SOURCE: The St. Petersburg Times
DATE: Issue #1578 (39), Tuesday, June 1, 2010
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TITLE: Visas Off Summit Agenda
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The European Union’s new leadership made its maiden visit to the country for an EU-Russia summit Monday, but the two-day talks appeared unlikely to yield substantial results.
Herman Van Rompuy, who heads the reformed European Council, foreign policy chief Catherine Ashton and commission president Jose Manuel Barroso are for the first time representing the 27-member bloc since Lisbon Treaty reforms came into force in December during their meetings with President Dmitry Medvedev and other government officials in Rostov-on Don.
Prime Minister Vladimir Putin is not attending the meetings.
But they won’t offer any eased visa regulations because of strong opposition from within the EU against granting Moscow any concessions ahead of other post-Soviet states like Georgia and Ukraine.
The Kremlin has openly pushed for the signing of a road map in which Europe promises a date for lifting travel restrictions once Moscow meets an agreed set of obligations such as introducing biometric passports and stepping up border security.
But the head of the EU delegation to Moscow, Ambassador Fernando Valenzuela, dashed any such hopes Friday by saying that a road map that sets exact dates was off the agenda.
“We are more inclined to the idea of determining necessary steps toward achieving the ultimate goal rather than to setting a date,” he said in an interview with Interfax.
The visa issue is particularly awkward because it has been eagerly pushed by Moscow after being raised by the Spanish EU presidency earlier this year.
Spain promised in January to initiate negotiations for visa-free travel, but other EU members said later that Russia should not be treated more favorably than the host of post-Soviet states that recently joined the EU’s Eastern Partnership Program. Last week, the EU promised to lift travel restrictions for citizens of Albania and Bosnia.
Valenzuela also said the EU would try to link visa negotiations with registration rules that require foreigners to notify authorities about their movements within Russia. “This is a serious obstacle that I hope can be resolved in the future,” he said.
In a possible sign that the Kremlin has already given up its hopes, the visa issue was not mentioned at all in an official preview of the summit released by e-mail Saturday.
The three-page document also indicated that a much-expected modernization partnership with Brussels has been delayed. It said the leaders would have “an exchange of opinions” at the summit and that a joint declaration was being prepared.
The new partnership program, which would help Russia get much-needed foreign investment and expertise to modernize its economy, was agreed in principle at the last EU-summit in November.
But a formal document on the program won’t be signed because approval procedures with all EU member states won’t be ready by Tuesday, when the summit ends, the EU delegation said Sunday.
“There will be a joint statement. This will give impetus for work to be done in order to work out an action plan,” deputy delegation head Michael Webb told The St. Petersburg Times.
Leaders were also due to discuss a new partnership and cooperation agreement between Moscow and Brussels that has been under negotiation for nearly two years.
About 90 percent of the wide-ranging agreement, which is supposed to give bilateral relations a new legal footing, has already been achieved, Deputy Foreign Minister Alexander Grushko said Friday.
But unsolved issues in energy and trade relations have so far proven to be serious obstacles.
The Europeans are unwilling to finalize the agreement before Russia joins the World Trade Organization, an issue that has been greatly complicated by recent confusion over Moscow’s plans for a customs union with Kazakhstan and Belarus.

TITLE: European Embankment to Cost $1.6 Billion
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: The cost of the European Embankment project, an ambitious construction plan backed by City Hall and funded by VTB (Vneshtorgbank) Development Company, will cost up to 48 billion rubles ($1.6 billion) and take nearly 10 years to complete, VTB head Andrei Kostin told reporters at a presentation in St. Petersburg on Saturday.
VTB Development Company is headed by Sergei Matviyenko, son of St. Petersburg Governor Valentina Matviyenko. 
The European Embankment, located between the Tuchkov and Birzhevoi bridges, will occupy 4.5 hectares and include a Palace of Dance — designed specifically as a permanent venue for the internationally acclaimed Boris Eifman Ballet Theater — as well as a large business center, five-star hotel, fitness center, shopping mall and series of upmarket residential buildings. The project will also create the first pedestrian embankment in the city.
Valentina Matviyenko called the site of the future construction “the last missing section on the Neva’s embankments.”
The multi-functional complex is to be built on the former site of the Applied Chemistry Institute, which is being transferred to new premises on the outskirts of the city that are currently being completed. The developers will spend up to 4.5 billion rubles on removing chemical pollutants from the soil.
Plans to develop the area date back to the Soviet era. However, the official decree on the transfer of the institute and the eligibility of the area for reconstruction was only signed in 2003.
“This highly complex project is unique as it seeks to kill several birds at once, targeting both cultural and commercial goals,” said Kostin. “I would like to stress, however, that in this particular case the commercial aspect is of secondary importance to us.”
As the project’s core investor, VTB took on two significant obligations in getting involved with the project — the construction of the Palace of Dance and new headquarters for the Applied Chemistry Institute — in exchange for obtaining the plum plot of land.
Eifman’s company, which was founded in 1977, has often been referred to as a group of “wandering stars.” The troupe performs almost exclusively abroad, but, as Eifman is always keen to point out, its touring schedule would be less dominated by foreign tours if the company had a base on home soil.
“There are very few local venues where we can perform: The Mariinsky, Alexandriinsky, Mussorgsky [now Mikhailovsky] theaters and the Conservatory,” Eifman said. “But they are almost always occupied.”
Eifman’s goal when he founded the Leningrad Ballet Ensemble in 1977 was to rock the Soviet ballet establishment out of its complacency and create something new and exciting that would appeal to young audiences.
The choreographer’s first ballets were set not to Tchaikovsky but to Pink Floyd, rock music that was practically forbidden at that time. The plots were provocative, based on the Old Testament or the short story of a soldier traumatized by his experiences in the Russian army. 
The company spent many years looking for a permanent place to settle, consuming a great deal of time and energy. Now the troupe is pinning its hopes on the proposed Palace of Dance, set to open in 2016.
VTB’s additional responsibilities in this financially consuming project include the construction of apartments for military personnel.
“In terms of architecture, no expense was spared; we held two separate international competitions, with one contest held spefically for the Palace of Dance,” Kostin said. “The European Embankment complex looks set to become an important new landmark that will be visible from most central spots in the city.”

TITLE: Mass Arrests Dash Hopes
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: A protest demonstration in central St. Petersburg was brutally broken up by police officers on Monday evening, dashing hopes raised by a weekend meeting between Prime Minister Vladimir Putin and members of the city’s intelligentisa.
About 100 protesters who gathered in front of Gostiny Dvor at 6 p.m. on Monday were arrested after they began shouting slogans. Police declared the rally illegal on the grounds that it had not been approved by City Hall.
Participants included members of Eduard Limonov’s banned National Bolshevik Party (NBP) and Mikhail Kasyanov’s People’s Democratic Union, along with representatives of other groups.
About 95 people were arrested and taken to various police precincts in five police buses, local news wires reported. Andrei Dmitriyev, the local NBP leader, confirmed that more than 100 people had been detained. He was speaking on his cell phone from a police station where he was being held.
The clampdown came two days after Putin voiced support for public protests during a weekend meeting in St. Petersburg with cultural figures, in which he fielded sensitive questions about speech freedoms and Gazprom’s controversial plans to raise a skyscraper.
Rock star Yury Shevchuk, an outspoken critic of the Kremlin, plied Putin with questions that are rarely asked in public, including restrictions on press freedom and the right for public assembly, during a charity event for children with cancer in St. Petersburg.
“I received a call the day before yesterday from your assistant, I guess — don’t remember his name — who asked me not to pose sharp questions,” Shevchuk told Putin, according to a transcript published on the prime minister’s web site. 
Putin seemed not to recognize Shevchuk, 53, even though he is a nationally known singer and songwriter with the rock band DDT, founded in 1980, and often compared to the iconic Soviet bard Vladimir Vysotsky.
“What’s your name, sorry?” Putin asked.
“Yura Shevchuk, a musician,” the singer said.
Putin dismissed the phone call as a “provocation” that could not have been made by anyone on his staff.
Undeterred, Shevchuk pressed ahead with his questions, mentioning that Moscow and St. Petersburg authorities have repeatedly banned attempts by human rights activists and the political opposition to stage rallies in support of free assembly. Police, sometimes brutally, have broken up the protests, held on the 31st of every month that has 31 days in recognition of Article 31 of the Constitution that guarantees freedom of assembly. Monday’s thwarted rally was part of the 31 campaign. Protesters at an analagous protest in Moscow were also arrested.
“The protesting electorate is growing, and you know it. Many are unhappy with the current situation,” Shevchuk said.
“Do you have a plan for the serious, sincere and honest liberalization and democratization of our country so state organizations do not strangle us and so we stop being afraid of the police on the streets?” he said.
Putin voiced support for public protests, saying they “don’t hinder but, on the contrary, help” the government.  
“If I see that people … are pointing to crucial issues that the authorities should pay attention to, what can be wrong with that? One should say, ‘thank you,’” Putin said, adding that demonstrations should not hinder other people.
Putin’s remarks had stirred some hopes Sunday that the police might respond more peacefully to unsanctioned rallies on Monday — hopes that proved wildly optimistic.
Worried about public unrest amid the economic recession, the authorities have moved quickly to stamp out protests of all kinds. President Dmitry Medvedev has threatened to fire governors unable to maintain calm in their regions after a highway blockade over wage arrears in the Leningrad region last year forced Putin to personally intervene, and the State Duma has toughened penalties for some kinds of protests.
Nikolai Petrov, a political analyst with the Carnegie Moscow Center, said Saturday’s meeting bore the hallmarks of election-time campaigning and said it closely echoed Medvedev’s meeting earlier this month with his human rights council for an unusually frank discussion about the country’s much-assailed human rights record.
“It looks like Putin and his team are carefully tracking all of Medvedev’s signals,” Petrov said.
He said, however, that the questions posed to Putin did not appear to be as scripted as in the past.
“They didn’t look like staged questions. Putin’s irritation was evident, but he didn’t really divulge his personal position,” Petrov said.
Oleg Basilashvili, a 75-year-old actor known for his roles in movies directed by Eldar Ryazanov, backed up Shevchuk’s criticism and denounced the plan by Gazprom to construct a skyscraper in St. Petersburg despite opposition from UNESCO and many other architectural experts.
“It’s time to wind up those skyscrapers,” Basilashvili said, dubbing the “unlawful” project as a “gazoscraper.”
Basilashvili was an outspoken political figure in the 1990s and supporter of Putin’s mentor, St. Petersburg Mayor Anatoly Sobchak.
Putin replied that cities like Paris and London also have buildings that failed to fit in with their traditional architectural styles. But he conceded that the St. Petersburg authorities should have reached an agreement with residents before approving the skyscraper.
Medvedev called for the height of the tower to be reconsidered a week earlier.
Among the other guests at Saturday’s event, the “Little Prince” charity concert for children with cancer, were actors Chulpan Khamatova, Alisa Freindlich and Sergei Garmash.

TITLE: Voters Back Saakashvili
AUTHOR: By Michael Mainville
PUBLISHER: Agence France Presse
TEXT: TBILISI — Georgian President Mikheil Saakashvili’s party headed for a landslide win in municipal elections Monday but victory was marred after Western observers said the vote suffered “significant shortcomings.”
Facing his first electoral hurdle since Georgia’s 2008 war with Russia, Saakashvili’s United National Movement was set to sweep the vote in 64 municipalities across the country and in the capital Tbilisi, according to initial results and exit polls.
The expected election sweep will give a boost to Saakashvili domestically but the assessment by foreign monitors is unlikely to help his reputation in the West, damaged by his handling of the war and opposition claims of growing authoritarianism in Georgia.
“Yesterday’s municipal elections in Georgia marked evident progress towards meeting international standards, but significant shortcomings remain to be addressed,” the Organization for Security and Cooperation in Europe (OSCE), the main international mission observing the vote, said in a statement.
Saakashvili had presented the election as a test of his commitment to democratic reforms and vowed they would be conducted fairly.
The OSCE said the elections were organized “in a transparent, inclusive and professional manner” but noted “systemic irregularities” including several cases of ballot box stuffing and an “uneven playing field favoring contestants from the incumbent party.”
With ballots counted in 32 percent of voting precincts across the country, Saakashvili’s United National Movement was leading with 61 percent of the vote, followed by the Christian Democrats and the Alliance for Georgia both with 12 percent, according to the Central Election Commission.
In Tbilisi, incumbent Gigi Ugulava, a key Saakashvili ally, was leading the mayoral race with 54 percent of the vote with 80 percent of precincts reporting.
Main opposition contender Irakli Alasania, a former ambassador to the United Nations, trailed with 20.5 percent.
With votes counted in 53 percent of precincts in the race for the Tbilisi city council, Saakashvili’s party was also ahead with 50.5 percent of votes, followed by Alasania’s Alliance for Georgia with 19 percent.
About 3.5 million people were registered to vote and voter turnout was 49 percent, the election commission said.
The election saw the first-ever direct vote for the powerful mayor’s post in Tbilisi, a position seen as a potential springboard for the presidency after Saakashvili’s second term ends in 2013.
Standing side-by-side with Ugulava after the vote, Saakashvili insisted the election had been a step forward for democratic reforms.
“The final result of the vote is that democracy has won,” Saakashvili said in televised remarks Sunday.

TITLE: Internet Providers To Tighten Up Net
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: Several Russian Internet providers signed a resolution Friday on Internet security, with the specific aim of protecting the country’s web from child pornography.
The resolution is expected to help the development of transparent and effective control mechanisms over illegal content on the Internet, such as child pornography or materials inciting religious or national hatred, which remain widespread on Russian web sites.
“We believe that big companies which form the image of the local Internet industry should not remain indifferent to the problem,” Alexander Panov, a partner of Hosting Community, one of Russia’s leading Internet providers, said Friday at the annual Hostobzor providers’ forum in Roshchino in the Leningrad Oblast.
 “We are aware of our responsibility for the safety of our users, and we believe that we should broaden and strengthen cooperation with public and state structures,” he said.
Panov said the resolution was significant because it would enable the development of a uniform approach and standards and help combat illegal content on the web, while previously, each provider had tried to do so independently.
“The reputation of the Russian Internet sector abroad is currently extremely low,” said Alexander Ivanov, a representative of the Ministry of Internal Affairs’ ‘K’ department, which deals with violations in the field of high technology, in particular on the Internet.
“This is because that sector contains a huge number of resources featuring illegal content. Calls for national and religious discord can often be found on sites open for public use, as well as pornographic materials, including those featuring minors,” said Ivanov, whose ministry supported the development of the resolution.
Ivanov said that although the police put a lot of effort into ridding the Internet of such materials, it is impossible to do so without the help of the country’s IT industry.
Yevgeny Bespalov, director of the Friendly Runet foundation, said in 2009 police and Internet providers received about 10,000 complaints from Internet users about sites featuring child pornography. Last year, Internet providers closed about 3,000 web sites containing such materials, he said.
The resolution contains recommendations on cooperating with state structures and public organizations to develop special measures to protect minors.
Internet providers will be able to receive notifications of child pornography on their servers. As soon as a provider gets such a notification, it will inform the server and demand the passport and contact details of the user. If the user does not respond within three to seven days, the provider will have the right to temporarily block its services for the user.
Most importantly, providers will also have the right to inform police about illegal activities by users. The resolution also allows providers not to inform users of any problems, to avoid the destruction of evidence pertaining to a police investigation.

TITLE: Gay Activists Outwit Police In Cat-and-Mouse Protest
PUBLISHER: Combined Reports
TEXT: MOSCOW — About 30 international gay rights activists held a brief protest on a central Moscow street Saturday, flouting the city authorities’ ban on a gay pride event in a “cat and mouse game” with police.
The activists, led by Russian Nikolai Alexeyev and also including British campaigner Peter Tatchell and German MP Volker Beck, ran along Leningradsky Prospekt in central Moscow with a huge rainbow flag.
Activists carried placards reading “Rights for gays” and shouted slogans such as “Russia without homophobes” and “Homophobia is a disease.”
The brief protest, lasting less than five minutes, was the first time that gay activists have managed to hold a peaceful demonstration after attempts during the last five years were marred by violence and arrests.
“We want to show that the peaceful march of gays and lesbians in this city is possible,” Alexeyev told AFP after the protest. “You saw we didn’t disrupt any traffic, we didn’t disrupt any rights of other citizens.”
“Unfortunately we are obliged to undertake some kind of military operation to make sure that this event takes place.”
A single police car arrived ten minutes after the protest ended and no one was arrested.
Organizers had changed the location at the last minute and bussed reporters on a twisting two-hour route to evade a heavy police presence in central Moscow.
In a diversion tactic, Alexeyev told journalists Wednesday the protest would be held outside the European Commission’s office in central Moscow. Police and riot police gathered at the announced location, organizers said.
French campaigner Louis-Georges Tin, who established the International Day against Homophobia, called the protest “a game of cat-and-mouse.”
“A rapid protest like this is the best way to both affirm our freedom and protect our security,” Tin told AFP.
Moscow city authorities, led by openly homophobic mayor Yury Luzhkov, have repeatedly refused permission for gay pride parades and riot police have broken up attempts to hold unsanctioned events.
Luzhkov has called such parades “Satanic” and argued that Russia is not ready for them.
This year, the city again refused the activists’ application to hold a gay pride event. Moscow courts upheld the ban and rejected an appeal.
Tatchell and Volk attended Saturday’s protest despite having suffered injuries when they were beaten by anti-gay counter-demonstrators in Moscow in 2007.
“We’ve succeeded in outwitting the police and thwarting Mayor Luzhkov’s ban,” Tatchell told AFP. “He said this protest would never take place — it has.”
Tatchell branded Luzhkov a “lawbreaker” for refusing permission for the protest.
“He has banned a protest which is legal under Russia’s constitution,” Tatchell said. “The only people who are criminals are not these gay rights protesters but the mayor of Moscow and the judges who banned this protest.” 

(AP, AFP)

TITLE: Russia Wants Lawyers
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Wanted: A high-profile lawyer to work on Russian cases in the European Court of Human Rights; Yukos case possibly included.
Employer: The Russian government.
Compensation: Up to 7.5 million rubles ($238,000) for a six-month contract.
The Justice Ministry has turned to an online state tender as it goes to new lengths to fend off a wave of Russia-related complaints in the court in Strasbourg, France.
The European court has already created a headache for the Russian authorities, not least for accepting a $98 billion case filed by Yukos investors and recently upholding Latvia’s conviction of a Soviet veteran for war crimes.
As it fights back, the Justice Ministry has extended two lucrative short-term contracts to lawyers ready to represent the Russian authorities in Strasbourg, according to a tender notice published on Zakupki.gov.ru, an online clearing house for state purchases.
Winning contracts for the tender, which closed Monday, are to be signed this month and expire Dec. 20.
The ministry decided to look for lawyers through the web site because of a government anti-corruption drive that requires all federal orders to go through Zakupki.gov.ru by July.
But Anna Stavitskaya, a prominent lawyer who has worked in the European Court of Human Rights, said she could not recall the authorities ever hiring lawyers this way.
Only a few high-profile Russian lawyers have worked in the court, and they might be attracted by the job offer, Stavitskaya said, adding that she herself had no serious plans to apply.
But the tender also confirms that the state cannot handle the Strasbourg complaints on its own and raises questions about the state’s use of resources, she said. “It is unreasonable for the government to spend large sums on lawyers acting against Russian citizens instead of using the money for the prevention of human rights violations,” she said.
Russians account for about a third of all complaints filed in Strasbourg, Grigory Matyushkin, Russia’s envoy in the European Court, said last year.
The court’s last annual report said that 33,550 pending cases (28.1 percent of all cases) against Russia were preliminarily accepted for consideration on Dec. 31.
Most complaints deal with abductions in the North Caucasus, a lack of health care in pretrial detention facilities and abuse of power by law enforcement agencies.
A spokeswoman for the Justice Ministry said last week that she knew nothing about the tender on Zakupki.gov.ru. Calls to her office went unanswered Monday.
This year, the court accepted a complaint by former Yukos management against Russia for the government’s forced bankruptcy of the oil company, once the country’s largest, in 2006.
Russia already has a large legal team headed by a British lawyer in the Yukos case, but the new lawyers might also take part in the trial, said Yelena Liptser, a lawyer for former Yukos co-owner Platon Lebedev who also works in the European court.
But the newcomers are more likely to work on other cases, she said.
The new lawyers will prepare official replies on behalf of the Russian government concerning cases presented in Strasbourg, Kommersant reported.

TITLE: Comment
AUTHOR: By Anna Shcherbakova
TEXT: Thirteen years ago I used to write a restaurant column in a local business paper. It was a great time for the catering business. Italian and French cuisine were favorites, while St.Petersburg’s first Japanese and Chinese restaurants were being launched. Reviews of recently opened fish restaurants or a new wine card at existing ones had a loyal audience, just as stories about mergers or fraud did, and generated a lively response. 
Information on the culinary arts was fairly scarce, and both consumers and professionals were hungry for it. Sushi, foie gras, T-bone steaks and strawberry soups were significant topics of conversation among the business community,  alongside money lending and tax evasion. I remember an issue of Caterer and Hotelkeeper magazine being passed around the St. Petersburg Chefs Association. 
Exotic recipes were not to be found on the Internet or discussed in livejournal communities back then, so the media was an important source of information — almost as important as the scrapbooks of recipes compiled by our mothers and grandmothers, who collected recipes in order to delight their family or guests. Food was more than just food for those generations of women; it was a way to impress or show respect to house guests. Preparations for a visit from friends or relatives took a lot of effort and resources. 
But today it’s a different story. Let’s go back to the famous restaurants of the 90s. Their financial reports were mostly confidential, and managers refused to disclose investment and payback periods — not to mention sources of funding — to journalists and the public.
No doubt those places made decent profits for their owners, but very often they were secondary  businesses for gas station operators, bankers or — to be quite frank — gangsters. Only a few of those restaurants have survived, and I cannot think of one that is as famous today as it was ten years ago. 
I may be mistaken, however, since being the editor of a business newspaper has given me more expertise in, let’s say, bank mergers than in high-end catering. I am pushed to recall more than ten visits to restaurants a year. My colleague who used to write a restaurant column in a competing newspaper is now an inspired theater critic.
Glossy magazines regularly report on the opening of new gourmet restaurants, and no doubt this information has its audience, just like the places themselves. But walking along Nevsky Prospekt, you mostly see coffee shops and diners. We order pizza to our office to save time, or Chinese take-away for house guests. 
A famous chef once said: “If you want fame, open a three-Michelin-starred restaurant; if you want cash flow, buy a McDonald’s franchise.” Although in Russia, McDonald’s does not trust franchisees and is developing its chain itself, the majority of caterers have, in a figurative sense, chosen the latter option. The owners of numerous fast food chains are well-known, and they discuss the profitability of their business rather than the cuisine served there. They have invented dozens of concepts, and serve up pancakes, sandwiches or sushi. But regardless of the menu, their main concerns are technology and cost-cutting. Now food is less than food. It’s pure business, and sometimes that’s a real shame. 

Anna Shcherbakova is the St. Petersburg bureau head of business daily Vedomosti.

TITLE: Federal Monuments To Become Hotels
AUTHOR: By Nadezhda Zaitseva and Maria Buravtseva
PUBLISHER: Vedomosti
TEXT: City Hall has put up three federal monuments for conversion into hotels in exchange for 161 million rubles ($5.3 million). The buildings have been given to structures close to the co-owners of Ilim group, brothers Boris and Mikhail Zingarevich. 
All three resolutions, which are available to Vedomosti, were adopted on May 4 at a closed government meeting. Lotus Hotels will get a building occupying 24,756 square meters located at 1, Field of Mars. The investor will transfer to the budget 30 million rubles ($978,000) for the right to convert the monument into a hotel. The investment cost of the right to conclude an investment contract is 3.2 billion rubles ($103 million), of which restoration work will cost 2.7 billion rubles, according to the press service of the Committee for Investments and Strategic Projects.
The project is expected to be completed in four years and 10 months. The building on the Field of Mars is rented by the Northwest Energy Management Company (SZEUK), who had agreed to rent it through 2013, but the lease will be canceled, according to the resolution. Smolny has the right to terminate the contract early in the event of the building being reconstructed, according to a representative of the Committee for City Property Management (KUGI). 
Orange-Development has acquired a building occupying 13,530 square meters at 1, Konyushennaya Ploshchad. The project is due to be completed in five-and-a-half years. The company will contribute 19.9 million rubles ($646,000) to the budget. The volume of investment in the project, taking into account reconstruction, will be about $120 million, said Sergei Rusakov, the company’s general director. Part of the building is currently occupied by the St. Petersburg Diocese of the Russian Orthodox Church and the Spas (Saviour) charity foundation on the condition of non-profitable use. The lease contract will be terminated, a representative of the KUGI said.     
A building occupying 9,100 square meters at 7-9, Nevsky Prospekt is to be given to IFG-Basis-Project for 111.3 million rubles. The total volume of investment into the project will be about $40 million, said Danat Bulavko, general director of IFG-Basis-Project. The building has about 10 tenants, contracts with whom will either soon expire or be terminated, he added. The task of reaching agreement with tenants and vacating the building is the investor’s responsibility, according to the KUGI press service.
Bulavko heads Aditum, which is the company behind the underground shopping mall project at Ploshchad Vosstaniya. Lotos Hotels, Orange-Development and Aditum are members of the Plaza Lotus Group, whose co-owners include Mikhail and Boris Zingarevich, according to the press service of Plaza Lotus Group. IFG-Basis-Project is not connected to the Plaza Lotus Group, confirmed Bulavko and a representative of the company. According to Spark-Interfax, IFG-Basis-Project belongs to the Cypriot concern Aplerson Holding Limited. Bulavko did not disclose its beneficiary, but said it was an international investment fund. 
Last summer, both Aplerson and Plaza Lotus Group signed a memorandum with City Hall on the same day regarding the construction of hotels. 
At a press conference in mid-May, St. Petersburg Governor Valentina Matviyenko announced City Hall’s intention to put up as many properties for auction as possible. But the administration doesn’t have the authority to draw up the documentation, she said.       
All three buildings are situated in excellent locations, said Nikolai Kazansky, director of the St. Petersburg office of Colliers. The buildings are suitable for five-star hotels, and there would have been a real fight for them if there had been a tender, said Igor Luchkov, director of consulting and evaluation at NAI Becar. Ordinary companies are not simply allocated such properties without tender, he added. In practice, investors do not always comply with their investment obligations on investment, said Luchkov.

TITLE: Local Tycoon Eyes Karstadt
AUTHOR: By Anna Shcherbakova, Viktoria Sunkina and Polina Khimshiashvili
PUBLISHER: Vedomosti
TEXT: Karstadt, one of Germany’s most prominent retail companies, may soon become the property of a Russian businessman. 
St. Petersburg entrepreneur Artur Pakhomov is willing to buy Karstadt, which is currently undergoing bankruptcy procedures.
According to Spiegel Online, a group of Russian investors led by Pakhomov has approached the German retailer with an offer to purchase 100 percent of the company’s shares. The investors are offering to pay “a two-figure sum in millions of euros,” provide funding for the stores’ operations during this year’s Christmas season and, from 2011, invest around 80 million euros annually into the chain’s development.
A Karstadt representative interviewed by Spiegel said the company has received at least one other offer but declined to disclose any details.
In an interview with Vedomosti, Pakhomov confirmed his intention to purchase Karstadt. “However, the final decision has not yet been made; we are studying the documents,” the businessman said.
Pakhomov stopped short of discussing the financial details of the offer he made Karstadt. He also declined to name the source of funding for the ambitious project. The entrepreneur said, however, that if the purchase does take place, the retail chain would expand to Russia and the Arab states.
Karstadt’s committee of creditors plans to choose a buyer during a meeting on June 9, Bloomberg reported.
Pakhomov is the owner of Karotex holding, an investment consortium which includes a hotel group comprising the Rossiya, Vyborgskaya and Burevestnik three-star hotels in St. Petersburg, Baltika sanatorium in the Leningrad Oblast and a hotel in the southern Russian city of Anapa. Pakhomov said that the holding currently “does not have a strong presence in the retail sector; Karotex rents out some of its office space to retail stores.”
The German holding Arcandor, which owns Karstadt, Quelle and several other companies, declared bankruptcy on June 1, 2009. Bankruptcy proceedings began on Sept. 1 in Essen, Germany. According to Bloomberg, as of last Friday, three offers from potential buyers had officially been registered: Triton private investment fund is ready to pay 100 million euros and invest a further 400 million euros in Karstadt during the next five years. Its competitors include German billionaire Nicholas Berggruen, the owner of Berggruen Holdings; and Highstreet Consortium led by U.S. bank Goldman Sachs. 
Highstreet owns most of the buildings in which Karstadt stores are located.
To secure funding for his offer, Berggruen has got BCBG Max Azria Group on side.
According to Bild newspaper, by the end of 2009, Karstadt, which had by then closed 10 of its stores, had started to make a profit. According to Rheinishche Post newspaper, the annual turnover of Karstadt is 4 billion euros.
The chain currently comprises 86 department stores, 26 sports stores and eight other stores, which altogether employ 25,000 staff, according to Deutsche Welle.

TITLE: Cash-Strapped Belarus Snubs Customs Talks
AUTHOR: By Alex Anishyuk
PUBLISHER: The St. Petersburg Times
TEXT: Russia and Kazakhstan said Friday that they planned to join the WTO together, but without Belarus, which snubbed a meeting on their trilateral customs union after Moscow ignored President Alexander Lukashenko’s offer to trade Belarussian energy assets for lower fuel prices.
The prime ministers from Russia, Kazakhstan and Belarus had been scheduled to meet in St. Petersburg on Friday to sign documents on their customs union, which enters its second stage July 1. Prime Minister Vladimir Putin cast doubt on the deadline earlier in the week, saying 18 additional agreements needed to be signed.
Belarussian Prime Minister Sergei Sidorsky skipped the meeting because of “the current ongoing disagreements on some principal matters,” spokesman Alexander Timoshenko told Interfax on Friday.
Despite the snub, Putin said Minsk was still welcome to join the customs union. But Moscow and Astana are ready to proceed with the union and accession talks to the World Trade Organization without Belarus.
“Of course, if we apply bilaterally as the customs union, it will be easier than if we applied trilaterally,” Putin said during a news conference with his Kazakh counterpart, Karim Masimov. “The more sides participating in the process, the more problems. Because every state is protecting its economic interests.”
After the first stage of the customs union formally came into force Jan. 1, Russia canceled a 36 percent discount on its oil export duty for Belarus. The move raised costs for Belarussian plants that refine and re-export Russian oil.
In return, Moscow dropped the duty altogether for 6.3 million metric tons of oil that Belarus needs for domestic consumption. But even the resulting $1.8 billion windfall could not cover the lost revenue for Belarus, which analysts estimated at $5 billion to $6 billion per year, or more than 10 percent of the country’s entire economy.
“Since January, Minsk was deprived of a big part of its revenue, which makes it economically unfeasible for Minsk to proceed with the trilateral customs union,” said Yaroslav Romanchuk, head of Mises Center, a Belarussian liberal think tank.
Lukashenko created a small sensation ahead of the Friday meeting when he said he was ready to sell control in Beltransgaz, which operates the Belarussian gas transportation system, to Gazprom in exchange for cheaper gas.
“I’m not opposed [to selling Beltrangaz] if they say that they will supply gas to Belarus at the internal Russian prices in exchange,” Lukashenko said Thursday, Interfax reported. “If it is on equal terms, then [let them] take the controlling stake.”
He also offered up the Mozyrsky oil refinery, one of the two plants that refines Russian crude, in exchange for oil at Russian domestic prices.