SOURCE: The St. Petersburg Times
DATE: Issue #1443 (5), Tuesday, January 27, 2009
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TITLE: Chichvarkin Sought In Criminal Investigation
AUTHOR: By Natalya Krainova
PUBLISHER: Staff Writer
TEXT: MOSCOW — Former Yevroset chairman Yevgeny Chichvarkin, who left the country in December and has not returned, is being sought by investigators in connection with allegations of smuggling, kidnapping and extortion.
The Yevroset founder’s whereabouts are currently unknown, and speculation is swirling that he will remain abroad permanently given the possibility of arrest in Russia. 
The Basmanny District Court on Wednesday is to rule on whether to grant a request by investigators to issue a warrant for Chichvarkin’s arrest, Moscow City Court spokeswoman Anna Usachyova told The Moscow Times on Friday.
Chichvarkin’s lawyer Yury Gervis said investigators were seeking his client’s arrest as part of a criminal case against two former Yevroset employees, Boris Levin and Andrei Yermilov. Levin and Yermilov were arrested in September on suspicion of smuggling, kidnapping and extortion.
Gervis could not say what specific charges Chichvarkin, 34, might face, saying he first needed to study case materials provided by investigators. 
Usachyova of the Moscow City Court said she had no information on possible charges against Chichvarkin. A spokeswoman for the Investigative Committee, which is investigating the case against Levin and Yermilov, declined to comment Friday.
Chichvarkin’s assistant, Natalya Ikonnikova, who answered Chichvarkin’s cell phone Sunday, told The Moscow Times that her boss and his wife were on vacation abroad. She said she did not know which country Chichvarkin was in or when he might return to Russia, but she added that Chichvarkin was arranging for his 10-year-old son Yaroslav to attend a school somewhere in Europe.
Ikonnikova said she had learned that investigators wanted to arrest Chichvarkin from media reports.
Gervis refused to comment on Chichvarkin’s whereabouts but said there was little chance his client would appear at Wednesday’s court hearing “given the current circumstances.” 
Investigators believe that he may be in London, where several Russian businessmen who have fallen out with authorities currently live. Chichvarkin left Moscow for London at 10 p.m. on Dec. 22 and an hour later was summoned to the Investigative Committee for questioning, Kommersant reported Saturday, citing a police report. Investigators are now seeking an international warrant for his arrest, the report said.
Chichvarkin was questioned by investigators in the Levin and Yermilov case after their arrest in September. He has said the two men were arrested in connection with a case involving former employee Andrei Vlaskin, who was charged with reselling phones stolen from shipments to Yevroset. Vlaskin later paid 20 million rubles ($608,000) in damages to settle the case.
Levin, Yermilov and two other Yevroset employees are suspected of kidnapping Vlaskin in 2003 and holding him in a rented apartment until he paid back the money and returned the handsets, Kommersant reported Friday. Chichvarkin has vigorously defended his former employees, saying they are guilty of nothing.
Chichvarkin founded Yevroset in 1997 and subsequently turned it into the country’s largest mobile phone retailer. Citing liquidity woes, he sold Yevroset in late September to billionaire Alexander Mamut in a deal that reportedly involved Mamut paying $400 million in cash and assuming $850 million in debt. 
Chichvarkin, however, stayed on as chairman of the company until November, when he announced that he was stepping down to focus his energy on promoting the new Kremlin-backed pro-business party Right Cause, whose Moscow branch he was tapped to lead.
The party’s co-chairman, Leonid Gozman, told The Moscow Times on Friday that the party was ready to support Chichvarkin in his legal battle and that the offer was open for him to head up the party’s Moscow branch if he returned to Russia and was not arrested. The party was to discuss alternative candidates for the position Monday.
“Our decision [to appoint Chichvarkin] doesn’t depend on the opinion of investigative bodies,” Gozman said.
Gozman called the allegations against Chichvarkin “yet another example of the onslaught against business” by authorities.
Right Cause leaders said they had not been in contact with Chichvarkin for several weeks. Party co-chairman Boris Titov said Thursday that Chichvarkin went on vacation abroad before the new year and that he had not spoken with him since.
State Duma Deputy Igor Lebedev, head of Liberal Democratic Party’s Duma faction, said Chichvarkin’s flirtation with Right Cause was merely an unsuccessful attempt to buy political capital in order to ward off criminal prosecution, RIA-Novosti reported Friday.
Chichvarkin last summer participated in the annual party congress of United Russia, which has an overwhelming majority in the Duma and is led by Prime Minister Vladimir Putin.
Alexandra Odynova contributed to this report.

TITLE: Siege of Leningrad Marked 65 Years Later
AUTHOR: By Irina Titova
PUBLISHER: Special to The St. Petersburg Times
TEXT: About 4,000 people gathered near the village of Nikolskoye outside St. Petersburg on Sunday to watch a reenactment of the battle that led to the breaking of the Siege of Leningrad during World War II.
At least 350 participants, dressed in original Soviet and German military uniforms, staged a 40-minute battle to mark the 65th anniversary of the end of the Siege on Jan. 27 1944.
Snow on the battlefield was blackened by smoke from explosions when enthusiasts representing the German side attacked those representing the Soviet side. 
A real German T-4 tank, a Soviet T-34 tank, 45-mm antitank guns, an armored vehicle and a truck were used in the battle, which simulated the repulse of the Germans from Leningrad, as St. Petersburg was then known, by Soviet forces. Some spectators climbed pine trees to get a better view of the show.
Valentina Sysoyeva, 81, a survivor of the Siege, who attended the show, said she was “moved that young people still remember about the tragedy of the Siege.”
Sysoyeva was 13 when the Siege began. She said her most dramatic memory of the Siege was dragging a sled carrying the body of her 15-year-old sister, who had died of starvation.
“We buried her in a huge deep mass grave where coffins were stacked on each other four rows up,” Sysoyeva said.
Sysoyeva said she only survived by begging for food.
“After my sister died I felt such a great desire to live, and then I like many other children went to beg from military men. They always shared their food with us,” she said.
The Siege of Leningrad by the German Army lasted for just under 900 days from Sept. 9 1941 and resulted in the death of about 1.5 million people from starvation, disease and bombardment. It remains one of the deadliest military offensives in history.
Alexander Kruzhkov, 73, who also survived the Siege as a child, said he came to Sunday’s reenactment with his son and grandson.
“I still can’t hold back the tears when I remember cutting a tiny piece of bread into several parts for my brothers. Our parents had died of starvation by that time,” Kruzhkov said.
World War II veteran Mikhail Kurykin, 88, cried when the reenactment ended with the Soviet victory and a salute was given.
“Such shows are particularly needed for young people, children, and teenagers. Many of them don’t know that much about that historical period. The memory of those hard and heroic times should not die,” Kurykin said.
The reenactment was organized by Epoch, an association of St. Petersburg historical clubs that unites hundreds of history buffs and reenactment enthusiasts. 
Vladimir Chikunov, head of Epoch, said hundreds of people came to take part in the reenactment —not only from St. Petersburg but also from other Russian cities, Ukraine and the Baltic States.
Sunday’s reenactment came ahead of events to be held on Tuesday, which marks 65 years to the day when the Siege of Leningrad was ended. President Dmitry Medvedev, a native of St. Petersburg, will visit the city to take part in official commemorative events. 
City residents are due to lay flowers at the city’s Piskaryovskoye cemetery and other cemeteries where those who died in the Siege are buried. Veterans and other residents can also attend a concert at the Ice Palace, while Governor Valentina Matviyenko is due to host a reception.
Residents are also expected to light candles in their windows from 7 p.m. on Tuesday, while later that night there will be a firework show in the city center.
On Monday youth volunteers were set to hand out about 1 million olive-colored ribbons marking Leningrad’s victory over the Germans at central metro stations and post offices.
Matviyenko said the city authorities are planning to improve the living conditions of Siege survivors — known as blokadniki in Russian — by 2010. 
“We provide a second pension to blockade survivors, help them to solve living problems, give them vacation home vouchers, and help with repairs to their homes,” Matviyenko said, Interfax reported.
“For me personally, the Siege of Leningrad is a turning point in the history of the city. St. Petersburg before and after the Siege are two different things,” she said.

TITLE: Tbilisi and Moscow Accused of War Crimes by Rights Group
AUTHOR: By Mansur Mirovalev
PUBLISHER: The Associated Press
TEXT: MOSCOW — Both sides in Russia’s war with Georgia over the breakaway South Ossetia region committed numerous human rights violations, atrocities and noncombat killings during and after the brief August conflict, Human Rights Watch said.
In a 200-page report released Friday, the New York-based watchdog accused Russian authorities of connivance in abuses by South Ossetian militias that it said amounted to ethnic cleansing.
The report detailed what the rights group called the “indiscriminate and disproportionate” use of force by the Russian and Georgian militaries as well as separatist South Ossetian forces backed by Moscow.
“All sides displayed negligence toward international law,” said Human Rights Watch researcher Tatyana Lokshina, who led a team that conducted nearly 500 interviews over several months.
She urged Russian and Georgian authorities to allow an independent and objective investigation and said the group’s report has been passed to the International Criminal Court in The Hague, Netherlands.
Russian and Georgian authorities were not immediately available for comment.
Georgian officials cooperated with the Human Rights Watch effort, the report said. Russian officials, by contrast, did not respond to requests for information sent to the Defense Ministry, Interior Ministry, Emergency Situations Ministry and presidential administration, it said.
Human Rights Watch said Georgian troops used “indiscriminate and excessive” force, including tank shellings of civilian homes and the use of cluster bombs in civilian areas. Georgian authorities admitted the use of cluster bombs but claimed that they only targeted the military. Russian forces bombed civilian targets, such as a hospital in the Georgian city of Gori, the report said. It said Russian forces also failed to provide security for civilians after the war, during what it called the “deliberate and systematic” destruction of ethnic Georgian villages by South Ossetian militias.
Lokshina said the group documented “massive” arson and looting, widespread beatings and torture of civilians by South Ossetian militias, as well as several rapes and killings of ethnic Georgians. It said there were cases in which Russian troops participated in looting.
Human Rights Watch said abuses by the militias amounted to deliberate ethnic cleansing and that Russia must share the blame.
During and immediately after the war, Russian officials repeated South Ossetian authorities’ claim that up to 2,000 South Ossetian civilians were killed in the war. But by late December, Russian authorities had confirmed the death of 162 civilians.
“Russia should publicly admit it exaggerated the figures,” Neistat said.
Georgian authorities have said 169 Georgian soldiers and police officers and 69 civilians were killed in the war. The Russian military said 74 Russian servicemen died.

TITLE: Russian Diplomatic Efforts To Be Stepped Up in Africa
PUBLISHER: Reuters
TEXT: KHARTOUM, Sudan — Russia is planning to step up its diplomatic involvement in African issues including Sudan’s Darfur crisis, Mikhail Margelov, head of the Federation Council’s International Affairs Committee, said Sunday.
“Russia is back in Africa,” Margelov, appointed as Russia’s envoy to Sudan in December, told reporters at the start of a six-day visit to Sudan.
He said Moscow had an “open door” to anyone looking for support for development projects.
“Russia is ready to play a more active role on the African continent,” Margelov said. “We want our voice to be heard in all the international discussions on African problems. We understand our part of the responsibility for what is happening in the African continent, and we are serious about it.”
Margelov said his government was still formulating its position on Sudan’s festering Darfur conflict and on a looming International Criminal Court case against Sudan’s president over purported war crimes in Darfur.
The world court’s chief prosecutor has asked judges to issue an arrest warrant against Sudan’s president, Omar Hassan al-Bashir, accusing him of orchestrating genocide during almost six years of conflict in the remote western region.

TITLE: Orthodox Church Selects Patriarch Nominees
PUBLISHER: Combined Reports
TEXT: MOSCOW — Senior clergy of the Russian Orthodox Church selected three nominees on Sunday to stand in a vote for the first new patriarch since the Soviet collapse.
Metropolitan Kirill of Smolensk and Kaliningrad, acting head of the Russian Orthodox Church since the death of Patriarch Alexy II last month and widely seen as a modernizer, received 97 of the total 197 votes cast by the council of bishops.
Metropolitan Kliment of Kaluga and Borovsk had 32 votes, while Metropolitan Filaret of Minsk and Slutsk had 16 votes, church officials said. 
The patriarch will be chosen at a separate gathering starting Tuesday.
Earlier Sunday, clergy prayed for divine guidance at the start of the contest for a new leader that is likely to pit conservatives against those who want to open up the church to the rest of the world.
The new patriarch will lead a church of about 165 million believers worldwide and determine whether to repair ties with the Roman Catholic Church that have been strained since a schism in 1054 split Christianity into eastern and western branches.
Several dozen of the church’s most senior clergy members, in gold-embroidered vestments, held prayers in Moscow’s Christ the Savior Cathedral asking God to help them choose a worthy successor to Alexy II.
“Thousands of churches and hundreds of monasteries across all our land have risen from ruins in less than 20 years, largely thanks to the devoted work of our deceased patriarch,” Kirill told the gathering of bearded senior clerics, dressed in black robes and cylindrical hats. “We cannot but understand the greatness of the task that faces us to be worthy of the memory of this great luminary of the Russian church.”
There has been no overt campaigning for the patriarch’s role, but there has been a vigorous debate in the Russian media between churchgoers who favor sticking to tradition and modernizers who want stronger ties with other Christian faiths.
The top contenders picked by the council of bishops are Metropolitan Kirill of Smolensk and Kaliningrad, 62, who spearheaded contacts with other religions, and a conservative camp whose favored candidate is Metropolitan Kliment of Kaluga and Borovsk, 59. 
A local council — made up of about 700 priests, monks and laypeople — will then convene Tuesday to choose the next patriarch. The final voting procedure has yet to be decided, but it could involve a secret ballot or drawing lots at random.
The cathedral, a short distance from the Kremlin, was surrounded by hundreds of police. Orthodox activists gathered outside holding up ecclesiastical banners embroidered with the image of Jesus Christ. “Let the Holy Spirit point to the most worthy candidate,” read a placard held up by one believer. 
— (Reuters, AP)

TITLE: Five Detained At ‘Conformists’ Rally
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Police detained five people in St. Petersburg on Sunday as a group of anarchists and left-wing activists held a so-called Conformists’ March. 
As Kremlin-backed party United Russia prepared a national demonstration in support of the Russian government’s measures to tackle the economic crisis, around 50 oppositionist activists held a rally only using pro-government slogans in an absurdist show of exaggerated loyalty.
The demonstrators, many of whom took part in recent “hare” demonstrations against the rise in public transport fares (zayats, or hare is the Russian slang for fare-dodger) this month and some who wore the movement’s hare/skull-and-bones buttons, demanded that prices and tariffs be raised and wages cut.
The organizers took pains to secure an official “sanction” for the event. Although the authorities denied permission for the demonstration to take place in the center of the city and said it could only take place at a deserted location on the coast of the Gulf of Finland, the organizers immediately agreed in the “conformist” spirit of the rally.
Some activists carried “icons” of Prime Minister Vladimir Putin and Transport Minister Igor Levitin. Another carried a large wooden cross with the word “Crisis” painted in red on it, while others held a banner in the Russian national colors with “We Agree to Everything” emblazoned on it.
Meanwhile, an activist with a megaphone cited a leaflet containing a list of the demonstrators’ proposals to the government that parodied official propaganda. The speaker suggested a tax on air and thanked police who escorted the demonstrators on a 500-meter march.
Slogans on display at the event included: “Yes to the Rise of Tariffs on Housing and Public Utilities;” “Raise Prices, Save Russia;” “Yes to a 12-Hour Working Day;” “Destroy Gardens, Build Towers;” and “Life Has Become Better, Life Has Become More Joyous” — the last being an infamous quote by dictator Joseph Stalin.
When the marchers reached the final point of the designated route, they turned back to march in the opposite direction, but were stopped by a police officer who said that the group could not do so because their permit allowed the marchers to proceed in one direction only. He let the demonstrators stay where they were and they gleefully agreed.
Arrests began about 30 minutes after the start of the rally, when the police thought that the tricolor banner on which “We Agree to Everything” was written constituted an offense against the Russian national flag. Several activists were detained as other demonstrators expressed their agreement with the police action and later gathered in a group to kiss the Putin icon and wave banners.
A police spokesman said that four activists and one organizer were taken to a police precinct and charged with minor offenses. 
“The main grounds for the detentions,” were violations of regulations on the holding of public events, specifically the change in the route of the procession, police spokesman Vyacheslav Stepchenko said by phone on Monday.

TITLE: ‘Helicopter Hunting’ a Favorite With Elite Poachers
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: MOSCOW — When a helicopter carrying senior government officials crashed into a remote Altai mountainside earlier this month, killing several passengers, the accident appeared to be nothing more than a tragic loss of life.
But photographs snapped at the crash site have thrown a spotlight on what conservationists say is a disturbingly popular pastime among the country’s political and business elite: the expensive sport of poaching from helicopters. 
One photograph published on an Altai region web site shows the carcasses of endangered argali sheep among the wreckage of the Mi-171 helicopter that crashed Jan. 9. One of the sheep has a knife sticking out of its haunches. 
The wild sheep is one of Russia’s rarest animals, and hunting it is punishable by up to two years in prison. The photograph prompted ecologists to press prosecutors to investigate whether the officials were hunting illegally when their helicopter went down.
Among the seven federal, regional and local officials killed in the crash was Viktor Kaimin, the Altai republic’s top official charged with protecting the region’s wildlife and whose committee was responsible for issuing hunting licenses.
Regional prosecutors say no formal investigation has been opened into whether the officials were engaging in illegal hunting, though regional environmental officials said they would push for a probe into the circumstances of the incident, which some ecologists and political commentators have dubbed “Altaigate.”
Conservationists say it is an open secret that officials come to Altai for hunting trips in which they simply shoot at animals from hovering helicopters, despite a ban on the practice.
With its remote mountains, the pristine Gorny Altai region is popular with hunters, and hunting is legal in some areas for Siberian goat and red deer. 
“Over the last decade, Altai has become a place where helicopter hunting has become rather common,” said Alexei Vaisman, head of WWF-Russia’s anti-animal trafficking program.
The officials in the fatal expedition had hunting licences for Siberian goats and red deer, Yelena Kobzeva, a spokeswoman for the Altai government, told Interfax. The photographs published on the AltaPress.ru web site, however, clearly show animals with round curved horns, while Siberian goats have tall, slightly curved horns. 
Remains of what ecologists say are argali sheep at the Altai crash site.
Vaisman, whose organization has been joined by Greenpeace and other environmental groups in calling for an investigation, said WWF-Russia does not “want anyone’s blood.”
“We don’t want anyone to be imprisoned,” Vaisman said. “The main aim of our actions is to make a court give an official legal assessment of what happened.”
Also killed in the crash were Alexander Kosopkin, the Kremlin’s envoy to the State Duma, and Sergei Livishin, a senior member of the presidential administration. 
Survivors included Anatoly Bannykh, deputy head of the Altai Republic’s administration, and Nikolai Kopranov, an adviser to the Duma’s Economic Policy Committee. 
Gorny Altai attracts “VIP hunters,” said Oleg Mitvol, the outspoken deputy head of Federal Inspection Service for Natural Resources Use. “There are special lodges that can only be reached by helicopter,” Mitvol said. “They are luxurious. Just imagine how much it costs to stay there.”
Environmentalists say helicopter hunting trips cannot be organized without the knowledge and support of local officials. 
It’s “rather common” for regional officials to treat federal officials to free hunting trips, Vaisman said. “It’s not a bribe, it’s to make good relations, to get additional money to the region from the federal center,” he said.
Low-level officials are often involved in organizing the trips too. State game wardens receive “almost negligible” salaries of around 1,000 rubles ($32) per month, Vaisman said.
Such helicopter hunting trips are organized in Kamchatka, Magadan, Sakhalin and Primorye regions, Vaisman said. “It’s popular among high-level officials and so-called New Russians, who think they are above the law,” he said. 
The targets can be mountain sheep, snow sheep, mountain goats, bears or moose, Vaisman said. “They shoot directly from the helicopter and then land to pick up any trophies,” he said.
Kobzeva, the Altai Republic administration spokeswoman, told The Moscow Times, sister paper of The St. Petersburg by telephone that the officials who crashed earlier this month were on a private trip and that no funds from the regional budget were used to finance it. The administration has no information on who ordered and paid for the trip, Kobzeva said.
Helicopter hunting trips even take place in nature reserves, said Mikhail Paltsyn, a scientist with a UN-sponsored environmental program called Biodiversity Conservation in the Russian Portion of the Altai-Sayan Ecoregion.
“Helicopter hunts take place regularly for Siberian goats and red deer in the Argut River valley, in Shavlinsky nature reserve, where hunting is completely banned,” Paltsyn said in e-mailed comments. “On practically all our expeditions to the Argut River valley, we see hunting helicopters and find traces of such hunting. Local residents say that helicopters with hunters come to these places every month.”
Last February, conservationists spotted a helicopter on two consecutive days circling and apparently firing at Siberian goats and red deer. They wrote down the number and contacted game wardens and police. “The people responsible were never found,” Paltsyn said. “It looks like the servants of the people were hunting again.”
Hiring a helicopter costs tens of thousands of rubles per hour, said Anatoly Mozharov, the editor of Safari magazine for hunters. Mozharov stressed, however, that legitimate hunters use helicopters to fly to far-flung areas and then hunt from the ground. 
Killing a protected animal is a crime in Russia punishable by up to two years. Relatively few poachers are ever convicted, however, officials and environmentalists said.
“Very few investigations are ever opened regarding ecological crimes,” Mitvol said. “Last year, practically none were opened. Unfortunately, many VIP hunters take into account that no criminal investigation will ever be opened against them.”
A spokeswoman for the Prosecutor General’s Office said the office had no available data on the number of illegal hunting cases investigated last year or the number of people convicted of poaching.
Convictions are rare in such cases because illegal hunting is “very, very difficult to prove,” said Alexander Bondarev, head of the Biodiversity Conservation in the Russian Portion of the Altai-Sayan Ecoregion.
“Some people see a helicopter in the mountains, but it’s not possible to determine which animal was shot,” he said.
In Gorny Altai, hunters often receive permission to shoot Siberian goats — whose territory is close to that of the endangered argali sheep, Bondarev said. The hunters can therefore claim that they are shooting at the goats, not the wild sheep.
“The only possibility is to find the hunter near the animal,” Bondarev said. “But it’s very difficult to prove that he killed this animal.”
Bondarev’s organization was one of the first to issue a statement identifying the animals in the photograph as argali sheep. The organization focuses on the conservation of argali and the snow leopard, both of which are listed as endangered in Russia.
The argali sheep is one of the region’s rarest species, and its population in Russia numbers only a few hundred.
The argali are the largest wild sheep in the world. Their large, curly horns, weighing around 50 kilograms, are prized as trophies. 
The area where the helicopter crashed is home to the largest group of argali sheep in Russia. Since they migrate between Mongolia and Russia, it is difficult to say how many sheep remain. In winter it could be 100-150, while in summer they number up to 400, Paltsyn said.
“The greatest threat for argali is poaching, including hunting by some local residents and hunting for pleasure and trophies by visiting hunters,” Paltsyn said. 
It is unclear how many argali are killed illegally each year in Russia, Bondarev said. He estimated that around six of the animals are poached annually.
Kaimin, the environmental official killed in the crash, was embroiled in a scandal in 2003 after he was purportedly seen hunting argali sheep. Altai Republic lawmakers appealed to prosecutors to investigate the incident, though the case was later dropped.

TITLE: VEB Takes Over Malev, Hungary’s Flag Carrier
AUTHOR: By Nadia Popova
PUBLISHER: Staff Writer
TEXT: MOSCOW — Vneshekonombank will take over Hungary’s flag carrier Malev within days, officials said over the weekend, marking the state-owned bank’s second major foreign acquisition this month and providing a boost to Aeroflot, which might run the airline.
The takeover was necessary because Malev’s main shareholder, Boris Abramovich, former owner of the bankrupt AirUnion airline, failed to fulfill the obligations he took in acquiring his 49 percent stake in the airline in February 2007, Hungarian Finance Minister Janos Veres said Saturday.
“The steps taken since the privatization have not been adequate to ensure the future of the airline,” Veres said at a news conference in Budapest.
Vneshekonombank, or VEB, financed the privatization and is still one of Malev’s major lenders. The airline has taken out a 30 million euro ($39 million) loan from the bank to finance expenses and improve its liquidity.
“The previous owner’s weak management and the global financial crisis have prompted us to seek a solution and finally put it in order,” First Deputy Prime Minister Viktor Zubkov said at the same news conference. 
The owner of the company will be changed in the next two to three days, Zubkov said. 
He said Aeroflot, Russia’s flag carrier that has tried unsuccessfully to acquire a European airline, would be Malev’s “strategic partner.”
Asked what the partnership would entail, Aeroflot spokeswoman Irina Dannenberg said her airline “could take part in managing” Malev. She declined to elaborate.
It was not clear the size of the stake VEB would take in the airline and how much money, if any, it would spend on the deal. A VEB spokeswoman told The Moscow Times last month that any potential deal with Malev would involve a minority stake of less than 49 percent. 
Malev spokeswoman Krisztina -Nemeth said investors would hold a special shareholders meeting Tuesday. “Settlement of the capital position of Malev, including the opportunities for a reduction in capital and possible changes in the board, are on the agenda,” Nemeth said by telephone from Budapest.
VEB, the state development bank, will also take part in the meeting, Veres said.
VEB spokespeople and Abramovich were unavailable for comment Sunday. Malev chief executive Peter Leonov did not answer the e-mailed questions. 
The acquisition casts the spotlight on VEB, flush with billions of dollars in government funds meant to rescue crisis-hit Russian industry. Earlier this month, VEB acquired struggling Prominvestbank, Ukraine’s six-largest lender, for 1.3 billion hryvnias ($150 million) and is expected to inject another 7 billion hryvnias in the bank.
“VEB is a state corporation, and it is pursuing the government’s interests in Russia or abroad despite the crisis or anything else,” said Natalya Orlova, chief economist at Alfa Bank.
A 2007 law defining VEB’s mission says it should act to secure the competitiveness and diversification of the Russian economy and stimulate investment activity through the realization of projects in many sectors at home and abroad.
The Malev deal could give Aeroflot a toehold in Europe, where it dropped a bid for ailing Italian carrier Alitalia in 2007, citing a lack of information about the potential acquisition. The deal also could give synergies to Aeroflot if it wins a stake in Czech Airlines, which is now being privatized.
Malev laid off 21 percent of its workforce last year and halted long-haul flights to Toronto, New York and Bangkok.
When Malev was privatized in 2007, a 99.95 percent stake in the company was acquired by AirBridge Zrt, which is 49 percent owned by Abramovich and 51 percent owned by Hungarian investors Kalman Kiss and Magdolna Kolto, according to Malev’s web site. Kommersant reported last month that Abramovich holds additional shares through affiliated companies, giving him control of the airline.

TITLE: New Statistics Reveal Lay-offs
AUTHOR: By Anatoly Tyomkin and Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: Registered unemployment is growing, but it is the hidden unemployment in St. Petersburg and the northwest region that is the real cause for concern, according to local employment analysts.
In December 2008, as the result of lay-offs and closures the number of vacancies at local employment centers fell by 28.7 percent to a total of 49,400. The number of people looking for work at the centers, meanwhile, rose by 10 percent, reaching 60,400, according to a report issued by City Hall’s Labor and Employment Committee. In the same month, 31 organizations reported that they had laid off a total of 3,070 employees, while in the preceding 11 months, 41 organizations had planned to lay off 12,416 employees. In December the number of people registered as unemployed rose by 28 percent to 14,414.
The official statistics, however, don’t take into account hidden unemployment, concealed by companies sending personnel on unpaid leave, says Olga Chebotkova, a partner at Transearch. Recruiters saw a marked decline in their volume of orders toward the end of last year, Chebotkova said.
The bulk of lay-offs have been among mid-level management, and only half of those dismissed are prepared to go through the procedure of being registered as unemployed, Yulia Sakharova of the Petersburg branch of HeadHunter said through the firm’s press service. 
According to Sakharova, the city’s job centers for the most part offer low-paid work that doesn’t require qualifications. 
In St. Petersburg, 28 percent of firms are cutting their personnel by an average of 12 percent to 15 percent, according to research carried out by Avanta Personnel, which polled 230 companies around the country at the end of December. For the most part, administrative, marketing, sales and human resources personnel are being laid off, as well as accountants. The local branch of Svyaz-Bank has laid off almost all the personnel in its mortgage, car-loan and stocks and shares departments, said its manager Oleg Bedrik. Lenstroitrest construction company has laid off its construction personnel, its general director Alexander Lelin said.
“You can’t just get rid of qualified personnel, it will be hard to find them again on the marketplace, so in the first instance I’m firing general office personnel,” said a senior manager at a large factory. 
For the first time in many years, the Bukvoyed chain of bookstores has managed to fill all its vacancies in the sales and marketing department, according to Denis Kotov, the chain’s general director. 
In 2008, the chain of computer stores Key didn’t make anyone redundant, but it is not currently taking on or looking for new staff, its marketing director Alexander Khomyakov said.

TITLE: Raising Fears, Kiev Seeks New Talks on Gas
AUTHOR: By Yuri Kulikov
PUBLISHER: Reuters
TEXT: KIEV — Ukraine needs new talks to improve the terms of last week’s gas agreement with Russia, a senior aide to President Viktor Yushchenko said Friday, raising fears of new gas supply disruptions to Europe.
The deal, reached by Ukrainian Prime Minister Yulia Tymoshenko, came as a relief for Europe after a two-week cutoff in Russian gas supplies, but it exposed rifts in Ukraine’s leadership.
Tymoshenko would not allow the gas deal to be revised, a senior government official said.
Oleksander Shlapak, Yushchenko’s economic aide, said Kiev would call for new talks with Moscow to renegotiate the deal on better terms for Ukraine.
“I believe the Ukrainian side must again carefully analyze this agreement ... work out proposals to the Russian side on altering this agreement and begin consultations no later than this summer,” Shlapak said at a news conference.
He said changing the deal was vital to ensure the survival of the Ukrainian economy, which is heading into its worst recession in a decade.
Speaking in Uzbekistan, Gazprom chief executive Alexei Miller ruled out any revision of the deal negotiated between Tymoshenko and Prime Minister Vladimir Putin.
“Where does this suggestion of revising the contract come from? A Ukrainian satirical newspaper?” Miller told reporters.
Slovakia, one of the countries hit the hardest by the interruption of gas supplies, strongly criticized any suggestion of changing the final deal.
“I consider attempts by Ukrainian President Yushchenko to block the signed contracts from Jan. 19 to be completely crazy,” Slovak Prime Minister Robert Fico said.
In a commentary published in Germany’s Die Welt newspaper, Gazprom’s deputy chief Alexander Medvedev said that reopening talks would only jeopardize European consumers.
“Any attempt to reopen negotiations would be doomed to failure and only burden millions of European citizens,” he wrote.
The gas dispute intensified the EU’s search for alternative sources of energy and injected fresh impetus into the stalled Nabucco project to supply Central Asian gas to EU customers.
Highlighting Moscow’s resolve to defend its interests in Central Asia, President Dmitry Medvedev was in Uzbekistan on Friday to win support for a rival trans-Russian gas pipeline.
In Kiev, the senior government official was adamant that Tymoshenko would not allow renegotiation of the deal.
“[The agreements] represent the country’s interests and were drawn up within the framework of Ukraine’s strategic and economic interests,” First Deputy Prime Minister Oleksander Turchynov told a news conference.
The gas dispute created a fresh rift between Ukraine’s president and prime minister. Tymoshenko says the deal provides the best possible conditions for Ukraine -- a 20 percent discount on European prices in 2009 and the elimination of intermediaries in the gas trade.
But Yushchenko called it a “defeat,” citing steep price increases in the first quarter with no rise in transit fees for Ukraine to offset them.

TITLE: In Brief
TEXT: <b>Ukrainian Deficit</b>
KIEV (Bloomberg) — Ukraine’s current-account deficit totaled $12.3 billion in 2008 as imports outpaced exports in the former Soviet republic, central bank First Deputy Central Bank Governor Anatoliy Shapovalov said Monday.
Ukraine’s economy is now in “crisis,” Shapovalov said, addressing lawmakers in Kiev.

<b>Investment Drop</b>
MOSCOW (Bloomberg) — Capital investment in Russia contracted 2.3 percent in December, Interfax reported, citing an unidentified government official with knowledge of State Statistics Service figures.
Capital investment expanded 9.1 percent in 2008, the Moscow-based news service said on Monday.

<b>Gazprom Neft Layoffs</b>
MOSCOW (Bloomberg) — Gazprom Neft plans to cut 10 percent of staff working at its Moscow headquarters, Interfax reported, citing Kirill Kravchenko, a deputy director in charge of organizational issues.
Personnel costs are the main expense at the oil company’s main office, the news service cited Kravchenko as telling the company’s internal newspaper Monday.

<b>Gazprom Fined</b>
MOSCOW (Bloomberg) — Gazprom was fined 157 million rubles ($4.8 million) for antitrust violations, as Russia’s anti-monopoly authority enforces an order from Prime Minister Vladimir Putin to challenge the natural-gas exporter’s pipeline monopoly.
Gazprom put regional company Trans Nafta at a competitive disadvantage by denying it pipeline access in the Tatarstan region, the Federal Anti-Monopoly Service said in a statement on its web site Monday. Gazprom spokesman Sergei Kupriyanov spokesman didn’t answer his mobile phone when Bloomberg News called.
The fine was set at close to the legally required minimum because of the “current economic situation,” the antitrust service said. Putin ordered the anti-monopoly watchdog to force Gazprom to open up its pipelines to independent energy companies in July.

<b>EIB Invests in Pipe</b>
BUDAPEST (Bloomberg) — The European Investment Bank, the European Union’s lending arm, agreed “in principle” to provide financing for the planned Nabucco pipeline, Chairman Philippe Maystadt said in Budapest on Monday.
The EU needs to help fund the project, which aims to bring natural gas from the Caspian region to Europe, bypassing Ukraine, Hungarian Prime Minister Ferenc Gyurcsany said at a separate press conference before meeting Maystadt.
The EU wants to speed up the development of new energy sources to cut its reliance on Russian gas after shipments stopped for almost two weeks.
“The way to bridge the risks is to use EU resources in the first period,” Gyurcsany said. “We have to make Nabucco an issue of the” European community.

<b>AvtoVAZ Sales in 2009</b>
MOSCOW (Bloomberg) — AvtoVAZ plans to maintain 2009 car sales at last year’s level, Interfax reported, citing Chief Executive Officer Boris Alyoshin. 
The automaker intends to sell about 600,000 Lada vehicles domestically this year, Alyoshin told reporters in Moscow on Monday, according to the news service.

TITLE: America’s Favorite Bogeyman
AUTHOR: By Nina L. Khrushcheva
TEXT: The fact that Russia is supposedly bad doesn’t make the United States better — or better off — at the end of George W. Bush’s presidency, when it is mistrusted by the world and is bogged down by two wars and a severe economic crisis. In this environment, is Russia a threat to the United States? Unlikely, but branding it as a dictatorship revives the old fears and diverts attention from the immense problems Washington faces today.
Barack Obama’s presidency promises to usher his country into a new era of post-unilateral decision-making, international diplomacy and coherent foreign policy making. This new era should also, perhaps, end senseless public animosity toward Russia that has continued since 1991, when the Soviet Union lost the Cold War and disappeared. 
Becoming the world’s only superpower proved very damaging to the United States. It is no surprise that U.S. overconfidence bred hubris. In the 1990s, President Bill Clinton’s administration tirelessly reminded the former Soviets that they, the losers, should unwaveringly follow the lead of the all-powerful United States. President Boris Yeltsin’s privatization program was not speedy enough, at least as judged in a Washington anxious to spend as little as possible helping Russia. Any thoughts of a Marshall Plan to ease Russia’s path were dismissed in Washington as welfare for the communists.
Russia is certainly far from perfect, and its current return to authoritarianism is not all, or even mostly, Washington’s fault. But the economic arrogance from the Clinton era, coupled with the political egotism of the Bush years, was not a sound strategy, at least in terms of impact on Russia. Wagging the dog of Putinism can serve only one purpose — to appeal to the familiarity of the communist threat in order to cover up the United States’ own imperfections. 
A CNN conversation with high school students once revealed that some of them equate Putin with Osama bin Laden, arguing that a diplomatic sit-down is not possible with either. What this “young generation of future policymakers” should have known is that although Russia continues to occupy 11 time zones, it’s not the Soviet Union, no longer communist or locked in self-imposed isolation from the world. But even Thomas Friedman, The New York Times foremost authority on internationalism, in one interview called Putin’s Russia “the Soviet Union.” Although Putin is by no means the ideal democrat, he is no Stalin either. 
Indeed, how much better was Pervez Musharraf, the former Pakistani president whom the Bush administration hailed as a beacon of democracy even as the Taliban regrouped in his country’s tribal regions? Or Afghanistan’s Hamid Karzai, another purported democrat who arguably presides over the most corrupt government in the world? What about Georgian President Mikheil Saakashvili, a politician who under the guise of democracy has been silencing Georgians who protest his rule? Then there are of course Hugo Chavez and Mahmoud Ahmadinejad. And the United States’ own claim to fame was former Vice President Dick Cheney, a perverse constitutional theorist and modern Dr. Strangelove if there ever was one. 
But Russia is the butt of political jokes, the focus of Sarah Palin’s foreign policy ire and the new Red Scare for The New York Times. And let’s not forget Hollywood, where the Russians have returned, after a brief interval, as the designated bad guys. In the latest “X-Files: I Want to Believe,” Russians are the horrible dog trainers and organ harvesters; in the 2004 “Hellboy,” the mummified Grigory Rasputin seeks to spread evil around the world; in “Hitman,” we have a bad Russian president, his criminal double and his corrupt brother; even in the Coen brother comedy “Burn after Reading,” Russia is made into an enemy, albeit a fake and funny one. In “The Golden Compass,” the latest in a series of grand fairy tales that attempted to take Americans’ mind off their troubles, the villainous animals speak perfect Russian. 
We all need a good enemy. As U.S. Defense Secretary Robert Gates once shrewdly pointed out, the talk of a new Cold War fills him “with nostalgia for a less complex time.” Indeed, the world made a glib sort of sense back then — communism vs. capitalism, good vs. evil empire. 
Terrorism is too amorphous, bin Laden you actually have to catch and the Arabs as the enemy is, somehow, politically incorrect. 
We shouldn’t be unfair to the Chinese. They too would make an excellent adversary, but China is too mysterious for a simple us-versus-them confrontation with its middle kingdom of Jet Li, kung fu and capitalists posing as communists. China also produces toys, medicine and everything else for U.S. consumers; even if tainted, leaded or spiked, there is no living without them. 
Russia, on the other hand, remains a distant land of ballet, bombs and Dostoevsky. The Cold War mystery has defrosted, but the familiarity of the threat remains conveniently alive. 
What makes Russia a great enemy is that unlike bin Laden, you don’t need to worry too much about it — not yet. But if the Russians continue to be treated as if the first Cold War never ended, the new Cold War will actually arise. 

Nina L. Khrushcheva, professor of international affairs at The New School University in New York, is the author of “Imagining Nabokov: Russia Between Art and Politics.”

TITLE: Poor Forecasts, In Every Sense
AUTHOR: By Anna Shcherbakova
TEXT: And here we are again discussing business issues, still unable to avoid the influence of the crisis. Despite the word being repeated about a thousand times a day by the media like some kind of mantra, no one really knows how long it will last and how hard it will hit the Russian economy. It’s this uncertainty that makes everyone particularly nervous. Companies don’t risk planning their budgets for any period longer than the coming quarter. Many people are canceling trips abroad or purchases of new cars, worried that they might be facing a drop in income. And that expectation comes on top of the fact that our incomes, paid in rubles, have already fallen by a good 20 percent due to the smooth devaluation of the national currency. 
People, to put it very, very mildly, are intrigued about what the crisis is going to bring us. Searches for reliable forecasts, however, have proved fruitless. Friends and acquaintances are asking me the same questions over and over again, providing more evidence of a lack of quality information on the crisis. I’m not, after all, a professional economist doing profession research on the subject, so I’m the wrong person to ask for serious forecasts. As a business journalist I do meet businesspeople, researchers and officials who appear to be closer to the reality. And I noted that it was the entrepreneurs who were the first to grow gloomy last autumn — they were the first to realize how big a problem we’re facing. The gloom stemmed from concern about their assets, which were soon to lose much of their value. Unlike most managers who are employed and only have their salaries, bonuses and reputation to lose, owners of the business are more sensitive to signs of trouble on the horizon. Usually, in a normal economic environment, there are managers who set ambitious and risky goals and owners who are more cautions because it is their property that is at risk. The latter now appear to be better informed, adapting faster to the negative consequences of the crisis. Shareholders of the companies, however, felt the pain four month ago. There is no way to fight the crisis, it’s best to just go with the flow, the owner of several mid-sized companies told me ruefully. To realize what a painful admission that is, you have to remember that these people are used to fighting. 
Now I see many sorry-faced senior managers, which probably means that they have heard everything the shareholders have been spared — the grim truth about the state of their companies and the economy at large. Some of them have lost some of their power because the shareholders have again got involved in operations in order to be more flexible and make decisions faster. The senior managers have been pushed aside in the process. This prosperous class, however, aren’t yet feeling the pinch — they usually have some property and savings and can afford to take a break if needs be. 
The worst hit are office workers, the lower middle class who followed the prevailing fashions and took out loans to buy apartments and expensive cars. Many of them have lost their jobs. Companies are no longer suppressing information on their lay-offs, as was the case just a couple of months ago — about 28 percent of firms have cut their workforces by from 10 to 15 percent, according to research by Avanta Personnel. The Internet is overflowing with resumes for sales, marketing and public relations managers, all of them ready to work at cut-price rates. As the “proles,” they have nothing to lose, and they, as always, are ready to turn over a new leaf. 

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

TITLE: Clinton Senate Replacement Named in New York
AUTHOR: By Michael Gormley
PUBLISHER: The Associated Press
TEXT: ALBANY, New York — Democratic insiders say the selection of Representative Kirsten Gillibrand to fill New York’s vacant U.S. Senate seat showed the pivotal influence of senior Senator Charles Schumer.
Gov. David Paterson selected the little-known congresswoman over candidates Caroline Kennedy, backed by President Barack Obama and New York City Mayor Michael Bloomberg, and Andrew Cuomo, backed by Hillary Rodham Clinton and former President Bill Clinton.
But at the news conference introducing Paterson’s choice Friday, one big smile gave it all away, and it was on the Schumer’s face.
“Schumer was pushing her, he was really pushing,” said a Democrat on Saturday who was told by Paterson that Schumer favored Gillibrand. The Democrat was familiar with the inner workings of Paterson’s selection but spoke on condition of anonymity because he wasn’t authorized to speak publicly about the process.
Schumer insisted he was neutral in the seven weeks since the Senate seat was opened by Hillary Clinton’s secretary of state nomination.
“Each one of them would make an excellent senator,” Schumer said in December, declaring he would not back any individual.
Publicly, Paterson’s process was, by all accounts, moving toward a coronation for Kennedy, daughter of slain President John F. Kennedy. She was praised by Bloomberg and by Obama, whom she had given an early and critical endorsement in last year’s presidential primaries.
But internally, Paterson always had Gillibrand high on his list. And by the time he attended Tuesday’s inauguration of Obama, Paterson started to focus on her, according to the Democrat who spoke Saturday.
She had been inspired by Hillary Clinton, worked on the former first lady’s 2000 Senate campaign, and has many of the same qualities: Unflappable, a bright and focused attorney, a work horse in devouring information on issues, and well-schooled in the retail politics that gets New Yorkers elected.
Then came Wednesday. Back in New York, a chaotic few hours began in the afternoon with Kennedy’s viability as the front-runner questioned, then dashed. Kennedy told Paterson she was rethinking her interest in the seat. She mentioned a new and pressing personal issue.
Meanwhile, Paterson had dinner with his closest advisers to try to finish the job by his self-imposed deadline of Saturday after a process that was becoming increasingly criticized as out of control. Paterson was sending mixed signals, even though he supposedly had already settled on Kennedy.
As Paterson dined in a Manhattan restaurant, Gillibrand’s chances grew. For Paterson, she started to seem much like Schumer was before he was a star, when he toppled Republican Senator Alfonse D’Amato in 1998. Gillibrand is also young for the job at 42.
Back at their offices, phone lines and Blackberries were burning up between Paterson and Kennedy camps. Shortly after midnight, after bouncing between rethinking her commitment and saying she was still in, Kennedy transmitted her shocking withdrawal, an e-mail to Paterson and reporters that said she was leaving for personal reasons.
By Thursday morning, all the public attention shifted to Cuomo, who Paterson — true to a secretive process that drew criticism — didn’t even confirm was under consideration until Tuesday. Appointing Cuomo, however, would require naming a new attorney general. And besides, Paterson has said he wanted to appoint a woman.
The other women in contention were all from New York City. And Gillibrand, from Columbia County south of Albany, was the upstate woman who would fix Paterson’s New York City-centric, all-male 2010 ticket.
Paterson placed a midday call to Gillibrand on Thursday, told her she was the likely choice, but he still wanted to check with others one last time. The last call, by this time just before 2 a.m. Friday, was to Gillibrand. She would be New York’s next senator.
After she screamed in excitement loud enough to be heard over the phone by others in the room, she thanked him and accepted.
Schumer ran the Senate Democrats’ national campaign efforts in two successful elections, and he says Gillibrand has the qualities of a winner.
“I found women candidates run better and win more easily,” he said Friday at Gillibrand’s news conference, also emphasizing the importance of having an upstate resident.

TITLE: Brit Hope Murray Crashes Out of Australian Open
PUBLISHER: The Associated Press
TEXT: MELBOURNE, Australia — Andy Murray wasn’t the only one feeling pain Monday at the Australian Open.
While Murray’s anguish was mostly psychological — the fourth-seeded Scot was ousted by Spain’s Fernando Verdasco 2-6, 6-1, 1-6, 6-3, 6-4 — three other players had to quit mid-match with injuries or illness, paving the way for Serena Williams, Gilles Simon and Svetlana Kuznetsova to reach the quarterfinals.
Top-ranked Rafael Nadal, meanwhile, left 2007 runner-up Fernando Gonzalez feeling out of sorts with another dominating performance in a 6-3, 6-2, 6-4 win. He has yet to drop a set and next faces the sixth-seeded Simon, who advanced when fellow Frenchman Gael Monfils retired with a wrist injury.
“I am playing well, but you never know if it’s going to be enough,” said Nadal, who had 33 winners and just 11 unforced errors.
Verdasco will meet fifth-seeded Jo-Wilfied Tsonga in the quarterfinal after he beat and No. 9 James Blake on Monday.
Williams was the biggest beneficiary of the wave of retirements. She lost the first set to 13th-seeded Victoria Azarenka of Belarus and was so frustrated with her first serve that she cursed it, earning a warning for a verbal obscenity. The 19-year-old Azarenka, who woke up sick, had to quit in the second set.
Williams, seeking a 10th Grand Slam singles title, next plays 2004 U.S. Open champion Kuznetsova, who advanced when Zheng Jie of China retired at 4-1 in the first set. They are the only major winners still in the women’s draw.
No. 22 Zheng, hoping for victory on Chinese New Year, injured her left wrist when she tumbled after the third game. She had treatment immediately but retired two games later and will go for X-rays Tuesday.
Murray said he, too, hasn’t been feeling well the last few days, though he refused to use it as an excuse.
“I don’t feel that was the reason why I lost,” Murray said. “I definitely did have my chances, and he played too well. I’m disappointed that I lost. But I’ll try and learn from it. It’s not a disaster. I’m still playing well. I lost to a good player in a very close match. I’ll have more chances to win Grand Slams.”
Murray saved two match points after falling behind 40-0 in the last game but wasn’t able to fend off a third, dumping a backhand into the net.
Murray, who lost in the U.S. Open final last year to Roger Federer, was attempting to become the first British man since 1936 to win a Grand Slam singles title.
Verdasco saved two break points in the pivotal sixth game of the fifth set against Murray, firing aces when he needed them and forcing errors from the other side. He broke Murray in the subsequent game.
“The consistency of his first serve was pretty awesome for the last two, three sets,” Murray said.
Verdasco was a key player in Spain’s Davis Cup final triumph in Argentina, and he said he was able to draw on the experience, when he clinched the title by rallying from a set down after doing the same in his first match.
“I think that Davis Cup final made me much stronger mentally,” Verdasco said. “And this preseason, I was working really hard. So today, I was really believing in myself, that I can win the match.”
Williams could only watch in sympathy as Azarenka deteriorated quickly. She said she wanted to win, but not like this.
“I just want to go inside and make sure she’s OK. I feel so bad. She was playing so well,” Williams said. “There are so many more great Australian Opens out there for her.”
Azarenka said she had been vomiting all morning and had a fever with what later was diagnosed as a virus. She didn’t want to default before the match started but ran out of energy.
Azarenka, serving at 30-30 while down 2-4 in the second set, wobbled back into the shade at the rear of the court, holding her face and choking back tears.
She had needed a medical timeout earlier in the set and left the playing arena. She returned for 1 1/2 games but was unable to continue and was helped from the court soon after by two trainers.
“The doctors didn’t want me to keep going, but I wanted to keep trying and see how I do,” Azarenka said. “But it was probably not a very good idea because it just gave me even more trouble after.”
The winners of the two completed women’s matches will meet in the quarterfinals.
Carla Suarez Navarro, the 20-year-old Spaniard who had an upset win over seven-time Grand Slam winner Venus Williams in the second round, beat No. 21 Anabel Medina Garrigues 6-3, 6-2.
She next plays Olympic gold medalist Elena Dementieva, who made the quarterfinals for the first time in 11 years at Melbourne Park with a 6-2, 6-2 win over Slovakia’s Dominika Cibulkova.
The fourth-seeded Dementieva, who reached the finals at the French and U.S. Opens in 2004 but has not been to a Grand Slam championship match since, extended her winning streak to 14 matches. She won two titles in tune-up events.

TITLE: U.S. Foes Soften Stance To Give Obama Room
AUTHOR: By Paul Haven
PUBLISHER: The Associated Press
TEXT: In his inaugural address, President Barack Obama signaled conciliation to America’s foes by using the metaphor of an outstretched hand to an unclenched fist.
Already, there are signs that some of those foes were listening, sensing an opening for improved relations after eight combative years under President George W. Bush. Fidel Castro is said to like the new American leader, and North Korea and Iran both sounded open to new ideas to defuse nuclear-tinged tensions.
Unclear is what they will demand in return from the untested American statesman, and whether they will agree to the compromises the U.S. is likely to insist on in exchange for warmer relations.
Are the Castro brothers really willing to move toward democracy? Can Russia and the West heal their widening estrangement? Will Venezuelan President Hugo Chavez stop being a thorn in America’s side?
Analysts say they see many bright opportunities amid the perils and complexities.
“In this dangerous world, in a world where America’s leverage has either been exposed as not being as strong as the rhetoric implied or where it is simply diminishing, I think Obama’s approach is exactly what America needs,” said Robin Niblett, the director of Chatham House, the London-based think tank.
“We need an approach that gets others to show their hand, that makes others have to think harder about their diplomacy, rather than just to react to rather strident and fixed American positions.”
Nowhere are the opportunities — and the risks — of diplomacy more stark than in the Middle East.
Iran still considers the U.S. the “Great Satan,” but a day after Obama was sworn in, it said it was “ready for new approaches by the United States.” Foreign Minister Manouchehr Mottaki said his country would study the idea of allowing the U.S. to open a diplomatic office in Tehran, the first since the 1979 Islamic Revolution.
Still, the differences between the two nations are deep — U.S. suspicions about Iran’s nuclear program, President Mahmoud Ahmadinejad’s threats to annihilate Israel, and Tehran’s support for militants in Iraq — and analysts say that baby steps are all that can be hoped for, at least in the short term.
Iran’s parliament speaker, Ali Larijani, said the country had doubts that Obama’s Mideast policy will be different from the Bush administration, state television reported Sunday.
And diplomacy has its limits: Some experts feel the Islamic nation is committed to developing nuclear weapons, whatever the cost.
Obama may think “he can convince Iran to give up its nuclear program, but this is a red line for Iran,” said Saudi political analyst Khaled al-Dakhil.
Israel and the Palestinians present the new president with one of his greatest challenges, and he has been quick to demonstrate his interest.
With the latest Gaza fighting still reverberating around the world, Obama appointed George Mitchell, mediator of peace in Northern Ireland, as special envoy to the Middle East.
While the task is daunting, some see room for Obama to maneuver.
Syria, which has teetered between pariah and potential peace partner, has indicated that it seeks no further quarrel with Washington, even saying it would like the new administration to mediate stalled Syrian-Israeli peace talks.
If Obama helps Syria in from the cold, analysts say it could have far-reaching benefits. Syria has great influence over two of Israel’s main enemies — Hezbollah in neighboring Lebanon, and Hamas, whose leaders live in Damascus. Assad could also help pressure Syrian ally Iran to take a more measured stance.
Another striking sign of change on Obama’s first full day in office was an article in The New York Times written by Libyan President Moammar Gadhafi.
In it, Gadhafi recognized the Jews’ long history of persecution and said they “deserve their homeland.” His solution — a binational Arab-Jewish state — is a nonstarter to Israelis, but still, his conciliatory language marked a striking turnaround from the terrorist-sponsoring Gadhafi of old.
Elsewhere, some see hope for progress in the frustrating on-again-off-again talks with North Korea.
Hours before Obama’s inauguration, a newspaper considered a mouthpiece for the isolated, nuclear-armed regime said the country would be willing to give up its nuclear arsenal if the U.S. accepts its conditions, which include establishing diplomatic relations.
Another crucial area for diplomacy is to repair the relationship with Moscow, riddled with distrust over Bush’s missile defense plan and support for Ukraine and Georgia joining NATO.
Obama has been noncommittal about deploying a missile shield in Poland and the Czech Republic, and Democratic supporters of the new president have voiced a willingness to reopen talks on arms control.
But experts say it will be Washington’s stance on NATO expansion that will determine future relations.
Sergei Karaganov, the chairman of the presidium of Russia’s Council on Foreign and Defense Policy, saw no room for Moscow to compromise because it feels it has already given away too much with nothing to show for it.
“The distrust, I believe, is almost complete after the years of the Bush Administration and the previous years of Clinton,” Karaganov said. “Compromise, constructiveness, any kind of good gestures toward the U.S. doesn’t bring anything.”
For its part, Washington has been rattled by the ferocity of Russia’s war with Georgia, and by its hard-line tactics in shutting off natural gas to Europe during a dispute with Ukraine.
Yevgeny Volk, coordinator of the Heritage Foundation’s Moscow office, warned Obama to be ready for a Russian test, recalling that in 1961, “Russia tried to test in the same manner John Fitzgerald Kennedy, who the Russian leadership also believed to be a relatively young and soft leader.”
In America’s own hemisphere, the greatest hope for diplomatic progress lies with Cuba, where Fidel Castro and his brother-successor, Raul Castro, have both spoken positively about Obama.
On Wednesday, Argentina’s president came out of a meeting with Fidel Castro quoting him as having said Obama seems “like a man who is absolutely sincere.”
That’s quite a change from Cuba’s attitude toward Bush, who was depicted on Havana billboards as a vampire.
Analysts say Obama is unlikely to move quickly to end Washington’s embargo on the island, which he has said will remain in force as a bargaining chip.

TITLE: Finnish Women Achieve Skating Success On Home Ice
PUBLISHER: The Associated Press
TEXT: HELSINKI, Finland — Laura Lepisto rewarded an enthusiastic home crowd Saturday, holding off Carolina Kostner to win Finland’s first women’s title at the European Figure Skating Championships. Teammate Susanna Poykio won the bronze, the first time two Finnish skaters reach the European podium.
“This feeling can’t be described,” said Lepisto, who covered her face when she saw her score. “I can’t even start to tell what all is going through my mind now. I could never have expected this to happen. I had said my goal is to medal, but that it would be gold, I can’t realize it.”
Kostner won the free skate, but still fell short of winning her third straight European title. Lepisto finished with 167.32 points while Kostner had 165.42.
It’s only the second European title for a Finnish skater, and the first by a singles skater. Susanna Rahkamo and Petri Kokko won the ice dance crown in 1995. With Kiira Korpi finishing fifth, it was by far Finland’s best showing ever at Europeans. Korpi won a bronze at the Euros two years ago.
Kostner was the heavy favorite coming into the competition. Not only was she the two-time defending champion, but main rival Sarah Meier of Switzerland was out with a back injury. But she struggled in the short program, falling on the takeoff of her triple lutz.
Kostner didn’t look any more relaxed Saturday. Instead of her usual triple-triple combination, she did a triple flip-double toe loop combo and also did a triple lutz-double toe-double loop combination. But she doubled a planned second triple flip, and didn’t get credit for one of her spins because judges decided it was the same as one she’d already done.
“At the flip, my concentration slipped for a moment,” Kostner said. “I can’t say this was my best program of the season. I made different errors each time.”
But Kostner said she was happy that Lepisto won in front of a home crowd.
“Next year, the world championships are in my hometown, Turin,” Kostner said, “and I hope I can do the same.”
Lepisto, the bronze medalist at Euros last year, didn’t have her greatest performance, either. The home crowd clapped, beating in time to her “Don Juan de Marco” music. But it fell quiet when she popped a triple lutz into a single.
“Yes, there was moment when I thought, ‘Blast! Why is she holding back?’ but then it was O.K.,” said Virpi Horttana, Lepisto’s coach. “I knew that Laura is fit, but figure skating is a very delicate sport and anything can happen.”
Lepisto rebounded nicely, finishing her program with three more triples — two in combination — and a double axel. She also did two spins that earned the highest level.
“I simplified the combination in the beginning and singled the lutz but tried to keep my thoughts together and focus on the next elements,” Lepisto said.
The crowd also spurred on Korpi, 20, who smashed into the boards and was left lying sprawled on her back. But she got up and started again.
“I guess this is figure skating drama at its best, or, in my case at its worst,” Korpi said.
Earlier during the championships, the men’s title went to Brian Joubert of France, who at age 24 took his 12th medal in world or European championships. Defending European champion Tomas Verner of the Czech Republic fell to sixth place.
In the pairs, defending champions Aliona Savchenko and Robin Szolkowy from Germany won by a wide margin. Russia’s Yana Khokhlova and Sergei Novitsky claimed their first ice dance title in a watered-down field.
World champions Isabelle Delobel and Olivier Schoenfelder of France didn’t compete because she’s recovering from a shoulder injury and defending European champions Oksana Domnina and Maxim Shabalin withdrew after compulsories because Shabalin fell and injured his knee.

TITLE: Bolivia Votes to End ‘Colonial State’
PUBLISHER: The Associated Press
TEXT: LA PAZ, Bolivia — Bolivians easily approved a new constitution granting more power to the indigenous majority, but its weak support in the opposition-controlled lowland east leaves the racially torn country divided as ever.
The constitution also gives its prime backer, leftist President Evo Morales, the opportunity to run for re-election and remain in power until 2014.
Bolivia’s first Indian president hailed the charter’s passage in Sunday’s peaceful referendum as the end of the “colonial state” in South America’s poorest country.
“Here begins the new Bolivia. Here we begin to reach true equality,” Morales told crowds packing the plaza in front of the presidential palace after an unofficial quick count of the vote showed the charter passing 59 percent to 41 percent.
The victory was historic in a nation where the oldest voters could still recall a time when Indians were forbidden to vote. But its rejection by the mestizo and European-descended minority foreshadows a political battle over vague clauses that seem to outline overlapping autonomous regions for both indigenous groups and eastern states.
Morales says the charter will “decolonize” Bolivia by championing indigenous values lost since the Spanish conquest. It also has clauses on land restribution and sets aside seats in Congress for minority indigenous groups.
Bolivia’s Aymara, Quechua, Guarani and dozens of other indigenous groups only won the right to vote in 1952, when a revolution broke up the large haciendas on which they had lived as peons for generations.
But even as Morales’ supporters joyously cheered the constitution’s passage, opposition leaders celebrated as well.
Although a majority of voters backed the charter nationwide, drawing high margins in the pro-Morales highlands, the ‘no’ vote won greater support in five of Bolivia’s nine states.
They say Morales’ focus on indigenous communitarism ignores the freewheeling capitalism that drives the eastern flats’ huge cattle ranches and powerful soy industry.
“In five states, we’re rejecting the constitution. In five states we have another vision of the country,” said Moises Shiriqui, the cowboy-hatted mayor of the eastern provincial capital Trinidad.
An unofficial tally by the Bolivian television network ATB showed the constitution winning with 59 percent of the vote. The quick count had a three-percentage point margin of error. The result was mirrored by two private exit polls. An official vote count will be announced Feb. 4.
The comfortable 18-point margin of victory is nonetheless a setback for Morales, who polled 67 percent support in an August recall election.
He will likely take his chances again in December, when the new constitution allows him to run for re-election. That vote will also fill a newly reorganized Congress with seats set aside for minority indigenous groups.
At the heart of the constitution is a provision granting autonomy for 36 indigenous “nations” and four opposition-controlled eastern states. But both groups are given a vaguely defined “equal rank,” likely creating a checkerboard of rival claims to open land in Bolivia’s fertile east, home to the large agribusiness interests and valuable gas reserves that drive much of the country’s economy.
With an eye to redistributing territory in the region, the constitution limits future land holdings to either 12,000 or 24,000 acres. Current landholders are exempt from the cap — a nod to the east’s powerful cattle and soy industries, which fiercely oppose the proposal.
Morales, an Aymara Indian, has allied himself closely with Venezuelan President Hugo Chavez in what the two leaders call “21st century socialism.” Elected in 2005 on a promise to nationalize Bolivia’s natural gas industry, he has increased the state’s presence throughout the economy and expanded benefits for the poor.
Sharing Chavez’s anti-U.S. rhetoric, he has also booted Bolivia’s U.S. ambassador and Drug Enforcement Administration agents after claiming they had conspired against his government last year. Washington has denied those allegations.
Morales’ reform project nearly failed in 2006, when an assembly convened to rewrite the constitution broke apart along largely racial lines.
In 2007, three college students were killed in anti-government riots and 13 mostly indigenous Morales supporters died in September when protesters seized government buildings to block a vote on the proposed constitution.
In an October deal, Congress approved holding the referendum only after Morales agreed to seek one more term instead of two. That compromise seems a distant memory now as the two sides prepare for battle over the charter’s new autonomies.
“This constitution was supposed to be an agreement,” sighed Mario Duran Chuquimia, a mestizo blogger who covers Bolivian politics. “But it’s turned out to be anything but.”

TITLE: Russia To Bid 
For World Cup
PUBLISHER: Reuters
TEXT: MOSCOW — Russia is joining the race to host the World Cup in 2018 or 2022, a senior official in the Russian Football Association (RFU) said on Friday.
“Yesterday we sent an official letter to FIFA informing them of our intentions to bid for the World Cup in 2018 or 2022,” RFU general director Alexei Sorokin told Reuters.
Last week, FIFA president Sepp Blatter urged the Russians to enter the fray. “I definitely expect Russia to be a candidate,” he told RFU chief Vitaly Mutko during his visit to Moscow.
Sorokin said his country had pinned its hopes on the 2018 tournament. “We feel that in 2018 the World Cup would be awarded to Europe,” he said, naming England and a joint bid from Spain and Portugal as Russia’s main competition.
FIFA has set a Feb. 2 deadline for potential bidders to formally express their interest. The successful bids will be announced in December 2010.
Spain and Portugal formalised their plan to bid together earlier this week, while Netherlands and Belgium also have a joint proposal. Other interested nations include England, the United States, China and Mexico.

TITLE: Sri Lanka Moves To Vanquish Tamil Tigers
PUBLISHER: The Associated Press
TEXT: COLOMBO, Sri Lanka — Sri Lankan forces captured the Tamil Tigers’ last major stronghold Sunday, confining the rebels to a narrow slice of jungle and ending their decade-long domination of the country’s north.
Army commander Lieutenant General Sarath Fonseka said the bloody ethnic separatist war that has plagued this Indian Ocean island nation since 1983 was nearly over.
But analysts warn that it is simply shifting from a conventional fight between two armies to a guerrilla war likely to be fought among the estimated 250,000 displaced civilians reportedly trapped in the northern jungles with the rebels.
In recent weeks, the Sri Lankan army drove the rebels from their administrative capital of Kilinochchi, forced them to retreat from most of the de facto state they controlled across a wide swath of the north and boxed them into a shrinking pocket of land.
On Sunday afternoon, troops entered the coastal town of Mullaittivu, the last major town under the rebels’ control and drove off the fighters remaining inside, the military said.
“The Sri Lankan army captured the Mullaittivu bastion completely today,” Fonseka said in a speech broadcast Sunday evening on every major television channel.
Sri Lankans across the capital, Colombo, exploded in celebration, honking their horns and lighting firecrackers, as they have for all the military’s recent victories.
The military made an all-out push last year into the north, where the Tamil Tigers ran an autocratic regime complete with its own police, courts and customs department.

TITLE: Luxury Sector Growing Despite Financial Crisis
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: It seems that nothing can persuade those used to leading a comfortable lifestyle to make cutbacks in their usual way of life. Even the current crisis is not having a major influence on the luxury hotels segment, and new elite hotels are planning to open their doors in the city during the next two years. 
“Among the most ambitious projects is the establishment of the Four Seasons five-star hotel on Voznesensky Prospekt. Its developer could see a profitable investment, even in the crisis,” said Nikolai Kazansky, head of the investment consulting department at Colliers International. 
Other luxury projects in progress on the local hospitality scene are W Hotel, Domina Prestige, Mansion, the extension of the Corinthia Nevskij Palace and Taleon Imperial Hotel. Their developers are not afraid of reduced guest volumes, and believe that in spite of the lack of mid-range hotels in the city, the luxury segment is a crucial.
“The emergence of new hotels, especially if they are world-famous international brands, develops the city as a tourist trend. With the support of other market players such as airlines, large tourist companies and museums, and with the support of the city administration new hotels are able to stimulate demand,” said Sergei Skalon, general manager of Taleon Imperial Hotel.
There are currently about 500 hotels in St. Petersburg, most of which are intended for the economy segment. New players are entering the market, and it is the hotel segment that is feeling the influence of foreign investors most of all, according to experts from Colliers International. 
“During recent years, the Norwegian hotel chain Wenass has bought Pulkovskaya and Pribaltiiskaya hotels and is now developing a hotel on Goncharnaya Ulitsa. The British investment company London & Regional Properties has purchased the Holiday Club hotel on Vasilievsky Island,” said Kazansky.
“Furthermore, there are foreign companies among the shareholders of the Grand Hotel Europe and Corinthia [Nevskij Palace].”
Various categories of hotels are emerging, and even three-star establishments could become competitors for the luxury segment.
“New hotels such as Holiday Inn Moscow Gate include large areas suitable for conferences. These establishments could take clients from the elite hotels, for example, Russian corporate groups who come on business,” said Natalya Minina, hotel manager at Helvetia Hotel & Suites. 
But the luxury segment will also be full of businesspeople who are not going to refuse the offer of the best accommodation.
“Many international business events have always taken place in St. Petersburg and the crisis is not affecting this. Business life is becoming even more active now. There may be a slump at present, but it is only temporary,” said Sergei Korneyev, director for the Northwest of the Russian Tourist Industry Union. 
Another segment of luxury hotel guests are people who are used to staying in particular hotel chains and seek their favorite hotel in every country. 
“They are regular clients, they usually have some bonus or discount, or it is simply a habit.”
The last group of luxury clients consists of Russian tourists. Some of them come on business, some for other reasons.
“When the luxury segment had just started to develop, it used to be mostly for foreigners. But for the last two years, fifty percent of luxury hotel guests have been Moscow inhabitants,” said Korneyev.
“Another section of guests were American. But now, because of the crisis, there will be fewer tourists from that country. And clients from Finland, Germany and the Baltic countries continue to stay in luxury hotels,” said Minina.
So the luxury segment will always have people to accommodate and remains an area with great potential. Businesspeople and the artistic elite will not want to change their way of life. 
“People may postpone their trips, but they won’t cancel them. Yet the real indicators of the influence of the crisis will be seen only in the summer,” said Korneyev.
Experts predict that during the crisis, the popularity of three- and four-star hotels will increase, but only temporarily. Consequently, companies continue to develop the luxury segment as a long-term investment.  
“Investments in the luxury segment will be paid back after five or even eight years. And the crisis cannot last forever. If the crisis is one or two years, the payback period will be postponed a little. But there is no point in canceling the project,” said Korneyev.
There are some companies however that simply cannot afford to wait, and the crisis is having an influence on the luxury segment. 
“We know about projects for opening new hotels that have been frozen, and about decreasing numbers of guests in the hotels that are already open. It is particularly noticeable in hotels that specialize in corporate clients and groups,” said Skalon. 
The hotel segment is currently in a transitional stage, experts believe. The market is expected to improve, but the decisive factor will be the professionalism of the hotel service. 
“This is the key word in hotel occupancy rates. The correlation between price and quality will determine everything. Many hotels have raised their star-level too high and consequently their prices too, while the service level does not correspond to requirements,” said Minina. 
“If hotels increase their prices, they should provide appropriate quality. If they cannot, they should ask for less money. But at the same time they should be prepared for the fact that their clients may go to their competitors.”
Another way to survive this difficult time, according to independent expert Sergei Korneyev, is to publicly reduce prices, as this will give people a good reason to stay in that particular hotel.

TITLE: Trends on Local Tourism Scene
AUTHOR: By Boris Kamchev
PUBLISHER: Special to The St. Petersburg Times
TEXT: Data and statistics from the last few years show that Russian travel insurance is often inadequate, credit and debit cards are the most popular methods of payment for Russian travelers, and the number of incoming tourists to St. Petersburg has dramatically decreased, causing City Hall to launch a program aimed at attracting more tourists to the city.
The number of Russians going abroad on vacation has increased by 15-20 percent during the last few years. Today the number is close to ten million, and could increase to 16 million in 2010 according to a study prepared by the strategic research center of the Russian State Insurance agency, Rosgosstrakh. Experts say that outbound Russian tourism will grow by 13-15 percent annually from 2008-2010. 
So far Finland has retained its position as the most popular destination among Russian tourists. In 2007, over 650,000 Russian tourists visited the country, according to official statistics. However, a report by the Finnish Tourism Board put the number substantially higher at 850,000. In the first half of 2008, the number of Russian tourists visiting Finland increased by 4 percent. 
In order to purchase a package tour, Russian tourists have to buy travel insurance. Some experts recommend that a law be introduced for specific obligatory travel insurance, especially for skiing holiday packages, which could cost more than normal insurance. A government  bill about insuring citizens of the Russian Federation traveling abroad stipulates obligatory medical and legal insurance for tourists.
“At the moment Russian tourists pay one dollar per day for medical insurance, but 80 cents of that dollar is commission for the travel agency. It is impossible to provide normal medical care for 20 cents per day,” Dmitry Davydenko, head of the center for help and support of Russian citizens abroad, was quoted as saying last year by local news agencies. According to Davydenko, around one percent of Russian tourists abroad appeal for some form of medical help annually, 10 percent of whom require serious medical intervention. Meanwhile, 0.1 percent of tourists ask for legal help, of whom 20 percent require help from a lawyer and translator. Legal insurance is not obligatory — it is the client’s choice whether or not to obtain it. 
People working in the insurance industry say that Russian insurance practices ought to adopt European standards. 
“Of course this could result in higher insurance costs, but we hope that a minimal rate will be stipulated by the law we are expecting to be passed by legislators this year,” said Sergei Korneyev, director of the northwest for the Russian Tourist Industry Union. 
“The insurance which is part of the popular tour offers is not at the same level as in developed countries. This is the result of a lack of knowledge among customers about the possibility and necessity of risk insurance related to the trip, including the real value of insurance cover. It is also the result of intense competition among insurance companies to attract travel agencies, which has led to market dumping,” Korneev said.
Analysts say that if a company oversees a large flow of tourists and has its own representatives in countries that tourists visit, then it will be more able to offer support to tourists in the event of any kind of emergency.
Most tourists traveling to Europe use bank cards to pay for their trips, according to a representative of St. Petersburg’s Neva travel agency.
“Using bank cards in Europe is most secure and popular way to shop. It has its own advantages because customers don’t pay commission for exchanging currencies,” said a representative of Neva travel agency. The representative, who declined to be named, said that tourists traveling to African or Arab countries however have to pay using cash (dollars, euros, or the local currency), because electronic payment systems are not usually installed or don’t work there.
The main routes for foreign tourists entering the country are the two Russian capitals. More than 75 percent of incoming tourists visit Moscow and St. Petersburg. 
At the same time, Moscow retains first place in the rating of the most expensive cities in the world and St. Petersburg occupies 18th position, having left behind Helsinki (21st position) and Stockholm (31st position). This allows the Russian regions to provide better tourist services in terms of price/quality correlation and thus to try to compete with the capitals in attracting tourists.
The Federal Strategy of Tourism Development for the period from 2008-2015 includes a planned increase in the number of incoming tourists to Russia to 35 million (the forecast for 2008 is 22.5 million). The number of hotels in Russia is expected to double, totaling 13-14,000 in 2015. Tourism currently provides just 1.5 percent of the federal GDP, which is very low in comparison to countries with more developed tourism industries. In Austria for example, tourism provides six percent of the GDP, while in countries such as Croatia, Greece and Turkey, tourism provides from 20-25 percent of the country’s GDP.
The biggest flow of incoming tourism to St. Petersburg is during the high summer season, from May to October.
Statistical data provided by the St. Petersburg City Tourist Information Center show that the number of foreign tourists visiting St. Petersburg in 2003 grew 13.7 percent to 3,112,632 tourists. Since then the number of tourists visiting the city has dropped significantly — the total number of visits in 2007 fell to 1,952,002, almost one percent less than in 2006. 
The total number of tourists visiting St. Petersburg in the first three quarters of 2008 totaled 1,845,319 people. Almost a third of the tourists visiting St. Petersburg and the northwest region for business or leisure are Finns.

TITLE: Travel Agencies Seeing Slump in Demand
AUTHOR: By Yelena Zborovskaya and Natalya Chumarova
PUBLISHER: Vedomosti
TEXT: The tourism industry has not been left untouched by the global financial crisis, which has led to a reduced demand for package holidays in Russia. In December, travel agency sales were down almost 50 percent.
Turnover in the tourism sector in the last quarter of 2008 was at least 30 percent less than in the same period in 2007, and in December revenues fell by 50 percent, according to Vadim Lezhnin, advisor to the president of Intourist. In a best-case scenario, travel company revenues will fall by 30 percent compared to 2007, estimated Igor Beltyukov, president of Capital Tours. 
Sergei Khokhlov, commercial director of West Travel tourism agency, said that in the final quarter of 2008, the company’s revenues decreased by 20 percent compared to 2007. “We haven’t yet calculated the financial results for the last year, but it’s already clear that they will be worse than in 2007,” said Dmitry Smirnov, general director of Atlas travel agency.
Out of 2,000 Petersburgers surveyed by WorkLine Research, 694 had been abroad. From August 2007 to August 2008, about 35 percent of Petersburgers went on holiday abroad, the researchers found, the most popular destinations being Finland, Ukraine and Germany. 
Since the middle of November, the demand for package holidays has decreased by 30-40 percent, said Vladimir Vorobyev, president of Natali Tours. Demand is falling, many clients have either lost their jobs or feel insecure, and the gradual devaluation of the ruble has also been a factor, since holidays priced in foreign currencies are now less attractive, said Lezhnin.
Vorobyev said that people were traveling far less to long-distance destinations with expensive airfares such as Thailand and the Dominican Republic, but were flying more to Egypt and Europe. Sergei Ignatyev, general director of Aerotravel, said that twice as many people flew to Paris compared to 2007, and 3.5 times more people went to Prague. Khokhlov said that sales of winter breaks to Finland and Scandinavia during the recent New Year holidays had decreased by 20-25 percent compared to the previous year. He said that New Year trips last year were bought at virtually the last minute, while winter breaks in previous years had been purchased further in advance. 
Khokhlov said that due to falling demand in December, the first cutbacks had been made in charter flights to long-haul and exotic locations such as Thailand, India, the Dominican Republic and Egypt. For example, there is now one charter flight to Thailand every two weeks, and discounts on holidays reach 20-30 percent. In the near future, many long-distance routes will be canceled, Khokhlov predicted. 
Lezhnin said that tourists are moving away from long-distance destinations in favor of 2- to 3-day trips to Scandinavia or around Russia. Demand is shifting from luxury and middle-quality trips to economy holidays, he said.
Vorobyev said that companies could close every fifth point of sales with the lowest sales and make staff cutbacks of 15-20 percent this year in order to minimize their expenses. Khokhlov said that from January to March, travel companies would lay off employees or send them on obligatory unpaid leave until the start of the new holiday season, measures that would affect 10-15 percent of staff. According to him, the first to be made redundant will be support staff, such as couriers, visa service providers and secretaries.

TITLE: Domestic, Foreign Airlines Have Big Plans for 2009
AUTHOR: By Boris Kamchev and Shura Collinson
PUBLISHER: Special to The St. Petersburg Times
TEXT: In spite of the expected drop in the number of passengers as a result of negative market trends, Russian and foreign airlines operating in Russia reported excellent results last year. Russian airlines set a post-Soviet record in the number of passengers transported, carrying 50.1 million passengers in 2008, or 11 percent more than the previous year, according to the Federal Air Transport Agency, Bloomberg reported.
Many domestic and foreign airlines operating in Russia intend to maintain last year’s levels of activity in 2009.
“Last year we carried 3.5 million passengers, 7.3 percent more than in 2007. Significant growth in passenger volumes was registered on flights to international destinations. Passengers flying abroad increase by 19 percent to 1.92 million passengers, while 1.57 million passengers flew our domestic routes,” said Marina Peshekhonova, head of PR at Rossiya airlines. She added that Rossiya’s passenger turnover grew by 15 percent, totaling 7.7 million passenger kilometers.  
Domestic passenger numbers grew 8.9 percent to 26.4 million, while the number of Russian passengers on international flights increased 14 percent to 23.7 million. Freight traffic rose 5.8 percent in 2008, the agency said.
Deutsche Lufthansa is the biggest foreign airline operating in Russia and CIS countries, holding 10 percent of the market share in St. Petersburg. The Lufthansa Group, which includes Swiss International Air Lines, announced record results in 2008 for their St. Petersburg operations. The company is looking for equal success in 2009.
“Last year we introduced daily flights to Zurich from St. Petersburg, and increased the frequency of flights to Frankfurt from three to four daily flights during the summer in the high season. All of this has led to record results for the company in St. Petersburg,” Bart Buyse, Lufthansa regional manager for St. Petersburg and Northwest, said Thursday at an informal meeting with journalists. He said that the company transported more than 430,000 passengers from St. Petersburg to the rest of the world, 18 percent more than in 2007, and that the Lufthansa Group in St. Petersburg sold 27 percent more tickets than in 2007. Lufthansa sales account for 15 percent of that figure, while the rest was brought in by Swiss.
Similarly positive figures have been published by the country’s three biggest airports — Sheremetyevo and Domadedovo in Moscow, and Pulkovo airport in St. Petersburg. 
Sheremetyevo handled a record 15.2 million passengers in 2008 — 8.4 percent more passengers than in 2007. The number of passengers on international flights rose 7.2 percent to 10.1 million, while domestic passenger numbers advanced 11 percent to 5.1 million. Eighty-five percent more people used charter flights, according to an announcement by Sheremetyevo airport cited by Bloomberg.
Domodedovo International Airport increased its passenger turnover by nine percent last year, RIA Novosti reported. Russia’s busiest airport handled 20.4 million passengers in 2008, the state-run news service said, citing the hub. 
St. Petersburg’s Pulkovo airport handled more than 7 million passengers in 2008, an increase of 15 percent, according to Olga Antipova, PR specialist at Pulkovo. 
The main factor behind Lufthansa’s success in St. Petersburg is the premium sector services offered by the company, such as business class and private jets.
“We are very fortunate that St. Petersburg citizens prefer to use our highly exclusive products. Last year we sold 40 percent more tickets in this segment, almost double the number from the year before. This clearly shows us that the Lufthansa group is the most in-demand corporate airline on this market,” said Buyse. 
Lufthansa has contracts with around 700 St. Petersburg-based companies, which frequently use the airline to travel to international destinations.
The second reason for Lufthansa’s success in 2008, Buyse emphasised, was the success of local soccer club Zenit, which won the UEFA Cup in Manchester, England and the Super Cup in Monaco. Many local fans traveled to the games, many of them using Lufthansa flights.
Russia’s flag carrier airline, Aeroflot, is also optimistic about its prospects for 2009.  At the end of last year, the company said that it hoped to boost profit to a record of about 9.3 billion rubles ($282 million) this year, Reuters reported.  In a statement, Aeroflot said that it hoped to meet the profit target by replacing fuel-hungry jets with more fuel efficient airlines and reducing administrative staff, the news agency reported.
Aeroflot representatives had earlier predicted a 10 to 20 percent decrease in Russian traffic volumes, due to corporate passengers taking fewer business trips as a result of the financial crisis, Reuters reported.
Aeroflot profits totaled about $85 million last year, the company said — a significant decrease from their 2007 total of almost $313 million, the company’s current record. The airline said that the fall in profits was due to higher fuel costs in 2008 and less demand for travel amid the worsening global economic situation.
The company said in the statement that despite the planned administrative personnel cuts, the overall number of staff would increase by 5.6 percent after Aeroflot launches a new international terminal at Moscow’s Sheremetyevo airport and puts new airplanes in operation, Reuters reported.
Official government forecasts are less positive, however.  In December, Russia’s transport minister Igor Levitin predicted a 10 percent decrease in civilian air travel for this year at a roundtable devoted to transport. Levitin said that civil aviation and rail shipping would be the worst affected transport sectors by the crisis, Reuters reported.  
“Above all we need to see more demand ... But I think in the first half of 2009 we will not see this (downward) trend go back to levels seen earlier in 2008. Indeed there could be sharper falls,” Levitin said, the news agency reported.
The minister’s comments came in the wake of a turbulent time for Russian airlines, many of which have been crippled by the financial crisis. The government has created a new state carrier, Russian Airlines, to incorporate up to 11 stricken airlines.
Levitin said the government, through Russian Airlines, would guarantee the flights of any carrier unable to maintain its schedule, Reuters reported. 
“All the firms who can’t complete scheduled flights will get government support,” he was quoted by the news agency as saying.
Also in early December, First Deputy Prime Minister Igor Shuvalov announced an emergency state loan package for the airline industry worth 30 billion rubles ($911 million). He said the loans were primarily intended for Aeroflot, Transaero and Russian Airlines, Reuters reported.

TITLE: Plans for Pulkovo Redevelopment Unfazed by Crisis
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: St. Petersburg’s Pulkovo airport’s plan to become an international hub by 2025 — in 16 years — has not changed despite the current global financial crisis. To achieve this goal, much at Pulkovo has to be changed, since the airport does not currently meet modern international standards. A general redevelopment project was drawn up in 2006. 
Out of three different plans originally proposed, the airport authorities eventually chose the most expensive (experts say the overall sum necessary for the redevelopment is 1 billion euros) — and the most convenient for passengers. 
At present it is almost impossible to get from one terminal to the other with luggage. For example, if a tourist arrives from abroad and needs to travel onward to another Russian city, it requires a lot of time and effort to get from Pulkovo II (the international terminal) to Pulkovo I, from where internal Russian flights depart.
By 2025, Pulkovo I passenger terminal will be expanded. The idea of building a new terminal onto Pulkovo II was not accepted because the airstrip is inconvenient for aircraft, so under current plans, it is Pulkovo I that is to be rebuilt. 
In addition, two new runways will be built, which planes will be able to use 24 hours, all year round. 
According to Pulkovo specialists, experts from the German company Hochtief Airport GmbH who participated in developing the project found that Pulkovo I is a unique piece of architecture and should be preserved. Consequently, the project entails extending the existing terminal rather than demolishing the building.
A united architectural complex consisting of two terminals is planned, while Pulkovo II — currently the airport’s international terminal — will be used for business or air freight. Until the introduction of the new terminal, Pulkovo II will continue to operate in its present capacity.  
“When we speak about the development of the airport, first of all, we mean the building of the new terminal. This expansion of the functional area will help to increase the quality of services both for passengers and airlines,” said Viktor Konyashchenkov, development advisor to the general director of Pulkovo airport.
“The passengers will receive both a high quality of service, and new services altogether. The project includes areas for the development of shopping and hotels. But the main benefit that passengers will get from the new terminal is the feeling from its modern architecture and technology.”
There are currently 43 check-in desks in the whole airport, and in 2025 Pulkovo will require 98. 
The new terminal will be built on two levels — arrivals will enter on the first floor, while check-in desks will be located on the second floor. According to the most recent forecasts by Pulkovo experts, after the reconstruction in 2025 the new terminal is expected to serve more than 22 million passengers annually (three times more than it does now), and more than 30 million in 2039. The concession agreement is for 30 years, so the airport is making forecasts through 2039. 
The airport is currently seeking an investor to fulfil these plans. The results of the tender will be revealed at the end of May 2009 — the original date in March was postponed by two months due to the financial crisis. 
There will also be a special terminal for private planes. The St. Petersburg government has allocated land to the airport for the construction of a VIP terminal. Business aviation is rapidly developing, and specialists believe the terminal will be widely used during international economic events, such as the annual St. Petersburg International Economic Forum. 
In spite of the crisis, the realization of infrastructure projects could kick-start the economy, experts believe. The redevelopment of Pulkovo into an international hub will develop St. Petersburg’s economy, experts at Colliers International believe.
“This is not a short-term project. By the time the first part of the project is complete, the economy will probably have started to grow again. Moreover, during the crisis, it is possible to save money on building expenses. So you could say that the project has been started in good time,” said Nikolai Kazansky, director of the investment consulting department at Colliers International.
“The payback period for this project could be longer than for a commercial real estate development project. At the same time, the profit from the airport building cannot be estimated without taking into account the effect the city will gain from it,” he said.
“It will attract new companies, and as a result there will be new job opportunities and additional tax revenues that will be reflected in the development of all kinds of commercial and residential real estate,” said Kazansky.