SOURCE: The St. Petersburg Times
DATE: Issue #1595 (56), Tuesday, July 27, 2010
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TITLE: Nascent Coke Ring Busted By
Russia, U.S.
AUTHOR: By Nataliya Vasilyeva
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Russia and the United States have uncovered a cocaine trade scheme involving a high-profile Russian impresario eager to set up business in Moscow’s expensive night clubs, Russia’s top drugs control officer said Monday.
Russians sprang into action after U.S. officials tipped them off about a 30-year-old Moscow man looking to buy cocaine wholesale in the United States, Viktor Ivanov, head of the Russian anti-narcotics agency, told reporters.
The announcement comes less than a week after a Russian pilot was arrested in Liberia on suspicion of smuggling South American cocaine into the U.S. and extradited to New York, drawing Moscow’s condemnation for the arrest.
Russian officials arrested the man and his three accomplices Thursday when they allegedly received a 10-kilogram cocaine shipment in St. Petersburg.
Ivanov refused to identify the buyer, citing the ongoing investigation, but said the man organized concerts of Russian and foreign music stars and was looking to use his network of contacts to set up a drugs business catering to high-profile Moscow clients.
The impresario worked with three accomplices, including a former police officer and his wife.
The man allegedly planned to import 100 kilogram shipments of cocaine through St. Petersburg on a regular basis and sell the drugs in Moscow’s expensive night clubs that he and his business contacts frequented.
The operation to track down and catch the drug traders red-handed took nearly six months.
Cocaine imports in Russia have been increasing by 25 percent each year in the past three years, Ivanov said.
U.S. Ambassador to Russia John Beyrle praised the operation as “clear evidence of the new spirit of cooperation between Russia and the United States in the war on drugs.”
Russia’s drugs tsar, meanwhile, urged the U.S. to step up efforts in battling drug production in Afghanistan.
“Heroin dominates the Russian drugs market, that’s why this is a vital issue for us,” Ivanov said. “The survival of Russian society is at stake.”
Cheap and abundant Afghan heroin has fueled a surge in addiction rates in Russia, and intravenous drug use has been a key factor in the spread of HIV, the virus that causes AIDS. There are about 2 million opium and heroin addicts and another 3 million people who use other drugs in Russia, according to official estimates. Each year, 30,000 die of drug overdoses.
Beyrle said he understood “the harm that the flow of Afghan heroin inflicts on Russian youths” but pressed for a more comprehensive approach such as tracking down traffickers and their financiers rather than just burning opium fields.
“The large-scale eradication of crops is not delivering the results we would like to see,” he said, adding that there was a significant increase last year in the amount of opium eradicated.
Afghanistan provides more than 90 percent of the heroin consumed in the world, and the bulk of it flows through ex-Soviet Central Asia and Russia.

TITLE: Russia Shamed by Ecology Record on Baltic Sea
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: Environmentalists who traveled by bike along the Baltic coast earlier this month have slammed Russia’s environmental policy, drawing unfavorable comparisons with that of its neighboring Baltic countries.
The group of environmentalists spent two weeks traveling by bike along the Baltic coast through Russia, Lithuania and Poland with the purpose of creating a map of pollution black spots and campaigning against environmental pollution resulting from industrial projects.
The bike trip, which finished last weekend, was organized by a string of local environmental groups, including “Friends of the Baltics,” the Association of Environmental Journalists of St. Petersburg and the St. Petersburg Center for Ecological Initiatives. The first such rally took place in 1999, and it has been an annual event ever since.
The ride began in St. Petersburg and then proceeded to Lithuania and Poland. Along the route, the ecologists-turned-bikers paid special attention to the River Neman, the city of Klaipeda in Lithuania and the Kurshskaya Kosa National Park shared by Russia and Lithuania.
“The aim of these rallies is to give local residents a true picture of a series of new construction projects that pose high risks to the environment,” said Oleg Bodrov, chairman of the Green World organization. 
“In order to protect the environment and prevent the authorities from sacrificing it for the sake of placating a deep-pocketed investor, it is crucial that local communities get involved in the decision-making process — in the form of public hearings, the collection of signatures or street protests. 
“These trips are most useful for raising public awareness about environmental issues, getting first-hand testimonials from residents of environmentally endangered areas and joining forces in developing solutions to ecological problems,” said Olga Senova, chairwoman of the Friends of the Baltics environmental group.
According to the rally’s participants, Lithuania and Poland are a striking contrast to Russia in terms of environmental protection. 
The Lithuanian side of the Kurshskaya Kosa natural park stunned the ecologists with its beauty, while the natural reserve’s Russian side looked neglected. The ecologists were particularly alarmed by an oilrig located within 22 kilometers of Kurshskaya Kosa. The rig is owned by oil giant Lukoil.
The Baltic Sea is abundant with dangerous toxic algae, especially in coastal areas. Rescuing the region’s ecology requires a consistent joint effort from all countries of the region, but not all of the coastal states are taking part in environmental clean-up and revival projects. Russia, the country responsible for the lion’s share of the pollution, has shown little enthusiasm for combating the consequences. 
The route featured campaign events held at some of the ecological blackspots.
“We are trying to increase awareness of the risks that new industrial developments involve and the challenges they pose,” Bodrov said. “To be able to exert substantial pressure on the authorities, locals have to offer solid and coordinated resistance.”
Nationwide, ecology does not appear to be a priority, Bodrov said. Soon after former President Vladimir Putin came to power in 2000, the Russian government closed the Environment Ministry and transferred its responsibilities to the new Natural Resources Ministry, which is also in charge of exploiting the country’s natural resources. 
Ecologists from countries around the Baltic Sea express frustration at what they see as a lack of measures in Russia to safeguard the environment. 
Ecologists warn that the south coast of the Gulf of Finland has become the site of vast construction work including the Baltic Aluminum Plant, the Baltic Silicon Valley project and a center for the treatment of spent nuclear fuel from LAES, the Leningrad Nuclear Power Plant.
“These projects, which are worth more than $20 billion, are bound to destroy the coastline if fully implemented,” Bodrov said.
According to Green World, genetic mutations have already been found in pine trees around the town of Sosnovy Bor where LAES is located, and environmentalists warn that risks to the environment would be vastly increased by the launch of a new waste processing facility.
Alexander Senotrusov, deputy head of the municipal council of the village of Lebyazhye, whose name translates into English as “Swan’s Land,” said the village has already lost two-thirds of its inland area owing to aggressive construction. 
“The area is inhabited by swans during the spring and autumn migration periods,” said Senotrusov. “If it is heavily developed, the land will become unsuitable for swans.”

TITLE: PM Sings  With 10 Expelled Agents
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prime Minister Vladimir Putin said he has sung Soviet-era patriotic songs with the 10 spies deported from the United States and knows the identities of those who betrayed them.
Putin described his meeting with the spies during a trip to Ukraine, where he also rode a Harley-Davidson motorcycle and sought to bolster Russian-Ukrainian relations.
Putin did not say when or where he met with the 10 spies, waho arrived in Moscow on July 9 and, most recently, were reportedly being debriefed at a Foreign Intelligence Service building in Moscow’s outskirts.
“I met with them. We talked about life,” Putin told reporters Saturday at the Crimean resort of Foros, according to a transcript published on the prime minister’s web site.
“They will find decent work — I’m sure. I don’t doubt that they will have interesting, bright lives,” said Putin, who served as a KGB agent in East Germany in the 1980s and led the Federal Security Service in the late 1990s.
He said he had joined them in singing several songs, including “With What the Motherland Begins?” from the 1968 Soviet movie “The Shield and the Sword” about an undercover Russian spy in Nazi Germany.
“I’m not joking, seriously. And other songs with similar content,” Putin said, adding that the songs were sung to live music, not karaoke.
The prime minister confirmed that Anna Chapman, the most well-known female spy from the group who married a British man and later divorced, also attended the meeting.
Putin said a betrayal had sparked the spy scandal and promised tough times for the traitors, whose names he said are known.
“Traitors always end badly. As a rule, they end up in the gutter as drunks or drug addicts,” he said.
When asked whether the state was planning to take revenge on the traitors, Putin said, “The special services live under their own laws, and everyone knows what these laws are.”
U.S. officials have not said how they learned about the 10 spies, who pleaded guilty in a U.S. court to being agents for the Russian government while living as “illegals” — deep-cover spies who pose as ordinary people without the immunity offered by diplomatic passports. Many of the Russians adopted fake names and lived in suburban America for years, buying homes and raising families as they sought to glean information and make recruits in U.S. government policy-making circles.
They were deported to Russia in exchange for four Russians jailed on espionage-related charges.
The success of their work is unclear, with U.S. officials saying they did not learn any secrets and therefore were charged with illegally working for a foreign government rather than with espionage.
Putin declined to evaluate their work.
“As far as those people are concerned, I can tell you that it was a hard fate for each of them,” he said. “First, they had to master a foreign language as their own. Think and speak it. And they had to fulfill tasks for the interests of their motherland for many, many years without being able to count on diplomatic immunity, putting themselves and their loved ones in danger.”
The former academic adviser for one of the spies has suggested that her former student had not mastered English very well. Nina Khrushcheva, who advised the spy called Richard Murphy for three years at The New School in New York, said the student’s Russian nature was surprisingly easy to spot.
“At first, I thought of him as a student like any other, but there was something odd about this man, with his strong Russian accent and his Irish-American name,” Khrushcheva, the great-granddaughter of former Soviet leader Nikita Khrushchev, wrote in the Foreign Policy magazine.
Separately, Putin on Saturday donned dark sunglasses, black jeans and black fingerless gloves to ride a three-wheeled Harley-Davidson at an international bikers convention near Sevastopol.
He signed several dozen cards, one bike seat and one Czech bank note brought by a biker from Prague at the annual gathering, which drew 5,000 bikers from various countries, the government said in a statement.
Putin delivered a speech before the bikers, calling their means of transport “the most democratic.”
“The bike is a symbol of freedom,” he said.
In his speech, he offered congratulations on Russia’s Navy Day, which fell on Sunday, and praised the friendship between Russia and Ukraine.
Answering journalists’ questions later Saturday about his work as leader of the ruling United Russia party, Putin said he was always on the election trail.
“The campaign for the next election starts right after the last election ends,” he said, adding that his preferred mode of campaigning was meeting with voters individually.
Putin also met with Ukrainian President Viktor Yanukovych.
Elsewhere in Crimea, Mayor Yury Luzhkov on Saturday visited Sevastopol in his second trip in a month to Ukraine after being banned in 2008 for urging Kiev to return Sevastopol to Russia.
Luzhkov told journalists that he had not changed his position on Sevastopol and thanked Yanukovych for lifting the ban. Luzhkov attended Yanukovych’s 60th birthday celebrations earlier this month.
Luzhkov on Saturday signed a cooperation agreement with Sevastopol Mayor Valery Saratov and presented him with a blueprint of a school building and kindergarten as a gift.
“With this, construction costs can be reduced by up to 10 percent,” said Luzhkov, whose billionaire wife, Yelena Baturina, owns the Inteko construction company, Interfax reported.
Luzhkov added that the gift was worth $3 million.
It wasn’t clear whether Sevastopol’s mayor gave anything back to Luzhkov.
Meanwhile, Russian Orthodox Patriarch Kirill also paid a visit to Ukraine over the weekend, traveling to Dnipropetrovsk, Ukraine’s third-largest city, to conduct an open-air church service for about 3,000 people.
He called on the Russian and Ukrainian Orthodox churches to lay aside political ambitions to unite as a single Orthodox nation, according to a transcript of Saturday’s speech.
On Sunday, Kirill arrived in Kiev, where all demonstrations either for or against the patriarch had been banned. He is to stay there until Wednesday.

TITLE: A Russian Milestone: Black Man Elected to Office
PUBLISHER: The Associated Press
TEXT: NOVOZAVIDOVO, Tver Region — People in this town used to stare at Jean Gregoire Sagbo because they had never seen a black man. Now they say they see in him something equally rare — an honest politician.
Sagbo last month became the first black man to be elected to office in Russia.
In a country where racism is entrenched and often violent, Sagbo’s election as one of Novozavidovo’s 10 municipal councilors is a milestone. But among the town’s 10,000 people, the 48-year-old from the West African country of Benin is viewed simply as a Russian who cares about his hometown.
He promises to revive the impoverished, garbage-strewn town where he has lived for 21 years and raised a family. His plans include reducing rampant drug addiction, cleaning up a polluted lake and delivering heating to homes.
“Novozavidovo is dying,” Sagbo said in an interview in the ramshackle municipal building. “This is my home, my town. We can’t live like this.”
“His skin is black, but he is Russian inside,” said Vyacheslav Arakelov, 
the mayor. “The way he cares about this place, only a Russian can care.”
Sagbo isn’t the first black person in Russian politics. Another West African, Joaquin Crima of Guinea-Bissau, ran for head of a district in the Volgograd region a year ago but was heavily defeated.
Crima was dubbed by the media “Russia’s Obama.” Now they’ve shifted the title to Sagbo, much to his annoyance.
“My name’s not Obama. It’s sensationalism,” he said. “He is black and I am black, but it’s a totally different situation.”
Inspired by communist ideology, Sagbo came to the Soviet Union in 1982 to study economics in Moscow. There he met his wife, a Novozavidovo native. He moved to the town about 100 kilometers north of Moscow in 1989 to be close to his in-laws.

TITLE: Chichvarkin Calls For Criminal Investigation
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Former handset mogul Yevgeny Chichvarkin has appealed to the country’s top investigator to open a criminal case into the death of his mother.
Chichvarkin’s lawyer Vladimir Zherebyonkov said Monday that he had filed the request on his client’s behalf with Investigative Committee chief Alexander Bastrykin. Chichvarkin lives in London and faces criminal charges at home in connection with his activities when he owned cell phone retailer Yevroset.
Chichvarkin’s mother, Lyudmila Chichvarkina, 60, was found dead in her Moscow apartment in April.
In June, the Investigative Committee ruled out murder and said the death was caused by heart disease. But it also said Chichvarkina had been beaten shortly before her death. Police have refused to investigate the suspected assault.
“The reports about the death being caused by heart disease do not match the facts,” Zherebyonkov said in an interview with Ekho Moskvy radio. “The doctors said she passed away hours after she had been beaten. I guess she died because of blood loss.”
Zherebyonkov said the apartment contained ample evidence that the woman had been attacked.
“The entire apartment was covered in blood. A trail of blood led to the kitchen,” Zherebyonkov said in a separate interview with Interfax.
He said the fingerprints and DNA samples of an unknown man had been found at the scene and had been ignored by the police.
He speculated that the attacker might be a man named Alexei who witnesses had seen visit Chichvarkina’s apartment.
The Investigative Committee had no immediate comment about Chichvarkin’s appeal.
In May, Chichvarkin recorded a video appeal to President Dmitry Medvedev in which he accused 11 senior Interior Ministry officials of harassing Yevroset and intimidating his business associates.
Russian prosecutors are seeking Chichvarkin’s extradition from Britain to face charges of extortion and kidnapping, which Chichvarkin denies. The next hearing in the case in a London court is scheduled for next Monday.

TITLE: Kremlin Deploys Fashion Tips in Fight Against Graft
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — In a two-pronged crackdown against corruption, the Kremlin has presented a new ethics code for officials — complete with fashion tips — and a waiting period for state employees who want to work at the organizations they used to supervise.
But anti-corruption analysts dismissed both measures as empty bureaucratic stunts that would do little to encourage officials and citizens to start fighting corruption.
The ethics code, drafted by the Health and Social Development Ministry and posted on its web site Thursday, prohibits federal and municipal officials from taking paid side jobs, except in research, education and “creative activities.”
Officials are also instructed not to accept gifts nor use their position to pressure anyone for personal gain. The code asks officials to report all attempts to offer bribes or engage in other forms of corruption.
The code also advises officials to be polite and friendly and even provides guidelines on their appearance, which should “instill in citizens respect for the state authorities.”
The code says dress attire should be “a common business style that is distinguished by its formal, moderate, traditional and orderly attributes.”
Punishment for violating the new ethics code can include warnings and dismissal.
The code, approved by the presidential anti-corruption council, will be included in the employment contract that bureaucrats sign when hired, Kremlin chief of staff Sergei Naryshkin said Thursday.
The code is supposed to curb corruption and improve the efficiency of the authorities by setting anti-corruption standards for officials, Naryshkin said.
The implementation of the code will not start until October, he said.
All state agencies are expected to draft their own ethics codes based on the current one but “taking into account the specific characteristics” of the given agency, Naryshkin said.
The Audit Chamber and the Prosecutor General’s Office are ahead of the pack because they already abide by similar ethics codes, he said.
Meanwhile, President Dmitry Medvedev has ordered retiring officials who occupy certain federal and municipal posts to wait two years before accepting employment in the commercial or nonprofit organizations they had supervised.
The decree was signed Monday but only published on the Kremlin’s web site Wednesday. It bans both full-time and part-time work during the waiting period.
The proposed measures are useless because “bureaucracy will not control itself,” said Pavel Kabanov, head of the National Anti-Corruption Committee, a nongovernmental organization.
The only effective ways to curb corruption are public control, independent media and political competition, all of which are virtually absent in Russia, he said.
“Our society is childish: It doesn’t understand that it is the citizens who hold power and the bureaucrats are simply supposed to serve the citizens,” Kabanov said.
The ethics code simply sums up legal norms already covered by existing legislation, said Yelena Panfilova, head of the anti-corruption watchdog Transparency International Russia.
She said the code would not help fight graft initially but might be useful in the long run.
In 10 to 15 years, “when officials get used to the fact that state service is not for personal enrichment but for serving the citizens, the code may start to work,” she told The St. Petersburg Times.
Despite the criticism, the authorities appeared determined to plow ahead with their own ideas for fighting corruption, a campaign that is a hallmark of Medvedev’s presidency.

TITLE: One Lake in City Is Safe for Swimmers
AUTHOR: By Olga Kalashnikova
PUBLISHER: The St. Petersburg Times
TEXT: As temperature records are broken and city residents turn to the wealth of bodies of water offered by the so-called “Venice of the North” in attempts to stay cool, a recent inspection showed that only one of St. Petersburg’s 26 beaches is officially safe to swim from. 
Three temperature records have already been broken this month in St. Petersburg alone, and forecasters believe it is only the beginning.
“There are some real anomalies,” said Lev Karlin, principal of the Russian State Hydrometeorological University. “The average daily temperature in July should be 17 to 18 degrees Celsius, while in St. Petersburg now it is up to 25 degrees C.” 
The heat wave has prompted thousands of city residents to take to the water. There are officially 26 beaches in St. Petersburg, but a recent examination conducted by the Federal Service for the Oversight of Consumer Protection and Welfare (Rospotrebnadzor) revealed that it is only Lake Bezymyannoye (“Nameless”) in the Krasnoselsky district whose beach and water meet all the sanitary requirements.
Other ponds do not meet sanitary norms, and swimming in them can be a health hazard.
“People can get skin diseases and stomach infections,” said Tatyana Kochetova, a Rospotrebnadzor representative. “People with poor health and children are particularly at risk.” 
According to the law, Rospotrebnadzor can investigate the city’s lakes and ponds only once every three years. The traditional inspection before the opening of the swimming season takes place only on the initiative of the district authorities, who invite Rospotrebnadzor experts to examine the condition of the water and territory of the shore. Then a decision is made as to whether it is advisable to bathe there or not. 
This year, 23 of the city’s 26 beaches were examined. Lake Bezymyannoye, the only one to pass the inspection, is situated almost outside the city in the Krasnoselsky district, between St. Petersburg and the town of Gatchina. The lake has a lot of springs and wells that constantly replenish and refresh the water, which is why it meets all the sanitary requirements. 
The main problem faced by all of St. Petersburg’s bodies and water is industrial and household waste. In 2008, the State Hydrological Institute launched a five-year rescue and purification program for various bodies of water. According to Valery Kolosov, head of the department of work on bodies of water of the Natural Resources Management Committee, the program brings bodies of water into better condition by cleaning them of all dirt and litter, but does not improve the microbiological quality of the water. Rospotrebnadzor specialists agree as, according to the inspections, even after being cleaned, swimming in the water can still be dangerous.
“Only the construction of local purification facilities and stopping of unrefined discharge will improve the quality of the water,” said Kolosov.
“Only when all the discharge in the city is fully channeled [to purification facilities] will it be possible to talk about there being places suitable for swimming. But there is another problem: We cannot prohibit vehicle traffic. The ground is polluted by heavy metals, which are washed into lakes with the rain,” he said.
There are 588 bodies of water in the city, according to data from the Natural Resources Management Committee. Only 2 percent of them can be regarded as clean, 18 percent are polluted and 80 percent are classified as dirty. 
City residents are paying little attention to the authorities’ warnings, however, and continue to swim everywhere they find water. Even the beach of the Peter and Paul Fortress has become a favorite swimming spot, in spite of the fact that it is strictly prohibited because the Neva River is dirty in this location. Moreover, sunbathers and swimmers often contribute to the pollution of lakes and beaches by leaving behind litter. 
Even at Lake Bezymyannoye, the conditions are far from ideal. Of the desirable facilities a beach should have, such as changing-cabins, drinking fountains and adequate parking, the lake only has bio-toilets. 
Outside the city, the options are more varied. The Leningrad Oblast contains 51 traditional sunspots, of which 21 meet all the Rospotrebnadzor requirements, though some are suitable for sunbathing but not for swimming.
Rospotrebnadzor specialists console people with the fact that this year is better than last year, when no body of water in St. Petersburg satisfied the requirements for swimming.
Since May 1, 25 people have drowned in St. Petersburg, according to the City Emergency Ambulance Station. In Moscow, where temperatures reached 36.6 degrees last week, 147 people have drowned since June 1.
Temperatures broke the record on Monday, when the mercury soared to 34.2 degrees. Forecasters are predicting 35 degrees on Wednesday. Cooler weather is expected after the weekend.

TITLE: Saratov Governor Mum Over Italian Yacht Raid
AUTHOR: By Alexandra Odynova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — When Italian police raided a luxury yacht earlier this month, they were searching for Russian criminals. But instead they found several senior Russian officials, including a man who in leaked video footage closely resembles Saratov Governor Pavel Ipatov.
Ipatov has been dodging uncomfortable questions all week about whether he was in fact on the 47-meter Axioma yacht when Italian police forced it to dock at a port on Stromboli Island on July 9.
On the day of the raid, the governor’s office released a statement saying Ipatov was meeting with Deputy Prime Minister Viktor Zubkov in Moscow to discuss a drought that is scorching his Volga River region.
But his office backtracked when video footage of the raid surfaced on YouTube and local journalists identified Ipatov on the yacht.
Ipatov’s spokeswoman said Thursday that the governor had met with Zubkov a day earlier than previously announced, on July 8, and had taken off July 9, a Friday, as part of a long weekend.
“He had a vacation planned for that period,” the spokeswoman said by telephone. “There is no scandal behind it.”
She did not confirm or deny Ipatov’s presence on the yacht.
When asked about the video at a news conference Tuesday, Ipatov simply replied, “I had a day off Friday,” the local news web site Vzglyad.info reported.
The image of the 60-year-old governor living it up on the Mediterranean while impoverished farmers in his region are suffering in a record heat wave is something that Ipatov would rather avoid. He was just reappointed to a second term as governor in March.
Italian police are keeping tightlipped about the raid, which they conducted after a tip that turned out to be wrong, and have not identified any of the people aboard the charter yacht.
Video footage shows the sleek, white yacht being escorted by three small vessels, an armed patrol boat and a helicopter into the port of Lipari. Armed carabinieri are later shown leading a half-dozen men and women off the boat and seating them in cars.
Saratov journalists have identified Ipatov as a tall, lean man with a shock of wavy white hair seen walking off the boat. The man, who is wearing dark sunglasses, is clad in striped black and white shorts, a purple T-shirt and flip-flops.
Some of the Russians on the yacht had diplomatic passports, and they included a State Duma deputy and a senior Russian diplomat, according to the yacht industry web site Eyachtreport.com, which cited the port’s Italian-language portal Lipari.biz.
The police, who were acting on a tip that one or two Russian gangsters were on board, released the Russians after five hours and without an apology, the report said.
Komsomolskaya Pravda reported that the yacht group had included 20 Russians and they had demanded an apology.
While Ipatov has not explained his whereabouts for that weekend, he was present the following Monday at a Cabinet meeting chaired by Prime Minister Vladimir Putin to discuss the drought and agriculture. Saratov is one of 23 regions where the government has declared a state of emergency because of the drought.
Ipatov is not finding much sympathy. The yacht affair escalated this week when former Saratov Governor Dmitry Ayatskov, now a Kremlin aide, suggested that the man in the video was Ipatov and questioned whether Ipatov had received permission from the Kremlin to travel abroad.
“There are regulations for officials going abroad under which the head of state or [presidential] administration must provide permission,” Ayatskov said, Vzglyad.info reported.
He added that an official who left the country for any reason without the slip could be dismissed.
Ayatskov said it was unclear whether Ipatov had notified the presidential administration about a trip to Italy.
Ipatov’s spokeswoman did not say whether the governor had sought permission.
The regulations were imposed by President Dmitry Medvedev after the Kremlin was left red-faced last year when tabloids showed former Russian Olympics Committee chief Leonid Tyagachov, Office of Presidential Affairs director Vladimir Kozhin and Federal Guard Service head Yevgeny Murov partying during a New Year’s vacation in France’s Courchevel ski resort.

TITLE: Church Program Focuses on State
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Vladimir Batrakov, 45, a retired military officer, enrolled in courses on how to be an Orthodox youth leader because he was disappointed with the lack of young people in church.
After receiving his diploma in mid-July, he started to work full-time at a Moscow church, where he is supposed to advise young people on religious issues and organize Orthodox youth rallies and other activities.
“The main aim is to divert young people from drugs, alcohol and sexual promiscuity,” Batrakov said.
A second goal is to inform the public about the church’s stance on contemporary issues through the youth rallies, he said.
Batrakov is one of the first foot soldiers in a campaign by Russian Orthodox Patriarch Kirill to train leaders to create youth groups in every prominent locality nationwide.
On the surface, there is nothing surprising about the Orthodox church reaching out to young people. Many Christian denominations in Western countries have their own youth groups, and in 1991 the Russian church itself created the All-Russia Youth Orthodox Movement, an understaffed organization that works mainly with children and early teens.
What makes the new youth groups stand out is their planned promotion of a blend of religion, anti-Western philosophy, politics and patriotism — values that will be passed on by youth leaders like Batrakov, who is among 100 people who signed up for a two-month crash course on Orthodox youth leadership in Moscow that started in May. Church representatives said the number of such leaders might reach into the thousands.
Religion analysts said the youth groups might be Kirill’s attempt to boost his political influence. But some said the project, which is supposed to produce a conglomeration of local groups not linked with one another, might be little more than a publicity stunt by Kirill.
A group of newly trained youth leaders made an appearance at the pro-Kremlin youth camp at Lake Seliger this month.
Both at the camp and in their churches, the youth leaders are supposed to promote the Ten Commandments, fight “so-called European values” and possibly prepare young people to take to the streets in the name of “national security,” youth organizers said.
The promise to fight for national security echoes the public activities of established pro-Kremlin youth groups like Nashi, Young Russia and Young Guard — albeit with a religious slant.
Kirill first called for church-trained Orthodox youth leaders at a meeting with senior clergy in December. He declared “the moral upbringing” of young people “the priority direction of modern church life” in a society filled with “moral relativism,” “all-permeating hedonism,” “moral permissiveness” and “the cult of personal success,” according to a transcript of the speech published on the church’s web site, Patriarchia.ru.
The Moscow courses, organized by the Synodal Department for Youth Affairs and the Patriarch’s Center for Spiritual Growth of Children and Youth, are a first step toward fulfilling Kirill’s call.
The courses, said Yulia Pavlyuchenkova, deputy head of the Synodal Department for Youth Affairs, will provide future youth leaders with the skills necessary to draw youth away from “so-called European values” promoted through the mass media such as convenience, free love, irresponsibility and egoism, which she said lead young people to drug abuse, alcoholism, promiscuity, early pregnancy and even imprisonment.
Pavlyuchenkova said the courses promote “values that are traditional for our Orthodox country such as the Ten Commandments.”
Yury Belanovsky, deputy head of the Patriarch’s Center for the Spiritual Growth of Children and Youth, said many young Russians live without spiritual or moral guidelines.
“The youth have become a tidbit for everyone who wants to eat them, be it religious sects or companies that make money on products for young people,” Belanovsky said.
Some youth leaders will work in churches, advising young people, gathering them to help the needy and organizing activities like rallies, pilgrimages, film discussions and the restoration of historic buildings, Pavlyuchenkova said.

TITLE: Prosecutors Investigate Scientology Center
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Prosecutors have opened a criminal case against a Scientology center in the town of Shchyolkovo, 13 kilometers northeast of Moscow, on charges of inciting hatred, punishable with up to five years in prison.
Investigators have decided that documents and literature confiscated at the center promoted extremism, a law enforcement official told Interfax, without elaborating.
The decision was based on expertise conducted by leading Russian linguistic institutions, including the Linguistics Institute at the Academy of Sciences, Interfax reported.
In April, works by Scientology founder L. Ron Hubbard were added to a federal list of extremist materials on the decision of a Siberian court, which de facto rendered all Scientology centers open to prosecution.
The court’s decision slammed Hubbard’s books as inciting social and religious hatred, justifying violence, especially toward opponents of Scientology, and promoting anti-state views.
Former science fiction author Hubbard created Scientology in the 1950s. The secretive church has faced regular criticism and litigation from former members, who accuse it of being a cult charging massive fees for purported religious services.
Germany has ruled that it is a commercial organization, and several other European governments have refused to recognize it as a religion.
Scientology’s branches in Surgut and Nizhnekamsk successfully sued the Russian government in October at the European Court of Human Rights for refusing to list them as religious organizations on the grounds that they had not existed in the country for 15 years.

TITLE: Russian Aid Frozen To Transdnestr
PUBLISHER: The St. Petersburg Times
TEXT: Russia has frozen financial aid for Moldova’s breakaway Transdnestr, saying the main bank of the pro-Moscow region had used the funds in money laundering schemes, Reuters reported.
The financial aid, provided by Moscow since 2008, stopped flowing last spring when Russia transferred 414 million rubles ($13.63 million) for the first half of 2010, Reuters reported, quoting from an article printed in the Kommersant newspaper on Friday.
The cash is used to supplement the tiny pensions of the local elderly population. Monthly local payments of $15 to each of the region’s 137,000 pensioners are popularly known as “Putinka” after Prime Minister Vladimir Putin.
Russian and separatist officials could not be immediately reached for comment.

TITLE: Chavez Backs Abkhazia, South Ossetia
PUBLISHER: The Associated Press
TEXT: CARACAS, Venezuela — Venezuelan President Hugo Chavez promised to call on his Latin American allies to recognize the independence of Abkhazia and South Ossetia, two separatist Georgian regions considered autonomous states by just four countries around the world.
Chavez met with Abkhaz leader Sergei Bagapsh and South Ossetia’s Eduard Kokoity in Caracas on Friday and agreed to back their fight for international support of their independence from Georgia.
“I’m sure we, together with Abkhazia and South Ossetia, will be able to build strong relations with Latin American nations such as Paraguay, Uruguay, Cuba, Bolivia, Ecuador, Brazil and Argentina,” Venezuela’s leftist leader said.
Chavez called Abkhazia and South Ossetia “new republics that are working hard for their development.”
Venezuela is one of only four countries — including Russia, Nicaragua and the small South Pacific island nation of Nauru — that have recognized Abkhazia and South Ossetia as independent republics.
Russia recognized the two territories as independent after the 2008 Russia-Georgia war and has stationed troops there. Georgia and many Western countries say the military presence amounts to Russian occupation.
Venezuelan officials signed a series of agreements with the visiting delegations to establish formal diplomatic relations and evaluate proposals for cooperation in areas ranging from energy to trade and agriculture.
Bagapsh said in an interview that he was seeking closer ties with Venezuela and help from its state oil company in looking for crude oil in Abkhazia.
Bagapsh said he sought Venezuela’s help persuading more Latin American governments to recognize Abkhazia, but acknowledged that those efforts could be difficult because the United States does not consider his region a separate country and has allies in Latin America.
“We understand that recognition is a long and difficult process, and we understand that the United States has much influence in the region,” Bagapsh said.
Bagapsh played down the Russian presence in Abkhazia, saying there are 1,800 Russian soldiers in Abkhazia who help with border security and that their numbers are relatively insignificant.
He took issue with suggestions by U.S. Secretary of State Hillary Clinton that Russia is occupying Abkhazia.
“She’s too important of a politician not to know what occupation means,” he said.
Chavez said he intended to visit Abkhazia in “the nearest future,” Interfax reported Sunday. 
“In the near future, Venezuelan ships will arrive in Abkhazia. I also promise that soon I will make a visit to Sukhumi,” he told Bagapsh.

TITLE: Fears Of Separatism Arise After UN Ruling
PUBLISHER: Combined Reports
TEXT: The World Court’s opinion that Kosovo’s unilateral secession from Serbia was not illegal will send a chill through other countries that have restive minorities keen to follow Kosovo’s example.
In a 9-5 nonbinding ruling Thursday on the 2008 secession, the Hague-based court said it considered “that general international law contains no applicable prohibition of declaration of independence.”
Diplomats at the United Nations said the ruling underscored the clash between two cardinal principles dear to rank-and-file UN member states: self-determination, in this case for Kosovo’s majority Albanians, and territorial integrity, in this case, Serbia’s.
From the outset, this caused a major split among the 192 UN member states over whether to recognize Kosovo. Some have recognized Kosovo, but many have been waiting to see how the World Court would rule.
Some, including Serbia and Russia, which has largely subdued a separatist Islamist insurgency in Chechnya, have rejected the independence declaration.
“Our position on the nonrecognition of Kosovo’s independence remains unchanged,” Russia’s Foreign Ministry said in a statement after the court ruling.
“It is essential to note that the court gave an assessment of only the actual declaration and specifically said it was not addressing the broader question of the right of Kosovo to secede from Serbia unilaterally,” it said.
“In its conclusions, the court did not express an opinion on the consequences of this declaration, in particular, on whether Kosovo is a state, or on the legality of the recognition of the this region by a number of countries.”
The United States and many in the West insist that Kosovo’s statehood is a special case because it is the result of a brutal Serbian ethnic cleansing campaign against Albanian separatists that led to an international administration in 1999, when NATO ejected Serb forces after a brief aerial war.
“We call on those states, who have not yet done so, to recognize Kosovo,” U.S. State Department spokesman Philip Crowley said. “Now is the time for them, for Kosovo and Serbia, to put aside their differences and move forward.”
Some experts say there is no practical way to prevent other independence-minded regions from drawing inspiration from the Kosovo ruling.
“The West wants to say that this case has no precedential importance, but that’s kind of a contortionist logic,” said Dana Allin at the International Institute for Strategic Studies, a London-based think tank. “You can say that, but whether you can enforce it is hard to say.”
Regions around the world where separatists may be energized by Kosovo’s secession include Spain’s Basque country and Catalonia, Scotland, Italy’s ethnic German-populated Alto Adige, and parts of Romania and Slovakia populated by restive Hungarian minorities.
South Ossetia and Abkhazia, which have declared independence from Georgia, applauded the ruling, which states that such unilateral declarations of independence are not illegal under international law.
“I think the decision itself will have a great influence on the efforts we are making,” said Abkhaz leader Sergei Bagapsh. “There can be no double standards.”
Russia recognized the separatist regions of Abkhazia and South Ossetia as independent states after the 2008 Russia-Georgia war and has kept troops there.
Nearby, Armenian separatists in Azerbaijan’s Nagorno-Karabakh region may seek to legitimize their secession dating back to the early 1990s.
In the Middle East, Kurdish politicians in Iraq’s autonomous Kurdish region said they would carefully study the court decision.
The ruling could also have far-reaching effects on Indonesia, where at least two provinces, Aceh and West Papua, are seeking independence.
So far, only 69 countries of the 192 in the United Nations General Assembly, including the United States and most EU states, have recognized Kosovo since it declared independence from Serbia in February 2008. Aside from Russia, a number of important countries have refused to do so, including China, India, Brazil, Israel, Egypt, Indonesia and South Africa.
For Kosovo to obtain UN membership, it needs a two-third majority in the General Assembly, plus the approval by all five permanent members of the UN Security Council — the United States, Russia, China, Britain and France.
Serbian President Boris Tadic said special envoys were dispatched over the weekend to 55 countries asking that they not recognize Kosovo in the UN General Assembly in September.
“Serbia will do its utmost so that there are the least possible such recognitions,” he said.
Kosovo Foreign Minister Skender Hyseni said he would send requests to 121 countries around the world asking for formal recognition of Kosovo’s independence. He planned to travel to the United States over the weekend for some 60 meetings with representatives of various nations in an attempt to get more recognitions ahead of the General Assembly.
Russian officials insisted that Moscow would keep Kosovo out of the United Nations and other world bodies where it has a veto.
“The legal debates about Kosovo’s independence will continue,” Russia’s envoy to NATO, Dmitry Rogozin, said in an interview broadcast on the Rossia-24 news channel.
“We will not accept the splitting of a country that is a member of the United Nations,” he said. “On principle, we consider Serbia a unified whole.”
(SPT, AP)

TITLE: State Considers Purchase Of Norilsk Nickel Stake
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia is considering buying a stake in Norilsk Nickel, the country’s biggest mining company, amid an ownership battle between two of its largest shareholders, three people familiar with the matter said.
The government has approached Norilsk shareholders about buying a stake in the company, said the sources, who declined to be identified because the talks were private. Oleg Deripaska, the biggest shareholder in United Company RusAl, has discussed selling RusAl’s 25 percent stake to state-owned companies, one of the people said. Two of the people said talks concerned other shareholders’ stakes, not RusAl’s.
President Dmitry Medvedev held talks in January 2009 with Deripaska and Vladimir Potanin, whose Interros Holding owns 25 percent of Norilsk, on proposals to create a merged commodity producer from six Russian companies. The plan was abandoned a month later.
Deripaska and Potanin are now involved in a dispute over the composition of Norilsk’s board.
“Quite a lot of people in government would like for Norilsk to evolve into a national mining champion,” said Chris Weafer, chief strategist with UralSib. “We’re getting to the point where that decision has to be taken, and this agitation is reflected in the shareholder dispute. The state must choose by 2012 or call it off.”
Norilsk shares rose as much as 3.5 percent Friday and closed up 1.3 percent at 5071.83 rubles on the MICEX. The MICEX Index finished Friday almost unchanged at 1380.86.
Prime Minister Vladimir Putin’s spokesman, Dmitry Peskov, said he had “nothing to say” when asked about the possible purchase of a stake in Norilsk. Erzhena Mintasova, a Norilsk spokeswoman, said the company “doesn’t comment on the actions of our shareholders.”
Maxim Sokov, RusAl’s head of strategy, said the Norilsk stake was a strategic asset and that there were no plans to sell it.
“We strongly believe that the only reason the government could decide to look at buying a stake in Norilsk Nickel is because of the potential damage to the company being caused by past and possible future backstage deals between Interros and management of Norilsk Nickel,” Sokov said in an e-mail.
Interros denied any plans to sell its stake in Norilsk.
“We never considered that issue because we’ve been investing in this company quite heavily,” Andrei Bugrov, managing director of Interros, said by phone Wednesday.
State-controlled companies, including Russian Technologies, have begun talks with Potanin and minority shareholder Alisher Usmanov’s Metalloinvest about purchasing their shares in Norilsk, one of the people said.
Usmanov acquired about 5 percent of Norilsk in 2008 when the conflict over control of the company emerged between Deripaska and Potanin. Usmanov, asked by Potanin to act as a so-called “white knight” to stave off Norilsk’s merger with RusAl, called for the nickel company to consider a tie-up with Metalloinvest, Russia’s biggest iron-ore producer.
Usmanov proposed the idea to Medvedev in January 2009, along with Deripaska and Potanin. Talks were abandoned after Metalloinvest and Norilsk couldn’t agree on merger terms. Metalloinvest cut its ownership in Norilsk to 4 percent after the nickel company’s share buyback in 2008.
Spokespeople for both Metalloinvest and Russian Technologies declined to comment.
Vladimir Zhukov, an analyst with Nomura International in Moscow, said RusAl might sell its Norilsk stake if it receives a good price. RusAl is trying to repay $12 billion of debt.
“Keep in mind that this would allow RusAl quickly to reduce its leverage and resume investment in a large pipeline of products currently shelved until debt reduction covenants are met,” Zhukov said.
“As the buyer would have to come from Russia, and given the lack of cash at most of the other private mining companies, the most natural buyer would be one of the state-controlled commercial banks, which are already involved either as creditors or shareholders in Norilsk or RusAl,” he said.

TITLE: Local Retailers See Profits Rise
AUTHOR: By Yelena Dombrova and Alla Tokareva
PUBLISHER: Vedomosti
TEXT: The Petersburg retail chains Lenta and Okay made respective profits of 348 million rubles ($11.5 million) and 1.8 billion rubles ($60 million) last year.
The revenue of the local retail chain Okay increased in 2009 by 31.6 percent compared to 2008 up to 67.9 billion rubles ($2.2 billion), according to information from SPARK Interfax. Revenue at Lenta increased by 10.6 percent compared to 2008 up to 58.8 billion rubles ($1.9 billion).
These indexes are established according to Russian accounting standards, and do not correspond to internal company standards, said a Lenta representative. In March, the chain’s shareholders confirmed 2009 revenue of 55.6 billion rubles, 9 percent more than in 2008. According to SPARK Interfax information, the company’s net profit was 348.1 million rubles compared to a loss of 379.4 million rubles in 2008. Lenta has 37 stores, the newest of which opened on July 10 in the city of Cherepovets.
Okay has increased its profit by 12 percent up to 1.8 billion rubles; it has 50 stores in Russia. An Okay representative declined to comment.
The biggest Russian retailer — X5 Retail Group — increased its turnover by a third last year up to $8.7 billion, of which net profit was $165.4 million compared to a loss of $2.1 billion a year earlier, according to a company report. The reason for the improvement was a reduction in costs, the report stated. 
Revenue at the national chain Dixy was 54.26 billion rubles ($1.8 billion) according to IFRS in 2009 — an increase of 12 percent. Dixy was the only company among market leaders to finish 2009 with a loss of 112.4 million rubles ($3.7 million). This is linked to an exchange rate difference on a syndicated loan of $135 million taken out in 2008, Fyodor Rybasov, vice president of Dixy Group, said in May. 
Sedmoi Kontinent saw revenue of 44.6 billion rubles ($1.5 billion) in 2009, of which 1.3 billion rubles ($42.8 million) was profit. Magnit chain finished last year with revenues of $5.35 billion and net profit of $275.15 million.
The rise of Okay and Lenta’s financial indexes reflects inflation, growing average checks, and also the growth of the chains, said Natalya Smirnova, an analyst at Deutsche Bank.
Both companies easily number among the ten biggest retailers, and Okay numbers in the top five in terms of growth rates, said Alexei Krivoshapko, director of Prosperity Capital Management. He cited Magnit and Auchan as examples of faster growing chains.

TITLE: State May Sell Stakes to Compensate Deficit
AUTHOR: By Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia may raise 883.5 billion rubles ($29 billion) to help cover its budget deficit by selling minority stakes in 10 companies including Rosneft, the country’s largest oil producer, the Finance Ministry said.
The ministry also proposes the sale of holdings in pipeline operator Transneft, Russia’s two largest lenders, Sberbank and VTB Group, Russian Railways, shipper Sovcomflot, the RusHydro utility, Russian Agricultural Bank and Agency for Housing Mortgage Lending. The 2011-2013 privatization plan must be approved by the government, and will be discussed at its next meeting.
The government is seeking to boost revenue to narrow the budget deficit, attract foreign investors and cut the economy’s dependence on energy. Economy Minister Elvira Nabiullina said on June 18 that Russia may raise 72 billion rubles from this year’s government asset sales.
“Privatization is a measure of last resort for deficit financing, and with state debt at around 7-8 percent of GDP, we view the sale of state assets as premature,” Alfa Bank analysts including Natalia Orlova and Pavel Sorokin said in a note to investors Monday. “As the government is planning to sell only minority rather than strategic stakes, the ultimate decision will be sensitive to market conditions.”
Vedomosti newspaper reported details of the asset sale Monday. The report was confirmed by a Finance Ministry official, who declined to be identified in line with ministry rules.
The government may earn 298 billion rubles from asset sales next year, 276.1 billion rubles in 2012 and 309.4 billion in 2013, the Finance Ministry official said.
The government said last year it sought to sell state energy and transport holdings, earmarked about 5,500 enterprises for divestment and pledged to sell shares in companies that are already publicly traded. Stakes lined up for sale included as much as 25 percent of Sovcomflot, Chief Executive Officer Sergei Frank said on Dec. 28.
The Economy Ministry began talks with “all major banks” including JPMorgan Chase & Co., Bank of America’s Merrill Lynch unit, UBS and Troika Dialog to choose consultants for the privatization, Alexei Uvarov, head of the Economy Ministry’s property department, said on April 27.
“The Finance Ministry will still have to give preference to borrowing as the primary source of deficit financing,” Moscow-based Alfa Bank said. “The government is in a good position to attract additional debt.”
Prime Minister Vladimir Putin said on July 12 that Russia’s budget deficit may shrink to less than 5 percent of gross domestic product this year from 5.9 percent in 2009, as the world’s biggest energy exporter recovers from a record 7.9 percent contraction last year. The shortfall is set to narrow to 3.6 percent next year, 2.4 percent in 2012 and 1.5 percent in 2013, Deputy Finance Minister Sergei Storchak said last month.
Russia plans to borrow 1.5 trillion rubles next year, 1.3 trillion rubles in 2012 and 931 billion rubles in 2013, Storchak said, citing preliminary estimates in the government’s borrowing program. The country will meet 90 percent of its borrowing needs on the domestic market, he said.

TITLE: In Brief
TEXT: <strong>New Holland Savior?</strong>
MOSCOW (Bloomberg) — Russian billionaire Roman Abramovich may finance the New Holland property development in St. Petersburg’s historic city center, Kommersant reported, without citing anyone.
The project, designed by British architect Norman Foster, was abandoned by former billionaire Shalva Chigirinsky after Russia’s record stock market rout in 2008, the Moscow-based newspaper said.

<strong>Grain Prices Soar</strong>
MOSCOW (Bloomberg) — Russian grain prices rose as much as 33 percent last week on drought concerns, SovEcon, the Moscow-based research center, said on its web site.
Wheat in the European part of Russia rose 15 percent to 4,850 rubles ($160) a metric ton by July 23 from a week earlier, SovEcon said. Barley added 30 percent to 3,350 rubles a ton, while rye climbed 33 percent to 3,400 rubles a ton, according to the research group.

<strong>Gold Output Falls</strong>
MOSCOW (Bloomberg) — Russia’s total gold output, including by-product, declined 3.5 percent to 74.66 metric tons from a year earlier, the Russian Gold Producers Union said.
The amount of mined gold fell 5.1 percent to 63.5 tons, the union said Monday in an e-mailed statement. Mined gold rose 6.1 percent to about 19 tons in June, compared with a year earlier, led by Polyus Gold, Kinross Gold and Petropavlovsk, the union said.

<strong>RusAl Splits In Two</strong>
MOSCOW (Bloomberg) — United Co. RusAl split its alumina production unit into east and west divisions, the company said in an e-mailed statement Monday.
Valery Matviyenko, a former GMK Norilsk Nickel deputy chief executive officer, will head Alumina Division East, which includes Russia and Ukraine, RusAl said. Yakov Itskov, who has worked at Russneft, will head the west, or international, division, the company said.

<strong>Severstal Output Rises</strong>
MOSCOW (Bloomberg) — Severstal, Russia’s largest steelmaker, said second-quarter output rose 11 percent from the prior quarter to 4.56 million metric tons, led by the U.S. 
Production in the U.S. jumped 20 percent to 1.82 million tons and output in Russia added 6 percent to 2.74 million tons, Severstal said Monday in a statement. Prices for hot-rolled steel were $723 a ton in the U.S. compared with $605 a ton in Russia.
Severstal raised output of washed coal for steel-making 15 percent to 1.85 million tons and output of iron ore pellets 8 percent to 2.43 million tons, the company said. Washed coal prices rose 21 percent to $155 a ton, while iron ore pellets gained 77 percent to $126 a ton.

<strong>Mall Loan Extended</strong>
MOSCOW (Bloomberg) — AFI Devlopment, Israeli billionaire Lev Leviev’s Russian property developer, said it won a two-year extension at a lower interest rate on a ruble loan from VTB Group for its Mall of Russia project in Moscow.
The repayment term on the 8.45 billion-ruble ($280 million) credit line was extended to August 2013 and the rate was cut to 13.25 percent a year from 16 percent, AFI said in a regulatory filing Monday.

TITLE: Troika Chairman To Leave, Sell 40% Stake
PUBLISHER: Bloomberg
TEXT: MOSCOW — Ruben Vardanyan, chairman of Troika Dialog, said Friday that he would quit Russia’s oldest brokerage in three to five years and offer his 40 percent stake to the firm’s management.
“After 20 years of being head of the company, I told people many times already I am not the person who wants to be in investment banking till the end of my life,” said Vardanyan, 42, in a phone interview from Italy. “I am trying to prepare people for when I step down in three to five years’ time.”
Should the management buyout fail, Vardanyan said another option would be to offer the stake to state-controlled lenders Sberbank and VTB Group, along with South Africa’s Standard Bank, which already owns 36 percent of the company.
Jacques Der Megreditchian, chief business officer of Troika, who proposed the buyout, is the leading candidate from within the company to take over, Vardanyan said.
Vardanyan’s decision to leave Troika comes after Pavel Teplukhin, managing director and head of the group’s asset management unit, announced in January that he would leave.
Teplukhin’s exit follows three senior departures since Troika entered into a strategic alliance with Standard Bank in March 2009 by selling a 33 percent stake for $200 million. Under the deal, Troika also received Standard Bank’s Russian business.
In its 2009 annual report, Standard Bank said it had a 36 percent stake.
“Troika’s founder, Peter Derby, was setting up the business and went to one of Moscow’s leading universities and asked the dean if he could meet the smartest graduate, who happened to be Ruben,” Ronald Freeman, a member of Troika’s board of directors, said by phone. Derby, an American investor, founded Troika in 1991.
Vardanyan said Troika was worth as much as $2.8 billion when he was approached to sell three years ago. “That was a fair reflection at a time in a crazy sellers market, when everyone was biased about the future,” Vardanyan said. “If you look back, everything was valued differently.”
Troika’s local rival, Renaissance Capital, sold a 50 percent stake to billionaire Mikhail Prokhorov in September 2008 for $500 million. That was 18 months after Renaissance rejected a $4 billion offer from state-run VTB Group, according to Vedomosti. UBS valued RenCap at as much as $10 billion four months later, Vedomosti reported.
“The partnership board consists of 15 people, and there is a mechanism and rules that exist for the buyout of shares owned by partners leaving the company,” Vardanyan said. He prefers a management buyout because it is important for a “strong and professional team that can take risks and move forward” to take over.
Selling his stake to foreign investors is another option, Vardanyan said in the interview.
Vardanyan, who has led Troika since 1992, helped set up Russian business school Skolkovo.
“We raised above $100 million from businessmen just to build a school without any tax benefits. People trust me and will provide me money for new projects,” he said. “I want to do other things, perhaps special asset management for charity or trying to build a charity industry which doesn’t exist yet in Russia.”
Vardanyan is board chairman of Armenia’s AmeriaBank and is a board member at AvtoVAZ, truck maker KamAZ, and gas producer Novatek.
Troika plans to increase its headcount this year by 10 percent from 1,200 and expand in Asian and African markets, Vardanyan said.
“We are looking for new opportunities,” he said. At the same time, “the market remains very shaky, and we don’t want to be very risky and to make many long-term commitments.”

TITLE: Stocks Rise as State Mulls Stakes Sale
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian stocks headed for their highest level in more than a month Monday as the government proposed selling stakes in some of the country’s biggest companies and stress tests on European banks bolstered investor sentiment.
Transneft jumped as much as 8.6 percent after the Finance Ministry proposed selling a 27.1 percent stake in the oil pipeline operator. Rosneft and Sberbank, which the ministry also put forward for asset-sales, climbed at least 0.9 percent. Those movements pulled the 30-stock Micex Index 0.4 percent higher to 1,385.74 at 3:07 p.m. in Moscow, pushing the gauge toward its strongest close since June 22.
European regulators found last week that most of the region’s banks passed stress tests designed to determine if lenders had sufficient capital to withstand a recession and a sovereign crisis. Russia may raise about $29 billion by selling minority stakes in 10 companies, the Finance Ministry said.
The proposed asset sales are “net positive” for the market, said Tom Mundy, a Moscow-based strategist at Renaissance Capital. “The market seems to be digesting stress tests pretty positively.”
Mechel, the country’s largest producer of coal for steelmaking, jumped as much as 6.5 percent to 680 rubles ($22.5), its biggest intraday advance in two months. Prime Minister Vladimir Putin said Friday he regretted a rebuke two years ago on the company over coal prices that caused the shares to tumble.

TITLE: Admiral Casts Doubt On Controversial Mistral Deal
PUBLISHER: Bloomberg
TEXT: MOSCOW — A Russian admiral told a Moscow radio station the country won’t buy a French helicopter carrier without technology transfers, putting in doubt a contract French President Nicolas Sarkozy said was “certain.”
Admiral Vladimir Vysotsky said in an interview with Ekho Moskvy that there was no point buying the ship unless it came with the “transfer of key, fundamental technologies.”
Sarkozy on Friday promised workers at the STX Europe shipyard in Saint-Nazaire that they would build two Mistral command ships for Russia. The shipyard faces job cuts without the contract.
Sarkozy has previously said the ship will be sold to Russia without electronics or weaponry. Six U.S. Senators wrote to France’s ambassador to the U.S. last year to protest the proposed sale.
The French Navy has two of the 200-meter ships which can transport as many as 900 combat troops, 16 helicopters and 60 armored vehicles, and can command amphibious landings and house a full hospital. A third is under construction.
The sale would be the first of advanced military hardware from a NATO country to Russia.

TITLE: Mechel Rises on Putin’s Apology
PUBLISHER: Bloomberg
TEXT: MOSCOW — Mechel, Russia’s largest producer of coal used in steel-making, climbed the most in two months in Moscow after Prime Minister Vladimir Putin publicly apologized for rebuking the company over prices in 2008.
Putin regrets his criticism of Mechel, he said on Friday at a meeting with metals oligarchs in Chelyabinsk that was broadcast on national television. His original criticism contributed to Mechel’s share price falling more than 20 percent in the space of a day.
Shares in Mechel rose as much as 6.5 percent to 680 rubles ($22.40) on the Micex exchange in Moscow on Monday, the most since May 26. They traded 1 percent higher at 645 rubles ($21.25) at 1:40 p.m. local time.
Putin’s comments on Friday came after trading closed at 6:45 p.m. local time in Moscow. In New York that day, Mechel climbed 7.7 percent to $22.23 a depositary receipt.

TITLE: Komarov Plans Dramatic Pipe Revival
AUTHOR: By Ilya Khrennikov
PUBLISHER: Bloomberg
TEXT: MOSCOW — ChTPZ Group, once the largest maker of steel pipes in Russia and now weighed down by $2.5 billion of debt, is preparing a dramatic recovery. Literally.
Billionaire owner and onetime theater administrator Andrei Komarov plans to double capacity and boost productivity with a new $700 million plant, the introduction of Toyota-style efficiency methods and an eye for the spectacular.
“It was Mr. Komarov’s idea to paint gold all technological equipment at the new mill so it would resemble the mechanism of a giant Swiss watch,” said Sergei Moiseyev, chief financial officer of the supplier to Gazprom.
The plant, tagged by ChTPZ as Russia’s most modern, came under the scrutiny of Prime Minister Vladimir Putin when he visited Friday. “It felt as if I were in the theater or in Disney- land,” he said after entering the site. “It’s great.”
Komarov, 43, needs more than chutzpah and the support of Putin to revive a business that, like other Communist-era producers, has lost sales to nimbler rivals. ChTPZ, which dates back to 1942 and is also known as ChelPipe, slipped to third place among the country’s biggest pipe makers last year behind United Metallurgical Company, as its market share shrank to 16.5 percent, from 22.7 percent in 2005 and about 70 percent in the Soviet era.
The billionaire, who made his mark trading goods from cars to lingerie and is now deputy chairman of the Federation Council’s Natural Resources Committee, is counting on a doubling in demand from Gazprom, which is building the 1,220-kilometer Nord Stream gas pipeline to Europe.
To commit to that wager, Komarov almost doubled ChTPZ’s debt in the past three years, funding the pipe factory and a new steel plant to make the company self-sufficient in the metal.
“We plan to ride the surge in orders with our new mill and to pay back in- vestments quickly,” Moiseyev said. Komarov was not available for comment when Bloomberg called his Federation Council office.
The company’s plans to start up the pipe facility, with an annual output capacity of 600,000 tons, were pushed back to Friday from last year by the world economic slump. ChTPZ reduced production 23 percent in 2009 in response to the crisis. “It would’ve been nice for ChTPZ to have this new facility in place half a year ago, when tenders on pipe supplies for Russia’s major pipeline projects were held,” VTB Capital analyst Olga Danilenko said. “Contracts to supply the second stage of Nord Stream have been awarded. Things will depend on whether Gazprom and Transneft will approve new large pipeline projects in the second half of 2011.”
Rivals such as TMK, the country’s biggest steel-pipe maker, and Vyksa Steel Works have large-diameter pipe orders booked until mid-2011 and are running at full capacity, while ChTPZ risks being underutilized in the “short term,” she said.
Vyksa, United Metallurgical’s biggest unit, said first-half output jumped one-third, with large-diameter pipes for Gazprom and Transneft, the national oil pipeline company, up 36 percent.
TMK said Jan. 29 that it would spend about $1.1 billion on plants by 2012. It will increase capacity for seamless pipes to 3.4 million tons and for large-diameter ones to 1.2 million tons, the company said in a presentation during President Dmitry Medvedev’s visit to its Taganrog factory.
The global recession also strained borrowings at ChTPZ, which refinanced debt from Sberbank and received state guarantees for loans of 5 billion rubles ($164 million) of loans. Komarov and his partners also sold a 58 percent stake in Chelyabinsk Zinc Plant.
Still, the billionaire has shown an ability to build a fortune from scratch, while innovating with management ideas new to Russia. After three years as chief administrator for the Satiricon Theater in Moscow from the age of 23, he made money trading goods and began buying workers’ shares in the assets of ChTPZ, building those into a 40 percent stake by 1997. He also became Russia’s largest developer of golf courses.
Komarov’s listed Chelyabinsk Pipe Works, which controls his biggest mill, rose 56 percent in Moscow trading in the past year.
Even the all-white overalls for the 1,400 workers at the new plant are part of his attempt to instill the Japanese ethos of continuous improvement, or kaizen, to involve staff in increasing efficiency and generating ideas.
“It felt like a medical production. Everybody was wearing white,” Putin said on his visit. “It’s external, but still a sign of the production culture.”
The factory, where employees get meals prepared by a chef trained in Spain as well as programs to quit smoking, is surrounded by groomed lawns.
“The exotic designs at ChTPZ may be good from the standpoint of corporate culture but are unlikely to boost sales,” IFC Metropol analyst Andrei Lobazov said.
Whether ChTPZ doubles output, Komarov is not alone in forecasting burgeoning demand. Use of large-diameter pipes, the most profitable segment, will grow to as much as 3 million tons by 2012 from 1.4 million tons last year, according to Russia’s Pipe Industry Development Fund.

TITLE: GE, Inter RAO To Form Venture
PUBLISHER: Bloomberg
TEXT: MOSCOW — General Electric is planning a joint venture with Inter RAO, Russia’s state-run electricity trader, to produce gas turbines as GE seeks to expand into the region.
The companies signed an agreement last month, Anton Nazarov, a spokesman for the Russian power utility, said in a phone interview from Moscow on Friday. He declined to provide further details about the venture. GE, based in Fairfield, Connecticut, is the world’s biggest maker of gas turbines.
Russian Prime Minister Vladimir Putin last month met with GE Chief Executive Officer Jeffrey Immelt and invited him to help modernize the country’s health-care and power-generation systems. GE began operations in Russia in the 1920s to develop electricity systems and now has about 2,500 employees in 25 cities in the country.
Russia provided $1.6 billion of GE’s $33 billion in revenue from emerging markets last year. Sales in Russia rose 25 percent in 2009, GE spokeswoman Anne Eisele said on June 5. Energy revenue more than doubled, while products in the technology-infrastructure segment, which includes aircraft engines, locomotives and health care, rose 23 percent, Eisele said.
GE is the world’s biggest provider of power-generation equipment as well as medical-imaging equipment and health information technology systems.
GE fell 14 cents to $15.07 at 9:53 a.m. in New York Stock Exchange composite trading. The shares had gained less than 1 percent this year before Friday.

TITLE: VTB Finds Lessee For  Scandalous Oil Rigs
AUTHOR: By Tatyana Voronova and Nailya Asker-Zade
PUBLISHER: Vedomosti
TEXT: MOSCOW — VTB-Leasing on Thursday signed an agreement with Orenburgskaya Burovaya Kompania, or OBK, to deliver six of its oil-drilling rigs for lease, a VTB spokesperson said.
The state bank’s leasing unit purchased 30 ZJ50DBS rigs in July 2007 from the Cyprus-registered firm Clusseter Ltd., rather than from their manufacturer, Sichuan Honghua Petroleum Equipment. The company planned to lease them to the firm Well Drilling Corporation under a contract valued at $456.9 million, with the total cost rising to $650 million after customs duties and fees.
Well Drilling Corporation handed the rigs to Severnaya Ekspeditsia, which had a subleasing agreement with Gazprom-Bureniye. Things didn’t work out with Severnaya Ekspeditsia, however, and VTB-Leasing tried to get back the rigs and contest the subleasing agreement.
As of the end of last year, the bank had managed to win back 11 rigs in court, while the other 19 are still being disputed. Severnaya Ekspeditsia quickly went into bankruptcy.
According to calculations by VTB minority shareholder Alexei Navalny, the bank lost about $160 million while purchasing the rigs, primarily because it paid the middleman firm $15 million for each rig instead of the company’s catalog price of $10 million per unit.
During VTB’s annual shareholders meeting, president Andrei Kostin assured them that the rigs would be subleased.
While VTB Group was able to sign one contract Thursday, it has yet to find users for all of the rigs, a manager at the bank told Vedomosti. OBK does drilling work for TNK-BP, a source at the bank said.
A spokesperson for TNK-BP confirmed that it would be a three-year agreement but said the rigs would be used by its subsidiary Orenburgneft, which will finance the project.
A source at OBK told Vedomosti that the work of one of the rigs was demonstrated Thursday not far from the town of Buzuluk. VTB, VTB-Leasing, TNK-BP and OBK will sign an agreement on the rental of another six units by the end of the year, he said.
The source said the bank was very thorough in selecting a partner for its equipment, with the talks lasting about a year and a half. The company has already rented two of the ZJ50DBS drills, he said. “They began working at the start of the year. One well is already drilled.”
By the end of the year, VTB-Leasing plans to place up to 40 rigs in various organizations, including OBK, the VTB spokesperson said, adding that the equipment was in demand.
Deputy Prime Minister Igor Sechin’s recent visit to Uralmashzavod supports that idea. While he was there, contracts and agreements were signed with two rig buyers: drilling service company Eriell Group and the firm Syrian European Community for Heavy Industries.
At the time, Sechin said Uralmashzavod’s oil derricks had “a very high level of dependability” and that they were built to work in the difficult conditions of Russia’s Far North.
Uralmash’s portfolio currently includes orders to deliver five drilling rigs for Gazprom Neft, three for Rosneft and two for Eriell Group. It also plans to produce six drilling units to re-equip an offshore platform for Azerbaijan’s state oil company.

TITLE: Gazprom Contracts Help Rotenberg
AUTHOR: By Yelena Mazneva
PUBLISHER: Vedomosti
TEXT: MOSCOW — In its first full year of operations, Arkady Rotenberg’s contracting business managed to become the industry’s second-largest player by revenue, thanks in large part to its contracts with state-run Gazprom, Vedomosti has learned.
Stroigazmontazh, which first appeared two years ago, had revenue of nearly 89 billion rubles ($2.9 billion) last year under Russian accounting standards, according to data from the State Statistics Service. That made it the single biggest company in the “construction” section by data from the statistics service that are available in Interfax’s SPARK database.
The company’s consolidated revenue last year was 100.3 billion rubles, a source close to Stroigazmontazh told Vedomosti.
On its web site, the builder only lists projects from Gazprom, including the Olympics gas pipeline Dzhubga-Lazarevskoye-Sochi, the Russian section of Nord Stream, and the project of the decade — the Sakhalin-Khabarovsky-Vladivostok pipeline, the first phase of which is alone worth about 210 billion rubles.
A spokesperson for Stroigazmontazh declined to comment on how much of the company’s revenue was from Gazprom, as did spokespeople for the gas company. Gazprom is Stroigazmontazh’s “main customer,” the builder’s spokesperson said, declining to comment on whether it was the only one.
But the market’s leader is still Stroigazkonsalting, which had a 2009 consolidated revenue of 138 billion rubles, according to a company presentation that Vedomosti has seen. The company also lists Gazprom as its largest client, representing about 65 percent of its turnover, but Stroigazkonsalting also has other projects, such as a contract to reconstruct the highway between Moscow and Minsk in a consortium with Lider and Gazprombank.
The Stroigazmontazh spokesperson declined to say whether the company was ready to surpass its main competitor this year. “We don’t have a goal to try to surpass anyone, but we are developing exponentially and it’s already clear that the company has broken into the industry leaders.”
Stroigazmontazh’s owner is Arkady Rotenberg, who was a childhood judo partner of Prime Minister Vladimir Putin.
The company got its start when firms controlled by Rotenberg bought five of Gazprom’s construction subsidiaries in March 2008 for 8.3 billion rubles, essentially at their starting prices. By May of that year, Stroigazmontazh won its first Gazprom tender. It then won four major orders, two of which — the Sochi and Sakhalin pipelines — were awarded without a tender.
The main owner of competitor Stroigazkonsalting is Jordan-born businessman Ziyad Manasir, who first visited the Soviet Union as an exchange student 26 years ago. His junior partners are managers at the company, although until last year he had other co-owners.
In the spring of 2009, Manasir told Forbes that Pyotr Polyanichko received a 20 percent stake in his business in 1995. Polyanichko is the son of the late Viktor Polyanichko, a former deputy prime minister and close acquaintance of Gazprom’s first chief, Viktor Chernomyrdin.
Another partner was Olga Grigoryeva, the daughter of the late Alexander Grigoryev, a friend of Putin’s and former deputy chief of the Federal Security Service, Forbes reported.
“The guarantee of our success is skilled, quality and quick work as well as resources — people and equipment,” the Stroigazmontazh spokesperson said. “We even go after the projects that others turn down.”
For example, the undersea Dzhubga-Lazarevskoye-Sochi pipeline will be built in about a year, although similar projects typically take two years, the spokesperson said.
Manasir gave roughly the same explanation for his success in an earlier interview with Vedomosti. “I always fulfill the terms of contracts. No one will support you if a project fails.”
He could not be reached for comment Wednesday, and a spokesperson for Stroigazkonsalting declined to comment further.
Several years ago, the largest oil and gas contractor was Stroitransgaz, which was Gazprom’s favorite builder under chief executive Rem Vyakhirev. Then Gazprom sold its shares in Stroitransgaz and reduced its orders. The firm’s earnings began to fall, and in 2007 it was sold to oil trader Gennady Timchenko. Its major clients now include state-run Rosneft and Transneft.
Vedomosti was unable to speak with Stroitransgaz chief Sergei Makarov on Wednesday about the company’s forecasts and plans. Under a program formed by its previous president, Alexander Ryazanov, Stroitransgaz planned to double its revenue by 2013 and generate an operating profit this year.

TITLE: Medvedev Is No Democrat
AUTHOR: By David J. Kramer
TEXT: Those who had hoped that President Dmitry Medvedev would lead Russia to a more democratic, Western-friendly future have experienced a roller coaster of emotions recently. They were uplifted by a speech Medvedev gave before Russia’s ambassadors two weeks ago in which he spoke of the need for “modernization alliances” with the United States and other Western countries. Once again, Medvedev voiced support for the rule of law, democracy, and civil society institutions: “It is in the interests of Russian democracy for as many nations as possible to follow democratic standards in their domestic policy.”
Three days later, however, Medvedev’s comments in a joint news conference with German Chancellor Angela Merkel were downright depressing as he took responsibility for a law that would dangerously expand the powers of the Federal Security Service.
The FSB bill was submitted by the government to the State Duma after the Moscow metro bombings in March. Among other things, it will broaden the powers of the FSB to warn citizens that their actions could be a future violation of the law. How law enforcement officials can divine this is anyone’s guess, but one of the substantiated fears is that the bill will be used to intimidate opponents of the government to think twice before they speak or act. After the Duma approved the bill, the Federation Council rubber-stamped it on July 19, and it now goes to Medvedev for his signature.
Russia’s leading human rights activists warned in a recent open letter that the legislation would return the country to “legal tyranny, intimidation of dissenters and control of security services over the peaceful activities of citizens.” They and other opponents of the bill had hoped that Medvedev would veto the legislation, but his comments with Merkel killed those chances. “The law on the FSB is our domestic bill. Every country has a right to improve its legislation, including that related to the special services,” Medvedev said. “What’s going on now — I would like you to know this — was done on my own direct instructions.”
Alas, this is not the only legislation threatening to curtail citizens’ rights. Another bill being considered would ban people previously convicted of offenses — including minor traffic offenses such as speeding — from organizing public rallies and protests. This would give authorities more latitude to reject applications for public gatherings. The Communications and Press Ministry, meanwhile, is pushing for passage of legislation that would grant law enforcement agencies greater discretion and power to shut down web sites and go after Internet providers. Medvedev has been silent on both of these dangerous bills.
But the disappointment with Medvedev extends well beyond his views on specific laws. At the news conference with Merkel, Medvedev responded defensively to the accusation that there has been no progress in the investigation into the slaying of Natalya Estemirova, a brave human rights activist in Chechnya who was brutally murdered a year ago. At the time of her murder, Medvedev promised to bring those responsible to account, yet nothing has been done. He made a similar pledge concerning Sergei Magnitsky, a lawyer imprisoned on trumped-up charges after he publicly accused Interior Ministry officials of mass corruption. Magnitsky died in jail in November after being deprived of proper medical care. Three ministry officials involved in his case were promoted earlier this year, and no charges have been brought against anyone for Magnitsky’s death. In addition, Medvedev signed a law last year that empowers local legislatures to oust mayors on charges such as mismanagement, neglect of duties or losing the respect of lawmakers. The president also granted new powers to governors to fire mayors. This law makes direct elections of mayors meaningless.
More than halfway through Medvedev’s term as president, the political situation in Russia remains abysmal. The U.S. State Department’s 2009 Human Rights Report gives detailed information about the high number of killings among critics of the government, journalists and human rights activists, most of which go unpunished. In addition, corruption is worsening, rule of law is virtually nonexistent, and the North Caucasus is a hotbed of human rights abuses and terrorism. Amid this lawlessness, the new legislation before the parliament suggests that the government intends to tighten the screws even more, especially ahead of Duma elections in 2011 and the presidential election in 2012.
Notwithstanding Medvedev’s occasionally lofty rhetoric and his gentle face to the West, Russia under his presidency continues to move in an authoritarian direction. That reality is difficult to square for those who want to believe in Medvedev’s speeches, including the Orwellian-like one he gave at the St. Petersburg International Economic Forum in June where he said Russia should become a country that would attract people from all over the world “in search of their special dreams, success and self-fulfillment.”

David J. Kramer is senior trans-Atlantic fellow at the German Marshall Fund of the United States in Washington. During the administration of George W. Bush, he served as deputy assistant secretary of state for Russia, Ukraine and Belarus. He writes here in a personal capacity.

TITLE: Gogol’s Take on Skolkovo
AUTHOR: By Alexei Bayer
TEXT: A well-known writer in Russia is never a mere celebrity, a storyteller or a best-selling wordsmith. He — and sometimes even she — is a moral compass, a political force and even a prophet. Russian officials fear books and their influence and endlessly try to buy off or banish literary figures. Stalin referred to writers as “engineers of the human soul.”
Even today, Russian writers retain some of their prophetic mantle — probably because Russian society has changed so little at its core, despite all of its momentous upheavals. Descriptions of 19th-century Russia by social critics and satirists such as Nikolai Gogol, Ivan Goncharov and Mikhail Saltykov-Shchedrin remain surprisingly fresh. The name of a New York-based gypsy punk group — “Gogol Bordello” — aptly describes Russia in the post-Soviet era.
Take Gogol’s classic, “The Dead Souls.” The rural serf-holding Russia it portrays no longer exists, but its characters are readily recognizable. Landowner Manilov, for instance, is an inventor of grand but useless schemes who dreams of modernizing his property and building a tunnel under his manor house. Meanwhile, he neglects his estate, which has fallen into ruin. Drunkenness, laziness and theft flourish among his serfs and servants.
Literary scholar Dmitry Likhachyov once suggested that Manilov is a veiled caricature of Tsar Nicholas I, but Gogol’s descriptions fit today’s Russian leader surprisingly well, especially in relation to President Dmitry Medvedev’s current obsession: the government-funded project to build a Russian Silicon Valley in Skolkovo, just outside Moscow.
With this in mind, Medvedev recently traveled to California to see the real thing, visiting the offices of Apple, Twitter and other global high-tech brands. He put these companies on notice that Russia will soon give them a run for their money. The idea is that Russian mathematical geniuses, computer geeks and other techies who currently man workstations and executive offices in Silicon Valley would do the same in their own country, thanks to the care and support of their government.
Since Medvedev’s return, Skolkovo has become a national priority, overshadowing preparations for the 2014 Sochi Olympics. Meanwhile, Russian bloggers have already showed their wit by inserting a soft sign into the world Skolkovo (Ńęîëüęîâî), making it sound like ńęîëüęî (How much?). In other words, the real question is how much money will be stolen by bureaucrats before the project gets off the ground.
In 2009, U.S. President Barack Obama visited Russia and was treated to a beluga caviar breakfast and other pompous meals. To reciprocate, he took Medvedev to a greasy spoon in Arlington, Virginia.
I don’t know what Obama thought of Medvedev’s Manilov-like plans for Skolkovo, but I suspect that the U.S. president, who got his start as a community organizer in innercity Chicago, probably would have advised him to start Russia’s technological breakthrough with small practical steps — for instance, buying computers for schools and hiring more math teachers.
While less ambitious, it would have been more useful. Silicon Valleys grow from the bottom up and are not imposed by a Kremlin fiat.

Alexei Bayer, a native Muscovite, is a New York-based economist.

TITLE: Uzbek Women Accuse State of Mass Sterilizations
PUBLISHER: The Associated Press
TEXT: GULISTAN, Uzbekistan — Saodat Rakhimbayeva says she wishes she had died with her newborn baby.
The 24-year-old housewife had a Caesarean section in March and gave birth to Ibrohim, a premature boy who died three days later.
Then came a further devastating blow: She learned that the surgeon had removed part of her uterus during the operation, making her sterile. The doctor told her that the hysterectomy was necessary to remove a potentially cancerous cyst, while she believes that he sterilized her as part of a state campaign to reduce birthrates.
“He never asked for my approval, never ran any checks, just mutilated me as if I were a mute animal,” the pale and fragile Rakhimbayeva said through tears while sitting at a fly-infested cafe in this central Uzbek city. “I should have just died with Ibrohim.”
According to human rights groups, victims and health officials, Rakhimbayeva is one of hundreds of Uzbek women who have been surgically sterilized without their knowledge or consent in a program designed to prevent overpopulation from fueling unrest.
Human rights advocates and doctors say autocratic President Islam Karimov this year ramped up a sterilization campaign that he initiated in the late 1990s. In a decree issued in February, the Health Ministry ordered all medical facilities to “strengthen control over the medical examination of women of childbearing age.”
The decree also said that “surgical contraception should be provided free of charge” to women who volunteer for the procedure.
It did not specifically mandate sterilizations, but critics claim that doctors have come under direct pressure from the government to perform them. “The order comes from the very top,” said Khaitboi Yakubov, head of the Najot human rights group in Uzbekistan.
Uzbek authorities ignored numerous requests to comment on the issue. Most Western media organizations have been driven from the country, and government officials face serious reprisals for contacts with foreign journalists. However, the AP was able to interview several doctors, sterilized women and a former health official, some on condition of anonymity.
This Central Asian nation of 27 million is the size of California or Iraq, and its population density in areas such as the fertile Ferghana Valley is among the world’s highest.
Rights groups say the government is dealing with poverty, unemployment and severe economic and environmental problems that have triggered an exodus of Uzbek labor migrants to Russia and other countries.
Heightening the government’s fears is the specter of legions of jobless men in predominantly Muslim Uzbekistan succumbing to the lure of Islamic radical groups with ties to the Afghan Taliban and al-Qaida.
Uzbekistan is not alone in coming under allegations of using sterilizations to fight population growth. Authorities in China’s Guangdong Province were accused by Amnesty International in April of carrying out coerced sterilizations to meet family planning goals. But no other country is known to use this method as a government policy.
Uzbekistan once had one of the Soviet Union’s highest birthrates — four to five children per woman — and Communist authorities even handed out medals to “heroine” mothers of six or more. Young army conscripts from Uzbekistan and the four other Central Asian republics made up for a declining ethnic Russian population.
Now, as Uzbek authorities try to unravel that legacy, the birthrate has dropped to about 2.3 children per woman — still higher than the rate of 2.1 that demographers consider sufficient to replenish a falling population.
The sterilization campaign involves thousands of government-employed medical doctors and nurses who urge women of childbearing age, especially those with two or more children, to have hysterectomies or fallopian tube ligations, said Sukhrobjon Ismoilov of the Expert Working Group, an independent think tank based in the capital, Tashkent.
The surgeon in Rakhimbayeva’s case, a burly man in his 40s named Kakhramon Fuzailov, refused to comment on her claims and threatened to turn an AP reporter over to the police for “asking inappropriate questions.”
In 2007, the UN Committee Against Torture reported a “large number” of cases of forced sterilization and removal of reproductive organs in Uzbek women, often after Caesarean sections. Some women were abandoned by their husbands as a result, it said.
After the 1991 Soviet collapse, Karimov, a former Communist functionary, remained at the helm and retained many Soviet features, such as strict government control of public health. Government-paid doctors and nurses are assigned to each district or village.
Family planning is far different from Western norms.
Instead of focusing on raising awareness of widely available condoms or birth-control pills, the Health Ministry has chosen to promote uterine resections nationwide as the most reliable method of contraception.
Some women do volunteer. Khalida Alimova, 31, a plump, vivacious sales manager from Tashkent, agreed to a resection in March, almost a year after her third child was born.
She said her husband, Alisher Alimov, 32, an occasional cab driver who spends days playing backgammon with his friends, refused to use condoms or allow her to take birth-control pills.
“Now I feel relieved,” Alimova said over a cup of green tea in the kitchen of their shabbily furnished Tashkent apartment. She added, though, that she never told her husband about the operation.
Many other women, especially from poor rural areas, say they face coercion from health workers or even potential employers to agree to sterilization.
Several health workers, who spoke on condition of anonymity because they feared dismissal or persecution, said the authorities are especially eager to sterilize women with HIV, tuberculosis or a drug addiction. Instruments often are not sterilized properly and can infect other women, they said.

TITLE: U.S. Military Leak Gives Inside Look at War
AUTHOR: By Kimberly Dozier
PUBLISHER: The Associated Press
TEXT: WASHINGTON — Shocking in scope if not in content, the leak of 91,000 classified U.S. records on the Afghanistan war by the whistle-blower website Wikileaks.org is one of the largest unauthorized disclosures in military history.
The documents cover much of what the public already knows about the troubled nine-year conflict: U.S. spec-ops forces have targeted militants without trial, Afghans have been killed by accident, and U.S. officials have been infuriated by alleged Pakistani intelligence cooperation with the very insurgent groups bent on killing Americans.
WikiLeaks posted the documents Sunday. The New York Times, London’s Guardian newspaper and the German weekly Der Spiegel were given early access to the records.
The release was instantly condemned by U.S. and Pakistani officials as both potentially harmful and irrelevant.
White House national security adviser General Jim Jones said the release “put the lives of Americans and our partners at risk.” In a statement, he then took pains to point out that the documents describe a period from January 2004 to December 2009, mostly during the administration of President George W. Bush. Furthermore, Jones added, before President Obama announced a new strategy.
Pakistan’s Ambassador Husain Haqqani agreed, saying the documents “do not reflect the current on-ground realities,” in which his country and Washington are “jointly endeavoring to defeat al-Qaida and its Taliban allies.”
The U.S. and Pakistan assigned teams of analysts to read the records online to assess whether sources or locations were at risk.
The New York Times said the documents reveal that only a short time ago, there was far less harmony in U.S. and Pakistani exchanges.
The Times says the “raw intelligence assessments” by lower level military officers suggest that Pakistan “allows representatives of its spy service to meet directly with the Taliban in secret strategy sessions to organize networks of militant groups that fight against American soldiers in Afghanistan, and even hatch plots to assassinate Afghan leaders.”
The Guardian, however, interpreted the documents differently, saying they “fail to provide a convincing smoking gun” for complicity between the Pakistan intelligence services and the Taliban.
The leaked records include detailed descriptions of raids carried out by a secretive U.S. special operations unit called Task Force 373 against what U.S. officials considered high-value insurgent and terrorist targets. Some of the raids resulted in unintended killings of Afghan civilians, according to the documentation.
During the targeting and killing of Libyan fighter Abu Laith al-Libi, described in the documents as a senior al-Qaida military commander, the death tally was reported as six enemy fighters and seven noncombatants — all children.
Task Force 373 selected its targets from 2,000 senior Taliban and al-Qaida figures posted on a “kill or capture” list, known as JPEL, the Joint Prioritized Effects List, the Guardian said.
WikiLeaks said the release Sunday “did not generally include top-secret organizations,” and that it had “delayed the release of some 15,000 reports” as part of what it called “a harm minimization process demanded by our source,” but said it would release the documents later, possibly with material redacted.
U.S. government agencies have been bracing for a deluge of thousands more classified documents since the leak of helicopter cockpit video of a 2007 firefight in Baghdad.

TITLE: Prosecutors Investigate 19 Parade Fatalities
AUTHOR: By Dorothee Thiesing
PUBLISHER: The Associated Press
TEXT: DUISBURG, Germany — German prosecutors are investigating whether negligent manslaughter was involved in the deaths of 19 people killed in a crush at the Love Parade techno festival.
But amid a clamor of questions about who is to blame, they said Monday they haven’t yet identified any suspects.
The tragedy Saturday — near a tunnel that was the only entrance to the festival grounds in the western industrial city of Duisburg — also injured 342 people.
It remains unclear what triggered the panic, but it appears that people trying to escape the surging crowd climbed up a metal stairway in front of the tunnel and then fell into the crowd and were trampled or crushed.
“The investigations are concentrating on the allegation of negligent manslaughter and negligent bodily harm,” said Rolf Haferkamp, a spokesman for Duisburg prosecutors. “They are not directed against any concrete person at present.”
A union representing German police has blamed organizers and officials in Duisburg. But witnesses also have pointed the finger at police and private security staff, saying the panic broke out after they closed one end of a tunnel — the only entrance — when the festival grounds became too full.
Police denied that and said they actually opened a second exit to disperse the masses before the accident happened.
At a news conference Sunday, Duisburg officials, police and the organizers provided few answers, frequently deflecting questions by noting that an investigation was under way.
The daily Tageszeitung newspaper’s sarcastic front-page headline summed up many Germans’ reaction to that: “19 dead — No one was to blame.” Berlin’s B.Z. tabloid ran a picture of the officials under the headline “Parade of Failures.”
One key question: whether the venue, an old freight railway station that local media estimated could handle 300,000 people, was suitable for the event.
German media reported that up to 1.4 million people showed up, although police suggested the figure was likely far lower given that the national railway brought 105,000 people to Duisburg by train in the preceding hours. Since the event was free, the number who attended may never be known.
Der Spiegel magazine reported Monday that the city had sent a letter to organizers limiting the maximum number of people at the grounds to 250,000. Haferkamp, the prosecutors’ spokesman, didn’t confirm that.
“The area was not large enough right from the start, that’s what I think,” Duisburg resident Kurt Moczko said. “I just can’t imagine how this area should be sufficient for 1.4 million people.”
Carsten Schroeter, another Duisburg resident, echoed that sentiment.
“I think it is not right to simply blame the police, because I think the planning ahead of the event should have been different,” he said.

TITLE: Khmer Jailer Faces 19 Years for 16,000 Dead
AUTHOR: By Robin McDowell
PUBLISHER: The Associated Press
TEXT: PHNOM PENH, Cambodia — A UN-backed tribunal sentenced the Khmer Rouge’s chief jailer to 35 years for overseeing the deaths of up to 16,000 people — the first verdict involving a senior member of the “killing fields” regime that devastated a generation of Cambodians.
Victims and their relatives burst into tears after learning that Kaing Guek Eav — also known as Duch — will actually serve only 19 years after being convicted of war crimes and crimes against humanity, having taken into account time already served and other factors.
That means the 67-year-old could one day walk free, a prospect that infuriated many who have been demanding justice for victims of the regime that killed an estimated 1.7 million people between 1975-79.
“I can’t accept this,” said Saodi Ouch, 46, shaking so hard she could hardly talk. “My family died ... my older sister, my older brother. I’m the only one left.”
More than three decades after the ultra-communist Khmer Rouge killed a quarter of Cambodia’s population while trying to turn the country into a vast agrarian collective, Duch is so far the only person to face justice. The group’s top leader, Pol Pot, died in 1998 and four other senior Khmer Rouge leaders are awaiting trial for their part in the deaths from execution, starvation, medical neglect and slave-like working conditions.
The UN-backed tribunal — 10 years and $100 million in the making — said it took into consideration the historical context of the atrocities: The regime was the product of the troubled Cold War times.
It also recognized that Duch, who headed Tuol Sleng, a secret detention center for the worst “enemies” of the state, was not a member of the Khmer Rouge’s inner clique and that he had cooperated with the court, admitted responsibility and showed “limited” expressions of remorse.
During the 77-day proceedings, Duch admitted to overseeing the deaths of up to 16,000 people who passed through the prison’s gates. Torture used to extract confessions included pulling out prisoners’ toenails, administering electric shocks and waterboarding.
At least 100 people bled to death in medieval-style medical experiments.
One of the tribunal’s international judges, Silvia Cartwright, said she understood that those who lived through the Khmer Rouge’s reign of terror may be upset at the sentence.
“That’s one of the reasons that we have an objective tribunal ... fixing as balanced a sentence as we can,” she said. “If left to the victims to decide how to punish a person, then it would be, possibly, mob rule.”
“You have to bear in mind that victims are very deeply hurt and traumatized,” she added. “We can never give them what they lost ... so a sentence can only ever be symbolic in a way.”
The prosecution and defense have one month to appeal.
Unlike the other defendants, Duch (pronounced DOIK) has several times asked for forgiveness, even offering at one point to face a public stoning. But his surprise request on the final day of the trial to be acquitted and freed left many wondering if his contrition was sincere.
“He tricked everybody,” said Chum Mey, 79, one of just a few people sent to Tuol Sleng prison — code-named S-21 — who survived. 
The key witness wiped his eyes. “See ... my tears drop down again. I feel like I was victim during the Khmer Rouge, and now I’m a victim once again.”
Duch, sitting rigidly in a crisp light purple shirt and starring into the distance, showed no emotion as he listened Monday to the judge talk about the court’s findings.
Judges noted that the jailer was often present during interrogations at Tuol Sleng and signed off on all the tortures and executions, sometimes taking part himself. He said the court had rejected arguments that he was acting on orders from the top because he was under duress or feared for his own life.
“In carrying out his functions, he showed a high degree of efficiency and zeal,” the judges wrote. “He worked tirelessly to ensure that S-21 ran as efficiently as possible and did so out of unquestioning loyalty to his superiors.”

TITLE: New Sanctions Against Iran
AUTHOR: By Slobodan Lekic
PUBLISHER: The Associated Press
TEXT: BRUSSELS — The European Union on Monday formally adopted a package of new sanctions against Iran, targeting the country’s foreign trade, banking and energy sectors.
The move, which was agreed to in principle by EU leaders in June, is the latest in a series of measures taken by the international community in an effort to halt Iran’s nuclear program.
EU foreign ministers adopted a decision “on a package of restrictive measures” in the areas of trade, financial services, energy and transport, said a diplomat who spoke on condition of anonymity under standing rules.
The new measures will come into force in the next few weeks, after they are published in the bloc’s official gazette, officials said.
“We have a comprehensive set of sanctions. This is something where we have all 27 countries working together,” EU foreign policy chief Catherine Ashton said ahead of the meeting.
EU foreign ministers are also expected to reaffirm the bloc’s invitation to Tehran to hold talks on the issue.