SOURCE: The St. Petersburg Times
DATE: Issue #1582 (43), Tuesday, June 15, 2010
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TITLE: Russia Mulls $12-Billion Shopping List for Arms
AUTHOR: By Ilya Arkhipov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia may buy $12 billion of arms from European and Israeli companies, including DCNS and Iveco, over the next five years as the world’s second-biggest arms exporter hunts for higher-quality weapons than domestic companies can provide, according to a Moscow research institute.
The two biggest deals — about 1.5 billion euros ($1.8 billion) each — may be signed within two years, according to a report compiled for Bloomberg News by the Center for Analysis of Strategies and Technologies. Russia plans to acquire four Mistral helicopter carrier ships from Paris-based DCNS, and is in talks with Iveco, a unit of Turin, Italy-based Fiat, for as many as 3,000 M65E light armored vehicles, the report shows.
“Russia has been an exception on military procurement, because no other country in the last 15 years tried to be 100 percent autonomous,” said center Director Ruslan Pukhov. “Now we have recognized that you can’t be competitive in all areas.”
While the military has always purchased some weapons from abroad, the search for overseas suppliers increased after the five-day war with Georgia in 2008 revealed weaknesses in Russian technology, Pukhov said. The drive for foreign equipment is now reaching the stage of large-scale deals. Russia ranked 80th in arms imports in 2005-2009 behind Myanmar, according to the Stockholm International Peace Research Institute.
Prime Minister Vladimir Putin wrapped up a two-day visit to Paris on Friday, where the deal to buy Mistrals was discussed. The purchase would interest Russia only if it were accompanied by a technology transfer, Putin said in an interview with Agence France Presse published Wednesday.
Russia will increase spending on military equipment by 8 percent to 1.17 trillion rubles ($37.2 billion) in 2010, Putin said in December. President Dmitry Medvedev said the military this year needs more than 30 ballistic missiles, five Iskander air-defense batteries, about 300 “modern” armored vehicles, 30 helicopters, 28 warplanes, three nuclear-powered submarines and a corvette.
The Center for Analysis of Strategies and Technologies publishes Arms Export, a bimonthly journal on the weapons trade and defense industry, and Moscow Defense Brief, which covers Russia’s view on security issues for an international audience. Pukhov sits on the Defense Ministry’s public advisory board.
The center “probably possesses the widest range of information on Russian defense procurement, technologies and arms exports and imports of any Russian research institute,” said Konstantin von Eggert, a Moscow-based political analyst and member of the Royal Institute of International Affairs in London. “It has proven accurate in its analysis.”
Medvedev called for an overhaul of the military after the war with Georgia. At least 30 percent of the army’s weapons must be “state-of-the-art” by 2015, he said last month.
“When ordering new weapons and technologies, the army will think first of all about what’s best in terms of personnel safety,” Defense Minister Anatoly Serdyukov said in April.
Russia is still the second-biggest arms exporter, with 23 percent of the market, behind the U.S. at 30 percent, according to the Stockholm institute. Annual shipments more than doubled to $8.6 billion in the past decade, Putin said in February.
The move to buy arms abroad shows “a clear realization” that the defense industry “isn’t ready to supply the armed forces with high-tech, advanced weapons,” von Eggert said.
Most of Russia’s purchases will be made in North Atlantic Treaty Organization countries, indicating a shift in Russia’s relationship with the alliance, Pukhov said.
“You have rhetoric that can be quite anti-Western at times,” he said. “Russia’s real policy is to buy arms from NATO countries. This means Russia doesn’t see the alliance as a main threat any longer.”
The biggest item on Russia’s shopping list is four Mistral warships. One vessel will probably be built at an STX France shipyard, according to the report. A second may be built by STX in sections and assembled in Russia, and two more may be built under license in Russia, the center said.
Nikolai Makarov, head of the Russian military’s General Staff, said the Mistral contract is almost finished, Interfax reported June 8. The vessel is superior to ships used by Russia, the independent Russian news service cited Makarov as saying.
Russia’s state-run United Shipbuilding Corp. is ready to participate in talks on building the warships at its shipyards, RIA Novosti said, citing Deputy Prime Minister Igor Sechin.
The army may acquire as many as 3,000 of Iveco’s M65E vehicles, which would be assembled by KamAZ, Russia’s biggest truck maker, according to the report.
Oleg Afanasyev, a spokesman for KamAZ, said the Naberezhnye Chelny, Russia-based company is in talks with Iveco, though no agreement has been reached. Fiat spokesman Richard Gadeselli said neither Fiat nor Iveco is in talks with Russia to produce military vehicles.
The report cites three more deals that may be concluded within two years. Russia may sign a 300 million-euro joint-production agreement with Tel Aviv-based Israel Aerospace Industries to make pilotless aircraft, the center said.
Doron Suslik, a spokesman for Israel Aerospace, said the company is interested in doing business with Russia, though he declined to discuss potential deals.
A contract to buy thermal cameras for tanks from Neuilly-sur-Seine, France-based Thales, may also total 300 million euros, the center said. A deal to purchase battlefield optics and navigation equipment from Sagem, part of Paris-based Safran, may cost the same.
Licensed production of Thales cameras will begin July 9 at a plant in Vologda, Russia, said Alla Kuznetsova, the company’s Russia chief. Patrick Barraquand, who heads Sagem’s Russian unit, said he couldn’t comment.
TITLE: Federal Spending Boosted by 3 Percent
AUTHOR: By Anatoly Medetsky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The government on Thursday decided to increase spending by 3 percent this year because the recovering economy and expensive oil are generating bigger tax revenues than planned.
Spending will swell by 325.5 billion rubles ($10.3 billion) under the amendments to this year’s budget approved by the Cabinet, making it the second consecutive year that revenues have beat expectations in the wake of the 2008 meltdown.
The government will sink almost half of the money into the Pension Fund to cover a shortfall caused by a huge increase in retirement payments, Prime Minister Vladimir Putin said. Most of the remaining cash will buy apartments for World War II veterans and military officers, he said.
“Obviously, thanks to the economic recovery, we now have a chance to increase funding for priority items and to reduce the budget deficit more rapidly,” Putin said. “I will stress, however, that the budget remains under strain.”
Finance Minister Alexei Kudrin said the spending did not risk spurring inflation, which shouldn’t top 7 percent this year.
“Our forecast of lower inflation … is exactly why we consider it possible to increase federal spending,” Kudrin told reporters after a Cabinet session. “It will not worsen the inflation rate.”
The need for an additional transfer stemmed from its poor collection of payments this year, said Renaissance Capital economist Anton Nikitin.
The 125 billion rubles that Putin earmarked for apartments is almost half of the 280 billion rubles invested in the construction industry in April, the latest month for which statistics are available, Nikitin said. The extra cash injection from the government will provide “serious” support to homebuilders, he said.
In total, additional federal revenues will amount to 833.8 billion rubles, Kudrin said. After the deduction for the spending spike, the rest of the money will go toward plugging the budget deficit to reduce it to 5.4 percent of gross domestic product from the planned 6.8 percent, he said.
Kudrin had predicted over the past few weeks that this year’s deficit would not top 5.9 percent, which it was last year.
While assigning new spending Thursday, the government also rearranged existing expenses. It allocated more funding to the renovation of Moscow’s Bolshoi Theater, St. Petersburg’s Mariinsky Theater and a children’s recreation center called Okean, or Ocean, near Vladivostok, Putin said. He didn’t give disbursement figures.
The government will also spend 16 billion rubles on building roads in large cities and 7.8 billion rubles on security measures for public transportation, Putin said.
Total budget spending will climb up to 7.8 trillion rubles, according to a Finance Ministry statement published on the Cabinet web site.
Additional non-oil and gas revenues will amount to 284 billion rubles. Of that sum, 113 billion rubles will come from the Central Bank’s profit for last year, which it contributed to federal coffers, Kudrin said.
Additional oil and gas revenues will represent a much more solid 550 billion rubles, the ministry said in the statement.
The government will probably borrow $10.3 billion less abroad than it planned, setting the total ceiling at $53 billion.
The Cabinet will send the amendments to the State Duma in a matter of days, Kudrin said. Putin promised to revisit budget spending in the fall to raise the salaries to federally paid employees such as teachers and doctors if the economy allows. Nikitin said he doubted that the employees would see raises because that would put further, unnecessary strain on federal finances.
TITLE: City College Encourages Children to Pray for Putin
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Even as Prime Minister Vladimir Putin denied that a personality cult has grown around him, news broke Thursday that St. Petersburg children were being encouraged to pray that God bless Putin and shield him from “demoniacal temptation.”
St. Petersburg’s Suvorov Military College presented printed Orthodox prayers to talented local children aged 8 to 14 who were invited to an International Children’s Day event at Tavrichesky Palace on June 1, Yelena Sakhno, who helped organize the event, said Thursday.
The prayers were among the gifts tucked into goody bags distributed to the 150 children.
“We didn’t consider the inclusion of Orthodox literature among the presents to be reprehensible,” Sakhno told The St. Petersburg Times.
“A prayer for the head of state is traditional in the canons of the church service,” she added.
“The Prayer for the President,” first reported by Fontanka.ru, calls on God to “send Your Archangel Mikhail to the aid of Your servants Dmitry and Vladimir” and to “shatter” their enemies and save them from “demoniacal temptation.” The text echoes the Russian Orthodox Church’s “Prayer to Archangel Mikhail.”
Natalya Yerutina, a teacher from the Suvorov Military College who came up with the idea of presenting the children with the prayers, praised the prayer for mentioning Putin and President Dmitry Medvedev by name, calling it “wise.” “Dmitry continues what Vladimir started, while Vladimir up to this day continues to care about the Russian state,” Yerutina said by e-mail.
Suvorov Military College is a state-operated preparatory school for higher military education.
Organizers of the children’s day event included the Interparliamentary Assembly of Member Nations of the Commonwealth of Independent States, the Club of Tavrichesky Palace Friends, the Tavricheskaya Chapel and Art-Assemblies, a production center where Sakhno works.
Putin denied this week in an interview with French media that there was a cult of personality around him. “A personality cult implies not only attention to one person but mass legal violations linked to repressions,” Putin said in a reference to the Soviet purges of the 1930s to 1950s, Interfax reported.
“Even in a nightmare, I can’t imagine that it could happen in today’s Russia,” Putin said.
The decision to present the prayer to the children “was not agreed upon” with the Russian Orthodox Church, said Artemy Skripkin, head of the church’s youth department in St. Petersburg, Interfax reported.
Still, there was “nothing bad” in presenting the children with the prayers, although the gift might be “a little inappropriate for small children,” another Orthodox clergyman, Vyacheslav Kharinov of St. Petersburg’s Skorbyashchensky Church, said by telephone.
On the other hand, he said: “If you don’t like the present, reject it. But if you are against praying for the head of the state, that might as well mean that you are against the authorities.”
TITLE: Ex-Spy Accused in Arctic Sea Case
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A Latvian has been sentenced to seven years in prison for hijacking the Arctic Sea ship last year, and he accused the former head of Estonia’s intelligence service of organizing the operation.
The defendant and convicted leader of the hijacking, Dmitry Savins, told a Moscow court that Eerik Niiles Kross, a former Estonian official, businessman and historian, was hard-pressed for money and orchestrated the hijack expecting to receive a $1.5 million ransom from the owners of the Arctic Sea, RIA-Novosti reported.
Savins, who was sentenced Friday, said Kross paid him 200,000 euros ($244,000), and each of the other pirates was promised 20,000 euros.
But no evidence against Kross was given, and piracy expert Mikhail Voitenko called the claim “pulp fiction” in his online Maritime Bulletin. Voitenko, who was the first to report about the Arctic Sea’s mysterious disappearance last July, was forced to leave Russia in fear for his life after he said the incident might be linked to a weapons smuggling operation.
Investigators are looking into the matter, Investigative Committee spokesman Vladimir Markin told reporters Friday.
Kross, who headed the Estonian intelligence service in the late 1990s, has acknowledged being acquainted with Savins, who rented an office in a building owned by him, but denied any involvement in the Arctic Sea case. Kross currently runs the Trustcorp consulting company, which is involved in political lobbying, intelligence planning and crisis management in post-Soviet countries, including Georgia, and Kross linked Georgia to the accusations against him.
“I think this invention is connected to my work as a security adviser in Georgia. Georgia is not Russia’s best friend,” Kross told Estonia’s Eesti Paevaleht newspaper.
Kross also wrote several historical nonfiction books about the “Forest Brothers,” Estonian guerillas who fought against the Soviet army in the 1940s. His father was a former gulag prisoner and prominent historical novelist.
The Estonian Prosecutor General’s Office said it did not have any evidence of Kross’ involvement in the case, Interfax reported.
The Arctic Sea, which was carrying a cargo of timber from Kaliningrad to West Africa, disappeared in July off the coast of Sweden and was rediscovered and boarded by the Russian Navy off Cape Verde a month later.
Russian authorities have given conflicting versions of what happened, prompting speculation that the ship might have been carrying secret cargo, possibly missiles for Iran or drugs.
TITLE: Kremlin: Missile Sale Impossible
PUBLISHER: Combined Reports
TEXT: MOSCOW — New UN sanctions prevent Russia from delivering S-300 air-defense missiles to Iran, said a Kremlin official, in a reversal of the position announced by the Foreign Ministry, Reuters reported.
A UN Security Council resolution passed Wednesday bans Iran from developing ballistic missiles capable of delivering nuclear weapons, investing in nuclear-related activities and buying certain types of heavy weapons.
The Kremlin official, speaking on condition of anonymity, said Friday that the S-300 falls under these sanctions.
The UN resolution does not specifically prohibit Russia from supplying the S-300, a U.S. State Department spokesman said. “However, for the first time, the resolution calls for states to exercise vigilance and restraint in the sale or transfer of all other arms and related material,” spokesman P.J. Crowley told reporters in Washington.
“We appreciate Russia’s restraint in the transfer of the S-300 missile system to Iran,” Crowley said.
This distinction may help explain the initial confusion.
On Thursday, Foreign Ministry spokesman Andrei Nesterenko said the UN resolution did not apply to air-defense systems, with the exception of shoulder-fired missiles.
In Paris, a French presidential aide said Prime Minister Vladimir Putin, in talks with French President Nicolas Sarkozy on Friday, said Russia had decided to “freeze the delivery of the S-300 missiles.”
The aide quoted Putin as saying Iran was “very unhappy” and wanted to impose penalties on Moscow.
Russia signed a deal to sell the missiles in 2007 but has delayed their delivery.
President Dmitry Medvedev will issue a decree specifying which types of weapons cannot now be sold to Iran, Foreign Minister Sergei Lavrov said in Moscow.
(AP, SPT)
TITLE: Duma Backs Bill Empowering FSB
PUBLISHER: The St. Petersburg Times
TEXT: The State Duma has approved in a first reading a bill that would allow the Federal Security Service to issue warnings to people or organizations deemed at risk of committing crimes in the future.
Not complying with directives in the warning would be a punishable offense, the ruling United Russia party said on its web site.
The bill also introduces fines and short-term arrests for people who ignore demands made by FSB officials or hinder them while on duty.
United Russia was the only Duma faction to back the bill during the Friday vote, Interfax reported.
Vladimir Gruzdev, a senior United Russia deputy, shrugged off concerns of human rights activists that the bill would legitimize the abuse of power by the FSB.
“Only someone who is absolutely unaware of the specifics of the activities of state security agencies can talk about the impairment of rights,” Gruzdev said in a statement on his party’s web site.
But he acknowledged that the bill must be amended before a second reading to ensure that it “would serve to prevent crime and not return us to 1937,” the worst year of Stalinist purges.
TITLE: Lawyer Jailed for Stealing $14.5M From Elderly Couple
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A Moscow court has sentenced a lawyer to 3 1/2 years in prison for stealing $6 million and 7 million euros ($8.5 million) in cash from an elderly Novosibirsk couple who inherited the money from their son, Interfax reported.
Yevgeny Skoblikov was convicted of staging a fake robbery in his rented apartment in Moscow, where he was keeping the money for the couple, in October. He was detained the day after he reported the robbery.
Skoblikov pleaded guilty in March and returned the money, which will now be passed on to its rightful owners.
Skoblikov had asked for a suspended sentence, and he promised to appeal Friday’s ruling by the Tagansky District Court. In November, his lawyer said he was abused by inmates, who wanted to know the whereabouts of the money.
The inheritance came from Sergei Rovbel, who owned the Krastonnel construction company. He died of a stroke at 47 and left his elderly parents, Nikolai and Zoya Rovbel, with a total of $200 million and 200 million euros ($240 million), RIA-Novosti reported earlier.
TITLE: In Brief
TEXT: Traffic During Forum
ST. PETERSBURG (SPT) — Traffic and parking restrictions will be in place in the city center for the duration of the Economic Forum from Thursday to Saturday this week.
Parking is prohibited from midnight Wednesday and Friday on Admiralteiskaya Naberezhnaya, Ploshchad Dekabristov, Proezd Dekabristov, Galernaya Ulitsa (from numbers 1 to 7), and Konnogvardeisky Boulevard. From 8 a.m. until midnight on Wednesday, and from 7 p.m. to 7 a.m Thursday to Sunday, parking is prohibited in the victinity of the Lenexpo complex (Nalichnaya Ulitsa, Ploshchad Morskoi Slavy, Opochinina Ulitsa and Gavanskoi Ulitsa).
Parking is also restricted on Wednesday from 8 p.m. on the embankment of the River Moika (from Nevsky Prospekt to Bolshoi Konyushenny Bridge), on Aptekarsky Pereulok (from Palace Square to Mramorny Pereulok), on Palace Square and on Bolshaya Morskaya Ulitsa (from Nevsky Prospekt to the arch of the General Staff Building). During this period, parking will not be allowed on Admiralteiskiy Prospekt from Proezd Dekabristov to Gorokhovaya Ulitsa, or on Admiralteisky Proezd.
On Friday from 8 a.m. till 4 p.m., parking is banned on Konyushennaya Ploshchad, Aptekarskoi Pereulok (from Millionaya Ulitsa to Krugly Pereulok), Ploshchad Iskusstv, Bolshoi Konyushennay Ulitsa (from Konyushennaya Ploshchad to Shvedsky Pereulok), the embankment of the River Moika, and Millionaya Ulitsa (from Mashkovy to Mramorny pereuloks).
The following traffic restrictions are also in place: from midnight to 8 a.m. Thursday on Nalichnaya Ulitsa from Maly Prospekt to Bolshoi Prospekt, from 8 a.m. to 4 p.m. on Friday from Nevsky Prospekt to Bolshaya Konyushennaya, the embankment of the Griboedov canal, and Ploshchad Iskusstv.
Explosives Found
ST. PETERSBURG (SPT) — Police officers confiscated a horde of explosives from a resident of Korablstroitelei Ulitsa on Friday amid preparations for the 14th International Economic Forum, which will be held at the nearby Lenexpo complex.
“An unemployed resident with a history of selling World War II firearms” was detained, a law enforcement agency source told Interfax.
Officers were directed to a forest cache in the Leningrad Oblast. Among the arsenal were five Mosina rifles, eight Mauser rifles, an MG-42 machine gun, three TMI-35 mines, and RGD-33 grenades. The confiscated arms were destroyed.
Protest Against Finns
ST. PETERSBURG (SPT) — The Young Guards of United Russia group held a sanctioned meeting Friday in front of the general consulate of Finland with the aim of drawing attention to custody rights, which have been the subject of recent dispute between Russia and Finland.
About twenty activists stood outside the consulate with flags and banners reading “We will not abandon our own,” “Compassion is the foundation of politics” and “Mothers have rights,” Interfax reported. No one from the consulate approached the activists, and the police watched the protest without interfering.
“We came here to ask Finland to show compassion and respect toward children’s and parental rights,” Artyom Murzakov, the regional chairman of the Young Guards told Interfax. Murzakov conceded that in the recent case surrounding Irina Antonova, the Finnish law was violated, but said that considering the circumstances, Russia’s EU neighbor could have compromised.
Antonova reportedly arrived in Finland in February 2008 on a guest visa to stay with her daughter after suffering a stroke. When her visa expired, she was asked to leave the country and was refused a residency permit. Plans to deport Antonova on June 3 were postponed for health reasons, and the next attempt to send her back to Russia is planned for June 16, Interfax reported. The case is the most recent in a series of diplomatic spats over custody and visa issues between Russia and Finland.
Robbers Shoot Cops
ST. PETERSBURG (SPT) — Law enforcement officers in the Novgorod Oblast have arrested one of two men suspected of robbing a group of tourists from Moscow and shooting traffic police officers while fleeing the scene, Interfax reported Sunday.
The identity of the second criminal is known, and about 350 officers continue to search for him. The identities of the men are not being made known to the public in the interests of the investigation.
Two young men threatened a group of tourists with a gun Friday in the Novgorod Oblast, stealing their car, mobile phones and valuables. When the vehicle was intercepted by traffic police, the men opened fire, shooting one officer in the leg and another in the head and stomach. Both the suspects have a criminal record, and now face charges for attacking a law enforcement officer.
2 Held Over Train Bomb
ST. PETERSBURG (SPT) — Two nationalists accused of setting off an explosion on the railroad in St. Petersburg on Feb. 2 have been detained, Interfax reported Friday.
Igor Gritskevich and Vladimir Smirnov, both 21, are accused of being behind a series of explosions, including one near the Zdorovy Malysh children’s store on Prospekt Veteranov on March 31.
Most of their crimes were committed in parts of the Kirovsk neighborhood densely populated by natives of the Caucasus and Central Asia, Interfax reported. The two men are also suspected of setting fire to two marshrutka fixed route minibus taxis in an act of vandalism.
Putin’s ‘Trust’ Rating
MOSCOW (Bloomberg) — Prime Minister Vladimir Putin’s “trust” rating with the Russian public fell to the lowest level since 2006, according to the Public Opinion Fund.
Sixty-one percent of respondents in a poll conducted June 5 to 6 said they trust the premier, down 3 percentage points on the week, while those who said they distrust Putin remained at 14 percent, said the fund, which is also known by its Russian acronym FOM.
The rating for President Dmitry Medvedev, who succeeded Putin in the Kremlin in 2008, also fell by 3 points, to 53 percent, the lowest since the first quarter of 2008, FOM said on its web site. FOM polled 2,000 people in 44 regions and the survey’s margin of error is 3.3 percentage points.
Trifonova Probe
MOSCOW (Bloomberg) — Russian businesswoman Vera Trifonova died during pre-trial detention from a pulmonary embolism caused by a catheter that surgeons left in a vein in her right thigh, prosecutors said.
Trifonova, who had been charged with fraud, died in a holding cell in Moscow’s Matrosskaya Tishina prison on April 30. The Prosecutor General’s Office ordered a criminal probe into her death, the office’s Investigative Committee said.
“Investigators must now determine how medical personnel operating on Trifonova left a catheter in her body that experts say caused her death, and who was responsible,” the committee said on its web site Friday.
TITLE: Experts Cautious on Industrial Production Growth
AUTHOR: By Maria Buravtseva and Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: The industrial production index in St. Petersburg exceeded 100 percent for the second month in a row in May, but experts warn it is too soon to start talking about sustainable growth.
From January to April, the industrial production index was 104.7 percent in St. Petersburg and 105.6 percent in the Leningrad Oblast. Russian industry as a whole grew 6.9 percent.
In St. Petersburg, the highest increase was seen in the production of vehicles and equipment, which grew by 1.9 times. This is primarily connected with the growth of automobile production, said Sergei Fiveisky, first deputy chairman of the Committee for Economic Development, Industrial Policy and Trade. According to him, delayed demand has now emerged, and automakers have increased production. Fiveisky said that in the first four months of the year, the city’s automobile plants produced more than 10,000 vehicles, compared to 20,000 produced during the whole of last year.
At processing plants, the index has grown by 16.2 percent, and by 23.1 percent in chemical production. Metallurgy has grown 29.1 percent (25.7 percent during the first quarter).
The growth in demand for end products of mechanical engineering has created an additional demand in metallurgy and metalworking, says Fiveisky. There is certainly growth in the industry, but it is not so large, says Vladimir Yevseyev, president of the Soyuza Liteishchikov (Founders’ Union). The foundry industry is working at 20 to 30 percent capacity; there are still not enough orders, though there are more than last year, he said. According to Yevseyev, the situation has improved in the defense industry, which is busy with state orders; the accident at the Sayano–Shushenskaya hydroelectric power station has provided St. Petersburg manufacturers with orders.
In the timber-processing industry, where the index is 115.9 percent, growth is visible only in comparison with the low rates of last year, says Denis Sokolov, executive director of the Confederation of Northwest Timber Industry Enterprises. According to him, logging has seriously decreased, and in the autumn this could lead to a shortage of raw materials for pulp-and-paper mills and a drop in production.
The food industry continues to decline. The index stood at 95.8 percent for the first quarter, and 94.2 percent for the first four months of the year. It’s possible that people are stockpiling less, said Maxim Ivanov, chairman of the Galaktika dairy plant. Revenue from the production of Baltika beer in the first quarter of 2010 decreased by 43.2 percent compared to the same period last year to 10 billion rubles ($316 million), according to a company report. This can be explained by a decrease in the volume of sales in real terms, increase in excise taxes and the consequences of the global financial crisis. The results for the year as a whole will show that the reduction in the turnover of the beer industry will not be so significant and will see a correction of 10 to 12 percent, said Tatyana Bobrovskaya, an analyst at BrokerCreditService investment company.
The city’s food industry problems are largely due to the state of the beer industry, which has been significantly affected by the battle against alcoholism, high taxes and falling demand, said Vsevolod Lobov, head of the analysis department of Dokhod investment company.
According to Lobov, the city’s economy should grow compared to the dismal results of the beginning of 2009. The year’s results for 2009 showed a 20.1 decline in production. The deepest slump was in July, when production decreased by 24.1 percent.
In April, sales and production began to grow, according to Fiveisky. Lobov said that the positive indicators for the beginning of the year do not constitute a trend. In the second quarter, the industrial production index could be 105 to 105.5 percent, but the results of the second half are more significant, when growth could come to a halt, the expert said.
TITLE: Pugachyov to Sell Shipyards to State
AUTHOR: By Tatiana Voronova, Alexei Nikolsky and Anatoly Tyomkin
PUBLISHER: Vedomosti
TEXT: Senator Sergei Pugachyov’s United Industrial Corporation will sell Severnaya Verf and Baltiisky Zavod to the state-run United Shipbuilding Corporation to raise funds for Mezhprombank, which Fitch Ratings said could have trouble paying off 200 million euros ($241 million) in eurobonds.
Mezhprombank, also known as the International Industrial Bank, had its outlook cut at Fitch Ratings from “stable” to “negative” on Wednesday on concerns that it will be unable to repay 200 million euros in bonds due July 6.
The lender, which is more than 80 percent controlled by Pugachyov’s family, was Russia’s 28th-largest bank by assets as of the first quarter.
Mezhprombank’s primary source of funding is the Central Bank’s uncollateralized loans, which account for one-third of its liabilities. MPB is the single largest recipient of the regulator’s collateral-free loans, collecting 56 percent of them, Fitch said.
“Without support from its shareholder, the bank’s access to liquidity appears limited given its clearly low cash generation from its lending portfolio, lower chances of borrowing on capital markets, and the bank’s already maximal use of uncollateralized borrowing,” Fitch said in a statement.
The bank’s management sees support from Pugachyov, who represents the republic of Tuva in the Federation Council, as the main source of additional funds to pay off the eurobonds. MPB executives informed the ratings agency that the funds could be raised by selling or putting up as collateral assets belonging to United Industrial Corporation, also known by its Russian acronym OPK.
Those assets are the shipbuilding companies Severnaya Verf and Baltiisky Zavod, which will be sold to the United Shipbuilding Corporation, or USC. Pugachyov is in talks on selling controlling stakes in both assets to the state holding, which is planning to make a decision in the next few days, a USC official said.
OPK spokesman Dmitry Morochenko confirmed that a deal was under way. He said it was in line with orders Prime Minister Vladimir Putin gave to USC and that the deal would be closed by June 20.
“We don’t comment on statements like that,” said Dmitry Peskov, Putin’s spokesman. He added, however, that “regardless of Pugachyov’s assets, we welcome the process of consolidating assets within USC.”
USC spokesman Igor Ryabov said “there’s no deal.”
The state holding already owns a blocking stake in Severnaya Verf, which builds ships for the Navy, and the state holds a so-called golden share in Baltiisky Zavod.
There has been talk of selling the two assets to USC for more than two years, but a sale really is close now, said a senior executive at one of the defense plants. The deal will involve a loan from one of the state banks, he said.
A source at USC said a state bank would be the buyer of OPK’s assets, and then it would sell them on to USC. The state shipbuilding holding last year gained control of the Amur Shipbuilding Plant under a similar deal involving Sberbank.
Pugachyov is expecting to get $2 billion for the plants, said an executive at one of OPK’s holdings. He said the figure was based on an independent valuation, without mentioning who conducted it.
USC will manage to drive down the price, said a manager at the state holding. The sum is being actively negotiated, and the figures under discussion are “far from billions of dollars,” he said, adding that Mezhprombank would likely be able to pay off its 200 million euros in bonds and some of its 32 billion rubles ($1 billion) in debt to the Central Bank.
A spokesman for Mezhprombank confirmed that the lender would continue to meet its debt payments, although he did not specify the source of the funds.
“I can’t remember any time when a ratings agency has ever said anything like that about a Russian bank,” said Yegor Fyodorov, an analyst at the Bank of Moscow. “Investors will certainly be put on guard by such an unconventional event.” Most likely, the warning will force shareholders to settle the situation at the bank, he said.
The yield on Mezhprombank’s eurobonds due in July was 16.5 percent on Wednesday, while those due in February 2013 was 11.86 percent. That’s considerably higher than for other major private banks with eurobonds due in 2013. Alfa Bank’s bonds yield 8.64 percent, while Promsvyazbank’s notes were offering 9.4 percent.
TITLE: Cherkesov Fired as Arms Head
PUBLISHER: Bloomberg
TEXT: MOSCOW — President Dmitry Medvedev fired a close ally and former KGB colleague of Prime Minister Vladimir Putin as head of the state arms agency.
Medvedev signed an order to dismiss Viktor Cherkesov as the head of the Federal Arms Procurement Agency, the Kremlin said in an e-mailed statement Monday, without giving a reason. Cherkesov will be replaced by Nadezhda Sinikova, a former deputy head of the Federal Tax Service, according to the statement.
Cherkesov, who was in charge of the KGB unit responsible for combating anti-Soviet propaganda in the 1980s, became a deputy head of its main successor body, the FSB, in the late 1990s when Putin led the service. Putin appointed Cherkesov as the head of the Federal Drug Control Service when he created it in 2003. Cherkesov has been in charge of the arms procurement agency since May 2008.
TITLE: In Brief
TEXT: Superjets Set to Arrive
MOSCOW (Bloomberg) — Sukhoi Co. will supply the first three of its SuperJet passenger airplanes this year as Russia seeks to challenge Airbus and Boeing in the mid-range market, Chief Executive Officer Mikhail Pogosyan.
Russia’s flagship carrier Aeroflot will get two SuperJets and Armenian airline Armavia will get one, Pogosyan said in an interview Friday in Paris.
Fifteen SuperJets, Russia’s first major passenger airplane project since the collapse of the Soviet Union, are scheduled to be delivered in 2011, Pogosyan said.
Forecast Exceeded
MOSCOW (Bloomberg) — Russia’s Industry Minister Viktor Khristenko said Friday that industrial output growth this year may exceed 6 percent, more than twice as much than the government’s official 2.7 percent forecast, RIA Novosti reported.
Khristenko was speaking in Paris, where he was traveling with officials including Prime Minister Vladimir Putin, the state-run news service said.
No Buyer For Rusia
MOSCOW (Bloomberg) — Russia’s state-owned Rosneftegaz doesn’t plan to buy Rusia Petroleum, the TNK-BP unit that holds the license to the Kovykta gas field and is now in bankruptcy proceedings, RIA Novosti said, citing Deputy Prime Minister Igor Sechin in Paris on Friday.
Rosneftegaz owns some of the government’s shares in Gazprom and Rosneft.
Uralkali Rises on Sale
MOSCOW (Bloomberg) — Uralkali, Russia’s second-largest potash producer, advanced the most in more than two weeks in London trading after billionaire owner Dmitry Rybolovlev sold a controlling stake.
Rybolovlev’s Madura Holding disposed of 53.2 percent of Uralkali to Kaliha Finance, Aerellia Investments and Becounioco Holdings, according to a statement Monday. The stake was sold for $5.2 billion, Interfax reported, citing a person close to the agreement.
Ukraine Guzzles Gas
KIEV (Bloomberg) — Ukraine’s gas consumption in 2010 may reach 60 billion cubic meters, or 8 billion cubic meters more than planned for the year, Interfax-Ukraine news agency reported, citing Fuel and Energy Minister Yuriy Boyko.
The minister also said that Russian owners of trader RosUkrEnergo have been told that NAK Naftogaz Ukrainy is not going to give back to RUE 11 billion cubic meters of natural gas after a Stockholm Arbitration Court ruling, which said Naftogaz hadn’t got the gas lawfully, Interfax reported.
Gazprom, EDF Agree
PARIS (Bloomberg) — Electricite de France, Europe’s largest power supplier, and Gazprom have agreed to a partnership for gas storage in southwestern France.
EDF is drilling to test the capacity of salt caverns at Salins des Landes to see whether they are suitable for gas storage, Bruno Lescoeur, deputy head of gas operations, said at an energy conference in Paris on Friday.
The project could require investment of as much as 500 million euros ($603 million) and the site could store “a few” hundred million cubic meters of the fuel, he said.
TITLE: AvtoVAZ Plans to Cut Workforce by 10 Percent
AUTHOR: By Laurence Frost
PUBLISHER: Bloomberg
TEXT: PARIS — AvtoVAZ, the Russian automaker 25 percent-owned by Renault, plans to cut 10 percent of its workforce as it disposes of non-automotive activities, Chief Executive Officer Igor Komarov said.
“The cuts will be achieved by the end of next year through asset spinoffs and optimizing production,” Komarov said in an interview in Paris on Friday.
AvtoVAZ, Renault and Nissan Motor Co., in which the French carmaker owns a 43 percent stake, are trimming costs as they prepare to assemble new models on a shared production line in AvtoVAZ’s headquarters city of Togliatti, southern Russia. The 7,000 job cuts follow the Russian carmaker’s reduction of its workforce to 70,000 from 102,000 a year ago.
Workers at AvtoVAZ employed in activities that aren’t essential to the company’s strategy — including social and other support services — are being progressively transferred outside the company to new Russian state-backed employers.
The transfers account for the “vast majority” of the 7,000 planned job cuts, with the rest achieved through retirements and without compulsory firings, Renault spokeswoman Axelle de Ladonchamps said.
AvtoVAZ, Renault and Nissan have urged the Russian government to abolish customs exemptions that allow foreign makers of auto parts to escape import duties, said Christian Esteve, Renault’s top executive in Russia, who sits on the AvtoVAZ board.
“Local suppliers don’t currently have the technology to produce modern parts,” Esteve told reporters in Paris. “If you want the local supplier base to develop, you have to protect it.”
The three carmakers want local parts makers to supply 74 percent of the components for new models to be introduced under the Renault and Nissan brands and AvtoVAZ’s Lada brand starting in 2012, Esteve said. That requires an end to the duty exemptions, “among other things,” he added.
They also want Russia to repeal a decree that allows foreign carmakers to avoid duties of about 35 percent, undermining the incentive to invest in the local supply chain, Esteve said. “We’re still negotiating over this.”
Renault’s Russian assembly lines currently draw on local suppliers for 51 percent of their components, excluding engines and gearboxes, Esteve said — about twice the average among foreign makers.
Government-sponsored incentives lifted the market share of AvtoVAZ, Renault and Nissan to 38 percent in the first five months from 30 percent last year, CEO Komarov said Friday. The companies said they are targeting a combined share of 40 percent for 2015.
TITLE: Sovereign Debt Crisis Forces Gazprom to Review Targets
PUBLISHER: Bloomberg
TEXT: PARIS — Gazprom, which supplies about a quarter of European gas, may review its targets for exports to the region amid the impact of the sovereign debt crisis.
“We are witnessing a slump in demand,” Chief Executive Officer Alexei Miller said at a press conference in Cannes, France. “Our upbeat forecast may have to be revised.”
The Russian gas monopoly will stick to its targets for exports to the European Union for the time being, though these may be reviewed should the “downward trend” in demand continue, Miller said. The slowdown is occurring in small and medium-sized European countries so far and not in the larger ones, he said.
Gazprom on Wednesday stepped back from a production target of 529 billion cubic meters of gas for this year, given in April, after demand for the fuel fell last month. Gazprom plans to produce 519.3 billion cubic meters of gas this year, according to Vsevolod Cherepanov, head of the gas, condensate and oil production department.
Miller said Thursday that the slump in May and at the beginning of June “spoiled” the trend of higher demand during the first four months of 2010 and end of last year.
“Financial turmoil in the euro zone started to affect the energy markets,” he said. “Nevertheless we are confident that in the long-term gas demand in Europe will be on the rise.”
TITLE: Russia Seen Driving Region’s Recovery
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A rebound in Russia’s economy will be among the main drivers of economic recovery in Europe and Central Asia this year, the World Bank said Thursday.
The region will see a 4.1 percent recovery in its real GDP, with Russia and Turkey accounting for 62 percent of that, the bank said in a report.
The World Bank expects Russia’s economy to grow by 4.5 percent this year, more than the forecast of 4 percent announced by the Economic Development Ministry earlier this year. The bank’s forecasts for 2011 and 2012 are 4.8 percent and 4.7 percent, respectively.
The Russian economy, which saw year-on-year growth of 2.9 percent in the first quarter, is likely to perform well over the first half of 2010, the report said.
But that growth may taper off by the end of the year.
“The recovery in Russia, initially export-led and fed by bounce-back factors, is expected to continue through the first half of 2010 but should lose some momentum toward the end of the year as these factors fade,” the report said.
Unlike a number of small economies, including Ukraine, Belarus, Armenia, Bulgaria, Latvia and Lithuania, industrial production in Russia has bounced back and returned to the pre-crisis level driving the economic recovery in the region, the report said.
Industrial output in Russia rose 5.8 percent year on year in the first quarter, the State Statistics Service reported in April, after the indicator fell 10.8 percent in 2009.
But despite the positive indicators, weak consumer demand and investment levels, brought on by high unemployment and spare capacity, are lagging the broader economic recovery, the report said.
At the same time, the bank is expecting rising wages, oil revenues and “a reduced drag from the financial sector to support an increasing prominent role for domestic demand in the recovery.”
“These forces, however, will be partially offset by the appreciation of the currency, which would curb export competitiveness,” the report said.
Russia’s oil-driven economy, whose contraction during the financial crisis and subsequent rebound was among the world’s most volatile, has an outsized effect on some of the smaller, regional economies, which are largely dependent on remittances from the country, the World Bank said.
Workers’ remittances from Russia to other members of the Commonwealth of Independent States declined by 26 percent and reached $5.3 billion in 2009, according to the Central Bank.
With Russia’s GDP increasing over the coming two years, the economy in Europe and Central Asia is likely to grow by 4.2 percent and 4.5 percent in 2011 and 2012, respectively, the report said.
The growth for CIS countries in particular over the period will remain relatively stable at 4.5 percent.
TITLE: Total Bids for Yamal LNG Stake
AUTHOR: By Anna Shiryaevskaya
PUBLISHER: Bloomberg
TEXT: MOSCOW — Total is bidding for a stake in the Yamal LNG project in the Arctic, while urging Russian Prime Minister Vladimir Putin to keep Gazprom’s Shtokman gas project on track.
Total is seeking 20 percent to 25 percent of Novatek’s project to produce liquefied natural gas from the South Tambey gas field on the Yamal peninsula, Chief Executive Officer Christophe de Margerie told reporters Friday in Paris.
Russia is seeking international expertise to tap Arctic resources as the country depends on increasingly complex deposits to ensure long-term growth and replace declining western Siberian output. The country is also seeking to expand production of LNG, fuel cooled to a liquid for transportation by tanker to target new markets.
De Margerie asked Putin to ensure the timeframes for the Shtokman project, in which his company holds 25 percent, aren’t moved again. Gazprom, Total and Statoil, which has a 24 percent stake, delayed first output by three years to 2016 after demand slumped during the economic crisis.
Putin pledged “good administrative support” for Total, saying the French company has reliable Russia partners in Gazprom, Rosneft, Zarubezhneft and Novatek.
“There is a potential to expand operations,” Putin said at a meeting with de Margerie in Paris.
Novatek CEO Leonid Mikhelson said Yamal LNG will make faster progress, de Margerie said.
Novatek, Russia’s second-largest gas producer, may sign an agreement as early as this week with Gazprom’s export arm for LNG sales, on terms that will be “beneficial” for the project, Mikhelson said in an interview Friday. Royal Dutch Shell and Qatar have also expressed interest in Yamal LNG.
Exports from Yamal are “part of discussions,” de Margerie said. The law making Gazprom the sole exporter of Russian gas won’t be changed, Putin’s deputy Igor Sechin said in an interview in Paris.
Novatek, which works with Total at the Terkokarstovoye field, plans to build two gas liquefaction trains on Yamal, each with the capacity to produce 7.5 million metric tons of LNG, Chief Financial Officer Mark Gyetvay said in February.
“Let’s move as quickly” on Shtokman, the Total CEO told Putin. Yamal LNG and Shtokman, which has enough gas to supply the world for a year, won’t compete, he said.
The Yamal LNG venture will have a different structure than Shtokman, de Margerie said, without elaborating. At Shtokman, the partners own stakes in the operator, rather than the license holder to the field, and their participation ends after the first phase is completed.
Putin and de Margerie’s meeting continued behind closed doors after the Total CEO said he wanted to discuss “a message” from Qatar, the world’s biggest LNG producer, to Russia. Reporters were asked to leave the room.
Putin also attended a Russian exhibition in Paris, where he called for “joint work and new successes” in cooperation with France, including in energy, nuclear, nuclear power, electricity and oil and gas, as well as aircraft building, machinery, chemistry and biology.
TITLE: Bank: Low Interest Rates Increase Russia’s Stability
AUTHOR: By Jason Corcoran and Paul Abelsky
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia may be less vulnerable to speculative capital flows after interest rates were cut to a record low, easing pressure on the government to introduce capital controls, according to Raiffeisenbank.
“The impact of this huge volume of hot money is not so noticeable anymore,” Pavel Gurin, chief executive officer of the Russian unit of Raiffeisen International Bank Holding, said in an interview in Moscow.
The central bank has acut rates 14 times in as many months, reducing the attractiveness of ruble assets and diminishing the need for regulation of speculative cash from hedge funds and short-term, domestic investors to prevent currency and stock volatility, Gurin said.
There was a “huge flow from overseas to gain from this high interest-rate environment,” Gurin said. “Now, it’s becoming less and less so, because the benefits are not that obvious.”
Bank Rossii last month pared the refinancing rate by a quarter point to 7.75 percent, the lowest on record, making Russia the last of the so-called BRIC countries — Brazil, Russia, India and China — to maintain an easing cycle. Rate cuts were partly designed to diminish “the attractiveness of short-term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” the central bank said in October.
Investors pulled at least $290 billion from Russia between August 2008 and February 2009 as the world’s biggest energy economy sank into its worst financial crisis since the government’s 1998 default.
Russia’s government may levy a tax on capital transactions in a bid to stem speculative flows, First Deputy Prime Minister Igor Shuvalov said in April.
“This inflow of hot money is bad for the financial system because it is becoming more fragile because of it,” Gurin said. Russia is still in danger of a “second wave” of large investment outflows if raw material prices drop, he said.
Declines in Russian stocks this month showed that the country’s markets are no longer overreacting to external events, Gurin said. The dollar-denominated RTS Index dropped 2.3 percent on June 4, compared with a 3.2 percent slide for the Dow Jones Industrial Average, after a Hungarian government official said his nation faced the possibility of a Greece-like crisis.
“The decline this time has been in line,” said Gurin. Previously, if the Dow Jones had fallen by 1 or 2 percent,the RTS would drop by 8 percent, he said.
TITLE: New Cherkizovsky Market Planned at Cost of $600M
AUTHOR: By Anton Filatov
PUBLISHER: Vedomosti
TEXT: MOSCOW — A replacement for the shuttered Cherkizovsky Market may appear in the Moscow region as plans are being made for a $600 million, multipurpose wholesale center — possibly the biggest in Russia.
A 130-hectare plot of land near the Korobovo village in the Leninsky district will house a multipurpose complex, said Sergei Sanakoyev, chairman of the management board of the Russian-Chinese Center for Trade and Economic Cooperation, which is a strategic partner in the project.
The project will have a total space of 600,000 square meters, Sanakoyev said, estimating the necessary investments at $600 million.
Even more grandiose plans are laid out on the project’s web site, which says trade and logistics warehouses will take up 500,000 square meters, and wholesale trade shopping streets will occupy another 300,000 square meters.
The project’s participants have been working on attracting Chinese partners — both investors and tenants — since February, the web site said.
If the plans are realized, the project will become a major wholesale trade center, said Mikhail Gets, managing director of Praedium Oncor International.
R1, the project’s investor, plans to begin construction work on-site in the next few months, Sanakoyev said.
“The first stage will be construction of a 260,000-square-meter universal wholesale and retail center for consumer goods, with the capacity for accommodating large-size cargo,” the project’s web site said.
An unnamed R1 representative said the final concept of the project is not approved yet.
No information is available on R1. The land plot in Korobovo was previously developed by RDI Group, which is currently working on real estate projects with the total space of 730,000 square meters in Khimki in the Moscow region together with Limitless, a Dubai company.
RDI has quit the Korobovo project, a source close to the company’s management said. The project has been passed to MDK Group, a company created by former RDI managers, an unspecified source in the consulting industry told Vedomosti.
TITLE: Rostov Entrepreneur to Supervise
Hotel Construction for Olympics
PUBLISHER: Vedomosti
TEXT: MOSCOW — An entrepreneur and legislator from the Rostov region will be appointed vice president of Olimpstroi, and one of his main duties will be overseeing hotel construction.
Konstantin Kuzin was appointed to the position on June 1, said Viktoria Kleshchukova, a press secretary for Megapolis Group, in which Kuzin owns a controlling stake.
Along with Kuzin, Khasyan Zyabirov, former vice president of Russian Railways, and Leonid Monosov, a former Moscow city official, also became vice presidents, Olimpstroi told Vedomosti.
Zyabirov will oversee transport and logistics, Monosov will be in charge of building Olimpstroi projects, and Kuzin will work with investors on the construction of hotels, the state corporation’s press service said.
“The position of vice president of Olimpstroi is not civil service, so [Kuzin] will fulfill his legislative duties, as well as his job as chairman of the board of directors of Megapolis,” Kleshchukova said.
About 23,200 hotel rooms are needed for the 2014 Winter Olympics in Sochi, and they will be built by investors chosen through tenders, the Olimpstroi press service said.
TITLE: Medvedev Calls Kyrgyz Talks as Death Toll Increases
AUTHOR: By Sasha Merkushev
PUBLISHER: Combined Reports
TEXT: OSH, Kyrgyzstan — President Dmitry Medvedev met with central Asian representatives Monday in a bid to stem unrest in Kyrgyzstan as neighboring Uzbekistan said the bloodshed is organized and aimed at provoking ethnic tensions.
Human rights groups called on the Kremlin to send peace-keeping troops as the official death toll climbed to 117 with about 1,500 people injured, Interfax reported. The Associated Press reported that there are claims 200 Uzbeks have already been buried, citing the head of the Uzbek National Center, Jallahitdin Jalilatdinov.
Security Council secretaries of the Collective Security Treaty Organization, which comprises central Asian states, were invited to a meeting to discuss the crisis, Interfax said, citing Medvedev’s press secretary Natalia Timakova. More than 80 human rights groups have called on Russia to send troops to end the bloodshed, Interfax said Monday. Kyrgyz and Uzbek groups clashed for a fourth day, burning houses and looting stores.
“These widespread cases of murder, robbery and burning of houses are taking place against the Uzbek diaspora in Osh city and Osh region,” causing serious concern,” the Uzbek Foreign Ministry said in a statement on its web site Monday. “There is every reason to conclude such actions have an organized, managed and provocative character. We have no doubt that all this is taking place under the instigation of forces whose interests are totally far from the interests of the Kyrgyz people.”
Kyrgyzstan’s interim government extended a state of emergency Sunday throughout the Jalalabad region as tens of thousands of refugees fled the country and Russia sent a battalion of soldiers to protect its military base.
Some 100,000 minority Uzbeks fleeing a purge by mobs of Kyrgyz massed at the border Monday, an Uzbek leader said, as the deadliest ethnic violence to hit this Central Asian nation in decades left a major city smoldering.
With fires raging in the southern city of Osh for a fourth day Monday, the official death toll of 124 killed and nearly 1,500 injured from the clashes that began Thursday appeared way too low.
The International Committee of the Red Cross said its delegates saw about 100 bodies being buried in just one cemetery.
The United States, Russia and the United Nations worked on humanitarian aid airlifts while neighboring Uzbekistan hastily set up refugee camps to handle the flood of hungry, frightened refugees. Most were women, children and the elderly, many of whom Uzbekistan said had gunshot wounds.
Jalilatdinov said on Monday that at least 100,000 Uzbeks had fled to the border and were awaiting entry into Uzbekistan, while another 80,000 had already crossed.
An Associated Press reporter saw hundreds of Uzbek refugees stuck in no-man’s-land between the two nations at a border crossing near Jalal-Abad, while an AP photographer saw hundreds of refugees in a camp on the Uzbek side.
Kyrgyzstan’s interim government, which took over after former President Kurmanbek Bakiyev was ousted by a mass revolt in April, has been unable to stop the violence and accused Bakiyev’s family of instigating it to stop a June 27 vote. Uzbeks have backed the interim government, while many Kyrgyz in the south have supported the toppled president.
The government said Monday it had arrested a well-known politician suspected of stoking the violence, but gave no further details.
Interim President Roza Otunbayeva’s government had hoped to hold a referendum to approve a new constitution on June 27, but the likelihood of that vote taking place now looks slim.
From his self-imposed exile in Belarus, Bakiyev on Sunday denied any role in the violence.
New fires raged Monday across Osh — the country’s second-largest city — which is only 5 kilometers from the border with Uzbekistan. Food and water were scarce as armed looters smashed stores, stealing everything from televisions to food. Cars stolen from ethnic Uzbeks raced around the city, most crowded with young Kyrgyz wielding sharpened sticks, axes and metal rods.
In the mainly Uzbek district of Aravanskoe, an area formerly brimming with shops and restaurants, entire streets were burned to the ground. In one still-smoldering building, an AP photographer saw the charred bodies of three people burned to death.
No police or troops were seen on the streets of the city of 250,000.
Hundreds of residents in Osh abandoned their homes to brave the central square Monday, where they were awaiting evacuation to the airport.
Osh police chief Kursan Asanov told the AP that 950 foreigners — mostly Russians, Pakistanis, Indians and Africans — have been sent out of the city since disturbances began. Trucks and buses had been arriving every few hours to brave the dangerous route to the Osh airport so people could fly to Bishkek, the capital.
“The entire city is in a state of panic — you see for yourselves — because all people have children,” said Osh resident Galina Nikolayevna.
“We are also evacuating our residents, both of Uzbek and Kyrgyz ethnicity,” Asanov said.
Mukaddas Jamolova, a 54-year old housewife from Kara-Su, near Osh, said she saw looters burn down many Uzbek homes. She said her house was not burned down but the family can’t flee to Uzbekistan as they fear armed attackers.
“We can’t go anywhere, we have a curfew, nobody’s letting us out,” Jamolova told The Associated Press on the phone.
In another city beset by violence, Jalal-Abad, about 40 kilometers from Osh, armed Kyrgyz amassed at the central square to hunt down an Uzbek community leader whom they blame for starting the trouble.
As the clashes continued, desperately needed aid began trickling into the south. Several planes arrived at Osh airport with tons of medical supplies from the World Health Organization. Trucks carried the supplies into the city, protected by a tank and an armored personnel carrier.
The U.S. had a shipment of tents, cots and medical supplies ready to fly to Osh from its Manas air base in Bishkek, the U.S. Embassy said.
The U.S. and Russia both have military bases in northern Kyrgyzstan, away from the rioting. Russia sent in an extra battalion to protect its air base. The U.S. Manas air base is a crucial supply hub for the coalition fighting the Taliban in Afghanistan.
Uzbeks make up 15 percent of Kyrgyzstan’s 5 million people, but in the south their numbers rival ethnic Kyrgyz. The fertile Ferghana Valley where Osh and Jalal-Abad are located once belonged to a single feudal lord, but it was split by Soviet dictator Josef Stalin among Uzbekistan, Kyrgyzstan and Tajikistan, rekindling old rivalries.
In 1990, hundreds were killed in a land dispute between Kyrgyz and Uzbeks in Osh, and only quick deployment of Soviet troops quelled the fighting. Russia has refused a request by the interim government to send troops into Kyrgyzstan, so the government began a partial mobilization of military reservists over the weekend.
“No one is rushing to help us, so we need to establish order ourselves,” said Talaaibek Adibayev, a 39-year-old army veteran who showed up at Bishkek’s military conscription office.
(AP, Bloomberg)
TITLE: The Beverage Fits the Toast
AUTHOR: By Michael Bohm
TEXT: When Yury Shevchuk, a rock musician and outspoken Kremlin critic, met with Prime Minister Vladimir Putin two weeks ago, it was truly a historic event. After all, we have waited 10 years for this precious moment — when Putin would finally go one-on-one with a real critic of his regime.
Indeed, most Putin-watchers — including many of his loyal supporters — have grown bored with the soft, self-censored questions from journalists or Putin’s highly staged call-in shows in which some of the more probing questions in years past have included:
1. “It is well-known that great people suffer from depression. Do you have depression?”
2. “Do you like going to the banya?”
3. “Do you use a cellular phone?”
4. “Is it true you promised to hang [Georgian President Mikheil] Saakashvili by one of his body parts?”
5. “Why does Russia’s national soccer team perform so poorly?”
6. “Why don’t the national television channels show gymnastics in the morning anymore?”
7. “How will you celebrate New Year’s Eve?”
8. “Are you romantic?”
9. “When will we see the first snowfall?”
10. “Do you let stupid questions get through on your program?”
Opposition leader Boris Nemtsov has been begging for years to have the chance to debate with Putin live on television. When he was a State Duma deputy in 2003, Nemtsov tried to introduce a law to force presidential candidates, including incumbents, to participate in debates on live television.
Nemtsov understands, as the Russian saying goes, that the truth comes out during an argument. Unfortunately, there have been far too few real arguments and little truth during Putin’s reign. During the past 10 years, Putin and top United Russia members have flatly refused to participate in debates. In addition, leading opposition figures such as Nemtsov, Vladimir Ryzhkov, Mikhail Kasyanov and Garry Kasparov say they have been kept on a Kremlin “black list” that prevents them from appearing on government-controlled television.
Therefore, it was highly unusual that Putin agreed to answer questions from one of his most vocal opponents in an uncontrolled environment and with cameras rolling — all the more since Shevchuk is a legendary rock musician who wields enormous influence over many Russians.
Why did Putin take the risk? Maybe he thought that Shevchuk would heed the advice of the phone caller who rang him up beforehand and advised him not to ask the prime minister any tough questions. (Shevchuk suggested that the caller was a Putin aide; Putin denied it.) Alternatively, perhaps Putin was trying to rebrand himself by presenting a new, “liberal” face in time for a 2012 presidential campaign.
In any case, it was clear that Putin overestimated his ability to field tough questions from a genuine opponent. But, then again, he has had little experience doing this, so it is perfectly understandable that he appeared uncomfortable, irritated and a bit rough. He was not the cool, confident Putin we have come to know so well from his daily, choreographed television appearances.
Putin relied mostly on smokescreen tactics in responding to Shevchuk. For example, when asked about the lack of freedom of the press in the country, Putin’s only answer was: “Without the normal development of democracy, there is no future for our country.”
When asked why opposition rallies are regularly broken up by OMON forces, Putin said protesters shouldn’t block people’s access to hospitals — something that has never happened in the country. What’s more, Putin said, “If I see that people … are calling attention to crucial issues that the authorities should pay attention to, what can be wrong with that? We should say, ‘thank you.’” Two days later, during opposition rallies in central St. Petersburg and Moscow, the 150 people who were detained and roughly two dozen who claimed that they were attacked by law enforcement officials got a good taste of Putin’s “thank you.”
Finally, when asked about poor conditions for coal miners, Putin gave a lecture about the difference between coke coal and power-generating coal. “I know about this,” Shevchuk said despondently, drooping his head in apparent realization that he wasn’t going to get a straight answer.
One of Putin’s replies caught some by surprise. In answer to Shevchuk’s question about police abuse of power, Putin said: “According to our cultural tradition, as soon as someone gets an official position … he tries to use it to make money. … This is characteristic of every sphere in which someone obtains authority and the opportunity to make enormous money from administrative economic rent.”
Who was Putin referring to? Perhaps he meant the top management of Rosneft, which received the lion’s share of Yukos after the government effectively expropriated the company. Maybe he was referring to Gunvor, the energy trading company with $53 billion in revenues and headed by Gennady Timchenko, an old Putin colleague from his days in the St. Petersburg mayor’s office. Perhaps it was even a veiled confession on Putin’s part?
Despite his best intentions, Putin failed in his attempt to play the role of a democratic politician who respects the opposition’s rights and is tolerant of their opinions. He gave himself away when Shevchuk stood up and offered a toast, wishing that the country’s children will grow up not in a “corrupt, totalitarian, authoritarian [country] with one political party … but in an enlightened, democratic country in which everyone is equal before the law.”
As Shevchuk ended his toast while everyone’s glasses were still raised, someone at the table said, “We are raising glasses of water! No one toasts with water.”
Grinning like a Cheshire cat, Putin retorted, “The beverage fits the toast!” (One colloquial meaning of “water” in Russian is meaningless, empty words or padding.)
Kudos to Putin for his quick and sharp wit. But in those five words, he instantly threw off his liberal mask and revealed his true disdain toward political opponents, democracy and pluralism.
Shevchuk, clearly hoping for a breakthrough dialogue with the prime minister, prefaced his questions to Putin by saying, “This may be the beginning of a genuine civil society.” But judging by Putin’s responses, it may very well have marked the end.
Michael Bohm is opinion page editor of The Moscow Times.
TITLE: Creating a Nation of Poor, Sick and Ignorant
AUTHOR: By Boris Kagarlitsky
TEXT: When initial reports appeared in the media that a new bill had been introduced that would alter the way the state regulates education, the arts and social services, many people refused to believe that it would actually be passed. But when deputies passed the bill, hope remained that President Dmitry Medvedev would not sign it. But the law has been passed and signed.
The document is a death sentence for universal access to education and health care. By introducing a per capita financing structure, the law makes it financially impossible for rural and small-town schools, hospitals and clinics to continue functioning. Those that do continue operating will be forced to lower the quality of their work. This is because under the new law, the more students a teacher instructs and the more patients a doctor treats, the greater the funding their host institutions will receive from the state. In addition, schools, hospitals, museums and universities that currently receive insufficient state funding to cover their operating expenses will go bankrupt.
The new federal law represents a conscious attempt to destroy the progress Russia had achieved in the educational, social services and cultural spheres during the 20th century. The same people who speak so passionately about modernizing Russia have made a decision that turns the country back to the 19th century — and I do not mean the 19th century of Western Europe, but of Russia, where villages and many small towns didn’t have schools or hospitals.
Behind the attempt to destroy free and universal education and health care, there is a certain philosophy that views social services as being no different from commercial services offered on the free market. The fact that not everyone will be able to afford social services does not worry the authors of this law. Education and health care should become the privileges of a chosen few, just like the migalki, or flashing blue lights, placed on the top of cars, issued to a select group of bureaucrats and businesspeople, allowing them violate traffic rules with absolute impunity. The Russian authorities are busy creating and developing a national elite, and the tens of millions of ordinary citizens not belonging to that elite are of little interest to them.
Meanwhile, there is mounting evidence of resistance from society. Demonstrations protesting the new law have been staged in many cities. Until recently, teachers and doctors — both are government employees — were considered loyal supporters of the ruling party. They were instrumental in turning the vote for United Russia, and they promoted its policies to their students and patients. They did this not so much out of conviction as out of necessity. State employees are in a vulnerable position and know better than to bite the hand that feeds them.
But now the authorities are taking a gamble. They are attempting to free themselves from the responsibility of funding social services and at the same time retain the loyalty of those most affected by the decision. What will happen if this little trick doesn’t go over well? Even if officials are able to prevent state employees from staging protests, it would be unrealistic to count on their continued support.
And if the authorities manage to actually put this law into practice it will be a dangerous mistake that could lead to a social explosion. But if the law is stopped, it will be a rare victory for the people over the government.
Boris Kagarlitsky is director of the Institute of Globalization Studies.
TITLE: In the Spotlight: Sexpots
AUTHOR: By Anna Malpas
PUBLISHER: The St. Petersburg Times
TEXT: Last week was full of bad news for Russian sexpots. A woman who claims to own Russia’s largest silicon breasts, Iren Ferrari, had a deflation incident midflight between Moscow and Zurich, Express Gazeta reported. Ferrari, whose name is as fake as her assets, felt a painful sensation after hitting the seat in front during turbulence, she told EG. Her breasts “acted like air bags,” EG explained.
Ferrari said she is planning to sue the airline for 100,000 euros ($120,450) for not leaving enough space for her breasts. She is a Russian size 7, EG boasted, which I’m guessing would be a G-cup at least.
Ferrari poses for men’s magazines and does a spot of acting. Her web site reveals that she is also a trained lawyer. She once turned up to support politician Vladimir Zhirinovsky at an anti-British rally — complete with a tiny dog called Bentley — and was earnestly questioned about her political views by a St. Petersburg Times reporter.
Oddly enough, it’s not the first time Ferrari has had in-flight trouble with her breasts. Last summer, one of her implants ruptured on a flight to Los Angeles. “They need to add a new point to the safety instructions: ‘What to do if a sex bomb explodes,’” the Komsomolskaya Pravda tabloid quipped. EG suggested more cynically that Ferrari’s breasts tend to leak whenever her career is going through a dry patch.
In any case, this story had legs, so much so that it featured in British tabloid The Sun.
Meanwhile, Masha Malinovskaya, a blond former television presenter and model who has also done some fine-tuning to her bodywork, had difficulties with her husband.
Malinovskaya is married to a Liberal Democrat deputy for the northern Arkhangelsk region, Denis Davitiashvili, who is currently making headlines in the tabloids in an unsavory story.
Tabloids reported that a woman identified him when she called police alleging robbery and assault. The woman said she went back to an apartment with a man she met outside a restaurant and that Davitiashvili joined them. Both men bruised and scratched her when she refused to have sex, she said. After leaving, she realized that money and an expensive cell phone were missing from her bag, the Moskovsky Komsomolets and Tvoi Den tabloids reported.
Davitiashvili denies the allegations and plans to sue the woman for moral damages, Tvoi Den reported.
Malinovskaya, whose real surname is Sadkova, married Davitiashvili last year. She has also dabbled in politics, getting elected as a Liberal Democrat deputy in the Belgorod region. She was booted out in 2008 after complaints about her attendance record.
Meanwhile, model Emilia Vishnevskaya told KP that her former boyfriend Vladimir Tishko, a television personality who advertises Tide laundry detergent, assaulted her, leaving her with a concussion. And if the allegation is true, I suspect that even Tide won’t wash his reputation clean.
Vishnevskaya, who is famous for — well — not much, became a hot topic this week. She told KP that Tishko drunkenly hit her after they met by chance in a restaurant.
Then Tishko sent her threatening texts, telling her that “you will die from cancer like your mother,” she said, posting photographs on her blog.
In an interview with KP, Tishko denied the allegations. He “did not touch her with a finger,” and the text messages were faked, he said.
Tishko used to present shows on CTC called “Newly Weds” and “Honeymoon.” He once dated curvaceous sex-show host Anfisa Chekhova.
Chekhova supported Vishnevskaya, telling Vechernyaya Moskva that she “went through the same thing” but that she never went to the police.
TITLE: A Summer of Nice Weather and Robust Recovery
AUTHOR: By Martin Gilman
TEXT: As Russians start to wind down for the summer and their attention turns to relaxing at the dacha, little do they realize that their country’s economy is seemingly shifting beneath their feet. When they return to the normal regime in September as schools open again, they may not recognize where they are.
In the spring, Russia seemed to be a laggard. First-quarter real growth was estimated at 2.9 percent, following upon a plunge of 9.7 percent in 2009. To call this a recovery seems like a stretch, especially in comparison with the other vibrant BRICs such as China. Even Europe and especially the United States were lauded by the Organization for Economic Cooperation and Development in January as it raised its forecasts for those economies. Stock markets were anticipating a V-shaped recovery.
Now as we proceed into summer, the specter in advanced economies has suddenly shifted to serious concern with the famous “double-dip” recession. Wall Street has plunged almost 15 percent since late April. As U.S. unemployment remains at high levels, most economists predict anemic growth at best. Japan is in deflation, and Europe is increasingly mired into a debt-induced recession. As global investors flee from risk, U.S. Treasury bonds have again become the safe-haven asset.
Meanwhile in Russia, the sluggish first half of 2010 may turn out to have been an illusion — at least in part. Since the data has been rebased, comparisons with last year are misleading until the State Statistics Service completes the changes. But real indicators such as rail traffic and construction materials are booming. Prospects for the second half of the year are surprisingly positive. There is thus a high probability that Russians will be returning from their dachas at the end of the summer to a torrent of increasingly positive economic news. UBS is forecasting 2010 real growth of 7.5 percent, and even the staid OECD raised its forecast in late May to 5.5 percent for Russia.
Why is Russia decoupling? First, it is a low-debt economy so there is plenty of room for credit to expand. Second, savings are relatively high at nearly 29 percent of gross domestic product. The sharp drop in public savings last year was offset to some extent by an increase in the private sector saving rate. With falling inflation, higher real returns and a stable ruble, there is a much better chance for these savings to be invested in the domestic economy. Third, in the past few quarters Russian broad money aggregates have shown a rapid recovery as capital returns to the economy, and this is particularly evident in ruble deposits.
This does not imply smooth sailing, however. Russia and the other major emerging market economies are not really decoupled. As 2008 made clear, the globalized economy is too interdependent for a country like Russia to remain oblivious to the deteriorating prospects in the advanced economies. The likelihood of lower and more volatile oil prices is just one critical aspect that should advise caution as the draft 2011 budget and spending plan to 2013 are being finalized. An oil price assumption of $75 per barrel for 2011 seems imprudent in this environment, even if longer-term prices are likely to rocket.
The real dilemma for Russia and the three other BRIC countries is the inconsistency of policy priorities with the advanced countries. If the summer does confirm continuing sluggishness in the West, then central banks, notably the Federal Reserve and the European Central Bank, will endeavor to maintain a very loose monetary policy. This wall of liquidity may at best provide a floor against deflation, but it will flood into those markets with higher yields in real terms. We already see significant money flows into emerging markets. This will continue causing excess liquidity that will either provoke inflation — as we are seeing in Brazil — or exchange rate appreciation.
These “hot-money” flows, in turn, imply greater vulnerability for a country like Russia since any bad news could trigger the mass exit of local depositors from ruble assets, which was a crucial and unique aspect of Russia’s dramatic 2008-09 downturn.
In fact, by virtue of its totally convertible currency since June 1, 2006, Russia maintains a more open external capital account than the rest of the BRICs and is thus more susceptible to swings in capital flows. It was precisely these flows that drove the collapse of domestic liquidity during the onset of the crisis.
The International Monetary Fund does not believe that the ruble at current levels is overvalued, but if the pressure from budgetary spending and high oil prices is exacerbated by capital inflows, an overly strong ruble might eventually be the consequence. The IMF has even suggested that capital controls might be useful in the Russian context, but I disagree. They didn’t work in 1998 and wouldn’t work now. Given the population’s long memories of monetary confiscation, the mere prospect of controls would send Russian capital into flight.
Assuming that oil prices remain close to current levels, the issue in Russia is not going to be if the economy will grow but rather will the economy overheat. But the better the news coming out of Russia, the more money that will be flooding in, complicating the management of economic policy.
Thus, the key problem will be to rein in a budget that has been loosened massively, with the government now spending about $100 billion annually more of its oil and gas export revenue than during pre-crisis years, when it put a very sizeable part of its oil and gas revenue into foreign-invested state funds. This is a demand boost of Chinese proportions, and given that it comes at the expense of savings abroad, this puts pressure on the currency to appreciate.
In addition to a tighter fiscal policy, the Central Bank should continue to lower its deposit rates and use monetary instruments to discourage inflows. A priority should be to encourage the development of domestic capital markets and strengthen regulatory requirements. In the longer term, highly indebted advanced economies will probably keep lax policies in place for too long, leading to global inflationary pressures. There may be little that Russia alone — or even in consort with China, India and Brazil — can do to prevent this development. After all, we still live in a world where the financial system is still controlled by the debtors.
Eventually, the new creditors will assert themselves to ensure that their money is used on their terms. Perhaps Russians should use this summer break to prepare better for the coming tectonic shifts.
Martin Gilman, former senior representative of the International Monetary Fund in Russia, is a professor at the Higher School of Economics.
TITLE: Cirque du Soleil’s ‘Corteo’ to Run for 2 Months in City
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: The celebrated Cirque du Soleil is carousing into town for two months of performances of one of its most recent productions, “Corteo,” inspired by the death and funeral of a clown. The shows start on June 26 at a venue created specially for the show just outside the Peterburgsky Sports and Concert Complex and will run through August 8.
Despite the show’s seemingly melancholy theme, the production is one of the most ecstatic and buoyant in the troupe’s repertoire.
“The production is very Italian in character in the sense that sadness and the joy of life go hand in hand,” explains the show’s director, Daniele Finzi Pasca, an Italian who was born in Switzerland. “The funeral takes place in the dream of a clown, and the dream is very bright and vivid. Because everything is happening in a dream, the funeral procession is transformed into a kind of carnival, a festivity that ultimately celebrates life, rather than mourning anything.”
Pasca describes “Corteo” as “a feast of life” that inspires spectators to “think about their relationships, their friends and people who are or have been part of their lives.”
The director envisages the show as being “nostalgic,” which he believes helps the audience move closer to poetic forms and reflect on life.
“Corteo” is the first show Pasca has directed for the Cirque du Soleil, and he often refers to the work as his “baby boy.” He said he most enjoyed working with “small secret details.”
The well-traveled Pasca takes inspiration for his stylish shows primarily from his family and neighbors. “I find my stories mainly where I socialize,” the director explains. “I tell my audiences the stories that happen, or would be likely to happen, in the quarter where I live.”
Cirque du Soleil was founded in the Canadian city of Montreal in 1984 by Guy Laliberte and Daniel Gauthier. The company has developed a unique performance style juxtaposing a variety of genres, including drama, choreography and acrobatics. Cirque du Soleil employs more than 400 people, enabling simultaneous performances to take place in different parts of the world.
“You forget all about the plot as soon as the first act — the German wheel — gets going,” reads a review of the company’s “Quidam” show in the U.K.’s Independent. “This explosive opener, in which a man in silver leggings, dreadlocks and a bowler hat careens about the stage like a demented, but very lithe, hamster in its wheel, is typical of Cirque. Each of the 12 acts — which range from fiendish tossing of diablos to gymnastic balancing on top of poles — begins fairly gently, gradually ratcheting up the pace and difficulty until it reaches the dizzy heights of what you might previously have thought to be physically impossible.”
This is not Cirque du Soleil’s first visit to Russia. Last year, the company brought its show “Varekai” to Moscow, winning rave critical reviews. Now the company nurtures plans to create a permanent performance venue in the capital. According to Natalya Romanova, the director of Cirque du Soleil in Russia, the project is the first time that the circus has taken the initiative of opening its own venue abroad.
“Typically we simply review the offers that are sent to us, but with Moscow we simply could not resist the enormous potential of such a plan,” Romanova said. “So now Moscow looks set to become the first European venue. The circus’s philosophy is very close to the traditions of the Russian circus. Moreover, up to one third of our performers come from Russia and CIS countries.”
Cirque du Soleil currently boasts nine permanent venues, including one in Japan, one in China and seven in the U.S. (all based in Las Vegas). Each venue has its own repertoire created specifically for that performance space.
According to Pasca, Russian audiences differ drastically from spectators in the U.S. and most of Western Europe, yet the director sees many parallels in the character of Russians and Italians.
“Our two nations share romanticism as well as a sense of nostalgia,” said Pasca. “We react very similarly to many things that happen both in life and on stage. The only difference is that the Russians take some time to open up — but once it happens they become just as emotional, loud and exuberant as the Italians.”
TITLE: Russians Snap Up Icons, Paintings, Porcelain for $86M in London
AUTHOR: By John Varoli
PUBLISHER: Bloomberg
TEXT: Russian billionaires battled for art in London last week, nearly doubling auction takings compared with the same weekly series last year.
Four auction houses sold 54.5 million pounds ($86 million) of icons, paintings, porcelain and Faberge items in the U.K. capital, the biggest center for Russian art sales, as dealers hailed signs of recovery and increasing optimism.
“The Russian art market is growing,” Giorgy Putnikov, a dealer and collector, said in an interview. “The market in London and New York is growing. In Moscow it remains stagnant.”
Collectors from emerging markets such as Russia and China have selectively bought the best examples of their countries’ art heritage at recent sales. Other international Impressionist and modern works have been selling for record prices.
The takings were more than 90 percent up on a year ago, when the auction houses raised 29 million pounds during London’s Russian week. Most artworks are sourced from private U.S. and European collections, while most of the buyers are newly wealthy tycoons from Russia and Ukraine. In April, Sotheby’s and Christie’s in New York sold $18.5 million of Russian art.
Early-20th-century modernist works proved the most popular. The top lot of the week was a 1926 painting of African women; the second most expensive was a 1922 portrait of a Russian boy.
Sotheby’s sold the most last week, with about 70 percent of 615 lots offered selling for 22.3 million pounds on a presale estimate of 19.3 million pounds to 28 million pounds.
Alexander Yakovlev’s “Titi and Naranghe, Daughters of Chief Eki Bondo” (1926) was most the week’s most expensive lot. The portrait sold for 2.5 million pounds, almost three times its top estimate of 900,000 pounds.
A pair of mid-19th century Imperial porcelain vases sold for 937,250 pounds on a low estimate of 800,000 pounds. A Faberge jeweled and hard stone flower sold for 481,250 pounds on a top estimate of 250,000 pounds.
On June 7 and June 10, MacDougall’s sold Orthodox icons and 19th- and 20th-century paintings worth 8.5 million pounds. On Friday, it closed the week by offering 1.5 million pounds of Russian works on paper.
“All of the auction houses had good results and this is a clear sign of a healthy recovering market,” said William MacDougall, co-director of MacDougall’s. “Buyers are motivated by a mixture of factors: the love of art, prestige, and art as an investment.”
MacDougall’s top lot was Niko Pirosmani’s “Arsenal Hill at Night” (1907), that sold to a collector in Europe for 1.08 million pounds on an estimate of 900,000 pounds to 1.2 million pounds.
Nikolai Roerich’s “The Black Gobi” (1928) sold to a Russian for 790,000 pounds on a top estimate of 700,000 pounds.
MacDougall’s also sold 740,000 pounds of Russian postwar and contemporary art, led by Oleg Tselkov’s “Matador and a Bull” (1957), which fetched 120,000 pounds on a top estimate of 150,000 pounds.
“Russian contemporary art took the hardest hit from the economic crisis, and today we saw that interest is coming back,” said MacDougall. “Previously, it was a very thin market with a small number of collectors.”
On June 7, Bonhams sold 1.9 million pounds of Russian art, or 49 percent of its 258 lots, on a low estimate of 3.2 million pounds. Its most expensive work, Andrei Lanskoy’s abstract “L’abime du soir,” didn’t sell on a low estimate of 100,000 pounds.
“For exceptional works the market sees strong results, but for the middle market, that segment under 150,000 pounds, people are much more cautious and watching on the sidelines,” said Sophie Hamilton, head of Russian art at Bonhams.
On June 8, Christie’s sold 12 million pounds of Russian art, and 76 percent out of 552 lots, with a presale estimate of 7.9 million to 11.2 million pounds. Its top lot was Kuzma Petrov-Vodkin’s “Vasya,” (1922), that sold to art dealer Alex Lachmann in the room for 1.8 million pounds on a top estimate of 350,000 pounds.
“You can find artworks allegedly by Petrov-Vodkin on the market, but almost never genuine ones,” said Lachmann after his win against an anonymous telephone bidder. “And ‘Vasya’ is definitely the real thing.”
TITLE: Innovative Orthodox Taxi Service Drives a Fine Line
AUTHOR: By Alexander Bratersky
PUBLISHER: Agence France Presse
TEXT: MOSCOW — When Nikolai Maslov, 29, decided to start his own taxi service, he knew he’d need a niche to compete with Moscow’s unruly swarms of private cabs and the few large companies that dominate the official market.
Moskovskaya Troika, the company he launched just two months ago, has already built a dedicated following among the city’s Russian Orthodox. Its drivers are all devout believers, who are more likely to share a prayer than rant about traffic or the weather.
The cabs come equipped with pre-recorded services from the Orthodox Radonezh radio station, as well as literature from the church.
“Jesus came to Jerusalem riding a donkey, and this was a sort of transportation, too,” Maslov said in an interview. “An Orthodox believer can spend time on the road to his soul’s advantage. If he’s stuck in a traffic jam, he’s with an Orthodox driver and listening to church prayers.”
The company, which timed its launch to coincide with Palm Sunday, now has 50 privately owned taxis, ranging from Mercedes cars to minivans. Its offices in southern Moscow are alongside a tourist agency providing trips to religious destinations in Russia and abroad.
But as Maslov cashes in on a resurgent interest in the Russian Orthodox Church, he has also had to parry complaints that Moskovskaya Troika is more about excluding others than catering to a few.
Last month, a host on the popular radio station Serebryany Dozhd called the taxi company to book a car to a mosque, giving a Muslim name and speaking with a Caucasus accent.
The station later played the recording of Moskovskaya Troika’s dispatcher telling the host, Alex Dubas, that her bosses do not allow the company “to take non-Orthodox passengers.”
The recording led to considerable criticism on blogs and in the press, but Maslov maintains that his company is ready to do business with anyone, regardless of faith.
“We are not an Orthodox taxi for Orthodox believers, but an Orthodox taxi for everyone,” he said, adding that the company had fired the dispatcher involved in the radio incident and posted an apology on its web site.
Maslov also complained about an article in Afisha magazine, written by reporter Yevgenia Kuida, who pretended she wanted to work as a driver.
In her story, Kuida quoted a company manager present at her interview as saying they do not hire “Georgians or Armenians, only decent, Orthodox people.”
Georgia is predominantly Orthodox, while most Armenians follow the Armenian Apostolic Church.
“Afisha magazine has not officially interviewed our company staffers, and a made-up story from a journalist cannot be a source of quotations,” reads a statement on the company’s web site.
The Constitution prohibits discrimination based on gender or religion, but for an individual to sue a business, he or she would need a written refusal to prove the grounds for the denial of service, said Eduard Sukharev, a Moscow-based civil lawyer.
The Labor Code also prohibits employers from refusing to hire people because of their religious beliefs.
But Maslov said Moskovskaya Troika was not in violation of the law, and that despite the largely hostile reaction in the press, business has been good.
“I had this idea to make money as I saw a market niche that hadn’t been occupied yet,” he said. The idea came to him several years ago when he met an Orthodox believer working as a private taxi driver.
“He gave me a business card saying he was an Orthodox man who provides a taxi service for the faithful,” recalled Maslov, adding that he had since hired him.
The company distributes leaflets inside churches to attract clients, and 30 percent of its orders come from people who are looking for a ride to church or back home after a service. The rates are comparable to other major services in Moscow, charging 300 rubles, or about $10, for the first half hour and 9 rubles for each additional minute.
Maslov declined to say how much he has invested. He runs the business with a partner, whom he identified only as a former executive at one of Moscow’s taxi companies.
The businessman personally interviews would-be drivers, whom he said must be baptized Orthodox and should have a car, preferably a Western model in good condition. “Most of our drivers are deeply religious people,” Maslov said.
One of them is Pyotr Yurenkov, 43, who joined the company as soon as it started hiring.
“I worked as a driver for a private company, but then it collapsed, thank God. I was glad to find a place where you can work honestly and have a free schedule,” he said.
Like all cars in the company’s fleet, Yurenkov’s Honda Civic was blessed by a priest.
Sometimes the company will offer a free ride to a senior church official, Maslov said, recalling how the company had driven a bishop and an icon painter around for a tour of Moscow churches for an entire day.
Galina Yastrebova, a priest’s assistant in the Spas Nerukotvorny Church at Andronikov Monastery in southwestern Moscow, said she welcomed the idea of an Orthodox taxi but doubted that many churchgoers would use the service.
“Most of them take the metro or ask for a lift from other churchgoers,” she said.
But she added that if she ever needed a taxi, she’d rather choose an Orthodox one. “Orthodox people understand each other better,” she said.
The Russian Orthodox Church was also supportive of the idea, although cautioning that the service should be respectful of others’ beliefs.
“This is a good idea in general, because people who are usually reluctant to take cabs would feel comfortable sharing a car with a fellow believer,” said Vsevolod Chaplin, who heads the church’s department for relations with the state. “But I would advise the owners not to treat people with other religious beliefs with disregard.”
Maslov said he planned to expand the business to include transportation and moving services for corporate clients.
“There are people who are looking for businesses with an Orthodox view, who will not be able to cheat,” he said.
TITLE: Obama Plans Fourth Tour of Gulf Oil Spill
AUTHOR: By Erica Werner
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Struggling to show leadership in a crisis, President Barack Obama is embarking on a three-state tour of Gulf Coast states tainted by oil before speaking to the nation about the country’s worst environmental disaster and what to expect in the weeks ahead.
Before the start Monday of a two-day trip to Mississippi, Alabama and Florida, the White House announced Obama would order BP to establish a major victims’ compensation fund. When he returns to Washington on Tuesday evening Obama will use his first Oval Office speech as president to address the catastrophe.
BP said in a statement that its costs for responding to the spill had risen to $1.6 billion, including new $25 million grants to Florida, Alabama and Mississippi. It also includes the first $60 million for a project to build barrier islands off the Louisiana coast. The estimate does not include future costs for scores of damage lawsuits already filed.
Obama’s first three trips to the Gulf took him to the hardest-hit state, Louisiana. On Monday, Day 56 since BP’s leased Deepwater Horizon drilling rig exploded and unleashed a fury of oil into the Gulf, he’s flying to Gulfport, Mississippi. From there he’ll travel along the coast to Alabama, where oil was washing up in heavy amounts along the shores Sunday in the eastern part of the state.
He’ll be met by state and local officials eager for him to show command, provide manpower and supplies and also tell the public that despite the catastrophe that’s crippling the fishing and tourist trades, many beaches are still open.
The day includes a speech and a ferry ride to view barrier islands in Alabama where oil has come ashore. Obama has not taken to the water in his previous Gulf visits.
The administration said early Monday that BP had responded to a letter sent over the weekend asking the company to speed up its ability to capture the spewing oil.
In its response, BP said it would target containing more than 2 million gallons of oil a day by the end of June, up from about 630,000 gallons of crude a day now. The government’s high-range estimates say as much as 2.1 million gallons a day could be billowing from BP’s runaway well.
Alabama Governor Bob Riley planned to ask the president for more leadership and coordination.
“Essentially we’re trying to manage this through a committee form, and it’s a committee where any one member has absolute veto power,” Riley said on CBS’ “Face the Nation.” “I don’t think you can do that.” He said: “I think we’re going to have to set priorities. We’re going to have to implement a plan to achieve those goals if we’re going to get through this.”
Although BP is now siphoning off significant amounts of oil from its well 5,000 feet below the ocean’s surface, the leak won’t be killed for good until relief wells are completed in August. At the same time more accurate estimates of the spill have brought the enormity of the disaster into focus. Already potentially more than 100 million gallons of crude have been expelled into the Gulf, far outstripping the Exxon Valdez disaster.
Now the nation may have to settle in for a long, hot summer of oil and gas spewing relentlessly from the ocean floor, driving residents to anger and despair, ruining precious marshlands, and poisoning pelicans, turtles and other wildlife.
For Obama, it is imperative that he try to help guide the country through what’s to come. Obama will aim to accomplish that with his speech Tuesday and also detail specifics of the response to the oil spill, from cleanup to damages claims.
The next day, Wednesday, Obama will convene his first meeting with BP executives, expected to include the company’s much-criticized CEO, Tony Hayward. The president will tell company officials he expects them to establish a multibillion-dollar compensation fund for people and companies damaged by the spill, to be administered by an independent panel, and that he will use his legal authority to ensure BP complies, White House officials said.
The steps add up to Obama’s most concerted efforts so far to assert leadership in face of the calamity, with the White House exercising every tool at its disposal — an on-scene visit by the president, a speech from the Oval Office, and the use of the power of the presidency to extract concessions from BP.
The White House hopes it will be enough to win back the confidence of a skeptical public.
James Carville, a leading Clinton administration political adviser, said Tuesday night’s speech gives Obama “a chance to hit the reset button” on the administration’s posture regarding the spill.
TITLE: Americans Confident After Tie In First Match
AUTHOR: By Ronald Blum
PUBLISHER: The Associated Press
TEXT: IRENE, South Africa — The day was sunny and bright, and so was the U.S. outlook.
Boosted by some super saves by Tim Howard and a gifted goal by England keeper Robert Green, the United States opened the World Cup with a 1-1 tie Saturday night. Having gotten what’s known as “a result” in soccer parlance, the Americans started preparing for Friday’s match against Slovenia with a booster shot on confidence.
“My Blackberry kind of blew up last night with friends and family sending me messages,” defender Steve Cherundolo said Sunday. “The overall feeling that I do get though is the general public is proud of our performance and that’s something that this team can be proud about and build on. At the end of the day, results matter more than anything. No matter how you play, nobody wants a loser.”
The U.S. opened with a troublesome defensive performance, allowing Steven Gerrard’s fourth-minute goal following defensive overcommitment on a throw-in that left holes. Green let Clint Dempsey’s two-hopper skip through his arms and into the net in the 40th minute, a gaffe at least one British paper compared to the Gulf of Mexico oil spill.
ABC’s telecast was watched by 12,956,000 viewers in the United States, the most-viewed U.S. national team game in America since the 1-0 loss to Brazil in the 1994 World Cup at home.
“The mentality of the group is strong,” U.S. coach Bob Bradley said. “We’ve been hardened along the way and we believe that we can play against tough teams, top teams.”
Bradley chose Steve Cherundolo to play right back over Jonathan Spector, his starter at the Confederations Cup last June who struggled late in the season for West Ham. Oguchi Onyewu played central defense with Jay DeMerit, Onyewu’s first 90-minute game since Oct. 10, four days before he tore his left patellar tendon during the final World Cup qualifier. Captain Carlos Bocanegra played left back rather than his preferred spot in the center because he was the best option given Jonathan Bornstein’s inconsistency.
Michael Bradley was in central midfield with Ricardo Clark, his first-choice partner at the Confederations Cup, picked over Maurice Edu and Jose Torre. Landon Donovan and Clint Dempsey were on the midfield wings, and Jozy Altidore returned from a sprained ankle to start at forward with Robbie Findley, selected by coach Bradley for his speed.
Against England, the U.S. midfield played a bit narrowly, with Donovan and Dempsey pinched in to put them in better position to force speedy attackers to cut outside rather than inside. England scored when a gaping hole on a throw-in left Gerrard isolated to score one-on-one against Howard from up close.
Defenders were so conscious of shutting down Wayne Rooney and Frank Lampard, they left Emile Heskey with room to pass and Gerrard with space to maneuver.
While England is ranked eighth in the world and the United States 14th, the Americans will be favored in their final two group games, against No. 25 Slovenia and No. 30 Algeria. Slovenia, the smallest nation in the World Cup with a population of 2 million, took the Group C lead with a 1-0 victory over the Desert Foxes on Sunday when Robert Koren’s long-range shot was misjudged by Fawzi Chaouchi and bounced in off the goalkeeper’s arm in the 79th minute.
TITLE: Report: U.S. Experts Find Minerals In Afghanistan
PUBLISHER: The Associated Press
TEXT: WASHINGTON — A team of U.S. geologists and Pentagon officials has discovered vast mineral wealth in Afghanistan, conceivably enough to turn the scarred and impoverished country into one of the world’s most lucrative mining centers, The New York Times reported.
“There is stunning potential here,” General David H. Petraeus, commander of the United States Central Command, told the paper in a report published Monday. “There are a lot of ifs, of course, but I think potentially it is hugely significant.”
Americans discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, including iron, copper, cobalt, gold and critical industrial metals like lithium, according to the report. The Times quoted a Pentagon memo as saying Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and cell phones.
During a visit last month to Washington, Afghan President Hamid Karzai said his nation’s untapped mineral deposits could be even higher — perhaps as much as $3 trillion.
The mineral resources are a “massive opportunity,” Karzai said at a May 13 event with Secretary of State Hillary Rodham Clinton held at the U.S. Institute of Peace.
The report in the Times said the U.S. Geological Survey began aerial surveys of Afghanistan’s mineral resources in 2006, using data that had been collected by Soviet mining experts during the Soviet occupation of Afghanistan in the 1980s. Promising results led to a more sophisticated study the next year.
Then last year, a Pentagon task force that had created business development programs in Iraq arrived in Afghanistan and closely analyzed the geologists’ findings. U.S. mining experts were brought in to validate the survey’s conclusions, and top U.S. and Afghan officials were briefed.
Waheed Omar, Karzai’s spokesman, said at a news conference Monday that the USGS was “contracted by the Afghan government to do a survey, so this is basically an Afghan government initiative.”
“I think it’s very, very big news for the people of Afghanistan and that we hope will bring the Afghan people together for a cause that will benefit everyone,” he said. “This is an economic interest that will benefit all Afghans and will benefit Afghanistan in the long run.”
So far, the biggest mineral deposits discovered are of iron and copper, but finds include large deposits of niobium, a soft metal used in producing superconducting steel, as well as rare earth elements and large gold deposits in Pashtun areas of southern Afghanistan, the report said.
Charles Kernot, a mining analyst with Evolution Securities in London, said it typically takes three to five years to get a lithium mining operation up and running. Factors include how close the deposit is to power sources and other infrastructure and the size of the deposit.
And large lithium deposits may not mean an automatic windfall — given competition and the uncertainty of the market.
Ghazni Province, where the lithium deposits are reported to be, is a dangerous place, home to many Taliban.
TITLE: FIFA Rules Out Ban on Vuvuzela Horns
AUTHOR: By Joshua Howat Berger
PUBLISHER: Agence France Presse
TEXT: JOHANNESBURG — FIFA on Monday ruled out a ban on the vuvuzela horns which have been driving some players and broadcasters mad at the World Cup, as the makers revealed they had designed a toned-down version.
After the chairman of the tournament’s South African organising committee said he would consider a ban on the tuneless trumpets, football’s governing body issued a swift rebuttal at a daily press briefing.
“Vuvuzelas will not be banned from the stadia,” FIFA spokesman Stan Schaffner told reporters. He said FIFA and the organising committee had given “clear statements” against a ban.
His comments were intended to draw a line under speculation that the horns could be shown the red card, sparked by an interview given by organising committee chief Danny Jordaan.
Asked by the BBC if a ban was an option, Jordaan said: “If there are grounds to do so, yes.”
“We have asked for no vuvuzelas during national anthems or during stadium announcements. I know it’s a difficult question,” he added, saying that “we’re trying to manage the best we can.”
The organising committee is a branch of FIFA and is ultimately subordinate to the sport’s governing body.
Jordaan’s comments came after complaints from players and broadcasters, who said their commentators are struggling to make themselves heard above the noise which has been compared to a hornets’ nest.
A recent survey found the sound emitted by a vuvuzela was the equivalent to 127 decibels — louder than a drum’s 122 decibels, or a referee’s whistle at 121.8 decibels.
Portugal’s Cristiano Ronaldo was the latest World Cup star to voice unease about the trumpet, telling reporters that it affected players’ focus.
“It is difficult for anyone on the pitch to concentrate,” the Real Madrid star told a press conference.
“A lot of players don’t like them, but they are going to have to get used to them.”
Following the welter of complaints, makers of the horns have come up with a quieter version.
“We have modified the mouthpiece, there is now a new vuvuzela which will blow noise that is 20 decibels less than the old one,” Neil van Schalkwyk, a partner at Masincedane Sport, told The Star newspaper.
“We hope to sell these at park-and-ride areas and public viewing areas,” added Van Schalkwyk, whose company owns the vuvuzela trademark.
Vuvuzelas are modern spin-offs of traditional instruments made from spiralling kudu horns. Van Schalkwyk said he decided to develop a plastic version after spotting the original versions of the horn being blown at games.
The company says it has sold 1.5 million vuvuzelas in Europe since October and expects the tournament to generate sales of up to 20 million rand (around two million euros).
TITLE: Iraqi Parliament Meets as Rivals Deadlocked
AUTHOR: By Qassim Abdul-Zahra and Lara Jakes
PUBLISHER: The Associated Press
TEXT: BAGHDAD — Iraq’s new parliament convened for just under 20 minutes Monday in what was little more than a symbolic inaugural session because of unresolved differences over key government positions — a precarious political limbo three months after inconclusive elections.
The sides are sharply divided over the formation of a new government, and analysts and some lawmakers have warned that a decision could still be months away. Prime Minister Nouri al-Maliki is battling to keep his job after the rival Sunni-backed Iraqiya list narrowly won the most seats in the March 7 balloting.
In parliament, al-Maliki watched as his chief rival, Ayad Allawi, who heads the Iraqiya bloc, and other lawmakers stood to take the oath of office in Arabic and Kurdish. The other half of the session was taken up by the singing of the national anthem and readings from the Quran.
Under Iraq’s constitution, the legislature should have chosen a parliament speaker and a president, but these appointments had to be put off because they are part of the negotiations between major political blocs over the rest of the new leadership — including a prime minister and top Cabinet officials.
Acting speaker, Fouad Massoum, adjourned the session after about 20 minutes, saying the parties needed more time to discuss the issue.
He said the session would be left open, a technicality aimed at allowing negotiations to continue beyond the 30-day deadline set in the constitution. No date was set for the next meeting.
The session began amid heightened security, a day after insurgents stormed the country’s central bank in a coordinated attack that left more than 20 people dead.
Persistent violence has raised fears that al-Qaida in Iraq and other insurgents are trying to exploit the political deadlock to foment unrest and derail security gains as the U.S. military prepares to withdraw by the end of next year.
UN envoy to Iraq Ad Melkert said it could take anywhere from two weeks to three months for the parliament to meet again but the fact that parliament was seated put pressure on the factions to reach agreement.
“This is an invitation by the newly elected parliament to make sure as soon as possible they can start to function effectively,” he said.
Al-Maliki’s State of Law coalition, which won 89 seats to come in second place behind Allawi’s Iraqiya list, has joined forces with a religiously devout Shiite alliance to form an Iranian-backed bloc called the National Alliance.
Iraqiya leaders have claimed they should have the first crack at forming the government because they won the most seats on election day. But a March court opinion opened the door to the possibility that the largest bloc could be one created after the election through negotiations — meaning that if the super-Shiite coalition holds together, it could have the right to form the government.
Massoum confirmed the National Alliance as an entity, but said it was up to the Federal Court to make a decision on the formation of the government.
The Shiite bloc insisted it should be the one to choose a prime ministerial candidate, who would then have to be approved by the president.
“Today lawmakers have completed their membership and we are the biggest parliamentary bloc,” said Khalid al-Attiyah, a National Alliance lawmaker.
Iraqiya lawmakers quickly dug their heels in, saying the coalition would not accept the National Alliance’s self-coronation as it had no legal or moral authority do so.
“We think that their announcement lacks a lot of legal regulations, and it is not legally binding for Iraqiya to go with it or accept it,” said Osama al-Nujaifi, a senior Sunni Iraqiya lawmaker.
TITLE: Aussie Media, Ex-Players Savage Socceroos After 4-0 Humiliation
PUBLISHER: Agence France Presse
TEXT: SYDNEY — Australian pundits and former Socceroos lined up Monday to sink the boot into the national team following their 4-0 humiliation by Germany in Durban.
Former Blackburn Rovers and Australia midfielder Robbie Slater, now a television pundit with Fox Sports, slammed the tactics of coach Pim Verbeek and said the Socceroos never showed any desire to win Sunday’s game.
“We played with six midfielders and no recognized striker. You at least have to go out and try and win the game and we never did that,” Slater said.
“You don’t mind losing if you give it a shot, but we never did.
“Verbeek has done a great job getting us here and the Asia Cup, but he has to take much of the blame for this.”
Former Socceroos goalkeeper Mark Bosnich attacked captain Lucas Neill for being too negative before the match.
“This game was lost before a ball was kicked,” he told Fox Sports.
“To go out before the game and make out your opposition is superior at a pretty big press conference is a self-fulfilling prophecy.
“Tonight was an embarrassing defeat.”
Commentator Mike Cockerill wrote in the Sydney Morning Herald that the players had passed their use-by date.
“A German team on the way up at times humiliated an Australian team on the way down,” he wrote.
TITLE: Revolutionary Guards in Iran Dismiss Sanctions Imposed by UN
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — Iran’s powerful Revolutionary Guard says it’s “not worried” by the latest wave of UN sanctions imposed over Tehran’s controversial nuclear program.
The force’s senior commander, General Hossein Salami, says Iran has shaped its defense capabilities “on the basis of worst-case scenarios” and that the new sanctions won’t stop Iran’s nuclear program.
His remarks — reported on Monday by the official IRNA news agency — were the Guard’s first reaction to the latest UN measure.
The new sanctions include a freeze on the assets of 40 additional companies and organizations — including 15 linked to the Guard and 22 involved in nuclear or ballistic missile activities.
The West accuses Iran of seeking to develop nuclear weapons. Iran denies the charge.
TITLE: Riot Police Break Up World Cup Wages Demo
AUTHOR: By Mike Corder and Derek Gatopoulos
PUBLISHER: The Associated Press
TEXT: DURBAN, South Africa — Armed riot police charged into hundreds of security stewards at a World Cup stadium, using tear gas and firing rubber bullets to break up a protest over low wages hours after Sunday’s match between Germany and Australia.
Police appeared to set off two percussive grenades, causing loud bangs, to drive the workers out of a parking lot under the Moses Mabhida Stadium in Durban after Germany’s 4-0 win in Group D.
Reporters saw about 30 riot police charge into the crowd to drive it out of the stadium. While calm quickly returned to the stadium, some of the security stewards, wearing orange and green jackets, continued milling around outside.
An AP photographer said police fired tear gas at protesters outside the stadium. A nearby street was littered with trash where the protesters were forced away. Concrete blocks had been pushed into a street.
About 100 police later surrounded a group of about 300 protesters on a street near the stadium and separated the men from the women. The protesters later left peacefully after discussions with police.
Lt. Colonel Leon Engelbrecht, a police spokesman assigned to the World Cup, confirmed that tear gas was used to help end the lengthy protest, but nobody was seriously injured.
A woman was hit by a rubber bullet but not badly hurt, he said.
Engelbrecht said the protest arose from a dispute between stadium workers and the security contractor over pay, and that disgruntled workers tried to stay in the venue after the match.
“It’s a concern that the security company didn’t have this settled before the tournament,” Engelbrecht said. “Dialogue will continue to ensure this sort of thing doesn’t happen again.
“It’s fortunate it was well after the game.”
Rich Mkhondo, head of communications for the local World Cup organizing committee, said the protest did not have any impact on security at the match or any spectators.
“Two hours after the end of the first match at the Durban stadium last night, there was an internal pay dispute between the principal security company employed by the organizing committee and some of the static security stewards employed by the company at the match,” Mkhondo said in a statement e-mailed to the AP. “Police were called on to disperse the protesting stewards.”
Mkhondo said later that World Cup organizers are meeting with stadium stewards and the security contractor, Stallion, to resolve the dispute but that “we don’t get involved on what an employer pays their employees.”
A FIFA spokesman had no immediate comment.
Protesters said they gathered at the venue to complain about their wages, claiming they’d been paid a fraction of what they were promised.
“We left our homes at seven in the morning and now it is nearly 1 o’clock (a.m.),” Vincent Mkize said. Before the tournament, “In the dry run, they didn’t want to tell us how much we would get.”
Another of the stewards, Fanak Falakhebuengu, told the AP he had heard they would be paid 1,500 rand ($195) a day but they were only getting 190 rand ($25).
TITLE: S. Koreans Adapting to South African Life Fast
PUBLISHER: Agence France Presse
TEXT: South Korean players have fast adapted to conditions in South Africa, with their use of oxygen masks paying dividends and more great exploits expected in the World Cup finals.
The ‘Taeguk Warriors’ powered to a convincing 2-0 win over Euro 2004 champions Greece in their World Cup opener, and now Diego Maradona’s Argentina await them in Johannesburg on Thursday.
Ahead of the tournament, the squad routinely used a specially built “thin-air” lounge to acclimatize for South Africa where five of the nine host cities are more than 1,000 meters (3,300 feet) above sea level.
The room had a rectangular metal box in the wall, with low-oxygen air funneled through the duct by a huge machine worth 130,000 dollars imported from the Netherlands.
They have also been using oxygen masks — and it has clearly paid off.
“The team’s mood is much better compared to when we first got here,” defender Kim Nam-Il told reporters here.
“We have gotten used to our days in South Africa.
“While there are concerns regarding the next match against Argentina, we believe we can achieve good results as we’ve done fairly well so far,” he said.
The team’s progress is being closely followed at home, with some one million red-shirted fans, including 200,000 in Seoul, packing boulevards, stadiums and parks on Saturday for their victory over Greece despite miserable weather.
Coach Huh Jung-Moo is confident but is being careful not to let his side get carried away, with Argentina — who beat Nigeria 1-0 on Saturday — their formidable next opponents.