SOURCE: The St. Petersburg Times
DATE: Issue #1357 (21), Tuesday, March 18, 2008
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TITLE: Lukashenko Turns to Brit For PR Help
AUTHOR: By David Nowak
PUBLISHER: Staff Writer
TEXT: MOSCOW — From Boris Yeltsin to Margaret Thatcher, from Alexander Litvinenko and Boris Berezovsky to General Augusto Pinochet — Timothy Bell, the British godfather of PR, has faced some real challenges.
And now, the 66-year-old, staunchly conservative spin doctor again has his work cut out for him if he is to alter public perceptions of his latest client — Belarussian President Alexander Lukashenko.
Lukashenko’s nickname as “Europe’s last dictator” is sure to feature prominently on Bell’s things-to-tackle list.
“He would like his country to be better understood, and his successes to be better grasped” Bell said by telephone Friday.
Bell, a member of Britain’s House of Lords whose most recent work has revolved around his friend and the Kremlin’s self-exiled enemy Boris Berezovsky, was invited by Lukashenko to his presidential office in Minsk for a midday meeting Thursday.
At the meeting, attended by Belarussian Foreign Minister Sergei Martynov and slowed by occasionally perplexed interpreters, Lukashenko told Bell that he wanted to hear how his company — Bell Pottinger — proposed to sell the former Soviet satellite to the West.
Bell refused to disclose the specific promotion methods he was considering, but revealed that Lukashenko said Belarus was a country willing to go to great lengths to be viewed as accessible.
“He has raised pensions and wages and would understandably like to shift the focus to these areas,” Bell said.
“Lukashenko doesn’t see why Belarus can’t be a friend to the West and a friend to Russia at the same time,” he said.
Asked whether he would advise on concrete policy changes for political clients, Bell said: “Yes, of course. But I view our work as more of an extension of policymaking rather than policymaking itself.”
According to a statement posted on the presidential web site, Lukashenko told Bell, “You will find working in our country pleasant.”
“We are counting on the fact that you will be a goodwill ambassador from Britain, with which we have actively developing relations, despite vicissitudes in the political realm,” he said.
In a career that has spanned four decades, Bell appears to have kept business and personal ethics separate, seldom refusing to represent either — or both — sides in a squabble.
Because of his dealings with Berezovsky, however, he said, “I know we won’t get any contracts with the ex-KGB guys, but then, we don’t want to.”
But in the case of Lukashenko he takes pride in working, as he put it, to reverse “isolationist policies” that have proved “unhelpful” to the country’s foreign relations.
No one is denying that a little improvement in Belarus’ image might help it economically.
“Lukashenko realizes the need to attract investment,” said Yaroslav Romanchuk, head of the Mizes Research Center in Minsk. “But it’s the age-old problem: He would prefer to take token steps that give the appearance of a favorable investment climate, rather than make the institutional changes that would make that a reality.”
The “token steps” Romanchuk mentioned included the abolition earlier this month of the “golden share” scheme, which gave the government the right to intervene in the management of private businesses.
Another, Romanchuk said, was the release in recent months of several opposition activists considered by the West to be political prisoners. The country’s most prominent detainee, Alexander Kozulin, is still serving a 5 1/2-year jail term for helping to organize protests against the president’s re-election.
Lukashenko has also given the green light for a European Commission representative office to be based in Minsk. Difficulties have continued with the United States, in particular, as U.S. Ambassador to Minsk Karen Stewart returned to Washington temporarily last week following a recommendation on the part of Belarussian authorities, but the signs that Lukashenko would like better relations with the West are there.
Problems to the east may be part of the reason.
The resources of a still heavily centralized economy are drying up at a time when Russia, a formerly dependable neighbor that sold Belarus energy at bargain prices, is starting to demand world market fees.
The same thousand cubic meters of gas that Russia sold to Belarus for $40 in 2006 is likely to cost as much as $170 by the end of the year, said the Mizes Research Center’s Romanchuk. That has narrowed the profit margins on Russian-derived gas that Belarus has been reselling to Europe at world prices.
As for the economic benefits he will receive from helping Belarus, Bell would only say that his company would earn millions of dollars over the space of several years.
Bell is best known in Britain for his advisory role in Thatcher’s three successful election campaigns. Bell Pottinger handled the media attention for Litvinenko, the former FSB officer who died in London of radiation poisoning in 2006.
Bell is also no stranger to former Soviet states. Former President Boris Yeltsin sought his advice when he ran for re-election in 1996. He has also advised Ukrainian President Viktor Yushchenko.
Russia has also sought the advice of Western PR firms. In 2006, President Vladimir Putin hired British PR firm Portland to advise on the country’s hosting of the G8 summit.

TITLE: African Student Stabbed in Skinhead Attack
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Doctors treating a Ghanaian student after he was stabbed 36 times by a suspected neo-Nazi gang on Wednesday said Monday that his life was not in danger after he underwent multiple operations including brain surgery, according to Aliou Tunkara, president of St. Petersburg’s African Union.
“They attacked to kill, but quite against their expectations, the victim survived,” said Tunkara, who linked the timing of the attack to Wedneday’s UEFA Cup soccer match played in St. Petersburg between home team FC Zenit St. Petersburg and Olympique Marseille of France. 
“It’s not a coincidence at all since every time Zenit plays a team involving blacks, racial attacks in the stadium turn into violence on the streets,” he said.
A group of suspected white supremacists attacked Justice Adjei, 20, a second-year student of the St. Petersburg State University of Finance and Economics at around 7.30 p.m. on Wednesday on Novosmolenskaya embankment on Vasilyevsky Island, on the night of the match.
Marseille defender Roland Zubar complained of racist chants by some Zenit fans directed at him and black teammates Charles Kabore and Andre Ayew during the match at Petrovsky Stadium. 
“They threw a banana at us and made monkey sounds,” Zubar told reporters after the match. 
UEFA has opened an investigation into the racial abuse and will examine the matter at its meeting on Thursday.
The attack on Adjei was similar to that on Maira Mkama, 23, an African-Russian student who was hospitalized with stab wounds after Zenit won the Russian championship in November. 
Although Mkama and a friend described the assailants as skinheads, prosecutors fell short of qualifying the incident as a racially motivated crime. Nobody has been charged in the case.  
Lampser Samba, a Senegalese student at the St. Petersburg State University of Telecommunications was shot  dead in April 2006, a day after Zenit had played FC Seville. The police are compiling a case against five murder suspects.
Adjei’s friend and compatriot, a fellow student who asked to remain anonymous because he now fears for his life, said Wednesday’s attack appeared to have been premeditated. 
“Justice was attacked on his way home from a visit to a Russian friend by people who appeared to have been on a manhunt,” the student said.
Meanwhile, Adjei described the attack from his hospital bed on Sunday.
“It happened so fast that I couldn’t make out if there were five or six skinheads, but there was an old lady walking a dog nearby, and a young lady walking in front of me ran away,” he said. 
“One skinhead stood watching from a distance as if to raise the alarm in case someone else appeared on the scene.”
“They ran away as the old lady yelled, and I managed to call a friend who appeared after a little while and who together with the old lady called the police and the ambulance,” Adjei added.
“The police showed up shortly afterwards, but it looked like it was a harassment when they focused their attention on my documents instead of my condition,” Adjei said, adding that at that moment he was on the edge of consciousness due to loss of bood. 
“The ambulance arrived about 40 minutes later.”
Pending the investigation into the case, the police have warned the elderly woman against talking to the press because, as a witness, her life could also be in danger. 
Although a hate motive has not been ruled out, prosecutors have filed charges of attempted murder in connection with the incident. 
Human rights activists say it is typical of St. Petersburg’s neo-Nazis to go on the rampage on the days approaching Adolf Hitler’s birthday on April 20, and that such attacks are a part of their rituals.
The St. Petersburg Foreign Students Union placed an announcement on its web site Thursday urging students to be especially vigilant this month.

TITLE: Governor Says Uni Will Open
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Governor Valentina Matviyenko said Monday that St. Petersburg’s European University will reopen in the near future after a flap involving fire regulations and heated accusations that it was closed for political reasons.
“The city’s fire inspectorate was satisfied with the most recent series of corrections to the violations of fire safety regulations,” Matviyenko said in a telephone conversation with the university’s rector, Nikolai Vakhtin, adding she would make sure the conflict gets resolved as soon as possible. 
A summary of the conversation between Matviyenko and Vakhtin was posted on the university’s website Monday.
Promises aside however, Matviyenko stopped short of taking any practical steps. 
City Hall’s Science and Higher Education Committee has not yet licensed a temporary venue in which the European University could hold lectures. 
The university has submitted several proposals for possible temporary locations where classes could be held.
Lectures at the European University in St. Petersburg have been suspended since the city’s fire inspectorate found 52 violations of the fire code at its buildings earlier this year.
The Dzerzhinsky district court twice ruled against granting the university permission to hold classes while correcting the violations. 
Critics of the decision to close the university are suspicious that although the fire inspectors’ complaints were directed against the building that houses the university, the court’s ruling stopped the University from teaching altogether.
The judgment orders a “temporary suspension of activities,” which makes it impossible for the university’s management to rent out other premises until the argument over the historic premises gets resolved.
The list of violations has not changed and is not even being revised.
Because it is located in a historic building protected by the state, any changes to either its exterior or interior would require lengthy coordination with a number of state organizations. For example, the university was asked to remove a narrow spiral staircase dating from 1881. To do that, the school’s management would need the approval of City Hall’s Committee for the Preservation and Protection of Historical Monuments. 
The university’s management found itself at a loss over such complaints because the staircase has always been there and did not present a problem on any previous annual fire inspection.
Over the course of the last two months, the European University has been subjected to two other inspections investigating the legitimacy of its registration and operations, and even the content of its courses.
While its fate is being decided by bureaucrats, students of the European University have been busy staging protest events aimed at drawing public attention to the plight of the University. 
The Internet has been buzzing with blogs and forums where bewildered students exchange information and consolidate their efforts.
Students have already organized a series of theatrical and satirical protests against the closure.
A conference held on Sunday in the library of the Jewish Culture House was called “Fire Practices and Conspiracies in the Slavic and Judeo Cultural Tradition.” 
On Wednesday, a soccer match between students and journalists against  the staff of a local firefighting academy will be held.
However, Alexander Viktorov, head of City Hall’s Science and Higher Education Committee accused the University of creating what he sees as unnecessary tension over the matter. 
Viktorov has asked the students to refrain from holding meetings, staging protest events and engaging in street politics.
“We live in a state ruled by the law and if we allow street politics to become a tool to solve our problems, it will be a road to nowhere,” Viktorov said. “Everything with the European University is going to be just fine if all of us join forces and correct the violations — without exerting pressure on the firefighters.”
Boris Firsov, the University’s honorary rector, described the conflict between the academics and the fire inspectorate as a triumph of bureaucracy over common sense.  
Human rights advocates across Russia have said the phrasing used in the verdict of the Dzerzhinsky court suggests that political pressure is being applied to the University, which until January ran a project on the study of independent election monitoring funded by the European Union.
The project drew criticism from a United Russia member of the State Duma, who called for an inquiry into the university’s activities and for the project to be closed. 
On Jan. 30 — after the University failed the first fire inspection but before the Dzerzhinsky court’s first ruling — the university’s Scientific Council voted to shut down the project on the grounds that “part of the activities involved in the project does not correspond to the school’s license.”
At that time Vakhtin declined to be more specific when confronted with requests from reporters to give a more detailed explanation behind the decision.
After the court twice prevented the University from functioning despite its attempts to resolve the fire code violations, Vakhtin then made a careful but powerful statement, pointing out that the University was founded by the late St. Petersburg mayor Anatoly Sobchak, a man revered by President Vladimir Putin and his successor Dmitry Medvedev.
Vakhtin took matters further by stressing that the campaign against the university clashed dramatically with Medvedev’s praise of the university as innovative — the European University  was the first academic institution in the country to implement an endowment scheme for its funding — as well as the politician’s calls to cut down on red tape in education.

TITLE: Toxic Train Rolls Into Town
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: Radiation levels near a stationary train in the city’s Avtovo residential district were 30 times higher than the accepted norm, city ecologists said after they took measurements next to it on Saturday. The train was loaded with radioactive waste from Germany.
“Background radiation levels near the train measured 680 microroentgen an hour, when the norm is 12 microroentgen an hour,” said Rashid Alimov, a member of the St. Petersburg branch of the ecological organization Bellona.
The siding where the train stood is where local residents regularly cross the railroad tracks so as not to walk across an elevated railroad bridge, Alimov said.
Alimov said exposure to radiation at these levels is not deadly but could still have negative effects on the health of people exposed to it. 
Activists from Bellona and other Russian environmental groups were met by a guard carrying a machine gun, which he cocked and pointed at the environmentalists as they took measurements near the train, Alimov said. 
The ecologists unfurled a banner reading “No to the Import of Nuclear Waste!” at the railway platform where the cargo train was located.
Bellona and Ecodefence have been following 1,000 tons of depleted uranium hexafluoride since it arrived at the  St. Petersburg port from Germany’s Urenco enrichment facility in Gronau. The radioactive waste is to be sent by train to the Urals for burial.
Alimov said the transport of such cargo is very dangerous and an accident during transit would have serious consequences.
“It is much safer to leave such waste where it was used — its transportation increases the risk of emergencies,” he said.
Alimov said the train was still in Avtovo on Sunday but had gone on Monday. Bellona was not sure if it had left the city.
On Sunday, Bellona, EcoDefence, Green Wave and Green World environmental groups also held a protest in the center of the city against the uranium imports. Demonstrators held photographs of children with deformities caused by radiation and pictures of radioactive disasters.
At the meeting the environmentalists gathered about 300 signatures from the city residents in a letter of protest addressed to Russian Atomic Energy minister Sergei Kiriyenko.
“In the letter we demanded the revocation of the treaty on the import of radioactive waste to Russia,” Alimov said.
Alimov said the ecologists also demanded that the Emergency Situations Ministry provide official measurements and research about the condition of the containers in which it is transported.

TITLE: Jailed Opposition Leader Focus of Protests, Pressure
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: As the leader of the Yabloko oppositional liberal party Maxim Reznik began a third week in custody in a case he calls “fabricated,” protests demanding his immediate release continued both in Moscow and St. Petersburg and political pressure from the authorities on the local branch of the party continued. 
Meanwhile, it has been announced that a meeting in support of Reznik is planned for Sunday.
Last week, Reznik’s case was discussed during a closed-door meeting between Yabloko’s national leader Grigory Yavlinsky and President Vladimir Putin, their first such meeting since 2006. 
The “necessity of [Reznik’s] immediate release” was discussed “in detail” according to a Yabloko news release. 
After the talks Yavlinsky called Reznik’s mother, Galina Malinovskaya, to tell her that Putin promised to look into the case. 
“As far as I know, Putin was in the city on Saturday but it’s difficult for me to say how he looked into the case,” said Malinovskaya by phone on Monday. “I’ll find out when I see results. I don’t have any personal, private information.”
“Yavlinsky said that Putin himself asked him questions about Maxim. Maxim has been a high-profile politician for a long time, for 14 years. He’s probably well-known to them,” Malinovskaya added.
After earlier being told repeatedly she was not allowed to see her son, Malinovskaya was given permission to visit Reznik, who is held in a pretrial detention center close to the Kresty Prison, on Monday. 
“I got the permission today. They had denied it because he allegedly makes phone calls from [his cell]. I can’t even repeat that nonsense.
 “The investigator [Mikhail Kalganov] [...] said, ‘I can’t permit the visit because we have information that Maxim calls from there and gives instructions [to his supporters],” said Malinovskaya, adding that if Reznik had an opportunity to make phone calls from his cell, he would have called her first.
Malinovskaya said that the permission was given after Natalya Yevdokimova, rights activist and advisor to Federation Council Chairman Sergei Mironov, got in touch with Andrei Lavrenko, the head of the Investigative Directorate of the Investigative Committee of the St. Petersburg Prosecutor’s Office.
“It looks like [Lavrenko] gave an order, because [the head of the Central District's Investigative Department] Pavel Vymenets, the boss of the investigator, spoke to me in the sweetest way. I asked him if I might to go to the investigator for the permission and he said, ‘Yes, sure,’” she said.
Later Monday, Mironov called Reznik’s arrest “unfair.” 
“It’s not a measure that should be used when such acute political issues are considered,” he was reported by Regnum news agency as saying at a news conference in St. Petersburg.
Malinovskaya said Monday she would visit Reznik on Tuesday. “Just imagine what a miracle. I can’t give any other comment but that,” she said.
Malinovskaya said that Reznik is in good form, citing Boris Gruzd, Reznik’s lawyer, who visited him earlier Monday.
“Maxim is OK, everything is alright, only it’s boring there, he says. Nobody plays chess, and cards are not permitted.”
Meanwhile on Monday, a date for Reznik’s appeal hearing in the City Court was set. The appeal, disputing the pretrial imprisonment as a preventive measure against Reznik’s possible attempts to “influence the course of the investigation,” will be heard in the court on Friday, Alexander Shurshev, the spokesman for Yabloko’s local branch, said. 
Reznik’s defense team is appealing the March 6 decision of Judge Olga Andreyeva who had ordered that Reznik be detained for the duration of the police investigation or not more than two months.
On Friday, a group of about 20 authors and artists, including film director Alexei German, author Boris Strugatsky and poet Alexander Kushner published an open letter to Putin and president-elect Dmitry Medvedev calling for Reznik’s immediate release.
A sanctioned meeting in support of Reznik will be held at 2 p.m. on Sunday, Shurshev said. The protesters will gather on Pionerskaya Ploshchad in front of the Young Spectator’s Theater (TYuZ). 
Shurshev said that the original location suggested for the rally was a garden opposite the Prosecutor’s Office on St. Isaac’s Square but it was moved to the second location after the city administration refused permission. 
“We were told that maintenance works in preparation for spring will take place there at that time,” said Shurshev.
As pickets at the prosecutor’s offices in Moscow and St. Petersburg continued, several protestors were briefly detained in Moscow after suspected provocations last week, whereby a picketer would be joined by a stranger, thus turning a one-man picket, which does not require permission from the authorities, into an allegedly mass action. 
An activist who was observing the picket in St. Petersburg was briefly detained on Saturday after asking the policemen who had asked for his passport to identify himself.
Meanwhile, the local branch of Yabloko received special attention from the authorities during the course of last week. On Tuesday, it received a letter asking it to leave its premises before June 1, while later in the week the party’s local offices were examined as part of investigation to determine whether Yabloko’s activities can be considered “extremist” under the law.
The office was visited by an officer of the Central District’s Prosecutor’s Office accompanied by a policeman, who examined the rooms occupied by Yabloko and picked up copies of the party’s documentation on Friday.
On Saturday, the local branch of Yabloko’s website, which publishes constant updates about Reznik’s case as well as news about actions in his defense, went down after it was hacked. The site was back up on Monday. 
“That’s nothing new for us. It happened frequently during the [Duma] election campaign,” said Shurshev.
Reznik was detained outside Yabloko headquarters on March 3 and was subsequently charged with verbally abusing and physically assaulting three policemen after intervening in a street fight between unknown men who subsequently escaped.
Although criminal cases against members of the banned National Bolshevik Party are not news, Reznik is a member of an officially registered party whose activities have never gone beyond the law.
In the recent clampdown on the opposition, the harshest penalty for a local oppositional politician before Reznik had been a 10-day administrative arrest for Sergei Gulyayev, a leader of the Narod movement and former Yabloko deputy in the Legislative Assembly. Last month, Gulyayev was sentenced to 10 days in prison for failing to follow a policeman’s lawful orders during an attempted picket, an accusation he denied.

TITLE: Putin Hints at Better U.S. Ties
AUTHOR: By Sue Pleming and Oleg Shchedrov
PUBLISHER: Reuters
TEXT: MOSCOW — Russian President Vladimir Putin said on Monday he saw a chance to move relations with the United States forward after he received what he called a “serious document” from U.S. President George W. Bush.
There were no details on its content but officials traveling with visiting U.S. Secretary of State Condoleezza Rice and Defense Secretary Robert Gates said the letter set out the issues the two sides should focus on to resolve differences.
Rice and Gates met Putin and his successor, Dmitry Medvedev, at the start of two days of talks in Moscow intended primarily to find a way out of a row over Washington’s plans to build a missile defense shield in eastern Europe.
“I recently had an opportunity to speak to the U.S. president and I received his letter,” Putin said at the start of his meeting with Rice and Gates.
“...it is a serious document which we have carefully analyzed. If we manage to agree on its main provisions, we will be able to say that our dialogue is progressing successfully.”
A Pentagon official traveling with Gates said the letter “dealt with the agenda, what we wish to discuss while we were here and, frankly, unless they were willing to focus on those issues it was probably not worth us doing the trip.”
Rice has said she wanted to use the meeting to soothe differences over the missile shield, which Russia says threatens its security. She also wants to build a solid relationship with president-elect Medvedev, who takes over in May.
Meeting Rice and Gates earlier in his first talks with senior U.S. officials since he won a landslide election on March 2, Medvedev sounded a conciliatory note.
“There are issues where we still have differences in positions ... but we also have a common will and commitment to move ahead,” Medvedev said.

INJURED NEGOTIATOR
Gates, who broke his arm when he slipped on ice at his home, joked his condition would make his negotiating less tough. Medvedev replied: “We’ll see.”
Washington says the missile shield system is designed to protect against attacks from what it calls rogue states, and specifically Iran. Moscow strongly opposes the system, saying it could be directed at Russia.
The dispute has helped push diplomatic relations between the United States and Russia to a post-Cold War low, although economic cooperation and trade have not been affected.
Trade between the two countries totaled $17.5 billion last year, up from $15 billion in 2006, and U.S. companies have been investing heavily in Russia.
Rice and Gates are expected to use the second day of their talks to tackle the nuts and bolts of the dispute over the missile shield with Russian Foreign Minister Sergei Lavrov and Defense Minister Anatoly Serdyukov.
At their last meeting in this format late last year, both sides put forward compromise proposals designed to bridge differences over the issue, but since then there has been no substantial movement.
Russian media quoted officials in Moscow as saying progress would only be possible if the visitors brought new proposals from Washington — something Gates has said he is not doing.
“At some point the Russians are going to have to decide whether they want to be true partners, which we are offering, or whether this is just all a sham game on their part to stall the whole deal,” Gates said en route to Moscow.
The two sides are also likely to talk about what will replace the Strategic Arms Reduction Treaty (START), a Cold War-era pact limiting long-range nuclear weapons which expires next year.
Washington is resisting pressure from Moscow to sign up to a fully-fledged successor to START, but Rice has signaled the United States could be prepared to consider a slimmed-down treaty to replace it.

TITLE: In Brief
TEXT: <b>Air Ticket Hike?</b>
As London’s two largest airports, Heathrow and Gatwick, increase aircraft landing duties, air passengers from St. Petersburg to London can expect rising ticket prices, Fontanka.ru reported.
In 2008-09 duty at Heathrow could rise by 23.5 percent and at Gatwick by 21 percent, Interfax reported. The plans have already been met with criticism from several airlines, including British Airways.
British Airways representative Paula Ellisa said that passengers travelling to Heathrow will pay approximately 17 percent more than was recommended by an antimonopoly commission in November 2007.
Russian airlines that fly to London have not yet said how the increases will affect ticket prices.

<b>Alexander Returns</b>
A monument to Tsar Alexander III that was removed from Ploshchad Vosstaniya in 1937 is set to return to its original location, Fontanka.ru reported on Monday.
The monument currently stands in the courtyard of the Marble Palace, part of the State Russian Museum. The museum’s director, Vladimir Gusev, said Monday that he would not be opposed to the move, and that the city is ready financially and technologically to carry it out. 
The 1909 monument, which is exceedingly heavy, will stand on a sturdy metal base currently in preparation.

<b>For the Record</b>
A marshrutka minibus overturned at the intersection of Zanevsky Prospekt and Energitikov Prospekt on Monday, Fontanka.ru reported. There were no casualties reported. The cause of the accident has yet to be determined.

<b>Twenty-four children were affected by tear gas Monday at a school in Pavlovsk, Fontanka,ru reported. </b>
The director of School 638 called the emergency services to report the gas and doctors checked pupils who did not feel well. After an inspection the decision was taken not to take the children to hospital.

TITLE: Murder Charge For Adoptive U.S. Mom
PUBLISHER: Combined Reports
TEXT: MOSCOW — An adoptive U.S. mother of three Russian children has been charged with murdering an infant and abusing a 4-year-old boy who was found suffering from malnourishment.
The case, which follows several high-profile deaths of adopted Russian children in the United States, is likely to raise new worries in Russia over children adopted by foreign parents.
U.S. court documents show the infant — 14-month-old Nikolai, who was adopted in February — died March 7 at a Utah hospital. An autopsy determined that the child had died from a skull fracture that doctors said was the result of blunt-force trauma, police and court records show. The infant also had a bruised face, head, knee and anus.
Fyodor Emelyantsev, the adoptive father and a Russian citizen, told police that the child had fallen on March 6. The child’s adoptive mother, Kimberly Emelyantsev, declined to speak with police, court documents said.
Doctors also found the couple’s 4-year-old son was suffering from extreme dehydration and malnourishment. The child had been admitted to the hospital three times since his adoption in December. A feeding tube was inserted into the boy’s stomach during the first visit to help him gain weight.
On Wednesday, prosecutors charged Kimberly Emelyantsev, 33, with one count of first-degree murder. A felony charge of child abuse was filed Thursday.
Fyodor Emelyantsev, 31, who is a Russian citizen, was also charged Thursday with one count of felony child abuse in the case of the 4-year-old child.
The Emelyantsevs were being held in jail, Fyodor Emelyantsev without bail.
A judge granted Fyodor Emelyantsev permission to be transported by jail officers to a graveside burial service for his infant son on Friday.
A telephone message left for Fyodor Emelyantsev’s lawyer was not immediately returned.
The Emelyantsevs have two biological children, aged 10 and 5. Those children and another adopted Russian child, who is two years old, are now living with relatives, said Edwin Wall, who represents Kimberly Emelyantsev.
Neighbors said the Emelyantsevs had wanted to adopt so badly that they took out a second mortgage on their home to finance their travel to Russia to get the children. “We don’t believe this is true because we all know how much they loved those kids,” neighbor Celeste Hansen said of the allegations in an interview with The Salt Lake Tribune.
Hansen said both the infant and the 4-year-old arrived in the U.S. with medical problems. The 4-year-old weighed just 8 kilograms, and Nicolai had suffered seizures, she said.
The Emelyantsevs are scheduled to appear in court again Tuesday.
Adoptions from Russia have all but ground to a halt due to bureaucratic barriers that were raised after influential State Duma deputies called for a moratorium on foreign adoptions in 2005. The call followed the well-publicized deaths of several Russian children at the hands of their adoptive parents in the United States.

AP, SPT

TITLE: Three Guilty in Gongadze Murder
AUTHOR: By Olga Bondaruk
PUBLISHER: The Associated Press
TEXT: KIEV — A Ukrainian court has convicted three former police officers of killing investigative journalist Heorhiy Gongadze nearly eight years ago.
Gongadze, who crusaded against official corruption, was killed in 2000 and his beheaded body was found in a forest outside Kiev. His head has not been found.
Former officer Mykola Protasov was sentenced Saturday to 13 years in jail. Valeriy Kostenko and Oleksandr Popovych each received 12-year sentences.
Investigations have failed to identify those who ordered the killing.
“Gongadze’s wife and mother have repeatedly said that they will insist on further investigations to identify those that ordered the murder,” said Valentina Telychenko, a lawyer for the family.
The slain journalist’s wife, Myroslava, and her two children received political asylum in the United States and have lived there since 2001.
Many Ukrainians have looked upon the Gongadze case as a test for the government of pro-Western President Viktor Yushchenko, who has come under harsh criticism from human rights groups for failing to solve the crime. Gongadze’s killing triggered months of protests after Mykola Melnychenko, a former bodyguard of then-President Leonid Kuchma, released tapes on which a voice resembling Kuchma’s is heard conspiring with others against the journalist.
Oleksiy Pukach, former chief of the Interior Ministry’s surveillance department, where the three defendants all served, is wanted for the murder and is being sought on an international warrant.
Protasov’s lawyer, Viktor Chevguz, said the sentence was excessively harsh and failed to recognize the role played by Pukach, who the defendants claim killed Gongadze by strangling him with his belt.
“The court should have considered that the defendants were completely subordinate to Pukach,” Chevguz said.
Prime Minister Yulia Tymoshenko said earler in the week that it was regrettable that the trial, which has lasted more than two years, had not revealed the identity of the masterminds.
“I am really sorry that our justice is so selective. But this is not the end of the story,” she said.
In September 2000, Gongadze got into what he thought was a taxi and was then joined by three others and driven outside Kiev, according to the defendants. He was beaten and strangled, his body doused with gasoline and burned. Experts said Gongadze was decapitated after his death.
Numerous tests have concluded the remains found in November 2000 were his.

TITLE: UN General Assembly Calls For Armenian Pullout From Karabakh
AUTHOR: By Edith M. Lederer
PUBLISHER: The Associated Press
TEXT: UNITED NATIONS — The UN General Assembly approved a resolution Friday demanding that ethnic Armenian forces immediately withdraw from the disputed region of Nagorno-Karabakh in Azerbaijan, but the vote reflected widespread unease at UN interference in efforts to resolve the conflict.
Only 39 of the UN’s 192 member states approved the resolution, which was sponsored by Azerbaijan, while seven voted “no” and 100 abstained.
Nagorno-Karabakh has been under control of ethnic Armenian forces since a six-year conflict that erupted in the waning days of the Soviet Union. Some 30,000 people were killed and about 1 million were driven from their homes before a cease-fire was reached in 1994.
Azerbaijan and Armenia remain locked in a dispute over the future of Nagorno-Karabakh, despite more than a decade of efforts by foreign mediators led by the U.S., Russia and France to help reach a resolution. 
Persistent gunfire along the Azerbaijan-Armenian border and in the regions near Nagorno-Karabakh has raised fears of a new war.
The United States, Russia and France voted against the resolution, stressing the importance of continued mediation efforts. They were joined in voting against the resolution by Armenia, Angola, India and Vanuatu.
The resolution, which is not legally binding, also reaffirms Azerbaijan’s territorial integrity, the right of those driven from their homes to return, and support for the international mediation efforts. 
The resolution urges UN members and international and regional organizations to help resolve the conflict.
Azerbaijan’s UN ambassador, Agshin Mehdiyev, accused Armenia of trying “to solidify the results of aggression and ethnic cleansing.” He cited a “dangerous” cease-fire violation by Armenian forces on March 5 that led to 5 Azeri casualties and 27 Armenian casualties.
Mehdiyev also expressed grave concern and alarm at “the lack of clear proposals” from the United States, Russia and France to solve the “vital issues of liberation of all the occupied territories and return of the Azeri population to Nagorno-Karabakh.”

TITLE: Businessman Jailed on Child Sex Charge
AUTHOR: By Ker Munthit
PUBLISHER: The Associated Press
TEXT: PHNOM PENH, Cambodia — A court in Cambodia sentenced Russian businessman Alexander Trofimov to 13 years in prison Friday for sexually abusing a 14-year-old girl, the second conviction of a foreigner on pedophilia charges this week.
Judge Ke Sakhan handed down the sentence against Trofimov, 41, after convicting him of debauchery, the legal term in Cambodia for sexual offenses against minors. Cambodia has long been a magnet for foreign pedophiles. While corruption is prevalent in the judicial system, the courts have taken aggressive action against sex offenders in recent years.
The 14-year-old girl testified during a trial on Tuesday at Phnom Penh Municipal Court that Trofimov had sex with her four times in September last year.
She said she received $100 out of $1,000 the Russian man allegedly paid to a Cambodian broker to bring her to him.
Trofimov denied the charge, saying he did not know the girl.
The judge also sentenced a 34-year-old Cambodian man, Phal Vannara, to 11 years in prison for helping procure the girl for Trofimov.
The judge told the two men that they had one month to appeal the verdicts after ordering them to jointly pay $100,000 in compensation to the girl.
Trofimov runs a company that received permission from the government in 2006 to develop Koh Puos, or Snake Island, into a tourist resort.

TITLE: Russian Rocket Fails U.S. Sat
PUBLISHER: The Associated Press
TEXT: MOSCOW — An unmanned Russian rocket failed to put a U.S. telecommunication satellite into its target orbit because of a malfunction after liftoff Saturday from the Baikonur Cosmodrome in Kazakhstan.
“The second booster module switched off earlier than expected, which resulted in the craft failing to reach its designated target orbit,” said the state-controlled Khrunichev State Research and Production Center, which made the Proton-M rocket carrying the satellite. A state commission will review the incident, but it may take up to a month to provide a full account of what happened, said Vyacheslav Davidenko, a deputy spokesman for the center.
The Federal Space Agency said the satellite could still be steered but that it was 8,000 kilometers short of its planned altitude of 36,000 kilometers.
The AMC-14 satellite was designed and manufactured by Lockheed-Martin and has a service life of up to 15 years.

TITLE: Up to 50% of Brands Unfit For Consumption
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Consumer rights advocates have urged the public to be vigilant when purchasing food products following a survey that revealed a series of market brands to be unfit for human consumption.
According to Anatoly Golov, co-president of the North West Russian Union of Consumers, about 50 percent of oil, dairy and meat products on the market do not meet quality standards. 
While 30 percent of such products contain ingredients not indicated on the label, others carry false information about the contents, he said. 
The findings by the North West Russian Union of Consumers, the St. Petersburg Civil Control Consumers’ Public Organization and the St. Petersburg Dialogue Consumers’ Organization indicate that false information, including the proportion of contents and expiry dates, was widespread, mostly in oil, dairy and meat products. “Sometimes the entire label on a canned product may be counterfeit,” said Galina Kozlovskaya, vice-president of the North West Russian Union of Consumers.
The warning comes at a time when reports of massive food poisoning in kindergarten and school canteens across Russia have been dominating newspaper headlines.
 But according to Kozlovskaya, it is corruption in the licensing bureaus and a lack of well-defined supply and consumer laws that have led to the alarming state of the consumer market.
However, despite the legal loopholes, Kozlovskaya claims to have won a total of 1.5 million rubles compensation from 34 suppliers out of 45 she took to court last year for violating consumer laws. Since the beginning of the year she has filed half a dozen lawsuits that are pending court rulings.
“This is only the tip of the iceberg of the prevailing consumer market impasse,” she said, adding: “Had we not been limited by resources, had we enjoyed full cooperation from the state organs, we would have shocked the public with our findings.”
But she accused the state organs responsible for controlling the market condition for all the problems, saying, “corruption is rampant up there... to fill their pockets, they go for cheap tenders and poor suppliers, seemingly supplying kitchens in children’s institutions with poor quality foods, resulting either in the dumping of the whole consignment if discovered or massive poisoning if not.”  
When City Hall decided to shut down kiosks, supermarket chains gained a monopoly, making the situation even harder to control since the chains were transformed into minor empires of chronic violators hard to track, said Kozlovkaya’s colleague, Vsevolod Vishnevetsky, who heads the St. Petersburg Civil Control Consumers’ Public organization.
According to him, while it is easier for such empires to set prices for poor quality commodities as high as they like, it is equally difficult for consumers to take action over infringements of their rights.
Kozlovskaya agrees: “While it is now easier for a chain to impose unfounded damage compensation on a client, it is almost impossible for the latter to prove otherwise.”
As an example of this kind of consumer right infringement, Kozlovskaya cited a situation when a consumer business organization throws an expensive party to celebrate an anniversary. “In fact, it forces a consumer to pay the costs by increasing the prices of its products in the chain without being noticed,” she said.
Furthermore, when such violations are discovered, the culprit faces fines that are too small for them to feel any sting, said Vishnevetsky, citing loopholes in monopoly and consumer laws.
But Vadim Ryzhkov, vice president of Dialogue Consumers’ Public Organization, believes that the general public’s ignorance of their consumer rights and lack of co-ordination with the judiciary and law enforcement organs are to blame for the dishonesty prevalent on the consumer market. 
He has taken off from where the official authorities failed by launching the website www.galoba.ru and a hotline to further legal ties and establish communication between the public and the relevant authorities.

TITLE: If Insurance Acquires Region
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: If P&C Insurance, a leading property and accident insurance company in Scandinavia, is acquiring the Russian insurance company Region as a means of entering the Russian insurance retail market, the company said Friday in a statement.
At the beginning of 2007, If opened a Russian office that is based in St. Petersburg and also has a branch in Moscow. Initially, If provided insurance services to its Nordic corporate clients doing business in Russia. The acquisition of Region is the second step in If’s expansion on the Russian market.
“If will continue to provide excellent service for its Nordic commercial customers in Russia, but by signing this agreement we are also entering the Russian domestic market,” said Timo Vuorinen, Head of If’s business in Russia and the Baltics.
According to data from last year, Region’s premium income was about $43 million in 2007, most of it generated by car insurance. Region has been active on the market since 1993 and has eight sales offices in St. Petersburg and a regional network of 16 branches.
“Russia is among the fastest growing insurance markets in the world, which naturally presents exciting opportunities for If. The Russian market has developed significantly during the last few years and today it is more stable and transparent than before,” said Torbjorn Magnusson, If’s CEO.
Although the managers did not disclose the cost of the deal, Vladimir Sergiyevsky, an analyst at FINAM investment company, suggested If could pay $60-65 million for Region.
“Besides property insurance, Scandinavian investors are interested in the car insurance that Region provides. This acquisition will give them a way into the insurance retail market,” Sergiyevsky said.
He indicated that by the end of 2007, foreign companies owned nine percent of the total capital of Russian insurance companies (more than $600 million) — which is twice the level of 2006. “Foreign companies have only recently started to acquire Russian insurers,” he said.
According to FINAM, the profitability of the insurance business in Russia is gradually decreasing and approaching the same level as in Europe — four-six percent a year. But some types of insurance are more profitable in Russia than in Europe, Sergiyevsky indicated.
“The Russian market is growing, which attracts foreign insurers. Entering the market involves a certain amount of risk, and so far the share of foreign companies has not been large. But their share will increase, partly through the acquisition of local companies with large regional networks of offices,” he said.
“As Russia is to join the WTO, the insurance market will open up, the share of foreign capital permitted by law will increase, and more foreign companies will come to Russia who will require services from their ‘own’ insurance companies,” Sergiyevsky said.
According to the Federal Insurance Supervision Service, over the last year the Russian insurance market grew by 25.1 percent up to 763.6 billion rubles in insurance premiums collected. 
Last year six subsidiaries of foreign insurance companies were granted licenses by the Federal Insurance Supervision Service.
“Half of the ten largest insurance companies in St. Petersburg have foreign shareholders. The number of companies that are completely owned by foreign insurers is smaller, but their share will increase as foreign investors become increasingly interested in the Russian market,” said Pavel Muretov, head of the Northwest branch of Renaissance Strakhovanie insurance company.

TITLE: Rosatom Ready For Major Expansion
AUTHOR: By Yuriy Humber
PUBLISHER: Bloomberg
TEXT: MOSCOW — For decades, civilian nuclear scientist Vladimir Asmolov lived in the shadow of the bomb makers. They were the elite, their names and work secret, building the arsenal behind a superpower. 
While the Soviet Union lost the Cold War, the Russians are back as a nuclear force. 
Asmolov, deputy head of nuclear-plant operator Rosenergoatom in Moscow, is tapping yesterday’s military brains to develop a new generation of atomic plants. The country’s reactor industry aims to compete with Westinghouse, General Electric and Areva. 
Since the 1986 meltdown of a reactor at Chernobyl, Russian engineers have adopted safety measures similar to those used in the United States, including reactors that shut down automatically when there’s a fault. Rosatom, the state-run nuclear holding, expects to build as many as 42 plants in Russia and 60 abroad by 2030, chief executive Sergei Kiriyenko said. The value may total $300 billion, based on Russian estimates. 
“Previously, the atomic energy industry was only a bastard child of the military program,” said Kiriyenko, who was a prime minister under Boris Yeltsin. “Growth in electricity demand has cardinally changed that.” 
Global power needs will double by 2030, according to the International Energy Agency, which was set up in the 1970s to counter the influence of oil exporting nations. Pressure to cut emissions of gases that contribute to global warming has made nuclear power more attractive, despite safety concerns. 
Reactor orders may total 237 globally by 2030, according to the World Nuclear Association in London. 
Atomstroiexport, the country’s nuclear-reactor builder, says each megawatt of installed capacity costs about $3 million. The typical reactor size is about 1,000 megawatts. 
After 20 years in which few nuclear-generating stations were built, Kiriyenko faces shortages of contractors with experience building atomic plants, components such as turbines and nuclear engineers. 
Factories that in Soviet days churned out enough equipment to build 10 or more reactors per year went bankrupt in the mid-1990s or switched to making products such as machine tools or gear for the oil industry. 
Russia will also need to convince international customers that its VVER reactor can compete economically with alternatives made by Areva, Toshiba’s Westinghouse and General Electric, which say theirs are more efficient and have extra safety features. 
Yevgeny Reshetnikov, vice president of Atomstroiexport, said the VVER was the same price or cheaper, taking into account all construction, operation and maintenance costs. While the Russian reactor has a shorter lifespan and needs to be refueled more often than those of its Western competitors, the plants are cheaper to build and Russia guarantees fuel deliveries, he said. 
Reshetnikov said Rosatom would catch up with its rivals with a reactor at Novovoronezh that is to start operating in 2014. 
Outside of China and India, the competition for nuclear-plant sales may broadly play out along Cold War lines, with Russia grabbing contracts among former Soviet satellites such as Bulgaria and the Czech Republic and African allies including Namibia. 
Russia is likely to be shut out of U.S. and Western European markets partly because of historical ties to local manufacturers, said Gene Clark, chief executive of U.S. consulting firm TradeTech. 
“The markets that Russia’s going for, I’m not too worried about,” said Dan Lipman, senior vice president for nuclear power plants at Pennsylvania-based Westinghouse. “Myanmar’s not on my list.” 
Rosatom officials say they want to position Russia as a safe and affordable alternative in developing countries, which are projected to be the fastest-growing nuclear markets. They plan to build on the company’s advantage of already having two of its VVER reactors up and running at the Tianwan power station in eastern China. 
Atomstroiexport’s order book will swell to $20 billion within two years, said chief executive Sergei Shmatko. In 2006, it sealed a two-reactor deal worth $5.4 billion with Bulgaria. 
The company has orders for two more VVER-1000s from China and a preliminary accord for four in India, pending a treaty on technology transfer. Vietnam, Indonesia and Thailand may also buy, said Shmatko, a former nuclear-submarine officer. 
Russia has pledged support to develop nuclear energy in Namibia, Mongolia and Belarus. The focus on emerging markets is a strength, Shmatko said. 
“The contractual rewards are roughly the same in any country where you build now, so why go where there is so much competition?” Shmatko said. 
After pursuing the Bushehr reactor project in Iran despite U.S. protests that the country was planning to build an atomic bomb, Russia may tap demand in the Middle East, said Alexander Pikayev, of the Institute of World Economy and International Relations. 
Arab nations may also buy fuel at the international enrichment center Russia set up last year in Angarsk, in eastern Siberia, he said. It lets non-nuclear nations enrich uranium under United Nations supervision, alleviating proliferation concerns. 
President Vladimir Putin has worked to resurrect the country’s atomic industry, code-named the Ministry of Middle Machinery in Soviet times, as a third arm in the country’s energy arsenal. Russia is already the world’s biggest exporter of natural gas and second in oil behind Saudi Arabia. 
The government will spend $27 billion through 2015 to develop atomic power. The industry will raise $32 billion more from sales and investors. Putin said Feb. 14 that Russia is ready to sell stakes in uranium and enrichment companies. 
Putin, who’s expected to be named prime minister when he’s succeeded by Dmitry Medvedev as president in May, set Rosatom the goal of increasing nuclear energy output to as much as 30 percent of power production by 2030 from 16 percent last year. Rosatom started adding two reactors a year in 2007 and aims to accelerate that to three or more annually by about 2012. 
“We think it optimal to have 30 percent of Russian energy coming from nuclear plants,” said Rosenergoatom’s Asmolov. “In terms of economics, in terms of everything.” 
Asmolov has been charged with retraining the military’s nuclear experts and converting defense contractors so they can help with the civilian power push. 
In January, Rosatom started operating as a holding company for all of the country’s nuclear interests, rather than as a government agency. Within seven years, Rosatom will no longer need financial support from the state, Kiriyenko said. 
Rosatom’s energy arm includes reactor-operator Rosenergoatom, where Asmolov works, nuclear-gear maker Atomenergomash and reactor builder Atomstroiexport, as well as uranium miners, fuel makers, traders and research institutes.

TITLE: Russia’s Stocks Hit By Global Tailwinds
AUTHOR: By Catrina Stewart
PUBLISHER: Staff Writer
TEXT: MOSCOW — Oil and gold prices punched through to new highs last week, a rare bright spot for some speculators in what was otherwise another week of shuddering losses in the United States. 
Washington-based Carlyle Group, one of the world’s largest private equity groups, saw one of its funds collapse Thursday, overloaded by $22 billion of debt, sparking new fears about what lies around the corner. 
Worse followed Friday, as shares of Wall Street bank Bear Stearns plunged 57 percent after JPMorgan and the Federal Reserve Bank of New York offered it a 28-day bailout on news of its worsening liquidity position. 
The news prompted a wave of declines in global markets Friday, sending European markets back into negative territory for the week, with the FTSE 100 down 1.2 percent, Frankfurt’s DAX down 1 percent and Paris’s CAC-40 down 0.6 percent. In New York, the Dow Jones’ gains were pared back to 0.5 percent on the week. 
The tailwinds just caught the Russian markets before the day’s close, leading to a reversal in the day’s earlier gains to finish up just 0.25 percent on the RTS, and 0.27 percent on MICEX. Over the week, the RTS and MICEX overall performed well against their global peers, adding 2 percent to 2064.41 points and 2.6 percent to 1651.91 points, respectively. 
Commodities barreled along on their upward curve, despite the outlook for a U.S recession and slowing global economic growth. Gold, which has enjoyed a 30 percent jump since November, surged through the $1,000 per ounce barrier for the first time ever, while tight supply and soaring demand pushed oil briefly to $111 per barrel in New York, another record high. And it doesn’t look like it’s going to stop anytime soon, with Goldman Sachs saying in a research note Friday that the oil price could go as high as $175 per barrel in the next couple of years. 
In the short term “$120 looks within reach,” said Ronald Smith, head of research at Alfa Bank. “At the same time, 10 days time from now, we could be at $90. These markets are extremely volatile.” 
Russia’s oil companies, which see most of their windfall profits snapped up in tax payments, moved up nevertheless. On MICEX, Rosneft rose by 3 percent and LUKoil by 6.6 percent on the week. 
“A big reallocation [of funds] into Russia is in the process,” said James Fenkner, who manages $100 million of assets at Red Star Asset Management. “We really didn’t see too much of a sell-off. [The markets] have been relatively resilient because of where the oil price is.” 
“Unless commodities reverse, it would take a lot to knock Russian share prices right now,” he added. 
Gold, meanwhile, has everything going for it — in the short term at least — as investors flee the weakening dollar. A dramatic $200 billion rescue package from the U.S. Federal Reserve, introduced in tandem with other central banks, to save the mortgage industry and head off a recession added to inflationary fears, also sent investors swinging to gold. 
High gold and oil prices are, in part, a consequence of a “dollar scare,” Fenkner said. “The dollar weakness is going to express itself in very high dollar commodity prices.” 
Regional telecom firms were among the biggest winners on Russian markets this week, prompted in part by IT and Communications Minister Leonid Reiman’s comments Thursday that the long-delayed privatization of Svyazinvest would be back on the cards after the new government takes shape in May. 
Sibir Telecom rose 8.1 percent Thursday, while Center Telecom was up 4.5 percent, Northwest Telecom up 4.4 percent and Volga Telecom up 3.7 percent. 
Reiman’s remarks “focused attention on a sector that has become incredibly undervalued,” said Philip Townsend, head of research at Metropol brokerage. “In reality, I don’t think there is any chance [the Svyazinvest privatization] could happen this year at all. It could become much more of a talking topic in the second half of the year. “ 
VimpelCom’s Global Depositary Receipts rose 11 percent in New York on Tuesday on the eve of its results, before falling 7 percent the next day after earnings failed to match analysts’ expectations. 
Uralkali was the surprise loser last week after it failed to win three auctions but fell just 1.8 percent on the week. Silvinit, which teamed up with arms trader Rosoboronexport, and Acron separately beat out Uralkali in two auctions. Silvinit rose 30 percent on the week, while Acron’s shine soon lost its gloss to finish down 2.3 percent. 
But Russia seemed little more than a sideshow to the global events last week. All eyes will be on the West in the next few days, as investors wait for more reverberations to come.

TITLE: Gazprom Neft Expects New Asset to Boost Output 14%
PUBLISHER: Reuters
TEXT: Oil firm Gazprom Neft said Saturday that it did not expect organic growth of oil production this year, although output would rise by 14 percent because of the acquisition of a new asset. 
Gazprom Neft president Alexander Dyukov told reporters that the company expected its oil production to reach 49 million tons (980,000 barrels per day) this year, compared with 43 million tons produced last year. 
The increase will be provided by its purchase of 50 percent of the 12-million-ton-per-year oil producer Tomskneft last year from oil major Rosneft. 
Rosneft bought the unit at a state auction to sell assets of bankrupt oil firm Yukos last year. 
“We have managed to stop production decline at Tomskneft and are going to stabilize output at 11.5 million to 12 million tons per year,” Dyukov said, adding that the slight production increase was possible at the unit this year. 
Gazprom Neft, the country’s fifth-largest oil producer, has been fighting declining production since its former owner, billionaire Roman Abramovich, sold the company, then called Sibneft, to the gas giant in 2005. 
Last year’s production was flat compared with the 2006 output. 
The company approved last year a development strategy that envisions production growth to at least 80 million tons by 2020. 
Gazprom Neft said earlier this month that it would raise capital expenditure by 36 percent to 89 billion rubles ($3.76 billion) for this year to increase stagnating output.

TITLE: LufthansaTo Move To Siberia
PUBLISHER: Bloomberg
TEXT: MOSCOW — Deutsche Lufthansa AG, Europe’s second-biggest airline, plans to move a hub for cargo planes from Kazakhstan to Siberia as part of an agreement to secure rights to fly over Russia.
Cologne, Germany-based Lufthansa intends to start using the airport in Krasnoyarsk as its new refueling base no later than five months after the facility has been modernized, the German Transport Ministry in Berlin said in a faxed statement Friday. Lufthansa spokeswoman Bettina Rittberger confirmed this.
Russia’s government temporarily banned aircraft from the German airline’s Lufthansa Cargo division from flying over the country in October in an effort to force the carrier to move the refueling hub from the Kazakh capital of Astana. Lufthansa later won an extension of its fly-over rights until the end of March while negotiations between Germany and Russia continued.
“Germany and Russia have successfully concluded their negotiations about air traffic rights,” the ministry said Friday.
Lufthansa’s fly-over rights for cargo planes will be extended until late October. Talks between Germany and Russia will need to resume beforehand to secure another extension beyond this, Rittberger said Friday by telephone.

TITLE: Moscow Promises More Tough Gas Talks
AUTHOR: By Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — A day after apparently settling a gas price dispute with Ukraine, Moscow set the scene on Friday for further tough talks with Kiev by saying adamantly that the era of low prices was over for good. 
Gazprom and Ukraine’s state energy company Naftogaz Ukrainy on Thursday struck a deal on prices for this year and said they would remove an intermediary in their trade. The agreement ended a tense standoff that could have endangered European supplies. 
Ukraine buys Central Asian gas through Gazprom, whose suppliers in the region — Turkmenistan, Kazakhstan and Uzbekistan — said last week that they wanted “European prices” starting next year. 
“The position of the Central Asian partners is final and is not subject to review,” Gazprom chief executive Alexei Miller said Friday in a televised meeting with President Vladimir Putin. 
Gazprom will “immediately” start talks with the customers who buy the gas, Miller said in comments broadcast by Rossia state television. These are primarily Ukraine, which gets most of the Central Asian gas, and Belarus. 
Gazprom most recently warned consumers about the looming price hike on Tuesday, a day before it restarted talks with Naftogaz Ukrainy about current payments and future contracts. The sides said Thursday that they would continue negotiations about next year’s prices. 
The comments by Miller and Putin were likely meant to reinforce their message of higher prices to Ukraine, which must have rejected the new pricing conditions for next year, said Konstantin Simonov, director of the National Energy Security Foundation. 
Ukrainian Prime Minister Yulia Tymoshenko and President Viktor Yushchenko said Friday after discussing Naftogaz’s deal with Gazprom that they were satisfied with the outcome of the week’s talks in Moscow. 
Tymoshenko said she would continue to push for elimination of intermediary RosUkrEnergo from the gas trade. 
“We continue all negotiations ... to switch over to direct agreements with Gazprom,” Tymoshenko said in Kiev. “It is a big victory for the Ukrainian side that all gas will be delivered to Ukraine without new intermediaries.” 
A previous warning from Moscow came at the end of November, when Gazprom announced that Turkmenistan wanted “market” prices for its gas. 
Miller said Friday that the current price in Europe was hovering above $370 per 1,000 cubic meters of gas and could reach as much as $400. 
Gazprom and Belarus agreed in 2006 that the country would pay 80 percent of the average European price in 2009. There is no such agreement with Ukraine. 
Deutsche Bank said in a note Friday that the price for Ukraine could exceed $250 next year, likely causing problems for the Ukrainian economy. Ukraine is a large gas consumer, planning to import 55 bcm of gas this year. Gazprom’s projected exports to the European Union for this year amount to 157 bcm, Miller said Friday. 
George Lilis, an analyst at MDM Bank, said Gazprom would charge Ukraine anything in the range of $275 to $320 under the assumption that the current European prices stay at their current level. 
That price would carry a discount for lower transportation costs, he said in e-mailed comments.

TITLE: Gazprom Warns European Gas Prices May Reach $400
AUTHOR: By Lucian Kim
PUBLISHER: Bloomberg
TEXT: MOSCOW — Gazprom, Russia’s largest energy company, said European consumers may pay as much as 13 percent more for natural-gas deliveries this year than it originally forecast, as fuel prices push new records.
European gas prices already exceed $370 per 1,000 cubic meters and may reach $400 later this year, Gazprom Chief Executive Officer Alexei Miller told President Vladimir Putin during a Kremlin meeting broadcast on state television Friday.
Gazprom, which supplies a quarter of Europe’s gas, depends on exports to the European Union to make a profit. The company now intends to drop subsidies for former Soviet neighbors such as Ukraine, as well as for Russia’s domestic consumers.
Gazprom plans to hold “immediate’’ talks with countries that rely on Russian pipelines for deliveries of Central Asian gas, Miller told Putin. Central Asian producers such as Turkmenistan and Kazakhstan are demanding “European prices’’ for their gas exports starting next year.
“The position of our Central Asian partners is final and isn’t subject to review,’’ Miller said. “We’re planning talks immediately.’’
Ukrainian state-run energy company NAK Naftogaz Ukrainy and Gazprom agreed Thursday on this year’s gas price levels, ending a dispute that lasted more than a month. The two companies left open the question of 2009 prices.
Gazprom plans to base Russian domestic gas sales on European prices from 2011. Discounting transportation costs, the price for Russian consumers will still be 40 percent lower than for Europeans, Miller told Putin Friday.
Gazprom originally forecast an average European price of $354 per 1,000 cubic meters, based on an oil price of $90 a barrel.

TITLE: Putin Tells Kudrin to Watch Ruble
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian President Vladimir Putin told the Cabinet to pay “close” attention to the strengthening of the ruble against the dollar.
“I ask you together with the central bank and the Economy Ministry to closely watch the strengthening of the ruble,” Putin told Finance Minister Alexei Kudrin during the Cabinet meeting in Moscow on Monday.
The strong ruble is boosting demand for imports by making them cheaper relative to locally made goods, which puts pressure on Russian manufacturers. The ruble has climbed 4.46 percent against the U.S. dollar this year through 3:49 p.m. Monday in Moscow, according to Bloomberg data.
“We see what is happening in the euro zone, how the strengthening euro is affecting the European economy. It’s necessary to watch this very closely,” Putin said in comments broadcast by state-run Vesti-24 television channel.
The dollar declined to a record low against the euro and below 96 yen for the first time in 12 years after the Federal Reserve’s emergency weekend cut in its discount rates.

TITLE: In Brief
TEXT: <b>Gazprom Plans Gas Hub</b>
MOSCOW (Bloomberg) — Gazprom plans to create Europe’s largest natural-gas exchange in St. Petersburg as Russia seeks to turn its tsarist capital into a hub for trading commodities, Kommersant reported, citing unidentified people familiar with the matter.
The bourse will become a part of St. Petersburg’s existing stock exchange, the newspaper said Monday. Gazprom’s lending arm, Gazprombank, and the MBNK inter-regional oil and gas exchange are participating in the project, according to Kommersant.

<b>Primorsk Assets Bought</b>
MOSCOW (Bloomberg) — Gazprom Neft bought port facilities near St. Petersburg to help develop its ship-fuel business, Interfax reported, citing Chief Executive Officer Alexander Dyukov.
Gazprom’s oil unit acquired assets at the Baltic port of Primorsk in January, the Russian news service quoted Dyukov as telling journalists in St. Petersburg on March 15.
Dyukov declined to specify which assets Gazprom Neft had bought, saying only that Transflot was among them, Interfax reported. The facilities will help the company develop its bunkering business, Dyukov was cited as saying.

<b>Reserves to Be Invested?</b>
MOSCOW (Bloomberg) — Russia may hire private companies to manage some of the nation’s $494.5 billion in gold and foreign currency reserves, Alexei Ulyukayev, first deputy chairman of the central bank, told Vremya Novostei.
“I can imagine” a system where private managers invest a part of the reserves to get “somewhat higher” returns, Ulyukayev said in an interview published in the Moscow-based newspaper Monday.
President Vladimir Putin ordered an improvement in the management of Russia’s sovereign funds and currency reserves during a Cabinet meeting on March 3.

<b>Druzhba Causes Worry</b>
MOSCOW (Bloomberg) — The Czech Republic is concerned Russia will phase out its 50-year-old Druzhba oil pipeline as it boosts shipments to Asia and builds new links to Europe, Mlada Fronta Dnes reported.
The Czech government has “no information” that Russia will make any repairs to its section of the pipeline, Vaclav Bartuska, energy security envoy at the Czech Foreign Affairs Ministry said, according to the newspaper.
Jaroslav Pantucek, director of Mero AS, the operator of the Czech section of Druzhba, said that there may be less crude allocated for the pipeline in the future, Dnes reported. The country takes two-thirds of its oil from Druzhba, the newspaper said.

<b>Price Growth Set to Slow</b>
MOSCOW (Bloomberg) — Russian consumer prices will probably rise at a slower monthly pace in March, Vremya Novostei reported, quoting central banker Alexei Ulyukayev.
Price growth will likely slow to “no higher than” 0.1 percent, Ulyukayev, first deputy chairman at the central bank, said in an interview published in the Moscow-based newspaper Monday.
Consumer prices rose a monthly 1.2 percent in February, led by food and utility costs. Goods in the non-food category rose 0.6 percent last month, which is “worrisome” because the increase was caused by monetary policy, Ulyukayev said, according to Vremya Novostei.
Pepsi Gets Russian Firm</b>
NEW YORK (Reuters) — Pepsi Bottling Group Inc and PepsiCo Inc said on Monday they have agreed to acquire Sobol-Aqua JSC, a privately held Russian bottling company. 
The companies said they will buy the entire Sobol enterprise through their joint venture in Russia, PR Beverages Limited. The acquisition includes a production facility in Novosibirsk, Russia, that makes the Sobol brand and currently co-packs various Pepsi products. 

<b>Imperial Oil Registered</b>
MOSCOW (Reuters) — London-listed, Russia-focused oil firm Imperial Energy said on Monday Russian authorities have approved the registration of substantial new oil reserves in West Siberia. 
The firm said in a statement the Federal Agency on Subsoil Use had registered 59 million barrels of recoverable C1 and C2 oil reserves from Imperial’s South Maiskoye field in the Tomsk region of western Siberia.  There were previously no Russian-registered reserves at the field. 
“The latest approval from the ministry significantly increases Imperial’s Russian-registered C1 and C2 reserves by over 15 percent to 432 million barrels of oil equivalent, with further material increases expected during the course of the year as Imperial moves towards its target of parity of its SPE reserves and Russian-registered reserves,” the company said.  

<b>Baltika Sees Profit Soar</b>
MOSCOW (Bloomberg) — Baltika Breweries, the largest Russian beer company, may increase its dividend on 2007 earnings by 32 percent after profit climbed.
The company’s board recommended paying 52 rubles a share, St. Petersburg-based Baltika said Thursday in a statement on its web site. The brewer paid 39.50 rubles a share in its annual dividend for 2006. Shareholders will vote on the payout April 29, Baltika said in a separate statement.
Baltika’s profit climbed 21 percent to $587 million in 2007 on increased sales of higher-priced foreign brews made under license, the company reported Feb. 20. Sales rose 30 percent to $3.28 billion.

<b>Rosneft to Submit Plan</b>
MOSCOW (Bloomberg) — Rosneft, Russia’s biggest oil producer, plans to send the government proposals for changing the tax regime to stimulate the development of new projects, Interfax reported.
The current system primarily taxes oil companies’ revenues instead of their profit and is holding back the industry, the news service cited Alexander Kochnev, first deputy head of the company’s department of analysis, as saying Friday in Moscow. As a result, rising oil prices don’t provide companies with sufficient funds for new projects, he said, according to Interfax.
Russia should introduce tax holidays for offshore projects in the country’s far-eastern regions, improve subsoil legislation and support the utilization of associated gas, Kochnev said, Interfax reported.

<b>UES Sells Stake to RWE</b>
MOSCOW (Bloomberg) — RWE AG, Germany’s second-largest utility, and billionaire Viktor Vekselberg acquired stakes in two Russian power generators as the state opens the industry to competition.
RWE, bidding with St. Petersburg-based mining company Sintez Group, agreed to pay more than 9 billion rubles ($378 million) for 33.5 percent of TGK-2, according to Russian national utility Unified Energy System, which sold the stake. RWE and Sintez will raise their interest to 43 percent after TGK-2 sells new shares next month, Alexander Chikunov, a manager at Unified Energy, said Friday.
RWE plans to gain more than 51 percent of TGK-2, according to an e-mailed statement from the utility. Sintez will conduct the transaction and hold a “minority share in a future consortium” with RWE, it said.

<b>Debt Installment Paid</b>
MOSCOW (Reuters) — Russia’s largest oil company Rosneft said on Monday it had completed repayment of the second, $5.2 billion tranche of the short-term loan it raised last year to finance acquisitions. 
“Rosneft funded the repayment by closing a new $3 billion five year pre-export international bank facility as announced in February and generation of sufficient free cash flow to cover the balance,” Rosneft said in a statement. 
The company said it had refinanced or repaid $5.6 billion out of $5.8 billion of short term debt falling due in the first quarter of 2008, with $2.6 billion fully repaid from free cash flow. It said the repayment of the remaining $190 million will also be funded by free cash flow.

<b>Oriola to Enter Russia</b>
HELSINKI (Reuters) — Finnish drugs distributor Oriola-KD said on Monday it would enter the Russian market by acquiring 75 percent stakes in Russian pharmaceuticals retailer Vitim & Co and wholesaler Moron Ltd. 
Oriola-KD said it expected the acquisitions to cost $93.2-$120 million, depending on the financial performance of the companies bought this year.

TITLE: Economy Ministry Moves to Cut VAT
AUTHOR: By Darya Korsunskaya
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s Economy Ministry has proposed to cut the value-added tax to 12 to 13 percent from the current 18 percent from 2009 as a measure to boost growth in non-energy sectors of the economy, a document showed on Sunday. 
The proposal comes after both outgoing President Vladimir Putin and President-Elect Dmitry Medvedev took the side of the industrial lobby in a tax debate that dragged on for years despite strong opposition from Finance Minister Alexei Kudrin. 
“The main positive effect (of the tax cut) will be the change of the quality of economic growth - investment will go to sectors with high added value,” the ministry said in a letter to Kudrin, who oversees Russian economic policies. 
The VAT tax brings about one third of Russia’s budget revenues and Kudrin argues the cut would badly affect the budget. Critics say the tax is difficult to collect due to bureaucracy while some of Russia’s record budget surplus can be used to support growth. 
The letter comes amid a chorus of tax break proposals, which include an idea from the financial market watchdog to scrap taxes on securities transactions as well as proposals by state oil major Rosneft to ease the tax burden on the oil sector to spur development of new fields. 
The letter also proposes to abolish a preferential 10 percent VAT tax rate for socially important goods such as food staples and to increase export and excise duties on heavy oil products to encourage production of lighter products, such as gasoline and diesel. 
The ministry said the measures will boost economic growth by 0.6-0.7 percentage points within two years and cut budget revenues by one percent of the GDP. 
It also said a lower VAT rate would help curb a widespread usage of tax evasion schemes. 
Other measures include tax breaks for expenses on research and development, voluntary medical insurance, corporate contributions to voluntary pension saving schemes and interest payment on mortgages. 
The letter also suggests scrapping a 24 percent corporate profit tax for transactions involving stakes of over 10 percent in Russian firms as well as their dividends to encourage firms with offshore ownership to make such deals in Russia. 
Russia enjoyed a record economic growth of 8.1 percent in 2007 despite a stagnant oil industry, whose lobbyists complain about an excessive tax burden. 
Some economists and officials, including the central bank’s monetary policy chief Alexei Ulyukayev, see signs of overheating. 
Kudrin has managed to successfully defend the budget and the oil fund where Russia piles up its windfall revenues for years but yielded to pressure last year ahead of the parliamentary and presidential elections, agreeing to raise pensions and wages. 
The pressure on fiscal hawk Kudrin, seen by many investors as the architect of Russia’s macroeconomic stability, has intensified further in recent weeks raising questions about his future in the new government, which Putin will form as prime minister after he steps down as President in May.

TITLE: Central Bank ‘Worried’ Over Inflation
PUBLISHER: Combined Reports
TEXT: LONDON — Central Bank deputy head Konstantin Korishchenko told a sovereign wealth conference that the bank was “really worried” about inflation, while ruling out a stronger ruble as a weapon against price increases. 
“There is a risk related to skyrocketing prices for commodities,” Korishchenko said on the sidelines of the conference Thursday. “It’s a global problem. We are really worried.” 
The Central Bank and the government are struggling to curb inflation spurred by oil and gas revenue and rising global food costs. They aim to slow price gains to 8.5 percent this year from 11.9 percent in 2007. 
Korishchenko said a stronger ruble, which would lower the cost of imports, was not the most effective way to achieve that goal. 
“We really think that this tool, the appreciation of the domestic currency, isn’t that powerful in fighting inflation because it has a flipside,” he said. “It has positive developments for imported goods, but negative developments for flows coming into the country and increasing the money supply.” 
A decrease in capital inflows would reduce pressure on inflation this year, Korishchenko said. The nation attracted a record $82.3 billion of inflows last year. 
The Central Bank plans to switch to inflation targeting, he said. That would mean allowing the ruble, which the bank controls by buying and selling foreign currency, to trade freely, Korishchenko said.  
Rising global borrowing costs following the collapse of the U.S. subprime mortgage market have also made it more difficult for Russian banks to obtain funding, he said. He estimated that Russian banks have about $100 billion in foreign debt. 
Bloomberg, Reuters

TITLE: Capital Buys Unimilk Stake, Might Hold IPO Next Year
AUTHOR: By Maria Ermakova
PUBLISHER: Bloomberg
TEXT: MOSCOW — Unimilk, Russia’s second-biggest dairy company, sold a stake to Capital International Inc. to help fund expansion as milk and baby-food demand surges in the former Soviet Union.
San Francisco-based Capital International Inc.’s private-equity fund, a unit of Capital Group Cos., paid more than $175 million for a minority stake, Unimilk Chief Executive Officer Andrei Beskhmelnitskiy said Monday at a press conference in Moscow without giving the holding’s size. The company may hold an initial public offering in next year’s first half, he said.
Unimilk, the maker of Petmol milk and creams and Bio Balance yogurts, is raising funds to build plants and develop products as rising incomes in Russia boost demand for higher-quality, more expensive food. The company introduced soft cheeses this year and expanded its baby-food range last month.
“The money will be spent on new plants and new products such as heavy yogurts and curd desserts,” Beskhmelnitskiy said at the press conference. Unimilk plans to complete a new plant in St. Petersburg this summer to replace an existing one and may build new factories in Rostov-on-Don in southern Russia and in Yekaterinburg in the Urals, he added.
Sales may rise as much as 40 percent to 44 billion rubles ($1.9 billion) this year on higher demand for milk products and an improved product range, according to the CEO. Revenue gained 43 percent in 2007, he said.
The company may decide on an IPO next year “if there are ideas, and if an IPO is the most optimal way to realize these ideas,” Beskhmelnitskiy said. “Management has a goal to prepare for an IPO in 2009. It’s a complicated, expensive and long-term project.”

TITLE: Sistema Sells Engines to Oboronprom
PUBLISHER: Reuters
TEXT: MOSCOW — Russian services conglomerate Sistema has sold its engine business for $190 million as part of its strategy to focus on services sector, the firm said on Monday. 
Sistema, controlled by billionaire Vladimir Yevtushenkov, said in a statement its subsidiary, RTI Systems, had completed the sale of Sahles, which owns 71.63 percent of Perm Motors Plant, to Saturn, a unit of state-controlled holding Oboronprom. 
Sahles also owns controlling stakes in other entities which make up the Perm Motors Group (PMG). PMG comprises 18 companies specializing in military and civil aviation engine construction. 
“According to the strategy approved by our board of directors, we are currently focusing on fast growing service sectors of the economy,” Sistema’s Chief Executive Officer Alexander Goncharuk said. 
“Sistema had considered its engine business as promising, but it was a non-core investment,” he said. 
Sistema’s key asset is Russia’s largest mobile phone operator, Mobile TeleSystems (MTS). Its public units also include fixed-line operators Comstar and MGTS, real estate developer Sistema-Hals and high-tech firm Sitronics.

TITLE: The Calm Before the Global Financial Storm
AUTHOR: By Martin Gilman
TEXT: Russia is the largest country in the world by land area and the seventh largest in terms of population. It may also have the eighth-largest economy, which is rapidly climbing up the rankings. But its size does not insulate it from the financial turbulence that is increasingly seizing up the world economy. 
Ironically, Soviet Russia — sealed in its oppressive isolation — was immune to whatever economic disturbances occurred elsewhere. Even the Great Depression arguably had little impact on the Soviet Union. Clearly, Russia is now fully integrated into the globalized economy, and both the global price shock and the financial meltdown are being felt. 
Although seemingly different phenomena, these two largely unanticipated developments share a common source. Both seem to feed from a relatively rapid expansion in global liquidity and, until last summer, a significant reduction in market perceptions of default risk, which encouraged a worldwide borrowing spree in real estate and other assets. The froth in housing markets was felt from the United States to Australia and touched Spain, Britain and others.  Financial assets rapidly rose in value, especially securities bundled from mortgage loans and other seemingly safe debt instruments. In a low-inflation environment, cheap and available debt was employed to leverage the returns on these assets. 
Then risk perceptions changed. In response to the U.S. subprime market collapse, the Federal Reserve began to ease monetary conditions aggressively. Not surprisingly, once Washington started to ease policy, investors have piled into commodities and other real assets, whose prices have soared. 
Even before the widely anticipated reduction in the Federal Reserve rate on March 18, the recent acceleration of inflation in the United States to 4.3 percent has led to the reappearance of negative interest rates. And negative rates fuel speculation. With money effectively free, anyone who can borrow on good terms has every incentive to find something to do with it. 
For Russia, the impact is mixed. While for many members of the Organization for Economic Cooperation and Development the surge in commodity prices is delivering a negative supply shock reminiscent of the 1970s, Russia enjoys a continuing positive in terms of trade gain. Last Monday, oil prices hit a historic high of $108 per barrel. And it is not just oil. Grains and metals have also reached all-time highs. Gold is flirting with $1,000 per ounce. 
Of course, these price shocks also reflect the rapid decline in the dollar. In terms of euros or rubles, the price spikes have not been as sharp. If these price levels are sustained, then the widely anticipated elimination of Russia’s current account surplus will be postponed for another year or two, possibly until 2011 or 2012, even with the surge in imports. Assuming no desire to allow a significant nominal appreciation of the ruble, the resulting accumulation of reserves will make it difficult to bring domestic inflation under control. 
This resulting overabundance of liquidity is the downside of the commodity boom as far as Russia is concerned. Inflation continued to accelerate in February to 12.7 percent higher than a year earlier. The increase in budgetary spending toward the end of last year and in January, combined with already loose monetary conditions, was the major reason for the continuing inflation acceleration. The government, despite its rhetoric, appears unwilling to use fiscal policy. Anti-inflationary measures, such as the Central Bank’s decision to increase basic interest rates by one-quarter percent, the fixing of prices for selected food items and the implementation of export duties on grain, seem to be largely cosmetic. 
While Russia and the rest of the world are flooded with liquidity looking for an inflation hedge, the financial meltdown in the United States continues. To some extent the liquidity paradox is an illusion, deriving from the fact that we use the word liquidity to describe different concepts. As investors have discovered in recent months, macro liquidity —  that is, plenty of savings — does not guarantee cheap and available credit. Nor does it guarantee micro liquidity — ease of buying and selling in markets. 
In fact it seems that a type of vicious cycle is developing. Banks are cutting back on their lending, in large part because of the losses they have suffered as a result of the credit crisis. By lending less to private traders, hedge funds and other participants in the credit market, banks reduce even further the demand for securitized debt instruments, worsening the problems in that market. 
More broadly, U.S. equity markets continue to fall from the highs reached last October, losing 18 percent since their peak. The dollar fell last week to an all-time low against the euro of $1.55. And despite aggressive cuts by the Federal Reserve, long-term mortgage rates have risen since January. 
In the United States, the credit crunch has provoked Congress to agree to a fiscal package of $168 billion, or 1.2 percent of the gross domestic product. It is interesting that while U.S. monetary policy has focused exclusively on the credit crisis, the European Central Bank and other central banks are more cautiously using the credit crunch to help against incipient inflation. 
The U.S. policy response may not help much to prevent a recession but clearly feeds the inflation in global commodity prices. So, even while the United States slides into a recession, forward inflation expectations in the bond market have risen to match the highest levels seen this decade. 
After the bubbles in dot.coms and housing, it may now be the turn for commodities.  Russia does not need this. Rather a phase of commodity disinflation is what is required to prevent the perception in the market that rising prices are a one-way bet.  The message is clear enough, but it is unlikely that anyone will pay much attention in a U.S. election year. 
The problem is that the United States, as the traditional key currency country, is, in effect, abandoning its responsibilities on the alter of domestic politics and short-term interests. As the world’s largest debtor country, the repricing of risk is playing havoc with overvalued assets and causing U.S. authorities to panic in an effort to forestall the possibility of a serious economic collapse. But the additional liquidity being created is the source of the inflationary pressure worldwide. The risk that inflation expectations might drag down the dollar anchor has been broadly ignored. 
Fortunately, the global financial meltdown manifests itself in a relatively limited and manageable manner in Russia. This is no doubt attributable to the hard lessons learned by Russian banks from the 1998 financial crisis and the relatively unsophisticated nature of its financial markets in terms of securitized products. Except for some localized and short-term liquidity concerns of banks that are squeezed to repay foreign loans that cannot be refinanced on attractive terms in current global market conditions at the same time that taxes are due, Russia remains largely immune. 
The secondary effects through inflation, however, are less congenial. Russia by itself cannot do much to stem this pressure. And each country, acting on its own, may exacerbate tensions in an increasingly fragile, globalized economy. 

Martin Gilman, a former senior representative of the IMF in Russia, is a professor at the Higher School of Economics in Moscow.

TITLE: Keeping It in the Family
AUTHOR: By Anna Shcherbakova
TEXT: It recently emerged that one of the most popular Russian social networking sites, Vkontakte.ru, was founded by relatives of St. Petersburg entrepreneur Mikhail Mirilashvili, who was imprisoned almost 7 years ago for kidnapping. In January 2007, his son Vyacheslav held 60 percent of the company that hosts the Internet site Vkontakte.ru, while the jailed businessman’s father also held 10 percent. Programmer Pavel Durov, who created the extremely popular service, had 20 percent. However, as of Feb. 1 2008, it was 100 percent owned by Doraview Limited, registered on the British Virgin Islands.  
The day after Vedomosti published news of the Mirilashvilis’ involvement in founding the site, Vkontakte reported it is owned by Digital Sky Technology fund. 
The popularity of Vkontakte has reduced the amount of work done in many Russian offices, as employees cannot resist the temptation to spend hours on it discussing everything from fashion and personal relationships to professional issues. People in offices where access to the beloved link has been prohibited subsequently claimed they had used it to contact their business partners and schedule appointments. However, despite Vkontakte’s 8 million registered users, which make it one of the top five most-visited Russian sites, it is not a prosperous business. Services like the ones it offers are free for users and only generate money through advertising, whose online turnover is fairly low. Vkontakte has no ads at all, and makes up to $50,000 revenue a month through its recruiting agency, according to a company representative. However, hosting the site is estimated to cost up to several million dollars a year. 
This amount is affordable for the Mirilashvilis, who are one of the wealthiest families in St. Petersburg. Mikhail Mirilashvili was president of Conti group, which includes several casinos. He also headed Petromir group, which has assets in real estate, pharmaceuticals, and medical services, and served as the top-manager at a local branch of a national oil company. In August 2000 his father, Mikhail Mirilashvili senior, was kidnapped by unknown people dressed in police uniforms, but returned home the next day. Shortly after that his eldest son was arrested on suspicion of kidnapping two people — presumably involved in the kidnapping of Mirilashvili senior — who were later found dead. 
Since his arrest the businesses have been run by his younger brother Konstantin, who also controls a large food importer, the medium-sized Viking bank and several other city enterprises. Viking also controls Gostiny Dvor, the city’s oldest and most famous department store. 
It is not surprising that the offspring of a rich family can afford to invest in online businesses, but I’m surprised that he has chosen the new economy. Almost all Mirilashvili’s businesses, or at least those that are known, belong to the old economy, where the most profitable assets like enterprises or real estate were shrewdly privatized or successfully raided from previous owners. The new economy of investment banks, modern IT-companies, most publishing houses and advertising agencies was created from scratch and its assets are mostly intangible. 
The entrepreneurial spirit needed to explore undervalued fields and take risks is important in both economies, but in different ways. Crossing the borders is rare, so Vkontakte is a significant example of how money from traditional businesses is flowing into the new economy. 

Anna Shcherbakova is the St. Petersburg bureau head of business daily Vedomosti.

TITLE: Business Boom Is Intoxicating
AUTHOR: By Richard Lourie
TEXT: You wouldn’t have known by looking around Moscow that March 2 was election day. The ratio of strictly commercial to political ads was 10,000 to one. You had to peer intently to find an image of President Vladimir Putin or Dmitry Medvedev. Of course, why waste good rubles on placards and posters when the outcome was never in doubt? 
In the end, commercial interests simply trumps the political. 
“Boom” was the word on people’s lips. Driving me around town, a friend recites the cost of square meters in downtown Moscow like a mantra that intoxicates him. Politics is predictable, boring and dangerous. The economy is unpredictable, exciting and dangerous. 
Turnout is what counted in the election, the authorities’ only worry that people would stay home in droves. One young doctor told me that he wasn’t allowed to discharge any of his patients on election weekend — it was easier to get them to vote lying in bed than out gallivanting around. 
After watching returns on television, I asked the doctor: “What channel should I watch? NTV?” 
“No,” he said. “MTV.” 
I laughed, but later that week sitting in a Shokoladnitsa Cafe, I watched a young couple both wearing earphones plugged into one laptop and realized that, as in the United States, the young people at the cutting edge were highly unlikely to get their information by sitting in front of a large piece of furniture. 
The Kremlin had seized control of yesterday’s technology. Of course, control can be imposed on the Internet, but not without risking serious damage to the free flow of information that is the lifeblood for a 21st-century society, for a country’s standing in the world and for the loyalty of the most productive class. 
Since there was zero possibility of any nesting-doll equivalent of a “Dewey Defeats Truman” headline, the matryoshka manufacturers had Medvedev dolls ready from day one. I bought one outside the entrance to Red Square. By the laws of physics — if not politics — Putin had to be smaller than Medvedev to fit inside him. Putin was followed by Yeltsin, but then there was a sudden skip to Stalin who proved to contain, like the seed of it all, a tiny Lenin. “But where’s Gorbachev?” I asked the salesgirl.  “There wasn’t room for them all,” she said with a laugh. 
I got another explanation for his absence a little later. In Russian cities, I have the habit of hailing gypsy cabs — meaning any citizen hard up enough to need to make a few rubles on the side. They’re cheaper than cabs, and you get a chance to talk to people you wouldn’t otherwise meet. 
I stepped off the curb to face the flow of oncoming traffic, and my first thought was — Where am I? Rodeo Drive? Nothing but Bentleys, Mercedes, Lexus. BMWs, Hummers. Hardly the sort whose drivers would interrupt their brilliant careers to make a quick 200 rubles. 
Finally, an old car pulled over and a deal was made through a half-opened window. The driver was in his late 20s — “too young to have worked in the Soviet Union” as he put it.  He was noncommittal about Medvedev: “We’ll see, we’ll see,” but then followed a passionate outburst on Russian leaders. “I don’t trust any of them. They’re never in touch with the people. Gorbachev was the worst. To forbid Russians to drink — what was he thinking of? As soon as he put the dry law into effect, everyone — bosses, workers, me, everyone — set up a still in their house. That was more than 20 years ago. And you know what? To this day I’ve kept mine, and in good shape too. You never know.” 
Reassured, I overtipped.

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

TITLE: Bewitched By Evil Eyes
AUTHOR: By Michele A. Berdy
TEXT: ᇂËÒÚ¸: envy

ᇂËÒÚ¸ in Russian is an evil emotion. The verb Á‡‚ˉӂ‡Ú¸ (to envy someone) is related to the word ‚ˉ‡Ú¸ (to see — ‚ˉÂÚ¸ in contemporary Russian) and seems to have been first associated with ‰ÛÐÌÓÈ „·Á (the evil eye). If someone looked enviously at you, he could hex your success. Later under Christianity, this black magic became one of the seven sins.
Today in Russia, Á‡‚ËÒÚ¸ comes in two main types, ·Â·¾ Ë ˜½Ð̇¾ (white and black), which represent a benign pleasure on the one hand and a bitter and rancorous ill will on the other. Although Western philosophers have noted this distinction, we don’t commonly distinguish between these two kinds of envy in everyday speech, which makes their translation rather awkward. ü Á‡‚ˉÛþ Ú· ·ÂÎÓÈ Á‡‚ËÒÚ¸þ means something like “I envy you in a good way” — that is, “I am happy for you and wish that your good fortune or success would rub off on me.” On the other hand, ü, ÔÐËÁ̇þÒ¸, Á‡‚ˉӂ‡Î Ú· ˜½ÐÌÓÈ Á‡‚ËÒÚ¸þ means something like “I admit I was bitterly envious of you,” which is to say: “I wasn’t the least happy for you and hoped you’d lose your good fortune or success — preferably to me.”
If you are feeling the good kind of envy — emulation envy — you might say: ì ÌÂ„Ó Á‰ÓÐÓ‚¸Â ̇ Á‡‚ËÒÚ¸ — Ô‡¯ÂÚ Ò ÛÚЇ ‰Ó ÌÓ˜Ë Ë ÌËÍÓ„‰‡ Ì ·ÓÎÂÂÚ (He has enviable good health — he works from morning until night and never gets sick). When you call something Á‡‚ˉÌÞÈ (enviable), you are probably operating in the white magical realm of envy. éÌ Ó·Î‡‰‡ÂÚ Ó‰ÌËÏ Á‡‚ˉÌÞÏ Í‡˜ÂÒÚ‚ÓÏ — ÌËÍÓ„‰‡ ÌË Ì‡ ÍÓ„Ó Ì ӷËʇÂÚÒ¾ (He has one enviable quality — he never takes offense at anyone). When you use Á‡‚ˉÌÞÈ in reference to a single man, you are probably hoping to bewitch him: ᇂˉÌÞÈ ÊÂÌ˦ (literally, enviable groom) is what we call an eligible bachelor in English.
In both English and Russian, envy/Á‡‚ËÒÚ¸ is associated with bile, which the ancients believed to be the source of emotional and physical distress. Dostoevsky’s narrator in “Notes from the Underground” famously declared: “[ü] Á‡‚ˉÛþ ÌÓÐχθÌÓÏÛ ˜ÂÎÓ‚ÂÍÛ ‰Ó ÔÓÒΉÌÂÈ ÊÂΘ˔ (“I envy a normal person to my last drop of bile”). Today you aren’t likely to hear about bilious envy, but the Russian afterglow of a bile attack is still tinted green or yellow: éÌ ÔÓÁÂÎÂÌÂÎ/ÔÓÊÂÎÚÂÎ ÓÚ Á‡‚ËÒÚË (He turned green/yellow with envy).
Over the millennia, Russians have been keen and often sharp-tongued observers of Á‡‚ËÒÚÌËÍË (envious people). Relatively benign envy can be conveyed with óÂ„Ó ÌÂÚ, ÚÓ„Ó Ë ¦Ó˜ÂÚÒ¾ or í‡Ï ¦ÓÐÓ¯Ó, „‰Â Ì‡Ò ÌÂÚ (The grass is always greener on the other side of the fence). When you stir a bit of greed to the envy cauldron, you can say: Ç ˜ÛÊ˦ ÐÛ͇¦ ÔËÐÓ„ ‚ÂÎËÍ, ‡ Í‡Í ‰ÓÒÚ‡ÌÂÚÒ¾ — χΠÔÓ͇ÊÂÚÒ¾ (The pie is big in someone else’s hands, but once you get it, it seems small).
If you want to bemoan the wretched nature of human beings, you can sigh: ɉ Ҙ‡ÒÚ¸Â, Ú‡Ï Ë Á‡‚ËÒÚ¸ (Where there is happiness, there is envy). This is also encapsulated by the witty but woeful: ëÓÒ‰ ÒÔ‡Ú¸ Ì ‰‡½Ú; ¦ÓÐÓ¯Ó ÊË‚½Ú (My neighbor keeps me up at night — he lives well).
ᇂËÒÚ¸ can also be tainted with ÁÎÓЇ‰ÒÚ‚Ó, a word that doesn’t have an exact English equivalent. áÎÓЇ‰ÒÚ‚Ó is something like gloating, only darker and deeper — the Russian version of schadenfreude, pleasure taken from someone else’s misfortune. This has been famously distilled into the expression: ì ÒÓÒ‰‡ ÍÓÐÓ‚‡ ҉Ӧ· — ÔÛÒÚ¾˜ÓÍ, ‡ ÔÐ˾ÚÌÓ (literally, my neighbor’s cow died — it’s a little thing, but pleasant all the same).

Michele A. Berdy is a Moscow-based interpreter and translator.

TITLE: The Game Is Over
AUTHOR: By Alex Yearsley
TEXT: The game is over” were the first words uttered by Russian arms dealer Viktor Bout when he was arrested by Thai police on March 6 after the nearly 10-year “game” came to a dramatic end. It reveals little of the horror and tragedy that his business has caused and says much about the man and his methods.
Since his arrest, hundreds of articles have been written about Bout. What has been missed in the high drama of his capture are the countless victims who have been maimed and killed by the cargo he is accused of delivering to some of Africa’s, Asia’s and South America’s bloodiest conflicts over the past 10 years. Millions of bullets, rocket-propelled grenade launchers and AK-47s have led to many innocent deaths in embargoed conflict zones. Bout must be tried for these crimes.
Officials from the United States and United Nations say that Bout’s list of customers included former dictator Charles Taylor of Liberia, Libyan leader Moammar Gadhafi, late dictator Mobutu Sese Seko of Zaire, now known as the Democratic Republic of Congo, and both sides in the Angolan civil war.
Blame for not arresting Bout earlier must be equally shared between the United States and Russia. Through Bout, the United States apparently supplied weapons and embargoed goods to unsavory regimes and rebel groups that it supported tacitly but could not fund openly.
For Russia, Bout was a cash cow to be milked. Senior military and intelligence officials effectively gave Bout a carte blanche to operate, and they expected big payoffs in exchange for granting him unfettered access to the cargo planes he used and the open access to the country’s Cold War-era weapons arsenals.
Then Bout became a political pawn in a tit-for-tat game between the United States, Britain and Russia. Britain hired Bout’s planes, which fulfilled certain British Defense Ministry contracts. Russia blocked a Belgian candidate from becoming the chairman of the UN Panel on Somalia because of his anti-Bout campaign. In addition, although he was living in Moscow and freely gave radio and television interviews, he was never arrested by a Russian law enforcement agency, even after Interpol issued a notice for his arrest. How many lives would have been spared if he had been arrested years ago?
The special forces of Belgium and Britain, which had organized its own audacious plan to capture Bout, were reportedly left seething when the plane that was to be carrying Bout arrived empty. He was tipped off on the plan midflight and landed the plane in a neutral country to evade capture. As one source states in “Merchant of Death,” Doug Farah’s and Stephen Braun’s book about Bout, the United States was the only country that had the capability to intercept the secure communications of either country.
The U.S. role in the Bout affair may have been connected with the Sept. 11 terrorist attacks and Washington’s subsequent mandate to fight the global war on terror. Later, Bout is reported to have flown on the first plane into Afghanistan with U.S. special forces as he had unique knowledge of Afghanistan’s landing strips and because of his business dealings with both the Northern Alliance and the Taliban.
Was Bout guilty or complicit in the atrocities that were committed with the weapons he flew in? He says he just delivered cargo and didn’t know what the cargo contained, but this is hard to believe.
U.S. authorities are seeking Bout’s extradition from Thailand to the United States to stand trial, where he faces up to 15 years in jail if convicted. Nevertheless, there are some members of the administration of President George W. Bush who do not want Bout to face trial in the United States. Their actions must be closely monitored to ensure that they can no longer interfere in this truly barbaric game of cat and mouse.
Finally the cat — in the form of the slick U.S. Drug Enforcement Agency, whose undercover agents posed as rebels from the Revolutionary Armed Forces of Colombia, or FARC, seeking to purchase millions of dollars’ worth of weapons. — has laid a trap so brazen that this carefree and lazy mouse sat firmly in the trap laid for him. The DEA deserves all the praise it can get for arresting this Cold War relic.

Alex Yearsley is head of special projects for Global Witness, a London-based human rights organization.

TITLE: Cartoons Tip Of the Iceberg
TEXT: An appeal by a Protestant group to close the 2x2 cartoon channel for purportedly promoting violence and hatred was well-timed.
The appeal, which the Consultative Council of the Heads of Protestant Churches in Russia sent to the Prosecutor General’s Office on Wednesday, came less than a week after 2x2 had to pull two shows over a warning from the government media watchdog that the shows promoted “a cult of violence and brutality.”
If prosecutors heed the Protestants’ appeal, the media watchdog might end up issuing a second warning — which by law would allow authorities to revoke 2x2’s broadcast license.
The appeal accuses 2x2 of promoting “cruelty, violence, homosexual propaganda, religious hatred and intolerance” with cartoons like “South Park” and “Beavis and Butthead.”
The Protestants, however, should remember that while violence and religious hatred are criminal offenses in this country, homosexuality is not. Furthermore, they should beware of the perils of attempting to legislate morality.
It is curious that the privately owned 2x2 — which runs disclaimers that its programs are for adults only — is under fire and not the state-controlled national channels. Prime-time programming on these channels includes not just adult-oriented movies but shows anchored by transvestites and “journalistic investigations” covering the “sexual revolution” posed by pregnant 6-year-old girls.
If there is anything offensive about television, however, it is the sheer lack of journalistic integrity and freedom. These days the national channels rarely delve beyond the Kremlin line, preferring instead to offer lavish and praise-filled coverage of President Vladimir Putin’s meetings with his ministers and international leaders. The political opposition — the obvious voice of dissent — has been rudely shut out of the conversation.
As a result, the news reports have increasingly resembled Soviet-era propaganda, especially during election campaigns and international disputes, such as Kosovo and U.S. plans to build a missile-defense shield.
But at the end of the day, Russia is a secular democracy, where everybody has the freedom of choice to watch whatever he or she wants on television. If the program is offensive, change the channel. If you still cannot find anything worth watching, turn the television off.

This first appeared as an editorial in The Moscow Times.

TITLE: Tbilisi Campers Should Look to Minsk, Yerevan
AUTHOR: By Matthew Collin
TEXT: A gust of wind blows open a canvas tent flap to reveal a man reclining on a camp bed, flicking through a newspaper, while his wife puffs daintily on a cigarette. This middle-aged couple are not, however, vacationers enjoying the early spring sunshine and the healthy air of the great outdoors. The exhaust-filled atmosphere of Tbilisi’s Rustaveli Avenue isn’t really the best location for that. Instead, they’re part the latest group of opposition activists to highlight their political grievances by setting up a protest camp, in what seems to have become a contemporary post-Soviet tradition.
The concept was perfected by Ukrainians during the 2004 Orange Revolution. The huge tent camp in central Kiev became a powerful symbol of the uprising — a statement of defiance and a seductive show of “people power,” as well as a cultural phenomenon in its own right. As the days passed, it took on a life of its own, like outlaw hippie festivals do, with pavement kitchens, samizdat art shows and do-it-yourself campfire entertainment. “This is a revolution of the mind,” one camper said.
But since the Orange Revolution, similar attempts to use tent camps as a political weapon have ended in failure. Two years ago, a courageous group of young dissidents led a daredevil picket against the authoritarian leader of Belarus, Alexander Lukashenko. Dodging the police and the KGB, they managed to occupy a downtown square for several days, despite subfreezing temperatures, creating what one of their leaders described to me as “an isle of freedom in this sea of dictatorship,” until the riot squads arrived in the middle of the night to take them all away to jail.
There were similar scenes in Yerevan a few weeks ago, where an illegal opposition encampment had grown into a colorful protest village. Some people decorated their tents with paper flowers and graffiti; others brewed hot tea on makeshift braziers. A photo exhibition was set up outside one tent. Outside another, there was a bulletin board with the latest opposition propaganda.
“There is a spirit here that no one can do anything to stop,” one young woman insisted cheerfully. “People here believe that no one could attack them in Freedom Square because that would be a big, big mistake.”
Her confidence turned out to be misplaced. A couple of days later, just before daybreak, I got a phone message from one of her friends: “Something terrible is happening here,” it read. The riot police had arrived. After driving the protesters out, they brought in trucks to clear away the piles of limp canvas and discarded possessions which remained. Within minutes, it was all over.

Matthew Collin is a journalist in Tbilisi and author of “The Time of the Rebels: Youth Resistance Movements and 21st Century Revolutions.”

TITLE: Bob Is Bootless in Seattle
AUTHOR: By Mark H. Teeter
TEXT: As a veteran foreign-language teacher, I was intrigued by the recent New York Times article “Learning From a Native Speaker, Without Leaving Home.” If you have good Internet access and a broadband computer connection, it seems that you can now study a new language interactively with a native speaker who wants to learn yours — and it’s free for both of you.
Perhaps “intrigued” isn’t the word; “threatened” may actually be closer to what I felt. One professor was quoted as saying that students now “have thousands of [teachers] to pick from — if the first one doesn’t work out, you can choose another.” Uh-oh.
But after some reflection, I deduced that laptop-to-laptop pedagogy isn’t really God’s way of telling me about early retirement. Though I am a stick-in-the-mud traditionalist teacher — to me, “distance learning” means an unusually long classroom — the peculiarities of my specialty should keep me employed.
I teach English to Russian speakers and vice versa, an arena in which even introductory greetings can prove so seeded with cultural and political land mines that well-meaning cyberstudents might get their socks blown off before you can say, “Go teach your wife to make borshch!”
Consider a hypothetical American student firing up his Lap-Ranger 3000, smiling toothily into his webcam and galumphing into the ether with a hearty ...
“Hi, I’m Bob from Seattle and I’m really excited about learning Russian! So, who are you?”
“Friendly greeting, Bob, I am Vera Nikolayevna in Piter, a tutor wanting to improve English and teaching you Russian. Now, please sit up straight on divan, remove hand from jeans and — wait, you are your putting booted feet on coffee table?!?”
“Um, hi back at you there, Veronica LaPeter, or whatever. What difference does it make where my feet are? In Ameri...”
“What difference?!? Young person, you are cyberguest in home, and you ask what dif— wait, now you are putting ice in cola drink?!? Do you want sore throat illness? March month outside, are you craz ...”
“Thanks, uh, Ms. LaPeter — wow, look at the time! Let’s study again next week, OK? Bye! [click-click] Whoa, what’s up with her? I need somebody more chill, for sure. Ooh, look, here’s one in Siberia — there’s some chill, I bet, ha-ha! OK, here goes: Hi there, this is Bob from Seattle and I’m excited about learning some Russian. Maybe.”
“Thank God!! It works!! I mean, hallo, Bob! I am Mikhail from Chita, and I am even more excited than you, believe this! I am building laptop five years from smuggled parts and scraps of wire and now it finally ... Aaarrggh, get back! Svolochi, otstante! bob, you must help, i am being held pris ...”
“Hello? Wait! Don’t go yet, McHigh-Yield! Jeez, some lesson — he disconnected! Oh well, at least that one didn’t yell at my boots. All right, lemme try one more, anyway. Here’s someone in Moscow named Ivan — he’s gotta be more typical. Yeah, Ivan Ivan-o-vich on Lubiyan-, no, Lubyanika Plowshed Street, or something. OK, here goes: Hello, I’m Bob from Se...”
“From Seattle, yes, I know, Bob. You’re a junior at Seattle Tech and you need three language credits, don’t you, to meet your humanities distribution requirement — and you plan to get them here on the net, without paying tuition. Smart plan, Bob, very smart. We’re quite impressed by your initiative.”
“Um, who’s ‘we,’ Mr. Ivan-o-vich? I thought this was a one-on-one thing. And hey, where’d you hear about my language credit prob ...”
“We can help you get those credits quickly, Bob — very quickly. Does that interest you? I’m your friend, Bob, always remember that. Now, do you want our help getting the credits — fast?”
“Well, sure, who wouldn’t? But c’mon, your English is really good. I don’t think there’s any way I could help you in return.”
“Oh, you’d be surprised, Bob. Now, put your feet up — right on the coffee table! And let’s forget about that Mikhail fellow, shall we? He looked like Al Capone, no? Now listen to my voice, Bob. This is the very latest in language training. You’re very relaxed, Bob — yes-s-s-s, you’re getting drowsy ...”
Wake up, people! Language learning isn’t like this. Remember books, paper, blackboards, tapes, films — and homework? News flash: That stuff works!
Too 20th century for you? OK, fine, go roll the cyberdice, bring a bunch of native-speaking weirdos through the looking glass into your rumpus room. Hey, I’m not saying it’s a plot, but watch your step ... as well as your boots.

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

TITLE: China Clamps Down on Tibetan Protests
PUBLISHER: Reuters
TEXT: BEIJING — China said on Monday it had shown great restraint in the face of violent protests by Tibetans, which it said were orchestrated by followers of the Dalai Lama seeking to wreck the Beijing Olympics in August.
But even as the governor of Tibet said no guns were used against protesters in Lhasa, troops poured into neighboring areas to enforce control as the regional capital counted down to a midnight deadline for protesters to give up.
“If the Tibetans in Lhasa take to the streets again in large numbers and really challenge the Chinese authorities, I think we’ll see a very harsh crackdown,” said Kenneth Lieberthal, a political scientist at University of Michigan.
The continued tensions ensured the violence of the past week in Tibet would hang over the country no matter what the resolution, with foreign protests, pleas for leniency and China’s crackdown weighing uncomfortably on the build-up to the Games.
About 40 students staged a peaceful sitdown protest at the Central University for Nationalities in Beijing, marking the spread of pro-Tibetan demonstrations to the capital, the scene of pro-democracy protests in 1989 which led to a bloody crackdown.
Russia said it hoped China would do what was necessary to curtail “unlawful actions” in Tibet. A brief Russian Foreign Ministry statement made no criticism of Beijing.
Tibet governor Qiangba Puncog said the protests were ignited by supporters of the exiled Dalai Lama.
“This time a tiny handful of separatists and lawless elements engaged in extreme acts with the goal of generating even more publicity to wreck stability during this crucial period of the Olympic Games — over 18 years of hard-won stability,” he said.
China condemned attacks on its embassies abroad, calling them a serious threat to safety.
“We strongly condemn the violent action of Tibet independence activists,” Foreign Ministry spokesman Liu Jianchao told a news conference. Of the violence in Tibet, he said: “This shows the international community the Dalai clique.”
The Dalai Lama has said he supports the Beijing Games and has outright rejected the Chinese claims about his role.
He fled Tibet after a failed uprising against Chinese rule in 1959 and set up a government-in-exile in Dharamsala, north India. Beijing reviles him as a separatist but he says he wants only real autonomy for the region, which Communist troops entered in 1950. The last major rioting in Tibet was in 1989.
An ethnic Tibetan in Sichuan’s Aba prefecture said fresh protests also flared near two Tibetan schools on Monday, with hundreds of students facing off against police and troops.
About 40 students from a high school for Tibetans in Maertang county, Aba, were beaten and arrested for protesting, the Dharamsala-based Tibetan Centre for Human Rights and Democracy later said. Repeated calls to the school went unanswered.
The resident, who asked not be identified, also said 18 people, including Buddhist monks and students, were killed when troops opened fire with guns on Sunday. Earlier a policeman was burnt to death, he said. His account could not be immediately verified.
Another Tibetan said the area was tense and few dared go out.
“There was talk that hundreds of nuns protested too, but when you’re locked up at home, who can tell?” he said. He also said a dozen or more people died in the violence on Sunday. 
Exiled representatives of Tibet in Dharamsala on Sunday put the protest death toll at 80. 
But Qiangba Puncog said only 13 “innocent civilians” had been killed and dozens of security personnel injured in Lhasa when several days of monk-led protests broadened into riots in which houses and shops were burned and looted on Friday. 
“I can say with all responsibility we did not use lethal weapons, including opening fire,” he said in Beijing. Tear gas and water cannon were used to quell the region’s worst protests in nearly two decades, he said. 
Peng Xiaobo, who sells clothes in Lhasa, told state television that seven family members were forced to leap from an upper floor when a mob set his ground-floor shop on fire. 
A member of the People’s Armed Police was beaten unconscious by a mob, one of whom then used a knife to carve out a chunk of flesh the size of a fist, said Qiangba Puncog. A passer-by was burnt alive after petrol was poured over him, he also said. 
Residents contacted in Lhasa said the city was under tight police watch ahead of a Monday midnight deadline for protesters to give themselves up. 
Foreign reporters are barred from travelling to Tibet without official permission and tourists have been asked to leave. Over a dozen Hong Kong journalists were forced out of Lhasa on Monday after being accused of illegal reporting. 
The Tibetan “government-in-exile” in northern India said armed police were carrying out house-to-house searches in Lhasa and had arrested former “political prisoners” in the clampdown. 
In Aba, two ethnic Tibetans said hundreds of People’s Liberation Army vehicles moved in overnight after unrest. 
Reuters reporters also saw convoys of troops moving through Sichuan province towards its borderlands with Tibet. Soldiers patrolled the streets of Kangding, the main town of Sichuan’s heavily Tibetan western side.

TITLE: Woods Makes It Five Straight Wins on PGA
AUTHOR: By Doug Ferguson
PUBLISHER: The Associated Press
TEXT: ORLANDO, Florida — This victory came with so many spoils, none of which Tiger Woods cared about at the moment.
He seemed oblivious to his PGA Tour winning streak that now stands at five, the third time he has put together so many consecutive wins. He wasn’t concerned about capturing the Arnold Palmer Invitational for the fifth time, earning him another spot in the record books. Nor was he thinking about career victory No. 64, tying him with Ben Hogan at No. 3 on the all-time list.
Woods simply was trying to figure out why his hat was in the hands of caddie Steve Williams.
His one-shot victory Sunday was so intense that Woods went blank after holing a 25-foot birdie putt that caused pandemonium around the 18th hole at Bay Hill, and heartache for Bart Bryant, the unlikely challenger who gave Woods his stiffest test in seven months.
“When Stevie handed me my hat, I was like, ‘How in the hell did he get my hat?’” Woods said. “Evidently, it came off. I don’t know how it came off, but it came off. I need to see the highlights.”
Where to start?
He was seven shots behind going into the weekend until making birdie on the three toughest holes at Bay Hill to forge a tie. And he pulled off the clutch shots-and putt-with the tournament on the line.
The only surprise was the celebration.
He was tied with Bryant coming to the 18th hole when he produced what Woods called his best swing of the week, a 5-iron from 164 yards into a stiff breeze over the water to a skinny green with bunkers behind it. Then came a 25-foot putt that he was trying to make, without hitting it so hard that it left him a tough putt in case he missed.
As it crept toward the cup, Woods backpedaled — nothing new there — and when it tumbled in for a final birdie, he turned and removed his cap, spiking it to the ground and letting out a roar that was drowned out by thousands of sun-baked fans who were swept up in the moment, even if they had seen it before.
“I was so into the moment of the putt going in and winning the golf tournament,” Woods said. “I kept telling myself, ‘I’ve done this before. I did it against Phil. And this time, it’s a little bit deeper into the green, and the putt has a little bit more break, and it has a little more grain. I’ve done it before and I can do it again.”’
That would be Phil Mickelson in 2001, the last time Woods made a birdie on the 72nd hole for a one-shot victory.
This time, the opponent was Bryant, a 45-year-old who showed more moxie that guys with a far greater pedigree. Bryant made two birdies, two clutch saves, shot 67 and became the only player to break par all four rounds at Bay Hill.
And it still wasn’t enough.
He sat in the scoring trailer, which didn’t have a television, and told the official he would just listen to the crowd for the result.
“I heard a big cheer, and I got up and left,” Bryant said. “That’s why he’s Tiger Woods.”
The final birdie gave Woods a 4-under 66 and another memory in a year already loaded with them.
And it’s only March, still one month before the Masters.
There was that eight-shot victory at Torrey Pines, winning four straight holes late in a first-round match against J.B. Holmes in Arizona. Even when he went overseas to Dubai, Woods chipped in twice and birdied the last hole to win again.
It’s a complicated winning streak, and the easiest way to explain it is that he hasn’t lost since September.
Woods now has won five straight on the PGA Tour dating to the BMW Championship at Cog Hill outside Chicago. His scoring average is 66.13 during that stretch, and he is a combined 74 under par.
He has won six straight worldwide, which includes the victory in Dubai. And he won the Target World Challenge in December by seven shots, although that doesn’t count because it’s unofficial and had only 16 players.
“What he’s doing right now, you can’t even fathom,” Bryant said.
There have been five winning streaks of at least five tournaments in PGA Tour history. Woods owns three of them, and the others belong to Hogan (six) and Byron Nelson, whose 11 in a row is considered among the most untouchable records in all of sports.
Woods won Bay Hill for the fifth time, becoming the first player in PGA Tour history to win at least five times in four different tournaments. The others are the Buick Invitational, Bridgestone Invitational and the CA Championship, where he plays next week at Doral as the three-time defending champion.
No wonder some are starting to question whether he will lose again.
Palmer knew what was coming, telling those around him that Woods was going to make the birdie. Never mind that he hadn’t made a putt longer than 20 feet the previous 71 holes.
“He just said, ‘It doesn’t surprise me you made the putt,”’ said Woods, who finished at 10-under 270. “Somehow you just get a good feeling. And he being a player knows better than anybody.”
Hogan won 64 times over 21 years, the last victory coming at the 1959 Colonial National Invitational.

TITLE: Alpine Skiing World Cup Hit by Bout of ‘Soft Snow’
AUTHOR: By Patrick Lang
PUBLISHER: Reuters
TEXT: BORMIO, Italy — Bode Miller said he felt deflated after Alpine skiing’s World Cup finals, even though he was happy about a season that brought him his second overall trophy.
“The finals were really kind of a letdown for a lot of people,” said the American. “The downhill obviously was shaping up to look really positive and a really cool finish for the season. To get that cancelled, it hit everyone.”
The men’s downhill, which had been due to open the five-day finals on Wednesday, was cancelled because of soft snow, leaving Miller second in the final standings behind Swiss Didier Cuche.
Miller, racing as an independent after splitting with the United States team, still captured the overall cup he first won in 2005.
“For me, I came in here and I knew I had to do a couple of things and I would win the overall,” the 30-year-old Miller said after Sunday’s awards ceremony. “I didn’t do much, but I did enough.”
Miller said the season’s results had vindicated his decision to set up his own “Team America” after his relationship with U.S. team officials was strained to breaking point.
“Obviously I’m excited about going on my own, breaking away, doing new things and having success with that,” he said.
“The end of the season was a little bit of a letdown — just the finals, though. Before that I came out of Norway obviously feeling great and racing hard. That was for me a really positive finish to a really positive season.
“I think this year we sort of set down the group. I was really happy because the coaches saw what they achieved. I think we also did some really great things. We have to sit down and appreciate that. We’re looking forward and we’ll see what’s going to happen next year.”
If he decides to continue racing, Miller will have to put together a new group of trainers after some of them decided to step down. John McBride, his head coach, wants to dedicate more time to his family.
“For the moment I don’t know too much about my future, I’ll see later on this spring,” Miller said.
He said he was happy that compatriot Lindsey Vonn had taken the women’s overall title, making them the first American double champions in 25 years.
“It’s cool to see that two American can take the two overall titles away from the Europeans but I don’t think it will be big news in the U.S. right now,” said Miller who has long complained about the lack of attention the sport attracts at home.
The finals closed early after Sunday’s team event was cancelled due to rain and fog. The new season will start in Soelden, Austria, on October 25.

TITLE: Iran Vote Called Into Question
PUBLISHER: Reuters
TEXT: TEHRAN — Staunch opponents of President Mahmoud Ahmadinejad complained on Monday about vote counting in Iran’s parliamentary election, in which conservatives have retained their grip on the assembly, a news agency reported.
Full results from Friday’s vote have yet to be announced, but the Interior Ministry said conservatives who call themselves “principlist” for their loyalty to the Islamic Republic’s values had 74 percent of seats decided so far. Parliament has 290 seats.
“We have complaints about the method of counting votes,” the spokesman of the reformist National Trust party, Esmail Gerami-Moghaddam, told Iran’s ISNA news agency.
“We want the Interior Ministry to announce the result of vote counting at each station through their Web site,” he said.
Mohammad Hossein Mousapour, deputy head of the ministry’s election headquarters, told a news conference the parliament election had been “unique and unprecedented regarding not having voting irregularities”.
Conservatives will again dominate the assembly. But Ahmadinejad may not get an easy ride because the camp is broad and includes political rivals who may use parliament as a springboard to launch into next year’s presidential race.
“The result of parliamentary election does not mean the government was victorious,” said Amir Ali Amiri, secretary for the Inclusive Coalition, a conservative group backed by Ahmadinejad’s rivals, Iran’s ISNA news agency reported.
“Conservative critics of the government will have a majority in the next parliament,” Amiri said.
One analyst said Ahmadinejad’s core support in parliament may have shrunk to about a quarter of seats, down from roughly two-thirds in the outgoing assembly. The lack of disciplined parties in Iran makes precise figures difficult to obtain.
The vote will not directly impact nuclear, oil or foreign policy, which are all ultimately determined by Supreme Leader Ayatollah Ali Khamenei under Iran’s system of clerical rule.
Many reformists, who seek political and social change, were barred from even entering the race by a pre-vote vetting procedure they say aimed to hand victory to conservatives.
The conservative-controlled Guardian Council of jurists and clerics, which checked hopefuls met criteria such as commitment to the Islamic Republic’s ideals, insists it acted without bias.
Iran’s state-owned Press TV satellite channel said on Sunday conservatives had won 163 seats and reformists had 40 - roughly matching the reformists’ minority in the outgoing parliament.
Without giving a precise breakdown, Mousapour said conservatives had 74 percent of 189 seats decided till now — that suggests around 140 seats.

TITLE: Lipscomb Wins in World Cup Upset
PUBLISHER: The St. Petersburg Times
TEXT: ITALY — Canada’s Crispin Lipscomb scored a surprise victory Sunday in the World Cup season-ending men’s halfpipe at Valmalenco, Italy, The Vancouver Sun reported. 
Lipscomb scored 45.3 points in the final to edge Iouri Podladtchikov of Switzerland, who tallied 44.4 for a second-place finish that allowed him to claim the season title for the first time. 
“I had a really stylish and super clean run,” Lipscomb, who won the season-ending event in 2006 in Japan for his only other World Cup win, told reporters in Italy. “I guess this is what the judges liked today.”
Lipscomb separated his shoulder a year ago and didn’t get onto the circuit this season until mid-February. He was 10th and 17th in two events in Asia and 26th at Calgary two weeks ago.
“It feels good to win again,” said Lipscomb. “I’m super happy. This is what I wanted to see after I had a hard time coming back from injury. It also paid off that I took off a week after the Calgary event. I came back stronger.”
Lipscomb’s win capped a great weekend for Canadian boarders after Matt Morison blitzed a strong field to win the parallel giant slalom on Saturday and claim his first victory of the season, The Vancouver Sun reported
The 20-year-old, who struggled at times with lofty expectations after a terrific rookie year in 2006-07, took out World Cup champion Karl Benjamin of Austria in his quarter-final and dispatched Andreas Prommegger of Austria, who wound up third in the points race, in the semifinal. In the final, Morison beat Roland Fischnaller of Italy.

TITLE: Left-Wingers Inflict Heavy Losses on Sarkozy in Elections
PUBLISHER: Agence France Presse
TEXT: PARIS — Victorious left-wing leaders stepped up demands Monday for French President Nicolas Sarkozy to make big changes in government, after inflicting heavy losses on his right-wing camp in local elections. 
Sarkozy was also facing pressure from part of his own UMP party, which lost dozens of towns to the opposition Socialists including prized cities Toulouse and Strasbourg, in a vote cast as a referendum on his first 10 months in power.
The president has signalled the results would lead to a rejiggering of his communications teams, and the arrival of some new faces in the lower tier of government, with an announcement expected later Monday.
But Segolene Royal, Sarkozy’s Socialist rival for the presidency last year, called for a radical change in government policy, saying the results were a “punishment vote” for the president, whose approval rating has plunged below 40 percent.
Socialist leader Francois Hollande said he expected “a reshuffle of the president’s behaviour and his policies,” and called for immediate measures to boost small pensions and the minimum wage.
The Socialists took an estimated 49 percent of Sunday’s vote, against 47.5 percent for the UMP. They now control 58 percent of towns with more than 30,000 inhabitants, after winning 40 from the right including several bastions.
The French press described the vote as a “disaster,” a “disavowal” or a “rout” — and a clear warning shot for the government.
“Mister President: somebody needs to tell you this: you well and truly lost this local election,” wrote the left-wing Liberation. “The Sarkozy spell has broken in the space of a few months.”
Prime Minister Francois Fillon sought to play down the scale of the defeat, attributing it to low turnout, at 62 percent, and the impatience of voters keen to sample the benefits of Sarkozy’s reforms.
The mayor of Marseille Jean-Claude Gaudin, who narrowly retained control of France’s second city, said voters had issued a “fairly serious warning” to the government and that speeding up change was the answer.
“We need to accelerate the promised reforms, we are wasting too much time,” he said.
Aides have suggested an image makeover was in order for the 53-year-old president, criticised for a brash style that has earned him the nickname “the Bling-Bling president.”
But other influential voices in the ruling right urged Sarkozy to draw wider lessons from the election. 
Former prime minister Jean-Pierre Raffarin, deputy-head of the UMP, said the government had to “change tack on a certain number of points.”
And the UMP leader in parliament Jean-Francois Cope called for “greater clarity” in Sarkozy’s reform programme, and for lawmakers to have more say in shaping policy. Since coming to power, Sarkozy has eased rules governing France’s 35-hour work week, the shortest in Europe; cut pension benefits for some state workers, which previous presidents tried and failed to do; and given universities more autonomy.
Unemployment has fallen to 7.5 percent, its lowest in two decades. But this has not dispelled public gloom, with consumer confidence at a 21-year low.
Pollsters attribute Sarkozy’s ratings collapse to pessimism about the economy coupled with perceptions that he is distracted by his personal life, following his divorce and remarriage to the former supermodel Carla Bruni. 
Despite their gains, the troubles of the rudderless Socialists were far from over as they brace for a bitter leadership showdown and struggle to modernise their party, which has lost three presidential elections in a row. 
The triumphant re-election of Paris Mayor Bertrand Delanoe has boosted his chances of winning the Socialist Party’s leadership against frontrunner Royal and of carrying its colours in the 2012 presidential race.

TITLE: McCartney to Pay Mills $48.6Mln After Divorce
PUBLISHER: The Associated Press
TEXT: LONDON — A judge awarded Heather Mills a total of $48.6 million Monday in the financial settlement of her divorce from former Beatle Paul McCartney. 
A document released by the Family Court said the judge awarded Mills a lump sum of $33 million plus the assets she currently holds worth $15.6 million.
“I’m so, so happy with this,” Mills told reporters following the closed hearing.
The court also ruled that the couple’s 4-year-old daughter Beatrice should receive a “periodical payments order” of $70,000 per annum. On top of that, McCartney will pay for the child’s nanny and school fees.
Mills had sought almost $250 million, while McCartney had said she should receive $31.6 million, including her own assets, which the court assessed at $15.6 million.
Judge Hugh Bennett found that the total value of all of McCartney’s assets, including his business assets, was about $800 million. He said there was no evidence to support the widely published figure that was more than twice as much.
McCartney left the court without making any statement.
“I’m so glad it’s over,” Mills said at her impromptu news conference.
“It was an incredible result in the end to secure mine and my daughter’s future and that of all the charities that I obviously plan on helping and making a difference with — because you know it has been my life for 20 years,” she said.
“Obviously the court do not want a litigant in person to do well, it’s against everything that they ever wish, so when they write the judgment up they’re never going to make it look in favor.
“But all of you that have researched know that it was always going to be a figure between 20 and 30 million (pounds), Paul was offering a lot less than that, which you’ll see in the judgment, and very much last minute to put me and Beatrice sadly through this ... incredibly sad.”

TITLE: Zenit Start Season With Draw
PUBLISHER: Reuters
TEXT: MOSCOW — Zenit St Petersburg began the defense of their Russian premier league title with a tepid 0-0 home draw against last year’s runners-up Spartak Moscow on Sunday.
Chances were few and far between for Zenit and Spartak in their first match of league season at St. Petersburg’s Petrovsky stadium with both sides looking sluggish and short of ideas.
Russia striker Pavel Pogrebnyak, who scored both Zenit goals in their 2-0 win over Olympique Marseille in the UEFA Cup on Wednesday, had the best chance but missed with a close-range header midway through the second half.
In the Siberian city of Tomsk, local side Tom and Dynamo Moscow braved freezing temperatures that dipped below minus 15 degrees Celsius by kickoff. The scrappy match also ended 0-0.
On Saturday, 2005 and 2006 champions CSKA Moscow, who finished third last year, were held to a 1-1 draw at home by promoted Shinnik Yaroslavl.
CSKA’s Brazilian striker Jo opened the scoring in the 63rd minute but Latvian midfielder Juris Laizans equalized three minutes later.
Two unfancied sides, Krylya Sovietov Samara and Amkar Perm, surprisingly lead the standings after the opening round of matches by posting identical 3-0 victories.
Samara crushed promoted Terek Grozny in the season’s opener on Friday, played in the Chechen capital that a few years ago was a war zone, and Amkar hammered FK Khimki the following day.

TITLE: NATO Troops Shot at in Serbia
PUBLISHER: Reuters
TEXT: MITROVICA, Kosovo — NATO troops came under fire during Serb riots in the northern Kosovo flashpoint of Mitrovica on Monday, in the worst violence in the territory since the Albanian majority declared independence last month. 
The riots posed a direct challenge to NATO, the United Nations and Kosovo’s fledgling European Union justice mission, underscoring fears in the West that Kosovo could be heading for ethnic partition one month after breaking away from Serbia.
A U.N. spokesman said the riot “crosses one of the red lines that had clearly been articulated by the U.N. to the leaders of Kosovo Serbs in the north and to officials in Belgrade.” The United Nations said at least 25 police officers were hurt.
But Serbia blamed the United Nations and NATO for heavy-handed action and increased the level of security on its borders, warning that the volatile situation risked provoking a fresh Albanian “pogrom” against Kosovo’s 120,000 minority Serbs.
The Orthodox church said Serbs were “again being killed.”
Serbia’s main ally Russia blamed the “illegitimate” secession of Kosovo for the rioting and urged the international police contingent to show restraint.
“A turn of events which leads to violence and clashes cannot be allowed,” Russia’s Foreign Ministry said in a statement. “The international presence should show restraint and act strictly in accordance with its (United Nations) mandate.”
The Serb director of Mitrovica hospital, political hardliner Marko Jaksic, said three people of Serb nationality had been severely injured in the rioting.
“One person has been shot in the head most probably by a sniper. The bullet went right through,” he said. “The person is in very bad condition (in) a hospital in Kragujevac in central Serbia.” Two others were in serious condition, Jaksic said.
The loyalist Serbian National Council of northern Kosovo called on Belgrade to “help Serb people and say that Kosovo is Serbia,” its leader Nebojsa Jovic was quoted as saying.
In an apparent hint at the forced partition the West fears, he said “there is a scenario” if people get killed, which could reach “a point from which there’s no way back.”
The violence began at dawn when several hundred U.N. special police backed by NATO peacekeepers stormed a U.N. court that had been seized by Serbs on Friday, and arrested dozens.
Hundreds of Serbs fought back with stones, grenades and firecrackers, forcing the U.N. police to pull back and leave KFOR to face the rioters. Rioters attacked three U.N. vehicles, breaking doors and freeing around 10 of those detained in the raid, witnesses said.
Police and troops responded with tear gas. Some U.N. vans with detainees were still in the courtyard of the compound, with dozens of Serb protesters outside blocking their exit.
NATO said its troops had come under automatic weapons fire.
“We used automatic weapons to respond but fired only warning shots,” French spokesman Etienne du Fayet de la Tour told Reuters. “We shot in the air, not into the crowd.”
“Eight French KFOR soldiers are injured with grenades, stones and Molotov cocktails,” said du Fayet de la Tour. 
U.N. police withdrew “after attacks with explosive devices suspected to be hand grenades, and firearms” a statement said. 
Fourteen Ukrainian police serving with the United Nations were injured when “fighters attacked a police station,” Ukrainian Interior Minister Yury Lutsenko told reporters in Simferopol. Poland said 13 of its Kosovo U.N. officers were hurt. 
The raid to retake the court coincided with the March 17 anniversary of Kosovo Albanian riots against Serbs in 2004, in which 19 people were killed and hundreds of homes and churches burned in two days of chaos that caught NATO flat-footed. 
It was this flare-up that pushed the West to start talks on Kosovo’s final status in 2006. But they got nowhere. 
Serbia’s President Boris Tadic warned NATO and the United Nations of the risk for Kosovo Serbs on the anniversary of what he called an Albanian “pogrom.” 
Bishop Amfilohije, acting head of the Serb Orthodox church, said “the suffering of our people is continuing this morning in Mitrovica ... strongmen are continuing to kill our people.” 
The Serbian Interior Ministry “raised the security level in the territory of Serbia to a higher level,” the state news agency Tanjug quoted a ministry source as saying. 
In Belgrade, police reinforced protection at embassies and government buildings ahead of planned protests on the March 2004 anniversary.

TITLE: Kuznetsova Through, Roddick Out in Pacific
AUTHOR: By Mark Lamport-Stokes
PUBLISHER: Reuters
TEXT: INDIAN WELLS, California — Big-serving Andy Roddick crashed out of the Pacific Life Open on Sunday while second-seeded Russian Svetlana Kuznetsova advanced after a battling 6-1 4-6 6-3 win over Slovakia’s Dominika Cibulkova.
American Roddick, the sixth seed, was beaten 6-4 by Germany’s Tommy Haas in a second-round match after Kuznetsova came back from an error-prone second set to seal victory in one hour, 48 minutes.
Much smoother progress was made by Swiss world number one Roger Federer, Australian Open champion Maria Sharapova and women’s title-holder Daniela Hantuchova, who all won their respective matches in straight sets.
Federer, fully recovered from a bout of mononucleosis (glandular fever), crushed Spaniard Guillermo Garcia-Lopez 6-3 6-2 and Sharapova maintained her perfect start to the year by sweeping past Eleni Daniilidou of Greece 7-5 6-3.
Slovakian Hantuchova, a double champion at Indian Wells, breezed through against China’s Zheng Jie 6-4 6-2 in a late match.
World number three Kuznetsova, who lost to Hantuchova in last year’s final, was relieved to book her place in the fourth round of the women’s draw at the Indian Wells Tennis Garden.
“I just stopped a little bit and lost my concentration,” the Russian told reporters of her slump midway through the match.
“I have to figure out how to start playing better earlier after being 5-0 down in the second set. I didn’t want to go to the third set 6-0 down so I changed that to give me the key to play better in the third.”
Kuznetsova, a runner-up this year in Sydney and Dubai, raised her game in the third set to set up a meeting with Denmark’s Caroline Wozniacki in the next round.
The 17-year-old Dane, who won the 2006 Wimbledon junior title, brushed aside Aiko Nakamura of Japan 6-0 6-2 in 53 minutes.
There were two upsets in the women’s event, American Ashley Harkleroad beating eighth-seeded Dinara Safina of Russia 7-5 6-2 and India’s Sania Mirza scraping past ninth seed Shahar Peer of Israel 6-7 7-5 6-3.
In the men’s draw, Haas swept aside 2003 U.S. Open champion Roddick, a winner of two ATP titles this year, in 85 minutes on the Stadium Court.
“Today was one of the matches where I won the majority of the important points,” said Haas, a former world number two whose career has been hampered by a series of injuries and surgeries.
“When I broke him a couple times today, I really played some great points, backhand and forehand passing shots and forehand lobs. And that was really the only difference today.”
The 29-year-old will next meet 30th-seeded Spaniard Fernando Verdasco, who beat Victor Hanescu of Romania 4-6 6-4 6-3.
In other men’s matches, fourth-seeded Russian Nikolay Davydenko defeated American wildcard American John Isner 6-2 7-6 and 12th-seeded Fernando Gonzalez of Chile was upset 7-5 3-6 6-3 by Croatian wildcard Mario Ancic.

TITLE: Red Cross: Iraqis Still Suffer Five Years After U.S. Invasion
PUBLISHER: Reuters
TEXT: GENEVA — Five years after the United States led an invasion of Iraq, millions of people there are still deprived of clean water and medical care, the International Committee of the Red Cross (ICRC) said on Monday.
In a sober report marking the anniversary of the 2003 start of the war, which ousted dictator Saddam Hussein and unleashed deep sectarian tensions, the humanitarian body said Iraqi hospitals lack beds, drugs, and medical staff.
Some areas of the country of 27 million people have no functioning water and sanitation facilities, and the poor public water supply has forced some families to use at least a third of their average $150 monthly income buying clean drinking water.
“Five years after the outbreak of the war in Iraq, the humanitarian situation in most of the country remains among the most critical in the world,” the ICRC said, describing Iraq’s health care system as “now in worse shape than ever.”
The Swiss-based agency is mandated to help victims of war and monitor compliance to international rules of war, enshrined in the Geneva Conventions.
Its report said tens of thousands of Iraqis have disappeared since the start of the war. The conflict was grounded in faulty U.S. intelligence suggesting Saddam was hiding weapons of mass destruction. No such arsenal was ever found.
“Many of those killed in the current violence have never been properly identified, because only a small percentage of the bodies have been turned over to Iraqi government institutions such as the Medical-Legal Institute in Baghdad,” it said.
The ICRC is providing forensic equipment to medical and legal institutes enabling them to examine DNA samples and match them with those of families searching for their loved ones.
Iraqi violence rates have fallen 60 percent since last June, but the U.S. military commander there, General David Petraeus, says the security gains are fragile and easily reversed.
Declining civilian casualties have been hailed by Iraqi and U.S. military officials as proof that new counter-insurgency tactics adopted last year have been working.
But Beatrice Megevand Roggo, the ICRC’s head of operations for the Middle East and Africa, said those who have fled their homes to escape violence in Iraq, including many children, women, and elderly and disabled people, remained extremely vulnerable.
“Better security in some parts of Iraq must not distract attention from the continuing plight of millions of people who have essentially been left to their own devices,” she said.
Tens of thousands of Iraqis — nearly all men — are in detention, according to the ICRC. They include 20,000 inmates at at the country’s largest detention facility.

TITLE: Pollution Played Down by IOC
AUTHOR: By Karolos Grohmann
PUBLISHER: Reuters
TEXT: ATHENS — Pollution at the Beijing Olympics poses no immediate threat to athletes’ health but could affect world-class performances, the International Olympic Committee’s top medical official Arne Ljungqvist said on Monday.
“I believe the conditions will be good for athletes although they will not necessarily be ideal,” the IOC medical commission chief told reporters in a conference call from Sweden.
“There may be some risks,” he added. “They would be associated with prolonged high risk respiratory functions. [Athletes] may breathe a lot of air that may be polluted. We may not see world records in unfavourable conditions.”
Marathon world record holder Haile Gebrselassie, who suffers from exercise-related asthma, told Reuters last week he would not run the 42.195-km event because he feared Beijing’s air pollution was a threat to his health.

TITLE: New York Gets New Governor After Scandal
PUBLISHER: Bloomberg
TEXT: NEW YORK — A new governor of New York typically appoints 55 agency heads and deputies before taking office. New York Governor David Paterson won’t have that luxury. 
Patterson, 53, became chief executive Monday of a state reeling from the abrupt resignation of Eliot Spitzer on Wednesday, amid allegations that he was the client of a prostitution ring. The Democratic lieutenant governor takes office facing a $4.5 billion budget gap that he is trying to close before the new fiscal year begins April 1 to avoid emergency spending measures. 
“He is planning to keep everybody on for now until he gets a real assessment of what is going on there — how the trains really run,’’ said Bill Lynch, a Paterson political adviser. 
Paterson was sworn in as governor at 1 p.m. an hour after Spitzer’s resignation became effective. He is the state’s first black governor and the nation’s first legally blind one. 
While Paterson started receiving calls from job seekers even before Spitzer resigned, the budget crisis should take precedence over forming his own team, said Lynch, a former deputy to New York Mayor David Dinkins. 
“He ought to assess everybody who is up there, how things are running and in a few weeks start to make political appointments that are his appointments,’’ said Lynch, who is taking names of those interested in working for Paterson and forwarding them to the new governor’s staff. 
As lieutenant governor, Paterson had a staff of 15. As governor, he will be in charge of almost 200,000 state employees and a proposed budget of $124.3 billion. 
“He is legally blind, but he can see and he can do a lot of other things,’’ said former New York Governor Mario Cuomo, a Democrat, in an interview on Bloomberg Television’s “Political Capital with Al Hunt.’’ “He should not be underestimated.’’ 
Paterson will retain Spitzer’s budget director Laura Anglin, 42, and director of operations Paul Francis, said Christine Anderson, a Spitzer spokeswoman. Anderson said she was asked to stay through the transition and will stay as long as needed. 
“You will see there is a lot of continuity in terms of the staff,’’ Anderson said. “There won’t be a lot of turnover.’’ 
One person who did resign, top Spitzer aide Richard Baum, will stay to help the transition, Anderson said. 
Spitzer’s senior adviser Bruce Gyory and first deputy secretary Sean Patrick Maloney will also stay on, Anderson said. Maloney will be given a new title and, along with Francis, serve as deputies to Charles O’Byrne, Paterson’s current chief of staff. O’Byrne will take on the title of secretary and serve as Paterson’s top adviser. 
A former Jesuit priest, O’Byrne is a Columbia Law School graduate, said State Senate Minority Leader Malcolm Smith, a Democrat from the New York borough of Queens. He is “a no- nonsense person and at times he can be that alter ego to the governor,’’ Smith said. “When the governor is known for humor and stuff, Charles will be there to be that sharp contrast.’’ 
Michael Jones-Bey, Paterson’s former chief of staff, said he “plans to be helpful,’’ declining to be specific about his role. He is executive director of the state’s minority and women’s business development unit. 
Assemblyman Herman Farrell, a Manhattan Democrat who heads the lower house’s ways and means committee, said Paterson “will take from everywhere’’ to form his administration. 
Farrell is from the same Harlem political establishment as Paterson and his father, Basil, a former New York secretary of state. That group includes former Mayor Dinkins, former Manhattan Borough President Percy Sutton and U.S. Representative Charles Rangel, the chairman of the Ways and Means Committee. 
“His style is to get along,’’ Farrell said, “but it doesn’t mean weakness.’’ 
Before he was elected as Spitzer’s running mate 15 months ago, Paterson was the senate minority leader. He came to power after forcing out former leader Martin Connor of Brooklyn. Paterson then dedicated himself to overturning the Republican seven-seat senate majority, said Senator Eric Schneiderman, a Manhattan Democrat who has known Paterson for more than 20 years. Democrats are two seats away from taking power in the senate. 
Spitzer staffers who stay with Paterson will have to make some changes from the way they briefed their former boss. 
Paterson, who doesn’t read Braille, gets his news and policy briefings by long voice mails when face-to-face meetings aren’t possible, said Armen Meyer, his spokesman.

TITLE: Malkin Scores 2, Secures Penguins 7-1 Victory
PUBLISHER: The Associated Press
TEXT: PITTSBURGH — The Pittsburgh Penguins never realized Sidney Crosby could look so good in a suit.
Dressed more for a night out than a push for the playoffs, the Penguins captain watched his team do just fine without him-again.
Evgeni Malkin and Petr Sykora each had two goals and two assists, and the host Penguins managed plenty of offense despite missing the injured Crosby to cruise to a 7-1 victory over the slipping Philadelphia Flyers on Sunday.
“That’s what you need when your top guy goes out,” said Ryan Malone, who had two assists while skating with Malkin and Sykora. “There’s no reason when Sid comes back that we can’t have the same desperation, the same attitude. He’s just going to add to us.”
In other NHL games Sunday, it was Calgary 4, Chicago 2; Carolina 5, Ottawa 1; Columbus 4, Detroit 3; Washington 2, Boston 1 in a shootout; Florida 3, Atlanta 1; and Edmonton 2, San Jose 1 in a shootout.
Crosby, the reigning NHL MVP and scoring champion, had the most points in the league when he sprained his right ankle Jan. 18. He recently returned to the lineup, but was forced out again this week, at least for a few games.
Malkin has more than picked up the slack, and is making a serious run on the two titles Crosby captured a season ago. He has 17 goals and 23 assists during Crosby’s absence for 23 of the past 26 games.
“He may be the best player in the league right now, and you have to respect that fact,” Flyers coach John Stevens said of Malkin, in his second NHL season.
The Penguins are 13-6-4 without Crosby and have an eye on their first Eastern Conference crown since 1992-93.
Pittsburgh scored seven goals for the second straight game to win for the fifth time in six. The Penguins are one point behind New Jersey, which leads the East and the Atlantic Division.
Marian Hossa and Hal Gill also scored their first goals since being traded to Pittsburgh last month. Hossa returned from a six-game layoff because of a knee injury that occurred in his first game with the Penguins on Feb. 28.
The Flyers, eighth in the East, have lost four in a row (0-2-2) and six of eight (2-3-3). They pulled Martin Biron after he gave up three goals on eight shots.
Antero Niittymaki stopped 24 of 28 shots in relief.
“It’s in our hands right now,” Philadelphia forward Mike Richards said. “It’s better to be in this situation than to be chasing from behind. We control our destiny, but we better start winning games and playing a whole lot better.”

Oilers 2, Sharks 1
At San Jose, California, Dwayne Roloson made 48 saves and stopped three more shots in the shootout, helping Edmonton end the Sharks’ franchise-record winning streak at 11 games.
Ales Hemsky scored in regulation and Fernando Pisani got the decisive shootout goal for the Oilers, who won for the fifth time in six games thanks to Roloson. The backup goalie, who memorably led Edmonton past San Jose in the 2006 playoffs, was impeccable while winning his second start in two days after six weeks of mop-up duty behind Mathieu Garon.
Robert Nilsson also scored in the shootout for Edmonton, and Patrick Marleau managed the Sharks’ only goal in four tries. San Jose, which hadn’t lost since Feb. 20, couldn’t get anything past Roloson after Marleau’s first-period goal during a two-man advantage.

Capitals 2, Bruins 1
At Washington, Alexander Semin and Viktor Kozlov scored shootout goals to lift the host Capitals.
Sergei Fedorov scored in regulation and Chuck Kobasew tied it for the Bruins in the second period.
With the point, the Bruins moved into a sixth-place tie with the New York Rangers in the East. Washington is two spots and two points behind Philadelphia and the postseason cutoff.

Flames 4, Blackhawks 2
At Chicago, Jarome Iginla, Kristian Huselius and Dion Phaneuf scored second-period goals, and Miikka Kiprusoff made 34 saves for Calgary.
Adrian Aucoin also scored for the Flames, who climbed into a three-way tie with idle Minnesota and Colorado for first place in the Northwest Division.
Calgary’s Owen Nolan and Alex Tanguay each had two assists.
Robert Lang and rookie Jonathan Toews each scored their 20th goals for the Blackhawks, who lost for the fifth time in six games (1-4-1).

Hurricanes 5, Senators 1
At Raleigh, North Carolina, Joe Corvo scored a career-high three goals against his former team, and Cam Ward stopped 16 shots for Carolina.
Patrick Eaves, acquired from Ottawa with Corvo last month, scored his first goal since the trade and helped the Hurricanes improve to 13-4-1 in their past 18 games.
Dany Heatley scored for the Senators.

TITLE: An Aristocratic Life and Soul of the Party
AUTHOR: By Irina Reyn
PUBLISHER: Special to The St. Petersburg Times
TEXT: In her spirited memoir “Red Princess: A Revolutionary Life,” Sofka Zinovieff chronicles the extraordinary adventures of her grandmother, Sofka Dolgorouky. A charming White Russian emigre turned World War II prisoner turned outspoken British communist, Dolgorouky led a turbulent life full of passion, conflict and tragedy, but until the very end she remained “the life and soul of the party.” 
Dolgorouky was born in 1907 into a St. Petersburg nobility on the verge of collapse. Her relationship with her parents, who were separated, was marginal — her mother, a surgeon by the age of 24, had patience for neither the conventions of noble society nor motherhood, and her father, before his untimely death, was kept busy by extramarital affairs and his Horse Guards regiment. In 1919, Dolgorouky, 11 at the time, and her grandmother, alongside members of the Imperial family and thousands of others, were evacuated by Allied ships.
In London, Dolgorouky capitalized on her aristocratic pedigree by insinuating herself into distinguished circles. Her first husband, fellow emigre Leo Zinovieff, seemed a promising match. However, the couple’s divergent political views, the increasingly strapped conditions brought on by Britain’s economic crisis in the early 1930s, and Dolgorouky’s subsequent pregnancy (with the author’s father) led to a rupture. Soon, both were having affairs, and Dolgorouky left her husband for the younger Sir Grey Skipwith, a budding diplomat. “Our wedding was arranged so hurriedly that we have not given our guests time to reply,” Grey told a journalist covering the event.
Dolgorouky had two more children (though the question of whether Grey or Leo is the father of one child is never entirely resolved) but mainly entrusted their upbringing to others, taking on administrative work with the actor Laurence Olivier and becoming an active communist. As the war geared up, Grey enlisted as a pilot while Dolgorouky, placing her children with various caretakers, moved to Paris and found solace in one-night stands.
In 1940, a soldier knocked on her door and Dolgorouky, who held a British passport, was interned along with women of 48 different nationalities at a former Vittel spa. Dolgorouky’s life in Vittel was no less rambunctious. A lover to both women and men, she found her heroic calling in small and large acts of subterfuge, from offering comfort to Polish Jews — who were housed for a time at an adjacent building before being shipped to concentration camps — to helping smuggle out a Jewish baby. After her release, Dolgorouky founded a communist newspaper (she was deemed enough of a Red threat to be placed under surveillance by the British secret service) and embraced a new career as a tour guide shepherding Western tourists though Eastern Europe. Her final chapter is the most unexpected of all — Dolgorouky devoted herself to a sedentary country life with an unassuming British man, surrounded by her books, her friends and her admiring (if understandably ambivalent) sons.
Dolgorouky’s story is well served by Zinovieff, who has published one previous memoir, “Eurydice Street,” about her family’s move to Athens. The author succeeds in teasing out the most vivid, colorful details from her grandmother’s unconventional life. The World War II sections are especially compelling for their portrayal of how Dolgorouky channeled her unique blend of fortitude, self-involvement and bohemianism into acts of great courage. The interviews with Dolgorouky’s relatives and in-laws deepen the portrait, revealing a charismatic woman who was unforgettable but rarely liked for her indifference to traditional family values.
Zinovieff convinces us that her grandmother’s life is worth our attention, but it is her own role in the telling of the story that is less successfully integrated. The author admits to being compelled to research Dolgorouky’s life when she first cracked open her grandmother’s diary, having inherited Dolgorouky’s documents after her death: “I wanted to get to know her well enough to understand her motives as well as her actions.” Ultimately, though, she reveals that her desire to write this book was born out of a shaky grasp on her own background: “It was a shock to realize that most of what I had ever known were half-remembered, second-generation hand-me-downs of an internalized, pre-Revolutionary Russia.” Her trips to Dolgorouky’s childhood homes in Russia offer her a feeling of continuity, an understanding of her White Russian roots. 
Yet it is Zinovieff’s “I” character, not entirely realized, that distracts from the many strengths of this biography. Sidelined by her distance from her Russian heritage, Zinovieff comes off as equally marginalized in her own relationship with Dolgorouky, which, during her grandmother’s lifetime, was one of respect and affection but not of palpable warmth. Her admiration for Dolgorouky’s role in protecting Jewish lives during the Holocaust is similarly complicated by her antipathy to Israeli policies in the Middle East. “I was only too aware of the irony of being given a humanitarian award by a country that was behaving so brutally and inhumanly to the Palestinians,” the author writes. Zinovieff’s fluid storytelling and blood ties to her subject make her the obvious choice for narrator, but sometimes she calls attention to herself and reinstates her goals a bit too emphatically. “There might not be people who remembered Sofka, but here, in her city, I could walk in her footsteps, see the places she’d seen, and find some sort of communication with her across the decades,” she muses from St. Petersburg. Still, if her answer to the question, “Why must I tell this story?” is not entirely satisfying, Zinovieff does persuade us that Dolgorouky’s rescue from the ashes of history is a crucial one. 
Perhaps one of the more interesting questions indirectly raised by this biography is the memoirist’s compulsion to excavate, interpret and (possibly) manipulate his or her own generational narrative. Who is thrust into the limelight and what remains shrouded in silence? By writing this book, Zinovieff gained access to her own place in the Dolgorouky lineage, but as her guide to Yalta points out by way of contrast, Russians often avoid looking into their own family trees for fear of what they’ll discover. “They’re afraid of the past,” the guide tells Zinovieff. “You’re lucky that you can find out about your family’s history. Most of us know nothing.” 


Irina Reyn’s first novel, “What Happened to Anna K.,” will be published in August.

TITLE: Griboyedov’s Woe to Wit
AUTHOR: By Victor Sonkin
PUBLISHER: Special to The St. Petersburg Times
TEXT: President Vladimir Putin’s surprise visit to see “Gore ot Uma” at the Sovremennik Theater and his criticism of the rendering of the principal role has sparked interest in the play itself, long considered a classic work of Russian literature.
The comedy is usually (and rather unfortunately) called “Woe from Wit” in English; it has also been translated Oscar Wilde-style as “The Misfortune of Being Clever;” another suggestion is that the title was actually taken from the English poet Thomas Gray, whose phrase “folly to be wise” was well-known at the time.
Alexander Griboyedov, the play’s author, was an aristocrat and career diplomat, and a lover of literature and the arts who composed poetry and music (one of his waltzes is still very popular in Russia), always as an amateur. Having left the manuscript of the comedy in St. Petersburg for publication, he departed for Tehran as Russian ambassador, where he was killed in 1829 at the age of 34 by a crowd of religious fanatics.
In the play, Alexander Chatsky, a young man who has grown up in the Moscow house of his relative Pavel Famusov, a high-ranking courtier, returns to Moscow after a long stay abroad. He is eager to rekindle his puppy love with Sofia, Famusov’s daughter, who is by then deeply in love with the young upstart Aleksei Molchalin. Disgruntled, Chatsky disrupts the household, scandalizes the guests at Famusov’s party, mocks the old-fashioned Moscow mores in long soliloquies, and finally leaves, ostracized as a madman.
Griboyedov’s play inspired at least two opposing interpretations. One, favored by the Soviet secondary education system and apparently supported by Putin, presents Chatsky as the democratic hero, who boldly criticizes the tsarist way of life represented by Famusov. Indeed, Chatsky’s bitingly satirical and funny remarks make “Woe from Wit” one of the most-quoted literary works in Russian culture.
Another interpretation dates back at least to the great national poet Alexander Pushkin, who remarked that the only smart person in the whole play was the author, and that “the first quality of a smart man is to see who he’s dealing with and not cast pearls before swine.” 
The theatrical tradition of presenting Chatsky as a simpleton who does not have a clue about human emotion and bumps into awkward social situations also has a long history.
Readers can decide for themselves (it should be noted, though, that the play’s wonderful poetic language does not lend itself easily to translation). One good thing about events such as Putin’s comments is that they bring classical literature into the spotlight.

TITLE: How the State Got a Grip on Energy, Putting Natural Resources Back in the State’s Hands
AUTHOR: By Miriam Elder
PUBLISHER: Staff Writer
TEXT: It was early March 2000 when Vladimir Putin landed in Surgut, one stop on a long campaign trail that would help take the acting president to the official seat in the Kremlin.
He toured the oil fields that surrounded the bleak west Siberian city, shaking hands with the men who toiled to produce the black gold that was the country’s lifeblood.
It was in Surgut — before the high-profile arrests and well before the days of $100-per-barrel oil — that Putin first gave a glimpse into what would become a defining strategy of his eight-year rule.
“We will support [oil and gas companies] by all means, but we will also control their work,” he said, hinting at a sector-wide review that would boost the state’s presence in an industry that had become the domain of dueling oligarchs.
Eight years later, two state champions — Rosneft in oil and Gazprom in gas — tower over a sector that provides for two-thirds of the federal budget and forms the foundation of the country’s swaggering foreign policy.
The road to majority state control was rough, leaving a number of private businessmen jailed or exiled and foreign companies largely sidelined. Most worrisome, insiders and analysts said, was that the strategy of state control has left production stagnating at near crisis levels, as the firms were encouraged to focus on acquisitions rather than making much-needed investments in new fields.
“We had high hopes that this period, an eight- to 10-year period, would be one of the major breakthroughs in developing certain very important projects,” said Vladimir Milov, a former deputy energy minister.
Instead, Milov, who became a Kremlin critic after leaving the Energy Ministry in 2002, speaks of an era of “disappointed expectations.”
“Putin’s legacy is largely a bunch of heavy discussions with few delivered projects,” he said. “Putin’s presidency has mostly focused on the redistribution of ownership and using energy resources as a tool for expanding Russia’s international influence.”

An Encouraging Start
When Putin came to power around 90 percent of the country’s oil production lay in private hands. Foreign oil companies, like Shell and ExxonMobil, ran huge projects in the east, after concluding preferential contracts in the mid-1990s that offered them favorable terms in order to compensate for the country’s volatile tax and legal system.
It was a total departure from the policy of the Soviet state that built Putin and an anathema to the powerful state that he hoped to rebuild. He took notice of the fact early, devoting a 1997 doctoral thesis at the St Petersburg Mining Institute to the state’s role in managing natural resources.
That role was impossible to realize while the country was run by a gaggle of oligarchs long used to pulling the Kremlin’s strings. Putin quickly moved to rein them in, calling a meeting in late 2000 to announce: Stay out of politics and business is yours.
Investors were encouraged. Putin appointed liberals to top government spots. In September 2000 he visited the far eastern island of Sakhalin and called for foreign investors to be supported.
He urged a revitalization of the energy industry by bringing online new oil and gas fields in the largely untouched eastern Siberia and offshore regions, as well as new export pipelines, such as a major route to the northern port of Murmansk.
The optimism reached its peak in February 2003, when a trio of oligarchs joined with British oil major BP to form TNK-BP, a 50-50 venture formed around the flagship gas field of Kovykta, in largely untapped eastern Siberia.
Announcing the deal, Mikhail Fridman, head of TNK-BP shareholder Alfa Group, said: “It is a reflection of the political change that has taken place in Russia over the past three years. Russia has stopped being associated with instability and nontransparency.”

The Yukos Attack
Five months later, Platon Lebedev, a major shareholder in oil firm Yukos, was arrested on suspicion of illegally acquiring shares in a fertilizer firm Apatit back in 1994. In October 2003, Khodorkovsky, Yukos CEO and then the country’s richest man, was arrested and the legal onslaught on the country’s largest oil company began, forever changing the landscape of the energy sector and the view of Russia and Putin’s Kremlin.
What precisely prompted the arrest is anybody’s guess — that Khodorkovsky was on the verge of selling a 25 percent stake in Yukos to a U.S. oil company, that he was planning to build a pipeline to China to bypass state-run pipeline monopoly Transneft, that he was openly funding opposition deputies ahead of December’s State Duma vote, or that he planned to grow even larger through a merger with Roman Abramovich’s Sibneft.
The final straw came in February 2003, when Khodorkovsky publicly criticized Putin for state-run Rosneft’s murky acquisition of medium-sized producer Severnaya Neft.
“We knew we would have serious problems,” said Alexander Temerko, a former Yukos vice president now living in self-imposed exile in London. “While they had a monopoly position in gas [with Gazprom], they didn’t have one in oil.”
Khodorkovsky was sentenced in 2004 to eight years in prison on charges of fraud and tax evasion, and the lion’s share of Yukos assets went to Rosneft in a series of orchestrated auctions, epitomized by the December 2004 sale of Yuganskneftegaz. He accused Igor Sechin, Putin’s powerful deputy chief of staff and chairman of Rosneft’s board, of orchestrating the attack on Yukos.
Yuganskneftegaz, which produces 11 percent of all Russian oil, went to an obscure company called Baikal Finance Group for just $9.4 billion. Rosneft bought Baikal weeks later, tripling its own production overnight and putting it on the path to becoming the country’s largest oil producer — a goal it achieved last year after buying the two remaining large Yukos units up for grabs.
“We are a state company and at the same time a public company, and one of our strategic priorities is to continue to improve our operations in order to demonstrate to our main shareholder that we are the best partner for developing new assets in Russia,” said Rosneft vice president Peter O’Brien, an American who was brought to the company ahead of its July 2006 initial public offering in London, which saw nearly 15 percent of the company sold off.
“During the IPO process, clearly some market participants, whether press or investors, did have a view toward the Yukos process which inhibited them from taking part in the IPO,” he said, but added, “Since the IPO, as we’ve followed through on increasing transparency and profitability, interest and share ownership by leading global institutions has accelerated.”
Rosneft’s Yukos acquisitions, plus Gazprom’s purchase of Sibneft in 2005, drastically boosted the state’s share in the energy game.
The approach was codified as early as May 2003, when the Cabinet passed an energy strategy through 2020 that signaled the beginning of the end of private reign over the sector.
Temerko, the former Yukos vice president, said that, after reading the strategy, “we knew they’d go after some company.”
The first line of the strategy reads: “Russia possesses great energy resources and a powerful fuel and energy complex that provide the basis of economic development and are the instrument for carrying out domestic and foreign policy.”
“It was then we realized the state runs everything,” Temerko said.
It took foreign oil companies and foreign capitals longer to wise up.
The euphoria of the TNK-BP deal faded into widespread concern over the role foreign firms would play, as they functioned in a legal vacuum while the state carved out its strategy through practice rather than regulations.
“[TNK-BP] represented the end of that chapter, when foreign companies could get almost unrestricted access to Russia’s energy sector,” said Chris Weafer, chief strategist at UralSib.
A notable exception is ConocoPhillips’ 2004 acquisition of a small stake in private oil firm LUKoil, which it has since increased to 20 percent.
Foreign oil firms rushed the country in the mid-1990s, capitalizing on its chaotic industrial landscape to win major contracts in the country with the world’s largest proven gas reserves and vast untapped oil fields. For the most part, they were awarded production-sharing agreements, which ensured that the firms would win back all expenditures before paying out revenues to the state.
With the oil price inching ever higher on the back of instability in the Middle East and rising demand from China and India, Putin realized that the state was missing out on billions of dollars per year and soon joined the trend of global resource nationalism.
Sustained campaigns led by Oleg Mitvol, the deputy head of the Natural Resources Ministry’s environmental watchdog, cast shadows over Royal Dutch Shell’s PSA at Sakhalin-2 and TNK-BP’s flagship Kovykta project.
Months of pressure, during which Mitvol threatened to revoke the firms’ licenses over purported environmental violations, ended with Shell handing a controlling stake in Sakhalin-2 to Gazprom and TNK-BP selling the entirety of its 63 percent stake in Kovykta to Gazprom.
Rather than codifying a long-awaited law on strategic sectors, which would limit foreign involvement to 49 percent stakes, Putin laid out his strategy through practice.
“It’s a strategic sector and certain rules are being applied, like in every country of the world,” Kremlin spokesman Dmitry Peskov said.
“The situation with Sakhalin and Kovykta occurred when foreign companies, foreign major shareholders, were having problems with Russian law. It is easier for every company to have a joint venture with Russian partners to avoid that,” he said.
Gazprom’s stake in Sakhalin-2, a sprawling project in the Far East, gave it a foothold in the country’s first foray into liquefied natural gas, in which gas is cooled to liquid form so it can be easier stored and shipped on tankers, rather than confined to pipelines.
Yet it has failed to follow through on decades-long promises to develop much-needed fields on the Yamal Peninsula and has delayed plans to produce from Shtokman, a field in the Arctic offshore estimated to hold 3.7 trillion cubic meters of gas.
“It is much easier to use the windfall to acquire companies that already generate cash” than bring new projects online, Milov said. “I’ll quote a top Gazprom manager, who once said to me, ‘Why should we bury money in Yamal, in the development of projects that will start to deliver in a decade, when many Gazprom managers will be long gone?’”
This has prompted concern in Europe, which relies in Russia for one-quarter of its gas supplies — an amount expected to grow to half by 2030.

The Gazprom Behemoth
Many had held high hopes that Putin would seek to reform Gazprom after replacing Yeltsin’s management team with his own, led by St. Petersburg native Alexei Miller as CEO.
Yet, eight years later, Gazprom remains an unwieldy behemoth, employing some 500,000 people and the domain of competing clans eager to shape what has become the country’s largest firm by market capitalization, with a value of $312 billion. Its current chairman is President-Elect Dmitry Medvedev.
A politically tinged pricing dispute with Ukraine in January 2006 signaled to Europe the return of “the Russian bear.”
“EU fears of over-dependence on Russian gas are a concrete expression of the progressive breakdown of political relations with Moscow, stemming from a range of issues of Russian domestic and international politics,” said Jonathan Stern, gas expert at the Oxford Institute of Energy Studies.
Just months after Ukraine’s Orange Revolution ushered in a Western-leaning government, Gazprom abruptly announced its own brand of shock therapy in December 2005, cutting subsidies to Kiev and drastically raising gas prices to its eastern neighbor. When Kiev couldn’t pay, Gazprom shut the taps, reducing shipments not only to Ukraine, but also to Europe, which gets some 80 percent of its Russian gas shipments through pipelines that crisscross the country.
“I don’t think it really led to any serious change with Europe, which is traditionally our biggest market,” said Ilya Kochevrin, executive director at Gazprom Export. “The only recognition is that we need to be more proactive in explaining our position.”
Kochevrin said he did not believe that resistance to Gazprom expansion into Europe, as well as Brussels’ proposal last year to bar non-EU firms from owning majority stakes in pipelines or power grids in the absence of reciprocal agreements, were direct responses to Gazprom’s growing politicized clout.
Pricing disputes with neighboring countries prompted Gazprom to pursue a strategy of direct shipments to Europe, including the Nord Stream pipeline, which will pump gas directly to Germany, and South Stream, which will send gas to the Balkans.
Putin has spent the past few years eagerly pushing “strategic reciprocity,” hoping to gain a solid foothold in the European market beyond long-term gas supply deals and pipeline agreements.
Yet, with the notable exceptions of Germany and Italy, Europe’s two largest gas importers, the opposition has been stiff.
“When we talk about the energy sector in Russia it is impossible to separate politics and economics, and that’s never going to change,” said Weafer of UralSib.
It is also impossible to separate the personal and professional, since, as one former bureaucrat put it, “everyone is trying to be the next Armand Hammer,” referring to the U.S. oil magnate who won key deals during the Soviet era through strong relationships with the leadership.
Putin’s close relationship with Gerhard Schroeder put the former German chancellor at the head of the Nord Stream consortium.
Those who fall afoul of the regime and its energy champions tend to suffer. William Browder, CEO of Hermitage Capital Management, then Russia’s biggest foreign portfolio investor, was denied entry into the country upon landing at Sheremetyevo Airport in November 2005, on the suspicion that he posed a threat to national security. The move was widely seen as retaliation for Browder’s outspoken calls to improve Gazprom’s transparency.

Supply Shortages
One of the most worrisome results of the past eight years, insiders and analysts said, is that Russia may soon face the prospect of failing to produce enough oil and gas supplies to feed growing markets both at home and abroad.
One hallmark of Putin’s presidency was the decision to liberalize gas prices inside the country, due to be achieved by 2011, in order to make the domestic market more attractive for its producers.
Yet, the fact remains that production at Soviet-era fields in western Siberia is dwindling, and political distraction, in addition to unfavorably high tax regimes, means that the Arctic and eastern offshores remain largely undeveloped.
“This is the result of the fact that private initiatives have been curbed and the advantage has been given to state companies, whose interest is not in production, but in the redistribution of control,” Milov said.
This has also increased Russia’s dependence on buying gas from Central Asia, in the absence of long-term supply contracts and amid signs that countries like Turkmenistan are seeking to raise their own prices to market levels.
Milov said Central Asian gas comprised 8 percent of Gazprom’s reserve base, up from 4 percent in 2002. And oil production, after years of a steady rising, faces the specter of falling flat this year.
“Without Rosneft, Russian production recently has basically been flat. With Rosneft, it’s growing 1 to 2 percent annually,” said O’Brien of Rosneft. “The vast majority of other oil producers are now fighting declining production.
“Ruble appreciation and inflation and a tax regime that is outdated will soon make it difficult to approve some potential projects,” O’Brien said. “Many projects look questionable in terms of future profitability, even with fairly optimistic, that is, low, inflation assumptions.”
“If something is not done soon, then many companies, particularly those with older portfolios, will need to reject investment proposals and as a result will see an accelerating decline in their oil production,” he said.
Putin has followed through on promises to reassert the state’s influence. Around 42 percent of Russian production now lies in state hands, versus 10 percent when he first took the reins, according to UralSib research.
That proportion is expected to rise if troubled oil producer Russneft, whose former owner Mikhail Gutseriyev last year accused the Kremlin of forcing him to sell, ends up in state hands. The fate of TNK-BP also remains unclear.
The world of energy reflects the broader state of the country. Its firms are staffed with Putin’s friends and FSB agents, from new Transneft chief Nikolai Tokarev to Andrei Patrushev, the younger son of Federal Security Service director Nikolai Patrushev who acts as an adviser at Rosneft.
It is fiercely controlled from the Kremlin. Before Putin announced that he would take the prime minister’s seat upon Medvedev’s election to the presidency, Moscow’s chattering classes proposed that he might move to chair Gazprom’s board. Beyond the importance of the state’s control over the energy sector, the energy sector’s control over the state is just as key.
Despite loud pronouncements on the need to diversify, Russia’s economy remains inextricably linked to the dipping production of oil and gas, with revenues squirreled away in a $168 billion stabilization fund that is intended in large part to encourage wider economic growth.
Yet the problem of its politicization remains.
“The government has become used to a high oil price that suits what it wants to do in the economy,” Weafer said.
An announcement last month that the three-year budget would boost its oil-price prediction to $74 per barrel — a sum that is, for the first time ever, higher than the previous year’s average — provoked worry. UralSib predicts that the country will begin eroding its surplus if the price dips to $64.
“It’s a real threat to the fiscal prudence we’ve had, which is part of the Russian story of the past eight years,” Weafer said.
“The legacy of the Putin era is that, at the end of it, Russia is even more dependent on energy than it was at the start of it,” he said.

TITLE: Energy Milestones
TEXT: <i>September 2000:</i> Putin promises to support foreign investors and production-sharing agreements.
<i>May 2001:</i> Putin replaces Gazprom CEO Rem Vyakhirev with longtime St. Petersburg ally Alexei Miller.
<i>February 2003:</i> TNK-BP formed through BP’s $6.75 billion investment into the joint venture with three oligarchs, the largest ever equity deal in Russia at the time.
<i>February 2003:</i> Yukos CEO Mikhail Khodorkovsky publicly questions Putin on state-run Rosneft’s acquisition of mid-level producer Severnaya Neft.
<i>May 2003:</i> The Cabinet passes a state energy strategy through 2020, calling the energy sector an instrument for carrying out domestic and foreign policy.
<i>July 2003:</i> Major Yukos shareholder Platon Lebedev is arrested.
<i>October 2003:</i> Khodorkovsky is arrested.
<i>December 2003:</i> Yukos hit with a back tax bill of $3.5 billion, the first in a series that eventually reaches $33 billion.
<i>July 2004:</i> Putin’s powerful deputy chief of staff Igor Sechin replaces Economic Development and Trade Minister German Gref as chairman of Rosneft.
<i>September 2004:</i> U.S. oil firm ConocoPhillips buys a 7.59 percent stake in LUKoil for $2 billion.
<i>December 2004:</i> Yukos’ largest production unit, Yuganskneftegaz, is sold at auction for a knockdown price to Baikal Finance Group, later bought by Rosneft.
<i>December 2004:</i> The Energy Ministry approves oil pipeline monopoly Transneft’s plans to build a major pipeline eastward, amid wrangling whether it will end in China or Japan.
<i>May 2005:</i> Khodorkovsky and Lebedev are found guilty of fraud and tax evasion and sentenced to eight years in prison.
<i>May 2005:</i> Gazprom and Rosneft call off a floated merger.
<i>August 2005:</i> Khodorkovsky accuses Sechin of orchestrating the attack on Yukos.
<i>September 2005:</i> Gazprom buys Roman Abramovich’s Sibneft for $13.01 billion in the biggest takeover deal in Russian history at the time.
<i>September 2005:</i> Germany and Russia agree to build Nord Stream pipeline, providing direct gas deliveries to Europe.
<i>November 2005:</i> William Browder, CEO of Hermitage Capital Management and activist Gazprom minority shareholder, is barred from entering Russia on grounds that he poses a threat to national security.
<i>January 2006:</i> Gazprom cuts gas deliveries to Ukraine for three days following a pricing dispute.
<i>March 2006:</i> Putin, during a trip to China, signs a deal pledging to eventually sell gas to the country.
<i>July 2006:</i> Rosneft raises $11 billion during an initial public offering in London.
<i>August 2006:</i> A Moscow court declares Yukos bankrupt.
<i>October 2006:</i> Gazprom says it will develop the Shtokman gas field alone and retain 100 percent ownership, shutting down years of negotiations with foreign partners.
<i>December 2006:</i> Royal Dutch Shell, Mitsui and Mitsubishi each halve their shares in Sakhalin-2 to hand Gazprom a controlling stake in the project for $7.45 billion following months of pressure from environmental authorities.
<i>February 2007:</i> Putin says he finds the idea of a gas OPEC “interesting.”
<i>May 2007:</i> Rosneft buys Samaraneftegaz and Tomskneft, Yukos’ final two production units, at auction for $13.2 billion.
<i>June 2007:</i> TNK-BP seals a deal to sell its 62.9 percent stake in its flagship Kovykta field to Gazprom for $700 million to $900 million following months of pressure from environmental authorities.
<i>July 2007:</i> Russneft owner Mikhail Gutseriyev flees the country after accusing the state of forcing him to sell his firm through the levying of politicized tax charges; Oleg Deripaska’s Basic Element says it is in talks to buy the firm.
<i>July 2007:</i> Reversing course, Gazprom gives France’s Total a 25 percent stake in developing Shtokman.
<i>September 2007:</i> The EU issues proposals on unbundling of its power industry, seen as a move to bloc Gazprom’s access.
<i>October 2007:</i> Gazprom gives Norway’s StatoilHydro a 24 percent stake in developing Shtokman.	
— MT