SOURCE: The St. Petersburg Times
DATE: Issue #1464 (26), Friday, April 10, 2009
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TITLE: Gref Warns Of a New Banking Crisis
AUTHOR: By Jessica Bachman
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Sberbank CEO German Gref warned that a second wave of the crisis was about to sweep over the banking sector on Wednesday, two days after Prime Minister Vladimir Putin told State Duma members that banks were out of trouble.
Gref said bad debt is piling up as worsening economic conditions make it more difficult for businesses and individuals to meet loan payments, which in turn leaves banks with insufficient cash to extend new loans.
“The crisis is just beginning for the banking industry ... and it will arrive from the real sector,” Gref, who runs the country’s largest bank, state-owned Sberbank, said at a conference at Moscow’s Higher School of Economics.
Gref’s comments came amid sparring between top bankers and government officials over the health of the banking system. Bankers say the crisis mounting in the real economy will soon engulf the banking system with a slew of defaults and cause hundreds of small lenders to close. But Putin, Central Bank Chairman Sergei Ignatyev and even relatively more pessimistic Finance Minister Alexei Kudrin maintain that the sector is on the road to recovery.
President Dmitry Medvedev stepped into the fray Wednesday, calling for increased government regulation of banks’ lending rates, which shot up during the fall when lenders lost access to Western credit and faced serious liquidity shortages. 
Speaking at a meeting with United Russia leaders, Medvedev said regulations, which could include subsidized interest rates, would prompt banks to increase their lending activity to the credit-deprived real sector. 
But with overdue loans in the banking system rising by 20 percent a month, it is “impossible” for bankers to expand their loan portfolios anytime soon, Gref said. Banks must instead put aside more money in loan-loss provisions, he said.
Bank assets fell by 1.9 percent in February, and as of March 1 bad loans had risen by 94.5 billion rubles ($2.8 billion) to 2.8 percent of the banking sector’s total loan portfolio, up from 2.3 percent the month before, the Central Bank said in a report this week. 
Both government officials and private lenders say the level of nonperforming loans is likely to hit 10 percent by year-end. 
“We are pumping practically all of our profit from the fourth and first quarters into provisions,” Gref said.
Gref, a former economic development and trade minister, rebuked the government for not giving due attention to the threat that overdue loans were posing to the banking sector.
“Slow [government] action allows the banks to hide bad debts and leads to the accumulations of bad assets,” Gref said. “The issue of bad debts is the key and most painful issue for the government during the second stage of the crisis.”
Other top bankers would agree. Pyotr Aven, head of Russia’s largest private lender, Alfa Bank, has said overdue loans could account for up to 20 percent of all loans in the system by the end of the year. 
Bad loans at VTB, the second-largest state-owned bank, could increase to 8 percent of its total credit portfolio by the end of the year, bank head Andrei Kostin said last week.
But Russia’s troubled assets are, in fact, much higher than stated if they are calculated according to the International Monetary Fund’s method, as they are in the West. 
In the West, if a debtor does not meet a payment for more than 90 days, the entire amount of the loan is counted as overdue. In Russia, the Central Bank considers a loan bad if an individual installment is overdue by a single day. 
In addition, a bank’s real level of bad loans is often concealed by debt restructuring and the practice of selling bad loans to debt collection agencies — sometimes subsidiaries of the banks, said Alexander Danilov, senior banking analyst at Fitch Ratings.
“There may be a significant difference between real impairment and what the banks report,” Danilov said.
He said banks have been persistently stressing their gloomy, troubled-asset outlooks in recent weeks in hope that the government will adopt preventive measures by recapitalizing them. 
“The banks want to be ahead of the game. They want the government to be on board in case things get really bad,” Danilov said.

TITLE: Russia Appeals to EU Over Moldovan Coup
AUTHOR: By Dmitry Solovyov and Sabina Zawadzki
PUBLISHER: Reuters
TEXT: CHISINAU — Russia asked the European Union and Romania on Thursday to guarantee the sovereignty of its ally Moldova, where riots have swept the capital and prompted a crackdown on the pro-Western opposition.
Moldova’s veteran Communist President Vladimir Voronin has blamed neighboring Romania for stoking a coup attempt after demonstrators ransacked parliament during post-election protests two days ago and waved EU and Romanian flags from his offices.
Russian Foreign Minister Sergei Lavrov said Moscow was “deeply disturbed” by the protest flags and slogans because they showed that the demonstrators “were obsessed with the idea of destroying Moldovan statehood.”
Most of present-day Moldova, Europe’s poorest country, was part of Romania until Stalin annexed it to the Soviet Union in 1940. It won independence when the Soviet Union fell in 1991.
“We hope that the EU and the Romanian leadership, which publicly condemned the violence, will take action to ensure that Romanian flags and Romanian slogans are not used as the cover for undermining Moldovan statehood,” Lavrov told the state-run RIA news agency.
The European Union and United States have urged calm and no repetition of Tuesday’s post-election riots in which one person died, more than 200 were injured and at least 193 were arrested.
Correspondents said Moldova had denied entry to more than 19 Romanian journalists, despite a demand from the Czech EU presidency for the “proper respect for freedom of the media and freedom of expression.”
RIA quoted a Moldovan secret service source as saying Moldova would expel three other Romanian reporters for “activities incompatible” with national law. There was no immediate government comment on the report.
Europe’s only Communist ruler, Voronin says Romania wants to seize control of his mainly rural country of four million people where the average monthly salary is $250. Romania has rejected the accusations.
In power since 2001, Voronin faces a growing economic crisis as thousands of Moldovans working abroad lose their jobs in the global economic crisis and stop sending home the hard currency on which much of the local economy depends.
“People here simply don’t have a future,” said a woman walking in the capital who refused to give her name. “We also have children and we’re hoping for a better life. We’re simply tired of this dictatorship.”
The streets of the capital Chisinau were quiet on Thursday morning as the opposition parties, shaken by the scale of Tuesday’s violence, pondered their next move.
Opposition leaders have tried to distance themselves from the violence. They said people had been getting messages on their mobile phones and via the Internet about a new protest on Friday which they said they had nothing to do with.
The Liberal party, which won 12.75 percent of the vote in the disputed parliamentary election, called on the European Union to send a special mission to investigate the riots.
Some Moldovan opposition figures say Voronin’s Communists were behind the violence as part of an attempt to distract the population from Moldova’s economic woes.
Brussels has already sent a mediator to Moldova to try to break the deadlock in the aftermath of the disputed election.
The Central Election Commission has rebuffed opposition demands for a recount of Sunday’s vote, which the Communists won 49.5 percent. The Communists are one seat short of the number they need in parliament to elect a successor to Voronin.
Russia pipes gas through Moldova to Romania, Bulgaria and Turkey and wants to avoid losing another ally to pro-Western forces. Moscow-friendly governments in Ukraine and Georgia were swept away by popular protests earlier this decade.

TITLE: Georgian President Saakashvili Under Pressure to Resign
AUTHOR: By Misha Dzhindzhikhashvili
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — Tens of thousands of protesters thronged the streets in front of Georgia’s parliament Thursday, calling on the president to step down in the largest opposition demonstration since last year’s war with Russia.
The opposition blames President Mikhail Saakashvili, a U.S.-educated lawyer who has built close ties to Washington, for the disastrous war last August and says he cannot lead Georgia forward because of his antagonistic relationship with Moscow.
Saakashvili, meanwhile, has vowed to serve out his term, which ends in 2013.
The protest was held on the 20th anniversary of a deadly anti-Soviet demonstration that galvanized Georgia’s fight for self-determination and led to Georgia declaring its independence two years later.
Tira Guledani, a 70-year-old psychologist called Saakashvili mentally ill and said many Georgians remain upset about the war with Russia.
“You have to treat him, he is sick,” she said. “We want normal relations with Russia, not war. We lived well with Russia. He spoiled everything.”
Nearby, Georgy Kirvalidze, a 19-year-old student, pointed at a wall bearing a well-known photograph of Saakashvili cowering under bodyguards during a Russian attack last August.
“Our president is a coward. Cowards are always cruel,” he said.
Earlier, Saakashvili made an unexpected visit to a memorial honoring the victims of the 1989 demonstration, located in front of parliament.
“We have to be steadfast and united,” the president told reporters as he approached the memorial, where a few hundred people, including some opposition leaders, were gathered. A banner saying “People for Saakashvili’s Resignation” hung overhead.
Police forces have promised not to intervene, but the city was on edge, with residents fearing the protests could lead to violence. Ahead of the demonstration, there was little visible police presence.
Among the politicians who joined the opposition after the war are former parliament speaker Nino Burdzhanadze, who was one of Saakashvili’s closest allies, and Irakli Alasania, who was Georgia’s ambassador to the United Nations. Former Foreign Minister Salome Zurabishvili was also to lead a group of protesters.
“They will elect a new government that will have their trust and strong support and also will have a real chance to begin a dialogue with Russia,” Alasania said before the protest.
Russian President Dmitry Medvedev has said he would refuse to deal at all with Saakashvili, whom Russian leaders depict as bloodthirsty and unbalanced.
Saakashvili called Tuesday for talks with the opposition but was rebuffed.
“There can be dialogue with the government only on one issue — the resignation of Mikhail Saakashvili,” said Levan Gachechiladze, who challenged Saakashvili in the 2008 presidential election.  Some Georgians continue to support Saakashvili, who has presided over substantial economic growth.
For others, Saakashvili was discredited by defeat in the five-day war. It set back his goal of regaining control over two Russian-backed separatist regions.
“Let’s imagine we live in a civilized European country, as the current president likes to imagine Georgia to be, and its leader starts a war that he loses disgracefully,” said Georgy Tarkhnishvili, 40, a physicist. “Does he stay in power? Of course not.”

TITLE: Immigrants May Be Able to Buy Work Permits
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Migration authorities said Wednesday that they plan to offer monthly work permits to immigrants hired by private individuals in an attempt to reduce illegal immigration and boost government revenues. 
Immigrants working in the private sector will have to pay a monthly fee to authorities for the work permit, Federal Migration Service chief Konstantin Romodanovsky said at a news conference Wednesday. 
“More than a half of those who enter Russia to work are employed in the private sector, constructing country houses, working as nannies, gardeners, guards,” Romodanovsky said. 
The monthly fee will be up to 2,000 rubles ($59) in Moscow and up to 1,000 rubles in other regions, Romodanovsky said. 
“If 3 million immigrant workers buy a license within a year, the federal budget will get $1 billion,” he said. “This is a fine sum.” 
No quotas will be introduced for the licenses. 
A relevant bill has been drafted and may be considered by the State Duma this spring.

TITLE: Khodorkovsky Presses Kremlin Over Promises About Judiciary
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Former Yukos CEO Mikhail Khodorkovsky challenged President Dmitry Medvedev on Tuesday to stand by his promise to create “independent, honest courts,” saying the alternative could be social unrest. 
Khodorkovsky, on trial for a second time, said a person whose rights have been violated or who is upset with dishonest officials has two options: a “calm” route through the courts or a “troublesome” route through public protests. 
“President Dmitry Medvedev, having promised independent and honest courts, has taken on an extremely heavy but very important burden,” Khodorkovsky said, reading from written remarks to Judge Viktor Danilkin from the glass-and-steel cage in Moscow’s Khamovnichesky District Court. 
Medvedev has said several times that he will put an end to “legal nihilism” in the judicial system. 
Khodorkovsky and his business partner Platon Lebedev are accused of embezzling 350 million tons of oil valued at about 900 billion rubles ($25 billion) between 1998 and 2003 from three Yukos-controlled production units — Samaraneftegaz, Yuganskneftegaz and Tomskneft — and laundering 487.4 billion rubles and $7.5 billion between 1998 and 2004. 
Khodorkovsky said Tuesday that he has been “deprived of my right to know what I am being accused of,” saying investigators wrote the charges in an unclear form.

TITLE: City, State to Divide Up Monuments
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: The St. Petersburg authorities and the Russian Federation have finally divided up responsibility for the city’s historic buildings and monuments.
Yury Molchanov, St. Petersburg’s vice-governor, said on Thursday that in the next few days the Russian government is due to sign a decree on the approval of the list of monuments that will belong either to the state or to the city, Fontanka.ru reported.
The list consists of 108 names and is fairly evenly divided. At least 58 buildings will be under the control of the Federation, and the other 50 will belong to the city.
For instance, one of St. Petersburg’s pearls — Gostiny Dvor — will remain under the city’s control.
Igor Metelsky, head of the city’s State Property Management Committee, said that after the final allocation of the buildings, no further important decisions about their privatization or lease are expected. The only factor that may influence the situation is interest shown by private investors who would take care of the restoration of any of these buildings.  However, such issues will be dealt with as they arise, he said.
At least 14 buildings have not been included in the decree as they are listed as places of worship. Responsibility for these buildings will remain with the religious communities themselves.
The main list of the city’s monuments was made and approved at the end of 2008 and the federal government’s consequent decree was signed on Dec. 31 2008. At that time the less contentious major buildings were allocated.
As a result, 155 buildings — monuments of federal significance located in the territory of St. Petersburg — became the property of the city at the beginning of this year. They include the Mariinsky Palace, the Peter and Paul Fortress (except the buildings of the Mint which are now federal property), Mikhailovsky Castle, Yelagin Palace on Yelagin Island, Smolny Institute, Oreshek fortress and the Pavlovsk and Gatchina palaces and their parks.
The Russian Federation acquired the property rights to 119 buildings, including the Alexander-Nevsky Lavra, the Hermitage and Winter Palace, the Admiralty, the Tavrichesky Palace, the Summer Gardens and the palaces of Peterhof and Tsarskoye Selo.

TITLE: Suspect Detained In Dubai Murder Case
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Investigators said Wednesday that a suspect has been detained in the September slaying of Ruslan Yamadayev, a brother of Sulim Yamadayev, who was killed in Dubai last month.
The announcement, which came after Dubai police accused State Duma Deputy Adam Delimkhanov of masterminding Sulim Yamadayev’s murder, might be an attempt to divert suspicion away from Delimkhanov and his relatives, who include Chechen President Ramzan Kadyrov, analysts said.
The Investigative Committee said in a statement that the unidentified suspect was detained in Moscow on Tuesday on suspicion of participating in the killing of Ruslan Yamadayev, a foe of Kadyrov and former Duma deputy who was shot dead in central Moscow on Sept. 24.
Unidentified law enforcement officials told the Rosbalt news agency that they believed Ruslan Yamadayev was killed by a Chechen group including former Grozny Deputy Mayor Gilani Shapiyev, his bodyguard Khalid Molochayev and Aslan Diliyev, a former adviser to Kadyrov. Shapiyev was shot dead in western Moscow in February. 
“It looks like they are trying to make the impression that there is a different group, one that is not associated with the Kadyrov clan, that sought to kill the Yamadayevs,” said Andrei Soldatov, editor of the Agentura.ru web site and an expert on Russian security services. 
The Investigative Committee also said it had detained a suspected gunman and an accomplice in the attempted murder of Konvers Group bank chairman Alexander Antonov on March 11 in Moscow. The committee said the two might be connected to Ruslan Yamadayev’s death.
Delimkhanov, meanwhile, cancelled a news conference where he had planned to speak about the accusations against him. No reason was announced. But he told reporters in the Duma on Wednesday that Dubai police were “sheltering the real killer, Yamadayev.”

TITLE: Report: Spies Invaded U.S. Grid
PUBLISHER: Combined Reports
TEXT: MOSCOW — Russian cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, the Wall Street Journal reported Wednesday.
The spies also came from China and other countries and were believed to be on a mission to navigate the U.S. electrical system and its controls, the newspaper said, citing current and former U.S. national security officials.
The intruders have not sought to damage the power grid or other key infrastructure, but officials said they could try to during a crisis or war, the paper said in a report on its web site.
The Russian Embassy in Washington denied any Russian wrongdoing. 
(Reuters, SPT)

TITLE: Senator Vavilov Claims Daughter Has Been Targeted by Kidnappers
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Federation Council Senator Andrei Vavilov said Wednesday that unidentified attackers tried to kidnap his 4-year-old daughter in Monaco.
People close to Vavilov connected the incident to an escalating conflict between the senator and a former business partner, State Duma Deputy Ashot Yegiazaryan, Ekho Moskvy reported, without elaborating. Yegiazaryan denied any involvement in the kidnapping attempt, calling the speculation “a provocation,” RIA-Novosti reported.
The incident happened Tuesday as Vavilov, his wife and daughter were taking a walk while on vacation in Monaco, Vavilov’s aide Anna Syomkina told Interfax. Unknown people approached the trio and tried to snatch the girl but failed, Interfax said. The attackers had features of natives of the Caucasus, Ekho Moskvy reported, citing witnesses of the incident. 
Vavilov told RIA-Novosti that he had received several threatening telephone calls in recent weeks. He did not elaborate.
Vavilov has reported the kidnapping attempt to local police, RIA-Novosti said.
Vavilov, a former deputy finance minister, has surfaced in several high-profile corruption cases. In the 1990s, he was linked to a scandal over missing federal funds earmarked to MAPO Group to buy MiG fighter jets. MAPO’s accounts at the time were handled by Unikombank, headed by Yegiazaryan.

TITLE: Ford Announces Price Hikes, Blames Sagging Ruble
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Ford plans to increase prices for its cars in Russia by nine to 25 percent from May 1, the Russian office of the American car manufacturer said this week. 
Prices for the Focus and Mondeo produced in Russia, for the Escape and Transit models manufactured this year and the Fiesta, Fusion, Focus, C-Max and Escape models made in 2008 may increase by nine percent. 
Prices for the Fiesta, Fusion, C-MAX, Kuga, S-MAX and Galaxy models manufactured this year may be raised by 18 percent, while Explorers made during 2008 and 2009 may cost 25 percent more, Interfax reported, citing the company. 
“The devaluation of the Russian ruble has had a significant impact on the Russian business of the company, whose basic expenses are fixed in euros,” said Nigel Brackberry, president and general manager of Ford in Russia. “The gradual rise in prices for our cars since the beginning of this year has slightly softened the effect. However, we can’t exclude the possibility of further raises,” he said. 
At the end of March, the company announced a five percent price hike for cars produced in Russia, effective from April 1. 
Consequently, the minimum cost of the Ford Mondeo, which began being produced at Ford’s plant in Vsevolozhsk, Leningrad Oblast in March, is now 599,000 rubles ($17,900). Previously it was on sale at 582,000 rubles ($17,400).
Until now, the company had only raised prices for cars manufactured abroad. From Jan. 1, Ford raised its import prices by five percent. The company said the increase was necessitated by the devaluation of the ruble and increased customs charges for importing foreign car brands into Russia.
At the same time, the company recently announced its intention to lower the minimum price for its bestseller Ford Focus. It planned to lower the price by five percent from the current price of 388,000 rubles ($11,600) to 345,000 rubles ($10,300).  
The measure was taken in order to meet the parameters of a new program, under which the state budget will pay part of the interest rate payment for customers buying cars included on an official list. 
In February, Trade and Industry Minister Viktor Khristenko signed a decree creating a list of such cars. The Focus, which is also made in Vsevolozhsk, entered the list, despite the fact that the government had earlier said that cars on the list should cost no more than 350,000 rubles ($10,400). 
Yekaterina Kulinenko, a spokeswoman for Ford in Russia, said the price increase on the Focus is still under discussion in the company. The company wants to evaluate whether the privileged loan terms on purchases of the car would influence sales of the Focus, Fontanka.ru reported.
“The program has only been operating for a week,” said Kulinenko. “Meanwhile, we’re planning to watch the situation for the whole of this month.”
“We’ll be surveying the volume of clients whom this program attracts,” she said. “It’s important to find out whether clients will order cars in their basic packages for 345,000 rubles ($10,300), or whether they would prefer more expensive cars of the same brand. However, we still hope that the government will support producers working on Russian territory, regardless of the price of the cars,” she said.
If Ford goes ahead with the price hike, it may lose a number of potential clients, since the latest survey showed that the Ford Focus occupied second position behind the Volkswagen Jetta on the government’s official list of cars that Russians would like to buy under the terms of the privileged loan program.
Almost 30 percent of the survey’s respondents said they would choose the Ford Focus.
Customer numbers are particularly important for Ford right now, since in the first quarter of this year the company registered a 28 percent decrease in Russian sales compared to the same period last year, Fontanka reported.
The government launched a program for issuing car loans on preferential terms last week.  Three Russian banks — Sberbank, VTB and Rosselkhozbank — began issuing loans with lower interest rates, and the government promised to pay part of the interest rate at the state’s expense. To be eligible for the program, buyers must make a downpayment of 30 percent and pay off the debt within three years.
The list of cars consists of 29 brands including the Chevrolet Niva, Fiat Albea, Kia Spectra, numerous Russian Lada models, Renault Logan, Skoda Fabia and the UAZ Hunter.

TITLE: In Brief
TEXT: <b>Cell Phone Sales Plunge</b>
MOSCOW (Bloomberg) — Russian mobile-telephone sales halved in the first quarter to the lowest total in five years, Kommersant reported.
Sales fell to $819 million from $1.76 billion in the same period last year, the newspaper said, citing independent analysts including Vladimir Bogdanov, the former marketing director of Yevroset, the country’s largest handset seller.
The number of units sold slid 30 percent to 5.48 million units, the lowest level since 2004, Kommersant said.

<b>MTS to Sell BlackBerry</b>
MOSCOW (Bloomberg) — Mobile TeleSystems, Russia’s largest mobile operator, plans to begin selling BlackBerry phones to individuals in the country within two weeks as communications companies compete for wealthy customers.
“It’s a niche solution, oriented toward the high-value segment that is interested in innovations and wants mobile email,” Irina Osadchaya, a spokeswoman for the Moscow-based company, said Thursday. “We want to bolster their  loyalty.” The BlackBerry, which can send e-mail and surf the web, is made by Canadian company Research In Motion Ltd., based in Waterloo, Ontario.
Mobile TeleSystems, which already offers corporate BlackBerry services, aims to attract about 3,000 retail clients in Russia this year, Kommersant newspaper reported Thursday. The operator has about 3,800 retail customers in Ukraine, after starting to offer BlackBerry service to individuals in June.

<b>Gazprom Accused</b>
MOSCOW (Bloomberg) — The Foreign Ministry of Turkmenistan
said Gazprom is at fault for a natural-gas pipeline explosion that cut supplies to Russia.
    The ministry said that Gazprom unit Gazexport on Wednesday “sharply cut” its intake of Turkmen gas without warning the Turkmen side. This reduction led to the accident, the ministry said Thursday in a statement posted on the web site of the Turkmen Embassy in Moscow. 

<b>Economy Inefficient</b>
MOSCOW (Bloomberg) — The “overwhelming part” of Russia’s economy is so inefficient that “it doesn’t stand a chance of surviving the next 10 years,” Arkady Dvorkovich, President Dmitry Medvedev’s top economic adviser, told a conference at Moscow’s Higher School of Economics. 
Dvorkovich on Wednesday reiterated the government’s position that state support should be directed toward “new efficient niches” of the economy rather than to inefficient sectors.

<b>Energy Efficiency to Rise</b>
MOSCOW (Bloomberg) — Russia plans for oil and natural gas to account for 18 percent of gross domestic product by 2030, down from 30 percent today, as it seeks to diversify its commodities-driven economy, Energy Minister Sergei Shmatko said.
Energy efficiency should more than double over that period, Shmatko told the 21st Century Energy forum in Moscow on Thursday.

<b>Budget Deficit $1.5 Bln</b>
MOSCOW (Bloomberg) — Russia’s budget deficit in the first quarter was 50 billion rubles ($1.5 billion), as revenue fell 24.5 percent to 473 billion rubles and spending rose 33.6 percent to 447 billion rubles, Interfax reported Thursday, citing Finance Minister Alexei Kudrin.

TITLE: We’re Close to Hitting Bottom
AUTHOR: By Lev Freinkman
TEXT: Last week, the World Bank again lowered its expectations for Russia’s economic performance in 2009. Its prognosis is that the country’s gross domestic product will fall by 4.5 percent this year. Meanwhile, the Organization for Economic Cooperation and Development expects a 5.6 percent drop over the same period. 
Nonetheless, there are still some bright spots in Russia’s economy that might mitigate these negative forecasts by the end of 2009. For example, over the past two months, manufacturers have increased their expectations for an economic upswing. This stands in clear contrast to the mood of analysts, international organizations and investment banks.
According to monthly analytical surveys conducted by the Institute for the Economy in Transition, top managers of the country’s leading companies are anticipating increased demand for their products. These surveys have been conducted since 1992 and have proven to be a reliable indicator of future trends. Thus, we can predict with a high degree of certainty that the fall in demand for manufactured goods will end in the next few months. In other words, the decline in Russia’s manufacturing sector is coming close to hitting bottom. 
But this by no means guarantees a resumption of economic growth. The economy’s relatively poor performance in the first quarter might lead to a months-long recession. There are a few reasons to be hopeful, however, that with a little luck, moderate economic growth will resume by the year’s end.
First, there are excellent opportunities for growth as a result of ruble devaluation and import substitution. According to surveys from the Institute for the Economy in Transition, the number of Russian manufacturers claiming that imports had a negative impact on their growth was three times lower in January 2009 than in January 2008. 
Second, there is a good chance that domestic demand will increase as a result of increased government spending. Until the end of February, leaders had been wary of implementing a broad fiscal policy to boost the economy. Instead, the government focused narrowly on supporting the banking system with the help of cash infusions from the Central Bank, but only a small portion of this liquidity reached the real sector. Now, however, the picture has improved for increasing government spending across broad sectors. 
Third, the sharp declines in industrial output in late 2008 was a reflection not only of the objective worsening of external and internal market conditions but was also a result of an exaggerated panic, which tends to be short-term. The sharp fall in manufacturing was not in line with the overall healthy macroeconomic characteristics of Russia’s economy — above all, its large gold and foreign exchange reserves and solid trade balance. A low level of trust within the business community and the government’s poorly defined anti-crisis plan helped cause the panic, but the situation has calmed down markedly since then. 
The fourth reason is that the government’s assumption of a mid-year price of $41 per barrel of oil is weighted on the low side. It is highly likely that the price of oil will increase above $45 per barrel in the third and fourth quarters, and this will have a positive impact on the Russian economy. 
Other positive trends include a more stable situation in terms of bank liquidity. For example, the Central Bank’s credit interest rate has stopped rising, and the ruble exchange rate has stabilized.
Moreover, the Russian government has changed the focus of its anti-crisis program in recent months. In the beginning of the crisis, the emphasis was placed on supporting large businesses and their owners. Now, the anti-crisis plan calls for increasing consumer demand, in part by increasing individual incomes. The government is ready to increase federal spending and to tolerate a budget deficit of eight percent of GDP. To be sure, an increase in government spending could easily lead to a spike in inflation, but overall it is a major improvement over the government’s previous efforts to combat the crisis. Now the question is how effectively the plan will be implemented. 
The government’s ability to spur demand will depend on how well it can handle two perpetual problems in Russia. The first is whether the government will release allocated funds on schedule. The second, of course, is whether corruption will prevent these funds from reaching its intended targets. To lower the risk of corruption, the government must improve the transparency of the entire allocation process. 

Lev Freinkman is an analyst at the Institute for the Economy in Transition. This comment appeared in Vedomosti.

TITLE: A Big Success for the G20
AUTHOR: By Konstantin Sonin
TEXT: Global summits raise expectations of finding global solutions. As a rule, though, that usually doesn’t happen. 
But last week’s meeting of the Group of 20 in London ended successfully for a change. The most important result was not the $1 trillion the International Monetary Fund allocated to help fight the crisis, most of which will help developing countries that have been hit hard by fluctuations in the exchange rates of their national currencies. 
Most significant, the meeting demonstrated that the world remains united. Government leaders, although primarily concerned about their own economies, realize the danger of adopting protectionist measures as a knee-jerk reaction to the crisis. For us, the most important result is that Russia reaffirmed its role as a part of the larger world order.
Meanwhile, there was no shortage of disagreements at the summit. European leaders, especially from France and Germany, offered resistance to the U.S. plan to stimulate demand through government spending, but their opposition did not stem from geopolitical considerations. In European countries, where the labor market enjoys more protection than in the United States, consumption does not fall as steeply when gross domestic product falls, and the need to stimulate demand is therefore lower. The lack of flexibility in the European labor market might also play a negative role because it slows the ability of European countries to make the transition toward growth. 
But for now, the United States is feeling the effects of the crisis more than Europe is. One reason for this: European governments have not yet fully realized the scale of the problem with toxic assets on the balance sheets of European banks. Stefan Ingves, governor of the Swedish Central Bank who co-authored the “Swedish solution” to the country’s banking problems in 1992, said last week at a seminar at the New Economic School in Moscow, “It is possible to postpone finding a solution to the problem of bad assets, but it will not resolve by itself.” 
It is no easy task to present a serious initiative at a global forum, and President Dmitry Medvedev was unable to do this. His talk of the need to switch to a new reserve currency is popular among average Russians, but it has little practical meaning at the government level. What prevents Russia from holding reserves in different currencies? The same thing that prevents any individual from doing so: The dollar remains the most secure reserve currency, and it is unclear what could replace it in the near future. 
The situation in China looks even worse. After 10 years of accumulating dollar reserves, it turned out that the very size of those assets (almost $2 trillion) has become a major headache for Chinese leaders. If they sell those dollars, the price of China’s exports will increase as the dollar drops relative to the yuan. This would render their own savings worthless. 
For Russia, the need to maintain its active participation in the global economy is actually more of a domestic priority than a foreign policy goal. It is easy to oppose protectionist measures when your trading partners take the same position. Russia needs to keep its markets open even if other governments buckle under the pressure of their lobbyists and start protecting their markets. 
Even if Medvedev’s promise to adhere to principles of free trade were just empty words, hard times are coming, and his resolve to stand by those words would make a significant contribution to the global struggle. 

Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.

TITLE: City chronicler
AUTHOR: By Alec Luhn
PUBLISHER: The St. Petersburg Times
TEXT: One cloudy day in 1973, legendary local photographer Boris Smelov perched high above a dvor, or apartment yard, in Leningrad, as St. Petersburg was then known. Having framed his shot so that the stolid apartment buildings seemed to ascend into the ether like the Cathedral of Chartres, he waited for the right moment, not knowing when or what it would be. Several hours later, it finally arrived: As a man in a light-colored cap carried a dustbin across the bottom of the frame, Smelov snapped the shutter.
The resulting photograph, “Man with a Bucket,” is typical of Smelov’s photography, which combines elements of premeditation and spontaneity, said Arkady Ipolitov, the curator of a new exhibition of Smelov’s work at the State Hermitage Museum.
“He was there for several hours, but when he saw that moment — when the man in the hat came in through that door — he captured it,” Ipolitov said.
“Man with a Bucket” has entered the pantheon of iconic images Smelov produced of his home city.  His subjects and themes varied, but each photo captured an essential element of Leningrad/St. Petersburg, making Smelov a legend in his time.
The exhibit, titled “Boris Smelov: Retrospective,” opened in the General Staff building of the Hermitage on March 20 and runs until June 28. It marks the first ever large-scale, comprehensive exhibition of Smelov’s work, including his best photos from the 1970s until the photographer’s death at the age of 47 in 1998.
The main patron of the show is none other than St. Petersburg Governor Valentina Matviyenko, who also wrote an article for the exhibition’s catalog.
“She was convinced that Smelov was the biggest Petersburg photographer at the end of the 20th century,” Ipolitov said.
Even though Smelov is renowned throughout Russia and Europe, the bulk of his work has not been shown together. Many of the pieces were displayed mainly in secret apartment showings during the Soviet era, when the government forbid Smelov to hold public exhibitions after a controversial show in the House of Culture.
Nevertheless, Smelov accrued a legendary status even during his lifetime, one that has drawn frequent comparisons to Joseph Brodsky, Leningrad’s most celebrated writer.  The “Brodsky of photography” could do with light what preeminent authors like Brodsky did with words, Ipolitov said, pointing to “Man with a Bucket.”
“This dvor resembles a castle” the way Smelov presented it, Ipolitov said.  “It resembles something Kafka-esque.”
Polina Silnova, a local student who was visiting the exhibition on a recent Wednesday afternoon, said she wanted to find the dvor depicted in “Man with a Bucket,” saying it seemed to be “from a different city, a different time.”
In this manner, Smelov’s photography draws Petersburgers’ attention to the subtle wonders of their city that go unremarked in daily life, attested her companion Mikhail Lipovskikh.
“We live it; for us it’s ordinary and habitual … but if we photograph it in such a way, under a certain light, then it’s already a different point of view,” Lipovskikh said.
Other photos in the exhibition cast light on a plethora of such unappreciated sights. A perfect example is “Sennoy Bridge,” which depicts the bridge over the Griboyedov Canal from above, laying out the angles of the surrounding buildings as if they are streaming off simultaneously on different geometric planes.  
Smelov’s works depict people just as skillfully, again with an eye for the unappreciated: “Lover of Sour Things” shows a bald man whose gleaming dome shines like the two lemons on the table in front of him, and “Bolshoy Prospekt, Vasiliyevsky Island” depicts a babushka bravely navigating a maze of urban backstreets.
The exhibition even includes several photos composed in the traditional still-life form, but again with a twist. For example, the objects rendered in “Still Life Under a Cello Table” are, as the title suggests, irrationally but carefully arranged under the table meant for them.
Smelov’s most often reproduced work, however, remains “Apollo,” which captures the face of a white marble statue in the Summer Garden as a spider crawls across its rain-soaked cheek. The photograph seems to capture the Neo-classical origins of Peter’s “Window on the West” along with its physical tempestuousness and its “relationship with solitariness and timelessness,” Ipolitov said.
“There’s a certain tradition and feel to St. Petersburg, a tradition originating from [Alexander Pushkin’s poem] ‘The Bronze Horseman’,” Ipolitov said. “Smelov is the continuation of this tradition.”

“Boris Smelov: Retrospective” runs until June 28 at the State Hermitage Museum, tel. 710 9079. Round tables and master-classes for photographers, photography historians, and photography lovers are due to be held in conjunction with the exhibit. www.hermitagemuseum.org

TITLE: Chernov’s choice
TEXT: “The Russians without vodka equals the Germans,” Martyn Jacques uttered in between two sets of <b>The Tiger Lillies</b> concert at Glavclub on Saturday. The band worked out this math after feeling that something was not quite “Russian” during the first set (the public felt a little like that in Germany, according to them), and then discovering that the venue only sold beer, having no license to sell anything stronger. 
The club’s director Pavel Klinov was quick to say that vodka would be on sale in ten days sharp.
Meanwhile, the club, which was launched close to the center of St. Petersburg with a concert by Leningrad on Nov. 7, turned out to be nice enough, well-organized and on the up, even if it does look a little like a hangar or a Lenta supermarket. 
Three hundred and twenty tickets were sold beforehand, a relatively small number for a venue like this, but hundreds more fans came to listen to The Tiger Lillies, who performed quite a few new songs from this year’s two double albums, “Sinderella” and “Freakshow,” alongside their classics.
The new song “Blow-Jobs” proved most popular with at least one member of the audience, who demanded an album with this track on it, only to find that all the copies of “Sinderella” that the band had brought to Russia had been sold in Moscow the night before. The Tiger Lillies celebrated their 20th anniversary during their brief Russian tour last week.
This week’s visitors include <b>The Alloy Orchestra</b>, the Cambridge, Massachusetts-based experimental music trio.
Created to perform their own original soundtracks to the silent films of the past, the band will play music they composed for the 1927 Buster Keaton comedy “The General.” The showing of the film is due to start at 9 p.m. on Friday as part of the Kinodance film event, which is mostly about films with elements of dance in them, held at Rodina film theater through April 18.
“An unusual combination of found percussion and state-of-the-art electronics gives the orchestra the ability to create any sound imaginable,” the band’s MySpace page reads.
“Utilizing their famous ‘rack of junk’ and electronic synthesizers, the group generates beautiful music in a spectacular variety of styles. They can conjure up a French symphony or a simple German bar band of the ‘20s. The group can make the audience think it is being attacked by tigers, contacted by radio signals from Mars or swept up in the Russian Revolution.”
<b>We Have Band</b>, the British band that describes itself as a “disco-rock trio,” will perform at Achtung Baby, the club that mostly has DJs on its repertoire rather than live sets, on Friday. The NME’s description was “East London weirdtronika pop.”

<i>— By Sergey Chernov</i>

TITLE: All that jazz
AUTHOR: By Travis Mills
PUBLISHER: The St. Petersburg Times
TEXT: The fifth LeJazz festival of French jazz will take place this weekend in St. Petersburg and Moscow, brightening up the chilly Russian spring with the romantic and euphoric melodies of the finest of French jazz acts. This year’s program includes Michel Portal, Jacky Terrasson and the Stefano di Battista Quartet. 
Stefano di Battista is an Italian-born saxophone player mainly associated with France, where he lives and has performed since the mid-1990s. Di Battista is signed to the major American jazz label Blue Note and belongs to the small but highly influential group of European improvisers with a 100 percent American, traditional approach to jazz. Batista’s music scrupulously follows the canons of mainstream jazz.
In his latest album, di Battista delves even further into the history of jazz, expressing his love of 1940s and 50s bebop. Batista is heavily influenced by Charlie Parker, striving to reproduce not only the music, but also the intonation of this great jazz reformer. 
Di Batista will perform in St. Petersburg on Sunday, along with his band: Fabrizio Boso on trumpet, Frank Aguyon on drums and Baptiste Trotinon on keyboards. The quartet will also perform in Moscow on Saturday.
The other headline act at the festival in St. Petersburg is pianist Jacky Terrasson, who will perform with clarinetist Michel Portal. Terrasson, described by The New York Times Magazine as one of the young artists who is “most likely to change American culture over the next 30 years,” was raised in Paris and moved to the United States, graduating from Berklee College of Music. After winning the prestigious Thelonius Monk Competition in 1993, he moved to the big stage and was soon signed to Blue Note. Despite being an American-trained pianist, the style and mood of Terrasson’s music remains distinctly French. He has even recorded two albums dedicated to Paris, “A Paris” and “Smile.” 
Portal is a renowned film music composer and three-time winner of the Cesar, the French Oscar. He is known for his dexterity, changing between the clarinet and bass clarinet to soprano sax and bandeon.
Portal does not limit himself to the use of traditional instruments. He plays the bass clarinet without a mouthpiece, allowing him to sing and speak to the crowd, instead of giving a purely instrumental performance. 
The festival, which is organized by ArtMania and sponsored by the French Cultural Center, the French Institute in St. Petersburg and the French Embassy, was first held in 2005 with the aim of popularizing French jazz in Russia. 
The premier set the tradition of bringing together famous jazz musicians such as Bireli Lagren, Mina Agossou and Henri Texier, who play at the most prestigious venues in the world. 
Although the homeland of jazz lies the other side of the Atlantic from France, Paris has long been known as the “second capital” of jazz after New York. Modern Paris can be described as an international crossroads of musical styles, a city where the sounds of countries across the world come together. 

LeJazz takes place at the Music Hall at 7 p.m. on Sunday. Alexandrovsky Park 4. Tel. 232 9201, www.musichallspb.ru.

TITLE: Italian enigma
AUTHOR: By Tobin Auber
PUBLISHER: Staff Writer
TEXT: This compact Italian eatery is something of a mystery. Stolyarny Pereulok and the surrounding Kolomna neighborhood in general aren’t known for their upscale, lavishly decorated restaurants, so it’s a little off the beaten track. When visited for lunch on a workday it was empty and the waiter appeared somewhat suprised to see us as he wandered about, cleaning cloth and plastic bottle of cleaning fluid in hand, giving the tables a once over. Nevertheless, Parmezanoff had more of the feel of an evening venue, and would perhaps make for a decent place to dine on your way to or from the Mariinsky.
It’s not large, comprising just one room and a grand total of seven tables, but the mirror right across one wall removes any sense of claustrophobia. The decor is done out in off-white yellows and golds, in danger of slipping openly into the gaudy and garish, particularly in view of the vast gilded sun-shaped clock and the equally garish golden mirror frame on another wall. The light and airy impression created by the color scheme and uncluttered windows, however, is a touch marred by some very heavy black metal lamp and chandelier fittings. The pan pipes muzak playing on the stereo was also a step in the wrong direction.
The menu is extensive and, while the restaurant doesn’t pretend to be staffed by native Italian chefs, rumor has it that an Italian worked with the Russian cooks in the run-up to Parmezanoff’s opening. He seems to have done a good job. 
We started with a tomato soup with sweet pepper and white bread (195 rubles, $5.80) and a chicken salad in a honey balsamic sauce (310 rubles, $9.25). The soup was fresh, bursting with plum tomatoes and olive oil without being too greasy. It came “pre-parmesaned,” with fresh shavings of the cheese already in it, which was something of a surprise, but then perhaps in view of the restaurant’s name it was only to be expected. The sauce for the chicken salad, which was essentially a Caesar without the crutons, had a very pleasant bite to it, and again the ingredients were very fresh.
The “sheep-cheese and spinach” tortellini (355 rubles, $10.60) that followed made for a very large portion and is definitely recommended for those who like their food rich and heavy. Those looking for something on the lighter side and concerned about their figures should take heed. Much the same could be said of the meat lasagne (315 rubles, $9.40) — packed with taste and perfect if you’re looking for a very hearty meal, but to be treated with caution if you just want a snack. 
Caution didn’t prevail at our table, however, as we also ordered a Tuscany pizza (299 rubles, $9). Again, it was perhaps a tad heavy for some tastes but entirely adequate – a summary that is fitting for Parmezanoff in general.

TITLE: Faberge Museum Due to Open in Baden-Baden
PUBLISHER: Bloomberg
TEXT: MOSCOW — Alexander Ivanov sits at his desk in Moscow, giving his first interview about the world’s only museum dedicated to the Russian Imperial jeweler Faberge.
The collector had originally planned to show his treasure trove of Russian art in the country’s capital and now reveals that it will open instead on May 9 in the German spa town of Baden-Baden. Ivanov, 46, says he’s a patriot and only changed his mind because of the high cost of building and Russian bureaucracy. He says his 3,000-piece collection is worth about $1.5 billion.
“The inaugural exhibition in Baden-Baden will feature the best works from the collection,” said Ivanov, 46, wearing a suit without a tie. “There will only be masterpieces.”
Other plans for a Faberge museum in Russia have stalled, leaving Ivanov able to beat both the State Hermitage Museum and billionaire Viktor Vekselberg.
Faberge was the official supplier to the Russian Imperial court from 1885 to 1917. The company’s artworks became popular with Western collectors, led by Malcolm Forbes, in the 1960s. As Russian billionaires appeared on the market earlier this decade, prices reached records.
The soft-spoken Ivanov calculates that his museum building cost about 17 million euros ($22 million) to buy and renovate, including a 1 million euro security system.
He is best known for owning a 1902 Faberge egg made as an engagement gift to Baron Edouard de Rothschild. Ivanov bought it at Christie’s International in London in 2007 and believes that it is Faberge’s “finest egg ever.” It has a clock and a diamond-set cockerel that pops up every hour and flaps its wings. The egg will be in the new museum’s first show.
Other items include a rare silver decanter in the form of a rabbit and what Ivanov believes is the last Imperial Egg, made of Karelian birch with gold and diamonds for Easter 1917. Czar Nicholas II was deposed before he could give it to his mother.
When Ivanov first bought the Karelian egg, some experts resisted because its existence wasn’t previously known. Ivanov now has a convincing group of documents that his researchers found in the Russian state archives proving that the egg is genuine. It has been shown at a number of major international exhibitions and is now officially accepted by scholars, he said.
Ivanov said he chose Baden-Baden, near Germany’s western border, because it is “close to France, a resort for the rich, and historically it has always been the most popular resort for Russians.” The local government has also been supportive, he said.
“We’re very happy to welcome another cultural highlight to Baden-Baden,” said Wolfgang Gerstner, Lord Mayor of Baden- Baden, in a telephone interview. “We hope there will be many visitors to prove to the investor that his investment is not misplaced.”
In the 19th century, prominent Russian visitors to Baden-Baden included writer Fyodor Dostoevsky, whose outings to local casinos left him penniless and inspired him to write his novel “The Gambler.” Members of the Russian Imperial family were also frequent visitors.
In 2005, the Hermitage announced plans to open a Faberge Museum to display its collection of about 90 items as well as visiting exhibitions. That project has stalled because of insufficient funding.
Vekselberg has plans for museums in St. Petersburg and Moscow that would rotate private collections including his Faberge holdings that include nine Imperial Eggs. Those plans were announced in 2006 and have also been delayed.
Ivanov’s Moscow office, a short walk from the Kremlin, is full of Orthodox icons, Faberge works and a Rubens painting, “The Holy Family,” bought at Christie’s International. Photos of President Dmitry Medvedev and Orthodox Patriarch Kirill hang on the wall.
Ivanov, who was born in Pskov, close to the Estonian border, said he began collecting Faberge works in the late 1980s after graduating in law from Moscow State University and “making a fortune” from importing computers.
His private collection is called the Russian National Museum, though it doesn’t have its own space. Selected items have been shown at exhibitions in Moscow and abroad. Some of the collection can be seen at http://www.rnm.ru.
The 19th-century, four-story museum has bulletproof cases, video cameras that react to odd behavior, sensors that monitor sound and an alarm system that shuts down the entire building like a fortress, Ivanov said.
Each year, about 8 million people visit Baden-Baden, which has a population of 55,000, according to the mayor. Approximately 815,000 of the annual visitors stay the night, of which 35,000 are Russians. Ivanov said Russian businessmen own a number of hotels in the town.
Entrance to the Faberge Museum will cost 20 euros. Ivanov’s most pessimistic forecast is 200,000 visitors a year, and he’s planning for up to 500,000.
“Even at 100,000 visitors a year, we would cover costs,” said Ivanov, “The collection needs to make money and to pay its way.”
The House of Faberge was founded in St. Petersburg in 1842 by Gustav Faberge. Under his son, Peter Carl Faberge, the company established its court links. It also catered to the growing demand for luxury items from the country’s newly rich as the economy boomed in the two decades before World War I.

TITLE: Robbers Steal $300k In Front of Cop
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — In a dramatic daytime heist, robbers armed with hammers attacked a group of cash couriers and made off with more than $300,000 — in full view of a traffic cop who refused to intervene because he was clearing the road for an official’s motorcade. 
The Investigative Committee said Tuesday that it had opened a criminal case in connection with the attack, which happened Monday afternoon outside the Tchaikovsky Concert Hall on Triumfalnaya Ploshchad, near the Mayakovskaya metro station. 
The assailants ambushed two couriers near their vehicle outside the concert hall at about 4:30 p.m. Monday, bashing them over the head with hammers, the Investigative Committee said in a statement. 
One of the couriers shot one of the robbers, who was subsequently arrested, the committee said. 
The other attackers grabbed 11 million rubles ($331,500) and fled the scene in a Mazda 6 getaway car, investigators said. At least three assailants took part in the heist. 
Police found the hammers at the crime scene, an Investigative Committee spokeswoman said. 
The suspect shot in the robbery was a 28-year-old man, a police source told Interfax. 
The two couriers worked for a private security firm called Vityaz-Soyuz, said the Investigative Committee, which has classified the attack as attempted murder and armed robbery, punishable by up to 15 years in prison. Two passers-by were also injured in the robbery, Rossiya television reported. 
Highlighting the brazenness of the attack, the robbery went down in full view of the staff and cameras of national state-owned media. 
The Interfax news agency’s office looks out onto Triumfalnaya Ploshchad, home to the iconic Soviet-era monument of poet Vladimir Mayakovsky, giving Interfax journalists a clear view of the robbery. 
Rossiya television had a fixed camera on the square and managed to capture footage of the robbery. 
Video stills posted on the channel’s Vesti news web site show a man — presumably one of the victims — in dark clothes lying on the ground between rows of parked cars who later has his head wrapped in bandages. 
Interfax posted photographs on its web site of a man dressed in a cream-colored sweater and blue jeans being loaded into an ambulance on a stretcher. 
Citing witnesses and its own staff, Interfax also reported that a traffic policeman was on duty just 20 meters from the getaway car on Tverskaya Ulitsa but that he refused to intervene. The traffic police officer was asked to help, but after walking over to look at the injured man he returned to his patrol car to issue a traffic offense. While he was writing up the fine, the robbers sprinted to the car and escaped, Interfax said. 
A senior traffic police officer later said the unit made no attempt to apprehend the suspects as they were preparing for an official’s motorcade. “We were providing support so that a VIP could drive past, and the officers didn’t have time for a shooting,” the officer said, Interfax reported Tuesday.

TITLE: Space Capsule Touches Down Safely With U.S. Billionaire
PUBLISHER: Combined Reports
TEXT: MOSCOW — A Soyuz space capsule carrying U.S. billionaire Charles Simonyi and a Russian-American crew touched down safely in Kazakhstan on Wednesday.
Charred black from its re-entry into the atmosphere, the capsule — also carrying U.S. astronaut Michael Fincke and Russian flight engineer Yury Lonchakov — landed northeast of the Kazakh industrial city of Dzhezkazgan as planned at about 11:15 a.m., about three hours after leaving the international space station.
Wrapped in blankets to protect against the wind and squinting in the sun, the trio smiled as rescue workers opened the spaceship and helped them out of the TMA-13 craft onto the barren steppe of central Kazakhstan.
“Really nice to see you! Hello, Earth!” a smiling Fincke said as support teams checked his pulse and gave him a big green apple — a Russian tradition for returning space crews.
Simonyi’s wife of four months, Lisa Persdotter, met him at the landing, giving him a long kiss and bouncing on her toes in excitement.
The men were carried in special reclining chairs for a scheduled checkup as they acclimatized to Earth’s gravity.
Russian space officials said the touchdown was flawless.
“All the systems worked excellently. We are extremely happy about it,” Anatoly Perminov, head of the Federal Space Agency, told reporters. “You can see for yourself from how they look that all of them are feeling excellent.”
The original landing site, in northern Kazakhstan, had been changed and the landing delayed by a day after officials said the area was too swampy and hard for rescue teams to reach.
“Welcome back to Earth!” a NASA official told the crew via a live communication link broadcast on NASA television. About 200 rescue workers and doctors helped assist the crew back on Earth.
Hungarian-born Simonyi, 60, spent about two weeks in space conducting experiments, making history as the first tourist to visit the international space station twice. He paid a total of $60 million for his two space trips.
However, officials say Simonyi could be the last space tourist for the foreseeable future, because all Soyuz seats have now been booked for professional crews representing the 16 countries working on the $100 billion orbital outpost.
Kazakhstan had planned to send up its first astronaut later this year, but Perminov noted that Kazakh officials had decided to cancel the plans. He told reporters that either a regular astronaut or possibly another paying tourist could next travel aboard a Russian craft.
Russia’s Soyuz and Progress spacecraft have long been the workhorses of the international efforts to build the space station. The craft will take on even greater importance after 2010, when NASA is expected to retire the space shuttles.
On Tuesday, the Federal Space Agency awarded an 800 million ruble ($23 million) contract to design a next-generation spaceship to replace the 40-year-old Soyuz, setting the ground for a potential new space race with the United States.

(Reuters, AP)

TITLE: Firms May Foot Cost of Flying Foreigners Back Home
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Companies that lay off foreign employees should pay for their trip back to their home countries, a senior federal prosecutor said Tuesday.
The proposal by Alexei Zhafyarov, a deputy department head with the Prosecutor General’s Office, appears to be primarily aimed at companies employing manual laborers from neighboring former Soviet republics. 
He did not, however, make a distinction between such employees and foreigners working white-collar jobs in Russia.
“If you break a contract with a [foreign] worker ahead of schedule, be so good as to pay for their trip out of Russia,” Zhafyarov said, Itar-Tass reported.
The proposal would help combat an increasing number of crimes committed by illegal immigrants, Zhafyarov said. Because of the current economic crisis, many illegal immigrants who have come to Russia seeking work often have no money to return home, he said. 
Illegal immigrants must “not be put into a situation when they have no choice but to commit a crime,” Zhafyarov said.
Illegal immigrants committed 50,000 crimes in Russia last year, up from 47,000 in 2007, he said.

TITLE: N. Korean Parliament Re-elects Kim Jong-il
AUTHOR: By Jack Kim
PUBLISHER: Reuters
TEXT: SEOUL — North Korea re-elected Kim Jong-il as its supreme military leader at its newly seated parliament on Thursday, marking his return to center stage as the country celebrates what it calls a triumphant satellite launch.
The move came as the UN Security Council failed to agree on an action in response to Sunday’s launch, widely seen as a disguised missile test, prompting U.S. Senator John McCain to press China, the North’s key ally, to get tough on its reclusive, impoverished neighbor.
Kim, 67, has been conspicuously absent from major public events after a suspected stroke in August, which raised questions about his iron grip over Asia’s only communist dynasty and whether anyone was waiting in the wings to succeed him.
“The First Session of the 12th Supreme People’s Assembly of the DPRK held here elected leader Kim Jong-il chairman of the DPRK National Defense Commission,” its KCNA news agency said, using the official name Democratic People’s Republic of Korea.
The chairman of the National Defense Commission is the seat of power in North Korea, which named state founder and Kim’s father Kim Il-sung eternal president after his death in 1994.
The North lauded the launch as resulting from the state’s guiding ideals of self-reliance and military-first saying the rocket shot showed “the powerful strength of the DPRK, which has rushed forward like the wind towards the rich and powerful country.”
Analysts said the carefully choreographed session of the rubber-stamp Supreme People’s Assembly would give Kim a mandate that cements his legacy of building a military-first state and could pave the way to transfer power to one of his three sons.
It was unclear whether Kim has appeared at the meeting as he customarily does at the opening session of parliament.
North Korea’s propaganda machine has carefully managed the re-emergence of Kim from his illness through reports about his tours to factories and military bases, while only showing still photographs of the visits.
It prepared the public for his full return by saying he was on hand Sunday to watch the long-range rocket launch. On Tuesday, it showed video footage of the launch on state TV followed by a documentary on Kim where the public saw recent video images of him for the first time since his suspected stroke.

TITLE: Ivanovic Double Helps Chelsea Stun Liverpool
AUTHOR: By Steve Griffiths
TEXT: 
LIVERPOOL — Chelsea moved within touching distance of the Champions League semi-finals thanks to a stunning 3-1 victory over Liverpool in Wednesday’s quarter-final first leg at Anfield.
Guus Hiddink’s side produced a breathtaking response after falling behind to an early Fernando Torres strike as Branislav Ivanovic buried two headers before Didier Drogba added a third goal.
Liverpool had beaten Chelsea twice in the league this season, but that was during Luiz Felipe Scolari’s underwhelming reign.
The Blues have been back to their imposing best since Hiddink replaced Scolari and they swept Liverpool aside to leave next Tuesday’s return at Stamford Bridge looking a formality. A last four clash against Barcelona, big winners over Bayern Munich on Wednesday, is also now on the cards.
Rafa Benitez’s team had only themselves to blame. Steven Gerrard was completely out of touch and woeful marking gifted Ivanovic his goals. Now the Reds, for so long Chelsea’s bogey team in Europe, look odds on to crash out against the Londoners for the second successive season.
Hiddink said: “If you score in an away Champions League tie it is a tremendous blow to the opposition and that is what we aimed for. We wanted to neutralize Gerrard and make them sweat in defence.
“But it is only half-time in the tie. If we go to the second game thinking it will be easy that would be wrong. We have seen in the past what Liverpool are capable of.”
Benitez added: “We scored the first goal and were doing well. But they had some chances and we conceded from a corner when we could have done better.
“After that we were not in control. The second game will be very difficult now because we have to score three goals.”
Benitez’s pre-match barbs towards Manchester United manager Sir Alex Ferguson suggested he was more concerned about the Premier League title race than success in Europe.
But Anfield on a big European occasion stirs the soul like no other venue and, with Liverpool seeking revenge for last season’s semi-final exit against Chelsea, it was no surprise to see Benitez’s side make a ferocious start.
From Liverpool’s first attack, Ivanovic almost deflected Dirk Kuyt’s powerful strike into his own goal.
If that was a fortunate escape for Chelsea, they had no such luck in the sixth minute as Liverpool sliced through their defence in clinical fashion.
Kuyt’s back-heel picked out Alvaro Arbeloa on the right and his cross caught the Blues flat-footed. Torres took full advantage to steer a perfectly placed shot past Petr Cech.
Anfield went wild but, with the celebrations still in full swing, Drogba had a golden opportunity to silence the Kop. Fabio Aurelio’s error allowed Salomon Kalou to pick out Drogba, but with just Jose Reina to beat his shot was too close to the Liverpool keeper.
These English powerhouses were meeting for the fifth successive season in Europe and, while previous ties have often been stifled by both sides’ caution, this was an open encounter.
Torres was terrifying the visitors’ defence with his pace and movement. He pulled clear of Frank Lampard before curling a long-range strike just over.
Drogba’s first miss had been bad enough but the Ivory Coast star was guilty of an even worse effort in the 30th minute. When Michael Ballack whipped in a low cross, Drogba had Reina’s goal at his mercy, yet he lashed over from no more than 10 yards.
After such a frenetic opening, Liverpool was beginning to falter and Chelsea, sensing blood, equalised in the 39th minute when Ivanovic met Florent Malouda’s corner with an emphatic header that flashed past Reina for his first Chelsea goal.
Drogba threatened again when he overpowered Martin Skrtel to reach Lampard’s pass and slid his shot past Reina, only for Jamie Carragher to make a superb goal-line clearance.
Then John Terry, one booking away from a suspension, rashly challenged Reina for a ball the keeper was clearly going to win. Both players fell to the turf but when Terry got up Danish referee Claus Bo Larsen was waiting with a yellow card that rules him out of the return leg.
Just as the momentum appeared to have swung in Liverpool’s favour, Chelsea took the lead in the 62nd minute from another set-piece.
When Lampard curled over a corner, Liverpool, marking zonally rather than man-to-man, allowed Ivanovic a clear run at the ball. Once again he made them pay with a bullet header past Reina.
Liverpool was stunned and there was worse to come. Five minutes later Ballack played in Malouda, whose low cross was turned in by Drogba from close-range.

TITLE: Pirates Take U.S. Citizen Hostage
AUTHOR: By Abdi Sheikh and Joanne Allen
PUBLISHER: Reuters
TEXT: MOGADISHU/WASHINGTON — A U.S. Navy destroyer arrived off Somalia on Thursday to apply pressure for the release of an American ship captain taken hostage in the first seizure of U.S. citizens by increasingly bold pirates.
Gunmen briefly hijacked the 17,000-tonne Maersk Alabama freighter on Wednesday, but the 20 American crew retook control after a confrontation far out in the Indian Ocean, where pirates have captured five other vessels in a week.
The four gang members were holding the captain on the ship’s lifeboat and the crew were trying to negotiate his release.
“Our main concern remains the safe return of the captain and our latest communications with the ship indicate that he is unharmed,” said B.J. Talley, spokesman for the Danish-owned freighter’s operator, Maersk Line Ltd.
The U.S. warship Bainbridge arrived on the scene before dawn on Thursday, the company added. The Federal Bureau of Investigation (FBI) said it had been called in to assist, and its negotiators were “fully engaged.”
U.S. Secretary of State Hillary Clinton said the lifeboat now appeared to be out of fuel.
“We are surrounded by warships and don’t have time to talk,” one of four pirates on the lifeboat told Reuters by satellite phone. “Please pray for us.”
The attack was the latest in a sharp escalation in piracy in the waters off lawless Somalia, where heavily armed sea gangs hijacked dozens of vessels last year, took hundreds of sailors hostage and extracted millions of dollars in ransoms.
The long-running phenomenon has disrupted shipping in the strategic Gulf of Aden and busy Indian Ocean waterways, increased insurance costs and made some firms send their cargoes round South Africa instead of the Suez Canal.
The upsurge in attacks makes a mockery of an unprecedented international naval effort against the pirates, including ships from Europe, the United States, China, Japan and others.
Pirates say they are undeterred by the foreign flotilla and will simply move operations away from the patrols.
“The solution to the problem, as ever, is the political situation in Somalia,” said analyst Jim Wilson, of Lloyds Register-Fairplay. Somalia has had no effective central control for 18 years.
“Until there is peace on land there will be piracy at sea.”
Maersk said its crew regained control of the Alabama on Wednesday when the pirates left the huge ship with one hostage, the ship’s captain, Richard Phillips. The rest of the crew were unhurt.
The ship was carrying thousands of tons of food aid destined for Somalia and Uganda from Djibouti to Mombasa, Kenya, when it was attacked about 300 miles off Somalia.
“We are just trying to offer them whatever we can, food, but it is not working too good,” second mate Ken Quinn told CNN of efforts to secure their captain’s release. He said the four pirates sank their own boat after they boarded the Alabama.
Then the captain talked the gunmen into the ship’s lifeboat with him. The crew overpowered one of the pirates and sought to swap him for the captain, Quinn told CNN.
“We kept him for 12 hours. We tied him up,” Quinn said. They freed their captive, he added, but the exchange did not work.
In Haradheere port, a pirate stronghold, an associate of the gang said the gunmen were armed and ready to defend themselves.
“Our friends are still holding the captain but they cannot move, they are afraid of the warships,” he told Reuters. “We want a ransom and of course the captain is our shield. The warships might not destroy the boat as long as he is on board.”

TITLE: Safina Keen To Prove Quality 
As No. 1
PUBLISHER: Agence France Presse
TEXT: PARIS — Russia’s Dinara Safina, who will replace Serena Williams as world number one later this month despite never having won a Grand Slam title, insists she will prove she belongs on top of the rankings.
The 22-year-old Safina, whose brother Marat was the men’s top player in the world in 2000, will replace Williams, who has been on top for 11 consecutive weeks, and 72 in all, on April 20.
“There’s no question that while I am very proud of my results over the past year, I would have liked to reach this achievement in a different manner,” said Safina, the runner-up to the American at the Australian Open this year.
“I hope to prove to everyone over the coming months that I merit the honour of being world number one.
“It’s a great honour to reach the number one ranking and it is a dream that every girl who has ever wanted to play professional tennis shares.
“It is even extra special for me since my brother Marat was able to reach the number one ranking and I am happy to share this achievement with him.”
Safina is only the second Russian woman, along with Maria Sharapova, to hold the top spot.
Her elevation was announced just after Williams suffered a shock 6-4, 3-6, 6-1 first-round defeat against world number 95 Klara Zakopalova of the Czech Republic in Marbella.
Safina becomes the 19th world number one following Chris Evert, Evonne Goolagong-Cawley, Martina Navratilova, Tracy Austin, Serena Williams, Venus Williams, Justine Henin, Kim Clijsters, Jennifer Capriati, Arantxa Sanchez-Vicario, Amelie Mauresmo, Monica Seles, Steffi Graf, Martina Hingis, Lindsay Davenport, Sharapova, Ana Ivanovic and Jelena Jankovic.
Over the past year, Safina has won four WTA Tour singles titles - Montreal, Los Angeles, Berlin and Tokyo and was runner-up five times, including the Australian Open and Roland Garros.
She was also a silver medallist at the Beijing Olympics.
Her move up the rankings will represent the first time a brother and sister have been number one in the world.
Meanwhile, Williams slumped to defeat in Marbella in her first claycourt outing of the season handing her Czech opponent a first win over a top 10 player since 2003.
Williams had been beaten in the final of the Miami hardcourt event on Sunday when her performance against Victoria Azarenka was severely hampered by a thigh injury which required heavy strapping.
“I am very sad about my defeat,” said Williams who again was wearing a bandage on her left leg.
“I wanted to play my best but due to my injury I couldn’t perform better.”
The 26-year-old Zakopalova, a top 30 player in 2006, had only won two of her matches on tour in 2009 before this week and she went into Wednesday’s encounter having lost both of her previous meetings with Williams, failing to win a set.

TITLE: U.K. Counterterroism Chief Quick Resigns Following Security Blunder
AUTHOR: By Nancy Zuckerbrod
PUBLISHER: The Associated Press
TEXT: LONDON – Britain’s top counterterrorism officer resigned from London’s Metropolitan Police on Thursday — one day after a security blunder forced police to move up a major operation in northern England.
Assistant Commissioner Bob Quick, who was the senior police counterterrorism officer in Britain was photographed Wednesday clutching confidential documents that could clearly be seen as he arrived for a meeting with Prime Minister Gordon Brown at 10 Downing St. The documents showed details of the planned anti-terror operation in northern England.
In anti-terror raids later on Wednesday, police arrested a dozen men.
Police said they were not aware of any instances in which the image of Quick holding the documents was made public before the raids were carried out Wednesday evening. After the raids took place, television news reports showed images of Quick holding them. Thursday morning newspapers also carried the photos, with at least one major daily showing a close-up image of the documents in which details of the operation were legible.
“I have today offered my resignation in the knowledge that my action could have compromised a major counterterrorism operation,” Quick said in a statement released by the department.
“I deeply regret the disruption caused to colleagues undertaking the operation and remain grateful for the way in which they adapted quickly and professionally to a revised time scale.”
Commissioner Paul Stephenson, who heads the Metropolitan Police, said Quick “accepted that he made a serious error and that has led to his resignation this morning.”
Assistant Commissioner John Yates is replacing Quick as head of counterterrorism, Police Commissioner Paul Stephenson said.
Yates has been involved in several prominent cases, including an investigation into whether honors such as knighthoods and seats in Britain’s House of Lords were being given in exchange for Labor Party donations. At the end of the investigation in 2007, which included questioning Tony Blair who was prime minister at the time, prosecutors did not charge anyone.
Opposition lawmaker Chris Grayling said Quick did the right thing by resigning.
“It is unacceptable for Britain’s most senior anti-terrorist officer to have had such an extraordinary lapse in judgment. To put the security of his police officers and the operation at risk has rendered his position untenable,” Grayling said.
Quick previously was criticized for his role in the decision to arrest opposition lawmaker Damian Green last year during an inquiry into alleged leaks of sensitive information from the Home Office. Conservative lawmakers were upset about the arrest of Green, who was never charged, and the search of his office in Parliament.
Home Secretary Jacqui Smith, whose department is in charge of policing, said Quick felt his position was untenable after his mistake on Wednesday, although she said the anti-terror sweep was successful.
Hundreds of officers across northwest England were involved in the anti-terror raids Wednesday evening.

TITLE: Ancelloti to Take Over at Chelsea Following Hiddink
PUBLISHER: Agence France Presse
TEXT: LONDON — AC Milan coach Carlo Ancelotti has agreed to take over at Chelsea next season to replace interim coach Guus Hiddink, the Sun newspaper reported on Thursday.
The report said Ancelotti has agreed to a contract worth 5.8 million pounds ($8.5 million) a season to move into the hotseat at Stamford Bridge.
Chelsea, who took a giant step towards the Champions League semi-finals by beating Liverpool 3-1 in Wednesday’s quarter-final first leg at Anfield, earmarked the Italian as their first choice after Hiddink insisted he wanted to resume coaching the Russian national team on a full-time basis at the end of the season.
Chelsea’s form has improved since Hiddink took over in Scolari.

TITLE: Death Toll Rises to 279 in Italian Earthquake
AUTHOR: By Silvia Aloisi and Antonella Cinelli
PUBLISHER: Reuters
TEXT: L’AQUILA, Italy — Rescuers pulled more corpses on Thursday from the rubble of Italy’s worst earthquake in three decades, braving strong aftershocks in the dimming hope of finding survivors.
The death toll from Monday’s quake in the central region of Abruzzo climbed to 279 after rescuers recovered the latest bodies, including two students buried beneath a dormitory hall.
“I am here out of duty, emotion and also gratitude for everything that you are doing,” President Giorgio Napolitano told rescue workers after visiting a makeshift mortuary.
“With the presence of the president, we felt the embrace of all of Italy,” said Cesare Cardozo, priest of the village of Onna, where 39 of some 250 inhabitants were killed.
Tremors shook the medieval mountain city of L’Aquila and nearby villages throughout the morning, further damaging buildings and prompting authorities to cordon off the city center, which bore the brunt of the 6.3 magnitude quake.
The aftershocks terrified many survivors, 17,000 of whom spent another cold night in tent villages after being made homeless. Rescuers said the chances of finding anyone alive under the devastated city were decreasing every hour.
“Let’s hope these aftershocks stop because it’s very difficult for our rescue workers and for survivors as well,” said Angelo Cutaia, a civil protection official at a camp holding 2,000 people in the outskirts of L’Aquila. “People here won’t feel safe if the earth keeps trembling every night.”
Many of the victims of the quake were students at L’Aquila university. At least 16 children, including a five-month-old baby, were killed.
The governor of the Abruzzo region, Gianni Chiodi, said around 10 people were still missing beneath the rubble.
Rescue workers haven’t found any survivors for more than 30 hours. The last person rescued, a 20-year-old woman, was dug out from the ruins of a four-storey building late on Tuesday.
In rare cases, people have survived more than a week buried under rubble following earthquakes. The government has said searches will continue at least until Easter.