SOURCE: The St. Petersburg Times
DATE: Issue #1400 (64), Tuesday, August 19, 2008
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TITLE: Numbers Weaken
Genocide Claims
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW — Days after the fighting ended in South Ossetia, a huge question mark is hanging over the number of civilians who actually died.
South Ossetian and Moscow officials estimated the number of Ossetian civilian casualties as being between  1,600 and over 2,100.
Some human rights activists on the ground said, however, that they were struggling to find even 100 slain Ossetians, while other experts said it was still too early to compile an accurate count.
In any case, it is looking increasingly unlikely that the death toll will be anywhere close to the numbers needed to support Moscow’s claim that Tbilisi had committed genocide.
President Dmitry Medvedev and Prime Minister Vladimir Putin both accused the Georgian military of committing “genocide” when it invaded South Ossetia on Aug. 8 in an attempt to regain control over the pro-Moscow republic. Medvedev has also ordered the Investigative Committee of the Prosecutor General’s Office to open an investigation that could lead to genocide charges being filed against the Georgian leadership.
South Ossetia’s top police official, Mikhail Mindzayev, told reporters Saturday that the number of civilian casualties was over 2,100, Interfax reported.
Separatist leaders had previously put the figure at 1,600, and Russian officials have cited the 1,600 figure for the past week. Most recently, Federation Council Deputy Speaker Alexander Torshin said Friday that 1,600 Ossetian civilians had perished under Georgian fire.
On the second day of the conflict, Aug. 9, Russia’s ambassador to Georgia, Vyacheslav Kovalenko, declared that more than 2,000 Ossetian civilians had died.
The Investigative Committee, which has opened a case on suspected genocide as well as murder, said Thursday that it had so far uncovered “more than 60 bodies of Russian citizens of Ossetian ethnicity,” Interfax reported. Most residents of South Ossetia carry Russian passports.
Investigative Committee spokesman Vladimir Markin told reporters in the North Ossetian capital, Vladikavkaz, on Friday that investigators have examined 29 bodies retrieved from South Ossetia. A team of 150 investigators are looking for evidence of genocide in South Ossetia’s capital, Tskhinvali, and the surrounding area, he said.
Markin urged the reporters to share any evidence of “Georgian aggression” they might have with the investigators.
A fact-finding mission for Human Rights Watch, a U.S.-based rights watchdog, has only been able to find about 60 bodies.
The head of the group’s Moscow bureau, Anna Neistat, reported by telephone from Tskhinvali on Friday that the Tskhinvali hospital was storing 44 bodies of people killed in the city, including civilians and soldiers. “We believe that the figure of 44 is not exhaustive,” she said, adding that she has heard of “at least a few other people dead in the city.”
Neistat said she visited the village of Khetagurovo, outside Tskhinvali, on Thursday and villagers told her of 15 people killed there, both civilians and soldiers. 
She said she expected the death toll to grow when the dead are counted in other villages near Tskhinvali, which bore the brunt of the fighting. 
But Neistat has not found evidence of a high civilian death toll. “The range of numbers we are getting is dozens of civilians rather than thousands,” she said.
The Tskhinvali hospital has reported taking in 273 civilians and soldiers injured in the city and the surrounding region, Neistat said.
The number of civilian injuries in a conflict is usually three to four times higher than the number of those killed, she said. “If the Russian authorities are talking about 1,600 people killed, we must be talking about some 6,000 wounded, and so far we haven’t seen anything close to that,” she said.
In the meantime, a federal crisis center set up to deal with the conflict said 519 injured South Ossetian civilians had sought medical assistance in North Ossetia as of Friday morning, while another 360 had turned to doctors in South Ossetia, Itar-Tass reported.
The head of the Moscow Bureau for Human Rights, Alexander Brod, who visited South Ossetia on Friday as a member of a team with the Public Chamber, said the official Moscow body count of about 1,600 looked credible.
“I saw there that a lot of people killed during the first two days of fighting were buried on the spot, right in their own yards, because the intense fire did not allow other options,” he said.
Also, the very strong odor of decomposing bodies is hanging over Tskhinvali’s demolished buildings, he said.
“There will be significantly more dead after the rubble is removed,” he said.
The civilian body count in an intense five-day battle like the one witnessed in South Ossetia could easily amount to hundreds and even thousands, said Yevgeny Satanovsky, a security analyst and president of the Institute of Middle East Studies.
Usually, civilian casualties in urban conflicts are several times higher than the body count of combatants, he said.
Russia’s Defense Ministry says 74 servicemen were killed in action and 19 were missing. Georgia’s Health Ministry says 112 troops were killed, excluding those left behind in South Ossetia.

TITLE: Russia Says Troop Withdrawal Has Begun
AUTHOR: By Mike Eckel
PUBLISHER: The Associated Press
TEXT: GORI, Georgia — Russia said its military began to withdraw from the conflict zone in Georgia on Monday, but left unclear exactly where troops and tanks will operate under the cease-fire that ended days of fighting in the former Soviet republic.
Russian troops and tanks have controlled a wide swath of Georgia for days after a short but intense war that reignited Cold War tensions.
In Moscow, Colonel-General Anatoly Nogovitsyn told a briefing that “today, according to the peace plan, the withdrawal of Russian peacekeepers and reinforcements has begun.” He added that forces were leaving Gori, which sits on Georgia’s main east-west highway.
Earlier in the day, Russian forces around Gori appeared to be solidifying their positions, and it was not immediately possible to confirm the withdrawal with AP journalists there.
A U.S. official said Monday that the Russian military had moved missile launchers into the breakaway region of South Ossetia.
The RIA-Novosti news agency reported that some Russian military vehicles were heading Monday out of the South Ossetian capital of Tskhinvali toward Russia. The leader of South Ossetia, Eduard Kokoity, also asked Russia on Monday to establish a permanent base there, the news agency said.
According to the European Union-brokered peace plan signed by both Medvedev and Georgian President Mikhail Saakashvili, both sides are to pull forces back to the positions they held before fighting broke out Aug. 7 in the Russian-backed Georgian separatist region of South Ossetia.
Nogovitsyn said the Russian troops are pulling back to South Ossetia and a security zone defined by a 1999 agreement of the “joint control commission” that had been nominally in charge of South Ossetia’s status since it split from Georgia in the early 1990s.
Georgian and Russian officials could not immediately clarify the dimensions of the security zone. Nogovitsyn said only that “troops should not be in the territory of Georgia,” but it was unclear if that excluded patrols.
“I think the Russians will pull out, but will damage Georgia strongly,” Tbilisi resident Givi Sikharulidze told an AP television crew. “Georgia will survive, but Russia has lost its credibility in the eyes of the world.”
Top American officials said Washington would rethink its relationship with Moscow after its military drive deep into its much smaller neighbor and called for a swift Russian withdrawal.
“I think there needs to be a strong, unified response to Russia to send the message that this kind of behavior, characteristic of the Soviet period, has no place in the 21st century,” Defense Secretary Robert Gates said Sunday.
But neither Gates nor Secretary of State Condoleezza Rice would be specific about what punitive actions the United States or the international community might take.
Rice, who was flying to Europe for talks Tuesday with NATO allies about what message the West should send to Russia, said Russia can’t use “disproportionate force” against its neighbor and still be welcome in international institutions.
“It’s not going to happen that way,” she said. “Russia will pay a price.”
French President Nicolas Sarkozy warned Medvedev of “serious consequences” in Moscow’s relations with the European Union if Russia does not comply with the cease-fire accord.
A U.S. official told The Associated Press that the Russian military moved SS-21 missile launchers into South Ossetia on Friday. From there, the missiles would be able to reach Tbilisi.
Nogovitsyn, the Russian military official, disputed the claim, saying Russia “sees no necessity” to place SS-21s in the region.
The war broke out after Georgia launched a barrage to try to retake control of South Ossetia, a Russian-backed separatist region that split off in the early 1990s. Russia had peacekeeping forces in South Ossetia and sent in thousands of reinforcements immediately, driving out Georgian forces. Georgian troops also were driven out of the small portion they had held in another separatist region, the Black Sea province of Abkhazia.
Russian troops also took positions deep into Georgia, including Gori, about 50 miles west of the capital, and in the Black Sea port of Poti. They also began a campaign to disable the Georgian military, destroying or carting away large caches of military equipment. An AP photographer saw Russian troops guarding rows of captured Georgian military vehicles Sunday in Tskhinvali.
An AP photographer also saw Russian troops Sunday in the South Ossetian village of Kikhvi. Houses in the mostly-ethnic Georgian village were burning days after most of the fighting had ended.
Bolstered by Western support, Georgia’s leader vowed never to abandon its claim to territory now firmly in the hands of Russia and its separatist allies, even though he has few means of asserting control. His pledge, echoed by Western insistence that Georgia must not be broken apart, portends further tensions over South Ossetia and Abkhazia.
In Gori, there were scenes of desperation Sunday as Georgians crowded around aid vehicles, grasping for loaves of bread. Virtually all shops were closed and the streets were almost empty, save for those seeking aid.
“I wouldn’t say there’s a humanitarian catastrophe, but there’s an urgent need for primary products,” Georgian national security council head Alexander Lomaia told journalists Monday on the outskirts of Gori.
Nearby, Russian troops inspected a Georgian humanitarian aid vehicle Monday before allowing it to enter Gori.
Georgia’s government minister for refugees, Koba Subeliani, said there were 140,000 displaced people in Tbilisi and the surrounding area.
U.S. Brigadier General Jon Miller arrived in Georgia to assess the need for further humanitarian aid. So far, at least six U.S. military flights carrying aid have arrived in Tbilisi.

TITLE: Conscripts Take Commanders to Court Over Contracts
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: A group of drafted recruits serving at the military detachment No. 67661 at the Sapyorny settlement of the Priozersky district in the outskirts of St. Petersburg are gearing up for a court battle with their commanders after allegedly being forced to sign contracts to keep them in the army.
Vladimir, one of the recruits serving in the detachment, said he and dozens of others have been getting such repeated requests over the past two weeks from senior officers. Vladimir, who requested anonymity due to the sensitive nature of the issue, has one month of compulsory military service left to serve.
Ella Polyakova, the chairwoman of the St. Petersburg pressure group Soldiers’ Mothers, told The St. Petersburg Times that such practices — complete with threats and promises of non-existent benefits — are commonplace in the Russian army
“Vladimir’s father told us that the officers have used both psychological intimidation and physical violence to pressurize the young men into agreeing,” Polyakova said. “The father described the emotional state of those recruits as ‘desperate and ready to go public about the situation while being fully aware of all the negative consequences such a move may entail’.”
“The officers have even told us that signing this contract does not mean anything, and that we would be free to terminate it at any time,” Vladimir said. “On top of that we were promised a sweetener of 10,000 rubles [$400] if we agree. It sounded fishy to me and many others.”
After speaking to Vladimir and several other recruits, the Soldiers’ Mothers sent an official enquiry to the authorities of the Leningrad Military District asking the officials to investigate the claims.
The Leningrad Military District Prosecutor’s Office held a rapid investigation into the recruits’ claims on Saturday, but no official statement has yet been released. No comment was available from prosecutors on Monday as the investigation was said to be still in progress.
“We learnt from the recruits that the officers appeared ‘alarmed, nervous and stressed’ about the investigation,” Polyakova said, adding that getting in touch with the recruits has been problematic. “They would not answer their mobile phones, which means [their phones] had either been taken off them or they did not feel free to talk.”
Soldiers’ Mothers said the organization routinely receives complaints from recruits who get forced or deluded into signing contracts with the army and then have trouble getting out of it.
“A couple of years ago, in a widely publicized case, in Pskov, around 500 young men were forcefully signed up as contract recruits,” Polyakova said. “This is happening because Russia’s Defence Ministry sends illegal orders to various regions demanding certain numbers of contracts be signed by a specific deadline. Regional commanders are coping and struggling as they try to follow these orders.”
In the meantime, Vladimir and at least twenty other recruits are preparing individual appeals to military prosecutors.

TITLE: Kiev Ready For Missile Shield Talks
PUBLISHER: Combined Reports
TEXT: KIEV — Ukraine said Saturday that it was ready to make its missile-warning systems available for Western countries after Russia announced that it was pulling out of a long-term cooperation agreement involving them.
A ministry statement said Russia’s abrogation earlier this year of an agreement involving two tracking stations allowed Ukraine to cooperate with other countries on missile-warning systems and satellite tracking.
Ukrainian President Viktor Yushchenko issued a decree last week putting an end to Ukraine’s participation in the accord in view of Russia’s own abrogation of the deal.
A top Ukrainian security official, meanwhile, on Saturday discounted any notion of a separatist rebellion in Crimea as President Viktor Yushchenko proposed Kremlin talks on the issue of the Russian fleet based there.
Yushchenko enraged Moscow this week by ordering restrictions on the movement of ships in the Black Sea Fleet, based in the Crimean port of Sevastopol. Russia’s military vowed to ignore the rules, saying the fleet answered only to Russia’s president.
Valentin Nalivaichenko, acting chairman of Ukraine’s SBU security service, said latent nationalism in Crimea could not be compared with South Ossetia’s longstanding rebellion.
Reuters, SPT

TITLE: UN Court Sets Hearings for Georgia
PUBLISHER: The Associated Press
TEXT: AMSTERDAM — The president of the UN’s highest court issued an urgent appeal for restraint Friday until the tribunal meets next month to hear Georgia’s petition seeking a halt to Russian military actions against civilians.
The International Court of Justice said it will hear arguments from both sides Sept. 8 to 10 at its seat in The Hague on Georgia’s request to intervene in its dispute with Russia over breakaway South Ossetia and Abkhazia.
In an unusual measure, Judge Rosalyn Higgins sent a message to both countries asking them to act in the meantime in a way that would facilitate whatever decision the court reaches.
Georgia filed a suit Wednesday that accused Russia of conducting a campaign of ethnic cleansing since the early 1990s. The next day, as Russian forces stepped up the pressure, Tbilisi filed a second request seeking the court’s intervention to safeguard civilians targeted by Russians and separatists.
Russia has not responded to Georgia’s legal actions, and a court spokeswoman could not immediately say who would represent Russia at the hearings. But Russia has raised the possibility that it would bring charges of genocide at an unspecified international court against Georgia for its attempt to retake control of South Ossetia.
The 15-judge tribunal’s findings are binding, although it has no power of enforcement.

TITLE: Poland Warned Over Plans for Missile Base
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia warned Poland on Friday that it is exposing itself to attack — even a nuclear one — by accepting a U.S. missile interceptor base on its soil.
U.S. and Polish officials stuck firmly by their deal, signed Thursday, for Poland to host a system the United States says is aimed at blocking attacks by rogue nations such as Iran.
Moscow is convinced that the base is aimed at Russia’s missile force. The deal comes as relations are already strained over the recent fighting between Russia and U.S.-backed Georgia over the separatist Georgian region of South Ossetia.
“Poland, by deploying [the system] is exposing itself to a strike — 100 percent,” said General Anatoly Nogovitsyn, the deputy chief of the General Staff, Interfax reported.
He added, in a reference to the agreement, that Russia’s military doctrine sanctions the use of nuclear weapons “against the allies of countries having nuclear weapons, if they in some way help them.” Nogovitsyn said that would include elements of strategic deterrence systems, he said, the news agency reported.
President Dmitry Medvedev said the deal “absolutely, clearly demonstrates what we had said earlier — the deployment has the Russian Federation as its target.”
Speaking at news conference with German Chancellor Angela Merkel, however, he appeared to take a softer position than Nogovitsyn’s, saying “it is sad news for all who live on this densely populated continent, but it is not dramatic.”
U.S. officials defended the missile-defense deal and have said the timing was not meant to antagonize Russian leaders amid the fighting in Georgia.
“Poland is an independent country. And it’s an ally of the United States. And it’s a democratic country, to whose security the United States is committed” through NATO, U.S. Secretary of State Condoleezza Rice said during a visit to Georgia’s capital, Tbilisi.
“Russia should welcome having democracies on its border, not threaten them,” she added.
Polish Foreign Minister Radek Sikorski said Friday that Poland is willing to let Russia inspect the future missile base to give Moscow “tangible proof” that it is not directed against Russia, the Polish news agency PAP reported.
The missile deal, struck Thursday after more than 18 months of talks, must still be approved by Poland’s parliament and signed by Rice during a future visit to Warsaw, possibly next week.
The U.S. also plans to set up a linked radar installation in the Czech Republic.
Polish Prime Minister Donald Tusk said the United States agreed to help augment Poland’s defenses with Patriot missiles in exchange for placing 10 missile-defense interceptors in the East European country.
He said the deal also includes a “mutual commitment” between the two nations to come to each other’s assistance “in case of trouble.”
That clause appeared to be a direct reference to Russia.
Poland has all along been guided by fears of a newly resurgent Russia, an anxiety that has intensified with Russia’s offensive in Georgia. 
“Simply the existence of this installation increases Poland’s security,” Polish President Lech Kaczynski said Friday.

TITLE: Zenit Soccer Team Rewards Top Supporter
PUBLISHER: The St. Petersburg Times
TEXT: A Zenit St. Petersburg fan who has attended a record 300 matches played by the soccer team has been rewarded for his loyalty with a life-long free ticket to Zenit’s home games. 
Denis Chiglyayev notched up his 300th Zenit match when the Premier League champions played Kazan on Aug. 10, Interfax reported.
Before Zenit’s home tie with Shinnik on Sunday, Chiglyayev’s favorite player, Coatian defender Ivica Krizanac, congratulated the fan and presented him with the life-long free ticket.
Zenit coach Dick Advokaat greeted Chiglyayev and hugged him.
When the referee blew the whistle to start the game, fans in the stands at Petrovsky Stadium, formed the letter E and the numeral 2 sign with green flares, as well as the number 300. 
“E-2” is Chiglyayev’s nickname derived from a chess move said to favor the white side. Zenit plays in white.
Chiglyayev was taken to his first Zenit match when he was four years old. By the time he was five he was already a soccer expert, Sovetsky Sport newspaper said.
Later Chiglyayev became the leader of the Piterskiye Volki (Piter’s Wolves) fan club.
Chiglyayev’s grandmother Nina Vasiliyevna said that Denis spends most of his money on trips to Zenit games.  His mother and wife are also fans of Zenit, she told Sovetsky Sport.
Zenit lost Sunday’s match against Shinnik, 1:3.

TITLE: In Brief
TEXT: <b><b>Stallone Pushes Vodka</b>
MOSCOW (Reuters) — Hollywood actor Sylvester Stallone, mighty destroyer of Soviet opponents in the “Rambo” and “Rocky” movies, now plans to advertise Russian vodka.
Russian vodka producer Synergy said on Friday it had signed a one-year contract with Stallone, who will appear in television and newspaper advertisements for the vodka brand Russian Ice, starting Sept. 1.
Sources valued the deal at $1 million.
Stallone — whose film character John Rambo killed Soviet troops by the dozen in Afghanistan and whose Rocky Balboa humiliated Soviet boxer Ivan Drago — will advertise the product under the slogan: “There is a bit of Russian in all of us.”
“The advertising campaign concept was based on the fact that the actor has Russian roots,” Synergy said in a statement, referring to Stallone’s great-grandmother, Rosa Rabinovich, from the Ukrainian town of Odessa.
The Rambo and Rocky movies were banned in the Soviet Union, but were hot property in the country’s underground VHS market.

<b>Marriage Fraud Arrest</b>
ST. PETERSBURG (SPT) — A 21 year-old St. Petersburg woman was arrested Friday, Interfax reported, on suspicion of swindling a 37 year old Australian man out of 270,000 rubles ($11,000) during two weeks in June under the pretence of marriage preparations. 
Svetlana Belonosova, who is unemployed, met the Australian man, who has not been named, on the Internet. 
The man sought recourse in a law enforcement agency at the beginning of August, Interfax reported.

<b>Metro Reveals Crack</b>
ST. PETERSBURG (SPT) — Gostiny Dvor metro station closed its entrances and exits Monday due to the appearance of a crack in a sloping passageway, Interfax reported. 
The station closure did not affect the passage of trains or the underground working of the station. 
The police reported that the cause of the fissure was a detached water drainage pipe. The crack was due to be fixed in time for Tuesday, Fontanka.ru reported.

<b>Nizhny to Make Movies</b>
MOSCOW (SPT) — A new film studio complex is being planned for the city of Nizhny Novgorod. 
Boris Vishyak, former general director of the TVC channel, along with several partners, plans to build a $15 million complex on a 75,000 square meter plot near Sormovskoye lake, the Hollywood Reporter said Monday citing business daily Kommersant. 

<b>New Mall in Gatchina</b>
ST. PETERSBURG (SPT) — A new trade and entertainment center owned by the company Mariya is to open in the town of Gatchina in the Leningrad Oblast at the end of October this year. 
The Gatchinsky complex will have a total area of 4,150 square meters, with 2,609 square meters available to rent. There will also be an underground parking lot for 150 cars.
Rent rates will be set at $480 per square meter per year excluding VAT.  The anchor tenant will be the food store Gretsia, while the rest of the space will be occupied by stores, a bank, beauty salon, food court and supermarket.

TITLE: Conflict in Ossetia Exposes Obsolete Hardware
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW — The brief but intensive armed conflict in South Ossetia has signaled Russia’s willingness and ability to fight and win conflicts beyond its borders after years of focusing its war machine on nuclear deterrence and the suppression of internal security threats.
But while the conflict has demonstrated that Russia can and will coerce its post-Soviet neighbors with force if the West doesn’t intervene, it has exposed the technical backwardness of its military.
The technical sophistication of the Russian forces turned out to be inferior to that of the Georgian military. While Georgia’s armed forces operated Soviet-era T-72 tanks and Su-25 attack planes, both were upgraded with equipment such as night-vision systems to make them technologically superior to similar models operated by the Russian Ground Forces, said Konstantin Makiyenko, deputy director of the Center for Analysis of Strategies and Technologies.
“The Russian forces had to operate in an environment of technical inferiority,” Makiyenko said. 
Another area where the Russian military appeared to have lagged behind the Georgian armed forces was in electronic warfare, said Anatoly Tsyganok, a retired army commando and independent military expert.
The Georgian forces were also well-trained, with many of them drilled by U.S. and Israeli advisers. 
These factors helped the Georgian military easily take the South Ossetian capital, Tskhinvali, located in a basin, after more than 10 hours of intensive air strikes and artillery fire on Aug. 7. The shelling of the city was probably carried out with the use of unmanned aerial vehicles for targeting — a capability that Russia’s armed forces have yet to acquire. 
The attack came as a surprise to Russian peacekeepers stationed in South Ossetia, and the conflict represents a major intelligence failure, former Defense Minister Pavel Grachev said in an interview published in Nezavisimaya Gazeta this week. 
But Stratfor, a private U.S.-based intelligence agency, said Russian commanders were aware of a strong possibility that Georgian forces might attack and had amassed equipment close to the Russian-Georgian border but refrained from crossing over so as not to jump the gun. “Given the posture of Russian troops, how could intelligence analysts have missed the possibility that the Russians had laid a trap, hoping for a Georgian invasion to justify its own counterattack?” Stratfor said in an analysis.
Whether or not the attack came as a surprise, the Georgian side timed it well, with Prime Minister Vladimir Putin in Beijing for the Olympics and both President Dmitry Medvedev and the commander of the 58th Army, which is closest to South Ossetia, on vacation, Tsyganok said.
Only 2,500 Ossetian fighters and less than 600 Russian peacekeepers were on hand to counter 7,500 Georgian troops backed by dozens of tanks and armored personnel carriers, according to estimates by Russian generals and experts. Tbilisi’s plan appears to have been to conquer Tskhinvali in 24 hours and then advance to South Ossetia’s border with Russia over the next 24 hours to present Russia with a fait accompli.
The blitzkrieg plan, however, faltered despite the personnel and technical superiority of Georgian troops, highlighting errors in the Georgians’ political and military planning.
The Georgians failed to fully conquer Tskhinvali and started to retreat on Aug. 8, when army units arrived from Russia. The Russians eventually forced the Georgian units into full retreat by bombing military facilities across Georgia in order to disrupt supplies and reinforcements. 
The Kremlin timed its response perfectly, because sending troops earlier would have drawn immediate accusations of a disproportionate response, while stalling further could have allowed the Georgian troops to seize Tskhinvali and the rest of South Ossetia, Makiyenko said. The Russian troops established control over much of South Ossetia by Aug. 10 and then started to make inroads into Georgia proper, destroying military facilities. As the Russian and South Ossetian units advanced, forces from another separatist province, Abkhazia, moved to push Georgian units out of the upper Kodor Gorge. They succeeded in doing so shortly after Russia deployed an additional 9,000 paratroopers and 350 armored vehicles to Abkhazia under the pretext of deterring a Georgian attack on Russian peacekeepers there.
The Georgian attack failed because President Mikheil Saakashvili and the rest of Georgia’s leadership miscalculated the speed of Russia’s intervention, defense analysts said. Tbilisi also underestimated the South Ossetian paramilitary’s determination to resist the conquest and overestimated the Georgian forces’ resolve to fight in the face of fierce resistance. The Georgian military also failed to take advantage of the fact that Russian reinforcements had to arrive via the Roksky Tunnel and mountain passes, which are easier to block than roads on flat terrain.
Another reason the Georgians lost was because the Russian military used knowledge gleaned from past conflicts, including the NATO bombing of Yugoslavia and its own reconquest of Chechnya. “Russia has learned the lessons taught by NATO in Yugoslavia, immediately initiating a bombing campaign against Georgia’s air bases and other military facilities,” Tsyganok said. 
Having learned from the Chechen conflict, Russian commanders minimized the presence of inexperienced and poorly trained troops in the advancing units, he said.
Anatoly Nogovitsyn, deputy head of the armed forces’ General Staff, denied media reports that conscripts served in these units, but in any case it was professional soldiers who bore the brunt of the assault. Among them were elite airborne commando and army units such as the Vostok battalion, manned by ethnic Chechens and subordinated to the Main Intelligence Directorate. The battalion did not lose a single soldier in the fighting and earned high praise from generals for the operation in South Ossetia, Kommersant reported Wednesday.
The extent of the causalities and loss of equipment by South Ossetian and Georgian forces remained unclear Thursday. As of Wednesday evening, Russia lost 70 servicemen in combat, while another 171 were wounded, including the commander of the 58th Army, Lieutenant General Anatoly Khrulev, who led the counteroffensive, Nogovitsyn said. 
The fact that Russian warplanes failed to prevent the shelling of Khrulev’s convoy attests to the insufficiency of the Russian Air Force in the conflict. 
Khrulev’s vulnerability, however, might have come as a result of his own incompetence, as he chose to travel in a convoy that lacked sufficient combat support and was accompanied by journalists who used telephones that could have been intercepted by Georgian electronic warfare specialists, said Yury Netkachev, a retired lieutenant general and former deputy commander of the Russian troops in the South Caucasus. 
Nogovitsyn said the Georgians shot down four Russian warplanes. The Georgians said that Russia had lost 19 planes as of Monday. 
The Air Force’s losses, including a long-range Tu-22, and helplessness in the face of air strikes by Georgian Su-25 attack planes and artillery fire on Tskhinvali as late as Monday should set off alarm bells in Russia, Makiyenko said. “The failure to quickly suppress the Georgian air defense despite its rather rudimentary capabilities or to achieve air supremacy despite a lack of fighter planes on the Georgian side shows the poor condition of the Russian Air Force,” he said. 
The loss of Russian planes might have come about because of the poor training of pilots, who log only a fraction of the hundreds of flight hours that their NATO counterparts do annually, Netkachev wrote in Nezavisimaya Gazeta on Monday. 
Russian intelligence also bears responsibility for failing to provide up-to-date information on the capabilities of the Georgian air defense and air force, Netkachev said. As recently as three years ago, Georgia had no pilots capable of flying the Israeli-upgraded Su-25 planes, he said, adding that Russian commanders should have known that Ukraine had supplied Buk and Osa air-defense systems to Georgia and might have trained its operators.
“One general lesson that the Russian side should learn is that it is possible to build a capable, well-trained force in just three to four years, as Saakashvili did,” Makiyenko said.
The military brass has admitted the poor performance of some systems and the inferiority of others and will draw “serious conclusions,” Nogovitsyn said Wednesday. “We have incurred serious losses, including to the Air Force, and have taken into account what’s happened and will continue to do so,” he said. 
He hinted that the military command was not satisfied with the way the Air Force had targeted sites beyond the front lines but said some blame lies in the fact that the Georgians’ air-defense systems were mobile. He attributed the inefficiency of aerial reconnaissance to smoke from burning buildings in Tskhinvali. He also singled out the backwardness of Russia’s electronic warfare systems, acknowledging that they dated back to Soviet times. 
The armed forces lack round-the-clock all-weather high-precision weaponry systems, as well as modern electronic warfare systems, defense analysts have said for years. The lack of such systems was highlighted by the two wars that federal forces fought in Chechnya. A draft strategy for the development of the armed forces through 2030, leaked to the press earlier this summer, says the modern and advanced weapons systems used by Western armed forces are one of the main threats facing Russia.
Only 20 percent of conventional weaponry operated by the armed forces can be described as modern, according to Nezavisimoye Voyennoye Obozreniye, an independent military weekly. Yet the government and military have disproportionately skewed financing toward the strategic nuclear forces, which they see as the main deterrent, at the expense of conventional forces.
The lack of modern, quality equipment became evident when several tanks and armored personnel carriers broke down as army reinforcements moved from Russia to South Ossetia, Makiyenko said. Overall, however, the Ground Forces operated better than the Air Force, accomplishing their mission of routing the Georgian units, he said.
“The main lesson that Russia should draw from this conflict is that we need to urgently upgrade our Air Force, with a comprehensive general reform to follow,” he said. 
So far, however, there is no sign that the Russian leadership wants to put more thought into preparing for future conflicts. While detailing the Western threat, the draft 2008-2030 military strategy only vaguely refers to local and regional threats.

TITLE: Petrovsky Arsenal Construction Under Way
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The official groundbreaking ceremony of the Petrovsky Arsenal development project took place on Friday in the suburb of Sestroretsk, 25 kilometers northwest of St. Petersburg. The project — the only one of its kind in Russia — plans to transform the former Sestroretsk Instrument Works factory into a multifunctional residential and commercial complex at an estimated cost of $467 million. 
Sestra River Developments (SRD), a daughter company of the Jensen Group, was founded in 2005 to design and construct the complex on a 13.9-hectare site that includes most of the historic buildings that previously comprised the Instrument Works. The site is located opposite Sestroretsk’s central Voskov Ulitsa. 
The project will include the reconstruction of 10 buildings listed as heritage sites and the construction of new buildings in the same style as the listed ones.
“All the buildings will undergo renovation. Some will become residential areas, while the rest will be commercial premises,” said SRD’s director, Irina Anisimova. 
“No discussion of total demolition or clearing out the area ever took place. It was out of the question. The approach is typical of European companies that preserve historical buildings to adjust them to new functions,” said St. Petersburg Governor Valentina Matviyenko, who along with Stephen Wayne, Jensen Group’s CEO, laid five bricks as part of the ceremony.
Engraved with three dates commemorating the respective launches of the Weapon Works on the same site by Peter the Great, the Instrument Works and Petrovsky Arsenal, as well as the surnames of Matviyenko and Wayne — the bricks are part of a monument that will become part of the future residential area.
The Petrovsky Arsenal project is being developed by the English architecture firm Paul Davis & Partners. 
“We are keeping in mind that the place was previously adjusted to manufacture tools and weapons, and is now going to accommodate tenants. So the focus has been on creating housing that meets modern standards here,” said the company’s Vsevolod Yakovlev, the project’s chief designer.
Alexei Lazutin, commercial real estate director at Becar Realty Group in St. Petersburg, named numerous industrial areas in Russia’s northwest region including the Krasnaya Nit textile factory and Russkiy Diesel Plant that are in demand, with investors planning multifunctional renovation. But according to experts, the redevelopment of the former territory of the Sestroretsk Instrumental Works is an unprecedented project for Russia, since old industrial buildings here are more likely to be demolished to make way for the construction of new office and warehouse amenities. 
“The Petrovsky Arsenal project to convert an underutilized industrial territory into a new modern center for Sestroretsk is unique, since the redevelopment focuses on the creation of residential areas and not only on business centers. The investor has to reconstruct and preserve the industrial buildings to make comfortable and modern housing,” said Lazutin.
According to the existing concept for the development based on market research, the historic area will include residential, retail and commercial real estate. In the residential area, low-rise townhouses modeled on the remaining historic redbrick buildings will be built. The housing will cost from $3,264 to $6,121 per square meter and is targeted at middle-class buyers, said Anisimova. Elements of luxury consumer services and public utilities that are unavailable in the majority of cottage complexes will be one of the project’s main competitive advantages. A high-rise residential building totaling an area of 40,000 square meters is also planned.
Olga Kopeikina, the head manager of SRD’s sales and marketing department, said that despite minimal promotion and moderate advertising, there is already a waiting list of more than 100 individuals willing to purchase real estate at Petrovsky Arsenal. 
The commercial area will include the local center with shops, a supermarket, restaurants, a business center and private school. The leisure part of the territory, according to preliminary plans, will include a newly-constructed multifunctional fitness center with a mini aqua park, spa complex and health and beauty services. 
According to Jensen Group’s Wayne, the costs of reconstructing the old buildings and moving production of the Instrument Works to other premises will total $467 million, giving Jensen Group strategic investor status, said Sergei Fiveisky, First Deputy Head of the St. Petersburg Department of Economics, Industry and Trade — and a Sestroretsk resident himself — at the groundbreaking ceremony. 
The Petrovsky Arsenal project is scheduled to be completed by 2012.

TITLE: Markets Survive Trio Of  Tricky Financial Storms
AUTHOR: By Tai Adelaja
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russian markets endured a turbulent week, as stocks of major companies faced a triple assault amid worries over fighting in Georgia, anti-monopoly measures against Mechel and the seemingly never-ending TNK-BP saga. 
After the big Georgia-induced sell-off on Aug. 8, stocks enjoyed a shaky recovery after President Dmitry Medvedev signaled that Russian forces would observe a cease-fire and pull out of Georgia proper, despite media reports suggesting the contrary.
The dollar-denominated RTS Index ended the week up 3.5 percent at 1,785.36 points, despite falling 0.6 percent Friday, while the ruble-denominated MICEX Index rose 7.4 percent on the week and 1.1 percent on Friday.
Other news unrelated to the war also made investors jumpy, with a demand by Federal Anti-Monopoly Service chief Igor Artemyev that Mechel cut its coking coal prices and switch to long-term contracts prompting fears of increased government regulation in the sector.
Also Thursday, a Moscow court’s two-year ban on TNK-BP chief executive Robert Dudley dampened investor sentiment, as Dudley said he saw BP’s billionaire partners behind the ruling.
“In isolation, none of these events are surprising, nor do any of them have a material effect on the investment case [for Russia],” UralSib said in a note to investors Friday. “But collectively they add further pressure onto an already deteriorating investment case and make the decision to stay away from the market until the ‘dust settles’ that much easier.”
Some analysts said, however, that the bad news flow made it a good time to invest in the country.
“Investors should buy even in the likelihood of U.S. imposing sanctions — economic or financial — on Russia,” said Ronald Smith, chief strategist at Alfa Bank. “The U.S. cannot do much to directly affect the Russian economy or the earnings of Russian companies.”
Smith predicted that the political risk would dissipate quickly.
“Once many funds are underweight, it will be possible for investors to ramp up their interest again in the country and deploy funds back to a very cheap Russian market,” Smith said.
Tom Mundy, an equity strategist at Renaissance Capital, said the oil price was arguably more of a driver for the market than perceptions of political risk.
Gazprom, LUKoil and Rosneft, which among them account for a 52 percent weighting in MSCI Russia Index, have lost 28 percent, 30 percent and 25 percent, respectively, as oil has sold off.
Mundy said the ruble, which fell last week on fears of Georgia-related instability, would rebound, benefiting from the cessation of hostilities and upcoming tax payments, resulting in an additional demand for rubles.
“We are also looking for further tightening of the credit default swap spreads to pre-conflict levels,” Mundy said.
Amid nervousness over the Georgia conflict, Russia registered fund outflows of $239 million in the week to Wednesday, according to EPFR Global.

TITLE: In Brief
TEXT: <b>Apple Deal Rumors</b>
MOSCOW (Bloomberg) — VimpelCom, Russia’s second-largest mobile-phone company, and MegaFon, the third-biggest, may sign a deal with Apple to start selling iPhones in the country this week, Vedomosti reported Monday.
As part of the agreement, Apple wants each operator to buy one million to 1.5 million iPhones, the newspaper said, citing unidentified people at the two companies.

<b>Lebedev Loses Out</b>
VIENNA (Bloomberg) — Russian billionaire Alexander Lebedev said his country’s conflict with Georgia is scaring investors and has caused him to lose money, Austrian newspaper Die Presse reported, citing an interview.
“Investors react to higher risk very simply: they withdraw their money,” Lebedev said, according to the paper. Lebedev lost money on his 30 percent stake in Aeroflot, Die Presse reported.
Lebedev is worth $3.1 billion and his investment funds hold stakes in around 100 Russian companies, Die Presse said.

<b>BTC Set to Reopen</b>
ANKARA (Bloomberg) — Turkey expects the Baku-Tbilisi-Ceyhan oil pipeline to open in “a few days” after repairs on the fire-damaged route are complete, Energy Minister Hilmi Guler said Monday.
An assessment of damage to the pipeline, where a fire broke out on Aug. 5, has revealed no evidence of sabotage, Guler told reporters in Turkey’s capital Ankara.
BP, StatoilHydro and partners had to reduce production at oil fields in the Azeri part of the Caspian Sea after flows were halted through BTC. The 1,768-kilometer link, which has a 1 million barrel-a-day capacity, connects Azerbaijan with the Turkish port of Ceyhan via Georgia.

<b>FDI Decreases 30%</b>
MOSCOW (Bloomberg) — Foreign direct investment fell 30 percent in the first six months of the year as investors avoided emerging markets in the global credit crunch.
Direct investment totaled $11.1 billion, while total foreign investment, including credits and flows into the securities markets, was $46.5 billion, 22.9 percent less than a year earlier, the State Statistics Service said in an e-mailed statement Friday. Foreign investment in stocks and bonds rose 4.4 percent to $1.2 billion, it said. 

<b>Good Time to Buy</b>
MOSCOW (Bloomberg) — Investors should add to their holdings of Russian stocks because they trade at a significant “discount” even as the country faces the risk of U.S. sanctions and falling commodity prices, Morgan Stanley said.
    The MSCI Russia Index currently trades at a 33 percent discount to the MSCI Emerging Markets Index based on the price of its constituent stocks compared with their estimated earnings, the U.S. investment bank said in a note dated Thursday.

TITLE: Georgian Bridge Blast Hits Oil Transit
PUBLISHER: Reuters
TEXT: TBILISI, Georgia — Azerbaijan suspended oil exports through ports in western Georgia on Sunday after an explosion damaged a key rail bridge there.
Georgia accused Russian troops of blowing up a railway bridge west of the capital Tbilisi on Saturday, saying its main east-west train link had been severed. Russia denied any involvement.
Georgian Railways said Sunday that the railway would reopen within 10 days. 
“The construction or repair works are expected to be completed within 10 days maximum,” said Irma Stepnadze, a spokeswoman for Georgian Railways. 
She said engineers and workers from Armenia and Azerbaijan were expected to arrive in Georgia on Sunday to help with reconstruction. They were also bringing specialist equipment. 
In a statement earlier Sunday, Azerbaijan’s state railway company cited the bridge explosion as the reason for the suspension.
A shipment of 72 oil tanks had been due to be sent to Armenia before the link was cut off, the Azeri company said.
The railway line runs from Tbilisi, through the Russian-occupied town of Gori, before splitting in three and running to the Black Sea ports of Poti and Batumi and southwest to just short of the Turkish border.
Earlier this month Azerbaijan suspended crude shipments via the BP-operated Baku-Tbilisi-Ceyhan pipeline, which carries 1 million barrels per day, to Turkey after a fire damaged it.
BP last week closed the pipeline taking crude from Azerbaijan’s Caspian port of Baku to the Georgian port of Supsa on the Black Sea, citing fighting between Georgian and Russian troops.
A pipeline running from the Caspian Sea to Russia’s Black Sea port of Novorossiisk is currently Azerbaijan’s only oil export outlet.

TITLE: Kudrin Suggests Tax Hike, Funds Reform
AUTHOR: By Gleb Bryanski
PUBLISHER: Reuters
TEXT: MOSCOW — The Finance Ministry on Sunday unveiled a draft fiscal strategy to 2023, proposing to raise social security taxes from 2010 and reform the $162 billion oil wealth funds to back up the pension system.
Under the proposal, the government’s oil revenues will be redistributed between the liquid Reserve Fund, designed to support the budget in case the oil price falls, and the National Welfare Fund, earmarked for riskier investment.
The Reserve Fund will shrink to six percent of gross domestic product from the current 10 percent, with the cash going to the $33 billion welfare fund, whose main task going forward will be supporting the pension system.
“The main challenge for the whole financial system of the country is the pension fund deficit. We should admit that today’s pensions are not sufficient,” Finance Minister Alexei Kudrin said.
The Finance Ministry also wants to raise the effective rate of the employers’ Unified Social Tax, the backbone of the country’s pension system, to 24.7 percent by 2010 from 21.5 percent now and introduce a 3 percent social tax on individuals.
“We will have to raise taxes. We are now at the threshold at which higher pensions will require higher budget spending,” Kudrin said. Russians currently pay a flat income tax of 13 percent.
The proposal, part of fiscal strategy until 2023, also sees the budget going into deficit from 2014 and suggests that Russia may tap oil wealth funds and borrow to keep up with ambitious goals of diversifying the economy and supporting social welfare.
The country’s pensioners, expected to number 37.3 million people in 2010, are surviving on about $160 per month from the state, but Kudrin said their patience was running out.
“The situation is becoming critical,” he said. Under the proposal, the government would keep the average ratio of pension to wages at a constant rate of 30 percent, with the average pension rising to double the subsistence level in 2013.
Under the fiscal strategy until 2023, to be handed over to the government next week, the National Welfare Fund will contribute 0.6 percent of the GDP per year toward the pension system, with the amount partly covered by the returns on the fund’s investment.
The investment return on the welfare fund, which will have about 40 percent of its assets invested in bonds and stocks of foreign corporations, is expected to fully cover the transfer to the pension fund in 2013.
Kudrin said that under such a scheme the horizon for the oil wealth investment has become clear. A special government-owned agency will oversee the investment in foreign corporate assets with the rest managed by the Central Bank.
He said the state-owned Development Bank, which manages the pension fund, government debt and infrastructure investment, may also receive a mandate to run private equity investment, with exposure to one issuer limited to 5 percent of total equity.
Kudrin fought recently against attempts to increase budget spending and cut taxes to give a boost to the economy. He did not say whether his plan was backed by the country’s leaders.

TITLE: Kazakhstan Government Reaches Out to Business
PUBLISHER: Bloomberg
TEXT: ALMATY — Kazakhstan’s small and medium-sized businesses will get 100 billion tenge ($830 million) in loans as the government seeks to bolster economic growth in its two biggest cities.
State-owned Kazyna will provide 50 billion tenge ($415 million) for lending to businesses in Astana, the capital, and Almaty, Industry Minister Vladimir Shkolnik told a cabinet meeting in Astana on Monday. Another 50 billion tenge will come from commercial banks, according to a statement on the government’s web site.
Kazakhstan’s $100 billion economy has grown an average 10 percent a year since 2000 as the price of oil surged, sparking a construction boom. The nation’s economy expanded 5.4 percent in the first half of 2008, almost half the pace in the same period a year earlier, as banks curtailed lending because of the global tightening of credit. Annual retail sales growth in the first half slowed to 2.1 percent in Kazakhstan, an 81 percent decline from the same period last year.
Kazakh small and medium businesses will get the money at an interest rate of no more than 12.5 percent a year, Shkolnik said. Kazakhstan’s central bank cut its benchmark interest rate to 10.5 percent from 11 percent starting July 1 to help ease a credit squeeze.
Kazkommertsbank, the country’s second-biggest lender, and Halyk Savings Bank declined to participate in the government program, Shkolnik said. Almaty-based businesses got $2.5 billion in the first half from commercial banks, a slump of 44.3 percent from a year earlier, the Almaty mayor’s office said in an e-mailed statement Monday. Tax payments by Almaty-based small and medium-sized companies fell by 13.6 percent in the first seven months, the office said.

TITLE: Telenor Told to Pay VimpelCom $2.8 Bln
AUTHOR: By Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — A Siberian court in the wee hours of Saturday morning ordered Norway’s telecoms company Telenor to pay $2.8 billion to VimpelCom in a ruling that highlighted the unusual judicial practices that may beset foreign investors.
Telenor, whose larger partner in VimpelCom is Alfa Group’s telecoms arm, Altimo, said it would appeal the verdict of the Khanty-Mansiisk Arbitration Court, which ruled that the Norwegian firm stalled New York-listed VimpelCom’s $230 million deal to buy a Ukrainian mobile operator.
The Norwegians complained that the choice of the court was puzzling, procedural irregularities abounded and the sheer size of the compensation — more than 12 times the value of the deal — defied common sense.
On top of that, the judge handed down the ruling at 2 a.m. on Saturday, after leaving a group of Telenor lawyers and representatives waiting for seven hours in a court building before returning from a recess that he announced would last just 30 minutes, a company spokesman said.
“We just had to hang in there and wait,” Dag Melgaard, Telenor’s vice president for communications, said by telephone Sunday.
The court complaint came from Farimex Products, a British Virgin Islands-registered company that owns 0.002 percent of VimpelCom shares. Telenor owns 29.9 percent of VimpelCom’s voting stock.
The court ruled that Telenor damaged VimpelCom by delaying its 2005 deal to buy mobile firm Ukrainian Radio Systems and awarded one-half of the $5.7 billion compensation sought by Farimex. 
Farimex also brought its claim against Alfa’s Altimo and affiliated companies, including CT-Mobile, which is registered in Khanty-Mansiisk, on the same counts, but the judge cleared the other defendants. 
Telenor said Altimo subsidiary CT-Mobile, a shareholder in MegaFon, has no relation to VimpelCom.
Alfa has been entangled in separate legal disputes over its holdings in VimpelCom and MegaFon for years, with multiple, often-conflicting rulings being handed down in various national jurisdictions.
Telenor said it believed that Farimex is affiliated with Alfa Group, which holds 44 percent of VimpelCom’s voting stock. A rift over strategy in Ukraine was a major reason why the partnership between Telenor and Alfa broke down years ago.
“It doesn’t help [our] future partnership, certainly,” Melgaard said of the court ruling. “Hopefully, Alfa will some time come to their senses and discover it’s just ludicrous and doesn’t take them anywhere. They just look stupid now, I think, in most people’s eyes [in] trying to do this.”
Altimo denied being behind the Farimex lawsuit but said it supported the case against Telenor. 
VimpelCom was able to complete the deal to buy the Ukrainian operator at the end of 2006, a year later than it planned, Altimo vice president Kirill Babayev said Sunday.
The number of mobile phone users in Ukraine grew from 50 percent to 75 percent of the potential market over the year that the deal to buy the company was up in the air, Babayev said. “If we had bought it in 2005, VimpelCom would now be [Ukraine’s] third-largest operator with a significant market share and worth much more,” he said.
In March, Alfa subsidiary Eco Telecom filed a near-identical claim against Telenor to the Khanty-Mansiisk case in a Geneva arbitration court, Telenor said.
Telenor said it opposed the Ukrainian Radio Systems acquisition because it was vastly overpriced and made no business sense. In addition, the sellers didn’t identify themselves, the company said.
Farimex’s legal action against Telenor bears some similarities to the case that obscure firm Tetlis won last month against TNK-BP in another Siberian court, based in Tyumen. Tetlis, also a small-scale shareholder, won a judgment against British oil major BP worth close to $500,000 over secondees’ salaries.
Events like this, or the risk of them, are the biggest reason after corruption why foreign investors are still very reluctant to commit to Russia even though they expect the country to harbor a better growth potential than China or India, said Chris Weafer, chief strategist at UralSib, citing recent surveys.
“It certainly does serve to remind foreign investors … that Russia remains a difficult place to do business, and partnerships with Russian investors have to be treated with more care than partnerships with other investors,” Weafer said of the Khanty-Mansiisk ruling against Telenor.
If the $2.8 billion in damages were to be enforced, it could cause Telenor to leave Russia, said Rostislav Musiyenko, an analyst at the Bank of Moscow.

TITLE: Prokhorov Villa Rumor Denied
PUBLISHER: Combined Reports
TEXT: MOSCOW — An official at Mikhail Prokhorov’s Onexim Group denied Sunday that the billionaire was close to buying the legendary Villa Leopolda on the French Riviera.
French newspaper Nice-Matin reported Saturday that Prokhorov would soon pay 496 million euros ($729 million) for the villa, which is owned by the widow of banker Edmond Safra. The newspaper did not say where it got the information.
Villa Leopolda is located in Villefranche-sur-Mer, a French Mediterranean seaside resort between Nice and Monte Carlo, and is named after Belgian King Leopold II, who built the house at the start of the 20th century.
Onexim deputy CEO Sergei Chernitsyn said Sunday that the Nice-Matin report was not true. “The rumors may be connected with the activities of the Onexim division dealing with luxury real estate.” Chernitsyn said by telephone. 
He added, “Mr. Prokhorov will not make any business in France until the Courchevel incident is settled and the French authorities give him an official apology.”
Prokhorov, whom Forbes ranks the sixth-richest man in Russia with an estimated fortune of $19.5 billion, last year announced that he was splitting from longtime business partner Vladimir Potanin after he and 25 other people were taken in for questioning at his hotel in the French ski resort of Courchevel over a suspected prostitution ring.
Prokhorov was released without charge after a few days. He has denied any wrongdoing and has demanded that the French authorities close the case.
Villa Leopolda was at one time owned by Fiat magnate Giovanni Agnelli, Agence France Presse reported.
Safra is said to have hosted U.S. President Ronald Reagan and crooner Frank Sinatra at the villa, the BBC reported. 

Bloomberg, SPT

TITLE: Chemezov Seeks Partner
AUTHOR: By Max Delany
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russian Technologies is considering Norilsk Nickel as a new partner in its consortium with Metalloinvest, which is bidding to develop the giant Udokan copper deposit, Sergei Chemezov, head of the state corporation, said Friday.
The announcement comes after Norilsk chairman Vladimir Potanin said earlier this month that he was pulling the miner out of a solo bid for Udokan.
But to team up with Russian Technologies, Norilsk would have to hand over all its other copper assets to the potential joint venture, Chemezov said.
“If Norilsk Nickel’s board takes the decision to include all the copper mines that they have on their books, then we would be ready to consider a potential partnership,” Chemezov said at a news conference, Interfax reported.
A Norilsk spokeswoman was not immediately available for comment Friday.
Chemezov denied that Russian Technologies had held talks with Oleg Deripaska’s Basic Element holding, which is behind another bid for the Udokan mine — and had not signed an agreement with Basic Element similar to its pact with Metalloinvest.
In July, Russian Technologies and Metalloinvest, half-owned by billionaire Alisher Usmanov, agreed to set up a joint venture on the basis of Udokan. Russian Technologies is thought to have a 25 percent stake in the potential venture, which is open to other partners.
Metalloinvest is currently behind one of three remaining bids for the Chita region deposit, which will be auctioned off Sept. 14. The starting price for the license is 4.5 billion rubles ($183 million), and the winning bidder will get a license for 20 years for the deposit, estimated to be capable of producing 15 percent of the country’s annual copper output.
Another bid is from a consortium that includes Urals Mining and Metal Company, the country’s second-biggest copper producer, and state-run Russian Railways. Billionaire Mikhail Prokhorov’s Onexim Group has already pulled out of the race over a shareholder conflict of interest.

TITLE: Outflows Reach $7 Bln
PUBLISHER: Reuters
TEXT: MOSCOW — Russia had capital outflows of $7 billion during the short conflict between it and Georgia, Finance Minister Alexei Kudrin said Sunday. 
The conflict spooked investors and sent Russian stocks tumbling to their lowest levels in nearly two years. 
“Outflows of [foreign] currency from Russia were $6 billion on Friday [Aug. 8] and $1 billion on Monday [Aug. 11],” Kudrin told reporters. 
Russian stocks rebounded Aug. 11 after President Dmitry Medvedev signaled that the conflict was nearing an end. Russia signed a cease-fire declaration Saturday, a day after Georgia. Kudrin said political risks were likely to further damage prospects for total capital inflows to Russia for the whole of 2008. 
The total would probably be less than the $30 billion to $40 billion forecast by the Central Bank, because of “continued turbulence on global financial markets and some political risks which have appeared in recent days,” Kudrin said.

TITLE: Looking Back at Default Crisis, Ten Years On
AUTHOR: By Maria Antonova
PUBLISHER: Staff Writer
TEXT: MOSCOW — In mid-August 1998, Julia Levit was taking time off her job to bask in the Crimean sun in Feodossia. What saved her from making that vacation an extended one was a television set in her hotel room. 
As soon as she heard about the government debt default on Aug. 17, she raced to the closest currency exchange booth and managed to get there to change all of her rubles into dollars before the news hit.
The ruble dropped in value from 6 rubles to the U.S. dollar to more than 20 rubles to the dollar by year’s end. People flocked to currency exchanges and banks, as well as stores, where they hurried to dispose of the cash that was devaluing before their eyes. Lines formed at employment agencies starting at 5 a.m. as people were laid off by bankrupted companies.
While the crisis changed the landscape of the economy 10 years ago last Sunday, it also was a personal story for many people, who learned hard lessons, started new careers or left Russia altogether. Interestingly, the crisis is a dim memory for many, blended together with the multiple, post-Soviet crises of Boris Yeltsin’s presidency.
Upon returning to Moscow, Levit quickly lost her job in a company that made laser shows for the Moscow government and the city’s elite with their newfound wealth. Entertainment companies took a blow right away as thinning wallets forced people to readjust their spending priorities. 
“I freaked out and found four different jobs, in addition to college studies,” she recalled. 
“My husband at the time worked as a system administrator in a newspaper, and they paid him in computer monitors rather than cash. He had five of them in the apartment for a while and managed to only sell three of them in the end,” she said. 
“We joked that the key to a happy marriage is seeing your spouse only twice a week.”
As the ruble devalued, the quality of life in Russia fell drastically.
Consumer prices increased by an average of 84 percent by the end of 1998, and adjusted salaries in December 1998 were about 60 percent of what they were a year earlier. Even in disproportionately wealthy Moscow, 20 percent of the population dipped below the poverty line, according to the State Statistics Service. In poorer republics like Ingushetia and Kalmykia, this figure reached 90 percent.
As imported foreign goods skyrocketed in price, fortunes were made selling domestic agricultural goods from rural areas in large cities at a substantial markup. The price increase was felt the most in Moscow and other regions with a high share of imports.
Alexander Tkach was making a comfortable salary of $2,000 per month before the crash and hoped to eventually buy an apartment in Moscow. He wanted to move his family from the town of Dzerzhinsk, in the Moscow region, to end the daily commute to his programming job at the Russian Trading System stock exchange. 
Although they only lost about $500 in savings, these hopes vanished after the default. 
“After the default, we felt insecurity in everything, that nothing would get better,” he said. “My salary fell right away, since I worked at a financial company.”
Tkach decided to apply for a job with Microsoft in Redmond, Washington. He was interviewed in November, and left Russia in February 1999. In contrast to Russia’s plight, the United States was going into the dot-com boom, and computer programmers were sought after. 
“I was never one of those people who dreamed of going abroad. Things just coincided,” Tkach said by telephone from Sammamish, Washington. Ten years later, he is still working for Microsoft.
Emigration from Russia, which had been sliding since 1995, spiked again to 108,263 people in 1999 compared with 83,674 the year before, according to data from the Interior Ministry. The “brain drain” out of Russia during the 1990s is part of the reason why there is a shortage of qualified professionals in the country today. 
Only a small percentage of Russians choose to come back from their established lives in other countries. 
When Tkach was offered to head a team of programmers in Novosibirsk in an outsourcing startup, he declined, although the salary was twice what he was earning.
“Financially, the situation is preferable in Russia right now, but we feel more secure in the States, especially with a child,” he said.
Increasing incomes and standards of living is a visible trend in Russia over the past eight years. In a 2001 poll by Levada Center, 23 percent said they did not have enough money to eat, and 42 percent spent all of their earnings on food. A similar poll this year indicated that only 12 percent could not afford food, while 60 percent considered themselves sufficiently fed and clothed. 
At the same time, people tend not to save money. Only 25 percent said they have any kind of savings, while the figure in 2002 was 26 percent. 
“People whose incomes rose in the past few years prefer to spend rather than focus on savings,” said Natalya Bondarenko, a sociologist at Levada Center. They are partly spending money to improve their quality of life, which has been quite low, she said. But another reason is that people’s sense of security has not been fortified. 
“Since 2001, when we first asked this question, the average time people plan ahead is only two years,” Bondarenko said. “This is how far ahead Russians think in terms of their careers, family planning, education and investment.”
Since most people did not have very much money to lose, the 1998 crash ended up blending in with the other financial hurdles of the 1990s, like the collapses of the ruble in September 1992 and October 1994 and the redenomination of the currency in early 1998. 
Only 36 percent of respondents to a Public Opinion Foundation poll this month remembered what happened in Russia in August 1998. But of those who said they were hurt by the crash, 16 percent said their quality of life is still lower than it was in early 1998.
Despite the odds, some successful companies were propelled to success by the 1998 crash. The ability to make lemonade with the lemons of Russia’s unstable economic environment has helped lucky risk-takers thrive 10 years later.
Vladimir Vinogradov left his position at a large public relations agency in July 1998 and invested all of his personal savings to start his own firm with a partner. When the default hit a month later, he had nothing to lose because the infant PR firm Pro-Vision Communications consisted of four employees huddled in a small room near the Mayakovskaya metro. 
“Other firms were laying people off and moving house, and we didn’t have a large infrastructure, so we offered lower prices at the time when most companies cut their PR and marketing budgets,” he said. 
“The default was a good school for us,” he added. “It formed our working style and taught us to count our money.”
His agency now has 70 employees and more than 30 clients.
“Memories of the crash keep us on our toes,” Vinogradov said. “I’m always ready for it to happen again, and I think I know what to do when it does.”

TITLE: U.S. Responsibility for the Georgian Crisis
AUTHOR: By Anatol Lieven
TEXT: The bloody conflict over South Ossetia will at least have been good for something if it teaches two lessons. The first is that now Georgia will never get South Ossetia and Abkhazia back. The second is that the West must not make promises that it neither can nor will fulfill when push comes to shove. 
Georgia will not get its separatist provinces back unless Russia collapses as a state, which is unlikely. The populations and leaderships of these regions have repeatedly demonstrated their desire to separate from Georgia, and Prime Minister Vladimir Putin made it clear again and again that Russia would fight to defend these regions if Georgian forces attacked them. 
The Georgians, like the Serbs in the case of Kosovo, should come to terms with reality and formally recognize the independence of these territories in return for a limited partition and an agreement to join certain Georgian-populated areas to Georgia. This would open the way either for an internationally recognized independence from Georgia — or, more likely in the case of South Ossetia, joining North Ossetia as an autonomous republic of the Russian Federation. For the Georgians, the resolution of their territorial conflicts would make it more likely that they could eventually join the European Union — although after the Georgian administration’s initiation of this conflict, that cannot possibly be considered for many years. 
Western governments should exert pressure on Georgia to accept this solution. These governments have a duty to do this because they, and most especially the United States, bear a considerable share of the responsibility for the Georgian assault on South Ossetia and deserve the humiliation they are now suffering. It is true that Western governments, including the United States, always urged restraint on Tbilisi. Georgian President Mikheil Saakashvili was told firmly by the administration of President George W. Bush that he must not start a war. 
On the other hand, the Bush administration, with the full support of the U.S. Congress, armed, trained and largely financed the Georgian military. It did this although the dangers of war involving these forces were obvious and after the Georgian government had told its own people that these forces were intended for the recovery of Abkhazia and South Ossetia. 
The Bush administration, backed by Congress, Republican presidential candidate John McCain and most of the U.S. media, also adopted a highly uncritical attitude to both the undemocratic and the chauvinist aspects of the Saakashvili administration and its growing resemblance to that of the crazed nationalist leader, Zviad Gamsakhurdia, during the fighting that destabilized the country in the early 1990s. 
According to European officials, the Bush administration even put heavy pressure on U.S. and international monitoring groups to refrain from condemning the flagrant abuses by Saakashvili’s supporters during the last Georgian elections. Ossetian and Abkhaz concerns were ignored, and the origins of the conflict were often wittingly or unwittingly falsified in accordance with Georgian propaganda. 
Most important, the United States pushed strongly for a NATO Membership Action Plan for Georgia at the last alliance summit and would have achieved this if France and Germany had not resisted strongly. Given all this, it was not wholly unreasonable of Saakashvili to assume that if he started a war with Russia and was defeated, Washington would come to his aid. 
Yet all this time, the United States had not the slightest intention of defending Georgia, and he knew this. Quite apart from its lack of desire to go to war with Russia over a place that almost no American had heard of until last week, with the wars in Iraq and Afghanistan, the United States does not have an army to send to the Caucasus. 
The latest conflict is humiliating for the United States, but it may have saved it from a far more catastrophic future — namely, an offer of NATO membership to Georgia and Ukraine, provoking conflicts with Russia in which the West would be legally committed to come to these countries’ aid — and would yet again fail to do so. There must be no question of this being allowed to happen — above all because the expansion of NATO would make such conflicts much more likely. 
Instead, the West should demonstrate to Moscow its real will and ability to defend those East European countries that have already been admitted into NATO and to which it is therefore legally and morally committed — especially the Baltic states. The United States and its European allies should say this and mean it. Under no circumstances should they extend such guarantees to more countries that they do not intend to defend. To do so would be irresponsible, unethical and, above all, contemptible. 

Anatol Lieven is a professor in the war studies department of King’s College London and a senior fellow of the New America Foundation. This comment appeared in the Financial Times.

TITLE: Gulliver’s Battles
AUTHOR: By Yulia Latynina
TEXT: To Our Readers

Late Thursday night, after destroying as much of Tskhinvali as it could with truck-mounted missiles, the Georgian military took control of the city. When giving the command to start the war, it would seem that Georgian President Mikheil Saakashvili assumed that Russia would never bother to interfere.
This was his major strategic blunder. Moreover, it was a moral miscalculation because any regime that bombs its own citizens — whether in Tskhinvali or Grozny — rarely wins the approval of the international community, regardless of whether or not it was provoked into doing so by an adversary. 
As it turns out, the attack was a total military disgrace for the breakaway republic. South Ossetian leader Eduard Kokoity and his regime exist on Russia’s payroll to maintain a permanent state of conflict with Georgia, but it is clear now that they never bothered to prepare the country for war. 
And the money we’re talking about here is not pocket change either. South Ossetia spent $570 million to build a gas pipeline that bypasses Georgia to supply an area that has only 7,000 people. According to some accounts, the unrecognized republic has a budget of $800 million to battle Georgian fighters. Add to this the fact that Moscow says it subsidizes the pensions and salaries of 80,000 “Russian citizens” who live in South Ossetia, although the real number of people holding Russian passports is no more than 30,000. It looks like South Ossetia has borrowed a page from Gogol’s “Dead Souls” by putting fictitious citizens on the books for financial gain. 
It’s hard to say where all of that money went, but judging from events, very little of it was spent on the war effort. But neither Kokoity nor his siloviki backers ever intended for South Ossetia to be able to independently protect itself against Georgia. Most important, they needed to drag Russia into the conflict. The 58th Army rolled through the Roki Tunnel, while Russian jets bombed Poti and Gori. 
But the most important thing happened later. On Friday, as soon as President Dmitry Medvedev announced that the country had entered the war, state-controlled television immediately reported that tanks had liberated Tskhinvali. In reality, they had been held up because of a bombed-out bridge, and for 2 1/2 days — until Sunday morning — the Georgian military retained control of a major part of Tskhinvali. During all of this time, Russian aircraft razed the city to the ground, decimating Georgian troops as well as any civilians who had survived the initial Georgian missile attacks. 
Saakashvili leveled Tskhinvali, purportedly to restore Georgia’s territorial integrity and to liberate South Ossetia from the dictator Kokoity. Russia, with Prime Minister Putin leading the charge, helped finish the job, ostensibly as a peacekeeping mission. During the war in Afghanistan in the 1980s, the Soviet intervention was packaged as “fraternal help to the Afghan people.” Then during the wars in Chechnya, we heard a lot from the authorities about “restoring constitutional order.” Now the Kremlin calls its intervention in South Ossetia and Abkhazia “a peacekeeping mission.” The tenacity and violence displayed by both sides is understandable because whoever controls Tskhinvali will be the victor. Everything else will be recorded in fine print in the history books. 
In the end, Saakashvili clearly underestimated Putin’s personal hatred for him — an enmity that became intense after an aide told Putin that Saakashvili described him as “Lilliputian.” But when Russian officials announced that “we established control over Tskhinvali” 2 1/2 days ago, they actually meant that for two days both sides have been demolishing the city. 
The second Chechen war, in which Grozny was wiped off the face of the earth, brought Putin to power. Russia’s first peacekeeping mission, in which Tskhinvali was demolished in a similar fashion, has locked Putin’s undisputed hold on power for many years to come. 

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

TITLE: Pervez Musharraf Quits as Pakistan President
AUTHOR: By Simon Cameron-Moore, Kamran Haider
PUBLISHER: Reuters
TEXT: ISLAMABAD — Faced with the humiliation of impeachment, former army chief Pervez Musharraf quit as Pakistan president on Monday, having lost political, popular and increasingly even U.S. support. 
His resignation climaxed nearly two weeks of political machinations in Islamabad after the fractious coalition finally agreed that Musharraf had to go. The powerful army, which has ruled for more than half the country’s 61-year history, has publicly kept out of the controversy over its old boss.
The coalition had prepared impeachment charges against Musharraf focusing on alleged violations of the constitution and misconduct. Coalition officials had said earlier Musharraf had sought immunity from prosecution but he said in his speech he was asking for nothing.
“I don’t want anything from anybody. I have no interest. I leave my future in the hands of the nation and people,” he said.
It was not clear who the next president would be. According to the constitution, the chairman of the Senate will become acting president until a new president is elected within 30 days for a five-year term.
Traditionally in Pakistan, the president has been a figurehead with the prime minister holding most powers, although under Musharraf, the president was much more powerful.
Celebrations broke out across the country after Musharraf’s announcement, with people dancing and handing out sweets.
Born in New Delhi on August 11, 1943, Musharraf arrived with his parents in Karachi, Pakistan’s first capital, a day after the Partition of India in 1947.
A career army officer, Musharraf came to power in a 1999 coup, went on to be a close U.S. ally in the war against terror, and narrowly survived al Qaeda-inspired assassination attempts.
His enemies said he betrayed Islam by caving in to U.S. pressure to abandon support for the Taliban government hosting al Qaeda in Afghanistan after the Sept. 11, 2001, attacks.
He believed he saved Pakistan.
The U.S. government sank more than $11 billion into Pakistan, mostly its military, and expected Musharraf to produce results.
Pakistan captured hundreds of al Qaeda, and lost over 1,000 soldiers fighting in tribal areas bordering Afghanistan. Yet suspicions lingered that Pakistani intelligence agencies played a double-game, allowing the Taliban safe refuge.
The alliance with the United States was always a hard sell in Pakistan, and contributed to Musharraf’s unpopularity.
Regarded as a military dictator, he was treated initially as a pariah by the West, but at home was seen as a different kind of general when he first seized power.
He had a friendly, straight-talking charm and after a decade of inept, corrupt civilian rule, many Pakistanis welcomed the overthrow of prime minister Nawaz Sharif.
Musharraf’s favorite film was “Gladiator”, the tale of an honorable general who saves Rome from a wicked emperor.
Critics say Musharraf suffered from a “savior complex”, believing he was indispensable for Pakistan, but in late 2007, people welcomed back from exile Sharif and Benazir Bhutto, the leaders they were disillusioned with a decade earlier.
Musharraf had promised to return Pakistan to democracy, but critics say he stifled political freedom.
A 2002 general election was widely seen as rigged. The pliant parliament that emerged elected Musharraf president. He turned to it again to re-elect him before its term ended in late 2007.
As challenges mounted, Musharraf reverted to autocratic ways. His downfall will be traced back to March 9, 2007, when he tried to force Supreme Court Chief Justice Iftikhar Chaudhry to resign.
Chaudhry’s defiance mobilized a lawyers’ movement to defend the judiciary and galvanized the opposition.
Out of desperation, Musharraf last November imposed emergency rule for six weeks to purge the judiciary before the Supreme Court could rule on the legality of his re-election.
Having secured a second term, Musharraf quit the army to meet a constitutional requirement, and set an election date.

TITLE: Superstar Phelps Triumphs With 8 Golds
PUBLISHER: The Associated Press
TEXT: BEIJING — Michael Phelps got what he came for, capping the greatest Olympics for an individual athlete by winning his eighth gold medal in Beijing and 14th of his career.
Things didn’t work out anywhere near as well for China’s Liu Xiang.
Liu, the reigning Olympic 110-meter hurdles champion, is as popular in China as Yao Ming. But he has been battling hamstring and foot problems, and he limped into the starting block for his first heat Monday morning. He burst out at the gun then pulled up lame after a few steps.
There actually was a false start by someone else that called everybody back, but Liu just peeled the number of his leg and walked off, disappointing tens of thousands in the stadium and hundreds of millions more throughout the country.
“We worked hard every day, but the result was as you see, and it’s really hard to take,” Liu’s personal coach, Sun Haiping, said at a news conference the hurdler did not attend.
Phelps helped the U.S. team close a meet full of world records with yet another in the Olympic 400-meter relay. The victory also pushed him past Mark Spitz’s record of seven golds, a record that’s stood since 1972 and gave headline writers everywhere fodder for lines like “Great eight!” “Eighth wonder!” and “Eight is enough!”
“I guess it’s a lucky number for me now, too,” Phelps said. “Seeing eight in ‘08, and opening ceremonies starting at 8:08, I guess it was meant to be.”
Elsewhere Sunday, headliners Rafael Nadal and the Williams sisters went home with gold, and China added more to its count. The hosts were up to 35, breaking its national record set four years ago in Athens. The United States led the overall medal count 65-61 over China. Americans have 19 golds.

LIGHTNING STRIKE 
Also at the track Monday, headliners like Jamaica’s Usain Bolt and the American 400 duo of Jeremy Wariner and LaShawn Merritt easily advanced in their heats.
Bolt didn’t bother putting on a show in his first time on the track since a thrilling world-record time in the 100 meters. In a preliminary round of the 200 — which is actually more his specialty—Bolt took it easy, finishing second to Rondell Sorillo of Trinidad and Tobago. The top three finishers per heat moved on.
American Wallace Spearmon a two-time medalist in the 200 at world championships, had the third-best time in the opening round. Other Americans advancing were reigning Olympic champion Shawn Crawford and Walter Dix, who won bronze in the 100. Another round was scheduled for Monday night, with the semifinals Tuesday and the final Wednesday.
Capping the morning activity, Australia’s Emma Snowsill won the women’s triathlon (American Laura Bennett was fourth); the U.S. men’s beach volleyball duo of Todd Rogers and Phil Dalhausser advanced to the semifinals by beating a German duo; and sailing officials settled a protest by declaring a Danish team the winner of the 49er skiff competition Sunday.

JAMAICA SWEEP
Shelly-Ann Fraser broke away from the pack early and cruised to victory in the women’s 100 meters, a day after Usain Bolt set a world-record in the men’s race. About the biggest difference was that Fraser waited until crossing the finish line before celebrating. Two other Jamaicans, Sherone Simpson and Kerron Stewart, tied for second, denying the American trio of Lauryn Williams, Torri Edwards and Muna Lee from making the medals stand.
The scoreboard flashed “Photo-Finish” for a couple of minutes before finally showing that Simpson and Stewart were both timed in 10.98 — and were both credited with finishing second. Williams was fourth, Lee fifth.
In the women’s 400, three-time U.S. national champion Sanya Richards won her semifinal in 49.90 seconds to move into Tuesday’s finals where she’ll go for an individual gold to go with the relay gold she won at the Athens Olympics. Americans Mary Wineberg and Dee Dee Trotter each failed to advance.
“Oh, man, I feel I can just taste it now,” said Richards, who has dominated the event but never won a world championship or Olympic gold medal, in part because she has suffered from a rare disease that caused painful sores on her body and in her mouth.
Bernard Lagat, a two-time Olympic medalist for Kenya now competing as an American, failed to make the 1,500 finals, missing out by .02. No Americans advanced.
“It’s a big loss for us,” fellow American Leo Manzano said. “We really thought we had a good chance to have at least one guy in that final.”

RUSSIAN RECORD
Francoise Mbango Etone of Cameroon defended her triple jump title, Russia’s Gulnara Galkina-Samitova set a world record in winning the first-ever women’s steeplechase, and Primoz Kozmus won the men’s hammer throw, giving Slovenia its first-ever track and field gold medal.
Kenenisa Bekele won his second straight 10,000 meters title, while Haile Gebrselassie—who won the 10,000 at the 1996 and 2000 Games—was sixth. He’s been running the marathon since Athens, but switched back because the asthmatic runner was worried about the polluted air in Beijing. It wasn’t so bad for the women’s marathon, which was won by Constantina Tomescu-Dita of Romania. The race also was incident-free, thanks in part to heavy security.
World record-holder Paula Radcliffe of Britain persevered through injuries, but finished 23rd. American record-holder Deena Kastor dropped out early because of a broken right foot. With Magda Lewy also pulling out because of a knee ailment, the only American to finish was Blake Russell, in 27th.

TITLE: Arshavin Move In Doubt
PUBLISHER: Agence France Presse
TEXT: LONDON — Zenit St Petersburg striker Andrei Arshavin’s move to Premier League side Tottenham has stalled, the player’s agent claimed on Sunday.
Spurs were expected to use the funds from Dimitar Berbatov’s move to Manchester United to land the Russian international.
But his agent Dennis Lachter believes Zenit’s valuation of the player means the deal is unlikely to reach a conclusion.
Lachter told The Mail on Sunday: “Andrei would love to go to England but if it stays like this, there will be no deal.
“Zenit will not sell for a penny less than 25 million euros and Tottenham will not go above 22 million.”
But Berbatov’s move from Spurs to Manchester United was also put into doubt on Monday. 
The 27-year-old has been linked with a move to Manchester United for much of the summer.
Spurs turned down the original bid of 20 million pounds saying they were not interested in letting Berbatov go for less than 30 million.
“I’m now in Tottenham but no one can disagree with me wanting to follow my dream,” Berbatov told The Times ahead of his country’s midweek friendly with Bosnia-Herzegovina.
His agent Emil Dantchev said: “We have two more weeks until the end of the transfer window and I think this will be the most important week. I read Alex Ferguson’s statement that he wants another striker and I hope that this striker is Dimitar Berbatov.”
United boss Sir Alex Ferguson has not made a formal offer since seeing his first bid turned down but with Cristiano Ronaldo out injured and Carlos Tevez missing due to a bereavement, the champions’ problems were obvious as they opened their title defence with a 1-1 draw against Newcastle on Sunday.
Ferguson has revealed that Michael Carrick will miss up to three weeks with an ankle injury and Ryan Giggs can expect a similar spell on the sidelines after picking up a hamstring problem after Sunday’s draw with Newcastle.
The pair limped off at Old Trafford as United started their defense of their Premier League title with dropped home points, with Darren Fletcher’s goal cancelling out Obafemi Martins’ effort.
Midfielder Carrick limped off in the first half and has been pulled out of the squad for England’s friendly against the Czech Republic on Wednesday, while Ferguson claimed that striker Fraizer Campbell has also picked up an unspecified injury.
Tevez will return at Portsmouth next Monday after missing the opening game of the season due to the death of an uncle and Ferguson feels Wayne Rooney, who has been struggling with a virus, will also be better for having played a full 90 minutes.
“Michael has an ankle injury and it has swollen up very badly and he’ll be out for maybe two or three weeks which is unfortunate,” Ferguson said.
“Ryan’s got a hamstring injury so it was disappointing to get these injuries on top of what we’re missing anyway,” he said.

TITLE: Muslim Rebels Go On Rampage in Philippines
AUTHOR: By Jim Gomez
PUBLISHER: The Associated Press
TEXT: MANILA, Philippines — Muslim rebels attacked several southern coastal townships Monday, killing a local official and burning houses in a sharp escalation of fighting amid uncertainty over a fragile peace process, officials said.
Regional military spokesman Major  Armand Rico said the towns of Kulambugan and Kauswagan in Lanao del Norte province came under attack early Monday from renegade forces of the Moro Islamic Liberation Front.
He said the rebels executed the leader of Libertad village in Kauswagan town. Government troops in armored vehicles fought the rebels in efforts to push them back into the hinterland, where they maintain camps. Local officials ordered the evacuation of residents from nearby communities to avoid casualties.
Rebel spokesman Eid Kabalu confirmed the attack, but said it was carried out by a renegade commander, Abdullah Macapaar, also known as Bravo, and without the knowledge of the group’s leadership.
Rico said there were reports that the attackers took a number of civilians hostage.
Early Monday, a passenger bus on the national highway in Lanao del Norte rammed a checkpoint and a roadblock set up by the rebels.
The rebels opened fire, and the driver, Antonio Aurillo, escaped into government-controlled territory, from where he called a radio station in nearby Zamboanga city, saying that 17 passengers were still in the bus and that some may have been hurt.
Regional military commander Major General Nehemias Pajarito said the rebels in the villages under attack numbered about 200 men. He said the 125-mile portion of the highway was closed as troops confronted the attackers.
Retired General Rodolfo Garcia, head of the government’s negotiating team with the rebels, called the attack on the towns a violation of a 2003 cease-fire. He said government officials were trying to get through to the rebels to get them to control their fighters.
“This is an act that must not be tolerated,” Garcia said.
Officials in the predominantly Christian cities in the southern Philippines — the traditional homeland of minority Muslims — have strongly opposed a preliminary accord forged between the government and the rebels in a bid to end the decades-old insurgency for Muslim self-rule in the predominantly Roman Catholic nation.
The agreement, which was supposed to be signed this month but was blocked by the Supreme Court, calls for the expansion of an existing Muslim autonomous region to include more than 700 new villages, subject to the approval of residents in a plebiscite.
The court acted on a petition filed by Christian politicians wary of losing land and power to Muslims. The justices began hearings last week to determine whether the accord violated the constitution. The issue has divided many Filipinos.
Garcia and the liberation front have been warning that many of the younger, more radical guerrilla commanders, such as Bravo, may have given up on negotiations.

TITLE: Clock Ticking on Vice Presidential Choice
PUBLISHER: Reuters
TEXT: WASHINGTON — A string of potential vice presidential candidates were queried on Sunday about the possibility of being picked for the No. 2 spot but all remained mum on their chances.
One, Louisiana Republican Governor Bobby Jindal, flatly said he did not want the job.
“I’ve got the job that I want,” Jindal said on NBC’s “Meet the Press.” “I don’t want to be the vice president. I am not going to be the nominee.”
Time was running out for both presumptive presidential candidates, Democrat Barack Obama and Republican John McCain. Democrats begin their national convention in Denver on August 25 with Republicans going to St. Paul, Minnesota, a week later.
Neither Obama nor McCain has given any clues as to whom they are considering as potential running mates when they face off in the Nov. 4 election.
McCain created a stir last week when he said former Pennsylvania Governor Tom Ridge, a supporter of abortion rights in an anti-abortion party, could not be ruled out as a possible vice presidential choice.
Some conservatives reacted angrily, but Ridge said on Sunday he was sure they would be pleased with McCain’s final selection and his administration would be strongly anti-abortion.
“The last time I checked, the vice president is not an independent voice. He echoes the position of the president of the United States,” Ridge said on “Fox News Sunday.” “If you’re unwilling or unable to do that, then I think you should defer to someone else.”
Ridge and Jindal joined fellow Republicans Minnesota Governor Tim Pawlenty and former Massachusetts Governor Mitt Romney on the Sunday television talk show circuit.
A group of Democrats believed to be under consideration — including Indiana Senator Evan Bayh also appeared on the shows.
“I hate to disappoint you, but nothing to report today,” Bayh said on CBS’ “Face the Nation.”
“Same answer here,” Pawlenty said.

TITLE: Soap Opera Seeks Iraq Veteran For New Role
AUTHOR: By Lynn Elber
PUBLISHER: The Associated Press
TEXT: LOS ANGELES — An open casting call for “All My Children” is far from business as usual: the soap opera is seeking an Iraq war veteran to play an injured solider.
The ABC daytime show has created a romantic storyline to combine entertainment and a window into the challenges faced after combat, said executive producer Julie Hanan Carruthers.
“All My Children” has launched a broad search to fill the role, inviting veterans to contact the show’s New York casting director. The series also is working with a veterans’ support group, USA Cares, as well as the military.
“It will make it such a heightened experience for the audience and for us ... to cast a real-life soldier, a veteran, and bring him into our created drama,” Carruthers said.
The veteran-turned-actor will play the character of Brot, a key figure in a plot that’s already under way and involves a visitor to fictional Pine Valley, Army Lieutenant Taylor Thompson (played by Beth Ehlers).
Taylor, who was stationed in Iraq and is on medical leave, has come to town to deliver medals to fellow soldier Dr. Frankie Hubbard (Cornelius Smith Jr.). But it’s Brot, the soldier and lover she believes died in combat, who’s on her mind.
Brot, however, survived. Unwilling to involve Taylor in his suffering, he’s allowed her to think he’s dead.
Their story will begin unfolding when the right veteran is found for the part, Carruthers said. The casting call is not limited to those who were wounded in the war, an ABC spokesman said.
But the role will be shaped around a veteran’s experience, possibly including a war-caused disability, Carruthers said.
“It’s a very delicate subject to begin with. There’s so much about the individual person that’s going to help us create the character, and whatever they bring and whatever their challenge is will be fitted into the story,” she said.
The show has woven potentially controversial events and themes into drama before, from the Vietnam War to, in recent years, a plot involving a lesbian mother who was forced to give up her daughter.
Also figuring in the “All My Children” wartime story is Jake Martin (Ricky Paull Goldin), an anti-war physician who provides differing social and political points of view.
Viewers accept tough issues in TV shows when they are dealt with on a personal rather than a political basis, Carruthers said.