SOURCE: The St. Petersburg Times
DATE: Issue #1552 (13), Tuesday, March 2, 2010
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TITLE: Mayoral Elections Criticized After Arrest
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Smolensk’s mayor was arrested Sunday in an extortion investigation that could fuel calls for the Kremlin to end direct mayoral elections.
Mayors are the most senior local officials still elected to office after the Kremlin abolished gubernatorial elections in 2004, and a number of them have faced criminal charges in recent months amid a drive in certain quarters of the federal government to cancel mayoral elections.
Eduard Kachanovsky, mayor of Smolensk, a city of 325,000 located 360 kilometers west of Moscow, was arrested together with his deputy and his bodyguard on charges of extorting an apartment as a bribe from the head of a construction company in exchange for granting a permit for the apartment building, investigators said.
Kachanovsky faces up to 12 years in prison if convicted of large-scale extortion.
The trio was detained Friday, and a local court sanctioned the arrest of Kachanovsky and his deputy on Sunday, the Smolensk branch of the Investigative Committee said. The bodyguard was released on condition that he not leave the city.
Smolensk regional Governor Sergei Antufyev told reporters Saturday that Kachanovsky’s detention had “seriously damaged” his reputation and that of Smolensk and the surrounding region, Interfax reported.
He called for the abolishment of direct mayoral elections in the region. The governor “must have the power to weigh in on a mayor’s candidacy. Popular elections are a risk,” Antufyev said.
Antufyev said mayors should be replaced with “city managers” proposed by governors and confirmed by city legislatures.
Although mayors are directly elected by their constituents, governors can fire them under new powers granted by President Dmitry Medvedev last May. Medvedev said governors needed to be able to reign in rogue mayors, while critics countered that the Kremlin was trying to remove any possibility of unpredictability from politics.
Antufyev did not say whether he would dismiss Kachanovsky, who was elected last March after refusing to heed a United Russia request to withdraw in favor of its preferred candidate. Kachanovsky is also a member of United Russia.
Kachanovsky’s arrest could be United Russia’s way of teaching him a lesson, said Dmitry Oreshkin, a political analyst with Merkator, a think tank.
United Russia officials and the Smolensk governor’s office could not be immediately reached for comment Sunday.
Kachanovsky was circled by plainclothes officers from the Federal Security Service as he left the building where the Smolensk governor’s office is located after a meeting at about 4:30 p.m. Friday and driven away in a car, Antufyev’s administration said in a statement.
The officers also detained Deputy Mayor Valery Osipov and Kachanovsky’s bodyguard, Roman Maximov. Maximov is accused of registering the apartment at the center of the extortion charges in his name on Kachanovsky’s orders, investigators said in a statement. It said the three-room apartment was worth more than 2 million rubles ($67,000).
Investigators did not identify the construction company.   
The alleged extortion attempt took place in September, Antufyev’s administration said in a statement.
Antufyev said at the news conference that investigators have searched the offices and apartments of the suspects and have questioned a number of possible witnesses.
Kachanovsky, 36, worked for a local construction company and a company that sold real estate from 1993 until his election as mayor last year, according to a biography published on the city’s official web site.
The directors of the real estate sales company, Erlan, where Kachanovsky worked as a manager from 1993 to 1997, were accused of failing to repay loans to several banks in 1995, Kommersant reported at the time.
Kachanovsky’s administration has faced previous legal problems linked to extortion. Earlier last month, regional prosecutors sent to court a criminal case against Kachanovsky’s adviser Alexei Khmelintsky, who is charged with seeking a bribe of 3.5 million rubles ($117,000) from the head of a construction company in exchange for a construction permit last summer.
Khmelintsky is also charged with submitting a fake diploma to obtain the position of adviser. The bribery charge carries a maximum penalty of six years in prison, while the fake documents charge could result in a prison sentence of up to six months.
Medvedev has declared war against corruption at all levels of government, and a number of mayors have come under fire.
In late February, prosecutors asked a court to hand Elista Mayor Rady Burulov a five-year suspended sentence on charges of abuse of office and illegal business activities.
In December, former Saratov Mayor Yury Aksenenko was sentenced to four years in prison after he was convicted of bribery and abuse of office.
Among earlier high-profile cases, former Arkhangelsk Mayor Alexander Donskoi was convicted of abuse of office and given a three-year suspended sentence in March 2008. In a separate case, Donskoi got a one-year suspended sentence in 2007 for faking his university diploma.
In February 2008, Tolyatti Mayor Nikolai Utkin was sentenced to seven years in prison on corruption charges.

TITLE: Russia Plays Its Worst Ever Olympics
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: Perhaps it’s surprising that Russia managed to walk away with even three gold medals after giving its worst-ever performance at a Winter Olympics.
Its luge team, for one, has to build its own sleds for lack of money and only got a track to practice on at home in 2008 — and even then it doesn’t freeze properly.
“We make the equipment ourselves and almost from scratch,” Valery Silakov, president of the Russian luge federation, told The St. Petersburg Times.
Silakov explained that it is hard to find people to produce luges within the country and even the Khrunichev space center cannot guarantee that its luges, which cost more than $100,000 each, will reach the needed speeds of about 130 kilometers per hour.
The Russian luge team left the Vancouver Games medal-less after veteran Albert Demchenko, 38, placed fourth. Demchenko complained in Vancouver about the lack of financing for his sport, saying he has to repair his luge out of his own pocket.
He and his fellow athletes only got a chance to train in Russia when a luge and bobsleigh stadium opened in Paramonovo, outside Moscow, in March 2008. The stadium, however, routinely faces problems with its freezing equipment, Silakov said. The stadium originally built for Soviet athletes is located in now-independent Latvia.
Despite the difficulties, Demchenko said he would like to try his luck at the Sochi Games in 2014, when he will be 42.
Russia might need him. With many athletes deserting during the turbulent 1990s, the younger generation who has replaced them remains amateurish. “Many of them entered sports schools after the [training] system had already been destroyed,” Silakov said.
Russia took home just three gold medals from Vancouver, compared with eight in the last Winter games. Russia came in a disappointing sixth place in the overall medal count with 15, trailing far behind its former Cold War athletic rival, the United States, which led with 37. 
Among the biggest setbacks were in ice hockey and skating, which the Soviet Union and Russia had dominated since the 1960s. An embarrassed President Dmitry Medvedev canceled a scheduled trip to Sunday’s closing ceremony.
Russia previously gave its poorest performance in the 2002 Salt Lake City Games, collecting five golds and a total of 13 medals.
The luge team’s woes are typical of the problems facing all Russian athletes. While the government boosted financing for Winter Olympic teams to $25 million last year, up from $22 million in 2008, a lack of proper training facilities, rampant corruption and a small pool of eager athletes contributed to Russia’s failure in Vancouver, sports officials and athletes said.
Prime Minister Vladimir Putin has said Russia needed to learn the lessons offered by Vancouver, but no shakeups are expected in the sporting world that could improve Russia’s chances for the Sochi Games.
Russia’s complete failure to win any golds in ice skating has prompted harsh criticism from champion Soviet ice skater Irina Rodnina.
She accused the heads of Russian sports federations of running their organizations like “family businesses” and lashed out at Russian Olympic Committee head Leonid Tyagachev, a close friend of Putin and his personal ski coach.
“Do you think that those who are responsible for the results are upset? I saw Tyagachev in the Russian House restaurant yesterday. He had a good appetite,” Rodnina told the Sovietsky Sport newspaper.
Sports federations are independent, although most of their financial support comes from the state. The state allocations are disproportional, with the majority going to hockey, biathlon, ski racing and ice skating, while far less goes to short track, ski jumping and luge.
Of the three golds that Russia won, two were in biathlon and one was in ski racing.

TITLE: City Hall List Puts Green Spaces Under Threat
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: Frustrated local residents are planning protest events as City Hall makes plans to exclude 861 green areas from a list that protects them from construction — which would ultimately result in the city’s green spaces shrinking by a staggering 40 percent in coming years.
A special commission led by Roman Filimonov, deputy governor of St. Petersburg, has prepared a list of areas that are to be reclassified from green space to vacant land, which means they would no longer be protected from becoming a construction site. 
Put into figures, the total size of green spaces protected from construction looks set to decrease from 7,872 hectares to 4,780 hectares. 
The list is to be approved by the St. Petersburg Legislative Assembly in the near future.
As the result of such land reclassification, the renowned Yuntolovsky nature reserve has shrunk 100-fold, according to the St. Petersburg Center for Ecological Analysis.
Originally, at the end of 2009, the City Hall was pushing to reduce the numbers of protected green areas by 1600 titles but the St. Petersburg Legislative Assembly managed to achieve a compromise figure of 861 land objects.
According to Alexander Karpov, head of the Center for Ecological Analysis, the consequences of this governmental move, if it takes shape, would be devastating for St. Petersburg. The future looks particularly depressing for Vasileostrovsky district, where the volume of green space would plunge from 6.1 square meters per person to 3.2 square meters.
Sergei Malkov, a member of Filimonov’s commission and a Communist party lawmaker with the St. Petersburg Legislative Assembly, said it was essential that parliamentarians develop a scheme for protecting the green areas from arbitrary state intervention in the form of “reclassification” or any other form. 
He said a group of parliamentarians was working on the problem.
Environmentalists describe the situation as disastrous. 
Environmentalist Alexei Smirnov said City Hall was contradicting its own general development plan, which stipulates a minimum of 12.8 square meters of green space per person for central districts, and 16 square meters per person in the suburban districts.
Only the central Petrograd Side of the city complies to these standards, along with the towns of Pushkin, Peterhof and Sestroretsk, located just ouside the city. 
Most destruction of parks, gardens and open spaces in St. Petersburg is due to rampant in-fill construction, which city authorities say is “a forced measure.”
City Governor Valentina Matviyenko has repeatedly made statements that her office will not ignore what she described as the fair and righteous anger of locals concerning in-fill construction. Yet in-fill construction remains commonplace, with green areas shrinking at an alarming rate. Matviyenko also promised that vacant land would be used primarily to accommodate new schools, kindergartens and other social projects.
Dmitry Artamonov, head of the city headquarters of Greenpeace, said local officials must enforce the federal law on green spaces, which was passed in 2003 and stipulates that if a company or any organization destroys a green zone to build within the city’s boundaries, they must plant trees in other areas to compensate for the loss.
In-fill construction in St. Petersburg appears to be taking place without any such compensation and many disputes over the issue are being processed by the courts, Artamonov said. 
“As a result of in-fill construction in zones that already have fully established infrastructure, the problem is not just that the locals are deprived of leisure areas, children’s play areas and places to walk domestic animals,” Artamonov said. “With more private transport entering the areas, the air is full of exhaust fumes.”
St. Petersburg already ranks 85th out of the country’s 89 regions in a rating compiled by the Russian Independent Environmental Monitoring Agency.
Olga Tsepilova, a member of the environmental wing of the liberal party Yabloko, said the destruction of green areas is one of the city’s most severe problems, along with water pollution and large amounts of industrial waste.
“Environmental threats are multiplying as we speak,” said Tsepilova. “The rampant in-fill construction that has flourished under Valentina Matviyenko has led to the devastating loss of hundreds of small parks and public gardens.”

TITLE: Tajik Pro-Government Party Sweeps Parliamentary Election
PUBLISHER: The Associated Press
TEXT: DUSHANBE, Tajikistan — Preliminary results show Tajikistan’s pro-government party winning weekend parliamentary elections by a landslide, officials said Monday, as international monitors and the opposition cited widespread fraud.
The results — if confirmed by the final count in 10 days — would reinforce President Emomali Rakhmon’s two-decade hold over the country.
The initial tally after all of Sunday’s votes were counted showed the government-backed party with 71.7 percent and the main opposition Islamic Revival Party with just 7.7 percent, the Central Elections Commission said.
But international monitors from the Organization for Security and Cooperation in Europe said that while the vote was peaceful, it was tarnished by ballot-box stuffing and proxy voting. Islamic Revival said it had evidence of forged ballot count reports.
“Such serious irregularities weaken genuine democratic progress,” said Pia Christmas-Moeller, an OSCE delegation leader.
The early results showed the Communist Party, the only other party with seats in the current legislature, in third place with 7.2 percent, according to the election commission.
It did not give a breakdown for how many parliamentary seats each party would receive but said two parties not represented in the current parliament would gain a seat each despite not exceeding the 5 percent threshold for party-list seats. 
In Tajikistan’s 63-seat parliament, 41 seats are elected directly in separate races and 22 are allotted based on proportional party representation.
Islamic Revival leader Muhiddin Kabiri warned that if his party’s complaints were not quickly addressed, “we will take tough and decisive legal steps.”
The opposition party said it had about 100 copies of blank vote count reports with faked signatures of local election commission members, which Kabiri said would have allowed for incorrect tallies to be submitted to the Central Elections Commission.
“This behavior is unacceptable in a democratic society,” he said, calling the vote “nontransparent and undemocratic.”
He said the OSCE should be firmer in its criticism, saying his party would study the organization’s report but that “so far they have expressed themselves very diplomatically and said nothing concrete.”

TITLE: TV Show Stokes Education Debate
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Kremlin had a hard time getting teachers and parents to care about education reform.
Then a raunchy teen series debuted on state television.
The documentary-style “School” is breaking taboos by showing Moscow teens with emo hairstyles discussing their sexual adventures and dragging on joints in the schoolyard, a female teacher stalking a ninth-grade boy and girls fighting in the restroom.
The gritty, in-your-face show is forcing outraged teachers, parents, politicians and even Cossacks from the southern city of Kuban to ask: “Has the Russian public school system come to this?” 
The answer is “yes,” said Valeria Gai Germanika, the 25-year-old indie director behind the show, which debuted on Channel One state television in January but has been on hiatus for the past two weeks because of the Vancouver Olympics.
Germanika — whose emo-style appearance has not won her any favors with her critics — told The St. Petersburg Times that the show simply depicted “the truth.”
When asked about the political implications of the series, Germanika said she “doesn’t care” and “doesn’t follow the public’s reaction.”
But the show has proved a boon for the Kremlin by getting a lackadaisical public to take interest in its efforts to reform schools.
Just days after “School” premiered on Channel One, President Dmitry Medvedev declared 2010 as the Year of the Teacher in Russia and approved a set of education reforms dubbed “Our New School.”
“I expect that the new year will become a year to launch a serious modernization of the education system and a year of positive changes,” Medvedev said in making the announcements Jan. 21.
Three days after Medvedev’s remarks, Prime Minister Vladimir Putin was asked during a visit to Chuvashia State University about the television show that depicts “kids from a negative angle.”
“Frankly, I haven’t seen the series and don’t watch it, just because I don’t have enough time,” Putin said, adding that he was aware of the debate about it.
Putin’s remarks and Medvedev’s silence have sent a clear signal that the series will not be shut down, despite the outcry.
Indeed, Education and Science Minister Andrei Fursenko offered mild support for the show earlier this month, saying it had helped attract attention to problems in the education system.
Kuban Cossacks had asked Fursenko and Culture Minister Alexander Avdeyev to pull the plug on the series in January.
Orthodox Patriarch Kirill said Wednesday that the show could provide an impetus for education reforms. “Sometimes we need to get very frightened in order to reconsider something,” he said at a meeting of the Russian Education Academy, Interfax reported.
A teacher from Moscow School No. 945, where the series is filmed, criticized the show as a “hypernegative rave.”
“The fact that the series is being shown during the Year of the Teacher is a humiliation,” she said, speaking on condition of anonymity.
She said the school was not half as bad as depicted in the show and had agreed to provide its premises in exchange for money that has allowed it to buy new furniture and computers.
“If they had called it ‘Teen’ instead of ‘School’ and it didn’t air on Channel One, it wouldn’t have caused so much fuss,” the teacher said.
A political significance appears to be attached to shows that premiere on Channel One because the channel has long served as a propaganda arm of the government, said Alexei Mukhin, an analyst at the Center for Political Information.
But, he said, this time it looks like an initially commercial project is unexpectedly providing the Kremlin with a welcome boost for its education reforms.
Channel One’s online forum for “School” is overflowing with hundreds of angry comments from teachers and school directors who say the show discredits schools and teachers.
This is not the first time that television content has provoked public criticism. But it might be the first time that a wave of criticism has not pushed the authorities to intervene.
In 2008, prosecutors accused the 2x2 television channel of promoting religious intolerance with an episode of the U.S. cartoon “South Park” and negatively influencing children by airing “The Simpsons” and “Family Guy.” The channel faced closure until widespread public support convinced the authorities to back off.
After the first episodes of “School” were broadcast in January, the head of City Hall’s education department, Olga Larionova, told the Moscow City Duma that television should focus on improving schools rather than their flaws.
“I see that extremely negative reviews from teachers, parents and students about the series have appeared on the Internet,” Larionova said, Interfax reported. “There should be a regular program telling about the secrets of the city’s best teachers and their students.”
Duma Speaker Boris Gryzlov has backed the idea of an alternative television series depicting smart and happy children and teachers to counter the negative imagery of “School.”
The pro-Kremlin Nashi youth group has promised to conduct a survey in Moscow schools to learn whether the raw school routine in “School” is in fact an everyday reality.
About 65 percent of “School” viewers believe that it “truly reflects the problems of Russian schools,” while 29 percent say it “discredits schools and teachers,” according to a recent nationwide survey by the independent Levada Center.
Channel One said critics were ignoring the real-life problems of public schools. “Hypocritical statements that education has no problems are unconstructive for the country and will not result in any changes in the field,” it said in a statement.
The channel promised that the 30-minute show would return to its twice-a-day broadcast in primetime on Monday after being off the air for two weeks during the Winter Olympics in Vancouver.
The suspension had sparked hopes among critics that the show would be banned.
Channel One has been releasing new installments on the Internet until the series returns to its regular timetable.
Incidentally, the buzz surrounding the show has not won over viewers, and “School” had a middling ranking before going on hiatus, according to TNS Russia.
Pavel Bardin, director of “Russia-88,” a mock documentary about skinheads and MTV’s “Club” series, said at the end of the day “School” was just entertainment that might surpass most of the other fare being offered on television.
“Even if the show is closed, the problems in schools won’t disappear,” Bardin added.

TITLE: Rogov House Gets Back Historic Status
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The historic Rogov House, which was severely damaged during three unsanctioned demolition attempts on Feb. 20 and 22, has been given back its heritage status — if temporarily.
Gosstroinadzor, the state construction watchdog, said the demolition work was “illegal,” as the watchdog had not issued a demolition permit, and fined the contractor. 
The developer Prestizh is planning to demolish the building, which dates back to the turn of the 18th and 19th centuries, in order to build a seven-story business center complete with an underground parking lot. 
The police were alerted to the demolition by preservationists, who had launched a round-the-clock vigil as soon as the first demolition attempt was reported. The police stopped the work each time, but the high reach demolition excavator still had time to approach the building, tear off its roof and take out massive chunks of the top floor of the three-story classical building. 
Preservationists say that if they had not called the police, the Rogov House would have been demolished by last Wednesday, when a court hearing on a lawsuit brought by members of the Russian Association for the Protection of Cultural and Historical Heritage (VOOPIK) against City Hall’s heritage protection committee (KGIOP), was scheduled. 
The Kuibyshevsky District Court on Wednesday revoked the KGIOP’s decision to deprive the building of its heritage status and state protection until the next hearing, scheduled for March 9. The committee was reported to have taken the decision on Feb. 2, but Pyotr Zabirokhin, an activist with the Living City preservationist organization, said Monday that the decision was not published as it should have been, and had not therefore entered into force. 
SetInzhenKom, the company hired by Prestizh to demolish the Rogov House, was fined 50,000 rubles ($1,668), Vyacheslav Agapov, a functionary of Gosstroinadzor, said at a press conference on Thursday, Interfax reported. Agapov described the attempted demolition as “illegal.” 
On Sunday, Living City held a protest and launched a petition calling for the dismissal of the KGIOP’s head, Vera Dementyeva, for taking decisions beneficial to developers instead of protecting the city’s heritage as her committee is supposed to do. 
The preservationists demand the restoration of the building, arguing in a Living City leaflet that far more seriously damaged buildings were restored in Leningrad after the WW2. The demolition excavator, however, was still parked in the courtyard next to the Rogov House on Sunday. Living City also demands that a plan for the overall architectural development of Vladimirskaya Ploshchad be accepted by City Hall. The historic square has already been blighted by the eight-story Regent Hall business and retail center opened in 2006. Two years later, City Governor Valentina Matviyenko admitted the center was a “town-planning mistake.”

TITLE: In Brief
TEXT: <strong>‘Abandoned’ Tanks</strong>
MOSCOW (SPT) — The army is rushing to remove dozens of tanks from a forest in the Ural Mountains after a video circulated on the Internet showing the vehicles unguarded and covered in snow.
About 200 vehicles were left in the woods more than two months ago, local residents told Rossia television. Local commander Sergei Skobelin denied the armor had been abandoned, saying it had been parked there because of severe cold and the limited capacity of a nearby railway station. The last tank will be removed within two weeks, Rossia reported.

<strong>Student Killed</strong>
ST. PETERSBURG (SPT) — A local student died on Sunday after slipping off a snow-covered roof, Interfax reported. The young man, identified by an Interior Ministry source as S. Spiridonov, was a 5th-year student of the St. Petersburg State University of Information Technology. Spiridonov was shoveling snow from the roof of Prospekt Stachek, 84 when he slipped and fell.

TITLE: Duma Votes to Cut Election Threshold
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — State Duma deputies on Friday gave preliminary approval to a presidential bill that would grant one seat in regional legislatures to parties that collect at least 5 percent of the vote.
The current threshold to win seats in a regional legislature is 7 percent.
But the election reform, one of several promised by President Dmitry Medvedev after United Russia’s sweep of October’s regional elections sparked widespread allegations of fraud, will give “no real power” to the party with one seat since United Russia already controls the majority of seats in regional legislatures, said Lilia Shibanova, head of Golos, an independent nongovernmental organization that monitors elections.
Shibanova and Sergei Obukhov, a Duma deputy with the Communist Party, said the only opposition parties that would be allowed to pass the 5 percent threshold would be those that had been tamed by the Kremlin.
The bill, passed in a first reading Friday, frees parties that made it into the legislature from the obligation of collecting signatures in support of their candidates in subsequent regional and municipal elections.
A party that has seats in at least a third of all regional legislatures won’t need to collect signatures in support of its candidates for State Duma elections.  
Parties that reach the 5 percent threshold will receive free coverage on state and municipal television and radio channels and have the right to nominate a representative to regional and municipal elections committees, according to the bill.  
Shibanova said the bill violated a guarantee in existing election laws that offers equal conditions for all parties that take part in elections.
“This is not the way free and fair elections should be held,” Shibanova said.
Medvedev, meanwhile, has submitted a bill to the Duma that would restrict early voting, the Kremlin’s web site said. Opposition politicians and election monitors have accused United Russia of using early voting to boost support for its candidates.
Meanwhile, early voting in March 14 regional elections started Friday in the Altai, Khabarovsk and Sverdlovsk regions and the Yamalo-Nenets Autonomous District, the Central Election Commission said on its web site.
In March 2009, the State Duma gave preliminary approval to a Kremlin-backed bill that would allow parties winning 5 percent to 7 percent of the vote in State Duma elections to receive one or two seats in the parliament.

TITLE: Court: Strasbourg Is Binding
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Constitutional Court on Friday ordered the state to obey decisions by the Strasbourg Court of Human Rights and demanded further legislative action to ensure their smooth implementation.
“The European Court of Human Rights’ decisions are binding for Russia,” the court said in a ruling published on its web site.
The judges called upon lawmakers to treat the European court’s rulings as a basis for reforming the country’s judiciary. They also demanded changes to the Civil Procedural Code, which so far does not force national courts to review cases after a decision from Strasbourg.
“The state must pay compensation to a person whose rights were violated as determined by the European Court and make sure his/her rights are restored as far as it is possible,” the judges said.
As a member of the Council of Europe, Russia is obliged to accept the court’s rulings, but rights campaigners have criticized Moscow for being slow to respond to its judgments.
Justice Minister Alexander Konovalov acknowledged last year that the court’s rulings revealed evident problems in the country’s justice system.
Rights groups have also criticized the government for paying damages ordered by the Strasbourg court, without addressing fundamental issues.
The ruling comes weeks after Moscow’s decision to finally ratify Protocol 14 of the European Human Rights Convention, a reform that is supposed to make the court more efficient.

TITLE: President Pushes to Limit Jail for Execs
AUTHOR: By Maria Antonova and Scott Rose
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev on Friday ordered his administration to re-examine how strict laws against money laundering are tacked on to other economic charges, a practice that has long drawn complaints from the business community.
He also said he would submit to lawmakers a bill on corporate raiding that would make it harder for law enforcement officials to steal a business by jailing its owner.
“We know there are plenty of these cases: First they throw [businessmen] in the zindan after a competitor squeals, then they let him out of there for cash,” Medvedev said, likening the country’s pretrial detention facilities to traditional, underground prisons in Central Asia.
“It’s time to put an end to this chaos. In the coming days, I’ll submit a bill on it to the State Duma,” he said.
During a meeting at his Barvikha residence with small and midsize business representatives and top law enforcement officials, Medvedev made a series of pledges to ease the burden on business, including facilitating the export of finished goods and the import of high-tech equipment.
But the business leaders present were most interested in planned changes to how economic crimes are investigated and prosecuted.
Medvedev has been pushing to liberalize the handling of economic crimes since the death in November of Hermitage Capital lawyer Sergei Magnitsky, who was repeatedly denied medical attention during his nearly yearlong pretrial detention on politically tainted fraud charges.
Several senior prison officials were later sacked over how Magnitsky’s case was handled.
The president said he wanted to see more suspects in economic crimes released on bail or their own recognizance — a nod to a Kremlin-drafted law that United Russia deputies submitted to the State Duma earlier this month. That bill would ban arrests for charges under 33 articles of the Criminal Code labeled as economic crime, though critics have said it still leaves too many loopholes for corrupt investigators to arrest entrepreneurs.
Yevgeny Yuryev, chairman of the business lobby Delovaya Rossia, complained at the meeting that money-laundering charges — which can be punished by up to 15 years in prison — are tacked on to virtually all other economic crimes, most of which carry far milder punishments.
“We need to look at the compatibility of the laws and at how this works in practice,” Medvedev said in response to the question. “This isn’t the first time I’ve heard about … an entirely insignificant economic crime being filed in tandem with laundering, with that laundering [charge] covering everything and turning into a club that slams so hard there’s simply no way for a person to recover.”
He ordered Larisa Brychyova, head of the state legal department, to prepare changes for a bill that is being prepared on the subject.
The practice of combining money-laundering charges with fraud is fiercely criticized by business activists protesting police crackdowns.
Under Article 174 of the Criminal Code, any investment or use of money earned illegally can be classified as money laundering. Unlike in Western countries, it does not matter whether the business that receives such funds is legitimate.
The government is now discussing a bill that would prohibit the combination of money-laundering charges with illegal entrepreneurship, a charge that is filed in roughly every third investigation against the country’s entrepreneurs.
Business leaders also complain that provisions in the Criminal Code originally intended to fight organized crime are used to step up charges against executives. Usually, investigators also name accountants or chief financial officers as participants in an economic crime, meaning that the company’s head acted as part of an organized group.
The Kremlin-backed amendments already submitted to the Duma would not cover crimes committed as a group, nor would they apply to several other frequently used charges, such as fraud, that fall outside the Criminal Code’s section on economic crime.
Medvedev noted Friday that recent changes to tax law had already prevented people from being “taken into detention on a whim” for most tax evasion offenses.  
In a case that shocked entrepreneurial-rights activists last month, Moscow businessman Oleg Roshchin was sentenced to 18 years behind bars for not paying customs duties, while an accountant in his company, a 47-year-old mother of two, was sentenced to 15 years in prison.
Last month, the Interior Ministry’s Investigative Committee reported that its investigators uncovered economic crimes committed in 2009 amounting to 1 trillion rubles ($33 billion), or almost 8.5 times more than a year earlier.
Some 428,000 investigations into economic crime were opened in 2009, with 106,000 people being sentenced to prison terms, according to the Interior Ministry.
“In practice, if a businessman is charged with contraband and continues his business, he is automatically a money launderer, which is a completely different criminal charge,” said Alexei Ivanov, a partner at Nadmitov & Partners, who also teaches law at the Higher School of Economics.
The wording of the money-laundering law allows investigators to use it to boost the seriousness of any financial charges, making it pointless to try to distinguish the relative severity of economic crimes, he said.
Authorities are always interested in juicing up the charges since it lets them extort bigger bribes, said Yana Yakovleva, head of the Business Solidarity group. The money-laundering article has been “the main instrument used to put entrepreneurs in prison for decades,” she said.
The law essentially equates entrepreneurship with criminal activity, “a concept that came from the Soviet Union, and evidently not much has changed since then,” Yakovleva said.
While Medvedev — a former law professor — appears to give much attention to reforming the justice system, so far the proposed changes are “mostly cosmetic,” she added.
Also on Friday, Medvedev proposed raising the minimum bail to 100,000 rubles ($3,300) for petty and medium crimes and hiking the sum to 500,000 rubles ($17,000) for serious crimes.

TITLE: EU Urges Ukraine To Make    Budget Cuts
PUBLISHER: Bloomberg
TEXT: MOSCOW — Ukraine has come under European Union pressure to make the budget cuts needed to release an International Monetary Fund loan as the struggle between President Viktor Yanukovych and his opponents over tax and spending intensifies.
On his first foreign trip since taking office last week, Yanukovych was told by European Commission President Jose Barroso that an accord over the stalled $16.4 billion IMF loan would also unlock 500 million euros ($680 million) in EU aid.
“Ukraine should get back on track with the IMF,” Barroso told reporters in Brussels. “This is the first step to improve the investment climate.”
Wrangling between Yanukovych and Prime Minister Yulia Tymoshenko, the loser in last month’s election, has left the 2010 budget in doubt and has complicated efforts to reconnect Ukraine with the international economy.
Yanukovych promised passage of a gas-market law to ensure supplies to Europe that were cut off by Russia in 2006 and 2009.
EU leaders pointed to the deadlock between the winner and loser of the election as the main risk for Ukraine’s economy after it shrank 15 percent last year.

TITLE: Vodokanal to Lose Property Tax Exemption
AUTHOR: By Anatoly Tyomkin
PUBLISHER: Vedomosti
TEXT: City Hall has decided to cancel tax exemptions for St. Petersburg’s water supplier, Vodokanal. Without the benefits, which have been in force since 2004, Vodokanal will be forced to pay property tax at two-thirds of the city’s rate by 2014.
The city government was due to meet Tuesday to discuss amending laws concerning property tax and tax exemptions. The changes will gradually increase taxes on city property intended for providing water supply and disposal services, explained Eduard Batanov, chairman of City Hall’s finance committee. Such property is under the operating control of Vodokanal SPb, a state unified enterprise. According to Batonov, the company will start paying 25 percent of the local property tax rate on January 1, 2011. Payments will increase to 50 percent of the rate in 2012 and 75 percent in 2013. The current property tax rate in St. Petersburg is 2.2 percent. 
Vodokanal was first exempted from paying property tax in 2004, when City Hall adopted a change in local tax legislation. The water supplier was actively developing its investments at the time and needed the exemption, said Batanov. But in light of the economic crisis, St. Petersburg’s budget is in need of additional income. Batanov estimates that the additional taxes paid by Vodokanal would add hundreds of millions of rubles to the city budget every year, estimates Batanov.
Felix Karmazinov, Vodokanal’s director, declined to comment. A source close to the company said that Vodokanal opposed cancelling the exemption. “The tax payments will end up reflected in consumer rates,” said the source, adding that Vodokanal already returns about 25 percent of its proceeds to the government in taxes. Meanwhile, a city official pointed out that the company has invested about 45 billion rubles ($1.5 billion) in infrastructure during the last five years.
According to Sergei Spasenov, director of the St. Petersburg-based Pepelyaev Group tax office, the city will be forced to raise Vodokanal’s service rates if the property tax is brought back into force. “After all, the company’s income comes entirely from supplying water, providing canalization services and attracting new customers,” Spasenov said. Property tax exemptions are most commonly granted to government-run and not-for-profit organizations; the city has separate benefits for investors, he explained. 
Only two other state enterprises in St. Petersburg are exempt from property tax — Metropolitan and Gorelektrotrans, both of which are responsible for local public transportation. 
“Despite its natural monopoly, Vodokanal is a commercial organization and should therefore pay full taxes,” said Alexander Deryugin, an expert at the Center of Fiscal Politics. According to Deryugin, the tax exemption for water supply and disposal violates the Tax Code, as it creates a disparity in conditions for companies based on the types of property in their control. 
An employee of one energy provider operating in St. Petersburg said that among the many companies participating in local infrastructure development, Vodokanal is the only one receiving tax privileges from the city, though the others are not investing any less.

TITLE: Palace in City Center Sold Off
AUTHOR: By Anatoly Tyomkin and Nadezhda Zaitseva
PUBLISHER: Vedomosti
TEXT: The firm Tsertum-Invest, a partner of Tashir and Gazprombank and a co-owner of the Blagoveshchensk Valves Plant, has purchased the palace of Count Alexander Kushelev-Bezborodko.
The federally protected building, built in 1775 and reconstructed in 1858 and 1874, is located in the historic center of St. Petersburg, alongside the Summer Garden between the Troitsky and Liteiny bridges.
Rossiisky Auktsionny Dom had planned to auction the palace, at 24 Naberezhnaya Kutuzova, in December. The 6,250-square-meter building, owned by Nevskoye, was to be sold off by Dutch auction with a starting price of 918 million rubles ($30.6 million), but a buyer willing to pay 740 million rubles for the property was found before the bidding began, said Andrei Stepanenko, director of the city’s property fund.
Stepanenko declined to identify the buyer, saying only that it was a diversified Moscow investment company.
According to the Uniform State Register of Real Estate Property, the building’s new owner is Tsertum-Invest. Interfax’s SPARK database lists the company’s owner as 29-year-old Filipp Polyansky and its specialty as financial intermediaries.
Polyansky said there are no concrete plans for the building, which could be reconstructed as a company’s representative office or as a hotel. Investment into the palace could be equal to what the company has paid for it, Polyansky said, declining to comment on how the project is being financed.
The deal was a major one, since before the crisis only land for long-term rent for residential construction sold for those prices, Stepanenko said.
Tsertum-Invest is a partner of the Tashir group. According to SPARK, of Tsertum-Invest’s six subsidiaries, companies in the Tashir group are co-owners of four. The diversified holding, whose main owner is Samvel Karapetyan, is involved in development, advertising and manufacturing.
“Tashir does have a series of projects with Tsertum-Invest, but this mansion was purchased by a company that was not acting on our behalf,” spokeswoman Irina Kagramanova said. Tashir already has one project in St. Petersburg — it is constructing the 85,000-square-meter Slovatsky Dom shopping center.
Tsertum-Invest owns 98 percent of the Blagoveshchensk Valves Plant, also known as BAZ, according to the factory’s financial reporting for the fourth quarter of 2009. BAZ supplies Gazprom and several major oil companies.
According to the results report, BAZ’s board of directors includes Polyansky, Gazprombank deputy CEO Ilya Yeliseyev and Alexei Nikolayev, a deputy CEO of Gazprombank subsidiary Upravlyayushchaya Kompania — Strategicheskiye Aktivy.
Yeliseyev was a university classmate of President Dmitry Medvedev and Polyansky’s law professor.
Neither Gazprombank nor its senior management has anything to do with the mansion, the bank’s press service said.
Until 2008, Polyansky headed the Dar Foundation for Regional Noncommercial Projects, which, according to SPARK, is 100 percent owned by Levit. That company is a shareholder in Novatek and, according to Novatek’s financial reporting, its owner is the gas company’s CEO, Leonid Mikhelson.
In December, Novatek’s press service said neither the company nor Mikhelson had anything to do with the purchase of the mansion.

TITLE: In Brief
TEXT: <strong>Laundry Ring Busted</strong>
MOSCOW (Bloomberg) — Russian investigators have busted a crime ring that laundered more than $1.6 billion since 2007 for companies and individuals in and around Moscow, the Interior Ministry’s economic crimes department said. 
The group charged a fee of between 1 percent and 7 percent to legalize ill-gotten gains through three commercial banks and 79 domestic and foreign firms, the ministry said in a faxed statement Monday. More than 150 officials were involved in the investigation. 

<strong>AvtoVAZ Plans Hike</strong>
MOSCOW (Bloomberg) — AvtoVAZ plans to double output to more than 1 million cars a year by 2020, Chief Executive Officer Igor Komarov told reporters Monday in Moscow.
Sales may reach 450,000 this year, Komarov said. 
Renault, France’s second-largest automaker, plans to double capacity at its Avtoframos venture in Russia to 160,000 cars a year, Chief Executive Officer Carlos Ghosn told reporters in Moscow on Monday.
Europe’s automobile market will probably shrink 10 percent by sales this year, Ghosn told reporters.

<strong>TNK-BP Boost?</strong>
MOSCOW (Bloomberg) — TNK-BP, BP’s Russian oil venture with a group of billionaires, may boost output by 1 percent to 2 percent, Chief Operating Officer Bill Schrader told reporters Monday in Moscow.
The company said net income last year was $5 billion. Schrader said 2009 was a “very strong year” for the company.
TNK-BP boosted oil and gas output 2.9 percent to 1.69 million barrels last year, while liquids production rose 2.4 percent, the company said.

<strong>Ukraine to Pay on Time</strong>
KIEV (Bloomberg) — Ukraine will pay Russia on time for February gas deliveries, Fuel and Energy Minister Yury Prodan told reporters Monday in Kiev.
March gas purchases will depend on the weather, Prodan said. Naftogaz Ukrainy, the state energy company, will seek loans from international finance organizations this year, he said, without giving details.   

<strong>Corporate Profits Up</strong>
MOSCOW (Bloomberg) — Russian corporate profits gained 14 percent last year compared with 2008, the Federal Statistics Service said.
The combined net income of all Russian companies except financial institutions, insurers, small businesses and Russian Railways increased to 4.3 trillion rubles ($143.9 billion) from 3.8 trillion rubles in 2008, the service said in an e-mailed statement Monday.

<strong>Georgian Developments</strong>
TBILISI (Bloomberg) — Egyptian investors may develop resorts on Georgia’s Black Sea coast at Gonio, site of a former Russian military base, a regional economic official said.
A group of Egyptian investors visited the area recently and expressed interest in developing a total of about 300 hectares in several areas of Georgia, including Gonio and the central Racha region, said Mikheil Tigishvili, head of the free industrial zone in Kutaisi, where Egyptian home appliance producer Fresh began building factories last June.

TITLE: Hungary Replaces VEB in Malev
PUBLISHER: Bloomberg
TEXT: BUDAPEST — Hungary’s re-nationalization of Budapest-based airline Malev contravenes rules banning state aid and should be blocked by the European union, rival carrier Wizz Air said Monday.
Wizz Air is “outraged” by the planned rescue and will ask EU competition authorities to review the proposal, the company, based in Vecses, near Budapest, said in a statement. 
Hungary will take a 95 percent stake in unprofitable Malev, providing 25.2 billion forint ($128 million) by converting debt to stock and paying the balance in cash, it said Saturday. The government will replace Russian state-owned development bank Vnesheconombank as controlling shareholder after the latest privatization of the carrier failed.
“It clearly violates the state aid rules, it is discriminatory, distorts competition and provides no benefit to the consumer,” Wizz Air said in its statement.
European Commission spokeswoman Amelia Torres said she couldn’t comment on Malev’s coming re-nationalization, adding that the project “seems to be a plan only.”
The government will implement a “forceful restructuring” of Malev, including job cuts, in an attempt to return the company to profit by 2012, the Finance Ministry has said. 
Vnesheconombank agreed to pay 32 million euros ($44 million) in bank guarantees to Hungary.
The Russian bank had controlled Malev since last year after taking over a stake sold to Boris Abramovich’s AirBridge in 2007 in the seventh attempt to unload the carrier since the collapse of communism in 1990.
Wizz carried 7.8 million passengers last year, up 33 percent, after the opening of a new base in Prague gave it a total of 11 hubs across central and eastern Europe. Malev, increased the passenger total 6 percent to 3.3 million, according to its web site.

TITLE: Analysts See Potential In City Investment Trends
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: The volume of foreign investment in St. Petersburg decreased by 6.8 percent to 5.5 billion last year compared to 2007.
The good news for the city was that the decrease was significantly smaller than the overall fall of foreign investment in Russia, which stood at 14.2 percent.
Another positive trend is that the biggest inflow of investment to the city last year was seen in the fourth quarter of the year. At $2.5 billion, the figure was 2.2 times higher than that seen in the same period in 2008, the city’s economic development committee said.
Sergei Fiveisky, first deputy head of the committee, said that in the last quarter of the year the volume of foreign investment grew significantly in the areas of trade and long-term loans. Most of those loans were given to the manufacturing industry, vkrizis.ru web site reported.
The volume of direct investment was $1.19 billion, most of which came from Finland, Germany and China. Trade loans totaled $2.3 billion — 9.8 percent more compared to the same period in 2008.
Investment in manufacturing industries increased by 2.9 percent up to $4.48 billion, accounting for 81.2 percent of total investment in the city. In 2008 it accounted for 73.5 percent.
The leading investors in St. Petersburg were Belarus (15.8 percent), Switzerland (14.7 percent), Germany (10.1 percent), Cyprus (10.1 percent) and the U.K. (9.5 percent). These countries together brought 60.2 percent of foreign investment to the city.
The volume of foreign investment in St. Petersburg was $5.9 billion in 2008, $6.3 billion in 2007, $5 billion in 2006 and $1.4 billion in 2005.
The leaders of foreign investment growth in St. Petersburg were the construction and automobile sectors, which continued to invest despite the fall in production in these sectors.
In January 2010, the volume of construction work decreased by 37 percent compared to January 2009. The production of automobiles decreased by 58 percent, and of trucks by 71 percent.
“Foreign investment projects in these areas began before the economic crisis, and for the most part have been continued,” said Fiveisky.
Last year the production of automobiles began at the city’s Nissan plant, and this year the Hyundai automobile plant will be opened. The Pulkovo technology park will also be opened this year by Finnish company Technopolis, he said.
Vladimir Gryaznevich, an economic expert, said there were clear reasons for the growth of investment in these two sectors. Visible activity on the real estate market can already be predicted, he said.
“The most reliable sign of future growth on the real estate market is usually certain actions by real estate agents, who have already begun to compete for land,” Gryaznevich said, vkrizis.ru reported.
Gryaznevich also said demand for automobiles may start to recover this year.
“The biggest investment in this sphere will be in the production of automobile parts, since the volume of car production is already so high that the production of car parts has become profitable,” he said.
Economist Sergei Shelin said that although St. Petersburg attracts 5.3 percent of all foreign investment, the city is still not very attractive to foreign investors because the region has a relatively low rate of work efficiency against a background of relatively high expenses.
The city’s real investment includes medium-sized investment in the food industry and trade, he said. 
Experts say that the city cannot expect much inflow of investment before 2011 to 2012.
According to a recent economic survey of Russia conducted by PricewaterhouseCoopers, the total volume of capital investment in Russia decreased by 17 percent in 2009.
Such low level of investment indicates tough lending conditions, limited access to loans and a low level of business confidence caused by limited demand, PwC said.
In general the volume of investment in Russia continues to decrease but the rate of decline is getting slower, the consulting company said.

TITLE: Kuzbass Considers IPO on Recovery in Demand
PUBLISHER: Bloomberg
TEXT: MOSCOW — Kuzbass Fuel, a Russian producer of coal for power stations, is considering an initial public offering to fund plans to almost double output as demand for energy recovers after last year’s record economic slump.
The company will spend $280 million raising production to 11 million metric tons in 2013, from 6.2 million tons last year, Chief Executive Officer Igor Prokudin said in an interview from Kemerovo, Siberia, where Kuzbass Fuel is based.
Demand for power in Russia is rebounding as factory output grew in January for a third month, pulling the world’s biggest energy supplier out of its worst economic contraction since the collapse of the Soviet Union in 1991. State spending, exports and efforts to stabilize inventories stoked a recovery after industrial output shrank for 12 months from October 2008.
Kuzbass Fuel hired UBS and Troika Dialog to manage the sale in Moscow in April or May, according to two bankers who declined to be identified because the deal is private. The offering would be Russia’s first for a producer of power coal.
“It will be the first IPO in Russia’s energy coal sector,” Nikolai Sosnovsky, an analyst at Uralsib Financial, said in Moscow. “It should pave the way for SUEK, which plans its IPO for the summer.”
Kuzbass, valued at $844 million on Moscow’s RTS over-the-counter market, may be worth about $1 billion when it is listed, Sosnovsky said. Siberian Coal Energy, Russia’s largest producer of the fuel, plans to raise $1 billion selling shares in an IPO in London in June, Reuters reported last month.
Kuzbass is building an enrichment facility with capacity of 2 million tons of coal a year and plans to build two more, Prokudin said. The company plans to increase its coal reserves to about 800 million tons from the present figure of 465 million tons, he said.

TITLE: Deripaska’s GAZ Completes Debt Restructuring
PUBLISHER: Bloomberg
TEXT: MOSCOW — GAZ Group, the Russian carmaker owned by billionaire Oleg Deripaska, “officially completed” restructuring 39.2 billion rubles ($1.3 billion) of debt, clearing the way for the government to guarantee its loans.
“This is a unique transaction because of the large number of participants involved, the large amount of ruble debt and the use of Russian legislation,” Alexander Bazarov, a vice president of Sberbank, which managed the restructuring, told reporters in Moscow on Monday. “This is the first-ever syndicate secured by a Russian state guarantee.”
Nizhny Novgorod-based GAZ agreed with 21 foreign and Russian banks on Sept. 24 to extend loans by five years, with a six-month interest holiday and payments of principal halted for two years. Alfa Bank held up the deal until last month in a dispute with Basic Element, Deripaska’s holding company.
GAZ agreed to pay 4 percentage points over the Russian central bank’s refinancing rate for loans under the restructuring agreement, Bazarov said. Bank Rossii cut its benchmark rate to a record low 8.5 percent last month.
The carmaker will have to approve any “big moves” with creditors for five years, including mergers and acquisitions, said Valery Lukin, chairman of Deripaska’s Russian Machines, the parent company of GAZ. Sberbank may get a seat on the GAZ board, Lukin said.
Deripaska’s companies, which also include United Co. RusAl, the world’s biggest aluminum producer, restructured about $20 billion of debt in the last year after demand for cars and commodities plummeted. Of that amount, RusAl accounted for $17 billion, the most in Russian corporate history.

TITLE: Foreign Investment Plummets in 2009
PUBLISHER: Combined Reports
TEXT: MOSCOW — Foreign direct investment fell in 2009 to a fourth of the level of previous years, while authorities have said the return to the pre-crisis level is unlikely until 2013.
FDI came to $15.9 billion last year, down 41 percent year on year and massively below the $60 billion to $70 billion that came in the years before the recession enfeebled the resources-rich economy, according to Central Bank statistics.
The decline in FDI comes in line with the average slide seen across all regions of the world — with the UN Conference on Trade and Development estimating total FDI falling to $1 trillion last year from $1.7 trillion a year earlier.
But while UNCTAD expects FDI inflows to gain momentum in 2011 and rise to $1.8 trillion, Russia — currently one of the top five most attractive nations for FDI — is not likely to see its pre-crisis levels until 2013 or so, Finance Minister Alexei Kudrin said earlier in February.
And Cyprus — home to a number of investment vehicles belonging to Russian firms or individuals — remained the biggest investor in Russia, distorting somewhat the real volume of foreign investment.
Resource-rich Russia saw its economy shrink by 7.9 percent in 2009, before slowly starting to grow anew in 2010.
The recovery remains unstable, with data showing mixed signals, but the economy is expected to grow by some 3.7 percent this year, according to a Reuters poll. Official estimates put GDP growth at 3.1 percent.
But with the economy still dependent on crude prices and with the prospect of a renewed fall in oil prices later this year on the disappointing pace of the global economic recovery, Russia’s growth will likely falter to just 1.5 percent in 2011, economists at Capital Economics in London warned.
“We think that output may not return to its pre-crisis levels until 2012,” Neil Shearing and David Oxley said in a research note. “By contrast, the Chinese and Indian economies are expected to grow by more than 25 percent over the same period. So for now at least, Russia seems destined to remain the fourth BRIC.”
Prime Minister Vladimir Putin has called on the government to create more favorable conditions for foreign investment.
“In the post-crisis period, the competition for attracting this investment will be fairly tough, and it has already begun,” Putin said earlier this month.
Overall foreign investment climbed to $27.2 billion in the fourth quarter from $22.5 billion in the third quarter of last year, the State Statistics Service said.
Foreign investment in stocks and bonds tumbled 37.7 percent in 2009 to $882 million from the previous year, according to the statistics office.  
Other foreign investments, including loans from foreign banks and Russian companies’ foreign divisions, were down 13.5 percent in the period to $65 billion, the data showed.
The wholesale and retail industry received the largest amount of investment, followed by manufacturing and transport and communications, according to the statistics service. Foreign investors brought $22.8 billion into the retail industry, including stock and bond purchases. 

(Bloomberg, SPT)

TITLE: Putin
Tightens Policy On Mortgages
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prime Minister Vladimir Putin said Friday that the government would only support mortgages for newly built apartments in a bid to boost the flagging construction industry.
The government plans to lend banks an additional 250 billion rubles ($8.3 billion) this year for their mortgage programs starting in April, Putin said during a trip to Tyumen.
Homebuyers only borrowed 138 billion rubles in mortgages last year, an abrupt decrease from the past few years. The amount came to 1.2 trillion rubles over 2007 and 2008 together, Putin said.
The near freezing of the real estate market prompted the government to take measures to prop up the flagging demand.
“This way, we will provide serious support for housing construction and stimulate the launch of new building projects,” he said.
Standard mortgages will have a cap of 8 million rubles for housing located in Moscow and St. Petersburg and 3 million rubles for the rest of the country, Putin said.
Deputy Prime Minister Dmitry Kozak said in October that the upper plank was initially planned to be considerably lower than the new limits, saying it was 4 million rubles for large cities and 2 million rubles for smaller cities.
Under the mortgage support program, Vneshekonombank and the National Welfare Fund will pump as much as 250 billion rubles into the financial system by buying mortgage bonds issued by banks. Putin reiterated Friday that the banks that want to be part of the deal will have to keep their lending rates at 11 percent or less. The current average rate is 14.5 percent, Putin said.
The banks that receive government money will also have to agree to drop demands that borrowers contribute more than 20 percent of the home’s cost, he said.
Putin first announced intentions to seek a lower mortgage rate of 11 percent through the cash infusion into banks at his United Russia party congress in November.
The plan has the potential to work, said Tigran Hovhannisyan, a real estate analyst at investment bank UralSib. One stumbling block may be the fact that banks are reluctant to accept collaterals of property in unfinished apartment buildings, which construction companies commonly begin to sell as soon as they lay the foundation, he said.
“How can you sell something that doesn’t exist?” he said.

TITLE: Investment in Russian Real Estate Falls Sharply
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The volume of investment in Russia’s real estate market dropped dramatically in 2009, brought on in large part by an exodus of foreign capital, real estate consultant CB Richard Ellis said in a report Thursday.
Total Russian investment in real estate fell 77 percent in 2009, declining to 790 million euros ($1.1 billion) from 3.4 billion euros the year earlier, the report said. The number of deals reported also plummeted, falling to 22 in 2009 from 50 the year before.
While the recession occasioned a big dip in investment in all asset classes, investment in real estate was driven down hard by a retreat of foreign capital, with only six deals settled in 2009 that involved foreign buyers.
“For the first time in recent years the majority of money came from domestic investors, not from foreign investors,” said Christopher Peters, director of the research department at CB Richard Ellis. “The reason is that in bad economic times people retreat to their core market. Foreign money went back to the Western market since people felt safe with this market,” Peters told The St. Petersburg Times.
Russia’s image in terms of attracting foreign investments has become quite negative, said Nikita Yarushnikov, head of real estate development at Wermuth Asset Management.
“The most frightening words for investors at the moment are real estate and Russia,” Yarushnikov cited an investor as saying.
Most of the deals that we made in Russia’s real estate market last year were either forced or agreed to in advance, he said, adding that there were no new projects and no new money was coming to the market.
The average deal size declined to 49 million euros, down from 71 million euros a year before. The largest deal, worth 214 million euros, was developer Horus Capital’s sale of five office properties in Moscow to BinBank.
Market players say, however, that the volume of investment in the real estate market will recover slowly over the coming year.
Foreign investors began returning to the real estate market in the fourth quarter of 2009, investing as much as 321 million euros over the period, outstripping the 117 million euros spent by domestic investors, the report said.
But the recovery is likely to be tepid, Yarushnikov said, as foreign investors are being very cautious as they step back in.
“Investors have no appetite for risk in Russia. The only market niche where investment is likely to return soon is in completed projects with low risk,” he said.

TITLE: Weapons Exports Hit Record High In 2009
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Arms exports hit a record high in 2009, but analysts said Friday that the defense industry may have reached the limits of its export revenue-generating capacity, Reuters reported.
Last month’s test flight of Russia’s first fifth-generation jet fighter suggests that its defense industry is emerging from a period of post-Soviet neglect, while Moscow’s portfolio of arms contracts can keep export revenue steady for five years.
Arms exports edged up by $150 million to a post-Soviet record of $8.5 billion last year, the Center for Analysis of Strategies and Technologies (CAST) said in a report.
Fluctuations in the dollar exchange rate resulted in exports showing “real-term growth of a modest 2.1 percent, meaning sales have essentially been flat over the past two years,” it said.
“That serves as further indication that Russia’s defense industry has reached the limits of its export revenue generating capacity,” CAST said.
“Further growth will require a serious upgrade of production facilities, as well as investment in skills and training.”
Arms export monopoly Rosoboronexport accounted for $7.436 billion of Russia’s 2009 defense exports, up from $6.725 billion in 2008, CAST said.
“Russia’s portfolio of defense contracts had reached $40 billion by the end of 2009 — an increase of $7 billion on the previous year,” CAST said. “Rosoboronexport … secured an unprecedented $15 billion of new sales last year.
“The existing portfolio of defense contracts should keep arms exports revenue steady for another five years.”

TITLE: Manufacturing Rises in February, Indicates Recovery
AUTHOR: By Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian manufacturing expanded for a second month in February, signalling a “fragile” recovery, as new orders continued to grow, while employers shed more jobs.
VTB Capital’s Purchasing Managers’ Index slipped to 50.2 last month from 50.8 percent in January, the bank said in an e-mailed statement today. The index, which is based on a survey of 300 purchasing executives, shows a contraction with a figure below 50 and growth with a figure above 50.
“A marginal expansion in activity across the sector for the second month in a row” was driven by new orders and higher output, Dmitry Fedotkin, an economist at VTB Capital in Moscow, said in the report. “The employment situation deteriorated further as respondents claimed improvements in business activity were too weak to justify new hiring.”
Improving global sales are prompting companies including Mechel, Russian billionaire Igor Zyuzin’s coal and steel producer, and Novolipetsk Steel, Russia’s biggest steelmaker by market value, to raise production.
Industrial output and retail sales boosted gross domestic product, which expanded a seasonally adjusted 0.3 percent in January from the previous month, Deputy Economy Minister Andrei Klepach said on Feb. 25. Frail investment demand and rising unemployment remain “weak links” of Russia’s economic recovery, he said.
Employers cut jobs at the fastest rate since last August and inflationary pressures built up, according to VTB. The unemployment rate rose to 9.2 percent last month, almost matching a credit crisis peak of 9.4 percent a year earlier, according to the Federal Statistics Service.
The average costs for manufacturers rose for a 13th month in February, driven by energy, utilities, transportation and metals prices, the report said. The rate of input cost inflation was the highest since July 2008, according to the report.
Manufacturers expanded input purchases at a faster pace in February, posting the highest rate since March 2008. Still, the overall level of input stocks in the sector continued to decline.
The PMI is derived from indexes that measure changes in output, orders, employment, suppliers’ delivery times and stocks, according to VTB.

TITLE: NATO-Phobia
AUTHOR: By Michael Bohm
TEXT: Once again, we have learned that NATO is the greatest external security danger to Russia. But this time it’s not coming from the country’s arch-conservative journalists or analysts carping at the alliance’s evil intentions on government-controlled television, but from the holy of holies in terms of Russia’s national security documents — the new military doctrine that President Dmitry Medvedev signed on Feb. 5 — conveniently timed to steal the show during the Munich security conference the same day. Unfortunately, the doctrine marks a new, aggravated phase in Russia’s NATO-phobia.
In Article 8 of the doctrine, NATO got the No. 1 spot among Russia’s 11 most important external military dangers. Global terrorism is way down the list at No. 10.
Medvedev noted rather disingenuously in an interview published Thursday that NATO is not a “threat.” What he was referring to was that the doctrine had two separate categories: Russia’s greatest “threats” and its “dangers.” NATO was No. 1 in the danger category only.
Whether it is called a threat or a danger, it is bad for U.S.-Russian relations any way you look at it. Things were looking so good after U.S. President Barack Obama took office a year ago. First, he supported the campaign to shelve NATO membership for Ukraine and Georgia, the two sorest spots in NATO-Russian relations. What’s more, Viktor Yanukovych’s presidential victory now means that NATO membership for Ukraine is a nonissue.
As for Georgia, this was always considered a neocon project of former President George W. Bush, and Obama has been all too eager to distance himself as much as possible from this foreign policy disaster, particularly after Georgian President Mikheil Saakashvili recklessly sent tanks into South Ossetia in August 2008. More importantly, NATO, according to its own rules, cannot accept new members that have unresolved internal territorial disputes. Since NATO doesn’t recognize the independence of South Ossetia and Abkhazia, alliance membership for Georgia is all but impossible so long as Russia has troops and bases there.
Since Georgia and Ukraine are off the NATO agenda, it is not clear what the doctrine meant when it warned of the danger of NATO’s infrastructure “approaching Russia’s borders.” Who exactly are the ferocious NATO enemies at Russia’s gates? The Baltic states? These three tiny countries have a total of 25,000 active military personnel and 25 shoulder-launched surface-to-air missiles, while their combined air force consists of about a dozen aging Czechoslovakian and Soviet trainers, military transporters and utility helicopters. Not exactly the stuff to make Russia’s generals stay up at night worrying about an attack.
Perhaps the doctrine was referring to NATO’s Baltic Air Policing force — four NATO-member aircraft that patrol the Baltic states’ airspace — but this hardly constitutes “infrastructure.” The NATO threat to Russia is clearly political, not military.
The main reason the Baltic states sought NATO membership is to fall under NATO’s collective security guarantee: Article 5 of the NATO Charter,  which says any attack on any member shall be considered an attack on all. But since Russia has no plans to attack the Baltics, the Article 5 collective-defense provision should not concern Moscow.
This NATO-phobia looks particularly strange when one of NATO’s key members — France — set a new precedent and agreed to sell a Mistral assault ship to Russia. These 23,700-ton, 210-meter-long helicopter and command ships will probably be deployed in the Arctic and the Black Sea. (If Russia had had just one of these ships during the 2008 war with Georgia, it could have subdued Georgia in just 40 minutes, according to Chief Navy Commander Vladimir Vysotsky.) With “enemies” like France selling supermodern assault ships, Russian doesn’t need friends like Venezuela, Iran or Cuba.
Whatever happened to the famous clause enshrined in the Founding Act on Mutual Relations signed by NATO and Russia in 1997 — that “NATO and Russia do not consider each other as adversaries?” It has now been definitively replaced by Military Doctrine 2010, which marks the apogee of the Kremlin’s 10-year propaganda campaign to turn a non-adversary into an adversary.
How can we get back to the cooperative spirit of the Founding Act? Yury Shevchuk, the legendary singer of the rock group DDT who is famous for his liberal political views, joked in a 2008 interview on Ekho Moskvy radio: “What is so terrible about NATO? Russia should join the alliance. Maybe as a member we could even undermine NATO from within with our alcoholism, laziness and pofigizm [a couldn’t-care-less attitude]. That is the best way to solve Russia’s NATO problem!”
There are two possible explanations for Russia’s NATO obsession. The first, incorrect explanation, which is commonly quoted in the West, is that Russian leaders suffer from chronic clinical paranoia. The other (correct) explanation is that they are as healthy as horses but feign the paranoia for internal political purposes and to justify huge defense expenditures to defend against a NATO invasion — which, of course, is only a cover for bureaucrats to plunder the funds. This is a vivid example of how NATO-phobia helps fuel corruption.
The military significance of Article 8 is minimal since few in the West believe this nonsense any more than Russia’s leaders, but the political significance should not be underestimated. This is only the third doctrine in Russia’s post-Soviet history and the first time that NATO has specifically been named as a danger and given top billing.
Why all the hysteria over NATO when everyone — including Prime Minister Vladimir Putin, hardline generals and pro-Kremlin archconservative analysts — knows that it is rubbish? One reason has to do with Defense Minister Anatoly Serdyukov’s military reforms. Feb. 15 marked his three-year anniversary as head of the Defense Ministry, and in this short period he has already carried out real, painful reforms despite fierce opposition from the officer corps and generals. About 180,000 officers have already been fired, and Serdyukov has shut down a few of the corruption schemes that have fattened the military at all levels for years.
But Serdyukov has to be careful that he doesn’t step on too many toes too quickly. On one hand, he must show Putin and Medvedev that he is cutting the tremendous fat and modernizing the army, but he doesn’t want to spark a rebellion among the top brass. NATO may have been included in the doctrine to throw a bone to Serdyukov’s opponents, The key to this strategy is to delay the reforms as much as possible for the hundreds of thousands of military personnel who could easily fall under the category of “fat” — at least until they reach retirement age. Crying “NATO!” is a tried-and-tested obstruction method and is particularly effective since it jibes so well with the Kremlin’s protracted propaganda campaign that “enemies are at the gate.”  
In the Feb. 22 issue of Vlast, Russia’s envoy to NATO, Dmitry Rogozin, was asked, “What is Russia’s greatest threat?” He answered: “Our biggest enemies are [our own] weakness and lack of confidence and corruption, which erodes the state … Of course, enemies can always be found, but the weaker the country, the more enemies there are.”
He hit the nail on the head. Sometimes, Rogozin can’t help but tell the truth, and kudos to him for this. To deal with the real threats that Rogozin mentioned, Medvedev should immediately amend Article 8 of the new military doctrine. He needs to remove the entire first point about NATO and replace it with corruption as the No. 1 threat to the territorial integrity and survival of Russia.
Medvedev and Putin should mobilize all of the country’s resources — both military and civilian — to fight against this dangerous and insidious enemy and forget once and for all about fighting imaginary ones.

Michael Bohm is opinion page editor of The St. Petersburg Times.

TITLE: Surviving in Extremistan
AUTHOR: By Anna Shcherbakova
TEXT: A year ago, many of us dreamed that the end of the financial crisis was just around the corner and that soon things like affordable loans and exciting, well-paid jobs would return. But the good old times appear to be gone for good, with no sign of where any new opportunities may come from — for instance, which industries will be new points of growth and who will be the new leaders.  
 The sole result of 18 months of crisis, besides fatigue, is uncertainty. Amid a lack of resources, uncertainty is the only certainty of doing business — and it seems to be becoming the dominant idea of the future. Nothing will be the same. 
Make an omelet with the broken eggs, advises Nassim Taleb, a veteran trader, distinguished professor and writer. According to him, debt should be converted to equity, leveraged buyouts should be banned, and the bankers and financial institutions who got us into this mess in the first place should lose their bonuses.  
His recipe for Capitalism 2.0 is smaller companies, better ecology, no leverage, entrepreneurs taking risks instead of bankers, and companies being born and dying every day without making the news. “Ten principles for a Black-Swan-proof world by Nassim Taleb” appeared in the Financial Times in April last year, several months before his bestseller “Black Swan: The Impact of the Highly Improbable” was published in Russian. When it first hit the shelves of American stores in 2007, it seemed like pure fantasy. But later Taleb gained fame as a guru who had correctly predicted the global crisis. 
I love the book, although the author describes the profession of business reporter as totally useless, and even hazardous  — because it allegedly creates a lot of irrelevant noise. Journalists are under pressure to make sense of the chaotic world, he explained in one of his interviews. He doesn’t seem to like his fellow traders or market analysts much either, along with bankers and regulatory authorities. 
Taleb identifies himself as Wall Street’s chief dissident, and questions the industry’s keystones such as leverage and derivatives. His attitude to risk is also atypical for a trader: “Most people take risks because they don’t know about them. It’s like crossing the street blindfolded.” He is also skeptical about analysis: Past shortfall doesn’t predict future shortfall. A turkey who gets food every day doesn’t expect this delight will end on Thanksgiving Day. 
Taleb’s main theme is that of the black swan — an unpredictable rare event with a high impact on markets and life itself — like 9/11 or the Russian default of 1998. Black swans can also be good, such as scientific discovery or existence itself.
Black swans reside in Extremistan — as opposed to Mediocristan — which is the territory of chaos and complexity. Traditional algebra and statistics don’t apply in Extremistan, where every single event could make a huge difference to the overall outcome. A lucky move, like publishing a book at the right time, can make one incredibly rich and famous. 
 
Anna Shcherbakova is the St. Petersburg bureau head of business daily Vedomosti.

TITLE: In the Spotlight: Love and Other Stupidities
AUTHOR: By Anna Malpas
TEXT: Rita has a few problems — her husband’s pregnant lover for a start — but when she dyes her mousy hair a vivid shade of scarlet, things start going her way.
In “Love and Other Stupidities,” a new series on the Domashny channel, the action centers around a beauty salon, where the staff dole out tea, sympathy and big hair to their sobbing clients — before passing on every juicy detail.
In an episode this week, Rita — possibly Russia’s most pathetic woman — complained that her family situation was spinning out of control.
Her macho husband, Misha, was spending a lot of time doing DIY for Eleonora, the sexy neighbor whose bouncy curls put Rita’s lanky locks to shame. After Eleonora grew a large bump, she took Rita aside and casually explained: “It’s Misha’s baby. Oh, and I’m moving in with you.”
Rita didn’t do the decent thing and pull out Eleonora’s curls, but instead somehow ended up pushing the pram for the new arrival on those long walks that Russian babies seem to require.
Luckily, the stylists at the salon came to the rescue and gave Rita a new look, if not some self-respect. Her new glossy locks enabled her to find her own boyfriend, who — in a final twist — decided to move in with the menage a trois. It’s a plot that could be a sitcom in itself, a bit like the U.S. show “Big Love” about polygamous Mormons.
You could accuse Domashny of many things but not of not knowing its audience. Its name means “Domestic,” and its programming is a warm, comforting blanket of Brazilian soap operas, cooking shows and Pierce Brosnan in “Remington Steele.”
Amazingly, the channel is also the only one in Russia to be showing the U.S. hit “House,” which it somehow snatched from under the noses of its bigger rivals.
“Love and …” is its first original drama series and is basically the visual equivalent of a romance novel. The women who pop in for manicures, haircuts and crying sessions are all mousey but redeemable, while Mr. Right is always hovering just out of sight.
The salon staff are the only characters who appear in every episode. The nervy owner, Syuzanna, who has permanently arched eyebrows and an aversion to calories, is played by former news reader Yelena Starostina. Then there’s Lyudasya, the beefy masseuse, who pummels clients’ cellulite, and a posse of blonde stylists who gossip and eat cake whenever they can escape Syuzanna’s beady eye.
No men ventured into the salon in the episodes I saw, but it would be fair to say that they are ever-present in the conversations.
The message of the show seems to be that nice hair can’t buy you love, but it does help. One client, Lena, arrived in despair with a head of mousy hair and a heart set on her unrequited high school crush, Oleg, now a high-flying diplomat.
Hours later, now a glamorous blonde, she sweeps past Oleg in a bar and forces him to grovel to find out her name. Days later, she drives up to the registry office in a white limousine. 
“That’s what a good haircut does,” a stylist boasts.
But in the end, Lena bolted after finding out that Oleg didn’t even remember her drabber school self, who humbly did his homework and let him come to her apartment to have sex with his girlfriend.
“It’s not real,” she confessed to the stylists. Luckily she had already found true love with a registry office clerk who liked the inner Lena and wouldn’t require her to go for daily blow-dry appointments.

TITLE: After Vancouver, It’s the Turn of Sochi
AUTHOR: By Stephen Wilson
PUBLISHER: The Associated Press
TEXT: VANCOUVER, British Columbia — As the Vancouver Olympics come to a close, the focus turns across the world to Russia’s first Winter Games in 2014 — taking the Olympic movement to a new territory and a new set of challenges.
“We are next,” Sochi organizing chief Dmitry Chernyshenko said. “The bar has been well and truly raised.”
The Russian city’s first big moment in the global spotlight came during Sunday night’s closing ceremony, with the Olympic flag handed from the mayor of Vancouver to the mayor of Sochi.
The world was given a first taste of what Sochi has to offer during an eight-minute segment featuring Russian sports stars, music and dance performers and giant glowing spheres called “Zorbs.”
“This is a historic event for Sochi,” Mayor Anatoly Pakhomov said. “We understand it is a huge responsibility for Sochi and for Russia and we can’t let anyone down.”
After the showbiz, the hard work must continue back home as organizers prepare for an event that has the prestige of Russia and its leaders — including Prime Minister Vladimir Putin — on the line.
Ever since Sochi was awarded the games by the International Olympic Committee three years ago, questions have been raised: Can Sochi complete its massive construction projects on time? Will the funding hold up? Will the games be safe in a city near the separatist Abkhazia region in neighboring Georgia?
Putin, Russian president at the time, was instrumental in Sochi securing the games when he traveled to Guatemala City in 2007 and personally lobbied IOC members. He and current President Dmitry Medvedev remain centrally involved in making sure the games are a success.
“It’s so important for Russians that they will not allow it to fail,” senior Canadian IOC member Dick Pound said. “Whatever has to be done will be done.”
Sochi, established as a summer resort under Josef Stalin, is a city of about 500,000 people in Russia’s Krasdonar region. Olympic organizers hope the games will serve as a catalyst in turning the area into a year-round world-class destination for Russians and foreign tourists alike.
Organizers say the games will feature the most compact layout in Winter Games history, with a cluster of ice arenas situated along the Black Sea coast and snow and sliding venues a half-hour away in the Krasnaya Polyana mountains. A new rail line is being built to connect the two clusters.
“You can swim in the warm Sochi sea, and after 24 minutes on a train, you can change clothes and go skiing in the mountains,” Pakhomov said.
First, Sochi has to build virtually all of its Olympic facilities from scratch. “Literally from nothing,” Chernyshenko said.
All venues are now under construction, with 16,000 workers busy on “what is probably the biggest construction site in the world.”
Sochi promises that all venues will be ready two years in advance to allow for the holding of Olympic test events. The first trial run will take place a year from now with a European Cup event in Alpine skiing. More than 70 test events are planned in 2012 and 2013.
The cost of the Olympic infrastructure project is put at $7 billion.
“All the money is allocated and we don’t see any risk for a shortage of finance,” said Chernyshenko, who has a separate operating budget of $1.8 billion.
Russia is also spending billions more on other non-Olympic projects, including renovation of the Moscow-Sochi railway line.
Despite the global economic downturn and fluctuating oil prices, Sochi has managed to raise record sponsorship revenues, surpassing $1 billion in domestic deals so far. The IOC has closely monitored Sochi’s preparations and is happy with the progress, although Jean-Claude Killy, who heads the IOC’s coordination for Sochi, has repeatedly warned there is no time to waste.
The construction and design of Sochi’s boblsed and luge track will be under scrutiny following the high-speed training crash that killed Georgian luger Nodar Kumaritashvili on the day of Vancouver’s opening ceremony.
IOC president Jacques Rogge has written Chernyshenko asking him to ensure the track is safe. The Russian said plans already called for the track to be 6-9 mph slower than Whistler’s.
“We will learn from this tragedy,” Chernyshenko said. “We will do all we can do guarantee the safety factor.”
Security is also an issue on a wider front. Sochi is located in a volatile region, just north of the border with Abkhazia, where Russia has thousands of troops. Russia defied the West by recognizing Abkhazia and another separatist region, South Ossetia, as independent after its war with Georgia in 2008.
“Sochi has been the safest city in the country, the summer residence for the president and prime minister,” Chernyshenko said. “This is a rather calm city. The government is doing everything to protect this region from any risk.”
Sochi brought a team of 150 observers to Vancouver to watch and learn. One key lesson so far: Have contingency plans in place for the kind of weather problems that caused havoc at the snowboard and freestyle venue at Cypress Mountain.
“We are already thinking seriously about Plan B if the weather doesn’t cooperate,” Chernyshenko said, citing plans for new technology and snowmaking techniques.
Another priority for Sochi is recruiting volunteers. Vancouver organizers brought in about 25,000 volunteers, who won rave reviews for their smiling hospitality. Russia doesn’t have a tradition of volunteerism, but is recruiting volunteers from all over the country.
“The games are about people and the human factor,” Chernyshenko said.
The biggest challenge might be in replicating the way Vancouver celebrated these games, with festive crowds in the streets and arenas packed with cheering fans. IOC officials said it had ben the best Winter Olympic atmosphere since the magical 1994 Games in Lillehammer, Norway.
“The Canadian atmosphere here is electric,” Chernyshenko said. “That is exactly what we want to reach in Russia. We will do it with a Russian touch, a Russian look without the stereotypes.”
Sochi organizers can only hope for improved performances from Russian athletes, who bombed at these games with just three golds and 15 total medals going into the final day. The Russians stood 11th in the gold-medal standings — the only time they have been out of the top five since the Soviet Union first competed in the Winter Games in 1956.
Canadian athletes thrilled the host nation by winning the most gold medals in Vancouver, although the U.S. clinched the most overall medals.
The Russian medal flop may account for the absence of Medvedev, who had been expected to come to Vancouver for the final days of the games. His plans apparently changed after the Russian men’s hockey team — expected to make Sunday’s final — was knocked out in the quarterfinals by Canada.
Before the Olympic flag left Canada on its journey to Russia, Vancouver’s organizing committee offered a word of advice to the next hosts.
“Develop a good thick skin and don’t shy away from criticism,” spokeswoman Renee Smith-Valade said, “because it’s healthy and it makes you better at what you do.”

TITLE: Chilean Forces Crack Down on Looting
AUTHOR: By Michael Warren and Eva Vergara
PUBLISHER: The Associated Press
TEXT: CONCEPCION, Chile — Security forces said Monday they had arrested dozens of people for violating a curfew after looters sacked virtually every market in this hard-hit city and Chile’s earthquake toll surpassed 700. President Michelle Bachelet promised imminent deliveries of food, water and shelter for thousands living on the streets.
“We are confronting an emergency without parallel in Chile’s history,” Bachelet declared Sunday, a day after the magnitude-8.8 quake — one of the biggest in centuries — killed at least 708 people and destroyed or badly damaged 500,000 homes. Bachelet said “a growing number” of people were recorded as missing.
The governor of the Concepcion region, Jaime Toha, said troops and police arrested 55 people overnight for violating a curfew imposed to halt looting.
Some coastal towns just to the north of Concepcion were almost obliterated, first shaken by the quake, then slammed by a tsunami that lifted whole houses and carried them inland and that reduced others to piles of sticks.
In Concepcion itself, firefighters were seeking survivors in a toppled apartment building, a day after they had to pause because of tear gas fired at looters who wheeled away everything from microwave ovens to canned milk at a damaged supermarket across the street.
Ingenious looters used long tubes of bamboo and plastic to siphon gasoline from underground tanks at a closed gasoline station.
Eduardo Aundez, a Spanish professor, watched with disgust as a soldier patiently waited for looters to rummage through a downtown store, then lobbed two tear gas canisters into the rubble to get them out.
“I feel abandoned” by authorities, he said. “We believe the government didn’t take the necessary measures in time, and now supplies of food and water are going to be much more complicated.”
Looters even carted off pieces of a copper statue of South American independence fighter Bernardo O’Higgins next to a justice building.
Efforts to determine the full scope of destruction were undermined by an endless string of terrifying aftershocks that turned more buildings into rubble — and forced thousands to set up tents in parks and grassy highway medians.
“If you’re inside your house, the furniture moves,” said Monica Aviles, pulling a shawl around her shoulders to ward off the cold as she sat next to a fire across the street from her apartment building.
As if to punctuate her fear, an aftershock set off shuddering and groaning sounds for blocks around.
“That’s why we’re here,” she said.
In another part of the city, eight Peruvian families shared a four-story building — the bravest living inside the cracked building, the others in tents out front.
“We’ve received help from the neighbors, from passing taxis and from other people who have offered us a coat or something to eat,” said Samantha Fernandez, who offered space to boyfriend Jose Luis Jacinto after he fled his room during after the quake.
Bachelet signed a decree giving the military control over security in the provinces of Concepcion and Maule and announced a 9 p.m.-6 a.m. curfew for all non-emergency workers.
She ordered troops to help deliver food, water and blankets and clear rubble from roads, and she urged power companies to restore service first to hospitals, health clinics and shelters. Field hospitals were planned for hard-hit Concepcion, Talca and Curico.
Bachelet, who leaves office March 11, said Chile needs field hospitals and temporary bridges, water purification plants and damage assessment experts — as well as rescuers to help relieve exhausted workers. 
Defense Minister Francisco Vidal acknowledged the navy made a mistake by not immediately activating a tsunami warning after the quake hit before dawn Saturday. Port captains in several coastal towns did, saving what Vidal called hundreds of lives. Thirty minutes passed between the quake and a wave that inundated coastal towns. 
The quake damaged houses, bridges and highways in Santiago, the capital, though a few flights managed to land at the airport and subway service resumed. Concepcion’s airport remained closed to commercial traffic. 
the State Department urged Americans to avoid tourist and other nonessential travel to Chile. U.S. citizens in Chile were asked to contact family and friends in the United States, whether by telephone, Internet or cell-phone text messaging. 
Secretary of State Hillary Rodham Clinton planned to briefly visit Santiago on Tuesday as part of a five-nation Latin America trip.

TITLE: Media in Sochi Area Face Major Pressure
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Pressure on media in the Krasnodar region is making fair coverage of preparations for the 2014 Sochi Games all but impossible, a media watchdog said Saturday, as the host city’s mayor visited Vancouver to receive the Winter Olympics flag.
Local journalists confirmed to The St. Petersburg Times on Sunday that regional and municipal authorities have been trying to keep a lid on dissenting voices. But the Olympics have merely shed light on an existing problem, rather than aggravating it, they said.
State-dependent publications were “press-ganged into supporting the Kremlin policy of ‘the games at any cost’” without reporting on environmental and social concerns, “except to brand them as anti-patriotic,” Reporters Without Borders said in a report on the situation in the Krasnodar region.
“The region’s media have been brought under the thumb of its pro-Kremlin governor, Alexander Tkachyov,” the report said.
The group said last year’s election of Sochi Mayor Anatoly Pakhomov was not fairly covered in the local press and that financial dependence remains the biggest obstacle to independent journalism in the region.
“It may be a certain Cossack mentality typical of a border region, where historically there is paranoia about enemies all around,” said Krasnodar-based journalist Yevgeny Titov, who has worked for two television stations, a radio station and two newspapers since 2004.
All of the publications — except his current employer, Novaya Gazeta — have faced pressure from the authorities, he said.
In 2005, it was common for the local television station to receive calls from the administration requesting a fair weekend weather forecast to help the governor promote tourism, Titov said. Reporters were told to make calls to the studio posing as students and pensioners during call-in sessions with the new Krasnodar mayor in 2004, and the channel was ordered by the mayor’s office to give unfavorable coverage to the city’s former leader.
Titov refused and was forced to resign after “being persecuted for political reasons at editorial meetings,” he said.
Regional authorities keep an official media register of publications that receive advantages in exchange for political loyalty, the report said.
This year, about 100 newspapers, television and radio stations were on the list, according to a decree on the regional administration web site. Benefits include subsidies on paper and distribution expenses.
The Krasnodar government’s press service did not respond to calls Sunday.
The register has turned “into a very effective means of controlling privately owned newspapers,” the report said.
But there are plenty of other ways that officials can exert pressure on a privately owned paper.
Krasnodar is a relatively prosperous region, but financing for media is difficult because businessmen are afraid to sponsor papers with an alternative editorial position and advertisers avoid independent publications, said Dmitry Shevchenko, a Krasnodar-based freelance journalist.
“There are big companies in Krasnodar, but their advertising budget goes to papers controlled by the authorities,” he said. “Nobody wants problems.”
Shevchenko was fired from a local paper last year after authorities complained to his editors over a story he wrote about a woman whose leg was amputated in a city clinic because of medical negligence.

TITLE: North Africa New Haven for Al-Qaida Forces
AUTHOR: By Lolita Baldor
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Al-Qaida’s terror network in North Africa is growing more active and attracting new recruits, threatening to further destabilize the continent’s already vulnerable Sahara region, according to U.S. defense and counterterrorism officials.
The North African faction, which calls itself Al-Qaida in the Islamic Maghreb (AQIM), is still small and largely isolated, numbering a couple hundred militants based mostly in the vast desert of northern Mali. But signs of stepped-up activity and the group’s advancing potential for growth worry analysts familiar with the region.
The rapid recent rise of the al-Qaida group in Yemen — which spawned the Christmas airliner attack — is seen by U.S. officials and counterterrorism analysts as evidence that the North African militants could just as quickly take on a broader jihadi mission and become a serious threat to the U.S. and European allies.
The Mali-based militants have yet to show a capability to launch such foreign attacks, but are widening their involvement in kidnapping and the narcotics trade, reaping profits that could be used to expand terror operations, officials and analysts said.
Several senior U.S. defense and counterterrorism officials spoke about AQIM on condition of anonymity to discuss internal analysis.
Those advances have set off alarms within the counterterrorism community, which watched as al-Qaida in the Arabian Peninsula quickly transformed over the past year from militants preoccupied with internal Yemeni strife to a potent group recruiting and training insurgents for terror missions inside the U.S.
That threat was underscored by the failed Christmas airliner attack, which officials say was planned and directed by Yemeni insurgent leaders.
A key fear is that as AQIM expands, its criminal and insurgent operations will continue to destabilize the fragile governments of heavily Islamic North Africa, much as it has in Mali. The Maghreb includes the North African nations of Morocco, Algeria, Tunisia, Libya and Mauritania.
As a result, the U.S. has been working to boost poverty-stricken Mali’s defenses. Last year, the U.S. gave $5 million in new trucks and other equipment to its security forces, and Pentagon funds also have been approved to provide training.
Several senior U.S. defense and counterterrorism officials spoke about AQIM on condition of anonymity to discuss internal analysis.
Bruce Riedel, a senior fellow at the Brookings Institution Saban Center and a former CIA officer, said that the North African terror group has a larger area to operate in and a wider Islamic population pool to draw from, but has not launched the kind of large-scale attacks initially feared when it became an al-Qaida affiliate three years ago.
“Now, if it is beginning to reorganize, recruit and develop, because of this international potential, it could become a much more dangerous threat,” Riedel said. “And if there is a role model in al-Qaida in the Arabian Peninsula, that is very disturbing.”
Born as an Algerian insurgency in the early 1990s, the group was largely defeated and driven into a swath of ungoverned desert land — about the size of France — in northern Mali. In the aftermath of the Sept. 11, 2001, attacks, the group reached out to al-Qaida in an effort to survive. AQIM was officially recognized as an al-Qaida affiliate by Osama bin Laden’s deputy, Ayman al-Zawahri, on the fifth anniversary of 9/11. Both the U.S. and the European Union have designated AQIM a terrorist organization.
The group has since absorbed some of al-Qaida’s techniques for roadside bombs and suicide attacks. Occasionally it has issued videos and statements on jihadi Internet forums.
In December 2007, for example, the group attacked the U.N.’s Algerian headquarters, killing 37 people, including 17 U.N. staff members.
At the same time, AQIM has increased its recruiting efforts, drawing insurgents from Mauritania, Nigeria and Chad, officials said. The recruits are trained in small arms and roadside bomb construction, officials said, then return to their home countries to plan and execute attacks.
The spike in recruiting and training, along with the increase in kidnappings and other crimes, has made the region more insecure and unstable in just a year, several officials said.
The militants often partner with local criminals, who kidnap tourists then sell them to AQIM, which then demands ransoms, officials said.

TITLE: Here’s the Dope: No Drug Scandals at Vancouver Games
AUTHOR: By Stephen Wilson
PUBLISHER: The Associated Press
TEXT: VANCOUVER — As the Vancouver Olympics closed, one of the most striking statistics after two weeks of competition is zero.
That’s how many athletes have been disqualified for positive drug tests, testament perhaps to the deterrent effect of the most stringent anti-doping program in Winter Games history.
Of nearly 2,000 planned tests, the only doping violation so far has been minor — a female Russian hockey player was reprimanded after testing positive for a light stimulant contained in a decongestant before the games.
“There is nothing sensational to report,” said Arne Ljungqvist, head of the International Olympic Committee’s medical commission. “We are finding not very much indeed. It seems promising.”
A few hundred more tests were conducted over the final weekend of the games, with those results known early this week.
Could these games really be doping free? Don’t bet on it.
“I’m a realist. I’m not naive,” IOC president Jacques Rogge said. “The final judgment will come in 2018.”
The IOC stores doping samples for eight years so they can be tested retroactively for drugs that are undetectable at the time the samples were taken. If future testing shows an athlete cheated, the IOC can impose sanctions and strip any medals.
That was the case last year, when the IOC retested samples from the 2008 Beijing Olympics and nabbed five athletes for using CERA, a new blood-boosting substance. Bahrain’s Rashid Ramzi was stripped of his gold in the 1,500 meters.
“Clearly there has been a deterrent effect here for taking the drugs that are on the banned list,” Rogge said. “I’m happy that athletes were wise not to use those ‘classic’ substances. But it does not mean we will not need to retest at a later stage.”
Rogge said the current testing program still can’t catch athletes conducting their own blood transfusions or detect designer performance-enhancers that aren’t yet known to anti-doping scientists.
“Retesting will help us in that,” he said. “But all our experts say they do not expect there are many drugs being used today that we do not know about.”
As of Thursday, the IOC had conducted 1,821 tests — 1,426 urine, 395 blood — since Feb. 4. Athletes were subject to out-of-competition tests at any time and any place.

TITLE: Atom Smasher Restarts For Research Into Big Bang
AUTHOR: By Alexander Higgins
PUBLISHER: The Associated Press
TEXT: GENEVA — Operators of the world’s largest atom smasher restarted their massive machine Sunday in a run up to experiments probing secrets of the universe, a spokeswoman said.
The European Organization for Nuclear Research, or CERN, sent low energy beams of protons in both directions around the 27-kilometer tunnel housing the Large Hadron Collider under the Swiss-French border at Geneva, said Christine Sutton.
After a cautious trial period, CERN plans to ramp up the energy of the beams to unprecedented levels and start record-setting collisions of protons by late March, Sutton said.
The restart follows a 2 1/2 month winter shutdown during which scientists made improvements and checked out the smasher’s ability to collide protons at energies three times greater than has ever been achieved previously.
The collisions are expected to shatter the subatomic particles and reveal still smaller fragments and forces than previously achieved on any collider, including the previous record-holder — the Tevatron at Fermilab outside Chicago.
The Large Hadron Collider was built to examine suspected phenomena such as dark matter.

TITLE: Rogge Urges Russians to Build Safe Luge Track
PUBLISHER: The Associated Press
TEXT: VANCOUVER — International Olympic Committee president Jacques Rogge said Thursday that he has written to Russian organizers of the 2014 Sochi Games to make sure that the luge track is built “absolutely for safety first.”
Georgian luger Nodar Kumaritashvili was killed in a training run hours before the Vancouver Games opened. 
Traveling at nearly 145 kilometers per hour, Kumaritashvili lost control of his sled and flew off the track into a steel pole.
“The IOC has been very clear in saying to the Russians: Please deliver us a track that will not be hazardous,” Rogge said at a press conference given on Thursday.
Construction of the Sochi track is due to start this year. 
The organizers of the construction say that it is designed to be 10 to 15 kilometers per hour slower than the track in Whistler.
Rogge said the International Luge Federation had approved the design of the Whistler track and said making it faster was never part of the “philosophy of the IOC.”
“We never asked for more speed in the IOC, never,” Rogge told reporters gathered at the press conference. “There’s never been any requests to say you have to go faster.”
The death has raised questions about the design and speed of the Whistler track, and whether the Olympics are pushing athletes too far. 
The International Luge Federation said the death was the result of human error, but made changes to the track for what it called emotional and not safety reasons.
Asked who was ultimately responsible for the fatal crash, Rogge said: “Everyone is responsible.”
“The IOC must make sure we have good games,” he said. “That’s our final responsibility. It’s not a responsibility in judicial terms. It is a moral responsibility.”
Rogge said the track was designed by the international federation and built to those specifications by Vancouver organizers. The competition was also run by the federation.
“The IOC is not legally bound to the track,” Rogge said. “We are morally responsible. Our responsibility is to make sure that no unnecessary risks are taken.”
The IOC chief said the luger’s death — the first fatal accident for luge since 1975 — will always cast a shadow over the Vancouver Olympics, just as the slaying of Israeli athletes remains a legacy of the 1972 Munich Olympics and a bombing is forever tied to the 1996 Atlanta Games.
At the same time, Rogge said the death should be taken separately from the overall success of the Vancouver Games, particularly the “unique atmosphere” fostered by huge and enthusiastic crowds.
He said the carnival atmosphere could be compared to that at the 1994 Winter Games in Lillehammer and the 2000 Olympics in Sydney.
“The people in Vancouver are partying and having fun,” he said. “What will stand out is the communion between the citizens and the games.”
Asked if there was an adjective he could use to describe the games, Rogge said, “In general I believe it will be a positive word.”
The IOC is counting on Russian athletes to bounce back in Sochi after a disappointing showing in Vancouver.
“The Russians know how important this is, not just to please the outside world,” Rogge said. “It will serve to ignite the interest of the games in the home country.
“We should not underestimate the knowledge of sport of the Russians. It’s in four years’ time, and I trust they will be ready.”

TITLE: Karadzic 
Lays Blame On Muslim Extremists
AUTHOR: By Arthur Max
PUBLISHER: The Associated Press
TEXT: THE HAGUE, Netherlands — Former Bosnian Serb leader Radovan Karadzic, charged with the worst genocide in Europe since the Holocaust, testified Monday that his people were simply defending themselves against Islamic fundamentalists who he claimed were seeking to take over Bosnia.
In his opening defense statement at the UN war crimes tribunal, Karadzic denied any intention to expel non-Serbs from their homes, and said the Serb objective was to protect their own lives and property during the violent 1990s breakup of the former Yugoslavia.
The Serb “cause is just and holy,” Karadzic said as he began his two-day statement, relying only on sparse notes. “We have a good case. We have good evidence and proof.”
Karadzic, 64, faces two counts of genocide and nine other counts of murder, extermination, persecution, forced deportation and the seizing of 200 UN hostages. He faces possible life imprisonment if convicted.
Prosecutors say Karadzic orchestrated a campaign to destroy the Muslim and Croat communities in eastern Bosnia to create an ethnically pure Serbian state. The campaign included the 44-month siege of the capital of Sarajevo and the torture and murder of hundreds of prisoners in inhuman detention camps. That violence culminated in the massacre of some 8,000 Muslim males in one horrific week in July 1995 in the Srebrenica enclave, the worst bloodbath in Europe since World War II.
Karadzic sought to trace the origin of Bosnia’s full-scale civil war to the Muslims’ rejection of all power-sharing proposals.
A core group of Muslim leaders in Bosnia was “plotting and conniving,” Karadzic told the court. “They wanted Islamic fundamentalism and they wanted it from 1991.”
Prosecutors are trying “to present me as a monster because they do not have any evidence” that I committed a crime, he said. “This indictment should not have been issued in the first place.”
Karadzic is the most important figure to be brought to trial since former Yugoslav President Slobodan Milosevic, who died of a heart attack in 2006 before his case was concluded. Karadzic, president of the breakaway Bosnian Serb state, negotiated with diplomats, UN officials and peace envoys; he appeared often in the media; and he set the tone and pace of the 1992-95 Bosnian war that killed an estimated 100,000 people.
In his statement, Karadzic portrayed himself in the pre-war years as a conciliator who had been prepared to compromise on Serb ambitions to preserve the Yugoslav federation or to unite predominantly Bosnian Serb territory with Serbia.
“The Serbs were claiming their own territories, and that is not a crime,” he said. “It was never an intention, never any idea let along a plan, to expel Muslims and Croats” from the autonomous Republika Srbska.
Bosnia’s Serbs “wanted to live with Muslims, but not under Muslims,” when they would be deprived of fundamental rights, he declared.
He rebutted charges that the Serbs ran concentration camps where non-Serbs were tortured and killed, saying the camps were “collection centers” for refugees. “It was a transit point for persons who had nowhere to go because of the fighting going on around them,” he said.

TITLE: KHL’s Medvedev Worried Over Sochi Olympics
AUTHOR: By John  Wawrow
PUBLISHER: The Associated Press
TEXT: VANCOUVER — Though the head of Russia’s pro hockey league shares NHL commissioner Gary Bettman’s concerns about committing to the Olympics, Alexander Medvedev said it “would be crazy” for the NHL not to have its players at the Sochi Games in 2014.
Medvedev, president of the Kontinental Hockey League and deputy head of Gazprom, said the popularity of the men’s hockey competition at the Vancouver Games — based on global TV ratings — shows that having the world’s top players competing at the Olympics is the best way to promote the sport.
Though he’s committed to having KHL players at Sochi, Medvedev noted that he and Bettman are on the same page when it comes to having issues with Olympic rules governing marketing, branding and times at which hockey games are broadcast.
In an interview Thursday at a Vancouver hotel, Medvedev said he has met with Bettman three times over the past week and hopes that the two leagues can work together in lobbying the International Olympic Committee to satisfy their concerns.
“We have a lot in common,” Medvedev said.
The NHL is unsure about committing to allow its players to compete in 2014, and Medvedev said he would be unhappy if the North American league skipped Sochi after allowing its players to compete at the Winter Olympics since 1998.
“It was not easy to come to the Olympic family,” Medvedev said. “But it would be crazy in my mind to step out of the Olympic family.”
IOC president Jacques Rogge remains optimistic of persuading the NHL to release its players for Sochi. He said the players want to go and the games serve as the best promotion for the league and sport.
“We still have plenty of time to find a solution,” Rogge said, noting that television ratings for the Olympic gold-medal games are “way higher” than those for the Stanley Cup finals.
International Ice Hockey Federation president Rene Fasel couldn’t predict the NHL’s intention, but he questioned the league’s priorities.
“I think Gary does not understand that the way the hockey is played here, and at the level of passion … is the best promotion for his game,” Fasel said Thursday. “It would be wrong for the game, for the fans, not having the best players in Sochi.”
Bettman’s concerns include the effects of shutting down the NHL’s regular season for two weeks. Another issue is how much North American exposure the NHL would get from playing at Sochi, given time zone differences, which mean that many games would be played in the middle of the night in key markets.
The NHL is also unhappy that it cedes control of its players to the IOC and that it is barred from using Olympic highlights on its web site.
Fasel dismissed the NHL and KHL’s concerns about branding.
“We are not here to promote the NHL, we are not here to promote the IIHF,” he said. “We are not here to promote anything than just the hockey game: That’s our mission.”
The NHL and KHL are also still working through the lack of a formal transfer agreement. Currently, they are abiding by an informal agreement not to sign players still under contract, and Medvedev said he hoped that a formal deal can be reached within three months.
The KHL has begun attracting talent from the NHL, most notably signing free agent Jaromir Jagr to a two-year contract two years ago.
Both leagues operate under a salary cap, but the KHL has a provision that allows it to sign one player whose contract is exempt from the cap, and the KHL can offer tax-free contracts.
Losing Jagr was a setback for the NHL, but a bigger blow would be the loss of New Jersey Devils star forward Ilya Kovalchuk, who is eligible for free agency this summer. Medvedev said there are a few KHL teams already expressing a strong interest in going after Kovalchuk.
“We would be happy if Kovalchuk decides to go back to Russia, and I believe we can provide him with a competitive proposal,” Medvedev said.
Medvedev established the KHL two years ago after Russia’s Super League folded. He intends to expand the league across the continent to form a pan-European rival to the NHL, and the KHL already has teams in Belarus, Kazakhstan and Latvia.
He said the league suffered a setback this week, when he was informed that the Swedish Hockey Federation barred one of its Division I pro teams, AIK, from joining the KHL.
“I can’t agree that if this club goes to KHL that it will negatively influence the development of hockey in Sweden,” Medvedev said. “My opinion is absolutely the opposite, that it will positively influence the development of hockey because it will allow this club to raise more money to bring more professional players.”

TITLE: Chernyshenko  Says Sponsors Have Passed $1 Billion
PUBLISHER: The St. Petersburg Times
TEXT: VANCOUVER — Organizers of the Sochi 2014 Olympics have topped $1 billion in domestic sponsorship revenue, putting the group more than three times ahead of its initial target, Reuters reported. 
The organizers pierced the level after inking a sponsorship deal Friday with Russian Railways, or RZD, which joins state-run oil giant Rosneft on the list of other major domestic sponsors. 
Sochi Games organizing chief Dmitry Chernyshenko denied that the deals were part of a back-door way to get government aid. 
“Absolutely not,” Chernyshenko said in Vancouver, where he and other officials were studying how their Canadian counterparts are handling operations during the 2010 Games. 
“I expect that we will probably not use public funds or government money. We will stay with the partnership investment,” he said through a translator. 
The sponsorship funding could be particularly important because the government said last year that it was slashing its state budget for the 2014 Games by more than $600 million because of the global economic crisis.