SOURCE: The St. Petersburg Times
DATE: Issue #1523 (85), Tuesday, November 3, 2009
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TITLE: Medvedev Gets Wish For .ðô Domain
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The world’s governing body for Internet domain names voted Friday to allow the use of non-Latin characters, clearing the way for the .ðô suffix and web sites named in Cyrillic.
The first step in a long effort to make the Internet less reliant on the Latin alphabet allows “nations and territories to apply for Internet extensions … made up of characters from their national language,” the not-for-profit Internet Corporation for Assigned Names and Numbers, or ICANN, said in a statement following a weeklong summit in Seoul, South Korea.
President Dmitry Medvedev — who has his own video blog and claims to be conversant in Russian web slang, known as Olbanian — made acquiring Cyrillic web addresses an early priority of his administration.
But commercial web site operators in Russia shrugged off the changes, saying they would provide more flexibility but were unlikely to attract masses of new users.
“This is only the first step, but it is an incredibly big one and a historic move toward the internationalization of the Internet,” Rod Beckstrom, ICANN’s president and CEO, said in the statement. “We just made the Internet much more accessible to millions of people in regions such as Asia, the Middle East and Russia.”
ICANN chairman Peter Dengate Thrush called it “the biggest technical change to the Internet since it was created four decades ago.”
The U.S. Commerce Department opened the U.S.-based ICANN to broader international oversight on Sept. 30, after years of criticism that Washington had a stranglehold on Internet regulation.
Russia will submit its .ðô application Nov. 16, the first day ICANN starts accepting them, said Andrei Kolesnikov, president of the Coordination Center for Top Level Domain RU, the organization tasked with overseeing Russian domain names.
There are more than 2 million domains registered under the .ru domain, which the center oversees. The .ðô suffix will officially be delegated to Russia in February or March, said Maria Mokina, a spokeswoman for the coordination center.
Initially, registration within the new top-level domain — .ðô — will be limited to government bodies, major cities and trademark owners.
Mokina said the Cyrillic domain would not lead to segregation of the RuNet, as the Russian Internet is known, since sites can always register both domain names, while search engines index based on the site’s content.
Accredited registrars in Russia will accept applications for Cyrillic second-level domain names from trademark holders from Nov. 25 to March 25, the Coordination Center for TLD RU said in a statement. Priority registration will end in April 2010. Second-level domains are the unique identifier — typically a name or brand — that precedes the top-level domain in a web address.
The coordination center has developed a road map for introducing the new domain, which is available on its web site. One of the key principles is to keep a list of forbidden domain names that contain “words that go against public interest, principles of humanity and morals … inhumane slogans that insult human dignity or religious feelings, etc.”
Mokina confirmed that the “stop-list mechanism” would be used but said the rules were still being finalized. “There will most likely be a static stop-list of obvious swear words,” she said. “But the issues of individual perception of insulting words have not been entirely resolved.”
Initial calls for a Cyrillic domain name were met with skepticism on some parts of the Internet, amid fears that it could be used to control content.
German Klimenko, owner and CEO of popular social network LiveInternet.ru, said he wasn’t worried about possible abuse of the system. “The practice of setting limits to registration is not unheard of, Russia is not unique,” he said.
Industry experts played down the importance of the .ðô for spreading Internet usage or the Russian language.
“The Cyrillic domain will simply add another technical option,” Klimenko said. “I don’t see any positive or negative aspects to it.” Asked whether LiveInternet.ru was planning to apply for æèâîéèíòåðíåò.ðô, he said he had never thought about it. “We’ll probably apply, but we will have to think about the name,” he said.
“Users are attracted to services, not domain names,” said Tatyana Komarova, spokeswoman for Yandex, the country’s search engine.
Yandex will start registering Cyrillic domains for its services when the application process begins but does not expect them to bring in more users, she said. “It’ll just add another type of domain, we don’t see any positive or negative aspects to it.”
Yandex already indexes web sites where the domain name is in Cyrillic but the suffix is in Latin, she said.
Andrei Vorobyov, a spokesman for RU-Center, one of the registrars, said .ðô was likely to have a different audience, “targeted for the local community,” while .ru would appeal to a wider range of Internet users, including foreign ones.
Medvedev lined up behind the .ðô domain in the first months of his presidency, casting it as a matter of national prestige.
“We must do everything we can to make sure that we achieve in the future a Cyrillic Internet domain name. It’s a pretty serious thing,” he told a Russian-language journalism congress in June 2008. “It is a symbol of the importance of the Russian language and Cyrillic.”
Communications and Press Minister Igor Shchyogolev told an Internet conference last month that “Russia would be the first country to use domains in a national language.” The localization of names “will help remove the language barrier,” leading to “further increases in the number of Internet users in Russia,” he said.
In May, Shchyogolev estimated that Russia would see a 34 percent increase in Internet users this year to almost 63 million people, from 47 million in 2008.
According to a poll of 94,000 Russians over the age of 18 conducted this summer by the Public Opinion Foundation, 35 percent use the Internet at least once every six months, or 39.9 million people. Eighteen percent, or 21.3 million, said they were daily users. The figures were 24 percent and 9 percent, respectively, in the summer of 2007.

TITLE: Federal Migration Service Busts Anti-Racism Marchers
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The March Against Hatred, an annual rally against neo-Nazi and racist violence held on Saturday, was raided by the Federal Migration Service. Officers started to single out participants of African descent and check their residency permits as the demonstration reached Ploshchad Sakharova, where the platform for the speakers had been installed.
Ella Polyakova, the local head of the Soldiers’ Mothers organization climbed the platform to demand that immigration officers, who left a minibus marked “Immigration Control” parked on the square, stop harassing rally participants.
“It appears that tolerance doesn’t exist in this city, while racism is flourishing,” she said.
“As we were marching with our friends, whose skin happens to be a different color, grey-jacketed men tried to drag them out and […] check their passports. We said, ‘Check everyone’s passports then.’”
She invited protesters to demand that the immigration officers either leave or join the rally and “protest hatred with us.” The crowd responded with applause. 
Organizer Alexander Vinnikov, the chairman of Russia Without Racism and a member of the St. Petersburg Human Rights Council, described the raid as “racist” and “illegal.”
“The immigration service decided to use our march to catch illegal foreigners — there was an ‘Immigration Control’ bus waiting for us on the square, and three officers who began a check,” Vinnikov said by phone on Monday.
“The people who were exposed to this totally illegal procedure asked the organizers for help, and we demanded the police put an end to this disgraceful behavior. No concrete measures were taken, but the three men … spent the rest of the time standing still.”
Vinnikov said the St. Petersburg Human Rights Council would be looking into the legal aspects of the raid and would make a statement. 
“They grab Africans — it’s a purely racist approach,” he said.
“There’s a March Against Hatred going on — against Nazism, fascism and xenophobia, and a state body appears immediately and starts behaving in a racist manner. They grab people who have lived in St. Petersburg for 20 years and who are all Russian citizens  — simply because they have a different skin color.”
Vinnikov said the goal behind the raid was to intimidate the public and prevent them from taking part in protests.
“It’s sheer boorishness — dumb, primitive, bureaucratic boorishness and xenophobia — and it was done right during the march,” he said.
“It’s done with only one goal — to make people afraid so they would not go to this march. There’s no other reason.”
According to Vinnikov, African students were previously warned not to take part in the March Against Hatred on the threat of having their visas canceled. Similar unofficial orders were given to the House of National Cultures, the City Hall-backed organization that encompasses more than 40 ethnic communities in St. Petersburg, he said.
The St. Petersburg and Leningrad Oblast Federal Migration Service did not answer the phone when called repeatedly Monday.
The sixth annual March Against Hatred, one of the few protest marches authorized by City Hall, began at Yubileiny Sports Palace, from where the protesters, heavily escorted by the police, marched two kilometers to Ploshchad Sakharova, close to the Strelka of Vasilyevsky Island.
Protesters carried portraits of three murdered human rights campaigners: Scholar and hate crimes expert Nikolai Girenko, in whose memory the march was launched in 2004, journalist Anna Politkovskaya and liberal politician Galina Starovoitova. Large groups of both anarchists, many with their faces covered with scarves or masks for security reasons, and gay rights activists carrying rainbow flags stood out.
The meeting on Ploshchad Sakharova to wrap up the march, whose official organizers included Russia Without Fascism, African Unity, Memorial, Soldiers’ Mothers, Yabloko, Solidarity and the gay rights group Vykhod (Coming Out), began with a list of victims of racist and neo-Nazi murders in St. Petersburg being read out.
The protesters expressed perplexity about UNESCO awarding City Hall’s Tolerance Program an honorary mention last month for “its constructive efforts to inculcate mutual respect and tolerance in a multi-cultural and multi-ethnic society and to prevent and eradicate all forms of discrimination,” and criticized the Russian authorities for inspiring or indulging hatred toward certain nationalities.
“We, participants of the Sixth March Against Hatred, declare our categorical rejection of a social order based on fear and hatred of anyone who is different,” the organizers said in the rally’s resolution, stressing that Russia is heading toward “isolationism, which will inevitably lead to the growth of xenophobia and great-power chauvinism.”
Among other things, the protesters demanded that police officers who provide protection for extremist nationalist groups, thus provoking nationalist pogroms and murders, be removed from the police force.
The police said 150 people took part, but a video recording showed at least 400 protesters marching.

TITLE: Miliband Calls For Lugovoi’s Delivery
AUTHOR: By Nataliya Vasilyeva
PUBLISHER: The Associated Press
TEXT: MOSCOW — Britain’s visiting foreign secretary pressed Russia on Monday to turn over the main suspect in the 2006 killing of former Russian security agent Alexander Litvinenko, who died from radioactive polonium poisoning in a London hospital.
Russia has refused to extradite ex-KGB officer-turned-businessman Andrei Lugovoi, saying its constitution forbids extraditing its citizens.
Russian Foreign Minister Sergey Lavrov used the same argument Monday in refusing the request from UK counterpart David Miliband, who said Britain would continue to demand justice in the “horrific murder.”
“I suspect that our British counterparts are aware of the fact that a demand to change our constitution is not realistic,” Lavrov said, referring to the Russian law forbidding the extradition of Russian citizens.
Lavrov said Russia was willing to prosecute any suspect if Britain provides the evidence. Miliband said Britain has already provided such evidence — which Lavrov denies.
Before his death, Litvinenko recorded a searing message from his hospital bed blaming Russian authorities, including then-President Vladimir Putin, for his killing.
The Litvinenko case pushed British-Russian relations to a post-Cold War low, and ties have been further strained by mutual allegations of spying, Russia’s assault on British Council offices and a boardroom dispute at British-Russian venture TNK-BP.
Miliband is the first foreign secretary sent by Britain to Russia in five years, as the British government seeks to improve relations and underline areas where the countries can cooperate.
“There are important areas of common ground alongside well-publicized areas of difference, and we don’t compromise on areas of difference by searching for common ground in other areas,” Miliband said after the talks Monday with Lavrov.
Miliband’s trip to Moscow — falling on the third anniversary of Litvinenko’s poisoning — angered Litvinenko’s London-based widow, Marina. In a statement last month, she said she was “deeply dismayed” by the timing of the visit.
“The fact remains that a British citizen was murdered in the center of London in a state-sponsored act of nuclear terrorism,” she said in the statement. “The apparent softening of Mr. Miliband’s position is a great disappointment to me.”
Lavrov and Miliband sought to emphasize other areas of shared interest, including collective work to settle the Iranian nuclear standoff and bring peace to the Middle East.
Lavrov said Russia expects Iran to accept a U.N.-backed plan demanding that it ship most of its uranium to Russia for further enrichment and then to France to be turned into fuel rods for use in an Iranian research reactor.
Iran hasn’t yet given an answer, insisting instead on simultaneously exchanging its low-enriched uranium for nuclear fuel produced overseas.
“We both want to see a prompt response from the Iranian regime,” Miliband said. “Iran can be treated as a normal country for nuclear matters if it behaves like a normal country and respects its responsibilities.”
The two foreign secretaries also discussed the 2007 closure of two British Council offices in Russia amid the diplomatic feuding, Miliband told Ekho Moskvy radio. The British Council is the cultural arm of the UK government.
Miliband said that while the talks Monday were “marked by mutual respect, principle engagement on very substantive issues and a genuine search for common ground and common action,” Lavrov gave no indication Russia would allow the reopening of the Council offices, which it has accused of back taxes.

TITLE: UN Panel Criticizes Russia on Human Rights
PUBLISHER: The Associated Press
TEXT: GENEVA — Russia fails to protect journalists, activists, prison inmates and others at odds with authorities from a wide range of abuses, including torture and murder, the UN Human Rights Committee said Friday.
The findings came in a report by an 18-member panel of independent experts who urged the Kremlin to implement a number of legal reforms. They include narrowing the broad definitions of terrorism and extremism under Russian law, decriminalizing defamation cases against journalists and granting appeal rights to people forced into psychiatric hospitals by the courts.
The report held Russia responsible for reported attacks on civilians by armed groups in South Ossetia in the aftermath of the August 2008 war with Georgia, saying Russia should have moved to stop them, and called for Moscow to investigate those abuses.
It also said journalists were subject to politically motivated trials and convictions, discouraging critical media reporting, and urged the government to take action against what the panel called an increasing number of hate crimes and racially motivated attacks.
Dmitry Peskov, spokesman for Prime Minister Vladimir Putin, said he had not seen the report and could not comment.
The harshest criticism, perhaps, was reserved for the justice system in Chechnya and other parts of the North Caucasus. The panel cited reports of torture, forced disappearance, arbitrary arrest and extrajudicial killing in those regions committed by the military and security services, saying the perpetrators “appear to enjoy widespread impunity” from punishment for their actions.
The Human Rights Committee gave Moscow one year to report back on how it was investigating abuses in the North Caucasus and South Ossetia, and protecting journalists and activists throughout Russia. The panel has no enforcement power, but it issues regular reports to draw public attention to human rights violations around the world.
While the report did not cite specific cases or statistics, it alluded to the killings of a number of journalists and human rights activists in Russia that remain unresolved, including the 2006 shooting of Anna Politkovskaya. The internationally known journalist was a harsh critic of the Kremlin and exposed widespread human rights abuses and corruption in Chechnya.

TITLE: H1N1 Virus Hits Aviation University
PUBLISHER: The St. Petersburg Times
TEXT: Nine cases of the H1N1 flu virus have been registered at the St. Petersburg State University of Civil Aviation, the Russian Consumer Watchdog told Interfax on Monday. "A hotbed of sickness is developing in the university," the spokesperon said. 
Two other cases of swine flu have been reported in local institutions of higher education. A fourth-year student at the Shtiglitz Academy of Applied and Industrial Arts fell ill on October 20 and was hospitalized two days later with H1N1, said Valentina Badanina, who manages the university clinic. A second-year student at Bonch-Bruevich University is also sick with the virus, Badanina confirmed. 
Both individuals' close contacts have been examined, but their institutions remain open to students. The University of Civil Aviation, meanwhile, has been quarantined with classes cancelled until November 12.
Ukrainian Prime Minister Yulia Tymoshenko on Friday banned public gatherings, including election rallies, and closed schools for three weeks after confirming the country’s first death from H1N1 flu, Reuters reported.
Tymoshenko, who also announced travel restrictions, said the measures were needed because the virus had reached epidemic levels in three parts of western Ukraine, where there has been an outbreak of respiratory illness since mid-October.
The epidemic coincides with the start of campaigning for a presidential election on Jan. 17. Tymoshenko, herself a front-runner, said the emergency would affect campaign rallies.
“All our pre-election events have been cancelled. They will not be held until the situation has stabilized,” she said in a televised statement.
President Viktor Yushchenko, a bitter rival of Tymoshenko’s, himself called off a public meeting in Kiev where he had been due to roll out his election program.
He told journalists that 11 people had died of H1N1, also called swine flu, contradicting a Health Ministry report of only one death. An aide and a ministry official said Yushchenko may have made a mistake.
The government allotted 500 million hryvna ($63 million) for medical supplies to fight the virus.
Yushchenko said Ukraine, already suffering the effects of a severe economic downturn, would turn to international institutions and foreign partners for help if the situation developed beyond Ukraine’s capacity to handle it.
“We are considering a quarantine not only in the west but also across the country because the virus is spreading very fast,” Health Minister Vasyl Knyazevych told reporters.

TITLE: Military Cargo Jet Crashes, 11 Killed
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A military cargo plane crashed Sunday shortly after taking off from a Sakha republic airport, killing all 11 crew members on board, emergency officials said.
The cause of the crash of the four-engine Il-76 jet was unknown. It came just weeks after aviation authorities temporarily grounded all Il-76s after one of them lost an engine during takeoff.
The Il-76 took off from the Mirny airport at about 8 a.m. Sunday and rose to an altitude of 15 meters before abruptly banking to the right, the Investigative Committee said in a statement. It flew 20 meters to 30 meters before it hit slag heap from an old ore mine, exploding into flames.
“Mirny airport officials saw a flash and fire,” the Interior Troops, a military unit within the Interior Ministry that owned the plane, said in a statement.
The crash occurred about a kilometer from the runway, investigators said. The remains of all 11 crew members were found among the debris, which covered an area of 500 square meters.
State television showed the twisted, charred metal of the plane scattered over white snow. Little was recognizable other than a burned-out engine, several tires and the battered tail, still emblazoned with the Russian flag.
The flight recorders were found and taken away for examination, investigators said.
The Investigative Committee opened a criminal case over suspected violations of flight and flight preparation rules. The investigators did not elaborate on the possible causes of the accident Sunday.
The Interior Troops said the weather was fair at the time of the crash, with 10-kilometer visibility, winds gusting up to 6 meters per second and a temperature of minus 24 degrees Celsius.
The plane had arrived in Mirny from the Kaluga region and was flying without cargo to Irkutsk en route to the North Caucasus for a military personnel exchange, the Interior Troops said. It was being piloted by seven crew members, and the other four were relief crew.
The plane was built in 1989, according to the Aero Transport Data Bank, an international aircraft registry.
It was the second accident involving an Il-76 in less than a month. The Air Force temporarily grounded all Il-76 planes after an engine fell off the wing of a plane during takeoff in Ivanovo on Oct. 7.
In the last major air disaster, an Aeroflot-Nord Boeing 737 jet crashed while preparing to land in Perm in September 2008, killing all 88 people on board. Investigators found alcohol in the blood of the pilot but blamed poor training for the crash. Aeroflot-Nord is a subsidiary of Aeroflot.
Separately, a private British-built BAE-125 plane flying from Moscow’s Vnukovo-3 Airport to Minsk crashed on its second attempt to land in Minsk in poor weather on Tuesday, killing all five people on board. Investigators said Thursday that there was no alcohol in the pilot’s blood.

TITLE: Court Rules in Former Ombudsman's Favor
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Debate surrounding the dismissal of a controversial city ombudsman and member of United Russia party Igor Mikhailov is becoming more heated. The St. Petersburg Legislative Assembly, which removed controversial city ombudsman Igor Mikhailov from his post last week and promised that it would quickly elect a successor, has now been paralyzed by a decision of the Oktyabrsky District Court. The judge took Mikhailov’s side and ruled that the parliament cannot elect a new ombudsman until Mikhailov’s case is settled in court.
Mikhailov has filed a suit against the city parliament claiming his dismissal was illegal. The hearings are scheduled to begin on Nov. 12. The ombudsman is also bringing libel charges against the deputies who  removed Mikhailov on the grounds that he allegedly helped several members of his administrative staff to get elected to municipal councils earlier this fall.
Although the assembly has not officially named any likely candidates for Mikhailov’s replacement, insiders have tipped United Russia lawmaker Igor Rimmer. The legal battle looks set to take months, however. Vadim Tyulpanov, the speaker of the St. Petersburg Legislative Assembly said he was disappointed with the  Oktyabrsky court verdict and is preparing an appeal.
In the meantime, Russia’s ombudsman Vladimir Lukin expressed concern over the St. Petersburg ombudsman crisis. He accused the St. Petersburg parliamentarians of “acting like Medieval landlords.”
“We have to make every effort to prevent such things from being repeated; the federal legislation on the issue is peppered with holes and doesn’t protect the ombudsman,” Lukin said. “An ombudsman’s is a very sensitive job and he has to be protected from the sort of instant dismissal that we have seen in Mikhailov’s case.”

TITLE: Pressure Grows as U.S. Moves to Overturn HIV Travel Ban
PUBLISHER: Combined Reports
TEXT: In a move that would leave Russia as one of the few countries with HIV travel restrictions, U.S. President Barack Obama said Friday that the United States would overturn a 22-year-old travel and immigration ban against people with HIV early next year.
The order will be finalized Monday, Obama said, completing a process begun during the administration of President George W. Bush.
The United States has been among a dozen countries that bar entry to travelers with visas or anyone seeking a green card based on their HIV status. The 11 other countries that ban HIV-positive travelers and immigrants are: Armenia, Brunei, Iraq, Libya, Moldova, Oman, Qatar, Russia, Saudi Arabia, South Korea and Sudan, according to the advocacy group Immigration Equality.
“If we want to be the global leader in combating HIV/AIDS, we need to act like it,” Obama said.
Russian authorities are keeping a close eye on the U.S. repeal, in an indication that Russia might end mandatory HIV tests for foreign residents. A 1995 law requires foreign nationals to pass an HIV test to receive a visa to stay in Russia for longer than three months.
The Health and Social Development Ministry has been waiting to see the details of the U.S. plan before considering its own steps.
Vadim Pokrovsky criticized the ban as a “violation of human rights because it limits the freedom of movement.”
HIV testing is not required for visits of up to three months and for those who enter Russia with tourist visas.

(AP, SPT)

TITLE: Gorbachev, Bush, Kohl Remember Cold War
PUBLISHER: Agence France Presse
TEXT: BERLIN — Helmut Kohl, George Bush, and Mikhail Gorbachev hailed their excellent relations at a Berlin cabaret on Saturday, 20 years after the Cold War leaders watched over the Wall’s fall.
The German ex-chancellor (1982-1998), US former president (1989-1993) and last Soviet leader (1985-1991) took the stage to share their memories of 1989 in front of a silvery curtain at a historic cabaret venue the Friedrichstadtpalast.
“Mikhail Gorbachev and George Bush were Germany’s most important partners,” said Kohl, 79, who has been wheelchair-bound since fracturing his hip in February 2008.
“There has never been a relationship that reached the level of my relations with these two gentlemen,” he said.
The “chancellor of reunification,” who speaks with difficulty after a stroke left his lower face partially paralysed, saluted Bush as someone to call if you wanted cheering up.
“If you were in a bad mood, you just had to pick up the telephone and call George Bush.... I can assure you that he’d put you in a good mood,” he said, to rapturous laughter from the 1,800 people present.
The audience included newly elected German Chancellor Angela Merkel, former Hungarian and Polish prime ministers Miklos Nemeth and Tadeus Mazowiecki, as well as ambassadors and other dignitaries.
Major celebrations are planned for November 9, marking two decades since the Berlin Wall came down, heralding the collapse of Soviet communism and the reunification of Germany.
Saluting his “former colleagues,” Bush, 85, who also has difficulty moving since a hip operation in 2007, hailed Kohl as “truly a great statesman of the 20th century -- he was a rock, solid!”
“Nevertheless, the events of ‘89 were not set in motion in Bonn, Moscow or Washington, but in the hearts and minds of the people deprived for too long of their God-given rights,” Bush said.
Gorbachev, 78, remembered two leaders who were absent, whose countries occupied West Berlin along with the United States: former British premier Margaret Thatcher, 84 and suffering from Alzheimer’s, and former French president Francois Mitterand, who died in 1996.
“Thatcher and Mitterand and myself, we defended the position that there needed to be two Germanys,” Gorbachev said. “I’m sorry, Helmut. We didn’t have good relations at the start.”
Recently declassified documents have shown that Britain was hostile and France trepidatious towards Germany’s reunification.
A “Festival of Freedom” is being organised for November 9, during which Merkel will receive guests including Gorbachev, Polish former anti-communist leader Lech Walesa, and British Prime Minister Gordon Brown.
French and Russian presidents Nicolas Sarkozy and Dmitry Medvedev will also attend, while US President Barack Obama will be represented by his Secretary of State Hillary Clinton.

TITLE: Art Director Brings Italian Flair to Che
AUTHOR: By Nadia Orekhova
PUBLISHER: The St. Petersburg Times
TEXT: Che Bar&Gallery on Friday unveiled “Photo Book About Sweden,” an exhibit of contemporary Swedish photography. Presented in conjunction with the Swedish Consulate in St. Petersburg, “Photo Book” depicts Sweden through the eyes of photographers between the ages of 14 and 32.
The exhibit, which runs through Nov. 13, is the latest in a series of contemporary art shows organized by Che gallerist Mikhail Dolgopolov and art director Francesco Attolini. Dolgopolov and Attolini are the driving force behind Royal Factory, an umbrella concept that includes Che Bar&Gallery and its sister gallery, OIOIOI. Attolini, an acclaimed video artist from Milan, describes Royal Factory as a “box for art” which provides the necessary tools, settings, and inspiration for artists to produce exceptional work. 
This laboratory model goes hand in hand with Royal Factory’s manifesto: Life is a Work of Art. “There is no difference between art and life, because both of them are the same universe, focused on human — or non-human — capabilities, images, rules, exceptions,” explains Attolini. “Art is all around us. The secret for any artist is just to care about the details and to give a strong message.” Working with an international network of professionals who share his philosophy, Attolini hopes to stimulate artists while making their work more accessible. “Art needs to be everywhere,” not just restricted to museums, he says. 
Royal Factory’s lifestyle concept takes form at Che Bar&Gallery, where exhibits are open to the public and displayed in a cosmopolitan bar setting. Visitors can enjoy live music and a wide selection of food and drinks as they check out the artwork, which includes some of Dolgopolov’s own sculptures. New exhibits go up about twice a month, with featured artists giving free master-classes and seminars. Che Bar&Gallery has shown the likes of Christiano Ceretti, Roberto Benzi, and Maria Budtova — but Attolini is always looking for new talent. “The goal is for normal people to be artists,” he says.
Che Bar&Gallery is located at 3, Poltavskaya Ulitsa, M: Ploshchad Vosstaniya. Tel: 309 3418, www.chebg.com. Open 9 a.m. to 11:00 p.m. Mon to Thurs (9 a.m. to 6 a.m. Fri to Sun.)

TITLE: Pirates Seize 23 Kaliningrad Sailors and Head for Somalia
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Somali pirates seized a Thai-flagged fishing trawler with 23 Kaliningrad sailors and were sailing it Sunday toward a pirate base off Somalia’s coast.
Pirates on two skiffs captured the Thai Union 3 ship Thursday as it was fishing for tuna about 200 nautical miles north of the Seychelles archipelago and 650 miles off the Somali coast, according to the EU’s anti-piracy naval force.
No sailors were injured in the attack, the Foreign Ministry said. In addition to the 23 Russians, the crew includes two Filipinos and two Ghanaians.
“The pirates did not hurt the sailors. The vessel is headed for Somalia. An EU warship is monitoring the voyage,” the Foreign Ministry said in a statement.
“The pirates have not made any demands. The ship has reserves of drinking water, food and fuel,” it said.
The ship’s owner, Samui Fishing, has asked its insurer to start negotiations with the pirates, RT state television reported. The negotiations are expected to start once the ship docks at the pirate base, which could happen Sunday or Monday, Interfax reported.
The Russian sailors were hired through a Kaliningrad recruitment agency, and local investigators have opened a criminal case, Interfax said.
But Russian authorities can do little to free the sailors because the ship belongs to a foreign company, piracy expert Mikhail Voitenko told The Moscow Times. The Russian Navy dispatched a warship to the pirate-infested waters off the coast of Somalia in September 2008 after pirates seized a Ukrainian ship carrying 33 battle tanks and its 20-member crew, which included three Russians. The ship was freed in February after Ukrainian billionaire Viktor Pinchuk paid an estimated $4 million ransom.

TITLE: Carlsberg President on Government Beer Tax Plans
AUTHOR: Anfisa Voronina
PUBLISHER: Vedomosti
TEXT: MOSCOW — The Russian government is only making alcohol consumption worse by increasing taxes for brewers, according to Jorgen Buhl Rasmussen, president of Carlsberg, which owns Baltika brewery.
Last year was extremely successful for Danish Carlsberg. Together with Heineken, it managed to take over U.K. company Scottish & Newcastle (S&N) and as a result of this acquisition — the biggest in the history of the company — its beer sales have risen by one third. The deal has also given Carlsberg full control of Baltic Beverages Holding, which manages Baltika, the leader on the Russian beer market. However, the Russian authorities have a nasty surprise waiting for brewers: The 2010 budget draft contains plans to increase excise by 200 percent in one fell swoop. Rasmussen talked about the implications for the industry of such a measure in a recent interview.
Q: Have you already assessed how the government’s plans could influence your business?
A: Right now, a whole range of changes to our sector is being discussed in the government. First of all, there are plans to increase excises. However, there is also talk of introducing a fixed minimum price for spirits and other measures. If the excise increase is 200 percent for beer and 10 percent for vodka, demand will shift toward vodka even more, and it will affect not only the brewing industry, but also related sectors — agriculture, bars and restaurants, transport companies, and can and bottle producers.
Right now, according to our estimates, 650,000 people are employed in the brewing industry, directly or indirectly: 50,000 people in the brewing industry itself, and 600,000 in related fields. According to our most optimistic estimates, if the present proposal is accepted — and we sincerely hope it won’t be — about 100,000 people will lose their jobs. 
Q: The figures you’ve given are huge. Does this mean that you expect beer sales to decrease over times if the excises are accepted?
A: As I’ve already said, we think that about 100,000 jobs will be lost. However, I don’t want to give figures on how it would influence the market as a whole. I can simply say that it would be substantial. All the evaluations are very rough so far, so I don’t want to voice them. We are preparing for a range of scenarios. But “about 100,000” can mean both 80,000 and 120,000. Let’s observe the overall effect. We can already see that the market has shrunk by 9 to 10 percent even before the tax increases. Some of our rivals are already closing down their plants, as they have too much spare production capacity. We know that there will be a further negative effect, and it will be substantial.
Q: Do you plan to close down any production facilities before the final decision on increasing excises is made?
A: I don’t think so. We are lucky as a company: Our brands are stronger and integration inside the company is better. Currently many of our plants are running at 80 to 85 percent capacity, so the situation is different from that of our rivals. Our position is stronger. However, if the government proposal is accepted, we will probably have to close down plants.
Q: As we are talking, I have the impression that we are discussing not only an excise increase of two to three times, but a plan to shut down the whole brewing industry. It’s an illusion, isn’t it?
A: It is an illusion. No one is going to shut down the brewing industry. However, we, as well as our rivals, used to invest in Russian business because the market was attractive and seemed predictable to us. If a 200 percent excise increase is suddenly brought in, which I have never seen anywhere in the world, it changes all the rules of the game. We work on many markets, and usually the annual tax increase is 5 to 10 percent, — it could be 20 to 30 percent in more extreme cases, — but we’ve never faced a 200 percent increase. If the whole pattern starts to change and the market situation is better for cheap vodka, I don’t think it will influence the investment climate in Russia positively. Our industry often serves as an example of how to attract capital investments, create jobs and pay taxes — so it has always been an example of how to invest. If the excise increase comes into force, I don’t know how the situation will change, but it will certainly change for the worse.
You know, due to the size of Baltika here in Russia, the heads of other companies often ask me questions like: “How is business in Russia done? Can it be predictable?” And I’ve always been extremely positive in my answers. I often come to Russia, and I really believe in this market. However, I have to admit that the next time the president of some company addresses me, it will be harder for me to say that the climate is predictable, if this dramatic beer excise increase is accepted.

TITLE: Russia, Poland Near Gas Deal
PUBLISHER: Bloomberg
TEXT: WARSAW — Poland and Russia are “much closer” to a final agreement on gas supplies after their respective state-controlled gas companies struck a deal on transit fees and increased supplies, a Polish official said.
“This agreement brings us much closer to a final deal” than the countries were yesterday, when Economy Minister Waldemar Pawlak said he wasn’t certain whether an agreement would be reached, Maciej Kaliski, head of the oil and gas department at Poland’s Economy Ministry, said by phone Friday.
Polskie Gornictwo Naftowe i Gazownictwo, Poland’s dominant gas company, reached an agreement with Gazprom, Russia’s state-owned exporter of the fuel, to increase supplies through 2037, set fees for transit shipments and change the way they manage EuRoPolGaz, their joint venture that manages the Polish section of the Yamal pipeline to Germany.
Poland may have a shortfall this year of 700 million to 800 million cubic meters, depending on winter temperatures and demand from the chemical industry, after RosUkrEnergo, 50 percent owned by Gazprom, halted deliveries at the start of the year. Poland uses about 14 billion cubic meters of gas a year. 
Kaliski “hopes” a final accord can be signed by the two governments in December, he said. Poland’s government gave Gornictwo the “outline” of the agreement to be sought with Gazprom and must now approve the details, he said.

TITLE: Putin, Tymoshenko Stoke Gas Crisis Fears
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prime Minister Vladimir Putin said Friday that Ukrainian President Viktor Yushchenko blocked a money transfer for Russian gas and risked provoking a new supply crisis that could disrupt flows to Europe.
“It seems we have problems with payment for our energy supplies again, which is utterly deplorable,” Putin said at a meeting with United Russia party leaders at his residence in Novo-Ogaryovo after a call with his Ukrainian counterpart, Yulia Tymoshenko.
Putin’s comments come in the run-up to a Ukrainian presidential election Jan. 17, in which Tymoshenko will challenge Yushchenko and former Prime Minister Viktor Yanukovych. Analysts have interpreted Putin and Tymoshenko’s relatively constructive partnership as a tacit endorsement from Moscow.
On Sunday, Putin also called Swedish Prime Minister Fredrik Reinfeldt, whose country holds the rotating EU presidency, to warn him of the possible disturbance, Interfax reported, citing the government press service.
Reinfeldt promised to deliver Putin’s concerns to the European Commission.
Europe watches gas ties between Moscow and Kiev very closely for signs of trouble, especially since a dispute last winter left large swaths of the EU without gas for several weeks in January.
Tymoshenko told Putin by telephone Friday that Yushchenko was impeding “the normal partnership between the Central Bank, which had the gold reserves at disposal, and the government.” The two also discussed a planned meeting in Yalta on Nov. 19 and 20, the government said in a statement.
Putin also cast the possible payment problems as a political obstacle — created by Yushchenko — rather than as a result of Ukraine’s crumbling economy.
Kiev has enough money to pay for Russian gas, Putin told the United Russia meeting, citing data from the International Monetary Fund. Kiev has gold reserves of $27 billion $28 billion, and the IMF is not opposed to using them to pay for energy supplies, he said.
Additionally, Russia has paid for its gas transit across Ukraine through the first quarter of 2010. Putin said those investments in the Ukrainian economy amounted to $2.5 billion.
Yushchenko’s first deputy secretariat chief Oleksandr Shlapak said Friday that the president had urged the government to find alternative ways to pay for Russian gas instead of Tymoshenko’s proposal to get the central bank to print more money, Interfax reported.
In August, the European Bank for Reconstruction and Development promised to give Ukraine a $750 million loan to pay for the fuel, but Kiev hasn’t received “a single hryvna from the EU” so far, Putin said.
The European Commission on Thursday proposed to European Union governments that they lend Ukraine 500 million euros ($736 million).

TITLE: Interest Rates Cut Fails to Boost Lending
AUTHOR: By Alex Nicholson
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian banks failed to raise lending to businesses and consumers even after the central bank cut interest rates in the hope of easing credit flows to support an economic recovery.
Lenders’ corporate loan books fell 0.7 percent in September after staying unchanged in August, the central bank said in a report on its web site Monday. Lending to consumers dropped 1.1 percent for an eighth consecutive monthly decline. The financial industry’s total assets fell 0.5 percent, while total equity capital rose 6.5 percent.
Bank Rossii last week lowered its key interest rates to record lows, cutting the refinancing rate to 9.5 percent from 10 percent “with the aim of additionally stimulating lending activity of the banking sector,” the bank said in a statement.
The world’s largest energy exporter is waiting for its financial industry to relax its grip on credit to allow businesses to resume investment and hiring to support a fledgling recovery.
The ratio of non-performing consumer loans climbed to 6.4 percent from 6.2 percent, according to Bloomberg calculations based on data posted on the central bank’s web site Monday. Household and business delinquent lending as a share of the total was unchanged in the month at 5.8 percent.
Banks set aside 1.82 trillion rubles ($62.5 billion) to cover overdue debt, an increase of 3.2 percent, compared with a month earlier. Overdue corporate loans fell to 5.6 percent of total lending in September from 5.7 percent a month earlier.
While non-performing debt represents a financial industry weakness, banks are more at risk from their practice of offering high returns to attract funding, and lenders may be stretched to service their debt, First Deputy Central Bank Chairman Gennady Melikyan warned at a conference in Moscow on Monday. Interest rates on deposits should be no higher than 15 percent, he said last week.
The number of lenders that posted losses through September fell to 142 from 196 in August, according to Bank Rossii.

TITLE: Economic Recovery in Doubt As Manufacturing Contracts
AUTHOR: By Alex Nicholson
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian manufacturing contracted in October as companies cut jobs and failed to build up inventories, casting doubt on the strength of the recovery.
VTB Capital’s Purchasing Managers’ Index fell to 49.6 from 52 in September, the Moscow-based bank said in an e-mailed statement Monday. A reading below 50 signals contraction. The index had been rising month-on-month from a record low of 33.8 in December and returned to growth for the first time in 14 months in September. The bank surveys 300 purchasing executives.
“Acceleration in job shedding and inventory depletion” hurt output, said Dmitri Fedotkin, an economist at VTB Capital in Moscow, in the statement. New export orders had a “notable decline” while companies were hampered by a “strong rise in costs associated with metals, energy and oil-related items.”
Businesses are struggling to stay afloat as banks withhold credit and the export outlook remains uncertain. The central bank last week cut the refinancing rate to a record-low 9.5 percent to reduce the cost of bank loans and help drag the economy out of its deepest slump since the collapse of the Soviet Union. Gross domestic product shrank an annual 10.9 percent in the second quarter and 9.4 percent in the third.
The ruble weakened 0.5 percent to 29.2127 versus the dollar at 11:19 a.m. in Moscow on Monday. It was little changed against the euro at 43.0914. Russia’s 30-stock Micex Index was down 1.3 percent.
“We doubt that Russia’s GDP will resume growth without a continuing rise in exports,’ Natalia Orlova, chief economist at Alfa Bank, said in an e-mailed report on Oct. 23. “Until the lack of investment is addressed, we believe there is a high risk that output will remain stagnant.”
The country emerged from recession in the three months ended September, Finance Minister Alexei Kudrin said on Oct. 20. Output grew 0.6 percent in the period from the previous three months, the Economy Ministry said.
While rising exports boosted sectors such as metals production, Russia in September posted annual declines in construction, capital investment, real disposable income and retail sales. The metals sector is close to reaching full capacity and may not expand further, according to Alfa. 
“We believe the economic data are more indicative of stagnation,” Orlova said. “The government’s view is based on the recovery in export-focused sectors; however, domestic sources of growth are still fragile.”
Bank Rossii’s rate cuts have failed to boost lending so far. Banks have continued to reduce the size of their loan books as they use their funds to repay emergency financing extended earlier by the central bank, Orlova said.
Companies have cut jobs to adjust to continued tight credit conditions and as they factor in the prospect of a slow recovery in export demand. The jobless rate remains “a clear challenge,” President Dmitry Medvedev said last month.
Unemployment stood at 7.6 percent in September. 
The International Monetary Fund is advising officials around the world not to withdraw economic stimulus programs too early. The risk of a double recession “is small, but it’s not impossible,” Dominique Strauss-Kahn, the Washington-based organization’s managing director, said on Oct 23.

TITLE: Barsky Tipped for Position of Acting CEO of TNK-BP
PUBLISHER: Bloomberg
TEXT: MOSCOW — TNK-BP Vice President Maxim Barsky may be named acting chief executive officer of Russia’s third-largest oil producer in a move to end a shareholder dispute, according to people familiar with the company’s plans.
TNK-BP, the Russian venture of London-based BP Plc and investor group AAR, is set to make a decision at a Nov. 13 shareholder meeting, said the people who declined to be named because the selection process is private. AAR represents TNK-BP’s billionaire shareholders Mikhail Fridman, Viktor Vekselberg, Len Blavatnik and German Khan.
TNK-BP, which accounts for about 25 percent of BP’s production and reserves, has been seeking a new chief since Robert Dudley resigned on Dec. 1 as part of an agreement to end a conflict over strategy at the Moscow-based company.
The dispute last year involved more than three months of public acrimony, as the Russia-based investors accused BP of treating the 50-50 venture like a subsidiary and ignoring their interests, which BP denied. The issue was resolved in September 2008 with an agreement on Dudley’s departure and the expansion of the board to include three new independent directors.
TNK-BP spokesperson Marina Dracheva referred enquiries about the CEO appointment to shareholders, while BP spokesman Toby Odone declined to comment. Renova spokesman Andrei Shtorkh did not immediately return telephone calls.
Barsky, former head of oil producer West Siberian Resources, joined the TNK-BP management on June 15 along with former Polyus Gold chief Pavel Skitovich in a move which Fridman described as preparing for “the next phase of TNK-BP’s evolution.” Barsky and Skitovich both declined to comment.
Fridman, founder of Moscow-based holding company Alfa Group, has been interim CEO since May. Alfa is one of the companies represented by AAR, along with Access Industries and Renova Group.

TITLE: Gambling Thrives Despite Ban Thanks to Loophole
AUTHOR: By Irina Filatova and Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Customers at a discount grocery store in northern Moscow have been gathering around the newest automated terminal there, a bright-green machine with a flashing touch-screen and a slot for “prizes.”
Emblazoned with the words “Charity Lottery,” the terminal accepts rubles and instantly rewards the lucky in kind. The proceeds go to an unspecified charity fund and the machine is licensed by a local branch of the tax service, according to barely visible print at the bottom of the screen.
Not far away, dozens of similar terminals crowd the smoke-filled parlor of a former slot machine hall near Savyolovsky Station. The front door is sealed, but the outline of the establishment’s former name — Zolotoi Arbuz, or the Golden Watermelon — is still faintly visible above a side entrance.
From the street, you can see the guards and waitresses, the metal detectors, and the dead-eyed clientele, all of which bear a striking resemblance to the notorious slot halls that provoked public resentment and nationwide restrictions on gambling.
Four months after the federal government banished most gambling to four special zones far from Moscow and St. Petersburg, the industry is thriving in the open under a legal loophole that allows lotteries — which must donate 10 percent of their proceeds to charity — to operate via electronic terminals.
Traditionally, lotteries involved paper tickets and a delay before finding out whether a ticket won or lost. Now, entire “lottery clubs” are appearing, which industry sources and government officials say are often operating well outside the law. Federal and regional authorities have complained that the industry must be better regulated and policed, but legislative efforts have been faltering and law enforcement — spotty.
Alla, a woman in her 50s who did not want to give her surname, said she drops by the grocery store, a Kopeika on 2nd Streletsky Pereulok, near her home, to gamble.
Most recently, she came away 4,000 rubles ($140) lighter.
“I don’t gamble often, but I always lose a lot. Last week, I lost 4,500 rubles ($4,500) at a time and won only 500 rubles. It’s a hobby for me. I play the same game, Give Five, almost every time,” she said while inserting 100-ruble and 500-ruble banknotes into the lottery terminal.
Alla said she’s sure the terminal has nothing to do with charity. “It’s here just for gambling because the gambling halls have been closed.”
Banning the Bandit
Outlawed in Soviet times, gambling burst into the open in the early 1990s. Massive casinos opened on Tverskaya and the Arbat, dingy slots halls were never more than a walk away, and single machines were put in stores, residential buildings and underground passages.
By 2008, gambling had become a $3.6 billion industry in Russia, according to PricewaterhouseCoopers. The audit company expects that figure to fall to $1.5 billion in 2010.
The slot machines — dubbed “one-armed bandits” for their crank mechanism to begin a game — were particularly reviled for targeting people who could ill afford to lose. But the anti-gambling movement, long backed by religious and community leaders, only started to see political success in 2006.
During a meeting with lawmakers that October, then-President Vladimir Putin likened gambling to alcoholism, because it “inflicts serious moral and sometimes financial harm.” Duma Speaker Boris Gryzlov said lawmakers would consider a bill to ban gambling in all but four zones: two in European Russia, one in Siberia and one in the Far East.
They passed the changes quickly and almost unanimously, limiting gambling to the zones from July 1, 2009. Putin signed the law in December 2006.
Few believed then that the plan would eradicate the notoriously influential industry. Politicians called the changes a ploy ahead of the 2007 State Duma vote. Major casinos balked at relocating to undeveloped zones, saying they would rather move abroad.
But the government refused to back down, despite warnings earlier this year that the ban would leave thousands unemployed in the midst of the economic crisis and cost billions of dollars in tax revenue. President Dmitry Medvedev warned the Federal Tax Service in May that “there will be no revisions, no pushing back — despite the lobbying efforts of various businesses.”
And on the night of June 30, Moscow authorities swept through the city to close 525 gambling establishments, including 29 casinos, by midnight. A week later, Deputy Mayor Sergei Baidakov, who oversaw the capital’s anti-gambling effort, said 95 percent of the facilities had removed their equipment.
The government soon removed poker from a list of registered sports after casinos began rebranding as “competitive poker clubs.” The state also toughened regulations on bookmakers, allowing only state and municipal horse racetracks to run on-site bookies.

The Charity Machine
The rapid proliferation of electronic lottery terminals, however, has been a harder nut to crack. In the Soviet Union, only the state was allowed to organize lotteries, with the first and most popular, Sportloto, opened in 1970 to help finance sports.
The privilege was greatly extended in November 2003, when Putin signed a federal law on lotteries that allowed any private company to open a traditional or electronic lottery. The main requirements are that they must be licensed by tax authorities and transfer no less than 10 percent of their revenues to charity funds each quarter. The prize fund must be no less than 50 percent of revenue and no greater than 80 percent.
Lottery players like Alla rarely know where their money goes, as the terminals almost never specify an actual charity. And terminal makers are not shy about advertising the profits that the “lottery business” can make.
“Lottery machines [terminals] can bring a noticeable profit to their owners, although they are, above all, intended to develop socially focused charity work,” ENGY, a payment and lottery terminal maker, says on its web site. “At the present, there are no legal limitations on the lottery business that prohibit obtaining or distributing tickets through self-service lottery devices.”
The company’s terminals sell for between 87,000 rubles and 120,000 rubles ($3,000 to $4,100), according to its web site. The firm also breaks down a “business plan” for potential buyers, which says the terminals can become profitable within half a year, with 150 transactions per day averaging 100 rubles each.
St. Petersburg Governor Valentina Matviyenko, who banned gambling in her city from Jan. 1, 2008, wrote to Prime Minister Putin in June to express her concern about the spread of lottery facilities that “look like gambling machines and have the same operating principle,” Kommersant reported.
The Finance Ministry, on Putin’s orders, is developing amendments to the law on lotteries, a ministry spokeswoman said, declining to comment on the nature of the changes. The amendments are being discussed with the Interior, Economic Development and Industry and Trade ministries, she said.
Last month, deputies from A Just Russia proposed removing a clause that lets former slot machines be renovated as lottery terminals.
But additional regulation on lotteries could face skepticism from lawmakers. Yevgeny Fyodorov, who chairs the Duma’s Economic Policy and Entrepreneurship Committee, told The St. Petersburg Times that he saw no reason for additional legislation.
“If we saw violations, we would make a move. But there has been no law enforcement experience so far that shows the law needs to be amended,” Fyodorov said. “Lottery terminals themselves pose no danger, but gambling machines disguised as lottery machines do.”
The only problem is that the police in some regions and in some districts of Moscow cannot tell the difference between a lottery machine and one for gambling. “It’s just a matter of time.”

Ticketing the Ticket-Less
Authorities say they are looking to slow the rising number of lottery machines and online gambling resources. About one-third of former Moscow casinos and slot machine halls closed in July are now selling instant lottery tickets, Baidakov told reporters Oct. 5.
But he blamed imperfect federal legislation for the sudden rise in “surrogate technologies,” namely lottery terminals and Internet clubs providing access to online gambling. The city has 91 registered Internet clubs, six bookmakers, 42 lottery clubs and 51 stand-alone lottery terminals, he said.
“Since the ban on gambling went into effect, Moscow police have closed 35 such places, opened 17 criminal cases and seized 618 lottery terminals,” Baidakov said, RIA-Novosti reported.
There are lots of illegal gambling facilities pretending to be lotteries, and the city shuts down about four so-called lottery clubs every week, said Filipp Zolotnitsky, a spokesman for the Moscow police’s economic crimes department.
“Only a special check can detect whether a machine is legal,” Zolotnitsky said. He declined to reveal the details of the examination, citing security reasons.
The Federal Tax Service provides lottery licenses, which are valid for five years, the service’s press office said in a statement. Tax authorities hold a scheduled check annually to make sure lottery organizers are following the law, but they also hold unscheduled inspections if they receive information about lottery organizers who violate the law.
The tax service also oversees the charity donations, the statement said.
If an inspection uncovers illegal machines, the case goes to prosecutors, who typically charge the accused with illegal entrepreneurship. Under Article 171 of the Criminal Code, the crime is punishable by a fine of up to 500,000 rubles or five years in jail.
Anatoly Palamarchuk, a senior official in the Prosecutor General’s Office, said in a recent interview with the Gazeta newspaper that since July, all but 14 of the 564 illegal gambling cases were opened under Article 171.
The criminals are usually let off with a fine, Zolotnitsky said.
Prosecutors are working on their own amendments, which would prohibit organized gambling outside the four federal zones, Palamarchuk said.

‘You Can’t Lose as Much’
In an apparent effort to stem the growing outcry, 36 lottery companies last week signed an agreement to create a self-regulating body for the industry, Vedomosti reported. Terminal makers and organizers say electronic lotteries are no different a from traditional one, and that they have nothing to do with gambling.
“The only difference is that you don’t buy a ticket from a dealer, but see it on the screen of a terminal. It’s normal. We live in a century of new technologies,” said Alexander Kosarev, technical director of a lottery terminal producer Terminal Technology.
There are currently no more than 1,000 electronic lottery terminals in Moscow, said Vladimir Kim, development manager at Terminal Technology. They work largely like ordinary payment terminals, with an Internet connection to a centralized server where winning and losing tickets have been uploaded in advance.
The gambler touches the screen during one of the games and the server then determines whether the chosen ticket is a winner or a loser. Lottery organizers say players can win up to 1 million rubles ($34,000) at terminals with a minimal bet of 10 rubles (34 cents).
“The server is independent and no one can influence the process. … There are about 20 winning tickets per 100,” Kim said.
Ilona Kesler, marketing director of lottery organizer LotProm, said every third ticket is a winner. LotProm bills itself as the first company on the Russian lottery business market, and says it has created more than 50 lotteries in the past nine years.
Established lotteries say their biggest concern is the increasing proliferation of open gambling in the industry.
“There are a lot of slot machines disguised as lotteries,” said Denis Kusenkov, marketing director of Orgloto, one of the biggest Russian lottery organizers.
The company organizes Gosloto for the Sports, Tourism and Youth Affairs Ministry. Earlier this month it signed a contract with TNK-BP to install 160 terminals offering paper lottery tickets at the oil company’s gas stations.
“A certain period should pass between the moment when a person buys a lottery ticket and learns the result. The result can’t turn up straight away, like it happens with a slot machine,” Kusenkov said. “Besides, one can’t lose a big sum of money playing a lottery. Lottery isn’t gambling, but a pastime.”
The law currently gives no clear definition of an electronic lottery, nor does it specify the difference between a lottery terminal and a gambling machine.
“An electronic lottery is legal if a terminal works properly and the organizers comply with the rules described in the law. That means they set an adequate prize fund, have real tickets and allot money to charity funds. But not all of them do,” said Denis Chuvilin, director of lottery terminal producer Auto-Pay.

Ruse by Any Other Name
While the larger lottery operators are moving to bring legitimacy back to their businesses, some smaller companies appear to be trying to make what they can before harsher regulations and policing take effect.
This summer, Auto-Pay terminated one of its contracts to provide Electrochance lottery terminals, saying owner Neiva was misusing the machines.
“We started partnering with Neiva in October 2008. But several months ago we broke off the contract. We think they work absolutely illegally,” said Chuvilin, the Auto-Pay director.
In July, he sent a letter to Neiva general director David Abagov explaining his company’s decision. After “permanent manipulations” with the prize fund, Neiva had increased it to 96 percent by June, according to a copy of the letter posted on Auto-Pay’s web site. “From that moment we understood that such work undoubtedly excludes the allotment of 10 percent of the revenue to a charity fund,” the letter said.
Auto-Pay managers asked Neiva to resolve the situation but got no response. Instead, Neiva deleted the monitoring function from its terminals, making it impossible to check the number of tickets sold, it said.
“It became impossible to count the size of the prize fund. Terminals showed only two indicators: ‘the sum paid’ and ‘the sum returned in cash.’ Lottery terminals turned into remotely controlled gambling machines,” the letter said.
“We didn’t know for sure whether they allotted money to charity funds, and we couldn’t check. But the calculations spoke for themselves. A company can’t work fairly if the prize fund is more than 95 percent, it allots 10 percent to a charity fund and pays us,” Chuvilin said by phone.
Neiva spokesman Igor Sigalov declined comment, saying only that his company had nothing to do with the lottery business.
On June 15, someone identifying himself as Sigalov wrote on Auto-Pay’s web site forum that Neiva really had allotted money to a charity fund, although the message did not identify the fund.
The terminal in the Kopeika lobby belongs to Neiva.
“I see people gambling on this terminal from time to time, but most of them lose much more than they win,” a security guard at the store said, declining to give his name. “It’s impossible to win more than 300 or 500 rubles here. I’m sure these terminals appeared to replace the gambling machines.”

2 Million Gamblers
Managers of the Kopeika chain said they knew nothing about the lottery terminal on 2nd Streletsky Pereulok.
“That Kopeika is a franchise store. We signed an agreement with a franchisee that works under our trademark. So we are responsible only for the goods in the sales area, not for the things outside of it,” Andrei Kondratyukin, head of Kopeika’s franchising program, said by telephone. “I know nothing about the lottery terminal, as it is placed outside of the sales area.”
The St. Petersburg Times was unable to contact the franchisee. Kondratyukin said he did not know who owned the store, and the manager on duty said he was not allowed to speak to the media.
The Zolotoi Arbuz slot-machine chain has taken down its web site’s main page, but all of its subpages remain online. The web site lists 26 slots parlors in the Moscow area. Five numbers on its contacts page were either unanswered or out of order. A security guard escorted a reporter from the premises of the facility on Sushchyovsky Val.
The Interior Ministry’s economic crimes department did not respond to a request for comment faxed last week.
Anti-gambling advocates say the so-called lottery business — particularly in its increasingly popular electronic format — is just as dangerous and addictive as the roulette wheels or card tables. A local chapter of self-help group Gamblers Anonymous said its ranks were growing every week, with three or four newcomers who say they placed their last bets only the day before.
“Gamblers are interested in the process of gambling itself, regardless of whether it’s a lottery or placing bets in a bookmaker’s office,” a member of the group, Konstantin, said by telephone. He declined to give his surname, saying the community he belongs to is anonymous. “There are 2 million gamblers in Moscow, most of them switched over to Internet gambling and electronic lotteries after the closure.”
New betting facilities disguised as electronic lottery machines pose the same dangers as the banished one-armed bandits, he said. Gamblers Anonymous members who had not placed a bet in two years are now returning, hooked again on electronic lotteries.
“Electronic lotteries are socially acceptable,” Konstantin said. “That means a gambler can easily hide his addiction under the mask of taking part in a lottery.”

TITLE: City Hall Signs Away Pulkovo
AUTHOR: By Anatoly Tyomkin and Yelena Zborovskaya
PUBLISHER: Vedomosti
TEXT: On Friday, City Hall signed an agreement with VTB, Fraport and Copelozus, granting the consortium control of Pulkovo airport by May 2010.
The agreement places Pulkovo under the management of Vozdushnie Vorota for thirty years, beginning before May 2010. Construction of a new terminal will begin in early June, said Nikolay Asaul, chairman of City Hall’s transport and transit committee. This was confirmed by a source at Pulkovo. The airport complex is quite large, so its gradual transfer and the processing of all the paperwork will take several months, he said.
Vozdushnie Vorota competed for Pulkovo with two rival consortia that included BasEl, Lider, Changi and Vienna Airport. The winning consortium, made up of VTB, the German company Fraport (which operates the largest airport in Frankfurt, among others) and Greek investment firm Copelozus, promised to build a new terminal covering 176,000 square meters for $1.4 billion by 2013. By 2025, the terminal will have to service 25 million travelers per year. The consortium is obligated to render St. Petersburg 11.5 percent of profits earned from managing the city’s only passenger airport. Representatives of Fraport, Copelozus and VTB capital (which is leading the project), declined to comment before the agreement had been signed.
Vozdushnie Vorota plans to borrow about 70 percent of the necessary funds, and credit agreements will be signed by May, said Asaul. The EBRD and VEB have confirmed their interest in the project. VEB’s board of directors agreed last spring to provide the winner of the tender with a loan of up to ten billion rubles ($343 million) for a maximum period of fifteen years, said VEB’s director of information policy, Andrey Mazurov. EBRD is prepared to make some funds for the project available as a syndicated loan. Meanwhile, discussions with other creditor banks about financial backing are still going on, said Richard Wallace, president of the EBRD in Russia.

TITLE: Putin Slashes State Support for Banks
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia will more than halve the budget for bank recapitalization next year as the industry turns around, Prime Minister Vladimir Putin said.
The government will earmark 100 billion rubles ($3.4 billion), down from a previously planned 250 billion rubles, with the difference going to the government’s “anti-crisis fund,” Putin said during a meeting at his residence outside Moscow on Friday.
 “The situation in the financial sphere is normalizing, improving,” Putin said, citing a central bank interest rate cut Thursday. “That’s why we will allocate the resources differently.”
Bank Rossii reduced its key interest rates by half a percentage point, the eighth cut since April. The government expects the economy to contract 6.8 percent in the second half and 8.5 percent in 2009 on average, after growth of 5.6 percent in 2008 and 8.1 percent the year before.

TITLE: Central Bank Warns Policies Unsustainable
PUBLISHER: Bloomberg
TEXT: RUSSIA — Russian banks are committing to funding costs so high they risk becoming unsustainable, a trend that constitutes a greater threat to the country’s financial industry than stalled credit flows, the central bank warned.
Banks are offering returns higher than 15 percent to attract funding both in the form of wholesale financing and deposits as they try to offset inflation in excess of 10 percent and offer a premium on the central bank’s key refinancing rate of 9.5 percent, Bank Rossii First Deputy Chairman Gennady Melikyan said at a conference in Moscow on Monday.
 “It would be very difficult to get the same returns after you raised money at rates of 18 percent to 20 percent,” Melikyan said. “This will be a problem for banks.”
Banks are struggling to turn a profit as they rein in lending to corporations and households over concerns that they’ll be unable to service their debt.

TITLE: Time to Take the Devil Out of NATO
AUTHOR: By Michael Bohm
TEXT: They say the devil is in the details, but if you listen to leading Russian politicians and conservative journalists and analysts you would think the devil is in NATO. Despite the fact that NATO has radically changed its military structure and heavily demobilized since the Soviet collapse, Russia continues to demonize NATO.
We all remember the exaggerated phrases of then-President Vladimir Putin: “Comrade Wolf who knows who he is going to eat,” or, after the 2004 Beslan hostage tragedy, when he referred to the enemy “who wants to seize the richest parts” of Russia. Although these statements were veiled, it was clear from the context that they were aimed at NATO or the United States, both of which are often used interchangeably in Russia.
During U.S. President George W. Bush’s two terms, the inflammatory anti-NATO or anti-U.S. statements could have been dismissed as an overly emotional reaction to what was then a global phenomenon of anti-Bushism. But what is disturbing is that this negative rhetoric continues even after U.S. President Barack Obama has offered the world a new foreign policy paradigm based on the respect for diplomacy, international organizations and multipolarity that includes a clear recognition of Russia’s important role as a global power.
In a recent example, President Dmitry Medvedev said during a Sept. 20 interview with CNN, “Let’s not forget that NATO is a military bloc, and its missiles are pointed at Russia.”
What NATO missiles was he talking about? After the Intermediate-Range Nuclear Forces Treaty, or INF, between the United States and the Soviet Union was signed in 1987, all nuclear and conventional ground-based missiles with a range of 500 kilometers to 5,500 kilometers were destroyed by June 1991, including their launching installations. This kilometer range clearly covers all of NATO’s European members. In addition, the INF prohibited renewed testing, production or deployment of missiles in this category on an indefinite-term basis. (Although the INF applied to only two countries — the United States and the Soviet Union/Russia — NATO’s European members have observed the treaty limitations to avoid sparking an arms race with Russia.) 
Surely, Medvedev did not mean to imply that NATO’s European members have somehow reconstructed Pershing intermediate-range missiles, snuck them back onto European military bases and aimed them at Russia? These missiles, with a height of more than 10 meters and a weight of 4,600 kilograms, aren’t exactly easy to hide from satellite surveillance. If they had already been redeployed in Europe, we would have definitely heard something about this from Russia’s military brass long before Medvedev’s CNN interview.
In reality, of course, since 1991 there are no longer ground-based, intermediate-range missiles anywhere on NATO territory — unless you count the few empty Pershing missiles on display in museums or the scrap parts of an old Pershing that were incorporated in Zurab Tsereteli’s sculpture “Good Versus Evil.” But it is doubtful that Medvedev had these missiles in mind when he spoke to CNN.
Medvedev could have meant NATO missiles that don’t fall under the INF — for example, sea-based missiles or U.S.-based missiles that have a range of more than 5,500 kilometers — but these missiles aren’t aimed at Russia either.
Perhaps, Medvedev simply misspoke.
But the more likely explanation is that he still clings to the old image of NATO from the late 1970s and early 1980s when the alliance’s European members were armed to the teeth with intermediate-range missiles aimed at the Soviet Union.
There is a rich Soviet history of crude anti-NATO propaganda. Old copies of Krokodil magazine, for example, contain plenty of grotesque caricatures filled with the bloody hands of rapacious Uncle Sam-like figures representing NATO, craving to take over the world. Two generations of Russians grew up reading Krokodil as well as Sergei Mikhalkov, who, in addition to writing several versions of the Soviet anthem, wrote popular, highly politicized fables such as “The Wolf-Diplomat” with direct references to NATO as the predatory wolf that gobbles up innocent hares. Even today, the sound of the word “NATO” invariably evokes a knee-jerk negative response among many Russians, even among the intelligentsia who understand perfectly well that NATO’s military capability and its relationship to Russia are completely different now than they were during the Cold War.
Given the degree to which NATO has disarmed in Europe over the past 18 years, it is ridiculous, of course, to speak seriously about a NATO military threat to Russia. The alliance’s “political threat” to Russia should not be confused with a military threat. What concerns the Kremlin the most is that the political and security model that NATO offers may become more attractive for the former Soviet republics than the one Moscow is offering. But instead of focusing on ways to improve Russia’s model (or to increase cooperation with NATO to fight common enemies), the country’s conservatives are pulling out the old skeletons from the Cold War closet, recreating the bygone image of a terrible NATO bogeyman -- one that supposedly threatens Russia militarily and sabotages the Kremlin’s relations with its allies in the Commonwealth of Independent States.
Thus, the spirit of Krokodil has been revived among Russia’s leading archconservative journalists and political analysts, such as Mikhail Leontyev and Alexander Prokhanov. One popular radio and television host recently described NATO on Ekho Moskvy radio as “the iron leviathan that crushes all humanity.” Granted, many Russians to this day find it hard to forgive NATO for its military campaign in the former Yugoslavia, and true, we hear plenty of inflammatory Russia-bashing from Poland and the Baltic states. But isn’t “iron leviathan that crushes all humanity” a bit of an overstatement to describe NATO?
This overblown rhetoric can be heard on a regular basis in the Russian mass media, particularly on government-controlled television. It would be nice if this could be dismissed as harmless bluster — or even encouraged as diversity of opinion, if such pluralism, in fact, existed. But the problem is that anti-NATO and anti-U.S. propaganda by the country’s conservative journalists and analysts dominates the mass media, and it has a direct impact on the public. Opinion polls, including the most current ones, confirm that anti-NATOism and anti-Americanism have stayed at the same levels as during the Bush era, despite Obama’s clearly new approach to Russia. Some polls indicate that negative feelings toward NATO and the United States have actually increased since Obama became president. This results in a self-perpetuating vicious circle: the more anti-NATOism increases, the more the politicians and journalists want to cater to this public opinion, fueling anti-NATOism even more. This can hardly help “reset” U.S.-Russian relations.
The anti-NATO rhetoric looks particularly primitive and obsolete after Russia agreed in July to provide the United States and other NATO countries with an air corridor for military shipments. In addition, new NATO Secretary-General Anders Fogh Rasmussen has made a commitment to improve NATO-Russian relations, and this offers a lot of hope.
It was thus very pleasing when Mikhail Margelov, head of the Federation Council’s International Affairs Committee and a member of United Russia, cut against the grain several weeks ago. During a debate on the popular “Sudite Sami” talk show on Channel One, he said: “Remember that NATO is defending Russia’s southern borders! I realize that this may not be a popular view in this audience.”
Additional voices like Margelov need to be heard more often in the mass media to give a more balanced discussion and debate within the country on NATO and its new relationship with Russia. It is high time for Russia’s leading conservatives who have such a strong impact on public opinion to bury once and for all their Krokodil-like depiction of NATO.
Russia has a wonderful saying: “Íå òàê ñòðàøåí ÷åðò, êàê åãî ìàëþþò” (“The devil is not as terrible as he is made out to be”). There are enough real devils in the world without concocting chimerical ones.

Michael Bohm is the opinion page editor of The Moscow Times.

TITLE: Smart Is the New Strong
AUTHOR: By Richard Lourie
TEXT: I am sitting in the Akademiya Cafe reading a newspaper and sipping a cappuccino, which I would give the title of “Best in Moscow” if I still practiced the fattening profession of food critic. But my attention is drawn from the coffee by Kommersant’s headline: “Reporters Without Borders Assigns Russia 153rd Place in Its Worldwide Press Freedom Index.” Only in Russia could the lack of press freedom be front-page news.
Russia has slipped a dozen points since last year and is now between Fiji and Tunisia — beneath even Belarus, but still above China. Since there are only 175 countries under consideration, it means that Russia is not too far from Journalism Hell — Turkmenistan, North Korea and Eritrea. I wonder in just what ways North Korea is worse than Turkmenistan yet superior to Eritrea.
There are some hard criteria used — the number of reporters killed, wounded and imprisoned and the number of opposition media allowed — while others like censorship are a little more difficult to quantify. Where would they get information about censorship in Russia? The media that are censored wouldn’t admit it, while those that aren’t could only speculate about those that are. A subtler but more interesting question is: Are the free media like Kommersant and Ekho Moskvy radio really free or only purposely tolerated to let the intelligentsia blow off steam and give the outside world a misleading impression? And how much is any of that relevant in the Internet age?
I take another sip of cappuccino, which at a cost of 190 rubles (more than $6) is pricey by any standard. Now I realize that the coffee may have more to tell me than the newspaper. The people around me in the cafe drinking their cappuccinos are in their 30s, casually but tastefully dressed and would blend in well in Berlin, London and New York, places they have surely visited. Well-off but far from oligarch-rich, they are exactly the sort of people — “inventors, innovators, researchers, teachers, entrepreneurs who introduce new technologies” — who President Dmitry Medvedev is counting on to transform Russia from a “primitive economy based on raw materials and endemic corruption” to one that is contemporary and competitive.
Medvedev’s clout is nowhere near Prime Minister Vladimir Putin’s, but he provides an essential service for Russia by laying out in clear and explicit terms what the country must do to regain its greatness, integrate itself into the community of advanced nations and become a 21st-century economy. “The modernization of Russian democracy and establishment of a new economy will, in my opinion, only be possible if we use the intellectual resources of post-industrial societies,” Medvedev wrote in his now-famous “Go, Russia!” article, available of course on the president’s web site.
Smart is the new strong. The combination of the qualities represented by Putin and Medvedev may be needed for a good many more years — say to the end of Putin’s fourth term in 2024 — but Medvedev is unequivocal in pointing to which forces must triumph for Russia to survive and thrive.
In New York, the progress of the recession can be charted by how well cobblers and dry cleaners are doing. In tough times, people fix their old shoes rather than buy new ones and wear their clothes longer than usual. Perhaps the fate of the new Russia could be chartered by the number of cappuccinos sold. But how would we get accurate statistics on that? I guess some European will have to form a Baristas Without Borders.

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

TITLE: Election Commission Declares Karzai Winner
AUTHOR: By Heidi Vogt  and Rahim Faiez
PUBLISHER: The Associated Press
TEXT: KABUL — Afghanistan’s election commission proclaimed President Hamid Karzai the victor of the country’s tumultuous ballot Monday, canceling a planned runoff and ending a political crisis two and a half months after a fraud-marred first round.
The Obama administration — which has been waiting for a government deemed legitimate to emerge in Kabul before announcing whether to deploy tens of thousands more troops — quickly commended the ruling.
“We congratulate President Karzai on his victory in this historic election and look forward to working with him” to support reform and improve security, the U.S. Embassy said in a statement. Britain and the United Nations also issued statements of congratulations.
The cancellation of Saturday’s vote came one day after former Foreign Minister Abdullah Abdullah announced he was pulling out of the Nov. 7 vote. Abdullah said the ballot would not have been fair and accused the Karzai-appointed Independent Election Commission of bias.
The annulment is a huge relief to organizers who were scrambling to hold the election before the onset of Afghanistan’s harsh winter, as well as to authorities who feared a wave of bloody violence on polling day after a Taliban spokesman threatened attacks against anyone who took part.
Election commission chairman Azizullah Lodin announced Karzai the winner during a news conference in Kabul.
“His excellency Hamid Karzai, who has won the majority of votes in the first round and is the only candidate for the second round, is declared by the Independent Election Commission as the elected president of Afghanistan,” Lodin said.
Lodin said that the commission had the authority to make the decision because the Afghan constitution only allows for a runoff between two candidates. There is a chance that the ruling could be contested, but the international community came out strongly in support of it.
The U.S. statement said the commission’s decision was in line with “its mandate under Afghan law.”
A spokesman for Abdullah, however, said the decision did not reflect Afghan law but declined to say if the candidate would challenge it.
“The announcement that was made by the electoral commission today will not solve the problems of Afghanistan, and it doesn’t have any basis in law,” Fazel Sancharaki said.
He said Abdullah would give his reaction in a speech Tuesday. “We expected that this commission would announce something like this because this commission has never been independent and has always supported President Karzai,” Sancharaki said. Ronald Neumann, a retired U.S. ambassador to Afghanistan, said canceling the runoff was the country’s best available option and that few were likely to contest the decision.
“It’s over. He withdrew. Karzai wins. I think we are much more hung up than they will be on rules,” Neumann said.
Karzai has led Afghanistan since U.S. forces invaded to oust the Taliban in 2001. He won elections in 2004 and his latest victory will give him another five-year mandate.
The U.S. will have to find a way to work with the Afghan leader, who has fallen out of favor in Washington after openly criticizing U.S. military tactics, including the heavy use of air power that has killed many civilians.
The mass ballot-box stuffing that characterized the Aug. 20 vote further sullied Karzai’s reputation. Fraud investigators threw out nearly a third of Karzai’s votes, dropping him below the 50 percent threshold needed to win outright.
Worried that Karzai’s government would not be seen as legitimate, a bevy of international figures, including U.S. Senator John Kerry, U.S. Secretary of State Hillary Clinton and British Prime Minister Gordon Brown, pressed Karzai to consent to a runoff.
But on Monday, UN Secretary-General Ban Ki-moon, who was in Kabul on a surprise visit, welcomed the decision to forego the runoff.
“This has been a difficult election process for Afghanistan, and lessons must be learned,” said Ban. “Afghanistan now faces significant challenges and the new president must move swiftly to form a government that is able to command the support of both the Afghan people and the international community.”

TITLE: Ford Posts Unexpected 
Profit Of $1 Billion
AUTHOR: By Tom Krishner and Dee-Ann Durbin
PUBLISHER: The Associated Press
TEXT: DEARBORN, Mich. — Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a “solidly profitable” 2011.
The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford’s shares rose 58 cents, or 8.3 percent, to $7.58 in pre-market trading.
The latest results signal that Ford’s turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn’t posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.
Dearborn, Mich.-based Ford reported third-quarter net income of $997 million, or 29 cents per share. Ford also forecast a “solidly profitable” 2011. Previously the automaker said it would be break-even or better.
Its key North American car and truck division posted a pretax profit of $357 million, the company’s first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.
Excluding one-time items, Ford earned 26 cents per share, blowing away analysts’ expectations of a loss of 12 cents.
The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development.
Chief financial officer Lewis Booth said the company took in $1.3 billion more than it spent in the quarter, an improvement over its $1 billion cash burn in the second quarter.
“That’s a huge deal,” Booth said.
Ford’s plan to create demand and get better prices for its products, coupled with cost cuts, gave the company confidence that it will make money in 2011, Booth said.
But Ford still faces obstacles in its turnaround. Last week, workers overwhelmingly rejected an agreement with the United Auto Workers that would have brought Ford’s labor costs in line with rivals General Motors Corp. and Chrysler LLC. Workers objected to clauses limiting their right to strike and freezing entry-level wages, and felt the company was healthy enough and didn’t need further concessions.
Ford also has $26.9 billion in debt, up $800 million from the second quarter.
The company avoided the same fate as rivals Chrysler and GM by mortgaging its factories and even the familiar blue oval logo to borrow $23.5 billion before credit markets froze last year.
Ford didn’t quantify the impact of Cash for Clunkers, which offered buyers rebates to trade in their vehicles. The program helped Ford cut costly incentives and raise production.

TITLE: Rival Somali Groups Fight Over British Couple
AUTHOR: By Mohamed Olad Hassan
PUBLISHER: The Associated Press
TEXT: MOGADISHU, Somalia — Rival pirates and militia groups have fought for control over a British couple held hostage for more than a week, an Islamic militia commander and a local elder said Monday. The couple were not injured in the fighting.
Meanwhile, an American-flagged cargo vessel came under gunfire from suspected Somali pirates but managed to escape, a U.S. Navy spokesman said.
Elders sent local fighters to thwart an attempt by some of the pirates holding the couple to take them to an extremist Islamic group, said a commander of a rival moderate Islamic militia who gave his name only as Ilka’ase.
“We did not want the pirates to use our territory to hold hostages or hand them over to another group. We took up arms with the help of (the moderate Islamic group) Ahlu Sunna Waljama and opposed” the other group, said Hussein Mohamed Kahiye, a clan elder in the central Somali village of Bahdo.
It was not possible to independently verify the reported fight over the British couple. The couple had been held on a ship at sea, but Kahiye said the couple were now in the coastal areas and traveling in two minibuses and an all-terrain vehicle.
A pirate claiming to speak on behalf of the group holding the British couple had said on Saturday that they want a $7 million ransom to release Paul and Rachel Chandler. The British government has said it would not pay a ransom.
The Chandlers were headed to Tanzania in their yacht, the Lynn Rival, when a distress signal was sent Oct. 23. The British navy found their empty yacht last Thursday, and the Chandlers have been in sporadic contact with the British media since.
Also Monday, the MV Harriette was targeted by pirates aboard two skiffs about 360 nautical miles off Mombasa, Kenya, Lieutenant Nate Christensen said. The pirates — about six in each craft — came within 3 feet (a meter) of the cargo vessel but were unable to board, Christensen said from U.S. 5th Fleet headquarters in Bahrain.
No one on the U.S. ship was injured, he said, and nzo other details of the incident were available from the U.S. Navy, which is part of anti-piracy patrols off the Horn of Africa.
The attack came a day after a Norwegian warship clashed with suspected Somali pirates, the European Union’s anti-piracy force said.
A statement from the force said a team from Norwegian warship HNOMS Fridjof Nansen on Sunday went to talk to the crew of four fishing boats near Alula, a northeastern Somali coastal village known for piracy.
The crew on the first three boats cooperated but when the Norwegian team approached the fourth boat, shots were fired at them. The team fired in self-defense and retreated to avoid further violence, the statement said.
Alula village head Hareed Issa Omar claimed the Norwegian team fired first, killing a Somali and a Yemeni man — whom he said were fishermen and not pirates.
Norwegian military spokesman John Espen Lien said Monday that Norway was “not able to confirm or deny” allegations by local authorities that two men were killed.
Lien added that the Norwegian navy was escorting a cargo ship transporting UN World Food Program food aid to Somalia.
The Horn of Africa nation does not have a navy or coast guard because it has not had an effective central government for 18 years. Warlords overthrew longtime dictator Mohamed Siad Barre in 1991. They then turned on each other, plunging Somalia into chaos and anarchy and creating the lawlessness that has allowed piracy to flourish off the country’s coast.
Pirates attacks in 2009 already have exceeded last year’s total off the Horn of Africa, an international maritime watchdog group reported last month.
A total of 306 attacks were reported between January and September, surpassing the 293 incidents recorded throughout 2008, according to a statement released by the International Maritime Bureau’s piracy reporting center in Kuala Lumpur, Malaysia.

TITLE: Tower of London Beafeaters Face Bullying Allegations
AUTHOR: By Sylvia Hui
PUBLISHER: The Associated Press
TEXT: LONDON — If the charges are true, it’s time to add bullying to the litany of foul deeds committed at the notorious Tower of London, where three English queens were executed centuries ago.
Three “Beefeaters,” or guards of the 11th-century royal fortress, are being investigated amid allegations of bullying the first female guard in their ranks. Two of the three were suspended from duties on Monday.
The Tower said harassment was “totally unacceptable” among its staff, and the internal investigation should be finished within three weeks. “We take such allegations very seriously,” the Tower said in a statement.
The allegations of bullying against Moira Cameron have sullied the ongoing effort to integrate women into Britain’s traditionally male military bastions.
Tower spokeswoman Ruth Howlett said she could not confirm details reported Monday by The Sun newspaper, which said Cameron’s uniform had been defaced and “nasty” notes left in her locker. 
The entry in online encyclopedia Wikipedia for the 44-year-old Cameron had also been tampered with, it said.

TITLE: Sochi: Olympian Dreams on the Shores of the Black Sea
AUTHOR: By Glenn Kolleeny
PUBLISHER: Special to The St. Petersburg Times
TEXT: Although often referred to as Russia’s Cote d’Azur, don’t come to Sochi expecting to find the French Riviera. You’ll soon realize your mistake when you land at the airport, which, despite preparations for the Olympics, remains something of an embarrassment. Sochi is a chaotic mix of a spectacular natural setting and Soviet and post-Soviet overdevelopment. Downtown Sochi and Adler are mazes of hectic bustle that some refer to as “Chinatown” or “Shanghai.” But with an open mind and a little planning, it’s still possible to experience the local color and have an excellent vacation experience. 
Geography: The first thing required when planning a trip to Sochi is a picture of the geography. Sochi is an area of roughly 140 square kilometers on the coast of the Black Sea comprising a number of towns such as Adler, Khosta, Dagomys and Central Sochi. 
Most travelers will probably head to Central Sochi because of the “action” on the boardwalk, the restaurants, caf?s and nightclubs (especially Platforma, a Moscow-style club built on a platform about 50 meters offshore in Central Sochi.) 
However, some travelers prefer the more unspoiled beaches of the northern parts of Sochi, such as Dagomys and Lazarevskoye. But there is another problem: the central planners made the easy choice of running the rail line right along the coast, so apart from two brief gaps in Central Sochi and at the end of the line in Adler, you have to cross the railroad tracks in order to get to the beach.
The largest metropolitan areas are Central Sochi and Adler. Adler, a more middle class resort, has the advantage of being close to the airport (it can take two hours or more in traffic to reach Central Sochi) and the mountains. A good deal of Adler is south of the railroad terminal, so there is no obstacle to reaching the beach. But when you get there, don’t expect to find fine white sand like the Jersey Shore or in St. Tropez — the Black Sea beaches are mostly rocky beaches. And like all “Soviet” beaches, the problem of cigarette butts and beer cans is universal.  
What to do: The one must when visiting Sochi is a day trip up into the mountains to Krasnaya Polyana. The Caucasus mountains are beautiful, and the fancy new Gazprom ski lifts are pricey but fun. The older lifts are also something of an experience. 
An improvised shashlik cookout maybe the best dining experience in Krasnaya Polyana, but Kaskad and Fort Edika are also good choices, especially for kids. You can catch your own trout as well as have great shashlik in a relaxed, outdoor atmosphere. There are a few similar places in the Krasnaya Polyana area, but although they’re further from the main road, Kaskad appears to be hard to beat.
Assuming you didn’t drive to Sochi, the first issue is transportation. Until recently, getting around was one of the biggest problems in Sochi. It can still be difficult, but in the last few years it has finally become possible to rent a car. Sixt and Hertz, among others, have outlets at the airport in Adler where you can rent a Ford, Hyundai or Mitsubishi for about $75 per day or an Audi A4 for a bit more. 
Another option is to try one of the group tours that are marketed at booths on virtually every block of every street throughout Sochi. If you’ve never tried one of these, they are not fancy, but are an incredible bargain and a lot of fun. The 33 waterfalls tour is highly recommended. After a ride through mountain rivers in an open truck, you hike up a series of beautiful waterfalls. Other excursions include visits to the Vorontsov cave, the Dolphinarium, the botanical gardens, and trips to the “Golden Ring of Abkhazia” just across the border in “independent” Abkhazia — now recognized as an independent state by Russia, Nicaragua and Venezuela. You can also go scuba diving in Khosta, rafting on the Myzyntma River near Adler, or take a tour of Sochi by night. 
During Soviet times, Sochi was famous not only for its beaches and mountains, but also as a health resort. Most of its fame as the latter rested on Matsesta, a mountain river that carved an impressive ravine roughly halfway between Central Sochi and Adler. The smelly, sulfurous waters have been famous since the time of the ancient Greeks as a cure for everything from high blood pressure to arthritis, as well as psoriasis and other skin problems. 
In addition to the massive classical sanatorium here, it is also possible to take the waters at a private VIP pavilion just in front of the sanatorium. Personalized service, including a 15-minute “wrap” to allow the sulfur to seep into the pores more effectively, runs about 600 rubles ($20) per bath. 
The rule of thumb is that you need a minimum of eight baths to feel any effect and you’re not allowed to take more than 12. Also, you’ll be told that you need three weeks to do ten baths, since you can only take a bath every other day. In fact, you can have two, three or occasionally even four bath days in a row, followed by a rest day. Whatever the curative value of the sulfuric waters, there is nothing more pleasant than the early morning drive up the ravine to sit in a warm bath. If it worked for the Greeks and Leonid Ilyich Brezhnev, who knows…
If you’re patient and don’t get put off by the traffic and cigarette butts on the beach, you can often find some amazing things in the Sochi area. The Park of Southern Plant Cultures in Vesyoloye lies in the midst of Olympic construction sites. The park was founded in the early 20th century by a St. Petersburg nobleman who gave it the delightful name of Chance (Sluchainoye); it comprises over 50 acres of some of the most beautiful trees, flowers and plants you’ll ever see, complete with ponds, paths and stairways. It's a bizarre oasis slap bang in the middle of sprawling, messy building sites. 
If you want to get a sense of the scale of the Olympic construction, walk all the way to the back entrance of the park — it opens out onto the construction of the Olympic port, which appears to have all the ingredients of an ecological catastrophe in the making. The contrast is breathtaking.
Where to stay: Unfortunately, in Sochi this is not an easy question. There are no ideal solutions and the answer involves choosing between the hotels and the sanatoriums. Sanatoriums were the Soviet answer to the Western spa, but have their roots in the pre-Soviet tradition of “taking the waters” at the resorts of the Caucasus mountains. 
Perhaps the best hotel is actually a sanatorium converted into a boutique hotel by oligarch Oleg Deripaska as the Grand Hotel Rodina. But for business travelers, the primary choices for hotels are the Marins Park Hotel in Central Sochi and the Radisson SAS Lazurnaya Hotel just south of Central Sochi. You can’t find a more central address in Sochi than the Marins Park, but ever since the new owners decided to kick out the management team from Radisson SAS, the service has gone rapidly downhill. The Radisson SAS Lazurnaya has much better service but is in an awkward location, right on the highway south of Central Sochi and with a barely adequate beach detached from the hotel and down a long, steep hill. So the best address in Central Sochi is now the Chernomoriye, a fancy, 5-star sanatorium. 
Another good choice is Frunze, the sanatorium for the Politburo back in the Soviet era. The rooms aren’t luxurious, but the grounds are spectacular, like a botanical garden, and the sanatorium experience is a unique journey through time to the days of the USSR. And if you can manage to schedule the massages and other treatments that, like the meals, are included in the price, why not? 
Eating out: Although Central Sochi is crowded, noisy and polluted, it does have most of the restaurants and almost all of the good ones. Favorites include Vostochny Kvartal and Cherskoye Pivo. Vostochny Kvartal is right on the boardwalk down from the Zhemchuzhina Hotel and serves excellent Uzbek plov, manti and shashlik overlooking the beach. In the evenings there is Uzbek music and dancing. Start with a glass of airan, a sour-milk drink, with zelen’ (greens) to aid your digestion. 
Cherskoye Pivo is a bit difficult to find in the industrial center of Sochi, and it’s well off the beaten track. However, it is well worth the effort, since it is one of the top restaurants, not only in Sochi, but in Russia. The beer is home-brewed and the Czech-style sausages are fine, but the real draw is the crayfish, which are the best, even in comparison with crayfish in season in Sweden, when the locals even wear crayfish masks to mark the occasion.
 The reason the crayfish are so good is that they are imported from the rivers around Lake Sevan in Armenia. In fact, the Armenian crayfish are just one of the reasons that a visit to the local market is also obligatory, even if purchasing and cooking live crayfish isn’t high on your agenda. Sevan crayfish are not dark green like Swedish or Russian crayfish, but a beautiful light blue. And the fresh fruits and vegetables, especially the pomegranates, which can also be purchased as freshly squeezed juice or homemade pomegranate wine, make for a very tasty excursion. 
Don’t forget the matsoni (sour milk) and cheeses such as Sulguni and Adegean. Finally, it’s worth noting that Siniye More is probably the top European restaurant, though Ice Box comes a close second. Finally, near the airport on the way to Krasnaya Polyana, there is a huge trout farm with a Greek restaurant adjacent — the trout cooked in tin-foil is excellent.
Getting there. There are regular trains to Adler from the Ladozhsky and Moskovsky railway stations at a cost of 4,500 ($154) to 9,900 rubles ($340), though you should be warned that the trip will take a total of 26 hours. Alternatively you can fly from Pulkovo 1 Airport for approximately 7,000 rubles ($240) each way, though Rossia Airlines often has special offers for around 9,000 rubles ($310) return. 

Glenn Kolleeny is senior partner at Salans St. Petersburg and has been resident in Russia for 10 years.