SOURCE: The St. Petersburg Times
DATE: Issue #1395 (59), Friday, August 1, 2008
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TITLE: Another 2 Coal Firms Under Fire
AUTHOR: By Nadia Popova
PUBLISHER: Staff Writer
TEXT: MOSCOW — The government’s antitrust probe into rising coal prices widened Wednesday to include Evraz Group and Raspadskaya, just days after Prime Minister Vladimir Putin attacked miner Mechel.
The Federal Anti-Monopoly Service said in a statement Wednesday that it had launched an investigation into whether Evraz and Raspadskaya had abused their “dominant position in the market for coking coal, setting unjustifiably high domestic prices and discriminated against the domestic market.”
The service said Raspadskaya’s and Evraz’s coal prices had “roughly doubled” from September through May.
Evraz is part-owned by former Chukotka Governor Roman Abramovich, a close ally of Putin’s. Evraz owns 40 percent of Raspadskaya.
If the companies are found guilty of antitrust violations, Evraz could face a fine of up to $70 million, and Raspadskaya of up to $40 million, said Georgy Buzhenitsa, a metals analyst at UniCredit Aton.
The new probes come six days after Putin last Thursday urged an investigation into Mechel over price-fixing, criticized its billionaire owner, Igor Zyuzin, for not showing up to an industry meeting and proposed scrapping import tariffs on iron ore and coal to curb steel costs. 
Putin followed up his criticism of the company Monday by accusing it of illegal transfer pricing. In response to the attacks, Mechel’s shares shed 49 percent of their value by Tuesday’s close. 
But analysts and market participants on Wednesday questioned the credibility of the accusations against the three companies, which together account for more than 50 percent of the country’s coking coal market.
No one at Raspadskaya, the country’s second-largest coking coal producer, was immediately available for comment. Evraz declined to comment. In its only statement since the scandal broke, Mechel said Friday that it was ready to cooperate with the government and answer any “arising questions.”
Evraz’s London-listed shares fell as low as $85.40, or 7.2 percent, in early trading, then recovered to finish the day flat at $92, while Raspadskaya rose 1.9 percent to 161.74 rubles on the MICEX exchange. Mechel’s New York-listed American Depositary Receipts were up 11.3 percent to $20.71 at 1.30 p.m. on Wednesday.
The ruble-denominated MICEX Index posted its first gain in seven days, led by steelmaker Severstal, and closed up 4.3 percent to 1,501.20. Norilsk Nickel, the world’s biggest producer of the metal, advanced for a second day after it moved to consider an ally of Putin as chief executive.
Olga Mitrofanova, an analyst at UniCredit Aton, said in a note to investors Wednesday that the state’s recent interventions in the metal sector were aimed at increasing control over the sector, as well as raising more taxes to fill in the gap left by recent tax cuts to the oil industry.
The Mechel case and Monday’s announcement that Vladimir Strzhalkovsky, a longtime ally of Putin’s, could become Norilsk CEO, were connected, Mitrofanova said. The markets “understood — a state person in the company’s management will decrease the risks,” she said. Mitrofanova said she expected other metal companies to soon follow Norilsk’s lead and offer top jobs to people with strong state connections.
A market source said the probes into Evraz and Raspadskaya rang a little hollow, as — unlike Mechel, which pursued aggressive sales policies — both companies were known for “their moderate client-friendly policies.” 
“The charges facing Evraz and Raspadskaya seem to serve as a screen to some different processes unfolding against Mechel, an aggressive leader on the country’s coal market,” a source said on condition of anonymity, citing the sensitivity of the issue. “We all understand what can happen with a company that has been criticized by Vladimir Putin, and has been criticized twice.”
Gerard McCloskey, head of the London-based McCloskey Group, a leading authority on the world coal market, said the country’s coal producers were being made scapegoats for the high prices being faced by some of their rivals in the steel industry. “Why should Mechel and Evraz pay for Novolipetsk’s mistakes?” McCloskey said. “Mechel and Evraz have ... gone to the expense of investing in coking coal mines, while Novolipetsk left it late in the day.” 
“The world is critically short of coking coal, just as it is of oil,” McCloskey said. “If Russia’s oil companies can charge world prices for their oil supplies, why not the coking coal companies?”

TITLE: Medvedev Frustrated by Slow Pace of Reforms
AUTHOR: By Oleg Shchedrov
PUBLISHER: Reuters
TEXT: MOSCOW — President Dmitry Medvedev expressed frustration on Thursday over his government’s inability to break the vicious circle of red tape and corruption which he said was hampering small businesses.
Medvedev, who took office in May, has promised to ensure the “rule of law” and make the economy more stable and life easier for small and medium-size businesses, which he wants to become major drivers of economic growth.
“One of the first decrees I signed after taking office was a decree scrapping administrative limitations on business activities,” Medvedev told an ad-hoc meeting of government and local officials in the central Russian town of Gagarin.
“We made the first step and that’s it. Nothing else,” the 42-year-old former lawyer, known for his gentle manners, added barely hiding his anger.
Medvedev’s predecessor, Vladimir Putin, presided over the longest Russian economic boom in a generation, driven by high prices for oil and gas, Russia’s biggest exports.
But Putin also presided over an expansion of the Kremlin’s involvement in the economy and studies show red tape and corruption spread during his eight-year presidency.
Nearly 27,000 graft-related crimes were registered in the first half of 2008, a 10 percent rise from the same period last year, according to official figures. Experts say the figure represents just a tiny part of the real volume of such crimes.
“We need to create a favorable investment climate in this country,” Medvedev told the televised meeting.
A dispute over the future of Russian oil venture TNK-BP and probes of major coal firms such as Mechel, Evraz and Rapadskaya have raised fund managers’ concerns about Russia’s investment climate.
Medvedev, who did not mention these problems, stressed that small businesses needed special protection.
“If you want, small businesses are the means of reviving our country,” he said. 
“Even if we involve 40 or 50 percent of people in business, we would see a totally different country.”
Small businesses now account for less than one tenth of Russia’s gross domestic product. The $1.3 trillion economy is driven by the sale of oil, gas and natural resources and a consumer boom.
Medvedev said officials were using discretional checks to extort bribes from businessmen and he criticized routine red tape which many owners say costs them a large chunk of profits.
“Our law-enforcement bodies should stop terrorizing business,” Medvedev said.
He said another problem was that companies sometimes sought to bypass the law, thus encouraging corruption in officialdom.
“As a result we see a vicious circle,” he said. “On the one hand (officials) use every opportunity to extort money from business. On the other hand, businesses provoke corruption with their actions,” Medvedev said.
Simplifying rules for running small businesses is the key to success, Medvedev said: “In the ideal world, small businesses should have few reasons to turn to courts or lawyers.”
Medvedev said earlier on Thursday that he had signed a comprehensive plan to fight corruption, which will soon be put into action.
“In this country they give special meaning to [Kremlin] signals,” he told officials. “You can consider I gave you such a signal.”

TITLE: IAAF Busts Six Russian Athletes for Failed Dope Tests
PUBLISHER: Agence France Presse
TEXT: MOSCOW — The international athletics ruling body IAAF temporarily suspended six Russian athletes after discovering DNA convergence in their samples given for dope testing last year, the head of the Russian athletics federation, Valentin Balakhnichev, said Thursday.
“We received a letter from IAAF, which said that six of our athletes — Yelena Soboleva, Daria Pishchalnikova, Gulfia Khanafeyeva, Tatyana Tomashova, Yulia Fomenko and Svetlana Cherkasova — were temporarily suspended,” Balakhnichev said.
The IAAF later confirmed a provisional suspension for 1,500 meter and 5,000 meter runner Olga Yegorova.
“The reason for the suspension was the convergence of DNA in the samples that were given by the athletes for dope testing last year,” Balakhnichev said.
“The fact gave IAAF reason to suspect our athletes in dope cheating and the right to suspend them.”
Balakhnichev added that five of the suspended athletes were already included in the country’s Beijing Olympics squad and were among the medal favorites of the upcoming Games.
“This IAAF decision dashes our athletes’ hopes of performing in Beijing,” Balakhnichev said.
Soboleva performed this season’s best results at 800 and 1,500 meter distances, while Pishchalnikova was leading the discus-throwing this season.
Khanafeyeva produced this season’s fifth best result in hammer throwing, while two-time world champion Tomashova and Fomenko respectively pulled out the season’s second and seventh fastest 1,500 meter times.
Adjudication responsibility for the seven cases now falls to the All Russia Athletics Federation while, under IAAF Rules, athletes have up to 14 days to request a hearing from their national federation. If a hearing is requested, it must be held within a period of two months. It is not the first time that Yegorova has been embroiled in controversy.
The IAAF ruled she could run in the 2001 Edmonton world championships because French authorities had failed to test her blood as well as her urine when she tested positive for EPO at a Golden League meeting in Paris.
She went on to win the title in Canada amid boos from the crowd while Britain’s long-distance star Paula Radcliffe held up a placard in the stands saying ‘EPO Drug Cheats Out’.

TITLE: 2 Subs Reach Bottom of Lake Baikal
PUBLISHER: Combined Reports
TEXT: MOSCOW — Two small, manned submarines reached the bottom of Lake Baikal, the world’s deepest freshwater lake, on Tuesday in a show of Moscow’s resurgent ambitions to set new records in science.
The Mir-1 and Mir-2 submersibles descended 1,680 meters to the bottom of the vast Siberian lake in a mission led by Artur Chilingarov, a scientist and State Duma deputy who was part of an earlier mission to the North Pole that sparked criticism in the West.
Tucked away in the remote hills of southeast Siberia, where Russia borders China and Mongolia, Lake Baikal is home to some of the world’s rarest types of fish and other water life.
The mission’s twin submersibles — used last year to plant a Russian flag on the North Pole seabed — slipped into the choppy waters just after dawn Tuesday and descended 1,680 meters to the lake’s deepest point.
Organizers initially said the expeditions set a world record for the deepest descent in a freshwater lake, but Chilingarov later said no such record was broken Tuesday, Interfax reported.
Each of the bright-red Mir-1 and Mir-2 crafts carried three scientists. 
The scientists will take samples of water and soil from the lake, which is home to more than 1,700 species of plants and animals. They also will plant a small pyramid bearing the Russian flag in the lake bed.
Mission chief Anatoly Sagalevich said the mission will make a total of 60 dives. 
Organizers then will compile a list of recommendations on how best to preserve Lake Baikal, a UNESCO World Heritage site.
Russia used Chilingarov’s mission to the North Pole to stake a symbolic claim to the energy riches of the region, believed to hold vast resources of oil and natural gas that are expected to become more accessible as climate change melts the ice cap.
Canada at the time mocked the expedition and accused Moscow of behaving like a 15th-century explorer. 

Reuters, AP

TITLE: Asylum Fraud Case Investigated
AUTHOR: By Maryclaire Dale
PUBLISHER: The Associated Press
TEXT: PHILADELPHIA — A group of Russian-born immigrants made $3 million helping 380 asylum-seekers file bogus applications over a four-year period, federal authorities said. 
David Lynn, 33, posed as an immigration lawyer and coached Russians on how to claim persecution on religious, sexual orientation or other grounds, prosecutors said Tuesday. 
He charged $8,000 per person or $10,000 to $12,000 per family, according to officials, who said they found $560,000 in cash and two gold bars hidden in the floorboards of Lynn’s home in Pennsylvania during a 2007 raid. 
Federal authorities also moved to retain more than $1.3 million in seized cash and other assets, including funds kept in a Swiss bank account. 
Despite a reputation that spread through the Russian community in Philadelphia and the surrounding area, only a handful of the applicants actually obtained asylum. 
Acting U.S. Attorney Laurie Magid said Lynn and his underlings exploited the asylum process — which she called “one of the cornerstones of the American immigration system” — for profit. 
“This fraud was about nothing more than money,” Magid said. 
Lynn, who came to the United States from Israel, ran a supposed translation service that attracted asylum seekers from the Philadelphia area and beyond. He claimed to be a lawyer but had no such training, officials said. 
While most of the clients were from Russia, others were from Ukraine, Poland and elsewhere. The green-card seekers were coached to tell immigration officials that they feared persecution for being Baptist, Jewish, a Jehovah’s Witness or gay, authorities said. 
Clients dissatisfied with the process ultimately tipped off authorities to the operation, Magid said. 
The defendants include Lynn, who lived in Holland, Pennsylvania; his father-in-law, Yevgeny Zemlyansky, 61, of Feasterville; Ilya Zherelyev, 46, of Philadelphia; Anatoly Zagrinichny, 62, of Philadelphia; Akbar Kadirov, 54, of Philadelphia; and Nelly Katsman, 41, of Holland. 
Lawyer Anna Durbin, who represents Zemlyansky, was in court and did not immediately return a request for comment. Zagrinichny’s lawyer, Trevan Borum, declined to comment. 
The defendants were expected to make initial appearances in federal court in Philadelphia this week. 
Lynn, also known as David Waisman, has not yet been arrested, but prosecutors said Immigration and Customs Enforcement officials knew of his whereabouts. He is in the United States illegally, they said. 
The other defendants are naturalized citizens or legal permanent residents, authorities said.

TITLE: U.S. Lawyer Put on Trial
PUBLISHER: Reuters
TEXT: MINSK — A U.S. lawyer went on trial behind closed doors in Belarus on Wednesday charged with carrying forged documents, drug offenses and industrial espionage — crimes that could carry up to seven years in prison.
Emmanuel Zeltser, a New York-based specialist in Russian law and organized crime, was arrested in March at the height of a diplomatic dispute between Belarus and the United States. 
He was initially charged with using forged documents, and the other accusations were added subsequently. 
“Under Belarussian law, he faces up to seven years in prison if found guilty,” said his lawyer, Dmitry Goryachko. 
He gave no details of the court’s first, hour-long sitting on grounds that the trial was closed. Also standing trial on the documents charge was Zeltser’s secretary, Vladlena Funk. 
“My client’s physical state can be described as stable but serious,” Goryachko said.
Belarus asked the U.S. ambassador to leave in March following U.S. sanctions against its oil producer, Belneftekhim. 
The drug charges were added after Belarus’ security service, still known by its Soviet-era initials, KGB, said more than 100 tablets found to be narcotics had been discovered on Zeltser. 
Zeltser’s lawyer said the drugs were to treat a back ailment. 
The U.S. State Department has expressed concern over Zeltser’s detention. 
Zeltser was born in Russia but emigrated to the United States.

TITLE: Thousands Head for Siberia To Catch Rare Solar Eclipse
PUBLISHER: The St. Petersburg Times
TEXT: Thousands of people are heading for Novosibirsk to observe a rare, total solar eclipse on Friday, when the sun will be fully obscured by the moon’s shadow for about two minutes.
A partial solar eclipse will be visible in Moscow shortly after midday Friday.
All 87 hotels in Novosibirsk are fully booked by people eager to experience the astronomical phenomenon, RIA-Novosti reported. 
Among the visitors, the Siberian city expects 13,000 to 15,000 “eclipse-chasers” — travelers from Russia and abroad who strive to be present at every single eclipse and count how much time they spend in its shadow.
The total eclipse will last two minutes, 19 seconds, said Yevgeny Nagovitsin, deputy head of Pulkovskaya Observatory, the country’s main astronomical institution.
In Moscow, the eclipse will start at 1:02 p.m. and finish at 3:15 p.m., Nagovitsin said. The eclipse will be at its fullest at 2:09 p.m., when 56 percent of sun will be obscured.
People should take care to protect their eyes if they want to look at the sun during any degree of the eclipse, Nagovitsyn said. 
People are advised to use special viewing glasses, solar cameras or even a homemade solar reflector, instructions for which can be found on the Internet.
Novosibirsk’s total eclipse will also be streamed live on the Internet on several sites, including www.rian.ru and www.altapress.ru/eclipse2008/. The total eclipse will start at 3:44 p.m. Moscow time.
Other countries will also see the eclipse, which will start in northern Canada and cross Greenland to Russia and then northern China before disappearing, Nagovitsin said.
The next total eclipse will happen in 2017 in North America.

TITLE: $42,000 Bounty Offered
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — With President Dmitry Medvedev stressing the importance of combating corruption, one regional politician is offering citizens an extra incentive to rat out crooked officials: money.
Yevgeny Rogoza, head of the Chelyabinsk city branch of pro-Kremlin party A Just Russia, is promising citizens a 1 million ruble ($42,000) reward next month for handing over evidence of corruption in the Chelyabinsk City Hall.
“We want to make our bureaucrats nervous,” Rogoza said in a telephone interview Wednesday. “If they are aware that every person they deal with can earn some money by turning them in for corruption, the climate of impunity they enjoy now will disappear.”
The reward money is being fronted by “businesspeople who are fed up with relentless extortion in the city,” Rogoza said. Evidence can include documents or audio recordings proving that city bureaucrats accept bribes, he said.
Rogoza, who has declared August “Corruption Fighting Month” in Chelyabinsk, said that the ultimate goal is to collect examples of malfeasance and report them to law enforcement authorities. “We will see how it works,” Rogoza said. “Maybe our experience will be worth implementing on a federal level.”
Chelyabinsk Deputy Mayor Oleg Grachyov said by telephone that the city administration would not oppose Rogoza’s campaign, though he said it could prompt a slew of provocations against officials by citizens looking to make some easy money. “I will strongly advise my colleagues to get tape recorders, too,” Grachyov said. “There are always two sides in bribery, and no one has repealed responsibility for offering a bribe as well as for taking it.”
Grachyov said the anti-corruption crusade was a campaign tactic by Rogoza ahead of local elections next year. While it is a largely tame opposition on the federal level, A Just Russia — created in 2006 by Federation Council Speaker Sergei Mironov as a center-left alternative to United Russia — has engaged the party of power in some scandalous, hard-fought regional elections. 
* Authorities registered 27,000 crimes related to corruption in the first six months of this year, up 10 percent from the same period last year, according to figures released by the Prosecutor General’s Office on Wednesday.

TITLE: Cheated Investors Suspend Hunger Strike
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Frustrated and disappointed by what they called “the shocking indifference of Governor Valentina Matviyenko,” a group of cheated investors in off-plan residential property developments on Thursday suspended a hunger strike they had held since July 21.
The protestors are not giving up, however, as they are plan to go to Moscow in the near future to resume the strike there and seek the help of federal authorities. 
No location or time for the Moscow protest has yet been announced.
Eleven investors who had paid local construction companies for apartments between 1993 and 2003, and were subsequently cheated out of their properties, went on a hunger strike with one key demand: a face-to-face meeting with Matviyenko. That was something they have not yet been granted and that they hope the Moscow hunger strike can help them to achieve.
“I saw on television this week that Matviyenko found the time to reprimand an official for the poor and neglected state of a garbage site she visited,” said hunger striker Lyudmila Landina, who spent several days at a hospital after a high blood pressure problem during the strike. “She never visited us. That shows she regards us as less important than a pile of rubbish. Shame on her really.”
Investor Sergei Dumtsev, one of the hunger strike’s organizers, said the protesters find Matviyenko’s intransigence extraordinary since many of the hunger strikers are old, physically weak, and needed hospital treatment during the protest.
“The governor showed her real, cynical face that belongs to someone who could not care less about the life and wellbeing of the city’s residents,” Dumtsev said. “Matviyenko behaved both coldly and defensively over the crisis, avoiding the meeting and just blaming the investors themselves. So helpless and pathetic that was.”
Matviyenko insisted that the cheated investors resolve their problems in court but almost all investors who went on hunger strike have been through several years of fruitless legal battles.
Hunger striker Tatyana Orlova was insulted by the coverage of the protest in the pro-government media and the attitude of City Hall officials that she felt presented the investors to the public as “a bunch of unlucky and not very intelligent people who trusted their money to rogue firms.”
Equally indignant is Natalya Yevdokimova, an advisor to Sergei Mironov, speaker of the Council of Federation. 
“This problem is not unique to St. Petersburg, and examples of other regions show that if there is political will, it gets solved quickly and efficiently,” she said. “Moscow and Tatarstan took full responsibility, while some other regions reached deals with construction companies giving them tax reductions and other benefits in exchange for providing flats to those who suffered in scams.”
“The trick is that the land belongs to the state, and every deal involving a plot of land in St. Petersburg is controlled by City Hall,” Yevdokimova said, adding that she has already submitted a detailed and lengthy report on the matter to Mironov. 
Mironov, in turn, has already promised the protestors that he will convince Russia’s General Prosecutor’s Office to give their cases priority and to reinforce investigations. 
St. Petersburg ombudsman Igor Mikhailov, who had a meeting with Matviyenko before the start of the strike, said he had warned the governor about the possibility of protest. 
Mikhailov has promised to secure at least one more meeting with the governor but openly admitted that the chances of her reconsidering the matter are scarce. The outcome of the previous meeting was Matviyenko directing the ombudsman to the City Hall’s commission that is supposed to work with cheated investors but has not yet helped anyone and draws scathing criticism from those who it is designed to help.
“The governor firmly stands by her opinion, which was formed a while ago,” Mikhailov explains.
According to City Hall, the number of cheated investors who suffered in construction scams amounts to several thousand, but no official exact figure exists.
Mikhailov suggested that the investors send him the files of the criminal cases concerning their lost properties that are still in progress.
“I wish I had the powers of Batman and could fly around chasing the criminals but I am just a human being with rather limited capacities,” Mikhailov said. “I will study the materials and find a way of using them to convince Governor Matvyienko — using these new legal arguments — that City Hall bears responsibility for the plight of the investors and must offer help in settling the problem.”

TITLE: Railway Troops Leaving Abkhazia
PUBLISHER: Reuters
TEXT: SUKHUMI, Georgia — The last of 400 soldiers sent by Moscow to repair a railway in Georgia’s breakaway region of Abkhazia began to pull out on Wednesday, ending a deployment that angered Tbilisi and its Western allies.
Loudspeakers played music from a brass band and children handed out flowers and Abkhaz flags to Russian soldiers at the opening ceremony of the 54-kilometer railway line.
“It’s certain that all the personnel and all the equipment will be sent away from here,” the Russian commander, Lieutenant-General Sergei Klimets, told reporters after handing out medals to the soldiers.
At the ceremony, Guram Gubaz, head of the Abkhaz railway department, said about 200 Russian soldiers had already left — a handful on Tuesday but most on Wednesday morning — and the remaining 200 soldiers would leave later Wednesday.
The Russian military has said over the last month that the soldiers would pull out of Abkhazia on July 29 and 30.
The railway line links Abkhazia’s capital, Sukhumi, to the town of Ochamchira further south. It will carry stone from Ochamchira to Sochi to help construction work for the 2014 Winter Olympic Games, Gubaz told Interfax.
Abkhazia is a lush, mountainous stretch of land that hugs the Black Sea. After the 1991 collapse of the Soviet Union rebels fought Georgia in a war that only a 1994 United Nations ceasefire ended. Now Abkhazia, and Georgia’s other breakaway region of South Ossetia, are at the center of a dispute between Russia, which supports the rebels, and Georgia, supported by the United States.
Georgia has accused Russia of trying to annex Abkhazia.

TITLE: Taxis to Finland Face New Penalties
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Finland is ousting unlicensed Russian taxi operators from the door-to-door transportation market and intends to further toughen the rules, impose fines and cancel travel visas from Friday, August 1.
A year ago, in August 2007, a law was passed in Finland making licenses compulsory for transport companies, individuals involved in the taxi business, and those who unofficially provide services in their vehicles, carrying up to eight passengers in addition to the driver.  Russians — both drivers and passengers — had been dodging the Finnish law for some time by simply denying at border checkpoints that the vehicle was a taxi and that passengers were charged money for the trip.  
“We do not offer door-to-door transportation at present,” said Tatyana Morozova, an international transportation manager at Morozov transport firm. “Drivers now face problems when crossing the Finnish border.”
“All passenger transport is seeing tougher inspections at Finland’s borders, because a lot of drivers work without licenses,” said Viktor Nos, founder of the Baltic Bus Company. “Customs officers ask passengers, for example, what the purpose of their journey is or their destination, and therefore they determine whether a vehicle is a taxi or not. In the event of an individual entrepreneur being identified, he is asked to show his license and other relevant documentation.”
“[Finnish customs officers] are much tougher now with private-owned automobiles,” said an employee of a Russian transportation company who asked not to be named. “Once one of our drivers was refused admission to the country, and the passengers missed their flight. As this business is becoming more risky, we no longer provide such services.” 
“We hear that a minimum fine is around 35 euros, and once a fine has been imposed, applications for a new visa may be rejected,” said Vladimir Borichev, a dispatcher at the St. Petersburg-based FinnWay company which offers its vans for door-to-door transportation to Finland.
Several companies have already suspended services as Finland stepped up its campaign this summer from warnings to actions, and numerous Russian taxi drivers were for the first time given fines ranging from 60 to 250 euros for providing illegal transportation services. In the most severe cases their visas were canceled, Irina Karimova, the owner of a transportation company told a Petrozavodsk television channel.
“One of our drivers had to surrender all his ID, including his green card, passport and other documents, and spent five hours at Niirala checkpoint while every passenger was questioned. On his way back from Finland he was given back the papers, but now he is on a black list at every admission checkpoint,” said Karimova.
According to Russian legislation, minibuses, vans and vehicles with a maximum capacity of up to eight passengers are permitted to provide commercial services. The stricter legislation on taxi services introduced in Finland last year empowers Finnish border guards and customs officers to fine Russian drivers who contravene the rules set by the Finnish parliament.
“Licenses for private taxis issued in Finland are very expensive and time-consuming to obtain,” said Irina, a transportation manager at Avtotur company. “This increases the total price of a journey and scares away clients, who are not prepared to pay that much. We are considering refusing orders for bulk transportation and providing some door-to-door services to a limited number of our VIP clients.”
The average fares charged by Russian taxis currently vary from 30 to 50 euros, whereas transportation services offered by Finland’s taxi operators exceed 50 euros.
“Taxis in Finland are more expensive. Even a two-euro increase in fares will hit a tourist from Russia,” said Borichev. 
According to operators, the number of travelers going between Russia and Finland rose tenfold within one year. One of the busiest customs checkpoints, Valimaa-Torfyanovka,  saw 2.7 million tourists in 2007, and the majority of people travelled by taxi. Some Russian transportation companies now assume that Finland intends to reserve profits for domestic taxi operators and is therefore trying to eliminate the competitors.
“To be honest, I am shocked by Finland’s attitude,” said the manager from Avtotur. “They are supposed to encourage Russians who spend money shopping abroad. Yet quite the reverse thing is being done.”
A warning against using private taxi services is displayed at the Consulate General of Finland, which is currently closed for vacation. Sources at the consulate declined to give an official comment, but confirmed that transport issues are being negotiated.
“The Ministry of Economic Development of Karelia has appealed to the Federal Ministry of Transport and Ministry of Foreign Affairs with a request to review the regulations and consider an agreement between Russia and Finland which would help to overcome the current difficulties,” Alexander Pavlov, head of the international cooperation department of the Ministry of Economic Development of the Republic of Karelia, told a Karelian television channel. 
The disagreement on passenger transport services is to be considered by a committee of experts from Finland and Russia’s ministries of transport scheduled to meet in mid-September in Moscow. But until then, all unlicensed mini-van transportation between Russia and Finland must be terminated, said officials at Finland’s Consulate General. Otherwise the Finnish authorities will start cancelling the visas of Russian taxi drivers who do not comply with the law.

TITLE: Aeroflot Weighs Up Stake in Serbia’s JAT
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: Having conducted failed negotiations with Italy’s near-bankrupt airline Alitalia, the Russian flagship carrier Aeroflot will now try to enter the European air passenger market by taking part in a tender announced on Thursday for the privatization of Serbia’s cash-strapped JAT Airways. 
The Serbian Privatization Agency on Tuesday publicized the privatization leaflet and called on potential investors to send their declarations of interest during the next few days. At the end of 2007, JAT was worth 162.6 million euros and had debts amounting to 247 million euros. According to the tender documentation, the minimum price for a 51-percent stake is 51 million euros, with the possibility of buying up to 70 percent of the company. Offers must be made no later than October 24. 
The Serbian government considers Russia’s Aeroflot and Iceland’s Air of Iceland to be the most serious companies ready to make bids.
Some analysts are dubious whether or not Aeroflot will take part in the JAT tender since the Russian company is also holding serious talks to gain control of the Czech flagship carrier, which is preparing a tender for the near future.
“We’ll see if we are going to participate in the tenders, but most probably we will. The picture is clearer with Czech Airlines,” Aeroflot’s deputy financial director, Mikhail Poluboyarinov, was quoted as saying last month.
“As far as Czech Airlines is concerned, we are getting ready for the tender by preparing valuations and a joint plan for a period from eight to ten years that would enable us to withstand a five- or six-year crisis,” Poluboyarinov said. 
Serbian observers say that this may be the last opportunity for JAT to find a strategic partner.
The world’s airline industry is currently facing a large-scale crisis due to massive increases in fuel prices, and experts predict that only the most successful companies will survive. In Moscow, kerosene jet fuel is five to six percent more expensive than in other European capitals, though the vast majority of European countries do not have their own deposits of crude oil. 
“If fuel prices go up another 20 percent, then bankruptcy will really become imminent for many airline companies,” Vedomosti newspaper quoted Yelena Sakhnova, an aviation analyst at Moscow-based Vneshtorgbank, as saying last week.
There has been speculation that these challenges explain why Aeroflot is reconsidering its investments in Europe.
Valery Okurov, Aeroflot’s general director, recently wrote a letter stating the company’s position on acquiring part of the Serbian airline. The St. Petersburg Times obtained a copy of the letter, which was sent to several Belgrade addresses, including the office of Mladjan Dinkic, Serbia’s economic minister. 
“Aeroflot has prepared a positive business plan for the future development of JAT, but due to the negative market condition, the current air transportation crises and higher fuel prices, the business plan would be less efficient. Bearing in mind these facts, Aeroflot reserves the right not to take part in the bidding,” Okurov wrote in the letter.
The Russian carrier’s prospects of entering JAT looked brighter earlier this year. After Serbian president Boris Tadic’s meeting in January with Vladimir Putin, who was then his Russian counterpart, Poluboyarinov announced that Aeroflot would take part in the tender for the upcoming privatization of JAT together with a European Union partner.   
Aeroflot’s deputy general director, Lev Koshlyakov, said earlier this year that Aeroflot was seriously considering taking part in the tender.
“Notwithstanding EU objections, Aeroflot has received a positive preliminary reaction from the Serbian government,” Koshlyakov said.
According an EU regulation, Aeroflot cannot obtain 51 percent of JAT due to the company’s non-EU origination, as JAT would not be able to obtain flight licenses for flights to EU member states. 
Regulation 2407/92 grants flight licenses only to companies owned and directly controlled by EU member states, to carriers whose majority stake is owned by an EU member stake, and carriers controlled by EU member states or EU citizens. 
If Aeroflot enters as a minority holder with less than 50 percent of the shares, it would have direct access to the European aviation market, since Serbia signed the Open Skies Agreement with Brussels in 2006. Some observers suggest that this is one of the main reasons for Aeroflot to take part in the tender — because Russia still hasn’t signed such an agreement with the EU.
The Serbian company might not be so attractive to Aeroflot as a package, but for certain assets it includes. Experts calculate that the authorized landing and take-off slots that JAT possesses at several major European airports are worth more than $200 million. 
In addition, JAT owns company buildings in major foreign cities such as London, Milan, Amsterdam and Athens. JAT’s fleet is old and requires significant investment, but in spite of this the company has seen permanent traffic growth during the last few years. In 2008, JAT plans to transport 1.5 million passengers.  
According to the memorandum of understanding signed between Aeroflot and JAT Airways in June 2007 in Sochi, Aeroflot’s goal is to transform the Serbian airline into a leading transnational Balkan airline company. Aeroflot has a fleet of 120 planes flying to 130 destinations in Russia and worldwide. Last year, the company carried nine million passengers and had a total income of almost $3 billion.

TITLE: Dudley Says Board To Review Spending
PUBLISHER: Reuters
TEXT: MOSCOW — The board of TNK-BP will review the firm’s investment plan for 2008, one of the points of contention in a fierce shareholders’ dispute, CEO Robert Dudley said Wednesday. 
Dudley, who is managing TNK-BP from abroad after he left Russia last week amid the conflict, said the board had agreed to review the budget, approved in November 2007, following a request by some directors that it be cut by some $900 million. 
“I continue to believe that the level of capital investment proposed to and approved by the board last November is the appropriate level for the company, underpinning our production, the continued safe operation of our facilities, and our continued investment in attractive options for future growth,” Dudley said in an e-mailed statement. 
The board meeting is due to be held in September. 
BP, which owns half of TNK-BP, and the group of four Russian billionaire shareholders that owns the other half, are involved in a public dispute over the strategy and the management tactics of the country’s third-largest oil producer. 
The Russian side has demanded Dudley’s resignation, accusing the BP-appointed executive of poor performance and favoritism toward BP. They also said the $4.4 billion capital expenditures plan for 2008 approved in November should be cut to $3.5 billion. 
“Until the board advises me that it wishes to reduce this, management will continue with the implementation of this program, which is on track,” Dudley said in the statement on Wednesday. 
Dudley, who left Russia after failing to receive his visa and saying he and the company were subject to a campaign of harassment, did not disclose his whereabouts. 
BP chief executive Tony Hayward said Tuesday that Dudley was in a central European location, which he would likely reveal soon. 
Labor authorities said Wednesday that Dudley and other TNK-BP managers may face a court case over labor violations that could ultimately see the BP-nominated CEO barred from running a Russian company for three years. 
The state labor agency has asked a court to hear a case of labor violations against senior management at TNK-BP, a spokeswoman for the agency said Wednesday. A senior official at the Moscow labor agency said earlier that it had fined TNK-BP and Dudley for labor code violations. A court could disqualify Dudley from running a company for three years if the violations were not corrected, the official said. 
The labor agency raised questions about TNK-BP’s use of foreign employees. 
A source at TNK-BP said BP, which has the right to nominate the chief executive under the shareholders agreement that founded the venture in 2003, has not nominated a replacement for Dudley. 
BP on Tuesday said that its billionaire partners wanted to tear up the agreement, a charge they denied.

TITLE: Norilsk Shares Jump on Merger Report
AUTHOR: By Tai Adelaja
PUBLISHER: Staff Writer
TEXT: MOSCOW — Norilsk Nickel shares closed up 8.4 percent on Wednesday amid speculation that the company would enter merger talks with billionaire Oleg Deripaska’s United Company RusAl.
Kommersant and Vedomosti reported Wednesday that Norilsk Nickel’s largest shareholder, Vladimir Potanin, and Deripaska might have secretly signed an agreement late Tuesday to begin talks to merge their metals giants.
RusAl released a terse statement Wednesday saying: “Deripaska is not carrying out any talks with Vladimir Potanin about a possible merger of UC RusAl and Norilsk Nickel. No confidentiality agreement has been discussed or signed between them.”
Interros, Potanin’s holding company, also denied the report.
Potanin controls about 30 percent of Norilsk through Interros. RusAl bought a stake of 25 percent plus one share in Norilsk Nickel in April from Mikhail Prokhorov, Potanin’s former business partner.
Analysts said the merger talks might still be on the cards with the possible appointment of an ally of Vladimir Putin’s, former KGB official Vladimir Strzhalkovsky, as Norilsk’s CEO. Interros said Tuesday that it backed Strzhalkovsky, head of the federal agency for the tourism industry, for the post.
“Strzhalkovsky’s presence is a catalyst for the merger talks,” said Marat Gabitov, a metals analyst with UniCredit Aton. “This is also a signal that, from now on, government interests in the company must stand above corporate conflicts or interests of individual shareholders.” 
He also said an appointment would guarantee state patronage and protection for Norilsk, the world’s biggest nickel miner.
Strzhalkovsky said Wednesday that he had agreed to take up the post “after consultations with the country’s leadership,” Interfax reported.
“I accepted Norilsk Nickel’s offer because it is a large, public and stable company that has no problems with the state authorities,” he said.
Maxim Khudalov, a metals analyst with AFK Metropol, said merger talks have become more urgent after Prime Minister Putin criticized steelmaker Mechel last week, reminding companies of their obligations before the state.
“It has been the Kremlin’s intention all along to consolidate the ferrous and nonferrous metallurgy industry, and the merger of RusAl and Norilsk Nickel would be a step in that direction,” Khudalov said.
“The government would also like to create a giant metallurgy company on a global scale by merging Norilsk Nickel and RusAl,” he said.
Putin’s spokesman Dmitry Peskov dismissed the suggestion of eventual state control of Norilsk, saying that Strzhalkovsky’s appointment was purely a shareholders’ decision.
Interros said Strzhalkovsky’s appointment was linked to company plans to create a global mining giant by merging with other metals producers.
Metalloinvest, the iron ore and steel company owned by billionaire Alisher Usmanov, announced in February that it would consider merging with Norilsk.

TITLE: First Sokos Hotel Opens in St. Petersburg
PUBLISHER: The St. Petersburg Times
TEXT: Finland’s biggest hotel chain and restaurant operator, Sokos Hotels, marked the entrance of its brand onto the Russian market with the official opening of its four-star Sokos Hotel Olympic Garden in downtown St. Petersburg last Friday. The latest addition to the city’s hotel scene is aimed at Finnish business travelers, said Juhani Jarvenpaa, president and CEO of SOK Holding at the official opening ceremony. 
St. Petersburg Governor Valentina Matviyenko, one of the VIP guests invited to cut the ribbon across the hotel’s entrance, confirmed that the local authorities would ensure the green light for investment projects of hotel operators in order to meet the objectives of the city’s plan for the development of strategic tourism. According to the plan, the number of hotel rooms in St. Petersburg is supposed to increase from a current 22,000 to 34,000 by 2011.
Sokos Hotel Olympic Garden is a conference hotel located off Moskovsky Prospekt, close to the Olympic Park. The hotel has 348 rooms, several restaurants and 13 convertible conference areas for events of up to 350 people. Rooms will cost around 135 euros ($160) per night. 
Jarvenpaa said that the Sokos Hotel Chain will open five more hotels in St. Petersburg during the next six years, with its second hotel, Sokos Hotel Vasilievsky, located on Vasilievsky Island, due to open this fall.  
Sokos Hotels owns 40 hotels in 27 cities around Finland, along with one in Tallinn, Estonia.

TITLE: King of the Hill
AUTHOR: By Georgy Bovt
TEXT: With all of the tremendous political weight that Prime Minister Vladimir Putin has accumulated over the last eight years, he has the rare ability to wreak havoc on financial markets with only one short phrase. 
Putin’s harsh criticisms on July 24 of the Mechel coal and steel company caused the value of its American Depositary Receipts to fall by 36 percent, or nearly $6 billion, on the New York Stock Exchange. Two days later, when Mechel’s management admitted that it had been selling raw materials to overseas customers at half the price it charged on the domestic market — precisely as Putin had claimed in his public rebuke — its share price rebounded by 22 percent. 
Few noticed that Putin’s statements coincided with the ongoing speculation in both the liberal and conservative press about the possibility of former Yukos CEO Mikhail Khodorkovsky gaining an early release from prison. A hearing will be held in August to decide that question. It seems to me that Putin, among other things, was trying to send a signal that this is not the time to be soft on corruption from big business. I think the court will have to carefully consider the importance of Putin’s message when it decides the Khodorkovsky case next month. In this sense, Putin’s verbal assault against Mechel was well timed, and it reminded everyone that there are certain rules of the game governing the relationship between businesses and the state.
According to these rules, both small and large businesses in Russia are not protected against the arbitrary abuse of their property rights and against biased and corrupt courts. If a government leader’s sharp statement can cause a company’s shares to lose one-third of their value overnight, it devalues another statement made by a different leader — President Dmitry Medvedev — on strengthening the rule of law and creating a more positive relationship between the government and business. 
Paradoxically, Mechel is one of main sponsors of the pro-Kremlin United Russia party, having contributed about 80 billion rubles ($3.4 billion) to its war chest. Moreover, it has never been singled out by the State Duma for “suspicious” activity, nor accused of supporting any nongovernmental organizations the Kremlin considers “undesirable.” The fact that neither of these circumstances saved the company from Putin’s withering attack demonstrates once again that one person alone determines the rules in the big game of Russian politics. It is also noteworthy in this context that Medvedev did not respond to Putin’s comments with any corroborating evidence or accusations of his own against Mechel.
Another interesting aspect of the Mechel case concerns the departments that Putin instructed to investigate the company’s alleged violations. Putin called on the Federal Anti-Monopoly Service and the Federal Inspection Service for Resource Usage to look into the matter — both of which answer directly to the prime minister. But he also asked the Investigative Committee, which is under the president’s jurisdiction, to get involved in the case. 
Putin padded his remarks by saying that “maybe it would be worthwhile” for that agency to become involved. But his gesture to the Investigative Committee was probably intended as a show of support for the agency’s embattled head, Alexander Bastrykin, who has come under fire by the Prosecutor General’s Office and muckraking journalist and Duma Deputy Alexander Khinshtein, who has accused Bastrykin of illegally running a real estate business overseas. 
Since Putin suggested that Bastrykin be entrusted with handling the important job of investigating Mechel’s purported corporate crimes, this is another signal to Bastrykin’s ill-wishers to back off.
In the coded language of the ruling elite, Putin’s pronouncements against Mechel owner Igor Zyuzin carry two additional messages — this is not the time to give Khodorkovsky an early release or to punish Bastrykin. Even if Putin did not intend either message, this is how his words will be interpreted. 
We can draw a lot of important conclusions about Putin’s power base based on how the Mechel affair turns out. If the investigation results in significant fines or even criminal proceedings, it will mean that the power-vertical model that Putin created over the last eight years remains unchanged. 
If, however, Mechel’s problems somehow blow over, this will probably mean that Putin’s next tirade won’t cost anyone anything near the $ 6 billion loss that Mechel had to swallow in one day.

Georgy Bovt is a political analyst and hosts a radio program on City-FM.

TITLE: Ending the Silent EU War
AUTHOR: By Igor Yurgens
TEXT: There has been little mutual trust lately between the governments of Russia and the European Union. Diplomatic relations between Britain and the Kremlin are at a low since Alexander Litvinenko was murdered — allegedly by a Russian agent — in London in 2006.
Such mistrust poses an obvious threat to trade and investment between Russia and the EU. Russia’s trade with the EU between January and August 2007 reached $173.3 billion, or 51.6 percent of its foreign trade turnover. More than a half of Russia’s goods are sold in Europe, and two of its top three trade partners are European: Germany, with a turnover of $31.9 billion, and Holland, $28.3 billion.
Similarly, European countries account for 75 percent of direct investment in Russia. Britain ranks first, pouring in more than $15 billion in the first half of 2007, despite the Litvinenko case and the tit-for-tat expulsion of diplomats during this period.
But the volume of foreign investment falls short of what Russia needs, for its economy is unbalanced. More than half of its exports are oil and gas, with the rest mainly chemicals and agricultural products. Petrodollars are Russia’s main resource for the development of an information-based society. EU countries will continue to demand energy, and Siberian deposits are far from exhausted.
As a result, diversification of Russia’s economy seems a distant prospect — all the more so because of its huge bureaucracy, together with the state’s interest in “strategic” areas of the economy, repels foreign business. Indeed, Europeans constantly reproach Russia for its growing state interference.
Russia’s relations with the EU are governed by an agreement signed in June 1994 concerning trade, business and investment, competition issues, protection of intellectual, industrial, and business property and financial cooperation. Over time, economic cooperation between the two sides has grown more complex, and a new legal framework is needed. But the European Commission is unable to start working on a new agreement until it has a mandate from the 27 EU member states. Such a mandate has not yet been secured.
At the same time, conditions for Russian investment in the EU are far from perfect. Investors face political discrimination and technical barriers, especially concerning the power industry. Some EU “open” tenders have turned out to be closed to Russian companies. Economic nationalism is growing. Foreign investment is limited in sectors that the EU considers to be strategically and politically important. Russian companies have had to face anti-dumping claims. European branches of Russian banks face over-regulation and expensive certification procedures.
In September 2007, a move by the European Commission to prevent foreign companies from controlling European energy transport networks was an example of a skirmish in this “silent war.” The commission’s order to “unbundle” energy companies into transport and distribution units is not likely to encourage foreign energy companies working in the EU to seek structural reforms in the Russian economy.
Russia also has to become integrated into the international economic system, accepting the rules applied by the rest of the world. Its eventual accession to the World Trade Organization will be crucial to this development, and its accession needs to be promoted more actively by Europe as well as by Russia. The long-delayed new trade and investment agreement will be less relevant once Russia is in the WTO`, whose rules take precedence over those of regional economic organizations. The legitimacy of European laws limiting the scope of Russian business activity in Europe and contradicting WTO regulations would be questioned immediately. 
Russia’s business leaders are ready to work for the creation of a common economic space between Russia and the EU. For Russia, such integration would provide a real spark for economic and social modernization. Russia’s government will, of course, have the final word in this matter. But it is unlikely to balk at a policy that treats Russia fairly.

Igor Yurgens is chairman of the Modern Development Institute in Moscow. © Project Syndicate

TITLE: Estonian Athens
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Tartu is the second largest city in Estonia, after Tallinn, and is a far cry from the capital in many ways. Whereas Tallinn is the Baltic country’s political and financial capital, Tartu, which is occasionally referred to (with a touch of irony in conversations and utter seriousness in tourists’ booklets) as the “Athens on the Emajogi,” is considered its intellectual and cultural capital.
Located in the south of Estonia, Tartu is an old Hansean city with a near 1000-year history (its first mention in a manuscript dates back to 1030), famous for its university. It is the country’s oldest and was founded in 1632, when the town was under the Swedish rule of King Gustavus Adolphus. 
A monument to the king that became one of the main symbols of the university, created in 1928 by sculptor Otto Strandman was destroyed by the Soviets in 1950, and not rebuilt until Estonia regained independence from the Soviet Union in 1991. The statue was re-erected in 1992 on its original site, Royal Square, and was created by Elisabeth Tebelius-Myren.
In Soviet and post-1991 history, for many Russians, Tartu University is linked to the name of Yury Lotman (1922-1993), the pioneering structuralist and founder of the Tartu-Moscow Semiotic School. Lotman is also one of many links between Tartu and St. Petersburg.
The Petrograd (St. Petersburg)-born scholar, who studied at Leningrad State University, fled from Soviet state-sponsored anti-Semitism in 1950 to Estonia, where it reportedly did not exist because the Soviet authorities were preoccupied with Estonian national resistance there. Lotman’s work was largely made possible due to more scholarly freedom and less harsh censorship practiced in Soviet-era Tartu.
As a reminder of the history of distinguished Russians in Tartu, one of the guided tours offered in the city is “Tartu’s Russian Connections.”
According to the University of Tartu’s website, even in the 1960s the majority of the professors at Tartu State University belonged to a generation who had received education at Tartu University in the Republic of Estonia before it was absorbed into the U.S.S.R. and thus were the bearers of the continuity of traditions in the process of instruction and scientific research. The classicist-style main building of the university (built in 1805-1809) also hosts an Art Museum, the oldest museum in Tartu University.
The green, squirrel-populated Toome Hill (Toomemagi), a great site for walking tours, is filled with educational facilities and other structures connected to the university, such as the History Museum of Tartu University, the old Tartu observatory (1811) and the old anatomical theater (1803-1805).
Now a public park, it has been used for military purposes for centuries due to its strategic position. One of the main attractions is the picturesque ruins of the 13th century Dome Cathedral (Toomkirik), first destroyed during the Livonian War in 1558-83.
Because of the university, a fifth of the city’s 100,000-strong population are students, which adds a distinctive flavor to Tartu’s environment. Ethnically, 80 percent of the population is Estonian and 16 percent is Russian. English is the universal language to speak in restaurants or shops.
Another link to Russia, though of an entirely non-academic nature, is General Dzhokhar Dudayev, Chechnya’s first president, who declared the Caucasian republic’s independence in 1991. In the Soviet era, between 1987 and 1990 he was in command of the air base of the Soviet Strategic Air Force at Tartu. 
Though a controversial figure in Russia, Dudayev, who was killed in a Russian rocket attack in Chechnya in 1996, has a special reputation in Tartu for reportedly preventing his troops from being used to suppress the Estonian struggle for independence in the late 1980s. Dudayev’s memory is marked with a plaque on the Barclay Hotel, where there was once his residence.
What still divides the two countries is the 1941-1991 occupation that brought many troubles to Estonia, especially mass deportations from 1941 and 1949. Some of the history of the period, including the Estonian Resistance Movement and the crimes of the communist regime, is on display in a museum called the KGB Cells, located in the so-called “Gray House” (15b Riia), the NKVD/KGB’s South Estonian headquarters in the 1940s/50s.
In Estonia the total number of people who fell victim to different repressions from the security organs amounted to approximately 122,000, and more than 30,000 of them lost their lives. 
Tartu’s most important historical heritage sites also include the old Lutheran St. John’s Church (Jaani Kirik), the University Botanic Gardens (launched in 1803, on the present site since 1806), the town hall square and various buildings around it. Tartu has 17 museums, four theaters, three cinemas and four public libraries.
Tartu was built on the Emajogi River (translated as “Mother River”), which starts from Lake Vortsjarv and ends in Lake Peipsi — Estonia’s two largest lakes (the latter is on Estonia’s southern Russian border and is called Chudskoye Lake by the Russians.)
One of Tartu’s most recently installed popular attractions also gives tourists some idea about local ancient history. Built by a group of enthusiasts in 2005, a wooden replica of a Hanseatic-era Peipsi Barge is equipped with a motor and offers tours up and down the Emajogi River. The river flows for 10 kilometers within the city limits.

The St. Petersburg Times was a guest of the Estonian Tourist Board, Enterprise Estonia (13/15 Liivalaia, 10118 Tallinn, Estonia. Tel: +372 6279 770). 

www.eas.ee, www.visitestonia.com.

HOW TO GET THERE
Visitors from many countries can enter with no visa, but Russians still need one. If a tour is less than five days long, no invitation is needed, if it is longer then one can go to a tourist agency (the list of local agencies dealing with Estonia is available from the Estonian Consulate General in St. Petersburg's website, www.peterburg.estemb.ru.)
From St. Petersburg, Tartu can be reached, without transfers, on Eurolines buses (www.eurolines.ru), which take about 10 hours (including customs checks.) Buses depart from the city's central long-distance bus station (and can be also caught at Baltiisky Railway Station a little later) at 11:15 a.m. and 11:35 p.m. and arrive to Tartu at 5:50 p.m. and 6:35 a.m. respectively.
The other option is to go by the train that now travels during the nights to Tallinn from where it takes 2.5 hours to reach Tartu. The GO Rail train (www.gorail.ee) departs from Vitebsky Railroad Station at 11:25 p.m. and arrives to Tallinn at 6:26 a.m.
You can take a short cut and skip a stop in Tallinn by leaving the bus at Tapa, a small town on the way to the capital, and take a bus or train from there. There is also a diesel train service between Tallinn and Tartu that takes 2 to 3 hours.

WHERE TO STAY
Villa Margaretha – A classic Estonian villa turned into a hotel, with 18 rooms and a dining room downstairs. According to the management, the historic two-floor wooden house had to be kept as it was built, with no changes to the original interiors allowed by Estonian law. 11/13 Tahe, Tel: +372 731 2030, www.margaretha.ee.
The Dorpat Hotel, a new modern steel-and glass hotel in the center, with 205 rooms and suites of different class and cost, half of which overlook the River Emajogi. A spa, a restaurant and a conference center are available. www.dorpat.ee
WHERE TO EAT
Crepp – A French-themed, early 19th century-look restaurant (upstairs) and cafe (downstairs) located in an old building in the Old Town of Tartu. Crepp is popular for its atmosphere, well-above-the-average meals, French-style crepes, baguettes and coffee. 16 Ruutli, Tel: +372 742 2133, www.crepp.ee.
Restaurant Volga – The name might be deceptive, as the newly renovated restaurant specializes in French-Mediterranean cuisine with an Estonian touch, not Russian food. The interior design of the restaurant, located in the Old Town of Tartu, follows the style of the 1920s/30s, the time when there was a favorite cafe of high society on the premises, its website claims. Menus feature fresh local products such as beef and lamb, fish from the Baltic Sea, vegetables and desserts. 1 Kuutri, Tel: +372 730 5444, www.restaurantvolga.ee.
There are also a plenty of restaurants, cafes and bars scattered around the center. 
For more information about hotels and restaurants, check out www.visitestonia.com, www.visittartu.com and www.tartu.ee.

TITLE: Chernov’s
         choice
TEXT: <b>Alina Simone</b>, the Ukraine-born, U.S.-based singer/songwriter, who made her local debut by performing a solo set at Revolution last year, will release a new, highly unusual album in the U.S. on Tuesday. 
Called “Everyone Is Crying Out to Me: Beware,” this is a full album of songs written and performed in the late 1980s by <b>Yanka</b>, the Siberian folk-punk singer/songwriter who died in May 1991 aged 24 without ever seeing her music released commercially. 
The record was due in March but was postponed until August.
“I’ve always loved [Yanka’s] music, she’s my favorite singer, and I think she had these incredible melodies and incredible voice, [but] she never had the time or the money or the resources to, say, go to a fancy studio with a fancy producer and give the songs big arrangements, so my approach was to take these melodies and really try to reinterpret them with full arrangements,” Simone said about the planned album last year.
“Most of the songs have cellos, trumpets, many guitars, drums and it was all recorded in a professional studio in New York City with a really good indie rock producer.”
Releasing a Russian-language record in the U.S. might look like a bold move, but Simone said there was already some interest from the press and venues.
“It’s totally a new thing. I mean people don’t do that!,” she said.
Now getting favorable reviews in the U.S., Simone’s album also gives some international exposure to Yanka (full name: Yana Dyagileva), who was largely obscure outside Russia’s punk scene until now.
“Simone has done a great service in bringing these treasures to non-Russian audiences,” wrote The New Yorker.
“Simone’s innovative versions reveal her many similarities to her heroine — most prominently, her haunting voice. The greatest difference is in the presentation. Yanka’s sound was spare and gritty, driven mainly by her acoustic guitar. Simone’s arrangements are fleshed out with trumpet, viola, slide guitar, and <i>bajo sexto</i>.”
The album was also praised by Time Out New York. “Whether or not you have any awareness of Dyagileva, the album is moody and moving, with Simone’s memorable vocal presence set in contexts ranging from tragic and spare to almost upbeat.”
In a recent exchange of emails, Simone said that she has no immediate plans to perform in Russia, and there is no Russian release of the album, but the record should be available at least on the Internet.

<i>— By Sergey Chernov</i>

TITLE: Brothers grim
AUTHOR: By Anne Waller
PUBLISHER: Special to The St. Petersburg Times
TEXT: The Brothers Karamazov opera, shown last week at the Mariinsky Theater, was billed as a world premiere. Written by St. Petersburg composer Alexander Smelkov at the theatre’s request, and directed by up-and-coming Vasily Barkhatov who now has four Mariinsky productions to his name, it stood out in the Stars of the White Nights summer festival as the first new opera at the venerated theater in 30 years. 
Dostoevsky’s last novel (1880) had been staged as an opera twice; in Prague in 1927 by Otakar and Jaroslav Jeremias and in 1981 in Leningrad by Alexander Kholminov at the Mussorgsky Opera and Ballet Theater. 
Smelkov and librettist Yury Dimitrin were faced with the artistic challenge of making the 21st century relevance of Dostoevsky’s famous novel resound in the imposing setting of the Mariinsky.
The epic novel follows the background and consequences for three brothers who are each complicit in the death of their father and the emotional intensity of The Brothers Karamazov naturally lends itself to the genre of opera. The fierce love rivalries of the novel, and its final courtroom scene in which the character of Katerina Ivanovna bursts forth accusing Dmitry Karamazov of his father’s murder, reappear in fresh color on the stage.  
But Smelkov’s clear enjoyment of the operatic potential of the love story is tempered by a clearly astute understanding and authentic portrayal of the spiritual turmoil and crisis of Russia in the 19th century, and Dimitrin’s libretto concisely and judiciously selects and conveys Dostoevsky’s key philosophical ideas. A Dostoevsky literature specialist, Igor Volgin, worked with the actors, which suggests the director did not want the messages of the novel to be lost in the glitz of the production.
Smelkov turns for inspiration to Russian opera music of the late 19th and early 20th centuries, so his production does not jar too much with the Mariinsky’s traditional repertoire. The varied emotional tones of Prokofiev, Mussorgsky, Tchaikovsky and Shostakovich are evoked to bring out the mood of each scene. Beethoven’s 9th Symphony, the German composer’s musical representation of universal brotherhood, is also alluded to. 
The two female soloists stand out as talented vocalists. Yelena Nebera’s elegant voice suits her character, the beguiling Katerina Ivanovna. Kristina Kapustinskaya as Grushenka, and the outstanding Avgust Amonov as Dmitry Karamazov, sing “Take Me Away,” a powerful and haunting duet.
Some of the most successful moments in the musical score are ironic juxtapositions; for example, Dmitry sings “perhaps I’ll kill him! I’ll kill him!” (refering to his father) while a female pilgrim sings “I so love humanity, I want to become a nurse.”  An original character is the witty Devil who personifies Ivan’s troubled conscience, singing spontaneous songs on the piano, trumpet and mandolin which satirize earlier leitmotifs and Ivan’s own idea, the famous slogan “If there is no God, all is permitted,” which Ivan increasingly fears is to blame for his father’s murder. 
Another success is the impressionistic musical environment of a scene from Alyosha’s dream. Alyosha ponders the question of responsibility, while the main characters echo his thoughts in an octet sacral chant to the melody of bells.
The opera’s 25 scenes are brief but powerful and are the result of compressing Dostoevsky’s most thought-provoking ideas. The fast-moving pace prevents the production from becoming overly introspective. 
The problem of staging an epic novel with its interweaving plotlines spanning across time and space demanded a clever solution from set designer Zinovy Margolin. The stage is dominated by a 19th century house, each side associated with a different group of characters’ lives, which revolves to move quickly between events. It opens out onto a medieval courtyard for the Grand Inquisitor scenes.
Somewhat typically for a Dostoevsky production, the actors wear drab and dull colors, reflecting nineteenth-century gloom, but creative lighting expresses a wide spectrum of moods. 
Smelkov’s version places particular emphasis on the religious dimension of the novel.  Four scenes are devoted to the medieval legend of the Grand Inquisitor, the most famous and perhaps prophetic chapter of the book, where Christ allegedly returns to earth and is rejected in favor of atheist socialism. 
In Smelkov’s unconventional choice of final scene, the simply-clothed and bald Wanderer, a symbolic image of Christ, kisses the Inquisitor’s forehead, the latter shuts the door of the monastery, and the Wanderer stoops down and seems to weep.  
Perhaps Smelkov’s particular interest in the Inquisitor chapter is what marks out this version of the opera with the message that the future spiritual direction of Russia is as relevant a question now as it was in Dostoevsky’s era, and that the country is once again in a period of ideological transition.

TITLE: Spiritual journey
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Rodion Shchedrin’s musical vision of the famed Russian soul received its first stage incarnation with the premiere of “The Enchanted Wanderer” at the Mariinsky Theater’s concert hall last Sunday.
Rooted in Russian spiritual music, “The Enchanted Wanderer” is clearly inspired by the traditional choral chants and bell-ringing of the Russian Orthodox church, gypsy romances and folk tunes, and has a distinctly Russian character. The opera rings with Russian spirituality, attuned by avant-garde minimalism.
Commissioned by Lorin Maazel for the New York Philharmonic Orchestra and originally premiered in 2002, “The Enchanted Wanderer” saw its Russian premiere in the summer of 2007 during the Stars of the White Nights Festival under the baton of Valery Gergiev.
Pierced with poignant intensity, the opera is beautifully transparent and is reminiscent in style of a prayer and a confession. Based on Nikolai Leskov’s eponymous novel, “The Enchanted Wanderer” tells the life story of an aged serf-turned-novice in a monastery in Valaam.
Maazel’s wish was for Shchedrin to create an opera reflecting on the Russian national character and exploring the depths of the ‘Russian soul.’
“If the ‘Russian soul’ genuinely exists, then nobody better than Nikolai Leskov could respond to this fundamental issue,” Shchedrin said in an interview after the premiere. The composer compared his work with Bach’s Passions in the sense that the main characters in “The Enchanted Wanderer,” as in Bach’s St. Matthew Passion, appear both as storytellers and dramatic characters as they perform.
Some would call the score traditional and even conservative, yet such a characterization is superficial.
Ivan Severyanovich Flyagin makes a pilgrimage into his own past, facing and reflecting on his sins  — from unwittingly flogging a monk to death to consciously murdering a gypsy beauty at her own request.
The plot is descriptive in character, appearing as a string of narrations by the three soloists. The composer himself defines the genre of his work as an “opera for concert performance” that bridges opera with oratorio. After scanning the synopsis, it may seem that meditation and reflection replace action in the opera, yet Alexei Stepanyuk’s rendition of “The Enchanted Wanderer” is by no means static. Depth, philosophy and zen elements meet dramatic intensity and snappy transitions: unhurried, reserved melancholic Orthodox monks in an instant turn into agile, astute, hardened and merciless Tatars.
Bass Sergei Aleksashkin (Flyagin) captivated the audiences with a vocally and dramatically powerful performance and the profound depth of his interpretation, carving out a very human image of a remorseful sinner turning to God and discovering Orthodox values. It is Aleksashkin’s talented portrayal of a story of a man’s genuine repentance that makes his take on the role especially valuable.
Mezzo-soprano Kristina Kapustinskaya, who possesses a dark timbre and fine technique, puts in a mesmerizing performance as Grusha the Gypsy, seduced and then abandoned by a prince, who, unable to control her despair and obsession, plots to kill the prince but asks Flyagin to kill her to avoid committing a crime. This charismatic young performer, whose performance was notable for a high degree of dramatic tension, magnetic pianissimos and expressiveness is a newcomer to the Mariinsky’s opera division, and truly one of the opera troupe’s most promising rising stars.
Tenor Andrei Popov was versatile and natural in his roles of the Flogged Monk, Prince, Magnetizer and the Old Man in the Woods, bringing satanic notes and devilish mimicry into his stage presence.
Flyagin’s life story is worthy of an adventure novel, a folk tale or a Russian traditional heroic epic all at once. The audience watches Flyagin whipping a monk to death, spending ten years in Tatar captivity, serving a prince, falling for a Roma beauty and spending the prince’s money on her. 
Stage designer Alexander Orlov opted for ascetism and visual simplicity. The setting — a cross-shaped podium covered by high reeds and a rope hanging from the ceiling — remains unchanged throughout the performance. 
Shchedrin made a winning decision by incorporating the sounds of traditional Russian bells and folk instruments, including gusli and balalaika, into the musical tissue of the opera that starts and ends with sublime peals. The Mariinsky Symphony Orchestra under the baton of Valery Gergiev navigated confidently through the score.
The opera will enjoy its U.K. premiere on Aug. 26 at the Edinburgh International Festival where it will be presented in a concert version.

TITLE: The state and a union
AUTHOR: By James Marson
PUBLISHER: Staff Writer
TEXT: “A machine doesn’t feel, it doesn’t think, it only sweeps people underneath it, this evil juggernaut of history.” 
Mila Bibikova’s words to her fiance from behind the Iron Curtain in the late ‘60s tell a common story from the Soviet Union: The authorities’ invasion into personal lives and their petty denial of personal happiness.
But the rest of her story is anything but common. Her fiance was Mervyn Matthews, a young British academic who had been expelled from the Soviet Union after a flirtation with the KGB had ended in his refusal to betray his country. 
But, refusing to bow to the “evil juggernaut,” he began a five-year campaign to get Mila out.
Mervyn and Mila’s story of love and separation forms the central part of “Stalin’s Children,” written by their son, Owen Matthews. But there is much more to the book: It is an epic journey through the lives of three generations of his family, whose lives were buffeted, shaped and nearly broken by Russia’s turbulent 20th century.
The story begins with the author’s grandfather, Boris Bibikov. A commissar and firm believer in the Soviet project of creating a new man and a new world, he threw himself into the industrialization drive of the 1920s. He led the construction of the Kharkiv tractor factory in record time, urging the workers on with the force of his words and his own physical efforts.
But he believed too strongly in the openness of ideological debate that would create this new world. When he backed Sergei Kirov’s plan, in defiance of Stalin, to slacken the pace of collectivization in 1934, he marked his own card as an “enemy” in the eyes of those who would carry out the purges with fanatical paranoia. After her husband’s arrest in 1937 and execution, which was not confirmed until decades later, Bibikov’s wife was sent to the gulag. Their two daughters, Lenina and Lyudmila, or Mila, who were 11 and 3 respectively, were sent to a prison for underage offenders.
In the years that followed, they survived disease, malnourishment and the violence and confusion of World War II. Adrift on a barge fleeing the German advance, scrubbing floors for extra scraps of food, digging trenches for the Red Army, Lenina and Mila seem to have survived by will alone. Matthews quotes Josef Stalin: “I believe in one thing only: The power of the human will.”
This phrase becomes the book’s leitmotif. While working at the Institute of Marxism and Leninism in Moscow in 1964, Mila met Mervyn when he was employed as a researcher at the British Embassy. The two fell in love and agreed to marry. But after being wined, dined and charmed by the KGB, Mervyn refused to cooperate and was expelled from the Soviet Union. There could be no return, and Mila was refused an exit visa.
Back in England, Mervyn pursued an academic career at Oxford but devoted his time to getting Mila out. He buttonholed MPs and public figures, traveled to foreign countries to try to give letters to visiting Soviet officials and even cooked up a scheme to exchange some of Vladimir Lenin’s letters for his fiancee. His academic career was left in tatters by his at times overzealous pursuit and his decision not to publish a book for fear of prejudicing his case in the eyes of the Soviet authorities. His fight for Mila was taking its toll on his professional and personal life.
But his will was not broken. The couple kept hope alive by writing to each other. Mervyn’s letters are written in the spare prose of a shy Welshman, while Mila’s are full of passion and pain.
“I have gone mad with love,” Mila writes during the first months of their separation. Her elegiac prose rails at the senseless cruelty of the authorities’ obstinacy. “Why don’t we just build a hut for ourselves at the end of the world far from all the evil and cruelty and hatred?” She urges Mervyn to show that “our love is stronger than their hate.”
Then, suddenly, their case was bundled up as part of a spy swap in 1969. Mila was allowed to leave for Britain. 
Reunited at last, Mila and Mervyn’s relationship was strained as Mila struggled to accustom herself to her new life. “Worse than Moscow” was her description of the weather in London. But their relationship survived.
Owen Matthews peppers his relatives’ stories with accounts of his own time in Moscow as a young reporter in the 1990s, including a stint at The Moscow Times, sister paper of The St. Petersburg Times, from 1995 to 1997. He draws parallels with the violence, confusion and despair — but also the hope, determination and strength of spirit — of the Russia his relatives knew and Russia in the 1990s.
As a reporter, Matthews witnessed firsthand the chaotic ‘90s and all their extremes. Two shady businessmen are gunned down in broad daylight, and his beautiful young ex-girlfriend is raped and murdered at a remote metro station. 
His trips into what he calls the “filthy underbelly” of 1990s Moscow reveal another side of the city to that of the rapacious businessman and cynical moneymakers. His stories of teenage prostitutes and glue-sniffing beggar children seep off the page with an overpowering pungency.
“These [runaway] kids ... were scruffy and emaciated but irrepressibly friendly and cocky, even though under constant threat from marauding homosexuals who tried to rape them, the police who periodically rounded them up, and American missionaries who brought them food and made them pray to Jesus.”
The material Matthews has to work with is extraordinary and his writing is worthy of it. He paints pictures with the broad strokes of a novelist, without losing the delicate precision of a historian. He writes about himself with self-deprecation, almost irony. 
There is certainly something of his father in Matthews’ writing, and this understated style leads him to play down his own bravery in reporting the Russian army’s onslaught in Chechnya.
He lets the events speak for themselves. He and his family were witnesses, observers of the maelstrom of events in a country lurching along almost beyond control.
A theme that runs throughout the book is Matthews’ growing respect for his father. 
“If I have realized anything in writing this book, it is that my father is a deeply honorable man.” Matthews states that he is unsure he could have rejected the KGB’s advances if it meant separation from his wife. “I would have considered the cause of my personal happiness supreme above all others.”
But as a writer, Matthews seems to have inherited more from his mother, which comes out in the letter extracts that are included in the book. They both write with a searing depth of emotion, combined with a touching sincerity and genuine warmth.

TITLE: At war with the establishment
AUTHOR: By Thomas Peter
PUBLISHER: Reuters
TEXT: MOSCOW — Carrying bags of stolen groceries, Oleg Vorotnikov takes out the batteries of his mobile phone before entering the secret headquarters of his underground art collective on the outskirts of Moscow.
“This is to prevent the cops from listening in,” said Vorotnikov, a 29-year-old art graduate, who with other politically conscious artists co-founded the Voina, or War, collective in 2007.
“Once a drunk artist introduced us to bystanders as ‘Russia’s main radical group’ — that’s when I understood that we have to do something together,” Vorotnikov said.
In a country where traditional opposition to the government has been dulled by public apathy and a diet of pro-Kremlin television news, these artists take a different approach: they poke fun at the establishment, and the more absurd the better.
They hunch over laptops in their headquarters — a garage — editing video of their latest piece of guerrilla street theater: an impromptu tea party in a police station.
For the lack of chairs they sit on chests of drawers and a TV set. Cameras, camcorders and books of poetry are scattered over the floor.
“We always do things that violate rules. We combine art and politics to acheive something new,” said Kotyonok, a slightly built young woman who teaches physics at a Moscow university and only gave her nickname, which means kitten.
“People watch us and are simply shocked.”
Voina became a famous name in the Russian blogger scene with a stunt intended as a wry commentary on the handover of power — decried by opponents as undemocratic — from former President Vladimir Putin to his successor, Dmitry Medvedev.
A day before the presidential election that Medvedev won by a landslide, five couples, including one heavily pregnant woman who gave birth four days later, secretly undressed in Moscow’s Biological Museum.
With video cameras rolling, they had sex in front of a banner calling for copulation in support of “the bear cub-successor” — a pun on Medvedev’s family name, which is derived from the Russian word for bear.

EVICTED
Blogs carrying photos and videos of the event shot to number one in Russian Internet rankings within 24 hours.
Some users called the participants “freaks,” “shit eaters” or “animals.” One blogger suggested they should be shot. When the mother of the pregnant woman saw her having sex on television, she threw her out of home.
Voina said they had to leave their old headquarters under pressure from the authorities but few members have yet to face the full weight of the law for their activities.
The group is most vulnerable to the catch-all “hooliganism” charge that could lead to a short prison term, but only one member is currently facing prosecution — for throwing cats during one performance.
Voina’s actionist art draws on Moscow Conceptualism, a movement that started in the 1970s with performances subverting socialist ideology. 
Given the repressive nature of the Soviet state, these happenings had to take place secretly. Only when state control over the arts receded during Mikhail Gorbachev’s perestroika reforms in the 1980s could artists take their events into the public sphere.
In April 1991, members of a group around Anatoly Osmolovsky, a Russian artist, art theorist and curator, lay down on Red Square forming an obscene Russian word for “penis” with their naked bodies. 
Voina members describe the happening as inspiring but add that it would be impossible today in an “authoritarian Russia” where, nevertheless, they have earned the respect of some in the mainstream art scene. 
“In the 1990s, art fell under the influence of a society that was becoming more and more bourgeois: Artists happily turned into conformists,” said Andrei Yerofeyev, who until last month was head of modern art procurement at the state-run Tretyakov Gallery. 
“Only in the last year, a strain of protest art reappeared, one that takes a critical line, reflects, takes a step back and sometimes cynically, sometimes comically, describes what is going on in our society.” 
Back in the Voina headquarters, the activists scramble around a laptop computer trying to improve the sound of their latest video to make it fit for Internet publication. 
Shaky images, filmed with a hidden camera the day before Medvedev’s inauguration, show the artists dishing out cream cakes and tea in a police station. 
Watched by a stunned officer, they pin Medvedev’s portrait to a wall. “We invite you to celebrate with us the inauguration of the new president,” one activist can be heard saying. 
Attempting to remove the intruders, the officer resorts to verbal abuse. “We have to fix the sound, you can’t hear anything,” said Kotyonok, twitching the dials on the video-editing software. 
In another piece of performance art, the group rigged up a table in a metro carriage, brought out food and vodka and held a wake for absurdist poet Dmitry Prigov. 
They also marked international workers’ day by going in to a McDonald’s restaurant and throwing live cats at the counter staff. The idea, they said, was to help snap the workers out of the dull routine of menial labor. 
Behind the stunts, the artists who make up Voina have a political agenda. 
“If the authorities say ‘we are building a strong state,’ an artist should show that this is not the case. If they say ‘we are improving the lives of the people,’ an artist should show that this is a lie,” said Vorotnikov over dinner, tearing off a hunk of the chicken he earlier stole from a supermarket. 
But they say their work is also a journey of self-discovery, to see how far they can push their own boundaries as artists and radicals. 
“We hate cops, but if we just attacked them like that, they would jail us immediately. So we hide our hatred behind art so they can’t get us,” said Kotyonok. 
The authorities have dealt harshly with overtly political opposition, but to date there has been no crackdown on Voina. Acting under the aegis of art largely protects them, she said. 
“We’ve had sex in public and are no longer scared of it. We’ve invaded a police station and are no longer scared of it. What else is there to scare us?” Kotyonok asked. 
“We’ll deal with death in the future. Soon we will be completely fearless.”

TITLE: Paratroopers on parade
AUTHOR: By Ali Nassor
PUBLISHER: Special to The St. Petersburg Times
TEXT: Saturday sees the epic celebration of Russia’s elite paratrooper division but the holiday — this year marking 78 years since the first airborne units were formed — suffers from a less than joyful image: the servicemen who celebrate it have a reputation for public thuggery and drunkenness.
However, the event’s organizers are urging people, especially those with non-Slavic appearance, to shower praise on the paratroopers and the founding father of the division, to avoid any unnecessary unpleasantness. 
“It’s just as simple as shouting: ‘Slava VDV! Slava Margelovu!’ (Glory to [Russian] Paratroopers! Glory to Margelov) when you see our guys; they’ll give you a hug and let you go in peace,” Colonel Vladimir Osipenko, president of the St. Petersburg Union of Veteran Paratroopers, said in a press conference Tuesday in response to a question over how foreigners and tourists should face the holiday. 
Colonel Vasily Margelov (1908-1990) was the founder and the first commander of the post-World War II incarnations of the Soviet Airborne Division (Vozdushno-Desantniye Voiska or VDV), originally set up in Voronezh in Central Russia on August 2, 1930. 
Margelov is a legendary figure within the VDV and sometimes these initials are said to stand for Voiska Dadya Vasya or the Troops of Uncle Vasya (Vasily). This year marks his centenary.
The VDV developed a fearsome reputation during the Cold War, especially during the Afghan War (1979-1989), but its units were scaled down after the demise of the Soviet Union.
Some members of the public — especially foreigners and those with non-Slavic appearance consider the holiday to be infamous for its street brawls as paratroopers, like their counterparts from the Russian Navy, go on the rampage following drinking sprees.
The Russian Navy marked its national holiday last Sunday but there were no reports of public disorder.
But Saturday’s events have invoked further fears because they coincide with a soccer game in which FC Zenit St. Petersburg will play at home with FC Moscow later in the evening.
However, the president of the Union of Afghan War Veterans Said Tulakov said “there is no reason for the public to be especially vigilant since paratroopers are peaceful, disciplined and law-abiding patriots who have not been involved in either street violence or in xenophobia-related incidents since I became an organizer of the events in 1984.” 
Retired Lieutenant General Vladimir Sukhoruchenko has said that the widely perceived notion of paratroopers on a “drunken spree, going on the rampage, causing public disorder and violent street confrontations with policemen” was wrong and has called upon the public to distinguish between real paratroopers and impostors who take advantage of the holiday to make trouble.
Paratroopers wear distinctive blue berets and striped jerseys, while other armed force units wear the jerseys but other parts of the uniform can be easily obtained (see box).
There are 32,000 paratroopers in the Leningrad Military District Airborne Unit, and about 7,000 to 10,000 of them, including veterans, will gather at the Palace Square at noon from where they will march on Millionnaya Ulitsa starting 1.30 pm to Marsovo Polye where they will pay tribute to the fallen heroes by laying wreaths to the eternal flame.
Saturday’s events are due to start at 10 a.m. with a wreath-laying ceremony at a military monument on Prospekt Slavy and at Serafimovsky Cemetery where a memorial meeting will also be staged. 
The planned events draw to a close at 5 p.m. following two hours of military theatrical shows and sports events near the site of Kirov Stadium.
Sukhoruchenko, who is also the first deputy chairman of City Hall’s Committee for Security, Law and Order, did not disclose the number of police to be deployed on the streets, but said 500 ex-paratroopers from the private security firms will volunteer to help the police  in maintaining public order. 
About 9,000 police were deployed last year.

The Story of the Sailor Shirt
“Elite forces have traditionally distinguished themselves from the rest of the military by adopting distinctive uniforms or insignia. The Soviet VDV was no exception. Colonel General Margelov was an enthusiastic proponent of the effort, feeling that it bolstered unit morale. The first step was the adoption of the Soviet Navy’s striped blue and white sailor’s shirt, the telnyashka, under the normal khaki tunic, to distinguish the paratroopers from the rest of the Soviet Army. This was an odd choice for an army unit, and was due to Margelov’s combat career in World War II. In the early years of the war, Margelov had served on the Leningrad Front. Many Soviet warships were bottled up in harbors in Leningrad, so the sailors of the Baltic Fleet were brought ashore and used as elite infantry. Although an army major, Margelov was assigned to command the 1st Naval Infantry Regiment, which was used for raiding behind German lines.
“Margelov associated the striped sailor’s shirt with this highly effective unit. He had kept his own naval shirt as a memento of past glories, and now he decided the sailor’s shirt would serve as the basis for the new VDV paratrooper’s uniform. In spite of its odd beginnings, the blue-and-white-striped shirt became the predominant symbol of Soviet and Russian elite forces, especially after Afghanistan.” 
Extracted from Steven J. Zaloga’s “Inside the Blue Berets: A Combat History of the Soviet and Russian Airborne Forces, 1930-1995” Presidio Press, 1995.

TITLE: New bites
AUTHOR: By Tobin Auber
PUBLISHER: Staff Writer
TEXT: Borsalino // Angleterre Hotel // St. Isaac’s Square/24 Ulitsa Malaya Morskaya
Tel: 494 5666 // Menu in Russian, English and Italian, major credit cards accepted // Lunch for two without alcohol 3,630 rubles ($155)
Traditionally, the summer season in St. Petersburg is something of a lull for the restaurant scene. Yes, the city is packed with tourists looking for a bite to eat, but the local clientele — who now make up the bread-and-butter income of the vast bulk of restaurants here —  are away at their dachas or even further afield. 
Despite the quieter summer pace, however, the restaurant boom continues, with a seemingly endless series of openings coming at us thick and fast. 
One to look out for in the coming weeks is a new Thai joint on the corner of Gorokhovaya and Fontanka – part of the ever-industrious Triton group, which will also be opening a Chinese eatery at the same address in the next few months. Another top tip is a new restaurant which will be attached to the vast and highly recommended Stroganoff Steak House. The new venue will feature Russian cuisine. Early reports on the jungle drums are good and all three will be reviewed in coming issues. 
So, while the new kids on the block prepare to dazzle, well-established restaurants have to work hard to maintain their niche. 
Not one to rest on its laurels, Borsalino at the Angleterre Hotel has revamped its menu to keep its place at the top table. The business lunch buffet remains popular, and tour groups will eat wherever they’re placed and whatever’s placed in front of them, but it’s the Italian dishes from head chef Stefano Balduccio that keep the locals coming.
Balduccio has introduced a grand total of 21 new dishes with some enticing titles – Rigatoni Amatriciano, Pappardelle with aubergine and basil, grilled swordfish Mediterraneo… Sticking to the new dishes, we began with the Vitello Tonnato (650 rubles, $28) and the roulade of aubergine with goat’s cheese (400 rubles, $17) – both excellently prepared, politely served and beautifully presented. The goat’s cheese went down particularly well, the moist eggplant wrappings going well with the tang of the cheese. 
After these great starters, the linguini pesto (430 rubles, $18) and the “Sea Bream in Crazy Water” (1,350 rubles, $58) that followed as main courses struggled to stand out — by no means bad, but lacking the richness of what had gone before.
The American cheesecake (200 rubles, $8.50) was also fairly standard, but the peach creme brulee (300 rubles, $13) was another knockout, relished by my sweet-toothed dining companion. Certainly not for those of us on diets.
At 3,630 rubles ($155) for two, it’s not a cheap option, but Borsalino continues to make the grade.

TITLE: In the spotlight
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: This week, the tabloids have been airing Naomi Campbell’s dirty laundry, as they discuss the bizarre story of the supermodel’s stay at The Ritz-Carlton hotel, which may or may not have ended with a burnt sheet and some extremely brave staff asking the supermodel to pay up for the damage.
Tvoi Den ran the story on Monday with a typically exaggerated headline, “Naomi Campbell almost burned down a hotel in Russia.” The story was a tribute to the tabloid’s meticulous approach to star-watching. Its reporters began tailing Naomi as soon as she arrived in Moscow last week. They wrote that she landed at Vnukovo-3 airport in a private plane and then checked into a presidential suite with Vladislav Doronin, a cleft-chinned construction magnate who is said to be her boyfriend. It didn’t name the hotel — tabloids suddenly have scruples when it comes to giving free publicity — but said the room cost 500,000 rubles ($22,000) per night. 
The hotel staff discovered the burnt sheet when Naomi checked out, the tabloid wrote. It quoted unnamed flunkies as saying that they chased after the model’s people with a bill for 10,000 rubles ($430), but she passed on a message that the situation was “ridiculous,” and she wasn’t planning to pay. The Daily Mail then picked up the story and named the hotel as The Ritz-Carlton. It also called Campbell’s spokesman, who said she hadn’t smoked or lit candles in the room and that the accusations were “completely untrue.” 
A spokesman for The Ritz-Carlton told gossip web site Spletnik.ru that the hotel doesn’t give out any information on guests. 
The story was quite revealing about the lives of the rich and famous. I knew that cheap Soviet-style hotels insist on counting the towels before you check out, but who would have thought that the same thing goes on at the Ritz-Carlton. Perhaps a little of the spirit of the Hotel Intourist, which once stood on the site, still pervades its walls. Plus, $430 seems quite reasonable for a set of silk sheets, since I’m assuming the presidential bed is so large that the current incumbent would need orienteering skills to ring for room service. But it has to be said there is something very fishy about the story, since it seems highly unlikely that Campbell would be expected to pay for the suite if she was staying with Doronin. 
The story about Doronin’s romance with Naomi first surfaced in late June, when they were pictured swimming in the sea together. Strangely enough, the boyfriend was initially identified as a Brazilian businessman called Marcus Elias, until a Brazilian journalist pointed out that Elias doesn’t have hair, while the man in the water had a luxurious crop. 
Doronin isn’t a familiar face in the tabloids, despite his craggy good looks. Last year, business-newspaper RBK listed him at No. 6 in its list of the richest owners of construction companies and wrote that his share in Capital Group was worth $1.8 billion dollars. 
The only interesting facts about Doronin which seem to be in the open are that he used to date a Swedish model and he has commissioned a very strange house from British architect Zaha Hadid in the leafy suburb of Barvikha. The bedrooms will be at the top of a 20-meter tower and the swimming pool will convert into a dance floor — and presumably back again, creating hours of fun. The Daily Mail coyly suggested that Campbell may move in if the couple gets married. Robb Report magazine wrote about the house last year, although it only described the future owner as “one of the founders of Capital Group.”

TITLE: Clubs Told To Release Players For Olympics
PUBLISHER: Reuters
TEXT: ZURICH — World soccer’s governing body FIFA has told clubs they must release any players aged under 23 selected for next month’s Beijing Olympics after rejecting a protest by three European teams.
In a statement issued on Wednesday, FIFA said Players’ Status Committee member Slim Aloulou had ruled as a single judge that the release of players was mandatory for all clubs.
German Bundesliga sides Werder Bremen and Schalke, and Spain’s Barcelona had argued against the need to release players because the Olympics were not included on FIFA’s international match calendar.
“The single judge determined that the international match calendar is not of relevance in establishing whether clubs are obliged to release players,” FIFA said in its statement.
“In view of the longstanding and undisputed practice [since 1988, clubs have always accepted the release of Under-23 players for the competition], he deemed that recourse to customary law is justified.”
The statement added that the Olympic Games was a “unique opportunity” for all athletes “and that it would not be justifiable to prevent any player younger than 23 from participating in such an event.”
Werder and Schalke have already filed complaints with the Court of Arbitration for Sport (CAS) following the call-ups of Schalke defender Rafinha and Werder playmaker Diego into Brazil’s Olympic squad.
CAS said last week it would wait until after FIFA had made its final decision before examining the complaints.
Barcelona, whose influential forward Lionel Messi has been called up by Argentina, confirmed on Wednesday that it would also go to CAS.
The Olympic football tournament runs from August 6-23, a period when many European clubs are beginning their domestic league seasons or playing qualifying matches for European competitions.
Barcelona is scheduled to play a two-legged Champions League qualifying tie in August.
Prior to FIFA’s announcement, Messi told Spanish media that he would hook up with Argentina as soon as possible if the governing body insisted players should be released.
“I want everything to be sorted out,” he was quoted as saying on Barcelona’s website.
“I understand the position of the club because a lot is at stake… But they also have to understand that it is my dream to play for my national team at the Olympic Games.”
Barcelona president Joan Laporta said they would discuss with Messi what to do next.
“We understand that it will be very difficult to retain the player and for him to take part in our tour of the United States,” he said.
“The normal thing will be for him to now go to join Argentina, but if CAS makes a decision in our favor then he will have to come back.”

TITLE: Karadzic Appears Before Hague Tribunal
AUTHOR: By Alexandra Hudson and Reed Stevenson
PUBLISHER: Reuters
TEXT: THE HAGUE — Former Bosnian Serb leader Radovan Karadzic appeared before a U.N. war crimes judge for the first time on Thursday to answer genocide charges and said he had been kidnapped and feared for his life. 
Karadzic, who was arrested last week after 11 years on the run, wore a dark suit and tie, and appeared gaunt, his trademark shock of hair whiter and shorter than when he was last seen in public out of disguise more than a decade ago.
Karadzic began in composed mood, giving one-word answers and occasionally cracking a wry joke. But as the proceedings continued he became more animated, then defiant.
Karadzic faces two charges of genocide over the 43-month siege of Sarajevo and the 1995 massacre of some 8,000 Muslims at Srebrenica, the worst atrocity in Europe since World War Two.
He said he would enter a plea after studying the charges. The case is due to resume on August 29.
The leader of Bosnian Serbs during the 1992-95 Bosnia war is the most prominent Balkan war crimes suspect arrested since late Serbian President Slobodan Milosevic, who died in detention in 2006 before his trial ended.
Karadzic said his arrest was illegal. “In Belgrade I was arrested irregularly, I was held kidnapped for three days... I had no right to a telephone call or even an SMS,” he said.
He also attacked former U.S. Bosnian peace mediator Richard Holbrooke, saying: “If Holbrooke wants my death and regrets there is no death sentence at this court, I want to know if his arm is long enough to reach me here.”
Holbrooke, architect of the peace deal which ended the Bosnian war, did not immediately comment.
At the start of the proceedings, judge Alphons Orie noted Karadzic was alone. Smiling, the suspect replied: “I have an invisible adviser but I have decided to represent myself.”
Offered a chance to have the indictment read to him, Karadzic declined.
“I’m not interested in having someone else read an indictment to me. I would rather receive the new indictment that has been announced and sufficient time to study it, then have my initial appearance after that and enter my plea.”
He appeared at the court after spending his first night in a cell at the U.N. war crimes tribunal detention centre in The Hague. He occasionally wiped his brow and spoke in Serbian. 
Since his arrest in Belgrade he has shorn the flowing beard and long hair that helped disguise him as an alternative healer in the years following the war. He was flown to the Netherlands on Wednesday morning.
Chief Prosecutor Serge Brammertz said he would conduct the trial efficiently, learning from the Milosevic case.
“Of course it will take some months before the prosecution and defence will be ready to start. It will be a complex trial but we are fully aware of the importance of being efficient,” he told reporters.
Karadzic’s lawyer in Serbia had said his client would make use of the 30-day-period he is allocated to make a plea. Under court rules if he refuses to enter a plea, then a plea of ‘not guilty’ is entered for him. 
Karadzic’s delivery to The Hague was key to Serbia securing closer ties with the European Union and his arrest was seen as a pro-Western signal.

TITLE: Isinbayeva Beats Own Record
PUBLISHER: Reuters
TEXT: MONACO — Russian Yelena Isinbayeva broke her own women’s world pole vault record on Tuesday when she cleared 5.04 meters at her third attempt at the Monaco grand prix.
Isinbayeva, who bettered her previous mark of 5.03 meters set at the Rome Golden League meeting on July 11, recorded her 13th outdoor world record and 23rd overall on a warm, still night in the principality.
The Olympic and world champion had come close to vaulting 5.04 meters last Friday in London, where she cleared the bar with her third attempt but brought it down during her descent.
“The record just happened,” the 26-year-old Monaco resident told reporters. “Monaco is my home town and it’s my first competition [in Monaco] since I’ve been living here. That motivated me.
“I’m in a good shape, I just need to keep my condition that way until the Olympics. I wanted to improve my personal best and that’s what I did. I see this world record first of all as a personal best.”
Former world record holder Asafa Powell won his third consecutive 100 meters race of the season in his last major meeting before the Beijing Olympics start next week.
The Jamaican Commonwealth champion clocked 9.82 seconds, his best time this year. Only compatriot Usain Bolt, who took the world record from Powell on May 31, and American world champion Tyson Gay have run faster in 2008.
Neither Powell nor Gay were in Tuesday’s race, in which American Darvis Patton finished second in 9.98 while Powell’s compatriot and training partner Nesta Carter took third place in 10.02.
“I still have work to do on my finish and I can do better than that,” Powell told reporters. “I’m not really surprised by my time. There was no wind at all and with a slight headwind, it might have been faster. I’m feeling well, fresh.”
“I believe I can,” Powell added when asked whether he thought he could recapture the world record of 9.72 seconds set by Bolt in New York on May 31 this year.
The women’s 100 meters was also won by a Jamaican runner, Kerron Stewart, in 10.94. She narrowly outsprinted compatriot Sherone Simpson, who came second in 10.95. American Torri Edwards, the leading 2008 performer with 10.78, was third in 11.02.
Britain’s Martin Rooney profited from the absence of U.S. 400 meters masters Jeremy Wariner and LaShawn Merritt to win over one lap in a personal best 44.72 seconds.
Daniel Kipchirchir Komen set a year’s best of three minutes, 31.49 seconds for the men’s 1,500 meters, narrowly beating compatriot Shedrack Kibet Korir, who came second in 3:31.94.
Jamaica’s Melaine Walker repulsed the challenge of American Tiffany Ross-Williams to clock a year’s best 53.48 seconds for the women’s 400 meters hurdles.

TITLE: Olmert To Quit As Israeli PM
AUTHOR: By Mark Lavie
PUBLISHER: The Associated Press
TEXT: JERUSALEM — Prime Minister Ehud Olmert’s decision to resign amid corruption allegations and his own plummeting popularity has intensified doubts about Israel’s prospects for reaching peace deals with the Palestinians and Syria.
Olmert said Wednesday he would not run in his party’s primary election Sept. 17 and would step down afterward to allow his successor to form a government.
But because of Israel’s political system, he could serve until well into 2009. Possibly hinting at his expectation of being in power for some time, he pledged to work for peace “as long as I am in my position,” and said talks with Palestinians and Syria are “closer than ever” to achieving understandings.
But the internal turmoil could make it difficult for Olmert to close deals with either of them, agreements that long have eluded Israeli leaders.
Israeli political analyst Yossi Alpher said Olmert’s resignation would at least slow the process.
“The Arabs are asking themselves how useful an agreement with Olmert would be, because he is a self-proclaimed lame duck and he will have a hard time to get his deals approved,” Alpher said.
Palestinian Foreign Minister Riad Malki said Olmert’s decision would not change much.
“It’s true that Olmert was enthusiastic about the peace process, and he spoke about this process with great attention, but this process has not achieved any progress or breakthrough,” Malki said. He said the Palestinians would deal with any Israeli government.
Olmert spoke as his delegation to indirect talks with Syria returned from a fourth round in Turkey. The two sides set another round for August. White House spokesman Gordon Johndroe said President Bush called Olmert to pledge his continued cooperation.
Political analysts had been predicting Olmert’s resignation for weeks as details of the latest allegations against him dominated the news.
The most damaging inquiry focuses on American Jewish businessman Morris Talansky, 76, who testified he gave Olmert envelopes stuffed with tens of thousands of dollars before he became prime minister, in part to finance Olmert’s lifestyle of expensive hotels and fat cigars.
Olmert has never been formally charged with a crime.
The latest allegation is that Olmert double and triple-billed trips abroad to Jewish institutions, pocketing the difference or financing trips for relatives. Other allegations include a shady real estate deal and questionable political appointments — all before he became premier.
Olmert’s brief address from his official Jerusalem residence included harsh criticism of the police investigations. He said he was choosing the public good over personal justice.
Although he has consistently denied wrongdoing, he had pledged to resign if indicted.
“I was forced to defend myself against relentless attacks from self-appointed ‘fighters for justice’ who sought to depose me from my position, when the ends sanctified all the means,” he said, appearing angry.

TITLE: Olympic Officials Upset By Beijing Censoring Internet Sites
AUTHOR: By Paul Radford
PUBLISHER: Reuters
TEXT: BEIJING — The media should have been told they would not have total Internet freedom before arriving for the Beijing Olympics, a senior IOC official said on Thursday, as rights groups piled criticism on both the IOC and host China.
As the row over censorship continued to rumble, International Olympic Committee (IOC) press chief Kevan Gosper told Reuters that both he and the international media had been taken by surprise that some sensitive websites had been blocked.
“It’s learning of it at almost the last minute that I think is destabilizing the international media and certainly embarrassing for me, as up till 48 hours ago I was insisting it would be free and uncensored Internet access,” Gosper said.
Gosper said the local organizers BOCOG’s failure to inform media beforehand that this would not happen was not good enough.
“We’ve noticed that the words being used by BOCOG have changed in recent months from ‘uncensored’ to what is more like ‘convenient and timely’, or ‘convenient and available’. These are quite different words,” he added.
“Nevertheless, no one has come out publicly and said on behalf of BOCOG or the IOC ‘sorry, but there are certain Internet websites which are blocked’,” Gosper said.
“It’s having to find out and get the big surprise by an announcement by BOCOG at a press conference. I think they could have done better.”
BOCOG is responsible for the direct running of the Beijing Games under the auspices of the IOC, which sets general Olympics policy and strategy among other functions. The organizing committee of an Olympics would generally work hand-in-hand with the IOC.
Rights watchdog Amnesty International, whose website is among those barred in China, condemned Internet restrictions during the Games as “compromising fundamental human rights and betraying the Olympic values.”
“This blatant media censorship adds one more broken promise that undermines the claim that the Games would help improve human rights in China,” Amnesty East Asia researcher Mark Allison said in a statement.

TITLE: 0-0 Draw For Zenit And CSKA
AUTHOR: By Chris Lillycrop
PUBLISHER: Special to The St. Petersburg Times
TEXT: Zenit St. Petersburg and CSKA Moscow played out an entertaining 0-0 draw at Luzhniki stadium in Moscow on Wednesday, but neither side will be happy after failing to secure all three points.
While Zenit was seeking to climb into the top half of the table after a lackluster start to the season, CSKA was seeking a win to keep up the pressure on Rubin Kazan and the other league leaders.
CSKA enjoyed the majority of the goalscoring chances in the first half. Star striker Wagner Love twice shot wide within the first ten minutes and Zenit goalkeeper Malafeev did well to beat Alan Dzagoev to the ball after the winger had been cleverly played in by Elvir Rahimic.
Zenit’s best chance of the half fell to Andrei Arshavin inside the first five minutes, but he hit a weak shot straight at goalkeeper Akinfeev. The talismanic striker — still the subject of frenzied transfer speculation — was otherwise largely anonymous. 
On a busy night for referee Igor Yegorov, who issued no fewer than 11 cards, both teams had a player sent off. Shortly after half-time, Zenit defender Ivica Krizanac received a second yellow card for a dangerous challenge on Milos Krasic. But the visitors fought tenaciously to overcome their numerical deficit and parity was restored when Dzagoev, already on a yellow card, was booked for simulation in the Zenit penalty area.
It was Zenit captain Anatoliy Tymoshchuk who masterminded the visitors’ stubborn resistance. In a typically effective performance, he patrolled tirelessly in front of the Zenit defense, repeatedly breaking down CSKA’s attacks and releasing the ball upfield for Arshavin and Igor Denisov to counter-attack.
After the dismissal of Dzagoev, both teams had chances to snatch a late winner. The best fell to Radek Sirl as he released a powerful shot from within the penalty area, but Akinfeev produced an impressive diving save to prevent a goal.
In a post-match interview on fc-zenit.ru, Tymoshchuk was clearly proud of the way his team had played after being reduced to ten men for the second match in a row. “Of course it’s better to play with equal numbers, but I think that when we were in the minority we acted well, probably because we had already learned to play with 10.”
CSKA were less relaxed about some of Yegorov’s decisions. In a statement after the game posted on their web site, the club expressed their disappointment at the “unjustified removal” of Dzagoev and the failure of the referee to award a penalty in the tenth minute for what appeared to be a handball by Krizanac.
Zenit’s next match is at home to FC Moscow, who after a 3-0 derby loss to Lokomotiv now find themselves lingering near the bottom of the league. It is a match that Zenit will want to win with ease if they hope to repeat their successes of last season.

TITLE: Zimbabwe Sheds 10 Zeros Off Hyper-Inflated Currency
AUTHOR: By Angus Shaw
PUBLISHER: The Associated Press
TEXT: HARARE, Zimbabwe — Zimbabwe announced Wednesday that it is knocking 10 zeros off its hyper-inflated currency — a move that turns 10 billion dollars into one.
President Robert Mugabe threatened a state of emergency if businesses profiteer from the country’s economic crisis, a move that could give him even more sweeping powers to punish opponents in the event that political power-sharing talks fail.
“Entrepreneurs across the board, don’t drive us further,” Mugabe warned in a nationally televised address after the currency announcement. “If you drive us even more, we will impose emergency measures. ... They can be tough rules.”
But in a glimmer of possible rapprochement in Zimbabwe’s political turmoil, opposition leader Morgan Tsvangirai revealed that he met with Mugabe last week for the first time in years and discussed the “pitfalls in any future government” that might emerge from the negotiations.
He didn’t indicate their meeting produced any agreement, however.
In a conciliatory gesture, Tsvangirai told Britain’s Channel 4 that his longtime rival is as “human as everyone else.” However, he added the president is “in denial” about the economic problems and political violence that have swept this once prosperous southern African nation.
Central Bank Governor Gideon Gono announced he was dropping 10 zeros from Zimbabwe’s currency, effective Friday. The move comes a week after the issue of a 100 billion-dollar note — still not enough to buy a loaf of bread. Gono said the new money would be launched with 500-dollar bills. He also said he was reintroducing coins, which have been obsolete for years, and told people to dig out their old ones.
That could be a boon for Fungai Matambo, a 33-year-old vendor of airtime for cell phones who said she has kept a large milk pail full of old coins.
“I’m very happy now,” she laughed. “In the old terms, I’m a multi-trillionaire!”
But, she noted, there is little to buy in the shops amid chronic shortages of food, medicine, power and water.
John Takawira, 28, who works in an Internet cafe, said the latest move would do nothing to improve life in Zimbabwe, where 80 percent of the work force in unemployed.
“The prices of goods have already started shooting up,” he complained. “This is not going to make any change to my poor life.”
Gono acted because the high rate of inflation was hampering the country’s computer systems. Computers, electronic calculators and automated teller machines at Zimbabwe’s banks cannot handle basic transactions in billions and trillions of dollars.
Inflation, the highest in the world, is officially running at 2.2 million percent in Zimbabwe but independent economists say it is closer to 12.5 million percent.
Economist John Robertson said the new bills would soon be worthless since the rate of inflation continues to skyrocket. What costs $1 at the beginning of the month can cost $20 by month’s end, he said.
“This is attending only to the symptoms of the problem. The real problem is the scarcity of everything driving up the prices. ... The government has not only caused the scarcities but damaged our ability to fix the problem.”
At the root, he said, is the damage to the farming sector, along with government raids on the state pension fund and foreign currency bank accounts of businesses.
Zimbabwe’s trials began nearly a decade ago when white farmers who were the driving force of the economy started supporting Tsvangirai’s opposition Movement for Democratic Change. Mugabe sent supporters to violently invade white-owned farms, saying he was reclaiming ancestral lands for poor black peasants.
Instead, the land went to Mugabe’s Cabinet ministers and generals, who left the fields untended. Hundreds of thousands of farm laborers lost their jobs and homes. 
Today, a third of Zimbabwe’s people depend on foreign food aid in a country that once exported food to its neighbors.
Mugabe blames the economic collapse on profiteers and on sanctions by the United States and the European Union. The worsening conditions have eroded the popularity of Mugabe, who has ruled for 28 years and was long revered for leading Zimbabwe to independence in 1980.