SOURCE: The St. Petersburg Times
DATE: Issue #1426 (90), Tuesday, November 18, 2008
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TITLE: Court Rules Politkovskaya Trial Open To Journalists
AUTHOR: By David Nowak
PUBLISHER: The Associated Press
TEXT: MOSCOW — A Russian court decided Monday not to ban reporters from the trial of three men accused in the killing of journalist Anna Politkovskaya — paving the way for an open trial where details of the much-criticized investigation will be made public.
Politkovskaya, who was slain in her Moscow apartment building in 2006, reported on human rights abuses in Chechnya, embarrassing the Kremlin. Her killing sparked international outrage and Western governments demanded an independent investigation.
Lawyers for Politkovskaya’s family were scathing Monday in their criticism of the official investigation, which they said was sabotaged to allow the suspected triggerman and the as-yet-unidentified mastermind to escape justice.
“Our aim is for the investigation to identify the mastermind, the financier and all the other accomplices in the murder,” Karinna Moskalenko, who is representing Politkovskaya’s son Ilya and daughter Vera, said after Monday’s preliminary hearing. “Until then, we do not consider the investigation over.”
The man accused of shooting Politkovskaya, Rustam Makhmudov, has fled the country, prosecutors say. The suspects being tried on murder charges are Sergei Khadzhikurbanov — a former Moscow police officer — and Makhmudov’s brothers Ibragim and Dzhabrail.
They are accused of providing logistical support for the murder. All three insisted to reporters Monday that they were not guilty.
The 12-member jury will be selected behind closed doors Tuesday, when a date for the trial itself could be announced.
Politkovskaya’s slaying deepened Western concerns about Russia’s course and underscored the risks run by independent Russian journalists. She was one of at least 13 journalists killed in contract-style slayings during Vladimir Putin’s eight-year presidency. Few suspects have been prosecuted.
The defense also said Monday that the probe had been deliberately undermined, but expressed surprise at Judge Yevgeny Zubov’s decision to allow the open trial that the defense and Politkovksaya’s family had requested.
Prosecutors had requested a closed trial because they say some of the potential evidence is classified.
“Soon you will all see what this criminal investigation is all about,” Murad Musayev, a lawyer for Dzhabrail Makhmudov, said outside the court.
Moskalenko presented a list of reasons why Politkovksaya’s family and colleagues at the Novaya Gazeta newspaper considered the official investigation a farce. She said officials leaked the list of suspects, the investigation failed to identify the mastermind and investigators allegedly failed to question other possible suspects caught on surveillance cameras outside Politkovskaya’s apartment before she was killed.
Moskalenko also said investigators failed to interrogate the leader of the southern republic of Chechnya, Ramzan Kadyrov, who has allegedly said more than once that he knew the identity of the mastermind.
Kadyrov has denied having any connection to the murder of Politkovskaya, who had sharply criticized him over rights abuses.
The case is being heard in a military court because the fourth defendant, Pavel Ryaguzov, is a Federal Security Service officer. Ryaguzov is accused of criminal links with Khadzhikurbanov, a former police officer, but he has not been charged in Politkovskaya’s killing.
Most military court hearings are held behind closed doors because they are considered to involve sensitive security information.

TITLE: Medvedev Signs Pledge on Tarriffs in U.S.
AUTHOR: By Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — President Dmitry Medvedev joined the other leaders of the G20 nations Saturday in pledging not to introduce new trade barriers over the next 12 months, a commitment that might complicate government plans to insulate the national economy from the global crisis. 
Medvedev, in Washington for a G20 summit where he signed a final declaration listing measures to deal with the crisis, also used his first trip to the United States to call for talks with President-elect Barack Obama to take place “without delays” to overcome a “crisis of trust.” 
The leaders of countries accounting for 90 percent of the world’s economic output said at the summit that a commitment to an open global economy is vital to countering the financial crisis. 
“We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty,” their declaration said. “In this regard, within the next 12 months we will refrain from raising new barriers to investment or to trade in goods and services.” 
Prime Minister Vladimir Putin signed a plan earlier this month calling for a rise in import duties “on a wide range of goods.” Since then, import duties were raised on used cars, and measures to cut import quotas for U.S. poultry and all pork are still in the works. 
The crisis plan developed by Putin at Medvedev’s behest also calls for a law giving preference in purchasing by state-funded programs to domestically produced goods. The government has until the end of next month to draft the bill. 
Medvedev spoke briefly at the summit and commented only broadly after its conclusion. 
“I believe that its results are quite positive,” he said at a meeting with British Prime Minister Gordon Brown, Interfax reported. 
Dmitry Peskov, Putin’s spokesman, said Sunday that he could not comment on the possible conflict because he had not yet seen the declaration. 
The declaration might force the government to amend some of its plans, said Maxim Tishin, a portfolio manager for UFG Asset Management. 
“I agree that these things run somewhat counter to each other, perhaps not from a legal prospective but at least ideologically,” Tishin said. “The more I think about it, the more curious I get about how they will find a way out.” 
The action plan coined in Washington is not legally binding, he noted. 
The government will go ahead with raising import duties regardless of whether it considers it the right way to protect certain industries, said Ronald Smith, chief strategist at Alfa Bank. The fact that the country’s main exports are oil, gas and weapons makes retaliation difficult, he said. 
“You’ll still need energy,” he said. “So, yes, there is a conflict there, but I think you’ll see that what Russia is doing it sees to be in its own interests.” 
In a positive development for Russia, the G20 leaders agreed that emerging and developing economies should have a greater voice and representation in international financial institutions like the International Monetary Fund and the World Bank. It was unclear Sunday if the agreement meant changes to a current IMF plan approved in March, which increases the voting weight of these economies. 
Tishin said Russia’s role was unlikely to increase significantly, as the economies of the developed countries remained strong despite the crisis and would maintain their weight in international financial institutions. 
Blaming the worst financial crisis to strike since the 1930s on a failure of investors to understand the risks they were taking, the G20 leaders did not refer to the U.S. subprime mortgage bubble that many blame for triggering the global debacle. 
They pledged to “take whatever further actions are necessary” on top of the substantial liquidity injections in recent months and also vowed to stimulate consumer demand, although they didn’t provide any specifics. 
The declaration called for better regulation of international banks and complex financial instruments, which are believed to have contributed to the financial meltdown. 
The leaders said they would meet again by April 30 and instructed their finance ministers to address a long list of measures to be worked out before those discussions. 
Medvedev called for the creation of international arbitration courts and a commission of “financial gurus” to hammer out proposals to counter the crisis. 
Later Saturday, Medvedev addressed the Council on Foreign Relations and fielded questions in a session moderated by former U.S. Secretary of State Madeleine Albright, who sat beside Medvedev at the summit. 
Medvedev said Russia and the United States lack “trust” in each other and expressed hope that the Obama administration — and a one-on-one meeting with the president-elect — would help build better ties. 
“I think we have good chances to restore relations to their full extent. We can start with anything you like; anti-missile defense in Europe is a good topic,” he said, Interfax reported. “It seems to me that the main thing is for this meeting to take place soon, without delays or preliminary conditions.” 
Relations between the countries have been soured lately by Russia’s war with Georgia, a U.S. ally, and by Washington’s plans to deploy elements of an anti-missile shield in Poland and the Czech Republic. Medvedev said Saturday that Russia would locate short-range Iskander missiles in its western exclave of Kaliningrad to target the shield installations only if the United States moved ahead with its plans. 
Medvedev announced the installation of the missiles in his first state-of-the-nation address on Nov. 5, when Obama’s win the day before monopolized international media coverage. 
Asked on the choice of day, Medvedev smiled and asked jokingly, “You think it was blackmail?” he said, using the English word. 
He said he had had to rework the text of the address himself and was so busy that he simply forgot about the U.S. elections, drawing laughter from the audience, which was made up of members of the U.S. foreign policy community, including former national security adviser Brent Scowcroft. NTV television showed Finance Minister Alexei Kudrin and billionaire Mikhail Fridman sitting in the audience. 
Medvedev said, “never say never,” also in English, when asked about the prospects of Russia’s membership in NATO but indicated that hopes, if any, were very distant.

TITLE: Rights Group Focuses Attention on Conscript Suicides
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: A local human rights group has discovered an alarming reason behind the depressingly high statistics for suicides in the army: the Soldiers’ Mothers pressure group has learnt of at least five recent cases where young people with marked suicidal tendencies or who had made previous suicide attempts were drafted into the army.
St. Petersburg recruit Alexander, 22, attempted suicide at the age of 15 after a quarrel with his father. He was drafted into the army in 2006 and a military physical examination deemed him fit for service.
But an independent clinical examination conducted this year — after he complained about physical abuse and hazing in his detachment — diagnosed him as having congenital brain damage resulting in reduced intellectual ability and emotional problems. The young man was not told about his condition by the military doctors following his army physical. 
Another recruit, Vasily, 20, attempted suicide while already serving in the army. An independent medical examination held following Vasily’s recovery identified “severely disturbed adaptive abilities.”
A homeless young man, Vladimir, 23, deserted from his detachment in Smolensk region after suffering what he described as “continued physical abuse.” During a psychiatric examination that diagnosed Vladimir with “transitory personality disorder,” the deserter admitted to having had suicidal thoughts for a long time. 
The Russian army is struggling to find sufficient numbers of recruits. Fertility rates in Russia have been declining since the late 1980s, and experienced a particularly sharp drop after the hasty introduction of poorly prepared economic reforms in 1991. Young men born during that turbulent period are due to be called up for military service in 2009.
According to government statistics, throughout the 1970s and 1980s betweem 2 million and 2.2 million babies were born annually in Russia. But since 1991, the birthrate dropped to between 1.2 and 1.5 million, rising to 1.6 million in 2007.
“The birth rate has been low in Russia and the number of potential conscripts has shrunk, although draft quotas remain as high as ever,” said Colonel Fyodor Sarayev, head of the draft section of the Leningrad military district.
Soldiers’ Mothers said the organization routinely receives complaints from recruits who have been drafted despite serious health problems or who have been forced or deluded into signing contracts with the army and then have trouble getting out of them. One group of draftees serving with a detachment in a district on the outskirts of St. Petersburg is suing its commanders after allegedly being forced to sign up for regular service.
In 2007, the official number of suicides in the Russian army was 341, up from 200 the year before. Suicides account for more than half of deaths due to non-combat causes in the armed forces. The figures for 2008 have not yet been released.
“Last year, we lost a whole battalion of recruits. The proportion of suicides in the total numbers of human losses has been on the rise in recent years,” said Sergei Fridinsky, Russia’s chief military prosecutor. 
Investigations of those suicides, as well as claims about alleged and other abuses, typically go nowhere.
In the meantime, Soldiers’ Mothers says recruits are driven to suicide by hazing, violence, and physical abuse. Some of the letters the group keeps at its headquarters were written by recruits who would go on to commit suicide.
These letters are sometimes brought to the pressure group by desperate parents wishing to sue the military authorities.
“Every month, deserters and their relatives flock to us telling absolutely chilling stories of torture, forced prostitution, and slavery,” Ella Polyakova, head of Soldiers’ Mothers, said. 
Collecting evidence in a closed structure such as the Russian army, which has its own military prosecution system, has proven difficult.
“It is a shame that the Russian armed forces are more concerned about their image — which they want to preserve at all costs — than about establishing the truth and protecting the victims of abuse,” said Ruslan Linkov, a human rights advocate, who runs the Democratic Russia organization.  “The draft plan has to be fulfilled at any cost so even mentally disturbed people with suicidal tendencies are called up. The suicide rate, which is more difficult to hide, remains an open indicator of just how grave the problem is. Throwing mentally troubled men into the abyss of the Russian army, with its infamous tradition of hazing, is like treating a headache with the guillotine.”

TITLE: Sarkozy Calls for U.S., Russian Missile Freeze
PUBLISHER: Combined Reports
TEXT: NICE, France — French President Nicolas Sarkozy said he won Russian backing on Friday for talks on security in Europe next year and urged a freeze on missile deployments by Moscow and the United States until then. 
His call was immediately questioned by the Czech Republic and Poland, which are due to host elements of a U.S. missile shield in Central Europe that has angered Moscow. They said he had no mandate to make such remarks. 
Speaking after an EU-Russia summit, Sarkozy said he voiced concerns about President Dmitry Medvedev’s threat to deploy missiles in Kaliningrad near Poland in response to U.S. plans for the missile-defense shield in Central Europe. 
“I indicated to President Medvedev how concerned we were about this declaration and how there should be no deployment in any enclave until we have discussed new geopolitical conditions for pan-European security,” Sarkozy said at a news conference. 
“As president of the European Union, I proposed that in mid-2009 we meet … to lay down the foundation for what could be the future of European security,” he said. France holds the rotating EU presidency until the end of this year. 
Sarkozy said such a summit, possibly under the auspices of the Organization for Security and Cooperation in Europe, which includes the United States and Russia, would not be conclusive but could lay the foundations for a future European security pact. 
“Between now and then, don’t talk about deployment of a missile shield, which does nothing to bring security and complicates things,” he said, referring to the U.S. plans. 
In the latest display of the difficulties the EU has in speaking to Russia with a united voice, Prague promptly distanced itself from the remarks. 
“France had not consulted such a standpoint with us in advance,” Czech Deputy Prime Minister Alexandr Vondra said in a statement. 
“As far as the French presidency’s mandate for the EU-Russia summit is concerned, it contains no mention of the anti-missile shield,” he added. 
Czech Republic is due to take over the rotating presidency of the 27-member bloc from France in January for six months. 
Polish Prime Minister Donald Tusk said Saturday that it was not Sarkozy’s place to take a stand on missile defense. 
“The president of France Nicolas Sarkozy expressed his view, but it will have no influence on what will happen with the project,” he told reporters in Warsaw, the Polish news agency PAP reported. 
“On the issue of the shield, I don’t expect either commentary or actions from third parties,” Tusk said. 
Later Saturday, Sarkozy backed down from his comments criticizing the U.S. plans. 
“Ultimately, it could be a complement against a missile threat coming from elsewhere, for example, Iran,” Sarkozy said after a global financial summit of world leaders held in Washington. 

(Reuters, AP)

TITLE: In Brief
TEXT: <b>Duma Calls For 6 Years</b>
MOSCOW (SPT) — State Duma deputies approved legislation in a first reading Friday that would extend the presidential term to six years.
The 388-58 vote came just over a week after President Dmitry Medvedev abruptly announced in his state-of-the-nation speech that he wanted to amend the Constitution to extend the presidential term from the current four years.
“The Communist Party completely voted against the bill,” Communist Deputy Nikolai Kharitonov said by telephone after Friday’s vote, adding that he believed that some deputies from A Just Russia party had abstained. 
The Communist Party has 57 seats in the 450-seat Duma.
Several Communist deputies, including Kharitonov, urged the Duma earlier Friday to take the bill off the agenda.

TITLE: Moscow Claims Victory in Media War
AUTHOR: By Nikolaus von Twickel
PUBLISHER: Staff Writer
TEXT: MOSCOW — More than three months after the final shots were fired in the conflict with Georgia, the information war is still going strong, and Moscow is claiming a new victory as it says Western media are finally getting the story right. 
In an unusual move, Russia’s ambassador to the United Nations, Vitaly Churkin, sent a letter to the editor of The New York Times last week congratulating the paper for an article questioning Tbilisi’s claims that it had acted defensively. 
“It took [U.S. media] three months to start telling the truth about the August war in the Caucasus,” Churkin wrote in the letter’s full version, published on the Russian Mission’s web site. 
The article in question, published Nov. 7, reported that military monitors for the Organization for Security and Cooperation in Europe said the Georgian military had attacked Tskhinvali, the capital of breakaway South Ossetia, exposing civilians, Russian peacekeepers and unarmed monitors to harm. 
The paper said the monitors’ accounts were inconclusive with regard to establishing blame, but that they call into question Tbilisi’s assertion that  the Aug. 7 attack on Tskhinvali was in self-defense. 
“Indeed, as the article notes, the war was started by the Georgians under a false pretext on the night of Aug. 7,” Churkin wrote. 
The article appears to be part of a broader trend in the West of re-examining assumptions about the outbreak of the war - a trend greeted positively in Moscow. 
Prime Minister Vladimir Putin’s spokesman, Dmitry Peskov, said Western media coverage, long accused by Moscow of suffering from a heavy anti-Russian bias, was slowly changing. 
“We are seeing more and more objective accounts now ... and attempts to find the truth,” Peskov said Friday. “We can only welcome that.” 
He also hinted that the Russian government was at least partially responsible for the change. 
“We said from the beginning that, sooner or later, the truth would find its way out,” Peskov said by telephone from the Moldovan capital of Chisinau, where Putin was attending a summit of CIS prime ministers. 
While a Western news bias may have played a role, the Georgian government also likely benefited from a better PR strategy to get its side of the story out in the aftermath of the conflict. 
Foreign reporters working in Tbilisi after the five-day war found officials and press spokespeople to be easily accessible and ready to help them travel through the country. 
The Russian military, by contrast, placed severe restrictions on travel where it was operating in Georgia proper, and reporters ran up against numerous obstacles while trying to travel to and work in North or South Ossetia. 
And, although the Kremlin hired high-powered PR agencies Ketchum and GPlus Europe in 2006, officials in Moscow have not broken the habit of rarely speaking to international media. 
The Georgian government says the media coverage merely reflected the facts and not media strategy. 
“While some commentators have classified our efforts as a massive PR front, we simply allowed the journalists to discover the truth for themselves by providing accurate information,” Giga Bokeria, Georgia’s deputy foreign minister, said Friday in e-mailed comments. “Then the journalists investigated these developments and simply reported on what they found.” 
Patrick Worms of Aspect Consulting, a Brussels PR firm working for the Georgian government, manned its press center in Tbilisi’s Marriott Hotel almost constantly in August. He said the media perception differed over time, but that merely reflected the course of events. 
“In the very beginning, the Georgians were the bad guys. Then the Russians lied so much that they became the bad guys,” Worms said by telephone from Brussels. “Now people are making their own investigation, like The New York Times did.” 
He also said the reporting differed from country to country and that the Times article did not get much attention in Germany and France, for example. 
“What counts in the end is what the international commission will find,” Worms said. 
The European Union announced in October that it would set up a commission to investigate the outbreak and course of the war. 
Worms also used the term “dubious” to describe the chief source for The New York Times article, Ryan Grist. 
Grist, a former British Army captain who was deputy head of OSCE’s mission in Tbilisi when the war started, left the organization shortly after under unclear circumstances. 
Attempts to reach Grist by telephone and e-mail on Friday and over the weekend were unsuccessful. 
A spokesman at OSCE headquarters in Vienna declined to comment on Grist. 
The organization’s chairman in office, Finnish Foreign Minister Alexander Stubb, has said the small contingent of OSCE monitors in Tskhinvali had not been in a position to determine how the war started and that it was not his job to make a judgment on the question. 
But a diplomatic source at the OSCE defended Grist against the charges. 
“He was a very skilled professional, and there was no reason for him to invent things, but he probably made some people unhappy with finger-pointing,” the source said, speaking on condition of anonymity because he was not authorized to comment on the subject. 
This is not the first time the OSCE has provided the source for reports critical of Georgia’s military actions. 
The German magazine Der Spiegel published articles in late August and again in September saying internal reports by the organization had criticized the Georgian leadership and that NATO officials had intelligence that Georgia had massed 12,000 troops on the border with South Ossetia. 
Bokeria, the Georgian deputy foreign minister, said the reports in Der Spiegel and The New York Times were wrong. 
They do “not represent a more balanced view on the situation but rather certain individuals within the OSCE that have leaked information that is inaccurate as stated by the OSCE itself,” he said. 
Tbilisi has also helped muddy the waters about the outbreak of the war. Shortly after Georgian troops entered South Ossetia, officials said the use of force was to “restore constitutional order” in the separatist region. 
But they later said Russian forces had moved into South Ossetia first, on Aug. 7, and that Georgia had no choice but to send troops to head off an invasion. 
Paradoxically, these Georgian claims have been bolstered by reports in state-controlled Russian media. 
On Aug. 7, state-owned Rossia television showed Sergei Bagapsh, the leader of Abkhazia, the other separatist province within Georgia, speaking at a meeting of the Abkhaz National Security Council. According to the report, which is still on the station’s web site, he said: “I have spoken to the president of South Ossetia. It has more or less stabilized now. A battalion from the North Caucasus District has entered the area.”

TITLE: Liberals Form Party With State Support
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW — In what is widely seen as a Kremlin attempt to round out the political spectrum with obedient parties, three liberal parties voted Sunday to merge into a new pro-business party called Right Cause.
A Right Cause leader, Leonid Gozman, acknowledged that the party had been created with the Kremlin’s support.
“In Russia, it is impossible to create a party without the backing of the powers that be. This is a shame, I know,” Gozman said on the sidelines of the founding congress.
“What kind of backing are we going to get [from the Kremlin]? That no one will upset the founding of our party?” said Gozman, former chairman of the Union of Right Forces, or SPS.
Right Cause is comprised of SPS and the Kremlin-connected Civil Force and Democratic Party. Its other two leaders are Boris Titov, head of the business lobby group Delovaya Rossia, and political commentator Georgy Bovt, a columnist for The Moscow Times.
Gozman said Right Cause would not be similar to other pro-Kremlin movements, which filled a Kremlin need during election seasons and later were abandoned or merged into other projects. “I’m sure that there will be people who want that. ... But we won’t allow this,” he said.
The nationalist Rodina party was created two months before the State Duma elections in 2003, but its independent-minded leader was replaced and the party was dissolved when it emerged as a strong political force in 2006.
SPS had long been viewed as pro-Kremlin because of its tacit support of Kremlin policies. All that changed in the middle of last year’s Duma campaign. Party sources told The Moscow Times during the campaign that they had been promised seats in the Duma but decided to go fiercely opposition when they learned that the Kremlin would break its promise. SPS garnered less than 1 percent of the vote in December; parties have to get 7 percent to win seats. 
“Our voters don’t like confrontations with the powers that be,” Gozman said Sunday.
Former senior SPS official Boris Nadezhdin said Right Cause’s congress reminded him of SPS’s founding congress in 1999. “It was the same. Even then it was a Kremlin project,” he said.

TITLE: Putin Likens Saakashvili 
To Hussein In Sarkozy Talks
PUBLISHER: The Associated Press
TEXT: MOSCOW — An angry Prime Minister Vladimir Putin spoke in graphic terms about hanging Georgia’s president during talks about a cease-fire to end the August war between the two countries, according to a French magazine report.
A spokesman for the Kremlin confirmed that “the rhetoric was very harsh” at the meeting.
The French magazine Le Nouvel Observateur reported Thursday that Putin compared Georgian President Mikheil Saakashvili to former Iraqi dictator Saddam Hussein during a meeting in Moscow with French President Nicolas Sarkozy.
The magazine said Sarkozy suspected that the Russian military was going to topple Saakashvili and set up a puppet government in Georgia.
“You can’t do that, the world will not accept it,” the magazine quoted Sarkozy as telling Putin in the Aug. 12 Kremlin meeting attended by President Dmitry Medvedev. 
It described its source as Sarkozy’s diplomatic adviser, Jean-David Levitte.
“I’m going to have Saakashvili hanged,” Putin said, ending the sentence with a crude anatomical reference. 
“Hang him?” Sarkozy reportedly said.
“Why not?” Putin reportedly said. “The Americans hanged Saddam Hussein, didn’t they?”
“Yes, but do you want to end up like Bush?” Sarkozy said.
“You have a point there,” Putin said.

TITLE: Grymov’s ‘Strangers’ Accused of Anti-Americanism
AUTHOR: By Ezekiel Pfeifer
PUBLISHER: Special to The St. Petersburg Times
TEXT: Russian filmmakers are not known for their glowing portraits of American culture. From the 1948 Soviet propaganda film “The Russian Question” about a communist-bashing American newspaper editor to the immensely popular film “Brother 2,” in which a young Russian man rampages through back-stabbing hoodlums in Chicago, there is no shortage of anti-Americanism in the country’s cinema.
Now in 2008, filmmaker Yury Grymov adds his film to the genre.
Americans “place themselves higher than all other peoples of the earth,” said Grymov in an online journal written during the shooting of his new feature “Strangers,” which opened in Moscow on Thursday. 
“They forcibly attempt to inculcate their morality and their modes of behavior. And what is most frightening of all, they sincerely suggest that they are committing a charitable act.”
“Strangers” was shot in Egypt but is set in a deliberately vague “somewhere in the East,” where an American medical team arrives to provide vaccinations to children living near a war zone. The vagueness of the film’s location inevitably suggests connections to the current U.S. presence in Iraq and Afghanistan.
After this par-for-the-course Hollywood setup, though, the script and acting become so loopy and exaggerated that the director’s agenda of showing the folly of letting Americans into any country with a desert becomes overwhelmingly apparent. 
When the ragtag group arrives on screen in its Toyota Land Cruisers, they are shown as culturally inept fools, blasting music from their SUVs and starting to dance before splashing each other with buckets of water from a nearby desert lake. 
After settling into their miserable quarters, the female lead, Jane, played by a Texas actress named Scarlett McAlister, starts flirting with their Arab security guard, quickly seducing him despite the presence of her husband Tom, also played by an American, Mark Adam. Meanwhile, Tom, the leader of the culturally crass band, finds a group of Russian military engineers and begins flinging insults at them about their “totalitarian minds” when they refuse to let the group into the village.
The other doctors — a gay couple who befriends a young Arab boy only to traumatize him when he sees them having sex and a spiteful, awkward older woman — make up the collection of utterly unsympathetic people that Grymov sees as typical American abroad.
Without giving the rest away, the Americans continue to be not very nice, do something especially not nice and get away with it. 
As you can guess, Grymov’s film has no truck with subtlety, but its bluntness doesn’t hide the fact that it is a lumbering mishmash of a movie, painfully combing elements of a thriller, a melodrama and a moralistic allegory. Through skull-bashing and lust-driven sex, tear-jerking child rescues and despondent wailing, the director has thrown together a virulent creative response to American imperialism but not much of a movie.
The film has made waves in Russian papers and on Russian television after it was erroneously reported that it was banned from the United States after U.S. Secretary of State Condoleezza Rice supposedly intervened. This story has all the trademarks of a deliberate PR move. However, in interviews Grymov has denied any knowledge of how it originated.
The film might have been expected to win rave reviews in a country where anti-Americanism is more the norm than the exception, but Russian reviewers have found the director’s slant so overbearing as to become ineffectual.
“If, in the beginning, the Americans are depicted as being ‘friendly but stupid,’ then later they seem to be possessors of all the most abominable qualities found in homo sapiens,” judged Vassa Petrova, a film critic for the Russian film site Nashfilm.ru, which publishes reviews of new Russian media. “The filmmakers, trying to show the process of intrusion of one culture into another, utterly forgot about the fact that cultures are not split into the bad and the good but into the similar and the dissimilar.”
Despite the film’s much-discussed anti-American stance and Grymov’s articulate diatribe, the director is not known for having a political consciousness. He gained fame with his philosophical 1998 film “Mumu,” based on the Ivan Turgenev short story, and the 2005 screen adaptation of a popular Russian novel, “The Case of Kukotskiy,” neither of which contains any hints of the culture war that “Strangers” tries to depict.
“I wanted to make a film that’s current,” explained Grymov in a recent interview. “The film is about the need to think very intensely about oneself and not to mess up when acting by your own set of rules in a foreign temple. I wanted to bring up a very important point about double morality, about how it happens in America, in Russia, about how you can’t come into a foreign place and impose your own morality on another culture.”
The film’s markedly negative characterizations of the generic Arabs — many of whom become unpredictably crazed at times and none of whom utters a single subtitled or dubbed word — support the notion that, for Grymov, the bad guys are not just the Americans. However, Grymov’s inclusion of Russia in his denouncement of cultural insensitivity, does not mesh with the film, where the Russian characters are universally heroic, intelligent and whimsical, the innocent victims of Arab and American aggression and stupidity.
This attitude has historical logic according to Susan Larsen, a scholar of Soviet and Russian film and a professor at the University of Chicago. Shame over the snags Russia has faced along its southern border and in the Middle East could explain Grymov’s turn against the U.S. as it faces similar problems, Larsen suggests.
“Self-definition frequently depends on the construction of a handy, negative ‘other,’” Larsen said. “And while Americans are handy ‘others’ at the moment, they’re not the only ones.”
The way Grymov tells it, the film is not about any particular place or event — not Iraq, Afghanistan, or Chechnya — although these are obvious analogs for the setting and participants.
When pressed, the filmmaker began to backpedal, denying the work’s political message that he himself had previously declared.
“Everybody’s writing that we’re bearing down on Americans and I think: ‘What’s that about?’” Grymov said. “I see a lot a films where Americans very severely press on Russians. And it’s not a big deal! And we made a film in which Americans showed themselves as rough, not very pleasant people and Russians say: ‘What are you doing offending America like that?’
“How can you offend America? In America there’s a lot of good things and a lot of bad, a lot of different things. And I don’t think that the film is about the U.S. It’s a made-up story. Why do you have to apply the film to all of America?”

TITLE: Economic Crisis Puts National Projects on Back-Burner
AUTHOR: By Maria Levina
PUBLISHER: Special to The St. Petersburg Times
TEXT: The national projects, a state priority during Vladimir Putin’s last years as president that catapulted Dmitry Medvedev into the Kremlin, have taken a back seat since the presidential election and face being sidelined further as the financial crisis sets in. 
The four projects were enacted in 2006 with a mandate to fulfill a series of short-term goals aimed at improving public health, raising educational standards, providing affordable housing and stimulating farming and agriculture. The measures, greeted by some as a sign that the government had begun to think proactively about public welfare for the first time in 15 years, turned the little-known Medvedev into a national figure overnight. 
Medvedev said last year that the national projects would fulfill their objectives by the end of 2009. But Deputy Prime Minister Alexander Zhukov said on Sept. 24 that the projects would be reclassified as government programs with long-term objectives starting next year. Zhukov, speaking at a meeting of the national projects committee, promised to develop concrete program proposals and present them at the next committee meeting by the end of the year. 
The national projects have only touched the tip of the iceberg. For real success federal funding must be committed to the four areas with long-term planning on a more systematic basis, experts say. But the projects have been successful in at least one thing — properly defining the four areas of social policy where support is most needed. 
“For years, everyone understood that things were bad, but few people talked about what should be done,” said Valery Fedorov, general director of the polling agency VTsIOM. “The projects became the battering ram that broke the wall of silence. The topics they addressed finally left the category of kitchen conversations and went into the realm of government decisions.” 
This year, the government is expected to spend 330 billion rubles ($12 billion) on the four projects, which, according to VTsIOM polls, are considered “vital” by the Russian population. But this financial commitment pales when compared to the more than 1 trillion rubles that will be spent this year to support the nation’s banks. 
In 2006 and 2007, a total of 432.6 billion rubles was spent on the four projects, with 51 percent, or 222.5 billion rubles, going to health; 20 percent to housing; 18 percent to education and 11 percent to farming. This is for a country that, at the end of 2007, had stockpiled $476.5 billion in foreign currency reserves and accumulated a stabilization fund of 3.8 trillion rubles ($156.8 billion), built up from windfalls in oil revenues since 2004. 
The government had waited for years to start pumping money into the areas that were at the core of Russia’s most critical social and demographic problems, only starting to act when it was almost too late. 
After the financial crisis struck in September, the state began scrambling for measures to stabilize the financial markets and prevent the economy from going into a recession. State-owned Vneshekonombank, or VEB, has been charged with refinancing the foreign loans of some of the country’s biggest and most aggressive borrowers with 1.35 trillion rubles from the national reserves. This might appear to be a reasonable measure when faced with the possibility of a flood of defaults. But it also could be seen as a missed opportunity, considering the funds that could have been invested into what Medvedev called “human capital” in his state-of-the-nation speech last week. 
United Company RusAl, whose 51 percent shareholder is Oleg Deripaska, one of Russia’s most heavily indebted oligarchs, last week received a $4.5 billion loan from VEB to prevent foreign creditors from taking over a 25 percent stake in Norilsk Nickel. By granting the loan, the VEB broke a $2.5 billion loan limit for a company that it had set itself. 
The RusAl loan alone is worth more than the funds spent on education improvements in all of Russia in 2006, 2007 and 2008, which amount to about 123.7 billion rubles ($4.48 billion). While RusAl generated $14.3 billion in revenues last year, it also has only four shareholders — Deripaska, billionaire Mikhail Prokhorov and Sual and Glencore shareholders — compared to the millions of Russians who had stood to directly and indirectly benefit if the same funds had been spent on education before the crisis. 
“This crisis has really shown the true value system of our government and business elite,” said Sergei Mikhyeyev, political analyst at the Center of Political Technologies. 
Deputy Prime Minister Igor Sechin said last week that oil companies would need $100 billion in state aid to get through the crisis — or 720 percent more than what has been earmarked for all national projects in 2008. 

Big 3-Year Plans
Yet, on the surface, the government has not reduced its commitment to the projects. In his state-of-the-nation speech, Medvedev vouched for continued investment into social programs such as education and health. He said a new development strategy for the education system would be approved shortly, building on the framework of the national project on education. “We must use the experience of the national project on education when developing the principles for the operation, design and construction of ‘our new school,’” Medvedev said. 
In approving the 2009-11 federal budget on Oct. 31, the State Duma set aside 354 billion rubles for the national projects in 2009, 323 billion rubles for 2010 and 274 billion rubles for 2011. Farming will receive the biggest chunk of the funding, getting 34 percent of the money in 2009, 43 percent in 2010 and 53 percent in 2011. Health care will be the second-largest recipient of state funds, accounting for a third of all funding over the next three years. 
The budget, however, could go into a deficit as early as next year as oil prices slide and the financial crisis continues. 
“Since the general population is the least sensitive to changes in the budget, their share of expenses would be the first to be cut,” said Konstantin Sonin, a professor at the New Economic School/CEFIR. 
He said some results of the national projects, like the purchase of new ambulances for all hospital emergency rooms, were immediately visible; however, longer, more gradual improvements in health care services would be more important. 
Statistics published by the Health and Social Development Ministry show that the number of outpatient clinic visits increased from 8,900 per 1,000 people in 2005 to 9,800 in 2006, 10,550 in 2007 and a projected 11,550 in 2008. No information is available as to the actual improvement in quality of outpatient services. 
During the meeting of the national projects committee in September, Prime Minister Putin emphasized that the experience of national projects should be used as a foundation to develop the new government programs, which will run through 2012. “The program for the development of farming has already been approved,” Putin said. 
The original project focused on incentives to speed up cattle breeding, the development of private farms and affordable housing for young agriculture specialists. But the project was the first of the four to be transformed into a government program when in June 2007, the state passed a five-year development plan for the agriculture sector that encased the initiatives of the national project. 
“The project gave momentum to the agriculture sector, which, frankly speaking, was in ruins for many years,” said Nikolai Shkilev, chairman of the commission on agriculture, land and forestry in Nizhny Novgorod and a deputy in the region’s legislative assembly. 
He said that of the 4.7 billion rubles granted to the region in 2006 and 2007, 2.6 billion rubles went to support 15,000 private farms and 480 collective farms, and 2.1 billion rubles were spent on building cattle-breeding centers. “In addition, we built 23,000 square meters for 400 young families,” he said. 
Shkilev said the biggest hindrance in the implementation of the project were banks, which were unable to disburse loans efficiently. 
He said the transformation of the project into a government program proved its necessity and showed that the government had finally started to think strategically about the sector. 
At a meeting Wednesday with the Russian Agrarian Movement, a lobby group, Medvedev said Russia had harvested 100 millions tons of grain this year, the largest crop in 15 years. Medvedev also said agricultural production grew 6.5 percent in the first nine months of 2008, the highest in the past seven years. “Russia has enough agriculture resources to minimize the risks of the global financial and food crisis,” Medvedev said. 
All programs implemented as part of the health care project will be retained in the 2009-12 government program, said Health and Social Development Minister Tatyana Golikova at a meeting of the national projects committee in September. In addition, three new programs will be introduced next year: 28.5 billion rubles will be spent on cancer patients, 3.5 billion rubles to develop healthy lifestyle programs and public campaigns against alcoholism and smoking, and 16 billion rubles to increase the use of technology in health care. Golikova said the program envisions the creation of a comprehensive database of patients and would store a patient’s medical history across all medical institutions. 
Education and Science Minister Andrei Fursenko said at the meeting that new education programs would cover four key areas — education as a means of social development, innovation in school education, continuity of basic education to match professional specialization needs and the development of communications tools between society, economy and education. 
For their part, ordinary Russians would most like to see spending increases on health and sports (34 percent), housing and social policies (31 percent) and science and education (20 percent), according to a VTsIOM survey last month that asked about 1,600 people about government spending priorities for the next three years. More than half of respondents said public administration expenses should be cut. 
The national projects committee has met only four times this year, compared to 11 times in 2007, according to its web site, www.rost.ru. The last transcript for a meeting dates back to April. 

Few Details 
At the national project committee’s most recent meeting, chaired by Putin, ministers touted the success of the projects. Putin spoke of the growth of new housing, improvements to health care, the development of new universities and the attraction of additional investment into agriculture. Fursenko said all of the country’s schools now have Internet access, and Golikova said the health care sector had benefited from reforms unseen in the previous 20 years, with total spending reaching 182 billion rubles ($7.5 billion) over the past two years. 
People familiar with the implementation of the projects agreed that they had made an important one-time impact and raised the profile of each of the four areas. Yet, no comprehensive studies have been released about the changes achieved over the past three years in health care, education, housing and agriculture and the effect of the projects on the lives of ordinary Russians. 
“The fate of the national projects is becoming less and less enviable,” said Ruslan Grinberg, head of the Economics Institute at the Russian Academy of Sciences. “The volume of financing was not significant to begin with. These were little islands of support in a sea of dilapidated infrastructure.” 
Grinberg said the transformation of the national projects into government programs is necessary and will allow for more systematic and structural support. 
“The biggest success can be seen in the farming program because it is the one that got the most continuous support,” he said. “The health project essentially focused on one-time increases in salaries and equipment, while education focused on increased levels of technology.” 
The biggest obstacles have been faced by the housing project, which counted on the availability of bank financing and mortgages to make housing affordable. In the current environment, the project’s future looks bleak. 
“The financial crisis will affect this program negatively because of the difficulty in getting mortgages,” said Alexander Serikov, chairman of the housing and construction commission in Nizhny Novgorod and a deputy in the region’s legislative assembly. “But the government’s decision to allocate 50 billion rubles to the construction sector should help.” 
Serikov said several thousand apartments have been provided to people through the programs “Young Family,” “Young Specialist,” and “Relocation Out of Old Houses” in the region over the past several years, but demand still far exceeds supply. 
“We have faced a significant increase in housing prices over the last several years,” he said. 
“We estimated that it would take three years for an average family of three people to afford an apartment, but at current prices it will take more like five to seven years,” Serikov said 
Serikov said that at current market prices, one square meter of new housing in the region costs about 48,000 rubles, while it costs only 30,000 rubles to build. He said the legislative assembly was currently discussing the possibility of putting some housing projects into government hands. 
Tamara Goncharova, a department head at the Union of Healthcare Workers, said the health care project was very successful in what it aimed to achieve — most doctors and nurses in emergency rooms and clinics have received significant salary increases and additional payments have been provided to specialists at maternity wards. 
She said, however, that no salary increases have been provided to doctors in hospitals, and they often are responsible for the most complicated surgeries.

TITLE: Uralkali Stares Into Chasm as Investigation Reopens
AUTHOR: By Courtney Weaver
PUBLISHER: Staff Writer
TEXT: MOSCOW — In a week when all investors in Russia were holding their breath, the bluest faces had to belong to Uralkali shareholders. 
Catching both the market and the potash producer by surprise, Deputy Prime Minister Igor Sechin reopened a 2006 investigation into the flooding of a Uralkali mine, sending the company’s shares — darlings of the Russian market not long ago — down 75 percent in London in the three trading days after the announcement. 
The losses came on top of the 75 percent Uralkali had already fallen since this summer. 
The flood, ruled an accident in the original probe, created an enormous sinkhole in the Perm region, which is home to both Uralkali and its main rival Silvinit, the country’s largest producer of fertilizer. What’s worse, the hole is spreading and has already forced the construction of two new rail links to export the companies’ potash. 
A state commission will now decide whether the fertilizer producer will have to pay reparations, which analysts say could range anywhere from $600 million to $2.6 billion, depending on the state’s ultimate intentions. The commission is expected to issue a decision by the end of the month. 
For its part, Uralkali said it was surprised by the decision to reopen the investigation but that it would cooperate fully. 
“We have no information as to why this decision was made,” the company said in a statement. “We believe that the first commission comprised recognized experts; that its investigation was competent and comprehensive, and we see no reason to question its conclusions.” 
The circumstances surrounding Uralkali drew immediate comparisons to Prime Minister Vladimir Putin’s public assault on coal miner Mechel this summer. The involvement of Rosneft chairman Igor Sechin, a deputy chief of staff to then-President Putin who was seen as the engine behind the dismantling of Yukos, generated echoes of that affair as well. 
In a somewhat hopeful sign for Uralkali, however, chemicals analysts said the investigation could be an attempt to pressure the company into forking over some cash to help pay for the new railroad links and the relocation of regional power producer TGK-9. 
While in the past higher transport prices have helped Russian Railways finance such projects with assistance from the state, the government is now looking, with an eye on inflation, to cap freight-carrying charges. 
Potash, a little-noticed asset until prices took off this year, garnered momentum as grain shortages produced greater demand for fertilizer. In the year through September, Uralkali’s revenue rose 150 percent, under Russian accounting standards, and its net profit rose 470 percent, the company said Friday. 
It had been reported earlier that the company’s net profits had jumped by 370 percent year on year for the first three quarters of 2008, according to Russian accounting standards. 
Majority-owned by billionaire Dmitry Rybolovlev, who also holds 25 percent of Silvinit, Uralkali is the country’s second-largest potash producer and third-largest in the world. It exports 90 percent of its output, primarily to the other BRIC markets — Brazil, India and China. 
“Until now, the government was not particularly interested in the [fertilizer] sector,” said Yelena Sakhnova, senior analyst at VTB. “It was very small compared with oil and gas and even metals, and it was not strategically important.” 
Should the state find Uralkali liable for the accident, however, fines against the company could extend above Uralkali’s current cash position, forcing the company into bankruptcy and leaving it open to a possible state takeover. 
Sakhnova said that, in the best-case scenario, Uralkali would only have to help cover the costs of building railway bypasses, relocating local Berezniki residents and transporting the nearby TGK-9 power facilities, a total of $600 million to $800 million — an “unpleasant but not devastating” figure for Uralkali. 
The worst-case scenario would bring charges of up to $2.6 billion, to cover the drop in tax revenues from lost reserves, a figure likely to dump the company into state hands — something Sakhnova said would hurt the entire market. 
“We think that right now the state is concentrating on the crisis and isn’t prepared to take such actions,” she said. 
In the immediate term, analysts are more concerned about negotiations of a new potash contract with China in December. If negotiations stretch on for months, as they have in the past, the Uralkali affair could reduce the industry’s leverage in striking a deal with its biggest global importer. 
Since Uralkali fell to $5.01 in London on Tuesday — its lowest closing price in the company’s history, the stock has gradually rebounded both in Moscow and London. In London, the stock rose 15.4 percent on Thursday, or 84 cents. On Friday, the shares finished up 24 percent, at $7.80 in London, and up 13.9 percent in Moscow at $44.87. 
Sakhnova said investors still might have reason to fear the beginnings of a state takeover until the commission releases more information. 
“In the worst of the worst scenarios, where the government would try to go not only for Uralkali but for the whole industry, the government might try to create one company in Russia that would be producing potash,” Sakhnova said. 
But given the current circumstances, she said, the state had likely bigger concerns than an overhaul of the national potash industry.

TITLE: $16Bln Sold Last Week To Boost Ruble
PUBLISHER: Reuters
TEXT: MOSCOW — The Central Bank sold around $16 billion to support the ruble last week, according to dealers’ estimates, despite allowing the currency to weaken 1 percent versus the dollar-euro basket. 
The ruble closed at 30.70 versus the basket on Friday, around the level seen as the new Central Bank support. It broke through the previously defended 30.41 mark on Tuesday. 
Tuesday saw the heaviest interventions, estimated at $7 billion, as the devaluation took investors by surprise — most had not expected it until next year. 
The estimates suggest that the country’s reserves are likely to post another hefty fall when last week’s data is published on Thursday. Ruble interventions have already helped slash them by one-fifth in the last three months. 
“Judging by the [dollar] purchases, the market is expecting that the Central Bank will take another devaluation step next week, maybe of 1 percent,” said a dealer at an bank in Moscow. 
There are signs that Russians are growing less confident in the ruble, with banks seeing outflows from ruble deposits and inflows into foreign currency ones.

TITLE: Trade in Rubles Appears Likely To Be a Long Haul
AUTHOR: By Dmitry Zhdannikov, Toni Vorobyova
PUBLISHER: Reuters
TEXT: MOSCOW — The country’s campaign to do more international trade in rubles, spurred by persistent pressure on its currency, is likely to prove a long haul with the chances slim of persuading any major players to sign up soon.
Moscow spent tens of billions of its hard currency reserves in recent weeks to defend the ruble from falling oil and stock prices and a broad-based flight from emerging markets, prompting policymakers to cast around for new ideas.
Belarus on Tuesday pledged to discuss settling oil and gas trades with Russia in rubles. Prime Minister Vladimir Putin talked about the possibility of bilateral trade with China in national currencies and the use of the ruble was expected to be discussed at the G20 meeting over the weekend.
“We need to take practical steps to strengthen the role of the ruble as a currency for international settlements. And to move to settlement in rubles ... for oil and gas,” President Dmitry Medvedev said in an address to the State Duma on Nov. 5.
The world’s second-largest oil exporter has accumulated reserves of nearly $600 billion during an oil and gas boom, but those reserves have fallen by one-fifth in the last three months, and falling oil prices may make them hard to replenish.
For the trade scheme to help, however, it will need bigger buyers of the ruble than Belarus and Kazakhstan, which account for 4.9 percent and 3.4 percent of Russia’s exports, respectively.
Analysts say that in the short term further devaluations of the ruble are likely after the Central Bank gave in and let the currency ease 1 percent this week.
“[Ruble-denominated trade] would be a good idea if it could be realized, especially because now there is a lot of concern in the world about the stability of the dollar,” said Natalya Orlova, chief economist at Alfa Bank.
“But we don’t have sufficiently large political partners who would agree to trade in rubles and hold rubles as a reserve currency. Those who would agree, like Belarus, are too small.”
The European Union is Russia’s largest trade partner.
Most other energy producers are sticking with the dollar and the status quo, though Iran has said it gets most of its oil income in euros and yen, and Venezuela has also opened some oil contracts in euros during the dollar’s fall earlier this year.
The country’s resource-dependent economy means that the ruble’s fortunes are closely tied with those of the oil price, potentially a big negative for its aspirations as an international currency.
“Our trading partners should understand what the ruble is and what its risks are,” said Stanislav Ponomarenko, head of Russia research at ING.
On the flip side, oil and gas also give Russia some muscle, and there are signs that the state is putting pressure on local companies to boost the role of the ruble.
“You cannot imagine how much pressure we have been facing recently to switch to rubles. We are being told it must happen at least with all of our term deals with foreign majors,” said a trader with a major Russian oil firm.
“The first step will be with the neighbors, at least Belarus and Kazakhstan. That could happen as soon as next year.”
Even if Russia succeeds in persuading some partners to trade in rubles, analysts say this may not be enough to override downward pressure on the currency.
“I think that the drivers of the ruble — oil and capital flows — will not change, even if the denomination of some of the flow is changed,” said Roderick Ngotho, FX strategist at UBS, which does not rule out a 20 percent depreciation of the ruble against the basket in the next 12 months.

TITLE: In Brief
TEXT: <b>El Al Back In Town</b>
JERUSALEM (Bloomberg) — El Al Israel Airlines, the country’s biggest carrier, is resuming flights to St. Petersburg stemming from increased demand following the elimination of visa requirements for travel between Russia and Israel.
Plans had been unveiled in August to suspend the service because of low demand, El Al, based at Ben-Gurion International Airport near Tel Aviv, said Monday in a statement.
Israel and Russia signed a memorandum of understanding last week to allow direct charter flights between Eilat and the cities of Moscow and St. Petersburg, Israel’s Transportation Ministry said Monday in a separate statement.

<b>BNP Considers Buy</b>
MOSCOW (Bloomberg) — BNP Paribas, France’s largest bank, is considering buying Russia’s National Bank Trust, Vedomosti reported.
BNP Paribas is in talks with Moscow-based Trust to possibly acquire its retail banking business, the Russian newspaper reported unidentified bankers with knowledge of the transaction as saying.
A representative of Trust denied negotiations were taking place and BNP Paribas refused to comment, according to Vedomosti.

<b>New Yevroset Chief </b>
MOSCOW (Bloomberg) — Yevroset, Russia’s largest mobile-phone retailer, will name Sergei Yuschenko, the former head of retailer Lenta, as its new chief executive officer, Kommersant reported.
The newspaper cited two unidentified people close to Alfa Group, a shareholder in VimpelCom, which bought 49.9 percent of Yevroset last month. Yevroset will also name as chief financial officer Vitaly Podolski, the former CFO of X5 Retail Group and currently a managing director of Renaissance Group’s merchant banking arm, Renaissance Partners, the newspaper said, citing the two people and another investment banker.

<b>Ikea Plans 30 Stores</b>
OSLO (Bloomberg) — Ikea, the world’s largest home-furnishings retailer, will accelerate an expansion in Russia, Dagens Industri reported, citing Per Kaufmann, head of the company’s Russian business.
Ikea wants to have stores in every city with at least half a million people and will build more than 30 outlets in Russia, making the country one of its largest markets, the Stockholm-based newspaper reported Monday on its web site.
Ikea has opened 11 stores in Russia, and will open three new outlets shortly. The retailer will have 30 to 34 warehouses in Russia, the newspaper cited Kaufmann as saying.

<b>PIK ‘Underweight’</b>
MOSCOW (Bloomberg) — PIK Group was cut to “underweight” from “overweight” by JPMorgan Chase & Co. because of the risk that the Russian housing developer may default on some debt as the Moscow city government seeks to pay less for apartments.
“We see a serious risk that the company may not meet some of its debt obligations, raising questions about the company’s ongoing viability in its current shape,” Elena Jouronova, a property analyst at JPMorgan in Moscow, wrote in a note to clients Monday. “Timing is crucial.”
PIK may be unable to repay $700 million of debt due this year as negotiations with the Moscow city government continue indefinitely, Jouronova said. PIK confirmed reports the city will probably cancel orders for about $1 billion of apartments that the developer won in October, she said. Kommersant reported Nov. 14 that the city wants to cut prices by 17 percent.

TITLE: Novolipetsk 
Won’t Buy Maneely
PUBLISHER: Bloomberg
TEXT: Novolipetsk Steel, Russia’s biggest steelmaker by market value, said Sunday that it has terminated an agreement to buy John Maneely Co. of the United States from The Carlyle Group. 
“I can confirm the contract has been stopped,” said Anton Bazulev, the firm’s head of investor and government relations.
Carlyle, the world’s second-largest private-equity firm, said Saturday that it will continue to pursue “all legal remedies” against Novolipetsk and that a court case filed on Oct. 15 in New York is still pending. Carlyle’s DBO Holdings filed the suit to enforce its rights under an Aug. 12 agreement for a merger between Novolipetsk and John Maneely. 
The news comes after Novolipetsk Steel halted deliveries on Friday to GAZ, billionaire Oleg Deripaska’s carmaker, because of overdue payments. 
Novolipetsk is continuing talks with other consumers whose payments are overdue, Bazulev said Friday.
Deripaska’s companies have faced pressure amid the credit-market turmoil. He ceded his stakes in Hochtief and Magna International last month after the shares used as collaterals to finance the acquisitions lost their value. United Company RusAl reduced production and work force at its Ukrainian alumina and aluminum complex on Nov. 3. 
??GAZ said Friday that sales climbed 20 percent in the first half. 
Revenue rose to 81 billion rubles ($3 billion), GAZ said, without giving a year-earlier figure.

TITLE: Astana, Baku Set Up Oil Shipping Links
PUBLISHER: The Associated Press
TEXT: ALMATY, Kazakhstan — Kazakhstan and Azerbaijan agreed Friday to set up an oil transport system across the Caspian Sea that will help get Central Asia’s massive energy reserves to Western markets and circumvent Russian territory.
U.S. Energy Secretary Samuel Bodman, meanwhile, told an energy summit in Azerbaijan that he was confident that the incoming administration would maintain interest in Central Asia and the Caspian and continue pushing to diversify export routes for the region’s oil and gas — still dominated by Russia.
“It is my firm belief that this effort and this region of the world will also be a priority for the next administration,” Bodman said at the meeting, which drew presidents or other senior officials from nations including Turkey, Georgia, Poland, Ukraine, Lithuania, Estonia, Bulgaria and Hungary.
Most participants signed a declaration that stressed the importance of diversifying export routes and expressed support for existing and planned Western-backed pipelines bypassing Russia.
Resource-rich Caspian nations Kazakhstan and Turkmenistan did not sign, presumably wary of damaging closer ties and energy export arrangements with Russia.
The network will rely on a fleet of tankers and barges to bring Kazakh oil to Azerbaijan, the starting point for a 1,770-kilometer pipeline that traverses the South Caucasus and ends at the Turkish port of Ceyhan.
Kazakh state energy company KazMunaiGaz said the network would be able to ship 500,000 barrels of oil a day at first, eventually growing to 1.2 million barrels per day. It did not say where the ships would come from or who would build or operate them; most tankers plying the Caspian are outdated.
Kazakhstan relies almost exclusively on Russian routes for oil exports, and Moscow has been reluctant to expand its pipelines.

TITLE: ‘Gas Troika’ Plans Draft Charter
PUBLISHER: Reuters
TEXT: The Energy Ministry said Friday that the Forum of Gas Exporting Countries will hold its Moscow summit on Dec. 23 and will agree on a draft charter on Nov. 26.
The meeting was originally planned for mid-November but was delayed while the countries made preparations for the forum’s charter, the ministry said in a statement.
The new charter will help the largely informal club morph into a more formal organization, which could resemble the Organization of Petroleum Exporting Countries.
Global No. 1 gas producer and largest reserve-holder Russia held talks with Iran and Qatar, the second- and third-biggest holders of natural gas reserves, last week after they formed a “big gas troika” last month.
The OPEC-style grouping should become a permanent body, holding regular meetings to discuss key developments in the gas markets, and could include other countries later on.
Its formation sent a nervous tremor through the European Union and the United States, which have argued that the market should set gas prices.
Both have repeatedly warned that an OPEC-style gas group could pose a serious danger to global energy. The reserves of Russia, Iran and Qatar boast more than half of the global total.
But Europe’s top suppliers argue that the new organization would help better structure long-term gas needs and coordinate capital expenditure programs.

TITLE: OMV, BP, Shell Hope to Use Nabucco
PUBLISHER: Reuters
TEXT: LONDON — Austria’s OMV is in talks with BP and Royal Dutch Shell to buy Azeri and Iraqi natural gas for transport through the planned Nabucco pipeline, which the European Union hopes will reduce its reliance on Russian imports.
OMV spokesman Thomas Huemer said the talks with BP were related to its leading role in the Shakh-Deniz project in Azerbaijan, while Shell has signed a gas deal with Baghdad that could lead to it becoming a major producer there.
The Nabucco consortium hopes that gas from phase two of the Shakh-Deniz project will be the bedrock of supplies to help start the pipeline, with additional supplies coming later from Iraq and possibly Iran and the Caspian region.
The shareholders are OMV, Romanian pipeline operator Transgaz, German utility RWE, Hungarian oil firm MOL, Turkish pipeline operator Botas and Bulgarian state gas firm Bulgargaz.

TITLE: New State Airline to Be Called Rosavia
PUBLISHER: The Moscow Times
TEXT: A new airline being created by the Moscow city government and state-run Russian Technologies will be called Rosavia, Mayor Yury Luzhkov said Saturday, Interfax reported.
Designed to serve as an alternative to Aeroflot, the airline, which earlier functioned under the working name Russian Airlines, will incorporate other regional carriers, including failed regional airlines such as AiRUnion, Krasair and Samara.
“The company will be big and serious and have a powerful potential to compete with Aeroflot,” Luzhkov said after a meeting with Sergei Ivanov, the deputy prime minister responsible for the airline industry.
Luzhkov and Russian Technologies head Sergei Chemezov on Saturday sent a letter to the Federal Anti-Monopoly Service requesting that Aeroflot be stripped of its royalties, the service’s deputy head Anatoly Golomolzin said.
Aeroflot receives “royalties” from international companies when their aircraft fly over Russian territory.

TITLE: Razgulai Cut 2,200 Jobs, Wages 15%
PUBLISHER: Bloomberg
TEXT: Grain and sugar producer Razgulyai Group said Friday that it cut 2,200 jobs and wages for its remaining workers as much as 15 percent as banks tighten credit, prices decline and customers fail to pay for deliveries. 
Sales fell 15 percent in October from the previous month as overdue payments increased, chairman Igor Potapenko said on a conference call. The job losses represent about 12 percent of the company’s 18,000 workforce, and wages will be cut by 5 percent to 15 percent, he said. 
Razgulyai is “seriously concerned” after accounts receivable, including payments owed, rose to 6 billion rubles ($219 million), Potapenko said. The company aims to refinance a loan from VTB of the same amount in the first half of 2009, he said. 
The company has about $1 billion of debt and plans to repay part of this by reducing trading positions now equivalent to 800,000 tons of grain and 200,000 tons of sugar, he added.

TITLE: 3PL: Pros and Cons of Outsourcing
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: For The St. Petersburg Times
TEXT: In contrast with transportation companies and warehouse operators, Third Party Logistic companies offer a comprehensive range of services. Industry experts, however, note that there are both benefits and risks associated with outsourcing logistics.
Third Party Logistics, or 3PL, is the outsourcing of logistics services. 3PL operators organize the management of the flow of goods and optimize financial and information resources for product shipment and distribution.
“A 3PL operator provides a whole range of services necessary to deliver products from producers to retailers. 3PL starts with moving the products from the production line, packaging and storage and delivering product lots to the stores,” said Alexei Gorinov, head of the sales department at Nienshants Logistics.
Antonina Amerik, head of the marketing and development department at Maxilog logistics company, added that 3PL operators also offer secondary services such as document clearance, insurance, agent services (including loans and assistance in signing contracts), consulting and outsourcing of other business processes in the client’s company.
Gorinov said that about 50 companies in St. Petersburg market themselves as 3PL operators. The market is dominated by large companies (Nienshants Logistics, Interterminal, Mega-Logistics, Relogix and FM-Logistics) and transportation companies that offer logistic services (STS-Logistics and Velts).
In addition, distribution companies use their ties with retail chains and offer logistics services, Gorinov said, as do companies that own former industrial premises in the city and in proximity to the ring road.
The benefits of 3PL are time and cost saving and a higher quality in product shipment and distribution.
“The main benefit of logistics outsourcing is the time that you save by delegating the distribution process to a specialized company. Having experience of working with various groups of products, 3PL providers can organize a better and more effective distribution process,” Gorinov said.
Logistics outsourcing does not mean that the company loses control over its goods while they are being transported.
“High-quality logistics outsourcing always includes distant management of the flow of goods. Using a laptop, the client can order additional product delivery from any place, if he unexpectedly gets an order,” Gorinov said.
Other experts also said that economy of scale is the main benefit offered by specialized logistics companies.
“By managing the whole distribution chain, 3PL operators can choose optimum routes and means of transportation and offer an optimum range of services to each client. Due to the synergetic effect, 3PL operators offer discounts,” Americ said. 
3PL operators decrease their expenses by combining several cargoes in one vehicle. As a result, clients pay for part of the vehicle rather than for all of it. 
“Some goods are regularly shipped in small quantities. There is no way to deliver them more cheaply than by combining them with other goods in a large vehicle,” Americ said. For companies with seasonal deliveries it’s also a good option, she added.
Large logistics operators use cutting-edge technology and information systems that their clients could rarely afford to buy for their own purposes, Americ said.
Gorinov said that logistics outsourcing could significantly decrease expenses for consumer goods companies and fast-moving consumer goods (FMCG) companies, as well as for suppliers of raw materials in continuous cycle industries and companies that import products to Russia.
A considerable advantage of 3PL is that operators can organize the distribution process in a way that is most suitable for a particular client.
“Third Party Logistics is more than simply transportation or freight forwarding. 3PL operators deliver goods from A to B while observing cost and time limitations and with respect to risks acceptable for the client,” Americ said.
“Some clients focus on minimum expenses while neglecting schedules. Others want products to be delivered on time, regardless of the cost. Still others are concerned with the safety of the goods,” said Americ.
3PL makes financial economy possible, Gorinov noted, as by using 3PL, companies can decrease the amount of VAT and profit tax they pay.
Gorinov listed several risks of logistic outsourcing. “A 3PL provider that has not worked with a particular product before would need time to get accustomed to it, which could lead to financial losses,” he said.
3PL providers should use conveyer technology and an automated warehouse management system, Gorinov said, otherwise there could be excess supplies and late deliveries.
“A 3PL provider should use a fair and transparent billing system. Many logistics companies state minimum prices and then charge extra fees. For example, they say that the package is three centimeters bigger than was agreed, which leads to additional expenses,” Gorinov said.
He recommended ascertaining all the details before signing an agreement. He also strongly recommended taking out insurance for the goods.
Another risk is losing physical access to products handed over to a 3PL company. Gorinov cited the example of a client who urgently needed to replace a fluid in some equipment. “At his request, we organized limited access to the equipment for his personnel. But very few 3PL companies would agree to do that,” he said.
On the other hand, 3PL eliminates some of the risks associated with the transportation process. Americ said that large logistics companies monitor situations at sea ports and on major roads. “They can forecast transportation problems and use alternative routes to avoid losing time,” she said.

TITLE: Real Estate Experts Positive
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: The prospects for the logistics and warehouse real estate businesses are no longer as optimistic as they were six months ago when the growing Russian economy, fuelled by energy and raw materials exports, was considered to be the number one among developing countries. Earlier this year, the situation was expected to result in a shortage of warehouses, prompting developers to build more properties in Russia. 
But the global financial crisis has forced logistics companies to reassess their long-term plans and adjust to the newly-formed negative conditions. The crisis has reached all spheres of the country’s economic activity.
People involved in the industry say that the volume of goods traffic has dramatically decreased. The clearest evidence is the absence of long lines of cargo trucks on the Leningradsky highway.
“Bearing in mind that development depends entirely on foreign investments, it’s fair to say that ongoing construction projects could be suspended or even frozen for a longer period — the flow of investments has now run dry. As a result, the current demand for warehouse facilities has fallen sharply,” said Olga Petrova, marketing coordinator at Itella Logistics, part of Itella Group.
Experts confirmed that the St. Petersburg warehouse market is currently experiencing a financial meltdown due to a reduction in the volume of affordable loans. Local logistics companies of varying sizes have been forced to slow down their business growth in St. Petersburg and other Russian regions. 
“The industry slowdown can be judged by the recent wave of lay–offs that happened in several key real estate agencies. Undoubtedly, this is connected with the recent reduction of real estate agencies’ activities on the warehouse logistics market,” said Sergei Orekhov, deputy director of Energo, in e-mail interview. 
He added that in the near future he is not expecting a large volume of offers on the real estate market, so previous staff numbers would no longer be necessary. 
According to analysts, the largest current obstacle is that available funds have become more expensive.
“There is an ongoing reassessment of projects whose financial construction was incomplete before the onset of the crisis, when interest rates were half of what they are today. Most of these projects have been set aside because they failed to break even, let alone generate a profit,” said Valery Trushin, head of the research and analysis department at Colliers International, adding that there is no evidence that consumer demand is increasing.
“Even if there is financial backing for a project, the number of potential lease holders ready to pay sub crisis rent rates — the basis for a business plan — is decreasing,” said Trushin.   
He said another serious problem facing the logistics industry is ineffective management. “During the last three years, numerous projects were launched by developers from other fields. Consequently, the period from 2009-2011 will see the ‘cleansing’ of the non-professional market,” he said.
However, experts are unanimous that the St. Petersburg warehouse market has good long-term perspectives, and expressed hope that the rehabilitation period of key warehouse customers would not be long enough to postpone this potential.
“Large retail chains and producers need warehouses as usual, although demand for floor space has decreased by a few percent,” said Petrova.
Olga Yasko, regional head of the analysis department at Colliers International, confirmed that companies are not hurrying to expand their businesses. Demand for warehouses larger than 10,000 square meters has decreased to 37 percent of what it was at the beginning of the year, while at the end of June it stood at 58 percent.
“The warehouse real estate market has good perspectives, because its main consumers — lease holders — are companies engaged in the fast moving consumer goods (FMCG) industry, and demand for these products is decreasing least of all,” said Trushin. He added that facilities that have already been started will be completed. 
“It is easier for a developer to find financial resources, complete construction and sell the project than to freeze it and lose the money invested,” he said.
Sergei Vereshchagin, commercial director at Evrazia Logistics, was quoted by news agencies as saying at a conference in Moscow last week organized by the Adam Smith Institute and titled “Investments in Russian regions” that his company intends to review its plans for the next year, particularly projects at an advanced stage of realization. Such projects include industrial parks in St. Petersburg, Moscow, Novosibirsk, Kazan, Yekaterinburg and Odessa, with completion deadlines ranging from 2009 to 2011. 
Up to 40 percent of the projects that have already been announced as complete will be postponed until next year, Omar Gadzhiyev, managing partner at Panorama Estate, was quoted as telling RBC daily last week.
“Only 148,000 square meters of high quality warehouse floor space will be put into operation before the end of 2008. The total new volume of high quality warehouse floor space for the year will be about 449,000 square meters, although expectations for 2008 were more than double that number — over one million square meters,” Yasko told RBC daily last week. 
Prognoses for high quality warehouses that will be put into operation in 2009 is about 500,000 square meters, said Trushin, adding that new projects will be realized exclusively by logistics market professionals — warehouse developers and 3PL operators.

TITLE: Creating a Logistics Utopia
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Companies often complain that warehouses are built without any attention being paid to the client’s specific requirements. Rental rates constantly rise, but the quality of logistics operator services does not improve accordingly. All companies dream of finding the ideal warehouse. 
This term, however, is not only a theory or a mere utopia. 
“The ideal warehouse is an optimum solution that is profitable for the developer and the logistics operator and meets all the requirements of the end consumer,” said Igor Shapkin, deputy chief director of warehouse logistics at Eltrans Plus. 
The number of models of the so-called ideal warehouse equals the number of clients. 
“Clients, however, can come and go, and it is a big risk to design a warehouse for the requirements of an individual company. Moreover, each depot usually has several clients and they have different priorities.”
Accordingly, the most effective method is to build universal warehouse complexes that are multifunctional and have broad transport opportunities. 
The ideal warehouse should have some fundamental features. The most important factor is location. It should be easy to get to the logistics park for both cargo vehicles and workers. The best location is the suburbs, as it generally eliminates time wasted in traffic jams. But the complex should be situated no further than an hour’s drive away from the center, and the main highways should be within easy and rapid reach.
Vehicles must always have access to parking space, regardless of the size of the goods, the time of day and the volume of other transport in the area. 
The ideal warehouse complex should have enough gates for all vehicles — it is important that lines do not form, and that various other operations are not hindered. 
The warehouse should be built using modern technology and the best quality materials. The logistics center should have a convenient layout to ensure that maximum benefits are obtained and to optimize all goods operations. The security system and safety devices also warrant attention. Depots to be used for storing food may have specific temperature requirements. 
Not everything depends on technology and equipment. The fundamental core of every warehouse is a professional and responsible staff that tracks the location of all products, enabling rapid assembly.
“It is incorrect, however, to speak about the uniformity of all depot parks. Warehouses differ in their functions,” said Shapkin.
Warehouse service providers must be able to find an individual approach to every client, and not only offer a standard range of conditions. The main task facing providers today is not only fulfilling all logistics functions, but doing everything they can to increase the client’s profits. This task is one that, according to Western companies, is not currently realized by Russian operators. They simply carry out their duties without thinking about the specific client. 
“Every personal task in the development of a warehouse, and adaptation for particular requirements, however, increases the fee,” said Shapkin.
General price hikes in the industry are natural, according to specialists. 
“The average service rate growth in 2007 of 10-15 percent does not exceed the level of inflation. One can hardly speak about artificial price politics.”
“The price of building materials and all work on power systems and equipment increases, and salaries are put up — this is all reflected on the charge for the building and logistics operators’ services.”
This does not mean, however, there can be providers that are not able to meet all their customers’ requirements. Logistics operators must strive to develop the quality of their work in order to remain competitive.
“They should expand the spectrum of their services and look for particular warehouse solutions that will optimize the time and financial expenditures of the client — for example, a flexible warehouse schedule, rapid goods processing, increasing the professional skills of the staff in order to work with goods more efficiently and perform specific, up-to-date operations,” said Shapkin.
Currently, many large suppliers prefer to outsource their logistics needs and arrange for an external company to provide services including transport and insurance, the function of a customs broker and all warehouse services. 
“The quality of each link in this chain of supplies is important for the logistics operator,” said Shapkin.

TITLE: Warehouses Set to Move Away From City Center
AUTHOR: By Yekaterina Dranitsyna and Nadezhda Zaitseva
PUBLISHER: Special to The St. Petersburg Times
TEXT: At the beginning of 2008, 6.3 million square meters of logistics space was available in St. Petersburg. According to City Hall’s project to develop logistics infrastructure, by 2025 St. Petersburg will need 8.2 million square meters.
According to Colliers International consultancy, out of the total stock of logistics space, about 500,000 square meters are A-class areas constructed during the last few years.
“Previously, warehouses were located in old premises of various kinds, mainly within the city’s border,” said Kirill Malyshev, director of the logistics and industrial real estate department at Colliers International.
According to City Hall’s project, by 2025, A-class warehouse space will reach 2 million square meters and refrigerated warehouse facilities 375,000 square meters.
City Hall will invest into transport and engineering infrastructure and provide an incentive for the construction of warehouses in proximity to the ring road and outside it, Nikolai Asaul, chairman of the committee for transport and transit policy, said via a press secretary. About 5.7 million square meters of logistics space are due to be located in proximity to the ring road by 2025, while City Hall will ban construction of new warehouses in the center of St. Petersburg and the Kurortny district. In the areas close to the sea port, Obvodny Canal and Ligovsky Prospekt the maximum size permitted for a warehouse will be 10,000 square meters.
Malyshev said that so far, the volume of logistics space in the city has increased by about 2.5 million square meters per year. At this pace, a level of eight million square meters could be reached by 2012. However, the financial crisis is certain to interfere with these plans.
“By the end of 2008, developers planned to complete over 1.3 million square meters of new high-class logistics space. In reality, we expect that only 40 percent of this space will be completed,” said Vera Boikova, head of the industrial real estate department at ASTERA St. Petersburg.
Boikova forecast that some of the projects will be postponed and others abandoned altogether due to the financial crisis and lack of funding.
Developers and warehouse owners have to compromise with tenants, said Boikova. For example, they offer low initial rent rates, which will increase every year during the period of the contract. “In some logistics centers, rent rates have decreased by almost 50 percent,” she said.
Some warehouse owners lease out smaller logistics areas. “To stay in this market and retain profitability, warehouse owners should pay attention to the clients’ needs,” Boikova said.
Yelena Alexandriiskaya, head of the industrial and logistics real estate department at Maris Properties in association with CB Richard Ellis, said that warehouse owners are offering various incentives to tenants.
“Instead of the compulsory seven-year rent period, they offer a five-year period. The insurance deposit has decreased from six months to two months, and advance payments have decreased from three months to one month,” Alexandriiskaya said.

TITLE: Russian Customs Brokers Will See No Crisis
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Anyone who has ever left their home country to travel abroad and returned home knows what a customs point is — especially if their home country is Russia. Sometimes it can take hours to clear customs, even for a tourist. For vehicles carrying cargo, the process is far more complex and time-consuming.
For companies that trade abroad, it is easier, more efficient and even profitable to delegate their customs problems to another firm, as the procedures involved are labor-intensive and companies cannot manage without expert help. Only qualified specialists in customs registration are able to deal with this task.
The services of a customs broker are particularly necessary if the company does not have a special department to deal with such operations. Employing the services of a customs broker enables the company to minimize the expenses that inevitably arise when bringing goods through customs. What is more, the company is able to manage all the risks – financial, economic and personal. 
“The services of a customs broker are a necessary part of the business processes for every company that has foreign trade affairs. In contrast to unaided customs registration, it is convenient, secure and avoids many problems and surprises at customs,” said Yelena Ivanova, head of the customs registration service at Eltrans Plus.
Companies that specialize in customs registration usually have essential contacts, even on a personal level, which ensures successful business. Customs brokers know and understand the law and all its nuances. Several years ago a special Customs Code was introduced. A mistake in this sphere can result in hefty fines and even prosecution, and naturally, companies do not usually want to take such a risk with their reputation. According to the law, Russian customs brokers can solve the same problem in various ways.
“Suppliers are interested not only in the specific service of customs registration, but in the transport and storage of the goods, and even subsequent delivery to the regions. Large-scale customs brokers can provide a whole range of logistics services,” said Ivanova. 
Russian customs are notoriously problematic. Russian business ethics and customs still differ from those in the West, and the customs business has its own specific national character, which for many foreign companies is the decisive factor in choosing a mediator for this sphere of business. 
Many companies turn to the services of a broker after having a negative experience of independent interaction with customs. This is often what inspires foreign companies to choose a Russian customs broker.
The range of services offered by a customs broker is usually standard, but companies should pay attention to the broker’s reputation and experience. Experts advise companies to choose on the basis of recommendation.
 “Companies should, however, be very careful when choosing a customs broker. One should be aware that such services can only be provided by a certified corporation and is included on the list of customs brokers,” said Ivanova. 
There is currently a problem emerging with so-called “grey brokers.” 
“This is when an organization or even an individual helps a company that has foreign trade to solve all the customs problems with registration. Formally, all the customs operations are done by the company, while in fact everything is arranged by a ‘grey broker,’” said  Yevgeny Privalov, head of international cargo shipments at DPD in Russia. 
“Grey brokers” are also organizations that have competence in dealing with customs, but they are not officially certified.
“The main obstacle facing potential brokers is the high demands stipulated by the Customs Code. Customs fees of 50 million rubles must be paid, the firm must have an insurance document of civil responsibility at a cost of 20 million rubles. For small organizations, even those comprised of qualified specialists, these conditions are impossible to meet,” said Privalov.
There are, however, some brokers who do not even attempt to obtain certification, and without facing any risks are in a better position than even legal brokers.
“The Russian market is now becoming more transparent, and it is obvious that the future lies in professional companies that cooperate honestly with the state and other trade bodies,” said Ivanova.
The system of customs brokers is justified and is indeed one of the guarantors of the law’s enforcement. 
“But legislation and practice show that if there are any doubts in the trustworthiness of the documents and information presented by the client, the first person taken to the administrative court will be the customs broker,” said Privalov.
“If this happens more than once, it can result in the broker losing its certified status story.”
Accordingly, specialists believe that the documents controlling the activity of customs brokers should be optimized.

TITLE: Large Firms vs. Individuals
AUTHOR: By Yekaterina Dranitsyna
PUBLISHER: Special to The St. Petersburg Times
TEXT: The cargo transportation market in St. Petersburg and the Northwest region is on the threshold of change. According to industry experts, individual entrepreneurs will force out large transportation companies. Small logistics vendors will win customers with lower prices, a higher quality of service and better response to the client’s needs.
Until now, most companies used traditional transportation schemes, either creating their own transportation divisions or cooperating with large auto-parks. Recently, a new option has gained popularity — that of using the services of transportation agents, companies that unify and coordinate individual entrepreneur-drivers.
“In Europe, unions of entrepreneur-drivers have proved to be more competitive than large auto-parks. Outsourcing transportation services to them is more efficient than operating a transportation division within the company,” said Yevgeny Potapenko, managing partner of National Transportation Company (NTC).
Potapenko cited the example of Shenker, a large European transportation company that cooperates with entrepreneur-drivers. This flexible scheme allows the company to operate in many remote locations.
“In St. Petersburg and the Northwest, entrepreneurs operating one to five cars account for 30-40 percent of the transportation market. Their share is steadily increasing,” said Potapenko.
Cooperation with entrepreneur-drivers — either directly or via a transportation agent — is gaining popularity.
“The main benefit of working with entrepreneur-drivers is a decrease in transportation expenses,” said Yury Ivanov, head of the logistics department at Komus company.
“Entrepreneurs are interested in delivering a maximum volume of cargo to earn maximum profits, while auto-parks charge hourly tariffs and we have to pay drivers regardless of the results and quality of their work,” said Ivanov.
Komus began working with entrepreneur-drivers who use their own cars two years ago. Ivanov said that the scheme has proved effective.
“I think this scheme will become popular. There is no other way to put transportation expenses under control. Creating a fleet of vehicles for the company requires huge expenses,” he said.
Potapenko of NTC estimated that companies could save 20 percent of their transportation expenses by eliminating their transportation divisions and switching to individual entrepreneurs or transportation agents.
“The effect of such a move depends on how the transportation process was previously organized in a particular company. Some companies could save up to 30-40 percent. Others might not gain any financial benefit, but they could improve the quality of transportation,” Potapenko said.
Potapenko explained that individual entrepreneurs are taxed more favorably than large auto-parks. They have smaller overhead costs due to cheaper accounting and to the absence of both special parking space and the need for a large service team. All these factors enable them to charge lower rates.
“Individual entrepreneurs spend fuel more economically and operate cars more cautiously than drivers employed by large auto-parks,” Potapenko said.
Other logistics experts agreed. “Entrepreneur-drivers provide a higher quality of transportation. They generally use their own cars, they care about their work and they are afraid of losing their job,” said Yury Legkov, deputy head of the transportation department at FAZER.
“It’s hard to fire drivers who are employed on a contract. The Labor Code requires serious reasons for this,” he explained. 
For some time, FAZER employed the transportation services of Khlebtrans, a large transportation company. Legkov estimates that in switching to transportation agents, FAZER saved 10-15 percent of its logistics expenses.
“Expenses vary depending on who owns the vehicles that are used for transportation. A large fleet of vehicles needs space for parking and maintenance personnel. Transportation agents use drivers who have their own cars, and this decreases expenses to a minimum,” said Legkov.
FAZER currently both operates its own auto-park and uses entrepreneur-drivers. Legkov said such a combination protects the company from negative market changes.
As mediators between a large number of companies and entrepreneur-drivers, transportation agents can easily adjust to changes in the client’s requirements. They can quickly respond to an increase in demand for transportation services, while at the same time, an unexpected decrease in demand would not pose any problem either.
The disadvantage of using the services of individual entrepreneurs compared to large auto-parks is that according to the law, companies cannot get back the VAT as they are entitled to when dealing with other large companies.  The other benefits of working with smaller companies, however, outweigh this disadvantage, according to Potapenko.
“Working with entrepreneur-drivers makes more flexibility, reliability and a higher quality of services possible,” said Potapenko.

TITLE: Advice From the Experts: Warehouse Construction
AUTHOR: By Karina Chichkanova and Irina Tio
TEXT: What do investors need to know about warehouse complexes?
The past few years have seen a boom in the construction of warehouse complexes in St. Petersburg. Two main logistics centers, equipped with the last word in technology, have appeared in Shushary and Yanino. Most centers are financed and/or managed by foreign operators. What then are the most crucial areas for investors or developers to be aware of? 
<br />
Can it be built or not?
According to current law, only properties that by their designation comply with the established zoning and permitted use of the territory may be built on a land plot. What problems might arise in connection with this?
The Land Code (art. 85(7)) and the Town-Planning Code (art. 35(7)) state that warehouses (public warehouse properties) may be situated in industrial zones. The locating of warehouses in other territorial zones is not referred to in any other place in these two codes.
However, there is a bright side. The law also stipulates that the permitted uses of a land plot may be of various types, among them “main,” in which the users of the land plot choose from among many permitted types of properties, without having to obtain additional permits and approvals, and “conditionally permitted,” which requires that permission be obtained from the authorized agencies. Also, any restrictions should be taken into account with regard to the percentage of an area of a block or zoning area that may be used for properties that fall within the conditionally permitted use. For example, we have seen cases in which properties which fall within a conditionally permitted type of use was only permitted for a maximum of 20 percent of the total area. The size of the area on which conditionally permitted properties are allowed to be built is stated in the permit for conditionally-permitted use. 
Currently under development, however, are the Rules for Land Use and Development in St. Petersburg (“Rules”). The rules are intended to regulate questions of permitted use of land, including issues dealing with what types of main or conditionally-permitted uses are possible in various territorial zones. In accordance with the draft rules, which have been made publicly available, the situating of warehouse properties is also possible in public and business zones (which in the rules are known as zones of multifunctional public and business development) as a conditionally permitted type of use. In order for investors (developers) to obtain the appropriate permission, they must apply for a permit to conduct warehousing activities in a public and business zone well in advance (i.e. before the design documentation is drawn up). However, as of yet there is no such permit issued in St. Petersburg due to the lack of a clear procedure for obtaining it (although the first step has been taken and a Commission on Land Use and Development has been created, whose task it is, among other things, to issue recommendations to the St. Petersburg authorities on providing permits for conditionally permitted types of use). It is expected that after the enactment of the Rules (which St. Petersburg plans to adopt this fall) the procedure for this will have been established, and in particular the issue of whether separate public hearings are necessary in order to obtain the permit should be ironed out as well.

What should be built? 
Russian legislation does not contain any definitions for the terms “warehouse,” “warehouse complexes,” or “warehouse activities.” Modern warehouse complexes, besides the “classic” storage of goods, also provide the opportunity to have commercial premises (for direct warehouse sales or wholesale) and office premises located there as well. In connection with this, a problem arises when determining the types of use permitted for properties built as “warehouse complexes,” including from the standpoint of how such activity corresponds to the territorial zoning of the land plot.
In certain situations, this issue can be resolved by having such “associated” functions relegated to an auxiliary permitted use, i.e., permitted as an addition the main or conditionally-permitted use. (The list of types of auxiliary permitted uses for each type of zone will also be included in the rules — for example, commercial activity is an auxiliary permitted use for an industrial zone). Furthermore, in accordance with the Rules, the area of the territory occupied by properties having an auxiliary permitted use cannot exceed 25 percent of the total area of the land plot, and the total area of such buildings cannot exceed 50 percent of the total area of all buildings on the land plot. 
In other situations (if a permit for conditionally permitted types of activities has been obtained) it may make sense to build a “multifunctional commercial warehouse complex.” 
These and other legal nuances require careful and detailed attention and correct structuring at the earliest stages of development of warehouse and other logistics complexes. The initial strategy chosen should determine how the information is reflected in the design and authorizing documentation. 

Karina Chichkanova is Partner and Co-Head of the Real Estate Group at Salans law firm.
Irina Tio is an Associate at Salans.

TITLE: Western Demands on Local Logistics Firms
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: About 80 percent of all goods in Russia are imported, mostly from Western countries. There are, however, some difficulties associated with the requirements of foreign companies and some peculiarities with working with foreign suppliers. Almost all global trading standards are accepted without Russian adjustments — a fact that Russian logistics operators have to remember when catering to foreign requirements.
“Among the obligatory demands of foreign suppliers is a certificate of inclusion on the list of customs brokers and insurers,” said Yekaterina Yefremova, chief director of GreenWay–Neva.
But these demands are almost the same as Russian ones. 
“Nowadays, large Russian companies are the market leaders, and they can create their own conditions. All the demands are more severe,” said Ivan Kozlov, advertising and PR manager at Relogix.
“Western companies generally prefer to procure a whole set of logistics services, including storage, transport and customs help — everything through one company,” said Sergei Vereshagin, commercial director at Evrasia Logistics.
“The important thing is the ability to integrate the IT system of the logistics provider into the IT system of the supplier in order to work without interruptions and mistakes,” he said.
All companies, first of all, are concerned with their reputation, so they have strict demands in choosing the logistics operator. If a Western company feels that operations are performed in semi-legal ways, it will be more likely to turn down a bargain. 
“Transparency in all dealings is a standard demand among Western companies,” said Yefremova.
Suppliers want everything to be legal, especially in the transport of cargo. For example, foreigners are unlikely to accept the common Russian situation in which the driver pays the traffic police in order to pass through a police checkpoint with dangerous goods. 
“The proper terms of delivery are very important for Western companies, as it costs them money. Nowadays, most large companies, especially supermarkets, have all their goods out on the shop floor. They do not have a depot, as it is expensive to keep storage space. So, if the logistics operator delays delivery for any reason, the shelves in the shop will be empty,” said Kozlov.
“This is why such delays are severely punished.”
Western companies also demand that all their rules concerning storage are adhered to. Goods should be stored in a particular way according to their structure, weight and size. There are no general standards, but every company has its own requirements.
Russian packaging standards are even stricter than those of foreign companies however, and logistics operators who transport goods from Europe often need to obtain additional certification to conform to Russian standards. 
“A depot and vehicle fleet belonging to the logistics operator are always welcomed by foreigners,” said Yefremova.
There are also specific demands that are sometimes difficult to explain. Some of them revolve around safety. For example, if a vehicle is transferring chemical products, the driver must wear a long-sleeved shirt and trousers. But it is very difficult to explain such demands to Russian drivers, especially when the weather is hot. If they do not adhere to such rules, however, the lorry will not be loaded with goods. 
One of the so-called “psychological” demands among Western suppliers is that the logistics operator have a European office. This is more convenient for the supplier, and ensures there are no language problems that put off many companies.
“There are some individual requirements — they depend on the company and the goods. But Russian logistics operators should just accept them. Whether or not one understands the demands, however, the work has to be done,” said Kozlov.

TITLE: Major Projects Boost Local Warehouse Scene
AUTHOR: By Yevgeny Rozhkov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Rental rates for quality warehouse facilities in St. Petersburg remain unaffected by the global credit crunch, according to recent market research conducted by Colliers International, the international real estate consultancy. The triple net rental rates for Class A and B facilities in Russia’s second city are estimated at approximately $120–$140 per square meter per year and $110–$120 per square meter per year, respectively. 
In the first half of 2008, more than 480,000 square meters of high-quality warehouse facilities were in operation, giving an increase to the total area of 27 percent or about 142,000 square meters (including logistics complexes and commercial warehouses, and excluding private facilities and freezers). In the second half of 2008, more than 600,000 square meters of new facilities are due to open, all of which have been announced as A grade. 
Large-scale projects are being realized in Shushary, Utkina Zavod and Gorelovo. Most of the warehouse projects have been announced in the vicinity of the Moskovskoye Highway area in the south of the city, where increased competition may lead developers to opt not to build standard warehouse box constructions, instead creating developed concepts for future warehouse requirements, taking into consideration the interests of small tenants. Currently, the minimum area for lease is 3,000 square meters (with only a few exceptions) offered at rates that are relatively high for small and medium-sized businesses.
However, the liquidity crisis on the world financial markets has affected all kinds of real estate, including warehouse development. According to Russia’s Ministry for Economic Development, inflation during the first half of 2008 amounted to nine percent, and the average construction cost for one square meter of high-quality warehouse facilities reached $1,100 — 24 percent higher than last year’s mid-market cost.
“Many domestic companies have faced financial constraints: there is a shortage of liquid cash flow on the Russian market. As a result, many Russian market players are in need of extra financing,” said Maxim Shakirov, regional director of the warehouse and industrial real estate department at Colliers International. 
The commissioning of four large-scale warehouse projects – the Evrosib Terminal project, Logopark Neva (2nd phase), Gorigo (1st phase) and the Kolpino industrial park, which planned to start operating in the 1st half of 2008 – was rescheduled for the beginning of 2009. 
Operating warehouses are 97 percent leased, whereas warehouse complexes scheduled to open by the end of 2008 are 40 percent pre-leased. Units from 500 square meters up to 20,000 square meters are still attractive, although the demand often depends on the core activity of any potential tenant. 
The burgeoning cluster of automobile plants near St. Petersburg’s suburb of Shushary is contributing to the concentration of auxiliary production and services around automobile factories. At present the warehouse market niche has not solidified in St. Petersburg. 
“If previously it was possible to say that growing demand for high-quality warehouse facilities could be explained, primarily, by the entrance of foreign retail companies and logistics operators onto the St. Petersburg market and by increasing freight traffic through the city, then now we should take into consideration the growing influence of light industry on the pattern of demand,” said Shakirov. He said that light industrial production companies generally demand warehouse units from 3,000 square meters up to 15,000.
However, most warehouse complexes are situated on land plots that are not suitable for industrial use due to poor electricity, engineering and transport infrastructure, other real estate experts say.
Colliers International analysts suggest that the market is stagnant now because of the virtually simultaneous launch of several large-scale projects and the expectation among potential tenants of a decrease in rental rates. Developers, in turn, are revising the need for and possibility of construction of future planned phases due to a considerable rise in construction costs and a shortage of financing.
London’s Heathrow warehouse sub-market currently tops the world price rankings with average rates of $269.2 per square meter per year.  Ranked 12th in Europe and 20th in the world, St. Petersburg has average warehouse rental rates amounting to about $135 per square meter per year, which is higher than rates on the real estate markets of North America, Australia, Holland, France and Germany.

TITLE: Putin’s Constitutional Junta
AUTHOR: By Dmitry Oreshkin
TEXT: What is most interesting about the term increases for State Duma deputies to five years and for the president to six years is the reaction to these changes. We heard hearty, prolonged applause by the Kremlin lackeys in the audience when President Dmitry Medvedev made his announcement in the state-of-the-nation address on Nov. 5. On the other hand, ordinary Russians are strangely silent on the issue.
The game that the Kremlin is playing with the people has taken a new turn. At some point Medvedev and Prime Minister Vladimir Putin will have to show their cards. Although most people probably have a good idea of what might be up the leaders’ sleeves, they are not ready to believe it completely. 
Why was this plan thrown together so hastily? After all, there are more than three years until the next elections, which is ample time for a thorough public discussion and a referendum on such an important matter involving a change to the Constitution. Moreover, given the government’s control over the media, getting a mandate from the people on Duma and presidential term extensions would not have been difficult.
There are two reasons why Putin rushed to change the Constitution only six months after stepping down as president. First, he sees the political and economic dangers of falling oil prices. The house of cards built on an eight-year oil boom is crumbling. Second, Putin understands that as the crisis develops, there could easily be a fierce battle among opportunistic politicians and businessmen to seize troubled assets.
Putin must act now before it is too late. In only six months a rival group could be formed as an alternative to his siloviki to take advantage of the public discontent and power vacuum caused by the crisis. If this group becomes powerful enough, it could even rally around Medvedev and convince him to dismiss the prime minister based on the government’s failures in handling the crisis. 
This threat may seem farfetched, but Putin cannot completely dismiss it. When oil was more than $100 per barrel, the Medvedev-Putin duo could get away with its ersatz — or “sovereign” — democracy. But during a financial crisis, it will be much more difficult to keep pulling the wool over the people’s eyes. 
Putin believes that during troubled times, the government and the Kremlin must be in the hands of a benign autocrat who is totally immune from critics and any opposition. Amid a state of emergency, the nation’s leader needs to have a full mandate for six — or, even better, 12 — years.
This looks as if Putin is carrying out a constitutional junta. The only difference between his junta and the one in Latin America is that Putin is taking pre-emptive steps now to avoid a military coup later. This way he can maintain a semblance of democracy by packaging the coup in constitutional trappings. 
Putin loyalists control the Central Election Commission, the major television stations, the main political parties, the Duma, the Federation Council, the military, the police and the secret services. And the president, of course, is also Putin’s man.
The only things in Russia that are not under Putin’s control are the dollar, the price of oil, Islamic extremists in the Caucasus and the financial crisis. These are all crucial factors that will determine the country’s political future. As the economy worsens, Putin will receive less support from the upper level of bureaucracy, which up until now has received a generous windfall from high oil prices. As this source of income dries up, so will the elite’s unconditional support for Putin. The elite may continue to support Putin on the surface but, at the same time, they will be calculating their personal financial losses as the crisis unfolds. They will also be asking themselves the question: “Perhaps we need a change from the current Chekist leadership?”
Equally important is the public’s silence. Despite first indicators that the global crisis is hitting Russia - including a drop in the ruble, layoffs, people rushing to take money out of their savings accounts and a general unease about the state of the economy - the government’s popularity rating has dropped a mere 5 percent. It has now returned to the standard high level before Russia’s victory in the five-day Georgian war. But this could easily change as the crisis intensifies.
Why the urgent need to extend the presidential term to six years? Is it possible that the liberal opposition is right in their prediction that Putin will become president again in early 2009? Why are prices rising if demand is falling? Why is the unemployment rate rising? Why is the value of the dollar rising if the epicenter of the global financial tsunami is located in the United States?
There is still a lot of conjecture surrounding the term-extension surprise that Medvedev pulled out of his hat 12 days ago during his address to the nation. But, sooner or later, Putin’s cards will be revealed and we will finally see the real “Putin Plan.” 

Dmitry Oreshkin is an independent Moscow-based political analyst.

TITLE: Policing Immigrant Workers
AUTHOR: By Alexei Bayer
TEXT: Two years ago I wrote a column about perverse relations between Russia’s immigrant communities and the police. At least 5 million illegal migrants, mostly from other former Soviet republics, work at construction sites, do low-paid manual labor or engage in legal businesses and commerce as well as a variety of shadowy activities. 
Too many of Russia’s police officers are corrupt, venal and racist. In addition to illegal immigrants, non-Slavic immigrants - and even Russian citizens of different ethnicities - are in danger of being stopped, harassed and shaken down for bribes by uniformed officers.
Small wonder that when immigrants fall victim to crime, the last place they tend to turn to is the local police station. Instead, they buy protection from tough guys in their own communities. Even when the authorities genuinely attempt to fight crime, immigrants don’t make good allies. They rarely volunteer information about unlawful activities, nor are they eager to testify against their own.
Ethnic mafias plague most immigrant communities, benefitting from isolation, distrust and fear. Disdain on the part of the indigenous population contributes to the problem. In the United States, which has been dealing with large-scale immigration for 150 years, the police have learned from their mistakes. Needless to say, even at its worst, the law enforcement establishment in the United States never even came close to the level of corruption found in modern Russia. But the U.S.’s harsh policing methods usually proved counterproductive. Successive waves of immigrants, ranging from the Irish, Jews and Italians in the 19th century to Hispanics more recently, felt hostility and fear toward the police, greatly complicating the task of fighting crime. The same remains true of many black communities.
But, by the time Russian Jews began arriving to the United States in the mid-1970s, the attitudes among police officials were already changing. It took only a couple of years for the precinct in charge of the Brighton Beach neighborhood, where many Russian emigres settled, to get its first Russian-speaking cop. The rise of the “Russian mafia” was not prevented, and criminal gangs still took root in the community. But greater openness on the part of the police has made fighting various traditional crimes, such as protection rackets and extortion, considerably easier.
In Russia, community outreach as practiced by the New York City Police Department seems inconceivable in general, but especially in relation to the immigrant community. Even during the time of prosperity, dreadful policing methods and social attitudes were tailor-made for the spread of ethnic mafias. The current economic crisis could unleash a crime wave and leave in its wake an entrenched infrastructure of ethnic organized crime.
Russia’s unemployment rate remains low and labor shortages endured until very recently. But the labor market is skewed, largely thanks to a vast army of government bureaucrats and the legacy of the planned economy upon which the market system has been grafted. The labor force is unwieldy, immobile and unproductive. Over the past decade, the influx of guest workers - both legal and illegal - helped smooth the cracks in the economic system. This workforce, by contrast, is highly flexible, inexpensive and efficient. Unfortunately, it is also the one that will suffer most in any economic downturn. 
There have already been media reports about the loss of jobs in Russia’s construction industry, with thousands of immigrant workers being thrown out into the street. With so many of them coming from desperately poor and war-ravaged countries, they have no place to go. Given the corruption and inefficiency of the country’s bureaucracy, deporting them will be difficult. But in the absence of legal jobs, it is easy to guess the kinds of activities into which they will be drawn.

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

TITLE: U.S. Firefighters Make Progress
AUTHOR: By Justin Pritchard
PUBLISHER: The Associated Press
TEXT: DIAMOND BAR, California — Firefighters aided by Mother Nature continued to make gains early Monday on three raging wildfires that reduced hundreds of homes to ash and cinders and forced thousands of residents to flee in Southern California.
Ferocious Santa Ana winds finally abated after fanning the blazes that have destroyed more than 800 houses, mobile homes and apartments since Thursday night from Santa Barbara to Los Angeles and counties to the east. In all, the fires burned more than 35,000 acres or 55 square miles.
In Orange and Riverside counties, the fires chewed through nearly 24,000 acres and were pushing toward Diamond Bar in Los Angeles county. A major aerial attack on Sunday raised containment to 19 percent.
Meanwhile, a 15 square-mile fire that hit hard in the Sylmar area of northern Los Angeles on Saturday had moved into the Placerita Canyon area of the rugged San Gabriel Mountains and was burning vigorously, but well outside the city. It was 40 percent contained.
The Santa Barbara-area fire that swept through Montecito has burned 3 square miles and was 80 percent contained.
Far away from the flames, the gains may not have been readily apparent. The smell of smoke pervaded metropolitan Los Angeles, downtown skyscrapers were silhouettes in an opaque sky and concerns about air quality kept many people indoors. Organizers on Sunday canceled a marathon in suburban Pasadena where 8,000 runners had planned to participate.
Officials warned of another bad air day on Monday and classes were canceled at dozens of schools near the fire zones in Orange County.
Many evacuees began the agonizing process of making their way back to their destroyed homes.
Starting Monday morning anxious residents of the Oakridge Mobile Home Park in Sylmar, where 484 homes were destroyed by fire early Saturday, will be allowed to return to inspect their properties. Firefighters were able to save about 120 homes in the community, but many were badly damaged.
Cadaver dogs had been searching the burned units to determine whether anybody perished during the fast-moving fire, but so far no bodies have been found, police said.
Tracy Burns knew her Sylmar home was gone but still wanted to get into the gated community to see what remained.
“Even those of us who know there’s nothing left, we want to go in and kick over the rubble and see if we can find something, anything,” Burns said.
Tears welled in the eyes of her partner, Wendy Dannenberg, as she echoed: “If I can find one broken piece of one dish — anything, anything at all.”

TITLE: Serbia Boosted By Djokovic’s Masters Win
PUBLISHER: The Associated Press
TEXT: HANGHAI, China — Novak Djokovic is trying his best to complete Serbia’s ascension to the top of the tennis world.
Jelena Jankovic, the U.S. Open runner-up, already is No. 1 on the women’s side. Compatriot Ana Ivanovic, the French Open winner, held the spot earlier in the year before slipping to No. 5.
Nenad Zimonjic became the top doubles player when he and Canada’s Daniel Nestor teamed to beat Bob and Mike Bryan for the Masters Cup doubles title Sunday and end the American twins’ four-year run atop the year-end rankings.

And Djokovic?
His 6-1, 7-5 victory over Nikolay Davydenko in the Masters Cup singles final gave him 150 ranking points, pulling him within 10 of No. 2 Roger Federer.
“There’s been so much going on for Serbian tennis lately that it’s just incredible to describe how could we do it in such a small period of the time,” Djokovic said after dedicating his title to his family, support team and fans back in Serbia.
It’s particularly surprising for a country that emerged from a devastating civil war not long ago.
“Probably the fact that we didn’t have the best possible conditions gave us more motivation to succeed,” Djokovic said.
Now, tennis is a growth injury in a country with a population of less than 7.5 million. Courts are being hastily constructed and Djokovic confirmed Sunday that his family landed the tournament once known as the Dutch Open. It will be held in May.
“I think we deserved it,” Djokovic said. “We were fighting for it. It’s not easy to get the tournament these days. The schedule is really packed. There (are) a lot of big cities waiting upon an ATP Tour tournament or WTA tournament. So we are very fortunate.
“I think we used the momentum that Serbia has in this moment — that Serbia is one of the most successful countries in tennis.”
He called it a great opportunity to promote tennis in Serbia and help improve the country’s image — an effort he is already trying to lead.
“Being a professional tennis player and being successful in it makes you a good ambassador for your country,” Djokovic said.
Performances like the one he put in Sunday certainly help.
Djokovic was sharp from the start. He won the first five games, allowing Davydenko only six points. 
The fans started off clearly favoring the Serb, then started cheering for Davydenko in hopes of prolonging the match.
But they were all behind Djokovic when he finished. He tossed just about everything in reach—two rackets, wristbands and his sweat-soaked shirt—into the crowd at Qi Zhong stadium.
Then he headed to the players box, where his coach, family and a former Miss Universe were standing and cheering. A joyous group hug ensued and they bounced up and down together, reveling in the Serb’s first title in six months.
But when Djokovic walked away, he realized he had cut his left hand somewhere in the joyous melee. It wouldn’t have been good form to drip blood on his new trophy, so he had to ask the trainer to apply a bandage before the awards ceremony.
“You don’t feel the pain in the moments of happiness,” he said.
The victory provided Djokovic with perfect bookends to his year. He won the Australian Open in January for his first Grand Slam and ended with what he called one of his best titles.
“I would put it in the same league as a Grand Slam because the best eight players in the world are participating here,” he said. “It’s a huge achievement for me.”
The $625,000 prize and a Mercedes SUV were nice, too. He got into the car, which was brought on court, and honked the horn.
And that cut? Not serious, and he has plenty of time to heal before starting 2009—and to think about how close he is to breaking the stranglehold that Rafael Nadal and Federer have had on the top two spots in the rankings since mid-2005.

Djokovic Thinks He has time
“Certainly, I believe that I have quality to reach the top spot in the upcoming year or, you know, whatever, next couple of years, 10 years,” he said. “That is my lifetime goal that I’ve been always trying to achieve.
“But I learned a lesson. If I pay too much attention on rankings, it doesn’t go the right way. So I just want to improve my game.”

TITLE: Haye Keen To Fight A Klitschko Brother
AUTHOR: By Robert Millward
PUBLISHER: The Associated Press
TEXT: LONDON — After winning his first heavyweight fight, David Haye looked WBC champion Vitaly Klitschko in the eye—or rather, chin—and said he’s ready to challenge him for the title.
The 6-foot-3 Haye stood next to the 6-7 Klitschko after his five-round TKO over Monte Barrett on Saturday night. Haye said his five-knockdown performance should convince skeptics that he is ready to compete for the belt after moving up from cruiserweight.
“I will end up victorious. I’m positive about that,” Haye said in a post-fight TV interview. “I don’t mind if it is (against) Wladimir or Vitaly. He and his brother are the best in the world. That’s why I want to fight these guys.”
Klitschko was happy to go along.
“I was very impressed with the fight,” Klitschko said. “Next year, it will be a great fight in Britain or Germany, in a big stadium.”
Klitschko noted that he and Wladimir are scheduled to defend their titles against other fighters. So Haye will have to wait and take on another heavyweight.
“I’m looking forward to going out and fighting for the heavyweight championship of the world,” Haye said later. “If that’s next, then that’s what I’ll have. If not, if it is delayed for a while for some reason, then I’ll get another fight in.”
With a ringside seat, Klitschko undoubtedly noticed how easily Barrett hit Haye and lured him into a toe-to-toe punching contest.
Although the fight ended with one  minute, 20 seconds left in the fifth round, both fighters regularly hit the canvas. Barrett went down before Haye entered the ring by mistiming his leap over the top rope, clipping it with his leg and landing on knees.
Barrett went down five more times under the weight of Haye’s punches, but knocked the British fighter down twice. Although the referee ruled they were either slips or illegal pushes, even Haye admitted one was a knockdown.
While the American considers whether to carry on after failing against Wladimir Klitschko, Hasim Rahman, Nikolai Valuev and Haye, the British fighter who unified the cruiserweight world titles by knocking out Enzo Maccarinelli in March sees a clear route to heavyweight glory.
“I’m the number one cruiserweight in the world. Now I want to clean up the heavyweight division,” he said. “To do that I need to get past the Klitschko brothers — hopefully beat one of the Klitschko brothers and then the other. Beat the two Klitschkos next year, that’s my plan.”
Haye, at 215 pounds, said he’s not concerned he may not be heavy enough to take on one of the Klitschkos, who regularly weigh in at 250 pounds.
“I’m not going to fall into the trap of bulking up for the sake of it,” he said. “It’s all about speed. I’m not going to have a wrestling match and try and lift him up.
“I know he’s a giant,” he said of Vitaly Klitschko. “I think I can slay the giant.”

TITLE: Afghan Taliban Rejects Safety Vow From Karzai
AUTHOR: By Sayed Salahuddin
PUBLISHER: Reuters
TEXT: KABUL — A Taliban militant leader rejected Monday an offer from Afghan President Hamid Karzai of safe passage for insurgent leaders who wanted to talk peace.
Karzai, back from a trip to Britain and the United States, said Sunday he would guarantee the safety of Taliban leader Mullah Mohammad Omar if he was prepared to negotiate.
With the Taliban insurgency intensifying seven years after the hardline Islamists were forced from power, the possibility of talks with more moderate Taliban leaders is increasingly being considered, both in Afghanistan and among its allies.
The Afghan government says it is willing to talk to anyone who recognizes the constitution.
The Taliban has ruled out any talks as long as foreign troops remain in Afghanistan. Karzai said Sunday that condition was unacceptable.
Mullah Brother, deputy leader of the Taliban, rejected Karzai’s offer of safe passage and again said foreign troops must leave before negotiations could start.
“As long as foreign occupiers remain in Afghanistan, we aren’t ready for talks because they hold the power and talks won’t bear fruit ... The problems in Afghanistan are because of them,” Brother said.
“We are safe in Afghanistan and we have no need for Hamid Karzai’s offer of safety,” he told Reuters by satellite telephone from an undisclosed location, adding that the Taliban jihad, or holy war, would go on.
Violence in Afghanistan has surged over the past two years, raising doubts about prospects for the country and Western efforts to establish peace and build a stable state.
Some 70,000 foreign troops, around half of them American, are struggling against the Taliban, whose influence and attacks are spreading in the south, east and west.
The prospect of a stalemate has focused attention on the possibility of talks. Negotiations with insurgents in Iraq are seen as having contributed to an improvement in security there.
U.S. Defense Secretary Robert Gates said last month the United States would be prepared to reconcile with the Taliban if the Afghan government pursued talks but would not consider negotiations with al Qaeda.
U.S. President-elect Barack Obama has also suggested he is open to talks with more moderate Taliban leaders to explore whether the Iraq strategy would work in Afghanistan.
Analysts say the government and its Western allies hope to draw moderate Taliban, or perhaps opportunistic commanders, into talks to isolate hardliners close to al Qaeda.
A tentative first step toward talks was taken in September when a group of pro-government Afghan officials and former Taliban officials met in Saudi Arabia.
But the Taliban derided those talks and repeated demands for foreign troops to get out.

TITLE: Collins English Dictionary Accepts New Word, ‘Meh,’ From Simpsons
PUBLISHER: Agence France Presse
TEXT: LONDON — “Meh,” a word which indicates a lack of interest or enthusiasm, became the latest addition to the Collins English Dictionary on Monday.
The word, which beat hundreds of other suggestions from members of the public, will feature in the 30th anniversary edition of the dictionary, which is to be published next year.
Though the word apparently originated in North America, Collins said it was now widely used on the Internet, and is increasingly used in British spoken English.
The dictionary entry for “meh” will say it can be used as an interjection to indicate indifference or boredom, as an adjective to describe something as boring or mediocre, or to show an individual is apathetic or unimpressed.
The word was popularised by the US comedy animation series “The Simpsons,” where characters Bart and Lisa use it to express indifference when their father Homer suggests a day trip.
It was submitted by Erin Whyte from Nottingham. A panel of Collins language experts singled it out from the hundreds of other submissions because of its frequency of use in modern English.
“This is a new interjection from the US that seems to have inveigled its way into common speech over here,” said Cormac McKeown, head of content at Collins Dictionaries.
“It shows people are increasingly writing in a register somewhere in between spoken and written English.”
Other words submitted to Collins’s campaign — which was launched in June and called on members of the public to suggest words they used in everyday English — were jargonaut (a fan of jargon); frenemy (an enemy disguised as a friend) and huggles (a hybrid of hugs and snuggles).

TITLE: Johnson Wins Record-Tying Third NASCAR Cup Title
PUBLISHER: The Associated Press
TEXT: HOMESTEAD, Florida — Nothing could stop Jimmie Johnson’s drive into the NASCAR record books. Not even a final, furious push by Carl Edwards.
Edwards led a race-high 157 laps and ran out of gas as he crossed the finish line, but still won Sunday’s season-ending race at Homestead-Miami Speedway. Still, his series-high ninth win of the year wasn’t enough to wrest away the Sprint Cup title.
Johnson locked up his third consecutive championship with a solid 15th-place run, beating Edwards by 69 points to join Cale Yarborough as the only drivers in NASCAR history to win three straight titles.
“It’s the ultimate reward. We worked so hard to put ourselves in this position,” Johnson said. “It’s just total teamwork and dedication. There were times this year when things were dark, but we buckled down and got to work and that’s what it was really all about.”
Yarborough won his three titles 30 years ago, under a different scoring system and in a very different NASCAR. He accomplished his feat when drivers scraped together the cash they needed to race. And the champion was the guy on top at the end of a long grueling season.
Johnson’s titles have been won in the glitzy new Chase to the championship format, where the best 12 drivers compete over a 10-race sprint to the title.
Johnson and his Hendrick Motorsports team have mastered the system, proving themselves unbeatable in their pursuit of Yarborough’s mark. They’ve won their titles with consistency — he finished outside the top 10 just twice in this Chase — and by winning eight of the last 30 Chase races.
They’ve also gotten very rich along the way: Johnson has won more than $2 million in the 10 Chase races this year. Yarborough earned a combined $1.63 million in all three of his championship seasons.
Although the industry was keenly aware of its front row seat to history, the celebration seemed subdued because of the economic crisis that’s finally found its way to NASCAR. The Big Three automakers are crumbling, car owners are struggling to find sponsorship, and widespread layoffs are expected Monday, when teams could combine to lay off up to 1,000 employees.
Just this weekend, NASCAR said it would suspend all testing next year to help teams save millions in their 2009 budgets.
Had the crisis hit earlier, and the testing ban was in place this season, Johnson very well might not have won the title. He struggled at the start of the year to adapt to the full-time use of NASCAR’s current car. So he and crew chief Chad Knaus embarked on an aggressive testing schedule that helped them catch the competition by late summer.
By the time the Chase began in September, Johnson drove right past them.
“It’s what we work for; it’s what we do,” said Knaus, the first crew chief to win three consecutive titles. “We don’t want to do anything but race and win races and win championships.”
When Edwards won back-to-back races in Atlanta and Texas to take a bite out of Johnson’s points lead, Johnson rebounded with a win in Phoenix last week to make Sunday’s drive a mere formality. He needed only to finish 36th or better to win the title, but got off to a rocky start when he qualified 30th.
But Johnson moved to the top of the speed charts in Saturday’s practices, then wasted no time driving through the field at the start of the race. He picked up at least one position a lap at the start and was running inside the top-10 as the race neared its conclusion.
He stopped for gas and tires with 13 laps to go, leading to his 15th-place finish.
Edwards pushed it to the limit, knowing he had to win the race, lead the most laps and prayed for Johnson to have some trouble to win his first title. But he was a gracious runner-up, and after his trademark celebratory backflip, he walked over to Johnson’s passing car on the track to congratulate him.
“At least we can lay our heads down tonight and know we won some races and just got beaten by a true champion,” Edwards said.
It was the second straight night Edwards won the race, yet still came up empty in the championship bid. He won Saturday night’s Nationwide Series event, but came up 21 points short of champion Clint Bowyer.
Edwards’ win Sunday chopped 72 points off of Johnson’s margin and he was optimistic as he crossed the finish line, radioing his Roush Fenway Racing team “we’ll definitely get them next year.”
Kevin Harvick finished second and was followed by Jamie McMurray and Jeff Gordon, who finished the year winless for the first time since his 1993 rookie season. But the four-time series champion didn’t let his own struggles dampen his Hendrick teammate’s celebration, as Gordon walked to the victory stage to offer his congratulations.

TITLE: Japanese Firm Recalls 8 Mln Bottles of Water
PUBLISHER: Reuters
TEXT: TOKYO — A Japanese firm recalled eight million bottles of U.S. mineral water on Monday after consumers complained it smelled like insecticide and medicine.
The case is the latest food scare in Japan, where consumer confidence has been shaken after several people complained of becoming ill from eating Chinese-made dumplings containing insecticide and instant noodles that had a chemical used in mothballs.
Otsuka Beverage Co. Ltd, which is unlisted, said it is recalling the Crystal Geyser mineral water after receiving 75 complaints in October about its smell.
Spokesman Kazuhiko Horiuchi said the firm did not find any abnormalities in the water, but the plastic bottles may have absorbed smells they were exposed to during storage.
He said no one had been made ill and the company had not seen any health effects.
The water’s manufacturer, CG Roxane LLC, gives a contact address in San Francisco on its website. It also lists locations of springs across the United States where the water is obtained and says the water can be kept for several years but is best stored in an odor-free environment.
Japan has been hit by a string of food safety scandals in recent years, after traditional sweets and cookies were found to have had false labels and tainted food, such as frozen dumplings and beans, were found to be imported from China.

TITLE: White House Refines Stance on Auto Industry
AUTHOR: By Stephen Ohlemacher
PUBLISHER: The Associated Press
TEXT: WASHINGTON — The Bush White House stressed Monday that it supports help for the struggling auto industry, but believes it should not be taken from the $700 billion financial system rescue program.
As lawmakers were returning to a lame duck session to focus on the troubled industry, President Bush’s chief spokeswoman issued a statement saying the administration “does not want U.S. automakers to fail.” Press secretary Dana Perino complained that reporting on the White House’s stance on this issue has involved “attempts to shorthand the administration’s position.”
Perino’s early morning statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. She said the $25 billion that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved to develop fuel-efficient vehicles.
Democrats want to use part of the $700 billion Wall Street bailout for emergency loans to help prop up the Big Three carmakers. General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking an infusion of $25 billion, a figure that several Senate Democrats embraced Sunday.
Senate Democrats plan to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits. A vote was expected as early as Wednesday.
“There’s a high degree of urgency” for federal action if GM is going to stave off a financial crisis, Rick Wagoner, GM chairman and chief executive, said Sunday in a joint appearance with United Auto Workers President Ron Gettelfinger on WDIV-TV in Detroit.
“It’s really time to move on this,” Wagoner said.
In her statement Monday, Perino said: “The auto industry is an important part of our manufacturing base. And we want the industry to succeed and compete in the global economy.” But she also said that media reports have erroneously depicted the administration as taking too harsh a stand on financial relief.
Her statement Monday seemed aimed more at elaborating on the administration’s position than revising or tweaking it.
“We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers — from the $25 billion Department of Energy loan program,” Perino said.
She said the $700 billion rescue program “was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector.”
President-elect Barack Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan - not simply as a blank check.
“For the auto industry to completely collapse would be a disaster in this kind of environment,” Obama said in a “60 Minutes” interview aired Sunday night on CBS. “So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance, but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan — what does a sustainable U.S. auto industry look like?”
House Speaker Nancy Pelosi, D-Calif., has embraced an auto bailout, though she hasn’t set a price tag. But passage is less certain in the Senate, where majority Democrats will need at least a dozen GOP votes to prevent opponents from blocking their measure.
On Sunday top Republican senators said using any of the Wall Street bailout money to help carmakers would be a mistake. 
Senator Richard Shelby of Alabama called the U.S. auto industry a “dinosaur” whose demise would simply be stalled by a bailout.

TITLE: Fighting 
In Congo Despite Promises
AUTHOR: By Todd Pitman
PUBLISHER: The Associated Press
TEXT: RWINDI, Congo — Congo’s army clashed with rebels in some of the worst fighting in a week despite the rebel leader’s promise to support a cease-fire, the United Nations and witnesses said Monday.
The two sides battled Sunday night in Rwindi, about 75 miles (125 kilometers) north of the eastern provincial capital of Goma. About 150 people took refuge outside a UN peacekeeping base here, huddling beside a white shipping container as mortar shells and artillery fire rained down.
“These blue helmets would not let us inside, but it’s better than nothing,” said Clement Elias, 20, referring to the UN peacekeepers. He said he heard 100 explosions Sunday night.
There was no immediate word on casualties, according to UN peacekeeping spokesman Colonel Jean-Paul Dietrich.
“Everybody is trying to push the other side back,” Dietrich said. “It’s very regrettable that they could not respect the cease-fire.”
On Monday, Rwindi was quiet but rebels were seen walking freely, carrying generators and boxes of ammunition. The town is tiny, housing little else but a headquarters for Virunga National Park and a peacekeeping base, which is surrounded by barbed wire and sandbags. Dozens of civilians were sitting under trees Monday, listening to the radio for news.
Heavy fighting also broke out Sunday in Ndeko, about 55 miles (90 kilometers) north of Goma, Dietrich said.
The Central African nation has the world’s largest UN peacekeeping mission, with some 17,000 troops, but the peacekeepers have been unable to either stop the fighting or protect civilians caught in the way.
Congo’s main rebel leader promised a UN envoy Sunday he would support a cease-fire as well as UN efforts to end the fighting.
“Now we have a message of peace. We should work with this mission,” rebel leader Laurent Nkunda said.
The UN envoy, former Nigerian President Olusegun Obasanjo, met with Nkunda for the first time, after speaking with President Joseph Kabila and the leader of neighboring Angola.
Nkunda launched a rebellion in 2004, claiming to protect ethnic Tutsis from Hutu militias who fled to Congo after Rwanda’s 1994 genocide left more than 500,000 Tutsis and others slaughtered. But critics say Nkunda is more interested in power and Congo’s mineral wealth.
Fighting among armed groups has gone on for years in eastern Congo’s lawless North Kivu province, but the violence sharply escalated in August and has since displaced 250,000 people.
Congo’s government says it is willing to meet Nkunda, but only with the many other militias in the region. Nkunda has criticized the government for signing deals with Chinese companies to exploit Congo’s cobalt and copper.
Congo has called on Angola for military help, but Angola insists it does not have any troops there.
Some fear Congo’s current crisis could once again draw in neighboring countries. Congo’s devastating 1998-2002 war split the vast nation into rival fiefdoms and involved half a dozen African armies, including Angola’s.

TITLE: White Backlash Festers After Obama Win
PUBLISHER: Agence France Presse
TEXT: Atlanta — In rural Georgia, a group of high-schoolers gets a visit from the Secret Service after posting “inappropriate” comments about President-elect Barack Obama on the Web. In Raleigh, N.C., four college students admit to spraying race-tinged graffiti in a pedestrian tunnel after the election. On Nov. 6, a cross burns on the lawn of a biracial couple in Apolacon Township, Pa.
The election of America’s first black president has triggered more than 200 hate-related incidents, according to the Southern Poverty Law Center - a record in modern presidential elections. Moreover, the white nationalist movement, bemoaning an election that confirmed voters’ comfort with a multiracial demography, expects Obama’s election to be a potent recruiting tool - one that watchdog groups warn could give new impetus to a mostly defanged fringe element.
Most election-related threats have so far been little more than juvenile pranks. But the political marginalization of certain Southern whites, economic distress in rural areas, and a White House occupant who symbolizes a multiethnic United States could combine to produce a backlash against what some have heralded as the dawn of a postracial America. In some parts of the South, there’s even talk of secession.
“Most of this movement is not violent, but there is a substantive underbelly that is violent and does try to make a bridge to people who feel disenfranchised,” says Brian Levin of the Center for the Study of Hate and Extremism at California State University, San Bernardino. “The question is: Will this swirl become a tornado or just an ill wind? We’re not there yet, but there’s dust on the horizon, a swirling of wind, and the atmospherics are getting put together for [conflict].”
Though postelection racist incidents haven’t posed any real danger to society or the president-elect, law enforcement is taking note.
“We’re trying to be out there at the cutting edge of this and trying to stay ahead of groups that are emerging,” says Special Agent Darrin Blackford, a spokesman for the Secret Service, which guards the US president.
“Anytime you start seeing [extremist propaganda] floating around, you have to be concerned,” adds Lt. Gary Thornberry of the Oklahoma Highway Patrol, a member of the FBI’s Joint Terrorism Task Force. “As far as it being an alarmist situation, I don’t see that yet. From a law enforcement point of view, you have to be careful, because it’s not illegal to have an ideology.”
After sparking conflict and showdowns in the 1990s - think Ruby Ridge, Waco, the Oklahoma City bombing - white supremacist and nationalist groups began this century largely splintered and powerless. Though high immigration levels helped boost the number of hate groups from 602 in 2000 to 888 in 2007, key leaders of such groups had died, been imprisoned, or were otherwise marginalized.
But postelection, at least two white nationalist websites - Stormfront and the Council of Conservative Citizens - report their servers have crashed because of heavy traffic. The League of the South, a secessionist group, says Web hits jumped from 50,000 a month to 300,000 since Nov. 4, and its phones are ringing off the hook.
“The vitriol is flailing out shotgun-style,” says Levin. “They recognize Obama as a tipping point, the perfect storm in the narrative of the hate world - the apocalypse that they’ve been moaning about has come true.”
Supremacist propaganda is already on the upswing. In Oklahoma, fringe groups have distributed anti-Obama propaganda through newspapers and taped it to home mail boxes. Ugly incidents such as cross-burnings, assassination betting pools, and Obama effigies are also being reported from Maine to Alabama.
The Ku Klux Klan has been tied to recent news events, as well. Two Tennessee men implicated for plotting to kill 88 black men, including Obama, were tied to the KKK chapter whose leader was convicted in a civil trial in Brandenburg, Ky., last week, for inciting violence. The murder last week in Louisiana of a KKK initiate, allegedly killed after trying to back out of joining, came at the hands of a new group called Sons of Dixie, authorities say.
“We’re not looking at a race war or anything close to it, but ... what we are seeing now is undeniably a fairly major backlash by some subset of the white population,” says Mark Potok of the Southern Poverty Law Center’s Intelligence Report in Montomgery, Ala. “Many whites feel that the country their forefathers built has been ... stolen from them, so there’s in some places a real boiling rage, and that can only become worse as more people lose jobs.”
In an election in which barely 20 percent of native Southern whites in Deep South states voted for Obama, the newly apparent political clout of “outsiders” and people of color has been unnerving to some.
“In states like Mississippi, Louisiana, and Alabama, there was extraordinary racial polarization in the vote,” says Merle Black, a political scientist at Emory University in Atlanta. “Black Americans really do believe that Obama is going to represent their interests and views in ways that they haven’t been before, and, in the Deep South, whites feel exactly the opposite.”
But for nonviolent secessionist groups like the League of the South, the hope is for a more vigorous debate about the direction of the US and the South’s role in it, says Michael Tuggle, a League blogger in North Carolina.
Tuggle says his group isn’t looking for an 1860-style secession but, rather, a model that Spain, for one, is moving toward, in which “there’s a great deal of autonomy for constituent regions” - a foil to what is seen as unchecked, dangerous federal power in Washington.
“To a lot of people, the idea of secession doesn’t seem so crazy anymore,” says Tuggle. “People are talking about how left out they feel, ... and they feel that something strange and radical has taken over our country.”

TITLE: Suspected Military Chief of ETA Separatist Group Arrested
PUBLISHER: Reuters
TEXT: MADRID — The suspected military leader of Basque separatist group ETA has been arrested in France, Spanish and French authorities said on Monday.
Garikoitz Aspiazu Rubina, known by his alias “Txeroki” or “Cherokee,” was arrested along with an unnamed female ETA suspect at 3:30 a.m. in France’s mountainous Pyrenean region near the Spanish border, French police said.
It was the latest in a series of captures of senior ETA figures and appeared to be the biggest blow to the organization since May, when ETA’s top commander Francisco Javier Lopez Pena was arrested in the French city of Bordeaux.
“Today ETA is weaker and Spanish democracy is stronger. ETA has not lost its capacity to attack, it hasn’t lost its capacity to hurt, but it has been dealt a hard blow,” Spanish Prime Minister Jose Luis Rodriguez Zapatero told a news conference in Madrid.
Aspiazu, 35, is suspected of involvement in the killing of two Spanish civil guard police in the French seaside town of Capbreton in December 2007, police said.
Spanish media have also said security forces blame Aspiazu for ordering a car bombing at Madrid airport in December 2006 which killed two people and wrecked peace talks with the Spanish government.
Aspiazu faces trial in France for the Capbreton killings but Madrid will ask that he be sent for trial in Spain on other charges, before being returned to serve any French sentence, a spokesman for Spain’s State Prosecution Service said.
Aspiazu, whose Spanish police photo shows a tough-looking man with a thin beard and a mullet hairstyle, has been in charge of ETA’s military operations for several years, during which time the group has staged dozens of attacks, security services believe.
He is also suspected of involvement in a failed plot to assassinate King Juan Carlos in Majorca in 2004, Spanish media reported.
“Having a man with Txeroki’s record in police hands is going to save lives,” Zapatero said.
French President Nicolas Sarkozy hailed the arrest.
“This arrest shows once again the strong commitment of the French police and gendarmerie and the excellent cooperation between France and Spain in the fight against Basque terrorism,” he said in a statement.
Several ETA suspects have been arrested in recent years and Spanish authorities say the group has been reduced to a relatively small number of fighters. But it has continued to carry out regular bombings.
ETA began its violent campaign for the independence of the Basque Country in northern Spain in the late years of the dictatorship of Francisco Franco in the 1960s, and has killed more than 800 people in four decades.
With the Basque language receiving state support and the region enjoying considerable autonomy over areas including education and health, ETA has become increasingly isolated.
Polls indicate most Basques do not want independence and there have been media reports of disagreements between ETA and its outlawed political wing Batasuna.
French police arrested Aspiazu in the apartment he had been renting since last week in the spa town of Cauterets. They found a pistol, a computer and fraudulent French and Spanish identity documents. He made no comment during his arrest.
The two policemen he is suspected of killing were in France to keep him under surveillance in a joint operation between French and Spanish police. They were shot in their car in the parking lot of a shopping center when they encountered a group of three suspected ETA members.
Two of the suspects, Asier Bengoa Lopez de Armentia and Soaia Sanchez Iturregi were arrested and charged days later.