SOURCE: The St. Petersburg Times
DATE: Issue #1420 (84), Tuesday, October 28, 2008
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TITLE: Market Plummets Despite 
Oil Cuts
AUTHOR: By Ira Iosebashvili
PUBLISHER: Staff Writer
TEXT: MOSCOW — The country’s stock markets were mauled on Friday, erasing modest gains earlier in the week, after Standard & Poor’s cut Russia’s outlook and the price of Urals crude slid below $60 per barrel. 
Trading on both the MICEX and RTS was halted for an hour in the early afternoon, only to reopen with sharp declines that saw both exchanges ordered closed until Tuesday. London-traded companies continued plummeting, with the FTSE Russia IOB Index falling more than 18 percent. 
OPEC said Friday that it would cut production by 1.5 million barrels per day, but the decision did nothing to halt the decline of crude or the energy-heavy Russian stock market. The benchmark RTS Index fell 13.7 percent to its lowest level since December 2004, while the ruble-denominated MICEX Index finished down 14.2 percent. 
“There was so much background noise today that the cuts didn’t really make a difference,” said Ron Smith, chief strategist at Alfa Bank. 
“If they would have cut 2 billion, it might have meant something, but 1.5 billion was the low end of what the market was expecting, and it didn’t really make an impression.” 
The spot price for Urals crude, Russia’s main export blend, fell to $59.93 — its lowest level since March 2007 — on concerns that the producers’ cut was not enough to stabilize prices or jump-start demand. 
To make matters worse, S&P cut Russia’s long-term credit outlook to “negative” on Thursday before the markets’ close, citing concerns over the government’s bank rescue, rising capital outflows and dwindling international reserves. 
The government has pledged more than $200 billion to support the economy, including injections of $86 billion into the banking system, after the war with Georgia and falling global markets led to capital outflows since August that have been estimated at more than $60 billion. 
“I doubt the ratings cut helped the markets very much today,” Kingsmill Bond, chief strategist at Troika Dialog, said by telephone from London. “It’s a wholesale global panic right now, and the question is: Who will weather the storm and who won’t?” 
Nervous investors dumped shares across the board. 
The RTS Index fell below the 600-point level for the first time since 2005 before being halted at 1:05 p.m. for an hour. The index then fell to 549.4 before being closed at 5:05 p.m. The MICEX called it a day early — closing at 513.6 by 2:10 p.m. 
The Federal Service for Financial Markets said both indexes would remain closed until Tuesday. 
The day’s biggest loser was Sberbank, which dropped 23 percent on the MICEX. The country’s largest lender confirmed on Friday reports that it could cut staff by 20 percent by 2014 to increase employee efficiency. 
Oil and gas companies were also among the day’s big decliners, with LUKoil shedding 14 percent to reach a four-year low and Rosneft down 13 percent on the day. Gazprom dropped 15 percent, while regional producer Tatneft fell a full 17 percent. 
In London trading, shares of mining giant Norilsk Nickel tumbled 19 percent to their lowest level since December 2004 on falling nickel prices. 
“There’s a persistent and growing fear of a total collapse,” said Andrei Kuk, a senior trader at UralSib. “People are forced to sell right now to cut their losses and meet margin calls. 
“South Ossetia, the Mechel situation, the global economic crisis and the price of oil are having a synergistic effect,” he said. “Any one of these things by itself would have knocked 10 percent off the indexes. But when you take them all together, the cumulative effect is huge.” 
The weekly slide in stock prices came amid an influx of capital into the Russian market, as the state began using cash from the National Welfare Fund to buy up blue chip stocks earlier in the week. 
Finance Minister Alexei Kudrin said Oct. 17 that the state would begin investing $6.7 billion into “secure, high yield” Russian securities as early as the following Monday. Kuk, of UralSib, said it was not immediately apparent which securities the government was purchasing. The buyback “had an effect, but it was very small,” he said. “The market has shown itself to be stronger than the government.”

TITLE: Lavrov Warns Arms Ban Will Hurt U.S. Ties
AUTHOR: By Maria Antonova and Nikolaus von Twickel
PUBLISHER: Staff Writers
TEXT: MOSCOW — Foreign Minister Sergei Lavrov warned the United States on Friday that a decision to extend a trade ban on state arms trader Rosoboronexport threatened to undermine fraught ties between Moscow and Washington. 
A senior U.S. official, however, said the sanctions merely reflected Washington’s concerns about arming Iran. 
The sanctions issued by the U.S. State Department forbid U.S. government agencies from dealing with Rosoboronexport and 12 other companies in five countries because of their weapons shipments to Iran, which Washington suspects of building a nuclear bomb. 
Lavrov accused Washington of breaking international law by imposing domestic policies on sovereign countries. “This is absolutely incompatible with the new realities in the current world structure,” he said at a news conference after talks with Luxembourg’s foreign minister, Jean Asselborn. 
“We will take this into account in our relations with the United States,” he said in televised comments. 
The Foreign Ministry said in a separate statement that the decision would have a negative impact on six-party talks with Iran over its nuclear program. 
David Merkel, deputy assistant secretary of state who oversees Russia in the State Department, said in an interview Friday that the sanctions were in everybody’s interest and were imposed because the affected companies were breaching U.S. law by delivering arms to Iran. 
“Now is not the time for business as usual with Iran,” Merkel said. 
Rosoboronexport, which is part of state holding Russian Technologies, suggested that the United States felt threatened by its growing clout in the global arms trade. 
“We’re not some dodgy shop. We are a government intermediary and follow all international laws and UN resolutions,” company spokesman Vyacheslav Davydenko said. 
Rosoboronexport has increased foreign deliveries by 23 percent in the first nine months of this year, which “the U.S. is without a doubt unhappy about,” the company said in a statement. In July, Rosoboronexport expected to ship at least $6 billion worth of weapons abroad by the end of the year, Interfax reported. 
The sanctions, published on the U.S. Federal Register, came into effect Oct. 23 but only gained attention after being assailed by Moscow. Also listed are companies based in China, South Korea, Sudan, Venezuela and United Arab Emirates and deemed able to “make a material contribution to the development of weapons of mass destruction or cruise or ballistic missile systems,” say the sanctions, which are posted at www.gpoaccess.gov/fr/ (Page 63,226). 
Merkel explained that a similar ban enacted in 2006 had expired in August. He could not immediately explain why it was only re-enacted in October. He noted that a ban against Sukhoi was lifted after three months in November 2006 because the jet maker had complied with U.S. regulations. 
The renewed sanctions, which will remain in effect until September 2010, appear to be the same as those that were imposed on Rosoboronexport in July 2006 and expired this summer. 
The sanctions will not hurt Russia’s arms trade but allow the government to vent its political anger at Washington, said Viktor Mizin, an analyst with the Moscow State Institute of International Relations. 
“Commercially, Rosoboronexport has no strong interests in the U.S. market,” he said. “Our biggest arms buyers remain China and India, followed by Middle Eastern and Latin American countries.” 
He said the administration of U.S. President George W. Bush might have extended the sanctions because some in Washington believe Russia and China have done everything possible to water down U.S. efforts to impose sanctions against Iran. The next U.S. president can waive the sanctions, he added. “It will be interesting to see what the next administration does,” he said. 
Russian Technologies is headed by Sergei Chemezov, an ally of Prime Minister Vladimir Putin, and also has stakes in carmaker AvtoVAZ and VSMPO-Avisma, the world’s largest titanium producer. 
Boeing, which imports titanium from VSMPO-Avisma, said the sanctions would not affect business relations. “We have already taken steps to ensure that all of our activities in Russia are in full compliance with the sanctions,” Boeing spokesman Dmitry Krol said in an e-mailed statement.

TITLE: Mariinsky Focuses on 20th Century Music for New Season
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Contemporary classical music spanning the 20th century from Alban Berg and Arnold Schoenberg to Henri Dutilleux and Rodion Shchedrin takes center stage at the Second New Horizons festival that kicks off at the Mariinsky Concert Hall on Thursday.
The brains behind the event is the Mariinsky’s indefatiguable artistic director, Valery Gergiev, whose ambition is to turn arguably Russia’s most successful opera and ballet company into a versatile troupe that performs contemporary classics with as much quality as its trademark productions that date from the 18th, 19th and 20th centuries. 
The event kicks off with a performance by the Mariinsky Symphony Orchestra under Gergiev’s baton of Olivier Messiaen’s “L’Ascention,” Pierre Boulez’s “Four Notations” and the second act of Schedrin’s opera “Lolita.”
Friday sees Gergiev conducting the Mariinsky Symphony Orchestra in a program work by the Hungarian composers Gyorgy Ligeti, Bela Bartok and Gyorgy Kurtag. Bartok’s one-act chamber opera “Duke Bluebeard’s Castle” will be sung in Russian for the first time in the country. The concert will also mark the Russian premiere of Ligeti’s Violin Concerto and Kurtag’s “Grabstein fur Stefan.”
“It is a shame to see wonderful scores that would honor world’s most respected stages gather dust on shelves of music libraries,” Gergiev said. “It is our mission and our priority to introduce the audiences to the music of some of the world’s finest contemporary composers.”
Ten years ago, Gergiev made a pledge to place Russia once again on the international musical map. One of his first steps was to get rid of the clumsy Russian-language renditions of the world’s most famous operas.
“Rossini will be sung in Italian here, and Wagner will be performed in German,” vowed the maestro. And he has fulfilled his promise. The world’s most acclaimed directors, including the UK’s Jonathan Kent, France’s Alain Maratrat and Germany’s Johanness Schaaf, have flocked to the company, while the repertoire features Richard Strauss and Leos Janacek, in addition to Verdi, Puccini, Mozart and Wagner. The next natural step is to explore the contemporary repertoire.
Britain’s Thomas Ades’s 1995 provocative chamber opera “Powder Her Face” about the life of a voluptious and sexually promiscuous duchess who gets thrown out of London’s Dorchester Hotel after not being able to pay her bills, became a genuine highlight of the first festival in 2007.
Moscow ensemble Opus-Posth is a special guest at this year’s festival. In an exquisite program at the Mariinsky Concert Hall on Saturday (Nov. 1 ) the musicians will perform Alexei Aigi’s “Recyclage,” Philip Glass’s String Quartet no. 2 (“The Company”), Yannis Xenakis’s “Aurora” and Vladimir Martynov’s “Autumn Ball of Elves,” among other works.
“I am convinced that in two to three-years’ time contemporary classical music will become integral part of the Mariinsky repertoire,” Gergiev said.
“The Mariinsky musicians are most thrilled to work with the living composers regardless of their age,” Gergiev said. “They might be 35 or 90; the only factor that matters is the quality of the score.
For Gergiev, the process of winning Russia a fitting place on the international music scene involves winning the Russian repertoire greater recognition among orchestras and theaters outside the country. Every year, during his summer festival, the maestro revives lesser-known masterpieces of Russian opera, such as Glinka’s “A Life for the Tsar,” Rimsky-Korsakov’s “The Legend of the Invisible City of Kitezh” and Tchaikovsky’s “The Enchantress.”
“During the past twenty years our company has done titanic work promoting the music of Prokofiev and Shostakovich on the international stage; there has not been any other project like that,” Gergiev said. “We performed their music — that had until then been obscure to the audiences — in many of the world’s most important cities, from New York to Tokyo.”
The New Horizons festival closes with two performances of the Mariinsky’s most recent operatic premiere, Alexander Smelkov’s opera “The Brothers Karamazov,” on Nov. 4 and 5. The production first saw the stage during the Stars of the White Nights Festival in July 2008 and won encouraging reviews.
A respected St. Petersburg composer, Smelkov was specifically commissioned to write the opera by the theater.
“The composer offered a rather unorthodox approach to Dostoyevsky’s masterpiece,” Gergiev said. “It is the ‘Great Inquisitor’ line that he was most interested in exploring and focusing on. The production may be not to everyone’s taste but I am convinced that experiments make a theater live.”
www.mariinsky.ru

TITLE: Dollar Strengthens Over Ruble Amid Crisis Fears
AUTHOR: By Emma O’Brien
TEXT: MOSCOW — The ruble weakened to an 18-month low against the dollar and strengthened for a second straight day versus the euro as the prospect of a global slowdown lures investors to the relative safety of the U.S. currency.
The ruble, which is managed against a dollar-euro basket to protect the competitiveness of exports, has slumped 8.3 percent against the dollar in the past month as the credit crisis sparked by the U.S. subprime mortgage collapse prompted an exodus from emerging markets. The dollar has strengthened against all of the 26 emerging market currencies tracked by Bloomberg in the past month, except for the Hong Kong dollar.
“The ruble is not doing well because of the strength globally of the dollar and what it’s doing versus the euro,” said Yaroslav Lissovolik, chief economist in Moscow at Deutsche Bank AG, the world’s largest foreign-exchange firm. “Due to a higher perception of risk, capital is going back to the States partly because it’s seen as less risky for the time being.”
The currency fell as much as 1 percent to 27.4809 per dollar on Monday, the weakest since April 2006. It was at 27.3500 by 2:01 p.m. in Moscow, from 27.1991 late on Oct. 24. The ruble jumped 0.8 percent to 34.0575 per euro. The move shadowed the euro’s 1.3 percent drop versus the dollar today.
“The world is in ‘get out of all assets and back into the U.S. dollar’ panic mode,” Clifford Bennett, an economist at Sonray Capital Markets Ltd. in Sydney, wrote in an e-mail to clients today.
Bank Rossii, Russia’s central bank, buys and sells foreign currency reserves to keep the ruble within a trading band against the basket. It sold almost $11 billion last week to prevent the ruble from falling beyond 30.40, according to Moscow’s MDM Bank. That’s the level regarded by banks, including Credit Suisse Group, UniCredit SpA and BNP Paribas SA, as the weakest end of the trading corridor.
Russia’s currency was little changed at 30.3769 against the basket, from 30.4096 at the end of last week, during which it strengthened just 0.1 percent.
Three-month non-deliverable forward contracts had the ruble at 31.34 per dollar today, a 5 1/2-year low. NDFs are contracts used to fix a currency at a particular level at a future date. They are used by companies seeking protection against foreign-exchange fluctuations. Banks, including Citigroup Inc. and Goldman Sachs Group Inc., predict the ruble will weaken 5 percent versus the basket over the next year.
The country’s Micex and RTS stock indexes are closed to trading until Tuesday after both falling 14 percent on Oct. 24. Crude oil, Russia’s biggest export earner, fell for a second day, extending its drop from a July 11 record of $142.27 to 57 percent. Urals crude, Russia’s main export blend, slid 10 percent last week to $59.93, below the $70 average.
Russian government bonds also fell. The benchmark 7.5 percent dollar-denominated bond set to mature in 2030 was steady at an almost 7-year low of 12.37 percent.

TITLE: U.K. Politician Plays Down Russia Link
TEXT: LONDON — Business minister Peter Mandelson said on Monday he had no plans to resign over his meetings with Russia’s wealthiest man, a relationship opposition parties say the minister needs to clarify.
Asked if he would resign over meetings with Russian metals magnate Oleg Deripaska, Mandelson said: “No, that is a fantasy.”
Mandelson, who this month left his post as EU trade commissioner to rejoin the government, has been criticised in the media for his meetings with Deripaska, whose businesses can be affected by EU trade rules.
Mandelson has twice been forced to quit the government in the past over scandals, one involving a property deal and the other the issuance of passports.
At the weekend, Mandelson clarified the extent of his contact with Deripaska, saying he had first met the billionaire in 2004, two years earlier than first indicated.
He has denied there was anything improper about their meetings, saying they were part of the usual gatherings that can take place between businessmen and politicians.
“The British media will have to write their own stories and decide what their own interests are ... I know what my job is and I am going to continue doing it on behalf of my country and my government,” Mandelson said, standing outside the British Embassy in Moscow.
The European Union has said it has no reason to believe Mandelson acted improperly.
“The Commission’s position is that we are not aware of circumstances suggesting any breach of rules or any conflict of interest. No evidence for such claims has been brought forward,” said Amadeu Alatafaj, a Commission spokesman.
“We don’t see grounds for changing these (commissioner code of conduct) rules at this stage which are clear and have been applied exhaustively,” he said.
The Commission’s trade unit said there was no political interference by Mandelson in Russian aluminium tariffs or anti-dumping duty files.
Mandelson, who was brought back into the Cabinet this month to help handle the fallout from the financial crisis, was in Moscow with a delegation of British businessmen for a four-day visit to promote trade with Russia.

TITLE: Zyazikov Survives Attempt on His Life
AUTHOR: By Sebastian Alison
PUBLISHER: Bloomberg
TEXT: Armed insurgents attempted to assassinate a deputy economy minister with a car bomb in Ingushetia, a region in Russia’s North Caucasus where at least 52 officials have been killed this year, the government said.
Arsamak Zyazikov escaped with minor injuries after the bomb exploded yesterday, Bers Yevloyev, a spokesman for Ingush President Murat Zyazikov, said today by telephone from the regional capital Magas. Russian media reported that Arsamak Zyazikov is a relative of the president. Yevloyev denied the link. "As far as I know, the two are not related," he said.
Ingushetia, twice the size of Luxembourg with a population of half a million, is located next to Chechnya, where separatists fought two wars against government forces after the Soviet Union collapsed. The region has seen a rise in deadly attacks on law-enforcement officers in recent months. President Zyazikov blames unspecified "guerrilla fighters," and denies that the republic is close to civil war.
"Ingushetia is not, has not been and will not be on the brink of civil war," Zyazikov told foreign journalists in the presidential palace in Magas on Oct. 25, adding that only people with "brains like cockroaches" could think so.
"I’m not saying that everything is well," he said. "People are being killed, our colleagues are being killed. They’re fighting a war with criminals." He said the violence doesn’t pose a threat to his government or the stability of the region.
Zyazikov, 51, was elected in 2002 and, after then-Russian President Vladimir Putin scrapped direct gubernatorial elections in 2004, he was appointed to the role in 2005. Ingushetia is one of 21 of Russia’s 83 administrative regions that has the status of a republic, meaning that it’s nominally autonomous and has its own constitution, president and legislature.
Signs of instability abound. On the 40-minute drive from Magas airport to Nazran, Ingushetia’s largest town, a minivan carrying a group of journalists passed convoys of military trucks and armored personnel carriers every few minutes. Checkpoints manned by troops are located every few kilometers, and Magas is ringed by checkpoints. At least nine men in military fatigues carrying machine guns provided security at the hotel where journalists stayed.
Russian media regularly report on deadly attacks in Ingushetia. The Interfax news service reported on Oct. 24 that armed men wearing masks and camouflage kidnapped 10 to 15 people from a gaming hall the previous night. On Oct. 18, Russian agencies said two soldiers were killed and five injured in an attack on a military convoy. An opposition Web site, Ingushetia.org, said as many as 50 soldiers died. Neither report could be independently verified.
While Chechnya to the east and North Ossetia, site of the 2004 Beslan school hostage crisis, to the west are now largely stable, Ingushetia has experienced a rise in violence after Russia’s five-day war with Georgia in August. Russia deployed about 10,000 troops to expel the Georgian army from the breakaway region of South Ossetia, which is linked to North Ossetia by a tunnel under the Caucasus Mountains.
Ingushetia’s chief prosecutor, Yury Turygin, told journalists in Nazran on Oct. 24 that crime is largely falling. He cited a drop in narcotics crime, kidnappings and road accidents, while acknowledging that killings of police and troops are increasing.
 "Everyone in the Caucasus is disturbed by the crimes of illegal armed bands and attacks on the forces of law and order," Turygin said. He said law-enforcement officers are "doing their duty in fighting terrorism and extremism." Like Zyazikov, he declined to say who the "guerrilla fighters" are or what they want, while calling them simply criminals.
Turygin said the purpose of the violence is "the destabilization of the situation" in the Caucasus and added that the U.S., by funding human-rights organizations in the region, was a beneficiary of the instability. He didn’t say how the U.S. benefited from the violence.
Ingush Finance Minister Aset Ustilgova said the economy is booming and the standard of living has risen more than three- fold during Zyazikov’s presidency. She said the region is rich is natural resources, including mineral water.

TITLE: Yevloyev's Shooting Deemed an  Accident
AUTHOR: By Natalya Krainova
PUBLISHER: Staff Writer
TEXT: MOSCOW — A police officer has been charged with accidentally shooting Magomed Yevloyev, owner of the embattled opposition web site Ingushetiya.ru, the Investigative Committee said Friday. 
Ibragim Yevloyev, a criminal police officer with Ingushetia’s Interior Ministry who is not related to the slain journalist, faces charges of manslaughter when the case goes to court, the Investigative Committee said in a statement. 
Magomed Yevloyev, a staunch critic of Ingush President Murat Zyazikov, was killed on Aug. 31 after being detained by police in Ingushetia’s main city, Nazran, as he stepped off a plane from Moscow. 
The Ingush opposition has accused Zyazikov, the Ingush Interior Minister Musa Medov and the Kremlin of ordering Yevloyev’s killing. On Friday, it dismissed the investigators’ finding that the killing was accidental. 
“The case is political. Yevloyev’s killing was premeditated,” Yevloyev family lawyer Musa Pliyev said. 
The lawyer accused the investigators of being biased and said he would boycott the trial, which he called a “disgraceful performance.” 
Pliyev said the investigators had refused to consider evidence from Yevloyev’s widow about the possible organizer of his death. They also disregarded an expert evaluation that Yevloyev was killed by a point-blank shot, which ruled out manslaughter, he said. 
An Ingush opposition leader, Magomed Khazbiyev, said he also believed that the investigation’s findings had been fabricated. 
A spokesman for the Investigative Committee declined to comment on Pliyev’s and Khazbiyev’s accusations. 
Pliyev said he did not believe that the death would be properly investigated in Russia and promised to appeal to the European Court of Human Rights in Strasbourg, France.

TITLE: Convicted Killer Released, Attempts to Seize Jet Plane
PUBLISHER: Combined Reports
TEXT: MOSCOW — A passenger on a Sky Express flight from Sochi to Moscow threatened to blow up the plane if it didn’t reroute to Austria on Friday, but he was overpowered and the plane landed safely.
The passenger, identified as Oleg Vasyanovich, 33, had been released earlier in the day from psychiatric treatment that was ordered after he killed his mother, the Federal Security Service said.
The Boeing 737 belonging to budget airline Sky Express was about 17 minutes into a flight from the Black Sea resort city of Sochi with about 130 people on board when Vasyanovich gave a note to a flight attendant saying he would blow up the plane unless it rerouted to Vienna, the FSB said, Interfax reported.
The plane landed safely at Moscow’s Vnukovo Airport at 6:05 p.m., and Vasyanovich was arrested.
According to the FSB, Vasyanovich was convicted in 2002 of killing his mother and was ordered to undergo psychiatric treatment, Interfax reported.
“Today, he was released by court order, and he immediately bought a ticket for this flight,” the FSB said.
Authorities said that after the flight crew notified them of the threat, the man was identified, “and his activities were localized.” The reports did not give details but appeared to indicate that the passenger was overpowered on board.
AP, SPT

TITLE: EU Calls Russia’s Cease-Fire Claims Overblown
PUBLISHER: Combined Reports
TEXT: Most Russian claims that Georgia is violating a cease-fire agreement in the breakaway region of South Ossetia appear to be inflated, the head of the EU monitoring mission there said Friday. 
Russia also needs to give more detailed information for European Union monitors to act. And so far Moscow has not even provided a telephone contact number, Hansjoerg Haber told reporters in Brussels. 
Moscow has complained that Georgian troops have failed to withdraw from areas near South Ossetia and Abkhazia, another separatist region, and have instigated shootings against Russian forces. Foreign Minister Sergei Lavrov on Thursday accused the 225 EU cease-fire monitors of “taking a light-hearted view of the situation” following the two countries’ brief war in August and called it “a dangerous game with fire.” 
“In general, the observation is that such reports are overblown,” Haber said. “There may have been isolated shootings, but no major incidents have been registered.” 
Haber said the monitors needed details of purported violations. “We don’t get any details from the Russians. We just get general allegations,” he said. 
“We literally don’t have any telephone number on their side so far. We have been asking for it and I will ask for it again,” he said, adding that the mission has to communicate with the Russians via the Swiss Embassy in Tbilisi. 
In the latest violence in Georgia, an explosion killed Gia Mebonia, the mayor of the small town of Mujhava near Abkhazia, while he was inspecting a house damaged by overnight shelling early Saturday, Georgia’s Interior Ministry said. A villager was also killed and a local police officer was seriously injured, it said. 
Ministry spokesman Shota Utiashvili said authorities found an antenna near the blast site and suspect that the explosives were detonated by remote control. Utiashvili blamed separatists and their backers. “We are working now only on one version and this is the Abkhaz and the Russians,” Utiashvili said. “Nobody else.” 
A Defense Ministry spokesman in Moscow said he had no information about the blast. 
EU observers in the area to investigate the overnight shelling were just 100 meters away when the blast hit, said a spokesman for the mission. 
“An EU monitoring team was investigating reports of an alleged earlier incident during the night when explosions occurred near a house nearby,” he said, speaking on condition of anonymity in line with his job requirements. “There were reports of explosions and shooting.” 
Despite their proximity to the blast, the monitors were unable to determine its origin, the spokesman said. 
Monitors found spent casings from rocket-propelled grenades near the scene of the attack. UN monitors were also nearby. Two white armored vehicles bearing the UN insignia can be seen near the site of the explosion in the video footage. An official with the UN monitoring mission in the nearby town of Zugdidi declined comment. 
Georgian President Mikheil Saakashvili summoned a meeting of the National Security Council. “We are faced with an evil power,” he said in televised comments from the Council session. “They are very disappointed they could not take Tbilisi and the whole of Georgia. That’s why the risks remain high.” 
In another development, Georgia has outlawed investment in South Ossetia and Abkhazia and imposed entry restrictions on foreigners under legislation designed to isolate the two regions. 
The measures were included in legislation approved by parliament late Thursday that declared the two regions as occupied territories. 
“This law describes the reality in these territories and the situation we face,” said Givi Targamadze, head of the parliament’s Defense and Security Committee. “If Europe shows solidarity with us, this law will work.” 
The legislation appears to primarily target the Russian investment and tourism that has propped up Abkhazia since it split from Georgia. 
The law bans economic and commercial activities on the territory of both regions without the permission of the Georgian government. The sale and purchase of property is deemed illegal, as are banking operations. 
Foreigners face prosecution if they enter the regions from Russia without the permission of the authorities in Tbilisi. Georgian permission is also required for humanitarian aid deliveries. 
President Dmitry Medvedev on Friday appointed Semyon Grigoryev as ambassador to Abkhazia and Elbrus Kargiyev as ambassador South Ossetia. 
Reuters, AP, SPT

TITLE: ‘Great Ride’ for U.S. Space Tourist
AUTHOR: By Steve Gutterman
PUBLISHER: The Associated Press
TEXT: MOSCOW— Soon after he touched down, U.S. space tourist Richard Garriott got a pat on the head and an admiring question from his astronaut father.
“How come you look so fresh and ready to go?” Owen Garriott, 77, asked his son, who was sitting in an armchair Friday on the steppes of Kazakhstan after being pulled from the gumdrop-shaped Soyuz capsule.
“Because I’m fresh and ready to go — again,” Richard declared. “What a great ride that was.”
Richard Garriott, a 47-year-old computer games designer who created the “Ultima” game series, paid $30 million for a trip to the International Space Station. When he lifted off on Oct. 12, he became the first American to follow his father into space.
Friday’s landing went perfectly — a relief to space officials. In the last two Soyuz landings, the craft went into “ballistic descent” — free fall — subjecting the occupants to high G-forces and sending one of the capsules far off target.
The smooth re-entry may ease concerns about plans to discontinue the U.S. space shuttle program in 2010. That will leave the Russian Soyuz craft as the only way to ferry people to and from the station, which is scheduled to host crews of six instead of three starting next spring.
“I’m looking forward to some fresh food and to calling my loved ones,” Garriott said in televised comments. “I’ve got my father here but I’ve got other family back home I want to get a hold of.”
Garriott, who lives in Austin, Texas, was seen off by his girlfriend and his older brother, among others, when he lifted off for the station in another Soyuz craft. He was accompanied on the return flight by cosmonauts Oleg Kononenko and Sergei Volkov, who had spent six months on the space station.
Volkov, helped to a chair next to Garriott and wrapped in a blanket, looked a little wearier than the American after 199 days in space. The son of a decorated cosmonaut who was in orbit when the Soviet Union collapsed in 1991, Volkov beat out Garriott as the first human to follow a parent into space.
Kononenko was the last out of the capsule and could not be seen in the television footage.
The head of the Federal Space Agency, Anatoly Perminov, said on state-run Vesti-24 television that Kononenko had a tougher time than his crewmates during the descent but “feels good now.” The longer one stays in space, the harder it is to adjust to gravity.
Garriott conducted experiments while he was on the station. Some were sponsored, helping to pay for the trip which Garriott said cost him a large chunk of his wealth. He also took pictures of the Earth’s surface to measure environmental changes since his father snapped photos from the U.S. station Skylab 35 years ago.
“This is obviously a pinnacle experience,” Garriott said.
And he praised the Russian equipment. “This Soyuz TMA-12 operated wonderfully,” he said.
The craft’s crew module separated without a hitch before it entered the atmosphere and a series of parachutes gradually slowed its speed from 230 meters per second to about 1.5 meters per second, according to an announcer on NASA television.
On a Soyuz returning in May, the malfunction of an explosive bolt delayed the separation of the re-entry capsule from the rest of the ship. It forced the crew — including a U.S. astronaut and South Korea’s first space traveler — to endure a rough ride as the gyrating capsule descended facing the wrong way.
It took nearly half an hour for search helicopters to locate the capsule, which landed 20 minutes late and 420 kilometers off target.
Last October, a computer glitch sent Malaysia’s first astronaut and two cosmonauts on a steeper-than-normal path during their return to Earth.
Russian space officials said changes had been made to equipment and computer programming to prevent another ballistic descent.
“I can’t recall a more ideal landing,” Perminov said.
U.S. astronaut Michael Fincke and cosmonaut Yury Lonchakov, who traveled to the station with Garriott and joined U.S. astronaut Gregory Chamitoff, are scheduled to stay six months and work on renovations to expand its capacity. The shuttle Endeavor is due to bring equipment needed for the project in a few weeks.
There are also worries the global financial crisis could disrupt plans for the station in the coming years.
The head of state-controlled RKK Energia, which builds the Soyuz crafts, said Friday that construction of ships for the next few missions is on schedule but that further plans could be jeopardized by the credit crunch. Vitaly Lopota said the banks had been slow to provide loans to the company and he urged the government to quickly earmark funds.
Perminov played down the issue, saying the government would make sure a lack of money does not derail planned missions.
“We will solve the problem,” he said.

TITLE: Logistics Experts Gather For Forum
PUBLISHER: The St. Petersburg Times
TEXT: The All-Russian Logistics Forum that opened Thursday at the city’s Radisson SAS Royal Hotel and ran through Friday attracted representatives of the logistics industry from around Russia, who gathered to discuss contemporary developments in the industry and exchange ideas and opinions. 
The themes discussed at the forum’s opening session included presentations on low-cost logistics as a method of improving efficiency by Alexander Yakovlev, logistics director at Nutritsiya; implementing a project to organize regional centers for a chain of shops by Vera Gorbachyova, sales and marketing director at Relogix; and innovations in logistics as an essential part of the business process, by Yury Legkov, deputy head of the order management department at Khlebny Dom.
In her opening address, Maria Kanaeva, director of Lanzess logistics at Bayer and the forum’s chairwoman, raised the subject of the financial crisis, an issue later tackled by Yakovlev, who said that while global financial developments have not yet reached the logistics sector and are not likely to do so before the New Year, the industry cannot remain unaffected. 
Yakovlev used the idea of the Kaizen principle in his presentation on improving efficiency. Kaizen is a Japanese philosophy that strives for continuous improvement, which when applied to business aims to make the various aspects of a process as efficient as possible. Yakovlev’s recommendations for applying the Kaizen principle to the logistics industry consisted of an eight-step plan that includes minimizing reserve stocks and unnecessary movement and transport of goods and people. 
The comparative benefits of outsourcing versus company transport, a program for overcoming the crisis in logistics personnel during the next two years, and aspects of training personnel were also under the spotlight at the forum.
The issues arising from customs regulations that can cause headaches for logistics companies were discussed in a special session focusing on current changes in customs policies and the organization of customs checks, presented by Kanaeva. 
The national and local logistics markets are seeing active growth, and for the first time, forecasts for the volume of new logistics space entering the St. Petersburg and Leningrad Oblast is comparable to that of the Moscow area, Alla Solovieva, chief operating officer of MLP, said earlier this year. 
Solovieva said that both the Moscow and St. Petersburg markets were characterized by a lack of warehouse facilities. 
Speakers at the forum contrasted Russia’s two biggest cities, saying that St. Petersburg does not yet have the same traffic problem as the capital, which saw traffic ground to a halt entirely last week as roads were choked with more than 500 kilometers of traffic jams. Delays caused by traffic jams cause headaches and extra costs for logistics companies.

TITLE: Crisis Forces Carmakers to Drop Forecasts
PUBLISHER: Combined Reports
TEXT: MOSCOW — The country’s car market, which was fast becoming the largest in Europe, has not stagnated yet, but the main drivers of its success have been buried under the weight of the global financial crisis.
Less than two months ago, some of the world’s automotive giants unveiled plans to increase their sales in Russia by tens of thousands of cars this year. Now, they are scaling back their growth forecasts, despite sporadic buying sprees among consumers.
In October, car dealers noted strong demand, as Russians were eager to spend money on something tangible.
Memories of the ruble’s collapse during the 1998 crisis are tempting many to spend cash now rather than risk another devaluation of their currency.
But such trends are not a lasting source of growth for the market.
“Without a doubt, everyone is going to have to rethink their sales plans,” said Ivan Bonchev, an analyst at Ernst & Young.
A key factor in the downturn is the effect of the credit crunch on the market for auto loans, experts said, noting that many lenders have simply stopped granting them.
The suspension of construction projects throughout the country, caused by a sudden lack of financing, has likewise cut into demand for heavy trucks and noncommercial vehicles.
“There isn’t going to be that kind of growth anymore, the kind that we saw in the previous three years. That growth was anomalous,” said Boris Alyoshin, president of AvtoVAZ, the country’s biggest carmaker. 
“Now, if we even see growth of a few percent, it will be normal,” he said.
According to the Association of European Businesses, growth in sales of foreign cars stood at 20 percent in August on an annualized basis and 22 percent in September. This compares with growth of 40 percent seen last year.
“We are no longer trying to catch up with too much demand. ... There is less activity, less action in the showrooms,” said Olga Sergeyeva, spokeswoman of Renault’s Russian unit.
The country’s largest chain of dealerships, Rolf, which specializes in the sale of Mitsubishi brand cars, cut the prices for its entire lineup Oct. 10 because of plummeting demand — which in August had fallen 19 percent and 25 percent in September.
Much of this is because of the unavailability of credit. This summer, about half of all cars were bought on credit, and half of all trucks were leased, said Bonchev, of Ernst & Young, adding that this figure was now likely to fall to 30 percent or lower.
Partly because of this, overall sales growth for the car market will be no higher than 20 percent, Bonchev said. This compares with more than 60 percent in 2007, when 2.76 million cars were sold in Russia for $53.4 billion.
Even that growth rate is inflated, experts said, by the consumers still willing to spend their savings on a car for fear of a ruble default. Once this pocket of demand is exhausted, sales rates will continue to slide.
“People right now are taking out all their cash and turning it into tangible goods, and that process is unlikely to end anytime this year,” said Sergei Solovyov, the financial director of Incom-Auto.
His comments have been echoed by some in the art market. Auction house Sotheby’s recently said it expected paintings worth tens of millions of dollars to be snatched up by investors.
“For next year we expect the growth rate for the automotive market to be 5 percent,” Solovyov said.
This week, Incom-Auto announced plans to sell 30 percent of its share capital to raise money for refinancing loans. 
Alyoshin, of AvtoVAZ, said tight credit could be deadly for the sales side of the industry.
“Dealerships are in no condition to pay so much for loans. This is simply killing their business,” he said. Many banks are charging rates of 18 percent or more for business clients.
On the manufacturing side, demand is also wreaking havoc. On Monday, Kommersant reported that Russian carmaker GAZ, the country’s largest producer of light commercial vehicles, may reduce output by 30 percent and lay off 20 percent of its workforce because of falling demand and the credit crisis, citing an interview with Chief Executive Officer Sergei Zanozin.
GAZ expects sales to fall as much as eight percent in 2008, while earnings before interest, taxes, depreciation and amortization may decline as much as 50 percent compared to last year, the Moscow-based newspaper said, citing Zanozin.
The Nizhny Novgorod-based company’s operational expenses increased by 20 percent because of the growing metals prices, Kommersant said, citing Zanozin. GAZ plans to freeze or scale down projects including the production of its main product, the new Gazelle minivan, the Siber sedan and Maxux minivans, according to Kommersant.
GAZ had to shut down its production lines for four days earlier this month, citing weak demand. The company said then that sales of the Gazelle had dropped 10 percent.
(Reuters, Bloomberg)

TITLE: Central Bank Official Sees No Need for Devaluation of Ruble
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Central Bank has the means to control sharp fluctuations in its currency but does not yet see the need to limit capital movements or change the ruble’s trading corridor, two top officials said Saturday.
Alexei Ulyukayev, the Central Bank’s first deputy chairman, said such measures would not be necessary because the country’s macroeconomic condition remains strong.
“We have a good balance of payments, large reserves and the basic economic indicators are strong,” Ulyukayev said in comments on Ekho Moskvy radio.
“Just because the global financial crisis has hit our shores does not mean that the ruble has to be significantly devalued,” he added.
Separately, First Deputy Prime Minister Igor Shuvalov said Russia would not allow any drastic volatility in the ruble, which dropped to two-year lows against the dollar last week.
“It’s important to understand that the Central Bank has the full arsenal of measures and financial resources not to allow any sharp fluctuations, upward nor downward, in the value of the Russian currency,” Shuvalov said on Vesti-24.
“Right now, everyone in the government and the Central Bank believes that sudden changes in the national currency’s value is detrimental and must not be allowed by any means,” he added.
Ulyukaev said that although capital outflows have continued in October, they would be significantly less severe than last month, when around $25 billion was pumped out of Russia.
“There are going to be outflows, but much less than in September,” he said.
Citing preliminary figures, Ulyukaev said the net capital flows were still positive for the first nine months of 2008, with inflows amounting to $800 million between January and the end of September.

TITLE: In Brief
TEXT: <b>Lukoil Interested</b>
MOSCOW (Bloomberg) — Lukoil, Russia’s largest independent oil producer, would be interested in developing the Russian offshore shelf as part of a group led by a state-owned company, Interfax reported.
Lukoil would be prepared to increase investment in searching for oil if it’s allowed to participate in Russian exploration projects and licensing auctions, the news service said, citing Chief Executive Officer Vagit Alekperov.
The state has hindered spending, especially on the offshore shelf, by introducing laws governing natural-resources investment, Alekperov said Monday at a conference in Moscow, according to Interfax.

<b>Transaero Cuts Prices</b>
ST. PETERSBURG (Bloomberg) — Transaero, Russia’s third-largest airline, will drop fuel surcharges on flights to Europe because fuel prices have fallen 36 percent since July at the European airports where it operates.
The carrier will end a 44-euro ($55) fee on round-trip flights from St. Petersburg and Moscow, the St. Petersburg-based company said in an e-mailed statement Monday. Transaero pledged to continue reducing airfares to reflect lower oil prices, according to the statement.

<b>Gazprom in Vietnam</b>
MOSCOW (Bloomberg) — Gazprom signed a 30-year contract to develop four fields off the coast of Vietnam as Russia’s largest energy company extends its global reach.
The state-run company will finance exploration at the joint project with Vietnam Oil & Gas Group, Moscow-based Gazprom said in an e-mailed statement Monday. The deal was signed at a Kremlin ceremony in the presence of Russian President Dmitry Medvedev and his visiting Vietnamese counterpart, Nguyen Minh Triet.

<b>Gazprom Neft Fields</b>
MOSCOW (Bloomberg) — Gazprom Neft may not develop parent company Gazprom’s Pechora Sea oil fields Prirazlomnoye and Dolginskoye, Interfax reported.
The economic environment doesn’t support the development of the offshore fields, the news service said, citing Gazprom Neft Head of Geology for New Projects Alexander Obukhov. The company hasn’t yet ruled out the plans, Obukhov added, according to Interfax.

<b>VEB Borrows $417 Mln</b>
MOSCOW (Bloomberg) — VEB, Russia’s state-owned development bank, borrowed 335 million euros ($417 million) from foreign lenders to finance its operations.
The three-year loan will pay 0.75 percentage points more than the euro interbank offered rate, or Euribor, according to a statement VEB, also known as Vnesheconombank, posted on its web site Monday.
The transaction was arranged by Barclays Capital, ING Groep NV, Intesa Sanpaolo SpA, Mizuho Corporate Bank Ltd., Societe Generale SA, Sumitomo Mitsui Financial Group Inc., Citigroup Inc. and JPMorgan Chase & Co., according to the statement.

<b>Retailers Ask For Loans</b>
MOSCOW (Bloomberg) — Russia’s 10 largest food retailers have asked state banks for loans worth a total of 50 billion rubles ($1.83 billion) amid a liquidity squeeze, Reuters reported, citing unidentified people familiar with the matter.
X5 Retail Group, Magnit and Dixy, Russia’s three largest publicly traded food retailers, are among 10 companies seeking funds, the news service said.

TITLE: Ministry Says Imperial Is Nonstrategic
PUBLISHER: Reuters
TEXT: MOSCOW — The Natural Resources and Environment Ministry said Friday that Imperial Energy would be deemed nonstrategic, removing the first of two hurdles for Indian state-run energy major ONGC to buy the company.
In late August, ONGC agreed on a takeover of the midsized, London-listed oil producer for $2.6 billion, but for the deal to go ahead it must have no strategic assets and must then be approved by the Federal Anti-Monopoly Service.
“Imperial has no strategic fields or deposits, and we’ll be sending this answer” to the anti-monopoly service, said a ministry official, who declined to be identified or say when.
Investors have been watching the outcome of the situation closely as the investment climate in Russia worsens. 
Anti-monopoly service spokesman Sergei Noskovich said Friday that it was awaiting the ministry’s answer and declined to give a time frame for when a decision could be made.
A well-connected investor in Imperial said approval would come “sooner rather than later,” when asked whether the deal was expected to close before the end of this year.
President Dmitry Medvedev is expected to go to New Delhi, where ONGC is headquartered, on Dec. 3, in what industry insiders believe will finally clinch the deal, though a Kremlin spokesman could not confirm the trip.
Imperial would not comment on the timing of the deal, and a spokeswoman said the company was awaiting the anti-monopoly service’s approval.
ONGC Videsh, the overseas arm of ONGC, would not comment on the deal but said it knew of no plans for ONGC to meet with Russian officials.
Imperial, which owns a number of licensees in the west Siberian region of Tomsk, hopes to produce 35,000 barrels per day by the end of 2009 and 80,000 bpd by 2011.

TITLE: Firms Show Caution In Accepting Cards
AUTHOR: By Tai Adelaja
PUBLISHER: Staff Writer
TEXT: MOSCOW — As distrust among banks spreads to retailers and consumers, signs are mounting that a worsening of the financial crisis could dampen businesses’ willingness to accept credit and debit cards.
In the wake of the 1998 collapse, nearly all of the country’s banks and retailers stopped accepting credit and debit cards. And even as the current liquidity crunch has put mortgages and car loans beyond most consumers’ reach, market players say rising reluctance to accept cards is not the onset of a wider problem.
In several parts of Moscow, some of Sberbank’s automated teller machines recently appeared to have been reprogrammed to reject cash requests on cards issued by other banks. Several ATMs in the southwest refused to give cash advances on credit cards or allow withdrawals from two debit cards issued by three other banks, displaying a yellow message saying the bank no longer processed those cards.
An executive at Sberbank, who requested anonymity in line with bank policy, said he suspected that the issuing banks might have taken measures to prevent withdrawals. He said Sberbank had nothing to do with the restrictions. 
On a recent visit to the Khodzha Nasreddin v Khive restaurant on Ulitsa Pokrovka, a waitress clad in traditional Uzbek floral dress said diners now needed to pay in cash.
“Over the past couple of weeks, we’ve had problems getting back payments made through credit cards from the banks,” said Fatma, who withheld her surname because she was not authorized to speak to the media.
“I think it’s more practical if our guests settle in cash. We spare both ourselves and the guests an extra headache that way.” 
Yury Topolov, vice president for credit card management at Citibank in Moscow, said that if the financial crisis deepened, banks would simply run out of funds to prop up credit reserves or settle their client’s accounts. 
“Banks may also have to curtail the volume of credit given as well as the credit limits imposed, and this would create a second-tier crisis of confidence between the banks and their cardholders,” he said.
Russian consumers spend around 30 percent more when using credit cards, Topolov said, meaning that retailers have a strong incentive to continue accepting them.
Nadezhda Mikheyeva, a spokeswoman for Eldorado, said the electronics chain had no plans to change its credit card policy, a sentiment voiced by several other retailers.
But while credit cards’ popularity has grown in recent years, a tradition of distrust toward financial institutions has prevented them from gaining wider acceptance. 
Oleg Tishikov, commercial director of the credit card clearing house United Clearing System, said limited use of cards could help the system continue to function. “Unlike in Europe, our people use credit cards for only about 20 percent of withdrawals and payments,” he said. 
“Only a small group of elite use credit cards in Russia,” said Sergei Grigoryan, a senior analyst for the Association of Russian Banks. “There’s a religious adherence to wads of cash here.” 
Federal protection of deposits of up to 700,000 rubles ($26,200) would be “more than enough to cushion any turbulence ... that could affect the use of credit cards,” a source at VISA International, the dominant credit card association in Russia, said on condition of anonymity, citing company policy.
Nevertheless, a worsening of the credit market or additional bank failures could spell trouble for buyers who prefer to swipe and sign.
“Our banks are bearing the bulk of the burden of the global financial turmoil,” said Alexander Surikov, an adviser to the president of the Association of Russian Banks. 
“It’s evident that there are problems in the system, including with credit card financing, but this is something of a commercial secret that banks don’t like discussed.”

TITLE: Deripaska’s Miner Will Postpone Its IPO
AUTHOR: By Jeffrey Hodgson and Robin Paxton
PUBLISHER: Reuters
TEXT: MOSCOW — The global financial crisis dealt Oleg Deripaska another blow Friday, when his mining company, Strikeforce Mining and Resources, postponed a Hong Kong share float because of the market downturn. 
SMR, which accounts for 4 percent of the world supply of steel-hardening alloy ferro-molybdenum, will delay the proposed IPO until markets recover or stabilize, the company’s chief executive, Geoffrey Cowley, said Friday. 
“In the current conditions of the global financial crisis, it is not rational and economically justified to sell a share in such a promising company as SMR,” Cowley said in a statement. 
Deripaska, Russia’s richest man on paper, has been forced to sell his stakes in auto parts maker Magna and German builder Hochtief after facing margin calls from banks when the value of his shares used as collateral plummeted. 
Russian stocks, down more than 70 percent since peaking in May, have fared worse than other emerging markets recently. Investor flight, exacerbated by the war in Georgia, has wiped billions of dollars from company valuations and eaten into the fortunes of its business elite. 
Deripaska has also deferred a $700 million tranche of his debt to fellow billionaire Mikhail Prokhorov, accrued to purchase a blocking stake in Norilsk Nickel. 
SMR, which stands for SoyuzMetallResurs in Russian, is a relatively small part of his business. The company had planned to float at least 25 percent of its shares in Hong Kong in a listing that one source in June said could raise about $200 million. 
Hong Kong has been courting listings by foreign companies, although some bankers have expressed doubts about investor appetite for companies without a strong connection to China. Most Russian overseas listings have taken place in London. 
The source familiar with the matter said in June that SMR had tapped BOC International and Morgan Stanley to underwrite its offering. 
The company, which is also exploring for gold and other minerals in Mongolia and Kyrgyzstan, was in compliance with listing requirements and ready in principle to float shares, Cowley said. 
He said several companies within Deripaska’s Basic Element holding, which posted revenues of $26.8 billion last year, had set the objective of being ready for an IPO by 2010. 
“SMR is IPO-ready now,” he said. “Unfortunately, it does not make a lot of sense to discuss a potential listing in the nearest future. 
“We could discuss the terms for listing only when we have clarity on the consequences of the financial crisis and understand how long it would take for the markets to recover and stabilize.” 
SMR owns the Sorsk ferro-molybdenum plant in the republic of Khakassia and the Zhireken plant in the Zabaikalsky region. 
Basic Element’s resources division, which includes a timber business as well as SMR, contributed $630 million in revenues last year, or about 2.4 percent of the company’s total revenues.

TITLE: First Deputy Prime Minister Announces Crisis Program
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The government is drafting a program for sustaining the economy amid the global financial crisis, First Deputy Prime Minister Igor Shuvalov said Sunday.
“The program contains measures concerning the international financial structure, how international financial organizations should function, as concerns national regulation as well,” he said in a meeting with reporters, Interfax said. 
In addition to the program, the government will take on any “surprises” and continue to monitor the developments on a daily basis, he said.
Most experts involved in drafting Russia’s development strategy to 2020 had warned that difficulties were bound to hit the world by 2011, Shuvalov said.
“That it happened in 2008 is better for Russia than it would be if it were to happen in, for example, 2011,” he said.
More companies and individuals would feel a stronger crunch in 2011 because more of them would have taken out loans, including mortgages, he said.
Russia’s huge financial reserves and the relatively unsophisticated financial system will allow the country to weather the global storm, Shuvalov said.
“We believe that we have a full arsenal to react [to problems] and insure the banking system,” he said.
The 2020 development strategy will largely remain unchanged, but some measures will need to be taken quicker, he said without elaborating, adding that the government would not cut funds already earmarked for social spending in the federal budget.

TITLE: Vneshekonombank Thrust Into the Role of Savior
AUTHOR: By Maria Levina
PUBLISHER: Special to The St. Petersburg Times
TEXT: Vneshekonombank, which does not even report to the Central Bank because it has no banking license, will soon take charge of $74 billion, or 14 percent of the country’s reserves. 
The funds channeled to the state corporation will include $50 billion to help companies refinance foreign debts, $17.3 billion in subordinated loans for the country’s largest banks, and $6.7 billion to invest in stocks and corporate bonds that the government sees as undervalued. 
The efficiency with which Vneshekonombank, or VEB, will channel these funds into the economy and the soundness of its decision-making will be critical at a time when investors worry that the cost of bank bailouts will continue to rise. Acting on those fears, Standard & Poor’s on Thursday changed its outlook on Russia from stable to negative. 
“Originally the bank planned to invest up to 850 billion rubles into infrastructure and industry by 2012, but now it’s obvious the spectrum of VEB’s activity will change,” VEB deputy chairman Alexander Vasilyev said in an interview. “A lot of our efforts will now be directed toward solving the problems relating to the financial crisis.” 
VEB chairman Vladimir Dmitriyev told President Dmitry Medvedev during a meeting Thursday that work on bailing out the economy was going full steam ahead. “VEB’s supervisory board has approved a number of documents that are needed to achieve our goal,” he said, Interfax reported. 
The demand for loans has already exceeded the amount made available, with applications for $100 billion received to date. VTB and Rosselhozbank will be the first to receive support, with documents drawn up and signed for 100 billion rubles and 25 billion rubles, respectively. 
That is a pretty sharp turn for VEB, which only a year ago was transformed into the Development Bank with the goal of fostering development and investment into Russian infrastructure and industry. Its charter capital was formed by pooling the assets of the old Vneshekonombank, the Russian Development Bank and Roseximbank, and the Russian government approved of its strategy, core team and structure. The bank is still known by its old name rather than the Development Bank. 
Despite more than 80 years of operations, the bank does not hold a banking license because historically it served as a financial agent of the government, managing foreign debts and receivables, providing loans and guarantees to exporters and managing pension fund assets. 
The philosophy behind forming the new VEB was to stimulate investment into the country’s obsolete infrastructure — where projects take long to execute and many years to recoup costs — through public-private partnerships. This has been the approach taken by many countries around the world, and VEB -- a state bank operating on market principles -- seemed an ideal instrument to stimulate such activity. 
Since last year, VEB has only financed several infrastructure projects, including a 4.5 billion ruble, 14-year loan to the Rostov sewage processing plant Voda Rostova and a 815 million ruble loan to a Zelenograd microchip production plant called Angstrem. As the financial crisis unraveled, VEB, whose advisory board now includes the most influential members of the Russian government, became the sacred cow ordained to save the ailing financial sector. 
Vasilyev, VEB’s deputy chairman, said the bank would now be responsible for several key areas relating to crisis management, including refinancing foreign loans for Russian corporations, analyzing the credit worthiness of banks that want to receive state subordinated loans and supporting the Russian equity markets. 
“To a lesser extent, we will be able to dedicate resources to infrastructure investments because this would mean we have to significantly increase our staff, which we cannot do at the moment,” Vasilyev said. 
Vasilyev said 1,500 people now work for the bank, and one of the biggest challenges in the coming weeks will be to quickly reorganize operations toward new tasks and away from the original mandate of the bank. 
The choice of VEB to act as savior appears to be a wise one: If a commercial bank such as state-controlled Sberbank or VTB had been selected, it would have gotten an unfair competitive advantage, said Olga Naydenova, a senior banking analyst at Alfa Bank. “VEB is viewed as a government agency that is well-positioned to perform these duties — it has the ability to make credit decisions without getting the competitive advantage that a commercial bank would get,” she said. 
Vasilyev said VEB had no plans to become a commercial bank and would focus only on solving the tasks relating to financial stability. “Infrastructure projects will still be here in a few years. These are our long-term goals. But the crisis needs to be addressed today,” he said. 
Yekaterina Malofeyeva, chief economist at Renaissance Capital, said many governments around the world were now taking a large role in crisis management, and she was not worried that VEB would turn into a true banking player. 
She said it was “logical” that the government alter VEB’s original functions to fulfill the goals that were most critical and noted that the bank would not receive the $50 billion for subordinated loans right away. 
Vasilyev said companies that want to receive refinancing of their corporate loans will have to go through three credit committees and be approved by VEB’s supervisory board. “Yes, in part, the final decision will be political, but we also are acting as a bank and have our own risk management department that will not blindly approve projects that carry big risks,” he said. 
But a key question is whether VEB might risk crossing the line between state and commercial interests. 
The banking sector is expected to go through a wave of restructuring and consolidation in the coming months, with the stronger players remaining, Medvedev’s economic aide Arkady Dvorkovich said at an investment forum on Wednesday. 
In a sign that VEB itself may become the driver of the consolidation and owner of some ailing banks, it has moved to take over two midsized banks, Svyaz Bank and Globex. 
As much as 50 percent of the country’s more than 1,000 banks may cease to exist, but the top 50 to 60 banks should be able to receive the funding support they need by matching government aid with private capital increases, said Nikolai Podguzov, a debt-markets analyst at Renaissance Capital. 
Medvedev on Thursday asked Dmitriyev to be quick in implementing the state’s anti-crisis program. “At the moment, given that you are the central coordinator of these funds, you must act as quickly as possible,” Medvedev said, Interfax reported. 
The bank’s supervisory board is chaired by Prime Minister Vladimir Putin (last year it was chaired by former Prime Minister Mikhail Fradkov), and its eight members include First Deputy Prime Minister Viktor Zubkov, Finance Minister Alexei Kudrin, Economic Development Minister Elvira Nabiullina, Regional Development Minister Dmitry Kozak, Transportation Minister Igor Levitin, Industry and Trade Minister Viktor Khristenko and VEB chairman Dmitriyev. 
Putin on Thursday showed his support for the country’s largest private bank, Alfa Bank, by visiting a branch office in Novosibirsk with bank president Pyotr Aven.

TITLE: HR Analysts Assess Financial Crisis
AUTHOR: By Shura Collinson
PUBLISHER: Staff Writer
TEXT: As the ruble fluctuates, stock markets slump and investment banks are sold off for a song, assessments of and forecasts for the financial situation vary. Sales of jewelry soared in October as Russians hurried to invest their money rather than leave it in banks, while television beamed politicians urging people to stay calm and offering reassurances that Russia’s economy is perfectly well equipped to weather the financial storm.
Despite optimistic official statements, redundancies have already been announced, with LEK construction company confirming 485 redundancies —10 percent of its staff — earlier this month, and local TV station Channel 5 announcing it would lay off 15 percent of its staff from Nov. 1. As the fall-out from the global financial crisis becomes increasingly apparent and widespread, the recruitment sector will also inevitably feel its effects, though opinions and forecasts vary as to the scale and nature of the consequences.
“The current financial crisis, and the general recession that will undoubtedly follow, is already having an effect on the search industry and the work of recruiters,” said Yury Mikhailov, managing partner at Consort Petersburg recruitment company.
The effect on some candidates in the financial sector has been disastrous.
“In September, we had a couple of candidates turned down by an investment bank when one was to start in three days’ time at his new place of work with our client (having left his previous tenure), and the second one was told he would not be getting any job offers due to the folding business,” said Mikhailov.
 “Although so far no Richter-scale quakes have been felt on the recruitment market, the rumblings of a future storm can be heard in some distant examples from several companies in the construction, real-estate, finance and banking sectors, with up to 20 percent of staff being made redundant,” he said.
 “We can see several, so far minor changes in the work of recruiting companies as a result of the crisis,” said Elena Kolmakova, business development manager at AVANTA Personnel. “Business in our industry is currently characterized by slowing growth in some sectors. It’s no secret that the first companies to freeze their projects are those working in the banking and construction industries and developers.”
Kolmakova said that AVANTA Personnel was operating as usual. 
“We are continuing to work actively, we’re still receiving new orders on a daily basis to fill vacancies in a whole range of diverse sectors, including engineers, IT specialists, accountants, administrative personnel, lawyers, financial directors and managers, and manufacturing staff of various levels,” she said, adding that the company had not seen a decrease in the volume of CVs being submitted by job hunters.
While some employers are making cuts in their personnel, others are seizing the moment to restructure their organizations. 
“There’s a growing tendency on the part of forward-thinking employers to try and snap up some of the professionals who have become available on the market,” said Mikhailov. “Some companies now perceive this moment as an opportunity to do an HR audit to review staff levels, revise some positions, enhance people’s responsibilities and motivation, and call on headhunters to provide them with a number one candidate to replace some of their low-performing employees in an effort to increase productivity and sales and maybe trim down some costs,” he said.
“The current situation may turn out to be advantageous for both employers and candidates,” agreed Kolmakova. “Employers can use the opportunity to reduce inflated staff and attempt to get rid of ‘unnecessary’ employees; others may choose to retain their current staff, since they understand that it will cost them significantly more to hire new employees in six months’ time,” she said.
Employees should not be overwhelmed by “artificially-created panic,” Kolmakova advised, but should take a time-out to assess the situation. “If you are really unsure about your position and company, you can always compile a CV and send it to the major recruitment agencies,” she said.
Mikhailov said he was amazed at how quickly — in just two months — the situation on the labor market had turned around 180 degrees.
“Whereas before, everyone was talking about a deficit in nearly every industry and professional segment, now some of the most sophisticated minds have come up with a new term — a ‘profitcit’ of manpower,” he said.
Kolmakova also noted the sudden turnaround, and suggested that headlines warning about mass redundancies were premature. “Just six to eight weeks ago, the printed press was talking about a famine in the personnel pool, about a universal deficit in workers and specialists in all spheres and highly-qualified managers,” she said. 
Mikhailov predicted that the recent trend of companies actively hunting for candidates would gradually reverse to a normal situation in which applicants will need to put in more effort to search for jobs in order to find the best one. 
“This will in turn affect salaries, whose unchecked growth will become minimal. I believe that the recruitment market might suffer accordingly, and probably shrink by at least 20 percent in the short term, when companies will look to cost-cutting measures and probably reduce their dealing with outsourced service providers and do most of their personnel selection themselves,” he said. 
Mikhailov predicted that the smaller recruitment firms would suffer the most, and might be forced out of the industry. 
Kolmakova said she expected some kind of balance would be achieved on the labor market between what employers could offer and what candidates expect — an equilibrium between supply and demand.

TITLE: Counter Offers: Fair Play Or Professional Bribery?
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Changing jobs is a natural part of almost any career. An employee finds a new post with a higher salary, considers all the pros and cons, and makes a final decision. And suddenly, their present company makes them an offer they can’t refuse. This is a counter offer — better pay and conditions in order to try to retain the employee. This situation was highly unusual for Russia just five years ago, but is now becoming a widespread phenomenon.
“Nowadays, when it is easier to retain staff than to find and train new personnel, counter offers are becoming more and more popular,” said Tatiana Modeeva, managing director of InterComp St. Petersburg.
“Now employees often receive both offers from other companies and from their current job.”
Employers primarily attempt to retain workers whom it is most difficult to substitute or whose resignation could lead to the failure of projects with which they are involved. 
“Counter offers are often made in segments characterized by a shortage of specialists,” said Natalia Galochkina, a consultant at ANCOR’s corporate clients department.
 “It is not necessarily only top specialists — it can be ordinary workers who possess unique knowledge or experience,” agreed Jury Ivanov, general manager of Arcadia ++.
“A counter offer can be a delayed reaction to an employee’s low salary. Senior staff realize that the employee should be paid more only when they officially announce their decision to quit the job,” he said.
Salary is one of the main causes of the phenomenon of counter offers. 
“Often, HR managers are simply ignored when they draw directors’ attention to increases in the average level of salaries in the field. As a result, the best employees start to look for better working conditions and higher salaries,” said Olga Wasko, HR director of InterComp St. Petersburg.
There are incentives for employees to accept the counter offer and stay at their current company. ANCOR’s experience shows that 20-50 percent of all candidates who receive a counter offer choose their old job.
On the one hand, the specialist understands the prospects for professional growth in the new job; on the other hand, everything is clear and predictable in their current job. If the main reason for looking for a new job was to earn more money, the employee usually accepts the counter offer. 
The employer can also suggest new, challenging and interesting projects that were not included in the employee’s responsibilities according to their old contract. 
“Nowadays, an offer to stay is not simply a request from the superior with some promises. It represents a new job offer with stated new tasks, terms and financial conditions,” said Galochkina.
Most companies, however, think primarily about their own profit, and not about the employee. 
“It’s naive to think that an employee announcing their resignation can open the eyes of the company owner to the fact that this employee is a priceless and indispensable specialist,” said Galochkina.
“Companies should make counter offers! Even if it is not a key employee, it will improve the image of the employer,” said Wasko.
By making a counter offer, the employer gains valuable time to conduct an unhurried search for a substitute. 
“In most cases, a person who was going to leave their job would not work with the same diligence as before, even for vast amounts of money,” said Wasko.
According to ANCOR statistics, nine out of 10 candidates who accept a counter offer leave the company during the next six months. If a good and loyal employee decides to leave the company, they have usually weighed up the pros and cons of doing so and are ready for a new job and a new company. Incentives and persuasion may delay the resignation, but not keep the employee forever, especially when the reasons for looking for a new job are not purely financial. A potential employer offers not only a new salary, but also new experience in a new company. If the employee does not see an opportunity for development and cannot see how to forge a career path in their company, they will seek it in another one. As a result, a counter offer may be declined in spite of all its attractiveness.
“Counter offers may be refused due to old technology, uninteresting projects or an uncomfortable atmosphere in the team,” said Ivanov.  
Counter offers can have unpleasant consequences for both the company and the employee. If one worker is given better conditions, it may not seem fair to others of the same professional level. They may also ask for a higher salary and position. In addition, an employee who accepts a counter offer may lose their boss’s trust. While it may even seem that relations improve, the employer still knows that a prized specialist was secretly looking for a new job. 
Moreover, employees should bear in mind that if they have found a new job, they will have a moral obligation before their future employer. Even if only a verbal agreement has been made, they may gain a reputation as a person who does not keep their word.
Unfortunately for employers, some candidates enter into negotiations with other companies solely in the hope of getting a counter offer and consequently a higher salary or position. 
“Often the employee accepts the counter offer, and effectively blackmails the employer using the threat of resignation,” said Wasko. 
In some cases, both employer and employee gain from a counter offer. 
“One of our former key employees decided to leave the company because he felt tired of the employer. He was actually worn out and had not accepted our suggestions to change his area of responsibility,” said Wasko.
“In response to his resignation, we offered him a two-month paid vacation as a counter offer. So the ‘monster employer’ becomes a ‘considerate’ one.”
There is no perfect advice or solution that will suit all parties concerning counter offers. Only the employee can make the best decision. Human resources specialists recommend trying to understand clearly the reasons for searching for a new job, and then decide whether or not the counter offer is really too good to refuse.

TITLE: Personnel Deficit Set to Be Reversed
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: In an atmosphere of global financial crisis, the Russian recruitment market is undergoing major changes, including dramatically increasing demand for technical staff and qualified specialists. The main problem currently facing the St. Petersburg recruitment market is not unemployment, but a shortage of skilled personnel. 
Statistics published by City Hall have shown that 70 percent of job seekers using the city’s employment service are women. According to central government official records, at the beginning of the summer the unemployment rate in St. Petersburg was 2.2 percent — less than half the country’s average unemployment rate, which was 5.3 percent for the same period.
“Our database has 76,000 vacancies, most of which are for qualified jobs. The city’s industries require highly skilled specialists in different areas — engineers, technicians, programmers and designers. People with these qualifications have better chances of finding a decent job,” Pavel Pankratov, head of City Hall’s employment committee was quoted as saying to local media earlier this month.  
Qualified specialists — skilled workers and technical specialists — are in greater demand than lawyers or economists. According to Pankratov, the boom in demand for lawyers and economists is declining.
“Highly qualified specialists in technical spheres like engineers, technicians, designers and programmers, as well as sales managers, who could be in great demand if the situation changes for the worse, are professions that are seeing surging demand on the local recruitment market,” said Svetlana Sokhatskaya, branch manager at St. Petersburg Kelly Services recruitment company.
Conclusions regarding staff recruitment in the IT and hi-tech industries were similar. 
“What we are seeing now is a shortage of skilled IT professionals on the local market, especially in the software development sector,” said Jury Ivanov, General Manager of Arcadia++ recruitment agency. He added that in general, the lack of skilled software developers and testers remains a topical issue.
Developments in the financial and investment markets are also causing a fallout in the IT and hi-tech industries. 
“At the moment, the situation that has formed on the IT and Telecom labor market can be characterized as a stressed dynamic balance between supply and demand. No new player, large or small, has appeared on the market since the first quarter of 2008,” said Ivanov, adding that salaries have not increased for software development positions since March this year.
The most efficient method of finding a job in St. Petersburg is by visiting the numerous vacancy fairs that take place almost every month in the city. Local government statistics have shown that last year, about 60 percent of visitors to such fairs found a job there. Most visitors are usually already employed, but are willing to change jobs if another company offers them better conditions.
As a result of the financial crisis, numerous companies in the banking, real estate and development sectors have made cutbacks in personnel spending. The current lack of trust between banks has deprived developers of access to affordable loans, so they have had to freeze not only ongoing projects, but personnel spending too.
Analysts say that for the first time in the last five years — a period that has seen unprecedented growth in the number of vacancies in the industry — the real estate market is seeing a sufficient number of available candidates. New employees now have to be prepared for a 20-percent discount on starting salaries.
“At the moment, the recruitment market is in abeyance, and is in some kind of waiting period. Companies in banking and construction are faced with difficulties related with the global financial crisis,” said Sokhatskaya. She said that some employers are currently suspending active searches for staff, promoting internal candidates to vacancies or closing positions using their own resources.
This is particularly visible on the recruitment market for development and construction companies. Head Hunter’s index for the correlation between resumes and vacancies for September was 1.19, according to data published in Kommersant daily earlier this month.
“This shows us that the real estate market has 19 percent of sufficient candidates. This is happening for the first time in the last five years,” Viktor Artyomev, head of the real estate and construction department at Lyte Recruitment, was quoted as telling the newspaper. 
The online recruitment resource Head Hunter gave an index for January-June 2007 of 0.56, meaning that the real estate market saw about a 44 percent personnel deficit during that period. Since then, the market has experienced gradual change. The first half of 2008 saw an increase in the number of candidates per vacancy. According to Head Hunter data, the index for January-June 2008 rose to 1.0.
Observers confirm that developmental companies are reducing the recruitment of new employees. The growth in vacancies for the first half of 2007 was above 60 percent, but for the same period this year, growth was only 42 percent. Despite the fact that the number of vacancies has already decreased by 30 percent, no misbalance has yet been observed between the number of vacancies and job seekers, according to Sokhatskaya.
Nevertheless, the most sought-after personnel are still top-managerial positions. 
“These are managers who have experience in investment portfolios and project documentation that is accepted by the local government,” Artur Shamilov, managing partner at Top Contact executive search company, was quoted as telling Kommersant. He added that the annual income of medium level top-managers working at development companies can range from $500,000 to $1 million, with additional bonuses of up to $700,000. Top managers at large companies have an annual income ranging from $1 million to $3 million, with bonuses of up to $2.5 million. Shamilov said that the current crisis could lead employers to make cutbacks in bonuses.
Head Hunter data confirmed that salary cuts for new employees could reach up to 20 percent. Other consequences of the crisis would be companies making cutbacks in spending on corporate events, limits in using mobile telephones and other services.

However, the most serious issue facing real estate and development companies is the possibility of redundancies. According to some experts, the industry could see 10 percent of personnel laid off before the end of the year. Redundancy threatens staff involved in venture projects most of all, because the deadline for the realization of such projects is usually prolonged indefinitely. Azariy Lapidus, president of the board of directors of SUI holding developmental company, told Kommersant that he is not excluding the continuation of such dismissals.

TITLE: Age: Seeking a Generation Balance in the Workplace
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Eighty percent of all job advertisements specify an age range among the requirements. In the U.S., a special law — the Age Discrimination in Employment Act — protects people from employment discrimination based on age. American employers can neither stipulate age preferences nor ask candidates about their age or date of birth during interviews or at any other stage. This is also true of most European countries. 
According to the Russian Constitution and labor code, everyone has the same right to realize their labor potential. According to the law, employers do not have the right to reject an application on account of the candidate’s age, with the exception of pilots, astronauts, rescue workers, law-enforcement officers and other similar occupations. In reality, however, the age of a candidate often plays a role in the recruitment process, and discrimination has always existed. 
“Large, successful companies avoid mentioning the preferred age of a candidate in a job advertisement. But all of them prefer a person under 45,” said Olga Wasko, HR director of InterComp St. Petersburg.   
Recruitment agencies are agreed that it is difficult for good specialists to find a job once they are more than 40-45 years old. But no company admits the real reason for passing over such a candidate. 
“The employer who knows the law about discrimination and human rights will never mention this reason to the candidate,” said Natalia Galochkina, a consultant at Ancor’s corporate clients department.
Such attitudes are illegal, but can be well-grounded. The question is whether it is possible to teach an old dog new tricks. 
“Unfortunately, a client-oriented approach and PC skills are mostly still beyond comprehension for people over 45,” said Wasko.
“After the age of 45, certain human physiological functions — reaction times, acceptance of innovations and the ability to learn — deteriorate.”
 “World perception, views on life, values and ways of behavior depend on age. And these are the basic factors of a corporate culture. One can understand the employer who looks for a new employee who will be well-matched with the other staff,” said Galochkina.
For example, in an IT company that has a young staff who have informal relationships and common interests, a woman in her fifties with the required skills applying for a vacancy could create a dilemma.
“Of course she may be able to do everything that is needed in the project, but such a new employee will not fit into the team well, and her joining the staff could cause problems within the project,” said Jury Ivanov, General Manager of Arcadia ++.
Age discrimination can also be a factor in jobs that include heavy physical work. Employers may not want to recruit an elderly person for such work due to the worker’s health. 
Not all reservations are well-founded, however. 
“For example, many employers are reluctant to offer a job to a woman of child-bearing age. Their explanation is that she will probably soon take maternity leave,” said Galochkina.
In such cases, candidates can take legal action against employers suspected of discrimination. But not every lawyer can prove that their client is right, and candidates may fear gaining a reputation as a confrontational worker. It takes a lot of nerve and demands strength of mind. Recruitment agencies advise candidates to spend their time and effort looking for a different job with a suitable corporate culture.
The shortage of qualified personnel, however, is forcing employers to broaden the age requirements of candidates. 
“Some consulting companies make it their practice to take on recent graduates of higher educational institutions who have no work experience. These former students are easily taught and do not have the disadvantage of having been trained to another company’s corporate standards,” said Tatiana Modeeva, managing director of InterComp St. Petersburg.
“Of course, only companies with a developed system of teaching and training and with a well-established corporate culture can afford to do so. Other employers have to take on ready talents whatever their age,” she said.
In addition, the population crisis is leading to a shortage of young employees and pushing up the average age of potential workers. In Europe, employees in their fifties and sixties are valued no less than their younger counterparts.  Experience has shown that companies that are able to overcome all age stereotypes and use opportunities to transfer experience to the younger generations will only gain from doing so.
But most long-term job hunters are still either young people with no experience or skilled people in their forties. 
“The task facing employers interested in creating effective teams is to organize production in such a way that experience and young enthusiasm work together for the same goal,” said Ivanov.

TITLE: Recruitment as a Reflection of Economic Growth
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The fortunes of executive search companies — once known as headhunters — can offer a glimpse into the true state of the economy. Who’s hiring who to run corporations, and where they come from, are important indicators of growth and movement of capital — particularly in an emerging but booming economy such as Russia’s.
Despite the recent credit crunch in the U.S. and the knock on effect on European financial markets, the latest State of the Executive Search Industry Report by the Association of Executive Search Consultants (AESC) revealed that executive search industry revenues continue to grow. Global net revenues experienced a rise of 9 percent in the first quarter of 2008.
Russia, however, differs from the worldwide trend. According to a report by Transearch International, there is an annual 30 to 40 percent growth in the industry and executive searches are carried out in four ways. Among these are Russian executive search offices with a net income in the market of around $30-$35 million, western executive search offices with estimated $10-$20 million, non-executive search offices ($10-$12 million) and around 30 to 40 percent of vacancies are filled by companies themselves.
However, two thirds of international corporations remain reluctant to see Russian managers holding key positions at companies’ branches in Russia, according to a survey conducted by The Association of Executive Search Consultants. A global survey of 237 senior executives from North America (60%), Europe (22%), Asia Pacific (10%), Latin America (4%), Middle East (2%), Africa (1%), and other (1%) reveals 73 percent anticipate that companies in Russia and Eastern Europe, facing a shortage of top executive talent, will hire expatriates to fill key executive roles.
Only 27 percent of respondents believe that Russia and Eastern Europe will deal with the executive talent shortage affecting the region by training young local talents to fill executive roles. With the growing affluent consumer class and potential for high returns, Eastern Europe and Russia have become the latest market targets for multinational companies. As a result, multinationals are competing with local businesses for scarce executive talent. Many multinationals are bringing in their own executives and hiring locals as entry and mid-level employees.
“These countries have reached a critical stage in which they require strong talent to make them global economic players,” noted Peter Felix, President of the global Association of Executive Search Consultants (AESC). “The question is where will that talent come from? While Russia is developing a younger ‘golden generation,’ top talent is still in short supply.” Western companies are sometimes conservative as they assume themselves to be the best employer and consider the local job market inexhaustible. In the meantime, candidates often accept offers from Russian companies that offer competitive salary and insurance packages.
Though the Russian job market differs slightly from the international one, executive search shortage rates should not be underestimated, warn experts. Head of THI Selection in St. Petersburg Alexandra Yevseyeva said that sometimes a position is filled in several days, but in general the search takes several months. “Many expats who are in charge of HR in Russian branches are picky,” she said.
“Russia’s international reputation is to be regarded as a major reason why Russian top executives are rejected by global corporations. Yet natives are also responsible for such attitudes,” says managing partner of Transearch International Russia Stanislav Alekseyev, who mentions the inappropriate working discipline typical of some Russian executives.
“For example, they never show up at work after the contract is signed. It goes without saying that this disgraces the reputation of Russian chief executives in general”. Russian CEOs and businessmen deserve their far from positive reputations, according to another survey conducted by Transearch International in Russia. Its focus group, consisting of Western consultants and specialists in executive search, thinks of Russian CEOs as “difficult to understand, arrogant, chauvinistic and unpredictable” people. Russian businessmen are referred to as “persistent, with deliberate goals, active, difficult to understand but eager to undertake, learning Western corporate culture.”
Within a decade, expatriate executives will be replaced by local top management, AESC reported in April 2008. According to a global survey of 62 senior consultants resident in developing market countries, reveals 44 percent predict that in 10 years’ time, supply in executive search industry will meet demand. Vacancies are to be filled by local executive talent, ousting foreigners who will obtain better positions upon their return to their home countries. This tendency is global but again Russian conditions differ, experts at Transearch International insist. “Local employers are looking forward to hiring expatriates rather than Russian managers who overprice themselves and are unpredictable due to agitation in demand for CEOs in the overheated economics of Russia,” says Stanislav Alekseyev.
Financial analysts in the bank and retail segment expect monthly payments of around 85,000- 95,000 rubles ($3,462- $3,869), some surveys say. Moderate expectations of a maximum of 75,000 rubles are found among analysts in the Fast Moving Customer Goods (FMCG) and IT sectors. Market researchers in the retail business price themselves at around 100,000 rubles per month ($4,000).
Igor Chugai, senior consultant at Amrop Hever Russia, sees no reason that would prevent Russian executives from replacing expatriate colleagues, Vedomosti reported. “About 20 percent of all our candidates were Russians five years ago. Now they constitute exactly half,” said Chugai.
try — the real estate market is seeing a sufficient number of available candidates. New employees now have to be prepared for a 20-percent discount on starting salaries.
“At the moment, the recruitment market is in abeyance, and is in some kind of waiting period. Companies in banking and construction are faced with difficulties related with the global financial crisis,” said Sokhatskaya. She said that some employers are currently suspending active searches for staff, promoting internal candidates to vacancies or closing positions using their own resources.
This is particularly visible on the recruitment market for development and construction companies. The online recruitment resource Head Hunter gave an index for the correlation between resumes and vacancies for September of 1.19, according to data published in Kommersant daily earlier this month.
“This shows us that the real estate market has 19 percent of sufficient candidates. This is happening for the first time in the last five years,” Viktor Artyomev, head of the real estate and construction department at Lyte Recruitment, was quoted as telling the newspaper. 
Head Hunter's index for January-June 2007 was 0.56, meaning that the real estate market saw about a 44 percent personnel deficit during that period. Since then, the market has experienced gradual change. The first half of 2008 saw an increase in the number of candidates per vacancy. According to Head Hunter data, the index for January-June 2008 rose to 1.0.
Observers confirm that developmental companies are reducing the recruitment of new employees. The growth in vacancies for the first half of 2007 was above 60 percent, but for the same period this year, growth was only 42 percent. Despite the fact that the number of vacancies has already decreased by 30 percent, no misbalance has yet been observed between the number of vacancies and job seekers, according to Sokhatskaya.
Nevertheless, the most sought-after personnel are still top-managerial positions. 
“These are managers who have experience in investment portfolios and project documentation that is accepted by the local government,” Artur Shamilov, managing partner at Top Contact executive search company, was quoted as telling Kommersant. He added that the annual income of medium level top-managers working at development companies can range from $500,000 to $1 million, with additional bonuses of up to $700,000. Top managers at large companies have an annual income ranging from $1 million to $3 million, with bonuses of up to $2.5 million. Shamilov said that the current crisis could lead employers to make cutbacks in bonuses.
Head Hunter data confirmed that salary cuts for new employees could reach up to 20 percent. Other consequences of the crisis would be companies making cutbacks in spending on corporate events, limits in using mobile telephones and other services.
However, the most serious issue facing real estate and development companies is the possibility of redundancies. According to some experts, the industry could see 10 percent of personnel laid off before the end of the year. Redundancy threatens staff involved in venture projects most of all, because the deadline for the realization of such projects is usually prolonged indefinitely. Azariy Lapidus, president of the board of directors of SUI holding developmental company, told Kommersant that he is not excluding the continuation of such dismissals.

TITLE: Salaries Present Mixed Picture
AUTHOR: By Olga Sharapova
PUBLISHER: Special to The St. Petersburg Times
TEXT: General research into salaries in Russia reveals specific features and trends — notably that salaries in general are increasing. 
In a new book, “Salaries in Russia. Evolution and Differentiation,” the authors attempt to create an objective picture of the often-confusing pattern of local earnings. The authors said in an interview with Money magazine that Russia’s situation is very specific and differs from other countries with developing economies. 
“If the economic sector is growing, it is natural that demand for employment will increase, and with it, the level of income,” said Rostislav Kapelyushnikov, deputy director of the Labor Research Center of the Higher School of Economics and one of the book’s authors. “Another point is that nobody expects such fast growth. All we think about is what would happen if world prices for gas and oil suddenly fall.” A number of experts indicate that the growth in Russian salaries is dependent on the high price the nation’s natural energy resources command on the world market. 
However, productivity is low in Russia, especially when compared to the highly industrialized countries of Europe and developing economies in Asia, including China and India.   
Other factors that keep official Russian salaries low include the low level of gross domestic product (GDP) and a relatively high level of inflation.
But it is important to note that while statistics indicate that base salaries are low in Russia, the rate of variable payments is very changeable. This can make final salaries much higher since they often include a range of bonuses.
The official average monthly salary in the northwest region is about 17,500 rubles ($650), according to Olga Wasko, HR director at InterComp St. Petersburg. 
Such a level of income makes major purchases such as cars or property impossible without obtaining a loan, and it is not easy to get credit. Bank loans are subject to interest rates of between 13 percent and 18 percent. Meanwhile, rental rates in St. Petersburg can be as much as 18,000 rubles ($670) a month for a one-room apartment — more than the average monthly wage.
All this adds up to a confusing picture.
On the one hand, salary growth is demonstrably fast for managers, heads of financial and banking departments, and in IT, construction and industrial positions. In these sectors salaries can be as much as $15,000 a month. 
On the other hand there is the high price of basic commodities and a static employment market, not to mention the growing wealth gap between the rich few and poor mass, corruption and the low level of understanding of contract law.
Kapelyushnikov said: “The main functional peculiarity of the Russian model of labor is a flexible, mobile form of payment and the sluggish and mechanical use of recruits.”
Profitability 
Salary growth has been noted in the ranks of major employers, web–specialists and personnel with official qualifications in marketing.  
According to the latest research by the head of the Analytic Research Center at ANCOR recruitment agency, Yevgenia Kvint, “since autumn last year up to this autumn, we can see an expansion of almost two times in the salary level in marketing positions [197 percent]. Such a great leap seems to be very surprising in comparison to the low growth of sales level salaries [19 percent]. Looking at these numbers we understand how much the income of companies depends on the competence and education of employers, who create the image of a company.” 
The research conducted by Kvint indicates that in the latter half of the year analyzed “the most profitable occupation was business developing director, which saw growth of 160 percent. The other most profitable positions during spring/autumn 2008 were planning specialist (221 percent) and repair and service engineer (183 percent).” 
Jury Ivanov, General Manager of Arcadia++ recruitment agency, notes that during this year, the construction sector has seen a faster increase of salaries than last year. 
In the opinion of AVANTA Personnel recruiter Alexandra Trofimova, “at the peak of the scale are factory managers, financial directors, marketing directors, sales and marketing operators, area salespeople, operation managers and HR directors.”
The authors of  “Salaries in Russia. Evolution and Differentia”  concluded that in the national system of employment there is a problematic lack of young and energetic recruits with modern knowledge and skills who could increase company productivity. In the words of Vladimir Gimpelson, director of the Labor Research Center of the Higher School of Economics, “This movement and the filling of positions a priori increases the efficiency of labor, modernizes, diversifies and competes national economic structure.”
Consulting experts from St. Petersburg optimistically point out that the number of companies opening programs for new graduates is growing. “In 2007, 32 percent of regional companies made special offers to attract young specialists. This year we have already 37 percent of such companies. They promise to pay new employees 25,000 rubles,” said ANCOR’s Kvint.
“Nowadays graduates of higher education institutions can reckon on a salary from 17,000 rubles ($680) to 20,000 rubles ($800) per month,” said Tatiana Modeeva, managing director of InterComp St. Petersburg. “Traditionally, there are certain universities quoted by employers, and the graduate will not encounter any difficulties in finding employment. A number of companies annually announce the enrollment of graduates for jobs as well as internships, after which they have a chance to obtain a contract in the company.”
 AVANTA Personnel’s Alexandra Trofimova shares her own experience:
“Among our clients are large foreign companies which have special partner projects with institutes and universities. Accordingly, some students may be invited first to take part in summer work experience. Then the most successful candidates get the opportunity to study and work at the same time, following an individual schedule. When a student finishes high school he or she is given a full–time job at the company.” 
The question of which professions are the most popular and what kinds of job are the most profitable is controversial. Traditionally, in the former U.S.S.R. and even in pre–revolutionary Russia, occupations such as scientist, doctor, teacher, writer and painter were very prestigious and respected by society. This is still true today, although nowadays the monetary factor plays an increasingly role in career choices.
Ivanov of Arcadia++ summed up  the dilemma with irony: “Personally for me, the most esteemed professions are scientist and teacher… but it is clear that today this kind of intellectual work isn’t connected with such concepts as ‘popularity’ and ‘profitability.’”

TITLE: A Swedish Take on the Local Market
AUTHOR: By Shura Collinson
PUBLISHER: Staff Writer
TEXT: Swedish recruitment agency Human Search opened an office in St. Petersburg 18 months ago. The company’s CEO and founder, Eva Jacobson Weinefalk, and Henric Nilsson, country manager for Russia, talked to The St. Petersburg Times about the process of transferring their headhunting techniques and experience of working in Scandinavia and Eastern Europe to the local recruitment market.
Q: What prompted you to enter the Russian market?
A: We had always planned to start operating in Russia. After we started working in Latvia and Estonia, a year before we opened an office here, our customers there asked us to open a Russian office. Eight months ago we opened in Kiev. That was not planned from the beginning, but many of our clients here wanted us to enter Ukraine. We also operate in the Czech Republic.
Q: What are the main differences between the recruitment markets in Russian and Sweden?
A: The main difference is the huge growth that Russia is seeing. Due to the growth, the Russian market is characterized by a constant lack of candidates, especially for technical, financial and management positions.  We’ve been working in the Baltic States for about three years, and they are somewhere between Sweden and Russia, in terms of growth and development. Ukraine’s recruitment market is about five years behind Russia at the moment. 
Q: Are most of your clients foreign organizations or local Russian companies?
A: At the moment, they are all foreign companies with local Russian units — about half are Finnish and Swedish, and the rest are Norwegian, Danish, French, British and German. But we hope to diversify this and attract business from more companies in the near future.
Q: Why did Human Search decide to set up its Russian branch in St. Petersburg, instead of in the capital?
A: Well, St. Petersburg is nearer to most of the other countries in which we’re active, and it’s actually easier to open an office in St. Petersburg than in Moscow, in terms of bureaucracy. We are planning to open a representative office in Moscow in December, but our operations are not limited by geography, as much of our work is done by telephone. About half of our projects are in Moscow, Voronezh, Nizhny Novgorod and Yekaterinburg. The regions are seeing the most growth right now, as lots of companies think about moving into the regions. It’s an interesting area for both us and them. Although we’re based in St. Petersburg, it’s no problem for us to find candidates for positions in other cities. We plan to focus more and more on the regions.
Q: What differences do you notice between the recruitment markets in Moscow and St. Petersburg?
A: The market in Moscow is more volatile — there are more candidates and more vacancies there, so everything is on a larger scale. Salaries are also larger in Moscow, but St. Petersburg is catching up — it’s a good market here.
Q: Are there any plans to open more Human Search offices in Eastern Europe and the CIS?
A: Our next office will open in Poland. We looked at Kazakhstan, but its market is behind that of Ukraine. We already receive some orders to fill senior positions in Kazakhstan, but we can actually do that from our office here in St. Petersburg. 
Q: Being a Swedish company, does Human Search differ to Russian recruitment companies in its approach and techniques? 
A: It certainly does. Human Search uses a direct approach — no databases, no advertising. We find candidates who are already working in the same position. This is an approach that we have developed during six years of working in Sweden and three years in the Baltic States. The process and results are different to traditional recruitment techniques and are far more effective.
 We guarantee to find a suitable candidate within 20 working days. The first 10 days are spent mapping candidates, to find around 50-100 potential candidates per assignment. That means 10 really intensive days of hard work. Then the second stage — the consulting — begins, in order to choose the top 2-4 candidates to present to the client company.
 We take on the most difficult jobs, finding candidates for positions that are hard to fill. Once companies see that our approach is successful, they realize that it is worth using our services to find not only a new chief engineer or a managing director, but other positions as well — it’s worth it as the process is very efficient.
 We are not really in competition with Russian recruitment agencies, as our direct search method is unique to us. 
  Q: How can you guarantee to find suitable candidates in 20 days? Does it ever happen that you simply can’t find someone?
A: We can guarantee this because it’s a tried and tested method that we know will work. In summer, of course this period may be extended because many candidates are away on holiday. If it’s a particularly difficult position, then we advise the client from the start that it may take a little longer.
Q: Do you notice any seasonal patterns in the recruitment industry?
A: We see even deliveries throughout the year. The construction boom in the summer offsets the holiday period. In Sweden, April, May, October and November are our busiest times of year.
Q: How do you expect the current financial situation will affect the recruitment market?
A: Of course it will have an impact, but recruitment services are always needed.  Six years ago, when Human Search was set up in Sweden, the country was in the middle of a recession, the economy was frozen, but companies were still recruiting. Russia will still be attractive to foreign investors. Even if growth drops off, money will still come to Russia from the West.

TITLE: Expert Opinion: HR Issues
AUTHOR: By Anna Shcherbakova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Our businesses are very dependent on people’s skills and loyalty — that was an issue I discussed with an old friend and colleague during lunch on a warm sunny day. His company was founded ten years ago and has grown into a medium-sized business that includes a research division. He boasted he’d headhunted experienced and ambitious researchers from competitors. I boasted that I had built a strong and balanced team of journalists that complement each other with their knowledge and competence. 
The sunny day was not over before the youngest and least experienced member of my team  announced that he was, well, you know, a bit tired and would like to quit his job in order to study or to do something else and, um, he was not satisfied with the salary. A couple of weeks later I learnt that the research division at my friend’s company no longer existed for exactly the some reason. 
During recent years, it had been a real problem for businesses to attract and retain talented, hard-working people. Almost every manager recognized the lack of qualified employees. Former students with no experience applied to well-paid leading positions. Employees blackmailed their bosses with tales of proposals made by competitors. However, the growing economy provided plenty of possibilities for tough managers, so they could double or even triple their income within a couple of years by changing jobs or even industries with a substantial increase in benefits. Companies flattered their stars with huge bonuses, share options and other pleasant things. In other words, it was a classic case of the sellers — or employees’ — market. 
But then the blue sky darkened. In August, the world’s press was discussing the troubles of American banks, but smart people in St. Petersburg refused proposals from private banks and preferred to stay with state-owned ones. The shadow of financial crisis was not yet visible, though some cautious companies froze job vacancies and some not-so-cautious others delayed pay-rolls. Soon, some large developers and banks began to lay off personnel. One well-known blogger who worked at an investment bank advised his readers to reduce their expenses and rewrite their CVs.  
And now we’re sitting here again with my entrepreneur friend sipping tea and discussing HR issues and the latest news. A publishing house known for spoiling the market with unfeasible salaries is now burdened by bank loans and margin calls. It has fired its highly-paid journalists and hired new ones on half the salary of their predecessors. A St. Petersburg TV channel has announced it is reducing its staff by 15 percent as of Nov. 1 in order to cut its expenses.  
My friend is happy that he didn’t borrow any money to develop his business, and he expects that competitors will cut their staff and decrease salaries, bringing lines of pretenders for job vacancies with fewer demands to his door. His business may decrease too, but now he will change with whom he works. I’ve already found several CVs in my inbox. 
No doubt soon we will see a typical buyers’ — or employers’ — labor market. And the revenge of companies that suffered from the manipulations of employees will be brutal. 

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

TITLE: Motivating Personnel: How To Recruit and Retain Staff
AUTHOR: By Alexandra Yevseyeva and Yelena Skalon
PUBLISHER: Special to The St. Petersburg Times
TEXT: Customers seek to purchase goods that correspond fully to their individual demands, and companies that are capable of offering such goods attract and retain customers. A similar scheme is used by companies to win over their staff. They develop new and original methods of retaining and motivating employees. The methods vary, but they all share a common goal of attracting employees and making them as loyal to the company they work for as possible. A dedicated employee means loyal customers and substantial revenues.
The problem of motivating personnel is perpetual, and even the most effective innovations cannot solve it definitively. Every two to three years, companies have to update their bonus and compensation programs to ensure that they correspond to changes in the economy and increasing demands.
In order to motivate staff inside an organization, top-level managers require special, unique offers. But even mid-level managers and other specialists require an individual, tailor-made approach. Today, most employers seek to find an optimal solution that will enable them to meet both the interests and needs of the company (and clients) as well as the interests and requirements of employees of all levels.
As with any other program, the system of motivating personnel is devised as part of a company’s general strategy. The results of motivation will be evident at every workplace, which means that the principles of the system have to be understood by every employee. This is the first and most important condition for implementing any efficient motivation strategy.
The second condition is a competitive package of basic remuneration. If a company is unable to offer a competitive standard package — if conditions are below average market standards, the workload is beyond reasonable and the salary is lower than the minimum income level for survival — no substantial long-term effect can be expected from a staff motivation scheme, however creative.
The key feature of most successful motivation schemes is that they not only reflect the perspective of the management, but also respect the interests of a particular type of specialist. Behind every efficient solution there is always a serious in-depth analysis of personnel motivation. Even if a company does not develop any individual types of motivation, the management is aware of the goals and tasks of a particular employee, and therefore can emphasize all the important nuances in explaining the new strategy.
However innovative the new method of motivation may be, it will be either a material or non-material solution. The material type includes bonuses and financial awards. Some companies choose to cover some of their employees’ expenses, such as mobile phone bills, medical insurance, rent, meals, corporate cars, or alternatively the costs of maintaining employee’s own cars. Many of these features have become an integral part of standard compensation packages and are even viewed as essential. 
One of the most effective types of material stimulation is company loans on favorable terms. There is currently a high demand for these benefits, which can significantly increase the level of staff loyalty to the employer. There is also substantial interest in pension programs. One of the most competitive tools in winning over employees is the employee stock option program.
Training, or sponsoring staff through education programs is another strong motivational factor that combines elements of both material and non-material types of stimulation. When staff attend various training programs on time-management or leadership training, it benefits first and foremost the business itself. At the same time, programs such as foreign language courses or advanced professional training offer equal benefit to both the company and the staff. This is a tool that encourages employees to develop their potential and boosts their professional development. For some people, this can be more important that material bonuses.
Other new forms of non-material compensation have emerged in Russia, including corporate universities or academies. The goal of such institutions is to build a centralized system of autonomous corporate education.
Individual professional development is important to many managers and a transparent system of career advancement within a particular company is an attractive factor itself. When an employee understands that after a certain amount of time of producing good results they can expect to proceed to a higher position, their motivation and productivity significantly increases. 
One of the new forms of motivating personnel is the “manager trainee” program, a long-term education agreement on particular conditions. An employee signs a contract with their company, which sees them advance to higher positions within a certain period of time, thus learning the specifics of the company. Upon completion of such a scheme, the employee may be offered a top managerial position.
International assignment programs, which offer employees the opportunity to travel abroad to work for a foreign branch of the company, are an attractive tool for a career-oriented professional.
One method of motivation that is already widely used in Western Europe is the “career break.” Many managers find it useful, as it allows specialists to retain their position while taking some time off work. Traditionally the reasons for taking a career break are not related to work and can often be personal.
Motivation methods that revolve around working hours are also used, such as the “work from home” option that allows employees to complete a certain amount of work from home. IT specialists often find this a convenient alternative worth considering.
Unique and personalized motivation schemes are aimed at increasing the loyalty and the efficiency of the recipients of the benefits — the people who are regarded as the most valuable to the business and who are expected to bring the greatest contributions. Generally, motivation methods are becoming increasingly tailor-made and varied to respond to the individual’s needs and reflect modern business realities. The tendency looks set to continue in the future as more people seek a balance that combines professional development with a fulfilling private life and self-realization. 

Alexandra Yevseyeva is head of the St. Petersburg office of THI Selection recruitment agency. Yelena Skalon is a senior personnel specialist at THI Selection in St. Petersburg.

TITLE: Hunting Graduate Recruits
AUTHOR: By Yulia Poletaeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: At present, competition on the job market is such that even well known employers with established brands have difficulty providing their personnel needs. Where companies focus on hiring established professionals, they also often encounter difficulties. For these reasons competition among companies seeking to employ students and graduates from higher education institutions is heating up. Both major international companies and Russian organizations are demonstrating an interest in attracting younger employees, creating graduate programs in their search for effective personnel solutions. In this time of economic crisis, while some firms have been forced to make cutbacks, even among recently hired younger personnel, the majority of firms have not yet shown a willingness to part with personnel reserves that have only been acquired with difficulty. 
As a result, graduate recruitment remains intensive on the Russian labor market, with simpler solutions being insufficient to attract talented graduates who demonstrate a great deal of potential. The majority of companies are putting into practice a series of measures in support of their overall HR strategy. Recruitment strategies aim to attract graduates for work experience placements and work with the company, and to adapt and retain the young specialists that have been hired.
The majority of companies interested in working with the top graduates and students have moved on from merely presenting the employer’s “brand” to leading higher education students. For today’s graduates, the brand alone or an image of a perfect employer promising great career prospects is no longer enough. In order to attract students, companies offer various programs which help young people while they are studying. This assistance may comprise educational seminars on themes matching the students’ profiles and the specifics of the work of the organization. Alternatively, it may comprise pre-graduation work experience placements during the course of which students participate directly in solving work tasks and gain valuable experience. 
It has been noted that the large number of positions available, coupled with the high level of the requirements made on candidates by organizations has meant that demand for talented graduates outstrips supply. Similarly, as the younger generation attempts to achieve its goals in an ever shorter timeframe, it has demonstrated that it is not inclined to be overly loyal to employers, preferring to keep up-to-date on what vacancies are currently being offered on the market. In these circumstances, one of the most important issues for companies is how to retain young specialists who have been painstakingly selected and trained for effective work within the company. Those companies that offer precise and realistic opportunities for professional and career development have a better chance of retaining ambitious youngsters. Research carried out by SHL consulting company in 2008 showed that key motivators for young applicants on the Russian market included any movement forwards, whether it be in terms of career growth or professional development, or even opportunities for geographical relocation. 

Yulia Poletaeva is senior research and development specialist at SHL Russia.

TITLE: Professional Experience vs. Business Education
AUTHOR: By Anatoly Tyomkin, Gleb Krampets and Natalya Chumarova
PUBLISHER: Vedomosti
TEXT: The salary expectations of St. Petersburg’s business school graduates are growing, but the financial crisis could curb them, experts believe.
A year ago, about half of all MBA holders counted on earning a salary of 50,000 to 100,000 rubles ($2,000-$4,000) per month, but by September this year, only a third of MBA graduates had such expectations, according to the recruitment research agency HeadHunter: St. Petersburg, which analyzed its database of 2.3 million resumes and 80,000 vacancies. The number of people expecting to earn more than 150,000 rubles ($6,000) per month, however, increased to 20 percent of all MBA graduates.
The market is drifting away from the widespread trend of an MBA as education for managers of all ages and professional levels, said Yulia Sakharova, director of HeadHunter St. Petersburg.  An MBA is becoming the preserve of successful professionals who wish to structure the knowledge of management they have already gained through practical experience, she said, which explains the growth in salary expectations of MBA graduates.
Among MBA students, there are now 15 percent more top managers and business owners, while previously the majority of students were middle-level managers, said Anna Izmailova, marketing manager at the Stockholm School of Economics. Upon completing an MBA program, graduates usually expect their salary to at least double, said Dmitry Pavlov, the deputy head of development and external relations at the International Management Institute St. Petersburg (IMISP).
At IMISP, a two-year MBA program costs 22,400 euros ($28,000), so for it to have paid itself off within two years, the graduate’s salary needs to increase by about 1,000 euros ($1,250) per month, said Pavlov. If the cost of the program has not been recovered through an increased salary within three to five years, then it was not worth doing, he said.
Employers are pleased to take on an MBA graduate, but they usually receive no more than any experienced professional working in the same position. A large manufacturing holding like Sevkabel only has five or six positions for which an MBA is preferable, such as financial and commercial directors, and general managers of factories that are part of the holding, said a spokesman for Sevkabel’s press service.  But when recruiting, the company’s management looks first and foremost not for an MBA diploma, but at the candidate’s work experience and professionalism, he said.
At Baltika brewery, an MBA does not make a candidate more likely to be offered a job, nor will it mean they receive a higher salary, said Nadezhda Sirotkina, HR manager at Baltika. A diploma cannot make up for lack of managerial experience, while experience can easily compensate for the lack of a diploma, she explained. 
Salary and other forms of material compensation do not depend on whether or not a candidate has a diploma, but on the factual results of a manager’s work, said Alexander Lelin, general director of Lenstroitrest. He said that his company was prepared to pay more only for efficient work.
Nevertheless, companies do pay for the business education of their managers. At Baltika, there are 11 managers who possess an MBA diploma, all of whom were sponsored by the firm, said Sirotkina. Sevkabel has given six managers the opportunity to get a business education during the last few years, but they left the holding almost immediately after completing the MBA program, having been offered more highly-paid jobs at other firms, including foreign companies, said the Sevkabel spokesman.  Another four top-level managers are currently studying for MBA diplomas, but the company now covers the costs of the course on condition that the employees remain with the company for several years, he said.
Some companies see covering the costs of business education as a way of stimulating and motivating managers, said Irina Veselova, the president of Planeta Kapital investment company. But this only applies to companies with foreign capital or to those with plans to expand into foreign markets — business school theories still rarely correspond to Russian business practices, she said.
Salaries of top-level managers, who constitute the majority of business school graduates, are gradually increasing — by five to six percent per year, said Alexei Zelentsov, the northwest regional director for Ascendant recruitment company. Soon managers will have to reign in their appetites, as the financial crisis leads to a reduction in the number of companies on the market and cutbacks in their structures. New projects are already being frozen and companies are conducting measures to optimize their personnel — the number of vacancies for top-level managers is already beginning to fall slightly, confirmed Sakharova.

TITLE: Motivation: Finding Ways To an IT Specialist's Heart
AUTHOR: By Yelena Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: With the growing lack of qualified personnel in Russia, more and more companies are inventing new tactics to lure new personnel to them. Although the global financial crisis has not bypassed Russia’s labor market entirely, there are still some “white collars” that are always in demand — namely IT specialists.
According to the latest research by HeadHunter, the Internet recruiting resource for managers in Russia, the first victims of the financial crisis include top managers, HR specialists, and marketing and PR managers — more of them are looking for new jobs than in the same period last year. However, the demand for programmers and software engineers is still not saturated, and salaries for these positions are relatively high.
In such situations, the question of personnel motivation is one of the most vital issues for many employers. 
“It’s very important to understand that in reality, most employees are not necessarily motivated to work. If managers take this into consideration in their work, they can define the criteria of their labor efficiency estimation and increase the use of petty sanctions. This will help managers to improve the business process with little effort,” said Denis Spetsakov, CIO of Fort-Ross.
According to HR experts, there are many illusions as to what constitute motivational and non-motivational factors. According to different classifications, types of motivation can be divided into internal, external, material and non-material, as well as self-motivation. It is often the case that material values such as a high salary, competitive social package and good working conditions can barely motivate IT personnel. So what is the way to IT specialists’ hearts? Spetsakov says that the key lies in the intelligent and elite professional status that the IT specialist has traditionally enjoyed. “IT staff are usually ambitious and very result-focused,” he said.
Askar Rakhimberdiev, general director of LogneX, a Software as a Service (SaaS) company, agreed that the ultimate motivation for good software engineers is the feeling that they are making great products. 
“Obviously, you have to provide decent compensation and working environment in order to prevent your employees from becoming demoralized by a lack of them. However, it is crucial for technical people to understand the value of their contribution, and you can hardly expect anything but mediocre results if you fail to make your team realize their professional mission,” he said. 
It is ultimately the manager who influences the working processes of a company.  
HR specialists agree that motivation is crucial. It should however be diverse, changeable and personal. The talent of understanding the roots of candidates’ motivation and choosing the instruments that can be used to motivate them at work is among the qualities a good manager should develop. 
“Honesty is the basis of any business collaboration among people, and you can avoid many problems if you just conduct a good and frank interview with a potential candidate at the very beginning,” said Spetsakov.

TITLE: My Tips on Running a Successful Business
AUTHOR: By Tremayne Elson
TEXT: Most Russia observers will be quick to point out that trying to transform the Russian business culture is a nonstarter. There are many rookie expat managers who have been tripped up by doing things in Russia the same way they do back back home. 
Russia has its own unique culture. If you are doing business here, one of the best pieces of advice I can give you is to learn the culture as best you can, including the language, and enjoy its riches.
When you start working here you will notice Russians’ direct manner of speaking. At first this may seem blunt, but from their perspective Russians see the British as comically polite when they say, “Could you possibly ... If it’s not too much trouble ...”
On a more serious level, bureaucracy is a significant barrier to doing business, but there are certainly ways of dealing with it and minimizing its impact. 
An entire service industry has been built around expediting and dealing with state bureaucracy — from procuring visas to dealing with tax, labor law, customs, registration or licensing. You can do it yourself, of course, but it is easier and actually cheaper in the long run to give these tasks to commercial agencies. Often their fees are a fraction of the actual costs you would incur yourself. 
Despite the all-encompassing bureaucracy, I have never paid a bribe in my 15 years working in Russia, unless you count buying a few beers from a kiosk for two policemen who insisted on taking me to the station to check my visa registration. I bought the officers a Grolsch beer at the nearest kiosk. Not only did they forget all about my visa, they even drove me home. Moscow’s finest taxi service. 
Although there are rogues in every country, my own dealings with Russian companies have been surprisingly smooth. Sure, one or two clients have not paid for our services, but they were also not paying their staff. That’s just bad financial management or a sign that their credit lines had dried up. 
When we have taken our grievances to arbitration, we have won. I have found that our contracts, once signed and stamped, virtually guarantee timely payment. When there have been disagreements, we have resolved them amicably through negotiations. 
The credibility of the legal system also has improved significantly in recent years. The business community as a whole seems to agree that although actual legislation still has gaps and flaws, judges appear to be quite pragmatic in applying them. 
Although a few high-profile cases of abuse by the tax authorities make the headlines, in reality companies have been increasingly successful in winning cases over the selective enforcement of the Tax Code. 
There is nothing to be feared here if you are running a transparent and legitimate business. There is a fear and perception that it’s better not to deal with the tax authorities, but we have found them very helpful and often turn to them for free advice, which they readily give. 
Crime in Moscow is no worse than any other major world city. In the course of 15 years my apartment was burglarized once. The thieves stole a suit, an expired passport and an iron that didn’t work. If you see a man in an oversized suit and matted shirt who has been detained by passport control, please contact my local police department. 
Gypsy cabs are a colorful and useful part of everyday life. Call an official taxi, and it will take at least an hour to arrive, if it arrives at all. When you hail a gypsy cab, negotiate in advance and make sure you define the currency. 
Avoid using a cab directly outside a hotel or you may find what you thought was 150 rubles is really $150, which the driver will insist you pay — with the help of a brick or iron bar stored under his seat if necessary. An unwritten rule is that the passenger is never responsible for any bribes a gypsy cabdriver has to pay if he’s pulled over by traffic police. 
Business cards are a must. If you’re doing a lot of business here, have them printed in Cyrillic. There’s no particular etiquette but it’s customary to present and receive them. If you have several cards from the same person, you can use them to stop the table from wobbling at your local Shokoladnitsa coffee house. 
Although you should always aim to be on time for meetings, it’s generally not seen as a heinous crime if you are 10 to 20 minutes late. In fact, many clients I visit are quite surprised — and not prepared — if I arrive on time. One footnote, however: This rule doesn’t apply to German or Swiss clients.
Particularly in the current global business environment, it’s very easy to find reasons not to do business in Russia. Daily newspaper headlines tend to put Russia in a bad light. However, the reality is much different. 
Business in Russia can be challenging but the right network can help overcome the hurdles. The first stop should be your home country’s chamber of commerce. They can put you in contact with their members, who are usually willing to offer guidance and advice on how to get things done. 
To be sure, doing business in Russia is not easy; the commercial and legal environment is much different than in the West. But this should not be a barrier for your market entry. There are always ways to get things done. If you have a will to succeed, you will. 
Fulfilling your business plan will surely cost you more than you budgeted and take you much longer than you expected. But if you are smart and innovative and able to manage the Russian risks, the return on your investment will more than compensate the difficulties that you experience.

Tremayne Elson is managing director of Antal Russia Recruitment Company.

TITLE: Financial Crime and Punishment
AUTHOR: By Richard Lourie
TEXT: It is now in Russia’s interest to release former Yukos CEO Mikhail Khodorkovsky from prison.
That wasn’t always the case. Early on, the benefits of keeping him in prison outweighed the costs. Khodorkovsky was punished for his hubris. He dared to meddle in politics even though he was explicitly warned by then-President Vladimir Putin himself not to do so. This set a firm example for the other oligarchs and they have taken it to heart. And Khodorkovsky’s major oil company passed into Kremlin-friendly hands. 
But things have changed in the five years since Khodorkovsky was arrested on Oct. 25, 2003. At the time, few were moved — billionaires don’t get much sympathy. People assumed that French novelist Honore de Balzac’s dictum applied: “Behind every fortune there’s a crime.” But while Khodorkovsky behaved with dignity in prison and elicited respect, his fortune dwindled. 
Russia also changed in the interim, becoming the odd hybrid it is today. Though social freedoms have remained fairly robust, the holy trinity of democracy — free media, opposition parties and independent judiciary — was reduced to the bare minimum. 
Though Soviet leader Mikhail Gorbachev recently founded a new political party, chances are it will remain marginal. Nor is any significant shift in media freedom likely. Russians will have to get by with the Internet, Ekho Moskvy radio and a few small-circulation newspapers. The judicial system is the only point where any change of substance can occur.
Though there are other worthy candidates for release, it is Khodorkovsky who has become the symbol of Russia’s compromised judiciary. Politically and economically that symbol has become too expensive to maintain.
A perfect example is Russia’s most recent PR disaster — the Georgian war. I support Russia in that conflict. Its actions were justified, even if they were excessive at times. In the West there was a knee-jerk reaction against Russia which was partially a residue of the Cold War but more the result of Russian thuggery in recent years. The murders of journalist Anna Politkovskaya and former security services officer Alexander Litvinenko cannot, of course, be laid at the Kremlin’s door, but it was hard not to notice that it is the regime’s critics — and never its friends — who are killed. Had Khodorkovsky been released from prison shortly before the conflict with Georgia, world reaction would have been more tempered. 
Russia may well weather the current financial and economic storm because of its vast hard-currency reserves — the third-highest in the world. But real damage will be done. There has been significant capital flight. Khodorkovsky’s shadow falls across any business transaction that goes awry in Russia. If the richest man in the country can end up in jail, what about anyone else? 
It’s now clear that many oligarchs are better at building business empires than at building actual businesses. They once got rich swapping loans for shares and are now going broke from swapping shares for loans.
Khodorkovsky took a rusty Soviet enterprise and turned it into a sleek, profitable, relatively transparent 21st-century corporation. 
He was convicted of fraud and tax evasion, crimes that are perfectly quantifiable. He could work off his remaining debt by consulting ailing Russian firms or by teaching in one of the new business schools. If this is not possible, he could be allowed to live quietly in Moscow or to emigrate.
In any case, his release would win significant moral capital for Russia and its new president while removing a toxic liability from the country’s books.

Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”

TITLE: Murray Retains St. Petersburg Open Title
PUBLISHER: The Associated Press
TEXT: Top-seeded Andy Murray won the St. Petersburg Open for the second straight year by beating qualifier Andrey Golubev 6-1, 6-1 Sunday.
Murray, who also won at the Madrid Masters last Sunday, became the first British player to win back-to-back tour-level titles since Mark Cox won in London and Washington, D.C., in March 1975.
Murray did not drop a set on the way to his fifth title this season and his eighth career win.
The Briton dominated the match from the baseline, constantly trapping Golubev in the corners. Murray won five consecutive games in the first set and six more in the second to win in 56 minutes.
“I played well today, I really enjoyed myself this week,” Murray said. “At the start of both sets it was quite close, but once I got ahead I started to feel much more comfortable. In terms of the score it was easy, but it wasn’t the easiest match I’ve played on the tour.”
Golubev saved two match points while serving down 5-1 and 40-15 in the second set, but netted a return shot on a second deuce. A 150th-ranked qualifier from Kazakhstan, Golubev upset eighth-seeded Marat Safin in straight sets in the second round Thursday to reach his first ATP quarterfinal.
Golubev said he was tired after playing eight matches in nine days, but he was happy with his performance.
“I’m a bit disappointed but not because I’ve lost today but because I couldn’t challenge Murray the way I really could,” Golubev said.
It was the twelfth consecutive win for the fourth-ranked Murray, including two victories in Britain’s Davis Cup World Group playoffs against Austria in September. He is 53-14 this season, making him the fourth player this year to win more than 50 matches.
Murray also won titles in Doha, Marseille and Cincinnati. His only loss in the finals this season was to Roger Federer at the U.S. Open.

TITLE: Mother, Brother of Oscar Winner Found Murdered
PUBLISHER: The Associated Press
TEXT: CHICAGO — The mother and brother of Jennifer Hudson were found shot dead Friday at a South Side home and police are looking for a missing child who is the nephew of the singer and Oscar-winning actress.
A man suspected in the deaths was in custody Friday night but the 7-year-old boy had not been located, according to published reports.
William Balfour was being questioned but Julian King’s whereabouts were not known, law enforcement sources told the Chicago Tribune and Chicago Sun-Times. Balfour has not been charged.
Police spokeswoman Monique Bond said investigators were talking to “a number of people in custody” but she declined to elaborate.
An Amber Alert issued Friday said Balfour was a suspect in the double homicide of Darnell Donerson, 57, and Jason Hudson, 29, whose bodies were found Friday afternoon in a South Side home.
Jennifer Hudson’s personal publicist, Lisa Kasteler, confirmed the deaths.
“We can confirm that there is an ongoing investigation concerning the deaths of Jennifer Hudson’s mother, Darnell Donerson, and her brother, Jason Hudson,” Kasteler said in a statement. “No further comment will be made and the family has asked that their privacy be respected at this difficult time.”
The deaths appeared to be the result of domestic abuse, Bond said. The Cook County medical examiner’s office said autopsies for Donerson and Jason Hudson were pending.
Deputy Chief Joseph Patterson said a family member entered the home around 3 p.m. Friday, found a woman shot on the living room floor and left to notify authorities. Responding officers found a man shot in the bedroom, Patterson said. There was no sign of forced entry.
Police tape blocked access to the large, white house, where a crowd gathered outside. Investigators with dogs and flashlights searched foliage surrounding a church that faces the home.
Authorities issued the Amber Alert for King and sought a 1994 white Chevrolet Suburban.

TITLE: NFL Stages Game For U.K. Fans
PUBLISHER: The Associated Press
TEXT: WEMBLEY, England — With dark gray clouds rolling overhead, the NFL brought its show back to London on Sunday when the New Orleans Saints “hosted” the San Diego Chargers in a regular-season game.
For the second straight year, Wembley Stadium was sold out with fans from England and the United States packed into the venue and wearing shirts of all colors and teams.
“Once in a lifetime,” said Brad Luebbermann, a 44-year-old commercial pilot from San Diego who came to London with a friend to watch the game.
With Saints flags waving all around because they are technically the home team, British rock band Stereophonics started things off with a short set on a rolling stage. Joss Stone then sang “God Save the Queen” shortly after the end of “The Star-Spangled Banner.”
Olympic swimming champion Rebecca Adlington, wearing her two gold medals over a Saints jersey with the No. 2 on it, came out to flip the coin. New Orleans won the toss, and then the game, 37-32.
Last year, fans from New York and Miami descended on Wembley to watch the Giants beat the Dolphins 13-10 in a rain-soaked game.
Despite early rain Sunday, there was none at the start of this year’s game. And that was good news for Jerry Yager, a 40-year-old engineer from New Orleans who came to England with a group of friends and had his face painted in the team’s colors.
“We go to an away game every year,” said Yager, who admitted he was pushing for Denver but changed his mind because the game was in September. “I wanted to go snow skiing, but it was too soon, so it was London all the way.”
Many in the packed crowd didn’t have thatfar to travel, however.
Ian Connor, who plays in the British American Football League, only had to travel from Bedfordshire, about an hour away.
“I started watching football in the early ‘80s,” said Connor, a 31-year-old physical education instructor at a prison. “Been mad for it since.”
So mad, in fact, that he plays defensive tackle for the Bedfordshire Blue Raiders, and was excited to finally see an NFL game in London after missing out last year because he couldn’t get tickets.
Luebbermann not only got tickets for the game, but he and friend Gar Frye are also going to see Arsenal play Tottenham on Wednesday in the English Premier League.
“Why come all the way to England and not see an English soccer game,” Luebbermann said.

TITLE: Israel’s Peres Calls New Election for ‘08
PUBLISHER: Reuters
TEXT: JERUSALEM — Tzipi Livni has seen a sharp turnaround in fortunes for Israel’s ruling Kadima party since she became leader last month and it could beat the right-wing opposition in a coming election, polls on Monday indicated.
President Shimon Peres, formally setting into motion procedures for a national ballot, told the Knesset after consultations with political parties that there is now no chance of reaching a deal now to form a new coalition government.
Following Peres’ announcement, parliament has up to three weeks to dissolve itself and set an election date, widely expected to be sometime in January or February.
Two newspaper surveys, published after Livni abandoned on Sunday her efforts to forge a coalition government and recommended to Peres a parliamentary election be held, showed Kadima just beating Benjamin Netanyahu’s Likud — a reversal of the results forecast in previous polls published in August.
Livni’s Kadima colleagues attributed the gains to her image as a new kind of corruption-free politician, though few appeared to relish going to polls with an untested leader so soon.
“I think that we didn’t want an election. We wanted to continue in the existing (coalition) configuration,” Environment Minister Gideon Ezra of Kadima told Israel’s Army Radio.
Briefing her faction, Livni, a 50-year-old former lawyer and one-time Mossad operative, made clear she was not complacent.
“We all awoke today to flattering polls, and while this is certainly important, we need a Kadima that is strong, a Kadima that is united, a Kadima that strides forward as one,” she said.
With Israel focused on choosing a new leadership, prospects for progress in the slow-moving U.S.-sponsored peace negotiations with the Palestinians seem dim. Washington had hoped for at least a framework agreement by the end of the year.
Centrist Kadima was battered by the 2006 Lebanon war and a graft scandal that forced Prime Minister Ehud Olmert to resign last month, although he remains in office until a new government is formed. Livni replaced Olmert as Kadima leader on Sept. 17.
The poll in Yedioth Ahronoth daily predicted Kadima would take 29 of 120 seats in the Knesset — the same number it has now — while Likud would take 26, up from 12. The Labor party of Defense Minister Ehud Barak, Olmert’s main ally in the current government, was predicted to take 11 seats, down from 19.
A similar poll, also conducted on Sunday, for the Maariv newspaper gave Kadima 31 seats, Likud 29 and Labor 11.
The results differed from past surveys that saw Netanyahu, a former prime minister whose popularity has been boosted by Israeli security jitters, easily beating Kadima and Labor.
Two polls in August, before Livni replaced Olmert as Kadima leader, showed Likud winning between 31 and 33 seats against a Kadima led by Livni that would take only 20 to 23.
Yuval Steinitz, a senior Likud lawmaker and Netanyahu confidant, described the surveys as selective and biased.
“The polls I’ve seen show Likud leading by six or seven seats, though that’s still not enough,” he told Reuters.
Livni said on Sunday that her efforts to form a new coalition government had failed over the demands by a key religious Jewish faction for special welfare stipends, and that she would seek an early ballot.

TITLE: Philadelphia Close to Clinching World Series Against Tampa
PUBLISHER: The Associated Press
TEXT: PHILADELPHIA — The same team that didn’t flinch shaking down Chicago or staring down Boston is suddenly showing its age.
More than half the players on Tampa Bay’s roster and in its starting lineup weren’t born the last time Philadelphia won a World Series. Nearly all of them were in high school the last time the Phillies played in one. That may bode well for the future, but if there’s anything to the notion that a team has to pay its dues, the Rays are cooked.
A team built on pitching and defense hasn’t shown much of either since this World Series left the land of snowbirds and headed north. Worse still, composure was at a premium in Sunday night’s 10-2 loss, and that was before the Rays found themselves parked in a three-games-to-one ditch.
With runners at first and third and one out in the first inning of Game 4, Phils slugger Ryan Howard grounded back to the mound. Instead of playing percentages and throwing to second to start a double play, Rays starter Andy Sonnanstine saw Jimmy Rollins stuck on the basepath between third and home and took the bait. His flip to teammate Evan Longoria led to a close play at third — replays appeared to show Longoria did tag the seat of Rollins’ pants — but the umpire called Rollins safe.
Another grounder from Shane Victorino eventually produced the only first-inning run, but the damage lingered much longer than that.
Plate umpire Tom Hallion warned the Tampa Bay dugout about chirping soon afterward. Then, normally solid second baseman Akinori Iwamura booted grounders at the start of both the third and fourth innings, leading to one and three runs, respectively. After making zero errors in their first seven postseason games, the Rays have five in the past four.
With Tampa Bay’s lineup hitting .187 for the series—run producers Carlos Pena and Longoria are in an 0-for-29 free-fall with 15 strikeouts—there wasn’t so much as a hint of a comeback. And mounting one now, with Philadelphia’s unbeaten postseason ace Cole Hamels starting Game 5, looks more like an uphill climb than ever.
Tampa Bay’s saving grace may be that all those kids take their cues from manager Joe Maddon, who at 54 has already forgotten more about panicking than most of them will ever learn.
“The mantra has been one at a time. I want to approach it that way. That’s how we’ve approached the whole season,” he said. “I don’t want us looking any further ahead than that.”
To prove his point, Maddon headed back to his office, lifted the lid on a pizza, sat down behind his desk and pulled the cork out of a good bottle of red wine. But he, at least, had the benefit of being a member of the Angels staff when they won a World Series in 2002. The flip side of the Rays’ improbable worst-to-first saga is that only six players have postseason experience. It’s hard to pretend you’ve been there before when you haven’t.
Just outside his door, even as Maddon’s fine-dining routine projected an calm aura, the mood in the rest of the clubhouse was anything but relaxed. Nobody was eating, no music was playing and answers were hard to come by.
Longoria was stuck in the center of a throng of reporters, saying he, too, thought he tagged Rollins, “but it wasn’t worth getting all worked up.” He said essentially the same thing about his struggles at the plate, which appear to be the result of chasing too many bad pitches: “You just don’t go up with the bat on your shoulder and hope you break out of a slump.”
But then, perhaps remembering how the Rays let the Red Sox back into the ALCS and still managed to win an epic Game 7, Longoria mustered up his courage and added, “We’ve been written off plenty of times before.”
Cliff Floyd, who is inactive for the series but at 35 remains the Rays’ resident sage, concurred. “We’ve come back from so much that if you doubt us for a minute, you end up looking like a clown.”
But a moment later, Floyd conceded, “This is the worst people have seen this team play.”
Before Game 4, Maddon talked about the five-man infield he deployed in the bottom of the ninth the previous night, when the Phils had the bases loaded and he brought Ben Zobrist in from right field. A topped grounder to third by Carlos Ruiz rolled too slowly for Longoria to throw home for the force play and prevent the winning run.

TITLE: North Korea Decries Leaflets In Rare Military Negotitations
PUBLISHER: Reuters
TEXT: SEOUL — North Korea complained during rare military talks with the South on Monday about anti-Pyongyang leaflets being sent into its territory by balloons, with a South Korean civic group sending a new batch over the communist state.
The talks were held despite a threat about 10 days ago from impoverished North Korea to cut off all ties with the South — a major supplier of aid and cash — in anger at the hardline policies of its president, whom it brands a U.S. sycophant.
“North Korea pointed out that more leaflets have been sent recently and called on the South to find ways to stop this,” South Korea’s Defense Ministry said in a statement.
South Korean groups have been sending the leaflets for years.
Analysts said the recent wave appears to have touched a nerve because they mention a taboo subject in the North — the health of leader Kim Jong-il, who was thought to have suffered a stroke in August.
The leaflets, printed in water-proof ink on plastic sheets, carried the names of South Korean civilians and prisoners of war believed to be held in the North, and a family tree that supposedly maps Kim’s relationships with the several women who have borne his children, the groups said.
In their first direct talks with the South since conservative President Lee Myung-bak took office in February, North Korea said earlier this month the leaflets violate a deal reached between the two states, whose 1950-53 war was halted by a ceasefire.
Lee’s government has asked anti-North Korea civic groups to refrain from sending the leaflets.

TITLE: U.K. PM to Tackle Economy in Recession
AUTHOR: By Kitty Donaldson and Mark Deen
PUBLISHER: Bloomberg
TEXT: LONDON — British Prime Minister Gordon Brown said he is ready to increase spending and borrowing to shore up the U.K. economy as it falls into its first recession in 17 years.
The government needs to maintain investment in job-creating public works as part of a “comprehensive” effort to counter the slump that includes a 50 billion-pound ($79 billion) bank-rescue plan and Bank of England interest rate cuts, he said.
“The responsible course of action is more borrowing for the investment that is necessary both now and for the longer term,” Brown told an audience of economists and businessmen in London on Monday. He said borrowing will fall as a share of national income when the economy recovers and generates more tax receipts.
The comments indicate he and Chancellor of the Exchequer Alistair Darling are preparing to abandon a decade-old pledge to limit debt to 40 percent of gross domestic product. Brown last week acknowledged that Britain is tipping into a recession after the economy shrank in the third quarter at the fastest pace since 1990.
He is planning to replace the pledge with new targets for cutting borrowing once the economy is on a stronger footing, and will announce the new fiscal regime in his pre-budget report this year, the newspaper reported, without saying where it got the information.
The government last week pledged to bring forward projects scheduled for after 2010 to spur the U.K. economy, which contracted 0.5 percent from the second quarter as the financial crisis ravaged industries from banking to construction.
Debt was 37.9 percent of GDP in September, compared with 36.2 percent a year earlier. Including the liabilities at Northern Rock Plc, the mortgage lender that was nationalized in February, it was already above the ceiling, at 43.4 percent.
Debt may rise to 50 percent of national income when the recent nationalization of Bradford & Bingley Plc and the pledge to buy stakes in cash-strapped banks are taken into account, according to the Institute for Fiscal Studies.
“You maintain the high levels of investment that you’ve got to prepare for the future,” Brown said. 
“You help people fairly through difficult times, and that means that your fiscal policy must support your monetary policy. 
“There is no one measure; there is a comprehensive set of measures that are going to take us through these difficult times.”
The Conservative opposition says Brown spent too much when the economy was growing during his decade as finance minister.
“What they’re talking about is borrowing out of necessity, not out of virtue,” George Osborne, Conservative economic spokesman, said Monday on BBC Radio 4. 
“The problem here is that the borrowing situation is very, very much worse because we enter into this recession with very weak public finances. 
“That’s not a deliberate plan; that is what economic circumstances dictate,” added Osborne.

TITLE: In Ohio, Obama Prepares to Make His ‘Closing Case’
PUBLISHER: The Associated Press
TEXT: CHICAGO — Looking ahead to closing his case against John McCain in Ohio, Barack Obama argues that voters there have a chance to reject “politics that would divide a nation just to win an election.”
Fresh off rollicking rallies in Colorado, Obama faced a more sober reality on Monday in Ohio. Polls show a tight race in the state that sealed President Bush’s 2004 re-election.
Obama is giving what his campaign calls the “closing argument” of his presidential bid in Ohio, where he already lost once this year, to fellow Democrat Hillary Rodham Clinton.
“In one week, you can put an end to the politics that would divide a nation just to win an election; that tries to pit region against region, city against town, Republican against Democrat; that asks us to fear at a time when we need hope,” Obama said in prepared comments released in advance early Monday by his campaign.
The longest presidential contest in history is down to just eight days, with Obama and Republican McCain dueling for the electoral riches of Ohio and Pennsylvania.
For his part, McCain’s core theme was that electing Obama would give Democrats, who are on track to increase their congressional majorities, complete control of the government. Such a situation would inevitably lead to more government and higher taxes that would deepen the nation’s economic woes, McCain and other Republican candidates were arguing in a message aimed squarely at independent and undecided voters that could decide the election’s outcome.
“My opponent is out there working out the details with Speaker Pelosi and (Senate Majority Leader) Harry Reid, their plans to raise your taxes, increase spending and concede defeat in Iraq,” said McCain. “We’re not going to let that happen.”
Democrats, meanwhile, argued that a one-party government could set the economy on the right track faster than one split between warring Republicans and Democrats.
“If the American people want to get something done, that’s not a bad idea.” said Virginia Governor Tim Kaine, a Democrat, said on CBS’ “Early Show.”Divided government gives everybody the ability to not do something and then point the finger at the other guy.”
Obama’s struggles to connect with white working-class voters in Ohio helped fuel his defeat in that state during the primaries. Economic concerns are even worse now with the country in a financial crisis, and perhaps headed for deep recession, with growing numbers of people out of work.
And as Ohio goes, often goes history. No Democratic contender for the presidency has won without Ohio’s support in nearly 50 years — since John F. Kennedy in 1960.
So it is a strategic choice that Obama will deliver his next speech in the industrial northeast Ohio city of Canton. His campaign touts it as his closing case, although there will presumably be other final arguments during the final, frenetic days of the campaign.
Obama is sticking to his theme of linking McCain to President Bush, the unpopular leader of his party.
McCain’s campaign says that’s false.
Unlike in other key states, Obama has struggled to sustain a big lead in Ohio despite pounding McCain with TV ads and building a strong get-out-the-vote operation.
Ohio, which has 20 electoral votes, never really recovered from the post-Sept. 11 recession. Long a manufacturing bastion, Ohio has lost almost 250,000 factory jobs since 2000. The unemployment rate is at 7.2 percent, well above the national average of 6.1 percent.
Pennsylvania is the only state that Democrat John Kerry won four years ago that both candidates are expected to visit before Election Day. With 21 electoral votes, it hasn’t voted for a Republican president since 1988, but McCain is working the state aggressively.
Public polls show Obama comfortably leading in Pennsylvania, though private Republican surveys show a closer race.

TITLE: Private Security Companies Hired to Protect Ships From Pirates
PUBLISHER: The Associated Press
TEXT: NAIROBI, Kenya — Blackwater Worldwide and other private security firms — some with a reputation for being quick on the trigger in Iraq — are joining the battle against pirates plaguing one of the world’s most important shipping lanes off the coast of Somalia.
The growing interest among merchant fleets to hire their own firepower is encouraged by the U.S. Navy and represents a new and potential lucrative market for security firms scaling back operations in Iraq.
But some maritime organizations told The Associated Press that armed guards may increase the danger to ships’ crews or that overzealous contractors might accidentally fire on fishermen.
The record in Iraq of security companies like Blackwater, which is being investigated for its role in the fatal shooting of 17 Iraqi civilians in 2007, raises concerns about unregulated activity and possible legal wrangles.
“Security companies haven’t always had the lightest of touches in Iraq, and I think Somalia is a pretty delicate situation,” said Roger Middleton, who wrote a recent report on piracy in Somalia for Chatham House, a think tank in London.
NATO, with a flotilla of warships due to arrive in Somali waters this weekend, is trying to work out legal and regulatory issues surrounding the use of armed contractors before adopting a position on private security companies.
But the U.S. Navy, part of the coalition already patrolling off the coast of Somalia, says the coalition cannot effectively patrol the 2.5 million square miles of dangerous waters and welcomes the companies.
“This is a great trend,” said Lt. Nate Christensen, a spokesman for the Bahrain-based U.S. 5th Fleet. “We would encourage shipping companies to take proactive measures to help ensure their own safety.”
Somali officials also approve of the private contractors.
Abdulkadir Muse Yusuf, deputy marine minister of the semiautonomous region of Puntland, said private firms are welcome in Somali waters. As well as fighting piracy, he said, they could help combat illegal fishing and toxic waste dumping.
Some security companies — not all of which let their employees carry lethal weapons — blame trigger-happy operators in Iraq and Afghanistan for tarnishing the reputation of legitimate businesses.
After a series of shootings that killed civilians, Iraqi legislators negotiated an agreement with the U.S. that will remove some of the private contractors’ immunity from prosecution. U.S. authorities are investigating Blackwater for improperly bringing weapons into Iraq and for its role in the 2007 Iraqi civilian deaths.
The removal of immunity, Iraq’s stabilizing security situation and a glut of security operators in the country have combined to tempt some companies to seek a new market in the pirate-infested Gulf of Aden off Somalia.
Last week, Blackwater announced it was hiring a ship fitted with helicopters and armed guards for escorting vessels past Somalia’s pirate-ridden coast. Spokeswoman Anne Tyrrell said it had received 15 inquiries so far.
Peter Singer, an expert on private security companies, agrees Africa is a potential growth market, but he says it’s unlikely many firms will abandon work in Iraq and Afghanistan, where there are dramatically more business opportunities as long as the wars continue.
“If somehow Iraq ends and you see a shrinking amount of contractors there, most of them are in logistics and training services,” Singer added. “None of that carries over to this role.”
British firms dominate security work in the Gulf of Aden, but American companies are increasingly getting into the action, according to an Associated Press examination of new anti-piracy efforts through interviews in East Africa, Europe and Washington.
In addition to Blackwater, Mississippi-based Hollowpoint, which has not been active in Iraq, says it will provide guards and recover seized ships.
“We’ll get your crew and cargo back to you, whether through negotiations or through sending a team in,” said CEO John Harris, who is discussing contracts with several companies.
There have been 63 reported attacks on ships off the Somali coast this year alone and probably many more have been carried out. Almost a third of the recorded attacks have been successful.
Ransoms can reach into the millions of dollars. That’s a fortune in a failed state like Somalia, where almost half the people depend on aid and warlords plunder food shipments meant for starving children. The money goes to clan-based militias, some of which are fighting in Somalia’s civil war.
Cyrus Mody, the manager of the International Maritime Bureau, says private security personnel can offer useful advice to ship captains, but he worries not all companies have clear rules of engagement or have sought legal advice about the consequences of opening fire.
So far hijackings are rarely fatal: One Chinese sailor was executed by pirates when ransom negotiations were going badly, and the two other known deaths resulted from a ricochet and a heart attack.
Mody says armed guards onboard ships may encourage pirates to use their weapons or spark an arms race between predators and prey. Currently, pirates often fire indiscriminately during an attack but don’t aim to kill or injure crew. The pirates usually use assault rifles but have rocket-propelled grenades; some reports also say they have mini-cannon.
“If someone onboard a ship pulls a gun, will the other side pull a grenade?” Mody asked.
British contractors stress the importance of intelligence and surveillance, a safe room for the crew to retreat to if the ship is boarded, and the range of non-lethal deterrence measures available.
“The standard approach is for (pirates) to come in with all guns blazing at the bridge because when a boat is stopped it’s easier to board,” said David Johnson, director of British security firm Eos. “But if you have guns onboard, you are going to escalate the situation. We don’t want to turn that part of the world into the Wild West.”
Johnson’s employees don’t carry arms, relying on tactics that can be as simple as greasing or electrifying hand rails, putting barbed wire around the freeboard — the lowest area of the deck — or installing high-pressure fire hoses directed at vulnerable areas of a ship.
One tugboat confused its attackers by going into a high-speed spin when pirates approached, causing the attackers to give up — and leaving the crew sick but safe.
High-tech but non-lethal weapons include dazzle guns, which produce disorienting flashes; microwave guns, which heat up the skin causing discomfort but no long-term damage; and acoustic devices that can blast a wave of painful sound across hundreds of yards.
Johnson believes his company’s refusal to carry guns has helped attract business: inquiries have gone up three- to fourfold in the past few months.
Other companies do arm their employees, pointing out that while non-lethal weapons are also carried and greatly preferred, they can be taken out by bullets or a grenade, sustain damage from salt water, and may have a shorter range than some weapons of pirates.
Pirate attacks have driven up insurance premiums tenfold for ships plying the Gulf of Aden, increasing the cost of cargos that include a fifth of the world’s oil. But some insurers will slash charges by up to 40 percent if boats hire their own security. Earlier this month, British security firm Hart launched the first joint venture with an insurance company, offering discounted premiums for ships sailing past Somalia that used Hart’s guards.
The 20,000 ships that pass through the Gulf of Aden on the way to or from the Suez Canal each year can’t avoid the 1,800 miles of Somali coastline without sailing around the entire continent of Africa.
The jump in interest in private contractors — spurred by last month’s hijacking of a Ukrainian ship loaded with tanks and other weapons — has brought new players into the market and a flood of business for well-established firms.
Drum Cussac, a specialist maritime security company, says its business has increased 50 percent the last few months.