SOURCE: The St. Petersburg Times
DATE: Issue #1255 (21), Tuesday, March 20, 2007
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TITLE: Deputy: ‘Fake Votes Were Cast’
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: A scandal is brewing over the results of the elections to the St. Petersburg Legislative Assembly as accusations of fraud are made and witnesses come forward with claims of clear irregularities at polling stations. 
Just Russia candidate Sergei Andreyev, who lost his seat to United Russia rival Anton Sikharulidze, an Olympic figure skating champion, has alleged massive ballot stuffing and a conspiracy intended to help Sikharulidze win.
“Widespread ballot stuffing, which resulted in Sikharulidze unjustly winning the seat in the parliament, occurred at ten polling stations [nos. 539-548] in my district,” Andreyev said. “On average, between 800 and 1,000 fake ballots were stuffed into ballot boxes at these stations.”
Andreyev said the fake ballots were printed on paper that differed in quality from the official ballots. 
Ten polling stations in the district recorded voter turnout  of 79 percent although the average voter turnout across the city was 33 percent.
Yeleonora Ratsiborskaya, a member of the election commission in the Andreyev/Sikharulidze district, complained that a gang of about 20 men showed up at one of the polling stations and surrounded a voting box.
“They completely blocked the view for us, and when I protested, they told me to shut up,” Ratsiborskaya said. 
Election observer Yelena Mikhailova said she and other observers were denied access to the count in the district. 
“When the officials announced the results to us, we expressed amazement at the unbelievably high turnout, that tangibly contradicted with the initial turnout reports we had in our hands,” she said. 
“We asked for details to be given, and we wanted to compare the turnout statistics that we had had with the much higher figures featured in the final results but the officials refused, without explanations.”
Just Russia leader Sergei Mironov, speaker of the Federation Council, last week promised to discuss the matter with President Vladimir Putin.
Maria Matskevich, a senior political analyst with the Institute of Sociology of the Russian Academy of Sciences, said it was difficult to predict the future of Just Russia and sounded a warning to Kremlin spin-doctors against creating opposition parties. 
“When you create a clone, you never know for certain how your creature will eventually transform,” she said. “One day, they could rebel and may turn into a Frankenstein-style monster.”
Andreyev has asked for a recount but the St. Petersburg Election Commission rejected his request.
Dmitry Krasnyansky, deputy head of the St. Petersburg Election Commission said strong proof of conspiracy and ballot stuffing has to be presented for the result to be declared invalid and a recount ordered.
“We have heard a lot of bold statements from Mr. Andreyev but what we need to make a decision is reliable and consistent evidence,” Krasnyansky said.
“The election commission has made its decision, and for us this is the end of the story really,” said Yelizaveta Agamalian, spokeswoman for the United Russia faction in the Legislative Assembly. “Had Andreyev presented compelling proof of violations, it would have been impossible for the commission to ignore.”
At least one independent observer is prepared to testify in court.
“When the ballot box was opened, I could not believe my eyes,” recalled election observer Mikhailova. “It must have involved the tricks of a master illusionist: on top of a modest pile of ballots, there were neatly folded bundles of ballots.”
“As far as I know, voters do not have the skills of David Copperfield: they really cannot multiply their ballots or stick them in voting boxes by the bundle,” she added. “I quickly jumped in and flipped through them, and, unsurprisingly, they were all for United Russia.”
Nationwide, protests from all political parties that took part in the March 11 poll — except for United Russia?— are mounting.
The local branch of Yabloko held a meeting on Sunday, where the party branded the past elections illegitimate and promised to contest them in the European Court.
The Union of Right Forces organized a protest event in Moscow on Saturday, to speak up against what they saw as falsified election results in the Moscow Region. The party failed to pass the 7 percent margin in the region but its spokesman Boris Nadezhdin alleged that more than 3,000 votes had been stolen from them.
Communist party leader Gennady Zyuganov said that his party cannot accept the elections results, which he branded “not credible,” while LDPR party leader Vladimir Zhirinovsky suggested that heads of regional election commissions who “allowed such blatant falsifications to happen” should commit suicide.
The flamboyant faction head walked out of the State Duma on Friday in protest.
Zhirinovsky spoke with outrage about Just Russia “snatching 10 percent of LDPR’s 20 percent” and serious vote rigging in particular in the Orlov Region in central Russia. He also said the initial election protocols in the region did not match with the official results and alleged shadow deals.

TITLE: 61 Killed In Mine Explosion In Siberia
AUTHOR: By Andrei Borisov
PUBLISHER: Reuters
TEXT: ULYANOVSKAYA MINE, Russia  — A methane explosion killed 61 people when it ripped through a coal mine in Russia on Monday, a regional spokesman said, the deadliest accident in the area in about three years. 
Almost 40 miners remained underground several hours after the explosion at the Ulyanovskaya mine, in Siberia’s Kemerovo region. 
The media quoted rescue workers as saying the evacuation was being hampered by smoke underground.
“Yes, I can confirm that 61 miners have died,” a spokesman for the regional administration told Reuters. Officials previously said the blast killed 28 people.
President Vladimir Putin ordered his emergencies minister to fly to the mine to oversee the rescue.
“The main task now is to find as many people as possible,” Kemerovo governor Aman Tuleyev said in footage broadcast by the Rossiya television station.
Television footage from the pit showed one miner lying motionless, his clothes black with dirt, before emergency workers transferred him into an ambulance.
The spokesman for the regional administration said 186 miners had been underground when the blast occurred and that 88 had been safely brought up to the surface while 37 were still believed to be underground.
The blast was the latest in a long line of fatal accidents in Russian mines, many of which are several decades old and lack modern equipment.
Last year, 25 Russian miners died in a fire at a gold mine in eastern Siberia. A gas explosion at a coal mine in Kemerovo in 2004 killed 45 people.
Security guards prevented reporters from getting close to the pit. 
The only sign of activity was ambulances and rescue vehicles driving to and from the site, a photographer at the scene told Reuters.
The mine belongs to the Yuzhkuzbassugol company, in which Russia’s second-biggest steelmaker, Evraz, holds a 50 percent stake. Yuzhkuzbassugol’s management owns the other 50 percent and has operational control of the company.
Evraz declined to comment on Monday. There was no marked change in its share price on the London Stock Exchange. The Ulyanovskaya mine was opened in 2002, making it unusually new by the standards of Russia’s mining industry.

TITLE: Gazprom-City Renamed Okhta Center
AUTHOR: By Evgenia Ivanova
PUBLISHER: Staff Writer
TEXT: The Gazprom-City development has been renamed and will be funded differently, Gazprom chairman Alexei Miller announced in St. Petersburg on Friday, although a controversial skyscraper that forms the centerpiece of the plan looks set to stay.
The radical overhaul of the $2.3 billion project means that a planned office complex will now be a community and business center to be known as the Okhta Center and jointly funded  by Gazprom and City Hall.
A theater, modern art center, museum, library, sports complex, shopping malls, cafes, restaurants and a park are planned to become what Miller called “the modern symbol of St. Petersburg.”
According to the new proposal, City Hall will not be the sole investor in the corporate headquarters and apartments for Gazprom Neft, a subsidiary of Gazprom. That idea had resulted in a public outcry.
“We don’t build housing for teachers, medical workers or veterans of the Great Patriotic War. In that context, to invest in building apartments for the employees of the richest company in Russia is cynicism, pure and simple, and a disgrace to the government,” then-Legislative Assembly deputy Sergei Gulyayev told the St. Petersburg Times in September, criticizing the draft for allocating financesto  support Gazprom’s housing needs from the city budget. 
Now City Hall says it will cover only 49 percent of the estimated cost of the project. 
“Gazprom Neft will realize 51 percent of investment from its investment program, 49 percent will be financed by the city from Gazprom’s tax contribution to the city’s budget,” reads a City Hall statement published Friday.
The funding stucture will allow City Hall to own some of the new buildings, the statement said. 
Rebranding the development from Gazprom-City to Okhta Center has effectively put an end to speculation that Gazprom Neft’s skyscraper would be moved to a different place, as the new name reflects the geographical location of the Okhta River, a tributory of the Neva River, that flows near the site.
“Gazprom is a very well-known company and it’s up to the experts to choose the location for the construction [of the tower],” St. Petersburg Governor Valentina Matviyenko said at Friday’s announcement, adding rhetorically, according to Fontanka.ru news service, “Do you like these ruins at Okhta, this wartorn image?”
Philip Nikandrov, a representative of RMJM London Limited, the architectural company behind the star-shaped design said that his company was always “entirely opposed” to moving their project to a different location, as they were inspired by Nienshants, a fortress built on the location in the 17th century, Gazprom’s website reported.
The concept for the 350 meter-high skyscraper “was born from the history of this place and is rooted in architectural shapes of the Malaya Okhta’s past,” Nikandov, who is a graduate of the St. Petersburg-based State Architecture and Construction University, said.

TITLE: 1995 Banker Poisoning Case To Open in Moscow Court
PUBLISHER: The Associated Press
TEXT: Moscow prosecutors sent to court on Friday the case against a suspect accused of poisoning a prominent banker more than a decade ago, in what was one of the most notorious killings of the turbulent 1990s.
Ivan Kivelidi, who died in August 1995 from apparent nerve toxins, headed Rosbiznesbank, as well as what was then the country’s influential business organization, the Russian Business Roundtable. His secretary also died of poisoning.
Investigators detained his former partner, Vladimir Khutsishvili, shortly after the death, but then released him and he went into hiding. Prosecutors charged Khutsishvili with murder some years after the killing and he was arrested in Moscow last year.
The Prosecutor General’s Office said in a statement Friday that murder and other charges against Khutsishvili had been sent to Moscow’s Zamoskvoretsky District Court. A court spokeswoman said preliminary hearings in the trial would be scheduled soon, Itar-Tass reported.
Prosecutors said a business dispute was likely the main motivation for the killing.
Contract killings and gangland-style murders were common in the 1990s. Such violence has become more rare now, although several high-profile killings and poisonings in recent months have raised fears of a return to violence.

TITLE: 1,000 Decry Regional Elections 
At City Rally
PUBLISHER: Reuters
TEXT: About 1,000 supporters of the liberal and socialist opposition united Sunday in St. Petersburg to protest recent regional elections. 
The demonstrators, gathered around a monument to Vladimir Lenin, shouted: “For honest elections!” and brandished posters with slogans criticizing President Vladimir Putin.
The elections on March 11, seen as a dress rehearsal for December’s State Duma election, handed Kremlin supporters a hefty majority and squeezed out its most outspoken opponents. 
United Russia won the biggest share of the vote in 13 of the 14 regions where elections took place. A Just Russsia, another pro-Kremlin party, led in the other region.
“The authorities turned the elections into a farce. These are elections without choice,” Sergei Gulyayev from the liberal Yabloko party told the protesters. “We will take to the streets and sweep away this government. We will build a new Russia, an honest and a free one.”
The demonstrators dispersed after about 90 minutes. 
Around 150 police looked over the rally, unusually large for anti-Kremlin protests in Russia but smaller than an opposition protest in St. Petersburg on March 3. That time, at least 3,000 protesters broke through police lines and blocked the city’s main thoroughfare in defiance of a ban by the authorities on the demonstration.

TITLE: Tu-134 Plane Flips Over in Samara, 6 Dead
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — At least six people died and more than 20 were injured when a Tu-134 jet operated by UTAir crashed Saturday morning in heavy fog at Samara airport.
It remained unclear Sunday what caused UTAir Flight 471 to crash short of the runway. Regional prosecutors blamed pilot error, while a mechanic on board put it down to a combination of zero visibility and technical problems with the aircraft.
Officials from the regional Emergency Situations Ministry said Sunday that the plane’s landing gear had failed, Gazeta.ru reported.
UTAir was one of nine carriers banned earlier this month from flying into European Union airspace for safety reasons.
Flights in and out of Samara airport were canceled until further notice.
Yury Mushikhin, a spokesman for UTAir, said 57 people had been aboard the Tu-134 jet, including 50 passengers and seven crew members. The plane was scheduled to make a stopover in Samara en route from Surgut to Belgorod.
Relatives of the dead were taken to local hospitals Sunday to identify the bodies, Interfax reported.
Mushikhin confirmed that six passengers had died in the crash. As of Sunday evening, he said, 21 people were receiving treatment at a local hospital. Five members of the crew were hospitalized, but none died.
Emergency Situations Ministry officials said earlier that 24 people had been hospitalized from a total of 51 people injured in the crash.
Before attempting to land, the plane circled several times above the airport to burn off excess fuel, ministry officials said. For reasons yet to be determined, the plane then landed 400 meters short of the runway.
After impact, the plane skidded onto the runway, flipped over and broke apart, Samara airport official Anatoly Ilin told RIA-Novosti.
In a statement, UTAir said the plane had no technical problems, RIA-Novosti reported.
“Before it hit the ground, the plane met airworthiness and maintenance standards applicable to this type of aircraft,” the statement said.
In February, Transportation Ministry Igor Levitin said the aging fleets of Tu-134 and Tu-154 aircraft would be phased out of commercial use over the next five years.
Mushikhin said the age of the plane that crashed in Samara was “irrelevant,” however, because it met government safety standards.
Only after analyzing the in-flight data recorders, which have been recovered and sent to Moscow, will the reasons for the crash become clear, officials from the Prosecutor General’s Office said, Gazeta.ru reported.
The Transportation Ministry has assembled a commission to investigate the crash.
Members of the commission include Deputy Transportation Minister Boris Korol; Gennady Kurzenkov, head of the Federal Transportation Inspection Service; Alexander Yurchik of the Federal Air Transportation Agency; and officials from the International Aviation Committee. The ministry announced that relatives of the deceased would receive $75,000 in compensation from UTAir.
Regional prosecutors have opened a criminal investigation into the actions of the pilot, whom they believe broke safety rules.
Saturday’s crash was the latest in a string of aviation accidents over the past 12 months in former Soviet republics, most of them in bad weather.
In May 2006, 113 people were killed when an Armenian Airlines A320 crashed into the Black Sea near Sochi.
In July, an Airbus A310 operated by the S7 airline blew up after sliding off a runway and slamming into a barrier at Irkutsk airport, killing 125 people.
One month later, a Pulkovo Airlines Tu-154 crashed in eastern Ukraine, killing 170.

TITLE: Ex-Prime Minister Kasyanov Ordered To Return Property
PUBLISHER: Combined Reports
TEXT: MOSCOW — A Moscow court on Friday ordered former Prime Minister Mikhail Kasyanov to give up what it said was an improperly obtained luxury villa.
The Federal Property Management Agency filed a suit against Kasyanov demanding that he return to the state the expensive riverside dacha and surrounding 11.5 hectare estate known as Sosnovka-1.
Kasyanov dismissed Friday’s ruling as groundless, repeating earlier statements that he was the victim of a smear campaign started by the authorities after he announced he was joining the opposition and would run for president in the election next March.
“I expected this decision,” Kasyanov said, Interfax reported. “Court proceedings have lasted for two years. This is their latest turn.”
He said he would appeal.
The court will not issue an explanation for its ruling for at least several days.
The property agency also wanted at least 46.6 million rubles ($1.78 million) in compensation, a demand the court rejected. A spokeswoman for the court declined to comment on the ruling until the court issued an explanation.
Separately, Kasyanov said Saturday that apart from himself, he believed Yabloko leader Grigory Yavlinsky, State Duma Deputy Vladimir Ryzhkov or United Civil Front leader Garry Kasparov could potentially be viewed as candidates to become the sole opposition candidate in the presidential election, Interfax reported.
(SPT, Reuters)

TITLE: Lavrov Criticizes U.S. Policies
PUBLISHER: The Associated Press
TEXT: MOSCOW — Foreign Minister Sergei Lavrov on Saturday harshly criticized what he called Washington’s unilateral foreign policy, and said Moscow intended to counterbalance it with its increasing global clout.
The comments were the latest expression of irritation from Moscow over the United States’ actions, including plans to base parts of its missile defense system in former Soviet satellite states, its handling of the Iranian nuclear problem, the war in Iraq and other issues.
Lavrov said the United States was still uncomfortable with the idea that there could be more than one superpower in the world.
“I don’t understand why multipolarity must be perceived as a confrontational approach,” he told members of the Council on Foreign and Defense Policy, a group of politicians, officials, experts and business leaders who meet regularly to discuss foreign policy matters.
He said he believed that Washington’s “overblown” role was decreasing, while Russia’s clout was on the rise.
Lavrov said the U.S. missile defense plans were a “provocation of European and global policy scale.”
Lavrov praised the U.S.’s flexibility in dealing with North Korea’s nuclear program, but lamented that Washington was still “unwilling to normalize bilateral relations with Tehran,” which he charged was slowing down efforts to convince Iran to suspend uranium enrichment.

TITLE: Film Festival to Tackle Racism
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Scenes of institutionalized xenophobia, violent hate crimes and genocide are depicted in four movies and a photo exhibition exposing a Russian-European-African triangle of intolerance to be displayed at Dom Kino starting Wednesday, to coincide with the UN’s World Day Against Racism.
The five-day Open Your Eyes! Movie Festival Against Racism and Xenophobia, organized by the St. Petersburg-based Russian-German Exchange in collaboration with the city’s inter-regional Social Democratic Youth Union, is the first in a series of cultural events to be held in the city as part of a public awareness campaign promoting tolerance, Astrid Schorn, the organization’s executive director, said. Entrance will be free.
The film progam includes Roman Khavronsky’s film, “Mirnoye Vremya” (2006) in which writer Alla Gerber, president of the Holocaust Foundation, quotes familiar anti-Semitic slurs that she hears in Russia. The film, showing on Friday, also depicts a white supremacist rally in Moscow and CCTV footage showing convicted anti-Semite Alexander Kopsov storming a synagogue to stab worshipers. President Vladimir Putin is shown voicing rhetoric of condemnation.
The festival opens on Wednesday with Terry George’s “Hotel Rwanda” (2004), set during the 1994 Rwandan genocide. Although the film won praise from Western critics for its depiction of the genocide, Valens Maniragena, head of St. Petersburg’s Rwandan asylum seekers and charity organization, Ichumbi, who witnessed the events said that the film is exaggerated and distorted,
“It s not about the Hutus butchering the Tutsis as portrayed in the film; it’s about civil war involving guns and military arsenals with victims from both sides,” Maniragena said. 
Kenny Glenaan’s “Yasmin” (2004), showing on Thursday, is a British-German production depicting a British young woman of Pakistani origin suffering discrimination as a result of Islamophobia in the wake of September 11 terror attacks on the U.S. 
In Ulf Malmros’ “We Can Be Heroes” (2002), two immigrant children are rejected by their Swedish classmates and in conflict with their parents over their future. 
Ten-year-old Marcello from Italy finds consolation from his female peer Fatima from Lebanon, who is also at odds with her conservative family over cultural values in a secular Swedish society. 
The film festival, which ends Saturday, is also part of a European Week Against Racism, an offshoot of the UN’s World Day Against Racism declared following the March 21, 1960 Sharpeville massacre in South Africa. 

For more information visit www.domkino.spb.ru
www.openeyes.spb.ru 
and www.obmen.org

TITLE: Duma Moves to Increase Penalties For Bad Driving
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — The State Duma is moving to increase fines for reckless motorists to slash roadway deaths, prompting activists to denounce the plan as one-sided, ineffective and unfair.
The measure, which passed the first of three readings on Friday, would increase the fines paid by motorists “to the extent that no one would want to pay them,” Duma Speaker Boris Gryzlov said.
The measure follows comments by President Vladimir Putin over the past two years demanding that the government take steps to lower the number of driving deaths from the current 35,000 per year.
Running a red light would jump to $58 from $3.80; drivers could also lose their licenses for up to four months.
Similarly, driving without a seat belt would rise to $12 from $1.90; driving without a license, registration, insurance policy and mechanic’s certificate would carry a fine of $12, up from $1.90.
Driving with a suspended license would cost drivers just shy of $100 or up to another year’s suspension. If the driver is drunk, the penalty would be double or 15 days in jail.
Besides imposing higher fines, the bill would also lengthen the period of time for which licenses can be suspended and allow officials to tow improperly parked cars.
It would also hold car owners responsible for violations committed with their cars, even if they were not driving at the time; those whose cars had been stolen would be exempted.
And the bill would allow police to conduct alcohol breathalyzer tests.    Drivers would be permitted to refuse to be tested, in which case they would be sent to certified medics.
Other frequent violations — stopping on a pedestrian crosswalk, driving on sidewalks, failing to signal, making a right turn from the wrong lane and illegally pulling a U-turn or driving in reverse — would also be targeted.

TITLE: Iranian ‘Freed’ From Airport
PUBLISHER: The Associated Press
TEXT: VANCOUVER, British Columbia — An Iranian woman who had been living with her two children at Sheremetyevo Airport for nine months was free in Canada on Friday.
Zahra Kamalfar arrived at Vancouver International Airport on Thursday after a flight from Europe. Surrounded by reporters and supporters, she burst out sobbing, then fainted, after being reunited with her brother, Nader Kamalfar, whom she had not seen in nearly 14 years.
Kamalfar, 47, and her children, Anna, 17, and Davood, 12, had been living in the transit lounge of Sheremetyevo Airport since May, her Canadian lawyer Negar Azmudeh said.
“I don’t know how to thank the Canada government. I say thank you, thank you, thank you so much,” she told CBC Television in broken English on Friday.
Kamalfar’s plight began almost three years ago when she and her husband participated in a demonstration in Tehran in July 2004 against the Iranian government, Azmudeh said.
They were both arrested after the demonstration and jailed, where Kamalfar says she was beaten with a chain. Other supporters say she was sexually abused while in prison.
The human rights activist’s chance for escape came when she was given a two-day pass to visit her family in April 2005. When she got home, Kamalfar was told that her husband had been executed. She then fled Iran with her two children with the intention of going to Canada, where her brother lives.
The fate of her husband is uncertain, Davood Ghavami of the Iranian Canadian Congress, told The Toronto Star.
Kamalfar declined to discuss her woes back in Iran. “I don’t like to remember because too much for me,” she said. “We need time; maybe after that I can explain for you.”
Kamalfar and her children had been living at the Moscow airport since last summer after Russian authorities refused her entry into the country. She feared she and her children would be detained and abused. In limbo at the airport, she depended on the goodwill of strangers and received food regularly from Aeroflot.
“That place very hard because we don’t have anything,” she said. “We cannot take shower. You cannot sleep.”

TITLE: Aricom Acquires Local Expertise in Mining
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Aricom Plc., an Anglo-Russian developer of mineral resources, has acquired a majority stake in the St. Petersburg-based mining design institute OJSC Giproruda, the group said Friday in a statement.
Giproruda’s key area of specialization is iron ore. Aricom sees it as a specific benefit in terms of the analysis and design of a number of the group’s future and existing development projects. Giproruda will continue its work with other clients but will be given the opportunity to focus on Aricom’s portfolio of projects.
“Aricom’s project portfolio now contains a sizeable amount of reserves and resources which are all located within 500 miles of the Russian Chinese border,” said Jay Hambro, Chief Executive of Aricom.
“We are already a client of Giproruda and their position, as a leader in Russian mine design and development, will significantly enhance the group’s ability to exploit the massive potential inherent in our assets,” he said.
According to Giproruda it currently has a 60 percent share in the project design services market in the Russian mining industry. As well as plans to expand its operations within the CIS, Giproruda is advancing its international program and has signed contracts on a number of projects.
Employing 148 people, Giproruda specializes in the analysis and design of mining projects. Giproruda has experience in the design of pits and mines in extreme mining, geological and climatic conditions.
Other areas of expertise include the development of efficient mining technologies, project repair base layout, design and transportation services, the repair of technical equipment, storage facilities and the design of administrative and domestic facilities.
“With Kuranakh nearing production, Aricom’s next task is to bring on board two very large iron ore projects – with Giproruda’s wealth of experience in iron ore, I believe there will be significant benefits in them becoming part of our group,” Hambro said.
Aricom has agreed to acquire a 68.49 percent holding in OJSC Giproruda for 211 million rubles ($8 million) conditional on the Russian Anti-Monopoly Service’s approval.
“In an environment where employing critical engineering expertise can prove challenging, this deal ensures Aricom’s access to the necessary set of skills to develop the company’s expanding asset base,” JP Morgan Cazenove, one of the U.K.’s leading investment banks, said Friday in a memo following the purchase.
The note categorises Aricom as “outperform.”
Among the most important of Aricom’s activities analysts listed the recent acquisition of the Garinskoye iron ore mine. “Our preliminary valuation of Garinskoye would almost double the current NPV (net present value) once incorporated,” the memo from JP Morgan Cazenove said.
“There is clearly enormous potential value currently unrecognized by the market within Aricom,” the analysts said.
Aricom was established in September 2003 to develop projects in the north west of the Amur region, in Russia’s Far East. These projects are set to service the Chinese and Russian commodity markets.
Aricom currently operates three projects in the Amur region and the adjoining Jewish Autonomous Region — Kuranakh, K&S and Bolshoi Seym — which have combined estimated reserves and resources of over one billion tons of iron ore and ilmenite ores.
The deposits’ location offers a logistical advantage, being close to the Trans-Siberian and Baikal-Amur Magistral railways.
In 2005, 700 million tons of iron ore was shipped globally, of that 300 million was shipped to China. It is currently estimated that by the end of 2006 China imported 300 million tons of ore with the aim of facilitating demand for steel production.
Giproruda has built and reconstructed about 200 mining enterprises in Russia, Kazakhstan and Transcaucasia. The institute has designed enterprises, which now work in China, India, Iran, Egypt, Bulgaria and the Balkans. Giproruda reported revenue of $6.8 million for 2006. Operating profit accounted for $1.4 million, profit after tax — $1.5 million, net assets — $3.3 million.
Part of Giproruda’s income comes from the lease of its 46 percent share of an office building in St. Petersburg. Giproruda’s stake in this building has recently been independently valued at $20.6 million although this number is not included in the above net asset valuation.

TITLE: Berlin Offers Up Window on Schizophrenic Tale of Two Cities
AUTHOR: By Nikita Savoyarov
PUBLISHER: Special to The St. Petersburg Times
TEXT: St. Petersburg was duly present at the world’s biggest travel fair, the 41st ITB, that took place in Berlin from Mar. 7 through Mar. 11. Yet rather than consolidating itself as a recognizable brand on the international tourism market, the city left visitors confused and unimpressed.
The ITB is recognized as the main forum for the evaluation of trends affecting the whole tourism industry as well as the showcasing of new travel-related innovations. This year the fair again saw record attendances with almost 11,000 exhibitors and 177,000 visitors, of which foreign visitors made up 42 percent. 
Francesco Frangialli, Secretary General of the UN World Tourism Organization, told delegates that during 2006 the worldwide tourism sector maintained the path of recovery it has been on for the last few years. The total figure of international arrivals rose to 842 million last year from 808 million in 2005, an increase of more than 20 per cent on 2003.
Frangialli also called on the international travel and tourism industry to “go green” and do more to reduce its environmental impact. His comments followed a controversial debate in the German tabloid press about the impact tourism is making on global warming. Frangialli said the travel industry contributes to climate change and the reduction of biodiversity “due to its own development and, to a certain extent, its own excesses.” “Our sector has to reduce its emissions,” Frangialli said.
St. Petersburg’s exhibition this year was split into two separate parts, which testified to a lack of organization and experience. One stand was organized by City Hall’s Committee for Investments and Strategic Projects and presented by the City Tourist Information Center, adjoined with the different travel companies and hotels including the Dostoevsky and Ambassador, and the tour operators Comintour, Versa, Fremad Russia, Red October, Going Russia and Amiko Travel.
A second St. Petersburg stand similar in size to the first was set up by an exhibition operator, St. Petersburg-Express. Among its exhibitors were the hotels Kolomyazhsky visit, The Holiday Club, Petro Palace Hotel and Petro Sport Hotel. 
In the form of the Arkhangelsk and Murmansk tourism boards, this stand also represented the Northwest’s new brand, ‘New Windows on Russia,’ developed within the EU project “Tourism Development in Northwest Russia,” in 2006.
According to Julia Rybakova, executive director of the Northwest branch of the Russian Travel Industry Union (RTIU) the region is faced with a critical shortage in EU funds, which is threatening to curtail all activities connected with the new brand.
The splitting of the St. Petersburg brand into two independent stands betrayed a lack of unity in the promotion of city and regional tourism and will have only confused visitors and weakened any positive impression. 
Re-branding problems have also been faced by the airline Rossiya. According to Alexei Kutuzov, an airline representative in Germany, the recent merging of two Russian companies Pulkovo and Rossiya under the Rossiya brand has damaged Pulkovo’s good reputation in the German market.  However, he vowed to fight to restore the airline’s former reputation under its new name.

TITLE: In Brief
TEXT: <b>At a Premium</b>
ST. PETERSBURG (SPT) — The Ingosstrakh group of insurance companies collected premiums worth a total of 422 million rubles ($16.2 million) in the Northwest region last year, Interfax reported Friday.
Premiums from voluntary insurance accounted for 292.566 million rubles (with the exception of life insurance).
Insurance payments last year totaled 250.239 million rubles. Payments for compulsory third party motor insurance totaled 95.712 million rubles.

<b>Mineral Deposits</b>
ST. PETERSBURG (SPT) — Phosphorit industrial group, part of Yevrokhim holding, will invest 2 billion rubles ($77 million) to 2.8 billion rubles into development by 2010, Interfax reported Friday.
The exact volume of investment will depend on the scale of restructuring in the mineral composite production enterprise.
 
<b>Kirovsky Profits</b>
ST. PETERSBURG (SPT) — Kirovsky plant plans to increase consolidated net profit by seven percent this year up to 548 million rubles ($21 million), Interfax reported Monday. Consolidated revenue is set to increase by 9.9 percent up to 10.7 billion rubles. EBITDA will increase by 27.6 percent up to 1.12 billion rubles.
Last year Kirovsky plant saw its consolidated net profit decrease by 29.2 percent, while revenue increased by 6.6 percent. EBITDA decreased by 1.8 percent.
By 2010 the holding plans to increase revenue up to 15.35 billion rubles. In 2007-2011 Kirovsky plant will invest 4.2 billion rubles into development.

TITLE: LUKoil, Rosneft Retain Licenses
PUBLISHER: Bloomberg
TEXT: The Federal Subsoil Agency dropped complaints against Rosneft and LUKoil, the country’s two largest oil producers, for violating licenses, Interfax said Friday, citing an unidentified person close to the agency.
Rosneft and LUKoil had remedied the violations and will keep their licenses to the Siberian and Far East oil fields in question, Interfax reported.
The agency’s license-revocation commission Friday reviewed Rosneft’s licenses to the Vankor, Vostochno-Lodochny, Zapadno-Lodochny and Nizhnebaikhsky fields, which will help fill an $11 billion oil pipeline Russia is building across eastern Siberia to ship fuel to growing Asian markets.
Vankor holds recoverable reserves of 490 million tons of oil and when fully developed will have a capacity of 660,000 barrels per day, or about 7 percent of the country’s current output. Rosneft and Surgutneftegaz, Russia’s fourth-biggest producer, said they would provide a combined 540,000 bpd for the pipeline by 2009, state-run news service RIA-Novosti reported last week.
The commission also reviewed licenses held by two units that LUKoil acquired from Marathon Oil last year.
Russia is building an $11 billion pipeline across eastern Siberia to ship fuel to growing Asian markets and encourage companies to develop the region’s untapped fields and maintain its position as the world’s largest producer of raw fuels. President Vladimir Putin is using Russia’s resource wealth to increase the country’s political status.
The Financial Times reported Saturday that Natural Resources Minister Yury Trutnev warned TNK-BP, the country’s third-largest oil producer, that its license to develop the Kovykta gas field in eastern Siberia might be revoked and auctioned.
Trutnev told reporters on a trip to Luanda, Angola, that TNK-BP would not have time to rectify breaches of its license to develop the gas field in time for a May deadline, the Financial Times reported.

TITLE: Bankers Lead London House-Price Explosion
AUTHOR: By Brian Swint
PUBLISHER: Bloomberg
TEXT: LONDON — London house prices advanced in March as buyers snapped up properties at the fastest pace in almost three years, led by demand from wealthy foreigners and bankers. 
Average asking prices in the U.K. capital rose 1.8 percent to 366,302 pounds ($713,000) in the four weeks through March 10, and 22 percent from the previous year, Rightmove Plc, the nation’s biggest property web site, said today. The average home stayed on the market for 65 days, the shortest period since July 2004. 
“London is the financial capital of the world, and we’ve just got more people looking than properties available,’’ said Commercial Director Miles Shipside in an interview. He sold part of his stake in Rightmove to fund his own house-hunt in the city. 
A shortage of properties for sale has driven up house prices even after the Bank of England raised benchmark interest rate three times since the start of August. Rising demand from the city’s richest residents is compounding a supply crunch that central bank policy maker Kate Barker said will probably outlast the current generation. 
U.K. house prices rose 1.5 percent on the month, the most in four months, and 12.2 percent on the year, to an average of 228,183 pounds. Values increased from February in each of the nine regions measured by Rightmove in England, led by a 2.6 percent gain in the North, while they fell by 0.3 percent in Wales. 
The average stock of unsold property per real-estate agent in London fell to 34 in February, the lowest in seven years, the Royal Institution of Chartered Surveyors said March 13. 
‘Not Affected’ 
“The supply problem is extremely bad, especially at the top end,’’ said Gary French, chief surveyor at the Friend & Falcke agency in Belgravia, an area neighboring Queen Elizabeth’s London residence at Buckingham Palace. “If people with money in Russia, or in the longer term China and India, start to see London as a safe haven, rightly or wrongly, then it will keep prices going right up. We’re not affected by domestic interest rates.’’ 
Kensington and Chelsea, the district where film star Hugh Grant lives, led annual gains in London, rising 83 percent from a year earlier to an average of 1,208,981 pounds. The next biggest gain was in Westminster, at 50 percent from a year earlier, followed by a 29 percent increase in Hammersmith and Fulham. 
Luxury-home prices in London rose at an annual rate of 31 percent in February, the fastest pace since 1979, when Margaret Thatcher become prime minister, real-estate broker Knight Frank said March 15. 
Interest-rate increases in August, November and January may be discouraging some buyers. The RICS index of house-price growth showed the smallest increase in nine months as the number of people registering to browse property dropped to a two-year low. 

Rate Policy 
The central bank would have to lift its key interest rate to at least 8 percent from 5.25 percent to curb house price gains because of the supply shortage, said Martin Weale, director of the National Institute of Economic and Social Research, in a March 13 interview. That’s unlikely to happen, he said. 
Kate Barker, a Bank of England policy maker who was commissioned by the Treasury to report on U.K. housing planning, said in an interview last month that the problem of short supply “will indeed take a long time to solve,’’ and may extend beyond the current generation in London and the southeast of England. 
Investors are betting on borrowing costs rising in the first half, futures trading shows. The implied rate on the June interest-rate futures contract rose 0.2 of a percentage point Monday to 5.66 percent as of 9:56 a.m. in London. The contract settles to the three-month London interbank offered rate for the pound, which averaged about 15 basis points above the bank’s benchmark for the past decade. 

Shipside’s House-Hunt 
Shipside sold 779,562 shares in Rightmove, equivalent to 0.6 percent of the company’s stock, according to a March 12 statement on the PR Newswire. The sale at 480 pence per share netted about 3.7 million pounds. 
“I live in Nottingham, so I’m looking to buy in London,’’ Shipside said, when asked about what he plans to do with the money. ``It’s quite a jump in price.’’ Nottingham is in the Midlands. Asking prices in the East Midlands rose 8.8 percent on the year to an average 161,069 pounds and they gained an annual 8.1 percent in the West Midlands to an average 193,080 pounds, Rightmove’s report showed. 
Shipside’s stake was the biggest of four sold by company directors, including a holding of 300,000 shares by Group Managing Director Ed Williams, worth 1.4 million pounds. 
The statement showed Shipside’s remaining stake totals 600,000 shares. “I have no plans to sell more,’’ he said. 
Shipside said he has been searching for a London property for the past four months, “not too long compared to some people.’’ 
“If I tell you where I’m looking it might push prices up there,’’ he said. He would like “somewhere along the Thames. There’s very much a shortage of supply and you’re having to get in there very quickly now to get the property of your dreams.’’

TITLE: Armenia-Iran Gas Pipeline Opens
PUBLISHER: The Associated Press
TEXT: YEREVAN, Armenia — Iranian President Mahmoud Ahmadinejad and his Armenian counterpart formally opened the first stretch of a natural gas pipeline Monday in Armenia, a landlocked country that relies on Russia for most of its gas. 
Ahmadinejad and Armenian President Robert Kocharian opened the 25-mile section in the town of Meghri, just over the border from Iran.
Under the first stage of the project, Iran is to deliver up to 14 billion cubic feet of gas a year. When the pipeline is completed and extends to the capital, Yerevan, the volume could rise to 88 billion cubic feet a year.
The project was launched in 2004 after more than a decade of negotiations.
Russia, which supplies most of Armenia’s gas, had objected to the project. Armenian officials said last year they were discussing the prospect of Russia’s natural-gas monopoly Gazprom purchasing the Armenian section of the pipeline from Iran.

TITLE: Engineering a Place in Early Morning News
AUTHOR: By Marina Kamenev
PUBLISHER: Special to The St. Petersburg Times
TEXT: Considering that “Good Morning, Russia!” claims to have 5 million viewers nationwide every morning, it’s surprising that its presenter Vladislav Zavyalov is not more famous. But the 43-year-old Rossiya TV newsreader has an explanation: “I am on from 5 a.m. to 8.45 a.m. — I don’t even know anyone who’s awake at that hour,” he said. 
Zavyalov had always wanted to be on television. When he was 6, his mother would listen to him reading his books out loud in the bath to a pretend audience. “She thought it was hilarious!” he said.
However, his life initially took a different path. Born in Rostov-on-Don, Zavyalov studied engineering in Kiev and was already a successful civil engineer when he decided to give television a go. 
“They say that if you are going to make any big, life-changing decisions, you should do it on the Chinese zodiac year that you are born in and luck will be on your side,” he said. “So when I was 24, it was the Year of the Dragon. I decided to call up the regional television broadcaster, in Rostov-on-Don, and speak to the film department.” 
Zavyalov was told there were no jobs, but was given the phone number of the channel’s head director. “She must have liked something in my voice because next thing I knew I had a screen test.”
Not everything ran so smoothly. After the screen test, “when I saw myself on TV for the first time, I was horrified and in absolute shock,” said Zavyalov, shaking his head. “Apparently that’s everyone’s first reaction.” 
Unfortunately, the feedback from the producers was no better, and he was told to go home, practice working on his pace of speech and to read out loud every day. 
They said they would give him a call if something relevant came up, but Zavyalov was skeptical. 
Six months later, he was invited for another screen test. 
“I was still disgusted at my appearance on screen but I got the job,” he said. 
The job was originally as a part-time announcer and the pay was low, but Zavyalov became a full-time newsreader on the show “Day of the Don” within two months. 
His resignation from his engineering job came as no surprise. 
“They saw me on the television at work,” he said. “In the ‘80s, the television industry was a little bit magical, and they were proud.” 
People started to recognize him.
“At first it was flattering, but after a while it got to be too much,” he said. 
“I always had to dress up just to go out with friends and people at restaurants would whisper and point at me. I didn’t like it.” 
Zavyalov has been working for the Rossiya channel since 1998 and says his favorite part of the job is “getting the news first-hand and delivering it to an audience.” However, he is easily frustrated. 
“When the material they give you is raw and badly edited, I lose my temper very quickly. I hate making mistakes, especially on air.”
His co-presenter, Kristina Aristova, agreed. 
“Slava is very demanding to work with, most of all on himself,” she said, using Zavyalov’s nickname. 
“When he does lose his temper he’ll be the first to apologize. … Because he is such a perfectionist, I can completely rely on him.”
Their work schedule is tough. During a working week, Zavyalov is picked up from his home at midnight, and starts work preparing and editing the information at 1 a.m. He is on air from 5 a.m. until 8.45 a.m. and gets home at about 10 a.m. 
“You can never sleep nine hours straight during the day like you can at night,” he said.
 “You are pretty much invisible to friends and family because even if you are awake, you are too tired to see them.”
Zavyalov’s advice is to “be your own harshest critic.”
“In Soviet times, they didn’t let just anyone get on TV like they do now; you have to be tough on yourself or you won’t improve.”
While Zavyalov loves his job, he only plans to stay in front of the camera for another five years. 
“I know in the West, news shows like their presenters to age on camera, as the audience trusts them more. But for me, I want to leave while I’m at my peak.”

TITLE: A Changing Partnership
AUTHOR: By Tony Brenton
TEXT: On Wednesday, there was a major reception at the British Embassy in Moscow to mark the departure of the Department for International Development, or DFID, the British government’s bilateral development program. DFID has been active in Russia since the early 1990s and has funded over 800 projects.
The centerpiece of DFID’s “going away” party was the screening of a new documentary film, “DFID — the Russian Story” about the organization’s impact here. Some of my colleagues from the United Nations, the European Union and the Russian government had been interviewed for this film, which is available from the British Embassy’s press section, and it was clear that they were genuinely impressed by the work that DFID has done with its Russian partners. The head of USAID said DFID “punches above its weight”; while its budgets were fairly limited, the impact of its projects has been high.
Considering that DFID has worked in Russia since the early 1990s in almost every sector and most regions, it is difficult to describe in a few words what it has done. It has worked on reforming the social protection system, on the HIV-AIDS issue, on public finance, on developing civil society and small and medium-sized enterprises, on environment, trade and conflict prevention.
Poverty alleviation is the driving principle of DFID’s work, and the way we go about this is by working in close partnership with Russian institutions at federal and regional levels. We look at the issues around poverty and try to build the capacity within the public administration to address them more effectively. For example, a social research project in Nizhny Novgorod showed that the most vulnerable members of society were in fact unemployed families with lots of children — not old people as had been assumed — and this helped social services to improve their targeting of benefits.
There are two significant points about DFID’s departure from Russia: It is a good example of how well Britain and Russia can work together on practical issues; and it is an indicator that Russia, as an increasingly wealthy country, no longer needs the kind of bilateral assistance that DFID provides to the world’s poorest nations.
The media sometimes raise questions about the political relationship between Russia and Britain, and there are issues about which we disagree. But as ambassador, I have been struck by how well we work with our Russian counterparts on a practical basis. DFID’s programs are the best possible evidence of this.
Through the DFID program, British and Russian experts have worked at the federal and the local level on complex and sensitive issues like public administration reform, working out ways of dealing with the HIV-AIDS epidemic, juvenile justice and encouraging foreign direct investment. None of this would have been possible if there had not been a strong sense of trust, mutual respect and discretion built up over many years.
Ending these partnerships and relationships will be difficult for all involved. On the one hand, Russia is a member of the Group of Eight and is becoming increasingly active in helping less developed countries. On the other hand, the reform process in Russia is still not complete. Too many people still live in poverty, and the kind of bilateral aid that DFID offers is arguably still needed.
In 2002, the British government decided to withdraw its support from the so-called middle income countries in order to concentrate its support on the poorest countries of Africa and Asia. Russia was classified as a middle income country, along with much of Latin America, and the painful decision to leave was made.
Fortunately, this is not the end of British bilateral support to Russia. Although its office in Moscow will close at the end of March, DFID will maintain a presence — with a particular focus on helping Russia implement its G8 commitments. In addition, we have the Global Opportunities Fund, which is another instrument with which we have been able to show that we can work successfully on practical issues with our Russian counterparts.
And Russia will have its own role to play in the international aid sphere. Having learned some useful lessons through our programs, Russia is now considering setting up its own donor organization to offer funding and expertise to poor countries of the world. It has already written off much debt from highly indebted poor countries.
I welcome this trend. It brings Britain and Russia even closer together — as partners, fighting poverty worldwide. If this is DFID’s main legacy, we will have done our job well.

Tony Brenton is the British Ambassador to Russia.

TITLE: Russian Transfer Pricing Rules: On the Verge of Change
AUTHOR: By Ruslan Vasutin and Yekaterina Kosheleva
TEXT: Transfer pricing rules were first introduced in Russia in 1999 and since then the “arm’s length” concept has remained relatively immature. The weakness of the legal framework played a great role in the notorious Yukos tax case where the tax authorities were forced to apply and further develop a “bad faith taxpayer” concept to penalize the company for tax evasions instead of adjusting the intra-group resale prices used. 
During the last couple of years all attempts to amend the transfer pricing rules were severely criticized and “died” at first or second readings in the State Duma. There came an understanding that Russian transfer pricing rules required fundamental changes for the development of a more effective legal framework. Things turned serious, and now it seems that after roughly a year of discussions,  a new chapter of the Tax Code specifying  transfer pricing rules will be introduced to the State Duma this spring.
The prospective legislative developments drastically change the previous guidelines and bring them more in line with OECD standards.  The draft law introduces three new transfer pricing methods – the method of secondary product, transactional net margin method (TNMM), profit split method (PSM) – that shall be applied along with currently existing CUP, subsequent sales method and cost plus method. The priority of methods would be changed as well – CUP would be the preferable method, PSM has the lowest priority and all other methods shall be applied under the best method rule.
Moreover, the new rules provide a detailed description of methods that would permit the elimination of certain loopholes in current legislation. For instance, the draft law finally defines the notions of “regular costs” and “regular profit” required for application of methods. 
The main idea behind the innovations is to prevent shifting income between a chain of companies inside and outside Russia.  The aim is to allow the tax authorities to specifically focus on transactions involving “low-tax” or “tax haven” offshore jurisdictions which would be subject to specific transfer pricing control.  
Another revolutionary development relates to the definition of ‘related parties transactions’. The Tax Code currently envisages very narrow criteria stipulating that for tax purposes only parties with more than 20 percent direct or indirect capital participation shall be deemed related. And although the court may prove the dependence on other grounds, the need for more advanced regulations is obvious. 
The new rules take a significant step toward preventing tax evasion schemes, extending the scope of  controlled transactions to  transactions between affiliated parties, “sister companies” (providing the parent owns over 20 percent in each company) and entities belonging to “50 percent chains.” On the other hand, transactions with over 20 percent price fluctuations during a “limited” period of time would not be a subject to control. The latter is definitely a progressive development as currently bona-fide taxpayers providing services or selling goods to clients at a discount are often likely to be involved in disputes with the tax authorities.
It is thought  that under the new rules the tax authorities will be entitled to adjust the price only if it falls outside the 25 percent-75 percent band  of the arm’s length prices corresponding to the tested transaction.  In comparison to deviation from a single arm’s length price (as envisaged by the current rules) such an approach is certainly more appropriate but with the  downside that it would require special legal regulations to prevent so-called “range-fittings” techniques.  At the same time, the new draft law does not solve the fundamental problem of  Russian transfer pricing rules which is that all taxes can be adjusted including not only corporate profits tax, but VAT as well, if the initial price is revised by the authorities.
Notably, to define the arm’s length price, the new rules would permit the use of appraisal valuations and information obtained from  state statistical institutions, customs authorities and some other sources. The notion of “official sources of information” would be eliminated from the law.  
As a revolutionary change, the draft law envisages the introduction of transfer pricing documentation requirements. Taxpayers whose controlled transactions with the same legal entity exceed one million rubles ($38,500) per year, would be required to submit to the tax authorities new documents describing the nature of the transaction(s), functions and risks of the entities involved, applied transfer pricing method and marketing strategy. Obviously, the new rules on documentation would significantly increase the administrative tax burden for  taxpayers and would be beneficial to the tax authorities as the latter would be able to maintain a powerful internal informational source to track controlled transactions.
Starting in 2010, the tax authorities plan to go ahead and provide the taxpayers with the opportunity to conclude advance pricing agreements (APA) permitting the reconciliation of the price, between the tax authorities and the taxpayer and/ or transfer pricing method applied by the latter in controlled transactions. The draft law envisages significant 1.5 million ruble  fines for violating APA terms; it would cost the same for the taxpayer to file an APA application. 
Certainly until the final bill is eventually submitted to the Duma it is hard to expect  the authorities  to fundamentally change the rules, but nevertheless, in the light of prospective changes,  taxpayers should expect the increase of  transfer pricing risks in the future. To sustain transfer pricing positions it is recommended that taxpayers take some precautionary actions in advance. 
One of the most effective measures to mitigate future tax risks already taken by retail groups in particular is the obtaining of defense transfer pricing reports including approval of the market price applied by the taxpayer. And although there are no current transfer pricing documentation requirements in Russia, the Supreme Arbitrational Court has confirmed that the courts must accept and consider the documents submitted by the taxpayer to support its tax position, which significantly increases the taxpayer’s chances of winning the case. 
Under the new rules, transfer pricing risk management would be especially relevant for multinational enterprises (MNEs) which, with the large volumes of intra-group transactions are the tax authorities’ real tidbit for the tax authorities. And while in the current legislative framework the latter could only dream of “the Russian Glaxo SmithKlineare case” as soon as the rules are improved, the MNEs would be the first to try them on. And, as it could be anticipated those companies going through the process of reorganization or holding restructuring shall become the authorities’ primary targets and bear most of the significant risks related to transfer pricing .

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

TITLE: Mild Winter Boosts 
Production
PUBLISHER: Reuters
TEXT: MOSCOW — Warm weather continued to support Russian industrial production’s strong annual growth rates last month, data released by the State Statistics Service showed Friday.
February industrial output rose 8.7 percent year-on-year after a gain of 8.4 in January, bringing year-to-date growth to 8.7 percent compared to just 2.7 percent in the same period a year ago.
“The reason behind the increase is the same as last month — previous year’s weather,” said Vladimir Tikhomirov, chief economist at UralSib Bank.
He said the strong year-on-year growth rates in February and January were due to a low base for growth provided by an extremely cold winter in 2006.
Strong industrial growth also shows the ruble appreciation has had little impact on producers.
The State Statistics Service data showed the sharp increase in February industrial growth was led by manufacturing, which rose by 14 percent versus February last year.
“The main driver is the consumer sector … proving that the factors driving economic and industrial growth have changed, which is especially noticeable if you compare it with the weak dynamics of the resource sector,” Tikhomirov said.

TITLE: S. Africa, Russia Explore Nuclear Ties
AUTHOR: By James Macharia
PUBLISHER: Reuters
TEXT: PRETORIA — South Africa is considering helping Russian state oil firm Rosneft and gas giant Gazprom in making liquid fuel from natural gas or coal, a cabinet minister said on Monday.
South Africa’s Mining and Energy Minister Buyelwa Sonjica said that PetroSA officials would hold technical talks on its gas-to-liquid (GTL) technology with the two Russian firms, which are in the early stages of exploring synthetic fuel production.
“There are plans to have such talks with officials of Rosneft and Gazprom. PetroSA will be involved in the talks, which will be on technology exchange to help them produce gas- or coal-to-liquids (CTL),” she said after a formal briefing by senior leaders from the two countries.
PetroSA runs South Africa’s biggest GTL pant at Mossel Bay.
Sasol, the world’s biggest maker of fuel from coal, said it remained committed to growing its GTL and CTL potential globally. Sasol declined to comment on whether it was involved in talks with the Russian companies.
Some media reports have said Rosneft officials visited Sasol’s plants in South Africa.
Sasol will later this month start shipping fuel from its 34,000 barrel-per-day Oryx GTL plant in Qatar, the world’s largest gas-to-fuels plant.
Sonjica’s comments were made after a press briefing by South African Deputy President Phumzile Mlambo-Ngcuka and Russia’s Prime Minister Mikhail Fradkov, who is visiting the region accompanied by officials from various Russian firms.
Sonjica also said South Africa and Russia will in July sign a landmark nuclear energy agreement that would see Russia sell processed uranium to South Africa.
The deal may also include the possibility of having some of the uranium processed in South Africa and sold internationally.
“We are talking about low-enriched uranium for energy production, and we are yet to specify the quantities and other details,” Sonjica said.
Russia has said it is ready to help build new nuclear power stations in South Africa and join ventures to mine uranium for the world market. The two countries have previously mentioned plans to cooperate in selling processed uranium internationally.
South Africa has earmarked uranium as a strategic mineral and will start stockpiling the sought-after nuclear fuel, in part to ensure it can power an ambitious multi-billion rand expansion of its own nuclear power industry.
The country, which operates Africa’s only nuclear power station, plans to build a second nuclear power station in a bid to boost energy supplies as power demand soars.
Russia is reorganising its civilian nuclear sector as it seeks to widen sales of nuclear technology abroad, expanding into the energy-hungry markets of Asia and Africa.

TITLE: Uranium Enrichment Center To Start Work
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia plans to put its international uranium enrichment center into operation soon, First Deputy Prime Minister Sergei Ivanov said Monday, according to Russian news agencies.
The center, at Angarsk in Siberia, is to enrich uranium that would be used for civilian purposes by other countries that have made nonproliferation commitments; the center also would reprocess used uranium to ensure it is not converted into material that could be used for nuclear weapons.
President Vladimir Putin proposed setting up the center last year, and he and U.S. President George W. Bush adopted a joint initiative on creating such centers.
Ivanov said inspectors from the International Atomic Energy Agency would visit the center on Tuesday.
“We figure on beginning work there in the very near future,” Ivanov said, according to the RIA-Novosti and ITAR-Tass news agencies. The first country to participate will be Kazakhstan, a major producer of uranium, Ivanov was quoted as saying.
Russia has proposed trying to resolve the controversy over Iran’s nuclear program by providing reactor-grade enriched uranium and then having the used fuel shipped back to Russia. Iran has resisted the proposals, although it has not formally rejected them.

TITLE: Morgan Stanley Reopens $2.24 Billion Russia Fund
AUTHOR: By Hui-yong Yu
PUBLISHER: Bloomberg
TEXT: SEATTLE — Morgan Stanley reopened a $2.24 billion real estate fund it raised last year, tapping investors for another $1.12 billion to be spent over the next 18 months on assets including stakes in Russian property developers. 
New York-based Morgan Stanley is keeping 25 percent of the profits on the Morgan Stanley Real Estate Special Situations Fund III, up from an average of 17.5 percent on the prior fund, raised in 2000, Chief Investment Officer J. Timothy Morris said during a pitch to the Washington State Investment Board on Mar. 7. 
Morgan Stanley, the biggest property investor among Wall Street banks, is raising more capital to take advantage of a building surge in countries such as India and Brazil, where rising incomes and economic growth are spurring residential and commercial construction. 
“This is a very emerging market-focused fund,’’ Morris told the trustees who oversee Washington’s investments in real estate. Aside from Germany and Italy, “there’s not a lot of distress out there,’’ now that Japan’s real estate market is on the mend, he said during Wednesday’s meeting. 
Morgan Stanley’s special situations fund had 42 percent of its assets in China as of Dec. 31, a percentage the firm expects to shrink over time, Morris said. Residential real estate accounted for 41 percent of net assets, followed by office properties and logistics, hotels and retail, according to his presentation. 
The firm made its first real estate investments in India and Russia last year. Morgan Stanley bought about 10 percent of RosEuroDevelopment, known as Red, and later formed a joint venture with Altarea, a French shopping center developer, to own 20 percent of Red. Morgan Stanley’s special situations fund owns 8.8 percent of Altarea. The fund also bought about 15 percent of RGI International Ltd., a Guernsey, Channel Islands-based company that develops property in Moscow. 
In January, Morgan Stanley invested about $152 million in Oberoi Constructions, a developer based in Mumbai, after investing about $65 million last year in Alpha G:Corp Development Private Ltd., headquartered in New Delhi. 
Similar to a venture capital fund, the special situations fund aims to spend more than half its capital buying shares of real estate companies before they go public, Morris said.

TITLE: Ruric Plans
PUBLISHER: The St. Petersburg Times
TEXT: ST. PETERSBURG - Swedish construction concern Ruric AB plans to invest up to $5 billion into real estate projects in St. Petersburg by 2017, Interfax reported Friday citing the company’s general director Thomas Zakariasson.
Ruric will construct about 1.5 million square meters of commercial real estate. The projects will be funded by Swedish banks and American and British real estate investment funds.
Current projects being realized by Ruric in St. Petersburg are valued at $1 billion. They include the reconstruction of some buildings in Apraksin Dvor.

TITLE: Prospects for a New EU-Russia Agreement
AUTHOR: By Fraser Cameron
TEXT: Both the European Union and Russia are facing uncertain times. The EU remains deadlocked over the future of the constitutional treaty designed to strengthen the union and streamline its decision-making processes. In Russia all eyes are on the presidential election next March to see who will take over the Kremlin.
Europe is also watching the race to succeed President Vladimir Putin, and the EU is actively seeking a new energy policy, partly in response to the disruption of Russian supplies to its neighbors. Add in European concerns about the state of democracy in Russia, and it raises questions about the advisability of carrying out what will inevitably be long and complicated negotiations for a new EU-Russia treaty.
EU-Russia relations are currently carried out under the auspices of the 1997 Partnership and Cooperation Agreement, or PCA, which was negotiated in 1994 during the Boris Yeltsin years but took over two years to ratify. The PCA is due to expire this year unless agreement can be reached on a new pact. Both Moscow and Brussels have said that they want a new deal, but Warsaw has vetoed any talks and said that it will continue to do so until Moscow lifts a ban on Polish meat imports. Russia is citing health issues as grounds for the ban.
Both sides seem to recognize that, despite the many problems, negotiations are inevitable. Moscow’s general position is that the PCA was negotiated at a time when Russia was weak and that the negotiations have to be carried out between equals this time. Brussels, meanwhile, wants a new PCA in place to provide a legal base for developments in certain policy areas over the past decade, including in the sensitive areas of legal and police cooperation and, of course, the energy sector.
There are some on the European side who argue that this is not the time for the EU to embrace an increasingly authoritarian Russia. Better wait, they argue, and see if Russia fulfills its existing international commitments regarding democracy and human rights, or at least until we find out who takes over as president in 2008. Others argue that Russia is too important to put on the back burner and that both sides have a major interest in working toward a new and comprehensive treaty.
These pragmatic voices are more likely to carry the day, but they will have to take into account public opinion. Public perceptions play an increasingly important role in European politics and the high-profile murders of Russians, the country’s heavy-handed approach to relations with its neighbors and its position with regard to frozen European conflicts has also not won it many friends. Add in crackdowns on the media, civil society and the judiciary, and there is real concern that it might be impossible to get a new treaty ratified by all 27 EU member states.
One major factor in all this is the replacement of European leaders who have had good relations with Putin by politicians whose attitudes toward him are cooler. Angela Merkel replaced Putin’s friend, Gerhard Schroder, as German chancellor last year, and this year will bring the departure from office of two other political heavyweights, French President Jacques Chirac and British Prime Minister Tony Blair. Their replacements will need some time to settle in before they and other leaders try to pick up the pieces of the failed constitutional treaty. In the meantime the EU will continue to muddle through under existing rules.
In recent years, it has been the German, French and British leaders who have set the tone for the EU’s policy on Russia. The attitudes of Gordon Brown, who is expected to replace Blair this summer, and the French presidential candidates toward Russia are unknown. Merkel, however, has a very different attitude to Russia than her predecessor, perhaps because she grew up in East Germany, under Soviet control. She is not anti-Russian — she speaks the language — but she does not think that Moscow deserves special treatment. When Russia cut the flow of oil to Germany and several other EU countries in January because of a dispute with Belarus, she didn’t mince words.
“It is unacceptable,” she said, “when there are no consultations about actions of this type. That always destroys trust.” This was the firmest stance a German chancellor has taken with a post-Soviet Russian leader, and Merkel’s comments were made, moreover, in her capacity as the head of the government holding the rotating EU presidency, a post that she had assumed just days before. It is difficult to imagine any other European leader speaking so directly.
There was also a reaction from Brussels. “We are paying for these energy resources and are never late in our payments,” said EU Energy Commissioner Andris Piebalgs. “We have a right to insist that you never disrupt supply.”
Despite Piebalgs’ stern words, there is clearly the chance that such a cutoff could happen again, and this understanding was part of the background last month as the European Commission began discussing plans to achieve energy savings throughout the union. Russia’s action means that member states are now more likely to take seriously the commission’s plans for energy security and diversification of supplies. They are quietly reconsidering their energy calculations to try to become less dependent on Russia, which supplies one-quarter of its oil and 42 percent of its natural gas.
Merkel has been saying that Germany should reconsider its plan to phase out nuclear power by 2020, although she cannot move unilaterally in this direction under the terms of the current coalition agreement with the Social Democrats. More important for the near future, she is urging private industry to build a network of gas pipelines across the EU connected to liquefied natural gas ports in Germany and elsewhere. That would give the EU, and especially the former communist countries of Eastern Europe, an alternative to heavy dependence on Russian energy.
So the path toward a new PCA could be a difficult one. Both the EU and Russia will continue to concentrate out of necessity on developments in domestic politics, but it is vital to maintain and deepen the dialogue between both actors. There is a huge agenda for the EU and Russia to cover regardless of any new treaty negotiations. Kosovo, Iran, Kyoto, WTO accession and combating terrorism are all areas where EU-Russia cooperation is hugely important. A new deal has to be signed.
But this is going to require open and frank discussion of common interests and differences. A sound, long-term relationship cannot be built without common values. The degree to which the EU is able to encourage Russia to recognize these values will have a direct effect on the prospects for and contents of a new PCA.

Fraser Cameron is director of EU-Russia Center.

TITLE: Abundance and the Absence of Order
AUTHOR: By Alexei Bayer
TEXT: Nearly 150 years ago, poet Alexei Konstantinovich Tolstoy wrote a tongue-in-cheek history of Russia, with the oft-quoted refrain: “Abundant is our land, / It lacks only order.” The poem plays on the account in the Povest Vremennykh Let, known in English as the Primary Chronicle, of how, in search of order and discipline, the principalities of ancient Rus invited Varangian princes to rule their land.
It goes on to tell how centuries later Peter the Great visited the Netherlands, whereupon “he gave us all a clean shave, / And by Christmastide — what a miracle! / Dressed us all like Dutchmen.”
Very much in line with Tolstoy’s refrain, Russian football exhibits a brimming purse and complete lack of order. Nor has Tsar Peter’s admiration for the Dutch diminished in modern Russia. Two Dutch Varangians were hired last year to try to bring order to chaos — one as manager of St. Petersburg club Zenit and the other to manage the national team.
Football is a microcosm of society, and Russian football displays all of the ills that dog post-communist Russia. It is a new system, featuring rich private owners and corporate sponsors, but it has been grafted onto the old one.
Back when the Soviet Union still maintained the fiction of amateur sports, football players held no-show jobs as automotive engineers. Now, international stars play for teams called the Central Army Sports Club and the Wings of the Soviets.
The market forces in football are skin-deep — just as they are in business. President Vladimir Putin is free to “correct” contracts between the football league and private broadcasters, just as he can tell private companies where to invest.
Russia is a huge country, but greater Moscow is home to seven of the 16 Premier League teams. Torpedo was relegated last year, but it has been replaced by Khimki. The national championship is typically an incestuous Moscow affair, even though Gazprom, which increasingly looks like Putin’s next employer, has been pumping gas dollars into Zenit.
All the private wealth and conspicuous consumption contrast with lousy public infrastructure. High-paid stars play on atrocious fields in rickety stadiums. Like officials in life, football referees ply their trade under a “for sale” sign. Just as Russian business is sordid and murky, so in football there are frequent allegations of thrown matches and other forms of fraud. As Russia isolates itself from the rest of the world, it too is limiting the influx of foreign players, called “legionnaires” in Russian.
Putin’s rule has been characterized by the gradual takeover of power by his St. Petersburg’s buddies. Accordingly, Vitaly Mutko succeeded a long-serving Soviet-era bureaucrat as the head of the Russian Football Union, extending the power vertical into football.
It will be interesting to see whether the Dutch manager he hired brings order to the national team. Surely it has nowhere to go but up. It barely made it to the 2004 European Championship, suffering defeats against such powerhouses as Georgia and Albania, and missed the 2006 World Cup entirely.
The plethora of oil money buys no more happiness in football than in real life. Or rather, money buys only the second-best option. Surely CSKA’s victory in the 2005 UEFA Cup is a huge achievement for Russian football, but the UEFA Cup is a distant runner-up to the Champions League crown.
Among the many foreign players on Russian teams there are no real big names. Nor are there foreign youngsters maturing in Russian clubs with the potential to be future stars. Lack of order and discipline is a terrible thing for an athlete, which also makes it difficult to attract stars.
Billionaire Roman Abramovich did turn his Chelsea into an international powerhouse. But then again, things are no different in real life, where Russians tend to succeed best when they leave their native country.

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

TITLE: Education More About Attitudes Than Times
PUBLISHER: Vedomosti
TEXT: The final shape of reforms to the country’s system of higher education appears to have already been decided. The government has already signed off on draft legislation that calls for universities to switch over gradually from the current system, which is geared toward the preparation of specialists and based on a five-year program, to a two-stage system offering bachelor’s and master’s degrees.
The aim of the reform is to bring the country’s post-secondary education system in line with the Bologna Process, with one of the positive effects being that degrees granted here will more readily be recognized in Europe. As always, the ultimate effect of the reforms will depend on their implementation, but any modernization in university education should help our institutions of higher learning integrate themselves into the modern global and national economies. Bringing the system of education in line with international practice will also help its graduates integrate themselves into international labor markets.
Those behind the changes insist that the current system has outlived its usefulness. They say its main role is helping young men avoid being conscripted for military service, that it bears no relation to contemporary economic conditions, and that it does not allow Russian-educated applicants to compete fairly on the world labor market. According to data from a World Bank study published in 2004, a mere 20 percent of all graduates end up working in their field of specialization.
The people behind the proposed changes hope they will ultimately make the country’s education system and the graduates it produces just as competitive as its energy resources and military technology. But they rightfully point to a number of problems that threaten to undermine the benefits involved.
The changes will necessitate a total redesign of the standard textbooks, which will have to be re-worked to reflect the reduction of the term of study from five to four years. The Education and Science Ministry will also have to reach an agreement with the Defense Ministry that will free graduates from military service if they chose to take a short break (two or three years) to gain real work experience between completing their bachelor’s degree and enrolling in a master’s program.
There are also psychological barriers that will have to be overcome. In a study by the Higher School of Economics published last year, 57 percent of students surveyed planned to stick with the five-year system, 36 percent planned to work toward a master’s degree, and a mere 3 percent were interested in receiving a bachelor’s degree.

This comment appeared as an editorial in Vedomosti.

TITLE: Postponing the Inevitable
AUTHOR: By Nikolai Petrov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Last Sunday brought the last major elections ahead of the State Duma vote in December. These affected almost every region, including 14 that elected legislative assemblies, two that held referendums on merging territories within their regions, and others that held municipal elections. More than 30 million people voted.
But the elections were more important for the country’s political elite than for the voters, as they decided the fate of all parties, from the newest — A Just Russia — to the old parties on the liberal right. Taking part as a unified party for the first time, A Just Russia had to test itself against the main party of power, United Russia, to justify both its creation and its right to further funding and attention from political elites in the regions. Kremlin insiders had to be convinced of the wisdom of placing all their bets on the new party and withdrawing support for older, though loyal, parties that have proved difficult to control, such as Yabloko and the Union of Right Forces.
The votes in all but four regions were the first without minimum turnout requirements and the “against all” option on the ballots.
The most important results were as follows: A Just Russia finished second in five regions and won in Stavropol, thereby justifying its creation; The stage appears to have been set for just four parties, including A Just Russia, to win Duma seats in December; and there was a striking contrast between the small numbers who turned out for anti-Kremlin demonstrations in St. Petersburg one week before the elections and the huge numbers of pro-Kremlin voters who turned out on Sunday.
United Russia, in contrast to the other parties jockeying for position, had to hold off gains from potential challengers in order to declare complete victory. 
Although United Russia maintained its dominant place, it did not prevent other parties from making a strong showing, which is one of the few positive political developments in recent months. Political competition, even coming from an “artificial” creation like A Just Russia, is positive both for society at large and for those in power. What we are likely to see in the future is an increasing role for the invisible hand of the political market. Following the 2008 presidential election, we are likely to see a decrease in populist policy from the executive branch. This will help A Just Russia’s socialist slogans stand out better and in all likelihood improve its prospects.
With regard to the more immediate future, it is common to talk about the “big four” — United Russia, A Just Russia, the Communist Party and the Liberal Democratic Party — that will win Duma seats in December. Realistically, it makes more sense to talk of the “big one and the next three.” It will be like a stool with one thick leg and three skinny ones.
One question arising from all of this is: How honest and fair were Sunday’s elections? For those parties that were allowed to participate, the answer is that they were relatively fair, if only because those in power were channeling media, systemic and financial resources to two parties as opposed to just one.
But the problem remains that the resources necessary to compete were set aside for those two parties only and denied the others. The Kremlin clans were only interested in United Russia and A Just Russia, and made it the responsibility of the regional governors to make sure that the parties did well. 
This explains Yabloko’s removal from the ballot in St. Petersburg and the pressure exerted on other parties ahead of the vote. It was not in the governors’ interests that there be additional contenders when all votes were earmarked for United Russia and A Just Russia.
It’s not difficult to see that the Kremlin is making a big mistake by relegating a number of experienced politicians outside of the two pro-Kremlin parties to the margins of political life rather than finding ways to incorporate them into the system in parliamentary posts at both the federal and regional levels.
Sooner or later, this policy will come back to haunt the country as a whole. The era in which the multitude of problems facing the country can be ignored thanks to enormous inflows of petrodollars will one day come to an end. At that point, all of the difficult jobs that have been put aside during President Vladimir Putin’s second term will have to be tackled. Unfortunately, a lot fewer experienced and effective people will be around to do the tackling.

Nikolai Petrov is a scholar in residence at the Carnegie Moscow Center.

TITLE: A Little House of Horrors on Ulitsa Petrovka
AUTHOR: By Kevin O’Flynn
PUBLISHER: Staff Writer
TEXT: MOSCOW — The barbed wire and watchtower visible through an archway across from the Marriot Hotel stand in stark contrast to the restaurants and upscale boutiques on Moscow’s fashionable Ulitsa Petrovka.
They are part of one of the city’s most unusual, and neglected, museums, devoted to educating people about the horrors of the Soviet forced-labor camps.
“Our main idea is to document what happened, to show personal memories and to be accurate,” Gulag Museum guide Oleg Kalmykov said.
Kalmykov dresses in a typical prison guard’s uniform as he leads visitors through the museum. Twelve photographs of political prisoners who died in the Gulag, such as theater director Vsevolod Meyerhold and Comintern chief Nikolai Bukharin, hang in the courtyard.
The museum basement has a mock up of a Gulag barrack and camp office.
“The coat is genuine,” said Kalmykov, pointing to a heavy, wool coat hung up on the wall of the office. Kalmykov knows it is genuine because it belonged to his grandfather, who served as a prison camp guard.
His other grandfather was a prisoner in the same camp.
“One grandfather was imprisoned, the other guarded,” said Kalmykov. “In Russian families there are lots of these kind of tragedies.”
The museum impresses on visitors the enormous size of the Gulag system. A large map of the Soviet Union shows the vast network of camps across the country.
It provides information about the colossal construction projects driven by prison labor, such as the Moscow-Volga Canal, which cost hundreds of thousands of lives.
The map shows there was even a camp on Vrangel Island, one of the most remote and inhospitable places in a country with a lot of competition for that title. The camp was probably built to provide a runway for U.S. planes bringing Lend Lease aid, Kalmykov said.
Pictures by former prisoners in the camps hang on the museum’s walls. Igor Abrosov’s pictures, which used to hang in the Tretyakov Gallery, tell of his father, Pavel Abrosov, one of the founders of the Sklifosovsky First Aid Institute, and of his sufferings in the Gulag.
The city-funded museum was originally conceived as a four-story complex complete with video displays, a chapel and numerous exhibition halls.
Three years on, however, the museum occupies just 300 of the 3,000 square meters it was promised, and it faces pressure to move to a less expensive location, director Anton Antonov-Ovseyenko said.
Antonov-Ovseyenko, 82, spent 12 years in the camps. His father, Vladimir Antonov-Ovseyenko, was a revolutionary who later became a prosecutor in 1934-36. He said the museum was needed because it touched nearly everyone in the Soviet Union.
“The Gulag touched every second family,” he said.
The museum, which works with the Federal Archive Agency, is currently limited to an exhibit about political prisoners in the Gulag, acronym for the Main Administration of Corrective Labor Camps.
A system of forced-labor camps was created in 1919, shortly after the Bolsheviks seized power. After a series of organizational changes in the 1920s, the system was consolidated as the Gulag in 1930. By 1936, it held some 5 million prisoners.
The Gulag was filled in three main waves — during the collectivization of agriculture in the late 1920s and early 1930s, the purges of 1936-38 and immediately after the end of World War II.
Estimates vary as to how many prisoners passed through the system; Alexander Solzhenitsyn, whose book “The Gulag Archipelago” first revealed the horrors of the system to people around the world, claimed that 40 to 50 million people served lengthy sentences in the Gulag from 1928 to 1953.
Some Western scholars estimate that as many 30 million people died in the camps from 1918 to 1956.
Following the death of Stalin in 1953, the population of the camps decreased dramatically as the result of mass amnesties. The Gulag itself formally ceased to exist when its activities were taken over by various ministries and the camps were placed under a new organization, the GUITK, or Main Administration of Corrective Labor Colonies.
The museum originally intended to deal with this tragic history in all its complexity, as well as the history of prison camps in the Soviet satellite states, but funds — and public interest — were lacking.
Fewer than 3,000 people visited the city-funded museum from 2005 to 2006, the only years for which data are available. On a good day, a dozen people might come through its doors. And with so few visitors paying the 30 ruble to 70 ruble entrance fee, the museum will not be able to expand on its own anytime soon.
Antonov-Ovseyenko wants to attract private sponsors, as he fears that city support will dry up or will be used as leverage to move the museum to a less desirable location.
Last Friday was a typical day at the museum. Apart from a group of French schoolchildren in the morning, the only visitors were a local pensioner and an English tourist.
“It is of little interest for the new generation,” said Antonov-Ovseyenko. “They are interested in television and the Internet, while the older generation is tortured by daily life — how their pensions are not enough to live on.”
Supporters of Stalin sometimes come to the museum and insist that the Gulag never happened, Kalmykov said.
The museum is better known among foreigners than Muscovites.
“I walked past and there was a sign. It is not in my guidebook,” said Lucy Bell, a software engineer from London, just before she was taken to the mock-up of a camp barrack in the museum’s basement. “It is really interesting.”
Despite a paucity of public interest, Antonov-Ovseyenko is convinced the museum is increasingly necessary in a society seemingly intent on whitewashing its past.
“It’s as if nothing happened,” he said, “The process of rehabilitation of Stalin has begun, and even [secret police chief Lavrenty] Beria, and it needs to stop.”
In January, NTV launched a series called “Stalin Live,” which has been criticized for glamorizing Stalin.
“This kind of museum is essential,” said Tamara Agafonova, 75, whose father was shot in 1943, and who was then exiled with her mother to Siberia. “For me it is very important that it exists.”
Agafonova volunteers at Return to the Truth, a group that helps former political prisoners who are retired or disabled.
There are other museums that deal with the Gulag. Perm-36 is a museum based in a former camp near Perm, closed in 1988. Israeli politician Natan Sharansky was a prisoner there.
The human rights group Memorial also has a small museum, as does the Sakharov Center, but the Gulag Museum is the most comprehensive.

TITLE: China Dominates as Russian Divers Slip Up
AUTHOR: By Beth Harris
PUBLISHER: The Associated Press
TEXT: MELBOURNE, Australia — China scored dominating victories in the men’s 3-meter and women’s 10-meter synchronized diving finals at the world championships Monday. 
Wang Feng and Qin Kai won the men’s gold medal by 39.84 points, giving Wang his second consecutive synchro springboard title. He won two years ago in Montreal with He Chong. 
Jia Tong and Chen Ruolin earned the women’s gold by 37.32 points, with Jia repeating the title she shared in Montreal with Yuan Peilin. 
Jia and Chen never relinquished the lead they built in the preliminaries. They earned three perfect scores of 10.0 for synchronization on their opening dives of the five-round final. 
In the men’s final, Wang and Qin totaled 458.76 points and benefited from two dramatic errors by the Russians. 
Alexandre Despatie and Arturo Miranda of Canada took the silver with 418.92. Germany’s Tobias Schellenberg and Andreas Wels finished third with 414.54, edging Americans Troy Dumais and Mitchell Richeson by three-tenths of a point for the bronze. 
Jia and Chen totaled 361.32 points. Australians Briony Cole and Melissa Wu settled for the silver with 324.00. Annett Gamm and Nora Subschinski of Germany took the bronze with 306.63. 
Americans Mary Elizabeth Dunnichay and Haley Ishimatsu finished fifth in the second competition together for the 14-year-olds. 
Wang and Qin were the leading men’s qualifiers going into the six-dive final at the indoor pool in Albert Park. But they immediately fell to fifth place after their opening dives, eventually moving up to fourth and then second before gaining the lead for good when the Russians stunningly earned zeros twice. 
“Under normal circumstances, the Russians may have won this competition because they performed pretty well in the first and second rounds,” Wang said through a translator. “It’s unusual that they made two mistakes in the final competition. Their dive is a bit harder compared to ours, maybe they felt pressure and made a big mistake like that.” 
The Americans’ fourth-place finish ended their streak of winning medals in every competition they had entered since pairing up last year. Dumais won a bronze in 2005 in Montreal with his brother Justin, who later retired to fly jets with the Air National Guard. 
However, their result qualified the United States for a spot in the Olympics next year. The top three teams, plus host country China, earned synchronized berths for Beijing. 
Dumais and Richeson were second after four rounds, but they slipped to fourth when Richeson overrotated on a reverse 2 1/2 somersault, creating a huge splash when his legs hit the water. 
“That’s the way it goes. We have no control over what the judges are going to give us,” Dumais said. “We just have to do better next time. We have to hit a dive a little cleaner, or we have to jump a little higher, go in the water with less splash. It’s hard enough doing one dive by yourself, let alone combining with someone else.” 
Russians Alexander Dobroskok and Gleb Galperin led through the first three rounds before things got weird. 
First, a bank of lights above the boards went dark as brothers Nicola and Tommaso Marconi of Italy were preparing to dive. 
Then, Dobroskok failed to complete two dives, earning zeros and dropping the Russians into last place, where they stayed until the end. 
“I’ve never seen that before. It looked like some kind of breakdown,” Despatie said. “The Russians were apparently the team to beat because they have very big dives. It shows anything can happen.” 
During the 25-minute delay, highlights of the opening ceremonies and action from the first two days of competition were shown on a big screen. The Marconi brothers used the extra time for a practice dive while others paced nervously and stretched or took turns bouncing high on the board. 
“The lights went out in practice this week and they said it was going to be fixed,” Despatie said. “I talked to the guy in charge and I said, ‘That would be bad if it happened in the meet’ and it did.” 
Galperin flubbed a couple of dives in morning preliminaries. At night, it was Dobroskok’s turn. 
Dobroskok and Galperin went into a reverse 3 1/2 somersault. But Dobroskok bounced once, stopped and looked over at Galperin, who completed the dive worth a 3.5 degree of difficulty. 
Aware of the costly mistake, the duo climbed out of the water and went their separate ways without saying a word. 
The same thing happened again on the Russians’ sixth and final dive. Dobroskok bounced once, then nearly fell off the side of the board before grabbing the railing to steady himself. Galperin went through with his dive, and the pair earned more zeros. 
“It was very sad for the Russian team,” Schellenberg said. “But it gave the other divers a chance to get a medal.” 
Dobroskok is no rookie, having won a handful of medals at previous world meets. 
As if to reassure himself, Dobroskok returned before the women’s final to try a spinning reverse dive off the springboard. He pulled it off without a hitch. 
Meanwhile, Natalia Ischenko took the solo technical gold at Rod Laver Arena, making Russia two-for-two in synchronized swimming. With a score of 99.000, Ischenko edged Spain’s Gemma Mengual Civil (98.000) in the new event. 
Japan’s Saho Harada claimed the bronze (96.833) in her first international competition as a solo swimmer. Christina Jones, a 20-year-old American, settled for fourth (95.500) with a routine that was inspired by Marilyn Monroe.

TITLE: Poll: Iraqis in Grip of Fear, Anger, Stress
AUTHOR: By Claudia Parsons
PUBLISHER: Reuters
TEXT: BAGHDAD — Four in five Iraqis have little or no confidence in U.S.-led forces and most think their presence is making security worse, but despite that only about a third want them to leave now, a poll showed on Monday. 
Four years after the U.S.-led invasion that toppled Saddam Hussein, insurgents kept up the pressure with bomb attacks in Kirkuk and Baghdad.
With Iraq bogged down in sectarian violence that threatens to tip the country into civil war, President Bush announced a strategy shift this year and is sending some 26,000 reinforcements for a security crackdown focused on Baghdad.
Bombers struck in the city of Kirkuk, to the north, on Monday, with two car bombs and four roadside bombs killing at least 12 people and wounding 39, police Brigadier Sarhat Qader said. Earlier police sources had put the toll at 18.
The city is a volatile mix of Shi’ites, Sunni Arabs, ethnic Kurds and Turkmen, and has seen growing sectarian violence.
A bomb in a bag near a Shiite mosque in central Baghdad killed four people and wounded 25 on Monday, police said.
With American public opinion turning increasingly against the Iraq war, a poll published by the BBC on Monday showed only 18 percent of Iraqis have confidence in U.S.-led forces.
The poll of more than 2,000 people, commissioned by the BBC, ABC News, ARD and USA Today, indicated Iraqis have become less optimistic about the future compared to a similar survey in 2005 when respondents were generally hopeful, the BBC said.
Asked whether their lives were overall better or worse than before the invasion, 43 percent said better, 36 percent worse and the rest about the same. Expectations for how things will be in a year were much lower than in 2005, with only 35 percent expecting improvement compared to 64 percent in a 2005 survey.
The survey showed sharp geographical variations, with confidence in U.S.-led forces highest in the north, at 46 percent, and non-existent in Baghdad, where 100 percent said they had not very much or no confidence in U.S.-led forces.
Overall, 18 percent of Iraqis expressed confidence in U.S. forces and 69 percent said their presence made security worse.
U.S. and Iraqi forces launched a major crackdown in Baghdad in mid-February that commanders say has already halved civilian deaths, largely through a reduction in the number of victims of death squad killings blamed on militias.
In Baghdad, the poll showed 100 percent said U.S. and other foreign forces had done a bad job in Iraq, opposed the presence of U.S.-led forces and said the presence of U.S. forces was making security in the country worse.
Despite that, only 35 percent of all Iraqis and 36 percent in Baghdad said U.S. forces should leave now.
The most popular view on how long they should stay was “until security is restored,” with 45 percent of Baghdad residents and 38 percent of all Iraqis picking that option.
Anti-war sentiment propelled Democrats into the majority in the U.S. Congress last November and the fourth anniversary of the Iraq war this week was marked by anti-war protests around the United States over the weekend.
Defense Secretary Robert Gates said on Sunday it was too early to evaluate whether the latest U.S. strategy was working but “so far, so good.” 
U.S. generals say it will probably be summer before the impact of the extra troops can be fully assessed, and have warned the troop increase could have a “squirting effect” where al Qaeda and insurgents would operate elsewhere, Gates said.

TITLE: BBC Makes Appeal For Release Of Journalist
AUTHOR: By Adel Zaanoun
PUBLISHER: AGENCE FRANCE PRESS
TEXT: GAZA CITY — The BBC appealed on Monday for help to find a veteran British correspondent who was kidnapped at gunpoint in the Gaza Strip a week ago, saying concern was mounting for his well-being.
Alan Johnston, the British broadcaster’s main correspondent in Gaza for the past three years, has been neither seen nor heard from since gunmen forced him out of his car while the 44-year-old was driving home from work on March 12.
“We call on everyone with influence on this situation… it is time to redouble our efforts, all of us, now that Alan has been missing for more than a week,” BBC Middle East bureau chief Simon Wilson told a Gaza news conference.
“Although we have not been able to establish exactly what has happened to Alan, it seems certain that he has been abducted and is being held somewhere in the Gaza Strip,” the BBC said in a statement released in London.
“As time passes, we are growing increasingly concerned about Alan’s safety.
“Over the past week, we have worked intensively with the authorities in Gaza and elsewhere to try to locate Alan, and we continue to receive assurances that everything possible is being done.
“It is disappointing that, after seven days, there has still been no firm word either about his whereabouts or his condition,” it said.
In a video released by the BBC, Johnston’s father Graham appealed to the captors to release his son.
“Holding Alan is not doing the Palestinian people any favors, quite the opposite,” he said. “It’s no way to treat a friend of the Palestinian people.
“All I can say to the men who are holding Alan (is) please let my son go, now, today.”
Experienced reporter Johnston, who was previously posted to Afghanistan and Uzbekistan, was one of the few Western journalists still based in the increasingly lawless Gaza Strip.
Palestinian president Mahmud Abbas and Hamas, the majority party in the new unity government, have condemned the abduction, the latest in a spate of kidnappings that has seen around 20 foreigners seized over the past year.
To protest against Johnston’s abduction, the Palestinian journalists’ union in Gaza City said it would observe a 24-hour strike on Tuesday. “We won’t guarantee any coverage, pending any Israeli aggression,” the union announced.
In the West Bank political capital of Ramallah, foreign and local journalists staged a sit-in at which Palestinian information minister Mustafa al-Barghuti condemned Johston’s abduction as an “unacceptable criminal act.”
Hostages are frequently used as bargaining chips to gain concessions from the Palestinian Authority, and so far all have been released unharmed.
The longest captivity endured by foreign hostages was the two-week ordeal last August of two journalists for the US-based Fox News television network.

TITLE: Pakistan Shocked By Death Of Coach
AUTHOR: By Waheed Khan
PUBLISHER: Reuters
TEXT: KARACHI, Pakistan — Several times after a poor performance by the Pakistan team he coached, Bob Woolmer would remind journalists grilling him that there were more important things in life than cricket. 
Inevitably, however, Pakistani newspapers on Monday linked his death from a suspected heart attack to the national team’s World Cup defeat to Ireland, a minnow of the cricketing world. 
“For Bob to go this way is sad and to be associated with such a performance is tragic,” Usman Samiuddin, a well-known cricket writer, said. 
Woolmer died in a Jamaican hospital at the age of 58 after being found unconscious in his hotel room. 
His death dominated the front pages in Pakistan. 
“Woolmer dies after shock defeat,” “Dejected Woolmer dead,” “Woolmer dead of heart attack after Pakistan’s shameful defeat,” were some of the banner headlines. 
However, there were also photographs of angry mobs burning and stomping on posters of Pakistan’s players, and critiques of Pakistan’s miserable exit from the World Cup. 
“His tragic death will offset some of the anger at the team’s performance. But it has been a bad week for Pakistan cricket,” former captain Rashid Latif said. 
The Foreign office said at its weekly briefing that Woolmer had endeared himself to Pakistanis who were sad to lose him at a time when the team was not doing well. 
“It is very sad that he died after a very poor performance by the team and his life ended on a unhappy note,” Tasnim Aslam, a spokeswoman for the ministry said. 
While Woolmer took criticism on the chin, he could not fathom the viciousness of the backlash and inevitable inquest about his cricketing credentials that followed almost every poor performance. 
The former England batsman, who was made coach in June 2004, never enjoyed a smooth ride with either the Pakistan team or cricket board, and had difficulty overcoming the handicap of being an outsider. 
Rumours of in-fighting surrounded the team before they went to the West Indies for the World Cup, and defeat by Ireland was seen by many Pakistanis as their team’s just desserts. 
“It is really sad the way he went,” said Javed Miandad, the feisty coach Woolmer replaced in 2004. 
“Even his worst critics I think are shocked.”

TITLE: Six Nations Dream Dies As Ireland is Denied By France
PUBLISHER: Reuters
TEXT: DUBLIN — Ireland’s hopes of a first Six Nations title since 1985 were undone twice by last-minute French tries in yet another tournament of high expectation that ended in frustration. 
Vincent Clerc’s effort at Croke Park ended the grand slam dream in the second round while Elvis Vermeulen’s injury-time score against Scotland on Saturday robbed the Irish of the championship on point difference on St Patrick’s Day. 
So, just as a year ago, they finished second to France having won four and lost one and this group of players is running out of time if they are really to prove themselves as the best the country has produced. 
While France, England and Wales spent the tournament experimenting and rebuilding, Ireland’s remarkably settled side merely set out to win it. 
That they could not when everything seemed to be in their favour must be a real worry as they approach the World Cup and a pool that includes France and Argentina. 
Brimming with Munster players fresh from winning the Heineken Cup, Ireland went into the Six Nations as favourites after an emphatic 21-6 win over Australia last November. 
But coach Eddie O’Sullivan said his side largely failed to live up to the standards set a few months ago when they also beat South Africa. 
“It would be hard to argue that except for the England match we hit the levels we set in the autumn,” he said earlier this week. “I’m not in a panic over it. We’re not too far from where we want to be.” 
O’Sullivan has devoted a lot of time to building a squad with the depth to withstand injuries but Ireland were without captain Brian O’Driscoll and scrumhalf Peter Stringer when they suffered their only defeat of the tournament against France. 
Playing their first game in front of a huge home crowd at Croke Park, Ireland recovered from a first-quarter onslaught to dominate the game. 
Clerc spoiled the party but O’Sullivan refused to be downcast. 
“If we got a shellacking by 50 points, we’d be worried about the World Cup but I wouldn’t mind being in the same boat in Paris with two minutes on the clock and see where the ball bounced,” he said. 
“On that performance I think we can go to France and win there. There’s nothing to be afraid of.” 
With O’Driscoll back in the driving seat Ireland produced what O’Sullivan described as a “clinical and ruthless” performance against England two weeks later. 
They handed the world champions their worst championship defeat, 43-13, and were well worth the mighty margin. 
Ireland’s form then took a dive, however, when they scraped a 19-18 win over Scotland in a flat performance. 
In the final game in Rome, despite some early struggles, Ireland found the confidence to throw the ball around. 
They poured on the points in the second half, scoring eight tries in all, to secure a 51-24 victory.

TITLE: Chavez Presses To Unify Left
AUTHOR: By Ian James
PUBLISHER: The Associated Press
TEXT: CARACAS, Venezuela — President Hugo Chavez on Sunday urged some of his political allies who are resisting his plan to form a single socialist party to leave his movement and go their own way, saying he hopes the split will be amicable even if they defect to the opposition.
Chavez aims to create the United Socialist Party of Venezuela to replace some two dozen smaller pro-government parties in the country, but the idea has faced resistance from the Podemos, Fatherland for All and Venezuelan Communist parties.
Chavez said he already considers the leaders of Podemos, including a handful of state governors and lawmakers, to be “almost in the opposition.”
“If you want to go, leave,” Chavez said during his television program “Hello, President.” “In reality, you aren’t indispensable.”
If some politicians refuse to join the new socialist party, they could form a splinter group outside of Chavez’s camp. The three parties hold small minorities in the 167-seat National Assembly, which has been entirely filled with Chavez’s allies since major opposition parties boycotted 2005 elections.

TITLE: Italian Fugitive-Turned-Writer Arrested
AUTHOR: By Tales Azzoni
PUBLISHER: The Associated Press
TEXT: SAO PAULO, Brazil — Accused of killings in his native Italy, militant 1970s leftist Cesare Battisti reinvented himself in France as a celebrated writer of police thrillers. But Paris got tougher on suspected terrorists and Battisti went on the run again in 2004, disappearing, apparently with the help of a French “support committee.”
Disappearing, that is, until Sunday, when police tracking a woman bringing Battisti money found the fugitive novelist near Brazil’s famed Copacabana Beach.
An extradition request was immediately sent to Brazil’s Supreme Court, which could send him back to Italy, said a spokesman for Brazilian federal police, Bruno Ramos.
Battisti “will try to ensure his rights,” said his Paris lawyer, Eric Turcon.
Like many leftists wanted for their roles in a tumultuous period of bombings and assassinations in Italy in the 1970s, Battisti, who escaped from an Italian prison in 1981, took refuge in France in the 1990s. He took advantage of a tacit policy, developed under Socialist President Francois Mitterrand, allowing Italian militants who took refuge in France the right to remain if they renounced their violent ways.
France was proud of its tradition as a haven for political refugees and disapproved of Italy’s use of mass arrests and informants to combat extremists. Some in France believed that Italian militants could not get fair trials at home.
Battisti was a member of Armed Proletarians for Communism, a group founded in 1977 that targeted mostly prisons and people who were believed to cooperate with law enforcement. He was accused of the slaying of a prison guard and of butcher Lino Sabbadin, who was slain in Milan on Feb. 16, 1979. Sabbadin had shot and killed a robber who had broken into his store months earlier.
Fleeing Italy and proclaiming his innocence, Battisti lived in France for more than a decade, gaining prominence by writing about two dozen books, including many dark thrillers.
He was convicted in absentia and sentenced to life in prison in Italy in 1990 for the slayings of the prison guard and Sabbadin.
He reiterated his claim of innocence of the killings in a book published in France a year ago.
“I am guilty, as I have often said, of having participated in an armed group with a subversive aim and of having carried weapons. But I never shot anyone,” he wrote in “Ma Cavale” (“My Escape”).
Mitterrand’s legacy left France vulnerable to criticism that it wasn’t doing enough to combat terrorism. As times changed, France adjusted its policy of sheltering Italians, as well as Basque militants accused of attacks in Spain.
In January 2003, Italian authorities formally asked France to extradite Battisti. Two months before then-Prime Minister Jean-Pierre Raffarin was able to sign an extradition decree in October 2004, Battisti disappeared again, failing to show up for a weekly check-in with judicial officials.
Law enforcement officials went on the hunt for him, while a support committee was formed to back his bid to remain in France. Artists and intellectuals rallied around him, including novelist Fred Vargas and philosopher Bernard-Henri Levy.
It was a young woman from the support committee, assigned to bring the fugitive money, who proved to be his undoing. Acting on a tip from Italian police, the French watched the woman for a month, tracking her to the Rio de Janeiro hotel where Battisti was found, French police officials said.
“Brazilian police had been following him for several months after receiving information from Interpol (the international police agency) in Paris and Rome,” Ramos said of Battisti.
It was not immediately clear whether the woman was also arrested Sunday. She was not identified by name or nationality.
In Rome, Italian Premier Romano Prodi telephoned to congratulate Interior Minister Giuliano Amato for the “brilliant operation.” Justice Minister Clemente Mastella said he hoped that Battisti would quickly be extradited to Italy, the ANSA and Apcom agencies reported.
Battisti is also accused of being an accomplice to the slayings of a police officer and jeweler Luigi Torregiani. Torregiani was killed in a gun battle in Milan on the same day Sabbadin, the butcher, was killed.

TITLE: Nadal Happy To Be Second Best
AUTHOR: By Ken Peters
PUBLISHER: The Associated Press
TEXT: INDIAN WELLS, California — Rafael Nadal has no trouble accepting his No. 2 ranking behind Roger Federer. 
“Right now, Roger’s not my competition. Roger is the best in history, so my goal is continuing winning tournaments and continuing being [high] in the ranking,” Nadal said Sunday after his victory in the Pacific Life Open. 
“I think if I play like this, I can win another major.” 
The 20-year-old Spaniard defeated Novak Djokovic 6-3, 7-5 Sunday to end what was — for him — a long winless streak. The championship was his first since he successfully defended his French Open title last June. 
“It was a very great week for me, a very, very important week,” Nadal said. “I have [gone] eight months without any title, but I came back with a big one.” 
When Djokovic’s forehand sailed long on the final point, Nadal raised his arms, then flopped on his back and lay there a moment, arms still extended, as the fans laughed and cheered. 
A five-time champion last year and an 11-time winner in 2005, Nadal had gone a stretch of 12 tournaments without a title. 
“Sometimes you’re a little luckier, a little bit more confident,” he said. “But well, I wasn’t a disaster in those eight months.” 
Federer, the three-time defending champion at Indian Wells, lost his first match in the tournament this year to end his 41-match winning streak. 
Djokovic, who won his third tour title at Adelaide the first week of this year, is ranked No. 13.

TITLE: Air Passenger Awakes Next To Deceased
PUBLISHER: The Associated Press
TEXT: LONDON — A first-class passenger on a flight from New Delhi to London awoke to find the corpse of a woman who had died in the economy cabin being placed in a seat next to him, British Airways said Monday.
The flight's economy section was full, and the cabin crew needed to move the woman and her grieving family out of that compartment to give them some privacy, the airline said.
The first-class passenger, Paul Trinder, told the Sunday Times newspaper that he was sleeping during a February flight from India and woke up when the crew placed the dead woman in an empty seat near him.
“I didn't have a clue what was going on. The stewards just plonked the body down without saying a thing,” the newspaper quoted Trinder as saying. “I remember looking at this frail, sparrow-like woman and thinking she was very ill. When I asked what was going on, I was shocked to hear she was dead.”
British Airways said in a statement that about 10 passengers die each year in flight and that while each situation is dealt with on an individual basis, safety is paramount.
“The deceased must not be placed in the galley or blocking aisles or exits, and there should be clear space around the deceased,” the statement said. “The wishes of family or friends traveling with the deceased will always be considered, and account taken of the reactions of other passengers.”
Because there was space in the first class cabin, that "allowed the family members traveling with the deceased some level of privacy in their grief," the airline said.
“We apologize to passengers in the first cabin who were distressed by the situation,” the statement said.

TITLE: U.S., North Korea Reach Sanctions Deal
AUTHOR: By Hiroshi Hiyama and Jun Kwanwoo
PUBLISHER: AGENCE FRANCE PRESS
TEXT: BEIJING — The United States said Monday it has struck a deal to release 25 million dollars of frozen North Korean assets, paving the way for progress in talks on ending the regime’s nuclear weapons program.
The move was announced as envoys from six nations met in Beijing to resume round-table negotiations that had been stymied by a long-running dispute over the U.S. financial sanctions.
Chief U.S. envoy Christopher Hill said all the money would be released from the Macau-based bank where it had been frozen since 2005 amid accusations of money laundering and counterfeiting.
“We feel this matter has been resolved and now we can move on to the next problems, of which there are many,” Hill told reporters after the U.S. Treasury Department announced the deal.
Later Monday, the Macau Monetary Authority confirmed in a statement that the funds would be released.
Pyongyang had insisted it would not implement a six-nation deal reached on February 13 until the sanctions dispute was resolved.
Under that deal, North Korea — which carried out its first atomic weapons test in October last year — would get badly needed energy aid and diplomatic concessions in return for shutting down its nuclear programs.
North Korea was given 60 days from the agreement to close its main reactor at Yongbyon and allow UN International Atomic Energy Agency inspectors back into the country to supervise.
In return, the impoverished state would initially receive 50,000 tonnes of heavy fuel, rising up to one million tons of that or equivalent energy if it permanently disbanded its atomic weapons program.
Chief North Korean envoy Kim Kye-Gwan said as Monday’s talks got underway that Pyongyang would close Yongbyon once it got the 25 million dollars back, according to China’s official Xinhua news agency and an official involved.
“Nuclear activities will stop at Yongbyon if the sanctions are fully lifted,” the official, speaking on condition of anonymity said, with Xinhua reporting similar comments.
Hill said he expected Yongbyon to be shut down and IAEA inspectors to be allowed into the facility by mid-April, as scheduled.
“My sense is that we will be in good shape for the first 60-day obligations,” Hill told journalists.
“The DPRK has an obligation to make sure they are shutting down and sealing the Yongbyon complex within 60 days.”
Deputy Assistant U.S. Treasury Secretary Daniel Glaser, who had overseen the negotiations on the sanctions, earlier said the 25 million dollars would not go back into the pockets of the North Korean elite.
“North Korea has pledged … that these funds will be used solely for the betterment of the North Korean people, including for humanitarian and educational purposes,” Glaser told reporters.
Hill said the latest round of six-party talks, which involved the two Koreas, China, the United States, Japan and Russia, was expected to last three days. South Korea, which has already said it would provide the initial batch of 50,000 tons of fuel oil, welcomed Monday’s development.
“Since the issue has been resolved, there will be no big obstacles … during the initial 60-day stage for disabling North Korea’s nuclear facilities,” chief South Korean envoy Chun Yung-Woo told reporters.
Japan’s chief envoy, Kenichiro Sasae, expressed similar optimism but also cautioned that the focus should remain on the much tougher task of permanently putting an end to North Korea’s nuclear program.
“We must work by holding a broad view, a long-term view. We must not be caught up on day-to-day movements,” he told reporters.
Chief Chinese envoy Wu Dawei said conditions remained “favorable” for further progress, but much work remained to be done.
“We still face a lot of difficulties and obstacles on the way ahead,” Wu said in his opening remarks to the chief envoys.

TITLE: Zimbabwe Says It Buried Slain Militant
AUTHOR: By Angus Shaw
PUBLISHER: The Associated Press
TEXT: HARARE, Zimbabwe — Government opponents said Monday the family of an opposition militant killed by police was forced to bury him at their rural home because the administration feared demonstrations at a planned ceremony in the capital.
The U.S. ambassador, meanwhile, suggested there was a split in Zimbabwe’s security forces, with police reluctant to carry out a crackdown on the opposition and President Robert Mugabe relying on youth militias and agents from the feared Central Intelligence Organization.
The government insisted that demonstrator Gift Tandare — killed as police disbanded a prayer meeting organized by Zimbabwe’s political opposition — was buried in the countryside at the family’s request and that the state assisted with the funeral arrangements and expenses.
Opposition spokesman Eliphas Mokunoweshure called the government explanation “nonsense.”
Members of the opposition said the Tandare family was coerced by CIO agents into holding the funeral in the Mount Darwin district, 95 miles northeast of Harare.
State television said most of the funeral expenses were paid by the ruling party lawmaker for Mount Darwin, Saviour Kasukuwere, a wealthy businessman. It denied Tandare’s body had been seized from a funeral home.
Hundreds of mourners and democracy activists have gathered at Tandare’s home in the Harare township of Glen View since his death March 11 when police crushed the prayer meeting. On March 13, police tried to quell mourners blocking streets and beating drums around Tandare’s home in the township, an opposition stronghold. Two were injured by police gunfire.
Nelson Chamisa, aide to the main opposition leader Morgan Tsvangirai, was assaulted at Harare International Airport by state agents using iron bars on Sunday as he was leaving to attend an international meeting in Brussels, Belgium, members of Tsvangirai’s Movement for Democratic Change said.
The alleged assault follows the re-arrests at the airport Saturday of three opposition activists, who were allegedly assaulted along with Tsvangirai and Chamisa when police broke up the March 11 prayer meeting.
Grace Kwinje and Sekai Holland, among the most severely injured March 11, were prevented from boarding an air ambulance to receive medical care in South Africa, and Arthur Mutambara, leader of an opposition faction, was later arrested at the airport.
Police spokesman Wayne Bvudzijena said a court case was pending against the activists on accusations of incitement to violence.
Mugabe accused the opposition of being terrorists supported by Britain and the West, and Tsvangirai said the crisis in Zimbabwe had reached a “tipping point.”
The latest violence has drawn new attention to a deteriorating situation in the southern African country, where the increasingly autocratic Mugabe is blamed by opponents for repression, corruption, acute food shortages and inflation of 1,600 percent — the highest in the world.
Mugabe, 83, has rejected the international condemnation following the arrests and alleged beating. The president accused the opposition party of resorting to violence sponsored by former colonial power Britain and other Western allies to oust his government, a newspaper reported Sunday.
“We have given too much room to mischief-makers and shameless stooges of the West. Let them and their masters know that we shall brook none of their lawless behavior,” Mugabe was quoted as saying in the state Sunday Mail.
U.S. Ambassador Christopher Dell told the British Broadcasting Corp. that Mugabe last week spoke to the youth movement of his party and authorized it to use any means available against the opposition.
“What we believe is that we’re witnessing a major split inside the security forces, where the regular police, the real police, the professional police of Zimbabwe, are reluctant to carry out such orders, and therefore the regime is increasingly relying on youth militias and special agents from their Central Intelligence Organization, the CIO of Zimbabwe,” Dell said.
“And I’m certain that the people of Zimbabwe, when the time comes, will ultimately hold him accountable for comments like that and his responsibility for the, for unleashing this violence over the last week,” he said.

TITLE: New Coalition in Finland May Include Conservatives
AUTHOR: By Sami Torma and Sakari Suoninen
PUBLISHER: Reuters
TEXT: HELSINKI — Finnish opposition conservatives made strong gains in a general election on Sunday, coming a close second to the ruling Center Party and staking a claim to a place in a new coalition government. 
The center-right National Coalition Party won 50 seats in the 200-member parliament — one fewer than the Center Party, but ahead of the 45 of the Social Democrats (SDP), the current partners in the cabinet, preliminary results showed.
The ballot, marking 100 years of elections in Finland, gives Prime Minister Matti Vanhanen the right to form a new four-year coalition.
“The result is clear. We are number 1 in votes and number 1 in seats,” he told cheering supporters at a Helsinki hotel.
National Coalition leader Jyrki Katainen, whose party came ahead of the SDP for the first time in the election, said it had won the right to join a new cabinet.
“The National Coalition has taken a landslide victory,” he told reporters. “I think it would be very odd if we were not in the next government.”
Full results showed the Center Party with 23.1 percent of the vote, the conservatives at 22.3 percent and SDP with 21.4.
Four years ago the Center Party narrowly edged out the SDP, winning the premiership and ending eight years of coalition between the SDP and the conservatives.
Vanhanen indicated a new government might need to include four parties this time. Such wide coalitions have been common in the consensus-minded Nordic country and would not raise concerns about possible instability.
The Finns’ swing to the right comes six months after neighboring Swedes voted out the Social Democrats and elected a center-right coalition. 
However, the Finnish outcome was unlikely to mark as dramatic a shift as in Sweden.
On the campaign trail politicians politely avoided confrontation with potential allies, and all tried to address the top concerns of voters, including social services, job-creation and issues like climate change.
Finland’s rapidly aging population was also a major issue, and Sunday’s election was likely to be the last where employed people make up a majority of voters.
Finland, home to Nokia, the world’s biggest mobile phone maker, has enjoyed the strongest growth of all euro zone economies, but many Finns worry the good times may not last.
It faces rising competition from lower-cost countries in some key industries, including high technology, electronics and paper-making.