SOURCE: The St. Petersburg Times
DATE: Issue #1481 (43), Tuesday, June 9, 2009
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TITLE: Ex-Baltika Chief Heads Olympic Constuction
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Amid worries that Russia is lagging in its Sochi Olympic preparations, Prime Minister Vladimir Putin on Saturday ousted the head of the state company responsible for Olympics construction and replaced him with Baltika’s founder. 
Putin said costs and other construction issues were behind the decision to replace Olimpstroi CEO Viktor Kolodyazhny with Taimuraz Bolloyev. 
“When high-ranking officials do not assist in lowering prices but, on the contrary, demand price retentions and increases, that is totally unacceptable in today’s circumstances,” Putin said at an Olimpstroi meeting attended by Bolloyev and Kolodyazhny at his Novo-Oga-ryovo residence outside Moscow. 
“Nothing of the kind will be allowed in the future. I ask you to pay attention to that,” Putin said, according to a transcript posted on his web site. 
Bolloyev, who joined Olimpstroi as vice president in January and owns a construction company, will be the third CEO at the company’s helm since it was created shortly after Putin led Sochi’s winning bid to host the 2014 Winter Games in 2007. 
Deputy Prime Minister Dmitry Kozak, the top government official in charge of preparations for the Olympics, lauded Bolloyev at Saturday’s meeting as a “top manager” who had been virtually running Olimpstroi for the past two months while Kolodyazhny was on vacation. 
Kolodyazhny won similar praise from Kozak when he quit his post as Sochi’s mayor to head Olimpstroi in April 2008. Kozak at the time called him “a highly professional manager.” Kolodyazhny replaced Semyon Vainshtok, the former head of pipeline monopoly Transneft, who stepped down amid accusations of mismanagement and cost overruns. 
Kolodyazhny, 55, asked to be relieved of his position for personal reasons, Kozak said at the meeting. 
“This job involves a lot of strain and commitment, 24 hours a day,” Kozak said, adding that Kolodyazhny had asked for a job that would allow him to stay in the city of Krasnodar, the capital of the region of the same name where Sochi is located. 
Putin would not say which position Kolodyazhny might get. “Your work was not bad,” Putin said. “I hope we will find a place where we can use your knowledge.” 
But Valery Suchkov, a member of Sochi’s Public Chamber, said Kolodyazhny was a poor manager and his dismissal resulted from his incapability to run Olimpstroi effectively. “It was clear from the time he was appointed that he wouldn’t stay in office very long,” he said by telephone from Sochi on Sunday. “His level of professionalism was too low for such a position.” 
Putin offered profuse praise for Bolloyev, a 56-year-old native of North Ossetia who built Baltika into the biggest brewery in Eastern Europe and oversaw its sale to Denmark’s Carlsberg before stepping down in 2004. Bolloyev is “a well-known and successful person in business who founded a Russian company that has become well-known beyond Russia’s borders, Putin said. 
Bolloyev acknowledged that a serious task lay ahead of him. “I believe that the construction decisions that were made earlier will be fulfilled on deadline,” he said in brief remarks at the meeting. 
Olimpstroi spokespeople could not be reached for comment Sunday. 
After leaving Baltika, Bolloyev turned the Clothes Factory of St. Petersburg, into a leading domestic garment manufacturer. He also has investments in real estate, owning business centers in St. Petersburg and the Grantica construction and investment company, which has built homes in St. Petersburg’s suburbs and Sochi, and is a senior official in the Russian Union of Industrialists and Entrepreneurs. 
Much of the financing for the Sochi Olympic Games is supposed to come from outside investors, whom Bolloyev was tasked with attracting as Olimpstroi ‘s vice president. The global economic crisis has deterred private investors, but state-linked companies have stepped in to fill the gap. The federal government also has earmarked about $13 billion toward the games. 
Last week, Deputy Prime Minister Alexander Zhukov said the government would not need to direct funds toward the Olympics in 2009 and 2010 because there was enough money from sponsors to cover expenses. “We got more money from them than had been expected,” Zhukov said. 
At Saturday’s meeting, Putin criticized the Krasnodar regional administration for meddling in Olympics construction. He said Russian Railways had received a request from a deputy Krasnodar governor not to cut prices for activities related to the construction. 
Kozak said the official, who was not identified, had already been fired. 
Putin told Bolloyev not to let such incidents happen again. “If there were similar situations, they must be thoroughly investigated,” Putin said. “Olimpstroi is not a private company but a project of public importance.”

TITLE: Medvedev Not Yet Ready for Champagne
AUTHOR: By Anatoly Medetsky, Ira Iosebashvili and Nadia Popova
PUBLISHER: The St. Petersburg Times
TEXT: President Dmitry Medvedev cautioned Friday that while the global economic crisis appears to have peaked, “it’s still far too early to open the champagne,” and Russians must be ready to retrain and relocate to help the country recover. 
The president also called for the creation of new reserve currencies and criticized international financial institutions, staying in relatively familiar waters in his keynote address to the 13th St. Petersburg International Economic Forum, which ended Saturday with smaller deals than last year but better-than-expected attendance. 
Medvedev told a packed room Friday that he didn’t know whether a graph of the country’s emergence from the crisis would most resemble an L, V, U or W but that “the most important thing now” was for people to adapt to the changing economy around them. 
“Everyone … needs to understand this fairly simple thing: Today, you need to become more mobile, sometimes to change your line of work and even where you live to ensure your family’s well-being and your children’s education,” he said. “That’s not just the state’s responsibility — it’s the responsibility of each of us.” 
The government in February allotted $43 billion to fight unemployment in the regions, including funding to retrain workers and compensate them for relocation expenses, to help avoid -unrest in cities and towns where factories are idling. The comments also suggested that the state would not be willing or able to conduct a Pikalyovo-style rescue for every ailing business or town. 
On Thursday, Prime Minister Vladimir Putin berated factory owners in the town of Pikalyovo, including billionaire Oleg Deripaska, for allowing a business conflict to leave thousands there with unpaid wages. Lawmakers from Putin’s United Russia party have introduced a bill to nationalize the three plants, and Putin personally ordered Deripaska to sign a supply contract and repay wage arrears by the end of the day. 
In comments that were markedly more sober than his speech here a year ago, when oil was close to its high of $147 per barrel, Medvedev lauded the Central Bank for choosing the “correct” devaluation strategy for the ruble and once again talked up the creation of a supranational currency — lately a favorite topic of the Kremlin. 
“Many countries decided on a sharp devaluation of their currencies, but our Central Bank chose a different route,” Medvedev said. “I think that was absolutely correct. The state of the financial markets today justifies their actions.” 
The Central Bank spent billions from its foreign reserves to devalue the ruble gradually, avoiding a sudden drop in its value and giving individuals and banks a chance to switch their holdings to other currencies. Medvedev recently appointed Central Bank Chairman Sergei Ignatyev for another four-year term. 
He also called for a reform of the global financial system, urging countries to lessen their reliance on the dollar as a reserve currency, and insisted that Moscow should become an international financial center. And while the speech broke little new ground, it did serve as a starting point for many of the discussion panels over the weekend, particularly regarding the shape of the recovery. 
Some participants felt more at ease commenting on Medvedev, a refreshing break from the monotonous praise of earlier keynote speeches by his predecessor, Vladimir Putin. 
“We’ve been waiting for some passion and optimism from Dmitry Medvedev, some carrots, but only got a sad narrative about what’s going on,” David Yakobashvili, chairman of Wimm-Bill-Dann, Russia’s biggest dairy producer, said as he walked from the hall where the session just ended.

TITLE: Vodokanal Gets $24 Million to Complete Sewage Project
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Vodokanal, the city’s state-run water treatment monopoly, signed a 17.5 million euro ($24.25 million) deal with the European Investment Bank at the St. Petersburg Economic Forum for completion of a central sewage collection facility and reconstruction of the northern aeration station.
The money adds to a 25 million euro ($34.66 million) grant provided last month by the Northern Investment Bank as part of the Northern Dimension Ecological Partnership, plus a further 17.5 million euros ($24.25 million) from the European Bank For Reconstruction and Development, also received in May of this year.
“When the collector starts operating, the city will be able to treat 100 percent of all sewage waters,” said St. Petersburg Governor Valentina Matviyenko. The collector is scheduled to be finished by 2012.
City Hall has already allocated 588 million rubles ($17.3 million) for the project, and a further 820 million rubles ($24.1 million) have been provided by the federal government.
St. Petersburg is ranked 85th out of the country’s 89 regions in a newly-released rating by the Russian Independent Environmental Monitoring Agency.
Every day in St. Petersburg, three million tons of waste water flow into the Neva, which cuts through the city. Two-thirds of it is untreated, according to Dmitry Artamonov, head of the St. Petersburg branch of Greenpeace.
Water pollution has remained a major concern in St. Petersburg since Soviet times. Unlike in most European cities, tap water is not drinkable. Before 1978, the city had no water-treatment facilities at all.
However, even with several water-treatment plants operating in town, according to City Hall’s annual report for 2007, 40 percent of the city’s sewage and industrial waste — the highest level for the past 15 years — went directly into the River Neva and the Gulf of Finland, owing to a shortage of waste treatment facilities. That figure does not include illegal discharges.
Three years ago city authorities said only 25 percent of untreated waste was being pumped into the river.
Ecologists stress that since 2000, the amount of unauthorized industrial discharge has grown, despite the fact that such practices are illegal and could lead to the temporary suspension of all operations by the company responsible.
Fines for illegal discharges have little or no impact on the problem.
Companies prefer to pay fines of anything between 20,000 and 40,000 rubles ($810 to $1,600) rather than install expensive filtration systems. Environmentalists stress that fines need to be increased drastically and economic sanctions must be used against companies that breach environmental standards.
Environmental groups have long criticized the St. Petersburg government for failing to build more water treatment facilities or an additional sewage collector, and for not putting enough pressure on industry to install filtration systems.
Greenpeace says its research suggests concentrations of copper in the city’s main waterway are 73 times the levels considered safe by the Russian government, and levels of manganese are 26 times too high.
Dmitry Artamonov said City Hall is not simply turning a blind eye to the city’s environmental plight, but is vigorously pushing forward with dangerous construction and industrial projects which, if implemented in the intended form, will further exacerbate the woeful state of the local environment.
“The massive land reclamation project on Vasilyevsky Island is particularly dangerous and it looks set to ruin the already damaged ecosystem of the Gulf of Finland,” Artamonov said.
“Turbid spots formed by the masses of highly contaminated deposits rising to the surface now stretch for many kilometers. The work has already led to the mass destruction of living sea organisms and, if continued as before, could potentially turn the Neva Bay into a body of stagnant water,” he said.

TITLE: Protests, Hunger Strike Over Artist’s Arrest Are Stepped Up
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Human rights activists and opposition politicians have published an open letter in defense of Artyom Loskutov, the 23-year-old artist and activist arrested in Novosibirsk last month, while the hunger strike led by local artists at City Hall entered its 12th day on Monday. Loskutov, who has been in custody since his arrest on May 15, is due in court again on Wednesday, when it will be decided whether or not he will be released pending trial. 
Meanwhile, Loskutov’s art group, Babushka Posle Pokhoron (Granny After the Funeral), declared Tuesday a day of solidarity for the imprisoned artist, whom they claim did not commit any crime and was arrested to punish him for “Monsterations,” colorful, non-political May Day processions in which he took part in Novosibirsk. The 11 grams of marijuana were planted on him by the police, Loskutov’s supporters say. 
Various events in defense of Loskutov, from leafleting to demonstrations and concerts, will be held in several cities in Russia and abroad on Tuesday, his supporters say. 
When visited on Monday, there were three artists on hunger strike and two supporters sitting in a public park in front of Smolny, the home of City Hall, next to the Soviet-era Karl Marx monument. The paintings that they have painted during the period were covered with polythene to stop them getting damp in the light rain, although they said they had painted a couple more when the sun briefly appeared during the past weekend. 
According to Anastasia Nekoza, who has been on hunger strike since the protest began on May 28, six participants remain on strike, three of whom were at work or taking exams when visited on Monday afternoon, while another three had to withdraw for health reasons last week. Despite threats from a high-ranking police officer and OMON special-task policemen who visited the site late last week, no physical action has been taken by the authorities, Nekoza said. 
Along with the immediate release of Loskutov, the artists are demanding the investigation and punishment of those responsible for May Day mass arrests, when an authorized 300-strong Pirate Street Party that they were organizing was thwarted by the OMON before it started. They also demand that a federal commission be launched to investigate the activities of the “E” (anti-extremism) Center, which they claim has turned into the political police and was behind Loskutov’s arrest. 
On Friday, a group of human rights activists and opposition politicians including Lyudmila Alekseyeva, Lev Ponomaryov and Gleb Yakunin published a letter in defense of Loskutov, describing the case as an “act of intimidation against all contemporary Russian artists” and “another step toward the suppression of freedom of assembly and expression guaranteed by the constitution.” 
The letter has since been signed by others, including the poet Lev Rubinshtein, the author Viktor Yerofeyev and the artists Alexander Brener, Andrei Monastyrsky and Vyacheslav Misin.

TITLE: Sniper Kills Dagestan's Top Policeman at Wedding
AUTHOR: Nabi Abdullaev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Dagestan’s top police official, known for conducting a brutal and indiscriminate fight against radical Islamists, was killed at a Makhachkala wedding Friday in a sniper attack that the region’s president blamed on corrupt law enforcement officials. 
Dagestani Interior Minister Adilgirei Magomedtagirov, 53, was standing outside the luxury Marrakech banquet hall, where he had been invited to attend the wedding of the daughter of a subordinate, when two snipers opened fire from the windows of two nine-story apartment buildings at about 1:05 p.m., police said. 
Magomedtagirov was shot in the heart with an armor-piercing bullet, police said. He was rushed to the hospital, where he died during an operation. 
The shooters, firing with automatic sniper rifles, also killed the head of the administrative department of Dagestan’s Interior Ministry, Abdurazak Abakarov, and wounded eight police officers standing close to the minister. 
Dagestani President Mukhu Aliyev accused corrupt law enforcement officials of luring Magomedtagirov to the wedding. 
“He was not even planning to go to that wedding,” Aliyev said in an interview with NTV television. “He was really lured there. I think it happened with the assistance of some dishonest members of the law enforcement agencies.” 
Interfax, citing police firearms experts, reported Saturday that Magomedtagirov had been shot with a rifle used by special police forces, the Federal Security Service and the Defense Ministry. The rifle was not registered in Dagestan, Interfax said. 
Federal Interior Minister Rashid Nurgaliyev and Prosecutor General Yury Chaika said they were taking the investigation under their personal control, while the head of the Investigative Committee, Alexander Bastrykin, flew to Dagestan on Friday to lead his own investigation. 
President Dmitry Medvedev ordered Aliyev, the Dagestani president, to provide financial and moral support to the families of the slain policemen, Medvedev’s spokeswoman Natalya Timakova told Interfax. 
Magomedtagirov had narrowly escaped several attempts on his life since being appointed minister in 1998, and a senior Dagestani government official told The Moscow Times that his killing marked a new stage in cooperation between corrupt Dagestani politicians and local networks of criminals and insurgents. 
“I have seen many attacks on officials, and these were mostly random bombings that hoped to get lucky. Sniper rifles are something new for Dagestan,” the official said, speaking on condition of anonymity because of the sensitivity of the issue. 
He said Magomedtagirov was very cautious about his own security and that somebody who knew his schedule must have alerted the attackers. “He was a very rough man. He had a lot of enemies,” the official said. 
Magomedtagirov, a career policeman who joined the force in 1978 and climbed the ranks from street cop to lieutenant general, was known in Dagestan for his harsh but effective methods of dealing with suspects and criminals. 
In the mid-1990s, he was appointed police chief of the Dagestani town of Derbent and tasked with stopping criminal pressure on the local diaspora of Mountain Jews. Magomedtagirov handled the formidable mission well, and in 1998, following a mob’s ransacking of the government and parliament buildings in Makhachkala, he was given the post of interior minister and the responsibility of leading the republic’s fight against extremism and radical Islamists. 
In 1999, Magomedtagirov made national headlines by issuing and enforcing an order to police not to allow refugees from Chechnya — where a military campaign began in October that year — onto Dagestani territory. 
He later spearheaded a series of brutal police crackdowns on religious dissenters, and in 2005 local Islamists put him at the top of a death list published on the Chechen rebels’ web site. 
In 2006 and 2007, Magomedtagirov narrowly escaped attacks on his motorcade that killed five police officers near him. 
Under Magomedtagirov, the Dagestani police became notorious for routinely torturing suspects, usually religious radicals, to get confessions from them. 
Magomedtagirov was repeatedly criticized by President Aliyev for his methods, particularly after he began ordering the demolition of houses and apartment buildings where rebels were believed to be hiding. 
The minister seemed to have no political ambitions and occupied the post that suited him most, said Enver Kisriyev, head of the Caucasus department at the Center for Civilization and Regional Studies of the Russian Academy of Sciences. These traits, said Kisriyev, combined with his unwillingness to seek compromises with Islamists, made him a thorn in the side of many Dagestanis.

TITLE: Medvedev Hints At Firings Over Crisis
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev has hinted that he might fire senior officials deemed as taking insufficient steps to deal with the economic crisis in an interview published Friday in Kommersant.
But Medvedev focused on anti-crisis measures such as economic reforms to make Russia less dependent on oil and gas and the creation of a new global financial system in the interview, his second with a Russian newspaper since becoming president.
“If it turns out in a phase of the crisis that this or that manager is not coping well, an effective replacement of him will have to be found,” Medvedev said in a reference to heads of federal agencies, governors and the heads of state companies. 
Medvedev said he would make such replacements “in the future,” without elaborating.
A huge drop in oil and gas revenues amid the crisis has left the government scrambling to readjust spending while fulfilling key commitments. Among the obligations are the 2014 Winter Olympic Games in Sochi, where the government has repeatedly insisted that preparations remain on schedule. But Prime Minister Vladimir Putin on Saturday replaced the chief of the state Olympstroi corporation, which is in charge of Olympic construction. (Story, front page.)
No wave of dismissals, however, is likely to take place until at least late August, said Alexander Morozov, an independent political analyst. “It’s summer now, the vacation season,” Morozov said.
Late August is also when Medvedev expects to see the first legislation to deal with energy, defense, agriculture and the Internet — issues that he described in the interview as priorities.
Although Medvedev didn’t make any announcements in the interview, it was “not so much the content” that mattered but his “intention to build a dialog” with society and “demonstrate his openness,” said Tatyana Stanovaya, an analyst with the Center for Political Technologies. 
Morozov and Stanovaya noted that Russian leaders traditionally give interviews to coincide with significant events, such as the three-day St. Petersburg International Economic Forum, which opened Thursday.
Medvedev used his first interview with a Russian newspaper, Novaya Gazeta, in April to talk about democracy and civil rights.

TITLE: Putin’s Cure for Pikalyovo May Turn to Poison
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The Moscow Times
TEXT: When Prime Minister Vladimir Putin’s helicopter touched down in Pikalyovo last week, it was clear that a remedy for the city’s pain was at hand.
It is uncertain how long the cure might last, but observers are sure that it might turn out to be poison for the government. Putin, they said, made a risky gamble by setting the precedent of doling out more than 40 million rubles ($1.3 million) to force Pikalyovo’s plants to pay their 4,000 unemployed workers.
Putin flew to the small Leningrad region town of 22,000 people on Thursday, two days after about 400 jobless workers blocked the main highway for seven hours to protest wage arrears.
“This was a very good show — a Hollywood movie,” said Vladimir Ryzhkov, a former independent State Duma deputy who hosts a talk show on Ekho Moskvy radio.
Ryzhkov was referring to a meeting where Putin threw a pen at tycoon Oleg Deripaska and ordered him to sign an agreement to buy raw materials for his local cement factory. Deripaska, who was once the country’s richest man and has lost billions of dollars in the economic crisis, was shown on state television dutifully stooping down to sign the agreement with mineral producer PhosAgro.
Putin made a strong man show out of the event, scolding stone-faced managers at the meeting. “Why was everyone running around like cockroaches before my arrival? Why was no one capable of making decisions?” he said. 
Ryzhkov warned that the show could backfire.
“In the short term, this will be very, very good for [Putin’s] ratings. People like it when a president or prime minister acts tough in public,” he said.
But in the long term, he said, Putin’s strategy was a daring gamble because there are 700 single-industry towns like Pikalyovo across the country. 
Ryzhkov said the problem was not so much that Putin could not visit all those places. “It is that the money is not enough for everyone,” he said.
Sergei Guriev, the rector of Moscow’s New Economic School, put it more bluntly. “This sets a very dangerous precedent, providing incentives for further street riots and roadblocks,” he said. 
Chris Weafer, chief strategist at UralSib, said the lesson that unemployed workers learned from Putin’s trip was that “the only way to get anything done was to make as much noise as possible.” 
Other business owners, meanwhile, should take note of Putin’s public dressing down of Deripaska, he said. “No business leader will want to be in the position that Deripaska found himself in last week. It will encourage them to deal with such problems early and not risk Putin’s wrath,” he said.
Guriev said the scolding sent the wrong message because it puts the blame for high unemployment on shareholders. “Unfortunately, any crisis is accompanied with an increase in unemployment, and it is the government’s — not the private sector’s — job to provide the unemployed with benefits and support for retraining and reallocation,” he said.
But Sergei Markov, a State Duma deputy with Putin’s United Russia party, said the prime minister had no alternative last week. “Sure this might set a dangerous precedent, but the government had to act to show that these people would not be left alone. Putin demonstrated the political will for that,” Markov said. 
He said Thursday’s solution was “absolutely a market solution” because the factories had not been nationalized, as some United Russia deputies had sought earlier in the week.
“We believe that the market is working. Putin just helped the owners to demonstrate his political will,” Markov said.
Markov said the government would have to step in to help other single-industry towns where conditions were essentially nonmarket. “These places have been set up artificially. People have no opportunity to work in another industry if their old one fails. That is why the government must help,” he said.
Putin told the Pikalyovo factory owners that they had three months to solve their problems. He essentially threatened nationalization by saying that if they could not find a solution one would be found without their involvement.
Markov said nationalization is an option when capitalism fails. “We do not want a return to the 1990s when a very few got rich and the masses were impoverished,” he said. “If private owners cannot safeguard [workers’ right], we have to nationalize and re-privatize.”

TITLE: Kremlin Downplays Hopes For Arms Deal With Obama
PUBLISHER: Reuters
TEXT: The Kremlin is playing down hopes of a breakthrough on reducing nuclear arsenals ahead of a visit to Moscow by the U.S. president, linking arms cuts with U.S. plans to deploy a missile defense system in Central Europe.
The United States and Russia are negotiating a nuclear disarmament treaty to replace the Strategic Arms Reduction Treaty, or START I, which is due to expire on Dec. 5.
The visit of U.S. President Barack Obama to Moscow from July 6 to 8 is not likely to trigger a major announcement on ongoing arms control talks or on other issues, the Kremlin said in a statement posted Friday on its web site.
“We are pragmatic. We do not have high expectations of the outcome of the visit,” the Kremlin statement said. “The process of improving relations will take time and honest effort on both sides,” it said, acknowledging that the United States was trying to improve relations.
But Moscow will not reduce its own nuclear potential until there is clarity on Washington’s plans for a missile defense system in Central Europe, General Nikolai Makarov, head of the military’s General Staff, said in separate comments Friday. “So long as the situation in the world is not clear, including on the missile defense system, we will not touch our nuclear potential,” Makarov said, in a reference to U.S. plans to install interceptor missiles in Poland and a radar base in the Czech Republic.
“The question of strategic nuclear forces for us is sacred. We will provide as many resources as are needed to maintain stability in the world,” he said. “We will leave our strategic missile forces practically unchanged.”
A U.S. administration official declined to comment on Makarov’s comments. On a conference call with reporters after Obama held talks with German Chancellor Angela Merkel, the official said he had just read the report and said it would not be prudent to say anything.

TITLE: General Says Georgia Fully Rearmed
PUBLISHER: The Associated Press
TEXT: Georgia has fully rearmed its military following last year’s war with Russia and now has even more weaponry than before the war, General Nikolai Makarov said Friday.
“Events in Georgia have seriously changed the situation to the south of our country and in many aspects of world politics,” said Makarov, chief of the military’s General Staff. “Today, the Georgian military has a greater amount of arms and equipment than it did on the moment of the beginning of the aggression last August.”
In Tbilisi, military officials refused to immediately comment on the report because Georgian Defense Minister Vasil Sikharulidze was traveling in the United States.
Makarov also said Friday that Russia’s armed forces would hold their largest military exercises in the North Caucasus since September — a move that will alarm Georgian officials.

TITLE: In Brief
TEXT: <strong>Bolshoi Director Dies</strong>
Boris Pokrovsky, the renowned Bolshoi opera director, died Friday at age 97, news reports said. No cause of death was given.
President Dmitry Medvedev and Prime Minister Vladimir Putin offered their condolences. “Pokrovsky belonged to the galaxy of celebrated masters whose names are rightfully considered the pride of our fatherland’s culture,” Putin said in a statement.
Pokrovsky became a director for the Bolshoi Theater in 1943 and staged more than 180 operas, including Pyotr Tchaikovsky’s “Eugene Onegin” and Giuseppe Verdi’s “Otello.”
He was named People’s Artist of the Soviet Union in 1961 and was awarded the Lenin Prize in 1980.
Pokrovsky will be buried Monday at Moscow’s Novodevichye Cemetery, where cellist Mstislav Rostropovich is also buried. (SPT)

<strong>Citizenship Rules Eased</strong>
The State Duma passed amendments in a crucial second reading on Friday that will simplify the procedure of getting Russian citizenship for parents with children born in Russia, Itar-Tass reported.
The simplified procedure means that applicants will no longer need to live in Russia for five years and prove Russian skills to receive citizenship. (SPT)

<strong>Anti-Polish Paper</strong>
The Defense Ministry has removed from its web site a research paper that blames Poland for starting World War II.
The paper, written by an active-duty colonel working at the ministry’s history research institute, concludes that Poland’s refusal to accede to Germany’s demands were what set off the war.
Poland contacted the Russian ambassador in Warsaw for an explanation Thursday. Military officials could not be immediately reached Friday. (AP)

<strong>Canadian Space Tourist</strong>
The Canadian billionaire owner of Cirque du Soleil will blast off into space on a Soyuz spacecraft in September, realizing a boyhood dream when he becomes the world’s seventh space tourist.
“I’ve been introduced as many things in the past — fire-breather, entrepreneur, performer, partier,” Guy Laliberte told reporters late last week. “But today, to be introduced as a private space explorer is an enviable and unbelievable feeling.”
He said he had dreamed of traveling in space since he visited a Soviet exhibition on space in Canada in 1967. Laliberte, 49, declined to say how much he paid to blast off with a cosmonaut and a U.S. astronaut on Sept. 30. (Reuters)

<strong>Yabloko Murder Trial</strong>
The Supreme Court has ordered a new trial for a man convicted of killing Yabloko’s top official in Dagestan, Farid Babayev, in 2007, RIA-Novosti reported.
Dagestan’s top court found Dagestani resident Rasil Mamedrizayev guilty of the murder and sentenced him to 16 years in prison. 
But the Supreme Court declared the trial flawed and ordered a new trial last week. Babayev was shot by unidentified gunmen in Makhachkala in November 2007, a month before State Duma elections in which Yabloko failed to win any seats. (SPT)

<strong>Russians Lead in Riga</strong>
RIGA, Latvia — Exit polls in Riga, the Latvian capital, after municipal and EU Parliament elections on Saturday showed big gains for the Harmony Center, the main Russian speakers’ party, and losses for government parties.
The polls showed a historic shift taking place because the Harmony Center was set to win the most seats for the first time since Latvia quit the former Soviet Union in 1991. 
The local election results would add to the problems of the ruling coalition, already grappling with the economic crisis. (Reuters)

<strong>For the Record</strong>
Ukrainian opposition leader Viktor Yanukovych said Sunday the country must retain direct presidential elections, backing off from a controversial idea to shift the elections to parliament.(AP)

—?Ukraine on Friday confirmed its first case of the new A/H1N1 flu, a Ukrainian who lived in the United States for two years. Three cases of the virus, also known as swine flu, have been confirmed in Russia. (Reuters)

—?The presidents of Armenia and Azerbaijan met late last week in talks brokered by President Dmitry Medvedev over the Nagorno-Karabakh enclave. No breakthrough was made in the St. Petersburg talks. (Reuters)

TITLE: Perm Museums’ Plan Dubbed the ‘New Bilbao’
AUTHOR: By Max Seddon
PUBLISHER: Special to The Moscow Times
TEXT: A two-hour flight east of Moscow, the city of Perm strikes you more as an industrial backwater than it does a future capital of the art world. Its most famous museums are in a yellowing church best known for its collections of bizarre wooden sculptures from the area and a former labor camp now detailing the history of the gulag.
That, however, looks set to change. The Living Perm festival, which took place recently, incorporated art, music and literature in more than a hundred venues to mark the biggest cultural event in the region’s entire history.
“There were doubts when I first suggested the title,” admitted Marat Guelman, director of the Perm Museum of Contemporary Art. “But now, I’m not worried, because having seen how many sheets of paper there were for every part of the program, I’ve realized that Perm is alive. The main task is to show Perm that it is alive.”
The museum itself officially came into being only this March, when Guelman left his gallery at Vinzavod in Moscow and the regional government signed the papers for its development. It is housed in an old riverboat station, in which Guelman curated an exhibition of “poor art” last September that was heavily favored to win the Innovation Contemporary Art Prize (though in the end, it lost out) and led Afisha magazine to name Perm “city of the year.”
Many have already begun to refer to Perm as the “new Bilbao.” The capital of the Basque region was, likewise, a large and largely unprepossessing industrial city until the Guggenheim opened a branch there in 1997. Since then, it has been transformed, featuring regular exhibitions by internationally known artists and becoming a major tourist destination.
Perm, of course, has a longer way to go still. The festival’s centerpiece, the “Moskvapolis” exhibition at the Perm museum, was more a nonprofit art bazaar than a conventional museum show. Featuring stands from Moscow’s major galleries, contemporary museums and its art press, it aimed to acquaint locals with big names like photographer Boris Mikhailov and painters Vladimir Dubossarsky and Alexandr Vinogradov and an equal measure of young artists, among them critical darling Vladimir Logutov and the popular Anya Zhelud.
The future of the museum looks sound. It has enjoyed the patronage of millionaire senator Sergei Gordeyev, who has to this point largely financed the project himself. Work is already well under way on establishing a permanent collection, and from the second half of this year the museum will be written into the regional budget. “In a year, Perm will be the cultural capital of Russia,” Guelman told The New York Times. “A phenomenon is being created in Perm that will pull all of Russian art up to an international level.”
The parallel events, far too numerous to list, ran the gamut from the post-Revolutionary avant-garde to a curious Russian take on Jean-Michel Basquiat. Those were the two particular highlights of the festival. The former, an exhibition dedicated to an obscure collective in a village near Perm “told” by Yekaterina Degot and artist Leonid Tishkov, will transfer to Vinzavod in September for the Moscow Biennale’s parallel program. The latter, which consisted of advertising billboards appropriated by the foul-mouthed St. Petersburg group Prosthesis, took place in a run-down building and had a buffet consisting of highly alcoholic medical spirits instead of the usual wine. And lest one should think that the festival relied too highly on imported art — inevitable at this nascent stage in Perm’s cultural development — 500 young artists and musicians from all over the region were brought over to visit the festival and take part in master classes.
“One thing is obvious — there was life there, a Living quarter, a Living Perm,” Perm Governor Oleg Chirkunov wrote in his blog at the festival’s close. “It’s a place which definitely needs to be given new life. We need to get thinking, so that there’s life there not once a year, but every weekend.”

TITLE: Soviet Computer Game Tetris Celebrates 25th Anniversary
AUTHOR: By Barbara Ortutay
PUBLISHER: The Associated Press
TEXT: NEW YORK — Completed by a Soviet programmer in 1984, “Tetris” has come a long way from its square roots. It’s played by millions, not just on computers and gaming consoles but now on Facebook and the iPhone as well.
“Tetris” stands out as one of the rare cultural products to come West from the Soviet Union during the Cold War. And the addictive rhythm of its task-by-task race against time was an early sign of our inbox-clearing, Twitter-updating, BlackBerry-thumbing world to come.
“Tetris” is easy to pick up. Rotate the falling shapes so that you form full lines at the bottom of the screen. Fit the shapes so there are as few open spaces left as possible. Aim for a Tetris: four lines completed in one swoop. Repeat. Watch your score zoom.
But Tetris is hard to master. Because the shapes — technically known as tetrominoes — come in a random order, it is hard to predict the best way to organize them so that they can form neat rows.
In fact, in 2002, Massachusetts Institute of Technology researchers determined that the potential combinations are so numerous that it would be impossible even for a computer to calculate the best place to put each falling shape. Erik Demaine, an associate professor of computer science, praised the game’s “mathematical elegance,” which perhaps stems from the background of its developer.
Alexey Pajitnov was 29 and working for the Moscow Academy of Sciences when he completed “Tetris” on June 6, 1984, for a Soviet computer system called the Elektronika. A computer programmer by day who researched artificial intelligence and automatic speech recognition, Pajitnov worked on the game in his spare time.
“All my life I liked puzzles, mathematical riddles and diversion,” Pajitnov said in a recent interview from Moscow. “Tetris,” he said, was just one of the games he made back then. The others are mostly long forgotten.
Pajitnov’s creation spread in Moscow through the small community of people who had access to computers. Word filtered through computer circles to the West, where the game drew the interest of entrepreneurs. A company called Spectrum HoloByte managed to obtain PC rights, but another, Mirrorsoft, also released a version. Years of legal wrangling followed, with several companies claiming pieces of the “Tetris” pie — for handheld systems, computers and arcades.
Complicating matters, the Soviet Union did not allow privately held businesses. The Soviet state held the “Tetris” licensing rights and Pajitnov had no claim to the profits. He didn’t fight it.
“Basically, at the moment I realized I wanted this game to be published, I understood that the Soviet authorities would either help me or never let it happen,” he said.
It wasn’t until 1996 that Pajitnov got licensing rights. Asked whether he made enough money off the game to live comfortably, he says yes, but offers no more details. Today, he is part owner of Tetris Co., which manages the game’s licenses worldwide.
Nintendo Co. was an early and big beneficiary of the game, which stood out from its mid-’80s peers because it had no characters and no shooting.
Pajitnov says “Tetris” could stick around another quarter-century.
“I hope so, why not?” he said. “Technology changes a lot, but I can’t say people change a lot.”

TITLE: Money-Saving Measures Visible At Economic Forum
AUTHOR: By Ira Iosebashvili and Nadia Popova
PUBLISHER: The St. Petersburg Times
TEXT: It was perhaps fitting that the headlining musical act for the St. Petersburg economic forum was Duran Duran, a band whose best-remembered single is the 1982 hit “Hungry Like the Wolf.” 
While the state splurged on lavish yacht parties and singing metal butterflies at previous forums, this year’s event took place in the middle of the worst recession the world has seen in decades. To make matters worse, the temperature plunged as low as five degrees Celsius and rain fell almost sideways at times, driven by a chill wind blowing in from the Gulf of Finland. 
President Dmitry Medvedev did not miss the chance to make the connection between the weather and the crisis. 
“This year, unfortunately, the weather let us down,” Medvedev said in his opening speech at the St. Petersburg International Economic Forum. “But maybe this weather corresponds to the economic mood. Hopefully, during the course of the forum the rain will end, the wind will die down and the sun will shine brighter than it does this morning.” 
St. Petersburg Deputy Governor Mikhail Oseyevsky said the city had cut its spending on the forum by 20 percent this year and, indeed, a noticeable frugality could be seen in the unchanging menu at the buffet and a toned-down reception thrown by Governor Valentina Matviyenko. Even Medvedev looked slightly rumpled as he delivered his opening address with his tie knot askew. 
Some participants were thriftier as well. 
“I stayed at a friend’s house this year,” said Mirax CEO Sergei Polonsky, who last year expressed outrage about being presented with a bill for 571,000 rubles (then worth $24,000) for a three-night stay at the Grand Hotel Europe. Last year, Polonsky and former Yevroset chief Yevgeny Chichvarkin unfurled a three-square-meter reproduction of the bill on stage at the forum to protest what they called price gouging by St. Petersburg hotels. 
“Matviyenko did a great job of getting that stuff under control,” Polonsky said. 
Polonsky, 36, who last year was Russia’s youngest billionaire, has seen his net worth plummet as Mirax Group remains mired in expensive building projects in a real estate sector paralyzed by tightening credit and illiquidity. 
He looked downright lucky, however, compared to Chichvarkin, who fled the country in December amid allegations of kidnapping, smuggling and extortion. 
Another businessman who had a run-in with the authorities — Mechel CEO Igor Zyuzin, who Prime Minister Vladimir Putin infamously threatened to “send a doctor to” when he cited poor health as a reason to skip a meeting last July — was reminded of the incident by Alexander Shokhin, head of the Russian Union of Entrepreneurs and Industrialists, at a panel on Russia-U.S. business ties on Thursday. 
When Zyuzin said Mechel had tens of thousands of shareholders in the United States, Shokhin replied, “You can’t send a doctor to tens of thousands of shareholders.” Zyuzin burst out laughing. 
One thing that organizers did not skimp on was security. Hordes of law enforcement officers in bat-like raincoats lined city streets, directing traffic, manning barricades or simply crowding under any available awning to get out of the rain. 
Local residents were divided about the forum, with some griping about snarled traffic and others voicing hope that the event would lead to a solution for their economic woes. 
“Look, there they are again,” complained Gassan Kerimov, a gypsy cab driver, as he steered his Zhiguli around yet another police barricade. “The whole city gets clogged, and it’s impossible to get anywhere.” He said gypsy cab drivers didn’t reap much benefit from the 3,500 delegates that attended the event. 
“That’s what they ride in,” Kerimov said, peering through his cracked windshield at a sleek, black Mercedes. 
Tatyana, a bartender at the Tribunal bar just off Nevsky Prospekt, was more optimistic. “I hope they think of something good over there,” she said. “Life here has gotten very tough lately.” 
The country’s elite might have been thinking the same thing as they sat at the governor’s reception, held Friday in a huge white pavilion next to the Peter and Paul Fortress on Zayachy Island. 
Gone were the doves in gilded cages, the singing metal butterflies and a choir in the middle of a lake that were all featured in last year’s over-the-top party in the garden of the Mikhailovsky Castle. Instead, several flame jugglers and jazzman Igor Butman — the lone holdover from last year’s reception — were the only entertainment. 
But that didn’t keep away top businessmen, some of whom skipped Matviyenko’s party in 2008. Among the guests were billionaire Viktor Vekselberg, Mechel’s Zyuzin and acting RusHydro CEO Vasily Zubakin. 
Government figures — who attended last year’s celebration in force — were notably absent, with the exception of Economic Development Minister Elvira Nabiullina, the forum’s organizer. 
A group of a dozen governors seated around a central table seemed happy enough, though, toasting one another and laughing uproariously. 
Security was higher than last year, with guests needing to pass through a metal detector and three checkpoints before arriving at the party. The measure might have been an attempt to save on food because portions were strictly limited, unlike last year’s buffet, which featured an endless supply of shashlik, lobsters and virtually every type of champagne, wine and cocktail. 
The menu this year consisted of cold peppered chicken, a dearth of cocktails and plenty of rain and cold. 
“I can’t eat this food, it’s all terrible,” said a guest who was on his way to the exit. Many of the other guests soon followed suit, along with Matviyenko, who also made an early exit. 
But the forum ended with a clear blue sky Saturday afternoon, prompting some participants to wonder whether Medvedev’s other hopes for a better economy would also come true. 

Anatoly Medetsky contributed to this report.

TITLE: Kraft Plant to Get $50 Million
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Kraft Foods will invest $50 million to double the capacity of its coffee factory in the Leningrad Oblast.
“We have already invested $100 million in the construction of the coffee plant that opened last year in Goryelovo,” said Sanjay Khosla, president of Kraft Foods International Inc, in an interview with Vedomosti newspaper. “This year we will invest $50 million more to double that capacity.”
The plant’s current capacity is 5,000 tons of coffee per year. 
Khosla said that the U.S. company had also built a new cookie-manufacturing plant that is set to start production soon in Sobinka in the Vladimir region. Kraft plans to transfer part of its production there from its Bolshevik factory in Moscow.
Khosla said that markets are growing, including the Russian one.
“According to our forecasts, the crisis will not change anything: The growth rate of developing markets will be higher. We see this trend clearly, even in the first months of 2009,” he said.
Russia provides 10 percent of Kraft Foods International’s sales, which stood at about 25 billion rubles ($800 million) last year.
“Today it’s Russia, China and Brazil who are competing for business growth speed,” Khosla said.
The Russian office of Kraft Foods Rus opened in Moscow in 1994. In Russia, the company has a confectionary factory in Pokrov in the Vladimir region and an instant coffee and coffee packaging plant in the Leningrad Oblast, as well as the Bolshevik confectionary factory.
The company produces three major categories: Coffee, including the Carte Noire, Jacobs and Maxwell House brands; chocolate, such as Alpen Gold, Vozdushny, Milka, Toblerone, Chudny Vecher, Cote d’Or; and potato chips such as Estrella.
In 2008 Kraft Foods saw total revenues of $42.2 billion, of which $2.9 billion was net profit. The branch of Kraft Foods International that operates in Europe and on developing markets had total revenues of $18.25 billion in 2008.

TITLE: Markets End Week Up Despite All Odds
AUTHOR: By Courtney Weaver
PUBLISHER: The St. Petersburg Times
TEXT: It’s tough to play an unpredictable market, even one that most would agree is in need of a correction. And while that correction looked to have arrived last Wednesday when the MICEX Index plummeted over 7 percent and the dollar-denominated RTS Index lost 4.5 percent, both indexes managed to recover and, against all odds, end the week up 1.9 percent and over 5 percent, respectively. 
Analysts have predicted that the MICEX and RTS indexes could only add 5 percent to 10 percent above 1,000 before some correction had to ensue — a point the two have now reached. 
Yet every time investors try to take profits, they are foiled by the arrival of more good news, said Alexander Zakharov, co-head of equities at Metropol. “The market sees inflows are drying up, and more and more people are trying to play games and they’re getting burned because of the emergence of more new good statistics,” Zakharov said. 
The so-called G2 are the source of most of this week’s good news. A U.S. jobs report was released on Friday that showed unemployment increasing slower than expected. 
Meanwhile, China lathered on the euphoria, announcing that its manufacturing Purchasing Manager’s Index had expanded for the third month in a row. 
“More observers are saying the macroeconomic flow of data coming out of the U.S. is very positive,” said Yaroslav Lissovolik, chief economist at Deutsche Bank. “The news flow from China has also been relatively good, with the growth outlook reported as relatively benign compared with past results.” 
But oil, as always, remains one of the main engines of the Russian economy. The country’s Urals export blend closed trading this week at $67.41, while a Goldman Sachs forecast on Thursday predicted that the price of crude could rise as high as $85 a barrel this year. 
Significant moves in dollar and oil price contributed to the markets’ volatility this week, Lissovolik said. But also playing a role were several downgrades from major investment houses. 
On Wednesday, Citigroup downgraded Russian stocks to “underweight” from “overweight,” and a day earlier Morgan Stanley downgraded four Russian steel and coal producers. 
The MICEX soared 7.4 percent to 1206.2 points Monday but quickly gave up the gains, plummeting 7.5 percent on Wednesday. It managed to eke out gains Thursday and Friday to finish the week up 1.8 percent at 1114.27. 
The RTS Index reported similar ups and downs, rising 7.3 percent to 1167.4 points Monday before giving back 4.5 percent on Wednesday. The index ended the week up 5.7 percent at 1149.95 points. 
Feeling the blow of Morgan Stanley’s downgrade, Norilsk Nickel finished the week down 3.4 percent, while Novolipetsk Steel gave up 1.8 percent. VTB fell 10.3 percent on Wednesday after Goldman Sachs downgraded the bank and ended the week down 3.8 percent. Sberbank, which fluctuated wildly throughout the week, still managed to finish up 14.8 percent.

TITLE: Executives Complain Of Excess Paperwork
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: President Dmitry Medvedev invited 45 bankers and international executives for a closed-door meeting to hear their views on doing business in Russia, fielding evergreen questions on excessive bureaucracy and obstacles to commerce. 
Alcoa chief executive Klaus Kleinfeld said tax authorities were a major irritant, forcing the aluminum giant to submit 47,000 pages of import and export records — many of them duplicates — in Samara alone last year. 
“That is by no means a normal number,” he said in comments confirmed Sunday by Alcoa spokesman Kevin Lowery. “It is a pain, a pain every day.” 
The government will work to ease the pressure of tax paperwork, Medvedev said over lunch onboard a boat moored in the Gulf of Finland. 
“This is, unfortunately, what sets our tax system apart,” he said. “And this is what we have yet to change.” Citigroup CEO Vikram Pandit said he, too, found bureaucracy to be a major hindrance. The bank has been trying to transfer more money into Russia since February to hand out new loans but to no avail, he said in comments published in Russian on the Kremlin web site. 
Pandit also said Citigroup was changing its business model to have a greater presence in emerging markets, which he said were promising more demand for credit than U.S. consumers are showing. 
Medvedev ignored the money-transfer aspect of Pandit’s comments but said he hoped for the emerging economies, including Russia, to rebound from the crisis faster than “we expect.” 
Opening the meeting, Medvedev thanked his guests for their interest in the Russian economy and drew a parallel with World War II, saying countries were as united in their response to the global economic hardship as they were in fighting the Nazis. The coordinated global action is inspiring, he said.

TITLE: U.S. Offers Russia WTO Encouragement
AUTHOR: By Scott Rose
PUBLISHER: The St. Petersburg Times
TEXT: U.S. Trade Representative Ron Kirk signaled on Friday that he thought Russia’s chances of joining the WTO in the coming year were better than even, despite Washington’s concerns over recent restrictions on pork imports. 
“We continue to hold out hope that Russia will move as quickly as possible to lift the ban,” Kirk said at a news conference, following talks with First Deputy Prime Minister Igor Shuvalov and Economic Development Minister Elvira Nabiullina. 
Russia’s 16-year push for accession to the World Trade Organization took center stage at the St. Petersburg International Economic Forum after European Union Trade Commissioner Catherine Ashton said Thursday that she and Nabiullina “have agreed WTO accession should be completed before the end of the year.” 
On a trip to Finland earlier in the week, Prime Minister Vladimir Putin agreed to reopen talks on Moscow’s plan to hike tariffs on timber exports, which has been widely criticized in Helsinki and Brussels as a way to protect Russia’s wood-processing industry. 
But the bans on pork from Mexico, Britain and several U.S. states — which the Federal Consumer Protection Service says is intended to protect against the spread of the A/H1N1 flu virus, also known as swine flu — remain a sticking point. The World Health Organization said in May that there was “no evidence that the virus is transmitted by food” and “no justification ... for the imposition of trade measures on the importation of pigs or their products.” 
A deputy head of the consumer protection service said at the time that the virus was a new strain and that further research was needed. Officials in Russia have also complained that they are not being kept adequately informed on U.S. and Mexican efforts to combat the flu. 
The pork dispute, while causing friction at a diplomatic level, has also re-energized the WTO’s efforts to include Moscow, which remains the last major economy outside the free-trade body. 
“[This is] one of the reasons that the United States would like to see Russia become a full functioning participant of the WTO,” Kirk said later Friday at a panel discussion on protectionism. “It gives you some place to find resolution for these kinds of issues.” 
Alejandro Jara, deputy director-general of the WTO, said Russia had to “do its homework” to demonstrate that it would comply with the body’s rules. “We’re not keeping them out, they have to negotiate their way in,” he said. 
Kirk told the panel, which included Finance Minister Alexei Kudrin, that the United States would “work diligently” with him and Shuvalov to make sure that Russia can join, although he declined to say whether he thought that it could happen by the end of 2009. 
Kudrin and Maxim Medvedkov, Russia’s so-called WTO sherpa, both joked about how long it had taken Moscow to win entry. 
“Going through these talks is like going through purgatory and not even knowing you’ll succeed,” Kudrin said. 
When asked why Russia did not want to join the WTO, Medvedkov bristled, “It’s a good question, why they don’t let us in.” For a body that prides itself on its rules, he said, the 153-member WTO had a very disorderly system for joining. 
“Once we agree with No. 153, No. 1 can come back to the table,” he said. 
But Medvedkov also reiterated his desire to join, saying the number of protectionist measures against Russia was up fivefold in the last nine months and that “we definitely want to be contributing” to trade stability. 
The 14-member panel, moderated by New York Times foreign affairs columnist Thomas Friedman, focused on worries that the global economic crisis could lead to new and subtler forms of protectionism, including through sanitary measures. 
But when Friedman opened the floor to questions from the audience, the discussion turned closer to home. 
Responding to a question from a Canadian businessman about the proper use of health measures in trade, Kudrin said Moscow was working to make its “pretty strongly justified” decisions more transparent and predictable. 
“In the course of June, we’ll have a new system,” he said. 
The final question was a poll, following up on Nabiullina’s comment Thursday that she didn’t want to celebrate “another anniversary” of the trade talks. Who thought that Russia had a better-than-even chance of WTO entry by June 2010? 
About one-third of the panelists, including Kirk, raised their hands, while Kudrin, sitting beside him and listening to the question in translation, did not budge. 
Kirk leaned in and gave a friendly nudge to Kudrin, who immediately threw up his arm, drawing laughter and applause from the audience. “I hope that’s on film,” Friedman said, dismissing the panel.

TITLE: Prokhorov Says Crisis Offers  New Possibilities
PUBLISHER: Bloomberg
TEXT: Mikhail Prokhorov urged foreign investors Friday to seize opportunities in Russia, saying previously inaccessible assets have been put up for sale. 
“This crisis presents a unique opportunity for all investors willing to take on Russian risk, to have access and a possibility where there has been no access before,” Prokhorov said. 
Investors may take stakes in Russian companies seeking to restructure borrowings in debt-for-equity deals or at a later stage, when the government begins selling stakes in companies it obtained during bailouts, he said. Companies have taken loans from state-run Vneshekonombank to repay foreign borrowings, pledging some of their holdings as collateral. 
“I’m sure that the state bank will sell collaterals,” Prokhorov said. “It’s inevitable, because for them it’s practically impossible to organize proper management.”

TITLE: GM Plant Part of Opel Deal
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Sberbank and Canada’s Magna will buy General Motors’ St. Petersburg plant for 65 million euros after their purchase last week of Opel’s share in GM.
The assets will be restructured at the second stage of the deal, when Sberbank will attract Russian carmakers to Opel’s capital.
“We’ll structure the future deal together with GM’s assets in Russia,” a source at Sberbank told Interfax.
Sberbank will own 35 percent of Opel’s shares, while its industrial partner Magna will get 20 percent of the shares.
GM began producing cars in St. Petersburg in 2006 when it opened an assembly line for the Chevrolet Captiva and Opel Antara on the territory of the Arsenal plant. In 2007, it added a temporary site in the village of Shushary just outside St. Petersburg, where the Opel Astra was until recently assembled. In early March, GM closed the two temporary sites and moved production to its main site.
In November last year, GM launched its own plant in St. Petersburg. The plant is expected to reach its full capacity of 70,000 cars per year by the end of 2010. Currently the plant produces the Chevrolet Captiva and Opel Antara, while production of the Chevrolet Cruze is set to start later in the summer.
The Sberbank source said that alongside GAZ group, other companies may become partners and investors of Opel, and cited Sollers, TagAZ and Izhavto as potential partners.
The source said that Sberbank had not yet decided what funds would be used to finance the purchase of the Opel share.
“It will be either our money or the money of one of our partners,” the source said.
Out of the Russian carmakers mentioned by the source as potential partners, Sollers, which assembles Italy’s Fiat, South Korea’s SsangYong and Japan’s Izuzu has the best financial situation. Izhavto, which halted its assembly line for Korea’s KIA due to the impossibility of financing current activity, has more available capacity for the production of foreign cars.
On Monday, St. Petersburg’s General Motors Auto stopped production until June 28, Interfax reported.

TITLE: Oil Taxes, Gas Supplies on Minds of Energy Heads
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: International energy executives raised concerns about high oil taxes and gas supplies to Europe at a meeting with President Dmitry Medvedev on the sidelines of the St. Petersburg International Economic Forum on Friday. 
Medvedev, in his opening speech, promoted his recent energy-security proposals at the event, also attended by chiefs of top Russian energy producers. 
The closed-door meeting was the first of three with business leaders during the three-day forum. 
Russia needs to develop new remote fields to stay a leading oil producer, a goal that would be easier to achieve if the government cuts taxes to encourage investment, said Royal Dutch Shell chief Jeroen van der Veer in comments published on the Kremlin web site. 
Medvedev responded by saying oil tax reductions would be put back on the agenda once the crisis subsides. The government has already granted tax breaks to the industry and has promised additional measures, including the removal of export duties on new east Siberian fields. 
Jean-Fransois Cirelli, president of GDF Suez, said the company wanted stability in the transit of gas through Ukraine, which became a major concern for European consumers after a standoff in January led to widespread supply disruptions across the continent. 
“A search for some global decision is needed here,” he said. “We, on our level, are ready to assist in the resolution of this issue in cooperation with the other European companies.” 
Paolo Scaroni, chief of Italy’s Eni, said he would help. “We will naturally be ready to make a contribution, do whatever is necessary because our business to sell gas would be endangered,” he said. “People are concerned about energy-supply security and are looking for other sources.” Medvedev said he would be grateful if the European gas companies prodded European Union bureaucrats to consider Russian ideas for reliable energy deliveries, including a proposed EU loan to help Ukraine build up its gas storage in the summer to ensure smooth winter deliveries. 
“We strongly expect that you will stimulate the European institutions to pay greater attention to these problems,” he said. In his introductory speech, Medvedev also touted his idea of adopting a new set of rules, instead of the current European Energy Charter, to govern the supply of oil, gas and other energy resources on the continent. 
The meeting came after an earlier panel discussion on the price of oil. During that session, TNK-BP shareholder Viktor Vekselberg said the company was considering a plan to increase its investment by 13 percent to $3.4 billion this year as the oil price climbs back to a level that producers consider fair. 
The increase would make TNK-BP the first oil producer in Russia to revise its spending upward after the declining global economy made a hefty dent in the industry’s profits last fall. Vekselberg said TNK-BP was stable in the current price environment and looking at the option to invest $400 million in oil field development. 
“We are quite optimistic as of today,” he told the audience of Russian and international oil executives, including chiefs of ExxonMobil, BP, Shell and Rosneft. 
TNK-BP, Russia’s third-largest producer, was in the midst of a heated shareholder battle during the forum last year, with 50/50 owners BP and a consortium of four billionaires fighting over management and strategy. The sides have since resolved their dispute but are still looking for a new, permanent CEO. 
Participants in the session also discussed future oil prices and took two votes to determine what they thought was a “fair” price, following a sharp drop from last summer’s record of nearly $150 per barrel. A moderator asked the audience — excluding the heads of energy companies, but including Medvedev, president of the world’s second-largest oil producer — to use a remote control-like device by their seats to select a price range. 
The largest number of votes fell in the $70-$80 range. Urals, the main Russian export blend, is nearing $70 after falling below $35 in December. Deputy Prime Minister Igor Sechin, who oversees the sector and is chairman of Rosneft, said earlier at the same session that Russia viewed $75 as a fair price. 
BP chief Tony Hayward appeared confident that demand for energy would pick up again before long as more people migrate from rural areas to cities in Asia and global population grows. “The future has not been canceled,” he said. “It’s been delayed by a year or two.”

TITLE: Kim Jong Il’s Dangerous Ploy
AUTHOR: By Alexander Lukin
TEXT: Pyongyang’s underground nuclear test on May 25 and its April 5 test-firing of a long-range missile that flew over Japan were condemned almost unanimously across the globe. It is easy to understand why. A small but extremely belligerent and reckless country has effectively undermined the existing system for resolving conflicts and providing collective security. 
The nuclear militarization of North Korea creates a serious risk for Russia. Any nuclear explosion by North Korea in the region would mean that radiation fallout would inevitably spread to Russia’s Far East. South Korea, China and Japan face the same risk.
Moreover, Pyongyang’s actions have posed a serious challenge to the United Nations and other international organizations in terms of their fundamental ability to resolve global problems. This is clearly not in Russia’s interests. Moscow has always supported the UN — and above all the UN Security Council, where Russia is a permanent member — as the leading authoritative international institution for resolving global conflicts. 
North Korea produces very little other than weapons. The starving population is able to survive only because the country receives aid from China, its traditionally loyal Communist comrade, and Western nations. 
North Korean leader Kim Jong Il’s main strategy to secure a steady flow of food and oil is extortion — foreign aid in return for a promise to back down from the military nuclear program. Pyongyang has used the ploy successfully for years.
It is important to note, however, that Washington also played a role in escalating the North Korean conflict. From the early 1990s, it has concluded agreements with Pyongyang that it never intended to carry out. The U.S. strategy was to buy time in hope that the Communist regime would collapse before it was able to develop nuclear weapons. In 1993, the United States promised to build two nuclear power stations in North Korea and to provide it with energy resources, but it never fulfilled that promise. One of the contributing factors to the current crisis was the U.S. failure to remove North Korea from its list of “terrorist states,” although it had promised to do so as part of an agreement reached during the six-party negotiations in 2007, after which Pyongyang destroyed the cooling tower at its main nuclear facility in Yongbyon in June 2008. The United States finally started fulfilling some of its obligations after North Korea threatened to reverse its denuclearization program, but it was too little and too late in Pyongyang’s opinion. 
For its part, North Korea did not fulfill all of the terms of the 2007 agreement. It has not allowed international monitoring of its activities, even though the United States gave it $5 million for a program to liquidate nuclear facilities.
In response to the crisis, Russia needs to take three basic steps. First, it should deploy missile defense batteries to protect its Far East region.
Second, Moscow should try to convince China, which holds the greatest economic leverage with North Korea, to take a tougher position against Pyongyang. Of course, China is concerned that if the Pyongyang regime collapses, it will result in a humanitarian catastrophe near its borders. Beijing also has no desire to see a newly unified, powerful and wealthy Korea allied with the United States. It might be necessary for Beijing and the other five members of the six-party negotiations to make a guarantee to Pyongyang that any sanctions or pressure they might apply are not intended to change the geopolitical situation on the Korean Peninsula. One good argument would be to point out that the North Korean threat is the main argument used by Japanese hardliners to justify building Japan’s own fully-fledged armed forces with the potential to initiate a war, something that is prohibited by Article 9 of the post-World War II Constitution imposed by the United States. China is also rightfully concerned about Kim’s policies and should be concerned about Japan’s aspirations to become an independent military force in the region.
Third, the Kremlin needs to explain to Washington that any failure to follow through on U.S. promises to North Korea will only exacerbate the problem. Moscow and Beijing could serve as mediators and guarantors to make sure that all obligations are met. As part of this agreement, of course, Kim must guarantee that North Korea will allow verification and negotiate on the particulars of any agreement without letting things reach another impasse. 
It should be remembered, however, that the situation in North Korea could change at any moment, particularly since Kim’s days are numbered.

Alexander Lukin is director of the Center for East Asian and SCO Studies at Moscow State University for International Relations.

TITLE: Too Much of a Good Thing
AUTHOR: By Alexei Bayer
TEXT: President Dmitry Medvedev has talked about using the economic crisis to wean Russia off its oil dependency and to create a more balanced economy by investing into new technologies. Even Prime Minister Vladimir Putin, whose eight years in power Medvedev is implicitly criticizing, agrees that the crisis could be an opportunity for the economy to become more competitive.
If a crisis is a good thing, Russia may have had too much of it. It felt the economic downturn sooner and deeper than the rest of the world. Now, a new financial bubble is developing, and Russia once again risks becoming a laboratory for excessive upswings and slumps.
After rightly criticizing the administration of President George W. Bush for presiding over the worst financial bubble in modern economic history, President Barack Obama inflated a financial bubble of his own. The banking system has been literally flooded with dollars. 
The U.S. Treasury’s Troubled Asset Relief Program infused more than $700 billion into banks, insurers and finance companies. The Federal Reserve increased bank reserves by more than $1 trillion in recent months. And U.S. households, which were saving less than $50 billion a year from 2005 to 2007, have put aside more than $200 billion between October and March.
The United States is by far the biggest provider of liquidity to the financial sector, but banks all over the world are choking with free money. The authorities have hoped that banks will start lending this money, but the problem is that there are relatively few creditworthy borrowers. Businesses are not investing since they already have too much capacity.
U.S. consumers, the engine of global economic growth until last year, are strapped. Some 12 percent of mortgage holders have trouble paying their mortgages, and with unemployment at 9.4 percent, even those who still have jobs don’t want to borrow and spend.
All that the banks can do with their money is speculate. Speculation is now risk-free since governments around the world have told large financial institutions that they are too big to fail. 
Cheap, plentiful liquidity has flooded world financial markets on a massive scale. The Dow Jones Global Index is up 50 percent since early March. Dollar-denominated eurobonds issued by risky emerging countries are trading at the lowest yield premium over U.S. Treasuries since last October. 
Commodity futures have spiked, oil has doubled from its December lows and copper is up by some 60 percent.
The biggest problem is that none of this is justified by economic fundamentals. In fact, even OPEC is concerned that oil prices are rocketing in an environment of soft global demand for oil.
While all financial markets around the world have heated up, Russia’s have been among the most overheated. Investors have been piling into the ruble and Russian stocks with wild enthusiasm. 
The currency has appreciated from a low of 36 rubles per dollar to nearly 30 rubles, and the dollar-denominated RTS Index has gone from 500 to 1,150 in just three months. With oil at nearly $70 per barrel, the crisis no longer looks frightening, and the impetus for economic reform is likely to be weakened. 
Moreover, the longer the bubble keeps inflating, the more spectacular its inevitable deflation is likely to be. 
Meanwhile, rising financial markets and runaway commodity prices will instill a false sense of security and leave both the Russian government and the people poorly prepared for the possible second wave of the global economic crisis, which could come some time in the fall.

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

TITLE: Grand Slam Federer Storms to Glory in French Open
AUTHOR: By Howard Fendrich
PUBLISHER: The Associated Press
TEXT: PARIS — Oh, how Roger Federer savored every moment with his first French Open trophy.
He raised it overhead. He cradled it in the crook of his elbow. He closed his eyes and kissed it. He examined the names of other champions etched on its base. Even in a downpour on Court Philippe Chatrier, as heavy, gray clouds blocked any shred of sunlight Sunday, that silver trophy sure seemed to glisten.
Finally, the lone major championship that had eluded Federer was his. With his latest masterful performance, Federer tied Pete Sampras’ record of 14 major singles titles and became the sixth man to complete a career Grand Slam.
History was at stake, and Federer was at his best, completely outplaying No. 23-seeded Robin Soderling of Sweden en route to a 6-1, 7-6 (1), 6-4 victory in a French Open final that lacked suspense but not significance.
“Maybe my greatest victory — or certainly the one that takes the most pressure off my shoulders,” Federer said in French, moments after dropping to his knees, caking them with clay, as his 127 mph service winner ended the match. “I think that now, and until the end of my career, I can really play with my mind at peace and no longer hear that I’ve never won at Roland Garros.”
Federer came heartbreakingly close in the past, losing the previous three French Open finals, so there certainly was something poetic about his tying Sampras’ Grand Slam mark at this particular tournament, on this particular court.
“Now that he’s won in Paris, I think it just more solidifies his place in history as the greatest player that played the game,” Sampras told The Associated Press.
“If there’s anyone that deserves it, it’s Roger,” Sampras said. “He’s come so close — lost to one guy who’s going to go down as probably the greatest clay-courter of all time.”
That would be Rafael Nadal, the man who beat Federer at Roland Garros in the 2006-08 finals and the 2005 semifinals, too. But Nadal’s 31-match French Open winning streak ended this year with a fourth-round loss to the hard-hitting Soderling.
“I knew the day Rafa won’t be in the finals, I will be there, and I will win. I always knew that, and I believed in it. That’s exactly what happened,” the second-seeded Federer said. “It’s funny. I didn’t hope for it. But I believed in it.”
Only 7-13 against Nadal, Federer entered Sunday 9-0 against Soderling and, other than the threat of postponement because of rain, there was never any doubt that would become 10-0 by day’s end.
That’s because Federer showed off the athleticism and artistry that carried him to five championships at Wimbledon, the last five at the U.S. Open and three at the Australian Open. Federer hit more aces than Soderling, 16-2. He broke Soderling four times. He won 40 of the first 47 points on his serve. He won five points with delicate drop shots.
Federer was outstanding at the start, taking a 4-0 lead, and close to perfect in the tiebreaker. That was Soderling’s chance to get into the match, but Federer wouldn’t allow it: The Swiss star served four points — and all four were aces, ranging from 118 mph to 132 mph.
Federer called it “one of the greatest tiebreakers in my career.”
Soderling never really stood a chance, not against Federer, not on this day, not on this stage.
“You really gave me a lesson in how to play tennis,” Soderling told Federer.

TITLE: Opponents Highlight Ahmadinejad's Eccentricity
AUTHOR: By Ali Akbar Dareini
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — A 2005 claim by Mahmoud Ahmadinejad that a “light” surrounded him during a UN address was mocked Monday by his main pro-reform opponents in the latest barrage against the president’s competence and another sign of the bitter tone dominating the election campaign in its final days.
Ahmadinejad and his main challenger, Mir Hossein Mousavi, have traded recriminations and engaged in mudslinging that has broken political taboos in Iran, reflecting the huge stakes in Friday’s vote.
Reformists — sensing that Ahmadinejad’s once-formidable lead has evaporated — have increased their attacks, seeking to portray him has erratic and eccentric. 
Ahmadinejad has struck back with accusations that Mousavi, who served as prime minister in the 1980s, is part of a clique of corrupt leaders who put their own interests ahead of the country.
The current reformist salvo is a video clip sent by e-mail and on CDs of Ahmadinejad telling a top cleric, Ayatollah Abdollah Javadi Amoli, that a “light” enveloped him during his address to the UN General Assembly in 2005 and that the crowd stared without blinking during the entire speech.
“A member of the (Iranian) delegation told me, ‘I saw a light that surrounded you,’” Ahmadinejad said. “I sensed it myself too ... I felt the atmosphere changed. All leaders in audience didn’t blink for 27, 28 minutes. I’m not exaggerating when I’m saying they didn’t blink. Everybody had been astonished ... they had opened their eyes and ears to see what is the message from the Islamic Republic.” The clip was released after Ahmadinejad on Saturday denied making the comment.
Mousavi’s daily newspaper, Kalemeh Sabz, or Green Word, said in a front-page report that Amoli’s office confirmed the video is authentic. The headline called it Ahmadinejad’s “halo.” Amoli could not be reached to verify the account in the Mousavi paper.
Mousavi accused Ahmadinejad of being “superstitious” and “brazenly staring at the camera and telling lies to the nation.”
On Saturday, Ahmadinejad said inflation stood at 15 percent, but Mousavi showed a report released by the Central Bank of Iran indicating it stood at 25 percent.
“Why do we lie to people? Why do we give people wrong information? Is this to the country’s benefit? Is gaining the presidential chair worth lying to people this blatantly?” Mousavi said on Sunday.
Reformists, who promise to ease social and political restrictions at home and seek better ties with the West, appear to be gaining ground on Ahmadinejad, who has become increasingly unpopular because of Iran’s economic woes. Critics also say he has needlessly enflamed world anger at Iran with his statements calling UN resolutions “worthless papers” and casting doubt on the Holocaust.

TITLE: Kuznetsova Stuns Safina To Capture French Title
AUTHOR: By Allan Kelly
PUBLISHER: Agence France Presse
TEXT: PARIS — Svetlana Kuznetsova defeated Dinara Safina 6-4, 6-2 in an all-Russian final of the French Open on Saturday to take away her second Grand Slam title.
It was a comprehensive win for the 23-year-old seventh seed who lost in the final here in 2006 to Justine Henin two years after she stunned the world of tennis by winning the U.S. Open as a 19-year-old.
For Safina it was a crushing end to  a two-week-long campaign geared at securing a first Grand Slam title and proving that she is worthy of the world number one spot.
It was the second straight year she has lost in the final here going down in straight sets to Ana Ivanovic of Serbia last year and her second successive Grand Slam final defeat having lost to Serena Williams in Melbourne this year.
“It was so many years since I won a Grand Slam and I thought it would never happen again,” Kuznetsova said.
“Today when I was coming onto the court I knew everything was going to be fine. It was the same as before, when I won the U.S. Open.”
It was the 14th time the two had met as professionals, Safina leading 8-5, but they go further back than that having been rivals in Russia in girls’ tournaments as they were growing up.
With conditions cold, damp and overcast and the Court Philippe Chatrier three-quarters full, Safina was quickest out of the blocks breaking Kuznetsova to 15.
But the younger of the two 23-year-olds surrendered that advantage immediately with a nervy service game that included a double fault and two unforced errors.
Safina was in trouble on serve again at 2-3 down when a double fault and a deft Kuznetsova drop shot left her at 0-30, but she came out on top of a marathon rally and then took the next three points to level the score.
Two games later though and on the back of another double fault, the Muscovite went 0-40 down. She saved the first two of those breakpoints but was left flat-footed by a raking Kuznetsova backhand drive on the third.
The St Petersburg-born player, however, failed to cash in, dropping her serve for the second time in the next game.
That mattered little though as she struck again in the following game, staggering Safina by running round her backhand to hit an outright winner and then forcing the world No.1 into slapping a forehand into the net.
Kuznetsova held serve to open the second set and Safina was beginning to berate herself for allowing her smaller and less powerful rival for the crown to dominate most of their rallies.
Games went with serve until the sixth game when a sixth double fault gave Kuznetsova the edge and she broke for the fourth time in the match shortly after when Safina blasted a forehand wide and long.
Kuznetsova held serve to make it 5-2 and then her pressure on the Safina serve paid dividends again with a seventh double fault on match point.
It was all over in 74 minutes and was the eighth consecutive straight sets women’s final at Roland Garros.

TITLE: North Korea Sentences Journalists To 12 Years
AUTHOR: By Vijay Joshi
PUBLISHER: The Associated Press
TEXT: SEOUL, South Korea — North Korea convicted two American journalists and sentenced them Monday to 12 years of hard labor, intensifying the reclusive nation’s confrontation with the United States.
Washington said it would “engage in all possible channels” to win the release of Laura Ling and Euna Lee, reporters for former Vice President Al Gore’s San Francisco-based Current TV media venture.
There are fears Pyongyang is using the women as bargaining chips as the U.N. debates a new resolution to punish the country for its defiant May 25 atomic test and as North Korea seeks to draw Washington into direct negotiations.
The journalists were found guilty of committing a “grave crime” against North Korea and of illegally entering the country, state-run media said.
The Central Court in Pyongyang sentenced each to 12 years of “reform through labor” in a North Korean prison after a five-day trial, the Korean Central News Agency said in a terse, two-line report that provided no further details. A Korean-language version said they were convicted of “hostility toward the Korean people.”
The ruling, nearly three months after their arrest, comes amid soaring tensions fueled by North Korea’s nuclear test last month and signs it is preparing for a long-range missile test. On Monday, North Korea warned fishing boats to stay away from the east coast, Japan’s coast guard said, raising concerns that more missile tests may beplanned.
Over the weekend, President Barack Obama used strong language on North Korea’s nuclear stance and said his administration did not intend “to continue a policy of rewarding provocation.”
Verdicts issued by North Korea’s highest court are final and cannot be appealed, said Choi Eun-suk, a North Korean law expert at the Institute for Far Eastern Studies at South Korea’s Kyungnam University. He said North Korea’s penal code calls for transferring them to prison within 10 days.
The United States, which does not have diplomatic ties with Pyongyang, was “deeply concerned” about the reported verdict, State Department spokesman Ian Kelly said in Washington. He said officials would “engage in all possible channels” to win the reporters’ release
The families of Lee, 36, and Ling, 32 — sister of National Geographic “Explorer” TV journalist Lisa Ling, who pressed publicly for their release last week — had no immediate comment, spokeswoman Alanna Zahn said from New York. Gore also had no comment, spokeswoman Kalee Kreider said.
Kim Yong-hyun, a professor at Seoul’s Dongguk University, said the 12-year sentence — the maximum allowed under North Korean law — may have been a reaction to recent “hard-line” threats by the U.S., including possible sanctions and putting North Korea back on a list of state sponsors of terrorism.
But he predicted the journalists’ eventual release following diplomatic negotiations.

TITLE: Conservatives Score Wins in EU Elections
AUTHOR: By Constant Brand
PUBLISHER: The Associated Press
TEXT: BRUSSELS — Center-right parties hailed European Parliament election victories as a continent-wide vote for conservative approaches to the economic crisis and pledged Monday to forge ahead.
Right-leaning governments came out ahead in Germany, France, Italy and Belgium, while conservative opposition parties won in Britain and Spain.
Many Socialists ran campaigns that slammed center-right leaders for failing to rein in financial markets and spend enough to stimulate faltering economies. But voters did not embrace their cause.
“The center-right has been addressing the economic crisis,” said Sara Hagemann, an analyst at the Brussels-based European Policy Center think tank. “The center-left parties failed to sell that message.”
Voters angry over poor economic conditions and political scandals punished ruling parties of both stripes in Greece, Austria, Spain, Britain, Bulgaria, Ireland, Hungary and the tiny island of Malta.
And the June 4-7 elections which ended Sunday across the 27-nation bloc saw only 43 percent of 375 million eligible voters cast ballots for representatives to the 736-seat EU legislature. The record low turnout pointed to enduring voter apathy about the European Union.
It was a discouraging sign for EU officials hoping Irish voters will approve stronger powers for the EU in a fall referendum.
European Commission President Manuel Barroso blamed politicians across the European Union.
“National politicians, whose debates all too often remain largely national in their focus, must acknowledge themselves more consistently as both national and European actors,” he said.
The European Union said center-right parties were expected to take the most seats — 267. Center-left parties were headed for 159. Green and pro-EU parties captured 51 seats, while far-right and anti-EU parties won around 40 seats. The remainder went to smaller groupings.
Reeling from an expenses scandal, British Prime Minister Gordon Brown’s center-left Labour party finished third behind the anti-European U.K. Independence Party — a crushing defeat that cast more doubt on Brown’s future. The Conservatives are expected to win Britain’s next national elections.
The vote also saw the all-white British National Party pick up two seats in the EU assembly — joining far-right parties from the Netherlands, Hungary and Austria that excoriated Muslims, immigrants and minorities.
Voters in Italy handed a tepid win to scandal-plagued Premier Silvio Berlusconi and rewarded the anti-immigrant party in his coalition. The 72-year-old billionaire media mogul spent much of the campaign fighting off his wife’s allegations of an improper relationship with an 18-year-old model.
Germans handed a lackluster victory to Chancellor Angela Merkel’s conservatives but a historic defeat to their center-left rivals, a result that comes only months before Germany holds its own national election.
“We are the force that is acting level-headedly and correctly in this financial and economic crisis,” said Volker Kauder, the leader of Merkel’s party in the German parliament.
French President Nicolas Sarkozy’s governing conservatives trounced the Socialists, while an ecology-minded party vaulted to a surprisingly strong third place.
“We will continue to modernize France,” Prime Minister Francois Fillon said, vowing to loosen France’s labor rules to make the country more competitive internationally.
“Tonight is a very difficult evening for Socialists in many nations in Europe,” admitted Martin Schulz, the leader of the Socialists in the European parliament.
Austria’s big winner was the rightist Freedom Party, which more than doubled its strength over the 2004 elections to 13.1 percent of the vote. It campaigned on an anti-Islam platform.
In the Netherlands, Geert Wilders’ anti-Islamic party took 17 percent of the country’s votes, winning four of 25 seats.
Three of 22 seats in Hungary went to the far-right Jobbik party, which describes itself as Euro-skeptic and anti-immigration. Critics say the party is racist and anti-Semitic.

TITLE: U.S. Technology Heads to Brazil 
To Find Black Box
AUTHOR: By Marco Sibaja and Alan Clendenning
PUBLISHER: The Associated Press
TEXT: RECIFE, Brazil — A U.S. Navy team was flying to Brazil on Monday with high-tech underwater listening devices to help the search for the black boxes from an Air France plane that crashed into the Atlantic Ocean.
Brazilian and French military ships, which have so far recovered 17 bodies and large amounts of plane wreckage from the sea, resumed their search amid the floating debris.
What caused the Airbus A330 to crash May 31 with 228 people on board will remain a mystery unless searchers can locate the plane’s black box flight data and voice recorders, likely buried deep in the middle of the ocean.
Two U.S. Navy devices that can detect emergency beacons to a depth of 6,100 meters are being flown to Brazil with a Navy team, according to the Pentagon. 
They will be delivered to two French tugs that will then listen for transmissions from the black boxes, which are programmed to emit signals for at least 30 days.

TITLE: Brown Clings On After Rout in EU Voting
AUTHOR: By Katherine Haddon
PUBLISHER: Agence France Presse
TEXT: LONDON — Prime Minister Gordon Brown clung to power Monday after his Labour Party suffered a second crushing poll defeat in days, while the far-right made historic gains.
Labour was beaten into third place in European elections behind fringe anti-Europeans the UK Independence Party (UKIP), after 11 ministers resigned in recent days.
The biggest winners in the European polls were the British National Party (BNP), whose policies include an end to all immigration to Britain, which won its first two members of the European Parliament.
It is the first time a far-right party has ever scored a seat in parliamentary elections here.
Although leading members of Brown’s government said he was still the best man for the job, he was hit with a fresh ministerial resignation on Monday when Environment spokeswoman Jane Kennedy quit.
She said the move came after she refused to pledge loyalty to Brown, although this was denied by Downing Street.
There could be more trouble ahead for Brown on Monday at a meeting with backbench lawmakers.
“There has been turbulence undoubtedly but... our reaction needs to be and will be not to turn in on ourselves, not to be disunited,” Labour’s deputy leader Harriet Harman told BBC radio.
“There is nobody better placed in terms of taking the economy forward than Gordon Brown.”
With 69 out of 72 seats declared, the main opposition Conservatives had 27.7 percent, UKIP 16.5 percent and Labour 15.7 percent, according to the BBC. The BNP was in sixth place nationally with 6.2 percent of the vote.
In Wales, its historic industrial heartland, Labour failed to come top for the first time in any election since 1918, pushed into second place by the Conservatives.
Labour was also second in Scotland, another traditional stronghold, behind the pro-independence Scottish National Party (SNP).
Some 52 percent of voters want Brown to resign immediately, a ComRes/BBC poll of 1,001 adults released after the results said.
Brown faced unprecedented pressure Friday when a wave of ministers resigned, including work and pensions secretary James Purnell, who urged him to quit in the wake of disastrous local election results Friday.
The killer blow against Brown failed to come over the weekend following a hasty cabinet reshuffle but the European election results are likely to lead to fresh uncertainty.
The situation could come to a head in the regular meeting of Labour MPs Monday night.
Already feeling bruised by public anger over a scandal about their expenses, many are worried that Brown’s unpopularity could lose them their seats at the next general election, which must be held by mid-2010.
Newspapers reported that Brown will try to buy off grumbling MPs with promises of a long-demanded inquiry into the war in Iraq and a pledge to shelve controversial plans to part-privatise the Royal Mail postal service.
Brown has pledged to go on, launching a reshuffle of junior ministerial ranks following the main shake-up Friday.
“What would they (the public) think of us if ever we walked away from them at a time of need? We are sticking with them,” he said Sunday, adding that it was a “testing time for our whole country”.
In another sign of opposition, former Lord Chancellor Charles Falconer called for Brown to be replaced as Labour leader in the Times newspaper on Monday, saying he would not win back public support.
“My view is that the painful step of changing our leader... would be best for the party and the country,” wrote Falconer.