SOURCE: The St. Petersburg Times
DATE: Issue #1568 (29), Tuesday, April 27, 2010
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TITLE: Gutseriyev Case Closed, Return Doubted
AUTHOR: By Nabi Abdullaev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The last two charges in a controversial case against billionaire Mikhail Gutseriyev were dropped Friday, but political analysts said it remained an open question whether he would return from the safety of London any time soon.
A spokeswoman for the Interior Ministry’s Investigative Committee, Irina Dudukina, told reporters that charges of illegal entrepreneurship and money laundering brought against Gutseriyev in 2007 had been dropped because there was no evidence of a crime.
Dudukina also noted that the case was closed because of recent changes to the Criminal Code initiated by President Dmitry Medvedev. Last month, he signed a package of Kremlin-drafted amendments making it more difficult for investigators to accuse businessmen of illegal entrepreneurship and money laundering.
The charges are among those most commonly used by law enforcement to jail entrepreneurs in hopes of extorting money or settling a business conflict.
Gutseriyev could not be reached for comment Friday.
The founder and former head of oil company Russneft fled the country in 2007 after the Prosecutor General’s Office accused him of tax evasion, fraud and license violations.
The charges were widely seen as punishment orchestrated by the siloviki — as security, defense and law enforcement officials are known — for snatching up some Yukos assets before state-run Rosneft could take them.
Before leaving the county, he managed to sell Russneft to companies linked to Kremlin-friendly tycoon Oleg Deripaska for $3 billion, although the deal never received required approval from anti-monopoly and foreign investment bodies.
Unlike other self-exiled businessmen hiding from the Russian law, Gutseriyev has maintained a low profile since arriving in London and has not continued his criticism of the state.
The tactics seem to have paid off. Last year, the tax charges were dropped and Russian authorities removed him from international wanted lists. No official reason was given, but it was widely believed that the Kremlin was considering recruiting Gutseriyev to help with the economic development of his native Ingushetia.
The failing republic suffers from massive unemployment and violence, including a nearly successful assassination attempt on the corruption-fighting local president, Yunus-Bek Yevkurov.
Still, prosecutors said Gutseriyev remained wanted on the illegal entrepreneurship and money-laundering charges. Russian Newsweek reported earlier this month, citing an unidentified source close to Gutseriyev, that the tycoon recently tested the soil in Russia by sending his empty jet to Moscow.
The aircraft was met by police commandos at an airport, the source said.
In January, Gutseriyev recovered Russneft from Deripaska, paying either nothing or $600,000 for the debt-burdened company, according to varying Russian media reports. In late March, Vladimir Yevtushenkov’s Sistema holding signed a tentative agreement with Gutseriyev to purchase 49 percent of the company.
Under the deal, which has yet to be finalized, Gutseriyev would retain operational control over Russneft, which was Russia’s seventh-largest oil producer by output last year. Yevtushenkov has been buying up oil assets, most notably Bashneft, Russia’s eighth-largest producer last year.
Yevtushenkov has said he will not seek more than 49 percent in Russneft until the company’s debt problems are resolved.
While Friday’s decision to drop the charges clears the final legal hurdle for Gutseriyev’s return, it is unlikely that he will hop on a plane for Moscow any time soon, political analysts said.
Mikhail Delyagin, head of the Institute of Globalization Problems, attributed the change to the growing power of Medvedev’s clan within the government rather than a broader effort to build stronger partnerships with business.
“Gutseriyev has proved to be a tough man, and his return may instill fear into quite a few senior siloviki,” he said, referring to Gutseriyev’s crucial role in returning hostages held by the Chechen separatists in the 1990s.
But Friday’s announcement would not prevent siloviki from arresting Gutseriyev the minute he comes to Russia, after which they could easily come with new charges, Delyagin said.
Tatyana Stanovaya, an analyst with the Center for Political Technologies, said part of the country’s ruling elite, embodied now in Medvedev, wants to stop the government from treating business as a cash cow that can be made to pay for anything.
“Two years ago, it would not be possible to imagine what happened now with Gutseriyev. Under then-President Putin, the government would not make any concessions to business,” she said.
Even though the decision in the Gutseriyev case was made at the top of the government, it does not mean that the Kremlin will bother to follow this line to the very end or give any security guarantees to the billionaire if he returns, Stanovaya said.
Nikolai Silayev, a Caucasus expert with the Moscow State Institute of International Relations, said the government’s need for Gutseriyev’s help in Ingushetia should not be overestimated.
“It is obvious to everyone in the government and to Gutseriyev himself that as long as corruption and bad governance reign there, the arrival of a single businessman, even as big and tough as Gutseriyev, will not change much in Ingushetia,” Silayev said.
Many analysts had speculated that the final charges would be dropped so that Gutseriyev could lend his local authority to Yevkurov’s struggling reform drive.
In January, Medvedev tapped businessman and then-Krasnoyarsk Governor Alexander Khloponin to lead a newly formed North Caucasus Federal District. The former Norilsk Nickel chief was simultaneously promoted to deputy prime minister, giving him broad authority to encourage political and economic reforms in the region.
TITLE: Austria Signs Up to South Stream Pipeline
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Austria agreed to join the South Stream project on Saturday, a key step toward beginning construction on a pipeline that aims to increase the flow of Russian gas to Europe.
Prime Minister Vladimir Putin, who presided over the deal, said supplies of Russian gas to Austria would increase by 2 billion cubic meters a year after South Stream’s launch, according to a transcript on the government web site.
The deal, signed by Energy Minister Sergei Shmatko and Austrian Economy Minister Reinhold Mitterlehner, grants permission for South Stream to cross Austrian territory.
Austria, which gets 60 percent of its gas from Russia, became the seventh country to sign on to the 900-kilometer South Stream pipeline, following Croatia, Bulgaria, Serbia, Hungary, Greece and Slovenia.
Putin took the opportunity to mock preparations being made for the rival Nabucco project, a 7.9 billion euro ($10.6 billion) pipeline that aims to supply Caspian gas to Europe. But Nabucco, spearheaded by Germany’s RWE, Hungary’s MOL, Romania’s Transgaz, Bulgaria’s Bulgargaz and Turkey’s Botas, has struggled to get off the ground as it has so far failed to book enough gas to fill its pipes.
“Before constructing something, one should sign supply contracts. Construction of the pipeline without contracts is dangerous and makes no sense. Name me just one contract for Nabucco,” Putin said.
Austrian Chancellor Werner Faymann said he did not see a conflict between Nabucco and South Stream and that Austria, which also supports Nabucco, was interested in different ways of diversifying its gas supplies.
“And we don’t know yet, if there will be gas supplies via Nabucco,” he told the news conference.
Austrian energy company OMV, already participating in Nabucco, will also join the South Stream project, having reached a deal with Gazprom on Saturday to build Austria’s section of the pipeline.
South Stream’s south arm will terminate at an OMV hub, which serves as a finishing point for Nabucco.
“[South Stream’s] precise route will be determined and the costs of the project evaluated,” OMV said in a statement. “The final investment decision is set to be taken within 18 months.”
Gazprom chief executive Alexei Miller, who signed the deal with OMV, talked up the 8.6 billion euro project, which is bankrolled largely by Gazprom, calling it “economically effective,” RIA-Novosti reported.
“After the implementation of the project is finished, Southern and Central Europe will be safe from transit crises and cold winters forever,” Miller said.
Gazprom plans to complete talks with the French power group EDF on joining the South Stream pipeline over the next 1 1/2 to 2 months, Miller said.
EDF agreed to take a stake in the South Stream in December, and Gazprom deputy CEO Alexander Medvedev told Bloomberg last month that his company could reduce its stake below 50 percent to allow EDF to participate. Currently, Italy’s Eni is an equal partner with Gazprom in the project.
Putin said Russia was ready to start construction of the South Stream projects as quickly as it began working on Nord Stream, another pipeline aimed at reducing transit risks to Russian gas.
Earlier this month construction began on Nord Stream, which will run under the Baltic Sea from Vyborg, Russia, to Greifswald, Germany.
“We intend to implement the project anyway. We started construction on the Nord Stream in the Baltic Sea, and we are ready to start work in the Black Sea quickly as well,” Putin said at a joint news conference with Austrian Chancellor Werner Faymann.
Putin emphasized that, while he was not opposed to Nabucco, Russia-backed pipelines would be sufficient for fulfilling Europe’s gas needs.
“We can satisfy the growing demand of the Russian economy and the growing demand of … almost all our clients in Europe for 100 years ahead. And the issue is not whether Russia can provide it or not. It’s the issue of diversification of supply routes to consumers in Europe. The South Stream contributes to solving this issue,” he said.
TITLE: City Gets New International Fashion Event
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: A new fashion event conceived with the ambitious goal of bringing a dash of color to the city’s dull fashion scene is scheduled to kick off at the Manezh Exhibition Hall on May 17.
The ambitious organizers of the Aurora Fashion Week want to kill an entire flock of birds with just one stone. They envisage their new event as a platform for fashion designers wishing to make contacts with retailers, a promotion of Russian fashion among potential Russian customers and, perhaps most ambitiously, as an attempt to revive the long-defunct local textile industry — one of the first victims of the failed economic reforms of the perestroika years.
St. Petersburg and Russia have their own fashion labels and up-and-coming aspiring designers, but there is almost no domestic textile industry to support them. Russian fashion is made using foreign fabrics, foreign buttons, and foreign zippers, with the exception of some linen items and fur coats.
“The city has a wealth of designer talent but lacks the industry to support those designers,” the city’s Deputy Governor Alla Manilova, head of the event’s board of trustees, said at a press conference last week. “Our designers need to be able to manufacture locally and to rely on local retailers.”
In addition to shows by prominent Russian designers such as Leonid Alexeyev, Biryukov, Poustovit, Konstantin Gayday and Kristina Gorina, the event will feature screenings of films inspired by and devoted to fashion-related subjects at the Coliseum Cinema (May 19 to 23), a series of master classes on brand promotion and an exhibition of haute couture designs and accessories from the 1960s by Yves Saint Laurent, Balmain, Christian Dior, Andre Courreges, Pierre Cardin and Chanel from the collection of renowned fashion historian Alexander Vasilyev.
The Aurora Fashion Week will run through May 23.
The international element of the event, which is part of the Year of France in Russia program, is by no means small, featuring the first-ever exhibition of the luxury jewelry brand Boucheron in Russia, as well as Russia’s first fashion shows by well-established foreign brands such as Bernhard Willhelm (Belgium), Mary Katrantzou (U.K.), Manish Arora (India) and David Koma (U.K).
The patrons and sponsors of the fashion week include a number of local private companies, as well as officials representing the Russian Culture Ministry and the St. Petersburg government and the general consuls of France, Italy, Belgium and Latvia in St. Petersburg.
According to the brains behind the project, Aurora Fashion Week is aimed at helping to develop the fashion market in the city.
According to official statistics, 90 percent of shoes and 80 percent of clothes sold in Russia are imported. Significantly, retail prices are usually three times higher than wholesale prices. It is not uncommon to see a 500-percent mark-up, which retailers claim are the result of “outrageous import duties” and “ridiculous rents.”
In Russia, according to the Trade and Industry Ministry, more than a third of retailers’ income is spent on rent. In January this year, the Federal Customs Service doubled the minimum amount payable on imported shoes.
According to the ministry, four out of five pairs of shoes sold in Russia are made in China. Originally purchased at $10 to $15 per pair, they are sold to customers at $50 to $300. The clothes market offers a similar picture. A Chinese factory gets $5 for a skirt that is eventually sold to the Russian customer at $25 to $60.
Importers say they buy almost exclusively in China and Turkey because, as a result of all the taxes, duties, rent and utility bills they have to pay, more expensive clothes from European and Latin American producers would be almost impossible to sell.
Unlike in many other countries, in Russia, fashion is one area that divides society. A fashion statement here is de facto a financial statement, and any talk is actually about whether or not a person can afford a certain brand item. Lower social status is generally seen as a barrier to entering the world of fashion.
The people behind the Aurora Fashion Week are out to change this predominant attitude.
“I am not an expert in fashion but I am very happy to be part of this culturally very important project,” said Michel Aubry, French consul general in St. Petersburg.
“In France, fashion plays one of the key roles in the country’s cultural life, being part of our mentality, what is known as the art de vivre, or the art of living. Fashion is unique in the sense that it brings together the entrepreneurial and the creative spirits, while being part of our everyday life and thus affecting the way we express ourselves and communicate to each other. That is why it matters far more than it appears to superficially.”
TITLE: Russia Extradites Kongatiyev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Almazbek Atambayev, deputy head of the interim Kyrgyz government, thanked Russia on Monday for detaining and extraditing the country’s former interior minister, Moldomusa Kongantiyev.
The Federal Security Service detained him and sent him overnight to Bishkek, officials in Kyrgyzstan’s interim government said.
The extradition is the latest signal of strong Russian support for the new administration, which came to power in Bishkek after an uprising April 7. Ousted President Kurmanbek Bakiyev has said Moscow may have played a role in his overthrow.
“With the help of Russian law enforcement agencies, we were able to detain in Moscow the former head of the interior ministry,” Atambayev said during a government security meeting, Interfax reported. “We’re grateful to the FSB for the help,” he said.
Kongantiyev — who was badly beaten during protests April 8 and forced to shout “Down with Bakiyev!” — was detained Sunday, a spokesman for Kyrgyzstan’s National Security Service said. “We have him in a pretrial detention center,” he said.
The interim government’s chief of staff, Edil Baisalov, confirmed that Kongantiyev had been detained by Russian security forces and sent overnight by plane to Bishkek.
He said Kongantiyev was under arrest and was being investigated for his role in the deadly upheaval earlier this month, among other things.
TITLE: ‘Extremist Site’ Becomes Available Again
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The web site of dissident author Eduard Limonov became accessible again for users of a major Internet provider after it emerged that the site had only been unavailable because it shared an IP provider with other sites banned as extremist.
The revelation came after more than two months of protests and calls for a boycott of Corbina/Beeline’s services for blocking the site as “extremist.” It has now emerged that the web site was never declared extremist by any court — contrary to what the company said in February.
The site’s editor said Sunday there had been no court decision about his site, Limonov2012.ru, which was blocked simply because it shared an IP address with two other web sites that were banned in December by a district court in Tambov, a small city south of Moscow. An unlimited number of web sites can be hosted on one IP address.
VimpelCom-owned provider Corbina/Beeline on Feb. 2 blocked the IP address that hosted web site Limonov2012, which was created last year soon after Limonov announced he would run for the Russian presidency in the 2012 presidential election, as well as two web sites thought to belong to activists of Limonov’s banned National Bolshevik Party (NBP).
In February, VimpelCom’s press officer Ksenia Korneyeva referred to a court decision ordering the sites to be blocked, but refused to name the court or the date on which the decision was taken, calling it “targeted information.”
On March 9, Limonov called on Internet users to boycott the provider.
“As if it’s not enough that we have a de facto police state in this country, private companies are starting to take police functions upon themselves to strangle our liberties,” Limonov wrote on his blog.
“I call on Internet users to reject the services of Beeline. They are censoring me today, they will censor you tomorrow.”
Limonov2012’s editor, Sergei Yezhov, said he was finally shown a court decision — which did not mention Limonov2012 — on March 19 at a meeting with representatives of VimpelCom, who admitted the situation had resulted in “harm” to the company and advised the editor to change the IP address for his web site, Yezhov said by phone Sunday.
“They acted foolishly — they should have shown a court decision from the start, and then there would have been no question or harm done to their image,” he said.
“[But] they kept insisting that there had been a court decision regarding [Limonov2012], which means they lied and subsequently had to admit it.”
The web sites previously hosted on the IP address blocked by Corbina/Beeline, including Limonov1012 and those of his supporters, became available earlier this month when the site administrators realized they only had to move their sites to another IP address.
“The court decision that we have says that we should block them by filtering IP addresses, but we don’t keep track of it if a site’s owner changes the IP; if after a while the site starts working, it’s most likely to be another IP,” VimpelCom’s Korneyeva said Monday.
“As we don’t monitor extremist resources, we can only block it from now on if we have a ruling to block it by filtering the IP.”
Yezhov described the current legal practices regarding the Internet as “absurd.”
“First, [when] blocking IPs, totally innocent sites can suffer, and secondly, any district court can declare a site ‘extremist’ while the site’s editors don’t even have the chance to confront the charges in court,” he said.
TITLE: ‘Photographer of Texture’ Slyusarev Dies
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Alexander Slyusarev, known among his colleagues as “the father of Russian photography” for eschewing the political themes that dominated Soviet art, died in Moscow at the age of 65, his son Maxim said Friday.
Maxim Slyusarev wrote on his father’s blog that the burial would take place at 10 a.m. Tuesday at Moscow’s Khovanskoye Cemetery. The cause of death was not specified.
Born in Moscow on Oct. 9, 1944, Slyusarev took up photography in the late 1950s. He held his first solo exhibition in 1979-80 at the Dzintarzeme festival in Latvia, instantly becoming the face of the “Moscow school of photography.”
Slyusarev, whose formal education was in translation, was part of a “formalist” faction in Soviet photography, avoiding the political subtext favored by many of his peers to focus on details such as shadows, flares and reflections.
Over the course of his career, Slyusarev held more than 20 exhibitions in cities such as Moscow, Kazan, St. Petersburg, Berlin and Amsterdam. Affectionately known as San Sanych, he had a tremendous influence on the current generation of Russian photographers.
“Amateurs from provincial clubs and fashionable photographers from the capital were united in their dislike of his sharp criticism of their photographs, but also called him their mentor,” the Photographer.ru web site reads.
“This is the first photographer of texture in Soviet Russia, the first who dared to see objects in an abstract fashion, the first metaphysical photographer who saw spirit in inanimate matter, the first to work with category of color in color photography.”
Slyusarev’s works are owned by a number of top museums, including the Pushkin Museum, the Museum of Modern Art in Moscow, the MoMA in New York and the Moscow House of Photography.
Earlier this month, Photobiennale-2010 featured a joint exhibition in Moscow by Slyusarev and Aman Geld, which was overseen by renowned art curator Marat Gelman.
TITLE: United Russia Seeks Ban on Zhirinovsky
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — United Russia is seeking a one-month speaking ban in the State Duma against Vladimir Zhirinovsky, head of the Liberal Democratic Party, for his “rude” criticism of Mayor Yury Luzhkov.
Deputies voted 302-67 on Friday to order the parliament’s ethics commission to analyze Zhirinovsky’s words and decide on a possible ban, news reports said.
In a heated speech Tuesday, the flamboyant nationalist lambasted City Hall for corruption and called on Prime Minister Vladimir Putin to fire Luzhkov and his whole administration.
Zhirinovsky was speaking after Putin had delivered his annual report to the Duma and promptly handed Putin a folder, which he said contained compromising information on the mayor.
The Duma deputy speaker also accused Luzhkov of selling the city’s “fat chunks” to foreign investors. As an example, he named the Hotel Rossiya complex, which he said was controlled by World Jewish Congress chairman Robin Lauder.
United Russia deputies, who had followed Zhirinovsky’s 10-minute rant largely unmoved, some of them even smiling, are now accusing him of transgressing parliamentary ethics.
“Statements of such a rude manner and inappropriate tone should not be heard in the Russian parliament. They … discredit the Duma,” Viktor Voitenko, one of the initiators of Friday’s motion, said in comments on the party’s web site.
“Zhirinovsky’s address was insulting, libelous and discredited a regional state organ,” the party’s motion said, Itar-Tass reported.
The possible ban would not be a first for Zhirinovsky, who was temporarily stripped of his right to speak in 2005 after getting into a brawl with a deputy from the rival nationalist Rodina party.
Luzhkov has not commented on the accusations, but Oleg Mitvol, prefect of the city’s Northern Administrative District, asked the Duma for disciplinary measures in an open letter carried by news agencies Friday.
Party officials also made it clear that they were sticking by Luzhkov.
“We are 90 percent like-minded with Yury Mikhailovich, he is one of our leaders and any attack on him from another party’s leader is wrong for us,” Deputy Andrei Isayev said Thursday, Interfax reported.
Luzhkov was one of the founding fathers of United Russia in 2001, when his Fatherland party merged with Putin’s Unity party.
He came under fire from Zhirinovsky after United Russia swept the City Duma elections in October. Luzhkov then filed a defamation lawsuit against the LDPR leader, prompting Zhirinovsky to seek damages from Luzhkov.
Sergei Ivanov, an LDPR deputy, criticized Friday’s motion as arm-twisting because it already laid down the punishment, Interfax reported.
TITLE: Chaika Report Critical of Traffic Police
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Traffic police provoke drivers to break the rules of the road in order to extort bribes, Prosecutor General Yury Chaika is expected to tell lawmakers in a report this week.
Police use road signs where they are not needed in order to fine drivers, Vedomosti reported Friday, citing a copy of Chaika’s report. The violations are possible because of lax oversight from superiors, the report said.
Chaika will present his findings on national crime statistics for last year to the Federation Council on Wednesday, according to a statement on the upper chamber of the parliament’s web site.
Spokeswomen for the Prosecutor General’s Office and the Federation Council refused to provide a copy of the report Friday and could not confirm Vedomosti’s report.
A spokesman for the Interior Ministry’s traffic safety department, Vladimir Shevchenko, had no immediate comment.
President Dmitry Medvedev criticized the country’s road safety record in July, calling the situation “monstrous” after a series of fatal bus and car crashes left dozens dead. He held a special meeting on road safety Aug. 31, giving a number of orders to ministries and agencies.
The Interior Ministry published an order in early February forbidding traffic police from issuing fines to officials immune from prosecution, such as investigators, judges and prosecutors.
Chaika’s report will also focus on a rise in crime in the North Caucasus and the number of extremist crimes, RIA-Novosti reported Wednesday.
A total of 1,263 servicemen, law enforcement officers and civilians died or were injured in rebel attacks in the Southern Federal District last year, compared with 914 in 2008, RIA-Novosti reported, citing Chaika’s report.
Police registered 549 extremist crimes in 2009, a 19 percent increase from 2008, RIA-Novosti reported.
TITLE: Olympic Champ Killed in Crash
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Natalya Lavrova, a two-time Olympic champion and coach for the Russian national rhythmic gymnastics team, was killed Friday in a car crash in her native Penza region. She was 25.
A VAZ-2114 driven by Lavrova’s sister crashed into a Mazda, a police source told RIA-Novosti. Lavrova and her sister died on the spot. The other driver was injured, though no other details were reported.
She was to be buried in Penza on Sunday.
Lavrova won gold medals in team competitions in rhythmic gymnastics at the 2000 and 2004 Olympics. She also won a European Championship in 2001 and was a world champion in 1999, 2002, 2003 and 2005.
In recent years, she worked at an Olympic training center and was a coach for the Dynamo club.
State Duma Deputy and fellow rhythmic gymnastics champion Alina Kabayeva called her death “a big loss for sport,” according to a statement on United Russia’s web site.
“Whenever I had problems, I could get her advice,” Kabayeva said. “She would always say with a smile: ‘Alinka, everything will be fine.’”
TITLE: Second Inmate Escapes From Moscow’s Butyrka, Recaptured
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Police have recaptured a suspected pedophile who broke out of Moscow’s notorious Butyrka jail on Friday in the latest embarrassment for the facility’s directors, who allowed another escape last month.
Vasily Lokalev, 24, was detained Saturday by law enforcement officers on Zubovsky Bulvar in downtown Moscow, Sergei Tsygankov, a spokesman for the Federal Prison Service, told RIA-Novosti.
Tsygankov said Lokalev would face additional charges for his escape, which is punishable by up to eight years in prison.
Lokalev, a native of the industrial town of Kondopoga in the republic of Karelia, is accused of molesting a minor, the news agency reported, citing prison officials. That charge carries a sentence of up to six years in prison.
Prison officials said Lokalev managed to break the metal grate over his cell’s window to get onto the roof. From there, he was able to climb down to the street.
In March, suspected thief Vitaly Ostrovsky, a 26-year-old from Belarus, escaped from Butyrka, reportedly by scaling a five-meter-high fence. He is still on the run.
The jailbreaks have called into question the security at Butyrka, which is still reeling from the death of a high-profile detainee.
Sergei Magnitsky, a lawyer working for Hermitage Capital Management, died in November after repeatedly being denied medical assistance by the jail’s staff.
The ensuing scandal led President Dmitry Medvedev to fire several senior prison officials and demote others. Vadim Magomedov, head of Butyrka, was fired after Magnitsky’s death, Alexander Reimer, head of the Federal Prison Service, told reporters in December.
Over its long history, Butyrka has housed many famous inmates, including writer Alexander Solzhenitsyn, poet Vladimir Mayakovsky and Felix Dzerzhinsky, the founding father of the Soviet secret police, whom the tsarist government put behind bars for his revolutionary activity.
The prison on Novoslobodskaya Ulitsa, known officially as Pretrial Detention Facility No. 2, now hosts more than 2,300 people awaiting or on trial. It was recently renovated and restocked with furniture.
Before this year, Butyrka had not had any jailbreaks since 2001, when three inmates, suspected of serial robbery and multiple killings, escaped by digging their way into a tunnel system beneath the jail.
TITLE: State Duma Passes Draft Health Law
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — While Washington plans to pump unprecedented sums into what critics call a government takeover of health care, Moscow is moving in the opposite direction by backing legislation that could force hospitals and other public institutions to go commercial or close.
A bill approved by the State Duma in a third and final reading Friday aims to overhaul the financing for medical, educational, cultural and scientific institutions by giving them for the first time a free hand in how they spend state subsidies.
But opponents warn that the “anti-socialist” reform also could lead to a drop in state subsidies, forcing hospitals, schools and even libraries to increase their numbers of paid services or reduce work hours so as to make ends meet. They say this free-market approach could ultimately hurt the population, especially in poor rural areas.
The current system of funding public institutions is based on cost sheets — detailed lists of planned expenses that the institutions submit to the authorities each year. The funding rules, which are rigid and have been unchanged for years, earmark similar funding for similar institutions regardless of the quality of their work. Leftover funds are confiscated at the end of the year — a practice that leads to wasteful spending.
“The bill is aimed at making public institutions spend state money efficiently, instead of exaggerating expenses,” said Vitaly Shuba, first deputy head of the Duma’s Budget and Taxes Committee and a United Russia member.
United Russia, the pro-Kremlin party that dominates the Duma, was the only parliamentary faction backing the bill; the other three factions have denounced it.
The bill, a copy of which was obtained by The St. Petersburg Times, adopts a laissez-faire approach instead of a micromanagement one. Subsidies for each public institution would be defined by a single line in the state budget. Leftover funds would no longer be confiscated.
Better services will lead to bigger subsidies, said Alexei Lavrov, a department head at the Finance Ministry, which drafted the bill.
Lavrov brushed off concerns that public institutions might be caught in a catch-22 of needing to boost the quality of their services to get more money, while at the same time needing more money to boost the quality of their services.
“The quality can be boosted through organizational efforts,” he said.
But critics pointed out that the bill also frees the authorities from bearing any responsibility if a public institution goes bankrupt.
Opponents said they found it ironic that Russia was adopting the bill at a time when the United States, its capitalist foe during the Cold War, was increasing the government’s presence in healthcare.
In March, U.S. lawmakers approved a seminal health care reform that will see the government spend almost $1 trillion over the next 10 years to broaden healthcare coverage. The reform, a hallmark of Barack Obama’s presidency, has been widely panned by its critics as “socialist.”
“France, Germany and the United States have more socialism than Russia, while even our Constitution implies that the country has to be socialist,” Duma Deputy Sergei Obukhov, a Communist, told The St. Petersburg Times.
The Russian Constitution defines Russia as a “social state.”
The Duma bill, which was passed in a first reading in mid-February and a second reading on Wednesday, does not cover institutions prohibited from doing commercial business, such as defense agencies and psychiatric hospitals, nor so-called autonomous institutions that use little state money and enjoy broad freedoms.
The bill also does not specify how much money will be distributed to public institutions.
The size of the subsidies — not the new funding mechanism — is the key issue, said Lev Yakobson, a senior official with the Higher School of Economics. What the government needs to do is figure out a method for calculating the size of the subsidies, he said, adding that the method would determine whether public institutions stand to benefit from the proposed reform.
“The bill is a framework,” Yakobson said.
The ambiguity, however, is stoking worries. The new rules are to be implemented nationwide by mid-2012.
A senior Just Russia deputy, Oksana Dmitriyeva, said the bill was unacceptable because public institutions should not have to face free-market pressures.
“A subsidy means partial financing, which implies a possible reduction of financing from the state budget and partial commercialization,” Dmitriyeva said in a telephone interview.
Commercialization might have dire consequences in rural areas if hospitals and schools are forced to close for lack of funds, said Sergei Shtogrin, deputy head of the Duma’s Budget and Taxes Committee and a member of the Communist Party.
“The country’s population will die out and the quality of national education will go down,” Shtogrin said in an interview in his Duma office.
He suggested guaranteeing a list of free public services for citizens.
The legislation allows the state to shrink its responsibilities and obtain a new way to pressure public institutions, said Irina Gorkova, a Duma deputy with the Liberal Democratic Party.
She explained that the bill makes legal a situation in which an institution does not receive enough money to fulfill assignments given by the state. In that case, the head of an institution would be held responsible and therefore be subject to pressure from authorities.
Insufficient funding also could result in a lack of medical equipment and cause doctors to shun jobs in public institutions, leaving hospitals understaffed, Gorkova said.
Workers in the cultural sector are equally pessimistic. With the bill’s enactment, authorities would be able to get rid of their obligation to finance many museums and theaters, Russian State Library head librarian Alexander Visly said by phone.
Russian libraries are not allowed to perform commercial operations, which makes self-financing, even to limited degree, all but impossible, he said.
Cutting salaries is not an option because pay is already very low, so the only alternative would be to reduce working hours to save some money on electricity bills, he said.
TITLE: Ivanov Says Crash Probe to Improve Ties
PUBLISHER: Combined Reports
TEXT: MOSCOW — Deputy Prime Minister Sergei Ivanov on Saturday told a delegation from Warsaw that he hoped that the investigation of the April 10 presidential plane crash near Smolensk would help improve ties with Poland.
The meeting came a day after the last 21 bodies of victims of the crash were flown back from Russia to Warsaw.
“We fully realize that, on the one hand, it is our debt to the memory of the dead, and on the other, it is a factor that will define the level of trust between Russia and Poland in future years,” Ivanov said at the start of a meeting to discuss the investigation.
Polish President Lech Kaczynski, his wife and 94 other mostly senior Polish political and military figures died when their plane crashed in thick fog near Smolensk in western Russia.
They were heading to the Katyn forest to mark the 70th anniversary of the massacre of 22,000 Polish officers and intellectuals by Soviet secret police. For decades until 1990, Moscow denied responsibility for the deaths, blaming the Nazis.
Leaders from both nations have said they hope that the crash serves as a catalyst for reconciliation between their countries, divided by historical grievances and present-day disputes over missile defense, NATO enlargement, gas pipelines and other issues.
“Only the truth will give us the possibility to continue the process of rapprochement between our people, who are living through the grief of this heavy loss together,” Ivanov said, seated across from Polish Defense Minister Bogdan Klich.
“We have to speed up the work, and we have to follow the principles of openness and transparency,” Klich said.
Ivanov said Russian specialists were working closely with their Polish colleagues on the investigation. They have obtained black box voice and data recordings and recordings from air traffic control at Smolensk Airport.
Ivanov said all 96 bodies had been identified. DNA tests in Moscow helped identify the bodies, including those of five crew members. Previously, 75 victims’ bodies had been returned, with burials being held throughout the week.
Polish Prime Minister Donald Tusk and the military honor guard were at Warsaw’s Okecie Airport on Friday for the return of the dead, the last of a string of sorrow-filled arrivals in the past two weeks.
Poland’s TVN24 television showed footage the same day from the investigation in Russia. Russian and Polish experts can be seen listening to one of the three flight recorders recovered after the crash. No words are recognizable in the 50-second footage.
The opened flight recorders can be seen: muddy on the outside, but intact inside.
(SPT, AP)
TITLE: Armenians Mourn WWI Mass Killings
PUBLISHER: The Associated Press
TEXT: YEREVAN, Armenia — Hundreds of thousands of Armenians laid flowers Saturday at a monument to the victims of mass killings by Ottoman Turks, marking the 95th anniversary of the start of the slaughter. U.S. President Barack Obama called it “one of the worst atrocities of the 20th century.”
Historians estimate that up to 1.5 million Armenians were killed by Ottoman Turks around the time of World War I. Turkey denies that the deaths constituted genocide, saying the toll has been inflated and those killed were victims of civil war and unrest.
Residents of Yerevan and other regions and representatives of the Armenian diaspora marched to a monument on a hill overlooking the capital. Some carried placards with slogans such as “Nobody and nothing will be forgotten!” and “Genocide never gets old!”
Armenian President Serzh Sargsyan described the slaughter as “unprecedented in its scope, monstrosity and graveness of its consequences” in an address to the nation.
In Asheville, North Carolina, where Obama was spending the weekend, he marked Armenian Remembrance Day by issuing a statement saying: “The indomitable spirit of the Armenian people is a lasting triumph over those who set out to destroy them.”
In Paris, about 1,000 people — led by famous French crooner Charles Aznavour, who is Armenia’s permanent delegate to UNESCO — took part in a commemoration that climaxed at the Arc de Triomphe, at the top of Champs-Elysees Avenue.
The slaying began on April 24, 1915, with the rounding up of about 800 Armenian intellectuals, who were murdered. The Ottoman authorities then evicted Armenians from their homes in actions that spiraled into the mass slaughter of the Armenian population. Scholars widely view the event as the first genocide of the 20th century.
“We are grateful to all those in many countries, including Turkey, who understand the importance of averting crimes against humanity,” Sargsyan said.
Turkey has warned the U.S. administration of diplomatic consequences if it fails to prevent the passage of a congressional resolution that would brand the killings of Armenians as genocide. The U.S. House of Representatives’ Foreign Affairs Committee last month passed a resolution declaring the killings genocide, but it is unclear whether the full House will vote on it.
Countries recognizing the killings as genocide include Uruguay, Chile, Argentina, Russia, Canada, Lebanon, Belgium, Greece, Italy, the Vatican, France, Switzerland, Slovakia, the Netherlands, Poland, Lithuania and Cyprus.
Last month, Sweden’s parliament narrowly approved a resolution recognizing the slaying of Armenians as genocide.
Obama’s statement, which did not use the word “genocide,” said: “I have consistently stated my own view of what occurred in 1915, and my view of that history has not changed. It is in all of our interest to see the achievement of a full, frank and just acknowledgment of the facts.”
Obama’s comments angered Turkey’s Foreign Ministry, which issued a statement saying: “We deeply regret this statement, which reflects an incorrect and one-sided political perception. The toughest enemy of historical facts is subjective memory records. No nation has the right to impose its memory records on another nation. Third countries neither have a right nor authority to judge the history of Turkish-Armenian relations with political motives.”
In addition to tensions over the mass killings, efforts to normalize ties between Armenia and Turkey also have been thrown back by the conflict in Nagorno-Karabakh.
The two countries signed agreements for reconciliation in October that would reopen their border, but neither country has ratified it. Armenia said last week that it was freezing its ratification of the deal, accusing Turkey of dragging its feet by demanding that the Nagorno-Karabakh dispute be settled first.
Turkey closed its border with Armenia in 1993 to protest the Armenia-backed war by separatists in the Nagorno-Karabakh region, an enclave within Azerbaijan but under the control of Armenian and ethnic Armenian forces.
TITLE: Activists Demand Inquiry
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Human rights activists are calling on authorities to open a murder inquiry into the death of Hermitage Capital lawyer Sergei Magnitsky, who died in pretrial detention in November.
“Magnitsky died of systematic torture and not of negligence,” Valery Borshchyov, of the Moscow Helsinki Group, told reporters Thursday.
The 37-year-old lawyer died in a detention center on Nov. 16 after officials repeatedly denied him medical treatment for illnesses that he developed while waiting nearly a year for his politically-tainted tax trial to begin.
The Moscow branch of the Investigative Committee opened a criminal investigation later that month but only accused unidentified officials of negligence and failure to provide medical aid.
In an open letter published on its web site, the Helsinki Group asked Investigative Committee head Alexander Bastrykin to open a criminal case.
Borshchyov said he was still waiting for an answer from prosecutors after the group sent a report with complaints in December.
He argued that Magnitsky died because he refused to make a deal with the investigators who put him in prison. “This is a principle in our law enforcement system, that everyone is in cahoots,” he said.
TITLE: Satirist, Radio Host Caught in Sex Video
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: Satirist and radio host Viktor Shenderovich on Thursday accused Prime Minister Vladimir Putin’s administration of trying to discredit him by posting online a video showing him cheating on his wife.
The clip, which also purported to show two other opposition figures having sex with the same woman, is the latest in a series of hidden-camera stings to target prominent critics of the government.
“I recognized this multipurpose girl Katya from photos published by Novaya Gazeta and understood that this movie is also out there and that the premiere is coming soon,” Shenderovich wrote on his blog at 3 a.m. on Thursday. He said some “kind folks” tipped him off that it would be released.
Several hours later, RuNet was roaring over the low-resolution video, which included individually shot clips showing Shenderovich; Alexander Potkin, the leader of the nationalist Movement Against Illegal Immigration; and a man who looked very much like writer and Other Russia opposition leader Eduard Limonov.
All were having sex with a person who appeared to be the same woman, although she could not be identified because her face was covered by a black spot.
Shenderovich, who is married and has a daughter, wrote that he had sex with the woman but without any particular pleasure. He also joked that security officials had shortchanged him by offering only one woman.
The woman, he said, was also featured in a compromising video circulated last month showing Russian Newsweek editor Mikhail Fishman. In the video he appeared to be snorting cocaine while a naked woman walked around the apartment.
Ilya Yashin, a leader of the Solidarity opposition movement, said at the time that he had spent a night with a woman at the same apartment, whom he now believes was an agent for the security services. He said he left when he was offered cocaine.
Yashin accused Nashi of being behind the videos, after the pro-Kremlin youth group posted a film earlier in March that appeared to show him, Fishman and liberal political analyst Dmitry Oreshkin giving bribes to traffic police.
Nashi denied involvement.
On his blog, Shenderovich called the video revenge from Putin’s retinue for accusing the prime minister of killings, corruption and seizing power.
“Putin’s administration was listening to [these allegations] with enormous cool, and without denying any of it, they answered with their typical, illegal filth,” he said.
Speaking later on Ekho Moskvy radio, where he works, Shenderovich said “federal authorities” were involved in making the video. “It was done by authorities with two purposes: discrediting and blackmailing.”
Putin’s press secretary, Dmitry Peskov, told The St. Petersburg Times that he was not aware of the incident.
“We’d like it if he faced his problems alone,” Peskov said.
Potkin, reached by phone Thursday, also confirmed that he was in the video.
“It was me,” he said calmly. “Now you see that there are no guarantees of having your private life protected.”
Limonov told The St. Petersburg Times that he had not seen the clip and could not comment. Shenderovich could not be reached for comment.
The woman whom Shenderovich mentioned is Yekaterina Gerasimova, an amateur model who works for the Progress modeling firm in Moscow and provides services to security service officials, Yashin said. He and other prominent bloggers have said they recognized her and the apartment where the clips were filmed.
The flat, located on Orlikov Pereulok in downtown Moscow, is listed in online realty databases and can be rented for $2,500 a month.
A spokeswoman for the Progress modeling agency denied that Gerasimova was ever employed there.
“We didn’t have any working agreement with her. She is not in our database,” she said, adding that anyone interested in working for the agency can register a profile on its web site. “We don’t know what these people do in their free time.”
TITLE: Experts Called Into Question by Ruling in Scientology Case
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — For more than 20 years, the works of L. Ron Hubbard, the controversial founding father of the Church of Scientology, have been widely available for purchase in Russia.
But following a recent ruling by a court in the Siberian city of Surgut, all of his works related to Scientology have been banned as extremist. Prosecutors said the writings undermined the “traditional spiritual values” of the country’s citizens, citing the opinions of “psychiatrists, psychologists and sociologists.” A local court agreed.
Irina Shiryayeva, a spokeswoman for the Surgut transport prosecutor’s office — which initiated the case along with local customs officials — told The St. Petersburg Times on Thursday that prosecutors used a “number of experts” to identify the works as extremist, though she declined to identify them.
“It would be good if they remained behind the scenes,” she said.
The ruling appeared to be just the latest strike against nontraditional religious movements in Russia. Scientologists from Surgut and Nizhnekamsk won rulings against Russia last year in the European Court of Human Rights for Russia’s refusal to recognize their organization as a religion.
But a spate of similar decisions in recent months has raised concerns among extremism scholars and rights experts about the competence and independence of those who are invited by prosecutors to offer their testimony.
A series of changes to the law on extremism signed by then-President Vladimir Putin in 2006 and 2007 expanded it considerably, introducing harsher punishments and allowing local courts to add works to a federal list of extremist materials.
If caught with titles on the list, an individual faces a fine of up to 3,000 rubles ($100) and up to 15 days in jail, while a legal entity could be fined up to 100,000 rubles ($3,400) and closed for up to 90 days.
No criminal charges apply, although possession of extremist materials can make punishment for other crimes more severe.
The changes have sparked a series of contentious and often bizarre rulings, prompting even the experts who are asked to testify on extremism to question the law’s merits.
For example, a court in the Rostov region decided to ban a local branch of Jehovah’s Witnesses in September 2009 for extremism, citing, among other things, an expert opinion on a passage written by Leo Tolstoy.
A magazine published by the group had quoted a passage written more than 100 years earlier by Tolstoy, one of Russia’s most beloved authors, in which he railed against the Russian Orthodox Church’s growing influence.
A panel of invited experts labeled the comments extremist — to the bewilderment of Jehovah’s Witnesses and literary scholars alike.
“By considering this text extremist, the court has considered Leo Tolstoy an [extremist],” Grigory Martynov, a spokesman for Jehovah’s Witnesses in Russia, told The St. Petersburg Times.
Courts are hearing more and more extremism cases that require expert testimony on a slogan, article, book or message, but the quality of their assessments is becoming increasingly dubious, said Mikhail Gorbanevsky, a Moscow linguistics professor whose GLADIS center is sometimes asked for expert testimony on extremism.
One of the most astonishing examples, he said, was from Yelena Kiryukhina, a specialist with the state-run Center for Forensic Expertise in St. Petersburg.
Kiryukhina was asked to testify in a criminal case against a gang of skinheads charged in the brutal beating of St. Petersburg ninth-grader Tagir Kerimov in February 2009. Witnesses said the men were shouting racist slogans, such as “Death to Khachs,” a derogatory name for natives of the Caucasus.
Kiryukhina told the court that the slogans “might have been or might have not been xenophobic.” The attackers were later convicted of hooliganism, a lesser charge than a racially motivated attack, drawing a major public outcry.
She also was the expert who found an episode of “South Park” extremist in 2008, although rulings against the U.S. cartoon and the television network 2x2 were later overturned.
Kiryukhina, who now works for the St. Petersburg branch of the Investigative Committee, was not available for comment on this article.
In another recent case, director Pavel Bardin’s anti-skinhead mockumentary “Russia 88” was accused of being extremist by Samara prosecutors, who asked a court to ban it.
They cited the opinion of Shamil Makhmudov, a Russian language professor at Samara State University, who said he thought hateful remarks by the film’s characters were the position of the film’s makers.
“He has turned everything upside down,” Bardin said at the time.
Samara prosecutors called off the case in January after the Prosecutor General’s Office said it needed additional opinions before a final decision could be made.
People employed by state institutions or private companies may be called on for testimony, and their findings should be considered equally by the court, according to a 2006 arbitration court ruling.
An author whose work is accused of extremism is also allowed to invite experts to testify. They can be paid up to 600 euros ($800) for their services, although typically the sum is far less.
Yelena Galyashina, a law professor at Moscow State Law Academy and an authority on extremism in Russia, said experts are required to be independent.
Those working for the Justice Ministry and Federal Security Service are often more professional than private analysts, because studying extremism is their only job, she said. Testimony from independent analysts is more frequently biased or made under pressure from local law enforcement, particularly in the regions.
“Often a dean of some provincial university is asked by a local law enforcement agency to order some of his scholars to provide the expert opinion that’s needed,” said Gorbanevsky, from GLADIS.
TITLE: Supreme Court Opens Door
To Shift on Katyn Case Documents
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The human rights group Memorial has cleared an initial hurdle in its legal fight to declassify documents on the 1940 massacre of Polish officers by Soviet secret police that still divides Russia and Poland, Reuters reported.
The Supreme Court has ordered the Moscow City Court to consider an appeal in which Memorial sought to force the authorities to declassify a 2004 decision by military prosecutors to drop an investigation into the Katyn massacre.
A Memorial leader, Yan Rachinsky, said the ruling could lead to a court decision to open up secret documents about the killings of thousands of Polish officers in the Katyn forest in the Smolensk region. Poland also wants the documents declassified.
The ruling comes amid signs that long-standing tensions between Russia and Poland are easing following the death of Polish President Lech Kaczynski and 95 others when their plane crashed en route to a commemoration ceremony at Katyn on April 10.
“The Moscow City Court will now be obliged to return to this case,” Rachinsky said Wednesday.
It could eventually rule “to drop the ‘classified’ tag, making the files available to historians, journalists and — what is more significant — the relatives of [the officers],” he said.
TITLE: Salary Growth Observed Among City Companies
AUTHOR: By Yelena Zborovskaya and Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: St. Petersburg companies have resumed salary revisions, leading to pay increases of 10 percent on average.
BAT-SPb, a tobacco company, gave 95 percent of its employees raises in April, said Alexander Liuty, director of corporate relations for BAT-Russia.
Heineken plans to reevaluate salaries in May. According to Anna Meleshina, the company’s public affairs director, Heineken expects to increase employees’ salaries by 12 percent. “Last year, Heineken did not cut salaries,” she noted.
Astera St. Petersburg, a consulting firm, was forced to make salary cuts in its service departments last year. “Employees in marketing earned 13 percent less for six months, but their salaries have now returned to pre-crisis levels,” said Lyudmila Reva, director of business development.
Some companies are basing salaries on performance. Since April 1, VTB-24 has raised salaries based on employees’ rates of competency and effectiveness. Seventy percent of workers received pay increases, with an average raise of 10 percent, said a representative from the bank’s press office.
Oksana Pochtivaya, human resources director of Avanta Personnel in St. Petersburg, estimates that between 20 and 25 percent of companies in St. Petersburg conducted salary revisions at the end of 2009. “We can expect as many firms to raise salaries by April or May of this year,” she added. Pochtivaya expects the average raise to be 10 percent.
In other companies, bonuses determine a large part of workers’ pay. Employees of Eurasia restaurants and Fitness House sports clubs, for example, did not see changes in their salaries last year. Alexei Fursov, president of the Eurasia holding, said that bonuses made up 20 to 50 percent of employees’ base salaries. “Bonuses amount to 10 to 30 percent of total salaries, but coming up with good figures in the middle of a crisis is difficult, so salaries have gotten smaller,” admitted Dmitry Ganibalov, director of sales and marketing for Volgobalt Media advertising company.
Approximately 50 percent of large companies will issue bonuses for 2009, but the amounts will be smaller than before the crisis due to lower sales, said Anna Ustiyants, regional director for Kelly Services in the northwest. “Last year, no more than 20 percent of companies paid out bonuses, but the size of premiums decreased by 40 to 50 percent on average,” said Ustiyants.
The management of Petersburg Social Commercial Bank (PSKB), for instance, earned no premiums for 2009 because lending activity did not grow, said Vladimir Pribytkin, chairman of the bank’s board of directors. Another local bank gave bonuses to employees in investment and securities, but withheld premiums for credit managers, said an anonymous representative.
“The management of Astera St. Petersburg has not been paid premiums during the economic crisis,” Reva said. “That motivating factor depends on profit, but in months of crisis the company was lucky to break even,” she explained.
TITLE: Employers Owe Millions
AUTHOR: By Maria Buravtseva
PUBLISHER: Vedomosti
TEXT: A government inspection has found that employers in St. Petersburg owe 53.1 million rubles ($1.8 million) in unpaid wages — a sharp increase from the 8 million ($274,000) owed last year. Inspectors discovered 540 labor law violations, said the operation’s deputy director, Olga Gazina. Employers were fined a total of 1.3 million rubles ($44,500) in 228 cases.
All of the offenders’ names have been published on the inspection’s web site. Inspectors determined that construction companies, government contractors and small and medium-sized businesses were most likely to withhold pay.
“Because of financial problems, wages were being paid late,” said an employee of one company that made the list. The company failed to settle accounts with several former employees, some of whom turned to the labor inspection authorities or the prosecutor’s office, he said. “In such cases, the company tried to pay the money immediately to avoid, for example, seizure of accounts,” the employee explained. “But many companies ended up in that situation, though employers are not breaking the law on purpose,” he added.
According to data from Petrostat, as of April 19, 1,835 employees in St. Petersburg were owed 53.9 million rubles ($1.8 million) in wages. Fourteen percent of local companies reported problems making the payroll on time in September of last year, said SuperJob.ru president Alexei Zakharov. That figure fell to 13 percent in January 2010 and 10 percent last month. Companies with fewer than 100 employees reported the most delays.
TITLE: FINEC Creates Alumni Endowment Fund
AUTHOR: By Yelena Zborovskaya
PUBLISHER: Vedomosti
TEXT: St. Petersburg University of Economics and Finance (FINEC) has created a fund for alumni donations.
The endowment fund was established by university alumni in conjunction with Gazprombank and has been in operation since April 2, said Igor Maksimtsev, FINEK’s rector. BFA management company has agreed to handle the fund’s operations.
“A modern university requires substantial, regular investments, which under budgetary financing is becoming increasingly difficult,” explained Maksimtsev. The rector expects FINEC’s alumni and partners to come forth with contributions, which will help finance everything from innovative education projects to repairs and restoration work.
Under Russian law, colleges and universities have had the right to establish investment funds since 2006. ”A state-run higher education institution cannot amass special-purpose capital without creating such a fund,” said Elvira Aleinichenko, director of the Program for Special-Purpose Capital Development in Russia. “If necessary, a management company is brought on board,” she added.
Around 25 higher education institutions in Russia have endowment funds, said Aleinichenko. The largest is held by Moscow State Institute of International Relations (MGIMO).
The first local endowment fund was created in May 2007 by the European University in St. Petersburg. According to the fund’s chief operating officer, Svetlana Lavrova, its profitability ratio stood at 27 percent in 2009. Most contributions come from Russian companies. “This is the only stable, long-term source of funding for non-profit programs,” Lavrova explained.
St. Petersburg State University’s Graduate School of Management opened its endowment fund in December 2007. Its profitability ratio was 19.94 percent last year, said Sergei Borisov, director of BFA management, which handles the fund’s assets. Contributions have been made by members of the school’s board of trustees, including Sistema joint-stock financial corporation, Sberbank of Russia and VTB, as well as by alumni, Borisov said. BFA can expect to boost its positive image by collaborating with the education system’s major players, he added.
TITLE: Drug Wholesaler’s Profits Soar
PUBLISHER: Bloomberg
TEXT: MOSCOW — Protek, Russia’s largest drug wholesaler, raised its profit more than seven-fold last year on rising demand from producers including Sanofi-Aventis and GlaxoSmithKline.
The company, which is planning an initial public offering in Moscow, increased its net income to 3.26 billion rubles ($110 million) from 418 million rubles a year earlier, according to a copy of the IPO prospectus. Sales added 18 percent to 91.6 billion rubles.
Protek, which owns Rigla, Russia’s second-largest drug retailer, plans to use IPO proceeds to expand its retail business to compete with Pharmacy Chain 36.6, the market leader.
TITLE: Energy Giants Lead Stocks Advance Amid Optimism
AUTHOR: By Alex Nicholson
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian stocks headed for their biggest two-day gain in almost two months as commodities advanced and Credit Suisse Group and VTB Capital raised their forecasts for the country’s equities.
Gazprom, the world’s biggest gas producer, climbed 1.4 percent. The country’s largest oil producers, Lukoil and Rosneft, gained more than 1 percent. The 30-stock Micex Index added 1 percent to 1,481.75, while the dollar-denominated RTS Index rose 1.3 percent to 1,624.33 at 2:35 p.m. in Moscow.
Oil, Russia’s biggest export earner, advanced 0.2 percent after gaining as much as 51 cents to $85.63 a barrel in New York as sentiment toward the strength of the global economy improved. China will unveil a new economic stimulus package, the China Business newspaper said Monday, while Greece moved toward securing an emergency aid package to plug its budget gap.
“Oil saw a remarkable rebound,” said Vladimir Osakovsky, an economist at UniCredit SpA in Moscow. “There is an optimism associated with the Greek situation,” he said.
Russian stocks were raised to 5 percent “overweight” from 5 percent “underweight” at Credit Suisse, which cited “supportive” fund flows and a potential 10 percent upside to the RTS. The gauge, the best performer worldwide last year, will gain about 25 percent to 2,000 by the end of the year, VTB Capital analysts said in a report Monday.
“The re-rating will be sustained by the earnings momentum, driven by benign conditions in the commodity markets and a solid domestic macro policy framework,” VTB analysts including Alexei Zabotkin said in the report.
Three-month copper on the London Metal Exchange advanced as much as 1.5 percent to $7,865 a metric ton. Shares of GMK Norilsk Nickel, the country’s biggest miner, gained 1.5 percent to 5,669.70 rubles after climbing as much as 2.3 percent.
TITLE: In Brief
TEXT: O’Key Owner in IPO
MOSCOW (Bloomberg) — Dorinda Holding, which owns O’Key, the St. Petersburg-based food retailer, plans to raise at least $300 million through an initial public offering in London, Kommersant reported, citing unidentified people familiar with the matter.
Dorinda, based in Luxemburg, will hold the IPO in the autumn, the newspaper said. The three principals, Dmitry Troitsky, Dmitry Korzhev and Boris Volchek, may sell some of their holdings in the sale, according to Kommersant. Russia’s VTB Capital and Goldman Sachs Group will organize the offering, the newspaper said.
Nuclear Memo Signed
MOSCOW (Bloomberg) — Enel SpA signed a memorandum of understanding with Inter Rao Ues for cooperation in the nuclear power industry, according to a statement released at a meeting between Italian Prime Minister Silvio Berlusconi and Russian Prime Minister Vladimir Putin and company executives outside Milan on Monday.
The companies plan to study the construction of a nuclear plant in Kaliningrad, that is expected to start operating between 2016 and 2018.
Severstal Posts Gain
MOSCOW (Bloomberg) — Severstal, Russia’s largest steelmaker, posted its biggest gain in more than three weeks in Moscow trading after saying first-quarter output rose 2 percent.
Output increased 2 percent in the first quarter to 4.73 million metric tons when compared with previous three months, the company said Monday in a regulatory statement. Production rose 25 percent from a year earlier, when the Moscow-based steelmaker slashed output because of the global recession.
Sistema Eyes Russneft
MOSCOW (Bloomberg) — AFK Sistema, Russian billionaire Vladimir Yevtushenkov’s holding company, will pay $100 million for a 49-percent stake in Russneft, Vedomosti said, citing an unidentified person close to Mikhail Gutseriyev, the oil company’s founder.
Glencore International, the commodities trader that holds a minority stake in Russneft and had loaned the oil producer 45.8 billion rubles ($1.57 billion) as of Oct. 1, will not block the deal, Vedomosti said, citing an unidentified person familiar with Russneft management’s plans.
Russia has dropped charges against Gutseriyev, who fled the country in 2007, clearing the path for his return, Vedomosti said.
Airline Compensation
MOSCOW (Bloomberg) — The Russian government is prepared to discuss compensation for airlines’ losses caused by flight disruptions after ash from a volcano in Iceland forced air traffic controllers to shut down large swathes of European air space, Interfax reported, citing Deputy Prime Minister Sergei Ivanov.
KamAZ Stake Reviewed
MOSCOW (Bloomberg) — Russian Technologies may boost its stake in KamAZ, the country’s biggest truck maker, to almost as much as a controlling 50 percent, and later seek to sell the stock at a profit, Sergei Chemezov, the head of the state-owned holding company, told reporters Monday in Moscow.
TITLE: Troika Expects More Foreign Investment
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — More foreign investors will flock to Russia this year because the macroeconomic situation is improving as a result of the government’s anti-crisis measures, said Chris Osborne, chief executive of Troika Dialog’s U.S. office.
Unlike other emerging markets such as Brazil, China and India, where inflation will grow over the year, Russia will see its inflation rate decrease by the end of 2010, Osborne said in an interview.
“For the first time in the post-Soviet era, Russia will see a period of sustained single-digit inflation below 10 percent,” he said.
Troika Dialog’s inflation forecast for Russia is 6 percent for 2010.
Foreign investors are also attracted to Russia because of falling interest rates and government spending, increasing currency and gold reserves, and low debt levels, Osborne told The St. Petersburg Times.
But the government also faces hard work ahead if it wants to keep investors interested, he said.
Troika Dialog expects the country’s economy to grow by 5.2 percent this year, which is higher than the government’s forecast of 3 percent to 3.5 percent.
“Lower interest rates, lower inflation are a good economic background for investors,” Osborne said.
While central banks in other emerging markets are raising their rates, the refinancing rate of the Central Bank in Russia has reached a new historic low of 8.25 percent on March 29.
Osborne said the Finance Ministry’s attempts to cut government spending were key in attracting foreign investment.
“In 2010, there will be no increase in government spending compared with 2009, and this follows a period when there were 30 to 40 percent increases in spending in the two to three years leading up to the crisis,” he said.
Russia also has very low public debt, while corporate debt levels are manageable, Osborne said.
“All this creates a very good macroeconomic basis for investment. And this will attract investors, including U.S. investors,” he said.
The government still has to work on stabilizing the equity market, which dropped by about 80 percent during the crisis, scaring off long-term investors, Osborne said.
Turning Moscow into an international financial center will do a lot for improving the Russian investment climate, he said.
President Dmitry Medvedev said Tuesday that the creation of an international financial center in Moscow had been slowed down by the crisis.
The process will be overseen by Alexander Voloshin, head of Norilsk Nickel’s board and ex-head of the presidential administration, Medvedev’s economic aide Arkady Dvorkovich said.
But before trying to win over Europe, Osborne said Moscow should focus on the Commonwealth of Independent States and play to Russian strengths by becoming a center for commodities trading.
“Right now we have the U.S., Europe and Asia, which are providing a 24-hour trading cycle. I think Moscow could be a good bridge between Europe and Asia in terms of facilitating commodities trading,” he said.
This will not contradict Medvedev’s plan to diversify the oil-dependent Russian economy.
Modernizing the economy is necessary for the country’s long-term development, but focusing on trading commodities gives Russia a competitive advantage, Osborne said.
Foreign investors are interested in Russia’s modernization attempts because the markets would benefit from having a broader range of economic sectors to invest in.
The growth of Russia’s middle class may attract foreign investors to the financial services segment, as well as to consumer-related segments such as food retail and processing, telecommunications and pharmaceuticals, Osborne said.
The government, however, needs to remove administrative barriers and convince foreign investors that their contracts with Russian companies will be enforced in case of a dispute, he noted, calling it “the most important thing.”
“Companies on the ground in Russia understand that the Russian courts actually are effective in ruling on contract disputes, but the impression abroad is very different,” Osborne said.
TITLE: Medvedev Talks Trade, Borders in Oslo
AUTHOR: By Lyubov Pronina and Vibeke Laroi
PUBLISHER: Bloomberg
TEXT: OSLO — Norway is ready to start trade negotiations with Russia, Minister of Trade and Industry Trond Giske said at a conference in Oslo on Monday, during a visit by Russia’s President Dmitry Medvedev.
“Russia is already an important trading partner for Norway,” Giske said in a statement distributed at the conference. “A trade agreement would give even after better terms of trade between our two countries.”
Medvedev is due to discuss Russia’s border with Norway in the energy-rich Barents Sea, a dispute that has run for four decades, during his two-day visit to Oslo.
Medvedev said the two sides could find a “reasonable compromise” to the long-running dispute. “There’s nothing extraordinary about it, but we have to find a solution that will allow us to settle on two zones about which we have no conclusive understanding,” the president said in an interview with Norwegian newspaper Aftenposten.
“We have to divide not just the shelf itself, but an exclusive economic zone,” Medvedev said in the interview, which was posted on the Kremlin web site.
Russia and Norway have been discussing their maritime border since the early 1970s. The two countries are vying with the U.S., Canada and others for control of resources in the Arctic, which may hold as much as 50 percent of the world’s undiscovered hydrocarbons, according to BP.
Norway maintains that the border should be delimited using the “median line” principle, contained in the United Nations Convention on the Law of the Sea, while Russia refers to a “sector line” decreed by the Soviet Union in 1926 that would divide the sea along a meridian stretching from the land border to the North Pole.
No border agreement will be signed during Medvedev’s visit, which began Monday, since the issue requires “thorough verification,” Sergei Prikhodko, the president’s foreign-policy aide, told reporters in Moscow last week.
Talks will also focus on Gazprom’s Shtokman gas project, located 550 kilometers (340 miles) offshore under the Barents Sea. Medvedev said the field would be developed in “close cooperation” with foreign partners, including Norway’s Statoil.
The government is unperturbed by delays in the project and remains interested in supplying North America and Europe with liquefied natural gas from the Shtokman field, Medvedev said.
The partners need to find a “successful starting point” for the project as energy markets recover from the recession of 2009. Whether it happens in 2010 or 2011 is not of “principal importance,” Medvedev said.
The Shtokman Development venture is 51 percent owned by Moscow-based Gazprom, with Total, Europe’s third-largest oil company, holding 25 percent and Stavanger-based Statoil owning 24 percent. The partners said on Feb. 5 that the production start-up would be delayed by three years until 2016, with an investment decision on gas production planned for March 2011 and on LNG output by the end of that year.
Medvedev will meet with Norway’s Prime Minister Jens Stoltenberg and King Harald V. He was also due to speak with Norwegian business leaders before departing for Denmark on Tuesday.
Prikhodko said Medvedev would also oversee the signing of a framework agreement on cooperation on energy efficiency and renewable energy sources while in Oslo.
TITLE: VTB-24 CEO Wary of Hiked State Spending
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s growing social spending and future infrastructure investment rely on high commodities prices, which are likely to fall in 2012, Mikhail Zadornov, chief executive officer of VTB-24, the retail arm of Russia’s second-biggest lender, told Dengi magazine.
“The macroeconomic situation in Russia is a cause for great concern,” Zadornov, a former Finance Minister, told the Moscow-based magazine in an interview published Monday. The budget deficit is financed from the Reserve Fund, an oil fund that may run out by the middle of next year, he said, Dengi reported.
The government will have problems narrowing the budget shortfall to 3 percent of gross domestic product by 2012 as it boosts social and infrastructure spending and pursues an “unbalanced” tax policy, Zadornov said. It plans to raise mandatory corporate insurance payments, which will encourage under-reporting by companies, while giving tax breaks to innovation companies and small businesses in other industries, he said, according to Dengi.
Russia is counting on the next economic growth cycle, fueled by high oil prices and global economic expansion, to last seven years, rather than two or three, which is more likely, Zadornov told the magazine. The government, which should only turn to foreign borrowing as a last resort, should raise money by speeding up asset sales and borrowing on the domestic market to help develop it, Dengi reported.
TITLE: UralChem Sued for $106 Million Over Supply Contracts
PUBLISHER: Bloomberg
TEXT: MOSCOW — UralChem, seeking to raise as much as $642 million in a London initial public offering, is being sued for 3.1 billion rubles ($106 million) over failing to buy agreed volumes of raw materials.
Apatit filed three suits against
UralChem and unit Voskresensk Mineral Fertilizers in Russian courts over supply contracts for apatite concentrate in 2008 and 2009, Apatit’s parent PhosAgro said in an e-mailed statement.
Moscow Arbitration Court spokesman Dmitry Tafintsev said the court received a 1.7 billion ruble lawsuit against UralChem and its unit and will decide within five days whether to review the claim. Apatit filed two suits against Voskresensk Thursday with the Moscow Region Arbitration Court, a court spokesman said.
Silvinit, Russia’s largest potash producer, also said on its web site that it had filed a case in Moscow against
UralChem and Acron, claiming that the two companies colluded on prices.
Moscow Arbitration Court registered a case involving the companies on Wednesday and appointed a judge, said an official who declined to be identified because of court policy.
UralChem has not received notification of the lawsuits, and will defend its interests, the company said in an e-mailed statement Friday.
TITLE: Kudrin Sees Lower Capital Outflows
PUBLISHER: Bloomberg
TEXT: NEW YORK — Net capital outflow will shrink further and may be “close to a zero” for 2010, while the ruble will be stronger than expected because of higher oil prices, Finance Minister Alexei Kudrin said Friday.
“The outflow will shrink,” Kudrin said in Washington after a meeting of the Group of 20 industrial and developing nations. “It will depend on what happens on the world markets. It will depend on oil prices.”
The government initially estimated the outflow at as much as $20 billion for 2010. The price of oil, Russia’s major export, has almost doubled during the last 12 months, boosting Russia’s foreign currency revenue.
Russian net capital outflow shrank to $12.9 billion in the first quarter from $35 billion in the same period a year before, the Central Bank said in a statement on its web site April 5.
The “global recovery will be slow and long drawn-out,” Kudrin said. “Demand is not strong enough yet, and it is being propped up by fiscal measures. There is also a problem of the size of the debt owed by some developed countries, such as Italy and Japan.”
Kudrin met with U.S. Treasury Secretary Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke on Thursday.
Russia’s Finance Ministry will revise the ruble exchange rate estimation for 2010, as it expects the currency to strengthen because of increasing oil prices, Kudrin said.
“We had initially estimated the ruble exchange rate at an average 33.9 per dollar for this year, but it is already obvious today that this figure is going to be lower,” Kudrin said. The current estimate “will be revised,” he said.
The Central Bank’s benchmark interest rate is at a “reasonable” level, and there is even a risk of an increase this year, Kudrin said.
“There are risks, but those are insignificant,” Kudrin said. “Taking into account that inflation is expected at as much as 7.5 percent this year, we currently are at a level of the refinancing rate that is reasonable.”
The government favors borrowing on the domestic market rather than abroad to curb inflation, which has been fueled by higher oil prices, Kudrin said. The government will cut plans to borrow abroad to $7 billion a year in 2011 and 2012, from $20 billion planned earlier, Deputy Finance Minister Dmitry Pankin said at the briefing.
“While we don’t plan to sell anything denominated in foreign currency on the foreign markets this year, the idea of selling ruble-denominated bonds” overseas “seems interesting,” Pankin said.
Kudrin said a sale of eurobonds would not have any major impact on the ruble’s exchange rate. “This is an insignificant amount” to affect the currency, he said. The price of oil has a bigger effect on the currency than eurobonds, he said.
Russia’s budget deficit might shrink to “closer to 3 percent” of gross domestic product in 2010, from 6.8 percent currently planned, if the price of oil stays above $70 per barrel and economic growth accelerates above 3.5 percent, Pankin said. He declined to specify the price of oil that would be needed to cut the deficit in half.
“All I can say at this point is that every additional dollar paid for a barrel of oil gives us $2 billion in additional revenue,” Pankin said.
TITLE: PSA, Mitsubishi Open Kaluga Plant
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: KALUGA — PSA Peugeot Citroen and Mitsubishi on Friday launched a new car assembly plant in Kaluga, a region roundly praised by officials and businessmen for creating conditions conducive to investment.
The companies have invested 470 million euros ($630 million) in the enterprise, called PSMA Rus, with 70 percent owned by PSA and 30 percent by Mitsubishi Motors. PSA’s Didier Aleton and Mitsubishi’s Masayuki Imada will manage the plant.
The enterprise aims to assemble 90,000 vehicles by 2012 from semi-knockdown kits. The factory will assemble the Peugeot 308, which is already in production; the Citroen C4, which will be assembled starting in June; and sport utility vehicles Peugeot 4007, Citroen C-Crosser and Mitsubishi Outlander, which begin production in September.
Starting in 2012, the factory will begin fully assembling about 125,000 cars a year, about 80 percent of which will be dedicated to Peugeot and Citroen sedans. The facility will eventually have to buy 30 percent of its components and equipment domestically, according to an agreement signed with the Industry and Trade Ministry in 2007.
Prices for the popular Peugeot 308 will be cut enough to qualify for a government subsidized loan program, PSA chief executive Philippe Varin said.
Both Varin and Mitsubishi Motors chairman Takashi Nishioka were confident that the Russian market would rebound to previous levels. “The market potential is 5 million cars per year, and we expect demand to go back to its former level,” Nishioka said after admitting that the rebound in the Russian auto market had been “delayed.”
Mitsubishi will keep the same pricing policy on models assembled in Russia, he added.
President Dmitry Medvedev had been scheduled to attend the opening but was replaced at the last moment by his envoy to the central federal district, Georgy Poltavchenko, who praised Kaluga regional authorities for creating “the best investment conditions.” He added that Medvedev planned to visit the plant once it reaches production capacity and begins full assembly.
French Ambassador Jean de Glimasty and Japanese Ambassador Masaaru Kono said they were glad that the companies saw the project through despite difficulties brought on by the financial crisis. “It was a very difficult time for France, Russia and Japan,” Kono said. “But now it seems like the situation is moving forward.”
Construction on the facility began in June 2008. It will sit on 145 hectares of the Rosva industrial park, located near the regional capital of Kaluga, about 180 kilometers south of Moscow. General Electric is constructing a $25 million electric turbine plant in the same industrial park.
The Kaluga region has developed its industrial parks to attract foreign investment and has already seen Volkswagen, Volvo Trucks and Renault Trucks set up factories in recent years, producing a total of 22 car models in the region at this time. “Later this year we are launching a L’Oreal plant and beginning construction of a Lafarge plant,” Governor Anatoly Artamonov said.
The PSA/Mitsubishi facility, once it reaches capacity, will be responsible for 8 percent of Kaluga region’s industrial output, Artamonov said.
PSA Peugeot Citroen sold a combined 42,100 cars in Russia in 2009, occupying 2.9 percent of the market. Peugeot 308 and Citroen C4 were the alliance’s most popular cars last year. Mitsubishi sold 41,000 cars in 2009, with the Lancer and the Outlander topping its list of most popular cars.
TITLE: Innovation City Will Have Own Laws, No Taxes
AUTHOR: By Maxim Glikin and Natalya Kostenko
PUBLISHER: Vedomosti
TEXT: MOSCOW — The future innovation city in Skolkovo will have a special legal regime, its own special police force and will be run by a fund rather than a mayor, Viktor Vekselberg, who will be president of the fund, told Vedomosti.
“We wanted the police force that will serve in the innovative city to be a little different from that in the rest of the country,” Vekselberg said, referring to the future organization of Skolkovo.
The city, which has come to be referred to as an innograd, will also have a tax regime that is not typical.
“Companies that have the status of ‘resident’ will be freed from profit and property taxes and will have lower rates for social expenditures,” Vekselberg said. “Tempers are high in the discussions. The most painful discussions are those with the Finance Ministry on tax preferences.”
The innograd will be run by a nonprofit foundation that will be managed by Vekselberg and established by the Russian Academy of Sciences, Rosnano, Vneshekonombank, Russian Venture Company, the Small Business Research Development Foundation, the Housing Assistance Foundation and several nonprofit organizations that will found universities, including Bauman Moscow State Technical University.
“If we manage to reach an agreement, there will also be foreigners among the founders,” Vekselberg said. Nobel Laureate Roger Kornberg, a biochemist, may become co-chairman of the city’s scientific council along with physicist Zhores Alferov, also a Nobel Laureate.
The foundation will build the innograd for 25,000 people to 30,000 people and organize its vital activities. The first residents will move in within 3 1/3 years. Scientific research premises will be built, as will graduate schools, laboratories, housing, offices, kindergartens, schools and hospitals. Highway infrastructure will be built within four years.
For such a territory (380 hectares) and population, it will be more effective to build low-rise apartment buildings and townhouses, said Konstantin Popov, chairman of Inkom. This would mean approximately 1.5 million square meters of real estate (1 million for housing and the rest for social infrastructure), he said.
The minimum necessary investment for such an undertaking is about $2 billion, he said. “Without the scientific and research components, this looks more like a typical construction megaproject for low-rise apartments in the Moscow region.”
There will be no skyscrapers, Vekselberg said. The construction focus will instead be on environmental factors and energy efficiency.
Financing the first stage (technical assignments, architectural plans, tenders, analyses) will cost 4.6 billion rubles, which was earmarked by the government’s commission for modernization this year.
The project will get its own assignation in the federal budget next year, Vekselberg said. It may receive 50 billion rubles to 60 billion rubles over the next 2 1/2 years. Investment from the co-founders will be minimal, and most of the funds will come from the state budget.
The foundation will establish a managing company that will be responsible for the innograd’s housing. There will be no local authorities, and the foundation itself will take care of lighting, plumbing and street naming, Vekselberg said.
This is an exception to the law on local governance, said Vyacheslav Timchenko, head of the State Duma’s Local Administration Committee, but to develop an innovative economy it is necessary to make exceptions.
The foundation will provide grants for several projects. Companies whose projects are selected will receive the status of participants and will be able to rent facilities nearly at cost. They will also get breaks on taxes and tariffs, as well as other subsidies.
A separate law is being prepared for the innograd, which will establish a special legal regime that will allow it to fully concentrate on science and research without being hampered by bureaucracy and formalities. The Economic Development Ministry will develop the law, and Elvira Nabiullina, the ministry’s head, will report on the legislation at the next meeting of the presidential commission on modernization.
The ministry’s framework document, a copy of which was obtained by Vedomosti, requires that nine laws and codes be changed, including the Tax Code, the Town Planning Code and the Land Code.
The status of “participant” will be given for 10 years and can’t be revoked before then, for example, for non-core activities. Housing will be rented to personnel, Vekselberg said, and all land plots will stay owned by the foundation.
The ministry’s framework discusses two possibilities for a preferential customs regime. Participants will either receive the right to import equipment without tariffs or subsidies to compensate for the tariffs. A representative of the customs service told Vedomosti that the service is prepared to for both options.
According the ministry’s project, the tax breaks will be given directly to the foundation, its subsidiaries and participants, either for 10 years or until its yearly revenues reach 3 billion rubles. Profit, property, land, transport and value-added taxes will all be repealed. Mandatory insurance premiums will be 14 percent.
The Interior Ministry, the Federal Migration Service, the Federal Tax Service, the Emergency Situations Ministry and the Federal Consumer Protection Service will all have special departments in Skolkovo that will be independent of local authorities and will report directly to the head office.
An official in the Economic Development Ministry said there is a proposal for such a scheme, but he didn’t know if it had been agreed upon yet.
A Finance Ministry spokesman declined to comment on the tax proposals.
An Interior Ministry employee said the ministry’s operations in Skolkovo might be analogous to the police forces in Russia’s closed cities. While the department that supervises such police forces is currently inactive, they will be subject to regional branches, and their independence, which allows such police forces to take into account the specifics of such territories, will be retained.
A simplified and expedited procedure will allow land to be transferred, advertisements to be placed and buildings to be constructed without permits from the authorities.
Imports of foreign goods and the use of new domestic products will be allowed without a conformity assessment: Risks and responsibility for the safety will be taken by the foundation.
Individual projects won’t have specific performance requirements, Vekselberg said. For the first time in Russian practice there will be a right to fail. In the West, only two out of every 10 startups are successful, he said.
The 10-year tax holidays are unprecedented, said Dmitry Chernik, president of the Tax Consultants Chamber. Typically, someone will do something and then ask for a year of tax subsidies and then, not having done anything, will ask for another 10 years.
A five-year tax holiday was considered in 2007 for residents of the special tourists’ zone in Krasnodar region, but that was only for land, property and transportation taxes, while profit taxes were lowered 4 percent.
This will just be a variation of a state corporation, i.e. a sinecure, said Sergei Mitrokhin, leader of the Yabloko party. In the absence of a local government, its activities will be completely beyond control.
The legislative field was already plowed up with the creation of state corporations, said Igor Nikolayev, of consulting firm FBK. The form of such entities is unclear, nontransparent and contradictory for investors, he said.
As in the case of state corporations, in two to three years they start to ask whether or not this was a good idea after all, he said. But while you can reorganize a state corporation, it’s not clear what you do with a city.
TITLE: Reiman Says RuNet Still Profitable Despite Crisis
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Russian Internet is profitable despite the economic crisis and outperforms Western countries in some categories, Leonid Reiman, an adviser to President Dmitry Medvedev, said Wednesday.
“RuNet has achieved much in its development, sometimes more than the same segments in some developed countries,” Reiman, a former telecommunications minister, told an industry forum, Prime-Tass reported.
The Internet is among the best-performing segments in Russia’s economy despite the crisis, Reiman said.
“This segment has suffered the least,” he said, noting that Internet advertising was showing growth.
The volume of Internet advertising increased by 8 percent in 2009 to reach 19 billion rubles ($650 million), according to AKAR, an advertising industry association.
Reiman said the Russian Internet, or RuNet as it is commonly known, has reached “a period of maturity.”
“Everyone understands today that the person who is not on the Internet first is in an unbeneficial position,” he said.
RuNet got a boost in November when the Internet Corporation for Assigned Names and Numbers, the world’s governing body for Internet domain names, approved the use of non-Latin characters, clearing the way for the “.ðó” suffix and web sites with Cyrillic addresses.
Registration for the new domain names, however, is currently limited to government bodies, major cities and trademark owners.
Reiman praised efforts by Medvedev and other government officials to reach out to the public via the Internet. Medvedev keeps a LiveJournal blog, and the Kremlin said earlier this month that he planned to open a Twitter account soon.
Reiman said such efforts were providing “a feedback channel between the authorities and people.”
“The authorities can gauge the mood of the society now,” he said.
Reiman also said plans to put greater swaths of the government online would be transparent, and he promised to release information on how much money would be spent on the project.
TITLE: Banks Asked to Close Some Accounts
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Central Bank has asked commercial banks to close their foreign currency correspondent accounts, scrapping another crisis-period tool.
The Central Bank launched the accounts in late 2008 in a bid to discourage local banks from shifting money out of the country at a time when companies and individuals alike ditched the devaluing ruble amid falling oil prices.
But a strengthening ruble and plentiful liquidity have enabled the Central Bank to start unwinding crisis- time support measures.
“Due to changes in financial markets and the end of validity of the Bank of Russia’s recommendation on limiting foreign assets,” the Central Bank asked commercial lenders to close their foreign currency correspondent accounts by June 1, 2010. The letter, dated April 12, was published on Wednesday.
TITLE: Russia and EU Seeking Inspiration in the Past
AUTHOR: By Fyodor Lukyanov
TEXT: After the tragic death of Polish President Lech Kaczynski on April 10 and the circumstances surrounding the 70th anniversary of the massacre of thousands of Polish officers at Katyn, we are forced to once again look at the role that history plays in politics.
Russia’s reaction to the Polish presidential airplane crash demonstrated that simple human relations are capable of smoothing over even the thorniest historical tensions. Of course, political will is needed as well. In fact, the gradual warming of relations between Russia and Poland did not begin in recent weeks but soon after Donald Tusk became the Polish prime minister in 2007.
Generally speaking, Russia’s foreign policy is reactive by nature, and it responds to both positive and negative stimuli. Tusk’s willingness to be flexible toward Russia — in contrast to his predecessor, Jaroslaw Kaczynski, who made no special efforts to establish a dialogue — has elicited a corresponding response from Moscow. The result has been that the Polish meat problem was resolved in 2008, and the two countries have started a constructive dialogue on different issues, including ones as sensitive as Katyn.
Of course, internal factors in Russia have also played a role. Two months ago, I wrote in this column that the time when Russian authorities could use the country’s Soviet past as a political tool was coming to an end. The events of this spring confirm this, and the reason is simple: It has become clear that attempts to rally the people around the legacy of former Soviet leader Josef Stalin have not only failed but have provoked futile and pointless controversy. Individual members of the ruling elite, such as Mayor Yury Luzhkov, continue to use the Stalinist theme to further their personal interests, but most authorities recognize that playing the “Stalin card” has exhausted its potential and has even become politically risky.
One example of just such an overblown and pointless conflict is found in the objections that leftist nationalist groups have raised over the Kremlin’s decision to invite representatives of the Allied countries to the May 9 Victory Day parade. The hysteria over this desire to give the occasion international significance only demonstrates that with Russian society confused and unsure of itself, there is more to be lost than gained from using World War II to win political points.
Taking a pragmatic approach can reduce the intensity of domestic and international disagreements, but it will not eliminate them. This is because Russia views World War II very differently than the rest of Europe does.
Russia focuses on the war itself and on its victory over the fascist enemy that threatened the very existence of the country. Any discussion of the price paid for that victory or of secondary motives that the Soviet authorities might have had is considered blasphemy. What’s more, the victory over Adolf Hitler stands out as the most important source of patriotic pride in Russia’s 20th-century history. This explains the fervor over attempts to rewrite the Soviet Union’s role in World War II. Attempts to diminish Russia’s role in the victory are perceived as attempts to undermine the very foundation of the state.
For today’s Europe, the war itself is of less importance than what followed it. In the post-war period, Europe managed to finally overcome the disastrous policies that had led to its collapse in the first half of the 20th century. Two events were of utmost importance. The program for European integration, begun in the 1950s, marked the end of the French-German confrontation that had spawned both world wars. Also, the fall of the Iron Curtain and the collapse of the communist empire enabled the West to wash its hands of the “sin” of having cut deals with Stalin at Yalta and Potsdam.
In other words, while Russia takes pride in having fended off an existential threat and views that achievement as a geopolitical moment of triumph, Europe experiences shame at having unleashed such a monstrous war and accepted dirty trade-offs after that in the first place. These are two very divergent views of the same historical event. History is important to every nation and serves as a source of political inspiration, especially when the future appears increasingly vague and confusing.
Because Russia and the rest of Europe do not yet have a clear idea of what place they will occupy in 21st century, they cling desperately to the past. In one sense, everything is clear regarding Russia’s position: The country suffered a serious trauma in 1991 when the Soviet Union collapsed, and it is still trying to define its geopolitical identity. It would seem that the European Union has no such problems. Although the integration of its constituent states has by and large proven successful, it is increasingly clear that Europe is losing its global significance and is turning into a secondary player, mired down by its own internal problems.
When Europeans say that their administrative model is in crisis, they implicitly refer to past crises such as the “Eurosclerosis” of the 1960s and 1970s, which they ultimately overcame. In general, the political character of the EU is based on a feeling of phenomenal progress, which Western Europe achieved in the second half of the 20th century. There have been very few examples in history where eternal enemies have been reconciled and where economic expediency has been placed above parochial national ambitions.
At the same time, Europe’s successes mask the fact that these previous results were achieved under unique conditions — a common threat, U.S. patronage and a degree of homogeneity among member states. But since the global architecture has changed so dramatically, it is unclear whether Europe will be able to repeat its successes in the future.
In this sense, Russia and Europe are in a similar backward-looking situation. But considering their vastly different understandings of the past, this similarity may separate them more than it will unite them.
Fyodor Lukyanov is editor of Russia in Global Affairs.
TITLE: Turning Bad Blood Into Good
AUTHOR: By David Marples
TEXT: A new group was recently organized on Facebook under the title “Polish plane crash should be investigated by the International Commission.” Within days, it ballooned to more than 4,500 members, raising the question of whether people really suspect Russia of being involved in the tragic Polish plane crash of April 10 near Smolensk that killed President Lech Kaczynski and more than 90 high-level officials of the Polish government and parliament.
Russia’s reaction to the crash was quite unusual. It appointed a high-level commission to investigate its causes, headed by Prime Minister Vladimir Putin. Putin also expressed his condolences and has shown every intention of continuing his surprising policy of working with the Poles to expose the full consequences of the massacre of Polish officers at Katyn by the NKVD in 1940. In contrast to other world leaders, President Dmitry Medvedev ignored the problems of volcanic ash and flew to Warsaw for Kaczynski’s funeral on April 17.
The current Russian attitude contrasts with both former Soviet policy, which blamed the shootings on the Nazis, and that of former Soviet and Russian Presidents Mikhail Gorbachev and Boris Yeltsin, who acknowledged Soviet responsibility but did not allow full access to the available archival information.
In other respects, however, the situation is less clear. The Russians had invited Polish Prime Minister Donald Tusk to an earlier commemoration of Katyn, neglecting to offer the same courtesy to Kaczynski, who was known for his conservative, firm stances on Russia — including his efforts to lobby former U.S. President George W. Bush to deploy elements of a missile defense system in Poland, one of the worst sore points in Russian-Polish relations during the Putin years.
While the suggestion that Russia was somehow responsible for the crash is, of course, absurd, such suspicions reflect the recent history of bad blood between the two countries.
From 1795-1918, Poland was virtually wiped off the map when its territories were divided among Russia, Prussia and Austria. After World War I, however, Poland re-emerged as an independent state, and this led to a joint Polish-Ukrainian attack on Soviet Russia in 1919. The new Red Army initially rebuffed the assault and advanced to the gates of Warsaw, intending to expand Communist influence to Poland and central Europe. But the Poles defended their capital successfully and then marched eastward again.
The result was the establishment of a Poland that included a large eastern territory comprised mainly of Ukrainians and Belarussians. The interwar period was a time of barely suppressed venom between Warsaw and Moscow, culminating in the Molotov-Ribbentrop Pact by which Adolf Hitler and Josef Stalin cynically carved up Poland in September 1939.
A brief period of Soviet-Polish conciliation that followed the Nazi invasion of the Soviet Union came to an end with the German discovery in 1943 of the mass graves at Katyn. The Polish government-in-exile in London broke off relations with the Soviet Union, although its Western allies all but ignored the discovery, focusing their efforts on the defeat of Hitler.
In July 1944, the Red Army advanced over the old Soviet border and reached the eastern bank of the Vistula River in Poland. In response, the Polish Home Army in Warsaw mounted an uprising against the German occupants on Aug. 1, believing that external aid would be forthcoming. But not only did the Polish-born General Konstantin Rokossovsky’s army of the First Belorussian Front fail to come to the aid of the Poles, Stalin even prevented the Western allies from dropping supplies to the insurgents from the air.
Subsequently, the Germans massacred the Poles and razed Warsaw. Stalin created the so-called Lublin Committee, which paved the way for the creation of the puppet Communist government in Poland after the end of World War II. Symbolic of Soviet dominance was the Palace of Culture in the center of Warsaw, a hideous “wedding cake” Stalin-era building that is still the tallest building in Poland.
Communist Poland, however, was rarely a tranquil satellite of the Soviet Union. After the death of Stalinist leader Boleslaw Bierut in 1956, an uprising took place in Poznan, but this was suppressed brutally by Rokossovsky, who had been serving as Polish defense minister since 1949.
The era of the Solidarity trade union began in the early 1980s, and the role of the Polish Pope John Paul II in bringing an end to communism not only in Poland but also in Eastern Europe as a whole cannot be underestimated. In 1999, Poland joined NATO, symbolizing the total demise of Russian influence.
Nonetheless, the shocking catastrophe of April 10 offers an opportunity to improve Polish-Russian relations. Tusk, whose Civic Platform party dominates the parliament, can also do a lot to push these efforts from the Polish side. Poland now needs to decide whether this reversal of recent history is genuine and, if so, whether it is mutually beneficial and worth pursuing.
David Marples is a professor in the department of history and classics at the University of Alberta, Canada.
TITLE: Central Asian Bedfellows
TEXT: U.S. history has two days that will live in infamy — Dec. 7 and Sept. 11. After each attack, the United States found itself fighting in Asia, a more difficult place for it to project power than Europe.
For purely logistical reasons, Washington rents the Manas air base, which is only 20 kilometers fr om the Kyrgyz capital, Bishkek. The United States is not seeking to win any hearts and minds, but there are some sensitivities involved. Named for the country’s national hero, the Manas base was originally built by the Soviets, and its flight school’s graduates include Egyptian President Hosni Mubarak. Because other routes, such as the Khyber Pass on the Afghan-Pakistani border, are frequently attacked by the Taliban, Manas bears quite heavy traffic in troops and materiel, especially fuel. In March, 50,000 troops were moved through the base and 12.5 million gallons of jet fuel were pumped. The corruption around the sale of fuel to NATO stank to high heaven and was one of the reasons for the April 7 revolt.
Kyrgyzstan is the only country in the world that has both U.S. and Russian bases on its soil. Russia does not welcome the intrusion of any outside power onto its “turf,” especially the power that defeated it during the Cold War. In 2009, Russia made brazen attempts to squeeze NATO out of the Manas base, thwarted only by the greed of then-President Kurmanbek Bakiyev who, in classic Central Asian style, played the two powers off each other.
Russian support of the current revolution has gained the country significant influence in Bishkek. Stephen Blank, a professor at the U.S. Army War College, said, “American tenure in Manas now truly depends on Moscow, not Bishkek.” Russia also controls U.S. flights over its territory to Manas. (In a similar development, Washington will depend on Moscow for travel to the space station for at least five years after the upcoming end of the shuttle program, though the astronauts of both countries apparently get along famously well.)
In a recently leaked memo, U.S. Secretary of Defense Robert Gates warned that the United States has no thought-through plan for dealing with a nuclear Iran. But does it have one in Afghanistan where the pullout date is clearer than the goals on which that pullout depends?
Unlike the United States, which really has only one reason for being in Kyrgyzstan, Russia has many. For Moscow, Kyrgyzstan is a stronghold and a lookout on the western border with China, where Beijing feels the least secure because of its restive Tibetans and Uighurs. Also, as nuclear weapons become less important, the principles of conventional warfare reassert themselves. Once again, mountains and distance matter.
Moreover, Russia has been assiduously winning back much of what it lost in the color revolutions. Ukraine is now leaning toward Moscow, which scored a major victory by securing a new 25-year lease for its Black Sea fleet. Georgia lost face and territory in the war of August 2009. And Kyrgyzstan’s Tulip Revolution has now been overthrown, a clear victory for Moscow.
But Russia cannot really have any overarching foreign policy because it is still in the process of defining itself. It can’t know what it wants until it knows who it is. Resurgence, revanchism and “winning back” what it lost have more to do with psychology than strategy.
Both purposeful and adrift, Russian and U.S. foreign policies could soon collide in Kyrgyzstan. It’s one thing to get along in outer space, but in Central Asia it’s another matter entirely.
Richard Lourie is author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”
TITLE: A Soccer Fan Club Helping to Make a Difference
AUTHOR: By Simon Eliasson
PUBLISHER: The St. Petersburg Times
TEXT: Sector 10 is one of many fan organizations devoted to St. Petersburg’s FC Zenit. But it’s not all about soccer. On Saturday, the group visited a boarding school for orphans and children suffering from poor health in Luga, 150 kilometers south of St. Petersburg, as part of a project run in cooperation with the Celebration for Kids charity that has been underway for three months.
“The kids have been waiting for this day for weeks,” said Yelena Urozhayeva, deputy director of Luga School and Sanatorium, during the visit on Saturday. “What they need most is interaction with adults other than those working at the school. And most of them love soccer too, so it’s a perfect combination.”
Sector 10 was founded in 2004, after seceding from another organization known as Klub Bolelshchiki (Fan Club), and currently has about a hundred paying members.
“Numbers vary depending on how times are going,” said Andrei Polyakov, head of Sector 10. “In good times we have had up to two hundred, but now it’s dropped off a little bit.”
The member fees go toward tifos, supporter slang for arranging spectacular choreography on the stands. In Zenit’s first game of this season, against Spartak Moskva, Sector 10 contributed to a huge painted blanket that covered an entire end of Petrovsky stadium.
“Projects like that take a lot of preparation, and cost huge sums of money,” said Polyakov. “Usually we use them only once. We have an artist who helps us to create designs, and then we work together to finish the piece before a game. Usually, about thirty or forty of us meet at a certain location and work through the night,” he said.
The sight of a towering man with a shaved head and wearing a black hoodie playing with a tiny girl dressed in pink contradicts most stereotypes of hardcore soccer fans. The packed program on Saturday included quizzes, relay races and last but not least, a friendly soccer game between the school’s own team and Sector 10.
“The cooperation with Sector 10 means a lot to the kids,” said Urozhayeva. “Here at the school, the only adults they meet are staff. They don’t get the ordinary experience of life that is necessary for everyone. It’s good for them to see that there are people out there who care for them, and enjoy spending time with them.”
Two hundred children aged seven to 17 live at the school. Although it is not officially an orphanage, fifty of them have lost both parents. Others have problems with their health, in particular lung complaints. Every day of the week is spent at school, except Sundays, when those who do have a family go home. The school has been badly hit by regional budget cuts, and lacks facilities such as a play area for the younger children, and nighttime security guards.
“The only things the younger kids can do outside is play football and run around,” said Urozhayeva. “The playgrounds are designed for older kids.”
After an awards ceremony following the quizzes, the time came for the most anticipated event on the schedule — the match. On a synthetic field a short walk from the school, the youngsters and the adult fans played a tough but fair game, cheered on by a group of girls from the school. And the end result? A crushing 7-1 victory for the young players.
For information on supporting the school, write to sanshk@mail.ru.
TITLE: Thai King Speaks Out on Crisis For First Time
PUBLISHER: The Associated Press
TEXT: BANGKOK — Thailand’s revered king has spoken out for the first time during a political crisis, telling newly appointed judges that they should help restore peace to the country.
In his speech, given Monday at the hospital where he has been for more than seven months, he did not directly address the deadlock between the government and protesters seeking its removal.
The 82-year-old king, who many in the country had seen as the best hope for peacefully resolving the standoff, told the judges that they should set an example by carrying out their duties because it would show that officials are committed to keeping the peace.
“It will show that there are officials in the country who perform their duties with strong, clear will and are determined to maintain stability in the country,” he said. “This will give people the determination to perform their own duties as well.”
The government has been accused of failing to keep order when faced with the militant protesters.
U.S.-born King Bhumibol Adulyadej, the world’s longest reigning monarch, stepped in to stop bloodshed during a student uprising in 1973 and again during antimilitary street protests in 1992. Both events lasted just days.
This latest iteration of Thailand’s political crisis, which pits a largely rural movement against the government, is in its seventh week. There is no end in sight and seemingly no one able to break the deadlock that has seen protesters occupying key areas of Bangkok for weeks.
Confrontations have so far taken the lives of 26 people and paralyzed central Bangkok, where the protesters, known as the Red Shirts, occupy a square-mile (half-kilometer) of some of the capital’s most glamorous shopping areas.
Almost everyone agrees that old-fashioned give-and-take is the best way out of the stalemate, which has crippled Thailand’s golden tourist industry and shaken investor confidence.
But three rounds of talks have already failed, and the seemingly intractable standoff even has some worrying publicly about the potential for civil war.
The latest talks broke down Saturday after Prime Minister Abhisit Vejjajiva rejected a Red Shirt proposal that Parliament be dissolved in 30 days, a softening of earlier demands for immediate dissolution to be followed by elections.
The Red Shirts consist mainly of rural supporters of former Prime Minister Thaksin Shinawatra and pro-democracy activists who opposed the military coup that ousted him in 2006. They believe Abhisit’s government is illegitimate because it came to power under military pressure through a parliamentary vote after disputed court rulings ousted two elected pro-Thaksin governments.
Thaksin, who fled Thailand ahead of a conviction on corruption charges, said Monday that he is in contact with the protesters as he defended their cause to reporters.
“We just fight for democracy. Let them fight for democracy and justice,” he said in Montenegro, one of a handful of countries that have offered the fugitive a passport. Others, such as Germany and Britain, have barred him.
Red Shirt leaders have urged their supporters in provincial areas to confront security forces being brought in to help crack down on the protests, and many have set up roadblocks to prevent reinforcements from moving into Bangkok.
The conflict has been characterized by some as class warfare, and a group of pro-establishment counter-protesters, known as the Yellow Shirts, have stepped up demands that authorities crack down on the demonstrators. The Yellow Shirts have implied they might take matters into their own hands if nothing is done soon.
With no easy solution or forgeable compromise in sight, many are looking to the king. Last week, Chavalit Yongchaiyudh, a former prime minister, petitioned the king, saying “I can see that there is no other institution that can stop this except the monarchy.”
But Paul Handley, who authored a biography of the king, says that Bhumibol’s “health problems may have left him without the energy to hash out a deal personally.”
The king, he says, has the constitutional right to order a dissolution, but he has never done so without the agreement of the government in power, so it is still the government that must strike a deal with the protesters.
TITLE: Obama Asks 2008 Coalition For Help
AUTHOR: By Liz Sidoti
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Desperate to curtail expected widespread losses this fall, President Barack Obama pleaded with supporters of his 2008 campaign Monday to help elect Democrats as his aides intensified their focus on re-energizing his broad coalition of backers.
“I need your help once more,” the president said in an online video sent to millions of his supporters. “If you help us make sure that first-time voters in 2008 make their voices heard again in November, then together we will deliver on the promise of change, and hope, and prosperity for generations to come.”
The video announcement of what Democrats are calling “Vote 2010” is part of a multi-pronged effort by the Democratic National Committee to re-engage the legions of backers — including first-time voters, young people, blacks, Hispanics, and independents — who propelled Obama to victory in his groundbreaking campaign. That won’t be easy.
Democrats face a tough political environment, partly because of the economic recession and continued joblessness.
Since Obama won the White House, voters of all political stripes have soured on the president and his party; his job performance rate hovers around 50 percent and support for Democrats in Congress is even lower. The growth of government and spending increases have turned off some independent voters. Parts of the Democratic base are frustrated with the pace at which the president has made change. And some Republicans who crossed over to vote for Obama now are disillusioned.
Even some of the most senior Democratic officials don’t expect that the coalition of voters who backed Obama will turn out in droves when he’s not on the ballot. They didn’t in three recent statewide races — in Virginia, New Jersey and Massachusetts — even though Obama himself made the same appeal and campaigned in those states on behalf of Democrats. Republicans won all three races.
Of particular concern for Democrats are people who were first-time voters in 2008; they’re among the least likely to vote again.
Democratic National Committee Chairman Tim Kaine as well as Obama political advisers David Plouffe and Mitch Stewart were rolling out details of the 2010 campaign strategy over the next week. The party plans to spend at least $20 million — and probably far more — to defend its comfortable majorities in Congress.
In his message, Obama sketched out the party’s core argument for keeping it in power: he cast the elections as a choice between continuing the changes made under Democrats who fight for everyday Americans and going backward under the rule of Republicans who do the bidding of big business.
“Today, the health insurance companies, the Wall Street banks, and the special interests who have ruled Washington for too long are already focused on November’s congressional elections,” Obama said. “They see these elections as a chance to put their allies back in power, and undo all that we have accomplished.”
TITLE: Eastern Jerusalem Construction Halted
AUTHOR: By Amy Teibel
PUBLISHER: The Associated Press
TEXT: JERUSALEM — The Israeli government has imposed a de facto freeze on new Jewish construction in Jerusalem’s disputed eastern sector, municipal officials said Monday. The decision was made despite Prime Minister Benjamin Netanyahu’s public insistence that building would not be stopped in the face of U.S. pressure.
It remained unclear if the slowdown constituted a formal moratorium or how long it would last, but the move reflected Netanyahu’s need to mend a serious rift with the U.S. over Israeli construction on lands the Palestinians claim for a future state as Washington tries to bring the Palestinians back to the negotiating table.
An Israeli government official claimed a weekslong delay in reviewing plans for new construction was nothing more than a bureaucratic issue. Nonetheless, signs of the freeze drew angry criticism from hard-line lawmakers, including a member of Netanyahu’s own party who warned the government could collapse over the matter.
Construction in east Jerusalem has been a major sticking point since Israel infuriated Washington last month by announcing a major new east Jerusalem housing development during a visit by U.S. Vice President Joe Biden.
Jerusalem Councilman Meir Margalit of the dovish Meretz Party said top Jerusalem officials intimately involved with construction projects told him that Netanyahu’s office ordered a freeze after Washington expressed anger over the building plans.
“The government ordered the Interior Ministry immediately after the Biden incident to not even talk about new construction for Jewish homes in east Jerusalem,” Margalit said. “It’s not just that building has stopped: The committees that deal with this are not even meeting anymore.”
He declined to identify the officials who informed him of the order because they had not approved the disclosure of their names. A Jerusalem municipal spokesman did not immediately return a call seeking interviews with the officials.
Another councilman, Meir Turujamen, who sits on the Interior Ministry committee that approves building plans, said his panel has not met since the Biden visit, after previously meeting once weekly.
“I wrote a letter about three weeks or a month ago asking (Interior Minister Eli) Yishai why the committee isn’t convening,” he said. “To this day I haven’t received an answer.”
Turujamen added that the last time his committee met was on March 9, when it made the provocative decision to approve the 1,600-apartment Ramat Shlomo project that riled the Americans.
He said he had received no official word of a de facto freeze order, “but based on the situation, those are the facts. We used to meet once a week, and now for several months we haven’t met. It’s clear there’s an order.”
After word of the Ramat Shlomo project got out, the Palestinians called off indirect U.S.-mediated peace talks. Under American pressure, Palestinian leaders will seek backing this week from the Arab League to renew participation in those talks.
Palestinian negotiator Saeb Erekat said he has not heard anything official about an Israeli construction freeze in east Jerusalem. “What counts for us is what we’ll be seeing on the ground,” he said. “We hope the Israeli government will halt settlement activity so we can give proximity talks the chance they deserve.”
Attempts to advance construction haven’t halted altogether. A lower-level municipal planning committee last week gave preliminary approval to a synagogue and kindergarten in a Jewish neighborhood in east Jerusalem, he said. But that decision still needs Interior Ministry approval.
An engineer who oversees residential construction in a Jewish neighborhood in east Jerusalem said requests for proposals to build hundreds of apartments already approved haven’t gone out. “I think it’s related to the political situation,” he said, adding that he knew of no official order to block construction.
TITLE: Iraqi Court May Skew Election
AUTHOR: By Qassim Abdul-Zahra
PUBLISHER: The Associated Press
TEXT: BAGHDAD — An Iraqi court on Monday disqualified 52 candidates from the country’s parliamentary elections, including two who won seats, and threw out their votes in a decision that could potentially change the outcome of the March 7 vote.
At least one of the winning candidates came from the coalition of secular challenger Ayad Allawi, which won 91 seats compared to 89 seats for a bloc led by incumbent Prime Minister Nouri al-Maliki, said Saad al-Rawi, a member of the independent commission that oversees Iraq’s elections.
He said a special court tasked with reviewing election-related complaints alerted the commission to the decision Monday.
However, al-Rawi said it was still unclear how the decision would affect the outcome until the commission is able to recalculate the votes. He said he did not expect the decision to affect the position of Allawi’s Iraqiya bloc because the barred candidates from his coalition only won a limited number of votes.
“The new process will be complicated because we need to do calculations again in order to decide whether this court decision will have an effect on the distribution of seats within the block,” al-Rawi said.