SOURCE: The St. Petersburg Times
DATE: Issue #1241 (7), Tuesday, January 30, 2007
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TITLE: Uranium May Be Siberian
AUTHOR: By Jim Heintz
PUBLISHER: The Associated Press
TEXT: MOSCOW — Novosibirsk is located in the depths of Siberia, but despite the remoteness it’s one of Russia’s main areas for nuclear activity and a cause of concern for those worried about nuclear materials falling into terrorists’ hands.
The concerns about Russia’s third-largest city rose to the forefront this week after officials in the former Soviet republic of Georgia announced the arrest of a Russian man for allegedly trying to sell weapons-grade uranium to an undercover agent.
The man, who was arrested last year, initially told his interrogators the uranium came from Novosibirsk, 1,600 miles east of Moscow, Georgian Interior Ministry spokesman Shota Utiashvili told The Associated Press on Saturday. He later recanted his statement, but Georgian authorities sent a letter to Russia’s Federal Security Service inquiring about the possible link to Novosibirsk, Utiashvili said. The agency declined to comment Saturday.
A top Russian science official has said the sample of the alleged contraband uranium provided by Georgia was too small for analysis that could determine its origin.
The episode appeared to cast doubt on Russia’s ability to halt the black-market trade in nuclear materials and renewed concern about security at Russia’s array of nuclear facilities.
The Novosibirsk Chemical Concentrates Plant is one of Russia’s main facilities for producing enriched uranium both for use in nuclear reactors and in the higher concentration that could be used to make an atomic bomb.
In addition, highly enriched uranium has been shipped into Novosibirsk in recent years from former Soviet bloc countries, including Poland and Romania. Under a program backed by the International Atomic Energy Agency, the uranium is to be blended down into lower concentrations.
The U.S. National Nuclear Security Administration funded a program to improve security at the Novosibirsk plant as part of a wider initiative to boost security at facilities throughout Russia. The NNSA says the Novosibirsk plant completed its upgrade in late 2004.
However, security apparently was lax in Novosibirsk for years before that. In 2002, the head of the agency that was then responsible for security at nuclear facilities admitted that weapons-grade nuclear material had disappeared from Russian facilities.
“Most often, these instances are connected with factories preparing fuel” including Novosibirsk’s, the official, Yuri Vishnyevsky, said at the time.
Novosibirsk was also the site of the 1997 arrest of two men who officials said intended to smuggle some 11 pounds of enriched uranium to Pakistan or China. That uranium reportedly was stolen from a plant in the former Soviet republic of Kazakhstan.
Security at Russia’s nuclear facilities was seen as deteriorating rapidly in the early years after the collapse of the Soviet Union, when economic hardships made black-market activities increasingly widespread and as political chaos left official lines of command and supervision shaky.
The U.S.-based organization Nuclear Threat Initiative said in a report last year that Russia remains the prime country of concern for contraband nuclear material.
“Russia has the world’s largest stockpiles of both nuclear weapons and the materials to make them, scattered among hundreds of buildings and bunkers at scores of sites. Over the past 15 years security for those stockpiles has improved from poor to moderate, but there remain immense threats those security systems must confront,” the NTI said.

TITLE: Yabloko Thrown Out Of Elections
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Yabloko, the only major political party represented in St. Petersburg’s Legislative Assembly that opposes the policies of City Hall, has been excluded from upcoming elections to the assembly amid claims that City Hall is forcing its most vocal critic out of the political arena. 
The nominally independent St. Petersburg Election Commission expelled the party from the race on the grounds that 11.97 percent of the signatures presented to the commission do not meet the required standards. A total of 954 signatures have been declared invalid.
The signatures are required in order for candidates or parties to be registered for the elections. The elections to the St. Petersburg Legislative Assembly are scheduled for March 11.
About 100 Yabloko protesters gathered outside the Kremlin in Moscow on Monday, waving flags and yelling “Russia without Putin!” as they claimed that President Vladimir Putin was personally behind the decision by St. Petersburg officials to exclude the party from the election, Reuters reported.
But Dmitry Krasnyansky, deputy head of the St. Petersburg Election Commission said on Monday that Yabloko simply failed to meet the required criteria and blamed the “sloppy work of the people who collected the signatures.” 
Krasnyansky also said that the commission’s decision was independent. 
“According to Russian law, the amount of invalid signatures is limited to 10 percent of those on the list,” Krasnyansky said. “In figures, Yabloko has exceeded the norm by 157 signatures.”
But Boris Vishnevsky, a member of the political council of the St. Petersburg branch of Yabloko, is convinced that the exclusion was orchestrated by City Hall and the Electoral Commission was fulfilling political orders.
“I see the hand of Governor Valentina Matviyenko behind the situation,” Vishnevsky said. “Clearly, she has had enough of Yabloko questioning her controversial decisions. The governor feels it is now time to terminate Yabloko’s access to the only venue for political discussions in town.”
Yabloko was barred from taking part in regional parliamentary elections in Karelia last year. The Karelian branch of Yabloko has been a strong critic of the region’s governor Sergei Katanandov. 
Yabloko leaders have also expressed concern that the same fate awaits the party in other regions of Russia. The party is already encountering registration problems for the forthcoming parliamentary elections in the Moscow Oblast.
Maria Matskevich, a leading researcher and project leader at the Institute of Sociology at the Russian Academy of Sciences, said that if it was allowed to compete in the St. Petersburg election, Yabloko would be sure to win seats in the local parliament. 
“Of course, with just a handful of seats, they would never be able to block a decision of the pro-governmental majority,” Matskevich said. “But they would ask tough questions, offer ‘inconvenient’ alternatives and send appeals to courts and prosecutor’s offices. All this is extremely annoying for the authorities.”
The opposition party recently came into conflict with City Hall when it pushed forward with a plan to launch a city-wide referendum on the planned 396-meter skyscraper to be built for the national energy monopoly Gazprom. 
In December, St. Petersburg Yabloko leader Mikhail Amosov and fellow lawmakers Natalya Yevdokimova and Sergei Gulyayev sent a letter of protest to the General Prosecutor’s Office, asking that the legitimacy of the architectural tender held to select the design for the tower and the deal between the city and Gazprom be investigated.
One of the people who collected the signatures for the party’s registration for the March election, speaking to The St. Petersburg Times on condition of anonymity, said election officials had been on the offensive from the start.
One signature was rejected because there was no apartment number provided in the address, she said. When a Yabloko representative explained that the person owns a private house, the officials refused to believe it and insisted that there must be an apartment number.
“It was clear that they weren’t going to register Yabloko, come what may. The officials rejected dozens of signatures with remarkable ease: in several cases officials claimed they were unable to read people’s handwriting,” she recalls. 
“In some other cases they said they suspected that signatures resembled one another and declared those signatures false. When they could see that the date on the document was written by the person who collected the signatures, rather than by the person who provided the actual signature, they rejected the documents immediately.”
Amosov said that when Yabloko offered to contact the people whose signatures had been questioned and get confirmation from them in whatever form the officials deemed necessary, the Election Commission refused the offer. 
“When we brought additional documents and statements from the voters whose signatures had been questioned, the officials would not even look at them,” he added. 
Yabloko offered to bring the voters to the Election Commission headquarters to sign the papers, but that suggestion was also rejected, Amosov said. 
“This is a Kafkaesque story: the opinion of their experts was more important than the physical presence of the people,” Vishnevsky said. “One day they might even show me a piece of paper that says I am dead, and they won’t even listen to my protests!”
Yabloko is preparing to make an appeal to the Central Election Commission in Moscow and, if necessary, is ready to continue the fight in court.
“Yabloko is a large and influential political party, and our expulsion from the election campaign is a serious blow to St. Petersburg voters,” Amosov said.
At Monday’s Kremlin protest, activists, most of them students, sent echoes across an icy street leading to Red Square as they shouted “Down with the police state,” Reuters reported.
“They’re afraid of us. That’s why they are trying to get rid of us,” said Sergei Mitrokhin, a senior Yabloko official.

TITLE: Tehran Calls for Russian Mediation
AUTHOR: By Nasser Karimi
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran —Iran wants Russia to help mediate in the standoff with the UN Security Council over Tehran’s nuclear program, Iranian state radio said Sunday as a ranking Russian diplomat met with top Iranian leaders.
The radio said Iran was looking to Russia for “new proposals, such as enrichment of uranium on Russian soil,” and expects Russia to “take a close stance with the international community” to help Iran resolve its nuclear standoff.
The Kremlin proposed last year that Iran move its uranium enrichment work to Russian territory, where it could be better monitored to alleviate international concerns that Tehran is trying to build atomic bombs in violation of its treaty commitments.
Iranian leaders had said they were interested in the idea, but nothing came of it as oil-rich Iran insisted its nuclear project is intended only to produce radioactive fuel for reactors that would generate electricity.
No details were released about the talks held Sunday between Igor Ivanov, Russia’s national security adviser, and Iran’s hard-line president, Mahmoud Ahmadinejad, the foreign minister and the top nuclear negotiator.
In a rare reception for visiting diplomats, Ivanov also met with Iran’s supreme leader, Ayatollah Ali Khamenei.
State radio also said Russia has pledged to complete the Bushehr nuclear power station on schedule this year. Russia last year agreed to ship fuel to Bushehr by this March and start up the facility in September, with electricity generation to start by November.
As a UN Security Council permanent member, Russia last month forced the body to water down proposed punitive measures that would have imposed curbs on the Bushehr project. But the Kremlin then supported limited sanctions against Iran over its refusal to suspend uranium enrichment.
Enrichment of uranium, using centrifuges, can produce material usable both as fuel for electricity-generating reactors and for nuclear weapons.
Ivanov’s visit came as Iranian officials issued contradictory statements about progress on expanding Iranian enrichment facilities by installing 3,000 centrifuges at the Natanz nuclear facility.
Hossein Simorgh, spokesman of Iran’s Atomic Energy Organization public relations department, said that “no new centrifuges have been installed in Natanz,” the official Islamic Republic News Agency reported late Saturday.
The remarks appeared to contradict lawmaker Alaeddin Boroujerdi, who said earlier Saturday that Iran was currently installing the 3,000 centrifuges.
Foreign Ministry spokesman Mohammad Ali Hosseini refused to elaborate on the discrepancy, saying Sunday only that the contradicting remarks were a “technical matter” that should be left to Iran’s nuclear agency organization to “elaborate … at a convenient time.”
The UN nuclear watchdog, the International Atomic Energy Agency, had no comment on the Iranian statements, spokeswoman Melissa Fleming said Sunday night. IAEA chief Mohamed ElBaradei said recently he believed Iran planned to begin work in February on an underground facility to hold uranium enrichment equipment.
Iran faces the threat of additional Security Council sanctions unless it stops enrichment by the end of a 60-day period that ends next month.
A senior U.S. State Department official warned Iran on Friday against accelerating its atomic program.
“If Iran takes this step, it is going to confront universal international opposition,” Undersecretary of State Nicholas Burns said. “If they think they can get away with 3,000 centrifuges without another Security Council resolution and additional international pressure, then they are very badly mistaken.”
For now, the only known assembled centrifuge operations in Iran consist of two linked chains of 164 machines each and two smaller setups.

TITLE: Lukashenko Threatens To Impose New Duties
AUTHOR: By Yuras Karmanau
PUBLISHER: The Associated Press
TEXT: MINSK — Belarussian President Alexander Lukashenko threatened Friday to slap fresh duties on Russian oil sent through the nation to Europe unless Moscow sells it oil at a cheaper price — raising the specter of a repeat of this month’s supply cutoff.
Lukashenko, who has been branded “Europe’s last dictator” for his iron-fisted rule, has made a series of defiant statements in recent weeks, accusing Russia of trying to crush or absorb the former Soviet republic. He has also pledged to seek less strained ties with Europe.
The Belarussian leader said the country had not signed an oil delivery contract for February because Russian oil companies were demanding prices above world levels. Belarus will charge a transit fee on Russian oil exported to Europe via its territory by these companies, he promised.
“We have to compensate for these losses. We’re not going to argue with them, it’s their oil. But we will pump this oil without any losses for us,” he said.
Earlier this month, Russia suspended oil supplies to Belarus, disrupting supplies through a Belarussian pipeline to eastern and central Europe. The dispute was sparked by Belarus’ decision to impose transit fees on Russian oil in retaliation for hefty Russian duties levied on oil exports to Belarus.
Facing the threat of a full-scale trade war with its powerful neighbor, which its economy is closely tied to, Lukashenko ultimately backed down, agreeing to pay some duties on Russian oil and sharply reducing the profits it had made by refining duty-free Russian oil and exporting the products.
Together with a doubling of Russian natural gas prices, the state budget is losing $3.5 billion per year, according to Belarussian estimates.
The oil disruption left lasting doubts in European capitals about Russia’s dependability as an energy supplier. Moscow’s reputation had been previously damaged last year when a price dispute with Ukraine resulted in temporary shortages of Russian gas to European customers.
Officials at the representative offices of Russian oil companies in Belarus declined to comment.
“Lukashenko is on the verge of despair and the only way out he sees is to blackmail Russia with the threat of a new cutoff of supplies to Europe,” independent economist Yaroslav Romanchuk said.
Russian state pipeline operator Transneft, meanwhile, is proposing to build a pipeline capable of carrying 50 million tons of oil per year that would bypass Belarus, Interfax reported Friday.
The agency cited an unidentified official at the Industry and Energy Ministry as saying that the proposed 1,000-kilometer pipeline would end at the Baltic port of Primorsk and help eliminate risks attached to delivering oil to Poland and Germany.

TITLE: Activists Held Following Bombing at Moscow Uni
PUBLISHER: Reuters
TEXT: MOSCOW — Police on Friday detained a group of opposition activists at a Moscow airport on suspicion of exploding a small bomb earlier in the day at Moscow State University, a spokesman for the unregistered National Bolshevik Party said.
The bomb exploded in the early hours of Friday in a university dormitory. It shattered windows, but no one was hurt.
A delegation from The Other Russia, an opposition alliance that includes the National Bolsheviks, was scheduled to fly to the Siberian city of Surgut, spokesman Alexander Averin said.
“They were detained without explanation at about 8 p.m. and after 1 1/2 hours they were told that they were being taken in for questioning on suspicion of involvement in the explosion at Moscow State University,” Averin said.
Averin said four members of the organization had been detained. Interfax, however, quoted an unidentified law enforcement source as saying that three people had been detained.
Averin denied that his group or any other opposition activists planted the bomb.
More than 1,000 students were evacuated from the 19-story dormitory building as a precaution, Yevgeny Bobylov, a spokesman for the Emergency Situations Ministry, told Interfax.
The blast, which occurred on a staircase, blew out windows on several upper floors and caused internal damage to a wall, Bobylov said.

TITLE: Igora Develops Resort Facility
AUTHOR: By Evgenia Ivanova
PUBLISHER: Staff Writer
TEXT: The latest addition to St. Petersburg’s ski resort map will shortly complete $20 million worth of development that will allow it to become “the first year-round [ski] resort complex [in the region],” managers said Friday speaking during a news conference.
Representatives of Igora, 54 kilometers north of St. Petersburg, said that a spa complex and swimming pool will feature in the development and add to an already diverse range of services that the resort hopes will improve its attractiveness to visitors.
“It’s obvious that if managers concentrate on the ski aspects only, the resort would have to be closed down immediately after the snow melts. But the hotel, restaurants, and the countryside — all of these are valuable assets in any season,” Igora PR director Yulia Ilyinykh said. 
Calling itself “one of the most ambitious projects in the Leningrad Oblast,” the resort has already seen $25 mln worth of investment in various slopes and ski lifts by its four investors AKB Rossiya, Severstal, Severo Zapad Center of Strategic Development and Sogaz, Ilyinykh told the St. Petersburg Times on Monday. 
As winter sports boom in Russia, the Leningrad Oblast region around St. Petersburg has renovated ski resorts built in the Soviet era and has developed new ones. 
Three resorts near the villages of Korobitsyno, Pykhtolova Gora and Okhta-Park are among popular destinations for Petersburgers who do not have money or time to ski further afield. 
Such resorts either boast steep slopes or cheap prices. Igora said it will differentiate itself with the quality of its service — traditionally a weak spot in Russia.
“Regardless of the presence of a number of international hospitality brands in Russia, service in the country remains an area that still largely needs improvement. What is needed is competent management with international experience and constant personnel training,” a statement from Leading Hospitality Company, the resort’s managers, reads. 
Equipped with a Russian slogan that translates as “The Hospitable Resort for Professional Lovers of Life,” Igora is right to provide quality and diversified services, experts say. 
According to data from the St. Petersburg-based WorkLine Group research company, there are around 50,000 people in St. Petersburg who ski “from time to time.” Experts say Igora is capable of taking a large slice of that pie.
“Igora is probably the most modern ski resort near St. Petersburg and it has enough advantages over its competitors to win the consumer with its nine slopes, a spa and swimming pool, and its proximity to St. Petersburg,” Mikhail Podushko, strategic development director of WorkLine Research wrote in an emailed statement Monday. 
Igora is a popular destination for those holiday-makers whose aim is to have fun rather than to ski, Anton Nikolayev, co-founder of Alt Media Group, which specializes in ski resort advertising, said. Not only is interest in winter sports such as skiing and snowboarding rapidly increasing, but demand for cottages as holiday accommodation is growing by leaps and bounds too, Nikolayev said.
“The skiing audience more or less consists of ‘sportsmen’ and ‘hobbyists.’ The first category wants good slopes more than anything, but for the latter it’s the cozy cottage that makes the difference,” Nikolayev said. 
In contrast to 5,000 such cottages available for rent in neighboring Finland, St. Petersburg and its outlying areas has only around a couple of hundred, he said.

TITLE: Foreign Minister Questions U.S. Policy in Middle East
AUTHOR: By Tom Miles
PUBLISHER: Reuters
TEXT: MOSCOW — Russia expects the United States to explain its growing military presence in the Middle East when the countries next meet to discuss the region, Foreign Minister Sergei Lavrov told reporters Saturday.
“I have seen no change in Washington’s fairly aggressive rhetoric,” Lavrov said. “It continues, just like its actions to increase the military presence in the region. It will be one of the questions that we want to clarify in Washington. What’s it all about?”
Lavrov is expected to attend a meeting of the so-called Quartet of international mediators in Washington on Feb. 2 to try to revive Israeli-Palestinian peacemaking. Russia, the United States, the European Union and the United Nations make up the Quartet.
The United States is in the process of sending an additional 21,500 troops to Iraq, which it invaded in 2003, in an effort to quell an insurgency. It already has 134,000 troops in Iraq.
Washington has said it is deploying a second aircraft carrier group in the Gulf as well as Patriot missile-defense systems, steps widely seen as a warning to Iran and Syria.
The United States, which has accused Iran and Syria of being destabilizing influences in the region, maintains a significant military presence in Kuwait, Qatar and Bahrain, base for the U.S. Navy’s Fifth Fleet.
Lavrov said unilateral U.S. sanctions against Iran would be counterproductive to efforts to resolve the problem of the country’s nuclear ambitions and would force Tehran out of the negotiating process.
The United States has accused Iran of having a secret program to build nuclear weapons. Tehran says its nuclear program is solely for power generation.
Russia’s No. 2 diplomat, Security Council chief Igor Ivanov, held talks in Iran on Sunday.
Colonel Oleg Kulakov, an Iran expert at Moscow Military University, said Lavrov saw obvious links between the Middle East peace process, violence in Iraq and U.S. suspicions of Iraq and Syria.
“[Lavrov] thinks the involvement of Syria and Iran — Iran in particular — could bring some fresh air to the [Middle East] talks,” he said. “Russia wants some kind of movement in this direction because the situation in the region is not developing according to the scenario written in Washington.”
But Kulakov said it would be a mistake to expect much from the Washington meeting. “One meeting can’t solve it,” he said.
Moscow has repeatedly angered Washington with its willingness to deal with Iran, which sits just across the Caspian Sea from Russia’s southern border. It regards Iran as a legitimate business partner.
Russia has sold Iran anti-aircraft missiles and helped it build a nuclear reactor at the port of Bushehr. It also watered down a UN resolution to impose sanctions on Iran that aimed to stop Tehran from enriching nuclear material for use in bombs.
Washington has hit back with sanctions on Russian defense industry firms it says were cooperating with Iran and Syria. Russia called the measures “illegal” and “vicious.”
Lavrov said Iran and Syria should not be isolated, but should understand they were expected to play a positive role and in return they would receive an appropriate position in the regional dialogue.
“We are deeply convinced that Iran and Syria should not be isolated, but brought into the peace process,” he said, speaking on his return from a visit to India with President Vladimir Putin.
“In general, the problems that exist in the Middle East and in the surrounding region are linked to muddle-headed ideas about prestige. Someone says something once and from then on he can’t break with this principle. This is an inflexible policy, and it’s shortsighted.”
Kulakov said the U.S. policy of isolating Iran was an error. “If you isolate Iran there are some forces that may gain strength within the country, such as the religious clerics. If you involve Iran, you will strengthen the less religious, less extremist forces.”

TITLE: British To Seek Extradition of Lugovoi
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — British prosecutors will request the extradition of Andrei Lugovoi, who has been described as the chief suspect in the killing of former Federal Security Service agent Alexander Litvinenko, a British newspaper reported Friday.
The Guardian cited unidentified British officials as saying a request to extradite Lugovoi would be filed early next month.
Alexei Mitrofanov, a leader of the Liberal Democratic Party, said Russia should give up Lugovoi and Dmitry Kovtun in exchange for the extradition of Chechen rebel envoy Akhmad Zakayev and tycoon Boris Berezovsky, both London residents who are wanted in Russia on charges including planning a violent coup.
“If they want us to give up Lugovoi, let them give us Berezovsky, Zakayev and others,” Mitrofanov said during a State Duma session Friday, Interfax reported.
The Prosecutor General’s Office is against an exchange.
“That is not going to happen,” Maxim Filatenkov, a spokesman for the Prosecutor General’s Office, said Friday, citing a statement made before Christmas by Prosecutor General Yury Chaika in which he ruled out a swap.
Lugovoi and Kovtun have maintained their innocence, claiming they were framed.
The possibility of extradition does not worry Lugovoi. “If it comes to it, I am ready to defend my good name and reputation in any court,” he told Interfax on Friday.
Litvinenko fell ill after meeting on Nov. 1 with Lugovoi, also a former security services agent, and Kovtun, a businessman. The three met at a bar at the Millennium Hotel in London.
It emerged Friday that Lugovoi and Kovtun could face charges in Russia.
“If there is enough evidence, then anything is possible,” Filatenkov said, adding that the Criminal Code allows for Russian citizens who commit crimes abroad to face criminal charges back home.
“But we cannot speculate under which article of the Criminal Code any suspect might be charged,” Filatenkov added.
Meanwhile, a former Soviet intelligence official who lives in London said Lugovoi and Kovtun had been exposed to lethal doses of radiation.
“They will probably die of cancer within three or four years,” Boris Volodarsky said by telephone from London on Friday.
Volodarsky confirmed earlier reports that Lugovoi and Kovtun had in all probability been nothing more than accomplices in the killing, “because they are not professionals,” he said.
It was reported last week that British police had tracked down the person who poisoned Litvinenko. Known only as Vladislav, he was captured on cameras at Heathrow Airport as he arrived from Hamburg on Nov. 1.
From his hospital bed, Litvinenko recalled that it was Vladislav who had made him a cup of tea, it was reported.
The Guardian, citing unidentified officials, reported Friday that Scotland Yard would in the coming days submit its findings to the Crown Prosecution Service because it had sufficient evidence to prosecute the suspects.
A Scotland Yard spokesman would not comment on those reports, saying only that it was “inevitable” that a report would be submitted “sooner or later.”
The Guardian’s reports have drawn criticism from Russian officials, who say the newspaper is trying to lay the blame for Litvinenko’s death at the door of the Kremlin.
“This is enflaming the situation to once again blame Russia,” State Duma Deputy Nikolai Kovalyov said Friday, Interfax reported. “In the West they will soon be saying that we conjured up the Lugovoi and Litvinenko business just to demand the extradition of Berezovsky,” Kovalyov added.
Also Friday, Britain’s Sky News reported that British police had identified the teapot that contained the radioactive tea served to Litvinenko.
U.S. network ABC aired a similar report, citing an unidentified official.
Police officials and a spokesman at the hotel declined to comment on the reports, The Associated Press reported.

TITLE: Karimov Gains From
Loophole In Constitution
PUBLISHER: The Associated Press
TEXT: ALMATY, Kazakhstan — Legal confusion between Uzbekistan’s constitution and election laws means the country’s autocratic president, Islam Karimov, can stay in office for an eighth year without seeking re-election.
Tashkent’s silence about the official end of Karimov’s seven-year term Jan. 22 is an indication that his grip on power remains strong and he has no intention of leaving, analysts say.
Karimov has wielded a tight grip since taking leadership of Uzbekistan in the declining years of the Soviet Union, cracking down on dissent and suppressing unauthorized sects of Islam. His rule has been widely criticized for human rights abuses including torture and show trials.
The constitution stipulates that presidents serve seven years. Since Karimov was last inaugurated on Jan. 22, 2000, the seven years expired Sunday, Jan. 21. But election law says a vote must be held in December of the year in which the president’s term expires — in this case, December 2007.
The constitution and the law are therefore at odds.
“Whether it’s a deliberately created legal ambiguity or not, it’s definitely a handy one,” said Michael Hall, Central Asia project director of the International Crisis Group think tank.
“There is no sign that Karimov is preparing to leave and he is apparently going to stand for and get another term in December,” Hall said.

TITLE: Azeri Police Beat and Detain Protestors
PUBLISHER: The Associated Press
TEXT: BAKU, Azerbaijan — Truncheon-wielding police beat protesters and detained more than 10 people Friday, breaking up a rally by Azeri opposition activists to protest rising utility and municipal rates.
About 20 people gathered outside a government building to protest the rate hikes, which were called for by the government after it stopped importing Russian natural gas after Moscow more than doubled its prices.
More than 100 police were called to the area after authorities refused to give the opposition coalition Azadliq permission to demonstrate.
After protesters reached an area between two groups of officers, police began beating them with truncheons and ripping posters from their hands. Police then rounded up a second, smaller group of demonstrators.
Isaq Avazoglu, a spokesman for one of the parties in the Azadliq coalition, said 30 activists were injured and 14 were detained. A Baku police official, Samir Seydli, said 10 to 15 people were detained and that some could face jail terms of several days.
Avaszoglu said that the 14 were released later Friday evening.
Azerbaijan’s government sharply raised domestic prices for electricity, water and gas earlier this month after announcing it would not buy natural gas this year from Russia, balking at Moscow’s demand that it pay $235 per 1,000 cubic meters of gas — up from $110. Azerbaijan imported about 4.5 billion cubic meters of natural gas from Russia in 2006 to cover domestic consumption.
Another opposition party, Musavat, vowed to demonstrate Sunday and has received permission from the authorities to protest — the first time this has happened since November 2005. Azadliq has not said whether it will take part.
President Ilham Aliyev has maintained a tight grip on Azerbaijan since succeeding his father in a 2003 presidential vote that observers said was flawed.

TITLE: S. Ossetian Police Hurt In Attack
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — Tensions in Georgia’s breakaway region of South Ossetia flared Sunday after separatist officials said three police officers had been wounded in a nighttime attack and blamed the incident on the central government.
A spokesman for South Ossetia’s unrecognized regional government said assailants had opened fire from a Georgian-controlled village on police posts in the regional capital Tskhinvali with mortars and grenade launchers.
Three policemen were wounded, two seriously, said the spokesman, Andrei Tatayev.
“This is a provocation by a Georgian sabotage group,” Tatayev said.
Georgian authorities denied any involvement in the attack.
“There is a version that this is an internal settling of scores between South Ossetian illegal armed groups,” said Mamuka Kurashvili, commander of Georgian peacekeeping forces in the region. Kurashvili said a joint group comprising separatist and Georgian sides, Russian peacekeepers and international monitors would investigate the incident.
Since a 1992 cease-fire ending fighting between Georgian and South Ossetian forces, the territory has been in a tense limbo — officially part of Georgia but under the control of an internationally unrecognized government that seeks to make South Ossetia part of Russia.

TITLE: In Brief
TEXT: <b>Contract Killing</b>
MOSCOW (AP) — The Moscow City Court on Friday convicted a Russian man of murdering a pregnant woman in Switzerland in what prosecutors said was a contract killing that went awry, and sentenced him to 20 years in prison.
The court found Alexander Bakayev guilty of killing Flavia Bertozzi, the wife of a Swiss border guard, at their home in the Swiss town of Ponte Capriasca in 2002, court spokeswoman Anna Usachyova said.
Prosecutors said Bakayev was contracted to kill the victim’s husband, Andrea Bertozzi, by Klaus Opris, a German-Romanian citizen who was sentenced to life imprisonment in Romania for the crime in 2004. 

<b>Chechens in Pankisi</b>
MOSCOW (SPT) — A senior official in the Federal Border Service said Friday that Chechen rebels were still using Georgia’s Pankisi Gorge as a hideout.
“We have information that a certain number of members of illegal armed groups are still present in the Pankisi Gorge,” Lieutenant General Anatoly Zabrodin told Interfax.
“Even today we cannot rule out the threat that members of illegal armed groups could breach the border from the Georgian side,” he said. 

<b>Detained Georgian Dies</b>
MOSCOW (SPT) — A Georgian citizen has died in custody in Moscow while authorities were in the process of deporting him, Interfax reported Friday, citing Georgian television reports.
Zurab Muzashvili, 38, had been brought from Saratov to Moscow to be deported but became ill on the way to the airport, the Georgian television station Rustavi 2 reported. Muzashvili died before reaching the hospital. Rustavi 2 reported that he had tuberculosis. 

<b>Prostitution Ring</b>
ATHENS (AP) — Police arrested six people and freed 24 East European women forced into prostitution following raids on three apartments in greater Athens, authorities said Friday.
The suspects, two men and four women, were held on charges of membership in a criminal gang, money laundering, abduction and pimping. 
Police said most of the women were from Russia but that some were also from Latvia and Lithuania. 
They were being kept against their will, subjected to violence and forced to work as prostitutes in the greater Athens areas of Kallithea, Neos Kosmos and Paleo Faliro.
The raids were carried out late Thursday, when police also seized cell phones, a laptop computer and cash and bank deposit books worth 26,000 euros ($33,750). 

<b>Ministry Slams U.S.</b>
MOSCOW (Reuters) — The Foreign Ministry on Friday said a U.S. plan to deploy anti-missile systems in Poland and the Czech Republic was a mistake that would have negative consequences for international security.
The U.S. State Department announced on Sunday that the two countries had agreed to start detailed talks on allowing their territory to be used for the system, designed to shoot down missiles with rockets. U.S. officials say the system is intended to counter a long-range Iranian missile threat, not Russia.
“This issue will be a subject of our detailed analysis and dialogue with the United States and their partners,” the Foreign Ministry said in a statement posted on its web site. 

<b>Ruling on Intoxication</b>
MOSCOW (SPT) — The Supreme Court has ruled that intoxication from alcohol or narcotics will no longer be considered an aggravating circumstance in criminal cases.
The ruling, issued Jan. 11, effectively orders judges not to hand out harsher sentences to people who were under the influence of drugs or alcohol at the time the crime was committed.

<b>U.S. Trains Tajiks</b>
DUSHANBE, Tajikistan (AP) — U.S. military instructors began training Tajik border guards in anti-terrorism and prevention of border infiltration Sunday under a program of military cooperation, the U.S. Embassy said Sunday.
Twelve U.S. marines will participate in the training of elite border guard troops until March 9 at a base 35 kilometers southwest of the capital Dushanbe, embassy spokesman Nur Umarov said.
The U.S. government last year granted $7.75 million to Tajikistan to help the country tighten security on its border with Afghanistan. The money will be used to build barracks and other facilities for Tajik border guards and customs officers. 

<b>Insult Laws Criticized</b>
VIENNA (AP) — The media freedom watchdog at the Vienna-based Organization for Security and Cooperation in Europe called Friday for the abolition of special insult laws in Kazakhstan and urged the country’s public officials to be more tolerant of criticism.
In a letter to Kazakh Foreign Minister Marat Tazhin, Miklos Haraszti, media freedom representative at the OSCE, said the laws, which give elevated protection to public officials from verbal insults, were undemocratic.
Haraszti made his plea after a Kazakh court on Monday gave journalist Kazis Toguzbayev a two-year suspended prison sentence for deliberately intending to insult the honor and dignity of the president, an OSCE statement said. 

<b>Uzbek Activist Arrested</b>
TASHKENT, Uzbekistan (AP) — A well-known Uzbek rights activist has been arrested on suspicion of possession of anti-government publications and entering Uzbekistan illegally, her lawyer, Abror Yusupov, said Friday.
Umida Niyazova, 31, was arrested as she tried to cross the border from Kyrgyzstan on Monday, one month after authorities confiscated her laptop computer, her passport and papers they said contained anti-government materials, Yusupov said. 

<b>Islamists Arrested</b>
ALMATY, Kazakhstan (AP) — Kazakhstan’s security service has made a series of arrests among suspected leaders of a banned radical Islamic group across the country over the past two months, authorities said Friday.
The arrests were made in several regions and targeted an unspecified number of national and local leaders and activists from Hizb-ut-Tahrir, the National Security Committee said in a statement.
Security officers also seized 25,000 extremist leaflets and 700 books, the statement said. Hizb-ut-Tahrir, whose Arabic name means Party of Liberation, claims to disavow violence in its quest to create a worldwide Islamic state. 

<b>Bakiyev Nominates PM</b>
BISHKEK, Kyrgyzstan (AP) — Kyrgyzstan’s president nominated a new candidate for prime minister Friday after lawmakers blocked his efforts to reinstate Felix Kulov as head of the Cabinet.
President Kurmanbek Bakiyev asked lawmakers to approve his nomination of Agriculture Minister Azim Isabekov, the president’s office said. Isabekov is seen as a Bakiyev loyalist and previously was a deputy head of his administration.

<b>Joint War Games</b>
MOSCOW (Reuters) — Russia is expected to host a joint military exercise with India in the northwestern Pskov region in September, RIA-Novosti quoted paratroop commander Colonel General Alexander Kolmakov as saying on Sunday.
Close ties between the Russian and Indian militaries are part of a “strategic partnership” between Moscow and New Delhi, which has replaced the Cold War alliance of the two governments.
India is one of two top buyers of Russian arms. Together with China, it accounts for most of Russia’s annual arms sales of around $6 billion. 

<b>Bird Flu Suspected</b>
BAKU, Azerbaijan (Reuters) — A 14-year-old Azeri boy, treated for suspected bird flu in a medical institute in the capital, Baku, died Sunday before his diagnosis could be finally established, a health official said.

TITLE: Making Good Use Of Efficient Finns
AUTHOR: By Nikita Savoyarov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Quality was the name of the game at the Nordic Travel Fair, Matka, held at the Helsinki Fair Center Jan 19-21, as Finland seeks to take advantage of the booming business of international tourism, offering valuable lessons to St. Petersburg in the process.
The largest travel event in the Nordic countries, Matka 2007 played host to 1150 domestic and foreign destinations and travel service providers from 69 countries. The theme of the fair was embedded in the slogan “Quality in traveling for everyone.”
The Finnish government has allotted tourism a significant role in its economy, something first embodied in the National Strategy for Tourism and afterwards through adoption of the Finnish Tourism Policy last December.
Such a strategy is based on the very favorable growth of international tourism — an average rate of 4.5 percent for the first eight months of 2006 according to the United Nations World Tourism Organization. If growth across Europe is only three percent then in Northern Europe it reaches six percent and in Finland ten percent. Finland’s National Tourism Strategy has set an annual growth target of 5 percent. 
In Finland the state puts forward a total of 261 million euros ($327 million) annually to promote the travel industry. This money is spent on both domestic and foreign marketing, marketing congress and meeting services, promoting incentive trips, PR, and general marketing. 
One of the aims of Finland’s Official Tourism Strategy is to increase the amount of overnight stays from 10 million to 25 million.
One way to make this possible is through sales of traditional, quality local products. In evidence at the fair were many Finnish stands with beverages, food and souvenirs. Another way is through hosting global events like the Eurovision Song Contest in May or the Tall Ships Race in Kotka in July.
Growth rates for tourism in northwest Russia are similar to those of Northern Europe and this is where the Finnish experience can serve as a useful example.  
St. Petersburg was much better represented this year than at Matka 2006. Its stand, organized by the Committee for Investments and Strategic Projects of City Government, had already appropriated a more central location compared to the “forgotten” corner of the hall it once occupied. It also boasted a completely new image: a new, bigger design, with new items on display. 
Alongside the main exhibitor, the City Tourist Information Center, were different travel companies, mini-hotels, Mini-hotels Union and The Hotels Club. The stand attracted visibly more trade visitors than before.  
This presence seems linked to successful implementation of the City tourism development program realized by the Boston Consulting Group (BCG) and designed to attract five million foreign tourists a year from 2010. 
While this might be feasible it is badly in need of the support of the transport service providers, as formulated in the Finnish Strategy (fluent accessibility, a functional infrastructure). Unfortunately, no Russian carriers were in evidence at the fair.
The City Government might cooperate with foreign companies already present in St. Petersburg, such as low cost carriers like Germanwings and AirBaltic. Germanwings will this summer increase the frequency of its flights between St. Petersburg and Germany, said Marc-Christian Gerdes, Country Manager for Northeast Europe. 
The Latvian carrier has just opened its office in St. Petersburg to develop connections between St. Petersburg and the Baltic states, said Inese Skreja, representative of AirBaltic.   
This cooperation could be very fruitful, but effects will be limited unless the Russian visa system is greatly simplified. New immigration regulations coming into effect after January 15 could have a seriously detrimental effect on incoming tourism and, almost inevitably, go against the Finnish Strategy that establishes a “regulated environment supportive of businesses.”

TITLE: Gazprom-Linked Firm Makes Bid for Yukos
AUTHOR: By Miriam Elder
PUBLISHER: Staff Writer
TEXT: MOSCOW — ESN, an investment firm with close links to Gazprom, stepped forward Friday as the first candidate to bid in the upcoming auctions for Yukos assets.
Energogaz, an ESN holding, applied to the Federal Anti-Monopoly Service last month for approval to bid for assets of the bankrupt oil firm, ESN spokesman Marianna Belusova said. She declined to say in which assets ESN was interested.
Yukos’ remaining assets, which include refineries and two oil production units, are due to be sold off this year. The company’s bankruptcy receiver said last week that a final valuation of the assets was expected in early February, after which open auctions can go ahead. Initial valuations estimated the assets at more than $22 billion.
ESN leads a consortium comprising Italy’s Eni and Enel that has said it was interested in bidding for Yukos gas assets, including Arcticgaz, a gas exploration and production unit.
Italy’s top energy firm, Eni, signed a wide-ranging cooperation agreement with Gazprom last year, allowing Gazprom to sell gas directly to Italy and extending supply contracts to 2035. Utility group Enel, meanwhile, has steadily invested in the country’s electricity sector and is widely believed to have bought a stake in OGK-5 when the utility was spun off from monopoly Unified Energy Systems last year.
President Vladimir Putin last week praised growing energy ties between the two countries during a meeting with Italian Prime Minister Romano Prodi in Sochi.
Given its close links to all the firms involved, Gazprom could use the ESN bid as a proxy for its own interest in Yukos assets while avoiding legal risks, analysts said. Gazprom could not immediately be reached for comment Friday.
ESN, with holdings ranging from energy to the media, is headed by investor Grigory Beryozkin, who sold 5.3 percent of UES’ stock to Gazprom in 2004. Russian media reported at the time that ESN had bought the stake initially on Gazprom’s behalf.
Gazprom withdrew its bid for Yukos’ main production unit, Yuganskneftegaz, at the last minute in a December 2004 auction following a legal injunction by a U.S. court. Yuganskneftegaz went to state-controlled firm Rosneft instead. In May 2005, a planned merger between Gazprom and Rosneft was called off.
“After Gazprom had to withdraw its bid for Yuganskneftegaz, it realized it didn’t have a Plan B,” said Steven Dashevsky, an analyst at Aton brokerage. “It has learned its lesson.”
Gazprom and Rosneft have signed a series of agreements in recent months aimed at increasing cooperation between the two companies ahead of the Yukos auctions. But analysts said the two firms could still come to blows over certain assets.
Both companies appear to be interested in Samaraneftegaz and Tomskneft, the two main oil production units up for auction. Rosneft is keen to scoop up Yukos refineries, while Gazprom is likely to buy the 20 percent stake that Yukos owns in its oil arm, Gazprom Neft, formerly known as Sibneft. The stake is a holdover from Yukos’ share in Sibneft, which Gazprom bought for $13 billion from Roman Abramovich in September 2005. Yukos also holds a 9.4 percent stake in Rosneft, which is due to be auctioned off.
Rosneft is close to drawing on $24.5 billion in loans from a consortium of eight international banks to fund its acquisition of Yukos assets, a banking source said Friday. “It’s all been agreed. It’s now up to them to decide when to draw,” the source said. “We expect that to happen over the next four weeks.”
The source declined to provide details into the types of loan that would be provided. ABN, Barclays, BNP Paribas, Citigroup, Credit Agricole’s Calyon, Goldman Sachs, JPMorgan Chase and Morgan Stanley are due to provide the loan.
Reuters reported Friday that each bank would provide $3 billion and that the financing package would pay 30 to 50 basis points above the London Interbank Offered Rate with a maturity of five years. The loan would include a eurobond portion carrying a maturity of 10 years, the news agency said, quoting an unidentified banking source.
Rosneft spokesman Nikolai Manvelov on Friday declined to say when the loan would be drawn or in which Yukos assets the company was interested. 
“Above all, Rosneft is interested in money as a Yukos creditor,” he said. “If it doesn’t get money, it will start looking at other options.”
To meet Yukos’ total liabilities, including back tax demands of $26.6 billion, the state-appointed receiver plans to sell off 193 assets in open auctions this year.

TITLE: Sberbank Seeks $12 Billion At Offering
AUTHOR: By Elisa Martinuzzi and Garfield Reynolds
PUBLISHER: Bloomberg
TEXT: MOSCOW — Sberbank, the Soviet savings bank that’s now Russia’s biggest lender, is seeking to raise a record $12 billion selling shares to fund expansion as growing personal wealth boosts demand for consumer loans. 
State-run Sberbank will offer as many as 3.5 million shares for 20 days starting tomorrow, the Moscow-based bank said Monday in a regulatory filing, without elaborating. The shares last closed at $3,500, valuing the stake at $12.3 billion. 
Russian lenders including VTB Group, the Soviet trade bank, are lining up to sell stock to tap investor interest in banking assets. President Vladimir Putin is using share sales by state companies to give Russians educated under communism a chance to benefit from capitalism. Sberbank is selling stock at all its branches, as OAO Rosneft did in its $10.4 billion IPO in July. 
“Sberbank has grown so fast over the past year that it needs to replenish its capital, so it’s coming to the equity markets with a potentially record-breaking share issue,’’ said Alexander Kantarovich, head of research at MDM Bank in Moscow. “A successful sale will allow Sberbank to boost its loan portfolio by tens of billion dollars over the next few years.’’ 
The stock has more than doubled in the past year as profit surged along with corporate demand for capital. Net income under Russian accounting standards jumped 42 percent to 89.3 billion rubles ($3.4 billion) and the bank’s loan book swelled to 2.7 trillion rubles last year, Sberbank said on its web site today. 
Sberbank’s stock has jumped 163 percent since the start of last year, valuing the company at $68 billion, about the same as OAO Lukoil, the country’s biggest oil producer, and more than ABN Amro Holding NV, the largest Dutch lender. 
“We like the banking sector because of the growth potential and low penetration’’ among customers, Jacob Grapengiesser, who helps oversee $5 billion at East Capital Asset Management AB in Stockholm, said before the announcement. 
“The stock had been undervalued for a very long time.’’ 
The shares slid 1.7 percent to $3,440 as of 2:10 p.m. in Moscow on Monday. They hit a high of $3,630 on Jan. 17. 
Putin signed amendments to a banking law on Dec. 30 that grants foreigners buying bank shares the same rights as Russians. That led Morgan Stanley Capital International to double Sberbank’s weighting in its MSCI Emerging Market Index, which is tracked by funds that manage $300 billion. The upgrade will come into effect March 1. 

Loan Growth 
The 165-year-old bank, established by Tsar Nicholas I, is benefiting from Russia’s ninth year of economic growth, bolstered by gains in oil and metals prices, which is fueling corporate and consumer borrowing. Under Chief Executive Officer Andrei Kazmin, who has led the bank for a decade, loans at Sberbank have grown more than fivefold in five years, with corporate loans accounting for about two-thirds of the total. 
The central bank’s stake in Sberbank will fall to 58 percent from 64 percent after the sale, Rustam Botashev, an analyst at Aton Capital in Moscow, wrote on Jan. 17. Russia’s central bank can buy as many as 892,601 Sberbank shares that are on offer. Credit Suisse Group and JPMorgan Chase & Co. are managing the sale. 
The remaining shares are on offer to existing investors first. The stock is likely to be sold at as much as 15 percent below the current market value, Maria Kalvarskaya, an analyst at CITFinance Investment Bank, wrote in a report Monday. “An increase in the number of actively traded shares will help raise the bank’s investment attractiveness,’’ Kalvarskaya wrote. 
VTB, the country’s second-biggest bank, will follow Sberbank in selling stock, with plans to raise as much as $4.6 billion in an initial public offering in May. 
The shares will be sold in London and Moscow and directly to Russian citizens, Chief Executive Officer Andrei Kostin said on Jan. 15.

TITLE: In Brief
TEXT: <b>Lukoil Shares</b>
MOSCOW (Bloomberg) — Three managers at Lukoil, Russia’s biggest oil producer, sold shares on Jan. 24 for 242 million rubles ($9.1 million) that they got in an employee share plan in 2003.
Chief Accountant Lyubov Khoba sold 40,000 shares for almost 93 million rubles, Moscow-based Lukoil said in a Regulatory News Service statement Monday. Two other management committee members, Anatoly Barkov and Alexander Matytsyn, each sold 32,000 shares for 74.4 million rubles.
The same day, four other managers sold shares worth $11.6 million, Lukoil said Jan. 25. All the shares sold by the seven managers amounts to less than 0.1 percent of the company’s equity.

<b>Kovykta Stake</b>
MOSCOW (Bloomberg) — Gazprom wants to acquire more than half the stake BP Plc’s Russian unit holds in the Kovykta natural-gas field in eastern Siberia, the newspaper Kommersant reported Monday, citing an unidentified person familiar with talks between the companies.
The Irkutsk region’s environmental inspectorate found the license holder, Rusia Petroleum, violated a requirement to supply 9 billion cubic meters of gas a year to the region, delivering only 33.8 million cubic meters last year, Kommersant reported, citing the inspectorate’s report. TNK-BP owns 62.4 percent of Rusia Petroleum.
The report made no recommendation to revoke the license because the government hasn’t ruled on a Rusia Petroleum request to lower the supply requirement, Kommersant said. The threat of losing the license may still be used to force TNK-BP to offer Gazprom better terms, the newspaper said.

<b>Arming Venezuela</b>
CARACAS (Bloomberg) — Venezuela’s government will purchase about $290 million worth of Russian-made anti-aircraft missiles, Agencia Estado newswire reported Monday.
Venezuela will buy Tor-M1 anti-aircraft missiles, the news agency said, citing comments made by Venezuela’s Defense Minister Raul Baduel on Jan. 25.
The missiles will be used in combination with radar stations imported from China and with the 24 fighter jets, also manufactured in Russia, to defend Venezuela’s air space, Baduel said according to Estado.

<b>Azerbaijani Tankers</b>
BAKU (Bloomberg) — Azerbaijan may spend as much as $500 million to create an oil-tanker company to carry shipments from Georgia and Turkey, TradeWinds reported Monday, without citing anyone.
The new company may have as many as six tankers each capable of hauling 80,000 metric tons of crude oil, TradeWinds said. Azerbaijan already runs Caspian Sea Shipping, which has a fleet of 24 carriers.

<b>Tax Haven Fight</b>
MOSCOW (Bloomberg) — Russia’s Finance Ministry will focus on fighting offshore tax shelters over the next three years, Kommersant newspaper reported Monday, citing the ministry’s tax policy plan for 2008 through 2010.
Revenues of foreign subsidiaries controlled by Russian companies may be taxed the same as Russian-based companies from 2009, the Moscow-based newspaper reported, citing the ministry’s plan. The State Duma will have to approve changes to the tax legislation to put this plan into action, Kommersant said.
Russia plans to sign information-sharing pledges and review double-taxation agreements with tax-haven countries to fight ways companies avoid paying domestic tax, Kommersant said.

<b>X5 Denial</b>
MOSCOW (Bloomberg) — X5 Retail Group NV, Russia’s largest supermarket chain, denied a report by the Kommersant newspaper that it’s considering selling a stake to an international retailer.
“The company and its major shareholders do not intend to sell its business in a medium-term perspective and are focused on the realization of a five-year strategy of the group’s development on the Russian market,’’ X5 Chief Executive Officer Lev Khasis said Monday in a Regulatory News Service statement.

<b>Sheremetyevo Link</b>
MOSCOW (Bloomberg) — Russian Railways, the country’s rail monopoly, will spend 2 billion rubles ($75 million) in 2007 to build a branch line to Sheremetyevo International Airport, which is now only accessible by an often congested highway.
The eight-kilometer (five-mile) link, to begin operation in 2008, will connect central Moscow’s Savyolovsky railroad station with the airport, Moscow-based Russian Railways said Monday in an e-mailed statement.

TITLE: Gazprom Approaches Shtokman Bidders
PUBLISHER: Combined Reports
TEXT: MOSCOW — Gazprom has offered possible contract work on its huge Shtokman project to the five companies that previously bid unsuccessfully for a stake in the scheme, it said Friday.
“Gazprom has sent a letter to the five companies on the Shtokman shortlist with an offer of possibly taking part as contractors,” a Gazprom spokesman said. “Talks with the five companies will start in February.” 
Last year, Gazprom stunned the five hopefuls — French oil major Total, Norway’s Statoil and Norsk Hydro, and U.S. majors ConocoPhillips and Chevron — by scrapping a yearlong bidding process and saying it would develop Shtokman without any foreign equity partners.
Energy analysts were dismayed by the move, saying Gazprom would struggle to complete the $20 billion project, under the stormy and iceberg-strewn Barents Sea, without foreign know-how.
After ditching the shortlist, Gazprom said it would use foreign contractors but would not offer them any equity in the project, which envisions piping some Shtokman gas to Europe and liquifying the rest for shipment to the United States. “We will continue to be open towards cooperation on the project if the Russians invite this cooperation,” Norsk Hydro spokesman Bjorn Sverdrup said, while declining to speculate on whether his company would come into the project as contractors.
“We are, of course, interested in the Shtokman project if an equity position is offered to the company,” Statoil spokesman Havor Engebretsen said. Both Norsk Hydro and Statoil, which have deep-water drilling and logistics experience in the Arctic, have said they still see opportunities in Russia despite the Shtokman snub.
In December, Hydro CEO Eivind Reiten said he had “modest” expectations for a deal soon, and added: “We do not exclude any type [of working agreement], but for us to work on a basis where we do not get an ownership stake in the resources is more challenging, because that is a model we are not used to.”
Chevron, Total and ConocoPhillips could not be reached for comment Friday.
Gazprom CEO Alexei Miller said Oct. 9 that the priority for Shtokman gas was filling a new pipeline under the Baltic Sea to Germany. The field, located 500 kilometers offshore in deep Arctic waters, poses new technological challenges to Gazprom, said Stephen O’Sullivan, an oil and gas analyst at Deutsche UFG in Moscow.
“Gazprom will need to tie up with someone to develop Shtokman,’’ said O’Sullivan. “There’s a constant need to replace declining production.”
A liquefied natural gas plant, capable of supplying Shtokman gas to the United States by tanker, is also under consideration. Gazprom has no experience developing LNG.
The five companies may accept the chance to work on Shtokman, said Valery Nesterov, an oil and gas analyst at Troika Dialog in Moscow. Shell, now a Gazprom partner in Sakhalin, may also join, he said.

(Reuters, Bloomberg, SPT)

TITLE: Gref Upbeat on Georgia Accord
AUTHOR: By Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: DAVOS, Switzerland — Talks with Georgia, the only country still refusing to sign a bilateral deal with Russia on its accession to the World Trade Organization, have been encouraging, Economic Development and Trade Minister German Gref said Friday.
“We have not disposed of all claims,” Gref said at the World Economic Forum in Davos, Switzerland. “We have conducted quite positive negotiations and outlined prospects to make our positions closer. We see obvious progress.”
Russia will work hard to join the WTO this year, Gref said. The WTO talks between Russia and Georgia are now stuck on just one issue, the Russian customs checkpoints in Georgia’s breakaway provinces of Abkhazia and South Ossetia, a spokeswoman for the Economic Development and Trade Ministry said Friday.
Marika Gabuniya, director of the foreign trade department at Georgia’s Economics Ministry, confirmed that the countries were focused on trying to fix the checkpoints issue. Georgia will agree to Russia joining the WTO as soon as Russia agrees to Georgian officials being present at the customs checkpoints, she said. The lack of Georgian customs officers is the “biggest problem,” Gabuniya said by telephone from Tbilisi. “We have to sit down at the negotiating table and resolve it.”
The latest round of negotiations took place in Geneva on Wednesday, and the next meeting is scheduled for late February, an Economic Development and Trade Ministry spokeswoman said.
Russia banned imports of Georgian wine and mineral water last spring, saying they were of substandard quality. Georgia would seek the lifting of those bans during the next stage of talks on Russia’s accession, Gabuniya said.
In the latest spat between the two neighbors, Georgia and the United States last week announced that Tbilisi had caught a Russian citizen who attempted to sell weapons-grade uranium in Georgia. Russian officials called the arrest a provocation.
Striking a conciliatory note, Georgian Prime Minister Zurab Nogaideli said Friday that Georgia was hoping to cooperate with Russia on nonproliferation, but “not trying to politicize the issue,” Interfax reported.
Relations dipped sharply last fall after Georgia detained four Russian military officers on suspicion of espionage. Russia responded by deporting several hundred Georgians, evacuating its citizens and diplomats from the country and cutting transport and postal links. 
Last week, Moscow made an effort to mend ties by returning its ambassador to Tbilisi. In another sign that ties are improving, Russia’s chief epidemiologist, Gennady Onishchenko, hinted on Tuesday that Georgian mineral water imports could be resumed.
 The head of the European Bank for Reconstruction and Development on Friday called for early Russian entry into the WTO. “It is very important that they join WTO now as quickly as possible,” EBRD president Jean Lemierre said on the sidelines of the World Economic Forum, Reuters reported.

TITLE: LUKoil Gives McDermott Caspian Oil Pipeline Deal
PUBLISHER: The Associated Press
TEXT: BAKU, Azerbaijan — LUKoil,  awarded a contract to a subsidiary of U.S. energy services company McDermott to build an oil pipeline under the Caspian Sea, the U.S. company said Friday. 
Under the contract, McDermott Caspian Contractors will lay a 58-kilometer pipeline to LUKoil’s Yury Korchagin oil and gas field, located in the northwestern, Russian section of the sea, the company said.
“The volume of construction work in Russia’s oil and gas sector is gathering pace and we are proud to be working with LUKoil on this world-class project,” Dan Houser, president and general manager for the company’s Caspian operations said in a statement.
McDermott did not say how much the pipeline project would cost; RIA-Novosti reported that the entire project to develop the field, including the pipeline, would cost $700 million.
The field is due to come onstream in 2008 with annual capacity of 80,000 barrels per day and 10 billion cubic meters of gas per year.
The Caspian Sea has some of the largest oil and gas fields in the former Soviet Union. Most are located in the section of the sea controlled by Azerbaijan.

TITLE: First Low-Cost Airline Begins Operations in Russia
AUTHOR: By Max Delany
PUBLISHER: Staff Writer
TEXT: When the inaugural Sky Express flight took off from Moscow’s Vnukovo Airport for Sochi last Monday afternoon, the low-cost airline phenomenon familiar in Europe and the United States finally came to Russia.
The brainchild of Boris Abramovich, general director of the country’s third-largest carrier, KrasAir, Sky Express is the first budget airline to start operating in the country. With a handful of competitors expected to follow, the airline looks set to change the face of domestic air travel by offering tickets for as little as 500 rubles ($19). 
As the country’s airlines have struggled to adapt to market conditions over the last 15 years, the number of passengers taking internal flights in the country has plummeted from over 130 million per year to fewer than 20 million. 
Now Sky Express hopes to step into this breach.
“When you look at the air transport market 20 years ago, only a fraction of that air travel happens today,” said Rod Brandt, the company’s American CEO.
“It is not a demand that we have to invent but a demand that exists already. It is staring us in the face,” said Brandt, a veteran of airlines Hong Kong Express, Air South, Air Atlanta and Pan Am.
With established Russian airlines often proving relatively expensive — Aeroflot low-season returns to Sochi go for about 6,000 rubles ($225) — millions of Russians opt for often ponderously slow and uncomfortable cross-country rail journeys. Currently, only 5 percent of Russians use internal flights, according to Sky Express.
Sky Express said it has sold almost 3,000 tickets sales since last week, including over the telephone and the Internet, and hopes that it will carry 600,000 passengers in the first half of the year, growing to 3.5 million next year. 
Sky Express will initially operate two flights per day to Sochi out of its hub at Vnukovo, a 35-minute train ride from the city center. 
The company aims to expand its current fleet of two 140-seat Boeing-737s to eight by April, and add six more destinations, including Rostov, Murmansk, Samara and Kaliningrad over the next few months. The longest flight planned is the 1,800-kilometer trip to Tyumen.
The start-up capital is $48 million, and investors include the European Bank for Reconstruction and Development, or EBRD, which is putting $10 million into the project.
“It should offer a good model to improve the efficiency in air transport [in Russia],” an EBRD official involved in the deal said Wednesday on condition of anonymity. The airline was a “high risk, high gain” investment, she said.
Speaking on the sidelines of the World Economic Forum in Davos, Switzerland, EBRD president Jean Lemierre acknowledged Thursday that the bank was going out on a limb by investing in a low-budget airline in a country where no such airline has yet succeeded.
“We have taken a risk to support this, but we hope it will fly well — excuse the expression,” Lemierre said.
Another investor, London-based fund management company MG Capital, which has recently acquired a 4 percent stake in Sky Express, was upbeat about the airline’s chances Thursday.
“There is no reason why the low-cost approach should not be as successful in Russia as it has been in the rest of the world,” said Charles Fowler, MG Capital’s managing director.
Citing the U.S. success stories JetBlue and Southwest, Brandt said Sky Express would follow the established streamlined models for budget airlines worldwide, meaning that on-board meals are not included in the ticket price. He pointed out, however, that certain elements had been adapted to suit the peculiarities of the situation in Russia.
With little culture of credit card spending in the country, Sky Express has had to come up with a network of 56,000 alternative payment points.
Tickets are available over the Internet, but with many people unwilling to give out their details online, they can also be purchased at branches of the Post Office, bank VTB 24 and cell phone firm Yevroset.
Unlike many of its European counterparts, Sky Express will be flying to cities’ main airports.
Brandt said negotiations with regional airports had been turbulent at times, with some “wary” of upsetting local airlines. But he said the obvious economic bonuses of hosting a budget airline had calmed worries. 
Vital for any domestic airline’s success is a need to address concerns about safety, as domestic flights have suffered a string of tragic accidents in recent years. 
Yelena Sakhnova, an aviation analyst at investment bank Deutsche UFG, said most Russians traveled by train not just “because the trains are relatively cheap, but because they are afraid of flying.” 
Brandt, despite admitting that domestic flights had “an image problem,” stressed that Western safety standards would be followed, pointing to the reliability of the Boeing 737 and a maintenance deal with Lufthansa.
Other low-cost airlines are reported to be in the works, with Alexander Lebedev’s National Reserve Corporation and Mikhail Fridman’s Alfa Group among those considering start-ups.
National Reserve Corp. mooted a low-cost airline, National Wings, last February and was reported Monday to be in negotiations to buy Moscow-based Airlines-400 as part of its plans. 
No one at National Reserve Corp. or Alfa Group was immediately available to comment on the projects Thursday. 
At Sky Express, the assumption is that sooner or later a number of competitors will join the market.
“That is why we have to get in there first and do it right. We have to create a recognized and trusted brand based on how well we treat our customers,” Brandt said.

TITLE: Local Experts Expect Business to Boom
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: The drawn out New Year holidays might have sent business into a kind of lethargy, but new ambitious projects and deals are on their way. Local experts are confident that this year will be another productive one for entrepreneurs and investors.

Boom in development
Commercial real estate is thriving thanks to ever-increasing investments into the local economy. Foreign and local companies are in need of business centers and logistic facilities as well as industrial zones to establish production sites.
This year St. Petersburg authorities will continue the development of industrial areas, the press service of the Committee for Economic Development, Industrial Policy and Trade said earlier this month in a statement.
At the moment several zones are being developed including Shushary, Metallostroi, Konnaya Lakhta, Krasnoselskaya, Ruchii, Yugo-Zapadnaya, Rybatskoye, the area near Novo-Orlovskiy park, Obukhovo, Parnas, Rzhevka, Pushkinskaya and Kupchinskaya, as well as Beloostrov and Prevportovaya-3.
As well as these territories, the committee will start development of 12 new zones this year. “Among real estate market trends I would indicate the continuing redevelopment of industrial territories in the city, something that is stimulated by the city administration,” said Boris Yushenkov, General Director of Colliers International.
Last year investment into commercial real estate in St. Petersburg exceeded $1.4 billion, with 85 percent of this invested into shopping areas, Yushenkov said. Colliers expects demand for high-quality commercial real estate to keep growing this year.
“In 2007 international investment funds will play an even more active role. Following the leading investors of 2006, Altarea, NIAM, Invesco, Capital Land and other funds are considering putting money into the St. Petersburg market,” Yushenkov said.
By the end of 2006 A-class and B-class business centers offered 420,000 square meters of area. Colliers expect about another 330,000 square meters of office area to be added this year.
About 350,000 square meters of logistic area (A-class and B-class) will be completed in 2007, Yushenkov said, and about 700,000 square meters of shopping area, including 500,000 square meters in shopping centers.

Projects that stand out
Yushenkov listed the major new developers that had recently announced large-scale projects. Italian company Margheri Group is investing $120 million into the first “factory outlet” in Russia. The 65,000 square meter shopping center will be opened in 2008 in the Bugry area, near the ring-road.
Austrian company Meinl European Land acquired the 26,000 square meters North Mall from Promocentro Italia. The shopping center will be opened this year.
Israeli holding Fishman Group is planning to open several Home Center DIY stores Home Center in the city. 
Colliers expects new international and Moscow based operators to enter the St. Petersburg market. This year Billa, Real, Leroy Merlin and Prisma are expected to launch local projects.
At the same time, local developers have started expanding into the regions and launching new projects. Dorinda is constructing 1,500 square meters’ worth of O’Key-Express supermarkets. Lenta plans to develop a chain of 200 to 400 meter shops called Norma.
Among the largest projects Yushenkov listed the 100,000 square meter shopping and entertainment center Gals-Mart that is being constructed by development company Systema-Gals Northwest at Pulkovskoye Shosse.
Aditum, a firm affiliated with Swedish development company Ruric, is investing $200 million into a 42,000 square meter shopping center underground, beneath Ploshchad Vosstaniya.
Dorinda is planning reconstruction of a building at Konyushennaya Ploshchad 1 to create a shopping center of 20,000 to 25,000 square meters total area.
Hypercenter SPb is investing $40 million into construction of the Mosmart supermarket at the junction of Marshala Blyukhera Prospekt and Laboratornaya Ulitsa on territory of 42 hectares. Hypercenter SPb plans to construct three to four shopping centers in St. Petersburg, investing a total of $150 million. Each center will be 20,000 to 30,000 square meters in size.
Shopping centers are likely to become even larger this year, Yushenkov said. Last year, the average size of a shopping center increased from 14,000 square meters to 22,000 square meters As for logistic centers, Yushenkov expects them to surpass 50,000 square meters in size this year.
Office centers will keep expanding outside the city, Yushenkov said. Developers are considering embankments and remote areas near the ring-road, he said.

Price Stabilization
Rushing to realize the national project “Affordable Housing,” local authorities expect to add some 2.4 million square meters of residential real estate to the existing housing stock this year.
Speaking at a press conference at the Interfax Northwest news agency last week, St. Petersburg vice-governor Alexander Vakhmistrov said that 14 million square meters of residential real estate are currently being constructed in the city, including the Baltic Pearl project.
Last year 2.3 million square meters of real estate were constructed and reconstructed in the city, according to official statistics. 
Last year the price for residential real estate in St. Petersburg nearly doubled and the average price for a one-room apartment in a typical building reached $95,000 in December, according to Central Real Estate Agency.
This year agency experts forecast the price for economy-class real estate to decrease by 10 to 12 percent by the summer, while in other market segments the price will keep growing.
“In the second half of the year the price could increase insignificantly,” said Yelena Pavlovskaya, deputy director of Central Real Estate Agency.

Banks benefits 
Yury Korolyov, general director of Credit and Finance Consultancy, indicated active inflow of foreign investment into St. Petersburg as the most significant trend that is likely to continue through 2007.
According to the Committee for Economic Development, Industrial Policy and Trade, in 2005 foreign investment into the local economy increased by 44 percent and accounted for $1.417 billion. In the first half of 2006 foreign investment accounted for $1.57 billion.
Korolyov was positive about the prospects of the banking and finance industry this year because of the increasing purchasing power of city residents.
“At the moment the market for credit services, obviously, is only starting to emerge. Many bank products are in demand and their volume could increase by several times over, like credit cards, financing on the security of real estate,” Korolyov said.
“The industry will demonstrate both an increase in volumes and increase the quality of its services,” Korolyov said.

Changing environment
Any changes in legislature in Russia could result in unexpected difficulties. Last year, the introduction of the new system of centralized control over alcohol excises paralyzed the work of alcohol plants for several months. This year a number of changes and amendments were introduced.
Since Jan. 1 banks operating in Russia must own capital of over 5 million euros. 
National producers are now guaranteed over 20 percent at retail markets and over 50 percent at agricultural fairs.
Brand-mobiles (cars that carry advertisement boards) were prohibited as well as advertising on road signs. The law on moving casinos and gambling centers to four special zones came into force, it should be fully realized by mid-2009.
However, among all these changes, a local legal expert pointed out amendments to the laws regulating the registration of migrants as having the largest impact on city life.
Since Jan. 15 amendments to the Federal Law on the Legal Status of Foreigners in the Russian Federation have been put into practice. “In particular, the paragraph on the temporary stay of foreigners in the Russian Federation was amended,” said Sergei Spasennov, head of the St. Petersburg office of Pepeliaev, Goltsblat & Partners. “The law now obliges foreigners temporarily based in Russia to deliver a temporary residence form and a number of other documents to the migration services personally within two months (in some cases — six months) after arrival,” Spasennov said.
Long lines of foreigners desperate to file the required documents to the migration service have been widely publicized in the local media.

TITLE: Sensing the Shape 
Of Things To Come
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: There is a popular saying in Russia: “The way you meet the New Year is the way you’ll spend it.” Nobody knows if this is particularly true but involuntarily we always base all sorts of forecasts on particular events that happen at the beginning of the year. And this January was abundant in events that might well signify new trends in city life.
 
Court moves in
The Constitutional Court’s judges will receive apartments in St. Petersburg on their own tenure.
Putting an end to the long dispute over this issue, on Jan. 24 the Federation Council approved a new version of the law moving the Constitutional Court from Moscow to St. Petersburg.
The law obliges the Constitutional Court to reside in St. Petersburg but allows it to hold particular meetings in other places as well. 
The court will have a representative office in Moscow.
Apart from the right to occasionally escape St. Petersburg, the court judges negotiated that no limit could be applied to the size of apartments granted them.
Prime-Tass

Mortgage resale
A new profitable business might emerge in the city as borrowers increasingly fail to pay off their mortgages.
On Jan. 17, St. Petersburg Property Fund auctioned off a two-room apartment located downtown, in a solid Stalin-era building. The formal grounds for the sale is that over several months the owner fell behind in his monthly repayments to St. Petersburg Mortgage Agency.
Acquiring the apartment last year, the person took a loan out with Alexandrovsky Bank with the assistance of the agency. To prevent the bank from further losses the agency initiated the auction.
The apartment was sold for 2.234 million rubles ($84,000), which was the starting price defined by Property Fund assessors, nearly three times less than the fair market price for the property.
Gazeta.ru

Locals evict Perrault
The city authorities dismissed Dominique Perrault because he is unable to complete his project for the second stage of the Mariinsky Theater on time.
The venerable French architect won the tender for reconstruction in 2003. However, after a number of delays the city officials announced that his project did not meet appropriate safety standards.
Since the new building is due to open at the end of 2009, the tender was announced on Jan. 15 to find a projection and construction company to correct and complete Perrault’s project.
The winner will be a local company able to meet the deadline and work in a specific Russian environment, officials said. Perrault will only watch over the process.
Interfax

The art of Matviyenko
The city governor Valentina Matviyenko has proved to be one of the most valued painters, at least in the local business community.
At a charitable auction on Jan. 13 her picture “Hedgehog Under the New Year’s Tree” was sold for 2.21 million rubles ($83,000) — a sum more appropriate for the work of a well-known artist.
The buyer, general director of Maxidom retail chain Gergei Golikov, estimated Matviyenko’s masterpiece much higher than a picture by Alisa Freindlikh, a famous artist whose films are known by several generations of Russians. For her work Golikov offered only 134,000 rubles.
The raised total of 4.93 million rubles will be donated to Raukhfus children’s hospital and Turner children’s orthopedic institute.
Rosbalt

your Beer tube
Football fans that have up until now had to illegally smuggle in alcohol to football matches may soon get a steady supply of beer right to the stands.
The city authorities have been repeatedly criticized for allowing beer festivals on Dvortsovaya square, which turn downtown areas into a mess. However officials remain favorable to beer lovers.
On Jan. 24 at a press conference in Interfax agency, vice-governor Alexander Vakhmistrov proposed creating a pipeline system for beer supply at the new 60,000 seat stadium under construction on Krestovsky island.
The idea struck the official at a match between Zenith and Shalke 04 in Germany, where he saw a similar innovation. 
Vakhmistrov proposed bringing this commodity to beer lovers at the expense of brewers. A tender to decide which beer is to be supplied to the stadium will be announced in due course.
Interfax

TITLE: A Great Game Update
AUTHOR: By Hugh Pope
TEXT: Saparmurat Niyazov, Turkmenbashi the Great, dictator of Turkmenistan, is dead. The political class of this remote Central Asian republic has rallied round his look-alike successor. Long Live Turkmenbashi!
At first glance, there seems to be little for the outside world to cheer in the trajectory of politics in Turkmenistan, or for that matter the other Central Asian “stans”: Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan. Since they spun almost unwillingly free of the Soviet Union 15 years ago, few have done much to move on from state-centered rule. Ruling elites are mired in nepotism, corruption and the suppression and occasional killing of dissidents. Add a decade-long international media obsession with the bizarre extremes of Turkmenbashi’s personality cult and the invention of a ridiculous Kazakhstan for the spoof film “Borat,” and Central Asia’s eclipse would appear complete.
So was the West wasting its time playing the new “Great Game” for Central Asia? No. But it has to become more realistic about how fast and in what way monopolistic states will move toward the rule of law and democratic rights. The stakes remain high: This is a moderate-minded Muslim region that has a strategic expanse equivalent to Western Europe, a young population of 55 million and natural resources ranging from 4 percent of the world’s energy reserves to 20 percent of its uranium. And above all, let’s not forget how far Central Asia has already come since the dying days of the Soviet Union.
Fifteen years ago, life proceeded at a crawl in a dead-end place like Turkmenistan. Thinly stocked shop shelves rarely carried more than rough East European plastics and shiny ceramic kitsch. Finding food of any kind was a constant struggle, even in hotels in the capital, Ashgabat. The city’s long, leafy boulevards were indistinguishable from one another, empty of people and innocent of basic facilities like taxis. Nobody had it easy. The first U.S. ambassador worked from a small, plywood room in the best Communist Party hotel and met his visitors with a line of socks hanging up to dry along one wall. The closest it had to a free market was the Ashgabat Sunday Bazaar on the edge of the desert south of the city, an almost medieval wonder where men in shaggy hats would size up camels and women in gorgeous flowing gowns bargained for silver trinkets still made of century-old coins.
Being left behind nurtured a profound inferiority complex in the Turkmen people and leadership, shared to various extents by their neighbors. It wasn’t all Central Asia’s fault. The region suffered more than a century of discriminatory Russian and Soviet policies. Just one famine engineered by Josef Stalin in 1931-34 killed 40 percent of the Kazakhs alone. Most Central Asians are Muslims who speak non-Slavic languages, but Moscow always privileged Russian culture and gave Slavic immigrants the best jobs. The Soviet Union worked to eliminate the Turkic, Tajik and other local cultures and their intellectual, religious and aristocratic leaderships. Central Asia endured pogroms, assimilation and devices like changing their alphabets from the traditional Arabic script into odd varieties of Cyrillic.
Small wonder, then, that the first 15 years of independence involved a steep learning curve for all the Central Asian republics, especially as the Slavic technocrat and urban elites headed back west. All states suffered and overcame crises ranging from hyperinflation to coups to Tajikistan’s 1992-97 civil war. Poverty remains widespread. But there has been no post-colonial collapse. Outsiders may laugh at Turkmenbashi’s fantasy marble palaces and gilded statues in central Ashgabat, and the $50 million Turkmen theme park outside town, but the patient Turkmen people, remembering the void and scorn before, can view them with a certain pride. In Uzbekistan, the regime has a mania for control, and its policies can amount to enforced rural poverty and murder of political opponents. But to an outsider its cities still look livelier and more prosperous than in Soviet times. Kyrgyzstan, with no wealth but its mountains and dams, developed a more happy-go-lucky attitude, and its people have become Central Asia’s pioneers in fighting for more democratic government. The best-run state, however, is the vast territory of Kazakhstan, whose strong banking system has helped propel its credit rating past Russia’s. While no democracy, Kazakh stability and prosperity are fostering some institutions and another essential ingredient for future democratic development: Central Asia’s first real middle class.
All in all, a remarkable number of goals set in the early 1990s have been quietly achieved. The region is now out of the exclusive control of Russia. Kazakhstan handed over its nuclear weapons. Governments in the region are relatively stable and secular. Islamist extremism remains a minor threat. Oil production from the region is well on its way to adding a few percentage points to world supply. U.S.-based oil majors Chevron and ExxonMobil are still by far the two biggest players in Central Asian oil, with more than $32 billion invested. Ten other Western oil companies have invested the same combined amount. A new westward energy corridor that avoids both Russia and the Middle East has opened. A vast, independent region now acts as a strategic buffer between Russia, China and the Middle East. Iran has remained a minor influence, although that is perhaps less because of U.S. anti-Iran policies than because of the way Iran’s economic weakness and bureaucratic foibles make it a paper tiger anyway.
There are plenty of reasons that the West should work harder, however. Right now, Russia and China are busily gaining ground, new oil and gas developments are pointing east rather than west, and in 2005 the United States lost one of its two air bases used in support of its troops in Afghanistan. Since June 2001, a regional security grouping, the Shanghai Cooperation Organization, has deliberately excluded the United States and privileges Russia and China. Turkmenistan’s existing gas exports are mainly to Russia’s Gazprom, but the change in leadership is an opportunity for the West to try for new fields; the likely new president is a Turkmen nationalist and can be wooed. Europe, in particular, can no longer count on this kind of work being done by the United States. In Kazakhstan, the regime is prickly because of a U.S. court action accusing the president of taking bribes. Central Asian states in general are convinced that the U.S. “freedom agenda” aims at regime change along the lines of popular revolutions-cum-coups since 2003 in Georgia, Ukraine and Central Asia’s own Kyrgyzstan.
As German Foreign Minister Frank-Walter Steinmeier said after touring the region in December, Central Asia has an “urgent desire” for an EU role. After all, Central Asians know that it is not their own strength, but the balance of superpowers around them that has given them what independence they have so far enjoyed since the collapse of the Soviet Union.
Throughout the region, this independence has allowed new national cultures to put down roots. Apart from the Persian-speaking Tajiks, these cultures are mainly Turkic. As they look forward, policymakers should consider parallels with the development of Central Asians’ ethnic cousins in Turkey. Since 1923, the Turkish model has moved from one-party state to clumsy democracy to broader freedoms. Along the way, prosperity, stability and interaction with the outside world have been the most important inputs, not high-minded and under-informed sermons from afar.
Indeed, the draft ideas for a new set of EU priorities in Central Asia are well-advised in focusing on the lifting of poverty as a key first step. In December, Germany’s Steinmeier himself noted that in the case of Russia, “we will not be able to influence things our way through criticism alone.” Why should Central Asia be any different?

Hugh Pope, a journalist based in Istanbul, is the author of “Sons of the Conquerors: The Rise of the Turkic World.” This comment was published in The Wall Street Journal.

TITLE: Plotting a Way Forward on Land Tax
AUTHOR: By Ruslan Vasutin and Yekaterina Kosheleva
TEXT: In anticipation of a wave of land privatization with buyout costs in excess of 4 billion euros ($5 billion) in Moscow and St. Petersburg, the government has introduced a new tax regime for the purchase of state land.  Just before the winter break, the State Duma enacted a law setting more beneficial rules for tax deductibility of eligible land purchase costs. The new tax regime has also been made applicable to so-called “rights to conclude a land lease agreement.” 
Specifically, for the first time ever in Russia, the new Federal law N 268-FZ permits the taxpayer to amortize the cost of privatized land plots bought from state authorities. Tax amortization of purchase costs can be achieved in relation to the land plots belonging to the state/municipal authorities on the condition that the purchaser owns a building on that site or buys the land for capital construction purposes.  The deduction of purchase costs is available in a form of either even installments in a period defined by the taxpayer himself but not less than 5 years or, alternatively, in an amount not exceeding 30 percent of the profits tax base of the previous year for as long as it takes to deduct the cost in full.
This solution proposed by the Russian government is innovative.  Russia has demonstrated that it will continue to stimulate the business activity of investors looking to invest in greenfield projects.  This also has signaled the intent of the government to consider increasing the cadastral value (the cadastral value is the basis of the land buyout price), which by law is allowed once every three years, based on reconsideration of the cadastre value of land plots. Currently, the buyout price of state land plots varies in broad terms from $38,000 to $510,000 per hectare for industrial sites located in St. Petersburg and in Leningrad Oblast (e.g. Vsevolozsk districts) - $ 14,000 - $55,000.  By passing the new law, the government is suggesting that it will share the burden of the buyout price increase with investors by permitting them to recoup 24 percent of the cost against tax.  True, it is better than nothing.
A loss resulting from disposal of qualified land plots has also been made deductible. Rules regulating how the loss shall be computed are rather poorly worded in the law and require clarification.
The law has no effect on purchase transactions on the secondary land market.  Such acquisition costs on the acquisition of non-qualified land plots are not amortizable.
Expenses incurred in obtaining the right to conclude the land lease agreement shall be recognized for tax purposes in the same way as the buyout cost. They are permitted for amortization if the respective land lease agreement is concluded.  In the past, Russian investors were looking to capitalize these rights as part of the historical cost of a building, not the land.  After that they could tax depreciate it but the depreciation could be only applied in accordance with general rules during the 30-year useful life term of the building.  The new law provides much better treatment as it allows much faster payback of the cost to acquire lease rights. Importantly, the amortization of such costs will no longer depend on the commissioning of the building.  Filing for registration of the concluded lease agreement will be enough to start claiming the tax deduction under the new rules.
The drawback of the law is that it has no retroactive effect and applies only to the qualified buyout agreements concluded during the period from January 1, 2007 through December 31, 2011.  However, the key question is if it can be applied already in 2007 because the State Duma failed to pass it before 1 December 2006, one month before the commencement of the new profits tax year as required by Article 5 of the Tax Code for all profits tax laws.  Obviously, as was the case for tax incentives in 2001, the tax authorities may seek to challenge the deduction claimed in 2007 and expect a taxpayer to wait until 2008 and then file an amended tax return for 2007 taking the tax deduction retrospectively.  It should be noted that under the recently amended Part 1 of the Tax Code, the filing of an adjusted tax return that results in reduction of a tax liability to the budget can be a legitimate reason for the authorities to make a repeat filed tax audit for the already closed period.  
Nevertheless, the positive changes in tax legislation brought by the law are obvious.  The law creates a good environment for investors to activate their decision-making processes to buy lands belonging to the state or municipal authorities.  This requires careful planning.  Timing for the buyout is also highly important in the light of the plans of the Ministry of Economic Development to lobby a legislative bill (now submitted for the second reading in the Duma) permitting state authorities to establish an increase in the buyout price of up to seven times, which will make the purchase of land for some investors (who are not related to the privatized companies) more than simply an expensive exercise.  The permission to recoup 24 percent against the tax for investors having to expend multi-million dollar amounts to buy the state land will be of little value to them in these circumstances.
Investors willing to buy land plots from the state will also have to tackle a practical requirement of state officials supported by many court precedents, that supporting documents of the investor must show that the leased land territory will be fully utilized by capital constructions, for example, warehouse facilities, built to operate the main real estate object located on the site. Without such evidence as the master plan or approved design documentation, investors will be at risk that buying out a part of the leased land plot may not be allowed, or at least the process may be significantly delayed. A recent October 2006 court case in St. Federal North-West Court supports such practice.  

Ruslan Vasutin is a  partner and Yekaterina Kosheleva an Associate at DLA Piper in St. Petersburg.

TITLE: European Constitution Rises From the Grave
AUTHOR: By Gareth Harding
TEXT: In all the best horror movies the baddie has an uncanny ability to survive certain death — again and again. The same could be said of the European Constitution, which received a mortal blow when French and Dutch voters rejected it in 2005 and was placed in cold storage by the British, Austrian and Finnish presidencies. It was read the last rites by a clutch of European leaders, including British Prime Minister Tony Blair and European Commission President Jose Manuel Barroso.
But now, thanks to German Chancellor Angela Merkel, whose country took over the rotating six-month European Union presidency this month, the constitution is slowly crawling out of its grave and threatening to haunt Europe’s chancelleries again.
In her speech to the European Parliament last week, Merkel promised to lay out a “roadmap” for adopting the constitution by June and warned that if the re-jigged text was not agreed on by 2009 it would represent a “historical failure” for the EU.
The EU is famous for setting itself ambitious deadlines and then choosing to ignore them. In the mid-1980s, leaders agreed to establish a single market in goods, persons, services and capital by 1992. Fifteen years after that deadline, this objective is still a distant dream. Likewise, in 2000, the EU set itself the lofty goal of becoming the most competitive economy in the world within a decade. It has quietly dropped the idea.
In her speech, Merkel compared the EU to a “wonderful house” that is “even more beautiful from the inside than from the outside.” Few would recognize this description in Brussels, where most of the EU’s key decisions are made. If today’s EU represents a building at all, it is closer to the back-end of a Belgian townhouse — all unfinished extensions and higgledy-piggledy add-ons — than to the architectural gem conjured up by Frau Merkel.
No one doubts that the EU’s rulebook, which was first drafted half a century ago for six members, needs to be updated for a club that now boasts 27 states with almost 500 million people. But the changes mooted by EU leaders in 2004, such as trimming the size of the European Commission, curbing national vetoes over decision-making, creating the posts of president and foreign minister and merging all previous treaties into one, have been rejected by voters in two of the EU’s six founding states. The text needs to be approved by all its members.
So what to do? There are essentially two schools of thought. The 18 nations that have ratified the treaty and are due to meet Friday in Madrid to seek a way out of the impasse would like to see the constitution agreed on in its present form as soon as possible. The blueprint’s backers, however, are less clear about how they intend to overcome French and Dutch objections as well as others that may follow.
The original plan had been to wait for the Dutch and French to elect new leaders and then put the text to voters again in the hope that the second time around they would answer the same question the “right” way. This approach worked in Denmark and Ireland after previous treaties were voted down, but the EU’s democratic credentials took a crippling blow in the process. Europe’s leaders are unlikely to do the same again, especially as polls show that even more French and Dutch voters would rebuff the constitution now than two years ago.
Segolene Royal, the French Socialist candidate for president, has pledged to put a new treaty to a referendum if elected in May. This is commendably democratic, if you believe that people rather than elected politicians are better at making complex choices. But Royal’s treaty is not the same one Blair has in mind, let alone her rival, Nicolas Sarkozy. Renegotiating the text, the fruit of four years of painful compromises, would lead to the mother of all battles between France, which views the constitution as an Anglo-Saxon free-market manifesto, and Britain, which would like to see a more economically liberal blueprint.
The second option is to draft a “mini-treaty” that scraps all mention of the word “constitution,” deletes the preamble’s motherhood-and-apple-pie statement of values and opts for institutional tinkering rather than political grandstanding. The beauty of such a “constitution-lite,” favored by Sarkozy and Britain’s eternal prime-minister-in-waiting Gordon Brown, is that it wouldn’t require any referendums. Deciding which parts of the 200-page charter should stay and which should go, however, would lead to an equally acrimonious bust-up.
There is another, slightly less conventional, alternative that would avoid exacerbating tensions among EU leaders, years of navel-gazing and accusations that the European Union does not listen to its people: Make do with the present treaty. The current rulebook, agreed to at Nice in 2000, is a pretty rotten document, but it has not led to the paralysis many predicted when it was adopted. Since the treaty was passed, the euro has been successfully introduced, 12 new countries have joined, membership talks with Turkey have begun, the next seven-year budget has been agreed on and EU troops, police and customs officials have been dispatched to Lebanon, Bosnia, Indonesia, Congo, Macedonia, Transdnestr, the Gaza Strip and Macedonia. If this is paralysis, long may it last.
Some urgent institutional changes, such as creating the post of foreign minister and opening up meetings of EU ministers to the public, could be made without any treaty changes. Others could be tacked on to the accession treaties of future states joining the EU, such as Croatia.
Granted, this solution isn’t grand. “We have to find Europe’s soul,” Merkel said in her speech. But here’s a thought: Maybe EU leaders can devote as much time to boosting growth and finding jobs for the bloc’s 17 million unemployed as they do to finding its “inner self” and answers to interminable institutional woes.

Gareth Harding is editor of thiseurope.com. This comment was published in The Wall Street Journal.

TITLE: Reflections on Latvia Then and Now
AUTHOR: By Alexei Pankin
TEXT: Your husband hasn’t been issued a visa,” the travel agent told my wife, who along with our daughter had received a visa for the New Year’s holiday we had planned in Latvia.
The agent then dictated the following statement for me to submit to get my piece of paper: “To the Consular Department of the Embassy of the Latvian Republic in Moscow, Russian Federation. I, Alexei Borisovich Pankin, will be vacationing in Jurmala with my wife and daughter Jan. 4-8, during the Russian official holidays. I promise not to engage in any activity connected with my profession during that period.” I then had to sign and date the document.
Although my wife is also a journalist, for some reason the consulate did not demand a similar statement from her. The only explanation the travel agent could up with was that the Latvians believe a mother’s place is to mind the children, so vacationing mothers pose no threat.
I don’t know which upset me more, the discrimination I faced as a result of my profession or that faced by my wife. It really made me wonder about the mores of the European Union.
During the communist era, the Baltic republics — and Latvia in particular — were islands of Western civilization for Soviet people. Mikhail Gorbachev’s program of glasnost took root there faster than in Moscow.
I can still remember the elation with which our democratically evolving press reacted to the appearance of the first personal-ads section in a Riga newspaper. It was like a fresh wind of freedom blowing over us from the Baltic coast.
The Moscow intelligentsia used to read and reread the wonderful articles in Rodnik magazine, which was published in Latvia in both Latvian and Russian, while Moscow journalists could only envy the freedom enjoyed by the magazine’s journalists. Articles were regularly published in Latvia written by Muscovites whom even the most courageous editors in the capital would not publish.
Working as a journalist and as an editor, I wrote and printed articles supporting the legal right of the Baltic republics to secede from the Soviet Union. I did hope, however, that having gained the freedom to choose, they would opt to remain as the proud western rim of the Soviet Union, rather than become a confused eastern province within Western Europe. I even went to rallies in favor of their freedom of choice.
And now look what we have ended up with: “I promise not to engage in any activity connected with my profession!”
Despite my anger and misgivings, I provided the required signed statement for the consulate, not wanting to cancel our long-planned family vacation. My feelings toward Latvia, however, were not particularly positive that day.
But I did end up enjoying Riga, and particularly its cosmopolitan feel. People there speak Latvian and Russian on about an equal basis and, regardless of their ethnic origins, appear to switch back and forth between the languages without prejudice. They don’t only do this when speaking to tourists but between themselves as well.
Just as it was in the Soviet era, Russian-speaking Latvians — even those without citizenship — enjoy privileges still denied to citizens of Russia. As of this January, Latvian residents no longer need visas to travel within the European Union. Meanwhile, Russian citizens will have to continue to trudge through consulate lines.
I admit that by writing this column I have broken the solemn promise I made to the Latvian government. Although I wrote this piece in Moscow, I formed and ruminated over these impressions while still in Latvia. Even worse, I had a conversation with a taxi driver there, which is pretty standard behavior for journalists traveling in foreign cities. And I’m not going to repent for this sin, even if it means being declared a persona non grata.

Alexei Pankin is the editor of Mediaprofi, a monthly magazine for regional media professionals.

TITLE: A (Somewhat) More Democrat 2008 Scenario
AUTHOR: By Yevgeny Kiselyov
TEXT: Russia has entered the latest dramatic period in its history, with two major elections scheduled over the next year and a half. The election for the State Duma is slated for this December and the presidential vote for March 2008, which will choose the successor to President Vladimir Putin, whose second term expires next year.
So far, most political analysts have predicted that Putin would simply name his successor, and the election would confirm his choice. That idea might come as a bit of a shock to many Western readers. After all, Russia is not a monarchy or some ancient tyrannical regime in which the ruler can simply transfer authority to someone else not according to established laws or even traditions, but solely at the discretion of the current ruler. In a true democracy, of course, the election step remains an important one.
The expectation here has been that people expect that one fine day Putin will simply appear on television and publicly announce whom he is endorsing and calling on the voters to support. This understanding sees the transfer of power following the 1999 scenario, in which President Boris Yeltsin proclaimed Putin as his successor.
But the current situation is different. In contrast to Yeltsin, Putin continues to be extremely popular, almost inexplicably so. Not even the administration’s unpopular pension and health care reforms, or its equally unpopular public utilities policies, seem to have put a dent in his approval ratings.
Some pollsters suggest that Putin’s official endorsement is worth about a 20 percent head start for a presidential candidate. Two possible candidates, First Deputy Prime Minister Dmitry Medvedev and Defense Minister Sergei Ivanov, have enjoyed most of the spotlight so far. Both are well known to voters and enjoy some level of popularity.
Another possibility that has been suggested by political analysts is that Putin may step down early, thus allowing the presidential and Duma elections to be held on the same day in December. This would allow the new president to ride into the Kremlin on the shoulders of the United Russia party, the prohibitive favorite to win a majority in the Duma.
In the meantime, nerves are becoming frayed and anxiety is growing in political circles as everyone wonders whom Putin will actually choose. With whom should they try to establish ties? Before whom should they bow and offer their oath of fidelity? How to avoid fawning over the wrong person? Placing your bet on the wrong player could prove a costly mistake for any major bureaucrat, politician or businessman.
The situation has been compared to that of a patient dying a slow death, as the uncertainty pervading the state political machinery has left it spinning its wheels. The political elite already appears to have been split by struggles between contending clans.
What is telling is that there is even agreement on this point between analysts loyal to the current leadership and those favoring opposition candidates.
One version of events so far is that the siloviki, led by powerful Kremlin deputy chief of staff Igor Sechin, have formally blocked Medvedev’s candidacy for the post of prime minister, and the steppingstone it could represent to the president’s office. That leaves the Kremlin liberals — a relative term in this case — with only one candidate: Ivanov. Paradoxically, Ivanov does not belong to a hawkish political clan.
Reading the tea leaves, one of the honored traditions of Kremlinology, the fact that Medvedev is heading the Russian delegation to the World Economic Forum in Davos, Switzerland this year would seem to be designed to provide him with positive coverage.
I recently conducted a telephone survey on my program “Vlast,” carried on RTVi cable television and Ekho Moskvy radio, which generated some interesting results. Seventy seven percent of all respondents said they did not believe that Putin would endorse a single candidate to succeed him. Following these same lines, political analyst and former Kremlin insider Georgy Satarov has made a convincing argument that Putin will most likely offer a selection of favored candidates from within the upper echelons of government.
It is true that Putin has always been steadfastly loyal to the members of his team. All of those who followed Putin to the Kremlin from St. Petersburg — fellow St. Petersburg State University law faculty graduates, colleagues from the local branch of the KGB and members of the city administration under the late Mayor Anatoly Sobchak — have remained at their posts throughout Putin’s tenure. Putin apparently depends a great deal on his team, judging from how it has remained relatively untouched over the last eight years, with only a minimum of horizontal shifts. It would be difficult for him to single out one candidate from among them.
If, instead, Putin chose to nominate a handful of candidates and leave it to the voters to pick from among them, the list might include the following options: Medvedev; Ivanov; State Duma Speaker Boris Gryzlov, who is also the siloviki’s strongest candidate; Russian Railways chief Vladimir Yakunin; and a regional leader, such as St. Petersburg Governor Valentina Matviyenko, who has already formed a political action group called Valentina the Great. The main condition for inclusion in this select group is, of course, absolute loyalty to their predecessor and patron: Putin.
In this way Putin would be freed from the difficult and unpleasant task of naming a single candidate, while victory would be practically guaranteed for one person on the list. Such a victory would likely only come after a second-round runoff, with the victor possibly winning by only a slim margin. This would leave the winner, at least initially, in a weak and politically vulnerable position, which would require something like a system of checks and balances in order to work in government with his or her former rivals.
It’s not hard to imagine Putin announcing at some future news conference that there are a number of people worthy of assuming the heavy burden of presidential authority, providing his own list, and saying he would support any one of them. He could then add that it would not be proper or democratic to endorse any one candidate. He might even go further and say Russia needs to take the next step toward democracy by conducting an election in which the winner would be determined through direct competition, with all of the leading candidates enjoying equal opportunities and access to the media. This, by the way, would significantly boost the winner’s legitimacy. The winner would then have to do for Putin what Putin did for Yeltsin: guarantee the ex-president’s safety and property.
But would Putin’s team be ready for such a scenario? More importantly, what kind of status is Putin seeking for himself after leaving office? Only when he answers that question will we have a better idea of the scenario that will play out for the transfer of presidential authority in 2008.

Yevgeny Kiselyov is a political analyst.

TITLE: His Tsar’s Secret Service
AUTHOR: By Saul Austerlitz
TEXT: To whom does James Fleming owe his literary allegiance? Bloodlines link Fleming to a noted writer: Ian Fleming, creator of that deathless adventurer on the high seas of governmental espionage, James Bond. On the basis of his latest novel, though, Fleming appears to share less with his Uncle Ian than with another notable: Vladimir Nabokov. Like Nabokov (in “Speak, Memory” and other works), Fleming concerns himself with Russia just before the Bolshevik Revolution, and with the cataclysm that cast the old way of life forever into the abyss. Echoing Nabokov’s interests, he also focuses on the natural world, with a protagonist who tracks down new species of insects and butterflies like a hunter stalks big game.
In that regard, perhaps, one can see the influence of Ian on James, for Charlie Doig, the Anglo-Russian warrior-scientist who narrates “White Blood,” owes a debt to old 007 himself. Doig may not be that interested in matters of national security, but in his indomitable self-assurance and his territorial possessiveness toward his women, he is a Bond before the fact, roaming the estates and snow-dappled streets of pre-Soviet Russia with a cocky swagger. 
Born in Moscow to a British father and a Russian mother in the waning years of the 19th century, Doig trains as a naturalist in Britain and earns his stripes on grueling journeys through remote Burma and Turkestan. While in Burma, he traps and kills a rare beetle, which is named the Chrysochroa birmanensis var. doigii in his honor. Fame and adulation follow, and Doig becomes a world-renowned naturalist — at least by his telling.
Doig cleverly worms his way into Elizaveta’s affections, displacing Potocki with hardly a ripple. For him, Elizaveta is the prime jewel in his collection of objects, a beautiful animal that, like a horse, must be tended to in order to receive maximum return on his investment. As Doig muses, “a woman and a horse are equal in the estimation of man and to witness either on their honeymoon with him is to truly understand the romance of history.” Possession of Elizaveta is both self-justification and apotheosis, a status symbol reflective of Doig’s newfound prominence and a public acknowledgement of his superiority: “I was dripping with happiness. We would conquer the world! We would live to a combined age of 180 years and die simultaneously, a multitude of bold deeds behind us, in the presence of an untold number of spawn and underspawn.”
Doig and Elizaveta’s paradise of sensual and emotional bliss is short-lived, however, buffeted by the onslaught of Bolshevik violence. The couple’s confrontation with the ascendant masses comes in the form of Glebov, a wily soldier who may or may not be a Bolshevik agitator. Doig’s cousin Nicholas, a symbol of the old guard’s privilege and grace, deftly grapples with Glebov in a battle of wits, but ultimately the young firebrand is interested in grappling of a more physical brand. 
Doig is eventually reduced to brute force (a reduction he hardly seems to mind) to protect his family from Glebov and from the disorder and mania that the latter brings. 
Between the strange figure of Doig and Fleming’s conflicted attitude toward the period he represents, “White Blood” is a difficult book to pin down. If it is intended as a historical novel with a straightforward swashbuckling hero, Doig’s grosser instincts sully his heroic qualities. 
And if Fleming means it to be read as a character study of the White tsarist mentality in the era of the Revolution, he fails to make his message clear. The novel falls into the gap between the historical and the psychological narrative, emerging as an energetic but imperfectly formed work. 
Fleming is at his best when dramatizing Doig’s realization that the world he has always known — that seemingly impermeable reality of tsar, nobles and peasants — is gone and never to return. Past and future Russias face off in Doig’s pas de deux with the scheming Glebov, as the hero who so prided himself on his brutal manliness is reduced by his bloodthirsty opponent to little more than a vengeful, violent schoolboy. 
Yet it is Doig’s cousin Nicholas who provides the most fitting epitaph for the White plight. “I’ve bred the best cattle in the province, satisfied several women deeply, and made a home for my chickens,” he tells Glebov. “As a young man I trained some first-class dogs. I’ve given amusement to many. And since people remember a good joke or a happy event for months, sometimes for years, I think that should count double. My tailor is most grateful to me. I’ve never killed anyone, or had a man beaten. So mark me, Glebov. What would I score in your regime?” Glebov’s response, succinct in its scientific detachment, is indication enough of the horrors to come: “You are a superfluous man in any progressive society.” 

Saul Austerlitz is the author of the forthcoming “Money for Nothing: A History of the Music Video from the Beatles to the White Stripes.”

TITLE: Literary Salon
AUTHOR: By Victor Sonkin
TEXT: Given the news of Ilya Kormiltsev’s illness, the timing of the announcement about Ultra Kultura seems especially malicious.

Last Monday, two messages appeared simultaneously on the web site of the Ultra Kultura publishing house. “Sad News 1: Our editor in chief, Ilya Kormiltsev, is in a London hospital, and his condition is very grave.” “Sad News 2: The Moscow office of Ultra Kultura is closing down on Feb. 1.”
Ultra Kultura is relatively small, but it is active enough to attract attention from the powers that be. As its name suggests, its publications are mainly devoted to various subcultural and countercultural themes; it also dabbles in opposition politics, publishing the works of people like Eduard Limonov, founder of the National Bolshevik Party. Last year, a State Duma deputy accused Ultra Kultura of distributing pornography, and Moscow prosecutors opened an investigation at his request; in the Sverdlovsk region, a couple of books on clubbing came under scrutiny for allegedly containing pro-drug propaganda, and their print runs were impounded.
The staff of Ultra Kultura told reporters that its owner, businessman Alexei Biserov, had gotten tired of such problems. Biserov himself said to Kommersant: “The publishing house stopped presenting subculture for readers and started creating subculture instead. Political opposition is of no use these days; what we need is intellectual opposition.”
Some time ago, Gazeta asked Kormiltsev himself what he thought about the possibility of Ultra Kultura closing down. “No comment,” he said. “The climate these days doesn’t seem very promising. The country is in a prolonged spiritual crisis, with all the usual consequences.”
Given Kormiltsev’s illness, the timing of the closure seems especially malicious. Media outlets reported that he had been diagnosed with spine cancer and that his condition prevented him from returning to Moscow. A fund has been set up to collect money for his treatment; details are available at Ultraculture.ru.
Kormiltsev has several claims to fame outside of Ultra Kultura. He is well-known in rock circles, having written some of the most famous lyrics for the cult band Nautilus Pompilius. He was also a prolific translator (translating, among other things, the novels of Bret Easton Ellis) and a cultural and political guru with strong ties to various fringe figures.
Now, I never found Ultra Kultura’s output that interesting; sometimes they published books out of sheer anti-establishment sentiment, even if they weren’t very relevant for today’s Russia. But criticizing books is one thing; suppressing them is another. And this sudden show of force when the editor is abroad and seriously ill just doesn’t look pretty. Apparently, some people still reach for their pistols whenever they hear the word “culture.”

TITLE: Governor Touts City As Hi-Tech Center
AUTHOR: By Andrew McChesney
PUBLISHER: Staff Writer
TEXT: DAVOS, Switzerland — St. Petersburg Governor Valentina Matviyenko said her priority this year would be to attract high-tech companies in an attempt to make her city the country’s technology and automotive capital.
Matviyenko, speaking in an interview on the sidelines of the World Economic Forum on Friday, also said she had no desire to succeed President Vladimir Putin in elections next year.
“We have a new automotive cluster, and we think that the next cluster in St. Petersburg will be high technology,” Matviyenko said.
Matviyenko said the creation of a free economic zone and IT parks were aimed at winning over large foreign IT companies. Some are already coming, including Hewlett-Packard, which said just last week that it would open a research and development facility with dozens of staff.
High technology “will tap into the huge intellectual potential that the city has today,” Matviyenko said. “We have 300,000 scientists. We have a great number of scientific and economic schools.”
Ford, General Motors, Toyota and Nissan have built or are building car assembly plants in St. Petersburg, and other car giants are believed to be on the way. Matviyenko said she had focused on foreign carmakers first because they not only brought jobs and investment, but also management expertise that she said was rubbing off on local companies.
The country’s northern capital received nearly $3 billion in foreign investment last year and was looking forward to matching or exceeding that amount this year, Matviyenko said.
She dismissed the suggestion of a slowdown in investment ahead of State Duma elections in December and the presidential vote in early 2008. “We don’t have that problem in St. Petersburg because St. Petersburg has a stable political situation,” she said.
Russian media have suggested that Matviyenko might be a candidate for Putin’s blessing as his successor, and her appearance at the forum of world business and political leaders at Davos did little to dampen the speculation.
Asked whether she wanted to become president, Matviyenko said: “No I don’t want to.” She paused and then added with a throaty laugh: “And don’t plan to.”
She insisted that her task at hand was to develop St. Petersburg and its economy, and that was all she wanted to focus on at this time.

TITLE: ‘I Deserve To Be No. 1’ Insists Sharapova
PUBLISHER: Reuters
TEXT: A one-sided defeat to Serena Williams in the Australian Open final is neither here nor there to Maria Sharapova — the Russian still deserves to be world number one. 
“The rankings don’t lie,” the 19-year-old told Reuters ahead of this week’s Pan Pacific Open in Tokyo. “I had a great end to last year. 
“I’m excited to get to number one and hopefully I can keep it for many weeks to come.” 
She admitted to having some mixed feelings, however, about reaching the summit of the women’s game following a painful 6-1 6-2 thrashing by Williams in Melbourne at the weekend. 
“Obviously after every loss you’re disappointed,” Sharapova said. 
“As an athlete, it’s never fun losing. But at the end of the day, I reached the final of a grand slam in my first tournament of the year.” 
Sharapova won the tier one Pan Pacific Open in 2005 and quickly promised to make up for a surprise defeat by Martina Hingis in last year’s semi-finals. 
“Martina took me out last year,” smiled Sharapova, flanked by her Swiss rival. 
“Hopefully I can get some revenge this year in the final.” 
Hingis is seeded two behind Sharapova as she bids to win a record fifth title at the $1.3 million tournament having won in Tokyo in 1997, 1999, 2000 and 2002. 
“I’ve got to the final a few times here,” said former world number one Hingis, now ranked sixth after reaching the Australian Open quarter-finals. 
“Hopefully it will bring out the best in me again.” 
Russia’s Yelena Dementyeva, Serb Jelena Jankovic and Israel’s Shahar Peer, who pushed Williams to the limit in the Melbourne quarter-finals, are also among a quality Tokyo field.

FEDERER’S PERFECT 10
Speaking in Melbourne on Monday, Roger Federer said his standing in tennis’s pantheon of champions should not be judged on whether he ever wins a French Open crown.
“[Winning] the French [Open] might put me in another atmosphere in terms of being a legend, because nowadays people want you to win all four otherwise you’ve not quite done it,” a bleary-eyed world number one told an invited group of journalists after scooping his third Australian Open title. 
“But I don’t think that is quite right. (The French is) a totally different surface. It would be different if the last one missing for you is the Australian Open or the U.S. Open because those are on hard courts and you can think ‘oh that’s the one anybody can win.’
“But the French Open and Wimbledon seem specific surfaces (on which) to win and you have to really be an expert to win. I think we’ll never really know who is the greatest because of eras — it’s so hard.” 
Just when the world thought that they had already seen the Swiss master at his peak after an unforgettable 2006 season in which he reached all four grand slam finals and won 12 titles, he proved he still had plenty in reserve. 
He completed the most dominant men’s grand slam campaign in 27 years when he won his 10th grand slam title at Melbourne Park with victory over Fernando Gonzalez on Sunday. 
Not since Bjorn Borg’s run to the 1980 French Open title had a man won a grand slam title without dropping a set in the tournament. 
The Wimbledon, U.S and Australian Open champion realises that the pressure to hold all four majors at once — and emulate Don Budge and Rod Laver — will again build on him during the European summer season. 

REALLY SHOCKED 
But after chalking up grand slam title number 10 in just 3- years, Federer was in reflective mood. 
“Number one [Wimbledon 2003] will always stay the most memorable one for me, no doubt about that,” he said. 
“I don’t like comparing different grand slams, like is Australian Open more [important] than Wimbledon or U.S. Open or whatever? 
“It depends so much on how you feel at the moment itself, how was the match point played. There are so many components that play a role in a grand slam victory. 
“This time I’m really shocked, it’s my first tournament of the year and right away to come out and don’t lose a set. That’s what stands out the most. It hasn’t been done for such a long time that this is my most dominant grand slam victory. 
“It’s already my 10th in such a short period of time so obviously I’m amazed myself. Now it’s a question of keeping it up as it keeps on coming.” 
But for a man who has probably forgotten what it feels like to be a loser, winning one of the big four still gives him a buzz. 
“You go to your room and you can’t sleep because your head is still spinning,” said the 25-year-old who was out celebrating in Melbourne till dawn. 
“Went to bed late, around six. It was already light outside, I slept for one hour… so it’s been a bit of an awkward sleep. But I feel pretty good now. I could win a match,” he grinned.

TITLE: Gazprom Calms Gas Jitters
AUTHOR: By Matt Moore
PUBLISHER: The Associated Press
TEXT: DAVOS, Switzerland — Gazprom deputy head Alexander Medvedev sought to assure jittery Europeans on Friday that new deals for the sale of natural gas to Belarus and Ukraine would prevent any more disruptions to Western Europe.
But European Union Energy Commissioner Andris Piebalgs said the continent should steel itself for future disruptions regardless.
Medvedev was asked whether Europe should be concerned that supply disruptions over disputes with Ukraine at the beginning of 2006 and with Belarus earlier this year could continue.
“Now we have in both cases the … contractual base that eliminates interference of supply. We have increased the security of Russian gas to Europe,” he said. “In spite of the absence of support from international organizations, we have a result that is good for everybody.”
Medvedev said Gazprom had reached deals with Ukraine and Belarus that avoided “the blackmailing of Russia and Europe” over its voluminous energy supplies.
“It’s a substantial enforcement of security of supply in Europe,” he said, sitting alongside Piebalgs, the energy commissioner for the 27-member EU, whose members are among Gazprom’s biggest customers. Piebalgs nodded politely as Medvedev spoke. But he said that even though the EU and Russia share a mutual dependency with each other for oil and gas, “we need to do our homework and prepare for disruptions.”
Asked whether he had any regrets about the high-profile spats with Ukraine and Belarus that resulted in supply problems, Medvedev said there were none. 
“We have improved the conditions of supply to Europe, and increased the security of transit,” he said, adding that Gazprom was working on long-term deals with built-in guarantees.

TITLE: Zenit Mulls ‘Beer Pipe’ At Stadium
AUTHOR: By Carl Schreck
PUBLISHER: Staff Writer
TEXT: The idea came to St. Petersburg Deputy Governor Alexander Vakhmistrov after he had knocked back a few malted beverages.
Vakhmistrov, who heads up construction in the city, was on hand in Germany recently to watch a soccer game between two teams sponsored by state natural gas monopoly Gazprom: Zenit from St. Petersburg and the German club Schalke 04.
“At the end of the game, an amusing statistic appeared on the scoreboard: ‘61,700 people are in attendance, and 44,000 liters of beer have been drunk,’” Vakhmistrov told reporters last Wednesday.
Impressed, Vakhmistrov and Zenit president Sergei Fursenko concluded that the Russian club’s new stadium should be equipped with a “beer pipeline” like the one at Schalke’s Veltins Arena in Gelsenkirchen, which features a five-kilometer pipeline that supplies suds to dozens of restaurants, cafes and snack shops.
“Fursenko and I decided that they can do what they want with the field, the goals and the stands, but we’ve got to have such a beer pipeline,” he told the newspaper Delovoi Peterburg in an interview published Thursday.
Vakhmistrov said the pipeline at Zenit’s new $250 million stadium, which is being built on the site of the old Kirovsky stadium on Krestovsky Island, will pump beer to VIP boxes and cafes in the stadium from 1,000-liter kegs.
“They don’t bring trucks full of bottles, cans and other packaging into [Veltsins Arena] anymore,” Vakhmistrov said, Delovoi Peterburg reported. “I saw it myself and even drank this beer, as it was a weekend and I could take the liberty.”
But there could be a hitch in the plan. Russian law forbids the sale and consumption of beer at sporting events.
While Russia’s football fans do not have the reputation of England’s hard-drinking hooligans, they are not exactly regarded as angels. Pre-match boozing sessions are common, and thousands of football fans are arrested or placed in drunk tanks every season after fighting before, during and after games.
Zenit spokesman Alexei Petrov said the club would welcome beer sales at the stadium.
Pyotr Makarenko, commercial director for the Russian Football Union, said beer sales for European clubs with large stadiums can bring in up to 1 million euros per game, Vedomosti reported Thursday.
St. Petersburg brewers would likely be winners should the plans go ahead. Vakhmistrov said the supplier would be a local brewery.
“If there is a competition to supply beer to the stadium, we will certainly consider participating,” said Alexei Kedrin, a spokesman for St. Petersburg-based Baltika, Russia’s No. 1 brewer.
Kedrin said it was unlikely the system would be installed until the question of legal beer sales at stadiums had been cleared up.
“Otherwise they’ll have to fill it with kefir instead,” he said.

TITLE: Russia Talks up its Reputation at Davos Forum
AUTHOR: By Andrew McChesney
PUBLISHER: Staff Writer
TEXT: DAVOS, Switzerland — Ernst & Young CEO James Turley didn’t mince words when he took the microphone at the World Economic Forum.
“I think the question that is on everyone’s minds out here is: ‘Is Russia reliable?’” he told a packed hall of about 1,000 people who had showed up Saturday to get the lowdown on Russia.
The answer provided by Turley and a parade of other business executives and Russian politicians was a resounding yes. Audience members at the gathering of the world’s most influential business leaders and politicians in the Swiss mountain resort seemed impressed.
“At the end of the day, the investors that are [in Russia] squarely feel that the country is very, very reliable,” Turley said at a plenary session titled “Modern Russia: Strengths, Challenges and New Prospects — A Perspective From the Government and Business.”
“I think the progress that has been made by Russia is absolutely magnificent,” Coca-Cola chief E. Neville Isdell said. “People don’t understand how fundamentally changed Russia is.
“However,” he added, “I think that if there has been one failure in terms of Russian business, in terms of Russian government, it is they have not always been able to put on the right face to the world, and therefore they have been looked at through negative eyes.”
 He said foreign companies working in Russia “need to help Russia project itself in a different way.”
Even Forbes chief Steve Forbes, who faced the darker side of Russian business when the editor of Forbes magazine’s Russian edition, U.S. citizen Paul Klebnikov, was gunned down by unknown assailants on a Moscow street in July 2004, had warm words of support.
“Russia’s future is great because it does have a tradition in math, in sciences, engineering,” he said. “And if those intellectual resources are free and allowed to flourish, Russia will become a mighty economy in the global economy — and that was the vision of our original editor Paul Klebnikov. He saw these forces rising up.”
“We are not trying to push anyone to love Russia,” said First Deputy Prime Minister Dmitry Medvedev, reading from prepared remarks in English, “but we shall not allow anyone to hurt Russia.” Medvedev, wearing a navy suit and dark purple tie, said Russia was striving to win international respect for itself and its people, “not by force, but by our behavior and achievements.”
The foreign investors who participated in the session acknowledged that behavior was an area Russia needed to work on, particularly when it came to corruption and red tape. But they stressed that the rewards far outweighed the risks.
Medvedev, widely seen as a potential candidate to succeed President Vladimir Putin, led a high-level delegation to Davos this year, in a sharp departure from recent years when the government all but ignored the event. He made his international debut at the five-day forum, which ended Sunday.
In his remarks, Medvedev said Russia would grow by diversifying its economy, improving its infrastructure and developing a highly skilled workforce. He said economic output this year would surpass for the first time the highest level set by the Soviet Union. 
“Some say Russia is starting to resemble the Soviet Union. Maybe so,” he said. “Maybe in part this is the case, but only in one area: This year we will reach the maximum level of GDP reached in the Soviet era.”
He also said Russia should pass Saudi Arabia to become the world’s largest oil producer in the near future, adding that Russia currently ranks No. 1 in gas production and No. 4 in electricity.
At a later news conference, Medvedev said the government would submit a bill to the State Duma in the “coming months” that sets limits on foreign ownership in strategic industries such as oil, gas, metals and defense. The lack of clarity on this issue has spooked investors, who have been put off by the prospect of investing in a project and then learning that it is off-limits to foreigners.
The bill will be “clear, fully balanced and answer all questions that arise in daily practice,” Medvedev said. “The worst thing in business is opacity and unpredictability.”
Economic Development and Trade Minister German Gref, however, offered assurances at the plenary session that the state would not get too involved in the economy. “There is no real danger of excessive state control of the economy in the future, because if it is in state hands, it will be inefficient, ineffective and we would find ourselves having to sell it,” he said. Forum participants listened attentively to the presentations Saturday. Medvedev’s informal, chatty style and the strong words of support from the foreign executives appeared to win many of them over.
Joseph Nye, a professor of international relations at Harvard University, tried to warn participants at a separate session that Russia would not remain a world power by 2020 if it failed to diversify its economy, to stop using its energy resources to “bully” other countries, to respect the rule of law, and to tackle its demographic crisis.
“Most participants seemed to ignore these criticisms,” Nye wrote in a comment posted on HuffingtonPost.com. “But it was interesting to hear one important participant admit that reform might progress faster if oil prices dropped, and another accept the point that friendly criticism should be welcomed as long as it is a two-way street.
“The fact that [Russian officials] have reappeared in Davos to defend themselves may be a small but healthy sign,” Nye said.

TITLE: Blini and Bodyguards On Party Circuit, But No Bill Gates
AUTHOR: By Andrew McChesney
PUBLISHER: Staff Writer
TEXT: DAVOS, Switzerland — Some 300 people crowded into a hotel restaurant on Friday for borshch and the chance to hear Ukrainian Prime Minister Viktor Yanukovych make his case for his country’s membership in the European Union.
But EU Enlargement Commissioner Olli Rehn and Latvian President Vaira Vike-Freiberga offered only lukewarm responses during a round of speeches that lasted for about two hours. The number of guests had dwindled to about 100 by the time the final speaker, former Polish President Aleksander Kwasniewski, stood up and waiters began serving cherry dumplings for dessert.
“I’m not sure why some challenge the sincerity of our European aims,” Yanukovych told the luncheon, titled “Where is Ukraine Heading?” and hosted by powerful Ukrainian businessman Viktor Pinchuk on the sidelines of the World Economic Forum.
The pro-Russian prime minister extolled Ukraine’s democracy and economy, and said he had no desire to displace the pro-Western president, Viktor Yushchenko. He and Yushchenko work under an uneasy power-sharing agreement.
As for Ukraine’s chances of joining the EU, Rehn offered an unenthusiastic “never say never.”
Vike-Freiberga made no secret about her critical feelings toward Russia and Yanukovych, launching into a lively speech about the Soviet “occupation” of both Latvia and Ukraine. She said her country, now an EU member, had found its identity and urged Ukraine to do the same.
“Make up your mind. Make a commitment. Do it. We’re with you. The Ukrainian people deserve much better than what they have,” she said to laughter and applause from the guests, who included financier George Soros, French socialist Dominique Strauss-Kahn and billionaires Viktor Vekselberg, Alexei Mordashov and Rinat Akhmetov.
N 
If the entry barriers to Russia were as low as they were to the official Russian reception, the country would have no trouble attracting foreign investment.
The government threw a glitzy reception Thursday night that it billed as an exclusive opportunity to meet with top officials and business leaders. While Medvedev, Gref and Matviyenko did schmooze at the presumably invitation-only event at a Davos hotel, a few guests did not recognize them.
“I frankly thought this was the Microsoft party,” said one, the founder and CEO of a California-based organization that promotes literacy in Third World countries. His friend, a New York financial manager, bobbed his head in agreement. “We were looking for Bill Gates,” he said.
Across the crowded room, the chairman of a large firm based in Munich, Germany, sipped wine with his wife as they watched Russian wait staff gently pat black caviar onto small blinis and pour ice-cold vodka. Metals billionaires Alexei Mordashov and Oleg Deripaska entertained small groups of businessmen at opposite ends of the room, while glamorous soprano Anna Netrebko sang in the center.
“I don’t have any business in Russia,” the chairman from Germany acknowledged to a reporter. “We didn’t know that this was related to Russia. Do you know anyone here?”

n 
The World Economic Forum is supposed to be a place where business leaders and politicians can have unrivaled access to one another. But organizers ran into some trouble conveying that three-decade tradition to the Russian delegation.
“Russian officials don’t understand why they can’t have their usual group of staff following them around,” one Davos representative said.
She said organizers had repeatedly tried to explain that the forum was not a place for a retinue of associates, assistants, press secretaries and bodyguards, but the government officials still insisted on doing things their way. 
At least the entourage problem this year was not as bad as when then-Prime Minister Viktor Chernomyrdin visited Davos in the mid-1990s. “He flew in with a planeload of his entire supporting staff, including accountants and doctors,” the representative said with a laugh.

TITLE: Medvedev Steps Into the Spotlight
AUTHOR: By Clara Ferreira-Marques
PUBLISHER: Reuters
TEXT: DAVOS, Switzerland — Russia’s First Deputy Prime Minister Dmitry Medvedev brushed off talk of his presidential ambitions this week, smiling modestly for the cameras and saying he loves his current job.
But Medvedev’s speeches and appearances at the World Economic Forum, a gathering of the world’s most influential business leaders and politicians, could easily have been mistaken for those of a man being groomed to replace President Vladimir Putin when Russia goes to the polls next year.
Reserved at home, Medvedev appeared relaxed and chatty at the forum, leading a Russian charm offensive aimed at restoring a national image tarnished by spats with its neighbors and accusations that Moscow wields its huge resources as a diplomatic weapon of blunt nationalism. 
In his keynote speech in the Swiss mountain resort of Davos, he outlined a three-point plan for Russia’s development: diversify the economy, overhaul infrastructure and develop human capital.
He then concluded in fluent English.
“We realise the problems we are facing — excessive dependence on [natural resources], corruption, a declining population,” he said, adding Russia would woo the West not with force but with its achievements, while also protecting its own strategic assets.
Russia has come under fire abroad for using tax or environmental rules to target foreign companies investing in major oil projects, including Royal Dutch Shell  which was forced to cede part of its Sakhalin-2 project to state gas monopoly Gazprom, which Medvedev chairs, last year.
Medvedev laughed off suggestions that his joint role as a high-ranking Kremlin official and Gazprom chairman allowed the state to use the gas giant as a tool for asserting Russian might, saying he was just “a lucky man” to hold both jobs.
He later said legislation clarifying Russia’s position on foreign investment in strategic resources could come in months.
“We are trying to prepare legislation that will be clear, balanced and that answers practical issues,” he said. 
Along with Defense Minister Sergei Ivanov, an ex-KGB spy who shares the current president’s St. Petersburg past, Medvedev is frequently named as a possible successor to Putin, though many commentators say a candidate could yet emerge from relative obscurity — much as Putin did when he succeeded Boris Yeltsin.
Quizzed on the succession, Medvedev said a transparent process would be a test of the maturity of Russian democracy.
“As I see it, the difference between a democratic state and a non-democratic state is the path to power,” he said.
But he refused to be drawn on his own hopes.
“I like doing what I am doing now. I believe my job is interesting and rewarding, it’s really a personal challenge to me,” he said. 
“I am not going to think about abstract notions of what will happen in the future. This only distracts me from my main task.”

TITLE: Bono Calls For West To Honor Debt Pledge
PUBLISHER: Reuters
TEXT: DAVOS, Switzerland — Governments in rich countries that promised to help Africa fight poverty and disease should come good on their offers of cash, rock star and activist Bono said.
Bono is a regular on the world business and aid circuit, campaigning for richer countries to forgive African nations’ debt and help fund their future.
Meeting political and business leaders at the World Economic Forum in Davos, he said late on Friday it was time for rich countries to come good on promises they made to cancel the debt.
“There were some serious promises made. The cheques were signed but as you know, politicians like signing cheques but they don’t like cashing them,” Bono told reporters in Davos.
At a meeting in 2005, the G8 group of industrialised nations agreed to cancel the debts of 18 low-income countries and pledged to double African aid to about $47 billion by 2010.
“Two years on, it’s time to take the temperature,” Bono said. “If those promises are not kept … it will make a generation of cynics. I don’t believe that’s going to happen, I am optimistic we’re going to get through this.”
Bono said debt cancellation programs had already opened the way for 20 million African children to go to school but there was still “lots, lots, lots to do”.
He pointed to the situation in Liberia, where President Ellen Johnson-Sirleaf is working to attract aid and get relief for the country’s $3.7 billion debt, racked up during years of conflict fuelled by money from the sale of diamonds.
“She is trying quell civil unrest and she’s got this ridiculous debt hanging over her head because of two corrupt leaders before and that is just not right,” Bono said.
Liberia’s ratio debt to gross domestic product is among the highest in the world, equivalent to 30 times the country’s annual exports and eight times GDP — a crippling level for what was once one of West Africa’s more prosperous countries.

TITLE: In Brief
TEXT: <b>PCs to Replace TVs</b>
DAVOS, Switzerland (Reuters) — The Internet is set to revolutionize television within five years, due to an explosion of online video content and the merging of PCs and TV sets, Microsoft chairman Bill Gates said on Saturday.
“I’m stunned how people aren’t seeing that with TV, in five years from now, people will laugh at what we’ve had,” he told business leaders and politicians at the World Economic Forum.
The rise of high-speed Internet and the popularity of video sites like Google Inc.’s YouTube has already led to a worldwide decline in the number of hours spent by young people in front of a TV set.

<b>Trade Talks Back On</b>
DAVOS, Switzerland (Reuters) — Major powers agreed on Saturday to resume global free trade talks, suspended six months ago because of deep divisions, and British Prime Minister Tony Blair said a deal was now “more likely than not.”
Trade ministers from around 30 countries expressed optimism too but said big hurdles remain in the way of a deal to settle the long-troubled World Trade Organization (WTO) negotiations.
WTO chief Pascal Lamy said ministers concluded the moment was ripe to get back to “full-negotiating mode” after the United States, the European Union and other key members reported some progress in recent bilateral talks. 
“I believe we are back in business,” EU Trade Commissioner Peter Mandelson said on the fringes of the annual World Economic Forum in Davos, where the trade ministers wrapped up four days of talks with a broad meeting.

<b>Ad Market Improves</b>
DAVOS, Switzerland (Reuters) — Advertising’s most influential players predicted a strong market in 2007 at the World Economic Forum on Saturday, adding weight to already high levels of confidence at the meeting of business leaders.
News Corp chief executive Rupert Murdoch told Reuters he was “bullish” for the market’s prospects in 2007. News Corp’s assets range from “old media” outlets like Fox and the New York Post to the popular social network MySpace and its wired, young, online audience.

TITLE: Chaos Reigns as 200 Militants Die in Iraq Battle
AUTHOR: By Sinan Salaheddin
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq — Iraqi officials claimed Monday that at least 200 militants were killed in a fierce battle between U.S.-backed Iraqi troops and a religious cult allegedly plotting to kill pilgrims at a major Shiite Muslim religious festival, while bombings and mortar attacks targeting Shiites elsewhere killed at least 15 people. 
The Iraqi government spokesman, Ali al-Dabbagh, said the raid on Sunday was targeting a group called the Jund al-Samaa, or Soldiers of Heaven, and the group’s leader was among those killed, along with foreign fighters.
Al-Dabbagh and officials in Najaf said the group included Soldiers of Heaven followers, a religious cult seeking to bring back a Shiite saint known as the “hidden imam,” as well as terror suspects and foreign fighters plotting to assassinate senior Shiite clerics as well as pilgrims on one of the holiest Shiite ceremonies of Ashoura.
The last of the 12 Shiite imams, Mohammed al-Mahdi, disappeared and Shiites believe he is still alive and will one day return as a savior of mankind.
“Ideologically, this group tries to use a sacred Muslim symbol who is Imam Mahdi al-Muntadar (the so-called hidden imam) to lure more recruits but they are defaming the picture of Imam al-Muntadar,” al-Dabbagh said.
Al-Dabbagh identified the slain leader of the group as an Iraqi man Ali bin Ali bin Abi Taleb.
The fighting that began Sunday near the Shiite holy city of Najaf had largely subsided by Monday as Iraqi security forces frisked suspects while others patrolled the battlefield.
A U.S. helicopter crashed during the fight, killing two American soldiers whose bodies were recovered, the military said. The statement did not give any information on why the aircraft crashed — the second U.S. military helicopter to go down in eight days.
The Iraqi troops killed 200 terrorists, wounded 60 and captured 120 in the operation, defense ministry spokesman Mohammed al-Askari said, citing the most recent figures he had received.
Ahmed Deaibil, a spokesman for Najaf province, and Brigradier General Fadhil Barwari earlier had put the figure at 300 militants killed and as many as 20 captured, including fighters from Afghanistan, Saudi Arabia, Sudan and Lebanon.
Deaibil said the fighting had continued until 4 a.m. Monday, but U.S. and Iraqi forces still had the area surrounded and had seized heavy machine guns, ammunition and other weapons.
Attacks, meanwhile, struck Shiite targets in the Baghdad area as the Islamic sect marks Ashoura, the holiest day in the Shiite calendar commemorating the 7th century death of Imam Hussein. The celebration culminates Tuesday in huge public processions in Najaf, Karbala and other Shiite cities.
A prominent Shiite leader said that setting up federal regions in Iraq would solve the country’s problems, adding that while Shiites are being subjected to mass killings, they should not retaliate by using violence.
Abdul-Aziz al-Hakim, leader of the Shiite bloc in the 275-member parliament, spoke at a Shiite mosque in central Baghdad to mark Ashoura. “I reaffirm that the establishing of regions will help us in solving many problems that we are suffering from. Moreover, it represents the best solution for these problems,” he said.
Al-Hakim said his concern cut across sectarian lines.
“I sympathize with our Sunni brothers in their ordeal with the terrorists as I sympathize with the Shiites in their ordeal with the terrorists,” he said. “I condemn the killing of Sunnis as I condemn the killing of the Shiites.”
Mortar rounds rained down on a Shiite neighborhood in the Sunni-dominated town of Jurf al-Sakhar, 40 miles south of Baghdad, Monday morning, police spokesman Capt. Muthanna Khalid said. He said 10 were killed, including three children and four women, and five other people were wounded.
A wounded boy lay next to his blood-stained father at a hospital in the nearby town of Musayyib, while six bodies were covered with blankets in the morgue. 
The strike came a day after mortar shells hit the courtyard of a girls’ school in a mostly Sunni Arab neighborhood of Baghdad, killing five pupils and wounding 20. UN officials deplored Sunday’s attack, calling the apparent targeting of children “an unforgivable crime.” 
No group claimed responsibility for the attack, but a Sunni organization, the General Conference of the People of Iraq, blamed Shiite Muslim militias with ties to government security forces. The group said the mortar shells bore markings indicating they were manufactured in Iran, which U.S. officials accuse of supporting Shiite militias. 
On Monday, a parked car bomb also struck a bus carrying Shiites to a holy shrine in northern Baghdad, killing at least four people and wounding six, police said. 
The blast occurred when a small car parked nearby exploded about 9:30 a.m. as the pilgrims were boarding the bus on Palestine Street. The bus, which was completely burned out, had been heading to Kazimiyah, which is home to the most important Shiite mosque in the capital. 
Elsewhere, a bomb hidden under a concrete barrier exploded as workers were paving a street in an intersection in a predominantly Shiite area in eastern Baghdad, killing one worker and wounding two others, police said. 
Authorities said Iraqi soldiers supported by U.S. aircraft fought all day Sunday with a large group of insurgents in the Zaraq area, about 12 miles northeast of the Shiite holy city of Najaf. 
Provincial Governor Assad Sultan Abu Kilel said the assault was launched because the insurgents planned to attack Shiite pilgrims and clerics during ceremonies marking Ashoura. 
Officials were unclear about the religious affiliation of the militants.

TITLE: Irish Party Backs NI Policing
AUTHOR: By Shawn Pogatchnik
PUBLISHER: The Associated Press
TEXT: DUBLIN, Ireland — Sinn Fein members overwhelmingly voted Sunday to begin cooperating with the Northern Ireland police, a long-unthinkable commitment that could spur the return of a Catholic-Protestant administration for the British territory. 
The result — confirmed by a sea of raised hands but no formally recorded vote — meant Sinn Fein, once a hard-left party committed to a socialist revolution, has abandoned its decades-old hostility to law and order.
The vote, taken after daylong debate among 2,000 Sinn Fein stalwarts, represented a stunning triumph for Sinn Fein chief Gerry Adams, the former Irish Republican Army commander who has spent 24 years edging his IRA-linked party away from terror and toward compromise.
It strongly improved the chances of reviving power-sharing, the long-elusive goal of the 1998 Good Friday peace pact, by Britain’s deadline of March 26.
“Today you have created the potential to change the political landscape on this island forever,” Adams told the conference.
Earlier, many speakers said for decades they had dreamed of defeating the province’s mostly Protestant police force and forcing Northern Ireland into the Irish Republic.
Some IRA veterans recalled beatings inflicted on them by detectives during interrogations. 
Others noted they had served long prison sentences for attacks on police, more than 300 of whom were killed during the IRA’s failed 1970-1997 campaign.
But nearly all speakers said they were voting to dump their party’s anti-police position for the sake of peace.
“This shows that the war is over. And if the war is over, we have to build the peace,” Adams said in an interview during an earlier break in debate.
Other Sinn Fein leaders sought to cloak their vote in bellicose terms, arguing that their position as the major Catholic-backed party in Northern Ireland meant they would be able to tell police commanders what to do.

TITLE: Bollywood Star Wins U.K. Big Brother
AUTHOR: By D’arcy Doran
PUBLISHER: The Associated Press
TEXT: LONDON — Indian actress Shilpa Shetty won the British reality TV show Celebrity Big Brother Sunday after enduring alleged racial bullying that triggered protests in India and sparked a race relations debate in Britain.
The 31-year-old Indian star won the public’s support after a fellow contestant hurled racially tinged insults at her in an episode that led to a record 40,000 complaints to media regulators.
“It’s truly been a roller coaster ride,” Shetty said. “The highs, the lows, each one has taught me so much.’’
British Prime Minister Tony Blair, Treasury chief Gordon Brown and Indian Finance Minister P. Chidambaram have commented on the incident, which South Asian and anti-racist groups said revealed the face of racism in Britain.
Shetty received 63 per cent of viewers’ telephone votes Sunday, host Davina McCall said. She did not give the number of votes cast.
Contestants on the show are locked in a house for about three weeks and are evicted one by one until someone is chosen as the winner of a cash prize for charity.
Shetty defended fellow contestant Jade Goody, who repeatedly reduced the Indian actress to tears by shouting at her, calling her cooking untrustworthy, mocking her accent and calling her “Shilpa Poppadum.’’
Goody became famous after appearing on the non-celebrity version of Big Brother and has earned an estimated $16 million fortune through television and magazine appearances, an autobiography and an exercise video — a livelihood endangered by her behavior in the house.
“She is a little aggressive and hot tempered, but she’s not a racist,” Shetty said.
“I don’t want people here feeling they welcomed an Indian here and she created so much trouble. I want to thank the whole of Great Britain for giving me this fantastic opportunity to make my whole country proud.’’
Shetty has hired British celebrity publicist Max Clifford to help develop her career in Britain. He estimated Sunday that she could earn $2 million in the next year from new contracts after appearing on the show.
“It’s been a huge success for her because of how she’s handled these nasty attacks with dignity,” Clifford said on BBC television.
The program made front-page news for days in both Britain and India, where the show’s producers were burned in effigy. More than 8.8 million people tuned into the show following the racism controversy.
Other participants on the show included former Jackson Five leader Jermaine Jackson and A-Team actor Dirk Benedict. Model Danielle Lloyd and singer Jo O’Meara were also seen by the British public as tormenting Shetty.

TITLE: Oscar Hopefuls Vie With Movie Spoof at Box Office
AUTHOR: By Jeff Wilson
PUBLISHER: The Associated Press
TEXT: LOS ANGELES — The comedy spoof “Epic Movie” debuted atop the box office as Oscar contenders got a bump in the first weekend since the Academy Award nominations were announced, according to studio and industry estimates Sunday. 
“Epic Movie,” which lampoons dozens of films, a few MTV shows and Paris Hilton, raked in $19.2 million. It was a cost-effective release for 20th Century Fox, which enjoyed a similar turnstile bonanza a year ago with the spoof “Date Movie.”
“When you gross the first weekend almost what it costs to make, it is enormously successful. We’re pleased,” Fox executive Bert Livingston said of the Regency Productions film distributed by Fox. “It seems these teen audiences have just this insatiable appetite for these spoofs,” said Paul Dergarabedian, president of box-office tracker Media By Numbers. “They are economically sensible. It’s just a license to make money for the studio.”
Audiences also turned out for Universal Pictures’ “Smokin’ Aces,” a violent, dark comedy about hit men converging on Lake Tahoe for the $1 million prize to assassinate magician Buddy “Aces” Israel. It opened in second place with $14.3 million.
“It’s a very edgy, R-rated, hip and cool movie. It doesn’t surprise me,” Dergarabedian said.
In third place was Fox’s everlasting “Night at the Museum,” which took in another $9.5 million to boost its six-week total to $217 million. The new Jennifer Garner movie, “Catch and Release,” was No. 4, and “Stomp the Yard” was fifth.

TITLE: U.S. Delegation Talks Troop Surge in Kabul
AUTHOR: By Jason Straziuso
PUBLISHER: The Associated Press
TEXT: KABUL, Afghanistan — The Afghan president told the Speaker of the U.S. House of Representatives Nancy Pelosi that his security forces need to be stronger as the two discussed possible U.S. troop increases on Sunday, days after the Pentagon extended the tour of 3,200 soldiers, an Afghan official said. 
President Hamid Karzai stressed his desire for increased training and equipment for Afghanistan’s fledgling army and police forces, the Afghan official said on condition of anonymity because he was not authorized to release the information publicly.
Pelosi and Karzai discussed plans announced last week by the Bush administration to ask Congress for $10.6 billion for Afghanistan, a major increase aimed at rebuilding the country and strengthening government security forces still fighting the Taliban five years after the U.S.-led invasion.
About $8.6 billion would be for training and equipping Afghan police and soldiers; $2 billion would go toward reconstruction.
Pelosi led a delegation of six other congressional Democrats to Afghanistan to meet with military and government leaders after traveling to Iraq and Pakistan.
The trip comes two weeks after Senator Hillary Clinton visited the region. Clinton, who entered the 2008 presidential race a week ago, said this month that U.S. leaders should be talking about increasing troop numbers in Afghanistan instead of Iraq.
The attention being paid to Afghanistan by Democrats is a way for them to highlight their seriousness about the fight against international terrorism and say that the Bush administration “led us in the wrong direction” in Iraq, said Marvin Weinbaum, a former State Department analyst on Afghanistan, now scholar at the Middle East Institute.
“It makes a lot of sense, then, to highlight Afghanistan as where the real source of terrorism began and where it still has to be dealt with so that the Democrats come out of this not looking like they’re weak-kneed when it comes to battling terrorism,” Weinbaum said.
The Pentagon last week said a brigade of U.S. soldiers would stay in Afghanistan four months longer than planned — an effective troop increase of 3,200 soldiers. That announcement came only days after a visit here by Secretary of Defense Robert Gates.
Pelosi, meanwhile, has led a drive in Congress against President Bush’s plan to send 21,500 more troops to Iraq as part of a new security crackdown in Baghdad.
Pelosi told Karzai that Afghanistan has bipartisan support in Congress, the Afghan official said. Members of the delegation also told Karzai they hope to see more coordination and cooperation between Pakistan and Afghanistan.
Earlier on Sunday, the delegation spent about an hour at the main U.S. base in Bagram, where Pelosi thanked soldiers from the 10th Mountain and 82nd Airborne divisions for their service, a U.S. military spokesman said. She also met with the top U.S. general here.
The seven-member delegation also met with U.S. Ambassador Ronald Neumann and the outgoing commander of NATO forces in Afghanistan.
The delegation did not talk to reporters.
The members of Congress stopped in Pakistan on Saturday, where Pelosi met with President General Pervez Musharraf to discuss the situation in Afghanistan and cooperation in countering terrorism.
Pelosi’s delegation earlier visited Iraq, where she met with Iraqi Prime Minister Nouri al-Maliki.
The delegation also included Representative John Murtha of Pennsylvania, a strong advocate of a phased pullout of U.S. troops from Iraq.

TITLE: Israeli Resort Suicide Bomb Kills 3
AUTHOR: By Rami Amichai
PUBLISHER: Reuters
TEXT: EILAT, Israel — Palestinian militant groups carried out their first suicide bombing in Israel in nine months, killing 3 people in the resort of Eilat on Monday. 
The Eilat blast came four days before the “Quartet” of Middle East peacemakers was to meet in Washington as part of a bid to revive Israeli-Palestinian talks. Efforts have only been complicated by fierce Palestinian factional infighting.
Islamic Jihad and al-Aqsa Martyrs Brigades claimed responsibility for what was the first suicide attack in the Red Sea tourist town, and named a 21-year-old from Gaza as the bomber.
In Gaza, rival Palestinian factions battled in the streets for a fifth straight day, killing at least two fighters on Monday. Saudi Arabia has offered to host talks between the feuding Hamas movement and Fatah in the holy city Mecca.
The fighting has been the fiercest since Hamas, an Islamist group, won elections a year ago. Gun battles have spread across the densely populated Gaza Strip where 1.5 million Palestinians live and prompted some families to flee their homes.
The latest deaths raised to 29 the number of people killed in clashes since Thursday. The fighting, which has erupted periodically over the past year, has derailed unity talks between Hamas and Fatah.
“What else can we call this but a civil war?” asked Abu Omar, a shop owner in Gaza City, where most businesses closed down.
Eilat residents were jolted by what witnesses described as a powerful explosion in the “Lechamim” bakery in a residential neighborhood of the city, far from its beach hotels.
“I saw a man with a black coat and a bag. For Eilat, where it is hot, it is strange to see someone walking with a coat. I said to myself, ‘Why is this idiot dressed that way?’ Seconds later, I heard a huge blast. The building shook,” Benny Mazgini, a local resident, told Israel Radio.
Prime Minister Ehud Olmert said in broadcast remarks all three of those killed by the bomber were Israelis. He said Israel was weighing its response.
Islamic Jihad and the Aqsa brigades said the bombing was a response to Israeli “attempts to defile al-Aqsa mosque” in Jerusalem, a reference to recent archaeological excavations. Israeli officials said the work had not damaged the shrine.
“The heroic operation announces the beginning of a series of operations in defense of al-Aqsa mosque and it was a natural response to savage aggression by the occupation [Israel],” the two groups said in a statement.
A spokesman for the Aqsa brigades, part of Palestinian President Mahmoud Abbas’s Fatah faction, identified the suicide bomber as Mohammad Faisal Siksik, 21, from Gaza City, a member of the brigades’ “Army of Believers.”

TITLE: Barack Obama May Be ‘Too White’ For Blacks
AUTHOR: By Beth Fouhy and Erin Texeira
PUBLISHER: The Associated Press
TEXT: NEW YORK — Being black doesn’t necessarily mean White House hopeful Senator Barack Obama has a lock on black voters. In wooing a faithful Democratic constituency, Obama faces two-term New York Senator Hillary Rodham Clinton, the party front-runner who enjoys strong support in the black community. She also is married to former President Clinton, so wildly popular among black voters that novelist Toni Morrison dubbed him “the first black president” in a 1998 essay. 
Obama also must contend with John Edwards, the 2004 vice presidential nominee who has won praise from black leaders for his commitment to fighting poverty. It was Edwards who recently addressed a high-profile New York commemoration of Martin Luther King Jr. — at the invitation of the slain civil rights leader’s son.
“It will be a challenge because [Obama] will be competing against people who have relationships in the black community,” said the Reverend Jesse Jackson, who ran for the Democratic presidential nomination twice in the 1980s.
Jackson, who won 13 primaries and caucuses in 1988, said he is leaning toward supporting Obama’s candidacy but hasn’t made an endorsement. His son, Representative Jesse Jackson Jr. of Illinois, is backing Obama.
For all his promise, Obama is a relatively new face on the national political scene and remains unknown to many voters, including blacks.
An Associated Press-Ipsos poll last October found Senator Clinton with the support of 25 percent of black voters compared with 10 percent for Obama. Former President Clinton, who is barred by term limits from running again, garnered 5 percent.
Black voters will be crucial in some of the early party primaries such as South Carolina on Jan. 29 and Alabama on Feb. 5. In 2004, blacks made up nearly 50 percent of the Democratic primary vote in South Carolina; in Alabama, it was closer to 55 percent.
Obama also may not be the only black candidate in the field. Civil rights activist Al Sharpton, who ran for president in 2004, says he is considering another bid, in part out of his frustration that no candidate is directly addressing urban issues.
Sharpton was in Washington on Thursday to meet with several candidates, including Clinton, Obama, Connecticut Senator Chris Dodd and Delaware Senator Joe Biden, to question them on their views before deciding whether to enter the field.
David Bositis of the Joint Center for Political Studies said that Obama needs to avoid the candidate mold of a Jackson or Sharpton, whose appeal did not extend much beyond a core black audience.
“A black candidate who’s mainly advocating for civil rights these days is not going to go anywhere in a presidential election,” Bositis said. “I think he [Obama] will get substantial support from blacks, but not all blacks. Some black voters are going to find him — what? Too white.”
Obama was asked recently whether he might be “too white” to appeal to black voters.
“If you look at my black vote in my U.S. Senate race or my approval ratings back in Illinois, I feel pretty confident that once folks know who I am, then we will do just fine,” he said.
Obama, 45, does not fit the familiar mode of King’s generation of black leaders. He is biracial — his white mother was from Kansas, his father Kenyan — and was educated at Ivy League universities.
In his first of two best-selling memoirs, “Dreams From My Father,” Obama said he couldn’t even get in the door at national civil rights groups when he was younger. He wrote letters to them after graduating from Columbia University but said none responded.
And while many voters have warmed to Obama’s themes of political reconciliation and national unity, analysts say the message may not resonate as clearly with black voters.
“Barack Obama might not be considered a black candidate for traditional black voters, given their history,” said Ronald Walters, director of the African-American Leadership Institute at the University of Maryland. “Obama has talked about America wanting a new kind of leadership. What is he talking about? He hasn’t defined that sufficiently.”
Still, some civil rights leaders already are claiming him as a major step forward for black American leadership — even if he didn’t spring from their movement. 
“Many are anxious to separate Barack Obama’s campaign from the civil rights struggle, but that is not true,” said the elder Jackson. “It’s an extension of our struggle.”