SOURCE: The St. Petersburg Times
DATE: Issue #1475 (37), Tuesday, May 19, 2009
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TITLE: Diplomatic Spat Over Boy Taken To Finland
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Finland’s Foreign Affairs Ministry officially confirmed on Friday that five-year-old Anton Salonen, the son of Finnish citizen Paavo Salonen and his Russian ex-wife Rimma Salonen, was currently in Finland.  
It also confirmed that an employee of the General Consulate of Finland in St. Petersburg helped the father to take the boy out of Russia.
The incident occurred in early May, when the boy’s father took him out of Russia against the will of Anton’s mother with the help of the Finnish diplomatic employee, causing serious tensions between the upper diplomatic services of the two neighboring countries last week.
Russian officials said that the father’s actions were illegal, while the Finnish diplomats said that it was Anton’s mother who had initially taken the child illegally out of Finland.
“The Foreign Affairs Ministry of Finland confirms that the Finnish child, who was illegally brought to Russia in March of 2008, and his guardian are currently in Finland,” read a report on the web site of the Finnish Consulate in St. Petersburg.
The ministry received information about the return of a boy with the Russian name Anton and his father to Finland on May 9, according to the report. They crossed the Russian-Finnish state border in a private transport vehicle belonging to a representative of the General Consulate of Finland in St. Petersburg. The consulate employee was acting on his own initiative because he didn’t see any other way of solving the drawn-out, complicated situation, it said.
The Foreign Affairs Ministry of Finland received confirmation of the participation of the consulate employee on May 10. According to the report, the ministry believes that the motive for his action was the interests of the child and the situation of his guardian.
The employee is also currently in Finland, and since “there are no pre-existing conditions” for him to continue his work in St. Petersburg, he is not coming back, the report said.
 The General Consulate of Finland in St. Petersburg also confirmed on Friday that Anton and his father had received help from the consulate for two weeks before they left for Finland.
“We let them live in a small apartment that belonged to the consulate, and dine at the consulate’s cafeteria,” said Olli Perheentupa, Consul General of Finland in St. Petersburg, in a telephone interview with The St. Petersburg Times.
“The boy’s father appealed to us for help after Russian border guards refused to allow him and the boy to leave for Finland in April. At that time, Mr. Salonen and his son had to return to St. Petersburg,” he said.
Perheentupa said that in the current situation, the consulate had acted in accordance with the legislation of the Republic of Finland.  
“Anton and his father both have Finnish citizenship. A year ago the boy’s mother illegally brought him to Russia from Finland,” he said.
“We didn’t violate any laws, we just helped our citizens. The consulate did not participate in organizing the transport of the boy and his father to Finland,” he said.
“Last week, Salonen and his son left St. Petersburg, but we did not know how they left,” Perheentupa said. “It was only later that we figured out it was one of our employees who helped them to leave. That employee doesn’t work at the consulate anymore, because he has made his choice not to,” he said. 
On Thursday, the head of the Russian Foreign Affairs Ministry Sergei Lavrov called his Finnish counterpart Alexander Stubb and announced a protest in regard to the fact that Salonen had taken his son to Finland against the will of the boy’s Russian mother. 
“Due to reports on the illegal transfer of a Finnish citizen, Salonen’s son Anton, out of Russia, we recorded a protest with Alexander Stubb to demand explanations from the Finnish side. The boy has Russian citizenship. We stated that taking the child out of the country against the will of his mother, who is a Russian citizen, is a serious violation of Russian legislation and may carry criminal responsibility,” reads an official report published on Thursday on the ministry’s web site.
 From the explanations of the Finnish minister, it became clear that the General Consulate of Finland in St. Petersburg was involved with the case, since Salonen had recently been staying at the consulate after his Russian visa expired.
 “All of this is an outrageous violation of the Vienna Convention on diplomatic relations that stipulates strict observance of the legislation of the host country by representatives of diplomatic offices,” the report said.
Lavrov said that the situation contradicts the traditionally “kind neighborly spirit” of cooperation between the two countries, and that the Russian side insists that the Finnish authorities should assist in resolving the incident, in regard to which Russia will take the necessary legal action, according to the statement.
In its turn, the Finnish side reminded its Russian colleagues that Russia is still not a participant of the Gaaga Convention on Civil Aspects of International Kidnapping, and nor do Russia and Finland have a bilateral agreement on the matter. Therefore, since there are no international agreements governing the issue between the two countries, solving such situations is very difficult, the Foreign Affairs Ministry of Finland said.
In his conversation with Lavrov, Stubb underlined the importance of developing an agreement mechanism to regulate cases of child kidnapping, the report said.
The Finnish story began in 1995 when the couple got married. They lived together for seven years before getting divorce. However, soon after the divorce Rimma Salonen realized she was pregnant. Anton was born in 2003, and Salonen recognized the boy as his child. Anton received Finnish citizenship, while a local Finnish court recognized his father as his official guardian.
In 2008, Rimma Salonen returned to Russia, taking her son with her, despite the fact that his father had not given his permission. In Russia, the mother organized Russian citizenship for the boy, but in 2008 the court of Balakhna in the Nizhny Novgorod Oblast deprived the boy of his Russian citizenship because Russia and Finland do not have an agreement on dual citizenship. Furthermore, citizenship can only be granted to a child if both the parents agree, while the father had not given his permission, Kommersant daily reported.
On April 12 of this year, Rimma, 48, told the Balakhna police that her son Anton had been kidnapped. A criminal case was not at first opened however, with the police citing the absence of a crime. The police believed that the boy had been deprived of Russian citizenship, and that Salonen, 65, had taken Anton back to his native country.
On May 15 however, the Nizhny Novgorod Oblast prosecution opened a criminal case into the matter under article 126 of the Russian Criminal Code (pre-meditated kidnapping of a person by an organized group.)
Vladimir Markin, an official representative of the Investigation Committee of the Russian Prosecutor’s office, said that “on April 12 in the town of Balakhna in the Nizhny Novgorod Oblast, one Johaness Salonen, acting as part of a plot agreed with a group of people, took Anton Salonen from Rimma Salonen by force and against her will.” While holding Rimma, he put Anton into a car and drove him away to an unknown destination, Markin said, Interfax reported.
Investigators are currently checking the facts to establish the circumstances of the incident, he said.
Rimma Salonen said that at the time when Anton’s father had taken him to Finland, the boy still had Russian citizenship, Ekho Moskvy radio reported.
On Friday, Finnish television showed reports of Anton playing happily with his toys at his father’s house in Finland.

TITLE: Police Violence Clouds ‘Best Ever’ Eurovision
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Russia won high praise from organizers and participants alike for its hosting of the 2009 Eurovision Song Contest final on Saturday, complete with hovering swimming pools, Dima Bilan “flying” over the audience and a live speech from an astronaut in the international space station. 
But international reaction was clouded by the violent suppression of a gay rights protest earlier in the day that threatened to tarnish a national image that Russia had spend millions of dollars trying to buff.
The winner, Norway’s “Fairy Tale,” performed by Belarussian-born Alexander Rybak, 23, won a record 387 votes, against 218 for second-place Iceland. 
The event was reported around the world alongside stories about the gay rights protest in Moscow. The New York Times gave scant coverage to the contest in a story about riot police breaking up the gay rally. Britain’s Sunday Herald newspaper headlined its story, “Inside: Eurovision, The Campest Show on Earth. Outside: Riot Police Round Up Moscow’s Gays.”
For Russia, hosting the contest was a costly prestige project. The exact price tag remains unknown, but Channel One director Konstantin Ernst, who organized the event, said it totaled more than 24 million euros ($32.3 million). A government official told Vedomosti this month that the show cost more than $42 million, a figure in line with promises made when Russia won the right to host the contest last year. Deputy Prime Minister Alexander Zhukov announced at the time that the Russian government would give 1 billion rubles (then worth about $40 million), while the Moscow city government, which oversaw the crackdown on the gay rally after banning it, said it would allocate 200 million rubles ($8 million).
President Dmitry Medvedev and Prime Minister Vladimir Putin have described Russia’s victory last year that gave it the right to host the event as important for the country. Putin even sent Dima Bilan, last year’s winner, a telegram saying his achievement was “another triumph for all of Russia,” coming after Zenit St. Petersburg winning the UEFA Cup football final and Russia winning the World Ice Hockey Championship.
With such high expectations, Eurovision 2009 was under unprecedented media scrutiny, with a record 2,238 accredited journalists.
Gay rights activists said Russia ruined its reputation internationally with the police clampdown on the rally. 
“In the minds of most European people, this year’s Eurovision Song Contest will be linked to the violent suppression of a wholly peaceful protest,” British activist Peter Tatchell said Sunday. He was detained at the march but released without charges. 
“The universal reaction from journalists, politicians and members of the public [in Britain] is utter revulsion at the scenes of police brutality and suppression that they saw on the television news,” Tatchell said.
He said he was “disappointed” that no contestants spoke out against police brutality. “They were under huge pressure from their own managers and from the Russian organizers not to bring any politics to the event,” he said.
Gordon Heuckeroth, an openly gay singer in The Netherlands’ entry, De Toppers, had said he planned to go to the rally but did not show.
The organizer of the protest, Nikolai Alexeyev, said he believed that he was detained overnight to keep him from disrupting the final. “I think the main idea was to keep me and other people in the police station to prevent us doing anything during Eurovision,” he said. 
The strategy misfired, Alexeyev said: “I can tell you the image of Russia after all that is totally spoiled. Obviously, this is not a democratic country that respects human rights.”
European Broadcasting Union, which owns Eurovision, has declined to enter the controversy. “As guests in Moscow, we feel obliged to organize the event within the limits of local law. If organizers of other events decide differently, that is up to their judgment,” the association’s spokesman Sietse Bakker said last week. 
At a news conference after the final, Bakker called the event “the best Eurovision Song Contest we have ever had.” 
However, one of the first questions from reporters was about the police action against the gay rally. 
“I think it’s a little bit sad that they chose to have the protest today. They spent all their energy on that parade, while the biggest gay parade in the world was tonight,” Rybak, this year’s winner, said in an answer that skirted around the police violence.
Talking on the sidelines of the contest, former State Duma Deputy Alexei Mitrofanov criticized the treatment of the protesters. “I think it was completely unnecessary. They shouldn’t have done it. In what way could 30 young men be a public danger? It’s not even as if they blocked any roads,” he said. 
The Eurovision final ran smoothly — most of the time, anyway — and was warmly received by the audience.
Moscow police said there were no incidents at the event. Officers were courteous as crowds maneuvered through multiple barriers and metal detectors.

TITLE: Anti-Nazi Given Five Years for Stabbing OMON Trainee
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: An anti-Nazi activist was sentenced to five years in a maximum-security penal colony by a local court on May 8 for stabbing two men who looked and behaved like neo-Nazis in the city center last year, while he insisted that he acted in self-defense as they attacked him. One of the men turned out to be an OMON special-task police trainee.
Alexei Bychin, 22, was on Nevsky Prospekt, St. Petersburg’s main street, on Russia Day, the national holiday celebrated on June 12, when he got involved in a fight with two men who had allegedly been marching down Nevsky Prospekt shouting Nazi greetings and making Nazi salutes.
According to Bychin’s defense, he was attacked by the men, while they claimed it was them who were attacked.
Bychin reportedly said that he stabbed the men, who were carrying a broken bottle, with a knife when they attacked him. As a result of the fight, the two men were hospitalized with penetrative wounds, while Bychin was left with a cut on his arm.
“They pressed him to the wall and cut him with a bottle, we have an expert’s conclusion: a horizontal cut made with what could have been a bottle,”  Bychin’s lawyer Olga Tseitlina said by phone on Monday.
Bychin was carrying a knife for self-defense, according to Tseitlina. Timur Kacharava, a punk musician and anti-Nazi activist, was stabbed to death by neo-Nazis in the city center in 2005.
Initially Bychin, who has been in custody since he was detained in July, was charged with “attempted murder,” but the charge was later amended by court to the less serious “conscious bodily injury, dangerous to a person’s life.”
The prosecutor asked for a nine-year sentence, while Bychin’s lawyers insisted on “excess of self-defense.”
“They shouted ‘Sieg Heil,’ it was on Nevsky, and it was Russia Day, they were marching and making Nazi salutes — it was confirmed in court,” Tseitlina said.
“But there are no witnesses of what happened next, so the judges believe the injured party’s version.”
According to a report on the Indymedia web site, on which antifascists exchange news and opinions, Bychin had been walking around with a large group of activists, but fell behind with his girlfriend. 
However, Bychin’s girlfriend failed to act as a witness.  
“There was the girlfriend who was standing nearby, but didn’t see anything,” Tseitlina said. 
“The girlfriend had bent down and was removing a piece of glass from her foot.”
Since Bychin’s arrest, anti-Nazi activists have held protests in several Russian cities. Activists claim that the police are saturated with nationalist ideas, with a number of policemen being former Nazi skinheads or sympathetic to them.  
In 2007, a photo of an OMON police officer with the SS (elite Nazi force) logo on his helmet taken during the first local Dissenters’ March caused a controversy when it was published in the Russian edition of Esquire magazine.
Tseitlina was not prepared to say whether or not the verdict would be appealed. “The [written] verdict is still being prepared, and we’ll decide when we receive it,” she said.

TITLE: Local OGF Leader Faces Charges
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: St. Petersburg opposition leader Olga Kurnosova was officially charged with knowingly obtaining illegally-gotten goods on Saturday, after an investigator came especially for the case from Astrakhan, a city on the Caspian Sea, to present the charges to her. She had to give a written pledge not to leave town, and if found guilty, could face up to two years in prison.
Last October, Kurnosova, the St. Petersburg head of Garry Kasparov’s United Civil Front (OGF), was searched and detained when returning on the train to St. Petersburg after a period in Astrakhan spent helping to prepare a conference of democrats there.  
The police found a 0.5-kilogram can of black caviar in her belongings and charged her with illegally receiving  goods.
“Some might have thought that it would go away by itself, but it was perfectly clear that it was organized not to let it go away,” Kurnosova said by phone on Monday.
Kurnosova described the case as “absurd.” 
“In fact, there should be a presumption of innocence — why should a person carry around receipts? And why did they decide that the caviar had been illegally received? I was also carrying apples, cookies, juice and water — what if they were illegally received, too?” 
Last year, Andrei Grekov, an OGF activist in Rostov-on-Don, a city in the south of Russia, was sentenced to two years in a penal colony after the police claimed they had found ammunition while searching his apartment.

TITLE: Police Forcefully Break Up Gay Rights Protest
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — An attempted gay rights protest on Saturday was swiftly broken up by OMON troops, who dragged protesters into police vans. 
More than 30 protesters were detained, including Peter Tatchell, a prominent British gay rights activist, Andy Thayer, an activist from Chicago’s Gay Liberation Network, and the organizer, Nikolai Alexeyev.
The unsanctioned protest, called Slavic Pride, was originally announced as taking place at Novopushkinsky Skver in central Moscow, but organizers changed the location at the last moment to the Vorobyovy Gory viewpoint near Moscow State University, a popular spot for wedding photographs.
Police learned of the plans and detained almost half the activists as they arrived at about noon, organizers said. More than 30 OMON troops turned up, in at least three vans.
A handful of protesters including Tatchell and Edvard Murzin, a heterosexual human rights activist, unfurled banners and shouted slogans including, “No compromises! Equal rights! Homophobia is a national disgrace!” Minutes later, OMON troops hurled themselves through a hedge and grabbed protesters, including Tatchell, who was dragged to the ground. As Tatchell was bundled into a police car, he called out, “Russian people don’t have freedom.”
The protest was filmed by television crews, including state-financed Russia Today.
The OMON troops were “needlessly violent,” Tatchell said Sunday. “I had my arm badly twisted up behind my back and they also twisted my wrist ... causing extreme pain.”
Tatchell was taken to the Ramenki police station but released without charges later Saturday after a British Embassy official arrived and Tatchell displayed a press pass, he said.
Organizer Alexeyev arrived separately, walking arm in arm with a drag queen in a wedding dress. Two burly OMON officers began questioning him. Alexeyev asked what offense he was committing, and one said, “We have reason to think that you are going for a walk with a man dressed up as a woman.” Minutes later, both were detained. The man in drag threw his bouquet at a plainclothed official.
The OMON went on to pick up protesters including Irina Fedotova-Fet and Thayer, both of whom were standing alone and talking to journalists. Fedotova-Fet attempted to register a same-sex marriage with her girlfriend Tuesday.
Another female protester, Ksenia Prilepskaya, was dragged into a police van; her clothes were roughly pulled off by OMON troops and her glasses were broken. The organizers’ web site, Gayrussia.ru, reported Sunday that she had suffered a suspected concussion.
A police spokesman said about 40 people were arrested around the city, both at Vorobyovy Gory and at Novopushkinsky Skver.
Prilepskaya said Saturday afternoon that she was being held at the Ramenki police station with 32 people, including Tatchell, Thayer, Alexeyev and 10 to 15 Belarussians.
The Belarussians were freed at about 2 a.m. Seven others were still held after that, including Alexeyev.
Alexeyev told The Moscow Times that he was freed at about noon Sunday after being held for almost 24 hours. He will go to court on May 26 on charges of organizing an illegal protest, he said. The other protesters were fined 500 to 1,000 rubles ($17 to $34).
Alexeyev said he was held separately from the other protesters and interrogated for six hours by FSB officers. 
“They insulted me in all possible ways,” he said, adding that they used homophobic insults and psychological pressure but no physical violence.

TITLE: Intermediaries Face Ax on Work Permits
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Migration authorities are promising to create a new agency to eliminate middlemen who obtain work permits for foreigners in exchange for money. 
Federal Migration Service head Konstantin Romodanovsky told a Federation Council hearing that a state unitary enterprise would be set up by July 1 that would offer “all services so far offered by the migration service,” Kommersant reported Thursday. 
Romodanovsky said at the Wednesday hearing that the move is aimed at rooting out rampant corruption connected with work permits for migrant workers. 
It was unclear if the new agency would affect white-collar foreign workers or whether it would work primarily with the millions of manual laborers from neighboring countries. A woman who answered the phone Thursday at the Federal Migration Service said no one was available for comment. 
Russian companies hiring white-collar expatriates usually employ private agencies to process paperwork for visas and work permits. 
The implications of the announced measure could be significant if the new agency proposed by Romodanovsky were to become the only place to legalize foreign employees. 
“There are probably more questions than answers,” Peter Reinhardt, a partner at financial services firm Ernst & Young, told The Moscow Times. 
Reinhardt added that if current channels were replaced entirely by the new agency, a number of new laws would have to be enacted. 
Alexei Filippenkov, head of the Visa Delight agency, agreed. “Current legislation does not allow legalizing foreign employees through any other agency but the migration service,” he said. 
Romodanovsky said the market for middlemen offering “shadowy” services to migrants was worth more than 30 billion rubles ($931 million) but that the state last year received just 5.8 billion rubles ($180 million) from work permit fees, Kommersant reported. 
Russia is home to one of the world’s largest migrant populations, second only to the United States, according to the World Bank. 
Romodanovsky said authorities issued 4.5 million work permits last year. Migration officials have previously put the number illegal immigrants in the country at 4 million. 
Migrant workers typically come from former Soviet republics that have visa-free travel with Russia. 
The migration service also said the new agency would significantly reduce the notoriously cumbersome bureaucracy for Russian citizens seeking a passport for foreign travel. 
If someone wants to forego the standard 30-day waiting period for a passport, he can go to the new agency and obtain the travel document within three days, service spokesman Konstantin Poltoranin told Kommersant. 
Alexandra Odynova contributed to this report.

TITLE: Fragments of Gun Found By Helicopter Crash in Irkutsk
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Fragments of a gun have been found among the debris of the helicopter that crashed last week, killing Irkutsk Governor Igor Yesipovsky and three others, rescue workers said Thursday.
The revelation has fueled speculation that Yesipovsky was on a hunting trip when his Bell 407 helicopter crashed May 10 in the Irkutsk region. 
Hunting from helicopters is banned in Russia, though regional officials have said Yesipovsky was on official business when the aircraft went down, surveying the coast of Lake Baikal in connection with a new economic zone to be established there. 
“A weapon was on board, but it’s hard to say which model it was, as it has been badly burned,” said Vadim Reiter, head of the rescue team working at the crash scene, Interfax reported.

TITLE: Bomber Kills 3 Near Grozny Ministry
AUTHOR: By Natalya Krainova and Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A suicide bomber plotting to blow up the Chechen Interior Ministry building killed two police officers and the taxi driver who drove him to the building, prompting Chechen President -Ramzan Kadyrov to call for all insurgents to surrender or be killed.
The bomber detonated the explosives near a police checkpoint several hundred meters from the ministry building in Grozny on Friday, Interior Minister Ruslan Alkhanov said.
The attack comes a month after the Kremlin declared the counterterrorist operation in Chechnya over, effectively ending a security regime imposed in September 1999 when federal troops poured into the North -Caucasus republic and quashed separatists.
Two men in civilian clothes attempted to enter the territory of the Chechen Interior Ministry but were stopped by police who asked for identification, Alkhanov said in televised remarks. In response, one of the men approached a policeman and detonated explosives, he said.
The blast killed two police officers and injured several other people, Alkhanov said.
Police identified the bomber as Beslan Chagiyev. Chechen law enforcement officials said they found a 10-minute video recording of Chagiyev calling for the killing of police officers near the Interior Ministry building. 
Alkhanov said Chagiyev apparently had been trained outside Chechnya, Interfax reported. 
The man accompanying the bomber was also killed in the blast. He was identified as a taxi driver who had driven Chagiyev to the ministry and was not involved in the attack, Alkhanov said.
Alkhanov said the bomber had intended to blow up the ministry building.
Chechen police killed four people suspected of belonging to a Chechen suicide bombing group responsible for ministry attack in separate incidents Friday night, authorities said Saturday. 
Repeated calls to the Chechen Interior Ministry’s press office went unanswered Friday.
Kadyrov, himself a former insurgent, took a tough line against remaining insurgents Saturday.
“I’ve decided today that I will never again ask for an amnesty for militants,” Kadyrov said, Interfax reported. 
He called on all insurgents hiding in forests to surrender or be killed. “There is only one way for them: either turn themselves in to law enforcement agencies and sit out a sentence and live or find themselves 3 meters under the ground,” Kadyrov said.
On Friday, Kadyrov praised the officers killed in the attack for their “courage” and for preventing more deaths, according to comments posted on his government’s web site.
The officers will be posthumously decorated with medals, while their families will receive compensation, Kadyrov said.
He called on attackers planning bombings to turn themselves in to police. “Otherwise, they will face a very sad ending,” Kadyrov said.
Armed insurgents in the North Caucasus have largely refrained from carrying out suicide attacks in recent years, a tactic they employed with great frequency in the first half of this decade. 
In September, a suicide bomber attacked the motorcade of Ingush Interior Minister Musa Medov in the Ingush city of Nazran. Medov escaped unharmed, while five bystanders were wounded.

TITLE: Medvedev Hopeful About Obama Visit
PUBLISHER: Combined Reports
TEXT: President Dmitry Medvedev expressed optimism Saturday about advancing relations with the United States during President Barack Obama’s visit to Moscow in July even on divisive topics such as NATO’s eastward expansion.
Medvedev again criticized NATO’s ongoing military exercises in Georgia, which Russia defeated in a brief war in August, saying such drills were clearly “provocative” and threatened stability in the region.
He expressed hope, however, that he would have a fruitful discussion on security cooperation with Obama when he visits Moscow on July 6 to 8.
“I hope that in the course of our meeting we will be able to talk about these problems as well and give a new impulse to our contacts in this field,” Medvedev said after a meeting with Italian Prime Minister Silvio Berlusconi.
The White House on Saturday also expressed hope that Obama’s visit would improve ties. “The summit meeting will provide an opportunity ... to deepen engagement on reducing nuclear weapons, cooperating on nonproliferation, exploring ways to cooperate on missile defense, addressing mutual threats and security challenges and expanding the ties between American and Russian society and business,” the White House said in a statement.
It said that after the Russia trip Obama would attend a Group of Eight summit in L’Aquila, Italy, from July 8 to 10, and visit Ghana.
Obama and Medvedev might also consider a Kremlin proposal to work out a new trans-Atlantic security pact between the United States, Canada, the European Union, NATO and alliances of former Soviet republics. 
“What’s better: to create a new security structure or hold military maneuvers in close proximity to the area which saw a military action less than a year ago?” Medvedev said in an interview with state television, fragments of which were broadcast Friday.
Medvedev first proposed to work out a new trans-Atlantic security pact in June, but the previous U.S. administration had ignored the offer.
Obama said after meeting with Medvedev in London last month that the proposal is worth exploring — part of the new U.S. administration’s push for better ties with Moscow.
Medvedev reaffirmed Friday that the new security pact he proposed is not aimed against NATO.
Russia and NATO recently started to improve ties frozen after Russia’s war with Georgia in August, but tensions soared again over expulsions of diplomats and the NATO exercises that began recently in Georgia. But Georgia and Ukraine say the August war and Russia’s subsequent recognition of two separatist regions in Georgia as independent nations underscores the urgency of NATO membership for their countries. 
Sergei Bagapsh, the leader of one of the regions, Abkhazia, said Friday that the province’s railroads and main airport would be handed over to Russian control for 10 years. But Bagapsh said Russia plans to cut the number of troops it plans to maintain at the main base in Abkhazia from 3,800 to 1,700 because of financial concerns. 

(AP, Reuters)

TITLE: U.S. Slams Russia’s Stance On Georgia
PUBLISHER: Reuters
TEXT: WASHINGTON — Signaling U.S. frustration as Washington seeks better relations with Russia, the United States criticized Moscow on Friday for blocking a deployment plan for peace monitors in Georgia.
State Department spokesman Ian Kelly urged Moscow to change its stance on keeping monitors from Europe’s top security and human rights watchdog in Georgia.
“It is disappointing, and we hope that Russia will reverse its stance,” Kelly told reporters.
The Greek chair of the Organization for Security and Cooperation in Europe failed last week to get consensus on extending its mission in Georgia because of Russian opposition to language in the proposal.
Russia insisted that the language reflected its view of South Ossetia as an “independent” state — a position that has been rejected by Georgia and not endorsed by any other country in the 56-nation group.
“We believe a monitoring presence in Georgia remains essential and hope Russia, which has acknowledged a need for monitors, will eventually accept Greece’s reasonable and balanced proposal,” Kelly said.
Russia sent in troops last summer to crush Georgia’s move to retake the separatist South Ossetia region and then rejected an extension of the OSCE’s 16-year-old monitoring mission in the former Soviet republic past Dec. 31, when it expired.
The monitors now face a June 30 deadline to pull out.
Greece’s OSCE ambassador, Mara Marinaki, said Thursday that she regarded the break-off of talks temporary and an agreement would come if key parties were willing to “go the extra mile.”
But the Greek Foreign Ministry said Friday that talks had been suspended until further notice.
“We’d like to hope that despite this, the achievement of a mutually acceptable compromise remains feasible,” ministry spokesman George Koumoutsakos said in a statement.
Kelly said Greece had worked hard to devise a compromise solution that avoided reference to South Ossetia’s legal or political status.
“We ... are disappointed that Russia could not accept the Greek chairmanship’s constructive, status-neutral solution,” he said.
Foreign Minister Sergei Lavrov discussed the issue with U.S. Secretary of State Hillary Clinton on a visit to Washington this month. 
They downplayed tensions over Georgia and said the issue would not cloud cooperation in other areas, such as arms control.
Asked if the latest Russian moves on Georgia were bad news for U.S.-Russia relations, Kelly pointed to the broad bilateral agenda between the two countries.
“We are very disappointed by this failure to reach consensus, but we have an important strategic agenda with Russia that includes nonproliferation issues, counterterrorism issues, a growing trade relationship,” Kelly said.
“I don’t see this as a bad omen necessarily,” he added.

TITLE: As Agencies Argue, Volunteers Swat Out Fire
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: KOSTENEVO, Moscow Region — When the Emergency Situations Ministry declared last week that there were no active wildfires in the greater Moscow region, volunteer firefighters in the village of Kostenevo were surprised. They had been trying to extinguish a smoldering peat bog for four days in a row. 
As wildfires rage across Russia every spring, federal agencies argue over who is responsible for extinguishing them and preventing them from happening, while environmentalists say changes to fire safety rules have only made matters worse. 
Emergency Situations Minister Sergei Shoigu complained last week that the Agriculture Ministry’s Federal Forestry Agency was persisting on using his people to fight wildfires. In almost the same breath, he ordered his personnel to “immediately begin working on peat bog fires,” Interfax reported. 
“There will be talk again that peat bogs are burning and the Emergency Situations Ministry is at fault,” Shoigu said at a ministry meeting May 5. “If we miss them, we’ll be fussing over them until winter.” 
But it is mostly volunteer firefighters who fuss over wildfires in the Moscow region’s Taldom district, which includes Kostenevo. Volunteers had already been working on extinguishing a local peat bog for four days when both the forest agency and the Emergency Situations Ministry reported on May 8 that there were no active wildfires in the region. 
Eager to extinguish the fire while telling Moscow that things were under control, the local fire department sent five firefighters to help the volunteers extinguish the peat bog. Part of the problem, however, is that professional firefighters are only trained to work in cities. 
“He looks like he is watering a flower bed,” smirked Anna Andreyeva, a local journalist who has volunteered as a firefighter for several years, as she observed one of the district firefighters direct a stream of water upward in a 3-meter-high fountain. 
“They think they have finished working on this section, so now we have to inspect it and finish what they missed,” sighed Oleg, head of the six-person volunteer squad working on the peat bog during the Victory Day holiday last Saturday. 
“Since it’s Victory Day, all they want is to go home at 5,” he added. 
Left unattended, peat bog fires can go as deep as 15 meters underground, making them virtually impossible to extinguish. A neglected peat bog fire in 2002 eventually covered about 300 hectares, spreading to forests, filling Moscow with dense haze and leading several districts to declare a state of emergency. In the Taldom district, several villages burned to the ground, while roads sank into the fiery recesses of burning peat, taking heavy trucks with them, recalled Grigory Kuksin, who was an officer in the local branch of the Emergency Situations Ministry at the time. 
Kuksin now coordinates the volunteer firefighting program, which is based in Kostenevo. The crew’s base is a house where the garage is filled with firefighting equipment such as pumps, hoses, buckets and rags, which the volunteers use to stamp out dry grass fires. 
District firefighters are not trained to extinguish fires in fields or peat bogs, Kuksin said as he filled a smoldering section of peat ground with water. Most of them think that peat bog fires will just die out on their own, Kuksin said. Moreover, nobody is responsible for monitoring and preventing fires in open areas like peat bogs, he said. 
“I guess we missed a couple of spots,” one firefighter said when asked why the ground was smoldering again in an area that his group had drenched during several hours of work. 
“It’s already 4, and we’ve been stuck here since morning without any food,” he complained. 
After 7 p.m., the firefighters cracked open a case of beer and watched as the volunteers looked for more smoking spots, drenched them with water and mixed the resulting mud with shovels to prevent the fire from igniting again. The tedious process was not finished until 10 p.m., but then Kuksin received a call on his cell phone about a burning grass field in another village. When the volunteers returned to the base, it was already past 11 p.m. 
Since the start of the fire season last month, Kostenevo’s volunteer firefighters have extinguished more than 40 fires in the Taldom district. Many of them were started by locals who believe that grass grows better on burned ground; others spread when farmers cleared their fields by setting them on fire. 
Although fires on dry fields can quickly spread to villages, peat bogs and forests, they were essentially legalized in 2007 when the Federal Agency for Forest Use amended fire safety rules to allow grass to be burned under “supervised” conditions. 
“Essentially, a farmer can set a field on fire and just watch as the flames reach the forest,” said Greenpeace environmentalist Mikhail Kreindlin, who has been involved in the volunteer firefighting program for many years. “Only then does the fire become the local forestry department’s responsibility.” 
The Federal Agency for Forest Use defended the fire safety rules. “Controlled burning can be good,” agency official Alexei Yermolenko told The Moscow Times. “Grass grows better, and some species of trees like sequoia only release their seeds in high heat.” 
He conceded, however, that many wildfires resulted from farmers who let field fires burn out of control. “We are working on that,” he said. 
His agency estimated that 2.6 million hectares of forest burned in Russia in 2008.

TITLE: S. Ossetians Describe Huge Corruption
PUBLISHER: The Associated Press
TEXT: Former officials of Georgia’s breakaway province of South Ossetia said Friday that tyranny and official corruption have flourished there following the Russian-Georgian war last summer.
Moscow has pledged more than $240 million in aid to South Ossetia since it drove Georgian forces out of the region last August, but former South Ossetian security council head Anatoly Barankevich, who battled Georgian tanks during the conflict, said many residents have become disillusioned with life under leader Eduard Kokoity.
Speaking at a Moscow news conference before May 31 parliamentary elections in the province, Barankevich said hundreds of millions of dollars meant to rebuild homes, schools and hospitals have been misappropriated under Kokoity. “What has happened practically a year after the war? Nothing. Not one apartment has been rebuilt, not one business has recuperated,” he said.
“There are dozens of concrete examples of theft” of aid, he said.
Barankevich would not say how much he thought had been pocketed by members of the separatist government, saying only he hoped that the figures would be released by Russian auditors.
Irina Gagloyeva, South Ossetia’s information minister, rejected the accusations of corruption. Of the $240 million in aid, only $45 million has arrived, and it was used to pay arrears to companies that conducted restoration work after the conflict, Gagloyeva said.

TITLE: Global Markets Rally Running Out of Steam
AUTHOR: By Courtney Weaver
PUBLISHER: The St. Petersburg Times
TEXT: All good things must come to an end, and that end might come sooner rather than later for a recent rally on the global equity markets.
Last week, investors saw signs of a correction to this spring’s month-long rally. While the bounce may hold out a few weeks still, at some point fundamentals have to outweigh sentiment, analysts said.
Both the S&P 500 and Nasdaq fell three sessions in a row last week thanks to a rush of poor data on U.S. April retail sales and unemployment claims. The MSCI Emerging Markets Index, which had gained as much as 53 percent since the beginning of the year, also began sputtering and reported five consecutive days of losses, falling 2.9 percent for the week. 
Though the country’s capital inflows continue to lag behind emerging markets Brazil and China, its markets’ gains have shot ahead thanks to low-priced equities and an oil price that reached as high as $60 per barrel before falling back to $56 at the end of the week.
The MICEX and RTS indexes have added roughly 50 percent since the start of the year, with MICEX becoming the world’s best-performing big market in 2009. 
“The Russian market has outperformed in terms of returns, but it had fallen a lot further as well,” said James Beadle, chief investment strategist at Pilgrim Asset Management. “It’s only natural that it bounced back slightly more than other emerging markets in the rebound.”
MICEX finished the week down 2.6 percent at 1002.2 points, after reaching its highest level since October, while RTS finished Friday at 936.27, shedding 0.2 percent after momentarily inching past the 1,000-point mark on Wednesday.
Energy stocks led the MICEX decline, with Gazprom flaring off 4 percent to close the week at 166.21 rubles. LUKoil lost 7 percent, finishing it out at 1,514.44 rubles, while Rosneft bled off 4.2 percent to 174.04 rubles.
Banks weren’t far behind, as Sberbank disposed of 2.2 percent to end up at 32.99 rubles, while VTB lost 2.4 percent, closing up the week at 0.04 rubles.
Fertilizer firms saw some growth, however, with Uralkali’s global depositary receipt shooting up 23 percent to $18.6, while Acron put on 12 percent to close at $23 on the RTS.
Polymetal, which replaced PIK Group on the MSCI Emerging Markets Index, delivered 6.9 percent to close at 228.84. 
But Russian markets will continue to be affected by indicators from the real sector, and those aren’t looking good. The country’s first-quarter gross domestic product contracted 9.5 percent year on year, according to preliminary State Statistics Service data released Friday.
A big test will come on Tuesday, when April’s industrial output figures are released, said Tom Mundy, an analyst at Renaissance Capital. 
“The market now is becoming much more focused on the real economy, and there are certainly some dangers that the RTS can crack quite sharply after touching the 1,000-point mark,” Mundy said.
“The Russian industrial production data has been pretty horrible, so that’ll be a good indication of how the stresses from the crisis have filtered down to the real economy,” he added.
Though some are forecasting an improvement from March, when output fell 13.7 percent year on year, Beadle said overall “substantial economic data continues to be quite bad.”
Combined with the rally’s uncertainty, he said, it all makes for one thing: “a very nervous market.”

TITLE: Ford Workers Protest Changes
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: About 100 workers of the Ford plant in the Leningrad Oblast gathered on Friday for a meeting in the town of Vsevolozhsk to protest the introduction of a four-day working week at the plant.
“We have gathered to protest such measures, because we understand that it will lead to our salaries being cut by about 25 percent,” said Alexei Etmanov, head of the Ford plant’s trade union.
The authorities of the plant are planning to cut the working week from June through October, Etmanov said.
Workers at the plant currently earn from 19,000 to 27,000 rubles ($590 to $640) per month, he said.
The Ford plant has not worked on Fridays for the past four weeks, but the company paid the employees two thirds of their salary for that day. During that period, the halt in operations was officially considered to be “due to the fault of the employer,” Etmanov said.
Yekaterina Kulinenko, spokeswoman for the Ford plant, said the plant’s authorities had announced plans to cut the working week to four days on April 6.
“Sales of Ford Focus cars produced in Vsevolozhsk dropped by 40 percent during the first four months of this year,” she said on Friday. “Therefore we had to take the unpopular decision of cutting the volume of work and accordingly the working week, in order to save jobs at the plant.”
The plant’s trade union and workers have always been very active in fighting for their rights. In 2007, they made the plant’s authorities raise salaries by 20 to 30 percent by staging strikes.
The Ford plant began operating in Vsevolozhsk outside St. Petersburg in 2002. The factory employs about 2,000 workers and produces Ford Focus and Ford Mondeo. In 2008, the plant produced 65,000 cars.

TITLE: Free Russian Buses for Supportive Nicaragua
PUBLISHER: The St. Petersburg Times
TEXT: Nicaraguan President Daniel Ortega on Friday accepted delivery of 130 buses donated by the Russian government to help ease the country’s public transportation problems.
“Brotherly Russia helped us, without any political or economic conditions,” Ortega said at the ceremony in the country’s capital, Managua, Itar-Tass reported.
In September, Nicaragua became the only country besides Russia to recognize the independence of the breakaway Georgian republics of South Ossetia and Abkhazia after they declared their independence. “The Russian and Nicaraguan people are connected by long, strong bonds of friendship, and the buses are just one more vivid confirmation of this,” said Russian Consul Igor Kondrashev, also at the ceremony. 
The buses were made at the Kurgan Bus Plant, and each seats 27 passengers. They will be used on routes connecting Managua with regional cities.

TITLE: Pharmacy Chain Turns to Raiffeisen for Debt Advice
PUBLISHER: Bloomberg
TEXT: Pharmacy chain 36.6, the country’s largest drugstore company, hired Raiffeisen Zentralbank Oesterreich to help restructure its debt to preserve funds, 36.6 said Friday. 
The bank will advise on a restructuring proposal that will be sent to bondholders in the near future, it said. The company’s 3 billion ruble ($94 million) bond matures June 30, according to Bloomberg data. 
CEO Jere Calmes said earlier this month that the company was talking to banks about possible loans and considering selling bonds and stock to ease its debt burden. 36.6 shares fell 6.8 percent Friday on concern that the announcement means that those talks haven’t progressed. 
“We will make the proposal to bondholders because of the overall unfavorable situation on financial markets and the company’s limited capacity to attract new capital,” Irina Lavrova, a spokeswoman at 36.6, said by phone. She declined to comment further. 
36.6’s debt stood at $149.4 million at the end of 2008, almost double its market value. About 80 percent of the company’s outstanding debt is due this year, Calmes said. 
The shares fell 22.44 rubles to 307.95 rubles on the MICEX Stock Exchange, giving the company a market value of 2.46 billion rubles.

TITLE: MTS Announces Sale of Five-Year Bonds Worth $467 Million
PUBLISHER: Bloomberg
TEXT: Mobile TeleSystems said it was selling 15 billion rubles ($467 million) of bonds, the biggest offering of ruble debt by a non-state company this year. 
The five-year notes will have a coupon of 16.75 percent, less than the initial price guidance, and a put option giving bondholders the right to redeem them after two years, the company said in a regulatory filing late Thursday. 
Russian companies have been struggling to raise funds since August after the global credit crisis and the country’s worst market rout since the 1998 sovereign default cut access to financing. Gazprom Neft sold 10 billion rubles of bonds last month. 
“The sentiment for Russian debt is much better now but is still very fragile,” said Mikhail Galkin, a fixed-income analyst at MDM-Bank in Moscow. It is now possible for companies to raise ruble debt by offering annual interest of 16 percent to 18 percent, although “many may want to wait for lower rates,” he said. 
Gazprombank and VTB Group are managing the sale of bonds, which are expected to be listed on the MICEX Stock Exchange May 19. The price guidance for the notes was set at 17 percent to 17.5 percent on April 29. 
Mobile TeleSystems has 55.7 billion rubles of domestic and foreign-currency bonds outstanding, according to data compiled by Bloomberg. Moody’s Investors Service rates the company Ba2, two steps below investment grade, with Standard & Poor’s ranking it an equivalent BB.

TITLE: In Brief
TEXT: <strong>Summit in Khabarovsk</strong>
MOSCOW (Bloomberg) — Russia and the European Union will seek joint solutions for the financial and economic crisis during a summit in Khabarovsk this week, Nezavisimaya daily said Monday, citing Vladimir Chizhov, Russia’s ambassador to the EU.
The summit which takes place May 21-22 in Khabarovsk in Russia’s Far East, will also focus on amending international laws on energy cooperation and reform of the Euro-Atlantic security system, Chizhov told Nezavisimaya in an interview.
Chizhov said Russia will seek EU priority project status for the planned South Stream pipeline. The status, already enjoyed by the Russia-backed North Stream pipeline, allows fast-track approval for documents in EU institutions, the paper said.

<strong>Forecast Lowered</strong>
ST. PETERSBURG (Bloomberg) — Goldman Sachs Group Inc. lowered its forecast for Russia’s economy this year after it showed the worst contraction in 15 years in the first quarter.
Gross domestic product will probably fall an annual 7.5 percent, compared with a previous forecast for a 5.5 percent contraction, Rory MacFarquhar, Moscow-based economist at Goldman, said in a note e-mailed late on Friday. Goldman reiterated its prediction for a 3 percent growth next year.
The slump in the first quarter may be attributed to a sharp decline in inventories, MacFarquhar said. Household consumption probably dropped seven percent in the first three months, while capital investment slid 15 percent, according to Goldman.

<strong>Overdue Wages Decrease</strong>
ST. PETERSBURG (Bloomberg) — Russian overdue wages declined 9.5 percent to 7.93 billion rubles ($245 million) on May 1 from 8.76 billion rubles a month earlier, the Federal Statistics Service said on its web site Monday.
The figures don’t include small businesses, the service said, without defining the term.

<strong>Russneft Plans On Hold</strong>
MOSCOW (Bloomberg) — Billionaire Oleg Deripaska suspended plans to sell Russneft after moving debt of his transportation unit onto the oil producer’s books, Vedomosti reported, citing two people familiar with the situation.
Russneft used $2.7 billion of a $2.9 billion credit line opened with Sberbank in February to purchase three subsidiaries belonging to Deripaska’s Basic Element holding company, Vedomosti said. That money was used to pay off $3 billion of loans and interest to Sberbank that Deripaska’s Russian Machines division borrowed in 2007 to buy the oil company, the newspaper said.
Russneft’s overall debt has now reached almost $7 billion, according to Vedomosti. Deripaska still doesn’t officially own Russneft as the Federal Anti-Monopoly Service hasn’t yet given its permission for a change of ownership, Vedomosti said.

<strong>Ukrainian Gas Conflict</strong>
KIEV (Bloomberg) — Ukrainian billionaire Dmitry Firtash, the owner of OstChem Holding AG, asked Germany and Austria for assistance in a dispute with state-run Ukrainian energy company Naftogaz, Kommersant-Ukraine reported.
Naftogaz stopped supplying natural gas to OstChem’s two plants in Ukraine last week, the Kiev-based newspaper said, citing Oleksiy Fedorov, an Ostchem spokesman. The chemicals company asked the German and Austrian authorities to assess the impact of the decision at the intergovernmental level, Kommersant said.

TITLE: Bidding Begins For Shtokman Contracts
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: The Gazprom-led international company set up to develop Shtokman, a huge offshore Arctic gas field, has opened up bidding for contracts in a step that will better define the project’s costs by the end of the year. 
Shtokman Development AG will invite more bids over the next few weeks in addition to the offers it has already posted on its web site since the end of April, Andrei Plis, the company’s head of supplier surveys, said Thursday. 
It’s now estimated that the field would cost Gazprom, France’s Total and Norway’s StatoilHydro, which are partners in Shtokman Development AG, $15 billion to develop. Prime Minister Vladimir Putin and his Norwegian counterpart Jens Stoltenberg may discuss the project when they meet in Moscow on Tuesday. 
In one of the higher-profile offers so far, Shtokman Development has announced a bidding for a 600-megawatt power plant near the Teriberka village on the Barents Sea, where the underwater gas pipeline will come to shore. 
There were a total of eight bidding invitations posted as of April 28, Plis said. The offers include offshore and onshore geological surveys for the project. 
There are no restrictions for foreign contractors in the field’s development, just a recommendation that they hire Russian companies to do some of the work where possible, Plis said. 
“Every potential bidder must realize this and seek to broaden the Russian involvement,” he said. 
Shtokman Development has been expanding its contacts with potential Russian bidders recently, informing them of opportunities and looking at their potential, Plis said. The company is holding a meeting with the members of the Association of Oil and Gas Equipment Producers on Friday. 
The association, its director Alexander Romanikhin said, is seeking a government decision to put a cap on the proportion of contracts that Shtokman Development will award to foreign competition. The global economic crisis is unlikely to lead to steep discounts by any association members because their costs keep rising, fueled by the government’s decision to raise the regulated gas and electricity prices, he said. 
Shtokman Development chief Yury Komarov sounded upbeat Wednesday on keeping costs at bay. “Today, the situation is favorable,” he said, adding that the budget will shape up more clearly after the bidding, Interfax reported. 
Bidding for the project is scheduled to finish by the end of the year, allowing Shtokman Development to make the final investment decision in the first quarter of next year. First Deputy Prime Minister Viktor Zubkov reiterated at a meeting with Stoltenberg in Oslo on Thursday that the government expected the decision at the start of next year. 
Initially, Shtokman Development planned to decide on investment at the end of 2009, but Gazprom deputy chief Alexander Medvedev announced in February that the date had been moved back to early 2010. The deadline for producing the first gas remained unchanged — 2013, Komarov said later.

TITLE: Ice Cream In Name Controversy
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: Most Russian-made ice cream will no longer be called ice cream if the milk industry gets its way. 
A State Duma committee considered a request from milk producers on Thursday to force makers of ice cream consisting of more than 12 percent vegetable oil to rename their product “melorin” instead of “morozhenoye,” the Russian word for “ice cream.” 
About 70 percent of Russian ice cream would fail to meet the purposed standards. The fact that “morozhenoye,” unlike “ice cream,” literally means “frozen” and gives no indication of its ingredients, does not seem to deter the milk producers. 
“The consumer should know whether he is buying real ice cream or a product made of palm oils that has no milk,” said Andrei Danilenko, head of the Russian Union of Milk Producers, who attended Thursday’s meeting of the Duma agriculture committee. 
Since ice cream made with vegetable oil is 20 percent cheaper than the kind made with real cream, calling them the same name is not fair to the milk producers, he said. 
A representative of the Duma’s agriculture committee said the proposition is one of 61 changes to technical regulations for the milk industry that are under review. Since the proposal would affect the entire industry and is highly contested by various industry players, it has been sent on to the government, the representative said, speaking on condition of anonymity. “It’s not the job of the deputies to reconcile the milk union and the ice cream union,” he said, adding that the Agriculture Minister Yelena Skrynnik has two committees where the lobbies can work out their differences. 
Russian Milk Union official Vladimir Labinov, who presented the case for “melorin” to the Duma deputies Thursday, was not available for comment after the meeting. 
Danilenko said he supported Labinov but was ready for a compromise. 
“Maybe we can name some products ‘morozhenoye’ and others ‘slivochnoye morozhenoye’ [frozen cream],” he said. 
The goal is a clearer distinction on ice cream packaging, Danilenko said, so that an elderly woman buying a plombir ice cream brick does not think that it is the same ice cream brick she bought in Soviet times. “It’s not like Russia is the only country where this distinction is made,” he said. 
“Melorin” appears to be borrowed from the English word “mellorine,” a nondairy alternative to ice cream that is offered for sale in some U.S. stores. 
Retailers are not likely to embrace the measure. “From a marketing perspective, any change in a product’s name affects consumer demand,” said Vladimir Rusanov, a representative of X5 Retail Group, Russia’s largest retailer and owner of the Pyatyorochka and Perekryostok chains. “In this case, the name is not changing for the better.” 
Ice cream makers fumed at the proposed name change, saying the label “melorin” would scare consumers because it provokes an association with “melamine,” the chemical in a recent milk contamination scandal in China. 
“Can you imagine how much money ice cream makers will need to spend to prove that melorin is ice cream and not poison?” Russian Ice Cream Union head Valery Elkhov said. 
Seventy percent of ice cream in Russia is made using cheaper vegetable oil, which also improves texture and stores longer, the Russian Ice Cream Union said. Russia’s ice cream market was estimated at 1.3 billion euros ($1.8 billion) in 2008.

TITLE: Inflation Rate Down at 6.5%
PUBLISHER: Bloomberg
TEXT: Russia’s inflation rate in the year through May 12 was 6.5 percent compared with 6.8 percent in the same period last year, the State Statistics Service said Thursday. 
Consumer prices climbed 0.2 percent between May 5 and May 12 after rising the same amount in the previous week, the service said. 
The cost of frozen fish rose 0.6 percent in the week, while black tea prices gained 0.5 percent. Prices for gasoline and diesel fuel slid 0.6 percent. 
Russia’s inflation rate fell more than expected in April to 13.2 percent as the economy slowed price growth and the effect of the ruble’s devaluation ebbed, the service said Wednesday. 
Producer prices, an early indicator of inflation, fell less than expected in April as price growth slowed and industrial output shrank, the service also said. The cost of goods leaving factories and mines dropped an annual 4.1 percent after falling 2.8 percent in March, it said.

TITLE: Savings Accounts Unpopular Amid Recession
PUBLISHER: Bloomberg
TEXT: Russia’s inflation rate and falling incomes have dissuaded people from opening new savings accounts, a new poll showed. 
The Deposit Insurance Agency, charged by the government in October with bailing out troubled banks, said only nine percent of respondents intend to open new savings accounts in 2009 or increase existing ones, while eight percent said they have no plans to save at all. 
Among the respondents disinclined to save, 26 percent cited the level of inflation as the main factor in their decision, while 22 percent blamed low incomes and 19 percent said they didn’t trust the banking system. The agency conducted the survey jointly with the VTsIOM polling center. 
Since September, 44 percent of respondents have seen their incomes dwindle while nine percent have reported an increase, the agency said Thursday. Thirty-six percent of Russia’s adult population holds bank deposits. 
The agency said 85 percent of respondents haven’t acted to protect their deposits from the volatility of the exchange rate. The ruble slid 35 percent against the dollar between August and January as the recession eroded demand and froze credit markets. The ruble has strengthened 12 percent against the dollar since the end of January. 
The survey of 1,600 Russians was conducted in March. The margin of error was 2.3 percentage points.

TITLE: Budget Deficit Jumps to 11-Year High 3.3% of GDP
PUBLISHER: Bloomberg
TEXT: Russia’s budget deficit widened last month to the equivalent of 3.3 percent of gross domestic product as the government spent 369.8 billion rubles ($11.5 billion) more than it collected. 
Revenue in the period was 2.2 trillion rubles, or 33.1 percent of the amount the government planned for 2009, while spending was 2.6 trillion rubles, or 26.5 percent of forecasted expenditure, the Finance Ministry said on its web site today, citing preliminary figures. The deficit was the biggest since at least Jan. 31, 1998, according to Bloomberg data. 
Russia will post a budget shortfall this year as a lack of credit stifled growth and revenue plunged after the global recession slowed demand for oil, gas and metals. The government expects revenue to shrink 30 percent this year, and the gap may rise to more than the official estimate of 7.4 percent of gross domestic product. 
The country may seek billions of dollars in loans from the World Bank to cover the expected deficit of at least 3 percent of GDP in the next three years, Finance Minister Alexei Kudrin said. 
Russia, the world’s biggest energy exporter, needs oil prices to average a minimum of $100 a barrel in 2009 and $87 in 2010 to balance its budget, Elina Ribakova, Citigroup Inc.’s chief economist in Moscow, said in a report last month.

TITLE: Ruble Reserve Currency May Not Be So Crazy
AUTHOR: By Martin Gilman
TEXT: One of Russia’s official policy goals is for the ruble to become a leading regional reserve currency. President Dmitry Medvedev presented his vision in general terms almost a year ago at the St. Petersburg economic forum. More recently, at the Group of 20 meeting in London on April 2, Medvedev suggested against a background of financial volatility that “It would be wise to support the creation of strong regional currencies and to use them as the basis for a new reserve currency.”
To many observers, such an ambition seemed derisory even before the financial crisis. With the crisis, it seems almost delusional. Not only are we in the midst of the greatest economic collapse since the Great Depression, but the flight to safety has, if anything, reinforced the central role of the U.S. dollar as the global reserve currency par excellence. The British pound and the Swiss franc have both slipped in recent months. The yen wobbles as speculators try to decide whether to pursue or ditch their carry trades. The euro still lacks political cohesion. It certainly looks like the dollar should reign supreme for years, if not decades, to come. And perhaps it will.
But maybe not. Let’s be clear what we are talking about. An international reserve currency is one that is used outside its home country. The attractiveness of a reserve currency can be considered in terms of the three classic functions of money domestically: as a store of value, a medium of exchange and a unit of account. Under each function, governments and private actors sometimes choose to use a currency that is not their own. With these notions in mind, one can broadly denote the common features of reserve currencies. First, the currency must be widely used in international transactions. Second, it has to be linked to deep and open financial markets. Finally, people need to have confidence the purchasing power of that currency will remain fairly stable.
Once a currency is widely used and held as a reserve currency, its use is likely to continue owing to inertia. But that situation can change. If a central bank fails to sustain confidence in the future value of its currency, participants in the global market will eventually find substitutes. One of the consequences of globalization is that substitutes do exist for any currency if policymakers allow inflation to erode its purchasing power. 
If anything, the performance of the ruble and Russian markets since late last summer would suggest that none of these conditions is fulfilled. After all, the ruble was devalued, domestic security markets collapsed and capital flight took off. There was even talk about the reimposition of capital controls that had been abolished only on July 1, 2006. To be fair, the pound fell by more against the dollar, and market dysfunctionality was not unique to Russia. 
Nevertheless, it could be that the Russians are on to something.
Last week, despite the apparent appeal of the dollar in the midst of this global crisis, the U.S. bond market — often a harbinger of future trends — suddenly panicked, and the prices of U.S. Treasury bonds plummeted with 10-year yields jumping to over 3.3 percent. This could be ominous for the future of the dollar.
For those of us old enough to recall the 1960s, an analogy may be appropriate. In the 1950s and early 1960s, the dollar was also considered scarce. Everyone wanted dollars. It was stable, safe and totally liquid. Then, starting in the mid-1960s, prudent economic policies were loosened to pay for a foreign war (Vietnam) and President Lyndon Johnson’s Great Society. This quickly led to a dollar glut. President Richard Nixon then broke the dollar’s link with gold, and several years later President Jimmy Carter had to issue foreign currency-denominated bonds. Investors sought the safety, strength and liquidity of the main creditor country currencies — the German mark and Swiss franc.
The parallel with today’s dollar overhang is worrying. Zhou Xiaochuan, governor of China’s central bank, following the lead of Medvedev, has suggested creating a “supersovereign reserve currency” to replace the dollar over the long run. He would sharply enhance the global role of Special Drawing Rights, or SDRs, the inter-national asset created by the Inter-national Monetary Fund in the late 1960s. 
The United States and several other governments, however, have been quick to reject the Russian and Chinese proposals, reaffirming their confidence in the key global role of the dollar. They apparently fear that serious discussion of this issue could shake confidence in the dollar, driving down its value and prompting a sharp rise in the euro and other currencies. Such instability and consequent rise in global interest rates would severely complicate crisis recovery efforts in the United States, Europe and the rest of the world. But there is a more immediate threat to the dollar than that represented by pursuing these limited proposals for reserve diversification. The risk is that China, Russia and perhaps other monetary authorities — who together hold more than $5 trillion in dollar reserves — will lose confidence in the dollar because of excessively large budget deficits in the United States. 
These worried dollar holders have thus far refrained from dumping U.S. Treasury securities only because their prices were rising and the dollar has strengthened over the past year — both of which are almost certainly temporary — and because of the adverse global repercussions. This situation is unlikely to be sustainable for long, and last week’s disappointing auction of Treasury bonds must tempt some to book their profits before the stampede begins. Big conversions by Russia, China or another large holder, or even market fears thereof, could trigger a massive run on the dollar.
Even then, a wobbly dollar doesn’t guarantee a global future for the ruble, but it does increase the likelihood that reserve currency substitutes will be in demand. It is highly unlikely that an artificial reserve asset like the SDRs will play more than a supporting role in a world still dominated by nation-states. For the foreseeable future, only national currencies can deliver the attributes sought for reserve currencies. The only issues are which ones and when? 
But one thing is certain: Currencies of creditor countries, as in the past, will be preferred. In today’s world, this would include China, Japan, Russia, South Korea and Saudi Arabia. Of course, the other conditions must also be realized. Medvedev’s vision for the ruble may not be so far-fetched, but the crisis has exposed just how much still needs to be done to make it come true.
In the end, whether the dollar continues to play its central reserve role depends above all on U.S. economic policies, but last week’s U.S. Treasury market may portend that potential new players could be thrust into leading roles sooner than they think.

Martin Gilman, a former senior representative of the International Monetary Fund in Russia, is a professor at the Higher School of Economics.

TITLE: Islands Apart
AUTHOR: By Peter Rutland
TEXT: Prime Minister Vladimir Putin descended on Japan last week, accompanied by a dozen governors and more than 100 Russian business leaders. Yet the visit failed to break the impasse in Russian-Japanese relations over the four islands east of Hokkaido, which Russia seized in 1945. This means that the two countries are still without a peace treaty and an agreed mutual border 64 years after the end of World War II.
Japan needs Russian energy, and Russia needs Japanese technology and managerial expertise. With the Sakhalin oil and gas projects finally coming on stream, bilateral trade has doubled twice in the past five years, reaching $29 billion. The one concrete result of Putin’s visit was an agreement to step up cooperation in nuclear power generation.
Japan will double the amount of uranium it buys from Russia (currently, Russia supplies 12 percent of Japan’s demand) and will send waste for reprocessing to Russia, subject to International Atomic Energy Agency safeguards. There will also be a joint venture for building new plants.
But there was zero progress on the Northern Territories issue. Back in 1956, the Soviet Union had offered to return the two smaller, southern island groups of Shikotan and Habomai. Japan rejected the offer and continues to insist that the islands were illegally seized, having never previously been claimed by the Soviet Union or tsarist Russia. As recently as 2001, Russia was still floating the possibility of a two-island solution, but since then Putin has effectively declared the issue closed. During a February summit with Japanese Prime Minister Taro Aso in Yuzhno-Sakhalinsk, President Dmitry Medvedev called for “original, nonstandard approaches” to the question, which the Japanese eagerly interpreted as a possible sign of the Kremlin’s new flexibility on the issue.
But after Medvedev’s statement, Russia did not come up with any new proposals. Then in an interview with the Mainichi Daily News on April 17, Shotaro Yachi, a former deputy foreign minister and current adviser to Aso, suggested that the four islands be split 50-50. But instead of offering the idea of splitting up the four islands according to two to each country, Yachi suggested a 50-50 split according to land area. The problem with this idea is that Habomai and Shikotan account for only 7 percent of the 5,000 square kilometers of the disputed islands. So a 50-50 territorial division would give Japan the two smaller islands plus Kunashiri, and it would also give Japan a chunk of the largest island, Etoforu. In the end, however, Yashi’s idea was promptly denounced by the entire Japanese political class, who insist on the demand of “four or nothing.”
The idea that Russia, having control of four islands, would turn around and hand over three and a quarter of them, demonstrates Japan’s unwillingness to confront the reality of Moscow’s intransigence.
Why is Japan so intractable on this issue? The best pragmatic explanation is that Japan is waiting for Russia’s economic boom to burst. Tokyo should patiently wait for the day when a weak Russia, isolated from Europe and challenged by a rising China, will be in desperate need of Japanese cash and economic partnership.
Another possible argument is that Japan has grown accustomed to the fuzzy diplomatic status quo. Strategic ambiguity is arguably useful not just for Japan, but also for Russia and China; none of them wants to be drawn into binding alliances with a regional partner that could alarm the other neighbors.
For its part, Japan sees it as a matter of moral and legal principle. In some respects, the nonreturn of the islands has become integral to Japan’s political identity. It enables Japan to continue seeing itself as a victim of the vengeful Allies in 1945. First, the Americans dropped the atom bomb twice. Then the Soviet Union, after entering the Pacific theater of World War II on Aug. 9, 1945, seized territories occupied by the Japanese Empire and expelled Japanese citizens not just from the Northern Territories but also 3 million Japanese from Sakhalin and Manchuria. Thus the politics of national identity are trumping the politics of national interest.
At a May 10 news conference in Moscow, a Japanese journalist asked Putin about the prospects for a 50-50 territorial split of the islands. Putin carefully replied that “the art of politics amounts to a search for acceptable compromise” and went on to point out that the Japanese government has not yet made a concrete proposal.
More broadly, Putin’s rhetoric during the recent Tokyo visit held out some vague hope of future flexibility — that is, if Japan proves itself to be a good friend and partner of Russia. For example, Alexander Shokhin, the head of the Union of Industrialists and Entrepreneurs who accompanied Putin to Tokyo, pointed out that Japan is holding back from funding the completion of the 4,118-kilometer pipeline — which will be the world’s longest — that would carry oil from the Irkutsk region to Perevoznaya Bay, near Vladivostok, to be exported to Asian and U.S. markets.
According to Kommersant journalist Andrei Kolesnikov, at the final news conference on May 12 Aso had to pretend that the islands issue had been discussed when it was pretty clear from Putin that it had not. Aso is now looking forward to his meeting with Medvedev at the Group of Eight summit in July. But between now and then, Japan had better come up with something better than offering the Russians the chance to keep three-fourths of an island.

Peter Rutland is a professor of government at Wesleyan University and an associate of the Davis Center for Russian and Eurasian Studies at Harvard University.

TITLE: Cipher in Chief
AUTHOR: By Richard Lourie
TEXT: President Barack Obama’s first 100 days and President Dmitry Medvedev’s first year in office roughly coincided, and the contrast is striking. Obama has launched a series of swift and significant actions while changing the mood of the country and the tone of its politics. Medvedev has done nothing of the sort and in fact remains something of a cipher. It’s not clear who he is, what he stands for and how much power he has.
As commander in chief, Medvedev seemed to demonstrate some power when he ordered troops into Georgia in August, although most people understand that it was Prime Minister Vladimir Putin who was running the show.
Medvedev, it turns out, was operating without the real power of commander in chief, but also without any official symbols on everything from his stationary to the uniform he is required to wear on certain occasions. Post-Soviet Russia had not gotten around to creating new emblems for its commander in chief. But as Kommersant reported on May 8, that situation has now been remedied by the Committee on Heraldry. The new emblem could not have been more tsarist — against the background of the Russian tricolor is a golden two-headed eagle whose breast bears an image of St. George, patron saint of Russia and Moscow, slaying a dragon. The eagle rests on an ornate baton modeled on those used by field marshals in Russia’s Imperial army. There is no reference whatsoever to the Soviet past. More important, there is no reference whatsoever to the Russian future.
Creating continuity is very important for the country’s current rulers. Since the Soviet past — its symbols, practices and mindset — has been rejected, it was only natural to create links with Russia’s pre-Soviet — that is, tsarist and imperialist — past. This can make Russia’s neighbors nervous.
But the Soviets, whatever else may be said of them, came to power armed with a dynamic vision of a time in which the future was the most important element. They quickly created powerful symbols — the red star, the hammer and sickle and the flaming torch. Out of their new vision, they created new symbols.
It is in the arena of vision and symbols that Medvedev can play a new and groundbreaking role. He is largely a symbolic figurehead anyway, with no power base to support him and beholden to no particular group. Thus, he can assume the responsibility of creating and disseminating the vision of what 21st-century Russia should look like and what it should represent. He may not have the levers of power, but he does have a bully pulpit.
Since he is already known as the Internet-savvy president, he could, for example, use the web to conduct a national referendum on what Russians really want, a sort of electronic national zemsky sobor (the country’s first parliament dating to 1549).
Do Russians want a further and more far-reaching investigation into the Soviet past? Is there a real desire to recapture a lost grandeur and reclaim eastern Ukraine, Crimea and Belarus? Or do Russians just want to make a decent living and live in peace without a grandiose ideology and historic mission?
Since the Internet is interactive, the president can also use it to propagate his own vision of the future. Medvedev’s doctrine of the “Four I’s” is, apart from sounding too Chinese, a plan for strengthening the country in areas that sorely need it but not a course and a destination. In the dialogue with the nation, a vision will evolve.
The two-headed Russian eagle looks both east and west. It must also look to the past and future.

Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”

TITLE: 100 Days of Patriarch Kirill
AUTHOR: By Leonid Sevastyanov and Robert Moynihan
TEXT: Patriarch Kirill was installed in office on Feb. 1. His first 100 days have been marked by innovation not only in terms of style, but also in substance — much like the reign of Pope John Paul II in the Roman Catholic Church. 
“Today, the church and society are in fact one and the same thing,” a spokesman for Kirill said. “Our believers go to discotheques and rock concerts, and if there’s a chance to give some church tinge to such youth gatherings, if young people are glad to hear a few words from a priest, why shouldn’t he go there and say a few words?”        
On March 8 in Moscow, Kirill showed the type of spirit that he is bringing to his pastoral task. He warned during a Sunday sermon not to trust radical Orthodox believers who are battling for the “purity of faith” and whose motto is “Orthodoxy or death!”
“When we meet a man who claims to be fighting for the purity of Orthodoxy, but his eyes are lit with the fire of anger ... if we find someone who is ready to shake the foundation of church life to defend Orthodoxy ... this is the first sign of that we have a wolf in sheep’s clothing,” he said.
On March 17, during a ceremony at the Danilovsky Monastery marking the return of the church bells that had spent the past 80 years at Harvard University in safekeeping, Kirill told John Beyrle, the U.S. ambassador to Russia, that the bells were a symbol of the improving relationship between the two countries.
On April 1, Kirill met with Putin and said his goal was to make the churches that were opened during the reign of Alexy II flourish. In this way, Kirill hopes to bring benefit to Russian society by promoting Christian values. 
On April 9, Kirill met with Ukrainian Prime Minister Yulia Tymoshenko in Moscow. He stressed the need to deepen relations between Russians and Ukrainians, calling them people from “the same nation.”
Kirill has proven to be a capable administrator. He has gathered around himself a team of well-trained and capable younger clerics and laymen to help him implement his vision for the church and the nation. Kirill’s team includes Archbishop Hilarion Alfeyev, 42, who has filled Kirill’s former post as head of the external relations department of the Moscow Patriarchate.
Today, Kirill is arguably one of the most influential men in Russia. When he was enthroned as Patriarch Alexy II’s successor in the Christ the Savior Cathedral, the church was filled with the country’s beau monde and top political leaders. The first person to receive communion from him was the first lady, Svetlana Medvedeva. 
Moreover, Kirill’s vision has a fully European scope, going far beyond the borders of the country. Kirill now heads a church with about 140 million adherents, far larger than the Anglican Church and second only to the Roman Catholic Church. With a significant percent of Orthodox believers living outside Russia, this gives the church a truly global reach. 
But statistics are less important than suffering and faith. The Russian Orthodox Church suffered greatly under Soviet rule. Now it has re-emerged from the catacombs following the collapse of the Soviet Union 17 years ago to take on a greater role in post-Soviet Russia.
Despite the enormous challenges that the Orthodox Church faces, now is the time of promise and hope for a country that has become highly secularized. Kirill evidently hopes that it will be an “Orthodox moment” for the church as well as the country.
One of Pope John Paul II’s most important goals was to put an end to the scourge of atheist communism, and Pope Benedict XVI still passionately hopes to see the restoration of a unified church. While Kirill has not spoken in terms of unification, he has helped improved ties with Rome. This explains why Benedict has made numerous gestures toward Kirill of welcome and appreciation since the moment that he was elected patriarch on Jan. 27.
After observing Kirill’s first 100 days, it is clear that he and the Orthodox Church aim to play an increasing role in Russian life and perhaps extend this reach to Europe and the rest of the world.

Leonid Sevastyanov is a general manager at StratinvestRu and a consultant to the Moscow Patriarchate. Robert Moynihan is a president of the Urbi et Orbi foundation.

TITLE: Using Rock Concerts To Shape Georgia’s Politics
AUTHOR: By Matthew Collin
TEXT: Pop music became the latest political battleground between Georgia and Russia last weekend as the government in Tbilisi tried to take some of the shine off the Eurovision Song Contest in Moscow by financing a rival rock festival that celebrated “freedom” and “European culture.” Presumably, Tbilisi wanted to send the message that the Kremlin cherishes neither concept. 
Georgia withdrew its entry to Eurovision this year after the lyrics to the song “We Don’t Wanna Put In,” an impudent snipe at Prime Minister Vladimir Putin set to a kitschy disco beat, were judged to be unacceptably political by the organizers. 
If the song was intended to cause controversy, have some fun at Moscow’s expense and put Georgia back in the international headlines, it worked. Putin’s spokesman described it as an act of musical “hooliganism,” although Georgian politicians insisted that Eurovision’s ruling was politically motivated censorship. They responded by backing a lavish three-day festival called “Tbilisi Open Air Alter/Vision,” one of the biggest musical events ever held in this country. 
This isn’t the first time that pop music has been used for political purposes in Georgia. During the Rose Revolution in 2003 that swept Mikheil Saakashvili to power, the country’s best-known rockers fueled insurrectionary fervor by playing live to protesters outside the parliament as they struggled to oust Georgia’s former leader, Eduard Shevardnadze. In recent weeks, demonstrations against Saakashvili have been partly inspired by a controversial pop star who has “imprisoned himself” in an imitation jail cell to create an unusual anti-government reality television show. Opposition activists have followed his lead by blocking streets outside the parliament and other state buildings with hundreds of similar mock cells.
Georgia may have received a propaganda boost from this year’s Eurovision, but in 2008 it wasn’t so fortunate. Last year’s entry was sung by Diana Gurtskaya, a blind refugee from Abkhazia, the Moscow-backed rebel region that split from Georgian government control during a vicious civil war in the early 1990s. “My land is still crying, torn in half,” she wailed. “Something’s gotta change, something’s gotta change!” But the title of her song, “Peace Will Come,” could hardly have been a more inaccurate prediction. Just three months after the Eurovision final, Georgia was at war again, and the “cold bitter tears” of Gurtskaya’s lyrics continued to flow.

Matthew Collin is a journalist based in Tbilisi.

TITLE: Safina Sweeps to Second Successive Title
AUTHOR: By Scott Williams
PUBLISHER: Agence France Presse
TEXT: MADRID — Women’s world number one Dinara Safina claimed her second major clay title in a row here on Sunday as she outclassed Danish teenager Caroline Wozniacki 6-2, 6-4 to win the Madrid Masters.
The 23-year-old Russian - who lost the 2008 Roland Garros final to Ana Ivanovic - showed she is on track as a serious title contender when the French Open gets underway in a week.
Safina has figured in WTA finals over the last three weeks in the grand slam buildup, losing Stuttgart to compatriot Svetlana Kuznetsova but turning the tables to beat her in Rome a week ago.
“I was getting a bit tired by the end,” said Safina. “But I dominated at the crucial times. I was very dominant in the first set.
“In the second I had a chance at a double-break.”
Despite the humbling defeat in 1hr,48 min, Wozniacki, 19, will still make her career Top ten breakthrough in Monday’s final pre-French Open rankings.
The youngster, playing her fourth final of the season, won a minor Florida title in February.
“I’m going one step at a time,” said Wozniacki, considering her new number two ranking. “I’m in the Top ten so I have nine more steps to go to reach my goal.”
Safina has quickly become a force in the game after shaking off a crisis of confidence. She emerged victorious with three breaks of serve, going through on her second match point.
The younger sister who has lived and played in the shadow of her flamboyant 29-year-old brother Marat Safin, has become a force in her own right in recent seasons. Madrid marked her fifth final in eight tournaments in 2009.
She was runner-up at Sydney and the Australian Open in addition to Stuttgart and now owns 11 career titles.
Since becoming number one on April 20, Safina has posted a 14-1 record. Wozniacki now stands 3-10 against Top five opponents.
Safina opened up an early lead, breaking in the third and fifth games as her greater experience began to make an impression in the opening set.
Wozniacki saved two set points before losing the opener in 44 minutes. In the second, Safina started with a break and fought through a long eighth game, saving two break points.
Wozniacki annulled a match point on her own serve in the ninth before Safina closed it out a game later for her 28th victory of the season against just six defeats. Wozniacki now stands 35-11.

TITLE: Mexican Police Accused In Drug War
AUTHOR: By Alexandra Olson
PUBLISHER: The Associated Press
TEXT: MEXICO CITY — Three police officers and two other men were arrested on suspicion of working for a drug cartel in central Mexico, federal authorities said Sunday. A former state security chief and the police chief of a state capital were detained for questioning.
Investigators uncovered the alleged police corruption ring after the arrest earlier this month of 14 alleged members of the Beltran Leyva drug cartel in Cuernavaca, the capital of Morelos state, the Public Safety Department said in a statement.
The head of the Morelos police vehicle recovery unit was arrested for allegedly selling stolen cars and auto parts to the cartel, the statement said, while a former state police officer was arrested on suspicion of serving as a hit man.
Two Cuernavaca municipal police officers were accused of stealing cars and kidnapping for the Beltran Leyva gang, and a fifth suspect was also arrested as an alleged hit man.
Federal police came under fire as they raided a Cuernavaca building where four of the suspects were arrested Saturday, the department said. Police confiscated several weapons inside along with a banner bearing an unspecified message for President Felipe Calderon.
Federal investigators are questioning former Morelos state Public Safety Secretary Luis Angel Cabeza de Vaca Rodriguez and Cuernavaca police chief Francisco Sanchez Gonzalez, according to an Attorney General’s Office press officer. The official, who could not be named because of agency policy, declined to provide further details.
Officials at the Public Safety Department could not be reached for further comment.
Corruption permeates the police in Mexico, a major obstacle to Calderon’s U.S.-backed campaign to crush brutal drug gangs. Calderon insists he is cracking down: Last year, his government rooted out more than two dozen high-level government officials, including a former drug czar, who were allegedly paid to protect the Sinaloa cartel.
On Saturday, the governor of Zacatecas, another central state, said prison guards were likely complicit in the escape of 53 inmates, including at least 27 with links to the Gulf cartel. About 20 gunmen freed the prisoners in a raid that lasted just five minutes.
Calderon has sent more than 45,000 soldiers to combat drug gangs, although the army has also been accused of abuses in the offensive.
Drug violence has killed more than 10,750 in the last 2 1/2 years.
Cabeza de Vaca had held his post until last week, but the statement from the Morelos government described him as the ex-public safety chief.
The brief statement said only that it was up to federal authorities to give information on their legal status, and that the Morelos government was cooperating with the investigation.
It was unclear if Sanchez had been removed as police chief. Local newspapers reported that he had been fired. The Morelos government statement said only that Mayor Roque Gonzalez had temporarily taken the reigns of the city police force in Cuernavaca, the Morelos state capital.

TITLE: Hiddink Calls For
Chelsea 
To Stop Utd
AUTHOR: By Steve Griffiths
PUBLISHER: Agence France Presse
TEXT: LONDON — Chelsea coach Guus Hiddink bid an emotional farewell to Stamford Bridge on Sunday, but warned his successor he’ll need to spend big money if the Londoners are to stop the Manchester United juggernaut.
Since being drafted in to replace Luiz Felipe Scolari, Hiddink has narrowly missed out on a Champions League final spot, guaranteed a top four league finish and could still win the FA Cup.
But the Dutchman insists that Chelsea don’t yet have a squad capable of competing with United who retained their English Premier League title on Saturday.
He believes the new manager will need more strength in depth to overhaul the champions.
“When you want to compete, you have to renew your squad almost every year,” he said. “To be realistic in the upcoming years we have players who are ageing.
“It is up to the new management. It’s my humble advice to bring in even more depth, but people in the club know that.
“For the FA Cup, League Cup, Premier League and Champions League, you need a squad of real depth in quality. You need to be able to use a lot of players, like Manchester United.”
Hiddink, who has one more league game at Sunderland next weekend, could have few complaints about the way his team brushed aside Blackburn 2-0 on Sunday in his final home league game.
They took the lead in the fourth minute when Florent Malouda headed home Nicolas Anelka’s cross. Anelka doubled the lead in the 59th minute with a low strike from the edge of the penalty area.
He admitted he will be haunted by a nagging sense of regret when he walks away from Chelsea after the FA Cup final.
He will resume his full-time role as Russia coach following the Wembley date with Everton on May 30 and he was afforded an emotional send-off during and after Sunday’s game.
Hiddink bowed in acknowledgement of the cheers from the Chelsea fans who chanted his name throughout the victory.
Such is the loyalty Hiddink has inspired from the club’s supporters that a section of them even made it clear they would rather keep him than have AC Milan boss Carlo Ancelotti, who is widely expected to succeed the Dutchman.
The former Australia and South Korea coach was also given a guard of honour by the players after the match.
All the plaudits emphasised the impact Hiddink has made at a club that was in turmoil when he arrived and he was emotional as he reflected on his brief taste of life in the Premier League.

TITLE: Sri Lanka: Tamil Tiger Chief Has Been Killed
PUBLISHER: The Associated Press
TEXT: COLOMBO, Sri Lanka — Sri Lanka declared Monday it had crushed the Tamil Tiger rebels, killing their chief, Velupillai Prabhakaran, and ending his three-decade quest for an independent homeland for minority Tamils.
State television broke into its regular programming to announce Prabhakaran’s death, and the government information department sent a text message to cell phones across the country confirming he was killed along with top deputies, Soosai and Pottu Amman.
The announcement sparked mass celebrations around the country, and people poured into the streets of Colombo dancing and singing.
Prabhakaran’s death has been seen as crucial in bringing closure to this war-wracked Indian Ocean island nation. If he had escaped, he could have used his large international smuggling network and the support of Tamil expatriates to spark a new round of guerrilla warfare here. His death in battle could still turn him into a martyr for other Tamil separatists.
Sri Lanka’s army chief, Lt. Gen. Sareth Fonseka, said on television that his troops routed the last rebels from the northern war zone Monday morning and were working to identify Prabhakaran’s body from among the dead.
“We can announce very responsibly that we have liberated the whole country from terrorism,” he told state television. It was widely presumed Fonseka was waiting for President Mahinda Rajapaksa to announce Prabhakaran’s death.
Fonseka and the commanders of the other security forces were scheduled to formally inform the president of the victory Monday evening.
Senior military officials said troops closed in on Prabhakaran and his final cadre early Monday.
He and his top deputies then drove an armor-plated van accompanied by a bus filled with rebel fighters toward approaching Sri Lankan forces, sparking a two-hour firefight, the officials said, speaking on condition of anonymity because they were not authorized to speak to the media.
Troops eventually fired a rocket at the van, ending the battle, they said. Troops pulled Prabhakaran’s body from the van and identified it as that of the rebel leader, they said. The attack also killed Soosai, the head of the rebels’ naval wing, and Pottu Amman, the group’s feared intelligence commander, the officials said.
Suren Surendiran, a spokesman for the British Tamils’ Forum, the largest organization for expatriate Tamils in Britain, said the community was in despair.
“The people are very somber and very saddened. But we are ever determined and resilient to continue our struggle for Eelam,” he said, invoking the name of the Tamils hoped-for independent state. “We have to win the freedom and liberation of our people.”
But in Colombo, which had suffered countless rebel bombings, people set of fireworks, danced and sang in the streets.
“Myself and most of my friends gathered here have narrowly escaped bombs set off by the Tigers. Some of our friends were not lucky,” said Lal Hettige, 47, a businessman celebrating in Colombo’s outdoor market. “We are happy today to see the end of that ruthless terrorist organization and its heartless leader. We can live in peace after this.”
The chubby, mustachioed Prabhakaran turned what was little more than a street gang in the late 1970s into one of the world’s most feared insurgencies. He demanded unwavering loyalty and gave his followers vials of cyanide to wear around their necks and bite into in case of capture.
At the height of his power, he controlled a shadow state in northern Sri Lankan and commanded a force that including an infantry, backed by artillery, a significant naval wing and a nascent air force.
He also controlled a suicide squad known as the Black Tigers that was blamed for scores of deadly attacks. The rebels were branded a terror group and condemned for forcibly conscripting child soldiers.
Earlier, the military announced it had killed several top rebel leaders, including Prabhakaran’s son Charles Anthony, also a rebel leader. The military said special forces also found the bodies of the rebels’ political wing leader, Balasingham Nadesan, the head of the rebels’ peace secretariat, Seevaratnam Puleedevan, and one of the top military leaders, known as Ramesh.
The rebels have been fighting since 1983 for a separate state for Sri Lanka’s ethnic Tamil minority after years of marginalization at the hands of the Sinhalese majority. More than 70,000 people have been killed in the fighting.

TITLE: Egypt Detains Bombers Over Tourist Attack
PUBLISHER: Agence France Presse
TEXT: CAIRO — An Egyptian cabinet minister said on Monday that those behind a bomb attack on a Cairo tourist site that killed a teenage French girl in February have been arrested, the official MENA news agency reported.
“The security services have detained those elements who carried out the Al-Hussein terrorist attack,” the news agency quoted Legal and Parliamentary Affairs Minister Mufid Shehab as saying.
Shehab told MENA he had been informed of the arrests by Interior Minister Habib al-Adli.
The February 22 nail-bomb attack in the famed 14th century Khan al-Khalili bazaar on the square outside Al-Hussein mosque killed the 17-year-old girl and wounded another 24 people -- 17 French, three Saudis, three Egyptians and a German.
It was the first deadly attack on tourists in Egypt since 2006.
Shehab said without elaborating that those held belong to “a cell comprising Egyptians and people of various other nationalities.”

TITLE: Putin on Plans: 'We're Getting This Done
AUTHOR: By Oksana Ivankova
PUBLISHER: The Associated Press
TEXT: SOCHI, Russia — Prime Minister Vladimir Putin assured wary IOC officials that Russia’s construction and financing plans for the 2014 Winter Olympics are on schedule.
Jean-Claude Killy, the French Olympic ski great who heads the International Olympic Committee panel overseeing the Sochi Games, urged organizers Thursday to keep working.
“Time is not a luxury that we have to play with on this project,” Killy said at a news conference as he wrapped up the second major visit by the IOC coordination panel since the Black Sea resort was awarded the games in July 2007. “The Sochi team must therefore ensure that it makes its decisions in a timely manner, so as to maintain its ambitious schedule.”
Putin, dining later with the visitors, assured them that all was well.
“We have said more than once that no matter what the difficulties, the necessary resources would be issued in full and on time — and this is what is happening,” Putin said, according to state-run RIA-Novosti and ITAR-Tass.
Most of the venues for Russia’s first Winter Olympics are being built from scratch, including the seaside site that will include ice arenas, a stadium and the main Olympic village. Another major project is a new road and rail link from the shore to the mountains inland at Krasnaya Polyana, where snow events will be held.
“We must not underestimate the size and complexity of what our Russian friends will achieve here,” Killy said.
The Olympic budget is estimated at $13 billion.
“I want to stress: We are getting this done,” the Russian news agencies quoted Putin as saying. “Moreover, the construction of some facilities is ahead of schedule.”
Russia’s Olympic plans have faced opposition from environmentalists and Sochi residents who will be evicted from their homes to make way for the games. Critics also have said the Olympics will leave the balmy resort city with unneeded ice venues.
Putin unexpectedly acknowledged that criticism, saying that “five ice arenas on the Black Sea shore is an excessive amount.”
In televised remarks, he suggested dismantling three of them after the games and moving them to other Russian cities “with the aim of developing winter sports and popularizing the Olympic movement.”
The IOC visit came weeks after a candidate from Putin’s party was elected mayor of Sochi in a vote labeled fraudulent by his main challenger, Kremlin foe Boris Nemtsov. Nemtsov has said the Olympics would leave Sochi with unneeded venues and called for many events to be moved to Moscow.
Nemtsov formally contested Anatoly Pakhomov’s victory in the April 26 vote in court on Thursday. A lawyer submitted documents listing about 40 alleged electoral violations, including forged signatures, multiple voting and ballot-box stuffing, according to a statement on Nemtsov’s Web site.
Another potential controversy surrounding the games is Sochi’s proximity to the separatist Abkhazia region in neighboring Georgia.
Russia defied the West by recognizing Abkhazia and another separatist region, South Ossetia, as independent after its war with Georgia last August.
Putin hosted Abkhazia leader Sergei Bagapsh in Sochi on Thursday, a meeting that may have been timed to signal that Moscow will not allow criticism of its policy in Georgia to affect Olympic plans.
Killy and other panel members spent two days mostly hearing progress reports from Sochi organizers. Killy said he may return to Sochi on a private visit in six weeks to monitor progress.
When Sochi was awarded the games following a push strongly supported by Putin, then president, Russia was still riding the crest of an eight-year oil-fueled boom.
Since then, oil prices have plummeted, causing Russia’s economy to shrink for the first time in nearly a decade. That has slowed the construction industry and cut deeply into the fortunes of Kremlin-friendly tycoons footing part of the bill.

TITLE: F1 Teams Fail 
To Cut Deal With Mosley on Cap
PUBLISHER: The Associated Press
TEXT: LONDON — Formula One teams failed to resolve the dispute over a proposed budget cap in a meeting Friday with FIA president Max Mosley, and Ferrari took legal action in a French court to stop the measure.
Team owners met with Mosley and F1 boss Bernie Ecclestone at a London hotel to discuss a proposal that many teams believe will create a two-tier championship.
The FIA wants a voluntary $60-million budget cap starting next season. Teams that accept the cap will have more technical freedom than those that don’t.
Ferrari, Renault, Toyota, Red Bull and Toro Rosso have threatened to pull out of next year’s championship if the cap isn’t overturned. Mosley called the meeting friendly but said the teams plan to come up with a counter proposal.
“They are going to come back in the next few days,” Mosley said. “I’m quite optimistic it will get sorted out. Whether it will get sorted out quickly is another matter. If they could think of something better obviously we will take a look at it but I’m very skeptical.”
Ferrari described the meetings as “work in progress” even though it filed an injunction in a French court to try to stop the plan.

TITLE: Speaker Faces No-Confidence Bid in Parliament
AUTHOR: By Michael Thurston
PUBLISHER: Agence France Presse
TEXT: LONDON — A group of MPs moved Monday to oust the beleaguered speaker of the House of Commons, over an expenses scandal which has rocked the political leadership and triggered widespread public fury.
Michael Martin, who could become the first speaker in 300 years to be ousted by a no-confidence motion, was to unveil plans to rewrite parliament’s tattered expenses rule book after more than a week of embarrassing revelations.
But there is increasing pressure for him to pay the price personally for the scandal, which has revealed lawmakers claiming taxpayers’ money for everything from swimming pools to moat-cleaning and installing chandeliers.
Newspaper commentators queued up to push for his resignation.
“Mr. Speaker’s Last Stand,” said the right-wing Daily Mail’s front page headline, while the left-leaning Guardian splashed the headline: “Growing crisis as Speaker defies calls to force him out”.
Martin, the top authority in the lower parliamentary chamber, has been accused of being an obstacle to reform of the expenses system, whose failures have been highlighted by leaked details of five years of MPs’ claims.
Amid growing public anger at the revelations, the leader of the Liberal Democrats, Nick Clegg, said on Sunday that Martin had to give way to a new speaker who could drive through change.
“I have arrived at the conclusion that the speaker must go,” Clegg told BBC television.
“He has proved himself over some time now to be a dogged defender of the way things are, the status quo, when what we need, very urgently, is someone at the heart of Westminster who will lead a wholesale radical process of reform.”
On Monday an MP from the opposition Conservatives was to table a motion of no-confidence against the speaker.
Douglas Carswell said he had “significant” support from MPs of all three main parties, although a vote on the no-confidence motion was not expected to be held immediately.
Martin was a long-time member of Prime Minister Gordon Brown’s Labour party, but renounced his political loyalties when he took office as speaker in 2000. He was due to make an emergency statement in the House of Commons on Monday.
His spokeswoman would not be drawn on the resignation row, saying only that his remarks would be “focused on how to resolve the problem of allowances as swiftly as possible.”
A close ally of Martin, Labour MP Jim Sheridan, said he expected the speaker to talk “about where his future lies.”
“I think Michael today will make a statement about where his future lies. I personally would like to see him stay until the next election, get through the reforms we need to get through,” he told BBC radio.
Elected by lawmakers and the highest authority in the House of Commons, the speaker traditionally stays in the job until he retires. The last time a post-holder was forced out was more than 300 years ago.
In 1695, Sir John Trevor was forced to quit as speaker after MPs found him guilty of bribery for accepting money to push through a piece of legislation.
Business Secretary Peter Mandelson declined to speculate on the current speaker’s future.
“Whatever your views about the speaker, the fact is that this is a system of paying MPs, of remunerating MPs, which has got to change,” he told Sky News television.
“It is no longer sustainable, the public do not have trust in it.... I think that is why all this has got to change and I hope that the parties will come together in the House of Commons and work out a proper alternative,” he added.