SOURCE: The St. Petersburg Times
DATE: Issue #1392 (56), Tuesday, July 22, 2008
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TITLE: Steinmeier Promotes Plan For Abkhazia
AUTHOR: By Nikolaus von Twickel
PUBLISHER: Staff Writer
TEXT: MOSCOW — A German-sponsored peace plan for Abkhazia has raised fresh hopes that the worsening crisis over the breakaway Caucasus republic can be defused, despite its immediate rejection by the Abkhaz leadership and a critical reception in Moscow.
Speaking in an interview Sunday, Georgia’s Reintegration Minister Temur Iakobashvili said German Foreign Minister Frank-Walter Steinmeier’s tour of the region late last week represented “a very successful start.”
Berlin is well suited to be an “honest broker” in the conflict, Iakobashvili said by telephone from Tbilisi. “Germany is in a unique position to have very friendly relations both with Georgia and the Russian Federation. And that is an opportunity.” 
Steinmeier presented a three-stage plan during a lightning visit Thursday and Friday to meet the leaders of Georgia, Abkhazia and Russia. While Tbilisi and Moscow cautiously accepted the initiative, Abkhaz President Sergei Bagapsh rejected it out of hand.
Proposed talks with Tbilisi over the return of refugees who fled during a vicious civil war that ended in 1993 and on the political status of the internationally unrecognized republic were unacceptable, Bagapsh told journalists Friday, after talks with Steinmeier. The two met in Gali, the Abkhaz town closest to the de facto border with Georgia.
Bagapsh warned that a return of the 250,000 Georgians expelled from Abkhazia would “definitely lead to a new war.” As a precondition for negotiations, he identified the withdrawal of Tbilisi’s forces from the upper Kodor valley.
Georgia regained control of the mountain region in Abkhazia after sending armed forces there in 2006.
Bagapsh’s negative comments were echoed by both Foreign Minister Sergei Lavrov and President Dmitry Medvedev, who each held separate talks with Steinmeier the same evening outside Moscow.
“The highest priority is to sign an agreement on not using military means on both sides and on the withdrawal of Georgian forces from upper Kodor,” Lavrov said in a statement published on the Foreign Ministry web site.
Medvedev also said in a statement that these two points were a precondition for any solution. 
Lavrov had earlier said the plan called for the return of refugees at too early a stage.
But Iakobashvili said the criticism by Bagapsh, Lavrov and Medvedev should be considered the beginning of a brokering process.
“Everybody is trying to position himself in the limelight for a maximum bargaining position,” he said.
In fact, Lavrov wrapped his criticism in an unusually warm appraisal for Steinmeier’s mission.
“We highly value Germany’s role as a coordinator,” he said, adding that the plan has “the right conceptual approach and addresses all aspects.”
“I am very grateful that Frank-Walter Steinmeier has made it possible for us to coordinate and discuss the next steps,” he said.
Tbilisi has accused Moscow of supporting the separatists in Abkhazia and of further destabilizing the situation with covert activities like the recent shooting-down of a Georgian spy plane and violations of its airspace by fighter jets.
Last week, Tbilisi temporarily withdrew its ambassador from Moscow and threatened to shoot down Russian jets in the event of further incursions.
The German-sponsored plan was agreed to in principle last month in Berlin by representatives of the five powers acting under the United Nations secretary-general — Britain, France, Germany, Russia and the United States.
The plan envisions three stages, the first of which involves increasing confidence-building measures between the government in Tbilisi and the Abkhaz leadership in Sukhumi.
The second stage is to focus on the province’s economic reconstruction with a donors’ conference in Berlin, while the third would see talks on Abkhazia’s political status, which most experts consider by far the most difficult issue.
Bagapsh said Friday that he would only consider the first stage.
Iakobashvili said expectations should not be raised too high and that no one expected that Steinmeier had any kind of magic wand that could solve the problems all at once.
Steinmeier himself said he had no illusions but that he wanted to press on.
“Each side’s position is still far from that of the other,” he said in a report posted on the German Foreign Ministry’s web site. “But the recent events force us to find a way out of the rising violence.”
Iakobashvili said he thought the current phase of instability would continue.
“I believe that there will be more provocations, unfortunately,” he said. “I believe that there will be … more allegations … until there is a new administration in the United States.”
He also warned Moscow against opening an official mission in Abkhazia.
“It would be a very clear indication that Russia is moving toward annexation if they opened something like that,” Iakobashvili said.
As the current crisis unfolded earlier this year, Moscow announced that it would set up “institutional links” with Abkhazia and Georgia’s other breakaway region, South Ossetia. No further steps have been reported so far, but Bagapsh held talks in Moscow about opening a Russian mission in Abkhazia earlier this month.
Iakobashvili said Moscow would probably open “something semiofficial,” reflecting previous patterns. He said, however, that he still believed “that there are people with reasonably good brains in Russia that will not allow hotheads to move in that direction.”
Abkhazia angered Tbilisi last week when it opened an official representation with a self-styled ambassador in Transdnestr, the breakaway region east of Moldova.
As for Steinmeier’s mission, Sergei Malashenko, an analyst with the Moscow Carnegie center, said it was a positive sign and could provide the impetus toward further negotiations.
“Russia well understands that Europe is taking an active role in the region,” Malashenko said, adding that the current standoff could not go on forever and that Moscow needed an independent broker. “Sooner or later, a proposal will be accepted, and this was a successful first step.”
But the German initiative also highlights the significance of Berlin’s special relationship with Moscow on the European Union’s ties with Russia.
Diplomats suggested that France, which in July took over the EU’s rotating presidency, had yet to live up to expectations.
“The French side has, unfortunately, not taken a very active role yet,” a senior European diplomat said Sunday, speaking on condition of anonymity because of the sensitivity of the matter. “But the EU hopes that this will provide an impetus and is ready to assist.”
EU Foreign Policy chief Javier Solana on a recent visit to Georgia invited all sides to hold talks in Brussels.
Yet Boris Chochiyev, a deputy prime minister of South Ossetia, said his government had rejected the invitation because no representative from the neighboring Russian province of North Ossetia had been invited, The Associated Press reported.

TITLE: Russia: No Visa for CEO Without Contract
AUTHOR: By Katya Golubkova and Michael Stott
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s migration service said it would not give a visa to TNK-BP Chief Executive Robert Dudley without a valid contract, a move that may help the Russian-connected co-owners oust the BP-backed executive.
The move is the latest in a long-running battle at TNK-BP, a 50-50 joint venture between BP and four oligarchs, over the firm’s management and strategy. TNK-BP is Russia’s second- biggest foreign investment and investors are following the fight closely.
“We cannot grant a visa to Mr Dudley before he presents a valid contract. The previous contract expired and we have no proof that it has been prolonged,” Konstantin Poltoranin, a spokesman at the Federal Migration Service (FMS) told Reuters on Monday.
Dudley’s contract expired last year but BP says it is still valid under Russia’s Labour Code because it has never been officially terminated and therefore rolls over automatically.
The four Russian billionaires, who want to sack Dudley as part of their dispute with BP, say the contract has never been officially renewed and is therefore no longer valid.
A source close to TNK-BP dismissed as “nonsense” the idea that Dudley did not have a valid contract, saying a board resolution tabled by the Russian oligarchs to sack Dudley earlier this year in itself proved that they recognised his contact was valid.
Dudley has a valid Russian work permit but needs to present a valid work contract to get his visa renewed. His visa expired on July 19, but the migration service agreed to give him a transit visa, which is valid until July 27.
“He (Dudley) has been given 10 days to present a contract. We may extend his visa one more time, but without a valid contract, he cannot work in Russia,” the FMS’s Poltoranin said.
Dudley is also facing penalties from a judge after a labour inspector found some minor violations, the TNK-BP source said. These could include suspending him from his post for a period of up to three years.
“Obviously the pressure is mounting,” the source said. 
“The likelihood is that somehow they will try to engineer Dudley’s suspension this week so that the Migration Service can then say they don’t need to consider his visa request and he has to leave.
“It’s ridiculous but this is the reality.”

TITLE: Greens Get On Bikes and Ride the Southern Coast
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Twelve environmentalists from Russia and Norway are getting on their bikes on Tuesday to ride across the southern coast of the Finnish Gulf. The rally is meant to help create a map of pollution black spots and campaign against environmental pollution resulting from industrial projects.
Starting in the town of Sosnovy Bor, some 70 kilometers west of St. Petersburg and home to the Leningrad Nuclear Power Station (LAES), the rally has its first stop at the plant’s construction site where a new storage facility for spent nuclear fuel is being built.
The driving engine behind the project is the Green World environmental organization which is located in Sosnovy Bor and monitors LAES.
“The mission of this rally is to give local residents a true picture of a series of new construction projects that pose high risks to the environment,” said Oleg Bodrov, chairman of the Green World organization. 
“To preserve the environment and prevent the authorities from sacrificing it for the sake of placating a deep-pocketed investor, it is crucial that local communities get involved in the decision-making process — in the form of public hearings, the collection of signatures or street protests. 
The route is set to cover 450 kilometers along the south coast, with campaign events scheduled at some of the “black spots,” including the Lebyazhye settlement near the town of Lomonosov which is rapidly turning into a focus for private construction initiatives and the new oil terminals near the Luga Bay of the Gulf of Finland. Other stopping points include Koporye, Bolshaya Izhora, Izvara, Kurgolovo, Bolshoye Kuzyomkino, Sarkyulya, Vistino and Staroye Garkolovo.
“We are trying to increase awareness of the risks that the new industrial developments involve and the challenges they pose,” Bodrov said. “To be able to exert  substantial pressure on the authorities, locals have to offer a solid and coordinated resistance.”
Ecologists warn that the south coast has become the site of vast construction works including the Baltic Aluminum Plant, the Baltic Silicon Valley project and a center for the treatment of spent nuclear fuel from LAES.
“These projects, which cost more than $20 billion, are bound to destroy the coastline if fully implemented,” Bodrov said.
According to Green World, genetic mutations have already been found in pine trees around the town of Sosnovy Bor where LAES is located, and environmentalists warn that risks to the environment would be vastly increased by the arrival of the new waste processing facility.
“Projects like this have to undergo an independent environmental assessment, but what we had in the case of the LAES waste treatment center was fictitious,” Bodrov said. “Vladimir Grachev, head of the State Duma’s Environmental Committee, set up a special NGO titled the Russian Ecological Movement for Concrete Activities, which then carried out the assessments with predictably favorable results. No independent environmentalists had a say in the issue.”  
The rally’s participants are gearing up to run three “postcard campaigns” along the way. Local residents will be offered, in particular, an opportunity to send a card directly to President Dmitry Medvedev and ask the Russian leader to end the practice of importing spent nuclear fuel from Germany and France. Another petition will be addressed to Prime Minister Vladimir Putin, urging him to develop a balanced plan for the region’s development that would protect the ecology. Valery Serdyukov, the governor of the Leningrad Oblast, will be sent a petition with a request to end the devastation of the Lebyazhye area, which is inhabited by over 200 species registered as endangered and was a national reserve until the Russian government removed it from the endangered list in 1999. 
Alexander Senotrusov, deputy head of the municipal council of the Lebyazhye settlement, said the area has already lost two-thirds of its inland zone owing to aggressive construction. “The area is inhabited by swans during the spring and autumn migration periods” [its name translates into English as “Swan’s Land”],  Senotrusov said. “If it is heavily developed, the land will become unsuitable for swans.”

TITLE: Disputed Submariners Garden Hit By Police, Demolition Begins
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Backed by dozens of policemen and hired guards, a construction company invaded Submariners Garden (Skver Podvodnikov) on Monday to fell trees and install a concrete fence around the perimeter. A number of the area’s defenders were beaten and arrested, according to residents.
Located at the Block 43 Polyustrovo in the north of the city, the garden was named to commemorate Russian submariners who died in non-combat operations after World War II. When visited early afternoon on Monday it had already been partially demolished. 
Old women cried as another massive tree trunk fell under the chainsaws and axes of the workers, who were encircled by the policemen and guards. “I planted these trees during the war,” said one. “During WWII, we defended the city, but then it was from foreigners, so it was more clear-cut; it’s worse now,” said another. The defenders said the company’s representatives failed to present any documents showing they had permission to perform the work.
Earlier in the day, four activists who tried to protect the trees, including Yelena Malysheva, leader of the local residents group, were detained by the police and taken to Precinct 61, the residents said, adding that the detainees had also been beaten.
“We tried to stop it, but the police started to beat us,” said local resident Yekaterina, who only gave her first name. 
“We were also beaten by some strange men, allegedly from a private security firm. They didn’t identify themselves or show us any papers.” One defender was hospitalized with concussion, while another experienced heart problems, according to the residents. The latter was also later hospitalized.
“Courageous women have been on watch here every day from morning to evening,” said Yelena Fradkina, a translator and local resident.
“We stopped them before, but today they brought so many men that we couldn’t do anything. Since 8 a.m. we’ve just been standing here, watching [the destruction] and crying.”
Listed in the city’s official register of public parks and green spaces, Submariners Garden, which includes a monument, a memorial oak lane, a playground, and hundreds of trees, has been under threat since 2006, when it became known that developers had plans to build two to four apartment buildings on the site. The apartment buildings have been ordered by the Federal Security Service (FSB), the successor to the Soviet KGB, according to the construction company, Stroikompleks XXI.
Direct confrontation with the authorities and developers began on May 23, when Stroikompleks XXI attempted to erect a fence around the garden. Since then, residents have been guarding the area and on several occasions have tried to stop the workers, who were escorted by guards and the police. Multiple protests and rallies have been held.
Arrests and beatings were reported on several occasions in June when the company attempted to resume work. Then, on June 17, Vice Governor Alexander Vakhmistrov asked the company to stop any work in the area “due to heightened social tension.” Last week, the residents were promised by the authorities that no work would be undertaken at least until September, when a “renovation” plan would be put into action, instead of the infill construction attempted by developers.
“They deceived us,” said Vladimir Dmitriyev, a Communist Party deputy in the Legislative Assembly, who arrived at the scene on Monday. 
According to Dmitriyev, Vakhmistrov was on vacation while Governor Valentina Matviyenko was scheduled to inspect Pushkin, in the south of the city, in the afternoon. He said his faction would appeal to the Prosecutor’s Office to inquire into the construction company’s “unlawful” activities.
The works in the former garden continued, as this issue went to press, with virtually all the trees cut down and the workers surrounding the area with a concrete fence, according to a telephone report from a local resident.
“Of course, it all comes from Matviyenko. [What happened today] means she gave the go-ahead, despite the law protecting parks and gardens, and in violation of our human rights,” said Yekaterina, adding that the garden was the residents’ only protection from the poisonous smoke emitted by local factories. 
The residents also worry that construction will adversely affect their fragile Khrushchev-era houses (many of which were built hastily in 1961), as well as gas and sewage works that were designed to serve only a limited number of buildings.

TITLE: Russia ‘Concerned’ by NATO
PUBLISHER: Reuters
TEXT: MOSCOW — The Foreign Ministry said Friday that it was concerned by joint NATO-Ukraine naval exercises in the Black Sea, saying the leaders of Ukraine were trying to force their people into NATO membership against their wishes.
Russia, sensitive to NATO expansion toward it borders, has warned of serious consequences if Ukraine and fellow former Soviet state Georgia join the military alliance.
The 11th Seabreeze naval exercises got under way this week. Sixteen countries are taking part in the 12-day exercise, during which service personnel take part in a mock peacekeeping operation and mass evacuation of noncombatants.
The ministry said the exercises included intelligence work, searches for enemy submarines and test firing of munitions.
“The character of the exercises, the attempts to present them in an anti-Russian tone, and also the participation of nonregional powers cannot but create questions and a certain concern,” the ministry said in a statement. “Why was the Black Sea chosen to work out the dubious aims of these exercises?”
Ukraine has been engaged in cooperation with NATO since the mid-1990s. Pro-Western leaders, brought to power by 2004 Orange Revolution protests against election fraud, have made NATO and European Union membership the cornerstone of foreign policy.
A NATO summit in April turned down Ukraine’s bid to secure a Membership Action Plan — a fast track to eventual membership — but assured Kiev it would one day join the alliance.
About 150 demonstrators staged a protest this week against the exercises, much smaller than in recent years.
“Mass protests against the exercises reflects the mood of public opinion in Ukraine,” the ministry said.

TITLE: Lawmaker Presents Bill For War on Corruption
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: A communist lawmaker has drawn up a draft law targeting corrupt senior bureaucrats in St Petersburg in what he says is a response to President Dmitry Medvedev’s declaration of an all-out war on corruption. 
“The Russian president has declared war on corruption, but no one seems to care about the extent to which corruption in the higher echelons of power has gone totally out of control,” said St. Petersburg Legislative Assembly Deputy Yury Karpenko on Wednesday, referring to his draft amendment to a law on the State Civil Service and a law regulating state officials and their duties in St. Petersburg. Both are scheduled for debate in September as the legislators return from their summer vacation.
If passed into law, about 50 top officials in St. Petersburg technically enjoying a degree of legal immunity may find themselves subject to legal scrutiny in line with ordinary state employees and other state officials.
The current legislation, according to Karpenko, currently provides a loophole for 31 heads of City Hall committees and heads of 19 jurisdictional districts, meaning that they are not subject to a law banning top state officials, among others, from dealing in private commercial activities. 
“In fact, the law provides enough room for them to go unchecked,” said Karpenko. 
His proposals would require officials to sign an employment contract in line with other state employees, allowing their business activities to be examined and infringements discovered to be penalized. 
They could be fired for providing false information about their income and property ownership and face a two-year ban from taking a job in a commercial organization following their dismissal, according to Karpenko’s draft. They would also be banned from using their offices to wage campaigns for political parties and from taking part in election campaigns or referendums while in office.
On reaching 65, they would also be prohibited from taking positions in state bodies, according to the draft.
Asked why the law will not affect other top officials including Governor Valentina Matviyenko and her deputies, Karpenko said, “Unlike the affected category, the governor is an executive figure indirectly elected by the public as her appointment requires approval from the elected Legislative Assembly.” 
Others falling into the same category as Matviyenko include vice governors, judges of the St. Petersburg Charter Court, the St. Petersburg Ombudsman, the St. Petersburg State Secretary and members of the St. Petersburg Election Commission, whose appointments requiring parliamentary approval.
“But heads of committees and district leaders are appointees, who, unlike vice governors, are immune from any parliamentary vote of no-confidence if they mess up,” Karpenko said.
“I’m going to back the bill and lobby for its passage,” said deputy Vladimir Fyodorov, head of the Assembly’s Liberal Democratic Party faction on Wednesday. “I don’t have any doubts about the [contents of the] draft, but I do doubt that it will get through,” he said. 
“It’s unlikely that a parliament dominated by United Russia party members is ready to provide a rope to hang its own colleagues,” Karpenko said, referring to the fact that nearly all those affected by Karpenko’s law belong to the United Russia Party.
Karpenko said, however, that a third of the deputies in the Legislative Assembly support his measures and that he expects to win a majority during the debates.
Russians believe that about 70 percent of the nation’s top bureaucracy are either directly or indirectly involved in corruption, according to recent polls conducted by the Moscow-based Levada Center.

TITLE: China, Russia End Dispute
PUBLISHER: Agence France Presse
TEXT: BEIJING — China and Russia signed an agreement Monday that ended a decades-long territorial dispute and finally determined their borders, in the latest sign of warming ties between the former Cold War foes.
The protocol, signed by the two countries’ foreign ministers in Beijing, added to an existing agreement on their 4,300-kilometre (2,700-mile) boundary, meaning all of the frontier is now set.
“China and Russia have discussed their border for over 40 years. It’s no simple matter that we have now demarcated the border in its entirety,” Chinese Foreign Minister Yang Jiechi said, after the agreement was signed.
“At a political level, it’s a mutually beneficial, win-win result,” he told reporters at a briefing at the Diaoyutai State Guest House in the Chinese capital.
A bitter rift during the Cold War saw the one-time communist allies fight skirmishes along their border.
For years, both nations deployed enormous tank armies on both sides of the border, and if full-scale war had broken out, it could have led to one of the largest land battles in history.
Recently, however, Russia and China have drawn closer together, motivated partly by a joint ambition to prioritise economic growth.
“As we preserve domestic stability in our respective societies, we have now created a very good external environment for social and economic development, which is of huge benefit to us both,” Yang said.
Yang’s Russian counterpart, Sergei Lavrov, described how the border — once one of the world’s most heavily fortified frontiers — would gradually come to bring the two nations closer.
“From a legal point of view we have created the preconditions for the border to become a link of stability, openness, mutual benefit, friendship and cooperation,” Lavrov said.
There were no specific details given to the press about the agreement, but the state-run China Daily newspaper said the agreement involved Russia handing back 174 square kilometres (69.6 square miles) of island territory to China.
All of Yinlong island, known as Tarabarov in Russian, and half of Heixiazi island, Bolshoi Ussuriysky in Russian, in the rivers that border the countries in China’s far northeast were returned, according to the paper.
The area will now become the “first place on the mainland to see sunlight”, forming the easternmost tip of the country, the China Daily said.
The area, long claimed by China, was occupied by the former Soviet Union in a border skirmish as early as 1929, according to the paper.
After his meeting with Lavrov, Yang spoke positively about the future of bilateral relations.
“We exchanged views about how to further promote our bilateral strategic relationship and strengthen our cooperation at the regional and global levels. We reached a broad consensus. I think our discussions were positive,” Yang said.
Chinese President Hu Jintao met with Lavrov later Monday, welcoming progress made between the two countries.
“I’m convinced that this visit will be instrumental in deepening the practical cooperation and strategic coordination between our two countries,” Hu said when meeting Lavrov in Beijing’s Great Hall of the People.

TITLE: Freak Weather Wreaks Havoc in Moscow
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — Torrential rains, heavy winds and lightning wreaked havoc throughout Moscow and the region over the weekend, knocking down trees, interrupting travel plans and even destroying a monument to Soviet leader Vladimir Lenin.
Dozens of travelers missed their flights from Sheremetyevo Airport after lightning struck an electrical station and caused delays on the Aeroexpress commuter line from Savyolovsky Station to the airport, Interfax reported Friday.
The delays began at around 8 p.m. Thursday night, meaning a typically 35-minute trip turned into a 90-minute ride to Sheremetyevo, Aeroexpress spokesman Anton Galatenko said, RIA-Novosti reported. The problem was fixed at around 10:30 p.m., and the company said it would accept complaints submitted by affected passengers, Interfax reported Friday.
Passengers waiting to fly into Moscow on Thursday evening were also left stranded or delayed in other cities because of the Moscow weather.
In St. Petersburg, passengers flying on the 8 p.m. Aeroflot flight to Sheremetyevo were told at the check-in desk that the plane was stuck on the tarmac in Moscow because of “technical problems.” Some were eventually booked onto a later flight.

TITLE: Chavez Tipped For Spree
PUBLISHER: Bloomberg
TEXT: MOSCOW — Venezuelan President Hugo Chavez will order $1 billion in Russian arms during his visit to Moscow, Interfax reported Monday, citing an unidentified defense industry official.
Chavez will buy up to 20 Tor-M1 air defense systems and three Varshavyanka diesel submarines, the Russian news agency reported. Chavez was to arrive in Moscow on Tuesday to discuss cooperation in arms trading and energy, Interfax said. 
The Russian daily Kommersant reported in May that Chavez would buy $2 billion in weapons.
Chavez, who was to meet Russian President Dmitry Medvedev on Tuesday, has bought more than $4.4 billion of Russian arms since 2003. He says the hardware, including jets and submarines, is needed to counter a military threat from the U.S. and its main regional ally, Colombia.
Russia last year announced plans to build two factories to make Kalashnikov assault rifles in Venezuela. 
Trade between Russia and Venezuela surged to $1.13 billion in 2007 from $517 million the previous year.

TITLE: Raven Russia Breaks Warehouse Record
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Raven Group Russia has purchased a warehouse complex in Shushary, near St. Petersburg, for $216 million — a record sum for the real estate business in the northwest region according to Colliers International, which is acting as Raven Group’s exclusive consultant and broker.
The project’s development is being managed by AKM Logistics in three stages, the first of which will see tenants move in by the end of 2008, while the entire warehouse — 164,000 square meters in total — is due to be completed by 2010.
“The market changed as soon as the global credit crunch happened. The number of players has decreased, but persistent and wealthy investors are still interested in Russia and St. Petersburg, ensuring further large-scale and professional deals,” said Boris Yushenkov, general director of Colliers International in St. Petersburg. 
The warehouse complex is expected to be popular with prospective customers, since it is located on a federal highway along which major freight routes between Moscow, St. Petersburg and other Russian cities are concentrated. The building is also located 5.5 kilometers from the eastern part of the ring road, five kilometers from Shushary railway station, 20 kilometers from the seaport and 10 kilometers from Pulkovo airport. The warehouse will have an advantage in its proximity to automobile makers such as Toyota, GM and Suzuki which operate in the area and are continuously expanding production, therefore requiring additional premises for storing spare parts and providing services. 
“The new owner, Raven Russia, will be able to attract customers and ensure the necessary cash flow,” said Maxim Shakirov, regional director of the industrial and warehouse department at Colliers International. 
 Experts say St. Petersburg’s warehouse market is growing. Around 630,000 square meters is currently under construction, in addition to 142,000 square meters of warehouse space completed in the first half of 2008. The south of the city around the major traffic artery of Moskovskoye Shosse is mainly chosen for warehouse projects offering premises ranging from $110 to $140 per square meter a year. The current saturation rate is around 97 percent.
“This market is still to be explored,” said Michel Pascalis, CEO of Pascalis, Gardner & Partners real estate firm. “Russia is in fashion, with the international investor community and number of western foundations which invest in the country’s real estate set to increase.”
In 2005, the U.K.-based Raven Group launched a Russian branch as a promising investor and developer which has so far accumulated 1.7 million square meters of commercial real estate at a total cost of $1.5 billion. 
Raven Russia is not the first western company to turn to Russian real estate as a successful investment. In 2004, Eastern Property Holdings of Switzerland acquired the Belinsky Dom office center in Moscow for $40 million from Westdeutsche Immobilien Bank, along with part of an estate belonging to hypermarket chain store operator Mosmart and property owner Hypercenter-7. Experts estimate the cost of the deal at an estimated $25 million to $30 million. This May, another of Mosmart’s partners, the Swiss-based Jelmoli Holding, invested $73.5 million into 49 percent of the shares that had been floated by Hypercenter Investment to promote the chain store network.

TITLE: Lenfilm Gets Rival in Shape Of State-of-the-Art Studios
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The construction of a Russian World Studios (RWS) movie-making center in St. Petersburg is complete and the complex is due to open in September 2008, Andrei Smirnov, general director of Sistema Mass Media which is in charge of the $250-million project, announced during a press conference at Interfax last week. 
RWS’s St. Petersburg studio is a three-stage construction project with estimated investment in two parts — $100 million to be invested into the studio in the fall, and a further $150 million during the next three years. 
“We are now doing calculations for the budget for further construction in St. Petersburg, which will probably be completed in three years,” said Smirnov. The payback period is expected at seven years, he said. 
RWS’ local studio in St. Petersburg, located in the Kalininsky District on Ulitsa Generala Khrulyova, is the first studio facility in Russia to fully meet the highest international standards, and the first studio to be built from scratch for the past fifty years in Russia. It covers a total area of 11,000 square meters, including 4,000 square meters of office, make-up and wardrobe facilities, as well as a cafeteria and other facilities.
The acclaimed Russian movie director Dmitry Meskhiev has been appointed general director of RWS in St. Petersburg.  He said that a studio like this was a dream come true. 
“The studio will handle 20 projects a year, including six or seven full-length and large-scale films with elaborate special effects and modern computer graphics, and TV series to cap it all,” said Meskhiev.
The movie-making facility will be comprised of six stages — four 750-square meter stages and two 350-square meter stages — with soundproof walls and ceilings, soundproof elephant doors that are unique to Russia, and polymeric covered floors. One of the largest Dolby Premier studios in the world and the largest in Russia, RWS St. Petersburg will also be equipped with an ingest-server, allowing on-line video and sound digitizing, and a film development laboratory. 
To enhance the project’s commercial efficiency, the facilities will be used both by RWS crew and tenant producers, who will dominate, at least at the initial stage. As soon as the company gains in weight, its own productions will be given priority.  
Commercial real estate experts were reluctant to make forecasts for the studio due to the specific nature of the project.   
Russian World Studios was founded in 1998 and is one of the leading film production companies in Russia, and the leader in the film production-related services market. It currently has foreign representatives in London, Luxembourg, Hong Kong and Los Angeles. The studio cooperates with international companies including Sony Pictures Television International, Hallmark Entertainment and HBO Films.
RWS plans to continue to expand. “We are negotiating on buying studios in the Baltic States and Mediterranean. India and China also look attractive to us,” said Smirnov. RWS is looking for a partner in India with whom to launch a movie center with animation and computer effects production departments, while China is to be the location for several RWS television projects.

TITLE: In Brief
TEXT: <b>Power Profits Rocket</b>
ST. PETERSBURG (Bloomberg) — TGK-1, the Russian power generator based in St. Petersburg, said profit in 2007 more than doubled as heating and electricity tariffs increased in northwestern Russia.
Net income advanced to 2.4 billion rubles ($103 million) from 1.15 billion rubles ($49 million) a year earlier, the utility said in an e-mailed statement Monday. Revenue at TGK-1, part-owned by Russia’s gas-export monopoly Gazprom, increased 22 percent to 28 billion rubles ($1.2 billion), according to the statement.

<b>Jobs, Wages Increase</b>
MOSCOW (Bloomberg) — Russia’s unemployment rate fell more than economists expected to 6.2 percent in June.
The rate dropped from 6.4 percent the month before, the Moscow-based Federal Statistics Service said Monday in an e-mailed statement.
The average monthly wage increased an annual 11.7 percent in June to 17,808 rubles ($767), the Statistics Service said. Disposable income rose an annual 6.6 percent in June, it added. 

<b>More Air Passengers</b>
MOSCOW (Bloomberg) — Transaero, Russia’s third-largest airline, carried more passengers in the first six months of the year as the carrier expanded its fleet.
Transaero transported 2.1 million people from January through June, 56 percent more than in the first half of last year, the St. Petersburg-based company said in an e-mailed statement on Monday. The airline added seven planes to its fleet this year through June, it said.
Annual wage growth has exceeded 10 percent each month this year, boosting demand for air travel and other services.

<b>Port Traffic Stable</b>
ST. PETERSBURG (Bloomberg) — Novorossiysk Commercial Sea Port, Russia’s largest port by cargo volume, said first-half traffic was little changed as gains in containers and oil products offset a decline in grain.
The Black Sea port handled 39.2 million metric tons in the first six months of 2008, 0.2 percent more than in the same period a year earlier, Novorossiysk said Monday in a statement.
“Despite the export duty on Russian grain that applied in the first half, company management was able to partially offset the decline in grain loading by attracting transit shipments from Kazakhstan,” CEO Igor Vilinov said in the statement.

<b>RZD Active in Korea</b>
MOSCOW (Bloomberg) — Russian Railways plans to spend 140 million euros ($222 million) in North Korea in an effort to open a new land corridor between Europe and East Asia.
The investment will go into upgrading the port of Rajin and refurbishing a 52-kilometer (33-mile) link to the Russian rail network, Russian Railways, known as RZD, said in its official newspaper Gudok on Monday.

TITLE: To the White House and Back: Olga Gracheva
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Olga Ostanina was a St. Petersburg household name associated with the 50-strong Ulita Fashion House, a design studio that supplied local and international businesses and the tourism, art and high fashion industries with women’s clothing and accessories for 15 years from 1990 when she founded it. 
Ostanina clothed women who came from as far away as Finland, Great Britain and the United States. She researched material and made new Russian flags for the city in the early 1990s. 
But Ostanina, who has adopted her maiden name, Gracheva, after recently marrying for the second time, is currently running the newly-founded Fashion Industry Projects, a three-person consultancy firm providing fashion clientele services, strategies and plans to major players in the local fashion industry as well as training to beginners and those seeking to develop.
“People wonder why I prefer the current, seemingly dwarf-like project to the fashion studio that they say was the talk of the town before its closure in 2005,” says Gracheva. “It’s love for the given diversity in this context rather than a desire to do business that drove me into the new project,” she says. “After all, I acknowledge the fact that I am a bad businesswoman who got into it by sheer chance, and unlike others, I never even had a business plan… I just love mixing with people and the things I do.”
However, her self-deprecating description of herself belies her success in the world of business.
As a pioneering entrepreneur in a country where the market economy was in its infancy, Gracheva had to face all the problems of a society in transition from the centrally-planned communist economy to the uncertainty of a free market economy ruled by the emerging mafia. 
As a female entrepreneur in a country known for its male chauvinistic traditions, she became an unwitting symbol of feminine pride, marking the dawn of the female influx into the business world, though Gracheva herself is reluctant to describe herself as such.  
As an African-Russian, Gracheva also broke the myth of Africans struggling to find a place in Russian society. She overcame the negative stereotypes by taking advantage of every opportunity that came her way, to make herself a name in Russia and beyond, crossing the Atlantic to the U.S. White House, bearing the title of an emerging female business talent from the new Russia. 
She was greeted with the red carpet by former U.S. Vice President Al Gore, President George W. Bush, the first African American Secretary of State Colin Powell, and the second U.S. female Secretary of State, Condoleezza Rice, at the White House and other venues. 
As one of the best 50 business women from the Nordic countries and the neighboring region, Gracheva was a member of a team of six from St. Petersburg who joined 50 others from the U.S. at the 2002 Women’s Business Summit in Helsinki, where she met the first female presidents of Finland and Latvia, Tarja Halonen and Vaiara Vike-Freiberga. 
“She has a magnetic power to influence people and make friends. We became friends within a minute of our first encounter at the summit,” says Gracheva's co-delegate to the Helsinki Summit, Natalia Kotsalainen, general director of Norvica tour agency.   “She's a born psychologist, and has influenced many people I know into changing their lives through her counseling and initiating contacts.” 
She was the first woman to win the national Production and Tourism Award in 1995, opening the way to a series of internships in economics and businesses abroad, including a trip to Italy the same year — less than a year after she had joined another 289 Russians in the 5-week “Business for Russia” training in the U.S. 
She was conferred with a certificate of Business and Economics by the Stockholm School of Economics following completion of a one-year course in 1999. She also attended courses in Electronic Skills in Small Businesses in 2006 as part of the European Union program developed in France, but conducted by Tasic in St. Petersburg. 
But Gracheva believes that she would not have achieved fame and success had it not been for invaluable counseling she attained from the world-renowned president of Camera Nazionale della Moda Italiana, Mario Bosselli, whom she met in Milan in 1995 when she attended the “Elegance of Life” events dedicated to the Day of Italy’s Great Ambiance of Fashion.
Despite the success story, and unlike most prosperous Russians of her generation, Gracheva leads a modest life. She lives with her husband, a sculptor, in the small village of Kaikino, about 50 kilometers from St. Petersburg. She comes to town for business twice a week using public transport. “I have a car and I like driving, but for various reasons I like it this way,” she says. She is reluctant even to talk about her meetings with prominent global personalities unless pressed hard.
“Meeting world leaders doesn’t make me special …it just occurred because I happened to be doing what I’m doing,” she says.
Admitting to being brave and confident, Gracheva attributes these qualities to her endless quest for knowledge, her creative capacity and innovative character, exacerbated by her strong will-power, which she says she inherited from her mother, Tamara Gribkova, one of the first female taxi drivers in Leningrad in the 1960s. 
“I owe my character to my mother, who’s strong and rebellious by nature — not only did she fight with men for her career, but also with the society of the time, which was seemingly hostile to anything foreign, not to mention a Russian woman giving birth to a black child,” says Gracheva. 
Born in Leningrad in 1963, she spent most of her pre-school years with her maternal grandmother in Roslavl near Samara where she learned to read, write and sew using her grandmother’s old Singer sewing machine. “I couldn’t feel any dislike of me from the public even in this small provincial town.   …Maybe I was too young to notice, but I don’t feel anything like it now, even here in St. Petersburg,” she says, adding, “I think lack of confidence in oneself is mostly a self-imposed phenomenon that depends on one’s perception of the surroundings.”
She cites the examples of her mother and white elder half-sister, who coped well with society despite having an “unusual” black member in their family. “I felt their love, they were proud of me and I still count on them,” she says.
She was sent to a special English School on Nevsky Prospekt, an elite institution. 
“Some people thought I was the daughter of an expatriate or foreign diplomat, and perhaps it’s because of this that I was spared public harassment,” says Gracheva. 
She graduated from St. Petersburg State University’s Faculty of Philology, where she majored in Russian language and literature, and later joined the Patent University and worked in the library of the Patent Department after graduating.
Top of the list of Gracheva’s acknowledgements is Lyudmila Bokayutova, director of the St. Petersburg Museum of Telecommunications, who was both a role model and a mentor to Gracheva in the free market economy in the early 1990s when she was the marketing director of Skanska and Faberge’s Russia representative. Bokayutova also founded the first St. Petersburg women’s “Club of Restorers” in the early ‘90s. 
Taking a leaf from Bokayutova’s book of experience, Gracheva founded the “Labyrinth of Style” online club in 2001, whose members meet once a month to discuss a range of topics including careers, new ideas and self-evaluation. They conduct regular fund-raising events to support artists and children. 
But Bokayutova is not the only person to whom Gracheva is obliged.
Others in the international arena include Patricia Cormanne, whom she met in 1992 when the former was president of the Faberge Foundation and CEO of the Marketing Research Company in Washington. While Gracheva was inspired by Cormanne’s lecture on cross-cultural communications, the latter was so impressed by the young woman’s innovative passion and eagerness to learn that she called her to meet up on her arrival in St. Petersburg the following year. They met in Washington the next year and have kept in touch ever since.
Gracheva says she is also indebted to Gennady Zubkov, a popular artist who, according to her, “has unraveled an encyclopedia of creative secrets and sacred ingredients of the arts.”  She has spent much time during the last three years in Zubkov’s workshop learning the secrets. “In fact,” she says, “my life owes much to what I have learnt from Zubkov.”

TITLE: Google Boosts Local Presence
AUTHOR: By Marianna Tishchenko
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW — Internet search giant Google on Friday announced that it was buying Begun, Russia’s leading online context advertising service, from Rambler for $140 million, a deal that boosts the U.S. firm’s challenge to Yandex. 
Rambler, which currently owns 50.1 percent of Begun, will buy the remaining 49.9 percent of the company’s shares from Bannatyne Limited, an affiliate of the Finam group of companies, Rambler Media spokesperson Alexander Kovalyov said Friday. 
Subsequently, Rambler will sell Begun to Google. 
Finam will receive $69.9 million from the transaction.
The deal will provide advertisers with access to a larger network of web sites, which will gain a greater number of advertisers, Google said in a statement Friday.
“The agreement means that even more users, advertisers and partners will get better results and more relevant advertising,” Mohammad Gavdat, Google’s managing director for emerging markets, said in the statement. “This agreement emphasizes our desire to invest in Russia, where the online advertising market is growing at a tremendously fast pace.” 
Under the deal, Rambler will place Google’s ads alongside its own.
Rambler, which will receive about $50 million from the deal, said in a statement that the country’s Internet advertising market would continue to grow by around 50 percent per year, surpassing $1 billion by 2010. 
The two search engines are expected to close the deal in September, Kovalyov said. 
“The entire industry will benefit from this transaction, as there is a high potential for synergies,” Begun general director Alexei Basov said in the statement, citing Google’s technology and his company’s connections in Russia.
Konstantin Belov, an analyst at UralSib, said the deal meant that Google, a relative latecomer in Russian-language content, would now pose “a serious threat” to Yandex.

TITLE: Producer Prices Threaten Growth
AUTHOR: By Alex Nicholson and Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian producer prices rose in June at the fastest pace in three and a half years, led by record energy and metal costs, raising concern that inflation may put a brake on economic growth.
‘The cost of goods leaving factories and mines surged 28.1 percent, compared with 25.1 percent in May, the Moscow-based Federal Statistics Service said in an e-mail Monday. The figure exceeded the 25.7 percent median forecast of 12 economists in a Bloomberg survey. Prices rose 4.9 percent in the month.
‘“It’s an awful figure,” said Tatiana Orlova, an economist at ING in Moscow. “It’s the same story, energy costs are rising, and it confirms the economy is generally overheating.”
‘“Russia’s economy, which grew 8.5 percent in the first quarter, is bolstered by record oil, gas and commodities prices, boosting wages and consumer demand and straining companies’ ability to get goods to markets. Eastern European economies are outpacing those of western Europe, risking a sudden slowdown as surging inflation eats away purchasing power.
‘“This may cause economic growth to slow in several months’ time,” Yulia Tsepliaeva, a senior economist at Merrill Lynch & Co. in Moscow, said in a telephone interview Monday. “It is bound to get the government’s attention.”
‘Given the June data, the cabinet is likely to sanction additional steps to slow rising prices, such as cutting budget spending or auditing companies for possible violations of antimonopoly laws, according to Tsepliaeva.
‘Higher salaries and employment boosted the inflation rate to 15.1 percent in June, unchanged from May, when it was the highest since December 2002. By contrast, the inflation rate for the euro region for that month was 4 percent.
‘The expansion led the central bank on July 11 to raise its refinancing rate by a quarter of a percentage point for the fourth time this year to 11 percent.
‘Russian producer prices are also rising as companies charge more because of extra costs for companies to move products to the market because of aging ports, roads and warehouses, said Orlova.
‘Monthly wages increased an annual 11.7 percent to 17,808 rubles ($767) while industrial investment rose 10.8 percent, the slowest pace in just over two years, the service said. Industrial production grew 0.9 percent in June.
‘“Fixed investment and real income growth have been the two major drivers of GDP,” Vladimir Tikhomirov, chief economist at UralSib Financial Corp. in Moscow said Monday. “Now we are seeing a weakening in both. This sends a negative signal in terms of the future growth rate.”

TITLE: Still No Official iPhones for Russia, China
AUTHOR: By Sophie Taylor and Maria Kiselyova
PUBLISHER: Reuters
TEXT: MOSCOW — Unauthorized sales of unlocked iPhones in Russia and China are flourishing, but Apple seems in no hurry to make deals with operators to sell the device in these huge markets officially. 
Despite the iPhone being set for launch in 49 more countries, including Honduras and Guinea-Bissau, Russia and China — home to almost half the world’s mobile users — aren’t on the list. 
Operators in those countries have proved reluctant to hand over part of their iPhone-related revenues to Apple — a model Apple succeeded in imposing in early deals it made with carriers in other countries, who got exclusive sales rights in return. 
Traders importing iPhones into these markets are often buying in the United States, boosting Apple’s sales in this key market, while costs are minimal. 
“Right or wrong, Apple needs to show good sales volumes. Russia is extremely profitable for it, all the more so because an iPhone shipped from the U.S. market is not serviced under warranty. That saves Apple around $70 per unit,” said Eldar Murtazin, at Mobile Research Group. 
Others say Apple is losing out. 
“While having the cracked phones certainly helps Apple with marketing because of the buzz factor, they are losing a lot of money,” said Shaun Rein, managing director of China Market Research Group. “Since the revenue split is a huge part of the profit ... it is critical that Apple begin to sell in China.” 
As many as 1 million “cracked” iPhones may be in use on China Mobile’s network, In-Stat China analyst Kevin Li told Interfax this month. 
In Russia, monthly sales of cracked iPhones are estimated at around 20,000, Murtazin said. 
“China and Russia, in terms of the black market in iPhones, are probably the two top markets,” said Andy Hargreaves, analyst at Pacific Crest Securities, adding that concerns over piracy of music and other content was likely also a big issue for Apple. 
The new third-generation, or 3G, model was released July 11, featuring faster Internet access and embedded satellite navigation. Its sale drew crowds in the United States plus 20 countries in Europe and Asia. 
The total number of iPhones brought into Russia in suitcases or sent by courier is seen rising to 600,000 to 700,000 units by the end of 2008 from 400,000 by the end of June — a significant number in the context of worldwide iPhone sales. 
“I believe there is still huge potential,” said Sergei Rumyantsev, chief operating officer at No. 2 phone retailer Svyaznoi. 
In Russia and China, the 3G devices are eagerly awaited despite the fact that buyers there cannot exploit many of the new advantages. Russia issued licenses for 3G last year and the service is available only in a few cities, while in China there is no usable 3G standard at all. 
In Russia, old iPhone models can sell for as much as 25,000 rubles ($1,100) — more than three times the carrier-subsidized U.S. price. Sergei Isakov, an Apple spokesman in Russia, declined comment because Apple does not sell the iPhone there. 
Apple CEO Steve Jobs has said the company will roll out the iPhone in Russia later this year, but Murtazin expects it no earlier than February or March 2009. Apple has not even applied to certify the 3G phone in Russia, he said. 
Pacific Crest’s Hargreaves said: “I would expect a deal in China probably in the next six months or so. Having a deal in Russia is probably a lot less likely because the market is so fragmented.” 
For now, Apple has given tacit consent to the informal supply chain by adding Russian and Chinese language options. Svyaznoi and No. 1 handset retailer Yevroset both say they are ready to discuss cooperation with Apple.

TITLE: Miller Orders Cutbacks
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Gazprom said Friday that it was working to cut staff just weeks after reporting that its salary expenses grew by one-quarter last year.
Chief executive Alexei Miller ordered measures to “optimize” staff numbers and cut expenses on administration, Gazprom said in an e-mailed comment. A spokesman for the world’s largest gas producer declined to say how large the downsizing would be or when it would start.
Kommersant reported Friday, citing sources inside the company, that the cuts would come into force in January and affect the head office and its branches — which employ nearly 6,000 people.
“It’s one of the first realistic proposals … for getting costs under control,” Alfa Bank said in a note to investors. “Given Gazprom’s bloated headcount, significant efficiencies are no doubt achievable if management seeks them.”
Gazprom spent $10.9 billion on salaries and retirement payments last year, up 25 percent from 2006, it said last month in a financial results statement.
That amount accounted for 15 percent of the company’s total operational expenses last year.

TITLE: Google, Microsoft See Profits and Stocks Slide
AUTHOR: By Vivek Shankar
PUBLISHER: Bloomberg
TEXT: SAN FRANCISCO — Google and Microsoft slid in Nasdaq trading last week after reporting profit below analysts’ estimates, signaling that the slowing economy may be weighing on demand for computer-related products.
Google fell $52.12, or 9.8 percent, to $481.32 on the Nasdaq Stock Market on Friday, the biggest drop since its August 2004 initial public offering. Microsoft declined $1.66, or 6 percent, to $25.86, the most since April 25.
The results raise concern that customers are curbing spending in the online ad market, dominated by Google, and the software industry, ruled by Microsoft. Google Chief Executive Officer Eric Schmidt said his company faces “a more challenging economic environment” for the first time, a sign investors can’t use technology as a haven from the battered housing and financial-services markets.
“You can’t consider technology a defensive sector at all,” said Jerome Dodson, chief executive officer of San Francisco-based Parnassus Investments, which oversees $1.4 billion in assets, including Google and Microsoft shares. 
“We’re going to have a small sell-off in technology.”
Google reported a slowdown in the growth of consumers clicking on web ads and higher-than-expected research and legal expenses, while Microsoft forecast sales and profit that missed analysts’ estimates.
Some technology companies — such as Intel and International Business Machines, which get a majority of revenue outside the U.S. — posted results last week that topped estimates.
“Earnings in tech have clearly been a mixed bag,” said Charles Heath, an equity analyst at UMB Financial Corp. in Kansas City, Missouri. “It looks like software companies in particular are the ones that could be more vulnerable to the weakness” in the economy.
Google, owner of the most popular Internet search engine, attributes about half its revenue to the U.S. Excluding costs such as stock-based compensation, second-quarter profit amounted to $4.63 a share, trailing the $4.73 average of estimates compiled by Bloomberg.
Advertisers pay Google when consumers click on text links that appear next to search results. Clicks on those ads climbed 19 percent, decelerating from growth of 47 percent in the year-earlier period, the Mountain View, California-based company said.
“Google’s management finally admitted that the economic slowdown will impact its business,” Stanford Group analyst Clayton Moran told Bloomberg Radio on Friday. “Some people assumed Google was immune to an advertising slowdown. That was just an incorrect assumption.” Moran, who is based in Boca Raton, Florida, advises investors to hold Google shares.
Google’s research spending climbed 65 percent, eating into profit. General and administrative expenses rose 49 percent to $475 million, in part because of costs to fight a lawsuit that Viacom filed against Google’s YouTube unit.
Microsoft, based in Redmond, Washington, gets about 60 percent of revenue from the U.S. The company’s fourth-quarter net income rose 42 percent to $4.3 billion, or 46 cents a share. Analysts had predicted 47 cents, according to a Bloomberg survey.
Sales of Microsoft’s Office programs missed the company’s goals for a second straight quarter amid slackening demand and high piracy rates in countries such as China. Microsoft’s Internet advertising also fell short of its targets as it lost business to Google. Overseas growth outpaced its U.S. sales.
“For any U.S. company, the domestic part of their products are going to come under pressure,” said Brian Rauscher, director of portfolio strategy at Brown Brothers Harriman & Co. in New York. “The U.S. consumer is getting pinched.”
Microsoft cut 1 cent from its forecast for the fiscal year that started this month, saying profit will be as little as $2.12 a share. Sales will be $67.3 billion to $68.1 billion. Analysts’ estimates averaged out to a profit of $2.17 and sales of $67.4 billion.
IBM, based in Armonk, New York, relies less on the U.S., with the country accounting for about 37 percent of its sales. The company reported a 22 percent increase in profit for the second quarter, with earnings of $1.98 a share and sales of $26.8 billion. Analysts had anticipated profit of $1.80 and $25.9 billion in revenue.
“The most growth and opportunities for IBM lie in its services and its sales outside the U.S.,” Eugene Zakharov, an analyst with Technology Business Research Inc. in Hampton, New Hampshire, said in an interview. 
“A lot of the growth this quarter came from Europe, the Middle East and Africa, where Microsoft and Google do not have a large presence.”

TITLE: Global Trade Talks Kick Off Amid Tensions, Controversy
PUBLISHER: Agence France Presse
TEXT: GENEVA — Ministers from 35 key nations began critical talks here on Monday to clinch a global trade deal after seven years of confrontation, crisis and caustic comment.
But amid a background of tension, an Egyptian minister expressed confidence that agreement could yet be snatched from the session precisely because expectations of success were low.
The so-called Doha Development Round of negotiations was launched with great fanfare in the Qatari capital in November 2001.
It has been deadlocked as developed and developing countries show brinkmanship over concessions on issues such as agricultural subsidies and tariffs on industrial goods.
Any draft agreement thrashed out here would then have to go before all 152 members of the World Trade Organization.
An already difficult situation was not helped over the weekend when a remark by a Brazilian minister, comparing the tactics of advanced countries to the methods of the Nazi propaganda chief Joseph Goebbels, sparked a row with Washington’s representative.
However, minutes ahead of the formal opening of the talks on Monday, Egyptian Trade and Industry Minister Rachid Mohamed Rachid expressed optimism that a deal could be forged this week.
“I’m optimistic because people expect nothing out of this week — because when expectation is so low, people are becoming more relaxed to negotiate. I can see it all around,” he said.
Brazil’s foreign minister, Celso Amorim, made his contentious comment at a news conference on Saturday in response to claims by the industrialised countries that they had offered concessions on agricultural tariffs.
He said he was reminded of a remark by Goebbels that “if a lie is repeated enough times, it becomes the truth.”
That prompted a sharp response from the office of US Trade Representative Susan Schwab, herself the daughter of Holocaust survivors.
“At a time when we try to find a successful outcome to the negotiations, this kind of statement is highly unfortunate,” her spokesman Sean Spicer said.
“For someone who is a foreign affairs minister, he should be aware of some sensitivities,” he added.
Amorim’s press office said he had “no intention of apologizing.”
His intention had not been to make comparisons between individuals, but “to show that propaganda can be superimposed on historical facts.”
Developing countries have been pressing for lower farm subsidies and agricultural tariffs in the developed world.
Industrialized states are demanding in return that developing countries make their markets more accessible to imported services and manufactured goods.
The man with the job of squaring the circle this week will be WTO Director General Pascal Lamy of France.
He has argued that a Doha deal could inject between 50 billion and 100 billion dollars each year into the world economy and be of enormous benefit to poor countries.
For the meeting to be a success, the WTO’s 152 members will have to agree on “modalities” — the key percentages for tariff cuts that would form the basis for any comprehensive deal.

TITLE: German Site Responds to Facebook
PUBLISHER: Reuters
TEXT: NEW YORK — The German company sued by Facebook for running a “knockoff” of the social networking web site said on Sunday it asked a German court to declare that Facebook’s claims are without merit.
Facebook’s complaint, filed on Friday in a California federal court, accuses studiVZ of copying the look, feel, features and services of Facebook and seeks “to end StudiVZ’s illegal activity” lest Facebook’s own reputation be harmed by association.
“As with any counterfeit product, StudiVZ’s uncontrolled quality standards for service, features and privacy negatively impact the genuine article,” Facebook stated in the complaint.
StudiVZ filed for declaratory judgment at the District Court in Stuttgart, also on Friday.
Facebook’s suit also seeks compensatory damages in an amount to be determined at trial.
StudiVZ claims Facebook is suing them only because Facebook has failed to transplant its success in the United States and other countries to the German market.
“Their strategy appears to be: ‘If you can’t beat them, sue them,’” said Marcus Riecke, chief executive of studiVZ, which is owned by Verlagsgruppe Georg von Holtzbrinck, a German publishing company.
Russia has a social networking web site, VKontakte, that resembles Facebook in format, color and some other respects.

TITLE: Roche Bids for Rest of Genentech Shares
PUBLISHER: Bloomberg
TEXT: GENEVA — Roche Holding, Switzerland’s largest drugmaker, has offered to buy the rest of Genentech for $43.7 billion to gain the largest U.S. maker of cancer medicines.
Investors in South San Francisco, California-based Genentech would get $89 a share in cash, 8.8 percent more than the Friday closing price, Roche said on Monday. The Basel, Switzerland-based company already owns 56 percent of Genentech.
Roche on Monday reported a decline in first-half profit as sales of the Tamiflu pill fell because governments stopped stockpiling of the medicine, one of only two drugs available to treat pandemic influenza. The proposed acquisition would be Roche’s biggest ever and would result in the U.S.’s seventh-biggest drugmaker in terms of market share. Genentech, the world’s second-biggest biotechnology company, has provided Roche with its best-selling Rituxan, Avastin and Herceptin cancer therapies.
“This makes a lot of sense,” said Beatrice Kunz, a portfolio manager at Clariden Leu in Zurich who helps manage $147 billion in assets, including shares of Roche. “The weak dollar and the fact that they are not paying a huge premium make this rather attractive.”
“Roche has always been very smart in acquisitions,” Romain Pasche, a fund manager at Vontobel Asset Management in Zurich, said before the announcement. “This conviction is reinforced by the fact that they have some of the best top-line growth in the industry and don’t really need to do this acquisition. They would do it only if it really makes sense for shareholders.”
The purchase would be the biggest in the pharmaceuticals sector since Pfizer’s 2003 purchase of Pharmacia for about $64.3 billion in stock, according to Bloomberg data. The deal would be the biggest in the industry this year. The second-biggest so far this year is Teva Pharmaceutical Industries’ Friday bid to buy Barr Pharmaceuticals for $7.46 billion.
Roche confirmed its outlook for an increase of almost 10 percent for group sales, with above-market rate growth in both its pharmaceuticals and diagnostics divisions. The forecast excludes sales of Tamiflu to governments and corporations. Roche said it expects core earnings per share to remain at least in line with the record level achieved in 2007.
The Genentech purchase would result in pretax savings of $750 million to $850 million a year and would add to EPS in the first year after closing, Roche said.
Roche is being advised by Greenhill & Co. and plans to finance the transaction through a combination of its own funds and debt. Roche’s Chairman Franz Humer said he is confident the company can raise the necessary debt financing.
“We talked to a consortium of banks beforehand and I am sure the financing will not be a problem while at the same time leaving us with enough cash for further smaller and mid sized deals,” he said in a Bloomberg interview.
The Genentech board of directors is likely to establish an independent committee to review the offer, Roche said. Genentech board members who are employees of Roche won’t participate in the evaluation of the proposal. The deal will likely be subject to approval by a majority of the owners of Genentech shares not held by Roche, the Swiss company said.

TITLE: Waiting for a Democratic Godot in the Kremlin
AUTHOR: By Dmitry Trenin
TEXT: Official Russian strategic policy papers have long been dismissed as bland statements of little practical value. The latest foreign policy blueprint, which was unveiled by President Dmitry Medvedev on Tuesday at the Foreign Ministry’s meeting with the country’s ambassadors, has received more than the usual amount of attention. People tried hard to identify a “Medvedev touch” in policy-making, or at least thinking. 
But, as it turned out, this was all in vain. The text of Medvedev’s foreign policy speech could have easily been signed by Prime Minister Vladimir Putin. Actually, it was drafted while Putin was still president.
What is routinely referred to as “Putin’s foreign policy” did not take shape until the spring of 2005. A number of events shaped its formation: the invasion of Iraq, the Yukos affair, Beslan, the enlargement of NATO and the European Union, and the color revolutions in Georgia and Ukraine. In short, Putin’s “new course” put an end to Moscow’s unsuccessful attempts to integrate Russia into the West and proclaimed the country’s strategic independence.
That was an important decision with all sorts of far-reaching implications. The EU would be more of a partner than a model, and certainly not a future home for Russia. The United States would often be a problem. 
Moscow’s desire for equal relations with the EU and the United States would require asymmetrical policies to compensate for the real inequalities. Even to hold what it regards as its own, the country would need to punch above its weight. 
This stance is unlikely to be reversed in the near future. Russia’s double-headed eagle will continue to look forward and backward at the same time. Its foreign policy strategy strives to make it a 21st-century technologically modern superpower, but it is stuck ideologically in a 19th-century status game. Trying to combine these two elements won’t come easy. Like Putin, Medvedev realizes that there can be no gain in status without advances in modernization. After all, the oil surge will not last forever. The problem is, of course, that genuine modernization would require changing the very system that Putin institutionalized to bring “stability” to the country. 
Even if Medvedev and Putin confront corruption seriously, liberate the courts from administrative abuse and proceed with innovation initiatives, Moscow’s foreign policy will not become pro-Western. The Kremlin already looks beyond the Western-dominated global system. The 500-year era that started with Portugal and Spain first dividing the whole world between them is coming to a close. To Russian leaders, the United States is the last Western empire. Rather than associating itself exclusively with the West, Russia is actively reaching out to the aspiring countries of the non-Western world, such as China, India, Brazil, South Africa, Iran and others.
At the very least, Moscow’s foreign policy objective is to keep its spot among the major global players, which it joined under Peter the Great and from which it nearly dropped out in the 1990s. On a more ambitious level, its objective is to replace U.S. hegemony with an oligarchy of the new global powers, with the United States as a primus inter pares and Russia as a sought-after moderator. In anticipation of that universal regime change, Russia — revisionist when it comes to the post-Cold War world order — has opted for creating alternatives to U.S. domination. 
The core element of Russia’s asymmetrical strategy calls for pitting U.S. economic and military power against the authority of existing international law. As a lawyer, Medvedev is particularly well-equipped for this. By raising objections to Western actions in Kosovo, Myanmar, Zimbabwe, Iran or Sudan, Moscow places the United States and its allies in a somewhat awkward position. They can either back down and thus acknowledge that the Russian position was correct, which would promote Moscow’s role as a guardian of international law, or they could decide to pursue their legally questionable policies at their own risk.
Those in the West who had granted Medvedev a grace period to prove himself different or independent from Putin, are dismayed by his handling of the Zimbabwe issue. At the Group of Eight meeting in Japan on July 8, Medvedev said he would support “financial and other measures” against Zimbabwe for the country’s crackdown on opposition activists. Several days later, however, Russia joined China in vetoing a United Nations Security Council resolution to impose sanctions on Zimbabwe. Whether the Western dismay was genuine or the vote was forced merely to cut off illusions about “Medvedev the liberal,” it means that the West continues to be stuck in the past in its thinking about Russia. 
Waiting for a liberal and pro-Western Godot in the Kremlin is a losing proposition. And hoping that a dramatic plunge of the oil price would finally bring Russia to its senses is not any more promising. But a modernized Russia is more likely to emerge as a capable competitor than pliant partner. 
You don’t have to agree with Medvedev’s foreign policy to acknowledge that one exists. What the West needs is a policy of its own for dealing with a country that it cannot change.

Dmitry Trenin is a senior associate of the Carnegie Endowment for International Peace and deputy director of its Moscow Center. He is the author, most recently, of “Getting Russia Right.”

TITLE: The Missiles of July
AUTHOR: By Richard Lourie
TEXT: Iranian President Mahmoud Ahmadinejad has done the impossible. He’s made U.S. President George W. Bush look intelligent. Just as the United States was closing the deal with the Czech Republic to station an early warning radar there to help shoot down Iranian rockets, Iran fired off a test series of missiles, including the Shahab-3, capable of hitting targets 2,000 kilometers away. Bush went from looking pre-scientific to prescient.
But then it turned out that not all the Iranian missiles were launched successfully, and at least one was the product of computer-image manipulation. One wag quipped that the best defense against Iranian missiles might be Photoshop.
Meanwhile, in a coincidence that defies all odds, the Russian supply of oil to the Czech Republic experienced mysterious technical problems.
The result is a log-jam of separate threats that makes each one harder to assess. There is the Iranian threat to Israel, Europe and the United States. There is also the Russian energy threat to the former Soviet and Warsaw Pact countries that depend heavily on Russia for gas and oil, as well as the recent threat to put the Czech Republic and Poland in Russia’s nuclear crosshairs. Finally, there is NATO’s threat to Russia as perceived by the Kremlin.
Iranian-U.S. relations are conditioned by two ticking clocks. One measures the time until Iran actually possesses a nuclear weapon — approximately two years. The other counts the days until the November election and the inauguration of a new U.S. president in January. Iran is the only element of the axis-of-evil problem that remains unsolved. 
The United States won’t attack Iran, but Israel might. The Times of London on July 13 reported that Bush has already offered implicit approval for an Israeli attack.
Israel rejects the intelligence reports that Iran suspended nuclear weapons work in 2003. Israel says that Iran is still working on nuclear weapons that will threaten Israel’s very existence, and Iran must therefore be denied those weapons. But does Israel possess concrete proof that Iran is still working toward nuclear weapons, or is that just a chance Israel is unwilling to take? With its prime minister facing a possible indictment and the prospect of bodies coming home, is Israel in any position to strike Iran?
From the very beginning, Moscow has adamantly opposed the U.S. plan to station a radar in the Czech Republic and interceptors in Poland. The Kremlin views that plan in the context of NATO expansion, which now essentially cordons Russia off from the Baltic to the Black Seas. “How would Washington feel if we placed interceptors in Cuba or Venezuela?” asked a source close to the Defense Ministry. 
The Kremlin’s response has been to threaten to target Poland and the Czech Republic with nuclear weapons. Russian officials have recently traveled to the Kaliningrad region to investigate the possibility of deploying such weapons there.
Would Russia really risk placing itself in such a hostile stance toward Europe while also further jeopardizing its reputation as a reliable energy supplier? Would the United States risk global conflict and recession by using Israeli surrogates to attack Iranian nuclear installations for reasons in which partisan politics play as much a part as strategic concerns? And how long will Iran confuse insolence with independence, creating an atmosphere of brinkmanship that may end up costing it dearly? 
There have been indications in recent days that the United States and Iran might begin talking. It might be the case that Israeli military exercises and the Iranian missile tests were simply signals and posturings, a prelude to negotiation. But those talks themselves may fail or just be a ruse to run out the clock on Bush. The next several months will be especially risky. A lot will be riding on accurate threat assessment and able diplomacy — qualities that are always in short supply.

Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”

TITLE: Harrington Wins 2nd Straight Brit Open
AUTHOR: By Doug Ferguson
PUBLISHER: The Associated Press
TEXT: SOUTHPORT, England — Padraig Harrington enjoys few moments more than the walk down 18th fairway of a century-old links course, especially with a four-shot lead in the British Open and the engraver putting the final touches on the oldest trophy in golf.
He stopped Sunday to share the moment with Greg Norman, who knows this path all too well.
Celebration for one, sympathy for the other.
“I did say to him coming down 18 that I was sorry it wasn’t his story that was going to be told,” Harrington said. “I did feel that, but I wanted to win myself. In this game, you have to take your chances when you get them.”
Harrington seized his opportunity by smashing a pair of fairway metals into the par 5s that carried him to a 32 on the back nine of blustery Royal Birkdale and made him Europe’s first player in more than a century to win the British Open two years in a row.
“Obviously, winning a major puts you in a special club,” Harrington said after closing with a 1-under 69 to win by four shots over Ian Poulter. “Winning two of them puts you in a new club altogether.”
Norman got a chance no one saw coming.
Still on his honeymoon with tennis great Chris Evert, at 53 only a part-time golfer with no expectations, the Shark found himself with a two-shot lead going into the final round and still one shot ahead with nine holes to play.
It ended like so many other majors for Norman — a quick succession of bogeys, the clutch shots belonging to someone else. He made eight bogeys in gusts that reached 40 mph, closed with a 77 and tied for third.
“Where does it rank in those? Probably not as high as some of the other ones,” Norman said of the six other times he lost a 54-hole lead in a major. “Quite honestly, I’m sure I surprised a lot of people.”
So did Harrington.
The 36-year-old Irishman injured his right wrist eight days ago, and it was so sore that he could only practice for nine holes on Tuesday and for three swings on the eve of his title defense.
He gave himself a 75 percent chance of starting, 50 percent of finishing.
Turns out that wrist was strong enough to hit all the right shots. Better yet, it was strong enough to lift the claret jug.
“It was a great distraction for me,” Harrington said. “It took a lot of pressure off me. It took a lot of stress off me. The fact that I didn’t play three practice rounds like normal for a major was a big bonus. I was very fresh going into the weekend, and this 36 holes was a real battle.”
Harrington first had to take the lead from Norman, which he did on the par-3 12th when Norman missed a 10-foot par putt. Then came a late charge from Poulter, who made a 15-foot birdie on the 16th and saved par with a 15-footer on the final hole for a 69 that looked like it might be good enough to win.
But the Irishman responded with clutch shots of his own. He hit a 3-wood into the wind to 40 feet on the par-5 15th and got down in two putts for birdie, giving him a two-shot lead. Standing in the 17th fairway, still aware that Norman could make eagle and stay in the game, Harrington hit a 5-wood that bounded onto the green and up the ridge, stopping 4 feet away for eagle.
That gave him a four-shot lead, and he knew it was over when his tee shot found the 18th fairway.

TITLE: British PM to Warn Iran in Israel Speech
AUTHOR: By Robin Millard
PUBLISHER: Agence France Presse
TEXT: JERUSALEM — Gordon Brown on Monday became the first British premier to address Israel’s parliament in a speech expected to warn Iran it must heed demands to stop enriching uranium or face further sanctions.
Brown was also set to attack Iranian President Mahmoud Ahmadinejad’s “abhorrent” threats against Israel and to underline that Britain stands alongside the Jewish state, according to excerpts issued before he spoke.
His comments on the Iran nuclear drive echo a warning by US Secretary of State Condoleezza Rice that Tehran had two weeks to respond seriously to an international offer or face further “punitive measures.”
Prime Minister Ehud Olmert said Israel “highly appreciates” Brown’s “determination ... [on the] issue of terrorism and Iranian nuclear armament.
“The most serious threat for stability in the Middle East and the global peace is rooted in ... Tehran,” he added.
Brown was introduced by parliament speaker Dalia Itzhik, who evoked the turbulent history of Anglo-Israeli relations.
“The past is for the history box. Today we are partners; we are going towards a better future, towards the thriving prosperity of our nations.
“The Iranian nuclear spearhead is directed not only towards Israel but towards the entire West.”
The Tehran regime was “inciting genocide and they are about to complete the last stages of nuclear weaponry. Many are trying to reassure us that the Shoah (Holocaust) will not be repeated.”
In prepared remarks, Brown was to promise “just as we have led the work on three mandatory sanctions resolutions of the UN, the UK will continue to lead — with the United States and our European Union partners — in our determination to prevent an Iranian nuclear weapons programme.”
“And Iran now has a clear choice to make: suspend its nuclear programme and accept our offer of negotiations or face growing isolation and the collective response not of one nation but of many nations.”
Brown’s spokesman said the prime minister did not rule out “extended sanctions in some form on the oil and gas sector”.
Sources said that could involve sanctions on spare parts for Tehran’s fairly limited domestic oil refining capacity.
“We should rule nothing out at this point, as he has always made clear, but our focus at the moment is on strengthening the sanctions regime to keep up the pressure on Iran,” Brown’s spokesman said.
Flying to the UAE, Rice also sought to tighten the screws on Tehran after taking the unprecedented step of sending a top US diplomat to meet Iran’s chief negotiator Saeed Jalili at international talks in Geneva.
The meeting sent a “very strong message to the Iranians that they can’t go and stall ... and that they have to make a decision,” Rice told reporters.
“It clarifies Iran’s choices and we will see what Iran does in two weeks. But I think the diplomatic process now has a kind of new energy in it.”
In his speech, Brown also took on Ahmadinejad, who has repeatedly attacked Israel’s right to exist and said it should be wiped off the map.
“To those who question Israel’s very right to exist, and threaten the lives of its citizens through terror, we say: the people of Israel have a right to live here, to live freely and to live in security.
“And to those who believe that threatening statements fall upon indifferent ears, we say in one voice that it is totally abhorrent for the president of Iran to call for Israel to be wiped from the map of the world.”
On Sunday, Brown visited Yad Vashem, Israel’s memorial to the six million Jews murdered in the Holocaust.
Brown was also set to praise Israel’s achievements in the 60 years since the state’s creation.
“To have achieved all this in the face of the war, the terror, the violence, the threats, the intimidation and the security is truly monumental,” he will say.
“Let me tell the people of Israel today: Britain is your true friend.”
Brown was on his first visit to Israel and the West Bank since becoming prime minister in June 2007. On Sunday he called on Israel to halt new settlement building on occupied land and pledged new aid to the Palestinians to help kick-start their economy.

TITLE: Zimbabwe Talks Lead To Striking Of Deal
AUTHOR: By Angus Shaw
PUBLISHER: The Associated Press
TEXT: HARARE, Zimbabwe — Zimbabwe’s president and opposition leader will sign an agreement setting the terms for talks to form a unity government, South Africa’s foreign affairs spokesman said Monday.
The spokesman, Ronnie Mamoepa, said the agreement is “a positive step forward in the ongoing dialogue,” to resolve the crisis in Zimbabwe since elections in March, which escalated after June’s widely condemned presidential runoff.
Opposition leader Morgan Tsvangirai won more votes than President Robert Mugabe in March but pulled out of the runoff because of escalating state-sponsored violence against opposition supporters.
Monday’s breakthrough came after South African President Thabo Mbeki agreed Friday to work closely with the U.N. and the African Union in his role as mediator.
The signing will take place Monday afternoon. Mbeki was met at the Harare airport by President Robert Mugabe. The two leaders briefly embraced and shook hands before leaving together in Mugabe’s limousine.
The deal is a diplomatic coup for Mbeki, who has insisted that dialogue and not punitive sanctions are the only way to deal with Mugabe.
Earlier this month, Russia and China delivered a rare twin veto of a U.S.-sponsored U.N. Security Council resolution to impose sanctions on Mugabe and his top aides. The aim was to punish them for allegedly overseeing political violence and force them to negotiate.
However, the European Union is expected Tuesday to widen sanctions targeted at Mugabe and his cronies, including tightening a travel ban.
Mbeki, appointed by the main regional bloc to mediate between Mugabe and Tsvangirai, has been negotiating with the two sides since July 10 and says the talks would produce some form of coalition.
Many observers and analysts see a coalition — perhaps with Mugabe as president and Tsvangirai as prime minister or vice president — as the only way to lead the nation out of its impasse and begin reversing its economic collapse.
Zimbabwe’s central bank on Monday issued a new 100 billion-dollar note in a vain attempt to keep up with shortages of cash and the world’s worst inflation running at 2.2 million percent.
Mugabe and his party insist he is Zimbabwe’s elected leader, though his one-man presidential runoff June 27 is widely regarded as a sham.
Mugabe’s party has said it is open to power-sharing but only if Mugabe heads any unity government. The opposition says publicly that it is open to a “government of national healing” — but only with moderate ruling party members, not Mugabe.
An end to political violence is expected to be one of the conditions outlined in the agreement.
Tsvangirai’s party says more than 120 of its activists have been killed by Mugabe’s police, soldiers and party militants since the first round of voting in March.

TITLE: Chambers Ban for Life Upheld
AUTHOR: By Rob Harris
PUBLISHER: The Associated Press
TEXT: LONDON — British sprinter Dwain Chambers failed Friday in his bid to overturn a lifetime Olympic ban because of doping, and will not be able to compete at the Beijing Games.
London’s High Court refused to grant an injunction against the British Olympic Association’s bylaw which bans doping violators for life from the games. Chambers’ legal team said it would not appeal the decision.
“The judge has made his decision,” Chambers said.
The sprinter did not comment on possible retirement plans. His attorney suggested in court Thursday that Chambers likely would retire if he lost the case.
Chambers, who won the 100-meter race at last Saturday’s British Olympic trials in 10 seconds, served a two-year ban after testing positive for the steroid THG in August 2003.
Despite ruling against Chambers, Judge Colin Mackay criticized the BOA bylaw.
“People both inside and outside sport would see this bylaw as unlawful,” Mackay said.
The BOA has asked its Anti-Doping Commission to undertake a review of the bylaw in conjunction with the independent British Athletes Commission.
“Today has strengthened our resolve that it’s the right approach, but we also want to make sure we are reflecting the athletes’ wishes,” BOA chairman Colin Moynihan said. “I don’t believe today will change that bylaw, but we need to keep it under review.”
The World Anti-Doping Agency said the verdict reinforced its decision to strengthen sanctions for serious doping violations.
“This decision sends a strong message that athletes who commit serious doping violations will have to face significant consequences,” said WADA president John Fahey. “There will continue to be no tolerance for cheaters in sport.”
Chambers would have been eligible to compete if only International Olympic Committee rules applied.
In his deliberation, Mackay highlighted the new IOC rule, which came into effect July 1, banning athletes from the following Olympics upon receiving a drug suspension of at least six months.
“We welcome the court’s judgment,” IOC spokeswoman Giselle Davies said. “We believe in a zero tolerance approach to athletes who take banned drugs.”
Mackay said Chambers had little chance of winning a medal in Beijing and that it would be unfair to deny an opportunity for athletes who had never taken drugs, upsetting the team’s harmony.
“His 10-second time achieved last weekend is confronted by the fact that there will be nine other athletes in Beijing who have run a faster time this year,” Mackay said.
He said athletes in other sports could make appeal if Chambers won his bid, such as cyclist David Millar and shot putter Carl Myerscough, who both have served doping bans.

TITLE: Beijing Takes Cars Off the Roads To Clean Air for Olympic Games
AUTHOR: By Audra Ang
PUBLISHER: The Associated Press
TEXT: BEIJING — Half of Beijing’s drivers left their cars at home Monday and took public transportation instead on the first workday under new restrictions meant to clear this city’s notoriously polluted skies before next month’s Olympics.
Under a two-month plan that started Sunday, half of the capital’s 3.3 million cars will be removed from city streets on alternate days, depending on whether the license plate ends in an odd or even number.
Those caught driving on days they shouldn’t will be fined $14, a pricey penalty even for China’s capital. It wasn’t known how many tickets had been issued; phones rang unanswered all day at the Beijing police traffic management bureau.
Drivers with even-numbered plates were forced Monday to take public transportation, and the government estimated that that would mean an extra 4 million commuters.
To meet the demand, the city was trying to shorten the time between subway trains from three minutes to two. But that triggered some glitches Monday as officials tried out a new signal system, the official Xinhua News Agency said on its Web site.
Some stops were forced to close for a few minutes as trains arrived late and the number of passengers waiting on platforms swelled.
The Jianguomen stop — a major interchange for Line 1, which circles the heart of the city, and the east-west Line 2 — shut down for about 20 minutes because it was too crowded, said a woman who answered the telephone at the subway information hot line.
“There are many more people on the subway at this hour compared with before,” said Wang Kai as he stepped off an afternoon train. “However I support the restrictions because it means the air quality will improve.”
In some areas, crowds remained surprisingly manageable, perhaps because employers have been asked to stagger work schedules, and public institutions opened an hour later than normal.
“It seems that the subway isn’t as busy as I expected. There are fans and air conditioning, so you don’t feel very hot,” said Chen Songde, who normally drives to work in Beijing.
Traffic still snaked along main thoroughfares and highways Monday, but it moved at a steady pace.
“Before we would be at a dead standstill,” said a taxi driver who would give only his surname, Zhang, as he steered around cars. “Now it’s better.”
It could be several days before the impact of the cleanup plan, which also includes cutbacks on construction and factory closures, is noticeable. The government has not made public a specific target for vehicle emission levels, one of the city’s biggest sources of pollution, or said how it will measure air quality.

TITLE: Rome Begins Census of Gypsy Population
AUTHOR: By Ariel David
PUBLISHER: The Associated Press
TEXT: ROME — City officials and Italian Red Cross workers began a census of Rome’s Gypsy population but said Friday that they will not participate in a national push to fingerprint all Gypsies unless they encounter someone suspected of a crime.
Premier Silvio Berlusconi’s government has drawn a stream of criticism from the European Union and human rights groups since announcing last month it wanted to fingerprint the tens of thousands of Gypsies, children and adults alike, who live in hundreds of encampments built mainly around Rome, Naples and Milan.
A government ordinance required a census of the camps but left authorities in each city leeway on how to identify the inhabitants. Rome Prefect Carlo Mosca, the government’s top security official for the city, has been skeptical of mass fingerprinting.
Officials with the Italian Red Cross began the census at a camp on the outskirts of the city Thursday, taking down details on the health, education and family status of a few dozen inhabitants. Police didn’t take part in the process, but stood by to provide security.
Mosca said at a news conference Friday that Gypsies will not be fingerprinted unless there is suspicion they may have committed a crime, in which case police will carry out the process after approval by a magistrate.
“When there is suspicion of a crime ... fingerprints can be taken as for any Italian,” he said on Friday.
The national government maintains that fingerprinting, part of a wider crackdown on street crime and illegal immigration, is needed to establish who is living in the country illegally, and to spur efforts to get Gypsy children to attend school.
Critics say the campaign is a discriminatory measure that singles out the Gypsy, or Roma, minority.
The camp in the Corviale neighborhood was half-empty and those residents who stepped up to fill the forms said some of the inhabitants had fled in fear of the approaching throng of media and officials.
“We are here only for humanitarian purposes, to get in touch with these people who have been always marginalized,” Massimo Barra, President of the Italian Red Cross, told reporters at the camp in Rome. “(We) have nothing to do with fingerprints.”
Barra said the inhabitants of the camps would not be forced to take part in the census, which is expected to wrap up by mid-October.
At Friday’s news conference, Barra said the way the census had started in Rome was “a step in the right direction.”
Asked if he felt the Red Cross was being used by the state to carry out the controversial program, he said that “theoretically, such a risk exists, but the government has an obligation to respect human rights ... if there will be attempts to take advantage of us we will know what to do.”
Other cities have been more aggressive in using fingerprinting. In Naples, where the census began weeks ago, authorities have been taking fingerprints and also filling out forms including information on ethnicity and religion.

TITLE: Ancient Egyptian Vessel To Be 
Reassembled
AUTHOR: By Jason Keyser
PUBLISHER: The Associated Press
TEXT: CAIRO, Egypt — Archaeologists will excavate hundreds of fragments of an ancient Egyptian wooden boat entombed in an underground chamber next to Giza’s Great Pyramid and try to reassemble the craft, Egyptologists announced Saturday.
The 4,500-year-old vessel is the sister ship of a similar boat removed in pieces from another pit in 1954 and painstakingly reconstructed. Experts believe the boats were meant to ferry the pharaoh who built the Great Pyramid in the afterlife.
Starting Saturday, tourists were allowed to view images of the inside of the second boat pit from a camera inserted through a hole in the chamber’s limestone ceiling. The video image, transmitted onto a small TV monitor at the site, showed layers of crisscrossing beams and planks on the floor of the dark pit.
“You can smell the past,” said Zahi Hawass, director of Egypt’s Supreme Council of Antiquities.
Experts will begin removing around 600 pieces of timber in November, said professor Sakuji Yoshimura of Japan’s Waseda University.