SOURCE: The St. Petersburg Times
DATE: Issue #1465 (27), Tuesday, April 14, 2009
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TITLE: Baghdad To Examine Pre-War Contracts
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Talks between Prime Minister Vladimir Putin and Iraqi counterpart Nouri al-Maliki on Friday produced a breakthrough agreement that would allow Russian oil companies such as LUKoil to revive prewar contracts in the Gulf state.
A triumphant Energy Minister Sergei Shmatko told reporters just minutes after the meeting that Iraqi authorities had agreed to begin talks on renewing prewar deals, a major departure from Baghdad’s previous stance that Russian companies would have to compete for the fields on an equal footing.
“It’s not a minor sensation, it’s major news,” Shmatko said. “A goal has been set to restore the contracts that were concluded before the war. … I believe it’s very serious progress.”
LUKoil, Russia’s second-biggest oil producer, and mid-sized oil company Tatneft would be some of the biggest winners if Iraq agreed to honor contracts that were signed before a U.S.-led invasion toppled Saddam Hussein in 2003. Violence in the country has subsided recently, raising the chances of developing the world’s third largest oil reserves.
A working group will convene in the near future to “revive” the contracts, Shmatko said. 
“We are now gaining quite a good foothold in this rich and promising country,” he said.
As for future oil deals, the Iraqi officials said Russian companies would bid on equal terms with their foreign rivals, Shmatko said.
Cabinet spokesman Dmitry Peskov whisked Shmatko away after his brief statement, preventing further questions.
In February 2008, Finance Minister Alexei Kudrin said Russia would write off the bulk of Iraq’s $12.9 billion debt, although the concession did not help LUKoil win back rights to develop the large West Qurna-2 field. 
Baghdad has renegotiated and signed a Hussein-era deal with the Chinese National Petroleum Company but said at the time that such decisions would be on a case-by-case basis.
An Iraq standing by the old deals would be a consolation prize for Russia, which vehemently opposed the war. The Iraqi government, confident of its ability to maintain security, won an agreement in November committing the United States to withdraw its troops by the end of 2011.
“The positive dynamics, of course, make for growing trust in Iraq as a promising international partner,” Putin said at a briefing after the talks, referring to the planned troop withdrawal and improving security conditions. 
The business part of the talks, Putin said, focused on oil and gas cooperation, where the countries enjoy “very solid, positive experience.” 
Russia and Iraq are also looking to renew trade in Russian military hardware, Putin said. He said he accepted an invitation to visit Iraq without saying when the trip might take place.
Al-Maliki said his country was grateful for past business cooperation and was looking forward to re-establishing ties. 
“Iraq remembers well Russian companies that had helped us in different areas, including the oil and gas industry. … We are sure that Russian companies can be and must be our important partners at the current stage as well,” he said, standing alongside Putin at the briefing.
On Saturday, al-Maliki and his ministers met with Russian business leaders to encourage them to invest in his country. His government has already approved Rosneft, the country’s largest oil producer, Gazprom Neft, the oil arm of Gazprom, LUKoil and Tatneft to bid for projects.
LUKoil is seeking to reinstate its 1997 contract to develop the West Qurna-2 field under a production sharing agreement. LUKoil said it could not start work on the contract because of the international sanctions to punish Iraq for its attack on Kuwait in 1991, a delay that prompted Hussein to tear up the agreement in 2002.
Vagit Alekperov, LUKoil’s chief, met al-Maliki during the visit and said Saturday that the talks were fruitful. The company is ready to alter the West Qurna-2 contract, which initially required a $4 billion investment, in order to comply with current Iraqi legislation, Alekperov said. LUKoil has said it will split its interest in West Qurna-2 with 20 percent shareholder ConocoPhillips, giving the U.S. producer 17.5 percent in the project.
Tatneft had also made some progress in Iraq that it would like to capitalize on. Three months before the U.S.-led invasion, the Tatarstan-based producer signed a memorandum of understanding to develop Block 9 in Iraq’s western desert. Tatneft is interested in resuming negotiations to develop this and another block in the area, deputy CEO Khamit Kaveyev told the Iraqi delegation Saturday. The company will bid for Block 9, he said.
During his short appearance Friday, Shmatko also said Iraq made a number of “tempting” proposals for Russian companies to rebuild and upgrade the country’s electricity facilities.

TITLE: Barter Makes Major Revival During Crisis
AUTHOR: By Nadia Popova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A construction company recently rang up the Chelyabinsk Tractor Plant to order a bulldozer. But there was a catch: The company lacked the 3.5 million rubles ($106,000) needed to buy the vehicle.
No problem, said Stepan Sergeyev, head of the tractor plant’s logistics department.
The Chelyabinsk Tractor Plant is now finalizing the sale of the bulldozer in exchange for 3.5 million rubles worth of sweetened condensed milk canned in the southern Urals.
“The construction company that wants the vehicle doesn’t have the cash, but it was paid in milk for modernizing a dairy in Bashkortostan,” Sergeyev said.
“When we get the milk, we will exchange it for other goods that our plant cafeteria needs, and we might try to sell some as well,” he said, speaking by telephone from the Urals city of Chelyabinsk.
Milk is not the only thing that the Chelyabinsk Tractor Plant has accepted as payment as customers and suppliers run short of cash because of the web of nonpayments brought on by the financial crisis. The plant has accepted sheet metal, cars and office space — and then placed them up for barter or sold them for cash.
Barter, which was widespread during the chaotic 1990s, is making a roaring comeback as insolvent companies struggle to stay afloat. Unrestricted by law but criticized by Western investors, barter is estimated to now account for 2 percent of sales, a miniscule amount but still worth billions of rubles. Small and mid-sized companies usually cut the deals through barter consultants or special web sites, while bigger metals and machinery producers and construction firms tend to act on their own. 
“The worse the situation is in the economy, the better it is for us,” said Anatoly Abadzhan, head of Rusbarter, a barter company in Rostov-on-Don.
The Chelyabinsk Tractor Plant now collects 20 percent of all payments in kind and pays 10 percent of its bills to its 2,000 suppliers with goods like cable and nickel. Since October, the plant has bartered for goods worth more than 130 million rubles ($3.9 million), the equivalent of 37 bulldozers. 
“We decided to be flexible and agreed to accept goods after our sales fell dramatically in November,” Sergeyev said. “Now we allow our customers to pay with whatever they can.
“We mainly exchange with steel suppliers, construction companies and our consumers, who pay for our bulldozers and tractors with things like cars, apartments and sometimes food,” he said.
The plant created a special barter department late last year when the problems with liquidity and poor sales began. Now barter is the norm. 
“In one deal in February, we took sheet metal for a third of a 60 billion-ruble payment for 20 bulldozers,” Sergeyev said. 
“We are now repairing a bulldozer for Ufaleynickel. The company will pay us with nickel, which we will use to make our payments to the Zlatoust Metals Plant. The plant, in return, will supply us with alloy steel.” 
The plant has set up a section on its web site where it lists about two dozen goods for sale, including cables and office space. 
Barter trade accounted for up to 90 percent of industrial sales in the 1990s, when economic turmoil following the Soviet collapse prompted companies to pay employees and creditors with the products they produced.
Many of those who worked with the barter deals then have been hired by barter consultancies today, said Abadzhan, 28, of Rusbarter. 
Abadzhan said he has invested 500,000 euros in the company and planned to get a return on his investment by June. 
“We are actively expanding and advertising,” Abadzhan said by telephone from Rostov-on-Don. “You can make a real business in this now.”Rusbarter’s web site says the company has goods worth 10.4 billion rubles on its database for trade. Abadzhan said he has overseen about 15 deals worth some 15 million rubles since January, and his company has collected a net profit of 153,000 rubles. 
While the level of profits might make it seem unrealistic to recoup investment costs by June, Abadzhan said demand was growing, and he planned to expand through partnerships in other regions.
“We have estimated that you will begin to collect a profit one month after opening an office,” Rusbarter’s web site says, inviting people in other regions to set up barter offices. 
Abadzhan said a regional office could make a net profit of 1 million rubles a month within 90 days of opening.
Barter accounts for only 2 percent of sales in Russian industry, Abadzhan estimated. “But it’s worth billions of rubles,” he said.
Abadzhan has competition. In Moscow, German Sterligov, one of Russia’s first millionaires and a former commodity trader, opened the Anti-Crisis Settlement and Accounting Center to facilitate barter deals in March and now oversees a network of 49 branches around the country. Sterligov said he has invested 15 million euros into the company, but he declined to put a figure on profits or the number of deals clinched by his company.
Representatives of Sterligov’s company in Kursk, Voronezh, Yekaterinburg and Chelyabinsk said their main job so far has been to explain to local businesses how their barter system works.
Demand for barter trade is growing in the regions.
Bosko Plus, a barter broker in western Siberia, has seen an eightfold jump in clients since November, said its director, Sergei Basyakin, speaking by telephone from Tomsk.
Basyakin, who had been bartering since 1999, refused to disclose the financial results of his company. 
He said he was currently working on a complicated deal to exchange corn for electric generators and motors.
“You can’t keep grain for long, while machinery can be left in the warehouse for ages, until the end of the crisis,” Basyakin said.
Among the goods available for barter on Bosko Plus’ web site are eight air conditioners, 400 female dress suits, one diesel generator and a pelmeni-making machine. 
Vadim Morozov, 32, head of the Moscow-based company Region-Trade, looks for potential clients by browsing through about 10 web sites specializing in barter, including www.smartbarter.ru and www.online-barter.ru.
“I am now trying to find someone who would like to trade sugar or corn for fuel oil,” he said. “My clients, fuel oil distributors, want money, but cash is easier to get by selling sugar than oil products.”
Barter is particularly widespread in construction, which is one of the sectors hit hardest by the crisis. The First General Contractor Company, a St. Petersburg-based firm specializing in building industrial infrastructure, saw more than 60 percent of its sales of 30 million rubles ($909,000) in the first quarter paid in apartments. “They paid us with apartments that they got from constructors,” company CEO Dmitry Smorodin said.
Smorodin recently received three apartments in place of 11.5 million rubles owned by concrete producers, transportation companies and some other clients of his firm. 
Smorodin said clients started to pay him with apartments in January, and he has been selling them through a real estate agency.
“You could go to court if a business partner refuses to pay, but it would take a year, and there would be no guarantee that you would actually get the money, or you might go bankrupt first,” Smorodin said. “For us, it is important to get at least something.”

TITLE: Georgian Protesters Move to Oust President Saakashvili
AUTHOR: By Matt Robinson and Margarita Antidze
PUBLISHER: Reuters
TEXT: TBILISI — Georgian opposition leaders said on Monday they would move daily street protests to President Mikheil Saakashvili’s office as they fought to maintain momentum in a campaign to force his resignation.
Some 20,000 people demonstrated on Monday outside parliament in the former Soviet republic, the fifth day of their protest.
The opposition leaders said they would keep up continuous protests until Saakashvili quit over his record on democracy and last year’s disastrous war with Russia.
“That way he will hear our voices much more loudly,” said Kakha Kukava, one of more than a dozen opposition leaders taking part in the campaign.
Turnout dipped over the weekend and there were signs that some opposition leaders were looking to hold talks with the president on finding a way out of the stand-off.
Some 60,000 people rallied at the start of the campaign on Thursday, followed by 20,000 on Friday, blocking Tbilisi’s central avenue and the main roads running past the president’s office and the public broadcaster.
Critics accuse Saakashvili, who came to power on the back of the 2003 Rose Revolution, of monopolising power and exerting pressure on the judiciary and the media.
Last year’s war, when Russia crushed a Georgian assault on breakaway South Ossetia, has emboldened opponents who say the 41-year-old leader has made too many mistakes to remain in power until 2013. 
But analysts doubt the opposition can remain united or muster the numbers over a sustained period to force him out. Despite the defection of some senior allies and repeated cabinet reshuffles since the war, Saakashvili’s position appears to remain strong.
The West, which receives oil via Georgia from the Caspian Sea, is watching the situation closely. In November 2007, police fired tear gas and rubber bullets to disperse the last peaceful mass demonstrations against Saakashvili.
Diplomats say a protracted stand-off risks sparking unrest.
The European Union’s special envoy for the South Caucasus, Peter Semneby, has been trying to broker a dialogue but opposition leaders have sent mixed signals about their readiness to talk.
“People like Semneby have been talking to them,” a senior government source told Reuters. “There are stirrings, but they haven’t settled on anything yet.”

TITLE: Lavrov Demands Proof Of Dubai Murder of Yamadayev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Foreign Minister Sergei Lavrov said Friday that he wanted to see documentary evidence from Dubai police that Chechen commander Sulim Yamadayev was assassinated there last month.
Lavrov, breaking nearly two weeks of government silence about Yamadayev’s death, said Moscow is waiting to receive “any kind of official report” from the United Arab Emirates that Yamadayev was killed, RIA-Novosti reported.
“We are counting on our partners in the emirates to do this quickly,” Lavrov told reporters on a flight from Turkmenistan to Moscow.
Yamadayev’s brother Isa denied last week that Sulim was killed in the attack and said he was recovering in the hospital.
Dubai police have said Yamadayev, a one-time ally of Chechen President Ramzan Kadyrov who had a falling out with him, was shot dead with a gold-plated Makarov pistol on March 28 in the underground parking lot of a luxury residential complex where he lived. Police have accused State Duma Deputy Adam Delimkhanov, Kadyrov’s first cousin, of masterminding the attack. Delimkhanov and Kadyrov have denied the allegation.
Dubai police, meanwhile, said they believe that the Russian-made murder weapon was smuggled into Dubai by a Russian diplomat, Dubai’s National newspaper reported Saturday.
“When a diplomat comes in the country, do you search him? Of course not, and in this case, this is how they smuggled the gun into the country,” an unidentified senior police investigator told the newspaper.
Dubai police chief Dhahi Khalfan Tamim said Thursday that two suspects in custody, a Tajik and an Iranian, have provided police with more than just “ordinary confessions” about the slaying, the National reported. He did not elaborate.
Tamim reiterated an earlier call for Russian authorities to hand over Delimkhanov.
“Delimkhanov is officially wanted by Interpol, and we will do our best to get him. Today he is in power, but tomorrow he will be out of it, and the request for his arrest will still be listed. He can end this situation by turning himself in to the Russian authorities for investigation,” Tamim said.

TITLE: Top Cop Defends Official Motorcades
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Traffic jams near the Kremlin are a daily headache for many Moscow motorists who are forced to idle while police wave through motorcades for senior officials.
But the country’s top road safety official defended the practice of blocking traffic to make way for officials on Friday, saying security concerns come first.
“Of course, when we stop traffic even for a few minutes, we get huge traffic jams. But probably, the security of those accompanied by police is more important than this,” Viktor Kiryanov, head of the Interior Ministry’s road safety department, told the State Duma in a question-and-answer session, Interfax reported.
Kiryanov was responding to a complaint about traffic from a Communist deputy, Interfax said.
Traffic jams are particularly severe on Kutuzovsky Prospekt, the thoroughfare that officials take to the city center from their homes on the elite Rublyovskoye Shosse. Drivers are regularly forced to stop on side streets as the officials’ motorcades speed by.
The road is jammed for an “hour or so” in the morning and for a “couple of hours” in the evening, said Leonid Olshansky, vice president of the Movement of Russian Motorists. 
The problem of roadblocks is most noticeable in Moscow because of the large number of government officials, Olshansky said. 
In fact, only about 15 people in Russia are entitled to this privilege, he said. “According to Russian law, we only block roads for a very small number of people: the president, the prime minister, the head of the constitutional court and so on,” Olshansky said.
Olshansky accused “unscrupulous traffic police officers” of taking bribes to block off traffic for individuals not entitled to such a service.
A city traffic police officer came under fire last week when Interfax reported that he failed to step in when armed robbers attacked two cash couriers Monday in central Moscow and allowed the criminals to escape in a car. 
Interfax quoted a traffic policeman as saying, “We were providing support so that a VIP could drive past, and the officers didn’t have time for a shooting.” 
Moscow traffic police chief Sergei Kazantsev later denied the report, telling Moskovsky Komsomolets that no escorted motorcades drove past that day. 
“Our officer was the first to run to the crime scene, he correctly assessed the situation [and] radioed information on the criminals who escaped,” he said.

TITLE: Krishnas Go Free, Activists Arrested
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: A small oppositional rally in defense of the constitutional right to gather on Nevsky Prospekt, St. Petersburg’s main street, lasted for just 14 seconds before the police took the two protesters, who were standing still holding posters, put them into a police van and took them to a police precinct. 
It was the third Sunday in a row that activists of the United Civil Front (OGF) and Yabloko Democratic Party had attempted to hold a protest, which the authorities have repeatedly refused to authorize, referring to the fact that metro stations and adjacent territories require “special security measures,” as well as to the “high density and intensity of passenger traffic” in the area.
But activists claim the practice of banning protests is unlawful, and that the policemen who stop such events are responsible for preventing a public event — a crime punishable by up to three years in prison under the Russian criminal code. Activists complain that the police indiscriminately detain protesters, who on Sunday were met by a dozen policemen, including a cameraman and two police vehicles, as soon as they raise their posters.
On Sunday, Polina Strongina of Youth Yabloko and Denis Vasilyev of OGF raised posters with quotes from the Russian Constitution (“Man, his rights and freedoms are the supreme value. The recognition, observance and protection of the rights and freedoms of man and citizen shall be the obligation of the State”) and the Law on the Police (“The activities of the police are built in compliance with the principles of respect of the rights and freedoms of man and citizen, lawfulness, humanism and openness”) only to be detained moments later. 
The protesters, who were released three hours later, say the bans on the rallies and their detentions are “unlawful.” 
“Federal Law 54 on rallies and gatherings demands organizers to notify [the authorities],” Vasilyev said by phone on Monday.
“They have the right to suggest an alternative route, but only in the event that they have grounds to do so — for instance, if we want to gather at a construction site under an operating crane, or if there’s an emergency situation. But their explanations are all far fetched.”
Vasilyev said City Hall is wrong in thinking that if it doesn’t authorize an event, it cannot be held.
The main law in Russia, he said, is the constitution, which states that “The rights and freedoms of man and citizen may be limited by the federal law only to such an extent to which it is necessary for the protection of the fundamental principles of the constitutional system, morality, health, the rights and lawful interests of other people, for ensuring defense of the country and security of the state.”
“Our rally doesn’t threaten the security of the state — and until it is proved otherwise, our rights cannot be curtailed,” Vasilyev said.
Although the two activists detained on Sunday were treated “fairly properly,” according to Vasilyev, he said that he and Yabloko’s Arseny Gundarev were beaten by the police on April 5.
“We were detained by the OMON [special-task police force] that time, and Arseny Gundarev was beaten a bit in the bus, while I was beaten at the police precinct,” he said.
According to Vasilyev, he and Gundarev were repeatedly insulted by the police in the police bus, while Gundarev was hit several times in the stomach. Later at a police precinct, Vasilyev was taken by two policemen into a room with a sign reading “Duty Investigator” on the door, where he was also hit several times in the stomach and had his sweater torn for refusing to remove either his shoe laces or his shoes.
He said the protests would be continued in the near future.
On Sunday, five minutes after the protesters were taken away to the police precinct, about 50 Hari Krishnas walked in a formation down Nevsky Prospekt to a site in front of Gostiny Dvor, near to that of the thwarted rally, where they danced and chanted using an amplifier for 12 minutes. One police officer was present on the scene and said that the Hare Krishna event was authorized.
Alexander Vashurin, an officer of the St. Petersburg Government’s Law, Public Order and Security Committee, declined to comment when contacted on Monday. Another officer from the committee who did not identify himself suggested that the Hari Krishna event was perhaps authorized by the local district authorities, rather than City Hall.

TITLE: In Brief
TEXT: <b>Karate Killer</b>
MOSCOW (Reuters) — A karate expert has been charged with beating to death a 61-year-old woman and her 25-year-old son, whom he accused of infecting his wife with lice, a state investigator said Friday.
The drunken 26-year-old man burst into a neighboring room in his hostel Tuesday in Tatarstan and used karate moves to kill the pair, investigator Eduard Abdullin said. “He literally beat them to death with his hands and feet,” he said by phone from Kazan. The suspect “blamed them for infecting his wife and the entire floor with lice.” 
He told Vesti-24 that neighbors said the family “drank constantly and were covered in lice. ... No one liked them and no one talked to them.” 
The 58-year-old widower was badly beaten but survived. The suspect, who studied karate for seven years, faces life in prison if convicted.

<b>Extremist Trial</b>
ST. PETERSBURG (SPT) — Defense attorneys in the case against a St. Petersburg group of extremists expect a long and drawn-out trial, said a member of the defense team Monday.
The trial against members of the Borovikov-Voyevodin gang, an extreme nationalist group accused of a series of attacks and murders, will likely continue for several more months, as only the first charges have been examined, defense lawyer Nikolai Kalmykov told Interfax. The jury began hearing the trial on Feb. 27, following the conclusion of a criminal investigation at the end of 2008, Interfax reported.
Thirteen group members are standing trial for charges of inciting hatred, murder and unlawful possession of firearms, according to Andrei Lavrenko, the director of the Investigative Committee of the St. Petersburg Prosecutor General’s Office. The charges stem from 13 incidents, including eight attacks and seven murders. Defendants are accused of killing students from Senegal and North Korea and a citizen of Uzbekistan, as well as ethnographer and human-rights activist Nikolai Girenko.
The gang is named after its founders, Dmitry Borovikov and Alexei Voyevodin, who created the group in 2003 to plan and carry out extremist crimes. Members of the group were arrested in a police raid in May 2006, during which Borovikov was killed.

<b>Duran Duran Gig</b>
ST. PETERSBURG (SPT) — Legendary pop group Duran Duran will perform on Palace Square in June as part of the 13th St. Petersburg International Economic Forum.
According to event organizer PMI, the 1980s English pop superstars will play on June 4, Interfax reported.  The concert is timed to coincide with the opening of the annual International Economic Forum, which will bring together political and business leaders to discuss economic issues.

<b>2 Bodies in Gulf</b>
ST. PETERSBURG (SPT) — Rescue divers recovered the bodies of two snowmobile riders in the Gulf of Finland on Sunday, the Northwest Regional Search and Rescue Team press service reported Monday.
The two riders drowned Saturday while riding on the ice in the gulf, Interfax reported. Their bodies were discovered near the Pervomaisky fort on Sunday afternoon. 
The riders were first reported missing Sunday morning, leading the Ministry of Emergency Situations to dispatch two teams of rescuers, a total of seven divers.

<b>Taxi Killer</b>
ST. PETERSBURG (SPT) — A passenger in the Leningrad Oblast killed a taxi driver after he couldn’t pay his trip fare, a government investigation concluded Monday. 
The incident occurred on Nov. 30 of last year in the village of Karino near the Estonian border, according to a press release from the Investigative Committee of the Prosecutor General’s Office. 
An argument broke out when the passenger couldn’t pay the fare, during which the passenger fatally stabbed the driver in the neck with a knife, Interfax reported. The driver died on the spot.
The case has been sent to the public prosecutor of Slantsy, the region in which Karino is located.

TITLE: Officials’ Wives Are Main Breadwinners
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — As top officials this week declared their spouses’ income and property for the first time and, taking a cue from President Dmitry Medvedev, made the declarations public, it emerged that some of them — on paper, at least — are not the main breadwinners in their families. 
The Kremlin on Thursday released the tax declarations of presidential administration officials, following earlier disclosures of income and property declared by several senior officials, including Medvedev and Prime Minister Vladimir Putin. 
Vladislav Surkov, the first deputy head of the presidential administration, who is often described as the Kremlin’s “gray cardinal,” earned 3.89 million rubles ($115,000) in 2008 but owns no property, according to his declaration published on the Kremlin’s web site. 
Meanwhile, Surkov’s wife, Natalya Dubovitskaya, earned 16.8 million rubles ($497,000) and owns two plots of land, a 761-square-meter house, an apartment and a 176-square-meter house for security guards, according to his declaration. 
Another senior official who earned far less than his wife is Medvedev’s aide Arkady Dvorkovich, who reported earnings last year of 3.12 million rubles ($92,000) and owns no car. His wife, Zumrud Rustamova, earned 27.2 million rubles ($808,000) and owns a Honda and a Lexus. 
Rustamova is deputy general director of metals firm Polimetall. 
The wife of Deputy Prime Minister Dmitry Kozak, Natalya Kvachyova, earned 1.4 million rubles ($43,000) more than her husband last year. She also owns three apartments and an Audi. 
A decree that Medvedev signed last month orders bureaucrats — beginning next year — to declare not only their income and assets but also those of their spouses and underage children, ostensibly to crack down on civil servants who hide suspiciously large personal fortunes by signing them over to spouses. Medvedev said last month that although the new law does not come into effect until next year, he would begin this year and release his declaration to the public. This week he made good on the promise, revealing an income of 4.1 million rubles ($124,000) in 2008 and seeing a wave of top officials follow suit. 
No senior official was so greatly out-earned by his wife as First Deputy Prime Minister Igor Shuvalov, who declared 4.7 million rubles in earnings last year. His wife, Olga Shuvalova, earned 364.7 million rubles ($10.8 million), according to his declaration. The couple jointly owns a Jaguar, four Mercedes, a Zil and a Ford camper van. In a 2002 interview, Shuvalova told Profil magazine that she was trained as a lawyer but not working at her husband’s request. In 2007, national media reported that she had a diamond ring worth more than $100,000 stolen in a beauty salon. 
Other top officials’ wives earned next to nothing last year but had significant property interests, according to their tax declarations. 
Finance Minister Alexei Kudrin declared an income of 5.6 million rubles ($168,000) and listed no property other than an Audi 6. His wife, Irina Tintyakova, earned 223,400 rubles ($6,600) but owns two plots of land, a Subaru, a house and an apartment, according to Kudrin’s declaration. His son Artyom, born in 1998, also owns an apartment. 
Apart from Kudrin, other politicians reported that their underage children owned or rented apartments. 
Energy Minister Sergei Shmatko declared 14 million rubles ($417,000) in earnings and one apartment. He reported that his two underage children rent another apartment at a discount rate from the Moscow city government. 
The Shmatko family also owns a Porsche Cayenne, a Toyota Prado and a Toyota Land Cruiser. 
The highest earner in the presidential administration was Medvedev’s former university classmate and Kremlin audit department head Konstantin Chuichenko, who declared 368,000 ($10.9 million). Chuichenko’s wife, Kristina Tikhonova, earned 92 million rubles ($2.7 million) and owns a 900-square-meter house. The top earner in the Cabinet was Natural Resources Minister Yury Trutnev, who declared earnings of almost 370 million rubles ($11 million) and listed among his property a Porsche Cayenne, a Porsche 911 and a Volkswagen Touareg.

TITLE: Billionaires Reluctant to Give Up Toys
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — For most of the decade, the country’s billionaires have spent hundreds of millions of dollars on boats, jets, expensive art and the occasional football team. But, despite strained bank accounts and public outrage, the tycoons have been loath to part with their expensive trinkets, choosing instead to hunker down and wait for better days. 
To be sure, these are not happy days for the country’s superrich. In Forbes magazine’s latest ranking of the world’s wealthiest people, Russia’s billionaires had an estimated collective loss of $369 billion last year, and two-thirds fell from the list altogether. Moscow, which had 74 billionaires a year ago, more than any other city in the world, now finds itself with only 27. 
Even those who have managed to hang on have not had an easy time of it. Oleg Deripaska, owner of RusAl, the world’s largest aluminum company, has seen his net worth tumble from $40 billion to about $4 billion, and he ceded his spot as Russia’s richest man to investor Mikhail Prokhorov, who himself is worth half of what he was in 2008. 
The country’s tabloids, trade unions and politicians have expressed outrage that the billionaires have been so reluctant to part with personal assets, especially as jobs and wages are being cut. 
Deripaska’s companies, for example, have received billions of dollars in government bailout money, but the metals magnate has not been in any rush to sell the Queen K, his 73-meter, $117 million megayacht. He did, however, agree to cede stakes in builder Hochtief and auto-parts maker Magna International to banks last year to help him hang on to his core assets. 
Another boat lover, Roman Abramovich, has sold none of his four yachts, which have been collectively dubbed the “Abramovich navy,” and he has said work continues on the fifth: the 168-meter, $290 million Eclipse, which reportedly will have a missile detection system and a detachable submarine to carry the billionaire to safety in case of attack. 
Abramovich, who owns a large stake in the Evraz Group steelmaker that got an $800 million loan from state bank VEB to refinance short-term debt in December, has also said he remains fully committed to what is perhaps his best-known toy: the Chelsea football club, which he bought in 2003 for 140 million pounds sterling (now $205 million). 
And while Portsmouth owner Alexander Gaidamak, the son of Russian-Israeli billionaire Arkady Gaidamak, said he was in the market to sell his football team if the price were right, other football club owners are doing more than holding on. Metalloinvest owner Alisher Usmanov has been quietly building up the 15 percent stake he bought in Arsenal last year and became the team’s largest shareholder in February, with a 25 percent blocking stake. 
Uzbek-born billionaire Lev Leviev, whose Africa Israel Investments holding company has been badly hurt by its exposure to the Russian and U.S. real estate markets, did sell his private Bombardier jet — reportedly for about $50 million, or $10 million less than he paid for it. A company representative, while not confirming the price, said the sale had less to do with liquidity than market timing. 
“The market for private jets is falling, and [Leviev] simply wanted to sell it so he could buy it back at a better price,” said company spokesperson Natalya Ivanova. 
She said the price being quoted in the media was “quite small” when considering the scale of the company’s global operations. “The shopping center we’re building on Tverskaya Ulitsa alone costs $250 million, and that’s just one of many projects,” she said. 
Leviev is not the only billionaire you might now spot in an airport VIP lounge. Alexander Lebedev, a banking and property mogul who also owns about 30 percent of Aeroflot, sold his private jet and an Italian villa before buying London’s Evening Standard newspaper in January for a nominal fee. 
While the English daily could hardly be considered a toy, the maintenance costs aren’t unlike that of a yacht or plane. The Times has reported that the paper loses one million pounds sterling per month. 
Some of Russia’s wealthiest had also been showing a growing taste for more highbrow pursuits, turning Moscow into a hot spot for the world’s top auction houses. 
When he wasn’t busy with his fleet or football club last year, Abramovich was brushing up on his knowledge of contemporary art — the tycoon was widely reported to be the mystery buyer behind a $120 million splurge at Sotheby’s and Christie’s in New York last May. The new interest could have been motivated by girlfriend Daria Zhukova, who in September opened the Garage Center for Contemporary Culture in Moscow, Russia’s largest exhibition of contemporary art. 
In September, a Sotheby’s exhibition of work by British artist Damien Hirst drew several big-name buyers from Russia and the CIS, including property magnate Vladimir Doronin and Kazakh mining tycoon Alexander Machkevich, who acquired two diamond cabinets, three butterfly paintings and a gold spot canvas for a total of 11.7 million pounds sterling, The Economist reported. Another buyer at the auction was Ukrainian steel mogul Viktor Pinchuk, whose eponymous art center in Kiev is scheduled to show a Hirst retrospective, featuring 100 works by the artist next month. 
Sotheby’s declined to comment on the auction. 
Despite the strain on their businesses and bank accounts, art collectors are not exactly stampeding for the exits, said Maria Baibakova, a curator at the Krasny Oktyabr Chocolate Factory gallery, who also collects art with her father, Oleg, president of Prokhorov’s Onexim-Development. 
Baibakova, who estimates that there are about 30 “serious collectors” in the country, said a recent 25 percent drop in the art market was caused by a dearth of buyers, rather than a rush to sell. 
“Most collectors do not collect as a business, and art is not their primary asset, so they do not need to sell into a low market,” she said. 
But while the country’s elite are not selling their toys, the lavish purchases of the last few years have been curtailed, said Ellen Verbeek, editorial director of Robb Report Russia, a lifestyle magazine for jet-setters. 
“Nobody’s selling, and nobody’s buying,” she said. “Everyone is just trying to spend less. [Thriftiness] is even becoming fashionable, although nobody would ever have imagined that six months ago.” 
Perhaps in keeping with this trend, Prokhorov in February denied a report in The London Times that he backed out of a deal to buy the world’s most expensive property, a French Riviera mansion that reportedly cost $633 million, leaving his lawyers to seek the return of a 39 million euro deposit. 
Prokhorov’s representatives have repeatedly said he will not invest in France until the government apologizes for arresting him in 2007 on suspicion of flying in a plane full of prostitutes for a party in Courchevel. 
At least one prominent businessman appears conflicted about what to do with his personal assets. 
In January, Mirax Group chairman Sergei Polonsky wrote in his LiveJournal blog that he was selling his yachts, a mansion on the Cote d’Azure and his Sungate Port Royal Hotel in Turkey and putting the money into his struggling developer, which like other big Moscow builders has been having trouble selling apartments and paying down debt. 
When contacted by The St. Petersburg Times, however, a Mirax representative said Polonsky still owned the Sungate Port Hotel and had never owned a yacht or a house on the Cote d’Azure. 
The blog post, she said, was “only a joke.”

TITLE: Space Crew Denies Food Feud
PUBLISHER: The Associated Press
TEXT: STAR CITY, Moscow Region — Russian and U.S. astronauts on Friday downplayed suggestions of disputes on the international space station over access to food and equipment.
U.S. astronaut Michael Fincke, Russian Yury Lonchakov and American space tourist Charles Simonyi made the comments to reporters two days after returning to Earth.
In a newspaper interview published just days after he blasted off for the station last month, veteran cosmonaut Gennady Padalka said squabbles on Earth over access to food, water, toilets and other facilities have hurt crews’ morale and hampered cooperation between the Russians and Americans.
Padalka told the newspaper Novaya Gazeta that new rules were put in place after Russia started charging other space agencies for the resources used by their astronauts.
On Friday, Fincke, Lonchakov and Simonyi said that if there were disputes, they were only on the ground, not in space — and not among the space travelers.
“Please don’t make a mistake. This is the best partnership that human beings have ever had. We’re building the best space station that’s ever been built. We’re going to the stars together,” Fincke told reporters at the cosmonaut training center in Star City outside of Moscow. “So let’s not let these little small things stop us from realizing this partnership we have together.”
“It’s called an international space station because people from different nationalities work there,” Lonchakov added.
“In space there are no politics,” he said. “What’s decided on Earth is decided on Earth. What we are working on in space is completely different, we work things out differently.”
This year, the station’s permanent crew will be doubled to six, and Russia will be conducting an accelerated schedule of Soyuz spacecraft launches in the coming months to add to the staff.

TITLE: Red-Faced Military Buys Israeli Drones
PUBLISHER: Combined Reports
TEXT: MOSCOW — The Defense Ministry said Friday that it had signed a contract to buy drones from Israel in the first such deal aimed at strengthening the armed forces after last year’s brief war with Georgia.
Deputy Defense Minister Vladimir Popovkin said the military has signed a contract to buy an unspecified number of pilotless drones from an Israeli company that he did not identify, RIA-Novosti and Itar-Tass reported. 
“I was in Israel and even operated one,” Popovkin said.
The deal is worth an estimated $50 million, and the Defense Ministry will buy three different types of drones from Israel’s largest defense firm, state-owned Israel Aerospace Industries, according to Russian media reports.
An Israeli defense source with knowledge of the deal said the Israel Aerospace Industries sale was the first of its kind to Russia by an Israeli firm. 
Israel Aerospace Industries officials declined to comment.
An industry source in Israel said Russian generals were impressed with the drones that Georgia bought from the Jewish state and approached the Israelis shortly after the war last August.
Popovkin said Russia had used a drone called the Tipchak toward the end of the conflict over Georgia’s separatist South Ossetia region, but it had “very many problems.”
“You could hear it flying from 100 kilometers away,” Popovkin said. 
And because of flaws in the system that is supposed to identify it to Russian forces as friendly, it was hit by both Georgian and Russian fire, he said.
“It returned all shot up,” he said.
Popovkin, who is in charge of procurement, said the Russian military has no plans to use the Israeli drones in combat. It wants to study the technology in an effort to improve its own drones, he said.
He joked that “as for the Israeli pilotless aircraft, we will work on them like the Chinese do” — a suggestion that China uses military technology that it acquires from other nations to improve its own capabilities.
Georgia used Israeli-made drones before and during the five-day war, in which Russian and South Ossetian forces routed Georgian troops who had launched an offensive in the breakaway region.
Israel’s Haaretz daily reported Friday that the deal for the drones went ahead only after Israel received clear signals from Russia that it had no intention of selling S-300 anti-aircraft missile systems to Iran.
Asked if the sale was connected to the S-300, the Israeli defense source agreed that there was a link but gave no further details.
Prime Minister Vladimir Putin has said that budget cuts this year connected to the financial crisis will not affect planned purchases of new weapons for the armed forces. 

(AP, Reuters)

TITLE: Hotels File Retaliatory Lawsuit Against Local FAS
AUTHOR: By Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: The hotels facing a fine by the Federal Antimonopoly Service (FAS) for price fixing have taken the case to court, which could result in a delay in the fines being issued.
West Bridge Hotel company, which owns the Novotel Saint Petersburg Center, and the company Moika 22 which owns the building of the Kempinski Moika 22 hotel opened a case last Tuesday against the St. Petersburg FAS at the Arbitration court of St. Petersburg and the Leningrad Oblast. They are contesting the written statement issued to them at the beginning of February informing them of the unlawfulness of agreed actions aimed at fixing or maintaining prices during state and city events. On March 20, the Taleon company that owns Taleon Imperial Hotel launched a similar case, which is due to open on Thursday.
The FAS suspects 11 hotels of conspiring to fix prices and violating the law on competition, after the antimonopoly body established that during the St. Petersburg Economic Forum (June 6 to 8 last year), the hotels raised room prices by 80 to 100 percent. The investigation was opened at the request of St. Petersburg Governor Valentina Matviyenko. The hotels investigated were the Grand Hotel Europe, Taleon Imperial Hotel, Topaz, Kempinski Moika 22, Corinthia Nevskij Palace, Radisson SAS St. Petersburg, Novotel, Park Inn Pribaltiiskaya, Park Inn Pulkovskaya, Ambassador and Marco Polo. On Feb. 4, the FAS issued them with the warning and is conducting an administrative investigation as a result of which the hotels could face a fine. The Administrative Violations Code stipulates fines from one percent to 15 percent of the profit gained by fixing prices.
The fines have not yet been set, but it is only a matter of time, Oleg Kolomiichenko, head of the FAS in St. Petersburg, told Vedomosti on Thursday. He said that the fines would probably be set at 7.5 percent of the profit gained. If hotels are prepared to take heed of the written notice, the fine may be reduced, he said.
The lawsuits were opened in response to the statement issued, representatives at Taleon and the Moika 22 said on condition of anonymity. The legal department of the West Bridge Hotel company declined to comment.
One of the interim measures taken as a result of the lawsuits will be a delay in issuing the fines, said Kolomiichenko. By launching the cases contesting the statement of the FAS, the hotels are halting the FAS’s action, agreed a lawyer representing the interests of one of the hotels that has not launched a lawsuit.
“The hotels have the right to contest the statement of the FAS if they consider that it violates their rights, for three months from the date they received the statement,” said Igor Gushchev, a partner at Duvernois Legal law firm. Administrative investigations usually last for one month, but can be extended for a second month, he said. A decision on imposing the fines could be made based upon the results of the investigation, he added.
Hotels are undergoing a difficult period. This year, demand has dropped by 20 to 30 percent compared to last year as a result of the economic crisis, and occupancy in the low season dropped to as low as 25 percent. According to Roman Lvov, a representative of the developer Caspian, profits in the hotel business are half of what they were and margins do not exceed 10 percent.
The organizing committee of the St. Petersburg Economic Forum recommends 18 hotels to guests of the event. The list includes some of the hotels featured on the list of the FAS.
Prices for the period of this year’s forum (June 4 to 6) have not yet been set, said Yulia Pashkovskaya, a manager at the Grand Hotel Europe.

TITLE: Business Lobbyist Says Ruble Must Be Stabilized
TEXT: MOSCOW (Bloomberg) — Russia’s anti-crisis package for business will have more success should the ruble be kept steady within a trading band of 38 to 41 against its dollar-euro basket, the head of the country’s biggest business lobby said.
 “The results of the anti-crisis measures will be much better if the ruble is stable and predictable,” Alexander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, said in an interview in Moscow on Monday. “A stable ruble is better, radical fluctuations are good only for speculators.”
After sliding 34 percent against the dollar from August until the end of January, the ruble has since gained 7.7 percent after the central bank pledged to end its “gradual devaluation” unless oil dropped to $30 a barrel. Bank Rossii has been buying foreign currency to keep the current account in balance and to prevent the ruble from strengthening too far, which may make imports more competitive than domestic goods. 
Many Russian “companies, banks and citizens made a lot of money because of speculation” when the ruble was depreciating in December and January, said Shokhin, 57, a former deputy prime minister who sits on the boards of oil producers Lukoil and TNK-BP.
The ruble was 38.2972 against the basket on Monday. The basket, which is made up of about 55 percent dollars and the rest euros, is used by policy makers to limit currency swings that hurt exporters.
Keeping the ruble within a 38 to 41 basket corridor would be “better for companies as it’s better than fluctuations,” Shokhin said. The central bank’s ruble policy is directly related to the oil price so most Russian companies are monitoring that closely, he said.
Urals crude, Russia’s chief oil export blend, gained 1.5 percent to $52.17 a barrel last week.

TITLE: Co-Op Merger to Form Giant
PUBLISHER: Reuters
TEXT: MOSCOW — A national network of consumer cooperatives said Friday that it planned to merge its shops into a new giant company, and state-controlled banks will participate, industry sources said.
The move comes as many retailers are facing a decline in consumer spending and heavy debt repayments.
Analysts say the crisis provides a possibility for consolidation of the highly fragmented market, with the top 10 players controlling about 10 percent.
The network of 50,000 branches, known as TsentroSoyuz, had turnover of 141 billion rubles ($4.2 billion) last year, lagging only X5 Retail Group and Magnit.
“Yes, a united retail network under the COOP brand will be created on the basis of TsentroSoyuz,” Sergei Leonov, general director of the new company, said Friday. He declined to provide details of the project.

TITLE: Stocks Rally Opens Way  To Foreign Bond Sales
AUTHOR: By Courtney Weaver
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A six-week rally in equity markets and an uptick in investor confidence could make now the right time for cash-strapped but highly rated firms to issue new debt abroad.
After testing the foreign bond market in early April with the sale of 500 million Swiss francs ($432 million) in bonds, Gazprom plans to take the plunge this week into dollar-denominated debt. 
Gazprom is said to be looking toward a eurobond issue to help finance a $4 billion buyback of a 20 percent stake in Gazprom Neft from Italy’s Eni.
Media have reported that the gas behemoth will issue $2 billion worth of 10-year eurobonds, which will have a three-year put option and a 9.25 percent to 9.5 percent coupon. The notes will be the first dollar-denominated bonds placed by a Russian company since Transneft sold $1.6 billion worth of five- and 10-year bonds last summer. And the timing couldn’t be better.
Global equity markets are riding a six-week rally, and investor confidence has seen a slight boost. In Switzerland, Gazprom’s original bond issue of 400 million Swiss francs was oversubscribed, prompting the company to sell an additional 100 million francs worth of notes.
Based on Gazprom’s success, Rosneft, LUKoil and VTB, who seek sums that the atrophied ruble bond market cannot provide, could follow suit with foreign placements. But the window may not last long.
Though the appetite for Russian debt may be approaching levels not seen since October, the demand can only last as long as the equity rally does.
“A prudent manager would assume that there aren’t going to be many windows [for eurobond sales] like this for the next 12 months,” MDM-Bank analyst Mikhail Galkin said. “The window is only open to a very limited number of high-grade companies and for an unclear period of time. It could shut tomorrow; it could shut in two weeks; it could last a month,” he said.
Since the start of the crisis, at least eight Russian companies have defaulted or have had to restructure outstanding dollar-denominated bonds. Galkin said he expected less than 10 percent of the outstanding Russian corporate eurobonds to be affected by defaults and restructuring.
The local bond market is another story. Since 2008, roughly one-fifth of third-tier ruble bond issues have defaulted, said Marina Vlasenko, a senior credit analyst at Commerzbank.
Within a year, 40 percent to 50 percent of Russia’s third-tier ruble bonds will have failed, Galkin said.
The spectacular default rates can be tied to loose market regulation, which allowed bonds to be traded on equity markets and agricultural holdings to issue debt for investment plans that far outstripped revenues, Vlasenko said.
So far, 50 bond issues amounting to $590 million have defaulted, she said.
Nevertheless, ruble bonds could be the only route for loss-making nonexporters to finance their operating expenses, and state-run banks flush with bailout money may be the only buyers.

TITLE: Putin, Tymoshenko To Discuss Cooperation
PUBLISHER: Reuters
TEXT: KIEV — The Ukrainian government said in a statement Friday that Prime Ministers Yulia Tymoshenko and Vladimir Putin would meet later this month, although Russia said a date had not yet been decided. 
Both sides said the prime ministers spoke by phone Thursday, and the Ukrainian statement said an intergovernmental committee on economic cooperation would meet after April 20. Putin spokesman Dmitry Peskov said a final date for the Putin-Tymoshenko meeting had “yet to be agreed.”
On a visit to central Ukraine, Tymoshenko said differences over how to modernize Ukraine’s gas transport system had been resolved during the phone call, Interfax reported.
Tymoshenko and Putin had been due to meet in Moscow at the beginning of April, but Russia put off the talks after Moscow strongly objected to a Ukrainian plan to modernize its gas transport system with the European Union.
Moscow said it had not been consulted on the plan, though Tymoshenko said Russia was welcome to take part in any modernization program.
Speaking in Dnipropetrovsk, Tymoshenko was quoted as saying: “We have made it clear that we are partners in modernizing the gas transport system. We believe the issue has been solved and we can carry on working.”
Russia angrily denounced a conference in Brussels last month devoted to modernizing the Ukrainian system.

TITLE: GDF Suez Starts Talks With Gazprom Over Nord Stream
PUBLISHER: Reuters
TEXT: PARIS — French utility GDF Suez said Friday that it was in talks with Gazprom over taking part in the Nord Stream gas pipeline project.
GDF Suez chairman and CEO Gerard Mestrallet told reporters that getting a stake in the pipeline was part of its drive to secure and strengthen its gas supplies.
“We have started talks with Gazprom. … We are ready to take part in this project, which directly links Germany and Russia via the Baltic Sea, under the condition that we secure additional gas supplies,” Mestrallet said.
Gazprom said at the end of 2008 that the French energy group had expressed interest in taking a minority stake in the pipeline, which is due to start at the end of 2011.
“We have gone from virtual interest to agreement with our partners, to making practical sense of it,” Stanislav Tsygankov, head of Gazprom’s external relations department, told reporters in Moscow.
GDF Suez was unsuccessful in becoming the sixth partner for the rival Nabucco gas pipeline, which aims to pump Caspian gas to Europe.
Russian gas comprised 14 percent of the group’s long-term supplies at the end of 2008.
GDF Suez plans to buy up to 2.5 billion cubic meters of gas per year from Nord Stream, which could cost up to 8 billion euros ($10.5 billion) and would run 1,200 kilometers from Vyborg, Russia, to Greifswald, Germany.
The Nord Stream consortium, majority-owned by Gazprom, is building the pipeline with Germany’s BASF and E.On and has plans to build two parallel gas pipelines of the same length. Dutch state pipeline operator Gasunie has joined the project, taking a 9 percent stake from the German partners.

TITLE: Gazprom Faces More Charges
PUBLISHER: Combined Reports
TEXT: MOSCOW — Turkmenistan accused a unit of Gazprom on Friday of violating its gas supply agreement, sharpening its rhetoric in a dispute after a pipeline explosion halted supplies to Russia.
Flows from Central Asia’s top gas producer to Russia stopped on Thursday following the blast, which Turkmenistan said had happened because Gazprom Export cut imports without sufficient warning, which led to the rupture.
“This accident happened due to a unilateral and egregious violation by Russian company Gazprom Export of agreements and rules of natural gas purchases,” the Turkmen Foreign Ministry said in a statement Friday.
Gazprom, Russia’s gas export monopoly, declined to comment on the Turkmen accusations, but the company has said the accident will not affect customers in Europe.
Analysts said Gazprom would benefit from a halt of Turkmen gas flows at a time when it is suffering from a drop in gas demand in Europe. Turkmenistan was exporting up to 70 million to 80 million cubic meters of gas per day via the link before the blast cut shipments completely.
Kommersant reported Friday that Russia began a “gas war” with Turkmenistan after Ashgabat called an international tender to build a pipeline, hurting relations as Gazprom expected the contract. 
The tender for the East-West link from the biggest gas field in the Commonwealth of Independent States came as a surprise for Russia, which held high-level energy talks with Turkmen officials last month. 
Turkmen President Gurbanguly Berdymukhammedov met with President Dmitry Medvedev and Prime Minister Vladimir Putin, as well as top energy officials, on March 25 for talks that failed to generate any significant agreements.
Sergei Prikhodko, Medvedev’s top foreign policy aide, said at the time that the presidents discussed the importance of reliable gas deliveries but postponed until their next meeting the signing of an accord on the East-West gas pipeline, which could cost $1 billion to build.
The link is widely seen as a potential challenge to the Western-backed Nabucco pipeline, which seeks to bring gas from Central Asia to Europe, bypassing Russia.
As diplomacy intensified over the dispute, Foreign Minister Sergei Lavrov flew to Ashgabat on Friday to attend a scheduled ministerial conference.
In his opening remarks at the conference, Berdymukhammedov made no direct mention of the matter, instead focusing on broad energy security issues.
“It is principally important to ensure the reliability, stability and security of [energy supplies],” he said as Lavrov and other foreign ministers from ex-Soviet states listened.
Berdymukhammedov said Turkmenistan would hold an international conference to discuss energy security this month. He and Lavrov shook hands afterward and looked cordial but made no other remarks.
The pipeline blast occurred on Turkmenistan’s border with Uzbekistan, but the extent of the damage was unclear. It was the second accident in the former Soviet Union this month, and analysts said aging infrastructure may be to blame, a claim that Turkmenistan denied. 
“Turkmenistan has modernized a significant part of its energy sector since independence,” the Foreign Ministry said. 

(Reuters, SPT, Bloomberg)

TITLE: In Brief
TEXT: <b>Gazprom to Set Fines</b>
KIEV (Bloomberg) — Gazprom may seek as much as $530 million in fines from Ukraine for failing to import contracted volumes of natural gas in March, Kommersant-Ukraine reported, citing an unidentified Gazprom official.
Russia’s gas export monopoly notified NAK Naftogaz Ukrainy that it intended to levy fines at the end of last week, Kommersant said. In March, Naftogaz bought 0.95 billion cubic meters of the fuel compared with 2 billion cubic meters envisaged by a January contract, according to Kommersant.

<b>RusAl May Get Breather</b>
MOSCOW (Bloomberg) — Foreign lenders, including BNP Paribas, ING Groep and Calyon, may give United Co. RusAl more time for debt talks with Alfa Bank after the previous deadline expired, Vedomosti reported, citing unidentified people familiar with the situation.
Disputes with Alfa threatened an agreement on $7.4 billion of RusAl’s debt, the newspaper said. Alfa rejected a standstill agreement on RusAl’s debt that other lenders agreed to and is seeking full repayment of about $90 million it’s owed by RusAl, Vedomosti said. Foreign lenders oppose full repayment being made to Alfa, the newspaper said.

<b>Norilsk Drops Sale Idea</b>
MOSCOW (Bloomberg) — GMK Norilsk Nickel suspended a plan to sell treasury shares it holds to its unit OGK-3, Vedomosti reported, citing unidentified people familiar with the situation.
Norilsk, the world’s biggest nickel producer, may sell the shares at a later date, the newspaper said. Norilsk last year spent 48.4 billion rubles ($1.44 billion) to buy back the shares, which amount to about four percent of the company’s stock.

<b>Moscow Declines Offer</b>
MOSCOW (Bloomberg) — Moscow’s government has no plans to sell its stake in Sibir Energy to TNK-BP, which is seeking to buy 100 percent of the oil producer, Kommersant reported.
The administration held talks with shareholder Igor Kesaev and decided that holding on to their shares was a “strategic undertaking,” the newspaper said, citing Vladimir Silkin, head of the Moscow government’s property department.
The Moscow government holds 18 percent of Sibir, while Kesayev has 23.5 percent, the newspaper said.

<b>Rosneft, Transneft Agree</b>
MOSCOW (Bloomberg) — Rosneft, Russia’s largest oil producer, signed an agreement to supply Transneft with crude so that Russia’s state-run pipeline operator can send fuel to China in return for loans.
The contract has been signed, Igor Dyomin, a spokesman for Moscow-based Transneft, said by mobile phone on Monday, without giving further details.
Rosneft and Transneft agreed in February to build a pipeline to China and supply the country with 15 million metric tons of oil a year for 20 years. In return, China Development Bank agreed to lend Rosneft with $15 billion and Transneft with $10 billion. An intergovernmental agreement still needs to be signed to allow the Russian companies to begin receiving funds.
<b>Factoring Rights</b>
MOSCOW (SPT) — All commercial enterprises in Russia now have the right to engage in factoring, the purchase of invoices from third parties and the subsequent collection of money for a profit, according to a law signed Friday by President Dmitry Medvedev.
The law expands the list of legal entities that can act as brokers in the buying of accounts receivable from companies at a commission and discounted rate, according to a copy posted on the Kremlin web site. The change comes as invoices pile up, and it may open up more financing options to cash-strapped suppliers. 

<b>KamAZ Shares Soar</b>
MOSCOW (Bloomberg) — KamAZ rose for a fifth day in Moscow after the head of Russia’s biggest truckmaker told Vedomosti that he’s seeking 12.8 billion rubles ($382 million) in state financing for new projects.
Government agencies are reviewing KamAZ’s application to Vnesheconombank, the development bank, Chief Executive Officer Sergey Kogogin told the newspaper on Monday. The funds would be for four projects, including the development of a next-generation truck from scratch, Vedomosti said.
KamAZ, based in the region of Tatarstan, rose as much as 9.8 percent. The truckmaker is worth an estimated 16.9 billion rubles. 

<b>Lukoil Owes $7 Billion</b>
MOSCOW (Bloomberg) — Lukoil, Russia’s second-biggest oil producer, has total debt of about $7 billion, Chief Executive Officer Vagit Alekperov said Monday.
Alekperov, who is also a billionaire shareholder of Lukoil, was speaking on Vesti-24, the government’s cable news channel.

<b>Shell at Sakhalin-3?</b>
MOSCOW (Bloomberg) — Gazprom is considering Royal Dutch Shell as a potential partner for the Sakhalin-3 energy project, said Stanislav Tsygankov, the head of the Russian company’s external relations department, RIA-Novosti reported Friday. 
As soon as Gazprom gets the license a partnership could be discussed, Tsygankov said. Shell has “good chances,” he said. 

<b>Potanin Bids for RBC</b>
MOSCOW (Bloomberg) — RBC Information Systems climbed the most in a week after a report that billionaire Vladimir Potanin offered a debt-restructuring plan for the company that rivals one made by his former partner Mikhail Prokhorov. 
Potanin’s Interros holding company offered to help restructure the debt of RBC, Vedomosti reported, citing unidentified bankers. Interros would buy new RBC shares for $90 million, which would allow the company to pay back 41 percent of its $220 million debt in cash. Another 23 percent of the debt would be converted into bonds. 

<b>For the Record</b>
Aeroflot said Friday that chief executive Vitaly Savelyev would help develop a new short-term business plan. 
(Bloomberg)

China may agree this week to lend $10 billion to Kazakhstan in return for the right to take a stake in a minority stake in oil producer Mangistaumunaigas. 
(Bloomberg)

TITLE: RZD Says It Will Cut 53,700 Jobs in 2009
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Russian Railways said Thursday that it expected a loss of 49.7 billion rubles ($1.48 billion) this year, compared with a profit of 13.4 billion rubles in 2008, and that it planned to shed 53,700 jobs. 
The state railway monopoly had a loss of 26.8 billion rubles in the first quarter as falling economic activity took a toll on its freight volumes. Russian Railways, or RZD, forecasts a loss of 14.2 billion rubles in the second quarter, a company spokeswoman told The St. Petersburg Times. 
In February, RZD chief executive Vladimir Yakunin said the company would “finish this year, at best, with zero profit, and in the worst scenario we will get losses.” In an interview with Bloomberg published last week, Yakunin said Russia was “only at the beginning” of the economic crisis. 
The company reaffirmed that it hoped to limit its falling cargo volume to 19 percent this year, even after it transported 27 percent less cargo in the first quarter, year on year. The drop in cargo turnover has been decreasing, with a 15.8 percent fall in March compared with a year earlier. In February, it fell 26 percent and in January 32 percent. 
“For now, our forecast seems justified,” senior vice president Fyodor Andreyev told reporters Thursday, Interfax reported. “We’re being hit hardest by the situation in the metals and construction sectors.” 
The Economic Development Ministry forecasts a 2.2 percent contraction of gross domestic product this year after a liquidity crisis hit the company’s banks and property developers last fall and plummeting commodities prices made large swaths of Russia’s metals and mining industry unprofitable. 
The company said many of the new job reductions would affect people retiring, joining the military or taking maternity leave. A hiring freeze was imposed in November, and the following month, RZD said it would lay off roughly 10,000 office workers out of its 1.3 million total staff. 
The company said Thursday that it employs about 1.2 million people, down from the 1.3 million figure listed on its web site. 
Unemployment has been a major concern for the government, which has retuned its anti-crisis measures to focus on social support. 
Speaking at the same news conference, Ilya Ryashchin, RZD’s planning and budget chief, said 450,000 people had been switched to shorter work shifts and that 247,600 had been required to take unpaid vacations. 
The company said in November that it planned to issue 100 billion rubles worth of state-backed infrastructure bonds, and it has been cutting back on investment, including on new wagons and rail. 
Last month, Barclays loaned RZD $500 million for financing, and VTB Group increased its credit line to the company to 80 billion rubles in February. 
On Tuesday, Moody’s Investors Service cut RZD’s debt rating to match Russia’s sovereign rating, saying it was “no longer appropriate” because of an “increasing correlation of the financial profiles of the Russian government” and state issuers.

TITLE: Alrosa Cuts Plans As Sales Slump
PUBLISHER: Reuters
TEXT: MOSCOW — Alrosa, the world’s second-largest diamond producer, said Friday that it cut its 2009 production plans by one-fifth as the global financial crisis dents demand for the gems.
Alrosa, which had expected to keep production levels unchanged this year, now counts on producing $1.87 billion worth of diamonds, down from $2.36 billion in 2008.
As a result, its net profits will shrink to 2.2 billion rubles ($65.6 million) from 3.8 billion last year, Alrosa said.
“The corrected plans are justified by a number of factors, including the sizeable drop in sales volumes on the diamond market and the changes in the ruble’s exchange rate against the dollar,” the state-controlled company said in a statement.
The ruble has lost about a quarter of its value versus the dollar in the last six months in adjustment to lower global commodity prices and a slowing domestic economy.
In recent months, Alrosa has been selling all of its output to Gokhran, the state precious metals and gems repository.
But it will need to find other buyers if it is to meet even the revised production plans — Gokhran aims to spend 45.4 billion rubles on precious metals and diamonds this year, just $1.34 billion at current rates.

TITLE: VTB Takes Over Moscow’s Cash-Strapped Dynamo
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — VTB said Friday that it was taking control of legendary Moscow football club Dynamo to help the financially strapped team repay a loan to the bank for the construction of a new stadium. 
The team had previously denied that it was having trouble meeting its debt obligations or that any ownership changes had been made, saying it was preparing to announce the terms of a new sponsorship deal with state-controlled VTB. 
Russian lenders are increasingly being forced to accept collateral — often unfinished real estate — to help recoup losses on nonperforming loans. Vedomosti reported last month that VTB took a stake of about 5 percent in developer PIK Group last fall at the request of one of its co-owners.
The bank said Friday that it would receive a stake of 75 percent minus one share in the Dynamo Management Company, which is building the new Petrovsky Park stadium. It will also receive 74 percent in the Dynamo Moscow team, making it the first Russian sports club to be taken over because of debt in the current financial crisis. 
The chairman of the team’s board of trustees, Audit Chamber head Sergei Stepashin, told reporters March 31 that he would not comment on “rumors” of a stake going to VTB, saying only that Dynamo would “meet all of its obligations.” 
The deal comes after VTB said last month that it would become Dynamo’s general sponsor, replacing billionaire Alisher Usmanov’s Metalloinvest. VTB had previously sponsored crosstown rival CSKA, the army team. Kommersant reported Saturday that a $50 million sponsorship deal would likely be announced this week.
Dynamo Stadium, one of Moscow’s oldest, was completed in 1928. The development of the surrounding Petrovsky Park area, where the club intends to build a 485,000-square-meter sports and entertainment complex, will include a hotel and underground garage.
“It’s important for us that — difficult economic conditions not withstanding — the Petrovsky Park project be completed in keeping with top global standards,” VTB president Andrei Kostin said at a signing ceremony Friday. 
VTB expects to receive a return on the investment, and the development project should pay off in five to seven years, Kostin said. “We hope to recover all the funds we have invested in these projects,” he said.
Kostin said the borrowing limit for the stadium would be 48 billion rubles ($1.4 billion), and that while VTB was the only lender, new investors could be brought in later. The bank will give the funding in two tranches, he said.
The change in ownership is not the first time that VTB has come to Dynamo’s rescue. 
In 2006, it loaned the team more than 3 billion rubles after another previous sponsor, businessman Alexei Fyodorichev, cut off financing. The next year, VTB loaned Dynamo an additional $200 million — half for management to buy Fyodorichev out of his 71 percent stake and half for the reconstruction of its dilapidated stadium.
Analysts said the move could be beneficial for both sides, with Dynamo getting its new stadium and VTB acquiring some prime real estate.
“It’s a logical step for both Dynamo and VTB,” said Konstantin Lysenko, associate director of capital markets development at CB Richard Ellis.
“The stadium was built a long time ago and badly needs repairs, which Dynamo probably couldn’t pay for if they sold 50 years worth of tickets,” said Konstantin Lysenko, associate director of capital markets development at CB Richard Ellis.
The Petrovsky Park area is “wonderful, central, with a nearby metro” and plenty of history, Lysenko said, adding that the costs of completing the stadium could be as high as $500 million. 
Dynamo was established in 1923 on the orders of Felix Dzerzhinsky, the notorious founder of the Soviet secret police, who wanted his officers in better physical shape, and the club has maintained its ties to the security services. 
Stepashin, a former prime minister, has also headed the Federal Security Service and the Interior Ministry, and Dynamo Management Company is chaired by Vladimir Pronichev, a first deputy director of the FSB.

TITLE: A Wake-Up Call for the Kremlin
AUTHOR: By Louis O’Neill
TEXT: For the first time in recent memory, the heavy hitters of international election monitoring — the Organization for Security and Cooperation in Europe’s Office of Democratic Institutions and Human Rights, the Council of Europe and the European Parliament — were in agreement with Russia-led observers from the Commonwealth of Independent States: Moldovan parliamentary elections on Sunday were run more or less in accordance with accepted norms. 
Nonetheless, provocateur-instigated violence and vandalism broke out in Chisinau following massive, peaceful and spontaneous opposition protests. Shortly after the fires in the parliament were extinguished, Foreign Minister Sergei Lavrov spoke of the “rare display of unity” by the two usually conflicting groups of election observers and added that the demand to hold a new vote was “absolutely groundless.” 
Some might argue — as did Emma Nicholson, a British member of the European Parliament — that election violations were ignored because of Russia’s sway over the consensus-bound OSCE. But Western-sponsored exit polls run by a respected Moldovan political analyst showed the Communists winning 45 percent of the vote. This was outside the usual margin of error for such polling but not by a preposterous amount. The current count gives the Communists 49.48 percent of the vote and still leaves them one seat short of avoiding a coalition government. Even the notoriously skeptical commentator Vladimir Socor compiled a convincing “10 Reasons Why the Communist Party Won Moldova’s Elections Again,” only one of which mentioned the power of the incumbency and pre-electoral irregularities. 
So the burden is now on the opposition parties to prove their allegations that thousands of “dead souls” voted for the Communists on Sunday. The Moldovan Central Election Commission has promised to open its books and voter lists to the opposition. Eventually someone will be declared the winner of these elections and will form a new parliament, which will in turn elect a new president. 
Beyond the elections and protests, we are seeing an enormous demographic and generation shift — a trend not only in Moldova but in other former Soviet republics as they rediscover and reassert their national identities. According to exit polls, the majority of Moldovans who voted for the Communists were older, rural and less educated. They also had fond memories of the “stable times” when Moldova was a Soviet republic. Opposition voters tended to be young, urban, educated and more drawn toward Europe and an integrated future. 
A similar split is visible in the demographics of Moldova’s breakaway, pro-Russian Transdnestr region, in contrast to the rest of Moldova, which leans more to the West. With each year, relations between the two regions become more estranged. 
This schism in Moldova has profound implications for the region. It could also complicate U.S. efforts to “reset” relations with Russia — in particular, finding common ground in building a new European security architecture. On the other hand, the Transdnestr conflict is by far the most amenable to resolution of the “frozen conflicts.” A high-level, good-faith effort at resolving it in good faith could not only do much to develop the trust and substance that has for so long been lacking in U.S.-Russia relations but could actually advance the interests of both counties. 
The United States, along with its European allies, wants a peaceful and democratic Europe. Russia wants to ensure security guarantees by, among other things, stopping NATO expansion and ensuring that it is surrounded by what it defines and perceives as friendly countries. Russia’s refusal to withdraw its troops and armaments from Transdnestr has complicated the ratification of the Adapted Treaty on Conventional Forces in Europe. 
The recent violence in Moldova has been a wake-up call for the Kremlin. It caught a disturbing glimpse of its nightmare scenario in which a pro-Romanian and pro-NATO government could come to power. Under this scenario, younger Moldovan leaders with no interest in reuniting with Transdnestr would be more ready to cut this troublesome sliver of land loose. Then they would race toward European political, economic and perhaps security integration, establishing another “pro-Western” nation on Ukraine’s border. This would leave the Kremlin with the responsibility of supporting an impoverished Transdnestr surrounded by an unfriendly Moldova and a divided Ukraine, creating an even bigger headache than it is now. 
Historically, only a very small percentage of Moldovans has favored union with Romania, but that number is growing, especially among the young. This factor helps explain both Moldovan President Vladimir Voronin and Russia’s accusations of Romanian interference in the election process, instigation of the protests and escalation of them to violence. 
The “5+2” framework to settle the Transdnestr dispute includes the OSCE, Russia, Ukraine, EU, United States, Moldova and Transdnestr. In 2007, the Moldovan and Transdnestr chief negotiators to the 5+2 talks on the breakaway region’s settlement told me that if given the green light, they could resolve all the outstanding issues for settlement in about two weeks. 
The Moldovan “comprehensive package” plan — which has never been rejected by Moscow and explicitly protects important Russian interests and institutions — could form a road map for progress in the 5+2 talks. But, as with any negotiations, creative flexibility would be needed. 
This willingness to compromise for an overall good deal has also been noticeably absent from U.S.-Russia relations. A strong commitment to solve the Transdnestr conflict in a way that respects key interests of all sides could open an important new area of trust in relations between the United States, EU and Russia. It could also improve the lives of people living in both Transdnestr region and the surrounding areas of Moldova and help eliminate the persistent zero-sum thinking that seems so out of place in the 21st century. 

Louis O’Neill was OSCE ambassador and head of mission to Moldova from 2006 to 2008.

TITLE: Don’t Hold Your Breath for High Oil Prices
AUTHOR: By Alexei Bayer
TEXT: The Russian government sees some sectors of the economy improving in the second half of 2009. Whether the recovery can be sustained — and, more important, whether the recent good times can return — will largely depend on the price of oil. 
After bottoming close to $37 per barrel in mid-February, oil rose some 50 percent and now trades at $52 per barrel. Officials in Venezuela, Russia’s new ally and another major oil producer, believe that oil prices can bounce to $90 per barrel by the end of the year.
True, the International Energy Agency has just cut its forecast for oil demand, and China reported a 5.5 percent drop in crude imports. But this makes long-term prospects even brighter. Cambridge Energy Research Associates warned that low oil prices and a global credit crunch could reduce investment and create an oil shortage by the middle of the next decade. Merrill Lynch envisions this happening even sooner, by 2010 or 2011.
Although at first glance it would seem that demand for oil is generally stable, oil prices are notoriously hard to forecast. Nevertheless, no one had anticipated a precipitous plunge in oil prices in the fourth quarter of last year. Instead, in mid-2008, with the global recession already under way, most analysts warned that oil was headed for $200 per barrel. 
In order to glean the future of oil prices, it is important to understand what happened in recent years — namely, why oil prices went from less than $10 per barrel to $147 over the past decade without creating a major recession.
There were many reasons for this, but the key one was that the world economy was enjoying extremely robust growth. It is a well-known fact that labor productivity increases in recoveries and declines in recessions. When orders increase, employers first get more work out of existing workers before hiring new ones. 
The same is true of all other inputs, including oil. It is easy to see why using simple examples. Trains and buses, for instance, carry more commuters, each of whom produces more output. Or, when a trucking company has a full order book, its trucks are loaded to capacity, each earning more money per run. When orders decline, trucks travel half full, producing less gross domestic product per gallon of fuel. From 2003 to 2008, oil output grew on average by 1.8 percent a year, while real gross world product expanded almost twice as fast, by 3.4 percent. In other words, it took progressively less oil to produce a dollar of output.
Even if the current global slump comes to an end by early 2010, growth will remain sluggish and fragile. Demand will remain weak everywhere, and the global economy will not be able to absorb renewed oil price increases.
A similar situation occurred in 1979. When the Iranian revolution pushed up oil prices, the global economy was already stagnating. Oil became the last straw that plunged the world into a deep recession, accompanied by defaults from international debtors.
The same is likely to happen this time. Even if oil supplies do not expand in the coming years, OPEC and other oil producers will find it difficult to raise prices. Of course, oil prices may still spike suddenly because of a sudden political jolt or military conflict. But higher oil prices will then trigger a contraction in global economic activity and a renewed decline in oil prices. It should be recalled that in the early 1980s, the recession ushered in a long period of declining oil prices, culminating in $10-per-barrel oil by the end of the 1990s. 

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

TITLE: Captain’s Rescue Ups Stakes In Piracy Ops
AUTHOR: By Vijay Joshi and Eileen Ng
PUBLISHER: The Associated Press
TEXT: KUALA LUMPUR, Malaysia — The killing of three Somali pirates in the dramatic U.S. Navy rescue of a cargo ship captain has sparked concern for other hostages and fears that the stakes have been raised for future hijackings in the busy Indian Ocean shipping lane.
Sunday’s rescue of Captain Richard Phillips followed a shootout at sea on Friday by French navy commandos, who stormed a pirate-held sailboat, killed two pirates and freed four French hostages. The French owner of the vessel was also killed in the assault.
The two operations may have been a setback for the pirates, but they are unlikely to quell the brigands, who have vowed to avenge the deaths of their comrades.
Experts indicated that piracy in the Indian Ocean off Somalia, which transformed one of the world’s busiest shipping lanes into one of its most dangerous, has entered a new phase with the Navy SEAL rescue operation of Phillips.
It “could escalate violence in this part of the world, no question about it,” said Vice Admiral Bill Gortney, commander of U.S. Naval Forces Central Command.
The International Maritime Bureau said Monday it supported the action by the U.S. and French navies, but cautioned it may spark retaliatory moves by pirates.
“We applaud the U.S. and the French action. We feel that they are making the right move, although the results sometimes may be detrimental,” said Noel Choong of the IMB’s piracy center in Kuala Lumpur.
He did not elaborate, but for families of the 228 foreign nationals aboard 13 ships still held by pirates, the fear is revenge on their loved ones.
“Those released are lucky, but what about those who remain captive?” said Vilma de Guzman, the wife of Filipino seafarer Ruel de Guzman. 
He has been held by pirates since Nov. 10 along with the 22 other Filipino crew of the chemical tanker MT Stolt Strength.
The U.S. rescue operation “might be dangerous (for) the remaining hostages because the pirates might vent their anger on them,” she said.
So far, Somali pirates have never harmed captive foreign crews except for a Taiwanese crew member who was killed under unclear circumstances. In fact, many former hostages say they were treated well and given sumptuous food.
The pirates had operated with near-impunity in the Gulf of Aden north of Somalia, and more recently in waters south of the country after a multinational naval force began patrolling the Gulf.
Choong said there have been 74 attacks this year with 15 hijackings as compared to 111 attacks for all of last year.
The modus operandi of the pirates is simple: Board unarmed or lightly armed merchant ships, fire shots in the air or at the hull to intimidate the crew, divert the ships to hide-outs on the Somali coast and wait for the owners to pay millions of dollars in ransom.

TITLE: Federer Ducks Limelight at Monte Carlo Masters
AUTHOR: By Scott Williams
PUBLISHER: Agence France Presse
TEXT: MONTE CARLO — Newlywed Roger Federer kept an unusually low profile on Monday as the Monte Carlo Masters kicked into gear with Andy Murray and Novak Djokovic eager to start staking their claims on the clay.
Minor seeds without the bye offered to the leading eight got started in the first round along with the rest of the field as Spain’s Oscar Hernandez created French disappointment with his defeat of Julien Benneteau 6-4, 6-4.
Murray and Djokovic, winner and finalist respectively at the Miami Masters which ended on cement just eight days ago, quietly talked up their chances at the start of the clay season.
Rafael Nadal, the top seed, is bidding for an unprecedented fifth straight title at the Country Club, which juts majestically over the Mediterranean.
Second seed Federer will have to get down to business quickly after taking a wildcard into the event at the last moment and then announcing that he and longtime girlfriend Mirka Vavrinec were married at the weekend.
But Federer apparently went to ground on his tennis honeymoon, with even the ATP unable to contact the Swiss.
Djokovic is still licking his wounds from his Miami mauling by Murray, who is within a hair-thin 1709 ranking points of seizing the number 3 spot from his Serbian opposition.
And Djokovic is not exactly exuding confidence.
“So far so good,” said the Serb Monday. “I didn’t have a long time to adjust to new surface and conditions.
“But I’ve played Davis Cup on clay which helps me a little bit. And here I feel at home, I know these courts really well and have been training for a few days already so I feel fine.”
Murray’s spirits are riding high as he leads the ATP with three titles this season.
The Scot has it all to gain on clay after never reaching a quarter-final on the surface. Since arriving in the principality on Friday he’s been hard at work with specialized clay trainer Alex Corretja added to the team.
“I’m hitting the ball fine but it takes time to get used to movement,” said the fourth seed.
“I haven't hit a ball on clay since the French last year so it's been ten-11 months. 
“I’m just getting used to sliding, not being 100 percent sure under your feet takes a bit of time.” Murray is counting on his bulked-up body to help him this spring, with hopes that his December fitness month will pay more dividends.
“Physical strength is important for me, and on the clay you need to be consistent with mentality and strokes. If you are stronger physically it’s not like you will panic when you are feeling tired, you know you can get through the match.
“I enjoy clay, it’s challenging. I’ve never made the quarters before on it, so it’s nice to have goals where it’s not just about winning events.
“But there is less pressure on me here, I’m just working hard to try and keep up with top guys.”

TITLE: Dempsey Double Sinks City In League
PUBLISHER: Agence France Presse
TEXT: MANCHESTER — Fulham kept up their challenge for a European place as Clint Dempsey’s double sealed a 3-1 victory at Manchester City on Sunday.
After 14 league matches without an away success this season, Roy Hodgson’s side have now won their last two games away from Craven Cottage.
The west London team, who won at Bolton in their last away fixture, fell behind to Stephen Ireland’s deflected first half strike at Eastlands, but produced an impressive second half display to move within one point of seventh placed West Ham.
Dempsey equalised soon after the interval and then former City trainee Dickson Etuhu put the Cottagers in front before Dempsey’s second wrapped up the points.
City boss Mark Hughes’s patience with Robinho finally snapped as he left the 32 million pounds club record signing on the bench after a series of lacklustre displays in recent weeks.
Robinho was on City midfielder Ireland’s mind when he accused his team-mates of lacking fighting spirit after Thursday’s 3-1 UEFA Cup quarter-final defeat at Hamburg.
Ireland certainly wasn’t hiding and it was his pass that released Valeri Bojinov, only for the Bulgarian striker to lash his shot wide.
Richard Dunne presented Fulham with a chance when he misjudged a Simon Davies pass, allowing Bobby Zamora to turn and shoot. But City keeper Shay Given was equal to the effort.
Ireland showed City’s slackers how to do it as he made the breakthrough in the 28th minute.
The midfielder ran from deep inside his own half without facing a single Fulham challenge. 
Fulham have won just once on their travels this season, while only Manchester United have won more home games than City, but the visitors drew level in the 50th minute.
Pablo Zabaleta gifted possession to Bobby Zamora and, when Micah Richards slid in to tackle, the ball fell perfectly for Dempsey to slot past Given.
It was the first time Given had conceded at Eastlands since arriving from Newcastle in January and he was soon picking the ball out of the net again.
In the 59th minute City midfielder Nigel de Jong’s weak clearance was seized on by Etuhu, who drove a fine strike past Given from the edge of the penalty area. Etuhu, playing against his brother Kelvin in City’s midfield, had extra reason to celebrate as it was his first goal for the club.
Hughes responded by sending on Robinho and Daniel Sturridge and the strike duo combined to create a chance immediately. 
Sturridge’s pass sent Robinho clear but the Brazilian’s shot was too near Schwarzer.
Fulham scored their third in the 83rd minute. Zamora’s pass caught Richards napping and Dempsey surged clear to deliver the knockout blow.

TITLE: Thai Soldiers Spray Gunfire and Tear Gas
AUTHOR: By Ambika Ahuja and Grant Peck
PUBLISHER: The Associated Press
TEXT: BANGKOK — Thousands of Thai troops, firing automatic weapons and tear gas, forced anti-government protesters rampaging across Bangkok to retreat Monday to their main encampment ringing the seat of government. The demonstrators said they were prepared for a “final stand.”
In a major escalation of Thailand’s ongoing turmoil, protesters and combat troops were locked in a series of tense confrontations and cat-and-mouse chases for 12 hours. At least 79 people were reported injured. The army spokesman said troops fired blank bullets into the crowds and live shots overhead.
As evening fell, some of the 6,000 troops deployed in Bangkok began moving toward Government House, where the protesters have been holding out since March 26. An estimated 5,000 of the demonstrators were gathered in the Government House area.
“This will be our final stand. I beg that you return here and face them together,” protest leader Jatuporn Phromphan shouted from a platform near the seat of government. “We will use peaceful means and stay right here to end their violence.”
Army spokesman Col. Sansern Kaewkamnerd said troops were narrowing the area of unrest. “It’s going to take time, and we are trying to cause as little loss as possible.”
Hundreds of soldiers and police assembled at the Royal Plaza, about a mile (less than 2 kilometers) from the Government House confronting about 100 female protesters who knelt down and screamed “Please stop, brothers.” Some hugged the soldiers.
“I don’t mind dying right here if it means we become a real democracy. You can kill me right here. I am not here to cause trouble. I just want my rights,” said Tanyawalai Wongsuriyaneth, 46, a female protester returning to join the rally at Government House.
The demonstrators are demanding the resignation of Prime Minister Abhisit Vejjajiva, saying his four-month-old government came to power illegally.
Earlier, the protesters were stationed at a half-dozen points in Bangkok, defying government-imposed state-of-emergency measures that ban gatherings of more than five people.
Protesters commandeered public buses to block several key intersections, set tires and vehicles on fire and sent two unmanned buses, one of them burning, hurtling toward lines of soldiers. The bus swerved and then ricocheted off trees on the side of the road before coming to a halt, with no one injured. The other bus also crashed without injuring anyone.
In one of several confrontations, a line of troops in full battle gear fired volleys of M-16 fire, most of it aimed above the heads of protesters and turned water cannons on the crowd near Victory Monument, a major traffic circle.
Armed forces chief Gen. Songkitti Jaggabatara said on nationwide television that soldiers would use “every means to end the chaos” but employ weapons only for self-defense and not “excessively.”
In contrast to a complete security breakdown over the weekend, where a 16-nation Asian summit was canceled after demonstrators stormed the venue, security forces began to take action.
“The shots fired into the crowd were blank bullets. The heads are made of paper, so it only causes sound. We use these when protesters head toward soldiers to push them back. Those fired into the air are real bullets,” said Sansern, the army spokesman.
The red-shirted demonstrators are supporters of ousted former Prime Minister Thaksin Shinawatra and want new elections and Abhisit’s ouster. They accuse the country’s elite — the military, judiciary and other unelected officials — of undermining democracy by interfering in politics.
In an interview with CNN on Monday, Thaksin accused the military of lying about firing blank bullets into the crowd, saying soldiers used live ammunition, killed protesters and dragged away their bodies. “They shot people. Many died. Many people were injured,” he said.
“I would like to urge every party that comes together to gather peacefully. War never ended with war,” said Thaksin, who a day earlier phoned in to a rally of supporters and called for a “revolution.”
Political tensions have simmered since Thaksin was ousted by a military coup in 2006 amid accusations of corruption and abuse of power. He remains popular in the impoverished countryside for his populist policies.
His opponents — many in urban areas — took to the streets last year to help bring down two governments led by his allies, seizing Bangkok’s two airports in November for about a week.
Parliament then appointed Abhisit in December after a court ordered the removal of the previous pro-Thaksin government citing fraud in the 2007 elections. Thaksin supporters took to the streets in protest, and their numbers grew to 100,000 in Bangkok last week.
Abhisit appealed Monday to the demonstrators to return to their homes, saying the government was using “the softest measures possible” against them.
“All the work I am doing is not to create fear or put pressure on or to harm any group of people. It’s a step by step process to restore order and stop violence,” he said on nationwide television.
Monday’s first and most serious clash began before dawn, as troops in full combat gear advanced to disperse the protesters, who were occupying a major junction, according to witnesses.
At the nearby Century Park Hotel, foreign tourists were seen rushing into taxis and heading for Bangkok’s international airport. But others seemed unruffled.
“We’re from South Africa. We don’t scare easy,” said Estelle Jones, a tourist from Johannesburg.

TITLE: Iran Welcomes Nuclear Talks
AUTHOR: By Nasser Karimi
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — Iran welcomes nuclear talks with the United States and other countries, Tehran’s top nuclear negotiator said Monday.
The negotiator, Saeed Jalili, made the comments during a telephone call with the European Union’s foreign policy chief, state television reported. During the conversation, Jalili said the talks should be aimed at “constructive cooperation” between countries.
Last week, President Mahmoud Ahmadinejad said Iran was open to talks — but only if they were based on respect for Iran’s rights, suggesting the West should not try to force Tehran to stop uranium enrichment. 
Jalili’s comments appeared to be more of a definitive answer, but he stressed that Iran would issue an official response to the invitation soon, the state television channel reported. He did not elaborate.

TITLE: Cost Decisive in Selection of Olympic Venue
AUTHOR: By Debbie Jamieson
PUBLISHER: The Associated Press
TEXT: QUEENSTOWN, New Zealand — Campaigning among the four candidates for the 2016 Olympics is increasingly centering on one issue: cost.
Tokyo, Madrid, Rio de Janeiro and Chicago made cases for their financial viability amid the global economic recession as part of their presentations to members of the Oceania National Olympic Committees in Queenstown on Tuesday.
Chicago representatives spoke of the city being home to 40 multinational corporations.
The United States is the only country that doesn’t offer financial backing from the federal government for an Olympic bid, although the Chicago and Illinois governments have given guarantees.
IOC president Jacques Rogge attended the official opening of the meetings and reassured members of the strength of the Olympic movement and of the bids from candidate cities.
“The financial position of organizing committees is solid. There’s absolutely no concern to have,” he said. “We have also a very strong assurance from the level of candidate cities.”
Chicago is hosting an International Olympic Committee delegation on an inspection tour this week. The American city is the first stop for the IOC delegation and follows meetings this past week in Denver where each city had a 20-minute presentation.
“There is a real danger of a deep global recession during the timing of construction for the games,” Ichiro Kono, chairman and chief executive officer of Tokyo 2016, told members.
Kono said Tokyo had already secured $4 billion in funding, and the bid had full support from the upper and lower houses of the Japanese parliament.
Secretary General of the Rio 2016 bid Carlos Osorio said millions from the capital budget was already being spent on roads, an airport renovation and improving infrastructure across Brazil.
The Brazilian government had established a $700 million setup fund, an investment which made the bid’s financial model certain, he said, adding that the national economy was strong and could withstand the worldwide economic downturn with little impact.
“We are presenting a 100 percent secure solution for the games,” Osorio said. Trying to bring the Olympics to South America for the first time, Rio is highlighting the Pan American Games in 2007, as well as its status as host of the 2014 World Cup.
Rio has put out a budget of $14.4 billion that includes infrastructure costs the other cities have left out — the main reason the Brazilian city’s budget is higher than the other three bids.
Chicago and Madrid are lobbying strongly for the rights to host the games in a race that will be decided by a secret ballot of IOC members at Copenhagen in October.
Madrid mayor Alberto Ruiz-Gallardon emphasized his city’s economic security and the fact it would cost only $317 million to transform concepts for new venues into reality. Madrid has described itself as the “safest choice” because it has 77 percent of venues ready or under construction.
The proposed budget is just under $5.6 billion, with Spanish government guarantees to cover any surplus costs.
Recognizing the changing times, all the cities pledged more compact games that will make extensive use of existing venues as one way of handling unexpected cost overruns. The era of using the Olympics to help rebuild a city could be over.
History has shown cities have very little ability to bring Olympic projects in at around budget. London’s budget for the 2012 Games, for example, has reached $16.5 billion, more than double when the original figures were released.
The Tokyo and Rio teams are offering the type of inducements that might be favorable to the small countries of the ONOC. Of the 17 member nations, Australia and New Zealand are the largest. The remainder are Pacific Island states.
Kono briefly outlined a plan to provide some flexibility within the traditional rate card system that would cut costs of sending a team to the games for some National Olympic Committees.
The Brazilian representatives committed to no bundling of ticket prices and fair travel grants based on full fare economy tickets for all participants.
Speaking after the formal presentations, Chicago representative Anita Defrantz said no specific inducements were made, although there would be some for smaller nations.
“We’ve seen these things a lot of the time. Often these things become less of an offer by the time you get to the games.
“We stay away from this sort of thing. We want to be sure we do what we say,” she said.

TITLE: Blaze at Homeless Shelter Kills 21 in Poland
AUTHOR: By Ryan Lucas
PUBLISHER: The Associated Press
TEXT: WARSAW, Poland — A fast-moving fire tore through a three-story building housing homeless families in northwestern Poland early Monday, killing at least 21 people and injuring 20 more, including an infant, officials said.
“I couldn’t breathe, so I opened the window and looked out, and the door was on fire because it was essentially made of paper,” a survivor told reporters at the scene in footage shown on TVN24 television.
“I put my pants on and boots, and a friend gave me a jacket, and there wasn’t any more time because it was burning like a torch. Some people jumped into the trees,” the unidentified middle-aged man said.
The blaze broke out around 1 a.m. in a shelter for people waiting for social housing in Kamien Pomorski, 370 miles (600 kilometers) northwest of the Polish capital and near the Baltic Sea coast, said Pawel Fratczak, a spokesman for Poland’s national firefighters.
“While searching the building again this morning, we found the bodies of three more people, raising the toll to 21 dead,” Fratczak said. “It is going to be hard to identify many of them quickly because they are so badly burned.”
Footage broadcast on TVN24 taken when firefighters first arrived on the scene showed the stone and metal building engulfed in flames, while in later video firefighters picked through the building’s charred, gutted shell with axes.
It was not immediately clear what caused the blaze, but police and fire investigators were examining the scene for clues.
There were 77 people registered as residents in the building at the time of the blaze. Fratczak said not all were yet accounted for, and that the death toll could rise.
The injured, many of whom suffered broken bones after jumping out of windows on the upper floors to escape the blaze, were taken to local hospitals. Two people were being treated for burns, including an 8-month-old baby.
The injuries are not considered life-threatening, Fratczak said.
“I’m in shock. The most important thing is that we’re alive and that the kids are alive,” a woman lying in a hospital bed with burns visible on her face told TVN24 through tears.
“I’m just worried what happens now. We lost everything. We have nothing. I hope there is somebody who will help not only us, but everyone who has suffered from this because this is truly a tragedy.”
Prime Minister Donald Tusk flew to Kamien Pomorski early Monday to inspect the damage, and promised aid for those who escaped the blaze. Many of the residents had been living at the temporary housing shelter for a long time as they waited for a permanent apartment in Poland’s crowded social housing network.
“The help will be full and will ensure the housing needs of those who survived this disaster,” Tusk told reporters in front of the still smoking building. “The most important thing is to help those who survived, but … we still cannot say with full certainty say that the list of those killed is final.”

TITLE: Terry Pleads With Chelsea to Keep Guus Hiddink As Chelsea Manager
PUBLISHER: Agence France Presse
TEXT: LONDON — John Terry believes Guus Hiddink is the only man to lead Chelsea after reports linked the Premier League club with a move for AC Milan boss Carlo Ancelotti.
Hiddink has revitalised Chelsea since taking over from Luiz Felipe Scolari on a temporary basis earlier this season.
But the Dutchman’s contract runs out in May and his insistence that he will resume his role as Russia coach on a full-time basis has reportedly forced the Blues to sound out Ancelotti about the job.
However, Terry has been impressed by Hiddink’s methods and wants Chelsea owner Roman Abramovich to do everything in his power to keep the former PSV Eindhoven manager at Stamford Bridge.
“He (Hiddink) has a good relationship with Roman Abramovich,” Terry said. “Things have gone very well and I’m sure there will be talks ongoing. If we keep progressing there’s only going to be one option.
“He’s done brilliantly. He’s on at us every day in training, and he doesn’t let anyone get away with anything.”
As well as the link with Ancelotti, it has also been reported that many of Chelsea’s players would like Abramovich to move for Jose Mourinho.