SOURCE: The St. Petersburg Times
DATE: Issue #1589 (50), Tuesday, July 6, 2010
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TITLE: Russian
Post Office Under Fire
For Tenders
AUTHOR: By Olga Razumovskaya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev promised to “bonk some heads” at the Russian Post after a businessman from the Far East questioned the fairness of the way the state-run postal company conducted business with some of its suppliers.
“Now this is serious talk. Give me all the information. Our people from the [presidential] administration are sitting here, and we’ll do some knocking of heads together... if this can be established,” Medvedev told the businessman, Sergei Mishin, during the trip to Birobidzhan on Friday.
Mishin said Russian Post shut his packaging supplies firm DV Upak-Servis out of a bid to supply packaging materials to the state-run postal service.
He told Medvedev that Russian Post is “failing the tender” because it only takes bids from companies affiliated with its top management.
Medvedev ordered Konstantin Chuichenko, head of the Kremlin’s control directorate, to investigate the situation.
Russian Post issued a statement Friday saying it had been doing business with Upak-Servis in three regions and had been planning to expand its cooperation with the company prior to his statement.
“To make these kinds of accusations the claimant must have facts that confirm them. Russian Post does not have this kind of information,” the statement said.
But this is not the first time Russian Post is being accused of unfair bidding practices. Mishin backed his claims by citing an investigation by Vedomosti, which published in January an extensive article on the peculiarities of the postal service’s bidding system.
In December 2009, four companies, including Moscow-based packaging suppliers Real Plus and Virni M, filed complaints about Russian Post with the Federal Anti-Monopoly Service.
Real Plus also filed a lawsuit with Moscow Arbitration Court asking it to cancel a packaging materials tender in which the company was not allowed to participate.
“Since [Alexander] Kiselyov became head of Russian Post, only three companies have generally been allowed to participate in electronic auctions for packaging suppliers — MSPC, Prom-Snab and Norden Dom,” Konstantin Natovich, founder and CEO of Real Plus, said in a phone interview Friday.
All three companies are affiliated with Russian Post’s management and sell overpriced products of inferior quality, which amounts to a major money-laundering scheme, representatives of both Virni M and Real Plus told The St. Petersburg Times.
“All we want is to supply our product by means of transparent paperwork. We offer high-quality products at a much lower price, but this obviously is not what Russian Post wants,” said Viktor Shkrunin, Virni M’s head production engineer.
The three companies bid among themselves and allow the end prices to drop by a nominal amount of 0.5 percent to 1 percent, Shkrunin said. Vedomosti compared this figure to the 52 percent drop at some of the auctions conducted from 2007 to early 2009, when Andrei Kazmin, the former Sberbank CEO who came up with the idea of a system of electronic auctions for suppliers, was head of Russian Post.
Natovich said 2008 was the best year for suppliers in terms of transparency.
“It all came to a halt when Kiselyov came to Russian Post,” Natovich said.
“The three companies could be selling at 2 rubles a piece what we were selling for 1,” Natovich added.
An anti-monopoly service commission will look into Real Plus’ complaint July 19 after postponing the hearing twice. “The documents we have provided make me certain that we will succeed,” Natovich said in an interview.
In April, Natovich’s Real Plus won a defamation suit filed by MSPC, which Real Plus accused of being affiliated with Russian Post.
Natovich said he expects that the paper trail will help expose the corrupt activities of Russian Post’s chief, Kiselyov, and his deputy, Dmitry Chuiko.
The anti-monopoly service said Russian Post faces a fine if the suppliers prove their case.
“If they succeed, Russian Post can expect a fine, and the results of the tenders will be canceled. Additionally, someone specific will be held administratively responsible,” said Dmitry Rutenberg, head of the anti-monopoly service’s transportation and communications department.
TITLE: Clinton Pledges U.S. Support for Georgia
AUTHOR: By Robert Burns
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — U.S. Secretary of State Hillary Rodham Clinton on Monday pledged U.S. support for Georgia, a former Soviet state recovering from an August 2008 war with Russia and seeking to consolidate its democracy.
At a news conference with President Mikheil Saakashvili, Clinton delivered what she called a message from President Barack Obama and herself.
“The United States is steadfast in its commitment to Georgia’s sovereignty and territorial integrity. The United States does not recognize spheres of influence,” she said, referring to Russia’s claim that it has privileged interests and special influence in former Soviet states like Georgia.
Clinton said she and Obama stressed those points to Russian President Dmitry Medvedev when he was in Washington last month.
Clinton also called on Russia to live up to the commitments it made in a cease-fire agreement following the August 2008 war — including withdrawing its troops to the positions they held before the conflict. Russia should also permit humanitarian access to the portions of Georgia its troops still occupy, she said.
“We’re calling on the Russians to enforce the agreement they signed back in 2008,” she said, adding the U.S. opposed Russia’s building of more permanent military bases in the sectors of Georgia that its forces are still occupying.
Speaking earlier to a couple of hundred women from rights groups, political movements and other organizations, Clinton said the U.S. “will stand with you” in pursuit of a stronger Georgian democracy. She did not mention Russia or the war until it was raised by a member of her audience.
The brief war remains a point of contention between Washington and Moscow and complicates U.S. relations with Georgia.
During a question-and-answer session, one woman asked if the Obama administration has a “real democracy agenda” for Georgia. She said her country suffers from a range of human rights abuses and she said these were largely ignored by the administration of President George W. Bush.
“The United States always has a democracy agenda,” Clinton responded. “Continuing to try to perfect democracy is one of the key challenges for any country — both its government and its citizens.” She applauded recent progress in Georgia, but added that the administration “raises as a friend” its concerns about limits on freedom of expression.
“We take seriously threats to democracy, wherever they occur,” Clinton said. “So we’re going to continue to support democracy here in Georgia.”
In her give-and-take with the advocacy groups, one woman asked about Russia’s continued occupation of parts of Georgia.
“The United States was appalled and totally rejected” the Russian invasion, she said. “I’m not going to stand here and tell you this is an easy problem, because it is not.”
The key for Georgia to move forward, she said, is to concentrate on improving its democracy and solving its internal problems and economic prospects.
“That is the rebuke that no one can dispute,” she said. Her unspoken point seemed to be that Georgia should resist any temptation to try to build up its military forces as a solution to the Russia problem.
Clinton advised that Georgia not take any actions that would offer Russia an excuse to perpetuate its occupation and its confrontational approach.
“I think it is a mistake to focus on the past,” she said, alluding to the remaining anger over the August 2008 conflict.
The Obama administration is trying to strike a balance between pressing Russia to withdraw its forces from the breakaway Georgian territories of South Ossetia and Abkhazia and convincing the Georgian government that building up its military is not the right solution.
At the center of the Russia-Georgia tensions is an effort by Moscow to reassert its influence in the region, to preserve what Medvedev calls a Russian zone of “privileged interest.”
Georgia was the final stop on a Clinton tour that began Thursday in Ukraine and also took her to Poland, Azerbaijan and Armenia.
TITLE: City’s Etiquette Code Proposal Sparks Controversy
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: A group of lawmakers from the St. Petersburg Legislative Assembly has embarked on a moral crusade with an eye to producing an etiquette code for foreigners in the city.
The draft behavior code suggests that non-residents should refrain from speaking their native languages and advises them against celebrating their religious holidays in public places.
The St. Petersburg ethics code follows in the footsteps of the “Muscovites’ Code” currently being developed by Moscow’s City Hall, along with a series of similar guidelines that have mushroomed around the country during the past year.
In addition to specific recommendations, such as refraining from “grilling kebabs in public places and on balconies,” “wearing ethnic clothing when outside” and “sexually harrassing women,” the “St. Petersburger’s Code” is peppered with pompous statements such as “A true St. Petersburger is a fine example of a citizen who fully respects the rules of society.”
The plans, which have caused an outcry in the local human rights community, even stirred a major controversy in the pro-Kremlin political camp. Sergei Mironov, head of the Federation Council and leader of the Just Russia party, slammed the idea as “a vestige of the Soviet era.”
“This proposal echoes the infamous ‘Moral Code of the Builders of Communism,’” said Mironov. “If you develop this idea, every small town would come up with its own lists. This is absurd. Simply respecting the constitution is enough, and no codes, however many we may pass, will help to make people obey the law.”
The driving force behind the controversial initiative is Yelena Babich, a city deputy with the Liberal Democratic Party. The parliamentarian said she felt prompted to act after seeing people in housecoats and slippers walking down St. Petersburg’s main street, Nevsky Prospekt.
She said such incidents damaged the city’s reputation as a “cultural capital.”
The lawmaker said that one tradition she finds especially “appalling” is the Kurban bayrami religious festival (also known as Sacrifice Feast) celebrated by the Muslims all over the world. “The lamb sacrifice is a brutal thing that should not be allowed,” said Babich.
The parliamentarian says that such ceremonies must be banned as they “might emotionally traumatize native residents who regard the tradition as barbaric.”
Human rights advocates say such demands, if passed, would have extremely negative consequences as they would provoke ethnic hatred, instead of making foreigners respect the city. Worse, critics say, threats of banning significant religious festivals, such as Kurban bayrami, send a clear signal to ethnic and religious minorities about the authorities’ xenophobic attitudes.
The city parliament has submitted an official request to St. Petersburg Governor Valentina Matviyenko to develop a behavior code.
Ethics’ codes appear to be in fashion in Russia. Regional parliaments and governments across the country have been busy developing guidelines for tourists, officials, doctors, teachers and other groups of society with impressive vigor.
The Ulyanovsk city government issued a document obliging local authorities “to demonstrate collective spirit” by participating in group activities, such as fishing or cookery competitions.
The Sochi government issued a written notice to staff reminding them to wear well-ironed trousers, while Yekaterinburg City Hall banned female employees from wearing tights that had been mended.
TITLE: Auditors: Sports Chief Had 5 Daily Breakfasts
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Each of the 15 medals that Russia won at the Vancouver Winter Olympics cost the country a staggering 388 million rubles ($12.4 million), the Audit Chamber said in a report that criticized the government’s training program as ineffective and corrupt.
A total of 5.8 billion rubles ($186.4 million) was spent on the February games, said the 71-page report on the management of state funds allocated for preparations for the 2010 games that was published on the watchdog’s web site late last week.
An example of misspending cited in the report was the Vancouver hotel bill for Sports, Tourism and Youth Politics Minister Vitaly Mutko, which came to 34,500 Canadian dollars ($32,400) for 20 nights.
The report said the room cost 1,499 Canadian dollars ($1,408) per night, which means that Mutko’s stay should have cost 29,980 Canadian dollars. The report does not explain why the actual bill was 4,500 Canadian dollars higher.
Government regulations prohibit paying more than $130 per night for hotel rooms for state officials.
During his 20-day stay, Mutko also had 97 breakfasts that cost another 4,800 Canadian dollars ($4,500), the report said. That amounts to about five breakfasts per day.
The Audit Chamber report also accused sports officials of embezzling money allocated for athletes and sports equipment, adding extra people to the Olympic delegation at the state’s expense, hiring incompetent coaches and selling overpriced tickets to fans.
But the report did not say how much money went missing, and said no officials had been identified who could be charged with wrongdoing.
“There is no single body in Russia responsible for the training and participation of Russian teams in the Olympic Games … that can be held responsible,” the report said.
The Audit Chamber will forward the results of its inquiry to the Investigative Committee and the Interior Ministry, the report said. It was unclear whether any officials involved with the Olympics would face charges.
Mutko denied accusations of misspending Friday, calling them “speculation” and “total rubbish,” Interfax reported. He said he did not choose his hotel room but did not explain who had selected it.
Russia won only three gold medals at the games, its worst-ever performance. It topped the medals box at the Paralympics, however, with 38 medals, including 12 golds. Russia spent 378 million rubles ($12.1 million) for the Paralympics, meaning that each medal cost 10 million rubles ($321,500), the Audit Chamber said.
TITLE: Anti-Beer Demonstrators Arrested at Beer Festival
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Nine protesters were arrested during a City Hall-sponsored Beer and Kvas Festival held near the Peterburgsky Sports and Concert Complex (SKK) in the south of St. Petersburg on Saturday.
About 50 activists gathered near Park Pobedy metro station at 4 p.m. and marched about one kilometer through Park Pobedy to SKK distributing leaflets saying “Say No to Beer Corporations,” “Stop Binge Drinking” and “Be Useful to Your Nation” before the group was surrounded by OMON special-task police officers, said organizer Andrei Pesotsky on Monday.
Seven participants of the protest — dubbed the “Sober March” — were arrested on the spot. Two others were later detained on the site of the festival.
Pesotsky, who belongs to the Natsbols — as former activists of Eduard Limonov’s banned National Bolshevik Party (NBP) call themselves — said that the protesters were mostly
Natsbols, along with members of “both right-wing and left-wing organizations.” Some wore T-shirts depicting a crossed-out bottle of beer.
The police targeted people who were carrying leaflets or wearing anti-beer festival T-shirts, Pesotsky said.
The detained activists were put into a bus and taken to the nearby Police Station No. 33 on Prospekt Kosmonavtov, where they were held for three hours in order to “establish their identities,” Pesotsky said, after which they were released without charges.
“First of all, this event was not against alcohol in general, but against substandard beer and against the culture of people getting together en masse and drinking this horrible beer, which is produced outside of any quality standards,” he said.
“Of course, it’s better not to drink at all, though not every participant [in the protest] is a teetotaler. But primarily it was against the beer festival in the format in which it was held.”
Opened by Deputy St. Petersburg Governor Mikhail Oseyevsky, the free event drew 188,000 people, Darya Kirpo of RusGrupp, the event’s organizer, said Monday. According to Baltika Brewery, more than 350 police officers were deployed to patrol the event.
Earlier this year, the brewing technologies used in Russia were criticized by Ochakovo brewery president Alexei Kochetov, who said that 70 percent of beer in Russia violates traditional technologies in its production, according to Interfax.
The Beer Festival was first held in 1997 and has frequently been the subject of criticism for promoting alcohol. Last year, it was renamed the Beer and Kvas Festival, with non-alcoholic drinks also made available.
Oseyevsky said the city spent two million rubles ($64,266) on the event, Baltinfo reported.
The police said Monday that 43 people had been detained for being drunk in public. The police spokesman declined to comment on the detained protesters.
TITLE: In Brief
TEXT: Spies in Britain?
MOSCOW (Bloomberg) — Russia may have as many as 35 intelligence officers deployed at its missions in London, the Financial Times reported, citing intelligence experts it did not identify.
Up to half of all Russian officials operating in European capital cities may be intelligence officers, the newspaper said, also citing unidentified people. They are working on cyber-warfare techniques in an attempt to get government and business secrets, the FT said.
Sukhoi Order Scotched
MOSCOW (Bloomberg) — Sukhoi Civil Aircraft, the maker of Russia’s new SuperJet passenger aircraft, said it mistakenly listed a firm order for 20 of the planes from Alitalia SpA on its web site.
“The document was erroneously published and will be replaced,” Sukhoi said in an e-mailed statement Friday.
TITLE: Legal Revamp May Free 100,000 Entrepreneurs
AUTHOR: By Ilya Arkhipov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian lawmakers say they plan to overhaul the law on economic crimes, resulting in the early release of as many as 100,000 imprisoned executives and entrepreneurs as the government seeks to attract investors.
Andrei Nazarov, deputy head of the committee that handles civil and criminal legislation in the lower house of parliament, on Wednesday introduced amendments to the criminal code designed to implement a decree by President Dmitry Medvedev. Nazarov said he will offer further amendments, including one ending pre-trial detention for economic offenses.
“We are taking economic amnesty not as one law but as a series of legal changes,” Nazarov said in a phone interview. “At least 100,000 businessmen will be released from prison or will have to spend less time in jail. This will happen within the next year and a half.”
Medvedev is trying to show investors their rights will be protected as he asks Apple Chief Executive Officer Steve Jobs and Citigroup CEO Vikram Pandit to help diversify the economy. Concern about the legal system is one reason Russia got one-fifth the investment of China and Brazil and half that of India in the past three years, according to EPFR Global of Cambridge, Massachusetts, which tracks $13 trillion of assets.
Legislation isn’t enough to change the “predatory” culture of police, prosecutors and judges, according to Yana Yakovleva. The co-owner of Moscow chemical distributor Sofex spent seven months in jail awaiting trial in 2006 to 07 before she was acquitted of trafficking in dangerous substances.
“The current environment is like swimming with crocodiles in a pool of sulfuric acid,” said Yakovleva, 38. “There’s a war on business people in Russia, and it’s purely business for officials. They can charge you with any crime and incarcerate you to extort money.”
Slow Implementation
Medvedev’s April 7 decree eased penalties for white-collar crimes, ended pre-trial detention for those charged with economic offenses and expanded the use of bail. Law enforcement officials were “slow” to implement the law, Supreme Court President Vyacheslav Lebedev said in an interview.
The president, a former lawyer, in December fired Moscow’s chief criminal investigator, the head of the city’s tax crimes unit and 20 federal prison officials after escalating reports of abuse, including the death of 37-year-old tax lawyer Sergei Magnitsky while in custody.
About one fourth of the 900,000 people in Russian jails are accountants, entrepreneurs, legal advisers or mid-level managers, Nazarov said.
Supreme Court statistics show that 97.3 percent of criminal defendants were convicted last year in Russia. The U.K. rate was 83 percent in 2008, according to the Ministry of Justice.
Justice,
Not Punishment
Russia’s legal system is a remnant of Soviet times, when courts were seen as primarily punitive, Lebedev said.
“But a court shouldn’t be about punishment, it should be about justice,” he said. “Justice should reign supreme.”
The best way to fight misuse of the law is to make information public, Lebedev said. All court documents will be available on the Internet as the result of a law that took effect July 1, he said.
“The main thing is to make courts to perform professionally and honestly,” Lebedev said. “If we have transparency then we can see whether a judge was mistaken or there is intentional misconduct.”
The number of business owners who saw the courts as the best place to protect their rights dropped to 66 percent in 2009 from 80 percent a year earlier, according to a survey of 1,200 entrepreneurs conducted in September by the Moscow-based All-Russian Center for the Study of Public Opinion.
While Navarov’s changes could apply to Russia’s best-known inmate, Mikhail Khodorkovsky, his case is too politically sensitive, said Andrei Piontkovsky, a senior researcher at the Russian Academy of Sciences in Moscow and author of “Another Look Into Putin’s Soul” (Hudson Institute, 2006).
Khodorkovsky, the former CEO of Yukos Oil, is serving eight years for fraud and tax evasion. Yukos went bankrupt after Khodorkovsky was arrested in 2003 and the government sold its assets to recover more than $30 billion in taxes when Prime Minister Vladimir Putin was president. Khodorkovsky, 47, says he was targeted because he opposed Putin.
“Khodorkovsky is a clear example of double standards and selective enforcement,” Piontkovsky said.
Death in Custody
The initiative comes too late for Magnitsky, a lawyer for London-based Hermitage Capital Management. Magnitsky was arrested in 2008 and charged with tax evasion after alleging that police stole money from Hermitage. He died in November after almost a year in pre-trial detention when “his rights to timely medical attention were violated,” according to a government investigation.
The Magnitsky case was “a very sad story,” First Deputy Prime Minister Igor Shuvalov said in an interview at his office.
“Both the president and prime minister say the whole system should be changed,” Shuvalov said. “We will need time for this. We cannot just fire all these people.”
Medvedev on Friday signed legislation giving human rights activists more access to suspects in custody. Another measure signed by the president is designed to protect companies from illegal property seizures, “especially when these crimes are committed with involvement of law enforcement officers.”
Yakovleva founded Moscow-based Business Solidarity to lobby for the rights of entrepreneurs after her release. While a few business people have been freed since April 7, most have seen no change, Yakovleva said. She cited the case of Oleg Yanechko, who is spending his 10th month in a Yekaterinburg jail awaiting trial on charges of fraud related to a decade-old property deal.
“Until you change the whole mentality of law enforcement officers you cannot succeed with humanization of this system,” said Natalia Taubina, director of the Public Verdict Foundation, a Moscow-based human rights group.
TITLE: Nuclear Power Vessel Launched
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: Amid protests from Russia’s environmental community, St. Petersburg’s Baltiisky shipyard hosted the launch ceremony of a floating nuclear power plant called the Akademik Lomonosov on Wednesday.
Sergei Kiriyenko, head of the state atomic agency Rosatom, said that floating nuclear power stations “open a new era and create new prospects for modernizing the power energy infrastructure of some of the more distant and isolated regions of Russia.”
The vessel carrying the plant is scheduled to start operating in late 2012, according to officials.
“Floating stations will facilitate the process of locating and developing natural resources, especially in the Far North of Russia and in the Arctic seas,” Kiriyenko told reporters at the launch ceremony. “The floating nuclear power plants make a genuine leap forward from building and running costly electric power lines and maintaining electric power stations.”
He said that the plant would be “absolutely safe,” adding that the Russian government expects a keen interest in such projects from foreign customers. China and India in particular have expressed enthusiasm, officials say.
The plant’s projected operating life is almost 40 years.
Environmentalists have questioned the rosy safety picture being drawn by the project’s ideologists, and argue that the floating nuclear power plant is a risky enterprise.
Experts from the Green Cross environmental group say that a floating nuclear power station is a potentially vulnerable target for terrorists, who could carry out an underwater attack on the plant. Ecologists also believe that long-distance voyages made by nuclear plants in the open seas increase the risk of accidents and subsequent radioactive leaks.
Other concerns are related to the storage safety of the nuclear waste, which is to be kept at the plant until its facilities fill up, and then moved to in-land reprocessing and storage centers.
Vladimir Chuprov, head of Greenpeace’s energy project in Russia, said that in the event of an accident, nuclear pollution would spread across dozens of hectares of land.
Critics also point to Russia’s discouraging history of nuclear disasters, from the Chernobyl catastrophe to the sinking of the nuclear-powered submarine Kursk.
TITLE: Drinking and Driving Ban Reintroduced After 2 Years
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Two years after the State Duma allowed drivers to have a bottle of beer before getting behind the wheel, deputies passed in a third and final reading on Friday a zero-tolerance bill on drinking and driving.
The reversal was initiated by President Dmitry Medvedev, who said last December that, seeing how Russians drink, they should not be allowed any alcohol before driving.
“They start with a shot, then another one, then two, three, and then they think they can still drive,” Medvedev said.
In 2008, the Duma approved a bill setting a limit of 0.3 grams of alcohol per liter of blood for the driver, or allowing a driver to down roughly a bottle of beer, a glass of wine or a shot of vodka.
The bill approved Friday specifies that drivers whose bodies produce alcohol naturally — which sometimes happens during certain metabolism dysfunctions — will need to carry a special medical certificate.
Last year, 2,217 people died in traffic accidents caused by drunk driving in Russia, according to the traffic police.
The zero-tolerance bill must now be approved by the Federation Council before it can be sent to Medvedev to be signed into law.
TITLE: Russian Tourist Killed in Miami Drug Deal
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Two drug dealers suspected of gunning down a Russian tourist in a drug deal gone awry have been detained by the Miami Beach police, the Miami Herald newspaper reported Friday.
According to the report, Roman Gubanov, 38, and his friend Andrei Orlov, 33, both from Tver, approached Duran Reed and Turaine Depri Burgess in Miami Beach on June 25, looking to buy cocaine from them. The two Americans had previous criminal records, police said.
On June 26, the Americans came to the Miami Beach Resort & Spa, an upmarket hotel where the Russians were staying, sprayed them with pepper spray and, when Gubanov grabbed a whiskey bottle to fight back, Reed shot him in the chest. Reed and Burgess fled with $500 in cash and a camera that they stole from a hotel table.
Gubanov died on the spot.
Police, citing security reasons, briefly evacuated about 1,000 guests from the hotel, including the prime minister of Belize and a 100-person wedding party being held on the hotel roof.
The attackers were detained several days later after police identified them in footage from the hotel’s surveillance cameras.
TITLE: Poll Reveals Few Know Shuvalov
AUTHOR: By Lyubov Pronina
PUBLISHER: Bloomberg
TEXT: MOSCOW — Almost three-quarters of Russians haven’t heard of Igor Sechin or Igor Shuvalov, two influential members of Prime Minister Vladimir Putin’s government, a poll published Monday shows.
The Moscow-based All-Russian Center for the Study of Public Opinion asked 1,600 people to give their approval for members of the government. Seventy-four percent said they either didn’t have an answer or did not know who Deputy Prime Minister Sechin was. Seventy percent and 52 percent respectively said the same about First Deputy Prime Minister Shuvalov and Economy Minister Elvira Nabiullina.
Dubbed by the Financial Times as “the third man in the informal triumvirate” headed by President Dmitry Medvedev and Putin, Sechin, 49, is in charge of Russia’s energy sector. Shuvalov, 43, is leading the government’s drive to attract investment and innovation to the economy.
“Shuvalov and Sechin have this position of gray cardinals,” Konstantin Abramov, deputy head of VTsIOM, the polling organization, said by phone from Moscow on Monday. “They prepare decisions but they are being voiced by the top men.”
TITLE: Vedomosti Gets First Extremism Warning
AUTHOR: By Alexey Eremenko
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A government watchdog has slapped Vedomosti with a formal warning, saying the newspaper promoted extremism by publishing an opinion piece by a well-known writer and journalist three months ago.
The Federal Mass Media Inspection Service ruled that Maya Kucherskaya’s article “Timeless Values. A Communication Breakdown,” published April 9, publicly justified terrorist activity.
The warning was issued June 24, but the watchdog only announced the decision on its web site Thursday. Two extremism warnings give the authorities the right to close a media outlet.
The warning was the first for Vedomosti, whose parent company, Independent Media Sanoma Magazines, also owns The St. Petersburg Times.
Vedomosti editor-in-chief Tatyana Lysova said the newspaper would appeal. “We disagree with the results of the expert conclusion,” she said in an interview.
The watchdog did not elaborate on the accusations and did not name the experts who it said had analyzed the article for extremist content.
The article, removed from Vedomosti’s site but available elsewhere online Thursday, discusses what could have motivated the female suicide bombers who blew themselves up in the Moscow metro on March 29, killing 40 people.
The article’s 40-year-old author is a graduate of Moscow State University and UCLA, a columnist for Vedomosti and the recipient of numerous literary awards, including the Bunin Prize in 2006 and the Russian Student Booker in 2007.
She could not be reached for comment last week.
A phone call to the Federal Mass Media Inspection Service went unanswered after office hours.
This is the second time that Vedomosti has been accused of promoting terrorism in connection with the March bombings. State Duma Speaker Boris Gryzlov on April 2 accused the newspaper and Moskovsky Komsomolets of siding with Chechen rebels in articles about the attack.
Gryzlov’s allegations were not related to Kucherskaya’s article.
Vedomosti sued Gryzlov for defamation, but a Moscow court dismissed the lawsuit in May.
TITLE: Courts Must Publish Rulings on Internet
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Most court rulings must be published online in their entirety, including the names of all parties involved, except witnesses, from Thursday in an initiative that proponents say will improve transparency at the expense of privacy.
The change, introduced in a law signed in 2008, is one of the first steps in a campaign against “legal nihilism” launched by Dmitry Medvedev at the start of his presidency.
Court rulings, which must not be published before they come into force, are to provide the names of all lawyers, prosecutors, defendants and judges involved in trials.
The law makes exceptions for cases dealing with classified information, state security, adoptions, family disputes, sexual abuse, minors, forced psychological treatment and the disabled.
About 5 million rulings will be published by the end of the year, and the number will grow to 10.6 million next year, the RAPSI legal news agency reported, citing the Supreme Court.
The authorities have opened about 9,000 web sites where courts are supposed to publish their rulings.
In a separate bid for transparency, the presidium of the Supreme Arbitration Court began releasing online videos of its hearings in June. The service is currently limited to pre-recorded videos but will include live broadcasts this fall.
Yelena Golubeva, director of the St. Petersburg-based Institute for Information Freedom Development, said the new legislation was important for the court system and society.
“Now it will be hard to hide some unlawful decision because anyone can read it,” she said.
Golubeva said the law poses no serious threat to privacy because the courts will only publish the names of participants, not passport data and addresses.
But Dmitry Agranovsky, a prominent lawyer, criticized the law as “absolutely unethical.”
“Strangers shouldn’t intrude into people’s private life,” Agranovsky told The St. Petersburg Times. “All this publicity will amount to additional punishment for defendants who have already suffered enough.”
Golubeva said a lot will depend on how the law will be implemented. The concern is warranted, considering gaffes such as a blunder by the Supreme Arbitration Court last year when it published a ruling ahead of the hearing where it was supposed to be handed down. The incident was played down as a “mistake.”
TITLE: Bashkortostan Officials Cleared Of Bribery Over Daimler Case
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Bashkortostan prosecutors have cleared local officials of wrongdoing in their acquisition of a shipment of German-built trucks, despite an acknowledgement from Daimler that it had paid bribes of about $30,000.
Prosecutors in the Sovietsky district of Ufa, Bashkortostan’s capital, examined a bribery case that Daimler settled with the U.S. Justice Department in April but found no evidence of any crime, Bashkortostan police spokesman Maxim Rodionov said Thursday.
The regional police department is reviewing prosecutors’ refusal to open a criminal case, Rodionov told The St. Petersburg Times.
In April, Daimler pleaded guilty in the United States to giving kickbacks in several countries, including 5 million euros ($6.1 million) paid to Russian officials and government-connected firms Dorinvest and Mashinoimport.
Implicated in the case were unidentified officials in the cities of Ufa, Moscow and Novy Urengoi, as well as in the Interior and Defense ministries and the Federal Guard Service’s Special Purpose Garage.
The Justice Department said Daimler paid the equivalent of 64,221 Deutsche marks (about $28,400 at the exchange rate of 2002, when the currency was replaced by euros) to Ufa officials between 2000 and 2005 to ensure that the city would purchase a batch of all-wheel-drive trucks called Unimogs.
Daimler was fined $185 million for corruption in the United States, with Mercedes-Benz Rus, the company’s Russian unit, paying $27.4 million of that sum — the biggest fine among all of the carmaker’s regional units.
No Russian officials have faced charges in the case.
TITLE: Iran Demands Promised S-300s
PUBLISHER: The Associated Press
TEXT: DAMASCUS, Syria — A senior Iranian official said Thursday that new UN sanctions do not ban Russia from delivering sophisticated air defense missiles to Iran as agreed under a 2007 contract, countering the Russian stance.
Iran’s parliamentary Speaker Ali Larijani said the contract for delivery of the powerful S-300 air defense missiles to Iran was concluded before the UN Security Council approved new sanctions last month.
“It is an old contract, therefore it has nothing to do with the … resolution. Moreover, it is a defensive weapon,” Larijani told reporters on a visit to Damascus.
Last month, the Russian government said the new UN sanctions prevent Russia from delivering S-300 missiles to Iran.
Speaking to reporters in Damascus on Thursday, Larijani denied any tension between Iran and Russia but added that there were some “fluctuations” in Russia’s position toward Iran.
Russia supported a fourth round of UN sanctions imposed last month to curtail Iran’s nuclear program, because of concerns that it is developing weapons. Iran insists that its nuclear development program is for peaceful goals.
But Russia criticized additional U.S. and EU sanctions against Iran.
TITLE: Glitch Causes Ship to Miss International Space Station
PUBLISHER: Agence France Presse
TEXT: MOSCOW — An unmanned Russian supply vessel docked Sunday without trouble at the International Space Station, two days after a technical glitch forced a similar maneuver to be aborted.
Space officials said they managed to avoid the radio signal problems that forced them to abandon last week’s docking. The Progress M-06M cargo ship, launched on June 30, is carrying 2.6 tons of fuel, food and water for the three Russian and three U.S. astronauts on the station.
“At 20:17 pm Moscow time, the Progress M-06M docked at the Star module of the ISS,” the Russian Mission Control Center said in an Internet statement.
An attempted docking on Friday was aborted when a radio link with the ISS was lost about 25 minutes before the planned rendezvous.
Sunday’s successful docking was done automatically under the supervision of experts in Moscow and the ISS team, it said, without using the radio link.
Progress launched from the Baikonur Cosmodrome in Kazakhstan on June 30.
It is the 40th Russian cargo vessel to dock at the station, the centre said.
In contrast to the troubles that plagued the first rendezvous attempt, Sunday’s second try “was executed flawlessly,” the U.S. space agency NASA said on its web site.
The space ship’s failure to dock last week after flying past the ISS was notable largely because it was a rare mishap in a space program which usually strives for and achieves pinpoint accuracy.
During the mishap “in the beginning everything was normal, then the automatic (docking) mode failed, and later the station’s crew could not dock the vessel in manual mode,” a Russian space center spokesman told the Itar-Tass news agency.
The automatic docking system also failed during the last Progress supply ship docking in May, though the process was successfully carried out manually.
The ISS, which orbits 350 kilometers above Earth, is a sophisticated platform for scientific experiments, helping test the effects of long-term space travel on humans, a must for any trip to distant Mars.
Progress is carrying 862 kilos of propellant, 50 kilos of oxygen, 100 kilos of water and 1,210 kilos of experimental equipment, spare parts and other supplies to the station.
The rendezvous occurred 350 kilometers above Earth as both the ISS and resupply ship flew over the point where the borders of China, Kazakhstan, Mongolia and Russia intersect.
TITLE: Suspect Lazaro Admitted Name Was Fake
AUTHOR: By Tom Hays and Larry Neumeister
PUBLISHER: The Associated Press
TEXT: NEW YORK — Within hours of his capture, U.S. prosecutors say, Russian spy suspect Juan Lazaro admitted his name was an alias.
So who is he? Lazaro wasn’t saying — not “even for his son,” court papers say.
Lazaro’s admission — and defiance — was revealed Thursday by federal prosecutors arguing against bail for him, his wife and another couple with children. The U.S. government claims those defendants and seven others were part of a spy ring on assignment to infiltrate America’s cities and suburbs for the Russian intelligence service.
Their cover was so deep, “there is no inkling at all that their children who they live with have any idea their parents are Russian agents,” Assistant U.S. Attorney Michael Farbiarz told U.S. Magistrate Judge Ronald L. Ellis.
Farbiarz warned that a powerful and sophisticated network of U.S.-based Russian agents was eager to help defendants in the spy ring flee the country if they were released on bail.
“There are a lot of Russian government officials in the United States who are actively assisting this conspiracy,” he said.
The judge ruled that two defendants, Cynthia and Richard Murphy, should remain in custody because there was no other way to guarantee they would not flee since it’s unclear who they really are. But he set bail of $250,000 for Lazaro’s wife, prominent Spanish-language journalist Vicky Pelaez, a U.S. citizen born in Peru, saying she did not appear to be trained as a spy. The judge required electronic monitoring and home detention and said she would not be freed before Tuesday, giving prosecutors time to appeal.
The judge ruled after Farbiarz said the evidence against the defendants continued to mount and the case was solid.
“Judge, this is a case where the evidence is extraordinarily strong,” Farbiarz said. “Prosecutors don’t get cases like this very often.”
The decision to set bail for one defendant came as police on the island nation of Cyprus searched airports, ports and yacht marinas to find a man who had been going by the name Christopher Metsos, who disappeared after a judge there freed him on $32,500 bail. Metsos failed to show up Wednesday for a required meeting with police. He was charged by U.S. authorities with supplying funds to the other members of the spy ring.
A spokesman for the U.S. Embassy in Cyprus flatly denied local media reports Friday that Metsos was in U.S. custody at the embassy compound, and the Russian Foreign Ministry said it had no reason to believe Metsos was in Russia.
In New York, prosecutors cited new evidence such as $80,000 in new $100 bills found in the safe-deposit box of the Murphys, who had been living in a Montclair, N.J., home paid for with money from the Russian intelligence service. Other evidence included the discovery of multiple cellular phones and currencies in a safe-deposit box and other “tools of the trade when they’re in this business,” Farbiarz said.
He said the spy ring consisted of people who for decades had worked to Americanize themselves while engaging in secret global travel with false passports, secret code words, fake names, invisible ink, encrypted radio transmissions and techniques so sophisticated that prosecutors chose not to describe them in court papers.
The prosecutors’ claims were countered by lawyers for several defendants who said their clients were harmless and should be released on bail.
“It’s all hyperbole, your honor,” said attorney Donna Newman on behalf of Richard Murphy.
Lawyers for Lazaro asked to postpone his bail hearing just hours after prosecutors revealed in a letter to the judge that their client had made incriminating statements.
U.S. authorities said in their court filing that Lazaro made a lengthy statement after his Sunday arrest in which he discussed some details of the operation.
Among other things, prosecutors said, he admitted that Juan Lazaro wasn’t his real name, that he wasn’t born in Uruguay, as he had long claimed, that his home in Yonkers had been paid for by Russian intelligence and that his wife had passed letters to the “Service” on his behalf.
He also told investigators that even though he loved his son, “he would not violate his loyalty to the `Service’ even for his son,” three assistant U.S. attorneys wrote in a court memo. They added that Lazaro, who investigators claim spent at least part of his childhood in Siberia, also wouldn’t reveal his true name.
Earlier in the day, the lawyer for another suspect, Donald Heathfield, told a judge the case against his client was “extremely thin.”
“It essentially suggests that they successfully infiltrated neighborhoods, cocktail parties and the PTA,” attorney Peter Krupp said.
A judge in a federal court in Boston gave Heathfield and his wife, Tracey Lee Ann Foley, of Cambridge, Mass., until July 16 to prepare for a bail hearing.
Not due in court Thursday was Anna Chapman, the spy suspect whose heavy presence on the Internet and New York party scene has made her a tabloid sensation. She was previously ordered held without bail. Her lawyer said the case against her is weak, and her mother said she’s innocent.
But Chapman’s former husband said her father was a high-ranking KGB officer and he wasn’t shocked to learn about his ex-wife’s secret life, a British newspaper reported Friday.
The couple was married in Russia in 2002, divorced in 2006.
A magistrate judge in Alexandria, Virginia, postponed a Thursday hearing for three other people accused of being foreign agents and rescheduled it for Friday.
TITLE: Femme Fatale Chapman Fears Deportation
AUTHOR: By Larry Neumeister
PUBLISHER: The Associated Press
TEXT: NEW YORK — The Russian diplomat’s daughter accused of being a spy is “embarrassed” by photos of her that have turned up in media reports and fears that she will be deported, her lawyer said.
Attorney Robert Baum said he showed Anna Chapman, 28, some of the tabloid newspaper stories that have branded the redhead as a femme fatale and feature photographs from her Facebook page, showing the smiling Russian enjoying Manhattan’s nightlife scene, posing in front of the Statue of Liberty and mixing with businessmen at a conference.
“She was embarrassed by some of the photos that were obviously taken from her Facebook pages,” the lawyer said. “The truth is she’s probably no different than your typical single 28-year-old woman in New York City. She runs a successful business, goes out at night. She dates men, enjoys a social life.”
Chapman is charged with conspiring to act as an unregistered agent of a foreign government, which carries a potential penalty of five years in prison.
Baum said Chapman’s father told her to go to police with a fake passport an undercover FBI agent had given to her, leading to her arrest and solitary confinement. He said he may use that information to appeal the bail decision.
At a bail hearing last Monday, Assistant U.S. Attorney Michael Farbiarz said only that investigators on June 27 intercepted phone calls in which Chapman was “talking to a man who is advising her, who is telling her essentially … to make up a story, to say that she’s being intimidated, that this might be some other criminal activity, and who advises her to get out of the country and to go to the police.”
Baum said he believed that the phone calls cited by prosecutors were conversations between Chapman and her father, whom Baum described as a low-level embassy employee whose family was middle class.
Baum said Chapman told him that she reached out to her father, Vasily Kushchenko, a day after an FBI agent posing as a Russian consulate employee asked her to deliver a fraudulent passport to an alleged spy.
“She spoke to her father, and her father said, ‘Go turn the passport in,’” Baum said. “Her father said, ‘You’ve got this passport. It’s forged. Go turn it into the police,’ and that’s exactly what she did.”
Yusill Scribner, a spokeswoman for federal prosecutors in Manhattan, declined to comment.
Baum discounted published reports Friday quoting Chapman’s ex-husband as saying her father is a spy.
“I won’t go into the circumstances of divorce, but he may be somewhat bitter about it,” Baum said.
Her ex-husband, Alex Chapman, told London’s Daily Telegraph that he had not been surprised to learn that his former wife had been arrested.
“Towards the end of our marriage she became very secretive, going for meetings on her own with ‘Russian friends’, and I guess it might have been because she was in contact with the Russian government,” he was quoted as saying in a Friday article.
TITLE: Children of Accused Spies Likely to Face Identity Crisis
AUTHOR: By David B. Caruso
PUBLISHER: The Associated Press
TEXT: NEW YORK — Children often ask the question “Who am I?” as they come of age, but that’s nothing like the identity crisis now confronting the sons and daughters of four couples accused of spying for Russia.
Over a turbulent week, at least some, and maybe all, have discovered that mom and dad are not who they said they were. The children’s citizenship, family history, and even their very names have been called into question.
At least two children involved in the case, ages 1 and 3, will soon be headed for Russia.
Of the 11 people charged last week with being members of a Russian spy ring, eight were parents. Collectively, they are believed to have eight children, although, like much else associated with this strange post-Cold War spying case, the true facts are hazy.
Some of the older children are likely already wrestling with questions about their identities.
Juan Lazaro Jr., a gifted 17-year-old pianist at New York’s LaGuardia High School of Music and Art, was named after his father. But the FBI said last week that dad’s name was fake, as was his claim to have been raised in South America.
Tim Foley, a 20-year-old student at George Washington University, wrote on a blog that he was born in Toronto and grew up in Paris and Boston. Now his true birth country has been called into question. Prosecutors say they have evidence that the family is actually Russian.
Two girls growing up in suburban Montclair, New Jersey, ages 7 and 11, were given the last name Murphy, but prosecutors said that was a lie, too.
“While the FBI has spent years conducting extensive electronic and physical surveillance of the people who call themselves the Murphys, there is no indication that the Murphy’s children have any inkling that their parents are, in truth and in fact, Russian secret agents,” Assistant U.S. Attorney Michael Farbiarz wrote in a court filing Thursday.
The future of those children, at least the youngest ones, is now in question.
Who will take care of them if their parents remain in prison? Do they have extended families in Russia they have never met? Are they all American citizens?
U.S. immigration officials have declined to comment on the children’s’ status, citing privacy rules, but note that any person born in the United States is a citizen by right, except in certain cases involving the children of diplomats or other foreign government workers.
At least two of the children, the toddler and preschooler whose parents posed as American Michael Zottoli and Canadian Patricia Mills, will be going to Russia. Federal prosecutors said Friday that the couple acknowledged they are Russian citizens and instructed a family friend now caring for the children to contact relatives in Russia to arrange for the youngsters to go there.
By most accounts, the couples charged in the case appeared to be caring parents. Several raised children who excelled.
Tim Foley wrote in his blog about speaking English, French and German and said he was learning Chinese. He said he was majoring in international affairs with a concentration in Asian studies, and he wrote about his plan to spend a semester in Beijing.
His 16-year-old brother, Alex, attended the International School of Boston, a private high school where some classes are taught in French and the theme is “shaping global citizens.”
Reached at home by telephone, the teen declined to talk about the case.
Federal prosecutors have questioned the family’s claim of Canadian heritage. The boys’ father, they said, faked his citizenship by stealing the name Donald Heathfield from a baby who died in Montreal in 1963. Investigators weren’t certain where the boys’ mother, who went by Tracey Lee Ann Foley, was born. However, photographs found in a safety deposit box, taken when she was in her 20s, had been developed by a Soviet film company.
The two sons were in court Thursday to watch a hearing in their parents’ case. The couple smiled at the boys, and Alex waved in return.
“My client and his wife right now are worried about their kids,” Heathfield’s lawyer, Peter Krupp, said after the hearing.
Juan Lazaro Jr. could be reunited soon with his mother, Vicky Pelaez, also a defendant in the case.
A federal judge on Thursday said Pelaez — one of the few suspects to use a real name — could be released on bail as soon as Tuesday and be placed under house arrest in Yonkers.
The elder Juan Lazaro is to remain behind bars for now. Prosecutors said after his June 27 arrest that he acknowledged his name was fabricated and that he had been working for the Russian intelligence service. According to investigators, he also admitted his claim to be a native of Uruguay was not true. Prosecutors said he spent his childhood in the Soviet Union.
Pelaez also has a 38-year-old son from a previous marriage, Waldo Mariscal. He said he had no knowledge of any spying activities by either his mother or Lazaro, and didn’t believe the charges.
“This is pure psychological pressure,” he said in Spanish during a court hearing Thursday. “It’s total confusion. He’s an old guy. His English isn’t so good.”
Authorities have not revealed the whereabouts of 11-year-old Katie and 7-year-old Lisa Murphy, who were last seen by neighbors being led from their home on the day of their parents’ arrest, carrying backpacks and pillows.
A state child services spokeswoman said the agency wouldn’t remove children and place them in foster care unless abuse or neglect was suspected. Federal prosecutors haven’t said where the children were born, but their ages suggest that their births occurred when their parents were living in Hoboken, New Jersey.
The citizenship of the children of the couple known as Zottoli and Mills is unclear, although they, too, were born after their parents had settled in the United States.
In a letter filed Friday with a court in Arlington, Virginia, prosecutors said the suspects’ real names are Mikhail Kutzik and Natalya Pereverzeva. They said Pereverzeva’s parents, brother and sister live in Russia, as does Kutzik’s father.
Former neighbors in Seattle, where the family lived before moving to Virginia last year, remembered the couple as doting on their now 3-year-old son, Kenny, and recounted how they gave him the master bedroom so he would have space to run around.
The tot may now find himself learning a new language in a new country, but possibly without his parents as teachers. If convicted, they could get up to 25 years in jail.
TITLE: Spy Suspects Allegedly Used Consumer Tech
AUTHOR: By Peter Svensson
PUBLISHER: The Associated Press
TEXT: NEW YORK — Before James Bond heads out on a mission, he has to stop in Q’s laboratory for custom-made gadgets such as an exploding watch. Life wasn’t so dashing for the suspected Russian spies arrested this week: They allegedly relied heavily on off-the-shelf consumer electronics.
“In the old days, they’d have special KGB-type equipment. Now they use normal computers, normal laptops,” said Sujeet Shenoi, professor of computer science at the University of Tulsa and a frequent consultant to the FBI. “Technology is so powerful now that you don’t have to have special-purpose equipment anymore.”
According to the FBI’s complaints that sought the arrest of the 11 suspects, the array of tools included laptops, flash memory cards and at least one prepaid cell phone. The suspects are accused of backing that up with old-fashioned spy technology such as short-wave radios, invisible ink, and a classic, manual encryption method known as a “one-time pad.”
Short-wave radios were once relatively common in homes. Today, they’re a bit of a giveaway if the FBI already suspects you’re a spy. Not so with laptops, cell phones or flash drives. But that doesn’t mean spies can feel safe. The way the Russian suspects used these gadgets was revealing to FBI agents who followed them for years.
The use of “spy-fi” is a case in point.
The FBI said that one of the suspects, Anna Chapman, would go to a coffee shop in Manhattan on Wednesdays and set up her laptop. A little while later, a minivan the FBI knew was used by a Russian official would drive by. To the naked eye, there was no contact between them.
But the FBI said it figured out that Chapman’s computer was set to link wirelessly to a laptop in the minivan, using a standard, built-in Wi-Fi chip. In the short time the computers were close, they could transfer encrypted files between each other.
The agency figured this out with commercial Wi-Fi analysis software, not with something from Q’s lab.
Glenn Fleishman, editor of the Wi-Fi Net News blog, said that from a technical standpoint, the Wi-Fi link appeared to be fairly amateurish and laughably easy to sniff out. He pointed out that there’s at least one other commercially available technology for short-range transmissions, known as ultra-wideband radio, that would likely have been impossible for the FBI to pick up.
On the contrary, Keith Melton, who co-authored the book “Spycraft” with the former director of the CIA’s Office of Technical Service, said the use of Wi-Fi could have been “very smart” because no data passed through the Internet. The connection would have been impossible to trace — if the FBI hadn’t been smart and dogged enough to have Wi-Fi analysis equipment in place at the right time.
Melton said the technique is reminiscent of a precursor to today’s BlackBerry, developed by the CIA in the 1970s to give its spies in Russia some way to pass messages unseen to receivers close by. The downfall was that being caught with the equipment could lead to a death sentence.
In another example of an everyday item allegedly being used for secret communications, the FBI said Chapman bought a cell phone last Saturday under a fake name. This was probably a “prepaid” phone, which doesn’t come with a contract. Because there’s no long-term commitment from the buyer, the sellers don’t check the IDs of the buyers. That means law enforcement don’t know which numbers suspects are using, making wiretapping very difficult.
Not surprisingly, prepaid phones used once or twice and then thrown away are a favorite tool of criminals and terrorists. Faisal Shahzad, who admitted to trying to bomb New York’s Times Square on May 1, used a prepaid phone. A proposed Senate bill would require buyers to show ID.
In the FBI’s documents, there is no mention of the agency intercepting a call from Chapman’s disposable cell phone. She bought it just after meeting an undercover FBI agent posing as a Russian official. He told her to meet another spy the next day, but she didn’t show up. Presumably, she had been suspicious of the “Russian,” called her handler on the cell phone and was warned to stay away.
But again, her behavior was a giveaway, according to the FBI. She bought the phone in a Brooklyn store, then immediately threw away the bag containing the charger and the customer agreement. The FBI retrieved the bag, and found she’d given her name as “Irine Kutsov,” living on “99 Fake Street.”
Another person charged in the case, Richard Murphy, received a bag with cash and a memory card from a Russian official at a White Plains, New York, train station in 2009, according to the FBI. That would be a classic “brush pass,” where conspirators walk by each other and quickly pass an item from one to the other. The FBI said it caught this exchange on surveillance video. It was only later that the agency figured out, by eavesdropping, that the bag contained a memory card.
For more than a century, spies have employed methods to miniaturize documents, usually by photographic means that require special equipment. Flash memory chips, the kind used in cameras, phones and USB drives, make it child’s play to stuff thousands of documents in a tiny, concealable area.
It’s surprising, then, that the spy ring is alleged to have used one of the oldest ways to conceal writing: invisible ink. Its height of popularity in intelligence circles was World War I, Melton said. Now, it’s mainly found in the toy aisle.
TITLE: Investment Climate Gets Positive Review
AUTHOR: By Taisiya Kiriyenko
PUBLISHER: The St. Petersburg Times
TEXT: Assessments of St. Petersburg’s investment climate were predominantly optimistic at a conference devoted to the subject held in the city last week. Positive forecasts were made and the prospects of the city’s investment development discussed, with participants identifying a number of obstacles and problems that could be solved by sound investment policy.
The active and successful development of the investment climate is partly the responsibility of local authorities with regards to the city’s economy and infrastructure, according to Denis Demin, a representative of Lenmontazhstroi developer. In the last 10 to 15 years, investment dynamics have demonstrated changes in the attitude of foreign investors toward the potential of the St. Petersburg market: An actively developing market economy is considered the main factor in attracting investors.
In addition, the city has investment activity legislation that offers governmental support, constructing and renovating properties and providing investors with property. According to Ivan Smirnov from Baker & McKenzie law firm, such targeted projects are very profitable.
“St. Petersburg is currently halfway; much has been done but we need to generate more legislation regarding warranties and guarantees and attract second and third level investors who will form a ‘hot’ segment and, as a result, add extra value to products,” said Smirnov. “Another important thing is to create a single point of contact for investors, in other words, a ‘one-stop shop’ at which all procedures and formalities can be completed,” he added.
Alisa Melkonyan of KPMG suggested that income and property tax benefits should be introduced for investors. Anastasia Kozlova of Glavstroi SPb developer said that the real estate sector could become even more attractive for investors and partners if certain changes were made in the city’s planning policy to improve engineering infrastructure, and to extend and develop transport and social institutions.
Participants were less optimistic about the investment potential of the city’s innovation sector.
“St. Petersburg and Russia in general do not have the motivation for manufacturing new high-tech products,” said Andrei Korzhakov, Foxconn Rus electonics maker. “Many countries are investing in microelectronics, but in this country the situation in this sector is less dazzling; we lack the same volume of work and market. Measures that should be taken to solve the problem include the introduction of tax benefits, extra value, and logistics, which would help to create a new customs and tariffs system.”
According to Viktor Kuznetsov of MKD law firm, St. Petersburg’s main potential is currently concentrated on raw materials, therefore investment should be made in the power- intensive, capital- intensive and resource-intensive industries. Emphasis should be put on the production of products with low extra value, he added.
TITLE: New Rules for Car Owners
AUTHOR: By Olga Kalashnikova
PUBLISHER: The St. Petersburg Times
TEXT: The Ministry of Health is attempting to improve the content of obligatory first aid kits carried by Russian drivers.
A new order that came into force on Thursday means medicines will disappear from first aid kits, while the number of bandages and sticking plasters are set to increase.
Kits should now consist of six types of bandages, a tourniquet, three types of sticking plasters, breathing apparatus, scissors and surgical gloves. Iodine and green antiseptic are no longer required, as the effectiveness of these medicines is not high, and doctors then have to clean injuries of green and brown staining in order to determine the size of the injuries, said Olga Krivonos, a department director at the Ministry of Health.
Medicines have been excluded from first aid kits due to violations of drug storage conditions, according to the Ministry of Health order. The main cause of death in car accidents is blood loss, and not enough bandages were carried in first aid kits.
“In reality, people use only bandages, sticking plasters and scissors,” said Denis Shubin, chairman of the A24 automobile club. “Medicines passed their sell-by date and no one knew how to use them correctly.”
“Medicines are often kept under the rear window and often go off, especially when it is hot in summer,” said Vyacheslav Androsov, general director of Vitalpharm, a company that makes first aid kits.
The new rules bring first aid kits closer into line with European regulations.
“This content is used all over the world,” said Shubin. “We haven’t invented anything with this law. We are simply repeating European experience, 30 or 40 years later,” he said.
No license is required to produce or sell the new first aid kits. Previously, only companies with a pharmacological license could produce them, and they could be sold only in pharmacies.
“Now, as there are no medicines, everyone can sell them, for example grocery stores and car showrooms,” said Vitalpharm’s Androsov.
In spite of Ministry of Health assurances that the new first aid kits will cost less than previously, experts say they will in fact cost more.
“The average price from manufacturers was 120 to 130 rubles ($3.85 to $4.10) per first aid kit,” said Androsov. “In pharmacies they were sold for about 200 rubles ($6.40). Even if we get rid of all of the medicines, when we factor in profit, prices will have to be higher.”
The deadline for purchasing new-format first aid kits is planned for December 31, 2011. Kits produced before July 1 this year will remain valid until the end of their sell-by date.
The Ministry of Health also nurtures plans to extend the list of medical conditions that render people ineligible to drive a car. Under current proposals, drivers with a history of alcoholism, drug addiction, epilepsy, tuberculosis or chronic heart disease will risk incurring a 3,000-ruble fine for getting behind the wheel.
TITLE: City Hall Names Its Price for Astoria
AUTHOR: By Nadezhda Zaitseva
PUBLISHER: Vedomosti
TEXT: City Hall has named the price it would like for the building of the Hotel Astoria at 39 Bolshaya Morskaya Ulitsa. Smolny intends the federal monument, which is currently leased through 2046, to fetch no less than 1.5 billion rubles ($48 million).
According to preliminary estimates, the starting price of the Astoria, which covers an area of 17,000 square meters, will be at least 1.5 billion rubles, taking into account the long-term rent contract, Oleg Lyapustin, deputy chairman of the committee for city property management, said last week at a meeting of the committee for industry, economy and property of the city’s Legislative Assembly.
According to Lyapustin, a preliminary evaluation was made by experts from the city’s Property Fund. After deputies approve the sale of the federal landmark, the fund’s experts will once again calculate the starting price for the building, he said, meaning the initial estimate could change.
The preliminary evaluation was carried out by experts last winter, and is therefore subject to change, a representative of the fund confirmed.
Last Monday, a specialist commission of the Legislative Assembly recommended legislators to pass amendments to the municipal law on the privatization of individual buildings located in St. Petersburg, including the privatization of the buildings of the Astoria and Nikolsky Ryady market, which covers an area of about 30,000 square meters at 62 Sadovaya Ulitsa.
The tenants of both properties have expressed interest in the upcoming auctions, according to a source at the Property Fund.
According to the City Property Management Committee (KUGI), the rent rate for the Astoria building is fixed at 3.45 million rubles ($111,000) per month and has not been paid in advance. The lease contract on the building is valid through 2046.
According to SPARK Interfax, the controlling stake in the Astoria hotel complex is owned by British company Rocco Forte and Family. The company’s press service declined to comment on plans to buy the building “until the exact starting price and conditions of the auction are named.” Andrei Stepanenko, director of the Property Fund, said earlier that City Hall is negotiating with the tenant on increasing rent rates.
A building with the disadvantage of a long-term lease agreement at $2,900 per square meter is unlikely to attract buyers on the market; the property can only be of interest to the tenant, said Vladimir Sergunin, deputy director of the investment department of the St. Petersburg office of Colliers International. City Hall could attract investors only by removing the property’s disadvantage of a tenant paying rent below market prices, and then the building could be worth $5,000 per square meter, he said.
The price named by City Hall is not inflated, and could even increase during the duration of the sale period, argued Zosya Zakharova, head of projects and analytical research at the Real Estate Development and Research Agency (ARIN). The property has a permanent tenant with a stable business, which reduces the investment risk, she said.
TITLE: In Brief
TEXT: Kudrin: Ratings to Rise
MOSCOW (Bloomberg) — Russian Finance Minister Alexei Kudrin said he expects his country’s debt rating to be raised by credit companies now that the economy has returned to growth after the deepest contraction on record.
Russia expects “further confirmation of the stability of our financial system,” Kudrin said at a conference in Ukraine on Friday, according to comments posted on the ministry web site Mon day.
Fitch Ratings was the last company to change its rating on Russian debt, cutting it to BBB, the second-lowest investment grade, in February 2009. Standard & Poor’s last changed its Russian score in December 2008, when it was also cut to BBB.
Service Industries Grow
MOSCOW (Bloomberg) — Russian service industries from banks to mobile phone retailers expanded in the past three months at the fastest pace since the third quarter of 2008, signaling consumer demand is invigorating the recovery.
The Purchasing Managers’ Index was at 55.4 last month, compared with 55.9 in May and 56.9 in April, VTB Capital said in an e-mailed statement Monday. The index, based on a survey of about 300 purchasing managers, shows expansion with a reading above 50. The gauge remained above 50 for an 11th straight month even as growth slowed to the weakest since March.
Search Engine Planned
MOSCOW (Bloomberg) — Russia’s government aims to build its own Internet search engine and seeks to make it the most-used Russian-language web site, Vedomosti reported, citing unidentified officials familiar with the plans.
The government may spend as much as $100 million on the project, the Moscow-based newspaper said Monday.
Ports to Get Coal Boost
MOSCOW (Bloomberg) — Russia’s government plans to build coal terminals at the country’s major ports to help support producers, Kommersant reported, citing Deputy Prime Minister Igor Sechin.
Sechin said the government is working on a national strategy for developing the coal industry that be ready by the end of the year and include technical and safety regulations, the Moscow-based newspaper said Monday.
TGK-1 Profits Increase
MOSCOW (Bloomberg) — TGK-1, a St. Petersburg-based power utility owned by Gazprom and Finland’s Fortum, said profit in the first quarter increased 26 percent to 2.95 billion rubles ($95 million) as cold weather boosted demand, according to a statement on the company’s web site Monday. Sales rose 33 percent in the period to 17.4 billion rubles.
Intourist to Get Partner
MOSCOW (Bloomberg) — Thomas Cook Group is close to forming a joint venture with Intourist, the travel agency founded by former Soviet Union leader Josef Stalin, Britain’s the Observer reported, citing people it didn’t identify.
Europe’s second-largest travel company will likely sign an agreement with Intourist’s parent, Sistema, in the next few weeks in a bid to tap the growing number of middle-class Russians seeking vacations in warm climates, the newspaper said.
TITLE: Sberbank Plans Debut Mortgage-Backed Bonds
AUTHOR: By Denis Maternovsky and Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — President Dmitry Medvedev’s attempt to boost home purchases is leading Sberbank to plan its debut mortgage-backed bonds while the government’s housing agency prepares its first issue in two years.
The Agency for Housing Mortgage Lending may sell home loan-backed securities in September, said Denis Grishukhin, head of structured products in Moscow at the government funding institution known as AIZhK. Sberbank, Russia’s biggest lender, is preparing its sale for 2012, Natalia Karaseva, the Moscow-based head of consumer lending, said in an e-mail on Friday.
While Medvedev began an initiative to increase home ownership in 2008, loan rates average 13.8 percent, more than twice the level of inflation and above Bank Rossii’s 7.75 percent benchmark refinancing rate, the central bank says. Lenders may struggle to find investors for mortgage bonds after losses on the securities from the U.S. subprime crisis, according to Commerzbank and UralSib Financial Corp.
“The plans might be more to please the government rather than them seeing real demand on the market,” said Marina Vlasenko, a London-based credit analyst at Commerzbank, Germany’s second-largest lender. “For these mortgage-linked bonds, the market still has no appetite.”
The housing agency will offer 6 billion rubles ($192.8 million) of the bonds in September and expects the notes to have the same debt ratings as government securities, Grishukhin said. Russia is rated Baa1 by Moody’s Investors Service and BBB at Standard & Poor’s.
‘Russian Dream’
Medvedev wants to increase single-family houses to bolster Russia’s middle class and fuel economic growth. In a nation of 141 million people, 77 percent are “cooped up” in apartments dating from Soviet policies that “excluded everything oriented toward the individual,” Medvedev said in 2008. The government amassed almost 2.5 million acres across the country and set up a property fund to help developers. The fund will nurture home ownership as a “Russian dream,” Alexander Braverman, its general director, said in an interview in Moscow last month.
Prime Minister Vladimir Putin said in February that mortgage rates remain too high and the government will spend 250 billion rubles this year to lower costs. As part of the plan, the government let Vnesheconombank, the state development bank, buy mortgage-backed securities with part of the pension assets it manages to help stimulate the market.
Russia’s central bank lowered its main interest rate by a quarter percentage point in May, its 14th reduction in as many months, to aid recovery from the worst economic slump since the Soviet Union collapsed in 1991. Moscow property prices tumbled 37 percent between October 2008 and October 2009, after soaring six-fold between 2003 and 2008, according to Moscow-based real estate consultant IRN.ru.
Outstanding mortgage-backed securities have mostly traded at distressed levels since the collapse of the U.S. subprime market, said Ian McCall, who helps oversee about $500 million of emerging-market debt as a director at Argo Capital in London.
Those backed by loans made in 2008 or earlier trade too infrequently to show reliable prices, according to Argo and UralSib, the Moscow-based lender owned by billionaire Nikolai Tsvetkov. Distressed debt yields at least 10 percentage points, or 1,000 basis points, above similar-maturity Treasury notes.
“After the subprime crisis in the U.S., the risk premium on such bonds must be larger,” said Dmitry Dudkin, a fixed-income analyst at UralSib in Moscow. “Even before the crisis they were not very popular.”
Shorter Maturities
AIZhK will “ensure investors’ interest” by reducing the maturity on new mortgage debt to about 2 1/2 years, Grishukhin said in an e-mail Saturday. The last bonds it sold in 2007 and 2008 mature in 2039, 2040 and 2041, Bloomberg data show.
Sberbank said last week that it plans to make home loans “more affordable” by cutting the down payment required and boosting the size of the maximum mortgage loan it extends by as much as 10 percent from the start of this month.
Russia credit-default swaps cost 4 basis points more than similar contracts for Turkey, which is rated four levels lower at Ba2 by Moody’s. The gap has narrowed from 40 basis points on April 20. Russia credit-default swaps rose 7 basis points to 202 on July 1, the highest level since June 8. The contracts, which investors use to hedge against losses on debt or speculate on creditworthiness, pay the buyer face value if a borrower reneges on its obligations.
Russia’s dollar bonds due in 2020 climbed 1 basis point on Friday, lowering the yield to 5.5 percent from the highest level since June 25. The ruble strengthened 0.3 percent to 31.1000 per dollar. Non-deliverable forwards, which provide a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a specific level in the future, show the ruble weakening to 31.2900 per dollar in three months.
Unknown Market
Russian lenders have issued at least 62 billion rubles of mortgage-backed bonds since May 2007, according to Bloomberg data. The banks have provided 83.7 billion rubles of home loans since the start of the year, central bank data show. New mortgages may reach 280 to 320 billion rubles this year, AIZhK said in an e-mailed report on June 23.
The consumer banking unit of state-run VTB Group, the country’s second-biggest lender, raised 15 billion rubles in December in the largest offering of Russian mortgage bonds. The VTB-24 securities are puttable in December 2011, when holders can force the bank to redeem them. The price has climbed to 104.7 percent of face value from 100 percent at the time of the sale, reducing the yield to 6.43 percent, compared with 6.55 percent on VTB-24’s ruble bonds due October 2011.
Most of the mortgage bonds investors are willing to buy come from government-linked institutions, said Paul Biszko, an emerging market strategist at Royal Bank of Canada in Toronto.
The Russian housing debt market is “really unknown” to investors, Biszko said in a phone interview. “In this credit environment I don’t see strong appetite for that kind of paper.”
TITLE: Customs Code Signed in Astana
AUTHOR: By Patrick Henry
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia took a step toward a common economic market with neighbors Belarus and Kazakhstan as the three countries’ leaders signed a joint Customs Code in the Kazakh capital Astana.
“A lot of work remains before the formation of a common economic space,” planned for Jan. 1, 2012, “but given that it really is a beneficial and interesting endeavor, I’m sure we can agree on everything,” Russian President Dmitry Medvedev said in Astana on Monday, according to the Kremlin web site.
If the three former Soviet republics succeed in creating a common market, the adoption of a joint currency would be the “next logical step,” Igor Shuvalov, a Russian first deputy prime minister, said in March. Russia has sought to promote regional currencies in trade and to diversify its reserves, the world’s third-largest, to reduce risks posed by the dominance of the dollar.
Plans for the Customs Code to come into force on July 1 were derailed by differences on energy policy. Belarus, the smaller of Gazprom’s transit routes to Europe, has demanded to pay Russian prices for gas, which are lower than fees charged to other countries. The dispute with the Russian gas export monopoly over mutual debts led to a brief reduction of supplies to Lithuania last month.
Belarus still maintains that the customs union, which takes effect tomorrow, should eliminate export taxes on all goods, including energy, Interfax reported Monday, citing Shuvalov.
Russia insists that export duties can be charged until the common market comes into force, the Moscow-based news service said, citing Shuvalov.
The presidents of Kyrgyzstan and Tajikistan, Roza Otunbayeva and Emomali Rakhmon, said in televised comments that their countries are considering joining the customs union.
TITLE: Motivating People to Participate in Skolkovo Project
AUTHOR: By Peter France
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Motivating people to participate in an innovative economy has been a key success for the government as it attempts to lure investors to participate in a new technology center in Skolkovo, said Sergei Belousov, a technology entrepreneur.
In the past, the main outlet for talented, motivated people has been in sectors where there is a lot of money up for grabs but that are not necessarily going to make the country more successful, said Belousov, chairman and founder of two software companies, Parallels and Acronis.
“Four years ago, during the boom of the Russian economy, we had motivated people who would reach a certain level of promotion in Parallels and then say, ‘I want to be a builder,’” Belousov said in an interview. “Someone might be a software engineer by training, but he would be motivated to do real estate because he has a friend who built 20 houses and made $5 million.”
“The motivation used to be to do those things, and now the motivation is changing,” he said.
The innovation city, a touchstone of President Dmitry Medvedev’s plan to modernize the Russian economy, has already drummed up interest from technology firms Siemens, Microsoft, Google, Nokia and Intel. Cisco Systems will become the first tenant, having promised to invest $1 billion during Medvedev’s visit to California last week.
For his part, Belousov said he would be happy to cooperate with the government.
As part of a drive to foster innovation among small businesses, he is co-founding a $30 million early-stage investment fund to provide seed money for software and Internet start-up companies.
The fund, Runa Capital, will invest in technology areas of rapid growth, including machine learning, virtualization, mobile software and cloud computing.
“There will be an incubator,” Belousov told The St. Petersburg Times. “It will be involved closely with incomplete teams and will help them compete — to come up with a business model, to raise initial funding, to write a business plan and to supervise the business development.”
Runa Capital, co-founded with Alexander Galitsky, founder of Almaz Capital Partners, will be supported by the Runapark business incubator, which will provide the environment for Russian startups to develop.
While motivating people is a key ingredient in turning Skolkovo into a success, Belousov said much depends on other factors if the city is to become a center of innovation: lowering administrative barriers, developing an investment-friendly ecosystem, building infrastructure and investing in education.
Although the government has promised to reduce red tape for investors at Skolkovo, cutting through Russia’s notoriously convoluted bureaucracy may take some doing. According to the World Bank’s Doing Business 2010 report, Russia ranks a dismal 120th out of 183 countries.
“There is a lot of promise that has not yet been delivered,” Belousov said.
Equipping Skolkovo with the necessary infrastructure, including business support services, will be a key test for whether it can attract small businesses to set up shop there — and elsewhere.
“In China, India and Russia, that’s how you do business — you employ your own cleaners, security guards, cooks and electricians,” Belousov said. “In Singapore or the U.S., it’s delivered as part of the infrastructure service. There is a promise that it will be much easier in Skolkovo.”
Belousov, who splits much of the year between his offices in Moscow and Seattle, has worked with small businesses for years. One of Parallels’ main products is “cloud services” — the hosting and administration of various computing platforms over the Internet. Offering computing through the cloud reduces the barriers to entry for small and medium-sized businesses, Belousov said.
“It’s not the cost, it’s not the flexibility — it’s the simplicity,” he said. “Small business doesn’t want to think about IT, small business wants to use IT and get benefit from IT, but not be an expert in IT.”
The government has scored an early success in facilitating investment in education, which Belousov called key for the creation of an innovative economy. Billionaire Viktor Vekselberg, who is heading Skolkovo’s development, has reached a preliminary deal under which the Massachusetts Institute of Technology will consider opening laboratories and other education facilities in the innovation center.
The government is also creating some big financial incentives at Skolkovo. The State Duma’s Economic Policy and Entrepreneurship Committee on Monday approved legislation outlining tax breaks for the project, including no value-added tax for 10 years and no property taxes.
But despite the promise of an advantageous environment for entrepreneurs, Skolkovo has also drawn some high-profile criticism from those concerned that the project will turn into a boondoggle for senior officials and business executives. Others have expressed doubt that it will help Russia shed its image as a risky destination for foreign capital.
“There are a lot of dangers in doing anything new. That’s totally normal,” Belousov said. “One of the dangers of any such initiative would be to make it restrictive. … Any restrictions put on innovation — geographical, national, corporate — would be bad in general, and particularly in the context of Russia.”
Ultimately, the goal must be to change the perception of doing business, a task that will take time, he said. “Perceptions are perceptions,” he said. “How do you fix perceptions? You wait, you show success stories, you do positive PR.”
While the Kremlin’s primary goal for Skolkovo has been to help develop an innovative economy in Russia, it has made no secret of the fact that it hopes such a center will also reverse the country’s “brain drain,” in which hundreds of thousands of highly trained Russians have left the country looking for better opportunities abroad.
But the goal should not necessarily be to bring Russians back from abroad, Belousov said. Instead, the government should ensure that they have a way to participate in the global economy.
“I don’t believe in non-global innovation,” Belousov said. “It’s not necessarily about ‘bringing them back.’ It’s about getting them to participate in this global technology development. They just need to be leverageable rather than living in Skolkovo with their families.”
TITLE: Surkov Says Skolkovo Must Put Aside Patriotism, ‘Import Brains’
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia should set aside “false patriotism” and lure foreign specialists as it seeks to set up a high-technology center outside Moscow, said Vladislav Surkov, first deputy chief of staff of the presidential administration.
“We have to make it normal for people to come and work in Russia,” Surkov said Thursday at a parliamentary hearing before the first reading of the law to foster the development of a technology hub in the suburb of Skolkovo.
Russia, which shed scientists and engineers en masse after the Soviet Union collapsed, “should have as many foreigners working as possible,” Surkov said. “Import of brains” will be the main instrument of bringing the best talent to Skolkovo, he said.
President Dmitry Medvedev last week visited California’s Silicon Valley and urged U.S. companies to “actively partake” in an effort to establish the center. The president in March asked oil and metals billionaire Viktor Vekselberg to oversee the creation of a Silicon Valley in Skolkovo, where tax breaks and other incentives will be offered to lure investment to spur innovation and production of high-technology products.
Vekselberg, executive director of TNK-BP, said he would quit the BP venture in Russia by the end of the year to focus on Skolkovo. He said he chose to chair the project because of the “serious challenge” it presented in bringing together business, the state and educational institutions.
In California, Vekselberg accompanied Medvedev who toured Cisco Systems in San Jose and Apple in Cupertino. Medvedev also visited Twitter, a microblogging service with about 190 million visitors per month, and opened his own account.
Cisco, the biggest maker of computer-networking equipment, plans to invest $1 billion in Russia over the next decade on innovation and business development, including building offices in Skolkovo and increasing research, chief executive John Chambers said June 23 during Medvedev’s visit.
TITLE: Leningrad Highway ‘Blockade’ Loosened
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Moscow City Hall said Friday that it agreed to reopen an extra two lanes on the busy highway to Sheremetyevo Airport, following a reprimand from Prime Minister Vladimir Putin and complaints from businesses of a “blockade” on Leningradskoye Shosse.
Construction work on a bridge owned by Moscow but located in the neighboring town of Khimki brought traffic to a near standstill for four days last week, causing hundreds of passengers to miss flights and headaches for local businesses.
IKEA, which operates the Khimki Mega mall, said Friday that the number of shoppers in its store there fell by 30 percent last week. The company was not warned about the construction-related traffic and may file a lawsuit, spokeswoman Oksana Belaichuk told reporters.
Sheremetyevo director Mikhail Vasilenko complained earlier in the week that Moscow officials were blocking the highway to benefit Vnukovo Airport, which is owned by City Hall.
The State Duma requested information from the Moscow regional government regarding damages to companies’ finances and business reputations resulting from the massive traffic jams caused by work on a small bridge.
State television covered the story heavily over the weekend, suggesting that little work was being done. The planned 140 million rubles in repairs will prolong the bridge’s life for up to seven years, the reports said, after which a new bridge costing 5 billion rubles would be needed.
Moscow had said it closed all but two lanes on the bridge to ensure that renovations were finished by Oct. 1.
First Deputy Mayor Pyotr Biryukov said in televised comments that keeping four of the road’s six lanes open would push back the finish date to Nov. 1.
Despite the reopened lanes, motorists said the work would be a heavy burden for Muscovites headed north.
“How are people supposed to live and travel?” said Vyacheslav Lysakov, head of the Freedom of Choice drivers association, Interfax reported. “The situation will only worsen as the rainy season sets in, not to mention snow.”
Putin ordered one of his deputies, Sergei Ivanov, to resolve the problem during a Presidium meeting on Thursday. Later that day, officials from Moscow, the Moscow region and the Transportation Ministry held an emergency meeting and agreed to open the extra lanes.
To solve Leningradskoye Shosse’s traffic problems, the Moscow region must repair the highway beyond the Moscow Ring Road, First Deputy Mayor Vladimir Resin said Friday, describing the city’s efforts to renovate the road within the city and remove traffic lights.
Critics have lambasted Moscow’s work to widen the highway to 12 lanes, since the road would still have to pass through a six-lane section in Khimki.
Moscow region Governor Boris Gromov told reporters that responsibility for the bridge lay with Moscow, although he said he would be ready to take ownership once the city renovates the structure.
“The whole road belongs to the city of Moscow,” Gromov told reporters in televised comments.
He also joked that travelers should consider ditching their cars for helicopters to travel like he does. “That way you don’t need roads,” he said.
Mayor Yury Luzhkov has not commented on the scandal. Last week, he met a delegation of monks from Mount Athos, in Greece, and called on Muscovites to boycott Moldovan products.
TITLE: A Forever Smoldering Conflict in the Caucasus
AUTHOR: By Thomas de Waal
TEXT: As U.S. Secretary of State Hillary Clinton traveled to Baku and Yerevan on July 4-5, an old issue again dominated her discussions: the Nagorno-Karabakh conflict.
Former Soviet leader Mikhail Gorbachev no doubt had a wry smile if he watched the media reports. He was the first leader to fail to solve this conflict in 1988. Since his day, the dispute has escalated into full-scale war and then degraded into a miserable deadlock, but its fundamentals have not changed. For years, the broad international consensus is that the competing Armenian and Azeri claims over Nagorno-Karabakh are still so extreme and contradictory that it did not merit a high-level peace initiative. The perception has been that the conflict — halted by a cease-fire but not resolved — is at least being managed and that the risks of a new war are negligible.
But recent developments are pushing Nagorno-Karabakh up the agenda again. First the good news. Since the end of 2008, President Dmitry Medvedev has surprised skeptics by personally working on a peace agreement. It is gruelling work. In Sochi this past January, Medvedev spent most of a day with Azeri President Ilham Aliyev and Armenian President Serzh Sargsyan and got absolutely nowhere. In St. Petersburg last month, he spent more than two hours with them and made a little more progress. This top-level Russian initiative has not received much attention outside Russia.
The default position of many in Washington, for example, is that Moscow wants to “keep the conflict smoldering.” But that does not jibe with the facts. No sane senior politician of Medvedev’s rank would work so hard on this if he did not genuinely want to see success. The Russians have also been scrupulous in involving their co-mediators, inviting the U.S. and French Nagorno-Karabakh envoys to St. Petersburg to join in the discussions with the two presidents. It looks as though Medvedev has made peace in Nagorno-Karabakh a personal project, and his government sees a peaceful initiative with Armenia and Azerbaijan as a good PR response to the damage Russia suffered internationally in Georgia in 2008. This is one area where, at the moment at least, Medvedev and Clinton are pushing in the same direction.
The bad news is that this latest push for peace comes at a time when more and more people are talking war. On June 18, only a few hours after the St. Petersburg meeting, one of the worst incidents in years occurred on the Nagorno-Karabakh ceasefire line. Four Armenian soldiers and one Azeri were killed. The circumstantial evidence points more to this having been an Azeri attack than an Armenian one — the bodies were on the Armenian side of the line — but the true picture will probably never be known. Clashes like this threaten the equilibrium that has held since 1994, when the ceasefire deal ended fighting. They reflect an overall hardening of positions on both sides. Many Armenians talk more openly about history ratifying the victory they won in 1994 in the hope that Nagorno-Karabakh will follow Kosovo down the path of international legitimacy. For its part, oil-rich Azerbaijan now spends more than $2 billion a year on its military and many Azeris adopt a more belligerent tone, calling for a war to recapture Nagorno-Karabakh from the Armenians.
The international mechanism designed to deal with the conflict, the Minsk Process of the Organization for Security and Cooperation in Europe, is still extremely modest. There are just six European monitors in charge of observing the ceasefire — basically a token presence given that there are more than 20,000 soldiers on each side facing each other along more than 175 kilometers of trenches. The chief work of mediation falls on three Organization for Security and Cooperation in Europe ambassadors representing France, Russia and the United States, who keep up the tortuous negotiations over a compromise document in a climate of almost total distrust in Armenia and Azerbaijan.
Naturally suspicious, neither government offers the offer anything constructive. To be precise, the Armenians offer constructive engagement on small issues such as sharing water over the ceasefire line, but the Azeris reject these gestures, worrying that this is “doing business with the enemy.” The Armenian side rejects all proposals to give up even an inch of Armenian-held land, before pledges on the status of Nagorno-Karabakh are made up front. The Azeris, saying that they are in a state of war, even reject the proposal made by the French, Russia and U.S foreign ministers in Helsinki in 2008 to remove snipers from the front line.
The result is that, even when Medvedev is pushing them, the two presidents lack the will to put their signatures on a piece of paper that will set their countries down a path of historic compromise with each other. To do so would unleash a storm of domestic criticism, while the international reward for taking this step is much less certain. So the leaders calculate that they will not pay a high price for doing nothing — and that other bilateral issues, such as Armenian diaspora concerns, gas pipelines and Afghanistan-bound flights over Azerbaijan will keep their relations with Moscow, Washington and Brussels on an even footing.
The bloodshed on the ceasefire line should focus minds and be a reminder that a new conflict over Nagorno-Karabakh would be catastrophic for everyone, not just Armenians and Azeris. More positive relationships between Moscow, Washington, Paris and Brussels makes this a good moment to have a conversation about what each of these capitals can offer to underpin a post-conflict settlement in terms of funding and peacekeepers. If the world’s top leaders send a signal to the Armenians and Azeris that they are more serious about a lasting peace, then the local actors may finally have to accept that the day of peaceful reckoning has come.
Thomas de Waal is a senior associate at the Carnegie Endowment for International Peace in Washington, specializing on the Caucasus.
TITLE: The Khodorkovsky Card
AUTHOR: By Richard Lourie
TEXT: Elie Wiesel, winner of the 1986 Nobel Peace Prize, has now lent his moral authority to the drive to free former Yukos CEO Mikhail Khodorkovsky from prison. This is an event of some significance and one that the Kremlin would be well advised to interpret correctly. That is especially true now when Russia is on a charm offensive to attract foreign capital and embarrassed by the recent spy scandal in the United States.
Wiesel invited former government officials, business leaders, human rights activists and journalists to the elite Lotos Club on Manhattan’s East Side. It is almost a rule in the West that high moral causes must be launched in posh surroundings. But it’s fitting for a billionaire in prison.
Unable to attend for health reasons, Yelena Bonner, lioness of the Soviet dissident movement and widow of Andrei Sakharov, sent a strongly worded statement read by her son, Alexei Semyonov. From the start of the Yukos affair, Bonner has spoken out in defense of Khodorkovsky, whom she considers a victim of political repression. She castigated the judge at Khodorkovsky’s second trial for openly favoring the prosecution.
Some commentators have likened Khodorkovsky to Sakharov. I attended Khodorkovsky’s trial in October 2009 and was impressed by his vigor and confidence when he entered the courtroom. He was like a heavyweight champion heading for the ring. But, to paraphrase former U.S. Senator Lloyd Bentsen, I knew Sakharov, and Khodorkovsky is no Sakharov.
Still, in one important respect, the two are alike. Former Soviet leader Mikhail Gorbachev signaled to the Russian intelligentsia and the world the seriousness of his intent to reform the Soviet Union when he released Sakharov from internal exile in late 1986. The Kremlin, now wishing to prove that it is moving in a new direction, could send a similarly powerful signal by releasing Khodorkovsky. The irony here is that we want an independent judiciary, yet we demand political intervention to resolve one of the most egregious violations of that very principle.
Some of the business leaders present at the luncheon pointed out that the symbolism of the Khodorkovsky case was practical as well as moral. Who wants to invest in an economy where billionaires are framed and journalists are slain?
So what could prevent the Kremlin from playing the Khodorkovsky card? Sheer vindictiveness is one possibility. Another is that Khodorkovsky is a symbol in the West and in Russia as well, an example for the oligarchs of what happens to those who confuse financial strength with political power.
According to opposition leader Boris Nemtsov: “Putin is pathologically afraid of Khodorkovsky, considers him an utterly powerful person — organized, serious, unbreakable.” But what specifically could Putin be afraid of? Khodorkovsky might well become the figure around which the opposition could rally and unite. But Khodorkovsky’s parole could be conditioned on his promise to refrain from all political activities. He could, of course, refuse this condition and choose to remain in prison. So even Khodorkovsky might someday have to play the Khodorkovsky card.
Stalin’s famous quote regarding suggestion that the pope participate in the Allies’ war conferences — “How many divisions does he have?”— is a question that could also be asked today of Wiesel. But the Kremlin should also not forget that it was a pope, John Paul II, who played a key role in bringing down the house that Stalin built. And what happened once can happen once again.
Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”
TITLE: In the Spotlight: Spies, and the Media That Loved Them
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: This week, talk has only been of the spy scandal, which has an unreal air to it, with reporters gaining most of their information from Facebook and the Russian equivalent, Odnoklassniki, and spinning out the details.
The focus has been on Anna Chapman, 28, who was immediately dubbed a “flame-haired femme fatale” by Western journalists, even if her hair color seems to fluctuate in photographs. Poor Anna did not have time to shut off access to her Odnoklassniki account, which gave journalists access to compromising photographs of her dubious fashion sense as she posed in appliqued jeans and waved a cigarette in a leopard-skin dress.
The British Sun embarrassingly got the wrong end of the stick and wrote that Chapman was actually born in Odnoklassniki, mistaking the social networking site for an oddly named Russian town.
Komsomolskaya Pravda called Chapman a “newfound Mata Hari” and wrote that she grew up in Volgograd with her grandmother — which sounds like a somewhat harsh deal, considering that her parents moved to Moscow and her father, a diplomat, also worked at the Russian Embassy in Kenya. She studied at the Peoples’ Friendship University in Moscow — notorious for turning out such unfriendly figures as Carlos the Jackal.
A reporter went to her parents’ home in a concrete tower block in Ramenki, a suburb in southwest Moscow — which did not even have a concierge, the tabloid sniffed. But it got nothing out of the trip except some gossip from neighbors who said they had not seen Anna for a long time and her family kept to themselves.
At least KP had an excuse to drag out an old joke about spies and their would-be enigmatic passwords. An agent whispers, “The elephants have gone to their drinking water.” “Ah, you’ll be wanting the spy Ivanov. He’s on the floor above.”
Tvoi Den suggested in an attempt at humor that Moscow should exchange Mayor Yury Luzhkov for the 11 spies, for the flimsy reason that he failed to ban the annual Fourth of July U.S. Independence Day celebration at Kuskovo Park. In TD’s cartoon, Luzhkov was pictured swapping his usual flat cap for a stars-and-stripes top hat.
Spies are not what they used to be, Moskovsky Komsomolets complained, saying revelations of the spies’ “pathetic” results blew away their mystique. “It’s as if James Bond finally opened his box of tricks and revealed a pair of socks and some fried chicken,” it said.
“They sent reports, of course, but of such a quality that after seven years of being followed, there wasn’t enough for a decent charge of espionage,” it sneered.
Spies used to work for the principle, not for the money, the author of the MK opinion piece wrote, saying her friend is a Russian agent in a “faraway country” who had to eke out his salary in the 1990s by selling dates. Nowadays, spies expect nice houses and flower beds, the author wrote. “No one works for an ideal anymore.”
A retired KGB colonel told the newspaper that the reports made it sound as if the group of “amateurs” had got their ideas for spy techniques from “not very clever books.”
“The kind of thing you read when you’re waiting for the fish to bite, and even then not more than two pages,” he said. The newspaper joked about the confused national identities of the accused with a cartoon playing on the difference between razvedchik, or agent, which means someone on Russia’s side, and shpion, or spy, used for foreigners.
A man in a vest dithers between vodka and whisky. “I can’t decide who I am today: a razvedchik or a shpion,” he says.
TITLE: Friends Pay Tribute to St. Petersburg Times Founder
AUTHOR: By Nikolaus von Twickel
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Lloyd Donaldson moved to St. Petersburg in 1992 in a borrowed coat with a huge hole on its right side — and put nearly his last $800 into an English-language newspaper.
Called The St. Petersburg Press, the paper soon turned into a successful operation that was sold in 1996 at a profit to Independent Media and rebranded as The St. Petersburg Times.
Donaldson, who died suddenly in Britain on June 26 at the age of 46, is remembered by friends and former colleagues as an adventurous foreigner who arrived in Russia during the heady days of the early 1990s with a desire to make a difference — and succeeded.
Donaldson, a New Zealander, was working as a freelancer in London as the August 1991 coup of Soviet hardliners unfolded in Moscow, and he sold Britain’s Daily Telegraph a story in which a new Russian friend, Grigory Kunis, retold his experience in the Soviet army. When the newspaper asked for photos, Donaldson borrowed a Soviet uniform from London street sellers and convinced Kunis to pose in it.
“We made good money, which we later invested into the founding of the newspaper,” said Kunis, who co-founded The St. Petersburg Press with Donaldson.
Donaldson then covered the war in the former Yugoslavia before resettling in St. Petersburg, where he and Kunis set up a small publishing house called Cornerstone.
Its founding documents were signed by the city official responsible for joint ventures with foreign capital. His name was Vladimir Putin.
A teetotaler vegan from New Zealand, Donaldson had a colorful career before he arrived in Russia, having worked as a forklift driver and burger flipper before turning to journalism in Western Australia.
Donaldson’s willingness to take risks — a trait that brought him to Russia — was perhaps best illustrated in how he got the job as a forklift driver at a warehouse.
The foreman came to the waiting room where Donaldson was sitting with three other applicants and asked, “Who can drive a forklift?” said longtime friend Geoff Crowhurst.
When none of the others replied, Lloyd quickly said, “I can.” He got the job on the spot.
“When the foreman left him with one of the other workers, Lloyd had to confess and got a crash course in forklift operation,” Crowhurst said. “By the end of the week, he was driving it around like a pro.”
Donaldson’s next job was as a burger flipper in Fast Eddie’s Family Restaurant, where he worked until he was practically running the place, Crowhurst said. When the owners opened a new restaurant on the other side of the country, Donaldson was sent over to help manage it.
After that, Donaldson worked for a retirement foundation helping recent retirees plan their finances, health and lifestyle. After the foundation folded, he went to work for an oil and exploration company, where he read international newspapers, the Internet and other publications in order to compile briefs for the company’s clients.
It was there that he decided he wanted to be a journalist.
Donaldson started by writing two stories about local people and visited several local newspapers, asking for a job. A weekly paper called the Stirling Times hired him.
He learned quickly about the sometimes fickle tastes of readers when he wrote a passionate piece about the sentencing of sex offenders and waited expectantly for a flood of feedback.
“He got nothing, not a single phone call or letter to the editor,” Crowhurst said. “The next week he wrote a story on the state government trying to move a public holiday to another day. His phone rang off the hook for the entire week.
“He learned, what was to him, a painful lesson on the public’s priorities,” Crowhurst said.
Later Donaldson went to work for Western Australia’s second-largest paper, The Sunday Times, where friends said he was happy until the desire to move to Russia became too strong.
In Russia, Donaldson had ample opportunities to use both his journalistic penchant for adrenalin as well as his business skills.
He spent his 30th birthday in Abkhazia, watching the bodies of 127 executed soldiers exhumed from a mass grave. “It took days for the stench of rotting human flesh to leach out of my clothes,” he later recalled.
Yevgenia Borisova, who was with him on assignment in Abkhazia and later became a reporter with The Moscow Times, said Donaldson taught her how to be invisible in conflict zones, telling her that “a dead journalist will never write a story.”
As editor, he left a lasting impression on his staff of young Russian journalists who were discovering a free profession that had re-emerged after years of Soviet censorship.
“He was the first and the last in the office, working everything to perfection and some people to tears,” Borisova recalled.
He also impressed the foreigners. “Lloyd was, ultimately, one of the great moralists and humanists, a man who saw journalism as a way of not only recording, but of fighting the injustices and moral failings all around us,” said Alistair Crighton from Scotland, who was the first journalist taken on.
Donaldson was “an inveterate voyeur of the lower strata of St. Petersburg society: the mafiosi, the whores, the drunks, the punks and the crooks,” Crighton added.
The early 1990s were the days when the mafia was part of anybody’s business in Russia — including newspapers.
“[Donaldson] resisted paying off the hoods, who used to turn up at the early offices in the city’s LDM Hotel with monotonous regularity,” Crighton said.
He even mocked death threats by posting them on a newsroom notice board.
Donaldson banned escort ads, refusing a potentially lucrative income stream because that crossed a line.
This policy did not outlast him.
Donaldson later described the move from journalism to newspaper management as one of the hardest things he did in his career, because it required not just learning new skills but changing his entire way of thinking.
“Journalists who cannot or will not change make the worst possible newspaper directors,” he wrote in a guidebook for the World Association of Newspapers and News Publishers.
“I see a tremendous amount of leadership by former journalists but very little balanced management,” he said, adding that often newspaper professionals in Russia and Eastern Europe lack management experience — particularly in budgeting and advertising.
Yet even as business manager, Donaldson retained a soft spot for the sort of journalism that is not necessarily popular with advertisers.
He used to snicker in hearty guilt at the weekly crimewatch column on the back page, detailing the latest horror stories from St. Petersburg’s underworld, former colleague Garfield Reynolds said.
“He knew most of his advertisers hated it and that the guy who wrote it despised him but Lloyd couldn’t stop admiring it or taking a perverse pride in it,” he said.
After leaving Russia, Donaldson worked as a media consultant for various organizations.
He felt a sense of achievement during a trip to Croatia in 2002 when the publisher of Montenegro’s Vjesti newspaper shared an issue with him that contained a section reminiscent of The St. Petersburg Times.
“I found a page of small adverts for restaurants which is unusual in the Balkans and which looked incredibly similar to what I did in St. Petersburg … and in fact that’s where the idea came from,” Donaldson later wrote in an e-mail.
It turned out that he had taught another Vjesti manager at an earlier seminar.
But the success of the early 1990s could hardly be repeated today in Russia, said Kunis, his former business partner who today is the publisher of the Norwegian-owned Moi Rayon chain of free local newspapers.
“Both in terms of attitude toward investment into print media and the money required to bring such a project to life — our country has become too costly,” he said.
If you want to start a good newspaper without thinking too much about money, risks and returns, less-developed countries like Laos or Cambodia would be the place to go, he said.
Donaldson spent his last years in relief work. Since 2005, he worked as a special projects coordinator for London-based aid agency Merlin. Yet his dream to one day run a refugee camp did not materialize.
He died June 26, one day after collapsing during a visit to the famed pop festival at Glastonbury in western England. A cause of death was not given.
Donaldson is survived by his wife, Lena, and their daughter, Masha.
TITLE: Oil Spill Costs for BP Pass $3-Billion Mark
AUTHOR: By Tom Breen
PUBLISHER: The Associated Press
TEXT: NEW ORLEANS — BP’s costs for the disastrous Gulf of Mexico oil spill climbed nearly half a billion dollars in the past week, raising the oil giant’s tab to just over $3 billion for work on cleaning and capping the gusher and payouts to individuals, businesses and governments.
London-based BP PLC, the largest oil and gas producer in the Gulf, released its latest tally of response costs Monday. The total of $3.12 billion was up from $2.65 billion a week earlier. The figure does not include a $20 billion fund for Gulf damages BP created last month.
As BP continued drilling relief wells that are the best hope for plugging the blown-out well, a giant new oil skimming vessel was tested in the Gulf. But poor weather means it may be longer than first hoped before officials know if it can work full-time sucking crude from the sea.
The Taiwanese skimmer dubbed “A Whale” was able to show off its maneuverability during a weekend test in a 25-mile-square patch of water just north of the site where an April 20 explosion on the Deepwater Horizon killed 11 workers and started the worst oil spill in Gulf history.
TMT, the shipping firm that owns the vessel, had hoped to test a containment boom system designed to direct greater volumes of oily water into the 12 vents or “jaws” that the ship uses to suck it in, according to spokesman Bob Grantham.
But lingering bad weather in the form of stiff winds and choppy seas has made that impossible, and prevented a flotilla of smaller skimmers from working offshore along the coasts of Alabama, Mississippi and Florida.
“As was the case yesterday, the sea state, with waves at times in excess of 10 feet, is not permitting optimal testing conditions,” Grantham said in an e-mail Sunday.
The skimmers, which have been idle off the coasts since a spell of bad weather last week kicked up by Hurricane Alex, were on the water along the Louisiana coast over the weekend. Officials with the U.S. Coast Guard are waiting for the weather to improve before sending them out elsewhere.
“We’ve got our guys out there and they’re docked and ready, but safety is a huge concern for us, especially with the smaller vessels,” said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala.
On Sunday, huge barges used to collect oil from skimming vessels were parked at the mouth of Mobile Bay, waiting for conditions to subside as waves rose to about 5 feet high miles offshore.
The current spate of bad weather is likely to last well into next week, according to the National Weather Service.
“This should remain fairly persistent through the next few days, and maybe get a little worse,” meteorologist Mike Efferson said.
On the shore, beach cleanup crews were making progress on new oil that washed up thanks to the high tides generated by last week’s bad weather.
In Grand Isle, about 800 people were removing tar balls and liquid oil from seven miles of beach, Coast Guard Commander Randal Ogrydziak said.
“In a day or two, you wouldn’t be able to tell the oil was even there,” he said.
By Wednesday, Ogrydziak said they should have a machine on the beach that washes sand where the oil washed ashore.
Crews have also been working to put containment boom thrown around by the storms back into place, he said.
So far, weather has not slowed drilling on two relief wells meant to finally plug the spill. BP officials have said they’re running slightly ahead of schedule on the drilling, but expect weather or other delays.
Early to mid-August is still the timeframe for the completion of the drilling.
Along with the drilling, the capture and burning of oil and gas at the site of the leaking well has gone on without interruption from the weather. But the choppy seas have delayed the operation of another vessel that officials say will roughly double the amount of oil being collected or burned.
The Helix Producer is supposed to connect with the leaking well by a flexible hose that will help it disconnect and reconnect quickly if a hurricane or other major storm forces an evacuation of the site.
Coast Guard officials say they’re hoping to have the Helix Producer connected to the well and collecting oil by Wednesday.
TITLE: Israel Alters Rules For Blockade Of Gaza
AUTHOR: By Karin Laub
PUBLISHER: The Associated Press
TEXT: JERUSALEM — Israel on Monday dropped its long-standing restrictions on allowing consumer goods into the Gaza Strip but retained tight limits on desperately needed construction materials, redefining the rules of its heavily criticized Gaza embargo on the eve of the Israeli prime minister’s trip to the White House.
The new rules, which come in response to an international outcry following a deadly Israeli raid on a blockade-busting flotilla, should bring some relief to Gaza’s 1.5 million people.
The decision ends the use of a narrow and often arbitrary list of permitted items. In a boost to the moribund Gaza economy, officials also said raw materials would soon be allowed to flow to Gaza’s shuttered factories.
But prospects for rebuilding the damage from a punishing Israeli military offensive last year remain uncertain. Israeli officials said construction materials like iron and steel would be allowed to enter only under Israeli supervision for use in projects overseen by the United Nations or other international bodies.
The officials spoke on condition of anonymity because the list was only being released later Monday.
Israel has been under intense international pressure to loosen its three-year embargo on Gaza since Israeli commandos killed nine Turkish activists in a May 31 raid on a flotilla carrying international activists trying to breach the blockade.
President Barack Obama, who is to meet with Israeli Prime Minister Benjamin Netanyahu on Tuesday, has said the embargo is unsustainable and has called for it to be significantly eased. Other world leaders have demanded the blockade be lifted entirely.
Israel and Egypt closed Gaza’s borders after the Islamic militant Hamas group violently seized power in the territory three years ago.
Under the old blockade rules, Israel permitted only a few dozen types of products, including basic food and medicine, into the territory. The system has forced Gazans to become accustomed to shortages of basic items like instant coffee, spices and fresh meat, or to depend on erratic deliveries of goods smuggled through tunnels along the southern border with Egypt.
Now, everything will be allowed into Gaza, except for items on the list.
But it remains unclear how much the order will help Gaza rebuild the damage caused by Israel’s three-week military offensive in the winter of 2008-2009.
TITLE: Komorowski Win In Polish Elections Gives Government Stronger Position
AUTHOR: By Monika Scislowska and Vanessa Gera
PUBLISHER: The Associated Press
TEXT: WARSAW, Poland — Bronislaw Komorowski’s all-but-certain victory offered Poland’s pro-business governing party an opportunity but also a challenge Monday as it prepared to govern without the obstacle of a hostile president.
With parliamentary elections scheduled for late 2011, the Civic Platform party of Komorowski and Prime Minister Donald Tusk has a year to show the country whether it can tackle major economic problems including high debt and unemployment.
“Civic Platform! You now have total power,” the tabloid Fakt declared in big letters on its front page Monday. “Show what you can do — you have a year!”
With 95 percent of the votes counted from Sunday’s balloting, Komorowski had what appeared to be an unassailable lead of 52.63 percent, compared with 47.37 percent for his rival, Jaroslaw Kaczynski. Full results were expected Monday afternoon.
Komorowski and his ruling Civic Platform party were withholding any declarations of victory until the final results were announced.
TITLE: Chinese Court Sentences U.S. Geologist
AUTHOR: By Charles Hutzler
PUBLISHER: The Associated Press
TEXT: BEIJING — An American geologist held and tortured by China’s state security agents was sentenced to eight years in prison Monday for gathering data on the Chinese oil industry in a case that highlights the government’s use of vague secrets laws to restrict business information.
In pronouncing Xue Feng guilty of spying and collecting state secrets, the Beijing No. 1 Intermediate People’s Court said his actions “endangered our country’s national security.”
Its verdict said Xue received documents on geological conditions of onshore oil wells and a data base that gave the coordinates of more than 30,000 oil and gas wells belonging to China National Petroleum Corporation and listed subsidiary PetroChina Ltd. That information, it said, was sold to IHS Energy, the U.S. consultancy that Xue worked for and which is now known as IHS Inc.
The sentence of eight years is close to the recommended legal limit of 10 for all but extremely serious violations. Though Xue, now 45 and known as a meticulous, driven researcher, showed no emotion when the court announced the verdict, it stunned his lawyer and his sister, his only family member allowed in the courtroom.
“I can’t describe how I feel. It’s definitely unacceptable,” Xue’s wife, Nan Kang, said by telephone, sobbing, from their home in a Houston, Texas, suburb where she lives with their two children.
U.S. Ambassador to China Jon Huntsman attended the hearing to display Washington’s interest in the case. He left without commenting and the U.S. Embassy issued a statement calling for Xue’s immediate release and deportation to the United States.
Xue’s sentence punctuates a case that has dragged on for more than two-and-a-half years and is likely to alarm foreign businesses unsure when normal business activities elsewhere might conflict with China’s vague state security laws.
Chinese officials have wide authority to classify information as state secrets. Draft regulations released by the government in April said business secrets of major state companies qualify as state secrets.
“This is a very harsh sentence,” said John Kamm, an American human rights campaigner whom the State Department turned to for help last year to lobby for Xue’s release. “It’s a huge disappointment and will send very real shivers up the spines of businesses that do business in China.”
Agents from China’s internal security agency detained Xue in November 2007 and tortured him, stubbing lit cigarettes into his arms in the early days of his detention. His case first became public when The Associated Press reported on it last November.
Like IHS, many multinationals have come to rely on people like Xue to run their China operations. Another China-born foreign national, Australian Stern Hu who worked for the global mining firm Rio Tinto, was sentenced in March to 10 years for bribery and infringing trade secrets that dealt with iron ore sales to Chinese companies.
Born in China, Xue earned a doctorate at the University of Chicago and became a U.S. citizen, returning to his native country to work. By all accounts, including witness statements cited in the court verdict, Xue poured his energies into his work for IHS, trying to gather information on China’s oil industry, contacting former schoolmates from his university days in China.
Two of the three other defendants sentenced along with Xue on Monday were schoolmates. Chen Mengjin and Li Dongxu, who worked for research institutes affiliated with PetroChina were each given two-and-a-half-year sentences and fined 50,000 yuan ($7,500). The other defendant, Li Yongbo, a manager at Beijing Licheng Zhongyou Oil Technology Development Co., was sentenced to eight years and fined 200,000 yuan ($30,000). Xue was also fined 200,000 yuan.
Li and Xue arranged the sale of the database — which was originally prepared by a Chinese company for PetroChina’s parent company and contained details on the coordinates and volume of reserves for the 30,000 wells — to IHS for $228,500, the court’s sentencing document said.