SOURCE: The St. Petersburg Times
DATE: Issue #1505 (67), Tuesday, September 1, 2009
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TITLE: Medvedev: Blaming Soviets a
‘Cynical Lie’
AUTHOR: By Steve Gutterman
PUBLISHER: The Associated Press
TEXT: MOSCOW — Russia’s president defended Moscow’s role in World War II before the 70th anniversary of its outbreak, saying in an interview broadcast Sunday that anyone who lays equal blame on the Soviet Union and Nazi Germany is telling a “cynical lie.”
Dmitry Medvedev’s remarks were the latest salvo in Russia’s bitter dispute with its neighbors over the war and its aftermath. The Kremlin has launched a campaign for universal acceptance of its portrayal of the Soviet Union as Europe’s liberator.
In Eastern Europe, however, gratitude for the Nazi defeat is diluted by bitterness over the decades of postwar Soviet dominance.
Medvedev suggested in the interview with state-run Rossiya television that nobody can question “who started the war, who killed people and who saved millions of lives — who, in the final analysis, saved Europe.”
“You cannot label someone who defended himself an aggressor,” Medvedev said.
Tuesday marks 70 years since the Nazis invaded Poland on Sept. 1, 1939, shortly after Josef Stalin’s Soviet Union reached a nonaggression pact with Germany that included a secret protocol dividing eastern Europe into spheres of influence.
Weeks after the German invasion, the Soviet army entered Poland from the east. After claiming its part of Poland, the Soviet Union then annexed the Baltic states and parts of Finland and Romania.
Germany is widely considered the chief culprit in the war, but many Western historians believe Hitler was encouraged to invade by the treaty with Moscow, called the Molotov-Ribbentrop pact. The Kremlin recently has mounted a defense against suggestions that the Soviet Union shares responsibility for the outbreak of the war.
Russians contend that the Soviet leadership saw a deal with Nazi Germany as the only alternative after failing to reach a military agreement with Britain and France, and that the pact bought time to prepare for war.
Medvedev lashed out at the parliamentary assembly of the Organization of Security and Cooperation in Europe over a July resolution equating the Soviet Union and Nazi Germany, saying: “Excuse me, but this is a cynical lie.”
In the broadcast interview, Medvedev accused Western nations of turning a blind eye to what he said is the practice of Ukraine and the Baltic ex-Soviet republics of treating “former Nazi disciples” as “national heroes.”
He suggested there was greater agreement between Moscow and the West about the moral aspects of World War II during the Cold War than there is now.
Russian leaders accuse Western countries of rewriting history and understating the staggering sacrifices of the Soviet Union, which lost an estimated 27 million people in the war. In May, Medvedev created a commission to fight what he said were growing efforts to hurt Russia by falsifying history.
Kremlin critics have accused Russia of doing the falsifying, saying its leadership glosses over the Soviet government’s conduct at home and abroad.
In recent months, Poland has expressed dismay over a program on state-run Russian television and a research paper posted on the Russian Defense Ministry’s Web site that seemed to lay significant blame on Poland for the outbreak of WWII.

TITLE: Opponents File Suit Against Tower Hearings
AUTHOR: By Sergey Chernov
TEXT: Opponents of the Okhta Center, also known as the Gazprom Tower, filed a lawsuit late last week asking the court to cancel an upcoming public hearing as “illegal.” The company ODTs Okhta (Okhta Public and Business Center), the Russian energy giant Gazprom’s company in charge of the construction, needs this hearing, scheduled for Tuesday, as the final public step in its campaign to have the planned skyscraper’s height extended to 396 meters from the 100 meters currently permitted by law.
ODTs Okhta argued earlier this month that the site should be exempted from the city’s law on height regulations as the size and shape of the construction site does not allow for the erection of several smaller buildings, so it must build a 396-meter tower instead. If built, it will be the city’s tallest structure, housing the headquarters of Gazprom Neft, a Gazprom subsidiary. The skyscraper’s 2006 design is the work of U.K.-based RMJM Architects.
According to the city’s preservationists and opposition politicians, independent expertise has shown that a skyscraper of that height, sited close to the 18th century Smolny Cathedral, will affect the city’s UNESCO-protected skyline and famous historical sights badly, whereas ODTs Okhta and city officials describe the project as an “architectural gem,” which will give the city a “modern look.” 
Amid the controversy about the planned hearing, UNESCO’s World Heritage Committee expressed a “grave concern” about the planned building and asked St. Petersburg’s authorities to suspend the project. The news was published on UNESCO’s website late last week.
Yevgeny Kozlov, the chairman of the coordinating committee of the Movement of Citizen’s Initiatives, and Tatyana Krasavina, the leader of preservationist movement Okhtinskaya Duga, have filed a suit against the Krasnogvardeisky District’s Land Use and Development Commission (KZZ), asking that the court declare the preparatory work for the hearing by this state body “illegal” and cancel it as such.
The plaintiffs claimed that the public was not informed about the hearing, due to be held at Hotel Karelia, properly and in due time, 20 days in advance, as required by the law. The notice was published anonymously in the Nevskoye Vremya newspaper’s Russian-Georgian war anniversary special, which was published on the morning of Aug. 13, just 19 days before the hearing. 
Although the newspaper later claimed that it received the text at 7 p.m. on Aug. 12 and managed to print and distribute a number of copies later the same day, the time period should still be counted from the next day, according to the Russian Federation’s Civil Code, the lawsuit claimed.
The hearing was scheduled to take place at 9 a.m. on Tuesday, which is Sept. 1, celebrated as the Day of Knowledge in Russia, when schools and universities reopen after summer holidays. According to the tower’s opponents, the timing is supposed to exclude students, teachers and school students’ parents, as well as most working people from the hearing. Similarly, they argue, the Day of Knowledge is expected to be the main story in the Russian media, overshadowing news about the hearing’s possible violations on Tuesday.
In their lawsuit, Kozlov and Krasavina also stated that, in a breach of local law, the notice was not published on the Town Building and Architecture Committee’s website and did not specify the hearing’s organizer, which can only be the Krasnogvardeisky District KZZ commission. They pointed out that the district commission also did not convene to review the application and its decision was absent from the pre-hearing Okhta Center exhibition at the district administration that operated from Aug. 17 to 28.
The Legislative Assembly’s Deputy Vladimir Fyodorov also listed the violations in the publication of the hearing’s notice in a letter to St. Petersburg Prosecutor Sergei Zaitsev. The letter also pointed out that the documentation presented at the exhibition was “incomplete,” as it lacked the state commission’s summary conclusion detailing possible negative effects on the city’s environment required for a public hearing. 
Fyodorov, who is also a member of the St. Petersburg Government’s Cultural Heritage Preservation Council, also drew attention to the fact that the Aug. 12 decision to authorize the hearing was made in absence of complete documentation, such as the site’s development plan and the City Hall-approved land-survey project. He asked Zaitsev to examine the situation and take measures if the results confirm the scheduled hearing’s illegality.
As last week came to an end, the UNESCO’s World Heritage Committee renewed its “grave concern that the proposed ‘Ohkta Center Tower’ could affect the Outstanding Universal Value of the property,” and requested “the State Party to suspend work on this project and submit modified designs, in accordance with federal legislation and accompanied by an independent environmental impact assessment,” according to its Web site. 
In June, Dresden’s Elbe Valley was stripped of its World Heritage status as a result of a four-lane bridge being built over the river which caused the cultural landscape to lose “outstanding universal qualities,” according to UNESCO.
Although the construction of the Okhta Center affects the whole city, the Krasnogvardeisky District administration announced on Friday that only the “districts’ residents” would be allowed to attend the hearing, Rosbalt reported. 
Meanwhile, ODTs Okhta was reported to have been giving instructions to people who were supposed to act as Okhta Center’s supporters at a local factory on Wednesday. According to the meeting’s transcript posted on Zaks.ru, Vladimir Gronsky, ODTs Okhta’s Corporate Communications Deputy Director, spoke to a group of workers from the district’s factories, dismissing the Okhta Center’s opponents as a small group of “yellers,” 50 to 60 people, financed by the Moscow administration. 
According to the words attributed to him in the transcript, Moscow’s authorities are interested in keeping Gazprom Neft’s offices – and taxes – in Moscow, and have allegedly launched an informational war against the Petersburg plans by using the internet and paying for publications in newspapers such as Novaya Gazeta and Kommersant.
At the meeting, the would-be supporters were provided with prepared sets of questions to be asked during the hearing, a copy of which was also leaked to the media. The questions such as “Will there will be a clinic at Okhta Center?” do not concern the subject of the hearing, which is the tower’s height.
The Wednesday meeting made Okhta Center’s opponents cautious about the possible use of a rent-a-crowd as was the case at a hearing in June 2008, when dozens were paid 400 rubles each ($17 at the exchange rate current then) to support the construction. The paid supporters, some of whom were recognized as film and television extras previously appearing on TV, were hired at the Lenfilm studios by unidentified casting agents.
When the opponents tried to declare the hearing illegal and demand that the organizers show the secretly-made video of the rent-a-crowd being instructed, an OMON special-task police force was brought in, pushing protesters down from the stage and arresting eight of them who were later charged with disorderly conduct.
According to a Megapolis Social Center poll, conducted in May, 38.2 percent respondents were against the Okhta Center, while only 13.5 percent supported the construction. Thousands of St. Petersburg residents attended rallies against the tower in 2007 and 2008. Despite the restrictions imposed by the district administration as well as the hearing’s questionable legitimacy, the tower’s opponents have asked residents to come to the hearing to express their objection to the construction plans.

TITLE: U.S. Reconsiders Controversial Missile Defense Plans
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — More than seven months after taking office, President Barack Obama’s administration is actively looking into alternatives to the missile defense plans that roiled U.S.-Russian relations under George W. Bush.
Some of these alternatives entail scrapping missile shield sites in Poland and the Czech Republic, which would please Russia and major EU players like France and Germany but disappoint U.S. allies in Eastern Europe.
Obama has said he would put the controversial missile plans under review, and analysts said the original concept would probably not survive scrutiny.
The U.S. State Department on Friday denied as premature a Polish media report that the plans to station missiles in Poland and a radar station in the Czech Republic will be ditched. The strategy review “is ongoing,” spokesman Philip Crowley said.
The Polish daily Gazeta Wyborcza cited U.S. administration officials and lobbyists as saying that Washington was looking at alternative sites, including Israel and Turkey.
Even the Polish government said the plans were up in the air.
“The missile defense system is now under review,” Polish Foreign Ministry spokesman Piotr Paszkowski told The New York Times in remarks published Friday.
“The chances that it will be in Poland are 50-50,” he said.
As a key indicator of Washington’s new thinking, analysts noted that no discussion about the Polish and Czech sites took place at a U.S. Army-sponsored missile defense conference in Huntsville, Alabama, earlier this month.
“The omission is the biggest departure of strategy from the previous administration,” said Riki Ellison, chairman of the Missile Defense Advocacy Alliance, a Washington-based lobbying group who attended the meeting.
Instead, General Kevin Chilton, the commander of the U.S. Strategic Command, responsible for missile defense, identified stability between the United States, Russia and China as a top priority, and presented Russia’s sensitivities to the site in Poland by “moving in a direction away from deployment there,” Ellison wrote in a report published on his web site.
At the same conference, Boeing and Raytheon presented new missile systems that could resolve the U.S.-Russian standoff over Poland and the Czech Republic. Boeing unveiled a surprise proposal for a mobile missile system operated through cargo planes.
The company said that the system would cost less than the silo-based interceptors, which have been reported to cost more than $1 billion.
Raytheon offered a land-based version of its Standard Missile-3 system and said the Pentagon was considering it as an alternative to the Central European plan.
U.S. officials hope to complete their review as early as next month, when Obama is to meet President Dmitry Medvedev at the annual opening of the United Nations’ General Assembly in New York, The New York Times said.
The Bush administration had propelled the plans forward, arguing that Central Europe was a necessary third site, after shields in California and Alaska, to protect the United States and its allies from rogue states. But this elicited fierce opposition not just from Russia, but also from Western European NATO members that champion good ties with Moscow and resent Washington’s decision to implement the shield bilaterally, outside NATO’s framework.
The Kremlin did not react to the missile defense reports over the weekend.
Analysts said it was logical to abandon the Bush-era system, which they called flawed, but stressed that the Obama administration needed to win concessions from Moscow in negotiations over a successor for the Strategic Arms Reduction Treaty, which expires in December. Alexander Konovalov, president of the Moscow-based Institute for Strategic Assessment, said the proposed missile shield in Eastern Europe would be technically hard to achieve and very expensive. “There is a threat from Iran, but it does not justify such a cost. The only decision I expect from a rational administration like Obama’s is to put it on hold,” he said Sunday.
Otfried Nassauer, an analyst with the Berlin Information Center for Transatlantic Security, said the shield’s feasibility had always been in doubt. “U.S. armed forces do not even have the desired rockets yet,” he said by telephone from Berlin. As an alternative interceptor, he mentioned so-called killer drones, high-flying unmanned aircraft put forward by U.S. scientist Theodore Postol earlier this year.
Nassauer also said it was time for Washington to signal that it was moving away from the Bush plans because time was running out to renew the treaty. “START I runs out in December, and they need to show good will,” he said.
Obama and Medvedev have said they want a new nuclear arms deal to replace the 1991 pact as part of an effort by both countries to improve their thorny relationship.
Jiri Pehe, a Czech political analyst and director of New York University in Prague, said that even though Prague and Warsaw would officially voice disappointment if the missile plans were abandoned, such a change should be welcomed because they are unpopular in both countries. “Very few people actually see a real threat from Iran or North Korea here,” he said by telephone from Prague.

TITLE: Investigation Lists Worst Planning Justifications
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: “As the suggested plot of land is too small to accommodate our facility we kindly request that City Hall  review its size and expand the plot to suit the construction needs,” reads one of the arguments in a list compiled by the St. Petersburg Center for Environmental Expertise of the city’s Society of Natural Scientists (or EKOM), which conducted an investigation into local construction practices. The center’s experts have long been wondering how local construction companies successfully manage to get around the dense plethora of regulations in local construction policy. 
EKOM’s have been perplexed by a close analysis of the justifications used by construction companies to achieve their goals. The number one argument usually cited when a company is fighting to get hold of a much larger piece of land is as follows: “the size of the plot is very limited,” they tell officials.
“This is astonishing and can be applied to just about anything, from a 600 square-meter slot for a cottage to a territory of several hectares — or several dozen hectares — because there is no such a thing as ‘an unlimited plot of land,’” said EKOM’s spokeswoman Anastasia Tolstopyatova.
“If a company needs to be absolutely sure of obtaining a plot of the desired size, a more detailed explanation can be offered: a heli-pad is needed, or a medical center, or a playing field for curling,” Tolstopyatova said.
Construction companies can also complain about the “complicated geometrical shape” of the land, or exploit the ecological theme and try to convince the authorities that 60 percent of the territory will be occupied by a park. “It is generally hard for the officials to resist this kind of argument, especially as construction companies usually destroy parks and gardens to build their objects, rather than create them,” Tolstopyatova explains. 
Critics say Russia’s corrupt authorities tend to regard all the country’s resources — its lakes, rivers, woods, palaces, architectural treasures — as their own property. 
Historian Yelena Malysheva, head of the Okhtinskaya Duga movement, said St. Petersburg is “besieged by construction vandals.” She accused the city of violating citizens’ rights in order to placate deep-pocketed investors.
“Governor Matviyenko seems to believe that the city that she governs is just one big bank account that must grow at any cost,” Malysheva said. “But any city is first and foremost its people. It is a living organism, and it is being ruined. The governor just creates an unfriendly environment for those who live here: in-fill construction is rampant, and instead of restoring architectural treasures, the authorities give way to new concrete and glass monsters.”
Mikhail Amosov, former head of the Town Planning Commission of the St. Petersburg Legislative Assembly, and the driving force behind St. Petersburg’s building code, said the regulations he helped write in December 2006 are largely ignored.
“Numerous examples illustrate that some companies are allowed to exceed the existing maximum height limits; the process of how these companies obtain permission to go ahead with their construction projects is not transparent,” Amosov said. “More detailed legislation and a transparent scheme would have put an end to such practices.”

TITLE: Sailors Make Bermuda Triangle Claim
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Crew members of the Arctic Sea cargo ship joked that they had disappeared into the Bermuda Triangle and been fed ice cream by pirates as they returned home to their families in Arkhangelsk on Sunday.
But the 11 sailors, who were greeted by relatives as they stepped off a train from Moscow, refused to shed any light on what had happened between July 24, when their ship was purportedly seized by hijackers near Sweden, and their rescue off the western coast of Africa by the Navy on Aug. 17.
The sailors also would not discuss their subsequent two weeks in Moscow, where investigators questioned them and only allowed them to contact relatives Thursday.
“The ship was in the sea, in the Bermuda Triangle, and the pirates fed us ice cream,” a sailor said in response to reporters’ questions about the ship’s mysterious disappearance, the Life.ru news portal reported.
Asked when the crew had realized that pirates had seized the ship, a sailor said: “Immediately. It was clear from the first minute.”
Plied about life on the ship with the hijackers and being questioned in Moscow, the sailors repeatedly offered the same answer: “It wasn’t very pleasant for us,” Life.ru reported.
Four other sailors from the original crew remain on the Arctic Sea and are sailing toward Novorossiisk, authorities say.
Eight suspected hijackers of the ship have pled not guilty and accused the ship’s captain of taking them captive, their lawyers said Friday. The suspects maintain that they belong to an environmental group and were fished out of the sea after their own boat ran out of gasoline during a storm.
“My defendant says that they were waiting for gas on that vessel. The captain promised that there would be gas,” said Alexander Samodaikin, the lawyer for suspect Alexei Buleyev, Interfax reported.
He said the suspects ended up stranded on the ship for three weeks because the captain refused to help them.
Meanwhile, the web site of the Sovfracht Maritime Bulletin, run by piracy expert Mikhail Voitenko, crashed Friday afternoon and remained down Sunday. Voitenko believes that the Arctic Sea saga has political overtones, and the issue has been widely discussed on his web site. “The site is down, and the forum too,” Voitenko said in a statement. “At the moment, I have no idea when it will open. I don’t know why it is down either.”

TITLE: Cries of 'Beat Blacks' Not Ethnic Hatred
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — St. Petersburg investigators said Friday that the severe beating of a Kyrgyz teenager in February was not motivated by ethnic hatred, even though the attackers shouted “Beat the Blacks!” and “Russia for Russians!”
Stunned human rights activists accused investigators of incompetence and voiced concern that nationalists might point to the case to justify their use of similar slogans.
A linguistic expertise ordered by investigators into the Feb. 14 beating of ninth-grader Tagir Kerimov found “no signs of extremism or national hatred in the actions of the attackers,” the St. Petersburg branch of the Investigative Committee said in a statement posted Friday on its web site.
The statement provided no further details of the attack, and a spokeswoman for the St. Petersburg branch, Yulia Kazakova, refused to elaborate, citing the ongoing investigation and “enormous public attention” to the case.
Gazeta.ru reported that a group of 25 to 30 young men attacked Kerimov and a friend, also a native of Kyrgyzstan, on a street in St. Petersburg, shouting the derogatory word “khuch,” which is used by nationalists to refer to migrants from Central Asia and the North Caucasus, Gazeta.ru reported, citing a lawyer for Kerimov’s family, Dmitry Dinze.
The attackers, shouting “Kill the khuch” and “Beat the khuch,” as well as “Beat the Blacks” and “Russia for Russians,” knocked Kerimov down to the ground and kicked him repeatedly in the head, causing a severe brain injury that left the teenager in a coma for several months, Gazeta.ru reported.
Five suspected attackers have been detained, Gazeta.ru said.
Repeated calls to Dinze’s cell phone went unanswered.
At the request of investigators, an expert with the Center for Forensic Expertise for the northwestern federal district, Yelena Kiryukhina, examined the slogans for signs of ethnic hatred.
Kiryukhina concluded that she could not say for sure whether the slogans were xenophobic because she lacked information about the “motives” of the attackers, a co-worker of hers told The St. Petersburg Times. Kiryukhina refused to comment on the case.
Alexander Brod, head of the Moscow Bureau for Human Rights, accused both investigators and Kiryukhina of unprofessionalism and cautioned that nationalists could use the findings to defend themselves in court.  
Nikolai Svanidze, who heads the Public Chamber’s commission on ethnic relations, promised that his commission would study the case.
Alexander Verkhovsky, head of the Sova Center, which tracks hate crimes, said investigators violated the Criminal Procedural Code by asking a linguistic expert to examine the slogans. “Such things are done to shift the responsibility onto somebody else,” he said.

TITLE: Ex-CIA Spy's Son Admits Taking Russian Money
PUBLISHER: The Associated Press
TEXT: PORTLAND, Oregon — The son of a former CIA spy has agreed to testify against his imprisoned father in a plea deal that could help him avoid jail time for taking money from Russian agents.
Nathaniel Nicholson pleaded guilty late last week to conspiracy to act as an agent of a foreign government and conspiracy to commit money laundering.
Jim Nicholson was the highest-ranking CIA official ever convicted of espionage when he pleaded guilty in 1997 to a conspiracy charge that sent him to prison for more than 23 years. He had been accused of selling information to the Russians about the CIA agents he trained and passing along other secrets.
Both Nicholsons were indicted in January on new charges of conspiracy, money laundering and acting as an agent of a foreign government. Jim Nicholson was accused of sending his son back to his Russian handlers from 2006 to 2008 to squeeze more money out of them.
Under the plea agreement, the 25-year-old Nicholson admitted taking money from the Russians and promised to testify, if required, against his father in the new case. In return, federal prosecutors have agreed to recommend a sentence that could result only in probation.
During a hearing before U.S. District Judge Anna Brown, Nathaniel Nicholson admitted traveling to San Francisco, Mexico City, Lima, Peru and Nicosia, Cyprus, to meet with Russian agents on behalf of his father.
The younger Nicholson took about $45,000 in payments from the Russian agents, who wanted to determine how much U.S. agencies had learned about their operations during the investigation of the elder Nicholson. He said he gave most of the money to family members, at his father’s direction.
Acting U.S. Attorney Kent Robinson said the guilty plea showed the younger Nicholson’s “willingness to accept responsibility for his actions.”
Sentencing was set for Jan. 25 for the younger Nicholson. A trial for his father, an Oregon native, is not expected until at least May.

TITLE: Moscow’s New Afghanistan
AUTHOR: By Edward Lozansky
TEXT: Chechen terrorists have claimed responsibility for blowing up the Sayano-Shushenskaya hydroelectric power plant. A group calling itself Riyadhus Salihiyn has announced its plans for stepping up “economic warfare” against Russia with the primary targets being oil and gas pipelines, power plants and major industrial enterprises.
While these allegations are considered “idiotic” by Russian officials, the threat of terrorism is real. The recent Nazran attack, as well as the now almost daily terrorist attacks in Ingushetia, Dagestan and in what seemed like a pacified Chechnya, suggest that the North Caucasus situation is rapidly reaching a boiling point.
The “Afghanization” of the Caucasus has both internal and external causes. Unemployment, corruption, blood feuds, criminal standoffs and struggles between various local clans provide a fertile breeding ground for terrorism.
The other contributing factor is the financing and supply of weapons from abroad. The terrorists have been backed by rogue foreign groups and governments, but to suggest, as Ingush President Yunus-Bek Yevkurov has done, that the United States, Britain and Israel gain from the instability in the region is irresponsible, to say the least. Making these kinds of statements does little to improve Russia’s relations with the West.
All the countries on Yevkurov’s enemy list have experienced similar terrorist attacks at home, while in Afghanistan and Iraq, U.S. troops face a near daily terrorist threat under more or less the same scenario as in Russia. For this reason, Russia and the West have no alternative but to pool their resources to fight this common global menace. A joint state-level U.S.-Russia group has been established to battle terrorism, but a single bilateral group alone is not enough to resolve the problem of global terrorism.
Thus, today’s security agenda should be on a global scale and bring together the United States, Europe, Russia, other former Soviet republics, China, India and other countries. In this context, there must be closer cooperation between NATO, the Shanghai Cooperation Organization and the Collective Security Treaty Organization.
Since NATO has the most experience, it ought to take the lead in this initiative against global terrorism. Another reason NATO needs to be more active centers on the issue of self-preservation. Having achieved undeniable success in ending military confrontation between Western countries and saving Europe from the threat of communism, NATO has lost the central raison d’etre. NATO’s obsessive enlargement without a new, clearly defined mission is like a real estate bubble. Given the growing threat of global terrorism, this bubble must not be allowed to burst.  Instead, NATO could become a key element of the new international security structure, provided it plays its foreign policy cards right.
Despite U.S. President Barack Obama’s more cooperative approach to U.S.-Russian relations, there are some policymakers and advisers in Washington who still adhere to the strategic goal of further expanding NATO and weakening Russia’s position in its traditional spheres of influence.  
But the fact that venerable foreign policy veterans such as former U.S. National Security Adviser Zbigniew Brzezinski, former U.S. Secretary of State Henry Kissinger and others are increasingly in favor of integrating Russia into the European-Atlantic security structure speaks volumes about the potential for such a system. It is necessary to involve Russia in closer cooperation in creating a global security network. If these efforts bear fruit, the next step should be bringing major Asian powers into this network as well.
The latest leaks from Washington suggest that one large obstacle in U.S.-Russian relations may be removed — the planned missile defense system in Central Europe. Now Prime Minister Vladimir Putin should respond in kind. When he delivers a major speech in Poland on Sept. 1, Putin should emphasize Russia’s readiness to form an alliance with the West to defeat the common enemy of terrorism.

Edward Lozansky is president of American University in Moscow and president of the World Russian Forum in Washington.

TITLE: Cracks and 2nd Guesses For Putin 10 Years Later
AUTHOR: By Vladimir Frolov
TEXT: August marked 10 years since Vladimir Putin appeared on the country’s national stage to become the sum of Russia’s politics, a fixation for the country’s national psyche and a public figure of international scale.
Putin has ruled Russia with a steady hand, defeating a militant Chechen insurgency, bringing baron-governors to heel, gradually rebuilding the functioning state and restoring the people’s confidence in the country and its future.
Putin returned Russia to the table of global politics as a serious player who can make its voice heard in ways often devoid of diplomatic niceties.
Domestically, he squeezed out his political opponents to the margins of Russian politics — driving some die-hards into exile or even prison — while engineering a transition to a 1 1/2 party system that leaves no room for radical opponents of the regime but tolerates significant dissent.
This allowed Putin to engineer a brilliant political succession to one of his closest friends and loyalists, President Dmitry Medvedev.
Rather than departing to the national hall of fame as one of the greatest Russian leaders, Putin chose to stay in politics as a prime minister, a position where his climb to the pinnacle of power began 10 years ago.
Life has come full circle for Putin. In 2009, just as in 1999, he is fighting a deepening economic recession, dwindling government revenues and soaring budgetary deficits, a new militant insurgency in the Caucasus and technological disasters on a massive scale.  
In addition, there are signs of cracks developing in his relationship with Medvedev, who has begun to assert his power and is pushing his own political agenda, which at times might conflict with Putin’s.
Internationally, he is still a powerful public figure who retains enormous influence, particularly in the former Soviet Union and in Western Europe. But he is being quietly nudged away as “a man of the past” by the administration of U.S. President Barack Obama, which has placed all its bets on Medvedev.
In Russia, Putin is still viewed by many as the nation’s savior who needs to return to the presidency to steady the rolling ship again.
But should he really? One wonders if Putin, looking back, does not view his decision to stay on as prime minister as a miscalculation that can now destroy his otherwise truly great legacy.

Vladimir Frolov is president of LEFF Group, a government-relations and PR company.

TITLE: Too Early to Break Out the Champange
AUTHOR: By Chris Weafer
TEXT: When you are mired in a severe economic crisis, it is normal to get excited at even the smallest morsel of good news. It is therefore tempting to interpret the 0.5 percent monthly improvement in July’s gross domestic product and the smaller contraction in industrial output as an assurance that all is now well with the economy and that the stock market will imminently start the second leg of its recovery rally. Deputy Economic Development Minister Andrei Klepach fueled this optimism when he proclaimed Monday that “the recession is over,” commenting on July’s GDP results.
Hopefully, this is the direction in which both the economy, and equity market will eventually go, but there are many serious problems still to be resolved and the seedlings of recovery will have to be extended to the consumer and small businesses if sustained recovery is to be achieved. The July data shows that the financial well-being of these important economic segments is still deteriorating. In absolute terms, the 9.3 percent year-on-year decline in GDP and the 10.8 percent drop in industrial output places Russia firmly at the bottom of the performance table of all major economies.
The risk of a second crisis wave has by no means been eliminated, although few expect the next challenges to cause the same level of destruction that we saw in late 2008 and earlier this year. But dealing with the still-unclear scale of bad debts in the banking system and restarting credit markets, at an affordable cost, as well as restoring consumer and investment confidence, are critical if the economy is to catch up with the positive trend in most major economies, which are now either seeing broadly based growth or are on the brink of it.
For the investment case in Russia, there are many serious problems that have to be solved before we can expect a return to the pre-crisis optimism and asset valuations. The 45 percent year-on-year decline in foreign direct investment through the first half of this year can be easily explained by the global crisis, but even before the crisis the level of FDI only accounted for a small percentage of GDP — by far the smallest contribution to GDP among similar developing economies. Business investors have remained wary of the slow pace of reforms and the vulnerability to the sort of boom-to-bust economic cycle that we have become accustomed to. Having exposed the myth that Russia had broken free of commodities dependency, strategic investors in sectors other than oil, gas, metals and a few others will want to see a much more determined and effective approach by the government in pushing reforms and directing resources to boost growth among the small and medium-sized enterprises and industries that will represent real economic diversification.
Another serious problem is that the money set aside to fund the country’s rapidly increasing pension liability is now likely to be completely spent as part of the stimulus spending. The National Welfare Fund held about $95 billion on July 1, although the plan was to accumulate several times that amount by the time pension support payments are due to increase substantially from current levels. At this stage, it is only a best guess as to exactly how much funding will be needed to cover the annual pensions bill by the middle of the next decade, but the scale of the problem can be seen from the population demographics. The Federal Statistics Service reported three years ago that 10 million of the 79 million-member work force would retire by 2015 and, with improving life expectancy, would represent a huge increase in the cost of the government’s pension support. That is why Finance Minister Alexei Kudrin fought so vigorously to create the National Welfare Fund to make sure that funding would be available. But it is clear that these funds will be gone by mid-2010.
For now, the more serious concern is that the fragile recovery through July was largely dependent on China’s demand for oil and other materials. Moreover, the economic well-being and confidence about the future among consumers and small businesses continues to deteriorate. And this is where the risk of a second wave of the crisis comes into play. Industries, such as steel, have soared on the back of rising demand and prices. This has also been one of the best-performing themes on the stock market with the market value of Evraz Group, for example, rising by over 600 percent since the low point of late last year. Oligarchs looked like an endangered species at the end of last year, but thanks mainly to China they have rebounded. But this could easily change. Already there are reports that China may soon impose curbs on industrial growth, cut excess supply and hedge against the risk of overheating. If that happens, there would be less demand for Russia’s steel, oil and other materials, and this could lead to a double dip in the crisis.
That highlights the other major problem — the lack of depth in the July “recovery.” The consumer — and industries that are dependant on consumer spending — are showing no signs of improvement. July’s indicators were much worse than the previous month. Retail sales were off 8.2 percent, and real wages were down 5.8 percent year on year. These numbers show that the effects of the recession are still extending across the broader economy. Confidence has also taken a tumble. One example: Despite the decline in real wages, people saved 17 percent of their income in the second quarter, which was twice the savings rate in the first quarter.
There is hope that the crisis in the economy can act as a catalyst for real change in the state’s fiscal, monetary and budgetary priorities. There is also hope that the government will finally move forward with long-awaited reforms, start spending real money on improving the country’s infrastructure and take the steps needed to improve the investment attractiveness of the country for both portfolio and strategic investors. These measures are needed to put the economy on course and to break Russia’s dependency on natural resources.

Chris Weafer is chief strategist at UralSib Capital.

TITLE: No Papering Over the Issue
AUTHOR: By Anna Shcherbakova
TEXT: Every second  person I’ve discussed the future of newspapers with  prefers reading text by folding pages ratherr than clicking with their mouse. I also prefer the whisper of paper to the clicking of a keypad. But according to the publishing statistics, those reading from paper will soon be in a minority. The circulation of U.S newspapers is dropping dramatically under pressure from on-line media. Making a trip to the corner shop and buying a paper to find out what is happening in the world has shifted from being the only option to being the least good of a thousand options, venture capitalist Nik Brisbourne writes in his article “The Future Of News Is Scarcity.” 
In Russia, only 21 percent of households have internet-access so the web is taking far longer in stealing the print media audience. Revenues of newspapers and magazines fell by 45 percent in the first half-year of 2009, which is the worst result of any media in the Russian advertising industry — a sector of the economy that itself shrank by 30 percent in total. In that same six months, advertisers spent 5 percent more on Internet than a year previously. 
During the Soviet era, newspapers were for the most part used to persuade rather than inform. That’s why the first independent Russian daily, Kommersant, met with such incredible success in 1992. At that time it was the only publication that gave straight information with no editorializing, and supplied almost every article with the contacts of the newsmaker in question — useful in view of the poor phone directories of the time. Since then, professional skills of reporters have developed significantly. Business writers should be able to distinguish EBITDA from profit and work out return on investment. Reporters from the tabloids are omniscient in finding out details of celebrities’ lives. In fact, there is a real demand for the business press and tabloids, where they are of a high quality, making them the most competitive sectors in the Russian print industry, alongside, of course, the fashion glossies. In other words print publications still have many advantages. 
The Vedomosti newspaper, which will celebrate its 10th anniversary next Monday, often beats the wire services to the hottest business news. But once news has been published it is turned into a commodity, and on-line media and television are far better delivery vehicles for that commodity than paper. And no media could react faster and with greater emotional impact to the catastrophe at the Sayano-Shushenskaya hydro-electric power station than local web sites and bloggers, who were receiving information from friends and relatives at the scene of the tragedy. Livejournal, with its broad opportunities for exchanging comment is slowly but surely replacing traditional paper columnists who provide opinion rather than information (like, for instance, what I’m doing right now). Web services provide instant and precise feedback that papers can’t compete with unless they launch their own Internet portals. Technology is surpassing tradition in many ways. 
It may appear, then, that print’s best days are behind it, but in fact it’s far from finished. Publications with very specifically defined and targeted audiences — particularly where those audiences have time to read and money to spend — are still a very valuable commodity. And omnipresent bloggers will never replace professional reporters with their perseverance and expertise in getting, confirming and referencing information. 
 
Anna Shcherbakova is the St. Petersburg bureau head of business daily Vedomosti.