SOURCE: The St. Petersburg Times
DATE: Issue #1409 (73), Friday, September 19, 2008
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TITLE: Markets Due To Reopen
On Friday
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia ordered its main stock exchanges closed for another day Thursday as President Dmitry Medvedev pledged a 500 billion ruble ($20 billion) injection into financial markets in an effort to stabilize them.
The government is struggling to stem a dizzying drop in share prices and restore confidence in the economy — a slide that has recalled memories of the 1998 financial collapse.
“We have sufficient reserves and a strong economy and this guarantees the avoidance of any shocks,” Medvedev said in televised comments. “There is no more important task for Russian authorities than supporting the stability of our financial system under the current circumstances.
“To that end, some 500 billion rubles will be injected into the financial sector, from the state budget and other sources,” he said.
The MICEX exchange, where the bulk of trading in Russian stocks takes place, is now at its lowest level in nearly three years in the wake of sliding oil prices and turmoil on Wall Street.
For a second consecutive day, the financial regulator suspended stock trading on MICEX and the other leading index, RTS; trading in some other financial instruments, such as repo contracts and futures, was being allowed.
Meanwhile, Russian banks are facing a tightening squeeze on liquidity — accelerated by a breakdown in confidence between lenders.
“Everybody’s sitting on a lot of cash, but nobody wants to lend it to anybody else,” said Hawk Sunshine, head of investment banking at Metropol investment bank.
The Kremlin has struggled to restore confidence in the banking system with a wave of emergency loans, fearing a repeat of the 1998 economic crisis, which saw the ruble devalued, default on the country’s sovereign debt and widespread bank foreclosures.
Russia’s situation is markedly different now — the government has huge cash reserves and virtually no debt. But analysts still warn that that disaster could loom if officials mishandle the problems.
The government pledged Thursday to lend a further 60 billion rubles ($2.36 billion) to the country’s three-largest banks — Sberbank, VTB Group and Gazprombank — in an attempt to filter money down to smaller lenders.
This comes in addition to the 1.13 trillion ruble limit offered Wednesday to the same banks for a minimum period of three months.
In another offer to struggling institutions, the Central Bank said it would slash the amount banks are legally required to set aside as reserves by 4 percentage points, potentially freeing up 300 billion rubles ($11.8 billion).
Central Bank chairman Sergei Ignatiev called on lenders to respond sensibly to the new measures.
“We hope that banks will spend these funds not on long-term crediting or other kinds of crediting of clients, but on the maintenance of the necessary volume of their liquidity and on making settlements,” ITAR-Tass quoted him as saying.
TITLE: Rice: Russia Heading Toward Irrelevance
AUTHOR: By Desmond Butler
PUBLISHER: The Associated Press
TEXT: WASHINGTON — In scathing criticism of Moscow, Secretary of State Condoleezza Rice told Russia on Thursday that its policies have put it on a path to isolation and irrelevance.
Rice called on the West to stand up to Russian aggression following its invasion of Georgia last month. The State Department released excerpts of her comments, from a speech that was delivered Thursday.
“The attack on Georgia has crystallized the course that Russia’s leaders are taking — and brought us to a critical moment for Russia and the world,” she said.
The speech for a German Marshall Fund event reflected an escalation of rhetoric in a relationship that has deteriorated markedly since last month’s war and Moscow’s recognition of two breakaway regions of Georgia.
Rice mocked Russia for its international isolation and attempts to project its influence into America’s backyard by cultivating U.S. foes like Cuba and Venezuela.
Rice noted sarcastically that Nicaragua and the Palestinian terror group Hamas are the only other entities that have so far recognized the independence of Abkhazia and South Ossetia.
“A pat on the back from Daniel Ortega and Hamas is hardly a diplomatic triumph,” Rice said, referring to the president of Nicaragua, a longtime opponent of the United States.
She also mocked Russia’s recent military exercises with another U.S. foe, Venezuela, suggesting that despite its crushing victory over Georgia, Russia’s armed forces have still not recovered from their decline as the Soviet Union collapsed.
“We are confident that our ties with our neighbors, who long for better education, better health care, better jobs, and better housing, will in no way be diminished by a few aging Blackjack bombers, visiting one of Latin America’s few autocracies,” she said.
The speech promised support for Georgia, highlighting promises of economic aid by the United States and European countries.
“In contrast to Georgia’s position, Russia’s international standing is worse now than at any time since 1991,” she said. “And the cost of this self-inflicted isolation has been steep.”
U.S. officials have pointed to Russian economic problems since the invasion as a sign of the country’s isolation. Russia is struggling to stem a dizzying plummet in share prices and restore confidence in the economy, as investors have sharply pulled capital out of the country in recent weeks amid a broader international credit crisis.
Rice, an academic specialist on the Soviet Union, said that as in the Cold War, the United States would seek to maintain cultural ties with Russia regardless of tensions.
“We will continue to sponsor Russian students and teachers, judges and journalists, labor leaders and democratic reformers who want to visit America,” she said. “We will continue to support all Russians who want a future of liberty for their great nation.”
TITLE: Police Raid Nightclub, Detain Dozens, No Reasons Given
AUTHOR: By Sergey Chernov and Matt Brown
PUBLISHER: Staff Writers
TEXT: A nightclub popular with gay people and their friends was raided by police on Tuesday night, witnesses said, with everybody in the club being transported to a police station for questioning until morning.
Dozens of visitors to Central Station were humiliated with homophobic threats and given no explanation for their detention, witnesses said.
According to Central Station’s founder and co-owner Ilya Abaturov, officially the raid was ordered by an investigator of the prosecutor’s office of the Moskovsky District who is investigating the death of a Ukrainian citizen whose body was allegedly found at the Moscow Station.
“[The dead man] had a map of St. Petersburg with the address of the club [written on it], and allegedly it occurred to this investigator, according to the statement, to search the club, because it’s somehow connected,” said Abaturov by phone from Moscow on Thursday.
“Immediately I asked the question, ‘Why don’t you take all the people in St. Petersburg at once? It is St. Petersburg this Ukrainian citizen came to, isn’t it?”
“I live in Moscow, and I feel much more comfortable here, because we don’t have the police lawlessness that continues in St. Petersburg. I mean, there’s complete disrespect for citizens’ rights.
“I also think that a search should not mean detaining people.”
Abaturov said a third of visitors to Central Station, which been on the scene since 2005, are tourists and the city should be interested in welcoming them.
“ [Governor Valentina] Matviyenko is opening a new port so there are cruise liners coming in. For instance, two or three months ago… we had a thousand Americans from this cruise liner [visting Central Station]. That’s when they should have come, and detained them all!”
A police spokesman was unable to comment further on the case on Thursday.
A witness to the raid, who requested anonymity due to the sensitivity of the issues involved, described what happened when he arrived at the club shortly after 1 a.m.
“When I approached the club, the door was wide open and when I entered I saw several men wearing black at the door. I realized something was wrong because there was no music playing and the lights were on.”
The witness said it was as if the police, who were dressed in civilian clothes and did not show any identification, had laid a trap.
“I was surrounded and they wouldn’t let me leave. I was taken to the ground floor lounge [where cabaret shows are performed]. Around 60 people were gathered there, as well as the staff of the club.”
There were signs of damage near to the entrance of the club, the witness said. About 30 minutes later, the witness said, the police instructed the clubbers to proceed to a bus that was parked outside.
“Some people protested but they were told we were all being taken to the Chief Police Department of the Moskovsky district. The police threatened to use force and said they had explained the purpose of the raid to the club’s management.”
The witness said the bus was too small to safely transport 60 people.
“We were crammed in like sardines in a tin,” the witness said, describing how the clubbers attempted to shield their faces when they realized one officer was filming the operation with a digital camera.
The clubbers were taken to the police station at 95 Moskovsky Prospekt where they were lined up, “like conscripts,” the witness said.
“We proceeded through a checkpoint and were taken to the third floor — the Criminal Investigation Department,” the witness said. “For a while we stood in the corridor. They realized they had too many people and opened up a meeting room.”
The clubbers were allowed to keep and use their mobile phones.
The witness described how the police then took the staff of the club, about 10 people, to be interrogated.
“Then they would come into the room every five minutes and demand answers. They asked who is gay and who is straight. Two said they were straight and were allowed to leave.”
About 10 of the group were women and they were then taken for questioning. Two couples who could prove they were married were then allowed to leave, while a third who could not remained.
The police were abusive and threatening, picking out people with dyed hair or piercings and using offensive, homophobic insults, the witness said. At one point they asked the group which among them were “tops” or “bottoms.”
“There was no violence, but they treated us like cattle, like slaves,” the witness said.
The police also attempted to blackmail the clubbers, the witness said, by threatening to reveal their patronage of the club to their families, educational establishments or places of work.
One by one the clubbers were photographed and made to sign a document obliging them to help the police with further inquiries. At around 6 a.m., the witness was released although a number of the group remained.
No explanation was given about the purpose of the operation, the witness said.
Openly homophobic attacks and abuse are increasingly considered acceptable in Russia, with Moscow mayor Yury Luzhkov repeatedly banning Gay Pride events and last year calling gay people “Satanic.”
TITLE: Ukrainian PM Mocks President’s Poisoning
AUTHOR: By Maria Danilova
PUBLISHER: The Associated Press
TEXT: KIEV, Ukraine — Ukraine’s premier mocked the president’s nearly fatal 2004 dioxin poisoning, saying Thursday that Viktor Yushchenko’s main problem was being poisoned by unlimited power.
Prime Minister Yulia Tymoshenko is locked in a bitter feud with Yushchenko that has ruined their coalition and put the county on the brink of its third parliamentary elections in as many years.
She spoke before she was questioned again in a probe into the dioxin poisoning four years ago. There was no evidence of her involvement made public and many see her questioning as part of the political infighting.
“The main poisoning is the poisoning with unlimited power, a serious intoxication in the presidential secretariat,” Tymoshenko told reporters.
The pro-Western coalition of Tymoshenko’s and Yushchenko’s parties fell apart this week due to the two leaders’ rivalry ahead of the 2010 presidential vote and disagreement over how to deal with Russia following its war with Georgia last month.
Yushchenko has strongly condemned Russia’s actions and accused Tymoshenko of kowtowing to the Kremlin by taking a cautious stance on the conflict.
Tymoshenko, while saying she does not support Russia’s recognition of two Georgian separatist regions, stressed that Ukraine needs good relations with its eastern neighbor.
Yushchenko and Tymoshenko were the heroes of the 2004 Orange Revolution that catapulted Yushchenko to the presidency. Experts say that a new government is likely to include the Moscow-friendly Party of Regions and could turn Ukraine toward Russia and away from the West.
The poisoning incident came at the height of the 2004 election campaign and left Yushchenko’s face badly disfigured. He has suggested the poisoning may have been orchestrated by Russia.
TITLE: Crimea Peninsula Defies Kiev Over Georgia
PUBLISHER: Reuters
TEXT: SIMFEROPOL, Ukraine — Lawmakers in Ukraine’s Crimea Peninsula, defying the country’s pro-Western leaders, called on the national parliament to follow Russia’s example and recognize Georgia’s two separatist regions.
Crimea, a Ukrainian region with a degree of self-government, is populated mainly by ethnic Russians and Russian-speakers, and local leaders have often adopted pro-Russian positions or even sought to rejoin the Russia state.
Some analysts suggested that Russia’s conflict with Georgia over South Ossetia could rekindle pro-Moscow or even separatist sentiment in Crimea.
The local assembly voted 79-8 to urge Ukraine’s national parliament to recognize South Ossetia and Abkhazia.
TITLE: Oligarchs Snub Vulgarity, Eye Fine Art
AUTHOR: By David Nowak
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia’s yachting, partying, British football club-acquiring billionaires are, as they mature, refining their tastes, learning the fine art of collecting fine art and breathing new life into a once-struggling Russian market.
Roman Abramovich, Russia’s 42-year-old uber-oligarch, jetted into Moscow this week for the opening of a new contemporary art space which he is funding as a pet project for his girlfriend, fashion designer Daria Zhukova.
“I’ve always thought that Moscow should have a place like this,” Zhukova, 27, a former model and famed socialite, told The Associated Press in the cavernous center’s cafe on Tuesday, before the opening.
Until recently, Russia’s super-rich seemed to splurge on art only when it had the added benefit of pleasing the Kremlin.
Last year, billionaire Alisher Usmanov paid more than $40 million to save an art collection owned by the late Russian cellist Mstislav Rostropovich from being auctioned off at Sotheby’s in London, and handed it to Russia.
He followed the lead of Norilsk Nickel-owning magnate Vladimir Potanin, who bought Malevich’s avant-garde Black Square for the government in 2002 for $1 million, saving it from foreign ownership.
According to the summer 2008 edition of ARTnews magazine, Abramovich is one of the 200 top art collectors in the world. He is the only Russia-based collector in the list.
Abramovich provided the startup costs for Zhukova’s project, named the Garage Center for Contemporary Culture. The center is housed in an 8,500-square-meter (91,500-sq. foot) tram shed built in 1927, and located in an old Jewish neighborhood on a northern fringe of central Moscow.
It opened to the public Thursday with the first retrospective of legendary artists Ilya and Emilia Kabakov.
The 74-year-old Ilya Kabakov is considered the founder of the conceptualist art movement in Moscow, which developed during the 1970s in the Soviet Union. He and his wife moved to New York in 1992.
Los Angeles-based art critic Alexander Panov said that, while the gallery may have started life as a billionaire’s vanity project, it has the potential for anchoring modern art in Russia.
“Are those in attendance mostly snobs and ‘wannabes’ who were there simply to show their Gucci bags and Armanis?” he said in an email. “Yes. Is art collecting simply a new expensive toy leading to greater social-cultural status in the hands of Abramovich? Yes again. Finally, is there a chance for good, thought provoking exhibitions to start and support a culture of open-minded, stimulating intellectual discourse? Yes as well.”
TITLE: Police Bust Estonian Vodka Pipeline Gang
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Eleven suspects in the Estonian town of Narva are facing charges of laying an illegal two-kilometer-long vodka pipeline along the bottom of a firewater reservoir on the Russian-Estonian border.
“It might sound weird and unbelievable but it is a very real criminal case,” Mari Luuk, a spokesman for the Estonian prosecutor’s office, told reporters.
The homemade poor-quality booze was smuggled from Russia to Estonia to be subsequently sold on the black market to avoid paying taxes. The prosecutors estimate that the scheme implemented by the criminal gang allowed them to avoid paying 57,000 euros ($81,000) in taxes.
Alcohol prices soared in Estonia after the country joined the European Union in May 2004. Vodka, in particular, is on average one and a half times more expensive in Estonia, compared to Russian market prices.
The criminal scheme first came to light in November 2004 when the Estonian tax police discovered a lorry in Tallinn loaded with 1,159 liters of undeclared vodka which the officers alleged had come through the underwater pipeline.
“The investigation has established that in November 2004 the suspects attempted to sell some of the smuggled alcohol in Tallinn but owing to the low quality of the product they failed to find customers.”
The prosecutors said the booze was later sold in Tartu, Estonia.
The suspects, if found guilty of smuggling, face up to five years in prison. Several of the suspects are Russian citizens, and the rest are Estonians.
The vodka pipeline is not the first of its kind and the town of Narva is not new to this extravagant smuggling technique.
A similar scandal broke in 2006 in the same region when Estonian customs officers discovered an illegal vodka pipeline which had been laid on the bottom of Narova river.
The Russian Embassy in Tallinn told Noviye Izvestia newspaper that the suspects, who hold Russian citizenship, have not yet contacted them for any help or advice.
Bootleg, low-quality alcohol abounds not only in cities across Russia but in Estonian towns near the Russian border. According to various estimates, approximately 20 percent of Estonians are believed to purchase bootleg booze.
The Estonian government plans to raise taxes on alcohol in the near future because the Baltic state of 1.4 million people is struggling to overcome a serious drinking problem.
According to official statistics, each Estonian consumes on average 12 liters of pure alcohol per year, and the amount of alcohol has been steadily rising in recent years.
Every year, between 1,500 and 2,000 people die from alcohol-related causes and illnesses in Estonia, including lethal poisoning by bootleg liquor.
TITLE: Financial Crisis Threatens Loan Market
PUBLISHER: Reuters
TEXT: LONDON — Russia’s slumping stock market and the financial crisis will make it more difficult for some of the country’s largest companies to raise international syndicated loans before the end of 2008, banking sources said Wednesday.
The Russian stock market suffered its biggest decline in at least a decade Wednesday, and trading on the MICEX and RTS was suspended. These developments, along with the Lehman Brothers collapse and the Georgian conflict, have rocked already negative sentiment in the Russian loan market.
“I’m petrified. We’re forced to lend into a market where very little domestic lending is done and international lenders are the lenders of last resort. Russian companies are funded by international lenders, which have no excess liquidity to offer,” a head of loan syndications said.
Banks are hoarding capital after Lehman’s collapse to fund further possible write-downs, and the ranks of potential lenders are thinning rapidly because of enforced banking consolidation.
Earlier this week, Merrill Lynch was sold to Bank of America, and on Wednesday a source said HBOS was in advanced merger talks with Lloyds TSB.
The deteriorating situation in the international financial sector could derail plans by Russian companies to borrow and threaten the syndication and sell down of loans that are already in the market, senior bankers said.
“The brakes have been put on any new funding,” an emerging markets loan specialist said.
TITLE: Families Rehoused As Metro Expanded
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The foundations of the new Obvodny Canal metro station are planned to be dug from October this year through April 2009. The seven-story apartment building at the intersection of the Obvodny Canal and Ligovsky Prospekt will be demolished by the end of September to share the fate of the Sever (North) cinema, which was taken off the list of the city’s buildings of historic importance before being demolished.
Demolition of the cinema was begun on Sept. 2 and is now complete. Sergei Sergeyev, deputy CEO of SMU-13, a sub-contractor of Metrostroi construction company, said that difficulties had been encountered in the clearance of the ground infrastructure due to the indefinite terms for settling the residents of the apartment building in new housing. One of the families has refused to move out until the district authorities provide them with appropriate housing.
“Due to this lengthy confrontation, the plans have been altered. The cinema building was pulled down using heavy machinery, but the top two stories of the apartment building have to be demolished manually. Originally, both the buildings were supposed to be razed at the same time,” said Sergeyev.
Some of the former residents of the apartment building at Ligovsky Prospekt 153 were rehoused in the Rzhevka sub-district in the city’s Krasnogvardeisky Rayon, while some of the families were moved to Malaya Bukharestskaya Ulitsa, said Tatyana Chizhova, acting head of the district administration’s housing department.
The Obvodny Canal station, which is to be located between the planned Zvenigorodskaya and Volkovskaya stations of the Frunzensko-Primorskaya line that is currently under construction, is regarded as a ghost metro station that has all the underground facilities but no outer entrance. The entrance is due to be completed by 2010. The previous deadline was 2008, and the two-year delay is being explained by the indefinite terms for the demolition of the over-ground infrastructure, said a spokesperson for Metrostroi.
The over-ground vestibule for the metro station will merge with the architecture of the new building, which will preserve the main aspects of the original design dating from 1911, when the former Sever Cinema and the apartment building were built there.
The complex’s main architectural concept is a contrasting red brick wall with metal and glass sections. The seven-story, 27,000-square-meter business center will stretch along the embankment of the Obvodny Canal and will be crowned with a clock tower above a conference hall accommodating 200 guests. The first floor will house a shopping mall and cafes, with parking lots nearby.
TITLE: In Brief
TEXT: IMF Positive on Russia
WASHINGTON (Bloomberg) — Russia has “buffers” that should help it weather the country’s worst financial crisis in a decade, the International Monetary Fund said.
Russia should seek “market-friendly” solutions for the financial turmoil, IMF spokesman David Hawley said Thursday at a press conference in Washington.
“Russia has some buffers,” Hawley said. “Overall the macroeconomic situation remains strong and the country will maintain a current-account surplus even with lower oil prices.”
Fitch Assesses Risks
MOSCOW (Bloomberg) — Russian real estate and construction companies are most at risk as domestic and international banks curb lending, according to Fitch Ratings.
Retailers may also suffer from “consumer tightening brought about by banking system issues,” Fitch said in a report Thursday.
The Russian government pledged $20 billion to support the nation’s stock market and cut crude oil export taxes Thursday to stem the country’s worst financial crisis since the government defaulted on domestic debt in 1998 and devalued the ruble. The Finance Ministry said Wednesday it will make $44 billion available for Sberbank, Gazprombank and VTB Group, the nation’s biggest banks.
“Short-term debt maturity profiles and an attachment to a vulnerable bank system already negatively affect many Russian corporate ratings,” Fitch said.
WTO Not Essential
MOSCOW (Bloomberg)— Russia can live without membership in the World Trade Organization for now if Western pressure keeps it out, Izvestia cited trade negotiator Maxim Medvedkov as saying.
Russia in the short term “won’t die” outside the WTO and might even benefit, the Moscow-based newspaper quoted Medvedkov as saying. He added that other countries wouldn’t “get what they want” by excluding Russia from the body that sets global trade rules.
Russia, the biggest economy outside the WTO, finished talks with all individual WTO members except Georgia and Ukraine and was negotiating a final agreement with the body when military conflict with Georgia broke out Aug. 7. The U.S. and the U.K. have suggested stalling Russia’s 15-year bid to join the WTO to put pressure on it to show more compromise over Georgia.
Russia, Serbia Agree
BELGRADE (Bloomberg) — Serbia and Russia agreed to eliminate customs and duties on a range of goods including alcoholic beverages and some home appliances traded between the two countries, Serbia’s Economy Ministry said.
A final draft protocol sees Serbia and Russia lifting customs on products including medicines, meat and meat products, confectionary products, beer, wine, soaps, refrigerators, washing machines and furniture, the ministry said in an e-mailed statement.
The agreement is expected to be signed within two months.
Serbia imported $1.9 billion worth of goods from Russia in the first six months, mainly in oil and gas shipments, an annual increase of 58 percent, data from the Serbian Statistics Office showed. Exports to Russia totaled $335.5 million, 69 percent more than in the same period of 2007.
TITLE: Russia Will Recover
AUTHOR: By Steven Dashevsky
TEXT: The global financial crisis that has ravaged stock markets globally now threatens Russia’s financial sector and its broader economy. If the Russian economy demonstrates resilience in its biggest test since 1998 and if the government offers a proper policy response, which I think it will, it would go a long way toward securing the country’s long-term economic development and investment appeal.
The country’s benchmark RTS Index has fallen 54 percent year-to-date and 36 percent in September alone, making it one of the worst performers globally. The global macro issues — the liquidity crunch and the falling commodity prices — as well as the increased concern about Russia’s political risks were the fundamental reasons for the sell-off, while the indiscriminate liquidation selling by funds and leveraged investors added fuel to the fire.
As a result of this sell-off, Russian equities have now moved into a distressed territory. More than that, the standard analytical terms of “cheap” or “undervalued” can hardly be used to describe the market that now consists of a collection of valuation anomalies rarely seen in any country in modern markets history. Most of Russia’s largest natural resource stocks are worth less than three times their forecasted 2008 cash flow. Steel and coal stocks discount long-term prices from 60 percent to 80 percent below their current levels, while oil stocks are discounted to the level of $50 or $60 per barrel. The RTS has been trading at about four times price-to-earnings ratios, the lowest multiple seen in this decade.
In general, there is little point in trying to explain current stock prices by any economic scenario when the dramatic falls have been generated mostly by a wave of liquidation selling and margin calls amid shrinking liquidity. The stock prices exist without any connection to the values of the businesses that they are supposed to represent.
Thus far, the damage is limited to losses sustained by domestic and foreign equity investors, but the crisis now threatens to spread to the real economy and the country’s financial system as a whole. Already, several Russian banks were rumored to be in trouble after being unable to repay debts collateralized by the rapidly plunging shares, while car sales have plunged in August, most likely a reflection of declining availability of credit. Banks and real estate developers, who are heavily dependent on external funding and lax lending standards, could be among the first real victims.
The Russian economy is thus facing the biggest test since the crisis of August 1998. But one of the biggest differences, of course, is that the country’s finances are in much better shape now than 10 years ago, with nearly $600 billion in Central Bank reserves and several reserve funds. Today, the economy is also more diversified, and its banking system better capitalized and regulated.
Nonetheless, it is crucial for investors to see concrete evidence that the safety cushion the country has created during the sunny days of constantly climbing oil prices will be sufficient to defend the banking system and the currency. They also need to be assured that domestic consumption will continue to expand even if oil prices drop to $70 per barrel and that the government is ready to swiftly and effectively react to the crisis with appropriate policy measures.
Prime Minister Vladimir Putin said Tuesday that Russia will be able to relatively easily survive the current crisis, while Finance Minister Alexei Kudrin said the Russian budget will remain in surplus in 2009 even if oil averages $70 per barrel next year. I tend to agree with these conclusions. Russia’s reserves seem more than adequate compared to the some $23 billion that foreign investors have so far withdrawn since the conflict with Georgia broke out in early August. Moreover, with virtually no debt, the Russian state has substantial borrowing capacity. I believe that the Russian budget will remain in positive territory as long as the price exceeds $70 per barrel.
The government’s response to date has been adequate and professional. The Central Bank has provided the three major banks — Sberbank, VTB and Gazprombank — with $44 billion in emergency funding to be used to improve the liquidity throughout the banking system. At the same time, the government has thus far steered away from the direct intervention in the stock market — and correctly so because it would amount to bailing out portfolio investors using Russian government funds, and this has proven to be very ineffective in the past in many other markets.
It is probably too early to declare an end to the crisis. We can expect more failures among the financial institutions and possibly among real estate developers when external financing dries up. It will also take some time for the liquidity in the banking system and the stock market to stabilize.
Still, it is important to remember that all major emerging market crises in history were predominantly top-down in nature, usually involving defaults on sovereign debt, massive currency devaluations and political upheaval, or a combination of the above. In Russia’s case, its reserves should be more than sufficient to weather the crisis, and it is not going bankrupt as it did in 1998. The country’s largest companies continue to generate massive cash flows even at reduced commodity prices, and its economy remains strong. Yes, the economy is slowing because of declining investments amid a serious credit crunch, but the absolute growth rates of both gross domestic product and corporate earnings remain healthy. The falling commodity prices and rising focus on costs by major Russian companies are likely to reduce inflation to a more manageable number. And while decoupling from the fortunes of the U.S. economy or broader global economic models is impossible in these jittery markets, the resilience of the Russian economy and corporate earnings will ultimately be recognized by investors.
The bottom line is that over time, markets with strong fundamentals and low valuations always recover after corrections. Russia has strong fundamentals and low valuations, and therefore it is going to recover sooner or later. The hysterical forced-selling in September could be the harbinger that the market’s true bottom is approaching.
Steven Dashevsky is managing director and head of equities at UniCredit Aton in Moscow.
TITLE: Why the Casualty Numbers Don’t Jibe
AUTHOR: By Yulia Latynina
TEXT: Russia and South Ossetia can’t seem to agree on their casualty numbers. South Ossetian leader Eduard Kokoity claims that 1,600 people died in the five-day war, but Alexander Bastrykin, head of the prosecutor general’s Investigative Committee, puts the figure at 134.
What is the reason for the discrepancy? One possibility is that Bastrykin named the figure of 134 precisely because this was the correct figure.
Don’t forget that before the war, Kokoity was all geared up for a military conflict. “We retain the right to strike Georgian cities, and we have the means to do this,” he said in an interview published in Nezavisimaya Gazeta.
What “means” Kokoity had in mind became clear soon after his interview. On Aug. 6 — three days before the war — journalists who had been sent to report on the struggle the South Ossetian people were waging against Georgia, reported seeing Russia’s 58th Army positioned on the Russian side of the Roki Tunnel, the only entry point into South Ossetia.
If, on the night of Aug. 8, South Ossetian and Abkhaz separatists, armed with Russian tanks, fighter aircraft and Tochka-U missiles, had fought against the Georgians without the help of Russian forces, Moscow’s position as an innocent bystander in the conflict would have been unassailable, and there would have been no talk of international sanctions against Moscow.
If this were the case, on Aug. 8 during the Olympic Games in Beijing, Prime Minister Vladimir Putin could have looked into the eyes of not only U.S. President George W. Bush, but also Georgian President Mikheil Saakashvili who was supposed to attend the games, and tell both of them that Kokoity had lost his mind by unilaterally initiating this attack against Georgia. Furthermore, Putin could have played stupid by claiming not only that he knew nothing about Kokoity’s plans, but also that he couldn’t clarify the situation with the South Ossetian president because he was unable to reach the Kokoity by cell phone from Beijing.
Russia very much wanted to lay low in the conflict by quietly and covertly aiding South Ossetia’s forces. But when Saakashvili launched a preemptive attack against South Ossetia’s beleaguered and outnumbered army and when it became clear that South Ossetian forces were unable to resist, Moscow was forced to fight Georgia directly in open warfare. The result was a war fought mainly with artillery and aerial bombings.
From that point on, it became clear to the world that it was Russia’s massive 58th Army — and not South Ossetian fighters — that was shelling South Ossetia and parts of Georgia. It was also clear that Moscow carried full responsibility for the aggression.
In the end, the Kremlin failed to achieve the main goals of the war that it had been planning for many years: toppling Saakashvili and gaining control of the oil pipeline running through its territory.
The only winners in this fiasco turned out to be the South Ossetian leadership. Behind the cover of Russia’s forces in the region, they were able to finally resolve the “Georgian problem” in their republic. “We have leveled them all,” said Kokoity, referring to the destruction of Georgian villages located in South Ossetia.
Russia is probably not too happy about having to bear the entire political burden of fighting the war against Georgia. Moreover, the victory cost Russia an incredible amount of money when considering all of the armaments, bomb shelters and other military aid Moscow poured into South Ossetia in the months and years leading up to the war.
Indeed, the Kremlin is upset that it has been stuck with a huge bill for the war in both financial and political terms. Maybe this explains why Russia’s Investigative Committee figure for war casualties is 12 times lower than what Kokoity claims.
Yulia Latynina hosts a political talk show on Ekho Moskvy radio.
TITLE: Raw power
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The Stooges, the forefathers of punk from Detroit, is one of the most influential rock bands ever, and they are coming to St. Petersburg. Formed in 1967 by Iggy Pop, the band did not look or sound like any other 1960s band, with its raw, loud, unstructured songs such as “I Wanna Be Your Dog” and “No Fun,” and Pop’s wild live performances. The British punk rock musicians of the late 1970s all cited The Stooges as an influence, while The Sex Pistols even covered “No Fun.”
Reformed with original members, brothers Ron and Scott Asheton, on guitar and drums, respectively, in 2002, The Stooges released its fourth studio album, “The Weirdness,” the follow-up to its 1974 classic “Raw Power,” last year.
Scott Asheton spoke to The St. Petersburg Times by phone from a hotel in Finland.
Q: How did the band get together again and what was the idea?
A: The exact year was, let’s see, 2002, and we’ve been touring a lot since. This year we played the Isle of Wight, which is a huge festival, that was good…
Me and my brother worked at some new songs to get them ready for Jim, for Iggy. Iggy’s never been out of the business, my brother and I have never been out of the business. I’ve been in a lot of different bands through the years and getting back together was, you know, like something that, I think, people wanted to hear and see and we were all for it. We enjoy playing the songs very much and we have a good time, the shows are good, we bring a lot of energy to stage, Iggy is good as ever, he’s in a good shape physically, mentally, he’s good. My brother is good, maybe better than he’s ever been.
But getting back together brought us all closer because we had been apart for a long time. And we’ve just been enjoying it, looking forward to carrying on, and I think we are going to take a break soon because we’ve been going hard at it for five years. We are due a little break and maybe we’ll put together another album and just continue on. That’s the goal.
Q: How did “The Weirdness” come about? What do you feel about the album?
A: Well, we, me and my brother, spent a lot of time with Iggy trying to put things together. We did it with Steve Albini in Chicago, and he’s kind of an old-school producer, he uses the older equipment, the older microphones, and he gets more of a sound that you have related to all of your life. With new technology things sound different.
So one reason we like him is because he’s old-school with more like a rock and roll, traditional recording style. It took us a while to put songs together, to put the album together, and then we went out to London, England, to Abbey Road and had it mixed, mixed it down and had it mastered there. The albums are doing alright. We play some songs from the album at our live show and they seem to get a good response, and we are looking forward to do another album.
Q: Was the idea basically the same as it was when The Stooges appeared for the first time?
A: Yeah, it was actually pretty much not the same. The next album we do will be more like the way we used to do it. But this album, “The Weirdness,” was more, like, structured, put together, with a lot of thought. But a lot of times the way we used to write was not with much thought: just play it, and what comes out, comes out.
What’s hot is fresh and what’s fresh is creative ideas. It’s a good way to go and I think we’ll try to do a more spontaneous thing next time, something that comes across and tells a story of rock and roll.
Q: How did you find it being in The Stooges again, when everything has changed, the world has changed and the music has changed?
A: Yeah, things definitely change, you know, things are always gonna change.
There’s a place for the band right now, because there’s a lot of young rockers who want to play hard and loud, and the audience is there.
Things have changed, sometimes for the good and sometimes for the not-so-good, but I think this is a good time right now. I think there are a lot of happy rock and rollers out there, and I know last year in Moscow there was a lot of happy- and into-rock and roll people at the show. So if you are thinking that a change wouldn’t be good for us, it’s actually the other way around, this time is good for us.
Q: Many people complain about the music industry dying. Is it, in your opinion?
A: Yeah, the change is the computer age of iTunes and Wi-Fi, and a lot of kids will buy an album and make copies for all their friends. A friend buys a copy and makes copies for all those guys. So not as many actual CDs are being sold, record companies are kind of struggling that way.
It’s harder for the younger bands than it used to be, because now record labels are wanting to make their own bands; they want to make a band, record them, sell the product and then take all the money. And it’s discouraging for younger players to think about dealing with those people, so they look for alternative ways. So a lot of them look very good on independent labels and just sell their own things without a record label. And some of them actually end up pretty good.
They end up playing bigger venues, good shows, they get large audiences.
You know, Internet reaches around the world, and sometimes they can do more than a record label can do.
So in that change, in that way, you know, the record industry is struggling, and yes, they’re really hard to deal with, but kids and younger players are finding other ways to get around working with record companies. You know, everyone can start his own label, everybody can sell any product they want. And some of the bands are really good at it.
Q: What music do you usually listen to, if any?
A: Well, I have a 16-year-old daughter and she listens to all the new rock and roll bands, and I find out what’s going on through her because she’s in that age group and there’s a lot of kids out there that really like rock and roll.
So I pretty much know a lot of the bands – whether I want to buy their CD or not, it’s another story. But some of them are really good, some of them seem like maybe in a couple of years they will be really good.
There’s no problem with the scene, no problem with the lack of kids wanting to rock and roll. You know, there’s big venues, and thousands and thousands of people show up. And these are kids that see their bands on the internet, because in the industry, the MTV thing is pretty much not even a music channel anymore. It shows these weird reality TV shows and they don’t pay attention to music all that much.
It used to be a good show, when it first came, it was 24 hours, one band after another, it was like “Wow, this is great!” You know, we could find out about a lot of bands on this show. So now with young people going to the Internet, they don’t even need to watch anything on TV, they’ve got their laptops, they can find out anything they want.
Q: So it’s positive?
A: Yeah, yeah, I’d say so.
Q: Could you give some names of the bands that you found interesting?
A: OK. A really good band right now that’s young and doing good is the band called Muse. And another band that kids really seem to like is Cobra Starship and then bands like Panic! At the Disco. My Chemical Romance, The Hives, are doing good. Let’s see… what are the bands my daughter likes. Oh, The Kooks are really young and they’re doing really well.
I like The Kooks, Hives, Muse… they are bands that are worthy to be heard.
Q: What will be the difference between the upcoming concert and your concert last year in Moscow?
A: There will be some different songs: we are doing “Search and Destroy,” we’re doing “I Got a Right” and we do songs from the first two albums, and then we do some “Raw Power,” and we do songs off “Skull Ring,” and we do songs off “Weirdness.” So we pretty much cover four albums and another two songs. What will be different is that we have some different material from the last time we played.
But, you know, the standards, the old greats — people still love to hear them and we could probably play those things forever, like “I Wanna Be Your Dog” and “No Fun.” You know, people will never, I think, get tired of hearing those songs.
Q: Does Iggy Pop perform exclusively with The Stooges or does he do some solo concerts as well?
A: Yeah, he gets a lot of offers from a lot of people to do a lot of things. He has a contract, the rest of us don’t. He’s obligated, he has to do certain things because of his contract.
Nobody has anything against him doing what he wants to do. We all have the same freedom, except that me and my brother choose just to stay in the vein of the band and think of material, and we have no plans to wander off and join some other bands or anything. [Pop is] free to do what he wants. He works hard, he’s worked for many years and he’s still got it. He’s still active. He’s not stopping. All the more power to him.
Q: The Stooges’ sound was pretty radical and avant-garde when you started out in the late 1960s. How did it come about?
A: Yeah, well, you know, there was a lot of bands playing when we started out, and the main thing is that we didn’t want to sound like any other band for a couple of different reasons — one being that we couldn’t!
We were just being creative, having new ideas. We were happy to grow up in the music scene in Detroit, where things were kind of on the rough side, you know, kind of a hard side, and that’s what people were, you know.
They didn’t want to hear love songs; they wanted to hear something hard and loud, brash. You know, they just didn’t want to sit there and listen to some nice music. I mean they liked music, but they didn’t want to listen to stuff maybe their mom and dad liked to listen to, and sometimes, for that matter, the stuff that was on the radio.
So we did it really well at that time, because there was a lot of different bands, and we were different. The industry was actually still pretty young for different kinds of music, rock and roll. You know, we are talking about the late 1960s, and rock and roll didn’t really even start until the 1950s, so in the 1960s it was only, like, ten years old. It wasn’t that old a style of music. Rock and roll was still very, very young.
So we got in kind of early, you know, not at the very beginning, but we got in pretty early so there was a lot of labels looking for new and different [bands]. There were almost too many bands at that time. But that’s how we got started. We just wanted to be different. We didn’t want to do what other bands did. And growing up in a rough place kind of came out in the music.
Q: What do you think about being described as a punk band? Many think that punk started in the late 1970s.
A: Things seem to go in cycles and in waves, and it’s also a big circle, it’s going to come back around. It might move off somewhere, but then it’s going to come back around and you jump on that wheel and do what you can. After the early rock and roll, then came this New Wave era… Well, in the 1970s, there were hard rock bands, and then disco and then New Wave and then techno and then rap. It’s a big wheel, and the big wheel is turning. They come up and down at the bottom of the wheel. So if you don’t hold on, you’re gonna fall off.
Right now that wheel is coming around and I think it’s coming around more back to rock and roll. I know there’s a lot of big techno/disco bands, and I know there are big rap bands, but, you know, everyone has a place. There are enough different varieties of music, everyone has a different choice of what they like and what they are going to do.
But things change. You know, things are going in waves, and people in the industry, they keep an eye on that, they keep an eye on the people, because they’re really dictating what’s going to do well and what’s not going to do well. So it’s staying in tune with what the people want, what they like, what the scene is and what direction things are heading in and then try to use that to your advantage. As a songwriter, player, musician, you try to get on that wheel and ride it.
The Stooges will perform at Ice Palace, 1 Pr. Pyatiletok, M: Prospect Bolshevikov, on Monday. www.iggypop.com
TITLE: Italian lessons
AUTHOR: By Matt Brown
PUBLISHER: Staff Writer
TEXT: Polenta // 7 Bolshoi Prospekt, Petrograd Side. // Tel: 325 1356. www.concorde-catering.ru // Open daily from noon through 11 p.m. // Menu in Italian and Russian. // Dinner for two 2,340 rubles ($93).
A big old fashioned meat-slicer, the kind normally seen behind the Deli counter, stands in the center of Polenta, a fancy new Italian restaurant on Bolshoi Prospekt on the Petrograd Side, and every now and then a chef in a floppy hat emerges to slice Carpaccio.
The glossy red meat-slicer is a fitting metaphor for Polenta itself — the latest venture from Concorde Catering, the blindingly glamorous company behind trendy hotspots such as Glyanets (Gloss), Russian Kitsch and Na Zdorovie.
Like the meat-slicer, dining at Polenta is theatrical and superfluous, as mechanical as the white automatic piano churning out eerily unkillable Toto Cutugno hits and as insubstantial as the ceiling-to-floor lighting fixture that features in one of the restaurant’s five rooms.
The restaurant is intricately arranged on three levels, fresh herbs grow in terracotta pots in the window, and jars of differently shaped pasta and huge golden-green bottles of olive oil line special shelves.
Oversized glasses contrast bizarrely with spindly cutlery laid next to fashionably square plates in shades of mustard and lentil.
A host seats guests and two different wait staff deal with food and wine separately.
A complementary bowl of light and dark bread rolls and breadsticks is served with a flourish.
The wine waiter drapes napkins suggestively near diners’ crotches.
If you can bear all this desperate fuss, Polenta offers a fairly priced, reasonable range of simple, well-made Italian classics.
The wine card was extensive with, at its cheaper end, for example, a robust red from Tuscany, Villa Antinori 2004, for 1,100 rubles ($42).
The wine went well with a starter of Carpaccio with mozzarella and lollo rosso for 310 rubles ($12) but less well with Neapolitan calamari with tomato and basil for 320 rubles ($12).
The menu has a healthy emphasis on fish and seafood. A popular main course option is the Dorado fillet, baked with mushrooms (340 rubles/$13) served with fried potatoes (90 rubles/$3.50). The fish was cooked to perfection with its flaky flesh exuding satisfying wafts of steam but the potatoes were over cooked, over-seasoned and dry.
The pasta dishes on offer provide excellent value in the swish surroundings, priced between 100 and 300 rubles a bowl.
However, tagliatelle with zucchini and shrimp was a disappointment simply because there was no sauce. Seemingly part of a disturbing new trend sweeping St. Petersburg, it may be healthier to allow customers to salt, season and oil the pasta themselves in order to provoke flavors from bare ingredients but it shows a distinct lack of imagination.
Meanwhile Polenta specializes in its namesake dish — the boiled cornmeal dish with a resemblance to Southern grits, Brazilian angu and African pap — with a variety of dishes prepared to Italian peasant recipes.
Other treats include seasonal fresh fruit — watermelon right now — cheese plates and platters of cold cuts. With its Deli atmosphere and upscale, aspirational clientele, Polenta even has a slogan: “Italian Lessons.”
TITLE: Beijing’s Moment of Glory Over as Paralympics End
AUTHOR: By Stephen Wade
PUBLISHER: The Associated Press
TEXT: BEIJING — Beijing capped its six-week run as the center of world sports, ushering out the Paralympic Games on Wednesday with a lavish closing ceremony.
The ceremony marked the end of seven intensive years of preparations and $40 billion in spending on venues and infrastructure — all meant to symbolize China’s emergence as a leading nation in the 21st century.
A 91,000 sellout crowd in the Bird’s Nest National Stadium saw the ceremonial flame extinguished and the event formally handed over to London, which will host the next Olympics and Paralympics in 2012.
As with the Olympics, officials praised their Chinese hosts for the striking venues, tight organization and stadiums that were mostly filled for 11 days of competition.
The games were held in nearly perfect weather with blue skies and light traffic, leaving Beijing’s chronic air pollution a distant memory.
However, traffic control measures are slated to end Saturday, with 2 million vehicles expected to return to the roads. In addition, heavy industry— shuttered for two months—and building construction is expected to return to pre-games levels, along with accompanying pollution.
“These games have been great games,” said Philip Craven, president of the International Paralympic Committee. “Everybody realizes that. These are the greatest Paralympic Games ever.”
The symbolic hand over came as London Mayor Boris Johnson and Beijing counterpart Guo Jinlong gathered on the infield. The London handover segment featured a red London double-decker bus, London landmarks like Nelson’s Column and a moment when a “tea lady” arrived and the show stopped.
Because if one thing unites China and Britain, it is the agreement that all things — even an Olympic ceremony — must stop for tea.
China led the gold-medal table in the Olympics and did the same in the Paralympics, winning 89 gold and 211 overall. Britain was No. 2 with 42 gold and 102 overall. The United States was No. 3 with 36 and 99.
South African swimmer Natalie Du Toit, who also competed in the Olympics, won five gold medals. She lost her left leg after a 2001 motorcycle crash.
Compatriot Oscar Pistroius, a double-amputee sprinter who runs on carbon-fiber legs, won three golds in 100, 200 and 400 meters.
He is hoping to run against able-bodied athletes in next year’s world championships in Berlin, and the London Games. Du Toit also plans to compete in the regular Olympics in London, in the 800-meter freestyle and the 10-kilometer open-water swim.
Four athletes were sent home for failing pre-competition doping tests — a German wheelchair basketballer, and powerlifters from Pakistan, Ukraine and Mali.
In a lunch Wednesday for foreign dignitaries, China president Hu Jintao said the Paralympics would push the government to improve care for the disabled, who historically have received little help or visibility in Chinese society.
“The Chinese government and people will build on the success of the Beijing Paralympic Games to carry forward the humanitarian spirit and advance in an all-round way the well-being of people with a disability in China,” the state-run Xinhua news agency reported Hu saying.
Four thousand athletes from 147 regions and countries took part. That number is expected to reach 4,200 in Britain, which gave birth to the modern-day Paralympic Games. The genesis of the games came in 1948, when German neurologist Ludwig Guttman organized an athletic event in Buckinghamshire — northwest of central London — for soldiers wounded in World War II.
Unlike the tight security at the Olympics, security was much looser during the Paralympics, with the Olympic Green area filled nightly with people lingering on strolls between venues.
That area was often nearly empty during the Olympics, as ordinary citizens were not given access.
It also ends a special run for 100,000 games volunteers, who staffed every nook and cranny at the venues. Their friendly efforts were credited with softening the image of China’s authoritarian government, which before and during the Olympics cracked down on security, visas and battled with journalists over blocked Internet access and freedom-of-the press issues.
“It’s no use being sad, it’s all ending anyway,” said Jiang Wei, a 19-year-old university student who worked since July 8 in the main press center. “We can take memories and get on with our lives.”
TITLE: Zenit Defeated by Juventus in Turin
PUBLISHER: Agence France Presse
TEXT: TURIN, Italy — Juventus marked their return to the Champions League after a two-year absence with a hard-fought 1-0 Group H victory over UEFA Cup holders Zenit St. Petersburg in Turin on Wednesday.
There was little to choose between the two sides until veteran Italy forward Alessandro Del Piero’s swerving 30-yard freekick deceived goalkeeper Vyacheslav Malafeev.
Zenit had more of the ball but failed to take advantage of their chances, although their Dutch coach Dick Advocaat vented his fury at Belgian referee Franck De Bleeckere after the game.
“In my opinion he was a little bit impressed by the Italian team,” he said wryly.
“But I can understand that, I know how this world works.”
Despite the setback, Advocaat was pleased with his team’s overall performance.
“I’m disappointed. Today showed that if you don’t take your chances, you will lose and that happened in a really Italian way.
“If you saw the game I saw, Zenit played the better football but football is about scoring and we failed to do that.”
Juve coach Claudio Ranieri agreed with Advocaat’s assessment of the game.
“He’s right,” he admitted. “We knew we were playing a great team and they proved their worth here.
“It wasn’t easy, Zenit were stronger than us physically as they are coming towards the end of their season.
“We weren’t fluid, we didn’t pass the ball well and we couldn’t find the right solution.
“It was very difficult, playing on this (bumpy) pitch was very difficult and because of these difficulties I was delighted with the spirit of sacrifice the team showed.”
Zenit had the first clear chance of the match with Danny almost turning home a sweeping move on 11 minutes after Igor Denisov headed Pavel Pogrebnyak’s left wing cross back across goal for the Portugal forward, who shot wide with the goal at his mercy.
Minutes later, though, Zenit gave the ball away in midfield and Del Piero almost capitalized, crossing for Trezeguet who headed well wide.
Zenit visibly grew in confidence after the break and started to see a lot more of the ball with the previously ineffective Andrei Arshavin increasingly getting involved.
They were denied a freekick on the edge of the Juve box when Denisov went to ground a little too easily under a challenge from Momo Sissoko.
But on 56 minutes Arshavin played in Radek Sirl only for Italy goalkeeper Gianluigi Buffon to rush out and block the leftback’s shot.
Juve started to come back into things, though, as Denmark midfielder Christian Poulsen forced Malafeev into a sprawling save with a flicked header from a Pavel Nedved freekick on 74 minutes.
Just two minutes later came Del Piero’s winning strike.
Zenit, who seemed to have missed their chance, had one last opportunity as Arshavin burst past two tackles and into the box but centre-back Giorgio Chiellini stood his ground and stopped the little magician in his tracks.
TITLE: Indian Team Hopes for New Start During Australian Tour
PUBLISHER: Reuters
TEXT: MUMBAI — Sachin Tendulkar is confident that the racism row that marred India’s tour of Australia in January will not cast a shadow on next month’s test series against the world’s top-ranked team.
“I don’t think there is any friction between us,” Tendulkar told reporters on Thursday.
“As far as the Indian team is concerned, we would want to be competitive but play in the right spirit. I am very sure that the Australians would want to do the same thing.”
India threatened to pull out of the series in Australia after spinner Harbhajan Singh was initially found guilty of racially abusing all-rounder Andrew Symonds in the acrimonious second test in Sydney.
A standoff between the teams ended after the charge was downgraded on appeal to using abusive language and the bowler let off with a fine. Australia won the series 2-1.
Symonds was omitted from the touring squad named Friday after missing a compulsory team meeting to go fishing.
“I do agree they don’t happen every weekend,” Tendulkar said of the row. “But such things have happened in the past as well.”
Australia arrive this month in India ahead for the four-match series which begins on Oct. 9 with the first test in Bangalore.
Tendulkar, who returns from his latest injury layoff in a premier domestic game next week, played down talk that the tourists were a weak unit.
Australia named uncapped leg-spinner Bryce McGain, who could make his test debut at the age of 36, and offspinner Jason Krejza in the squad to replace retired Stuart MacGill.
“As we all know it [Australia] is the number one team in the world. They will come here with serious force,” Tendulkar said.
“They still have a lot of experienced players in the team. It is not that it is a completely transformed side with no senior players in the team,” he added.