SOURCE: The St. Petersburg Times
DATE: Issue #1467 (29), Tuesday, April 21, 2009
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TITLE: Just Six Candidates Left In Sochi Race
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — And then there were six.
With a week left before Sochi votes for a mayor, the city’s election committee on Friday removed wealthy businessman Alexander Lebedev from the ballot over alleged mistakes in his application to run. On Saturday, the committee removed A Just Russia’s candidate, Viktor Kurpitko, for the same reason.
That leaves only six candidates — including United Russia’s candidate, acting Sochi Mayor Anatoly Pakhomov, and Kremlin critic Boris Nemtsov — out of the initial 25 contenders for the April 26 election.
Nemtsov told The St. Petersburg Times on Sunday that thousands of people are being pressured to vote for Pakhomov in early voting or risk losing their jobs.
Similar tactics were used to collect votes for United Russia during the 2007 State Duma elections.
“The matter is not in the number of candidates left but that the authorities are holding the elections amid total fraud and censorship,” said Nemtsov, leader of the Solidarity movement.
“But these elections are being closely watched by the whole world,” he added.
Lebedev has accused the authorities of edging them out to ensure Pakhomov’s victory. In an interview published Sunday in Germany’s Welt am Sonntag, he said that his Sochi bid might be connected to the grounding of his Blue Wings airline.
Germany’s aviation authority said March 31 that it had canceled Dusseldorf-based Blue Wings’ license over unspecified “business problems.”
Lebedev said he would appeal to the Supreme Court. “We are going to appeal for the decision to be voided by the Supreme Court, and then we’ll seek to cancel the election results,” Lebedev wrote on his LiveJournal blog.
Sochi election committee spokeswoman Valentina Tkachyova told The St. Petersburg Times on Friday that the committee’s decision to strike Lebedev from the ballot was based on a ruling by Sochi’s Central District Court on April 13 that Lebedev had failed to properly fill out his registration paperwork. Tkachyova refused to elaborate or provide a copy of the committee’s decision.
Kurpitko was struck from the ballots Saturday, and he vowed to appeal, Interfax reported. The complaints against Lebedev and Kurpitko were filed by one of the remaining candidates, local businessman Vladimir Trukhanovsky.
Early voting started Wednesday, and votes cast for the removed candidates will be voided, election officials said.
TITLE: Rescuing Tourism With Spas, Cheap Fares
AUTHOR: By Jessica Bachman
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — At least 10 percent fewer tourists are expected to visit Russia this year, and the government is hoping to convince Russians to spend their vacations at home to make up for the shortfall, Federal Tourism Agency head Anatoly Yarochkin said.
And Russians who give up their foreign vacations will have options beyond Moscow, St. Petersburg and the other usual big cities. The Federal Tourism Agency is looking to revitalize the Soviet tradition of health resort vacations.
“I predict that about 20 percent of the people who last summer flew out of the Rostov-on-Don airport last summer to destinations like Tel Aviv, Istanbul and Dubai will get in their cars this year and drive to resorts in Krasnodar,” Yarochkin said in an interview in his office last week, pointing to the main Black Sea costal cities in the Krasnodar region — Novorossiisk, Tuapse and Sochi — on a wall map of Russia.
Yarochkin said the number of Russians who vacationed abroad in the first three months of this year dropped by 25 percent compared to the same period last year as salary cuts, layoffs, a weaker ruble and economic uncertainty squeezed family budgets. He expects the trend to continue into the summer season.
“This year, many more people, Europeans and Russians alike, will be sticking closer to home, and it is the government’s job to mitigate the effects of this on our tourism industry,” Yarochkin told The Moscow Times.
The World Tourism Organization expects international tourism to fall by up to 2 percent in 2009, its first decline since the organization began tracking the industry’s growth in 2003.
In 2008, 11.3 million Russians took vacations abroad, while 2.3 million foreigners vacationed in Russia, according the State Statistics Service. The figure for foreigners is contentious, however, because authorities in St. Petersburg, the country’s top tourist destination, recorded 2.3 million foreign tourists last year.
The discrepancy is connected to how various state authorities count foreign visitors, and it was impossible to reconcile the difference.
The tourism industry might be even worse off than expected if St. Petersburg is any indication. The city, which claims 80 percent of the country’s tourists, expects a 30 percent drop in foreign tourists and a 10 percent to 15 percent drop in Russian tourists this summer, said Mariana Ordzhonikidze, head of St. Petersburg’s tourism department, citing information from local hotels and tour agencies.
The city’s tourism budget for 2009 has been slashed to 73 million rubles ($2.2 million), compared with 120 million rubles in 2008, forcing it to cut advertising in the regions and abroad. About 2.5 million Russian tourists visited St. Petersburg last year.
“We are all very troubled and discouraged,” Ordzhonikidze said.
“We had to downsize our stands at trade shows and even cut out countries such as Japan and major cities like Chicago and Dubai,” she said.
The Federal Tourism Agency, however, is flush with advertising cash after receiving government assistance aimed at encouraging Russians to vacation at home and foreign tourists to visit despite the financial crisis.
The agency has been allocated 180 million rubles -- 50 million rubles more than in 2008 -- to advertise tourist destinations, Yarochkin said.
And the government is experimenting with other ways of boosting the flagging sector. In February, President Dmitry Medvedev said the state would subsidize air travel during the summer months for retirees and people under the age of 23 flying between the Far East and the country’s major tourist destinations — Moscow, St. Petersburg and Sochi. The government will cover half the cost of a return, economy-class ticket.
Ordzhonikidze said she is confident that the subsidized plane tickets will bring more retirees from the Far East to St. Petersburg this year.
The Federal Tourism Agency is hoping to expand the country’s list of tourist destinations beyond the urban centers and is advocating measures that it hopes will revitalize the Soviet tradition of health resort vacations.
“We have asked the government to consider making summer sanatorium and health resort visits tax deductible for retirees and youth. We hope the measure is approved,” Yarochkin said.
It was a widespread practice in the Soviet Union for the state to subsidize workers’ vacations to sanatoriums in the sunny southern regions. Since the early 1990s, however, the number of sanatoriums has declined significantly -- few Russians can afford travel to the regions and pay for the cost of room, board and health treatments at the resorts.
It may be an easy sell for the government, which is already eyeing an unemployment rate of 8.5 percent. The country’s tourism sector directly and indirectly employs about 6 percent of the working population, and a disappointing tourism season could exacerbate the already dark statistics.
For St. Petersburg, tourism is even more crucial, employing 18 percent of the city’s working population, or 500,000 people. Ordzhonikidze predicted that the contraction could force the sector to cut 10 percent of its jobs.
To avoid that, convincing Russians to stay home this summer may be key.
“Foreign tour operators always used to book an entire boat for the whole season, but this year they have all said no,” said Larisa Eganyan, sales manager for Turflot, one of Russia’s largest river-cruise operators.
Turflot owns four boats, she said, and foreigners used to account for 20 percent of the firm’s revenue.
The company is hoping that domestic demand grows to make up for a fall in foreign bookings through European tourist agencies, Eganyan said.
“Because of the economic crisis, fewer Russians are traveling abroad, so we think we could even see a growth in our Russian tourist bookings if they opt to travel closer to home instead,” Eganyan said.
But so far, less than a month before the official opening of Russia’s summer tourist season, there is no evidence of a pickup in sales for cruise operators.
Another large river-cruise operator, Orthodox, whose passengers are almost all foreign, said it has seen a 10 percent drop in bookings for the 2009 season from France and Germany.
“The European travel agencies that sell our tours told us they are having a hard time finding clients,” said Irina Samorodskaya, the company’s sales manager.
“So now, we are offering them 25 to 30 percent discounts. We hope that helps,” she said.
International ocean cruise liners that dock in St. Petersburg are experiencing similar problems with advance bookings. Peter Deilmann, a large ocean and river cruise company, said its North American sales for summer cruises have dropped by 33 percent overall.
“The booking window for cruises is generally nine months to one year in advance, and that window has collapsed. We are still accepting reservations,” said Richard DeSousa, the company’s sales manager for North America.
Nevertheless, sales for the company’s Baltic cruise, which docks in St. Petersburg and other northern European cities, have suffered the least.
“Our Baltic tour remains the strongest European segment, and St. Petersburg is the biggest draw on the tour,” DeSousa said.
Tour operators and government officials are counting on that staying power to draw the tourism sector through the downturn.
“The fall is just crisis related and very temporary. Numbers will pick back up in about year,” Ordzhonikidze said.
TITLE: Azeri President Proposes Selling Gas to European Market
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Azeri President Ilham Aliyev said Saturday that he wanted Russia to serve as a transit route for his country to begin selling gas to Europe, a proposal that could please Western policymakers who have been looking to diversify their energy supplies.
The possibility surfaced a day after Aliyev met with President Dmitry Medvedev, who said there was a good chance for the countries to reach an accord on the issue of gas. Last month, Gazprom and the State Oil Company of Azerbaijan, or Socar, agreed to start talks on Russia buying Azeri gas with “delivery at the border” as soon as next year.
The meeting came as Moscow has been trying to shore up support from other Caspian Sea gas suppliers to buck the Nabucco pipeline, which would bypass Russia but faces a number of obstacles to construction.
“It’s very disappointing to have no opportunity to produce the gas that we have because transit issues haven’t been resolved,” Aliyev said in an interview with the Vesti state-television channel. “The main thing is to come to an agreement about the possible transit and sale of gas between Russia and Azerbaijan and move forward.”
A Gazprom spokesman said Sunday that he could not immediately comment on the transit option.
The European Union would likely welcome the emergence of a new supplier from the east, albeit one dependent on Russian pipelines, especially since the completion of Nabucco remains in doubt.
The backers of Nabucco, a number of EU energy companies, plan to fill the pipeline with gas from Turkmenistan — across the Caspian Sea from Azerbaijan — or Iran. But the project has faced numerous problems, including disagreement over how to divide the energy-rich sea and suspicion in the West of Iran’s nuclear program.
Transiting foreign gas would not be unusual for Gazprom, which until the end of last year carried Turkmen gas for sale to Ukraine. Those supplies were handled by RosUkrEnergo, a trader half owned by Gazprom.
Alexander Nazarov, an analyst at investment company Metropol, said it was not immediately clear what Azerbaijan would gain from a transit deal for European exports, since it would not make much more money than it would from direct sales to Gazprom.
During the talks in Moscow, Aliyev signaled that he had no objections to contributing to Nabucco as well — if it’s ever built.
“Provided the terms are good, we would be able to supply a portion of our gas in that direction,” Aliyev said. “But it’s difficult to say when this project will move from a standstill.”
Initial supplies from Azerbaijan to Russia would be far smaller than the flow from Turkmenistan, with flows capped by the pipeline’s current capacity of 5 billion cubic meters per year. Gazprom and Socar agreed last month to inspect the link, which Gazprom used to export gas to Azerbaijan before 2007, to determine the amount of investment required for any repairs.
Turkey buys and transits a total of 7 bcm of Azeri gas per year.
Azerbaijan has the potential to raise output by another 12 bcm to 14 bcm per year from the second phase of the Shah Deniz field, which is led by Norway’s StatoilHydro, Aliyev said. The field will produce that much more once the company finds a market and a transit route for the gas, he said.
StatoilHydro’s chief of exploration and production, Peter Mellbye, said earlier this month that the company was considering exports through Russia and Iran. Azerbaijan has not been able to agree with Turkey on expanding the current transit to Greece.
TITLE: Political Theater Flourishes in Tbilisi
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — They hop around like bunnies to mock their president, step into cages to vent claims of political repression and recite poetry at the top of their lungs.
Georgians have long been famous for their theatrical flair, and they are putting it on ample display in more than a week of street protests against President Mikheil Saakashvili.
While demonstrators stand for hours listening to rousing political speeches, the sidelines of the protests have become a stage for whimsical performance art.
Metal cages representing prison cells have been set up at the main protest sites, and another one appeared in front of the grand Rustaveli Theater. From inside the cage, actors proclaimed that “something is rotten in our kingdom” — a nod to Shakespeare’s “Hamlet.”
The cages were inspired by a reality show featuring singer Giorgi Gachechiladze, who “imprisoned” himself in a “cell” at a local television studio.
Gachechiladze, whose brother is an opposition leader, began his protest in late January and said he would not come out until Saakashvili resigned.
Protesters have pelted Saakashvili’s official residence with carrots, released a bunny onto its grounds and performed a circle dance, hopping around and holding up their fingers to represent long bunny ears — all a way of saying the president acted like a scared rabbit during Georgia’s August war with Russia. Footage of Saakashvili chewing on his tie before a BBC television interview in August has inspired protesters to hang dozens of ties on the fence around his residence.
Saakashvili himself is known for a fondness for the dramatic.
He brandished a rose as he and his supporters stormed parliament during Georgia’s 2003 Rose Revolution. After then-President Eduard Shevardnadze fled the building, Saakashvili ostentatiously drank from his tea cup.
Georgian directors and actors were some of the best-loved artists throughout the Soviet Union. But only in Georgia was the tradition of political satire allowed to flourish as early as the 1960s, when theaters began putting on plays that criticized Soviet life.
“When directors would arrive from Moscow, they would say, ‘Oh, are we no longer in the Soviet Union?”’ recalled prominent director Keti Dolidze. “The virus of freedom and protest has always been part of the Georgian people and Georgian art.”
Georgians will tell you that theater is part of the national character. “If 10 people are sitting at a table, even if they are drinking only tea, one will recite poetry, one will sing a song and another will play the guitar,” said Leo Melikishvili, a film director. “You’ll think you’re sitting with a group of actors, but it will turn out that not one is an actor.”
The current protests have more than a dozen leaders, all with their own political party. They kept some of their activists at the main protest sites through the long holiday weekend, when the predominantly Orthodox Christian country celebrated Easter. The mass protests will resume in full force Tuesday, they said.
TITLE: Recount Does Not Change Moldovan Election Results
PUBLISHER: Combined Reports
TEXT: CHISINAU, Moldova — A recount in Moldova’s disputed election, ordered after violent protests against a Communist victory, showed no changes in the standing of parties in the parliament, a senior official said Friday.
“Preliminary data from the recount show that there will be no major changes in the results,” said Iurie Ciocan, secretary of the Central Election Commission. “The relative strengths of the parties and the number of seats won will be maintained.”
Ciocan said no figures from the recount would be released ahead of a long weekend, when mainly Orthodox Moldovans celebrate Easter.
Results from the April 5 election gave the Communists 49.48 percent of the vote and 60 seats — one short of the number needed to ensure victory for their candidate when the parliament chooses a new president. Three opposition parties scored a combined total of 35.34 percent and won 41 seats.
The recounted results must be turned over to the Constitutional Court, which must validate the figures by April 22.
Election officials proceeded with the recount after Communist President Vladimir Voronin said such a step could re-establish trust.
(Reuters, AP)
TITLE: Foreigner, Family Killed in Fire
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A French businessman and his family were discovered dead in their burnt-out apartment in central Moscow on Monday in an apparent case of murder and arson, investigators said.
Firefighters found bodies of winemaker Thierry Spinelli, his wife and young daughter in their apartment on 3rd Tverskaya Yamskaya Ulitsa, near the Mayakovskaya metro station, after responding to a report of a fire in the apartment at around 6:30 a.m. Monday, law enforcement officials said.
Forensics experts at the scene preliminarily determined that Spinelli’s wife, Olga Spinelli, had been strangled, Anatoly Bagmet, head of the Moscow branch of the Investigative Committee, told RIA-Novosti.
Firefighters discovered at least two separate sources of the fire, indicating a possible arson attack, and the door of the apartment was open when they arrived, Interfax cited law enforcement sources as saying.
The couple’s two-year old daughter, Elise, was also found dead at the scene, Bagmet said.
Thierry had lived in Russia for more than a decade and was a co-founder of the Chateau le Grand Vostok winery in the Krasnodar region.
“He was a very successful businessman,” Yelena Denisova, a member of the company’s board of directors, told The St. Petersburg Times in a telephone interview Monday. “The company has produced the best wine in Russia. I don’t think he had any enemies. It could be only a robbery.”
The couple purchased the apartment in 2006, RIA-Novosti reported Monday, citing no sources. They had also hired a nanny to look after their daughter, though none of the neighbors saw the nanny Monday, the report said.
RIA-Novosti cited a law enforcement source as saying that the couple’s black Mitsubishi Jeep Pajero was missing.
The Investigative Committee has classified the crime as multiple homicide, punishable by up to life in prison.
TITLE: Medvedev Cautions NATO Over War Games
PUBLISHER: Reuters
TEXT: MOSCOW — President Dmitry Medvedev warned NATO on Friday that planned military exercises in Georgia could hinder efforts to mend ties.
“This is the wrong decision, a dangerous decision,” Medvedev told a news conference at his Barvikha residence outside Moscow.
“Decisions of this kind are aimed at muscle-flexing,” he said. “Such decisions are disappointing and do not facilitate the resumption of full-scale contacts between the Russian Federation and NATO.”
NATO cut all formal ties with Russia as a result of Moscow’s invasion of Georgia during a brief war last August, but earlier this year they agreed to resume relations.
“We will follow what happens there in the most thorough manner and make certain decisions if need be,” Medvedev said of the NATO exercises.
NATO says the exercises, to be held 20 kilometers east of Tbilisi from May 6 to June 1, will be based on a fictitious United Nations-mandated, NATO-led crisis response operation and will not involve heavy weaponry. They will involve 1,300 troops from 19 countries.
Georgia’s Foreign Ministry accused Russia on Friday of “yet another undisguised attempt to impose its will on the international community and to interfere in the internal affairs of the sovereign state of Georgia.”
“Russia’s actions clearly indicate that its aggression against Georgia has not come to a halt for one day,” it said in a statement.
The leader of Georgia’s separatist region of Abkhazia, Sergei Bagapsh, said the region was reinforcing its border with Georgia and confirmed earlier announced plans to host a Russian naval base and an air base, adding that the deal with Moscow would be signed “fairly soon.”
“Because Western nations will now hold their exercises — allegedly to support Georgia — we will hold similar exercises [with Russia] in response, both in Abkhazia and South Ossetia,” Bagapsh told a news conference in Moscow.
“Georgia must decide for itself how it wants to exist — at the epicenter of fighting or as a stable and peaceful state.”
But NATO officials and diplomats in Brussels expressed surprise at Moscow’s sharp reaction to the exercises, which were planned last year. Russia was fully informed and as a NATO partner country had been free to participate, they said.
The Pentagon said Thursday that Russian objections were nothing new and that Georgia has insisted that the exercises go ahead. NATO member Italy sought to allay Russian fears on Friday.
TITLE: In Brief
TEXT: A Family Affair
ST. PETERSBURG (SPT) — A new St. Petersburg youth government and parliament will be headed by relatives of Prime Minister Vladimir Putin and the Speaker of the State Duma, respectively, Interfax reported Monday.
Dmitry Gryzlov, the son of Speaker of the State Duma Boris Gryzlov, was chosen to be chairman of St. Petersburg’s Youth Council last week. Vladimir Putin’s niece Vera Putina, the editor of a St. Petersburg magazine, has been chosen to lead the youth government, Interfax reported.
Gryzlov promised to transform the Youth Council, which has been criticized for its lack of activity, into a “youth parliament” that will work with the city legislature, Novaya Gazeta reported. After running unsuccessfully as an independent in St. Petersburg’s municipal elections last month and accusing his father’s ruling United Russia party of voter fraud, Gryzlov has since agreed to join the party to direct youth politics, according to a Kommersant report.
Maxim Reznik, the leader of the St. Petersburg branch of opposition party Yabloko, criticized the choice of leadership Monday, joking that the youth parliament should create a second house to be led by a relative of Speaker of the Federation Council Sergei Mironov. According to Reznik, the youth wing of Yabloko has not yet decided whether it will participate in the youth parliament, Interfax reported.
University Challenge
ST. PETERSBURG (SPT) — A city-wide “Universiada,” or student athletic games, began Monday in locations around St. Petersburg, announced the Committee of Physical Culture and Sport.
Over 2,000 students from 32 St. Petersburg institutions of higher education will compete in basketball, chess, soccer, swimming, table tennis, track and field, volleyball and sambo (a Russian martial art) events.
The games are intended to attract attention to student athletics and discover the best athletes for St. Petersburg teams that compete on the national and international level, said committee representative Vyacheslav Chazov.
The games will also feature well-known athletes, including Olympic medalists and other international champions, Interfax reported.
Yabloko Keeps Chief
ST. PETERSBURG (SPT) — Party delegates reelected Maxim Reznik as leader of the St. Petersburg branch of opposition party Yabloko Sunday, Interfax reported.
Reznik received 22 votes to beat challenger Olga Tsepilova, who received 14 votes, at the party’s reelection conference, a representative of the St. Petersburg branch said.
Tsepilova was subsequently chosen as one of the party leader’s deputies, along with Yuri Nesterov, Olga Shtannikova, Nikolai Rybakov and Alexander Shurshev. In the past, the city branch only appointed two deputies, according to Interfax.
TITLE: State Embarks on Unrivaled Drive to Clean Up Fishing
AUTHOR: By Jessica Bachman
PUBLISHER: The St. Petersburg Times
TEXT: Four poachers glided their Cambodian-flagged schooner, the Kisuka, into Russian waters in the dark of night to haul up traps illegally laid off the coast of Kunashir, a small volcanic island in the Pacific Ocean.
But before the poachers could finish filling their crates with sea urchin, whose bright yellow and orange roe fetch high prices as a delicacy product in Japan, a Russian Coast Guard patrol boat had snuck up on them.
“As the patrol boat approached the area of illegal fishing, the Kisuka began maneuvers to avoid pursuit,” the Coast Guard said in a statement.
But the Kisuka, loaded with 500 crates of spiny sea urchin, 200 more than it could carry safely, sank within minutes.
“The majority of the crates were on the top deck, and the ship’s crew didn’t have time to fix them into place. During one maneuver, the load shifted and the ship flipped over,” the Coast Guard said.
Two members of the Kisuka crew drowned on that night of March 18. The other two, including the captain, were rescued and charged with illegally crossing the border into Russia. All four men were Russian citizens, and they had set sail from a Japanese port.
The Coast Guard’s attempt to seize the schooner comes amid an unprecedented government bid to overhaul the fishing industry and curb the illegal fishing of sea urchin, king crab and other seafood, which are primarily exported to Japan and South Korea.
First Deputy Prime Minister Viktor Zubkov said Thursday that acute systematic reforms — including changes to the Tax Code, customs regulations, and federal investment into production facilities and shore infrastructure — are needed to fuel the modernization of the fishing sector and ensure its economic viability.
“So far, we don’t have our own domestically made vessels, our own engines, our own refrigeration units, or our own processing equipment. ... We need to develop a portfolio of orders for our industry so as to not to import everything and in order to stimulate the West,” Zubkov said at an industry meeting attended by Federal Fishing Agency head Andrei Krainy.
The government took a first step toward revamping the industry on Jan. 1, when a new law mandating that all seafood caught in Russian waters must be hauled back to land and declared to the authorities.
The law, which fishermen have nicknamed “All Fish Ashore,” aims to curb poaching and overfishing and boost the supply of seafood on the domestic market by increasing controls over fishing in Russian territorial waters, which stretch 12 nautical miles, or 22.2 kilometers, from the coast. The authorities are now tracking each vessel’s location with a special device and making sure that they are returning their catch to shore.
“It is no secret that fishing vessels used to leave the 12-mile zone to sell their catch in the ports of neighboring countries,” Krainy told Prime Minister Vladimir Putin at a meeting last month. “This practice was especially frequent in the Far East. The Russian state had no idea how much they were catching and at what prices the catch was selling for.”
The reforms — integral parts of a 12-year development plan by the government to turn Russia into the world’s top fishing country by 2020 — are needed in a sector that sorely lacks transparency, said Alexander Medikov, a maritime lawyer for Jurinflot.
“The old regime meant easy profits for the fishermen, but it was a serious problem for the state, not only because the fishermen weren’t paying taxes but because it was impossible to account for all the fish that were caught — and these numbers are used to establish fishing quotas,” Medikov said.
Rising Fishing Power
The reforms follow more than a decade of state neglect for the industry. After the collapse of the Soviet Union, which boasted one of the world’s most powerful fishing fleets, state investment into the industry waned, and with little private investment to take its place, fishermen could not pay for ship upkeep or the purchase of modern technology and equipment.
“In the Soviet Union, we used to fish everywhere, in international waters, in our territorial waters, everywhere. We were No. 1 in the world,” said Boris Sorokin, deputy chairman of the Federation Council’s committee on sea policy.
But after the collapse, the government had more important things to do than deal with the fishing industry, Sorokin said in a telephone interview. “Now we are left with a graveyard of ships that are occasionally torn apart and used for scrap metal,” he said.
The amount of seafood caught from 1991 to 2008 plummeted by 53 percent, from 6.9 million tons to 3.3 million tons, according to government statistics based on officially recorded catches. The catch for 2008 was 2.4 percent lower than the previous year.
Meanwhile, seafood imports have grown steadily to 1.1 million tons last year, triple the amount of 1999 and close to one-third of Russia’s own catch.
The Federal Fishing Agency blamed last year’s poor catch on rusting vessels, high fuel prices and bureaucratic problems with the quota system, which regulates how much seafood each company can catch.
In 2008, Russia’s fishing fleet consisted of 2,509 vessels, 576 less than in 2003, according to the agency’s calculations.
With reforms taking effect and a state pledge to pump 33 billion rubles ($1 billion) into the industry’s infrastructure over the next five years, the government hopes to reverse the decline in seafood catch volumes already this year. January and February’s catch volumes were double what they were in 2008, and the total catch for the year should amount to 3.65 million tons, the fisheries agency said.
Slowdown at Customs
Fishermen, however, are warning that the new customs registration law and other looming regulatory measures, such as the establishment of seafood export exchange, will make fishing unprofitable.
The Association of Pollock Fishers, an influential interest group that includes 29 of Russia’s largest fishing companies, said its members lost a total of 5 billion rubles in the first quarter of 2009 after the customs registration law took effect.
“The customs infrastructure was not prepared to process the sharp increase in volumes, and this sorely hindered the work of fishing companies,” the association said in a statement.
Exporters, accustomed to shipping their catch directly to foreign ports without a customs stopover in Russia, have taken issue with the extra time and costs incurred over the past three months.
“We aren’t against the law per se, but rather the way the changes to the system were handled,” said Peter Savchuk, chairman of Nakhodka Active Marine Fishery Base, one of the country’s largest fishing companies based in Russia’s Far East.
The Federal Customs Service only made changes to its internal regulations and procedures to comply with the federal law on March 4 and officially registered the changes with the Justice Ministry on March 27 — close to three months after the law came into effect, according to information posted on the fisheries agency’s web site.
Savchuk and representatives of other export companies complained to Krainy, the head of the fisheries agency, at a recent Pollock association meeting that customs terminals at ports were severely understaffed and as a result, the clearance of their goods took days. By law, customs’ clearance of fishing vessels can take no more than three hours.
“Their frustration is understandable because fish are, naturally, a very delicate commodity,” said Medikov, the lawyer. “They may rot due to a lack of sufficient refrigeration units at the ports. If they have to be frozen for a longer period of time, companies will incur extra costs.”
Seafood Exchange
Large seafood exporters are also up in arms about the creation of the seafood exchange, which could open as soon as this fall. Once established, it will be the only legal way for fishermen to sell their seafood abroad. Exporters fear that the price transparency that will accompany the exchange will decrease seafood prices and hurt their global competitiveness.
“If the exchange is created, nobody is going to sell on it. All the fish will just sit in freezers, because it is not profitable to sell or buy this way,” said Savchuk of fish exporter Nakhodka.
German Zverev, president of the Association of Pollock Fishers, said the current export system works smoothly and should not be tampered with. “Prices on the market are already going down with each negative signal, so I don’t understand why [the state] is inhibiting Russian exporters and making us sell low on global markets,” Zverev said in a statement on the association’s web site.
Natalya Kazakova, a lawyer for Nakhodka, said exporters should be given the choice to participate in the exchange or not. “It violates our economic freedom to force us to sell on an exchange,” she said. “For some smaller companies it might make sense, but others may not want to disclose — and shouldn’t have to disclose — their buy and sell prices to the public.”
The Federal Fisheries Agency, however, is unlikely to give up its drive to better regulate the seafood trade. The agency maintains that the price transparency afforded by the exchange will make it nearly impossible for companies to hide sales revenues, thereby ensuring that the state collects taxes in full.
Plans are also in the works for a domestic fish exchange that could make fish more affordable for Russians. The state is aiming to increase fish consumption per person from its current level of 12.6 kilograms per year to 22 kilograms by 2020 by enabling small retailers, restaurants and stores to buy directly from fishermen and fish product producers.
“This is a market measure to cut down the number of middlemen and as a result reduce the retail price of fish,” Krainy said in a statement on his agency’s web site.
The government also wants to edge out middlemen who ship fish from ports to inland towns and cities by creating a large fish trading and transportation company, the statement said.
The agency hopes that the company and the domestic exchange cut fish shipping costs by 17 percent and retail prices by 15 percent and create 900 new jobs.
TITLE: Rental Rates Plummet As Retail Premises Empty
AUTHOR: By Yelena Dombrova and Nadezhda Zaitseva
PUBLISHER: Vedomosti
TEXT: The owners of commercial real estate on St. Petersburg’s main thoroughfares have dropped their rental prices by 30 to 50 percent, but the volume of empty premises continues to grow.
In the first quarter of this year, retail premises on Nevsky Prospekt have decreased the most dramatically in price, from 9,000 to 14,500 rubles ($266 to $428) per square meter per month in the second quarter of 2008 to 3,500 to 8,000 rubles per square meter per month, according to research conducted by Colliers International. Retail premises on Bolshoi Prospekt of the Petrograd Side can be rented for 1,500 to 5,500 rubles per square meter, down from 6,500 to 9,000 rubles a year ago.
Rates on Nevsky are half of what they were last year, said Roman Ignatenkov, a representative of the Uspekh real estate agency. Landlords are mostly prepared to reach a compromise with their tenants, he said.
There are enough people who want to rent premises, but it is difficult to reach an agreement with them, since companies ask for large discounts, said a representative from Jensen Group, which has been searching for tenants for a shop at 51/9 Bolshoi Prospekt since last year. The company is currently offering the premises for $60 per square meter.
The average rent on Nevsky Prospekt and the city’s other main streets has decreased by 35 to 50 percent compared to last year, said Lyudmila Reva, director of brokerage services at Astera St. Petersburg. The company manages 35 premises on Nevsky and another 22 on Bolshoi Prospekt of the Petrograd Side.
The majority of landlords have dropped their rates by 30 or even 40 percent, said Marina Sheludko, general director of the Idealnaya Chashka chain of cafes in St. Petersburg. She said that only premises that had previously been overpriced had halved their prices. As a result of the new rates, the company has opened a new cafe at 32 Nevsky Prospekt.
Even prices that were reasonable before the crisis struck have decreased by 25 to 30 percent, said Filipp Kapchits, general director of the St. Petersburg office of the Sela clothing stores corporation.
Virtually all street retail has become 30 to 40 percent cheaper, though some landlords are still asking 1.8 million rubles for 200 square meters (9,000 rubles per square meter per month), said Denis Radzimovsky, general director of Vkus, which operates the Mikc chain of coffee shops. Previously, it took six months to find new premises, whereas now it only takes a month, he said.
According to data from Colliers International, many shops in the city remain empty — more than 7,700 square meters on Nevsky, more than 3,700 on Bolshoi Prospekt of the Petrograd Side and more than 2,700 on Moskovsky Prospekt. The owners are not prepared to drop prices as fast as the market requires them to, explained Boris Yushenkov, director of the St. Petersburg office of Colliers International.
Opportunities for tenants have also changed. Turnover at clothing stores has decreased in volume by 20 to 30 percent, according to Kapchits, while Sheludko said that demand for prestigious, image-boosting premises was falling.
Radzimovsky said that at food establishments, the cost of renting the premises should equal about 20 to 25 percent of revenues, but that in some locations it was up to 50 percent.
In clothes retail, rent should not exceed 20 percent of revenues, said Kapchits. He said that two years ago, Sela more or less stopped developing its street retail outlets due to unjustifiably high rent rates, but that this year the company might open a new store on one of the high streets. “Previously, we used to get four or five interesting propositions per year, whereas now we get as many in one week,” he said.
The footwear chain Clarks is waiting for rent rates to decrease and for the appearance of suitable premises, according to Valery Popov, head of the company’s sales department. The company New Step, which represents the Geox footwear brand in Russia, is also planning to open stores on the city’s main streets. Irina Unchikova, the company’s executive director, said that despite the decrease in rental costs, rates in St. Petersburg are still unjustifiably high, which is why there are so many premises standing empty on the city’s main retail thoroughfares.
The time when property owners could make huge profits has passed, and almost everybody realizes this, but no more than 15 percent of owners are willing to sell their properties, said Reva. Only a few premises are up for sale, since owners are reluctant to sell potential source of income, and rent is an important source of revenue for them, said Yushenkov.
TITLE: Forbes List Reflects Effect Of Crisis on Billionaires
AUTHOR: By Torrey Clark and Anastasia Ustinova
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s 100 richest people lost 73 percent of their wealth last year as the economic crisis slashed the value of commodity and banking assets, Forbes Russia said.
“Not a single business leader in the Golden Hundred increased his fortune in the past year,” Forbes said in its annual list published Friday. Only 32 billionaires remain, compared with 110 in the previous year.
Mikhail Prokhorov, 43, with a fortune of $9.5 billion, topped the list, Forbes said. In April last year, Prokhorov sold 25 percent of GMK Norilsk Nickel, Russia’s biggest mining company, to Oleg Deripaska, 41, for about $7 billion in cash and 14 percent of aluminum producer United Co. RusAl.
The value of assets held by the so-called Golden Hundred tumbled to $142 billion as of Feb. 13 from $522 billion a year earlier, according to the magazine. Those who “suffered least” sold interests before the financial crisis, which has wiped 38 percent from the Micex index and 30 percent from the value of the ruble against the dollar since Aug. 1, Forbes said.
Russia is sliding into its first recession since 1998, when the government defaulted on $40 billion of domestic debt and oil slumped below $12 a barrel. The government has said the economy may contract 2.2 percent this year, after Urals crude dropped 64 percent to about $50 a barrel from a July 2008 peak and prices for metals exports fell.
“We’re all experiencing financial problems,” Alexander Lebedev, who owns a bank, shares in Aeroflot and calls himself the world’s biggest potato farmer, told Bloomberg Television in an interview last week. “All of us, without an exception.”
Lebedev disputed Forbes’s estimate that his fortune shrank by $2.5 billion to $600 million, cutting his ranking to 63rd from 39th. “The market came back, so probably half a billion,” he said yesterday. “Where’s another $2 billion?”
Deripaska, the first of the billionaires to cede secured assets to banks, dropped to 10th from first place after losing an estimated $25 billion in the past year, the most on the list. Forbes put his fortune at $3.5 billion now. Deripaska downplayed the fortune Forbes ascribed to him in 2008.
Lukoil Deputy Chief Executive Officer Leonid Fedun rose to eighth, with a fortune of $4.3 billion. His loss of $2.7 billion was the least among the country’s 20 richest men.
Boris Berezovsky, the self-exiled Kremlin opponent, was one of four men who closed out the group of 32 billionaires. Yelena Baturina, the wife of Moscow mayor Yury Luzhkov, ranked two places below the billionaires with $900 million, remaining the only woman on the list.
The highest ranked of eight people joining the list for the first time was Yury Bortsov, 38, who with his father sold control of the Lebedyansky juice maker to PepsiCo and Pepsi Bottling Group in a $1.4 billion sale last year. Forbes rated Bortsov 71st, with $500 million.
TITLE: In Brief
TEXT: Toyota to Close for Week
ST. PETERSBURG (Bloomberg) — Toyota Motor Corp. said it will close its Russian car factory for five working days next month to slow production amid “unstable” market conditions.
Toyota will close its factory in St. Petersburg from May 1 to May 11, a period that includes two national holidays, Toyota said in an e-mailed statement on Friday. Workers will get two-thirds of their normal pay.
Suzuki Plant Postponed
TOKYO (Bloomberg) — Suzuki Motor Corp. will delay a plan to build a factory in St. Petersburg, the Nikkan Kogyo newspaper reported on Friday, without saying where it obtained the information.
The factory won’t open until at least 2011. Suzuki initially planned to open the plant this autumn, the report said.
GAZ Profits Unexpected
ST. PETERSBURG (Bloomberg) — GAZ first-quarter revenue reached 18.5 billion rubles ($554 million) after the Russian government balked at aiding billionaire Oleg Deripaska’s automaker and the company cut costs, Vedomosti said.
Revenue from cars at the Nizhny Novgorod-based company reached 11.3 billion rubles, or 13 percent, more than GAZ expected, Vedomosti said, citing a presentation to bondholders.
GAZ trimmed administrative and personnel costs and cut its workforce 29 percent to 84,522 people, Vedomosti said. The company plans to reduce the number of employees to 60,000 by the end of June, the newspaper said.
Ruble May Lose 10%
MOSCOW (Bloomberg) — Russia’s ruble may depreciate another 10 percent by the first quarter of next year as inflation quickens and the economy worsens, ING Groep NV said.
Inflation of more than 14 percent this year will erode some of the gains in competitiveness achieved by the central bank’s 34 percent gradual devaluation of the ruble between August and the end of January, Tatiana Orlova, a Moscow-based economist for ING, wrote in a client note Monday.
ING doesn’t expect Russia’s economy to rebound this year and “prolonged weakness of the economy” will add to the case for a weaker ruble versus its dollar-euro basket, Orlova said.
Baltimor Changes Mind
MOSCOW (Bloomberg) — Baltimor-holding, Russia’s largest ketchup maker, said it’s talking to investment funds and Russian banks about selling a minority stake to help pay debt.
Baltimor is not in talks with Unilever or any other potential industrial buyers, Nadezhda Chernysh, a spokeswoman for Baltimor, said by phone from St. Petersburg on Friday, correcting her previous statement.
A stake sale may be announced “soon,” Chernysh added. The company had sales of 5.1 billion rubles ($152 million) in 2008 and has debt of 2 billion rubles, she added. Baltimor’s total value may be $100 million, including debt, according to Irina Yarotskaya, an analyst at Otkritie Financial Corp. in Moscow.
Sochi Resort Gets Loan
MOSCOW (Bloomberg) — Russian billionaire Vladimir Potanin’s Rosa Khutor ski resort project in Sochi borrowed 3.15 billion rubles ($94 million) from state development bank VEB.
The loan is part of a 15-year, 21 billion-ruble financing agreement Rosa Khutor signed with VEB last year to build infrastructure for the 2014 Winter Olympic Games, VEB said in an e-mailed statement Monday.
TITLE: Vodokanal to Receive Grant for Waste Facilities
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: The Northern Dimension Ecological Partnership (NDEP) is to provide St. Petersburg’s state utility company Vodokanal with a grant for 24 million euros.
The money has been allocated to help finance work on the extension of the main sewage collection facility and reconstruction of the northern aeration station, Vodokanal’s press service said.
The agreement on the grant was signed within the framework of the Days of St. Petersburg in Helsinki last week.
“The NDEP grant is one of the results that St. Petersburg Vodokanal has achieved in its quest to attract non-budget sources to the extension project of the main collection facility,” said the statement from the press service.
“There is also the potential to receive more grants, including one from Finland’s Environment Ministry, and purpose-specific loans from the European Bank of Reconstruction and Development, Northern Investment Bank and European Investment Bank.”
Meanwhile, 588 million rubles have been allocated from the St. Petersburg budget for the project, along with 820 million rubles from the federal budget.
The NDEP grant will be spent on purchasing equipment for a unit to regulate drainage of the collection facility and on the reconstruction of the northern aeration station.
Vodokanal launched the first stage of the main sewage collection facility in the autumn of 2008, enabling the sewage system to take up to 90,000 cubic meters every 24 hours, and to clean up to 87 percent of St. Petersburg’s waste water.
When the construction of the collection facility is completed, 98 percent of all the city’s waste water will be cleaned. The facility is due to be completed by 2012.
The project for the collection facility project was signed by the state government back in 1989. The facility was needed to transport waste water from residential buildings and plants located in the city’s Nevsky, Central, Primorsky, Vyborgsky, Kalininsky and Krasnogvardeisky districts to the northern aeration station in the village of Olgino just outside St. Petersburg. The project was however postponed due to a lack of financing, before construction was resumed in 2005.
Consequently, until last year, more than 300,000 cubic meters of the city’s sewage was dumped without cleaning into the River Neva and its tributaries.
The extension project of the collection facility consists of two 12.2-kilometer sections.
TITLE: Flight to Dusseldorf Launched
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Germany’s flagship airliner Lufthansa launched a new daily flight to Dusseldorf from St. Petersburg on Monday.
“We are glad that Lufthansa has been flying to St. Petersburg for 30 years already,” Ronald Schulz, Lufthansa’s regional director for Russia and the CIS, said at a press conference at the city’s Pulkovo airport.
“In 2006, we launched a new flight to Munich, and today we offer a flight to another German business and shopping center of Dusseldorf. As you see, we are devoted to the Russian market,” said Schultz.
Bart Buyse, Lufthansa’s regional manager to St. Petersburg and the Russian Northwest, said the launch of the company’s new flight “confirms the significance of the Russian market for Lufthansa.”
The flight to Dusseldorf will be Lufthansa’s sixth daily flight from St. Petersburg, along with three flights to Frankfurt and two to Munich, Buyse said.
“Dusseldorf is the third biggest airport in Germany, and it’s a big transition point to Paris, Milan and other European cities,” he said.
Sergei Piliponsky, transport director at Pulkovo Airport, said that Dusseldorf is a destination that has a lot of potential for the airport as a place in which they are observing “stable growth in demand”.
“In 2008, more than 42,000 passengers traveled to Dusseldorf and back by direct flights,” he said. “More than 57,000 passengers flew to Dusseldorf for transit flights.”
During the first two months of 2009, more than 15,000 people flew to Dusseldorf for direct and transit flights, Piliponsky said.
“Having these positive dynamics on the market, we intend to develop this direction,” Piliponsky said.
A special offer of 2,960 rubles (without taxes) for a return flight to Dusseldorf in economy class will be available until May 7 for travel until June 20.
When asked if Lufthansa was offering the discount due to the financial crisis, Schulz said it wasn’t because of the crisis, but was instead due to the fact that during the past two years, the company has been very successful and has seen good revenues that helped it to finance the offer.
Buyse said that in launching the new flight to Dusseldorf, the company also aimed “to promote business between the two countries.”
A 70-seater CRJ 700 airplane will fly to Dusseldorf. The flight will take about two hours and 55 minutes, leaving St. Petersburg at 5.20 p.m. The return flight will arrive in St. Petersburg at 4.35 p.m.
Lufthansa representatives said the company was not yet planning a flight to the German capital of Berlin from St. Petersburg.
“Berlin is more of a tourist destination, but we consider our flights more from an economic point of view,” said Schulz.
Buyse said passengers from the Russian northwest actively use Lufthansa services partly to take advantage of the opportunity for private and corporate clients to receive bonus tickets as part of the Miles&More and Star Alliance Company Plus programs.
Lufthansa currently operates 146 flights a week from Russia, flying from St. Petersburg, Moscow, Yekaterinburg, Nizhny Novgorod, Samara, Ufa, Perm, Rostov-on-Don and Kazan.
TITLE: State Spending to Be Slashed
AUTHOR: By Anastasia Ustinova
PUBLISHER: Bloomberg
TEXT: MOSCOW — The Russian government may cut planned expenditures by as much as 30 percent next year as the world’s biggest energy exporter runs through its cash reserves, Deputy Finance Minister Tatyana Nesterenko said.
“The situation next year will be very difficult,” Nesterenko told reporters in Moscow on Friday. “We won’t see an increase in revenues, while our cash reserves will be stretched to the limit.”
Finance Minister Alexei Kudrin said on April 14 that 2010 spending may be cut by 10 percent to about 9 trillion rubles ($269 billion) as revenue is expected to decline by more than 30 percent compared with 2009.
Russia is bracing for recession as tumbling demand cuts tax revenue and pushes down the price of Urals crude oil, its chief export earner. The Russian government has revised the 2009 budget based on a $41 per barrel price for oil and expects a deficit equal to 7.4 percent of gross domestic product. The previous budget was based on an average price of $95 per barrel.
The government had a budget deficit for the first time since 1999 as the government spent 50.5 billion rubles more than it collected in the first quarter. Nesterenko said 124 billion rubles had been spent from Russia’s oil funds as of April 16 to cover some of the shortfall.
“I am confident the budget will allow us to fulfill all of the obligations we have this year,” Nesterenko said. “But we might use the reserve more than we’d like and this could seriously hurt the 2010 budget.”
TITLE: Half a Million Russians Affected by Growing Wage Arrears
PUBLISHER: Reuters
TEXT: MOSCOW — Wage arrears rose 8.3 percent last month to a new three-year high, affecting half a million people, the State Statistics Service data showed Friday.
Arrears, an indicator of stress for companies and a cause of mass protests in 1998, stood at 8.76 billion rubles ($262 million) on April 1, compared with 8.09 billion rubles a month earlier.
After the 1998 crisis, companies resorted to paying workers in goods, and wage arrears reached $3.8 billion. Unpaid wages sparked social unrest, and the payment of arrears was an issue in Vladimir Putin’s 2000 presidential campaign. This time, protests have been relatively small scale so far.
The lion’s share of arrears, 94.5 percent, was attributed to companies not having enough cash. The rest was because of not receiving local, regional or federal budget funds on time.
Of the sectors, manufacturing accounted for nearly half of the wage arrears. Russia’s manufacturers have slashed production because of slumping domestic and global demand while lower commodity prices have further strained their resources. About one-fifth of the unpaid wages were in the transportation sector, where freight volumes and passenger numbers have slumped. Construction accounted for 12 percent of arrears and agriculture for 7 percent.
Some 30 percent of the current wage arrears date back to last year, while 8 percent were accumulated even earlier.
TITLE: President Medvedev Says State Will Step In to Reduce Mortgage Rates
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia has provided funds and loans to its mortgage-lending agency in an attempt to reduce mortgage rates to pre-crisis levels of about 12 percent, President Dmitry Medvedev said.
“We have increased its capital by 20 billion rubles ($600 million) and another 40 billion will come as loans,” Medvedev said according to the transcript of an interview with Russian TV channel NTV posted Sunday on the Kremlin web site.
After growing at about 7 percent a year since 1999 on the back of revenue from oil, gas and metals and consumer spending, the government expects the economy to shrink this year.
Medvedev said the measure aims to cut rates by about 6 percent. The addition of regional co-financing would reduce the rate further.
“The overall effect could be a reduction of 8 or even 8.5 percent,” Medvedev said. “And thus we would come back to the rate we had; the one at which people were actually willing to take out a mortgage.”
Russian mortgage lending in 2008 increased by 13.8 percent to 633 billion rubles, Medvedev said. It will also set aside 100 billion rubles “specifically for the housing and public utilities sector and the renovation of decrepit housing,” he told NTV.
The state aims to create 1.07 million temporary jobs in the coming year as it seeks to retrain workers and spur small business growth, Medvedev said.
TITLE: Luxury Cars Defy Trend of Plunging Sales
AUTHOR: By Courtney Weaver
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Plunging automotive sales have brought domestic auto giants to their knees, and even foreign majors are feeling the pinch.
New car sales in Russia declined 40 percent overall in the first quarter, but a few luxury brands are bucking the trend thanks to competitive prices and new models.
Four brands posted year-on-year sales increases in the first quarter, and three of them rank high in the premium car segment: Hummer, Infiniti and Cadillac.
General Motors is continuing its desperate search for a buyer for Hummer after the brand’s worldwide sales dropped 76 percent year on year in March. In Russia, however, sales couldn’t be better, growing 89 percent in the same month.
While Cadillac and Infiniti boasted first-quarter sales growth of more than 50 percent year on year, other luxury brands felt the pinch throughout the broader market.
Overall new car sales in Russia plummeted 47 percent in March and 40 percent first quarter, and sales for other high-end cars tumbled in turn.
Lexus sales plummeted 74 percent first quarter; Mercedes-Benz sales fell 57 percent; and Porsche saw a 45 percent drop.
Neither the ruble devaluation nor the tax increase on imported cars has been kind to the foreign auto market. By offering prices that beat predevaluation 2008 ones, however, Hummer has been able to successfully market its new H2 and H3 models with competitive deals, said Roman Skolsky, a spokesman for Hummer and Cadillac Russia.
Ivan Bonchev, an auto analyst at Ernst & Young, said it was hard to determine whether the premium segment’s relative success was a short-term trend or a strong indicator of continued success.
While the premium market upswing here could just be the “delayed responsiveness of the Russian market,” it could also mean that the more affluent customers remain less affected by the crisis, he said.
Then again, despite poor March figures, demand on the overall market may also be showing signs of recovery with an increasing number of customers taking out car loans, Bonchev added.
“With the oil price and national currency being strengthened recently, to a certain extent confidence is already coming back as well, and we see that in the increase in the number of cars sold on credit in March,” he said.
While most banks offer auto credit at rates as high as 20 percent, the number of cars bought on credit rose to above 15 percent in March from just over 10 percent in January, perhaps indicating a return of consumer confidence.
In turn, automakers’ confidence appears to be growing as well.
BMW, which bested most by retaining flat sales’ growth first quarter, announced last month that it planned to begin production of its high-end X5 and X6 sport utility vehicles in Russia this summer. And they might just see results.
Most high-end brands have begun to mark down prices significantly, and the SUV market is faring well, with many customers choosing to splurge on four-wheel drive vehicles whose prices have been marked down to levels not much higher than those for a lower-end sedan, Bonchev said.
TITLE: Machinery Producers Call for Tax
PUBLISHER: Combined Reports
TEXT: MOSCOW — Farm equipment producers are asking the government to set a 15 percent import duty to support domestic production, an industry group said.
The duty on imports of seeding machines, plows, grain separators and other equipment similar to the types produced in Russia would boost domestic output 35 percent in 2010, Soyuzagromash said in a statement. Soyuzagromash represents Russia’s biggest producers of farming equipment.
Russian farmers bought $5.55 billion worth of agricultural equipment last year, about 65 percent of which was imported, the group said. Imports of farming equipment surged as much as sevenfold over the last three years.
Switzerland’s Bucher Industries, the world’s biggest maker of feed-mixing equipment, would be hurt directly by such a tax, CEO Philip Mosimann said in an interview.
“We are fighting against it,” Mosimann said by phone. “Of course, this doesn’t comply with the WTO,” he said. Russia has been seeking entry to the World Trade Organization for 16 years, but periodic trade disputes, most recently over timber and meat, have stalled its bid.
Mosimann said his company made between 10 million euros ($13 million) and 20 million euros in annual sales in Russia with farming equipment. “It’s not dramatic, but you have to nip this in the bud.”
(Bloomberg, SPT)
TITLE: The New Kremlin Dreamers
AUTHOR: By Michael Bohm
TEXT: Several weeks ago in Voronezh, First Deputy Prime Minister Igor Shuvalov said the ambitious goals for “Strategy 2020” remain in place despite the economic crisis. He also said Russia has every chance of becoming the world’s most desirable place to live by 2020. “This is no fairy tale,” Shuvalov added, but if you examine the strategy closely, it certainly looks like one.
Consider the four main goals of Strategy 2020:
1. Increase per capita gross domestic product to $30,000 from its current $15,800 based on purchasing-power parity. Although it is difficult to compare developed economies with developing ones, it took Canada 28 years, Britain 24 years, Japan 27 years and the United States 35 years to double their per capita GDPs. How will Russia do it in only 11 years? True, if you look at a BRIC country — China — it was able to double its per capita GDP income in less time, but China’s has enjoyed average GDP growth of more than 10 percent over the past decade (its “crisis growth” in 2009 is expected to be 8 percent!), while Russia’s growth rate has been much lower for this period. It would be more appropriate to look at Brazil, another BRIC country, which has a profile much closer to Russia. Brazil has not been able to accomplish doubling its per capita GDP over a 11-year period since 1980.
2. Increase life expectancy to 75 years. This doesn’t require any doubling, but it still requires a 13.6 percent increase over current life expectancy of 66 years. The only way this goal can be reached is if Russia is able to bring its health care system up to Western standards by 2020 and if the majority of Russians are able to change their unhealthy lifestyles.
3. Increase the middle class to 60 percent of the population. This is a tricky one since it depends on how you define “middle class.” Russia often uses a monthly income of 15,000 rubles ($454) as a starting point. True, every country has its own definition of a “middle-class lifestyle,” but 15,000 rubles is a stretch any way you look at it, particularly considering Russia’s chronically high inflation.
4. Jump to the No. 5 spot from its 2008 ranking of No. 8 in the world in terms of nominal gross domestic product. Let’s look at who occupied that spot in 2008 — France, whose nominal GDP is roughly 70 percent larger than Russia’s according to the CIA World Factbook. Since Russia is so dependent on natural resource exports for its GDP growth, its economy can grow only if the economies of the leading oil and gas importers — mainly the Group of Seven nations and China — grow. If these countries decline, so does Russia, as the current crisis clearly shows. Of course, nanotechnology, commercial space and other high-tech sectors could be the silver bullet that propels Russia to the No. 5 spot, but the logical question is: Even if Russia becomes a high-tech leader, who is going to buy all of that wonderful technology if the world’s leading economies are in decline?
Once the crisis passes, what would it take for Russia to replace France in the No. 5 spot? If France’s economy grows at a modest 2.5 percent annually, Russia’s economy would need to grow by 9 percent per year to close the gap. But even in the oil-boom years from 2004 to 2008, Russia’s real GDP growth averaged only about 7 percent annually.
But the most important ranking is not mentioned in Strategy 2020 at all — the Transparency International’s corruption index, in which Russia ranks 147 out of 180 countries in 2008. Corruption is particularly onerous for Russia’s struggling small and medium-size businesses, which make up only 10 percent to 15 percent of the country’s GDP. In the United States, small and medium-size businesses are the engine of economic growth, comprising roughly 50 percent of the country’s private GDP and creating about two-thirds of net new jobs annually.
As long as Russian bureaucrats (and competitors) are free to terrorize businesses by creating “administrative barriers,” extorting bribes and raiding, economic growth in the real sector will always be insignificant. To his credit, President Dmitry Medvedev is backing a new law to assist small businesses, which will, among other things, limit the number of government inspections of businesses. Most likely, however, these limitations will be easily sidestepped when bureaucrats simply extort a larger amount of money per inspection.
To be sure, many Russians already consider Russia to be a very desirable place — without Shuvalov’s help. And this is also true for foreigners, including the editors and reporters of this newspaper, who voluntarily choose to live and work in this country. But for those who don’t believe this to be true, even the most advanced Kremlin propaganda will do little to make Russia more desirable. To rephrase a Russian expression, no matter how many times the Kremlin PR machine repeats the word “halva,” it won’t make Russia any sweeter.
Kremlin myth-making has a rich tradition, dating back to the very beginning of the Soviet Union. When British writer George Wells visited Lenin in 1920 and learned of his utopian 10-year plan to create wonders out of a country very much still in ruins in the aftermath of the Bolshevik Revolution, he called Lenin “The Kremlin Dreamer.”
Shuvalov’s vision of Russia 2020 is also eerily reminiscent of Nikita Khrushchev’s grandiose promise that he made at the 1961 Communist Party congress: that full-blown communism — defined roughly in terms of a U.S.-style middle-class standard of living for every Soviet citizen — would be achieved in 1980. As the old joke went, instead of communism in 1980, the Soviet people got the Olympic Games for two weeks and the Afghanistan war for nine more years.
After the global economic crisis blows over, Russia has a lot of potential to grow by 2020 — particularly if it can develop what Prime Minister Vladimir Putin calls its wealth of “human capital.” But for this to happen, entrepreneurs, scientists and other innovators must be free to be creative and innovative — above all, they must be free from administrative barriers and corruption.
United Russia and the government should adjust Strategy 2020 to make it more realistic and less heroic in the Soviet Stakhanovite tradition. Perhaps U.S. President Barack Obama could serve as a good example. He has done a lot to modify U.S. ambitions after the disastrous mistakes of President George W. Bush and after the humbling impact that the financial crisis has had on U.S. hubris. And Obama was able to do this with dignity.
The Kremlin should try to do the same, and it can start by cutting every Strategy 2020 goal in half. This probably should have been done before the crisis, but it is even more compelling now. Even the notoriously pessimistic Finance Minister Alexei Kudrin, who has warned about a long and difficult recovery, has not called for Strategy 2020 to be reviewed.
In addition, a new crucial goal to Strategy 2020 should be added: to improve Russia’s corruption ranking to 100 from 147. To be sure, this would be no easy task. No Russian tsar, general secretary or president has been able to significantly curb corruption, but perhaps Medvedev’s anti-corruption program has the teeth to do the job.
Although Russians often say that it doesn’t hurt to dream, feeding people myths is just as dangerous now as it was during the Soviet period. It is hard to believe that after 73 years of Soviet utopian slogans, superheroic five- and 10-year plans and empty promises, the Kremlin has essentially returned to spinning the same fairy tales again. The Kremlin should remind itself that the ridiculous Soviet myths and unfulfilled promises, which made Soviet leaders the laughing stock of the world, did more to discredit, undermine and ultimately bury the Communist Party and the Soviet Union than a million dissidents could ever do.
When Shuvalov was a young teenager in the late Brezhnev years, he, like every other Soviet citizen, listened to the Communist patriotic song about heroic Soviet achievements — “We were born to turn fairy tales into reality”. It was a national favorite on radio airwaves and sung at summer camps and during holidays. Although that was 30 years ago, I have a secret suspicion that Shuvalov is still humming this tune on his way to work.
Fairy tales are wonderful, but they should be read to children. They have no place in Strategy 2020.
Michael Bohm is the opinion page editor of The Moscow Times.
TITLE: The Whitest of White Papers
AUTHOR: By Richard Lourie
TEXT: The old joke about a camel being a horse designed by committee is unfair to camels and committees. No committee could have come up with the camel’s ungainly elegance and humorous ugliness. Committees are more likely to produce the bland than the unique. That is certainly the case with “The Right Direction for U.S. Policy Toward Russia,” a report produced by the Nixon Center and Harvard University’s Belfer Center. Chaired by former U.S. Senators Chuck Hagel and Gary Hart, the commission’s members include former U.S. ambassador to the Soviet Union Jack Matlock, Nixon Center president Dimitri Simes and Harvard professor Graham Allison, all of whom I am glad to read individually.
But the report, bland with abstraction and exhortation, comes close to being unreadable. In ringing tones we are told the obvious: “Not only rhetoric but swift action is essential to build a relationship with Moscow ... “ In fact, the report itself is mostly rhetoric lacking the action of strong verbs and good ideas. “The Obama administration must establish an effective, comprehensive bilateral structure to facilitate consultation, dialogue and negotiation.” Why must it, don’t we have any such structures already? And, if not, what is this new structure supposed to look like? Not a word.
In the report’s list of specific recommendations, we find this in its totality: “Seek to make Russia an American partner in dealing with Iran and the broader problem of emerging nuclear powers.” An airier statement could hardly be imagined. And what if Russia does not want to be “made” into an American partner and prefers an Iran that is hostile to the West and therefore cannot become the alternative energy source that Russia dreads? The report makes an appeal to “support European efforts to develop non-Russian sources of natural gas ... “ without once wondering how these contradictory goals can be reconciled.
There are a few good points, even if they are made hesitantly. The report acknowledges that “options other than NATO membership” might be best for Georgia and Ukraine and that the planned missile defense system in Poland deserves a “new look.” The one sharp-edged idea is to reduce proliferation risks “perhaps by exploring the creation of an international nuclear fuel bank that would render national enrichment efforts unnecessary.”
As with U.S. Secretary of State Hillary Clinton in China, the authors signal that human rights are not at the top of the agenda. “What is most important to U.S. security interests in Russia, however, is a rational and competent government” (always Russia’s strong suit). The goal is partnership, “however uneasy,” on the big issues of nonproliferation, arms control, terrorism and economic recovery.
The one time the paper does take a strong, clear stand, it gets itself into trouble: “Even if the U.S.-Russian relationship should break down completely, Russia does not have the will or the resources for a new Cold War.” But what could cause the biggest problems in the bilateral relationship is if, for example, Russia gobbles more of Georgia or if the Russian part of Ukraine secedes. As far as “will” is concerned, ill will is never lacking anywhere. And as for the supposed lack of Russian resources, this won’t cost so much. The recent cyber-incursions into the U.S. energy grid by computers in China and Russia weren’t expensive. Besides, authoritarian regimes usually have no trouble finding the funds they need to cause trouble.
Maybe we’ll get some ideas we can sink our teeth into when the authors of this whitest of white papers start writing again as individuals.
Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”
TITLE: Singer Birkin Speaks Out on Human Rights in Russia
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Despite performing at a luxury nightclub in Moscow and upscale restaurant in St. Petersburg over the weekend, Jane Birkin’s visit to Russia was to support Russian human rights organizations, the France-based British singer said in an interview with The St. Petersburg Times on Monday. Birkin used the opportunity to speak out against human rights violations and the rise of xenophobia in Russia.
She dedicated songs to Anna Politkovskaya, the political journalist shot dead in Moscow in 2006, and to human rights lawyer Stanislav Markelov and journalist and anti-Nazi activist Anastasia Baburova, who were both killed in Moscow in January. Another song was dedicated to three Russian rights organizations — Memorial, a group that investigates crimes committed during the Soviet era and fights for human rights in contemporary Russia; Soldiers’ Mothers, an organization set up to defend the rights of conscripts, recruits and their relatives; and the SOVA Center, which monitors hate crime in Russia.
Q: I heard that the proceeds from the Russian concerts will go to charity. Is it true?
A: I would like to do that; I don’t know whether they can accept or not. I don’t want to take any money out of Russia. I don’t want to profit in any way from the concerts — I did them because I wanted to speak out for Memorial, the SOVA Center, and Soldiers’ Mothers.
Q: Was there any contradiction between the setting, the public and the ideas you wanted to express? I mean restaurants, maybe the wrong public.
A: I don’t think any public is wrong. I think that if you have the chance to sing with people who invite you to come to St. Petersburg or to Moscow, then as long as it’s not run by the mafia, I think this is an opportunity for me.
I can’t fill a big concert hall, I’m not well-known enough by the Russian public. Last night, I was able to say what I wanted, I was able to sing with my orchestra, and I’m very aware that not many people could afford the tickets, but, on the other hand, it gave me the opportunity to speak to all of you, so maybe the best thing is always to come — not to China, but to Russia. Even if you don’t agree with the government, then you can stick up for ordinary people, even if ordinary people weren’t necessarily here last night.
I’m talking about poor people, people whose houses are falling down, and maybe if you push the house too hard, you’ll push the whole street down, and then you could put up a big building with Dolce&Gabbana or Dior.
I read Anna Politkovskaya’s diaries, and I read about her sadness for people like war veterans who had to go on hunger strike because they weren’t paid anything. Some widows have no money. Some Russian soldiers don’t come back and the parents just get a head; they don’t even know where their sons died.
In 2008, 11 people died as a result of hate crimes in St. Petersburg. Maybe by me coming as a foreigner with my foreign orchestra, then people might think.
In France, if you kill somebody because they’re a foreigner, you usually get found out, you go to prison.
At Anna Politkovskaya’s trial in Moscow, they acquitted three people and the person who probably did it wasn’t there. I was told by a newspaper that rang me in France about the murders of Anastasia Baburova and Stanislav Markelov.
I could stay in Paris, but I would rather come here to honor these people who are brave, much braver than me. I just sang a concert, but if I can talk about them, maybe their parents will hear about it. I think the worst thing in the world is being indifferent. If you’re indifferent, then you say if they die in that country, I don’t care. But I do care.
There’s so many things I love about the Russians. Today I went to the [Alexander Nevsky Lavra] cemetery, and there were ladies there having a picnic at the grave, and they said, “Come and drink the vodka!” They were so sweet. And that was a typical Russian thing — in France or England you’d never find that!
When I go back to Paris, the first play I’m going to see on Friday is Chekhov’s “The Cherry Orchard.” It’s a wonderful production.
Russian people touch me very much, and Serge [Gainsbourg] was Russian, so it seems natural that I should come and sing his songs here in Russia. Three quarters of my show was Serge’s songs.
Q: Has Russia changed since you were last here four years ago?
A: I don’t know. In St. Petersburg I didn’t notice any particular changes, but I heard that they were going to take down the Summer Gardens. When people say “restore,” they can restore it in an artistic way, so it’s beautiful, that’s one thing. If you make it into a Disneyland, that’s another thing. The romantic side of St. Petersburg for me is the Gardens as they are, because Pushkin walked there. But people can take all this romantic side away — we did it a lot in London, there’s a lot of things that sadly have gone.
There’s a house in Paris that looked so beautiful. Some rich Italian, I think, bought it and he just waited for it to collapse. I saw this beautiful house falling down, and I thought, “Will no one save it?” He waited for it to fall down and then he built a high-rise building.
So it happens. But you fight for it. In Paris, we’re allowed to demonstrate, we’re allowed to say “No! I’m not d’accord! [agreed]. And the good thing about democracy is having a party that says, “No! I don’t agree. Even if I’m wrong, I don’t agree.” I think you should discuss it, see who suffers from it, see who benefits from it. And let it be transparent.
Q: There is even less democracy in Russia now — public protests mostly get banned, and the police are sent to suppress them.
A: If you say so, I believe you, and the journalist who rang me and told me about those two murders and about xenophobia getting worse. I can’t see what’s worse, but if you tell me, then I believe you. Having censorship on everything just makes you tired and depressed. If you can’t fight for what you believe in, you finish by caving in, and that’s a pity, because you need a lot of energy to keep fighting. So I admire Memorial.
There was a party in St. Petersburg that I think has been banned now [from the parliament], Yabloko. This party stands up for what people believe in. I think other people’s opinions are interesting to hear; you need another party.
I want to help you. If somebody told me, if you could come back, then you can help an orphanage, I want to. I do this in France — it’s not only in Russia. I would do it for you, if I were asked.
TITLE: Petersburg Theaters, Early Risers Take Golden Mask Awards
AUTHOR: By John Freedman
PUBLISHER: The St. Petersburg Times
TEXT: It was a day that began with rain in the morning, moved on to bright sunlight in the early afternoon and ended with a few lonely snowflakes falling as the clock ticked on toward midnight. It was an ideal meteorological setting for the closing of the Golden Mask Festival, a two-pronged awards ceremony that this year seemed to have something of everything even more than usual.
For the first time in its 15 years of existence, the Golden Mask did the almost unthinkable on Saturday — it rousted the Moscow theater community from bed to attend a formal affair that officially began at noon under the skylight of the Atrium at the Stanislavsky and Nemirovich-Danchenko Theater. Mercifully, it got under way only at 12:30 p.m., but it still may have been the earliest gathering ever held of Russia’s theater elite, all of whom are hard-core night owls.
The ceremony, in which 31 awards were handed out to actors, directors, designers and producers to honor the top achievements in Russian dance, opera, drama and puppetry during the 2007-2008 season, was only the beginning, however. An evening continuation of the festivities included the presentation of several honorary awards announced previously and featured a delightful performance of “Golden,” a new one-act opera by Alexander Manotskov, designed and directed with tongues planted firmly in cheek by Andrei Moguchy and Dmitry Krymov.
Above all, it was a day that honored winners, and no one took home more of the jeweled ceramic-and-glass Golden Mask plaques than dancer Diana Vishneva and her producer Sergei Danilyan. Vishneva was named Best Dancer for her work in “Diana Vishneva: Beauty in Motion,” while Danilyan stepped up to accept the award when the show was named Best Ballet. For good measure, “Beauty in Motion” also received the Critic’s Prize.
One of the most stirring moments of the afternoon session came moments before Vishneva received her award. The legendary ballerina Maya Plisetskaya was introduced as the presenter for the dance awards, and the entire hall stood for a prolonged standing ovation. “Today, I have a very pleasant job,” she said before beginning to read off the names of winners handed to her in specially printed Golden Mask envelopes.
Another multiple winner in the dance category was Sergei Smirnov and his production of “Clay Wind” for the Sergei Smirnov Eccentric Ballet of Yekaterinburg. Smirnov was named Best Choreographer, and his show was declared Best Contemporary Dance piece. Smirnov drew chuckles from the crowd with his identical and brief acceptance speeches, “I want to thank my brilliant dancers!”
Acceptance speeches generally were kept short and sweet by the ingenious but almost imperceptible work of two percussionists — Manotskov and Dmitry Vlasik — whose Eastern-flavored musical accompaniment was present throughout the ceremony. Dubbed “these two magical people” by presenter Konstantin Raikin, they tactfully but insistently began tapping out a rhythmic tune each time a speaker exceeded the 30-second limit. Almost everyone took the hint, keeping the proceedings moving at a brisk pace. The entire afternoon ceremony lasted just 80 minutes.
St. Petersburg theaters came away as big winners in the field of opera. Mariinsky Theater artists took three awards, including Rodion Shchedrin as Best Composer for his opera “The Charmed Pilgrim.” The Zazerkalye Theater was honored with awards for Best Conductor (Pavel Bubelnikov) and Best Opera (“Cinderella”).
With the exception of one award — a special Jury Prize to Natalya Makarova and Alexander Khryakov for their outstanding acting duet in “Woyzeck” for the Altai Drama Theater from Barnaul — Moscow and St. Petersburg theaters hauled in all the honors in the field of drama.
Accepting the nod as Best Actress for her performance in “Without a Dowry” at the Fomenko Studio, Polina Agureyeva thanked her teacher Pyotr Fomenko for giving her the opportunity to take chances and “make errors.” It was a fitting sign of reverence offered to the veteran director, since his former students have won four of the last eight Best Actress Golden Masks.
The Alexandrinsky Theater of St. Petersburg hit gold with three major triumphs: Krystian Lupa’s staging of “The Seagull” was declared Best Large-Scale Production; Valery Fokin was named Best Director for his work on “The Marriage”; and Alexander Borovsky took the Best Designer award for his work on the same show.
For a personal view of the Golden Mask award ceremony and a complete list of the winners, see Theater (Plus), John Freedman’s blog at www.themoscowtimes.com.
TITLE: Ahmadinejad Divides States Over Racism Conference
AUTHOR: By Frank Jordans
PUBLISHER: The Associated Press
TEXT: GENEVA — Iranian President Mahmoud Ahmadinejad’s planned appearance at a racism conference threatened Monday to unravel the United Nations’ attempt at stamping out intolerance worldwide.
Nine countries, including the United States and Israel, are already boycotting the conference over concerns about its fairness.
And Israel angrily recalled its ambassador to Switzerland on Monday to protest Swiss President Hans-Rudolf Merz’s meeting with Ahmadinejad late Sunday during which Merz pressed the case of a jailed American journalist in Tehran.
“The meeting between the president of a democratic country with an infamous Holocaust-denier such as the president of Iran, who calls for Israel’s destruction, does not mesh with the values that Switzerland represents and that are supposed to be represented at the UN conference on racism,” the Israeli Foreign Ministry said in a statement.
President Barack Obama said Sunday that the United States would communicate with Iran about journalist Roxana Saberi through its Swiss intermediaries, which have officially represented U.S. interests in Iran since the American hostage crisis that began in 1979.
Even before he spoke, Ahmadinejad became the flash point of a conference already strongly divided over Muslim countries’ attempts to use it to denounce Israel and over their call for a global ban on criticizing Islam.
The United States announced Saturday it would boycott the weeklong meeting, which follows a 2001 conference in South Africa. Muslim condemnation of Israel at the earlier conference angered that country, and the United States, as well.
Organizers have sought to avoid the controversies that marred the earlier meeting but have encountered many of the same issues. Besides the United States and Israel, seven other countries — Australia, Canada, Germany, Italy, Netherlands, New Zealand and Poland — are also declining to participate.
European Union spokeswoman Christiane Hohmann said that, while four EU nations had decided to boycott, others would push to ensure the document adopted by the conference was fair.
“It is essential that the current draft text ... does not have any language on defamation of religion, of anti-Semitic nature or targeting specific countries or religions of the world,” Hohmann said.
Ahmadinejad’s attendance provoked outrage from Jewish groups and Israel. He has in the past questioned the Holocaust and called for Israel’s destruction.
In his opening speech Monday before thousands of ministers, diplomats and dignitaries at the UN’s European headquarters in Geneva, UN Secretary-General Ban Ki-moon sought to show respect for Israel and Muslim countries alike.
He said racism “may be institutionalized, as the Holocaust will always remind us,” and can also manifest itself more generally, “as anti-Semitism, for example, or the newer Islamophobia.”
TITLE: Vettel Takes Chinese GP for Red Bull's First Win
AUTHOR: By Chris Lines
PUBLISHER: The Associated Press
TEXT: SHANGHAI — Sebastian Vettel gave Red Bull its first Formula One victory on Sunday, leading throughout a soggy Chinese Grand Prix to end the team’s drought in its fifth season and 74th race.
Having finally broken through, Red Bull also celebrated a one-two finish with Mark Webber notching his best ever finish.
Brawn GP’s Jenson Button was third at the Shanghai International Circuit, stretching his championship lead to six points over teammate Rubens Barrichello, who was fourth.
Red Bull’s 1-2, elevating it to second in the constructors’ championship, was a credit to the team’s crew, which fixed a drive shaft problem that hampered the cars in Saturday’s practice, restricting their running in qualifying.
“It was a fantastic strategy and extremely good effort by the team to get both cars reliable after the trouble we had yesterday,” said Vettel, who had his second career win after triumphing in wet conditions in Italy last year. “It’s an enormous job by all of Red Bull.”
The exultation in the Red Bull garage was in severe contrast to the gloom at Ferrari, which again finished out of the points, making it their worst start to a season since 1981. Felipe Massa had an electrical failure, while Kimi Raikkonen was 10th.
“We need to stay cool,” Ferrari team principal Stefano Domenicali said. “There is no reason to get in a panic mode because that would be worse.”
Ferrari rival McLaren had its best showing of the year, with Heikki Kovalainen and Lewis Hamilton fifth and sixth, respectively, ahead of Toyota’s Timo Glock. The trio all benefited from a strategy that required only one pit stop while most others had two. Toro Rosso’s Sebastien Buemi was eighth.
Vettel effectively led for the whole race, but not without drama. The German survived being hit from behind by Buemi while coasting behind the safety car about one-third into the race, and also had to contend with a track made treacherous by standing water.
“It was close sometimes to keep the car on the track, especially entering turn one sometimes there was a bit of a river running down the track and you just lost the car, snapped oversteer, just caught it and hoped for the tires to stick again,” Vettel said.
Webber and Button had an entertaining battle midrace, with three passing maneuvers. The Australian eventually prevailed with an impressive pass around the outside on the seventh turn, which he described as “one of the best moves of my career.”
“It was incredible to get the car home,” Webber said. “To get maximum points after the missed opportunity in Australia and Malaysia, it’s a great day for the team.”
Though Brawn now has a real rival in the championship races, Button was pleased to get another podium position in the conditions, where visibility was poor due to the spray when trailing cars.
“It’s very, very scary in a way,” Button said. “Being third ... is such a relief and such a great feeling to come away with these points.”
The hard luck story of the race was Force India’s Adrian Sutil, who was in sixth place with five laps to go and on course to give his team its first points finish when he spun off on worn tires.
“It’s hard to believe when you are in the car and then suddenly you lose it and it’s all over from such a great position,” Sutil said. “But you have to get over it. We had a great performance today.”
It was the third straight race this season in which the pole sitter took the victory.
The first seven laps of the race were behind the safety car, which had to re-emerge after BMW’s Robert Kubica crashed into the back of Toyota’s Jarno Trulli on the 19th lap.
TITLE: Parents of Journalist Jailed in Iran Make Visit
AUTHOR: By Nasser Karimi
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — The parents of an American journalist imprisoned in Iran for allegedly spying for the U.S. visited their daughter Monday for the first time since she was sentenced to eight years in prison and said she was in good condition.
The country’s judiciary chief ordered a full investigation into 31-year-old Roxana Saberi’s case, a day after President Mahmoud Ahmadinejad asked the chief Tehran prosecutor to ensure she is allowed to offer a full defense in the appeal.
“She seems to be OK,” Saberi’s Iranian-born father, Reza, told The Associated Press after he and his wife visited their daughter in Evin prison north of Tehran. Roxana Saberi, who was born in the U.S. and grew up in Fargo, North Dakota, was convicted last week after a one-day trial behind closed doors.
The developments appear to be the latest signs that some senior Iranian officials want to ensure tensions over the case do not derail moves toward a dialogue with the Obama administration to break a 30-year diplomatic deadlock between the two countries.
However, Iran’s Foreign Ministry took a swipe Monday at President Barack Obama, saying “those who studied law” should not comment on the case without seeing the context. It was a clear reference to Obama, who has a law degree from Harvard University and taught constitutional law at the University of Chicago before becoming president.
Some analysts have said the mixed messages emerging from Iran may be an indication of political divisions in the leadership, with hard-liners in the judiciary trying to hamper government moves toward closer relations with the U.S. by pressing the Saberi case.
Obama said Sunday he was “gravely concerned” about Saberi’s safety and well-being and was confident she was not involved in espionage.
The visit by Saberi’s parents, who live in Fargo but traveled to Iran to seek her release, may help ease some of those concerns.
“As far as she is healthy and she is taking good care of herself, I told her I will be OK,” Akiko Saberi, the journalist’s mother, told the AP. She denied her daughter was a spy, saying “once you know her she is the last person to do that.”
Saberi’s father said his daughter was looking forward to the appeals process because she believed the verdict was too harsh for her.
He said he hoped officials will heed Ahmadinejad’s letter to the prosecutor on Saberi’s defense at appeal.
“Also, they should be compassionate in their judgment and not very harsh,” he said.
Saberi, who was 1997 Miss North Dakota, had been living in Iran for six years and worked as a freelance reporter for news organizations including National Public Radio and the British Broadcasting Corp. Because Saberi’s father was born in Iran, she received Iranian citizenship.
Iran has released few details about the charges Saberi, who was arrested in January and initially accused of working without press credentials. But earlier this month, an Iranian judge leveled a more serious allegation that she was passing classified information to U.S. intelligence services.
She told her father in a phone conversation that she was arrested after buying a bottle of wine. Her father said she had been working on a book about Iranian culture and hoped to finish it and return to the U.S. this year.
The United States broke off diplomatic relations with Iran after its 1979 Islamic revolution and takeover of the U.S. Embassy in Tehran. Iran has been mostly lukewarm to the Obama administration’s overtures, but last week, Ahmadinejad said Iran was ready for a new start.
Saberi’s conviction also comes about two months ahead of key presidential elections in June that are pitting hard-liners against reformists, who support better relations with Washington. Ahmadinejad is seeking re-election, but the hard-liner’s popularity has waned and he’s been trying to draw support away from reformists.
The Iranian president met late Sunday with Swiss President Hans-Rudolf at a UN racism conference in Geneva. During the meeting, Merz pressed Saberi’s case though no other details were immediately available. Obama said Sunday that the United States would communicate with Iran about Saberi through its Swiss intermediaries, which have officially represented U.S. interests in Iran since the 1979 hostage crisis.
TITLE: Ferguson: Team Will Gain From FA Misery
AUTHOR: By Ian Winrow
PUBLISHER: Agence France Presse
TEXT: LONDON — Sir Alex Ferguson insists his decision to field a depleted side in the weekend FA Cup semi-final defeat to Everton will benefit Manchester United’s long-term future.
Ferguson, who said his side will be back to full strength for this week’s Premier League clash with Portsmouth, revealed he took the decision to make more changes than planned when he saw the impact of the Wembley pitch on the Arsenal and Chelsea players in the previous day’s tie.
In all, the manager made eight changes from the starting line-up that beat FC Porto four days previously and fielded a side packed with youngsters.
But he is adamant he will have all his big names back against Portsmouth on Wednesday including ankle injury victim Wayne Rooney.
He claimed his side’s performance in the 0-0 draw that was eventually decided on penalties gave hope for the future, and is certain the end of United’s quintuple ambitions will not affect their bid to lift the Premier League and the Champions League.
“We had a team picked after Wednesday’s game, but when I saw the pitch yesterday I didn’t want to go into extra-time with our strongest squad,” said the manager.
“We had to take the bold decision of going with the younger ones with energy, confidence and a good temperament.
“This club is built on giving younger players opportunities, they got that today and didn’t disappoint. I’m delighted for them, and the only disappointment is they were in a losing team.
“I’m satisfied with their performance. Everton didn’t make one chance in the game. I couldn’t see Everton scoring, put it that way.
“It’s disappointing when you lose an FA Cup semi-final as we haven’t lost one in my time. But we have to pick them up as we’ve got an important game Wednesday, Saturday, Wednesday, Saturday.
“The good thing is I’ve got no doubt in my mind that the young players can play during the run-in in any game. Marcheda and Danny Wellbeck were outstanding for me.”
Ferguson denied a clean sweep of honours was ever realistically on.
“It was impossible thinking we could do that,” he added.
“In the last few weeks we’ve had a lot of injuries to defenders and I’ve been patching players up. If all our players had been fit you never know, but realistically it’s very difficult.”
While Ferguson was left to contemplate United’s first FA Cup semi-final defeat since 1970, Everton manager David Moyes revelled in a first final for the club since 1995.
Moyes’s side will now face Chelsea in the final and the manager believes this current cup run can provide a springboard for the club’s development after steady progress in recent years.
TITLE: Brian Gay Wins Verizon Heritage PGA Event
AUTHOR: By Pete Iacobelli
PUBLISHER: The Associated Press
TEXT: HILTON HEAD ISLAND, S.C. — Brian Gay’s taking next week off. After what he did at Harbour Town Golf Links, he might want to reconsider.
Gay won his second PGA Tour title in a record-breaking show Sunday at the Verizon Heritage.
He shot a 7-under 64 Sunday to set tournament marks for scoring (20-under 264), margin of victory (10 strokes) and fewest bogeys over 72 holes (two).
It’s the latest plateau for the 37 year-old Gay, who toiled for more than a decade before notching his first career win in his 293rd start.
“I’ve been moving, kind of going, up, up, up, the last three years,” Gay said.
And Gay thinks things could get even better.
Gay’s win at the Mayakoba Golf Classic in Mexico last year propelled him to a career year with a record high of more than $2.2 million in prize money.
Gay says he’s ready for his latest triumph to push him to bigger things. He “played a lot better than my results, and I just came here and blew it out,” he said. “So it was nice.”
Future success figured to come easily for Gay, the former Florida Gator who remains the only player to win two Southeastern Conference championships. He made the Walker Cup team in 1993.
Gay didn’t make the tour until 1999 and had just 17 top 10s over his first nine seasons.
He finally broke through at Mayakoba. But bad luck for Gay, that triumph came the same weekend Tiger Woods’ finished off the field at the World Golf Championships’ Match Play event.
“Yeah, it’s a bit of validation,” Gay said.
It was the ninth time since 1970 a player won by double digit strokes, according to the PGA Tour, and the largest margin of victory since Phil Mickelson won the 2006 BellSouth Classic by 13 strokes.
Gay bested Loren Roberts’ mark of 19 under in winning the 1996 Verizon Heritage. Gay’s 10-shot edge over Luke Donald (66) and Briny Baird (68) shattered the seven strokes five-time champ Davis Love won by in 1998.
Besides a $1.026 million first prize, Gay earned a spot in next year’s Masters, something he also didn’t get with the Mayakoba victory. It will be his first time at Augusta National.
“I’ve had a lot of heartache not getting in that tournament, winning (and) not getting in, and missing by one spot on the money list two times,” he said. “I just figured, who cares? What’s going to happen is going to happen, just go play golf.”
Gay moved into the lead Friday and carried a three-stroke margin over Tim Wilkinson into the final round. Gay’s game plan? Don’t do what he did at Mayakoba, holding on despite some passive, wait-for-pars play.
“I told myself to keep my head down and keep plugging along,” Gay said. “I didn’t watch any (leader) boards. I didn’t watch anything.”
Soon enough, Gay was out of sight of the field.
He essentially wrapped things up two holes into the round — and never gave the chasers a chance to climb back in.
Gay struck his approach to 10 feet on No. 1 for a birdie to increase the lead to four. A hole later, he rolled in a curling, uphill 57-footer for an eagle-3, raising his putter as the ball disappeared into the cup.
Playing partner Wilkinson, facing a 10-footer for birdie, never had a chance with the cheers for Gay still in his ears and the margin increased to six shots.
A birdie on the par-5 fifth gave Gay a seven-shot edge that no one could dent.
TITLE: Ship Fights Off Pirate Attackers
AUTHOR: By Malkhadir Muhumed
PUBLISHER: The Associated Press
TEXT: NAIROBI, Kenya — Somali pirates attacked a Maltese-flagged-ship before dawn Monday with rocket-propelled grenades, but the ship escaped unharmed, a NATO spokesman said.
And in a rare case of good news, Somali pirates released a Lebanese-owned cargo ship only a few days after they found out it was headed to pick up food aid for hungry Somalis.
Monday’s attack on the MV Atlantica took place off the coast of Yemen in the Gulf of Aden, said Lt.-Cmdr. Alexandre Santos Fernandes, a spokesman for the NATO alliance.
Two boats attacked the ship and one skiff attempted to board it. The ship took evasive maneuvers and escaped without damages or injury to its crew, Fernandes said.
Meanwhile, UN World Food Program spokesman Peter Smerdon said pirates released the Lebanese-owned MV Sea Horse on Friday. He had no more details and it was not known if a ransom was paid.
The Togo-flagged ship was hijacked April 14 with 19 crew as it headed to Mumbai, India, to pick up over 7,300 tons of WFP food destined for Somalia.
Somali clan elder Abdisalan Khalif Ahmed, speaking from the pirate haven of Harardhere, said the gunmen released the ship when they found out it was carrying relief supplies.
TITLE: ‘Mentally-Challenged’ Hijacker Captured
AUTHOR: By Howard Campbell
PUBLISHER: The Associated Press
TEXT: KINGSTON, Jamaica — A gunman forced his way though airport security and hijacked a Canadian jet near Montego Bay, holding six crew members hostage for eight hours before police and soldiers stormed the aircraft on Monday and captured the man.
Nobody was killed or injured in the ordeal, which ended with a raid near daylight after talks broke down with a 20-year-old Jamaican hijacker described as “mentally challenged.”
“We were getting nowhere with the negotiations,” Jamaican Information Minister Daryl Vaz said. “Police and military went on the plane and captured him.”
The suspect identified as Stephen Fray was in custody. Vaz said he is a “mentally challenged” 20-year-old man from the northwestern resort city of Montego Bay. He did not detail the man’s mental condition but said he was apparently upset over a failed relationship.
The hostage crisis that began around 10:20 p.m. Sunday and ended near 6:40 a.m., when members of the Jamaica Defence Force Counter Terrorism Operations Group stormed the aircraft’s cabin, according to a police statement.
The young man boarded CanJet Airlines Flight 918 in Montego Bay and demanded to be flown to Cuba, Vaz said.
A total of 159 passengers and eight crew members were aboard the Boeing 737 at the time, according to Jamaican police. Police said all the passengers and two crew members were released after a short time.
There were unconfirmed reports that a shot was fired outside the aircraft, CanJet Vice President Kent Woodside said in a news conference Monday. He said the passengers also were robbed.
Alphonse Gosselin, whose 30-year-old son Christian was on the plane, said his son told him that the hijacker pointed a gun at him and other passengers. Christian and his girlfriend were among a group of 22 family members traveling to Cuba for a wedding.
“The first thing that he said to his girlfriend was, ‘Be calm. Don’t say a word.’ He said take your passport and your credit card and put it in your back pocket. He said we’ll give him the money,” Gosselin said in an interview from Tracadie Sheila, New Brunswick.
All the passengers were Canadian, Woodside said. The plane had arrived from Halifax, Nova Scotia, and was scheduled to stop in Santa Clara, Cuba, before returning to Canada.
Jamaican Prime Minister Bruce Golding addressed all the passengers after they were debriefed by police, according to the police statement.
The passengers were taken to a hotel, Vaz said. CanJet planned to fly another aircraft to Montego Bay to return the passengers to Canada, Woodside said.
“It’s a most unfortunate situation, but I can say the passengers are happy to be alive,” Vaz said. “This whole experience has been very traumatic for them.”
CanJet Airlines said 174 passengers were expected on the flight, but some apparently were not aboard by the time of the hijacking.
Canadian Prime Minister Stephen Harper, who was in Jamaica for a one-day visit, called Golding and “congratulated him for the successful resolution,” Harper spokesman Dimitri Soudas said.
The charter airline is owned by Halifax-based IMP Group Ltd., according to CanJet’s Web site.
Jamaican National Security Minister Dwight Nelson said the plane has been isolated and the airport is expected to reopen Monday morning.
TITLE: Olympic Council Of Asia Fumes Over Accusations
AUTHOR: By Martin Parry
PUBLISHER: Agence France Presse
TEXT: SINGAPORE — The Olympic Council of Asia has angrily denied “baseless” accusations that it was involved in “vote-buying” to influence the outcome of elections for a FIFA executive committee seat.
The Council, headed by Kuwait’s Sheikh Ahmad Al Sabah, has been asked by FIFA’s ethics committee to clarify the claims surrounding an increasingly ugly battle for power within the Asian Football Confederation.
At stake is an Asian seat on the powerful FIFA executive committee, currently held by AFC president Mohamed bin Hammam of Qatar.
His term ends on May 8 and Bahrain’s crown prince, Sheikh Salman bin Ebrahim Al Khalifa, is challenging him.
In an interview with Australia’s SBS television on March 30, Bin Hammam claimed that the OCA, via its national Olympic committees, was offering grants to football associations in Asia to secure their votes for Sheikh Salman.