SOURCE: The St. Petersburg Times
DATE: Issue #1339 (3), Tuesday, January 15, 2008
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TITLE: Russia To Assess U.S. Democracy
AUTHOR: By Alexander Osipovich
PUBLISHER: Staff Writer
TEXT: MOSCOW — A Russian foundation devoted to democracy and human rights is setting up shop in the United States.
The Moscow-based Institute of Democracy and Cooperation officially registered its New York branch on Dec. 31, several weeks after registering a branch in Paris, the chairman of the foundation said Friday.
Anatoly Kucherena, a lawyer and member of the Public Chamber, said his foundation’s U.S. office would organize expert discussions about elections and human rights issues — while helping improve Western perceptions of Russia.
“The improvement of Russia’s image abroad is, of course, an important goal,” Kucherena said by telephone.
The foundation appears to be the latest attempt to influence foreign opinion about Russia through so-called “soft power” tactics. Another such project is Russia Today, a 24-hour English-language news station funded by the Kremlin.
In October, President Vladimir Putin told European leaders that he wanted to set up a think tank for freedom and democracy in Brussels or another European capital.
The goal, he said, was to counter the activity of Western nongovernmental organizations operating in Russia. Moscow has accused Western NGOs of meddling in Russia’s internal affairs and helping oust Moscow-friendly governments in Ukraine and Georgia.
But Kucherena denied that his foundation was a Kremlin project.
“There were no instructions from the president,” Kucherena said. “He expressed his opinion, but I would stress that this is a civil organization, an association of NGOs and citizens.”
The Institute of Democracy and Cooperation is funded by private donations from Russian businessmen and receives no money from the government, Kucherena said.
He denied that it was meant to be a Russian version of Freedom House, the U.S.-based democracy watchdog that released a report last year declaring Russia “not free” and ranking it near the bottom of a list of 195 countries.
“I have no desire to copy the behavior of organizations like Freedom House,” Kucherena said. “We have completely different tasks. ... Freedom House has only one goal: to publish data, which was assembled using methodologies that nobody understands, in order to draw attention to themselves.”
Phone calls to the New York and Washington offices of Freedom House were not answered Friday.
Western experts would be willing to attend events hosted by the Institute of Democracy and Cooperation as long as they were well organized and featured quality speakers, said Rose Gottemoeller, head of the Carnegie Moscow Center.
“Certainly, people will not want to attend if they are perceived as being simply propaganda events,” she said.
But even if the foundation organizes valuable events, Gottemoeller said, it may have trouble getting noticed in New York, which already has numerous think tanks and NGOs competing for media attention.
“They have to be aware that they’re going be in for some very steep competition, and they’ll be a newcomer in that market, so it will be hard to break in,” she said.
The foundation has plans to expand. It may eventually set up branches elsewhere in Europe and the CIS, Kucherena said, although he declined to give details.
It is currently looking for office space and hiring staff for its New York and Paris branches, he said.
Gottemoeller said it made sense for Russia to invest its newfound oil wealth in soft-power projects, which have long been used by Europe and the United States and typically include foreign-aid programs, cultural foundations and student exchanges.
“Russia historically has not been great on the soft-power front and, instead, has liked to throw its military weight around,” she said. “It makes sense for any country to have a full panoply of capabilities — a full toolbox, so to speak, to advance its own interests. That’s just common sense.”

TITLE: Moscow Angered by British Council Defiance
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The St. Petersburg branch of the British Council opened on Monday in defiance of a Jan. 1 order to close, prompting an angry reaction from the Ministry of Foreign Affairs as a diplomatic dispute between Russia and the U.K. appears to go from bad to worse.
“The Russian side considers such actions to be an intentional provocation directed at increasing tension in Russian-British relations,” a Ministry of Foreign Affairs spokesman said in a statement Monday. 
Earlier Monday, the Ministry had summoned British Ambassador Tony Brenton for talks on the matter.
The Ministry repeated its assertion that the British Council, a nonprofit organization that acts as the cultural arm of the British Embassy, operates in violation of Russian law and repeated its demands that offices in St. Petersburg and Yekaterinburg be closed down. It said the Russian authorities neither gave permission for the opening of the central and regional offices nor were asked for it.
The British Council’s Yekaterinburg office was also open on Monday in defiance of the closure order.
After both branches defied the order, the Ministry’s statement went on to say that Russia will not issue visas to new British Council employees in either city, will not continue to supply accreditation to current employees, and will demand back taxes from the St. Petersburg branch.
If the regional offices stay open, the Ministry said it reserves the right to take additional measures, including against the British Council’s Moscow office.
“We expect our British partners to stop ignoring obvious facts and refrain from a line of further confrontation that is fraught with the most negative consequences for Russian-British relations,” the Ministry said.
After his visit to the Ministry, Brenton told reporters that the British Council in Russia would stay open.
“The British Council is working entirely legally, and it will continue, therefore, to work, and any Russian action against it would be a breach of international law,” Brenton was quoted by The Associated Press as saying.
The dispute comes amid broader tension over the poisoning of former KGB agent Alexander Litvinenko in London in November 2006. Russia has refused Britain’s request to extradite the man it considers the main suspect; this summer Britain expelled four Russian diplomats in response, and Russia kicked out four British diplomats.
Foreign Minister Sergei Lavrov said last month that the British Council closure order was taken as a “countermeasure” to the diplomat expulsion.
Brenton said that during a meeting with Deputy Foreign Minister Vladimir Titov he received a document in which the Russian side explains its view of the problem.
The positions of the two sides on the issue seriously differ, but the British side would attentively study it, he said.
But Brenton added that it was a mistake to connect the work of the British Council with the murder of Litvinenko.
“To turn that issue into an attack on an institution that is valuable to Russia, and valuable to the United Kingdom, is frankly mystifying,” Brenton told reporters.
James Kennedy, director of British Council in Russia, was present in St. Petersburg on Monday as the branch reopened after its holiday break. 
“The message of our opening today is that we wish to continue our work, our business in Russia,” Kennedy said.
“As far as we are aware the work of the British Council in Russia is legal.  We have received no information to indicate that our work is not legal,” said Kennedy.
Kennedy said that the British Council works in Russia under a 1994 agreement on culture and education relations signed between Russia and Great Britain.
Kennedy said the British Council is “dismayed that the work of the council for culture and education has been brought into the political arena.”
“We’re not a political organization,” Kennedy said.  
Stephen Kinnock, director of British Council North-West Russia, said the British Council has a number of projects with Russian educational and cultural institutions, including a close collaboration with St. Petersburg State University.
“I hope our partners will continue to work with us,” Kinnock said.
Konstantin Kosachyov, head of the International Committee of the Russian State Duma, said the situation should be resolved according to the Russian authorities’ demands, Interfax said.
“I’m sure the Russian side will make sure that both of those branches will either meet to a full extent the demands for such organizations or they would stop them from operating,” Kosachyov said.
Kosachyov said Russia completely disagrees with London’s declaration that the demands have a political character, despite clear signals from Lavrov that this is the case.
“These pretensions have exclusively juridical and financial character and have nothing to do with the recent complications of Russian-British relations, though those complications have come to its culmination point,” Kosachyov said.
Kosachyov revived long-standing allegations that the British Council operates like a business in Russia but without paying taxes because of its special status as an arm of British diplomacy.
“If they have such status, then according to the Vienna Convention they are freed from paying tax and should have no commercial activities.  However, those branches do have such commercial activities,” he said.
Kosachyov said only the Moscow branch of the British Council acts legally.
The Minsitry of Foreign Affairs said the Vienna Convention is only a framework that defines neither the legal status nor the conditions of cultural exchanges between signatories.
It said efforts to develop a bilateral agreement on the terms under which such centers operate in Russia were halted in July last year by the unfriendly actions of Britain.
Meanwhile, Ella Pamfilova, head of the Presidential Council for the Development of Civil Society and Human Rights’ Institutions, said that the British Council should not become the victim of bad relations between Moscow and London, Interfax said.

TITLE: Two Detained at Gazprom Tower Protest, OMON Holds Off
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Two activists were detained during a protest against the city administration’s plans to build a controversial 400-meter, 67-floor skyscraper tower for Gazprom, Russia’s state-controlled energy behemoth, on Saturday. 
An estimated 300 protesters arriving at the site of the rally on Malaya Okhta, a district on the Neva’s right bank in the city’s north-east near the planned site for the Okhta Center tower, were met by two dozen police officers who warned that the meeting could not be held as it was “unsanctioned.” 
Organizers claimed an application to hold the protest had been submitted on time to the relevant authorities.
However, the police did not prevent the rally from taking place after it was described by protesters — who did not use party flags — as a “narodny skhod” (a public gathering), rather than a “meeting,” and, thus, not legally regulated. 
Organized by pressure groups Okhtinskaya Duga and the Movement for Civil Initiatives, the rally, called “Okhta Is a Territory for Life,” also featured members of the pressure group Living City, liberal party Yabloko, the Communist Party, Garry Kasparov’s United Civil Front and Eduard Limonov’s banned National-Bolshevik Party (NBP), the latter two being part of the pro-democracy Other Russia coalition.
The protest was held on a small hill, next to the Church of the Assumption on Novocherkassky Prospekt, with speakers addressing the audience while standing on a bench.
Activist Vladimir Yushchenko was detained in the middle of the meeting, which lasted for 90 minutes, and taken to a police station in a police truck. He was accompanied by Legislative Assembly deputy Vladimir Dmitriyev of the Communist Party who wanted to see that the detainee was treated properly by the police.
Yushchenko was reported to have been charged with the “violation of the rules for holding meetings.” When the rally was approaching its end, Andrei Dmitriyev, the leader of the local branch of the banned NBP was detained, apparently for the use of the word “natsbol,” a colloquial term for an NBP member. In both cases some activists tried to prevent detainments or the police truck from leaving the site.
Dmitriyev, who was held in the police station for three hours, said he was charged with two administrative offences — failing to cooperate with the police and damaging municipal facilities — “that is because I was standing in my boots on a bench and speaking from it.” 
“I also had to give an explanation because, in the policemen’s opinion, I was promoting the banned party by introducing myself as a member of NBP, even if I didn’t introduce myself like that; I said, ‘natsbol, a member of the Other Russia coalition,’” said Dmitriyev by phone on Monday.
“It’s not clear whether they will open a case or not. But anyway, they took a statement and stated that I must appear at the prosecutor’s office or in court.”
The meeting’s resolution, read out by Okhtinskaya Duga leader Tatyana Krasavina, voiced “resolute protest against the city’s housing and town-planning policy directed against the vital interests of most Petersburgers” and demanded the rejection of the Okhta Center tower project because it is “non-economically motivated, unlawful, impairs the rights of Petersburgers and distorts the historical image of St. Petersburg.” 
Among other things, it also claimed that the plans contradict town-planning laws and will lead to the deterioration of the quality of life of those living in Okhta.
Soon after the rally finished, a truck of the heavily-equipped OMON policemen arrived, but after running in line near the site, they got in the truck and left without interfering. The rally was held as a build-up to public hearings about the Okhta Center that were held Monday.
Previously known as Gazprom City, the Okhta Center project has come in for criticism from cultural figures, ecologists and opposition politicians for violating the city’s height limitations and destroying St. Petersburg’s historical skyline.
Last year UNESCO, which includes the historical center of St. Petersburg on its World Heritage List of protected monuments, also expressed concern about the effects of the planned tower.

TITLE: Beslan Group Branded ‘Extremist’ by Court
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW —A court on Monday is to review a prosecutor’s request that a group of Beslan survivors and their relatives be outlawed as extremist.
Acting Ingush Prosecutor Magomed Aushev wrote in his complaint that the Voice of Beslan broke the law on extremism by making “false accusations” against President Vladimir Putin as “an accomplice of terrorism” in an open letter, according to a copy of the lawsuit posted on the Voice of Beslan’s web site.
The 2005 letter, addressed to “Everyone sympathetic to Beslan’s tragedy” and posted on the group’s web site, says “none of the acts of terrorism that occurred during Putin’s presidency has been investigated properly” and that Putin has become “the guarantor for the terrorists” by not punishing senior officials for the botched Beslan rescue operation. More than 330 people died, most as special forces tried to rescue them during the final chaotic hours of the 2004 hostage taking at the Beslan school.
“We are surprised to find out that our right to demand a fair investigation of the Beslan tragedy has been declared extremist,” Voice of Beslan founder Ella Kesayeva said by telephone from Vladikavkaz.
Vladislav Svetostov, a spokesman for a Nazran prosecutor, declined to comment about the extremist case ahead of the hearings. He defended the complaint, though, saying prosecutors in all regions are supposed to monitor the media to make sure that nothing illegal is published.

TITLE: Thousands Protest in Tbilisi Claiming Election Rigging
AUTHOR: By Misha Dzhindzhikhashvili
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — Tens of thousands of Georgians protested the election victory of U.S.-allied President Mikhail Saakashvili on Sunday, claiming fraud and demanding a recount.
The massive demonstration raised fears of instability in the former Soviet republic, which sits on a pipeline carrying Caspian oil to Western markets and has been battleground for influence between Russia and the United States.
It was a dramatic turnaround for Saakashvili, who rose to power as the hero of the 2003 Rose Revolution protests against fraudulent elections. He has since faced accusations of authoritarian leanings, and his popularity has fallen.
Wearing the opposition’s trademark white scarves, the protesters marched for several hours across downtown Tbilisi in freezing weather to demand a recount of the Jan. 5 election. Organizers said about 100,000 people turned out.
“Misha the Rose, you will fall soon!” protesters chanted, calling the president by his nickname.
Saakashvili won the election with 53 percent of the vote, while his main challenger, Levan Gachechiladze, had just under 26 percent, according to final official results released Sunday.
Gachechiladze and his supporters accused the government of rigging the vote and demanded that those responsible be prosecuted. They claimed Saakashvili fell far short of an outright majority and should face off against Gachechiladze in a runoff.
“Georgia doesn’t have a legitimate president,” Gachechiladze said at the demonstration. “If we stand together, we will win.”
Opposition leaders also demanded regular access to state television, which has focused on covering Saakashvili and his allies.
Observers from the Organization for Security and Cooperation in Europe gave a mixed assessment of the election, calling it “triumphant step” for democracy in Georgia while pointing to an array of violations.
Demonstrators Sunday carried signs reading: “OSCE backs rigged elections” and “U.S.A. supporter of dictatorship.”
Saakashvili, 40, has helped transform Georgia into a country with a growing economy and aspirations of joining the European Union and NATO, cultivating close ties with the U.S. and seeking to decrease Russia’s influence.
But a brutal police crackdown on an opposition rally in Tbilisi on Nov. 7 provoked widespread public anger and drew harsh criticism from Western governments.
Saakashvili called the early presidential vote to assuage tensions.
“The Nov. 7 police action against peaceful civilians was outrageous, and official fraud in the presidential vote was disgusting,” said Irina Berishvili, 52, a literature expert at the protest march.
Zviad Dzidziguri, leader of the Conservative Party, said the opposition alliance would stage regular protests outside state television and other official buildings.
“We will seek to achieve our goals by exclusively peaceful methods,” he said at the rally. “We will win, because we defend the truth.”

TITLE: U.S. Audit Says Aid Mispent
AUTHOR: By H. Josef Hebert
PUBLISHER: The Associated Press
TEXT: WASHINGTON — A U.S. economic aid program to keep Russian scientists from selling weapons information to terrorists apparently funneled much of the money to researchers who never claimed to have a background in nuclear, chemical or biological programs, a congressional report said Friday.
The auditors also found that in many cases help went to scientists who were too young to have participated in the Soviet-era weapons programs. Thus, instead of doing what the law was meant to do, some of the grants helped Russia and Ukraine train new scientists.
The report by the Government Accountability Office urged the Energy Department to overhaul the nuclear nonproliferation program and come up with a way to end it. 
Some Russian officials told auditors the program was no longer needed, given economic improvements in Russia in recent years.
The department’s National Nuclear Security Administration, which oversees the program, said in a letter attached to the GAO report that the agency viewed the program as justified and will continue to support it.
A National Nuclear Security Administration spokesman had no additional comment, citing the letter.
Created after the Soviet Union’s collapse in 1991, the program — known as the Initiatives for Proliferation Prevention, or IPP — was designed to provide economic assistance and find jobs for Russian scientists involved in nuclear, chemical and biological weapons research. 
With many of these scientists losing their jobs, the concern was that they might use their knowledge to sell information or their services to terrorists.
As of last October, there were 929 IPP projects either completed or at some state of activity involving about 200 facilities in Russia and other former Soviet bloc countries, the GAO report said.
But the report said the Energy Department has overstated the success of the program both in terms of the number of targeted scientists that have been helped financially and the number of private-sector jobs that have been created.
The auditors found that of 6,450 scientists in a sample of projects, more than half the scientists receiving payments from the program never claimed to have experience in dealing with weapons of mass destruction — nuclear, chemical or biological — or had the ability to conduct the kind of knowledge transfer the program was aimed at preventing.
While the Energy Department has said that through April 2007, the assistance program had created 2,790 long-term private sector jobs, the auditors found in their review of 48 projects they “were unable to substantiate the existence of many of these jobs.”

TITLE: State Duma Kicks Off With Flury of Bills
AUTHOR: By Natalya Krainova
PUBLISHER: Staff Writer
TEXT: MOSCOW — It was clear from the start of the session what would occupy most of the time for State Duma deputies Friday as they returned from their long holiday recess.
“Good afternoon,” Speaker Boris Gryzlov said in the way of a brief greeting, adding without a pause, “Let’s start voting.”
Although Gryzlov’s party, United Russia, which holds a huge majority in the legislature, postponed voting on a few of the 24 measures planned and some introduced by other parties were voted down, a fair bit of legislation made it through a first reading.
Discussion in the session, meanwhile, ranged from issues like the agenda for the coming session, complaints about vote rigging during the Dec. 2 Duma elections and inflation rates.
The most pressing concern appeared to be, however, that many of the deputies to the new Duma had yet to be assigned offices.
Communist Deputy Nikolai Kolomeitsev complained that the problem had reduced about 100 deputies to working in the building’s halls and corridors.
“The deputies speaking today are mostly those who already have new offices,” Kolomeitsev told the Duma. “The others can’t speak out because you can’t prepare for a session in the corridor.”
Gryzlov answered with a promise that all deputies would have offices by the end of the week.
Another order of business Friday was to fill out the membership of the legislature’s committees and other positions.
David Tsabria, head of the Duma legal administration, was appointed as the chamber’s representative to the Constitutional Court, despite objections from Liberal Democratic Party leader Vladimir Zhirinovsky that Tsabria does not hold a Duma seat, while Gryzlov and Alexander Kozlovsky, also from United Russia, were named head and deputy head, respectively, of the Duma’s interparliamentary group.
On the legislative side, voting was postponed on a bill that would expand the number of instances in which a person’s legal or civil competence can be limited and another changing the powers of prosecutors in civil cases.
One of the opposition bills that did not make it past a first reading was a measure calling for Duma deputies to be allowed to examine materials and evidence from criminal, civil and administrative-offense cases after verdicts have been delivered or the case closed.
Others included a measure that would have allowed municipal authorities to set their own quotas for foreign workers in the retail sector and one changing the level of responsibility in the Administrative Offenses Code for those selling alcohol and cigarettes to minors.
In general statements before the Duma, Zhirinovsky claimed that the Dec. 2 parliamentary vote had been rigged and that his party had been deprived of votes, and Communist Deputy Anatoly Lokot proposed inviting Prime Minister Viktor Zubkov to answer before the Duma for climbing inflation rates.
“We must break the negative pattern where the government is not called on to account for its actions,” Lokot said.
A total of 651 bills are scheduled for consideration during the spring session, which runs through July, First Deputy Speaker Oleg Morozov said Friday.

TITLE: New Biometric Passports Issued With Empty Chips
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — The first biometric passports for Russians traveling abroad will be issued this month as Russia joins the world community in its efforts to fight terrorism, the Federal Migration Service said Friday.
The passport will include a special photograph of the holder and contain a microchip for digital finger or retina prints, Mikhail Turkin, deputy head of the Federal Migration Service, said at a news conference.
But the chip will remain empty for now, because the government has yet to pass the necessary legislation, Turkin said. “We are ready for this technically, and we can implement it in a short time once it has been approved,” he said.
The introduction of the next generation of passports is seen as an essential step in Russia’s integration into the world community. The United States and many European Union countries have already started introducing biometric passports in an effort to prevent terrorism and crime.
A final decision on what information will be placed on the microchip has yet to be made by Russia and other countries, said Konstantin Poltoranin, a spokesman for the Federal Migration Service. He said some human rights concerns had to be addressed first.
The new Russian passport with the empty chip looks similar to the old passport, except for some perforated figures on the pages and a thicker cover page with a digital photograph of the holder. Among other things, the photograph can be scanned at airports, Poltoranin said. For now, the photo can only be taken at 82 passport offices that are issuing the new document in Moscow.
The passport is being issued en masse after 135,000 of them were introduced under a pilot program in Moscow and St. Petersburg.
Turkin said the passports would be issued nationwide by 2009, although old ones would remain valid.

TITLE: Swiss Drop Adamova Charges
PUBLISHER: Reuters
TEXT: GENEVA — A money-laundering investigation against the daughter of former Nuclear Power Minister Yevgeny Adamov has been dropped, Swiss prosecutors said Friday.
Switzerland also released funds frozen in connection with the case, said Jeannette Balmer, a spokeswoman for the federal prosecutor’s office. She declined to reveal the amount.
“The case has been closed,” she said from Berne, adding that under Swiss law it would have been difficult to prove money laundering given the lack of a conviction abroad for fraud.
Adamov was arrested while visiting his daughter Irina Adamova in Switzerland in May 2005 on a U.S. extradition request. The United States accused him of embezzling $9 million that Washington had sent Moscow to help fund nuclear safety projects.
Russia sent its own extradition request, triggering a tug-of-war. Switzerland extradited him to Russia in December 2005 in a ruling that irked the United States.

TITLE: Moscow-Petersburg Highway Gets Closer
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Construction of the high-speed freeway between Moscow and St. Petersburg could start as early as this year, a government official said Friday at a meeting in Murmansk with journalists from the Northwest region. The highway will become one of the largest public-private partnership projects in the region.
“We need a highway like this, I’m quite sure of that. A decision about how it will be built has already been made — it will be financed through a public private partnership,” Interfax cited First Deputy Prime Minister Dmitry Medvedev, as saying Friday.
Authorities expect work on the project to get underway promptly. “The contractor will probably begin construction as early as this year, because a decision on the concession tender will be made by the middle of 2008,” Medvedev told Interfax.
The 600-kilometer highway will be constructed in several stages, starting with a small section of 60-70 kilometers.
Construction costs are estimated at approximately 350 billion rubles ($14.4 billion). “It’s a large investment. That’s why we are using a concession scheme,” Medvedev said.
“The attractiveness of this project to investors will depend on the cash flow that the road will generate. We need to perform an economic assessment first,” said Igor Gorchakov, partner of Baker & McKenzie in St. Petersburg.
“Taking into consideration the real need for such a toll road, it should be highly attractive. Foreign investors are likely to be interested in participating,” Gorchakov said.
Economic figures as well as existing legal limitations will decide what kind of concession scheme will be used, he indicated. 
One expert, on condition of anonymity, said that in western countries, toll roads are common, and that foreign investors would likely expect such roads to be in demand in any country.
“Considering this, foreign investors should be interested in this project. However, Russia’s network of toll roads is poorly developed. And there are serious concerns that Russian drivers will be unwilling to pay for using the road,” he said.
“Since no large-scale infrastructure project related to concessions has yet been completed in Russia, foreign investors could be more cautious and concerned about risks,” the expert added.
Currently several large public-private partnership projects are underway in St. Petersburg, including the Western High-Speed Link-Road and the Orlovsky Tunnel. The cost of the Orlovsky Tunnel under the River Neva is estimated at $1 billion, which is to be provided in equal proportions by the Investment Fund of the Russian Federation, the St. Petersburg budget and a private investor.
The project is due for completion in 2011, when the investor will operate Orlovsky Tunnel for 30 years, charging drivers a fee. The tender procedures are still being held.
The Western High-Speed Link-Road will cost about $2 billion in investment and should also be completed by 2011. Financing is expected to come from the same sources as the Orlovsky Tunnel.
Four companies have applied to participate in the tender for the construction of the 46.6 kilometer road. The results of the tender are still to be announced.

TITLE: Ukrainians Line Up for Payments
PUBLISHER: The Associated Press
TEXT: KIEV — Thousands of Ukrainians streamed to state bank offices Friday to get compensation for savings lost in the 1991 Soviet breakup — a promise of new Prime Minister Yulia Tymoshenko that some analysts caution could hurt the economy.
The payments by the state Oshchadbank, however, were slow to come. People across the country stood in long and impatient lines. 
An administrator at a Kiev branch of the bank suffered a head injury when an angry crowd pushed her to the floor. A retiree in the central Zaporizhia region died of a heart attack as he waited in line to receive the money.
Tymoshenko pledged to pay out 6 billion hryvna ($1.2 billion) of the estimated 130 billion hryvna ($26 billion) debt to citizens this year. The remainder will be paid out over the next several years, the government said. The exact amount of the debt will be calculated once citizens claim the money.
Ukraine follows in the footsteps of Lithuania and Kazakhstan, which returned some — or almost all — of Soviet-era savings to their citizens. Other former Soviet nations including Russia have yet to follow suit.
Tymoshenko made compensating for the lost savings a theme of her campaign for parliamentary elections last year, which swept her to the post of prime minister. Ukrainians will get up to 1,000 hryvna ($200) in cash for their Soviet-era savings. One Soviet ruble will be equivalent to 1.05 hryvna. Those who held over 1,000 hryvna in their accounts will be able to receive the rest of their money later in noncash payments, such as vouchers that would offset utility bills.
Some experts applauded the decision, saying it would restore people’s trust in the government and benefit the needy, especially pensioners and low-paid government workers.
But Anton Struchenevsky, an economic analyst at Troika Dialog, dismissed the measure as a populist move that would strain the state budget. 
“Such methods can destabilize the economy and lead to hyperinflation,” he said.
The 2008 budget forecasts annual inflation of 9.6 percent, but experts say it could spike to more than 15 percent.
Sophia Panchenko, an 80-year-old retired school teacher who counted her 1,000 hryvna at a bank office in central Kiev, said she was glad to receive at least a fraction of the money the state owed her. “In our old age, they are giving crumbs — but at least we get something.”

TITLE: Auctioneers Report Record Russian Sales
AUTHOR: By John Varoli
PUBLISHER: Bloomberg
TEXT: MOSCOW — The world’s top two auction houses, Christie’s International and Sotheby’s, profited from an expanding Russian economy with its growing ranks of newly rich collectors to score a record year in Russian art sales.
Their combined 2007 global Russian sales totaled $324.9 million, up 45 percent from a total of $223.6 million in 2006. All figures include buyer’s premium.
After an economic and financial crisis in 1998, the Russian economy has expanded in each of nine consecutive years, in large part due to the export of commodities such as oil, natural gas and metals. A growing class of wealthy Russians is eager to acquire luxury goods, such as fine art.
“The demand for Russian art remains very strong, especially due to the appearance of new Russian collectors,” said Alexander Gertsman, a New York-based dealer of Russian contemporary art, in a telephone interview Friday. “Every year more Russians start collecting art, which means more bidders at auction, and this competition helps push prices higher.”
Sotheby’s, the market leader in Russian art for the past decade, said its 2007 total grew 18 percent to $180.9 million. Christie’s said its 2007 Russian art total increased 87 percent to $144 million.
“A focus on the top end of the market in terms of both buyers and great artworks helped make 2007 our best year ever for Russian art,” said Jussi Pylkkanen, president of Christie’s Europe. “It also helped that we brought excellent artworks to exhibit in Russia, and worked hard to build relations with the country’s top collectors.”
The Rothschild Faberge Egg was Christie’s main Russian attraction in 2007, selling on Nov. 28 for $18 million. This was the most expensive item ever sold at a Russian art auction.
Sotheby’s 2007 total didn’t include the September sale of the Rostropovich Collection of 19th- and 20th-century Russian art bought by billionaire Alisher Usmanov three days before the auction was scheduled to take place. Usmanov later told Russian media that he paid about $80 million for the collection.
Sotheby’s annual Russian results have risen more than 22-fold since 2000 when its total was $6 million. In 2006, Sotheby’s total was $153.6 million.
“It’s been the best year we’d ever had, and had the Rostropovich Collection been included then our final results would have been much higher,” said Jo Vickery, head of Sotheby’s Russian art department in London.
Sotheby’s has three Russian art sales a year, with a winter and summer sale in London, and a spring sale in New York. Since 2006, the auction house also has an annual late-winter Russian contemporary-art sale in London.
Christie’s annual total has risen four-fold since 2004 when it reported Russian art sales of $23 million on two annual auctions. Since 2006, Christie’s has three annual Russian auctions: a winter and summer sale in London, and a spring sale in New York. Its 2006 Russian art total was $70 million.
Christie’s is owned by the French billionaire Francois Pinault. Sotheby’s was at $32.64, down $1.83 in New York Stock Exchange composite trading at lunchtime on Monday.

TITLE: In Brief
TEXT: <b>Whisky Usurps Vodka</b>
ST. PETERSBURG (SPT) — Imported whisky, gin and rum are replacing vodka in the segment of imported spirits in Russia, Interfax reported Saturday.
According to a survey by the center for federal and regional alcohol markets research, 1.17 million decaliters of whisky was imported to Russia last year — a 160 percent increase on 2006 figures.  The market share of whisky increased from 5.67 percent to 12.25 percent.
Gin imports doubled over 2007, amounting to 72,000 decalitres (0.75 percent of the market). The share of rum increased from 1.06 percent to 2.1 percent (200,000 decaliters).

<b>Belarus Increases Fees</b>
MOSCOW (Bloomberg) — Belarus will increase fees for pumping Russian oil through its territory to Europe by 15.7 percent starting Feb. 1, Ekonomicheskie Izvestiya reported, citing the government.
Belarus will raise the tariff to 2.8 euros ($4.14) a metric ton of crude, pumped via the Druzhba pipeline, the world’s longest, and earn the country an extra $31 million a year, according to the newspaper. The former Soviet republic transports 70 million tons of Russian crude a year to Europe, Ekonomicheskie Izvestiya reported.

<b>Gazprom Enters Ireland</b>
MOSCOW (Bloomberg) — Russia’s Gazprom, the world’s biggest natural-gas provider, secured a license to enter Ireland’s 2 billion-euro ($2.96 billion) gas market and plans to begin supplying customers by the end of the year, the Irish Independent reported, citing an executive at the company.
The company would target “high-end commercial customers” and power stations, said Jon Feingold, the retail director of U.K. subsidiary Gazprom Marketing and Trading Retail Ltd., according to the newspaper.
Gazprom hasn’t ruled out making an acquisition to enter the market, the Independent added. 

<b>Toyota Plans 2nd Line</b>
MOSCOW (Bloomberg) — Toyota Motor Corp. may build a low-cost car at a new plant in Russia, the Financial Times reported Friday, citing Tadashi Arashima, president and chief executive officer of its European unit.
The Japanese carmaker may add a second production line to its plant in St. Petersburg to build a car priced at between $7,000 and $10,000, the daily said.
Toyota sold 157,000 cars in Russia last year, surpassing Germany as its main European market, FT said. Toyota plans to sell about 200,000 cars in Russia this year, the newspaper said.

<b>Casino Zone Approved</b>
MOSCOW (Bloomberg) — The Russian government approved the first of four casino zones to be opened in July 2009 as part of an effort to restrict gambling, which spread widely after the collapse of the Soviet Union, Vedomosti reported.
The first zone, approved by Prime Minister Viktor Zubkov on Dec. 29, will be located on the Azov Sea near the southern city of Rostov-on-Don. Trump Entertainment Resorts Inc. and Casinos Austria International Ltd. may be interested in the project, the Moscow-based newspaper said, citing Viktor Deryabkin, economy minister of the Rostov region.
The three remaining zones are located on the Baltic Sea coast in the Kaliningrad region, the Altai region of Siberia near the Chinese border and the Pacific coast near the port city of Vladivostok. The government hasn’t yet approved these zones, Vedomosti said, citing local administration officials.

<b>Black Sea Link Agreed</b>
MOSCOW (Bloomberg) — Transneft, Bulgargaz AD and Hellenic Petroleum SA signed an initial agreement on creating a joint venture to build an oil pipeline from the Black Sea to the Mediterranean.
Representatives of the Russian, Bulgarian and Greek companies and government officials signed the accord in Athens, the Greek Development Ministry said late Thursday in an e-mailed statement. The deal will be completed “very soon” in the Bulgarian capital Sofia, Development Minister Christos Folias said in the statement, without elaborating.
The 285-kilometer pipeline will link the Bulgarian city of Burgas with the Greek port of Alexandroupolis, bypassing Turkey’s crowded Bosporus and Dardanelles straits. It will be able to carry 35 million tons of oil a year.

<b>Truck Plant for Pushkin</b>
ST. PETERSBURG (Bloomberg) — International Truck and Engine Corp., a unit of Navistar International Corp., the world’s fourth-largest truckmaker, will open an assembly plant near St. Petersburg, Russia, this month to tap demand for heavy-duty vehicles as the economy expands for a 10th straight year.
International Truck will unveil the new facility under the name of local distributor GoodWill Holding on Jan. 22, Maria Manukhina, a spokeswoman for GoodWill, said by phone Friday.
The plant, based in the town of Pushkin, will produce 16 to 24 trucks a month, mainly the International 9800i model, using parts from Brazil and the U.S., Manukhina said.

<b>Gazprom Sponsor Bid</b>
MOSCOW (Bloomberg) — Gazprom, the world’s biggest gas supplier, has held talks about becoming an official sponsor of the 2012 Olympic Games in London, the Evening Standard reported.
In return for 60 million pounds ($117.6 million), Russia’s biggest company would have exclusive Olympic marketing rights in the U.K. in the oil and gas sector, the report said.
Organizers are seeking $1300 million toward the cost of staging the games and have already announced agreements with German sports goods maker Adidas AG, accountant Deloitte & Touche LP and other companies.

<b>Energy Growth Down</b>
MOSCOW (Bloomberg) — Russia consumed 2.3 percent more electricity last year, less than half the annual growth in power demand the national utility forecasts for the next four to five years.
The nation used 985.2 billion kilowatt hours in 2007, of which Unified Energy System, the national utility, provided 705.8 billion kilowatt hours, the Moscow-based company said in an e-mailed statement Friday. Unified Energy’s power generation grew by 1.6 percent last year and 6 percent in December.
Chief Executive Officer Anatoly Chubais said Oct. 2 that power usage would grow less than 3 percent this year. In January the government forecast an annual 5 percent growth through 2011.

<b>Ukraine To Sell Bonds</b>
MOSCOW (Bloomberg) — Ukraine’s government will sell domestic bonds for the second time this month to help cover the state budget deficit, the Finance Ministry said.
The government will sell bonds on Jan. 14 with maturities in 2010 and 2011, the Kiev-based ministry said Friday in a statement released on its Web site. Interest will be paid quarterly, the statement said, without specifying the rate.
The government forecasts a 2008 budget deficit of 18.4 billion hryvnia ($3.68 billion), or 2.1 percent of gross domestic product. The government raised 135.7 million hryvnias ($27.4 million) on Jan. 10 by selling two-year treasuries, according to the Finance Ministry.

<b>Oil Income Announced</b>
MOSCOW (Bloomberg) — LUKOIL Chief Executive Officer Vagit Alekperov said net income at Russia’s largest private oil producer exceeded $8 billion last year.
The oil and gas company plans to invest $11 billion in 2008, Alekperov told reporters in Moscow on Saturday. Lukoil has no immediate plans to sell new shares, he added.

<b>S&N Considers Offers</b>
MOSCOW (Bloomberg) — Scottish & Newcastle Plc has held “detailed” talks with two private-equity firms about buying out Carlsberg A/S’s stake in their Russian joint venture, the Sunday Times said, without saying where it got the information.
The company has been approached separately by Blackstone Group LP and TPG Inc., and both groups have said they are prepared to invest up to 2 billion pounds ($4 billion) in buying Baltic Beverages Holding, the newpaper said.
The approaches are “one of the key reasons” behind the Edinburgh-based brewer’s rejection of a bid of 780 pence ($15.32) a share last week from Carlsberg and Heineken NV, the Sunday Times said.

<b>Senator Eyes Royalty</b>
MOSCOW (Bloomberg) — Billionaire Russian Senator Sergei Pugachyov is in talks with David Linley, Queen Elizabeth II’s nephew, about buying a stake in his furniture and interiors business, The Sunday Times reported, without saying where it got the information.
For Pugachyov, 44, who has close ties with Russian President Vladimir Putin, the deal with Linley will ease his entry into British high society, the Times said.
Pugachyov, who represents the Tuva republic in Siberia, bought French gourmet food chain Hediard and Russian watchmaker Poljot over the past 18 months, the Times said.

TITLE: Cabinet Supports Ban on Tobacco Ads
AUTHOR: By Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — The Cabinet on Thursday backed further efforts to battle one of Russia’s most unhealthy addictions — smoking — by giving the go-ahead to a total ban on tobacco advertising, promotion and sponsorships.
The bill approved by the Cabinet in its Thursday session clears the way for Russia to join a UN tobacco control convention requiring members to take these steps within five years of signing on.
Current laws forbid outdoor, radio and television advertising for tobacco, but major international firms that dominate the domestic market, such as British American Tobacco, run ads in glossy magazines, the metro and are heavily involved in sponsorships.
British American Tobacco most recently helped organize an art exhibition tat the State Russian Museum in St. Petersburg. Promoters often hand out cigarettes to passersby in busy locations.
Accession to World Health Organization’s Framework Convention on Tobacco Control will come if and when the bill is passed in the State Duma and is signed by the president.
Duma Speaker Boris Gryzlov, whose United Russia party holds an overwhelming majority in the chamber, has already signaled his support for the bill.
“I personally don’t smoke,” he said. “I think accession to the convention is absolutely the right thing to do.”
The convention also requires that member countries raise taxes on cigarettes in order to discourage consumption. Russia currently charges a token 3 percent tax on tobacco production, compared with some 50 percent in Western Europe, said Azam Buzurukov, the WHO’s national tobacco-control officer in Moscow. The cheapest cigarette brand costs a mere 6 rubles (25 cents) per pack in central Russia, he said.
The convention binds governments to restrict smoking in public places, a measure that many West European countries adopted over the past year, with the latest bans hitting French cafes, hotels and clubs on Jan.1.
It also tells member states to require producers to remove words like “light” and “mild” from packaging, which should also bear larger health warnings. In an effort to reduce supply, the document also calls for a crackdown on counterfeit products.
The WHO hailed the government’s decision. “We are positively thrilled,” said Buzurukov. “It would have been great if it had happened even earlier.”
According to the WHO web site, Angola and Uganda, for example, both ratified the document last year.
Galina Sakharova, deputy director of the government’s Pulmonology Research Institute, attributed the delay to heavy lobbying by the tobacco industry and a government reshuffle in 2004, a year after the convention was opened.
Russia has attracted significant investment from tobacco companies in recent years as they looked to make up for markets where tight anti-smoking regulations had come into effect, including neighboring Ukraine.
British American Tobacco, a leading domestic producer, said Thursday that it supported Russia’s efforts to enter the convention, but that it expected that government decisions about regulating the industry would be balanced.
“Every country is an individual case, and practical decisions aimed at reducing the effect of tobacco consumption on health may vary significantly,” company spokesman Alexander Lyuty said in an e-mailed statement.
The government’s health watchdog, the Federal Consumer Protection Service, said in November that 65 percent of Russian men and 30 percent of women smoke. Some 400,000 people died in 2005 from smoking-related illnesses, according to government statistics released last year. In 2000, the government recorded 340,000 such deaths.

TITLE: GM Seeks Growth With New Leader
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — General Motors announced on Thursday that Chris Gubbey would head its Russia division as it seeks to expand and cement its market share in the country. 
Gubbey will succeed Warren Browne, who will focus on GM’s growth strategy for Turkey, from Feb. 1.
“Russia is quickly becoming one of the largest car markets in the world,” GM chairman and CEO Rick Wagoner said in a statement. “In his new role, Gubbey will continue to drive our expansion in this vital high-growth market.”
Gubbey, 51, is currently chairman and managing director of GM Holden, a GM subsidiary based in Melbourne, and oversees GM operations in Australia and New Zealand. 
In moving to Russia, he will be in charge of one of the most vital world markets for the company. Russia, along with Britain, Italy, Ukraine and Greece, was the main contributor to GM’s growth last year. GM said it almost doubled its sales in Russia to 258,835 units last year. GM’s market share in Russia reached 9.3 percent last year, up from 6.3 percent in 2006, Ernst & Young said.
Under Browne, who took over in February 2004, GM expanded in Russia by choosing St. Petersburg for a $115 million plant. Browne also had to deal with state directors from arms trader Rosoboronexport when they questioned a GM venture with AvtoVAZ in 2005. 
“Warren’s four years were extremely eventful for GM in Russia,” GM spokesman Marc Kempe said.
GM is the only foreign carmaker in Russia that both builds cars on its own and with a local partner. Its models are also assembled at a private plant in Kaliningrad, as well as in Ukraine, Kazakhstan and Uzbekistan.
Ivan Bonchev, an analyst with Ernst & Young, praised Browne’s record, saying the company’s sales numbers speak for themselves. “He’s got a really good understanding of the market and has good connections,” he said.
Gubbey joined GM Holden last July after serving as vice president of Shanghai GM, a joint venture in China.
In December, GM lost a bid to buy a stake in AvtoVAZ to Renault, and the carmaker is now believed to be in talks with billionaire Oleg Deripaska’s GAZ.
Securing and working with a local strategic partner may prove to be one of the most challenging tasks for Gubbey. Kempe declined to speculate on the outcome of those talks. “How long is a piece of string?” he said. “We’ll talk about the results when we’ll have them.”

TITLE: New Year Holiday Costs Russia $28.5 Bln
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The extended New Year’s holiday cost the economy 700 billion rubles ($28.5 billion), or about 2 percent of the gross domestic product, economists said Thursday.
Most businesses across the country shut down for the 10-day holiday, which began Dec. 30 and ran through Jan. 8, the day after Orthodox Christmas. 
In addition, the regular work week got off to a slow start Wednesday, with many workers putting off their return to work until next week. Some of those who did come back found it difficult to get into the swing of things after the long break.
Vladimir Bragin, an economist at Trust Bank, said the slowdown in economic activity costs Russia dearly.
“I think that 10 days of pure holidays mean about 20 days of stress and hangovers. This is too high a price,” Bragin told Russia Today television.
In comparison, the Christmas holiday in Britain costs the local economy only $1.5 billion.
Economists believe, however, that Russia’s GDP doubled at the end of December, as people loaded up on presents to put under their New Year’s trees.
While $28.5 billion in lost productivity may seem like a lot, Alfa Bank economist Natalya Orlova dismissed it as a fact of life.
“This is just a fact to take into account. World banks, for example, have to take into account that in January the number of transactions in general is much lower, and as a result more employees can take vacation in January,” Orlova said on Russia Today.
With the 10-day break for New Year’s and Christmas and a series of other public holidays, Russians get at least 120 days off work each year, including weekends, the television channel said.

TITLE: High Global Oil Prices Boost Russia’s Trade Surplus
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia posted its biggest trade surplus for more than a year in November as global oil prices boosted the value of exports.
The surplus rose to $13.5 billion from $12.8 billion in October, the most since August 2006 and the second consecutive monthly increase, the Moscow-based central bank said on its web site Friday. The median forecast of 6 economists surveyed by Bloomberg was for $11.9 billion in November.
“The high prices for crude oil and gas are feeding into the overall export numbers,” Alexander Morozov, chief economist at HSBC Bank in Moscow, said by telephone.
The price of crude oil — Russia’s no. 1 export — averaged almost $90 per barrel from October to the end of November. Energy, including oil and gas, accounted for 68 percent of exports in the first ten months of last year, the Federal Customs Service said Dec. 11.
Exports rose to $36 billion from $34.8 billion in October and imports increased to $22.6 from $22 billion. The trade surplus in the first 11 months of last year narrowed from the same period in 2006 as growth fueled demand for foreign-made goods.
The surplus fell to $118.4 billion from $129.4 billion in same period a year earlier, according to Bloomberg calculations, based on data released by the central bank. Russia’s economy will probably expand by 7.6 percent in 2007, according to the Economy Ministry, compared with a revised pace of 7.4 percent for 2006.
Wages increased an annual 14.8 percent in November, reaching a monthly average of 14,406 rubles ($588.94), the Statistics Service said last month.

TITLE: A Year of Consolidation
AUTHOR: By Anna Scherbakova
TEXT: The end of the New Year vacation usually brings with it some contradictory thoughts. Looking back, we can remember a lot of significant deals and contracts. Looking forward sometimes makes us more pessimistic.
In 2007 consumer optimism increased with the volume of money people borrowed from the banks. Despite the liquidity crisis in the U.S., the number of mortgage deals in St. Petersburg almost doubled, while the small short-term loans that are more risky for banks are becoming less popular. People are very keen to buy new cars, preferably by taking out loans from the banks. About 120,000 new imported cars were sold during the year in the city, according to expert estimations. 
International carmakers continue to   come to St. Petersburg. Along with Toyota, which opened its plant at the very end of December, Nissan and GM are expanding their facilities, and Suzuki and Hyundai have signed agreements with the city’s administration and will open their plants in 2008. Producers of components are expected to be the next wave of investors. 
Other major deals are expected in residential property. In 2007, St. Petersburg auctioned about 770 hectares of land, about 95 percent of which was bought by Glavstroy. This company is part of Oleg Deripaska’s business empire, estimated by Russian Forbes to be worth $16.8 billion. So Glavstroy has enough resources to pay incredible prices at city auctions. By 2015, when the company should have completed the first stages of the projects, it will occupy up to 20 percent of the residential real estate market and squeeze out smaller construction companies from it, industry players fear.  
Consolidation is taking place on other markets, for instance in retail, which is flourishing. 
The city is attractive to large companies, so small and medium-sized businesses could feel more and more uncomfortable next year. 
However, the economy does at least look far more promising than politics, where there were few surprises last year, as a kind of consolidation is to be seen here too. Elections to the St. Petersburg parliament and State Duma were won by United Russia, the party of power, while Yabloko and SPS lost with catastrophic results. I could explain it as being down to the political inertia of the middle class, which is obsessed with consumption and votes “for stability” or does not vote at all.  
But credit for such exemplary election results should also go to the new head of  the Central Elections Commission, Vladimir Churov. He is Putin’s faithful ally, but stayed in Smolny for several years after his former boss at the External Affairs Committee left for Moscow. Then Churov, who boasts that his first rule is “Putin is always right,” entered the Duma on the Liberal Democracy Party list, and last year was appointed to the Elections Commission. There is no doubt that with presidential elections under his control, political life in 2008 will be quite predictable and unpleasant. 
The opinion and interests of the minority are being ignored more and more, in both economics and politics.

TITLE: Purge or Coup for the President
AUTHOR: By Anders Aslund
TEXT: For years, President Vladimir Putin promised everybody that he would retire from politics when his second term lapsed in 2008. With his usual consistency, he changed his tune last June, saying he would maintain a major political role. In December, he “agreed” to serve as prime minister under a future President Dmitry Medvedev. 
Many commentators have called this an ideal outcome and write about the Putin-Medvedev “dream team.” 
“Dream” might arouse the right perception because it might not be more real than Putin’s previously long-acclaimed retirement. 
Putin could not retire for two reasons. First, serious accusations of corruption and grand larceny have been raised against him. Therefore, he could not retire in a Russia without rule of law because no legal guarantees of amnesty could be plausible. Second, Putin’s rule is a personal authoritarian system in which all power rests with the ruler. If he retires, his system is prone to collapse.
Putin’s plan to become prime minister secures his badly needed immunity. But as prime minister he could not safeguard his personal dictatorship or arbitrate among his closest conspirators from the KGB in St. Petersburg. These people have all the reason in the world to revolt.
The strongest Chekist clan is led by Igor Sechin, the deputy head of the presidential administration and chair of Rosneft. A close ally of Sechin is Viktor Ivanov, responsible for personnel in the Kremlin and chairman of the armaments company Almaz-Antei and Aeroflot. Other prominent members of this camp are FSB head Nikolai Patrushev, Federation Council Speaker Sergei Mironov and Justice Minister Vladimir Ustinov. It was Sechin’s clan that campaigned for a third term for Putin.
Its main antagonists are Viktor Cherkesov, head of the Federal Drug Control Agency, and Viktor Zolotov, head of the presidential security service. Prosecutor General Yury Chaika appears to have joined them.
Beyond these two competing groups, Putin’s friends from the KGB and St. Petersburg form several seemingly independent groups. Vladimir Yakunin, chief of Russian Railways, leads one clan; Sergei Chemezov of Rosoboronexport and Russian Technologies heads another. IT and Communications Minister Leonid Reiman and First Deputy Prime Minister Sergei Ivanov seem to represent separate KGB forces.
All these KGB people have come to the fore only because they were friends of Putin. Putin has maintained his power by dividing these groups and arbitrating between them, so that they all hate one another.
But by appointing Medvedev as his heir apparent, Putin has carried out a coup against his KGB friends, betraying them all. 
Today, all of Putin’s Chekists must hate their former friend Vladimir Vladimirovich. They all hoped to remain in power, but what will happen to them in the future under the Medvedev-Putin dream team? 
Their fortunes hinge on government positions that President Medvedev could fire them from, and any student of management or history knows that it would be imprudent of him not to do so instantly.
The situation is quite simple. Either the Chekists gang up against Medvedev and Putin while they still have power, or they face being discarded into the dustbin of history. The oligarchs may be ready to defend Medvedev with their money, but the Chekists have the arms and troops. 
The Sechin group appears to have started to attack Putin himself. The very precise information about Putin’s personal wealth seems to originate from the Sechin clan. 
Nobody but the Sechin operatives are likely to have had access to Marina Salye’s report from 1992 on Putin’s alleged corrupt foreign trade deals in St. Petersburg at that time, which was released on the Russian Internet for the first time on Nov. 30, two days before the State Duma elections. Suddenly, the censorship on criticism of Putin has eased, and it is controlled by the Sechin crowd.
On Nov. 30, Kommersant published the extraordinary Oleg Shvartsman interview that blackened Sechin. It outed KGB business in general. Alisher Usmanov, the owner of Kommersant, is connected to Gazprom, which Medvedev chairs.
If Medvedev is to become president, Putin had better fire all these Chekists before the planned coronation in May. Since both a purge and a coup are obvious actions for a conspiratorial brain trained in the Kremlin, neither might come into fruition. But the nasty infighting in the Kremlin is likely to continue and lead to upsets for the dream team.

Anders Aslund, senior fellow of the Peterson Institute for International Economics, is author of “Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed.”

TITLE: Eni Cedes Bigger Kashagan Stake to Kazakhs
AUTHOR: By Nariman Gizitdinov and Lucian Kim
PUBLISHER: Bloomberg
TEXT: MOSCOW — Eni SpA and partners in the Kashagan oil field agreed to cede a greater stake in the world’s biggest crude discovery in 30 years to Kazakhstan, giving the government more profit and resolving a dispute over delays and costs.
State-run KazMunaiGaz National Co. will gain a stake equal to the top Kashagan shareholders, Kazakh Energy Minister Sauat Mynbayev said Monday. The company will pay $1.78 billion for about 8 percent of the development, bringing its total holding to 16.6 percent, Mynbayev told a press conference in the capital Astana.
Kazakhstan demanded renegotiation of the Kashagan agreement after delays, technical complications and cost overruns hampered the project. The government is following in the footsteps of neighboring Russia, which a little more than a year ago took control of Royal Dutch Shell Plc’s Sakhalin-2 project in the Pacific Ocean after pressure by regulators.
“Although none of the foreign oil companies will be happy to give up equity, it’s a small price to pay to resolve the impasse,” said Chris Weafer, chief strategist at Moscow-based UralSib Financial Corp. “It’s better to have a reduced equity stake in a project that has full state support rather than a bigger position in a project that faced an ever increasing number of problems.”
Eni and its partners will make a payment of as much as $5 billion to the government over the life of the development as compensation for lost revenue, Mybayev said Monday. The companies and government are set to complete changes to the development contract resolving the dispute by May, he said. Production at the field is now set to start by the end of 2011, he said.
Eni will lose its role as sole operator of the field after 2011, Mynbayev said. Exxon, Total and Shell will join Eni as operators, he said.
The Italian company, Exxon Mobil, Total SA and Shell each now hold 18.5 percent of the development, while ConocoPhillips has 9.3 percent. KazMunaiGaz and Japan’s Inpex Corp. have each held 8.3 percent until now.
Kazakhstan and Russia, struggling with the economic aftermath of the collapse of communism, wooed investment and technology by signing production-sharing agreements with foreign companies in the 1990s. As costs began to soar on higher metals prices and crude oil set fresh records, deals signed in leaner times came under review.
Kazakh Prime Minister Karim Masimov, Eni Chief Executive Officer Paolo Scaroni and Exxon Mobil Corp. CEO Rex Tillerson were among those who met for more than nine hours in a restaurant in Astana, the Kazakh capital, yesterday to reach the deal.
The giant offshore development in the Caspian Sea is crucial for Kazakhstan to achieve its goal of doubling crude output by 2015. Eni expects output from the field to reach 1.5 million barrels a day. The government cut its crude production forecast to 2.6 million barrels a day in 2015 from a previously estimated 3.2 million barrels a day because of the Kashagan delays.
Kazakhstan demanded a greater share of profit from Kashagan as compensation for delays, which may prolong by as much as 11 years the time it will take for the country to see returns from the field. Costs have more than doubled the price for developing and running the project to $136 billion, according to the state.
The delays and cost overruns at Kashagan will cut Kazakhstan’s returns from the project by more than $10 billion over the 40-year life of the field, Deputy Finance Minister Daulet Ergozhin said Oct. 20.
Kazakhstan began pressuring the Eni-led project after the Energy Ministry said in May that Kashagan wouldn’t start producing oil until 2011, instead of 2008 as originally planned. The ministry then revised down its production targets.
Kazakhstan published amendments to its subsoil law on Nov. 5, allowing the government to cancel oil projects such as Kashagan if developers “significantly violate the obligations set up by the agreement or the program of works.” The state can annul oil agreements if the contractor doesn’t resolve in a timely manner any obstacles identified by the government as reasons to halt a project.
Eni and its partners paid a $150 million fine in 2004 after delaying the start of oil production at the Kashagan field to 2008 from 2005. Talks to alter Kashagan’s 1997 contract took place after rising engineering costs and safety considerations forced the group to delay output a second time to the third quarter of 2010.
Kazakhstan ordered Eni to stop work at Kashagan on Aug. 27 for at least three months because of “environmental violations.” State officials also instructed Eni to halt construction of a refinery for alleged breaches of safety rules. Both complaints were subsequently resolved.

TITLE: Stock Markets, Metals Inspire New Optimism
AUTHOR: By Catrina Stewart
PUBLISHER: Staff Writer
TEXT: MOSCOW — It’s a slow start to the year when half the country is still on vacation. Two weeks after the ushering in of a new year, there is still a skeleton staff at many Moscow investment banks. 
Those who bowed out in December with a list of glittering predictions for the Russian stock market in 2008 can feel moderately encouraged, as both the RTS and MICEX ticked up on thin volumes of trading in the first week back. 
More encouraging, though, was news that Russian funds attracted $212 million of investors’ money in the first two weeks of January to Wednesday, second only to India, according to EPFR Global. By contrast, China- and Brazil-focused funds, the big winners of 2007, lost $995 million between them. 
“What investors try to do in the new year is to reduce exposure to markets that outperformed in the previous period and catch the upside in markets that underperformed,” said Erik DePoy, a strategist at Alfa Bank. 
“Russia and India seem like the favorites within BRIC. Investors seem to be scaling back their exposure to China and Brazil,” he said. BRIC is the emerging markets of Brazil, Russia, India and China.
In the United States, Federal Reserve Chairman Ben Bernanke admitted last week that the U.S. economic outlook was deteriorating and hinted at an aggressive cut in interest rates. 
Global woes are Russia’s gain — for now. Growing fears of a downturn in the United States reflect badly on Brazil, a significant trade partner. “The Japanese economy ... is teetering on the edge of recession, according to some views. If that happens, it will have an effect on China,” DePoy said.
And if that happens, he said, it will have an effect on Russia because there will be less demand for raw materials. And so it goes on. 
For now, though, Russia is looking quite rosy by comparison. 
Gazprom, the top pick for many in 2008, propped up the stock markets in their first day of trading in the new year. “Everybody loves Gazprom,” DePoy said. Including, it seems, Deutsche Bank and Troika Dialog, which bumped up their target price for the gas monopoly. 
But it was metals that were really sparkling. Polymetal, a silver producer that has performed poorly since its IPO nearly a year ago, cheered the market with news that it has eliminated its silver hedging activity. When raising money in 2001, Polymetal secured financing from Western banks on the proviso that they conduct forward sales. The stock surged 13 percent on the news on MICEX. 
“Hedging cost Polymetal around $100 million in lost opportunities in 2006 and 2007,” said Alexander Pukhayev, a metals analyst at Deutsche Bank. “Investors don’t like hedging. They can hedge themselves. They want to be fully exposed.”
Gold, meanwhile, has been enjoying a significant rally, as investors latch on to the commodity in a weak dollar environment and as a hedge against inflation. Gold broke through $900 an ounce Friday, a record high, and the soaring prices are feeding over into other precious metals, including silver. Platinum also touched new highs last week.

TITLE: Bush Has Hit a Dead End
AUTHOR: By Steven Weber and Bruce W. Jentleson
TEXT: After years of proclaiming that it understood international politics better than its predecessors, the Bush administration is now trying to undo the damage its first seven years have wrought — trying, in effect, to take U.S. foreign policy back to where it was before President George W. Bush was sworn in. 
But the world is a very different place today, and much less advantageous to the United States. Square one, administration officials are finding, is no longer really square one. 
In 2001, the administration declared a revolution in the practice and substance of U.S. foreign policy. It ridiculed liberal internationalist ideals of multilateral cooperation. It opposed using U.S. military power dressed up as “nation-building.” It wrote off global warming as Al Gore’s obsession, and it said it wouldn’t get bogged down, as its predecessors had, in Israeli-Palestinian peacemaking. Then after 9/11, the administration went even further, developing a radical new doctrine for the preemptive use of military force. 
Today, the world looks very different. And in trying to reverse the damage done during its first seven years — including an overstretched military and a loss of global prestige and influence — the administration, ironically, has quietly adopted many of the policies it once scorned. 
At the end of his term, President Bill Clinton was successfully working to preserve the benefits and correct the flaws in the 1994 Agreed Framework that aimed to halt North Korea’s nuclear weapons program. After taking office in 2001, the Bush administration wrote off this progress and instead placed North Korea into the “axis of evil.” It then halfheartedly went along with the six-party talks, initiated in 2003 and hosted by China, on the security issues raised by North Korea’s nuclear weapons program. Meanwhile, North Korea built more warheads, declared itself a nuclear power in 2005 and conducted its first nuclear test in October 2006. 
With the problem worsening, the administration finally loosened the negotiating strictures, and a major agreement with North Korea was reached in early 2007. Although the pact has only been partly implemented and compliance is spotty, it was enough for Bush, who called Kim Jong Il a “tyrant” and “Pygmy” in 2003, to write the North Korean leader a personal “Dear Mr. Chairman” letter last month, reiterating the U.S. commitment to security guarantees for Pyongyang and other benefits if it lived up to the deal. 
All well and good. But it’s a North Korea policy not that different from Clinton’s — exchanging nuclear disarmament for economic and energy assistance with a goal of diplomatic normalization. Except now, North Korea has a larger (and tested) nuclear arsenal. 
In the Middle East, the Bush administration backed off the traditional U.S. role of peace broker between Arabs and Israelis. “The road to Jerusalem,” it explained, “runs through Baghdad.” In other words, ousting Saddam Hussein was the key to unlocking a Palestinian-Israeli deal. Yet even after Hussein’s fall, U.S. peace efforts amounted to little more than drive-by diplomacy: a trip here and a speech there but no sustained campaign to secure a settlement in the decades-old conflict. 
Then late last year, at a peace conference in Annapolis, Maryland, the United States revived its role as Middle East peace broker. Last week, Bush even flew to the region and met with the principals to get the process off the ground. But the obstacles to a settlement seem greater now than when Bush took office. The Palestinian Authority in the West Bank is weak and fragmented. Hamas controls Gaza. The Israeli public feels less secure and more encircled by hostile foes in large part because of the war in Iraq. And seven years of West Bank settlements have further radicalized Palestinian youth. 
While the situation in Iraq is completely different from what it was in 2000 — Hussein is gone, there are hundreds of thousands of U.S. troops in the country and there is a democratically elected government — success there in 2008 is defined, for all intents and purposes, as containment: no weapons of mass destruction, no terrorist havens and no spillover of internal violence into other countries. That’s a policy a lot like Clinton’s. 
The big winner of the Iraq war has been Iran, whose influence in the region has multiplied, particularly in Iraq, Lebanon and Gaza. After 9/11 and again in 2003, the Bush administration effectively rebuffed potential opportunities to improve relations with Iran when the Iranians hinted at a willingness to bargain. Throughout, U.S. rhetoric toward Iran, also branded a member of the “axis of evil,” became increasingly bellicose, with threats of military action if Iran continued to pursue nuclear weapons. 
The end result of all this? Well, it turns out that Iran stopped its nuclear weapons program in 2003, according to a recent National Intelligence Estimate, though the country is continuing its nuclear fuel enrichment program. So the goal now is to constrain Iran’s nuclear program and limit its reach in the region while waiting for political change inside the country to alter the terms of the game in Washington’s favor. If U.S. policy succeeds in 2008, the outcome will look remarkably like it did in 2000, when a change of leadership in Iran led to U.S. overtures for better relations. 
But the next president will not be starting from an international position similar to the one Bush inherited no matter how successful the administration is in undoing the damage of its failed policies. A once internationally weak and democratizing Russia has become an autocratic and provocative petro-state. China’s economy is more than twice the size of what it was in 2000, and its global influence has correspondingly risen. And a new generation of jihadists, no less committed to violence, is eager to continue the anti-U.S. campaign. 
The Republican candidates who would build on Bush’s old approach to foreign policy clearly don’t get how the world has changed. But neither do Democrats who stress reversing what Bush has done. 
When you are a great power, a lost decade does not simply leave you back where you started. It leaves you far behind. U.S. presidential candidates had better plan to do more than simply reboot the system and start over, as though the clock had stopped in January 2001. 

Steven Weber is professor of political science and director of the Institute of International Studies at UC Berkeley. Bruce W. Jentleson is professor of public policy studies and political science at Duke University. This comment appeared in the Los Angeles Times.

TITLE: Russia’s Succession Minefield
AUTHOR: By Alexei Bayer
TEXT: On Moscow’s Romanov Pereulok stands a handsome apartment building dating from the turn of the 20th century. Its facade is festooned with memorial plaques bearing dozens of names of illustrious former tenants, including Semyon Budyonny, a Red Cavalry commander in the Russian Civil War, and Alexei Kosygin, a Soviet prime minister.
Most lived the privileged lives of top Soviet nomenklatura and now rest behind Lenin’s Mausoleum. But two men, Nikolai Voznesenky and Alexei Kuznetsov, commemorated here by nearly identical modest plaques, died young. These two apparatchiks from Leningrad were regarded as Stalin’s anointed heirs briefly in the late 1940s. Then came their downfall. Undermined by the intrigues of Stalin’s entourage, who knew how to exploit the boss’ paranoia, they were arrested and shot in 1950.
But by early 1953, Stalin had apparently grown weary of the rest of his Politburo as well. Evidence suggests that he was preparing another murderous purge at the time of his death. Starting with the trial of mostly Jewish surgeons and physicians accused of plotting to kill Soviet leaders, it was to feature a nationwide pogrom and the arrest and execution of Stalin’s closest comrades.
Some historians believe that his intended victims acted to pre-empt the blow. Stalin’s death, which conveniently came at the height of his anti-Semitic witch hunt, was probably no accident. He might have been poisoned, and even if he did die of natural causes, medical help was probably intentionally withheld.
This story illustrates the dangers inherent in the transfer of power in Russia. Once the heir is picked, rivals unite in their struggle against him. Worse, there is a risk that the losing camp will act against the ruler before the transfer of power becomes a fait accompli.
Of course, post-Soviet Russia is a very different place from Stalin’s U.S.S.R. But many aspects have not changed that much. Political power remains personified by an individual ruler, whose personality is conflated with his office. The institution of power transfer by a living ruler does not exist, and most Russians, opinion polls show, are hostile to this concept. When Boris Yeltsin became the first Russian leader to step down voluntarily, the transition was handled on an improvised, ad hoc basis.
Just as Yeltsin chose him, Putin has now picked Dmitry Medvedev. However, his choice was influenced by the fierce struggle of rival clans, which present a united facade and swear fealty to Putin but in reality are locked in a fight with each other.
A recent article in The Guardian explained why Putin wants to leave the presidency and detailed the lineups vying to succeed him. According to this version, Putin wants to enjoy his hidden wealth, estimated by analyst Stanislav Belkovsky at around $40 billion, and to lead the international life of the super-wealthy, a la Roman Abramovich perhaps. Medvedev represents a pro-business wing in the Kremlin. It is opposed by a hard-line group headed by Viktor Sechin and composed of former KGB brass. Putin will need to stay on as prime minister, the article says, to shield his protege from his former colleagues. If this analysis is correct, the coming months could be extremely dangerous — for Putin no less than for Medvedev. Those who pooh-pooh the murky undercurrent of violence in Russia’s business-political axis need only to remember the murder of Andrei Kozlov, first deputy chairman of the Central Bank.
When reporter Anna Politkovskaya, a government critic, was gunned down, Putin acknowledged that her death was meant to undermine him, stating that her “murder harms the Russian ... leadership much more than any newspaper article could do.”
The blatant poisoning of former FSB officer Alexander Litvinenko in London might have been another warning to Putin. It has surely made buying an English football club a lot more difficult for him than, say, for Abramovich.

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

TITLE: Israelis, Palestinians Discuss Peace Terms
AUTHOR: By Laurie Copans
PUBLISHER: The Associated Press
TEXT: JERUSALEM — Israeli and Palestinian negotiators took on the most contentious issues in their bitter conflict on Monday under a U.S.-backed effort to hammer out a final peace deal by the end of the year.
Chief Palestinian negotiator Ahmed Qureia and Israel’s lead negotiator, Foreign Minister Tzipi Livni, met for two hours at a Jerusalem hotel and began discussing sovereignty over Jerusalem, Palestinian refugees, and the final borders of a Palestinian state, an Israeli spokesman said.
“They started talking about the core issues,” Israeli Foreign Ministry spokesman Arye Mekel confirmed. The two plan to meet about once a week, Israeli officials said.
There was no immediate comment from the Palestinians, but Palestinian President Mahmoud Abbas had said Sunday that the talks would touch on the three key issues.
The talks could widen internal divisions in both the Israeli and Palestinian camps, weakening Abbas and Israeli Prime Minister Ehud Olmert.
Hawkish Israeli lawmaker Avigdor Lieberman, head of the Yisrael Beiteinu Party, has threatened repeatedly to pull out of Olmert’s coalition if the government begins discussing the three questions at the heart of the Israeli-Palestinian conflict.
Olmert’s government would still command 67 of parliament’s 120 seats if Yisrael Beiteinu’s 11 lawmakers were to leave. 
But the ultra-Orthodox Shas party, which has 12 lawmakers, has also threatened to leave the coalition if Jerusalem comes up for discussion.
This would leave Olmert without a majority, making it very hard to win support for the sacrifices required by any peace agreement.
Lieberman is due to meet with Olmert on Tuesday to sound out the prime minister on his intentions, Army Radio reported. After the meeting, faction leaders will meet to decide whether to remain in the government, Lieberman spokeswoman Irena Etinger said.
Abbas, meanwhile, is struggling with Palestine’s own political divide.
His moderate government controls the West Bank, but Islamic militants in Hamas-run Gaza fire rockets and mortars at southern Israel almost daily.
Even before Livni and Qureia sat down for their talks, Hamas spokesman Sami Abu Zuhri demanded that Abbas “stop giving away Palestinian blood and rights for free.”
“This is a failed meeting that is going to provide a cover for the occupation crimes against our people,” Abu Zuhri said in a text message to reporters.
Hamas wrested control of Gaza from Abbas-allied forces in June. The militant Muslim group is isolated internationally and is not a party to the negotiations. Olmert has said repeatedly that Israel would not implement any peace agreement before Gaza militants were subdued.
In violence late Sunday, an Israeli aircraft blasted a car in Gaza City, killing three militants, two from a group linked to Hamas and the other to Fatah, Palestinians said. 
The Israeli military said the two targeted militants were involved in rocket fire at Israel.
At a U.S.-sponsored conference in late November, the Israelis and Palestinians publicly declared their intention to relaunch negotiations for the first time in seven years, and their hope to reach an agreement before President Bush leaves office.
The talks stalled over Israeli construction in disputed territory and Palestinian militant activity. Then last week, before Bush arrived in the region to try to propel negotiations forward, Abbas and Olmert instructed their negotiators to start discussing the key issues.
“If we reach an agreement on all these issues, then we can say that we have reached a final agreement,” Abbas said in a speech Sunday, where he announced that the core issues would be tackled Monday.

TITLE: Metallurg Crowned European Champion
AUTHOR: By Christopher Hamilton
PUBLISHER: Special to The St. Petersburg Times
TEXT: Metallurg Magnitogorsk became the fourth consecutive Russian team crowned European Champion after they defeated Sparta Prague 5-2 in the 2008 International Ice Hockey Federation (IIHF) European Champions Cup (ECC) final at the Ice Palace in St. Petersburg on Sunday night. 
Czech forward Jan Marek, who played for Sparta Prague 2003-2006, scored two goals and had two assists for Metallurg, while Igor Mirnov scored the game-winner in the second period, as well as an insurance goal late in the third. 
Metallurg started strong and tournament MVP Vitaly Atyushov threaded a pass to Marek who easily beat Sparta netminder Tomas Duba at 2:58. Metallurg dominated the first period of play, but Sparta’s Martin Podlesak evened the score at one with 27 seconds left before the first intermission slipping the puck past Metallurg’s Canadian goaltender Scott Travis.  
Metallurg continued controlling the game and retook at the lead 26:19 on another Marek powerplay goal. 
Midway through the game Sparta knotted the game at two, capitalizing on a two man advantage powerplay. Tom Netik crossed the puck to Jiri Vykoukal who easily beat a prone Travis. Martin Streba was credited with an on the play. But for Sparta it would stop there. 
Mirnov scored the game winner with 1:24 left in the second period, then sealed the win with a breakaway goal with 1:26 left in the game. Sparta went all out after Mirnov’s second goal but turned over the puck, and Alexei Kaigorodov secured the 5-2 win with a goal in the final minute during a 3-on-2 odd man rush. 
The dominance that Metallurg showed on Sunday was in great contrast to their performance against Slovan, Bratislava the day before. Slovan controled the Russian team, which tied that qualifying game in a desperate attack with just over a minute left in the third period. Slovan disputed the goal because it appeared to go in off a player’s skate, however after a lengthy review, the referee ruled it a goal. Metallurg held on through a number of attacks in overtime and went on to defeat Slovan in a shootout to advance to the gold medal game.
This is Metallurg’s third time as European Champion. The perennial powerhouse from the Urals won the final two seasons of the now-defunct European Hockey League in 1999 and 2000, and it was fitting that they won the fourth and final ECC, keeping it an all-Russian event. Previous ECC winners include Avangard Omsk, Dinamo Moscow, and Ak Bars Kazan. 
The IIHF announced the formation of the Champions Hockey League (CHL), which will replace the European Champions Cup, as the new way to crown the kings of European club hockey. 
“St. Petersburg is a city whose history and events have shaped the history of the world. Therefore, I am very pleased to announce that yesterday evening  we reached an agreement that hopefully will shape the history of ice hockey,” said IIHF President Rene Fasel. 
In its inaugural year the Champions Hockey League will consist of 12 teams from Europe’s top seven countries according to IIHF world rankings. The top four countries, the Czech Republic, Finland, Russia, and Sweden will have two teams each, the regular season champion and the playoff winner. “Should one team claim both titles then the regular season runner up will have the right to go,” clarified Fasel. 
The champions from Germany, Slovakia and Switzerland and a team to be announced later round out the 12 teams. The format is similar to that of UEFA’s Champions League in European club soccer and will start with four group stages of three teams that will play each other home and away. The games will start on Oct. 8, 2008 and be played on Wednesdays. The four group winners will advance to the semi-finals to be held in late December and January and the finals in late January — during a break in UEFA football action.  
The CHL will expand to 30 teams from 24 countries in the 2009-2010 season, featuring qualifying rounds preceding the group stage involving champions of teams from lower ranking European countries. The qualifying stages will be similar to the IIHF Continental Cup. However, Fasel said he didn’t want to see that competition discontinued. 
“I really like that competition. It’s a good stimulus for lots of clubs from countries all across Europe, not just hockey hotbeds,” Fasel said. “And maybe some of the losers [from the CHL] could have a second chance [in the Continental Cup] similar to how [third place] teams from the Champions League drop down to UEFA Cup [European club soccer’s second-tier tournament].”
“The Champions Hockey League will not only contribute to the development of club hockey in Europe, but it will also be financially rewarding for the clubs,” Fasel said. Prize money totaling 10 million euros will be distributed to the participants. “This is by far most substantial prize sum ever introduced in European club hockey,” he added.

TITLE: Iran Tops Bush Talks In Riyadh
PUBLISHER: The Associated Press
TEXT: RIYADH, Saudi Arabia — Iran, Mideast peace and democracy in the region topped the agenda for President Bush during talks Monday with ally Saudi Arabia.
Bush’s first visit to the kingdom came as his administration notified Congress of its intent to sell $20 billion in weapons, including precision-guided bombs, to the Saudis. The announcement was timed to coincide with the president’s arrival in the Saudi capital.
It is “a pretty big package, lots of pieces,” national security adviser Stephen Hadley told reporters on Air Force One.
The sale is an important part of the U.S. strategy to bolster the defenses of its Arab allies in Saudi Arabia and other oil-producing majority Sunni Muslim Gulf nations against threats from Shiite Iran. The official announcement will start a 30-day review period during which Congress could try to block the sale, which has raised concern among some lawmakers.
Saudi Arabia and other Gulf states, which have majority Sunni Muslim populations, harbor deep suspicions about Shiite Iran’s apparent designs to establish itself as a major power and have reacted skeptically to the conclusions of intelligence estimates about Iran.

TITLE: Man Utd Notch Up 6-0 Victory
PUBLISHER: Reuters
TEXT: LONDON — English champions Manchester United thrashed Newcastle United to take the Premier League lead in a high-scoring weekend across the big European leagues.
Manchester United took over top spot in the Premier League with a 6-0 hammering of managerless Newcastle United after Arsenal could only draw 1-1 at home with Birmingham City.
Newcastle, turned down on Saturday by Portsmouth boss Harry Redknapp for their vacant managerial job, conceded six goals in the second half as the champions ran riot, with Cristiano Ronaldo netting his first hat-trick for the club.
Chelsea remains in touch in third spot after a routine 2-0 home victory over Tottenham Hotspur. Juliano Belletti and Shaun Wright-Phillips sealed the points, while new signing Nicolas Anelka hit the crossbar.
Fourth-placed Liverpool lost ground when they drew 1-1 at Middlesbrough. Fernando Torres equalized for the disappointing Reds in the second half.
United and Arsenal both have 51 points, with United enjoying a better goal difference. Chelsea has 47 points with Liverpool on 39 along with Everton, Aston Villa and Manchester City.
In France, Champions Olympique Lyon moved six points clear at the top of Ligue 1 after recovering from a goal down to beat Toulouse 3-2 on Saturday.
Young France strikers Hatem Ben Arfa and Karim Benzema scored a goal each to help Lyon move on to 42 points from 20 matches, ahead of second-placed Nancy, who had to be content with a 0-0 draw at Caen.
Third-placed Girondins Bordeaux joined Nancy on 36 points with a 4-1 home win over strugglers Auxerre, featuring two goals from Argentine forward Fernando Cavenaghi.
Paris St Germain broke a jinx with their first home win of the season in the league, as Ivory Coast forward Amara Diane scored twice to help them beat Racing Lens 3-0 on Sunday.

TITLE: Big Guns of Tennis Trade Shots at Australian Open Grand Slam
AUTHOR: By Paul Alexander
PUBLISHER: The Associated Press
TEXT: MELBOURNE, Australia — The first round is about survival, finding that little bit extra when things aren’t going great and there’s an unseeded player across the net, hungry for an upset.
Serena Williams and Justine Henin handled it, but Jelena Jankovic and Lindsay Davenport struggled to find top form Monday at the Australian Open. All managed to advance — unlike ninth-seeded Andy Murray of Britain, who became the first high-profile casualty at the season-opening Grand Slam.
“I think I was a wee bit nervous out there,” defending champion Williams admitted after beating Jarmila Gajdosova 6-3, 6-3 in the first match on center court. “I think everyone could probably tell I was a little scratchy. But it’s the first round. Just moving forward.”
It didn’t help that brisk breezes were swirling around Melbourne Park, and the bright sun played havoc with serve tosses and overheads.
Top-ranked Henin, making her first appearance here since defaulting with an upset stomach in the 2006 final against Amelie Mauresmo and sitting out last year while going through a divorce, ran off the last six games to finish off a 6-2, 6-2 victory over Japan’s Aiko Nakamura.
“It was a little bit windy and she had a game that wasn’t the easiest for me to start the tournament. I’m glad it’s behind me now,” said Henin, who ran her winning streak to 29 matches, six short of Venus Williams’ record.
Murray lost 7-5, 6-4, 0-6, 7-6 (5) to Jo-Wilfried Tsonga of France, who gave Andy Roddick a tough time in the first round last year. Juan Ignacio Chela of Argentina, seeded 18th, fell in four sets to Guillermo Garcia-Lopez of Spain.
Sixth-ranked Roddick had less trouble this time, advancing 6-3, 6-4, 7-5 over Czech qualifier Lukas Dlouhy, who self-destructed with 12 double-faults in the first two sets.
No. 4 Nikolai Davydenko, still subject to an ATP investigation into illegal gambling, beat Michael Llodra 7-5, 7-5, 6-3.
Women’s No. 3 Jankovic wasn’t sure how she managed to beat Austria’s Tamira Paszek 2-6, 6-2, 12-10, fending off three match points in the third set, which ran nearly two hours and included 15 service breaks.
“I was praying, ‘Please, God, help me get out of the situation,’” said Jankovic, who appeared to be fit after struggling with a leg injury at the Hopman Cup earlier this month. “I didn’t want to go home, and that was what was driving me.”
Davenport, the 2000 champion here who has won three of four tournaments since coming back after the birth of her first child last June, held off Italy’s Sara Errani 6-2, 3-6, 7-5 in what she called the worst outing of her comeback.
“When you can get through, kind of scrape through not playing your best, a lot of times you can turn it around,” said Davenport, who surpassed Steffi Graf atop the all-time list of money winners on the women’s tour at $21,897,501 with the win. “I’m hoping that happens.”
She likely will have to be at her best Wednesday when she plays fifth-seeded Maria Sharapova, who had no easy time downing Jelena Kostanic Tosic of Croatia 6-4, 6-3.
Last year, Serena Williams was unseeded, ranked 81st and coming off one of her worst losses on tour — in a Tier 4 event at Hobart — yet she beat six seeded players en route to the title here. It was her eighth, and least expected, Grand Slam win.
This time, she’s seeded seventh, looks to be in excellent shape and is one of the clear favorites. The courts also have been resurfaced in bright blue.
“It’s obviously a lot different — I’m not No. 81 any more. And the court’s different — it’s a different color,” Williams, dressed in fuchsia bicycle shorts and headband, a short white dress and dangling, chandelier-inspired earrings, told the crowd after her 62-minute victory over wild-card entry Gajdosova.
After an inconsistent start, Williams ran off the last three games of the first set, with three aces in the last game. Grunting with effort on every shot, she dropped only one of her last 16 points on serve.
Mauresmo, who has slumped from No. 1 to No. 18 since winning here in 2006, opened with a 6-7 (6), 6-0, 6-0 victory over Tatiana Poutchek of Belarus. 
Other women’s winners included 11th-seeded Elena Dementieva of Russia, No. 12 Nicole Vaidisova of the Czech Republic, No. 13 Tatiana Golovin of France and No. 15 Patty Schnyder of Switzerland.

TITLE: British PM Reasserts Ties With EU
AUTHOR: By Adrian Croft and Katherine Baldwin
PUBLISHER: Reuters
TEXT: LONDON — Prime Minister Gordon Brown, often accused of being lukewarm towards the European Union, said on Monday it would be a mistake to question Britain’s EU membership at a time of global economic problems.
Recent financial turbulence was “a wake-up call” for every economy and has tested the stability of financial systems, Brown told an audience of business leaders in London. 
Britain is well placed to withstand the global turbulence expected this year because it has low inflation and interest rates, record high employment and the public finances are “in a sustainable position,” Brown said.
“What is clear is that at this time of global economic uncertainty, we should not be throwing into question our future membership of the EU — risking trade, business and jobs.”
“I strongly believe that rather than retreating to the sidelines we must remain fully engaged in Europe so we can push forward the reforms that are essential for Europe’s, and Britain’s, economic future,” he said.
Brown said the EU must work together to take any immediate necessary measures to protect against financial turbulence.
He confirmed he would meet French President Nicolas Sarkozy, German Chancellor Angela Merkel and Italian Prime Minister Romano Prodi later this month to discuss stability measures.
His remarks were seen as a riposte to views aired by opposition Conservative leader David Cameron on Sunday, though critics said his own commitment to Europe had been thrown into doubt last month by his late arrival in Portugal to sign the EU Lisbon Treaty.
Cameron said on Sunday he wanted Britain, rather than Brussels, to decide on its social and jobs policy and suggested that a future Conservative government might try to reopen the Lisbon treaty even if every EU state had ratified it by then.
Brown’s government is struggling to find a rescuer for stricken mortgage lender Northern Rock, a casualty of the global credit crisis, and is under pressure over a series of blunders.
One poll on Sunday showed the Conservatives extending their lead over the ruling Labour Party to 10 percentage points, though Brown does not have to call an election until 2010.
Brown, who will meet Sarkozy, Merkel and Prodi on Jan. 29, said more must be done to “ensure continued stability and to strengthen and deepen economic reform in Europe.”
Now that the Lisbon Treaty has been signed, Europe must focus on stability, growth, competitiveness and jobs, he said.
Britain’s parliament is set for a battle in the next few months on whether to ratify the treaty.
In 2005, the government promised a referendum on the proposed EU constitution, which was then rejected by French and Dutch voters. Brown sees no need for a referendum on its modified successor, the Lisbon Treaty, saying it does not involve a significant loss of British sovereignty.

TITLE: Italian Businesses Resist Mafia With Internet Site
AUTHOR: By Frances D’Emilio
PUBLISHER: The Associated Press
TEXT: PALERMO, Sicily — When it came down to business, Cosa Nostra could always count on fear. No more.
In a rebellion shaking the Sicilian Mafia to its centuries-old roots, businesses are joining forces in refusing to submit to demands for protection money called “pizzo.”
And they’re getting away with it, threatening to sap an already weakened crime syndicate of one of its steadiest sources of revenue.
The Mafia has a history of bouncing back from defeat, but this time it is up against something entirely new: a web site where businessmen are finding safety in numbers to say no to the mob.
At the same time, businessmen ranging from neighborhood shopkeepers to industrialists are being emboldened by arrests of fugitive bosses, and the discovery in raids of meticulous Mafia bookkeeping on who paid the “pizzo” and how much.
“This rebellion goes to the heart of the Mafia,” said Palermo prosecutor Maurizio De Lucia, who has investigated extortion cases for years. “If it works, we will have a great advantage in the fight against the Mafia.”
These latest gains build on other successes in the fight to break Cosa Nostra’s stranglehold on Sicily. In the last two decades, the syndicate has been battered by testimony from turncoats, who helped send hundreds of mobsters to prison in the late 1980s, and a fierce state crackdown a decade later after bombs killed two Palermo anti-Mafia prosecutors.
The number of rebels on the web site is still tiny compared to Palermo’s businesses overall, but their movement has helped to chip away at the Mafia’s psychological hold on Sicilians — long conditioned to believe that defiance would bring ruin or a death sentence. And any consistent crumbling of that culture of fear could ultimately lead to Cosa Nostra’s undoing.
The businesses are openly defying the Mafia by signing on to a web site called “Addiopizzo” (Goodbye Pizzo), which brings together businesses in the Sicilian capital that are resisting extortion.
The campaign was launched in 2004 by a group of youths thinking of opening a pub. They started off by plastering Palermo with anti-pizzo fliers, reading “AN ENTIRE PEOPLE WHO PAYS THE PIZZO IS A PEOPLE WITHOUT DIGNITY,” and eventually brought their campaign online where it struck a profound chord with Sicilians fed up with Mafia bullying.

TITLE: Non-EU Foreigners Wanting UK Visas To Give Fingerprints
PUBLISHER: The Associated Press
TEXT: LONDON — All visitors to Britain requiring visas will have to be fingerprinted starting Monday, the government said.
Immigration Minister Liam Byrne said those applying for a British visa from any of 133 countries would now have their fingerprints checked against a database. Byrne said the system, which the government has gradually been introducing around the world since September 2006, had already captured biometric information from more than 1 million people. He said the system had flagged nearly 500 cases of identity fraud.
Logging and checking visitors’ biometric information is one of the central planks of the government’s new immigration strategy, which includes the introduction of an Australian-style points system intended to encourage skilled immigrants, the creation of police-like border force and fines for bosses who do not ensure their employees are legally entitled to work in Britain.
Tourists from the United States and the European Union, which do not require visas for short visits to Britain, will not be fingerprinted.

TITLE: Odd Couple Assume Power in Guatemala
AUTHOR: By Juan Carlos Llorca
PUBLISHER: The Associated Press
TEXT: GUATEMALA CITY — Guatemala’s new president, Alvaro Colom received training as a Mayan priest. His vice president is a heart surgeon.
As the two men prepare to take office on Monday, Guatemalans are hoping for some healing.
After a 36-year civil war, and still plagued by poverty, corruption and street gangs, “Guatemala is sick, very sick, in intensive care,” says Vice President Rafael Espada, who gave up a decades-long medical career in Texas to return to Guatemala last year as Colom’s running mate.
“But I think that if we use a smart methodology and do things well, it will be better in four years and in very good shape in 20,” he told The Associated Press in an interview.
Guatemalans survive on less than $1 a day, on average. Mayan Indians, half the population of 13 million, suffer discrimination and economic exclusion in a country dominated by those of European ancestry. Colom and Espada are part of that elite and are promising to move the country leftward, raise taxes, protect human rights and widen access to health care, education and housing.
They face a powerful business class as well as an archaic legal system that makes reforms virtually impossible without constitutional amendments. It “is a straitjacket for any president,” says political analyst Gustavo Porras. “Any change will take years.”
Colom is best known for his work with the Guatemalan government and the UN to bring home more than 40,000 refugees, mostly Mayan, after the civil war ended in 1996 and invest hundreds of millions of government dollars in the areas that were hardest hit by the war. The refugees honored him by training him as a minister in their religion.
“He was the person that spurred the return of the refugees ... by buying land and giving loans for productive projects between 1992 and 1997,” said Gunther Mussig, who led the UN-sponsored organization that oversaw the repatriation.
With the departure of President Oscar Berger’s pro-business government, 47 percent of Guatemalans believe the country will be better off, about 29 percent think it will stay the same and 17 percent expect life to be worse, according to a poll published in the El Periodico newspaper. The survey polled 1,008 Guatemalans in December and had a margin of error of 3 percentage points.
Four years ago, when Berger took office, only 39 percent of Guatemalans polled in the same newspaper expected the country to be better managed, while 21 percent thought things would get worse.
Colom “has been in poor communities and he has a better understanding of the country’s situation,” said Mario Rodriguez, who works as a bodyguard. “I am not expecting great things, because the rich control the country. But let’s hope something changes.”
Colom and Espada vow to focus their first 100 days on three key areas: public safety, rural aid, and building more schools and public health facilities.
Max Rustrian, a janitor at a public swimming pool, says he’s willing to wait a year, “because 100 days is not enough to do anything.”

TITLE: Sarkozy, Saudis Discuss Energy
AUTHOR: By Laurent Pirot
PUBLISHER: The Associated Press
TEXT: RIYADH, Saudi Arabia — France’s president offered Saudi Arabia help in exploring a possible civilian nuclear energy program as the French leader began a visit to the oil-rich kingdom on Sunday.
President Nicolas Sarkozy and King Abdullah signed agreements on oil and gas and political cooperation at the start of the visit. Sarkozy also intended to press the leader of the world’s top oil producer for lower prices of crude, which reached a record high of $100 a barrel this month, according to a French diplomat.
The Saudis want to buy more helicopters, ships, and submarines from the French, as well as get help revamping border security systems. They also want to tap French expertise on railway construction, as Saudi looks to build a TGV fast train link between the holy cities of Mecca and Medina, as well as a subway in the capital Riyadh.
Sarkozy offered the king the services of France’s Atomic Energy Commission to explore the possibilities of a civil nuclear energy program in Saudi Arabia, the president’s office said.
The trip is Sarkozy’s third to the Middle East in three weeks and during a December visit to Egypt, Sarkozy also expressed France’s willingness to assist Egypt in the nuclear field.
France was to sign a nuclear cooperation accord with the United Arab Emirates during Sarkozy’s upcoming visit there Tuesday, the French leader told the pan-Arab daily Al-Hayat in an interview published last week.
The accord for cooperation in civilian nuclear activities, a first step toward building a nuclear reactor, would be the third France has signed recently with Arab nations, after Libya and Algeria.
“I have often said that the Muslim world is no less reasonable than the rest of the world in seeking civilian nuclear (power) for its energy needs, in full conformity with international security obligations,” Sarkozy told the London-based Al-Hayat.
Building nuclear reactors for civilian use for these countries would mean lucrative contracts for France.

TITLE: Jerusalem Indicates Use Of Force Against Nuclear Iran
AUTHOR: By Laurie Copans
PUBLISHER: The Associated Press
TEXT: JERUSALEM — Prime Minister Ehud Olmert told a powerful parliamentary panel on Monday that Israel rejects “no options” to block Iran from obtaining nuclear weapons, a meeting participant said.
The statement was the Israeli leader’s clearest indication yet that he is willing to use military force against Iran.
“Israel clearly will not reconcile itself to a nuclear Iran,” the meeting participant quoted Olmert as telling the Foreign Affairs and Defense Committee. “All options that prevent Iran from gaining nuclear capabilities are legitimate within the context of how to grapple with this matter.”
The meeting participant spoke on condition of anonymity because the session was closed.
Olmert addressed the panel days after discussing Iran’s nuclear ambitions in talks with President Bush in Jerusalem.
During that visit, Israeli officials disputed the recently released conclusions of a U.S. National Intelligence Estimate, which concluded Iran halted its nuclear weapons program in 2003.
In Jerusalem, Bush declared that Iran remained “a threat to world peace,” but reasserted his commitment to trying to resolve the standoff over Iran’s nuclear program diplomatically.
Israel, which sent warplanes in 1981 to demolish an unfinished nuclear reactor in Iraq, advocates a diplomatic solution to the Iranian standoff as well. But in his comments to the parliamentary committee, Olmert said: “It’s clear that Israel won’t reconcile itself to a nuclear Iran. We reject no options a priori.”
Israel considers Iran to be its most dangerous enemy and rejects Tehran’s insistence that it has only a peaceful nuclear program designed to produce energy for civilian uses. Iranian President Mahmoud Ahmadinejad has called for the dissolution of the Jewish state. Iran possesses long-range missiles that are capable of striking Israel and can be fitted with nuclear warheads.
Meir Javedanfar, an Israel-based Iran analyst, said Olmert refused to rule out a military option “in order to increase the urgency to find a diplomatic solution.”
“I think this is Prime Minister Ehud Olmert’s way of making sure that the international community stays alert on the Iranian nuclear issues,” Javedanfar said. “The concern in Israel is that after the NIE report, the world is just going to sit and watch Iran continue with its nuclear weapons program.”
Two sets of UN sanctions have failed to push Iran to abandon its enrichment of uranium, a process that could also be used to develop fissile material for a warhead.
Although Israel successfully knocked out Iraq’s nuclear program with a single airstrike 26 years ago, any attack on Iran’s nuclear program would be more complicated because its facilities are scattered, with some hidden underground.
Such an attack would also almost certainly unleash an Iranian reprisal against Israel, U.S. forces in the Persian Gulf or both.