SOURCE: The St. Petersburg Times
DATE: Issue #1263 (29), Tuesday, April 17, 2007
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TITLE: A Reporter’s Story: I Was Locked Up
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — A firm hand on my shoulder caused me to stop firing questions at young men being frog-marched into a police truck by OMON riot police near Pushkin Square.
I turned around and saw it was a policeman. Assuming he just wanted me out of the way, I backed off. But his grip tightened and he spun me around and pushed me toward the truck.
“What the hell have I done?” I shouted. I wasn’t looking for a response. I just wanted to register with the police and hundreds of onlookers that I had done nothing wrong.
A police officer manning the door asked me my name, which I gave, and without waiting to be shoved into the back of the truck, I clambered inside.
Somehow police managed to cram 12 of us into the tiny, stifling gray cell, which was lined with two benches. Two weak bulbs in the ceiling provided little more than candlelight.
The atmosphere in the truck was strangely jovial. It was as if everyone accepted that this was the inevitable outcome of the Dissenters’ March from Pushkin Square on Saturday. Everyone knew they would be released in a matter of hours. I tried in vain to strike up a conversation with the others, none of whom looked older than 25.
We sat there for about 30 minutes before being driven off to the Zamoskvorechye police station. During the ride, a young man opposite me made a call from his cell phone, apparently to his girlfriend.
“God knows, must have been some kind of anti-Putin meeting,” he said. He explained that OMON had plucked him from the platform at the Pushkinskaya metro station and put him into the truck.
Maybe he fit the police profile for protesters.
“I’m not going to make it,” he said. “Kisses. See you later.”
The young man next to me said he was 22 years old and “theoretically” among the organizers of the Dissenters’ March. He clammed up when he learned I was a journalist.
We arrived at the police station and were escorted inside. All 12 of us lined up at a desk next to a large jail cell to hand over cigarettes, lighters and other personal effects to a guard. I was the last in line.
The guard did not ask to see anyone’s documents. As I approached the table, I saw the others had been put in the cell. One of the detainees asked how long we would be held.
“According to regulations, three hours,” the guard answered.
When my turn came, I produced my press pass and British passport, and the guard whistled his superior over to the desk. The officer took me into a back room, where he asked what I was doing at Pushkin Square.
I said I had come to cover the pro-Kremlin Young Guard gathering, which took place at the same time as the Dissenters’ March. He said I would be released on one condition: that I write a statement saying I had no complaints regarding my detention. 
I did not ask why I had been detained, nor did I ask on what grounds they could keep me in custody should I decline his offer.
I wrote the letter as dictated to me by the officer and was released. But first he insisted on telling me a story about his friend who worked in London and loved it there.

TITLE: Demonstrations End in Police Violence
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Violence erupted at the end of an opposition rally in central St. Petersburg on Sunday as riot police wielding truncheons beat and chased protesters walking to a nearby metro station.
Police detained about 120 participants of the Dissenters’ March including National Bolshevik leader Eduard Limonov, head of the St. Petersburg branch of Yabloko Maxim Reznik and Sergei Gulyayev, local coordinator of The Other Russia coalition, which organized the event.
A similar rally was held in Moscow on Saturday where more than 170 people were detained, including opposition leader and former world chess champion Garry Kasparov. Dozens were beaten by police.
President Vladimir Putin, who has not publicly commented on the weekend crackdown, was in St. Petersburg on Saturday night to watch a martial arts event billed as a “fight without rules” at the Ice Palace.
Flanked by guests former Italian prime minister Silvio Berlusconi and former Hollywood action star Jean-Claude Van Damme, Putin watched Team Russia beat Team America. 
St. Petersburg authorities had sanctioned Sunday’s rally which began at noon under heavy police surveillance — including two tight circles of OMON and Interior Ministry troops, metal detectors, barriers and a helicopter — at Pionerskaya Ploshchad. Authorities, however, refused to grant protesters permission to march to City Hall.
Participants began to disperse at around 2 p.m. when a group of them clashed with OMON riot police when walking to Pushkinskaya metro station.
Officers waded into groups who were trying to leave the scene carrying flags, including a group of National Bolshevik Protesters. They were violently beaten with batons. 
When the police exercised force, the crowd started chanting “Shame, shame!” 
The police then made a sudden move forward and began to chase protesters, beating a number with their truncheons, and hitting other people who were in their path, including some elderly women who had been waiting for the metro station to open. 
Yabloko member Olga Tsepilova suffered in the clash and was sent to hospital with a broken nose and concussion. Gulyayev received multiple bruises and his left arm was broken.
A number of people were beaten over the head as scared passersby sought refuge in the metro station.
Rally participants spoke with outrage about the treatment they received from the police.
“The police were battering people without even looking at them,” said Reznik. “At least one passerby, apparently scared by the violence, suffered a heart attack and was sent to hospital.” 
Contesting official figures of 120 activists detained, Reznik also said several hundred of activists were detained and dozens beaten.
The police, in turn, accused the opposition of “staging provocations.”
The meeting was organized by The Other Russia, a coalition of groups that oppose Kremlin policies. The local branch of Yabloko supported the event.
Demonstrators chanted slogans such as “Free Elections!” “No More Corruption!” “Matviyenko Resign!” “Putin Is An Enemy Of The State!” “We Are Not Afraid” and “No Police State!”
Chants and slogans targeted Kremlin policies, with some protesters demanding an end to corruption and greater accountability of the authorities. Others called for free debate on television and demanded an end to police violence against political demonstrations. 
“The rally is a reminder to the authorities that they serve the people, and not vice versa,” said Gulyayev. “The most compelling result of the Kremlin’s policies is the genocide of the Russian people. Russia’s population has been shrinking at high speed: we are losing the equivalent of two Piskaryovsky Memorial Cemeteries every year.”
Piskaryovsky Memorial Cemetery is the last resting place of more than 470,000 people who died in the Siege of Leningrad during World War II.
The rally’s organizers had invited Governor Valentina Matviyenko to attend and respond to criticism but the invitation was turned down. 
“No constructive dialogue is possible during such heated street events, where emotions run high,” the governor told reporters last week.
The protesters accused the authorities of cowardliness and hypocrisy. Limonov said the state has gone to war with its people.
“Look around at all the OMON and police trying to stifle us! It shows how scared the authorities are, and they are scared for a good reason,” Limonov said. 
“They do not want a strong and organized opposition because they know that the people are with us, and, if well organized, there are enough of ‘the discontented’ to overthrow this corrupt gang ruling the country.” 
St. Petersburg forces were reinforced by counterparts from Pskov, Novgorod and Arkhangelsk.
According to the organizers, the meeting drew over 3,000 supporters and there were at least 1,500 police present. The police said the event gathered 500 demonstrators and did not release deployment figures. 
The number of marchers represented a tiny fraction of St. Petersburg’s 4.6 million inhabitants.
Earlier in the day a double line of officers in riot gear tightly cordoned off the meeting area. A wider cordon of police surrounded the square. Those participants who managed to get into the square had to go through metal detectors. They were then penned in by barriers and a solid police cordon.
After 12 p.m., the time the event was due to begin, access to the scene was prevented and a crowd of protesters began to build up outside the cordon. A police helicopter hovered low over the scene and the sound of its engines at times drowned out the voices of speakers.
Towards the end of the meeting, which had been planned to last until 2 p.m., police numbers appeared to increase and officers moved in closer to the protesters.
“This is scary and shocking,” said female pensioner Albina Bychkovskaya among the protesters. “It looks like a trap. I can’t understand why so many police have been deployed. This tight chain of officers is like a noose, and their riot gear is meant to scare the hell out of us. But I’m not going home.”
As demonstrators excluded by the barriers tried to get closer to the speakers, police lines held firm and prevented them getting access.  
When challenged to let people through, one soldier in the uniform of Interior Ministry troops said: “I am here to keep order and prevent a riot. I am not interested in politics.” 
He declined to give his name.
“I am not listening to the speeches, and I could not care less about what they are saying,” a member of the special police task force said as he stood in an external cordon in full riot gear. “We don’t discuss the orders we get, we follow them.”
Besieged by police, the speakers emphasized the growing importance of street politics in Russia.
“It is often believed that actors should stay away from politics and as a performer I agree with that, with the only exception: it does not work in a police state, which is what modern Russia is,” said St. Petersburg actor Alexei Devotchenko. “My profession aside, it is a matter of civil responsibility to get involved.”
Andrei Dmitriyev, leader of the St. Petersburg National Bolsheviks, said he and his followers were determined to continue to protest. 
“Our party is under a double ban; it has been branded extremist by the authorities but nothing can stop us from coming to rallies as ordinary Russian citizens,” Dmitriyev said. “We are not afraid.”
The crowd on Sunday reflected The Other Russia coalition’s differing and sometimes opposing factions, but people said they were willing to join forces despite the differences in their political beliefs.
“I cannot agree with everything that is being said at this meeting. But I will stay here until the end because I, too, disagree with what is happening to Russia. It is drowning in corruption,” said Dmitry, a student of the St. Petersburg Electrical Technical University. 
“Students at my university are constantly approached with offers to do street campaigning for the pro-presidential Nashi movement,” he went on. “My mother was tempted with a tin of caviar and a cake to vote for [pro-Kremlin] United Russia [at recent local elections it won]. All this is happening openly and I find it disgusting.”
Whole quarters in the neighborhood around the location of the meeting were cordoned off by police and closed to both traffic and pedestrians. Marata Ulitsa, along which the protesters had intended to march toward City Hall, was entirely closed off by police.
Earlier, on Friday and Saturday, OMON had raided Yabloko’s St. Petersburg headquarters to confiscate publicity material about the rally. 
Officers also demanded contact information about the people and companies involved in the printing and distribution of the material. 
Also on Saturday, several people who distributed leaflets about the rally were detained by police.

TITLE: Troubled SKA Recruits U.S. Hockey Coach
AUTHOR: By Christopher Hamilton
PUBLISHER: Special to The St. Petersburg Times
TEXT: The management team of St. Petersburg’s professional ice hockey team SKA officially named U.S. specialist Barry Smith as head coach and director of operations last week. 
“This was a very difficult decision,” Smith, who resigned from his position as associate coach with the NHL’s Phoenix Coyotes, said last week. 
“I was working closely with one of hockey’s greatest players, Wayne Gretzky and I wanted to be sure that his program wouldn’t suffer. I am very grateful to him and to the entire Phoenix organization for the support they have given me. I needed a new challenge and I’ve been in the National Hockey League for a long time. And I’ve wanted a chance to build my own program.”
Smith, who has been a successful coach at various levels and contributed to five Stanley Cup championships, stressed that he wants to build an organization at St. Petersburg’s struggling hockey team that works well together. 
“I am just one person. In order to be successful I have to do my work, but we as an organization need to work together toward one goal,” he said.
Smith is no stranger to Russian hockey. 
“I spent two weeks in the U.S.S.R. in 1975-76 studying at the Moscow Institute of Physical Culture and Sport at a time when the national head coach was Anatoly Tarasov. I took that Russian hockey experience home with me. 
“I was also fortunate enough to coach some Russian greats in the NHL including [Vyacheslav] Fetisov, [Igor] Larionov, [Sergei] Fedorov, [Vyacheslav] Kozlov, [Vladimir] Konstantinov and in later years [Pavel] Datsyuk. We developed a great relationship. We won [Stanley Cup] championships together and lived through tragedies like the [1997 limousine] accident [that left Konstantinov with career-ending head injuries]. 
Smith also came to Russia during the NHL lockout in 2004-05 when the North American season was suspended during a pay dispute. 
“I’m not getting any younger so this is probably my last chance to come to Russia,” Smith said. 
The renowned coach dismissed the notion that many of his ideas may not be easily accepted by Russian players, and that the team’s problems stem from a Russian approach to the game.
“I see a huge amount of potential in Russian hockey and I’m not bragging that my system is better. I’m just bringing in new methods that combine the best of European and North American hockey that I learned while working in Sweden and the NHL. Sometimes we are challenged by something new. But hockey is really based on fundamentals and execution.
“I’ve coached in Europe and I’ve worked with new European talent in the NHL and every nation has their own mentality and approach. The Swedes, Finns, Russians, Czechs, Slovaks and now the Swiss and the Germans all have their own mentalities. We need to work inside this,” he said, pointing out that “there are really two Russian mentalities: The old one exhibited by players who worked really hard and a new one where players think everything is owed to them. You find the same problems with North American players.” 
Smith is currently working closely with SKA’s current coaching staff to address a number of issues but has yet to make any decisions regarding his coaching staff or other key personnel. 
Alexander Medvedev, chairman of SKA’s board of directors and deputy CEO of Gazprom, the energy company that sponsors the team, said he wouldn’t comment on possible personnel changes.
“All of these decisions will be made by Barry Smith… I don’t want to talk about who’s leaving the team and who’s joining the team. But I can tell you the team will be successful,” Medvedev said. He added that the team was still negotiating with some of the team’s leading players, such as Maxim Sushinsky. 
 “I don’t have anyone specific in mind. I need time to meet, interview, negotiate and really understand who is going to make the best fit,” Smith said, adding that he plans to call on a number of friends, including the most successful coach in NHL history, Scotty Bowman. 
“Bowman is a curious man who likes Russian hockey,” he said, adding that he has agreed to consult the team but that the details have yet to be worked out regarding how much time and responsibility he would take. 
Smith plans to make a number of decisions before he leaves for Moscow on April 22 where he will be an associate coach for Team USA at the World Ice Hockey Championships. 
“I hope I’ll be able to interview some people while in Moscow and I feel that most things will really come together for SKA in early summer,” he said.
This is Smith’s third appearance with Team USA. He was an assistant coach for the U.S. team during the 1991 Canada Cup and the 2004 World Cup of Hockey. 
He also has had extensive international experience coaching in Sweden, Norway and Italy and he additionally ran coaching workshops in Magnitogorsk, Russia in 2005. 
He coached in the NHL for 17 seasons, first working for his native Buffalo Sabres before moving to Pittsburgh where he got his first two Stanley Cup championships in 1991 and 1992. He then spent 11 seasons with the Detroit Red Wings where he contributed to three more Stanley Cup championships in 1997, 1998 and 2002. 
In Detroit he worked under Bowman for ten years. He joined Gretzky and Phoenix Coyotes in August 2005.

TITLE: 2 Arrested for Running Firing Range Business
AUTHOR: By Kevin O’Flynn
PUBLISHER: Staff Writer
TEXT: MOSCOW — Two army officers have been charged with helping organize target practice for money at an artillery academy in Yekaterinburg.
Customers could fire different weapons at the academy’s firing range, Mikhail Yanenko, assistant to the chief military prosecutor, said Friday.
He did not disclose how much the officers were charging or what kinds of weapons were made available for customers to fire.
Izvestia, which first reported about the issue Friday, put the price tag at 35,000 rubles ($1,355) per practice session and said the weapons included Kalashnikov automatic rifles and Makarov pistols.
The detained suspects are the head of the academy’s firing range and the head of the academy’s arsenal, Yanenko said. They were arrested April 6 and charged with abuse of power and misappropriating arms, he said. Abuse of power carries a sentence of up to 10 years in prison, while misappropriating arms has a sentence of up to 12 years.
Sergei Bogomolov, the assistant to the Military Prosecutor’s Office of the Volga-Urals Military District, which is investigating the case, confirmed that the two had been charged with abuse of power but did not know whether they had also been charged with misappropriating arms.
Neither Yanenko nor Bogomolov would identify the two officers. Izvestia said they were Major Alexander Lisovykh and Warrant Officer Vladimir Kireyev.
The officers were caught by agents of the Federal Security Service, which is responsible for counterintelligence and other security-related operations in military units, working together with the local police force’s economic crime unit, Izvestia reported. The agents and detectives posed as customers and handed the two officers more than 35,000 rubles to shoot at the range.
“I don’t even know what the fuss is about,” Izvestia quoted an unidentified officer at the academy as saying. “Shootings — either commercial or for powerful people — were organized before, and nobody was punished for them.”
Academy officials could not be reached for immediate comment.
Local legislators and companies have been invited to try out the firing range, the report said. Company officials got to shoot in exchange for building materials.
Izvestia illustrated the report with a picture of dancing girls in front of a tank and a photo caption saying dancing was not yet available at the Yekaterinburg academy.
An Internet search on Friday turned up several tour operators offering rides in tanks and shooting games. The web site Vipvoyage.ru was offering the National Security Agent tour, which promised that customers could use special services weapons.
The firing takes place at an army base outside Moscow, said an employee who answered the telephone.

TITLE: Berezovsky Flip-Flops On Coup d’Etat Plan
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — Self-exiled tycoon Boris Berezovsky said in comments published Friday that he was plotting a coup to remove President Vladimir Putin from office by force.
“We need to use force to change this regime,” Berezovsky told British newspaper The Guardian. “It isn’t possible to change this regime through democratic means. There can be no change without force, pressure.”
Asked by The Guardian whether he was working to bring about a revolution, Berezovsky said: “You are absolutely correct.”
Berezovsky also claimed to be in close contact with members of the political leadership who share his views.
“There is no chance of regime change through democratic elections,” he told The Guardian. “If one part of the political elite disagrees with another part of the political elite, that is the only way in Russia to change the regime. I try to move that.”
Berezovsky declined to name his contacts, saying they could be killed if identified. He said he was providing them primarily with financial assistance.
Following the appearance of his interview with The Guardian, however, Berezovsky took steps to soften his stance.
“I do support direct action. I do not advocate or support violence,” he said in a statement released on Friday afternoon.
In an interview with The Associated Press, Berezovsky said Saturday that he wanted to bring about regime change by using “force like in Ukraine and Georgia.” In both of those countries, opposition leaders took power after nonviolent demonstrations.
Berezovsky’s remarks, which came on the eve of opposition demonstrations in Moscow and St. Petersburg, drew a sharp response from Moscow. Foreign Minister Sergei Lavrov called on British authorities to extradite Berezovsky, who fled to Britain after Putin’s election in 2000 and was subsequently granted asylum and a British passport.
“He has taken actions that under British law require his handover,” Lavrov told Itar-Tass.
Berezovsky shot back in a telephone interview Friday. “I don’t care at all what the foreign minister says. Not at all,” he said.
A British Home Office spokeswoman said Friday that for Berezovsky to be extradited, a British court would have to determine that he had committed a crime punishable by at least a 12-month prison sentence under British law.
London’s Metropolitan Police said Friday that it was assessing Berezovsky’s remarks to determine whether an offense had been committed. A recording of the interview was posted on The Guardian’s web site.
British Foreign Secretary Margaret Beckett said in a statement released Friday that she was aware of Berezovsky’s comments, “appearing to call for the overthrow of the current Russian government by force.”
“I deplore such sentiments. We expect everyone living or working in, or visiting the U.K., whatever their status, to observe our laws and regulations. The Home Office will now seek to collate full information on the alleged comments so that a review and full assessment can be made,” Beckett said.
In Moscow, the Prosecutor General’s Office said Friday that it had opened a criminal investigation into Berezovsky’s comments, which it characterized as “an open call to overthrow Russia’s constitutional order.”
In a statement posted on its web site, the Prosecutor General’s Office also said that on Monday it would renew its request for British authorities to strip the tycoon of refugee status in connection with the investigation.
Prosecutors will also attempt to have Berezovsky extradited to face criminal charges in Russia, the statement said.
Kremlin spokesman Dmitry Peskov said Friday that he hoped Berezovsky’s “unbelievable comments” would prompt British authorities to review his status.
“We don’t know why he was granted asylum in the first place,” Peskov said. “We hope his latest comments will undermine his illegal efforts to stage a violent coup.”
Federation Council Speaker Sergei Mironov said Berezovsky would not escape punishment.
Communist Party leader Gennady Zyuganov said the majority of Russians would not support Berezovsky’s attempts to foment revolution.
“Mr. Berezovsky helped the previous powers rob the country,” Zyuganov told Interfax. “Now he wants to be a revolutionary. It won’t work. The masses will never follow him.”
Berezovsky brushed off threats made by Prosecutor General Yury Chaika on Friday that his remarks would bring new criminal charges.
Chaika said Berezovsky was wanted not only for planning a violent coup, but also for stealing $50 million from Aeroflot.
“Chaika has referred the matter to the relevant agencies [in Russia],” said a spokeswoman for the Prosecutor General’s Office. “He will request that Britain annul Berezovsky’s asylum status.”
Berezovsky’s lawyer Andrei Borovkov said later Friday that his client would face new charges of embezzling and laundering $8.25 million from Aeroflot, Interfax reported.
Berezovsky has called for the overthrow of the Putin government in the past. In January 2006, he told Ekho Moskvy radio that Putin was an illegitimate and anti-constitutional president, and said he had been plotting to depose him for 1 1/2 years.
Then-British Foreign Secretary Jack Straw warned that Berezovsky could forfeit his refugee status if he continued to agitate for Putin’s ouster.
Straw said in a statement released at the time that the British government would “take action against those who use the U.K. as a base from which to foment violent disorder or terrorism in other countries.”
Yury Korgunyuk, a political analyst with the Indem think tank, said Berezovsky had no serious intention of staging a coup.
“Everyone knows he is bluffing,” Korgunyuk said. “He needs to create the image that he is fighting the regime. But in reality, that is not the case.”
Korgunyuk said Berezovsky had chosen an “excellent method” for upsetting the Kremlin, which “fears revolution more than anything.”

TITLE: Chaika Calls for Pre-Trial Detention Reform
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prosecutor General Yury Chaika said Friday that people arrested for minor offenses should no longer be held in the country’s overcrowded pre-trial detention facilities.
Chaika told the Federation Council that holding small-time offenders in detention facilities was a burden on the federal budget.
He also said detention facilities faced an overcrowding crisis. In 2004, Chaika said, detainees had an average of four square meters of living space. Today, by contrast, “each inmate in a pre-trial detention facility has just one square meter,” Interfax reported.
The number of detainees has increased from 740,000 in 2004 to some 900,000 today, he said, and the numbers keep rising.
“This is happening despite the fact that courts, not the Prosecutor General’s Office, issue arrest warrants. Our hope that the number of detainees would decrease after this procedure was introduced has not been justified,” Chaika said.
The number of detainees initially decreased after changes in the Criminal Procedures Code that required courts to issue arrest warrants came into effect in 2003 .
Chaika also told senators that the number of crimes solved by law enforcement had dropped to nearly 50 percent, while the number of crimes grew by 8.5 percent to 3.8 million in 2006.
Chaika singled out the armed forces, where crimes are investigated by a branch of his office, the Chief Military Prosecutor’s Office. He said a total of 766 Defense Ministry personnel had died last year, of whom 33 died as a result of hazing incidents. A total of 6,700 servicemen were injured in hazing incidents last year, he said.
The prosecutor general said extremist crimes were also on the rise. The number of such crimes, which include everything from hate crimes to calls for the overthrow of the government, jumped from 153 in 2005 to 263 last year, he said, noting that the situation with racially motivated crimes was “alarming” in St. Petersburg and Voronezh.
Chaika told the upper house that corruption in government — including law enforcement — was growing. Police committed 5,500 crimes last year.
The Prosecutor General’s Office currently performs multiple functions, including law enforcement oversight in all government agencies, the investigation of crimes and prosecution.
A bill backed by the pro-Kremlin United Russia party could restrict the office’s powers, however. The bill calls for assigning criminal investigations to a semi-independent agency.
Chaika said revisions were needed in the bill. He said the new agency should assume the investigative functions not just of the Prosecutor General’s Office, but of all law enforcement agencies.
The prosecutor general said his office was warning organizers of the Dissenters’ March about their legal responsibility for any provocations.

TITLE: Duma Complains of U.S. Meddling
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — The State Duma accused the United States on Friday of using non-governmental organizations to meddle in Russia’s domestic affairs and called for a federal inquiry into whether NGOs were spending foreign grants on political activities in an election season.
Duma deputies unanimously approved a resolution expressing concern over “growing and unprecedented attempts” by the United States to interfere in internal issues. “Under the guise of helping to conduct free and fair elections for the State Duma in December 2007 and for the president of the Russian Federation in March 2008, U.S. taxpayers’ money is being used to fund numerous training courses, surveys, seminars and other events that propagandize … and distort the situation,” the resolution said.
The document came after the U.S. State Department released a report that criticized Russia’s rights record.

TITLE: VTB Valued At Up To $35 Billion
AUTHOR: By Olga Popova and Dmitry Sergeyev
PUBLISHER: Reuters
TEXT: MOSCOW — Analysts have valued the country’s No. 2 bank, state-run VTB, in a core range of $30 billion to $35 billion ahead of its international stock market float, a banking source close to the offering said Friday.
The valuations, from analysts at the banks organizing the first float by a Russian bank in London, are well above initial estimates of $20 billion to $25 billion that state-owned VTB would attain via the float. VTB, the former-Soviet foreign trade bank, plans to float a stake of 22 percent to 23 percent. At the higher valuations VTB could raise $8 billion, which CEO Andrei Kostin wants to invest in expanding its retail operations and investment banking acquisitions.
“The consensus is $30 billion to $35 billion,” the source said. “But the range is very wide — from less than $30 billion to as much as $40 billion.”
State-owned VTB formally announced its long-awaited float last week. A price range for the offering is due to be announced on April 25, with final pricing of the deal expected on May 11.
Citigroup, Deutsche Bank and Goldman Sachs are joint global coordinators for the IPO, together with Renaissance Capital as joint bookrunners. Its retail arm, VTB 24, and Renaissance Online are already taking orders from Russian private investors.
The positive buzz surrounding the initial public offering lifted shares in Russia’s only other big bank, state-controlled market leader Sberbank, which rose 3 percent to a record high of 102,000 rubles ($3,944).
Sberbank last month completed an $8.8 billion rights issue, but the deal was placed only on the Russian market whereas VTB expects to sell up to 70 percent of the shares it is offering to international institutions.
UBS banking analyst Bob Kommers upgraded his price target for Sberbank to $5,250 from $4,400 and reiterated his ‘buy 1’ rating, saying completion of its rights issue and the VTB deal “provide near-term catalysts for a further re-rating.”
Analysts said VTB’s 2006 results this week, in which net profits rose by 131 percent to $1.18 billion while interest margins and return on equity improved, were supportive of a more demanding IPO valuation.
But they noted that VTB’s profitability lagged behind Sberbank’s and depended more on volatile income from its investment portfolio, which features a 5 percent stake in European aerospace company EADS.
“Because of its lower profitability, even in the very best case VTB could place shares at a price-to-book ratio of 2.4 times, compared to Sberbank’s placement multiple of 3.1 times,” Alfa-Bank’s Natalya Orlova said in a note.
Plugging that ratio into the deal would give VTB a market capitalization of $45 billion, Orlova said, estimating that VTB could raise between $8 billion and $10 billion when it floats. One investment banker not involved in the deal has expressed skepticism, however, saying he would have preferred to see VTB include its retail operations in the float.
“I don’t trust banks that rely only on corporate business — it should be one bank,” the banker said, adding that the concentration of VTB’s investment portfolio also posed a risk.

TITLE: London Still The Place to Raise Cash
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: London remains the most attractive IPO market in Europe. According to the latest survey “IPO Watch Europe” by PricewaterhouseCoopers, 297 companies raised a total of 29.7 billion euros ($40.25 billion) in London last year.
It was another record year for Russian IPO activity with Rosneft, Severstal and Comstar among the five largest international offerings welcomed in London, according to the survey released last week.
PwC experts indicated the increasing popularity of GDRs. “Europe’s top five international IPOs were all GDRs on London’s main market, accounting for more than 40 percent of the total offering value on the exchange. They were particularly popular with companies from Russia, India, Korea and Kazakhstan,” said Tom Troubridge, head of the PricewaterhouseCoopers London Capital Markets Group.
Troubridge also indicated a “movement away from smaller company IPOs in favour of those by larger, more established businesses, with a consequent rise in the average offering value.”
European markets raised more money than the U.S. markets and remained ahead of the rapidly expanding Greater China capital markets. 653 IPOs were listed across Europe last year — a nine percent increase on 2005 figures.
The offering value increased by 27 percent up to 65.4 billion euros. A quarter of all new money was raised by international IPOs, despite a six percent fall in their total number. By the fourth quarter of 2006 the average offering value per IPO reached a record level of 116 million euros. The value of each of the top ten IPOs exceeded one billion euros.
“2006 was a record year for Russian companies raising money in London, and the pipeline of Russian IPOs for 2007 also looks promising,” said Steven Berger, Partner at PricewaterhouseCoopers.
Rosneft, the Russian oil and gas conglomerate, raised 5.2 billion euros through GDRs on London’s main market. This was the largest IPO of the year in Europe. Severstal and Comstar issued the third- and fourth-largest international IPOs in London, generating 839 million euros and 823 million euros respectively.
“Stock quotes have increased compared to the price of the initial offering. The raised funds corresponded or even exceeded company expectations,” said Vladislav Isayev, analyst at FINAM investment holding.
According to FINAM, 11 Russian companies listed in Europe in 2005 raising $4.9 billion (seven on London Stock Exchange, three on AIM market in London and one on Swiss Exchange). Last year 14 Russian companies raised about $20 billion, most of them in London, with the exception of STS-Media that listed on NASDAQ.
“Considering statements by Russian companies, this year will at least repeat the success of 2006. The largest companies including VTB, OGK-1 and GV Cold plan to get listed on both Russian and foreign stock exchanges,” Isayev said.
The offering value is expected at $20 billion, Isayev said, as Russian companies prefer to embark on their IPOs this year, before the 2008 presidential election. He noted that, according to legal requirements, part of the shares will be listed in Russia and distributed among individual minority shareholders.
Tatiana Romanova, trader of international markets department at Brokercreditservice investment company, expects between 70 and 90 Russian companies to be listed this year raising $30 billion to $45 billion both on Russian and foreign stock exchanges.
“The largest expected IPO is by VTB for $4 billion (with 50 percent of shares to be listed abroad) and Sberbank for $7-8 billion. I would not exclude a Gazprombank offering in the first half of 2007,” Romanova said.
She also considered last year’s IPOs a success, especially Rosneft’s. “All participants considered the company to be significantly over-valued during the initial offering,” she said.
Severstal and Comstar IPOs were also successful, she said, “though soon after the listing stock quotes dropped and remained below the price of the initial offering.” At the moment both companies are quoted above the price of the initial offering, she said.

TITLE: Secretive Surgutneftegaz Sold Ren-TV Stake to Bank Rossiya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Surgutneftegaz is the Ren-TV television shareholder that sold its stake to Bank Rossiya.
Secretive oil firm Surgut in December sold a 75 percent stake in Media-Invest, which holds 35 percent in Ren-TV, to Bank Rossiya. The bank now has a 70 percent stake in the channel, previously one of the country’s most independent-minded TV stations.
In December, news broke that IK Abros, an affiliate of Bank Rossiya, had bought a stake in Ren-TV, but not whether it had bought it from Surgut or steelmaker Severstal. On Thursday, a Surgut company filing revealed that it had sold the stake. 
Abros also owns more than 38 percent of TV firm Petersburg, which is based in St. Petersburg.
Severstal owns 18 percent of Petersburg. The steelmaker also owns 7 percent of Bank Rossiya, which handles the company’s accounts. 
Bank Rossiya’s chairman, Yury Kovachuk, is a close friend of President Vladimir Putin.

TITLE: In Brief
TEXT: <b>Investing with Energy</b>
ST. PETERSBURG (SPT) — Lenenergo power distribution company will invest 15.2 billion rubles ($590 million) into the development of power facilities this year compared to the 5.8 billion rubles ($225 million) it spent in 2006, Interfax reported Friday.
Total investment in St. Petersburg and Leningrad Oblast in the period 2006-2010 is estimated at 128 billion rubles ($5 billion). Lenenergo plans to complete 46 power sub-stations and 422 kilometers of power networks. 

<b>Turbine Togetherness</b>
ST. PETERSBURG (SPT) — German concern Siemens?and Nevsky Plant?open joint-stock company have agreed on the joint production of lower-power gas turbines, Interfax reported Friday.
The new joint venture — Baltiisliye Turbosystemy — will produce 25 Megawatt gas turbines licensed by Siemens. Nevsky Plant?will provide equipment for the venture. 

<b>Communal Limits</b>
ST. PETERSBURG (SPT) — The Federal Tariff Service has released limits for communal and housing tariffs in St. Petersburg for the next three years, Interfax reported Friday.
Tariffs for water supply are limited to a 14.5 percent increase in 2008, 13.6 percent in 2009 and 12.1 percent in 2010. Combined tariff for all communal and housing services are restricted to a 14 percent increase in 2008 and a 15 percent increase in 2009 and 2010.

TITLE: First Nuclear Plant Afloat
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia began construction of its first floating nuclear power plant Sunday, and plans to build at least six more despite long-standing environmental concerns that they are vulnerable to accidents at sea, Russian news agencies reported. 
Russia justifies the program as a way of bringing power to some of the country’s most remote areas, also saying some of the plants could be sold to other nations.
The head of Russia’s atomic energy agency, Sergei Kiriyenko, said the plants will be safe.
“This plant is much safer than atomic energy stations on the ground,” the RIA-Novosti news agency quoted him as saying at a formal ceremony at the Sevmash fabricating plant in Severodvinsk on the White Sea coast.
He cited the 2000 sinking of the nuclear submarine Kursk as evidence of the reliability of the plants, which will use reactors similar to those on the submarine.
“After the boat was raised, specialists proved that the reactor could be put into service that very moment,” he said, according to RIA-Novosti.
The atomic energy agency and Sevmash signed on Sunday a document on their intent to build six more floating power plants, the ITAR-Tass news agency said.

TITLE: Gazprom’s German Expansion
PUBLISHER: Reuters
TEXT: HANOVER — Gazprom plans to build a power station in Germany, expanding further into the electricity market with one of its first major projects outside Russia.
Gazprom said Friday that it planned to supply industrial customers and to trade power on Europe’s largest power market with the 400 million euro ($541.8 million) gas-fired power plant that it seeks to build in the east German town of Eisenhuttenstadt.
Gazprom plans to build the 800-megawatt power station together with Soteg, Luxembourg’s main power supplier, in which the state of Luxembourg, steelmaker Arcelor Mittal and E.ON, Germany’s largest utility, each hold about 20 percent. 
Both parties, which each hold half of the project, signed a memorandum of understanding in which they agreed to form a joint venture for the project, Gazprom said. 
They plan to produce power with the plant from 2010 and have not yet received approval to build the station, a spokesman for Gazprom in London said.
The move comes as Gazprom seeks to expand outside Russia and the gas business, while the German government, as well as the European Union, seeks to get more companies to compete on the region’s power market.
In Europe, Gazprom is involved in projects such as a Latvian utility and power trading in France as well as Germany, and it has a power-for-natural-gas agreement with the Deeside power station in Britain. 
Soteg plans to supply power to industrial customers and distributors in Luxembourg with its share of the power, it said in a separate statement.

TITLE: PwC Loses Contract For Sakhalin-2 Audit
PUBLISHER: Reuters
TEXT: MOSCOW — The $22 billion Sakhalin-2 oil and gas project, taken over last year by Gazprom, has dropped PricewaterhouseCoopers as its auditor, the Industry and Energy Ministry said in a report obtained Friday.
Gazprom said earlier this week that it had kept PwC on as its own auditor, a vote of confidence after the “big four” accounting firm lost its job as auditor to carmaker AvtoVAZ and ran into trouble working for the now-bankrupt oil firm Yukos.
But Gazprom has terminated the firm’s 10 years as auditor to Sakhalin-2, according to the government’s annual review of production-sharing agreements, of which Sakhalin-2 is one.
“Its work was viewed by Russia as unsatisfactory because of its constant comments relating to completion of the audit accounts and the amount of reimbursable expenditure,” the Industry and Energy Ministry report said.
Under the production-sharing agreement, the state only gets royalties from the project after reimbursing the operator’s capital investments.
The document said that after a tender process, the new auditor would be a Russian company, Finekspertiza.
Industry and Energy Minister Viktor Khristenko, who sits on the Sakhalin-2 supervisory board, denied that PwC had suffered because of its link to Yukos.
“I don’t see any signal or any sensation here,” he said at a news conference on Friday. “The decision about the change of auditor was taken by the supervisory board. Decisions like this are taken, as a rule, to stop blood clotting in the veins. This isn’t a family thing, this is business.”
U.S. Commerce Secretary Carlos Gutierrez said earlier this month that the authorities should not apply the law selectively in their probe of PwC after a court ruled it had breached rules while auditing Yukos.
The court fined PwC about $500,000 on charges of producing false audits for Yukos and helping it evade tax, and the firm must now wait to find if its license to work in Russia, which expires next month, will be renewed.
PwC is also facing a separate $11 million back-tax claim.
Russia is considering cutting payments to the operators of the Sakhalin-1 and Sakhalin-2 offshore oil and gas projects after auditors reviewed the costs of the work.
The Industry and Energy Ministry said in a report on the projects’ results for 2006 that independent auditors recommended cutting reimbursable expenses to Sakhalin-1 operator ExxonMobil by 10.4 percent, or $370 million, for 2004 and 2005 together. 
The 76-page report also said reimbursable expenses of Sakhalin Energy, the operator of the Sakhalin-2 project, should be lowered by 7.2 percent, or $362.5 million, for 2004.
The ministry said ExxonMobil had disagreed with the auditors’ conclusion.

TITLE: Trutnev’s Pump-or-Pay Oil Tax
PUBLISHER: Reuters
TEXT: MOSCOW — The country’s oil companies will have to pay mineral extraction tax on the volume of oil in their oil fields, regardless of how much they actually produce, under a plan unveiled Friday to punish under-producers.
Natural Resources Minister Yury Trutnev wants to encourage oil firms to eke out as much as they can from each well by penalizing those who fail to produce the volumes laid out in their license terms, his ministry said in a statement.
“This way, companies will pay for non-achievement of the oil extraction figure set out in the project documents as if they had achieved it,” the statement said. “This principle will be much more effective than simple increases in fines.” Oil firms’ performance, or the ratio of reserves produced, now stands at 30 percent to 35 percent, which meant 65 percent to 70 percent of potential oil production was lost, Trutnev said.

TITLE: Stalin’s Metals Plant Looks to Go Public
AUTHOR: By Dmitry Solovyov
PUBLISHER: Reuters
TEXT: KRASNOYARSK — It was built by gulag slaves during World War II and soon presented its first platinum and palladium ingots to Josef Stalin. 
Six decades later, the Krasnoyarsk Nonferrous Metals Plant, known by its Soviet-era acronym Krastsvetmet, works closely with the West and is even considering going public. 
“It’s really hard to say what Stalin could have been thinking when prisoners from the local Kraslag labor camps produced the first platinum and palladium in March 1943,” said Boris Khodyukov, head of the plant’s jewelry-making division. 
“Maybe he just puffed his pipe and said: ‘Well done, keep up the good work and produce more of the stuff.’” 
Today Krastsvetmet, in eastern Siberia, refines about 80 tons of gold per year, roughly half of Russia’s output, and processes all but a tiny fraction of the country’s platinum-group metals. 
Krastsvetmet’s gold output, buoyed by world prices that have doubled since 2003, has grown 2.5 times over the last five years, CEO Igor Tikhov said. 
Silver refining is forecast to jump tenfold from around 100 tons annually at present. “Silver prices nearly tripled over the last few years, so we had to start refining the metal so as not to miss out on such lucrative business,” Tikhov said. 
Non-ferrous metallurgy is the backbone of the Krasnoyarsk region, the country’s main gold-mining region and an area four times the size of France populated by only 3 million people. 
Polyus Gold, the country’s largest gold miner, and metals giant Norilsk Nickel, the world’s largest palladium miner, are among the pillars of the local economy. 
Once witness to Stalinist repression and a top-secret enterprise, Krastsvetmet now boasts state-of-the-art workshops equipped with Western machinery and is trying to adapt to market economics. 
Tikhov said the state-owned firm might even consider joining the ranks of those that have raised billions of dollars in share offerings at home and abroad. 
“The idea of an IPO — the buzzword in Russia now and one that has swept through the Russian market — would be an interesting option for us as well,” he said, without elaborating. 
Norilsk Nickel, Polyus and precious metals miner Polymetal are all major suppliers to Krastsvetmet, and Tikhov said selling stakes in the company to these firms could also be an option. 
“My personal opinion is that we should issue additional shares to these firms and thus solidify their status as suppliers of raw materials to Krastsvetmet,” he said. 
Krastsvetmet, employing 3,200 workers, is a joint stock company but 100 percent-owned by the Krasnoyarsk regional government. 
The company’s net profit has more than trebled in the last six years, reaching 1.8 billion rubles ($69.23 million) last year. 
The Krasnoyarsk region is packed with natural resources, holding 99.9 percent of all Russian platinum, 65 percent of its nickel, 30 percent of copper and coal, 20 percent of lead and 10 percent of gold. 
But the harsh climate and huge distances are a challenge. “Our greatest disadvantage is that we are equally 4,000 kilometers away from European and Asian markets,” Krasnoyarsk Governor Alexander Khloponin told visiting foreign journalists. “There’s only one way out — to produce competitive output.” 
Diversification has become Krastsvetmet’s motto. 
“We work on competitive, fickle markets,” Tikhov said. “Our experts now cudgel their brains about what to do if these markets tumble. … Our ideology is output with high added value.” 
To cushion possible fluctuations in metal prices, the plant launched its own jewelry manufacture in 1994. Hundreds of sophisticated machines work round-the-clock, 365 days per year, churning out kilometers of gold chains and bracelets.

TITLE: Serving Up More Of Yukos
PUBLISHER: Reuters
TEXT: MOSCOW — The receiver of bankrupt oil firm Yukos will auction its service companies on May 16, the receiver’s office announced in a notice in government newspaper Rossiiskaya Gazeta on Saturday.
The starting price for the lot will be 1.67 billion rubles ($65 million), the notice said.
“The decision has been taken to form a single lot comprising Yukos’ service companies, including construction, maintenance, information and technology companies,” Nikolai Lashkevich, a spokesman for Yukos receiver Eduard Rebgun, said in a statement Friday.
The sale will include Yukos’ eight oilfield service companies that failed to attract any buyers at an auction earlier this month, when the starting price was set at 992 million rubles ($38.42 million).
The government is holding a string of auctions to sell off Yukos’ assets to pay off its debts of over $26 billion. 
Rosneft has transferred $7.6 billion to pay for a block of its shares previously held by Yukos, Rebgun’s office said Friday. Rosneft bought the 9.44 percent stake of its own equity last month, the first lot in a series to sell off Yukos, which was destroyed by $33 billion in back-tax claims.

TITLE: Picking Out the Well-Stocked
AUTHOR: By William Mauldin
PUBLISHER: Bloomberg
TEXT: For Zina Psiola of Clariden Leu, shopping for Russian stocks literally means going shopping.
She visited stores in Kiev, Moscow and St. Petersburg to check out investments in her $700 million Russia Equity Fund. Customer service at a Perekryostok store run by X5 Retail Group made her decide last June to keep its shares. She sold Sedmoi Kontinent because its store’s workers were unable to help her change her watch battery — at Perekryosto they did.
“You just go and look at real life,” Psiola, 34, said in a telephone interview from her office in Zurich. “I want to feel the experience of the middle-class person in Russia.”
Since she sold Sedmoi Kontinent on June 9, the stock has lagged behind the 80 percent gain of the X5 shares she retained, rising 41 percent.
Between the excursions to stores and a set of financial ratios she uses to find undervalued stocks, her fund returned 37 percent in the last 12 months. 
That beat the 31 percent return of the RTS Index, her benchmark, and placed Psiola second among 25 funds that invest in Russia and are sold internationally, according to data from Morningstar.
Psiola trailed only the Prosperity Quest Power Fund, which invests in the electricity industry. Managed by Moscow-based Alexander Branis, that fund has more than doubled in the past 12 months.
Now Psiola is increasing her holdings in banks, which are benefiting from a rapid rise in lending. Gross domestic product expanded 6.8 percent last year in Russia, more than double the pace of the euro region.
Her biggest holding is Sberbank, the stock that analysts call the best proxy for the country’s economy and consumer spending. Sberbank controls the bulk of Russian deposits and has branches spanning 11 time zones, from Kaliningrad to Kamchatka regions. Sberbank shares have more than doubled in value over the past year. The company now makes up about 20 percent of Psiola’s portfolio following her investment in the bank’s $8.8 billion stock sale in February. She first bought Sberbank in December 2004 at $454 per share, less than one-eighth the current price.
She is now looking to diversify into other banks and shrink the share of her fund occupied by Sberbank. She is mulling putting money into VTB Group, the country’s second-largest bank, which started accepting bids last week for its initial public offering.
VTB plans to raise as much as $6 billion from the sale of one-quarter of its stock to Russian and foreign investors this year. VTB’s profit last year more than doubled to $1.2 billion from $511 million, the bank said last week.
Psiola is also investing in companies that are rebuilding the country’s aging roads, rails and electrical system. She owns shares in pipemaker TMK, and she’s thinking of buying into Novolipetsk Steel, the country’s most profitable steelmaker.
She is also considering buying more shares in Norilsk Nickel, the country’s biggest mining company, which is trading at a discount to its competitors, she said. Norilsk shares trade at 10.6 times estimated 2006 earnings, compared with an average price-to-earnings ratio of 15 for Russian metals companies, according to Alfa Bank.
That ratio for Norilsk looks “extremely attractive,” she said. Shares in the company have nearly doubled in value over the past 12 months.
To fund the purchases Psiola has been selling the oil and gas producers that make up half of the RTS. She has slashed her holdings in the energy industry to 19 percent of the fund, compared with 45 percent at the end of September, by selling companies such as LUKoil.
Psiola predicts that some of these companies will see their earnings per share decline in 2007. At a time when oil is below its peak of last July, Russian oil producers also are being hit by the ruble’s 7 percent rise against the dollar in the past 12 months. That reduces ruble revenues from dollar-priced oil.
Shares of Gazprom are down 11 percent this year, while those of LUKoil have fallen 4.2 percent.
Paring holdings of an industry that dominates the benchmark index is a risk, said Vladimir Matias, managing partner at Asset Capital Partners. Russian oil firms’ prices are attractive compared with their global peers because they have lower production costs, he said.
“LUKoil is undervalued,” Matias said. Shares in the company trade at 9.5 times future earnings, compared with 12.4 times future earnings at ExxonMobil, the world’s biggest publicly traded oil company. LUKoil shares have dropped 9.1 percent in the last year and Exxon shares are up 25 percent.
The Morgan Stanley Capital World Energy Index trades at 11 times estimated earnings, about the same as that for an MSCI index of Russian energy stocks.
Psiola grew up on the Ukrainian Black Sea coast and attended Moscow State University, graduating with a diploma in mathematics in 1994. She won a scholarship in 1997 to study at the London School of Economics for three months, and in 1998 she moved to London to work in Enron’s energy-trading unit in Britain.
In 2000, Psiola got a job in Zurich working on mergers and acquisitions for Credit Suisse Group, and in 2004 took over as portfolio manager of the Russia fund at Clariden Leu, a private-banking unit of Switzerland’s second-largest bank. To take her mind off fund management, she hikes in the Alps.
Her mathematical background means she “looks at the world in figures,” she said. She will only buy a company that she can hope to sell later for a 20 percent profit. Her favorite ratio is that of a company’s enterprise value to its earnings before interest, taxes, depreciation and amortization.
Numbers can be more reliable than her other method of research — pretending to be a consumer. Psiola had intended to open an account to test banking service during a recent trip to Krasnodar, but when she saw how long the lines were, she gave up.
“I only had one hour,” she said. “It requires lots of time to open an account.”

TITLE: Boom in IPOs Fraught With Inflationary Risks
AUTHOR: By Artyom Danielyan
PUBLISHER: Reuters
TEXT: MOSCOW — A boom in public share offerings is fraught with inflationary risks, but poses no threat to the stability of the currency market, a senior Central Bank official said Friday. 
“An increase in IPOs, despite all its positive aspects, is still a big problem and headache for monetary policy,” Konstantin Korishchenko, Central Bank deputy chairman, said at an investment conference. 
“This problem [capital inflows] is fraught with inflationary risks,” he added. 
Firms raised over $17 billion by listing their shares on domestic and foreign bourses in 2006, according to a report by consultants PBN. Investment bankers forecast that listings may raise a record $30 billion this year.
The next major IPO will be by state-owned VTB, the No. 2 bank. Analysts working in the IPO syndicate estimate that the deal could raise $8 billion, a source familiar with the deal said Friday. 
Korishchenko noted that Russian shares were in huge demand from global investors who actively sell foreign currencies on the interbank market and buy rubles to fund purchases of them.
Korishchenko, responsible for the bank’s open market operations, said, however, that he was not concerned over Thursday’s record ruble-dollar trade volumes, as he was confident the forex market could handle such risks.
Volumes on the country’s currency market hit a record $9 billion on Thursday, and the Moscow Interbank Currency Exchange suspended trading for around 30 minutes due to a technical glitch. 
Traders said the heavy dollar selling was possibly linked to auctions of assets in bankrupt oil firm Yukos that would continue into May, potentially leading to billions of dollars more being put through the currency market. 
The Central Bank, which runs a managed float of the ruble, is typically the dollar buyer of last resort and is running its ruble printing presses flat out to curb excessive appreciation that would hurt national economic competitiveness.
Its foreign reserves, already the world’s third largest, rose by $7.6 billion last week to $346.6 billion.
Growth in the money supply is running at over 50 percent, making it hard to keep inflation down. 
“We expect more upward pressure on the ruble over the next few months, as capital inflows are likely to remain strong, partly due to more major transactions in the pipeline,” Goldman Sachs said in a daily commentary.

TITLE: Retailer X5 Backs Lower End Share Issue Amidst Concerns
PUBLISHER: Reuters
TEXT: MOSCOW — Food retailer X5 said Friday that its board had approved a $1 billion secondary share offering to finance acquisitions and organic growth.
The issue is at the low end of a $1 billion to $2 billion range suggested earlier by CEO Lev Khasis. Analysts had expressed concern that raising too much fresh equity capital might be earnings-dilutive.
“The secondary offering of our shares is one of the instruments we are planning to use during this year to raise additional capital to finance the potential acquisition of the Karusel hypermarket chain,” Khasis said in a statement.
The option to buy Karusel becomes effective on Jan. 1, although one of the company’s owners has said Wal-Mart Stores was a potential buyer.
Company spokesman Gennady Frolov said X5 would announce details of the share offering in June and hoped to complete the transaction in October or November.
London-listed X5 would also consider floating shares in Moscow, but only if legislation allowing the creation of Russian depositary receipts, a type of proxy share, is in force by then.

TITLE:  The Advantages of Insider Trading
PUBLISHER: Vedomosti
TEXT: Russia is once again standing on the threshold of WTO accession. Officials involved in the negotiations are once again giving rein to unrestrained optimism. As for the dangers liberalized trade poses for Russia’s economy, they say their hope is that Russia will have a greater role in determining the rules of the game once it has achieved membership. There is some basis for these hopes.
On Monday, at an event titled “Russia in the WTO: Prospects and Strategic Possibilities,” Economic Development and Trade Minister German Gref said Russia expected to conclude bilateral talks on World Trade Organization membership with Vietnam and Cambodia by the end of May. He also said that he expected to conclude multilateral talks with the organization as a whole by the end of July, meaning that Russia would gain membership to the trade body “by the end of 2007, or in the worst case in the early part of next year.” The outcome of negotiations with Georgia, the last bilateral deal that has to be sealed, is still unclear, but Moscow can probably expect help from Washington on this front. Last week U.S. Commerce Secretary Carlos Gutierrez expressed unconditional support for Russian WTO accession.
Russia is joining the organization at a time when trade globalization is facing a crisis and growth in international trade is slowing. According to WTO figures, in 2005 the volume of trade between the world’s countries was $10.1 billion, or 13 percent higher than in 2004. But in 2003 and 2004 the rate of growth was significantly higher, from 17 percent to 21 percent. In corners where the call for freer trade has traditionally been strongest, like the United States and the EU, protectionism has been making a comeback in recent years, and the benefits of freer trade are increasingly being called into question.
It is for this very reason that Russia should feel quite at home in the WTO. The hopes on the part of our officials are riding on the fact that membership in the organization has not always meant the immediate liberalization of access to home markets. The examples of China, the United States and other countries that have successfully subsidized their producers and torpedoed any “harmful” decisions from the WTO all provide solace for Russian policymakers. By joining the WTO, Russia will simply move into a higher league of protectionism, where it will have to battle for each and every ruble of trade preference. It will be tough at first, but practice and experience will eventually lead to more effective performances.
The hopes of liberal economists are the exact opposite: By helping to open up Russia’s markets, they believe WTO membership will engender a rise in competitiveness. Russia will enter the big leagues of competition, meaning that its companies will have to battle for every ruble. Uncompetitive companies and entire sectors will ultimately fail, contributing to a rise in the effectiveness and strength of those that remain.
The Economic Development and Trade Ministry maintains that the conditions it has negotiated for accession are reasonable. The most trade-sensitive sectors of the economy will enjoy a seven-year transition period during which import duties will not be lowered. The biggest sectors that will still enjoy protection will be automobile manufacturing, shipbuilding and agriculture. With regard to 1,100 other products, there will be adjusted combined tariffs determined by world price conditions. Average import duties on manufactured goods after the expiration of the transition period will fall to 11.5 percent — not much lower than the current 12.9 percent.
After joining the WTO, Russia will still be allowed to maintain quotas on the import of beef, pork and poultry products. Protective tariffs will remain on liquor and other drinks with high alcoholic contents, as will measures prohibiting foreign banks from opening local branches. Foreign insurance companies will not be allowed access to the Russian market for nine years.
Gref was also able to point out that the projected fall in budget revenues resulting from the changes will be negligible. In 2008, this will mean a fall of 40 billion rubles ($1.6 billion) for the federal budget. The sum will be 70 billion rubles in 2009 and 100 billion rubles in 2010. He provided no estimate of the expected benefits associated with an increase in trade volumes.
In reality, the effects of WTO accession will depend on how well Russia uses existing instruments within the organization. Russia’s exports are for the most part to countries already in the WTO. If it is able to increase its exports to these countries during the transition period, then the competitiveness of Russian companies will improve and calls for protectionism will dwindle. If the state does not stimulate exports, then sooner or later imports will manage to overcome any protectionist measures.

This appeared as an editorial in Vedomosti.

TITLE: World Bank Chief Must Go
PUBLISHER: Financial Times
TEXT: Should Paul Wolfowitz leave the World Bank? The answer to that question is yes. Will Wolfowitz leave? The answer to that question is murkier. The United States gave Wolfowitz the job and it will decide whether he will stay. U.S. President George W. Bush will hate to abandon a loyal henchman. He should do so, nonetheless.
It would be absurd to leave the decision to the bank’s executive directors. These mid-level bureaucrats are not going to reach such a decision on their own.
In practice, national capitals will make the choice, unless Wolfowitz himself takes it out of their hands. The United States will be decisive. It is the bank’s largest shareholder and has always appointed the bank’s president. Bush himself chose Wolfowitz.
Bush tends to be loyal to those he regards as loyal to himself. But to place loyalty above all other virtues is the ethics of a mafia boss not of the leader of a great country. The president also needs to consider both what is right and what is in the interests of his own country.
That the United States has in recent years lost a great deal of moral credit around the world is undeniable. But one area where the Bush administration has been relatively forward-looking has been aid and development. It has raised the share of gross domestic product spent on official aid to 0.17 percent, still low but well above the mere 0.1 percent in 1999. It has supported ambitious debt cancellation for the world’s poorest countries. It has also, rightly, put much weight on the need to tackle corruption and improve governance in aid recipients.
The best justification for placing Wolfowitz at the Word Bank was his determination to give battling corruption and improving governance overriding priority. It is possible to debate the wisdom of this, since the quality of governance is not the sole determinant of development. But if the United States has decided that this is what it wants the World Bank to achieve, it cannot sustain a president who is no longer a credible spokesman for that cause. To do so can only destroy yet more of its own battered moral capital. It would be worse than a crime; it would be a blunder.
Loyalty is indeed a virtue. But loyalty is not the overriding virtue. The United States needs to perceive its true interests in having an effective and credible bank. 
It needs also to preserve its own credibility as a campaigner for good governance. Wolfowitz now needs to go if the aim of his presidency is to survive. The choice is as simple and stark as that.

This appeared as an editorial in the Financial Times.

TITLE: Private Riches Behind the Public Poverty
AUTHOR: By Alexei Bayer
TEXT: Flying out of Moscow recently, I chatted with the head of a medium-sized technology firm. His Russian client recently placed an order worth $1.5 million to $2 million. As the company was just gearing up to fill the order, the client called to apologize for making a mistake. Their order would be closer to $15 million to $20 million. 
With so much money sloshing around Russia these days it’s easy to miss a zero or two. But Russia, being one of the most extreme participants in the global economic boom, is indicative of what has been going on elsewhere. This is the case not only in fast-growing emerging economies, but in the industrialized world as well. The City of London has a similar boomtown feel, for all its moth-eaten lion-cum-unicorn veneer. In the United States, people with serious money to invest have been reeling from an embarrassment of lucrative options.
The board of trustees of New York’s Metropolitan Museum of Art consists of highly dedicated, wealthy individuals who have given millions of dollars to the museum. But now they are complaining that any number of nouveaux riches can trump them at a stroke of a pen. Donors to Ivy League colleges wishing to make a mere six-figure gift might find it hard to get anyone to return their calls.
It may be tempting to see this as one of those periodic changes of the guard. Just as in the late 19th century Gilded Age, when the Rockefellers and the Morgans replaced the old Dutch and English families as the moneyed elites in the United States, so hedge fund managers and techno-billionaires, as well as the super-rich from Russia, China and India, are shunting aside established American and European wealth.
Yet something seems to have gone terribly awry in this global boom. Private enrichment everywhere has been accompanied by the impoverishment of the public sphere. While the plethora of money has devalued it at the top of the pyramid, the common good has been starved of funding. What started as a tax revolt by the middle class now looks increasingly like the disintegration of the social compact.
Once again Russia, with its stark customs, casts this process into greater relief. On Moscow streets, numerous hugely expensive, loutishly driven automobiles serve to underscore the absence of anything resembling a community, the willful ignorance of environmental concerns, the blatant disregard for rules and laws and the disrespect for fellow citizens that permeate Russian society from top to bottom.
Ruling over such a society, the Kremlin understandably overreacts to any form of dissent. At Saturday’s protests in Moscow, police outnumbered protesters almost 10 to one by some accounts.
My American friends in Moscow often comment on the contrast between private wealth and a dingy public landscape. They should not rush to judgment. The cynical Soviet-era saying “money can’t buy everything, but really big money can” is now equally relevant in the United States. Huge, easy money accruing to the top 10 percent of the U.S. population has eaten into the fabric of American society. While small towns still thrive on a collective spirit, there has been a marked degradation in the standards of public service, community and plain honesty at the top. Despite tremendous private prosperity, future generations of Americans are being saddled with an insurmountable public and external debt and denied everything that constitutes the basis for a prosperous life, including arts and sciences, medical research and education.
U.S. leaders should worry as much about domestic social peace as their Russian counterparts already do. The country’s Great Society programs of the 1960s have been rolled back, and higher education has become unaffordable, limiting future social mobility. Official Washington is already hated around the world, and the nexus of political, lobbying and corporate power that runs the United States may discover that its hold on the nation is more tenuous than it appears to understand.

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

TITLE: Right On The Money
AUTHOR: By Konstantin Sonin
TEXT: Since there is very little likelihood of even a moderately competitive presidential election breaking out in Russia anytime soon, it is a lot more interesting to follow these campaigns in other countries. The presidential campaign in the United States has already begun, with open campaigning already well under way for a vote that will only be held in November 2008. The numerous public opinion polls coming out regularly in the United States, although providing ample material for the talking heads and analysts, are almost useless when it comes to predicting the outcome. The current focus is therefore on how much money each candidate has managed to raise. New York Senator Hillary Clinton leads Democratic Party candidates with $26 million collected so far, followed closely by Illinois Senator Barack Obama with $25 million. Former Massachusetts Governor Mitt Romney is in first place among Republican candidates, with $21 million. There doesn’t seem to be anything unusual in politicians drumming up money to get elected. Were elections in Russia — back when we still had real elections, that is — different in any way?
There is, however, one fundamental difference, and it can be found in the way the candidates accumulated these war chests. Most of the campaign contributions to Russian parties and individual candidates received in past elections consisted of huge sums contributed by a few donors. Clinton’s campaign, in contrast, received donations from 50,000 people over the past three months alone, while 100,000 people have contributed to Obama’s campaign. What generates these relatively broad donor bases are U.S. laws that limit campaign contributions to a maximum of $2,300 per donor prior to the parties’ national conventions. Ninety percent of Obama’s individual contributions have been for amounts under $100, and 40 percent have been for $25 or less.
Contribution caps force candidates to seek support from a larger number of voters. How many hands do you think candidates had to shake, and how many questions did they have to answer to roll up those kinds of sums? Thousands — and that was only during the opening three months of a two-year campaign. By November 2008 the candidates still in the presidential race will have visited hundreds of small cities and towns. It isn’t surprising, therefore, that U.S. politicians generally do a good job of representing their local constituents. 
It is also more advantageous for candidates to receive their money this way: A person who has contributed $50 is more likely to vote for that candidate than one who has simply stated his intention to do so during a poll. And a small businessman who, along with 200 others, pays $500 to listen to a candidate speak over breakfast, will likely send another $500 check to the local party headquarters as well.
Everything is done differently in Russia. Large donations sever the connection between politicians or parties and the millions of voters whom they purport to serve. But it is no easy task to force politicians to seek millions of small donations in place of a few large ones. 
The simple recognition of the merits of this method would be a step forward for Russia’s electoral system. If parties or politicians were to ask for 500 rubles from millions of voters, rather than millions of rubles from a few contributors, they would certainly be more likely to take their constituents’ interests into consideration.

Konstantin Sonin is a professor at the New Economic School/CEFIR.

TITLE: Strictly Orthodox
AUTHOR: By Evan R. Golstein
TEXT: Last year, about 2,500 immigrants to Israel from the former Soviet Union began their conversions to Judaism. The official framework of Orthodox Judaism — the only one recognized by Israeli law — typically takes about 10 months and involves studying Jewish law and thought, navigating an intricate bureaucracy, and adopting an Orthodox lifestyle, including strict adherence to kosher dietary laws and observance of Jewish holidays. The process culminates in a visit to the beit din, or rabbinical court, where the potential convert’s knowledge of Jewish history and practice is probed.
It turns out that of the roughly 2,500 Russians who began their conversions last year, only about 940 successfully completed the process. This sparse result has triggered the latest battle in the long-running war over conversion in Israel. In the last decade of the 20th century, a wave of some 1 million immigrants from the former Soviet Union arrived in Israel. Though one-third were not recognized as Jewish according to rabbinic law, primarily because their mothers are not Jewish, all were granted Israeli citizenship under the Law of Return, which has a more expansive definition of who is a Jew and thus entitled to live in Israel.
For the roughly 300,000 Israeli citizens from the former Soviet Union who are not recognized as Jews by the chief rabbinate, a state-financed academy was created to ease their path to conversion. Benjamin Ish-Shalom, who directs the Institute for the Study of Judaism, said the grinding pace of Orthodox conversions was due to the courts’ excessively rigid standards, demanding that women wear only long skirts or that converts move to more Orthodox neighborhoods, for example.
Ish-Shalom maintains that the current crop of presiding rabbis — many of whom are Haredi (ultra-Orthodox), as opposed to modern Orthodox — holds potential converts to a higher standard than is required by Jewish law. Earlier this month, he raised the stakes of his protest, announcing that the institute will no longer send graduates to the conversion courts until there is a change in rabbinical conduct and an easing of the requirements. “This problem jeopardizes the future of the Zionist idea and the unity of the Jewish people,” Ish-Shalom said.
For its part, the Orthodox rabbinate defends its strict interpretation of Jewish law, arguing that conversion is not a casual decision. It says Russians are free to live as citizens of Israel even if they are not Jewish by Orthodox criteria but otherwise consider themselves Jews.
But they are not accorded the same rights as citizens. In an arrangement that dates back to the earliest days of the Jewish state, matters of marriage, divorce and burial are governed by Orthodox religious authorities. Israelis who are not Jewish according to Orthodox standards, therefore, are unable to have an official Jewish wedding ceremony or be buried in some Jewish cemeteries there.
The current tussle exemplifies how this arrangement with the Orthodox rabbinate has been mutually corrupting. It has fostered a bureaucratization of religious faith that sometimes renders disputes about theology indistinguishable from disputes about state money and power. Nowhere is this more evident than when it comes to the deeply vexing matter of conversion.
The prospect of a permanent class of inferior-status half-Jewish or non-Jewish Israelis raises the ugly specter of an Israel increasingly divided by hierarchical definitions of Jewish authenticity, and it has bred a dangerous sense of alienation in certain precincts of Israel’s Russian immigrant community. According to a recent study, 48 percent feel more “Russian” than “Israeli.”
In an effort to address this looming threat, the Absorption and Immigration Ministry recently opened a marketing campaign aimed at encouraging non-Jewish Russian Israelis to undergo Orthodox conversions. The outreach effort has led to a modest spike in interest, but there is every reason to believe that interest will remain modest.
Most Russian Israelis were raised in the spiritually desolate environs of the Soviet Union, and since arriving in Israel many have naturally adopted the secular lifestyle favored by a majority of their Jewish countrymen. They speak Hebrew and serve in the army, but the prospect of embracing strict Orthodoxy as a precondition to conversion — and full inclusion in Israeli life — is a hard sell. Why should the Russian immigrants have to keep kosher and observe the holidays in order to get the full rights of Israeli citizenship when their nonimmigrant friends do not?
Many understandably resent being considered illegitimate in the eyes of the religious authorities despite having demonstrated a sincere commitment to live as Jews. “If the immigrant communities cannot be included ‘in the fold,’ then this presents a serious danger to the Jewish dimensions of the state,” said Rabbi Seth Farber, director of ITIM, a privately funded nonprofit organization that helps potential converts navigate the often maddening rabbinic bureaucracy. He warned that this conversion crisis “can, and very possibly will, erode the Jewish character of the state.” A prospect that Israel can ill afford.

Evan R. Golstein is a contributing editor at Moment magazine. This comment appeared in The Wall Street Journal.

TITLE: Like It or Not, The Word Is Authoritarian
TEXT: Of the epithets regularly applied to President Vladimir Putin and his political practices, “authoritarian” in particular seems to rankle the Kremlin and its supporters. But what other word comes to mind when 9,000 riot police officers are sent out onto the streets to handle several thousand protesters, as they were Saturday?
Part of the explanation for the government reaction Saturday is that, with Putin leaving office next year, those in power are determined to make sure nothing like the 2004 Orange Revolution in Ukraine happens here. It is difficult to see how Saturday’s gathering posed such a threat.
One of the leaders of the event was former Prime Minister Mikhail Kasyanov, whose liberal economic credentials, along with allegations about corrupt dealings while still in government, would make it impossible for him to win election in today’s Russia.
Another, Eduard Limonov, is a writer whose National Bolshevik Party has been stripped of its official recognition and, despite offensive nationalist rhetoric in the past, has been in recent years limited to preaching social populism and staging publicity stunts.
The third, Garry Kasparov, who is handicapped in the eyes of much of the public because he shares Kasyanov’s liberal bent, also carries the additional baggage of being an Armenian Jew in a country where ethnicity is still a major issue.
There is little chance that Kasparov, for example, could become for today’s Russia the kind of figure Viktor Yushchenko became for the Ukraine of 2004. The police detained him anyway Saturday.
There were even more preposterous detentions. One man told a call-in show on Ekho Moskvy radio that he, his wife and young child had been detained while they were trying to see what was happening. His wife and child were grabbed and bundled into one police vehicle, while he was stuffed into another. 
Some of the younger members of the crowd wearing National Bolshevik regalia did start rushing the riot police following the speeches on Turgenev Square, apparently trying to provoke a confrontation. But the police did not bother detaining these protesters. They simply shoved them back.
The deliberate targeting of Kasparov and the arbitrary detentions were part of the day’s absurd nature. They provide more than a hint of its authoritarian nature, too.

This first appeared as an editorial in The Moscow Times.

TITLE: Bringing Some Order 
Back to Investment
PUBLISHER: Vedomosti
TEXT: The success of the “Chukotka experiment” has made it tough for other regional leaders. By uniting business and political power in his own person, Roman Abramovich did much for the region: Between 2000 and 2006 the average monthly salary of Chukotka residents grew from 5,687 rubles ($220) to 25,114 rubles ($970) and the portion of the population living under the poverty line fell from 50.1 percent to 19.9 percent. Now, the presidential envoy for the Far East Federal District, Kamil Iskhakov, is calling on businessmen to help with 87 major projects aimed at pumping 2.7 trillion rubles ($104 billion) into the economy.
So far there has been little concrete information on the projects as most remain only proposals from various governors. There already is a clear example of the type of thing the state is looking for, in the form of a private-public sector partnership program for the development of Sochi. If Sochi wins the right to host the 2014 Winter Olympics, the Economic Development and Trade Ministry plan calls for a total development budget of 313.9 billion rubles ($12.1 billion), with 185.8 billion rubles coming from the federal budget and the rest from the private sector.
The problem is that official development policy calls for the state to help business by building infrastructure, but the far eastern projects suggest the opposite. 
None of the infrastructure development projects targeted by the state investment fund have received a kopek. The 2006 budget was 69.7 billion rubles, but the application approval process took so long that no money was disbursed.
How did big business end up under the state’s thumb so easily? The birth trauma of big business came in the privatizations and tax schemes of the 1990s. This created a particular model of dependency between business and the state: First and foremost, companies have to be loyal. The important thing is not to pay taxes in full and on time, but to pay “special taxes” immediately and whenever asked to. These taxes have come in the form of financial or media support during elections and the reconstruction of palaces. Lately they have given rise to the phrase “social responsibilities for business.” Now we have reached a new stage where the state not only tells businesses how much they owe, but also how and where to invest the money.
The form of private and public sector partnerships is increasingly what you would expect from a planned economy — where the question isn’t one of attracting investment but of directing it. In the opinion of analysts, this model for regional development is unlikely to be a successful one — investment is only effective in cases where there are the proper economic conditions, and businesses are better at identifying these than government officials.

This appeared as an editorial in Vedomosti.

TITLE: Vodka by Any Other Name
AUTHOR: By Serge Schmemann
TEXT: A lot has been said lately about how the European Union has staved off war on its continent since the signing of the Treaty of Rome 50 years ago. Really? How about the great Banana War, in which the combined forces of the New World and Third World were routed, and the European Commission boldly proclaimed that nothing with “abnormal curvature” could be called a banana? (Britons who persist in claiming that the European Union mandated straight bananas are just trying to malign it.) And even now the Vodka War is raging.
Unlike the Banana War, this one is strictly a civil war. Under dispute is the definition of a drink that generates around $12 billion in annual sales.
The European Union would define vodka simply as diluted ethyl alcohol, which is, of course, what it is. 
That suits members like Britain, the Netherlands, France and Austria, which wring “vodka” from anything from grape mush to sugar cane. 
The quotes are important here, because countries of the vodka belt around the Baltic Sea, which have distilled the stuff for centuries and produce two-thirds of the European Union’s vodka, insist their traditional use of grains and potatoes to make vodka should be enshrined in the definition. 
All else, they insist, is mere regional swill, and should be labeled as such.
A decision is said to be imminent. For that reason, I would like to add my two cents.
My qualifications are impeccable: I am of Russian descent. 
Yes, I know, the Poles claim they invented vodka, and the Finns used to claim in a memorable ad that “real Russian vodka comes from Finland,” but that’s not the real issue here. 
Let’s face it, it is the Russians who are most closely identified with vodka, if only by virtue of the heroic amounts they have consumed and the suffering they have endured. 
Besides, vodka is a Russian word, a diminutive of “water” (before you adopt an ironic smile, be aware that “whiskey” comes from the Gaelic for “water of life”). 
The Poles may put “vodka” on their bottles, but among themselves they call it “gorzalka” (it’s “horilka” in Ukrainian), from the root “to burn,” which tells you something about their stuff.
My issue, however, is not with who gets to choose which name, and for what in Europe. 
The Eurocrats in Brussels are paid princely salaries to come to decisions on such mattters as whether feta has to come from Greece (yes) or how curved cucumbers can be (Class I cukes are allowed a bend of 10 millimeters per 10 centimeters of length, according to Commission Regulation No. 1677/88). 
My beef is with the whole brouhaha over a liquor whose greatest, and only, virtue is that it is colorless and tasteless.
The proliferation of premium brand vodkas, sold in ever fancier bottles and at ever higher prices, is understandable, given the decadence of the Western world. The endless debates about which vodka “tastes” better are less so.
Untold numbers of veteran vodka users from across the Eurasian expanse, around the vodka belt and up the eastern seaboard with whom I’ve raised an ice-cold shot are unanimous that all vodkas are divided into two, and only two, categories: pure and impure. 
The way you can tell is this: good vodka has no taste; bad vodka tastes like rubbing alcohol (if it tastes like brake fluid, it probably is, and you will die).
The 80-proof stuff, the standard set by Tsar Alexander III in 1894, is just the right strength for extended abuse. 
The 100-proof vodka, which is 50 percent alcohol, will burn your mouth and takes effect too fast, but it can be fine-tuned a little bit by simply adding water.
All vodka-drinking peoples have scores of recipes for flavoring vodka, from the buffalo grass popular in Poland (Zubrowka) to the pepper-honey Ukrainian vodka that I particularly like. 
It goes without saying that vodka can only be drunk neat, just out of the freezer, followed by a tablespoon of caviar on toast. If you’re out of caviar, use a slightly bent pickle. As for the name, well, vodka is vodka is vodka.

Serge Schmemann is editorial page editor for the International Herald Tribune. This comment first appeared in The New York Times.

TITLE: Essar Steel Rises After Parent Agrees Purchase
AUTHOR: By Debarati Roy
PUBLISHER: Bloomberg
TEXT: MUMBAI — Shares of Essar Steel, India’s third-biggest steelmaker, rose after its parent agreed to buy Algoma Steel Inc. for $1.63 billion to gain sheet mills that supply carmakers in North America. 
Essar Global, which owns 88 percent of Mumbai-based Essar Steel, on Sunday offered C$56 a share in cash per share for the Canadian company. The price is 48 percent more than the 20-day average ending Feb. 14, when Algoma said it was in talks that may lead to a takeover. 
Algoma will fetch Essar customers including General Motors Corp. and Ford Motor Co. in the world’s biggest vehicles market. 
Indian companies, fueled by accelerating economic growth, are buying rivals overseas to add production capacity and get access to mature markets. 
Tata Steel Ltd. In January bought Corus Group Plc for $12 billion to add finishing mills in Europe to plants in India, which has the world’s fifth-biggest iron-ore reserves. 
“The rationale is to move closer to markets for higher-end products while continuing to tap cheaper raw materials’’ such as iron ore in India, said Ashutosh Satsangi, head of research at Crisil Ltd., an Indian unit of rating agency Standard & Poor’s. 
Shares of Essar Steel climbed 1.7 percent to 41.2 rupees at the 3:30 p.m. close on the Bombay Stock Exchange.  The stock has risen 17 percent this year, valuing the steelmaker at $1 billion. Shares of Algoma rose 26 cents to C$54.12 on April 13 in Toronto. They have gained 63 percent in the past year on speculation about a purchase. 

‘Steel Cycle’ 
Algoma shipped 2.42 million metric tons last year, with about 80 percent coming from hot-rolled sheet. The transaction is expected to close in June, said Brenda Stenta, a spokeswoman for the Canadian steelmaker. The company’s board backed Essar’s offer, it said in a statement yesterday. 
The purchase comes amid a recovery in global steel prices. 
Prices in China, used as a regional benchmark, have climbed 6.3 percent this year to 4,263 yuan a metric ton, according to the Beijing Antaike Information Co. Prices may rise further this quarter because the peak demand season is approaching and the government is closing obsolete mills to prevent a glut, the National Development and Reform Commission said March 29. 
“The steel cycle is up so making acquisitions at this time becomes easier,’’ said Giriraj Daga, an analyst with Khandwala Securities Ltd. In Mumbai. “Higher prices reduces the pay-back time for companies.’’ 

Iron Ore, Coal 
Essar Global’s offer is seven times Algoma’s earnings before interest, taxes, depreciation and amortization, or ebitda, said Niraj Shah, an analyst at Mumbai-based Prabhudas Lilladher Pvt. Tata paid nine times the earnings of Corus Group and Mittal paid 4.46 times the earnings of Arcelor. 
“Algoma also has a 15-year coal-supply agreement and a 7-year contract for iron ore’’ giving Essar an immediate access to raw materials, Shah said.

TITLE: ABN Gains On the Eve 
Of Battle
AUTHOR: By Reed Stevenson
PUBLISHER: Reuters
TEXT: AMSTERDAM — ABN AMRO reported double-digit earnings gains on Monday, strengthening the hand of the underperforming Dutch lender as it enters the last days of merger talks with Barclays and faces a rival break-up bid.
ABN shares — on the first day of trade since a rival consortium of three suitors emerged late on Friday — rose more than 5 percent to a record 35.6 euros in morning trade, taking it above the level Barclays is expected to pay and valuing ABN at 68 billion euros ($92.13 billion).
Spain’s Santander, Royal Bank of Scotland and Dutch-Belgian group Fortis approached ABN last week asking for access to its books and management, days before ABN’s 30-day period of exclusive talks with Barclays ends on Wednesday.
The banks say they want their bid to be friendly, but sources close to the matter said late on Sunday ABN would not open its books until it had more details on the consortium’s plans — raising the prospect of what another source close to the situation called a “more aggressive approach” from the trio.
Monday’s share climb and a looming bidding war for ABN, already trading at one of the sector’s highest multiples, raises the stakes for Barclays.
Barclays had been seen offering a maximum of 35 euros per share for ABN — a level the trio of banks is expected to beat, given higher synergies, with analysts forecasting a potential offer closer to 40 euros.
“From an ABN shareholder perspective, the offer of Barclays stand-alone is unlikely to match the offer of the consortium,” Keefe, Bruyette & Woods said in a note on Monday.
“In our view, in order to remain in the competition, Barclays will need to go back to its drawing board and consider either selling some ABN assets in a competitive tender or construct its own consortium.”
Sources close to the situation have said Barclays could sell assets like ABN’s U.S. business LaSalle to raise cash. 
ABN’s results, boosted by the sale of its U.S. mortgage business to Citigroup earlier this year, showed profitability in line with expectations, with net profit up 30.6 percent at 1.31 billion euros in the first quarter. Earnings per share from continued operations rose 30 percent to 0.65 euros.
ABN said it issued the summary of results ahead of a planned April 26 date — which would have coincided with its key annual shareholder meeting — “in order to be fully transparent.”
“This might indicate that Barclays, without hard statements on the current year, is not able to hand in a reasonable bid,” said Petercam analyst Thijs Berkelder in a client note. 
“The proposal by Fortis, RBS and Santander now really has opened a potential bidding war,” Berkelder said.
ABN’s period of exclusivity with Barclays is expected to end around Wednesday, just days ahead of the AGM, and the two banks are expected to say by then whether the British bank, under pressure from shareholders not to enter a value-destroying bidding war, will table an offer or scrap the talks.
ABN has come under pressure from investors, including British hedge fund TCI, to consider a sale or break-up to boost shareholder returns after several years of underperformance.
ABN shares, up 37 percent since TCI sent its letter two months ago, were trading up 5.7 percent at 0916 GMT. Barclays shares were up 1.4 percent at 754 pence while RBS was up 3.1 percent.

TITLE: Yen Hits New Low Against  Euro After G7
AUTHOR: By Chikako Mogi
PUBLISHER: Reuters
TEXT: TOKYO — The yen hit a record low against the euro on Monday as Group of Seven finance officials did not single out the Japanese currency’s weakness at a weekend meeting, before trimming its losses as investors took profits on the drop.
The G7 repeated its call for exchange rates to reflect economic fundamentals, and cited China again by name in calling for greater currency flexibility, using the exact same wording in its communique as after its February meeting in Germany.
Traders said the lack of surprises from the G7 Washington meeting appeared to give a green light to carry trades, in which investors borrow funds in low-yielding currencies such as the yen to invest in higher-yielding currencies and assets.
European officials seemed to have softened their complaints about the weak yen after this meeting compared with the last gathering in February, when some warned about markets building up one-sided bets in carry trades, analysts said.
“The market’s reaction to sell the yen is natural as players saw the G7 as allowing the euro to strengthen further against the yen and the dollar due to the strong euro zone economy,” said Nobuo Ibaraki, a deputy general manager at Nomura Trust and Banking.

TITLE: Ballack Blasts Chelsea Into FA Cup Final
AUTHOR: By Rob Harris
PUBLISHER: The Associated Press
TEXT: MANCHESTER, England — Michael Ballack put Chelsea into the FA Cup final by scoring in extra time Sunday to give his team a 2-1 win over Blackburn. Ballack scored from the left side after Salomon Kalou’s shot was blocked in the 109th minute. 
Frank Lampard gave Chelsea the lead at Old Trafford with his 21st goal of the season in the 16th minute, but Jason Roberts tied it for Blackburn in the 64th.
Chelsea will face Manchester United in the FA Cup final May 19 — the first major match to be played at the new Wembley Stadium since it reopened after more than six years under construction.
The two teams could play each other three times in two weeks.
“We can share trophies between us. We can win nothing and in spite of that Chelsea and Man United are two unbelievable teams,” Chelsea manager Jose Mourinho said.
United, which leads the Premier League with 78 points, visits second-place Chelsea on May 9 in the penultimate round of the season in what could be a title-deciding game.
Four days after the FA Cup final, United and Chelsea could meet again in the Champions League final in Athens, Greece. Both English teams have reached the competition’s semifinals, where Chelsea will face Liverpool and United will take on AC Milan.
Chelsea, which has already won the League Cup, is trying to win four major trophies this season.
The Blues took the lead Sunday when Ballack tapped a pass to Lampard. The England midfielder then shrugged off a challenge from Ryan Nelsen and steered the ball past former United States goalkeeper Brad Friedel.
Roberts scored by deflecting in a free kick from Morten Gamst Pedersen.
“I think we never give up. We always believe we can make it even in the last seconds and today we did that again,” Chelsea goalkeeper Petr Cech said.
In the Premier League, Robbie Keane’s two goals helped Tottenham rally three times to earn a 3-3 tie at relegation-threatened Wigan.
Keane also set up Dimitar Berbatov for a score.
Wigan striker Emile Heskey gave his team the lead in the second minute, but Berbatov eluded two defenders before scoring his 20th goal of the season in the fourth.
Leighton Baines then curled in a volley in the 30th, but Keane tied the score from the penalty spot in the 35th after Wigan goalkeeper John Filan brought down Jermaine Jenas.
Kevin Kilbane headed in Wigan’s third goal in the 60th, but Keane again scored in the 68th with a 35-yard lob over Filan.
Everton beat Charlton 2-1 with an injury-time goal from James McFadden. Joleon Lescott gave Everton the lead in the 81st, but Darren Bent briefly tied the score in the 89th.
N?ROME (AP) — AC Milan moved into fourth place in the Italian league for the first time this season with a 3-1 win at Messina. 
Milan, which started the season with an eight-point penalty from the Italian match-fixing scandal, got goals from Kaka, Giuseppe Favalli and Ronaldo to put itself in contention for berth in next season’s Champions League. 
Inter Milan rallied to a 2-2 tie with Palermo and moved within one win of the title. The result also maintained Inter’s undefeated record. 
Julio Ricardo Cruz scored in the 67th and Adriano tied the score in the 74th with a header. Andrea Caracciolo and Cristian Zaccardo scored for Palermo in the first half. 
AS Roma bounced back from its 7-1 loss to Manchester United by beating Sampdoria 4-0. 
League-leading scorer Francesco Totti scored his 19th and 20th goals, and Matteo Ferrari and Christian Panucci added the others. 
Third-place Lazio played the final 15 minutes with 10 men and was held to a 2-2 tie at last-place Ascoli, snapping the Roman club’s eight-match winning streak. 
Inter leads the league with 81 points. Roma is next with 65 points, followed by Lazio with 56, Milan with 50 and Palermo with 49. 

n?MADRID, Spain (AP) — Barcelona needed a last-minute own-goal to beat Mallorca 1-0 in the Spanish league and stay in first place. 
Fernando Navarro inadvertently deflected the ball into his own net in the 90th minute after Javier Saviola’s shot bounced off the left post. 
Mallorca could have taken the lead in the 30th minute from the penalty spot, but Barcelona goalkeeper Victor Valdes made the save shortly after he took down Jonas Gutierrez in front of goal.

TITLE: French Presidential Hopefuls Battle It Out
AUTHOR: By Elaine Ganley
PUBLISHER: The Associated Press
TEXT: PARIS — A week before the French begin choosing their next president, the dozen candidates moved into the final campaign stretch like a band of ragtag political warriors, insulting, pleading and dickering for votes. 
In the first round of an election that no one dares call in advance, Socialist presidential hopeful Segolene Royal has made an unflinching appeal to women to support her in Sunday’s vote, while front-runner Nicolas Sarkozy is reaching out to farmers, to those who voted no to a European constitution and to all who love France.
Unlike previous elections, no single theme has emerged. Jobs, immigration and the French identity have all taken turns in the spotlight.
The only constant has been the front-runner status of conservative candidate Sarkozy, whom far-right leader Jean-Marie Le Pen dreams of facing in the May 6 final round.
Candidates have five days left to campaign, until Friday night, and they are casting their nets wide.
At a Paris rally on Sunday, Le Pen, in fourth place in polls, predicted a “big surprise” in the first-round vote, perhaps large enough to match his stunning performance in 2002 elections. The anti-immigration candidate placed second then and faced off incumbent President Jacques Chirac in the final round.
“There will again … be a big surprise, a crying and gnashing of teeth,” the 78-year-old Le Pen told a crowd of 5,000. “I count on the general mobilization of all French patriots.”
An earthy orator who typically lambasts opponents, Le Pen took aim at Sarkozy. “You haven’t understood the formidable anger of the French, plundered, ruined, desperate, at the political scum of which you are one of the leaders,” he said.
Sarkozy’s campaign has been haunted by the word “scum,” which he used in 2005 as interior minister to describe delinquents, days before riots broke out in housing projects. The term has handicapped his ability to campaign in poor neighborhoods where voter registration has dramatically increased.
Le Pen, whose hallmark slogan is “French first,” denounced the poaching on his political territory that Sarkozy has blatantly done with his emphasis on immigration and the French identity. Royal also took up the theme, playing the French national anthem at rallies and suggesting all citizens get themselves a French flag.
“My rivals put at the center of their campaigns themes… for which I have been defamed, insulted and demonized for 30 years,” Le Pen said.
Sarkozy, covering all bases, nodded to farmers, those who hobbled construction of the European Union by voting down a constitution in a referendum last May and patriots during a political outing in southern Aix-en-Provence.
“I want to say that you can also talk about the nation without being treated like a nationalist,” Sarkozy said.
No candidate can feel secure in victory.
Some polls have shown up to 40 percent of the electorate undecided. A sounding by the Ipsos firm published over the weekend showed that nearly one in five of those who said they were sure to cast a ballot next Sunday had not yet picked a candidate.
A poll published Sunday by the Sofres firm gave Sarkozy 30 percent of the first-round vote, Royal 26 percent and centrist leader Francois Bayrou 17 percent. Le Pen slipped a point to 12 percent.
A full third of the 1,000 people polled said they may change their minds about their choice by Sunday. No margin of error was provided.
Sarkozy and Royal must worry about the creeping popularity of Bayrou, a fixture in French politics who has cast himself as healer of the bitter divisions between left and right. Traditionally center-right, he is gaining ground among voters in Royal’s camp on the left. 
Royal, campaigning Sunday in Achicourt in northern France, was clearly feeling the heat as she made an unusual outright appeal to women voters. 
“I need the vote of women,” said Royal — the first woman with a serious chance of becoming France’s president. 
“It is time to end centuries of injustice, time to end senseless prejudices.” 
Royal is to be joined by Spain’s Socialist prime minister, Jose Luis Rodriguez Zapatero, in her last major appearance Thursday in Toulouse — a clear bid to lure leftist voters of all stripes.

TITLE: Valuyev Loses Title On Points
AUTHOR: By Peter Starck
PUBLISHER: Reuters
TEXT: STUTTGART, Germany — Uzbekistan’s Ruslan Chagaev upset the odds to outpoint defending champion Nikolai Valuyev of St. Petersburg in their World Boxing Association (WBA) heavyweight title bout on Saturday.
Two of the three judges scored the contest in favour of the challenger by 115-113 and 117-111 margins, while the third called it a 114-114 draw.
 “Today was my day. Today I was the better boxer,” Chagaev told reporters after his victory over the giant Valuyev.
Weighing in at 144.7-kg and standing 2.13-meters tall, Valuyev was unable to make his physical advantage tell against the 28-year-old southpaw Chagaev in the fourth defence of his title.
“Before the fight everybody said that Nikolai is too tall for me to have a chance. Well, I’m smaller but I have the sting,” the 1.85-metres Chagaev said after improving to 23-0-1 with 17 knockouts.
Valuyev said he had not moved enough and made many mistakes, but vowed to stage a comeback after suffering his first loss in 14 years as a professional.
“There’s no reason for me to lie down in my grave. I am going to keep on boxing and I will be back in the ring to fight for the world title,” he said.
The defeat also ruined the 33-year-old Valuyev’s dream of surpassing Rocky Marciano’s 49-bout winning record in the division. The American remains the only world champion to retire without a loss or draw.

TITLE: Wolfowitz Worries Europe
PUBLISHER: Reuters
TEXT: BRUSSELS — The European Commission raised concerns on Monday over the controversy surrounding World Bank President Paul Wolfowitz and expressed hopes it would not hit plans to boost cooperation between the two key aid bodies. 
Wolfowitz has said he will not stand down over a promotion he approved for his girlfriend despite increasing fears among bank member governments that the affair is hurting its image as an agency that is tough on corruption.
“We are concerned about the institution, we are concerned about these allegations and of course we are monitoring this,” a spokesman for EU Aid Commission Louis Michel said.
“We hope this will be dealt with in the proper way. We hope also it won’t affect a cooperation that is increasing and which is crucial in particular for developing countries and more in particular for Africa,” he told a regular news briefing.
He said Michel had just had meetings with Wolfowitz in Washington and had reaffirmed plans for the two bodies to examine how their activities could be better coordinated to deliver greater and more efficient aid.
Wolfowitz has come under fire for the high-paying promotion he agreed for his girlfriend, bank employee Shaha Riza, before she was assigned to work at the State Department.
A number of European countries have raised concerns about the affair but none has publicly called for the dismissal of Wolfowitz.

TITLE: Democracy Pledge for U.S. Capital
AUTHOR: By Stuart Grudgings
PUBLISHER: Reuters
TEXT: WASHINGTON — It has taken a little over 200 years, but Washingtonians finally sense that their quirky status as citizens without voting representation in the U.S. Congress might just be coming to an end. 
The self-styled “capital of the free world” has been a democratic black spot for the United States — drawing sharp criticism from rights groups and even the United Nations.
Residents of the District of Columbia, which is not legally a state, have had to fight for the limited voting rights they have since Congress relocated here from Philadelphia in 1800.
It took until 1961 to gain the right to vote in presidential elections, and they still have no full-fledged member of Congress — either in the House of Representatives or the Senate — despite having to pay federal taxes like everyone else.
But a determined grass-roots movement, a Democratic-controlled Congress, a weakened Republican president and a compromise involving far-away Utah has raised hopes that D.C. residents eventually might discard the “Taxation Without Representation” protest messages many carry on their car license plates.
“I’ve talked to activists in the city and they haven’t seen a moment like this in a very, very long time,” said Iler Zherka, executive director of DC Vote, a group campaigning for congressional representation for Washington.
Thousands of people, ranging from students to taxi drivers, are expected to join a march to Congress on Monday, the city’s annual Emancipation Day marking Abraham Lincoln’s 1862 signing of the act that ended slavery in the District.
The aim is to press lawmakers into passing a bill this week that, while not making the District a state, would raise the number of seats in the U.S. House by two — one for Washington and one for Utah, which has been demanding more representation because of population changes.
The bill is to be taken up by the House on Thursday, where approval is likely. But it would still have to pass the narrowly divided Senate and be signed by President George W. Bush, who pointedly had the protest plates removed from presidential limousines and whose aides have advised a veto.
Washington’s heavily black and Democratic population has been seen as the main cause of long-standing Republican opposition to giving the capital a seat, so handing one to Republican-friendly Utah could greatly boost the bill’s chances of success.
Advocates also hope Bush would be reluctant to pick another fight with a resurgent Congress that is already challenging him over the Iraq War and other issues.
But the legislation has disappointed some rights activists, who say it sells Washington short by not giving it Senate representation and by leaving open constitutional questions that could make it vulnerable to legal challenges.
It would require an amendment to the U.S. Constitution to make the District a state with full representation by two senators and a representative in the House.
“I think the bill is wholly unworthy of the people of the District of Columbia,” said Timothy Cooper, executive director of advocacy group Worldrights.
“My fear, as well as the fear of others, is that this will completely deflate any move to get U.S. senators,” he said.
The bill is “flagrantly unconstitutional” — ignoring the Founding Fathers’ stipulation that Congress members are elected by “the several states” — and is virtually certain to be struck down by the courts, said Jonathan Turley, a professor at the George Washington University Law School.
Advocates of the bill say it is legitimate because the Constitution gives Congress the power to exercise “exclusive legislation” over the capital.

TITLE: New F1 Star Hamilton Makes History
AUTHOR: By Alan Baldwin
PUBLISHER: Reuters
TEXT: MANAMA, Bahrain — Lewis Hamilton celebrated a Formula One record and transformed himself into a championship contender just three races into his grand prix career on Sunday.
The 22-year-old Briton was runner-up in Bahrain, adding to his second place in Malaysia last weekend and third in Australia in March, to become the first driver to finish on the podium in his first three races.
Formula One has not seen a debut like it in the 57 years of the championship, with the youngster leaving Bahrain level on 22 points at the top of the drivers’ standings with double world champion and McLaren team mate Fernando Alonso and Ferrari’s Kimi Raikkonen.
Hamilton is technically third, since of the three leaders he alone has yet to win a race, but that first victory should surely come before long.
Asked whether he felt he now had the same chance to fight for the title as Alonso, Hamilton did not hesitate: “Absolutely, I don’t see why not,” he replied.
“I’m in the same car and I seem to be as competitive as him.
“As long as I can keep up this consistency, I know that I’ll feel a lot more comfortable and that a win is going to be possible.”
McLaren chief executive Martin Whitmarsh agreed that Formula One’s first black driver, whose effect on the glamour sport could be as great as that of Tiger Woods in golf, had the credentials to go all the way.
“I think at the moment there are three co-leaders so they are all championship contenders,” he told reporters.
“We’ve worked with Lewis for 10 or 11 years and indeed we wouldn’t have put him in the seat unless we thought that he was going to be a real contender this year.
“But we don’t put any more pressure on him. He’s dealing with it fantastically but he will want to win in Spain (in the next race on May 13),” said Whitmarsh.
“He will be winning races this year and there’s no reason why he can’t compete for this championship.
“But Fernando is a great and tough competitor and he is also very much a contender for the championship this year.”
Hamilton started the season as apprentice to the master, with Alonso beating Ferrari’s now retired Michael Schumacher and Raikkonen to the title for the past two years with Renault before joining McLaren.
Alonso showed in Malaysia, when he led Hamilton home in a one-two finish, what an outstanding competitor he is but the Spaniard had an off-day at Bahrain’s desert circuit.
Hamilton was on the pace all weekend, fastest in final practice and starting on the front row for the first time alongside Ferrari’s Brazilian race winner Felipe Massa while Alonso qualified only fourth.
“This weekend we definitely closed the gap towards Ferrari,” said the Briton.
“To have another second place in only my third race, I couldn’t ask for more. There’s only one more step from here and we’ll be pushing, making sure that in Barcelona we’ll be just as quick,” he added.

TITLE: Sweden Captures Bolshoi Priz
PUBLISHER: The St. Petersburg Times
TEXT: Sweden won its second straight gold medal at the Bolshoi Priz junior ice hockey tournament winning all four of its games held last week at the Yubileiny Sports Palace. 
Team Sweden cruised to the gold medal without trailing once during the round-robin competition. They shut out the Czechs 2-0, edged the Russians 3-2, crushed rivals Finland 4-0, and defeated Team St. Petersburg 3-2. 
Russia beat the Czechs 3-2 in the final game of the tournament to clinch the silver medal. They also downed the Finns 4-1 and steamrollered Team St. Petersburg 14-2.  
The Finns, Czechs, and Petersburgers all won a game each and were tied for third with two points each. 
The Finns beat the Czechs 5-3, the Czechs were victorious over the Petersburgers 4-2 and Team St. Petersburg completed the circle with a 3-2 win over Finland. 
Finland won the bronze on goal difference over the Czechs and Team St. Petersburg. 
Team Russia was anchored by netminder Sergei Bobrovsky, who picked up an individual award for the tournament’s best goalkeeper.

TITLE: Fairy-Tale Romance Ends For U.K. Prince
AUTHOR: By David Clarke
PUBLISHER: Reuters
TEXT: LONDON — British newspapers devoted page after page on Sunday to speculation over why Prince William’s romance with Kate Middleton ended, with one saying Queen Elizabeth had told him “we don’t want another Diana.”
An official spokesman for William, eldest son of the late Princess Diana, said: “We will not discuss the prince’s private life.”
Britain’s best-selling Sunday newspaper the News of the World said Queen Elizabeth had told the second in line to the throne at a secret “royal summit” not to rush into anything he might regret.
Friends of William, who first met Middleton in 2001 while at university in Scotland and began dating her in 2003, rubbished suggestions there had been any family summit or that his grandparents had told him to end the romance.
Middleton, the eldest child of middle-class entrepreneurs who had won plaudits for her dress sense and poise, was widely tipped to be Britain’s next Queen.
The News of the World devoted the first nine pages of its edition to the split and said William’s grandfather Prince Philip had told him to commit — or walk away.
The Sunday Telegraph said it was Prince Charles, whose ill-fated relationship to Diana rocked the royal family, who had told his son not to keep Middleton hanging on if he had doubts about the relationship.
The Sunday Mail put the story on its first seven pages and said Middleton, the daughter of a former air stewardess, did not have a sufficiently upper class background to become queen.
The Sunday Mirror also plugged that line saying Middleton’s mother was simply “not posh enough for royals.” It said she had raised eyebrows by saying “toilet” instead of “lavatory” and by not addressing Queen Elizabeth properly on their first meeting.
Outgoing British Prime Minister Tony Blair told the BBC in an interview the couple should be left in peace.
“In respect of Prince William, they’re a young couple. We’ve had the announcement. Fine. They should be left alone without reams of stuff being written that I can assure you from my experience… will be complete nonsense.”
There has so far been no official announcement about the split.
The Sun, the tabloid that broke the news on Saturday, said the relationship had been strained since William graduated from Sandhurst military academy last December at a ceremony attended by Middleton.
It said the couple had reached “an amicable agreement” to end their relationship.
The main underlying reason given by most commentators for the split was simply that at 24 years old, William was not ready to get married and wanted to wait until he was 28 or 30.

TITLE: Al Sadr Followers Leave Iraq Government
AUTHOR: By Qassim Abdul-Zahra
PUBLISHER: The Associated Press
TEXT: BAGHDAD — At least 13 Iraqi soldiers were killed Monday when gunmen ambushed their military checkpoint near the northern city of Mosul, police said. 
Another four soldiers were wounded in the attack, said police Brigadier Saeed Ahmed al-Jibouri, director of Ninevah police.
The ambush occurred around 10 a.m. in the al-Abdaiyah area of Mosul, a mostly Sunni Muslim city 225 miles northwest of Baghdad, he said.
Earlier, radical cleric Muqtada al-Sadr ordered his followers to withdraw from Iraq’s coalition government on Monday, the head of his parliamentary bloc said.
The move, while unlikely to topple Prime Minister Nouri al-Maliki’s regime, would deal a significant blow to the U.S.-backed leader, who relied on support from the Sadrists to gain office.
Al-Sadr’s ministers will “withdraw immediately from the Iraqi government and give the six Cabinet seats to the government, with the hope that they will be given to independents who represent the will of the people,” said Nassar al-Rubaie, head of al-Sadr’s bloc, reading a statement from the cleric.
Al-Sadr, who wields tremendous power among Iraq’s majority Shiites, has been upset about recent arrests of his Mahdi Army fighters in the U.S.-led Baghdad security crackdown. He and his followers have also criticized al-Maliki for failing to back calls for a timetable for U.S. troops to leave the country.
Meanwhile, thousands upset about poor city services marched peacefully through the streets of Iraq’s second largest city on Monday, demanding the provincial governor’s resignation despite calls by top government officials a day earlier to call off the protest.
Some 3,000 demonstrators gathered near the Basra mosque, then marched a few hundred yards to Gov. Mohammed al-Waili’s office, which was surrounded by Iraqi soldiers and police officers. The protest ended without incident a few hours later.
Residents have complained of inadequate electricity, garbage disposal and water supplies in Basra, situated 340 miles southeast of Baghdad.
In Ramadi, U.S. forces killed three Iraqi police officers Monday in a case of friendly fire during a raid targeting al-Qaida in Iraq members, the military said.
The U.S. military issued a statement saying its troops “coordinated their operation and no Iraqi police were known to be in the area.” The Americans came under small arms fire and responded, killing three men later identified as Iraqi police officers, the statement said. Another policeman was wounded.
The incident was under investigation, the military said.
Two huge explosions rocked central Baghdad midmorning — apparently the sound of mortar shells slamming into a schoolyard at Baghdad University, along the Tigris river. No casualties were reported.
But the blasts left residents skittish a day after cars, minibuses and roadside bombs exploded in Shiite Muslim enclaves across the city, killing at least 45 people in sectarian violence that defied the Baghdad security crackdown.
One week ago, al-Sadr mobilized tens of thousands of Iraqis for a peaceful demonstration in two Shiite holy cities, on the fourth anniversary of Baghdad’s fall. At the rally, many participants called for such a timetable.
Al-Rubaie, speaking to reporters in Baghdad’s heavily-fortified Green Zone, said the Sadrists’ withdrawal from the Cabinet was because the prime minister did not respond to demands made at last week’s demonstration.
Al-Sadr’s followers hold six positions in the 37-member Cabinet, and 30 seats in the 275-member parliament. Monday’s move would affect only the Cabinet members. 
“We will have a major role in working on a timetable in parliament. This will be our message to the government,” al-Rubaie said. “Setting a timetable for the withdrawal will be done in parliament.” 
Other legislators said the withdrawal was likely to further destabilize al-Maliki’s already shaky hold on power. 
“The withdrawal will affect the performance of the government, and will weaken it,” said Abdul-Karim al-Ouneizi, a Shiite legislator from the Dawa Party-Iraq Organization. Al-Ouneizi is from a different branch of the party al-Maliki heads. 
All six ministers were expected to hand in resignation letters later Monday. 
“I ask God to provide the Iraqi people with an independent government, far from [U.S.] occupation, that does all it can to serve the people,” the statement said.

TITLE: In Brief
PUBLISHER: The St. Petersburg Times
TEXT: Metallurg Magnitogorsk became the 2007 Russian Hockey Champions after edging Ak Bars Kazan 2-1 in game five of the RHL finals Friday night in Kazan. 
Vitaly Atyushov wasted no time capitalizing on an early power play giving Metallurg a early 1-0 lead 5:45. That lead lasted until Ilya Nikulin scored 51:15. Vladimir Vorobiev fed the puck to Nikulin who beat Metallurg goalie Travis Scott and tied the game at one. Ak Bars fans at the stadium in Kazan erupted into jubilant rapture.
But that delight evaporated just over a minute later when Metallurg forward Jan Marek scored the game winner at 52:37 on a power play.
This is Metallurg’s third championship victory after winning RHL titles in 1999 and 2001.

TITLE: German Army Under Fire For Racist Training Video
PUBLISHER: The Associated Press
TEXT: BERLIN — The German Defense Ministry said Monday that an incident in which an army instructor ordered a soldier to envision himself facing hostile blacks in New York while firing his machine gun was “absolutely unacceptable.” 
“This behavior is absolutely unacceptable and contradicts the training standards of the German army,” Defense Ministry spokesman Thomas Raabe said.
He said the army is investigating the incident, which was recorded in an Internet video. He didn’t say when the probe will be completed.
A video of the army instructor telling the soldier to shoot and yell obscenities while thinking of African-Americans in the Bronx aired on German national television Saturday and prompted calls for an apology by the New York City borough’s president.
The video shows an instructor and a soldier in camouflage uniforms in a forest. The instructor tells the soldier, “You are in the Bronx. A black van is stopping in front of you. Three African-Americans are getting out and they are insulting your mother in the worst ways. … Act.”
The soldier fires his machine gun several times and yells an obscenity several times in English. The instructor then tells the soldier to curse even louder.
The German Defense Ministry said the video was shot in July 2006 at barracks in the northern town of Rendsburg and that the army has been aware of it since January.
In New York, Bronx Borough President Adolfo Carrion Jr. has called for whoever was responsible for the video to be disciplined.
“The German government obviously has work to do to correct something that is insidious… Clearly these folks don’t know anything about African-Americans or the Bronx,” he said Saturday.
The video was taken down from the German myvideo.de Web site but reappeared on youtube.com.

TITLE: In Brief
TEXT: <b>Rabbits Block Road</b>
BUDAPEST, Hungary — Five thousand rabbits blocked a Hungarian highway Monday after the truck that was carrying them crashed.
The animals came free after the truck collided with another vehicle and overturned, police officials said.
The  highway was expected to be closed for several hours while authorities tried to gather the loose animals, Highway Patrol Spokeswoman Viktoria Galik said. 
By midday, 4,400 of the free-roaming bunnies had been collected and taken away from the scene.

<b>Toilets Catch Fire</b>
TOKYO (Reuters) — Twenty-six smoking toilets, and three more on fire, put a Japanese toilet maker in the hot seat on Monday.
Toto, known for its high-tech toilets with bidets that have blow-drying, air purification and seat-warming functions, apologised to consumers and offered free checks and repairs after some of its toilets with bidets and heated seats sent up smoke and three caught fire.
Toto said no people were injured as a result of the problems and damage was limited to a small part of the toilet tank.