SOURCE: The St. Petersburg Times
DATE: Issue #1593 (54), Tuesday, July 20, 2010
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TITLE: Tough Pill To Swallow For Russian Drug Firms
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Most of the customers at a drug store in northern Moscow prefer medicines made abroad because of their better reputation for quality.
“At this point, people don’t trust Russian drug makers,” said Larisa Bezuglaya, a pharmacist at the drug store.
Svetlana Kopteva, 34, who had just bought a bottle of French moisturizing cream, agreed, saying it didn’t matter that Russian-made drugs were cheaper.
“If Russian drug makers improved the quality of their products while retaining lower prices than foreign firms, I might change my mind,” she said.
The Russian government is hoping she will.
As of 2007, only one out of every five drugs purchased in Russia was produced domestically, and only one of the top 20 producers of drugs sold domestically was a Russian firm — Pharmstandart.
This dependence on imports, and the backward state of the industry, have led President Dmitry Medvedev to declare the modernization of the pharmaceutical industry a national priority and one of the five key priority areas for modernization.
The market is not without prospects: Since 2003, the Russian market has grown on average 10 percent to 12 percent annually. But it still accounts for less than 2 percent of the global market. Most troubling, Russia only accounts for a paltry 0.3 percent of the world’s drug production.
One reason for this state of affairs is the old equipment and ancient facilities that form the backbone of the industry, said Deputy Industry and Trade Minister Denis Manturov.
“There’s a lag in the technological development of facilities needed to manufacture competitive products in accordance with international standards,” Manturov said in an e-mailed statement.
Another problem is that most pharmaceutical production in Russia is currently geared toward the production of generic medicines, with very little spent on research and development of innovative drugs, said Manturov, who is a member of the pharmaceutical working group of the presidential commission for modernization.
Most Russian drug makers produce low-profit generic drugs, which allows companies to appropriate just 1 to 2 percent of their revenues for research and development, compared to 5 to 10 percent spent by U.S. and European drug makers, whose portfolios consist mostly of innovative compounds.
Dragging the country’s aging medical technology into the 21st century and increasing the amount of research and development that is done on Russian soil is going to take a lot of investment — both on the part of the government and foreign pharmaceutical firms.
The government’s strategy for tackling this problem is the Pharma 2020 strategy, which aims to raise the competitiveness of the industry, stimulate the production of innovative medicines, modernize factories’ equipment, remove administrative barriers for drug registration and launch educational programs.
The goal is an ambitious one: to raise the share of domestically produced medicines from the current 23 percent to 50 percent over the coming 10 years.
Doing so will reduce the country’s dependence on imports, as well as make medicines more affordable for consumers and the government, Manturov said.
“There is no doubt that a significant increase in the share of domestically produced medicines on the market will result in decreased prices for the final products. Thus, as a result of import substitution, the anticipated budget savings in state purchases will account for 20 to 30 percent,” he said.
The strategy calls for 178 billion rubles ($5.84 billion) of investment in the pharmaceutical sector over the next decade in three key areas: research and development, training and infrastructure development, and introducing good manufacturing practices at all Russian facilities.
Much of that investment figure will be state funds, funneled through either regular budget allocations or one of the federal target programs — state funding vehicles created to accomplish certain development goals.
Industry and Trade Minister Viktor Khristenko said last month that the government was ready to appropriate as much as 120 billion rubles of state funds for supporting the pharmaceutical industry.
The government is also doing the best it can to entice international pharmaceutical companies to invest in Russia.
Setting Up Shop
International drug makers are betting that despite the obstacles, they will be able to succeed on the Russian market. A group of pharmaceutical firms have pledged to invest up to 1 billion euros ($1.3 billion) in their localization projects over the next several years, and many have already embarked on that process.
“We have proved over the past year that this was not an empty declaration. … It’s an absolutely concrete statement, which is supported by concrete investments. … And I think it’s only a start,” said Vladimir Shipkov, executive director of the Association of International Pharmaceutical Manufacturers.
In April, Novo Nordisk, the world’s largest producer of diabetes drugs, agreed to invest as much as $80 million to $100 million in the construction of an insulin-packaging plant in the Kaluga region, the Danish firm said in a statement.
Initially the plant will pack insulin in cartridges and insulin-delivering devices, but it may expand later to full-scale insulin production.
In June, Swiss company Nycomed began construction on a plant in the Yaroslavl region in which it will invest up to 75 million euros ($97 million).
The factory will take over the production of several of its portfolio drugs intended for the Russian market and will make up to 3 billion tablets and 180 million ampoules per year, said Jostein Davidsen, managing director of Nycomed in Russia and the Commonwealth of Independent States.
“The plant will contribute to better product availability in the Russian market, higher service level, logistics excellence. In fact, this is in line … with the 2020 strategy of the Russian government to focus more on local manufacturing,” Davidsen said.
Nycomed has also agreed to team up with General Electric’s health care unit to establish a joint venture producing contrast agents for X-rays and MRI equipment.
“Production of contrast agents is a small niche. This market is not that big in Russia. It’s a market of not more than 50 million euros today,” Davidsen said in an interview, adding that the manufacturing of these medicines was “a priority segment,” which was expected to show “significant growth” in Russia.

Government’s Duties
But while drug makers have been cautiously dipping their toes into the water, before diving in they want to see a concerted effort on the part of the government to invest in the health care industry and put spending in the sector on par with that of the developed world.
It would be much easier to attract investment if the amount invested by the government into the health care system were comparable to that in developed countries, said Naira Adamyan, the Russian head of Janssen-Cilag, a subsidiary of Johnson & Johnson.
Russia spends only about 3 percent of its gross domestic product on health care, compared with 8 percent to 10 percent in most European countries.
“It’s clear that with the huge number of problems we have in the health care field [this level of spending] is absolutely insufficient,” Adamyan said. “It’s very hard to speak of very massive … investments in a country where only a few percent of the population are reimbursed with medicines on preferential terms.”
Davidsen agreed, saying that while the government has done a lot of work to boost the health care industry in recent years, there is still much to be done.
“There’s still a lot of spending that should be going toward health care before it becomes a relatively defendable marketplace for future significant investments,” he said.

Innovation
Building new factories with new machinery is a crucial aspect of the modernization agenda. But the government is hoping that these plants won’t just be producing drugs developed somewhere else.
That’s why it’s funneling hundreds of billions of dollars into human capital programs, as well as research and development, in order to make Russia a center for the development of innovative medicines.
And there are already signs that progress has been made toward achieving this goal.
Under the agreement signed in September, Swiss health care giant Roche has supplied Russian research center Chemrar with AIDS trial drugs at the pre-clinical development stage. The drugs will undergo further development in Russia and Chemrar will retain the right to sell the future medicines in Russia and the CIS.
Earlier this month, state investment fund Rusnano said it would back a $160 million project with Chemrar to develop innovative medicines for cancer and hepatitis C.
The Chemrar center is among the 11 pharmaceutical modernization projects getting support from the presidential commission on modernization because it will be manufacturing products with a potential for export, said Alexander Ivashchenko, Chemrar’s chairman.
Other projects range from medical equipment facilities to factories producing nuclear tracers.
But to develop an innovative and vibrant pharmaceutical industry, more is needed than infusions of cash. A legislative and regulatory environment conducive to growth is another necessary step.
The State Duma tried to take a step toward that end in March, when it approved a hotly contested law on the circulation of medicines, which outlines a new drug registration process, requires producers to transition to good manufacturing practices, tightens sanctions on counterfeit drugs and imposes retail prices controls.
The new law, which replaced the old Medicines Law passed more than 10 years ago, significantly cuts some red tape for manufacturers by requiring regulators to register new drugs within 210 days for both Russian and foreign drug makers. Previously, the procedure took up to a year and a half or more.
But the new legislation is not likely to allay manufacturers’ concerns about intellectual property rights.
“While the old legislation defined an original medicine as one that was under patent protection, the new legislation defines it as medicine containing a new active pharmaceutical ingredient,” said Yulia Fyodorova, senior lawyer at international law firm CMS.
“That means that according to the new law, a generic drug may be theoretically acknowledged as an original medicine if it appears on the Russian market before the original medical product is registered in Russia,” she said.
But perhaps more serious is the lack of data protection in the new law, making foreign drug makers reluctant to register new medicines in Russia.
When registering a new medicine, producers have to provide regulators with all the data generated in pre-clinical and clinical testing in order to prove that the medicine is safe.
“The secret information that is protected by data protection regimes in the West is not protected in Russia. As a result producers can register their generic drugs using, for example, clinical trials data of the original medicine, which causes producers of original medicines to bear losses,” Fyodorova said.
Prognosis
Despite the pitfalls, drug makers are optimistic about the future of the Russian pharmaceutical market. Russia’s pharmaceutical market may see compounded annual growth of 15 percent to 16 percent through 2015, said Patrick Aghanian, the Russia head of Sanofi-Aventis, Europe’s biggest drug maker.
“Eight years ago, the volume of the pharmaceutical market in Russia accounted for maybe $3 billion. Last year, it was more than $14 billion,” he said, adding that this growth was a good driver for raising additional investments.
But Russia isn’t alone in the race to develop an innovative pharmaceutical industry.
Russia lags behind its BRIC peers in the size of its market and the competitiveness of its industry. In 2009, when the worldwide recession caused Russia’s pharmaceutical market to shrink 5 percent, China’s grew 27 percent and Brazil’s shot up 14 percent.
Compared with dynamic markets such as these, Russia needs to be able to offer global players a good reason to bet on it, rather than on other developing countries.
Russia’s low level of competitiveness compared with its developing country peers is one of its main problems, Aghanian said.

TITLE: 2,000 Bravely Stage Rally in Black Sea Town
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — About 2,000 residents of a small town near Sochi rallied against environmental pollution Sunday evening despite colossal efforts to prevent the gathering after a previous protest drew 4,000 and left the top local official without a job.
The protesters gathered on the periphery of the central square of Tuapse, a Black Sea town of 60,000 popular with tourists, ignoring rain and the campaign to prevent the rally, which included closing the square for construction, distributing flyers with false information, closing down the town’s web site, and printing a special issue of a local newspaper with appeals not to attend, residents said.
“It’s the height of the summer season, and no person in their right mind would make a decision to do construction work now on the central square when Tuapse is filled with tourists,” said Anna Tesheva, an activist involved with the protest.
The events in Tuapse illustrate the lengths that local authorities are willing to go to prevent any sign of unrest after President Dmitry Medvedev last year threatened to fire lax governors following the Pikalyovo protests that shut down a major highway and forced Prime Minister Vladimir Putin to intercede.
Krasnodar Governor Alexander Tkachyov visited Tuapse after the last rally in May brought 4,000 people to the same square to protest poor environmental conditions and demand a referendum on a fertilizer terminal being built by EuroChem for a grand opening this year.
Residents say a test loading of fertilizer by EuroChem polluted the atmosphere, and they are not mollified by company denials of wrongdoing.
Rally participants also called for the dismissal of local officials and a ban on the construction of new dangerous facilities in the town’s center.
Tesheva said organizers of Sunday’s rally had problems printing banners in local print shops, and the local television station refused to accept a paid announcement about the rally, instead running a message that the rally had been canceled. Flyers posted by activists were removed or covered with new flyers announcing the cancellation of the rally, she said.
Residents also received a special issue of the local Tuapsinskiye Vesti on Saturday “for the first time in 10 years,” Tesheva said.
The special “environmental” issue has a front-page article in which Vladimir Lybanev, the new head of the Tuapse district, which includes the town, tells residents: “Protesting is easier than coming to terms with the matter, than cleaning the sea and rivers, than planting trees and flowers. … We will not be disrupted by somebody’s desire to muckrake, to rouse attitudes and blow things out of proportion.”
Lybanev is a newcomer to Tuapse from an area in the Krasnodar region located 200 kilometers north of Tuapse. He was appointed by the governor two weeks after the rally in May, when the previous district head lost his job.
Tkachyov visited Tuapse on May 31 and held a meeting with local authorities. During the meeting, former district head Leonid Koshel announced that he was quitting. 
“The weakness of authority is evident. The mayor is not communicating with the people but is sitting locked in his office,” Tkachyov said at the time, Rossiiskaya Gazeta reported.
The head of the Tuapse Bulk Terminal, Valery Khatyanov, resigned two days later and was replaced by Nikolai Snytkin. 
Snytkin addressed residents on Saturday from the pages of another local paper, Tuapsinskiye Novosti. 
“We address those troublemakers and environmental racketeers and those who sponsor them: Stop causing a nightmare for our terminal! … Think about where your children and grandchildren will work, and whether life be sufficient for all of us,” he wrote.
Protest organizers asked for permission on July 5 to hold the event on the square Sunday but were told that the square would be closed for renovation. The municipal decree closing the square was signed on July 5, and no alternative sites for the protest were offered, organizers said. Last Thursday, local authorities fenced off a large part of the square and sent workers to remove tiles. 
The popular city web site, Tuapse.ru, whose forum was used by people to discuss and plan for the rally, was suddenly “closed for reconstruction” on Friday night, with no further explanation.
Although rumors permeated Tuapse about an OMON riot police squad being dispatched from the regional capital, Krasnodar, with water cannons, the rally was held peacefully, said Andrei Rudomakha of the Environmental Watch on North Caucasus, who acted as a rally organizer. 
His group’s web site has been down for the past three days because of a virus attack that Rudomakha linked to its involvement with the rally.
Rudomakha spent three hours earlier Sunday talking with the local police, who pressed him not to hold the rally, he said. 
“But in the end, they were afraid to use force against such a large crowd,” he said. “People were sure that they would be dispersed, and there was pouring rain. But they came anyway.”

TITLE: Crime Chronicle Charts City’s Gangster Underworld
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: An updated, three-volume edition of the legendary chronicle of St. Petersburg’s criminal underworld “Banditsky Petersburg” by Andrei Konstantinov was last week unveiled by the author, head of the AJUR investigative agency and a noted crime researcher.
The classic epic explores the city’s criminal environment, tracing its evolution and transformation over the past 16 years since work on the book began.
For the uninitiated, the book’s title is misleading: Those who have not read the book may wrongly associate it with the once hugely popular television crime series of the same name that hit screens in 2000.
“The television series was based on my other books, which are crime fiction, really, while ‘Banditsky Petersburg’ as a book is a documentary work,” Konstantinov explained at a presentation of the new volume at the House of Journalists on Thursday.
Konstantinov’s investigative work began in 1992, when he published a series of reports in the local daily newspaper Smena. Organized crime gave the impression at the time of being rampant, with contract killings in St. Petersburg becoming commonplace.
When the first edition of the book came out in the mid-1990s, it was used as a handy manual for businessmen and politicians alike, as well as anyone who needed to navigate the murky waters of the seemingly highly mobbed-up business and political scene in the city. The demand for the chronicle has been impressive, with the sales of various editions topping a handsome two million copies.
The book’s stinging title — “Gangland St. Petersburg” — soon became a humiliating nickname for the city as gangster wars raged across town. The nickname stuck.
“The term was used heavily in political battles against Vladimir Yakovlev, who was then the city governor,” Konstantinov recalled. 
“It was actually already untrue at the time: The gangster wars reached their peak before Yakovlev came to power, and by the end of the 1990s the wave was dying down.”
At the time, Konstantinov was frequently accused of being responsible for concocting the image of St. Petersburg as the criminal capital of Russia.
“A lot of people would just come up and try to put me to shame, saying things like, ‘Is it really that much fun to indulge in all things dirty?’” Konstantinov remembered. 
“That was so unfair. Blaming me for writing a popular book about crime is just as pointless as accusing Mikhail Kalashnikov of making a weapon that became one of the most internationally established Russian brands. The truth is that we simply did a good job. And I, for one, am not the slightest bit ashamed.” 
Konstantinov said he would continue to document the city’s criminal scene, but he said the events are never going to be as thrilling and brutal as they were in the early 1990s. 
“The big fire burnt itself out by about 2000,” he said. “The time of in-your-face street killings is not going to come back, as the country’s political and business environment has changed. Pity, though, that law enforcement agencies played such a modest role in fighting the fire.”

TITLE: French Police Arrest 3 In Moscow Metro Bomb Plot
AUTHOR: By Alexey Eremenko
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — French police have detained three Chechens after receiving a tip from Russian law enforcement agencies that they might be plotting bombings in the Moscow metro.
Russian authorities suspect the trio of bankrolling Ruslan Ozniyev, a Chechen man arrested 20 months ago in Moscow on suspicion of planning attacks in the city, Kommersant reported Saturday.
“French law enforcement agencies targeted them after receiving intelligence from the Russian side,” an unidentified Russian law enforcement official told Interfax on Friday.
The names of the detainees have not been released. But French authorities said Friday that they — like Ozniyev, who has political asylum in France — lived in the city of Le Mans in northwestern France. The city has a large Chechen diaspora.
The three Chechens are suspected of conspiracy to prepare acts of terrorism, a spokesman for a French anti-terrorist prosecutor’s magistrate said, adding that there was no direct evidence against them, Reuters reported.
Two men remain detained, while the third has been released on bail. The arrests were made on July 5 but only announced late last week. 
A fourth suspect was questioned and released without charges being filed.
Ozniyev, 27, an ethnic Ingush born in Grozny, was arrested in November 2008 carrying a bag with a gun, explosives and a metro map with a note indicating that Moscow’s police headquarters was located near one of the stations, Kommersant said.
This could echo a plan carried out in the Moscow metro on March 29, when twin suicide blasts killed 40 people. One of the explosions took place in the Lubyanka metro station, the stop just below the headquarters of the Federal Security Service.
The FSB said that Ozniyev picked up the bag with explosives at the request of an associate of Doku Umarov, the Chechen rebel leader who claimed responsibility for the March metro bombings, and spent the whole day riding the metro, Kommersant reported.
“He was looking for the places with the most passengers and to use the information he collected to plant bombs,” an investigation source told the newspaper.
Ozniyev said he was unaware of the contents of the bag, which he said he had been asked to pick up, the report said, citing law enforcement officials. He also said he was only passing time in the metro and had not marked any stations on the map.
It was unclear Sunday why the arrests in France were only made 20 months after Ozniyev’s detention. His lawyer told Kommersant that the police were likely investigating contacts found on his cell phone.
Russian authorities believe that Ozniyev left his family to join the Umarov-led insurgency in 2004, but then moved in with relatives in Le Mans in 2006, Kommersant said. In 2007, he traveled to Moscow, where the FSB implicated him in a plot to assassinate Chechen President Ramzan Kadyrov in an explosion, but it pressed no charges and let him return to France.

TITLE: FSB Bill Clears Duma Amid Protests
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The State Duma approved in a third and final reading Friday a bill that will expand the powers of the Federal Security Service to allow it to issue warnings to people whose actions “create the conditions for a crime.”
No definition of those actions is provided in the bill, stirring fears of possible abuse among human rights activists. 
The Duma passed the bill in a vote of 354-96, with deputies from the Communist and A Just Russia parties voting against it.
The Federation Council was expected to approve the bill Monday, it said on its web site. The legislation will then go to President Dmitry Medvedev to be signed into law.
Medvedev defended the bill at a news conference with German Chancellor Angela Merkel last week, calling the changes a domestic security matter.
But human rights group Memorial denounced it, comparing it in a statement with a 1972 decree that allowed the KGB, the FSB’s predecessor, to warn dissidents who went public with their views to not engage in “anti-social activities that contradict national security.”
Critics fear that the bill could be used to further crack down on opposition protests and intimidate critical media outlets.
Three activists with the liberal opposition Yabloko party were detained Friday as they distributed leaflets opposing the bill outside the Duma, Yabloko said.
The Duma approved a total of 24 bills on Friday, its last working day before adjourning for the summer recess. Deputies passed an all-time-record 249 bills in the spring session, the Duma’s web site said.

TITLE: Helsinki Train Necessitates Bridges
PUBLISHER: The St. Petersburg Times
TEXT: Twenty-eight new bridges will need to be built over the railway between St. Petersburg and Helsinki if massive traffic jams are to be avoided at the current level-crossings that traverse the line after a new rail service to and from the Finnish capital begins at the end of this year. 
Delovoi Peterburg newspaper reported that Russian Railways has developed a plan for the construction of the bridges over the line between St. Petersburg’s Finland railway station and Buslovskaya railway station on the Finnish border, but questions remain about sources of funding.
The cost of a single bridge ranges from 900 million rubles ($29.5 million) to 2 billion rubles ($65.6 million), experts say. The bridges are expected to be built by 2013 but before then car traffic will be halted at level-crossings to allow the expanded rail traffic service to pass.
The new train, the Allegra, is set to go into service on Dec. 12, with testing of the route taking place from September.
The Allegro will consist of seven wagons with a capacity of 350 passengers, and will shave two hours off the journey time between St. Petersburg and Helsinki to 3 ? hours.
The lack of bridges over the Moscow-St. Petersburg line became a source of conflict when the new Sapsan high-speed train went into service last year. Car drivers and local residents have repeatedly thrown stones at the trains in protest at level-crossing delays and timetable alterations.

TITLE: Lukashenko Has New Friend
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Belarussian President Alexander Lukashenko has used Georgian leader Mikheil Saakashvili in a surprising counterstrike against the Kremlin, although analysts said their alliance is unlikely to last.
An interview with Saakashvili, a bitter enemy of the Kremlin, appeared on state-run Belarussian Channel One late Thursday, days after NTV television, controlled by Gazprom, slammed Lukashenko in a documentary on July 4.
The NTV film, “Krestny Batka,” an allusion to both the classic “Godfather” mafia movies and Lukashenko’s nickname, accuses the Belarussian president of political repressions, creating a police state and even sympathizing with Hitler.
Saakashvili told Belarussian television that the documentary was “almost trying to accuse Belarussian authorities of being cannibals.”
“It is very sad and has the smell of a propaganda war,” said Saakashvili, who also thanked Belarus for not bowing to Russian pressure to recognize the independence of Georgia’s breakaway republics of South Ossetia and Abkhazia.
Saakashvili said Russia could not criticize another country for rights violations since it was guilty of them itself. He cited the unsolved murders of journalist Anna Politkovskaya and human rights activist Natalya Estemirova as examples.
Lukashenko said last week that he met with Saakashvili during a trip to Ukraine earlier this month. But he said no special coalition was planned with Georgia, Interfax reported.
“Our meeting was not aimed against anyone,” Lukashenko said, adding that no one should raise a “fuss” about it.
NTV struck back Friday, when it aired a sequel to its documentary, this time linking Lukashenko to self-exiled businessman and Kremlin arch-nemesis Boris Berezovsky and ousted Kyrgyz leader Kurmanbek Bakiyev, who has found exile in Belarus. The film also claimed that Lukashenko led a playboy lifestyle.
“Lukashenko wants to criticize Putin and Medvedev, and he needs Saakashvili for this,” said Sergei Markov, a State Duma deputy with United Russia.
Yaroslav Romanchuk, an independent Belarussian political analyst, agreed that the purpose of the interview was to “humiliate Putin and Medvedev.”
But he said he did not expect Minsk and Tbilisi to form a stable anti-Kremlin alliance. “All that unites them is their dislike of the Kremlin,” Romanchuk said.
He also noted that the interview could damage Saakashvili’s reputation because Georgia has supported Belarussian democratic movements that have been persecuted by Lukashenko.
Relations between Georgia and Belarus have been strained for years, and the countries only established proper diplomatic ties in 2007.
Russian lawmakers were united in criticizing Saakashvili’s interview. Duma Speaker Boris Gryzlov called Saakashvili an “outcast” and said the interview will not “affect the relationship with Russia in a good way,” Itar-Tass reported.
Communist leader Gennady Zuganov and Liberal Democratic Party leader Vladimir Zhirinovsky also spoke sharply about the interview.
But Markov said Lukashenko knew that the Kremlin would not go beyond angry words.
“He is needed by everybody,” Markov said of Lukashenko. “His country is in the middle of Europe, and it controls [energy] transit routes.”

TITLE: In Brief
TEXT: <b>Record Drownings</b>
MOSCOW (Bloomberg) — Moscow’s heat wave claimed 25 drowning victims over the weekend as residents sought refuge from the worst heat wave in decades, Interfax reported, citing unidentified health officials.
July 17 will go down in history as a “black” day, after a single-day record 11 people drowned in the capital, the news service said.

<b>Death Confirmed</b> 
MOSCOW (AP) —Dubai authorities have confirmed that Sulim Yamadayev, a member of an influential Chechen family at odds with Chechen President Ramzan Kadyrov, was killed in March 2009, Interfax reported Friday.
Yamadayev’s brother Isa has repeatedly denied that Sulim was dead, saying he was seriously wounded in an attack outside his home.
But a spokesman for the Russian Prosecutor General’s Office said it has obtained information from Dubai authorities confirming Sulim Yamadayev’s killing and burial. He did not elaborate.

TITLE: Poet Donates House to State
PUBLISHER: The Associated Press
TEXT: PEREDELKINO, Moscow Region — Yevgeny Yevtushenko, Russia’s most renowned living poet, has given his house along with an extensive art collection to the state as a museum.
The two-story museum in the writer’s colony of Peredelkino, just outside Moscow, joins nearby house-museums, including those of Boris Pasternak and Bulat Okudzhava. It contains paintings by Marc Chagall, Joan Miro, Pablo Picasso and Georges Braque.
The museum also exhibits Yevtushenko’s photographs from his travels in Siberia, China, Italy and the Middle East, and items collected during his life, among which is American writer Mark Twain’s cane.
Yevtushenko, who opened the museum at a ceremony Saturday, came to prominence during the Soviet Union’s cultural thaw under Nikita Khrushchev.
One of his best-known poems is 1961’s “Babi Yar,” which denounces anti-Semitism and the failure of Soviet authorities to build a monument commemorating the Nazi massacre of Jews near Kiev.
At the height of his fame, Yevtushenko read his work in packed football stadiums and arenas. There was a recital in 1972 in New York’s Madison Square Garden, an audience of 27,000 in Mexico City, and a crowd of 200,000 in 1991 who came to listen during a failed coup attempt in Moscow.
Yevtushenko, who turned 77 on Sunday, has traveled to 96 countries and now divides his time between Moscow and Tulsa, Oklahoma, where he teaches poetry at the University of Tulsa.
Before cutting the ribbon, Yevtushenko read his recent poem, “U.S.S.R. - FRG 1955. (Reportage from past century),” about a football game that brought Russian war veterans and Germans together 10 years after the end of World War II. He expressed hope for the future.
“I grew up during the Cold War, now it is a time of ‘Cold Peace,’” Yevtushenko said.
The director of the State Museum of Contemporary History of Russia, Sergei Arkhangelov, said poets in Russia have a vital social role.
“A poet in Russia is not just a poet; it is a role of an activist,” he said. “The development of Russian intellect is tied to him. For us it came through these works, tied to his name.”
The museum will open this week. Besides its permanent exhibition, it will feature shows by contemporary Russian artists, poetry readings and a library of archives.

TITLE: Russian-Made Web Site Identifies Authors’ Styles
PUBLISHER: The Associated Press
TEXT: NEW YORK — For anyone who has ever thought that Charles Dickens was lurking inside his or her prose, a Russian-created web site claims that it can find your inner author.
The recently launched I Write Like has one simple gimmick: You paste a few paragraphs that exemplify your writing, then click “analyze” and — poof! — you get a badge telling you that you write like Stephen King or Ernest Hemingway or Chuck Palahniuk.
The site’s traffic has soared in recent days, and its arrival has lit up the blogosphere. Gawker tried a transcript from one of the leaked Mel Gibson phone calls. The suggested author: Margaret Atwood.
The New Yorker found that an invitation to a birthday party was James Joycean. Many others were aghast to discover that they wrote similarly to “The Da Vinci Code” scribe Dan Brown.
The New York Times tried putting in actual novels, such as “Moby-Dick.” Herman Melville, it turns out, writes less like himself than King, according to I Write Like.
Atwood, herself, tried the site only to discover that she also apparently writes like King. “Who knew?” she tweeted.
Obviously, I Write Like isn’t an exact science. But simply the idea of an algorithm that can reveal traces of influence in writing has proven wildly popular.
Though the site might seem the idle dalliance of an English professor on summer break, it was created by Dmitry Chestnykh, a 27-year-old Russian software programmer currently living in Montenegro. Though he speaks English reasonably well, it’s his second language.
“I wanted it to be an educational thing and also to help people write better,” he said.
Chestnykh modeled the site on software for e-mail spam filters. This means that the site’s text analysis is largely keyword based. Even if you write in short, declarative, Hemingwayesque sentences, it’s your word choice that may determine your comparison.
Most writers will tell you, though, that the most telling signs of influence come from punctuation, rhythm and structure. I Write Like does account for some elements of style by things such as number of words per sentence.
Chestnykh has uploaded works by about 50 authors — three books for each, he said. That, too, explains some of its shortcomings. Melville, for example, isn’t in the system.
But Chestnykh never expected the sudden success of the site, and he plans to improve its accuracy by including more books and adding a probability percentage for each result. He hopes that it can eventually be profitable.
“I think that people really like to know how they write, even if it’s not accurate results,” Chestnykh said. “Still it’s fun for them.”
It’s easy to find a laugh. U.S. President Barack Obama’s Oval Office speech in June? David Foster Wallace. Glam rocker Lady Gaga’s lyrics to “Alejandro”? William Shakespeare.
Whatever the deficiencies of I Write Like, it does exude a love of writing and its many techniques. The site’s blog updates with inspiring quotations from writers, and Chestnykh — whose company, Coding Robots, is also working on blog editing and diary writing software — shows a love of literature. He counts Gabriel Garcia Marquez and Agatha Christie among his favorites.
“I had a typewriter when I was six years old,” he said. “But I’m not a published writer, and I don’t think I write very good.”

TITLE: New Leaders Named by Medvedev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev has completed the latest regional reshuffle by appointing new leaders to Bashkortostan and Karelia, Interfax reported Saturday.
RusHydro deputy CEO Rustem Khamitov, 56, will become the president of Bashkortostan, replacing Murtaza Rakhimov, who resigned last week after 17 years in office.
In Karelia, former Federation Council Senator Andrei Nelidov, 53, will replace Sergei Katanandov, who resigned in June. The appointments are expected to be confirmed this week by the regions’ local legislatures.

TITLE: ‘Eight-Legged Oracle’ Picks Russia’s Next President
PUBLISHER: The St. Petersburg Times
TEXT: One of Russia’s most popular newspapers said Friday it had managed to get Paul, the oracle German octopus who accurately predicted the World Cup results, to forecast who will be Russia’s next president, Reuters reported.
But Komsomolskaya Pravda said the results of Paul’s prediction for the 2012 presidential election have been sealed until election year.
The paper said one of its reporters approached Paul, who lives at the Sea Life attraction in the German city of Oberhausen, and put two sheets of paper with the names of Russian Prime Minister Vladimir Putin and President Dmitry Medvedev in front of the soothsaying invertebrate, which pointed to one of the names with a tentacle.
Since Medvedev replaced Putin as president in 2008, with the latter taking over the cabinet, it has been unclear who is the number one decision-maker in a country with a tradition of strong, individual rulers.
Reuters reported that a recent poll conducted by Russia’s Levada-Centre shows that 76 percent of respondents believe Putin is the country’s most influential person, while 67 percent see Medvedev as top leader.
Both politicians at some point said they were considering running for president in 2012. In April Medvedev said they would decide together who is going to run. Putin said in June they would talk about it closer to the election date.
Paul the octopus became famous for accurately predicting the outcome of Germany’s World Cup campaign and the World Cup final between Spain and The Netherlands.
His Russian presidential pick has been conducted in a fashion rather different to his World Cup prognostications, where he predicted football matches by picking food from two different transparent containers each adorned with a flag.

TITLE: Dresden Festival Celebrates Russian Music, Gergiev
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: DRESDEN, Germany — Russian music took center stage at this year’s edition of the respected Dresdner Musikfestspiele, an annual classical music festival in Dresden, which opened in mid-May with a performance by the Russian National Orchestra under the baton of Mikhail Tatarnikov. 
The festival was dedicated to celebrating Russian music. This year’s festival even had a second name — Russlandia — and it featured appearances by an array of internationally famed musicians including the violinist Vadim Repin and the pianist Richard Goode, as well as the Pittsburgh Symphony Orchestra under Murray Perahia and the Bolshoi Theater Symphony Orchestra under Vasily Sinaisky. 
St. Petersburg’s Mariinsky Theater Symphony Orchestra gave a concert conducted by Valery Gergiev at the festival, performing the overture from Richard Wagner’s opera “Tannhauser,” Sergei Rachmaninoff’s Rhapsody on a Theme of Paganini and Tchaikovsky’s Sixth Symphony. 
The annual Dresdner Musikfestspiele was founded in 1978 in Dresden in the former East Germany at the height of the Cold War. 
In its early years, the event welcomed some of the finest musicians from the West such as Herbert von Karajan and the Berlin Philharmonic Orchestra, Claudio Abbado and the La Scala Symphony Orchestra and Zubin Mehta with the New York Philharmonic Orchestra.
According to the festival’s director, the outstanding cellist Jan Vogler, the Dresdner Musikfestspiele showcases a city that was, for many years, on the border between the capitalist West and the socialist East.  This had a strong influence on its cultural policies. 
“We are aiming to re-evaluate our attitude to Russia’s musical legacy and will be focussing on the greatest contemporary interpreters of Russian music,” Jan Vogler said. “With this in mind, we have invited Russian musical ensembles to Dresden which are today international trendsetters in classical music. These naturally include the Mariinsky Theater Symphony Orchestra, the style of which combines European elegance and Russian emotionality in the most unique manner.” 
During the festival, which ended last month, the Glashutte Original Music Festival Prize 2010 was presented to maestro Gergiev for his support of talented young musicians. Vogler and Gunter Wiegand, head of the German watchmaking company Glashutter Uhrenbetrieb, took part in the ceremony. 
The prize includes an award of 25,000 euros. 
Previous recipients of this prestigious European prize, founded in 2004, have included conductor Kurt Masur, choreographer John Neumeier, violinist Gidon Kremer, conductor Gustavo Dudamel and mezzo-soprano Christa Ludwig. 
Gergiev has promised to donate the prize money to the development of the International Tchaikovsky Competition — one of the world’s most important music competitions and of which he is chairman. 
“I have been connected with Dresden for a long time; it was in this city that I once took one of the most important steps in my music career,” the Russian conductor said. “It is naturally a great honor for me to rank alongside such prize-winners of previous years.” 
The festival’s ambitious director, Vogler, who is currently on his second year as the head of the event, feels the festival has the potential to become Germany’s premier classical music festival. 
In 2009, the festival, held under the Neue Welt (the New World) title, explored musical links between Germany and North America. 
This philosophy of looking into the musical influences of various countries and cultures looks set to continue.
“We would like to push geographical and stylistic boundaries as far as possible,” Vogler said.

TITLE: World’s Oldest Bubbly Found in Baltic
PUBLISHER: The Associated Press
TEXT: STOCKHOLM — Now that’s some vintage bubbly.
Divers have discovered what is thought to be the world’s oldest drinkable champagne in a shipwreck in the Baltic Sea, one of the finders said Saturday. 
Diving instructor Christian Ekstrom said the bottles are believed to be from the 1780s and likely were part of a cargo destined for Russia’s imperial court of St. Petersburg. 
The nationality of the sunken ship has not yet been determined.
They tasted the one bottle they’ve brought up so far before they even got back to shore.
“We brought up the bottle to be able to establish how old the wreck was,” he said. “We didn’t know it would be champagne. We thought it was wine or something.”
Ekstrom said the divers were overjoyed when they popped the cork on their boat after hauling the bubbly from a depth of 60 meters.
“It tasted fantastic. It was a very sweet champagne, with a tobacco taste and oak,” Ekstrom said.
The divers discovered the shipwreck last Tuesday near the Aland Islands, between Sweden and Finland. About 30 bottles are believed to be aboard the sunken vessel.
Ekstrom said he is confident of the champagne’s age and authenticity, but samples have been sent to laboratories in France for testing. 
“We’re 98 percent sure already because of the bottle (we found),” he said.
Swedish wine expert Carl-Jan Granqvist said each bottle could fetch nearly $70,000 if the corks are intact and the sparkling drink is genuine and drinkable.
“If this is true, it is totally unique,” said Granqvist, one of the experts contacted by Ekstrom and his team. “I don’t know of any other (drinkable) bottle this old. I’ve never even heard of it.”
Granqvist said he had seen pictures of the bottle, and it had languished in near-perfect storage conditions — in the dark at a constant cold temperature.
“If it’s the right atmosphere outside, and inside the bottle the cork is kept dry in the middle; it keeps itself,” he said.
According to French champagne house Perrier-Jouet, a subsidiary of Pernod Ricard, their vintage from 1825 is the oldest recorded champagne still in existence.

TITLE: Rare Baby Mammoth Takes a Break in France
PUBLISHER: The Associated Press
TEXT: PARIS — After tens of thousands of years under the Siberian frost, a baby woolly mammoth is taking a summer vacation in southeast France.
Baby Khroma, one of the oldest intact mammoths ever found, went on display in a French museum Friday — after it underwent special tests to ensure it was no longer bearing the anthrax believed to have killed it.
Khroma is on display at the Musee Crozatier in Puy-en-Velay in a special cryogenic chamber kept at -18 degrees C (-0.40 Fahrenheit).
The 80-centimeter-high, 1.6-meter-long prehistoric guest may be the oldest baby mammoth ever discovered. Carbon dating methods failed to determine its age, suggesting it is more than 50,000 years old, said French researchers and Sergei Gorbunov, project coordinator for the Geneva-based International Mammoth Committee. Russian news reports have said it is 32,000 years old.
It will undergo further isotope analysis in France to try to pin down its age — and its gender, up to now unclear.
“It’s a unique discovery,” Gorbunov said by telephone. “Any discovery of a new mammoth gives us new scientific information about prehistory.”
Similar enthusiasm was felt six months ago in the United States when a 42,000-year-old baby woolly mammoth named Lyuba arrived at the Field Museum in Chicago, where it is still on display. The practically intact specimen, discovered in 2007 in Siberia as well, is the best-preserved of her kind, according to researchers.
For Tom Skwerski, project manager for the Chicago exhibition, Khroma will be an important addition to the specimen pool.
“There is still a lot to learn about woolly mammoths, and the more specimens we find, the closer we get to answering those questions,” he told AP. Some aspects of those animals’ lives, like migration patterns, still challenge scientists.
Such mammoths offer scientists the opportunity to do analysis that they cannot carry out on skeletons, such as studying stomach contents and fur. Putting them on display gives a broader public a tangible link to the prehistoric past.
Khroma, dug out last year from the Yakutia region in Siberia, arrived in France on Sunday as part of a year of Franco-Russian cross-cultural events.
The mammoth was delayed by three weeks after concerns surfaced about the transfer of an animal that might contain lethal bacteria. Russia’s chief epidemiologist, Gennady Onishchenko, said the mammoth died of anthrax, according to Russian news reports. Russian scientists carried out further study of the risks involved, and the trip was given the go-ahead, Gorbunov said.
After arriving in France, Khroma went to a special conservation facility in Grenoble, where it underwent gamma ray treatment for eliminating any potentially lethal bacteria. The presence of anthrax could not be totally confirmed from the first studies, but the treatment was used as a precaution, said the museum’s paleontologist, Frederic Lacombat.
The laboratory has used the same procedure in the past, when it treated the Ramses II mummy for parasites.
Researchers plan to take the animal in late August to a nearby medical facility for an autopsy and scanning.
The researchers hope to discover valuable information about the mammoth calf in time for the 5th International Conference on Mammoths in Puy-en-Velay in early September.
The exhibit will also display other attractions, such as life-size replicas of other mammoths discovered previously and the skull of a mammoth found in France in 2008.

TITLE: Pianist Returns to Thailand to Face Child Sex Charges
PUBLISHER: The Associated Press
TEXT: PATTAYA, Thailand — A renowned Russian pianist and conductor arrested on child sex charges returned to Thailand for a court hearing Monday, honoring the terms of his controversial release on bail that allowed him to leave the country.
Mikhail Pletnev, the conductor and founder of the Russian National Orchestra, told reporters before his court appearance that allegations he had raped a 14-year-old boy were “not true.”
“During the police search of my home, nothing connected with the allegations — no photographs or other visual material — was found on [my] computer,” he said, reading from a prepared statement.
Thailand has long been known as a haven for sex tourists and pedophiles because of widespread prostitution and lax law enforcement. Authorities have voiced intentions to crack down on such offenses, and the conductor’s July 6 arrest is one of the most prominent cases to date.
Pletnev could face up to 20 years in jail and a fine of up to 40,000 baht ($1,200) if found guilty.
After his arrest in the seaside resort town of Pattaya, the provincial court granted him permission to leave the country to perform at a festival in Macedonia, after posting bail of about $9,000.
Anti-pedophile activists, doubting he would return, had criticized the action as too lenient for someone accused of a serious crime.
“[Since my return] I hope everyone now accepts that I am a man of honor and that I am a man of my word,” said Pletnev.
Internationally known as a pianist, conductor and composer, Pletnev won a 2005 Grammy for an arrangement of Prokofiev’s “Cinderella” which was recorded with him and Martha Argerich on piano.
He owns a restaurant and the Euro Club — which includes a swimming pool and badminton courts — in Pattaya, where he reportedly lives in a palatial compound.
Activists still believe there is a strong case against him.
“It’s up to the police now to collate all the evidence and call the witnesses,” said Supagon Noja of the Child Protection and Development Center, a non-governmental organization.

TITLE: Sistema Suggests Ban On Imported GPS Devices
PUBLISHER: Combined Reports
TEXT: Russia should legally prohibit the import of devices that operate using GPS satellite positioning technology to help develop the competing Glonass system, Sistema chief Vladimir Yevtushenkov told Prime Minister Vladimir Putin on Friday.
Under the proposal, consumer navigation devices destined for use in Russia would be required to have a Glonass receiver alongside the GPS one, possibly forcing more gadget makers to move part of their production to Russia.
Sistema has discussed the matter “with practically all of the suppliers of such equipment,” including Nokia, Siemens and Motorola, Yevtushenkov said in comments posted on the government web site.
Makers of telephones and smartphones “understand perfectly well that we will close the market for equipment that doesn’t have a Glonass chip. They only want us to do this legislatively,” he said. “We aren’t able to do this legislatively yet because we have some of our own problems to untangle, making chipsets and so forth.”
A source with knowledge of the matter said Friday that the Industry and Trade Ministry was preparing customs regulations that could raise duties on various types of devices.
Russia has been developing Glonass, its answer to the U.S. Global Positioning System, since 1976 but still cannot produce enough chips for mass manufacture of Glonass-compatible devices. Funding stalled in the early 1990s, but in 2006, then-President Putin told the government to accelerate the program and look for commercial clients.
Russia and other emerging countries like India are keen to develop the system to lessen their dependence on GPS, which Washington can switch off for civilian subscribers, as it did during military operations in Iraq.
GPS, originally developed by the U.S. military, was opened for commercial use in the 1990s and is currently the only fully developed satellite navigational system.
Yevtushenkov justified the move, saying the United States had protected its market when GPS was being developed. RTI Systemy and Sitronics — both of which are controlled by Sistema — are involved in developing the Glonass system.
There will be some pilot batches of Glonass chipsets available for commercial use this year, while “2011 should become a year of mass usage of Glonass equipment in Russia,” Yevtushenkov said.
Putin tentatively backed the initiative, saying “it’s good our partners understand” that Russia will defend its national interests.
“We need to build relations with them the right way — like we did, for example, with the carmakers, when they were shown the trend for how the situation would develop,” Putin said. “They reacted in a timely fashion, and now … in my opinion, they’re very happy with what’s happening.”
But the prime minister chided Yevtushenkov for outsourcing much of Sistema’s technology work to other countries, especially India, where labor is cheaper.
“I remember your plans for setting up partial production in countries where technology permits and production is cheap. Nevertheless, it’s necessary to move toward creating jobs here domestically,” Putin said.
Gleb Mishin, head of Acer’s office in Russia, said the restrictions should not apply to devices whose main function is not navigation, such as cell phones. Nokia spokeswoman Viktoria Yeryomina confirmed the talks with Sistema, saying the “topic is interesting to us” but declining to elaborate.
A number of popular cell phones and computers have a built-in GPS, including several of Apple’s iPhones and phones made by Nokia and Samsung.
(SPT, Vedomosti)

TITLE: Illegal Terraces Face Charges
AUTHOR: By Maria Buravtseva and Yelena Dombrova
PUBLISHER: Vedomosti
TEXT: The prosecutor’s office has identified summer cafes working without land lease contracts with City Hall. Obtaining permission for seasonal terraces is very difficult, businessmen say.
The Vasileostrovsky district prosecutor’s office found breaches of land legislation by popular caf? chains including Teremok — Russkiye Bliny, Kofe Khaus. Espresso and Cappuccino Bar, and Express during an inspection, the prosecutor’s press office said last week. 
Teremok set up eight tables on a 78.5 square-meter area, while Kofe Khaus set up 14 tables on 18 square meters without agreeing it with KUGI (the City Property Management Committee). 
Express opened a 60 square-meter raised wooden terrace for eight tables without permission. According to a representative of the prosecutor’s office, all of the organizations have promised to sign a contract with KUGI and pay for leasing the plots. 
The companies and their management may be charged with illegally occupying a land plot, which carries a fine of up to 20,000 rubles ($656). Representatives of Teremok and Kofe Khaus declined to comment, while Express could not be reached for comment.
An employee of one of the companies said that the caf? didn’t manage to sign a contract in time due to lengthy negotiations with the Committee of Economic Development and KUGI. According to the source, the process for obtaining permission is incomprehensible, and KUGI was taking a long time to approve documents that the company had submitted back in April. 
The permission process is compiled by the Committee of Economic Development, Industrial Policy and Trade (KERPPiT) based on proposals by district administrations, said an official from KUGI. Completing the process can take up to six months, but getting approval from KUGI does not take long, he said. 
The committee constantly deals with queries about summer terraces, and KERPPiT even wrote to KUGI on June 24 requesting it to simplify the lease legislation process, said a KERPPiT representative.
It is difficult to obtain permission for terraces, and as a result, the company abandoned its plans to open a terrace on Italianskaya Ulitsa, said Yakov Pak, marketing director for the Idealnaya Chashka caf? chain. 
Getting permission is a time-consuming process, but summer terraces increase the number of clients to a restaurant by 50 percent, said Margarita Zhurina, a representative of the Ginza Project restaurant group. 
Summer terraces are always profitable, they ensure an increase in clients — especially tourists — of 20 to 22 percent, said Valeria Silina, PR director for RosInter Restaurant Holding. According to Silina, it costs half as much to rent terrace space as it does to rent indoor premises. Investment of up to 500,000 rubles ($16,400), depending on the terrace, will pay for itself during the season, she said.
KUGI regularly starts legal proceedings against caf?s working without a rental agreement, said a KUGI representative. According to him, leasing land for a summer terrace costs from 20,000 up to 200,000 rubles ($656 to $6,564) per square meter per year, depending on the location.

TITLE: Retail Sales, Employment Advance
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian retail sales surged the most since November 2008 last month as the number of unemployed slid for a third consecutive month, signaling domestic demand may help drive the recovery.
The jobless rate in June fell to 6.8 percent, the lowest level in 20 months, from 7.3 percent in May, the Federal Statistics Service in Moscow said in an e-mailed report Monday. Retail sales rose for a sixth month, jumping an annual 5.8 percent after growing 5.1 percent in May. Real wages gained 5.5 percent and disposable incomes advanced 1.4 percent, the report said.
The rise in employment and consumer spending may give companies the confidence to boost investment as the world’s biggest energy supplier recovers from its worst recession since the Soviet Union’s collapse in 1991. The economy expanded an annual 2.4 percent last month, the fastest pace since November 2008, according to VTB Capital.
“The huge state spending spree continues to show up in both real wage and retail sales data,” Credit Agricole Cheuvreux said in a report before the release. “The spending outlook is good, particularly as the unemployment rate continues to show a downside trend.”
The government may raise its 4 percent forecast for economic growth this year as the outlook continues to improve, Economy Minister Elvira Nabiullina said on July 15. Fixed capital investment rose an annual 7.4 percent last month, its fourth monthly gain and the biggest jump since September 2008.

TITLE: Family Fires Back in Polyus Gold Takeover Investigation
PUBLISHER: Bloomberg
TEXT: The Assaubayevs, locked in a dispute with Polyus Gold, said Russia’s biggest producer of the metal was using allegations against the family to divert attention from a Kazakh government probe of the company.
Polyus — which acquired 50.1 percent of KazakhGold Group last year from the Assaubayevs — may lose the Kazakh unit’s mining permits as a result of the probe, the family said Friday.
KazakhGold management, including chairman Yevgeny Ivanov, who is also chief executive of Polyus, may face criminal proceedings in Kazakhstan, the statement said.
“Whether or not KazakhGold will lose its mining licenses in the country will totally depend on how active a position the Kazakh regulators take in defending the interests of the Assaubayevs,” Ivanov said Friday. “If the licenses are withdrawn, we will consider this unlawful and take action.”
KazakhGold said in June that it intended to acquire its parent Polyus in a so-called reverse takeover.
Kazakhstan’s Industry Ministry said July 12 that it annulled its previous approval of Polyus’ 2009 acquisition and ruled out the sale of additional shares by KazakhGold as part of the reverse takeover.

TITLE: In Brief
TEXT: <strong>EBRD Helps Pulkovo</strong>
MOSCOW (Bloomberg) — The European Bank for Reconstruction and Development and the International Finance Corporation raised a $200 million loan from a group of eight banks to upgrade and expand Pulkovo airport in St. Petersburg, Russia, the EBRD said Monday in an e-mailed statement.

<strong>Drought Consequences</strong>
MOSCOW (Bloomberg) — Russian inflation may be 1.5 to 2 percentage points higher than forecast this year because of the drought, Arkady Zlochevksy, president of the Russian Grain Union, told reporters in Moscow on Monday.
The government has declared emergencies in 17 crop-producing regions because of the worst drought in at least a decade as temperatures rose to as high as 36 degrees Celsius (96.8 degrees Fahrenheit). The heat will persist in central Russia and along the Volga River through July 23, with rains coming to Siberia and southern parts of the country, according to the Federal Hydrometeorological Service.
The drought may contribute to consumer-price growth from September if the country harvests less than 80 million metric tons of grain, RIA Novosti cited Deputy Economy Minister Andrei Klepach as saying Monday.

<strong>Air Orders Expected</strong>
MOSCOW (Bloomberg) — Russian companies expect to sign “several” billions of dollars of deals at the Farnborough Air Show this week, United Aircraft Corp. Chief Executive Officer Alexei Fyodorov told reporters there, Interfax reported.
Most of the orders will be for the new SuperJet and MC-21 passenger aircraft, the Russian news service cited Fyodorov as saying Monday.

<strong>IIB Buys Time</strong>
MOSCOW (Bloomberg) — International Industrial Bank, the Russian lender controlled by lawmaker Sergei Pugachyov, said 90 percent of investors in its 200 million euros ($253 million) of 9 percent notes agreed to extend repayments.
The bank will meet on July 21 with owners of the notes, on which IIB defaulted earlier this month, to vote on whether to pass “extraordinary resolutions from the meeting on July 6,” the Moscow-based lender said in an e-mailed statement late on Friday. According to preliminary results of the vote, 90 percent of the investors provided instructions to vote in favor of the resolutions, IIB said.

<strong>VW to Issue Loans</strong>
MOSCOW (Bloomberg) — Volkswagen, Europe’s largest automaker, received a banking license in Russia to issue car loans, Kommersant reported, citing the central bank. 
Sberbank, Russia’s largest lender and Volkswagen’s loan partner, expects to continue cooperating with the German company, the newspaper said, citing Natalia Karaseva, the state-run bank’s retail loan chief. 

<strong>Gas Tax to Rise</strong>
MOSCOW (Bloomberg) — Russia’s government agreed to raise its tax on extracting natural-gas next year, Vedomosti reported, citing unidentified officials.
The government is still discussing the size of the increase, which will probably be 10 percent or 15 percent, the Moscow-based newspaper said. 
Gazprom, the world’s biggest gas company, would have to pay an extra 11.8 billion rubles ($386 million) a year if the tax is increased 15 percent, Vedomosti said, citing analyst estimates.

TITLE: Finnish Ban Suspended
PUBLISHER: The St. Petersburg Times
TEXT: The Agriculture Ministry’s safety watchdog on Thursday agreed to let 14 Finnish food producers continue sending their goods to Russia until July 23, temporarily lifting a ban over violations of sanitation norms.
The Federal Veterinary and Phytosanitary Inspection Service said in a statement late Wednesday that it had banned animal-based products from 14 plants effective July 9, without commenting on the nature of the violations.
The service did not say Thursday why it pushed back the date, but political factors could be at play.
President Dmitry Medvedev is scheduled to visit Finland on Tuesday and Wednesday to meet Finnish President Tarja Halonen.
Among the companies caught up in the ban was dairy producer Valio, which had four of its factories blocked, Finnish newspaper LTE reported. Valio’s Russian unit sold 71.6 million tons of goods last year, some of which are made in Russia, Vedomosti reported.
The head of Finland’s food safety body, Jaana Husu-Kallio, said Thursday that she was relieved that Russia had backtracked on the restrictions.
“It was good news. Now we have more time to clarify with the foodstuffs industry precisely, and facility by facility, why the import ban was imposed. We now want to assure the Russian authorities that all is in order,” she told Finnish newspaper LTE.
“I don’t believe that they will all be lifted. The target is to get some of the bans rescinded,” Husu-Kallio said.

TITLE: Russia, Bulgaria Boost Energy Cooperation
AUTHOR: By Elizabeth Konstantinova
PUBLISHER: Bloomberg
TEXT: MOSCOW — Bulgaria will no longer use intermediaries when arranging natural-gas contracts with Russia in order to cut costs and avoid losing out in the event of supply disruptions.
“The new contracts will be signed between Bulgargaz and Gazpromexport,” Bulgaria’s Energy Minister Traicho Traikov said Monday in an interview with bTV television, referring to their respective state energy companies. “This will be a direct contract which will enable us to seek compensation for any disruptions.”
Under contracts signed in 1998 and 2006, Russia’s gas export monopoly Gazprom sells the fuel to Bulgaria via Wintershau and Overgaz as well as its export arm Gazpromexort, all companies in which it holds a stake. Bulgaria bore the brunt of a dispute between Russia and Ukraine in 2008 that led to widespread supply cuts. The government was unable to claim compensation because it didn’t have a direct contract with Gazprom.
Russian and Bulgarian energy officials held three meetings in the past 10 days to discuss joint energy projects including the construction of a 2,000-megawatt nuclear power plant on the Danube, natural-gas supply contracts and the South Stream gas pipeline.
“It is difficult to negotiate competitive prices as Bulgaria entirely relies on Russian supplies,” Traikov said. “We have yet to find out by how much we’ll be able to reduce prices.”
Russia will respond Aug. 10 to Bulgaria’s terms for a 10-year gas supply agreement with Gazprom, Traikov said. The contracts should be signed by June 2011 and take effect starting 2012.
Gazprom pumps 17.8 billion cubic meters a year to Turkey, Greece and Macedonia via Bulgaria. About 3.5 billion cubic meters of that is consumed by Bulgaria.
Bulgartransgaz, Bulgaria’s state run company that oversees gas pipelines, will form a joint company with Gazprom by February to assess the feasibility of the proposed South Stream pipeline that will run across the Black Sea via Bulgaria to western Europe.
The government will take a final decision on whether to continue with the project based on its viability in the spring of 2011, Traikov said.
The Bulgarian section of the pipeline is estimated to cost $835 million, out of a total cost of 20 billion euro ($26 billion).
Bulgaria also backs the OMV-led Nabucco pipeline, which aims to bring gas from the Caspian Sea region and the Middle East to Austria via Turkey, and thereby reduce Europe’s reliance on Russian supplies. The two pipelines do not compete on Bulgarian territory, according to Bulgarian Prime Minister Boiko Borisov.

TITLE: Sakhalin-2 Posts Surprise Profit on LNG Shipments
PUBLISHER: Bloomberg
TEXT: MOSCOW — Gazprom and Royal Dutch Shell’s Sakhalin-2 venture posted an unexpected profit last year after oil and liquefied natural gas shipments beat targets to offset losses from a delay in the project.
Sakhalin Energy, operator of Russia’s only LNG plant, had net income of $582 million, compared with an expected loss of $870 million, according to a company presentation to investors.
The partners had estimated a loss because a delay in the start of LNG output forced them to compensate customers for contracted volumes, two people familiar with the results said, declining to be identified in line with company policy. The venture, based in Sakhalin’s capital of Yuzhno-Sakhalinsk, does not report financial results.
Sakhalin Energy loaded the first commercial LNG cargo in March 2009, a delay from a planned start in the second half of 2008. A total of 81 cargoes of LNG and 59 cargoes of oil were loaded, beating targets for the year by more than 47 percent and 11 percent, respectively.
The LNG plant has allowed Russia, the holder of the world’s biggest gas reserves, to break into Asia-Pacific markets, with 65 percent of the volume contracted for Japan.
Sales reached $3.6 billion last year, and the venture cut operating expenses to $1.56 billion and capital expenditure to $846 million from a planned $2 billion and $1.14 billion, respectively, according to the presentation.
Gazprom declined to comment on the presentation, as did Ivan Chernyakhovsky, a spokesman at Sakhalin Energy.
Vera Surzhenko, a Shell spokeswoman in Russia, confirmed that the venture posted a profit before interest and after taxes last year. She declined to provide figures or comment on the presentation.
The venture reached operational profitability last year, Shell chief executive Peter Voser told Vedomosti.
The Sakhalin-2 partners had $21.3 billion in capital expenditure from 2001 through 2009, while total costs exceeded $24 billion, according to the presentation.
In 2005, Shell, then-majority owner, said the second phase of the project, which involved year-round crude output and production of LNG, would cost $20 billion, double an original estimate.
The announcement stirred controversy with the government, which will share royalties only after the investment is recouped. The dispute on costs and environmental damage led Shell to agree to cede control of the project to state-run Gazprom in 2006.
Russia in 2007 approved a second stage of investment for Sakhalin-2, allowing the spending of $19.4 billion until 2014. That level refers to costs that can be recovered under the production sharing agreement.
Gazprom controls Sakhalin Energy, Shell owns 27.5 percent. Mitsui holds 12.5 percent; Mitsubishi has 10 percent.

TITLE: Airbus, Boeing Have Rivals
PUBLISHER: Bloomberg
TEXT: PARIS — For more than a decade, Airbus and Boeing had only each other to watch.  
Now rivals from Canada, China and Russia are developing models to break into the narrow-body segment, dominated by about 10,000 Airbus A320s and Boeing 737s in operation and 4,000 on order. The single-aisle jet market will likely reach $1.68 trillion over the next 20 years, Boeing estimates.
“This cozy world of just the two of us is almost over,” Boeing chief executive Jim McNerney said in an interview. “We’re still going to compete like crazy. If you think you had to meet promises with two guys, think about when you’ve got five.”
The shifting dynamics will be visible at the Farnborough International Airshow, the world’s largest aerospace exhibition, which started Monday. Canada’s Bombardier, China’s state-owned Comac and Russia’s Irkut will brief on their jets’ development.
At stake is the incumbents’ hold on a narrow-body market that is the cash cow of the civil aviation industry, accounting for more than two-thirds of output and about 40 percent of sales. The two manufacturers churn out a combined 70 planes each month.
By the time the show returns to Farnborough in two years, Bombardier’s CSeries jet will likely be in test-flight phase, ahead of market entry in 2013. Comac and Irkut have said they will field challengers to Airbus and Boeing by 2016.
Boeing and Airbus will seek to use this year’s show to assert their dominance in the $60 billion commercial plane market. Boeing will bring its 787 Dreamliner, the jet’s first appearance in Europe, while Airbus will fly its A380, the biggest passenger jet with capacity for more than 800 seats.
About 153,000 people visited Farnborough in 2008, and exhibitors from 38 countries are signed up to come this year. The daily flying display will include drones, or unmanned aerial vehicles, for the first time.
Manufacturers have flagged the show as a guide to the strength of the recovery after airlines shunned new orders last year at the equivalent event in Paris. Airbus and Boeing combined won $64 billion in orders at the Farnborough 2008 show, mainly from the Gulf region.
“We are negotiating several deals and believe that we could have a good show,” said Airbus chief operating officer John Leahy. “The market is clearly firming as the economy recovers.”
In the first half of this year, Airbus won 131 orders, while Boeing won 177.
One field where the two companies remain without competition is in the market for wide-body planes, which comprise less than one-third of all jets built but represent about 45 percent of the value of planes delivered.
Airbus has begun building parts for the A350 jet, which seats as many as 350 passengers, in response to Boeing’s midsized, long-range 787 Dreamliner and the 15-year-old 777. That has increased pressure on Boeing to revamp or replace its 777 to battle with the A350, scheduled to begin service in 2013.
While none of the new jets competing with Airbus and Boeing will be on display because they remain in various stages of design, Bombardier already has orders for its CSeries. Deutsche Lufthansa, Germany’s largest carrier, plans to buy 30 units, and Republic Airways Holdings has ordered 40, bringing the backlog to 90. Qatar Airways, one of the world’s fastest-expanding airlines, has also said it may order the CSeries.
The 130- to 149-seat plane has a “high potential” of pulling in additional orders at Farnborough, JPMorgan Securities aerospace analyst Joseph Nadol said.
“One has to watch the competition; one has to take competitors seriously, like Bombardier, our Russian friends, and the Chinese,” Airbus CEO Tom Enders said. “The duopoly is slowly coming to an end. Maybe not as far as very large aircraft is concerned — that may take a little more time. At least I hope to enjoy that segment for a while before we see competition.”
Bombardier’s promise of lower emissions and fuel consumption, coupled with less noise, makes the company hopeful that it can capture half the market for 100- to 149-seaters over 20 years, aerospace division head Guy Hachey said.
In Russia, state-run Irkut is planning a 150- to 160-seat jet for 2016, promising 15 percent fuel efficiency over existing models. Irkut will display a mock-up of the plane’s cabin and cockpit in Farnborough and provide updates on its development.
The Chinese jet has support from local carriers. China Southern Airlines and Air China, two of the nation’s three major airlines, said they are prepared to buy the aircraft. Economic growth means that the world’s most populous nation will account for about one-third of Asia-Pacific aircraft orders over the next 20 years, Airbus says.
Comac has said it aims to sell more than 2,000 C919s over 20 years, with entry into service planned for 2016.
“I think they are definitely going to be a force in the industry — it’s inevitable,” British Airways chief Willie Walsh said in an interview. The timetable set by Comac is “ambitious,” said Walsh, who will seek an update on progress at the air show next week.
Airbus and Boeing have sought to blunt the upstarts’ momentum by telling airlines that they may put new, more-efficient engines on current models. Failure so far to upgrade or replace them as oil prices tripled over the last decade has left the door open for new challengers.
So far, neither plane maker has committed. The Airbus A320 entered service in 1988, while Boeing’s 737 entered fleets in 1967 and has been upgraded since.
Leahy said it might take until 2027 before Airbus can offer an all-new narrow-body. Boeing has said it will not do so until at least 2020, without being more specific.

TITLE: State to Boost Stake In Avtovaz to 29%
AUTHOR: By Scott Rose
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — AvtoVAZ’s three main shareholders agreed Thursday to a two-part restructuring of the carmaker that will see state-run Russian Technologies boost its stake to 29 percent by 2012 while France’s Renault retains its blocking stake.
The federal government gave AvtoVAZ a support package of 40 billion rubles ($1.3 billion) in December to help the struggling carmaker pay down bank debt and repay suppliers. The funds, contributed through Russian Technologies, brought AvtoVAZ’s debt to the state corporation to 65 billion rubles.
Renault will provide the equivalent of 240 million euros ($306 million) in equipment and technology to maintain its 25 percent stake through the first phase of the transaction, which will see AvtoVAZ issue additional shares, the carmaker said in an e-mailed statement.
Russian Technologies will convert a proportional amount of debt into shares, the statement said.
AvtoVAZ’s shares rose 1 percent in Moscow, outperforming the benchmark MICEX Index’s 1.4 percent decline.
Speaking at the signing ceremony in Tolyatti, where the carmaker is based, Russian Technologies deputy head Igor Zavyalov said AvtoVAZ’s board would consider the share issue July 28, with an extraordinary shareholders meeting scheduled for Sept. 9, Interfax reported.
The first phase of the two-part share issue will also be broken into two stages, he said.
In the first, from November 2010 to November 2011, Russian Technologies will contribute the equivalent of 330 million euros in rubles, and Renault will put in 114 million euros.
In the second stage, running to November 2012, the state corporation will invest 400 million euros, and Renault will add 126 million euros, he said, adding that the second phase of the share issue will take place from 2012 to 2016.
“Under the second phase, Russian Technologies’ stake would rise to 36 percent,” Zavyalov said, Interfax reported.
Troika Dialog, which also holds a 25 percent stake, will see its holding gradually reduced, said managing director Sergei Skortsov, who signed the agreement for the investment bank.
The bank, which said in March that it was ready to “exit” the company with a profit, will see its holding in AvtoVAZ fall to 20.5 percent this year and to 17.5 percent in 2012, he said.
Speaking to reporters in Yekaterinburg, Russian Technologies president Sergei Chemezov said it would be up to Renault to decide what to do when the second share issue comes around.
“That’s for them to decide. Either they will agree to be diluted or they will contribute something else to keep their stake. For now, the plan is for them to keep their 25 percent stake,” he said.
Renault senior vice president Christian Esteve said the company remained committed to Russia.
“Russia remains one of our priority regions, which is why Renault wants to continue its active and long-term cooperation with AvtoVAZ,” Esteve said in the AvtoVAZ statement.
AvtoVAZ made a profit of just less than 1 billion rubles ($32 million) in the second quarter under international financial reporting standards, chief financial officer Oleg Lobanov said Thursday, Interfax reported.
The company said in June that it lost 49.2 billion rubles last year as sales plummeted 44 percent.

TITLE: Russia May Spend $656M on Arms
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s government may increase the Defense Ministry budget for arms purchases this decade by about half to 20 trillion rubles ($656 billion), RIA Novosti reported, citing Deputy Defense Minister Vladimir Popovkin.
That figure, for the period 2011-2020, includes about 70 fifth-generation fighter jets, 20 Ruslan heavy-lift cargo aircraft and 1,000 helicopters, Popovkin said at the Farnborough Air Show in the U.K. on Monday, according to the state-run Russian news wire.

TITLE: Oligarchs Mull Their Inheritances
PUBLISHER: Bloomberg
TEXT: MOSCOW — For Alexander Lebedev, hardly a week goes by without a call from a crooked security-services agent or cop angling for a chunk of his $3.4 billion fortune. It’s not a lifestyle he wishes for his son, Yevgeny.
“Business in our country is like wrestling with bears,” Lebedev said in an interview. “I’m not sure you’d want to pass that on to your son — would you?”
At 50, Lebedev is already pondering a dilemma that will confront the entrepreneurs and industrialists who amassed riches in the early years of post-communist Russia: What will become of their billions — sometimes acquired through unorthodox means — and how should they plan their successions?
By 2020, the average age of the nation’s top 50 businessmen will exceed 60. While the wealthy may outlive the average male lifespan of 62, the transfer of assets to the next generation is a pressing issue in a country where property rights cannot be guaranteed and corruption ranks on par with Cambodia, Venezuela and Sierra Leone, according to Berlin-based watchdog Transparency International.
“There is almost no such thing as private property in Russia,” said Stanislav Belkovsky, a former Kremlin adviser who now heads the National Strategy Institute, a think tank. “It’s no harder for the authorities to fire an owner than it is an employee.”
That was apparent in the fallout from a 2007 coal-mining accident in Siberia that killed more than 100 people, prompting the regional governor to insist on an ownership change. Georgy Lavrik, the pit’s general director, who had inherited the asset from his father a year earlier, sold his 40 percent stake.
Russia ranks 143rd out of 179 countries in the 2010 Index of Economic Freedom, with protection of private property “weak” and the judicial system “corrupt,” according to the Heritage Foundation.
“The easiest asset to transfer to children will be cash in accounts outside of Russia, such as in Swiss banks, and property,” Lebedev said. An ex-KGB agent who worked in London as the Soviet Embassy’s economic attache, Lebedev owns a house near Hampton Court Palace outside the city, a 13th-century castle in Italy, a French chateau and the Swiss Chateau Guetsch, with its own funicular and luxury restaurant.
Other billionaires are exploring a variety of options for transferring their wealth. Telecom magnate Vladimir Yevtushenkov has primed his son and daughter by giving them executive roles. Felix Yevtushenkov is vice president of his father’s Sistema holding, while daughter Tatyana is vice president of the holding’s mobile provider unit Mobile TeleSystems.
Vladimir Potanin, on the other hand, has pledged his fortune, including a stake in Russia’s biggest mining company, to charity.
With the potential fragmentation of some of the country’s biggest companies as owners account for numerous heirs, corporate stability may increase as business units become better focused, according to a report by UBS.
Even so, not all the oligarchs’ children, often sent abroad for their education, will be equipped with the political clout of their parents and some, such as the younger Lebedev, show little interest in returning to Russia to take the helm.
“The heirs may not want to be the hamster in the wheel,” said his father, whose Russian assets include about 19 percent of airline Aeroflot and 26 percent of aircraft leasing company Ilyushin Finance.
Alexander sponsors his 30-year-old son’s investments in Europe, which include London’s Sake No Hana restaurant and Wintle fashion house. A graduate of the London School of Economics, Yevgeny also runs London’s Evening Standard and Independent newspapers, which his father bought for ?1 each. Yevgeny’s representative said he had no time to comment for this article.
“The new generation has more freedom,” said Anton Zingarevich, the 28-year-old son of entrepreneur Boris Zingarevich, who with partners sold 50 percent of Russia’s biggest paper producer, Ilim Pulp Enterprise, to International Paper in 2006. “We also have more opportunities; the trick is using them.”
Shunning the paper industry, Anton chose to join his father’s Ener1, a maker of lithium-ion batteries for electric cars, calling the company more “revolutionary and interesting.”
Most of Russia’s top businessmen prioritize international experience and overseas education for their children, with 80 percent of the children getting schooled both in Russia and abroad, according to UBS, which polled 25 businesspeople.
That experience may bode well for Russia Inc., according to Ruben Vardanyan, chairman of investment bank Troika Dialog. If the oligarchs’ children can avoid family strife and meddling from the Kremlin or corporate competitors, they may be better prepared to run businesses than their fathers were when they acquired them, he said.
“Russian companies will become more global, and the children will be CEOs of global companies,” Vardanyan said. “They will be more ready for M&A, for control of a global company.”

TITLE: Metropol Founder Invests Karate-Style
AUTHOR: By Maria Antonova
PUBLISHER: The St. Petersburg Times
TEXT: A geographer turned investment banker, Mikhail Slipenchuk has combined his passion for karate and travel with an entrepreneurial streak to turn his Metropol firm into a leading investment company after starting off with a modest $300,000 in the early 1990s.
The company almost went bust in the 1998 crisis and is now active in projects from Japan to Africa, in addition to boasting eclectic extracurriculars like Lake Baikal diving and balloon trips over the Arctic.
Slipenchuk sold his 50 percent share in Metropol-controlled Obibank earlier this year to Japanese SBI Holdings in a deal that would provide state-of-the-art Internet technology to the bank, enhancing its personal banking arm.
The deal was one of the first foreign bank acquisitions since the start of the financial crisis, and produced the first bank jointly controlled by a Russian and a Japanese company in a 50-50 ownership structure.
“The Internet is developed more seriously in Japan than in Russia, but seeing the geometric progression of Russian IT market growth, I think we’ll catch up in five years,” Slipenchuk said.
It was Slipenchuk’s interest in karate that opened the door to Japan for him: He was introduced to Japanese business circles through his martial arts instructor in the early 2000s. He has since established an office in Tokyo.
Slipenchuk said SBI Holdings has a more aggressive strategy than the average Japanese investor, whom he described using a Japanese saying: “He tests each stone of the bridge he is crossing before stepping on it.”
This cautious approach is the reason why Japan already lags far behind China in the race to enter Russia’s resource market, he said.
Hoping to change that, Slipenchuk recently invited Japanese companies to Buryatia, where Metropol is looking for partners to expand its mining capacities since Sweden’s Lundin Mining pulled out of the Ozernoye deposit project last fall.
Metropol is in talks with companies from Russia, Japan, China and Hong Kong, Slipenchuk said.
“European companies are financially weakened,” he said, adding that Metropol is also ready to develop the Ozernoye deposit on its own, “step by step.”
By 2013, Ozernoye, which is controlled by the East Siberia Mining Company, a Metropol subsidiary, is expected to reach the capacity of six million tons of various ores, mainly lead and zinc, but it will take $1 billion to fully develop the deposit, Slipenchuk said.
Slipenchuk sees much more potential in another ore deposit which has been in judicial limbo after it fell inside the environmentally protected zone around Lake Baikal, outlined by the government in 2006.
Metropol acquired the license for the Kholodninskoye deposit, which sits about 30 kilometers from the lake and is three times bigger than Ozernoye, in 2005, but now industrial activity is prohibited in this area.
“On one hand, we have to obey the law and develop it to meet licensing obligations, but on the other, we cannot do any development,” Slipenchuk said.
Slipenchuk has been lobbying the government for years to permit mining at Ozernoye.
“I am sure that the government is interested in this development and will make the one right decision sooner or later,” he said.
Sealing off the mine, which was only active for a while in the 1960s, will cost $100 million.
“If the government is ready to spend $100 million on this, we can do it for the government, but I don’t think it would be the right decision,” Slipenchuk said.
Like some other Russian investment banks, Metropol has also been pursuing resource-related projects in Africa, focusing primarily on Congo.
“In Africa, we are like the Japanese in Russia, with the difference in that we have experience of working in Russia in the 1990s,” Slipenchuk said.
Congo is considered the most dangerous country in the region, but Metropol hopes it will give it a head start.
“Comparing it to Russia, Angola is 1997 and Congo is still 1991, maybe even 1989,” Slipenchuk said.
“We have been there for four years. We are not touching politics, but keep good relations with everyone,” he said, adding that Metropol has established a bank in Congo and is interested in developing mining and hydropower projects there, but has not yet acquired any licenses.
Speaking on the economic situation back home, Slipenchuk said he still harbors doubts about the alleged recovery, adding that he saw “no growth or decline in the economy.”
“There cannot be an economic crisis in Russia because there is no economy,” he said. “Everything is built on oil and gas.”
Slipenchuk predicted volatility of up to 15 percent on the Russian stock market until the end of the year due to financial speculation.
“There is a lot of money on the market since it never went to the real economy,” he said.
Slipenchuk said he welcomes President Dmitry Medvedev’s innovation and modernization campaign, but noted that it faces a mammoth obstacle in the country’s “archaic certification system.”
Metropol, which set up its own venture fund six years ago, has selected four scientific projects that it deemed to have good market potential, but none can currently proceed because of the complicated certification process.
One of the projects is a “growth vitamin” for plants, which the company has been giving out to employees and their friends for use at their dacha gardens.
“We’ll harvest in the fall and find out what the results are. So far, my [plants] are flourishing,” Slipenchuk said.

TITLE: In the Spotlight: Sons and Lovers
AUTHOR: By Anna Malpas
PUBLISHER: Staff Writer
TEXT: Last week, paparazzi grabbed the first photographs of Portuguese footballer Cristiano Ronaldo’s infant son — whose mother remains a mystery but is definitely not svelte model Irina Shayk.
In a bizarre situation, Ronaldo said the baby’s mother preferred to keep her identity secret and that he was the child’s only guardian. He is rumored to have had the baby with a surrogate mother.
The first reports that Russian-born Shayk and Ronaldo were dating appeared in May. The Sun reported that Ronaldo, who is reportedly the world’s highest-paid player, enjoyed his “most torrid weekend ever” on a yacht with Shayk.
The couple met at an Armani photo shoot, where else? Those Ronaldo underwear shots may look pretty unalluring to the rest of the world, but apparently they did the trick with Shayk.
Shayk has a heartwarming rags-to-riches story. She comes from a small coal-mining town near Chelyabinsk, and her father was a miner who died when she was a child. Her music teacher mother worked hard to make ends meet, but everything changed after Shayk was spotted by a talent scout. She won a local televised modeling competition and soon afterward moved to Paris.
Although she models underwear and swimming costumes, her real name is Shaikhislamova, which suggests that she has Tatar, meaning traditionally Muslim, roots.
Lifenews.ru dug out some embarrassing teenage photographs of Shayk with her school friends, all of whom were wearing very short skirts and shiny tights and were posing with a huge stuffed dog. Shayk’s legs were about twice as long as the other girls’ legs, and she already had a star quality to her.
The New York Post recently reported that Shayk’s Facebook account was hacked into after Ronaldo’s announcement, and fake messages were posted saying that she was “devastated” by the news. Her people issued a statement denying that she said anything about Ronaldo’s son or wanting to have children.
The couple was then photographed together working on their already perfect suntans by a pool in New York, suggesting that Ronaldo is taking a relaxed, hands-off approach to diaper-changing.
Another couple making the headlines last week also did not have too many sleepless nights with their new baby. They solved the problem by living in one luxury London apartment while the nanny and baby lived next door.
This is the story of the costly divorce of Ilya Golubovich, 24, the son of two very wealthy Russians.
A glossy-looking blond man, he married a pretty blonde design student in 2007 and they had a baby. A few years later, their relationship deteriorated into a costly court battle in both Moscow and London.
Amazingly, the couple has already spent up to ?2.25 million ($3.4 million) in legal fees, The Independent reported, as the British judge dismissed their case as “divorce tourism.”
Golubovich is the head of a venture fund. His father is a former executive at the now-defunct oil company Yukos, and his mother is the general director of Russky Produkt, which produces tea, pasta and other staples.
The two luxury apartments in South Kensington where they lived alongside the nanny and baby Maya were bought by Golubovich’s mother for nearly ?4 million, The Independent reported, citing Elena’s lawyer.
Elena has so far gained only a ?300,000 annual settlement, which can hardly keep her in the style to which she is accustomed.
There is little information about Elena, but Ilya Golubovich reveals that he likes “blonde beauties” on the Russian social networking and culture site Snob.
His Facebook page reveals diverse “likes and interests,” including President Dmitry Medvedev and Japanese porn star Anri Suzuki.

TITLE: A Keynesian Recipe for the Global Crisis
AUTHOR: By Joseph E. Stiglitz
TEXT: It was not long ago that we could say, “We are all Keynesians now.” The financial sector and its free-market ideology had brought the world to the brink of ruin. Markets clearly were not self-correcting. Deregulation had proven to be a dismal failure.
The “innovations” unleashed by modern finance did not lead to higher, long-term efficiency, faster growth or more prosperity for all. Instead, they were designed to circumvent accounting standards and to evade and avoid taxes that are required to finance the public investments in infrastructure and technology — like the Internet — that underlie real growth, not the phantom growth promoted by the financial sector.
The financial sector pontificated not only about how to create a dynamic economy, but also about what to do in the event of a recession — which, according to their ideology, could be caused only by a failure of government, not of markets. Whenever an economy enters a recession, government revenues fall and expenditures — for example, unemployment benefits — increase. So, deficits grow.
Financial sector deficit hawks said governments should focus on eliminating deficits, preferably by cutting back on expenditures. The reduced deficits would restore confidence, which in turn would restore investment — and thus growth. But, as plausible as this line of reasoning may sound, historical evidence repeatedly refutes it.
When U.S. President Herbert Hoover tried that recipe, it helped transform the 1929 stock market crash into the Great Depression. When the International Monetary Fund tried the same formula in eastern Asia in 1997, downturns became recessions, and recessions became depressions.
The reasoning behind such episodes is based on a flawed analogy. A household that owes more money than it can easily repay needs to cut back on spending. But when a government does that, output and incomes decline, unemployment increases and the ability to repay may actually decrease. What is true for a family is not true for a country.
More sophisticated advocates warn that government spending will drive up interest rates, thus “crowding out” private investment. When the economy is at full employment, this is a legitimate concern. But not now. Given extraordinarily low long-term interest rates, no serious economist raises the “crowding out” issue nowadays.
In Europe, especially Germany, and in some quarters in the United States, as government deficits and debt grow, so, too, do calls for increased austerity. If heeded, as appears to be the case in many countries, the results will be disastrous, especially given the fragility of the recovery. Growth will slow, with Europe or the United States possibly even slipping back into recession.
Stimulus spending, the deficit hawks’ favorite bogeyman, did not cause most of the increased deficits and debt, which are actually the result of “automatic stabilizers” — the tax cuts and spending increases that automatically accompany economic fluctuations. Because austerity undermines growth, debt reduction will be marginal at best.
Keynesian economics worked. If not for stimulus measures and automatic stabilizers, the recession would have been far deeper and longer, and unemployment much higher. This does not mean that we should ignore the level of debt. But what matters is long-term debt.
There is a simple Keynesian recipe: First, shift spending away from unproductive uses — such as wars in Afghanistan and Iraq, or unconditional bank bailouts that do not revive lending — toward high-return investments. Second, encourage spending and promote equity and efficiency by raising taxes on corporations that don’t reinvest, for example, and lowering them on those that do, or by raising taxes on speculative capital gains (say, in real estate) and on carbon- and pollution-intensive energy, while cutting taxes for lower-income payers.
There are other measures that might help. For example, governments should help banks that lend to small- and medium-size enterprises, which are the main sources of job creation — or establish new financial institutions that would do so — rather than supporting big banks that make their money from derivatives and abusive credit card practices.
Financial markets are a harsh and fickle taskmaster. The day after Spain announced its austerity package, its bonds were downgraded. The problem was not a lack of confidence that the Spanish government would fulfill its promises, but too much confidence that it would, and that this would reduce growth and increase unemployment from its already intolerable level of 20 percent. In short, having gotten the world into its current economic mess, financial markets are now saying to countries like Greece and Spain: Damned if you don’t cut back on spending, but damned if you do as well.
Finance is a means to an end, not an end in itself. It is supposed to serve the interests of the rest of society, not the other way around. Taming financial markets will not be easy, but it can and must be done through a combination of taxation and regulation — and, if necessary, government stepping in to fill some of the breaches (as it already does, for example, in the case of lending to small and medium-size enterprises.)
Unsurprisingly, financial markets do not want to be tamed. They like the way things have been working, and why shouldn’t they? In countries with corrupt and imperfect democracies, they have the wherewithal to resist change. Fortunately, citizens in Europe and the United States have lost patience. The process of tempering and taming has begun. But there is far more yet to do.

Joseph E. Stiglitz, professor of economics at Columbia University and a Nobel laureate in economics, is the author of “Freefall: Free Markets and the Sinking of the Global Economy.” © Project Syndicate.

TITLE: The End of the Rakhimov Era
AUTHOR: By Nikolai Petrov
TEXT: The departure of one of the very last “Mohicans,” Murtaza Rakhimov, who had led Bashkortostan for two decades as president, is not just a serious change to the political scene. It paints a clear picture of how things are run from the Kremlin.
Recall the scandal after the first round of the 2003 Bashkortostan presidential election when ballots that had been printed without the authority of the election commission were confiscated. (Rady Khabirov, who was head of the Rakhimov administration and is now a deputy to Kremlin first deputy chief of staff Vladislav Surkov, has been implicated as the person who organized the false ballot campaign.)
Then before the second round, Rakhimov went to Moscow and cleaned up everything, promising to hand over control of the republic’s petrochemical plant. Seeing a good opportunity, banker Sergei Veremeyenko, with the Kremlin’s blessing, actually ended the battle, and Rakhimov continued on as the republic’s president.
Two years ago, there was a big scandal involving Khabirov when he was invited to work in the Kremlin. Fearing that Khabirov could be a potential threat, Rakhimov fired him, using the scandal as a pretext, and opened a criminal case against him.
The next scandal happened last year when Rakhimov ruffled a lot of feathers in the Kremlin about incompetent leaders within United Russia.
The Kremlin’s candidate to replace Rakhimov as president is Rustem Khamitov, a former Bashkortostan minister and chief federal inspector who then left the republic. It seems that he had been handpicked by Moscow some time ago, after it was decided to replace Rakhimov before his term was up last year. Rakhimov tried to resist by playing the nationalist card. But it’s possible that he fought back a bit too hard, which only accelerated his departure. The mass media released compromising material against the Rakhimov clan, including Rakhimov’s son Ural, who lost control of Bashneft and fled to Austria.
How did such a stubborn, unrelenting regional leader, whom Moscow obviously had wanted to remove for quite some time, last for so long? The political mechanisms set in place by former Tatarstan President Mintimer Shaimiyev, Rakhimov and Mayor Yury Luzhkov in the 1990s are very hard to dismantle. After all, it is difficult to change horses midstream.
But in the end, the Kremlin accomplished what it had to do and cleaned the slate of unwanted regional heads. The trophies are awe-inspiring: In addition to Rakhimov and Shaimiyev, there was Sverdlovsk Governor Eduard Rossel, Khanty-Mansiisk Governor Alexander Filippenko and Rostov Governor Vladimir Chub. The only survivor — so far at least — from the group of veteran regional bosses is Luzhkov.
It’s not bad that a generation of governors is leaving the political scene. That is quite normal. What is bad is that they are leaving as a result of a Kremlin special operation and that they are being replaced by small-time officials who neither have the experience of public politics nor an appetite for it.

Nikolai Petrov is a scholar in residence at the Carnegie Moscow Center. Richard Lourie will return to this spot in September.

TITLE: Deadly Train Wreck Kills Dozens in India
PUBLISHER: The Associated Press
TEXT: CALCUTTA, INDIA — A speeding express train plowed into a stationary passenger train in eastern India on Monday, killing 61 people in a crash so powerful it sent the roof of one car flying onto an overpass. Officials said they could not rule out sabotage.
Residents crawled over the twisted wreckage trying desperately to free survivors before rescue workers arrived with heavy equipment to cut through the metal.
Railway Minister Mamata Banerjee, who rushed to the site, raised the possibility the crash could have been another case of sabotage, two months after Maoist rebels were blamed for a derailment that killed 145 people.
“We have some doubts in our mind” about whether it was an accident, she said.
The crash happened about 2 a.m. when the Uttarbanga Express slammed into the Vananchal Express as it left the platform at Sainthia station, about 200 kilometers north of Calcutta.
The accident destroyed two passenger cars and a luggage car, turning them into a tangle of twisted metal. The passenger cars were reserved for those on the cheapest tickets and such carriages are usually packed to capacity.
The force of the crash was so intense the roof of one car flew into the air and landed on an overpass above the tracks. Local residents climbing through the debris searching for survivors were later joined by rescue workers using heavy equipment to cut through the metal.
“I was sleeping when I felt a huge jolt and heard a loud noise and then the train stopped,” passenger Lakshman Bhaumik told local television. Bhaumik survived with minor injuries.
Rescuers recovered 61 bodies from the crash site and 125 other people were injured, said Surajit Kar Purkayastha, a top police official. The two drivers of the Uttarbanga Express were among the dead, Banerjee said.
Rescue teams arrived about three hours after the accident, a local resident said. Before that locals scrambled to help survivors out of the trains and to pull out bodies.
“For many hours it was just the local residents helping and it was very difficult to help without any equipment,” the unidentified man told NDTV television channel.
Police official Humayun Kabir told NDTV, however, that rescue workers reached the site within an hour of the crash.
By late Monday afternoon, rescue operations were nearly complete, said Samir Goswami, a railway spokesman. 
Cranes and laborers were working to remove the mangled coaches so the tracks could be cleared and train services resumed.
The disaster was the second major train crash in the state of West Bengal in the past two months. On May 28, a passenger train derailed and was hit by an oncoming cargo train in a crash that killed 145 people. Authorities blamed sabotage by Maoist rebels for that crash.
Accidents are common on India’s sprawling rail network, one of the world’s largest, with most blamed on poor maintenance.

TITLE: Australian PM Tops Key Poll
PUBLISHER: Agence France Presse
TEXT: SYDNEY — Australian Prime Minister Julia Gillard leapt ahead in a key opinion poll Monday and sealed a vital deal with the Greens party, underlining her as early favorite for Aug. 21 elections.
As Gillard campaigned in the key battleground state of Queensland, the Newspoll survey put her government 10 points clear of the opposition at 55-45 percent, contradicting an earlier study which had them neck-and-neck.
Gillard, Australia’s first woman prime minister who deposed ex-leader Kevin Rudd just three weeks ago, dismissed the poll’s findings and insisted the campaign was headed for a “photo-finish.”
“We’re going to see a lot of polls between now and election day,” Gillard told reporters in the tropical north-eastern city of Townsville.
“I believe this election is on a knife-edge. I believe it’s going to be a photo-finish ... here and right around the country. This is going to be a tough contest.”
Gillard has stressed quality-of-life issues and healthcare in the early days of campaigning, addressing rising concerns over the cost of living in a country which largely escaped the ravages of the financial crisis.
On Monday, her conservative opponent Tony Abbott continued his attacks on Gillard’s controversial rise to power and the Labor government’s policy failings as he hit the hustings in Melbourne.
“We have a leader who can execute a prime minister, but we don’t have a leader who can execute a government program,” Abbott told Jewish community leaders.
“The only way for Australia to move forward economically is for Labor to move out.”
Senior Liberal figure Peter Costello also ridiculed Gillard’s renowned nasal accent and frequently repeated her “Moving Australia Forward” slogan in a personal attack.
“No amount of moronic repetition of ‘moving forward’ will overcome the fact there is a record there, and that record needs to be carefully assessed,” the former treasurer said, mimicking Gillard’s voice.
Labor had been streets ahead of the opposition since Rudd ousted former Liberal leader John Howard in 2007. But Rudd’s popularity dropped dramatically this year, prompting his shock removal last month.
The Coalition needs a 2.3 percent swing to make Labor the first single-term government since World War II, with key marginal seats in the populous eastern states of Queensland, New South Wales and Victoria.
However, the government’s chances were boosted Monday as the Greens, Australia’s third party, agreed to hand over second preference votes — used when there is no clear winner — for certain seats in the lower house.
In return, Labor will direct preferences to the Greens in voting for the upper-house Senate.
Voting in the first winter polls since 1987 looks set to hinge on the touchstone issues of people-smuggling, the economy and global warming, echoing the themes of the last election in 2007.

TITLE: In Brief
TEXT: <strong>Autobahn Picnic</strong>
BERLIN (AP) — Germany’s autobahns are renowned for average speeds well in excess of 80 miles (130 kilometers) an hour. But the average dropped near zero Sunday as tens of thousands of people sat at a 37-mile table for a cultural celebration titled, appropriately enough, “Still Life.”
Cars were strictly verboten.
“Attention on the A40,” a radio traffic report warned. “There is a 60-kilometer closure between Duisburg and Dortmund due to the longest table in the world.”
A festival spokesman said an estimated 3 million people turned out amid fine weather, one million of them with their bicycles, to celebrate on the highway between Dortmund and Bochum, in western Germany. Tens of thousands sat at the table, which was made up of 20,000 individual tables, spokesman Oliver Haenig said.

<strong>$4 Bln For Spill</strong>
LONDON (AP) — Oil company BP says that the cost of dealing with the Gulf of Mexico spill has now reached nearly $4 billion.
The company, which last week managed to place a temporary cap on the leak, said Monday it has made payments totaling $207 million to settle individual claims for damages from the spill along the southern coast of the United States.
To date, almost 116,000 claims have been submitted and more than 67,500 payments have been made, totaling $207 million.
Including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, payment of claims and U.S. government costs, BP says it has now spent $3.95 billion.
The company adds that it is still too early to quantify the eventual total cost.

<strong>Journalist Shot Dead</strong>
ATHENS, Greece (AP) — A Greek journalist was gunned down Monday outside his home in Athens, in an attack broadly condemned by political parties.
Sokratis Giolias, 37, died after being shot more than 15 times before dawn in the capital’s eastern neighborhood of Ilioupoli, police said.
Giolias headed private Athens radio station Thema FM and wrote on a popular online news blog, Troktiko, which often deals with scandals.
The blog said two or three gunmen were believed to have shot Giolias, who was married with a young child. Police said they also believe more than one gunman was involved.

<strong>Pride in Poland</strong>
WARSAW, Poland (AP) — Thousands of gay men and lesbians from around Europe marched through Poland’s capital Saturday to demand equal rights and more tolerance in this heavily Roman Catholic nation.
The parade, part of the EuroPride gay rights festival, is meant to give a boost to the fledgling gay rights movement in Poland. Gay rights were strongly repressed during the communist era, and gays and lesbians have struggled since communism fell 20 years ago for acceptance in a society still strongly influenced by the church.
“We feel like they are 20 years behind the Netherlands,” said Ad Bakker, a 39-year-old from Holland who traveled to Warsaw to show solidarity with Polish friends. “But the atmosphere is good and we hope that EuroPride will help.”
A Polish friend of his, Sebastian Blaszczyk, 36, said the situation in Poland “gets better and better every year,” but the country still has far to go in accepting gays.

<strong>Swan Two Three...</strong>
LONDON (AP) — An entourage of royal boatmen has set out on stretches of the River Thames in England to begin this year’s count of the waterway’s swan population — an annual practice dating back to medieval times.
Monday marks the start of the five-day “Swan Upping.” The ceremonial census aims to provide an updated count of the number of young cygnets and ensure the swan population is maintained.
Britain’s monarch has claimed ownership rights to all mute swans on the country’s waterways since the 12th century. The graceful birds were often served as a delicacy at royal banquets, and today, the swans are counted — but no longer eaten.
David Barber, the Queen’s Swan Marker, said many swans died in the past year from the cold weather and attacks by youths.

<strong>PNG Quakes</strong>
SYDNEY (AFP) — Papua New Guinea was hit by two strong earthquakes around 30 minutes apart on Sunday, geologists said, though no tsunami warning was issued.
A 7.3-magnitude quake hit at 11:35 p.m. local time around 105 kilometers east of Kandrian on New Britain island, the U.S. Geological Survey (USGS) said, at a depth of 58 kilometers.
USGS initially gave the magnitude of this quake as 6.8.
Around half an hour earlier, USGS recorded a 6.9-magnitude quake 110 kilometers east of Kandrian, at a depth of 58 kilometers.

<strong>Climb Ev’ry Mountain</strong>
VIENNA (AFP) — At the age of 63, former U.S. president Bill Clinton says he has one more mountain to climb before he dies — and that’s Kilimanjaro, the highest peak in Africa.
Clinton revealed the secret goal — along with his dream of running a marathon — while in reflective mood at the 18th International AIDS Conference, where he made the keynote speech on Monday.
He explained that one of his favorite movies was “The Bucket List,” a 2007 film in which two terminally ill men, played by Morgan Freeman and Jack Nicholson, draw up a list of things they wish to do before they die, and then travel around the world to do just that.
“I’ll soon be 64, so I think I’m old enough to join Jack and Morgan in making a bucket list,” said Clinton.