SOURCE: The St. Petersburg Times
DATE: Issue #1414 (78), Tuesday, October 7, 2008
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TITLE: Gay Film Festival Held In Secrecy
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The Side by Side Film Festival, Russia’s first international gay and lesbian film event, which was apparently stopped by the authorities on Thursday when two venues that were to hold the screenings were raided by the fire inspectorate and ordered to close, went on in secrecy over the weekend.
“We did hold the film festival at a closed venue, there was not much space, only for 100 people, so we did it mostly for those who visitors to the city who’d come especially,” said Irina Sergeyeva, one of the festival’s organizers, by phone on Monday.
According to Sergeyeva, two documentaries, one short film and three feature films were shown during the two days. The festival also included a round-table discussion of Moscow director Maxim Zirin’s documentary “The Alien Body,” about a transsexual, and a performance from U.S. director John Cameron Mitchell, who was one of the festival’s international guests.
“He said he never saw our authorities being so efficient [in stopping the festival],” she said. 
“[However the festival] went very well, the jury was working and we will announce the winners later this week.”
The screenings were not advertized anywhere, including on the Internet, the times being announced by phone calls or at meetings. A “secret” press conference, featuring Mitchell and film directors and executives from the U.S., Germany, Kazakhstan and Russia, was held at a kindergarten on Friday, with the participants having to wear blue shoe covers to keep the place clean.
Side by Side’s organizers are now planning to hold screenings of the festival’s films for the local public at various institutions.
“It will be not the whole festival at once, we’ll be just showing films, bit by bit,” Sergeyeva said.
On the night of the planned opening audience-members who came to see the films were met by the police, who came in several trucks, bailiffs and officers from the Emergency Situations Ministry. 
“But I don’t think they came to get us, they came to close the club,” Sergeyeva said. “The Emergency Situations Ministry officers came in and switched off the lights.”
Sergeyeva said she still had a problem understanding what hit the festival.
“It’s difficult to understand. It’s clear there is some stigma, a certain pressure, why such fear emerged is difficult for us to say,” she said.
Since January, the festival has been facing opposition from some figures in Russia’s cultural establishment, such as when Nikolai Burlyayev, an established actor and the head of Zolotoi Vityaz film festival that he describes as an “International forum of Slavic and Orthodox Christian peoples,” publicly opposed the event as “pathological” and dismissed gay people as “degenerates.”
However, there was also a demonstration of solidarity with the Side by Side from the local art scene. Artists and filmmakers Glyuklya and Tsaplya, whose film retrospective at Rodina film theater coincided with the planned opening of Side by Side on Thursday, made a statement in defense of the suppressed event and started their own program, spontaneously, with Tsaplya’s short film, “Vika and Zhenya’s Room,” about two boys going through a sex change.
The venues’ problems also affected the other planned events that had nothing to do with Side by Side. Aposition, the international forum of experimental music also due to take place at The Place over the weekend, had to move to GEZ-21, where it was held in the afternoon, because GEZ-21’s own program started at 8 p.m. The Place, which was sealed on Thursday, was to reopen on Monday.
Sochi kept on functioning as a bar, with no film screenings, but said it would close for several workdays this week to meet the fire inspectorate’s demands.
Sergeyeva said that the organizers are planning to hold a full-scale Side by Side Film Festival next year.
“I hope that working tightly with the Culture Committee, organizations and the press we will take away that fear that formed for unclear reasons,” she said.
<i>For related story, see Arts & Features.</i>

TITLE: Israel to Press Russia on Arms Sales to Iran
AUTHOR: By Allyn Fisher-Ilan
PUBLISHER: Reuters
TEXT: TEL AVIV — Israeli Prime Minister Ehud Olmert will press Russia during a visit that began on Monday not to sell advanced missiles and weapons technology to Iran and Syria.
Addressing his cabinet on the eve of the two-day trip, Olmert said he would discuss issues of “special, immediate concern” including the supply of weapons to “irresponsible elements.”
Olmert, caretaker prime minister until a new government is formed following his resignation last month in a corruption scandal, meets Russian President Dmitry Medvedev on Tuesday and Foreign Minister Sergei Lavrov later on Monday.
Israeli defence sources, revising earlier statements that a deal between Moscow and Tehran was imminent, said on Sunday Iran had not received Russia’s advanced S-300 anti-aircraft system yet, though the countries were still discussing a purchase.
The S-300 would help Iran fend off any Israeli or U.S. air strike against its nuclear facilities. Analysts believe a purchase of the system by the Iranians could accelerate the countdown to military action designed to deny them the bomb.
Russia has denied intending to sell Iran the S-300, the best version of which can track 100 targets and fire on planes 120 kilometers away. The system is known in the West as the SA-20.
Hours before Olmert’s arrival, the Russian arms export agency, Rosoboronexport, said on Monday it had no information on Russian plans to deliver the arms system to either Iran or Syria, Russia’s Interfax news agency reported.
“We do not have any such information,” Interfax quoted the Rosoboronexport spokesman as saying.
Asked whether Iran had bought the missiles, Iranian Foreign Ministry spokesman Hassan Qashqavi gave a vague response on Monday in comments translated by Iran’s English-language Press TV.
“Iran’s defensive might is based on our indigenous capabilities and whatever action that helps with expanding and strengthening our military and defensive might, we’ll look into that,” Qashqavi said.
“We have good defence cooperation with the Russians. One example would be anti-aircraft systems. We have had good cooperation and we continue to cooperate with them,” he said.
Iran says its uranium enrichment activities are aimed at generating electricity. Israel, believed to have the Middle East’s only atomic arsenal, has called Iran’s nuclear program a threat to the existence of the Jewish state.
In his comments at Sunday’s cabinet meeting, Olmert said his first face-to-face talks with Medvedev since the Russian leader was elected in March would focus on the “security, military, diplomatic and international agenda between us and Russia.”
Israel is also concerned about reports Russia plans to supply advanced missiles to Syria. Russia has said any arms sales to Damascus would be solely for defensive purposes.

TITLE: Rice Denies Trying to Undermine Moscow in Kazakhstan
PUBLISHER: Combined Reports
TEXT: ASTANA, Kazakhstan — U.S. Secretary of State Condoleezza Rice on Sunday rejected any suggestion that U.S. efforts to build closer ties to Kazakhstan are meant to undermine Russian influence in Central Asia.
“This is not a zero-sum game,” she told reporters flying with her to the Kazakh capital. U.S. gains need not mean Russian losses, she said.
“First of all, Kazakhstan is an independent country. It can have friendships with whomever it wishes,” she said. “That’s perfectly acceptable in the 21st century, so we don’t see and don’t accept any notion of a special sphere of influence” for Russia in the region.
Later at a joint news conference with Kazakh Foreign Minister Marat Tazhin, Rice said no one should question Kazakhstan’s desire to have good relations with all countries.
“This is not some kind of contest for the affection of Kazakhstan,” Rice said.
Tazhin described his country’s relations with the United States as “stable” and Kazakh relations with Russia as “excellent” and “politically correct.” Asked by a reporter whether he considered his country to be in a Russian “sphere of influence,” Tazhin said no, adding that he believed such a question was of interest mainly to academics and journalists.
Rice also met President Nursultan Nazarbayev during her five-hour stopover.
During the talks, Rice was expected to seek closer energy ties with Kazakhstan, where U.S. companies have invested billions of dollars in oil money. But no concrete deals were expected to be reached.
Another issue was human rights. Kazakhstan’s democracy credentials are being closely watched in the West ahead of the country’s chairmanship of the Organization for Security and Cooperation in Europe in 2010.
“They are set commitments, and I expect Kazakhstan to live up to them. And they are commitments that they’ve taken and they say they want to live up to,” Rice said en route to Kazakhstan.
She added that the United States had raised some individual cases of human rights with the Kazakhs but gave no details.
With some of the world’s biggest oil reserves, Kazakhstan has played a careful balancing act by keeping smooth ties with Russia while looking to the West to diversify oil exports. To highlight his neutrality, Nazarbayev held large-scale military exercises with both NATO and Russia in the two weeks preceding Rice’s visit.
Rice also met with Kazakh Prime Minister Karim Masimov, who assured her that his country planned to follow a policy of different transit routes for its energy exports, Interfax reported Sunday evening.
“The prime minister confirmed that Kazakhstan still supports a multidirectional policy for transporting energy, including through Azerbaijan and Georgia,” the Kazakh governmental press service said in a statement released after the meeting, the news agency reported.
Astana “understands the role and place of Kazakhstan in the region and its responsibility for ensuring stability in the whole of Central Asia in the areas of both food and energy security,” Masimov said.
But the balancing act has been in doubt since Russia’s invasion of Georgia in August, which threatened to close off the corridor for pipelines around Russia.
Since Russian forces pushed close to Georgia’s capital before pulling back, the U.S. government has tried to signal its commitment to countries in the Caucasus and Central Asia. Last month, Vice President Dick Cheney traveled to Georgia, Ukraine and Azerbaijan, another important energy exporter in the region.
The administration does not want to be seen as the one “that lost Eurasia and the Caspian region,” said Ariel Cohen, an analyst at the conservative Heritage Foundation in Washington.
(AP, Reuters, SPT)

TITLE: Malevich Expected to Smash Auction Record
AUTHOR: By John Varoli
PUBLISHER: Bloomberg
TEXT: Sotheby’s said it will sell a painting by leading Russian avant-garde artist Kazimir Malevich that may fetch “in excess of $60 million” at an evening sale in New York on Nov. 3.
The 1916 “Suprematist Composition” recently hung in the collection of the Stedelijk Museum in Amsterdam and was restituted to Malevich’s heirs after a four-year court battle. They are selling the painting.
Malevich is considered by critics as one of the greatest figures in 20th-century art. He experimented in geographic shapes in abstract art, and is best known for “Black Square,” which is a black square painted on a white background.
“‘Suprematist Composition’ is a magnificent modern work of art of enormous art historical importance and cultural resonance,’’ said Emmanuel Di-Donna, Sotheby’s vice chairman of and head of evening sales, New York.
The painting goes on public display today at Sotheby’s London office, and will be on view through Oct. 20, the auction house said. From Oct. 29 to Nov. 3 it will be on display at Sotheby’s offices in New York.
“It ranks among the finest paintings of the 20th century, on a par with the best paintings of modern masters such as Picasso, Rothko, Pollock and De Kooning that have ever come up for sale either at auction or privately,” said Di-Donna in an e- mailed release.
“The sale confirms Kazimir Malevich’s place in the pantheon of 20th-century masters,” the heirs said in a statement released by Sotheby’s.

TITLE: Russia Seeks Tycoon’s Extradition from U.K.
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia has asked Britain to extradite a former oil tycoon who fled after what he said was severe harassment by the government, an investigative official said Monday.
Mikhail Gutseriyev, the former president of Russneft, fled the country last year amid what he said was “unprecedented hounding” from the state, including a tax-evasion probe. Analysts linked his troubles to a dispute with the state-run oil giant Rosneft over some oil fields.
Gutseriyev is in Britain and Russia has sent documents requesting his extradition, said Igor Tsokolov, spokesman for the Interior Ministry’s Investigative Committee.
Russneft was Russia’s seventh-largest oil company when Gutseriyev headed it. Pressure on Gutseriyev began to mount late in 2006, when federal prosecutors opened a criminal investigation. Charges of tax evasion and illegal business activity for exceeding production quotas at Russneft were filed against him last year.
Russia has unsuccessfully asked Britain to extradite other prominent figures wanted on what the accused claim are politically motivated charges, including the tycoon and former Kremlin insider Boris Berezovsky and Chechen separatist Akhmed Zakayev.
Relations between Britain and Russia plummeted to a post-Cold War low amid Russia’s demands for the extradition of its foes and its refusal to hand over the suspect in the 2006 radiation poisoning death of Alexander Litvinenko, an associate of Berezovsky.
Critics say the Kremlin used groundless criminal charges to strengthen its control over the lucrative oil industry under former President Vladimir Putin, who is now prime minister. Former Yukos oil company chief Mikhail Khodorkovsky is serving an eight-year prison sentence on fraud and tax evasion charges.
Most of Yukos’ former assets are now in the hands of Rosneft.

TITLE: Russian Rights Activist Tipped As Possible Nobel Prize Winner
PUBLISHER: The Associated Press
TEXT: STOCKHOLM — Human rights activists from Russia and China are considered front-runners to win the Nobel Peace Prize this week.
The Nobel announcements kick off Monday with the medicine prize. While the selections for the 10 million kronor ($1.3 million) awards in medicine, physics, chemistry and economics are usually met by approval from the scientific community, the peace and literature committees nearly always face accusations of political bias.
The top member of the Swedish Academy, which awards the literature prize, rejected the notion that politics had anything to do with its decisions. “One doesn’t read literature with the same part of the brain as one votes for a political party,” said Horace Engdahl, the academy’s permanent secretary.
Peace prize speculation is focusing on human rights, partly because 2008 marks the 60th anniversary of the signing of the UN Universal Declaration of Human Rights in New York in 1948. 
Peace researcher Stein Toennesson, whose picks tend to shape world speculation, suggested lawyer and activist Lidia Yusupova of the human rights group Memorial as a way of drawing attention to human rights abuses in Russia and to remember Novaya Gazeta journalist Anna Politkovskaya, who was gunned down in 2006.
“We always watch Stein Toennesson’s predictions with interest,” said Geir Lundestad, the prize committee’s nonvoting secretary.

TITLE: Foreign Minister Calls For Action Over Pirates
PUBLISHER: The Associated Press
TEXT: Russia will work with the United States and European Union to fight piracy off the African coast and wants naval forces gathering in the area to coordinate their efforts, Foreign Minister Sergei Lavrov said Friday.
Lavrov’s comments signal that momentum is growing for coordinated international action to back up the sharp response after the stunning seizure late last month of a Ukrainian ship with a cargo of 33 Soviet-built tanks and a crew that includes two Russians.
“Russia aims to prevent pirates from causing mayhem,” Lavrov said. 
He said nations with naval vessels in the area, which include the United States, should work together against piracy.
“It would be useful to coordinate the naval forces that are deployed,” Lavrov said, RIA-Novosti reported. “It seems everything is leading to this.”
A Russian warship with commandos aboard is headed to the waters off Somalia, where pirates are holding the MV Faina. The Navy said the frigate Neustrashimy is carrying marines and special forces but has also sought to play down talk of the use of force to free the Faina’s crew.
The United States and some of its allies already have 10 warships in the area in the Gulf of Aden, located north of Somalia on Africa’s eastern elbow and between the Indian Ocean and the Red Sea. The Gulf of Aden is crossed by some 20,000 ships each year.
Lavrov said Russia, “like the U.S. and EU,” will act on the basis of United Nations resolutions calling for international action against piracy.
A resolution adopted by the Security Council in May called on states and regional organizations “to take action to protect shipping involved with the transportation and delivery of humanitarian aid to Somalia.” In early June, a different Security Council resolution authorized countries, for a period of six months, to enter Somalia’s territorial waters and use “all necessary means” to stop piracy.
France’s defense minister said last week that eight EU countries have volunteered to take part in an anti-piracy operation off Somalia that could get a formal go-ahead next month. 
The EU patrols — which will at first involve only three frigates — will be modeled on the successes of another operation designed to protect World Food Program convoys destined for Somalia, a mostly lawless state where warlords and Islamic militias have replaced government control in many regions. French officials note that none of the 27 relief deliveries was hit by pirates.
Meanwhile, pirates holding the Faina gave no indication that they planned to surrender over the weekend as six U.S. warships circled the vessel with clearance from the Somali government to attack it.

TITLE: Troops Dismantle Security Zones
PUBLISHER: The Associated Press
TEXT: NADARBAZEVI, Georgia — Russian troops began dismantling positions Sunday in the so-called security zones inside Georgia they have occupied since August’s brief but intense war, a Georgian Interior Ministry official said.
The moves came as Russia faced a Friday deadline for pulling back its troops under terms of a deal brokered by French President Nicolas Sarkozy on behalf of the European Union. Hundreds of EU observers began monitoring Russia’s compliance with the pact last week.
The moves also followed the explosion of a car bomb outside the Russian military’s headquarters in South Ossetia on Friday, which killed seven soldiers.
Georgian and Russian authorities traded accusations over the blast, the deadliest single occurrence reported in South Ossetia since the nations fought a war over the region in August. Both sides claimed that the explosion was aimed at scuttling the fragile Western-backed cease-fire.
South Ossetia’s separatist leader, Eduard Kokoity, called the explosion “a targeted terrorist act” and claimed that the Georgian State Security Ministry was behind it. Russia’s Defense Ministry called it a “carefully planned terrorist act designed to undermine” the cease-fire.
Russia and Georgia went to war in early August after Georgia launched a massive barrage on the capital of South Ossetia, one of two Georgian separatist regions where Russia has troops stationed as peacekeepers. Russian forces then declared what it called a security zone roughly seven kilometers deep inside Georgia south of South Ossetia and the other separatist region, Abkhazia.
The EU-brokered agreement obliges Russia to pull its troops out of the zones by the end of this week, but Russia plans to keep thousands of troops inside Abkhazia and South Ossetia. 
On Sunday, troops lowered the flag at a Russian base in Nadarbazevi, about 50 kilometers northwest of Tbilisi. Georgian Interior Ministry spokesman Shota Utiashvili described the position as a communications center and said Russia had promised to leave it fully on Monday.
Utiashvili also said a checkpoint in Ali, in the zone around South Ossetia, was dismantled on Sunday and that Russian forces were leaving another position in Zugdidi, in the zone south of Abkhazia.
A spokesman for the European Union monitoring mission, speaking on customary condition of anonymity, confirmed that the Ali checkpoint was being taken down.
“We have to see how it ends, but so far this is a good sign,” Utiashvili said.
Georgian and EU officials could not immediately clarify how many Russian positions in total would have to be dismantled to meet the agreement’s terms. After the war, Russia said it would set up a total of 36 checkpoints in the security zones — 18 in each.

TITLE: Bill Proposes Return of Powers to Prosecutors
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — The State Duma is considering a bill that would restore to the Prosecutor General’s Office the right to open criminal cases against certain categories of senior government officials, a deputy said Friday.
According to the bill — drawn up by the Supreme Court and sent to the Duma on Thursday — the Prosecutor General’s Office should regain the right to open criminal cases against investigators, judges, prosecutors and lawyers, said Viktor Ilyukhin, deputy chairman of the Constitution and State Affairs Committee, which is considering the bill.
“It would be a positive improvement, even if the prosecutors do not get back the right to open criminal cases against Duma deputies, senators and judges from the Constitutional Court,” Ilyukhin said.
In May last year, a bill was approved to create the semiautonomous Investigative Committee to operate alongside the Prosecutor General’s Office. As a result, criminal proceedings against senior government officials and State Duma deputies are now conducted not by the prosecutor general, but by the chief of the committee. The prosecutor general retained the authority to call for inquiries. 
“The Prosecutor General’s Office role is now insignificant; it has lost its supervising powers. Now, we have investigators starting criminal cases against their former bosses. How can they be unbiased?” said Ilyukhin, a Communist deputy who once occupied a senior post in the Soviet Prosecutor General’s Office.

TITLE: In Brief
TEXT: <b>Chinese Milk Seized</b>
MOSCOW (AP) — Food inspectors have found nearly 2 tons of Chinese dry milk believed to be contaminated with the industrial chemical melamine in the far eastern city of Khabarovsk.
The country’s chief epidemiologist, Gennady Onishchenko, said that the dry milk was seized, Itar-Tass reported Friday.
Interfax, meanwhile, reported that inspectors have found more than 1,000 items containing Chinese dairy products around the country. And RIA-Novosti said milk powder containing melamine had been found in Tomsk.
Federal authorities on Tuesday banned all imports of Chinese dairy products following news that milk containing melamine may have killed four Chinese babies and sickened more than 54,000 others.

TITLE: Troika Head Gives  Diagnosis
AUTHOR: By Ellen Pinchuk and Alex Nicholson
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s economy is “quite vulnerable” to the global credit crisis and retail companies and developers are at particular risk, Andrei Sharonov, managing director of Troika Dialog investment bank, said.
“There are two main consequences for Russia, a lack of confidence and a lack of liquidity,” Sharonov, a former deputy economy minister, said in an interview Monday in Moscow with Bloomberg Television. “This problem is not only for financial institutions, but for the whole of industry, for the whole economy. Many companies feel these problems with debt financing.” 
Russia’s economic growth may slow this year more than the government expected because of the global credit crunch, President Dmitry Medvedev’s senior aide, Arkady Dvorkovich, said in September. The five-day war in Georgia, a slump in commodity prices and the seizure of global capital markets have triggered capital flight, with investors pulling out about $58.9 billion between Aug. 8 and Sept. 26, according to BNP Paribas.
Retail and real estate development companies were at particular risk, said Sharonov, who has previously likened the crisis to a “Pandora’s box.”
Oil companies “still enjoy a lot of liquidity,” he said. 
Sharonov said that Troika had solved its own problems for the “time being.”
“I hope that we will survive,” he said, while reiterating that Troika Dialog was not in talks with a strategic investor. “We are still independent and we think that we could enjoy this status for a while. It’s just a rumor.”
Billionaire Mikhail Prokhorov agreed last month to pay $500 million for half of Moscow-based Renaissance Capital, one of Russia’s biggest banks, after the credit squeeze led to a plunge in the country’s financial stocks and a two-day halt in Moscow trading.
Sharonov said that “there was a sense” that the government had dragged its feet with a package of liquidity-boosting measures, eventually worth over $150 billion, and the nation’s three biggest banks were not allowing the funds to trickle down into companies and smaller banks as intended.
“There was a camp that thought that the considerable reserves that have been collected meant that the economy was quite protected, that the problems on the financial markets were primarily due to speculators and wouldn’t affect the real economy. Now it’s clear that plenty of companies are already reducing their prices and production levels,” he said.
The Finance Ministry pledged $44 billion for Sberbank, VTB Group and Gazprombank on Sept. 17 on the understanding that the funds would be used to end a seizure on money markets, where rates soared to a record 11.1 percent that day.
“These resources aren’t being transmitted. This is the main problem,” Sharonov said. The three banks are not performing their government-ordained “role,” he said.
“They can’t give out money with their eyes closed, even at high rates. To an extent there is deadlock.”

TITLE: Micex Stops Trading After Plunging 18%
AUTHOR: By Denis Maternovsky
PUBLISHER: Bloomberg
TEXT: MOSCOW — Emerging market stocks fell the most in at least two decades on Monday and exchanges in Brazil and Russia were forced to halt trading as the global banking crisis escalated with European bailouts of Hypo Real Estate and Fortis, and oil fell below $90 a barrel for the first time since February.
Russia’s Micex index plunged 18 percent before trading was halted for a second time on Monday, and Indonesia and Saudi Arabia fell the most in at least six years. The MSCI Emerging Markets Index slumped 10.5 percent, putting it on course for the biggest drop since the Asian markets meltdown of October 1997.
Russian authorities grappling with the worst financial turmoil since the 1998 government default have halted share trading seven times in the past three weeks and pledged more than $150 billion for banks and companies through loans and tax benefits. Declines in Russia, China, and Brazil pushed the MSCI emerging market gauge down 44 percent this year, the biggest annual retreat in at least two decades.
“Dealing with the crisis will remain out of the hands of the domestic authorities,” said Ivailo Vesselinov, a senior economist at Dresdner Kleinwort in London. “This just goes to show how fragile sentiment is.”
Western European leaders meeting in Paris this weekend pledged to bail out their own nations’ banks, while stopping short of a regional rescue effort. Germany’s government, banks and insurers agreed on a 50 billion-euro ($68 billion) rescue package for commercial property lender Hypo Real Estate. BNP Paribas, France’s biggest bank, agreed to take control of Fortis in Belgium and Luxembourg for 14.5 billion euros ($19.8 billion), completing a breakup of the lender after a government rescue failed.
Stocks tumbled in Europe and Asia and U.S. index futures dropped, while treasuries advanced.
“In this environment, no one wants to buy because things are spiraling downward globally,” said Ronald Smith, chief strategist at Alfa Bank in Moscow.
Russia’s economy is “vulnerable” as the credit crisis worsens, with retailers and developers the most at risk, said Andrei Sharonov, managing director at Troika Dialog, Russia’s oldest investment bank.
“If people have limited confidence in several-hundred-year-old banking institutions, then maybe it’s not surprise they don’t have confidence in the Russian market,” said Mattias Westman, who helps manage about $5 billion in European emerging markets at Prosperity Capital Management in London.
“I’m sure there will be some casualties.”
The war in Georgia, falling oil prices and the seizure in capital markets triggered almost $60 billion in investor withdrawals from Russia since Aug. 8, according to BNP Paribas.

TITLE: Corporate Events Market In City Taking on New Levels
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: Dance shows, singing violinists, dancers in traditional Russian costumes adapted to mini skirts and non-run stockings and a host of other offers from numerous local event management companies were presented Friday at the Radisson SAS Hotel, marking the start of the 2009 New Year corporate party season.
People involved in the industry insist that it is the best technique for easing stress caused by working long, intense days and nights, as well as for relaxing interpersonal competition in management teams and boosting motivation to develop better working habits.
Many companies now list corporate parties as part of the social package offered to new employees.
“As well as medical and pension insurance, bonuses and additional paid vacancies, when making a job offer, companies offer corporate parties as well,” said an employee of Deloitte on Friday in an interview.
According to analysts, the average sum that companies can pay is not big, bearing in mind the results achieved by holding a corporate party.
“Companies usually pay $4,000 to organize a party with an all-night program, though this price does not include meals. A good meal can range from $140 to $200 per head,” said Pyotr Novik, general director of Spbpresent.ru holiday organization on Friday. He added that to realize each project, Spbpresent.ru does research into what the company wants to achieve by holding the event.  
“We are ready to make every celebration original, atypical, proceeding from the company’s professional habits and wishes, and to make the event interesting and unforgettable,” said Novik. 
The Radisson New Year fair demonstrated the services of small event companies which usually operate by renting out services such as chocolate and champagne fountains, balloon bouquets or butterfly fireworks on the Internet.
“Exotic butterfly fireworks are ordered most often by big companies for their corporate parties. During the event, we release hundreds of butterflies and the party guests have fun running and jumping trying to catch one,” said Irina Mikhailova, director of Anisima, which owns the only butterfly store in St. Petersburg.
According to Mikhailova, the price of a tropical butterfly in Moscow ranges from $70 to $100. Prices at her store range from $30 to $50 for a single insect, the price depending on the span of the butterfly’s wings.
Corporate New Year parties and company anniversaries are the two most important events for every serious company, said Yulia Anisimova, PR manager at the Radisson SAS hotel. 
Excursions to forests, scooter-driving, paintball and safari are new social trends that are seeing surging demand by many St. Petersburg companies for their corporate events.
“On these occasions, staff relax, make closer bonds between themselves and form new perspectives for the well-being of the team,” said Novik.
“Those who play hard, work hard,” is the motto of Akademiya Priklyucheniya, a local event management company. The company offers services to a variety of companies, ranging from small to very large, who are investing more and more in the idea, hoping that the saying is true.

TITLE: In Brief
TEXT: <b>Store Profits Fall 19%</b>
MOSCOW (Bloomberg) — Seventh Continent, Russia’s fourth-largest publicly traded food retailer, said first-half profit fell 19 percent on higher expenses at its banking unit.
Net income declined to $42.3 million from $52.4 million, the Moscow-based company said Monday in an e-mailed statement. Sales increased 33 percent to $791.4 million, helped by new stores.
Seventh Continent incurred first-half costs of $35.5 million from banking, compared with $29.5 million in revenue. The retailer holds a 25.5 percent stake in Bank Finservice.

<b>Net Inflow May Be Zero</b>
MOSCOW (Bloomberg) — Russia may see as much money leave the country as enters it this year, Interfax reported, citing Deputy Economy Minister Andrei Klepach.
Net capital inflow may total zero, or there could be a “slight” volume of inflow or outflow, the Moscow-based news service quoted Klepach as telling reporters in Minsk, Belarus, on Monday.
Russia certainly won’t reach a net inflow of $30 billion this year as previously forecast by the Economy Ministry, Klepach said, Interfax reported. The situation is “changing drastically,” he added, according to Interfax.

<b>Google Awaits Approval</b>
ST. PETERSBURG (Bloomberg) — Russia’s competition watchdog delayed approving Google’s purchase of a Russian advertising agency controlled by Rambler Media, Vedomosti reported, citing an unidentified official at the antitrust watchdog.
Google agreed in July to pay $140 million for 100 percent of Begun, the Moscow-based newspaper said. The Federal Anti-Monopoly Service requested additional information about the deal and postponed a scheduled hearing by a month to Oct. 22, according to Vedomosti.
Google’s Russian spokeswoman Alla Zabrovskaya said the company is not aware of the delay and expects a decision soon, Vedomosti said.

<b>Oil Producer Prices Cut</b>
MOSCOW (Bloomberg) — Russia’s biggest oil producers including Rosneft were cut by Credit Suisse as falling output, lower crude prices and rising costs restrain earnings.
Russian oil companies face “considerable headwinds,” the Zurich-based lender said in an e-mailed research note.
Besides Rosneft, the bank also lowered price estimates for Lukoil and Surgutneftegaz, as well as for pipeline company Transneft, according to the note.

<b>EBRD Helps O’Kay</b>
MOSCOW (Bloomberg) — O’Kay, a Russian superstore chain, has borrowed $90 million from the European Bank for Reconstruction & Development to refinance its debt.
The borrowing is the first part of a $200 million credit line given to O’Kay by the EBRD, the St. Petersburg-based company said Monday in an e-mailed statement. O’Kay didn’t disclose the interest rate on the loan, saying only that it is “significantly lower than current market levels.”
The retailer will take the rest of the loan by April 2009 and will use those funds for the chain’s expansion.

TITLE: Deripaska Gives Up 1.5 Bln Magna Stake
AUTHOR: By Max Delany
PUBLISHER: Staff Writer
TEXT: In the latest signal that no one is immune from the current financial crisis, billionaire Oleg Deripaska has handed over one of his biggest overseas investments — a one-fifth stake in Canadian auto parts maker Magna, worth $912 million — to creditors.
Deripaska, ranked Russia’s richest person by Forbes magazine, ceded his 20 million shares in Magna to an unidentified bank that financed the original deal, Magna said in a statement Friday.
In May 2007, Deripaska agreed to pay more than $1.5 billion for the Magna stake, held through his Russian Machines auto subsidiary. Since then, shares in Magna have tanked, losing nearly half their value.
Reports at the time said French bank BNP Paribas was helping finance the deal. 
“Russian Machines has made a decision to terminate their participation as a shareholder in Magna International due to the current global financial crisis,” Basic Element said in a statement posted on its web site Friday.
“Cooperation between Russian Machines and Magna in the development of the auto components business in Russia and other projects will continue as planned,” the statement said.
Analysts said the news was further proof that, after a year of lavish spending, Deripaska could be forced to sell off some of his major assets.
“Deripaska is facing very big liquidity problems,” an investment banker who covers the industry said on condition of anonymity, citing the sensitivity of the situation.
“He has been on a big buying spree ... and it seems like a lot of it was done through loans, and now with the current problems he is having trouble refinancing it,” the banker said. 
Over the past 18 months, Deripaska’s acquisitions have included a 30 percent stake in Austrian construction giant Strabag and United Company RusAl’s taking a 25 percent stake in Norilsk Nickel — one of the biggest deals in the country’s corporate history.
RusAl, in which Deripaska is the majority shareholder, took a $4.5 billion loan in March from a consortium of international banks to finance the purchase of the Norilsk stake. Norilsk’s share price has since fallen dramatically.
Basic Element spokesman Sergei Rybak dismissed suggestions that Deripaska’s firm was facing liquidity problems as “fundamentally” incorrect.
“We have the necessary liquidity,” Rybak said. “The firm’s debt burden is bearable.” 
Rybak refused to discuss the specifics of the decision to hand over the stake in Magna, saying only that “like any major company [Basic Element] is working to optimize our credit portfolio.”
A spokeswoman for BNP Paribas in Moscow refused to confirm that the bank was involved but said it might issue a statement in the next few days.
The events surrounding Magna come amid a series of media reports that Deripaska could be facing liquidity issues.
On Wednesday, Vedomosti reported that Soyuz Bank, owned by Deripaska, was looking to boost liquidity by off-loading around $800 million of loans.
On Friday, production was halted for the rest of the month at Deripaska’s pulp plant near Lake Baikal, Interfax reported, citing the leader of the plant’s labor union.
The halt was because of “temporary difficulties” connected to the payment of products due for export, Interfax reported.
Basic Element CEO Gulzhan Moldazhanova confirmed Sunday that the holding as a whole was not seeing any problems with liquidity. But she said Basic Element had stopped hiring staff because it saw “no bottom” to the credit market turmoil.
“Our country’s economy and the global economy will go through a slowdown,’’ she told reporters, Bloomberg reported. “Our hiring was tied to expansion’’ and the start of new projects.
When the Magna deal was signed it was heralded as a major step toward increasing foreign involvement and expertise in the Russian auto industry and giving the Canadian firm greater access to the booming regional market. 
Magna on Friday praised its partnership with Deripaska and promised that it was not withdrawing from the Russian market.
“Our strategic alliance with Russian Machines has assisted us in accelerating our growth on the Russian market,” Magna co-chief executive Siegfried Wolf said in a statement.
“We believe that the Russian market still holds significant opportunity for us and intend to continue to pursue joint opportunities,” Wolf said.

TITLE: TNK-BP Deal Almost Official
AUTHOR: By Lucian Kim
PUBLISHER: Bloomberg
TEXT: MOSCOW — BP Chief Executive Officer Tony Hayward said he expects to complete the legal documents governing Russian venture TNK-BP by Dec. 1, putting a formal end to a shareholder conflict that threatened to paralyze Russia’s third-largest oil producer.
The Russian government “indirectly” helped resolve the dispute by bringing the two sides to the negotiating table, Hayward said in an interview with the Kommersant newspaper published Monday. BP spokesman Vladimir Buyanov confirmed the authenticity of Hayward’s comments.
BP last month agreed to replace TNK-BP CEO Robert Dudley, meeting a key demand of its billionaire partners in the 50-50 venture. The two sides also agreed on a capital spending plan of $4.4 billion and a dividend of almost $1.9 billion, allowing a resumption of normal operations at the Moscow-based company.
The shareholders are now reviewing a list of half a dozen candidates to replace Dudley, Hayward said, adding that the new CEO would be a Russian-speaker though not necessarily a Russian citizen. Three independent directors, who may come from politics rather than the oil industry, will also be chosen this year to help regulate any potential disputes, the BP chief said.
TNK-BP is likely to hold an initial share offer before 2010, Hayward said, with each side selling 10 percent of their shares.
For now the company will focus mainly on exploration and production, including new projects in eastern Siberia and possibly other countries, Hayward said. TNK-BP is considering expanding into Kazakhstan, Turkmenistan and Venezuela, he said, with a Venezuelan project at the most advanced stage.

TITLE: Nokia’s iPhone Rival Expected in ’08
PUBLISHER: Reuters
TEXT: LONDON — Nokia’s answer to Apple’s iPhone will go on sale in Russia and six other countries — across Asia, the Middle East and Europe — this year but will miss the Christmas shopping season in most developed markets.
The first touch-screen phone from the world’s top cell phone maker will go on sale in Russia, India, Indonesia, the United Arab Emirates, Hong Kong, Taiwan and Spain by year’s end.
The Nokia 5800 will cost 279 euros ($387) before operator subsidies and taxes, substantially less than the i-Phone.
“The phone is competitively priced, and Nokia’s competitive advantage is in emerging markets. When putting two and two together, it’s logical they start the roll out from emerging markets,” said Neil Mawston, an analyst at Strategy Analytics.
The research firm expects Nokia to ship more than 10 million touch-screen phones next year.
But Ehud Gelblum, an analyst at JPMorgan, said he had hoped that the 5800 would be in shops in developed markets by Christmas.
“This is disappointing as we had expected the device to be shipping in the critical holiday season for most developed countries,” he wrote in a note published Friday.
Spurred by Apple, LG and Samsung have already rolled out touch-screen phones over the last two years, mostly in developed markets.
Nokia said its schedule was similar to that for many other phones, adding that customizing the phone’s software for operators in other markets would take some time.
The touch user interface makes such adjustments more complex than for other types of phone.

TITLE: Taking Advantage Of Financial Threat
AUTHOR: By Anna Shcherbakova
TEXT: Not just threat, but also opportunity — that is a popular definition of a crisis. Last week, Finance Minister Alexei Kudrin admitted that an era of recession is beginning. The problems are not focused on Russia, but it is clear that no country can avoid the global economic changes. Financing any kind of project is becoming more expensive, so companies are having to reduce their investment programs and stop recruiting new employees. The increased cost of loans will slow consumption, especially sales of cars, electronic goods and luxury items, not to mention property. 
So besides the banks, the most vulnerable sectors are development and retail, which borrowed money widely. Some developers, even the major ones, have announced that they have frozen new projects due to problems with financing. Smaller companies that find themselves unable to survive the devaluation of assets should change owners. 
And this is where opportunity knocks. Russia’s largest retailer, X5, which operates the Pyatyorochka and Perekryostok grocery chains, has announced the reduction of its own development, despite having purchased the businesses of regional companies, whose assets, according to X5 executives, are on sale at 60 to 70 percent of their original prices. 
Mikhail Prokhorov, who is worth $2 billion after his recent business-divorce with Vladimir Potanin, has already purchased a stake in the national investment bank Renaissance Capital for $500 million, while the bank’s former evaluation was several times higher. 
Good times are coming for those who hoard cash. 
“You must know some good proposals; I’m ready to look at new prospective projects with good conditions,” a local tycoon greedily asked me last week. And the main beneficiary of the crisis could be Russia, which will be able to purchase distressed assets through state-owned banks and companies. 
The companies that are ready to sell are not yet as visible as prospective buyers. Maybe their shareholders have not yet evaluated the consequences of the crisis. However, negotiations, especially those concerning prices, are usually confidential, and proposals to sell will not be as demonstrative as proposals to buy, I assume. That explains why news of mergers is rare these days, unlike estimations and forecasts. About half of companies are “optimizing” the number of their work force, and 38 percent have frozen their investment programs, according to a survey conducted by Cornerstone, in which 42 companies with revenues of about $500 million were questioned. Eighty-one percent of them acknowledged the threat of the crisis. 
Among those trying to take advantage of the opportunity are spammers advertising porn web sites. They are becoming increasingly inventive as users increasingly prefer social networking sites to their websites. Last week some of the indecent spam-invitations began with the words “Even amidst the financial crisis…” 

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

TITLE: Brezhnev Comes to Washington
AUTHOR: By Alexei Bayer
TEXT: I have repeatedly drawn parallels in this column between President George W. Bush’s United States and the Soviet Union during the rule of Leonid Brezhnev. The similarities between the two regimes are uncanny, ranging from the messianic drive to spread ideology abroad — at the point of a bayonet if need be — to tight surveillance at home. Now comes the U.S. financial debacle to complete the list.
It is ironic that the first U.S. president with an MBA presided over the disintegration of the nation’s financial system and the demise of Bear Stearns, Lehman Brothers and Merrill Lynch — names that are synonymous with modern capitalism.
Speaking of capitalism, after having spent eight years lecturing about the virtues of an unbridled free market and the private sector, and even outsourcing his wars to private contractors, Bush has reached for a “socialist” straw of public money to bolster the banking system. This comes straight from Lenin’s dialectic playbook. The founder of the Soviet state also taught his Bolsheviks to shift tactics shamelessly whenever expediency required.
But the main similarity with the Soviet Union is not the nationalization of bad banking debt via the $700 billion rescue package signed by Bush on Friday. Rather, it is the nexus between an unnecessary war abroad and economic collapse at home.
The foray into Afghanistan proved to be the Soviet Union’s undoing. The old fools in the Kremlin decided in 1979 that their small neighbor was ripe for communism — or at least could be pacified by a limited contingent of Soviet troops. The engagement lasted nearly a decade, cost 15,000 Soviet lives, spread disgust with the government and contributed to the fall of Soviet communism.
Bush’s neoconservatives similarly believed that Iraq was ripe for Western-style democracy and that Americans would be met with flowers on the streets of Baghdad. The war’s supporters thought it would be a short victorious campaign — a cakewalk. Now, 5 1/2 years on, open-ended occupation has created cynicism and hypocrisy among Americans who shrug off evidence of torture of “enemy combatants,” ignore massive pilfering and war profiteering going on in Iraq and pay sanctimonious lip service to the wanton deaths of U.S. soldiers.
Whether moral turpitude or the economic impact of the war will be more damaging in the long run is for historians to decide. In many ways, the current economic crisis is the result of the Iraq war. Iraq — and more broadly, the misguided war on terror — has cost the United States trillions of dollars in direct and indirect costs. It is the money the country didn’t have and had to borrow from foreign investors.
In the aftermath of the Sept. 11 terrorist attacks, Bush invited the country to go out and shop. He didn’t want his countrymen to analyze the causes of the terrorist attacks or to take a hard look at Washington’s response. He wanted U.S. citizens to keep on living beyond their means and to wander in a daze in the interminable aisles of Wal-Mart and Home Depot. To ease the shopping spree, his administration kept financial oversight lax and taxes low in the face of widening budget deficits. Wall Street then helped Americans squeeze every last dollar of credit from their leverageable assets.
Uncle Sam faces the financial crisis bereft of resources and heavily in debt. The congressional debate about the $700 billion bailout package ignored the fact that the country simply doesn’t have this money. The Kremlin faced severe challenges in the 1980s — when oil revenues declined and Ronald Reagan unleashed a costly arms race — with an economy badly weakened by the Afghan misadventure. 
If Americans emerge from this crisis much poorer and far less secure, they could ask the Russians what it felt like living in the Soviet Union circa 1990.

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

TITLE: Fighting Financial Fires With Blini
AUTHOR: By Andrei Illarionov
TEXT: From its peak on May 19 to its lowest point on Sept. 17, the Russian stock market has fallen by almost 58 percent. This is its largest decline since the crash of 1998. What is the cause of the current cataclysm? 
The Kremlin has been quick to blame the West, and primarily the United States, for the country’s troubles. Prime Minister Vladimir Putin blamed Western “speculators” who pulled out their investments en masse at the first sign of trouble. He also denied that Russia’s conflict with Georgia played any role in the market’s fall. Putin suggested that the crisis is connected “not with the problems of the Russian economy, but with problems of the West’s economy.” In recent comments, he even referred to it as the “American contagion.” 
President Dmitry Medvedev concurred, saying, “The United States caused the whole crisis with its own financial market. ... Regarding the factors that were responsible for the drops in the Russian stock market, I would estimate it as follows: 75 percent of the fall in the stock market is connected with consequences of the global financial crisis and 25 percent due to our internal problem, including consequences of the war in the Caucasus.” 
How accurate are these assessments? 
After May 19, stock markets in almost every country of the world started to decline, and Russia followed this downward trend. Therefore, in the first stage of the global crisis, the financial problems were by no means specific to Russia. This global decline continued for almost two months. During this period, the U.S. stock market fell by 11.5 percent, the global market by 12.9 percent and the Russian market by 13.1 percent. Because the Russian market’s decline was slower in comparison to emerging markets, which fell by 17.5 percent overall, this may have confirmed for many observers what Finance Minister Alexei Kudrin claimed in January — that Russia had become an “island of stability.” 
But all of that changed on July 18, when the RTS fell by 4.5 percent, while there was little or no change in the U.S., European or emerging markets. What happened on that day? The Federal Migration Service granted TNK-BP chief Robert Dudley a “temporary visa” — valid for 10 days only. This was followed by a prolonged harassment campaign aimed at Dudley and other top managers from the British side of the joint venture. It became clear that the government was favoring the Russian shareholders in the conflict. In 2003, when TNK-BP was formed, the company was touted as the crown jewel of successful joint ventures between Russian shareholders and a venerable foreign multinational corporation. It had the support at the highest level of both countries, including then-British Prime Minister Tony Blair and Putin. Thus, when this much-celebrated joint venture deteriorated into a nasty, underhanded shareholder battle, many investors drew their own conclusions about the unstable, unpredictable and arbitrary investment climate in the country. They started to pull their money out of Russia. 
In the following weeks, Russia’s stock market continued to drop. These declines were deeper than in other emerging markets, and this was because of the following additional events: Putin’s promise to “send a doctor” to Mechel’s director on July 24; the start of Russia’s intervention in Georgia on Aug. 8; the Kremlin’s unilateral recognition of independence for South Ossetia and Abkhazia on Aug. 26; and a whole series of official, inflammatory statements directed against the West from Sept. 3 to Sept. 17, which were accompanied by the decision to send strategic bombers to Venezuela and the announcement of naval maneuvers in the Caribbean Sea. 
The authorities managed to achieve the impossible: In less than two months, Russia’s stock market declined by 51.8 percent. To be sure, stock markets in other countries also declined during this period, but it was nothing like what happened in Russia. The U.S. stock market fell by only 8.5 percent, the global market by 12.4 percent and the overall market of developing countries by 25.4 percent. 
Given those dynamics, it would be difficult to blame outside influences — especially the United States — for causing Russia’s financial crisis. Had investors appraised the risk-return ratio for their Russian investments to be the same as that in the crisis-stricken United States, then the Russian stock market would have lost no more than the U.S. market did. And even if we were to take seriously what was reported in the Western media — that top Russian officials believed that the U.S. government had instructed U.S. banks not to lend to Russian companies — then why didn’t investors from Europe, Asia and the Arab states happily rush in to snatch up those greatly devalued shares at bargain prices? On the contrary, they stayed far away from the Russian market because they also evaluated it as a high-risk investment. 
The drop in world oil prices has also been cited as a contributing factor to the country’s stock market crisis. Indeed, oil prices fell by 38 percent over a two-month period — from July 17 to Sept. 17. But Russia’s market — which includes far more than just oil company shares — fell even further. In fact, the main evidence against the “oil factor” argument is the performance of markets in other leading oil-exporting countries. Even in these countries, where the share of oil production in their gross national product is generally higher than Russia’s, markets fell by only 20 percent. 
In the end, the “American contagion” can only be blamed for a small portion of the 51.8 percent decline in Russia’s stock market. In reality, the “U.S. factor” could not have accounted for more than a 17 percent decline. But by insisting on blaming the United States for its financial woes, the Kremlin is trying to trick the Russian people, as well as themselves. Foreigners, however, would never fall for that nonsense. 
As it turns out, at least half of the market’s fall is attributable to domestic causes. Foremost among them were the Kremlin’s attacks on Russian and foreign businesses, its aggression against Georgia followed by its recognition of independence for South Ossetia and Abkhazia, and the subsequent fears of investors and the international community as a whole that a new Cold War was about to start. Unlike Russia’s leaders, investors are scared off by any form of war — whether it is “hot” or “cold.” 
The total capitalization of Russian companies with shares traded on the stock market has fallen by almost $800 billion since May 19. Capitalization losses since July 17 alone account for more than $600 billion. Half of those losses — more than $300 billion — were the direct result of factors originating from Russia. 
The Russian government pretended to be mitigating the effects of the crisis by pumping more than $100 billion of state funds into the stock market, but nearly all of these funds went to state-owned companies and to other businesses that have close ties with the government. 
But Russia’s stock market crisis was brought on by more than just superficial causes. The drop in global oil prices to $90 or $100 per barrel — a symptom of the shifting winds of the global economy — was not damaging enough to trigger a crisis of this depth. Neither could the liquidity crisis be the reason, with Russia currently awash in petrodollars. Systemic, institutional problems are the real cause of this crisis. There is a fundamental incompatibility between open global markets and the universal principles of tolerance and respect that govern it in the West, on the one hand, and the paranoia and aggressiveness of Russia’s current leadership, with its cult of isolation and militarism and the modus operandi of street gangsters, on the other hand. 
In Korney Chukovsky’s classic children’s poem, “Putanitsa” (“The Muddle”), a crocodile is unable to put out a fire with pirogi and blini. Similarly, the fire of Russia’s deep and long-term institutional crisis cannot be extinguished with the financial “pirogi and blini” offered by Russian leaders — particularly when these goodies are doled out only to their close friends. 

Andrei Illarionov, formerly the economic adviser to President Vladimir Putin, is president of the Institute of Economic Analysis in Moscow and a senior fellow at the Cato Institute in Washington.

TITLE: Prepare for a Bumpy Ride
AUTHOR: By Boris Kagarlitsky
TEXT: When some analysts began discussing an upcoming drop in real estate prices last spring, most economists reacted with open contempt. “How can you speak of a drop when prices are climbing daily?” they asked. In the past six weeks, however, circumstances have changed so drastically that the only questions now being asked are: “How severe will the crash be?” and “How long will the real estate crisis last?” Even a decision by some real estate agencies and builders to give corporate buyers discounts of up to 40 percent has not been sufficient to revive the market. 
For almost 10 years, investors have found that speculating on real estate is almost as profitable as exporting oil, gas and weapons. But all good things must come to an end. Since demand is plummeting, the attempts by sellers to keep prices steady will turn the real estate crash into a larger catastrophe. The longer that sellers try to prevent the inevitable, the worse the ultimate consequences will be. 
The problem goes far beyond the real estate market. At first glance, however, it would seem that the economy is keeping its head above water, particularly if you consider how other countries have suffered much worse in the global economic crisis. But, in reality, the country’s “stability” is quite shaky, and the sharp stock market drops in recent weeks are a vivid testament to this. True, the number of Russians who own stocks is quite small. But a major downturn in the real estate market could be the trigger that sets off a widespread economic collapse, and this will be felt by every Russian. 
The Kremlin’s self-confidence stems from Russia’s stable economic growth for seven straight years, the building of a huge currency reserve — the third-largest in the world — and a rise in real wages. But it is one thing to captain a ship during fair weather — that is, during a period of high oil prices — and quite another to bring it through a storm. 
In March, politicians celebrated the successful transfer of Kremlin authority. And they did so without violating the Constitution. Unfortunately, holding a position of authority in Russia is like being the head of an explosives factory. The financial rewards are high, but they are countered with the high risk that the whole place could be blown up with a single match. 
To be sure, Prime Minister Vladimir Putin and President Dmitry Medvedev have a strong grip on authority because they enjoy popular support. The question is whether that support will continue during a severe economic crisis and whether the Kremlin has the financial tools and know-how to weather the storm. 
Recent events in the United States have shown that when the economy gets bad enough, the only way out is though government intervention and bailouts. But state aid is a double-edged sword. The government cannot save everybody. What will be the reaction of those who are not lucky enough to find a place on the lifeboat? Will they quietly go down with the ship or will they mutiny? 
To get through the crisis, the Kremlin needs to have a thorough strategy with concrete measures to rescue the economy. However, this is woefully lacking. This means that we will have to drive over every pothole and deal with each unpleasant surprise in a chaotic, ad hoc fashion. 
Those who only yesterday appeared to be the victors could easily and quickly become the hapless victims of uncontrollable circumstances. But they were the ones who were so hungry for power and glory. The higher they stand, the harder they will fall. And this fall will be particularly painful. 

Boris Kagarlitsky is the director of the Institute of Globalization Studies.

TITLE: Charity Ball
AUTHOR: By Mae Dunne
PUBLISHER: Special to The St. Petersburg Times
TEXT: One of the highlights of the social year takes place Saturday at the Catherine Palace with the glitter and grace of the Eighth Annual Golden Autumn Pushkin Charity Ball.
The event was initiated by the head of the Grand Hotel Europe’s charity fund, hotel manager Thomas Noll and by the president of the International Pushkin Charity Fund, Kenneth Pushkin — a descendent of Russian national poet Alexander Pushkin (1799-1837). 
“The program of the Golden Autumn ball promises a graceful combination of performances by stars of Russian opera and ballet,” the event’s organizer said. “The design of the program reflects the special style of the Pushkin era.”
Guests of the ball will be offered the chance to stroll around the Great Hall of the Catherine Palace in the town of Pushkin south of St. Petersburg, while the chef of the Grand Hotel Europe is said to be preparing a “culinary surprise” based on 18th century cuisine.
The International Pushkin Charity Fund was founded in 1997 and registered in Moscow in 2001. The fund was created to aid children’s shelters and hospitals in Russia, considering its mission to give to important charity causes.
The ball has been held in venues in New York, Moscow, Washington DC, and St. Petersburg. This year it takes place in the halls of the palace, its organizers noted ruefully, where Russia’s Pre-Revolutionary high society “came to a close.”
The money raised by this year’s ball will go to children’s hospitals in St. Petersburg and toward Pushkin scholarship.  

<i>For more information call Natalya Nemchenko on +7 921 965 3538.</i>

TITLE: Director Reflects on Festival Flap
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: John Cameron Mitchell, the New York-based award-winning film director visiting St. Petersburg to attend this week’s Lesbian, Gay, Bisexual and Transgender film festival, concluded in an interview Saturday: “This is certainly not San Francisco”
The director found himself thrust into the harsh realities of Russia when the festival was forced into hiding after the venues where it was due to be held were suddenly leaned on by the authorities.
Cameron Mitchell, an internationally acclaimed director, whose films “Hedwig and the Angry Inch” (2001) and “Shortbus” (2006) garnered 26 wins and 21 nominations, arrived as an honorable guest to the Side by Side Film Festival, which was meant to be Russia’s first open gay and lesbian film event, last week.
As the event was held in secret around the city, Mitchell shared his views with The St. Petersburg Times.
<b><i>Q: It seems that you go from festival to festival collecting awards. Then you come to St. Petersburg, and it’s a totally different situation. When did you learn about the problem?</i></b>
A: It was just last week that they found out that Pik [cinema center] dropped out, breaking the contract. So they had been struggling for the last week to find alternative spaces. Then, the day of the opening, they heard from the space that the fire department was harassing them and closing them. Because they couldn’t communicate to all the audiences and the press so quickly, they were all going to meet outside The Place and talk about what was happening. Suddenly lots of police and rapid response units [showed up], as if it was a riot or something.
We were going to meet outside The Place, where all the audiences and the press were going. We also wanted to tell them what was happening, so there wouldn’t be problems, and also to let them know we had alternate plans for screenings. They have been already doing screenings today: we have a system where we’ve had to keep it private. It’s like the Soviet era, people calling each other on the phone. Avoiding the Internet.
<b><i>Q: I haven’t heard about this. So the police came to The Place?</i></b>
A: They came to The Place, and not just police, but riot police. I don’t know if it was OMON. OMON backwards spells “HOMO.” (I don’t have to say that to them because I’m leaving.) With bulletproof vests, as if it was some kind of riot. They were expecting a riot!
But we had security there to make sure everyone was OK. Private security, who were great. A lot of press came; a lot of people came. There were supposed to be screenings all day, so they came in the early afternoon and stayed until after nine, because there were people expected all day.
We didn’t know if there were going to be ultra-right gangs there also, because, certainly, at other gay events the ultra-right has harassed and beaten people up. So [organizer] Irina [Sergeyeva] wanted to make sure everyone was OK, including the press, the audience, the filmmakers, the guests, the staff, and people from the club. So she heroically stayed there all day, and then suddenly the police came. And then she was afraid the people were going to be arrested, for no reason — because they were coming to see a film! And for the opening night.
I was supposed to DJ and sing and show my film. I wanted to go down there, but she was, like, “Please don’t come.” She wouldn’t allow any of the guests to come, because she didn’t want us to get arrested. And luckily there were no arrests, but it was strange. I feel somewhat honored by the great effort extended by the powers that be to respond to this event, as if it were some kind of national disaster. It was like a hurricane or something. 
The speed and efficiency with which the authorities have responded to this has been blinding and impressive. But of course their objective was to stamp it out and discourage it in the future. I’m sure some clubs will now be discouraged, because they shut them down summarily. It’s my understanding that they didn’t even specify what the fire code violations were. The idea was, “You’re shut down and we’ll talk about what the violation is later.”
[The organizers] made a decision to reach out to the cultural powers that be and to the press, and to talk about this as a family event — about families, parents, children. It was a community-based thing, meant to address the issues of queer people in Russia especially and around the world, kind of avoiding sexual content. Even though my film, “Shortbus,” which is certainly sexual in content, played in the theaters in St. Petersburg and Moscow without incident. 
They also avoided the word “gay” in the title of the festival, so as not to alarm alarmists, but still they were very forthright with the press, with the local cultural organizations, asking them, “Will you support us in this endeavor?” By being open about it, it seems to have brought down a larger reaction from the powers that be than might have been the case if they tried to do it in a somewhat underground punk way, with just flyers and the Internet. It’s the very publicness of trying to be accepted that seems to provoke, in my view, a terrified and shameful reaction.
To me, it’s shameful. It really is. It’s like when there are so many problems to deal with in the world and the city, things that need to be done, to use those kinds of resources to shut down a cultural organization is just completely hubristic. It’s out of balance; it’s ridiculous and offensive. [It’s] personally [offensive] to me, of course, because it makes me feel like a criminal. 
And it directly contributes to violence. I’m talking about violence against the self — the suicide rate amongst gay people, because people tell them they’re evil or sick or wrong, when these are just people who love in a different way. It’s completely consensual. It’s a different way of thinking than some, but no one is hurt, no one is forced to do anything. No one is forced to go and see these films, even.
Nobody has been even forced to look at images they don’t want to in terms of advertising. The advertising has been incredibly soft and gentle: “Side by Side.” They have gone out of their way to be non-provoking in terms of imagery and language, and in the content of the films.
So some say they shouldn’t have even tried [to hold the festival in these venues] and seek approval from the culture ministry et cetera. It should have been done in an underground way. There are plenty of young people who would come. “Shortbus” was a hit, for example, in Russia, with straight and gay audiences, mixed audiences. It certainly could have an audience without causing scrutiny from the authorities. But I admire the fact that they’re trying a different approach. Eventually, a festival like “Side by Side” will be no big deal in St. Petersburg. I don’t know how many years it will take, but in every other country the progress of events shows that that kind of event becomes part of the cultural development of a city, of an urban center.
<b><i>Q: Why do you think they reacted like this?</i></b>
A: There are gay bars here: certainly they get harassed, but when there’s money, there’s money for the government.
This festival is not necessarily a moneymaker for anybody, even though the festival has certainly spent money, added to the economy of St. Petersburg, and, theoretically, can bring in tourism — from around Russia as well as internationally, as film festivals often do. I believe the authorities found the public nature of the way they announced themselves to be a threat. Whoever these people are (I don’t know who they are), they don’t want to be seen as condoning homosexuality in some way. And it’s somehow embarrassing to them; perhaps some of them actually have religious feelings about it. The thing is that this case is unlike Moscow, where the mayor is very publicly against any kind of gay gathering and unashamedly homophobic. And in his very publicness he kind of encouraged, in my view, the violence that ensued from the ultra-right gangs.
In this case, I’d describe it as a weird kind of progress, in that the pressure was indirect, it was cowardly. The mayor didn’t officially say, “This is wrong, it should be stopped.” I know that some Orthodox sites have written about it, but no figures of local stature have come out specifically against the festival, directly. Which to me implies that they’re ashamed to.
The pressure has been very indirect. Certain organs of government, the fire department or other city groups, have certainly put pressure on to stop the festival. This is a kind of indirect pressure, which seems to be more secretive. They are perhaps aware that if they were open and direct about it, it might bring some criticism from quarters of society that they do not welcome. This implies they are aware that what they are doing is wrong or, at least, counterproductive. Bad publicity, let’s say. They were probably thinking it was bad publicity.
But there are plenty of people at this festival from other countries who are going to be talking about it in their own countries. I am writing about it for two magazines in the U.S.
<b><i>Q: So there will be a reaction?</i></b>
A: I hope so. I don’t believe that this kind of hatred can go unchallenged, or, at least, can go unspoken about.
It’s truly inspiring, the courage of the organizing, because there’s no advantage to them, except morally and socially, to do this festival. There’s no money in it for them, and there’s a lot of trouble for them. There’s the possible threat of violence. That’s another sign of the progress: there were no counter-demonstrators or violence from the far right.
There were rumblings of it on the Internet earlier, but in the last weeks they couldn’t find any organized opposition in terms of violent skinheads, etc. And they were a little unsure what that meant. Perhaps it’s less of a big deal than it was two years ago in Moscow. I hope that it’s a positive sign. I’m sure that if the police came the other night, one of the ways of describing that might have been, “Oh, we were trying to protect people there.” [But] there was no dialogue. The police didn’t talk to the organizers of the festival. They didn’t say, “We are here to help.” There was just an armed presence, and [there was] no communication. It felt like intimidation because there was no dialogue about it. I was disappointed that the organizers didn’t let me come. I wanted to be there with these very strong, very brave people, who are really taking early steps in what will eventually be a boring fact of life in St. Petersburg: “Yeah, so there are gay people, who gives a shit?”
<b><i>Q: Could it be part of a bigger thing — the return to authoritarian rule? A few years ago, nobody would have paid any attention to it. But now the authorities seem keen to suppress civil society, any protest activities from the grassroots.</i></b>
A: Right. It’s tightening up again. People were saying that in the 1990s it was not a big deal. It seems like a strange trickle-down effect. [Gays] tend to be equated with political dissent or something. It certainly happened here under Communist rule, but the same things happen in China. Anything that’s too independent, anything that’s a little bit too organized, that is not approved by the government is somehow seen as a threat, whether it is religious, philosophical, social or cultural. Forget political! It’s somehow seen as trouble. And it’s interesting that when I was doing a lot of press about “Shortbus,” which uses a lot of explicit sexuality, it’s implicitly political, but it’s not explicitly political. In its own way, there’s a certain threat. In some countries it has been banned. And I realized, after doing a little bit of anecdotal research, that sex and repression or violence are weirdly linked in an inverse way.
The more relaxed cultures are about sex, i.e., the fewer proscriptions there are about sexual behavior, the less violence — domestic violence, sexual violence and even war — there is. Do you know of a culture that has invaded another culture militarily that is really relaxed about sex and its cousin, gender? I include the U.S., which has certainly had its share of invasions lately. 
Gay people aren’t going away: the same percentage of people will be gay anywhere in the world. There’s a variety of ways for dealing with it. Unfortunately, the way it’s described to me in St. Petersburg, when you’re told there’s something wrong with you, it can drive you to drink. 
A gay bar is one outlet for being gay, but for me it’s not the most interesting. Drink and sex only go so far in terms of fulfillment. And that’s the only sanctioned place where you can gather and be gay: it can become conformist, stifling, boring and ultimately unproductive. That’s certainly how it was in the U.S. for a long time. It was just the gay bar scene, and now it’s becoming more integrated. There’s no longer unanimity on how to be gay, and the gay mainstream is to me very boring in the U.S. 
That’s why I am actually energized and moved to be here, to see the people who are working on this festival. The cool people in places that have such trouble are really cool. When you are in New York, the price of acceptance is a certain amount of mediocrity and jadedness. And though I would still choose to be in a place where I was allowed to hold hands with my boyfriend and not worry about losing my job because I was gay, I am still very happy to be here and meet the people I have met. Really cool people. 
<b><i>Q: So the festival is continuing?</i></b>
A: It’s continuing in an underground way. People are saying that this is what it was like in the Soviet Union. 
<b><i>Q: Yesterday’s press conference at a kindergarten, where everybody had to wear blue shoe covers.</i></b>
A: That was hilarious! It was fantastic: it was D.I.Y., punk rock. It’s like you make do with what you have. We all had to put on our little shoe condoms because the place where we were doing our meeting didn’t want us to soil the carpets, which, metaphorically, is what is happening here with the authorities. 
<b><i>Q: Not many journalists came.</i></b>
A: I didn’t know what to expect, but a lot of the press coverage has been as frightened as anyone in the municipal government. It was like, “Should we talk about this? Does this make us uncool? Will we get pressure? Will someone think I’m gay because I’m writing about a gay thing?” It’s so juvenile. 
I went to the Kunstkamera Museum, because there’s a similar museum in Philadelphia with medical oddities. I was reading about Peter the Great. He was a man who, in his view, was trying to modernize Russia and perhaps promote Descartes and rationality, to show superstition to be not useful, in order to help Russia progress economically, artistically, into a world power and a partner with Europe. Birth abnormalities at the time were characterized by the ordinary people as the work of the Devil. And Peter said, “No, in fact I believe that the Devil cannot create a human being. Only God can do that.” And he issued a decree that all these poor, freakish children, if they had died young, were to be brought to him. They could be used as legal tender, I think was the term used. He wanted to show these unfortunate children to the regular people and to celebrate them as part of God’s handiwork. They’re strangely beautiful and sad. They’ve inspired my favorite band (Neutral Milk Hotel, which is an influential band in the U.S) to write a song called “Two-Headed Boy,” about a two-headed boy tapping his jar from the inside.
It was very moving to be there and think about this festival, too. St. Petersburg was, in Peter’s view, the window to the West in a country that was struggling to free itself from superstition and from a certain way of thinking that perhaps was not as useful as it once had been. I believe that general homophobia in Russia, specifically as evidenced by the events of this week, is not useful to the city, to anyone in it. People had described [the city] to me: “Oh, it’s like San Francisco in the U.S. It’s like the second city, but it’s the more beautiful one.” But obviously in terms of the city government, it’s certainly not San Francisco. [City officials] would be probably quite happy not to be compared to San Francisco: they don’t want to think of themselves as a place where gay people could be welcome. It’s somehow embarrassing to them or shameful. 
<b><i>Q: Have there been any problems like this one with festivals anywhere else, in your experience?</i></b>
A: Not in my experience. Even Istanbul has a gay sidebar to the Istanbul Film Festival. “Shortbus” played in a gay section at the Istanbul Film Festival. I would have thought St. Petersburg would be more forward thinking than Istanbul in terms of sexuality. I’m sure there have been other places where there’s been trouble, but not in my experience. Singapore is another place that has been pretty anti-gay, and they still have laws on the books where they can shut down anything gay. But even that’s relaxing, I’ve heard. In China there are plenty of gay bars, but there’s not an official festival, because everything has to be [approved by] the central government.  
<b><i>Q: “Shortbus” was shown at Dom Kino in St. Petersburg for three months, from January through March, and there was no problem with it.</i></b>
A: Yeah, it was no problem. In Moscow, they played it even longer and more often. My actors got a lot of MySpace comments from Russian people who loved the film. But I guess what was different about this festival was that they specifically wanted some kind of official, if not approval, then tacit acceptance of the festival as a legitimate cultural event. The organizers sought that out. They felt it was the time to see if things have changed enough to do that. Obviously it hasn’t [changed] for the powers that be.
For the audiences it has. There were plenty of people who came today for all the films that they show, and tomorrow they are expecting to be full. I’m even having a screening in my hotel room. Talk about an alternative film festival! I am having my own film festival screening. I love it. I love these people’s spirit. Other people would be really discouraged, depressed, crushed by it. But they gathered yesterday and did it the old-fashioned way. One of them was like, “I remember this from the 1980s. When there was a band playing, you’d call your friends, and they’d call their friends, and suddenly there was an audience.” And you’re having a better time because of it, because of the secretive nature of it.  So that is what it needs to be for now.

TITLE: PM Brown Changes Top Team
PUBLISHER: The Associated Press
TEXT: LONDON — British Prime Minister Gordon Brown announced more changes to his government Sunday, completing a shake-up intended to strengthen the government as it faces the global economic crisis.
The government shuffle has also been seen partly as an attempt by Brown to bring his critics into a unity government.
The country’s first Muslim government minister, Shahid Malik, was named one of several ministers in the justice department in a shuffle of lower government ranks. He previously had been an international development minister.
In other appointments, Vernon Coaker became police minister, and Phil Woolas was named immigration minister. Earlier this year Woolas angered some Britons of Pakistani descent by suggesting marriage between cousins in the Pakistani community was leading to high rates of birth defects.
The government is hoping the changes will help tighten its grip on the economy as the global financial crisis deepens.
On Friday, Brown moved several senior Cabinet members and brought back to government his longtime adversary Peter Mandelson — a key architect of former Prime Minister Tony Blair’s rise to power in the 1990s.
Mandelson, a former European trade commissioner, was appointed business secretary in the shuffle.
A new poll published for Sunday’s News of the World newspaper, however, offered a mixed message for Brown. It found that voters wanted Brown to lead the country through the economic crisis, but would still vote him out at the next election.

TITLE: EU Governments Scramble to Save Banks
PUBLISHER: The Associated Press
TEXT: LONDON — European governments struggled to find a coordinated approach to the crisis sweeping financial markets, as Denmark became the latest country to guarantee bank deposits, putting more pressure on Britain and other countries to follow.
Denmark’s move came after a startling announcement by German Chancellor Angela Merkel on Sunday that her government would guarantee all private bank deposits held in the euro zone’s single largest economy. “We want to tell people that their savings are safe,” she said.
A sense of disarray has mounted amid government bailouts of several major banks in the past week and a worsening of the outlook for the wider economy. The Bank of England is expected by many to cut interest rates by at least a quarter point at its Thursday meeting, and European Central Bank President Jean-Claude Trichet gave a decidedly downbeat outlook on the countries using the euro at the bank’s meeting last week.
Austrian officials suggested they might join in guaranteeing deposits as well, and analysts said a failure by other authorities to offer a similar guarantee could risk a massive funds outflow from their countries’ coffers, while the guarantees themselves raised questions about their potential impact on government finances.
“Although the move to provide such guarantees is undoubtedly better than the highly destabilizing alternative, this will raise questions about how these guarantees would be funded were they to be called upon,” said Simon Derrick, an analyst at Bank of New York Mellon.
The markets are keeping a close eye on signs that Europe’s banking system is under pressure and the unraveling of a weekend pledge from the leaders of the four largest EU economies — France, Britain, Germany and Italy — in Paris that they would work in a coordinated manner to ensure the stability of the financial system.
European Union finance ministers were set to begin two days of talks on the crisis in Luxembourg.
“This is a very serious situation and one that needs to be addressed,” said EU spokesman Johannes Laitenberger. “Obviously there is a great effort under way. Nobody is suggesting that this is business as usual, but it’s true that there is not one single magic bullet that will solve this.”
British Prime Minister Gordon Brown planned a call to Merkel to discuss the crisis, and Britain’s Treasury chief Alistair Darling was due to make a statement to Parliament on Monday.

TITLE: O.J. Simpson Facing Life in Prison, Some Say for Earlier Crime
PUBLISHER: The Associated Press
TEXT: LAS VEGAS, Nevada — Jurors had been told to ignore what they knew about O.J. Simpson’s past, but for many observers, the line connecting the former NFL star’s murder acquittal last decade and his new conviction for robbing memorabilia peddlers couldn’t have been clearer.
The attorney for the family of Ronald Goldman — who was killed along with Simpson’s ex-wife Nicole Brown Simpson in Los Angeles in 1994 — said he thought his hounding of Simpson for years to collect a $33.5 million wrongful death judgment pushed him to a desperate gambit to recover personal items he had lost.
“We drove him into that room to grab the sports memorabilia before we could seize the stuff,” said David Cook, who represents Goldman’s father, Fred. “Going to jail for beating Fred Goldman out of footballs and family mementos. Is this closure for Fred Goldman? No. Is this closure for America? Yes.”
Simpson lawyer Yale Galanter said Saturday, the day after Simpson and Clarence “C.J.” Stewart were convicted of all 12 charges against them in the hotel room confrontation, that the Las Vegas jury was “on an agenda” to make up for Simpson’s murder acquittal. The two face up to life in prison.
“This was just payback,” Galanter said. “A lynching from the first second to the end,” agreed Thomas Scotto, a close Simpson friend who testified and was overcome by emotion in the courtroom after the verdicts were read. “It’s a total injustice.”
Scotto later told reporters he would remain in Las Vegas to seek out witnesses and show they were forced into their testimony.
“I need these witnesses to come forward and start telling the truth,” he said.
The case against Simpson was won the moment the jury was chosen, according to the consultant who helped prosecutors pick the panel.
“That was the best possible jury prosecutors could ever have,” said Howard Varinsky, who drafted a questionnaire for the prosecution that formed the basis of a survey used to cull 12 jurors and six alternates from a pool of 500 prospects.
“I was surprised that we got all the counts,” he said Saturday. “But it wasn’t an accident that the jury wound up looking like that.”
Whatever the jury was thinking, Fred Goldman praised the verdict.
“We’re absolutely thrilled to see the potential that he could serve the rest of his life in jail where the scumbag belongs,” he told CNN. Brown Simpson’s relatives said in a statement that they want to be left alone as they “work through many mixed emotions.” They said they are primarily concerned about the children from the marriage, Sydney and Justin.
The jury that convicted Simpson consisted of three men and nine women, including one woman who identified herself as Hispanic, a court spokesman said. The jury contained no blacks, the race of both defendants.
Jurors declined interviews and avoided the media after the verdicts were read. 
According to jury questionnaires released Saturday, five of the 12 jurors wrote that they disagreed with the 1995 verdict that cleared Simpson of murder. Most others claimed to be uncertain or did not answer the question.
Redacted versions of the questionnaires were made public by Clark County District Judge Jackie Glass.