SOURCE: The St. Petersburg Times DATE: Issue #1537 (99), Tuesday, December 22, 2009 ************************************************************************** TITLE: State Duma Slaps Cap On Major Ad Seller AUTHOR: By Irina Filatova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — The television advertising market was stunned Friday by the State Duma’s decision to pass in three readings a recently submitted bill that would force industry powerhouse Video International to reduce its market share to 35 percent. The amendments prohibit federal TV channels from signing agreements with ad houses whose market share exceeds 35 percent. Channels will have to choose a contractor based on the results of auctions or competitive tenders, while current agreements between advertisers and sales houses will remain in force for one year. Earlier this month, Video International’s nearest competitor on the TV market, Gazprom-Media, accused its rival of limiting competition and coordinating its actions with television channels. The Federal Anti-Monopoly Service said at the time that it was already conducting an investigation into Video International and that it was waiting for evidence from Gazprom-Media. In 2007, the watchdog concluded a two-year probe into Video International’s possible monopolistic behavior but took no action after deciding not to treat advertising platforms as individual markets. The bill’s passage also comes a month after Video International founder Mikhail Lesin was sacked from his post as President Dmitry Medvedev’s media adviser, and several publications reported that he was reprimanded for conflicts of interest. The company says Lesin has not had any links to it since 1994. The changes to the law on advertising were submitted Monday by United Russia deputies Irina Yarovaya and Sergei Neverov and their quick passage took both advertising sellers and TV channels by surprise. Video International, which sells advertising on state-controlled Channel One, the state VGTRK holding, CTC Media and Prof-Media, covering a total of 12 channels, said it was worried by the quick pass of the amendments. “It’s a very unpleasant situation for us,” spokesman Anton Charkin told The Moscow Times, declining additional comment. Vedomosti reported Dec. 1 that Video International had 67 percent of the market in October, based on gross rating points, while Gazprom-Media had 23.6 percent, citing data from Media Logics. “Such amendments are, of course, a very big surprise for the market. We’re monitoring the situation and are studying the amendments now,” said Yekaterina Osadchaya, a spokeswoman for CTC Media, which owns Russia’s fourth-biggest television network. Shares of CTC Media slumped 15 percent in New York on Friday. Analysts said Gazprom-Media filed its complaint after losing contracts with two major channels owned by National Media Group — Ren-TV and St. Petersburg’s Channel 5. Video International will sell advertising on these channels starting from the next year. Gazprom-Media and its partner Alkasar also sell advertising on NTV, TNT and TV-Center. The amendments propose calculating the market share of advertising sellers as a ratio between the volumes of funds received by the sellers from advertisers and the funds that federal channels have received for placing commercials. The calculations are based on the amount of money that advertisers spent in the last two years before the tenders. Additionally, the Federal Anti-Monopoly Service would be allowed to file a lawsuit against the sellers it believes are violating the new rules, the amendments say. If an arbitration court agreed with the watchdog, any contracts signed would have to be terminated. The share of Channel One at the TV advertising market exceeded 18 percent in 2008, while the share of Rossia, which is part of VGTRK holding, amounted 14.5 percent, Kommersant reported. That means that after the amendments come into force, Video International would not be able to sell on other national channels if it kept its contracts at the state’s two big TV media outlets. To become law, the changes would need to be approved by the Federation Council and signed by President Dmitry Medvedev. Analysts saw Lesin’s firing and now the amendments as a first step toward reaching a more transparent market. “The TV advertising market was widely controlled by individuals who had strong connections with certain people in the government. The amendments followed Lesin’s ejection. As far as I can see, this is a step toward some measures of transparency,” said Eric Kraus, chief strategist with Otkritie. An industry source said the changes would soon affect all the market players and that the Kremlin wanted to press Video International for political reasons. “There’s a political background above all here. But it’s hard to say exactly whether the situation is good or bad,” said a market source, who did not want to be identified because of the sensitivity of the topic. “The time chosen for passing the amendments is inappropriate because it’s the end of the year, when advertising contracts are being signed. That means that all advertising sellers will turn out to be in equally uncomfortable conditions in the nearest time,” the source said. The source added that the changes were not necessarily negative for channels, however. “Probably in future everyone will be used to this situation, and Russian TV networks will benefit from it,” the source said. The volume of television ads contracted by 21 percent over the first nine months of this year after amounting to 94.5 billion rubles ($3.1 billion) in the same period last year, according to AKAR. TITLE: 10,000 Pay Last Respects to Gaidar AUTHOR: By Alexandra Odynova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Thousands of people stood in line on a chilly Saturday morning to pay their last respects to former acting Prime Minister Yegor Gaidar at a funeral at the Central Clinical Hospital. Gaidar, whose “shock therapy” reforms in the early 1990s turned the Soviet economy into a free market, died of a blood clot Wednesday at the age of 53. “We wouldn’t have managed, we wouldn’t have pulled through without him,” said Rusnano chief Anatoly Chubais, who served with Gaidar in President Boris Yeltsin’s government, Interfax reported. Chubais was among about 10,000 people who walked by Gaidar’s coffin during the four-hour funeral, braving lingering public anger over his reforms that decimated the savings of ordinary Russians as well as outside temperatures of minus 20 degrees Celsius. Among the dignitaries were Finance Minister Alexei Kudrin, Deputy Prime Minister Alexander Zhukov, Kremlin economics aide Arkady Dvorkovich and Yeltsin’s widow, Naina. President Dmitry Medvedev and Prime Minister Vladimir Putin, who largely ignored Gaidar during his lifetime and lavished praise on him when he died, did not attend. Gaidar, who served as acting prime minister for just six months in 1992 before public anger forced Yeltsin to fire him, had maintained that his bold policies saved Russia from civil war, and many liberal economists and politicians agree with him. But the State Duma rejected a motion Friday to hold a moment of silence to honor Gaidar. A Just Russia Deputy Vera Lekareva made the motion, noting that Gaidar had served as both acting prime minister and a Duma deputy. But Duma Deputy Speaker Oleg Morozov of United Russia said Duma Speaker Boris Gryzlov had already sent condolences to Gaidar’s family on behalf of the Duma, Interfax reported. In his blog, Morozov explained that two factions had warned him on Wednesday that any attempt to hold a moment of silence would result in a scandal. “It seems to me that Yegor Timurovich [Gaidar] would be on my side. He was a modest person and didn’t like public attention,” Morozov wrote. Gaidar’s body was to be cremated after the funeral ahead of a private burial at Moscow’s Novodevichye Cemetery. The burial, which initially was to be held Saturday and made open to the public, was postponed to an unannounced date and closed to the public at the wishes of his family. TITLE: Prosecutors Trapped In ‘Clan War’ AUTHOR: By Nabi Abdullaev PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — The Prosecutor General’s Office announced Friday that the head of the Moscow branch of the Investigative Committee, Anatoly Bagmet, had been fired for violating his oath of office. But Bagmet refused to step aside in an indication, observers said, that a new battle has erupted between Prosecutor General Yury Chaika and the Investigative Committee, which is a part of the prosecutor’s office and headed by the independent-minded Alexander Bastrykin, a former classmate of Prime Minister Vladimir Putin. “Bagmet is dismissed from the prosecutors’ service and from his post for violating the investigator’s oath,” said a spokeswoman for the prosecutor’s office, Marina Gridneva, Interfax reported. She said the dismissal order was signed Friday. A prosecutor’s office spokesman reached by telephone could not explain what part of the oath Bagmet was accused of violating. Late Friday, RIA-Novosti reported, citing an unidentified source in the prosecutor’s office, that the dismissal order had been signed by Deputy Prosecutor General Alexander Buksman, who is heading the office while Chaika is on a business trip. Spokespeople for the Investigative Committee and the committee’s Moscow branch declined to comment on the dismissal order Friday. But Bagmet, who was appointed to the post in May 2007, told Kommersant on Saturday that only his boss, Bastrykin, had the right to dismiss him. Bastrykin, who was visiting St. Petersburg on Friday, told Bagmet that he would deal with the matter when he returned to Moscow on Monday, Kommersant said, without citing anyone. Bastrykin promised to fire the heads of 12 regional branches of the Investigative Committee “who work badly” during a meeting with the Federation Council last month. Bastrykin did not say who might be dismissed. According to the Constitution, the prosecutor’s office is a centralized agency whose employees are subordinate to the prosecutor general. However, a clause in the law on the prosecutor’s office says even though the Investigative Committee is part of prosecutor’s office, its officials are appointed and dismissed under rules set by the Investigative Committee’s head. The prosecutor’s office earlier tried to fire Bagmet for accepting a law degree from a university in the Chelyabinsk region, where he previously worked as a deputy prosecutor. The prosecutor’s office accused Bagmet of acting illegally in accepting the degree in 2007, and a court case about the issue is ongoing. The deputy head of the State Duma’s Security Committee, Alexei Volkov, said the latest decision to dismiss Bagmet followed an in-depth investigation into his work by the prosecutor’s office. “This attempt to remove Bagmet is simply an episode in an internal fight between the prosecutors’ clans. Some group just wants to put its own man into the post,” said another member of the Security Committee. He spoke on condition of anonymity, saying he did not want to jeopardize his relationship with Bagmet. Volkov said he doubted that Bagmet’s fate is a chip in any power play between Putin and President Dmitry Medvedev, which some political commentators have started tracing recently. “I don’t think that the leaders of the state are discussing changes within the Investigation Committee with the prosecutor general,” he told The Moscow Times. Removing Bastrykin, who is one of Putin’s closest allies, would indicate a conflict between Putin and Medvedev, who is seen as close to Chaika and generally unfriendly to the so-called siloviki clan to which Bastrykin belongs, said Vladimir Pribylovsky, who tracks dynamics between the ruling elites at the Panorama think tank. But Bagmet, 48, is too low-ranking an official for Putin and Medvedev to be involved, he said. Igor Trunov, a celebrity lawyer who has participated in several high-profile cases investigated by Bagmet’s office, said Bagmet’s work was problematic but this was probably not linked to the dismissal. “The Moscow branch of the Investigative Committee performs and has performed terribly. Saying that its officials have violated their oath is too mild. They violate the criminal law,” Trunov said, referring to an attempt earlier this year to pursue criminal charges against investigators accused of stealing personal items kept as evidence from victims of the 2002 Nord-Ost hostage taking. Trunov said even if Bagmet were dismissed, his replacement would not be any more professional. Staff writer Alexander Bratersky contributed to this report. TITLE: Pulkovo Doubles Capacity With New Airstrips AUTHOR: By Irina Titova PUBLISHER: The St. Petersburg Times TEXT: St. Petersburg’s Pulkovo Airport on Friday introduced two new all-weather landing strips capable of receiving all classes of aircraft, making it one of the most modern facilities of its kind in Russia. The opening of the new airstrips came soon after the launch of the Sapsan train between Moscow and St. Petersburg and claims made by the head of Russian Railways that the new high-speed rail link was intended to win passengers away from air carriers. Prime Minister Vladimir Putin took the Sapsan train from St. Petersburg to Moscow on Saturday, while Vice Prime Minister Sergei Ivanov’s government plane was the first to land on one of the new airstrips following their opening. With the opening of the new facilities Pulkovo Airport has doubled its flight capacity. TITLE: In Brief TEXT: City Quits Tower ST. PETERSBURG (SPT) — St. Petersburg lost about $47 million while withdrawing from the controversial Okhta Center project last week. The city sold its 22.6 percent share in the project for 2.96 billion rubles ($98.5 million) to Gazprom Neft, an oil company belonging to the Russian state-owned energy giant Gazprom, Interfax reported on Friday. The sum is 1.44 billion rubles ($47.3 million) less than the 4.4 billion rubles that the city has invested in the project since 2006, without taking into account the drop in the ruble’s exchange rate against the dollar from 26.2 in Dec. 2006 to 31.7 in Dec. 2009. In 2006, when City Hall and Gazprom agreed to build the Okhta Center, then known as Gazprom City, as offices for Gazprom Neft close to the center of St. Petersburg, the city was due to finance the project in its entirety. Criticism and protests against both the plans to build a high-rise tower, endangering St. Petersburg’s UNESCO-protected skyline, and the use of the city budget to fund the project followed. In March 2007, it was agreed that the shares would be split between Gazprom Neft and the city’s budget, with each receiving 51 and 49 percent respectively. Late last year, City Hall announced that it had decided not to fund the project due to the economic recession. More Club Closures? As fire safety checks at St. Petersburg nightclubs and other entertainment businesses continue in the wake of the deadly Dec. 5 nightclub fire in Perm, Governor Valentina Matviyenko demanded that nightclubs where drugs are sold also be blacklisted. “A black list of clubs where incidents of drug use and sale have been registered should be compiled,” Matviyenko was quoted by Interfax as saying on Thursday. Meanwhile, by Monday 400 out of 15,000 inspected venues were temporarily closed by courts across Russia, Russia’s Chief Fire Inspector Gennady Kirillov said, Interfax reported. Kirillov said a decision to shut down a total of 2,700 venues had been taken. To close a venue, a court decision is required by Russian law. In St. Petersburg, the Ministry of Emergency Situations sued 26 venues over fire security violations, which were included in its Black List of Nightclubs, Discos and Restaurants posted on its web site, the ministry’s press officer said on Monday. According to the spokesperson, “three or four” venues have been temporarily closed by court decisions. She did not give the names of the venues. One hundred and fifty people died as the result of the Perm nightclub fire, according to Interfax’s Monday update. TITLE: Poles, Kadyrov Trade Barbs AUTHOR: By Nikolaus von Twickel PUBLISHER: The St. Petersburg Times TEXT: Chechen President Ramzan Kadyrov and Poland’s foreign minister traded barbs after Kadyrov, who has been linked to human rights abuses in Chechnya, accused Poland of violating the rights of Chechen refugees. Kadyrov said he has “regularly heard that Chechen refugees in Poland are living in miserable conditions” and a group of Chechens must have been desperate for trying to take a protest about Polish conditions to Strasbourg before being stopped at Poland’s border earlier in the week. “We do not force anybody to return … but if these people come back, their rights will be much better protected,” Kadyrov said in a statement published last week on his government’s web site. Kadyrov has regularly been accused of grave human rights violations, including kidnapping and murder — charges that he denies. Polish Foreign Minister Radoslaw Sikorski reacted Friday by questioning Kadyrov’s logic. “If there was democracy in Chechnya, I suppose that there would not be as many Chechen refugees as there are, including in Poland,” he said in remarks e-mailed by his ministry to The Moscow Times. The protest began when asylum seekers boarded a train on Tuesday and said they wanted to protest at the Strasbourg, France-based European Court of Human Rights about their treatment in Poland and the slow process of getting political asylum. But the group of about 170 people, comprised of natives of Chechnya, Ingushetia and Georgia, got no further than the German border because they lacked tickets and proper documentation, Polish and German media reported. The refugees were brought to Debak, a camp near Warsaw, the United Nations refugee agency said Friday. One of the organizers, 30-year-old Ingush refugee Zhanetta Baisurkayeva, said the protest was motivated by a wave of violence against asylum seekers from the Caucasus since the fall. “It started with numerous beatings of our people by young people. Then they started to assault refugee stations. … Strasbourg was the last attempt to call for attention and for real help,” she said in an interview published on the Waynakh.com web site. Baisurkayeva added that she feared extradition to Russia as punishment for her involvement. Polish ombudsman Janusz Kochanowski promised that living conditions at the Radom camp would be checked, the Thenews.pl web site reported Sunday. The United Nations refugee agency disputed the notion that conditions in Polish camps justified the protest. Melita Sunjic, a spokeswoman for the agency’s office in Budapest, Hungary, which covers Poland, said that according to her monitoring reports, conditions have greatly improved recently. “The situation is no worse for Chechens than for anybody else,” Sunjic told The St. Petersburg Times. TITLE: President Touts Russia, Quickly Exits Climate Talks AUTHOR: By Alexandra Odynova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — President Dmitry Medvedev touted Russia as a world leader in cutting emissions at a UN climate change conference and then took the lead in ducking out of the meeting as U.S. President Barack Obama worked overtime to clinch an agreement. Medvedev, who left the talks in Copenhagen on Friday evening to attend an informal CIS forum in Kazakhstan, offered mild praise on Saturday to those who had stayed behind to draft the nonbinding Copenhagen Accord, which sets a billion-dollar program of climate aid to poor nations but does not bind Russia or other leading polluters to make deeper cuts in their gas emissions, which are blamed for global warning. “There are results, but they are rather modest. Unfortunately, the work was very difficult, but we managed to put a document together,” Medvedev said in Almaty, according to a transcript published on the Kremlin’s web site. The agreement was drawn up Friday night and formally accepted Saturday morning, but it remained unclear how many of the 193 countries that participated in the United Nations-organized conference would sign it. Obama, who met Medvedev on the sidelines of the conference to discuss nuclear cuts, added six hours to his planned nine-hour visit to push through an agreement. Medvedev, however, was one of the first world leaders to leave the conference, where he delivered a speech extolling Russia’s readiness to stop global warming. “At the moment, Russia is a world leader in cutting greenhouse gas emissions. Our emissions have been cut up to 30 percent … since 1990,” Medvedev said. TITLE: Demolition of War Memorial In Georgia Kills Mother, Girl PUBLISHER: The St. Petersburg Times TEXT: TBILISI, Georgia — A mother and her 8-year-old daughter were killed in Georgia on Saturday when workers blew up a towering Soviet war memorial, Reuters reported. The demolition, to make way for a new parliament building, was condemned by Russia and Georgia’s opposition. The victims were killed by lumps of concrete sent hurtling into the courtyard of their home in the country’s second city of Kutaisi, local media said. Four other people were hospitalized in serious condition. Georgia’s chief prosecutor, Murtaz Zodelava, said Saturday’s detonation had “resulted in tragedy.” “According to preliminary information, security norms were violated,” he said in televised remarks. He said the detonation of the 46-meter-high concrete and bronze monument was carried out by a private demolition company. Georgian President Mikheil Saakashvili has said he wanted to move parliament sessions to Kutaisi in a bid to revitalize the former industrial hub in the west of Georgia. But Georgia’s opposition said the demolition reflected an indifference to public opinion by Saakashvili. About 300,000 Georgians were killed while fighting in the Soviet army during World War II. “The Georgian government has carried out an act of state vandalism, insulting the feelings of any civilized person,” the Russian Foreign Ministry said in a statement. Georgian television said Saakashvili moved forward his return to Georgia from Copenhagen, where he was attending UN climate talks. The dispute has echoes of Estonia in 2007, when Moscow reacted furiously to the relocation of a World War II memorial in Tallinn. ??South Ossetia freed three Georgian teenagers on Saturday in a move that appeared designed to boost Saakashvili’s opponents. The prisoners were escorted over the de facto border by former Georgian Prime Minister Zurab Nogaideli, a fierce Saakashvili critic who visited Moscow earlier in the week. TITLE: Jobless Total At Highest In 4 Months PUBLISHER: Combined Reports TEXT: Unemployment rose to a four-month high in November and retail sales fell on the month after rising slightly in October, indicating that the economic recovery remains uneven and painful, according to data released Friday. The jobless rate rose for a second month to 8.1 percent, from 7.7 percent the month before, the State Statistics Service said. The median estimate in a Bloomberg survey of 15 economists was for a rate of 7.8 percent. The rate, however, still remains below the five-year high of 9.5 percent registered in February. On the positive side, Russians had more cash to spend last month than in October and completions of housing picked up by about one-fourth on the month. Russia suffered more than most developing countries during the recent recession, which wiped out a tenth of its gross domestic product in the first half of the year. The economy began showing some incipient signs of revival in the summer, aided by rising oil prices and overall improvement in the global outlook. There has been a slight spark in activity in some industries and the 23.1 percent monthly rise in housing completions suggests that construction may have left the worst of the crisis behind. At 19,174 rubles ($626.7) per month, Russia’s average wages are significantly higher than they were a year ago, and those who work seem to have more disposable cash to spend. “It’s not because the government was pushing salaries up or the private sector was increasing salaries; it was the effect of a stronger ruble,” Vladimir Tikhomirov, an economist at UralSib, said before the data were released. A stronger ruble also makes consumers less inclined to save, he said. But uncertainty about the economy’s future might curb spending desires, economists said. Retail sales fell 1.3 percent in November from October, the first monthly decline since April, while falling at a slower pace on an annual basis as a stronger ruble made imports cheaper and encouraged household spending. Sales declined 6.4 percent from a year earlier, compared with a revised 8.4 percent drop in October, the statistics service said. Disposable incomes rose 1.9 percent last month after growing 9.9 percent in October. Real wages fell an annual 0.7 percent after a 3.5 percent decline the previous month. “Hopefully, hopefully, hopefully, people were just saving in November for holiday shopping,” said Vladimir Osakovsky, head of strategy at UniCredit Bank. “We do have a crisis, and we do have a rising unemployment rate, and we do have some deterioration in retail sales.” Fear of losing work is the biggest concern for 49 percent of Russians, according to a poll by the Levada Center published Dec. 14. That’s up from 17 percent in 1997, the year before the country’s last economic slump. The jobless figure contrasts with assurances by Finance Minister Alexei Kudrin last week that the job-cutting “trend has been broken” and indications that the economy may be on the verge of recovery. Output contracted an annual 8.9 percent in the third quarter from a record 10.9 percent in the second as companies restocked inventories and oil prices recovered. GDP contracted 3.8 percent in November, the economy’s best performance this year, but the government does not expect the economy to reach its precrisis growth rate until the end of 2012. (SPT, Bloomberg) TITLE: City Plans to Rebuild Sennaya Church AUTHOR: By Galina Stolyarova PUBLISHER: Staff Writer TEXT: The city’s Town Planning Council is to run an architectural design contest to select a new concept for a reconstruction of Sennaya Ploshchad in early 2010, City Hall announced on Friday. The plans envisage the total rebuilding of the Church of the Assumption of the Virgin and the construction of a massive new shopping center and hotel complex. Yury Mityurev, St. Petersburg’s chief architect, said a contest will be held for Russian architects in early 2010 to select the best project for the development of the Sennaya Ploshchad area. Earlier this year the city authorities decreed that the Church of the Assumption of the Virgin, which was demolished in 1961, should be entirely rebuilt. Smolny has also given its backing to the construction of a hotel complex at 47 and 49 Gorokhovaya Ulitsa and the PIK-II shopping center on Sennaya Ploshchad itself. The planning council last week reviewed a concept plan for the square proposed by the Rosar architectural bureau. The council members were highly critical of Rosar’s idea of juxtaposing the reconstructed church and the planned PIK-II shopping mall. Rosar’s plan envisaged the church and the shopping center standing right next to one another. Architect and council member Yury Kurbatov branded the suggested architectural solution “medieval”. “Yes, in some medieval European towns you can sometime see such churches located very next to shopping areas and markets, but St. Petersburg is not a medieval town,” he said. “In our city, it would not be appropriate.” Nikita Yavein, another architect, was even more outspoken in his negative reaction to the concept presented. “Nothing could be more dissonant next to a church than having a busy shopping mall next door,” Yavein said. “It would be nothing other than a demonstration of poor taste.” Mityurev said that during the 2010 competition the jury would pay particular attention to the architectural designs of the facade of the new PIK-II shopping center and its location in relation to the church. Built in the second half of the 18th century, the Church of the Assumption of the Virgin was demolished in 1961 to make room for the Sennaya Ploshchad metro station. The city’s architectural community, including the city’s Union of Architects, has been campaigning for more than 15 years for the reconstruction of the church. Dmitry Kunets, chief architect of the St. Petersburg metro, expressed doubts about the advisability of rebuilding the church on its historic site, noting that most of the area is occupied by the halls of the metro station, which would have to be considerably altered. “The concept of the church’s reconstruction, as it’s envisaged at present, appears to be completely surreal,” Kunets said. “It is dangerous to play with such issues as passenger flows.” TITLE: Daimler in Talks to Boost Kamaz Stake by 6 Percent AUTHOR: By Irina Filatova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Kamaz shareholders are negotiating to sell an additional stake of 5 percent to 6 percent to Daimler on the same terms that the German carmaker bought 10 percent last year, Russian Technologies chief Sergei Chemezov said Friday. “We’re talking about 5 percent to 6 percent. The price remains the same as in 2008,” Chemezov told reporters, adding that it would be “more effective” for Daimler to buy a bigger stake. He said Daimler might increase its stake to a controlling one by 2017 to 2018. Analysts said a purchase of about 5 percent would likely serve as a prelude for Daimler to build up to a blocking 25 percent stake but that the company was unlikely to seek control of Russia’s largest truck maker. Troika Dialog, which currently has 44.4 percent in KamAZ, sold Daimler the 10 percent stake for $250 million in December 2008. Daimler also agreed to a one-time $50 million payment in 2012 based on KamAZ’s successful performance. “We’re still considering the possibility of selling both 13.2 percent and 15 percent, which would be more effective for Daimler,” said Chemezov, who is also chairman of KamAZ’s board of directors. Troika proposed that Daimler and Russian Technologies buy a 13.2 percent stake in KamAZ earlier this year. The state corporation, which holds 37.8 percent in KamAZ, began talks in September on acquiring the shares, which would give it a controlling stake, but Daimler has a priority option for the shares as part of the initial agreement. “The 5 to 6 percent is a matter of a difference in prices. Daimler is ready to buy a minimal stake at the price we’re requesting,” Sergei Skvortsov, managing director at Troika Dialog, said at the same news conference, which followed a KamAZ board meeting on its plans for 2010 to 2013. Daimler declined to comment on its negotiations with the Russian shareholders. “We’re always in talks with KamAZ as our partner, but we have nothing to say regarding the stake increase,” Daimler spokesman Heinz Gottwick told The Moscow Times. He also said Daimler was “very pleased” with its partnership with KamAZ. TITLE: Prokhorov Steps Toward NBA Buy PUBLISHER: The Associated Press TEXT: EAST RUTHERFORD, New Jersey — Billionaire Mikhail Prokhorov moved a step closer to becoming the NBA’s first non-North American owner on Wednesday. Prokhorov’s Onexim Sports and Entertainment Holdings and the company that owns the Nets announced that they completed their agreement to create a partnership that would own the NBA team and develop the Atlantic Yards project in New York City. The agreement provides for the sale of 80 percent of the Nets and 45 percent of a new Nets arena to Prokhorov’s Onexim, subject to approval by the NBA Board of Governors. It also includes an option for Prokhorov to acquire up to 20 percent of Atlantic Yards, which would surround the new Barclays Center arena with apartments and office towers on 9 hectares in Brooklyn. Forest City Ratner, which is led by Nets majority owner Bruce Ratner, and Nets Sports and Entertainment signed a letter of intent with Prokhorov on Sept. 23. Wednesday’s announcement came one day after Forest City Ratner announced that $511 million in tax-free bonds for the Barclays Center had been sold. Project opponents had hoped that the bond sale would fall flat and end the project. Ratner plans to have a master closing on the Barclays Center next week. Construction crews have been cleaning up the Brooklyn site and tearing down buildings since the summer. A date has not been set for a groundbreaking on the new arena. “I am looking forward to working with Bruce and his team to bring a world-class entertainment and sports center to the heart of New York City,” Prokhorov said in a statement. “Brooklyn is an exceptionally attractive market for a new arena, and the Barclays Center will provide a fantastic home for the Nets.” Utah Jazz forward Andrei Kirilenko, who played for Prokhorov’s CSKA Moscow before joining the NBA, expects his countryman to make the Nets into a title contender. “He is going to be a great owner,” Kirilenko said Wednesday. “He is a guy who has a passion for basketball, and he’s a successful businessman. Everything he touches turns into a very successful project, and I hope New Jersey will be the same.” Kirilenko said Prokhorov will not only throw money into making the Nets a winner, he will make the team financially successful. “Not a lot of players want to go to New Jersey now because of the situation — losing, not having a good base,” Kirilenko said. “He will start from scratch and build everything and make it desirable for people to be here and make it desirable for the fans.” The cash-strapped Ratner had been searching for a major investor for more than a year. The NBA Board of Governors is expected to rule on the sale and relocation by early next year. Ratner and his development company hope to finish the arena by 2011. They eventually plan to add apartment towers and office buildings. TITLE: Watchdog Approves Nord Stream Plan PUBLISHER: Bloomberg TEXT: MOSCOW — A Russian environmental watchdog approved the construction of the Nord Stream gas pipeline through its waters, becoming the third country to grant permission for the Gazprom-led link across the Baltic Sea, the pipeline consortium said Friday The Federal Inspection Service for Natural Resources Use granted an offshore permit for the 123-kilometer Russian section of the pipe, Nord Stream said in a statement on its web site. The move marked the conclusion of an “extensive process of environmental impact assessments,” it said. The pipeline, scheduled to start sending gas to Europe in 2011, would pass through Russian, Finnish, Swedish, Danish and German territorial waters. Denmark and Sweden have already granted permits for construction, while Finland has cleared two of three steps needed for approval. The German permitting process is “nearing completion,” Nord Stream managing director Matthias Warnig said in the statement. “We are firmly on schedule to start construction of the pipeline in spring 2010,” he said. The 1,220-kilometer link will initially deliver 27.5 billion cubic meters of gas per year from Vyborg, Russia, to Greifswald, in northern Germany. The link will bypass Ukraine, potentially helping to avert a repeat of the gas dispute that disrupted Russian shipments to Europe in January. Gazprom owns 51 percent of Nord Stream. Germany’s BASF and E.On Ruhrgas each hold 20 percent and Nederlandse Gasunie has 9 percent. TITLE: The Death of Russia’s Premier Shock Therapist AUTHOR: By Konstantin Sonin TEXT: Yegor Gaidar, acting prime minister during the critical months of 1992, was 35 years old when he assumed responsibility for economic policy under President Boris Yeltsin. His tenure at the top lasted less than a year, yet it was his name that is most prominently associated with the transition from a communist, planned economy to a market-based one. It is Gaidar’s name that became the symbol of free-market ideology in Russia. He was a courageous leader during the grim period of 1991-92, and throughout the difficult 1990s and 2000s Gaidar continued to stand up for free markets. He remained a dominant intellectual force in economic policy discussion until his untimely death Wednesday. As an economist, Gaidar had an unusually sharp ability to see the country’s problems through all of the smoke and fog. As a politician, however, he was far too blunt. Many of Russia’s political leaders — and perhaps most Russians as well — have tended to view their country through the prism of Soviet propaganda and the difficulties that they experienced living in the Soviet Union. Gaidar was much different. When he became “economic tsar” in November 1991, he spoke directly about Russia’s food shortages, while other top officials spoke impractically about preserving the Soviet Union, even after the failed putsch against Soviet leader Mikhail Gorbachev. Gaidar openly expressed a critical view of the Soviet military-industrial complex that produced useless goods and drained scarce resources from other industries, while his colleagues still clung to the inflated, worn-out demagoguery about the “treasured legacy of Soviet science and industry” and the empty platitudes about “Soviet achievements in the social sphere.” Instead, Gaidar worked around the clock to have basic foodstuffs delivered to Russian cities when the country was on the brink of famine in the last months of the Soviet Union. Gaidar will always be remembered for his “shock therapy,” which in reality was never planned in advance. He understood that rapid price liberalization and the complete abandonment of import tariffs in early 1992 were a necessary evil; otherwise, the broken supply chain in a country teetering on collapse could have led to severe food shortages. Gaidar proved to be correct: Two weeks after his price-liberalization policy went into effect, Russians once again saw food and basic consumer goods in the shops after years of being absent. Moreover, cutting the budgets of dying Soviet industrial dinosaurs was politically painful and ultimately fatal for Gaidar as prime minister. But there was no viable alternative since the budget that the Gaidar government inherited had a deficit of more than 20 percent. Most Russians, in search of a scapegoat for the turbulent, chaotic 1990s, continue to demonize Gaidar to this day. But their negative reaction to Gaidar is tantamount to Russia’s cholera outbreak in the late 19th century. Ignorant peasant mobs would sometimes kill doctors who came to villages to fight cholera. The peasants observed a pattern: The appearance of doctors were a sign that cholera is spreading through the area. For exactly the same reason, the overwhelming majority of Russians believed that Gaidar, who assumed economic leadership after six years of slow, incoherent and largely ineffective economic reforms under Gorbachev, was somehow responsible for the misery brought to the people by the economic collapse. Yet Gaidar never stopped fighting for free-market principles, advocating what he believed would help transform Russia into a developed country from an endlessly developing one. He never compromised his beliefs, never wavered in the face of vicious ad hominem attacks and was never lured into the comfortable life of Russia’s pseudo elite or oligarchy. This is what separates Gaidar from other Russian politicians and will  make him a point of comparison for years to come. Despite plunging popularity as a leader of a political party, Gaidar established himself as a dominant intellectual force in economic policy circles. His understanding of Russian politics was unrivaled. His strength was not so much in his ability to push a liberal agenda but in determining which elements of the liberal agenda are truly feasible for Russia at the moment. His Institute for the Economy in Transition, a policy think tank commonly called the Gaidar Institute, produced the lion’s share of economic reform blueprints in the 1990s. During the years when Vladimir Putin was president, Gaidar stayed out of the spotlight. Nonetheless, Gaidar’s economic policies were actively discussed among Putin’s top economic advisers, although few were ever adopted. Yet his intellectual influence was profound. Everybody, including the advocates of the “Back to the USSR” policies that Gaidar despised, discussed current economic affairs in terms that he himself defined. Analysts and journalists who attended Gaidar’s presentations — almost always standing room only — paid close attention to his every word. In the run-up to the global financial crisis, when most pundits believed that nothing could shatter Russian economic growth, he warned about the country’s growing dependence on natural-resource exports and correctly predicted that Russia would be hit hard by a crisis in the international finance markets. His book “Collapse of an Empire: Lessons for Modern Russia,” published in 2007, was a masterpiece of political and economic history — a detailed account of the Soviet economic collapse. It defined the framework that most economists rely on when discussing Russia’s present and future. He wrote about the federal budget’s overdependence on oil revenues, the blind spots among the ruling elite because of closed information channels and the lack of competing ideas and the inefficiency of the overcentralized state. All of these factors are as relevant for today as they were relevant in the late 1980s. It is a tragedy for Russia that Gaidar will not be able to contribute to these crucial discussions anymore because the outcome of this debate will ultimately determine the country’s economic position in the world and the prosperity of millions of Russians. Russia’s economic course will determine whether the country will remain a stagnant, natural resource-based economy, or whether Gaidar’s dream of Russia becoming a prosperous, leading global economic power will ever come true. Konstantin Sonin, a visiting professor at the Kellogg School of Management at Northwestern University, is a professor of the New Economic School.