SOURCE: The St. Petersburg Times
DATE: Issue #1438 (102), Monday, December 29, 2008
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TITLE: Ruble Falls To 3-Year Low Against The Dollar
AUTHOR: By Denis Maternovsky
PUBLISHER: Bloomberg
TEXT: The ruble fell to a record low against the euro as Russia’s central bank extended six weeks of devaluations to compensate for falling oil prices.
The ruble lost as much as 1.6 percent to 40.8931 per euro before trading at 40.8143 at 12:28 p.m. in New York, the weakest level since the European currency was introduced in 1999. It declined as much as 1.2 percent to 29.0577 against the dollar, a four-year low, capping a 19 percent drop since early August.
Russia’s foreign reserves, the world’s third largest, have fallen by a quarter since August to $451 billion as the central bank sought to prop up the currency and export revenue declined. Standard & Poor’s cut Russia’s credit rating this month for the first time in nine years to BBB on concern Russia is wasting reserves defending the ruble.
“The central bank tries to devalue the ruble as fast as it only can without attracting too much unwelcome attention of the speculators, many of whom are on vacation now,” said Evgeny Nadorshin, a senior economist at Trust Investment Bank in Moscow. “The less speculations, the more reserves the central bank keeps for itself in the short term.”
The currency has weakened 15 percent against the dollar and 12 percent against the euro this year as oil, the nation’s biggest export earner, lost 62 percent and the global credit crisis prompted investors to pull out of emerging markets.
Russia’s dollar-denominated RTS Index of stocks fell 0.7 percent, a third day of declines, to 651.50. The 30-stock ruble- denominated Micex Index, which lost 60 percent of its value since August, rose 0.3 percent.
The RTS has dropped 72 percent this year, compared with a 56 percent decline in MSCI’s emerging-market index.
Bank Rossii allowed the ruble to fall more than 1 percent against its target basket of dollars and euros for the fourth time in a week and the 11th time since Nov. 11, according to a central bank official who declined to be identified. The currency lost 1.2 percent today against the basket, which is 55 percent dollars and 45 percent euros, to 34.3139.
Russia’s economy will sink into a recession next year as the price of Urals crude oil, the country’s main export blend, tumbled from a record high in July, Barclays Capital says. Urals has fallen 77 percent since then to $32.34 a barrel, less than half the $70 Russia needs to balance its budget next year.
The economy had been expanding an average 7 percent in the eight years to 2007 as surging oil prices helped the country recover from the government’s debt default and ruble devaluation in 1998.
With oil at “very low levels,” Bank Rossii “prefers more safety in case it goes even lower,” according to Nadorshin.
Crude oil for February delivery gained as much as $1.45, or 4.1 percent, to $36.80 a barrel on the New York Mercantile Exchange, after declining by a third this month.
Russia’s industrial production shrank the most last month since 1998, when the country defaulted on $40 billion of domestic debt and the ruble plunged more than 70 percent against the dollar.

TITLE: Israeli Tanks Mass Near Gaza as Jets Strike
PUBLISHER: Agence France Presse
TEXT: GAZA CITY — Israeli tanks massed at the Gaza border on Sunday as warplanes again pounded Hamas targets in the densely populated enclave where raids have killed more than 280 people in less than 48 hours.
Dozens of tanks and personnel carriers idled at several points near the border after Israel warned it could launch a ground offensive in addition to its massive air bombardment, AFP photographers reported.
Hamas responded by firing rockets the farthest yet into Israel, with one striking not far from Ashdod, Israel’s second-largest port, some 30 kilometers north of Gaza. It caused no casualties, medics said.
In the latest plea for the violence to end, Pope Benedict XVI implored the international community to do “all it can to help the Israelis and Palestinians on this dead-end road... and not to give in to the perverse logic of confrontation and violence.”
But Israeli Defense Minster Ehud Barak vowed to “expand and deepen” the bombing blitz, unleashed in retaliation for persistent rocket fire by militant groups.
“If it’s necessary to deploy ground forces to defend our citizens, we will do so,” his spokesman quoted him as saying.
The cabinet gave the green light to call up 6,500 reserve soldiers, a senior official told reporters after the meeting.
Warplanes continued to pound the impoverished and overcrowded territory of 1.5 million people, where many streets were deserted and schools and shops stayed shut as hundreds of funerals were held.
Businesses in the occupied West Bank, including annexed Arab east Jerusalem, observed a strike in protest at the onslaught, which has killed at least 282 people and wounded more than 600 since early Saturday, according to medics.
Israeli Prime Minister Ehud Olmert said the campaign was launched “in order to regain a normal life for the citizens in the south who have suffered for many years from incessant rocket, mortar and terror attacks.”
Israel is “aiming to change the situation on the ground whereby in the future there will be a tranquil border between Israel and Gaza,” Welfare Minister Isaac Herzog told reporters.
But Hamas, which has controlled Gaza since ousting forces loyal to Western-backed Palestinian president Mahmud Abbas in June last year, remained defiant.
Its exiled leader Khaled Meshaal called in Damascus for a new Palestinian intifada, or uprising, against Israel and promised more suicide attacks. Hamas’s last suicide bombing in Israel was in January 2005.
The Israeli bombardment, one of the bloodiest 24-hour periods in its 60-year conflict with the Palestinians, sparked huge international concern.
In New York, the United Nations Security Council called for an “immediate halt to all violence” and urged all sides “to stop immediately all military activities.”
In Rome, the pope said that “the terrestrial homeland of Jesus cannot continue to be the witness of such bloodshed which is repeated ad infinitum.”
Egypt, which had brokered a six-month truce between Israel and Hamas that expired on December 19, said it was trying to negotiate a new ceasefire.
But a senior Israeli official told AFP that “we have our goals and our timetable and we don’t seek mediation.”
Israel’s main ally Washington has blamed Hamas “thugs” for provoking the offensive by firing rockets into the Jewish state from Gaza, and urged Israel to avoid causing civilian casualties.
Amid the bombing, Barak authorized the passage of an aid convoy into Gaza on Sunday, his spokeswoman said.
Israel has kept Gaza largely sealed off since the Hamas takeover allowing only very limited supplies of basic goods into the aid-dependent territory.
Egypt, which has slammed Israel over the bombing campaign, on Sunday criticized Hamas for not allowing hundreds of wounded to enter its territory through the Rafah border crossing — Gaza’s only one that bypasses Israel — to receive medical treatment.
The Israeli offensive sparked protests in the occupied West Bank, where one demonstrator was killed in clashes with police. Twenty thousand people rallied in Egypt and hundreds in Dubai.
Israel unleashed “Operation Cast Lead” against Hamas in the middle of Saturday morning, with some 60 warplanes hitting more than 50 targets in just a few minutes.
By Sunday, some 230 targets had been hit, the military said.
Hamas has responded by firing more than 90 rockets and mortar rounds at Israel, killing one man and wounding a handful of other people.
Army chief Lieutenant General Gabi Ashkenazi told the cabinet on Sunday that half of Hamas’s rocket launch sites were destroyed in the initial wave of Israeli attacks.
“Hamas was dealt a surprising and hard blow yesterday,” a senior official quoted him as saying.
The Israeli blitz came after days of spiraling violence since the expiry of the Gaza truce. It comes less than two months before snap parliamentary elections in Israel called for February 10.

TITLE: Moscow Punishment Museum Arouses Public Interest
AUTHOR: By Alexandra Odynova
PUBLISHER: Staff Writer
TEXT: MOSCOW — If history was a challenging subject for you at school, or if you found yourself snoozing in the middle of class, the Museum of the History of Corporal Punishment may offer you more engaging ways to connect with the distant past.
Its shadowy, cloth-draped halls stored with guillotines, lashes, tongs and shackles of all shapes and sizes depict the history of the subject in a wonderfully demonstrative way. And while the museum skips over any generalized history of Russia, you will be provided essential knowledge about the institution’s disturbing niche, such as the preferred means of corporal punishment used by tsar Ivan the Terrible .
As soon as you go through the museum’s narrow, dark entrance, you are immediately and jarringly plunged into the freaky atmosphere by the screams of present-day metal bands such as Korn and Rammstein. A sign on the wall reads “executioner’s toys,” referring to leather face straps that hang nearby; another with the words “corpse lantern” sits below a gruesome, mangled plastic body.
Equally macabre are the medieval prints from around Europe and Russia that line the walls to illustrate how the devices exhibited were used, processes that may seem enigmatic to the 21st-century visitor.
The forms of corporal punishment practiced in Europe and Russia tended to be similar, although they diverge at times due to the Russian tendency to adapt Western methods in its own original way.
The museum came into existence in 2000 as a mobile exposition that by now has been to 42 cities in Russia. Two years ago the museum set up its twisted wares at Moscow’s All-Russia Exhibition Center together with a collection of sharks and reptiles also owned by one of the exhibition’s directors.
“At the beginning we were planning it as an educational program,” explained museum director Valery Pereverzev as he stroked his pet snake “Shnurochek” (Lace) who sat curled around his neck. “Instruments of torture tend to arouse interest and make for good publicity.”
All the items in the exposition are part of Pereverzev’s private collection that he has been gathering since his school days, where ordinary history lessons failed to hold his attention. Fifty percent of the museum’s visitors are young couples, and while it is possible to meet an old lady roaming with a grandchild along the gothic corridors casting intrigued glances at the chastity belts and spiked throne, the sight is rare, according to Pereverzev.
The museum opened a new display this November titled “Underground Art. Art of the Insane,” which features exclusive “outcast dolls” that are, predictably, not exactly akin to Barbie or Ken. Chuckie would be a closer relative, as many of the characters come from some of the horror genre’s most celebrated films. All handmade and one-of-a-kind, choice specimens from the little shop of designer abominations start at 15,000 rubles. For rather obvious reasons, none of their selections are available at your standard Detsky Mir.
“At some point you stop understanding whether it’s an exhibition or entertainment,” said student Nika Bazhanova, 21, on a recent visit to the museum. “People who are deeply interested in the history of corporal punishment should search for a more serious place. [But] those looking for a show will be pleased here.”

TITLE: Financial Crisis Forces Team Russia To Ditch Yacht Race
PUBLISHER: Agence France Presse
TEXT: SINGAPORE — Team Russia has withdrawn from the round-the-world Volvo Ocean Race because of insufficient funding during the worldwide economic crisis, team backer Oleg Zherebtsov said.
“By this stage in the Volvo campaign we had intended to find sponsorship, but this process has been impacted by the global economic situation,” Zherebtsov, the founder of a Russian hypermarket chain, announced late Tuesday.
He said he had been financing the team with his own money in anticipation of sponsorship, which did not come about.
Team Russia said it had “suspended” racing after arriving in Singapore at the end of the race’s third stage.
Teams completed the third stage from Kochi, India on Tuesday. Spanish yacht Telefonica Blue sailed into the city-state first, snatching the lead from Sweden’s Ericsson 4 as the boats headed for the finish.
The US entry Puma Ocean Racing grabbed second place, just ahead of the all-Nordic crew of Ericsson 3. Race favourite Ericsson 4 came fourth.

TITLE: Sunken Soviet Sub Up For Sale
PUBLISHER: The Associated Press
TEXT: PROVIDENCE, Rhode Island — A former Soviet cruise missile submarine that was once featured in a Hollywood film and sank in the Providence River during a storm last year will be converted to scrap metal if no one agrees to buy it, the president of the foundation that owns it said Wednesday.
The 282-foot submarine, also known as Juliett 484, began serving as a floating educational museum in 2002, until it went down during a powerful nor’easter in April 2007.
Army and Navy dive crews raised the sub in a training exercise last July, and inspections showed the vessel had deteriorated and corroded during its 15 months underwater.
Restoring it to an operational museum would have cost more than $1 million, said Frank Lennon, director of the Russian Sub Museum and president of the USS Saratoga Museum Foundation, a private, nonprofit group.
“Based on the input we received from experts, the cost of restoring it was beyond our capabilities,” Lennon said.
A local company has agreed to move the sub downriver and eventually dismantle it for scrap metal if no one offers to buy it intact by the end of January.
“We remain hopeful that someone will step forward who might be interested in taking over the stewardship of this very interesting Cold War relic,” Lennon said.
.

TITLE: Healers Gaining Licences, Credibility
AUTHOR: By Gary Peach
PUBLISHER: The Associated Press
TEXT: MALAKHOVKA, Moscow Region — Mikhail Fadkin claims he can cure a long list of disorders — pancreatitis, bronchitis, digestive problems, even infertility — by using his hands to manipulate what he describes as a person’s “bio-energy field.”
Many laugh at such ideas and might call him a quack. But the 63-year-old healer, who practices out of an office in the village of Malakhovka, 20 kilometers southeast of Moscow, holds a license from the Russian government.
For the past two years, the Federal Health Service has been issuing licenses to practitioners of what it calls “traditional medicine,” meaning anything from the use of herbal treatments to the manipulation of “auras.” His claims buttressed by officialdom, Fadkin charges patients 3,500 rubles ($150) per session.
And he says business is very good. 
“Every day I learn something new,” he said, smiling as he gestures to what he says is an invisible aura surrounding him — “because all the information I need is out there, in the vast energy field surrounding us.”
So far, 130 healers, including Fadkin, have passed the service’s voluntary testing program, which promoters in the government say can determine whether someone has the inherent ability to cure. The program is limited to Moscow, but a Moscow City Duma deputy is pushing to extend it nationwide and make it mandatory. 
Skeptics scoff at the notion that such testing is meaningful and criticize the government for lending credibility to those claiming paranormal powers. “I think that this entire system is a result of ignorance and corruption,” said Eduard Kruglyakov, a laser physicist and member of the Russian Academy of Sciences. “Science has certain rules that must be followed, and this system of certification hasn’t passed any serious scientific tests.”
He deplores the whole notion of legitimizing folk healing through licensing.
“This kind of healing has nothing to do with science or medicine,” he said.
The program includes a background check, a scan of electrical activity in the brain and a committee review of the results. The agency charges applicants 10,000 rubles ($430) for the tests.
Andrei Karpeyev, director of the Federal Scientific Clinical Center for Traditional Methods of Diagnostics and Healing, which administers the tests, insists that folk medicine, including psychic healing, is backed by scientific studies. While he acknowledges that some of the criteria for determining who has healing powers are subjective, he claims the tests are able to weed out “charlatans.” He said there are perhaps 100,000 people in Russia offering to use magic, psychic or other extra-sensory methods to cure illnesses, read minds or cast spells.
Faith in magic and the occult lingered for centuries in Russia, long after the Renaissance, with its emphasis on rationalism and empiricism, weakened similar beliefs in Western Europe.
Russia is among a small number of nations where traditional healers are licensed at any level. In Indonesia, local governments certify those claiming to use magical charms or psychic powers for healing. And in India, the government licenses healers who use yoga and homeopathy, although not people who claim extra-sensory powers.
Albina Domolazova, 70, paid 3,600 rubles ($155) to an unlicensed clairvoyant to cure her son of drug addiction. When the woman recommended Domolazova toss chunks of beef to black dogs and then light a candle in seven churches, she dutifully obeyed.
After completing the ritual, which included burying the last chunk of meat in a graveyard, Domolazova’s son was still addicted. The healer refused to refund the fee — which represented half of Domolazova’s monthly pension. While Domolazova is now more wary, her faith that some people have healing powers has not been shaken.
Every year, thousands of Russians claim to have been defrauded by people calling themselves clairvoyants, occultists, and self-styled witches, who advertise in the Russian media.
In July, a Moscow court handed an 11-year prison sentence to Grigory Grabovoi, a cult leader who promised to resurrect children killed in the Beslan school siege in 2004. He reportedly charged grieving relatives some 40,000 rubles ($1,700). In response to cases like Grabovoi’s, legislators in the State Duma have proposed a law banning traditional healers from advertising.
But Lyudmila Stebenkova, a United Russia deputy in the Moscow City Duma, said the answer is to weed out the false healers from the true ones. She wants to expand the testing and licensing system to the rest of the country and make it mandatory. “The measures we’re proposing will protect Russia’s population from fraudsters,” she said.

TITLE: Yushchenko Declares A Day of Mourning
PUBLISHER: Combined Reports
TEXT: KIEV — Ukrainian President Viktor Yushchenko declared a day of national mourning as the death toll from an explosion that ripped through an apartment block in a Black Sea resort town rose to 26, including three children.
“This is a major disaster,” Yushchenko said yesterday as he visited the site in Yevpatoria on the Crimean peninsula. “It is important to be here to demonstrate that the victims aren’t forgotten. The nation is with them, we are all with them.”
The blast late last Wednesday, which destroyed 33 apartments, is the country’s deadliest such incident since a gas explosion killed at least 13 people in the eastern city of Dnipropetrovsk in October last year. Flags are flying at half mast throughout the country and light entertainment programs on television were canceled on the president’s orders.
Television footage showed rescuers on Thursday pulling out a man, awake and alert but with bruises on his face, as rescue colleagues applauded. The explosion caused the entire central section of the building to come down, exposing apartments on either side.
Emergency teams including dog handlers have pulled 21 people out of the debris, five of whom have been hospitalized, the Emergency Ministry said. In all, 58 people were registered in the destroyed apartments and 565 people are working at the scene of the accident, which authorities said may have been caused by oxygen or acetylene cylinders blowing up in the basement.
Yushchenko traveled to the site with Prime Minister Yulia Timoshenko, as the two put aside months of political feuding. The president ordered local authorities to check buildings to prevent similar incidents and urged his premier to honor a pledge to re- house all those that lost their apartments by the New Year.
President Dmitry Medvedev sent his condolences yesterday. Medvedev said units of Russia’s Black Sea fleet based in Crimea, which has a large Russian-speaking population, were ready to help with the rescue effort, the Kremlin press service said in a statement.
Yushchenko thanked Russia for offering to send naval personnel to help with the rescue, but said they were not needed.
Medvedev’s offer of condolences came only a day after Russia renewed its threat to disrupt natural gas supplies or impose other sanctions against Ukraine unless the former Soviet republic pays $2.1 billion it owes by next week.
Ukraine’s government approved 70 million hryvnias ($8.75 million) in compensation to families of the victims during a meeting yesterday, according to the government’s web site.
(Bloomberg, AP)

TITLE: Layoffs, Pay Cuts Cast Shadow Across City of Steel
AUTHOR: By Robin Paxton
PUBLISHER: Reuters
TEXT: NOVOKUZNETSK, Kemerovo Region — The working week, like the winter days in this Siberian city, has become shorter since the global financial crisis paralyzed its heavy industry. Paychecks have been cut by a third or more. 
Novokuznetsk’s half a million residents, over 60 percent of whom depend on the steel, coal and aluminum industries, dare not contemplate the alternative — mass layoffs — as they struggle to repay bank loans taken out in more prosperous times. 
“If nothing changes, we will come up against more serious consequences in February or March,” said Alla Semyonova, director of the city’s employment center. “People have not yet fully grasped what is happening here.” 
Novokuznetsk, 3,000 kilometers and four time zones east of Moscow, was booming when demand for steel produced by its two giant mills reached record highs early this year. The sudden reversal in the world economy has hit hard. 
Yevgeny Sobolev, head of the city’s labor inspectorate, said up to 80 percent of the city’s employed were now working a four-day week. “This should mean a decrease of one-fifth in salaries, but they are being cut by 50 or 60 percent,” he said. 
Outside his office, disgruntled employees, mostly from the service sector, queued to voice their complaints. 
Billboards and local radio stations advertise 40 percent discounts on furniture and shops offer half-price jackets and boots. A loaf of bread, however, costs 4 rubles more than before the crisis, said retired steel worker Anatoly Karpetsky. 
“I’m a pensioner. I’ve been wearing the same pair of boots for 10 years. But I need to buy groceries every day,” Karpetsky, 82, said as he trudged through the snow with a shopping bag. 
Prime Minister Vladimir Putin built his popularity during his time as president on a decade of economic growth fueled by high oil and commodity prices. The financial crisis poses the first test of his ability to handle leaner times. 
Putin has told employers across Russia not to cut jobs “without extreme need.” In Novokuznetsk, mass layoffs have so far been avoided. 
The city’s main employer is Evraz Group, the steel maker part-owned by billionaire Roman Abramovich. Its giant Novokuznetsk steel complex, around which the city grew in the 1930s, has cut output by 20 percent from pre-crisis levels. 
Alexei Yurev, the plant’s general director, said his 8,000 employees had accepted a one-third reduction in wages and most were working a four-day week. Inside the plant, sparks still fly as red-hot rails are cut to supply 70 percent of Russia’s needs. 
“Most importantly, in the three months we have been feeling the crisis, we have managed to retain our entire workforce,” Yurev said. “We have 10,500 [retired ex-workers], substantially more than we have workers, and we also haven’t cut their social programs.” 
But he added: “We can’t be completely certain everything will remain as now.” 
Residents are also more exposed to debt risk, having taken mortgages and loans to buy cars and household goods. About 2,500 employees of the Novokuznetsk steel plant had bank debts adding up to over 600 million rubles ($21 million), a trade union survey showed. 
Unemployment levels in Novokuznetsk, known as Stalinsk until 1961, have remained practically unchanged at 2,500 this year. This is due to large companies choosing to cut wages and working hours rather than lay off employees, Semyonova said. 
The employment center’s aim, she said, was to limit the number of jobless at 1.5 percent next year compared with a traditional level of 0.7percent to 0.9 percent, among the region’s lowest. 
“The Russian mentality favors stability. It’s better in such conditions to accept a shorter working week. When the link (with the employer) is severed, the risk of discontent grows,” Semyonova said. 
Small, private businesses and companies servicing the city’s main employers were the first victims of the crisis. Nikolai Dantsov, a coal miner, left his job in September when the director of his private company stopped paying his wages. 
“There’s no need for coal,” he said, shrugging as he joined the morning queues at the employment center. Managerial vacancies promise monthly salaries from 10,000 rubles, below the city average of around 18,000 rubles ($650). 
This crisis is different, say local officials, to those of the 1990s. Russia is now tied more closely to the global economy and the growth of large corporations has curbed the creative, and sometimes criminal, methods used to survive a decade ago. 
The city’s administration, like many across the country, has set up an anti-crisis center to monitor labor practices and field calls from concerned or angry employees. 
“The crisis of the 1990s was linked to our change of government. The negatives were a consequence of perestroika. Today, we are up against an economic crisis born of capitalism,” said Sergei Zykov, Novokuznetsk’s 52-year-old deputy mayor. 
Lyudmila Morozova, deputy chairman of the Kuznetsk metal workers’ trade union, said labor unrest could not be ruled out if local authorities fail to provide sufficient protection and restart programs for unemployed workers. 
“People with nowhere else to go will head for the street. When it comes to protecting yourself, anything is possible,” she said. 
“The biggest loss is the loss of faith in what will happen tomorrow.”

TITLE: Ex-Kremlin Aide Gets Norilsk Chairman Job
AUTHOR: By Natalia Vasilyeva
PUBLISHER: The Associated Press
TEXT: MOSCOW — A former Kremlin chief of staff was elected Friday to chair the board of mining giant Norilsk Nickel as the state appeared to tighten its grip on the strategic company.
Alexander Voloshin, who was chosen unanimously at an extraordinary board meeting at a Moscow hotel, denied being a de facto Kremlin envoy.
“There are no representatives of the state on the board,” Voloshin said after his appointment, but added that “the successful development of Norilsk Nickel will benefit my dear country.”
Voloshin brings to the post a wealth of government experience and connections. He served as former President Boris Yeltsin’s chief of staff, a job he retained for several years under Yeltsin’s successor, Vladimir Putin. One of his deputies under Putin was Dmitry Medvedev, the current president.
After leaving the presidential administration, Voloshin chaired the board at the state-run electricity giant Unified Energy Systems.
His election is part of a compromise to settle a feud between Norilsk Nickel’s two main shareholders, Vladimir Potanin and Oleg Deripaska.
Potanin, who owns 30 percent of Norilsk, and Deripaska, the owner of aluminum giant UC Rusal, surprised the market last month when they brought an end to a bitter seven-month dispute over strategy and control, which had hurt the company’s share value and contributed to a management crisis.
The two metals tycoons agreed that the Norilsk board would be headed by an independent chairman, replacing Potanin, with both billionaires agreeing not to stand for election.
Potanin’s Interros investment vehicle and Deripaska’s Rusal each received four seats on the board. The other five seats went to independents.
The global financial crisis, which has hit Russian stocks particularly hard, forced the shareholders to set aside their differences, Potanin said. Norilsk’s shares have plummeted more than 65 percent since the beginning of the year, and investors have criticized the company for failing to overcome the management crisis.
Norilsk general director Vladimir Strzhalkovsky warned on Friday that things could get worse.
“A further decline in metal prices will take a great toll on the company’s performance,” he said.
Voloshin had been expected to compete for the post against Sergei Chemezov, the director of the state holding Russian Technologies, but Chemezov pulled out of the running earlier Friday.

TITLE: Gazprom Warns Europe on Gas
PUBLISHER: Agence France Presse
TEXT: MOSCOW — Russian energy giant Gazprom warned European clients Friday that its gas conflict with Ukraine, conduit for European-bound gas from Russia, could affect deliveries to Europe.
The warning came in a letter from Gazprom chief Alexei Miller to the company’s European clients.
“Gazprom is doing everything possible to avoid any disruption of gas deliveries to Europe,” said Miller in the letter cited by Interfax news agency.
“However, if events develop along an unfavourable scenario, the problem of Ukrainian transit will be a common problem for Russia and Europe,” Miller said.
Gazprom and Ukraine’s state energy firm Naftogaz have for the last weeks failed to agree a solution over unpaid debts in a conflict that comes amid increasing diplomatic tensions between Moscow and Kiev.
“We consider that it’s our duty to warn [Europe] that we cannot be sure that transit obligations will be respected, seeing that Naftogaz is systematically slowing its contractual obligations,” Miller said in his letter.
Russian President Dmitry Medvedev told Ukraine on Wednesday to pay its gas debts “to the last ruble” or face the prospect of sanctions from Moscow against its wider economy.
His comments came after Gazprom warned Ukraine it would cut gas deliveries on January 1 if a new contract were not signed for 2009 and the debts for 2008 not paid back in full.
Gazprom claims it is owed over two billion dollars — 805 million dollars for November, 862 million dollars for December and 450 million dollars in penalties for late payment.
Medvedev did not say what sanctions Russia could use against Ukraine’s flagging economy but menacingly warned it had a “whole arsenal of possibilities” at its disposal.
“We do not have any aim to cut it off. Our aim is just to get our money,” he said in a Russian television interview.
“But if Ukraine does not pay we will use a whole arsenal of possibilities and it is completely clear that there can be no illusions there.”
Earlier Gazprom spokesman Sergei Kupriyanov told reporters that “if a contract for 2009 is not signed then we are not going to deliver gas without a contract.”
“When there is no contract we cannot realise deliveries. The situation is not simple. It is even critical,” he said.
While Ukraine paid its October debt, it has not done so for November and December, Kupriyanov said.
“To our frank question if they would pay by the end of the year, we received a frank answer — ‘No’,” he said.
Ukraine is a major transit country for Russian gas exports to the European Union and a dispute over gas prices led to a brief interruption of gas supplies in several EU countries in January 2006.
But Kupriyanov said: “We will deliver the full volume of gas destined for transit and we will fulfill all our obligations towards European consumers.”

TITLE: Lukashenko Say Belarus Set To Pay Less for Gas Imports
AUTHOR: By Katya Andrusz
PUBLISHER: Bloomberg
TEXT: Belarus will pay less for its natural gas imports from Russia next year after talks between the two countries’ leaders, Belarusian President Alexander Lukashenko said on his web Site.
Lukashenko and Russian President Dmitry Medvedev reached an agreement when they met in Moscow on Dec. 22 that the price would “fall significantly,” according to the Dec. 24 statement.
An agreement with Belarus should be completed “within a couple of days,” Alexander Medvedev, chief executive officer of OAO Gazprom, Russia’s natural-gas exporter, told reporters in Moscow.
Belarus’ close ties with Russia “won’t have any effect” on the improving relations between Belarus and the West, Lukashenko said. 
“The Europeans are well aware of our relations with the Russian Federation,” he said.

TITLE: Crisis Puts Putinomics to the Test
AUTHOR: By Anders Aslund
TEXT: Suddenly, Russia stands out as one of the countries likely to be worst hit by the international financial crisis, although it entered the crisis with huge budget and current accounts surpluses since 2000 and the third-largest currency reserves in the world. It would be unfair to blame only international markets, as Prime Minister Vladimir Putin does, considering how flawed his own economic policy is.
Apart from Russia’s excellent fiscal policy, just about everything has been wrong with the country’s economic policy since authorities arrested former Yukos CEO Mikhail Khodorkovsky in October 2003. Shortly after this, Yukos was confiscated. The only significant short-term relief is to free the ruble so it can depreciate. Apart from the very fall in oil and other commodity prices and the international liquidity squeeze, Putin has caused the lion’s share of the country’s current economic problems.
Initially, Russia was hit with a huge exogenous shock when its terms of trade deteriorated sharply because of the sudden fall of oil, gas, metals and other global commodity prices. With current commodity prices, the country’s exports next year could plummet by some 40 percent in current dollars, or by $200 billion. Budget and current account surpluses will quickly turn into deficits.
Russia is praised for its large currency reserves and its limited domestic leverage, but it suffers from minimal domestic financial intermediation because inept state banks dominate the financial market. The state takes money out of the country, while its big corporations are forced to borrow abroad, maximizing their currency risk. If Russia had privatized its banking system as most other post-Soviet countries, its companies would suffer from fewer currency risks.
Putin’s chief project has been to develop huge, unmanageable state-owned mastodons, considered “national champions.” They have stalemated large parts of the economy through their inertia and corruption while impeding diversification. In addition, they have financed themselves with foreign loans rather than equity, and this has aggravated the country’s currency risks.
Russia’s nationalistic energy policy after 2003 has stalled the development of major new energy investments (apart from the Sakhalin projects, which date back to the Boris Yeltsin era). Gazprom and Rosneft have financed themselves with foreign debt rather than with equity capital, accounting for almost one-fifth of Russia’s corporate foreign debt of $490 billion. Gazprom’s aggressive pricing and delivery disruptions have scared away customers, reducing the demand for its gas.
Huge public funds are being diverted to state corporations, which either hoard the money or siphon it off. In their new book “Putin and Gazprom,” Boris Nemtsov and Vladimir Milov have offered a staggering and credible account of how Putin and his friends pilfered assets of $80 billion from Gazprom during his second term as president. Investors have taken notice, slashing Gazprom’s market capitalization from $350 billion last spring to $70 billion at its nadir. Although Russia is the 46th-richest country in the world in per capita terms, it is ranked 147 out of 180 countries on Transparency International’s corruption perception index for 2008. Only Equatorial Guinea is both richer and more corrupt than Russia.
Under Putin, transparency has systematically been reduced, and we no longer dare to trust the government’s public statements on its currency reserves. Officially, they have declined by $163 billion, or 28 percent, from $598 billion in early August to $435 billion in early December. But when Vneshekonombank was given $50 billion of state reserves to help Russian oligarchs with refinancing, nothing was deducted from the official reserves as it should have been. In an article on Gazeta.ru on Oct. 24, Alexei Mikhailov plausibly claimed that another $100 billion or $110 billion of “other reserves” had been transferred to the banking system and were nothing but rubles. To my knowledge, no official denial has been issued. If that were correct, the reserves have fallen by more than half to less than $300 billion, but the government sheds no light on this.
Russia’s largest corporations have turned out to be much more leveraged than anybody had thought. The government has made clear that it will refinance their foreign loans to secure “strategic” ownership. So far, $13 billion has been paid, out of which United Company RusAl has received $4.5 billion and Altima $2 billion, but such private pledges are huge. Vneshekonombank has $37 billion left to spend, but it has already asked for $30 billion more from the government, and more is likely. Thus, Russia can swiftly lose more than $100 billion of reserves.
Putin has persistently denied that anything is wrong with the country’s economic policy, while everything but its fiscal policy has been wrong. Domestic and foreign businesspeople realize that he does not talk about reality, which undermines confidence in the Russian market. Without free public debate, rational policy decisions are unlikely.
Incredibly, the government is repeating its mistake from 1998 to maintain a pegged exchange rate in the face of falling commodity prices. Until this summer, this policy provoked speculative capital inflows that boosted the money supply excessively and propelled inflation to 15 percent. Now, the pegged exchange rate, which is probably overvalued by up to 25 percent, promotes speculative capital outflows, quickly reducing the currency reserves. Devaluations in very small steps only convince the market that a major depreciation is inevitable. The coming combination of loose fiscal policy, negative real interest rates, current and capital account deficits and an overvalued ruble is unsustainable. The incentives for capital flight are overwhelming.
The global economic crisis is testing Putin’s system. He has undermined the ground under the house Yeltsin built, transforming the country into a house of cards ready to tumble. He has wasted the oil wealth rather than investing it in infrastructure, health care, education and law enforcement reform. Russia needs fundamental change; above all, it needs to uproot — or at the very least contain — the country’s pervasive corruption, which has gotten markedly worse under Putin. Nothing would serve the country better than the retirement of the failed prime minister, but that is evidently not in the cards.
One of the few policy measures that can be undertaken with Putin still in power is to let the ruble float freely, move to inflation targeting and boost interest rates to positive real interest rates. A commodity-exporting country needs to let its exchange rate float up and down with global raw material prices to balance its foreign payments. At present, all speculators sensibly bet on a ruble devaluation, just like in 1998, which quickly depletes the country’s currency reserves. When the ruble is allowed to float, it is likely to plummet. But after that, nobody knows whether it will rise or fall, and this will reduce speculation and losses of currency reserves.
Does anybody still believe that Russia’s economy will grow in 2009?

Anders Aslund, a senior fellow of the Peterson Institute for International Economics, is the author of “Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed.”

TITLE: The Party Is Over
AUTHOR: By Yulia Latynina
TEXT: Prime Minister Vladimir Putin and Deputy Prime Minister Igor Sechin were quick to react to the street demonstrations against higher tariffs on imported used cars in Vladivostok over the past two weekends. Putin said it was “absolutely inadmissible” to spend money on foreign cars during a time of crisis, and Sechin called the protesters a bunch of “swindlers.” 
It is not difficult to see that the situation in Primorye is a repeat of what happened in Novocherkassk in 1962. In this small, one-factory city near Rostov-on-Don, workers were told to increase production while their pay was effectively cut after Moscow’s central planners announced major price increases on staple foods. 
Now in the Far East, where salaries had already been dropping, Kremlin leaders will raise the price on imported cars. The impact in Primorye from price hikes on car imports is dangerously similar to what was felt by Novocherkassk residents in 1962, when prices were raised for butter and meat.
I don’t think the authorities were overly worried about the Primorye residents when they decided to raise import duties, despite the fact that the number of people who resell or service used imported cars in the region is no smaller than those who assemble Russian passenger models in Nizhny Novgorod, Tolyatti and other cities. 
Most likely, the decision on import duties was made in order to help Kremlin favorites like Sergei Chemezov and Oleg Deripaska whose holding companies own the AvtoVAZ and GAZ carmakers. But it is highly questionable whether this tactic will save the domestic car industry. The only possible hope for this dying sector is if the government allows the ruble to devalue to its real market value. But that would be a bold move, and the authorities are not accustomed to making bold decisions. They prefer making cautious — which inevitably means bad — decisions, for which they rarely have to answer later. 
Few people know that the Kremlin has delivered not one, but two deadly blows to Primorye. On Nov. 1, the government also placed high tariffs on the export of raw timber. As a result, the whole economy of the Far East ground to an immediate halt. Thousands of timber-filled train wagons and cargo ships stood idle on the region’s borders and at its ports, and tens of thousands of people lost their jobs overnight. In this case, however, the government quietly repealed the tariffs.
The ingenious plan behind the high tariffs on timber exports was to stimulate the development of Russia’s wood-processing sector. But it seems that the effect was just the opposite: The lumber industry froze up and nobody built any wood mills. 
This example clearly shows that state regulatory measures only work when there is a functioning government. But when the state apparatus has become nothing more than a feeding trough for corrupt bureaucrats or a cover for officials to avoid answering for their bad policies, regulatory measures become nothing more than a sham. 
In reality, Russia is not going through an economic crisis. The real crisis is that its government model is fundamentally flawed. Under Putinomics, when petrodollars are flooding state coffers, the government can afford to make bad decisions without worrying about the consequences. Even before the crisis, the country was already sinking into a state of disorder and the government was dysfunctional, but while oil money kept pouring into state coffers, Putin was able to cover up most of the mess.
But starting in the fall, it became clear that the country’s national wealth was acquired thanks to high world oil prices and not as a result of any individual’s personal wisdom. But now the party is over, and any decision the authorities make — whether it is ruble devaluation, bankruptcy for AvtoVAZ or squashing protests in Primorye — will come at a very high price indeed.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

TITLE: Two Crises Derailed Attempts to Improve EU Ties
AUTHOR: By Fyodor Lukyanov
TEXT: The year 2008 will receive a special mention the history books of Russia’s foreign policy. The Georgia war in August brought a host of consequences demanding attention, and the convulsions of the global financial markets in September and October redefined the boundaries of what Russia could realistically achieve. Together, they helped shape the framework of Russia’s national interests.
In responding to Georgia’s attack on South Ossetia, Russia, probably for the first time since the Soviet collapse, took major action without worrying about the international community’s possible reaction. The Kremlin concluded that the course of action favored by its international partners would come at too high a cost for Russia’s vital interests. This is a necessary stage for the formation of a state identity.
However, it is also necessary to identify which national interests are so vital that they must be upheld at any cost. The second crisis played a role here. The global financial crisis showed, first of all, that all countries are interdependent. It also established economic — and as a result, geopolitical — limits to Russia’s ambitions. Hard reality always forces us to focus on our priorities and to discard matters of secondary importance.
After the Soviet collapse, Russia’s main task was to preserve something of the international status quo by holding on to at least some of its former geopolitical assets. Russia is perceived to have made a sharp turn toward revisionism over the past two years, changing the rules that had been generally accepted up until that time. Despite these bold moves, however, Moscow remains an advocate of preserving the status quo. (Abkhazia and South Ossetia are major exceptions, but this situation also shows how many problems can arise when the status quo is broken.) The problem is that Moscow wants to uphold a status quo that, in reality, no longer exists. Russia is trying to return to principles of international order that were agreed upon in the past. Yet these principles underwent unspoken but profound changes following the end of the Cold War, even if they ostensibly remain intact.
A distinguishing feature of recent years has been the deepening contradiction between international rules that nobody questions and the actual principles governing states’ actions. International organizations and legal standards remain relatively unchanged since the end of the Cold War. They have changed, however, even though they remain in force. The basic understandings of what constitutes state sovereignty and territorial integrity, as well as the criteria for the use of force in resolving conflicts, have been washed away.
New concepts such as humanitarian intervention or soft power have appeared to serve the political purposes of the leading states, even though there is no provision for them in international law. Most states have refused to review the rules of the game. That is why there has been no official change to these rules, even while the gap between the letter and the spirit of the law and how it is applied continue to widen. The United States, as a dominating de facto international actor, has refused to follow rules of the Cold War era.
It has been aptly noted that President Dmitry Medvedev’s call for a pact on European security that he made last summer in Berlin and developed further at a conference in Evian, France, this fall is essentially a repeat of the final act of the Helsinki Accords signed in 1975. However, these ideas require a new legitimacy now because of the above-mentioned divergence between the rules and the reality of how states operate. Today’s Europe bears little resemblance to the Europe of just a few decades ago. The outstanding spirit that animated the Helsinki Accords should be restored in full with regard to the military-political, economic and humanitarian aspects of international policy. Europe needs an authoritative confirmation of those principles reached more than 30 years ago, especially because the challenges facing the continent today are almost identical to the problems that confronted it then.
First, at issue is the military-political balance and the establishment of mutual trust in matters of security. Russia was unsuccessful in its attempt last year to discuss problems with the Treaty on Conventional Armed Forces in Europe within the framework of the Organization for Security and Cooperation in Europe. Moscow’s negotiating partners were not interested because the OSCE has long ago ceased dealing effectively with such issues.
Another pressing problem is that states’ borders need to be reaffirmed. Since the time they were last agreed upon, the map of Europe has been redrawn several times so that not a single post-Soviet state — including Russia — can confidently assert that its borders are 100 percent guaranteed and can be justified, both naturally and historically.
Second, the economic situation in greater Europe requires consideration. Europe is a complex mix of political and economic interests. It is impossible to separate economic cooperation — especially in the field of energy — from security issues. The economy is becoming increasing politicized by every participant, and this reflects the generally low level of mutual trust present.
Third and last, humanitarian concerns should be addressed. The protection of democratic principles and human rights are Europe’s crowning achievements, and it would be beneficial for OSCE member states — Russia included — to reaffirm their commitment to these principles. But democracy must be protected not only from encroachment by authoritarian regimes, but also from transforming the idea of democracy into a tool to serve geopolitical ambitions. That is exactly what happened when the United States used military and other types of might to “promote democracy” abroad.
Nonetheless, we should not expect to see any progress toward the creation of a new European political architecture. Apart from Russia, nobody has any enthusiasm for such a plan. Both the European Union and the United States are satisfied with the current arrangement. Given the changed economic situation, it would be difficult for Moscow to insist upon any fundamental reappraisal of the existing system. The reserve fund that Russia has accumulated does not seem as large now as it did only a short time ago, and the political weight carried by Russia’s main exports and bargaining tools — hydrocarbons — has subsided for a time. Higher oil and gas prices will one day come, providing renewed political influence to Moscow, but Russia must find a way to survive until then.
In all likelihood, Moscow will have to content itself with a little regular maintenance and fine tuning in place of a major overhaul of EU-Russian relations. Some form of temporary compromise might be found concerning the Treaty on Conventional Armed Forces in Europe and the strategic plans of the United States. Substantial negotiations on any new European setup will take place only after the current crisis has subsided and its results become clear, because the future balance of power depends on which states suffer the least from the current economic downturn. Russia will have to make serious efforts now if it wants to maintain its position as an influential player in the future world order.

Fyodor Lukyanov is editor of Russia in Global Affairs.

TITLE: Postcards from Christmases Past
AUTHOR: By Ezekiel Pfeifer, Elizabeth Shockman. Compiled by Marina Darmaros
PUBLISHER: Special to The St. Petersburg Times
TEXT: There is no Christmas on Dec. 25 in Russia, and foreigners celebrating on that day have long felt the absence of the typical trimmings and trappings. However, as a motley medley of foreigners have found over the centuries, all you really need is Christmas cheer. 
Besides which, there is only a week to wait before the biggest Russian holiday of them all — New Year’s. 

American journalist and spy Marguerite Harrison, jailed for 10 weeks in a KGB prison in the center of Moscow in 1920.
It would seem, naturally, that holidays would be harder to endure than other days in prison, but as a matter of fact, this was only partially true. The last two holidays with their home memories were the hardest of all to face, and I shall never forget the two weeks just before Christmas. Some of us, including myself, were foreigners. We knew that there was no hope of our release before the great holiday, but there were several Russian women, detained as witnesses, or on relatively unimportant charges, who hoped up to the last minute.
It was an immense stroke of luck that we had a tree at all, and we owed it to the fact that three days before Christmas we had been taken out to the public baths with an armed convoy, and marched for some distance through the snow-covered streets. They were selling trees in the Trubnaya Square through which we had to pass, and we managed to pick up a number of branches which had broken off and lay scattered on the snow. When we got back to our room we tied them together and stuck them in a bottle, which we covered with white paper that had been wrapped around a package received by one of the prisoners. Then we set about making decorations.

Harrison, Marguerite. Marooned in Moscow: The Story of an American Woman Imprisoned in Russia. New York: George H. Doran company, 1921.
www.archive.org/details/maroonedinmoscow00harr.

British travel writer Stephen Graham; spent many years in pre-Soviet Russia in the early 20th century. 
December and the year had almost unwound themselves. We were among the scantily clothed days at the end of the year . . . around me were many green wooden crosses. . . . Suddenly out of the mist a form emerged, as if the mist itself had taken form. An old woman, tall and bent with age, came slowly forward, gathering sticks here and there as she walked. . . . I did not go nearer, but saw they had planted a new Christmas tree before a grave, and they had hung it with little ornaments and candles. . . . I love Russia. She is something more to me than my native land. Behind her eyes are new mysteries, new potentialities; for she is the daughter of a different family from mine. Those of England who come as I have done will rest under the same spell and feel the same enchantment, but she is a difficult princess to come by. Often, it seems to me I am the only fortunate prince who has found the Sleeping Beauty.

Graham, Stephen. Undiscovered Russia. New York: John Lane Company, 1912. www.archive.org/details/undiscoveredruss00grahrich.

English traveler Olive Gilbreath, who voyaged from China to Russia in the early 20th century.
A grotesque Christmas! I awoke in the express, the sun shining and the whole landscape looking like a monster Christmas Card, silvered and frosted and ready to mail. There through the world, in London and New York, Christmas chimes were ringing. Packages were being untied, and children were pulling toys out of their stockings. I looked out at the monotony of the steppe, at a row of birches fluttering and dancing in the breeze. But there was one bit of holiday. A plum-pudding had been thrust into the car by a kind English friend the last moment in Peking. The Russians had never tasted English plum-pudding and I was eager that this should be irresistible.

Gilbreath, Olive. Russia in Travail: Christmas on the Steppe. London: J. Murray, 1918. www.archive.org/details/russiaintravail00gilbrich.

Jose Milhazes, journalist from Portugal; has lived in Moscow since 1967.
The first Christmas [in a foreign place] is always the hardest to spend away from family. In 1967, when I came to Moscow State University, we celebrated Christmas, trying our best to maintain Portuguese traditions. We tried to get some dried cod fish — the internationally known traditional Portuguese dish — by asking the parents of some friends to send it to us. We couldn’t get it directly from Portugal, though, so we had to buy the salted cod because, after all, Moscow hasn’t enough sun at this time of year to dry a fish.
There were so many of us at the university that we couldn’t find a big enough pan to cook for so many people! In the end, our neighbors, some girls from Cyprus, lent us a big aluminum basin, inside of which all that food finally fit. We all ate together — Portuguese, Brazilians, people from Mozambique, Angola. It was a little hard to get wine in those times, too, but we got it, and we ate cod with potatoes and gave each other what gifts we could, although we were still students. There was only one Catholic church in Moscow, but, as we didn’t go there much anyway, we didn’t go then either.

Gema Zuiga Roestel, doctor from Chile; lived in Moscow from 1979 to 1990.
I studied at the People’s Friendship University when I lived in Moscow, and we had class on December 25! But our teachers, ignoring the rules, gave us the day off, and we celebrated Christmas every year among compatriots.
Christmas in the Soviet era was a grand event for the Latin-American community. With a sizeable effort, we put together a party with friends. For supper, we used to get a frozen chicken from Bulgaria, which we prepared with rice and vegetables and many, many pieces of fruits that we would buy in Cheryomushkinsky Market. That was festive food for us in the Soviet era, especially when there were shortages. It was quite something to get a good piece of meat! After I had my son, Ivan, I would mark the festive day with much care. We always decorated a Christmas tree with ornaments bought in Detsky Mir, and I made my son believe, until he was 5 years old, that Santa Claus, indeed, existed. Every Christmas, I made these boot marks in the snow on the balcony so that he would think that Santa had entered the apartment to leave him gifts. We used to live in student lodgings that the Soviet government provided us for free. And Ivan always said that he saw Santa Claus coming with gifts and going away, even though nobody played Santa but the boots.

Mariana Prestes, Brazilian; lived in Moscow from 1970 to 1988. The daughter of the most famous Brazilian communist, Luis Carlos Prestes, she initially lived in political exile with her family, then stayed to continue her studies.
I lived in Moscow until 1988 with my family — my father, mother and eight brothers. We celebrated Christmas at home together. My Russian friends and my brothers’ Russian friends always came too, and for them it was very interesting because we celebrated just like we used to in Brazil.
My mother used to prepare roasted turkey, farofa [manioc flour toasted in butter or olive oil] and rabanada [French toast], which are popular Christmas dishes in Brazil. We decorated a Christmas tree and put gifts under it, and either my brothers or my brother-in-law would put on a Santa Claus outfit. Our Russian friends went crazy over this because they didn’t have that tradition.
Even though we had fun, it was very hard too on holidays, because we couldn’t keep in touch with people during the time of the dictatorship in Brazil. We couldn’t contact anyone for almost 10 years, not by telephone or by mail, and, of course, there was no Internet then.
Later, though, after being amnestied, my parents went back to Brazil, in 1979, while my brothers and I stayed to finish our studies. Then, on Christmas, my mother would send us some things on Christmas.

Francie Shane, American woman who lived with her husband and three children in Moscow from 1989-90.
Despite the collapsing economy at the end of the Soviet Union, my American family greatly enjoyed our two Christmases in Moscow. Of course, life was easy for us compared to a Russian family. We could buy food from Denmark, Finland, the U.S. Embassy and, of course, the Central Market near our apartment and special stores for foreigners with hard currency. We bought a Christmas tree and decorated it with plastic pine cones and shiny metallic balls purchased from the House of Toys. The store also offered up large plastic dolls, bouncing balls, miniature Soviet tanks, Lego look-alikes and more. We celebrated very much as we would’ve at home, actually delighting in the lack of obsessive commercialism for the holidays. We were well aware, however, of the deprivations most Russians suffered at the time.
More interesting for us was New Year’s with dear Russian friends. Boris dressed up as Ded Moroz and completely fooled our young daughters. Masha accompanied him as a lovely Snegurochka. We ate a feast late at night as the New Year arrived, and walked the empty streets of Moscow, circling Pushkin Square, in the wee hours of the frigid night. The next year we were at their dacha in a winter wonderland of pure white snow and thick ice — ideal for sledding and skating. We treasure these memories of relatively simple Christmases amidst the blaring Christmas muzak and excessive consumption of the American holiday.

Richard Chancellor, English explorer and navigator; first Brit to sail into the White Sea and establish contact with Muscovy, traveling there from 1554-56. He celebrated Christmas with Tsar Ivan IV, also known as Ivan the Terrible.
On Christmas Day we were all willed to dine with the Emperor’s Majesty, where for bread, meat, and drink we were served as at other times before. But for goodly and rich plate we never saw the like or so much before. There dined that day in the Emperor’s presence above 500 strangers and 200 Russians, and all they were served in vessels of gold, and that as much as could stand one by another upon the tables. Besides this there were four cupboards garnished with goodly plate, both of gold and silver. Among the which there were twelve barrels of silver containing above twelve gallons apiece, and at each end of every barrel were six hoops of fine gold. This dinner continued about six hours.

<i>Hakluyt, Richard. The Discovery of Muscovy, from the collections of Richard Hakluyt. London: London Cassell, 1889.
www.archive.org/details/discoveryofmusco00hakluoft</i>

TITLE: Eartha Kitt, Sultry Singer, Dies
PUBLISHER: The Associated Press
TEXT: NEW YORK — Eartha Kitt, a sultry singer, dancer and actress who rose from South Carolina cotton fields to become an international symbol of elegance and sensuality, has died, a family spokesman said. She was 81.
Andrew Freedman said Kitt, who was recently treated at Columbia Presbyterian Hospital, died Thursday in Connecticut of colon cancer.
Kitt, a self-proclaimed “sex kitten” famous for her catlike purr, was one of America’s most versatile performers, winning two Emmys and nabbing a third nomination. She also was nominated for several Tonys and two Grammys.
Her career spanned six decades, from her start as a dancer with the famed Katherine Dunham troupe to cabarets and acting and singing on stage, in movies and on television. She persevered through an unhappy childhood as a mixed-race daughter of the South and made headlines in the 1960s for denouncing the Vietnam War during a visit to the White House.
Through the years, Kitt remained a picture of vitality and attracted fans less than half her age even as she neared 80.
When her book “Rejuvenate,” a guide to staying physically fit, was published in 2001, Kitt was featured on the cover in a long, curve-hugging black dress with a figure that some 20-year-old women would envy. Kitt also wrote three autobiographies.
Once dubbed the “most exciting woman in the world” by Orson Welles, she spent much of her life single, though brief romances with the rich and famous peppered her younger years.
After becoming a hit singing “Monotonous” in the Broadway revue “New Faces of 1952,” Kitt appeared in “Mrs. Patterson” in 1954-55. (Some references say she earned a Tony nomination for “Mrs. Patterson,” but only winners were publicly announced at that time.) She also made appearances in “Shinbone Alley” and “The Owl and the Pussycat.”
Her first album, “RCA Victor Presents Eartha Kitt,” came out in 1954, featuring such songs as “I Want to Be Evil,” “C’est Si Bon” and the saucy gold digger’s theme song “Santa Baby,” which is revived on radio each Christmas.
The next year, the record company released follow-up album “That Bad Eartha,” which featured “Let’s Do It,” “Smoke Gets in Your Eyes” and “My Heart Belongs to Daddy.”
In 1996, she was nominated for a Grammy in the category of traditional pop vocal performance for her album “Back in Business.” She also had been nominated in the children’s recording category for the 1969 record “Folk Tales of the Tribes of Africa.”
Kitt also acted in movies, playing the lead female role opposite Nat King Cole in “St. Louis Blues” in 1958 and more recently appearing in “Boomerang” and “Harriet the Spy” in the 1990s.
On television, she was the sexy Catwoman on the popular “Batman” series in 1967-68, replacing Julie Newmar who originated the role. A guest appearance on an episode of “I Spy” brought Kitt an Emmy nomination in 1966.
“Generally the whole entertainment business now is bland,” she said in a 1996 Associated Press interview. “It depends so much on gadgetry and flash now. You don’t have to have talent to be in the business today.
“I think we had to have something to offer, if you wanted to be recognized as worth paying for.”
Kitt was plainspoken about causes she believed in. Her anti-war comments at the White House came as she attended a White House luncheon hosted by Lady Bird Johnson.
“You send the best of this country off to be shot and maimed,” she told the group of about 50 women. “They rebel in the street. They don’t want to go to school because they’re going to be snatched off from their mothers to be shot in Vietnam.”
For four years afterward, Kitt performed almost exclusively overseas. She was investigated by the FBI and CIA, which allegedly found her to be foul-mouthed and promiscuous.
“The thing that hurts, that became anger, was when I realized that if you tell the truth — in a country that says you’re entitled to tell the truth — you get your face slapped and you get put out of work,” Kitt told Essence magazine two decades later.
In 1978, Kitt returned to Broadway in the musical “Timbuktu!” — which brought her a Tony nomination — and was invited back to the White House by President Jimmy Carter.
In 2000, Kitt earned another Tony nod for “The Wild Party.” She played the fairy godmother in Rodgers and Hammerstein’s “Cinderella” in 2002.
As recently as October 2003, she was on Broadway after replacing Chita Rivera in a revival of “Nine.”
She also gained new fans as the voice of Yzma in the 2000 Disney animated feature “The Emperor’s New Groove.’”
In an online discussion at Washingtonpost.com in March 2005, shortly after Jamie Foxx and Morgan Freeman won Oscars, she expressed satisfaction that black performers “have more of a chance now than we did then to play larger parts.”
But she also said: “I don’t carry myself as a black person but as a woman that belongs to everybody. After all, it’s the general public that made (me) — not any one particular group. So I don’t think of myself as belonging to any particular group and never have.”
Kitt was born in North, S.C., and her road to fame was the stuff of storybooks. In her autobiography, she wrote that her mother was black and Cherokee while her father was white, and she was left to live with relatives after her mother’s new husband objected to taking in a mixed-race girl.
An aunt eventually brought her to live in New York, where she attended the High School of Performing Arts, later dropping out to take various odd jobs.
By chance, she dropped by an audition for the dance group run by Dunham, a pioneering African-American dancer. In 1946, Kitt was one of the Sans-Souci Singers in Dunham’s Broadway production “Bal Negre.”
Kitt’s travels with the Dunham troupe landed her a gig in a Paris nightclub in the early 1950s. Kitt was spotted by Welles, who cast her in his Paris stage production of “Faust.”
That led to a role in “New Faces of 1952,” which featured such other stars-to-be as Carol Lawrence, Paul Lynde and, as a writer, Mel Brooks.
While traveling the world as a dancer and singer in the 1950s, Kitt learned to perform in nearly a dozen languages and, over time, added songs in French, Spanish and even Turkish to her repertoire.
“Usku Dara,” a song Kitt said was taught to her by the wife of a Turkish admiral, was one of her first hits, though Kitt says her record company feared it too remote for American audiences to appreciate.
Song titles such as “I Want to be Evil” and “Just an Old Fashioned Girl” seem to reflect the paradoxes in Kitt’s private life.
Over the years, Kitt had liaisons with wealthy men, including Revlon founder Charles Revson, who showered her with lavish gifts.
In 1960, she married Bill McDonald but divorced him after the birth of their daughter, Kitt.
While on stage, she was daringly sexy and always flirtatious. Offstage, however, Kitt described herself as shy and almost reclusive, remnants of feeling unwanted and unloved as a child. 
She referred to herself as “that little urchin cotton-picker from the South, Eartha Mae.”

TITLE: Playwright Harold Pinter, Nobel Laureate, Dead at 78
PUBLISHER: The Associated Press
TEXT: LONDON — British Nobel laureate Harold Pinter — who produced some of his generation’s most influential dramas and later became a staunch critic of the U.S.-led war in Iraq — has died, his widow said Thursday. He was 78.
Pinter died Wednesday after a long battle with cancer, according to his second wife Antonia Fraser.
In recent years he had seized the platform offered by his 2005 Nobel Literature prize to denounce President George W. Bush, former British Prime Minister Tony Blair and the war in Iraq.
But he was best known for exposing the complexities of the emotional battlefield.
His writing featured cool, menacing pauses in dialogue that reflected his characters’ deep emotional struggles and spawned a new adjective found in several dictionaries: “Pinter-esque.”
“Pinter restored theater to its basic elements: an enclosed space and unpredictable dialogue, where people are at the mercy of each other and pretense crumbles,” the Nobel Academy said. “With a minimum of plot, drama emerges from the power struggle and hide-and-seek of interlocution.”
His characters’ internal fears and longings, their guilt and difficult sexual drives were set against the neat lives they constructed in order to try to survive. Usually enclosed in one room, the acts usually illustrated the characters’ lives as a sort of grim game with actions that often contradicted words. Gradually, the layers were peeled back.
“How can you write a happy play?” he once said. “Drama is about conflict and degrees of perturbation, disarray. I’ve never been able to write a happy play, but I’ve been able to enjoy a happy life.”
Pinter wrote 32 plays; one novel, “The Dwarfs,” in 1990; and put his hand to 22 screenplays.
The working-class milieu of his first dramas reflected his early life as the son of a Jewish tailor from London’s East End.
Born Oct. 30, 1930, in the London neighborhood of Hackney, he was forced along with other children during World War II to evacuate to rural Cornwall in 1939. He was 14 before he returned. By then, he was entranced with Franz Kafka and Ernest Hemingway.
By 1950, Pinter had begun to publish poetry and appeared on stage as an actor. Pinter began to write for the stage, and published “The Room” in 1957.
A year later, his first major play, “The Birthday Party” was produced in the West End.
In it, intruders enter the retreat of Stanley, a young man who is hiding from childhood guilt. He becomes violent, telling them, “You stink of sin, you contaminate womankind.”
The play closed after just one week to disastrous reviews, but Pinter continued to write and was most prolific between 1957 and 1965.
“With his earliest work, he stood alone in British theater up against the bewilderment and incomprehension of critics, the audience and writers, too,” British playwright Tom Stoppard said when the Nobel Prize was announced.
“I find critics on the whole a pretty unnecessary bunch of people,” Pinter once said.
In “The Caretaker,” (1959) a manipulative old man threatens the relationship of two brothers, while “The Homecoming” (1964) explores the hidden rage and confused sexuality of an all-male household by inserting a woman.
In “Silence” and “Landscape,” (1967 and 1968) Pinter moved from exploring the underbelly of human life to showing the simultaneous levels of fantasy and reality that occupy the individual.
“The speech we hear is an indication of that which we don’t hear,” Pinter once said. “It is a necessary avoidance, a violent, sly, and anguished or mocking smoke screen which keeps the other in its true place. When true silence falls we are left with echo but are nearer nakedness.”
“Betrayal” (1978) was reportedly based on the disintegration of his marriage to actress Vivien Merchant, who appeared in many of his first plays.
Their marriage ended in 1980 after Pinter’s long affair with BBC presenter Joan Bakewell. He then married Fraser. Merchant died shortly afterward of alcoholism-related disease.
During the late 1980s, his work became more overtly political; he said he had a responsibility to pursue his role as “a citizen of the world in which I live, (and) insist upon taking responsibility.”
In the 1980s, Pinter’s only stage plays were one-acts: “A Kind of Alaska” (1982), “One for the Road” (1984) and the 20-minute “Mountain Language” (1988).
Off-stage he was also highly political: Pinter turned down former Prime Minister John Major’s offer of a knighthood and strongly attacked Blair when NATO bombed Serbia. He later referred to Blair a “deluded idiot” for supporting Bush’s war in Iraq.
He said he deeply regretted having voting for Margaret Thatcher in 1979 and Tony Blair in 1997.
French President Nicolas Sarkozy called Pinter a “great playwright and lucid, agitated and uncompromising humanist.”
He called the Nobel “a belated consecration of his immense work, but also an homage to a man’s courage and commitment against all forms of barbarism.”
The prize gave Pinter a global platform, from which he frequently and bitterly decried the Iraq war.
“The invasion of Iraq was a bandit act, an act of blatant state terrorism, demonstrating absolute contempt for the concept of international law,” Pinter said in his Nobel lecture, which he recorded rather than traveling to the Swedish capital of Stockholm.
“How many people do you have to kill before you qualify to be described as a mass murderer and a war criminal? One hundred thousand?” he asked, in a hoarse voice.
Though he had been looking forward to giving the Nobel lecture — calling it “the longest speech I will ever have made” — he canceled his attendance at the award ceremony, and then announced he would skip the lecture as well on his doctor’s advice.
In March 2005, Pinter announced his retirement as a playwright to concentrate on politics. But he created a radio play, “Voices,” that was broadcast on BBC radio to mark his 75th birthday.
“I have written 29 plays, and I think that’s really enough,” Pinter said. “I think the world has had enough of my plays.”
Pinter’s influence was felt in the United States in the plays of Sam Shepard and David Mamet.
Friend and biographer Michael Billington said Pinter “was a political figure, a polemicist and carried on fierce battles against American foreign policy and often British foreign policy, but in private he was the most incredibly loyal of friends and generous of human beings.”
“He was a great man as well actually as a great playwright,” Billington said.
Pinter is survived by his son, Daniel, from his marriage to Merchant.

TITLE: Thousands Gather To Mourn Benazir Bhutto
AUTHOR: By Asim Tanveer
PUBLISHER: Reuters
TEXT: GARHI KHUDA BAKHSH, Pakistan — Hundreds of thousands of supporters of former Pakistani prime minister Benazir Bhutto gathered in her home town on Saturday to mark the first anniversary of her assassination.
The anniversary of the killing that sparked days of violence by her supporters, comes as Pakistan faces yet another crisis.
Tension has been rising with India over last month’s militant attacks in the Indian city of Mumbai, stoking fears of conflict between the nuclear-armed neighbours.
Bhutto, 54, was killed in a gun and bomb attack in the city of Rawalpindi as she emerged from an election rally just over two months after she had returned from years of self-exile.
In February, the two-time prime minister’s Pakistan People’s Party (PPP) rode a wave of sympathy to win an election and it now heads a coalition government. Her widower, Asif Ali Zardari, has become president.
Zardari, in a statement marking the anniversary, said the attack on his wife was an attack on the viability of the state and aimed at undermining efforts to build democratic structures and to fighting militancy.
“The tyrants and the killers have killed her but they shall never be able to kill her ideas that drove and inspired a generation to lofty aims,” Zardari said.
Security was tight at the Bhutto family’s graveyard in the village of Garhi Khuda Bakhsh, in Sindh province. She was buried next to her father, former prime minister Zulfikar Ali Bhutto, who was hanged in 1979 after being deposed in a military coup.
Senior police official Tanvir Odho said 6,000 policemen and hundreds of paramilitary soldiers were on guard.
Bomb-sniffing dogs swept the site and surveillance cameras and walk-through metal detectors been set up. Odho estimated that 200,000 people had gathered.
Supporters cried and beat their heads and chests in a sign of mourning as they stood by the grave covered with rose petals and sheets inscribed with Koranic verses.
“I was at the rally where she was assassinated. It is my duty to be here on her anniversary,” said Maqbool Hussain, 75, a PPP activist with a picture of Bhutto stuck to the front of his shirt. “She is my leader. She is leader of all of Pakistan.”
A year after her murder, many questions remain unanswered.
Investigations by Pakistan’s previous government, British police and the U.S. Central Intelligence Agency accused an al Qaeda-linked militant of killing Bhutto, a staunch supporter of the U.S.-led campaign against Islamist militancy.
But many of her supporters have expressed dissatisfaction with those investigations and are perplexed as to why the PPP-led government has done virtually nothing to get to the bottom of the case.

TITLE: Queen Strikes Somber Note in Speech
PUBLISHER: Reuters
TEXT: LONDON — Worries about the global economy and violence across the world have turned the celebration of Christmas into a more somber affair this year, Queen Elizabeth said on Thursday.
Britain, like many other developed nations, is facing the risk of a prolonged recession. Unemployment is rising fast, household high street firms are collapsing and several big banks are only able to stay in business with government help.
There has also been an increase in the number of British soldiers killed in Afghanistan in recent weeks, just as troops in Iraq prepare to come home next year.
“Christmas is a time for celebration, but this year it is a more somber occasion for many,” the Queen said.
“People are touched by events which have their roots far across the world. Whether it is the global economy or violence in a distant land, the effects can be keenly felt at home.”
But, in her annual Christmas broadcast which dates back to 1957 and is watched by millions across Britain and the Commonwealth, the 82-year-old said those with courage would work hard to survive and improve their lot.
“When life seems hard the courageous do not lie down and accept defeat; instead they are all the more determined to struggle for a better future,” she said, standing by a piano adorned with pictures of her family.

TITLE: Cruise Nazi Film Opens Well
PUBLISHER: Reuters
TEXT: LOS ANGELES — It was an improbable plot hatched during World War II and to match it on movie screens, Hollywood offered perhaps the most unlikely casting of a hero at the holidays — Tom Cruise playing a Nazi-era German army officer.
Cruise, of course, enjoys All-American looks that helped send him to movie stardom playing heroic young men such as Pete “Maverick” Mitchell in 1986 movie, “Top Gun.” As of late, he’s been on a mea culpa tour to explain his odd behavior in recent years and to regain his good-guy image with fans.
The improbable plot was a plan by German officers to kill Adolf Hitler by placing a bomb near him at a top secret meeting, and the resulting movie about that attempt is “Valkyrie,” starring Cruise as Colonel Claus Von Stauffenberg, who was at the center of the assassination attempt.
“Stauffenberg was unique, handsome, and Tom had a lot of the same attributes, besides the physical looks of the character,” “Valkyrie” director Bryan Singer told Reuters.
“I look for similarities in the actor and the person and in that world — you take all [Cruise’s] baggage away — and you’ve got a good casting choice,” he said. “In the context of an assassination thriller ... Tom Cruise was a natural for this character,” Singer said.
Audiences apparently agree. With mixed reviews and against stiff competition that included family films “Marley & Me” and “Bedtime Stories,” as well as Oscar hopeful “The Curious Case of Benjamin Button,” “Valkyrie” held its own at box offices.
Early reports had the film taking in an estimated $8.5 million in ticket sales on Christmas Day, although its studio backer United Artists — owned by Cruise, Wagner and Metro-Goldwyn-Mayer — had not issued official numbers.
“Considering the subject matter and level of competition, ‘Valkyrie’ did just fine,” said Paul Dergarabedian, president of box office tracker Media by Numbers.

TITLE: Obama Hit by Power Outage
AUTHOR: By Ross Colvin
PUBLISHER: Reuters
TEXT: HONOLULU — U.S. President-elect Barack Obama was without electricity for 12 hours at his vacation home on Oahu after a suspected lightning strike blacked out Hawaii’s most populous island, an aide said on Saturday.
The outage on Friday night left hundreds of thousands of people, including Obama and his family, in the dark as an electrical storm rolled over the island. The Obamas are staying at a heavily guarded beachfront villa in eastern Oahu.
“Power was restored to the residence during the 6 o’clock hour this morning. The Obama family is grateful for the offers of assistance from local officials,” said Ben Labolt, a spokesman for Obama.
Those offers included a generator from the Hawaiian Electricity Company, but an Obama aide said the family did not use one. It was not immediately clear why.
No additional security measures were visible on Friday night at the compound, which is guarded by Secret Service agents, and no attempt was made to move the Obamas through darkened streets to a nearby Marine Corps military base.

TITLE: Strange Days, Before and After Start of 2008 Crisis
AUTHOR: By Erik Kirschbaum
PUBLISHER: Reuters
TEXT: BERLIN — Whether smashing plates in San Diego to relieve frustration or drinking “Bailout Bitter” beer in Canada sold as a “bitter ale for bitter times,” people the world over kept a sense of humor in 2008 despite financial woes.
Some of the year’s top off-beat tales included a Canada brewery that created a special tough times bitter and “Sarah’s Smash Shack” in California, which charges patrons $10 for 15 minutes of pleasure by pulverizing dinnerware against a wall.
“It was the best $50 we’ve spent in the last two years,” said insurance broker Adam DeWitt, who smashed plates in San Diego with his wife after his home mortgage loan was rejected.
A glance back at 2008 shows a world full of wonderful, weird and whacky stories both before and after the financial upheaval.
In May, a Wall Street restaurant boasted it was selling the costliest burger in New York, with the $175 patty made of Kobe beef, black truffles, seared foie gras and flecks of gold leaf.
“Wall Street has good days and bad days,” said Heather Tierney at her Wall Street Burger Shoppe. “We wanted to have something special if you really have a good day on Wall Street.”
One bank in Kazakhstan offered a diamond-encrusted credit card for well-heeled clients with incomes over $300,000. A jeweller in Tokyo kept busy selling 13-piece tableware sets made of gold for $1 million — aimed at newly rich Chinese customers.
A Polish man got the shock of his life when he visited a brothel and spotted his wife among the establishment’s employees, making some extra money on the side. After 14 years, the couple are divorcing.

WHACKY NEWS
But away from the financial turmoil, the world had its usual slew of whacky news as well in 2008. In China, the world’s tallest man, Bao Xishun, became the world’s tallest father with the birth of his first child.
In Italy, a man accused of being a Mafioso got out of prison after a court ruled he was too fat for jail. Guards said the 210-kilogram man could not fit through the bathroom door.
In Germany, dozens of lobsters destined to be boiled alive made a successful getaway from a supermarket, crawling out of a poorly secured wire mesh one night and squeezing past an unlocked metal door to freedom.
In China, a pig that survived 36 days buried in the Sichuan earthquake rubble was voted the country’s favorite animal. But he suffered the curse of celebrity: he was later criticized for basking in the limelight while growing fat and bad-tempered.
One Italian couple was caught red-handed having sex in a church confessional box while morning Mass was being said while a British virgin celebrated her 105th birthday by telling journalists the secret to longevity was avoiding sex.
An Australian outback mayor won the country’s outrageous sexism award for urging lovelorn female “ugly ducklings” to move to his remote mining town, where men outnumber women 5-1. He said: “Beauty-disadvantaged women should proceed to Mount Isa.”
An Indian Muslim couple made news for exchanging wedding vows by phone after the groom, who lives abroad, said he did not have money to return home. The whole village witnessed the ceremony when clerics put the mobile phone on speaker mode.