $5.3 billion in weapons last year, buoyed by demand for its aircraft and naval technology.
More than half of deliveries through Rosoboronexport, which Thursday became the sole exporter of Russian arms, were aircraft, company spokesman Valery Kartavtsev said Saturday. Exports totaled $5.2 billion in 2005.
Russia led the world in arms exports to developing nations in 2005, ahead of the United States, the world’s largest arms exporter, according to a U.S. Congressional Research Service report released Oct. 27. Overall, Russia was the third-largest arms exporter in 2005, after the United States and France, the report said.
“Despite tough competition and sanctions from the U.S. State Department, the company managed to reach a new post-Soviet record,” Kartavtsev said. “We expect to increase the volume of exports in 2007.”
The U.S. State Department sanctioned Rosoboronexport twice last year, in August and December, for alleged arms trading with Iran and Syria.

TITLE: Belarussian Leader Sees Hard Times
PUBLISHER: The Associated Press
TEXT: MINSK — President Alexander Lukashenko warned Belarussians on Friday that they would have to tighten their belts over the next few years in the wake of price rises for Russian energy.
“The new economic conditions that our country has found itself in makes higher demands on all of us,” Lukashenko said. “The next three or four years will not be an easy time.”
Lukashenko has relied heavily on cheap Russian natural gas and oil to fuel his country’s largely Soviet-style, centrally controlled economy and maintain popularity. He grudgingly agreed to pay more than twice the previous price for gas this year — and even more in coming years — in a bitter price dispute in December.
The outcome of a subsequent dispute over oil supplies and transit fees will reduce the profits Belarus makes by refining Russian oil and selling the products.
“Nobody will give us cheap oil and gas, not even the closest countries, our allies,” Lukashenko said, referring to Russia more warmly than he did during the disputes. “But this does not mean that the country’s leadership will stop fighting for less expensive resources.
He said Belarus would push ahead with a five-year plan to modernize factories and make the economy more efficient, and would stick to targets of 9 percent growth in gross domestic product, and inflation no higher than 8 percent this year. “In no case will we slow down the tempo,” he said.

TITLE: Yukos May Be Worth $22Bln
PUBLISHER: Reuters
TEXT: MOSCOW — A bankruptcy receiver said Friday that initial valuation estimates showed the assets of bankrupt oil firm Yukos might be worth more than $22 billion.
Nikolai Lashkevich, spokesman for Yukos receiver Eduard Rebgun, said in a statement that a consortium of five valuers had valued 180 of 193 Yukos’s enterprises.
“According to the valuers’ preliminary estimates, the total value of all Yukos assets may exceed $22 billion,” he said.
As soon as the valuation is completed at the beginning of February the receiver will start selling the assets of what was once Russia’s top firm at open auctions, Lashkevich said.
Vedomosti on Friday quoted a source familiar with the process as saying the final value of Yukos’ assets would be slightly over $20 billion, far short of the company’s total liabilities of $26.6 billion.
Yukos was declared bankrupt in August and its assets, including several large refineries, oil companies and stakes in other companies, are expected to be put up for sale within a year.
Yukos’s main creditors include the Federal Tax Service and state oil firm Rosneft, which analysts say is likely, along with gas monopoly Gazprom, to grab most of the assets.
Rosneft bought Yuganskneftegaz, the main production unit of Yukos, at the end of 2004.

TITLE: TMK Steel Shipment Boost
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s TMK, the world’s second-largest producer of steel pipes for the oil and gas sector, boosted shipments by 3.2 percent last year to an all-time high of 3.018 million tonnes.
TMK, which raised over $1 billion listing nearly a quarter of its shares in October, said on Monday its share of Russian steel pipe exports rose to 56.1 percent last year, from 48.8 percent in 2005, amid favorable world demand for its products.
TMK, which produced 2.15 million tonnes of steel last year, said it would be able to supply 90 percent of its own steel billets this year after launching continuous casting machines at two of its plants, Seversky Pipe Plant and Taganrog Steel Plant.
The company said it had financed 30 percent of a strategic investment program that runs until 2010.

TITLE: Vekselberg to Dig Deep in Africa
PUBLISHER: Bloomberg
TEXT: MOSCOW — Billionaire Viktor Vekselberg plans to invest in uranium exploration and mining projects in Asia and Africa and cash in on Russia’s global hunt for more sources of the element vital for atomic power.
Renova Group, a Vekselberg holding with $10 billion in assets, signed a partnership agreement Friday with state-owned nuclear trader Tenex. The two are seeking access to uranium in South Africa, Namibia, and Congo, among other locations, they said in a joint statement.
The fuel trader’s “possibilities and Renova’s investment potential should give very positive results,” said Vladimir Smirnov, head of Tenex.
The move fits with Russia’s goals to increase its uranium stocks, as it seeks to expand nuclear fuel exports, he said.
Vekselberg, who is also an adviser to South African President Thabo Mbeki, agreed to spend several billion dollars on metals and mining projects in South Africa during a visit to the country with President Vladimir Putin last September. Russia, which is short on uranium, aims to build as many as 42 atomic plants at home and 60 abroad as governments worldwide seek alternative energy sources.
Renova already plans to spend at least $1 billion building a ferroalloy plant in South Africa and study the feasibility of building a large manganese pit. The projects would form a base from which to expand to Namibia, Ghana, Congo and Mozambique, Vekselberg said during the visit.
Russia has enough uranium to satisfy its own needs for the next 60 years. It wants to develop foreign projects to provide its nuclear industry with uranium for the export contracts of nuclear fuel. 
“Tenex is at present in talks with other Russian and foreign companies, interested in joint investments in uranium mining projects in Russia and abroad,’’ Smirnov said. Talks were “developing well,” he said.

TITLE: Ford’s Russian Production To Increase by 20 Percent
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: Ford, which emerged as the country’s best-selling foreign carmaker in 2006, plans to increase production at its Russian plant by 20 percent and sell a total of 150,000 units this year, Ford Russia president Henrik Nenzen said.
Demand for the carmaker’s models in Russia was so high last year that one of its domestic dealerships became its most successful all over the world by sales, Nenzen said.
In order to meet burgeoning domestic demand for foreign vehicles, Ford will increase production at its St. Petersburg plant by 20 percent to 75,000 units this year, Nenzen told reporters at a briefing late Thursday.
The St. Petersburg plant currently operates on a three-shift model and is aiming to extend overtime over weekends and increase efficiency levels, Nenzen said.
He declined to confirm media reports about the company starting production of two new models — the mid-sized Mondeo sedan and the Maverick sport utility vehicle — and said the plant would continue to manufacture the Ford Focus, which became the country’s best-selling foreign automobile last year.
Ford sold 115,985 vehicles in 2006, becoming the best-selling foreign carmaker.
Last year, New York Motors, a Moscow-based dealer in new and second-hand Ford cars, sold 10,060 units, 25 percent more than the company’s previous No. 1 dealer, Los Angeles-based Galpin Ford, sold over the same period, Nenzen told reporters. The carmaker’s No. 2 dealer is also in Russia, he said.
“That’s the wonder story of the Russian market,” said Nenzen.
Ford is also pinning its hopes on seeing more growth in sales in the regions. The carmaker plans to have 174 dealerships in 100 towns by the end of 2007. It currently has 124 dealerships in 81 towns.
New foreign-branded cars outsold domestic brands for the first time in the country last year. Ford’s turnover in Russia reached $2 billion last year, from just $17 million in 2000.
According to a PricewaterhouseCoopers report released Tuesday, last year Russians bought 1 million new foreign cars, both imported and assembled locally, up from 560,000 last year. In the same period, sales of domestic brands dropped 5 percent to 800,000 units.
Nenzen also said Ford had yet to recover more than $20 million that the carmaker paid the authorities after claims stemming from a discrepancy between federal regulations and local rules governing tax breaks to investors. The authorities have since allowed the carmaker to switch to a new tax regime.

TITLE: Mobile Firms Urge Users to Get Talking
AUTHOR: By Julie Tolkacheva
PUBLISHER: Reuters
TEXT: With babushkas now chatting on their cell phones and kids sending text messages to their school friends, mobile phone operators in Russia’s saturated market are pushing their clients to talk more to boost revenues. 
The mobile boom started a few years later than much of Europe’s, and firms have rushed to amass clients and gain market share, handing out free SIM cards and splurging cash on advertising.
But with market penetration now over 100 percent and most of the Commonwealth of Independent States already carved up between Russia’s “Big Three” — Mobile TeleSystems, Vimpelcom and MegaFon — the only way for the firms to grow is to persuade clients to use their phones more. 
Vimpelcom’s latest advertising slogan “Turn words into gifts” targets greater usage by existing customers. Mobile TeleSystems, or MTS, has a similar pitch: “Give minutes of communication as a gift. It’s easy.” 
Igor Pepelyayev, head of marketing at MegaFon, the country’s No. 3 mobile phone company, said: “Now is the turning point when the client realizes that a mobile phone has turned into a mass product, not something for the elite.” 
Cutthroat competition has curbed average revenues per user, or ARPU, a measure of client quality. Russian monthly ARPU, on average $9 to $10, is one-third of typical European levels. 
In front, with an ARPU of $16, is MegaFon, 44 percent owned by Sweden’s TeliaSonera. Vimpelcom is second with $9 and MTS, which has just hired a new head of marketing, comes in third at $8, according to recent results. 
“Russia is unique — nowhere else in the world on a mature market are the conditions there for ARPU to grow,” a Western bank analyst said. “We expect companies’ revenues to grow because all clients are ready to speak more.” 
Industry leaders and analysts say the potential is high, as the country’s oil export boom fills the pockets of consumers with cash. Real wages are increasing at an annual rate of nearly 15 percent, official figures show. 
Alexander Izosimov, CEO of No. 2 operator Vimpelcom, said the usage uptrend was already visible in Moscow, where fewer than 10 percent of people lack a cell phone and multiple card holding is common. 
“Client-base growth in Moscow is very low but minutes of use are growing quickly and revenues too,” he said. “Minutes of use will grow and if companies refrain from price wars, they will translate into revenue growth.”
The analyst said he expected minutes of use, or MOU, in Russia to grow by up to 20 percent per year in the next five years — whereas MOU elsewhere in Europe has largely stabilized. 
Earning more MOU means firms should refocus from building their networks to selling more services, says Ernst & Young partner Vadim Balashov.
“CEOs are now facing very difficult times and an unfamiliar environment,” said Balashov, who heads Ernst & Young’s telecoms practice in Moscow.
“Telecoms will now have to change their business model — they should go from a network-centric to a client-centric approach. The key person in a [telecommunications company] is a marketing guy.”
MegaFon’s Pepelyayev said high penetration levels meant the client, not the phone company, would set the rules of the game, and would want to understand for what he was paying. Gone are the times when mobile phone firms fought for the clients by advertising low prices, hiding the fact they did not include many taxes and additional payments.
Pepelyayev said mobile phone firms had started putting out real prices and simplified roaming billing, turning it into one figure instead of a confusing combination of a foreign partner’s fee and cross currency rates. 
The firms have also converted the bulk of their tariff plans to rubles from dollars, and cut the number of products to make them easier for clients to understand.

TITLE: Hewlett-Packard to Open St. Pete Lab
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: American IT giant Hewlett-Packard announced plans to open a research center in St. Petersburg on Monday. Local experts considered the move positive, both for HP and Russian software developers.
HP’s decision to open a lab in St. Petersburg is a result of a strategy “establishing research centers in growing economies,” HP said in a statement. The task of the new HP Labs Russia is to develop advanced data mining technologies.
“Russia’s high growth and pool of talent make it an exciting location to expand HP’s global research capabilities,” Shane Robison, HP executive vice president and chief strategy and technology officer, said in the statement distributed on the web Monday.
HP Labs Russia will be the third facility that the company has opened in the past five years. HP Labs China began operations in Beijing in 2005 and HP Labs India opened in Bangalore in 2002. HP also has facilities in Bristol, (U.K.), Haifa (Israel) and Tokyo (Japan). The company’s headquarters is in Palo Alto, California.
The lab in St. Petersburg will work on new methods for extracting, analyzing and organizing information. Initially, it will share HP’s existing premises in St. Petersburg.
“The opening of HP Labs Russia is a recognition of the country’s success in science and technology research,” HP quoted Academician Evgeny Velikhov, president of Kurchatov Institute, as saying.
“HP’s involvement with Russian R&D organizations will not only benefit the economy, but our overall scientific and technological development as well,” Velikhov said.
In the last year HP has launched a number of projects in Russia, including the establishment of the first external HP next-generation data center at the Kurchatov Institute to conduct research into future utility computing systems.
The new lab will conduct joint research on information management technology with research centers in Palo Alto, Bristol and Beijing and collaborate with computer scientists and engineers in HP business units around the world. Joint research projects are expected to be established with Russian universities and research institutes.
At the moment HP is seeking a director and staff for the lab comprising “a couple of dozen” scientists. The total number of scientists in HP Labs is 650.
A local expert said HP would benefit by focusing on high-level research.
“I think the St. Petersburg labor market is very attractive for IT companies in terms of available high-end specialists — software engineers and software architects. Advanced specialists were often left without good job opportunities in the city,” said Mikhail Zavileiskiy, Chief Operating Officer of DataArt in St. Petersburg.
It takes three to seven years to become a qualified software architect, he said, and St. Petersburg, along with Moscow, is the place to find such specialists.
“Middle-range software specialists, on the contrary, are in deficit. To hire a lot of middle specialists here is not an easy task. Neither Intel nor Sun have managed to do this,” Zavileiskiy said.
“Russia’s image benefits from the opening of such high-end research centers,” said Nikolai Puntikov, general director of StarSoft Labs.
“When we promote our products and services abroad we always list Intel, Motorola and other giants that already have local research labs. It helps us to position Russia not as a country of cheap labor but as a country of qualified specialists,” Puntikov said.
Unlike ambitious Google, HP does not intend to hire thousands of programmers and Puntikov said that another research center in the city “would not harm the local labor market.”

TITLE: Sistema Seeks Italian Job
PUBLISHER: Reuters
TEXT: MOSCOW — Services conglomerate Sistema is interested in buying a minority stake in Telecom Italia from Italy’s Pirelli group, Kommersant quoted Sistema’s president as saying Friday.
“This giant telecommunications company is undergoing wide-scale restructuring and that is why things are complicated there,” Sistema president Alexander Goncharuk told the paper. “We are really interested in the company but we have not agreed on anything yet.”
Pirelli owns 80 percent of Olimpia financial company, which in turn owns 18 percent of Telecom Italia.
Pirelli’s willingness to sell a minority stake in Olimpia “has led to various contacts with interested parties,” the Milan-based company said Friday. 
Last year, Sistema approached Deutsche Telekom with a proposal to swap its telecoms assets for up to a 20 percent stake in the German operator. 
However, the German government rebuffed the overture, and industry analysts said opposition to a sale of Deutsche Telekom to a foreign company was strong in Germany.

TITLE: Business Remains Bound
AUTHOR: By Hasmik Mkrtchyan
PUBLISHER: Reuters
TEXT: YEREVAN, Armenia — The Turkish-Armenian border has been shut for 14 years because of a dispute rooted in the centuries-old suspicions between Muslims and Christians in this remote part of the world. 
But the business communities in both countries pay heed to a different imperative — making money — and they are telling their political leaders to put the past behind them. 
“I want the borders opened,” Turkish businessman Kaan Soyak said on the sidelines of a conference in Armenia’s capital over the weekend that brought together business leaders and officials from both countries. 
“The first problem is the lack of trust. Turks don’t know Armenians, and Armenians don’t know Turks because there is no connection. … We need more dialogue, more visits.” 
Turkey and Armenia share a 355-kilometer frontier that snakes through the Caucasus mountains. 
Ankara closed all border crossings and cut diplomatic ties in 1993 to protest the seizure by Armenian forces of territory in Azerbaijan, Turkey’s historical ally that at the time was fighting a war with Armenia. 
Lurking in the backdrop are Armenian accusations that Turkey carried out a genocide of 1.5 million Armenians during the last days of the Ottoman Empire. 
Turkey denies that there was a genocide, a stance that has complicated its bid to join the European Union. 
These, however, are not the most immediate concerns for businesses struggling to operate in this isolated corner. 
For Turkey, the closed border means building materials and textiles it exports to the booming Russian market have to go by road via Georgia to the north, instead of using the cheaper but now rusting railway route through Armenia. 
Armenia, under virtual blockade because its border with Azerbaijan to the east is also closed, has to import goods from Turkey by air or through third countries. And Armenian exports have to go around Turkey. 
“There are two aspects: [opening the border] will make trade with Turkey cheaper and on the other hand it will open up transit routes for Armenia to the Mediterranean,” said Arsen Kazaryan, an Armenian businessman. 
With no sign of any diplomatic thaw soon between Yerevan and Ankara, business groups are trying to ratchet up the pressure for the border to be reopened. 
The conference, at Yerevan’s plushest hotel, was organized by a U.S.-based think tank and attracted several hundred entrepreneurs, economists, researchers and officials. It was supported by the U.S. government. All speakers were in favor of reopening the border.

TITLE: How to Steady A Sinking Submarine
AUTHOR: By Anna Shcherbakova
TEXT: It’s a tale of two firms, or rather two think tanks, (construction bureaus.)  Both have a rich history of submarine design, with good contracts and comprehensive state funding. Obviously this was in the good old Soviet times, when the Army and Navy were not areas where one economized.
The general constructors of both firms were respected masterminds, top experts in military shipbuilding and organization. 
In the early 1990s each enterprise had the same strengths and weaknesses. The number of contracts shrunk along with state prosperity; only limited funds were available for new research and development and even salaries often went unpaid. Each bureau possessed an enormous amount of property, skillful personnel and a good reputation both inside and outside the country. Given that their research was deemed top secret, I was surprised to see a very exact replica of a modern Soviet submarine in the toys section of a big department store in Germany — of course its potential enemies were well aware of Soviet shipbuilding techniques and could appraise their achievements. 
Following the collapse of the Soviet Union, the head of the first bureau seemed reluctant to change his mindset. He probably expected the old times to return, or just wanted to take care of himself and remain in pocket. Although he won some contracts to repair old submarines and started to design new ones, work soon stopped from want of money. 
Many of the firm’s engineers and constructors left. He rented part of a newly-vacated building but it did not keep the enterprise afloat. His empire was in ruins but he sat there still, hopeless in his huge, old-fashioned office with only a secretary for comfort. Several years ago he quietly quit his job. The bureau still exists, but without sensation. 
His colleague, on the other hand, plays tennis, is slim and sometimes advertises jeans and sporty sweaters despite the fact that he turned 80 last summer. 20 years ago, on witnessing the end of Communism, he started to look for new contracts abroad, duly doing some deals in India. At a time when it was prohibited to use foreign currency inside Russia, he founded a trade company that converted profit into the goods that he distributed between his own employees. It was a good idea at a time when almost everything was in deficit. 
Later the company purchased Indian tea and sold it in Russia. At the same time the company helped to out-staff some engineers, which also kept people satisfied. The general constructor used his political influence to develop elite real estate, such as a business-center on Nevsky prospekt. It was followed by a hotel and mall containing St. Petersburg’s first and only oceanarium. 
So this submarine designer became a very successful manager. On top of all this, his bureau was carrying out new projects, striking deals at home and abroad. When one of its submarines sunk, it even helped to rescue it. 
I will not name the first bureau, but the second is Rubin and its director is Igor Spassky, who announced his resignation at the end of last week. 
Enjoy yourself, Igor Dmitrievich, you did an awful lot for your company! 

Anna Shcherbakova is St. Petersburg bureau chief of business daily Vedomosti.

TITLE: Coming Out Negative in the Balance
AUTHOR: By Robert Skidelsky
TEXT: Russia’s temporary halt to oil supplies through the pipeline crossing Belarus earlier this month was the latest in a sequence of public relations disasters for the Kremlin. The West’s romance with President Vladimir Putin’s Russia ended with the Yukos affair and since then Russia has generally gotten bad press, even when it had a good case. The Sakhalin-2 affair is a good example.
Early in December, Royal Dutch Shell announced that it had sold Gazprom a majority stake in the project to develop the Sakhalin gas field. In its Dec. 8 edition, The Economist magazine accused the Russian state of using “minor environmental infringements” to force Shell and its partners to sell out to Gazprom at the moment when they stood ready to receive a “flood of revenues.” Such “loutish” behavior was incompatible with Russia’s claim to be a reliable energy partner. The Russian case for action, based on the impact of Shell’s cost overruns on the expected revenue of the Russian state, was simply ignored. 
The key point of the original deal signed in 1994 was that the Russian state would only start receiving a share of revenues from extracted oil and gas once the Sakhalin Energy Investment Company — now Royal Dutch Shell, Mitsui and Mitsubishi — had recovered its costs and made a 17.5 percent real rate of return. The contract had no cost cap nor any indication of what costs were non-recoverable. This left Shell with no incentive to exercise cost control. In fact, the opposite was the case: By inflating its costs and keeping its rate of return just under 17.5 percent it could prevent the Russian state from sharing any of the revenues until some indefinite point in the future.
This became more than a theoretical possibility when Shell announced a 20 percent, or $2 billion, overrun in 2004, and a further overrun of $10 billion in 2005. The issue became one of whether costs have escalated because of inherent difficulties with the project (as Shell has argued) or whether they have been artificially inflated to postpone payments to the Russian state (as Russian officials claim). Either way, the revenue about to come on stream was not headed in Russia’s direction.
After several failed attempts to revise the contract, the Kremlin cut the Gordian knot by “persuading” the Sakhalin Energy Investment Company to sell a majority stake to the state gas company Gazprom for $7.5 billion. That way the Russian state secures control over costs and a share of the revenues as soon as they arise. Legal harassment over environmental violations was part of the “persuasion.” Western media have focussed attention on these dubious legal tactics to force a sale, rather than on the nature of the original deal.
The opinion on the Russian side is that Shell took advantage of Russia’s weakness and corrupt government in 1994 to negotiate an extremely favorable contract for energy extraction at a ridiculously low price. The exploration had already been done; the profits were assured. The only real risk for Shell was political risk — that the Russian government would renege on the deal. This was already discounted in the price. So the forced sale of shares in the consortium should not be seen as a windfall loss to the shareholders — it is just the realization of the risk that Shell and its partners willingly assumed. This is apart from the fact that Shell received a fair price for the sale.
Shell’s defenders say that the contract did not reflect political risk but economic risk: The price reflected the unforeseen hazards of the project and the fact that the Russians lacked the technology to attempt the extraction themselves. 
This is the nub of the question, but you will not see it discussed in the Western press. Instead, most of our commentators have argued that the Sakhalin-2 “seizure” is part of a deliberate Kremlin policy to exclude foreign investment and management from its “strategic sector.” This is clearly untrue. Gazprom is open to foreign investment; China got a share of the recent sale of Udmurtneft. And as for the supposed effect of the Russian action in discouraging foreign investment, it was announced Jan. 11 that Gazprom had reached a deal with Chevron, the giant U.S. energy company, to explore and pursue a range of oil projects in Russia. Shell is likely to remain the operator of the Sakhalin-2 project, because Gazprom has no experience at all in producing liquefied natural gas. The issue is one of control, not ownership, of strategic resources. The problem is that the Kremlin has not so far defined what it means when it says “strategic sector.” It includes the natural resource sector, but is apparently not limited to it. This creates uncertainty in the area of property rights.
Despite the defense that can be made of its actions in relation to Sakhalin-2, Russia’s energy policy is not coherent. The Economist is right to note the contradiction between Russia saying that it will be a “reliable” energy supplier for Europe and using oil and gas as a political weapon. It would be far better if the market for energy were depoliticized. In actual fact, consumers the world over seek security of supply, while producers look to extract maximum advantage from control over a scarce, non-renewable resource. It is rather hard to demand that Russia uniquely abstain from this game.
Let me return to the question of why Russia gets such bad press. First, many of the actions of the Russian state can and should be criticized — as much by Russians as by those in the West. The country has no understanding of the meaning of the rule of law. It uses legal devices to obtain political objectives. This makes it look shifty and vindictive. Secondly, journalists are often just lazy. It is much easier to compile lists of misdemeanors and assert trends than to dig into the circumstances of particular cases.
Finally, Russia’s behavior is often crude. It badly needs to launch a charm offensive. Most of its officials sound as if they have never heard the word diplomacy. Yes, they often talk and act as bullies. But the Kremlin usually has a better case than it knows how to present. Partly as a result, the Western media nearly always attribute the worst motives to Russian behavior. A modicum of grace would help bridge the gap between perception and reality. 

Lord Skidelsky is chairman of the Centre for Global Studies and professor of political economy at the University of Warwick.

TITLE: A Policy Paved With Good Intentions
AUTHOR: By Boris Kagarlitsky
TEXT: At least one good thing has come out of the absurdly warm weather so far this winter. Even though the high temperatures cannot be attributed to global warming, politicians and many in the business community are paying more attention to this issue. The European Commission, for example, has announced an ambitious plan to cut European Union greenhouse gas emissions by 20 percent by 2020, and by 30 percent if the United States and other leading polluters sign on to the program.
The bureaucrats in Brussels maintain that the best way to save the environment is to encourage market competition in the energy sector. We should note here that neither China nor India are being called on to reduce emissions. As developing countries, they apparently retain the right to destroy the global environment along with their own particular part of it. By calling on energy-consuming companies to install rapidly new clean technologies, the requirements from the European Commission represent a threat to their commercial viability. If simultaneously, as it also claims, it intends to create more competitive industries, then the pressure on businesses is only greater. 
There is, however, a third option: Corporations can attempt to transfer the additional costs to taxpayers by demanding that governments subsidize their ecology-related expenditures. The problem is that it is hard to draw a line between real expenses and costs that are the result of poor management. Even more absurdly, governments end up following subsidization policies and stressing liberalization and privatization at the same time. Bureaucratic structures become the primary market agents under such conditions, and the most effective competitive strategy becomes the time-honored tradition of paying bribes.
In the cases of China and India, development implies the introduction of progressive rather than outdated technologies. But corporations will still have their choice of countries with lower ecological standards to which they can move their production facilities. Greenhouse gases will be produced at a different address, but the overall level of emissions will increase, even if the European Commission’s new targets are met.
Western Europe may today be willing to finance its post-industrial revolution unilaterally and make no demands on developing nations to follow suit. Political and economic considerations rule out moves to bring financial pressure to bear on poor polluting countries in the near future. But U.S. companies are already starting to voice concerns that they could be targeted by trade tariffs if they don’t move quickly enough to clean up their act, and when countries start to impose tariffs like these, it is always the developing nations that end up suffering the most.
The only solution is to give developing countries ecologically friendly technologies at no cost. But this would be diametrically opposed to the market policies espoused by the European Commission. So the main obstacle to fighting global warming is not the cost. It is that the only way to address this ecological threat runs counter to the most basic practices of modern capitalism.

Boris Kagarlitsky is the director of the Institute of Globalization Studies.

TITLE: Steely Growth
PUBLISHER: Bloomberg
TEXT: LIPETSK — Novolipetsk Steel, Russian billionaire Vladimir Lisin’s steelmaker, said steel production advanced 7.8 percent last year after upgrades at its main facility. Pig-iron output surged.
Steel output climbed to 9.13 million tons in 2006 from 8.47 million tons the previous year, NLMK, as Novolipetsk is also known, said in a regulatory filing Monday. Pig-iron production jumped 15 percent to 9.04 million tons.
“NLMK has restored production to historic levels after scheduled maintenance at the major blast furnace and steelmaking facilities in 2005,’’ the company said in the statement.
Novolipetsk, Russia’s fourth-largest steelmaker, said it expects to report that sales rose 36 percent last year on prices and acquisitions of smaller producers including DanSteel AS.
Earnings before interest, tax, depreciation and amortization were probably about $2.6 billion, the company said, without elaborating. NLMK said it will release 2006 results to U.S. reporting standards in April.

TITLE: Sitronics on Tour
PUBLISHER: Bloomberg
TEXT: MOSCOW — Sitronics, which makes tickets for the Moscow subway and microchips for missile systems, began its promotional tour to gauge investor interest for the company’s initial public offering.
Sitronics, which plans to have the share sale in the first quarter and is a unit of Russian billionaire Vladimir Yevtushenkov’s AFK Sistema holding company, also published its preliminary prospectus, the Moscow-based company said in regulatory statement Monday.
Sitronics intends to sell as much as $550 million of shares in an IPO to fund expansion, Alexander Boreyko, head of investor relations at the company, said Jan. 9. Revenue in the nine months to Sept. 30 was $1.05 billion, while operating income before depreciation and amortization was $115 million, he said.
“The company evaluation will be based on the expectations of future growth in revenue and profitability. Profitability so far is a dark horse,’’ Konstantin Belov, an analyst with UralSib Financial Corp. in Moscow said in a telephone interview Monday.
Sitronics, which also develops software and makes telecommunications gear, will list global depositary receipts on the London Stock Exchange, and the ordinary shares on the Russian Trading System and also the Moscow Stock Exchange.

TITLE: Unified Changes
PUBLISHER: Bloomberg
TEXT: MOSCOW — Unified Energy Systems, the Russian power utility in the process of being broken up, wants the state-run Federal Grid Co. to get the government’s stakes in generating companies in order to boost investment in the grid.
The proposal, sent to the government for review, would boost the nation’s stake in the national grid operator to more than 75 percent and speed up the government’s exit from power generation, said Unified Energy strategy chief Dmitry Akhanov.
“The point is not to leave any sales for the government to deal with,’’ Akhanov said in a statement. “That would make the process lengthy, complicated and unclear as to where the funds would end up.’’ The plan would help ensure that revenue from selling generating assets goes where it’s needed most, to upgrading and expanding the grid, he said.
Russia is reorganizing its power sector along market lines by splitting up the generation, sales and services sectors into competing companies. Unified Energy will be broken up into the new companies and cease to exist by July 2008, Akhanov said.
The Federal Grid, rather than rely on the budget, would raise the 700 billion rubles ($26 billion) it needs for investments before 2011 by selling shares in power generators, which the government holds via its stake in Unified Energy.

TITLE: Zimbabwe  Plants
PUBLISHER: Bloomberg
TEXT: HARARE — Turbo Engineering, a Russian company, may build hydropower generators worth $150 million in Zimbabwe, said the Daily Mirror, citing unidentified media reports.
The company may build 17 hydropower turbines in the southern African nation, generating at least 123 megawatts of power, the Harare-based newspaper said Monday on its web site.
Turbo Engineering representatives will meet officials from Zimbabwe’s central bank, energy ministry and the state-owned Zimbabwe Electricity Regulatory Authority, the paper said, without saying when the meetings would take place.
Zimbabwe imports about 35 percent of its electricity requirements from South Africa, Mozambique, Zambia and the Democratic Republic of Congo.

TITLE: Hapoalim Bid
PUBLISHER: Bloomberg
TEXT: TEL AVIV — Bank Hapoalim Ltd., Israel’s largest bank, is seeking foreign investors to join its bid for an unnamed Russian lender, daily newspaper Ma’ariv said without citing anyone.
The transaction will be in partnership with a European investment bank and values the Russian company at $350 million, of which Hapoalim expects to pay $200 million, the newspaper said.
The Russian lender has 22 branches and is held by two investors who will continue to hold a stake in the bank, the report said without giving any names.
Hapoalim has completed due diligence and visited the Russian lender several times. The board of directors has discussed the deal but not made a final decision, Ma’ariv said.
Hapoalim assumed control of Turkey’s Bank Pozitif Ve Kalkinma Bankasi A.S. in a $100 million acquisition last year.
The bank has been seeking acquisitions abroad as regulators won’t let it increase market share at home.

TITLE: Peter Hambro Rise
PUBLISHER: Bloomberg
TEXT: LONDON — Peter Hambro Mining Plc, Russia’s third-biggest gold producer, said metal production rose 4.6 percent in 2006 as output increased at its Pokrovskiy mine.
Production last year rose to 260,800 ounces, from 249,300 ounces in 2005, and beat Peter Hambro’s July target of 250,000 ounces, the London-based company said Monday in a statement. The average selling price rose 33 percent to $586 an ounce.
Peter Hambro on Dec. 14 won the support of the Russian government in a dispute over mining permits. It agreed to work with the authorities to eradicate violations at the Novogodneye-Monto and the Toupugol-Khanmeisholrsky fields.
“I am pleased to note that the questions on our mining licences which arose in December 2006 are now resolved,’’ Chairman Peter Hambro said in the statement.

TITLE: Polyus Mine
PUBLISHER: Bloomberg
TEXT: MOSCOW — Polyus Gold, Russia’s largest gold producer, said the government confirmed its Natalka mine in the far east holds about 48 million ounces of the precious metal.
The State Reserves Committee of the Natural Resources Ministry confirmed 1,501 tons, or 48 million ounces, of gold based on open pit mining, the Moscow-based company said in a regulatory filing Monday. Another 335.3 tons was confirmed as “off-balance reserves outside the pit outline,’’ Polyus said.

TITLE: Bank Earnings
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian banks will raise their average annual profit to $90 billion by 2015, from $14 billion now, on growth in retail lending and mortgages, Vedomosti reported, citing a report by McKinsey & Co.
The banks’ annual earnings have risen on average by 41 percent in the past five years, the newspaper said, citing the report. That compares with annual earnings growth of 24 percent for eastern European banks, 19 percent for Brazilian lenders, 15 percent for Chinese banks and 10 percent for those in India, according to the report.
Russian retail lending and mortgages will account for 74 percent of the banks’ earnings from retail services by 2015, Vedomosti said, citing the McKinsey report. That compares with 35 percent to 60 percent for global banks.
The New York-based management-consulting firm will release a detailed report on Russian banks in April, according to the daily.

TITLE: Tabloid Turnoff
PUBLISHER: Bloomberg
TEXT: MOSCOW —Gazprom Media, a unit of Russia’s state-run gas company, will not buy Komsomolskaya Pravda, the country’s most popular tabloid, Vedomosti newspaper reported Monday citing a company statement.
Billionaire Vladimir Potanin’s Prof-Media News and Publishing Holding will sell Komsomolskaya Pravda Publishing House, which brings out the tabloid with a circulation of four million copies, to businessman Grigory Beryozkin’s ESN Group, the Russian daily said.
Gazprom Media has already acquired the country’s main political broadsheet Izvestia from Prof-Media, and acted as a consultant to Beryozkin’s Media Partner on the purchase of 60 percent plus one share in Komsomolskaya Pravda, Vedomosti said.

TITLE: Not So Happy Together
AUTHOR: By Gwynne Dyer
TEXT: Angela Merkel has a very different attitude to Russia from the last three or four German chancellors, perhaps because she grew up in East Germany, under Russian control. She’s not anti-Russian (she speaks the language fluently), but she doesn’t think that they deserve special treatment. So when Russia suddenly cut off the flow of oil to Germany and several other European Union countries on Jan. 8 because of a dispute with Belarus, she did not waste time on tact.
“It’s unacceptable,” she said, “when there are no consultations on such actions. That always destroys trust.” It was the harshest thing that any German chancellor has said to any Russian leader since the collapse of the Soviet Union — and she said it, moreover, in her capacity as the current president of the European Union, a post that she had assumed just days before. Something is going on here.
The dead of winter is the ideal time for an energy supplier to have a confrontation with an energy-poor customer in a cold climate, and this is the second January in a row that Russia has pulled the plug on a neighbor that was resisting hefty increases in the price it paid for Russian gas and oil. Last year it was Ukraine; this year it’s Belarus. In each case, Moscow brought them to heel by turning off the taps — but that also cut off its EU customers farther west, since the pipelines pass through Belarus and Ukraine en route to the rest of Europe. The EU was not amused.
“We are paying for these energy resources and are never late in our payments,” EU Energy Commissioner Andris Piebalgs said in mid-January. “We have a right to insist that you never disrupt supply.” But behind Piebalgs’s stern insistence that “the disruption to oil supplies we have seen in the last few days must never, never happen again” was the knowledge that it might well happen again. The Russian negotiating style is too muscular for the EU’s taste, and what happens to Ukraine or Belarus today might happen to other Russian customers tomorrow.
When Moscow told Minsk that the price of gas was going up from $47 to $105 per thousand cubic meters on Jan. 1 and that it was imposing a “customs duty” of $180 per ton on the oil Belarus buys from Russia, Belarussian President Alexander Lukashenko’s first response was defiance: “We will live in dug-outs, but we will not surrender to blackmail.”
Belarus has no energy resources of its own, and Lukashenko’s popular support among poorer Belarussians depends entirely on the fact that he has preserved the old Soviet system and the guaranteed minimum living standard that it provided. His support would probably not survive a prolonged bout of hardship as a result of a confrontation with Russia over energy prices, so he took a different tack.
Just after the new year, Lukashenko accepted the Russian demands on oil and gas prices — but then he tried to claw the money back by imposing a $45 per ton “transit fee” on all the oil passing through Belarussian pipelines to the EU. What’s more, knowing that he could never force Moscow to pay up, Lukashenko started collecting the fee in kind by diverting oil from the pipeline that crosses Belarussian territory on its way to the EU. So Moscow shut the pipeline down.
Fair enough, in the bandit world of post-Soviet capitalism — and it brought Lukashenko sharply to heel. He gave in completely, and since he has now also been forced to sell 50 percent control of Belarus’ pipelines to Russia he will never pose this problem again. But farther west, the EU is quietly re-examining its energy calculations as the lesson sinks in that it is unwise to be too dependent on energy supplies from post-Soviet Russia. (The EU imports one quarter of its oil and 42 percent of its gas from Russia.)
As Piebalgs put it: “If there’s disruption of supply, it’s not retaliation that’s required but appropriate action. … You simply conclude that this partner is not worth your trust and you don’t make any more contracts.” There will actually be lots more contracts, because nobody can switch the bulk of their energy purchases overnight, but the trend line in EU purchases of Russian energy is likely to be down.
Chancellor Merkel is already saying that Germany should reconsider its plan to phase out nuclear power by 2020, although she cannot do so under the terms of the current coalition agreement with the Social Democrats. More importantly for the near future, she is urging private industry to build a network of gas pipelines across the EU that is connected to liquefied natural gas ports in Germany and elsewhere. That would give the EU, and especially the former communist countries of Eastern Europe, an alternative to heavy dependence on Russian energy.
Russia doesn’t care. In the long run, it can probably sell almost all of its exportable oil and gas to China and other East Asian customers (though the pipelines mostly have yet to be built). But a major strategic shift is getting under way: The EU no longer assumes that Russia is a reliable partner or even a friend.

Gwynne Dyer is a London-based freelance journalist and political commentator.

TITLE: Napoleon Also Won the First Round
AUTHOR: By Alexei Bayer
TEXT: Even as U.S. President George W. Bush proposed a new strategy for victory in Iraq on Jan. 10, those who engineered the war kept on producing self-serving explanations of what, if anything, actually went wrong. By far the most amusing is the version adopted by a coterie of neo-conservative pundits in and around Pentagon, who before the Iraq invasion promised that the war would be “a cakewalk” and that U.S. troops would be greeted as liberators.
In their view, there have been two Iraq wars. The first, lasting barely a month and a half and resulting in less than 200 U.S. and British military deaths, was a stunning success. The Iraqi army was defeated, Baghdad fell and the feared dictator was deposed.
Then came the second war, in which things didn’t go quite so smoothly. That second war is now about to enter its fourth year and has produced chaos and civil strife among Iraqis, while also killing over 3,000 coalition soldiers. However regrettable, the reasoning goes, this second, mismanaged war should not diminish the brilliance of their initial campaign.
What a novel idea. It turns out, then, that Napoleon fought two distinct campaigns in Russia. The first was a victorious cakewalk, allowing him to overrun a large portion of the Russian Empire, beat up on the Russian Army at Borodino and occupy and burn Moscow. End of brilliant Phase One. In the longer run, of course, there were setbacks, but that’s beside the point.
Of course, this approach conveniently ignores the fact that Napoleon’s ultimate defeat in Russia was a direct — and unavoidable — consequence of his apparent successes at the start of the campaign. He was allowed to march into the vastness of Russia (or lured there by Field Marshal Mikhail Kutuzov), whereupon his supply lines got stretched and Russian winter set in.
Rather similarly, the swift U.S. victory in Iraq is the root cause of the current unfolding disaster. Former U.S. Defense Secretary Donald Rumsfeld introduced a number of reforms at the Pentagon, building a light, mobile, technologically advanced military force. The new military is designed to go in quickly, defeating any adversary in a surgical strike — which they duly did in Iraq.
However, the United States is no Batman visiting vengeance upon evildoers and then flying into the sunset. It is a dominant economic and political power, a guarantor of global peace and stability. After a regime change — especially in such a pivotal region as the Middle East — it has no choice but to stick around and pick up the pieces.
For this, astonishingly, the U.S. Army has never been trained — just as Napoleon’s formidable Grande Armee was not built to winter 2,500 kilometers away from Paris.
Bush believes that victory in Iraq is still possible. After all, doesn’t the U.S. military continue to win every battle against the insurgents? Another 20,000 or so troops means there will be more victories, and thus the war will be won.
This is an old refrain, heard after U.S. defeat in Vietnam and, before that, after the German surrender in World War I. In Southeast Asia, too, the U.S. military won every battle, and Kaiser’s armies gave up before they were crushed by the Entente. The politicians, we are told by various revanchists, are the ones who stabbed our valiant heroes in the back.
It should be remembered, however, that Napoleon never suffered a military defeat in Russia, either. His army merely disintegrated as it retreated to Russia’s borders. As many as 400,000 soldiers, or 80 percent of the original number, perished along the way.
Of course, the U.S. military force in Iraq is unlikely to disintegrate in the same way. But U.S. generals have been warning that the U.S. Army has been overextended to the breaking point. Most Americans still think it is a metaphor.

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

TITLE: Don’t Expect Energy to Fuel an Income Boom
AUTHOR: By Alexander Zhelenin
TEXT: Unless projections by economists turn out to be radically wide of the mark, the Russian economy should post strong growth numbers in 2007 for a seventh straight year. Although 60 percent or more of the growth can be attributed directly to high world commodities prices and the resultant high profits for exporters, particularly in the energy sector, annual gross domestic product growth between 4.5 percent and 7 percent is impressive. Although not as quickly as the government or economists would like, inflation is still slowing and industrial output is on the rise.
Standard of living indicators for the majority of the population, however, remain low in comparison to overall economic growth. This is a problem President Vladimir Putin has commented on publicly on more than one occasion.
Economic Development and Trade Minister German Gref recently said that in the near future Russia should expect “a breakthrough in the economic sphere, with an accompanying rise in consumption and personal incomes.”
In July, Gref released data related to this same theme. At a meeting between Putin and members of the government, Gref announced that the average income had reached 11,000 rubles, or about $420 per month. Given past figures this might have sounded like good news. But the number is a bit misleading, as the astronomical earnings of a small number of people at the top of the pile and regional differences distort the picture. It makes about as much sense as calculating the average temperature for the patients at a particular hospital.
In a number of places, like Dagestan and Ingushetia in the North Caucasus, an income of 11,000 rubles would be very high. In a region plagued by widespread unemployment, a monthly salary of 2,000 to 4,000 rubles, or $75 to $152, is considered fairly good. And this is where people often have to pay bribes as high as 12,000 rubles just to land a job in the first place. Nobody appears to be concerned with the question of where poor people are supposed to get their hands on such a sum. Local authorities in the North Caucasus are run by oligarchic clans. It has always been this way and nobody in power is interested in seeing things change. As far as the Kremlin is concerned, as long as everything looks peaceful from the outside, the local authorities can handle the details as they see fit.
One of the results of this situation is an exodus of able-bodied workers from the North Caucasus into Russia’s central regions, where a shortage of laborers means job opportunities with less corruption than at home — a migratory pattern that disturbs ethnic-Russian nationalists. This also contributes to an increase in criminality in the region and a lack of trust in local authorities. But I digress.
I took part in a study in the Black Sea resort of Sochi that provides another example. The results of the research were staggering — 40 percent of those surveyed reported monthly incomes of 3,000 rubles or less. And this in Russia’s resort capital!
I had a remarkable conversation with a woman who worked there as a pharmacist. She and her husband had moved to Sochi from the Far East, where she had been earning 16,000 rubles per month at the same job. This is just one example of the degree to which income levels vary across the country.
The latest average salary figure I have heard for Moscow, for example, is 28,000 rubles (keeping in mind, of course, the hospital analogy above). 
Moscow is a city of millionaires and billionaires with a high concentration of offices and banks that employ high-salaried managers and middle-income, white-collar workers. This is enough to counter even the notoriously low salaries for the millions of government workers in the capital.
But let’s put geographic differences aside and return to our first figure of 11,000 rubles. In most places this sum is too low to cover reasonable living expenses.
According to calculations by the Russian Academy of Labor and Social Relations, the average subsistence-level income in the country is 14,000 rubles, or about $525, per person. This demonstrates that the government’s official subsistence income of about 2,600 rubles per month is indecently low. The Finance Ministry doesn’t even refer to it anymore.
Leaving averages aside and looking at different groups, we discover that, according to official data, about 65 percent of the population live on less than 8,000 rubles per month, and 50 percent earn less than 6,000 rubles. So Gref’s talk of a “breakthrough” in salaries should be good news. But is it really going to happen? Not according to some economists.
“Russian incomes cannot grow faster than they are at present,” said Andrei Kolganov, a professor of economics at Moscow State University. “There is no solid foundation to current economic growth.”
Kolganov said that, given the economy’s dependency on world energy prices and the unlikelihood that these prices will grow at the pace seen over the last four years, rapid income growth is unlikely.
The State Duma election in 2007 and the vote to choose a new president next year will likely have an effect. Vladimir Gutnik, head of the Center for European Research at the Institute of World Economics and International Relations, said the elections will drive incomes higher.
“We can expect significant increases in wages for state employees, pensions and government aid,” he said. “It is clear that these increases will outpace the rate of inflation, even if the economy does not grow at the rate forecasted.”
This can be accomplished even if growth slows by using funds accumulated in reserves and the stabilization fund to cover the difference.
So, while expectations of a boom in incomes and consumption from continued economic growth might not be reasonable, an infusion of cash could still make them realistic. Pouring this money into people’s pockets, even if only ahead of elections, isn’t the worst outcome we could hope for, especially as the reserves have been built up from years of economic growth.
As long as this strategy doesn’t put too much upward pressure on prices, it will provide some hope for the economic road ahead.

Alexander Zhelenin is a freelance journalist working in Moscow.

TITLE: Two New Books Examine the Georgia Factor
AUTHOR: By Thomas de Waal
TEXT: Georgia is a small, mountainous country that somehow grips the imagination and commands a large amount of international attention. Despite having a population of less than 5 million and no natural resources, it is currently the main cause of the new mini-cold war between Russia and the United States, its government condemned as a militaristic threat by President Vladimir Putin, and just as extravagantly praised not only by U.S. President George W. Bush, but also by Senator John McCain, as a beacon of freedom.
I, too, plead guilty to the Georgia obsession, but I concede that, to a detached outsider, this level of attention seems unjustified. The young presidency of Mikheil Saakashvili has scored some notable successes, mainly in cracking down on corruption and raising budget revenues, but its democratic scorecard is actually fairly mixed: The media is less free than it was three years ago, the rule of law is frequently subverted by politicized court cases, minorities still feel uncomfortable. This is not a model government and it does not deserve the recent comment from the United States’ normally sober former UN ambassador Richard Holbrooke that “the 38-year-old Saakashvili represents almost everything the United States and the European Union should support.”
So what is the Georgians’ secret? They have produced some great theatrical and film directors, and their capacity for grand gesture must have something to do with it. In a gray bureaucratic world, the Georgians give us dash and spectacle. Bernardo Bertolucci could have directed the drama of the 2003 Rose Revolution, the culmination of which had Saakashvili marching at the head of a throng of leather-jacketed supporters through Tbilisi and into the parliament chamber to overthrow the ancien regime, unarmed and clutching only a single rose. Since then, Saakashvili has been a master of PR and grand gestures, his presidential practice marked more by style than by substance.
The deeper reason for this kind of interest lies in the Soviet past, in Georgia’s special place within the Soviet Union and in the double strand of Georgian history that has tied it to both Russia and Europe. All kinds of Russians find it harder emotionally to let go of Georgia than, say, Kazakhstan or Moldova. The interpenetration of Russian and Georgian culture, combined with the memory of Georgia as a beloved childhood vacation destination, leads them to unthinkingly assume that Georgia is part of “their” space — and that an independent Georgia that wants to embrace the West is guilty of some kind of disloyalty. This in turn only drives the Georgians’ fiercest nationalism, bolstering the response that they have an ancient culture and a Christian tradition that predate Russia’s, and strong ties with Europe that bypass Russia.
And, of course, looming over all this is Josef Stalin, the world’s most famous Georgian, still interred in Red Square. His legacy has formed and deformed both countries in myriad ways. You could write a whole Ph.D. thesis unraveling the subtexts that underlie Putin’s deliberately needling remark comparing the Georgian government’s detention of alleged Russian spies in Tbilisi to the behavior of Stalin’s security boss Lavrenty Beria. A Russian leader and ex-KGB veteran accusing the pro-Western nationalist leader of Georgia of being Beria’s heir? Who is the pot here and who is the kettle, the Georgians asked with some justification. Yet the truth is that, whether they like it or not, both Putin and Saakashvili live in the shadow of Stalin, shaped by all the assumptions he gave them about the uses of power.
Stalin inevitably makes an appearance in both of these fascinating books on Georgia. Peter Nasmyth is made to drink to Stalin, “the great general,” during an alcohol-soaked trip to the mountains of Svaneti. Thomas Goltz tracks the influence of Stalin and Beria in his thrilling reporter’s account of good times and bad in post-Soviet Georgia.
Both of these authors know and love the place well. The danger — one that neither avoids — is that the story turns into one of those over-long Caucasian feasts, in which you are offered far too much to eat, the digressions get ever lengthier and you begin to forget where you started. A bit more Anglo-Saxon editing would have helped. Nasmyth, a professional Georgiaphile, co-founded the indispensable English-language bookshop Prospero’s Books in Tbilisi and has also written a walking guide to the mountains. The first edition of “Georgia: In the Mountains of Poetry” dates back to 1998, and this new edition brings it up to date with material that covers the Rose Revolution and its aftermath. 
It is a first-person story of two decades of journeys to Georgia and has all the pluses and minuses of an insider’s account. Yet the book is worth having for the photographs alone, and should be on the shelf of anyone who wants to understand the Caucasus.
Goltz’s “Georgia Diary” is a different proposition altogether, being the third installment in a (initially unintended) trilogy, following “Azerbaijan Diary” and “Chechnya Diary.” Fans and detractors will already know what is in store for them: a racy, ground-level account of our reporter’s battle with the chaos of the post-Soviet Caucasus and of its unfortunate citizens made victims of geopolitical battles. The same caveats apply in that the background information is not always well-sourced nor the spellings correct, but Goltz’s journey is well worth the ride. Goltz wears his heart on his sleeve, never shirks the most dangerous assignment and can rival any drink-hardened Caucasian glass for glass. In a recurring subplot, he is frequently at war with foreign editors who can’t find the Caucasus on the map, have commissioned something else from Moscow or have filled their week’s quota of war coverage from the Balkans.
When I was living in Moscow in the 1990s and struggling to grasp the bigger meaning of the post-Soviet chaos around me, “Azerbaijan Diary” was a tonic. Not for this author reassuring platitudes about how this was a “transition to democracy and market economy” (as far too many Western analysts insisted on portraying it) — here was an up-close account of the scramble for resources and power in a world without rules.
The best passages in the new book are about the breakaway region of Abkhazia and the unnecessary nationalist war there of 1992-93. Goltz was there before it started and after it was over, and in some of the most riveting and truthful chapters of war reportage you will ever read, he witnesses the fall of Sukhumi, the capital, to the Russian-backed Abkhaz, with Georgian President Eduard Shevardnadze clinging on to the end.
Goltz says that he first encountered Georgia in Bertolt Brecht’s “The Caucasian Chalk Circle,” and the most moving and mysterious character in his book is also the most Brechtian. While in Sukhumi, Goltz got to know a Georgian woman named Nunu Chachua, the commercial director of a theater and also a fanatical Zviadist, or in other words, a supporter of Georgia’s nationalist and fiercely anti-Russian first president, Zviad Gamsakhurdia. She was, Goltz tells us, “Medea, a raven-haired beauty with dark almonds for eyes, who was tough as nails, and possessed an absolutism that was both splendid and frightening.”
Chachua’s story takes us through the whole tragic arc of Georgia’s recent history. We meet her shortly after Gamsakhurdia is deposed in 1992; then again as war starts in Abkhazia, with her house on the front lines of the battle for Sukhumi; and then when she is in exile in Tbilisi, doing business deals and drawing refugee benefits while pouring scorn on the “so-called Rose Revolution.” Goltz does not iron out her contradictions, and yet we admire her fortitude. In short, she is a very Georgian character and the kind of person with whom the professional policy strategists in Moscow or Washington have failed to come to terms. Perhaps it is the glorious devil-may-care attitude of people like Chachua that continues to draw us to Georgia — in 2007 we long for places where chivalry still has value, even if the price the Georgians pay for it has been far too high.

Thomas de Waal is Caucasus editor for the Institute for War and Peace Reporting in London.

TITLE: Farmers Plow Ahead, With or Without the Promised Assistance of the Russian State
AUTHOR: By Maria Levitov
PUBLISHER: Staff Writer
TEXT: BAYGUSHI, Vladimir Region — A devastating fire, skyrocketing gasoline prices and the daily hardships of rural life would probably persuade any hardy farmer to hang up his sickle. Not Viktor Lomakin.
The 54-year-old construction worker turned hog farmer says his indefatigable work ethic has sustained him since he started his farm in 1993. “The peasants never surrender!” he declared.
The government, which has embarked on a national project to revive the country’s agriculture sector, better hope there are more Lomakins out there.
To date, the agriculture project has been the toughest of the four projects — including health care, housing and education — to implement, a recent poll shows.
Lomakin, who recently secured a loan through the project, could be a poster boy for the national effort, with all his determination, earthiness and good cheer.
On a recent morning, the Vladimir region farmer stormed into his renovated pig barn, shouting, “Time to wake up, my beauties!”
Marching from one pen to the next, Lomakin made a point of checking on all his wards, from 15-day-old piglets to giant hogs. “I only feed them potatoes, whey, just the natural stuff. That’s why they are so pretty,” he yelled, as cranky pigs roused from their sleep began squealing uncontrollably.
A jokester full of energy and optimism, Lomakin takes care of his 450 hogs with the help of two grown sons and two hired hands at his farm, 190 kilometers east of Moscow.
“I wanted to make something that was mine,” said Lomakin, who once managed construction crews that built grain silos and other rural infrastructure all over the Soviet Union.
After the 1991 collapse, he left construction work for a job at a small slaughterhouse in Vladimir. One of the pigs that arrived at the plant turned out to be pregnant and was spared; this unexpected development led Lomakin, sow in hand, to open his own farm.

SUCCESS BREEDS ENVY
Lomakin said he loved rural work, having grown up on a collective farm in the Kursk region, where his mother was a prize-winning calf farmer.
But nine years ago he nearly gave up after a fire destroyed his barn, along with 30 hogs and 25 cattle.
He was tight-lipped about the fire, saying one of his “well-wishers” did it — someone who wanted to buy his meat but didn’t like the price, or, just as likely, someone, a villager, a fellow farmer, who was jealous of his success, he said.
Envy, and the violent consequences that come with it, has been one of many scourges that have left Russia’s farms incapable of feeding the nation.
When private farming was legalized in 1990, before the end of the Soviet Union, workers left collective farms in droves to launch their own small farms.
The following year, then-Prime Minister Ivan Silayev’s government gave farmers a little more than $150 million, in 1991 dollars, to encourage privatization, according to AKKOR, the Russian farmers association.
But in the midst of the economic turmoil of the early 1990s, including the elimination of price controls and the dismantling of the Soviet state, many of the farming pioneers went bankrupt.
The rare success stories like Lomakin’s were often met with hostility in rural communities besieged with rampant alcoholism, unemployment and crumbling apartment blocks.
It was common for neighbors or rivals to resort to arson to settle a score.
“I thought I was done with farming,” Lomakin said of the 1998 fire.
Not quite. After the shock subsided, he said, Lomakin began hoarding all his savings and preparing for a comeback. “It was hard,” he said. Two years later he began rebuilding.

REVIVIFYING A WAY OF LIFE
Today, Lomakin’s is one of 261,000 officially registered private farms in the country.
The figures can be deceiving. Agriculture sector analysts say more than half of registered farms have effectively shut down. And a large fraction only exist on paper.
Indeed, estimates suggest that roughly 30 percent of registered farms, about 78,300, are actually up and running, said Sergei Kiselyov, head of the agricultural economics department at Moscow State University.
What’s more, about 40 percent of Russia’s large-scale farming operations operate at a loss, Kiselyov said.
Farmers must often contend with a lack of plumbing and pipeline gas, especially when they live more than a couple hundred kilometers from the capital.
Paradoxically, the economic boom is compounding rural problems, as cities, with more jobs and a higher standard of living, draw hordes of young people from the countryside.
The national agriculture project, first mapped out by President Vladimir Putin in late 2005 along with the three other projects, aims to reverse this trend.
The goal, government officials say, is not simply to create a booming farm sector that can feed Russians and make the country less dependent on importers.
It is also to shore up a fading agricultural tradition and way of life ravaged by collectivization and the wild fluctuations of the post-Soviet economy. And, no less important, the project aims to secure the country’s hinterlands, which span 11 time zones.
“We must view agriculture not only as an important economic sector but also as a very important way of life [and] a sector that solves a whole slew of other national goals,” Agriculture Minister Alexei Gordeyev said during an online conference in November.
To that end, the government in 2006 spent nearly $250 million on the development of small farms like Lomakin’s.
Another $280 million-plus went to increasing cattle and dairy production, and more than $75 million was spent on rural housing to lure people back to villages.
The figures come from the Agriculture Ministry.
“This is the first time in all of our modern history when this kind of money will be spent in the villages,” First Deputy Prime Minister Dmitry Medvedev, who oversees the national projects, recently said, Interfax reported. “Indeed, the money has already arrived and has begun working.”
Looking toward the year ahead, Medvedev, speaking at an AKKOR meeting late last year, said the state would spend nearly $5.3 billion on helping cultivate the agriculture sector, Interfax reported. Of that, nearly $602 million has been earmarked for loans for upgrading farms.

CONFUSED PRIORITIES
No one seems to dispute that the state has an important role to play in improving Russia’s farming outlook, but public opinion and farming industry analysts are skeptical of the national project’s effectiveness.
“I have the greatest admiration for farmers from Vladimir and other small farmers, but they are such tiny producers, it’s a drop in the bucket,” said Dmitry Rylko, head of the Moscow-based Agriculture Market Research Institute.
Spending precious resources on these farmers, Rylko said, would neither make the agriculture sector more efficient nor solve the deep-rooted social problems that bedevil village life.
Huge farms that incorporate all components of the food-production process are the wave of the future, he added. “Only large, vertically integrated holdings have the potential to be truly competitive,” Rylko said.
Kiselyov, from Moscow State University, said the major problem with the national project is that it hasn’t decided what its No. 1 priority is — improving the Russian agriculture sector or alleviating rural-area social ills.
While there is no doubt that rural areas are in dire straits — many isolated pockets face the possibility of total depopulation when their last residents die — solving that problem does not necessarily jibe with boosting farm activity.
Moreover, the national project’s third goal, beyond improving small farms’ efficiency and rehabilitating village life, is modernizing meat and dairy production, and state spending has, so far, focused largely on large producers, not small farms. It’s unclear how this third prong in the agriculture project helps or complements the other two objectives.
“There are lots of figures and details about how much will be spent buying cattle,” Kiselyov said. “But there are no indicators for measuring what those expenditures will accomplish.”
Failure to track the effectiveness of government spending, he said, poses a danger of the national project turning into a giant black hole that swallows up federal funds year in, year out.
The public also has reservations about the project. A majority of the 1,500 people in a public opinion poll in December in 44 cities and towns called the agriculture project the least successful of the four projects. Five percent call the project a success.

DOUBTS PERSIST
Even Lomakin has his doubts. Last year, he borrowed just shy of $113,000, the maximum allowed, to renovate his barn, which can now accommodate 1,000 pigs.
The government-subsidized loan came from the state-run Rosselkhozbank and included a 14 percent annual interest rate. That marked a four percentage point drop from four years ago, said Yelena Degtyaryova, head of a local farmers association, who helped convince Lomakin to take out the loan.
Rosselkhozbank and Sberbank, which is also state run, issued the vast majority of the agriculture project loans in 2006.
“The 3 million [rubles] is nice, but what can you really do with 3 million rubles?” Lomakin said. “It’s nothing.”
He added that he needed to scrape together another $75,000 to complete work on the barn.
One of the subsidized loan program’s stipulations that has most irked farmers is the one that states that they must employ a professional construction crew to make improvements. Degtyaryova noted that many farmers say they can do the work better and cheaper on their own.
She conceded that the project was not perfect but added: “You can’t make a personal program suited to each farmer.”
Lomakin hasn’t been sold. “Want my honest opinion?” he said. “The national projects are not all that important. Those of us who managed to stay afloat owe everything to out stubbornness, our work.”

TITLE: At Least 78 Dead in Coordinated Baghdad Blasts
AUTHOR: By Sinan Salaheddin
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq — At least 78 people were killed and more than 150 wounded Monday after two nearly simultaneous bombs struck a predominantly Shiite commercial area in central Baghdad in the deadliest attack in two months, officials said. 
The first blast occurred shortly after noon when a bomb left in a bag placed among the stalls of vendors peddling DVDs and secondhand clothes exploded in the Bab al-Sharqi area between Tayaran and Tahrir squares.
It was followed almost immediately by a parked car bomb just feet away. A suicide bomber killed at least 63 people in the same area last month.
Deputy Health Minister Hakim al-Zamili said at least 78 people were killed and 156 were wounded.
The explosions left body parts strewn on the bloodstained pavement as black smoke rose into the sky. Iraqi police sealed off the area as ambulances rushed to the scene to evacuate the victims.
The bombings were a further sign of what appears to be a renewed campaign of Sunni insurgent violence against Shiite targets. Last week, 142 Iraqis were killed or found dead on Tuesday alone, including 65 students at a leading Baghdad university who died in twin car bombings.
Monday’s death toll made it the single most deadly attack against civilians in Iraq since Nov. 23, when a series of car bombs and mortar attacks by suspected al-Qaida in Iraq fighters in Baghdad’s Sadr City Shiite slum killed at least 215 people.
Hours earlier Monday, gunmen killed a female teacher as she was on her way to work at a girls’ school in the mainly Sunni area of Khadra in western Baghdad, police said, adding that the teacher’s driver was wounded in the drive-by shooting.
The two U.S. Marines were killed Sunday in separate attacks in the Anbar province, an insurgent stronghold west of Baghdad, the military said. The deaths came a day after 25 U.S. troops were killed Saturday in the third-deadliest day since the war started in March 2003 — eclipsed only by the one-day toll of 37 U.S. fatalities on Jan. 26, 2005, and 28 on the third day of the U.S. invasion.
The heaviest tolls on Saturday came from a Black Hawk helicopter crash in which 12 U.S. soldiers were killed northeast of Baghdad as well as an attack on a provincial government building in the Shiite holy city of Karbala that left five U.S. troops dead.
The violence underscores the challenges faced by U.S. and Iraqi forces as they seek to rein in Sunni insurgents and Shiite militias that have made the capital and surrounding areas a battleground.
Meanwhile, two government officials on Sunday said Iraq’s prime minister dropped his protection of an anti-American cleric’s militia after being convinced by U.S. intelligence that the group was infiltrated by death squads.
Prime Minister Nouri al-Maliki’s turnaround on the Mahdi Army was puzzling because as late as Oct. 31, he had intervened to end a U.S. blockade of Sadr City, the northeast Shiite enclave in Baghdad that is headquarters to the militia.
Shiite militias began taking revenge after more than two years of incessant bomb and shooting attacks by Sunni insurgents.
Sometime between late October and Nov. 30, when the prime minister met President Bush, al-Maliki was convinced of the truth of American intelligence reports which contended, among other things, that his protection of radical cleric Muqtada al-Sadr’s militia was isolating him in the Arab world and among moderates at home, two government officials said.
“Al-Maliki realized he couldn’t keep defending the Mahdi Army because of the information and evidence that the armed group was taking part in the killings, displacing people and violating the state’s sovereignty,” said one official.
Both he and a second government official who confirmed the account refused to be identified by name because the information was confidential. Both officials are intimately aware of the prime minister’s thinking.

TITLE: Sharapova On Course for Australian Title
PUBLISHER: Reuters
TEXT: MELBOURNE — Top seed Maria Sharapova edged out Vera Zvonareva 7-5 6-4 to reach the Australian Open quarter-finals for the third time in her career on Monday. 
The 19-year-old Russian clinched a tight opening set to take the initiative and despite recovering from 5-2 down in the second, the 22nd seed could not fend off Sharapova, who won in an hour and 46 minutes on Rod Laver Arena. 
Sharapova was grateful to come through in relatively quick time after a draining week of action at Melbourne Park and against an opponent who had beaten her twice in their five career meetings. 
“It was very good to win in two sets today because I’ve had some tough matches against her. I came up with three really good shots to win it at the end there,” she said in a courtside interview. 
Sharapova, who will regain the world number one ranking at the end of the tournament, served solidly in the first and did not concede a break point throughout. 
She sealed her own break with a crunching forehand drive and Zvonareva swiped her racket at the floor in frustration. 
Sharapova, a semi-finalist the last two years here, plays her third fellow Russian of the tournament in the last eight when she faces 12th seed Anna Chakvetadze. 
On Sunday a shell-shocked Amelie Mauresmo had the Australian Open trophy ripped from her grasp by a teenage upstart who had won only one grand slam match before arriving at Melbourne Park. 
On a day when Russian seeds Svetlana Kuznetsova, Yelena Dementyeva and Dinara Safina were also hustled out, Lucie Safarova played the match of her life to shatter Mauresmo’s title hopes in the fourth round with a 6-4 6-3 win. 
As the 19-year-old Czech sealed the defending champion’s fate after 89 minutes and held her arms aloft to lap up the applause from the hollering fans, a forlorn Mauresmo was left to digest her worst showing in Australia since losing in the fourth round in 2001. 
“I’m not completely down, just disappointed,” said Mauresmo. 
Shahar Peer continued a day of upsets by becoming the first Israeli woman to reach the quarter-finals of a grand slam when she humbled third seed Kuznetsova 6-4 6-2. 
Seventh seed Dementyeva’s fragile serve was once again exposed during a 6-3 6-3 defeat by Czech Nicole Vaidisova, who at 10th is now the highest seed left in the bottom half of the draw. 
Serena Williams lived up to her status as a dangerous floater as she claimed the scalp of in-form 11th seed Jelena Jankovic with a 6-3 6-2 hammering. 
In the Czech camp, a triple celebration was being planned for Sunday night after Safarova’s boyfriend, 13th seed Tomas Berdych, demolished Russian Dmitry Tursunov 6-2 6-1 6-1 to reach the last 16. 
The youthful exuberance of Serbian tyro Novak Djokovic proved no match for the touch and finesse of Roger Federer.
The men’s champion never allowed the hyped contest to get out of hand and rolled over the 19-year-old 6-2 7-5 6-3 in the fourth round. 
“I feel good physically, straight sets every time, couldn’t be better,” Federer smiled. 
Federer’s potential semi-final opponent, sixth seed Andy Roddick, ensured coach Jimmy Connors would not have to endure a wasted trip by overcoming the firepower of big-serving Croatian Mario Ancic 6-3 3-6 6-1 5-7 6-4. 
“I wasn’t very comfortable there today… I was lucky to get through today,” Roddick said. 
But the day belonged to Safarova. 
For a woman ranked 70th in the world who had never before experienced the imposing surroundings of the Rod Laver Arena, Safarova initially seemed overawed and predictably fell 4-1 behind to Mauresmo. 
With the first set nearly in her grasp, the second seed imploded and lost seven successive games as the left-handed Safarova sprayed a non-stop array of winners from the baseline. 
The Frenchwoman had said before the start of the tournament, “I hope I’ll be Super Woman in the next two weeks.” 
On Sunday she could have done with some super powers as she simply could not find an answer to Safarova’s blistering strokes. 
The second set was almost a mirror image of the first, except it was Safarova who galloped to a 4-1 lead as Mauresmo struggled to stem the flow of errors flying off her racket. 
Although Mauresmo claimed back one break, it was not enough to deny Safarova victory and the Frenchwoman surrendered her maiden grand slam title. 
“It’s amazing I still can’t believe it. I’m so happy, it’s incredible,” a stunned Safarova told the crowd. “It’s the first time I’m playing on Rod Laver Arena and in the morning I thought, wow this is a big court.”

TITLE: Arsenal Kick Life Into 
Premiership
AUTHOR: By Trevor Huggins
PUBLISHER: Reuters
TEXT: LONDON — Late goals by Robin van Persie and Thierry Henry gave Arsenal a thrilling 2-1 win over Manchester United on Sunday, shattering the visitors’ bid to open a nine-point lead in the Premier League. 
A day after second-placed Chelsea lost 2-0 at Liverpool, England striker Wayne Rooney headed United into a 53rd-minute lead that could potentially have decided the title race. 
But Van Persie came off the substitutes’ bench to score an 83rd-minute equaliser and captain Henry headed a fine stoppage-time winner. 
Though victory completed a league double over United after Arsenal’s 1-0 win at Old Trafford in September, it was marred by Van Persie suffering a broken bone in his foot that almost certainly means a long spell on the sidelines. 
United, chasing their first league title since 2003, have 57 points after 24 games. Chelsea, champions for the last two seasons, have 51 points, Liverpool 46 and Arsenal 45. 
Arsenal manager Arsene Wenger said his team’s victory had thrown open the title race and that determination and team spirit had turned the game around. 
“It was a test of character, resilience and togetherness,” he told a news conference. 
“I believe we went until the end, right up to the last second, because we really wanted to win. In the last 20 minutes, it was all us.” 
United manager Alex Ferguson was at a loss to explain how his side had lost a game they were leading after conceding two goals following high crosses from the right flank. 
“They kept hitting long balls up to Henry and (Emmanuel) Adebayor and we were coping with that great….We’ve lost two goals from positions I didn’t think we would lose goals in. But that’s football,” he told Sky Sports. 
The only cloud on the horizon for Arsenal was a broken fifth metatarsal for Van Persie, an injury which Wenger said the striker had sustained in his goal celebration. 
The break, likely to sideline him for at least six weeks, will be a major setback for Arsenal as the Dutchman is their top league scorer with 11 goals. 
Arsenal, who flirted with their first defeat at their new Emirates Stadium, will be grateful though for a win secured by some relentless second-half pressure. 
United seized the early initiative, with Rooney, Cristiano Ronaldo and Henrik Larsson stringing passes through a hesitant Arsenal defence. 
Years of rivalry, along with the current title stakes, meant there were plenty of crunching tackles. Space was at a premium and clearcut chances almost non-existent. 
United nearly snatched the lead on the stroke of halftime, though, when Jens Lehmann tipped a Rooney shot onto the bar and over and then palmed away a Larsson header from the corner. 
Rooney was not to be denied eight minutes after the re-start, though, when United defender Patrice Evra made a good run down the left, his cross was touched on by Arsenal’s Kolo Toure and the England striker dived to head home at the far post. It was his first goal in 13 games since early December.

TITLE: Oil Leaks From Beached U.K. Shipwreck
AUTHOR: By Kate Kelland
PUBLISHER: Reuters
TEXT: LONDON — Waste oil was seen coming from a stricken cargo ship off the southern English coast on Monday and coastguards said it had spread to around 8 kilometers.
The MSC Napoli, abandoned by its crew after being holed during storms last Thursday, was deliberately run aground at Lyme Bay in Devon to stop it from sinking. It is listing at between 18 and 25 degrees and has already lost waste oil and more than 200 of its 2,400 containers into the sea.
“A sheen of oil has been sighted coming from the MSC Napoli which is suspected to come from waste oils in the flooded engine spaces,” the Maritime and Coastguard Agency said in a statement.
About 200 tonnes of oil are thought to have leaked from the ship. The sheen has spread but is “breaking up and dissipating” and did not pose a major environmental threat, it said.
Coastguards said salvage teams hoped to be able to start pumping out the remaining 3,000 tonnes of fuel oil in the ship’s tanks on Monday, but experts warned this may take several days.
“We have two vessels on charter now to receive the oil, and pumping should start today,” Robin Middleton, the government’s representative for maritime salvage and intervention, told BBC radio.
“But this is a very viscous product, it’s almost like a sludge, so what they have to do is heat it and remove it slowly. It could probably take the best part of a week.”
Coastguards said some of the containers on board the ship held potentially dangerous materials — perfume, battery acid and car parts. Some of them had ruptured and some washed ashore, they said, adding a warning to members of the public to stay away from anything they find on beaches.
“The ship’s owners have appointed a private security company to guard the beached containers,” they said. 
The British-flagged Napoli, built in 1991, was bound from Belgium to Portugal when it was holed last Thursday.

TITLE: Hardline Serbians Lead Poll
PUBLISHER: Reuters
TEXT: BRUSSELS — The European Union on Monday put a brave face on the lead of Serb hardliners in a key general election, insisting pro-West parties could still hold sway in parliament and go on to form a new government. 
EU foreign policy chief Javier Solana denied the poll, in which the ultranationalist Radical Party attracted most support, had shown the failure of Western efforts to quell nationalist sentiment in Serbia and steer it onto a pro-EU path.
“The majority voted for forces that are democratic and pro-European,” Solana told reporters as he arrived for a meeting of EU foreign ministers.
“I hope very much there will be a speedy formation of a government that will be on the line of pro-European forces.”
The hardline Radical Party attracted most support in the election, scoring 28 percent. But there was no certainty they could form a government and party leader Tomislav Nikolic was quoting as predicting his party would be shut out of power.
“The radicals got most votes but nevertheless two thirds of the seats in parliament will go to democratic forces,” said German Foreign Minister Frank-Walter Steinmeier, whose country currently holds the rotating EU presidency.
“I believe that is going to be the basis for a government that is going to lead the country on a path toward Europe.” 
Dutch Foreign Minister Bernard Bot also denied the poll cast a pall over hopes of having a progressive Serb government to deal with.

TITLE: Valuyev Retains Heavywieght Crown as Challenger Trips Up
PUBLISHER: The Associated Press
TEXT: BASEL, Switzerland — Nikolai Valuyev retained the WBA heavyweight title Saturday when American challenger Jameel McCline collapsed in the third round after injuring his left knee. 
McCline missed a swing at the 7-foot Russian and fell to the canvas as he tore ligaments in his kneecap. He tried unsuccessfully to stand up several times. 
“He was in terrible pain, literally screaming,” said Scott Hirsch, McCline’s manager. “He thought he was fighting well — what a crazy end to a fight.” 
Billed as the biggest title fight in history by the promoters, the 6-foot-6 McCline tipped the scales at 268 pounds and the unbeaten Russian at 322 pounds. 
“He is a big man and it’s very important for a 120-kilogram man to keep his balance, but he couldn’t,” Valuyev said. 
McCline rocked the Russian with a hard left in the first round and they traded a lot of blows, although Valuyev appeared to be gaining the upper hand. 
“It’s terrible the way this ended, but it could have been worse,” Valuyev said. “I got used to his style. If this injury hadn’t happened, I would have knocked him out by the sixth or seventh round.” 
McCline, 38-7-3 with 23 knockouts, was carried out on a stretcher. Beforehand, his corner propped him on a stool in the ring to say a few words. 
“I’m disappointed. I will remember this my whole life,” McCline said. 
The 36-year-old lost his third title bout. In 2002, he was stopped in the 10th round by Vladimir Klitscho in a WBO fight. Two years later, he floored Chris Byrd but lost a close decision in the IBF title shot. 
The 33-year-old Valueyv, 46-0 with 33 knockouts, made his third defense after winning the belt with a close decision against John Ruiz in December 2005. 
Valuyev, facing his biggest opponent, wasn’t able to stand outside with his towering frame and jab him into submission this time. The 9,000 spectators cheered for the underdog McCline — ranked just 14th — against the Russian giant. With the abrupt end, the cheers changed to loud jeers.

TITLE: New Israeli Army Chief
PUBLISHER: Reuters
TEXT: JERUSALEM — A retired general with years of experience fighting Lebanon’s Hezbollah guerrillas has been chosen as the new chief of Israel’s armed forces, Israeli media reported on Monday. 
Gaby Ashkenazy, 52, an infantry commander and currently director of the Defense Ministry, will replace Lieutenant-General Dan Halutz who quit last week over his failure to crush Hezbollah in the July-August war, they said.
Israel Radio and the Yedioth Ahronoth daily said a formal announcement of the appointment could be made later in the day after a meeting between Prime Minister Ehud Olmert and Defense Minister Amir Peretz.

TITLE: Goody: ‘I’m a baddie’
PUBLISHER: Reuters
TEXT: LONDON — In a tearful confession on Sunday, Jade Goody, the reality television star accused of bigotry and bullying on the “Celebrity Big Brother” show, has admitted that her comments were racist.
The 25-year-old former dental nurse, at the center of an international storm last week for her verbal assaults on fellow contestant and Bollywood actress Shilpa Shetty, also said that she had been a bully.
“I’m not a racist, but I accept I made racist comments,” Goody said in an interview with the News of the World tabloid, which was also aired on Sky television.
“She (Shetty) was a victim of bullying and racism, yes.”
On the show, Shetty’s accent was mocked, her cooking was criticised, Goody called her “Shilpa Poppadom” and said “she makes my skin crawl” while another contestant added: “She should f*** off home.”

TITLE: Super Bowl Line-Up
PUBLISHER: Reuters
TEXT: INDIANAPOLIS — Indianapolis Colts coach Tony Dungy and quarterback Peyton Manning were reveling in the prospect of a trip to the Super Bowl on Sunday, after the team registered a long overdue victory over the New England Patriots. 
“We had to go through a great champion, and we got down 18 points to them and that’s not easy,” Dungy said after his team’s 38-34 NFC championship game win.
Twice in the last three years, New England stopped the Colts in their tracks during the playoffs on their way to winning two of the trio of Super Bowls they secured since 2002.
“What they’ve done in the NFL these past number of years has been nothing short of incredible,” Manning told reporters after leading the Colts’ furious second-half comeback.

TITLE: French ‘Saint’ Dies
PUBLISHER: Reuters
TEXT: PARIS — Abbe Pierre, a Roman Catholic priest who renounced wealth to campaign for the homeless and became one of France’s most revered men, died on Monday aged 94. 
French leaders hailed the outspoken priest as a tireless anti-poverty crusader and champion for the outcasts of society.
President Jacques Chirac said France had lost “an immense figure, a conscience, a man who personified goodness.”

TITLE: Most Americans Think U.S. is on Wrong Track
AUTHOR: By Darlene Superville
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Americans seem sour on the state of the union in advance of U.S. President Gerorge Bush’s address on the subject. A poll finds most believe the country is on the wrong track — a complete flip from five years ago. 
Most people also are not confident that Bush and the Democrats who now control Congress and share responsibility with him for running the country can work together to solve its problems, an Associated Press-AOL News poll finds.
At the same time, Americans see the president as likable, decisive and strong — but also stubborn. And only a minority think he is honest — 44 percent, down from 53 percent two years ago.
Bush delivers his State of the Union address Tuesday, nearly two weeks after he told the nation he is sending 21,500 additional U.S. troops to Iraq in a new effort to end violence there.
The White House says the speech will focus on a few issues, energy and health care among them, on which Bush might be able to reach agreement with Democrats, who control the House and Senate for the first time during his two-term presidency.
Two-thirds of Americans, 66 percent, think the country is on the wrong track. That’s about the same as a year ago, when 65 percent thought so, the poll found.
That’s a stark reversal from mid-January 2002, when 68 percent said the country was on the right track and 29 percent said it was not. Then, the nation was still coming to grips with the terrorist strikes four months earlier on New York and Washington that killed nearly 3,000 people. And, U.S. troops Bush sent to Afghanistan had toppled the Taliban government that harbored the terrorists believed responsible.
After the U.S. led an invasion of Iraq in March 2003, public support for the mission there began to slide as the war continued, the U.S. death toll climbed and the violence raged on.
John Raab, 77, of Allentown, Pennsylvania, a conservative Republican, said the United States can change course “if people rally around the president and he can get this fiasco in Iraq under control.”
Kerry Moore-O’Leary, a 31-year-old Democrat from Boston, said it will take new leadership.
“I really think the only time we are going to see some real changes is when we elect a new president,” she said. “Even people who are moderate Republicans are going to say that we need someone who’s a breath of fresh air.”
Lawmakers in both political parties have promised more bipartisanship and comity since the November elections, when voters took away the reins of Congress from Bush’s Republican Party.
But the public appears largely skeptical of those pledges.
Nearly two-thirds, 60 percent, have no confidence that the political institutions at either end of Pennsylvania Avenue can work together to solve the nation’s problems. Overall, the public has grown less confident since the days after the election when nearly half, 47 percent, expressed confidence that Bush and Congress could work together.
Four in 10, or 42 percent, think the country will now be better off with Democrats controlling Congress, while 18 percent think it will be worse off. Thirty-nine percent think it won’t make much difference.
Iraq remains the public’s top concern, with 65 percent disapproving of Bush’s handling of the situation.
Support for sending more troops to Iraq grew slightly after Bush’s speech, although the idea is still unpopular.
Almost one-third of the public — 31 percent — favor the plan, an improvement from 26 percent in a survey done almost entirely before he spoke to the country Jan. 10. Thirty-five percent now believe additional troops will help stabilize the situation in Iraq, also up from 25 percent. 
Bush’s overall approval rating inched upward to 36 percent, from 32 percent early in the month. Despite that low score, 53 percent of Americans say he is likable; 58 percent, decisive; and 58 percent, strong. 
In the eyes of 83 percent of Americans, he also is stubborn. 
“Mainly it’s his ‘stay the course’ attitude,” said Bill Basher, 21, a Republican from Angola, N.Y. 
The telephone poll of 1,005 adults was conducted Jan. 16-18.

TITLE: Clinton Says She’s ‘In to Win’
AUTHOR: By Beth Fouhy
PUBLISHER: The Associated Press
TEXT: NEW YORK — Starting her first full week as a presidential contender, Senator Hillary Rodham Clinton expressed confidence she can win the 2008 Democratic nomination. 
Clinton, speaking publicly for the first time since declaring her candidacy on her web site, said Sunday she decided to run after doing a “thorough review” of the challenges facing the country. She said she is the best candidate for the job and is eager to begin campaigning.
“It’ll be a great contest with a lot of talented people and I’m very confident. I’m in, I’m in it to win and that’s what I intend to do,” she said.
The former first lady was vying to be the first woman and first presidential spouse to win the White House. Polls show her leading a crowded field of Democratic candidates that includes Illinois Senator Barack Obama, who hopes to become the first black president.
A Washington Post-ABC News poll released Sunday shows Clinton is the favorite of 41 percent of Democrats, more than double the support of any of her rivals.
Despite abundant strengths, Clinton remains a polarizing figure to many voters and faces questions about her ability to win a general election. Her position on the Iraq war — she voted to authorize the invasion in 2002 and has refused to call for a date-certain removal of troops — has alienated many Democratic activists, who vote heavily in primaries.
Clinton was due to start a three-day series of web chats with supporters Monday evening, and travels to Iowa, site of the first nominating caucuses, next weekend.
“I want to have a conversation with our citizens about what we want for our country,” Clinton said.
Clinton’s comments came during a visit to a Manhattan community health clinic, where she was promoting a federal children’s health-care program.
Clinton said she would introduce legislation to expand the Children’s Health Insurance Program to all families who need it, regardless of income. Aides said Clinton was determined to attend to her Senate duties throughout the campaign.
Reflecting her new status as a leading presidential contender, the room was packed with media — some two dozen television camera crews jockeyed for position with scores of reporters from as far away as Germany. Photographers waited outside in chilly temperatures for over an hour to snap pictures of Clinton’s arrival.
Clinton said she decided to run after talking to family, friends and supporters since her re-election in November.
“I concluded, based on the work of my lifetime and my experience and my understanding of what our country has to confront in order to continue to make opportunity available to all of our citizens here and to restore our leadership and respect of America around the world, that I would be able to do that — to bring our country together to meet those tough challenges,” she said.
The former first lady answered questions after promoting the CHIP legislation. She appeared onstage gripping the hands of 1-year-old Olivia and 3-year old Camilla Harden, whose parents said they relied on CHIP for their daughters’ health care. The girls looked bewildered as hundreds of flashbulbs popped and cameras whirred throughout the room.
“It’s simply wrong for any child to lack health care in America. That’s where we start,” Clinton said.
Clinton and Obama are the most visible candidates in a field that includes the 2004 vice presidential nominee, John Edwards. Other candidates include Connecticut Senator Chris Dodd, former Iowa Governor Tom Vilsack, and Ohio Representative Dennis Kucinich. 
New Mexico Governor Bill Richardson jumped in Sunday; Delaware Senator Joe Biden has said he is running and would formalize his decision soon.

TITLE: Man Murdered After Mixing Online With Lying Lovers
AUTHOR: By Carolyn Thompson
PUBLISHER: The Associated Press
TEXT: BUFFALO, New York — He was an 18-year-old Marine headed to war.
She was an attractive young woman sending him off with pictures and lingerie.
Or so each one thought.
In reality, they were two middle-aged people carrying on an Internet fantasy based on seemingly harmless lies.
When a truthful 22-year-old was drawn in, authorities say, their cyber escape turned deadly.
“When you’re on the Internet talking, you haven’t got a clue who that is on the other end,” Erie County Sheriff’s Lieutenant Ron Kenyon said. “You don’t have a clue.”
When Brian Barrett was shot to death Sept. 15 outside the factory where he worked to help pay for college, investigators and his family were stumped.
Barrett, 22, was an aspiring industrial arts teacher, an accomplished high school athlete who had coached Little League all summer and helped his father coach soccer. Those who knew the Buffalo State College student described him as quiet and unassuming.
He had clearly been targeted. Barrett was shot three times at close range in the neck and left arm after climbing into his truck about 10 p.m. at the end of a shift at Dynabrade Corporation in Clarence, outside of Buffalo. His body was found two days later when a co-worker spotted his pickup in an isolated part of the company parking lot.
“He was just a nice kid, a gentleman,” said Starpoint High School Athletic Director Tom Sarkovics, who was Barrett’s baseball coach for two years. “I don’t think anybody could say a bad thing about him.”
On Nov. 27, Barrett’s 47-year-old co-worker and friend, Thomas Montgomery, was charged with Barrett’s murder. The motive, investigators said, was jealousy over Barrett’s budding Internet relationship with the same 18-year-old woman Montgomery had been wooing since the previous year.
What neither man knew was that the woman was really a 40-something West Virginia mother using her daughter’s identity to attract Internet suitors. Cyberspace, it appeared, was enough for her, and it was a near certainty she would never have met either man.
“The game would have been over at that point and time for sure,” Kenyon said.
When Montgomery began chatting with the woman in 2005, the former Marine portrayed himself as perhaps a previous version of himself — a young Marine preparing for deployment to Iraq, Assistant District Attorney Ken Case said.
For a time, they communicated strictly through chat rooms and e-mail.
Then the woman began sending gifts to Montgomery’s home, Case said. Pictures of the woman’s daughter, lingerie and a set of custom-made dog tags arrived at the pale yellow suburban house that Montgomery shared with his wife and two teenage children.
Montgomery’s wife intercepted one of the packages, Case said. She wrote back to the woman at the return address, and included a family portrait to make her point. 
“As you can see, Tom’s not 18,” Case said she wrote. “He’s married and he’s a father of two. He’s 47 and I’m his wife.” And, believing she was writing to an 18-year-old: “You’ve obviously been fooled.” 
The West Virginia woman — whom authorities will not identify — remembered a friend named Brian that Montgomery had mentioned. She recalled enough of his computer screen name to contact Barrett to ask him about what Montgomery’s wife had told her. 
Soon Barrett was in regular contact with the woman. Despite knowing the truth about Montgomery, the woman remained in contact with him as well, Case said. 
The woman made no secret of the fact she was chatting with Barrett, Case said, and Barrett talked about the relationship at work. Montgomery, authorities say, became jealous. 
Sheriff’s investigators believe Barrett’s killer wore camouflage and a ski mask when he approached Barrett in the parking lot with a .30-caliber rifle and fired at close range. 
Montgomery is being held without bail after pleading not guilty to second-degree murder. Tall and with thinning hair, glasses and a mustache, he said nothing at a procedural court appearance on Jan. 10. He is due back in court in June. 
His wife, whom authorities have not named, has begun divorce proceedings, Case said. She did not respond to a message left at Montgomery’s home in suburban Cheektowaga or answer a reporter’s knock there. 
Internet crime expert J.A. Hitchcock, author of “Net Crimes & Misdemeanors,” said the case illustrates the dangers that lurk on the web. 
“I’m hoping that this case will make people think twice about what they do online and what their actions can cause in the long run,” she said.

TITLE: ‘Go To Hell,’ Chavez Tells U.S.
PUBLISHER: The Associated Press
TEXT: CARACAS, Venezuela — President Hugo Chavez told U.S. officials to “Go to hell, gringos!” and called Secretary of State Condoleezza Rice “missy” on his weekly radio and TV show Sunday, lashing out at Washington for what he called unacceptable meddling in Venezuelan affairs. 
The tirade came after Washington raised concerns about a measure to grant the fiery leftist leader broad lawmaking powers. The National Assembly, which is controlled by the president’s political allies, is expected to give final approval this week to what it calls the “enabling law,” which would give Chavez the authority to pass a series of laws by decree during an 18-month period.
On Friday, U.S. State Department deputy spokesman Tom Casey said Chavez’s plans under the law “have caused us some concern.”
Chavez rejected Casey’s statement in his broadcast, saying: “Go to hell, gringos! Go home!”
He also attacked U.S. actions in the Middle East.
“What does the empire want? Condoleezza said it. How are you? You’ve forgotten me, missy … Condoleezza said it clearly, it’s about creating a new geopolitical” map in the Middle East, Chavez said.