SOURCE: The St. Petersburg Times
DATE: Issue #1402 (66), Tuesday, August 26, 2008
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TITLE: Moscow Dismisses Economic Threats
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — Attempts to isolate and punish Russia for its military actions in Georgia will backfire, given Russia’s economic muscle and key role in mediating international disputes, senior Russian officials said Friday.
Top officials in President George W. Bush’s administration have said Russia’s continued military presence in Georgia could jeopardize its membership in the Group of Eight and its bid to join the World Trade Organization, among other things. 
“We are a big economy today,” said Vladislav Reznik, chairman of the State Duma Financial Markets Committee. “Whether they like it or not, we have to be reckoned with.”
Yevgeny Fyodorov, chairman of the Duma’s Economic Policy and Entrepreneurship Committee, was even more blunt. 
“It’s a political bluff,” he said. “It’s an absolute certainty that the Americans won’t [impose any sanctions] because they themselves would suffer.”
In the latest U.S. warning, Commerce Secretary Carlos Gutierrez said all of the United States’ efforts to help Russia “integrate ... into the world community” were “at risk,” according to an interview published Saturday in Germany’s Der Spiegel.
Of the two presumptive U.S. presidential nominees, Republican Senator John McCain has been by far the most strident in his anti-Russian rhetoric during the Georgia crisis, reiterating his call for Russia to be thrown out of the G8 and for Moscow’s WTO bid to be blocked. 
Senator Joe Biden, who was named Democratic candidate Barack Obama’s vice presidential running mate on Saturday, has been more tempered in his criticism of Russia, restricting himself to saying there would be “consequences” for U.S.-Russian ties from the conflict. During a trip last week to Tbilisi, Biden proposed a $1 billion aid package for Georgia, but he also stressed that he had long sought to “forge a more constructive relationship with the Kremlin.”
Another leading Democrat, former Secretary of State Richard Holbrooke, said Aug. 11 that kicking Russia out of the G8 as McCain advocated was “an impossibility,” Bloomberg reported.
But Washington has only limited options for exerting economic pressure on Moscow, and threats to suspend G8 membership would largely be about denting Russian prestige.
“I haven’t noticed that they’ve actively welcomed us into the WTO anyway,” Fyodorov said.
Yury Afanasyev, the top trade official in charge of WTO accession talks at the Russian mission in Geneva, said he had not received any signs that the United States planned to withdraw its support of Russia’s bid to join the global trade body.
“I am hoping U.S. officials will have enough common sense not to link WTO issues with politics,” he said by telephone from Geneva.
Russia has finalized bilateral agreements with all of the WTO’s 153 member countries except for Georgia, which rescinded its 2006 backing when Russia severed trade and transport links following a spying dispute between the two countries.
Russia is the biggest economy still outside the WTO, whose members account for more than 95 percent of global trade.
The next meeting to consider Russia’s WTO bid has been scheduled for Sept. 18, Afanasyev said.
If the United States moves to reconsider its support for Russia’s WTO bid, Moscow will retaliate, Afanasyev said.
Russia has “a rich arsenal” of countermeasures at its disposal, he said, referring to a deal that allows the United States larger import meat quotas, among others.
Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab, declined to say whether the U.S. administration intended to revoke support for Russia’s WTO bid, referring only to comments by Bush on Aug. 13. “This [is] as much as we have stated,” Spicer said in e-mailed comments.
In that statement, Bush indicated that Russia might find itself isolated if it lost U.S. support. “In recent years, Russia has sought to integrate into the diplomatic, political, economic, and security structures of the 21st century. The United States has supported those efforts,” Bush said. “Now Russia is putting its aspirations at risk by taking actions in Georgia that are inconsistent with the principles of those institutions.”
The economic costs of possible sanctions, such as delayed WTO entry, may not be significant, said a senior Western economist who has studied Russia for 15 years.
“Russia would not suffer much — if any — immediate economic pain as a result of such a delay, since the direct trade effects of accession (the impact of tariff changes and improved access to foreign markets) will be limited,” the economist said on condition of anonymity, because he was not authorized to comment on Russian politics.
Both Russia and the West would only gain from changes such as the “reduction in formal and informal barriers to foreign investment in key service sectors [and] the overhaul of technical regulations,” he said.
U.S.-Russian economic interdependence was underlined by Commerce Secretary Gutierrez in June, when he wrote in a commentary in Izvestia that Washington was eager to “expand our economic relationship.” 
In 2007, there was a 57 percent growth in U.S. imports to Russia and bilateral trade of $27 billion, Gutierrez noted, including “significant growth not only in the extractive industries but in products as diverse as innovative pharmaceuticals, farm machinery, information technology and an increasing array of services.” 
Among the U.S. companies that rely heavily on a thriving Russian economy are struggling U.S. auto giants General Motors and Ford, whose Russia sales make up some of the gap being felt back home. 
Also, for U.S. aircraft maker Boeing, whose Moscow engineering center is the company’s biggest outside of Seattle, business has been lucrative here. 
“Perhaps no other country is able to offer the United States as broad a range of partnership opportunities or capabilities for cooperation in every scientific or technical sphere,” the U.S. Embassy in Moscow said on its web site.

TITLE: Russian Lawmakers Recognize Georgian Rebel Regions
AUTHOR: By Oleg Shchedrov and Aydar Buribaev
PUBLISHER: Reuters
TEXT: MOSCOW — Russia’s parliament unanimously approved on Monday resolutions calling for the recognition of two rebel regions of Georgia as independent states, a move likely to worsen already strained relations with the West.
Both houses of parliament, which are controlled by Kremlin loyalists, swiftly approved non-binding resolutions calling on President Dmitry Medvedev to recognize the pro-Moscow breakaway regions of South Ossetia and Abkhazia.
The lower house, or State Duma, approved a second resolution calling on parliaments worldwide to back independence for the two regions, saying they had many more reasons than the former Serb province of Kosovo to aspire to international recognition.
Georgia and Russia fought a brief war over South Ossetia earlier this month after Tbilisi sent in troops to try to retake the province by force, provoking a massive counter-attack by land, sea and air by Moscow.
Medvedev, who was working in the resort of Sochi, just along the Black Sea coast from Abkhazia, did not immediately comment on the resolutions, but said ties with NATO had “worsened sharply” as a result of the Georgia conflict.
“We are ready to take any decision, up to halting relations altogether,” he said at a meeting in Sochi with Dmitry Rogozin, the Russian envoy to NATO.
In the South Ossetian capital Tskhinvali, jubilant residents drove down Stalin Street with South Ossetian and Russian flags hanging out of the windows, thrusting their arms into the air and shouting “Victory, Victory.”
The resolutions could either signal Medvedev’s intentions or be designed to strengthen his hand as he negotiates the status of Russian forces in Georgia with the West.
“Today it is clear that after Georgia’s aggression against South Ossetia, Georgian-South-Ossetian and Georgian-Abkhazian relations cannot be returned to their former state,” upper house speaker Sergei Mironov said during the debate. “The peoples of South Ossetia and Abkhazia have the right to get independence.”
Moscow has so far always stopped short of recognizing the two rebel regions as independent, though Foreign Minister Sergei Lavrov signaled a tougher line recently when he said the world could “forget about” Georgia’s territorial integrity.
Formal recognition by Russia of the independence of South Ossetia and the Black Sea province of Abkhazia would put it on a collision course with the United States and other Western nations which insist on Georgia’s territorial integrity.
In Tskhinvali, officials followed the Russian parliamentary debates on live television in a building pockmarked with shrapnel and bullets.
Murat Dzhioyev, the South Ossetian rebel administration’s foreign minister, said: “In less than 100 years, the Georgian military has three times carried out genocide against the Ossetian people. ... Why are they killing us? Because we simply want to live as equals with all the other nations.”
In Georgia, Kakha Lomaia, secretary of the country’s security council, said the Kremlin would isolate itself internationally if it recognized the breakaway regions.
“If it does this, Russia will further isolate itself from the entire world, and will force the international community to seek more active ways to restore the territorial integrity of Georgia,” Lomaia told Reuters.
Germany, criticizing Russian legislators’ resolution, said it expected Medvedev to ignore their recommendation, and said Russia had not yet met its obligation to pull back all its troops under the French-brokered peace plan.
French Foreign Minister Bernard Kouchner was cautious about the likely EU reaction. “We’re not talking about sanctions,” he told France Inter radio.
“Getting a ceasefire, stopping hostilities and the troop withdrawal in eight days, that’s quite a lot already. We’ll have to see. We have to take stock of the situation.”

TITLE: Jailed Ex-Tycoon Khodorkovsky’s Parole Request Denied
AUTHOR: By Nadia Popova
PUBLISHER: Staff Writer
TEXT: CHITA — A court in Chita on Friday turned down a parole request from Mikhail Khodorkovsky, the former boss of oil giant Yukos who is serving an eight-year sentence in the east Siberian city for fraud and tax evasion.
The ex-tycoon’s lawyers said the decision by the Ingodinsky District Court was based on falsified evidence and provided “a shining example of the legal nihilism that President Dmitry Medvedev has himself criticized.”
Many awaited the ruling on the application from Khodorkovsky, once the country’s richest man with an estimated fortune of $15 billion, as a litmus test for the legal system under Medvedev.
Khodorkovsky reacted only with a grim smile toward his lawyers as the decision was read.
“Our justice system is not being reformed very quickly, and I knew this from the very beginning,” Khodorkovsky said to journalists from behind the bars as he was rushed out of the prisoners’ cage in handcuffs by guards after judge Igor Falileyev handed down the verdict Friday.
In a bizarre twist to the announcement, at 11:24 a.m. Interfax erroneously reported that Khodorkovsky’s request had been granted, fueling a 1.6 percent jump in the market — a rise of $12 billion in real terms — on a volume of 3 billion rubles ($125.5 million) over the next 10 minutes. Interfax posted a correction at 11:31 p.m., and the index surrendered about two-thirds of the gain in the following 10 minutes.
In his ruling, Falileyev said one of the reasons for denying the parole request was that Khodorkovsky had failed to cooperate in a prison occupational training program.
“Since prisoner Khodorkovsky showed no desire to take part in the professional educational program offered him in detention ... he does not deserve conditional early release,” Falileyev said. Khodorkovsky was offered training as a tailor, but chose instead to work packaging clothing, said prosecutor Alexei Fyodorov. In his testimony Friday, Khodorkovsky said he had never refused the assignment.
“The law says that prison authorities have to take prisoners’ education and experience into consideration when choosing work for them,” said Vadim Klyuvgant, one of Khodorkovsky’s lawyers. “Khodorkovsky may not have shown any personal interest in the tailoring work, but he didn’t resist either.”
Prosecutors had also requested that Khodorkovsky’s application be denied because he had yet to serve a penalty for allegedly disobeying an order to keep his hands behind his back as he walked from an exercise yard to his cell in October. Igor Gnezdilov, a witness to the incident who has since been granted parole, testified Thursday that Khodorkovsky had not broken any rules.
Khodorkovsky’s lawyers questioned the authenticity of footage of the incident submitted by prosecutor’s Friday, saying the absence of sound on the recording made it impossible to determine whether such an order had been given. 
They also pointed out that the men in the video file were barely recognizable, the video wasn’t from the time and location cited in the report of the infraction, and the disc submitted could easily have been tampered with, as it had not been sealed.
Earlier in the day, Fyodorov told the court that Khodorkovsky had received no commendations during his imprisonment, had not repented for his crimes, displayed “a steady trend toward committing new crimes” and was still facing trial on additional charges. He said that if he was released, Khodorkovsky could interfere with the investigation into outstanding charges and try to hide ill-gotten gains.
Dmitry Zelinsky, managing partner at Dia Law International, said the main legal reason for refusing Khodorkovsky parole was the fact that he continues to deny his guilt.
“In up to 95 percent of successful Russian parole cases, the criminal admits his guilt,” Zelinsky said. “According to recent changes to the law, an admission of guilt by the prisoner is not necessary, but it remains an important factor in granting parole.”

TITLE: Russian General Slams U.S. Black Sea Presence
AUTHOR: By David Rising
PUBLISHER: The Associated Press
TEXT: ABOARD THE U.S.S. MCFAUL — A Russian general suggested that U.S. ships in the Black Sea loaded with humanitarian aid would worsen tensions already driven to a post-Cold War high by a short but intense war between Russia and Georgia.
The U.S. Navy destroyer U.S.S. McFaul reached Georgia’s Black Sea port of Batumi on Sunday, bringing baby food, bottled water and a message of support for an embattled ally.
The deputy chief of Russia’s general staff suggested the arrival of the McFaul and other U.S. and NATO ships would increase tensions: Russia shares the sea with NATO members Turkey, Romania and Bulgaria as well as Georgia and Ukraine, whose pro-Western presidents are leading drives for NATO membership.
“I don’t think such a buildup will foster the stabilization of the atmosphere in the region,” Russia’s ITAR-Tass news agency quoted Col. Gen. Anatoly Nogovitsyn as saying Saturday.
Georgian Defense Minister David Kezerashvili said on the aft missile deck of the McFaul after greeting U.S. Navy officers that the population of Georgia would feel “more safe” from the “Russian aggression” as a result of the ship’s arrival.
“They will feel safe not because the destroyer is here but because they will feel they are not alone facing the Russian aggression,” he said.
Local children offered the Americans wine and flowers.
In Europe, French President Nicolas Sarkozy said he would convene a special meeting of European Union leaders over the crisis as Russia ignored Western accusations it has fallen short of its commitment to withdraw forces from its smaller neighbor.
The war erupted Aug. 7 as Georgia launched a massive artillery barrage targeting the Russian-backed separatist province of South Ossetia. Russian forces repelled the offensive and drove deep into Georgia, taking crucial positions across the small former Soviet republic.
Russia pulled the bulk of its troops and tanks out Friday under a cease-fire brokered by Sarkozy, but built up its forces in and around South Ossetia and Abkhazia, another separatist region. They also left other military posts at locations inside Georgia proper.
The U.S. and EU say both those moves violated Russia’s commitments.
NATO halted the operations of its vehicle for interaction with Russia, demanding a fuller withdrawal, and Moscow responded by freezing military contacts with the alliance — its Cold War foe whose eastward expansion has angered a resurgent Russia.
The guided missile cruiser USS McFaul, carrying about 55 tons of humanitarian aid, is the first of three American ships scheduled to arrive this week. It brought baby food, diapers, bottled water, milk and hygiene products.
Sailors in a chain on deck passed the supplies up from the hold to be lifted by a crane for transport to shore.
The commander of the U.S. task force carrying aid to Georgia by ship, Navy Captain John Moore, downplayed the significance of a destroyer bringing aid.
“We really are here on a humanitarian mission,” he said.
The McFaul, an Arleigh Burke-class destroyer, is outfitted with an array of weaponry, including Tomahawk cruise missiles, which can carry either conventional or nuclear warheads, and a sophisticated radar system. For security reasons the Navy does not say whether ships are carrying nuclear weapons, but they usually do not.
A U.S. official said the American ship anchored in Batumi, Georgia’s main oil port on the Black Sea, because of concerns about damage to the Georgian port of Poti — not because Poti is closer to Russian forces in Abkhazia and Georgia proper.
Russian troops still hold positions near Poti, and Georgian port officials say radar, Coast Guard ships and other port facilities were extensively damaged by Russian forces.

TITLE: Opposition Rocks for Freedom
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Rock for Freedom, a free outdoor concert organized by opposition rock musicians to mark the anniversary of the 1991 failed coup and to address current issues such as Russia’s incursion onto Georgian territory, held in the city on Friday, almost ended in the arrest of its headliner Mikhail Borzykin of the band Televizor, when a City Hall official warned the organizers about the alleged use of expletives in his lyrics. 
Olga Kurnosova, the local leader of Garry Kasparov’s United Civil Front and one of the concert’s presenters climbed the stage and told the crowd about the incident, beginning a chant in defense of the musician. 
Earlier, Borzykin shared his highly critical views of Kremlin policy and the ongoing conflict in Georgia before performing a set of his anti-authoritarian songs, from his classic “Your Daddy Is a Fascist” to the recently-written “Gazprom Worker.” “The victory has been stolen by scoundrels,” he said. 
Organized by the local branch of The United Civil Front, part of pro-democracy group The Other Russia Coalition, and a group of musicians, the concert drew an estimated 1,000 to 1,500 — a motley crowd that included former dissidents, opposition supporters and rock fans. The police presence was massive, featuring OMON special task police and internal security troops equipped with helmets and truncheons and several police dogs. Ploshchad Sakharova, a square on Vasilyevsky Ostrov close to St. Petersburg University’s main building, where the concert was held, was surrounded by OMON police trucks and metal fences.
Friday’s rock show was a far cry from the concert celebrating the coup’s failure held on that day 17 years ago — the victory concert on Palace Square was attended by a reported 150,000 with almost no police in sight. Although the day was designated Flag Day, a national holiday, by former president Boris Yeltsin, the concert organizers were not allowed to raise the Russian flag on a pole next to the monument to dissident Soviet physicist Andrei Sakharov.
“We were told [the pole] was the property of the City Advertising Center, as if we would harm it by hanging a flag on it for a couple of hours,” Kurnosova said by phone on Monday. 
“In fact, at the beginning [the police] started chasing people who had flags, even though the written permission we’d received said that we could have flags. We had to get an official from City Hall involved to sort out the situation.”
Russian national flags, as well as the flags of the United Civil Front, the democratic party Yabloko, the oppositional group Defense, the preservationist movement Green Wave, Ingermanland and the European Union were all visible among the crowd during the performances.
Speakers included a young man who introduced himself as a Georgian living in St. Petersburg and spoke against the war, and Maxim Reznik, the local leader of Yabloko who addressed the case of jailed tycoon Mikhail Khodorkovsky, denied parole earlier that day, and dedicated an extract from Alexander Pushkin’s poem about the Decembrists to the imprisoned businessman.
Apart from Televizor, local bands SP Babai, Drugoi Veter and Vremya ot Kazhdogo performed, as well as Sergei Parashchuk of NEP and Vadim Kurylyov of Electric Guerillas.

TITLE: Syria Arms Talks Spur Olmert Visit
TEXT: JERUSALEM — Israeli Prime Minister Ehud Olmert plans to visit President Dmitry Medvedev amid concern about reports that Moscow is considering arming Syria with advanced missiles, Israeli officials said Friday.
One official said Olmert might try to block such a deal.
Olmert’s spokesman Mark Regev said final details for a visit had yet to be settled. Another government official said the trip would take place in the first half of September. A Kremlin spokesman said such a meeting was possible.
The Israeli official said Olmert, who plans to resign over a corruption scandal some time after his party elects a new leader on Sept. 17, wanted to “find out what Russia is planning to sell.”
“Depending on the nature of the deal, he may try to block it,” the official added.
Medvedev telephoned Olmert last week ahead of a visit to Russia by Syrian President Bashar al-Assad, Israeli officials said.
Interfax, citing a diplomatic source in Moscow, reported that Syria and Russia were working on complex deals involving Damascus buying anti-aircraft and anti-tank missile systems.
Following talks Thursday between Medvedev and Assad, Syria’s state news agency denied Russian media reports that Assad said he was ready to host Russian Iskander missiles, which would be able to hit much of Israel and are designed to evade anti-missile systems.

TITLE: U.S. Envoy Sees Georgia as NATO Member
PUBLISHER: Reuters
TEXT: MOSCOW — Russia has hastened Georgia’s march toward membership in NATO by going to war over its breakaway province of South Ossetia, a senior U.S. diplomat said Saturday.
“I think what Russia has done now is the strongest catalyst it could have created to get Georgia in NATO,” U.S. Deputy Assistant Secretary of State Matthew Bryza, U.S. envoy to the Caucasus, told Ekho Moskvy radio.
“This is what is going to happen now. Georgia is going to accelerate its march toward NATO and, I hope, to an action plan in December,” he said.
The 26-member alliance, which already includes the three former Soviet Baltic states, will convene in December to decide whether to grant Georgia a road map to accession, known as a Membership Action Plan.
NATO has promised Georgia, which Russia’s considers part of its traditional sphere of influence, that it will one day be admitted to the alliance. But opposition from some European member states has prevented it from setting any timeframe.
Russia sent its troops into Georgia to defeat an attempt by the country’s pro-Western leadership to retake the breakaway province of South Ossetia.
Moscow says it acted in its role as a regional peacekeeper to protect South Ossetia, most of whose people have been given Russian passports. But Georgia and its Western allies accuse Russia of going beyond that aim by pushing deep into Georgian territory.
“Russia has shown exactly why Georgia needs to be in NATO. ... Russia did not lift a finger against the Baltic states once they entered NATO. It would not lift a finger against Ukraine if Ukraine were in NATO. The same goes for Georgia,” Bryza told Ekho Moskvy.
“We need Georgia and Ukraine in NATO to deter these kinds of tragic military adventures on the part of Russia when it feels it has some room to potentially block the accession of these countries to NATO.”
U.S. Secretary of State Condoleezza Rice has said there is no plan to accelerate NATO’s debate on whether to bring Georgia into the alliance.

TITLE: A Georgian Toast
TEXT: WARSAW — U.S. Secretary of State Condoleezza Rice and Polish Foreign Minister Radoslaw Sikorski celebrated the signing of a missile-shield deal last week with Georgian wine, a choice sure to leave a bitter taste for Russia. 
Moscow, which is embroiled in a flap with the West over Russia’s military incursion into Georgia, is fiercely opposed to the missile-defense shield, saying it poses a direct threat to its own security. 
Poland said the choice of Georgian 2005 Kakhetian Royal wine to complement Polish pike-perch at a dinner hosted by Sikorski was not meant as a slight to Russia. 
“[Rice] smiled and, if I remember correctly, said she had had a chance to deal with Georgia and its politicians, but had not tasted its wine,” Deputy Foreign Minister Ryszard Schnepf told the Polish newspaper Dziennik.

TITLE: The Challenge of Finding a Remedy for Health Care
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — When anesthesiologist Dmitry Sedykh was called to treat an 8-month-old suffering from heart failure this May, he found no equipment to resuscitate the baby boy. 
Sedykh, the only anesthesiologist in the village of Lesnoye in the Kirov region, was summoned to the children’s ward of the local hospital to help little Alexei Artemikhin, who was in critical condition because of severe pneumonia. 
The boy needed oxygen, but the hospital had no oxygen concentrator, a device used to provide oxygen therapy to patients. Like many small, rural hospitals, this one also lacked a centralized system in which oxygen is shipped through pipes. The hospital did have compressed oxygen in tanks, but because of the decrepit condition of the children’s ward, fire inspectors had banned them from being used there.
All Sedykh could find was an antiquated oxygen pillow, a rubberized sac filled with oxygen from a tank. The oxygen passes from the pillow through a plastic pipe to a humidifier, where a nasal catheter then feeds it to the lungs.
“But there was not even a catheter to carry oxygen from the pillow to the baby’s lungs. Do you think I am a magician?” Sedykh said by telephone from Lesnoye. 
Sedykh took an adult oxygen mask and somehow adapted it to the baby’s face. To humidify the oxygen, he filled a 20-gram syringe with wet cotton, placed it between the plastic pipe and the mask. After pumping the pillow with his hands for a few minutes, he saw the boy’s checks take on a rosy glow. Sedykh called for a nurse.
“I told her, ‘Keep pumping this pillow. Maybe we’ll be able to take the boy to the district hospital tomorrow,’” he said.
The boy needed a new pillow every 20 minutes. Nurses scurried in and out of the room as they filled pillows with oxygen from the tanks in the adult ward. The process continued day and night for a week before Alexei was finally transported to the larger district hospital in the town of Kirs. 
Inventive medical treatments are just the tip of the iceberg of the health care crisis facing Russia. The country ranks a lowly 130th in terms of the effectiveness of its health care system and 127th in terms of its population’s health, according to the World Health Organization. This means that the country is not only considerably behind developed Western countries but also the majority of East European and Latin American countries with a similar level of economic development. 
At the same time, Russians tend to fall ill much more often than Europeans. In fact, Russians are 30 percent more likely to get sick than Europeans, according to WHO figures.
As in most industrial countries, Russians suffer mostly from cardiovascular diseases. The number of heart disease patients — 16 million — places Russia second in the world, after Ukraine, said Raphael Oganov, the country’s chief cardiologist. 
Oganov blamed the heart disease on stress linked to the country’s ongoing social and economic reforms and Russians’ unhealthy lifestyles, which include a higher smoking rate than anywhere in Europe. Combined with the lack of timely medical checks and preventive programs, heart disease kills 1.3 million Russians per year, he said. 
An alarming 70 percent of the equipment in regional hospitals is obsolete, but that is only the start of the problem for patients, said Tatyana Siburina, a researcher with the Health and Social Development Ministry. 
“Patients are often asked to bring everything from cups to syringes with them when they are checked into the hospital,” Siburina said.
Patients with serious diseases such as AIDS, tuberculosis, cerebral palsy, bronchial asthma, multiple sclerosis or Parkinson’s disease have the right to receive free drugs in special pharmacies. But when the patients go there, they are often told that the medicine is not available, doctors and other health experts said. Doctors authorized to prescribe medicine to patients eligible for discounted or free drugs must select from those listed on the state-approved “essential drugs list.”
“This list is meager and needs to be updated, so doctors do not have much to chose from,” Siburina said. 
The list is comprised of domestically made or cheap imported drugs. 
But with expensive new imported drugs entering the market, some doctors are looking to supplement their meager incomes by effectively acting as distributors for pharmaceutical companies — and patients end up paying more than they should for what might not be the medicines best-suited for their illnesses, said Rosa Yagudina, a laboratory chief at Sechenov Moscow Medical Academy.
Many doctors, however, seem to have few options if they want to make ends meet on their low pay, which comes from the state. An experienced professional like Sedykh collects 8,000 rubles per month. Nurses are paid 4,000 rubles. Seventy percent of Moscow medical graduates do not work in the public health sector, according to data from Moscow’s health care committee. 

A Sickly Population
The woeful condition of health care is not the only cause of the crisis. Unhealthy lifestyles and risky behavior are killing Russians, especially men, whose average life expectancy is 59, one of the lowest in the industrial world. Interestingly, mortality figures have changed drastically for some population groups over the last century. For example, 40 percent of all infants died before the age of 4 in 1897 in Russia, while today almost all of them survive. 
But with men aged 30 to 60, the situation has changed little since 1897. In fact, mortality among Russian men has risen by 60 percent since 1991 and is now four to five times higher than in Europe. 
Along with heart and lung disease, alcohol consumption is a leading cause of death. Although official figures suggest that alcohol poisoning kills about 30,000 Russians per year, autopsies of people who died as a result of murder, suicide and other unnatural circumstances show that 64 percent of them had alcohol in their blood, said Alexander Nemtsov, a department head at the Moscow Scientific Research Institution of Psychiatry. “The total contribution of alcohol to overall mortality is roughly 50 percent,” he said.
Smoking kills 300,000 to 400,000 people per year, and it plays a role in up to 52 percent of deaths blamed on heart disease, according to published studies. More disturbing, Russia ranks fourth in the world in teenage smoking. Some 60 percent of boys and 40 percent of girls smoke, the country’s top public health official, Gennady Onishchenko, said in October. Tobacco consumption has increased by 50 percent — up to 375 billion cigarettes per year — over the past decade. 
Social decay is compounding the problem, facilitating the spread of once forgotten infectious diseases such as tuberculosis among low-income people. The WHO groups Russia among 22 countries at high risk for tuberculosis. It said in a report that Russia’s plans to provide proper treatment to those with tuberculosis this year and last were not fully funded and that the treatment success rate was low. Russia has Europe’s highest tuberculosis mortality rate at 30,000 people per year — 20 times higher than in the West. 
A combination of falling birth rates and rising death rates from chronic and infectious diseases means that by 2025, Russia’s population will fall from about 142 million to about 125 million, according to data from the Center for Strategic and International Studies.
The government is well-aware of the challenge, making health care one of the four national projects eligible for billions of dollars in state spending in 2006. President Dmitry Medvedev personally oversaw the projects as first deputy prime minister.
Over the past two years, 220.3 billion rubles ($9.3 billion) have been allocated for the health care national project. Much of that money was assigned for the construction of 15 high-tech medical centers across the country, new equipment for hospitals, vehicles, immunization programs and salary raises for family doctors. 
Though designed to support individual sectors of the health care system, the project helped reduce the death rate from 15.2 per 1,000 people to 14.7 last year, Health and Social Development Minister Tatyana Golikova told a Cabinet meeting in March.
Medvedev has also declared it successful. “It has created somewhat better conditions for providing medical aid, but there is huge work ahead here,” he said at a Kremlin conference devoted to health care and social development issues in April.

Misspent Funds
The government’s willingness to spend money is not always translating into better hospitals.
An investigation by prosecutors into Hospital No. 1 in Nizhny Tagil in June 2007 revealed that new equipment worth 8.45 million rubles that had arrived under the national projects program was not being used.
During a visit to the hospital, the prosecutors saw a new X-ray machine broken since February and a colposcope in the gynecology ward that remained unpacked, the Regnum news agency reported, citing prosecutors. The head of the ward explained that there were no doctors trained to work on the machine. Also, patients who needed circulation tests were directed to private clinics while two Doppler ultrasonography units stood in a locked hospital room. 
“This situation is not unique. Many of the regions are incapable of making good use of the federal aid,” said Siburina of the Health and Social Development Ministry.
The government’s efforts have actually created a headache for some regions in terms of finding and training personnel, especially when new high-tech centers were planned. 

More Money, Less Graft
Well-known pediatrician Leonid Roshal is convinced that the national projects are good but that adequate regular funding of the health care system would be even better. Funding for public health should be at least doubled, if not tripled, by 2015, he said at a conference in April.
He said the Public Chamber’s health commission, which he heads, had forwarded a report to Medvedev showing that life expectancy and death rates directly depend on funding for the health care system.
Financing is not the only challenge, of course. The government has not had a strategy for health development for the past decade.
The Health and Social Development Ministry formed a commission earlier this year to draft a strategy to develop the health care system through 2020. Everyone — bureaucrats, the public, doctors — is invited to discuss it on the web site www.zdravo2020.ru. 
As a part of this discussion, experts will have to analyze the national health care model. Officially, the country has an insurance health care model, but in reality, it is funded by taxes. The state insurance fund oversees this money and uses private companies to manage the money as well, said Chubarova of the Russian Academy of Sciences.
“This system is not effective and not transparent, and it is also costing more money,” Chubarova said. 
All three typical public health models — state, insurance and private — have worked themselves out, said Natalya Grigoryeva, head of the Social Policy and Management Center at Moscow State University. There should be a new decision or a new approach to old things, she said. 
“Maybe we need to look again at the state health care model, which we once brushed aside, not in order to return to the old Soviet system but to return to state funding and control,” she said.
In many Western countries, the state is taking a larger presence in public health, and this is even more reason to replicate the trend in Russia, where most of the population is poor, she said. 
“Public health should be an area of state responsibility in a country like Russia,” she said.
Alternatively, state money could be offered in tenders among medical institutions, and patients could be fully informed of medical services, said Andrei Demin, head of the Russian Association of Public Health. “This would promote competition in the medical industry and develop the medical institutions properly,” he said.
Corruption siphons off as much as 35 percent of money spent on health care, according to estimates from the Open Health Institute at the Russian Academy of Sciences. 
For Sedykh, the anesthesiologist, the most important thing is choosing the right priorities. For one, every hospital should have an emergency room, while the current rules only allow district and larger hospitals to have them, he said. At the same time, rural hospitals have large general care wards that tend to be only half filled.
An emergency room would have made it a lot easier for Sedykh to treat Alexei Artemikhin. The doctors who tended to Alexei initially refused to send him to the district hospital in Kirs because of his condition. 
Alexei, the son of impoverished parents, survived by a miracle, Sedykh said. The boy now spends his days between the Lesnoye hospital and his home.
“He is still very weak, and at 1 is not able to walk,” Sedykh said. “But he is a really cheerful baby. I’m keeping an eye on him.”

TITLE: Galaktika Processing Plant Joins Local Milky Way
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The Galaktika dairy plant, launched in Gatchina in the Leningrad Oblast on Friday, is capable of processing about 800 tons of milk and 100 tons of juice a day — making it one of the biggest enterprises of its kind in Russia’s northwest and one of the most modern in Europe. Finland’s Valio is a partner in the project, which some analysts expect to lead to a milk supply crisis in the region. 
The $82.5 million fully-automated successor of Gatchina’s dairy plant, which failed to meet production and sales targets, is named Galaktika (Galaxy), from the first syllable of the plant’s location, Gatchina, and the Greek word for milk, gala, reflecting the activity of the plant. 
Galaktika will employ about 350 workers in total. Each shift will require no more than 40 employees, whose main responsibility is to test product quality and operate automatic systems installed by the Swedish company Tetra Pak. The only operation to be performed manually at the plant is attaching a supply hose to the milk trucks.
“What we have seen during a 30-minute tour of the plant is really a miracle,” said Nikolai Arkhipov, Russia’s Deputy Agriculture Minister, who said at the opening ceremony that the plant in Gatchina is a “masterpiece, incomparable to any European dairy plant.”
The plant’s managers said the automated system would guarantee the quality of the products. “Being 100-percent automatic, the production technology makes it impossible to add ingredients like dried milk to the tanks,” said Maxim Ivanov, chairman of Galaktika’s board of directors. 
With initial daily production volumes of 300 tons set to potentially increase to 800 tons,  Galaktika will overtake St. Petersburg’s largest dairy production players such as Unimilka and Vimm Bill Dann. 
Market analysts however predict the company’s ambitions may not be fulfilled so easily, and say that a milk supply crisis could be on the horizon as soon as Galaktika’s production volumes reach 400-450 tons per day and a separate plant in Kingisepp processes 300 tons. 
According to official statistics, the dairy farms of the Leningrad Oblast produce a combined total of about 1,500 tons of milk per day. Currently Petmol, Baltiiskoye Moloko and the  Piskaryovsky plant — the biggest existing dairy producers in St. Petersburg and the Leningrad Oblast — have a combined daily processing rate of 800 tons, while minor enterprises contribute a further 100 tons. 
Leningrad Oblast Governor Valery Serdyukov said that dairy production at farms would increase as the result of special programs intended to support agriculture. In addition, supply rates to dairy producers are to some extent guaranteed by preliminary agreements, he added.
“Thirty farms in the Leningrad Oblast are prepared to work with Gatchina [the Galaktika plant] as the plant will offer higher wholesale pricing,” said Serdyukov.  
The Leningrad Oblast is seen as an important outlet for Galaktika products, but investors are also considering cooperating with distributors all across Russia, as well as from the Baltic states and Finland. 
“We are at the beginning. By launching a large and modern plant, we have accomplished a minor goal,” said Galaktika’s Ivanov. 
Mika Koskinen, the CEO of Valio Russia — a major consultant, equipment supplier and partner of Galaktika — denied that the company intends to increase its share of the Russian market and insisted that quality is Valio’s current primary objective. 
“As soon as there are reports on the production efficiency, we will consider whether or not to expand,” he said. 
In six months’ time, the Finnish company intends to start producing its sterilized milk and yogurts at Galaktika’s production line in Gatchina. Valio’s estimated annual production volume for the new plant is about 30,000 tons, or 10 percent of the company’s entire production, according to Koskinen.

TITLE: Dudley  Complains Of Abuse
PUBLISHER: Reuters
TEXT: Banned TNK-BP chief Robert Dudley has lodged an official complaint over the treatment of the company in a letter to five federal agencies.
“There has been an abuse of power by the State Labor Inspectorate,” Dudley wrote in the letter dated Aug. 19 and sent to five governmental bodies, including the labor inspectorate, Prosecutor General’s Office, the Federal Security Service and an anti-corruption council.
Dudley said seven inspections made at TNK-BP “when there is a developing corporate conflict between the Russian and foreign shareholders over a short period of time” indicates that the inspectorate is interested in the outcome.
A Moscow court this month banned Dudley from working in Russia for two years. The move was the latest blow to hit the troubled firm, whose four Russian billionaire shareholders owning half of the company are at loggerheads with BP, which owns the other half, over management and strategy.
The labor inspectorate chief, Mikhail Malyuga, denied Dudley’s claims of bias. “All the checks that took place at the firm were done by the law,” he said.
TNK-BP has been deluged with a wave of tax, labor and police inspections, several lawsuits and visa problems. Analysts say repeated inspections and Dudley’s ban mean a state-controlled company could be eyeing TNK-BP.
“The unambiguous conclusion is that the said officials were carrying out somebody’s orders, and we request that this be investigated,” Dudley said.

TITLE: City Hall Expects Gazprom to Cough Up for New Stadium
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: City Hall has announced it will choose a new contractor to build the new stadium for the city’s FC Zenit on Krestovsky Island, due to the increased cost of the project, and has also expressed hope that Russia’s state-owned energy behemoth Gazprom will finance 50 percent of the work.
“The administration has ordered the city’s Construction Committee to announce another tender for a new contractor with a new budget and approval from the main state expert body before the end of the year,” St. Petersburg Governor Valentina Matviyenko said on Monday, Interfax reported.
Matviyenko said the city would not be able to manage the financing of such a large project and expressed hope that Gazprom would help the city.
“The city is not able to finance the whole project.  Now we are holding negotiations to have Gazprom co-finance no less than 50 percent of the project.  I even think that Gazprom should cover even more than 50 percent,” Matviyenko said.
The negotiations should be concluded by the end of September, and the stadium is due to open in 2010, she said.
Matviyenko said no multistory parking lots would be built on Krestovsky Island to serve the stadium.
Last week, the main state expert body approved a construction budget for the stadium of 23.7 billion rubles ($971 million).  The initial budget was 6.7 billion rubles ($275 million).
The new soccer stadium is being constructed on the site of the former Kirov stadium to a project by the Japanese architect Kise Kurokawa, who died earlier this year.  The stadium will have a seating capacity of 62,000, and will be 60 meters high with an area of about 10,000 square meters.

TITLE: Analysts ‘Shocked’ by Gazprom’s Budget
PUBLISHER: Bloomberg
TEXT: MOSCOW — Gazprom fell in Moscow trading on Friday after analysts said they were “shocked” by the company’s plans to raise its investment budget to more than $40 billion this year.
Gazprom shares fell 9.9 rubles, or 4 percent, to 240.43 rubles, the worst performer on the MICEX on Friday.
The state-run monopoly may raise its investment budget for 2008 by about 25 percent, Interfax reported Thursday, citing deputy chief executive Valery Golubev.
Gazprom last month already increased the budget for 2008 by 16 percent to a record 822 billion rubles ($33.8 billion). A spokeswoman for Gazprom, who asked not to be identified, said Friday that the company had no comment on the matter.
“We’re shocked by the magnitude of the numbers, especially given that the company revised its investment plans only a month ago,’’ Troika Dialog analysts Oleg Maximov, Valery Nesterov and Alex Fak wrote in a note to investors Friday. “This raises questions about whether the management actually intends to generate any meaningful free cash flow.”
JPMorgan’s analysts said in a note Friday that they “doubt” the ability of Gazprom to invest that amount of money efficiently. The spending signals “potential value destruction” for the stock, the bank said.
Gazprom in July said it increased spending in part to accelerate the development of new projects in the Arctic, eastern Siberia and Sakhalin. The company said it would speed up development of the Bovanenkovskoye field, its first production site on the Arctic Yamal peninsula.
The spending increase “limits the likelihood of the company returning value to the shareholders in the short term,” Yevgenia Dyshlyuk, oil and gas analyst at Renaissance Capital, said in an e-mail to investors Friday.
Gazprom, which supplies one-quarter of Europe’s gas, faces declining output as fields in west Siberia age. The company is being forced to develop fields far from existing infrastructure in the Arctic, eastern Siberia and off Russia’s coasts.
Gazprom plans to spend as much as 10 trillion rubles ($411 billion) bringing new gas to market, Sergei Pankratov, Gazprom’s deputy head of strategic development, said June 16.

TITLE: In Brief
TEXT: <b>Investors Take Flight</b>
MOSCOW (Bloomberg) — Investors withdrew money from Russia following the conflict in Georgia at the fastest rate since the ruble crisis of 1998, the Financial Times reported, citing figures from Russia’s central bank.
Tight credit conditions have been exacerbated by the flight of foreign capital since the fighting, the newspaper said. 
Russian equity and debt markets have also suffered sharp drops since the clash started on Aug. 8, the FT said.

<b>BTC Back in Action</b>
ISTANBUL (Bloomberg) — Tankers began loading oil Monday from the Baku-Tbilisi-Ceyhan pipeline for the first time after an explosion disrupted flows almost three weeks ago.
“The flow of oil began this weekend, and the pipeline reopened today,” said Oznur Yilmaz, a spokeswoman at BP’s Istanbul office on Monday. “Loadings have begun.”
BP is the main operator of the 1,768-kilometer pipeline, which carries Azeri crude through Georgia to Turkey’s Mediterranean coast. The Turkish section of the pipe was shut on Aug. 5 after a blast required repairs and testing.

<b>S7 May Make AA Bid</b>
VIENNA (Bloomberg) — S7, Russia’s second largest airline, may be interested in bidding for Austrian Airlines Group, Oesterreich reported, citing an unidentified person at Austria’s state asset agency OIAG.
S7, formerly known as Siberian Airlines, is one of six airlines that expressed an interest in buying the Austrian government’s stake in the carrier, the Vienna-based newspaper said in a pre-release of an article published Monday.
Deutsche Lufthansa and Air France-KLM also declared an interest, while Air China Ltd. had yet to do so, Oesterreich said. The deadline for expressions of interests ended at midnight Sunday, the newspaper said.
The Austrian government holds a 43 percent stake in the country’s largest carrier via its state asset agency OIAG.

<b>Foreign Auto Sales Soar</b>
MOSCOW (Bloomberg) — Russian sales of foreign automobiles jumped 40 percent in July from a year earlier, led by Toyota Motor and Hyundai Motor, the Association of European Businesses said Monday.
Sales of foreign-branded cars, including those produced locally, rose to 56,493 units in the period, the association said in an e-mailed statement Monday, without providing a comparative figure for last year.

<b>Mechel Plans Expansion</b>
MOSCOW (Bloomberg) — Mechel, a Russian steel and coal producer, plans to acquire more power plants in Bulgaria and Romania, Prime-Tass reported.
The company will boost output at the Bulgarian power plant it bought in 2007 by a third this year and take part in more state tenders of coal-fired plants, the news service cited Vladimir Polin, chief executive officer of Mechel’s management company, as saying in an interview.
Mechel is also considering expanding European exports of special steels by 20 to 25 percent a year with new clients, Polin told Prime-Tass. This year, Mechel will export 250,000 metric tons of special steel to Europe, the agency said.

TITLE: Hermitage Lawyer Says Office Raided
AUTHOR: By Melissa Akin
PUBLISHER: Staff Writer
TEXT: MOSCOW — A lawyer representing Hermitage Capital Management, once the largest foreign investor in the country, said his office was raided last week in what he said was an attempt to link him to tax fraud.
Hermitage chief executive Bill Browder, an investor-rights crusader barred from Russia on national security grounds since 2005, has said three investment vehicles formerly under his control were used to defraud the state of $232 million in taxes. Browder and his lawyer, Eduard Khairetdinov, have said the three companies’ founding documents and seals had previously been taken from another Moscow law office by investigators, and subsequently used to take control of the three companies.
“They are trying to tie me, as Browder’s lawyer, to the extortion of $232 million from the state budget,” Khairetdinov said by telephone.
Khairetdinov, who represents Hermitage and its trustee, HSBC, said his office received a package Wednesday with Hermitage Capital Management’s office in the West End of London marked as the return address.
Before Khairetdinov’s staff could sort through the contents, investigators arrived and seized the package, leaving them with a protocol stating that they took the three investment vehicles’ founding documents, which had not been seen since they were originally seized, Khairetdinov said.
Browder said Hermitage did not send the package and received confirmation from the courier service that the package was sent from a drop-off point in south London on Aug. 18.
The protocol also contained power-of-attorney documentation from a man named as a plaintiff in a series of lawsuits instructing Khairetdinov to act on his behalf. The lawsuits have resulted in claims that left the three investment vehicles in debt, creating pre-conditions for a $232 million tax refund, he said.
He said the investigators were from Kazan, the capital of Tatarstan, where Hermitage and HSBC are fighting in court to regain control of the companies.
A Kazan district court issued an order for the search on Aug. 11. A copy of the order showed Tatarstan Interior Ministry investigators thought the three companies had been used to commit tax fraud and requested permission to search the office.
The investigators believed Khairetdinov’s Moscow office could contain valuable evidence, including proof of the companies’ debts and documents authorizing him to represent all the entities, the order said.
A spokeswoman for the Tatarstan Interior Ministry said her department was not responsible for the case. 
A spokeswoman for the Prosecutor General’s Office was unavailable for comment.
Three other Moscow law offices were searched, Browder said by telephone from London. 
A partner at one of them, Jamison Firestone of Firestone Duncan, Hermitage’s general counsel, confirmed by telephone his office was searched and police removed some documents already reviewed by investigators.
“If lawyers are being attacked it makes it impossible to access the legal system. In no civilized country would the attack on lawyers be allowed to happen,” Browder said.

TITLE: Severstal Acquires American Miner in Further Expansion
AUTHOR: By Robin Paxton and Polina Devitt
PUBLISHER: Reuters
TEXT: MOSCOW — Severstal will pay $1.3 billion to acquire North American coal miner PBS Coals in an all-cash deal giving it access to raw materials for its expanding network of U.S. steel mills.
Severstal, owned by billionaire Alexei Mordashov, said Friday that its mining division had agreed to pay 8.30 Canadian dollars ($7.97) per share to acquire PBS after the coal miner is folded into Canada’s Penfold Capital Acquisition.
“The acquisition of PBS will help ensure that Severstal controls its operating costs by providing a guaranteed supply of metallurgical coal for our coke making operations in the U.S.,” Severstal chief operating officer Gregory Mason said.
Severstal has spent more than $1.7 billion in the last year acquiring steel mills in the United States, where Russian companies with record profits to burn have snapped up about one-tenth of steel melting capacity. Coking coal and iron ore, both crucial for making steel, are in great demand as a China-led boom in steel consumption pushes prices for the raw materials to record highs.
The acquisition of PBS by its mining division, Severstal Resurs, represents the company’s first venture into the raw materials sector in North America. Severstal Resurs already runs coal, iron ore and gold mines in Russia and Kazakhstan. “It’s a good acquisition in that it allows Severstal to supply the needs of its North American assets,” said Olga Okuneva, mining analyst at Deutsche Bank.
PBS shareholders owning a combined 66.8 percent of the company, including all its directors, have executed irrevocable lock-up agreements to sell to Severstal and a break fee of 41.9 million Canadian dollars has been agreed.
The deal, expected to close by mid-October, is conditional upon Canadian company Penfold acquiring PBS to form a publicly listed company called PBS Coals.
PBS operates six underground and six opencast mines in Pennsylvania. It produced 2.4 million tons of coal, including 1.5 million of coking coal, in the year to March 31, 2008. Total annual metallurgical coal capacity is 4 million tons.
PBS would supply Severstal’s North American unit with about 40 percent of its coking coal needs, said Roman Deniskin, chief executive of Severstal Resources, the firm’s mining division.
“Production of coking coal can be expected to double in the medium term,” Deniskin told a conference call, without giving details of how the company would achieve this.
While the acquisition will afford Severstal greater ability to control its production costs in the United States, analysts said the company had yet to prove its ability to turn around the ailing U.S. steel assets that it has purchased. “The acquisition looks a bit expensive compared with Russian coking coal producers. But compared with North American coals, it’s a bit cheaper,” said Maxim Semenovykh, an analyst at Alfa Bank.
He estimated Severstal was paying about $450 per ton of raw coal capacity for PBS and compared this with $350 per ton for Raspadskaya, Russia’s largest pure-play coking coal miner, and an average of $500 for U.S. coal miners.

TITLE: Mistake Prompts Glitch on Markets
AUTHOR: By Tim Wall
PUBLISHER: Staff Writer
TEXT: MOSCOW — A steady stream of bad news sent the markets tumbling last week, and one of the few bright spots — when investors latched onto a report Friday that Mikhail Khodorkovsky had been granted parole — turned out to be false.
The MICEX fell 5.9 percent to 1,374.69 points over the week, while the RTS slipped 4.7 percent to 1,702.61 points. The markets have fallen more than 30 percent from their May highs.
The MICEX’s worst fall, of 5.2 percent, came last Tuesday, as oil and gas stocks took a battering from falling global oil prices and banking stocks were caught in the fallout from the crisis at Fannie Mae and Freddie Mac.
Investors were worried about the continuing TNK-BP dispute, the Mechel pricing affair and the ongoing troubles faced by William Browder’s investment fund Hermitage Capital, whose lawyers last week had their offices raided by police.
Another unpleasant revelation came from the Central Bank, whose international reserves fell $16.4 billion after it propped up the ruble at the height of the war in Georgia.
Russia portfolio funds were down for the eighth straight week, but the figure — $23 million — was far less than the nearly $500 million of outflows in the weeks of the Mechel affair and the start of the Georgia war, according to EPRF Global.
The overall effect of the “crescendo of bad news” over the last few weeks has been of a “long, hard summer,” said Erik de Poy, equities strategist at Alfa Bank. “But Russia’s like a prize fighter who’s been knocked down yet will get back up and beat the count.”
The critical test for foreign investment will come in early September, when investors re-examine their portfolios, said Chris Weafer, chief strategist at UralSib. 
“At that time, it’s very important that the investment case for Russia is there,” Weafer said. “Any bad news in the next couple of weeks would add fuel to the funeral pyre of investment sentiment.”
Kingsmill Bond, chief strategist at Troika Dialog, said in a research note Thursday that it would “take more than the passage of time and the usual September rally” for the market to get back to fair value.
Equity would continue to be expensive “until relations improve between Russia and the West, significant progress is made on legal reform, yields drop globally or major pension reforms are enacted,” Bond said.
The best news for investors would be more tax cuts for the oil sector in September, the three analysts said.
Among cheap stocks, Weafer picked out Gazprom, saying that despite rising costs, it had gained influence as a Caspian energy supplier out of the Georgia conflict. Sberbank also looks very inexpensive compared with Western banks, he said.
Both Weafer and De Poy said stocks unaffected by the commodity cycle or by government price-fixing would be among the safer bets.
Telecoms firms Mobile TeleSystems and VimpelCom and utilities such as RusHydro are good plays, while export-driven fertilizer producer Uralkali was largely untouched by domestic price controls, Weafer said.
One jump in stock prices, on Friday, came as the result of an erroneous Interfax report that jailed tycoon Khodorkovsky had been granted release. In the few minutes before it was corrected, markets rose 1.6 percent.
Weafer said the jump was not about Khodorkovsky. “Investors are just looking for a sign that the government cares about them, so they can think: ‘They do love us, after all,’“ he said.

TITLE: Carmakers Putting Best Wheels Forward in Moscow
AUTHOR: By Svetlana Osadchuk
PUBLISHER: Staff Writer
TEXT: MOSCOW — With Russia quickly overtaking European countries to become the biggest car market and St. Petersburg earning the title of the Russian Detroit, a record number of carmakers have picked Moscow to unveil new models.
Fifty cars, including several specifically designed for the Russian market, will make their debut at Russia’s biggest car show, the Moscow Automobile Salon (MIAS-2008), which opens Tuesday.
“We expect 50 premieres, while we only had 22 of them in 2006,” said Arkady Zlotnikov, deputy head of the Crocus Expo International Exhibition Center, which, along with the Association of Russian Carmakers, is organizing the exhibition.
“Some of the cars are designed specially for the Russian market, like the Mazda Kazamai, which is due to be unveiled at our show for the first time in the world,” Zlotnikov said. 
The Mazda Kazamai is a SUV concept car meant to appeal to younger SUV owners who have a strong sense of style, Zlotnikov said. 
The car show will also offer the European debut of the Mazda CX-9, a full-size crossover SUV that has been described as a “modern station wagon.”
Audi, meanwhile, will present a new edition of the Audi A6, its successful business-class sedan, and the brand-new Audi RS 6, while Mitsubishi will unveil its new Pajero Sport SUV. 
Russia has been selected for the debuts because of its unprecedented car sales, Zlotnikov said.
Russia passed Germany as Europe’s biggest automobile market in the first half of this year, as sales jumped 41 percent to 1.65 million cars, led by demand for models by U.S. and Asian carmakers, according to a report by PricewaterhouseCoopers last month. Spending on cars grew 64 percent to a record $33.8 billion, the report said.
Gasoline prices are high in Russia as in the rest of the world, but that has done little to dampen the enthusiasm of a car-loving population with soaring personal incomes and easy access to car loans.
In part because of the sales, the Moscow car show has been upgraded to “category A” by the Organisation Internationale des Constructeurs d’Automobiles/OICA, putting it on par for the first time with annual car shows in Geneva, Paris, London, Detroit and Frankfurt.
“This is the first time that such a car show has been held in Russia,” Zlotnikov said.
Another record this year will be the number of participants at the show — 30 countries will be represented, Zlotnikov said. More than 1.5 million visitors are expected to attend the event, which runs through Sept. 7.

The exhibit space for the show will cover 63,000 square meters and will be open 12 hours a day, from 10 a.m. to 10 p.m. 
Aug. 26, 27: Opening days for the media and invited guests.
Aug. 28: Business day, for specialists, wholesalers and suppliers. Admission: 2,000 rubles.
Aug. 29-Sept. 7: Regular days. Admission: 300 rubles (Monday-Friday) 400 rubles (Saturday and Sunday). Children 7 and under: free. Children 7 to 12: 150 rubles.
Free Crocus Expo shuttle buses will operate between the exhibition center and the Planernaya metro station from Aug. 28 to Sept. 1. Web site: eng.mas-expo.ru, tel. 495 727-2631.

TITLE: The Art Of Detracting Attention
AUTHOR: By Konstantin Sonin
TEXT: In any country — whether it is democratic or authoritarian — politicians in power do everything they can to make citizens pay more attention to foreign policy issues and less to domestic ones. The reason is simple: it is easier to manipulate people when the issue is abstract and remote. 
During the Soviet period, the Communist leadership liked to stress global issues, such as freedom for Africa or the Palestinians. The people were constantly told about the Soviet Union’s noble support of these movements on the news. This was done, in part, to try to mask the serious economic problems facing the country. 
The more Soviet citizens had to deal with serious economic problems, such as chronic shortages, on a daily basis, the less they cared about Africa or the Palestinians. They had more important matters to be concerned about — like where they would be able to find meat or butter for their next meal.
With all due respect to geopolitical issues, Russia’s current government clearly has more pressing issues that it needs to focus on. In the short term, the main challenge is to curb inflation without stunting economic growth. It also has to prepare for the economic consequences should there be a sharp increase in consumer loan defaults. The most pressing long-term issues include low labor productivity and the country’s technological backwardness. 
The conflict with Georgia over the fate of South Ossetia will surely result in an increase in military spending, and this will divert government budget allocations from other badly needed sectors. It will also add fuel to the already burning inflation fire. 
But an even greater concern is the increasing exodus of foreign investors and the sharp decline of the stock market. After panicking this summer over the showdown with TNK-BP, and over Prime Minister Vladimir Putin’s televised threat to Mechel, which dangerously echoed the Yukos affair, investors are becoming increasingly pessimistic about doing business in the country. This month, the stock market plunged to the level it was at in 2006.
Russia needs foreign investors much more than investors need Russia. The more important benefit of foreign investments is that it is often accompanied by technology transfer, a key element in the economic success of all developing countries.
Yet Putin is borrowing a page from the Soviet era, trying to divert Russians’ attention away from the most serious economic problems facing the country. With inflation running at 15 percent per year, it is difficult for Russians to avoid confronting the issue every time they buy food. 
Of course, Russia had no other choice than to protect its citizens and the civilians of South Ossetia from Georgia’s aggression. But in this conflict, we have wasted too much time and energy focusing on the good-versus-evil aspect of Russia’s battle against the West. We must return to the serious economic problems threatening our country — inflation, low labor productivity and technology transfer.

Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.

TITLE: Russia Values Oil Over War
AUTHOR: By Pavel K. Baev
TEXT: One counterintuitive feature of the five-day war between Russia and Georgia is its minimal impact on the energy flows from the Caspian to world markets. There is always a legion of experts who would confidently assert that “It’s all about oil,” and no amount of hard evidence would shake this petro-geopolitical article of faith. There were indeed reports about airstrikes on the Baku-Tbilisi-Ceyhan, or BTC, pipeline, eagerly circulated by The Wall Street Journal, but those turned out to be just products of the desperate Georgian war propaganda. Traffic involving small tankers from Poti and Supsa was interrupted, but these ports have never had any strategic significance on the European energy map since the supertankers carrying Caspian oil to Europe are loaded in the deepwater terminal in Ceyhan. The fact that Russia did not try to completely shut down the South Caucasus energy corridor invites a re-evaluation of risks and longer-term consequences.
Moscow obviously did not want to cause any additional anxiety among European consumers. Nor did it want to deal Tbilisi any unnecessary trump cards for its blame game. From what is possible to deduce from scarce information provided by official sources, Russia’s restraint in targeting Georgia’s highly vulnerable energy infrastructure was confirmed to Turkish Prime Minister Tayyip Erdogan, who rushed to Moscow for meetings with President Dmitry Medvedev and Prime Minister Vladimir Putin the day after French President Nicolas Sarkozy negotiated the conditions for cease-fire. That visit had a peculiar context, since Russian reassurances were focused on the BTC pipeline that had in fact been shut down, but for a completely different reason — an explosion in the Turkish section of the BTC pipeline, most probably an attack by Kurdish insurgents, that interrupted the flow of oil for at least two weeks. Neither that emergency nor the combat operations had any noticeable influence on the oil price; it continues to slide to about $115 per barrel.
This trend is punishing Russia with lost profits measured in billions of dollars, but Moscow still prefers to keep energy business separate from the war matters. This compartmentalization is consistent with the pattern that emerged in the course of the second Chechen war. This conflict saw dozens of deadly terrorist attacks, but there was not a single attack on the oil terminals in Novorossiisk and Tuapse or on the strategic pipelines that crisscross the North Caucasus. The fact that the energy infrastructure is safe does not mean, however, that the war had no impact.
There are different consequences for Georgia, the Caspian petrostates and Russia’s relations with Europe. After the military conflict with Russia, Georgia cannot be marked on oil and gas maps as a safe transit route, and no amount of support from NATO can change this alteration. It means that no new pipelines will be added to those that were constructed earlier this decade. Nonetheless, the Western oil majors still have to secure returns on their investments, so the Azeri oil and gas will continue to flow through the BTC pipeline at pre-war volumes. The leadership of Azerbaijan, which refrained from any expression of support to Georgia during and after the war, would have to give a second thought to Gazprom’s proposal to buy any amount of noncontracted gas, particularly since it makes perfect economic sense. Kazakhstan could reconsider its calculations on what portion of the expected oil from its big Kashagan field would be transported via Baku. As for Turkmenistan, it can hardly keep promising everything to everybody, but it probably feels highly motivated to deliver on its commitments to Russia. Thus, the blueprints for the proposed trans-Caspian pipeline that would carry gas from Turkmenistan to Azerbaijan now belong in the trash basket.
Russia, nevertheless, should be very careful in harvesting these ripening energy fruits since its reputation has suffered great damage. Every day that it delays withdrawing its troops from Georgia adds more mistrust and suspicion. The European reaction generally amounts to its traditional milquetoast response of: “We don’t like it but we can’t do anything about it.” Meanwhile, Europe is keeping the door open for Moscow to repair a few broken ties. While diplomats continue to exchange bitter tirades, small steps such as resolving the scandalous conflict with TNK-BP or removing a few bureaucratic hurdles that have slowed down the huge Shtokman gas project could be very helpful in restoring a modicum of normalcy in energy relations — and perhaps in shifting the pessimistic mood in the stock market.
The war in the Caucasus has not opened any perspective of peaceful resolution of its many conflicts. It might stimulate Europe’s interest in Iranian gas, which has always been the last-resort option for the struggling Nabucco pipeline project, intended to bring gas to Central Europe from Azerbaijan and Turkmenistan. In Iran, however, the Georgian troubles could play both ways: The probability of a U.S. strike has probably diminished, but the prospect of convincing Iran to discontinue its nuclear program has quite possibly evaporated. Russia’s cooperation was crucial for maintaining pressure on Tehran, but the quarrel between Moscow and Washington has reached such an intensity that a meaningful cooperation is reduced to wishful thinking.
The tragedy has not brought any catharsis at all. It is entirely understandable that Georgia remains defiant. And Russia may soon discover that achieving a “military victory” is not as simple as pushing Georgia’s U.S.-trained but poorly led army out of South Ossetia. It is a heavy burden that adds to the many tensions in its economy and politics deformed by the country’s petro-prosperity.

Pavel K. Baev is a research professor at the International Peace Research Institute in Oslo.

TITLE: Gazprom To Foot The Bill?
AUTHOR: By Anna Shcherbakova
TEXT: The city is luring Gazprom into the mammoth project of its new football stadium, after it emerged last week that the project’s costs have soared to three and a half times greater than the original estimates. City authorities expect that Gazprom, a majority shareholder of St. Petersburg’s football club Zenit will contribute “at least 50 percent of the financing,” St. Petersburg Governor Valentina Matviyenko said Saturday. Gazprom officials confirmed the negotiations with Smolny but declined to give further comment. 
The gigantic new sports arena will be built on Krestovsky Island in the northwest of the city, where the old Soviet-era stadium has already been demolished at the expense of the city budget. The new one will meet FIFA and UEFA requirements, including 60,000 seats, in order to be able to host international matches. 
The project was initially announced to be worth $200 million, and City Hall — euphoric after Gazprom Neft was registered as a taxpayer in St. Petersburg — said it would finance it from the city’s coffers, allocating $283 million for this purpose from the budget. A contractor was chosen via tender in 2006, but progress began to slow, accompanied by rumors of increasing costs for the stadium leaked from Smolny. Earlier this year, the president of Zenit and CEO of Gazprom Neft, Andrei Dyukov, admitted that the costs of the arena had increased to $573 million due to cutting-edge and complicated technical solutions. But he did not say that his company would finance it. 
Last week, the final calculations came to $971 million. City officials speculated on negotiations with Gazprom, which has remained silent. 
The company has little choice but to pay for the project, I suppose. Sport — especially such a popular one as soccer — is among the state’s priorities, and the largest Russian company should not begrudge the city’s beloved soccer club a measly $1 billion for a modern stadium. 
In other words, the city authorities have cheated Gazprom once again. Last year, City Hall shared with Gazprom investment in the 400-meter skyscraper that is to be built to house the company’s subsidiaries. Initially the city was prepared to finance the 60 billion-ruble project as a bonus for taxes paid here, but later changed the terms of the deal. 
The investment return from the stadium is highly questionable, along with the efficiency of the use of the funds. We have the example of the Ice Palace, built in 2000 at three times the expense of an analogous stadium in Finland. It now hosts the occasional touring pop star. 
The city authorities would never be able to persuade a private company to finance the stadium — at least not without serious threat. But Gazprom’s main shareholder is the Russian state. The main difference between private and state money is that no manager will be killed or even fired for inefficient use of the latter. And the modern stadium is a pathway to glory not profit. 

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

TITLE: Putin’s Gold Medal War
AUTHOR: By Chris Patten
TEXT: What does the “Olympics War,” otherwise known as Russia’s invasion of Georgia, really mean? The war itself, of course, was predictable and predicted. Its results are equally clear.
Prime Minister Vladimir Putin remains unambiguously in charge in Moscow. He may play a “good cop-bad cop” routine with President Dmitry Medvedev. But the bad cop, Putin, is the real boss.
Putin cannot stand Georgian President Mikheil Saakashvili, who admittedly is not an easy man to like. Putin thought Saakashvili had become too big for his boots. He waited for Saakashvili to go a step too far, and then came down on him and his poor country like a ton of bricks.
Russia has been stirring up trouble in South Ossetia and Abkhazia for years. Moscow wants to keep Georgia weak. It plays the same game when it supports the pro-Russia separatist region Transdnestr to undermine Moldova. If an outsider had tried similar tactics in Chechnya, the Russians would rightly have howled with rage.
Russia’s leaders, like 19th-century tsars, want a sphere of influence around their borders. So far as they are concerned, the countries that were once part of the Russian empire in the Soviet Union should enjoy only limited sovereignty, a message that has been transmitted very clearly to Georgia, Ukraine and the Central Asian republics. Russia has opposed its neighbors joining NATO. What is NATO against, the Russians ask? Where is NATO’s front line? Are we Russians really the enemy? If so, how should we react? Russia’s actions have had the opposite effect of what was presumably intended. The invasion of Georgia has made a powerful case for further NATO enlargement.
Georgia itself provides an important link to Caspian energy for those Europeans who do not want to be completely dependent on pipelines controlled by Russia. Indeed, Georgia interferes with Russia’s policy of using oil and gas as strategic foreign policy weapons, which it has done repeatedly. The Swedish Defense Research Agency has reported that out of 55 deliberate gas supply interruptions, explicit threats, or coercive price actions by Russia since 1991, only 11 had nothing to do with politics.
The United States has reacted strongly — at least verbally — to Russia’s attack on its neighbor, in which the Russian army moved in and made things safe for the Russian-backed unofficial South Ossetian militias to burn and pillage Georgian property. But Washington is not in a strong position to go any further. Its moral authority has been compromised during George W. Bush two terms as president. It cannot put more troops on the ground to defend Georgian sovereignty, and, even if it could, doing so would escalate the crisis. 
The United States’ position is further weakened in the absence of a strong and united European response. But you can forget about seeing that.
Russia knows that when it comes to conducting a serious foreign and security policy, Europe is all mouth. The Kremlin has pushed Europe around for years on energy issues, cutting bilateral deals with the bigger countries and opposing efforts to create a common European energy policy.
Europe certainly needs Russian gas. But Russia needs European consumers, and it will seek more European investment in energy exploration and extraction sooner rather than later.
No sensible person in Europe wants to revive the Cold War. But it is not the European Union that is being provocative. It is not Germany, France or Italy that are invading their neighbors.
We Europeans seem to have forgotten our history. There were other times when we have stood by while a militaristic European power insisted that it had the right to intervene wherever it wanted to advance the interests of those who claimed shared ethnicity from the Baltics to the Caucasus.
French President Nicolas Sarkozy claims to have brought peace to Georgia. Yet it looks suspiciously as though the deal that ended the fighting will leave Russian troops in that truncated country for years.
So what, exactly, will Europe do? Perhaps initially, Europeans should be cautious. But I doubt whether anything tougher than strongly worded communiques will ever be employed.
Will we stop talking about our alleged shared values with Russia? Will we press the pause button on further discussion of how to integrate Russia into the international community? Will we cut off some of our contacts with Russia, reconsider its membership of the Group of Eight, or delay its entry to the World Trade Organization and Organization for Economic Cooperation and Development? Will we put to the side for the time being negotiations on a partnership and cooperation agreement between the EU and Russia? 
I suspect that the answer to each of these questions is a resounding “no.” It will be business pretty much as usual as Europeans prepare cheerfully in the years ahead for the Winter Olympics in Sochi in 2014, just up the road from the Russian missiles and tanks on Georgian soil. Meanwhile, Europeans will continue to talk about their crucial role in world affairs.
It is enough to make even the cynics shake their heads in disbelief. You could not make it up. Europe’s approach is weak and will cause bigger problems in the future. So Putin wins the gold medal in his favorite event — bullying his smaller neighbors.

Chris Patten is a former EU commissioner for external relations, chairman of the British Conservative Party and was the last British governor of Hong Kong. He is currently chancellor of Oxford University and a member of the British House of Lords. © Project Syndicate

TITLE: The Age of Solzhenitsyn
AUTHOR: By Alexei Bayer
TEXT: Post-Soviet Russia is a curious place. It revels in unbridled jingoism that Soviet propaganda would have envied while renaming streets to honor dissident writer Alexander Solzhenitsyn. But these may not be so incompatible after all.
In the early 1970s, when Solzhenitsyn was habitually tarred in Pravda, a political joke made rounds: 
In the 25th century, a history teacher asks her students: “Who was Lenin?” Nobody has any idea. “What about Stalin?” she persists. Dead silence. “Brezhnev?” A tentative hand goes up: “A minor despot in the Age of Solzhenitsyn?” 
The joke hits the nail on the head. Few people remember Brezhnev, and Lenin and Stalin have become mere symbols. As for Solzhenitsyn, while his influence on contemporary Russian literature may be modest, in politics and ideology Russia is certainly living out his era.
“Moscow 2042,” is Vladimir Voinovich’s biting look at senescent communism. The 1986 novel satirizes Solzhenitsyn’s triumphal return from his Vermont estate to Moscow, astride a white horse restoring a caricatured old regime. When it became possible for him to return in the late 1980s, many people expected Solzhenitsyn to be on the first plane to Moscow, to lead the extraordinary change occurring in Russia. But Solzhenitsyn dawdled, returning only in 1994, after the revolution was long over. 
Nevertheless, his influence on contemporary Russia is difficult to overestimate. The dissident movement in the 1960s and 1970s consisted of many strains, but the two main factions, temporarily allied against the oppressive regime but incompatible in their competing visions, were pro-Western liberals led by physicist Andrei Sakharov and nationalist conservatives exemplified by Solzhenitsyn. 
There is no question as to who prevailed. Sakharov has a remarkably ugly Brezhnev-era boulevard named after him, but democratic reforms he advocated mostly failed in the 1990s. Sakharov’s surviving acolytes gravitate toward the coalition called The Other Russia and are classified as opponents of the Putin-Medvedev regime. Sakharov would not have welcomed Russia’s involvement in the South Ossetia conflict. 
Solzhenitsyn has always railed against the West and cautioned against transplanting its democracy onto the Russian soil. He reveled in Russia’s spiritual heritage, Orthodox faith and statist tradition, with a strong authoritarian component. This is now Russia’s official ideology and its main elements, including a strong anti-Western bias and belief that Russia is somehow special, have been starkly on display during the conflict with Georgia. 
In his 1990 essay on rebuilding Russia, Solzhenitsyn wrote about replacing the Soviet Union with a Slavic core. Russia is now part of the Russia-Belarus Union.
This pseudo-Union shows what is wrong with today’s Russia and what has always been wrong with Solzhenitsyn’s political creed. It is mainly literary fiction. Russia’s spirituality, its anti-Western rhetoric and its “special path” are all fiction, too. In reality, it is a thoroughly corrupt country whose leaders hide their wealth offshore, consume vast quantities of luxury imports and educate their children at elite schools abroad. As cynical as other authoritarian leaders, they mask their incompetence and venality by wrapping themselves in the flag — as they have so successfully done in the Caucasus. 
In the 19th century, a writer in Russia was more than a mere literary figure. He or she was a prophet, a national conscience, almost an alternative center of power. This was Solzhenitsyn’s role in the Soviet Union, but his efforts to remain a national conscience in the 21st century turned into a pathetic farce. He lent his support to former President Vladimir Putin and, specifically, to Russia’s erratic, pubescently aggressive foreign policy. For all his courage in standing up to the Soviet regime, he might be remembered as an ideologist of Russia’s senseless military forays into its former colonies.

Alexei Bayer, a native Muscovite, is a New York-based economist.

TITLE: Obama Appoints Biden as Running Mate
AUTHOR: By Liz Sidoti
PUBLISHER: The Associated Press
TEXT: DENVER — Barack Obama’s choice of Joe Biden as a running mate sets the bar for John McCain. The Republican could use his own pugnacious No. 2 to deliver attack lines and a solid debate performance. 
An appeal to working-class voters also would be a plus, although most political strategists add quickly that running mates historically make scant difference in the outcome of a presidential election.
“Highly overrated,” said Mike Murphy, a Republican who was a senior adviser in McCain’s 2000 campaign.
The GOP nominee-in-waiting is in the final stages of deciding who should join him on the ticket, and Obama’s selection of Biden — a savvy debater, willing attack dog, and blue-collar champion — is certain to figure into McCain’s calculation.
His short list of contenders reportedly includes former Massachusetts Governor Mitt Romney and Minnesota Governor Tim Pawlenty, as well as former Pennsylvania Governor Tom Ridge and, perhaps, Democrat-turned-independent Joe Lieberman of Connecticut. A dark horse pick — like General David Petraeus or former Secretary of State Colin Powell — also is possible when McCain announces his choice, perhaps as early as Friday.
“Obama has picked someone who is going to be very aggressive in going after McCain, and who is not going to be recalcitrant about it,” said Steve Elmendorf, a deputy campaign manager for Democrat John Kerry in 2004. “If I was McCain, I’d be thinking about my own attack dog.”
Added John Feehery, a Republican and ex-aide to former House Speaker Dennis Hastert: “He’s going to want someone who can go toe to toe with Biden.”
For months now, McCain has had to do double duty, casting himself as the tested experienced leader while at the same time criticizing Obama as unqualified for the Oval Office. A tough-talking vice presidential nominee would free McCain to focus largely on his first task.
Romney, who challenged McCain with zeal during the GOP primary, and Ridge, who as a McCain surrogate assailed Romney during the primary, both have shown a talent for the requisite biting rhetoric.
At the same time, strategists say McCain should consider how his running mate will stack up against Obama’s in the vice presidential debate this fall. It’s arguably the most visible role vice presidential nominees play in the race, and Biden is a deft performer with deep knowledge of policy, both foreign and domestic.
Here, too, Romney stands out. He consistently had solid showings during numerous GOP debates.
Still, that’s not to say any of the others wouldn’t rise to the occasion.
“Certainly Biden was a big choice for Obama, and it does, therefore, force McCain to think about a big choice, both in terms of debates and the potential demographic or state-by-state advantages in who he picks for his running mate,” said Bob Shrum, a Democrat and veteran of many presidential campaigns.
Obama’s campaign hopes Biden, with his Catholic, working-class, Pennsylvania roots, proves to be an asset in key swing states and among core voting groups. They also hope his foreign policy, crime-fighting, 36-year Senate resume will help reassure voters wary about Obama’s readiness to be president.
Biden is the senior senator from Delaware, a longtime Democratic voting state that Obama is certain to win. However, he’s also a native of Scranton, Pa. He has been dubbed “Pennsylvania’s third senator” because of his ties to the battleground state and his exposure in the Philadelphia media market that reaches Delaware.
Republicans — and even some Democrats — cast doubt that Biden on the ticket will seal Pennsylvania for Obama, but they say he may help some. Likewise, Obama’s campaign hopes Biden gives Democrats an edge in Midwest states like Michigan, Ohio, Wisconsin and Iowa that are home to the same types of voters.
“Biden is a blue-collar, pro-union attractive candidate,” said Scott Reed, a Republican who ran Bob Dole’s campaign in 1996. “Republicans are going to need to counter that.”
McCain has several options to offset Biden’s strengths, both in terms of states and demographics. 
He could put Ridge, a former Pennsylvania governor who backs abortion rights and connects with the working class, on the ticket, or choose Romney to try to help in Michigan, another Democratic-leaning state where McCain hopes to prevail and one where Romney grew up and still has deep ties. 
Pawlenty might be able to help in Minnesota but Republicans say the state will be tough for McCain to win even if the governor is on the ticket. Still, Pawlenty could help counter Biden’s blue-collar biography; he, too, came from a modest background and calls himself a “Sam’s Club” Republican. 
Republicans and Democrats alike say McCain also would be wise to choose someone who is strong where he is weak — such as on economic issues — to try to undercut the opposition’s attacks. 
Obama sought to do that with his Biden pick. 
Said Steve McMahon, a Democrat who was a senior aide on Howard Dean’s 2004 campaign: “Obama has effectively checked McCain on McCain’s only relevant argument by choosing Biden, who has more foreign policy and Washington experience than McCain.”

TITLE: Spectacle Marks End of Gigantic Games
AUTHOR: By Ossian Shine
PUBLISHER: Reuters
TEXT: BEIJING — With its $40 billion landscape of twisted steel stadium, luminous Water Cube and imposing arenas arching high into the Beijing sky, the 2008 Olympic Games were as much a statement as a sporting spectacle.
China’s lavish staging of the Games underlined the nation’s economic superpower status and served as a breath-taking statement of intent. Never before have the Games been staged on such a grandiose scale. And it is likely they never will again.
Spanking new structures were central to the success of China’s extravaganza, but “reuse”, “recycle” and “revive” are the buzz words for future Games, even though Beijing has ambitious sporting, residential and entertainment post-Games plans for its venues.
Beijing’s Olympics were far and away the most expensive ever. The bill for the Games and infrastructure directly and indirectly related to the Games — which analysts put at around $40 billion — dwarfs the previous record of $15 billion footed by Athens in 2004.
While that $15 billion all but paralyzed the Greek economy, Beijing’s bill is mere pocket change for the roaring Chinese economy.
These Games were always about showcasing modern China to the rest of the world, but there is little appetite or financial capacity to repeat the grand feat elsewhere.
Indeed, the International Olympic Committee is determined to ensure Beijing is the last of the huge Games. IOC president Jacques Rogge has repeatedly cautioned against “Games gigantism” and by 2012 a size-reduction plan first gradually introduced at the Athens Games will be fully in place for London.
The plan covers issues such as the use of temporary grandstands, changing rooms, and training facilities instead of permanent structures.
London has chosen to carefully plan its post-Games legacy to ensure no white elephants are left standing after the athletes have left.
Repeatedly praised by the IOC for its post-Games thinking, London Games chief Sebastian Coe and his team have opted for a compact event that will also revive a run-down part of the capital in the East End.
“I think we accept that it is unlikely you will see a Games on this size and scale and stature again,” Coe told reporters in Beijing.
“The IOC in 2001 reached the conclusions that the focus must be much more on sustainability, that big is not necessarily better.”
London Mayor Boris Johnson said he had been “blown away” by Beijing’s achievements, but both he and Coe said London would deliver an Olympics to rival the Chinese event.
“We have been dazzled, we have been impressed, we have been blown away by these Beijing Games, but we have not been intimidated and in our own sweet way, without wasting tax payers’ money, I am convinced that we can do just as well in 2012,” he said.
London’s Games will lay the foundations of “a new small city” in the East End and pump money into sports education in state schools, something that could also help Britain’s rampant youth crime problem, Olympics Minister Tessa Jowell told reporters in Beijing earlier this month.
London’s plans include temporary stands for the 80,000-seater Olympic stadium, to enable it to be trimmed down to a mere 25,000-seater after the Games.
There will be no media village for reporters who will be put up in hotels — a significant saving in construction considering Beijing hosted more than 28,000 journalists.
“9.75 out of 10” Denis Oswald told reporters in May in response to a question on how he would rate London’s preparations. Their parsimonious approach is being praised all the way.
Rogge’s campaign against Games gigantism is aimed at encouraging more cities to bid for the extravaganza, given the Olympics have yet to be staged in South America or Africa. With spiraling costs, especially for Athens and Beijing, the IOC had feared candidates would be scared off.
Vancouver plan an “intimate” Games in 2010, to be enjoyed by Canadians. London is working hard to keep costs down and provide a lasting legacy.
For 2016, Tokyo’s main selling point is the revival of its old harbor, Chicago’s downtown plan makes use of the lakefront and open park space while Rio de Janeiro will utilize PanAm Games facilities.
Rogge’s message seems to have sunk in.

TITLE: U.S. Gets Back On Top In 
Basketball
AUTHOR: By Alastair Himmer
PUBLISHER: Reuters
TEXT: BEIJING — Flashing smiles as ultra-bright as the gold medals hanging around their necks, the United States restored basketball’s “natural order” at the Beijing Olympics.
A 118-107 victory over world champions Spain in Sunday’s final erased eight years of hurt for an American team whose aura of invincibility had slipped since the 2000 Sydney Games.
It also completed a perfect Olympics for U.S. basketball after the women’s team won their fourth successive Olympic gold.
The U.S. had been hot favorites to win their 13th men’s Olympic title after adding Kobe Bryant, the NBA’s Most Valuable Player, and Jason Kidd to the team relegated to bronze in 2004.
“We were at our lowest point in ‘04,” said forward Carmelo Anthony. “We did a hell of a job putting American basketball back where it belongs — on top of the world.”
The U.S. obliterated their opponents by an average of 30 points until Spain, who had been shredded 119-82 by the Americans in the group stage, gave them a fright in the final.
A late blitz of three-pointers from Bryant and Dwyane Wade killed off Spain’s charge, exorcising the demons of Athens and a third-place finish at the 2006 world championships.
“It’s not only Kobe,” said Argentina’s Luis Scola, shaking his head at the embarrassment of riches in the U.S. team. “Kobe’s probably the best player in the world. He’s awesome.
“But you take Kobe out, you put Carmelo Anthony in, you put Dwyane Wade in, you put Jason Kidd in, you put in LeBron James — I can keep going if you want. I wish it was only Kobe.”
Argentina, gold medalists in Athens four years ago, took bronze despite losing leading scorer Manu Ginobili to an ankle injury in their semi-final loss to the U.S.
The Americans, however, were never seriously threatened.
“It’s going to be a tough blueprint to follow,” said Wade. “It will be tough to put a team like this back together.”
Lisa Leslie took home her fourth Olympic gold after the Americans trampled world champions Australia 92-65 in the women’s final to gain some redemption of their own.
Still smarting after a bronze medal finish at the world championships two years ago, the U.S. women were every bit as dominant as their male counterparts.
“That bronze drove me every day since ‘06,” said American coach Anne Donovan, before announcing she was stepping down. “I’m not coaching the team anymore — I can sleep at night now.”

TITLE: Kyrgyz Plane Crashes, 
68 Killed
AUTHOR: By Tolkun Namatbayeva
PUBLISHER: Agence France Presse
TEXT: BISHKEK, Kyrgyzstan — A passenger plane bound for Iran crashed shortly after take-off from the Kyrgyzstan capital of Bishkek on Sunday, claiming the lives of 68 people onboard, the health ministry said. 
The Boeing-737 with 90 people onboard went down a few kilometres from Bishkek’s Manas airport after the plane suffered a dramatic loss of cabin pressure, said Prime Minister Igor Chudinov.
“According to updated information, 68 passengers were killed, including 24 Kyrgyz, five Iranians, one Turkish national, three Canadians, three Kazakhs and one Chinese,” Chudinov’s spokeswoman Rosa Daudova said.
Earlier, health ministry spokeswoman Yelena Bayalinova had said that “65 passengers were killed, 22 injured and three are missing.”
The plane was owned by Itek Air, a private Kyrgyz company, that is on the European Union blacklist of airlines banned from flying in EU airspace.
Chudinov said all seven crew members were among the survivors of the crash, the worst in the former Soviet republic of Kyrgyzstan since the Central Asian state gained independence in the early 1990s. Kyrgyzstan boasts Central’s Asia biggest and most modern airport.
“The plane took off and then it lost pressure,” Chudinov told reporters. It was bound for Tehran, according to airport officials.
The pilot made an emergency landing in a field not far from the runway and the plane caught fire, he said.
Civil aviation officials said it went down at around 8:40 pm, just 10 minutes after take-off.
Kyrgyz reporters on the scene said body parts were strewn across a large area surrounding the plane wreckage.
There were 51 foreigners among the passengers, according to the prime minister.
Rescue teams and firefighters were dispatched to the crash site near the village of Dzhany-Dzher where the plane was engulfed in flames, officials said.
US military officials at a nearby base sent firefighters and medical staff to the scene, said Aygul Karemshakova, a press spokeswoman for the US base in Kyrgyzstan.
The prime minister said the plane had no known safety problems.
“The Boeing was produced in 1979, was in good condition, was checked a month ago and had an extended warranty,” he said.
Iran’s ambassador to Kyrgyzstan visited the injured at Bishkek hospitals as rescuers continued a frantic search for survivors under the cover of darkness.
“Mostly the passengers have combined injuries — burns, broken bones and bumps,” a doctor at Bishkek hospital said.
There were reports that the plane was owned by the Iranian company Aseman and leased to Itek Air, but a spokesman for the national aviation agency in Tehran denied the information. 
“The plane belongs to Kyrgyz airlines,” said Reza Jafarzadeh, spokesman for the agency, the official Irna news agency reported.

TITLE: Bolt, Phelps and China Shine as Games Live Up to Motto
AUTHOR: By Simon Evans
PUBLISHER: Reuters
TEXT: BEIJING — Athletes at the Beijing Games lived up to the Olympic motto ‘Faster, Higher, Stronger’ and none more so than swimmer Michael Phelps and sprinter Usain Bolt.
Jamaican Bolt, celebrating his 100 meters world record before he had even finished his gold medal-winning run, provided the most striking image but Phelps’s eight gold medals in the pool are likely to be regarded as the most enduring feat of the Games.
American Phelps beat compatriot Mark Spitz’s record of seven golds in a single Games, which had stood since 1972. He broke four individual world records and took part in three record-breaking relays, powered by a kick borrowed from dolphins.
Only twice did his goal of overtaking Spitz look in real danger.
He needed Jason Lezak to overtake France’s Alain Bernard in a thrilling final leg of the 4x100 freestyle relay and he then beat Serbian Milorad Cavic by one hundredth of a second by using his huge arm span to touch first in the 100 meters butterfly.
Spitz declared his successor to be the “best Olympian of all time” and, while there is more to greatness than medals, his record of 14 career golds is unprecedented in any sport and the 23-year-old could add to his tally in London in 2012.
Bolt already owned the 100 meters world record and in front of a capacity 91,000 crowd at the spectacular Bird’s Nest stadium he stormed down the track in 9.69 seconds.
He would have been even quicker had he not begun waving his arms in triumph and slapping his chest well before the finish line.

‘‘SUPERMAN 2’’
Bolt had always insisted he was a 200 meters runner and he confirmed his participation in the shorter distance only after arriving in China.
When it came to the 200, Bolt broke American Michael Johnson’s 12-year-old record, setting a time of 19.30 seconds. Johnson declared Bolt to be “Superman 2”.
Bolt led a magnificent performance by Jamaica on the track — the Caribbean island nation won six gold medals and took a podium sweep in the women’s 100 meters led by winner Shelly-Ann Fraser.
Excellence was on show across 16 days of gold, sweat and tears that ended on Sunday.
Russian pole-vaulter Yelena Isinbayeva achieved what athletes in field events so rarely manage. She occupied centre stage by securing the gold and then returning to break her own world record.
She cleared 5.05 meters at the final attempt after spending most of the competition relaxing under a towel and duvet.
Ethiopia’s Tirunesh Dibaba won both 5,000 and 10,000 meters to become the first woman to complete that double and her compatriot Kenenisa Bekele matched her in the men’s competition.
The millionaires of major professional sports, the U.S basketball team and the world’s number one tennis player Rafael Nadal of Spain, came, were seen, and conquered.
Others showed that the Olympic success is still within reach for people from troubled countries and modest backgrounds — Afghanistan’s Rohullah Nikpai won his country’s first Olympic medal with a bronze in the men’s 58-kg taekwondo.
There were disappointments — China’s favorite sporting son Liu Xiang had to pull out of his defense of his 110 meter hurdles title due to an Achilles tendon injury, leaving his legions of fans heartbroken and the U.S’s Tyson Gay, who was billed as the main threat to Bolt, failed to even make the final of the 100 meters and then dropped the baton in the relay.
The hosts take pride not only out of putting on a great show but from their results. For the first time they topped the medal table.
Although China have yet to truly break through in track and field they have emerged as a gold medal power in a range of sports where they were once also-rans such as rowing, sailing and weightlifting.
The hosts, who did not even compete in the Summer Games between 1952 and 1984, have taken just 24 years to become the most successful nation at the Games and with the enthusiasm generated by hosting the event they are likely to continue expanding their sphere of success.
The next hosts of the Summer Games, Britain, enjoyed their biggest haul of gold medals since 1908 thanks, in large part, to their excellent performances in cycling and rowing.
Like China in Beijing, the British will be under intense pressure to succeed in four years time in London and other countries will have learnt from both nations’ intelligent targeting of resources in the search for gold.

TITLE: Israel Frees Nearly 200 Palestinians
AUTHOR: By Dalia Nammari
PUBLISHER: The Associated Press
TEXT: RAMALLAH, West Bank — Israel on Monday freed nearly 200 jailed Palestinians — including a militant mastermind from the 1970s — in a goodwill gesture just hours before U.S. Secretary of State Condoleezza Rice was to begin her latest peace mission to the region. 
The prisoners returned to cheers and applause as they entered Palestinian-controlled territory before heading to a massive rally attended by thousands of people at the headquarters of President Mahmoud Abbas.
The prisoners arrived in Ramallah after being released by prison guards at an Israeli military checkpoint near Jerusalem. 
The prisoners, some waving black-and-white checkered keffiyeh headdresses as they stepped off Israeli buses, kissed the ground before boarding Palestinian vehicles.

TITLE: Police Arrest Two Opposition Politicians in Zimbabwe
AUTHOR: By Nelson Banya
PUBLISHER: Reuters
TEXT: HARARE — Police in Zimbabwe arrested two opposition Movement for Democratic Change (MDC) MPs in parliament on Monday and the party responded by saying it would stop the election of the parliamentary speaker.
Power-sharing talks between Mugabe’s ruling ZANU-PF and Morgan Tsvangirai’s MDC are deadlocked over what the opposition says is the veteran Zimbabwean leader’s refusal to give up executive power.
The MDC also said President Robert Mugabe’s appointment of three non-constituency parliamentarians were a threat to the talks which began a month ago.
“Clearly they have chosen the path of arrogance, unilateralism that’s a serious blow to confidence building in the talks,” said Movement for Democratic Change (MDC) spokesman Nelson Chamisa.
The MDC said its two MPs were arrested as they entered the parliamentary building and police also attempted to arrest another MDC MP but he was rescued by other parliamentarians.
MDC spokesman Nelson Chamisa said the opposition party will prevent the election of a parliamentary speaker to be held later on Monday.
“We are not going to allow the election to go ahead without our members, even a single one. We will not allow them to rig this process,” Chamisa said.
There was no immediate comment from police on the arrests. Soon after the March elections, police announced a manhunt for several MDC politicians over charges of murder, rape and electoral violence.
Parliament began swearing in MPs, including those of the MDC, in groups of 10 despite the arrests of the two opposition lawmakers, a Reuters reporter said.
Opposition and ruling party MPs exchanged light-hearted exchanges and taunts across the floor in front of a packed public gallery.
Mugabe appointed three members of parliament’s upper house, the Senate, and eight provincial governors, state media said.
Mugabe intends to officially open parliament on Tuesday despite protests by Morgan Tsvangirai’s opposition Movement for Democratic Change (MDC) that this would scuttle negotiations on forming a unity government to end the current political impasse.
Tsvangirai maintains that a power-sharing agreement is being held up by Mugabe’s refusal to give up executive powers. Mugabe says Tsvangirai wants to strip him of all authority.
The MDC won 100 seats in March elections and ZANU-PF 99, a breakaway MDC faction has 10 seats and there is one independent seat.
Whoever the breakaway MDC faction of Arthur Mutambara sides with gets an effective majority in the legislative chamber.
Western countries, key to the funding that Zimbabwe needs to emerge from economic collapse, have said they would only recognize a government led by Tsvangirai.
Tsvangirai defeated Mugabe in a first round presidential vote in March but without an absolute majority. Mugabe won a run-off election in June which was boycotted by Tsvangirai over political violence which he said killed over 120 MDC supporters.
Mugabe has often accused Tsvangirai of being a puppet of the United States and former colonial power Britain and ignoring Western sanctions he blames for Zimbabwe’s economic decline.