SOURCE: The St. Petersburg Times
DATE: Issue #1335 (101), Tuesday, December 25, 2007
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TITLE: Expats Hit By New Visa Rules
AUTHOR: By Alexander Osipovich
PUBLISHER: Staff Writer
TEXT: MOSCOW — These should be happy times for Alessandro Balgera. After all, the 50-year-old Italian is getting married Wednesday.
But Balgera can only spend three weeks with his new Russian wife before he has to leave the country for 90 days, thanks to new visa rules that took effect in October.
“It’s really sad. Extremely sad,” Balgera, a former hotel restaurant manager, said by telephone this week.
Balgera is one of many foreigners scrambling to deal with the new, tougher rules on multiple-entry business visas that were introduced in a decree signed by Prime Minister Viktor Zubkov on Oct. 4.
Under the new rules, such visas permit stays of no more than 180 days out of one year and for no longer than 90 days at a time. Previously, many expats used multiple-entry business visas to live in Russia year-round, making an annual visa run outside the country whenever their old one expired.
For them, 2008 promises to be a year of paperwork hassles as they try to obtain work visas or residency — the two main ways they can legally remain in Russia year-round after their old visas expire.
The changes may go unnoticed by employees at big companies, which are usually well equipped to deal with the bureaucratic burdens of hiring foreigners. Many such companies got work visas for their employees even before the Zubkov decree.
But the new rules are proving to be a colossal headache for freelancers, entrepreneurs and people who work at smaller companies.
Among the hardest-hit individuals are English teachers, who often meet their students through agencies that never previously bothered to get them work visas.
Anya Soroka, a Canadian citizen, does not know whether she will stay in Russia after March. It depends on whether her English-teaching agency will come through with a work visa.
“I’m not going to be devastated if I can’t come back to Russia,” said Soroka, an actress who supplements her income by teaching English lessons.
“Obviously, I’d rather have a choice,” she added.
Most of the English teachers interviewed for this report said they expected to stay in Russia in 2008 because their schools were promising to sponsor work visas for them.
But the process is fraught with uncertainty, said Kira Hagen, an American who has taught English and worked as a nanny for well-off Russian families. Hagen said she was hoping to return to Russia as a dependent of her husband, if his company gets him a work visa. If not, they might leave the country.
“We could probably make an emergency move to Poland right now, if we needed to,” Hagen mused in her blog. “Or even Korea, if the ticket and housing were paid for.”
Legal experts stress that coming to Russia on any document other than a work visa and earning income — even as an independent contractor — is illegal.
But that law has never been seriously enforced, and Zubkov’s decree was an attempt to close the loophole, said Peter Reinhardt, a partner at Ernst & Young.
“The underlying presumption behind this rule change is that if someone is having to spend more than half their time here, then it can no longer conceivably be a business trip,” Reinhardt said.
Government officials say the rule changes were based on the principle of reciprocity.
Russians face the same restrictions when traveling to Europe on multiple-entry visas, Alexander Aksyonov, director of the Federal Migration Service’s visa and registration department, said last month at an event organized by the American Chamber of Commerce.
“If you take a look at the European Union countries, you will see that they have exactly the same system,” Aksyonov said.
Changes were introduced after a Russia-EU agreement to simplify visa procedures went into effect in June. In some respects, the agreement did make things easier, especially for short-term business travelers. For instance, companies that want to bring a foreigner to Russia can now issue their own invitations, whereas before they had to get the invitations through the Federal Migration Service.
But some expatriates find it absurd that an agreement intended to simplify visa procedures has actually made their lives more complicated.
The EU “caused more harm than good to European businessmen” with the agreement, Jon Hellevig, a managing partner at the law firm Hellevig, Klein & Usov, said in a news bulletin last month. The fallout from the agreement might damage the Russian economy by scaring away foreign investors and entrepreneurs, Hellevig said in a telephone interview. “I think perhaps it would be better if Russia did not insist on full reciprocity,” he said.
A high-ranking EU diplomat said the visa agreement only covered short-terms visits and that Russia, not the EU, was responsible for imposing the 90-day limit.
“Russia introduced the rule mainly on grounds of its policies toward foreigners living and working in the country,” said Taneli Lahti, head of the political section of the EU’s delegation to Russia.
Now, the two options that most foreigners have if they want to stay in Russia — a work visa or residency — both have their own difficulties.
Experts say it currently takes about three months to get a work visa. Most of that time is taken up by the process of getting a work permit, which a company needs to obtain before its employee can get the visa.
Not surprisingly, Russians applying for work permits in Europe face difficulties too. Unlike Russia, many EU countries require personal interviews at embassies for foreigners seeking work permits, and the rejection rate is higher, Hellevig said.

Staff Writer Nikolaus von Twickel contributed to this report.

TITLE: Putin Hails Constitutional Court Move
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: St. Petersburg’s oft-quoted status as the “second capital” of Russia will take a step toward official recognition by May next year, President Vladimir Putin has said, as Russia’s Constitional Court prepares to relocate to the city from Moscow by that date.
Putin signed a decree in St. Petersburg on Sunday ordering the relocation of the Court from Moscow to the city’s historic building of Senate and Synod, begining on Feb. 1 and concluding on May 20, 2008.
“St. Petersburg is called the ‘second capital’ or the ‘northern capital’ but there hasn’t been any capital-level function here — until now,” Putin, who was born in St. Petersburg when it was called Leningrad, said at a meeting with constitutional judges at the Senate and Synod on Ploshchad Dekabristov.
Putin said deputies of the State Duma had decided to give one of the most beautiful buildings “in Russia and the world” to the court.
“This decision has significant meaning for the country,” Putin said.
Putin said the idea to open a hotel in the historic building, which looks out onto the Bronze Horsman statue of Peter the Great, was “sacrilege.” 
First Deputy Prime Minister Dmitry Medvedev, who was also present at the meeting, said the location of the Constitutional Court in St. Petersburg was new in Russian history.
“The Court will now perform its functions in a different city. It is important for strengthening of the country,” Medvedev said.
Before it was reconstructed the building, which housed the State History Archive, was in very poor condition. Now, rich illumination makes the light yellow building, which also looks onto the River Neva, look bright.  Inside the building, modern baroque styling with golden modeling, painted ceilings, beautiful chandeliers, and comfortable chairs, has been lavishly applied.
Valery Zorkin, head of the Court, who was once critical of the planned relocation, said it was “important that the Court was located in the historic heart of the judicial establishment.”
“Previously many Russian courts looked like peasant houses, and what has been done now is impressive,” Zorkin said.
Nikolai Bondar, one of the judges at the Constitutional Court, said he treated the move as an “inevitability.”
“Personally, I have a serene attitude to the move. St. Petersburg is related to the times of my army youth and scientific activities. However, in regard to the work of the Constitutional Court itself, the move will require it to form a new system of interaction between the supreme state organs,” Bondar said.
Meanwhile, Tamara Morschakova, an advisor of the Constitutional Court and its ex-deputy head, told Ekho Moskvy radio station on Sunday that the move was an “expression of despotism” and would “undoubtfully cripple the constitutional justice.”
“It will cause harm if only for the reason that all the technical employees will be replaced completely,” Morschakova said.
“I see no rational aim, no necessity, for such a decision. The only obvious reason for it is that they could not find a worthy way to fill up monuments in St. Petersburg as beautiful as the building of Senate and Synod. From that point of view it is is worth the Constitutional Court being there,” she said.
Morschakova said that she anticipated that her role as a Court advisor will be “completely, automatically stopped” after “what [I have] said on the matter of the Court’s relocation.”
Members of the Constitutional Court were critical of the move in March 2006 when the Duma passed the law on it in the first and then following readings.
At that time Constitutional judges expressed a concern that as a result of the move the Court would lose its qualified staff; that the change of the court’s location would damage its stability, and lower the effectiveness of its work. The judges also doubted the move would cut down on corruption, as had been suggested as a reason to move it.
The idea of moving some of Moscow’s federal functions to St. Petersburg was reanimated by Governor Valentina Matviyenko in December 2005 when she appealed to Putin with a request to express his opinion on the possibility of moving the Constitutional Court to St. Petersburg.
In the process of preparing the new location for the Court, the country’s State Archive was moved to a new building.
Meanwhile, the president’s Sunday decree also stated that the representative office of the Constitutional Court in Moscow will be located at 21 Ulitsa Ilyinka.

TITLE: Public Sector Wages a Priority For New Duma
PUBLISHER: Reuters
TEXT: MOSCOW — Prime Minister Viktor Zubkov told newly elected parliament members on Monday to hike wages for public sector workers to compensate for rising inflation.
The Duma lower house of parliament, where the pro-Kremlin United Russia party won an overwhelming majority in a Dec. 2 election, was convening for the first time and faces a challenge from inflation that returned in 2007 to double digits.
“We have an obligation to guarantee real wage growth by 50 percent in three years. Since inflation will exceed the target this year, we need to adjust wages accordingly,” Zubkov told the Duma.
President Vladimir Putin has called for a revision of the three-year budget in February to raise wages for public sector workers by 14 percent and for the military by 18 percent. The proposed hikes will cost 102 billion roubles ($4.1 billion).
Inflation is expected to reach 12 percent in 2007 due to loose fiscal policy and a global rise in food prices. Russia targets an inflation rate of 8.5 percent in 2008 but officials already admit that meeting the target will be difficult.
Real wages grew by 14.8 percent year-on-year in November and nominal wages by 28 percent, according to official figures.
Rising prices are certain to be a sensitive topic ahead of March 2 presidential polls which First Deputy Prime Minister Dmitry Medvedev, backed by Putin, has the best chance of winning.
Communist deputy Zhores Alferov, who opened the first meeting of the new parliament, urged the legislature, dominated by pro-Kremlin parties, to spend more on social programmes, including so-called national projects overseen by Medvedev.
Medvedev is expected to use populist slogans in his campaign to draw votes from the Communists.
“If a representative of the Communist party calls for more money to be spent on national projects, that means that people who have so far voted for the Communist Party will back our Dmitry Anatolyevich Medvedev in the presidential polls,” news agencies quoted Putin as telling his cabinet.
Finance Minister Alexei Kudrin, the government’s leading fiscal hawk, said the 2008 budget will have about 272 billion roubles in extra revenues, which can be spent on wage and pension hikes. Zubkov said other priorities for the new parliament included new land distribution, voluntary pension saving and tax legislation.
Zubkov did not mention a draft law setting ground rules for foreign investment in ‘strategic’ industries, passed at a first reading in September but then stalled by wrangling between ministries and the Federal Security Service (FSB).
Industry sources have told Reuters the FSB wanted limits on foreign investment in exploration of strategic deposits to apply to existing licences, causing an outcry among foreign investors already working in Russia.

TITLE: Putin Produces DVD on Martial Art
AUTHOR: AP, Reuters
TEXT: He is better known for political maneuvers, but soon anyone with a DVD player will be able to check out President Vladimir Putin’s moves in another area of expertise: judo.
Putin, a black belt, said Friday that he and Yasuhiro Yamashita, a world and Olympic judo champion from Japan, had made an instructional video together.
The news came after Putin got a message of greeting from Yamashita during an opening ceremony at Toyota Motor’s new assembly plant near St. Petersburg. “He and I have recorded a video disc as a video supplement to a judo manual,” Putin said. “I think it will be coming out in January or February.”
Two years ago, Putin and Yamashita attended a judo lesson in St. Petersburg together, helping students practice holds at the judo school Putin, 55, attended in his college years. 
He thanked Yamashita for making the manual but expressed displeasure upon learning that he was to coach the Chinese team at next year’s Beijing Olympics. “Say it’s not so! Let him come here to coach our team,” he said. “Our Chinese friends will win everything now. They have home advantage.”
Putin said judo has played a key role in instilling discipline throughout his life. “Sports like judo teach you mutual respect: respect for your rival, with the knowledge that an adversary who appears weak can put up resistance and even beat you if you lose concentration and become complacent.”

TITLE: Russia Will Allow Artwork To Go to London Exhibit
PUBLISHER: The Associated Press
TEXT: MOSCOW — Paintings from Russian museums will be permitted to go to London for a major exhibition after British legislation protecting art from seizure comes into force, the Federal Culture and Cinematography Agency said.
The exhibition, “From Russia: French and Russian Master Paintings 1870-1925,” is scheduled to open at The Royal Academy on Jan. 26. But the exhibit was cast in doubt after the Russian agency said British laws did not adequately protect art from seizure in connection with private legal claims.
James Purnell, head of Britain’s culture department, responded Thursday by saying Britain would move up the effective date of a provision in new legislation to bar seizure of art loaned on a government-to-government basis. The provision, due to come into force in late February, would now become effective on or about Jan. 7.
Culture agency spokeswoman Natalya Uvarova said Friday that her office would issue licenses for the paintings to go to London after the British law came into force.
The agency’s chief, Mikhail Shvydkoi, said earlier in the week that descendants of two prominent 19th- and early 20th-century Russian art patrons and collectors, Sergei Shchukin and Ivan Morozov, had not ruled out legal action. Among the works are masterpieces from their collections, which were seized by the state after the Bolshevik Revolution.

TITLE: 6 To Stand In Elections For President
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Six candidates will run in the presidential election, including three independents, the Central Elections Commission said Sunday, the deadline for submitting the last applications.
On Saturday, the commission rejected seven requests from independent candidates, including Vladimir Bukovsky, a Soviet-era dissident and writer who lives in Britain.
Approved to run in the March 2 election are First Deputy Prime Ministry Dmitry Medvedev, Communist leader Gennady Zyuganov, Liberal Democratic Party leader Vladimir Zhirinovsky, former Prime Minister Mikhail Kasyanov, Union of Right Forces leader Boris Nemtsov and Democratic Party leader Andrei Bogdanov, the commission said.
Medvedev is expected to easily win the election after President Vladimir Putin blessed his candidacy.

TITLE: Letters on British Council Released
PUBLISHER: The Associated Press
TEXT: LONDON — The Foreign Ministry’s decision to close the British Council’s regional offices was “politically motivated,” Britain’s ambassador to Moscow said in one of several letters released Friday by UK government.
In a letter dated Dec. 7, Deputy Foreign Minister Vladimir Titov said Moscow had decided to order the British Council to close its branches in the cities of Yekaterinburg and St. Petersburg by Jan. 1 as a “logical consequence” of the expulsion of Russian diplomats from London.
In his response, dated Dec. 12, British Ambassador Tony Brenton told Titov: “Your letter makes clear ... that Russia’s ultimatum relates to an entirely separate matter and that Russia’s motives are political rather than legal.” 
He said European-Russian cultural cooperation would suffer if the Russians refused to back down.
The release of the letters was an unusual move; Britain usually insists that such diplomatic correspondence is private.

TITLE: Sobyanin to Manage Medvedev Campaign
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — First Deputy Prime Minister Dmitry Medvedev announced Thursday that Kremlin chief of staff Sergei Sobyanin would head his presidential campaign.
Medvedev, speaking after submitting documents to run for president with the Central Elections Commission, also promised that the election would be fair and said his candidacy had not been President Vladimir Putin’s idea.
Sobyanin, a former Tyumen governor, filled a Kremlin post vacated by Medvedev in 2005, when Medvedev was made first deputy prime minister. Media reports said at the time that Sobyanin had been promoted to Kremlin chief of staff to rally governors around Medvedev as Putin’s possible successor.
Sobyanin’s job involves organizing Putin’s schedule and advising on foreign and domestic policy issues, according to the Kremlin’s web site. He has also traveled abroad in a diplomatic capacity. Notably, he visited Britain in May 2006 to try to diffuse a dispute between Moscow and London ahead of a Group of Eight summit in St. Petersburg.
Sobyanin is likely to delegate much of the work on Medvedev’s campaign to his deputy Vladislav Surkov, who has more experience in getting out the vote, said Sergei Markov, a Kremlin-connected political analyst.
“This is a sign of trust in Surkov, who will in reality conduct the campaign,” Markov said. “Sobyanin does not have great experience in this field.”
Surkov was behind United Russia’s State Duma campaign, which resulted in the party securing two-thirds of the seats in the parliament.
Anton Bakov, the campaign manager for Union of Right Forces founder Boris Nemtsov, said he doubted that Sobyanin and Surkov would work together on the campaign. “Yes, one is the other’s boss, but both wanted this job and Surkov lost. There is no formal leader and informal de facto leader,” Bakov said.
Nemtsov also submitted his documents to the commission Thursday.
Medvedev told reporters there that the presidential vote in March would be fair no matter what anybody said to the contrary. International observers have described this month’s Duma elections as “unfair.” “Is there anything for us to fear?” Medvedev said, Interfax reported. “Elections are the internal affairs of a state. However much they criticize us, at the end of the day all decisions are made by the voters.”
Medvedev also said his candidacy was United Russia’s idea, not Putin’s. “Naturally, I discussed this with the president. I am a person whom the president has led, who has worked with the president for 17 years. ... But the initiative came from the party,” he said.
VTsIOM, the state pollster, reported Thursday that Medvedev had the support of 45 percent of voters, while LDPR leader Vladimir Zhirinovsky and Communist leader Gennady Zyuganov tied for second place with 5 percent.

TITLE: Deripaska’s RusAl Gets Stake in Norilsk Nickel
AUTHOR: By Catrina Stewart
PUBLISHER: Staff Writer
TEXT: MOSCOW — Oleg Deripaska’s United Company RusAl on Friday won its battle to grab a 25 percent blocking stake in Norilsk Nickel, the first step toward acquiring control of the company.
A full takeover by RusAl of Norilsk would create a $100 billion metals giant to rival the world’s biggest, but analysts raised concerns that minority shareholders in Norilsk would emerge as the biggest losers in such a tie-up.
Vladimir Potanin’s Interros Group, which owns a 25 percent stake in Norilsk, waived its right to buy the stake Friday from Mikhail Prokhorov’s Onexim Group, hours before a deadline expired, claiming that the $15.7 billion asking price was too expensive.
RusAl, which had a deal to buy the stake if the Interros offer failed, said in a statement that it was moving ahead with the deal and expected to close the transaction in the first quarter of 2008. RusAl said the deal would have to clear anti-monopoly hurdles in seven countries, including Russia.
“We intend to create Russia’s first global diversified metals and mining company,” RusAl chief executive Alexander Bulygin said in the statement. “Our company will join the ranks of the world’s top five mining giants.”
Prokhorov is to receive an 11 percent stake in the enlarged RusAl and an undisclosed amount in cash for his share, for which RusAl said it had received guarantees from ABN Amro, BNP Paribas, Credit Suisse and Merrill Lynch. Prokhorov will also gain board representation.
Kommersant said earlier this month that the deal with RusAl was worth $12.7 billion, $3 billion less than the terms offered to Potanin. The deal gives RusAl an implied value of $45 billion and Norilsk a value of $55 billion, according to media reports.
Until their breakup, Potanin and Prokhorov were one of the country’s most successful and established business partnerships. The relationship appeared to turn sour after Prokhorov was arrested in January at a French ski resort in an investigation into a prostitution ring. Since then, the two men have wrangled very publicly over how to split their assets, the most valuable of which is Norilsk.
Potanin had originally been expected to walk away with a controlling stake in Norilsk. That deal was scuppered last month, when Prokhorov sent Potanin a nonnegotiable offer widely seen as overvaluing the company.
Potanin approached several lenders but was understood to have received guarantees only from domestic banks. Analysts have attributed the lack of interest to a lukewarm lending environment and to uncertainty over whether a deal with Potanin would have Kremlin support.
RusAl has strongly hinted that it would seek to take control of Norilsk and merge the two to create a $100 billion company capable of challenging the likes of global giants BHP Billiton and Rio Tinto.
Analysts said the deal made strategic sense, given RusAl’s strong organic profile and Norilsk’s good cash position. A diversified miner would put it higher on the radar of international investors.
A spokeswoman for Interros said Potanin had no plans to sell his 25 percent stake. He owns a further 4 percent via holding company KM Invest.
Alexander Yakubov, metals analyst at Trust investment bank, said a takeover bid by Deripaska might face resistance from Potanin. “Norilsk is Potanin’s baby,” he said. “Psychologically, it is difficult for him to sell. I don’t think he will sell ... to Deripaska in the short term.”
Deripaska could seek to buy shares from minority shareholders, but recent speculation has pushed Norilsk’s price up to close to its fair value, Yakubov said.
Minority shareholders could lose out if RusAl and Norilsk merge, as analysts consider RusAl to be artificially overvalued for the purposes of the Norilsk deal.
“If a merger happens, it will be on a stock for stock basis — not cash — because RusAl would not be able to raise that much cash,” said Vladimir Zhukov, a metals analyst at Lehman Brothers. Minorities may be forced to swap lower-valued Norilsk shares for expensive RusAl shares, he said.
Norilsk said in a statement Friday that it would make every effort to protect minority shareholders’ rights in the transaction.
Analysts warned that the deal could face political resistance when RusAl seeks anti-monopoly approval — if not at this stage, then later.
“If this transaction was being pushed by the Kremlin, then Potanin would get a deal with Deripaska,” Zhukov said. “The reason why Potanin is objecting to this deal is because it is not being pushed by the Kremlin, which means eventually the Kremlin may block it.”
The Kremlin might not support Deripaska, because it is feared that he is becoming too powerful, Kommersant said Friday.
Some analysts, however, said the Kremlin was supporting Deripaska’s bid for RusAl with the aim of creating a national metals champion.
“For a long time investors assumed that the state was looking for the right mechanism to acquire a controlling stake, but as that has not been possible then the next-best alternative is to have it controlled by a business group that is almost a proxy for the state,” said Chris Weafer, chief strategist at UralSib. “Deripaska, like [Roman] Abramovich, is in that category.”
A deal with RusAl could bring to an end shareholder feuding that was starting to hurt the company, yet it remains to be seen whether Deripaska and Potanin will be able to work together, analysts said.
“They have no choice, they have to be good partners,” said Trust’s Yakubov. “Otherwise they would destroy the value of Norilsk.”

TITLE: Toyota Opens New Car Plant
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: Toyota Motor Corporation launched the assembly line of its plant in the village of Shushary, St. Petersburg, on Friday.
“The successful beginning of production is an achievement of the combined team of Japanese and Russian specialists, whose enthusiasm allowed all difficulties and obstacles to be overcome together,” said Katsuaki Watanabe, president of Toyota Motor Corporation, at the launch ceremony.
President Vladimir Putin, who also attended the opening, congratulated the plant on the beginning of its work.
“This is a very important project not only for St. Petersburg and the North-West but for the whole country because it’s the first serious step to organization of the full car-manufacturing cycle in St. Petersburg,” Putin said.
Putin said investment into the project amounted to five billion rubles ($200 million) and that the project had created 600 jobs so far.
Putin said the Russian government would do everything possible to make the Japanese investors “feel comfortable and confident about the future and have new stimuli to expand production [at the Shushary plant].”
The per capita income of Russia’s population is growing by 11-12 percent a year, which means that the opportunities for the sale of Toyota cars in Russia will grow, too, Putin said.  
Currently, Russian people buy over two million new cars a year which is even more than in India, he said.
Putin said the Toyota plant was also “a serious step towards increasing trust between the two countries,” with the links between the two constantly growing stronger.
At the initial stage of production the plant is to produce 20,000 cars a year.  When the plant begins to work in two shifts it will produce up to 50,000 cars a year, Watanabe said.
“Our dream is to increase the volume of production in St. Petersburg to 200,000 cars a year,” he said. 
Watanabe said that to this end Toyota needs to build new workshops.  Currently the plant occupies only a part of its land of 224 hectares in Shushary.
The plant will produce the Toyota Camry, currently the most popular Toyota model in Russia.  It will make two basic types of Camry with engine volumes of 2.4 and 3.5 liters. 
Putin said the Toyota project has become another stimulant attracting other car manufacturing investors to come to the city’s market. 
“The arrival of Toyota is a significant event by itself, but it’s also a good sign for other investors,” Putin said.
A GM plant is already being constructed, with Nissan and Suzuki also to begin operations soon, Putin said.
“All the world’s biggest car producers came to St. Petersburg, to Russia.  In St. Petersburg, the five biggest car manufacturing companies will be working, and one of them [the Ford plant] is already working in the Leningrad Oblast,” Putin said.
  Basically, St. Petersburg is becoming the largest Russian and a major world center for car production,” Putin added.
Putin said that by 2010 about 300,000 cars will be produced in Russia a year with the help of foreign investment. By 2012, this number will increase to one million cars a year.
Such tremendous growth in the car industry in Russia would require the production of car components in Russia, Putin said. 
The construction in St. Petersburg of a plant to produce parts for cars would be a first step in that direction, Putin added.

TITLE: Gazprom, State Top Picks for 2008
AUTHOR: By Catrina Stewart
PUBLISHER: Staff Writer
TEXT: MOSCOW — Every new year starts with a few good resolutions, most of which are soon lying by the wayside. But investors in Russia will be hoping that the government keeps its promises, as they bank on big infrastructure spending to fuel stocks in the year ahead.
The benchmark RTS index is hanging short of its all-time high of 2,360 points, but strategists predict that it will go much, much higher next year.
Underpinning this confidence is a sense of political stability following President Vladimir Putin’s nomination of Gazprom chairman Dmitry Medvedev as his chosen successor, and his agreement to serve as prime minister. Recent weeks have also seen a flurry of important deals, including three announced on Friday alone: RusAl winning a stake in Norilsk Nickel, VimpelCom’s $4.3 billion deal to acquire Golden Telecom, and AXA’s purchase of a stake in insurer RESO-Guarantia. 
Renaissance Capital and UralSib are leading the bulls for 2008, predicting that the RTS will breach the 3,000-point barrier by the end of next year, a 33 percent increase on current levels. It’s a strong claim as the volatility on global financial markets continues to pose a real risk to economic growth prospects.
“The market here should continue to perform even if the economies in Western Europe and the U.S. do not,” said Philip Townsend, head of research at Metropol. “If things do get rough, fund managers will technically still be trying to find a home for their money, and Russia will be an obvious example of where to put [it].”
Russia is going strong, with Putin saying last week that GDP growth would reach 7.6 percent for this year. And if a U.S. recession can be avoided, said Chris Weafer, chief strategist at UralSib, the RTS could even top 3,500.
Others are more cautious. Alfa Bank estimates an RTS high next year of 2,920 points, while Troika Dialog puts the figure at 2,800.
Max King, strategist at London-based Investec Asset Management, is convinced that Russia is a big-growth story among emerging markets for 2008.
“To some extent, there is a mismatch between the generalized popular perception of Russia and actually what goes on in terms of the markets,” King said. “It has performed very well and people who invest in Russia have done very well. Looking around the BRIC markets, Russia has got the best potential.”
Not that it has been showing that potential. The RTS has risen by a solid but unspectacular 19 percent in the year to date, underperforming China, Brazil and Turkey.
Many have attributed that lack of momentum to political uncertainty, but now investors are looking to the Putin-Medvedev “dream team” to continue the job that Putin started. 
To that end, the government has made promises to pump money into infrastructure in tandem with the private sector.
“It seems to us that the political priority is the modernization and diversification of the economy beyond the extractive industry,” said Ron Smith, chief strategist at Alfa Bank. “If you’re going to have a modern, diversified economy, you need an infrastructure to run that economy.”
Steelmaker Evraz will be one of the best ways to play the infrastructure story next year, Weafer said, while analysts at Metropol said they expected the growth to shift toward value-added sectors, such as pipe makers, among them Vyksa and Chelyabinsk Pipe. Norilsk, whose stock has soared over 2007, received some support based on continuing strong metals demand from China.
With very few exceptions, analysts have identified Gazprom as their top pick for 2008. One of its main drivers is the expectation of higher profitability following recent approvals to hike domestic tariffs for industrial users.
Independent gas firm Novatek will be a big winner in the deregulation of tariffs, analysts said. Citibank noted in a report Thursday, however, that a failure to secure pipeline access from Gazprom could place downward pressure on its price.
Despite oil prices still being within striking distance of $100, analysts and investors say oil has had its day, although Rosneft and LUKoil still made it onto some banks’ top picks. Combined with the Kremlin’s push for diversification, high taxation on oil firms has taken its toll, and investors are looking for rewards elsewhere.
Telecoms are a good sector to follow in 2008, Metropol’s Townsend said.
“Personal incomes [are] growing about 12 percent per year. People will wish to spend it in exactly the same way as in the past, [and] ... one of the key things people spend money on is mobile telephony,” said Townsend, marking out MTS and VimpelCom as interesting prospects.

TITLE: In Brief
TEXT: <b>Pipeline Delay</b>
MOSCOW (Bloomberg) — Gazprom’s Nord Stream pipeline under the Baltic Sea delayed the first deliveries of natural gas to Germany until 2011 because of an intensive testing phase, company spokesman Jens Mueller said Friday.
Nord Stream, which planned to begin shipping gas by the end of 2010, is moving back the date to spring 2011, Mueller said. He declined to say how long the delay would be, calling it insignificant. 

<b>Kashagan Deal</b>
LONDON (Bloomberg) — Kazakhstan and a group of companies including Eni on Friday agreed to sell part of their holdings in the Kashagan oil field to KazMunaiGaz, the Financial Times said, without citing a source.
The consortium will pay the Kazakh government about $4 billion to make up for production delays and rising costs at the Caspian Sea oil development, the newspaper said. 

<b>Rosneft Shares</b>
MOSCOW (Bloomberg) — Billionaires have sold more than $1 billion of Rosneft’s shares over the past two months, Kommersant reported Friday.
Oleg Deripaska, Roman Abramovich, Suleiman Kerimov, Filaret Galchev, Alisher Usmanov, Vladimir Lisin and Vladimir Potanin bought shares in the oil company’s IPO in July 2006, the newspaper said. Nearly all of them have sold their stakes because of dissatisfaction with the stock’s performance, Kommersant reported, citing an unidentified banker. 

<b>Inflation at 2-Year High</b>
MOSCOW (Bloomberg) — The country’s inflation rate rose to a two-year high in November as fruit, vegetables and other food prices surged, the State Statistics Service said Friday.
The rate rose to 11.5 percent, the highest since October 2005, from 10.8 percent, the service said. 

<b>For the Record</b>
Gazprom chief executive Alexei Miller visited Uzbekistan to discuss the upgrade of a pipeline that would help Russia keep control over exports of Central Asian natural gas. (Bloomberg)

Transneft proposed delaying the opening of the first stage of a crude oil pipeline from eastern Siberia to the Pacific Ocean by a year, to September 2009, Interfax reported Friday, citing an unidentified government source. (Bloomberg)

Gazprom Neft said Friday that its net profit edged down in the third quarter to $957 million, from $1.03 billion the same period last year, while core earnings rose to $1.45 billion versus $1.35 billion last year. (Reuters)

Sakhalin Energy will delay first liquid natural gas exports to Asia by six months to spring 2009 because of problems with pipelines, Sakhalin Governor Alexander Khoroshavin said Friday. (Reuters)

Gazprom pitched a 2.44 trillion ruble ($99 billion) plan to develop new gas supplies to potential investors in Tokyo on Friday, which includes building 9,000 kilometers of pipelines and drilling 1,294 wells in eastern Siberia by 2030. (Bloomberg)

President Vladimir Putin may replace Dmitry Medvedev as chairman of Gazprom, Vedomosti reported Friday, citing unidentified government officials. (Bloomberg)

Russian Railways has been given a 75 percent stake in TransCreditBank by the government as it seeks to simplify the lender’s ownership structure, the bank said Friday. (Bloomberg)

TITLE: VimpelCom Buys Into Golden Telecom
AUTHOR: By  Taj Adelaja
PUBLISHER: Staff Writer
TEXT: MOSCOW — VimpelCom, the country’s second-largest mobile phone operator, announced Friday that it would acquire fixed-line and Internet firm Golden Telecom for $4.3 billion, a deal that could give it a head start over its rivals in providing one-stop services.
Under the deal, VimpelCom will pay $105 in cash for each of all the outstanding shares of Golden Telecom, the two operators said in a joint statement.
The acquisition, which still has to be formalized by Jan. 18, has been unanimously approved by the boards of both companies and would not require shareholder backing.
“We are delighted to offer the advantages and growth potential of this powerful strategic combination to our shareholders,” VimpelCom chief executive Alexander Izosimov said Friday in the statement.
Jean-Pierre Vandromme, chief executive and director of Golden Telecom, also praised the deal, calling it “a positive development for Golden Telecom shareholders and employees.
“It represents an opportunity for our shareholders to capture the significant value that has been created at Golden Telecom over the last few years,” he said.
The companies said last month they were in talks that might lead to a merger.
The deal brings together VimpelCom’s 62 million mobile subscribers across Russia, Ukraine and Kazakhstan with Golden Telecom’s 400,000 broadband customers and its Wi-Fi networks in Moscow and St. Petersburg.
Altimo, the telecoms arm of Mikhail Fridman’s Alfa Group, has a 44 percent voting stake in VimpelCom, while Norway’s Telenor owns 29.9 percent.
Alfa and Telenor also own 26.6 percent and 18.3 percent, respectively, in Golden Telecom, the country’s largest independent fixed-line operator.
The acquisition could signal a thawing in relations between Altimo and Telenor, which have been locked in a dispute over Ukrainian mobile operator Kyivstar, which they own jointly.
“This looks like a strategic rapprochement for the sake of clinching a good deal,” said Nadezhda Golubeva, a telecoms analyst at Aton. “The larger picture may be slightly different though, since Altimo and Telenor had never had any disputes over Golden Telecom.”
Altimo vice president Kirill Babayev expressed cautious optimism Friday that the consensual purchase of Golden Telecom was “another step forward toward restoring full working relations between both companies.”
A Telenor official declined to comment Friday, citing company policy.
The deal, which had been widely expected, will better position VimpelCom to diversify services and provide new solutions for its clients, capitalizing on Golden Telecom’s strong position in the broadband market, analysts said.

TITLE: Local Tourism Market Heats Up for Holidays
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Vacations in Egypt topped the list of holiday destinations among St. Petersburg residents this year, with many clients choosing exotic countries over ski resorts, tourism industry professionals said.
Tatyana Demenyeva, deputy head of the Northwestern branch of the Russian Tourism Industry Union, or RST, said skiing vacations have not sold as well as hoped this holiday season.
Oleg Afromeyev, general director of Calypso: World of Travel, one of the city’s largest tour operators, said many residents learnt a bitter lesson from last year when they had paid for ski packages which were later ruined by the unusually warm temperatures and late snow.
“This time around, many of them decided not to take risks and go to the warm countries instead,” Afromeyev said. “Besides, truly dedicated skiers are more likely to travel in February when the weather becomes more stable and predictable,” Afromeyev said.
Demenyeva said prices for package tours during the New Year have increased by around 15 percent compared to last season, mainly due to the increase in air ticket prices prompted by a rise in the price of fuel.
“Some Russians had bought tours for the upcoming holidays as early as September but 70 percent of sales by local travel agencies were registered in November,” Demenyeva said. “Locals used to leave organizing a vacation until the last moment — and most of them choose visa-free destinations — but they are clearly learning to plan their holidays ahead like in most European countries.”
The Egyptian resorts of Sharm el-Sheikh and Hurghada, along with destinations in Turkey, are among the most popular with Russian vacationers throughout the year, largely because entry requirements for Russian citizens are straightforward.
Vladimir Strzhalkovsky, head of the Russian Federal Tourism Agency, said other popular countries include China, Finland, Spain, Italy, Ukraine, Bulgaria, Germany, France, Czech Republic, the United Arab Emirates, Poland and Croatia.
“More than 100,000 Russians tourists visit these countries every year,” Strzhalkovsky said.
According to official statistics, 10 million Russians traveled abroad as tourists in 2007, a 20 percent hike since 2006. The number of Russian tourists increased drastically over the past five years, the Russian Union of Travel Industry said, demonstrating growth of nearly 1 million people per year.
The highest growth is noticed in countries where Russians don’t need an entry visa, such as Egypt. 
However, more and more Russians are waking up to exclusive exotic destinations. Vadim Permyakov, general director of the St. Petersburg branch of Tez Tour said the general pattern of Russian travel is changing. While beach tourism and classic excursion routes are still very popular but there are now requests for gastronomic trips, musical festivals and sport events, including yachting and diving.
“The structure of Russian tourism is becoming more and more diverse,” Permyakov said. “Russians are showing an increased interest in new places, and look for new angles when visiting already familiar countries.”

TITLE: Kudrin Sees 8.5% Inflation For 2008
PUBLISHER: Reuters
TEXT: MOSCOW — The government hopes to keep 2008 annual inflation within 8.5 percent despite an anticipated leap early next year, Finance Minister Alexei Kudrin said on Sunday.
“We expect inflation to drop down to 8.5 percent next year,” Kudrin, who is also first deputy prime minister in the Russian government, told NTV television.
“In the beginning of the year inflation will grow at a higher rate, but we expect it to reduce considerably in the middle of the year,” he added. 
“We hope that we will manage to rein in inflation in 2008.”
Russia planned for 8 percent annual inflation in 2007, but officials admit that the real figure is likely to be around 12 percent. High inflation, hurting businesses and people’s pockets, is likely to turn into a sensitive issue next year, when a successor to popular President Vladimir Putin will be elected in March 2 polls.
Putin, who is not allowed by constitution to run for a third term, has said he wanted to maintain political influence after stepping down. He has named his loyal ally, First Deputy Prime Minister Dmitry Medvedev, as his preferred successor.

TITLE: A City Celebration
TEXT: On December 12, in the Aquarel Restaurant, the Celebratory Present charity evening was held. The Organizers of the event were The St. Petersburg Times newspaper, the AFK group of companies, Aquarel Restaurant and the Anna Akhmatova Museum in Fontanny Dom. The event was supported by the General Consulate of Finland in St. Petersburg.
The Celebratory Present -2007 event raised money for the organization of a trip to Finland for disabled and deprived children taking part in the Christmas project of the Anna Akhmatova Museum in Fontanny Dom for 2008-2009. The result of the project will be an exhibition that is being developed together with the Annantalo Arts Center (Helsinki, Finland) and will be shown in 2008-2009 in the Anna Akhmatova Museum in Fontanny Dom and then in Helsinki in 2009-2010.
The 2007 event raised 147,100 rubles. The money will be used to pay for the travel and accommodation of the children of School No. 584 Ozerki (for children suffering from neurological disabilities) and the students of No. 9 Boarding House who are being taught at home. The trip to Finland will allow them to meet children of their own age group – participants in the Christmas project from Helsinki and take part in master classes organized by the Annantalo Arts Center as part of the preparations for the planned exhibition. This event will be a true Christmas present for the children, many of them, due to various illnesses, are taught at home and very rarely go beyond the four walls of their own apartments. The visas for the disabled and deprived children taking part in the project will be provided by the General Consulate of Finland for free. 
As part of the celebration a special Art Present event was held, having been organized by the pARTner gallery with the participation of Hermitage magazine. The evening’s guests were given the chance to win works of art by leading contemporary artists: Vladimir Bystrov, Vita Buivid, Mikhail Bychkov, Igor Lebedev and Andrei Chezhin.
Also taking part in the evening’s program were the Non Cadenza group and Hand Made Theater, the latter performing excerpts from the “Circus in the Palm of Your Hand” production (artistic director – Andrei Knyazkov; production director – Svetlana Ozerskaya).
The evening was concluded with the raffling of prizes that had been provided by over 40 companies, artistic groups, designers and artists. The evening was organized on a non-profit basis, with everything needed for the organization and holding of the evening and its concert program being provided free of charge. 
The New Year’s charity event A Celebratory Event was being held for the fifth time. In 2003 and 2004, the money raised was used for the organization of New Year’s celebrations for children-participants in the programs of the Parents’ Bridge charity fund; in 2005, the resources raised were donated to the In Search of Harmony fund; and in 2006 the money raised was donated to the City Association of Social Organizations of Parents’ of Disabled Children.
The organizers of the project would like to thank the 2007 event’s partners, without whom the celebration would have been impossible: the Wild Orchid chain of stores, the Musubi Oriental Martial Arts and Healthcare Center, the MITS tourism company, Palkin Restaurant, Boutique.ru, Esquire Magazine, the Astoria Hotel, the Bosco di Cileigi group of companies, Fashion Industry Projects, Filippov-Hotel, the Traveling Puppets of Monsieur Pejot, Cosmopolitan Magazine, the Orange Language School, the Flowers on the Fontanka salon, the Mukla studio, the Paktor chain of stores, the Dyuvernois Legal law firm, Harvard Business Review, the May beauty salon, the New Literary Review publishing house, the Finnish chain of chemist’s Universitetskaya Apteka, the Azbuka publishing house, the Phoenix framing workshop, Cabinet, Khamoneria, Sputnik, State Entertainment Russia, the Talosto group of companies, the Medi clinic system, the Fifth Ocean medical fitness center, the Gobelen salon, Coca-Cola, the Mikhailovsky Theater, the Rive Gauche chain of stores, Sunway, Volynskaya Manufaktura, Novotel, Deloitte, Karkas Theater, Multon, Alianta Group, the designers Anna Tereshenkova, Elizaveta Titanyan (Abrakafabrika), Yekaterina Petukhova, Ded Mazaitsev, the artists Galina Fesenko, Alina Rappoport, the footballer Andrei Arshavin, the musician Billy Novik (Billy’s Band), Non Cadenza, Hand Made Theater, the pARTner project gallery, Hermitage Magazine and the artists Vladimir Bystrov, Vita Buivid, Mikhail Bychkov, Igor Lebedev and Andrei Chezhin.
We would like to thank all those who attended and took part in the event. Special thanks to Tatyana Arshavina who bought 220 tickets and Kristina Langotskaya who bought 120 tickets.

TITLE: Lavrov Talks Business With Libya
PUBLISHER: Agence France Presse
TEXT: TRIPOLI — Russian Foreign Minister Sergei Lavrov held talks in Libya on Sunday as the longtime pariah state consolidated its return to the international fold.
Lavrov had been expected to offer Russian help for Libya’s plans to develop a civil nuclear power programme, barely four years after it renounced efforts to develop a non-conventional arsenal in a move that launched its rapprochement with the West.
But after talks with his Libyan counterpart Abdelrahman Shalgham, the Russian chief diplomat made no specific announcement on nuclear energy.
He said only that a number of projects in energy and other fields were being discussed between the two governments.
“I am satisfied with these negotiations,” Russia’s Interfax news agency quoted Lavrov as saying.
“The two sides expressed their sincere desire to overcome the hiatus of the past few years which flew in the face of the long tradition of cooperation between Russia and Libya, above all in the economic and commercial sphere.
“The Russian-Libyan Business Council has selected a number of projects in the energy, transport, construction, housing and rail transport fields,” he said.
The RIA Novosti news agency quoted Lavrov as saying that several contracts had already been signed and more were in the pipeline.
“All of that has been completed through the efforts of the two governments aimed at concluding agreements in the investment protection field ... and other areas including military and technical cooperation,” he said.
When Russia announced Lavrov’s visit on Wednesday, it said it was “ready to help Libya realise its enduring right to attain civil nuclear (energy)”.
Libya renounced its efforts to acquire weapons of mass destruction four years ago this month in a move that began a slow rapprochement with the West.
Libya has since consolidated relations with all the key Western powers, sparking intense competition to boost business with one of Africa’s main oil and gas exporters.
France earlier this month announced plans to sell nuclear reactors to Libya and President Nicolas Sarkozy welcomed Kadhafi for a five-day visit to Paris.
That visit drew fierce protests from human rights groups as well as senior politicians who accused Sarkozy of bestowing international respectability on a government that had long been a pariah.

TITLE: Rosspetssplav Plans Expansion, Bond Issue
PUBLISHER: Reuters
TEXT: YEKATERINBURG — Russian Rosspetssplav, which controls top chromium maker Klyuchevsky Ferroalloys Plant and chrome oxide plant Russian Chrome 1915, said on Monday it was building a ferro-alloy holding firm.
Sergei Gilvarg, president of Rosspetssplav, or Russian Special Alloys firm, told reporters it also planned to secure $200 million via a eurobond issue in 2008 to buy new assets.
“We are planning to create a group specialising in ferro-alloys,” Gilvarg said. “This year we have made first steps to create a holding embracing our productive assets, a trading company and a niobium mining firm based in Congo.”
He said the new holding, Midural Inc., had been registered in Luxemburg. Midurals planned to issue eurobonds next year to buy new assets, including abroad. He did not provide details.
“In the next 10 years we will witness a dramatic increase in the demand for special steels from the defence, aerospace and atomic energy industries, for which ferro-alloys will be necessary,” Gilvarg said.
He said Klyuchevsky, located in Sverdlovsk region in the Ural mountains, had capacity to produce 82,000 tonnes of ferro-alloys per year, but it is using only 60-65 percent of its capacity.
Klyuchevsky, which produces more than 30 types of ferroalloy used mainly to toughen steel, exports 80 percent of its output.
Klyuchevsky is expected to produce 9,000 tonnes of chromium metal this year, up 45 percent from 2006 volumes. Ferro-titanium alloy output will rise by 98 percent to 8,000 tonnes, he said.
Gildvarg said the largest consumer of Klyuchevsky’s ferro-titanium is the world’s largest steel group ArcelorMittal.
Rosspetssplav has imported chromite ores from Kazakhstan for its chrome metal and its alloys production, but it has recently won an auction for a deposit in the Urals, which it plans to start developing in 2008.
To produce ferro-titanium it has imported ilmenite concentrates from Ukraine, Australia and South Africa. But it is also looking for its own titanium ore deposit to buy. Gildvarg did not give details.
Gildvarg said Rosspetsplav had restarted concentrate output in Congo.

TITLE: Trucks in Record Line Along Finnish Border
PUBLISHER: Reuters
TEXT: HELSINKI — Russian trucks have lined up for 100 kilometers at the Finnish border ahead of the holiday season, prompting Helsinki to ask the European Union for help eliminating the record blockage.
While trucks are stuck at the border, retailers in Russia and the transportation firms are losing money, and local people are afraid to drive on the roads with one lane blocked by trucks.
Finland’s government said Friday that Transportation Minister Anu Vehvilainen had pleaded for the European Commission to influence Russia to reduce the traffic blockage by increasing electronic customs services, reducing border bureaucracy and developing roads on the Russian side.
Truck lines were about 50 kilometers long on Sunday morning at Finland’s busiest border, Vaalimaa, east of Helsinki. They extended to more than 100 kilometers late Saturday, the Finnish Road Administration said.
“They now probably beat all records so far. A year ago the situation was similarly tough,” senior road administration official Jukka Tamminen said Sunday.
Tamminen said he expected the lines to ease and nearly dissolve by Monday. Customs officials at Vaalimaa have said there were lines 300 days last year.
Finland has raised the issue with Russia. Finnish President Tarja Halonen said after a meeting in September with President Vladimir Putin that Russia had made decisions that would help improve border traffic but had not carried them out fully.
Russians prefer to import goods through Finland to minimize theft and because harbors near St. Petersburg lack sufficient unloading equipment and warehouses.
Finnish customs have said they could double the amount of trucks that pass through as processing export papers takes only a couple of minutes. But procedures on the Russian side take longer.
The amount of goods imported through Finland has doubled since 2002 to about 3 million tons in 2006 and Russia’s Transportation Ministry has admitted its officials cannot handle the growing number of vehicles.
Finnish Prime Minister Matti Vanhanen said earlier this month in an interview he was considering the introduction of a road tax for Russian trucks by 2011.

TITLE: A Little Oil Firm Playing a Big Game
AUTHOR: By Miriam Elder
PUBLISHER: Staff Writer
TEXT: TOMSK — In a time of fast-encroaching state control over the oil sector, Imperial Energy is a rare bird. Founded in 2004 by a flamboyant English lawyer, the London-listed firm has seen a lot in its short history.
From murky startup negotiations with regional authorities in Tomsk through tussles with federal environmental officials that sent its share price fluctuating wildly, the experience of this small firm exemplifies what it means to navigate the mazes of corruption that permeate President Vladimir Putin’s Russia.
“We are very happy to operate in Russia,” Imperial founder and chairman Peter Levine said during a recent trip organized by the company to its main fields in western Siberia. “We don’t make any complaints about the environment we have to operate in,” he said. “We just get on with the job and work here — we have great faith in the system.”
Levine, who is of Russian descent and speaks the language fluently, has proven to know how to use that system to great effect as he makes his way through what remains of Russia’s “Wild East.”
At 51, he speaks with the bravado and flair of a courtroom lawyer, launching into seemingly crafted monologues at a moment’s notice. His briefcase swims with $100 bills, and he bantered easily with four fur-clad Siberian beauties who descended upon an isolated helipad outside Tomsk before taking up their posts as flight attendants in waiting helicopters.
His finely tailored suits stand in stark contrast to the flashy pinstripes and gold rings that are still the favored look of those in power beyond the stylized streets of Moscow. Yet it is with those very people that Levine has fostered deep links to make his firm one of the region’s most successful.
Levine is reluctant to explain what prompted him to found Imperial Energy in 2004 — a time when the Kremlin’s campaign to bring down Yukos, then the country’s largest private oil firm, was in full swing.
Foreign investors were weary of the country’s business climate, fearing that the Yukos campaign was the opening shot in a wider policy of renationalization.
Yet Levine, a corporate lawyer who entered business in 1998 when he was appointed chairman of Severfield-Rowen, a British steel construction firm, thought the time was right.
“I met Peter, we spoke. I asked him some basic questions. He gave me the correct answers, and then started getting licenses,” said Tomsk Deputy Governor Vladimir Yemeshev, declining to elaborate.
Imperial Energy built itself up initially through acquisitions — buying assets from Sibinterneft and Allianceneftegaz from Tomsk native Alexander Korchik, who was general director of the company until the appointment of new chief Christopher Hopkinson in January.
Someone only described as Korchik’s partner and identified in company documents as L.I. Sheshko handled Imperial’s negotiations with Tomsk regional authorities.
Imperial Energy now owns 47.5 percent of Sibinterneft, and Levine declined to say who owns the rest. “It’s certain local individuals, we don’t go into that,” Levine said in a telephone interview last week.
“Imperial Energy has no links with anyone else,” Yemeshev said, when asked whether officials in the Tomsk regional administration held stakes in the company. “[Levine] is a proper lawyer and a good negotiator,” he added.
Those negotiating skills were called upon earlier this year, when Imperial Energy entered a drawn-out battle with Oleg Mitvol, the deputy head of the Natural Resources Ministry’s environmental agency.
Imperial was growing fast. Though still failing to turn a profit, its share price had risen by nearly 800 percent in the eight months since it first listed on the London Stock Exchange’s AIM market in April 2005, making it one of the best new issues in Europe that year.
Yet it only caught the attention of authorities this year, on the eve of the start of oil production from two of its main fields, Snezhnoye and Maiskoye, after sinking nearly 20 billion rubles ($810 million) into the project through 2007.
The trigger was the release in March of an independent audit by DeGolyer and MacNaughton, which nearly doubled the size of the company’s reserves to 800 million barrels.
Imperial’s shares jumped 121 percent in two months on the news, only to drop by 30 percent in one day on April 18, when Mitvol threatened to revoke the company’s main license for drilling “ridiculously small volumes” while sitting on such supposedly huge reserves. The reserves, Mitvol claimed, were overstated.
Viktor Ilyukhin, a Communist State Duma deputy, told The Moscow Times at the time that he helped initiate the inquiry into Imperial’s reserves. “People from the Tomsk regional administration came to me and I saw some problems, so I asked Mitvol and the prosecutor’s office to look into it,” Ilyukhin said.
When contacted Monday for this article, Ilyukhin said he could not remember the incident.
“At these early stages, valuation depends not on actual business performance or financial results, but on reserves confirmations or denials,” said Steven Dashevsky, an analyst at Aton brokerage who has long championed the firm’s prospects.
Levine, he said, “attracted the attention of people who wanted a piece of the pie.”
Mitvol, a former associate of businessman Boris Berezovsky turned outspoken state environmental official, is best known for his campaign against Shell at Sakhalin-2 last year. After wild threats of license revocations for purported environmental damage at the site, Mitvol’s campaign appeared to succeed last December when Shell and its Japanese partners sold a majority stake in the project to Gazprom.
When Mitvol launched his campaign against Imperial Energy, many observers speculated that it was a state-driven attempt to muscle in on the company. Yet as the fight dragged on, and Imperial’s shares flopped up and down on the heels of competing statements from Mitvol and the company, it became clear that a wider game was at play.
In July, Imperial appealed to the Financial Services Authority, the British government’s markets watchdog, to investigate “certain matters affecting its share trading and share price.”
Mitvol, in a telephone interview, denied that he had sought to capitalize on the success of his campaign against Sakhalin-2 to reap financial gain from the Imperial affair. He declined to comment further on the company.
Levine has his own explanations for why the spotlight shined so suddenly on his company this year. “How about the word ‘jealousy’?” he said.
“For a small company with 800 million barrels of reserves, they went from floating under the radar to arriving very quickly on the stage, and that brought it into the line of fire,” said Adrian Wood, an energy analyst at UBS in London.
“It has been a bad year for independent foreign companies in Russia. They were, in a sense, seen as prospecting with the country’s minerals and resources wealth,” Wood said.
The interest shown by authorities in small independent oil explorers this year has not been confined to Imperial, as a string of British- and U.S.-based firms have faced license revocations and queries, plus other checkups from officials.
The case of Imperial shows that the Kremlin’s rules of the game pertaining to large-scale projects in the strategic oil sector have made their mark on even the minnows in the industry, prompting a wide-scale internalization of the fact that the Kremlin holds sway over all.
Lying close to the border with Kazakhstan, Tomsk is one of Russia’s main oil producing regions. It is home to fields owned by Gazprom Neft, Rosneft and Surgutneftegaz, but also to about 25 small-sized oil companies. And its administration is peopled with former oilmen who know the lay of the land and where the sweet spots lie.
Imperial’s fortunes lifted in October, when it began shipping oil through state pipeline monopoly Transneft, and boosted production to 8,500 barrels per day.
Then, in early November, Imperial announced that it had received an unsolicited offer from a financial investor to buy 25 percent of the firm at a discount. The company announced the next day that Gazprombank stood behind the bid.
One source close to the situation said Imperial and Gazprombank had negotiated the bid together, with the purpose of staving off the attack from Mitvol.
Levine said the statement was “absolutely not true.” Gazprombank declined repeated requests for comment on its bid for a stake in Imperial, or on its relationship with the company.
Levine owns 10 percent of Imperial’s shares, while his family, friends and associates own another 2 percent to 5 percent and the rest of the shares are free float.
Imperial’s shares were listed on the main LSE market in May.
Levine said he maintained close ties to individuals at Gazprombank, but declined to elaborate. Gazprombank owned no shares in Imperial, Levine said.
Imperial declined the bid, but “we are working with Gazprombank to identify the possibility of possible cooperation,” Levine said.
The Gazprombank bid signaled a new era in the company’s history. After three short years, having yet to turn a recorded profit while having enriched its shareholders immensely, Imperial Energy appears ready to take a state-run partner.
“The fact that Imperial was even considering that approach shows they would like the backing of someone like Gazprom,” said Wood, of UBS.
Having capitalized on the relative chaos of the region — a large majority of Imperial’s 400 employees once worked for Yukos at Tomskneft, which was sold in a bankruptcy auction this year to Rosneft — Levine appears to understand that the state is supreme in today’s Russia.
“As Imperial grows into a substantial player, it would be natural, appropriate and correct to cooperate and associate with likewise substantial and serious players in the marketplace,” Levine said. He said he expected some sort of deal in the coming year.
Levine has even managed to garner political support for his cause, enlisting the help of British Ambassador Tony Brenton.
“This is a serious British oil company doing serious work in Russia,” Brenton said on the Imperial-organized trip to Tomsk earlier this month. “It’s a very good example of the U.K. and Russia coming together, and I thought it was important to show British government support.”
As for his dealings with Mitvol, Levine said he had put them behind him.
“It’s a closed subject,” Levine said. “We’ve made our views clear as to what was valid of what was said. We want to look forward.”
And look forward they can. The Natural Resources Ministry earlier this month decided to extend six of the company’s exploration licenses. The company has reached its production target of 10,000 barrels of oil per day, and hopes to increase this to 25,000 bpd by the end of 2008 and 35,000 bpd by the end of 2009.
Yet analysts agreed that they did not expect Imperial Energy to remain independent for much longer, and Levine seems fine with that.
The system that Levine has faith in — the rules of the game — says there is still much money to be made, as long as the connections are right both to enter the market and stave off unwanted attacks.
The ultimate rule, it seems, is that the state rules.

TITLE: Rudnov Acquires KP Paper
AUTHOR: By Tai Adelaja and Francesca Mereu
PUBLISHER: Staff Writers
TEXT: MOSCOW — Bank Rossiya co-owner Oleg Rudnov has taken control of Komsomolskaya Pravda, a step seen as concentrating the popular media in the hands of Kremlin loyalists ahead of the presidential election.
Rudnov, a close ally of President Vladimir Putin’s, bought a majority stake in the mass-circulation tabloid from Grigory Beryozkin’s ESN Group, a holding believed to be allied with Russian Railways chief Vladimir Yakunin.
The buyout comes a week after Kommersant reported that a majority stake in another leading pro-Kremlin daily, Izvestia, was being sold by Gazprom-Media to Bank Rossiya’s insurance unit, Sogaz.
“We had a meeting yesterday and we elected the board of directors. We are yet to elect the board chairman, but I’m sure that this will be Rudnov,” Vladimir Sungorkin, editor of KP, the country’s largest-circulation daily, said by telephone Thursday. “This is only a formality.”
Sungorkin said the paper’s editorial policy was unlikely to change. “Everything will stay the way it is,” he said.
Rudnov heads The Baltic Media Group, a holding that includes regional newspapers, a radio station and television channel in St. Petersburg. His main interests are in Bank Rossiya, which he owns jointly with business partner Yury Kovalchuk, who is also a Putin ally.
Kovaluchuk’s brother Mikhail, the director of the Kurchatov Institute, is head of the State Nanotechnology Corporation. Yury Kovalchuk also has media assets, including a controlling stake in Ren-TV and a 35 percent stake in the St. Petersburg TV and Radio Company. “It would have been impossible for a paper that loves Putin so much to end up in the hands of someone who didn’t love him,” said Oleg Panfilov, head of the Center for Journalism in Extreme Situations. “The Kremlin never would have allowed a paper with such a circulation to be bought by someone who was not loyal.”
In July, the ESN Group increased its share of KP, buying a 25.05 percent stake from Norway’s A-pressen, Interfax reported. Representatives of ESN Group could not be reached for comment. Last year, Gazprom-Media held a series of talks with Prof-Media, KP’s previous owner, fueling speculation of a buyout.
But after months of intensive negotiations, Gazprom’s representatives said they were negotiating on behalf of the ESN Group. ESN has close ties with Yakunin, who is also a longtime ally of Putin’s, RBK Daily reported in January.
Yevgeny Kiselyov, a political talk show host on Ekho Moskvy radio, linked the decision to sell the paper with the aftermath of the realignment of forces in the presidential race.
“People like Yakunin have bought media to use them as a tool during a potential presidential campaign,” Kiselyov said.

TITLE: The Gazprom Dog-and-Pony Show
AUTHOR: By Roman Kupchinsky
TEXT: It is futile to attempt to sell an idea or to prepare the ground for a product that is basically unsound,” wrote Edward Bernays, the father of public relations, in his 1928 book “Propaganda.” 
Despite these words of caution, a number of Western PR companies have taken on the daunting task of trying to not only sell a new image of Gazprom to policy and opinion makers in the West but, more important, to help Gazprom get listed on the New York Stock Exchange. 
The current effort includes hiring the PR firms Ketchum and GPlus, which were brought on to boost the country’s image when it hosted the Group of Eight summit in 2006. Gazprom is also being advised by Gavin Anderson, a British PR firm. All three companies belong to Omnicom, a U.S. communications holding company.
News of Gazprom’s intent to list on the NYSE came in the spring of 2006 during a visit to the exchange by Finance Minister Alexei Kudrin. NYSE Group president Catherine Kinney said at the time: “The NYSE is proud of our partnership with Russia and our growing list of Russian listed companies. We look forward to expanding our relationship with Russia.” 
Unlike the London Stock Exchange, however, the NYSE has much stricter rules on transparency and governance, two areas that could easily disqualify Gazprom’s bid. Gazprom management chose to conduct a public relations campaign, hoping that this would be an easy, painless alternative to the serious reforms that need to be instituted to fundamentally change the way the company operates internally and externally. 
In early December, Alexander Medvedev — the deputy chairman of Gazprom, the head of Gazprom Export and a member of the board of RosUkrEnergo, a joint company between Gazprom and two Ukrainian businessmen that buys Central Asian gas from Gazprom to resell to Ukraine — was dispatched to the United States to help the campaign pick up steam. 
In New York, he met with NYSE officials and reassured them that he represented the new, transparent Gazprom — a Gazprom with a human face. 
From New York, Medvedev went to Washington, where he held a panel discussion organized by the Center for Eurasian, Russian and East European Studies at Georgetown University.
The discussion turned out to be nothing more than a cheerleading rally full of unabashed praise for Gazprom by U.S. academics, businessmen and a former director of Yukos. Gazprom, they claimed, was not only sincere and honest in its intentions, but it was as transparent as a shot glass of chilled vodka. 
European concerns about energy security were ridiculed by the U.S. panelists, and anyone slightly critical of Gazprom was dubbed an unrepentant Cold Warrior. 
Medvedev was asked about the dealings of RosUkrEnergo and whether it was common practice for Gazprom to enter into a multibillion-dollar business partnership with individuals whose identities it didn’t know. He coolly responded that the company was created at Ukraine’s insistence and that Gazprom was forced to accept the deal. But it takes two to tango, and many in the audience did not quite believe that Ukraine was in any position to dictate terms to Gazprom. 
Medvedev also said he would prefer to deal directly with Ukrainian customers and not through a middleman, who should be eliminated. Two days later, a new gas agreement was signed between Ukraine and Gazprom, and RosUkrEnergo remained as the middleman. As a result of the agreement, Medvedev’s Gazprom Export will continue to earn commissions of about $50 million a year from the opaque scheme.
The Gazprom cheerleading show was repeated with some variations a week later at Columbia University, where former German Chancellor Gerhard Schröder took to the podium to lobby for Russia and Gazprom, his current employer. 
As the shrillness of the sales pitch grew, President Vladimir Putin added muscle to the effort by announcing that his heir would be Dmitry Medvedev, Gazprom’s chairman.
By naming Dmitry Medvedev as his preferred presidential candidate, Putin did his share to help promote the listing of his favorite company on the NYSE. Dmitry Medvedev, after all, is perceived by many influential people in Washington, New York and London as a “Westerner.” This is strangely reminiscent of the opinion held by many in Washington that Yury Andropov, the former KGB chief, qualified as a “liberal” because he enjoyed jazz and drank single malt Scotch whiskey.
The projected public image of Dmitry Medvedev could well be a legend crafted by the Kremlin’s image-makers to inspire confidence in a man who will most likely be the next president. He is, we are led to believe, a man dedicated to free enterprise and the rule of law, someone who will not confront the West — unlike many of his less-enlightened comrades in the Kremlin. 
Only time will tell whether this is an accurate profile of the man or whether it is merely a ploy to play on the wishful thinking of Western politicians starved for good news from Russia. 
The subtle PR message being offered to the West is that Medvedev, a cultured, soft-spoken lawyer, would never allow Gazprom to become a poorly managed, corrupt or opaque company. Thus, all the loose talk about the murky nature of Gazprom is pure conjecture and libelous accusations spread by its enemies. Therefore, the company must be allowed to list on the NYSE.
It remains to be seen whether the new president of Russia, whoever that might be, will insist that this PR campaign be matched by a move toward greater openness and responsible practices in Gazprom. It is also unclear whether the Kremlin and Gazprom will stop using gas as a tool of foreign policy.

Roman Kupchinsky is an analyst for Radio Free Europe/Radio Liberty in Washington.

TITLE: Steady Flight Requires A Good Pilot
AUTHOR: By Konstantin Sonin
TEXT: Whenever a Russian economist says he teaches “the problems of economic security,” other professional economists have treated this in a contemptuous manner. Thirty years ago, this type of job, which requires no real effort, would have been called “the methodology of teaching the fundamentals of Marxism-Leninism.” In contrast with Marxism-Leninism, however, economic security is a serious subject that needs to be addressed. I am not talking about simply calculating the share of foreign ownership in Russian mining companies; that is precisely what many economic analysts do in government organizations.
Strong and stable economic institutions give nations the ability to survive periods of turbulence and avoid catastrophic consequences. This is the key to providing economic security to a nation.
In all likelihood, we are now heading toward a period of high global inflation. This is a serious problem for any national leader. Solutions such as indexing pensions to the rate of inflation might make sense for political reasons, but they do not make sense from an economic point of view. The actual outcome will depend on how independent the Central Bank’s monetary policies will be — that is, it will depend on the strength of institutions.
Similarly, real economic security is achieved when the Central Bank is independent enough to strengthen the ruble whenever the situation demands it, even if it means that exporters will suffer additional hardships as a result. It also depends on whether the finance minister feels secure enough to avoid feeding off the national budget and stabilization fund.
It also requires a State Duma that can respond quickly if the inability of borrowers to pay back their consumer loans spins out of control. The fact that Russian banks charge high interest rates these days and have just learned the techniques of beating money out of individual defaulters here and there in no way means that they will be able to deal with an nationwide insolvency crisis.
Or take another critically important question — whether state regulators have a clear picture of what is happening within major banks. For example, do they know who owns a significant share of Gazprombank, which ranks second in assets among all Russian banks? These types of issues may be unimportant during times of economic growth under a popular president with whom the bank’s owners have close ties, according to media reports. But the fact that the bank’s success is so dependent on the president could prove to be a catalyst for crisis if the president’s ratings falter, in which case depositors and insiders could end up stepping over each other in a race to pull their money out of the bank.
In the meantime, economic turbulence is intensifying. It is unclear just how much the flow of money into new markets — Russia included — represents real growth opportunities, or how much of it is simply “flight from the dollar.” The Chinese stock market bubble is expected to burst soon with unknown consequences for the global demand for oil.
This does not necessarily mean that an economic catastrophe is imminent. Occasional turbulence is a normal economic occurrence. For Russia, the real question is: Amidst all of this turbulence, what is happening in the captain’s cabin? As it seems now, the pilot and chief steward eagerly offer each other the pilot’s spot. But, so far, the flight is on course.

Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.

TITLE: A Striking Lesson
AUTHOR: By Boris Kagarlitsky
TEXT: The strike at the Ford factory in Vsevolozhsk, located right outside St. Petersburg, ended on Dec. 14. It was the longest and most intense standoff in post-Soviet times. The strike began on Nov. 20 and continued for three weeks. According to union activists, the plant’s conveyors came to a full stop. Then management threw together one shift mainly composed of office workers and, toward the end of the strike, a second shift to keep the assembly line running. But the quality control department continued its strike, which means that cars produced in early December might not meet all of the technical standards.
During the strike, only a small number of cars came off the assembly line, and the company can expect to be counting its losses for a long time to come. The striking workers, for their part, are now morally and physically exhausted after fighting a long battle against management. The labor union’s strike fund was unprepared for such a protracted battle, OMON police forces harassed the picketers and the strike’s organizers were threatened with prosecution.
In the end, a general meeting of striking Ford workers voted in a secret ballot to halt the protest, and the company’s administration promised to raise their wages. Both sides signed an agreement prohibiting punitive actions against the strike’s participants.
The union and the company promise to settle all matters of dispute by Feb. 1. Union leader Alexei Etmanov said the Ford administration was already prepared to index salaries to keep pace with inflation and to provide additional pay for extra work and for length of service in the company. Etmanov characterized all of this as a victory, saying: “This strike turned out to be the most protracted in the past 10 years. I think the administration should agree to concessions. They would hardly want to see a new strike in the spring.”
The union achieved much less than expected, however. In addition to the concessions obtained, workers had demanded a 30 percent wage increase, higher pensions and changes to the work schedule and the number of work hours per day.
It would appear that the confrontation ended in a draw. The management failed to break the union, and the striking workers walked away with only modest results, especially considering the tremendous effort and stress they went through to get what they wanted.
The conflict at the Ford factory took on significance far beyond the organization itself and even beyond the auto manufacturing industry in Russia. The media from all over the country covered the story extensively. This was the country’s first open-ended strike since the new Labor Code came into force several years ago. It was also the first strike that the authorities did not squash and in which its participants obtained a guarantee that they would not be subjected to reprisals. The strike once again demonstrated that the laws work against labor unions, but it also showed that strong workers’ organizations can find ways to get around many of those restrictions.
Finally, the Ford conflict forced many people to acknowledge that factory workers are shamefully underpaid in Russia — not only in comparison to Western Europe, but also with respect to analogous car plants in Latin American countries.
Ultimately, the fundamental issues in this strike concern not only Ford workers and managers, but all of society. Although the Ford factory is working again and things seem to be back to normal, we must all draw these important conclusions from this strike and understand that serious labor problems still remain in the country. The first stone has been thrown into the water, and the waves will continue rippling outward for a very long time.

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

TITLE: The Power Paralysis
AUTHOR: By Lilia Shevtsova
TEXT: Those watching President Vladimir Putin on television could not fail to see a change in his mood. After he decided on his partnership with First Deputy Prime Minister Dmitry Medvedev, he started to look like a different person. He is very much at ease — as if a huge burden has been taken off his back. Last week, he was joking at the State Council meeting, and he curtly put the Time magazine journalists in their place during an interview at his Novo-Ogaryovo residence. His body language shows that he is enjoying his position of power immensely.
Putin has good reason to be satisfied. He has solved the most important conundrum of how to leave office and stay in power at the same time: by staying on as the prime minister. Ironically, the survival and continuity of the current Kremlin leadership could undermine the system it created. Trying to retain the status quo, it has become trapped in what British historian Arnold Toynbee defined as “suicidal statecraft.”
There are three possible scenarios. Scenario No. 1: Putin acts as Medvedev’s guardian by saving him from the warring clans. After Medvedev wins the election, Putin rejects his offer to become prime minister. In this case, the inevitable happens: Medvedev will be forced to follow the traditional pattern of succession, according to which a new president rejects the previous political regime, which is exactly what Putin did vis-a-vis BorisYeltsin. This would mean that Medvedev would have to build his own basis of support, and he would also have to reject the symbols of Putinism, including its architect. Medvedev may run out of oil luck and will face the problems that Putin and his ministers put on the back burner — an undiversified economy, social disparities, demographic drama, a spillover of instability from the North Caucasus, corruption and a rising tide of nationalism. The new president will be forced to reject the Putin status quo and either start reforms or consolidate his rule by making his predecessor a scapegoat.
Scenario No. 2, which is the most plausible: A Medvedev-Putin tandem will be created as a junior-senior partnership. Even if Putin, as prime minister, has to do the dreary, thankless work of overseeing road and housing projects as well as answering for people’s salaries, he will still be viewed as the center of power. If the Kremlin shifts the center of gravity to the prime minister role, it would undermine the presidency, which is the only viable institution in Russia. In the end, this leaves both society and the political class baffled about whom to obey. It also provokes sharp and bitter divisions among the elite and infighting between the president and prime minister. This would ultimately lead to a paralysis of power.
The Kremlin propagandists argue that Putin will start to transfer his power to Medvedev as soon as the young protege matures. But why on earth would Putin want to do this? Those who solidify their grip on power never let it go. How will Medvedev be able to mature as president when his senior partner is the person running the show? No one has a clue about how the diarchy will function. We may assume that Putin’s people will be in place, but the subordination mechanism that he instituted will be fundamentally disrupted. Moreover, the Russia’s political system is built around its leader, and Putin intends to play the role of the national leader when he leaves the Kremlin. This would contradict tradition and the Constitution. This attempt to secure Putin’s continuity may lead to instability, crisis or even a coup d’etat.
Scenario No. 3: Putin and Medvedev work as a united team and succeed in retaining the status quo based on high oil prices, lack of alternatives and persistent comparisons to the terrible chaos of the Yeltsin period. But Putin, in the role of the prime minister, will undermine stability if he continues to do what he has started to do in December — make populist promises and raise salaries. The government has shown throughout 2007 that it is incapable of controlling the country’s high inflation rate, and if Putin makes a bad situation even worse by raising salaries and other government spending, inflation could easily spin out of control. Moreover, in order to ensure continuity, the huge state-controlled corporations — Gazprom, Rosneft, Rosobonexport and Rosatom — would have to be strengthened even further in an effort to beef up the Kremlin’s power base. But in the end, this could actually weaken and decentralize the government by shifting the center of power to the business groups who control these behemoths. And this raises the question: Will Putin and Medvedev be presiding over nothing more than a shell?
The moment of truth for Russia will come at the end of the current political cycle — when Putin has to leave the Kremlin. Today, the political elite are not ready to follow the Belarussian or Kazakh examples by rejecting the principle of leadership rotation. But at the same time, the elite do not want to leave the scene because they fear that their assets will be redistributed. So far they have been reasonably successful in creating the illusion that there will be a genuine transfer of power in accordance with the Constitution. At the same time, the Kremlin elite believe that they can preserve power behind the scenes by simply changing hats. Today, Medvedev puts on the hat of the president, but soon it will be Putin again.
But the hope that this shell game will guarantee stability could fail miserably. By rejecting political alternatives, the Kremlin is fooling itself into believing that it can extinguish the opposition. It may be able to silence dissent for a certain time by stuffing it into a bottle, but the people’s dissatisfaction will only intensify to the point where it could easily boil over and explode. Thus, in the quest for stability, the Kremlin is creating a situation where stability is less certain than ever before.
In this way, the Russian elite may be planting the seeds of their own destruction.

Lilia Shevtsova is a senior associate at the Carnegie Moscow Center.

TITLE: Fathers and Sons
AUTHOR: By Richard Lourie
TEXT: Two questions hung over Russia: Whom would President Vladimir Putin appoint as his successor? What role would Putin play in that successor’s government? We now know the answer to the first, and, to some extent, to the second. But these answers generate as many new questions as they put old ones to rest.
First Deputy Prime Minister Dmitry Medvedev may be no more than the face Putin wants on “post-Putin” Russia, but it’s an interesting choice in itself: young, business-oriented, with a background in the intelligentsia, not intelligence. As a West-appeasing choice, the slightly Clintonesque Medvedev — rock-loving, boyish, unsteady — was a smart move.
As a signal in domestic politics, the choice of Medvedev is less easy to read. Was this a signal to the siloviki to cease their internecine warfare or risk getting cut out of the game? Or perhaps he decided that it was impolitic to have too many ex-KGB people out in front — better to have Medvedev serve as an amiable frontman while the same crowd maintains control in back.
Medvedev was also chosen because he was controllable. Though he and Putin are both from Leningrad, their backgrounds couldn’t be more different. Medvedev was an academic and the only child of academics. Putin grew up in a slum battling rats for fun when not watching KGB thriller movies and dreaming of espionage glory. There’s no question who’ll be calling the shots.
People in the know describe the relationship of Putin and Medvedev as that of father and son. It was Putin who brought Medvedev up from local St. Petersburg government to the heights of power — head of Gazprom and first deputy prime minister. In fact, Medvedev’s willingness to accept United Russia’s selection as its candidate for president is the ultimate sign of loyalty to Putin.
But can he? Power not only corrupts, it awakens latent talents unsuspected by others and by the person himself. That shouldn’t be too much of a problem with Medvedev, who has no power base, although presidents can acquire those fast enough. Medvedev should be worried about Putin. Even if Medvedev is only a figurehead, he will still be the one who will attend certain high occasions of state. His office will be in the Kremlin, Prime Minister Putin’s will be in the White House. How much does Putin need the trappings and glory, and how much will he content himself with the satisfaction of power itself? His KGB background shaped him for the latter, but his eight years on the world stage could have offset that.
A lot of Russian history is about fathers and sons. The revolutionaries were rising up against the paternalistic tsar as much as tsarism. Dostoevsky’s classic novel “The Brothers Karamazov” centers on the slaying of the father. Consumed by suspicion, Russian leaders like Ivan the Terrible, Peter the Great and Josef Stalin sent their own sons to their deaths. So, to describe the Putin-Medvedev relationship as father-son is not necessarily touchy-feely.
The personal elements of trust and loyalty will matter because Putin has stated that he does not want to fiddle with the Constitution. If his intention is to return to the presidency during Medvedev’s term or immediately after, Putin would not want to formally shift too much executive power to the prime minister only to have to shift it back. But if his plan is to remain for a long time as prime minister, then he will no doubt want much of the presidential power shifted to him on an informal basis — a situation whose inevitable ambiguities can lead to all sorts of misunderstanding.
Medvedev is on record as favoring a strong presidency and is known as one of those mild-mannered intelligentsia types who can become intractable when points of principle are concerned. And it is around that point where the father-son drama could play out.

Richard Lourie is the author of “A Hatred for Tulips” and “Sakharov: A Biography.”

TITLE: With Its Foot in the Door, Russia Needs to Act
AUTHOR: By Fyodor Lukyanov
TEXT: The entire issue of who will succeed President Vladimir Putin is a fascinating story, and its possible plot twists will no doubt provide even more entertainment for the remaining months leading up to March. Unfortunately, the political drama has become more important than the serious issues facing the country, which should be a central part of the presidential campaign.
On the other hand, the profile of the future president and his political and economic agenda is a very important issue. It represents the culmination of the transitional period that began with the collapse of the Soviet Union in 1991. By the end of the next president’s term in 2012, the general outline of Russia’s future role in the world will be apparent.
It is clear in retrospect that the first two presidents pursued foreign policy agendas that achieved different goals.
If you put aside the meaningless arguments over who “lost” the Soviet Union and look at Boris Yeltsin’s presidency in the context of establishing a new country, it is obvious that his main task was to preserve Russia’s role as a major player on the world stage and to retain at least something of its Soviet geopolitical legacy.
And at the opening of the 21st century, Moscow has remained an important world capitals with a unique view on the evolving global order. Although Yeltsin lacked the strength to push that vision forward, evaluating the legacy of his presidency requires a more objective analysis than the caricatures and banal comments that we often hear about him.
On this backdrop, Putin set about the task of re-establishing Russia’s status as a superpower— one that can play a role in determining the rules of the global geopolitical game. Overall, he succeeded. Russia is now a global leader whose interests and views are taken into account by other nations.
But the next president will face a difficult challenge. Having returned to the superpower club, Russia must first define its function in this arena and, second, it needs to convert its abstract influence into concrete geopolitical and economic dividends. Achieving these tasks will require substantial effort.
During the last year of his presidency, Putin’s strategy of waging a diplomatic frontal assault has had a significant impact on the country’s relations with the West. His hard line changed the West’s attitude toward Moscow: The United States and its European allies could no longer afford to treat Russia with indifference. But after gaining the West’s attention and putting its foot in the door of its arrogant neighbors, Moscow found itself at a loss as to what it wanted to say. It lacked a well-defined and logical set of ideas and desires.
It is time to move away from the practice of denouncing various imperfections in the world order and toward making constructive, substantive suggestions. Strategic vision and solutions to problems are needed, not empty rhetoric. For example, if Russia is dissatisfied with the Ahtisaari plan for Kosovo, it should present a detailed alternative for resolving the conflict. Propagandistic retorts are not constructive. Moscow’s current tactic of engaging in endless negotiations is a losing strategy because it is not putting any concrete proposals on the table.
In addition, Russia’s persistent statements advocating a new, multipolar world order, which it first voiced two years ago, have now become a banality. These appeals are even counterproductive since they focus attention on an empty discussion of Russia as an “independent center of global power.”
If you take a sober, balanced look at Russia’s real potential, it is doubtful that the country is able to be a power center all by itself, but this says nothing about the country’s future course. There is an even greater need for Moscow to develop a clear-cut system of principles, priorities, mutual relations and alliances in this multipolar — and thus less stable — world. Instead of engaging in developing such a vision, it seems that Moscow cannot stop rejoicing over the failure of the United States’ efforts to spread its influence around the world.
In the meantime, a much more urgent problem looms for Russia over the next five to seven years — its inability to maintain political parity with China’s increasing global influence. The prospect of becoming Beijing’s junior partner might make the multipolar paradigm seem far less attractive to Moscow.
Russia’s ability to achieve its goals remains a critical concern. Putin’s style reflects his attempt to reaffirm the country’s status after a decade of political and economic crises. But self-affirmation cannot be a goal in itself, especially since this aggressive behavior has a impact on Moscow’s partners for a limited time only; Moscow’s partners soon become accustomed to this firm stance, and they even find ways to work to turn Putin’s toughness to its own advantage. Measuring a country’s foreign policy effectiveness by the level of influence it exerts — in this case mostly negative — is to reduce an superpower to the level of a petty nation.
It is common for Russian officials familiar with international relations to take pride in Putin’s “intellectual superiority” over his foreign colleagues. There is no doubt that Putin stands a head above most of his partners in his ability to answer any question with a wide range of facts and to discuss specific topics in depth. True, it turns out that other heads of state don’t necessarily need to memorize the capacity of a particular gas pipeline or the specific articles of a country’s investment laws. Their job is to promote a general political strategy, and this requires not so much a genius IQ as it does a certain intuitive sense acquired through political experience. Only after the agreements are reached and projects set in motion is there a need for highly qualified and ambitious bureaucrats to step in and finish things up.
Carrying things through to their proper conclusion is obviously more difficult to accomplish for various reasons — either for lack of qualified personnel or due to psychological factors. This is why it is necessary to stress the impact that Russia’s policies have on its foreign partners. And this results in a paradox: The public does not take pride in finding advantageous solutions to international problems, but rather in striking blows to relations with foreign states, interpreting each hit as a show of Moscow’s growing strength. Moreover, this kind of thinking is characteristic of our ardent “professional patriots,” whose numbers have been increasing exponentially the last few years.
Russia’s foreign policy priorities should become the subject of serious and broad discussion. If we make a shallow or incorrect analysis, this could lead to damaging consequences. Substituting discussion with demagoguery and propaganda — whether pro- or anti-Kremlin — is outright dangerous.

Fyodor Lukyanov is editor of Russia in Global Affairs.

TITLE: Russians Welcome Seasonal Trees
PUBLISHER: Agence France Presse
TEXT: MOSCOW — Valentina Zhigulina sounds less than festive as she displays her stack of Christmas trees at a central Moscow bazaar.
“They’re rather prickly,” she warns.
And not just prickly: the typical, khaki-colored Russian Christmas tree is spindly, sheds needles in a hurry, and appears to have been battered in a Siberian storm.
As Yelena, a Moscow city employee shopping under a light snowfall, said: “These trees look empty however much decorations you hang on them.”
Russia, the country with the world’s biggest spread of forests, including half of the planet’s coniferous stocks, is a strangely difficult place to get a decent Christmas tree.
And the reason, say economists and ecology experts, goes to the root of the messy way that business is done here 16 years after Soviet communism collapsed.
On the face of things, Russians should have plenty of choice when picking what they call the New Year’s yolka.
Russia has 80 million cubic meters of timber reserves, four times the amount in the United States, according to Izvestia daily. Although the Communists banned Christmas in 1917, they later allowed trees to be used in celebrating Dec. 31 and the custom remains extremely popular.
However, at any of the thousands of mini-bazaars that spring up in December shoppers are confronted either by a sickly homegrown effort, or a luxurious and wildly priced Danish import.
As Zhigulina conceded, the Danish version “is better and it lasts longer, while the Russian one falls apart. The Danish one’s also got softer needles, which means it won’t hurt children, who are the ones you’re really buying for.”
But where a two-meter Russian yolka costs about 1,250 rubles ($50), its deep-green, healthy looking European rival costs 4,900 rubles ($200).
Experts say that gap in quality and price reflects the difficult climate for small and medium business investment.
Denis Doren, director of the tree firm Yolky, said imported trees “are grown by specialists in high-tech nurseries. Here, there are no real nurseries - it’s all half-wild. They’re just grown without care, then chopped down.”
Economist Mikhail Delyagin said that setting up a decent tree farm in Russia is simply too complicated, since it demands heavy initial investment, and years of growing time. “A small business can’t think that far ahead because of political uncertainty.”
Besides, if a farmer opts for the higher end of the market, he’ll only end up more exposed to corruption, which is rife in Russia and particularly notorious in the forestry sector, where the likely next president, Dmitry Medvedev, worked in the 1990s.
“Grow a beautiful tree and it will cost you a lot. After that, you will have to pay [bribes] left and right,” Delyagin said. “It’s easier just to get any old plot and grow something worse.”
Those plots, says Ivan Yakubov, editor of Russian Forestry magazine, are often “wasteland, or located under high-voltage electricity lines.”

TITLE: Moldovan Mayor Wins Tree Battle in Chisinau
PUBLISHER: Reuters
TEXT: CHISINAU — The mayor of Moldova’s capital Chisinau, who backs closer ties with neighboring Romania, has scored a symbolic victory over the ex-Soviet state’s communist president in a duel focusing on rival Christmas trees.
Municipal staff on Thursday decorated the city’s tree by the town hall, but the operation was not as easy as it seemed. It had initially been erected near the government offices only to be removed overnight to make way for the government’s own tree.
“We have been putting up a Christmas tree for 12 years, but this is the first time I have seen such a mess. And such a fight over where to put it,” said Eugenia Bondarenco, who works for the city firm that supplied its tree.
Moldova and Romania broadly share a common history and language but are locked in a row over borders and national identity, with President Vladimir Voronin furious at Bucharest’s suggestions that his people are merely ethnic Romanians.
And though both countries are predominantly Orthodox Christian, Romania’s independent church marks Christmas on Dec. 25, while Moldova’s, part of Russia’s Orthodox Church, follows the old Julian calendar and celebrates on Jan. 7.
Admiring one or the other of the firs, and at which point in the festive season, clearly betrays one’s political convictions.
“We want to take a step forward to Europe,” said Chisinau’s Romanian-educated mayor Dorin Chirtoaca, 29.
Chirtoaca had the tree erected by government headquarters on Dec. 9, but municipal workers sealed off the area with metal barricades and took the tree to a park. It was later allowed to stand by the town hall, 300 meters [yard] from the government building.
The government tree has yet to be erected in keeping with the Russian tradition of waiting for the run-up to the New Year.
The mayor uses every occasion to expand ties with Bucharest. Two days after his election he met Romanian President Traian Basescu, who this week called Moldova a “sea of Romanians” and offers its people fast-track citizenship.
Voronin, the only communist leader of an ex-Soviet state, accuses Romania of “permanent aggression” against his much smaller state, which also has longstanding links to Russia.

TITLE: Queen Launches YouTube Site
PUBLISHER: The Associated Press
TEXT: LONDON — Britain’s 81-year-old Queen Elizabeth II, considered an icon of traditionalism, launched her own special Royal Channel on YouTube on Sunday.
The queen will use the popular video-sharing web site to send out her 50th annual televised Christmas message, which she first delivered live to the nation and its colonies on Dec. 25, 1957.
Buckingham Palace also began posting archive and recent footage of the queen and other royals on the channel Sunday, with plans to add new clips regularly.
YouTube, which allows anyone to upload and share video clips, was founded in 2005 and bought by Google last year.
“The queen always keeps abreast with new ways of communicating with people,” Buckingham Palace said in a statement. “The Christmas message was podcast last year.”
The palace said, “She has always been aware of reaching more people and adapting the communication to suit. This will make the Christmas message more accessible to younger people and those in other countries.”
The royal page, which bears the scarlet lettered heading “The Royal Channel — The Official Channel of the British Monarchy,” is illustrated with a photograph of Buckingham Palace flanked by the queen’s Guards in their tall bearskin hats and red tunics.
Its modern video clips show shots of garden parties, state visits, the queen,  and a day in the life of her son, Prince Charles.

TITLE: Bethlehem, Scarred by Conflict, Celebrates Christmas With Renewed Hope
AUTHOR: By Dalia Nammari
PUBLISHER: The Associated Press
TEXT: BETHLEHEM, West Bank — Gloom was banished from Christmas celebrations in Bethlehem for the first time in years on Monday as Christian pilgrims from all over the world flocked here to celebrate Jesus’ birth in an atmosphere of renewed tranquility.
After Israeli-Palestinian fighting erupted in 2000, most of the people milling around Manger Square in the center of this biblical town on Christmas had been local Palestinians. But this year there were large numbers of tourists from all over the world, back after avoiding the region’s strife.
Tiago Martins, 28, from Curitiba, Brazil, said he was excited about visiting. New peace talks between Israelis and Palestinians reassured him that there was no threat to his safety, he said, before crossing from Jerusalem to Bethlehem.
“The idea that it’s a Christian city makes me more calm, and I think going to the West Bank is more comfortable since Annapolis,” Martins said, referring to the Israeli-Palestinian peace conference held in the U.S. last month.
Bethlehem Mayor Victor Batarseh predicted earlier this month that the lull in violence would help to bring about 65,000 tourists to visit to visit the traditional site of Jesus’ birth this Christmas — four times the number who trickled into town for Christmas in 2005.
Still, unmistakable signs of the conflict that has killed more than 4,400 Palestinians and 1,100 Israelis in just the past seven years made it clear that peace was not yet at hand.
Gray concrete walls measuring about 25 feet high enclose Bethlehem on three sides — part of the separation barrier that Israel says it’s building to keep out attackers from the West Bank. Palestinians allege that the complex of concrete slabs and electronic fence, which dips into parts of the West Bank, is a thinly veiled land grab.
Latin Patriarch Michel Sabbah, the Roman Catholic Church’s highest official in the Holy Land, could only reach Bethlehem after passing through a massive steel gate in the barrier. An escort of Israeli mounted policemen led Sabbah, in his flowing gold and burgundy robe, up to the gate, where border policemen waited to clang it shut behind him.
Last week, Sabbah waded into the charged debate over Israel’s Jewish character by alleging that Israel’s identity as a Jewish state discriminates against non-Jews.
“If there’s a state of one religion, other religions are naturally discriminated against,” Sabbah — the first Palestinian to hold the position — told reporters at his annual pre-Christmas press conference. Israel rejected his claim that people of other faiths do not enjoy equal rights.
According to the Jerusalem Center for Jewish-Christian Relations, there are an estimated 170,000 Christians in Israel, the West Bank and the Gaza Strip.
In the Gaza Strip, the mood was much more somber than in Bethlehem. Festivities in the poverty-stricken territory’s tiny Christian community of 3,000 were decidedly muted.
For decades, Christmas had been marked by an enormous, lavishly decorated tree in Gaza City’s main square, colored lights strung across the plaza and Christmas carols ringing out from loudspeakers.

TITLE: Western Celebs Take Corporate Meal Ticket
AUTHOR: By Kevin O’Flynn
PUBLISHER: Staff Writer
TEXT: MOSCOW — When the guest arrived at a construction company’s corporate party last year at an unfinished skyscraper at the Moskva-City complex, he was greeted by the sight of 25 beautiful women seated in 25 bathtubs.
A party organizer sidled up to him: “Four or five hundred euros and you can do anything you want.”
The season of corporate holiday parties is in full swing, and companies flush with cash are spending up to $2 million on holiday bashes and reaching for newer technology, increasingly outlandish ideas and bigger imported stars each year.
“The days of Ivan falling face first into the salad olivye are long gone,” said Svetlana Churilova, head of Alef Trading, which organizes New Year’s parties for many of the country’s best-known companies.
There is, after all, much more to a corporate party these days than naked flesh — even if certain construction companies might disagree. If you’re lucky, you may be sitting next to George Clooney or Bruce Willis at your company party.
“Budgets have increased greatly,” said Sergei Knyazev, whose company, Knyazev Productions, arranges corporate parties.
The average cost of corporate parties ranges from $200,000 to $2 million, said Churilova, who has organized events for MegaFon, TNK-BP and Aeroflot.
“Companies skimp on health benefits, toilet paper and coffee creamer for an entire year for the ultimate holiday blow-out,” nightlife blogger Moscow Doesn’t Believe in Tears, or MDBIT, said in an e-mail interview. She declined to give her real name because she said a corporation owns her and could easily withhold her lunchtime blogging privileges.
Companies start organizing parties up to seven months before the event, Churilova said.
“A few years ago it was a mixed program of entertainment, and then we would finish with striptease,” Churilova said, adding that theme parties were the current rage. One company had its entire staff dress up as characters from the Luc Besson film “The Fifth Element” in a club decorated with aliens.
Clubs with brutally strict face control, such as Diaghilev, Rai and Opera, are some of the most sought-after venues for corporate parties, but each year companies hunt for novelty to sate their world-weary employees.
One popular new venue is that same unfinished skyscraper — the Federation Tower at the Moskva-City complex — where the construction company party featured women in bathtubs.
Health and safety regulations will go out the window when one large corporation holds a party on the unfinished building’s top three stories, with the film Sin City as a theme. Another corporate party there will see a Ded Moroz parachute from the top of one of the nearby towers onto the Federation Tower.
“Initially the idea was for him to jump from a helicopter,” Knyazev said.
Minutes after the Ded Moroz landing, the beautiful snow maiden Snegurochka will abseil down the side of the building and knock on the window asking to be let in.
The stunt artists will then be stealthily replaced by the real — as in actors — Ded Moroz and Snegurochka.
Innovations aside, naked women aren’t going away any time soon, Knyazev said. A couple of years ago, bankers, of all people, looked down on strip shows, he said. Now they ask for naked women — but with a twist.
“They want a special artistic level,” Knyazev said, adding that a new wave of strippers has appeared.
“If striptease before was for a girl who did not have an education, now it is female athletes, gymnasts and circus artists who go into stripping,” said Knyazev, who once ran a strip club on Prospekt Mira.
But strip shows can have serious consequences at corporate parties.
When a male strip show at one party was interrupted by a young woman who climbed on stage and began artfully removing her clothes, most in attendance thought it was part of the act. Alas, the young woman was actually an employee and subsequently sacked, Churilova said.
The entertainment at parties depends much on the whims of the management, which explains the popularity of 1980s Western groups, such as Boney M, that will be playing at parties throughout the city. Most senior executives are in their 40s and their 50s, and this is the music from their formative years, Churilova said.
Companies are also willing to pay top dollar to bring a famous face to a party. George Clooney, despite resisting for a long time, eventually succumbed to the lure of the ruble and made an appearance at one party, said one celebrity booker, who declined to give his name. All Clooney did was sit at the main table with the CEO, he said.
“They don’t do much more besides smile confusedly and pose for photo ops,” the nightlife blogger, MDBIT, said in e-mailed comments.
Cameron Diaz hosted a company awards ceremony earlier this year, and if negotiations go well, Bruce Willis will be doing a lot of nothing at a company event this year too.
“Remember Gwyneth Paltrow? Academy Award-winning actress Gwyneth Paltrow? Martini paid to have her in a cage at one of its parties” MDBIT wrote. “If Moscow history has taught us anything, it’s that anyone can be bought.”
Technically Paltrow stood in a box, according to Sunday Times writer A.A. Gill, who went to the party last January.
Paltrow and British television presenter Jeremy Clarkson met at the Martini party “blinking in the continuous flash like a pair of giant pandas brought together in a distant foreign zoo,” Gill wrote.
It is a different story at the New Year’s parties of the country’s ultra rich, who are willing to pay millions to have international celebrities play for them, according to celebrity bookers who said they are not allowed to speak on the record.
The stars try to keep their arrival and departure secret, but tabloids have captured the arrival of Robbie Williams, Shakira and Christina Aguilera, among others, for private parties in recent years.
Williams is set to come soon, said one party organizer, and there are rumors that Robert De Niro may make a trip. Last year, George Michael played at oligarch Vladimir Potanin’s New Year’s bash for a reported $3.3 million, British media reported. Britney Spears is said to be the desired star for this year’s party, Knyazev said.
“The presence of a celebrity validates the affair under the principle that if you throw enough money at something, it becomes truth,” MDBIT wrote. “Also, it’s a middle finger to the rest of civilization: ‘We OWN you, bitches!’“
But merely thrown cash at a party doesn’t mean you know how to throw one.
It’s not uncommon for bosses to make 20-minute speeches one after the other while the staff waits painfully for the food and drinks, Churilova said.
One French company deeply underestimated the determination of its employees to get drunk, she recalled.
Determined to keep things civilized, the company served only nonalcoholic drinks at the holiday party. But unbeknownst to the management, gossip had already spread that the event would be dry, and the company’s 500 stevedores managed to sneak in some booze.
Less than an hour after the party started, the stevedores began throwing office equipment down the stairwell.

TITLE: Thai Parties Wrangle After Close Election
PUBLISHER: Reuters
TEXT: BANGKOK — Thailand’s political parties got down to hard bargaining on Monday after voters roundly rejected last year’s military coup but failed to give supporters of ousted prime minister Thaksin Shinawatra an outright majority.
The deal-making looks likely to be long, tense and dirty after Sunday’s vote showed a country polarized between Thaksin supporters in the People Power Party (PPP) and opponents represented mostly by the Democrat Party.
The PPP said it had managed to gain enough support to form a coalition government but refused to name its partners, prompting speculation the announcement might be part of the usual post-election bargaining process.
“There is still plenty of room for mischief,” the Bangkok Post said in an editorial. “Other groups, including the military, must abide by the election decision.”
Combative PPP leader Samak Sundaravej, who openly admits to being a Thaksin proxy, is not shy about his job prospects, saying his party’s 232 seats in the 480-member parliament will “certainly” allow him to be Thailand’s next prime minister.
The big question is whether the army and royalist establishment, whom the Thaksin camp accuses of masterminding the coup, will stand by and let this happen.
Two of the crucial minor parties, Chart Thai (Thai Nation) and Puea Pandin (Motherland), with 65 seats between them, would act together and take their time making a decision, Chart Thai leader and former prime minister Banharn Silpa-archa said.
Parliament must meet within 30 days of the election and then has a month to elect a prime minister.
However, the army and Thailand’s old elite are likely to call in every favor to stop Thaksin making a comeback by proxy, including getting the Election Commission (EC) to whittle down PPP numbers by disqualifying candidates for vote fraud.
“At every step in coming days and weeks, the EC must be seen to be doing exactly the right thing in every decision,” the Bangkok Post said.
There was no immediate market reaction as Thailand is on a holiday for the election. The stock and currency markets reopen on Tuesday, Christmas Day.
But reflecting fears of another coup, ratings agency Standard & Poor’s said any more military meddling would be likely to lead to a credit downgrade, making it harder for Thailand to borrow money on international markets.
“If such divisions result in another unconstitutional replacement of the government, or social unrest, the political and economic consequences will be much more negative than experienced so far,” S&P said.
Underlying the political horse-trading is the fear of trouble on the streets of the capital, where prior to the coup the middle classes staged months of anti-Thaksin protests, paralyzing government and hitting consumer confidence.
Despite his unpopularity in the capital after four fractious years as governor there, Samak shrugged off fears that protests would give the army cover to step in again after the obvious failure of the 2006 coup to consign Thaksin to the history books.
“It is a victory for this country,” Samak said of the vote, adding that new army chief Anupong Paochinda was a “good guy” committed to keeping out of politics.
The military’s preferred outcome is a government led by the Democrats, who won 165 seats according to a full count, even though most analysts say such a weak five-party coalition would be unlikely to last beyond a year.
Financial markets hope the return of an elected administration will signal the end of a period of disappointing economic growth, likely to fall from 5.1 percent in 2006 towards 4 percent this year, the lowest rate in six years.
“As a positive, you could argue that the election did go ahead, but I don’t know what the military is going to do, and I don’t pretend to know what they are going to do,” said David Cohen of Action Economics in Singapore.
“Maybe that will make foreign investors a little bit wary.”

TITLE: Man Utd, Chelsea Chase Arsenal’s Lead
AUTHOR: By Mitch Phillips
PUBLISHER: Reuters
TEXT: LONDON — Cristiano Ronaldo scored an 88th-minute penalty to give Manchester United a 2-1 victory over Everton at Old Trafford on Sunday that kept them within a point of Premier League leaders Arsenal.
Third-placed Chelsea also kept up the chase when a first-half Joe Cole goal gave them a 1-0 win at Blackburn Rovers.
Arsenal, who beat Tottenham Hotspur 2-1 on Saturday, lead the way on 43 points with United second on 42 and Chelsea on 37.
Manchester City, who drew 1-1 at Aston Villa, have 34 while Liverpool, 4-1 home winners over Portsmouth, are fifth on 33. Everton remain sixth on 30, ahead of Portsmouth on goal difference.
Manchester United, seeking a ninth successive home league win, went ahead in the 22nd minute when Ronaldo cut in from the right and clipped in a left-footed shot.
Everton hit back when Tim Cahill showed great determination to power in an excellent header.
United looked lively and inventive but found Everton difficult to break down despite the wealth of attacking talent on show.
That changed when Steven Pienaar thrust out a leg behind him in a playground tackle on Ryan Giggs that handed Ronaldo the decisive penalty.
Sunday’s double made the Portuguese winger the league’s leading scorer with 11. “This game was very tough, Everton played very well,” Ronaldo told Setanta Sports TV.
“It’s an important win with many games to come and not too much time to rest.”
Everton manager David Moyes rued Pienaar’s late lapse, saying: “It was a moment of madness for Steven. The players have worked really hard to take something from the game but it is just one of those things.”
Chelsea weathered some early Blackburn pressure before striking with a sweetly taken goal by Cole after a killer through-ball by Salomon Kalou in the 22nd minute.
Both goalkeepers then made excellent first-half saves as Petr Cech pushed a Steven Reid shot on to the bar and Brad Friedel dived to tip a Frank Lampard effort against a post before Chelsea tightened up to secure the victory.
In Sunday’s other game bottom club Derby County secured their first point in eight matches with a 2-2 draw at Newcastle United, who twice came from behind with two goals by Mark Viduka.
The Premier League swings into action again on Dec. 26 with a near-full programme.

TITLE: Dutchmen Flying High In Russia
AUTHOR: By Gennady Fyodorov
PUBLISHER: Reuters
TEXT: Russians like their heroes homegrown, but this New Year’s Eve, football fans will be toasting two middle-aged Dutchmen.
Guus Hiddink led Russia to the Euro 2008 finals while fellow Dutchman Dick Advocaat steered Zenit St. Petersburg to its first national title for nearly a quarter of a century.
The Dutchmen’s influence, however, goes well beyond the playing field.
Hiddink, 61, the first foreigner to coach Russia’s national team, not only has transformed an often underachieving side, but has become a media darling for his openness, straightforward approach and sense of humor.
“He was like a breath of fresh air,” said Igor Rabiner, football columnist at the newspaper Sport-Express. “And we all needed that after a long procession of sterile personalities,” he said in reference to former Russian managers.
“In some ways, Hiddink has revolutionized Russian football,” said Grant Kasyan, sports editor at Kommersant.
Unlike Hiddink, Advocaat, who replaced popular Czech Vlastimil Petrzela midway through the 2006 season, struggled at first to win over Zenit fans.
But that all changed this year when he took Zenit to its first league crown since 1984, going one better than his predecessor, who led the club to the runner-up spot in his first season in 2003.
Petrzela was almost a cult figure in St. Petersburg, loved by the Zenit media and fans for his attractive brand of football as well as his sharp tongue.
Advocaat, 60, said all he wanted was to build a winning team.
“I’ve never cared much for having a popularity contest. It just doesn’t interest me,” he said shortly after his arrival.
Gradually, he was able to turn things around, instilling order and discipline into Zenit’s often impetuous game.
After a fourth-place finish in 2006, Zenit finally made the breakthrough this year, disproving Petrzela, who famously said they would never win the title against the powerful Moscow clubs.
Ironically, this year it was the capital’s clubs that often complained about refereeing and other outside factors aiding Zenit, which was backed by Gazprom’s seemingly limitless resources.
Advocaat, dubbed the Little General by the Dutch media, remained unperturbed by the controversy around him.
“I always let my results do the talking for me,” he said in response to complaints of some of his fellow coaches.
Having finally warmed to Russia’s second capital, Zenit’s title finish convinced Advocaat to extend his contract.
The Dutchman, who had previously agreed to coach Australia, last month changed his mind and decided to stay in St. Petersburg for another year.
“The lure of playing in the Champions League was just too big to resist. Of course, money was also a factor,” said Advocaat, who will reportedly earn over $4.5 million next year.
The successes of both Hiddink and Advocaat have raised the profile of Dutch coaches to a new height in Russia.
Local papers were full of stories linking several of their countrymen, including former Netherlands manager Louis van Gaal, with a number of top Russian clubs.
Former Dutch captain Ruud Gullit, who now coaches Los Angeles Galaxy, has also expressed interest in coaching in Russia at some point in his career.
“Why not? The Russian league is getting better and better and it seems money is not a problem here,” Gullit, 45, told Reuters in an interview earlier this month.
“Besides, I really like Moscow,” said the former Chelsea, Newcastle United and Feyenoord manager, who had visited the Russian capital twice in a three-week period.

TITLE: Burqa Full Of Bombs Discovered
PUBLISHER: Reuters
TEXT: ASADABAD, Afghanistan — A woman carrying a waistcoat filled with explosives under her all-enveloping burqa was arrested on Monday in eastern Afghanistan, provincial officials said, in the first possible reported case of a female suicide bomber in the country.
She was arrested on a tip-off in Jalalabad after being followed by intelligence department officials near the border with Pakistan.
The elderly woman’s identity was not given, but she was now being questioned, officials said.
It was not immediately clear if the woman wanted to use the explosives herself or was carrying the bomb to deliver it.
If the former, she would be the first reported female suicide bomber in Afghanistan where hundreds of people, many of them civilians, have been killed this year alone in such attacks.
Despite the overthrow in 2001 of the Taliban — who forced women to wear the all enveloping burqa whenever outdoors — most women still wear it.
Security checkpoints in Afghanistan are usually manned only by men who are not supposed to check women for fear of offending their modesty.
Afghanistan has seen steady rise in violence in the past two years, the bloodiest period since Taliban’s ouster.
In the latest reported violence, two civilians were killed, after they tried to retrieve the bodies of two men who were beheaded on Sunday by suspected Taliban insurgents in the southern province of Kandahar, a provincial official said.

TITLE: Tennis Betting Scandal Snares 2 Italian Players
PUBLISHER: Combined Reports
TEXT: The Association of Tennis Professionals (ATP) suspended Italians Potito Starace and Daniele Bracciali on Saturday for making bets — some as little as $7 — on tennis matches involving other players.
The Italian tennis federation denounced the penalties by the governing body as an “injustice,” and the players said they have been made scapegoats.
Starace, ranked 31st, was suspended for six weeks and fined $30,000, the Italian federation said. Bracciali, ranked 258th, was banned for three months and fined $20,000. Both suspensions take effect Jan. 1.
The federation said Starace made five bets for a total of $130 two years ago, and Bracciali made about 50 bets of $7 each from 2004-05.
“Injustice is done,” the statement said. “These penalties are absolutely, excessively severe compared to the magnitude of the violations carried out by the two players.”
The federation said the two were not aware of the ATP’s betting regulations, and they stopped placing bets as soon as they learned it was against the rules.
“It’s disgusting,” Starace said. “The ATP doesn’t know where to turn. It’s all a joke.”
Bracciali said the two had been “sacrificed.”
“That’s why they came after us,” he said. “We are not champions and we don’t count in the upper echelons.”
Another Italian, Alessio Di Mauro, became the first player sanctioned under the ATP’s new anti-corruption rules when he received a nine-month ban in November, also for betting on matches.
ATP officials could not be reached for comment Saturday.
Concerns about match-fixing have risen since August, when an online betting company reported unusual betting patterns during a match between fourth-ranked Nikolai Davydenko of Russia and Martin Vassallo Arguello of Argentina. The company, Betfair, voided all bets and the ATP has been investigating. Davydenko, who quit while trailing in the third set, denies wrongdoing.
In a separate development, Australian Open organizers have introduced anti-corruption measures including fines, bans and jail terms for any players found to be involved in match-fixing at next year’s opening grand slam.
The sport has been rife with rumors of match-fixing this year after the Davydenko story broke, with several players saying they had been approached to throw matches.
“We don’t believe our sport has a corruption problem but we do recognize that a threat to the integrity of tennis exists,” Tennis Australia (TA) chief executive Steve Wood said.
(AP, Reuters)

TITLE: U.S. Muslims, Jews Find New Ways to Relate
AUTHOR: By Michael Conlon
PUBLISHER: Reuters
TEXT: CHICAGO — Muslims and Jews, a tiny slice of the U.S. population, are looking for new ways to get along that could set a worldwide example for two ancient but often alienated faiths, religious leaders and experts say.
“I’ve encountered [among Muslims] a more centrist, a more moderate voice that is looking to the Jewish community to help project that voice ... to the greater world,” said Rabbi Marc Schneier of New York, speaking of a national summit of imams and rabbis he helped organize earlier this year.
He also cited a recent incident in a New York subway “where four young Jews were being verbally and physically assaulted on a train for wishing the passengers a happy Hanukkah, and the only individual to come to their rescue was a young Muslim man,” Hassan Askari, of Bangladeshi heritage, who was beaten.
“That is a very, very powerful example” of what can happen. The challenge is to try to strengthen Jewish-Muslim cooperation and have it serve as a paradigm for communities around the world,” added Schneier, who founded the New York Synagogue in Manhattan and also the Foundation for Ethnic Understanding.
On another front, leaders of the Islamic Society of North America and the Union for Reform Judaism, representing respectively the largest U.S. Islamic organization and the largest organized Jewish segment in the country, have agreed on a tutorial for dialogue.
“We need to get the truth about each other from one another,” said Ingrid Mattson, president of the Islamic group.
Rabbi Eric Yoffie of the Reform group told his followers the two religions share “ancient monotheistic faiths, cultural similarities and, as minority religions in North America, experiences with assimilation and discrimination.”
In a country of 315 million, Muslims number about 2.4 million, according to a recent Pew Research Center study, which also found them to be mostly middle-class members of mainstream society. Others believe the figure is several million higher, and no estimates are available on how many practice the faith.
There are perhaps 6 million Jews in the United States, only about a third of them affiliated with a congregation. Of those who do attend synagogue, 38 percent are Reform, 33 percent Conservative and 22 percent Orthodox, according to one survey.
Zahid Bukhari, director of the American Muslim Studies Program at Georgetown University, said Muslim-Jewish dialogue “is a new beginning.”
One difference, he said, is that in places like Europe “within each country you will find a concentration of Muslims from a certain country,” such as Algerians and Moroccans in France or South Asians in England.
“In America we have Muslims from 80 different countries. They are younger, they are more educated, more professional, more integrated into society and they feel more comfortable. And the host society here is different,” he said.
But what is happening is a “model which I hope we could duplicate” globally, he said.
Rabbi Brad Hirschfield, author of the newly published “You Don’t Have to be Wrong for Me to be Right,” said one thing that sets the U.S. situation apart is that no one speaks for all Jews or Muslims and this allows for openness.
“Even religious Muslims and religious Jews are more integrated into the fabric of general American society than in other countries like Britain and France. It is possible to be deeply and visibly religious and still participate in the public culture — that’s not true everywhere,” he said.
Farid Senzai, director of research at the Institute for Social Policy and Understanding, said there is a real effort at the local effort by mosques to develop joint activities with synagogues, and it goes down to the individual level as well.
“Muslims in this country have it much better off than elsewhere in the world,” he said. “The Muslim community in the United States will in fact have a tremendous impact on Muslims elsewhere because they are able to debate and influence each other.”
Amaney Jamal, of Princeton University, said Jews and Muslims share more in common in the United States than elsewhere “due to Muslim assimilation, but not in the cultural sense, rather in the socioeconomic sense. Muslims and Jews find themselves having to interact in many forums, be it university campuses or professional work places.”

TITLE: Hockey’s Champions Cup To Come to St. Petersburg
AUTHOR: By Christopher Hamilton
PUBLISHER: Special to The St. Petersburg Times
TEXT: Europe’s top six hockey teams will come to St. Petersburg to fight for the European title in the fourth annual IIHF European Champions Cup, Europe’s premier club competition, held Jan. 11-13 in the Ice Palace. 
“We are grateful for all the support that we have received from the city of St. Petersburg, Governor [Valentina] Matviyenko, and of course local hockey fans,” said International Ice Hockey Federation president Rene Fasel at a press conference last Thursday. “The ‘Super Six’ is a great competition and coming from Switzerland, I know that about 300 fans are coming to root for our champion, Davos.” More than 400 fans are expected from Magnitogorsk to cheer for Russian champion Metallurg, while thousands of Scandinavian fans have purchased package tours to attend the tournament, added local organizer Oleg Arnautov. 
“Ticket prices start at a mere 80 rubles and the most expensive tickets are 800 rubles. Tickets are valid for the entire day, which includes two games,” Arnautov said. 
For the last three years the Russian champion has won the competition and this year is Metallurg’s first chance at a European title since it won the defunct European Hockey League final in 2000. But the tournament will showcase a number of familiar European teams.

TITLE: U.S. Presidents Thanks Troops, Plans Cozy Maryland Christmas
PUBLISHER: The Associated Press
TEXT: WASHINGTON — President Bush made Christmas Eve calls to 10 U.S. troops serving in Iraq, Afghanistan and other spots around the world, thanking them for their sacrifice and wishing them a happy holiday even though they’ll be far away from their families and friends.
The president made his calls Monday from the Camp David presidential retreat in the Maryland mountains, where he is spending Christmas. He spoke with members of the Army, Navy, Marines, Air Force and U.S. Coast Guard, including seven serving in Iraq.
White House press secretary Dana Perino said Bush knows it is difficult for the children of U.S. servicemen and women to understand why their fathers and mothers cannot be home for the holidays. Bush said that when the children are older, he hopes they’ll understand and appreciate their parents’ sacrifice, Perino said.
“He said he couldn’t thank them enough for their contribution to their country, hopes they are in high spirits, and that they are serving a cause that is very noble,” Perino said. “He said, `I know that you miss your family.’”
“He asked them to pass on to their colleagues his appreciation and his wishes for a Merry Christmas and a Happy New Year.”
Bush also exchanged holiday greetings on the phone with Russian President Vladimir Putin and spoke with Turkish Prime Minister Recep Tayyip Erdogan. National Security Council spokesman Gordon Johndroe said that Bush and Erdogan discussed their efforts to fight terrorism and the importance of the United States, Turkey and Iraq working together to confront the PKK.
The PKK, or Kurdistan Workers’ Party, has fought for autonomy in Turkey’s predominantly Kurdish southeast since 1984. The group is considered a terrorist organization by Turkey, the United States and the European Union. Over the weekend, Turkish warplanes bombed Kurdish rebel targets in northern Iraq in the third confirmed cross-border offensive by Turkish forces in less than a week.
Bush will leave the day after Christmas for his Texas ranch and will return to Washington on New Year’s Day. Among those joining the president at the wooded compound in Maryland’s Catoctin Mountains are Mrs. Bush’s mother, Jenna Welch; and the first couple’s twin daughters, Barbara and Jenna; the president’s sister, Doro Bush Koch and her family; and the president’s brother, Marvin, and his family.
For Christmas Day lunch, the president will dine on roast turkey, cornbread dressing, green beans, sweet potato casserole, fruit salad, pumpkin and pecan pies and red velvet cake.

TITLE: Bulls Coach Scott Skiles Fired
PUBLISHER: Reuters
TEXT: CHICAGO — Scott Skiles was fired Monday as coach of the Chicago Bulls, who have one of the worst records in the Eastern Conference.
The underachieving Bulls (9-16) have lost three of their last four and were booed throughout by the home crowd during Saturday night's 116-98 loss to the Houston Rockets.
“This was a difficult decision to make, but one that was necessary at this time,” Bulls general manager John Paxson said in a release. “Scott helped us in many ways during his time with the Bulls; most importantly, he helped this franchise get back to respectability. I am appreciative of his hard work.”
The Bulls didn’t immediately announce a replacement for Skiles, who went 165-172 after replacing Bill Cartwright in November 2003.

TITLE: Kyrgyzstan ‘Home Of Santa Claus’
PUBLISHER: Reuters
TEXT: BISHKEK — Seeking a novel remedy to revive its rickety economy, the tiny ex-Soviet state of Kyrgyzstan has declared itself the new home of Santa Claus.
Citing Swedish engineering firm that determined the ideal spot for Santa’s global toy delivery hub, officials in this predominantly Muslim country have quickly moved to capitalize on the finding.
They named a mountain peak after Santa, to join Mounts Lenin, and Yeltsin, and declared 2008 “The Year of Santa Claus.”
“Its slogan will be “Kyrgyzstan is the land of Santa Clauses”, said Kyrgyz tourism authority spokeswoman Nurkhon Tajibayeva.
In most Western countries Santa Claus, or Father Christmas, is thought to live at the North Pole or in Finland. However, if he were located in Central Asia and started westwards on his traditional Christmas Eve trips, Kyrgyz officials said he would have a more efficient delivery route.
n Officials in Tajikistan reduced the death toll from an avalanche to three, saying Monday that the earlier total of 15 dead was a mistake.
The Interior Ministry had said 15 people were killed Friday when a mass of snow crashed onto a section of the highway linking the capital, Dushanbe, with Khudjand, the major city in Tajikistan’s northern sector.
However, Deputy Interior Minister Sharif Nazarov said Monday the toll was “a mistake.” Tajikistan’s emergency services agency gave the death toll as three.
(AP)

TITLE: Uzbekistan’s Karimov Wins by Landslide
PUBLISHER: The Associated Press
TEXT: MOSCOW — Uzbekistan’s authoritarian President Islam Karimov won a new term in office with 88.1 percent of the votes in an election dismissed by critics as a sham, according to figures released by the Central Elections Commission on Monday.
Karimov faced three other candidates in the Sunday vote, but all of them publicly supported Karimov. The election-monitoring arm of the Organization for Security and Cooperation in Europe said the election failed to meet an array of democratic standards.
Uzbekistan is a member of the OSCE, which aims to promote democratic standards, but is one of the most politically repressive of the former Soviet states. Most of Karimov’s opponents have been sent to jail or into exile and authorities muzzle news media.
The Associated Press and some other international news organizations were denied accreditation to cover the election.
The three other candidates in the race were given little coverage in state-controlled media. On election day, state television broadcast a series of programs extolling Uzbekistan as developing democratically and economically under Karimov — despite economic stagnation due to his resistance of market reforms.
“In the context of democratic development, it is notable that this time there were more candidates. ... But since all candidates in the present election publicly endorsed the incumbent, the electorate was deprived of a genuine choice,” Walter Siegl, the OSCE’s ambassador to Uzbekistan, said in the statement.
A much different assessment came from the observer mission of the Commonwealth of Independent States, a loose grouping of most of the former Soviet republics.
The election “proceeded in line with the country’s election legislation and universally recognized norms for holding democratic elections,” mission head Sergei Lebedev was quoted as saying by the ITAR-Tass news agency. “It was a major factor in further democratization of social life in Uzbekistan.”
The CIS is dominated by Russia, whose Dec. 2 parliamentary elections came under international criticism.
Almost half the population of ex-Soviet Central Asia lives in Uzbekistan, and the country’s political course and stability are crucial for the energy-rich region in which Russia, China and the United States are vying for influence.
Karimov’s clampdown on Muslims who worship outside state-controlled institutions has fueled radical Islam throughout the region, adding to tension in an already troubled part of the world.
Karimov has maintained a hostile stance toward the West since he ordered the shutdown of a U.S. air base in 2005 following Western criticism of his government’s bloody crackdown on an uprising in the city of Andijan.
He also threw out several foreign media organizations and almost all aid groups, accusing them of trying to foment a revolution, and has sought to strengthen ties with Russia and China.
Karimov, who will turn 70 next month, became the top Communist boss in 1989 in what was then a Soviet republic and Soviet industry’s main cotton supplier. Since the Soviet collapse, he has won two presidential elections — in 1991 and 1999 — and had his term extended twice, once through parliament and again in a referendum.
None of those elections were recognized by international observers as free or fair.
Human rights activists reported numerous cases of multiple voting throughout the country and official pressure on voters at polling stations to cast ballots for Karimov.
Karimov has resisted market reforms since the Soviet disintegration and has brought the resource-rich nation’s economy to the brink of collapse, plunging most of its 27 million people into poverty. More than 3 million Uzbeks have left for Russia and Kazakhstan in recent years as guest workers by the two countries’ official estimates. In suppressing the 2005 Andijan revolt, Uzbek government troops reportedly killed some 700 mostly unarmed civilians.

TITLE: Morgenstern Misses Seven Straight Wins
PUBLISHER: The Associated Press
TEXT: ENGELBERG, Switzerland — Thomas Morgenstern failed to win a record seventh straight event in World Cup ski jumping after finishing third Sunday.
The Olympic champion was beaten by Andreas Kuettel of Switzerland, who won with jumps of 125.5 and 136 meters in the large hill for 252.7 points.
Austria’s Gregor Schlierenzauer was second with 248.9 points after jumps of 124.5 and 136. Morgenstern came third with 124.5 and 135 meters for 246.6 points, ending his bid to break the record for most consecutive victories.
“I’m happy with my performance and of course it’s best when you’re at home,” Kuettel told Swiss television.
Going into the two-day meet, Morgenstern had already become the first skier to post five straight victories to start a season — and he extended his streak to six in Engelberg on Saturday. 
Morgenstern leads the overall World Cup standings with 660 points. Schlierenzauer is second with 429 points.

TITLE: Clemens Denies Doping Allegation
PUBLISHER: The Associated Press
TEXT: NEW YORK — Roger Clemens posted a video Sunday repeating his denials of the steroids use alleged against him in the Mitchell Report and plans to be interviewed for a future episode of “60 Minutes.”
The seven-time Cy Young Award winner was accused in the report of using steroids, an allegation made by his former trainer.
In October last year, the Los Angeles Times reported Clemens was linked to steroids in the May 2006 sworn statement of a federal agent who cited former big league pitcher Jason Grimsley. At the time, the names of players in the public version had been blacked out. When the full affidavit was unsealed Thursday, Clemens’ name was not in it, and the paper issued a correction and an apology.
“I faced this last year when the L.A. Times reported that I used steroids. I said it was not true then, and now the whole world knows it’s not true, now that that’s come out,” Clemens said in the video, which was posted Sunday on the web site of his foundation and on You Tube.
George Mitchell, a director of the Boston Red Sox and a former Senate majority leader, wrote in his report that former Toronto and New York Yankees strength coach Brian McNamee said he injected Clemens with steroids in 1998 while with the Blue Jays, and in 2000 and 2001 while with the Yankees. McNamee also claimed he injected Clemens with Human Growth Hormone in 2000.
“Let me be clear, the answer is no. I did not use steroids, or human growth hormone and I’ve never done so,” Clemens said. “I did not provide Brian McNamee with any drugs to inject in to my body. Brian McNamee did not inject steroids or Human Growth Hormones into my body either when I played in Toronto for the Blue Jays or the New York Yankees. This report is simply not true.”
Baseball players and owners did not jointly ban steroids until September 2002. They did not ban HGH until January 2005.
While Clemens has released a written and video statement since Mitchell issued his report on Dec. 13, he has not answered questions.
“After Christmas, I’m going to sit down with Mike Wallace of `60 Minutes,’ and I’ll do an interview, and he’ll ask me a ton of questions on this subject, and I’ll answer them right there in front of him, and we’ll do all of this again,” Clemens said.
CBS spokesman Kevin Tedesco said the interview is scheduled to air Jan. 6.
“I’m angry about it,” Clemens said of the allegations. “To be honest with you, it’s hurtful to me and my family, but we’re coming upon Christmas now, and I have been blessed in my life. I’ve been blessed in my career, and I’m very thankful for those blessings.”
Mitchell said McNamee, a former personal trainer to Clemens and Yankees and Houston Astros teammate Andy Pettitte, told him Pettitte had used HGH two-to-four times in 2002.

TITLE: Serbian Propaganda War Targets Kosovo
AUTHOR: By Nicholas Wood
PUBLISHER: The New York Times
TEXT: BELGRADE, Serbia — As the dispute over Kosovo’s future nears a climax, the Serbian government has enlisted the support of some the world’s best known statesmen — all of them dead.
For the past two weeks, billboards carrying the images of Washington, Lincoln, Kennedy, Churchill and de Gaulle have appeared throughout the country above the mantra “Kosovo is Serbia!”
Next to their pictures are extracts of their speeches, each one selected, and adapted in some cases, to support Serbia’s desire to keep the province of Kosovo from declaring independence.
The twist is all the stranger because Serbs have so far looked mostly to Russia for assistance, because most Western countries have supported Kosovo’s independence drive.
But there is Churchill, cigar in hand, alongside an excerpt from a speech urging the British to stand up against Nazi Germany: “We shall defend what is ours. We shall never surrender.”
Washington’s head appears in front of a billowing American flag with an approximate quote from the American Revolution: “The time is near at hand which must determine whether we are to be free men or slaves.” (Washington used the word “Americans” where the Serbian version uses “we.”)
By borrowing words from some of the greatest Western leaders, the authors of the billboard campaign say they are offering not only a note of defiance but also a means of finding some common ground with the West as it collides with Serbia over Kosovo’s future.
“We are trying to remind people there are Western politicians who say it is all right to defend your state,” said Dragoslav Bokan, the director of Arts and Crafts, the marketing agency commissioned by the Serbian government to undertake the poster campaign.
The United States and a majority of European governments have indicated they believe that the United Nations administration of Kosovo, in place since 1999, is untenable and that ethnic Albanians, who make up nearly 90 percent of the population, should be granted an independent state.
Last week, the European Union approved a new mission that would replace the United Nations and help supervise Kosovohe state if it became an independent state. Serbia’s prime minister, Vojislav Kostunica, reacted angrily to the decision, accusing the Union of attempting to set up “a puppet state” on Serbian soil.
According to Bokan, the question now posed by those who favor Serbian integration into the European Union — and according to opinion polls they are an increasingly narrow majority here — is how to resolve that clash of interests. How can Serbs identify with the West and oppose what it is doing to Serbia?
Senior advisers in the Serbian government portray the controversy over Kosovo in stark terms, suggesting there is no point in Serbia’s joining a bloc that would occupy Serbian territory.
As the dispute has continued, and as pro-Russian rhetoric has increased, especially from government officials, many Serbs are bewildered, Bokan said.
For all their ties with Russia, including a shared Christian Orthodox faith and military alliances dating back two centuries, Serbs today seem to have far more in common with the West. Serbia borders the European Union to the north and east and does not border Russia, Bokan noted. And Serbs, he said, play in the National Basketball Association in the United States and for soccer clubs throughout Europe. 
“Ask anybody the name of a Russian film director, composer or even rock group and they will struggle, but they can name five or six American directors,” he said.
The poster campaign, Bokan said, is a reminder that Serbs can still fight for their cause and be Europeans.
Ljiljana Smajlovic, the editor of Politika, a conservative newspaper that has run a vigorous campaign against Kosovo’s independence, is more specific.
“I don’t expect the government to go to war” over Kosovo, she said in a telephone interview. “But I expect them to go to court over this. I think one can be a good European and still protest this.”
Regional commentators say it is also possible to see a gloomier outcome, one in which Serbia seeks strength in its history as a nation surrounded by enemies, proudly defiant, even at terrible costs.
Serbia’s most celebrated battle is a defeat at the hand of the Turks in Kosovo; its national motto is “Only Unity Can Save the Serbs.”

TITLE: As Blair Turns To Rome, Catholicism Takes Off
PUBLISHER: Reuters
TEXT: LONDON — Catholics have overtaken Anglicans in church attendance in Britain, according to research published on Sunday.
England officially split from Rome during the reign of Henry VIII more than 400 years ago, making Anglicanism and the Church of England dominant.
But a survey by the group Christian Research published in the Sunday Telegraph newspaper showed that around 862,000 worshippers attended Catholic services each week in 2006 exceeding the 852,000 who went to the Church of England.
The release of the figures followed news that former prime minister Tony Blair, who was raised an Anglican, had converted to Catholicism, joining his wife and four children who are devout Catholics.
Attendance at Anglican services has almost halved over the past 40 years as Britain has grown steadily more secular. Only 6 percent of the population attends church regularly. In the United States, that figure is nearer 40 percent.
While attendance figures for both Catholic and Anglican services are declining, Catholic numbers are slipping by less as new migrants arrive from east Europe and parts of Africa, boosting Catholic congregations.
Catholic leaders were buoyed by the figures, and Blair’s high-profile conversion, seeing a resurgence of Catholic popularity in a country which once spurned the religion.
“When a former prime minister becomes a Catholic, that must be a sign that Catholicism really has come in from the cold in this country,” Catherine Pepinster, the editor of Catholic weekly The Tablet, wrote in the Sunday Telegraph.
“I would hope that my fellow Catholics will welcome Tony Blair into the Church as they welcome other converts.”
Blair, now a Middle East peace envoy, is not the first high-profile Briton to convert to Catholicism.
The author Evelyn Waugh, the son of an Anglican churchman, converted in the 1930s, and novelist Graham Greene was a noted convert, although his books often explored doubts over faith.
Blair’s conversion was long expected but it has not come without a degree of criticism.
While in office, he frequently championed stem-cell research, was in support of civil partnerships for gay couples and has voted in favor of abortion, all issues on which the Catholic faithful hold strong positions.
Politicians, including some who have converted themselves, didn’t question the sincerity of the conversion, made in a private ceremony on Friday, but wondered what it said about the stances he had taken on issues while in office.
Mostly though, the reaction was muted.
“In the 19th century when someone ‘poped’ it caused great scandal,” wrote the Right Reverend Richard Harries, a former bishop of Oxford, in the Observer newspaper.
“But in recent decades a fundamental shift has taken place ... If someone shifts their allegiance, well, as Jesus said, ‘there are many dwelling places in my father’s house’.”

TITLE: Fumble Costs Boise State Hawaii Bowl, But Johnson Steals Show
AUTHOR: By Jaymes Song
PUBLISHER: The Associated Press
TEXT: HONOLULU, Hawaii — All Chris Johnson could think about after his record-setting night was how let his team down.
Johnson set an NCAA bowl record with 408 all-purpose yards, and Ben Hartman kicked a 34-yard field goal as time expired to give East Carolina a 41-38 victory over No. 24 Boise State in the Hawaii Bowl on Sunday night.
Johnson ran for 223 yards, caught three passes for 32 yards and returned six kickoffs for 153 yards. But he committed a costly fumble late that almost sent it to overtime. It was his first fumble of the season.
“I let my team down,” he said. “But when I got back to the sideline, they told me they had my back and they loved me.”
Johnson made up for it with his big night.
“It feels good to end my career like this. I wanted to come out here and show the country that I am the best back in the country,” he said.
Hartman’s kick gave the Pirates (8-5) their first postseason victory since the 2000 Galleryfurniture.com Bowl.
“I felt good going out there. I felt real confident,” Hartman said. “I just knew if I did my thing, it was going to go in.”
With East Carolina trying to run out the clock near midfield, Marty Tadman scooped up Johnson’s fumble and returned it 47 yards for a touchdown to tie it at 38 with 1:25 left.
The Pirates took possession at their 39 with 1:16 left and drove to the 17 to set up Hartman’s kick.
The Pirates stormed the field in celebration and chased after Hartman, who dashed toward the locker room.
Hartman said he took off because he was scared about get squashed underneath a pile of teammates.
The Broncos (10-3), making their sixth straight bowl appearance, almost repeated their last-minute magic from a year ago when they stunned Oklahoma in overtime in the Fiesta Bowl to finish 13-0. But this time, it was the Broncos who fell a little short without any trick plays and an ailing Ian Johnson.
Johnson, who was nursing a sprained left ankle, carried the ball just once for 1 yard in the first quarter and finished with 11 yards on four carries.
It was Chris Johnson who stole the show.
He was selected the Most Valuable Player for the Pirates. Jeremy Avery, who rushed for 68 yards and caught four passes for 43 yards was Boise State’s MVP.
Taylor Tharp was 30-of-44 for 266 yards and two touchdowns with two interceptions for Boise State.
“It was weird for us to start slow,” Tharp said. “I think it was a combination of not being ready to go and missed assignments.”
Patrick Pinkney threw for 117 yards and also rushed for 53 more for East Carolina.
The Pirates appeared to have the game in hand when they took a 38-14 lead early in the third quarter on Brandon Simmons’ 3-yard TD run. The Broncos, however, hung in and reeled off 24 straight points.
D.J. Harper’s 1-yard TD plunge cut East Carolina’s lead to 38-31 with 7:09 left.
Most of the crowd was headed out of the stadium after Titus Young fumbled the ball, setting up the Pirates at their 39 with 1:45 left.
But East Carolina’s star couldn’t hang on to the ball as he struggled to add a few more yards to his record, which was previously held by Alabama’s Sherman Williams 359 yards set against Ohio State in the 1995 Citrus Bowl.
“I was trying to run hard and get the first down,” he said. “I cut up field and I just didn’t put two hands on the ball. I had the first down and it just popped out.”
Johnson had 181 rushing yards in the first half alone, including a 68-yard TD run that put East Carolina ahead 10-7. He also caught a screen pass from Pinkney and went 18 yards for a score to make it 24-7.
Third-year Pirates coach Skip Holtz said he was proud of his players, especially Johnson.
“What rest of country saw is what we’ve been watching for three years,” he said. “I’m the president of the Chris Johnson fan club. I am his biggest fan. He is one of the hardest workers on this team. He’s humble.”

TITLE: Moscow Gang Robs Russian Tennis Champ
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russian tennis star Anna Chakvetadze was tied up by masked robbers who broke into her home on Dec. 18 and stole money and goods worth hundreds of thousands of dollars, her father said.
Chakvetadze, ranked No. 6 and a 2007 U.S. Open semifinalist, was bound for 30 minutes in her home outside Moscow but not seriously hurt, NTV television reported.
“Anna is holding up quite well,” Russia tennis coach Shamil Tarpishchev told the ITAR-Tass news agency.
Six assailants approached the home before dawn, tied up a maid in another building and forced her to hand over a remote control enabling them to enter the house through the garage, Dzhamal Chakvetadze told NTV.
“They started to beat me, and I resisted. They hit me over the head with, I think, a pistol butt. It was dark,” he said, taking off his cap to show his bruised scalp. “They took out a pistol and told me my child was at home — reminded me — and they told me to hand everything over. I did.”
Police and Tarpishchev said the assailants tied up Chakvetadze and her parents, the ITAR-Tass news agency reported. Tarpishchev said the 20-year-old player “tried to resist but it was useless.”
Chakvetadze’s 9-year-old brother, Roman, was asleep in the house during the break-in and was not touched, Tarpishchev said.
NTV said the robbers took about $106,000 in cash, as well as jewelry and other goods worth about $200,000.
Moscow region police did not answer phone calls seeking comment.
Chakvetadze reached a career-high ranking of No. 5 in September, following her first run to a Grand Slam semifinal. She won four singles titles and about $1.4 million in prize money in 2007, her best season since turning pro in 2003.

TITLE: Troubled Striker Adriano Caught Drinking Beer
PUBLISHER: Reuters
TEXT: RIO DE JANEIRO — Brazilian striker Adriano, who last week promised to turn over a new leaf and get his career back on the rails, has landed in fresh controversy after being photographed at a pop concert holding a can of beer.
Brazilian newspapers Estado de Sao Paulo, O Dia and Lance all published the photographs of the player, which they said were taken on Saturday night in Rio de Janeiro.
AC Milan’s injury-prone striker Ronaldo also appeared in the pictures.
Adriano last week joined Brazilian champions Sao Paulo on loan from Italy’s Inter Milan, where he has barely featured in the last two seasons after battling fitness and reported alcohol problems.
On Friday, Adriano, once one of Serie A’s most feared strikers, told a news conference that was determined to get his career back on track and win back his place in the Brazil team.
“I want to make the most of this chance to recover,” he said. “Everyone here wants to help me. Now it just depends on me.”
Adriano has been undergoing a fitness and psychological recovery program at Sao Paulo’s training centre for the last month. Sao Paulo’s players are now on holiday and are due to report back on Jan. 7 for the new season.