SOURCE: The St. Petersburg Times
DATE: Issue #1457 (19), Tuesday, March 17, 2009
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TITLE: Sechin Asks For Revamp Of Market From OPEC
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Deputy Prime Minister Igor Sechin sought to assure OPEC on Sunday that Russia was doing its part in reducing global crude supply and proposed an overhaul of the market to rid it of financial speculators. 
OPEC said on Sunday that it would keep existing output levels unchanged but would seek to eliminate overproduction by some members. The decision comes after global crude prices stabilized from their free fall to just above $40 a barrel in the wake of the cartel’s steep production curbs that started in January. 
It means that the 12-member group, which accounts for 40 percent of the global oil supply, will work to cut another 800,000 barrels a day to meet its daily target of about 25 million barrels. 
Russia, an observer with the group, reduced its crude output by about 2 percent over the last two months year on year because investment dried up, Sechin said in a speech at a meeting of the cartel’s ministers in Vienna. 
This represents a faster decline compared to last year’s total output contraction of 0.7 percent. Last year, Russian oil production dropped for the first time in a decade. 
Any further output reductions by Russia will depend on the market, Sechin said. He previously has said Russian production could fall by 3 percent, or 16 million tons, this year if prices remain low. 
As has now become the custom, Sechin led the Russian delegation to the Organization of the Petroleum Exporting Countries’ meeting, accompanied by Energy Minister Sergei Shmatko and the chiefs of the country’s largest oil companies. Sechin sharply raised the profile of relations with his first visit to OPEC’s headquarters in September, when oil prices were midway to their current dismal lows. 
Finance Minister Alexei Kudrin said on Saturday that Russia would cooperate with OPEC, rather than the G20, on the issue of energy price stability. He made the statement at a meeting of G20 finance ministers in Britain. 
Despite falling output, Russia in recent months has overtaken Saudi Arabia as the world’s largest oil producer because the OPEC member ordered a steeper cut. 
In a supply-cutting measure, the government also indefinitely delayed issuing development licenses for several major new fields, Sechin said. The delays again had an impact on the Trebsa and Titova fields in northern Russia, deposits that were initially scheduled to be available last fall, Sechin said. 
In addition, the government will work to cut exports by stimulating local demand, Sechin told reporters on the sidelines of the summit. It will “hand over” 2 million tons of oil to farmers, Sechin said without elaborating, Interfax reported. It was not immediately clear how the shrinking domestic economy could take away crude from the export flows. 
Going forward, oil-producing countries must prevent sharp fluctuations of the price for the commodity, Sechin said. To this end, Russia could work with OPEC on stripping the global oil trade from banks, hedge funds and other financial market players, he said. 
Sechin said crude producers should seek to conclude long-term contracts with consumers, suggesting that they could replace spot sales, which can be heavily influenced by financial investors. 
The price that the producers would charge under these long-term contracts would take into account the rising costs of lifting and delivering crude, ensuring future investment, he said. 
A system of such contracts would not allow financial institutions to “unreasonably rock the boat,” Sechin said. 
Investors are believed to have inflated the oil price sharply in the first half of last year because they fled the then-weakening dollar for safer bets. The oil price crashed in July from about $150 to the current level, which producers say is insufficient for them to invest in increasing output. Oil companies and experts have warned that the world economy could run into a lack of oil when it recovers from the current downturn. 
Long-term contracts could help draw bank loans into the industry because the contracts could serve as collateral, Sechin said. 
“A sufficiently broad use of long-term contracts would ... limit the activity of market speculators,” Sechin said, Interfax reported. 
Crude-producing countries should also coordinate their tax, trading and transportation policies, Sechin said. 
Russia would like to post a permanent representative to the OPEC secretariat to facilitate routine liaisons, Sechin said. He didn’t raise the issue of membership. 
Sechin also called on other OPEC nonmembers — such as Kazakhstan, Azerbaijan, Norway and Brazil — to join forces in bringing stability to the market.

TITLE: Medvedev Welcomes Criticism Over Crisis
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev urged regional lawmakers to debate the government’s anti-crisis policies and said he would welcome criticism. 
In a notable departure from Vladimir Putin’s Kremlin, which rarely tolerated criticism, Medvedev said open discussion of anti-crisis measures among the lawmakers was “permissible and even necessary,” as was criticism of the state’s efforts to rescue the economy. 
“It would not be surprising if there was criticism about the course that has been taken,” although “arguments in its favor” should be presented as well, he said at a Kremlin meeting with the lawmakers. 
Medvedev, however, also contrasted Russia’s handling of the crisis with that of neighboring countries and took a clear swipe at one of them, presumably Ukraine, where he said political infighting had brought the economy to the edge of collapse. 
“We do not have political problems, which is good, because a country that goes through a crisis with political difficulties has a high risk of experiencing a default,” he said. “Look at what our neighbors are doing. There is a permanent state of political tension and internal clan war over there, and it complicates an already difficult situation.” 
Recently, some political pundits have started calling for Medvedev to depart from what they describe as the tacit pact between the government and society reached by Putin, in which society agreed on limitation of civil liberties in exchange for economical well being. The economic crisis demands that the accord be revised, say the pundits, including Igor Yurgens and Yevgeny Gontmakher of the Institute of Modern Development, a think tank that advises Medvedev on domestic policies. 
In another departure from Putin’s principle of concentrating decision-making power in the Kremlin, Medvedev called on Friday to change the relationship between the regions and the central government, with regional lawmakers taking more responsibility for making decisions. 
“This is a new time,” he said. “The responsibility of all levels of government has grown significantly.” 
The regions should share their experiences in fighting the crisis with the state and among themselves, he said. 
“A council of lawmakers could aid the exchange of information between regions,” he said. “It is also necessary to build a system of vertical communication with the federal center.” 
Regional administrations should cut their spending on things like “palaces” and “certain kinds of entertainment complexes” but keep vital social budgets, including those on “primary infrastructure facilities and housing” intact, he said. 
The president also railed against “irresponsible, weak and incompetent” managers in government, and said the state must get rid of them. A reserve of qualified officials is needed “at every level of government,” he said. 
The last time Medvedev used similar language was last month, shortly before four regional governors were dismissed and a minister was demoted in an unprecedented shuffle that analysts said smacked more of a publicity stunt than an anti-crisis measure. Also last month, the Kremlin made public the “Golden list” of the top 100 candidates, a presidential reserve handpicked by a pool of experts upon the president’s request to occupy future government posts. 
The government is working on a new anti-crisis plan that is to be presented on March 19. It will be accompanied by a revised budget that will show an 8 percent budget deficit, the country’s first in a decade, as well as additional support to banks and companies if the financial crisis worsens, First Deputy Prime Minister Igor Shuvalov said. 
Medvedev reiterated comments made by government officials that the budget could be revised should the price of oil sink lower than $41 per barrel. 
In an unorthodox move, Medvedev also called for the state to examine the possibility of allowing citizens to mine gold in order to combat unemployment. “If something can be done about this, let’s try to do it,” he said.

TITLE: Hundreds of Zenit Fans Arrested During Clashes in Moscow
AUTHOR: By Irina Titova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Moscow police detained about 659 fans at a match between Russia’s eternal soccer rivals Spartak (Moscow) and Zenit (St. Petersburg) in Moscow on Sunday night.
Zenit’s fans were the initiators of the disorder, and accounted for most of the detained — 513 people were Zenit fans, Interfax reported.
During the game a Zenit fan threw a chair that he had torn from its mounting at the Spartak fans’ sector. This led to a fight between the fans. Police managed to control the disturbances.
Zenit fans also tried to provoke other fights with Spartak’s fans and policemen, Interfax reported. The majority of the troublemakers were detained for breaking chairs, throwing smoke bombs and fireworks or for being drunk, police said.
Spartak’s owner Leonid Fedun said he felt very negative about the behavior of the fans at the match.
“If they are going to break and throw chairs at the new stadium, then why should we build it at all?” Fedun said, Vesti TV news channel reported.
Fedun said that paying fines for the disorderly behavior of fans during the global crisis would be particularly hard to stomach. He said that the fines for the incidents at the Zenit match could run to tens of thousands of dollars.
On Monday morning police released the Zenit fans and sent them back to St. Petersburg.
About 52 thousand spectators attended the match which was the first leg in the Russian Premier League. At least eight thousand of those in attendance were Zenit fans. Three thousand policemen oversaw the event. The match result was 1:1.
Meanwhile, at the pre-match press-conference held on Friday in St. Petersburg, Zenit’s coach Dick Advocaat shared the team’s plans and news for the up-coming season.
Advocaat introduced the team’s three new players – Igor Semshov transferred from Dinamo (Moscow); Hungarian Szabolch Husti transferred from Stuttgart; and Portuguese Fernando Meira transferred from Galatasarai.
“All the new players are of the highest quality. But they need some time to find their place in the team,” Advocaat said.
The club bought Semshov to replace one of Zenit’s top players and captain Anatoly Timoschuk who plans to leave the club in May- June, Advokcaat said.
Timoschuk is to join Munchen’s Bavaria.
“Semshov will be able to replace Timoschuk if necessary,” Advocaat said.
The president of the club and head of Gazprom Neft Alexander Dyukov said Zenit’s task in 2009 would be to regain the title of Russian champion.
“Our aim is to regain the champion’s title and to have successful results in the European cups,” Dyukov said.
Dyukov praised the selection of the new players, calling them “very experienced.”
Dyukov confirmed the plans and finishing date for the construction of Zenit’s new stadium, saying that it would be completed in 2010. He said that the construction of the club’s new base in the village of Mistolovo had already begun.
“The city is continuing the construction of the stadium. They have begun the concreting and that should be completed this year. In the summer they will begin to assemble the metal constructions so that in 2010 the stadium can be put into operation,” Dyukov said.
Dyukov also said that the recent negotiations for the transfer of Zenit’s top player Andrei Arshavin to London’s Arsenal were among the most difficult of his career. 
Dyukov said that as a result of the talks the club managed to get a good price for the player, while Arshavin has gone to a strong team where he instantly became a first team player.
Arshavin’s transfer was finally signed on Feb. 2. The transfer cost 16.5 million pounds ($23 million).

TITLE: EU Extends Ban on Belarus Leader
AUTHOR: By Leon Mangasarian and James G. Neuger
PUBLISHER: Bloomberg
TEXT: MOSCOW — The European Union agreed to extend its suspension of a travel ban on leaders from Belarus, including President Alexander Lukashenko, as it pursues closer ties with the key transit country for gas from Russia.
EU foreign ministers, meeting today in Brussels, said in a statement that the policy of engaging Lukashenko, dubbed “Europe’s last dictator” in 2005 by then U.S. Secretary of State Condoleezza Rice, was aimed at encouraging “democracy and respect for human rights and fundamental freedoms” in the former Soviet republic of 10 million that borders Russia and three EU member states.
“For 12 years we have tried the policies of sanctions and we saw where it took us: basically nowhere,” Finnish Foreign Minister Alexander Stubb said before the meeting. The 27-nation EU agreed to suspend the travel ban for another nine months, after which the bloc will either lift the measure entirely – or reapply it, depending on democracy and human rights developments in Belarus, the statement said.
Pipelines through Belarus handle a fifth of the EU’s imports of Russian natural gas, heightening the need for good relations at a time of economic crisis. More than 40 percent of Europe’s gas imports come from Russia, a figure the European Commission says will rise to 60 percent in 2030.
Benita Ferrero-Waldner, the EU’s external relations commissioner, said consultations on electoral reform in Belarus, the lifting of bans on two newspapers and talks between presidency officials and civil society groups were signs of “progress.”
“This is good, but it’s not enough,” she told reporters, adding that 13 newspapers remain banned. “We wish to seize the opportunity to construct a relationship that is beneficial to both sides.”
Ferrero-Waldner had planned to meet Lukashenko and other officials in Minsk last week. She canceled her trip after being told that Lukashenko wouldn’t be available to meet her.
Last October, the EU agreed to lift a travel ban on Lukashenko for six months as part of a bid to promote democracy and human rights there after flawed Sept. 28 parliamentary elections in the eastern European nation. Voting was criticized for not having been free and fair by the EU and the U.S. as Lukashenko’s allies claimed all 110 seats in parliament.
International observers have criticized all elections in Belarus since 1996, and in May 2008 the U.S. Treasury Department froze the assets of three subsidiaries of a state-run Belarusian oil company.
Both Swedish Foreign Minister Carl Bildt and Estonian Foreign Minister Urmas Paet warned that a key condition for closer EU ties is non-recognition by Belarus of the breakaway Georgian regions of South Ossetia and Abkhazia. Russia granted diplomatic recognition to both regions after it fought a war with Georgia over South Ossetia last August. So far, Nicaragua is the only other state to recognize the two regions.
Belarus Foreign Minister Sergei Martynov said in a Feb. 12 interview that his country hadn’t decided whether to recognize the two self-styled states. “We continue to consider the recognition of South Ossetia and Abkhazia, but no decisions have been taken,” he said. Russia and Belarus are close allies and signed an agreement for a two-state union in 1999 aimed at closer political and economic integration.
Officially maintaining the travel ban on Lukashenko and his government ministers while at the same time waiving its application so they can travel to the EU was described by Finland’s Stubb as a “wonderful way forward.”
“Remember that the European Union is a wonderful place for finding innovative compromises,” he said.

TITLE: Air Force Says 90 MiGs Dangerous
PUBLISHER: The Associated Press
TEXT: MOSCOW — A large part of the Air Force’s fleet has been found unsafe during inspections made after a MiG-29 plane lost part of its tail on a training flight, the Air Force said Friday.
The Air Force grounded the entire MiG-29 fleet after the Dec. 5 crash in southern Siberia, an area where another one of the jets had crashed in October. A check of the planes’ condition began as a military panel investigated the cause of the December crash.
Air Force spokesman Vladimir Drik said on Friday that about 90 MiG-29s had been found unsafe to fly and would need repairs. More than 100 of the planes have been cleared for flights, and a number of others remain to be checked, he said.
Drik did not say how many MiG-29s the Air Force has. Russian media reports put their number at about 300 and the entire fighter fleet at some 650.

TITLE: Convent Contests Neighboring Building
AUTHOR: By Irina Titova
PUBLISHER: Special to The St. Petersburg Times
TEXT: The mother superior of St. Petersburg’s Novodevichy Convent has said that the convent is ready to dispute the results of a cultural and historical commission which has opened the way for the construction of a multi-story building next to the convent.
The Novodevichy Convent, which stands just off Moskovsky Prospekt, close to the Moskovsky Voroty metro station in the south of the city, was designed by the architect Nikolai Yefimov and built in the mid-19th century in the Greek and Byzantine style. In 1925 the monastery was closed, before being partially reopened in 1990. 
“We won’t stop our fight for what is right, even though the Russian State Construction Watchdog has given the construction company LEK permission to build the Imperial complex,” Mother Sofia said at a press conference on Thursday, Interfax reported.
Mother Sofia said the convent did not agree with the conclusions of a report drawn up by the Tatyana Slavina architectural bureau — which was commissioned by LEK itself — that approved the construction of a tall residential building behind the religious complex.
The monastery, along with the All-Russian Society for the Protection of Historical and Cultural Monuments, intends to write an open letter to the federal Russian Cultural Protection Service to ask for a more objective report, Mother Sofia said.
The convent has already sent a letter on the matter to the authorities but they have not yet received an answer, she said.
Earlier the convent had proposed that LEK restore a belfry and five domes on one of the churches in the northern section of the nunnery.
“Those reconstructions would partly hide the eight high-rise buildings that have already been built.  However, the company didn’t accept this offer,” Mother Sofia said.
Inna Malinovskaya, a spokeswoman for LEK, told The St. Petersburg Times that the company had built its complex legally and had received all the necessary permits.
“The construction is almost complete, and it’s hard to imagine how the company could demolish 10 stories on each of the eight buildings, especially in the midst of a financial crisis,” Malinovskaya said, referring to calls for the nearby buildings to be shortened. 
“Besides, who could justify such a thing to the people who have already bought apartments in those buildings?” she said.
Malinovskaya said that if it wasn’t for the monastery’s objections, LEK could already have been moving people into their new apartments.
Malinovskaya said the demands of the monastery regarding the construction of the belfry and five domes as compensation for the effect of the high-rise buildings could seriously increase the prices for the apartments in the buildings.
“The construction of the domes is very expensive. Does this mean that our clients would have to pay for that?” she asked.
Malinovskaya said that if the convent had simply come to the company with a request for help, LEK would probably have reacted differently.
“However, at present these demands simply look like some kind of blackmail attempt,” she said.
On March 9, new rules governing construction and land use came into effect, limiting the height of residential buildings to no more than 35 meters, Interfax reported. Three days earlier, on March 6, the Russian State Construction Watchdog gave LEK permission to construct the Imperial high-rise complex, with a height of over 70 meters.

TITLE: Lugovoi Mulls Bid for Mayor  Of Sochi
AUTHOR: By Vladimir Isachenkov
PUBLISHER: The Associated Press
TEXT: MOSCOW — Andrei Lugovoi, the prime suspect in the killing of Kremlin critic Alexander Litvinenko, may run for mayor of Sochi, which will host the 2014 Winter Olympics, the Liberal Democratic Party said Friday.
Litvinenko’s widow said she would circle the world to call for a boycott of the games if Lugovoi was elected.
Lugovoi’s election would be “an affront to all people of good will who are looking forward to the 2014 Winter Olympics,” Marina Litvinenko said in a statement. 
British prosecutors have named Lugovoi as their chief suspect in the 2006 radiation poisoning of Litvinenko in London, but Russia has refused to hand him over, and the case has strained ties. Lugovoi, who met with Litvinenko in a London hotel hours before he fell ill, has denied involvement in the death.
Lugovoi, a millionaire businessman with a taste for pinstriped suits and flashy ties, said Friday that the Liberal Democratic Party, or LDPR, would make a final decision within days on whether to nominate him. He scoffed at the suggestion that his election could prompt Britain and or other countries to boycott the Olympics.
“It’s a mayoral election in a Russian city,” he said on Ekho Moskvy radio. “If we keep looking back at these people outside Russia, it will bring us no good.”
Kremlin critic Boris Nemtsov, a former deputy prime minister, also plans to run, along with a candidate from Prime Minister Vladimir Putin’s United Russia party.

TITLE: In Brief
TEXT: <b>Raid Under Review</b>
ST. PETERSBURG (SPT) — The Dzerzhinsky District Court will begin a review on Tuesday of human rights organization Memorial’s complaint over a December raid on its office, the organization’s lawyer said on Monday.
The court will hear witness testimony and view videos of the raid on the St. Petersburg office of Memorial, according to the human rights group’s lawyer Ivan Pavlov, Interfax reported. The second hearing comes in the wake of an appeal by the Prosecutor General’s Office against the court’s previous decision, which declared the raid illegal and ordered the Investigative Committee of the Prosecutor General’s Office to return seized materials.
Masked, armed men claiming to have been sent by the Prosecutor General’s Office stormed Memorial’s office on Ulitsa Rubinshteina on Dec. 24, seizing 11 computer hard drives.  According to Interfax, the raiders confiscated materials related to the victims of Stalin-era repressions.  
The Investigative Committee of the Prosecutor General’s Office has claimed the search was part of a criminal investigation over a June 2007 article in the newspaper Novy Peterburg that it alleges incited social and ethnic hatred. Several international bodies have expressed concern over the raid and seizure of materials, including the U.S. Department of State and representatives of the European Union.

<b>Museum Thief Caught</b>
ST. PETERSBURG (SPT) — A local 30-year-old man has been arrested for the theft of artifacts from the Kronshtadt Fort museum, according to a press release from the Central Internal Affairs Directorate of the Ministry of the Interior.
The artifacts — a Russian naval flag, models of Soviet medals and an infantry sword dating from 1817 — were stolen from the museum in May last year, Interfax reported Monday. The museum is housed in the Maritime Cathedral of the naval fortress town of Kronshtadt, which is located on an island in the Gulf of Finland 30 kilometers from St. Petersburg.
The intruder scaled scaffolding erected around the cathedral and broke in through a second-floor window to steal the items, which were on display in the museum’s exposition hall, the press release said. An expert analysis found that the infantry sword was of great cultural value.
The suspect, a native of the Leningrad Oblast, has a previous criminal record, according to the release.

<b>Train Passes Test Run</b>
ST. PETERSBURG (SPT) — A new high-speed train planned to operate between St. Petersburg and Moscow made its first test run Monday, Interfax reported.
The Sapsan train currently being tested by Russian Railways can reach speeds of 180 kilometers per hour and will travel between St. Petersburg and Moscow in three hours and 45 minutes, said Russian Railways President Vladimir Yakunin. The train could go faster if it were not limited by laws on technical safety, he said.
Testing of the new Sapsan series, which is produced by Siemens, will continue until December 2009. Regular services between St. Petersburg and Moscow will begin at the end of 2009, according to Interfax. Sapsan trains will also run between Moscow and Nizhny Novgorod.
Russian Railways placed a 276 million-euro ($359.6 million) order with Siemens for eight of the high-speed trains in May 2006. The two companies signed a 30-year maintenance contract for 354.1 million euros ($460.6 million) in April 2007, Interfax reported.

<b>‘Russia Arming Armenia’</b>
BAKU, Azerbaijan (Reuters) — Azeri Deputy Foreign Minister Araz Azimov accused Russia on Friday of supplying arms to Armenia, its foe in a conflict over the Nagorno-Karabakh enclave.
Azimov said Moscow was arming Armenia under cover of restocking its military hardware at a Russian military base in the Armenian town of Gyumri.
Both Moscow and Yerevan have denied that Russia is supplying weapons to Armenia. Russia says it moved some troops and equipment to Gyumri after it pulled out of bases in Georgia under an arms-control pact. 

<b>Polish Meeting Allowed</b>
GRODNO, Belarus (AP) — Belarussian President Alexander Lukashenko allowed a banned group of ethnic Poles to meet Sunday for the first time in four years, sending a tentative signal of his willingness to relax his tight hold in exchange for warmer ties with the West.
But the Union of Poles’ congress took place under a heavy police presence, and 16 of the 174 delegates stayed away. Ahead of the congress, many delegates said they had been called in for questioning by police or KGB and warned that they could face criminal charges for participating in an unregistered organization. 

<b>Kyrgyz ‘Assassination’</b>
BISHKEK, Kyrgyzstan (AP) — The Kyrgyz opposition said former presidential chief of staff Medet Sadyrkulov has died in a fiery car crash that some claim was a “political assassination.”
A car loaned to Sadyrkulov was severely damaged after it collided with another car and then caught fire outside Bishkek on Friday, the Interior Ministry said. It said the remains of three people found inside the car were too damaged to identify. 

<b>Lithuanian Candidacy</b>
MOSCOW (Reuters, SPT) — Lithuanian election officials told businessman Vladimir Romanov on Friday that he cannot run in a presidential election because he was born in Russia.
Romanov, 61, who owns Scottish football club Heart of Midlothian and a local bank, applied unexpectedly Thursday to stand in the May election.
The Constitution requires the candidate to be of Lithuanian origin. Romanov was born in the Tver region and moved to Lithuania with his father, an army officer, at the age of 9. 
“I am disappointed. It made me wonder who I am,” Romanov said. 

<b>For the Record</b>
Defense lawyers said Friday that they had finished filing motions in the second trial of former Yukos CEO Mikhail Khodovkosky and that the court would rule on them and the prosecution’s motions Tuesday. Also Friday, Khodorkovsky asked the court to seize the former Yukos property that he is charged with embezzling.  
(SPT)

A bus with 24 Russian tourists on board crashed late Friday in Vietnam, killing at least 11 people. 
(Reuters)

 Azerbaijan will vote Wednesday on whether to scrap the country’s two-term presidential limit. 
(Reuters)

TITLE: Ingushetia Tries New Anti-Insurgency Ploy
PUBLISHER: Reuters
TEXT: MAGAS, Ingushetia — Ingush President Yunus-Bek Yevkurov, chosen to rein in Russia’s most violent insurgency, says he will tackle the root of the problem by stamping out the official corruption driving young men into the arms of Islamist rebels.
“The root of the evil is in the dishonesty of local officials, and then the people start living in violation of the law because ... [they] have no opportunity to earn by legal means,” Yevkurov told reporters in Magas, the Ingush capital.
Yevkurov’s approach marks a stark departure from the focus on tough security operations that critics said had been dragging Ingushetia into a civil war. Ingushetia has overtaken Chechnya as the epicenter of violence, challenging the Kremlin’s fragile rule and, Yevkurov said, providing a foothold for global networks of Islamist militants.
Yevkurov said since President Dmitry Medvedev nominated him to run Ingushetia last October, prosecutors had opened 20 criminal cases against corrupt local officials and uncovered the theft of nearly $30 million in public money.
“If we make sure that this money reaches its target and works for the population, then the crime rate will drop sharply,” he said late Thursday.
“And then those who are leading criminal communities, including international terrorist organizations, will find it harder to recruit young people into their ranks because they will no longer be able to point the finger at local officials and say, ‘Look, he steals your money.’”
Security experts say Ingushetia is fertile territory for Islamist militants because it has an unemployment rate of more than 50 percent, desperately poor communities of refugees from Chechnya and a sectarian conflict with North Ossetia. 
More than 90 percent of Ingushetia’s revenue comes in the form of subsidies from Moscow, but rights groups and the opposition say most of this was being siphoned off by corrupt local officials under former Ingush President Murat Zyazikov. 
There was a brief lull in violence after he took office, but Yevkurov still faces an immense security challenge.
Magas is ringed by paramilitary police clad in body armor and wielding Kalashnikov automatic rifles. 
Yevkurov — a 45-year-old former paratrooper with a boxer’s flattened nose who said he still does parachute jumps to keep in practice — said he had asked Moscow to allow him to increase police numbers by more than half and that this year, the local Interior Ministry’s budget was up 40 percent.
Yevkurov won Russia’s highest military award for leading an audacious 1999 operation to seize Pristina airport from under the noses of NATO forces advancing into Kosovo. But he said the job he has now is more daunting.
“One can lead a column to Pristina every day, but of course, here in the republic things are far more difficult,” he said. “The criminal situation is very complicated, and when people ask me, ‘Do you have a war there?’ I understand them, even my friends talk about it.”

TITLE: U.S. Actor Rourke Visits Jail
PUBLISHER: Bloomberg
TEXT: MOSCOW — U.S. actor Mickey Rourke toured Moscow’s overcrowded Butyrka prison to prepare for his upcoming role as a Russian villain in “Iron Man 2,” becoming the first person in 35 years to don a tsarist torture device used to keep prisoners awake.
Rourke visited Butyrka on Thursday to get a firsthand view of Russian prison life and inspect the 18th-century “slingshot” sleep-deprivation tool, which was last worn in the 1970s, according to the prison’s web site. 
Rourke attended the Moscow premiere of “The Wrestler,” for which he won a Golden Globe Award for best actor, the previous evening.
Butyrka is the main presentencing facility in Moscow, whose inmates have included the KGB forerunner’s founder Felix Dzerzhinsky, Nobel laureate Alexander Solzhenitsyn and oligarch and former NTV owner Vladimir Gusinsky. 
Rourke’s next role is that of an evildoer who goes by the name of Whiplash in “Iron Man 2,” a sequel to the blockbuster starring Robert Downey Jr.

TITLE: Dovgy Goes on Trial Amid Power Struggle
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A former senior Investigative Committee official went on trial Monday in a case that refocuses the spotlight on infighting between powerful clans that has rocked Russian politics for the past two years. 
Moscow City Court spokeswoman Anna Usachyova said Friday that a preliminary hearing in the case against Dmitry Dovgy, the former head of the committee’s main investigative directorate, would start behind closed doors. Dovgy is accused of abuse of office and bribery. 
Analysts said the fact that the trial will be held shows that the battle for influence between competing groups close to Prime Minister Vladimir Putin is ongoing. “I do not see that the main parameters [of the power struggle] have changed,” said Andrei Soldatov, editor of the Agentura.ru web site and an expert on Russian security services. 
Dovgy was dismissed last April and arrested three months later on charges of accepting a bribe of 750,000 euros ($970,000) from a “well-known businessman” in exchange for halting an investigation into his company, investigators have said. He has denied the charges and said they were an act of revenge by former colleagues. If convicted, he faces up to 12 years in prison. 
Dovgy oversaw investigations into Deputy Finance Minister Sergei Storchak, senior Federal Drug Control Service officer Alexander Bulbov and Vladimir Barsukov, a reputed crime boss from St. Petersburg. 
In a newspaper interview last May, Dovgy accused his former boss, Investigative Committee head Alexander Bastrykin, of ordering him to open the investigations into Storchak and Bulbov, whom he said were innocent. 
Storchak was arrested on attempted embezzlement charges in November 2007 and freed last fall pending trial. Bulbov, who was arrested in October 2007 on charges of abuse of office and illegal wiretapping, remains in custody after the Moscow City Court last November rejected a request by the Prosecutor General’s Office to release him. 
The cases against Storchak, Bulbov and Barsukov have been called victories for a group of hardliners, including Bastrykin, close to Deputy Prime Minister Igor Sechin. The rival group, centered around former Federal Drug Control Service head Viktor Cherkesov, includes Prosecutor General Yury Chaika. 
Since its creation in 2007, Bastrykin’s Investigative Committee has accumulated the powers to open and conduct investigations, and it has routinely refused to carry out orders from the prosecutor general. In February, the Supreme Court ruled that the Prosecutor General’s Office has ultimate authority over the Investigative Committee. 
Stanislav Belkovsky, head of the National Strategy Institute, said the power struggle would only end if President Dmitry Medvedev combined the competing law enforcement agencies into a single investigative body. 
Belkovsky said the outcome of Dovgy’s trial was difficult to guess, given what he called political influence on the courts.

TITLE: Saakashvili Says Georgia Open to Russian Firms
PUBLISHER: Combined Reports
TEXT: TBILISI, Georgia — President Mikheil Saakashvili said he would not prevent Russian companies, including power trader Inter RAO and gas producer Itera, from investing in Georgia, rejecting criticism that their control of utilities was a threat to security. 
“We’re not going to hinder Russian companies from coming to Georgia,” Saakashvili said in an interview in the Black Sea port of Batumi. “The more business interest we get, the less political pressure there will be. I’ve never said that Georgia doesn’t need Russian business.” 
A proposed agreement with Inter RAO, a utility controlled by Russian state nuclear corporation Rosatom, would give it “management control” of the 1,300 megawatt Inguri hydropower plant on the border with Abkhazia for 10 years. 
The deal has met with criticism from Georgian opposition leaders, who say it would violate a law on the “occupied territories” of South Ossetia and Abkhazia and damage Georgia’s national interests. 
Georgia’s $12.8 billion economy is still recovering from about $1 billion in damage from a five-day war with Russia in August over separatist South Ossetia. Russia routed Georgia’s army in the conflict and later recognized both South Ossetia and Abkhazia as independent. 
On Friday, about 7,000 people rallied in the capital to demand the resignation of Saakashvili, whom opponents criticize for sparking the war with Russia and the country’s worsening economic situation. 
Another 2,500 protested on Sunday in downtown Tbilisi, calling for Saakashvili to resign. 
“We’ve never said we’re against Russian business or investors,” opposition lawmaker Levan Vepkhvadze said by telephone. “But privatizing crucial assets — like water systems, power stations and God knows what else — is different. And selling Inguri to a Russian state company? This is a terrible idea, and more than that, it’s dangerous.” 
Saakashvili said the government has no timetable for concluding the hand over of Inguri to Inter RAO. “We’re working with the Russians to get the best deal,” he said. 
“The Russians are trying to replace Georgian wine with Italian or Spanish,” Saakashvili said, referring to a Russian ban on wine imports from Georgia, part of an economic embargo imposed in 2006 that remains in effect. “But there’s no way they can replace Georgian electricity. We both have an interest in Georgia exporting power, and Georgia will gain extra revenue. I think the Inguri deal will be perfect.” 
Inter RAO owns or controls several Georgian utilities, including Telasi, the country’s largest electricity provider, which serves Tbilisi. The utility controls about 35 percent of Georgia’s power market, spokesman Boris Zverev said. 
“When I was prime minister, we encouraged all companies, including Russian, to invest in Georgia, and if I had to do it all over again I’d do the same,” Zurab Noghaideli, who served as prime minister from February 2005 to November 2007, said in an interview. 
 (Bloomberg, Reuters, AP)

TITLE: Global Downturn Hits Tourism
AUTHOR: By Nikita Savoyarov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The trade stands of St. Petersburg and other Russian regions attracted a poor showing at the 43rd ITB Berlin, the leading trade fair for the global travel industry, which was held from Wednesday to Sunday at the Berlin Exhibition Fair Ground. 
The Russian travel industry’s national stand occupied about the same area in comparison to last year, along with representatives from Moscow, St. Petersburg and the Russian regions. Its location appeared to be a strategic one due to the presence of two major neighbors: the U.S. and Canada. Ukraine’s stand was also in the vicinity, while Belarus missed the event this year. 
The St. Petersburg exhibition this year consisted of the stand of the City Tourist Information Center along with those of various tour operators and hotels. Yelena Pozdeyeva, representative of the tourism department of the city’s Committee for Investment and Strategic Projects, said that the situation of the hospitality industry in St. Petersburg had changed as a result of the global economic downturn. Big hotels are trying to cope with the new situation by offering more flexible room rates, she said. Natalya Baranova, sales and marketing manager at the Hotel Dostoevsky and Antonina Syromyatnikova, director of Pul Express travel company in Berlin, agreed. Hotels are now negotiating with tour operators that have groups with a limited budget in order to maintain occupancy rates. 
The pricing policy of the many small hotels from St. Petersburg presented at the ITB — mainly by brochures and price lists — did not appear reasonable, especially compared to hotel prices in Berlin, offering very high prices without any discounts in comparison with the previous season.
St. Petersburg’s major air carrier, Rossiya, had a stand opposite that of the city. Alexei Kutuzov, the official representative of the carrier in Germany, said the company had devised several special offers in order to compete with other companies offering flight connections to St. Petersburg. 
The stands of St. Petersburg and Russia were not overcrowded by trade visitors. Some regions were only represented within the overall Russia stand, and some regions were not represented at all due to a lack of funding.
Taleb Rifai, the Secretary General ad interim of the UN World Tourism Organization, presented the latest results of the world travel industry at the opening of the exhibition. While UNWTO figures show international arrivals hit a record 924 million last year and annual growth of two percent, the second half of the year tracked a monthly decline in macro-economic returns and forecasts. The last six months of 2008 saw negative growth of minus one percent — an indication of the trend forecast for this year.

TITLE: Baikal Plant Likely to Close
PUBLISHER: Combined Reports
TEXT: A unit of Oleg Deripaska’s Basic Element holding said Friday that it would probably close a pulp plant on UNESCO World Heritage Site Lake Baikal after measures taken to reduce pollution helped make the site unprofitable. 
Shutting down Baikalsk Paper and Pulp Mills would eliminate 2,000 jobs, and a final decision will be taken by shareholders in the “nearest future,” Deripaska’s Continental Management said on its web site. 
For decades, the plant spewed chemicals and foul effluent into Baikal’s pristine waters, making it a lightning rod for the country’s environmentalists, many of whom trace the roots of the movement back to the plant’s construction 43 years ago.
“It’s good news, of course, though it wasn’t completely unexpected,” said Marina Rikhvanova, a veteran activist who heads environmental group Baikal Wave.
The Natural Resources and Environment Ministry had demanded that the company close the plant and pay a 4.2 billion-ruble fine ($121 million) for polluting the lake. The facility suspended cellulose production on Oct. 6, about a month after introducing a closed-drainage system that halted discharges into Baikal, satisfying the ministry. 
But the company cannot come up with the 8 billion rubles ($230 million) it needs to preserve the mill, Continental Management said. The factory, based in the Irkutsk region city of Baikalsk, is not commercially viable and will be unable to meet its 1.2 billion ruble debt obligations if the pulp mill shuts down, the company said in a statement. 
“Unfortunately, time is already up for the [factory], and the plant will never be able to resume production,” the statement said.
Management hasn’t succeeded in its attempts to seek aid from the government, which owns 49 percent of the plant. A closure will lead to a glut of available wood products in the region with an expected 90 percent decline in China’s demand for unprocessed timber this year. 
Nestled in the vast wilderness of Siberia’s southern taiga, Lake Baikal is the world’s oldest, deepest and largest freshwater lake by volume, holding more water than all five of North America’s Great Lakes combined.
Scientists have dedicated careers to studying the lake’s flora and fauna — a mind-boggling 1,500 species found nowhere else in the world — or the lake’s depths of up to 1.6 kilometers. Poets have dubbed it the “Sacred Sea,” and the “Galapagos of Russia.”
That reverence and fascination with the lake helped galvanize opposition to Soviet leader Nikita Khrushchev’s orders to build the plant in 1966. Scientists who studied the lake warned that putting major industry on Baikal’s southern shoreline would irrevocably damage its ecology.  
But scientists’ warnings were ignored, and four decades later experts say the plant’s discharges have resulted in a more than 30-square-kilometer dead zone in the relatively shallow waters in the south.
In recent years, regional officials had grappled about what to do with the factory but were stymied by the tax revenues it provided, the heat and electricity it generated for the town of Baikalsk and the employment it gave to thousands in an impoverished region.
(AP, Bloomberg)

TITLE: In Brief
TEXT: <b>AvtoVAZ Seeks $750M</b>
MOSCOW (Bloomberg) — AvtoVAZ, Russia’s biggest carmaker, indebted to suppliers, is seeking 26 billion rubles ($750 million) from the government to continue production, Vedomosti reported.
State-run AvtoVAZ wrote a letter to Prime Minister Vladimir Putin asking for 26 billion rubles in loans and guarantees, the newspaper said. First Deputy Prime Minister Igor Shuvalov was due to consider the proposal at a meeting Tuesday, the newspaper said.
The automaker has borrowed 36 billion rubles from banks including state-controlled Sberbank and VTB Group, backed by 45 billion rubles of assets, or 60 percent of its total, and can’t take on new bank debt, the newspaper reported, citing an unidentified person close to AvtoVAZ management.

<b>Deripaska Shifts Debt</b>
MOSCOW (Bloomberg) — Billionaire Oleg Deripaska transferred the $2.8 billion debt he took out to buy Russneft to the oil producer, Vedomosti said, citing three unidentified people familiar with the transaction.
Russneft is now responsible for servicing the loan, which is backed by all of its shares and some shares of Gaz, a carmaker owned by Deripaska, the newspaper said.
Sberbank originally gave the loan to Deripaska’s Russian Machines holding company, which also manages Gaz, Vedomosti said. Deripaska doesn’t officially own Russneft, though he has paid for the crude producer, according to the newspaper.

<b>Deficit Could Top 8%</b>
MOSCOW (Bloomberg) — Russia’s budget deficit may exceed the eight percent of gross domestic product currently forecast for this year, Interfax news agency reported, citing Finance Minister Alexei Kudrin.
The government’s current forecast is “most likely optimistic,” the Moscow-based news service quoted Kudrin as saying Friday at the G-20 finance ministers’ meeting in the U.K.

<b>Ukraine Building Slump</b>
KIEV (Bloomberg) — Ukrainian construction plunged in February as the global economic crisis crimped companies’ finances, the Kiev, Ukraine-based state statistics office said in a statement on its web site.
Construction fell 57.3 percent from the same month last year, following a 58 percent drop in January, according to the data. There was a 16 percent decline in 2008, the most since 1997.
Ukraine’s economy and banking system, like other emerging markets, has been shaken by a lack of credit, a weakening currency and plunging demand for its exports during the crisis. The former Soviet state received approval for a two-year, $16.4 billion International Monetary Fund loan in November to help support its banking system.

<b>Oil Firms Seek Loans</b>
MOSCOW (Bloomberg) — Russian oil companies including Rosneft and Lukoil, the two biggest, are in talks with foreign banks to borrow as much as $4.6 billion in total, Dow Jones Newswires reported, citing unidentified people familiar with the matter.
Rosneft and Lukoil are seeking as much as $1.5 billion each, while Tatneft and Gazprom Neft are seeking as much as $1 billion and $600 million, respectively, the news service reported Friday, without identifying the banks involved.

TITLE: Ivanov Planning Toll Roads
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: All federal highways in Russia will become toll roads as the state teams up with the private sector to build up and repair the country’s ailing transportation infrastructure, Deputy Prime Minister Sergei Ivanov said Friday at a meeting with the Transportation Ministry.
Also at the meeting, Transportation Minister Igor Levitin said he had offered the post of deputy minister to Aeroflot head Valery Okulov, who has not yet responded to the offer.
Affixing a toll to all federal highways would be consistent with international practice, Ivanov said, Prime-Tass news agency reported. “The whole world’s experience suggests that this is the most effective path,” he said, adding that the construction of toll roads should be undertaken by public-private partnerships
“Projects of national importance, including those carried out as public-private partnerships, must be the priority,” he said.
Creation of a state company to develop toll roads has long been part of the government’s infrastructure plans, and the State Duma proposed legislation in January to create such a company, Avtodor. The bill was withdrawn for further development, however, because of loopholes and vague language.
Sergei Shishkarev, the deputy who heads the Duma’s Transportation Committee and attended the meeting, said he disagreed with Ivanov on the tolls. 
“Creating a company to build new toll roads is a good idea but not charging people for driving on any federal roads, especially during the crisis,” he said, adding that creating any public-private partnership is currently problematic because of the lack of clarity in Russia’s laws governing private use of public property.
Legislation regarding Avtodor is being hashed out at the Transportation and Finance ministries, but the bill is expected to be sent to the Duma next week, Shishkarev said.
Okulov’s candidacy for the deputy minister post comes after Kommersant cited government officials last week as saying his imminent departure from Aeroflot had already been decided at the highest levels of government. 
A Transportation Ministry spokeswoman said there were two openings for deputy ministers, and the candidates were Okulov and Oleg Belozerov, head of the Federal Road Agency. She declined to say when the ministry planned to fill the spots.
Okulov, who is married to a daughter of former President Boris Yeltsin, began working for Aeroflot during the 1990s, shooting up through the ranks from his job as a navigator in Sverdlovsk. Okulov’s contract expires in 2010. 
Aeroflot spokeswoman Irina Dannenberg said it was too early to talk about Okulov’s replacement. “He is happy with his position,” she said.
One of the candidates for Okulov’s spot is Vitaly Savelyev, vice president at Sistema, Levitin said.
The replacement of Aeroflot’s management does not seem logical given the instability in the industry, said Marina Irkly, analyst at Veles Capital. “Savelyev has no background in aviation, so he would take some time to familiarize himself with the company, while the times call for quick decisions,” she said.

TITLE: Kudrin Cautious of Devaluation Contest
AUTHOR: By Gleb Bryanski
PUBLISHER: Reuters
TEXT: HORSHAM, England — Finance Minister Alexei Kudrin said Saturday that a global round of currency devaluations was creating problems and that the International Monetary Fund remained a critical source of help for emerging economies to stabilize exchange rates. 
Russia has devalued its ruble by a quarter against its dollar/euro currency basket since August in response to capital flight and falling oil prices. 
Many other emerging and developed nations, including some of Russia’s neighbors, have let their currencies fall with varying degrees of resistance or encouragement, making their exports more competitively priced but increasing the burden of foreign-currency debts. 
“I would call it a devaluation contest. ... Devaluation in one country leads to inevitable devaluations in other countries and creates problems,” Kudrin told reporters after a meeting of G20 finance ministers south of London. 
Kudrin said the IMF and regional funds were the only sources of help for smaller economies in stabilizing their currencies. “If a country has no foreign currency, it has to devalue, and Ukraine is the most notable example,” he said. 
Ukraine has been squeezed hard by a collapse in demand for its steel exports and a global retreat by investors from emerging markets, sending its currency tumbling. Political infighting has complicated a deal with the IMF, which has suspended the second tranche of a $16.4 billion loan. 
Kudrin said G20 finance ministers had discussed the exchange rate issue but not the Chinese yuan, which has been widely criticized as undervalued. 
He said the dollar could weaken within the next two to three years against other currencies, but he did not expect any dramatic fluctuations. 
Kudrin said Russia and other major emerging economies had succeeded in boosting their clout in financial affairs at the G20 finance ministers’ meeting Friday and Saturday. Just before the meeting, the Financial Stability Forum announced that it would expand to include Brazil, Russia, China and India and all other G20 members — one of Russia’s stated goals leading up to the gathering. 
The FSF comprises central bankers and finance ministers, up to now mainly from the older economic powers, and looks at financial market supervision and surveillance. 
“We have increased our influence in the global financial decision making. Key global issues will not be discussed without Russia,” Kudrin said. 
Kudrin said the BRIC countries, which issued their first-ever joint communique on the sidelines of the G20 meeting, would have liked to see an immediate rebalancing of IMF quotas in favor of emerging economies, but a compromise envisioning the rebalancing by January 2011 has been found. 
He said the deepening economic crisis and a need to raise more capital for the IMF could soon force developed nations to agree to an earlier rebalancing. He said Russia’s quota would not be increased after the rebalancing. 
“As soon as the IMF capital requirements become more acute, the decision will be taken more quickly,” Kudrin said, praising the World Bank for agreeing to a similar move by April 2010. 
Russia voted against the previous IMF quota rebalancing completed last year and called it “cosmetic.” 
Kudrin also said the new U.S. administration of President Barack Obama was gathering strength but needed to fine-tune the mechanism of cooperation with other countries.

TITLE: Russia’s WTO Bid Making Limited Gains
PUBLISHER: Reuters
TEXT: BRUSSELS — Russia is making “limited but forward progress” in its bid to become a member of the World Trade Organization, the official steering the negotiations at the global trade watchdog said Friday.
Iceland’s envoy to the European Union, Stefan Johannesson, said he had called a meeting of the working group on Russia’s WTO membership, which he chairs, for March 27 and hoped that it might pave the way to further substantive talks.
“This meeting will take stock of the situation and decide on the next steps,” he said in an interview. “Russia has had informal, bilateral talks with a number of WTO member states in recent weeks, notably with the EU and the United States. Negotiations are making limited but forward progress.
“Everybody would like to see real progress, but it remains to be seen if I will be able to recommend to hold a substantive meeting soon after,” Johannesson said.
Russia, which has been trying for more than a decade to join the 153-member global trade body, is the largest economy to remain outside the WTO.
The EU supports Moscow’s membership, but a long-standing dispute over export duties on Russian timber, recent moves by Moscow to place import duties on cars and threats of further tariffs on other goods, ranging from shoes to furniture, have hurt relations with Brussels.

TITLE: Investors See Major Implications in Telenor Case
AUTHOR: By Courtney Weaver
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A lawyer for Farimex Products said Friday that it did not want Telenor to sell its stake in VimpelCom, a perhaps surprising admission given that Farimex has spent the past few months fighting in court to make Telenor pay close to the very value of that stake. 
The now three-year saga, which has drawn comparisons to the attack on Yukos and the drama last year at TNK-BP, stands alone for the questions it has raised regarding the hierarchy of competing verdicts — and the might of individual shareholders. 
For lawyers, it is a question of whether related verdicts in New York, Omsk and Kiev comply with their respective domestic legal codes and the decisions of the other courts. For market participants, the case represents a more simplified issue of business ethics. 
An Omsk court last week seized Telenor’s 29.9 percent stake in VimpelCom after the Norwegian telecoms firm failed to pay the $1.7 billion that minority shareholder Farimex believes that it owes VimpelCom, Russia’s second-largest mobile operator. 
It’s obvious enough that a forced sale of Telenor’s stake would send VimpelCom shares — including Farimex’s .002 percent stake — plummeting. Why the tiny Farimex decided to take on Telenor in the first place is another story. 
Once an unknown British Islands-registered company, Farimex is now a key player in a drama starring Telenor and Altimo, Alfa Group’s telecoms unit. Surprisingly, the only character noticeably absent is VimpelCom itself, in which Altimo is also a shareholder with a 40 percent stake. 
“This is a test case for how serious the Russian government is in encouraging foreign investment in the post-crisis world,” said Roland Nash, head of research at Renaissance Capital. 
“In the past, Western capital markets were able to deliver finance to Russian corporates. Now, the state is in control and has the opportunity to step in and make it clear that foreign investors are either welcome to invest in Russia or not.” 
Farimex says Telenor purposefully blocked VimpelCom’s expansion into Ukraine in 2005 to protect a 56.5 percent stake in Kyivstar, VimpelCom’s would-be competitor, successfully keeping the Russian company out of the Ukrainian market for two years. 
Assuming that VimpelCom would have garnered 25 percent of the Ukrainian market, losses for the delayed entry would amount to about $2 billion, said Philip Townsend, head of research at Metropol. 
The feud also concerns the rights of Telenor and Altimo as shareholders in Kyivstar. 
Alfa owns a 43.5 percent stake in Kyivstar and gained greater leverage in 2006 when Ukraine decided that a shareholder must own at least 60 percent to enjoy the privileges of a majority shareholder. 
A subsequent court ruling in Kiev ordered the Kyivstar board to be re-evaluated as Telenor no longer had control under the higher threshold, Kirill Babayev, Altimo senior vice president, said in a telephone interview. 
According to the Kyivstar shareholders contract, Telenor was allowed to appeal the case in New York, leading to further tangles when several aspects of the Kiev ruling and a recent New York verdict contradicted each other. 
On Wednesday, a New York court found Alfa in contempt and ordered the company to pay $100,000 per day until it complies with an earlier ruling. 
The New York court also demanded that Alfa bring its Kyivstar stake to New York as a deposit while Alfa’s shares are technically frozen for protection by the Ukrainian commercial court, Babayev said. 
“We are definitely trying to cooperate with the courts worldwide and comply with the rulings,” Babayev said. “But how can we comply with two rulings that contradict one another? It’s hard work.” 
Further complicating the case is the lawsuit that Farimex filed against Telenor in Siberia. Alfa claims that it has no connection to Farimex or the suit, a claim that Telenor has contested. 
Telenor spokesman Dag Melgaard called the Omsk ruling “illegal” and a “lawsuit that should never have been considered in the first place.” 
“We are really worried that a small company like Farimex is actually capable of raising such a lawsuit in the Siberian region,” he said. 
The appeal of Telenor’s case will rest on whether Russia decides to uphold any aspect of the New York or Kiev rulings based on reciprocity, said Edward Bekeschenko, a partner at Baker & McKenzie. 
As much as the trial is a bellwether for foreign investor rights in Russia, it will also be a test for how the country interprets foreign judgments. The trial could be a way for the country to develop a more cohesive legal policy on the issue, Bekeschenko said. 
While Bekeschenko said there were few similarities between the Telenor case and the Yukos trial, Renaissance Capital’s Nash said many investors were looking to the one-time oil giant’s demise as a historical precedent. 
“In many ways, I think it is even bigger than Yukos,” he said. “Yukos was about an oil company and oil is strategic, while this is about a mobile telecoms company. It doesn’t have any real strategic value, and so there is no excuse for the rights of foreign investors to be walked over.”

TITLE: Crisis Causes Changes at the Top
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — It was the very peak of last October’s liquidity crisis, and Binbank owner Mikhail Shishkhanov knew that he had to act fast. 
To make the crucial, split-second decisions needed to assure the midsize bank’s survival, Shishkhanov — who had not been taking an active role in the company’s day-to-day operations — replaced his top executive with the person he felt was best able to handle the crisis: himself.
“In times like these, it’s important to be in the middle of things, to react fast,” Shishkhanov said in an interview with The Moscow Times. “That’s not going to happen if you get your updates from the board of directors once a week.”
As the hard times spread from banks and builders across the broader economy, many Russian companies have taken a hard look at their chief executives. In some cases, such as Binbank, shareholders are returning to the helm. Others are getting rid of their former managers — including expats acquired in times of plenty — and hiring CEOs with experience in past crises or connections in the government. 
A study released last month by RosExpert shows that 62 of the country’s top 500 companies changed their CEOs in 2008. While chief executives are typically replaced in the second quarter, most of the changes in 2008 took place in the last three months, as companies began feeling the full weight of the economic downturn, the study said.
“There’s a belief that in good times, a CEO simply has to have a helicopter’s view of the situation and count the money,” said Luc Jones, a partner at the Antal recruiting agency. 
“During a crisis, however, you want to rely on somebody who’s been through bad times, somebody who’s experienced in downsizing and is a strong leader.”
Sometimes, that person is a company’s founder or a major shareholder. Oleg Deripaska, once Russia’s richest man, has sought to staunch the losses at his overleveraged empire by taking the helm at both his holding company, Basic Element, and its crown asset — United Company RusAl, in which he owns 57 percent. 
Others, however, believe that companies perform best when they are run by hired executives who often have a more objective view of the situation than a founder or owner. 
“A CEO’s job should be left up to the CEO alone,” Jones said. “Just because Roman Abramovich owns Chelsea, it doesn’t mean he has to run onto the field and tell the players what to do. There’s a trainer for that.”
In addition to good management skills, a corporate leader should have a clear vision of where the company should go, said Yevgenia Glikina, who specializes in executive searches at human resources firm Neumann International. 
Knowing a few people in the right places doesn’t hurt, either.
“One of the things in demand right now is a personal network of government relationships,” Glikina said. “It also helps to have someone who understands the unique requirements of running a business in Russia.”
Many times, that person is a Russian executive rather than one of the many foreign CEOs hired during boom times. 
“There was definitely a trend toward foreign CEOs in the past,” said Igor Shekhterman, managing partner of RosExpert. “Many were brought in for some specific reason, either to lead an IPO, or because of a lack of Russian top management experienced in dealing with Western institutions or investors.
“Now, however, the mandates that were in place before the crisis have changed completely.”
In October, MDM-Bank replaced Frenchman Michel Perhirin, who was with the company for more than three years, with Igor Kuzin. A month earlier, Raiffeisenbank replaced Jonah Jonach with Pavel Gurin, the first nonforeigner to head the Austrian bank’s operations in Russia. 
“The crisis forces you to react faster and to rely less on past experience because whatever experience you have, it is probably not going to be relative to the situation,” Gurin said.
Both banks said the changes were long-planned. The sector as a whole, however, had 16 CEO changes in 2008, the majority of them in the fourth quarter, according to the RosExpert study. 
At least one company has bucked the trend, however. VimpelCom said last week that CEO Alexander Izosimov would be replaced by Telekom Austria chief executive Boris Nemsic on April 3. 
Izosimov, who last month was named one of the top 100 managers that President Dmitry Medvedev will rely upon to fill senior government posts, has said he plans to spend more time with his family in Sweden. 
The company’s board has asked Izosimov to stay on in a nonexecutive capacity at VimpelCom to ensure a smooth management transition, the company said on its web site.

TITLE: 55 Ex-Billionaires Found On New Forbes Rich List
AUTHOR: By Mikhail Overchenko
PUBLISHER: Vedomosti
TEXT: MOSCOW — The majority of Russia’s billionaires couldn’t cope with the financial crisis, which wiped 55 names from the country’s tally in the 2009 Forbes rich list. Of the 32 who managed to defend their spots on the list, all lost money — as did 87 percent of the world’s tycoons. 
The collective pocketbook of the world’s billionaires ended the troubled year an astronomical $2 trillion lighter, falling to $2.4 trillion. The new list contains 793 billionaires — 332 fewer than in 2008 — putting the Russian casualties at almost 17 percent of the global total. 
The competition for first place turned into a race for survival: Microsoft founder Bill Gates recaptured the title, with losses of “just” $18 billion for a net worth of $40 billion. Gates looks unscathed compared to Warren Buffett, whose fortune shed $25 billion to take second place at $37 billion, following the worst year ever for his Berkshire Hathaway. 
Despite everything, 44 people managed not only to hang on to their wealth but to increase it. One of the best bets was on consumers looking to save money: Nine of the world’s 20 richest people own discount stores. 
Forbes compiles the rating every year by taking into account stakes in companies (using share prices for publicly traded companies and comparisons with similar businesses for closely held firms), private investments, real estate and art collections. Reporters also speak with the businessmen, their representatives and market participants. 
The list was shorter for the first time since 2003, when the number of tycoons fell to 476 with a combined worth of $1.4 trillion. Then began a boom, led by developing markets and surging demand for raw materials, credit and property. 
In 2005, Russians took third place, after the United States and Germany, with 27 people, up from just seven in 2002; by early March 2008, Forbes listed 87 Russian billionaires, and its Russian edition had 110 just a month and a half later as the country’s stock market soared. 
But in the period from Feb. 11 last year and this year, when the data were gathered, the RTS Index fell 67.64 percent, leaving 32 Russian citizens, including exiles Boris Berezovsky and Mikhail Gutseriyev, on the list. 
Their combined wealth fell $471.4 billion to $102.1 billion, which also deprived Moscow of its title as the world’s billionaire capital. In 2008, Moscow had 74 — slightly more than New York’s 71 and more than double London’s 36. Now, both have passed Moscow’s 27, with New York home to 55 and London with 28. 
Hardest hit was Oleg Deripaska, who in 2008 took ninth place with $28 billion — an increase of $14.7 billion — to surpass Roman Abramovich as the wealthiest Russian. The new Forbes list has him in 164th place at $3.5 billion, a drop of 88 percent. 
“That’s the value of the assets of Deripaska’s companies, minus debt,” said Maxim Kashulinsky, editor of the Russian edition of Forbes. 
When the crisis hit, Deripaska’s companies were among the most leveraged, and now they’re fighting for survival. United Company RusAl has debts of $14 billion to banks, while his GAZ Group owes about 45 billion rubles ($1.3 billion). Acquaintances of Deripaska say his holding, Basic Element, has overall debts of $25 billion to $28 billion. 
Leading the Russian table now is Mikhail Prokhorov, who went into the crisis not with debt but with dollars. 
He sold Vladimir Potanin a 50 percent stake in their holding KM-Invest, which controlled the majority of the former partners’ assets, as well as 25 percent of Norilsk Nickel to RusAl. The two deals brought him about $8.5 billion to $9 billion, people who know Prokhorov said, and RusAl owes him another $2.8 billion. 
Prokhorov has already managed to spend some of his money: He has invested in Renaissance Capital, TGK-4 and his Snob media project, among others. Forbes took into account the cash and the investments Prokhorov made, Kashulinsky said. His fortune also fell — to $9.5 billion from $19.5 billion. 
Abramovich has hung on to his silver medal. 
“Eight and a half billion dollars looks about right, if you’re talking about his main assets and the cash he had after selling Sibneft and buying [into] Evraz,” said a source close to Abramovich.

TITLE: Alfa Seeks $1 Bln in Debt from Deripaska’s Firms
PUBLISHER: Combined Reports
TEXT: MOSCOW — Alfa Bank, Russia’s biggest private lender, is seeking to recover about $1 billion of debt from companies controlled by Oleg Deripaska after rejecting a payment moratorium agreed to by other banks. 
The Island of Jersey’s Royal Court last month froze ?13.7 million ($19 million) of assets belonging to EN+, through which Deripaska controls aluminum producer United Company RusAl, according to EN+ and Alfa Bank. 
Alfa Bank is controlled by billionaires Mikhail Fridman and Pyotr Aven. 
The ruling is only “the first step,” said Vladimir Tatarchuk, deputy chairman of Alfa Bank. 
“We are in negotiations over the restructuring of the entire debt owed by BasEl companies to Alfa Bank group, which stand at about $1 billion,” he said, referring to Deripaska’s Basic Element holding company. 
“We don’t yet see acceptable conditions for the restructuring, and we believe that BasEl is a long way from having exhausted all possibilities for restructuring the debt,” Tatarchuk said. 
The court order prevents EN+ from reducing assets held in Jersey below ?13.7 million pending the resolution of the case, which was brought by Amsterdam Trade Bank, a wholly owned subsidiary of Alfa Bank. 
Sergei Rybak, a spokesman for Basic Element, said the group’s debt to Alfa Bank was “less” than $1 billion, without being more specific. 
“Our companies are conducting restructuring talks and have reached significant progress in certain cases,” Rybak said. “Alfa’s actions often undermine normal work of our companies and fulfillment of agreements with other lenders.” 
(Reuters, Bloomberg)

TITLE: The Kremlin’s Propaganda Ministry
AUTHOR: By Yevgeny Gontmakher
TEXT: Which event in Soviet history marked the beginning of the end for communism? It happened 27 years ago, when Mikhail Suslov, the chief Communist Party ideologist during the 1970s, died in January 1982. Those who subsequently filled his post — one after another in rapid succession — increasingly contributed their part to communism’s demise. They included Yury Andropov, Vadim Medvedev and Alexander Yakovlev. My sincere thanks to all of them for quickly dismantling — willfully or not — the insane totalitarian system that they called “the workers’ paradise.”
With the emergence of post-Soviet Russia, it was unsuitable to speak about a new “state ideology.” Although Boris Yeltsin made many mistakes during his presidency, to his credit he never tried to impose any ideology on society — not capitalism, socialism, Russian Orthodoxy or anything else. He strictly adhered to Article 13 of the Constitution:
1.The Russian Federation recognizes different ideologies.
2.No ideology can be declared a state or obligatory ideology.
3.The Russian Federation recognizes political diversity and a multiparty system.
But starting in 2000, when Vladimir Putin became president, I started sensing that the government was trying to dupe me once again by forcing a new ideology on me — the only difference being that this time the state was using a much more modern and subtle PR technology. Television news and documentaries started to characterize the Yeltsin era as one marked by a lack of patriotism, self-deprecation and excessive servility to the West. We were told in many different ways that it is impossible to love your motherland without hating the West, which rejoiced as the Soviet empire fell apart piece by piece from 1989 to 1991, and then relished as the chaos of the ‘90s brought Russia to its knees.
In the beginning of Putin’s era, it seemed like a bad joke, but when pro-Kremlin groups such as Young Guard and Nashi faithfully took to the streets like zombies and when State Duma Speaker Boris Gryzlov in all earnestness declared that “the Duma is no place for discussion,” that is when I understood for good that this seemingly harmless exercise in manipulating the public’s collective consciousness was truly dangerous because it had such a powerful impact on millions of Russians. As it turned out, the Kremlin got an excellent return on its investment after spending so much on high-paid political strategists, with Kremlin deputy chief of staff Vladislav Surkov — the modern-day Suslov — leading the pack.
That propaganda machine, well-oiled by petrodollars, would have continued to roll smoothly onward had the economic crisis not gotten in the way. At first glance, the crisis seemed to support the state’s ideological line. State-controlled television enthusiastically reported that the United States was going through its death throes even while Russia remained an “island of stability,” thanks to the wise policies of the government. 
Now, it is clear that the situation is not quite that rosy. Unemployment is rising, and salaries are dropping. Inflation is climbing, and the gross domestic product is decreasing. After years of budget surpluses, the federal budget is now in deficit. Moreover, Russia’s crisis is more severe than in the West, where unemployment is growing at a slower pace and prices have been falling markedly. 
The government has to face the harsh reality. Its mythical island of stability was quickly destroyed by the first waves of the global economic tsunami. The Kremlin will be entirely powerless to resist the millions of people who have lost their jobs or whose real incomes have dropped by a devastating combination of pay cuts and inflation. The government needs to speak more with ordinary people and owners of small businesses to get a sense of how bad things really are. 
Instead of doing this, Surkov is calling everyone to defend the current political system. There should be an open political debate and discussion in the Duma, on television and elsewhere of what is wrong and what needs to be done to best fight the crisis. But Surkov, in his infinite wisdom, sees it differently. He thinks that any debate he has not personally scripted and staged will threaten his own ability to function as Russia’s Suslov.
Officially, Russia doesn’t have a propaganda ministry. Nonetheless, we are still seeing a Soviet-like government propaganda machine that manipulates people’s consciousness and public opinion. 
To put it in economic terms, the government needs to divest itself of its “noncore business”: It needs to stop brainwashing the population. Otherwise, it could prove fatal. Although average Russians are quite tolerant of hardships and it takes a lot to force them to protest against government abuses, if the state continuously shoves their faces into the dirt and treats them like cattle, sooner or later they will respond with anger, vengeance and perhaps violence. And the likelihood of that scenario playing out is increasing daily with so many people losing their jobs, incomes and basic faith in the government. 

Yevgeny Gontmakher is the director of the Center for Social Policy at the Institute of Economics of the Russian Academy of Sciences. This comment appeared in Vedomosti.

TITLE: Stuck in the Minor Leagues
AUTHOR: By Alexei Bayer
TEXT: I sympathize with Russian leaders. Only a year ago, Russia had risen from its knees and assumed its rightful place at the head of the international table. An energy superpower, it controlled how Europe was heated and contributed one out of every eight barrels of oil produced around the world. Petrodollars flowed in even faster than Russian billionaires could spend them on Bentleys and Gucci. The billionaires, while meek as lambs in the presence of Kremlin political bosses, roared like lions abroad, buying up foreign companies.
Last summer, Russia’s military won its first foreign war in decades, albeit against a tiny neighbor. While not yet loved or respected, Russia was starting to be feared — a welcome return to the glories of the past.
The current economic crisis, too, seemed promising at first. The hated Yankees were finally getting their comeuppance. America’s economic power was finished, its greenback was garbage and its economic management was discredited. 
How sweet it was! And what a disappointment, also. The economic slump hit Russia sooner and more severely than the rest of the world. Equally unpleasant was the rally by U.S. Treasury bills and the appreciation of the dollar, which rose a whopping 50 percent against the ruble. 
But by far the worst blow was when it became clear that Russia was only a minor-league player on the international scene. Russia is not contributing anything significant to the debate on how to solve the economic crisis. The only thing Russian leaders can plausibly do is sit tight and wait until U.S. President Barack Obama finds a way to pull the U.S. economy out of its slump.
That Russia is not a decision maker in the world economy should not be surprising. Russia is a latecomer in the global economic system, which functioned in its current form for nearly five decades before the Soviet Union emerged from behind the Iron Curtain.
Even China, with its huge population and enormous flow of exports, has not been able to mitigate the crisis. Just like their Kremlin colleagues, the communists in Beijing have no choice but keep their fingers crossed for Obama’s success.
Both Russia and China are precariously situated. The current economic crisis, as more and more people realize, is not about the real estate collapse in the United States or the breakdown of the global financial system. It is a once-in-a-century shift in the supply-demand paradigm. Old demand, based on excess dollar liquidity and sophisticated debt engineering, has disappeared and cannot be revived. The world will have to develop new ways of paying for the formidable quantities of goods and services that the global economic machine has geared up to produce. It is going to be a long and arduous process.
Until last fall, there was plenty of debt-financed demand, which meant that most markets were sellers’ markets. From now on, demand is going to be extremely scarce, which means that buyers will have an upper hand in transactions. They will require low prices, greater reliability and better quality of everything they pay for.
This applies not only to cars, clothing and consumer electronics but to commodities as well. The World Bank has warned recently that global gross domestic product will shrink this year for the first time since World War II. The world will need less oil, natural gas, metals, lumber and other commodities. Unless Russia wakes up and becomes more responsive to the needs of its international clients, it may find itself unable to sell its commodities in a highly competitive market environment.

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

TITLE: Makers of Nesting Dolls Turn to State for Assistance
AUTHOR: By Nadia Popova
PUBLISHER: The St. Petersburg Times
TEXT: SEMYONOV, Nizhny Novgorod Region — The state will place about 1 billion rubles ($28.4 million) in orders for crafts such as nesting dolls and hand-painted dishes and could reduce taxes to support craft makers whose sales have plummeted, the Industry and Trade Ministry said last week Thursday. 
Ministries, state agencies, the White House and the Kremlin will all make large purchases of matryoshki and khokhloma dishes to be used mainly for gifts, a spokeswoman for the ministry said. 
The measures were announced at a meeting on Wednesday between Industry and Trade Minister Viktor Khristenko and 20 souvenir makers. 
One of the main measures of support should be state orders, Khristenko said at the meeting, according to a statement on the ministry’s web site Thursday. “We still have to work out the regulatory documents ... and draw up a list of the products the state will buy,” he said. 
The state will also help the producers sell their crafts at crafts fairs both at home and abroad.
Speaking earlier this month, prior to Khristenko’s announcement, Alexei Polikarpov was apologetic during an interview in his cold, dimly lit office on the outskirts of Semyonov, the heart of Russia’s nesting doll industry. With sales of the country’s most famous souvenir diving, Polikarpov cut production, leaving fewer wood chips to heat his shop. 
Across town at the Khokhloma Painting Plant, the country’s largest matryoshka producer, the situation was no better. Salaries were slashed along with output as the iconic wooden figures piled up on storeroom shelves. 
Crafts makers in Semyonov, a town of about 25,000 people 70 kilometers north of Nizhny Novgorod, have been particularly hard hit by the economic crisis. Polikarpov said he saw domestic demand fall 30 percent in November compared with a year earlier, while foreign sales sunk by as much as 60 percent. 
In January and February, domestic demand was halved. 
“We get fewer orders from souvenir shops, companies and private clients,” Polikarpov said sadly. His company, Dyuna, had almost no sales in December, despite the traditionally lucrative New Year’s holidays. 
Polikarpov used to sell 400,000 rubles ($11,300) worth of dolls per month in Russia and had exports of $10,000 to $15,000 — mainly to Britain, Argentina and the United States. 
Now, he said, the company’s warehouses have enough stock to cover sales for the next 1 1/2 months without producing anything. Dyuna had no profit in January and February and has just paid its employees for January. 
The company cut production by 30 percent this year and has started producing wooden toys such as robots. 
But Polikarpov hasn’t laid off any of his 30 employees. 
“I can’t lose them, because the painting skill is invaluable,” Polikarpov said. “Even though there are fewer orders, I will be paying them at least something so they can buy some food.” 
Dyuna’s artists earned 10,000 rubles per month before the financial crisis, and Polikarpov said most of them were still receiving their precrisis wages. The amount was worth about $430 before the crisis and $285 now. 
Only two artists were seen in Polikarov’s workshop on Friday; the rest were either ill or not working. 
Salaries were more than halved at the larger Khokhloma plant in downtown Semyonov, which had sales of about 30 million rubles ($860,000) on 100,000 matryoshkas last year. 
“We were loss-making in January and February,” Nikolai Korotkov, the plant’s general director, said in his office at the company’s production facility. 
As sales fell 30 percent in the fourth quarter, Korotkov reduced production by 37 percent and shifted to a four-day workweek in January. The plant has reduced its output plans by 40 percent in March, compared with last year. 
The low spirits also prevailed in the Khokhloma workshop, where formless chunks of wood were being turned into smiling lady dolls dressed in colored kerchiefs and flower-dotted aprons. 
“I’ve been doing this for as long as I can remember,” Vera Molodtsova, 45, said while painting solid blue shawls on a doll. “So I won’t leave for any other job. There are almost none anyway because of the crisis.” 
Molodtsova, a divorced mother with a 5-year-old son, said she used to take work home and paint on weekends. “Now, I do my work from 9 a.m. to 5 p.m. and go home done.” 
She earns 3,000 rubles ($85) a month, down from 8,000 before the crisis. “It’s hard to survive on that, as I have to pay 2,500 for electricity, heating and hot water,” she said, adding that she gets 2,000 rubles in alimony. 
Molodtsova and her colleagues said they had no choice but to underpay for the utilities, building up debt. Other women in the painting room said their husbands were also of little help. 
“My husband used to work at a construction site in Moscow, bringing home around 25,000 rubles a month,” said Galina Yuferova, 43. “He got 10,000 in January and brought home nothing in February.” 
Korotkov, who has been in matryoshka production for 35 years, said he had seen sales fall all over Russia, from Kaliningrad to Vladivostok, and couldn’t pay his workers more. 
“I sold matryoshkas for 800,000 rubles less in January and February than last year,” he said. “And I still have matryoshkas worth 6 million rubles at the warehouses, which I could be selling for the next three month without producing a doll.” 
Korotkov, however, denied that there had been a dramatic change in salaries, saying they had fallen 25 percent. 
Nonetheless, the business is faring better than in the 1990s, he said. “Back then, our customers used to pay with food or alcohol,” he said. “We had a special shop at the production site where people could take food instead of part of their salaries, which they used to get once every couple months. 
“I hope it won’t get that hard this time,” he said with a sigh. 
Dolls featuring everything from Presidents Barack Obama and Dmitry Medvedev to cartoon characters and the head of al-Qaida leader Osama bin Laden were all selling for 500 rubles. 
A vendor standing nearby said he was in a slightly better position because he was selling dolls he made personally. “But it still doesn’t save me, as my sales have dropped by 70 to 80 percent,” said Konstantin, 51. “I have some permanent customers, like souvenir shops on the Arbat, but now they buy way less.” 
Polina, who operates a souvenir store on the Arbat, Moscow’s famed pedestrian street, said her matryoshka sales fell 30 percent in February from the previous year. 
The dolls date back to 1890, when Sergei Malyutin, a painter from a crafts workshop in the estate of Russian railroad magnate Savva Mamontov, drew a sketch of what would become the traditional Russian matryoshka after he had seen a set of Japanese wooden dolls. 
Korotkov, of the Semyonov plant, said he was confident that the matryoshka would make it through the crisis. “It’s a symbol of maternity, she is a great mother,” he said. “The matryoshka is eternal, it will survive any cataclysm.” 
For others, however, the symbolism of the matryoshka was secondary. “If people don’t buy them any more, we’ll have nothing to eat,” said Valentina, 60, who has been selling the dolls at the Vernisazh market since 1991 and has seen a 50 percent drop in sales this year. “For me, the matryoshka is a symbol of survival.”

TITLE: Navy Aids  Clean-Up Mission
PUBLISHER: The Associated Press
TEXT: BRISBANE, Australia — The Australian government sent a navy mine hunting ship to search Monday for hundreds of tons of chemicals lost overboard during a mishap that also blackened miles of beaches with fuel oil.
Authorities said they have scraped the slick off of more than half of the affected beaches just north of the Queensland state capital Brisbane, five days after Wednesday’s spillage from the freighter Pacific Adventurer.
Authorities declared a disaster zone Friday along 37 miles (60 kilometers) of some of Australia’s most popular beaches, after it became clear the spill was much worse than it was initially thought.
The spill happened when 31 containers lashed to the ship’s deck broke free during a storm and fell overboard, ripping a hole in a fuel tank as they pitched into the sea.
Each of the containers held some 22 tons (20 tonnes) of ammonium nitrate, a chemical used as fertilizer that can also be explosive if mixed with diesel and detonated.
Authorities say ammonium nitrate dilutes easily in water and that at worst the spilled containers could cause an algal bloom. Still, they should be located and recovered as soon as possible, Environment Minister Peter Garrett said.
“We will deploy a Royal Australian Navy mine hunter vessel to search for (the) 31 fertilizer containers that were lost from the Pacific Adventurer during topical Cyclone Hamish on 11 March,” Garrett told Parliament on Monday.
Queensland Deputy Premier Paul Lucas said Sunday an estimated 66,000 gallons (250,000 liters) of oil spilled from the ship. Britain’s Swire Shipping Ltd., the Hong Kong-registered ship’s owner, has not publicly confirmed the amount.
Maritime Safety Queensland said authorities served the captain of the Pacific Adventurer legal papers on Sunday ordering him to remain on the ship until the investigation is complete. The captain’s passport was handed to the authorities pending an investigation.
Queensland officials have threatened Swire with a multimillion-dollar lawsuit. Under Australian law, the company faces fines of up to 2 million Australian dollars ($1.3 million) and could be liable for up to AU$250 million ($160 million) more in penalties for causing environmental damage.
Swire says it is cooperating with the authorities. The company has said it regretted the incident and the company and its insurers were talking with the government about cleanup costs.
Hundreds of workers toiled through the weekend to scoop up black, sludgy sand on Moreton and Bribie islands just north of the state capital of Brisbane and along the Sunshine Coast. More than half of the affected coastline was oil-free, Lucas said.

TITLE: Nadal Breezes Into Indian Wells 3rd Round
PUBLISHER: Agence France Presse
TEXT: INDIAN WELLS, California — World number one Rafael Nadal breezed past qualifier Michael Berrer and into the third round of the Indian Wells Masters series on Sunday.
Nadal downed Germany’s Berrer 6-2, 6-1 in just 67 minutes, encountering little resistance from the 28-year-old ranked 112th in the world.
Nadal, the 2007 champion in the California desert, broke Berrer in the opening game of each set and marched on from there.
“I played a very comfortable match,” said Nadal, who booked a meeting with Russian Dmitry Tursunov, a 7-6 (7/5), 4-6, 6-3 winner over American qualifier Michael Russell.
Nadal, who won his fourth French Open title and first Wimbledon crown in 2008, boosted his hardcourt credentials with his Australian Open triumph this year.
But the 22-year-old Spaniard said he wasn’t entertaining thoughts of a calendar Grand Slam.
“I haven’t thought about that,” he said. “The true Grand Slam is not impossible, but really, really difficult.
“Right now, I only focus on trying to continue to improve my tennis.”
Last year it was Novak Djokovic who arrived at the first Masters series of the year as the Australian Open champion.
Seeded third this year behind Nadal and Roger Federer, the defending champion from Serbia admitted that he wasn’t on quite the same high now that he was at this time in 2008.
But he believes his victory in Dubai two weeks ago, with the new racquet he has struggled to adjust to, showed he is moving in the right direction.
“This year hasn’t started maybe the way I thought I would, but now I’ve raised my confidence in a higher level,” he said. “Winning Dubai meant a lot for my confidence level and for my game overall.”
Djokovic defeated 54th-ranked Argentinian Martin Vasallo Arguello 7-5, 6-4.
He went up a break in each set, only to give it back, but managed to break again in each frame to seal the win.
“Winning this first match, it’s never easy,” Djokovic said. “From the baseline he made me work a lot with some points. But I played as much as I needed to, and I’m happy to get through.”
Djokovic next faces German veteran Tommy Haas, who downed compatriot Rainer Schuettler 6-7 (4/7), 6-2, 6-4.
Women’s top seed Dinara Safina of Russia had to work to book a fourth-round berth, beating China’s Peng Shuai 7-5, 6-4.
Safina, who has a chance to supplant the absent Serena Williams atop the world rankings by reaching the final of this WTA event, was up a break in the second set but gave it back before breaking Peng again to lead 5-4.
The Russian made no mistake as she served for the match, finishing off with a love game.
“Suddenly I stopped in the middle of the second set,” Safina said. “I was like, ‘What am I doing? Just play!’”
Despite the lapse of concentration Safina avoided the upset bug that saw 15 of 32 seeded women eliminated in the second round, including second-seeded Jelena Jankovic of Serbia, No.3 Elena Dementieva and No.6 Svetlana Kuznetsova, both of Russia.
In the fourth round she’ll meet U.S. veteran Jill Craybas, who beat slumping Czech Nicole Vaidisova 6-4, 6-3.
Fourth-seeded Russian Vera Zvonareva also reached the fourth round, with a 6-3, 6-1 win over Petra Kvitova of Czech Republic.
Men’s sixth seed Juan Martin Del Potro rallied for a 6-7 (6/8), 6-3, 6-1 victory over wildcard Ryan Sweeting, and seventh-seeded American Andy Roddick advanced with a 6-1, 7-6 (7/3) victory over Austrian qualifier Daniel Koellerer.
There was disappointment for France’s ninth-seeded Gael Monfils, beaten 6-7 (5/7), 6-1, 6-4 by wildcard John Isner.
In other men’s matches, last year’s suprise men’s finalist Mardy Fish, who shocked Federer in the semi-finals in 2008, was beaten 7-6 (7/4), 7-6 (7/1) by France’s Jeremy Chardy.
Chardy next faces Spain’s David Ferrer, runner-up to Djokovic in Dubai, who beat U.S. qualifier Todd Widom 6-4, 7-5.

TITLE: Hiddink: U.K. Title Race Far From Over
AUTHOR: By Ian Winrow
PUBLISHER: Agence France Presse
TEXT: LONDON — Guus Hiddink insisted the Premier League title race is far from over after Chelsea narrowed the gap on leaders Manchester United to just four points.
Hiddink’s side responded to United’s shock 4-1 home defeat to Liverpool by beating Manchester City courtesy of Michael Essien’s first half goal.
While the Chelsea manager acknowledged that the advantage still lies with Sir Alex Ferguson’s side, who have played a game less, he claimed the weekend’s results could have a major impact on the eventual destiny of this year’s championship.
Hiddink believes the decisive factor will be how United react to the shock of being humbled at Old Trafford by one of their fiercest rivals.
Hiddink said: “If it was just four points it would be very close, but they have that game in hand. But it’s clear that after yesterday’s unexpected result that the tension has come back in the league.
“It’s a boost. But if we want to track them, we have to keep on winning. That’ll give tension at the end of the season, which is good for everyone.
“Every now and then you get a defeat you don’t expect. Sometimes you don’t expect it at home because you have a beautiful record at home, then all of a sudden it happens. But they’re a very experienced team.
“Let’s see how they react in the up-coming days. It’s not the first time that it’s happened, but the big teams always react.
“It depends on their calmness if it goes on. When you are in the driver’s seat and someone else is coming, you can get a little bit nervous.”
Essien’s goal was the midfielder’s second in two starts since he returned from the knee injury that has kept him out since March, underlining the belief that the Ghanaian will have a major role to play in the closing weeks of Chelsea’s campaign.
“It was important for the team and the crowd that he came back after a long period of recovery,” Hiddink added. “We played him at Juventus and he did a good job, not just by scoring... like today.
“But by being in the team gives him and us a lot of confidence, and that’s good to see. I knew before he’s very strong, and he gives a lot to the team as well. Plus, it gives me tactically some options to play differently with other players as well.
“When we go to the end of the season, being in three competitions, having him available is important.”
But a successful afternoon’s work was marred by a recurrence of Deco’s thigh injury that could keep the Portugese midfielder out for the season although Hiddink was more optimistic about the knee injury that forced Didier Drogba off in the second half.
“I don’t think Deco will be recovered very shortly,” added Hiddink.

TITLE: Fritzl On Trial For Rape, Incest, Murder
AUTHOR: By Sylvia Westall
PUBLISHER: Reuters
TEXT: ST. POELTEN, Austria — An Austrian man who fathered seven children with a daughter he held in a cellar for 24 years pleaded guilty to incest on Monday but denied murdering a newborn son who died underground.
The case of Josef Fritzl, 73, has sent a wave of revulsion through Austria and around the world. The trial drew hundreds of foreign journalists to the provincial court where the defendant arrived holding up a folder to conceal his face.
Fritzl pleaded “partially” guilty to rape — understood to mean he is contesting the way the charge is worded — and deprivation of liberty. He said he was fully guilty of depriving the children marooned underground of their liberty.
Fritzl, also pleaded innocent to a charge of enslaving his daughter Elisabeth for most of her life, according to Reuters reporters at the closed-door trial. A verdict was expected on Thursday or Friday. He faces life in prison if convicted.
Wearing a mismatched grey suit, Fritzl entered the courtroom flanked by six policemen and holding a blue folder with both hands to prevent photographs of his face.
He remained silent and motionless, ignoring questions from television crews before the judge and eight-person jury — six men and six women — entered and cameras were sent out.
Fritzl’s lawyer argued that a charge of enslavement was inappropriate and he would contest the gravest charge, murder.
Prosecutors said Fritzl was responsible for the death of a twin who died shortly after being born in the cellar in 1996.
They said this was murder by neglect because Fritzl failed to seek help for the baby, whose body he burned in a furnace.
“He shut (Elisabeth) away in the cellar and made her totally dependent on him, forcing her into sexual acts and treating her as if she was his own property,” his charge sheet read.
Fritzl built the soundproofed cellar with a reinforced door under his home in the provincial town of Amstetten.
If he is found guilty of murder by the jury in St Poelten, near Vienna, he could be given a life sentence or 10-15 years in prison. His lawyer says his client is not a “sex monster,” but expects to spend the rest of his life behind bars.
Fritzl’s daughter and her six children, three of whom were incarcerated from birth, are now living in a secret location under new identities.
The case came to light when one of the three children who had never seen sunlight, 19-year-old Kerstin, fell seriously ill and was taken to hospital by Fritzl.
In comments via his lawyer last year, Fritzl said he had lived a “second life” in the windowless 60 sq meter (650 sq foot) cellar complex, watching adventure videos with the children and bringing flowers for Elisabeth, who cooked dinner.
Elisabeth told police she had been kept on a leash in the early months of her imprisonment.
Fritzl told them he had threatened to kill his captives using gas if they tried to escape.
Three of the children born in the cellar were raised above ground by Fritzl and his wife Rosemarie after he pretended Elisabeth had abandoned them. Police say Rosemarie did not know of her husband’s actions.
The case emerged less than two years after Austrian teenager Natascha Kampusch escaped from a basement where she had been held by a kidnapper for eight years.

TITLE: Pakistani Judges Restored, Protests Called Off
PUBLISHER: Agence France Presse
TEXT: ISLAMABAD — The restoration of top judges two years after their dismissal will give Pakistan desperately needed rule of law and marks up a victory for opposition leader Nawaz Sharif, analysts said.
Hours before a planned march by lawyers and opposition parties was due to descend on Islamabad, the government Monday caved into public pressure and agreed to reinstate the judges and end a repressive crackdown on activists.
Prime Minister Yousuf Raza Gilani, in a dawn address to the nation, announced that all judges, including chief justice Iftikhar Chaudhry who was sacked by former military ruler Pervez Musharraf, would resume office from Saturday.
The decision came after a series of meetings he and army chief General Ashfaq Kayani held with President Asif Ali Zardari to avert bloodshed and instability in the frontline U.S. ally in the “war on terror”.
Main opposition leader Sharif, a former prime minister who galvanised opponents of Zardari and led thousands of protestors in a march out of Lahore, hailed the announcement and promptly called off a mass protest.
The government’s climbdown was widely seen as a product of Western pressure on Zardari to defuse the standoff with Sharif, and Gilani’s orders to release hundreds of people in detention as a victory for rights.

TITLE: Mickelson Holds Off Watney for 1st WGC Win
AUTHOR: By Tim Reynolds
PUBLISHER: The Associated Press
TEXT: DORAL, Florida —There was the hospital trip for two bags of intravenous fluids before the final round. The hot showers and baths to alleviate nighttime chills. The right-handed swing with a left-handed club to extricate his ball from shrubbery. The upstart challenger who wouldn’t go away.
Phil Mickelson overcame it all.
And he’s closer than ever to overtaking Tiger Woods.
Mickelson shot a 3-under 69 Sunday to beat Nick Watney by one shot at Doral, getting his first World Golf Championships victory and vaulting to No. 2 in the world behind Woods. Mickelson finished at 19-under 269 and earned $1.4 million, the biggest payday of his career.
Not bad for a guy who could barely eat for three days, spent part of his Saturday night in an emergency room fighting dehydration and got tested all the way to the end by Watney, who came up with plenty of dazzling shots before falling just short.
“I enjoy this process of competing, being in the final group, tied for the lead, against a player who is playing some terrific golf, feeling that pressure, feeling that intensity, and how important each shot is throughout the entire round,” Mickelson said. 
“All of that adds to helping me,” he said.
He meant helping him win.
He may as well have said helping him take the No. 1 spot in the world.
Mickelson has never been closer to passing Woods in the world rankings, a spot to which he’s long aspired.
But Mickelson would hardly revel in that Sunday, saying all the right things about how Woods — who was in a stroke-play event for the first time since last summer’s U.S. Open, after which he needed knee surgery and missed eight months — will certainly be as good as ever soon enough.
“He’s the greatest player of all time. I don’t want to go there with the world ranking,” Mickelson said. “What I’m excited about is I’m playing some of my best golf.”
Watney finished with a 2-under 70, and had plenty of moments. He holed a birdie chip from behind the ninth green, giving a Tiger-esque fist pump after the ball fell and even drawing applause from Mickelson.
Watney followed that with an eagle at the par-5 10th to tie Mickelson at 20 under, but bogeyed the next two holes and never got back into the top spot.
“I’ll get over this,” Watney said. “It’s a positive week. I played really well. Beat 78 of the best players in the world. Beat Tiger, which is always good. I’m very pleased with the way I’m playing.”
Woods, in his first stroke-play event since winning the U.S. Open, shot 68 to finish eight shots behind in a tie for ninth.
“I’m happy with the way I played,” Woods said. “I didn’t say the way I finished.”
Jim Furyk shot 31 on the back nine for a 67 to finish alone in third. Jeev Milkha Singh had a 70 and was alone in fourth, his best result in a PGA Tour event.
“Those boys up front were superb,” Singh said.
He and Furyk never seriously challenged Mickelson and Watney, though, and the stage was clear for what essentially amounted to match play on the back nine.
Watney is no Woods, but he did his part in reprising a classic Doral duel.

TITLE: Swiss Study Raises Questions About Testerone Tests
AUTHOR: By Stephen Wilson
PUBLISHER: The Associated Press
TEXT: LONDON — A key test for catching drug cheats in sports should be scrapped because it fails to take into account vital ethnic variations, according to a study by a leading Olympic anti-doping lab.
The study, published in the British Journal of Sports Medicine, claims the testosterone test is “not fit for purpose” and should be replaced by a system that tracks a competitor’s biological patterns.
The study, funded by football’s world governing body FIFA, was conducted by scientists at the anti-doping laboratory in Lausanne, Switzerland.
Testosterone is a naturally occurring hormone but is believed to be widely used as a steroid in synthetic form to enhance performance among athletes.
The scientists studied the steroid profiles of 57 Africans, 32 Asians, 50 Caucasians and 32 Hispanics.

TITLE: Pope Speaks Out on Bishop Scandal
AUTHOR: By Flavia Krause-Jackson
PUBLISHER: Bloomberg
TEXT: ROME — Pope Benedict XVI said the Vatican made “mistakes” in its handling of a Holocaust-denying priest who was re-admitted into the Catholic Church.
The German-born pope has come under attack for his decision in January to lift the excommunication of Richard Williamson, an English bishop who at that time said in a television interview that there was “no historical evidence” for the Nazi genocide. His anti-Semitic views were distributed by media outlets on the Internet.
“I have been told that consulting the information available on the Internet would have made it possible to perceive the problem early on,” Benedict, 81, said in a letter addressed to Catholic bishops worldwide and distributed by the Vatican on Saturday in Rome. “I have learned the lesson that in the future in the Holy See we will have to pay greater attention to that source of news.”
The Vatican had initially said the timing of the bishop’s return to the fold was unrelated to his comments on the Holocaust. Benedict’s actions were part of a broader move to heal a rift with ultra-conservatives who opposed changes in the Second Vatican council, the Vatican said.
“An unforeseen mishap for me was the fact that the Williamson case came on top of the remission of the excommunication,” the pope wrote. “That this overlapping of two opposed processes took place and momentarily upset peace between Christians and Jews, as well as peace within the Church, is something which I can only deeply deplore.”
Williamson and three other bishops were banished from the Catholic Church in 1988 by John Paul II, Benedict’s predecessor, because they had been consecrated without papal permission by Marcel Lefebvre, founder of the Society of Pius X that opposed the Church’s modernization in the 1960s.
“Another mistake, which I deeply regret, is the fact that the extent and limits of the provision of 21 January 2009 were not clearly and adequately explained at the moment of its publication,” the pope said, referring to a Jan. 24 statement that announced his decision to lift the excommunications.
The pope’s spokesman, Federico Lombardi, on Feb. 27 said Williamson must publicly retract his views on the Holocaust, the murder of 6 million European Jews under Nazi German rule, before he can be officially reinstated. Until now, Williamson’s apologies have been “generic and ambiguous,” he said.
The pope also addressed criticism he had focused too much on the schism with the 486 followers of Lefebvre’s order.
“But the question still remains: Was this measure needed? Was it really a priority? Aren’t other things perhaps more important?” the pope said. “Of course there are more important and urgent matters.”

TITLE: Two Israeli Policemen Shot Dead by Militants Near Border in West Bank
PUBLISHER: Reuters
TEXT: JERUSALEM — Palestinian militants shot dead two Israeli policemen in an attack in the occupied West Bank on Sunday, the first incident of its kind in the area for several months.
In Gaza, a spokesman for the al-Aqsa Martyrs Brigades, an offshoot of Palestinian President Mahmoud Abbas’s Fatah faction, said a little-known group called the Imad Mougniyeh units had claimed responsibility for the attack. The group is named after a military commander of the Lebanese guerrilla group Hezbollah who was assassinated in Damascus in 2008.
The policemen were shot dead near the mainly agricultural Jewish settlement of Massuah, in an area of the West Bank close to the border with Jordan that is under Israeli security control.
An official from Israel’s Magen David Adom ambulance service said medics had found a car that had veered off the road and that the two men inside had suffered gunshot wounds.
Earlier this month, a Palestinian bulldozer driver was shot dead after attacking two police officers in their car with his vehicle in Jerusalem.
Last Wednesday, Israeli soldiers shot and killed a Palestinian youth and wounded another after firebombs were thrown at their vehicle in the occupied West Bank.
Israel has transferred some control to Palestinian security forces in West Bank towns but controls much of the traffic that travels through the areas at checkpoints.