SOURCE: The St. Petersburg Times
DATE: Issue #1495 (57), Tuesday, July 28, 2009
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TITLE: President Calls For Action Over Crashes
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — At least 29 people have been killed in a series of bus crashes in the past week, including one Friday that left nearly two dozen dead, prompting President Dmitry Medvedev to demand that officials boost order on the roads.
In the bloodiest accident, 21 people were killed when a bus and gasoline tanker collided Friday afternoon on a southern highway that has often been called one of the country’s most dangerous. The empty KamAZ tanker apparently veered into oncoming traffic on the M-4 highway between Krasnodar and Rostov-on-Don, Interfax reported.
A criminal investigation has been opened into the accident, Rostov prosecutors said.
Interior Minister Rashid Nurgaliyev said he would take personal control of the investigation and sent the head of the ministry’s road safety department to the scene.
Medvedev criticized Russia’s road safety record Friday at a meeting of the country’s Security Council. He urged the traffic police and other law enforcement agencies to work harder to improve order on the Russian roads.
“We can’t bury so many people because our traffic system is organized like this,” he said, according to comments on the Kremlin web site.
Between 30,000 and 35,000 people die in traffic-related accidents in Russia every year. In Moscow alone, about 700 people die on the roads annually, according to police statistics.
Two children were among the dead in the Rostov crash. The bus is thought to have been carrying about 40 passengers.
The driver is believed to be among the dead. The 35-year-old worked for a bus company called Kurganinskoye and had five years of experience driving Ikarus buses, Interfax reported.
The health minister of the Rostov region, Tatyana Bykovskaya, told Interfax on Friday that seven people were injured in the crash. One was in very serious condition and had been hospitalized in Rostov-on-Don, she said.
The bus was traveling from Kurganinsk to Taganrog.
In 2007, Putin identified the Don highway as one of the country’s most dangerous in a speech to lawmakers, RIA-Novosti reported.
Every summer, about 3,000 people are killed on the highway, RIA-Novosti reported, citing Transportation Ministry statistics.
The accident was the second fatal bus crash in Russia in the last week.
On July 20, a bus left the road and turned over in the Novosibirsk region. Eight people died, including one child, and 39 were injured, Interfax reported.
The driver was arrested and is being questioned by police. He could be sentenced to up to seven years in jail for causing death by careless driving.
A passenger told a Tomsk region TV station that the driver bent over to pick up some spilled sunflower seeds before the crash, RIA-Novosti reported.
In a third crash, a KamAZ truck slammed into a shuttle bus waiting at a stop on the Moscow Ring Road, or MKAD, on Saturday morning. Fourteen people inside the bus were injured in the accident, and 11 of them remained hospitalized Sunday, Interfax reported.
TITLE: Medvedev Chides NATO Over Georgia
AUTHOR: By Mansur Mirovalev
PUBLISHER: The Associated Press
TEXT: MOSCOW — President Dmitry Medvedev said NATO is beginning to realize that Georgia and Ukraine should not be “dragged” into the alliance.
“The understanding that these respected states are not ready to make this sort of decision and that the alliance is not ready to absorb them is gradually understood,” Medvedev said in a prerecorded interview broadcast Sunday on Russia’s NTV television. “We don’t think it’s right to drag certain countries into military and political alliances against the will of their nationals.”
Earlier this week, U.S. Vice President Joe Biden visited both ex-Soviet nations and pledged support for their efforts to break free of Russia’s orbit and join the alliance.
Moscow has struggled to revive its clout in former Soviet states, and has often bristled at Washington for close relations with the pro-Western leaders of Ukraine and Georgia.
In Sunday’s broadcast, Medvedev said that Ukraine, where the idea of joining the alliance remains unpopular, should hold a referendum to “provide a legitimate ground” for NATO membership.
As for Georgia, Medvedev said, “Does NATO need a state that has that many problems?”
Georgia’s drive to join NATO added to the tensions that preceded Russia’s war with the tiny Caucasus Mountains nation last summer. Since the war, Russia has persistently warned the U.S. not to rearm Georgia, and has ignored Western anger over its recognition of two Moscow-backed separatist regions in Georgia as independent nations.
Medvedev spoke disapprovingly of Georgian President Mikheil Saakashvili and said that his government harms historically close ties between the Russian and Georgian nations. “Regimes, like that of Saakashvili, come and go, but feelings between the nations remain,” Medvedev said.
The war drove already strained relations between Russia and the U.S. to a post-Cold War low. President Barack Obama has declared his intention to “reset” those ties, and both sides saw the July 6-8 Moscow summit as a chance to begin.
Medvedev emphasized the importance of good ties with Washington, but said Russia will not be pushed around — a stance often asserted by his tougher-talking predecessor Vladimir Putin, who is now prime minister.
In the NTV interview, Medvedev compared today’s Russia to the Soviet Union.
“We want to see Russia as a strong state. Not for the sake of flexing muscles, not for teaching someone lessons, but for creating good living conditions for our citizens,” he said.
At a summit in Romania last year, NATO leaders decided to offer Ukraine and Georgia a so-called “membership action plan” to prepare them to become members.
Faced with opposition from Moscow and after the Russian-Georgian war, NATO has since backed away from establishing the plan, but offered to step up military and political cooperation to help the countries achieve their goal of eventual membership.
TITLE: Calls Made for Starovoitova Case to Be Reopened
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The sister and the former aide of slain State Duma deputy Galina Starovoitova addressed President Dmitry Medvedev on Monday, urging him to reopen the investigation into what is seen as one of the most shocking, unresolved political murders of the 1990s.
A co-chair of the Democratic Russia Movement, Starovoitova was a prominent democratic politician in Russia in the late 1980s and 1990s.
Olga Starovoitova and Starovoitova’s former aide Ruslan Linkov reasoned that the recent arrest of former State Duma deputy Mikhail Glushchenko, whose name was mentioned as one of the murder’s organizers during court hearings on the case, could lead to the person who ordered the crime. Linkov was injured in the gun attack that killed the deputy in November 1998.
The investigation of Starovoitova’s murder was put on hold in April 2008 when the time limit for the investigation expired. Two of Starovoitova’s killers, Valery Akishin and Yury Kolchin — a hitman and a technical organizer — were sentenced to 23 1/3 and 20 years in prison respectively in June 2005.
“The case was put on hold for an indefinite period because several people involved in the case had not been located — a suspected shooter, a technical organizer and another organizer, as well as several more people mentioned during the investigation and in court, and the investigation group ceased to exist,” Linkov said by phone on Monday.
Glushchenko, 51, who is charged with organizing the murder of three Russian citizens — Yury Zorin, Viktoria Tretyakova and Vyacheslav Shevchenko — in Cyprus in March 2004, was detained while trying to renew his internal passport at a local police station in June.
Along with Shevchenko, whom Linkov named as another person behind the killing, Glushchenko used to be a State Duma deputy and member of nationalist politician Vladimir Zhirinovsky’s Liberal Democratic Party (LDPR).
According to Linkov, Glushchenko’s name was mentioned as a superior to Kolchin, the murder’s sentenced technical organizer, during the investigation and in court by one of the accused and a witness who was involved in illegal surveillance of Starovoitova.
“[The case] should be reopened because of this new situation, but no new steps are possible without a legal decision, and that’s why we’re asking the president to order the reopening of the case, to have the General Prosecutor’s Office make this decision,” Linkov said.
In their letter, Olga Starovoitova and Linkov also asked for the investigative group that was on the case until it was put on hold last year to be reformed.
“We’re asking that the investigative group include the people who were investigating the case previously, because around 50 volumes on the case were presented to the court, and it would take at least 12 months just for a new person to study these materials,” said Linkov.
TITLE: Chinese Officials ‘Accept’ Crackdown on Smuggling
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A Chinese delegation that flew to Moscow last week for talks about the closure of Cherkizovsky Market expressed “understanding and approval” of the fight against smuggling, the Investigative Committee said Friday in a statement on its web site.
Ling Ji, deputy director of the Chinese Commerce Ministry’s Europe department, “expressed his satisfaction with the results of the meeting and noted that the work of Russia’s law enforcement agencies to fight contraband and ‘gray’ import schemes earned understanding and approval in the People’s Republic of China,” the statement said.
The Investigative Committee led the effort to shutter Cherkizovsky, Europe’s biggest retail market. About $2 billion in merchandise has been confiscated since the closure in June, formally over sanitary and fire safety violations.
The move disrupted the businesses of thousands of Chinese businessmen in Moscow and at home and has been widely covered in the media there.
The senior delegation, led by Deputy Commerce Minister Gao Hucheng, stressed the countries’ strategic partnership in talks with officials from the Federal Migration Service, Economic Development Ministry and Foreign Ministry, Chinese state news agency Xinhua reported.
Gao said the Chinese traders’ contributions to the Russian economy should be taken into account when deciding how to mitigate the effects of Cherkizovsky’s abrupt closure.
Mayor Yury Luzhkov said Thursday that “accommodating the trade of our friends from China is not our job,” a day after Hucheng said City Hall should do more to find new trading space for those left jobless after the market was closed.
TITLE: Chechen Govt Meets Separatists for Talks
AUTHOR: By Ian MacDougall
PUBLISHER: The Associated Press
TEXT: OSLO — A Chechen separatist leader and a senior representative of the regional government said Friday they had met for talks in an effort to bring stability to the war-scarred Russian region.
Rebel envoy Akhmed Zakayev and Dukuvakha Abdurakhmanov, chairman of the Chechen regional parliament, gave few details about the meetings in the Norwegian capital. They also remained tightlipped when asked whether the talks had yielded any concrete results.
Norwegian mediator Ivar Amundsen, director of the Chechnya Peace Forum — a human rights group — said it was the first political talks between the two sides in eight years.
“It’s a promising start,” he told The Associated Press. “This is not a peace agreement, but it’s an intention. ... The talks have been very constructive and very positive.”
Amundsen said further talks were planned in London in the next two weeks, with more people involved. Amundsen also said that other parties “may have been” involved in the Oslo talks, but refused to elaborate.
Zakayev, who lives in London, said he represents the political faction of Chechnya’s separatist movement and has no connection to the military wing that is spearheading the insurgency there.
“I would like to express delight that this has taken place,” Zakayev said through a translator. “I’m strongly convinced that every Chechen person should be well aware of the processes that are taking place, and should take part in them.”
Abdurakhmanov, who was representing the Kremlin-backed government of President Ramzan Kadyrov, said talks had centered on “political stability in the Chechen republic and the final consolidation of Chechen society.”
Ahead of Friday’s announcement, Abdurakhmanov traveled to Moscow for what Amundsen described as “consultations” with the Kremlin. The Norwegian mediator said the meetings had been approved by Russian Prime Minister Vladimir Putin.
Chechnya was devastated by two separatist wars in the past 15 years. It is more peaceful under Kadyrov, who was nominated by the Kremlin, but violence has increased in recent months.
Human rights activist Natalya Estemirova was abducted July 15 outside her home in Chechnya and found dead later that day. Estemirova was renowned for her investigations of rights abuses in Chechnya.
TITLE: In Brief
TEXT: $24M Check Rip-Off
MOSCOW (SPT) — Three men were detained in Moscow after trying to cash a check for almost 17 million euros ($24 million), Interfax reported Friday, citing police.
Natives of Belarus, Dagestan and Bashkortostan showed up at a BSGV bank branch on Moscow’s central Chayanova Ulitsa on Thursday with a check for 16.8 million euros and a forged power of attorney for the check, which they claimed was issued to them by a French citizen, police said.
Police detained the men and opened a fraud investigation.
Navy Missile Error
MOSCOW (SPT) — The military made a rare admission Sunday that it had violated Ukrainian law by trying to transport cruise missiles outside its Black Sea naval base of Sevastopol, RIA-Novosti reported.
“There were violations of basic agreements on basing the Russian Black Sea Fleet in Sevastopol,” Navy commander Admiral Vladimir Vysotsky said, RIA-Novosti reported.
“We believe those were serious violations,” he said. “Those responsible will be punished, quite heavily.”
Vysotsky, in Sevastopol to mark the annual Navy Day holiday, said that the paperwork dealing with the convoy had not been not completed in the proper manner.
Police Pass on UN Offer
MOSCOW (SPT) — Foreign Minister Sergei Lavrov said Sunday that investigators would turn down an offer from a group of UN human rights experts to help investigate the killing of Memorial activist Natalya Estemirova earlier this month.
“I think everyone understands that the investigation will be based on Russian laws,” Lavrov said.
“And I think everyone also understands that such high-profile murders will be investigated under the close watch of the government’s leaders,” he said, Interfax reported.
TITLE: Navy Accidentally Shells Vladivostok
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A dummy shell fired from a warship veered off course Friday and landed just feet from a building in a residential area of Vladivostok, less than two months after a similar incident off the Gulf of Finland.
The anti-ship shell was fired during rehearsals for Sunday’s Navy Day celebrations in the far eastern port. For reasons yet to be determined, the projectile changed course after takeoff and landed beside a nine-story building, breaking windows and leaving a 1.5-meter crater, RIA-Novosti reported.
No one was hurt in the incident, and the Navy said it was investigating.
A bomb disposal team from the Pacific Fleet was sent to dig out and remove the shell. Military officials said it was intended only to make a sound effect for the parade.
Pacific Fleet spokesman Roman Martov said experts would evaluate what caused the bomb to deviate from its course. “All the parameters were set right, it was supposed to fall into the ocean,” he said, Interfax reported.
On May 28, a similar incident happened in the Leningrad Oblast, when a Russian warship in the Gulf of Finland fired 14 shells in the direction of a dacha settlement on shore.
Fragments of the shells rained down on the village, but damage was minimal and no one was injured. The Navy later promised the dacha settlement “several tens of thousands of rubles” in damages, Ekho Moskvy reported.
The military is not considering abandoning its Bulava naval intercontinental ballistic missile, despite numerous failed test launches, in favor of the Sineva missile that is already in service on Russian nuclear submarines, Chief Navy Commander Vladimir Vysotsky told RIA-Novosti on Sunday.
Only four of 11 Bulava launches have fully succeeded.
Vysotsky said the Bulava, capable of carrying 10 nuclear warheads, was “not an absolutely ideal weapon” but added that he didn’t see any alternative.
TITLE: Classic Car Museum Opened by Collectors
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Boris Yeltsin’s Mercedes, Marilyn Monroe’s Cadillac and Yury Gagarin’s Pontiac Tempest are just a few of the attractions on display at a new museum of classic cars that unveiled for the media in Vyborg over the weekend and is getting ready to open to the general public in early August.
The 6,000-square meter, two-story building that houses the Vyborg Classic Car Museum is home to 150 rarities. Most of the cars date back to what specialists refer to as “The Age of Detroit Baroque” [1954-1962], an era noted for extravagant, whimsical shapes and rich decorative elements. The vehicles reach up to seven meters in length and typically weigh around 3 tons. American airforce pilot Harley Earl is widely regarded as having been the founder of the style..
“Harley Earl’s designs were ahead of their time,” writes Dale Wickell in his profile of Harley Earl for About.com:Trucks. “His vision of cars with undulating curves, low and long bodies and airplane-inspired fins and cockpits led GM through the next 30 years.”
A few of Earl’s best-known creations include the late 1930s Buick Y-Job, the automotive industry’s first concept car; the 1951 Buick LeSabre, with airplane styling and innovative features such as a dual gasoline and alcohol fuel system and a moisture sensor that automatically lifted the convertible top during a rainstorm; the mid-fifties Chevy Nomad, a sporty looking 2-door station wagon; and the 1950s Firebird I, II and III, a series of concept vehicles with airplane styling and experimental engine designs.
Earl’s creations, which are often spoken of as “the embodiment of the American dream,” were first seen in Russia in 1959 at the American National Exhibition in the USSR at the Sokolniki Exhibition Center in Moscow. The museum also possesses three cars from the 1959 display that the Americans sold to the Russians: the Ford Skyliner, Ford Thunderbird and Chevrolet Corvette.
The Vyborg collection claims to be one of the largest and most comprehensive of its kind in Europe. The owners are particularly proud of three cars that once belonged to Leonid Brezhnev. They include a Citroen DC, once considered the most striking car of the 20th century; a Soviet-made ZIL limousine and a Lincoln Continental presented to the Soviet leader by Richard Nixon. Another must-see is a pink Cadillac previously owned by Elvis Presley.
The interior of Brezhnev’s ZIL car has a strong aroma of cigarette smoke. “We could have dry-cleaned the salon, but decided against it because we really want to preserve the atmosphere and the special ambiance of this legendary car,” said Sergei Sviridov, president of the Retro-Union, the association of collectors that created the museum.
Almost 100 collectors joined forces to establish the automobile museum in Vyborg, and it has taken the enthusiasts nearly 35 years to assemble a collection of which they are now very proud.
The museum is located at 65, Leningradskoye shosse, Vyborg. Opening hours: 11 a.m. to 7 p.m. Telephone: (812) 715-80-45. Tickets cost 150 rubles. Links: http://www.retrounion.ru, www.carofthecentury.com
TITLE: Suspected Crime Boss Released
PUBLISHER: The Associated Press
TEXT: MOSCOW — Semyon Mogilevich, an alleged organized crime boss who is also wanted in the United States, was released from pretrial detention 18 months after his arrest in Moscow, the Interior Ministry said Monday.
A Moscow court freed Mogilevich on an oath not to flee, said Irina Dudukina, spokeswoman for the Interior Ministry’s investigative committee. He was released Friday along with his business partner Vladimir Nekrasov, she said.
The two men had been in custody since their arrest in January 2008 on tax evasion charges relating to a prominent chain of cosmetics stores. The latest extension to their detention period expired Sunday and prosecutors did not ask for a further extension.
TITLE: AvtoVAZ Workers Plan Demo
PUBLISHER: Bloomberg
TEXT: MOSCOW — AvtoVAZ workers will hold a demonstration Aug. 6, five days after Russia’s biggest carmaker suspends production for a month, to protest against pay cuts of 50 percent that the company plans in response to slumping sales.
Wages for AvtoVAZ’s 110,000 employees will be slashed by half when the Tolyatti-based manufacturer resumes operations in September as it scales back work hours, Pyotr Zolotarev, head of the independent Unity labor union at the carmaker, said. Average monthly pay at the plant is 12,000 rubles ($386), he said.
“The salary cuts will be absolutely devastating for the local economy,” Zolotarev said Friday.
AvtoVAZ announced plans on June 24 to operate one production shift of eight hours a day, five days a week through February to reduce spending. Alexander Shmygov, an AvtoVAZ spokesman, said by phone Friday that the cutbacks, which include reducing individuals’ weekly work times by 50 percent to 20 hours, allow the carmaker to save money without eliminating jobs.
TITLE: Bribery Cases Soar by 26%, Average Sum Almost Triples
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s Interior Ministry said the number of bribery cases increased 26 percent in the first half after President Dmitry Medvedev vowed to fight corruption as a threat to national security.
The average amount of a bribe rose almost three times to more than 27,000 rubles ($879) compared with last year, the ministry’s economic crimes department said in a statement on its web site Monday.
Authorities have opened 3,500 criminal cases from a total of 4,900 instances of bribery uncovered in the period, the ministry said.
Russia is one of the most corrupt countries in the world, ranking 146 out 180, according to Berlin-based watchdog Transparency International. Medvedev came to power last year assailing his country’s “legal nihilism” and pledging to fight the everyday corruption that citizens encounter in dealings with police, hospitals and schools.
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TITLE: In Brief
TEXT: Road Concession Inked
MOSCOW (Bloomberg) — Vinci, the world’s biggest construction company, signed a 60 billion-ruble ($2 billion) concession to build and operate the initial stretch of Russia’s first major toll road from Moscow to St. Petersburg.
Vinci plans to start work on a 43-kilometer section of the road next year, the Transportation Ministry said in a statement distributed to reporters. The government plans to allocate 23 billion rubles from the state investment fund for the work, which will take about three years to complete, the ministry said.
The contract was signed by Vinci Concessions CEO Louis-Roch Burgard and Anatoly Chabunin, head of the Transportation Ministry’s Federal Highway Agency, in Moscow on Monday. Vnesheconombank, the state development bank, and a World Bank unit will help finance the road, Vinci Chairman Yves-Thibault de Silguy said.
The government wants to complete the 626-kilometer road by 2015 at a cost of about 600 billion rubles ($20 billion).
Gazprom Thinks Big
MOSCOW (Bloomberg) — Gazprom, the world’s biggest gas company, plans to increase output at Zapolyarnoye, one of its key fields in western Siberia, by 30 percent to 130 billion cubic meters a year.
The company plans in the near future to start up two gas treatment units at the field, which hit peak capacity of 100 billion cubic meters per year in 2004, the Moscow-based company said in an e-mailed statement Monday.
The field has been producing since 2001, now accounting for about one fifth of Gazprom’s total gas output.
Dixy Sees Revenues Fall
MOSCOW (Bloomberg) — Dixy Group said revenue in the first half of the year fell 16 percent in dollar terms.
Revenue declined to $809 million from $964.4 million in the year-earlier period, the Moscow-based retailer said Monday in an e-mailed statement.
Insolvency In Spotlight
MOSCOW (Bloomberg) — Russia plans to reform its bankruptcy law, to help companies survive financial reorganization without being broken up, the Financial Times reported, citing Arkady Dvorkovich, President Dmitry Medvedev’s economic adviser.
The government hopes legislation can be drawn up and passed by the Duma by the end of the year, the newspaper said.
Fewer than 10 percent of Russian companies that have gone through bankruptcy procedures have survived as going concerns, because of the activities of corporate raiders and others, Dvorkovich told the FT.
Aeroflot At a Loss
ST. PETERSBURG (Bloomberg) — Aeroflot loses money on 40 percent of its flights, Vedomosti reported, citing an interview with Chief Executive Officer Vitaly Savelyev.
The airline, Russia’s biggest, plans to cut spending by $859 million in 2009 and fire 6,000 employees, or 40 percent of its workforce, in the next two years or three years, Vedomosti reported.
Savelyev, who became chief executive of the Moscow-based company in April, added that Aeroflot would be interested in European airlines only if it can acquire a controlling stake, and doesn’t rule out buying Russian assets, the newspaper said.
Polish Demand to Rise?
WARSAW (Bloomberg) — Poland probably will import more gas from Russia and extend the current contract by at least 10 years, Rzeczpospolita reported, without citing anyone.
Poland buys about 7 billion cubic meters of natural gas annually from Russia under an existing contract that runs through 2023.
Annual domestic demand for gas may rise to as much as 20 billion cubic meters from 14 billion, the newspaper said.
TITLE: Shoplifting Height of Fashion As Crisis Continues
AUTHOR: By Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: Retail chains are seeing an increase in shoplifting, but do not seem to be in a hurry to spend more on their security systems.
The incidence of shoplifting at Lenta stores increased by 33 percent during the first half of 2009 compared to the same period last year, according to the supermarket chain’s press service. The press service of X5 group said that shoplifting had risen by 66 percent in its local Pyatyorochka stores, by 18 percent in Perekryostok stores, and by 10 percent in Karusel stores.
A representative of a clothing retail company said that the volume of thefts had risen and the resulting losses amounted to two to three percent of the company’s turnover. Denis Kotov, general director of the Bukvoyed bookstore chain, said he had also noticed an increase in shoplifting, and that his stores were seeing more amateur thieves than previously. The security department of X5 said that it was mainly expensive goods being stolen with the aim of selling them on in smaller shops, rather than for personal use.
A representative of Lenta said that shoplifters tend to go for coffee, expensive kinds of sausage, caviar, cognac and vodka, and that the theft of non-food items such as clothes, multimedia and cosmetics had become twice as common. He said that thieves were often groups of two to three shoppers or minors unaccompanied by their parents, as well as cleaning company staff.
Yelena Asanova, head of the public relations department of Realgipermarket, said that retail companies that operate on a self-service basis generally factor the expected cost of losses into the end price for small or expensive products such as make up, creams and small souvenirs. She did not say what the size of the price markup usually was, saying only that “for the consumer it is usually kopecks, but can significantly minimize losses in the company’s turnover.”
Natalya Smirnova, an analyst at Uralsib Capital, said that shoplifting losses are taken into account when pricing certain categories of goods, and that the markup does not exceed 0.5 percent of the price.
Shoplifting is not the biggest problem, as about 70 percent of goods lost at the supplier – consumer level are the result of internal theft at warehouses and shops, said a representative of a discount chain who asked not to be named.
Most thefts from shops fall under the administrative violations codex, and shops try to protect their expensive goods with magnetic detectors, said Vyacheslav Stepchenko, head of the State Department of Internal Affairs (GUVD) for St. Petersburg and the Leningrad Oblast. According to data from the GUVD, since November 2008, about 250 thefts, including from shops, have been registered per month in St. Petersburg. Stepchenko said that security guards do not always call the police.
In a six-month period, 15,416 people were detained at Lenta stores for shoplifting. X5 group said that criminal proceedings were only brought against 10 percent of those detained in their stores. “We let old ladies, children and ill people go after we have taken back the stolen goods; you have to feel sorry for them,” said the X5 representative.
At Karusel and Pyatyorochka, the total losses avoided this year increased eightfold to several million rubles. Sales of the northwest branch of X5 totaled $576 million in the first quarter of this year.
The discount chain representative said that in order to prevent losses, which are felt particularly keenly in times of crisis, the company is introducing an IT system that will allow them to control the movement of goods. Installing the system at six checkouts in a shop costs on average 500,000 rubles ($16,165), excluding expenses on the software, said Alexander Nemtsov, head of the retail systems department at 1C:Bukhuchyot i Torgovlya.
Sergei Kryl, head of the systems integrator department at SM Trade, said that a security system for an 8,000 to 12,000-square meter hypermarket, including CCTV, controlled access and alarm system costs from 4.5 million to 8 million rubles ($145,000 to $259,000).
Kryl said that sales of security systems are falling, as most retailers want to cut back on technical expenses and are shifting the responsibility for finding a way to reduce losses from theft onto staff.
Bukvoyed’s Kotov said that spending on security had not increased, but that the company was paying closer attention to training its staff.
TITLE: Putin’s Firm Hand Could Backfire
AUTHOR: By Ira Iosebashvili
PUBLISHER: The St. Petersburg Times
TEXT: A visit to Sberbank headquarters by Prime Minister Vladimir Putin last week may have been more cordial than some of his recent corporate appearances, but the message was little changed.
After touring the facilities, meeting with senior executives and grilling Sberbank head German Gref on the methods used to size up a prospective borrower’s credit worthiness, Putin got down to business —that is, telling business how business should be done.
Sberbank should improve the quality of its loans but not “close its coffers,” Putin told bankers.
“It’s very easy to just shut the box, it is harder to work with clients and understand which of them are reliable,” Putin said.
New regulations, however, will cap the amount of interest Sberbank can charge at 14 percent, Putin said — down from the bank’s current rate of 15 percent to 16 percent.
“The level of 14 percent a year [interest on loans] is quite acceptable in current conditions,” Putin said. The new level represents a three-percentage point premium over the Central Bank’s benchmark refinancing rate, now at 11 percent.
The directive is just the latest in a series of encroachments that have seen the government and the Central Bank take an increasingly active role in micromanaging the financial system. The state has tried to promote lending — all the while maintaining one of the highest refinancing rates among developed economies in a bid to stem capital outflows.
But such a policy could be shortsighted, as it hinders banks’ risk-management strategies and could ultimately destabilize the financial system if it results in too many bad loans being made.
Interest rates at some banks reach as high as 20 percent, drawing the ire of borrowers and now government officials. Banks, in turn, have justified charging high interest by citing the risk inherent in lending money during a major economic downturn.
After Putin gave his decree, Gref contradicted the prime minister, saying interest rates at 14 percent were not realistic.
Gref said the Central Bank offers funding to the sector through collateral-free loans at rates of 12 percent to 13 percent. “That is the real cost of money. Then you need to add the bank’s margin of at least 3 percent, and the result is that minimum [rates on commercial loans] are 15 to 16 percent,” he said.
In April, Putin gave an order requiring that all banks receiving government assistance lend out just as much as they receive and obliging them to keep lending rates no higher than 3 percentage points above the refinancing rate.
In a bid to spur lending and encourage banks to give out more affordable loans, the Central Bank has cut interest rates by 200 basis points since April, sending the benchmark refinancing rate to 11 percent. It has encouraged banks to lower its rates to reflect the discount.
Earlier this month, Central Bank First Deputy Chairman Gennady Melikyan said lenders had “reached an agreement” that no new deposits will be offered at interest rates above 18 percent beginning next month. Those who did not cooperate would face limited access to Central Bank cash and other funding instruments, Melikyan said.
Amid the ruble’s weakness earlier this year, the bank applied a similar policy on cash and loans secured by bonds or other collateral to limit bets on the currency’s devaluation.
Analysts were not surprised by the state’s move, although some said the long-term consequences would be hard to predict.
“The worldwide financial system has been going through a very unusual period. Governments have taken control of banks in many countries,” said Roland Nash, chief strategist at Renaissance Capital. “And keep in mind, Putin was saying this to Sberbank, in which the government holds a 51 percent stake.”
Interests rates should reflect the risk a bank has to assume, and 14 percent might not factor in every type of customer, Nash said.
“If you’re lending to Gazprom, then of course 14 percent is too high. But if you’re lending to an IT startup out of Barnaul, then 14 percent might not be high enough,” he said.
And while capping interest rates could cut into Sberbank’s profitability, it could also bring positive long-term consequences for the lender.
“If you can convince a monopoly like Sberbank to go out and lend, it could kick-start the economy, which would ultimately help Sberbank in the end,” Nash said.
Other market watchers said the state’s actions could have an effect that would be very different from the intended one.
The government is trying to manage the crisis in “manual mode,” said Natalya Orlova, chief economist at Alfa Bank. “But lower interest rates mean riskier loans, and if banks cannot reuse their money they could just reduce their exposure to the Central Bank.
“This could result in a contraction of the banking system,” she said.
TITLE: Communist Party Critical As Duma Meets to Revise Bill
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: The Communists poured scorn on United Russia when the State Duma reconvened for a special session Friday to revise a bill that the Federation Council rejected despite strong support from the Kremlin and Cabinet.
The rejection represented a very unusual malfunctioning of the normally obedient parliament, and lawmakers were quick to cast it as a result of poor coordination rather than a revolt.
A handful of deputies and senators debated the bill in a joint mediation committee for just two hours before the Duma voted to approve the amended bill, which would allow universities to set up enterprises to commercialize high-tech inventions.
Duma Speaker Boris Gryzlov, who also heads the United Russia faction, walked past the press point without even looking at the reporters during a break in the session. Communist Party leader Gennady Zyuganov, however, leaped at the chance to poke his political rival.
“It’s a bad sign that the ruling party can’t handle the management,” Zyuganov said. “If they can’t agree on such a small bill, how will they be able to agree on the more complicated issues?”
Another Communist, Anatoly Lokot, told fellow lawmakers: “I have trouble understanding what’s going on. … Today’s situation is scandalous.”
One of the two amendments backed by the mediation committee requires universities to seek government approval before contributing state funds or property to their high-tech enterprises. The other would oblige universities to inform the government when they set up such enterprises.
The Federation Council, which voted down the bill on July 18 on the grounds that it could encourage embezzlement of state assets, would reconsider the modified legislation at a special session Monday, a spokeswoman said.
The parliament is reconvening from recess on orders from President Dmitry Medvedev, who backed the bill vocally on the day before it was voted down and said it was part of efforts to fight unemployment. Of the Duma’s 450 deputies, 444 turned up for Friday’s session.
The bill’s rejection was an embarrassment for United Russia, showing — as Medvedev put it — a “lack of coordination” with the government. The United Russia faction, which is so large it can unilaterally approve changes in the Constitution, did not take into account the Finance Ministry’s amendments for the bill.
A Finance Ministry spokesman said the ministry had no comment Friday.
United Russia, which sponsored the bill, made an apparent attempt to cast blame toward the other pro-government party, A Just Russia, whose chairman, Sergei Mironov, is Federation Council speaker.
Deputy Valery Chereshnev, of A Just Russia, was responsible for shepherding the bill through as chairman of the Science and Science-Intensive Technology Committee, which supervised the legislation, United Russia Deputy Grigory Balykhin said in comments posted Thursday on the Duma’s web site.
On Friday, the Duma removed a Just Russia deputy from its representatives on the mediation committee.
TITLE: Resetting Georgia's Democracy
AUTHOR: By Irakli Alasania
TEXT: Most people will be familiar with the threat Georgia faces from its Russian neighbor. But Georgian society also faces massive internal challenges to its democracy and economy. We need to get past our confrontational politics to create a pluralistic democracy and bring prosperity based on open markets to all Georgians. This would also improve our security in the face of the Russian threat.
Unfortunately, some ruling politicians forget that these goals can only be achieved with a strong but balanced government, the rule of law, room for dialogue and disagreement, a vibrant opposition and fair elections. It is time to press the restart button on democracy in Georgia.
Following the Rose Revolution in November 2003, a new government came to power under President Mikheil Saakashvili that had unquestioned popular support and a massive mandate for change. The government enacted a range of economic reforms, many of them successful. But it made a key miscalculation, thinking that the quickest way to reform was to put unparalleled power in the presidency and weaken the powers of the parliament. Presidential selection of judges ensured a compliant legal system. Tbilisi also removed the autonomy and tax-raising powers of municipalities, which contributed to Georgia’s depressingly poor democracy rating in the recent Freedom House assessment.
The irregularities during the presidential elections in January 2008 suggest a government that uses its power to handicap the opposition. Some 23 percent of monitored ballot counting had problems that were either “bad or very bad,” and in 8 percent of voting stations there was direct tampering, according to the Organization for Security and Cooperation in Europe. This in an election where the president — even according to the official count — avoided a second-round vote by only 3 percentage points.
This climate of intolerance has also contributed to our economic difficulties. Past reforms have been successful in reducing red tape and streamlining government bureaucracies. But as a recent World Bank report stated, poverty has hardly been reduced in the last four years and unemployment has actually gone up. Any attempt to discuss the country’s economic difficulties is dismissed out of hand as opposition to reforms. But our economic problems stem from our democratic failings. It is understandably difficult for businesses — foreign or domestic — to invest in our economy when our ratings for governance are poor. Why would you want to risk your capital when, as Freedom House puts it, “the Interior Ministry is a law unto itself, accountable to no one.”
Overcentralization of power is also at the heart of our security problems. The disastrous execution of last August’s war against Russia’s aggression was the result of the failure of our president to create a state system where decisions are made after proper discussion and analysis. As Georgia’s ambassador to the United Nations at the time, I was concerned that the war was directed by the president’s inner circle and those military and intelligence leaders who offered different opinions were simply excluded from the decisions.
Of course, the responsibility for reform does not just lie with the government. If the Georgian opposition wants to be taken seriously, it must do more than just oppose. Over the next few months, we will aim to formulate the policies and create the institutions to present ourselves as a credible alternative to the ruling party.
At the moment, though, there is a strong perception in Georgia that the power of the state would be wielded against anyone who supports us. If the political opposition in Georgia is to offer any competition to the ruling party, we must be able to recruit and fundraise without harassment.
Anticipating U.S. Vice President Joe Biden’s visit, Saakashvili offered some reforms in his speech to the Georgian parliament a week ago. But the government has made and broken promises before. The international community will need to hold Saakashvili to his promises if these warm words are ever to be transformed into action.
To do this, the European Union and the United States need to have clear and transparent benchmarks to measure Georgia’s democratic progress to ensure a free media, independent judiciary and free elections. The international community should be forthright in its criticism of any anti-democratic behavior in Georgia. Fears that this criticism might bring instability or weaken the country are exaggerated. A vibrant democracy needs internal debate and honest friends abroad.
This country may disagree about who is to lead us, but it is united in its aspirations for democracy, independence and European integration.
Irakli Alasania is the leader of the opposition party Our Georgia–Free Democrats. This comment appeared in The Wall Street Journal Europe.