SOURCE: The St. Petersburg Times
DATE: Issue #1369 (33), Tuesday, April 29, 2008
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TITLE: UK Readies For 12,000 Zenit Fans
PUBLISHER: Combined Reports
TEXT: The British Consulate General in St. Petersburg is preparing to process up to 12,000 visa applications from fans of the city’s soccer club Zenit within two weeks if the team wins its second-leg semifinal match of the UEFA Cup and advances to contest the final in the Europe-wide tournament in Manchester, U.K., on May 14.
If the team advances, the consulate will not accept visa applications from regular visitors to Britain from May 1 through May 14 to cope with the extra work.
“We’re asking visitors who are going to Great Britain from May 1 through May 15 for other reasons than the final match to apply for a British visa before Wednesday, April 30,” Yelena Mishkenyuk, spokeswoman for the British Consulate in St. Petersburg, said.
Mishkenyuk said if Zenit wins the semifinal second-leg to be played at the city’s Petrovsky Stadium on Thursday, the consulate will begin to operate a simplified visa procedure for Zenit fans.
“We are now working out a simplified visa procedure for such a scenario, including longer working hours and a possible requirement to show a ticket to the match in Manchester,” she said.
Mishkenyuk said the consulate and Zenit estimate that up to 12,000 fans would be willing to go to Manchester.
“It’s an unusual situation for us because normally we process about 22,000 visa applications a year,” she said. “Therefore we want to warn regular citizens about our plans beforehand. Otherwise, we may not cope with the flow.” 
However, if Zenit doesn’t advance in the tournament, the consulate will continue to work as normal, she said.
Meanwhile, representatives of St. Petersburg’s police will also accompany Zenit fans to Manchester if the team makes it to the final, Vladislav Piotrovsky, head of the St. Petersburg and Leningrad Oblast police said, Interfax reported.
Piotrovsky said three specially prepared police representatives would go to Manchester.
The representatives would not only accompany Zenit fans to the stadium but would also “make contact with the British police.”
“This is required in order to quickly solve any problems if Zenit fans or other fans violate the law,” Piotrovsky said.
Earlier, Zenit coach Dick Advocaat praised his side’s resilience after a 1-1 draw against favorites Bayern Munich in the UEFA Cup semifinal first-leg match in Munich on Thursday.
“I’m very pleased with the way we played in the second half,” the Dutch coach told reporters, Reuters reported.
The draw gives the Russian domestic champions the edge in Thursday’s second-leg thanks to the away goals rule.
Zenit have struggled at home in the new season with only one win and seven points in the first six matches while Bayern all but mathematically clinched their 21st Bundesliga title on Sunday by defeating Stuttgart 4-1 in Munich.
Advocaat said Zenit’s success in the UEFA Cup was coming at the expense of their performance in the domestic league.
“It’s quite simple,” he said when asked about the success in Europe despite a mediocre start to the defense of their Russian crown.
“We don’t have the same possibilities as a team like Bayern. They played with eight different players tonight from their last Bundesliga match and can still win 3-1 at Eintracht Frankfurt.
“That’s the big difference between Bayern and my club,” he said. Advocaat said the loss of three key players due to suspension would hurt for the return leg, including Russia playmaker Andrei Arshavin, voted the league’s top player last season.
But he added that the uneven quality of the turf in St. Petersburg could give his team a distinct advantage against Bayern.
“It’s a big surprise,” he said when asked about the quality of the pitch in the face of complaints. “It could be to our advantage.”
Bayern coach Ottmar Hitzfeld was disappointed about the second half own goal but confident his men will advance. They also played a 1-1 draw at home against Spanish side Getafe in the quarterfinals before advancing thanks to a 3-3 away result.
“We’re not at all satisfied with the result,” he said, adding goalkeeper Oliver Kahn, substituted midway through the second half, had suffered a pinched nerve in his neck while striker Miroslav Klose had sustained a broken nose.
“But we created a lot of chances. We’re as strong away as we are at home. I’m still very optimistic we can reach the final.”

(SPT, Reuters)

TITLE: Japan, Russia See Hope in Island Dispute
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: NOVO-OGARYOVO, Moscow Region — Japanese Prime Minister Jasuo Fukuda and President Vladimir Putin agreed on Saturday to expedite talks to resolve a decades-old territorial dispute by issuing “fresh directives” to their respective governments, Japan’s Foreign Ministry said.
Fukuda is the first Japanese prime minister to visit Putin’s official residence outside Moscow, a venue seen by some as more prestigious than the Kremlin and a gesture that the Foreign Ministry said Fukuda appreciated.
Following the talks, the two governments agreed to jointly explore oil and gas in Siberia in a five-year, $96 million project.
Making his first visit to Russia since his election last fall, Fukuda sought to establish a good rapport with Putin and his successor, Dmitry Medvedev, and to secure their support for the upcoming Group of Eight summit on Hokkaido in July.
Moscow’s refusal to return a chain of islands seized during the last days of World War II has prevented the two countries from reaching a peace treaty. The islands are known as the Southern Kurils in Russia and the Northern Territories in Japan.
“We are continuing our dialog on a peace treaty and creating the necessary conditions to advance in this direction,” Putin told Fukuda at the start of the talks Saturday. 
Putin did not elaborate in front of reporters, but he added that “a lot of unresolved problems” remained between the two countries despite an improvement in ties in recent years. 
Fukuda, who nodded frequently as Putin spoke, thanked the president for his personal role in promoting ties and said he wanted to deepen cooperation in the Pacific region.
It was unclear to what extent the dispute over the islands was discussed.
Putin’s spokesman Alexei Gromov told reporters that the territorial issue was not discussed in detail. But Japanese officials appeared to have interpreted the talks in a more positive way.
“With respect to the territorial issue, I believe we will be able to secure a positive direction,” Fukuda said after separate talks with President-elect Dmitry Medvedev at his official residence outside Moscow, Main Dorf Castle, Reuters reported.
Kazuo Kodama, a Japanese Foreign Ministry spokesman, told reporters late Saturday that Fukuda and Putin had agreed to “issue fresh directives” to their governments to expedite talks on the islands to elevate bilateral ties to a new dimension. Kodama did not elaborate, and it was unclear whether the agreement between the outgoing Russian leader and the Japanese prime minister, whose support at home is faltering, would bear any fruit.
Japan has said it wants back all four islands — Kunashir, Iturup, Shikotan and Habomai — but Moscow is not ready to give them up. Tokyo maintains that a peace treaty should be in place for ties to be taken to a new level.
But some Russian observers believe no peace treaty is needed because economic ties are booming anyway.
“In the great scheme of things, Russia doesn’t need the peace treaty,” said Valery Vinogradov, the point man on Japan within the Russian Union of Industrialists and Entrepreneurs, the big business lobby group. “It wouldn’t change anything in the current state of affairs,” he said.
In the most recent example of increased cooperation, the governments agreed Saturday to cooperate on oil and gas exploration in eastern Siberia in the first project of its kind, said Kodama, the Japanese Foreign Ministry spokesman.
Japan Oil, Gas and Metals National Corp. and Russia’s Irkutsk Oil will jointly explore oil and gas deposits 1,000 kilometers north of Irkutsk and 150 kilometers from the East Siberia-Pacific Ocean oil pipeline, which is under construction, the Japanese company said in a statement. The two companies have set up a joint venture in which the Russians have a 51 percent stake. They will jointly invest 10 billion yen ($96 million) in the project, which will initially span five years, Kodama said.
Trade between the two countries grew about 65 percent to $20.1 billion last year, and Japanese total investment totaled $3.1 billion as of late 2007, according to Kremlin figures.
In March, state-owned nuclear energy company Atomenergoprom and Toshiba agreed to build power plants and produce atomic-reactor fuel.
Several Japanese carmakers, including Toyota, Suzuki and Nissan, have built or are building plants here. Oil deliveries from Sakhalin to Japan totaled 6.8 million tons last year, and deliveries of liquefied natural gas to Japan will start no later than 2009, the Kremlin said.
Kodama said the conclusion of the peace treaty was needed, and its absence was a reason why an agreement to develop the Far East and Siberia had not gotten very far. 
The Japanese government appeared to interpret the choice of the Novo-Ogaryovo residence for the meeting as a positive sign. “It’s indeed the first time that the Japanese prime minister was invited to the official residence of a Russian president, “ Kodama said. “The prime minister appreciated such a gesture.” 
Putin and Fukuda were initially scheduled to meet at the Kremlin. 
Putin has held numerous meetings at Novo-Ogaryovo, and he presided over a Security Council meeting here immediately before his talks with Fukuda on Saturday.
In other issues, Russia and Japan agreed to “drastically” expand youth exchanges to 500 people a year and cooperate on climate change after the Kyoto Protocol ends in 2012. Fukuda also “requested to exercise Russia’s influence over North Korea on all issues, including the issue of abduction” of Japanese citizens, Kodama said.
Fukuda’s meeting and a subsequent lunch with Putin lasted for two hours, and the talks with Medvedev went for about an hour. Before his meetings with the Russian leaders, Fukuda visited a Japanese festival at a Moscow school where the students showed off their knowledge of Japanese and sang songs for him, Kodama said.

TITLE: Determined Deripaska Casts a Long Shadow
AUTHOR: By Hugo Miller and Yury Humber
PUBLISHER: Bloomberg
TEXT: A table laid out with platters of blini, beets, caviar and a bottle of 2001 Montrachet awaits Oleg Deripaska and his guests in a dining room at his Moscow headquarters. While others dig in, Deripaska sips only black tea and nibbles on toast. 
The 40-year-old owner of Basic Element, the holding company for a rapidly expanding mining and manufacturing empire, exhibits little appetite for the trappings of corporate power. His focus is on fundamentals — restoring what he sees as the country’s pre-perestroika industrial might. 
“It’s a big country,” Deripaska said, speaking softly in English and wearing a navy blue blazer, dark-blue loafers and jeans. “This country needs everything: roads, hospitals, schools, airports, cars, trains, airplanes. There is huge demand, and supply is not coping.” 
Few people have the means to affect the country’s economy like Deripaska. He’s worth at least $30 billion, based on analyst estimates of his closely held aluminum interests and Bloomberg data on his stakes in publicly traded auto, construction and insurance companies. Basic Element employs more than 300,000 people. 
Operating from a quiet side street a three-minute walk from the prime minister’s office, Deripaska is on a tear. The ballet aficionado has choreographed a global buying spree in the past year, spending at least $3.5 billion on stakes in two West European construction companies and Magna International, North America’s largest auto-parts supplier. 
Now he’s aiming for control of Norilsk Nickel, the world’s biggest producer of the metal, and oil producer Russneft. On Thursday, United Company RusAl, which Deripaska controls, acquired 25 percent of Norilsk, the first step in a potential takeover. And he’s negotiating investment and manufacturing partnerships with General Motors and jet maker Bombardier. Along the way, his construction holdings have propelled him into a major role in the remake of Sochi as it prepares to host the 2014 Winter Olympics. 
Political change can wait, Deripaska said. The typical Russian is more concerned with bread-and-butter economic issues. 
“More democracy, less democracy; more freedom of the press, less freedom of the press — just ask people in Nizhny Novgorod what they think,” Deripaska said, referring to the home of his auto making business, GAZ. 

‘I Like Spartak’
Deripaska’s focus on rebuilding the country’s infrastructure dovetails with the drive by President Vladimir Putin to restore Russia as a global economic and political titan. The idea of an industrial renaissance is a passion of Deripaska’s, his partners say. 
“He does everything to give back to his country,” Magna co-chief executive Siegfried Wolf said. 
So far, Deripaska’s aggressive deal making has suffered few failures. His stake in closely held RusAl, the world’s biggest aluminum producer, is worth around $23 billion, Lehman Brothers analyst Vladimir Zhukov said. GAZ, which is 73 percent owned by Basic Element and trades on the RTS, has a market value of $4.1 billion. His 60 percent holding in insurance company Ingosstrakh, which also trades in Moscow, is worth around $1.3 billion. 
Basic Element said in November that it planned to be ready to sell minority stakes in all of its companies within three years. 
Two obstacles may yet slow Deripaska, however. Since 2006, he has been denied direct access to the world’s largest economy because the U.S. State Department revoked his visa. Neither the agency nor Deripaska will explain why. 
Closer to home, Deripaska’s relationship with President-elect Dmitry Medvedev is a wild card. Medvedev, 42, and Deripaska clashed over a deal in 2001, said Stanislav Belkovsky, a political analyst and former Kremlin adviser.
The dispute was over assets controlled by Ilim Pulp, the country’s largest pulp and paper company, in which Medvedev at one time held a 20 percent stake, according to corporate filings. Deripaska says the tug of war ended amicably. 
“Deripaska stands out among other Russian businessmen in that he’s the most aggressive, a man who wants to control the maximum of everything,” Belkovsky said. “If the elite start to view him as too aggressive and fear his actions, he may be neutralized.” 
Deripaska’s move this year to buy oil assets, an industry the government has increasingly taken control of, may be a concern inside the Kremlin, Belkovsky said. 
“I think Medvedev is anxious about Deripaska and his influence,” he said. 
Deripaska shrugged off a question about whether the pulp plant duel meant relations with Medvedev would be chilly. “Like or dislike, what’s the difference?” he said. “We are all here to work.” 
Putin and Medvedev aides declined to comment. 
Deripaska isn’t lowering his profile. He tours his factories at least twice a month and sometimes works 20-hour days, said adviser Georgy Oganov, who was a spokesman for the last Soviet Embassy in Washington. 
Deripaska owns at least seven homes — in France, Italy, Russia and Britain — but spends most of his time in Moscow, though he says he deplores the capital’s traffic. That’s where his wife, Polina, 28, publisher of entertainment magazine Hello!, and young son and daughter live. 
Deripaska has teamed up with local builder Mirax Group on the $10 billion Moskva-City residential and office development, and he’s a trustee of and frequent visitor to the Bolshoi Theatre. 
“I like ‘Spartak,”’ Deripaska said, referring in Russian to the Aram Khachaturian work “Spartacus.” 
“Russian ballet, after all, is a genuine piece of art.” 

Opening Doors
Beyond Moscow, Deripaska has cultivated relationships with such financiers as former World Bank president James Wolfensohn, a Magna director, and Nathaniel Rothschild, a member of the famous banking family and co-chairman of New York hedge fund firm Atticus Capital. Rothschild smoothed the way for Deripaska in London financial circles, a Moscow-based banker said. 
Rothschild declined to comment, Atticus Capital spokesman Andy Merrill said. 
Although he’s not permitted inside the United States, Deripaska sits on the 52-member international advisory council of Harvard University’s Belfer Center for Science and International Affairs, along with Rothschild and former Federal Reserve chairman Paul Volcker. 
Basic Element has established a reputation with London banks of being “tough but fair,” said a banker who has worked on loans to Deripaska’s companies. In 2006, his Russian Aluminum, the predecessor to United Company RusAl, secured a $2 billion loan. At the time, it was the single biggest loan to a private Russian company outside the oil and gas industry. 
“He’s tough with a capital T, but Deripaska knows how to make sure people walk away feeling like they got a fair deal,” the banker said. 
That may be news to Czech private equity firm PPF Investments. In October, it acquired 38 percent of Ingosstrakh. Basic Element called a shareholder meeting and voted to quadruple the insurer’s capital. PPF says it was not invited and that the aim was to dilute its stake. Basic Element says it sent invitations. They sued each other, and PPF won an initial round in a Moscow court. Basic Element plans an appeal. 
The legal tussle involving Medvedev unfolded in December 2001, when a court ruling that favored a minority shareholder prompted Ilim to default on electricity payments to Irkutskenergo, a Deripaska-owned generator. Deripaska seized the mill as a creditor, sparking further court disputes. 
Medvedev, at the time a Putin aide, provided behind-the-scenes guidance for Ilim, a company that gave him his first break in business as its head of legal affairs, political analyst Vladimir Pribylovsky said. Deripaska and Ilim settled the dispute with a 2004 asset swap, according to an Ilim statement. 
Deripaska’s relationship with Putin has been smoother, and family ties may have played a role. In a presidential decree after succeeding President Boris Yeltsin, Putin conferred “legal and social guarantees” upon Yeltsin and his family. 
The following year, Deripaska married Polina Yumasheva, the daughter of a Yeltsin aide. Eighteen months later, her father, the aide, married Tatyana Dyachenko, Yeltsin’s daughter. The weddings made Deripaska the husband of Yeltsin’s granddaughter by marriage, qualifying him for special protection, Belkovsky said. 
Putin, 55, has met Deripaska several times a year while president and visited the tycoon’s Swiss-style ski retreat in southern Siberia. 
“Deripaska used that visit of Putin to the full,” Pribylovsky said. “The president doesn’t visit everyone.” 
During the 2007 presidential campaign, a United Russia billboard greeted visitors at Deripaska’s Sayanogorsk smelter. But that kind of support doesn’t open any doors, Deripaska said. 
“He does not need our consultation,” he said of Putin. “It’s a wrong representation of Russia that everything is conducted through the Kremlin. We have a very liberal economy. You can do what you want.” 

Dynamic Manager
At Basic Element, Deripaska has turned as much to young outsiders as the Moscow elite. Three of Basic Element’s seven main units are headed by foreigners. The holding company’s CEO is Gulzhan Moldazhanova, a Kazakh woman who’s a rarity: None of the country’s 30 biggest listed companies is headed by a woman. 
Moldazhanova, 41, studied physics and math at Moscow State University and was hired in 1995 as a personal assistant to Deripaska. 
“I could manage to remember phone numbers and speak fairly fluent English,” she said, recalling Deripaska’s first impression of her. Moldazhanova was named to Basic Element’s top post in 2005. Deripaska sets strategy, and she manages day-to-day operations, she said. 
Deripaska’s roots lie in rural Russia, far from the Bolshoi. On his grandparents’ farm near Krasnodar, at the edge of the Caucasus Mountains, he tended the horses before school. As a teen, he lived with his mother in nearby Ust-Labinsk. 
“In Russia, there are three different cultures: Moscow culture, hunters and growers,” Deripaska said over lunch with visiting Canadian journalists. “I’m from the south of Russia, and we’re used to growing things.” 
Deripaska did well enough in school to win entry in 1985 to Moscow State University. He studied nuclear physics, earning his degree in 1993 and learning English along the way. The army interrupted his path in 1986; he served two years in the Strategic Missile Forces. In 1990, Deripaska enlisted as a financial director at a trading company that eventually focused on aluminum. 
As a young trader, Deripaska had ideas and energy but lacked contacts, said Michael Cherney, a former associate who now lives in Israel and is claiming in a London court that half of Basic Element belongs to him. They met at a London metals conference in 1993, said Cherney, who was born Mikhail Chernoi. 
“I was looking for a young, dynamic manager, and I thought he fit the bill,” Cherney said. 

‘Not a Clean Business’ 
Private enterprise was forbidden in the Soviet era. Even under perestroika, only collectives that rented assets from the state to engage in primitive entrepreneurship were allowed. Emerging from communism, Russia lacked laws on ownership, property rights and taxation. 
To promote the concept of private property, Yeltsin gave each citizen a voucher worth around $60 to buy shares in state enterprises. Workers were also given shares in their factories. 
Because paychecks were often delayed, desperate workers would sell shares and vouchers at the factory gates. Cherney and Deripaska used this tactic to build a stake in a huge smelter four time zones east of Moscow in Sayanogorsk, Cherney said. The money came from millions of dollars Cherney had banked as a coal and metals trader.
Through the mid-1990s, several groups vied for control of the country’s aluminum industry, and unsolved murders accompanied the scramble, spawning the label “aluminum wars.” 
“The deaths were probably in the scores, as many as 40 or so when you take into account all the lower-profile guys,” said James Fenkner, a money manager at Red Star Asset Management, who worked in Moscow for U.S. commodities brokerage AIOC when its Russian metals chief was killed during the struggle for control of a smelter in Krasnoyarsk. “Certainly, it was not a clean business.” 
Cherney, his brother Lev and two other investors created a metals company, Trans World Group, which gained stakes in Kazakh and Ukrainian refineries that processed bauxite to supply the raw material alumina. When Cherney and TWG won control of the Sayanogorsk plant, Deripaska took over in 1994 as smelter manager. Cherney moved to Israel that year because, he said, he feared attacks by organized crime groups. Deripaska was one of several young TWG plant managers. 
“They were all abrasive, committed, completely self-made men,” said Yulia Latynina, an author and political commentator. 
Anxious about leaving his plant unattended, Deripaska at times slept on the factory floor, and the proximity to smelter fumes led to dental problems, Latynina said. Cherney said he rewarded Deripaska and at least one other manager by making them equal partners in the enterprises in which Cherney held shares. Deripaska and Cherney formed Sibirsky Aluminum in 1998, and Cherney said he turned over management to Deripaska. 
The young managers revolted against the Cherney brothers and TWG because they came to believe promises of ownership stakes were not being fulfilled, Belkovsky, Latynina and Pribylovsky said. Through power plays and legal maneuvers, they gained control, the analysts said. 
“It was about who had the biggest balls, and it seems like Deripaska won,” Latynina said. 
A British court hearing on Cherney’s claim to part of Basic Element is due to start Wednesday. 

Basic Element’s Growth
The lawsuit centers on the validity of several agreements, including one the two made on a napkin at a London hotel in 2001. A Deripaska aide said the two men settled all debts that year. 
“We don’t have any outstanding obligations to Mr. Cherney,” the aide said. “Mr. Deripaska does not owe him any money. The rest of it can be sorted out in court.” 
Deripaska created Basic Element in 2001 amid a series of acquisitions. The tycoon merged his aluminum assets with those of billionaire Roman Abramovich in 2000 and then bought him out for $1.58 billion four years later. 
Around the time of the Cherney split, Deripaska moved into the auto industry with his purchase of GAZ. He paid $1.54 billion last year for part of Magna, giving him access to assembly expertise, 42 percent of a new holding company that controls Magna and the right to nominate six of 14 Magna directors. 
In 2007, Deripaska teamed up with two rivals to form United Company RusAl, swapping assets in exchange for shares. He holds 66 percent of the new company, former holders of SUAL own 22 percent and Swiss commodities trader Glencore has 12 percent. 
RusAl said the public would be offered shares in London by early 2010. 
Deripaska moved quickly on other fronts, including construction. While Magna co-CEO Wolf was still negotiating a deal with Basic Element in early 2007, he introduced Deripaska to Hans-Peter Haselsteiner, CEO of Austrian builder Strabag. 
In April, Deripaska paid around 1.2 billion euros ($1.9 billion) for 30 percent of Strabag, which is bidding for a share of the Sochi Olympics’ $12 billion in construction work. A week later, he bought a 3 percent stake for an undisclosed sum in Germany-based Hochtief, which is rebuilding Sheremetyevo Airport. He raised the stake to 9.9 percent in May. 
The two investments, plus his 50 percent stake in Transstroi, the country’s biggest road builder, guarantee Deripaska a central role in construction for the 2014 games. 

Norilsk and Russneft 
In July, Deripaska set his sights on oil when Basic Element filed for the right to buy Russneft, after billionaire owner Mikhail Gutseriyev fled the country amid a criminal investigation. Deripaska says he wants to use it as the basis for a petrochemical venture with an unspecified foreign partner. The Federal Anti-Monopoly Service has not approved the Russneft purchase. 
“We’re in no hurry,” Deripaska said. “How often does an oil company get sold in our country?” 
Soon after the Magna deal was announced, the Ontario-based company told shareholders that Deripaska had been barred from the United States pending the resolution of what Magna called “unspecified questions” raised by visa officials. Deripaska says he hopes the ban might be lifted with a new U.S. administration. 
Deripaska met with Senator John McCain, the presumptive Republican presidential nominee, at the World Economic Forum in Davos, in January. A call and e-mail to McCain’s press office were not returned. 
U.S. Senate and House records show that Deripaska spent $260,000 in 2005 for help with “visa policies and procedures.” His lobbyist was former Republican presidential candidate and Senator Robert Dole, said Mike Marshall, a spokesman for Dole. 
Deripaska’s most audacious move may be his bid for Norilsk, which produces nearly all of Russia’s nickel, one-third of its copper and half of the world’s palladium. Norilsk shareholder Vladimir Potanin, a former first deputy prime minister, tried to block Deripaska with help from iron ore producer Metalloinvest, which opened its own merger talks with Norilsk. Metalloinvest’s primary owner is Alisher Usmanov, a manager of Gazprom, which Medvedev chaired for seven years. 
In mid-April, Deripaska said he was undeterred. And on Thursday, RusAl said it had acquired the 25 percent stake in Norilsk, purchased from Onexim Group, controlled by billionaire Mikhail Prokhorov. He received 14 percent of RusAl and around $4.5 billion in cash through a syndicated loan the aluminum company took out last month. 
Even if he stumbles in his bids for Russneft’s oil and total control of Norilsk’s ore, Deripaska’s partners are confident that his position is secure. 
“The current oligarchy will stay in power for at least 20 or 30 years,” Strabag CEO Haselsteiner said. “It doesn’t matter whether Mr. Putin will be president, prime minister or a fisherman in Alaska.” 
Pribylovsky wasn’t sure. Deripaska’s ambition may win over Medvedev or lead to the tycoon’s undoing, he said. “Maybe he wants too much.” 
For his part, Deripaska says the path forward is clear: Russia needs to renew its transport, health and education infrastructure. As the country’s biggest cement importer, Basic Element plans to spend at least $1 billion on six cement plants across the country by 2012. 
“We’re still trying to catch up with the Soviet Union,” Deripaska said. “Only next year, for example, will cement consumption — which reflects construction volume — reach the Soviet Union level.”

TITLE: Tensions Rise Sharply Over Abkhazia’s Status
AUTHOR: By Nikolaus von Twickel and Matt Siegel
PUBLISHER: Staff Writers
TEXT: MOSCOW — Tensions between Moscow and Tbilisi escalated over the weekend amid reports that Russian military reinforcements were being deployed in Georgia’s breakaway republic of Abkhazia and local residents were being forced to swap their ID cards for Russian passports.
Russian-led peacekeeping forces in the region denied a report Friday by Georgia’s Rustavi 2 television that it had video evidence that divisions of the Maikop brigade had been sent to the Ochamchira region, which is mostly populated by ethnic Georgians. 
Lieutenant Colonel Alexander Diordiev, an aide to the commander of the peacekeeping forces, said the report was an attempt to “keep tension high and prolong provocations against the Russian peacekeepers,” Interfax reported.
But Georgia’s minister for reintegration, Temur Iakobashvili, said Sunday that isolated cases of Georgian citizens being forced to exchange their ID cards for Russian passports had been confirmed. He urged caution and said his government wanted a full report from the local United Nations observer mission.
“There is some evidence that this type of thing is happening,” he said by telephone from Tbilisi. “On what scale, it’s hard to say.”
The reports of troop movements came just one day after Georgian President Mikheil Saakashvili called for the expulsion of Russian peacekeepers. “Russia’s presence, the presence of the Russian contingent in the conflict zone, is becoming a risk factor,” Saakashvili told a meeting with foreign ambassadors broadcast on national television.
Relations between the two countries have been strained after Georgia accused the Russian military of shooting down an unmanned spy plane over Abkhazia, a charge denied by Moscow.
The accusations and escalating rhetoric continued to spill over from both sides last weekend. Valery Kenyaikin, an official from the Russian Foreign Ministry said Russia would take “all possible measures” to protect its citizens in Abkhazia if fighting broke out,” provoking an outcry from Georgia.
The United States reiterated its support for Georgia and criticized Russia’s overall policy toward breakaway republics. “We hope Russia will retract this statement as well as the steps it recently announced to strengthen its ties with Georgia’s separatist regions of Abkhazia and South Ossetia,” State Department spokeswoman Joanne Moore said, The Associated Press reported.
Iakobashvili, who told The Moscow Times in February that Georgia would respond to any Russian recognition of the republics militarily, denied that his government was planning any armed response.

TITLE: State Duma Approves Bill Over Media Clampdown
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — The State Duma passed in a first reading Friday a bill that would allow courts to close media outlets for publishing libelous statements, a law critics say would give authorities an additional tool to crack down on dissent.
The bill would add “dissemination of deliberately false information damaging individual honor and dignity” to the list of offenses for which a media outlet can be shut down.
Under current law, courts can close media outlets for publishing state secrets, extremist statements and statements supporting terrorism.
The Duma voted 339-1 in favor of the bill, which will now face two more Duma readings before being sent to the Federation Council for consideration. If approved there, it will be passed on to the president to be signed into law. 
Friday’s reading came two weeks after the tabloid Moskovsky Korrespondent published an article claiming that President Vladimir Putin planned to divorce his wife and marry Olympic champion gymnast Alina Kabayeva. The newspaper suspended operations — for financial reasons, according to its publisher — after Putin dismissed the story as “rubbish.”
The bill’s author, United Russia deputy Robert Shlegel, said Friday that the bill was drafted before the Moskovsky Korrespondent article and that it was aimed at making Russian media “more civilized.” 
Shlegel, 24, is a former spokesman for the pro-Kremlin youth group Nashi.
Authorities have initiated numerous libel cases in recent years involving reports about public officials. In one high-profile case, Ivanovo journalist Vladimir Rakhmankov was convicted in October 2006 of publicly insulting a public official and fined 20,000 rubles ($840) for referring to Putin as “a phallic symbol” in an opinion piece.
Oleg Panfilov, head of the Center for Journalism in Extreme Situations, said the amendment would give authorities an additional instrument to shut down independent-minded media outlets. 
“Now that television and most newspapers are under the Kremlin’s control, authorities want to control the very few media outlets that remain free in the country,” he said. “There still are a few newspapers — and the Internet — that are out of its control.”
Kremlin critics would likely be targeted should the bill become law, Panfilov said. “It would work the same way the law on extremism works, only against those who oppose the powers-that-be,” he said. “If [the extremism law] worked properly, many Duma deputies would be in jail for their extremist statements.”
Mikhail Fedotov, the secretary of the Russian Union of Journalists and author of the current law on mass media, said it was unnecessary to include the amendment in the media law because libel is already a criminal offense.
“You should then include [in the media law] that you should not encourage murder, rape or theft,” Fedotov said, Interfax reported. “In short, the whole Criminal Code. This is just stupid.”
Even without the libel amendment, “any word that a governor or mayor doesn’t like is considered by courts to be false information, and the paper is simply closed,” Fedotov said.

TITLE: Aqua Park To Consider Claims
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The Waterville aqua park will consider applications for compensation from visitors who suffered chlorine poisoning in the park’s swimming pools last month.
“Applications for compensation will be considered by a special commission to include both the park’s authorities and representatives of Russia’s Consumers’ Union,” Waterville said in a press release, Interfax reported.
The commission met for the first time on Monday.
Twenty-six swimmers applied for compensation from Waterville, and 10 more applications were sent to the Consumers’ Union.
Meanwhile, Christian Mayer, manager of the Pribaltiiskaya Hotel Complex, which owns Waterville, said that the results of tests made by the federal health center for Hygiene and Epidemiology said that “the reason for the March incident could not be the high content of chlorine in the water.”
“However, complaints by a number of visitors that they suddenly felt bad makes it seem that there could have been the influence of an irritating substance,” Mayer said.
A previous inspection at Waterville ascertained that on the day people reportedly fell ill the park’s pools were overcrowded and the water contained an organic pollutant.
Furthermore, maximum doses of active chlorine were used that day and a filter system was not working effectively, the inspection determined. The water in the swimming pools did not meet chemical and toxicological standards, the report said.
Meanwhile, Waterville also appealed to independent experts to confirm that the supporting construction of the park’s swimming pools is safe.  The park did so in order to deny rumors about the construction not being safe enough, the park’s website said.
On March 26, visitors to Waterville, the biggest aqua park in St. Petersburg, reported irritation in the eyes and throat. By the evening of March 27 at least 224 people, including 181 children, had sought medical attention.
The Vasileostrovsky district court temporarily closed the park until April 30.

TITLE: Chernobyl Reactor To Get Giant Steel Coffin
AUTHOR: By Maria Danilova
PUBLISHER: The Associated Press
TEXT: KIEV, Ukraine — Twenty-two years after the Chernobyl nuclear disaster, work is under way on a colossal new shelter to cover the ruins and deadly radioactive contents of the exploded Soviet-era power plant.
For years, the original iron and concrete shelter that was hastily constructed over the reactor has been leaking radiation, cracking and threatening to collapse. The new one, an arch of steel, would be big enough to contain the Statue of Liberty.
Once completed, Chernobyl will be safe, said Vince Novak, nuclear safety director at the European Bank for Reconstruction and Development which manages the $505 million project.
The new shelter is part of a broader $1.4 billion effort financed by international donors that began in 1997 and includes shoring up the current shelter, monitoring radiation and training experts.
The explosion at reactor No. 4 on April 26, 1986 was the world’s worst nuclear accident, spewing radiation over a large swath of the former Soviet Union and much of northern Europe. It directly contaminated an area roughly half the size of Italy, displacing hundreds of thousands of people.
In the two months after the disaster, 31 people died of radioactivity, but the final toll is still debated. The U.N. health agency estimates that about 9,300 will eventually die from cancers caused by Chernobyl’s radiation. Groups such as Greenpeace insist the toll could be 10 times higher.
The old shelter, called a “sarcophagus,” was built in just six months. But intense radiation has weakened it, according to the U.S. Nuclear Regulatory Commission, and rain and snow are seeping through cracks.
Officials say a tornado or earthquake could bring down the shelter, releasing clouds of poisonous dust.
The first step, shoring up the sarcophagus, is almost complete, Ukrainian and EBRD officials say.
Later, the 20,000-ton arch — 345 feet tall, 840 feet wide and 490 feet long — will be built next to the old shelter and slid over it on railtracks.
Its front side will be covered by metal, and the back will abut the wall of reactor No. 3. Construction is to begin next year and be completed in 2012, and it is designed to last 100 years. It is designed and built by Novarka, a French-led consortium.
Workers will wear protective suits and masks, and those needing to be closer to the radioactivity will work in shifts as short as several minutes.

TITLE: In Brief
TEXT: <b>Pensioner Compensation</b>
St. Petersburg’s Kirov district court has ruled that a 62-year-old woman who suffered serious injuries after an automobile accident in August 2006 should be awarded financial compensation, Fontanka.ru reports. 
The long-term medical treatment the woman has undergone proved too costly, so she appealed to the prosecutor’s office. The pensioner is hoping to claim 50,000 rubles ($2,116) in compensation although the sum will be decided at a later hearing. (SPT)

<b>Metro Zone System</b>
St. Petersburg’s metro is developing a zone system for the city’s subway, Fontanka.ru reported, in which passengers will be charged for the number of zones they cross as opposed to a single-price admission for the entire network. 
Passengers will have to make sure that they have a sufficient amount of money on their non-contact smart card to get them from one zone to another. 
The Research and Design Institute of Territorial Development and Transport Infrastructure, the company spearheading the project, is planning on installing turnstiles not only at entrances, but at exits as well. The exact division of the zones is still being decided, but the installation of the new system should take about 18 months. (SPT)

<b>Fountains Switched On</b>
The fountains in the gardens of the Peterhof Palace outside of St. Petersburg will be switched on on May 9, the day Russia has a holiday marking victory over Nazi Germany in World War II, Interfax reports.
The return of running water to the more than 150 fountains in the parks surrounding the palace symbolically marks the start of summer and new opening hours for the parks and museums at Peterhof, except for the Tsaritsyna and Olgina Collonade Pavillions, which will officially open on May 31.
From May 9, the Lower Park will be open daily from 9 a.m. through 7 p.m. The fountains will work from 11 a.m. through 5 p.m. on weekdays, and from 11 a.m. until 6 p.m. on weekends. (SPT)

<b>Museum Night</b>
More than 30 museums in St. Petersburg throw open their doors at night on Sunday for the third annual Museum Night event, Interfax reported. 
“In each museum there will be a special program for visitors: concerts, performances, excursions, and unusual exhibits,” Vasily Pankratov, vice chairman of City Hall’s Culture Committee, said. “There will be 16 different buses running on three routes so that visitors can easily see the programs offered at each museum.” 
Tickets for entrance to all exhibits and use of the buses cost 150 rubles ($6). (SPT) 

<b>Editor Faces Trial</b>
The deputy editor of the independent-minded daily Nezavisimaya Gazeta will be tried on charges of blackmail and possession of illegal drugs, the Investigative Committee said Friday, Interfax reported.
The editor, Boris Zemtsov, was detained in September on suspicion of blackmail. The newspaper said at the time that he was innocent.
The Investigative Committee said Friday that Zemtsov had demanded a monthly payment of $15,000 from an official at Soyuzplodoimport, the state-controlled company that owns the domestic rights to Stolichnaya vodka, in exchange for not publishing articles critical of the company, Interfax reported. (SPT)

TITLE: Managers Pool Strategies at Marketing Forum
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: While some marketing professionals readily interpret negative political trends as beneficial for business activities, others find unexpected barriers in the seemingly prosperous regions.
At the 2nd Marketing Forum which opened Friday in St. Petersburg, managers of Russian and foreign companies shared their experience in assortment management and discussed strategies for regional expansion and the cultural aspects of brand building. The forum was organized by WorkLine Group and Organica consultancy.
Expansion strategies were one of the most discussed issues. Prior to entering the Russian market, the German concern Freudenberg thoroughly analyzed the business environment in the country.
“Contrary to popular belief, we saw a one-party political system and strong “power vertical” as evidence of stability, which is good for business. A weak opposition and lack of political dialogue we also considered a positive factor for business,” said Andrei Andreyev, general manager of Freudenberg Simrit.
Andreyev was positive about the adherence of the new president to the same political principles. However he indicated that a likely struggle for power between political groups could cause problems.
Andreyev estimated actual GDP growth in Russia at 10-11 percent last year as opposed to official figures of 8.7 percent. “Over the last three years the purchasing power of Russian consumers has doubled,” Andreyev said.
He admitted that high inflation interferes with business performance. Among other negative factors he listed the increasing dependence of the Russian economy on oil and gas exports. According to his data, during the last eight years the proportion of oil and gas sales in the country’s GDP increased from 13 percent to 32 percent.
Meanwhile, investment into high-tech enterprises is practically non-existent, Andreyev said. “Profits from processing raw materials are decreasing. About 60 percent of the federal budget comes from oil and gas export taxes,” he said.
Among the negative social trends, he listed Russia’s decreasing population. “According to various estimations, the income of 18-20 percent of the population is not enough to ensure minimum standards of living, and the situation does not seem to be improving,” he said.
In view of all these factors, Freudenberg decided to expand into Russia. “We see opportunities for development through investment into regions like the Urals and Volga. The resources of the main administrative centers are exhausted,” Andreyev said.
“Investment into production facilities in Russia would be more efficient than simple product import. So far import growth has exceeded production growth in the country, and through the acquisition of Russian assets we can decrease our expenses on bureaucracy,” he said.
Other marketing specialists indicated low average incomes and old-fashioned consumer behavior as the main barriers to regional expansion. Azbuka Vkusa, which operates 24 premium-class supermarkets in Moscow, investigated the St. Petersburg retail market, but decided against opening supermarkets in the city.
“According to our research, the share of premium class supermarkets in total retail turnover is less in St. Petersburg than in Moscow. The market here would not allow us to open enough supermarkets to justify operating a branch here,” said Alexei Znamensky, head of analysis and the CRM department at Azbuka Vkusa.
Yelena Churina, a member of the committee for industry, economics and property at the St. Petersburg Legislative Assembly, indicated that prior to starting any project in St. Petersburg, investors and their consultants should make sure that local infrastructure and legislature are suitable for the project.
She cited the example of Pavlovsk, a suburb which recently became popular among investors. “A new shopping center opened there and has consumed all the existing energy capacity. No other investor would get any power, because it has been exhausted,” Churina said.

TITLE: Beeline Ranked 1st Place For Roaming Availability
PUBLISHER: The St. Petersburg Times
TEXT: Beeline was ranked the number one cellular operator for the number of countries and regions covered by roaming services in the most recent global report by J’son & Partners analysis agency.
Beeline currently provides roaming services in 205 countries and has partner agreements with 502 cellular operators abroad, Beeline managers said Monday at a press conference.
“Usually, cellular operators have about 300-350 partners,” said Yana Takmazis, leading marketing specialist at Vimpelkom, the company which owns the Beeline trademark.
In the Northwest region, last year Beeline’s profits increased by 162 percent on calls made using the roaming service, by 121 percent on text messages written using roaming and by 350 percent on GPRS traffic.
Finland was the most popular country for using the roaming service among Beeline’s Northwest subscribers. The next most popular countries were Estonia, Turkey, Germany and Lithuania.
Northwest subscribers are increasingly using roaming services in Ireland, Australia, Algeria, Jamaica and South Africa.
The number of Beeline’s subscribers in the Northwest region using roaming increased by 70 percent last year. Seventy-six percent of Beeline’s roaming clients in the Northwest region are based in St. Petersburg and the Leningrad Oblast.

TITLE: In Brief
TEXT: <b>Stadium Costs Double</b>
ST. PETERSBURG (Bloomberg) — Gazprom may pay for most of the new stadium being built for soccer club Zenit St. Petersburg after the venue’s cost doubled to as much as $593 million, Vedomosti reported, citing Alexander Dyukov, Gazprom Neft chief executive officer and also Zenit president.
St. Petersburg’s city government had previously planned to pay for the stadium from increased tax receipts after Gazprom units Sibur Holding and Gazprom Neft registered as taxpayers in St. Petersburg, the newspaper said Monday. Gazprom is Zenit’s main sponsor.
The municipal government has asked Gazprom to help finance the venue’s construction, Vedomosti reported, citing Vladimir Barkanov, the chairman of the budget and finance committee in St. Petersburg’s legislature.
The new stadium is now scheduled to be completed in 2010, a year later than initially planned, according to Vedomosti.

<b>Jaguar Traded for Volvo</b>
/ST. PETERSBURG (SPT) — Strategia Rost Holding has broken an agreement with Jaguar Land Rover Russia to build a new dealership center, the company said Monday in a statement.
According to the agreement signed in 2006, the companies planned to construct the new center in Kudrovo at the junction of the ringroad and the Murmanskoye highway. The center is due to be completed by August this year.  The company has decided to open a Volvo dealership center in the 4,800-square meter building instead.
<b>Budget Car Plan Falters</b>
ST. PETERSBURG (Bloomberg) — Russian billionaire Oleg Deripaska’s GAZ dropped a joint effort with General Motors Corp. to develop a $10,000 budget car for the Russian market, Vedomosti reported, citing Deripaska.
GAZ and the U.S. carmaker began talks in 2007 to create a car based on the Chevrolet Lacetti model and produce 50,000 a year, the newspaper said. The prices of parts from Korean suppliers made the project impossible, Vedomosti said, citing an identified GAZ official.
General Motors is preparing a new proposal and GAZ is expected to make a decision this summer, Vedomosti said.

<b>Galakta Plans Distillery</b>
MOSCOW (Bloomberg) — Galakta, a Russian vodka producer, plans to build a distillery that may become the second-largest in the country, Vedomosti reported.
The plant outside the central Russian city of Kaluga will have an annual capacity of 8 million hectoliters (80 million liters), the newspaper said, citing an unidentified Galakta executive. That would make it the largest distillery in Russia after Moscow’s Kristall plant, Vadim Drobiz, head of the Center for alcohol markets research, told Vedomosti.
Moscow-based Galakta, whose vodka brands include Moroz I Solntse, or Frost and Sun, was Russia’s 12th biggest vodka producer with a market share of 1.9 percent last year, the newspaper said, citing the State Statistics Service.

<b>GECF Meets in Tehran</b>
TEHRAN (Bloomberg) — The world’s largest natural-gas producing nations opened a meeting in Tehran to discuss closer cooperation as markets for the fuel turn more global.
Members of the Gas Exporting Countries Forum are holding a two-day meeting to study proposals for a “framework of cooperation,” the Iranian Oil Ministry’s official news agency, Shana, reported on its web site Monday.
The group includes the world’s three largest gas producers, Russia, Iran and Qatar. The organization is seeking closer coordination on pricing as increased tanker shipments of liquefied natural gas, or LNG, reduce dependency on pipelines and make markets more global.
Russia has requested the delay of an annual summit scheduled for June 24 in Moscow, Algerian Oil Minister Chakib Khelil said in Algiers on April 26.

<b>Railworkers Hold Strike</b>
MOSCOW (Bloomberg) — More than 120 rail workers in Moscow staged a strike Monday in support of pay raises and equal treatment for members of independent unions.
Russian Railways, operator of the world’s longest train network, called the strike “illegal” after local train services were disrupted in the Yaroslavl and Nizhny Novgorod directions, the company said in an e-mailed statement.
The stoppage follows several strikes in the past six months, including a dispute at United Co. Rusal’s mining complex in Severouralsk and a strike at Ford Motor. Co.’s plant near St. Petersburg in November.

<b>Oligarch Case Continues</b>
LONDON (Bloomberg) — Roman Abramovich’s lawyer told a London court on Monday that Boris Berezovsky must be more specific about allegations of threats in a lawsuit over the sale of Berezovsky’s Sibneft shares.
Berezovsky, a Russian billionaire granted asylum in the U.K., claims in the suit that Abramovich used “threats and intimidation” to force him to sell shares in the oil company at a fraction of their value. Abramovich, 41, says no threats were made.

TITLE: Pipeline Presidency Refused
PUBLISHER: Reuters
TEXT: ROME — Italy’s outgoing prime minister, Romano Prodi, has declined Russian leader Vladimir Putin’s offer of the presidency of South Stream, a pipeline venture by Gazprom and Eni, a cabinet source said on Monday.
A source in Prodi’s office said: “He is not interested.”
Prodi met the Russian and Italian energy companies’ CEOs on Monday, and Russian newspaper Kommersant said he would be offered the job, mirroring former German chancellor Gerhard Schroeder’s appointment to Gazprom’s Nord Stream pipeline.
Prodi hands over to media mogul Silvio Berlusconi in a few days’ time after his center-left party lost Italy’s mid-April election. Prodi was previously head of the European Commission and twice chaired Italian state holding company IRI. He beat Berlusconi twice at the polls and had two spells as premier.
Kommersant had reported that 68-year-old Prodi would be offered the job at lunch on Monday with Gazprom’s head Alexei Miller and Eni’s Chief Executive Paolo Scaroni.
The Russian and Italian companies formed South Stream to build a gas pipeline that will eventually transport 30 billion cubic metres of Russian gas per year under the Black Sea to southern Europe.

TITLE: RusAl Wants Norilsk Merger in Next Year
PUBLISHER: Combined Reports
TEXT: MOSCOW — Oleg Deripaska’s United Company RusAl said Friday it would seek to combine with Norilsk Nickel, the country’s biggest mining company, in the next year and may buy shares on the open market. 
A merger is “in the interests of all shareholders,” RusAl chief executive Alexander Bulygin said in e-mailed answers to questions. “If the combination completes within a year, in 10 years we can become the leader in metals and mining, producing all the metals traded” on the London Metal Exchange, he said. 
RusAl on Thursday bought 25 percent of Norilsk from Onexim Group, an investment company controlled by billionaire Mikhail Prokhorov. 
Prokhorov’s Onexim received 14 percent of RusAl in return for the shares it sold in Norilsk. His investment company also got $7 billion in cash, Kommersant said Friday, citing unidentified bankers familiar with the transaction. 
Closely held RusAl may seek to raise its stake in Norilsk by buying shares on the market if conditions are favorable, Bulygin said. 
“If not, increasing the stake is not a must,” he said. “We will review different ways to merge, discussing it with Norilsk shareholders large and small.” 
Vladimir Potanin holds about 30 percent of Norilsk and is the company’s largest investor. RusAl said it plans to meet with Potanin’s Interros to discuss managing Norilsk. 
Norilsk rose 74.58 rubles, or 1.1 percent, to 6,651.97 rubles Friday, after falling 3.1 percent Thursday after RusAl announced the stake purchase. 
RusAl may be worth $35 billion, Lehman Brothers said in a March report. A combination of RusAl and Norilsk would create a company with a market capitalization of $90.5 billion, potentially rising to $110 billion in a year, Lehman said. 
RusAl, formed in March 2007 in a merger between Russian Aluminum, SUAL and the alumina assets of Glencore International, has “unique experience in unifying three companies,” Bulygin said. “We are consolidators.” 
Separately, Norilsk began talks with Metalloinvest on a possible combination. Metalloinvest, controlled by billionaire Alisher Usmanov, is the country’s largest iron ore producer. 
Bulygin said RusAl would not take an “aggressive” position to block a deal with Metalloinvest. RusAl doesn’t want to “spoil relations” with global funds that hold stakes in Norilsk as the aluminum company itself plans to sell shares next year, Bulygin said. 
Metalloinvest said Thursday that it would continue to pursue merger talks with Norilsk. 
Analysts reacted positively to the deal Friday. 
“RusAl wouldn’t risk billions of dollars to get into the company and get stuck because of a stubborn shareholder,” said Kirill Chuiko, a metals analyst at UralSib. “The deal seems to have been clinched behind the scenes.” 
In recent years, leading Russian businesses have tended to consult with President Vladimir Putin about major mergers and acquisitions, and Thursday’s deal, potentially involving consultations among up to four business groups, appeared to be no exception. 
Potanin met with Putin on Thursday to “discuss the realization of Interros’ international projects,” the Kremlin official web site reported Thursday evening. 
“It is hardly a pure coincidence,” Chuiko said. 
Vladimir Zhukov, senior metals analyst at Lehman Brothers in Moscow, said in a note Friday that Bulygin appeared skeptical about the quality of Metalloinvest assets, and that could indicate that RusAl intended to “at least initially [play] hardball with Norilsk Nickel before a potential acquisition of Metalloinvest” in an attempt to lower the value of Usmanov’s firm. 
(Bloomberg, SPT)

TITLE: Deripaska Includes Glencore In Plans for Russneft Purchase
AUTHOR: By Greg Walters and Yuriy Humber
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian billionaire Oleg Deripaska said he wants to form a partnership with Glencore International AG, the world’s largest commodity trader, to run Russneft, should he succeed in purchasing the crude producer.
Deripaska, Russia’s richest man according to Forbes magazine, requested approval from the anti-monopoly agency to buy Russneft last year through his holding company, Basic Element. Deripaska, speaking to reporters on April 25, said permission from the anti-monopoly service could take several more months.
Glencore, based in Baar, Switzerland, is seeking separate antitrust approval to buy shares in production subsidiaries of Russneft, the company said in an e-mail on Oct. 24. Deripaska’s and Glencore’s filings came weeks after Russian officials launched an international manhunt for Russneft’s former chief executive and founder, Mikhail Gutseriev, who is under investigation for tax evasion.
“Gutseriev came to us and offered the company last summer,” Deripaska said on April 25. “We never discussed Gutseriev leaving Russia. I was not aware of any political pressure he was under.”
Deripaska wants to use the oil company as the basis for a petrochemical venture with an unidentified foreign partner, he said in an interview this month.
Glencore, which began working with Russneft when it was run by Gutseriev, bought as much as 49 percent of several Russneft units two years ago. In addition to those stakes, worth $972 million, Glencore had made two long-term loans of $554 million to Russneft as of the end of 2005, according to a Glencore bond prospectus from August 2006.
Basic Element and Glencore are partners in United Co. Rusal, the world’s biggest aluminum producer.

TITLE: Storchak Relieved of Duties
PUBLISHER: Reuters
TEXT: MOSCOW — Jailed Deputy Finance Minister Sergei Storchak has been stripped of his duties as a deputy governor of the European Bank for Reconstruction and Development, Interfax reported Saturday. 
Storchak, a close ally of Finance Minister Alexei Kudrin, is currently awaiting trial on suspicion of attempting to embezzle $43 million. He denies the charges. 
Prime Minister Viktor Zubkov signed a decree stripping Storchak of his EBRD duties, Interfax reported. 
A decree published on the government’s web site said another deputy finance minister, Dmitry Pankin, had been appointed in his place. 
The Storchak case is being watched by investors who say his arrest could be part of an attempt by a hard-line Kremlin clan to undermine the position of Kudrin, who as finance minister has fought for tight fiscal discipline and market reforms. 
Storchak, who also oversaw the country’s $144 billion stabilization fund, faces up to 10 years in jail if convicted. 
Kudrin has offered to vouch personally for Storchak if he is released.

TITLE: Is It The End For Local Bankers?
AUTHOR: By Anna Shcherbakova
TEXT: Perception is important, but we have to count our expenses, the CEO of one of St. Petersburg’s biggest banks said, explaining why his bank is reducing its network of retail offices. The manager was prepared to discuss the international financial crisis as well as the problems of local banks. Even if I hadn’t studied his CV before the interview, I would have known instantly that he is a Muscovite. Many St. Petersburg residents know the word “perception,” along with many other foreign words, but none of them heads a bank.
Fifteen years ago St. Petersburg mayor Anatoly Sobchak and his deputy Vladimir Putin dreamed of transforming the city into an international financial center. They made the first steps — the first Russian banks opened with foreign capital, Dresdner Bank and Credit Lyonnais, registered here — and tried to persuade national giants to open subsidiaries, not branches, here in order to bring more taxes to the city budget. (Now the finance minister, Alexei Kudrin, who served in Sobchak’s administration as chairman of the finance committee, is announcing plans to turn Moscow into the international financial capital. It’s a familiar tune.) St. Petersburg’s most intelligent bankers grew up in an academic environment, forged a managerial career in the ‘90s and then moved to Moscow, often by using their connections with the powers that be. The way to Moscow was fairly broad and I remember that some of the best positioned bankers stressed on the record that they “were expecting a call from capitol,” and when asked to comment on the appointment of their colleagues, said hopefully — also on the record — that “St. Petersburg has not yet run out of bankers.” 
However, despite St. Petersburg’s reputation as the window on Europe and the high quality of education, the local banking community has, shall we say, no style. A top bank manager might be wearing an expensive suit and Swiss watch, but with the wrong tie or shoes. Another might look important and well informed, but refuse to discuss the American mortgage crisis: “Don’t bother me with America — let’s talk about the excellent results of our bank.” They are professional enough, but don’t care about modern financial or marketing issues such as EVA (economic value added) or brand awareness. Those who do care don’t make the top positions, and if they do they rapidly move to Moscow. Sometimes I’m afraid that St. Petersburg really has run out of bankers. A look at local bank owners is enough to understand why.  They are Soviet-era directors or New Russians in the worst sense of the word — they need obedient performers rather than well-educated or intelligent managers with broad views. 
This is why local banks could lose their position to foreign-owned or national financial institutions, since the latter hire foreigners or Muscovites who care about perception, cost cutting and many other issues that make banks more profitable.
Things started to change a couple of years ago when the largest St. Petersburg bank hired a foreign manager. There is less gold and glitz in the bank’s corporate style, but the lines in its branches are just as long as before. Whether or not a CEO has enough administrative power to really make changes is the topic of another article. 

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

TITLE: Reinventing Energy
AUTHOR: By Jeffrey D. Sachs
TEXT: The world economy is being battered by sharply higher energy prices. While Russia and OPEC countries are reaping huge profits, the rest of the world is suffering as the price of oil has topped $110 per barrel and that of coal has doubled. 
Without plentiful and low-cost energy, every aspect of the global economy is threatened. For example, food prices are increasing alongside soaring oil prices, partly because of increased production costs but also because farmland in the United States and elsewhere is being converted from food production to biofuel production. 
No quick fix exists for oil prices. Higher prices reflect basic conditions of supply and demand. The world economy — especially China, India and elsewhere in Asia — has been growing rapidly, leading to a steep increase in global demand for energy, notably for electricity and transport. Yet global supplies of oil, natural gas and coal cannot easily keep up, even with new discoveries. And, in many places, oil supplies are declining as old oil fields are depleted. 
Coal is in somewhat larger supply and can be turned into liquid fuels for transport. Yet coal is an inadequate substitute, partly because of limited supplies and partly because coal emits large amounts of carbon dioxide per unit of energy. Therefore, it is a dangerous source of man-made climate change. 
For developing countries to continue to enjoy rapid economic growth and for rich countries to avoid a slump, it will be necessary to develop new energy technologies. 
Three objectives should be targeted: low-cost alternatives to fossil fuels, greater energy efficiency and the reduction of carbon dioxide emissions. 
The most promising technology in the long term is solar power. The total solar radiation hitting the planet is about 1,000 times the world’s commercial energy use. This means that even a small part of the earth’s land surface, notably desert regions, which receive massive solar radiation, can supply large amounts of the electricity for much of the rest of the world. 
For example, solar power plants in the United States’ Mojave Desert could supply more than half of the country’s electricity needs. Solar power plants in Northern Africa could supply power to Western Europe. And solar power plants in the Sahel of Africa, just south of the vast Sahara, could supply power to much of West, East and Central Africa. 
Perhaps the single most promising development in terms of energy efficiency is “plug-in hybrid technology” for automobiles, which may be able to triple the fuel efficiency of new automobiles within the next decade. 
The idea is that automobiles would run mainly on batteries recharged each night on the electricity grid, with a hybrid engine as a backup to the battery. General Motors might have an early version by 2010. 
The most important technology for the safe environmental use of coal is the capture and geological storage of carbon dioxide from coal-fired power plants. Such “carbon capture and sequestration,” or CCS, is urgently needed in the major coal-consuming countries, especially China, India, Australia and the United States. The key CCS technologies have already been developed; it is time to move from engineering blueprints to real demonstration power plants. 
For all of these promising technologies, governments should be investing in the science and high costs of early-stage testing. Without at least partial public financing, the uptake of these new technologies will be slow and uneven. Indeed, most major technologies that we now take for granted — airplanes, computers, the Internet and new medicines to name but a few — received crucial public financing in the early stages of development and deployment. 
It is shocking and worrisome that public financing remains slight, because these technologies’ success could translate into literally trillions of dollars of economic output. For example, according to the most recent data from the International Energy Agency, in 2006 the U.S. government invested a meager $3 billion in energy research and development. In inflation-adjusted dollars, this represented a decline of roughly 40 percent since the early 1980s, and now equals what the U.S. spends on its military in just 1 1/2 days. 
Of course, developing new energy technologies is not the responsibility of the Unites States alone. 
Global cooperation on energy technologies is needed both to increase supplies and to ensure that energy use is environmentally safe, especially to head off man-made climate change from the use of fossil fuels. 
This would not only be good economics but also good politics, since it could unite the world in our common interest, rather than dividing the world in a bitter struggle over diminishing oil, gas and coal reserves. 

Jeffrey Sachs is professor of economics and director of the Earth Institute at Columbia University. (c) Project Syndicate

TITLE: High Time To Weaken Gazprom’s Grip on EU
AUTHOR: By Financial Times
TEXT: If the European Union needed a new warning of Russia’s efforts to strengthen its grip on the continent’s gas supplies, it has come in the shape of President Vladimir Putin’s trip to Libya.
During the visit, Gazprom, the state-run gas monopoly, agreed to a wide-ranging joint venture with Libya’s national oil and gas company. Gazprom also revealed it was talking to Italy’s Eni about investing in a new Libya-Italy undersea pipeline and to Nigeria about a trans-Sahara route. The discussions follow talks with Algeria and Qatar and a determined drive to reinforce Russia’s grip on central Asian gas exports.
Gazprom’s ambitions make sense even at a purely commercial level. With some 25 percent of EU gas going through its pipes, it will naturally strive to boost market share, with or without partners. That is what would-be monopolists do. But, for the West, the Kremlin connection adds a disturbing political dimension — Gazprom is the embodiment of Putin’s stated aim to make Russia an energy superpower.
The EU recognizes the danger. But its ability to present a united front to Russia is undermined by the repeated willingness of leading states, including Germany, France and Italy, to strike bilateral deals. Gazprom divides and rules.
So what should the EU do? First, it must encourage Gazprom and other Russian gas companies to invest more in new production. The more gas that Russia produces, the better for consumers. Next, Brussels must accelerate internal energy market liberalization so all states benefit from a common energy pool. 
Also, union members must reinforce ties with non-Russian suppliers, including Libya and Nigeria. It must redouble efforts to secure new suppliers, notably in the Caspian. The planned Caspian-EU Nabucco route needs finance and committed gas supplies. Both might be easier to find if EU states offered more explicit financial support. Finally, the EU must do more to encourage energy saving and energy diversification, backing investments in clean coal and nuclear power. With EU gas output declining, there is no time to waste.
There is no need to demonize Russia. Moscow is unlikely to use its dominance to cut off the EU. It depends on gas revenues even more than the union depends on its gas. But a stronger market position allows the Kremlin to seek higher prices and better terms — and to exert political influence, particularly in Eastern Europe where dependence on Russian gas is highest. 
The only effective EU response is a unified, multi-headed and flexible approach to energy security. It is perhaps the biggest contribution the union could make to Europe’s economic well-being.

This comment appeared as an editorial in the Financial Times.

TITLE: Office Center Classification System Unveiled
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: Three international real estate consultancies — Colliers International, Jones Lang LaSalle and Knight Frank — have presented unified criteria for the classification of existing and planned office centers, recommending that real estate professionals use the new classification in order to make communication with foreign and Russian clients and partners easier.
“The existing classifications were created at the beginning of the decade, when any reconstructed building could be labeled an A-class office center. Market players often use various terms to describe the same thing and imply different things with the same term,” Nikolai Pashkov, director for professional activities at Knight Frank St. Petersburg, said Monday at a press conference.
The new classification was designed as a joint effort by the three consulting companies, who are members of the St. Petersburg Research Forum. The classification was designed specifically to apply to the conditions of the St. Petersburg commercial real estate market, and is based on a classification system created by the Moscow Research Forum for Moscow based office centers, with a number of adjustments.
The consultants suggested using 26 criteria for classification. Those criteria are divided into six groups — engineering infrastructure (heating and air conditioning systems, elevators, security), the building itself (layout), location (transport hub connections), parking availability, ownership of the center (integral or divided), and management and services (reception, telecommunication providers).  To qualify for the standards of each specific category — A, B and B+ — the office center must not fail to meet more than two obligatory criteria and four optional criteria, explained Andrei Rozov, head of the St. Petersburg office of Jones Lang LaSalle.
“We took into account the recent trends and limitations typical for the St. Petersburg market, including the redevelopment of industrial areas in the city center, decentralization of office space and introduction of new modern multifunctional centers,” Rozov said.
The new assessment criteria define benchmarks for market professionals and should bridge the gap between Russian and European standards.
“More and more international investors and tenants are entering the St. Petersburg market, and they expect comprehensible assessment and classification of property,” Rozov said.
However, the new classification may become an unwelcome innovation for many property owners.
“This classification is rather strict, probably even stricter than its Moscow prototype. If we apply it immediately, I don’t think a single office center in the city would retain the classification claimed by its owners,” said Boris Yushenkov, general manager of Colliers International in St. Petersburg.
Yushenkov indicated that the new classification system is not obligatory, but only a recommendation for market players. However, all three consultancy firms will use the classification system in their market reports for 2008.
Yushenkov also promised that previous market reports would be corrected in respect to the new classification. As a result, statistics will show a decrease in high quality office space in the city, Yushenkov said.
“Taking into account how the new classification system was introduced in Moscow, I expect that developers will sneer at it for some time, but then the market will accept it,” Yushenkov said.
The consultants expect that the new classification system will become a guideline for property owners, developers and investors planning and constructing new office centers in St. Petersburg.
With the unified classification system, consultants will be able to use the same terms and criteria for classification and analysis procedures.
In the near future the St. Petersburg Research Forum will present unified classification criteria for shopping centers and logistic centers. However, classification criteria are not the only result of the forum’s operations.
“Information exchange is the main substance of our alliance. For many years we could not assess for certain the total volume of the market, and could not estimate our share in this market. We wandered about like blindfolded people in a dark room. I hope that the situation will change now,” Yushenkov said.
As members of the St. Petersburg Research Forum, the three consultancies will regularly share data on existing and planned office centers and market trends.
“Information about leasing and acquisition deals is of crucial importance. In most cases this information is not public, but we need the information for research purposes,” Pashkov said.
“In Russia there are no specialized research institutes and no comprehensive research data. Consulting companies have to fill this gap, and we are interested in combining our efforts,” Pashkov added.

TITLE: Declining Property Prices In Baltics Set to Keep On Falling
PUBLISHER: Bloomberg
TEXT: TALLINN — Baltic property prices are only at the beginning of a decline that may last for several years, said Paul Oberschneider, the founder of the Ober-Haus property broker.
The decline will also affect commercial property, such as retail and industrial real estate, Oberschneider, who founded Ober-Haus in 1994 and last year sold it to Finland’s Realia Group Oy, wrote in a commentary posted on the Baltic Business News web site on Wednesday.
“We are perhaps at the beginning of a long, protracted decline rather than in a knee-jerk correction,” Oberschneider wrote. “For a correction to fully occur, it may take several years, as prices come back to a normal equilibrium point.”
Mortgage lending and property investment that in the past three years boosted economic growth in the Baltic countries of Estonia, Latvia and Lithuania have slowed as rising inflation cuts spending and banks set stricter terms for borrowers to cool the European Union’s fastest growing economies.
House prices in Tallinn fell an annual 14.5 percent in the fourth quarter last year, the most in the Global House Price index compiled by Knight Frank residential research in London, with the Latvian and Lithuanian capitals also among the six biggest decliners.
Oberschneider’s development company, Haeuser-Oberschneider Real Estate, owns four retail centers in Tallinn, and said last year it was planning residential development in the Lithuanian capital Vilnius.

TITLE: Okhta Center Tender Closed
PUBLISHER: Bloomberg
TEXT: ST. PETERSBURG — Arabtec Holding PJSC, the company erecting the world’s tallest building in Dubai, has won a contract to build the 60 billion-ruble ($2.56 billion) headquarters of Gazprom Neft in St. Petersburg.
Arabtec will build the first stage of the planned complex, known as the Okhta Center, which includes a tower that will be about 400 meters (1,050 feet) tall, Gazprom Neft, the oil arm of Russian natural-gas monopoly Gazprom, said Wednesday in an e-mailed statement.
The skyscraper will include office space as well as entertainment facilities, restaurants and a library, according to the statement. Gazprom Neft is funding 51 percent of the project, while the rest is financed from the city budget in exchange for a 49 percent stake in the complex.
The United Nations Educational, Scientific and Cultural Organization, or Unesco, said in January that the proposed skyscraper threatens to disrupt the architecture of the former tsarist capital. The current height limit for buildings in St. Petersburg is set at 48 meters (157 feet).
A St. Petersburg court ruled on Apr. 16 against a lawsuit brought by the Yabloko opposition party that challenged the use of taxpayer money to pay for construction of the building.
Gazprom Neft registered last year as a taxpayer in St. Petersburg, the birthplace of President Vladimir Putin and President-elect Dmitry Medvedev.

TITLE: Russia’s Pre-Olympic Nightmare
AUTHOR: By Garry Kasparov
TEXT: The international community is justly concerned about China’s crackdown in Tibet in the run-up to the 2008 Olympic Games in Beijing. But perhaps some attention could be spared for the suffering of Russians ahead of the 2014 Winter Olympics, scheduled to take place in Sochi. 
An International Olympic Committee official visited Sochi last week and remarked: “Here you start from nothing.” Jean-Claude Killy went on to say that the complete lack of infrastructure only meant that it was “an incredible chance” to build a resort. 
The original estimate for the Sochi Games was $12 billion, more than was spent on the last three Winter Olympics combined. Now the organizers are saying $20 billion, and it’s only 2008. This is only the beginning of yet another massive shift of Russian assets from public to private hands — this time under the cover of the Olympic rings. 
Three weeks ago, I and other Russian opposition members held a news conference with residents of Sochi. We read aloud from a new law pertaining to the Olympic site. It gives the state the ability to confiscate as much land as it wants in the area, with no possible appeal. With one decision, people will lose their homes and businesses and will have no avenue of protest. 
The government announced that it would soon begin to appropriate land and that the current owners will get a “fair-market price,” which, of course, will be set by the government. During the IOC’s visit, a group of local protesters tried to unfurl an “SOS” banner and were physically attacked by the police. 
U.S. President George W. Bush recently visited Vladimir Putin in Sochi and did not object to the Kremlin’s assault on private ownership. Perhaps this is the same “quiet diplomacy” advocated by U.S. National Security Adviser Stephen Hadley a few weeks ago, when he was asked about the Chinese crackdown in Tibet. In other words, we are not going to hear this U.S. president say “I am a Tibetan” any time soon. 
I have had a painfully close-up view of over seven years of Western quiet diplomacy toward Russia. “Quiet diplomacy” can be roughly translated as, “we’ll cut a deal no matter what.” During this period we have moved from a frail new democracy to a KGB dictatorship. Based on such results, it is long past time to try something noisier. 
Despite their bluster over missile defense, Kosovo and NATO, there are only two things that Putin and his gang really care about: total control inside of Russia and legitimacy outside of Russia. 
Legitimacy in Western eyes is clearly important to Putin. Otherwise, why not simply change the Constitution or ignore it entirely and remain as president for a third term? Why did he even bother with the rigged elections? 
The answer: the hundreds of billions of dollars flowing out of Russia in the hands of Putin’s oligarchs need a safe home. London’s capital markets, Swiss banks, real estate, energy companies across Europe — this is where much of the Russian treasury has been going for the past eight years. In order to maintain such a cozy arrangement of mutual enrichment with the West, Russia must maintain a democratic facade. 
I used to compare our vanishing democracy to that of countries like Venezuela and Zimbabwe. But events have shown how wrong I was to make such comparisons — and how unfair I was being to Hugo Chavez and Robert Mugabe. Venezuela’s Chavez, little more than an oil-empowered hooligan, actually lost a recent referendum on expanding his powers by 2 percent. Vladimir Churov, head of the Central Elections Commission, would never have stood for such an embarrassment! 
Even Mugabe, Zimbabwe’s old-fashioned despot, is too shy to publish victorious results in the latest elections. Perhaps Churov can be rented out to other would-be dictators who wish to maintain pleasant relations with the champions of democracy in the United States and the European Union. 
After Putin’s handpicked successor, Dmitry Medvedev, “won” the presidency in March, the leaders of the free world lined up to congratulate him on, as German Chancellor Angela Merkel put it, “a smooth transition of power.” Were phone calls made to celebrate a similar transition in Cuba, when Fidel Castro handed the reins to his brother? 
Legitimizing their capital in the West is the Kremlin’s top priority, and those congratulatory phone calls to Medvedev were worth countless billions of dollars. The last hurdle, transition of power, has been surmounted with barely a word of protest from the leaders of the G7 nations. The return of Silvio Berlusconi, a self-declared European “advocate” for Putin and his gang, can only make things worse. 
It doesn’t take a whole lot of courage to criticize the rule of Fidel Castro or Kim Jong-Il. British Prime Minister Gordon Brown sounded quite tough criticizing Zimbabwe’s elections. But when it comes to nations like Russia and China, issues of basic human rights suddenly become “complicated.” 
I am all for refusing to bless the Chinese show. But at the same time, it’s not fair to suddenly drag the world’s greatest athletes into a battle that politicians should have had the courage to fight. Will Russians have to wait until 2014 to see support for our own struggle for human rights? 

Garry Kasparov, leader of The Other Russia coalition, is a contributing editor of The Wall Street Journal, where this comment appeared.

TITLE: White Paper Blacked Out
AUTHOR: By Richard Lourie
TEXT: In February, Boris Nemtsov published a white paper on the Vladimir Putin years that he considered so inflammatory that he suspended his membership in Union of Right Forces, the party he co-founded, to spare it the Kremlin’s ire. Nemtsov, the former boy-wonder governor of Nizhny Novgorod and first deputy prime minister in 1997 and 1998, wrote the 75-page essay with Vladimir Milov, a former deputy energy minister, in 2002. 
All Russian bookstores have reportedly refused to carry the book, whose title has been variously translated as “Putin: The Results” and “Putin: The Bottom Line.” It is available in Russian and English on the blog of La Russophobe.
After a one-paragraph review of Russia’s success — “true but only the lesser part of the truth” — the authors launch into an unremitting assault on the crimes, follies and failures of the Putin administration. The central failure was not using the oil windfall to modernize the country’s economy, army, health care, education and infrastructure.
Authoritarianism only brought corruption on a colossal scale — $300 billion a year. Transparency International ranks Russia 143rd on its Corruption Perceptions Index, along with Gambia and Togo. The authors’ analysis of the larceny under Putin is sharp, detailed and convincing. They do not hesitate to call his a “criminal system of government.”
Meanwhile Russia is dying out. Men can expect to live less than 59 years (“I’m officially dead,” a Russian friend said to me on turning 60). The annual numbers are bad — car accidents (33,000), murder (30,000) and suicide (57,000). Drinking, smoking, poor diet and the lamentable health care system polish off even more. 
The justice system obeys the Kremlin, causing “the collapse of the idea of the supremacy of the law” (never very widespread in Russia if the truth be told). The Constitution has been “trampled into the dust.” The infrastructure is in dire straights, endangering economic progress (Finland has more paved road).
The report’s own weakness lies in its off-putting tone and its too-general suggestions. The tone is too dark, every problem is a crisis. Understatement was always alien to the intelligentsia. 
The report offers very little in the way of practical suggestions. Something more than exhortations can reasonably be expected from men with their political experience. How to build a decent “successful, European” Russia is, they say, “perfectly clear. First and foremost, the police state has to be dismantled and human dignity returned to the people.” You could hardly think of a more unobjectionable statement, except perhaps to the people running the police state in question. 
The authors do, however, at times propose useful solutions to pressing problems. For example, they point out that it makes more sense to encourage middle-class people to have more children by writing down mortgage debt at government expense than to encourage the “lumpen proletariats” to reproduce by offering cash awards to “hero mothers” who produce large numbers of offspring.
The authors’ list of Russia’s problems contains no great surprises. And just as we can guess pretty much in advance what a New York liberal will think of U.S. President George W. Bush, we can do the same for what a Moscow liberal will think of Putin. But there is one subject where the authors came up with some surprising, even shocking conclusions — the fear of China. They accuse Putin of conducting “capitulatory” policies — arming the enemy and making “major territorial concessions.” In time, China will demand much more, claiming that tsarist treaties were unequal and unjust. 
“China represents a real threat to our country,” they say, calling Putin a “Chinese agent of influence.” I have heard similar sentiments from highly placed political figures with whom Nemtsov and Milov would otherwise have nothing in common. Perhaps in the absence of ideology all that can unite Russia now is love of money and fear of China. 

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

TITLE: There Is Nothing Normal About Corruption
AUTHOR: By Anders Aslund
TEXT: In 2004, Foreign Affairs published a seminal article by professors Andrei Shleifer and Daniel Treisman, arguing that Russia was a “normal country”: 
“Russia was in 1990, and is today, a middle-income country with GDP per capita ... comparable to Argentina in 1991 and Mexico in 1999. Almost all democracies in this income range are rough around the edges. Their governments suffer from corruption, their judiciaries are politicized, and their press is almost never entirely free. They have high income inequality, concentrated corporate ownership and turbulent macroeconomic performance. In all these regards, Russia is quite normal.”
Berkeley Professor Steven Fish noted that Russia was “just as corrupt as one would expect it to be, given the prominence of natural resources in its exports.” The oil revenues are a cause of the country’s authoritarianism and corruption, but both have become quite extraordinary. 
Over the past eight years three major factors have defined the state of affairs in Russia. First, the country’s gross domestic product has grown by 27 percent a year in dollar terms. Second, the country has moved from being partially democratic to authoritarian. Third, its level of corruption has not decreased according to the measurements of the World Bank, the European Bank for Reconstruction and Development and Transparency International, while corruption has abated elsewhere. In these regards, Russia is no longer normal, but extreme.
Many draw parallels between Russia and China, but even today, after 30 years of high economic growth, China’s per capita GDP at current exchange rates is merely one-quarter of Russia’s. Unlike Russia, China is still a developing country; it may be more authoritarian, but Transparency International assesses it as less corrupt.
By the standards of U.S. political sociologist Seymour Martin Lipset, Russia is too rich, too educated and too open to be so authoritarian. The faster the country grows, the greater this contradiction between an increasingly obsolete political system and a swiftly modernizing economy and society. It is likely to be untenable even in the medium term. 
No modern society can function without a debate on policy issues, the ability of opposition groups to oppose the government, or institutional checks and balances. A Russian president cannot make important decisions when he intentionally cuts off all channels for criticism and concentrates so much of the decision-making process around himself. During President Vladimir Putin’s reign, the Kremlin has become too rigid and centralized to handle crises. Therefore, it would be difficult to consider this regime stable. 
Authoritarian rule is often used by rulers to hide and sustain their corruption. According to Transparency International, the only country with higher income per capita and more corruption than Russia is Equatorial Guinea. That is hardly a standard worthy of a great nation.
Russia has grown faster than similar countries like Argentina and Mexico, but it has become more authoritarian and corrupt. The conclusion is not that authoritarianism and corruption are good for development, but that Putin has been lucky. Having been blessed by the good fortune of high oil prices, Putin was able to make the government as authoritarian and corrupt as he wanted.
There are several reasons that the Kremlin’s dictatorship may be in danger of collapsing in the near future. First, opinion polls show that Russians are as upset as any other people about corruption and that they have more of it.
Second, the mismanagement of the large state corporations and alleged kickbacks of 20 percent to 50 percent on major infrastructure projects have gotten out of control. In other corrupt countries, people are upset at mere 2 percent kickbacks. Russia’s corruption is some of the largest in terms of the absolute amount individuals receive and the relative share of the kickbacks. Claims that close friends of the president are stealing billions of dollars from the state or private businessmen abound, but so far the president has never reacted, which suggests that he sanctions such activities. 
Third, and to his credit, Putin has decided to step down as president, which means that Russia will have an ambiguous, dual power structure. Ironically, both Putin and Medvedev feel forced to claim that they are pursuing an anti-corruption campaign. Unfortunately, Putin is set to become party leader and head of government, the two posts that Joseph Stalin held during the last decade of his rule.
Russian public officials have to declare their wealth and income, but in most cases they file inaccurate or false statements. Moreover, many ministers own major companies in the industries that they regulate. If the government is serious about fighting corruption, it needs to battle against obvious conflicts of interests between business and the government.
Since February 2004, a large number of publications have claimed that multibillionaires Gennady Timchenko of Gunvor oil trading company and Yury Kovalchuk of Bank Rossiya are intermediaries for Putin’s personal business interests. President-elect Dmitry Medvedev — or at the very least the Public Chamber or the Audit Chamber — should order an investigation of such links. Interestingly, we have learned a great deal about the economic interests and lives of Timchenko and Kovalchuk in the last half year, while they were virtually unknown before. 
Can anything be done as long as the Putin clique stays in power? Yes, quite a few things can be done. The Russian Internet is full of interesting and detailed information about every conceivable corruption story. Unfortunately, few Western correspondents in Moscow dare to touch this issue. How long will they miss the greatest corruption story in history? Ordinary investigative journalism could do wonders. 
Needless to say, a state as corrupt as Russia is far from being strong; it is dysfunctional and weak. Corruption poses a systemic threat to the quality of education, health care, and the stability of the state as a whole. The government’s inability to carry out major infrastructure projects is a good example of its fundamental weakness. The country suffers a desperate shortage of qualified labor because much of the education system has been eroded by corruption, and the government has made no attempt to clean it up.
Ironically, the biggest hope that anything will be done against corruption comes from Putin’s high-level ex-KGB friends, who are now arresting one another and their mafia liaisons for corruption. As getting rid of competitors is the surest path toward political power, this may prove to be one of the most effective weapons for fighting corruption.

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

TITLE: Back to basics
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Liars, an experimental rock trio whose members are based in Berlin and Los Angeles, delves into the entire history of rock music on its most recent album. 
Called simply “Liars,” the album encompasses influences from both postpunk bands such as The Cure and Siouxsie and the Banshees that the band members listened to as teenagers and earlier hard-rock bands from the 1970s, such as Led Zeppelin and Black Sabbath, and returns to the simplicity of well-crafted pop songs, according to Angus Andrew, Liars’ Australia-born, Berlin-based singer and guitarist.
Liars, which also includes Aaron Hemphill who plays percussion, guitar and keyboards, and drummer Julian Gross, who both live in Los Angeles, will be supporting Radiohead on its U.S. tour next month.
Ahead of an appearance by St. Petersburg on Saturday, Andrew spoke to The St. Petersburg Times by phone from his home in Berlin last week.
<b></i>Q: I spoke recently to Alexander Hacke of Einsturzende Neubauten, and he was complaining about Berlin being no longer as good for art and music as it once was. As a Berlin-based musician, how do you feel being there?</i></b>
A: Well, it’s a little hard for me to say, because obviously I wasn’t here in the golden years... I probably use Berlin, I think, in a different way. I like to come and live here to kind of get away from things more than I’m trying to find things, you know what I mean? To me, I don’t speak German and I don’t really have a lot of friends here, so it means I’ve been left in virtual isolation. And when I’m not touring, I really like to come back to Berlin for that kind of solitude. 
<b></i>Q: When did you move to Berlin in the first place? </i></b>
A: I moved here after our second record, “They Were Wrong, So We Drowned” [2004]. It was approximately, actually, the time when the Americans found Saddam Hussein in a little hole. I remember when I was living in New York and I just freaked out, because I realized that I’ve been living in America for a long time and that I’m not actually American. I suddenly felt like I didn’t want to be part of anything to do with them, so I wanted to move to Europe.
<b></i>Q: What effect has Berlin had on your music, if any?</i></b>
A: To me, you know, it’s the idea of dissolving your identity. To me, like I said, I was living in New York and fairly comfortable there, but moving to Berlin was like rediscovering yourself as a person and the history here is nothing that I’ve ever experienced in my life. So it allowed me really to evaluate, I think, who I am and, therefore, obviously the music is affected directly by that kind of personal and internal revelation, I suppose. And I think it at least allowed me to make music possibly a bit more personal, you know, and direct. 
 <b></i>Q: David Bowie recorded his most dark albums in Berlin in the late 1970s, but it was a different time, during the Cold War.</i></b>
A: Yeah. I mean like I said there’s been a lot of golden years, I think, for creativity here in Berlin, and I think for the most part, all of them have been for different reasons. But I associate somewhat with the idea that Bowie and Iggy [Pop] and possibly the Bad Seeds and people like that were all sort of escaping the mainstream and going somewhere, I think, that they were unfamiliar with for somewhat similar reasons than I did. And I guess the difference is what happens when you get here. But I think the point, the idea is the same. It is to reestablish yourself somewhere completely foreign and see how that affects you creatively.
<b></i>Q: I read that your most recent album was recorded in the eastern part of Berlin, at a former communist radio station. </i></b>
A: Yes, that’s right. The studio is called Planet Roc (sic), inside an old broadcasting center for the old radio. What’s really interesting is that they have an incredible amount of different rooms for making that kind of theatrical radio sound, so there’s one room just for footsteps. It really offers an incredible acoustic chance that we would never get if we would try to find it in America.
<b></i>Q: The most recent album, “Liars,” released last August, has been described as going back to basics.</i></b>
A: Yes, for us, the record that we made before, which was “Drum’s Not Dead” [2006], was a really intense kind of process, conceptually and practically. So we were interested in getting back to the fundamentals of what we appreciate about music, and as we thought about it, we realized that its not often to do with any concept or theory or title, but more about, like, the cool guitar or nice melody or good vocals. So we started to think about the music that we were really affected by when we were younger, because it seems like when you’re younger, you have a more innocent association with music. We kind of started to go very traditional in a way. For us it felt like more experimental to write a pop song, and really difficult, in fact.
The whole idea of the record was to get back to the simplicity and the very internal drive of music.
<b></i>Q: What did think of “Control,” Dutch photographer Anton Corbijn’s film about Joy Division’s late frontman Ian Curtis?</i></b>
 A: To be honest, I didn’t like it. I didn’t think I was going to like it, either. Because I think we’re all aware that’s a pretty depressing story, right? I don’t know, just the simplicity [that makes] it such a downer. 
To be honest, I didn’t finish the movie. I left about halfway through, because I love Joy Division so much and I think he’s just one of the best lyric writers ever. But I really was frustrated with how they portrayed the rest of the band, they made them out to be such idiots. And I thought that was horrible. I mean I don’t know if they were idiots but I doubt it... I mean as much as I appreciate that there was a movie made about Joy Division, which I think is really important, I personally didn’t enjoy watching it.

<i>Liars will perform at A2 on Saturday. www.liarsliarsliars.com
<b>All About Town returns on May 8</i></b>

TITLE: SALON
AUTHOR: By Victor Sonkin
TEXT: Historians are important people. Often, they create a literary tradition that transcends the boundaries of their trade and assumes universal importance. Thus, Herodotus, “the father of history,” is at the same time essentially the first European prose writer, and every classic from Balzac to Tolstoy is in one way or another in his debt. The same may be said about Russian literature — Nikolai Karamzin’s “The History of the Russian State” was the first universally accepted and widely popular Russian prose text. 
Its evaluation by the brilliant creators of Russian classics of the early 19th century, including Alexander Pushkin, varied: They felt it was too loyal to the authorities. 
However, it was from Karamzin that Pushkin took the idea and the plot of his phenomenal drama “Boris Godunov,” probably the best Russian play ever; and it was to the memory of Karamzin, “precious to all Russians,” that he dedicated his work.
The late 19th century also produced several brilliant historians, such as Sergei Solovyov and Vladimir Klyuchevsky, whose university courses and monographs inspired generations of students. History remains a powerful force in the popular culture of the Western world today, as is evident from the existence of television channels devoted exclusively to this subject and from a glance at the history sections at any large Western bookstore.
In Russia, though, the situation is far from perfect. The old classics, the Karamzins and the Klyuchevskys, are republished and widely available — a definite improvement on Soviet times. On the other hand, classics are sometimes reprinted very sloppily: A beautiful edition of Caesar’s “Gallic War” was marked “translated from Greek” on the cover.
“Alternative history” flourishes, from the “new chronology” marketed by mathematician Anatoly Fomenko, to other quack treatises about alien artifacts or the Russian origin of the Etruscans. Some books are woefully under-researched or extremely derivative. 
There is no shortage of collections of scandals or wonders from the past. The explosive success of books and television programs by Edvard Radzinsky indicates strong interest among the public. 
Radzinsky is definitely not the worst among modern Russian historians. His books show a modicum of research, and he can weave an exciting story, a must for any historian who ventures outside academia. But to take that for the pinnacle of historical writing is very saddening.
We live in hope, then, that Russia will eventually catch up with the world trend and the new generation of Russian historians will be worthy of the rich and stormy history of the country.

TITLE: Abkhazia Waits for Its Future to Begin
AUTHOR: By Megan K. Stack
PUBLISHER: The Los Angeles Times
TEXT: LOWER ESHERA, Georgia — In this half-abandoned place of rusting ports and skeleton homes, there is a land that is recognized by no one.
Fifteen years since its war with Georgia, the breakaway republic of Abkhazia is a surreal spot where Soviet isolation lingers, the Cold War never ended and people cling to facades of statehood.
Now, with Russia and the United States engaged in a high-stakes power grab in the former Soviet Union, this forlorn slip of lush beaches and snowy mountains has emerged as a hub of new tensions between the former Cold War enemies.
To the dismay of U.S.-backed Georgia, which still considers Abkhazia its territory, Moscow has already distributed passports to nearly all the people here and encouraged them to vote in Russian elections. Tensions have ramped up in recent weeks after Kosovo declared independence from Serbia, a traditional Russian ally. Moscow objected, warning that Kosovo’s example would embolden other breakaway regions and destabilize Europe.
Russia turned to Abkhazia to drive its point home. Moscow suddenly freed this place from harsh sanctions and hinted that it might soon recognize Abkhaz independence.
“We were flying up to the sky with happiness,” said Tamara Ezugbaya, the head of this seaside village and the mother of five sons, four of whom died fighting Georgia in the early 1990s.
But among leaders here, there is a lurking wariness of Russian motives. They fear that their powerful northern neighbor is more interested in territorial expansion than in Abkhaz independence and may simply absorb Abkhazia.
Russia’s attachment to Abkhazia is both sentimental and strategic. Soviet-era vacations in the pristine mountains and on the balmy beaches of Abkhazia are still a fresh memory for many Russians. Soviet leaders such as Stalin and Khrushchev vacationed in private dachas here, and many Russians feel a fond entitlement to this strip of fertile, subtropical land where the Caucasus Mountains slip off to the Black Sea. Russia’s interest is also piqued by the steady encroachment of Western military might into Eastern Europe.
With Georgia striving to join NATO, many observers believe that Russia is empowering Abkhazia and South Ossetia in order to build a buffer zone between itself and its Western-armed neighbor.
On April 16, Russia said it planned to establish “special relations” with Abkhazia and South Ossetia, and Georgian Foreign Minister David Bakradze said his country would regard such a move as annexation of its territory and “a gross violation of international rules on … territorial integrity,” the Interfax news agency reported.
The parliament has been pushing to beef up the number of Russian peacekeepers stationed in Abkhazia and suggested that Moscow might fight on the side of the breakaway republic in the event of Georgian military aggression.
“For us, the main thing is not to be in between two superpowers at a complicated time of dividing zones of influence,” said Sergei Bagapsh, the president of Abkhazia’s self-declared government. “We’re watching the situation very, very carefully.”
But Bagapsh acknowledged that Abkhazia hungrily snatches up all the help that Moscow throws its way. Police wear Russian uniforms; elderly people collect Russian pensions.
“Since the war nobody has asked us, how do you live? How do your children live?” Bagapsh said. “Nobody was interested. Not Europe. Nobody. Only Russia gave us aid. Only Russian peacekeepers stood up here.”
Today, with sanctions removed and independence talks under way in Moscow, Abkhazia is waiting for ships to flock back to the abandoned ports, trains to creak back to life and tourists to flood south. People here expect to sell massive quantities of stone and other building materials to Russia in preparation for the 2014 Winter Olympics in Sochi, which sits just over the border.
Abkhazia is a vast junkyard of collapsed structures and resurgent nature. Roads are dotted with the shells of homes, picked clean of all but the frame. Staircases to nowhere rise from tangles of vine. Cows claim the right of way on shattered roads, stepping among the bomb craters and puddles.
Abkhazia has a flag, license plates, visas, border guards and a government. There is also a quixotic campaign to distribute Abkhaz passports. “They are not recognized elsewhere in the world, but inside the country they are very much in effect,” a government official said without irony.
The factories are blighted and offices shut down. Families have turned to their gardens to survive — to their milk cows and chickens, to their fruit and nut trees. The economy is broken, but the people don’t starve.
The government says more than 200,000 people live in Abkhazia; most independent analysts believe that the real number is lower. In any case, the official figure is less than half of the more than 500,000 people who lived here before the war erupted.
The fight was brutal on both sides. In the end, as ethnic Abkhaz emerged as victors, ethnic Georgians were driven out in an orgy of torture, rape and looting.
For Georgia, Abkhazia is an open wound. Thousands of refugees from the region linger in limbo in Tbilisi. The Georgian government has vowed to bring Abkhazia back within its borders.
The Abkhaz swear it will never happen. “God forbid!” Ezugbaya said. She is a slight woman who has worn black for many years, her gray hair pulled back into a bun. 
Her sons died in quick succession, within a span of only six months, the first two in the same battle. Her mother was paralyzed with shock; her husband grieved to death. “I don’t think a single Abkhaz living here will allow this, as long as they’re alive,” she said.
But Georgia is furious over Russian interference. Leaders have called for a boycott of the Sochi Olympics if Abkhaz goods are used to build the sports facilities and have also warned that any more Russian peacekeepers posted to Abkhazia would be seen as “an act of aggression against the Georgian state with all ensuing consequences,” according to a Georgian Foreign Ministry statement.
In the Abkhaz capital of Sukhumi, the once-thriving port is a ship graveyard, with rusted craft buried in the sand. Two men sat listlessly in an office overlooking the deserted coast, Lenin’s stern face keeping watch from the wall. 
Asked what they were up to, the men laughed ruefully. Everything is at a standstill, they said. They were just waiting around for Russia to make things better.
At the Sukhumi airport, out past the destroyed hotels and crushed Pepsi-Cola plant, abandoned helicopters and airplanes litter the runways. No international flights run in or out of Abkhazia these days; the only things taking off now are United Nations helicopters, crop planes and the occasional flight to the mountains to drop off scientists or skiers.
“I am personally worried about losing sovereignty,” said Vyacheslav Eshba, the chief of aviation. “But if they say, ‘You Abkhaz can’t be independent, you have to be a part of something,’ then Abkhazia would rather be a part of Russia, which has oil and gas and is where our fraternal people live.”
Outside, a handful of idle men in camouflage showed off the private plane of former Georgian President Eduard Shevardnadze, who had to flee Abkhazia during the war. A faded Soviet flag was still visible on its wing. The Abkhaz flew the plane at first, the men said, but then fuel became too expensive.
It’s a relic from another time, and nobody knows quite what to do with it.

TITLE: Russia to Defend Fed Cup Against Spain
PUBLISHER: Reuters
TEXT: LONDON — Holders Russia will play Spain in the Fed Cup final after both teams made light work of their semifinal opponents on Sunday.
They quickly finished off the job they started on Saturday, with Vera Zvonareva beating U.S. player Vania King to give Russia an unassailable 3-0 lead in the tie and Nuria Llagostera Vives overcoming China’s Peng Shuai to do the same for Spain. With their places secured for the Sept. 13-14 final to be hosted by Spain, they played out their remaining dead rubbers. Spain eventually won their tie 4-1 and Russia were pegged back to 3-2.
The Americans, without former world number ones Serena and Venus Williams and Lindsay Davenport, were never going to match the class of a Russian team that featured three top-20 players.
But in Sunday’s first reverse singles rubber 115th-ranked King shocked Zvonareva, ranked 101 places above her, by capitalizing on the Russian’s early nerves to take the first set at Moscow’s Luzhniki arena. Zvonareva, who blamed her jitters on not having played on red clay for nearly two years, soon regained her composure to send Russia into their fourth final in five years with a 4-6 6-3 6-2 win. “I was able to overcome the early nerves and score the winning point for our team,” Zvonareva, a late replacement for world number four Svetlana Kuznetsova, told reporters.
The U.S. made the scoreline respectable by winning both dead rubbers, Fed Cup debutante Ahsha Rolle upsetting Elena Vesnina 6-3 6-4 in the reverse singles and Liezel Huber and King triumphing 7-6 6-4 in the doubles over Kuznetsova and Vesnina.
Russia captain Shamil Tarpishchev vowed to field his strongest team for the final, saying Australian Open champion and world number three Maria Sharapova would be in the lineup after being allowed to skip the semi-final.
“We should have both Sharapova and Kuznetsova in the lineup. I might even have them play doubles together,” he told Reuters.
Five-times champions Spain cruised into their first final since 2002, trampling on any notion that the tie would have been closer against a Chinese team who had looked stronger than them on paper.
Holding a comfortable 2-0 lead after Saturday’s matches, Spain claimed victory when Vives used her strong forehand to outplay Peng 6-4 6-4 in Sunday’s first reverse singles at the Beijing International Tennis Centre.
“We knew we could win the tie but we never expected to win three matches in a row,” said world number 76 Vives. China, who had been hoping to reach their first Fed Cup final, avoided a whitewash when twice grand slam doubles champion Zheng Jie beat Carla Suarez-Navarro 7-6 6-3 in the dead reverse singles.
But Spain underscored their dominance after Vives and Maria Jose Martinez Sanchez eased to victory over Peng and Sun Tiantian in the dead doubles.
The weekend’s other Fed Cup action involved teams fighting for survival in the top-tier World Group.
France kept their place with a 4-1 win over Japan in their playoff.

TITLE: Calm Welcome for Torch in N Korea
PUBLISHER: The Associated Press
TEXT: PYONGYANG, North Korea — Assured of a trip free of anti-Chinese protests, the Olympic torch made its first-ever relay run Monday in authoritarian North Korea.
An attentive and peaceful crowd of thousands watched the start of the relay in Pyongyang, some waving Chinese flags, footage from broadcaster APTN showed. The event was presided over by the head of the country’s rubber-stamp parliament, Kim Yong Nam, who often acts as a ceremonial state leader.
The torch relay has been a lightning rod for anti-China demonstrations. At other stops, such as in London and San Francisco protesters have focused their ire on Beijing’s recent crackdown on anti-government riots in Tibet.
But communist North Korea, an ally of neighbor China, has been critical of disruptions of the torch relay elsewhere and has supported Beijing in its crackdown against violent protests in Tibet.
North Korean leader Kim Jong Il was not seen at the event but was “paying great interest to the success of the Olympic torch relay,” said Pak Hak Son, chairman of the North’s Olympic committee, according to a report by Japan’s Kyodo News agency from Pyongyang.
North Korea is one of the world’s most tightly controlled countries, where citizens are not allowed to travel freely and civil rights are restricted by the iron-fisted regime.
“We express our basic position that while some impure forces have opposed China’s hosting of the event and have been disruptive, we believe that constitutes a challenge to the Olympic idea,” Pak said, according to Kyodo.
The relay began from beneath the large sculpted flame that tops the obelisk of the Juche Tower, which commemorates the national ideology of “self-reliance” created by the country’s late founding President Kim Il Sung, father of current leader Kim Jong Il.
At the start of the run, Kim Yong Nam passed the torch to Pak Du Ik, who played on North Korea’s 1966 World Cup soccer team that made a historic trip to the quarterfinals. 
As he began the 12-mile route through Pyongyang, thousands more cheering people lined city streets waving pink paper flowers and small flags with the Beijing Olympics logo and chanting “Welcome! Welcome!”
“I, as the first torch runner, will keep this beautiful memory deep in my heart forever,” former athlete Pak said.

TITLE: Raikkonen Reigns In Spain
PUBLISHER: Reuters
TEXT: BARCELONA — Ferrari’s world champion Kimi Raikkonen stretched his Formula One lead to nine points with a dominant win from pole position in the Spanish Grand Prix on Sunday.
Brazilian Felipe Massa sealed Ferrari’s second successive one-two finish, and third win in a row, with McLaren’s Lewis Hamilton taking third place to revive his title challenge after a disappointing last race in Bahrain.
Raikkonen’s 17th grand prix win left the Finn with 29 points, nine clear of closest rival Hamilton, and catapulted Ferrari back in front of BMW Sauber in the constructors’ standings.
“If we wanted, we could have gone a bit faster but there was no point in pushing more than we need to,” said Raikkonen, who still set the fastest lap.
Spaniard Fernando Alonso, who started on the front row for Renault, retired on lap 35 with a blown engine but he had already fallen down the field after being the first driver to refuel.
Massa, winner in Bahrain, had got past double world champion Alonso at the start while Hamilton slotted into fourth place after muscling past BMW Sauber’s Robert Kubica from fifth.
“When we qualified fifth we knew it would be very difficult to beat the Ferraris,” said Hamilton. “The key was to get a good start and make up as many places as possible.
“We had two bad races and to come back on the podium is fantastic.”
While Raikkonen had an uneventful afternoon in the sunshine, his compatriot Heikki Kovalainen was flown to hospital with concussion after his McLaren plunged across the gravel and into a tyre wall.
Kovalainen had been leading at the time after both Ferraris and Hamilton had made their first pitstops.
“He banged his head in the accident and has concussion. As a precaution he is going to hospital to have more checks,” McLaren chief executive Martin Whitmarsh told reporters outside the circuit’s medical centre.
Briton Hamilton, who suffered a similar accident at the Nuerburgring last year, said he had been concerned until team boss Ron Dennis had assured him on the radio that Kovalainen was conscious and stable.
The safety car was deployed following Kovalainen’s crash, having already been brought out after Sebastian Vettel’s Toro Rosso and Force India’s Adrian Sutil collided on the first lap.
Poland’s Kubica finished fourth, moving him up to third in the championship with 19 points, ahead of Massa on 18, with Australian Mark Webber fifth in a Red Bull.
Britain’s Jenson Button finished sixth for Honda’s first points of the year while Japan’s Kazuki Nakajima was seventh for Williams and Italian Jarno Trulli eighth for Toyota.
Ferrari leads the constructors’ standings with 47 points to BMW Sauber’s 35. McLaren has 34.
The first European race of the season ended with an entirely predictable result, with the Circuit de Catalunya setting a record as the track with the longest run of successive winners from pole position.

TITLE: Killers Miss Karzai But Avoid Capture
AUTHOR: By Amir Shah
PUBLISHER: The Associated Press
TEXT: KABUL, Afghanistan — Afghan security officials hunted Monday for suspects in the attempted assassination of President Hamid Karzai during an attack that killed three people and underscored the fragility of his U.S.-backed government.
Militants also wounded eight people when they fired rockets and automatic rifles at Karzai and other dignitaries during a Sunday ceremony in Kabul to mark the mujahedeen victory over the Soviet occupation of Afghanistan.
The Taliban claimed responsibility for the assault, which sent Karzai and foreign ambassadors scurrying for cover. Three of the attackers were killed, the government said, but the Taliban said additional attackers were involved.
Sunday’s strike launched so close to Karzai was a serious security lapse at a time when the Afghan police and army are expanding and the government is demanding greater control of security, still provided in much of the country by U.S. and NATO-led forces.
General Mohammad Zahir Azimi, a spokesman for the defense ministry, said that the authorities were investigating who could have helped the assailants perpetrate the attack.
The gunfire apparently came from a three-story guesthouse about 300 yards from the stands where Karzai was seated alongside Cabinet ministers and senior diplomats, who all escaped unharmed.
Residents said a 30-minute gunbattle broke out between security forces and gunmen holed up in the guesthouse.
On Monday, Afghan troops were deployed in parts of the city where government officials and foreigners live, while investigators still focused on the area where the attack was launched.
About 100 people were rounded up for questioning, an Afghan intelligence official said on condition of anonymity because he was not authorized to speak to the media. Some of those detained have since been freed, said Defense Ministry spokesman General Mohammad Zahir Azimi.
Lawmaker Fazel Rahman Samkanai, who was about 30 yards from the president, was killed in the attack. Nasir Ahmad Latefi, a local Shiite leader, and a 10-year boy also died.
Defense Minister General Abdul Rahim Wardak said three attackers were killed by security forces, and assault rifles and machine guns were confiscated.
Taliban spokesman Zabiullah Mujaheed said six militants were sent to target the president, and three them died. He said they were armed with guns, rockets and suicide vests although no suicide bombings were reported.
The initial moments of the attack, which came as a marching band played the national anthem, were broadcast live until TV transmissions were cut. Hundreds of dignitaries could be seen diving for cover.
Less than two hours later, Karzai appeared on state-run TV and said “everything is OK.” Appearing calm and smiling, Karzai said “the enemy of Afghanistan” tried to disrupt the ceremony but was thwarted. He said several suspects were arrested.
The live coverage of the assassination attempt will add to the sense of insecurity in the Afghan capital, which has been spared the worst of the violence as fighting has escalated between Taliban insurgents and NATO and U.S.-led forces.

TITLE: Spat to be Investigated
PUBLISHER: Reuters
TEXT: LONDON — The FA will request CCTV footage of the fracas between several Manchester United players and Chelsea ground staff after the teams’ Stamford Bridge Premier League game on Saturday.
United players Patrice Evra, Gary Neville, Paul Scholes, Gerard Pique, Park Ji-sung and John O’Shea were warming down after Chelsea’s 2-1 victory when ground staff asked them to move to another area of the pitch.
A row developed and Chelsea security staff pulled the parties apart.
“We will obviously be asking Chelsea to let us see their CCTV footage of the incident,” an FA spokesman told the BBC.
“This will have nothing to do with the referee’s report. “He would have been in his dressing room, a long way from the incident.”
The Guardian reported on Monday the confrontation had been sparked by a racial insult aimed at Evra.
“Patrice received a grave insult from a member of Chelsea’s staff,” United’s Argentine striker Carlos Tevez was quoted as saying. “He demanded an explanation and from that moment these men just wanted to attack Patrice. I think that the security cameras will show the provocation we received.
“I have never seen anything like it in my career.”
The newspaper said the disagreement broke out when the players were asked to continue their warm-down in the same direction as the lawnmowers so repairs to the pitch could be carried out ahead of Wednesday’s Champions League clash against Liverpool.
The dispute was the final act of a controversial afternoon as Chelsea won with a late penalty to join league leaders United on 81 points with two games remaining.
United’s Rio Ferdinand apologized to a steward for accidentally kicking her as he lashed out at a wall while leaving the pitch, seemingly annoyed about the decision to award the match-winning penalty following a clear handball by Michael Carrick.
The result means the title will not be decided until the final day of the season on May 11, although United’s vastly superior goal difference means they could effectively secure it earlier by beating West Ham United if Chelsea lose at Newcastle United.
Before those games, however, both teams have European matters to deal with in the second legs of their Champions League semifinals.

TITLE: Tajikistan Faces Locust Plague
PUBLISHER: Reuters
TEXT: GENEVA — Tajikistan needs urgent help to combat a locust infestation that threatens the impoverished country’s food supply, the U.N. said on Friday.
More than 150,000 hectares of the Central Asian country are covered in locust eggs and larvae at various stages of development, said Elisabeth Byrs of the U.N. Office for the Coordination of Humanitarian Affairs (OCHA).
The insects threaten Tajikistan’s maize and wheat crops and could cause shortages and exacerbate upward prices on food staples in the country, following global commodities rises that have sparked riots in developing countries around the world.
“There is a real danger for the food security of the population because of these (locusts),” Byrs said. “The pest is developing quicker and earlier than usual.”
The Tajik government’s national pesticide stocks are running out, and the U.N. has received only $13 million of the $25 million it has sought in emergency aid to combat the insects and provide food assistance to hungry people there, she said.

TITLE: Cuba’s Bloggers Try to Get Message Out
AUTHOR: By Andrea Rodriguez
PUBLISHER: The Associated Press
TEXT: HAVANA — Only a month has passed since ordinary Cubans won the right to own computers, and the government still keeps a rigid grip on Internet access.
But that hasn’t stopped thousands from finding their way into cyberspace. And a daring few post candid blogs about life in the communist-run country that have garnered international audiences.
Yoani Sanchez writes the “Generacion Y” blog and gets more than a million hits a month, mostly from abroad — though she has begun to strike a chord in Cuba. On her site and others, anonymous Cubans offer stinging criticisms of their government.
But it isn’t simple. To post her blog, Sanchez dresses like a tourist and slips into Havana hotels with web access for foreigners. It costs about $6 an hour and she can’t afford to stay long given the price and the possibility someone might catch her connecting without permission.
It’s a testament to the ingenuity and black-market prowess Cubans have developed living on salaries averaging $20 a month, with constant restrictions and shortages.
The connections Cuban bloggers are making with the outside world via the Internet are irreversible, said Sanchez, who this month won the Ortega y Gasset Prize for digital journalism, a top Spanish media award.
“With each step we take in that direction, it’s harder for the government to push us back,” she said.
On an island where many censor themselves to avoid trouble, Sanchez says Generacion Y holds nothing back.
“It’s about how I live,” she said. “I think that technically, there are no limits. I have talked about things like Fidel Castro, and you know how taboo that can be.”
But she added that “there are some ethical limits. I would never call for violence, for instance.”
Since taking over from his ailing brother Fidel in February, Raul Castro has lifted bans on Cubans buying consumer electronics, having cell phones and staying in luxury tourist hotels.
While the changes have bolstered the new president’s popularity, most simply legalized what was common practice. In a typically frank recent posting, Sanchez noted that many Cubans already had PCs, cell phones and DVD players bought on the black market.
“Legally recognizing what were already facts prospering in the shadows is not the same as allowing or approving something,” she wrote. Cuba’s leaders are responding to the inevitable, “but they won’t soothe our hunger for change.”
Authorities have made no sustained effort to stop Sanchez’s year-old blog, though pro-government sites accuse her of taking money from opposition groups.
Only foreigners and some government employees and academics are allowed Internet accounts and these are administered by the state.
Ordinary Cubans can join an island-wide network that allows them to send and receive international e-mail. Lines are long at youth clubs, post offices and the few Internet cafes that provide access, but the rest of the Web is blocked — a control far stricter than even China’s or Saudi Arabia’s.
Still, thousands of Cubans pay about $40 a month for black market dial-up Internet accounts bought through third parties overseas or stolen from foreign providers. Or they use passwords from authorized Cuban government accounts that hackers swipe or buy from corrupt officials.
Sanchez said so many Cubans read her blog that fans stop her on the street.
Generacion Y takes its title from a Cuban passion for names beginning in Y. It offers witty and biting accounts of Cubans’ everyday struggles against government restrictions at every turn.

TITLE: Nadal Shows His Clay Court Skills To Win Against Federer in Monaco
PUBLISHER: The Associated Press
TEXT: MONTE CARLO, Monaco — Rafael Nadal won his first title of the season, defeating top-ranked Roger Federer yet again on clay to claim his fourth consecutive Monte Carlo Masters.
The second-ranked Spaniard won 7-5, 7-5 Sunday, and improved his clay-court record over Federer to 7-1.
“Winning four times here is unimaginable,” said Nadal, who earned his 24th career title. “Roger played a great match. We always have good finals.”
Nadal has won 98 of his last 99 matches on clay, with a loss to Federer in the 2007 Hamburg final the only blip.
The Swiss star blew commanding leads in each set, breaking Nadal to lead 4-3 in the first and racing to a 4-0 lead in the second.
“Disappointing second set,” Federer said. “After playing the right way against him and then letting him back into the match, it was disappointing. Maybe I didn’t play my best.”
Federer committed too many unforced errors, surprisingly on his forehand, and let Nadal back into the match.
“He deserves to win,” Federer said. “I’m pushing Rafa today, having the feeling I can beat him if I play the right way. And I think that’s the feeling I didn’t have after (Monte Carlo) last year.”
Nadal is the only player in the Open era to win four straight titles at Monte Carlo, and the first since Anthony Wilding of New Zealand (1911-14).
Nadal has won 22 consecutive matches at Monte Carlo since losing to Guillermo Coria in the third round in 2003. Federer was the last person to take a set from him in the 2006 final. Nadal missed 2004 with injury.
The three-time French Open champion is 19-1 in clay-court finals, while Federer dropped to 7-8 on his least favorite surface. The 12-time Grand Slam champion has never won the French Open, the only major title missing from his resume.
Still, Nadal thinks Federer remains the best, despite a slower start to the season. Federer picked up his first win of the season last week at the Estoril Open.
“I think he doesn’t get enough credit,” Nadal said. “It is impossible to be at 100 percent all your career, he is still No. 1, the best in the world.”
Relying too much on his forehand, Federer also missed routine volleys at the net, and made 44 unforced errors.
Federer seemed poised to even the match after hitting some near-perfect winners down the line and taking a 4-0 lead in the second set. 
Nadal struggled to hold his serve in the fifth game, but turned the match around.

TITLE: Obama’s Ex-Pastor Explains
AUTHOR: By Jeff Karoub
PUBLISHER: Associated Press Writer
TEXT: DETROIT — The former pastor of Barack Obama whose words have rallied many but offended others told an audience of 10,000 that his critics get it wrong when they call him divisive and polarizing.
“I describe the conditions in this country,” the Reverend Jeremiah Wright Jr. said during the NAACP’s 53rd annual Fight for Freedom Fund Dinner.
“I’m not here for political reasons. I’m not a politician. I know that fact will surprise many of you because many in the corporate-owned media made it seem like I am running for the Oval Office,” Wright said. “I am not running for the Oval Office. I’ve been running for Jesus a long, long time and I’m not tired yet.”
Receiving a lengthy and loud standing ovation, Wright followed in the footsteps of Obama, President Clinton and Hillary Rodham Clinton in his speech at the event, a $150-a-plate fundraiser billed as the largest sit-down dinner in America.
Obama, who is vying with Hillary Rodham Clinton for the Democratic presidential nomination, distanced himself from Wright after publicity over the minister’s sharp criticism of America’s racial history and government policies.
The Reverend Wendell Anthony, president of the Detroit branch of the National Association for the Advancement of Colored People, stirred the crowd with an animated introduction to Wright. He let the audience know, among other things, that Wright speaks five languages and is an Egyptologist, writer, author, family man and “innovator and sustainer of the word of God.”
Anthony said at a press conference before the dinner that he was excited to invite the “hottest brother in America right now — outside of Barack Obama.”
Wright, who is retiring as pastor of the 8,000-member Trinity United Church of Christ in Chicago, followed the dinner’s theme, “A Change is Gonna Come.”
He drew numerous contrasts between racial and ethnic groups in language, music and other aspects of American culture. He danced, beat-boxed and even sang an aria from the podium to make his points in the massive exhibition hall, which served as an impromptu pulpit.
“In the past, we were taught to see others who are different as somehow being deficient,” Wright said. “I believe that a change is going to come because many of us are committed to changing how we see other people who are different.”
He also responded to Republican Oakland County Executive L. Brooks Patterson, who had called Wright “divisive” during an April 18 forum.

TITLE: More Than 70 Die in China Train Crash
PUBLISHER: The Associated Press
TEXT: BEIJING — A high-speed passenger train jumped its tracks and slammed into another train in eastern China on Monday, killing at least 70 people and injuring more than 400. Authorities were quoted as saying human error was to blame.
The death toll could rise, with 70 people hospitalized in critical condition after the pre-dawn crash in a rural part of Shandong province, the official Xinhua News Agency said.
It said a total of 420 people had been hurt in China’s worst train accident in a decade.
Xinhua said investigators had ruled out terrorism as a cause of the crash. Its English report said it was human error, while its Chinese-language report attributed the crash to negligence, without giving other details.
Xinhua said two high-ranking railway officials in Shandong had been fired.
The crash just before the May Day long weekend holiday happened when a train traveling from Beijing to Qingdao — site of the sailing competition during the Olympics in August — derailed and hit a second passenger train just before dawn. Nine of the first train’s carriages were knocked into a dirt ditch, Railway Ministry spokesman Wang Yongping said in a statement.
The second train on its way from Yantai in Shandong to Xuzhou in eastern Jiangsu province was knocked off its tracks although it stayed upright. News photos showed several of its carriages sitting across the train tracks just outside the city of Zibo.
News photos showed rescuers pulling passengers from a carriage sitting on its side. Survivors bundled in white bed sheets from the sleeper cars stood or sat near the wreckage.
Xinhua said bloodstained sheets and broken thermos flasks could be seen on the ground beside the twisted train cars.
It did not say how many people were on both trains.
“Most passengers were still asleep, but some were standing in the aisle waiting to get off at the Zibo railway station,” one passenger surnamed Zhang told Xinhua.
“I suddenly felt the train, like a roller coaster, topple ... to one side and all the way to the other side. When it finally went off the tracks, many people fell on me,” Zhang said.
Zhang, who was on the train from Bejing, was injured when the train toppled into farmland beside the track. She said local villagers used farm tools to smash train windows to pull out trapped passengers.
“I saw a girl who was trying to help her boyfriend out of the train, but he was dead,” Zhang said.
A 38-year-old woman told Xinhua that she and daughter, 13, escaped unhurt by scrambling through a huge crack in the floor of their carriage.
Four French nationals — three from one family — were among the injured.
Xinhua said heavy cranes were being used to move the wrecked rail cars, with workers aiming to reopen the line by early Tuesday, a little more than 24 hours after the accident.
One villager who witnessed the rescue operation said ambulances ferried the injured away for more than three hours.
“There were a lot of police and soldiers around and I saw a lot of ambulances going back and forth,” the villager said. He would give only his surname, Wang.
It was the second major railway accident in Shandong this year. In January, 18 people died when a train hurtling through the night at more than 75 miles per hour slammed into a group of about 100 workers carrying out track maintenance near the city of Anqiu.
According to the 163.com news Web site, it was the worst train accident in China since 1997, when another collision killed 126 people.
Trains are the most popular way to travel in China, and the country’s overloaded rail network carried 1.36 billion passengers last year, Xinhua said.

TITLE: Man Kept Daughter in Dungeon for 24 Years
PUBLISHER: Reuters
TEXT: AMSTETTEN, Austria — A 73-year-old Austrian man has confessed to imprisoning his daughter in a windowless cellar for 24 years and fathering her seven children, police said on Monday.
A 42-year-old woman had told police on Sunday that her father, Josef Fritzl, lured her into the basement of the block where they lived in the town of Amstetten in 1984 and drugged and handcuffed her before imprisoning her.
“(Fritzl) has now said that he locked up his daughter for 24 years and that he alone fathered her seven children and that he locked them up in the cellar,” Franz Polzer, head of the criminal investigations unit in the province of Lower Austria told Reuters by telephone.
Three of Elisabeth Fritzl’s children had been locked up since birth in the basement of the plain, grey building along with their mother and had never seen sunlight or received any education, police said.
Austrian investigators were combing through the network of windowless, underground cells where Elisabeth and the children had been holed up.
Some parts of the dungeon were no more than 1.70 meters high and officials in Amstetten said the basement labyrinth even contained a padded cell.
Fritzl had hidden the entrance to the cell behind shelves and only he knew the secret code for the reinforced concrete door, said officials.
The case unfolded when a 19-year-old girl — the oldest of the three — became seriously ill and was hospitalized, prompting doctors to appeal for the girl’s mother to come forward to provide more details about her medical history.
Fritzl then brought Elisabeth and her remaining two children out of the basement, telling his wife — who thought their “missing” daughter had chosen to return home, police said.
Elisabeth agreed to make a “comprehensive statement” detailing her ordeal to the police after receiving assurances she would have no further contact with her father, who she said abused her from the age of 11.
Newspaper headlines called the case the “crime of a monster” and the “worst crime of all time.” Media asked how authorities and residents of Amstetten, 130 kilometers west of Vienna, could have failed to notice what was happening in the “horror house.”
The case was especially shocking because it was reminiscent of that of Austrian Natascha Kampusch who spent eight years locked up in a windowless cell before escaping in August 2006.
“The community of Amstetten should drown in shame ... The neighbors are turning a blind eye,” the Oesterreich newspaper wrote in an editorial.
The daily Der Standard wrote: “The whole country must ask itself what is really, fundamentally going wrong.”
Police have said they believe Josef’s wife Rosemarie had been unaware of what happened to her daughter when she disappeared in 1984 and it was assumed Elisabeth had left voluntarily when her parents received a letter from her saying they should not search for her.
But all the while Elisabeth was being held in what Polzer described as a sophisticated network of chambers with facilities for sleeping, cooking and washing.
Elisabeth gave birth to seven children, one of whom died shortly after being born, police said.

TITLE: Mexico Border Town Hit by Large Gun Battle
AUTHOR: By Elliot Spagat
PUBLISHER: The Associated Press
TEXT: TIJUANA, Mexico — Massive gunbattles broke out between suspected drug traffickers who fired at each other while speeding down heavily populated streets of this violent border city early Saturday, killing 13 people and wounding nine.
 All of the dead were believed to be drug traffickers, possibly rival members of the same cartel who were trying to settle scores, said Rommel Moreno, the attorney general of Baja California state, where Tijuana is located.
“Evidently this is a confrontation between gangs,” Moreno told reporters.
Eight suspects and one federal police officer were injured in the pre-dawn shootings, none gravely, said Agustin Perez Aguilar, a spokesman for the state public safety department. The suspects are being held on suspicion of weapons possession among other possible charges.
Police recovered 21 vehicles, many with bullet holes or U.S. license plates; a total of 54 guns; and more than 1,500 spent shell casings at various points in the city where the battles broke out, Perez Aguilar said.
At one point, the alleged traffickers fired at one another as their sport utility vehicles sped down a busy six-lane boulevard lined with restaurants, car repair shops, medical offices and strip malls.
Bullet holes could be seen in the walls of a factory building and on the perimeter wall of a housing complex along the road, but no bystander deaths were reported. 
It was not clear how long the gunbattles lasted.
A mall security guard said he heard hundreds of gunshots fired, some of which passed near him.

TITLE: Bush Shows Funny Side
AUTHOR: By Christine Simmons
PUBLISHER: The Associated Press
TEXT: WASHINGTON — President Bush poked fun at his potential successors Saturday night, expressing surprise that none of them were in the audience at the White House Correspondents’ Association annual dinner.
“Senator McCain’s not here,” Bush said of GOP nominee-in-waiting John McCain. “He probably wanted to distance himself from me a little bit. You know, he’s not alone. Jenna’s moving out too.”
Bush then referred to scandals that have dogged the campaigns of the two remaining Democratic candidates, Hillary Rodham Clinton and Barack Obama, in explaining their absence: “Hillary Clinton couldn’t get in because of sniper fire and Senator Obama’s at church.”
The president admitted to being “a little wistful” in his final appearance at the dinner, showing video clips of his routines from previous years. He finished by conducting the U.S. Marine Band in a medley of patriotic marches.
Bush was followed by Craig Ferguson, the host of CBS’s “Late Late Show.” Vice President Dick Cheney, Ferguson said, “is already moving out of his residence. It takes longer than you think to pack up an entire dungeon.”
The guest list for the dinner included Secretary of State Condoleezza Rice, Supreme Court Justice Antonin Scalia and Homeland Security Secretary Michael Chertoff.