SOURCE: The St. Petersburg Times
DATE: Issue #1459 (21), Tuesday, March 24, 2009
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TITLE: Murmansk Governor Yevdokimov Resigns
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Murmansk Governor Yury Yevdokimov resigned abruptly Saturday after enduring a week of harsh criticism from United Russia over the loss of the Murmansk mayoral election to an independent candidate.
President Dmitry Medvedev welcomed Yevdokimov’s resignation and appointed Federal Fisheries Agency deputy head Dmitry Dmitriyenko as the acting governor, the Kremlin said.
Political analysts said it was the first instance that a regional leader had been forced out of office for supporting a non-United Russia candidate in an election.
Independent candidate Sergei Subbotin, a former Murmansk deputy governor, was elected mayor with 61 percent of the vote in a runoff election on March 15, well over the 35 percent collected by the United Russia candidate, incumbent Mayor Mikhail Savchenko.
After the election, the new mayor refused to join United Russia but declared himself a supporter of Prime Minister Vladimir Putin, who heads United Russia.
Yevdokimov, a United Russia member, had served as Murmansk governor since 1996 and was appointed by then-President Putin to a fourth term in 2007.
In an interview with Gazeta.ru on Thursday, he denied speculation that he would step down.
But on Saturday, he said he thought that it would be best for the country if he quit. “I’ve always been ready to bear responsibility for my actions,” he said, Interfax reported.
Senior United Russia officials had accused him of violating election law by offering support for the non-United Russia candidate on local television and threatened to throw him out of the party.
United Russia said in a weekend statement on its web site that Yevdokimov had resigned on his own accord.
The acting governor, Dmitriyenko, 46, served in submarine units of the Navy from 1980 to 1992 and was appointed as deputy head of the Federal Fisheries Agency last year.
United Russia welcomed Dmtiriyenko’s appointment.
“There is a need for professionals able to work in new ways during crisis conditions,” party official Sergei Neverov said in the web site statement.
Dmitriyenko will be sworn in as governor on Wednesday, pending confirmation by the regional legislature.
Dmitriyenko flew to Murmansk on Saturday to meet with regional United Russia officials.
In his first official statement as acting governor, Dmitriyenko said he would focus on ways to make regional spending more effective.
Alexei Titkov, regions analyst at the Institute of Regional Politics, said the shuffle was the first time that a governor has been replaced after a conflict with United Russia over support of a candidate in elections. “Yevdokimov’s resignation will become an example for the other governors,” Titkov said.
The resignation follows a series of replacements started when Medvedev dismissed four governors in February. The president has the right to appoint and dismiss governors under a law proposed by Putin in 2004.
Meanwhile, the State Duma on Friday approved in a final third reading a bill that would give the party that holds the most seats in a regional legislature the right to propose gubernatorial candidates.
Under the existing procedure, this right belongs to the presidential envoys to the federal districts.
The bill, which now must be approved by the Federation Council and then the president, says the party should propose at least three candidates to the president no later than 90 days before the incumbent governor’s term expires.
TITLE: New Line To Fly Direct
To U.S.
AUTHOR: By Jessica Bachman
PUBLISHER: The St. Petersburg Times
TEXT: Major airlines are slashing prices and grounding planes in order to remain profitable in the tough global economy. But a group of investors believes that the time is ripe to launch a new airline offering flights between New York and St. Petersburg.
Baltia Air Lines has won approval from the U.S. Transportation Department to provide a nonstop service between New York’s John F. Kennedy International Airport and St. Petersburg’s Pulkovo 2 Airport, and the flights will start this summer, the airline’s chief executive, Igor Dmitrowsky, told The St. Petersburg Times.
The airline will initially offer the round-trip flights once a week on a Boeing 747, later expanding to three days per week and then five days per week, Dmitrowsky said.
The eight-hour flight will be the first direct connection between St. Petersburg and any city in North America, which Dmitrowsky sees as an unfilled niche that will give the airline an advantage.
Dmitrowsky said the economic downturn would also make Baltia competitive.
“Frankly, these are the best of times for us. The fuel price has gone down dramatically, and the other costs are not so extreme,” Dmitrowsky said by telephone from New York.
“Can you imagine if we were living in an era where Pan Am was flourishing along with other major airlines with no debt?” he said. “We would have such a hard time breaking into the market and an even harder time staying afloat.”
Baltia intends to offer three-class service in its aircraft, which will feature a white fuselage with a red tail emblazoned with a white rooster, representing punctuality. The airlines currently offering direct flights to the United States — Aeroflot, Delta Air Lines and American Airlines — provide two-class service.
A fourth carrier, United Airlines, will start flights to Russia next Sunday after postponing the Washington-Moscow route last year because of high fuel costs.
Oil prices have dropped from a high of about $150 last summer to around $50 last week. But the financial crisis has since enveloped the global economy, discouraging business and leisure travel and forcing airlines to cut prices and capacity.
Last week, United Airlines slashed prices to mark the start of the new daily flights between Washington’s Dulles Airport and Moscow’s Domodedovo Airport. Sample fares on the airline’s web site show one-way tickets to Moscow via Dulles costing $119 from New York and $167 from Los Angeles. The tickets must be purchased by Thursday, and travel is between March 29 and April 30.
Several other airlines dropped their prices below $500 for round-trip flights to Moscow last week, said Rick Seaney, chief executive of FareCompare.com.
Seaney linked the price cuts to the crisis.
“You have to understand that this is an absolutely crazy airfare environment,” he said in a column on the ABC News web site. “The airlines are trying to fill up their planes, but people are procrastinating, while others just aren’t flying. ... So we get the yo-yo price game: When nobody’s buying, prices take a dive.”
He said he found American Airlines offering one round-trip fare of $205 from Baltimore to Moscow.
Baltia’s ticket costs will remain “along the lines of the current price structure on carriers with connecting services,” Dmitrowsky said.
But Baltia’s web site is already promoting a host of discounts to students, seniors and youth. During the first month of service, all passengers will receive 25 percent off the ticket cost, and the first 300 passengers to book flights will receive a free ticket for future use.
The date for Baltia’s inaugural flight remains to be set, pending approval of its air certification documents from the Federal Aviation Authority, Dmitrowsky said. He said approval was expected within three months.
The airline, based in Rego Park, New York, will start service with a single 747.
It hopes to start nonstop flights between New York and Moscow, Kiev, Minsk and Riga next year.
Dmitrowsky, a U.S. citizen born in Riga, founded a kefir company in 1979 and led it to a public offering in 1986. He has financed several aircraft and automotive projects, but his dream for nearly 15 years has been to launch Baltia.
Baltia’s shares, which trade on the “over-the-counter bulletin board” electronic system, closed up 20 percent at $0.04 on Friday after seeing a 52-week low of $0.01 on Nov. 12 and a high of $0.07 on March 24.
Dmitrowsky faces an uphill battle. Airlines could lose more than $2.5 billion in 2009 after cargo volume dropped by 23 percent and passenger traffic fell by 5.6 percent in January, the International Air Transport Association said last week.
TITLE: National Bolsheviks Accuse ‘Spy’ Found in Their Ranks
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: An alleged police spy was exposed within an oppositional organization in St. Petersburg, only to claim two days after his confessions had been published that he had been telling lies to make money.
In a video published Saturday on oppositional blogs and web sites, a young man who identified himself as Dmitry Dubovoi said that he had been planted into the local branch of Eduard Limonov’s National Bolshevik Party (NBP) and had recorded meetings on his cell phone to play them later to the police.
He said his main task had been to inform the police about the routes and times of Dissenters’ Marches organized by the pro-democracy coalition The Other Russia, formed by Garry Kasparov’s United Civil Front (OGF) and the NBP.
Dubovoi, 19, said in the video that he had been a police volunteer for about two months, assisting a local district policeman, but was later invited to a meeting with another officer whom Dubovoi believes was from the E Center — the police branch dealing with extremism — and was told to infiltrate the NBP.
“This officer, alongside the district policeman, explained to me that there is such an organization, the NBP, that I should infiltrate it in order to find out what activities it organizes and report about the planned activities so they could be prevented,” said a stuttering Dubovoi on the video.
According to Dubovoi, the policemen did not show much interest in his recordings and did not suggest organizing any actions to damage the NBP’s reputation. He also denied being paid by the police.
Having been with the NBP since January, Dubovoi aroused suspicion among other activists when they noticed him recording their meetings and taking videos on his cell phone at protests, along with other strange signs, the NBP’s local leader Andrei Dmitriyev said by phone on Monday.
“We decided to test him, and gave him the wrong location for the [unauthorized] March 12 Dissenters’ Day march,” said Dmitriyev.
“We met at Ploshchad Alexandra Nevskogo metro, but told him the meeting point was Vladimirskaya metro,” he said. “When several activists arrived there, they saw Dubovoi, a police bus and a lot of policemen.”
However, two days later Dubovoi denied he was a police spy, saying that in the video, he had simply read aloud a text that the NBP activists had given him, local news web site Fontanka.ru reported on Monday. He said he was told that the video would be used in Limonov’s 2012 presidential campaign and was promised 5,000 rubles ($150), but was paid only 2,000 rubles instead.
“By 2012 I would have changed my appearance and nobody would recognize me. And I would have left St. Petersburg by then,” Fontanka.ru quoted him as saying.
Dmitriyev dismissed Dubovoi’s claims that he had been paid by the NBP to lie.
“There are two possibilities,” he said.
“Either the guy is not all there, which cannot be dismissed considering his behavior and how he reacted when interviewed [for the video], or his bosses from the police are also not intellectually brilliant, coming up with such crazy versions. It sounds like the ravings of a madman.
“There’s no doubt he worked for the police, the only question is whether it was his personal fantasy or whether it was thought up for him by the policemen.”
According to Dmitriyev, the video with Dubovoi’s confession was published to warn other young people against making further attempts to infiltrate his group.
“We uploaded the video on the web to warn other people like him,” Dmitriyev said.
“He is from the Tyumen Oblast, a provincial guy who wanted to make a career, so he came to the police and offered to cooperate. We’re warning them that it is not the best way to start a career and it’s better not to do this, because the stigma of being an informer will stay with a person for the rest of his life.
“We wanted to warn any other people whom the police or security services might try to send to us that they should think hard before following their bosses’ instructions,” he said.
In the video, Dubovoi identified his police contact as “Denis Gennadyevich Tarasov” and gave his telephone number, but when called on Monday the phone was answered by a woman who said it was a wrong number.
The police did not elaborate on the situation. “It could just be some weird person,” police spokesman Elmar Shakherzayev said by phone on Monday. “This is the first I’ve heard about it.”
Last month, the Oborona democratic movement caught a spy in its St. Petersburg branch.
Pressed by the activists, Anna Bukovskaya admitted she was an activist with the Kremlin-backed Nashi youth group and said she coordinated a group of 30 paid informers who infiltrated branches of the NBP, Youth Yabloko and the OGF in Moscow, St. Petersburg, Voronezh and six other cities.
TITLE: In Brief
TEXT: Gogol Metro Stop
ST. PETERSBURG (SPT) — A new metro station may be renamed in honor of 19th-century writer Nikolai Gogol, St. Petersburg Culture Committee chairman Anton Gubankov announced Thursday, according to an Interfax report.
According to Gubankov, the committee is supporting a request made by citizens to change the name of the Zvenigorodskaya station to Gogolevskaya to commemorate the writer, who wrote his best-known works in St. Petersburg. He pointed out that although historic local writers Alexander Pushkin and Fyodor Dostoevsky each have a metro station named after them – Pushkinskaya and Dostoevskaya, respectively – Gogol has never been commemorated in this manner.
Organizational questions over the renaming of Zvenigorodskaya, a station on the fifth, “purple” line that opened in December 2008, would be resolved in the course of this year, which marks the 200th anniversary of Gogol’s birth, Gubankov said.
Culture Committee Deputy Chairman Anatoly Agrafenin added that the recently renovated House of Writers may also be named after Gogol, as it is located on the same street as the entrance to the Pushkinskaya and Zvenigorodskaya” stations, which are linked by an underground passageway.
Gogol moved to St. Petersburg from Ukraine, beginning his writing career in the city and setting many of his iconic stories here, including “The Nose” and “The Overcoat.”
3 Held Over Slayings
ST. PETERSBURG (SPT) — Three suspects have been detained on suspicion of organizing and carrying out the murder of an Investigative Committee official in St. Petersburg in January, the committee said in a statement Friday.
The slain official, Dmitry Marininov, was investigating illegal drug trafficking when he was gunned down on a city street on Jan. 15, news reports said. A local police officer was arrested in connection with the murder in early February.
A pistol believed to have been used to shoot Marininov was found in the apartment of one of the three detained men during a search, Fontanka.ru reported.
4 Die in Disco Stampede
MOSCOW (SPT) — Four people died in a stampede at a discotheque in a small town outside Yekaterinburg when word spread that it was offering limited free entry Saturday night, a local police spokesman said Sunday, according to news reports.
About 200 people flocked to the discotheque in the Urals town of Pervouralsk after it announced that admission would be free for the first 30 minutes after it opened its doors, spokesman Valery Gorelykh said.
Three 16-year-old schoolgirls and a 30-year-old man died in the crush to get to the door, one person was rushed to hospital and seven were treated by paramedics at the scene, he said.
The discotheque has a capacity of 400 people, he said.
Police have opened an investigation.
TITLE: At Least 17 Die in Battle In Dagestan
AUTHOR: Combined Reports
TEXT: MAKHACHKALA — Three days of intense fighting between police and insurgents in a wooded area of Dagestan ended Saturday with five officers and about a dozen militants left dead, officials said.
Clashes are frequent in Dagestan, but the fighting in an area near the border with Georgia and Azerbaijan was some of the most intense in recent months. Helicopter gunships fired on the militant positions.
Regional Interior Ministry spokesman Mark Tolchinsky said 14 insurgents were killed, but Interfax cited the Federal Security Service as saying 12 died.
“The group committed several crimes in two regions in Dagestan,” Dagestani Interior Minister Adilgirei Magomedtagirov told reporters.
“There are at least three non-Russians with Arab nationality among the dead militants, perhaps even four,” he said.
State-owned Vesti-24 television showed a row of dead rebels lying in the snow with Kalashnikov rifles slung across their limp shoulders.
Magomedtagirov said a collection of Kalashnikov rifles, machine guns and a sniper rifle were found where the militants were hiding.
Earlier, television showed helicopter gunships firing from the snowy skies at targets in a forest and armored vehicles rolling into the mountainous area.
(AP, Reuters)
TITLE: Kadyrov, Putin Trade Barbs at Meeting
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prime Minister Vladimir Putin held a tense meeting with Chechen President Ramzan Kadyrov on Friday, trading thinly veiled barbs about whose responsibility it was to rebuild the impoverished republic.
While the government aims to cut the budget for regional subsidies this year, Kadyrov has been pressing for more federal support. President Dmitry Medvedev said in February that regional leaders who were not meeting expectations on handling the crisis would be called to Moscow for meetings.
Putin opened the meeting by asking whether Kadyrov’s “discussion with the Finance Ministry was finished,” without elaborating.
“Everything is great with the Finance Ministry now,” Kadyrov said.
“Friends?” Putin asked.
“Friends, thanks to you, Vladimir Vladimirovich!” Kadyrov replied, according to a transcript of the meeting on the government’s web site.
In the choppy exchange, which stood out from the usually fawning gubernatorial reports to the prime minister, Putin asked Kadyrov about problems in his region, including wage arrears and unemployment.
Answering a query about aid to Chechens who suffered in an earthquake last year, Kadyrov said his government had given families construction materials and used the “national way — when people help one another.”
“But it’s important to give state help, as well,” Putin said. “What about the hospital that was destroyed?”
“We did everything that was in our power,” Kadyrov said, adding that a new hospital project was being reviewed at the federal level — in the Health and Social Development Ministry. Putin responded that it needed to be a modern hospital, to which Kadyrov replied: “Of course. Euro-standard.”
“The main thing for us is your word that you settle this issue,” Kadyrov said, responding to another jab from Putin about the quality of the facility.
The prime minister then abruptly turned his attention to a giant mosque finished in Grozny in October. Called “The Heart of Chechnya,” it can hold 10,000 worshipers and is finished with rare marble and 36 Swarovski crystal chandeliers. It is located on Prospekt Vladimira Putina. “And how is your mosque functioning? I saw that you’ve held some big events,” Putin said, referring to the festivities on the prophet Mohammed’s birthday earlier this month.
While the sparring suggested a worsening of mutual frustration over who dictates Chechnya’s spending priorities, Kadyrov appeared satisfied with the results of the meeting. A statement on the Chechen government’s web site said Putin gave “special attention” to the mosque and was “impressed” by the scope of the celebrations.
TITLE: Plea Bargain Bill Clears Key Reading in State Parliament
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The State Duma on Friday passed in a crucial second reading a bill that would allow prosecutors to offer reduced punishments to suspects and defendants who cooperate with investigators.
While it’s a common practice in the United States, current Russian law does not allow prosecutors to offer formal plea bargains to defendants.
Deputies said the bill passed Friday is aimed at giving authorities more leverage in cracking down on organized crime. “Law enforcement agencies hope the bill will help track members of crime syndicates,” State Duma Deputy Vladimir Vasilyev, one of the bill’s authors, told The St. Petersburg Times.
If enacted, the bill would give cooperative suspects a firm guarantee of reduced punishments by obliging prosecutors to sign a formal contract when offering a plea bargain, Vasilyev said.
Currently prosecutors can offer informal plea bargains, though judges often issue harsh sentences despite a suspect’s cooperation. The bill is primarily aimed at defendants suspected of crimes of medium severity but could be offered to defendants charged with serious felonies, Vasilyev said.
If a suspect fulfills his obligations under the plea bargain, the court would be required to issue a prison sentence no greater than half of the maximum allowable sentence for a given crime, according to the bill.
Lawyers had mixed opinions on the legislation. Yelena Liptser, defense lawyer for former Yukos executive Platon Lebedev, said the bill would allow for “various violations on the part of the investigators” because they would be the ones drawing up the terms of the plea bargain.
TITLE: A Just Russia Tosses Hat Into Sochi Ring
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Another name was added Friday to the crowded mayoral election in Sochi, which will host the 2014 Winter Olympics, as A Just Russia announced that its local leader will vie for the seat.
Viktor Kurpitko, head of A Just Russia’s branch in the Black Sea resort, is the latest entry to the country’s hottest political show this year.
Several high-profile candidates, including opposition politician Boris Nemtsov and prominent businessman Alexander Lebedev, have announced plans to run.
Another big name linked to the race is Andrei Lugovoi, the State Duma deputy who faces murder charges in Britain in connection with the 2006 poisoning death of Russian emigre Alexander Litvinenko in London.
Lugovoi, who represents the ultranationalist Liberal Democratic Party in the Duma, will decide next week whether to enter the Sochi race, his spokeswoman said on Friday.
Even former Bolshoi ballerina Anastasia Volochkova says she is mulling a bid.
“I think I would do a good job. In the run-up to the Olympics, the idea of having a ballerina as the city mayor has something beautiful, good and bright about it,” Volochkova said.
TITLE: Lavrov Criticizes NATO's Expansion
PUBLISHER: Combined Reports
TEXT: MOSCOW — Russia is unhappy with NATO’s dominant role in European security and its dealings with neighbors that used to be part of the Soviet Union, Foreign Minister Sergei Lavrov said in Brussels on Saturday.
Lavrov said both the European Union and NATO were involved in unfair dealings with Russia’s neighbors.
On Friday, the EU promised a hefty program of aid trade and closer political ties to six former Soviet republics where Moscow retains influence — Ukraine, Azerbaijan, Georgia, Armenia, Moldova and Belarus. (See story on this page.)
“Russian foreign policy is not about fear. It is about fairness,” Lavrov said. “We see unfairness in dealing with our partners.”
Europe’s security should be run by the 56-nation Organization for Security and Cooperation in Europe, Lavrov said during the annual Brussels Forum security conference. “We should give that a try.”
The idea has been repeatedly rejected in NATO capitals, which view the 56-member OSCE as unsuited for the task.
Lavrov’s reiteration of Moscow’s demand for a new security compact showed an enduring divide between Moscow and its former foes of the Cold War era — 20 years after the Iron Curtain came down.
Lavrov said NATO should commit to “legally binding” security arrangements through the Vienna-based OSCE to cure what he called the alliance’s appetite “for more and more scenarios” of unilateral actions.
“NATO bombed Yugoslavia without any legal justification,” Lavrov said. “This bothers us. NATO takes it upon itself to judge everyone and everything.”
After the Cold War, the EU and NATO took in a dozen East European nations that had been part of the Soviet-led Warsaw Pact.
Javier Solana, the EU’s security affairs chief — and a former NATO secretary-general — said the NATO security arrangement whereby the United States is the key guarantor of European security “was a very intelligent setup.”
“If there is someone who doesn’t feel comfortable, he has the right to say it,” he said. “I think the Americans and the Europeans are ready to engage the Russians and make them comfortable.”
Moscow has pushed for an increase in OSCE’s involvement in European security for some time. On Wednesday, Lavrov said the presidents of Russia, Moldova and Moldova’s breakaway republic of Transdnestr agreed during negotiations outside Moscow that Russian peacekeeping troops stationed in Transdnestr could be replaced with OSCE forces once the region’s status was resolved.
(AP, SPT)
TITLE: Medvedev Upbeat on Ties With U.S.
PUBLISHER: The Associated Press
TEXT: MOSCOW — Some of the biggest names in U.S. diplomacy of the past decades met with President Dmitry Medvedev and other Kremlin leaders Friday in an effort to improve frosty relations that experts say could threaten many U.S. foreign policy goals.
In some of his most upbeat comments about U.S. relations since President Barack Obama took office, Medvedev said his meetings with current and former U.S. officials in recent weeks “reflect the goal of our nations to significantly improve ties.”
After greeting a delegation led by former U.S. Secretary of State Henry Kissinger, Medvedev praised the U.S. initiative, first announced by Vice President Joe Biden, to “press the reset button” on U.S.-Russia relations.
“The surprising term ‘reset’ ... really reflects the essence of the changes we would like to see,” Medvedev said. “We are counting on a reset. I hope it will take place.”
Kissinger, an architect of U.S. Cold War strategy toward the Soviet Union, said he and a group — including former Secretary of State George Shultz and former Senator Sam Nunn — had discussed energy and other “strategic issues” with Medvedev. “I’m happy to report that the differences were not so remarkable and the agreements were considerable,” Kissinger said.
Kissinger also told Medvedev that the U.S. group hoped that his April meeting with Obama on the sidelines of the Group of 20 meeting in London would help improve ties. “We believe in the generally optimistic attitude, and we hope ... that the meeting between you and our president will begin a new period in our relationship and will lead to concrete results,” Kissinger said.
Kissinger also met privately with Prime Minister Vladimir Putin on Thursday, in a meeting shown briefly on state-run television.
Experts say chilly bilateral relations have complicated efforts to limit the spread of nuclear weapons, ease tensions in Eastern Europe and expand the war in Afghanistan. Kissinger’s group has pushed for drastic reductions in global nuclear arsenals. And reviving talks on limits to nuclear arms, especially START I, which expires in December, is at the top of the U.S. agenda.
But the broader aim appears to be repairing the damage to relations over the past eight years between Washington and Moscow, which are at their lowest point since the early 1980s — a point highlighted by both Russian and U.S. officials in Moscow.
“I see we are in a race between cooperation and catastrophe,” Nunn told reporters at a briefing attended by the other Americans as well as Russian officials former Prime Minister Yevgeny Primakov and former Foreign Minister Igor Ivanov.
“We are certain that the low point of this period of chill in our relations is behind us,” Deputy Foreign Minister Sergei Ryabkov told reporters Friday. “The reset ... has really begun.”
While the Kremlin has welcomed the U.S. initiatives, it has also sent signals that it is up to Washington to make concessions, not Moscow, if relations are to improve.
Ryabkov expressed confidence that Moscow and Washington can resolve deep differences over the proposed U.S. missile defense facilities in Central Europe and forge a new treaty to replace START.
TITLE: 'Bourne-Style' Action Picture About Georgian War to Air
PUBLISHER: Reuters
TEXT: MOSCOW — A Russian action film inspired by last year’s Georgia war and shot in the same style as the “Bourne” trilogy will be broadcast soon on Channel One television, a spokeswoman for the station said.
The trailer for “Olympus Inferno,” the latest Russian interpretation of last August’s events, shows its two young heroes ducking gunfire, explosions and a raging Georgian officer firing his pistol.
The film, which will be shown on March 29, is set to highlight the debate between Moscow and Tbilisi about who started the five-day war over South Ossetia. The film is “something like the Bourne films,” said the Channel One spokeswoman, referring to the U.S. action movies starring Matt Damon.
The fictional account tells of a U.S.-based entomologist and a female Russian journalist who unintentionally capture evidence that Georgia started the conflict using a special camera night lens as they attempt to film rare night butterflies. The entire production was shot over the winter months in Georgia’s second breakaway region, Abkhazia, because its temperate climate resembled South Ossetia in summertime.
Director Igor Voloshin said it should be seen simply as an action film about two young people who get caught up in the war. “Debates begin ... ‘bad Russian or bad Georgians,’ but it’s just a film. You should look at it as a film, as a work of art, which is what I made,” Voloshin said. “People love buying films like ‘Apocalypse Now,’ masterpieces about war in Vietnam. Hollywood masterpieces and nobody remembers that the heroes of these films invaded Vietnam and burned it with napalm — for some reason that is forgotten.”
A trailer can be seen at www.1tv.ru/promovideo/6684.
TITLE: Deripaska Could Lose Control of RusAl Amid Crisis
AUTHOR: By Yuriy Humber
PUBLISHER: Bloomberg
TEXT: MOSCOW — Oleg Deripaska, the billionaire aluminum magnate who was once Russia's richest man, may lose control of his United Co. RusAl as it buckles under $14 billion of debt and plunging metal prices.
Lenders will meet this week to consider consolidating loans and swapping them for equity, said a banker familiar with the situation who declined to be identified because the talks are private. RusAl said it isn't considering a swap. The company has until early May to negotiate $7.4 billion owed to more than 70 foreign banks including ABN Amro Holding, Citigroup, BNP Paribas and Merrill Lynch & Co.
"At this stage, Deripaska's stake is likely to fall below 50 percent," said Michael Kavanagh, an analyst with UralSib Financial Corp. in Moscow. "Unless there are signs of an aluminum recovery, I can't see how RusAl can be saved without using equity."
Deripaska, 41, has lost 88 percent of his fortune in the past year, according to Forbes magazine, as Russian stock prices collapsed and the price of aluminum fell to a seven-year low. Russia's government won't step in to help pay the debt of its largest aluminum producer, First Deputy Prime Minister Igor Shuvalov said last week.
RusAl isn't counting on financial help from the government and plans to reorganize its borrowings and cut costs, the Moscow-based company said in an e-mail.
"We're not considering or discussing with banks the conversion of debt for equity," RusAl spokeswoman Vera Kurochkina said by phone Monday. Sergei Babichenko, a spokesman for Deripaska, declined to comment on whether Deripaska may reduce his stake in RusAl
On Sunday, though, Deripaska agreed to trim his position in RusAl to 53.8 percent from 56.8 percent to restructure $2.8 billion of debt owed to billionaire Mikhail Prokhorov. About $2 billion of that total will be converted into RusAl shares.
Deripaska borrowed to modernize RusAl's aging Russian smelters and expand into Guinea, Ukraine and Nigeria. Last year, seeking to create a diversified metals producer rivaling Australia's BHP Billiton Ltd., RusAl took out a $4.5 billion loan to help fund the purchase of 25 percent of GMK Norilsk Nickel from Prokhorov.
Prokhorov has an option to sell the new shares in RusAl back to the company also for $2 billion, Vedomosti said Monday, citing unidentified people close to the company. The option can be triggered if RusAl defaults, fails to restructure bank loans or doesn't carry out an initial public offering by 2013, the newspaper said.
Norilsk jumped to the highest since Nov. 14 on Prokhorov's swap, rising as much as 11 percent to 2,597 rubles on the Micex Stock Exchange on Monday. The shares closed up 6.4 percent at 2,480.04 in Moscow.
RusAl sought to expand its output as global aluminum demand grew. The lightweight metal used in cars and beverage cans traded at a record high of $3,380 a metric ton in London in July. It has since tumbled 56 percent as global demand for raw materials collapsed. State-owned lender Vnesheconombank, or VEB, gave RusAl a one-year bailout in October. Shuvalov said the facility shouldn't be rolled over.
"He's done some exceptional things, but he's had the markets on his side," said James Beadle, an investment strategist with Moscow-based Pilgrim Asset Management. "This is the worst crisis he's ever faced."
Raised in the Krasnodar region in Russia's south, Deripaska started trading while at college in Moscow. He later worked with commodity trader Trans-World Group, owned by investors including Michael Cherney, and was managing an aluminum smelter in Siberia at the age of 26.
In the mid-1990s, several groups vied for control of Russia's aluminum industry, and unsolved murders accompanied the struggle, spawning the label "aluminum wars." Deripaska survived and pooled his assets in 2000 with billionaire Roman Abramovich's aluminum operations.
Abramovich was later bought out and a merger with rival billionaire Viktor Vekselberg's Sual Group and assets from Swiss trader Glencore International has left Deripaska with 53.8 percent of RusAl. Deripaska was ranked as Russia's richest man in 2008, with his wealth estimated by Forbes at $28 billion.
Sunday's deal with Prokhorov, who replaced Deripaska as Russia's richest man, values RusAl at $44 billion. UralSib says it's worth $15 billion excluding debt, compared with $30 billion before commodity prices fell.
Closely held RusAl doesn't publish its profit. Revenue in the first half of 2008 was $8 billion on sales of 2.2 million tons of aluminum. ING Groep estimates that earnings before interest, tax, depreciation and amortization may drop 64 percent to $2.1 billion this year.
RusAl and other aluminum makers have slashed output amid a global supply surplus. Alcoa Inc., the largest U.S. producer, last week forecast a second-straight quarterly loss.
Servicing RusAl's debt may require at least $1.5 billion a year, said Alexander Pukhaev, an analyst at VTB Capital in Moscow. RusAl must also repay the government bailout loan.
"Deripaska wants to retain equity control, but this is looking almost unfeasible given the kind of money he needs to raise," said Mikhail Stiskin, an analyst with Troika Dialog in Moscow. "While outright bankruptcy is surely not an option, the shareholder structure may undergo significant changes."
Should RusAl's lenders gain stakes in the company, it may be only a stop-gap measure while they try to find a buyer. The banks lack the expertise or desire to run RusAl, said Timothy McCutcheon, a partner with DBM Capital Partners in Moscow. The aluminum producer's assets include six smelters in Siberia, which borders China and Mongolia.
"No bank in their right mind would seek a Siberian factory," McCutcheon said.
RusAl should look to investors from China or the Middle East for cash, following the example of Rio Tinto Group, said Cary Pinkowski, a former investment banker at Canaccord Capital and now head of Kola Mining Corp., a nickel and gold miner in Russia. "The Chinese would also be a buyer of the metal."
TITLE: Shuvalov: Growth Could Return by End of 2009
PUBLISHER: Reuters
TEXT: MOSCOW — The economy shrank eight percent in the first two months of the year, the Economic Development Ministry said Friday, as First Deputy Prime Minister Igor Shuvalov signaled that growth could return by the year’s end.
The Russian economy has been rocked by a collapse in oil prices, vast outflows of capital and waning demand for exports as the global economic crisis intensified.
Consequently, gross domestic product is likely to contract by 7 percent year on year in the first quarter, Economic Development Minister Elvira Nabiullina told the government Thursday, according to the text of her speech published Friday.
The ministry stuck by its forecast for full-year contraction of just 2.2 percent, suggesting that things could improve before too long. That optimism was picked up by Shuvalov.
“In some sectors, we are noticing more liveliness and a positive mood,” he told reporters. “We are already near the bottom, and we feel that by the end of the year we could have growth ... [But] it could be worse if the situation on the external market deteriorates.”
Data suggests, however, that the situation stabilized in February — even though the slowdown is in full swing and companies are cutting thousands of jobs per day — giving some cause for investors and politicians to feel more optimistic.
Oil is now worth $5 more than the $41 per barrel year average factored into the government’s revised 2009 forecasts and budget. But any signs of light at the end of the tunnel could be quickly extinguished by a renewed slump in crude prices.
“In an optimistic scenario of renewed world economic growth in 2010 and rising oil prices, the Russian economy could grow by between 2 and 4 percent in 2010,” Nabiullina said.
She added that the realization of government anti-crisis measures — worth some 1.6 trillion rubles ($47 billion) this year — would play a key part in the economy’s turnaround.
For now, data remains grim, but within the details there is reason for hope. Industrial production slumped 13.2 percent year on year last month, the second-worst reading on record but an improvement on January’s 16 percent contraction.
Purchasing managers’ indexes for the service and manufacturing sectors have edged up in the past two months, though both remain deep in contraction territory.
Job losses have stabilized at 300,000 per month, while nominal wages have risen from January’s eight-month low. A 14.1 percent fall in capital investment was less than expected.
“Stronger than expected data might suggest that the Russian economy could have already passed through the worst phase of the crisis,” UniCredit said in a research note. “On the other hand ... all important indicators ... remain in deep negative territory or on a strong downward trend. This provides continued downside risks to economic growth.”
TITLE: In Brief
TEXT: Mariinsky II Costs Soar
ST. PETERSBURG (Bloomberg) — Construction of the second building of Russia’s Mariinsky Theater may cost 18 billion rubles ($540 million), twice as much as planned two years ago and a sixfold increase over a 2002 estimate, Kommersant reported, citing an Audit Chamber’s report.
The amount would make the building one of the most expensive opera houses in the world, the newspaper said.
Last fall, the Russian authorities rescinded a contract with French architect Dominique Perrault, who won an international competition to design the new stage in 2003. Valery Gergiev, artistic and general director of the Mariinsky, has recently selected Toronto-based Diamond and Schmitt Architects Inc. to prepare a new design, the newspaper said.
Ford Contract Signed
ST. PETERSBURG (Bloomberg) — Ford Motor Co., the second-biggest U.S. automaker, signed a labor contract with its Russian workers through the end of next February.
The new agreement was signed Friday, the Dearborn, Michigan-based company’s Russian unit said in an e-mailed statement. More than 1,500 workers staged two strikes in November 2007 over wages and working conditions.
Ford became the first foreign carmaker to begin production in Russia in 1999 when it started its plant in Vsevolozhsk, near St. Petersburg.
Air Travel Down 22%
ST. PETERSBURG (Bloomberg) — Russian airline passenger numbers dropped by the greatest number on record during the first two months of this year as the country’s first recession in a decade slowed demand for travel, according to federal transportation agency data.
Carriers flew 4.8 million passengers in January and February, 22 percent less than the 6.1 million during the same period in 2008, Moscow-based Transport Clearing House said in a statement published on its web site on Thursday.
Passenger traffic, or the number of passengers multiplied by the distance flown, declined 20 percent in the period, while cargo volumes tumbled 39 percent.
Timber Duty Reviewed
ST. PETERSBURG (Bloomberg) — Russia may lift timber export tariffs for certain “priority” projects after the government approved a set of measures to combat the economic crisis.
Financial support for Russia’s biggest forest industry ventures, including loans and interest payment assistance, will also be made available, the government said in a document published on its web site on Thursday.
Three or four forestry projects, each worth more than five billion rubles and including ventures by Finland’s Stora Enso Oyj and Metsae-Botnia Oy, may receive exemptions on timber exports, Kommersant newspaper said Friday, citing an unidentified ministry official.
Aeroflot Bids for CSA
ST. PETERSBURG (Bloomberg) — Aeroflot filed an application with the Czech Finance Ministry to take part in a tender for the Czech state’s 91.5 percent stake in its national airline CSA on Monday.
Aeroflot Deputy CEO Lev Koshlyakov said on Friday that Russia’s biggest airline wants to use CSA to develop transit routes from central and southern Europe to Asia.
TITLE: Ukraine Seeks $5.5 Bln To Upgrade Gas Pipelines
AUTHOR: By Daryna Krasnolutska and Halia Pavliva
PUBLISHER: Bloomberg
TEXT: KIEV — Ukrainian Prime Minister Yulia Timoshenko said her country is seeking $5.5 billion to upgrade Soviet-era pipelines to help Europe secure supply routes that carry about a fifth of its natural gas needs from Russia.
The eastern European nation is aiming to increase capacity by 60 billion cubic meters of gas a year, Timoshenko told reporters on Monday in Brussels at a conference before signing a declaration on improving the network with the European Union.
Ukraine’s 1,100 kilometers of pipes transport an average of 120 billion cubic meters of gas a year from Russia to the EU, which consumed 517 billion cubic meters of the fuel last year. Monday’s conference comes two months after Ukraine and Russia ended a spat that disrupted gas shipments to the 27-member bloc and renewed calls for alternative supply routes.
“There is currently much talk about new pipelines bypassing Ukraine, but given the global economic crisis there is no reason to invest billions and billions of dollars in new pipelines,” Timoshenko said. “Ukraine’s gas system is very powerful and doesn’t need much money for upgrading.”
Gazprom, Russia’s gas exporter, resumed supplies to the EU via Ukraine after the sides signed 10-year contracts on Jan. 19. The state-run company is promoting the South Stream and Nord Stream pipeline projects, via the Black and Baltic seas respectively, to help supply Europe while bypassing Ukraine.
Timoshenko signed the declaration with Benita Ferrero-Waldner, the European commissioner for external relations, and Energy Commissioner Andris Piebalgs. The European Bank for Reconstruction and Development, the World Bank and European Investment Bank said they were ready to provide financing under certain conditions.
Ukraine represents the best route for gas from Russia, which may be able to participate in talks on upgrading the Ukrainian system, Piebalgs told reporters. “We want to stabilize the situation, not jeopardize” it, he said.
Russia should be involved in the modernization of Ukraine’s pipelines as the system is very closely linked to Russia and it was built in the Soviet era, Russian Energy Minister Sergei Shmatko said in the Belgian capital. The declaration between Ukraine and the EU on the upgrading process should include Russia, he told reporters Monday before it was signed.
“A bilateral approach may lead to a review of all gas contracts and so threatens the EU’s energy stability,” Shmatko said. “Only a three-party agreement will benefit everyone.”
About 2.5 billion euros ($3.41 billion) through 2015 will probably be needed to renovate the system to keep it operating at current levels, the EU said in a statement March 20.
Ukraine, a country of 46 million people sandwiched between the EU and Russia, secured a $16.4 billion standby loan from the International Monetary Fund in November as Timoshenko’s government sought to cover a current-account deficit and support the financial system. The first $4.5 billion was disbursed in the same month.
The former Soviet republic should make some legal changes and improve decision making to get investment from the European Investment Bank, EIB President Philippe Maystadt said Monday.
Timoshenko, who returned to the premiership in 2007, swapped barbs with President Viktor Yushchenko after the January gas deal, which she negotiated with Russian Prime Minister Vladimir Putin. Yushchenko called the agreement a “capitulation” amid wrangling with his premier, whom he has fired once during his term of office, over the economy.
Yushchenko called on his country to spend $2 billion on pipelines and $455 million on doubling storage capacity by adding as much as 30 billion cubic meters of facilities near its western borders. Ukraine can now store 31 billion cubic meters of gas, he said.
Today’s declaration is about Ukraine’s integration into the EU, Yushchenko said, adding that his country remains “open” to talks with Russia.
TITLE: Kudrin Mulls Currency Swap
PUBLISHER: Bloomberg
TEXT: MINSK — Russia may agree on a currency swap with Belarus to boost trade and investment during the economic crisis after turning down a request for a 100 billion ruble ($3 billion) loan, Finance Minister Alexei Kudrin said Friday.
China and Belarus on March 11 agreed on a currency swap worth $3 billion. The three-year accord is worth 20 billion yuan, or 8 trillion Belarussian rubles.
“I wish Belarus good luck with its currency swap agreement with China,” Kudrin told reporters in Minsk. “As for Russia, we still need to study this mechanism, but it’s not out of the question.”
Belarussian President Alexander Lukashenko failed to win approval for the $3 billion loan from President Dmitry Medvedev during talks outside Moscow on Thursday, Kommersant reported. The two presidents went skiing near Sochi on Saturday.
Russia received a request for the loan in December after agreeing to provide a $2 billion loan a month earlier. Deputy Finance Minister Dmitry Pankin said in January that Russia was “not even considering” the new request.
Kudrin said Russia would provide the final $500 million of the $2 billion loan soon, probably after the Russian budget is approved by the State Duma.
Kudrin said Russia and Belarus have been talking about “using our national currencies for settling accounts,” and that an April deadline had been set for proposals on this issue.
Asked about long-standing plans for a common currency in Russia and Belarus, Kudrin said this is a “very delicate matter.”
TITLE: Renault Balks at Idea of New AvtoVAZ Shares
PUBLISHER: Reuters
TEXT: MOSCOW — France’s Renault opposes the idea of issuing new AvtoVAZ shares because the move would dilute its 25 percent stake in the struggling carmaker, Renault’s regional chief said Friday.
The head of AvtoVAZ, Boris Alyoshin, said earlier last week that his company needed 26 billion rubles ($775 million) in financing as it battles mounting debt and a sharp drop in demand.
He said it was considering a new share issue to raise capital.
“Theoretically, it’s a great idea, but in practical terms, we as shareholders cannot welcome it, because our stake in AvtoVAZ would be diluted,” Christian Esteve, the head of Renault’s operations in Russia, told a news briefing.
Renault paid more than $1 billion last year for the stake in AvtoVAZ, which has seen demand for its vehicles fall 40 percent in recent months after Russian banks stopped giving affordable car loans to consumers.
“We would also not refuse help from Russia,” Esteve said when asked about the possibility of Renault helping Russia’s biggest automaker directly with its financial problems.
Along with Renault, state conglomerate Russian Technologies owns a 25 percent stake, as does investment bank Troika Dialog. The rest is held by smaller minority shareholders or traded on the Russian stock market.
TITLE: U.S. Poultry Ban
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia is halting poultry imports from three U.S. plants, including facilities owned by Tyson Foods and Sanderson Farms, after reporting drug residue in shipments, the U.S. Department of Agriculture said.
Exports from the Tyson plant in Cumming, Georgia, and Sanderson’s facility in Hammond, Louisiana, won’t be allowed after Friday, the USDA said Thursday on its web site. Russia also canceled shipments from a Peco Foods Inc. plant in Canton, Mississippi.
The USDA “has requested information from Russia,” spokeswoman Amanda Eamich said Friday in an email. “We will then work with the establishments to determine if in fact the antibiotics and anti-parasitics were used and will then take appropriate actions.”
Tyson, the second-largest U.S. chicken processor, said the suspension should not impinge on global sales. Sanderson Chief Executive Joe Sanderson Jr. said he is waiting for more information from the USDA on the suspension.
Russia halted imports from three other U.S. poultry facilities and nine pork plants this year, citing clerical errors on shipments, according to the USDA.
TITLE: In Expectation of Lower Prices
AUTHOR: By Maxim Karbasnikoff
TEXT: One of the chief questions for Russian consumers seeking a silver lining as retailers struggle in the aftermath of the credit crisis is when prices are going to fall. After all, shoppers are aware that turnover is down and that tenants are paying less for the space that they rent. When, they are asking, are these going to translate into discounts for consumers?
Unfortunately, the simple answer is that shopping prices are not going to go down as a result of the crisis. But the shopping paradigm that many Russians have grown accustomed to over the years — one that includes luxury brands, high-scale boutiques and a handful of raspberries for $35 — is going to change. In simple terms, discounter stores like Auchan are going to take a bigger share of the market. For the consumer, that means that upscale brands will remain expensive, but there will be a lot more inexpensive, no-name brands and discounted shopping options at understaffed hypermarkets.
To understand the pending transformation, we need to take a careful look at the current state of the Russian retailer. From the retailer’s standpoint, the question about when it will lower prices is simply formulated incorrectly. Whatever advantage it has felt as a result of falling rents has been eaten away by slowing demand, falling turnover and the depreciated ruble. Because retailers import in hard currency and sell in rubles, the devaluation has hit them particularly hard, and their margins have shrunk. The only logical thing to do to combat shrinking margins is to raise prices, not lower them.
But in today’s crisis, consumers are significantly less eager — or able — to spend as they have been in the last decade. Raising prices will result in fewer shoppers and possibly even smaller margins.
Stuck between a rock and a hard place, retail operators are being forced to rethink their business plan. In a changing environment, natural selection on the market will favor companies that can survive and grow on a small margin. These are the existing discount hypermarkets like Auchan. But today, there are not very many retailers working according to that kind of model in Russia.
As they seek ways to navigate a changing market, retailers will start looking to Europe. There, two particular discount models have become successful. The German supermarket Lidl is a good example of the first approach. It has very simple stores with very little service, just three people for 2,000 square meters. Another approach is the success of no-name brands: Erhmann, for instance, has a line of yogurt with very little spent on marketing, with the savings getting passed down to the consumer. In this sense, the European consumer is a few steps ahead of his Russian counterpart. If he can’t explain the difference in quality between one product and another, he will choose the cheaper one.
As the crisis worsens, this attitude will start spreading to Russia and shoppers will become more sophisticated. The discounter model will become the next stage for a lot of Russian retailers. In the next two years, grocery operators will witness a redistribution of market share.
We are already seeing the first signs of this. Brands that rely on quality space may have to find other ways to cut costs in order to survive. High-positioned retailers such as Azbuka Vkusa are finding that their targeted audience can no longer expand. A changing consumer base means that opening a single store outside of Moscow is no longer viable because the size of the regional market doesn’t offer the potential to reach a critical mass. The Moscow market for high-priced goods, meanwhile, is saturated. And a market that cannot expand is in danger of dying out altogether.
That will mean that the days of the oligarch who brags to his neighbor about finding a more expensive apple around the corner are numbered. The discerning shopper will become just as concerned about price as his European counterpart.
In the long run, this could mean lower average prices. This decrease, however, will be less a result of the current crisis and more a reflection of how retailers have redistributed their market share. As more discounters appear, today’s surplus of name brands will dwindle. And in the end, Russia will end up with a more balanced, democratic retail market.
Maxim Karbasnikoff is head of the retail department at Jones Lang LaSalle in Moscow.
TITLE: Deferring Nabucco Is Win-Lose for Gazprom
AUTHOR: By Vedomosti
TEXT: On Monday, the foreign ministers of 27 European Union countries could not agree on the 3.5 billion euro budget for energy projects. This means, among other things, that the fate of the Nabucco project, which was supposed to be allocated 250 million euros, has been essentially put on hold. Cutting the priority for the Nabucco gas pipeline, which if built will bypass both Russia and Ukraine, can be seen as either a victory for Gazprom or as a relief for the EU members, whose budgets have been heavily taxed by the financial crisis.
Although France and Italy also supported the downgrading of Nabucco, Germany, which stands to be on the receiving end of the Nord Stream pipeline, is Nabucco’s largest opponent. Nord Stream’s shareholders include Gazprom with 51 percent, German enterprises E.On and BASF with 20 percent each and Dutch Gasunie with 9 percent.
Most of the skepticism surrounding Nabucco centers on the lack of gas to fill it. Iran, with the world’s second-largest natural gas reserves, could easily fill the pipeline, but it is impossible to imagine Tehran as a reliable partner in Nabucco considering how many sharp points of contention there are between Iran and the United States (and many EU members as well) — mainly over Tehran’s nuclear program. Turkmenistan, which has the world’s fifth-largest reserves of natural gas, could play a prominent role in Nabucco, but this would require building a new Trans-Caspian pipeline. Moreover, there are security issues regarding transit routes through Georgia and Turkey.
Gazprom’s other proposed project, South Stream, which would transport gas from Russia to Bulgaria and onward to other European countries via the Black Sea, would be Nabucco’s competitor.
Now Gazprom can see itself as the victor. While Europe is shelving Nabucco until more prosperous times, Gazprom continues to see the ambitious South Stream and Nord Stream projects as their key strategic priorities.
On the other hand, Gazprom’s gas exports to Europe have shrunk since the beginning of the year by 40 percent in comparison with the same period a year ago. Moreover, long-term forecasts point to European demand for gas dropping much more than previously believed, which makes the Nabucco deferral logical.
Gazprom may believe that the Nabucco downgrade strengthens its status as a near-monopoly supplier of gas for Europe. But the price of having this privilege may prove to be very expensive.
This comment appeared as an editorial in Vedomosti.
TITLE: Job Seekers Adapt to Changes
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Widespread redundancies have given rise to a growing army of job seekers in Russia, which looks set to grow even further in the summer with a new wave of university graduates. It might seem to desperate job seekers that no companies want any new workers during the economic crisis. Yet, in spite of a decreased volume of vacancies, there are still some job opportunities, recruitment agencies confirm.
“Vacancies for accountants, sales managers, project managers, engineers and anti-crisis managers are in demand now, while PR and marketing specialists and administrative staff will face more difficulties in searching for a job,” said Yelena Kolmakova, manager of business development at Avanta Personnel.
Among the so-called lucky spheres is also FMCG — fast-moving consumer goods. Workers are always needed in this sphere.
The crisis has affected almost every area of business. If at the end of 2008, the spheres suffering the most were the banking and financial sectors, along with construction and development, the global downturn is now being keenly felt among ordinary businesses.
The number of opportunities has decreased because many companies have stopped hiring new workers and are optimizing the resources they already have.
“In this situation, young specialists who know the specifics of the market well will have the most difficulty in finding a job,” said Alexandra Yevseyeva, local branch manager at THI Selection. “In addition, their salary expectations often do not correspond to their experience,” she said.
“It will be much easier to find a good job for those who are able to rapidly react to the changes on the labor market and who are ready to adapt to the new reality, and who can realistically evaluate their own potential as a specialist in the conditions of severe competition on the market,” she explained.
Jobseekers should clearly determine the limits of their activities and the conditions under which they are prepared to work, advise experts from Avanta Personnel. People should be aware that the volume of jobseekers is now growing, and many candidates will need to increase their qualifications to get the job they want, due to increased competition. Some may even have to change their specialization.
“The readiness of specialists to consider proposals that do not correspond to their expectations depends on various circumstances,” said Avanta’s Kolmakova. “Interesting tasks and ambitious projects may be offered to them.”
“Low salaries may be balanced out by compensation packages,” she said. “But sometimes people need every opportunity they can get to earn money because they have certain obligations, such as loans or a mortgage.”
According to research by Ancor, almost half of all jobseekers are prepared to reduce their salary expectations by 10 to 20 percent. More than half of candidates are prepared to work for half of their usual wage or to be employed on a part-time basis.
Surveys carried out by Ancor show that 72 percent of respondents are prepared to take up a position in another area of specialization or to re-specialize and change their occupation.
“Specialists who have a range of professional experience can certainly change their occupation,” said Kolmakova.
Psychologists say that periods of economic decline and changes in the economic environment are an appropriate time for professional reorientation.
“When candidates receive new proposals, they can gather all the information about future employers and try to weigh up all the pros and cons of changing their job,” said Yevseyeva.
But recruitment agencies do not see a mass trend in this phenomenon.
“We do not observe such a trend with mid- and top-ranking specialists,” said Yelena Skalon, training and development manager at THI Selection. “Such cases cannot be accounted for by the crisis; maybe people had already decided to change their jobs, and simply see a good opportunity to do so now.”
The idea that it is easier to find a good specialist during a crisis is a myth, experts say.
“Of course, we are observing an increasing number of CVs — approximately 10 to 15 percent more — but the amount of really good and qualified specialists looking for a job remains almost the same as before the crisis,” said Skalon. “This means that companies are trying to retain and motivate their best employees and those with the most potential.”
Another myth about employment and the crisis is that companies are using the situation to reshuffle their staff by getting rid of bad workers and taking on better ones. That can of course happen, but recruitment agencies do not see a trend of companies doing so, since this way of solving the problem is costly, both in terms of financing and time.
“First of all, some of the staff have to be made redundant,” said Kolmakova. “Then new people have to be selected from an increasing number of job-seekers. If your HR department got, for instance, 20 CVs every day before, now it will be at least five times as many,” she said.
“And the last step is to adapt new specialists to solve problems in the current, unstable situation and for less money,” Kolmakova said. “Each company should carefully estimate the efficiency of such team restructuring in the present crisis conditions.”
Nonetheless, Ancor’s research showed that optimism lives on in the hearts of professionals, and even those who are currently actively searching for a job believe that sooner or later their skills will be valued. As one respondent to the survey said, “It can’t rain all the time.”
TITLE: Employers Cut Salaries, Benefits to Battle Crisis
AUTHOR: By Irina Titova
PUBLISHER: Special to The St. Petersburg Times
TEXT: With salary cuts and redundancies becoming a common occurrence since the onset of the economic crisis in Russia, the latest research by Avanta Personnel recruitment agency shows that the average decrease in salaries in the country stands at about 16 to 19 percent.
About 18 percent of the city’s employers had already reduced the salaries of their employees in December. The cuts were the result of reduced working hours, such as a shorter working day or a four-day week. At the beginning this year the number of such employers was expected to increase to 25 percent, according to Avanta.
Yelena Yegorova, who works in one of St. Petersburg’s media outlets, said her company had cut the salary of its employees by 10 percent at the beginning of the year.
“It’s not a critical figure, and maybe it has just returned us to the salary level of 2007, but it is still sad, especially for those whose salary is still not that high,” Yegorova said.
“Besides, if we consider that salaries did not even drop, but simply did not increase in January as is traditional by some 10 to 13 percent to cover inflation, then we can see that our salaries have factually decreased by 20 to 23 percent,” she said.
“At the same time, the prices for everything, including food, utility services, transport and other services have increased,” she said. “As a result, people have become poorer by almost 25 percent.”
Meanwhile, if the crisis had not interfered with employers’ plans, more than 90 percent of them would have considered raising their employees’ salaries at the start of the year as usual. Traditionally, salaries were raised by 12 to 14 percent, which was equal to the official inflation rate in Russia, Avanta said.
The major factors in deciding pay raises were usually the situation on the labor market, inflation and the personal achievements of employees. In most cities, the former traditionally played the leading role in deciding raises, though in Moscow, Yekaterinburg and Rostov-on-Don, the inflation rate mattered more to employers, data shows.
As recently as October last year, the majority of research participants planned to raise salaries in 2009. The average rate for the raise was 12 percent.
By December, however, research conducted in St. Petersburg and Moscow showed that some employers decided not to review salaries at all (14 percent in St. Petersburg and 20 percent in Moscow), while others decided to either make the raise less than usual — about seven to nine percent — or postponed giving employees a raise.
Avanta also conducted research into the average salaries in Moscow and St. Petersburg companies in October.
Researchers found that an office manager in Moscow made on average about 47,000 rubles a month, while in St. Petersburg they would get 32,000 rubles. A secretary in Moscow received about 30,000 rubles a month, in St. Petersburg — 21,000 rubles.
Financial analysts in October made 48,000 rubles a month in Moscow, and about 38,000 rubles in St. Petersburg. Accountants in Moscow made 41,000 rubles, while in St. Petersburg the average was 29,000 rubles.
Mechanics in the capital earned an average of 36,000 rubles, while those in St. Petersburg earned 33,000 rubles. Production line operators in Moscow made 31,000 rubles, while in St. Petersburg they made 30,600 rubles.
The research showed that the biggest different of salaries in Moscow and St. Petersburg is observed in the administrative field, HR, finances and accounting. The smallest gap was observed in manufacturing.
A number of companies — 10 percent in October — also decided not to pay standard bonuses in order to combat the crisis.
The system of privileges and compensation packages has also suffered during the crisis. In December about 45 percent of companies were planning to cut expenses on training their employees, while some planned to end such programs entirely.
More than 60 percent of companies changed their policy on New Year and Christmas parties, either spending less on such events or even cancelling them.
About 20 percent of companies reevaluated their spending on business trips and expenses on cell phones, company cars, medical insurance for their employees and meals, according to Avanta.
Minimal changes were seen in regard to additional payments for sick leave, the provision of additional vacation days and the company car policy.
Research undertaken by Ancor indicated that most of the city’s residents who continue to work have suffered from their employers’ anti-crisis measures.
The most frequent measures were salary cuts, failure to pay bonuses, reduced benefits packages and other payment cuts. Some people are also suffering from lengthy delays in payment of up to three months.
Ancor investigated which anti-crisis measures employees see as the most unfavorable. Most of them said that being put on unpaid vacation and having their salaries cut were the most painful measures — 5.4 and 5.2 points respectively on a six-point scale. Being downgraded to working part-time or to a shorter working day, and lack of bonuses were seen as slightly less painful measures with 4.6 and 4.1 points. The least painful measures cited by respondents were being transferred to a “gray” or unofficial salary, and canceled social packages.
Ancor’s research showed that even in a crisis situation, at least 66 percent of employees want to remain loyal to their companies if their management informs them about their plans for the period of the crisis.
The number of people prepared to do more work for less money in the current situation (26 percent) is slightly lower than those who are not prepared to do so (31 percent.)
Job seekers said the current market situation has forced them to consider offers with lower salaries than they previously expected.
At least 46 percent said they were prepared to lower their salary expectations by 10 to 20 percent.
Nina Oding, economist at the Leontief Center for Social and Economic Research, said that salary cuts had resulted in a fall in the population’s income. This in turn has resulted in a decrease in retail trade.
“For the first time in recent decades, we did not observe any growth in retail trade in February and March,” Oding said. “People have either postponed their planned purchases, or are going for less expensive products,” she said.
Oding said that both decreases and stabilization are expected in salaries in the next few months, but no growth is yet predicted.
TITLE: Redundancy Procedures: Advice From Legal Experts
AUTHOR: By Olga Kalashnikova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Since October last year, more than half of all Russian companies have made staff cuts, according to data gathered by Ancor recruitment agency. Although 44 percent of those who have lost their job have no objection to the redundancy procedures, 31 percent feel that the company behaved dishonestly toward them. According to the review, some former employees think that staff reduction and wage cuts are not justified. Most people believe that such measures are the result of employer greed and dishonesy, “who try to increase the profitability of their business with the help of accounting and financial machinations instead of increasing the quality of their product and services,” according to the research carried out by Ancor.
“Our experience shows that people frequently do not know their rights and very often they simply make no effort to defend them, as they don’t see the point in doing so,” said Oksana Kovalyova, senior attorney at Capital Legal Services in St. Petersburg.
Redundancy is a complex procedure, but the Labor Code of the Russian Federation gives employees a number of rights. For example, employees who are the most qualified or productive, or have two or more dependents, or are the only breadwinner in the family have preferential rights for being retained by the company.
“An internal agreement can provide additional grounds for employees to be retained by the company, so this is worth investigating,” said Kovalyova.
There are also categories of employees who cannot be made redundant.
“Among them are pregnant women, mothers with children under three years old, single mothers with children under 14, or 18 if the child is disabled,” said Svetlana Rybalko, head of HR administration and consulting at Coleman Services. “Staff cuts cannot touch employees who are bringing up children without a mother, or those who are on leave looking after the child. Nowadays, this can be any member of the family, including fathers and grandparents,” she said.
Employers are also obliged to offer employees another vacant position in the company before making them redundant. It should be equal to or lower than the employee’s qualifications.
“If an employee is on a list of employees to be made redundant, the employer must give them written notice of the redundancy no less than two months before the termination of the labor contract,” said Rybalko.
“Employees have the right to receive severance payment equal to the employee’s average monthly earnings for two months from the termination date and compensation for unused vacation time,” said Kovalyova.
“In exceptional cases, at the discretion of the job exchange, the employee has the right to receive a third month’s salary if they applied to the exchange within two weeks of the termination date and did not gain employment.”
If the employee consents, the labor contract can be terminated prior to the expiration of the two-month period, but the company is still obliged to pay the worker additional compensation equal to two months’ salary.
Today, however, there is an increasing volume of cases in which the employee is forced to leave their job “voluntarily.”
“Companies do this in an attempt to reduce their financial losses,” said Kovalyova. “In such cases, we advise the employee not to sign any documents or statements of resignation confirming their consent.”
In such cases, the employee can offer the employer a variant in which the contract is terminated, but with some severance pay, according to experts from Coleman Services. The amount of compensation can be negotiated.
“Large Russian and western companies usually try to adhere to the Labor Code over questions of staff cuts,” said Alexandra Yevseyeva, branch manager at THI Selection in St. Petersburg. “But unfortunately some organizations try to minimize their losses, and as a result some violations occur.”
The first violation can be the redundancy itself.
“Some companies try to substitute redundancy procedures with the dismissal of certain employees, considering this way to be easier,” said Kovalyova. “If a genuine redundancy takes place, it must be supported by relevant facts and documentation. Otherwise such redundancies can be disputed and recognized as illegal.”
Employers also violate the law by failing to offer workers vacant positions, give them two months’ notice, or pay the full sum required by law.
“Any of these violations entitle the employee to turn to the labor inspection authorities or courts in order to have the redundancy recognized as illegal, be reinstated at their job and recover compensation for compelled absence or — if the employee does not wish to stay at their job — to recover unpaid severance pay,” said Kovalyova.
Recruitment companies and legal firms offer the same advice to employees who believe their rights have been violated.
“We would like to draw employees’ attention to the fact that according to the Labor Code, an employee is entitled to go to court with a case of wrongful redundancy for one month from the date they received a copy of the redundancy document,” said Kovalyova.
TITLE: Government Attempts to Bring Science Back Home
AUTHOR: By Francesca Mereu
PUBLISHER: The St. Petersburg Times
TEXT: The government would like to entice the thousands of Russian scientists who have left for better-paying jobs abroad to return to Russia for good. But in a pinch, it appears that officials will settle for a few months a year.
The Education and Science Ministry opened a tender at the beginning of this year for 100 scientists working abroad to come to Russia, offering them a chance to lead scientific teams and conduct scientific seminars. Those willing to take part are required to stay in Russia for only two months every year.
The tender comes as top officials express concern over the brain drain that depleted much of the country’s intellectual resources after the fall of the Soviet Union, when Russian science suffered a precipitous decline in financial support, prompting tens of thousands of scientists to seek opportunities elsewhere and others to leave science for more profitable fields.
In his first address to the nation on Nov. 5, President Dmitry Medvedev called for Russian scientists to come back home, echoing previous calls from his predecessor, Prime Minister Vladimir Putin.
“We need to organize a large-scale and systematic search for talent both in Russia and abroad, to carry out … some headhunting,” Medvedev said. “This will increase the number of talented young people in basic and applied sciences.”
But while salaries for scientists have increased in recent years, the government still faces an uphill battle. Many scientists based abroad say they would think twice about coming back even if the salaries in Russia were to rise to levels found in other countries.
Monthly salaries from the state for Russian scientists run from $1,000 to $1,500 — a figure that is 10 times higher than six years ago. Furthermore, scientists have the possibility of receiving Russian or foreign grants to finance research, meaning that at the end of the month they could take home up to $3,000.
“The salary is not a problem anymore like it was years ago,” said Alexander Karasik, a professor at the Moscow Engineering Institute and a laser researcher at the General Physics Institute in Moscow.
But according to research carried out by Ivan Sterligov, an expert with the Open Economy Foundation, better wages are not attracting Russian scientists home. Scientists who have worked in the West find it difficult to adapt to Russian reality and face Russian bureaucracy and politics, Sterligov said.
“Some professors, after working in Canada, came back to St. Petersburg and saw how authorities cracked down on the Dissenters’ Marches,” said Sterligov, referring to public protests led by liberal opposition movements. “Scientists pay attention to these things as well. Science needs freedom. It is something liberal.”
Alexander Nevsky, a senior researcher who heads a lab at the Institute for Experimental Physics at the University of Dusseldorf in Germany, left Akademgorodok, a scientific town 40 kilometers from Novosibirsk, for better opportunities in the 1990s. Nevsky said he would come back home only if he could get the same treatment that he currently gets in Germany.
While the economic situation of his colleagues in Akademgorodok has drastically improved in the past few years, Nevsky said there still remain numerous problems in Russia, above all a lack of transparency.
“Sometimes money is spent to buy new equipment, but people don’t use it because they didn’t need such equipment,” Nevsky said. “Equipment is bought through such complicated channels that no one understands where the money came from.”
Scientists say the Russian Fund for Fundamental Research gives the grants but that the money is enough only to pay salaries, not to buy equipment.
“The grants we get are enough to buy computers but not modern equipment,” Karasik said, adding that scientists often struggle to conduct research on Soviet-era equipment. “We try to compete with foreigners only with our enthusiasm, but there are few teams able to compete internationally.”
Valentin Gordeli, a biophysics professor at the Jean-Pierre Ebel Institute of Structural Biology in Grenoble, France, echoed that bureaucracy and constant lack of funds hamper work done in Russia.
“An experimenter needs equipment and substances, and he needs them quickly, otherwise it is impossible to compete,” Gordeli said. “When compared to working in the West, there are very few Russian scientists who want to come back and work under such circumstances.”
Transparency is also an issue, with grants often given to groups who have connections rather than to those that deserve funding, Gordeli said.
“Financing should be a transparent process, and people should get grants in open competitions,” he said.
The Soviet scientific establishment was one of the largest in the world, boasting more than 1 million scientists, or roughly one-third more than in the United States at the time. But its superiority was not only in numbers: Soviet scientists were considered among the best in the world.
After the fall of the Soviet Union, Russia inherited immense Soviet scientific resources. During the economic and social turmoil of the 1990s, however, science was downgraded from its status as a state priority. Consequently, the Russian research establishment — like many other sectors of Russian society — was hit hard by the economic crisis that followed the Soviet collapse.
Problems in the field are evident in the number of scientists actually working in Russia. There are an estimated 30,000 to 40,000 Russian scientists now working abroad, as compared to 30,000 working in the country today, according to research carried out by Sterligov of the Open Economy Foundation.
TITLE: Babushka Russia
AUTHOR: By Nikolai Zlobin
TEXT: The age-old question of which came first, the chicken or the egg, will probably never be put to rest since most people agree that one cannot exist without the other. The same could be said of the interdependence of politics and economics on the regional, national and global levels.
On the one hand, no one denies that the financial crisis has secured its grip on the world economy, and overcoming it will inevitably have to involve a cooperative effort on the part of all nations. The world’s financial and economic systems are so intricately intertwined that it would be impossible for any kind of recovery to take place by sparking another world war or a series of armed conflicts, as some experts like to suggest. If war were to break out, countries would be helpless in defending their national economies against crippling shocks. In an age of globalization, every nation is heavily dependent on the global financial system.
For the last several decades, the United States has had to play a delicate balancing act between protecting its national interests and not causing conflicts with the other leading economic powers on which it has grown to depend more and more. For example, U.S. President Barack Obama must deal with the country’s inflation and the unpaid debts of subprime mortgage holders while at the same time stimulating demand for U.S. goods on the global market and confidence in the dollar as the global reserve currency. In addition, he has to solve American workers’ social problems while protecting employment at U.S. corporations in Southeast Asia.
Obama has to consistently find a balance between domestic politics, protectionist measures and the steps needed to revive a global economy that opposes — at least on paper and in its declarative announcements — protectionism and other manifestations of “national egoism.”
Oil-dependent countries like Russia are stuck in a difficult situation. When energy prices are low, its budget is hit hard, but any attempt to artificially raise these prices — for example, by decreasing production — to stabilize the budget would inevitably lead to an even greater global economic slowdown and a drop in consumer energy demand. In other words, Russia’s domestic policy is constantly at odds with its economic policy.
The same situation is true in the West. For example, the United States’ financial problems have significantly complicated its ability to fulfill its foreign policy agenda. Washington is tightening its belt abroad as it walks away from high-cost foreign policy ventures. This may create rare opportunities for other nations — including China, the European Union and Russia — to increase their roles on the world stage. But by doing so, they could easily bite off more than they can chew and become entangled in new global and economic conflicts from which they may not be able to extricate themselves.
For the past decade, Russia has constructed a national economy whose main function was to serve as a huge gas pump to the world. The crisis has shown that the country cannot operate independently of global energy markets. It is extremely difficult for a country with a service economy to develop an independent and effective foreign policy. If it is serious about preserving its national identity and sovereignty, Russia needs to try and build a national economy that is not based on serving others. Russia needs to turn the tables so that the global economy will depend much more on Russia’s purchasing power and not the other way around.
The financial crisis may be the catalyst for this change, but if this does not take place, Russia will remain a natural-resource appendage for the West and China. When prices are high, Moscow can think big and boast of its economic — and foreign policy — achievements.
Yet when prices take a nose dive, the government turns into a poor babushka. Although she has been able to stow away a modest sum under her mattress for a rainy day, during the crisis she is forced to count how many more times she can afford to go to the grocery store before her savings are depleted.
Maybe the government will give her a completely new lease on life by quadrupling her pension one day, but whether she will live that long is an open question.
Nikolai Zlobin is the director of Russian and Asian programs at the Institute for World Security in Washington. This comment appeared in Vedomosti.
TITLE: Russia in Fear of Itself
AUTHOR: By Richard Lourie
TEXT: Churchill’s famous line about Russia being “a riddle, wrapped in a mystery, inside an enigma” is rarely quoted in full. Here’s the rest: “ ... but perhaps there is a key. That key is Russian national interest.”
As a new U.S. administration begins to define its own relation to Russia, it is timely to ask just what Russia’s national interest is now.
Russia’s interest is, first and foremost, its survival. The country has collapsed twice in less than a century — tsarist Russia in 1917 and Soviet Russia in 1991. It is now also in a demographic crisis, losing the equivalent of one San Francisco a year.
Though freighted with centuries of history, the new Russia is less than 20 years old. It is a slapdash affair — a witch’s brew of tsarist extravagance, Soviet bureaucracy and robber-baron capitalism that would have given Marx agita. The society has yet to coalesce into a new entity with a definite identity, which is why it has no adjective of its own and is referred to as “post-Soviet” or “new.”
This is both good and bad. Bad because it could indicate that the new combination is even flimsier than it appears. Good because it may mean that there is still some wiggle room for the country to evolve and change direction. George Kennan, former ambassador to Moscow and author of the containment theory, predicted in 1950 — one of the darkest hours of Stalinism — that Russia would one day find its own road to democracy, but neither that road nor Russian democracy itself would fit Western notions. He may yet be proved right. But that’s far in the future, if anywhere. The current generation of Russian leaders, especially Prime Minster Vladimir Putin, is haunted by the specter and spectacle of the Soviet Union’s demise.
Russia’s recent move to reclaim a sphere of influence and project power may be viewed as adolescent, old-fashioned or perfectly normal. The humiliations of the ‘90s still rankle; as Thomas Friedman nicely put it, “Humiliation ... is the single most underrated force in international relations.” Former President Boris Yeltsin cried that Russia wasn’t “Haiti.” His foreign minister retorted when forced by the United States to acquiesce in the bombing of Serbia, “Don’t add insult to injury by also telling us that it’s in our interests to obey your orders.”
Russia’s newfound assertiveness is part of this complex, but its border problems are still trickier than that. It is only natural for countries that suffered under Soviet — and in some cases tsarist — oppression to seek shelter and protection in NATO. But how can Russia feel secure ringed by nations that fear and loathe it and have joined the alliance that was for nearly 50 years the Kremlin’s principal adversary?
Internally, Russia has now developed a sizeable middle class, which is the basis for a stable and potentially democratic society. But it’s not enough for that class simply to exist; it also has to be cut in. Their interests have to be defended. That is not what happens when protesting auto dealers in the Far East are roughed up by riot police shipped in from Moscow.
Russia’s real interest now is in building a society that is politically diversified enough to resist its ingrained tendency to overly centralize power. It also has to become economically diversified enough to withstand the 21st century’s swift changes and sudden shocks.
The truth is that for one of the few times in its long and agonized history, Russia does not have an enemy. Russia has nothing to fear but Russia itself.
Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”
TITLE: Factory Boss to Workers: Sell Your Stuff to Survive
PUBLISHER: Reuters
TEXT: ZLATOUST, Chelyabinsk Region — The burly steelworker leading hunger strikers here is furious at huge wage cuts triggered by the global economic crisis but is not ready to man barricades just yet.
“We don’t want a revolution,” said Alexander Negrebetskikh, 32, standing near the gates of this sprawling Ural Mountains steel mill. “We just want to makes ends meet.”
His nemesis is the MBA-educated plant director, who has advised his workers to sell their possessions to get by. He sees the hunger strike, which involves just 16 of nearly 7,000 workers, a little differently.
“They should be put in prison and go on hunger strike there,” said plant director Sergei Khomyanin. “Hunger strikes by their very nature are extremist.”
Factories across the country have slashed jobs and wages since the economic slowdown took hold, prompting officials in Moscow to voice fears of unrest. In this town of 200,000 in the Chelyabinsk region, the feeling is less anger than fear as the prosperity afforded by years of wage gains vanishes overnight.
A five-day hunger strike ended Saturday after a concession on back wages. But protesters are preparing another strike later this week if, as seems likely, talks break down.
The hunger strikers insist that they are more worried about making payments on crippling consumer loans than they are about fomenting class warfare.
Management says it has slashed average wages by about 45 percent and given voluntary layoffs to 1,200 of 8,000 workers. Workers say they now make one-third of what they did last year, most less than 6,000 rubles ($174) a month. The hunger strikers want average wages to be raised to two-thirds of their precrisis levels, about 12,000 rubles.
“An increase to two-thirds would lead to bankruptcy or mass firings,” Khomyanin said. “There is no economic logic for these wage levels.”
Hunger strikes, last used by workers in the economic chaos of the 1990s, are a dangerous precedent, he said.
The government has warned that up to 100,000 people may lose their jobs in the metallurgical sector this year. But many factories are opting instead for deep pay cuts. “Firing people is not allowed” by the government, Khomyanin said. “Of course there’s nothing about it in the law, but on the level of agreement ... otherwise there would be a social explosion.”
He said that since September the factory’s income had fallen to less than a quarter of what it was before the slowdown as orders dry up and prices fall. Workers needed to accept that the good times are over for now.
“People don’t just need to start getting used to it, they need to start selling their things to clear their debts,” Khomyanin said. “There is no easy answer.”
The hunger strikers say they have been scrupulous about sticking to the law. They kept working and checked the Criminal Code to make sure they were doing nothing illegal. There have been no other outward signs of protest.
Negrebetskikh, a rolling mill operator, said he felt something had to be done. He lives with his wife and two children in a 44-square-meter apartment near the factory, where chimneys pump brown and gray smoke into the mountain air. In September, he was making up to 18,000 rubles per month before tax. Now, he is earning 5,900.
“The 5,000 rubles my wife makes working in a shop means the kids don’t go hungry,” he said.
After tax, their joint income is about 8,000 rubles. After 2,000 rubles in fixed utility bills and a 3,000 ruble monthly payment on a $1,000 fridge, they have 3,000 rubles left.
Treats like trips to the movie theater or candy for his children are unaffordable. “Sausage is now a luxury,” Negrebetskikh said. “It doesn’t matter to me if I go on hunger strike, I’m hungry anyway.”
For five days last week, Negrebetskikh slept on inflatable mattresses on the floor of the musty Union Hall at the plant with 15 other hunger strikers, sustaining himself on juice, tea and cigarettes. They hope more workers will join in, but support is patchy. Even the workers’ union has distanced itself from the strike.
Some night-shift workers voiced their support as they left the factory on a freezing morning this week. Others were apathetic or angry that the strike might make a bad situation worse.
“In my mill, they are frightened like hares,” said Pyotr, 33, who withheld his last name because he has “three kids to feed.”
“What can we do? Just sit and wait for better times!” he said, his hand shaking as he lit a cigarette. “If you strike, they’ll kick you out the gate. There’s nothing for you there.”
TITLE: Klitschko Stops Gomez in 9th, Keeps Title
AUTHOR: By Graham Dunbar
PUBLISHER: The Associated Press
TEXT: STUTTGART, Germany — Vitali Klitschko stopped Juan Carlos Gomez in the ninth round Saturday night, easily retaining his WBC heavyweight title.
The 37-year-old champion twice put down the Germany-based Cuban defector, in the seventh and ninth rounds, before the referee Daniel Van de Wiele stopped the fight with 1 minute, 11 seconds remaining in the round.
Klitschko (37-2, 36 KOs) was making the first defense of the title he reclaimed by stopping Samuel Peter in dominating fashion last October. The Ukrainian, whose brother Wladimir holds two other versions of the title, hasn’t lost since getting knocked out by Lennox Lewis in 2003.
“I knew that he was a world-class boxer,” Klitschko said. “I said before that the fight would not be easy.”
At 6-foot-7, Klitschko had a size advantage of more than 3 inches and 19 pounds against his southpaw opponent, who tired in the middle rounds and eventually couldn’t move fast enough to get inside of Klitschko’s long reach.
The 35-year-old Gomez was the mandatory challenger and Klitschko’s former sparring partner, and was trying to become the first heavyweight champion from Cuba.
Gomez managed to frustrate the champion early, keeping his hands high to fend off jabs and peppering Klitschko with right hands.
Klitschko landed his first big right midway through the second round, drawing a smile from Gomez, who showed he could push the bigger man back when he landed a few combinations.
The champion found success leading with his right in the fourth as he began to take control, and opened a small cut on Gomez’s right eyebrow in the fifth.
A cut opened high on Klitchsko’s forehead in the sixth, and he was forced to backpedal to the ropes in the seventh. But that effort seemed to tire the Cuban, who lowered his hands and provided a better target for Klitchsko, who dropped Gomez to a knee for a count of eight.
Gomez was trapped in the corner and took another big right, and the challenger pulled both fighters to the ground before ending the round defending himself in his own corner.
Gomez got some breathing space in the ninth when Klitschko was reprimanded for gouging, but Klitschko just launched into another assault, downing Gomez by the ropes with another right and finishing the fight a minute later.
“I was a little hectic,” Klitschko said. “I wanted to end the fight earlier but I didn’t get to hit him enough.”
Klitschko said he wants to meet Russian giant Nikolai Valuev, who holds the WBA title, but his next battle might well be in the court room.
Klitschko has appealed to the Court of Arbitration for Sport in Switzerland, which will decide whether the WBC can force him into another mandatory defense against Russian former champion Oleg Maskaev.
Wladimir, who was in his brother’s corner, holds the IBF and WBO versions of the heavyweight title and the Klitschkos have long talked about rounding up all the belts between them.
Wladimir Klitschko is in negotiations to face Britain’s David Haye, the charismatic former cruiserweight champion, on June 20.
A three-time champion, Vitali retired because of injuries and vacated the WBC belt in 2005, only to return last October and reclaim when Peter decided not to come back for the ninth round.
Gomez previously held the WBC cruiserweight title for four years before vacating in 2002 to move up to heavyweight. He earned the right to face Klitschko by winning a unanimous decision over Vladimir Virchis last September.
TITLE: Alaska’s Mount Redoubt Volcano Erupts 5 Times
AUTHOR: By Mary Pemberton
PUBLISHER: The Associated Press
TEXT: WILLOW, Alaska — Alaska’s Mount Redoubt volcano erupted five times overnight, sending an ash plume more than 9 miles into the air in the volcano’s first emissions in nearly 20 years.
Residents in the state’s largest city were spared any falling ash, though fine gray dust was falling Monday morning on small communities north of Anchorage.
“It’s coming down,” Rita Jackson, 56, said early Monday morning at a 24-hour grocery store in Willow, about 50 miles north of Anchorage. She slid her fingers across the hood of her car, through a dusting of ash.
Ash from Alaska’s volcanoes is like a rock fragment with jagged edges and has been used as an industrial abrasive. It can injure skin, eyes and breathing passages. The young, the elderly and people with respiratory problems are especially susceptible to ash-related health problems. Ash can also cause damage to engines in planes, cars and other vehicles.
Alaska Airlines on Monday canceled 19 flights in and out of the Anchorage international airport because of the ash.
Elmendorf Air Force Base in Anchorage told only essential personnel to report to work. The Air Force says 60 planes, including fighter jets, cargo aircraft and a 747 commercial plane, were being sheltered.
The first eruption, in a sparsely populated area across Cook Inlet from the Kenai Peninsula, occurred at 10:38 p.m. Sunday and the fifth happened at 4:30 a.m. Monday, according to the Alaska Volcano Observatory.
The wind was taking the ash cloud away from Anchorage, toward Willow and Talkneetna, near Mount McKinley, North America’s largest mountain in Denali National Park.
Dave Stricklan, a hydrometeorogical technician with the National Weather Service, expected very fine ash.
“Just kind of a light dusting,” he said. He said the significant amount of ash probably dropped immediately, right down the side of the volcano.
“The heavier stuff drops out very quickly, and then the other stuff filters out. There’s going to be a very fine amount of it that’s going to be suspended in the atmosphere for quite some time,” he said. “The finer ash is going to travel farther, and any ash can affect aviation safety.”
Jackson said she was taking a sip of coffee when she tasted something funny on her lips - ash. She was experiencing other affects, too.
“My eyes are itching really bad,” she said as she hurried to get out of the store and to her car.
Jackson, who unexpectedly got the day off, hurried home from the grocery store to secure a motorcycle, snow machine and vehicles under protective blue tarps.
The 10,200-foot Redoubt Volcano, roughly 100 miles southwest of Anchorage, last erupted during a four-month period from 1989-90.
In its last eruption, Redoubt sent ash 150 miles away into the path of a KLM jet and its four engines flamed out. The jet dropped more than 2 miles before the crew was able to restart all engines and land safely. The plane required $80 million in repairs.
Meanwhile, the volcano became restless earlier this year. The observatory had warned in late January that an eruption could occur at any time.
Increased earthquake activity over the past 48 hours prompted scientists to raise the alert level for Mount Redoubt on Sunday.
On Sunday morning, 40 to 50 earthquakes were being recorded every hour.
A steam plume rising about 1,000 feet above the mountain peak was observed Saturday.
TITLE: NATO: Taleban Leader Killed
AUTHOR: By Fisnik Abrashi
PUBLISHER: The Associated Press
TEXT: KABUL — NATO killed a senior Taliban commander and nine other suspected militants in southern Afghanistan, while the coalition and its Afghan allies suffered an equal number of deaths in separate attacks in the same area, officials said Monday.
The violence highlighted the deadly insurgency raging in the south as the U.S. prepares to deploy thousands of additional troops to reverse Taliban gains in recent years.
Senior Taliban commander Maulawi Hassan and his associates were killed Saturday when troops attacked an isolated compound in the Kajaki area of southern Helmand province, NATO said in a statement, adding there were no civilians involved.
“Maulawi Hassan was a senior insurgent figure in northern Helmand, and his influence extended into western Oruzgan,” the statement said.
Southern Afghanistan is the center of the Taliban insurgency, which has made a comeback in the last three years following the group’s initial defeat by U.S.-led forces in late 2001. Afghan and coalition forces have stepped up operations against militants in southern Afghanistan, and the U.S. plans to send thousands of additional soldiers there this year.
On Monday, Afghan police and intelligence agents detained five Taliban militants in Oruzgan, including the group’s senior commander for the province, Mullah Azizullah, said police officer Wali Jan.
The militants were stopped in Arzo district while driving from the city of Quetta in neighboring Pakistan, Jan said.
Quetta is believed to be a safe-haven for many senior Taliban leaders, including the group’s supreme leader, Mullah Omar, according to Afghan officials. Pakistan denies the claim and says Omar is in Afghanistan.
Also on Monday, Taliban fighters ambushed a police patrol in southern Kandahar province’s Spin Boldak district, killing eight officers and wounding another, said Sahib Jan, a police officer.
On Sunday, a rocket slammed into the main NATO military base in the south, killing a contractor and wounding six others.
Kandahar airfield, the nerve center for the alliance’s war effort in southern Afghanistan, has been hit by many rockets in the past but Sunday’s death was the first in such an attack, another NATO statement said.
Also on Sunday, two NATO soldiers were killed in a “hostile incident” in the same region, a third NATO statement said, without releasing the soldiers’ nationalities or the exact location of the attack.
President Barack Obama said Sunday that sending additional U.S. troops to Afghanistan must be part of a comprehensive strategy that includes an exit plan.
“What we can’t do is think that just a military approach in Afghanistan is going to be able to solve our problems,” Obama said on CBS’ “60 Minutes.” “So what we’re looking for is a comprehensive strategy. And there’s got to be an exit strategy. There’s got to be a sense that this is not perpetual drift.”
Obama’s comments were a prelude to a revamped plan for fighting insurgents in Afghanistan and Pakistan that is expected to be announced this week. On Friday, a military official said the overhauled U.S. strategy would call for new garrisons in far-flung Afghan communities to better hold off the Taliban.
Obama’s plan covers the next three to five years, with the goals of containing the insurgency, heading off the possibility that it could topple Afghanistan’s fragile central government and providing enough security for Afghan citizens that they reject the insurgents of their own accord, the official said Friday. He spoke on condition of anonymity because the review was not complete.
In the interview, Obama said the most difficult decision he’s had to make in his 2-month-old presidency was to send more troops to Afghanistan, which he decided before completion of a strategic review on the region.
“When I make a decision to send 17,000 young Americans to Afghanistan, you can understand that intellectually, but understanding what that means for those families, for those young people when you end up sitting at your desk, signing a condolence letter to one of the family members of a fallen hero, you’re reminded each and every day, at every moment, that the decisions you make count.”
TITLE: Murray Destroyed In Indian Wells Final
AUTHOR: By Rebecca Bryan
PUBLISHER: Agence France Presse
TEXT: INDIAN WELLS, California — World number one Rafael Nadal crushed Scotland’s Andy Murray 6-1, 6-2 to win the Indian Wells ATP Masters series title.
Nadal, the reigning Australian Open champion, defied difficult, blustery wind conditions to capture the crown in the California desert for the second time, after triumphing here in 2007.
As in the women’s final that preceded it, the men’s championship match was played in swirling winds that had both players scrambling.
But Nadal, who started the tournament as the top seed for the first time — after Roger Federer came in as the number one the past five years — kept his focus to get the job done in one hour, 20 minutes.
“I played a really good match with those conditions,” Nadal said. “Probably Andy didn’t play his best because of the conditions, but I think I played a really complete match, moving very well. I never stop the legs during all the match, and I think that was the key today.”
Murray, meanwhile, seemed unable to get to grips with the situation.
“I think I accpeted a little bit better than him the conditions today,” Nadal said, and Murray agreed.
“Rafa dealt with it very well,” Murray said. “He hit the ball cleaner and seemed to get himself in better positions than I did.
“You don’t necessarily want to be doing a whole lot of defending and running,” Murray added. “You want to be in the best position possible to hit each ball, and I wasn’t.”
Despite the defeat, world number four Murray leaves California closing in on world number three Novak Djokovic, whose title defence here ended with a quarter-final loss to American Andy Roddick.
Murray beat Federer in the semis to book his place in the championship match, giving himself a shot at a third title of 2009 to go with those he won in Doha and Rotterdam.
Since those successes Murray has been slowed by illness, withdrawing from the quarter-finals in Dubai and skipping the Davis Cup.
Under the circumstances, he said, reaching the final was a good result.
“I don’t feel like I’m that disappointed just now with how the week went, because I wasn’t expecting to do that well,” he said.
“Today was not my best day, but I’ll definitely get over it. I’m guessing I’m not going to play in those conditions each week.”
Nadal was playing in his third final in four starts this season, including his five-set Aussie Open triumph over Federer and a loss to Murray in Rotterdam.
Nadal also lost to Murray in the semi-finals of the U.S. Open last September, but the Spaniard said he wasn’t out for revenge against the Briton.
TITLE: FedEx Plane Crashes During Landing in Tokyo, Two Dead
PUBLISHER: Reuters
TEXT: TOKYO — A FedEx Corp cargo plane caught in a gust of wind crashed and burst into flames as it landed at Japan’s Narita airport on Monday, killing the two man crew and closing the main runway at the busy gateway to Tokyo.
Airlines canceled more than 30 flights and diverted some to other airports as the longest of two runways was closed.
“We have information that strong winds caused the plane to divert from the runway,” a Narita Airport spokeswoman said.
The FedEx plane landed hard, tipped onto its left wing and burst into flames, video of the crash on public broadcaster NHK showed.
A bright orange fireball and black billowing smoke engulfed the plane as it flipped and skidded off the runway. Firefighters sprayed foam onto the broken remains of the plane with its wheels in the air.
The MD-11 plane had been on a cargo flight from Guangzhou, China, FedEx said in a statement.
The plane’s two American crew had died, a transport ministry official told reporters, in what was the first fatal crash at Narita airport since it opened in 1978.
It was unclear how long the main runway would be closed at Narita, the main international airport for the Japanese capital.
Japan Airlines Corp, Japan’s main international airline, said 27 flights had been canceled, affecting nearly 6,700 people, and some arriving flights had been diverted to Tokyo’s Haneda airport and Sapporo airport in northern Japan.
All Nippon Airways said in a statement was that the airline had canceled 9 flights so far, including international flights to New York, Washington and London.
Japan’s meteorological agency had issued an advisory of gales for the area around the airport and a local observatory said it had notified airlines of possible wind shear -- a condition in which wind speed and direction suddenly change.
The MD-11 was a freighter made by McDonnell Douglas, part of Boeing Co.
TITLE: Gerrard Warns United the Pressure Is On
AUTHOR: By Graham Chase
PUBLISHER: Agence France Presse
TEXT: LIVERPOOL, England — Steven Gerrard has warned Manchester United that Liverpool will take full advantage of any more slips from Sir Alex Ferguson’s Premier League leaders.
Liverpool moved to within one point of United, who still have a game in hand, with a thumping 5-0 victory over Aston Villa at Anfield on Sunday.
Following Rafael Benitez’s side’s 4-1 win at Old Trafford last weekend, United lost 2-0 at Fulham on Saturday and Liverpool’s fine recent form has seen them move to within touching distance of Ferguson’s team.
Liverpool now have just eight matches left but Gerrard has promised United that the Reds are just waiting for a chance to seize control of the title race.
He said: “It’s important that we don’t get carried away because Manchester United are capable of winning all their remaining games.
“We’ve got to focus on what we’re doing, keep winning and keep on their shoulders and keep piling that pressure on them so that they’re going into games knowing that we’re ready to pounce on any mistakes that they make.
“When you win, it’s good to win convincingly and everyone knows we’re on a rich vein of form and confidence is high here but we’re just taking each game as it comes.”
Benitez has told his players that they have to treat every remaining league game like a cup final if they are to catch United.
But the Spaniard insists that the key to coming out on top is not wondering about United’s results.
He said: “We need to do our job and wait for United to make mistakes. Now we are much closer but they are still in a much better position, but we have to keep going and pushing them.
“We are closer. They will see that we are working hard to win every game so my message is that every game is really important and like a cup final for us.”
Having struggled for goals at times this season, the Reds have now scored 13 goals in three matches against Real Madrid, United and Villa.
And Benitez believes that confidence is flowing through his side as the season reaches a climax.
He added: “Against Real Madrid we scored first and we did that again against Aston Villa. This is perhaps the key because the other team have to come and play more openly.
“When you are playing well, the players are playing with more confidence. Without changing players, with one game a week, (Fernando) Torres is fit, (Steven) Gerrard is fit, (Fabio) Aurelio is fit and it is easier for them to play one game a week.
“We can keep this momentum, but we have this international break. After that, we hope we can play with same mentality and keep doing well.”
Aston Villa have now failed to win in eight matches in all competitions and after a fine start to the season, their dream of Champions League football is slipping away.
They remain three points adrift of fourth placed Arsenal and their manager Martin O’Neill admits that it will be difficult for them to return to the top four.
He said: “Winning football games in this Premier League is exceptionally hard and we were doing it fine up until four or five weeks ago and our form has certainly dipped.
“We’re not out of it yet but anyone would say at this minute that the top four are the strongest sides and we were well beaten but we’re better than we showed against Liverpool.
“We’re definitely not as strong as the other four teams with strength in depth. They’ve been over the course, they know what it’s like and this is the crucial time of the season and those top four sides find themselves there again.
“It’s no fluke that they’re doing it but they’re there again and credit to them.”
TITLE: Sylvia Plath’s Son Commits Suicide in U.S.
PUBLISHER: Agence France Presse
TEXT: LONDON — The son of tragedy-scarred poets Ted Hughes and Sylvia Plath has killed himself 46 years after his mother gassed herself, The Times reported on Monday.
Nicholas Hughes hanged himself in his home in the U.S. state of Alaska last week after battling depression, his sister told the newspaper, 40 years to the day after Hughes’ next lover also killed herself.
Hughes was a professor of fisheries and ocean sciences at the University of Alaska-Fairbanks, although he had recently left the posting at the university shortly before he died to set up a pottery at home.
“It is with profound sorrow that I must announce the death of my brother, Nicholas Hughes, who died by his own hand on Monday 16th March 2009 at his home in Alaska,” Frieda Hughes said in a statement published by The Times.
“He had been battling depression for some time.”
Nicholas Hughes was unmarried, and had no children.
Plath killed herself by breathing in fumes from a kitchen oven in February 1963, preventing the fumes from seeping into her children’s room by sealing the kitchen door with towels.
Ted Hughes, who died in 1998, suffered another loss six years later when his mistress Assia Wevill gassed herself and their daughter on March 23, 1969, in an apparent copycat suicide.
Critics have long accused the English poet of driving Plath — whom he met when she was on a Fulbright Scholarship from the United States — to her death because of his relationships with other women.
Hughes remained silent on Plath’s death for years, until shortly before his death when he examined their turbulent life together and his reaction to her death in Birthday Letters, published in 1998.
TITLE: Hamilton Joins Criticism Over Formula 1 Rules
AUTHOR: By Stuart Condie
PUBLISHER: The Associated Press
TEXT: LONDON — World champion Lewis Hamilton joined the criticism of Formula One’s decision to alter the way the title is decided.
Hamilton followed record seven-time champion Michael Schumacher in suggesting that awarding the title to the driver with the greatest number of race wins rather than the largest number of points was likely to do little or nothing to boost fans’ interest in the sport.
Had the new rule been in force last year, Ferrari’s Felipe Massa would have edged Hamilton for the title.
“It’s a shame what’s happening to F1,” Hamilton said in a statement provided by his McLaren team.
“It’s hard to believe that these recent decisions will improve things for the track-side spectators and TV viewers, who should always be our priority.”
The rule change was imposed even though Hamilton snatched victory in one of the most exciting season finales, clinching the title after overtaking on the final turn of the final lap in the final race.