SOURCE: The St. Petersburg Times
DATE: Issue #1379 (43), Friday, June 6, 2008
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TITLE: Yavlinsky’s Leadership Challenged
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: The head of the St. Petersburg branch of the democratic party Yabloko looks set to challenge the party’s founding leader Grigory Yavlinsky in forthcoming leadership elections in Moscow on June 21.
Yabloko holds such elections once every four years but Yavlinsky’s position has recently become vulnerable. Since December, after Yabloko failed to win a comeback to the State Duma after four years in the wilderness, Yavlinsky has been blamed from both fellow democratic and pro-Kremlin opponents who declared him a “political corpse.”
The party’s St. Petersburg branch, headed by 35-year-old Maxim Reznik, has been calling for an overhaul of the party’s management and structure, including the introduction of several co-chairmen.
“We believe that the party’s management should become more diverse and showcase new, different faces,” Reznik said. “The party could consider having several co-chairmen to ensure responsibilities are more evenly distributed.”
The last conference that re-elected Yavlinsky was held in 2004.
Yavlinsky has fought his critics and argues the party’s poor showing is caused by “state propaganda, biased media coverage or no coverage at all, and administrative intervention at all stages — these are the realities of Russia’s current political landscape.”
Yavlinsky is one of the longest serving politicians in post-Soviet Russia. He entered politics in the wake of perestroika, working as an economic adviser to the government. He offered a program, that was never implemented, of gradual reform that contrasted with the “shock therapy” strategy later undertaken by Yegor Gaidar and his team during Boris Yeltsin’s first term as president.
Yavlinsky was also appointed deputy chairman of the Council of Ministers of Russia but resigned from the government in 1990.
Along with Yury Boldyrev, former deputy chairman of the Audit Chamber, and Vladimir Lukin, the country’s ombudsman, Yavlinsky founded Yabloko in 1993. Its name is an abbreviation formed from the three men’s names — the word also means “apple” in Russian. Yabloko’s guiding principles are freedom of expression, transparency, fair political competition, the encouragement of small business, and a strong civil society.
The party entered the Duma in 1995, winning about 7 percent of the vote. By the 2003 elections, however, it was out, having failed to pass the 5 percent mark needed to stay in the legislature.
Relations between the national party leadership and the St. Petersburg branch soured in early 2007 after local Yabloko members were criticized by Yavlinsky for supporting and participating in a series of events organized by opposition coalition Other Russia that challenged the Kremlin and campaigns against the regime. Yavlinsky views the coalition as too radical and feels any collaboration with it would damage the image of his party.
Yabloko spokeswoman Yevgenia Dillendorf is skeptical of Reznik’s reformist ambitions.
“The St. Petersburg branch has proposed a unification plan with the radial opposition three times already but they have repeatedly failed to win the support of the majority,” she said.
Vladimir Yeremenko, a political analyst at the St. Petersburg Institute for Economics and Trade, sees Yavlinsky as a lost cause as party leader.
“A successful politician has to make achievements, and Yavlinsky has nothing to show for himself, other than low and ever-decreasing ratings,” Yeremenko said. “Despite being a veteran politician with almost 20 years’ experience, he lacks fresh ideas and keeps repeating the same things he was saying when he first surfaced back in the late 1980s.”
In the meantime, some critics stress it would be hard for a new leader or co-chairman — however able and charismatic they are — to win new supporters.
Maria Matskevich, a senior analyst with the Institute of Sociology of the Russian Academy of Sciences, argues that most of those who once backed Yavlinsky in his past bids for the presidency, and those who backed Yabloko, have completely lost any interest in politics.
“People who share these liberal values, and who might once have voted for Yavlinsky, these days prefer to opt out of Russian politics altogether,” she said. “These people are making a conscious choice. They want to stay out of it because they don’t see fair competition or open discussion. Whether this silent protest is a constructive method or not is another matter, but it means the potential market for what Yabloko has to offer is still significant.”
St. Petersburg political analyst Grigory Golosov, stressed that Russia’s democratic tradition is very weak and most of the population does not relate to liberal values, while campaigning in Russia has not yet been tailored to suit these factors.
“Russian democrats are still misjudging their audience, and they are failing to explain to people exactly what the regime is doing wrong, in the sort of language that ordinary Russians would understand,” he said.
TITLE: Medvedev To Go It Alone in St. Petersburg
AUTHOR: By Catrina Stewart, Natalia Popova and Max Delany
PUBLISHER: Staff Writers
TEXT: This weekend’s St. Petersburg International Economic Forum will be President Dmitry Medvedev’s first major international appearance, while Prime Minister Putin, the headline attraction in recent years, will be nowhere to be seen.
The forum, which opens officially on Friday evening, is now in its 12th year but only shot to international prominence last year, when Russian businessmen and officials boycotted the London-based Russian Economic Forum.
Since then, the St. Petersburg get-together has emerged as the premier business event on the country’s business calendar.
The forum will provide Medvedev with the opportunity to expound on plans to catapult Russia onto the list of the top five global economies by 2020.
The Economic Development Ministry has suggested that the total value of deals signed this year could surpass last year’s $13.5 billion. Automobile manufacturing, infrastructure and technology are the most likely sectors to see new agreements struck.
“There will be at least 20 contracts signed and presentations of the projects made at the forum,” said a ministry spokeswoman, who did not give her name in accordance with ministry policy. “The organizers are still calculating their value.”
Lenexpo — the exhibition center on the city’s Vasilyevsky Island that will play host to the event — has been a hub of feverish activity this week, with workers still installing walk-through metal detectors and television monitors in the main entrance hall. Most of the accreditation points were already manned.
More than 2,500 delegates are scheduled to attend the forum, among them members of more than 120 official delegations from around the world, including neighboring states, the European Union and the United States.
The forum will bring together some of Russia’s best-known businessmen, including metals magnates Oleg Deripaska, Alexei Mordashov and Vladimir Lisin, as well as hundreds of foreign executives.
Medvedev will speak in the opening sessions of the conference Saturday morning, as might be expected, but the news that Putin will not be making the trip to the northern capital from Moscow comes as a surprise.
“Putin will not attend,” Kremlin spokesman Dmitry Peskov said Tuesday. “But almost the whole government will be there, so that’s enough.”
On Friday and Saturday, Medvedev will meet with the leaders of the other 11 CIS states at an informal summit, where most of the attention will be focused on any exchanges with Ukrainian and Georgian leaders.
Russia’s relations with Georgia, in particular, have become increasingly frosty lately, with Moscow and Tbilisi regularly engaging in exchanges over the status of Georgia’s breakaway republics of Abkhazia and South Ossetia.
“The toughest negotiations will be with Ukraine and Georgia,” said Vladimir Zharikhin, the deputy director of the Institute of the CIS. “While all the guests from the post-Soviet space will be discussing their participation in Russia’s ambitious economic plans until 2020.”
CEOs from 75 foreign companies will have a chance to quiz Medvedev on Saturday evening in a closed roundtable, before meeting with First Deputy Prime Minister Igor Shuvalov and Economic Development Minister Elvira Nabiullina on Sunday.
Foreign energy sector representatives to meet with Medvedev will include BP’s Tony Hayward, ExxonMobil’s Rex Tillerson, and Total’s Thierry Desmarest. Hans-Joerg Rudloff, chairman of Barclays Capital, will take part in the closed-door session, along with James Dimon of JP Morgan and Khalid Abdulla-Janahi of Bahrain’s Ithmaar Bank. Jon Fredrik Baksaas of Norway’s Telenor will also take part.
Those organizing the meeting between Medvedev and the executives said it would provide foreign businesspeople with an opportunity to get a better lay of the land following Medvedev’s move to the Kremlin.
“With the change of government, it is very important to understand if things will change or stay the same,” said Andre Schneider, Managing Director of the World Economic Forum in Davos, Switzerland. “This is a unique occasion for them to have a very private dialogue with key members of the government.”
Many will be hanging on Medvedev’s every word, as they look for signs of the government’s commitment to increased global integration and cooperation with foreign investors.
“The key person at the forum will be Medvedev”, said Roland Nash, head of research at Renaissance Capital. “His speech will outline what Russia’s economic strategy will be and how Medvedev is going to interact with business”
Russian businessmen will also be looking for hints of continuity with the policies initiated while Putin was in the Kremlin.
“It’s very important that we continue this dialogue between business, government and foreign investors,” Troika Dialog CEO Ruben Vardanyan said Wednesday. “It is good that this is happening so soon after the new president came to power.”
But VimpelCom CEO Alexander Izosimov, who will attend, said Wednesday the forum would have to send the right messages to attract the kind of investment the country needs to help diversify its economy.
“The task is to break the stereotype of Russia as a country with cheap natural resources and an inexpensive work force, and to attract the world’s attention to Russia’s huge potential in the sphere of innovation and high-tech,” Izosimov said.
Local authorities hope to play a key role in the event, with St. Petersburg Governor Valentina Matviyenko to speak to the first session.
Alexei Sergeyev, head of the city’s Economic Development, Industry Policy and Trade Committee, said the local authorities planned to sign six deals during the forum.
TITLE: U.S. Welcomes Russian Support for Georgia Peace Plan
AUTHOR: By Conor Sweeney
PUBLISHER: Reuters
TEXT: MOSCOW — The United States welcomed Russia’s endorsement of a Georgian peace plan for the breakaway Abkhazia region as “tremendous news”.
But U.S. Deputy Assistant Secretary of State Matthew Bryza placed the blame on Moscow for a series of steps he said had increased tension over the breakaway region, and he called on Moscow to reverse its measures.
After months of tough rhetoric between Moscow and aspiring NATO member Georgia over Abkhazia, Russian Prime Minister Vladimir Putin said last week he approved of a plan from Tbilisi to give the separatists wide autonomy within Georgia.
Putin qualified his support by saying the Abkhaz separatists had to approve the plan, something they have already ruled out.
“The fact that he (Putin) sees something positive in this peace initiative is tremendous news and reflective of what I said before, that there’s no way any of these conflicts can be resolved without Russia,” Bryza told Reuters on Thursday.
“That was a refreshing moment, unexpected. Russia is nothing if not full of things you don’t expect. Often good, often not so good — in this case it was good,” he said in an interview.
Bryza is the State Department’s point man for the South Caucasus. The region is emerging as a vital transit route for oil and gas from the Caspian Sea, and Russia and the West are competing for influence there.
He was in Moscow for meetings with Russian Deputy Foreign Minister Grigory Karasin and Deputy Secretary of Russia’s Security Council Yuri Zubakov.
“Our government is hoping we can launch a new initiative with Russia... and other countries, to support a new peace process that has a real chance to reach a political settlement to the impasse over the Abkhaz conflict,” Bryza said.
Abkhazia has been a source of friction between Moscow and Tbilisi since a 1990s war in which the separatists threw off Georgian control. Georgia accuses Russia, which backs the separatists, of trying to annex Abkhazia.
EU foreign policy chief Javier Solana is in Georgia on Thursday while Russian President Dmitry Medvedev and Georgian President Mikheil Saakashvili are to meet in Russia’s second city of St Petersburg this week.
This year, Moscow sent in extra troops to Abkhazia to counter what it said was an imminent Georgian attack. Georgia, which wants to join NATO and the EU, says it has no plans to attack the region.
A United Nations report concluded last month that a Russian air force jet had shot down an unmanned Georgian spy plane over Abkhazia, though Russia denied involvement.
Russia drew fresh criticism from Georgia’s Western allies at the weekend when it sent in new troops. It said their task was to rebuild a railway.
“Finally, last weekend just as we thought maybe we were moving the conflict towards a de-escalatory phase, then, there were these additional railway troops, which sent a bit of a chill through Tbilisi and made people wonder what’s really going on here,” said Bryza.
“These sort of steps are not helpful, but if they were to be reversed, I think we would see it is possible for Russia to play a very positive role.”
TITLE: Briefs
TEXT: Traffic Restrictions
ST. PETERSBURG (SPT) — Road closures and parking restrictions will apply in the city center during this weekend’s Economic Forum, Interfax reported.
On Friday, Saturday and Sunday Nalichnaya Ulitsa, Ploshchad Morskoi Slavoi and Opochinina Ulitsa will be completely closed to traffic, which will be diverted to Gavanskaya Ulitsa.
Parking will be restricted in the vicinity of the city’s main hotels and at Pulkovo 1 airport until Tuesday.
Due to special events for forum delegates, roads will be closed near theaters and venues on the following days:
Friday: Mikhailovsky Castle, Musical Comedy Theater. Roads will be closed near Palace Square between 7 p.m. and half-past midnight for Roger Waters’ concert.
Saturday: Mikhailovsky Gardens, Alexandriinsky Theater.
Friday, Saturday and Sunday: parking will be restricted in various locations on Vasilyevsky Island from noon; parking and traffic restrictions on Ploshchad Isskustv and various roads closed to traffic from 6 p.m. through 10 p.m.
Saturday and Sunday: traffic and parking restrictions around Teatralny Ploshchad.
Sunday: no parking around St. Isaac’s Cathedral.
New Development
ST. PETERSBURG (SPT) — A contract for a $470 million redevelopment project in the Konnaya Lakhta industrial zone is due to be signed at this weekend’s Economic Forum, Interfax reported.
City Hall is to sign the contract with Sestra River Developments, part of Jensen Group, which by 2012 plans to build a 93,000 square-meter industrial park for the relocation of the Sestroretsky Tool Factory. A business complex and residential complex, Petrovsky Arsenal, is also planned.
“The city will benefit from many forms of social and economic development with this investment project,” said the deputy chairman of City Hall’s Economic, Industrial Policy and Trade Committee, Sergei Fiveisky.
Leningrad Boss Dies
ST. PETERSBURG (SPT) — The former Communist party boss of Leningrad from 1970 to 1983, Grigory Romanov, has died in Moscow aged 85, the Associated Press reported.
Romanov, a Politburo member who was Mikhail Gorbachev’s chief rival to become Soviet leader in the mid-1980s, was praised Tuesday by the current leadership of St. Petersburg for developing the industrial plants that became the flagships of the region’s economy.
TITLE: Authorities Target eXile Over Possible Violations
AUTHOR: By Alexander Osipovich
PUBLISHER: Staff Writer
TEXT: MOSCOW — Federal authorities are scrutinizing the English-language tabloid The eXile to determine whether it has violated media laws, a step that could lead to the shutdown of the notorious biweekly.
Mark Ames, editor and founder of The eXile, was scheduled to meet Thursday with inspectors from the Federal Service for Mass Media, Telecommunications and the Protection of Cultural Heritage, he said by telephone Wednesday.
Ames said he did not know why the service had taken a sudden interest in The eXile, which just celebrated its 11th anniversary.
“It could be one of the many people we’ve pissed off over the last months or years,” said Ames, a U.S. citizen who launched the newspaper in 1997.
The eXile’s staff received a letter from the service last week announcing an “unscheduled inspection” to check whether the newspaper had violated media laws or its license, Ames said.
A four-person commission must reach its conclusion by June 11, according to a copy of the letter obtained by The Moscow Times.
Repeated calls to a phone number listed on the letter were not answered Wednesday, and a spokesman for the service did not answer repeated calls to his cell phone.
An official initially said the paper would have to provide Russian translations of all its back issues, Ames said.
Told it would be impossible to translate “zillions” of issues, the official said inspectors would meet with the editor instead and have him explain “different articles,” Ames said.
Ames said he did not know which articles were of interest to the inspectors, but he suggested that one possibility were columns by Eduard Limonov, founder of the banned National Bolshevik Party and a vehement Kremlin foe.
He conceded that many other eXile editions could have riled the authorities.
The eXile, which publishes Gonzo-style journalism on topics such as drugs, prostitution and Moscow nightlife side-by-side with political analysis, has often pushed the limits of decency — not to mention libel law.
Hockey star Pavel Bure won a 500,000 ruble lawsuit against the newspaper over a 2001 spoof article it published about his relationship with tennis player Anna Kournikova.
If inspectors uncover violations, they could hit The eXile with a warning. A second warning within the next year could result in the paper’s license being revoked, effectively shutting it down.
Media outlets can receive warnings if they are found to have incited ethnic hatred or promoted the use of illegal drugs, said Svetlana Zemskova, a lawyer at the Glasnost Defense Foundation.
Other reasons are more technical, such as if a newspaper publishes political content while describing itself as an “entertainment” paper in its license application, said Zemskova, who is familiar with The eXile’s situation.
Zemskova added that such inspections were rare and that authorities seem to be moving with unusual speed. “Such inspections do happen, but not in such a hurried, immediate way,” she said.
Ames said he feared that this could mean the end of The eXile.
“I get the general sense that they have decided it’s time to shut us down, that they’re not going to tolerate us anymore,” he said.
TITLE: Court Ruling Affects Few Dachas
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: MOSCOW — “Without a document, you’re an insect. With a document, you’re a person,” goes a Russian saying.
A Supreme Court decision related to the country’s registration laws has generated hope among people who make their permanent residence at their dachas, but it seems unlikely that the court’s ruling will help most of these people escape the “nonperson” category anytime soon.
Everyone living in the country is required to have a registration stamp either in their passport or, if the registration is temporary, on some other appropriate document. Without this stamp, Russians cannot apply for most jobs, get loans from banks, send their children to school, sign up at medical clinics or even stay at hotels.
Prior to an April 14 decision from the Constitutional Court, people who resided permanently at their dacha — a dwelling built on an allotment and usually considered mostly a summer residence — could not have themselves registered there and, as a result, could not access a broad range of benefits and services.
The court’s widely publicized decision found in favor of seven dacha owners from Krasnodar, agreeing that they should be allowed to register at their dachas, as they were their sole places of residence.
But as is often the case, the court’s decision may not lead to much in the way of changes in the way things work.
Compulsory registration in cities was part of the tsarist internal passport system and, after being abolished during the Revolution, was reintroduced by the Soviet government in the 1920s in the form of the propiska, or residency-permit system. The ultimate effect was to make some people illegal residents in their own country, and gaining a propiska for Moscow or Leningrad was particularly difficult.
In the early 1990s, the propiska system was replaced again by registration. Russians are required to register in a place if they have been living there for longer than three months. Although the system is not as strict as the propiska system was, it would still prevent people like the dacha owners in Krasnodar, who had sold their previous accommodations, from claiming benefits.
At first glance, the decision seemed to mean that any dacha owner could now get registered there.
“If your dacha is suitable for living in, you’ll get registration!” ran a headline in Komsomolskaya Pravda.
It sounded good to people like Olga Silina, 26, who rents in Moscow and can’t afford to buy an apartment right now but will later need registration to send her child to school.
“We’re now just considering buying a dacha,” Silina said. “One of the deciding factors is the adoption of such a law.”
Unfortunately, the decision is not as far-reaching as it sounds, experts say, and will likely only affect a tiny number of people.
The Krasnodar dacha residents who appealed to the Constitutional Court all live in gardeners’ cooperatives — or groups of dachas — built on land within a residential settlement rather than on land classified as agricultural.
Almost 13 million families in Russia have small lots of land they use for gardens, Martin Shakkum, the chairman of the State Duma’s Construction and Land Use Committee, said in answer to e-mailed questions. From 25 to 30 percent of these are located in residential areas, meaning that the owners could benefit from the court decision.
The law on dachas is convoluted, however. People could be registered there only if the land was originally allotted for the construction of a dacha — not for a garden or some other non-residential use — and the building itself has to be declared suitable for permanent residence.
And the requirements don’t end there.
“The law only applies to people who don’t have another residence,” said Valery Polukhin, a member of the Council for Land Use in the Moscow region, a consultative body that offers free legal advice to the public.
The Constitutional Court decision leaves in place many of the old requirements, so dachas will still have to be “residential buildings suitable for permanent inhabitation” in order for people to register at them.
The Krasnodar residents had running water, heating and indoor plumbing at their dachas, NTV reported.
Because new legislation has yet to be passed to reflect the court’s ruling, eligible dacha owners can gain registration only after obtaining a decision from a court that their housing is adequate.
The government has three months to submit the necessary amendments to reflect the court’s ruling, but Shakkum said it is unlikely to be discussed in the Duma before the fall session. He said regional legislatures had the right to pass laws defining which dachas are suitable for habitation before the Duma adopts federal legislation.
TITLE: $50 Bln By 2020
AUTHOR: By James Brooke
PUBLISHER: Special to The St. Petersburg Times
TEXT: Almost a century after Tsarist-era spending came to an end, St. Petersburg is embarking on a new golden age. This time, Russia’s new energy wealth is funding $50 billion in infrastructure projects that will bring Peter the Great’s “Window on Europe” into the 21st century.
By 2020, the city is to have an office tower taller than any in Europe today, a new international airport busier than any in Scandinavia today, and a cruise ship port with more berths than any cruise port of call in the world.
To ease transportation bottlenecks, St. Petersburg is doubling the underground subway system and plans to build a 72-kilometer elevated rail system. Construction crews are building a $3 billion container port, a 116-km ring road, and a 46-km north-south bypass toll road, to speed highway traffic between Finland and Moscow.
Reflecting St. Petersburg’s renewed integration with the world, architects from Britain, China, France, Germany, Holland, Japan and the United States are working on major projects in the city, the fourth most populous in Europe. Most investments for St. Petersburg’s modernization are flowing into areas outside the city’s historic core. Sometimes called “The Venice of the North,” this concentration of 18th- and 19th-century architecture draws more and more tourists to St. Petersburg every year.
Amid all the development, the major lightning rod for controversy is Okhta Center, a steel and glass spire that is to rise almost 400 meters into the sky over the Neva River. Critics charge that it will loom over the historic center, a UNESCO World Heritage site that starts on the opposite river bank with the baroque flourishes of Smolny Cathedral.
Backers say that the tower, which will hold the headquarters of Gazprom Neft, will become a city landmark similar to the Eiffel Tower, which measures only a few meters taller that than the 396-meter spire for St. Petersburg. Gazprom, the largest company in Russia, is to pay for half of the $2.4 billion office complex, which is to be completed in 2016.
In April, Arabtec Construction, based in the United Arab Emirates, won a contract to construct the first section of the project. To ease access to what is popularly known as the “Gazprom Tower,” the city plans to build a $1 billion toll tunnel under the Neva and new subway stations in the Okhta district as part of a $17 billion, 12-year subway expansion.
Controversy has swirled around another modern project - a French architect’s design to encase a second stage for the Mariinsky Theater in what looks like a gold tinted glass pillowcase. The 2,000-seat theater, designed for opera and ballet performances, has been delayed for several years and is expected to cost around $400 million when it is finally constructed, early in the next decade.
In contrast, most projects in the historic center are low profile and involve the restoration and reconstruction of historic buildings. Two blocks from the Mariinsky, a design team led by the British architect Lord Norman Foster is working on a $400 million project to convert the brick structures New Holland Island into a new cultural center with hotels, retail and three stages.
“We are opening up the island,” Gregory Ingleright, the American public affairs consultant for the project, said in May as he walked the triangular island. Bordered by canals on three sides, the 17-acre island in the city’s Admiralty District was an off-limits military installation after its creation in 1721 by Peter the Great. In 2006, Shalva Chigrinsky, a billionaire Russian developer, won the rights to the project, which is to have 200,000 square meters of hotel, retail and entertainment space.
In a first step to create a new rail gateway to St. Petersburg, work is underway to create a $200 million Scandinavian-style underground shopping mall below Ploshchad Vosstaniya, in front of Moskovsky railway station. Next door to the station, a lot long lampooned as "the big hole" is now the construction site of a $400 million new shopping center, complete with a cherished amenity in the new St. Petersburg — ample underground parking.
For visitors by sea, St. Petersburg is increasingly popular as a Baltic cruise port of call. But the first view that many cruise ship passengers get of the city has often been a bus ride through a wasteland of rusting Soviet-era cranes at the city’s cargo port. That will start to change in September, when the first cruise ships dock at Morskoi Fasad (Marine Facade), Russia’s first modern cruise ship terminal. By 2010, there will be seven berths — enough to handle up to 1.5 million cruise and ferry passengers each season, more than four times the number that came to St. Petersburg by boat last summer.
"When Marine Facade opens, it will be the largest dedicated cruise port of call in the world," said Mark Ittel, a partner with Bermello Ajamil & Partners, the Miami-based architectural firm that is designing Marine Facade along with other cruise ports around the world.
The cruise terminal is to be the centerpiece of $1.2 billion landfill development that, upon completion in 2020, is to offer bayside hotels with 2,000 rooms, a convention center, apartments for 35,000 people, shopping, entertainment and office complexes, two metro stations, and a high speed highway to St. Petersburg’s airports. Planners say that Marine Facade, with about 1,000 acres of landfill development, is the largest urban waterfront development underway in Europe today.
One stop on the highway north of Marine Facade, the city’s championship soccer team, Zenit Football Club, is to have a new $250 million, 62,167-seat soccer stadium. Designed by the Japanese architect Kisho Kurokawa, the stadium is to open in 2010 with a translucent retractable roof, which will allow year-round use in a city often called Russia’s “Northern Capital.”
Arriving by air, many visitors to St. Petersburg find Pulkovo Airport to be poorly organized and confusing. Next spring, the city is to announce the winner of a tender to construct a new airport terminal, a project that is expected to cost $1.1 billion. Last year, the city chose a soaring, illuminated tented design submitted by Grimshaw & Partners Ltd., of Britain.
From a level of 6 million passengers last year, the airport’s goal is to hit 20 million in 2020. The new airport is to have the capacity to handle almost 600 takeoffs or landings a day. By then, planners believe, Pulkovo and its main carrier, Rossiya Airlines, will have supplanted Helsinki and Finnair as the most important airline and airport hub in the region.
"They [Pulkovo] want to add 1 million passengers a year,” said Bruno Balvanera, regional head of the European Bank for Reconstruction and Development. The EBRD plans to extend loans to build a high speed light rail line that will connect the airport to the subway network and to the city’s fast growing southern suburbs, an expected $2 billion project.
With modern new apartment blocks going up daily in St. Petersburg’s suburbs, 80 percent of the city’s 4.5 million people do not live within reasonable walking distance of a metro station. In January, the city approved the system’s first major expansion in 15 years - a project to build 40 stations and over 80 km of new track by 2020.
For the city’s growing legions of drivers, the Ring Road is scheduled to be completed in 2012. Over $5.5 billion is being spent on this beltway, which will include two tunnels, 18 interchanges and 58 bridges and overpasses. Another $9 billion is to be spent on the North-South link road.
The elevated rail route will connect two ambitious projects along the southern shores of the Gulf of Finland.
“Baltic Pearl” is the fruit of a sister relationship between Shanghai and St. Petersburg, two cities that live in the shadows of their national capitals. Shanghai Overseas Enterprises Corp. is building a $1.5 billion residential, retail and office development on a 450-acre waterfront site. Financed by Chinese capital and scheduled for completion by 2013, the complex has already opened its “clubhouse,” a landmark building that looks like a black pearl emerging from an oyster shell.
Further west along the Gulf of Finland, workers are building Russia’s first world class business school, the Graduate School of Management at St. Petersburg State University. In a $300 million project, workers are restoring six surviving historical buildings of Mikhailovskaya Dacha, a UNESCO World Heritage site located next to another 18th-century palace that is now a Presidential residence. The historic buildings will serve as the core of a modern, low-rise campus that is to open in 2010 with 1,600 business students. To make St. Petersburg more attractive to business executives, three projects are underway to build suburban country clubs with 18-hole golf courses.
In another effort to build universities to support a modern, market economy, the city is planning a 100-acre technopark at the Bonch Bureyevich State University of Telecommunications, on the eastern side of St. Petersburg. Initial plans call for five towers which would include almost 500,000 square meters of research, office and hotel space.
In addition to betting on high technology, city officials believe that St. Petersburg will emerge as the major platform for international car production. GM and Ford, the nation’s best selling foreign car brands, are now expanding their plant capacities in St. Petersburg. In December, Toyota started production of its Camry cars in St. Petersburg, while Nissan, Suzuki and Hyundai are building car plants and Magna International is building a car parts plant.
In another university related project, the Military Transport University is to be moved from a prime location on the Moika Canal, next to the Yusupovsky Palace. Historic buildings are to be restored and almost 200,000 square meters of new retail, residential and office space are to be built according to a design prepared by the Dutch architect Erick van Egeraat.
In another project in the historic core, Oleg Deripaska, currently listed as Russia’s wealthiest man by Forbes, won a tender in January to develop a 31-acre site surrounding Apraksin Dvor. Deripaska’s Glavstroi promised to invest $1.1 billion to build 347,000 square meters of retail, residential and office space by 2012. The design, by Wilkinson Eyre Architects of Britain, includes a glass covered pedestrian bridge over the Fontanka River.
Outside the historic center, Hungary’s Tri Granit Development Corporation announced plans in April to invest over $2 billion to build almost 1 million square meters of commercial space on a 60-acre lot in an industrial zone in the south of the city. To be completed by 2012, the new complex will include a 1,500-room hotel and a 10,000 seat convention center.
A similarly sized project, Nevskaya Ratusha is to hold the national headquarters of Vneshtorgbank, a major part of the city administration, and private offices. Costing $800 million, the 300,000-square meter project is to be ready by 2011.
With millions of square meters of office space scheduled to be completed over the next decade, critics question whether the local economy will be strong enough to absorb such a supply. But the building comes as Russia’s federal government, dominated by natives of St. Petersburg, is trying to avoid an excessive concentration of government spending in Moscow. In coming years, the transfer of federal agencies to St. Petersburg may help the city avoid soaring vacancies.
On May 27, Russia’s Constitutional Court completed its relocation from Moscow, starting work in the Tsarist-era Senate and Synod buildings, which are undergoing renovations totaling a $212 million. This year, Russia’s navy is to start relocating its headquarters back to St. Petersburg, where it was founded over 300 years ago. Almost a century after the Bolsheviks downgraded the capital of the Tsars, St. Petersburg seems destined to win back some of its lost glory.
James Brooke is Director for External Relations in Russia for the international real estate consultancy Jones Lang LaSalle.
TITLE: Will St. Petersburg Ever Catch Up?
AUTHOR: By Shura Collinson
PUBLISHER: Staff Writer
TEXT: While the speed with which new apartment blocks seem to mushroom on the outskirts of the city and the endless restoration of historic facades around the city center could give the impression that nowhere is developing faster than St. Petersburg, the city’s real estate market still lags far behind that of the capital, according to experts.
“St. Petersburg is currently three to five years behind Moscow,” said Boris Moshensky, general director of Maris Properties in association with CB Richard Ellis. “There is not such a huge demand for commercial real estate as in Moscow,” he said. “In Moscow, there are far more deals on the market for offices covering 5,000 square meters than there were four years ago. The average size of an office in St. Petersburg is 250 square meters, and in Moscow that figure is 500 to 1,000 square meters.”
Vladislav Zabrodin, managing partner of Capital Legal Services, estimated the time lag between the cities at two to three years. “It would be unrealistic to think that St. Petersburg could catch up with Moscow any time soon,” he said. “However, there are some interesting exceptions. For example, according to published statistics, there is more high-quality decent retail space available in St. Petersburg than in Moscow — about 300 square meters per 1,000 inhabitants in the former, compared to 180 in the latter.”
Office space, however, is more abundant in the capital, where there are about 500 square meters per 1,000 people, compared to 200 square meters in St. Petersburg, according to Zabrodin. However, the difference between the Russian cities seems negligible when compared foreign statistics. There are 7,000 square meters of office space per 1,000 people in London, and 5,500 square meters in Stockholm, he added.
However, when it comes to profitability, Russia’s second city outstrips not only its traditional rival Moscow, but other European cities too.
“The profitability of real estate in London stands at five percent, and at 13-14 percent in Moscow,” said Zabrodin. “That figure is 17-20 percent in St. Petersburg.”
Many trends can be seen on both markets. For example, business centers in both cities are gradually moving out of the city center, but the rate at which they are doing so is slightly faster in St. Petersburg due to the restrictions on building in the center, according to Zabrodin.
The cities also share a lack of logistics space. This year, the volume of new logistics space in St. Petersburg and the Leningrad oblast is for the first time comparable to that in the Moscow region, according to Alla Solovieva, chief operating officer of Multinational Logistics Partnership. “On both markets, demand for logistics complexes significantly outstrips the market’s ability to supply, as there is still a deficit of logistics space,” she said. She predicts that after several large-scale logistics projects are completed by early 2009, there will be no new influx of space due to the current situation on the financial markets, though MLP is currently waiting for planning permission to build a logistics center in Shushary in the Leningrad oblast.
TITLE: Sochi Tipped for Hotel Building Boom
AUTHOR: By Max Delany
PUBLISHER: Staff Writer
TEXT: MOSCOW — There may still be six years to go until the 2014 Winter Olympics in Sochi, but officials are anxious to show that the Black Sea resort will not face the same criticisms as Moscow did last month, when the capital’s hotels struggled to cope with an influx of football fans for the Champions League final.
The final, which many have seen as an early test of Russia’s readiness to welcome hordes of foreign visitors for the Olympics, received a boost when the government rushed through a law to suspend the country’s complex visa regime for those traveling to the match at Moscow’s Luzhniki stadium.
Yet the estimated 40,000 traveling English fans stretched the capital’s hotels to the limits — and beyond.
In a bid to avoid the spectacle of desperate sports fans sleeping in river cruise ships, hired cars or on park benches around the city, officials in Sochi have pledged that an extra 35,000 hotel rooms will be built over the next few years.
“We are sure that we won’t have the same problems as Moscow, as making sure there are plenty of available and affordable rooms is a priority,” said Yelena Pavlovich, head of the city administration’s hotel development department.
Having doubled its capacity over the past five years to 125,000 beds, Sochi, the country’s largest resort, already boasts twice the number of rooms in Moscow. But most of those are in Soviet-era relics that would barely qualify for a one-star rating in Europe.
“Sochi is an old-style resort town made up mainly of sanatoriums and small hotels rather than international standard hotels,” said Marina Smirnova, vice president for Jones Lange LaSalle Hotels in Russia.
And the imbalance in the hotel market poses some unique problems for the sector’s development in Sochi.
A serious lack of top-end accommodation — Cushman and Wakefield estimate that there are only 126 four-star rooms within 10 kilometers of the planned site for the Olympic Village — has forced some wealthy Russians to take drastic steps and opened the door for major international chains.
Aluminum and construction magnate Oleg Deripaska, the country’s richest man according to Forbes magazine, built his own hotel — the luxury 40-room Rodina — in 2006 to give him and his friends somewhere to stay in the city.
On a grander scale, a subsidiary of Deripaska’s Basic Element holding is behind one of Sochi’s biggest developments — the giant 3 million-square-meter Imeretinskaya Riviera mixed-used development. Other major projects also have high-profile backers, including Interros owner Vladimir Potanin and state-mammoth Gazprom.
The Altius site will include four hotels — totaling more than 1,000 rooms — and could see top-end international operators brought on board, spokesman Yevgeny Prokhorenkov said.
Across the city, a number of Western chains are currently eyeing up Sochi - although none have put pen to paper on any concrete new deals yet. Sochi’s hotel development program requires the construction of another 50 five-star hotels, the Cushman and Wakefield study said.
“Companies such as Sheraton and Hilton are conducting negotiations to open hotels here, and Radisson is looking to expand,” Pavlovich said.
There are already two Radisson hotels in Sochi.
Five-star operator Kempinski has also been eyeing Sochi, even since before the city won its bid for the Olympics.
“Sochi is the only resort in Russia, so where else would you want to have a hotel?” said Natalya Kalashnikova, Kempinski development manager for Eastern Europe and Russia. The company is set to sign a concrete deal - most likely with a local developer - before the end of the year, Kalashnikova said.
As the foreign operators move in, Western visitors will feel more at home in Sochi with the brands that they are used to. But the prices will rise, too.
“Sochi used to be for the middle class, but now staying there in August is more expensive than going to Turkey. Even in a small midrange hotel, it costs $150 a night,” Smirnova said.
With all the projects being mooted at the moment, some operators and officials fear that Sochi could actually end up with a glut of hotel rooms once the Olympics are over.
“There would be a huge oversupply if all the projects that are being talked about happened, but all the plans have to be taken with a pinch of salt,” said Darren Blanchard, business development director at Rezidor, which runs the Radisson and Park Inn chains.
“There is talk of tens of thousands of hotel rooms coming on line for one event, but Sochi needs to have a long-term future as a resort or it will be difficult for the operators,” Blanchard said.
Local officials admit that trying to weigh the demands for the Olympics against the city’s future needs is proving a complex balancing act.
“Maybe we will have slightly more rooms than necessary, but that will mean that we will have places in reserve that we can use for other events,” said Pavlovich, the city administration official.
High-end hotels are known to have a long payback period, and the city wants to avoid having locations standing empty in the future, Pavlovich said. But as the hotel development is in the hands of private investors, it’s ultimately up to them.
“You cannot build and own a hotel for a two-week sporting event. Most shrewd investors build temporary accommodation solutions for such events and adapt them for more permanent use, such as residential apartments,” said Joel Goldman, director of Cushman and Wakefield Hospitality.
While the new hotels are set to start springing up over the next few years, many of the Soviet-era facilities that used to house sun-scorched tourists from friendly Soviet satellite states are being refurbished.
“The sanatoriums are to some degree a threat to development,” Blanchard said. “The market is diminishing, and as it diminishes, they have to start reinventing themselves.”
One argument in favor of renewing the older hotels and sanatoriums is the huge infrastructure challenge facing the region.
“In Sochi, the main problems are transport and communication infrastructure problems, such as electricity, sewers and water supplies,” said Smirnova, of Jones Lange LaSalle.
The government initially pledged to pump around $12 billion into bringing the city’s infrastructure up to speed, but recent reports suggest that that figure could soar.
“I understand that power supply is a major problem in Sochi. Without sufficient mains power it will be disastrous. However, with political will there is a way,” said Goldman, of Cushman and Wakefield.
City officials denied that the major building works going on in and around the city over the next few years would stem the flow of visitors, and hit hotels occupancy in the short term.
“The major building works for the Olympics are being carried in the town’s Adler district and in the Imeritinskaya valley outside the center, toward the airport,” said Lela Megrelidze, deputy head of Sochi’s tourism development department.
“The place where most of the tourists stay is in the center, quite far from there — and the work we are doing in the city is just renewing the roads and squares,” Megrelidze said.
TITLE: All Eyes on Medvedev for Policy Clues
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Russia has a dream of regaining the glory it lost overnight just under two decades ago when the Soviet empire over which it had reigned for 70 years fell apart. As a result, the economic superiority it had enjoyed during the Soviet era suffered a blow, and its remnants were consolidated by a group — branded The Family — close to the first post-communist Russian President, Boris Yeltsin, following the chaotic implementation of privatization policies.
When Vladimir Putin became president of the Russian Federation in 2000 he was seen as a long-awaited Messiah figure in the eyes of many ordinary Russians. Back then, the annual St. Petersburg International Economic Forum — seen by many in the international community as a variant of the Davos Economic Forum — had already been held for five years. But Russians saw it as a step forward in realizing the country’s dream of taking the nation back to its economic heights. In the eight years of Putin’s reign, the economy saw successive years of growth, and the forum was always there to magnify its development.
Russians are naturally proud that the forum is increasingly associated with the annual World Economic Forum in Davos. However, the global powerbrokers left their annual gathering in Davos in January pursued by grim warnings of a tough year ahead for the world economy. The same message is likely to echo at the three-day 12th St. Petersburg International Economic Forum which opens Friday at Lenexpo, at which the world will be watching to see what signals President Dmitry Medvedev will give regarding his economic policy and how far he intends to follow in the footsteps of his predecessor.
However, expecting radical changes in Medvedev’s economic policies would be naive, since he is widely perceived to be playing second fiddle to Putin in the latter’s new role as Prime Minster.
When he was Deputy Prime Minister last year, Medvedev and his colleague Sergei Ivanov, who was then also tipped to be a candidate for the presidency, were accused of saying nothing fundamentally new regarding the government’s future liberal economic policies at the forum. They sang from the same hymn sheet as their boss.
However, it is inevitable that Medvedev will face new economic challenges as a result of ongoing global economic changes that had yet to surface during the reigns of Yeltsin and Putin. The public is expecting clear-cut answers to these questions at the economic forum.
While Putin is perceived by many in Russia to have raised the nation to the level of an energy superpower of a might to match those of the Western economic powers, at the St. Petersburg economic forum Medvedev is expected to hint at how he plans to withstand turbulent times.
Medvedev must prove that it was not only thanks to soaring oil prices on the world market that Russia’s economy revived during Putin’s tenure. As the world is busy looking for alternative energy sources and resources are being systematically exhausted both in Russia and across the world, Medvedev is expected to speak on this issue at the forum.
He is also expected to respond to a new call for Russia to put more emphasis on the development and export of hi-tech and nano-technology in order to wean the country away from its total dependence on energy and military exports — an issue that has held little weight at previous forums.
As searches for new energy alternatives take place in parallel with the exploration of new natural resources sites, Medvedev is expected to show how well he is equipped to face the bitter scramble ahead with the United States, Canada and the Nordic states for the Arctic continental shelf, over which Russia has so far shown itself to be thoroughly determined.
While Putin’s policies were geared at retaining universal arms industrial hegemony, Medvedev is expected to indicate what policy he intends to follow in this area.
In March 2006, when the public was in the dark as to whether then-Deputy Prime Minister Medvedev or then-Defense Minister Sergei Ivanov, who was also a deputy prime minister, would succeed President Putin, Ivanov was nominated as head of a new defense industry commission to oversee state military procurement. The commission was allocated $25 billion, which together with the Defense Ministry’s budget of $17 billion would deal with state military procurement and arms contracts with foreign countries.
Had Ivanov — like his boss, a man with a KGB background — become president, there would have been no question as to Russia’s economic priority. But Medvedev remains something of a puzzle, because on the one hand he is considered to belong to a new generation of leaders, as a man with a civilian background, while on the other he has vowed to follow in the footsteps of his former boss.
All these issues are revolving around Russia’s 2020 long-term economic plan, which is not immune from the crisis marking the global consumer market that has prompted major market players, including Russia, to revise their long-term economic policies. There are also other problems that may arise due to global warming. These are new challenges that have not been given the significance they deserved at previous forums.
The question arises once again of whether Medvedev’s Russia will open its gates wider to let in foreign investment, or restrict its economy in favor of political gains. What Medvedev has to say on this issue remains to be seen, as he is expected to deliver his speech hours before the discussion of the topic scheduled for later on Saturday afternoon.
But Medvedev did not wait for the forum to reveal some of his economic blueprint.
As president-elect in March, he said, “When I hold the office, my first destination abroad will be a neighboring CIS country to strengthen our traditional ties, including economic relations.” He seemed to be giving a signal that he would pay special attention in his economic policy to the Commonwealth of Independent States.
The suggestion is supported by the fact he indeed made a one-day stopover in Astana, Kazakhstan, on May 22 en route to China on his first international trip since becoming president on May 7. All three countries are members of the Shanghai Cooperation Organization.
He was accompanied by a group of Russian businessmen, which spoke volumes about the nature of the industries at issue. They included Vladimir Yevtushenkov, the billionaire chairman of AFK Sistema, which has interests in telecommunications, technology, real estate and retail; Mikhail Pogosyan, CEO of Sukhoi Aviation Holding Co.; Valery Okulov, CEO of Aeroflot, Russia’s largest airline; and Andrei Kostin, CEO of VTB Group, the country’s second largest bank group.
“Such a beginning is a good continuation of what has been achieved during the past year between you and President Putin,” he told Kazakhstan President Nursultan Nazarbayev, implying that he was following in the footsteps of his predecessor.
But Kazakhstan is not only the second largest of five states bordering the energy-rich Caspian Sea, as well as holding three percent of the world’s oil. It is also a country known for its increasing influence in the neighboring region of the former Soviet republics. Thus, Medvedev was going for long and sustainable gains in line with his national 2020 long-term economic plan.
However, it was only the beginning in what was probably designed to send signals to the West that Medvedev’s Russia would slowly but surely align its economic ties to the East rather than to the West. Medvedev is expected to confirm this at the forum.
The president and his delegates struck multi-billion dollar deals in China in the initial stages to boost trade between the two countries to reach a target of $80 billion by 2010. Trade grew fivefold to $48 billion during Putin’s eight-year tenure. For Medvedev to reach the target of filling a gap of $32 billion in two years, he will have to run where his predecessor walked, prompting him to embrace China thoroughly.
But no sooner had Medvedev returned from China than Prime Minister Putin and a group of government officials and business leaders made a two-day visit to France, where they held talks on economic cooperation in energy, aerospace, transportation and infrastructure.
However, Putin’s visit to France, whose trade with Russia grew to only $16 billion as of last year as opposed to China’s $48 billion, seemed like a symbolic trip aimed at consolidating Russia’s relationship with the European Union as France assumes the Union’s presidency next month.
Given the circumstances surrounding Russia’s economic push to the East in pursuit of the fast-growing economies, India could be Medvedev’s next stop after the forum as there are still a series of nuclear, energy and arms deals in store.
“We are going to create a good investment climate for you to invest in Russia, while we are exploring new markets in China, India, Brazil and other emerging economies,” is the answer that some Western investors expect to hear from Medvedev’s team at the forum, despite the recent passage of a law limiting foreign involvement in Russia’s key economic sectors.
However, the realities are somewhere outside the forum. ln geopolitical terms, Medvedev, like his predecessor, seems to see the fulfillment of the Russian dream in outsmarting Western rivals in a scramble for the global market through exploration of the world’s economic hotspots where the Americans have preferred to use a strong foreign policy backed with military force.
While U.S. policy has always been instrumental in shaping the Kremlin’s economic policies — hence the bilateral relations — Medvedev may be forced to rethink his economic plan, depending on who takes control of the U.S. White House in the upcoming presidential elections. But he will have nothing to worry about if the Republicans remain in power.
American and other foreign investors should not expect a genuine answer from Medvedev and his team at the forum.
TITLE: Forum Cost $30 Mln
AUTHOR: By Anatoly Tyomkin
PUBLISHER: Vedomosti
TEXT: The cost of holding the St. Petersburg Economic Forum, which runs from Friday to Monday, amounts to 716 million rubles ($30 million), it was announced at a session of the event’s organization committee held at the end of last week.
The organizer of the event, the non-commercial St. Petersburg International Economic Forum fund, was created last year by the Ministry for Economic Development, City Hall and the Mariinsky Theater. The subcontractors, due to receive 530 million rubles ($22.27 million) from the fund, were selected at the beginning of the year. They were selected on the basis of experience gained at previous forums, a representative of the fund’s press service said. In addition, companies could get information on the services required on the forum’s official site and send their proposals, he said. In the selection of new subcontractors, the fund made its decisions on the basis of the prices and quality of the services offered, as well as the use of innovative approaches. As the fund is a non-profit organization, it is not obliged to hold tenders, the representative said.
This year’s mobile phone operator for the event is the same provider as last year — Metrocom. The company will be providing landline phone and internet access, as well as the event’s internal informational channel, the fund representative said. A Metrocom representative confirmed that the firm was a contractor for the provision of telecommunications services but declined further comment. Ten million rubles ($420,000) was allotted for the organization of communication links at the forum, according to a presentation made at the organizational committee’s meeting. This is not a huge amount, but could allow for profits of about 10 percent, according to a top manager at a St. Petersburg telecommunications company who wished to remain anonymous. He believes that only Metrocom stood a chance of winning the contract, as it has worked with the economic forum for the last two years and has one of the most developed networks in the city.
“We could have provided communications for the event, but we didn’t know about the order for the service,” said a top manager from the St. Petersburg branch of a Moscow company.
The forum has a budget of 15 million rubles ($630,000) for transport, with Baltic Travel due to receive the full amount. It will provide buses that will shuttle between the city’s hotels and Lenexpo, the venue for the forum, as well as providing other transport for participants and guests outside the exhibition complex, a member of staff at the company who asked to remain anonymous said. In addition, Baltic Travel will be providing cars for the forum. For an event of this scale at least 30 buses will be needed, according to the general director of a St. Petersburg bus tour firm. His company knew about the opportunity of providing services to the forum, but thought that it would not be profitable. Participation in such events is something of a lottery, according to the manager — you never know whether you will eventually be paid or not.
Goods and services provided through the contracts will be received by the head of the department that selected the subcontractor, according to the forum’s site. In the event of their quality or quantity being deficient or deadlines being missed, the department head has the right to fine the subcontractor.
Concord will be providing the catering for participants and guests, with 50 million rubles ($2.1 million) allocated in the budget for this purpose. About 500 personnel will be working at the forum, Concord’s press secretary Inna Rabotyagina said. The catering company will be providing for 2,500 delegates at the sessions at Lenexpo and at official receptions. The manager of a foreign catering company in the city said that the profit margin for catering at the event is just 20 percent. He said that his company has been trying unsuccessfully to win the contract for three years, but has always been turned down by the organizational committee without any explanation.
TITLE: Investment Climate In the Spotlight
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Foreign and domestic investments in Russia showed a drastic decline at the beginning of 2008, according to Rosstat (the Russian Federal State Statistics Service).
2005 and 2006 were years of investment hype for Russia, during which the world’s biggest car and machine makers, such as Nissan and Caterpillar, together with spare parts suppliers began building plants in Russia’s northwest. Espro Management, which has worked in the development of warehouse and industrial real estate since 1996, won an award for its design of Kulon-Baltia, which was named the best warehouse complex of 2005.
Oleg Konovalov, CEO of Espro, is positive about working with international partners and investors as, in his opinion, it encourages competition and promotes well-established standards of quality and management. Yet he emphasizes that foreign investors’ experience occasionally contradicts Russian conditions, standards and legislation.
“For example, they insist on employing western experts, consultants and architects, who sometimes fail to take into account the harsh climactic conditions of this country. As a result we see building designs which fail to bear the weight of snow,” Konovalov says.
In mid-2007, the State Duma, having seen the constant and rapid growth of investments from $55 billion in 2006 to $120 billion in 2007, became concerned that an uncontrolled financial tsunami from abroad might endanger national security and provoke inflation. Advised by economists, parliamentarians called for changes in Russian legislation. A bill limiting foreign investment in the country’s most strategic economic sectors such as the military, energy, metals, telecommunication, aerospace and many more was finally passed in April 2008.
Sergei Spasennov, head of the St. Petersburg practice of Pepelyaev, Goltsblat & Partners law firm, which has rendered legal support for foreign direct investment projects since 1994, insists that domestic and international investors are now able to compete on equal and fair terms. “With the recent changes in Russian legislation, the favors that were once offered to foreigners are now history.”
Nevertheless, investors both inside and outside of Russia now feel that they have seen better years. In April 2008, Rosstat reported on a recent considerable decline in both foreign and domestic investments. “In the first quarter of 2008, foreign investors contributed $17.3 billion to the economy of the Russian Federation — 29.9 percent less than the amount of investments made within the same period in 2007.”
The list of countries which are major investors in Russia, amounting to a combined share of 84 percent, remains almost unchanged and includes the largest investor — Cyprus — followed by the Netherlands, Great Britain, Germany, Switzerland, the United States, France and Ireland, according to the Statistics Service.
Rosstat’s official report on investment decline partly proves forecasts and predictions made last year, and decisively refuted the idea that legal limitations for foreigners would encourage domestic investors. Wide-spread concern was subsequently expressed. At a conference in April hosted by the American Chamber of Commerce, Deputy Economic Development and Trade Minister Stanislav Voskresensky even had to urge foreign investors “not to be scared of the law, and to approach it with trust.” But fund managers seem to be concerned not only by the red tape, corruption and legal limitations set by Russian government officials, but also with the inflation rate, which hit an alarming 14 percent in April, and along with the global credit crunch became another obstacle for entrepreneurs.
Entrepreneurs on both sides of the border are indeed concerned. According to Rosstat, from January to March of 2008, Russian investment abroad also demonstrated a slowdown, with the total amount comprising a comparatively feeble $7.3 billion — 38 percent less than in 2007.
Sergei Spasennov says that City Hall is more concerned with large-scale projects, such as the High Speed Link Road, the Overland Express, and Pulkovo airport complex. Therefore, the investment climate tends to favor big businesses that are affiliated and act in partnership with the local authorities. The chances that state funding will improve investment statistics are low, due to considerable corruption among government officials who control the projects and — just as importantly — control the finances.
What troubles some economists most of all is that along with the inflow of finances allegedly provoking leaps in the inflation rate in the national economy, there is still monetary outflow. In 2007, Russia’s state-controlled Central Bank invested $100.8 billion in the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). In 2007 the two American companies reported combined losses of $5.2 billion, and continued to lose a further alarming $2.35 billion through January to March this year. The Russian funds they hold amount to a quarter of the country’s total financial reserves invested abroad.
Some financial analysts say the companies are only able to stay afloat due to foreign investments, some of which are of Russian origin. If the situation for Fannie Mae and Freddie Mac worsens, the so-called “economic slowdown” in Russia could result in a financial breakdown.
TITLE: Forum Tipped to Be Bigger Than Ever
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: As St. Petersburg braces itself for this weekend’s 12th International Economic Forum, its organizers are determined to make the event live up to its nickname of “a second Davos” amid the increased presence of the world’s leading politicians, economists and business tycoons who will gather to discuss the future and potential of Russia’s booming economy.
As one of the world’s biggest emerging markets, with great geopolitical and economic ambitions, in recent years Russia has established the forum as a supreme showcase of the country’s vast and diversified business potential.
At a recent meeting of the forum’s planning committee, organizers confirmed that the government wants the St. Petersburg event to become the main international event for discussing the most important contemporary economic challenges.
“This is our aim,” said Elvira Nabiullina, Minister of Economic Development and president of the committee.
German Gref, the former Economics Minister who now heads Russia’s largest state-owned bank, Sberbank, last year pledged that the next forum would cover an “even wider range of topics and be even more informative.”
Nevertheless, the volume of agreements and protocols signed during the last forum — worth a staggering $13.5 billions, half of which were private direct investments — showed that the summit’s focus is Russian issues, including the boom in foreign investment, risks and competitiveness accompanying it, the future of doing business in Russia and challenges faced.
In 2007, the general mood in the international business community was one of excitement about the opportunities in Russia.
“The business environment in Russia is absolutely fantastic. Many companies rate this market number one in the world. Russia is much better than China and India, sales and opportunities are very good, due to top quality products with top quality prices,” said Daniel Thorniley, Vice President of the Economist Group in an interview in February at a Moscow conference of Economists.
Since last year, the St. Petersburg forum has become global, judging by the list of participants.
According to the committee’s final records announced at a press briefing, the summit is expected to welcome official delegations from 120 different countries and almost 1,000 representatives of domestic and international business, along with an estimated 180 CEOs. In total at least 8,000 guests will attend and dozens of agreements worth billions of dollars are expected to be signed in the presence of President Dmitry Medvedev and top government officials.
Only time will show if the St. Petersburg forum can truly overtake the multinational World Economic Forum (WEF) in Davos. The annual talks in the Swiss Alps are based on different summits numbering about 200 sessions, usually attended by around 800 leading global CEOs and official delegations from most nations, who meet to discuss global and European challenges.
However, the partnership between the two forums has become closer since the WEF decided in 2006 to support the St. Petersburg event with their new concept of organizing CEO roundtables, which are designed to facilitate in-depth interaction between the CEOs and highest government officials.
Felix Howald, Director for Europe at the WEF, last year compared the two summits to brothers. Speaking on the Russia Today television channel during the event, he said, “We are the older brother that has existed for 37 years, but these two brothers can work together perfectly well and should cooperate.” The St. Petersburg Economic Forum has been held annually since 1997.
This year’s Russian CEO roundtable is crucial because many of the 180 leading global CEOs are expecting to meet Medvedev and influential government heads.
Among the CEOs due to meet the president are BP’s Tony Hayward, Shell’s Jeroen van der Veer, Chevron Corp’s David O’Reilly, PepsiCo’s Michael White, Cargill’s Greg Page, JPMorgan’s James Dimon and Intel Corp’s Craig Barrett.
Christopher Weber, Associate Director and Head of Europe and Central Asia at WEF, emphasized the significance of these meetings for the Russian economy. “The issues that are going to be discussed are foreign direct investment, corruption, corporative transparency and energy security. All these contemporary topics will be raised informally with Russian top officials,” he said in an interview via email, adding that this year the organization of the Russian CEO Roundtable has been planned with Nabiullina.
The St. Petersburg forum is a symbolic moment for Medvedev. His major international debut to the business world comes about 3 months since he was elected in March.
Many expect his opening plenary speech, “National Economic Interests vs Global Governance Institutions” to provide some insight into Russia’s economic development under his rule and his vision of the future role of the Russian economy in the global market.
The new government, headed by former president Vladimir Putin, has to tackle the complex problem of the country’s entry into the World Trade Organization; the question of the diversification of the economy, developing infrastructure, reforming the pension and health care system, interregional and global trade, secured energy supply, global financial risks and inflation.
According to analysts, these are the key economic challenges that must be solved under the auspices of the Medvedev presidency, implementing the government’s optimistic scenario of making the country one of the five most developed economies in terms of GDP by 2020. These topics are certain to be discussed at both the International and Russian days of the forum’s varied program.
Top experts who will moderate some of the conferences will include Lionel Barber, Chief Editor of the Financial Times, and Jim O’Neill, Managing Director and Chief Economist of Goldman Sachs, author of the BRIC concept.
At a briefing, Gref said the forum’s program reflects the most difficult problems that the world economy is facing today. “The world economy has presented us with two basic challenges: market globalization and the need to protect national economic interests. If earlier we were faced with difficulties in exporting energy, then now it seems that we have the same problems in other sectors as well, for example in the export of food production.”
First Deputy Prime Minister Alexei Kudrin and Nabiullina are expecting to speak at Sunday’s plenary session, “SWOT Analysis of the Russian Economy — Global Challenges and Opportunities through 2020,” discussing the strengths and weaknesses of the domestic economy and the country’s economic policy, to show Russia as a reliable and trustworthy partner.
Unprecedented in scale, the forum has a total budget of 700 million rubles ($30 million) — about 30 percent more than last year’s budget, according to the organizers. Part of this sum has come from the Russian business community. Sberbank and state energy giant Gazprom are the forum’s main sponsors.
Last year an entire new complex covering more than eight square kilometers was built at Lenexpo to host the forum, equipped with cutting edge lighting, sound, huge screens and communication systems.
The state is clearly determined to put the St. Petersburg Economic Forum on the map and present a real rival for its Alpine sibling.
TITLE: Does Attendance Pay?
AUTHOR: By Alexei Shaposhnikov and Gleb Krampets
PUBLISHER: Vedomosti
TEXT: The budget for the St. Petersburg Economic Forum amounts to 700 million rubles ($29.4 million) according to the web site of City Hall’s Economic Development, Industrial Policy and Trade Committee. The city’s budget is providing 25 million rubles ($1.04 million) of that amount, and about half of the total cost will come from registration fees paid by participants (ranging from 110,000 rubles to 150,000 rubles ($4,620-$6,300) depending on when the payment was made). This year 2,500 participants have registered, including representatives of 1,000 companies and 300 official delegations, Economic Development Minister Elvira Nabiullina said. The cost of the forum in 2007 was 500 million rubles ($21 million), with participation costing from 100,000 to 140,000 rubles ($4,200-$5,900). The general sponsor last year was Gazprom, which contributed 45 million rubles ($1.9 million) for the privilege. This year it will be replaced by Sberbank, which is paying a contribution of around 50 million rubles ($2.1 million), according to a representative of one of the companies. The cost of standard sponsorship has grown from 15 million to 25 million rubles ($630,000-$1 million). Their number includes Vimpelcom, Basic Element, Yevroset, Vnesheconombank, Bank Moskvy, Mechel, Unified Energy System and BMW.
The chairman of the board at Yevroset, Yevgeny Chichvarkin, believes that participation in the forum will be very beneficial. “In just a few hours at the forum you can solve extremely varied problems — from negotiations with regulators about import rates, to reducing the interest rates paid on the company’s credit portfolio,” Chichvarkin said.
Not everyone can gain access to the forum. There were more applications than places, and only the largest and most influential companies have been accredited, said German Gref, president of Sberbank and a member of the forum’s organizational committee.
The press service of the St. Petersburg International Economic Forum fund, which collects payment from participants, declined to comment.
TITLE: WTO Bid Brings Copyright Clampdown
AUTHOR: By Olga Sharapova
PUBLISHER: Special to The St. Petersburg Times
TEXT: One of the roundtables at the 12th St. Petersburg International Economic Forum is dedicated to protecting intellectual property in Russia. This matter has become a crucial issue ever since Russia began the process of joining the World Trade Organization.
The pirated CDs, DVDs and software programs awash on the local market have hindered Russia’s negotiations to enter the WTO. Two years ago, the illegal sales turnover of counterfeit goods was more than 90 percent. In 2006, before the Group of Eight summit in St. Petersburg, the local police began an organized campaign against widespread pirated goods on the film and music market. June of that year also saw the foundation of the Organization for the Control and Protection of Copyright and Related Rights, which included official representatives of Universal Pictures, Vox Video, DVD Magic and others in Russia. Together, the law enforcement agencies and legal owners of intellectual property launched a large-scale attack on counterfeit commodities.
Well-known local shops such as 505, Iceberg and Titanic that sell music and film on disc were closed to be checked for pirated goods and were then reorganized.
As a result of the war on copyright infringement in St. Petersburg, the director of the Orbi film and music chain, Oksana Okhrimets, was recently arrested. In cooperation with a state-licensed company called Favorite, the chain had a turnover of one million dollars per month.
It is not only American and European intellectual property rights that remain under threat from pirates. Russian pop music and software programs are also targets for making a quick buck. The antivirus software programs Consultant Plus and 1C are among the most popular with programs, not only at offices and accountants, but also among producers of pirated discs.
According to statistics from St. Petersburg’s law-enforcement agencies, offences connected with copyright infringements have now decreased by a total of 35 percent.
But according to Sergei Sereda, director of TAdviser, a center for information technology investigations, the situation on the Russian software market cannot be changed by merely reinforcing the law. “The level of people’s income is the strongest factor in whether they choose to buy a legal disc, or counterfeit software.”
Currently, the difference in price between official and illegal CDs or DVDs is about 100-150 rubles. The price gap for software, however, is far greater. Installing an officially registered version of Microsoft Windows, Word, Excel and other programs will set back offices and PC-users between 3,000 and 5,000 rubles ($120-$200), or even more if the customer wants just one program. In comparison, unlicensed software may cost no more than 300 rubles to 500 rubles ($12-$20).
However, some supermarket chains such as Lenta and O’Key, which have a huge daily sales turnover, sell legal music and film on disc from 75 to 120 rubles — even lower than the cost of pirated goods, which now cost about 150-170 rubles.
One of the underlying causes behind Russia’s problem of protecting intellectual property is mentality — traditionally, there is little history of the concept in the country. In the Soviet Union, actors, musicians, writers and scientists had no rights over their intellectual creations, or regular income for their creative work and inventions. As a result, the country lacks long-term experience of how to protect and use such rights.
On the other hand, people who purchase intellectual property often do not understand why they should have to pay a lot of money to listen to music, watch a film or pay more for legal software than they paid for the computer itself. In the U.S.S.R., most kinds of creative work cost very little.
One Russian blogger summed up the attitude to intellectual property rights.
“Good for the pirates! I see bulldozers breaking up pirate discs on TV, but pirates don’t watch TV. Plus, we don’t have enough machines to destroy all the CDs and DVDs. I have visited some provincial towns and couldn’t find even one legal disc. I am against the latest strict laws, which allow criminal cases to be opened against producers of counterfeit goods. If they (artists, musicians) are working, as they say, for the people, why should they be getting rich with our help?”
Likeminded Russians are not alone. The so-called free culture movement, which rejects the modern concept of intellectual property, is a worldwide phenomenon.
There is however another point of view on the issue of intellectual property rights in Russia. In St. Petersburg and Moscow, where salaries are higher and various intellectual property goods are more widely available than in other parts of Russia, the situation is better than in the regions. According to research by Delfi marketing agency, every second resident of Omsk, one of the biggest cities in Siberia, believes that people who buy counterfeit goods are guilty of encouraging theft. On the other hand, 49.3 percent of Omsk’s residents regularly use the Internet, and 33 percent of them use it to download illegal programs, games and music.
The Internet is the most difficult forum in which to control the abuse of intellectual property rights — and not only in Russia.
Russia’s official position on the regulation of intellectual property rights, trademarks and patents is now very clear, and is aimed at upholding copyright laws at all times.
In January 2008, the State Duma ratified the fourth part of the Civil Code, according to which all crimes connected with the illegal dissemination of copyright material and abuse of intellectural property rights are classified as administrative and criminal offences. President Dmitry Medvedev, who was deputy prime minister when the law was passed, compared the ratification with the establishment of the constitution, and it was the fourth section of the Civil Code that facilitated the destruction of goods and the clampdown at Orbi and other pirate companies.
Significantly, the fourth part of the Civil Code combines all the previous copyright laws and related laws on patents and trademarks that were introduced in the 1990s. This point is the most contentious aspect of the new law, according to experts.
Olga Barannikova, a representative of the Coalition for Intellectual Property Rights in Russia, says that the fourth part of the Civil Code should have been the subject of public discussion before an official approval. The Civil Code cannot be the only legal instrument that regulates the protection of intellectual property rights, and in practice, previous laws should not have been superceded by the state decision, according to Barannikova.
Lawyers point out that there is no provision in the fourth part of the Civil Code for consumer rights, although this is an equally important aspect of the intellectual property rights issue. Furthermore, Russia does not yet have a clear system for registering intellectual property rights.
On a political level, however, in the words of Veniamin Yakovlev, one of the authors of this section of the Civil Code, the ratification of the law should show the World Trade Organization that Russia has the legal requirements in place for the regulation of copyright issues.
TITLE: Ground Broken at Hyundai Plant
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The South Korean carmaker Hyundai laid the first stone for the building of its plant near St. Petersburg on Thursday.
St. Petersburg Governor Valentina Matviyenko said that “the laying of the first stone in the foundation of Hyundai — one of the leaders of the world’s motor-car construction — is a historical event in St. Petersburg,” according to a press release from City Hall.
“St. Petersburg is the only region of Russia where several of the world’s motor-car giants are simultaneously building plants. World brands such as Toyota, Nissan, General Motors, and Suzuki have come to our city. Hyundai makes this total a ‘wonderful five,’” Matviyenko said.
The governor said that when she met the president of Hyundai in Seoul for the signing of the contract, he emphasized the company’s plan to build a model of car that would be suitable for conditions in Russia.
“There is already serious work being done about this, and I believe it will be a Hyundai car, but with Russian nuances. That’s very important, especially taking into account our weather conditions,” Matviyenko said, according to Russian television’s Channel One.
Hyundai plans to start production of its cars at the beginning of 2011. It initially plans to produce 100,000 cars a year at the plant, the construction of which has attracted 330 million euros in investment. In future the company plans to increase production up to 200,000 cars a year, said Ahn Joo-Soo, vice-president of Hyundai.
“St. Petersburg has a good geographical position for logistics and good infrastructure. This is a place where all the leading automakers are and it’s easier to get highly skilled workers,” said Ahn.
The new car will belong to the C-class category with 1.4- and 1.6 liter engines. The car will have a mid-range price, he said.
The company is planning to hire up to 1600 workers, according to the city administration.
St. Petersburg has recently acquired the new label of “capital of Russian automobile construction,” or the “Russian Detroit.”
TITLE: Mixing Business With Pleasure
AUTHOR: By Yelena Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: The cultural program of the Economic Forum this year is no less eventful than the business program. Art, music and theater lovers will have a vast array of dazzling events to choose from and will almost certainly not have enough time to visit all the shows taking place during the forum this weekend.
Among the events taking place in the city within the official cultural agenda of the St. Petersburg International Economic Forum is Beauty on the Neva, the second international festival held as an official event of the Confederation Mondiale de la Coiffure (World Hairdressing Confederation), which launched a branch in Russia, CMC-Russia, in 2007.
Having kicked off on Thursday with a Professional Day during which several master classes and seminars for hairdressers were held at the Menshikov Hall of the Military Academy of Logistics and Transport, it was followed by a bridal show and a yacht regatta off the beach of the Peter and Paul Fortress.
On Friday, the main event of the festival, Show of Nations, will take place at the Mikhailovsky Castle. It will present gala performances by world stars from 12 countries — France, Belgium, Bulgaria, Greece, Italy, Turkey, Romania, Czech Republic, Poland, Switzerland, Israel and Russia.
“Every performance of the show represents the conceptual solution of a stylist, his or her vision, a dream expressed in a musical and physical form composed by professional directors and choreographers,” said Anna Mikhailova, president of CMC-Russia.
On the same evening, the St. Petersburg Academic Mikhailovsky Theater will host a concert performed by the National Philharmonic Orchestra of Russia conducted by Vladimir Spivakov, a world-famous violinist and conductor. The concert program features compositions in diverse styles from a range of eras, including Bellini and Rossini, Verdi and Puccini, Rachmaninoff and Shostakovich.
Later the same night, Roger Waters, the English singer, bass guitarist, songwriter and one of the founders of the legendary group Pink Floyd will give a free concert for the citizens and guests of the city on Palace Square. The show, entitled “The Dark Side of the Moon,” will feature the band’s greatest hits.
On Saturday night, the governor’s reception for guests of the forum in the Mikhailovsky gardens will present a fusion of different art forms and styles, gathering together world-famous ballet dancers such as Ilze Liepa and the Boris Eifman ballet troupe, performers of classical music such as Denis Matsuev and Sergei Stadler, and jazz performers such as Igor Butman.
For those not invited to the governor’s reception, a laser show with music will be held on the Strelka of Vasilyevsky Island on Saturday night from 00.30 to 1.30am.
Among the ballet performances on the list of the three-day cultural program of the forum are the new version of Spartak at the Mikhailovsky Theater, Sleeping Beauty at the Mariinsky Theater, and two performances of Swan Lake — one at the St. Petersburg State Theater of Musical Comedy on Friday and the other at the Alexandriinsky Theater on Saturday.
There will also be a concert featuring the ballet soloist Denis Matviyenko along with the stars of the Bolshoi and Mariinsky Theaters. The concert will be held at the Mikhailovsky Theater, while at the Mariinsky Theater, ballet star Uliana Lopatkina will give a gala-performance at the Mariinsky Theater.
On Sunday, the chamber choir of Smolny Cathedral will perform a concert at St. Isaac’s Cathedral dedicated to its 150th anniversary, while at the same time the Mariinsky Theater Concert Hall will host a concert by the Mariinsky’s brass orchestra.
TITLE: Forum Set To Pass Locals By
PUBLISHER: Vedomosti
TEXT: Thirty-eight percent of Petersburgers are unaware that the International Economic Forum is taking place in the city this weekend, according to research by the Agency of Social Information (ASI), which conducted a telephone survey of 1,616 people in May.
Seventy percent of respondents support the forum being held, while another 16 percent were undecided. Among those who said they did not support the forum, most were between 35 and 44 years of age (23 percent), from 45 to 54 years old (18.6 percent) and were entrepreneurs (17 percent.)
Any down sides to the forum may be connected to traffic and transport, since half the city has been dug up and traffic flows have been diverted and restricted, said the general director of the Paprika Branding agency, Margarita Vasilyeva.
“There are always those who are discontent,” agreed Alexander Pushkin, sales director of Temp Perviy, which is part of the Nakhodka foodstore chain. In his opinion, holding the forum has a positive economic effect on the city, boosting the profits of hotels and catering companies. And most importantly, it boosts the status of the city, he added.
Those who know nothing about the upcoming forum are the kind of people who are not interested in anything, because there is information about the forum everywhere, from outdoor advertising to postings on the Internet, said Vasilyeva.
Spending on PR and advertising this year came to a total of 51 million rubles ($2.1 million), compared to 54.7 million rubles ($2.3 million) in 2007.
Last year 20 percent of locals did not know about the forum, recalled Roman Mogilevsky, head of the ASI.
TITLE: Moscow’s Fig Leaf
AUTHOR: By Ron Asmus and Mark Leonard
TEXT: The West could be sleepwalking into a war on the European continent. Georgia, which burst into view with a moving display of democratic ambition during the Rose Revolution of 2003, is teetering on the brink of war with Russia over the separatist Georgian enclave of Abkhazia. The outcome of this crisis — involving a fledgling democracy with aspirations to join NATO and the European Union — will help determine the rules of the post-Cold War security system. But Western diplomats are not sending strong enough signals to either side.
Moscow seems determined to provoke Tbilisi to take military action that would discredit Georgia in Western eyes and kill the country’s aspirations to join NATO. Prime Minister Vladimir Putin used the West’s recognition of Kosovo as a pretext to strengthen his own country’s links with the breakaway republic. One of his last acts as president was to establish “direct official relations” with Abkhaz quasi-state bodies, a move just short of outright diplomatic recognition. In early May, Moscow sent an extra 1,000 “peacekeeping” troops to the region, using the cover of a United Nations mandate to change the balance of power in the enclave.
Yet Georgia also is far from perfect. Its president, Mikheil Saakashvili, is charismatic, brash and a touch authoritarian. He arouses as much anxiety in European capitals as he does admiration. Saakashvili sees himself as a “father of the nation” and is determined to unify his country. If he is forced to choose between Georgian unity and the West, there is a danger he will be tempted to try a land grab of Abkhazia by force.
But despite of its president’s mercurial character, Georgia represents the best hope for democracy in the region. The recent presidential and parliamentary elections — which Saakashvili’s party won handsomely — have gone some way toward undoing the damage that his 2007 crackdown did to his democratic credentials.
What should the West do? Thus far, U.S. and EU actions have been largely limited to issuing statements calling for restraint — statements that seem to have had little impact on either side. Unconditional Western support for Georgia could encourage Tbilisi to take actions that it may regret later. Yet preaching at Tbilisi without providing it with any credible support is not a viable strategy. In fact, the EU’s attempts to avoid entanglement could simply end up strengthening the hawks on both sides.
The West needs to understand that the best way to keep the peace is to get involved, rather than standing on the sidelines. The United States and the EU need to send a clear signal to both sides. President Dmitry Medvedev must be told that future relations with the West — from visits to cooperation agreements — will be influenced by Russian behavior toward its neighbors.
On the other hand, Washington and Brussels must also send a message of tough love to Tbilisi, making it clear that Western support is conditional on Georgian restraint. If Georgia attempted to pursue a land grab, it would end any hope of integration into the West.
Above all, Western countries need to get directly involved in building confidence between the two sides. The current peacekeeping and negotiating formats are not working. For years they froze the tensions in Abkhazia, but now they have become pawns of Russian policy. Moscow is using the UN and the Organization for Security and Cooperation in Europe peacekeeping mandates as a fig leaf to legitimize a military buildup. It claims to be a mediator but is de facto a party in the conflict.
In the early 1990s, Western countries urged Russia to assume a leading peacekeeping role because they were not willing to put their own forces in. But today these peacekeepers are leading the region closer to conflict. Western countries must be prepared to withdraw those mandates and insist on new missions that are truly neutral and include greater Western participation, both civilian and military.
Finally, Western governments need to help create a real peace process about Abkhazia’s future. The Georgian strategy of publishing peace plans for Western consumption is not enough. Georgia must show that it is willing to engage in a real dialogue, without any preconditions, with the Abkhaz leadership.
The key to a long-term solution will be breaking down the isolation on both sides of the conflict by creating new human and economic ties and the kind of security that will allow people to start returning to their homes.
Ultimately the stakes in this crisis go well beyond the Caucasus. The escalation threatens to make a mockery of the principles on which the West has worked to build a post-Cold War peace — principles that transcended spheres of influence and that gave all countries, big and small and irrespective of their geography, the right peacefully to determine their own future. Moscow agreed to those principles in the 1990s, but now, flush with nationalism and petrodollars, it flouts them. The West should not. That is why the situation in Georgia is a litmus test for us.
Ron Asmus is executive director of the Transatlantic center of the German Marshall Fund of the United States in Brussels. Mark Leonard is executive director of the European Council on Foreign Relations. This comment appeared in the Financial Times.
TITLE: Foreign Bank Accounts Prevent War
AUTHOR: By Yulia Latynina
TEXT: Georgia says Russia was planning to invade the Kodor Gorge during the early morning hours on May 9. Although the breakaway republic of Abkhazia considers the gorge a part of its territory, in the strict legal sense, the Kodor Gorge is Georgian territory and it is controlled by Tbilisi now. Therefore, had this attack actually taken place on Victory Day, it would have been classified as a Russian-Georgian war.
The main reason why this attack did not take place was unprecedented strong opposition from the West, including the United Nations’ sharp condemnation of Russia after Moscow shot down Georgia’s unmanned reconnaissance aircraft on April 20. Another reason — less well known — was U.S. President George W. Bush’s phone call to President Dmitry Medvedev.
The excellent work by Georgia’s military intelligence was an unpleasant surprise for Russia’s generals. Tbilisi was able to produce clear evidence of Moscow’s military buildup in the region, including howitzers brought to the city of Tkvarcheli, an ideal place to shell the Kodor Gorge. In addition, Georgian intelligence spotted intensified paratrooper training exercises in the region, not to mention the relocation
of Tochka-U short-range missiles to North
Ossetia, from which they could have
easily reached Tbilisi.
It is inconceivable that then-President Vladimir Putin was not aware of this military buildup. Moreover, the escalation of forces in the region occurred right after Putin called for closer economic integration between Russia, Abkhazia and South Ossetia.
For Abkhazia, the war would have surely meant losing its independence to either Georgia or Russia.
What impact would this war have had on Georgia? If attacked, Tbilisi would have been forced to retaliate.
No country will turn the left cheek after the right comes under howitzer fire. But even under the best of military outcomes for Tbilisi, any armed conflict with Russia would have wreaked havoc with Georgia’s economy.
What would an Abkhaz war have meant for Russia? It would have caused the total destabilization of the entire Caucasus region, effectively turning it into a new Balkans.
Paradoxically, although this war would have created serious problems for Russia, there were two groups that would have clearly benefited. One is the military, which profits from any war — even the one that is lost. Another group is Putin and his entourage. A war that would have begun immediately after Medvedev’s inauguration would have assured that Putin effectively stayed in power.
In the end, however, it was the West that ruined the general’s big plans for an invasion. The military had banked on the hope that the West would not care who was attacking whom in the region. But the West — and particularly the East European democracies from Poland to Latvia — were very concerned over a military conflict in the region, because they saw it as part of an attempt to fundamentally restructure the post-Soviet geopolitical landscape in Russia’s favor.
If Russia attacked Abkhazia, this would have placed Moscow squarely in the category of the world’s rogue state. A country is considered a rogue state not so much because it eliminates freedoms for its own citizens, but because it pursues a reckless, aggressive foreign policy.
One interesting twist, though, is that the leaders of rogue states keep their money in foreign bank accounts, which are often frozen after they wreak havoc in other countries. Perhaps it was precisely this factor that played the most important role in dissuading Moscow from invading Abkhazia.
In the end, Moscow’s elite were guided by one sober and pragmatic rule — you should never fight against those countries in which your bank accounts are located. I think I know why Putin had such a gloomy, sour expression on his face during Medvedev’s inauguration.
Yulia Latynina hosts a political talk show
on Ekho Moskvy radio.
TITLE: Chernov’s
choice
TEXT: Bob Dylan’s local concert drew between 4,000 and 5,000 fans on Tuesday, Kommersant reported. The number included fans who came in from Moscow and other Russian cities to see Dylan’s only Russian concert on the tour, as the legend was stopping in the city on his way from Helsinki to Tallinn.
It may look like a ridiculously paltry turnout for a European Dylan concert — the Ice Palace, where the concert was held, can seat 12,000 and must have looked half-empty with, according to another report, only 50 fans raving in front of the stage — but it’s a huge number for Russia where Dylan, for a number of reasons including poor local knowledge of English, lack of interest in American roots music and an underdeveloped taste in popular music, only has a cult following.
Only playing keyboard (no trademark guitar-harmonica combination), Dylan performed 17 songs in two hours, including “Don’t Think Twice, It’s All Right,” “Girl of the North Country,” “Just Like a Woman,” “It’s Alright, Ma (I’m Only Bleeding)” and “Highway 61 Revisited”, with “Like a Rolling Stone” as a last encore, according to Bob Links website.
While Roger Waters is notorious for his anti-capitalist, anti-politician stance (metaphorically depicting the targets of his criticism as “pigs” and “dogs” in his former band Pink Floyd’s 1977 album “Animals”), Waters has found himself in the perhaps uncomfortable position of being a “gift” of capitalists and politicians.
Waters’ City Hall-supported open-air concert on Palace Square on Friday is held on the opening day of the International Economic Forum and is, officially, a “gift from the Forum to guests and residents of St. Petersburg,” according to the Economic Forum’s English-language website.
Waters might still use a big flying inflatable pig as a stage prop, but he appears to have changed his principles or been misinformed about the nature of his show, which is part of the official event drawing thousands of top businessmen and politicians, including President Dmitry Medvedev, to St. Petersburg.
Heavy security measures and the suppression of public protests are expected.
And, in reality, it’s not much of a gift — although the concert is free in theory, a large area of Palace Square is reserved for a V.I.P. zone, with tickets costing between 3,000 and 15,000 rubles ($127-$636).
Could there be a better illustration of capitalist greed?
This week’s other concerts of note include that by PJ Harvey, who will perform at Music Hall on Saturday, and Massive Attack, who will open the Stereoleto series of music events on Yelagin Ostrov on Wednesday.
— By Sergey Chernov
TITLE: Classic cuisine
AUTHOR: By Matt Brown
PUBLISHER: Staff Writer
TEXT: Polovtsev Mansion // 52 Bolshaya Morskaya Ulitsa. Tel: 571 5900. // www.polovtsev.restoran.ru // Open from noon through 11 p.m. // Dinner for two without alcohol 1,850 rubles ($75)
Seen one palace, seen ’em all? St. Petersburg can be like that.
After the Bolshevik coup in 1917, the terrorists rubbed their hands with glee and stole hundreds of the city’s grandest residences and put them to better use. One of the most notorious of these “expropriations” concerned the Nabokov Mansion on Bolshaya Morskaya Ulitsa, the house where author Vladimir Nabokov was born in 1899. In his autobiography written in the 1950s, Nabokov wrote bitterly, not of the theft of mere bricks and mortar but of a past despoiled by the thuggery of the Soviet state.
But St. Petersburg’s palaces are now being returned to something of their former splendor if not to their former owners or their ancestors. The Nabokov House survived being made into offices and even a laundry and now houses a fascinating museum about the writer. And the Polovtsev Mansion, on the other side of the street from the Nabokov Mansion, once the residence of a courtier to Tsar Alexander III, became Dom Arkhitektura (House of Architects) under the Soviets. It remains the HQ for the city’s architects but also houses a restaurant that attempts to recapture an Imperial idyll.
The Polovtsev Mansion restaurant makes the most of its magnificent interior. The walls of the first of two halls (seating 60) are covered in cream and white plaster moldings with gilt trim and neoclassical frescoes. The second hall is more imposing, with carved walnut paneling, dark damask wall coverings and Moorish tapestries evoking the early 17th century. The table settings are formal with silver cutlery on starched white tablecloths glinting in the light of a magnificent chandelier. Heavy velvet drapes make the room a little gloomy and the marble floor is hard and cold, while the scarlet carpeting in the lobby where smoking is allowed has seen better days. But the setting is impressive and worth the trip.
The menu, presented to diners in heavy leather binders, contains a deeply conventional selection of classic Russian dishes and reads like an exam paper for first-year chefs. This is either depressing or comforting depending on your point of view. Whether the meal would rise to match the magnificence of the noble ambience would depend on the ability of the chef and not on any culinary novelties.
The appearance of Siberian pelmeni (250 rubles, $10) which looked like they came out of a packet wasn’t very promising. These meat filled dumplings are the macaroni cheese of Russia but they can be delicious when combined with sour cream and chopped dill. Of a higher order altogether were two excellent and hefty potato cakes that, with added ham, were classic Belarussian draniki rather than Jewish latkes (250 rubles, $10). Three mushroom-stuffed pancakes (blinchiki) were also brilliantly presented as little packages tied up with strips of leek and filled with freshly chopped champignons in cream and butter (200 rubles, $8).
The meal took an adventurous turn toward China with a main course of crispy strips of battered chicken in a sweet-and-sour sauce on black-and-white rice (390 rubles, $16) but the detour was a mistake. More in line with the haute cuisine standards set by the starters was “Ministerial Salmon” — an elite cut of fish poached in white wine and served on a bed of shredded, steamed leek (500 rubles, $20). The white sauce served with the salmon was a classic. The chef passes with flying colors.
All the dishes were extremely hot when they were served and one imagines vast ovens and an army of chefs humming away deep in the cellars of the Polovtsev Mansion. The old waiter was courtly and made every effort to cater to guests’ needs, even presenting a bottle of Diet Coke to a diner in the manner of a wine bottle. You won’t have seen all of St. Petersburg’s palaces until you’ve seen this one.
TITLE: Get ready for Ghenghis
AUTHOR: By Lewis Beale
PUBLISHER: The Los Angeles Times
TEXT: “Mongol” may fool you: It’s a foreign-language film, yes, but it has enough appeal to pull in the same fanboy audience that made “300” a huge hit. Russian director Sergei Bodrov’s Oscar-nominated movie about the early life of Genghis Khan is thoroughly exotic, utterly romantic, beautifully shot and features some of the bloodiest, most astounding battles ever put on screen. It is — no kidding — totally cool. Not that the 59-year-old Bodrov recognized this during the film’s grueling shoot.
“When I was making this movie, it was a fight, a battle, a war, and I was thinking only how to survive,” says Bodrov. “I was thinking it was a fresh story, nobody had made a movie about this guy before, but when I was making it, I didn’t think about the future. Then when it was finished and I saw it for the first time, at the Toronto Film Festival, and I saw how people reacted, I thought, ‘This will be good for me.’”
Bodrov isn’t kidding with that war metaphor. Shooting in Mongolia, China and Kazakhstan wasn’t exactly like a day on the back lot. In fact, the production was initially suspended after nine weeks because, says the director, “We didn’t have enough money, the weather conditions were bad, and [the production] was much bigger than we thought. So I said we would come back next year, and I was able to find more money and we were much more prepared to shoot the movie, and we did it right.”
Still, some locations were so remote that the film company had to build roads to get to them. When Bodrov needed 1,500 horses and riders for a battle sequence, he had to import them from Kazakhstan into China because, he says, “The Chinese, they can’t ride. You can’t use the Chinese army. You have to bring the people in with their own horses, then train them, because they’re not professional actors. So I brought people from Kazakhstan and they trained for two months.”
Tough shoots are nothing new for Bodrov. His other Oscar-nominated film (in the foreign-language category), 1996’s “Prisoner of the Mountains,” was filmed in the Russian republic of Dagestan, near the Chechnyan border, where Bodrov had to hire security to protect him from drug traffickers and other forms of local lowlife. “Mongol” was particularly special for Bodrov, however, because its challenges helped the director keep his mind off the 2002 death of his son, Sergei Jr. (star of “Prisoner of the Mountains”), who had been killed in an avalanche in the Caucasus while making a film. His death, says Bodrov, “was almost a reason for me to go to unknown places and do a big, tough movie and be really busy. I was busy for four years. I’m much more serious now, taking a different approach when I make my movies. I think each one could be my last.”
The story of the great Khan also resonated for Bodrov in a geopolitical sense. When the Mongol leader, who died in 1227, consolidated all the nomadic tribes in his homeland, he and his descendants wound up conquering a good portion of Eurasia, including most of modern-day Russia. “Genghis Khan is one of the most hated names in Russia,” says Bodrov. “We lived 200 years under Mongol rule and we still blame them for all our problems. People were shocked I was making a movie about him, but I said, ‘Good or bad, he’s part of our history.’”
Bodrov got it from both sides; contemporary Mongolians were not happy about a Russian making a film about their national hero. “It was a scandal, one I wasn’t ready for,” he says. “Genghis Khan’s name was forbidden in Mongolia for 70 years because of the Communists and because he was a Russian enemy. When everything collapsed, he became a living god. So for Mongolians, I’m coming — and my intentions were very good — but for them it was not good.” In fact, Bodrov was so concerned about negative reaction inside the country, he shot only landscapes there, then left.
If nothing else, the advance buzz for his latest work may give Bodrov a second chance at cracking the Hollywood inner circle. In 2000, he made “Running Free,” a children’s film for Columbia, but the results were disastrous — Bodrov hints at unending studio interference but will say only that “it was not my best experience.”
Now, however, after “Mongol” has made the festival circuit, Bodrov says he is getting “a lot of offers, huge offers,” including the possibility of making a film about the Italian explorer Marco Polo.
“People like ‘Mongol’ because it’s an epic,” he says. “But I want to be very careful with projects and people.”
TITLE: Dinara Safina Aims For First Grand Slam Crown
AUTHOR: By Pritha Sarkar
PUBLISHER: Reuters
TEXT: PARIS — Roger Federer’s pursuit of an elusive French Open crown gathered momentum on Wednesday while Dinara Safina again tottered on the brink of elimination before salvaging her title dreams to reach the semi-finals.
As Safina booked an all-Russian last-four date with fourth seed Svetlana Kuznetsova, Federer overcame a slight hiccup to record a 2-6 6-2 6-3 6-4 win over Chilean Fernando Gonzalez.
“To make four (semis) in a row (here) is a great accomplishment, but this year I’m obviously aiming for the title so I hope it’s not going to stop here,” said Federer, who is eyeing a third straight final with champion Rafael Nadal.
Next up for world number one Federer will be local favorite Gael Monfils, who became the first Frenchman to reach the last four since Sebastien Grosjean in 2001 with a 6-3 3-6 6-3 6-1 win over Spanish fifth see David Ferrer.
Safina reached the last four of a major for the first time with a 4-6 7-6 6-0 win over fellow Russian Yelena Dementieva, while Kuznetsova overcame Estonian Kaia Kanepi 7-5 6-2.
Doing things the easy way is not a mantra known to Safina and for the second match in succession, the Russian produced a stirring comeback from a set and 5-2 down, saved a match point and then took pleasure in trampling all over her hapless victim.
“It’s not easy to come back every time because once it’s going to be too late,” a grinning Safina told reporters.
“(But) Impossible is nothing,” she added, adopting the slogan of a famous clothing sponsor.
Kuznetsova managed to avoid any high drama. Kanepi opted to contest her first grand slam quarter-final wearing sunglasses but it was not long before she was dazzled by the Russian’s charge towards victory.
Kuznetsova’s win over Kanepi guaranteed for the second grand slam running, Russia and Serbia will do battle for the honors.
With Ana Ivanovic contesting the other semi-final against fellow Serb Jelena Jankovic, both Eastern European nations will be represented in the women’s showpiece match on Saturday.
In January Russian Maria Sharapova had overwhelmed Ivanovic in the Australian Open final.
Safina, the conqueror of Sharapova in the previous round, looked to have one foot on the plane back home to Moscow on Wednesday before she suddenly came to life.
Dementieva served for the match at 5-2 up in the second set, but a combination of her fragile serve and a rash of blistering winners flying from her opponent’s racket saw her get broken.
In the next game, seventh seed Dementieva seemed to have earned her ‘get out of jail free card’ when Safina served up a double fault to hand the 2004-runner-up a match point.
But just as she did against Sharapova, Safina took the moment in her stride, narrowed her eyes and slammed the door shut by unleashing a ferocious winner.
As the contest wore on, it seemed as if Safina had hit the replay button on the Sharapova match from two days ago and true to form, it was not long before her temper boiled over.
The racket went flying, she turned up the decibel levels on her mutterings and at 5-5 in the second set, the red geraniums planted courtside faced the full force of her anger.
She whacked the potted display with her racket, resulting in a flurry of petals to fall on to the ground, but the episode proved to have the desired effect.
After sealing the tiebreak 7-5, she ran amok in the third to leave a crestfallen Dementieva to wonder what might have been.
“I think she played quite well today,” deduced Dementieva.
The success also earned Safina the distinction of becoming the first woman in a grand slam to have come from match point down in successive matches—winning both.
If Safina is one to believe in omens, she would do well to read up on her brother Marat’s run to the Australian Open title.
TITLE: Red Wings Claim Stanley Cup
PUBLISHER: Reuters
TEXT: PITTSBURGH — The Detroit Red Wings clinched the Stanley Cup with a nailbiting 3-2 Game Six win over the Pittsburgh Penguins on Wednesday.
The Red Wings, who were just 35 seconds from securing the Cup in Game Five on Monday, shrugged off the disappointment of the home defeat and hung on to claim the best-of-seven series 4-2 and lift their fourth Cup in 11 years.
It marked the fourth consecutive series the Red Wings had won on the road as they finished off the gritty Penguins, who sought to become the first team since the Toronto Maple Leafs 66 years ago to climb back from a 3-1 series deficit and win the Cup.
As the final buzzer sounded, players poured off the bench, celebrating as NHL commissioner Gary Bettman handed the Stanley Cup to Detroit’s Swedish captain Nicklas Lidstrom, who became the first European to lead his team to a championship.
“It felt great being the first guy on our team to touch the Cup,” Lidstrom told reporters. “Experience has a lot to do with it (winning).
“I think that gives the whole team some calmness. We’re not going to panic.
“Losing (Game Five) in triple overtime, I think we did a good job of putting that behind us. The main thing is we didn’t get rattled.”
After being shutout in the opening two games of the series, the Penguins promised they would not go down without a fight and were true to their word, battling the Red Wings and taking it right to the wire for the second successive game.
Clinging to a 3-1 lead, the Red Wings watched their advantage sliced to a single goal when Marian Hossa converted a power play with 87 seconds left in regulation, sending a shudder down the Detroit bench.
Just 48 hours earlier, the Red Wings were left stunned when Maxime Talbot tied Game Five with seconds left in regulation and Petr Sykora shredded party plans with his triple overtime winner.
But this time, the Red Wings refused to buckle under an all-out Penguins assault that left the capacity crowd breathless and on its feet as Detroit netminder Osgood made a last-second stop to seal the win.
“They came at us,” said Osgood. “It was chaotic the last 40 seconds.
“(Sidney) Crosby was flying. I knew it was good backhander, I tried to get out as far as I could and it ended up hitting my arm.”
The Penguins were welcomed back to the Igloo, where they have lost just once this post-season, by a thunderous ovation from a towel waving capacity crowd.
TITLE: Chicago Among Frontrunners To Host 2016 Games
PUBLISHER: The Associated Press
TEXT: ATHENS — Getting to the final phase was one thing. Now, Chicago has some hard work ahead to overcome weaknesses in its bid for the 2016 Summer Olympics.
Chicago was one of four cities selected as bid finalists Thursday, along with Tokyo; Madrid, Spain, and Rio de Janeiro, Brazil. The lineup sets up a high-profile contest featuring major cities from the Americas, Europe and Asia.
Failing to make the International Olympic Committee shortlist were three cities—Doha, Qatar; Prague, Czech Republic, and Baku, Azerbaijan.
The IOC said Doha had the potential to host the Olympics and even rated the Qatari capital tied for third with Chicago in its technical assessment. But the IOC said it turned back Doha because it proposed holding the games in October.
The finalists now advance to a 16-month race that will culminate on Oct. 2, 2009, with a secret ballot by the full IOC at its session in Copenhagen, Denmark.
“It’s a very competitive field,” said Chicago Mayor Richard Daley, who is trying to take the Summer Olympics back to the United States for the first time since the 1996 Atlanta Games. “The competition begins now.”
Chicago got a strong dose of reality in the IOC’s report assessing the technical bids, which cited problems with finances and transportation, among other things.
“We really respect the experts who have done the evaluation,” said Chicago bid leader Patrick Ryan, who had not yet read the report. “We’re going to learn from that. We’re going to respect it and we’re not going to alibi to ourselves about it. We’re going to do everything we can to correct all the deficiencies.”
Tokyo scored highest in the technical evaluation, which rated cities in 11 categories—including infrastructure, venues, transportation, security and finances—on a scale of 1 to 10.
The Japanese capital scored an overall average of 8.4, followed by Madrid with 8.2. Chicago was back at 7.0 with Doha, with Rio at 6.5. Chicago didn’t rank first in any of the categories, and lagged in fifth in three.
The early ranking is not crucial, however. When the IOC picked the finalists for the 2012 Olympics in 2004, London was ranked third behind first-place Paris and Madrid in the technical report. London went on to win the games in 2005.
“We’ll evaluate the report, look at the strong points and any weaknesses,” Daley said. “There’s always a wakeup call for everything. If there is any negative, you take it and try to be able to correct it, simple as that.”
The IOC report said Chicago’s wording on government guarantees “does not fully confirm” with requirements; questioned the $27 billion figure listed for highway and transit projects; said sports venue construction budgets “appear low and may warrant review,” and cited a “lack of detail” in plans for transportation between venue clusters.
“We’re very pleased, but at the same time sober knowing we have to improve and have a tremendous amount of work ahead,” U.S. IOC member Bob Ctvrtlik said. “This is the first hurdle. … We’ll keep improving until we submit our bid book.”
Cities must submit their detailed bid files to the IOC by Feb. 12, 2009. After that, a panel of IOC experts will visit each of the cities, tour the proposed sites and meet with bid and government leaders. The panel will release an evaluation report to the IOC members a month before the October 2009 vote.
Madrid is back again after a third-place finish in the vote for the 2012 Olympics.
“I think there are about 40 million Spaniards that want us to bring the games home,” bid leader Mercedes Coghen said.
TITLE: Sports Watch
TEXT: Russia Win Warm-Up
BURGHAUSEN, Germany (Reuters) — Russia struck three second-half goals to beat Lithuania 4-1 in their final Euro 2008 warmup on Wednesday.
The Russians, already without leading striker Pavel Pogrebnyak because of a knee injury, lost Alexei Berezutsky early in the game when the defender sustained a cut over his eye after being caught by an elbow.
Lithuania scored against the run of play in the 25th minute when Mantas Savenas slotted in the rebound after his first effort was saved by Russia’s reserve keeper Vyacheslav Malafeyev.
Russia also play Greece in Salzburg on June 14 before taking on Sweden in Innsbruck four days later.
Porto Punished
LISBON, Portugal (AP) — FC Porto lost its place in next season’s Champions League after a bribery scandal.
The Portuguese champion said in a statement that UEFA barred the club from the lucrative competition in a decision Wednesday. Porto will appeal the ruling.
In Portugal’s biggest soccer scandal, Porto lost six points for trying to bribe referees in two games during the 2003-04 season.
Chambers On Track
ATHENS (Reuters) — British sprinter Dwain Chambers won on Wednesday his first 100 meters race since returning from a drugs ban and then said he still hoped to compete at the Beijing Olympics.
Chambers, 30, clocked 10.26 seconds at the Papaflessia meeting in Kalamata. He finished second in the 200 behind American Mardy Scales.
He is not eligible to compete at the Games under British Olympic Association rules after serving a two-year suspension following a postive test for the designer steroid THG.
However, Chambers said on Tuesday he could launch an appeal against the ban after competing in Greece.
Chelsea Rumors
MILAN (Reuters) — Carlo Ancelotti said on Tuesday that he will definitely stay on as AC Milan coach next season, refuting reports he is about to take over at Chelsea.
“I’m staying at Milan 150 percent,” Ancelotti, who led Milan to the 2007 and 2003 Champions League titles, told reporters.