SOURCE: The St. Petersburg Times
DATE: Issue #1297 (63), Tuesday, August 14, 2007
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TITLE: Russia Claims Missile Drop Was Faked
AUTHOR: By Irina Titova
PUBLISHER: The Associated Press
TEXT: A top Russian official on Saturday said Georgia’s claim that a Russian missile fell on its territory was nothing more than a “theatrical presentation” aimed at preventing a meeting about a disputed region.
Georgian officials have said the missile, which did not explode, came from a Russian military aircraft that violated Georgian airspace on Monday. The incident occurred near the border with South Ossetia, a separatist Georgian region that seeks to become part of Russia.
Russian officials have consistently denied that any of their aircraft were in the area.
On Saturday, First Deputy Prime Minister Sergei Ivanov insisted Georgia had faked the incident to prevent a planned meeting of a commission of South Ossetian and Georgian authorities to discuss the decade-long standoff over the region’s status.
“The authors of this theatrical presentation achieved their main goal — they ruined the meeting,” he said.
Georgia’s Foreign Ministry said records from radars compatible with NATO standards showed that a Russian Su-24 jet had flown into Georgia and launched a missile. Investigators identified the weapon as a Russian-made Raduga Kh-58 missile, designed to hit radars, the ministry said.
Georgian officials said the nation has no Su-24 jets or missiles of that type.
Georgia accuses Russian peacekeepers in South Ossetia of backing the separatists, and Georgian President Mikhail Saakashvili has vowed to bring the region back under central government control.
South Ossetia broke free from Tbilisi in fighting in the mid-1990s. Since then, it has been de-facto independent, led by an internationally unrecognized separatist government. Small clashes sporadically continue to break out, more than a decade after the end of the war.
The missile incident raised tensions between Georgia and Russia, which have been especially high over the past year. The two countries have long been at odds over South Ossetia and Abkhazia, another pro-Russian separatist region.

TITLE: Court Hears of 52 Murders, a Dog
AUTHOR: By Svetlana Osadchuk and Carl Schreck
PUBLISHER: Staff Writers
TEXT: MOSCOW — The specter of Andrei Chikatilo, Russia’s most notorious serial killer, hovers luridly over the case of Alexander Pichushkin, whom prosecutors say killed 52 people over 14 years, many in the sprawling Bittsevsky Park in southwest Moscow.
Compared with Chikatilo’s bizarrely savage crimes — he was convicted in 1992 of murdering 52 women and children, dismembering victims and eating some of their remains — Pichushkin’s purported style was methodical and workmanlike. Typically he would invite elderly people to drink alcohol in a secluded part of the park and then bash in their skulls with a hammer or another blunt object after they were drunk, police and prosecutors say. 
Pichushkin supposedly invited victims to drink at the grave of his dog, which he walked in the park after the death of his beloved grandfather.
Authorities say Chikatilo was always on the mind of Pichushkin, 33.
“He dreamed of surpassing Chikatilo and going down in history,” Moscow’s top prosecutor, Yury Syomin, told reporters last week.
Preliminary hearings for Pichushkin, dubbed the “Bittsevsky Maniac” by the media, are scheduled to start Monday at the Moscow City Court.
“This is the first such case in Moscow,” Syomin said. “We are charging him with 52 murders. He insists that he killed 63, but there are no bodies, no fragments, not even records of people gone missing.”
Prosecutors — and Pichushkin himself — say he committed his first murder in 1992, when he killed a classmate. A law enforcement source who participated in Pichushkin’s arrest said the suspect pushed the man out of a stairwell window of an apartment building in what police called a suicide at the time.
Pichushkin did not kill again until 2001, when he went on a killing spree that only ended with his detention last year, said the source, speaking on condition of anonymity because of the pending trial.
Pichushkin told investigators during an interview shown on NTV television in July 2006 that he committed 60 murders in the park. Televised confessions are common in Russia. Pichushkin said he left the bodies of 17 victims lying on the ground and tossed the rest into sewer ducts. Alexander Kshevitsky, a senior Interior Ministry investigator who worked on the case, said Pichushkin primarily killed lonely, elderly people who were “down on their luck.”
“No one would come to the police and report them missing,” Kshevitsky said.
Asked why he killed, Pichushkin said on NTV that for him, “A life without murders was like a life without food.”
“It was a necessity, you understand? I felt like the father of these people,” he said. “I opened up the door for them to a new world. I let them into a new life.”
The law enforcement source who helped detain Pichushkin said the suspect opened up in the hours following his arrest, telling how he grew up without a father and that his mother had placed him in an internat, a state home for disadvantaged children, before taking him out to go live with his grandfather. The death of the grandfather was devastating for him, and after that, Pichushkin spent much of his free time taking his dog for walks in Bittsevsky Park, the source said.
After the dog died, Pichushkin buried it in the park, and he lured many of his victims into secluded areas by inviting them to drink at the dog’s grave, the source said.
Criminal psychologist Mikhail Vinogradov said the death of Pichushkin’s grandfather could have prompted him to target elderly people as a kind of revenge for having been “abandoned” by his grandfather when he died.
He also said there was likely a sexual subtext, in the murders, though prosecutors have said Pichushkin did not sexually assault his victims.
“All serial killers experience a kind of sexual pleasure from murder,” Vinogradov said.
The law enforcement source said Pichushkin described the pleasure he got from killing as a kind of “perpetual orgasm.”
Pichushkin’s last victim was Marina Moskalyova, 36, a co-worker at a Grossmart supermarket on Ulitsa Khersonskaya, where Pichushkin worked as a lifter, the law enforcement source said. Moskalyova’s body was discovered in the park on June 14, 2006.
Two small pieces of paper with the body led investigators to Pichushkin.
“A metro ticket found in Marina Moskalyova’s coat pocket helped us track down the perpetrator,” the source said. “Using the ticket, we were able to establish the date and time she rode the train, and video surveillance footage clearly showed [Pichushkin] walking with her.”
The second piece of paper was a note Moskalyova had left for her teenage son that he showed police the day her body was found, the source said. Moskalyova wrote on the piece of paper that she had gone for a walk with Pichushkin and jotted down his cell phone number.
Having identified Pichushkin as the primary suspect, police took elaborate precautions when detaining him at his apartment two days later, on June 16, the source said.
“The most important thing was to keep him from committing suicide,” he said.
To this end, police arrived at the apartment building late at night along with a fire truck to give the illusion they were responding to a blaze.
“There were OMON officers hanging by cables on the walls of the building to make sure he couldn’t jump out of the window,” the source said. “A neighbor called through the door, ‘Is anything burning in there?’ His mother opened the door, and [Pichushkin] was grabbed still lying in bed.”
Pichushkin said on NTV that he thought “long and hard” about whether to kill Moskalyova.
“I knew that she had left a note for her son with my cell phone number and that they could track me down,” he said.
“While we were walking in the park, while we were talking, I just kept thinking: Kill her or forget it? In the end, I decided to risk it. I was, after all, already in the mood.”
Pichushkin’s arrest followed a yearlong search rife with false leads and tragicomedy.
On Feb. 20, 2006, police shot and injured an apparently innocent man while combing the park for the killer. About 200 officers were deployed there after police received a tip that a man resembling the killer had been spotted. The officers detained a suspect, but he pulled out a knife and managed to break free from his handcuffs. He then tried to flee. Police shot the man in the leg, and he was hospitalized.
About three weeks later, plainclothes police detained a transvestite who tried to flee when stopped for a document check not far from the park. Police found a hammer in the 31-year-old man’s purse, but his alibi checked out and he was released.
After his arrest, Pichushkin underwent several months of psychiatric evaluation at the Serbsky Institute and was declared mentally competent to stand trail, said Syomin, the city prosecutor.
At Monday’s preliminary hearing, a judge will decide whether the trial will be open to the public and whether it will be by jury, court spokeswoman Anna Usachyova said Friday. The judge will also set the opening date of the trial, she said.
Pichushkin’s lawyer, Pavel Ivannikov, conceded on Friday that he faced an uphill battle.
“Any case is difficult, especially if it concerns several murders and has great resonance in society,” he said by telephone.
Ivannikov declined to comment on whether Pichushkin would plead insanity.
With a moratorium on the death penalty, Pichushkin faces a maximum punishment of life in prison if convicted.

TITLE: Christie’s Plans an Office for Russia
AUTHOR: By Katya Kazakina
PUBLISHER: Bloomberg
TEXT: NEW YORK — Christie’s International, the world’s largest auction house, plans to open its first office in Russia as the country’s wealthy buyers play an increasingly important role in the booming global art market.
The new branch, scheduled to open by the end of the year, will be in Moscow, though the auction house has not made a final decision on the location, said Ellen Berkeley, Christie’s director of business development in Europe. Sotheby’s, the world’s No. 2 auction house and a fierce rival to Christie’s, opened a Moscow office in May.
Russia is the world’s second-biggest oil exporter. The number of billionaires in the country jumped to 53 in 2007 from seven in 2002, according to Forbes magazine, which estimated the group’s collective worth at $282 billion. Russia has more billionaires than any other country except the United States and Germany, Forbes said.
Anna Belorusova, Christie’s consultant in Russia for the past 12 years, will head the Moscow branch, Berkeley said. Belorusova will focus on cultivating clients, getting consignments and arranging private sales.
Christie’s, however, will not hold auctions in Moscow.
“I just can’t imagine having sales in Russia,” said the London-based Berkeley. “Russian law changes dramatically. The structure isn’t really in place.”
Russian collectors “are connoisseurs now,” Berkeley said. “They know exactly what they want,” with Russian, Impressionist and modern art topping the list.
Russian collectors are eyeing other areas of art ranging from Japanese swords to Asian figurines, Berkeley said. “There is a lot of interest in the ornate,” such as French and German furniture, icons, porcelain and silver, she added.
The interest in decorative arts stems from a trend in lavish home decor among wealthy Russians.
“They love entertaining,” Berkeley said. “Their wives have got endless amounts of time.”
Christie’s said its sales of Russian art increased more than sevenfold between 2000 and 2006. In the first half of 2007, the auction house sold $69 million worth of Russian art worldwide. The house took in $70.5 million for Russian art for all of 2006.
Sotheby’s said its Russian art sales have risen more than 20-fold since 2000, totaling $153.5 million in 2006. So far this year, Sotheby’s Russian art sales have totaled $107.2 million.
Christie’s ties with Russia date to the late 18th century. In one private sale, Empress Catherine the Great bought works by Rubens and Rembrandt for the State Hermitage Museum.
In recent years, Christie’s has worked with Russian museums and companies to bring works of art to Russia for public display ahead of the auction house’s sales in London and New York.
In March, a painting by 19th-century Russian realist Vasily Vereshchagin was shown at the Tretyakov Gallery. The work had never been shown in Russia until then. In April, it fetched $3.6 million at Christie’s auction in New York.
In November, Christie’s used a gallery owned by Leonid Mikhelson, chief executive officer of Novatek, the country’s largest independent natural-gas company, to exhibit more than 20 Russian artworks from Christie’s London sale that same month. “We had 5,000 visitors in one weekend,” Berkeley said. “They were queuing around the block.”

TITLE: In Brief
TEXT: <b>Weather Fans Fires</b>
LENINGRAD OBLAST (SPT) — Twenty five fires destroyed 63.14 hectares of forest in the Leningrad Oblast during the weekend, Regnum.ru reported. 
Most of the fires were rated at grade three according to their severity out of a possible five grades, but fires in the Gatchinsky, Luzhsky, Volosovsky, Kingisepsky and Lomonosovsky districts were rated at grade four.  
On Monday afternoon the fires had been successfully localized, but they were still being extinguished. According to the Ministry of Emergency Situations, the reason for such blazes remains a general careless attitude to fire. 

<b>Salmon Breeding</b>
ST. PETERSBURG (SPT) — Two billion rubles ($7.8 million) is being put aside for the breeding of salmon in St. Petersburg’s waters in a program lasting through 2015 that has been devised by the State Scientific Research Institute, Fontanka.ru reported.
It is estimated that within five years approximately three metric tons of fresh salmon will be produced annually in the region. There are plans to use an area of the Finnish Gulf, as well as Lake Ladoga and various quarries and reservoirs. 

<b>Editor Resigns</b>
MOSCOW (SPT) — Raf Shakirov resigned as editor of The New Times weekly magazine, Interfax reported Sunday.
The magazine’s owner, television businesswoman Irena Lesnevskaya will take over the position, the agency said.
Lesnevskaya told Interfax that Shakirov’s departure was motivated by differences over their vision for the future of the magazine.
“Shakirov wants to see it addressing more business issues and targeted toward the elite, and that is not of much interest to me,” Lesnevskaya said. 

<b>Boy Hits Pedestrian</b>
MOSCOW (SPT) — A 6-year-old boy driving a KamAZ truck, hit a pedestrian in the Primorye region, in the Far East, Interfax reported Friday.
Local traffic police said the boy was given the wheel by his father, a 26-year-old worker from a local plant, on a busy highway in the region, but the boy lost control of the vehicle and hit a pedestrian.
The pedestrian was taken to a nearby hospital, where he was diagnosed with concussion. The boy suffered head injuries, while his father was not injured. 

<b>Kadyrov in Saudi Arabia</b>
MOSCOW (SPT) — Chechen President Ramzan Kadyrov flew to Saudi Arabia on an official visit Friday night, Interfax reported.
He was accompanied by the head mufti of Chechnya, Sultan Mirzayev, and members of the Chechen government.
“I will tell the king of Saudi Arabia about the positive changes that are taking place in the republic of Chechnya, as well as the overall situation at present in the region,” Kadyrov was quoted as saying by Interfax.
“I will also make an umrah to the city of Mecca, which is holy to Muslims,” Kadyrov added, referring to a voluntary pilgrimage to Mecca. 

<b>Mystery Find at Plant</b>
VILNIUS, Lithuania (Reuters) — Lithuanian police said Saturday that they were investigating several metal cylinders found leaking an unidentified powder in a sensitive zone near the country’s nuclear power plant.
The cylinders were found in a forest about seven kilometers from the Ignalina nuclear plant Lithuania.
“It is not radioactive, but its origin is still unclear,” said a police officer for the district of Zarasai, in whose territory the powder was found.

TITLE: Governors Risk Loss of Party List Places
AUTHOR: By Natalya Krainova and Svetlana Osadchuk
PUBLISHER: Staff Writers
TEXT: MOSCOW — The United Russia leadership has floated the idea of removing unpopular governors from the top of its regional party lists ahead of State Duma elections in December, while the Kremlin is reportedly considering removing some governors from office ahead of the vote.
Andrei Vorobyov, head of United Russia’s central committee, said Friday that the body would closely examine the results of recent regional elections, held March 11, when deciding whether to put governors at the top of the pro-Kremlin party’s lists in their regions for the December poll.
“We are proceeding from the fact that our regional lists should be headed by respected and worthy people,” Vorobyov said. “If you are managing a region successfully, if your approval ratings are high, then that’s one story.”
“But if you are a loser, that is another story. By all means, the results of the elections will be taken into consideration,” he added. “If they were a loss, we should find out why.”
Meanwhile, the Kremlin is putting together a list of governors who might be ousted ahead of the elections, Gazeta reported Friday.
Kremlin spokesman Dmitry Peskov denied Friday that any such list existed and said he had no information about any governors who might be close to losing their jobs.
But two Kremlin-connected analysts said such lists could exist in some form or other. They said the inability to deliver good results for United Russia in regional votes or to solve serious problems in their regions could see governors shown the door.
“So far, governors have been replaced with one aim: to put pressure on them and show them that membership in United Russia or the approval of the president won’t save them if they can’t secure a United Russia victory at the polls,” said Mikhail Vinogradov, head of the Center for Political Environment Studies.
Sergei Markov, head of the Institute of Political Studies said there was a “list of figures who were being watched closely” as candidates for dismissal but that there was no list of governors sure to be fired.
Among governors in shaky positions, Vinogradov and Markov listed the Samara region’s Konstantin Titov, Karelia’s Sergei Katanandov, Karachayevo-Cherkessia’s Mustafa Batdiyev, Nikolai Maksyuta of the Volgograd region, the Perm region’s Oleg Chirkunov, the Chita region’s Ravil Geniatulin, the Arkhangelsk region’s Nikolai Kiselyov, Khakasia’s Alexei Lebed and the Stavropol region’s Alexander Chernogorov.
Titov seemed a likely candidate for dismissal once he told his staff that he would resign in the near future after a meeting Tuesday with presidential administration head Sergei Sobyanin, Vedomosti and Gazeta reported late last week.
Vedomosti cited sources close to Titov, while Gazeta cited no sources. Both newspapers said Sobyanin took Titov to task for United Russia’s poor results in the most recent regional and federal elections.
Titov dismissed talk of his departure Thursday, Interfax reported.
Both Peskov and Lyudmila Takoyeva, Titov’s spokeswoman, confirmed that Sobyanin and Titov had met.
But Takoyeva denied that past election results were discussed, saying the discussion was only of preparations for the upcoming vote for the Duma.
Peskov, meanwhile, denied that elections were discussed at all.
The Volgograd region’s Maksyuta was in Moscow for a meeting with presidential administration officials at the end of last week, his spokeswoman Olga Trofimova said by telephone from Volgograd on Friday.
“He is very optimistic,” Trofimova said. “Recently, [First Deputy Prime Minister] Sergei Ivanov visited us, and we could see his positive reaction to what was happening in the region,” she said.
Under powers he gained as a result of a 2005 law, President Vladimir Putin has fired three governors: Leonid Korotkov of the Amur region; Vladimir Loginov, of the Koryak autonomous district; and Alexei Barinov, of the Nenets autonomous district.

TITLE: Putin Discusses Development With Governor
PUBLISHER: The St. Petersburg Times
TEXT: Governor Valentina Matviyenko briefed President Vladimir Putin on key matters facing St. Petersburg on Sunday during a presidential visit to the city that included a pilgrimage to the grave of Putin’s political mentor. 
At the meeting in Strelna, Matviyenko summarized for Putin the city’s main socio-economic developments, saying that “real income has increased by 8 percent, 7 percent of which was made up of industrial growth,” Regnum.ru reported.
She also said that the average salary in the city is nearly 16,000 rubles ($630) a month.
During the televised meeting, Matviyenko also discussed St. Petersburg’s housing crisis and plans to increase construction of housing in the city. 
“The city has adopted a breakthrough program,” Matviyenko said. “We have 10 million square meters of communal living space, many hostels and Krushchyovki [Krushchev’s era housing]. The city is planning to decrease the length of housing queues by 50 percent by 2011.” 
Matviyenko added that 139 billion rubles ($5.45 billion) would be required in order to realize this program. 
Putin responded by saying that “the volume of new housing being made available is big, but the problem is yet bigger.” 
They spoke at length about the demographic situation in St. Petersburg, which according to Matviyenko, has started to improve. 
“The birth-rate has risen by 6 percent in the last six months, and the death-rate has dropped by 7 percent,” Matviyenko said.
Putin expressed his interest in the preparations for the new school year. 
“We are planning to open seven new kindergartens and two new schools,” Matviyenko said. 
“In light of the demographic situation it will be necessary to build 60 kindergartens by 2011: at the moment the queue for a place at kindergarten is a thousand people long.” 
During the visit, Putin also paid a visit to the Nikolskaya Cemetery. He met with Lyudmila Narusova, the widow of Anatoly Sobchak, former mayor of St. Petersburg and Putin’s political mentor, who would have been 70 on Friday, Interfax reported. Putin spoke with Narusova and placed a bouquet of purple roses on the grave. 
Putin also placed a bouquet of red carnations on the grave of Galina Starovoitova, a liberal politician who was assassinated in 1998.

TITLE: Hundreds of Police Officers Sent to Ingushetia
AUTHOR: By Mansur Mirovalev
PUBLISHER: The Associated Press
TEXT: MOSCOW — Hundreds of Interior Ministry police reinforcements have been dispatched to Ingushetia, the ministry said Friday, as fears grow that a sharp spike in violence in the volatile North Caucasus republic is signaling a resurgence in rebel activity from neighboring Chechnya.
The Ingush police force has been tripled — to almost 2,500 from 700 — and provided with additional armored personnel carriers, ministry spokesman Vasily Panchenkov said.
The troops will search for suspected militants in mountainous hideouts and among civilians in an operation expected to wrap up in early September, he said.
The mostly Muslim republic of fewer than 500,000 people shares the language and culture of Chechnya, where rebels and other militants continue to mount daily hit-and-run attacks on federal forces and allied paramilitaries. About 60,000 Chechen refugees currently live in Ingushetia.
Deployment of the federal troops will only intensify the cycle of violence, said Magomed Mutsolgov, head of the Ingush rights group Masher.
“Most of the human rights violations in Ingushetia are committed by law enforcement officers,” Mutsolgov said. “None have been punished.”
He claimed that masked men in military vehicles without license plates kidnapped civilians and demanded ransom or cooperation with authorities. 
He said his group had documented cases when officers sold dead bodies back to their relatives.
Ingush President Murat Zyazikov sought to play down the significance of the reinforcements, insisting that the situation was under control and blaming the attacks on “criminals.” A former regional chief of the Federal Security Service, Zyazikov is disliked by many residents. The deployment will help “fight criminals and investigate unresolved crimes,” Zyazikov said in comments broadcast on Ekho Moskvy radio. 
“The alleged deterioration of the situation ... is made up by the media.”
Recent violence in Ingushetia has included an attack July 31 on a police bus that killed one officer and wounded three others. The police were from North Ossetia.
Last month, unidentified gunmen killed one of Zyazikov’s closest advisers, who was responsible for ethnic issues.
Meanwhile, in Dagestan, another southern Muslim republic that shares a border with Chechnya, police Friday dispersed a demonstration of about 30 women picketing the main government building to protest the abduction of their relatives in recent months by suspected members of the security services.

TITLE: Party Blocked in Ukraine
PUBLISHER: The Associated Press
TEXT: KIEV — Ukraine’s elections commission Saturday refused to register candidates from Yulia Tymoshenko’s bloc for next month’s parliamentary elections, and supporters of the group erected a tent camp in central Kiev on Sunday to protest.
The Central Election Commission declined to register candidates from Bloc Yulia Tymoshenko because the group had failed to state its members’ exact addresses.
Tymoshenko, in a statement, called the move illegal and said the bloc’s registration was stalled by commission members loyal to Prime Minister Viktor Yanukovych.
“These marionettes have just fulfilled Yanukovych’s direct order,” Tymoshenko said.
Yanukovych’s supporters rejected Tymoshenko’s allegations and accused her of deliberately creating a scandal around her political force to boost its popularity.
“Who is interested in a scandal around documents filled out the wrong way? ... Who is building its ratings on scandals? I think the answer is obvious,” said Olena Lukash, a senior member of Yanukovych’s Party of Regions.
The early parliamentary elections called for Sept. 30 defused a months-long confrontation between President Viktor Yushchenko and his foe Yanukovych, which broke out after Yushchenko ordered the parliament dissolved. 
The rejection of candidates from the Bloc Yulia Tymoshenko is likely to raise questions about the vote’s legitimacy.

TITLE: Lack of Rehabilitation Packs Out Prisons
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — Alexander Rysyev, a penitentiary system official in Krasnodar, was shocked when a former prisoner released two months prior came to him and asked to be imprisoned again.
Though his request was a rarity, ex-convicts returning to prison are not. Each year 230,000 are convicted of crimes after having served time, according to Federal Prison Service data. With almost a million people behind bars, a record high, there are no state-supported rehabilitation programs for ex-convicts, said Alexander Chuyev, an initiator of social rehabilitation legislation recently submitted to the State Duma that would create 100 centers nationwide to help freed prisoners re-integrate into society.
About 70 percent of ex-cons lose their social connections, and almost half of them also lose their homes and documents while in prison. Their homes are sometimes sold by relatives and their documents lost by penitentiary system bureaucrats, Chuyev said. Without proper identification, they are unable to work legally or receive medical care.
The man who made the unexpected plea, Pavel Apenit, 23, was imprisoned for three years in the Khadyzhenskaya prison for stealing a blanket and a television from an inn. He said that when he was released in December 2005, he had 100 rubles ($4) in his pocket to start over. Without proper identification, except a sheet of paper stating that he had been released from prison, no one was interested in hiring him. He found neither opportunities nor assistance in this pursuit. Instead, he sought the help of Rysyev, his former captor.
“There are two options for these people — to become homeless or to become criminals again,” Chuyev said.
Nearly half of the 889,598 prisoners, including the 1,620 in pre-detention, are repeat offenders, said Vitaly Polozyuk, one of the new legislation authors and head of the Federal Prison Service’s department of social, psychological and educational work with convicts.
The total number of prisoners in the United States is about 2.2 million, which equals 737 per 100,000, while in Russia it is 624 per 100,000, according to Vlast magazine.
Left without work, these people turn to lives of crime. According to data on the Supreme Court’s web site, the number of cases for those committing subsequent crimes increased by 24 percent last year, and 25 percent of freed prisoners in Russia commit crimes again.
The experience of imprisonment, the lack of life skills and the obstacles faced upon re-entry into society are major factors in crimes that prisoners commit following their release, Polozyuk said.
Apenit had never had a passport before, he said. His parents, who lived in Kazakhstan, had divorced when he was 8. He was then sent to St. Petersburg to live with his grandmother who shared an apartment with her elderly sister, who was never married and was not fond of children. When his grandmother died, her sister asked Apenit, then 16, to leave her home. By that time, his parents had new families and were not interested in his return.
Since he was originally from Kazakhstan, there was no chance to obtain a Russian passport.
“I worked in the market for kopeks and lived with a friend,” Apenit said.
But when the friend’s girlfriend moved in, he moved out. He decided to go to Sochi, where the weather was less severe during the winter. He worked illegally on a construction site, spending nearly all his wages renting a room in the suburbs. Due to the lack of money created by his desperate circumstances, he turned to crime.
His theft resulted in a conviction and in his serving three years in Khadyzhenskaya prison.
Kazakhstan, Apenit’s homeland, would not permit him to return following his incarceration. He was stopped on the border and sent to Omsk to seek permission from the embassy. He waited for two months, half-starved, living at a railway station, only to discover that the permission would not be granted to him.
“I was broken. I felt like freezing on the street,” he said, indicating that he was very near committing suicide.
People from a local Protestant church bought him a ticket to go to Krasnodar, and there he went to Rysyev.
“Take me back to prison — I hate being homeless,” Rysyev recalled Apenit saying. The official could do nothing for him but send him to a local nongovernmental organization that helped teenagers in need.
“When Pavel came, he looked so desperate,” said Tatyana Rudakova, head of the NGO Mothers for Convicts’ Rights. She said there were about 600 letters requesting help from young people who will soon be released. They typically return home carrying all their old liabilities — addictions, bad work habits — and they bring new ones: the stigma of having been imprisoned and damaged relations with family, she said.
“There should be centers for these people with medical and mental health services, drug treatment and mentoring,” Rudakova said.
She found a temporary, illegal job for Apenit, arranged for him to live in a shelter where he had no right to live and started the process of restoring his documents.
“Without state support it is hard to help many,” Rudakova said.
During the Soviet era, there were quotas for job opportunities for freed prisoners and they were even urged to work under the supervision of their mentors, Polozyuk said. Today, while having no official right to refuse to hire ex-convicts, businesses still avoid them, he said.
The few NGOs that try to provide offenders with shelter and work have great difficulty surviving. Nikolai Libenko, who organized a farm for such people in the Tula region and successfully managed it for 15 years, cannot find any assistance to proceed and expand his work.
“I pledged to help open a woodshop so I could take on more people. But both the state and private enterprise were not interested in us,” he said.
Some regional centers have been constructed in Samara and St. Petersburg, Rysyev said. In general though, people in this situation go to homeless shelters. In Krasnodar, where Apenit was released, shelters would not admit those who had committed crimes, Rysyev said.
While religious organization and NGOs do exist, they can help just a few, Rysyev said.
There are no accurate figures for how many ex-convicts come to Moscow each year, but some NGO experts say the number is around 40,000. Only half of all those imprisoned in the Moscow region Mozhaiskaya and Ikshanskaya prisons are Muscovites, Polozyuk said.
In Soviet days, Moscow prohibited repeat offenders, even Muscovites, from residing within a 101-kilometer radius of the city. Now, criminals of all sorts can easily come, and adequate resources to keep them from returning to lives of crime do not exist.
The Interior Ministry, the Prosecutor General’s Office and the Justice Ministry contributed to the proposed legislation to create 100 centers for ex-convicts, Polozyuk said. Chuyev said he hoped it would be considered in the Duma this fall.
Apenit’s life changed dramatically by chance — he met a girl who fell in love with him. She did not know of his past at first, but when she asked him to travel with her, she was surprised to learn he had no passport. So, he told her everything.
“I was ready to be rejected and even insisted that we should forget each other,” he said.
But Alyona, a psychology student in Sochi, did not leave him. In fact, she took his last name though they were not married to prove how serious she was about him.
“I felt that I had found a really good man who was struggling against his bad fortune,” she said.
Despite her parents’ opposition, she brought Apenit to her native city of Sochi. She even left the university so that they both could work and pay the rent for the little house they found in city’s suburbs.
After two years together they dream of building their own house some day. Her parents accept their love now and approve of them getting married — as soon as he gets a passport.

TITLE: Driving Penalties Stiffened
AUTHOR: By Marina Kamenev
PUBLISHER: Special to The Moscow Times
TEXT: MOSCOW — Trying to beat the traffic by taking a sidewalk shortcut became a lot more expensive for drivers who get caught, as new traffic violations establishing  higher fines came into force at midnight last Friday.
This is just the first stage, as further measures will be introduced on Jan. 1 and July 1, 2008, in an attempt to reduce the number of traffic accidents and fatalities in a country where road deaths per vehicle are 10 times those in Britain or Germany.
Fines for certain offenses will rise as much as twentyfold. Driving on the sidewalk, for example, used to bring a fine of 100 rubles, or about $4. Starting Saturday, it jumps to 2,000 rubles.
Infractions that will bring fines for the first time include talking on a cell phone without a hands-free device while driving, which will cost drivers 300 rubles, and a 100 ruble fine for making a turn from the wrong lane. Driving on the wrong side of the street brings a maximum penalty of a six-month suspended license.
As of Jan. 1, the fine for running a red light will increase to 700 rubles from the current level of 100 rubles, while breaking the speed limit by more than 60 kilometers per hour will cost offenders 2,500 rubles, or about $100, and can also mean a license suspension of six months. The penalty for driving without a seatbelt will increase to 500 rubles from 100 rubles.
The harshest new measures to come into effect in January will be for drivers refusing to take a blood test when suspected of being drunk while driving with no license or under suspension. This will carry a jail sentence of 15 days.
Pregnant women, mothers of children younger than 14 years old, minors, the handicapped and members of the military are exempt from serving time, and will face a fine of 5,000 rubles, or about $200.
The new measures are being introduced in the face of worsening traffic statistics.
The number of traffic accidents reported over the first eight months of the year was 100,000, a 10 percent increase over the same period in 2006, according to official traffic police statistics. The total number of fatalities was 12,000, with 1,251 of those coming in Moscow. Traffic deaths in the area surrounding Moscow were up 30 percent from last year.
Vyacheslav Lysakov, head of the drivers’ rights group Freedom of Choice, said Thursday that raising fines was unlikely to reduce accidents. Instead, he said, better roads and police and officials who follow the rules of the road are needed.
Lysakov said the biggest effect of the new measures would be an increase in bribes paid to traffic officers.
Traffic police representatives refused to comment Thursday, but a statement posted on their web site Wednesday said tough measures were also being put in place to tackle corruption.

TITLE: PepsiCo to Splash Out On
Juice Maker Lebedyansky
PUBLISHER: Bloomberg
TEXT: MOSCOW — The world’s No.2 soft drink firm PepsiCo has agreed to buy Russia’s top juice maker Lebedyansky for $1.5-2 billion to boost its modest Russian juice market share, a newspaper reported on Monday. 
Kommersant business daily said the deal would take place before the year end, and PepsiCo would buy over 76 percent of Lebedyansky for $1.5-$2 billion, implying a possible premium to its market capitalisation, which at Friday’s closing price was $1.95 billion for the whole company. 
A spokesman for Lebedyansky declined to comment. PepsiCo was unavailable to comment. 
The news sent shares in Lebedyansky up 7 percent to 2,600 roubles ($102). 
PepsiCo controls around a fifth of the Russian soft drinks market and around a third of potato chip sales, but currently controls just 2 percent of the Russian juice market through the Tropicana brand. 
PepsiCo’s main rival, CocaCola, controls over a fifth of the Russian juice market after the $530 million purchase of producer Multon in 2005. 
PepsiCo has no juice-producing assets in Russia, and Lebedyansky, which controls over 30 percent of the Russian juice market, is seen as an attractive target for the beverage giant. 
Analysts said the deal could have become more likely after private equity group Lion Capital agreed to buy PepsiCo’s previous target, Russia’s No. 3 fruit juice maker, Nidan Soki. 
“We have long seen Lebedyansky, with its leading market position in juice and its best-in-class distribution system, as an attractive takeover target for international food and beverage companies,” Alfa Bank said in a note. 
About 23 percent of Lebedyansky shares are freely floated, while 76 percent are controlled by a group of Russian businessmen, including former director Nikolay Bortsov and his son Yuri, the firm’s chairman. 
Kommersant said Deutsche Bank was advising PepsiCo on the deal.

TITLE: Lending a Hand To Constructive Plans
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: LOMO industrial enterprise has started its funding of commercial real estate projects by handing out a loan of 500 million rubles ($19.63 million) to RGS Nedvizhimost construction company. The loan will be used to finance the construction of the Clover Plaza center at Ushakovskaya embankment, Interfax reported Friday.
Though LOMO is known as one of the largest producers of optics in the country, the company has also been managing real estate for over 10 years. Until now LOMO has focused on industrial real estate.
“I consider our company’s participation in Clover Investment Program as LOMO’s first step into new segments of commercial real estate market,” Interfax cited Marina Zvereva, director for corporate property management at LOMO, as saying in the statement.
RGS Nedvizhimost is a part of Clover Group holding. Clover Group unveiled the Clover Plaza project in May — a multifunctional center in Primorsky district. Alexander Popov, general director of Clover Group, said he expects to raise $3.5 billion on capital markets to replicate similar projects across Russia.
Clover Plaza in St. Petersburg should be completed by 2011 with an investment of $500 million. The complex will offer over 327,000 square meters of space. It will comprise an A-class business center, elite residential areas, shopping and entertainment areas. It will also include a conference hall, car park, 150-room 4-star hotel as well as a 120-room apartment-hotel.
Real estate experts were positive about Clover Plaza’s attractiveness for investors. “Stable, long-term investment into one project is an advantage when one considers the level of competition for investment in St. Petersburg,” said Yury Borisov, managing partner of IB Group and president of the Guild of Developers and Managers.
Popov said he expects a return on investment into this particular project within six to seven years. In total, Clover Group plans to develop 1.5 million square meters of commercial and residential space and over one million square meters of premium and business-class housing in Russia’s 29 largest cities.
“It’s unusual that an industrial enterprise acts like a financial institution and grants a loan. Rather many enterprises are actively participating in development projects as partners. In such partnerships they can also provide property or funding,” said Igor Luchkov, director of the department for assessment and analysis at Becar Commercial Property SPb.
Luchkov considered the loan to be relatively small. “Banks usually credit about 50 percent of the project costs. The LOMO loan is not a substitute for bank funding but supports it,” Luchkov said.
According to Luchkov, terms of construction funding are similar across different banks – nine to 13 percent depending on the risks associated with the project.
“Partnership with private enterprises implies no annual interest payments but rather a partner that is getting a share in the project,” Luchkov said.
At the moment LOMO manages over 500,000 square meters of areas, including five large buildings in St. Petersburg and several premises in the suburbs. LOMO also operates premises rented from the St. Petersburg Committee for State Property Management.
The property management department at LOMO employs over 600 people. At the moment the company has about 260 rental agreements with tenants. 
LOMO profits from property management have been increasing at 25 percent a year over the last few years, the company web site says. Last year LOMO reported revenue of 1.752 billion rubles ($68.8 million).
At the moment Clover Group manages 240 premises. Since 2003 the company invested about $300 million. Clover Group net assets account for $500 million.

TITLE: The Kremlin Gets a Pocket Bank of Its Own
AUTHOR: By Simon Shuster
PUBLISHER: Staff Writer
TEXT: A new state giant has been born that will shape the future of the economy by its ability to parcel out the country’s massive energy wealth.
But insiders fear that the Development Bank is already showing signs that it will not be able to tread the fine line between serving state interests and remaining economically viable.
The Development Bank, 99 percent controlled by the government, is tasked with coordinating all state investments starting next year.
By then, its capital — made up mostly of funds from state-owned Vneshekonombank, the development arm of the Soviet Union created in 1924   will reach $10 billion, and that should grow to $45 billion in two or three years, said Denis Mazurov, the bank’s head of communications. 
Its entire capital base will come from the state. 
“In terms of its scope, the bank’s place will be unique,” Mazurov said. “It will be an entirely new economic entity, without precedent in Russia, and will be guided by the priorities of the government and its long-term needs.
“The country has been waiting for this for 15 years,” he added.
During this period, oil and gas exports have allowed Russia to amass nearly $420 billion in foreign currency and gold reserves and a stabilization fund worth more than $120 billion, which it has been very careful not to spend.
Meanwhile, the country’s infrastructure has wasted away, surviving largely on the roads, homes and machinery inherited from the Soviet Union. 
Total investment stands at around 19 percent of gross domestic product, less than half of the levels seen under communism, according to the Russian Institute for Economics, Policy and Law, a state research body. The average age of infrastructure is therefore more than 20 years, the institute said, old enough to account for at least some of the mining accidents and plane crashes that make headlines. 
In the past year, the government has woken up to this reality. From the $157 billion spent in 2006, budget expenditures are set to almost double next year, reaching $275 billion and spelling a decline in the fiscal restraint the government has shown in recent years. 
“But simple budget spending is never really efficient,” said Anatoly Aksakov, deputy head of the State Duma’s committee on financial markets and credit organizations, which co-wrote the law on the Development Bank. 
“Simple bureaucrats do not have their pay depend on the efficiency of their decisions,” Aksakov said. “That is why it was important to channel the spending through a bank that behaves more or less according to market principles.” 
On this point, Russia has taken its cues from similar institutions in Germany, China and Japan, all of which used state banks to channel their investments during their own periods of economic transition. 
All of them have had to strike the balance now awaiting Russia’s Development Bank, the one between serving state interests and staying economically viable. By some indications, the state is getting its new bank off on the wrong foot.

Friends in High Places
Indeed, if anything has become clear, it is that the state will not take a liberal approach. In fact, the bank’s loyalty to the Kremlin is expected to be unrivaled, even in the already crowded arena of state national champions. 
The bank’s eight-member supervisory board, which makes all executive decisions, is handpicked by President Vladimir Putin and headed by Prime Minister Mikhail Fradkov.
Its list of board members reads like the names in the morning headlines: Deputy Prime Minster Sergei Naryshkin, Economic Development and Trade Minster German Gref, Finance Minster Alexei Kudrin, Industry and Energy Minister Viktor Khristenko, and Sergei Kiriyenko, head of the Federal Atomic Energy Agency. 
Friends like this have already garnered the bank a few favors. 
Under the legislation that established the bank, it is not obligated to hold a banking license, making it the only lender not subject to Central Bank regulations. It also has exclusive rights to loan out the money in the Investment Fund, which gets $2.5 billion per year from the budget. 
Moreover, the bank will not have to compete with other lenders. “One of our basic principles is not to enter into competition with commercial banks,” Mazurov said. 
“We will only take part in investment projects that cannot be financed by commercial banks.”
This means that the bank will focus on loans for five years or longer and 2 million rubles ($78 million) or more, according to the bank’s statute, which was adopted Aug. 2. Such loans offer such meager returns that almost no other banks would be interested in giving them, said Yulia Tseplyayeva, economist at Merrill Lynch. 
Among the bank’s founders, this was the most controversial point, as it raised fears that the bank would not be able to make ends meet.

Finding Viable Projects
The debate on this issue — fought mainly between the hawkish camp around Fradkov and the liberal one around Gref — decided how susceptible the bank would be to competition from other banks. Earlier this year, when Fradkov was placed at the helm of the bank, the hard-liners won out, and the principle of noncompetition was written into the rules. 
“The question now becomes: Can the bank choose the most efficient investment projects, or will we end up again with these loss-making ideas?” Tseplyayeva said.
Some of the signs on this score have not been very good. 
Last year, when inflation reached 9.8 percent, the bank’s investment of the $11 billion state pension fund was only able to get 5.67 percent in returns, shaving more than 4 percent off the value of the fund. This was caused by the state’s unwillingness to invest pensions in anything much riskier than government bonds, generally the safest bet with the smallest returns. 
“This is a state-run bank, so objectively speaking, the influence of the bureaucratic decisions will be a hindrance,” said Aksakov, the Duma deputy. “In this sense, it will be important for the supervisory board to be influenced by market players, who can optimize the investment decisions.”
The great hope for this influence will come from the so-called public-private partnerships, which will account for most of the investment projects the bank takes on. 
The 10 projects that have already been chosen by Gref’s ministry — including ones to build sewage processing plants in Rostov-on-Don and toll roads in Novorossiisk — have private partners that are leveraging state money by more than 20 times, spending $30 billion while the state spends less than $2 billion. 
“PPPs may well prove to be the most effective means of allocating public money,” said Roland Nash, head of research at Renaissance Capital. 
If Nash’s prediction pans out, the bank may well achieve its goal of renewing Russia’s capital base and diversifying the economy.
But in any event, as the holder of the key to Kremlin coffers, it will be an institution Russians will hear about for years to come.

TITLE: In Brief
TEXT: <b>Rubber Sales</b>
ST. PETERSBURG (SPT) – Nokian Tires net sales accounted for 432.5 million euros in the first half of 2007 — a 23.8 percent increase compared to the same period last year, the company said last week in a statement.
Sales in Russia and the CIS grew by 52.1 percent, in Eastern Europe – by 66.2 percent and in Scandinavia – by 11.8 percent.

<b>New Foundry</b>
ST. PETERSBURG (SPT) — Kirovsky Plant will invest 1.63 billion rubles ($64 million) into industrial site in Gorelovo, Leningrad Oblast, the company said last week in a statement.
The new foundry will start operating by November 2009 and will produce iron and steel for the automotive industry. A production capacity is planned at 25,000 tons a year.

<b>Gas Profits</b>
ST. PETERSBURG (SPT) — Lentransgaz, a local subsidiary of Gazprom power company, reported net profits of 1.3 billion rubles ($51 million) last year — a 42 percent increase on 2005 figures, Interfax reported Friday.
Revenue grew by 37.3 percent up to 28 billion rubles ($1.1 billion). Operation costs increased by 32.4 percent up to 23.45 billion rubles ($920 million). 
Last year Lentransgaz delivered 95 billion cubic meters of gas to consumers in Russia, Western Europe, Finland, Baltic States and the CIS.

<b>Costly Brew</b>
ST. PETERSBURG (SPT) — Net profits of Heineken brewery decreased by 30.5 percent last year to 501.9 million rubles ($19.7 million), Interfax reported Friday.
Revenue increased by 30.2 percent up to 9.2 billion rubles ($361 million), according to Russian accounting standards. 
Production costs increased by 20.1 percent up to 4.576 billion rubles ($180 million). 
The Heineken group has 10 plants across Russia.

<b>Prosperity Stakes</b>
MOSCOW (Bloomberg) — Prosperity Management Capital acquired stakes in two regional subsidiaries of Svyazinvest, the national fixed-line phone monopoly, Kommersant reported Monday, citing Ivan Mazalov, who manages the Prosperity Voskhod Fund.
Prosperity units accumulated 9.8 percent of Center Telecom and 4.7 percent of Southern Telecommunications Co., the Russian newspaper said.
Prosperity may sell the shares, but hasn’t held talks with potential buyers so far, Kommersant cited Mazalov as saying.

<b>Belgian Opposition</b>
BRUSSELS (Bloomberg) — Belgium’s energy regulator has advised against the project of Fluxys and Gazprom to store natural gas underground in Belgium, De Tijd reported in its online edition, citing the regulator, which is known as CREG.
Fluxys, the manager of Belgium’s natural-gas grid, and Russian natural-gas company Gazprom plan to build the underground storage facility in Poederlee, Belgium.
Belgium’s energy regulator, while favoring additional gas storage capacity in the country, is against some terms of the project, including a condition that would give Gazprom use of all capacity in Poederlee for 25 years, the newspaper said Monday.

<b>Seeking Uranium</b>
ALMATY (Bloomberg) — Toshiba Corp., Japan’s biggest maker of nuclear reactors, sold a 10 percent stake in its Westinghouse Electric Co. unit to Kazakhstan’s state uranium miner to gain access to the world’s second-largest reserves of the metal.
Toshiba, which bought 77 percent of Westinghouse in October for about $4.16 billion, sold 10 percent to Kazatomprom for $540 million, Almaty-based Kazatomprom said in a statement Monday.
Kazakhstan, the world’s third-biggest uranium miner, plans to become the largest by 2010 and boost its share of Japan’s market to about a third from 1 percent now. The nation wants to use it reserves, which may be 20 percent of the world’s total, to gain market share in all parts of the nuclear fuel cycle, including power generation.

<b>PIK Expands South</b>
MOSCOW (Bloomberg) — PIK Group, a Russian apartment builder, bought architecture firm Novorosgragdanproekt to expand in the region around Sochi, host of the 2014 Winter Olympics.
PIK paid $6 million for the stake, the company said in a statement distributed by the Regulatory News Service Monday.
Novorosgragdanproekt designed developments for PIK in the Black Sea town of Novorossiisk, which is 150 kilometers (90miles) from Sochi.
PIK may make more acquisitions in the region to gain from investment for the Olympics and “because of the continuing expansion of its role as a transit point for southern Russia and Central Asia,’’ Chief Executive Officer Kirill Pisarev said in the statement.

<b>Coal Exports</b>
MOSCOW (Bloomberg) — Russia may double coal exports after Germany said it will halt hard-coal production by the end of 2018 and rely on imports, Kommersant reported.
Russian coal companies may boost sales by more than 50 million tons of coal a year, worth more than $1.3 billion, on increased supplies to Germany, Kommersant said, citing industry analysts Igor Nuzhdin at Bank Zenit and Alexei Pavlov at VICA.
German coal producer RAG AG started talks with Russian companies about coal supplies after mining ends, Kommersant said Monday. It’s in talks with Siberian Coal and Energy, Russky Ugol and SDS-Ugol, the Moscow-based newspaper said, citing Victor Sobolev, director of Deutsche Bergbaur Technik.

<b>Wide Baltic Loss </b>
LONDON (Bloomberg) — Baltic Oil Terminals, an exporter of Russian oil products, said its first-half loss widened on exploration and administrative costs.
Baltic’s net loss increased to 4.4 million pounds ($8.9 million) from 3.92 million pounds in the year-earlier period, the London-based company said in a statement distributed by the Regulatory News Service Monday. Revenue gained 23 percent to 273,000 pounds.
“Baltic’s results for the first six months of 2007 are modest,’’ the London-based company said in its statement. “The second half of 2007 should see the company handling a variety of cargoes including crude, mazut and diesel from four separate terminal businesses, thereby giving a diverse income stream.’’

<b>OMZ Contract</b>
MOSCOW (Bloomberg) — OMZ Gruppa Uralmash-Izhzhora, a Russian heavy-machinery producer, won a contract to supply oil-refining equipment to Tatneft.
The agreement to supply equipment to Tatneft’s refinery being built in Nizhnekamsk is valued at 1.5 billion rubles ($60 million), Moscow-based OMZ said in an e-mailed statement Monday.

TITLE: Phone Giant Gets Irkutsk
PUBLISHER: Bloomberg
TEXT: MOSCOW — VimpelCom, Russia’s second-largest mobile-phone operator, bought a Russian unit of Sweden’s Tele2 AB to expand in its domestic market.
VimpelCom bought Irkutsk, Siberia-based Corporation Severnaya Korona for $232 million, it said Monday in a statement distributed by PR Newswire. 
Separately, Tele2, Sweden’s second-largest telephone company, said it signed a 10-year roaming agreement with VimpelCom allowing its customers access across the Russian company’s network.
The sale “should not be seen as a change to Tele2’s strategy to continue to expand its Russian operations,’’ Johnny Svedberg, executive vice president for operations and market area for Russia and the Baltic region, said in a statement distributed through Hugin Monday. 
He said the company plans acquisitions in Russia by the end of this year.
Moscow-based VimpelCom, which is also active in Kazakhstan, Ukraine, Tajikistan, Uzbekistan, Armenia and Georgia, had more than 59 million subscribers in June. Buying Severnaya Korona extends VimpelCom’s presence to 75 of Russia’s 85 administrative regions. 
It seeks a presence in all of Russia’s regions.

TITLE: Russneft Tax Evasion Ruling Upheld in Court
PUBLISHER: Reuters
TEXT: MOSCOW — A Moscow arbitration court on Friday upheld a 17 billion ruble ($666.7 million) lawsuit against oil firm Russneft over tax evasion, increasing the firm’s debt before its planned sale to a Kremlin-friendly owner.
The ruling added to a 3.4 billion ruble ($133.3 million) back tax claim against the midsized oil firm upheld by the court last month and extended the state pressure which prompted the firm’s head, Mikhail Gutseriyev, to step down, also in July.
The new tax claim may complicate the plans of Oleg Deripaska to buy Russneft. Deripaska is considered a close ally of President Vladimir Putin.
A spokesman for Deripaska’s investment vehicle, Basic Element, said the firm was not going to change its plans concerning Russneft and was still waiting for the Federal Anti-Monopoly Service to approve the deal.
A Moscow court earlier this week seized Russneft shares, as well as other property of Gutseriyev, who was personally accused of tax evasion and illegal business activities.
Gutseriyev said he was the target of unprecedented bullying from the state, but later withdrew the statement.
Analysts have linked the pressure on Russneft with the state’s wish to increase control over the strategic energy sector, and said the firm eventually might go to state-controlled oil major Rosneft.
Russneft produces 300,000 barrels of oil per day, has two refineries and recoverable oil reserves of 4.6 billion barrels.

TITLE: Baltika Triples Samara Brewery’s Flow
PUBLISHER: Combined Reports
TEXT: MOSCOW — Baltika Breweries, the country’s largest beer company, completed improvements that will enable its brewery in the city of Samara to triple output as beer consumption rises, the St. Petersburg-based firm said Friday in a statement.
The plant can now brew 6.5 million hectoliters of beer per year, Baltika said. The company spent 101 million euros ($138 million) on new equipment for the plant.
Baltika, which is majority-owned by Scottish & Newcastle and Carlsberg, is increasing production in the country as higher incomes enable more drinkers to switch to beer from vodka and seek out higher-priced brews. The country’s beer market, the world’s third-largest by volume, may expand by as much as 13 percent this year, Baltika said Wednesday.
The company in April doubled the planned capacity of a plant it is building in Novosibirsk. The brewery, Baltika’s 11th in the country, will be able to make 4.5 million hectoliters of beer per year when production starts in 2008.
London-based SABMiller, the country’s fifth-largest brewer by market share, also is expanding in the country. The company said in June that it would build a second Russian brewery, increasing output by 50 percent and permitting a doubling of production if demand suffices.
Baltika’s president, Anton Artemyev, said at a news conference Wednesday that the firm expected investment for 2007 to reach 300 million euros, Prime-Tass news agency reported. Baltika invested 143 million euros into development from January to June, he said, the agency reported. In 2006, the brewer invested 204 million into development, Artemyev said.
Baltic Beverages Holding, whose main asset is Baltika Breweries, said in a statement Wednesday that second-quarter profit gained 26 percent.
Earnings before interest, taxes, depreciation and amortization climbed to 248 million euros, Scottish & Newcastle said. Sales gained 33 percent to 825 million euros. 
The EBITDA margin, or earnings as a percentage of sales, narrowed by 1.7 percentage points to 30 percent in the quarter because of higher costs, Baltic said in the statement. (Bloomberg, SPT)

TITLE: Inaction Derails Country’s IT Boom
AUTHOR: By Tai Adelaja
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Vladimir Putin’s ambitious plans to turn the country’s IT industry into an economic powerhouse are being derailed by labyrinthine bureaucracy and endless jousting by government officials, industry players say.
Enamored with India’s information technology landscape after his visit to Bangalore in 2004, Putin pledged to help diversify the country’s export base away from natural resources and toward innovative high-tech. A month later, Putin announced the first tax incentives for IT investors during a visit to the Akademgorodok scientific center in Novosibirsk. 
Promised tax breaks have not materialized, however, and now there seem to be as many IT policies as there are ministries, leading IT companies say.
“The biggest hurdle is the unwillingness of the Economic Development and Trade Ministry, the Finance Ministry and the IT and Communications Ministry to work out a coordinated strategy for IT development,” said Valentin Makarov, president of Russoft, an association of Russian software developers. “Bureaucracy remains the main stumbling block to kick-starting the innovation economy.
“Government officials, for example, have been unable to reach a consensus on how to reform taxation,” he said.
After Putin called for tax breaks in early 2005, amendments to the law on unified social taxes were drafted that aimed to reduce the rate for IT companies. The amendments went through so many revisions in the State Duma, however, that they lost much of their meaning by the time they were finally passed last year.
“Like every other initiative, the proposed special tax regime for IT exporters was lost in the labyrinth between the Duma, the presidential administration and the Finance Ministry,” said Sergei Matsotsky, general director of leading IT firm Information Business Systems.
Matsotsky said the original legislation would have spurred the IT industry and made it competitive with India and China. But seemingly never-ending promises and declarations from state officials took precedence over real action, he said.
As the law stands now, IT companies can qualify for tax relief if they export 70 percent of their goods and employ at least 50 people. But no company can claim the relief because the law, which came into force Jan. 1, also requires them to register with a special government agency, which has yet to be created.
Bureaucracy has also beset attempts to simplify export duties on software and reduce the value-added tax.
Software exporters have complained that it is next to impossible to reclaim VAT on exports due to outdated legislation and obstructive bureaucracy. They also wanted the VAT to be drastically reduced or abolished altogether. 
Both Finance Minister Alexei Kudrin and Economic Development and Trade Minister German Gref had staunchly opposed reduction of the VAT from 18 percent to 13 percent as proposed by Prime Minister Mikhail Fradkov, arguing that the cut would boost inflation, strengthen the ruble and cause a budget deficit.
Kudrin has also said on several occasions that reducing the tax will prevent the government from meeting inflation targets and stifle positive financial measures. 
Anton Danilov-Danilyan, a former economic aide to Putin, singled out Kudrin’s ministry as the main government agency blocking tax reforms. “Whatever economic decision is made and whatever directive is given by the president, the position of the Finance Ministry eventually dominates all others,” he said. “Kudrin is the man Putin trusts in fiscal decision-making. ... In the fiscal sphere, he is authority No. 1 for Putin.”
A Finance Ministry spokesman declined to respond to Danilov-Danilyan’s comments.
Despite the bureaucracy, some strides are being made in IT.
Earlier this year, Putin put First Deputy Prime Minister Sergei Ivanov in charge of the government’s diversification efforts and of developing what he termed “the innovation economy.” The president also announced that $1 billion would be set aside to develop nanotechnology, and the Duma recently approved legislation to create a state company called the Russian Nanotechnology Corporation. 
The government also plans to sink $740 million into the creation of technology parks over the next two years, IT and Communications Minister Leonid Reiman said in June at a investment conference. He said he expected IT exports to increase from last year’s $1.5 billion to $12.5 billion by 2010. 
IT players said they were ready to displace the resource-based economy but that bureaucracy needed to loosen its stranglehold for this to happen.
“There is Reiman’s ministry, there is Gref’s ministry, there is Kudrin’s ministry and to some extent, there is Putin’s ministry. Each has its own idea on how the IT industry should evolve,” said Alexei Sukharev, president of Auriga, a U.S. IT outsourcing-services provider with development centers in Moscow, Kazan and St. Petersburg.

TITLE: Searches Could Hit Handset Supplies
AUTHOR: By Tai Adelaja
PUBLISHER: Staff Writer
TEXT: Last week’s raids at the offices and warehouses of the country’s leading mobile phone retailers may end up hurting more than just the executives under investigation.
On Friday, for the third day running, investigators carried out searches in connection with a contraband case dating back to 2005 that was opened after Interior Ministry officials impounded around 200,000 handsets at Sheremetyevo Airport, Interfax reported. The companies under investigation — Dixis, Tsifrograd, Betalink and Yevroset — control 70 percent of the mobile phone retail market.
And as searches continue, handset dealers are unable to replenish their stocks, which could create a shortage of handsets in stores, analysts said.
“If the searches go on, it will lead to shortages of handsets and consequently to a price hike,” said Sergei Savin, a telecoms analyst at J’son & Partners.
The authorities conducted a similar investigation into the contraband mobile phone industry in 2005, but the move only had the effect of exacerbating the problem.
“The campaign two years ago created a gray economy for handsets with some people smuggling them into the country in their suitcases and handbags,” Savin said. 
Illegal imports will not be enough to satisfy the enormous demand for handsets, however, so a price increase may be inevitable, Savin said.
The high saturation rate in the country’s mobile phone market could mean that a disruption in handset supply will not dent the market significantly.
Figures from research by J’son & Partners show that mobile phone sales have been gradually diminishing over the last few years.
While end users purchased 33.5 million handsets in 2005, only 31.6 million phones were sold in 2006, and the sales projection for 2007 is at a maximum of 28.7 million units.
“The mobile phone market has long peaked, and most Russians now have one or more handsets,” said Konstantin Chernyshev, a telecoms analyst at UralSib.
Also, the number and variety of outlets selling mobile phones has grown over the last few years.
“There are too many retail outlets for handsets in Russia for the closure of a few to make an impact,” Chernyshev said. Phones are also being imported and sold by nonspecialized retail outlets, such as M. Video, which will cushion the effect of any supply-side glitches, Chernyshev said.
Tatyana Petrovna, the duty prosecutor at the Prosecutor General’s Office, confirmed that the investigation was ongoing but declined to offer any further comment.
Dixis, Tsifrograd, Betalink would not comment on the investigation Friday.
Yevroset, which is the country’s largest mobile phone retailer, denied that any searches had been conducted at any of its offices or warehouses Friday. 
Interfax earlier cited law enforcement sources as saying searches had taken place.
“Investigators came to us on Wednesday and we supplied them with all the necessary documents and materials,” Yevroset spokesman Ochir Mandzhikov said. 
Mandzhikov also insisted that the investigations would have no effect on Yevroset’s operations or on its supply of new handsets.

TITLE: Don’t Believe in Fairy Tales
AUTHOR: By Georgy Bovt
TEXT: Workers at the AvtoVAZ factory staged a strike last week demanding higher salaries of 25,000 rubles ($980) per month. That is a very nice sum for the average resident of Tolyatti, where the plant is based — a city of about 700,000 people located almost 1,000 kilometers southeast of Moscow. Workers on the factory’s assembly line earn just over 10,000 rubles per month, which is somewhat lower than the current national average across all sectors of nearly 13,000 rubles per month.
On one hand, the 25,000 ruble salary that the AvtoVAZ workers are demanding is not all that surprising given the fact that Russia’s oil revenues have pushed average salaries higher over the past several years. On the other hand, the auto factory’s workers did not choose the best time for presenting their demands. The plant is not doing well financially because sales of its economy-line Lada and Zhiguli cars are in decline. Foreign-brand automobiles of the same class cost only slightly more, yet they are considered to be far superior in quality. 
For this reason, the situation with the AvtoVAZ factory workers is more problematic than that of the autoworkers at the Ford plant outside St. Petersburg. Workers at Ford also staged a strike about six months ago, demanding a similarly enchanting figure — $1180 per month. The big difference between AvtoVAZ and Ford is that buyers are lining up to purchase the popular Ford models made in Russia but are far less enthusiastic about the Ladas and Zhigulis produced by AvtoVAZ. 
Ford union leaders like to compare the salaries of their autoworkers with those in Brazil. It’s a good thing the AvtoVAZ workers did not use U.S. autoworkers as a point of reference. It would have come as a shock to learn about factory wages at General Motors, for example. There, the local management agreed to unprecedented concessions in the midst of a major downsizing at the company. GM issued one-time payments of $140,000 to each worker with 10 years or more on the payroll and $70,000 to those with fewer than 10 years. Various medical insurance benefits were also included in the deal, whereas AvtoVAZ offers no insurance benefits to its workers. The average salary among GM factory workers is $56,000, not including overtime. And the highest hourly wage at GM for factory workers is now $27 per hour, and when you add the expenses of various insurance programs, pension benefits and other perks, the total cost at GM to support the highest-paid factory worker jumps to the equivalent of $73 per hour.
The salaries of Russian autoworkers are much closer to those of their East European counterparts. Romanian assembly-line workers at factories producing foreign automobiles earn an average of $400 per month. In Slovakia, the average salary is $620, and in the Czech Republic, it is $890. 
Yet those salaries seem like a small fortune compared with what autoworkers earn in China, which has muscled its way into the global retail automobile market, including Russia. Despite the fact that the Chinese yuan is devalued against the dollar by 25 to 40 percent, it is still shocking how low the salaries are in China. The typical assembly-line worker in China’s auto industry earns the equivalent of $1,000 to $3,000 per year. Technicians and office workers take home anywhere from $1,200 to $5,000 annually. Middle managers’ yearly salaries total $3,000 to $4,000, while top managers slave away for about $10,000 yearly. Salaries of $30,000 per year or higher are extremely rare.
Russian autoworkers’ struggle for higher salaries seems like a hopeless endeavor. In fact, Ford’s factory workers failed to obtain the pay hikes that they sought, despite the company’s amazing success in Russia. This means that it will be even more unlikely that companies like AvtoVAZ, which are having difficulty remaining competitive on domestic and global markets, will be able to fulfill the increasing demands of their workers.
The autoworkers, however, are probably much more optimistic about their ability to receive higher wages, especially when government propaganda trumpets how much Russian wages and pensions have increased. And this campaign has intensified as a result of upcoming State Duma and presidential elections. 
What is lost in all of this populism is that labor productivity has severely lagged behind the growth in salaries. For example, salaries rose by 15.5 percent in 2007, while labor productivity rose by only 7.8 percent during the same year. This is happening at the same time that the nation is experiencing a serious demographic crisis, which means that the number of Russians entering the work force is dropping dramatically. If the growth in salaries continues to outpace the growth in labor productivity, the country’s work force will become significantly less competitive on the international market. 
On the eve of elections, however, it is quite unpopular to remind voters about the need to work more efficiently and increase productivity. Instead, leaders are actively promoting a socialist or welfare-state mindset, according to which Russians believe that wealth will magically appear by itself, or more accurately, will be “bestowed from above” by a wise and caring government.
My hunch is that AvtoVAZ workers did not get the $1,000 figure for their desired monthly salary from their colleagues at the Ford plant, but from United Russia’s official election campaign documents, which predict that monthly salaries will average 25,000 rubles within two years. The other pro-Kremlin “party of power” — A Just Russia — apparently can’t wait that long: Party leader Sergei Mironov promises these wonderful salaries are just around the corner. 
These political fairy tales only raise workers’ hopes. This leads to higher labor demands and strikes. And when the strikes fail to achieve their ends, this inevitably results in greater dissatisfaction with the government. And this may lead to even more strikes.

Georgy Bovt is a Moscow-based political analyst.

TITLE: Laboring Over Limited Supply
AUTHOR: By Anna Shcherbakova
TEXT: “Sorry, but I was not made for journalism,” read the email I got last Sunday from a girl answering the job vacancy at our newspaper. I had my suspicions therefore about her ability to become part of our team but everyone has to be given a chance, so the 22- year-old with a degree in management was told to compile the comments of financial analysts and bankers into a business story. It’s not as easy as reading a newspaper. She gave up after a couple of days. 
Many applicants did not even get that far. A former student of a respected local business school, for instance, had no idea what IPO means, not to mention knowledge of any Russian companies that recently went public. Another candidate, who had no knowledge of any particular market or industry, proudly revealed she was an expert in chronicling society. The guy who claimed to be editor-in-chief of an unknown magazine said he was looking for a managerial job and boasted familiarity with many advertisers when as a matter of fact we need a journalist and our editorial team is strictly isolated from the advertising department. The girl with an education in economics had no experience except for a high-school essay on gender differences and then let slip that she was pregnant and became upset that the four months left to her were not enough to learn how to be a journalist.
The idea of recruiting young ambitious people with a background in economics in order to convert them to business journalists came to me when I noticed that the labor market in our industry had become a candidates’ market. I’d described the process maybe a hundred times in various other branches of the economy before discovering it for myself.  The new competitor flirts with those rare talented business journalists by promising to double their salary. Added to this, many journalists leave for fashionable professions such as PR or consulting. It’s easier to find new people than divide the existing ones among a growing number of employers, I decided, and advertised our vacancy. 
The response was massive but not particularly efficient. I received the CVs of a metal trader, a salesman, a Master in agriculture, a bookkeeper, several teachers and numerous students. One applicant still lives in Sakhalin but intends on moving to St. Petersburg. Another is in Moscow and looking for a job at a distance. Also proposing his services was a screenplay writer who also works as a driving instructor and part-time reporter at a real estate magazine.  
I do not answer letters littered with mistakes. A couple of applicants were simply rude when I called them back, so their ambitions remain a mystery. One candidate missed the interview and I’ve had no word of them since, another called with an excuse for not attending.  
I have not yet found a journalist but have learned a lot about the labor market and even about life in general. My mailbox is full and I have several more interviews planned for this week. I’m wondering how many people really want to be journalists and hope to find a normal one, who knows about business, about local markets and is ready to work hard in order to become well-known for his or her writing. If the right person is reading this column, they are welcome.

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

TITLE: Ticking Time Bomb Under the Ice
AUTHOR: The New York Times
TEXT: For a brief moment, it seemed that Dr. Frederick Cook and U.S. Admiral Robert Peary, credited with reaching the North Pole in 1908 and 1909, respectively, had risen from the mists to renew their race to the North Pole.
On Aug. 2, a couple of Moscow legislators in a small submersible vessel deposited their nation’s flag on the seabed 4.2 kilometers under the polar ice cap — backing up Russia’s claim to nearly half of the Arctic Ocean floor.
For its part, Canada announced that it plans to build two military bases to reinforce the country’s territorial claims. At stake is control of the Northwest Passage and, with it, what could be huge deposits of oil and natural gas in the seabed below.
In a 21st-century twist unimaginable to Cook and Peary, global warming — driven, in part, by humanity’s profligate use of those same fossil fuels — has begun to melt the polar ice, exposing potentially huge deposits of hitherto unreachable natural resources.
Russia and Canada are not alone in the great Arctic oil race. Denmark, Finland, Norway, Iceland and the United States also have a deep interest in the matter.
Under international law, nations have the rights to resources that lie up to 320 kilometers off their shores. The rest is regarded as international waters, subject to negotiation under the Law of the Sea. A nation can claim territory beyond the 320-kilometer limit, but only if it can prove that the seabed is a physical extension of its continental shelf.
To show just how crazy this could get, the Danes are spending a fortune trying to prove that their end of the same ridge — though now detached — was once part of Greenland, which belongs to Denmark.
The United States does not find itself in a strong position. Misplaced fears among right-wing senators about losing “sovereignty” have kept the Senate from ratifying the Law of the Sea even though the United Nations approved it 25 years ago. This, in turn, means that the United States, with 1,609 kilometers of coastline in the Arctic, has no seat at the negotiating table.
U.S. President George W. Bush will try to remedy this blunder when Congress reconvenes. This would at least enable Washington to stake its claims to the continental shelf extending northward from Alaska. We may never need a share of that oil, but it seems foolish not to keep it in reserve.

The comment appeared as an editorial in The New York Times.

TITLE: Ticking Time Bomb Under the Ice
AUTHOR: By Jeremy Rifkin
TEXT: The government of President Vladimir Putin claims that the seabed under the North Pole, known as the Lomonosov Ridge, is an extension of its continental shelf and therefore Russian territory that will be open for oil exploration.
Moscow is not alone in making such a claim. Geologists think that 25 percent of Earth’s undiscovered oil and gas may be embedded in the rock under the Arctic Ocean. No wonder Norway, Canada and Denmark (through its possession of Greenland) are all using the continental-shelf argument to claim the Arctic seabed as an extension of their own sovereign territories.
The sudden interest in Arctic oil and gas has put a fire under U.S. lawmakers to ratify the 1982 Law of the Sea Treaty, which allows signatory nations to claim exclusive commercial exploitation zones up to 320 kilometers out from their coastlines.
What makes this development so depressing is that the interest in prospecting the Arctic seabed and subsoil is only now becoming possible because climate change is melting away Arctic ice.
For thousands of years, the fossil fuel deposits were inaccessible, locked under the ice. Ironically, the very process of burning fossil fuels releases massive amounts of carbon dioxide, or CO2, and forces an increase in the Earth’s temperature. This, in turn, melts the Arctic ice, making available even more oil and gas for energy. Burning these potential oil and gas finds would further increase CO2 emissions, depleting the Arctic ice even more quickly.
But there is an even more dangerous aspect to the unfolding drama in the Arctic. While governments and oil giants are hoping the melting ice will allow them access to the world’s last treasure trove of oil and gas, climatologists are deeply worried about something else buried under the ice that, if unearthed, could wreak havoc on the biosphere, with dire consequences for human life.
Much of the Siberian sub-Arctic region — an area the size of France and Germany combined — is a vast, frozen peat bog. Before the most recent Ice Age, the area was mostly grassland, teeming with wildlife. The coming of the glaciers entombed the organic matter below the permafrost, where it has remained ever since. Although the surface of Siberia is largely barren, there is as much organic matter buried underneath the permafrost as there is in all of the world’s tropical rain forests.
Now the permafrost is thawing on land and along the seabeds. If this happens in the presence of oxygen, the decomposing of organic matter leads to the production of CO2. If, in the absence of oxygen, the permafrost thaws along lake shelves, the decomposing matter releases methane — the most potent of the greenhouse gases, with an effect 23 times that of CO2.
Katey Walter of the Institute of Arctic Biology at the University of Alaska in Fairbanks wrote in the journal Philosophical Transactions of the Royal Society in May that the melting of the permafrost and subsequent release of methane is a “ticking time bomb.”
Walter and her researchers warned of a tipping point sometime within this century, when the release of methane could create an uncontrollable feedback effect, dramatically warming the atmosphere. This would, in turn, warm the land, lakes and seabed, further melting the permafrost and releasing more methane. Once that threshold is reached, there will be nothing humans can do to stop this process. Scientists suspect that similar events have occurred in the ancient past, between glacial periods.
Scientists are particularly concerned that the thawing permafrost is also creating shadow lakes across the Siberian sub-Arctic landscape. The lake waters have a higher ambient temperature than the surrounding permafrost.
As a result, the permafrost near the lakes thaws more quickly, forcing the ground surfaces to collapse into the lakes. The stored organic carbon then decomposes into the lake bottoms. Methane from that decomposition bubbles to the surface and escapes into the atmosphere. Scientists calculate that thousands of tons of methane will be released from Arctic lakes as the permafrost thaws.
A global tragedy of monumental proportions is unfolding at the top of the world, and the human race is all but oblivious to what’s happening.
When U.S. astronauts stepped onto the moon in 1969, Neil Armstrong’s first words were, “One small step for man, one giant leap for mankind.” The Russian “aquanauts,” landing on the Arctic seabed, might just as well have said, “One small dive for man, one giant leap backward for life on Earth.”

Jeremy Rifkin is the author of “The Hydrogen Economy: The Creation of the World Wide Energy Web and the Redistribution of Power on Earth.” This comment appeared in the Los Angeles Times.

TITLE: On Top of the World
AUTHOR: By Richard Lourie
TEXT: President Vladimir Putin’s presidential career began with a submarine disaster in August 2000, and is winding up with a submarine triumph in August 2007.
The sinking of the Kursk resulted in the loss of the entire crew of 118 sailors and the vessel itself, a nuclear cruise missile submarine, the largest attack submarine ever built. A product of post-Soviet Russia, the ship was “baptized” by a priest, and its loss did not augur well for the new Russia in general and the administration of Putin in particular.
Putin was criticized at home and abroad for not seeking international help early enough and for refusing to interrupt his vacation to demonstrate his concern. Those two motifs — a disdain for dependence on other countries and for “sentimental humanism” in regard to the people — have run throughout his years in office. His dismissive remarks on the murder of journalist Anna Politkovskaya, for example, betrayed the same lack of human finesse displayed in the Kursk incident. Foreign companies wishing to do business in Russia have been offered increasingly less advantageous terms, and many agreements reached in the 1990s, when Russia was weak and chaotic, have recently been circumvented. It is Europe, in fact, that is increasingly dependent on Russia.
The success of the expedition to the North Pole, and the planting of a titanium-encased Russian flag on the ocean floor more than 4 kilometers from the surface initially elicited admiration tinged with derision. Who could fail to admire the bravery of the expedition leader, State Duma Deputy Artur Chilingarov, 67, to descend that deep for some eight hours with a very real risk that his mini-submarine might not find an opening in the ice on its return to the surface. A sign of Russia’s renewed confidence was that the event was announced in advance and played out in real time.
There were some unintentionally comic moments. Chilingarov, a member from the Kremlin-friendly United Russia political party, crowed to the news, “The Arctic has always been Russian.” (At least for the last 150,000 years.) And the planting of the flag itself came in for a bit of mockery by Canada’s foreign minister, who said Russia was playing by the rules of the 15th century.
But the chuckling abruptly stopped in Canada. It also has claims in the Arctic, which may contain as much as 25 percent of the world’s undiscovered oil and gas. All of a sudden, Canada was ready for some dramatic symbolic action of its own. Canadian media quoted a senior official as saying: “The Russians sent a submarine to drop a small flag at the bottom of the ocean. We’re sending our prime minister to reassert Canadian sovereignty.” (It wasn’t clear if they were also sending him to the bottom or whether a photo op stroll on an ice floe would suffice.) Upon arrival, the prime minister announced the establishment of two new military bases to reinforce Canadian claims.
Concurrent with the polar expedition, the Navy announced plans to build a new nuclear submarine base on the Kamchatka Peninsula. Navy commander Vladimir Masorin also called for Russia to restore a “permanent presence” in the Mediterranean.
A resurgent Russia is better than a disintegrating Russia. But aside from reminding itself — and the world — that it is a force to be reckoned with, what exactly are the goals of this resurgent Russia? Thus far, Moscow has failed to articulate a new sense of national identity and mission. Not being quite sure of who it is and what it wants makes it easier for the Kremlin to miscalibrate some of its projections of power. And for others to misread its intentions. All of this could lead to trouble — in the warm Mediterranean or under the Arctic ice.

Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “A Hatred For Tulips,” a newly released novel about Anne Frank’s betrayal.

TITLE: A Georgian Antidote For Treating Its Gays
AUTHOR: By Matthew Collin
TEXT: It was the campest thing I’d seen on television in quite a while. Four young hunks in camouflage uniforms, members of a Georgian boy band, were preening and strutting their way through a cheesy disco dance. On the background was footage of muscle-bound soldiers performing training maneuvers. It looked like the kind of act you might see with dancing, super-muscular men at one of Europe’s more tacky gay clubs.
But Georgia is a country where that kind of love still dares not speak its name, and where the closet remains home sweet home to any homosexual who values his personal safety. In Moscow, gays get beaten if they attempt to show some pride.
In Tbilisi, they haven’t even dared to try it. A few weeks ago, wild and unsubstantiated rumors spread about “sexual minorities” participating in a city parade. The Georgian Orthodox patriarch has advised that any such procession would be “unacceptable.” If this is combined with the moral outrage that most Georgians feel toward gays, the situation could lead to riots.
This being the Caucasus, where rumor is a valued currency, scurrilous gossip about the sexual proclivities of top political figures circulates freely. But while tales of the nocturnal exploits of heterosexual politicians raise smirks, an open declaration of homosexuality would be career suicide.
A few months back, I met some courageous youths who had set up Georgia’s first gay rights group. They were wary about revealing their full names, and I won’t repeat them here.
“Violence is an everyday thing if a person is an outright homosexual,” one told me. “The response from family members when someone comes out as gay is usually negative, including being kicked out of the house, being locked up in a room or being taken to psychiatrists.
“It’s only a community of maybe 150 to 200 people who are ‘out,’ but it’s not stable. There is no regular place for homosexuals. If a place becomes known to be gay-friendly, homophobic people come in and try to stop it.”
Afterward, I went out onto the street to ask people what they thought about this new organization for Georgian homosexuals. Surprisingly, most of the women I spoke to thought it was wonderful, although I quickly realized that they had no idea what I was talking about. “It’s good there is an organization that will enable them to get help,” said one middle-aged shopper. “Maybe they can be cured of this sickness.”
The men were somewhat less forgiving. “It goes against God’s law,” went one response. “I think it would be better if they were dead.”

Matthew Collin is a Tbilisi-based journalist.

TITLE: Thinking Outside the Box
AUTHOR: By Mark H. Teeter
TEXT: My Russian godson, Zhenya, recently announced that he is ready to go to college. No surprise there. He is 18 years old and has been taking what many Americans call a “gap year” between secondary and higher education. The idea is to gain a bit more maturity and experience before returning to things academic and then heading off to the big world.
Zhenya has definitely matured and gained experience. He has been observing life from the business end of a McDonald’s counter, and he has had enough of the view. His new vision extends far beyond burgerland and toward a macroeconomic big world unimaginable a generation ago. Given the option, he would probably major in Oligarch Studies.
Having worked both sides of the desk in six Russian universities, I should have some useful godfatherly advice to share with Zhenya about college options. But I’m not sure I do. Russia’s higher education is in flux; there is no unified theory to explain where it stands today or where a proto-entrepreneur like Zhenya might best fit into it.
The overview can be encouraging if you cherry-pick the right figures. One recent study makes a nice best-case graphic of the post-1991 era, showing higher institutions doubling in number, enrollments up 250 percent and per-student spending up 70 percent since 2001 (in real terms). Moreover, it would seem that market forces are starting to work as well: 15 percent of Russia’s undergraduates now attend private institutions.
Perhaps best of all, Russia’s accession in 2007-2008 to the Bologna Process — a European-standard curriculum and degree regimen — could put the country’s diplomas on par with those of European and North American institutions, leading to a host of benefits for young college graduates here.
If the good news is good, the bad news is worse. The new institutions are often bogus, meaning the country will soon be “flooded with graduates of nonexistent universities,” warns the Moscow News. In addition to the sham institutions, the enrollment at real ones has sharply increased. The system is less educational and more “a place for a large number of male students to hide from the army,” one sociologist laments. Moreover, paltry living stipends offer scant help to struggling undergraduates; most of mine spend a great deal of their time either at jobs or looking for them.
Two of the worst aspects of the Soviet educational legacy — bribery and cheating — have grown and prospered. New federal teaching subsidies and a nationwide standardized admissions exam might affect the first of these — in a generation or so. In the meantime, bribery will continue to grow, paralleled by a culture of cheating that pervades the system — literally, from top to bottom.
And finally, Russia’s accession to the Bologna Process might not take place at all. Highly critical statements by Viktor Sadovnichy, rector of flagship Moscow State University, and First Deputy Prime Minister Dmitry Medvedev signal their firm belief that the much-debated Bologna Process is a bunch of processed bologna.
Some of my Russian colleagues say it’s time to start thinking outside the old college box. In fact, somebody already has, beating Zhenya to the punch. In 2003, then-Yukos CEO Mikhail Khodorkovsky offered a $100 million gift to Moscow’s prestigious Russian State University for the Humanities. But this unprecedented donation was rejected — not because it had strings attached, but because the state clearly had different plans for the donor and his money.
Can’t this paradigm be re-examined now? Several Kremlin-friendly oligarchs could step into the chronically underfunded world of Russian higher education and make a difference overnight. Given significant tax incentives (and perhaps the odd get-out-of-jail-free card), Russian versions of U.S. “oligarchs” Leland Stanford and Andrew Carnegie could also build monuments to learning, creating centers of scholarship and independent research that any modern society needs for long-term success. Why not encourage the creation of Abramovich University, the Deripaska Institute of Technology or even, in a rather longer perspective, the Boris Berezovsky School of Management?
Is there an alternative “new approach”? Of course: the University of Rosneft and Gazprom State. There, students could double major in Russian History for Patriots and Sovereign Democracy Studies. But it’s unlikely that they would learn how a real market system can breed enlightened self-interest and raise the common standard of living. Which is what I’m really hoping Zhenya will actually major in.

Mark H. Teeter teaches English and Russian-American relations in Moscow.

TITLE: Akzo Snaps Up U.K. Paint Maker ICI
AUTHOR: By Jeroen Molenaar and Scott Hamilton
PUBLISHER: Bloomberg
TEXT: LONDON — Akzo Nobel NV, the world’s largest maker of paints and coatings, agreed to buy Imperial Chemical Industries Plc for 8 billion pounds ($16 billion) after a two-month effort to win over the U.K. maker of Dulux and Glidden paints. 
Investors of ICI will get 670 pence a share in cash, Akzo said today in a statement. That’s 22 percent higher than ICI’s close on June 15, the day before Arnhem-based Akzo offered 600 pence in a first proposal. Shares of London-based ICI traded below the bid price on speculation Akzo investors may reject the deal. 
The Dutch company expects to generate 280 million euros ($382 million) in savings from the takeover, which will make Akzo the No. 2 paint supplier in the U.S. and China. ICI’s U.S. National Starch unit will be sold to German detergent maker Henkel KGaA for 2.7 billion pounds. The rest of ICI will boost Akzo’s revenue by one-half to 15 billion euros. 
“From a strategic point of view, it’s certainly an excellent match,’’ said Wim Hoste, an analyst at KBC Securities in Brussels. “Whether it’s a good deal from a financial point of view is another matter. That will depend on Akzo getting the savings to make the deal worthwhile.’’ 
Akzo shares rose 1 percent, or 58 cents, to 57.26 euros today. ICI had advanced 11 pence, or 1.8 percent, to 635.5 pence as of 10:52 a.m. in the U.K. capital, below the bid price. 

Shareholder Concern 
“The key risk is that Akzo shareholders will veto,’’ said James Knight, an analyst at Collins Stewart in London with a “hold’’ on ICI. “There’s every chance they’ll try to block the deal but overall they’re unlikely to succeed.’’ 
TPG-Axon, a shareholder of Akzo, said it was concerned about the Dutch paint maker’s offer to buy ICI at 650 pence. The U.S. investment firm is one of Akzo’s largest shareholders, with a 3.5 percent stake. Chief Executive Officer Hans Wijers said he hasn’t yet spoken in detail to Akzo investors and the company’s rationale will be explained over the next couple of days. 
The maker of Crown and Sikkens paint brands may return 3 billion euros in cash to investors, starting in 2008. That’s on top of an ongoing 1.6 billion-euro share-buyback program. 
Making the deal attractive to Akzo owners will also depend on the savings gleaned from integrating businesses, which will have a combined workforce of some 43,000. Today’s target for synergies is on the “conservative’’ side, Wijers said, with most of the benefit coming from coatings operations. 
There’s scope for job cuts in sales and administration, the CEO said. He declined to give specific numbers or plans. 

Market Leader 
The acquisition will mean Akzo retains its market leading position, staying ahead of PPG Industries Inc., which is taking over SigmaKalon Group for 2.2 billion euros. Akzo primers and paints are used on Airbus SAS’s A380 airliner as well as on automobiles. 
The deal for ICI hinges on Akzo’s planned sale of drugs unit Organon for $14.4 billion to Schering-Plough Corp. Wijers said he doesn’t have any doubts that transaction will go through. 
“We will create a leading global coatings and specialty chemicals company with a diversified geographic presence and well-developed access to fast-growing Asia-Pacific markets,’’ Wijers said. “Through this combination, we will be able to realize significant synergies.’’ 
ICI was formed in 1926 when four chemical companies merged to create a British industry bellwether capable of taking on the rest of the world’s chemical producers. It helped develop the anti-malarial drug paludrine as well as perspex. ICI spun off its drugs and agricultural operations as Zeneca in 1993. 

`Good Deal’ 
Merrill Lynch and UBS Investment Bank advised ICI, while Morgan Stanley & Co. worked with its suitor. 
Henkel will acquire the adhesives and electronic-materials units of the National Starch division, which generates about 40 percent of group sales and also supplies ingredients to improve the texture and shelf life of yoghurts and ice cream. 
ICI Chief Executive John McAdam sold the Quest flavorings unit for $2.3 billion in November to focus on household paints and coatings, which now account for 48 percent of revenue. 
“It’s a pretty good deal for ICI’s investors,’’ said Collins Stewart’s Knight, who rates ICI a “hold’’ and Akzo a “buy.’’ “Considering where the company was a few years ago, it’s remarkable how far ICI has come.’’

TITLE: Chinese Toy Boss Commits Suicide
PUBLISHER: The Associated Press
TEXT: BEIJING — The head of a Chinese toy manufacturing company at the center of a huge U.S. recall has committed suicide, a state-run newspaper said Monday.
Zhang Shuhong, who co-owned Lee Der Industrial Co. Ltd., killed himself at a warehouse over the weekend, days after China announced it had temporarily banned exports by the company, the Southern Metropolis Daily said.
Lee Der made 967,000 toys recalled earlier this month by Mattel Inc. because they were made with paint found to have excessive amounts of lead. The plastic preschool toys, sold under the Fisher-Price brand in the U.S., included the popular Big Bird, Elmo, Dora and Diego characters.
It was among the largest recalls in recent months involving Chinese products, which have come under fire globally for containing potentially dangerous high levels of chemicals and toxins.
The Southern Metropolis Daily said that a supplier, Zhang’s best friend, sold Lee Der fake paint which was used in the toys.
“The boss and the company were harmed by the paint supplier, the closest friend of our boss,” a manager surnamed Liu was quoted as saying.
Liu said Zhang hung himself on Saturday, according to the report. It is common for disgraced officials to commit suicide in China.
“When I got there around 5 p.m., police had already sealed off the area,” Liu said. “But I saw that our boss had two deep marks in his neck.”
A company official who answered the telephone at the Lee Der factory in the southern city of Foshan on Monday said he had not heard of the news. A man at Lee Der’s main office in Hong Kong said the company was not accepting interviews and hung up.
According to a search on a registry of Hong Kong companies, Zhang — whose name is spelled Cheung Shu-hung in official documents — is a co-owner of Lee Der. 
The recall by El Segundo, California-based Mattel came just two months after RC2 Corp., a New York company, recalled 1.5 million Chinese-made wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line because of lead paint.
The maker, Hansheng Wood Products Factory, was also included in the export ban announced Thursday by the General Administration for Quality Supervision, Inspection and Quarantine, one of China’s quality watchdogs.
The administration also ordered both companies to evaluate and change their business practices.
Lead poisoning can cause vomiting, anemia and learning difficulties. In extreme cases, it can cause severe neurological damage and death.
The quality watchdog also said police were investigating two companies’ use of “fake plastic pigment” but did not give any details. Such pigments are a type of industrial latex usually used to increase surface gloss and smoothness.
In its report, the Southern Metropolis Daily said Zhang, who was in his 50s, treated his 5,000-odd employees well and always paid them on time.
The morning of his suicide, he greeted workers and chatted with some of them, the newspaper said.
Chinese companies often have long supply chains, making it difficult to trace the exact origin of components, chemicals and food additives.
On Sunday, a Chinese court sentenced a reporter to a year in jail for faking a television story about cardboard-filled meat buns in a case that has drawn even more attention to China’s poor food safety record.
Zi Beijia, 28, pleaded guilty to charges of infringing on the reputation of a commodity during his trial at the Beijing No. 2 Intermediate Court, the official Xinhua News Agency said. 
He was sentenced to a year in jail and a fine of 1,000 yuan (US$132; euro97), it said.

TITLE: Japanese Central Bank Injects Money Markets
PUBLISHER: The Associated Press
TEXT: TOKYO — Japan’s central bank injected 600 billion yen (US$5 billion; Ÿ3.6 billion) into money markets Monday, a bank spokeswoman said, amid global worries about dubious U.S. mortgages.
It was the second trading day in a row that the Bank of Japan has pumped money into the markets, BOJ spokeswoman Naomi Mariko said.
U.S., European, Australian and Japanese central banks injected funds into money markets Friday as stocks dropped on concerns over U.S. subprime mortgage problems. The U.S. and European central banks had also injected funds Thursday.
It was the first time these banks and others around the world have worked together to inject liquidity into the markets since the aftermath of the Sept. 11, 2001, attacks in the United States.
Finance officials elsewhere in Asia sought to calm markets Monday as well.
In South Korea, officials said the impact from the U.S. subprime loan crisis on the country is limited, but vowed to deal with any credit squeeze by adding cash to the financial system if needed.
“Since we have relatively smaller exposure to U.S. mortgages, and in light of solid global economic fundamentals, the markets will gradually regain stability,” Vice Finance Minister Kim Seok-dong said to reporters after a meeting with senior government officials.
Malaysia’s Bank Negara Governor Zeti Akhtar Aziz also played down the subprime crisis’ threat, telling reporters the country’s financial institutions have “minimal” exposure to subprime loans.
“Right now, we have sufficient liquidity in the financial system, so it is not necessary to inject liquidity,” she added.
Investor confidence worldwide has been shaken by the credit market problems over concerns that they will affect the larger financial system and hurt the U.S. economy.
Japan’s benchmark Nikkei 225 stock index dropped 2.4 percent last Friday to close at 16,764.09 points on the Tokyo Stock Exchange, while the broader Topix index of all shares on the exchange’s first section sank 3 percent.
Both indexes dipped at Monday’s open, but soon edged back into positive territory.
The Nikkei closed up 0.22 percent at 16,800.05 points, while the Topix retreated in afternoon trade to finish down 0.08 percent, to 1,632.64 points.

TITLE: Deutsche Bank Brings in Former Fed Chairman
PUBLISHER: The Associated Press
TEXT: FRANKFURT, Germany — Deutsche Bank AG said Monday it is bringing in former U.S. Federal Reserve Chairman Alan Greenspan as an advisor to its corporate and investment banking unit.
Greenspan, 81, stepped down at the beginning of 2006 as Fed chairman, a post he had held since 1987. He was replaced by Ben Bernanke.
He will serve Deutsche Bank as a senior advisor “to provide ongoing advice and insight to Deutsche Bank’s investment banking team,” the bank said in a statement.
Greenspan’s “position as one of the architects of the modern financial system gives him a unique perspective from which to help our clients make critical risk management decisions,” Deutsche Bank Chief Executive Josef Ackermann said.
“I look forward to adding my perspectives on the world economy to (Deutsche Bank’s) own and to helping the bank advise its clients,” Greenspan said in a statement released by the bank.

TITLE: The Foreign Governess Comes Back in Vogue
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: With free reign over one floor of the family mansion, tummies swollen with treats and scores of Barbies, two Rublyovka children have everything but the attention of their parents — who leave even the bedtime stories to the nannies.
They are among those who have never learned to take “no” for an answer in any language. That was until their parents hired a British governess to give them a flawless accent and a smattering of etiquette.
Alexander Pushkin had one, as did Vladimir Nabokov and Nicholas II. An English nanny or governess was once the norm for wealthy Russian families, teaching children manners and a cut-glass English accent. Now the trend has returned among Moscow’s new rich, although today’s governesses are just as likely to come from the United States.
Earning up to $6,000 per month — far more than most English teachers — governesses are hired to teach children as young as 3, but they do not generally perform domestic duties. Their charges live surrounded by domestic staff — often including Russian nannies as well — and enjoy luxuries such as country estates and exclusive vacations.
Maria Nikolayeva opened an office of her recruitment agency, Bonne International, in 2001 in southern Moscow, focusing exclusively on providing native-English-speaking governesses and nannies. The office is furnished with prints of London sights and dark wooden furniture. Its other office is on London’s Harley Street.
Nikolayeva educated her three daughters in England and is enthusiastic about overturning Soviet-era child-care methods. She has opened a kindergarten with expat staff in the same building, which she watched via remote camera as she talked.
Often it’s Russian fathers who see the need for a governess, she said. “Suddenly they realize, especially the fathers, ‘Oh, he doesn’t look like a gentleman who can inherit my business. Now we have to make a gentleman of him. How do we do that? Right, we get an English nanny and then we send him to Eton.’“
“They want a better future for their children,” Nikolayeva said. “For example, the Russian father has business contacts with foreigners. ... He wants to be friends with them, but he doesn’t understand their way of thinking, the way they joke.” The idea is that the son, educated by a native speaker, will be “one of them,” she said.
The agency ensures that British nannies have a preliminary visit to Russia and follow-up support, she said, recounting how one nanny arrived in Moscow for the first time and began crying as they drove away from the airport. She left three days later.
When nannies join the agency, they must sign a confidentiality agreement, Nikolayeva said, adding that her clients include politicians. “At least three are on the Forbes list,” she said.
Several governesses said they didn’t know what their employers’ occupations were. “One of the first rules of this work is never ask how they got their money,” said Kira Hagen, an American who has worked as governess for five families in Moscow.
Formerly a Russian teacher in Alaska, Michelle Mitchell said she believed that her employers worked in real estate. They have a country house with a swimming pool as well as a large apartment in an elite housing complex. “I think they have eight or nine bathrooms,” she said.
This winter, she holidayed with the family and her 5-year-old charge — who already speaks fluent English — at Courchevel ski resort in France, working only after 4 p.m. each day. “This is one of the coolest teaching jobs I have ever had,” she said.
Although aristocrats used to employ British nannies, nowadays it’s not essential to speak the Queen’s English. “My accent’s pretty neutral, so I’ve never had a problem with getting a job,” said Amy Carrick-Chernova, an American nanny.
“Some families are quite strict, they don’t want anyone from England who doesn’t have a very posh accent — they don’t want their child to be speaking in a Cockney accent,” she added.
Conflicts can arise over childcare beliefs — from serving drinks at room temperature to dressing children very warmly and making them take naps.
“Russian children sleep for two or three hours during the day — even 5-year-olds — then they hang around till 11 and go for a walk when it’s dark,” Nikolayeva said. “None of the English nannies can understand it.”
“Here, they’re convinced that if you’re exposed to cold water, you’ll die,” Hagen said. She added that “about the worst trouble” she ever got into was after allowing her charge to run through a sprinkler in summer — when the grandmother was visiting.
Pay starts at an absolute minimum of $28 per hour, the governesses said. One said she was paid $3,000 per month for a four-hour day. Another said she was offered a live-in job paying $6,000. Agency director Nikolayeva said salaries started at $2,000. By contrast, Russian nannies may earn as little as $600.
Hagen said her employers are always paid in cash. “They don’t want their income to be traceable.” On payday, she wears a sports bra, which she stuffs with rubles in order to transport them home safely. One of her employers — who was married to an investment banker — used to leave her salary, $100 per day, in her shoe in the hallway, she said.
Despite their relatively high salaries, they have little job security. One said she had no work permit, while another said that only one employer had given her visa support. One warned that agencies work on commission, so job stability isn’t their priority.
Unlike old-style staff, none of the governesses contacted for this article lived with their employers. “It would drive me crazy,” Hagen said. “I think you need some space of your own.”
After tiring of the unreliable pupils she encountered while teaching business English, Hagen decided to become a governess. She cautioned, however, that working for families also has instability because parents may suddenly go abroad, for example. “You really do have to remember, ‘don’t get too involved,’“ she said. “This work can last a long time or just dissolve.”
Yet many complain of the difficulty of imposing discipline.
One governess, who asked to remain anonymous to protect her job, complained of “appalling behavior” from her Rublyovka charges. Though they spoke no English and she only knew a few words in Russian, she soon set aside four hours per day to teach them to mind their manners — and not to bite the staff, which included a bodyguard, a security guard, a gardener, a driver, a housekeeper and two Russian nannies.
Despite the horror stories that come with spoiled children, governesses also spoke of their job satisfaction. The Rublyovka governess said her charges were now beginning to speak English and that one had even hugged her. “I’ve discovered depths of patience that I never knew I had,” she said.

TITLE: Red Tape Reaches Soviet Heights
AUTHOR: By Nikolaus von Twickel
PUBLISHER: Staff Writer
TEXT: From inside the Kremlin’s walls to everyday lives with endless paperwork, bureaucracy rules.
Like the nation’s economy, bureaucracy seems to be booming. Determining its exact size is difficult, much like navigating the mire of it. But by all accounts, the number of public servants today likely exceeds Soviet levels. And they are making substantially more money than their average compatriots.
Sociologists have detected a growing inclination among young people toward jobs like customs officers or tax inspectors, despite widespread allegations of corruption and inefficiency.
While attempts to remedy the sprawling and sluggish state sector have yet to bear fruit, experts are baffled by how much bureaucracy Russians are prepared to tolerate. The official figure has grown by almost 40 percent in the last five years. While in 2001 there were 1.14 million employees in federal and local government, the figure for 2006 is 1.57 million, according to the State Statistics Service.
In the last years of the Soviet Union, those numbers declined from almost 2 million in 1987 to 1.57 million in 1989, and the country then was much more populous than today.
Experts warn that Soviet and contemporary statistics are not necessarily comparable, for instance because functions today performed by the public service were in the past provided by functionaries in the then-sprawling Communist Party organization.
Many are convinced that bureaucracy has ballooned, however.
“The number of public servants has increased dramatically,” said Yelena Panfilova, head of the Russian branch of Transparency International, a global corruption watchdog. The official figures, she added, probably understate the problem because they did not include employees at the municipal level. “I think that there are up to 3.5 million public servants in Russia today,” she said.
The main reason for the expansion, Panfilova said, is the creation of seven federal districts in 2000, with which President Vladimir Putin brought in a “huge army of bureaucrats” working in a new middle tier of administration, sandwiched between the federal and regional level.
Also the creation of new federal agencies boosted numbers, such as the Federal Drug Control Service, the Federal Agency for Registering Real Estate, the Federal Financial Monitoring Service and Federal Service for Financial Markets, Panfilova said.
Vladimir Rimsky of the Indem Foundation, a Russian nongovernmental organization devoted to fighting corruption, said many more salaries depended directly or indirectly on the state. “If you include staff at companies owned or controlled by the government, you get a figure around 10 million,” Rimsky said.
And pay is on the rise, too. On average, federal bureaucrats earned 21,300 rubles ($824) per month in the first quarter of 2007, well above the national average of roughly 12,000 rubles ($460) per month. In Moscow, federal employees are even making a monthly average of 27,700 rubles ($1,070), according to official statistics.
With this in mind, it might not come as a total surprise that a survey of the Sociology Institute of the Russian Academy of Sciences released in May found that the prestige of government jobs is climbing. Seventeen percent of 1,796 men and women between the ages of 17 and 26 said they rated a position in state service as prestigious — much more than the 10 percent rating in a similar survey in 1997.
The state sector won much of the esteem lost by the legal and financial professions — whose ratings dropped from overall 89 percent in 1997 to 60 percent 10 years later.
“Prestige is no longer associated exclusively with high salary potential, but more and more with notions of professionalism and power,” the survey’s authors said. Rimsky, who has conducted a nationwide survey, said careers in customs, tax and financial authorities came up most frequently when he questioned students about their future plans.
“There are big regional differences, but most young people seem to be driven by economic insecurity,” Rimsky said.
On the other hand, many Russians still associate their public servants with the hallmarks of inefficiency — corruption, inertia and negligence. In another poll by the Sociology Institute in 2005, 38 percent voted that bureaucracy in the present epoch is stronger than in any other in history. Twenty-two percent thought it was stronger under Yeltsin, 17 percent under Breshnev, 12 percent during perestroika, 6 percent under Stalin and 2 percent during tsarist times. The rest could not decide.
And 57 percent of those 1,800 polled said the bureaucracy exerted a negative influence on politics.
A recent World Bank research paper on government effectiveness bolsters the claim of poor administration. The survey, released in July, showed that Russia’s performance in key areas like rule of law and control of corruption was in the lowest quartile of the 212 countries and territories surveyed. It also recorded significant setbacks in voice and accountability — a measure of citizens’ ability to participate in government — and political stability.
And in a recent Levada Center poll, 29 percent blamed bureaucrats for economic stagnation and 28 percent said poor law enforcement was to blame.
The growth of bureaucracy has worried political analysts and independent experts both inside and outside the country. In November, the Organization for Economic Cooperation and Development warned that the trend of expanding the state into the private sector was slowing down the economy. Increasing state control over sectors like oil and aviation was “disturbing” and made the economy more prone to corruption, the OECD said in its sixth biennial report.
Yet experts on administrative reform said some things in Russia have been moving in the right direction. “The bureaucracy is not very service-oriented, but it is undoubtedly more efficient than in Soviet times,” said David Fawkes, a British economist who leads an European Union-funded project aimed at reforming public service in Russia. “I think there is a strong understanding of the need to improve efficiency and to improve the quality of services to the public,” he said.
Among the biggest obstacles is not so much bureaucrats’ complacency but the people’s apathy, he said. “It is difficult to convince the public to demand better service,” Fawkes said. “It is actually difficult to get people to complain.”

TITLE: Iraq PM Struggles to Get Politics Moving
AUTHOR: By Qassim Abdul-Zahra
PUBLISHER: The Associated Press
TEXT: BAGHDAD — Sunni politicians maintained a hard line Monday after Iraqi Prime Minister Nouri al-Maliki invited key Sunni and Kurdish allies to a crisis conference in a desperate bid to reach a compromise among Iraq’s divided factions.
With the political process stalled, the U.S. military pressed ahead with its efforts to crackdown on the violence, launching a new offensive against extremists on both sides of the sectarian divide.
Operation Phantom Strike would build on the successes during recent offensives in Baghdad and surrounding areas, the military said.
The statement singled out Sunni insurgents linked to al-Qaida in Iraq and said the Shiite extremists were being backed by Iran. The military has stepped up its rhetoric recently against Tehran, which is accused of supplying militias with arms and training to attack U.S. forces. Iran denies the allegations.
“Coalition forces and Iraqi security forces continue to achieve successes and pursue security throughout many areas of Iraq,” the U.S. second-in-command Ray Odierno said. “My intent is to continue to pressure AQI and other extremist elements throughout Iraq to reduce their capabilities.”
Iraqi judicial authorities also said the third trial against former officials with Saddam Hussein’s ousted regime would begin on Aug. 21. Saddam’s cousin Ali Hassan al-Majid, known as “Chemical Ali,” and 14 other defendants will face charges in the brutal crushing of a Shiite uprising after the 1991 Gulf War.
Al-Maliki called for the meeting during a news conference Sunday and said he hoped it could take place in the next two days as he faces growing impatience with his government’s perceived Shiite bias and failure to achieve reconciliation or to stop the sectarian violence threatening to tear the country apart.
It was a limited invite, including President Jalal Talabani, a Kurd, Vice President Tariq al-Hashemi, a moderate Sunni, Vice President Adel Abdul-Mahdi, a Shiite, and Massoud Barzani, the leader of the autonomous Kurdish region in northern Iraq.
The prime minister also threatened to isolate the political blocs who have boycotted his Cabinet, suggesting they could be replaced by local Sunni tribal leaders who have recently formed alliances and joined U.S.-led efforts against al-Qaida in Iraq.
“We hope to end this crisis and that the ministers will return,” al-Maliki said. “But if that doesn’t happen, we will go to our brothers who are offering their help and we will choose ministers from among them.”
But Iraq’s minority Sunnis expressed growing anger over their perceptions of al-Maliki as a deeply biased sectarian leader with links to Iran and his failure to bring all sides together after taking office in May 2006 and promising a national unity government.
“It is one year and 4 months now that he has been in office and he is still leading a one-man rule and a sectarian policy,” said Hamid al-Mutlaq, a senior member of the National Dialogue Front, a Sunni Arab political party. “The country is on the verge of collapse.”
“Is he going to give a cure after all this destruction? He has proved that he is a sectarian leader and a failure, the country is under the control of criminal gangs with the complete absence of an authority or government.”
His sharp words came a day after Iraq’s most senior Sunni politician, Adnan al-Dulaimi, issued a desperate appeal for Arab nations to help stop what he called an “unprecedented genocide campaign” by Shiite militias armed, trained and controlled by Iran.
Al-Dulaimi said Iranian Shiites, were on the brink of total control in Baghdad and soon would threaten Sunni Arab regimes which predominate in the Mideast.

TITLE: Rooney Breaks His Foot in Season Opener
AUTHOR: By Trevor Huggins
PUBLISHER: Reuters
TEXT: LONDON — Champions Manchester United were held to a 0-0 home draw by 10-man Reading and lost England striker Wayne Rooney to a hairline fracture of his left foot in a wretched start to their title defence on Sunday.
Chelsea opened their new Premier League season with a record-breaking 3-2 home win over Birmingham City while Arsenal snatched a late 2-1 victory at home to Fulham.
The injury to Rooney, who suffered a broken bone in his foot in 2004 and 2006, will cast a shadow over United’s opening weeks of the season. The fracture, sustained in a challenge by Reading defender Michael Duberry towards the end of the first half, was revealed by a hospital scan.
United did not say how long the 21-year-old would be sidelined, but his absence will also be a major setback for England in their battle to qualify for Euro 2008.
United manager Alex Ferguson was already without fellow strikers Louis Saha and Ole Gunnar Solskjaer through injury on Sunday. New Argentine signing Carlos Tevez was also missing but will now be expected to shoulder an even bigger burden.
In the game, United had all the possession but failed to make it count against a Reading side who had substitute striker Dave Kitson sent off in the 72nd minute, less than a minute after coming on, for a reckless tackle on Patrice Evra.
“It just wasn’t our day,” Ferguson told Sky Sports before he knew the extent of the injury.
“We created chances...but we just didn’t take one of them.”
Chelsea, looking to wrest the title back from United this season, took the points at Stamford Bridge with a second-half strike from Ghana midfielder Michael Essien.
Victory was made even sweeter by Chelsea setting an unbeaten home record in the top flight of 64 games. The run dates back to February 2004 and eclipses the previous mark set by Liverpool from February 1978 to January 1981.
The day’s action left United as the only one of England’s big four without a winning start. Liverpool beat Aston Villa 2-1 on Saturday with a fine late strike by captain Steven Gerrard.
There was no shortage of goals in west London, where Birmingham took a shock lead with a 15th-minute header from Finnish, former Chelsea striker Mikael Forssell.
The hosts hit back with goals from league debutants Claudio Pizarro of Peru and Frenchman Florent Malouda, who was on target again after scoring in last Sunday’s Community Shield defeat by United.
City levelled with a left-footed, bullet strike from their new French signing Olivier Kapo, but Essien gave Chelsea a deserved victory with a curling first-time shot from Shaun Wright-Phillips’s cut-back.
Chelsea coach Jose Mourinho told BBC radio: “We had so many chances to kill the game, it would have been more enjoyable for me to see a 4-2 or a 5-3 than a 3-2.”
But he added: “It was a good game to celebrate the home record, a game with goals and enthusiasm, and better than a 0-0 where we still have the record but it’s not a good game.”
Mourinho, whose side have suffered a spate of injuries, was without captain and central defender John Terry, but was able to send on Ivorian striker Didier Drogba from the subs’ bench.
A goalkeeping howler by Arsenal’s Jens Lehmann gifted Fulham their first-minute lead, the German’s clearance handing Northern Ireland striker David Healy a tap-in on his competitive debut.
But Dutch striker Robin van Persie equalised with an 83rd-minute penalty and Belarus midfielder Alexander Hleb struck a 90th-minute winner.
“Better late than never,” Arsenal manager Arsene Wenger told BBC radio after his side’s late strikes. “We were physically and mentally strong and didn’t give up.
“That kind of result can change a season for a team, and certainly strengthen the belief.”

TITLE: French Public Perplexed By Behavior of New First Lady
AUTHOR: By Crispian Balmer
PUBLISHER: Reuters
TEXT: PARIS — Capricious, mercurial or just unlucky? The failure of France’s first lady to show up to lunch with U.S. President George W. Bush has once again raised questions about Cecilia Sarkozy’s character.
President Nicolas Sarkozy unexpectedly arrived alone for the informal gathering at a Bush family compound in Maine on Saturday, near the luxury lakeside residence where the French leader and his wife are spending their holidays.
Sarkozy said his wife was suffering from a severe sore throat and could not make the journey, but the fact Cecilia was spotted shopping with friends on both Friday and Sunday raised eyebrows back home.
“Cecilia has set a new record for making a swift recovery,” a news reader said dryly on France Inter radio on Monday.
The no-show came just weeks after Cecilia made a spectacular foray into international politics by apparently helping to broker the release of Bulgarian medics imprisoned in Libya, and left commentators puzzling over her motives.
“With every day that passes, the mystery deepens: Who is Cecilia Sarkozy?” French regional newspaper Le Telegramme wrote in its Monday edition.
“What does the wife of the president of the republic want? To live her life as she likes, without constraint? In which case, why does she accept invitations, like that made personally by Laura Bush?” it added, saying that U.S. first lady Laura had personally organized the lunch with Cecilia.
French papers quoted doctors as saying sore throats could flare like a summer storm, but it was not the first time that Cecilia had failed to stand by her man at an important moment.
After playing virtually no part in her husband’s election campaign earlier this year, she famously failed to turn out to vote for him in the second round ballot on May 6.
This snub provoked widespread speculation that the couple, who briefly separated in 2005, were set to divorce, but Cecilia proved the gossip-mongers wrong by turning up at her husband’s inauguration ceremony and stealing the show in a stylish dress.
However, the whispering resumed weeks later when she stayed barely 24 hours at the three-day G8 summit of world power leaders in Germany, and then when she snubbed a concert on the July 14 national Bastille day holiday.
“People will no doubt accuse us of making too much of these absences,” regional daily Charente Libre wrote on Monday, suggesting that her absence on Saturday came close to causing a diplomatic incident between the United States and France.

TITLE: Beijing ’08 Rowing Lake Given Top Marks
PUBLISHER: Reuters
TEXT: SHUNYI, China — If organizing an Olympic event was just about getting the venue right, the Beijing 2008 rowing competition could be counted a success already.
Athletes, coaches and officials at this week’s world junior rowing championships — the first of 26 Olympic test events taking place this year — were unanimous in their praise for the rowing lake in a northeast suburb of the Chinese capital.
“It’s a fantastic venue, the moment I walked through the door I was very impressed with the size and scale of the whole venture,” said Robert Treharne Jones of Britain’s historic Leander Club, who is commentating on the championships.
“I’ve seen rowing courses all the way around the world and this is so impressive. All credit to the Chinese for building such a magnificent facility.”
The International Olympic Committee (IOC) consider the test events to be among the most important stages of Games’ preparations and will be watching the 42 “Good Luck Beijing” test events taking place over the next 12 months very carefully.
“The Olympics is a one-off,” IOC president Jacques Rogge told Reuters on Monday.
“You are not going to rehearse it and you don’t get a second chance. We learn a lot from these events and the lessons we learn are going to give perfection later on.”
The 1.62-square kilometer facility, the first of the 16 new venues being built for next year’s Games to be handed over, may not yet be offering perfection but it was difficult to find anyone who had a complaint.
“I’ve never seen such a nice rowing area,” said German single sculler Tina Manker.
“Amazing!” added South African Morgan Kloes after his double sculls semi-final.
“From day one, everything has worked perfectly,” British team leader John Layng said.
“They’ve taken on board all the advice everyone’s been giving to them and been working on it and improving it day by day.
“So I think next year this is going to be absolutely fantastic for the Olympics.”
Even Beijing’s notorious poor air pollution, one of the main problems for the Beijing Games, has not been a factor on the 2.9 kilometer long lake an hour out of the center of the city.
“I haven’t seen a flaw in the venue yet from a rowing point of view,” said Californian Sam Sweitzer, coach of the U.S. men’s coxless fours.
“Our athletes took a little time to adjust but that happens anywhere you go. We’ve not had any complaints from them as far as ailments or anything that would affect their performance.”
The Chinese were also finding success on the water, reinforcing their status as a rising power in a sport where they have yet to win Olympic gold.
Chinese teenagers took part in 12 of the 13 events at the championships and will have representation in nine of Saturday’s “A” finals.
“They’re using their home advantage, there are tons of fans for them,” Sweitzer added. 
“Their boat speed has been very impressive...”
Beijing is also hosting an invitational hockey tournament this week, while the second Olympic test event at the sailing venue in the coastal city of Qingdao starts on Wednesday.

TITLE: Polish Coalition Collapses
AUTHOR: By Vanessa Gera
PUBLISHER: The Associated Press
TEXT: WARSAW — Poland’s fractious governing coalition came to an end on Monday when the country’s president dismissed four Cabinet ministers from two junior partners — clearing the way for an early election expected this fall.
The changes leave Prime Minister Jaroslaw Kaczynski at the helm of a government that lacks majority support in parliament — meaning that it will struggle to get any new laws passed.
The prime minister said this weekend that early elections could be held on Oct. 21, two years ahead of schedule — a potentially risky gamble given that polls have shown his party trailing.
President Lech Kaczynski, the prime minister’s twin brother, formally brought the curtain down on the three-party coalition by firing four ministers from the junior coalition parties, which joined the government in May 2006.
“Today’s changes stem from a change in the political situation, from the end of the coalition’s work,” the prime minister said. “There is going to be a shortened term and elections not far off.”
“I’m convinced that these changes...will strengthen the Cabinet,” he said. “People who are excellently prepared have taken up these posts.”
Departing the government were two ministers from the right-wing League of Polish Families — Education Minister Roman Giertych and Maritime Economy Minister Rafal Wiechecki — as well as two from the populist, agrarian Self-Defense party, Labor Minister Anna Kalata and Construction Minister Andrzej Aumiller.
They were replaced with members or allies of Kaczynski’s Law and Justice party.
The new education minister is Ryszard Legutko, 57, a philosopher, writer and deputy Senate speaker; the construction minister is Miroslaw Barszcz, 37, a nonaligned former deputy finance minister.
The labor minister is Joanna Kluzik-Rostkowska, 44, who had been deputy labor minister since November 2005; and the maritime economy minister is Marek Grobarczyk, 39, a nonaligned expert.
Prime Minister Kaczynski must now focus on clawing out of a deficit in polls.
The main opposition party, the pro-business Civic Platform, has strengthened its lead in polls in past weeks as Law and Justice has been bogged down in bitter fighting with its coalition partners.
According to a GfK Polonia survey conducted Aug. 9-10, 36 percent of Poles would vote for Civic Platform, while 22 percent would support Law and Justice. Some other polls, however, have shown a narrower lead for Civic Platform. The Left and Democrats party, a loose grouping headed by the ex-communist Democratic Left Alliance, could count on 11 percent support, while a joint party formed recently by the League of Polish Families and Self-Defense would earn 5 percent support.

TITLE: Federer Beaten by Djokovic But Calls Loss Insignificant
AUTHOR: By Simon Cambers
PUBLISHER: Reuters
TEXT: MONTREAL — Roger Federer described his defeat by Novak Djokovic in the Montreal Masters final on Sunday as “insignificant” overall, but admitted the Serb had deserved to win his second Masters Series title.
The world number one was left to rue six missed set points in the opening set as Djokovic, who will rise to third in the world rankings on Monday, became the first man to beat the Swiss and Rafael Nadal in the same tournament.
“The goal was to win Wimbledon,” Federer told reporters. “Done that. Then, try to stay number one in the world. It would have helped to have won today but you can’t have it all.
“Looking at the U.S. Open, and down the road, the Masters, there’s still a long way to go. I can’t start being disappointed about just one match.”
With a break in the second game, Djokovic raced to a 3-0 lead but he was pegged back to 3-3 and Federer looked odds on to win the set when he led 6-5, 40-0 on his own serve.
But a couple of loose shots, combined with some free hitting from Djokovic handed the break back and the Serb then played inspired tennis to win the tiebreak.
Federer won the second set thanks to two breaks, but after hauling himself back from 4-2 down in the third, he lost the deciding tiebreak to give Djokovic the title.
“I was pleased that I came back in the second set,” Federer said.
“But I couldn’t play freely from the baseline because I was always in a tough situation whereas against the other players I was able to get a break ahead. (Today) I could never really breathe.
“It was not too bad a performance -- but there were too many ups and downs and then I totally missed my chances when I had them.”
Djokovic’s win over Andy Roddick, who began the week as the world number three, and his subsequent victories over the world’s top two made him the first man since Boris Becker in Stockholm in 1994 to beat the top-three ranked players at the same tournament.
Federer said he expected Djokovic to be a force at the U.S. Open later this month.
“He’s been able to back it up basically for a year now,” Federer said. “This might be a breakthrough tournament.”

TITLE: India Looks Set To Take England Test
AUTHOR: By Richard Sydenham
PUBLISHER: Reuters
TEXT: LONDON — India captain Rahul Dravid inflicted slow torture on England on Sunday with a laboured innings which made it almost impossible for the home side to claim the victory they need to square the series.
India, who chose not to enforce the follow-on, were 121 for five at tea off 46 overs on the fourth day of the third and final test at The Oval, an overall lead of 440 runs.
Dravid’s 12 in 140 minutes was the slowest dozen runs scored in test cricket in terms of minutes taken, according to statisticians.
VVS Laxman was unbeaten at the interval on 16, while Mahendra Singh Dhoni also had 16. James Anderson and Paul Collingwood have two wickets each.
India are on the verge of claiming their first test series win in England for 21 years, while the home team will need to score more than the world record 418 to win batting fourth or more realistically bat out the second innings to draw the match.
Pundits criticised Dravid for not making England follow on and pushing for a 2-0 series win. However Dravid clearly felt he wanted to snub out any lasting chance England had of an unlikely victory by using up more time and increasing the target.
After India went to lunch on 35 for three, Saurav Ganguly continued his counter attack by racing to 57 from just 68 balls with nine fours until he edged to slip.
Ganguly gave Andrew Strauss his 50th test catch when his attempted cut through his favoured square of the wicket region found first slip.
While Ganguly batted fluently, his skipper still appeared inhibited by the early loss of three wickets.
Dravid was stuck on two for 35 balls and when the 50 partnership with Ganguly was raised his share was five from 53 balls while Ganguly had contributed 45 from 46.
When Laxman moved to five in seven minutes at the crease, Dravid had been batting for 125 minutes for the same score, receiving ironic cheers from the crowd when he passed that mark.
Dravid’s 96-ball stay ended when he edged a Collingwood outswinger to Strauss.
England have not lost a home test series since 2001.

TITLE: Democrat Nominees Face Gays’ Questions
AUTHOR: By Michael R. Blood
PUBLISHER: The Associated Press
TEXT: LOS ANGELES — Democratic presidential contenders faced pointed questions on gay marriage and the basis for sexual orientation in a forum that forced candidates to confront politically touchy issues that have vexed a nation.
Former Senator John Edwards found himself discussing whether he is comfortable around gay people — he said he is. New Mexico Governor Bill Richardson appeared to struggle with a question about why people become gay or lesbian. Senator Hillary Rodham Clinton ended up defending the record of her husband, former President Clinton, on gay rights.
“We certainly didn’t get as much done as I would have liked,” the New York senator said. “But there was a lot of honest effort.”
Six of the eight Democratic candidates answered questions Thursday on gay rights at the two-hour forum co-sponsored by the Human Rights Campaign, a gay-rights group active in Democratic politics, and Logo, a gay-oriented cable TV channel that aired the forum live.
Organizers said it marked the first time that major presidential candidates appeared on TV specifically to address gay issues. The candidates appeared one at a time in an upholstered chair on a Hollywood studio set and took questions from a panel that included singer Melissa Etheridge.
The candidates underscored differences with Republicans on gay and lesbian rights, but leading candidates also faced aggressive questioning on their reluctance to embrace marriage for same-sex couples.
All of the Democratic candidates support a federal ban on anti-gay job discrimination, want to repeal the “don’t ask, don’t tell” policy barring gays from serving openly in the military and support civil unions that would extend marriage-like rights to same-sex couples.
A majority of Americans oppose nationwide recognition of same-sex marriage and only two of the Democrats support it — former Alaska Senator Mike Gravel and Representative Dennis Kucinich of Ohio, both longshots for the nomination.
Barack Obama belongs to the United Church of Christ, which supports gay marriage, but Obama has yet to go that far.
“If we have a situation in which civil unions are fully enforced, are widely recognized, people have civil rights under the law, then my sense is that’s enormous progress,” the Illinois senator said.
In a campaign dominated by the Iraq war and terrorism, the forum provided unusually probing talk about issues that alternately touched on questions of tolerance, morality and religion.
Clinton said she made a mistake in March when she steered around a question on whether homosexuality was immoral. She was asked about it after General Peter Pace, chairman of the Joint Chiefs of Staff, said he considered homosexual acts immoral and similar to adultery. He later said he should have not expressed his personal views. Clinton later issued a statement saying she did not think being gay was immoral.
“It was a mistake,” Clinton said. “I should have put it in a broader context.”
Clinton was cheered by the crowd when she alluded to the prospect for change at the White House in the 2008 election. Edwards argued that Democrats must speak out against discrimination coming from the Republican right wing.
Unless you speak out against intolerance, it becomes “OK for the Republicans in their politics to divide America and use hate-mongering to separate us,” Edwards said.
Etheridge, speaking to Edwards, said she had heard he once said he felt uncomfortable around gay people — an assertion contained in longtime political strategist Bob Shrum’s book “No Excuses: Concessions of a Serial Campaigner.”
“I’m perfectly comfortable,” Edwards said. “I know where it came from. It came from a political consultant. And he’s just wrong.”
Logo, available in about 27 million homes, wanted to hold a second forum for Republican candidates but Republican front-runners showed no interest, channel officials said.

TITLE: Tiger Woods Nails PGA Championship
AUTHOR: By Jim Litke
PUBLISHER: The Associated Press
TEXT: TULSA, Oklahoma — The best of Tiger Woods is still to come.
We’re not talking about some indefinite time off in the future. We’re talking next season.
Woods won the PGA Championship on Sunday by just two shots. He started the day with a three-stroke lead, saw it balloon to five and then shrink to one. In the end, he had to hold off a journeyman named Woody Austin, who was playing lights-out in a major championship for the first time in his life, and a familiar rival, Ernie Els, who hadn’t played anywhere near that tough in a long, long time.
“I just felt if I played the back nine under par that I would win the tournament,” Woods said. “That didn’t happen.”
The only time he was real danger of losing, though, came after a three-putt at No. 14.
“I felt like I gave all the momentum back to Ernie and to Woody. And I just felt like, I got myself in this mess, I need to get myself out of it. I did serious yelling at myself going up to the 15th tee,” Woods added, “just to get back into what I do.”
He did, then made pars the rest of the way to win the tournament. It was one of his most controlled, masterful performances between the ears, even if it didn’t always look that way out on the golf course.
Most people put Woods at his most dominant during a stretch that began with the PGA Championship at Medinah in 1999 and lasted until the middle of 2002. And it’s hard to argue otherwise. During what qualifies as the greatest sustained run in major championship history, he won seven of the 11 majors contested, including three in 2000 and the first two of 2002.
That run ended in the wind and sideways rain at Muirfield in the third round of the British Open, when Woods shot 81. Less than two years later, he pink-slipped swing coach Butch Harmon, who had been at his side since Woods was 17 and began revamping his swing — in private, at first — under the tutelage of Hank Haney.
As the winless streak in the majors stretched to 10, Woods stubbornly insisted he was “close.” Then he proved he was as good as his word by using the flatter, wider swing — it lets Woods bring the clubhead through the hitting zone on a more consistent path, for a nanosecond longer — to win the 2005 Masters.
And guess what? Beginning with that win at Augusta and continuing through Sunday’s triumph at Southern Hills, Woods has now won five of the last dozen majors and one each of the last three years. He also won nine times in 2006 and five times already this season, not to mention finishing second at both the Masters and U.S. Open.
When someone asked whether he considered himself a better player now than in 2000, he didn’t hesitate.
“Yeah,” Woods replied, “by far. Just experience. Understanding how to handle it and how to manage my game around the golf course. I have more shots than I did then, just because I’ve had that many more years to learn ‘em. And how to make adjustments on the fly, that just comes with experience.
“And I’ll say the same thing seven years from now,” he added, “when I’m more experienced than I am now.”
The wins may never look as easy as they did back in 2000, in part because the wide gap in talent, fitness and drive Woods had over the field has narrowed.
“Back when I first came out here on Tour, how many guys had personal trainers? I don’t think any of them did. Now, going to the fitness van, everyone has a trainer there. Everyone’s gotten stronger, more fit. They’re hitting the ball farther. Technology has certainly helped that out. ... And guys are shooting a lot better scores. It has become a lot harder to win tournaments.
“But that’s the fun of it,” he added. “That’s the challenge.
Yet more has changed than just Woods’ swing and the quality of the competition. 
He lost his father, Earl, last year and became father to Sam Alexis, the daughter wife Elin gently rocked to sleep as she paced in the trailer where Woods tallied and then signed his scorecard. 
He’s become not just smarter and more versatile about navigating his way around a golf course, but away from it, too.
Sunday’s win was Woods’ 13th career major, tying him with Bobby Jones and leaving only Jack Nicklaus and his record 18 ahead. 
After Augusta National, where Woods always does well, the majors detour through Torrey Pines, where Woods won as a junior and five times already as a pro; then to Royal Birkdale for the British Open and Oakland Hills for PGA Championship, courses that Woods can sink his teeth into.

TITLE: Top Bush Aide Quits White House
AUTHOR: By Terence Hunt
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Karl Rove, President Bush’s close friend and chief political strategist, plans to leave the White House at the end of August, joining a lengthening line of senior officials heading for the exits in the final 1 1/2 years of the administration.
On board with Bush since the beginning of his political career in Texas, Rove was nicknamed “the architect” and “boy genius” by the president for designing the strategy that twice won him the White House. Critics call Rove “Bush’s brain.”
A criminal investigation put Rove under scrutiny for months during the investigation into the leak of a CIA operative’s name but he was never charged with any crime. In a more recent controversy, Rove, citing executive privilege, has refused to testify before Congress about the firing of U.S. attorneys.
Bush was expected to make a statement Monday with Rove. Later Monday, Rove, his wife and their son were to accompany Bush on Air Force One when the president flies to Texas for his vacation.
“Obviously it’s a big loss to us,” White House deputy press secretary Dana Perino said. “He’s a great colleague, a good friend, and a brilliant mind. He will be greatly missed, but we know he wouldn’t be going if he wasn’t sure this was the right time to be giving more to his family, his wife Darby and their son. He will continue to be one of the president’s greatest friends.”
Since Democrats won control of Congress in November, some top administration officials have announced their resignations. Among those who have left are White House counselor Dan Bartlett, budget director Rob Portman, chief White House attorney Harriet Miers, political director Sara Taylor, deputy national security adviser J.D. Crouch and Meghan O’Sullivan, another deputy national security adviser who worked on Iraq. Defense Secretary Donald Rumsfeld was forced out immediately after the election as the unpopular war in Iraq dragged on.
Rove became one of Washington’s most influential figures during Bush’s presidency. He is known as a ruthless political warrior who has an encyclopedic command of political minutiae and a wonkish love of policy. Rove met Bush in the early 1970s, when both men were in their 20s.
Once inside the White House, Rove grew into a right-hand man. Rove is expected to write a book after he leaves. He disclosed his departure in an interview with The Wall Street Journal.
He said he decided to leave after White House Chief of Staff Joshua Bolten told senior aides that if they stayed past Labor Day they would be obliged to remain through the end of the president’s term in January 2009.
“I just think it’s time,” Rove said in an interview at this home on Saturday. He first floated the idea of leaving to Bush a year ago, the newspaper said, and friends confirmed he’d been talking about it even earlier. 
However, he said he didn’t want to depart right after the Democrats regained control of Congress and then got drawn into policy battles over the Iraq war and immigration.
“There’s always something that can keep you here, and as much as I’d like to be here, I’ve got to do this for the sake of my family,” said Rove, who has been in the White House since Bush took office in 2001.
Rove’s son attends college in San Antonio and he said he and his wife plan to spend much of their time at their nearby home in Ingram.
Rove, currently the deputy White House chief of staff, has been the president’s political guru for years and worked with Bush since he first ran for governor of Texas in 1993.

TITLE: Putin Mulls Sochi ’14 Organizing Committee
PUBLISHER: The St. Petersburg Times
TEXT: HOWEVER — President Vladimir Putin met with high-placed government officials in the Kremlin on Friday in connection with preparations for the Sochi 2014 Winter Olympics.
“The president is continuing to pay a lot of attention to the issue of Olympic preparations,” Kremlin spokesman Dmitry Peskov said Friday.
Speculation swirled in the media that Putin — who experts say played a vital role in securing the right to host the Games — was just days away from naming the head of the organizing committee.
“Friday’s meeting with high-placed members of the government and other departments was not ceremonial; it was a work meeting,” Peskov added.
Media reports have linked several names to the prestigious post, and the current front-runner is thought to be Deputy Prime Minister Alexander Zhukov, who was chairman of the government’s Sochi 2014 supervisory board.
Dmitry Chernyshenko, the CEO and face of the bid committee, hinted at an interview in June that he would like to have a role in the organizing committee.
Media reports have named Federal Agency for Physical Culture and Sports head Vyacheslav Fetisov, Krasnodar Governor Alexander Tkachyov, and even Putin, whose term ends in March, as other possible candidates.
Under International Olympic Committee rules, Russia has five months to register the composition of the Sochi organizing committee.

TITLE: Cuba Marks Castro Birthday
AUTHOR: By Anita Snow
PUBLISHER: The Associated Press
TEXT: HAVANA — Fireworks exploded over Havana Bay and five Cuban agents imprisoned in the United States sent greetings as ailing leader Fidel Castro turned 81 on Monday, spending his second consecutive birthday convalescing at an unknown location.
“Today we celebrate one more anniversary of the birthday of our Comandante en Jefe Fidel Castro, who turned 81 and who will continue celebrating many more birthdays with Cuba and the world,” Havana resident Rosa Maria Suarez said in the early hours of Monday.
She and hundreds of others stood on the Malecon sea front just after midnight to watch the fireworks marking Castro’s birthday and the end of Havana’s annual summer carnival.
“He’s celebrating with his family at home, but it’s as if he were with us here,” said student Irane Neskaye, also watching the colorful pyrotechnics show popping over the bay with the skyline of Havana’s iconic Cabana Fortress in the background.
From prisons in the United States, five Cuban agents serving long terms on espionage-related charges sent greetings of their own, which were published on Monday’s Communist party newspaper Granma. Two documentaries about the bearded revolutionary’s life were scheduled to air on state television early Monday evening.
“On this 81st birthday, we desire for you health and vitality, that you have many more, and that we can celebrate all those future anniversaries together in our beautiful fatherland,” wrote Ramon Labanino, one of the so-called “Cuban Five” who were living in Miami a decade ago when they were arrested on espionage charges.
The men deny they were seeking U.S. secrets and say they were gathering information about violent groups in an effort to prevent terrorist attacks against the island.
No major public celebrations of Castro’s birthday were announced, and there was no expectation that he would make a public appearance more than a year after he announced he had undergone emergency intestinal surgery and was temporarily ceding power to his brother Raul, who is now 76.