SOURCE: The St. Petersburg Times
DATE: Issue #1597 (58), Tuesday, August 3, 2010
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TITLE: Police 
Brutally Disperse Protest
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: Activists and journalists are demanding an investigation into beatings and arbitrary arrests made Saturday at a peaceful rally in defense of the constitutional right of assembly. People were punched and hit with police batons, dragged by their hair, pushed face-first against a police bus and half-strangled inside the bus. 
Three detained men were taken to hospital from the police precincts where they were being held, while an old woman who fell to the ground after being pushed by a police officer was taken to hospital from the site of the rally — outside Gostiny Dvor on Nevsky Prospekt.
Sixty nine were detained during several waves of brutal arrests in the rally, which was part of Strategy 31, the civil campaign demanding the right to assemble peacefully that has been held across Russia since July 2009 on the 31st day of the months with 31 days. The campaign is not affiliated to any single political party.
The day was chosen by oppositional politician and author Eduard Limonov because the right to assemble peacefully, without weapons, is guaranteed by Article 31 of the Russian Constitution.
Since its inception, the campaign’s rallies have not once been authorized by the authorities in St. Petersburg or Moscow, where protesters gather on Triumfalnaya Ploshchad.
In St. Petersburg, an estimated 500 came to Gostiny Dvor metro station on Nevsky Prospekt, St. Petersburg’s main thoroughfare. The protest was launched by Andrei Dmitriyev, the local leader of Limonov’s banned National Bolshevik Party (NBP), who spoke surrounded by supporters with their arms linked in order to make arrests more difficult.
“The whole country is with us today; Strategy 31 events are taking place across the country — from Vladivostok to Kaliningrad,” he shouted.
“The number 31 has become sacred for the political opposition. Article 31 is needed by all the political forces, whatever their ideology, it’s also needed by ordinary passersby.”
The protesters, many of whom wore T-shirts with the number 31 printed on them, deliberately refrained from using megaphones or banners, without which their protest could not officially be qualified as a rally. 
But the police rushed to detain participants, who shouted “Russia Will Be Free” and “Freedom,” after an officer speaking into a megaphone claimed that the event was illegal and ordered people to disperse.  
The police acted more brutally than during the three previous rallies held in St. Petersburg since Jan. 31. People shouted “Fascists” and “Killers” in response to the police’s actions.
Activists are trying to establish the name of one particular officer who hit a young man in the face with a rubber baton. The officer walked through the crowd shouting “F***ing animals, who else wants some?” Before this incident, he was seen dragging a young woman to a police bus by her hair.
One man, whose head was deliberately rammed into a police bus, was then seen sitting inside the bus near the window with his face covered in blood. 
Although the police did not detain journalists during the previous events, three photographers were detained during Saturday’s protest, which lasted for about 40 minutes. 
They were charged with “participating in a unsanctioned rally” and “disobeying police orders.” Alexander Astafyev of Moi Rayon weekly newspaper said he was detained when he took a picture of the policemen relaxing after making a wave of arrests. 
“One pointed at me and said, ‘I wish you were dead,’ with a smile,” Astafyev said Monday. He was then seized by several policemen and carried to the bus, during which a policeman damaged his camera. Another photographer, Mikhail Obozov of Yevropeyets newspaper, was detained while taking a picture of an old woman lying on the ground after being pushed by a police officer.
A policeman struck Obozov’s camera lens and his photographs were deleted, Astafyev said.
The photographers, who are now waiting for their court summons, have written a complaint to the St. Petersburg Union of Journalists, he said.
Andrei Konstantinov, chair of the St. Petersburg Union of Journalists, said Monday that the detained photographers were being provided with legal support by the union. 
 “Our lawyers will examine what really happened and then we’ll hold a secretariat meeting and decide what our actions will be. It’s too early to issue any statements right now,” he said.
Strategy 31 events were held in 42 cities and towns across Russia on Saturday, according to the campaign’s organizers. In Moscow, 500 to 1,500 people came to Triumfalnaya Ploshchad, where the protest was also dispersed, with more than 80 people arrested, including former first deputy minister and current Solidarity democratic movement leader Boris Nemtsov.
The statement said that the police acted far more brutally in St. Petersburg than in Moscow.
In St. Petersburg, those detained were taken to four different police stations and released at about midnight, more than five hours after being detained, Dmitriyev said Sunday. Most were charged with “participating in an unsanctioned rally,” while several were also charged with “disobeying police orders,” a more serious offense punishable by up to 15 days in prison.
“The police are acting more and more roughly, with some officers breaking every limit, in particular the one who smashed the man’s head [into the bus] and dragged a young woman to the bus by her hair,” Dmitriyev said.
“We will find the people who were beaten and file complaints to the prosecutor. To stop this from happening again, we’ll invite the local ombudsman and rights activists to our next rally, scheduled for Aug. 31. Hopefully, it will dampen the rage of the uniformed men a little.”
A police spokesman declined to comment Monday.

TITLE: Death Toll From Wildfires Reaches 40
PUBLISHER: Combined Reports
TEXT: MOSCOW — The death toll from wildfires raging across central and western Russia rose to 40 on Monday, as millions of Muscovites coughed through a haze of smoke from burning peat bogs and firefighters scrambled to put out hundreds of new blazes.
The fires come after weeks of searing heat and practically no rain. Although temperatures in the Moscow area dipped modestly over the weekend, experts predict they’ll climb back to around 38 degrees Celsius this week.
Still, firefighters on Monday reported making some headway against the blazes that have destroyed hundreds of homes, burned through vast sections of tinder-dry land and forced thousands to evacuate.
Vladimir Stepanov, head of Russia’s Emergencies Ministry’s crisis center, said about 500 new wildfires were sparked nationwide in the past 24 hours but most of them were immediately doused.
“Most importantly, the mission we are tasked with — to avert the spread of fires to population centers, and to avoid more death — is being accomplished,” Stepanov said in televised comments.
Muscovites awoke Monday to a sharp burning smell from the smoldering peat bogs south and east of the capital, haze that has increased the city’s already-high pollution readings.
Wildfires were still burning Monday across some 300,000 acres (125,000 hectares), mostly in central and western Russia, slightly less than the area engulfed in flames over the weekend, Stepanov said.
About 1,500 homes have been wiped out by fires. Regional Development Minister Viktor Basargin on Monday estimated the cost of fire damage at more than 6.5 billion rubles ($210 million).
The Health Ministry on Monday said 40 people have died in the fires, 19 of them in the Nizhny Novgorod region 400 kilometers east of Moscow.
In all, wildfires were reported in 17 of Russia’s regions. President Dmitry Medvedev on Monday declared a state of emergency in seven of the regions, including the area that surrounds but does not include Moscow.
In the half-destroyed village of Maslovka near Voronezh, emergency officials handed out food and clothing to residents Monday as the heavy smoke and smog cleared. In the nearby village of Shuberovskoye, which also had been decimated by fire, locals complained that they were abandoned by firefighters.
“Nobody came to us and nobody helped us,” said Anna Izmakina, 79. “We called by phone several times, trying to call firefighters — they set off, but never arrived.”
She said she managed to salvage a few possessions before fire engulfed her home.
President Dmitry Medvedev said fires on this scale only occur every 30 to 40 years and ordered Prime Minister Vladimir Putin to oversee firefighting efforts and ensure that relief was provided to those affected by the disaster.
Putin promptly ordered local officials, including governors, to work on weekends.
“Neither fire nor wind have days off, so we can’t take any days off,” Putin said during a videoconference Saturday.
Emergencies Minister Sergei Shoigu urged Russians vacationing in rural areas to be especially vigilant about disposing of flammable materials, since barbecues are a popular activity.
Russian news agencies reported that some of those rendered homeless by the blazes received the first part of a 200,000-ruble compensation package ($6,600) promised on Friday by Putin.
On Medvedev’s orders, the army dispatched several battalions and 300 of its own firetrucks to help the firefighters in the Moscow region, Defense Minister Anatoly Serdyukov said Friday.
Nizhny Novgorod Governor Valery Shantsev said in televised remarks Saturday that the situation there remained grave because thick smoke was preventing firefighting aircraft from pouring water on the blazes.
On Friday, Putin visited Verkhnyaya Vereya, a village in the Nizhny Novgorod region that lost all 341 of its houses to fire. Local residents told him that they blamed officials for sluggish reaction to the fire. That prompted Putin to call on mayors who face criticism from residents over the fires to resign.
At least one official has decided to follow the recommendation. Alexei Sokolov, head of the Vyksa district, which includes Verkhnyaya Vereya and where at least 550 houses had burned down, has filed his resignation with the local legislature. But no one has been available to accept it so far because all deputies are busy fighting fires, Interfax reported Sunday.
Residents in fire-hit areas expressed worries about what might happen next.
Natalya Biryukova, an accountant from Kuzmiyar, a small town in the Novgorod region, said the town has been blanketed in smoke for several days.
“The situation was terrifying three days ago when the fire was seen 1 1/2 kilometers away from the town,” she said by cell phone, the line constantly disconnecting because of damage to local cell phone infrastructure.
“Now the fire has been fought back into the forest and is staying there only,” she said.
Still, the town administration evacuated children and women, as well as several patients from a local psychiatric hospital, as the fire neared the town, Biryukova said. “The residents were frightened,” she said.
No buildings have been scorched by fire in Kuzmiyar so far.
Emergency Situations Minister Sergei Shoigu told journalists Saturday that more efforts are needed to prevent destruction in regions.
“The situation may become complicated in the 17 regions where fires have been detected,” Shoigu said.
He said the Vladimir and Moscow regions face the worst threat because of burning peat bogs.
The government has decided to purchase seven additional aircraft — two planes and five helicopters — to add to the 18 aircraft already fighting the fires, Shoigu said.
Offers for help are also coming from abroad. Sergei Shamba, prime minister of Georgia’s separatist region of Abkhazia, said Sunday that local Black Sea resorts were ready to offer vacation trips to 1,000 children whose houses were destroyed in the fire, Interfax reported.
Germany has offered to help clean up the destruction caused by wildfires and build temporary housing for those left homeless.
Russian Orthodox Patriarch Kirill ordered all local churches to hold services to pray for rain and urged believers to join in.
“The disastrous events reflect both on the economy and the spiritual state of people,” Kirill said during a visit Sunday to the village of Diveyevo in the Nizhny Novgorod region, Interfax reported.
August is commonly known as the month of disasters in Russia, starting with the government debt default on Aug. 17, 1998, that led to the ruble’s devaluation and a financial crisis. Other August disasters have included the sinking of the Kursk nuclear submarine in 2000, passenger jet bombings in 2004 and the accident at the Sayano-Shushenskaya hydropower station in Siberia last year that killed 75.
(SPT, AP)

TITLE: Criminal Case Opened Into Poisoning of Local River
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: The city’s environmental prosecutor’s office said Monday that a criminal case had been opened into a recent discharge of toxic industrial waste into the Slavyanka River, which flows from Pavlovsk into the Rybatskoye district of St. Petersburg.
An official statement posted on the web site of the prosecutor’s office said a massive case of waste dumping had been registered in the early hours of June 4, which resulted in the death of large numbers of fish.
“Our research and analysis have established a direct connection between the death of the fish and the toxic dump,” the statement reads.
Water tests taken at the scene showed that the levels of pollutants such as copper, zinc, aluminum and oil derivatives significantly exceeded the norm. 
The criminal case into the pollution incident was initiated by the Kolpino district branch of the Russian investigative committee of the state prosecutor’s office. According to local environmentalists, more than 30 industrial enterprises systematically dump their industrial waste into the waters of the Slavyanka. 
On July 27, St. Petersburg Governor Valentina Matviyenko, who rarely speaks out critically on environmental pollution issues, made a harsh statement in which she demanded that the enterprise responsible for the discharges be identified and measures be taken to put an end to the dumping.
Since June 4, a total of four illegal discharges into the Slavyanka River have been registered by the local branch of Greenpeace, yet the current criminal case is the only concrete step to have been taken by the authorities.
Dmitry Artamonov, head of the St. Petersburg branch of Greenpeace, said that although its experts routinely document similar discharges, the authorities are typically lax to act.
“We often file complaints providing comprehensive evidence of substantial environmental pollution, and yet nobody is punished,” Artamonov said. “Then the prosecutor’s office and other controlling organizations talk about the high level of pollution in nearby territories and try to justify their helplessness by stressing that there are so many industrial sites on the banks of local rivers and canals that establishing the guilty party is almost impossible.”
According to ecologists, in order for the situation to improve, environmental prosecutors must start working closely with official monitoring organizations and provide regular and consistent control of local waters. It is extremely alarming, they say, that it is always pressure groups who identify polluted areas, while official organizations never report anything.

TITLE: Russia Wins Euro Championship
PUBLISHER: The St. Petersburg Times
TEXT: The Russian Athletics squad is returning triumphant from the 2010 European Athletics Championships, which ended in Barcelona on Sunday. 
Russia topped the medal table, taking 10 golds, six silvers and eight bronzes, beating France (eight golds, six silvers, four bronzes) and the U.K. (six golds, seven silvers, six bronzes) into second and third places respectively.
Russia’s successful showing comes as a relief for its supporters after a fourth-place finish in the 2009 Berlin World Championships and a third-place finish in the 2008 Beijing Olympics. 
In both competitions, Russia trailed the gold medal count of the top finisher — the U.S. in Berlin and China in Beijing — by more than half. The 2008 Olympics marked an especially disappointing occasion for the Russian squad, as China reeled in 51 gold medals, compared to the U.S.’s 36 and Russia’s 23.
Stanislav Yemelyanov, with his victory in the men’s 20-kilometer walk, was the first Russian to clinch a gold medal in the 2010 competition, but it was the women who provided the lion’s share of Russia’s medal shower. Female athletes won 18 out of Russia’s 23 medals at the event. The most notable victory was in the women’s 20-kilometer walk, where Russia took first, second and third positions.

TITLE: Targeted Programs Get Boost in Federal Budget
AUTHOR: By Peter France
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Presidium on Thursday approved an outline for the 2011-13 federal budget, which included a large infusion of funding for federal targeted programs and a steadily decreasing deficit throughout the period.
The plan foresees a deficit of 3.6 percent of gross domestic product in 2011, dropping to 3.1 percent and 2.9 percent in 2012 and 2013 respectively.
To start reducing the shortfall without seriously curtailing spending, the government will embark on an ambitious new tax regime, including hefty hikes on oil and gas extraction and increased duties on nickel and copper exports.
Additionally, the government hopes to raise at least $29 billion over the next three years by selling stakes in 11 state-owned companies.
The rest of the deficit will be funded largely through increased borrowing. Russia may raise up to $50 billion on capital markets next year, and another $43 billion and $30 billion in 2012 and 2013, Deputy Finance Ministry Sergei Storchak said last month.
According to the plan, as the deficit contracts, so will the share of state revenues that come from the oil and gas industry.
The share of oil and gas money in the budget revenues will decrease by 1.5 percentage points over the three-year period, Economic Development Minister Elvira Nabiullina said.
“Our goal is to diversify the structure of the economy and increase the share of other sectors. We think this will happen over the next several years,” she said, Interfax reported.
Much of the difference will be covered by increased taxes on oil and gas extraction and levies on exports of other raw materials.
Funding for federal targeted programs — interagency funding channels aimed at developing a specific sector or region — will see a year-on-year increase of 19 percent in 2011, Prime Minister Vladimir Putin said at the meeting.
The new budget outline calls for 15 new federal targeted programs, including ones for developing the pharmaceutical industry, developing domestic machine building, protecting Lake Baikal, building an information society and developing foreign and domestic tourism.
With inflation at a historical low of 6 percent annually and second-quarter GDP growth of 5.4 percent, the government is in a better place to invest in the development and modernization of the economy.
“It’s evident that the federal targeted programs should work toward strengthening these positive tendencies, and first and foremost stimulate qualitative changes in the structure of the economy, in technological development and infrastructure modernization,” Putin said.

TITLE: Foreigners Invited to Take Part in $29Bln Sell-Off
AUTHOR: By Olga Razumovskaya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The government is counting on foreign investors to help it privatize an estimated $29 billion in assets to reduce the state’s “excessive” presence in the economy, Economic Development Minister Elvira Nabiullina said Thursday.
Stakes in 11 state-run companies will be offered starting next year, and the sales will proceed even if state revenues outpace expectations, Nabiullina said during a government meeting on budget plans.
The timing and size of the sales — the largest since the controversial loans-for-shares privatizations in the mid-1990s — are still being discussed. But foreign investors said they were encouraged by the focus on restructuring the economy and raising funds, rather than just unloading property.
“The privatizations should not just be a fiscal matter and not so much oriented toward raising funds for the budget, although that’s also important. … They are in large part a way for us to influence the structure of the economy,” Nabiullina told reporters following the meeting.
Any changes to the list of companies will be made before a draft budget is submitted to the State Duma, she said.
Nabiullina conceded that the government has not yet arrived at a revenue forecast for the sales, although she said the Economic Development Ministry expected earnings of 600 billion to 700 billion rubles ($19.9 billion to $23.2 billion) from 2011 to 2013.
Finance Minister Alexei Kudrin, who is usually more conservative than Nabiullina in his forecasts, estimated privatization revenues at 883 billion rubles ($29.3 billion) during a meeting with Prime Minister Vladimir Putin on Wednesday — a figure that Vedomosti estimated could eventually become two times higher.
The Finance Ministry presented an updated list of companies Thursday, which dropped Russian Railways and the Mortgage Lending Agency, or AIZhK. The state will maintain controlling stakes of at least 50 percent plus one share in all of the companies.
Investors and analysts said the discrepancies in the ministries’ estimates and shuffling of the list were natural and would likely persist as the government refines its plan toward the end of the year.
“It is very difficult to predict privatization revenues, especially when the market constantly changes and you do not know whether you will actually sell your stake and at what price,” said Liam Halligan, chief economist at Prosperity Capital Management.
The ministries did not have enough time to discuss the details, and media coverage has added hype to the sales, said Yaroslav Lissovolik, chief economist at Deutsche Bank Russia.
Despite the lack of firm plans, analysts welcomed the movement toward privatization, calling it a positive sign for Russia’s investment climate and the overall economic situation.
“In general, privatization is a good thing for Russia. … I absolutely believe that the government wants to lower its stake in the Russian economy. There have been lurches and some regress, of course, but overall, over the past 10 years, the state has been stepping back,” Halligan said.
The economic crisis left the government with a much broader presence in the economy and influence on the market. State banks helped industry refinance its debt to foreign lenders and even purchased shares on the open market to help support plummeting stock prices.
Those measures, which helped avert a deeper economic fall, were generally welcomed by the market as a temporary digression from the government’s path toward a reduced role in the economy.
The main question now, analysts say, is whether the state will break its habit of maintaining control over the country’s largest corporations.
“Overall this [privatization] is positive for private investors, but some uncertainty remains, as the government plans to retain controlling stakes in these companies,” Marina Shestakova, deputy chief investment officer on listed assets at Wermuth Asset Management, told The Moscow Times.
Investors also fear that dumping large stakes on the market could negatively affect prices for companies that are already traded. And while some of the 11 companies on the list might still be removed, the importance of the privatization message would not be diminished, Halligan said.
“The $29 billion is an unrealizable sum for the domestic market,” Shestakova said. “So the Russian government will have to attract foreign investors.
“But I would be oriented toward Asia, and not the U.S. or Europe. Maybe China or India,” she said.
But for foreigners to come, Russia will need to work on improving its investor climate, analysts agreed. Bringing clarity to its taxation plans for natural resources companies and increasing transparency would be a good start.
Foreigners would not want to invest in companies where it is unclear how money is spent, Shestakova said.
The government looks determined to make the sales happen, which will mean finding a way to ease investors’ concerns, Lissovolik said.
“The need for additional sources of financing is strong, so they will not pull back,” he said.

TITLE: Pensioners Win $870K in Court
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The European Court of Human Rights has awarded 668,000 euros ($873,000) to 87 military veterans from the town of Novocherkassk in the Rostov region who were denied pensions and other compensations, the Vremya Novostei daily reported Monday.
The pensioners successfully sued local authorities between 2004 and 2007, but the officials ignored the court orders and later won appeals during so-called “review trials,” which allow defendants to dispute a court ruling after it was supposed to be enacted.
The Strasbourg court ruled that the pensioners were denied fair trials and awarded them a sum about 10 times higher than the average amount won in cases of people who disappeared in the North Caucasus — the most popular type of lawsuit filed with the court by Russians.
In November, the European Court of Human Rights stopped accepting Russian cases contesting review trials after being swamped with thousands of such complaints.
The court said Russian authorities must deal with this “systemic” violation, which led to the State Duma passing a bill allowing Russian citizens to sue the state for stalling on court orders. But no court decisions have been made under the new legislation, which was enacted May 4.
Two of the 87 pensioners did not live to hear the Strasbourg ruling.

TITLE: Peace Tower Can’t Take the Heat, Dismantled
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: The Peace Tower, which was erected in the center of the city’s Sennaya Ploshchad in 2003 when St. Petersburg was celebrating its 300th anniversary, could not withstand the extreme summer temperatures and has been dismantled.
After the glass surface of the tower became covered with cracks, it was disassembled and removed from the square on Thursday. Vibrations from the metro lines passing underneath the square may have contributed to the damage, experts said.
The city’s architectural community is struggling to find a new place for the monument. On Monday, Mikhail Piotrovsky, director of the State Hermitage Museum, offered to accommodate the tower in the vicinity of the Hermitage’s storage facilities in the Staraya Derevnya district of the city. 
“This move would make the area much livelier,” Piotrovsky said.
The tower — an obelisk enveloped by transparent glass plates on which the word “peace” is inscribed in 32 languages — has a diameter of three meters and is 17.5 meters high. The monument, which cost 1.5 million euros to produce, was criticized by architectural experts and locals alike, who claimed it clashed with the architectural landscape of the square. There have been unsuccessful campaigns to move the monument to a less central part of the city.
The monument will undergo examination. Some experts have said that the glass has been damaged too severely to be repaired, but no decision has yet been made. In the meantime, it is not yet clear whether the monument will return to its old location or whether it will be given a new location.
The Peace Tower monument was presented to the city by the government of France. The idea of creating the monument came from the French designer Clara Halter, who is responsible for a similar monument titled The Wall for Peace, which was erected in Paris on the Champs de Mars near the Eiffel Tower in 2000. Halter worked in alliance with another French designer, Jean-Michelle Vilmotte.

TITLE: Showman in Cocaine Plot Linked to Big Stars
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Federal Drug Control Service said Friday that a man arrested last month in a cocaine smuggling ring was a show business producer who organized Russian concerts for internationally acclaimed musicians like Elton John, Duran Duran and Enrique Iglesias.
Agency head Viktor Ivanov said the suspect, Igor Logachyov, 30, had acted as ringleader of the group, which included a former police officer and the owner of a car dealership, and tried to use his networking skills and professional ties to smuggle large quantities of cocaine from the United States to Russia.
“Logachyov was known as the man who organized concerts for show business celebrities from the United States, Australia and Europe, and he also organized leisure activities for VIPs,” Ivanov said, Itar-Tass reported.
He said Logachyov has been charged with possessing and attempting to distribute drugs, which carry a maximum penalty of 20 years in prison.
Acting on a U.S. tip, police detained him and two other suspects, Dmitry Tsvetkov and Alexander Gutsul, in St. Petersburg on July 22 as they sought to bring 10 kilograms of cocaine as a first sample from the United States.
A gram of cocaine sells for 3,000 rubles to 6,000 rubles ($100 to $200), meaning that the shipment could have been worth up to 60 million rubles, or nearly $2 million, the GZT.ru news portal reported.
“The criminals acted in deep secrecy,” Ivanov said. “The delivery of drugs was organized in such a way that neither the carrier nor the client interacted with each other.”
Ivanov said the suspects were planning to sell up to 100 kilograms of cocaine a month in Russia, and he praised U.S. law enforcement officials for their assistance.
Logachyov’s clout in Russian show business appears to be limited.
Representatives from several Russian show business agencies told The St. Petersburg Times that they had not heard of Logachyov. A representative of SAV Entertainment, one of the country’s leading concert promoters, said Logachyov had worked with the company as a part-time translator. “He was invited as an entrepreneur because of his good English-language skills,” he said.
Logachyov was among the organizers of the Hip-Hop Summit festival in the Luzhniki stadium in April, according to the festival’s official web site. The festival’s guests included U.S. hip-hop musicians like Corey Woods, known by his stage name Raekwon.
Ivanov confirmed that Logachyov was a good English speaker and said he had lived in the United States with his parents before being deported on drug charges in 2002.
“He is a talented man and has excellent English skills. We hope that the correctional system and society will help people like him get better,” Ivanov said.

TITLE: Top Chechen Rebel Steps Down
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Chechen rebel leader Doku Umarov has stepped down for health reasons and appointed Aslambek Vadalov as his successor, the rebel web site Kavkaz Center said, Reuters reported.
A statement on the web site did not elaborate on the health of Umarov, 46, but said he wanted the insurgency to “be led by younger and more energetic commanders.”
“He intends to continue to wage jihad and will do his utmost to help the new leadership,” the statement said.
Chechen President Ramzan Kadyrov said Monday that efforts to capture Umarov would continue unabated despite his resignation.
“He is sick, hiding like a rat in a hole, overrun with lice, toothless and in no position to lead,” Kadyrov told reporters in Grozny, Interfax reported.
Umarov has claimed responsibility for a host of attacks in recent months, including the March 29 suicide bombings in the Moscow metro that killed at least 40 people and wounded 100 others.
The United States has listed Umarov — Russia’s most-wanted guerrilla — as a terrorist.
“This [stepping down] does not mean that I give up jihad,” Umarov, bearded and wearing a national skullcap, said in a video address posted on the same site.
“I will do whatever I can by word and deed,” he added, filmed sitting down and relaxed in a forest next to Vadalov and another rebel commander.
Vadalov is a native of Chechnya who has fought against federal troops sent in by Moscow since 1994, Kavkaz Center said.
It said that in 2007 he was one of the first senior Chechen rebels to support Umarov and pledge allegiance to him after the death of the previous Chechen rebel leader, Abdul-Khalim Sadulayev, who was killed in a gun battle with Chechen and Federal Security Service forces.
While rebels stage near-daily attacks on local civilians and police, an attack on a hydroelectric plant in Kabardino-Balkaria last month could signal a change in their tactics — making good on their pledge made long ago to attack Russia’s economic targets.

TITLE: Peru Mulls Charges for Spouse Following Swapping of Spies
PUBLISHER: The Associated Press
TEXT: LIMA, Peru — A Peruvian journalist whom the United States deported to Russia last month in a spy swap is free to return home, but her Russian husband could be charged with lying on his citizenship application, Peru’s foreign minister said.
“They didn’t spy in favor of or against Peru,” the official, Jose Antonio Garcia, said in a radio interview Friday.
He said Peruvian-born Vicky Pelaez, a longtime columnist for the newspaper El Diario La Prensa in New York, is a Peruvian citizen and is free to return home, where she is not accused of breaking any laws.
But her husband Mikhail Vasenkov — who plans to accompany her — could face fraud charges, Garcia said.
Pelaez, 55, and Vasenkov, 65, met in Peru in the early 1980s when she was a television reporter and he a news photographer. He identified himself as Juan Lazaro, a Uruguayan. It was that name he gave when he fraudulently obtained Peruvian citizenship in 1979, Garcia said.
The couple’s New York lawyer, Genesis Perduto, said Friday that the couple planned to return to Peru in a matter of weeks. She said it remained to be resolved whether Vasenkov could indeed be prosecuted in Peru.
The law against the falsification and use of fraudulent public documents that Vasenkov purportedly broke has a 10-year statute of limitations, so he cannot be prosecuted, said Mario Amoretti, a Peruvian criminal law expert.
It is unclear whether Pelaez was aware of her husband’s true identity before the couple’s arrest in late June.
Perduto said the couple’s 17-year-old son, Juan Lazaro Jr., and his stepbrother Waldo Mariscal, 38, would stay in the New York area.
“They’re getting an apartment,” she said. “They have a few more months until they have to leave the house.”
U.S. prosecutors say the family’s two-story brick and stucco home in suburban Yonkers was paid for by Vasenkov’s Russian government handlers.

TITLE: In Brief
TEXT: <strong>Mitvol Loses Suit</strong>
MOSCOW (SPT) — Moscow’s Meshchansky District Court on Friday threw out a 20 million ruble ($660,800) defamation lawsuit filed by Oleg Mitvol, prefect of the city’s Northern Administrative District, against Liberal Democratic Party leader Vladimir Zhirinovsky, Interfax reported.
Mitvol sued Zhirinovsky for accusing city authorities of corruption during a live television broadcast in April. The prefect, who was not directly mentioned in Zhirinovsky’s speech but said he sued as a city official, promised to appeal.
Mitvol, Mayor Yury Luzhkov and other city officials have filed similar lawsuits against Zhirinovsky with the Savyolovsky District Court. The total sum of compensation they demand is 63 million rubles ($2 million).

<strong>Anti-Doping</strong>
MOSCOW (SPT) — Russia should do more to fight a surge of doping in sports, John Fahey, president of the World Anti-Doping Agency, told a Kremlin-sponsored forum of sportsmen and top officials on Friday, Reuters reported.
“Russia needs to expand its domestic doping control program. … Testing needs to be conducted in a smart way,” Fahey said.
He added that Russia’s domestic anti-doping watchdog, RUSADA, needed to get proper and stable funding to build expertise and become sustainable.
Sports, Tourism and Youth Politics Minister Vitaly Mutko said fines, as well as the arresting and detaining (for up to 15 days) of coaches and competition organizers who encouraged athletes to take banned drugs, would be introduced soon.

<strong>President of the Bored</strong>
MOSCOW (Bloomberg) — President Dmitry Medvedev told ministers he was “bored to death” by reports that boast of accomplishments and avoid mentioning problems, Kommersant reported Friday.
Medvedev complained that projects listed as achievements by Regional Development Minister Viktor Basargin had been started even before he became president in 2008, the newspaper said, citing a Kremlin meeting on “priority national projects” on Thursday.
The president also criticized Agriculture Minister Yelena Skrynnik for trying to start her report with positive news and quizzed her on the need for the Russian Agriculture Academy if it does not focus on applied sciences, asking: “What do they study? Questions of life in the universe?”

<strong>Horses for N. Korea</strong>
MOSCOW (SPT) — Representatives of North Korean leader Kim Jong Il have purchased nine elite Orlov Trotter horses from an Altai breeding ranch, Itar-Tass reported Friday.
Five stallions and four mares, all 3 to 4 years old, will travel from the Altai region to North Korea by way of Moscow, the ranch’s head, Yevgeny Kukovitsky, said, without specifying the cost of the horses.
The animals will be used during North Korean state ceremonies by a special mounted squadron similar to the one in Russia’s presidential regiment, Kukovitsky said.

<strong>Missing Darfur Pilot</strong>
UNITED NATIONS (AP) — A Russian helicopter pilot who went missing after his helicopter was forced to land in a tribal area of Darfur has been found and taken to a hospital for examination, the United Nations said.
The pilot, Yevgeny Mostovshchikov, who was working for the international peacekeeping force in Darfur, was apparently beaten by his captors. His health is in good condition, a representative of the Russian Embassy in Sudan told Interfax on Friday.
The UTair aircraft, working under contract for the joint UN-African Union force, known as UNAMID, made an unscheduled landing last Monday and came under attack by armed locals, who detained Mostovshchikov, UNAMID said.
But the pilot was released after negotiations, Russia’s Foreign Ministry said.

TITLE: Boy in Adoption Flap Moved 
To Orphanage
PUBLISHER: Combined Reports
TEXT: A boy who was sent back to Russia by his American adoptive mother has been placed back in an orphanage, the lawyer for an adoption agency said.
Larry Crain, who works for the World Association for Children and Parents, said he did not have further information about the orphanage, the Shelbyville Times-Gazette reported Friday.
The boy’s adoptive mother, Torry Hansen of Shelbyville, Tennessee, created an international uproar in April when she sent him to Moscow unaccompanied on a plane with a note saying she did not want him anymore because he had severe psychological problems.
The 8-year-old boy, Artyom Savelyev, was adopted in September 2009 from an orphanage in the Primorye region town of Partizansk.
The family of a Russian diplomat expressed interest in adopting the boy shortly after he arrived in Moscow.
(AP, SPT)

TITLE: Dispute Over Khimki Forest Takes a Violent Turn
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A campaign to protect the Khimki forest took a dramatic turn late Wednesday when dozens of people stormed the Khimki town administration building, pelting it with smoke grenades and smearing slogans on the walls.
Police did not detain any assailants but instead detained nine environmental activists camping out in the Moscow region forest, which is slated to be partly destroyed to make way for an $8 billion federal highway.
Unidentified anti-fascists have claimed responsibility for the incident, maintaining that ecologists and opposition activists also took part in the attack.
The attack on the administration building in Khimki, just north of Moscow, happened at about 8:15 p.m. Wednesday, Moscow region police said. 
It left the building with broken windows and covered in graffiti reading “Save the Russian Forest,” according to Antifa.ru, a web site for anarchists and anti-fascists.
No one was injured because the staff had left for the day, the Khimki administration said in a statement, adding that the building suffered “considerable damage,” particularly to an art gallery it housed.
Security guards present in the building did not resist the assailants, whose number was put at 300 by Antifa.ru.
The Khimki administration said between 100 and 150 people stormed the building, while the police, who described the incident as “an insolent bandit attack,” put the number at 90.
The administration denounced the attackers as “extremists” who were “fulfilling a specific order” in a “selfish manner.” It did not elaborate on its accusations but said the town had nothing to do with the highway because it was a federal project.
But it was Khimki Mayor Vladimir Strelchenko who suggested earlier that the highway, which is to connect Moscow and St. Petersburg, pass through the 1,000-hectare forest of centuries-old oak trees. He said this route was preferable “so that the road doesn’t pass through residential areas, where there are dachas and garden plots.”
Moscow regional police have opened a hooliganism case into Wednesday’s attack, and anyone charged and convicted will face a maximum sentence of seven years in prison.
Overnight, police entered the environmentalists’ camp in the Khimki forest, saying they were acting on orders from Moscow region Governor Boris Gromov, who had banned the activists from the deforestation site, Interfax reported.
One of the detained activists, Yelena Maximova, was fined by a local court Thursday for taking part in an unsanctioned gathering and resisting police, another detained activist, Yaroslav Nikitenko, said by phone.
Several others, including leader Yevgenia Chirikova, were to appear in court later Thursday.
Repeated calls to Gromov, the Khimki administration and Moscow region police, as well as Chirikova’s cell phone, went unanswered Thursday afternoon.

TITLE: New Bid to Raise Tsereteli Statue in Puerto Rico
PUBLISHER: The Associated Press
TEXT: MOSCOW — Christopher Columbus is on the move again in the New World, after numerous rejections in a nearly two-decade quest to find him a suitable spot.
Russian sculptor Zurab Tsereteli’s towering statue of the explorer — twice the height of the Statue of Liberty without its pedestal and shunned by several U.S. cities — might be erected on Puerto Rico’s northern coast. It would be the tallest structure in the U.S. Caribbean territory.
The chosen spot is near the town of Arecibo, Jose Gonzalez, administrator of Holland Group Ports Investments, said Wednesday.
“It has already been inspected and approved by the artist,” Gonzalez said.
He declined to identify the location.
Although the site has been chosen, several permits must be obtained before the project can go forward, Gonzalez said, declining further comment.
It was unclear who picked the site and authorized the statue’s move. Gonzalez’s company runs the port where the colossal statue is stored.
The nearly 90-meter bronze creation shows Columbus at the wheel of a tiny ship with three billowing sails behind him. It weighs 600 metric tons.

TITLE: Editor Quits Police Council
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Kommersant editorMikhail Mikhailin announced Thursday that he was resigning from the Moscow police’s public council because the police have failed to prosecute officers who broke a journalist’s arm at an opposition rally.
Gazeta.ru reporter Alexander Artemyev was injured after he was detained in a police crackdown on an unsanctioned May 31 rally on Triumfalnaya Ploshchad.
A police investigation failed to determine who broke Artemyev’s arm, so no one has been punished over the incident. Mikhailin said he thought “no one ever intended to identify the people who broke the journalist’s arm,” Interfax reported.
He also accused the police of backtracking on a pledge to pay Artemyev’s medical bills.

TITLE: Heat May Affect Industry
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s record-breaking heat wave may drag down manufacturing and damage the popularity of Prime Minister Vladimir Putin’s ruling party, VTB Capital said.
“Industrial production might suffer in July-August from the recent abnormal heat,” the Moscow-based bank said in an e-mailed note Monday. “The abnormal heat this summer has not only affected crops, but might also have a negative effect on the ratings of the ruling parties in the regions.”
After setting heat records throughout July, central Russia faces more scorching temperatures until at least the end of the week, the state Hydrometeorological Center said on its web site Monday. Wildfires have killed 34 people nationwide, state-run broadcaster Rossiya-24 reported, citing the Emergency Situations Ministry.
The government has already declared drought emergencies in 27 crop-producing regions. Last week, state-run automaker AvtoVAZ suspended production because of the heat.
Daytime temperatures will rise to as high as 42 degrees Celsius (108 degrees Fahrenheit) in central Russia and along the Volga, according to the Hydrometeorological Center. Similar temperatures are forecast to persist in southern Russia and the Caucasus through Aug. 4.
Fires covered an area of 500,000 hectares (1,930 square miles), an area about twice the size of Luxembourg, Interfax reported Monday, citing Vladimir Stepanov, the head of the Emergency Situations Ministry’s crisis center in Moscow.

TITLE: Cell Phones Set to Replace Metro Tokens
AUTHOR: By Maria Buravtseva
PUBLISHER: Vedomosti
TEXT: The St. Petersburg Metropolitan plans to launch a pilot project in the city that will allow people to pay for the metro using their mobile phone. Potential partners for the project include Megafon and Bank St. Petersburg.
Passengers will be able to pay their metro fare using their mobile phone from the autumn, Yevgeny Yelin, a representative of the committee for economic development, industrial policy and trade (KERPPiT), said at a government meeting last Tuesday. He said that city residents would soon be able to pay for other services using their mobile phone using NFC technology (see insert).
The committee signed an agreement on March 22 with the American firm Ambiq Technologies on the introduction of NFC technology to St. Petersburg, KERPPiT’s press service reported. According to Ambiq’s web site, the company is working on non-contact payment systems using mobile phones together with the St. Petersburg Metropolitan. 
One of the cofounders of Ambiq is Misha Rozenberg, according to two of his St. Petersburg acquaintances. Rozenberg is the former vice president of the Singapore company Flextronics, which in 2008 almost bought the local Elcoteq plant. Rozenberg plays an active role in the technical and financial side of Ambiq’s project, said Ilya Tolstov, director of the Ingria business incubator. A City Hall official confirmed that Misha Rozenberg was the project’s initiator. Rozenberg himself declined to comment. 
Ambiq Tech SPB was founded in 2010 and is one of the residents of the Ingria business incubator. According to SPARK data, its sole founder is its general director, Maria Azarova. She confirmed that Ambiq Tech SPB and Ambiq Tech USA are both owned by Amiqtech Holdings Ltd.
A chip will be inserted into the sim card of the mobile phone that will connect it to the client’s bank account. The cost of the fare will be deducted from the bank account, not from any pre-paid funds on the passenger’s mobile phone, said a KERPPiT representative. Azarova said the pilot project was due to be implemented this year.
The Metro is interested in the possibility of using such technology, according to its press service. The scheme could help the metro to economize on producing tickets and tokens and on payment procedures, and speed up throughput, said a KERPPiT representative. The costs of the project will depend on its scale, he said. 
According to SPARK data, the revenue of the St. Petersburg Metropolitan in 2009 was 12.5 billion rubles ($414 million). The St. Petersburg metro has 63 stations and 808 turnstiles, according to the site, and up to 2.3 million passengers use the metro every day. According to data from the Moscow metro, 100,000 people use bankcards that allow them to pay for their fare. Every day, 8 million people use the metro.
Bank St. Petersburg is taking part in all of the meetings devoted to the project, said Pavel Filimonenok, the bank’s deputy chairman. He said that the bank is considering two options for taking part in the project — using bankcards with chips equipped with PayPass technology, of which about 10,000 have been issued since November last year, or using mobile telephones. Work will be based on an acquiring contract, and commission for the metro’s partners in the scheme could be up to 2 percent of the payment amount, said Filimonenok.
Megafon’s press service confirmed that the mobile network company is testing NFC, but declined to make further comment. MTS is preparing to launch a similar project with the Moscow metro, but no bank is participating in the project, and money will be deducted from the client’s mobile phone account. Fellow telecom company Vimpelcom is focusing on the wide-scale commercial use of NFC, and not on pilot projects, said Marianna Yankova, PR specialist at Vimpelcom’s Petersburg office. According to data from ACM Consulting, the operator’s commission on mobile phone services stands at 3 to 5 percent.
In this situation, the operator is interested not so much in the commission as in increasing the range of services offered, which increases customer loyalty and stimulates demand for other services, said a senior manager at one mobile phone operator.

Near Field Communication is a short-range high frequency wireless communication technology that enables the exchange of data between devices over about a 10-centimeter distance. It has been used in Japan since 2007. In the U.K., it has been used since 2006 to pay for transport fares and at gas stations. Last year, O2 launched a test zone in the city of Pilsen in the Czech Republic, offering customers the opportunity to pay for bus fares and for purchases in certain shops using their mobile telephone. Cell phones are also used to pay for metro fares in several U.S. and German cities.

TITLE: In Brief
TEXT: <strong>H&M Store on Nevsky</strong>
ST. PETERSBURG (SPT) — H&M Hennes and Mauritz will open a new store on Nevsky Prospekt later this month, the clothes retailers’ press service announced Monday.
The new local store, located at 80 Nevsky Prospekt, will open at noon on Aug. 19. The store will occupy about 1,500 square meters, according to the company’s press service.
The Swedish retailer entered the Russian market in March 2009, and currently has six stores in the country, including one at the Mega Dybenko mall in St. Petersburg. All the others are located in Moscow. 

<strong>Wheat Prices Skyrocket</strong>
MOSCOW (Bloomberg) — Russian wheat prices surged as much as 19 percent last week as farmers delayed sales in anticipation of higher prices, SovEcon said.
Third-grade milling wheat was offered at 5,775 rubles ($191.22) a metric ton, 19 percent more than a week earlier, the research agency said on its web site Monday. Feed-quality wheat gained 12 percent to 4,975 rubles.
“Wheat shouldn’t cost less than $300 a ton this season,” said Kirill Podolsky, CEO of Valars Group, Russia’s third-biggest grain trader.
Russia’s grain harvest may fall below 70 million tons amid the worst drought in at least a decade, the Moscow-based researcher said July 27. Russia harvested 97.1 million tons of grain last year. Russian grain exports in the marketing year that started July 1 may fall to 11 million tons, compared with 21.5 million tons last year, SovEcon said.

<strong>RusHydro to Invest</strong>
MOSCOW — RusHydro, Russia’s largest renewable-energy utility, plans to invest 400 billion rubles ($13.2 billion) through 2015 to install more than 6,000 megawatts of power generating capacity, RIA Novosti said Monday, citing Chief Executive Officer Yevgeny Dod at a government meeting about rebuilding the Sayano-Shushenskaya hydro plant in Siberia, which was damaged in a deadly accident in August 2009.

<strong>Micex Heads for High</strong>
MOSCOW (Bloomberg) — Russia’s Micex Index headed for its highest close in three months as oil traded near $80 a barrel and speculation China will reverse policies aimed at cooling the economy boosted demand for riskier assets.
Sberbank, the country’s largest lender, increased 2.1 percent. Rosneft, Russia’s biggest oil producer, jumped 3.3 percent. Those movements pushed the 30-stock gauge 1.8 percent higher to 1,422.17 by 4:01 p.m. in Moscow.
Oil advanced to its highest in almost three months, rising as much as 1.3 percent to $79.95 a barrel in New York and boosting the outlook for producers in the world’s biggest energy exporter. Emerging-market stocks gained after China said manufacturing grew at the slowest pace in 17 months, prompting speculation that the third-biggest economy won’t require more tightening.

<strong>China May Buy Assets</strong>
LONDON (Bloomberg) — Russia may sell some government-owned companies’ assets to Chinese state investment funds, the Sunday Times reported, citing Russian bankers it didn’t identify.
Preliminary talks have taken place with government officials from Russia and China, the newspaper said. Chinese state funds could act as investors in Hong Kong share sales of Russian companies, the Sunday Times said.
The government said last week it planned to sell holdings in Rosneft, Russia’s largest oil producer, within three to five years to help narrow the budget deficit. The Finance Ministry also proposed selling minority stakes in companies including Russia’s two largest lenders, Sberbank and VTB Group.

<strong>TNK-BP to Spend More</strong>
MOSCOW (Bloomberg) — TNK-BP plans to increase spending on three northern Siberian deposits in the second half as the oil venture, owned by BP and a group of Russian billionaires, seeks to boost production.
Investment in the Suzun, Tagul and Russko-Rechenskoye oil fields will rise more than 73 percent in the second half, Rustem Bakirov, head of TNK-BP’s Rospan International unit, said Monday on the venture’s web site. The company spent 2.4 billion rubles ($80 million) on the fields in the first half, according to the web site.

<strong>Uralkali Stock Jumps</strong>
MOSCOW (Bloomberg) — Uralkali, Russia’s second-biggest potash producer, jumped to a near seven-month high after Vedomosti said its billionaire owner planned to buy a controlling stake in Silvinit as early as this month.
The stock surged 9.8 percent to 139.83 rubles, its biggest gain since Jan. 11, in Moscow trading. 
Suleiman Kerimov’s holding company Nafta Moskva, which already owns a 25 percent stake in Silvinit, plans to acquire a controlling stake in the country’s biggest potash producer, Vedomosti reported, citing three unidentified people. Nafta Moskva spokesman Anton Averin denied the report.

<strong>Poland Won’t Limit Oil</strong>
MOSCOW (Bloomberg) — Poland won’t limit oil imports from Russia in August, Roman Goralski, a spokesman for PERN Przyjazn, the Polish pipeline operator, said Friday.
“There won’t be any reduction” in the monthly crude oil shipments, Goralski said, contradicting comments earlier Friday from Transneft, Russia’s oil pipeline operator, that Poland would reduce its intake in the first 10 days of August.

TITLE: Dudley To Meet With Deputy PM
PUBLISHER: Bloomberg
TEXT: MOSCOW — BP incoming Chief Executive Officer Robert Dudley will arrive in Moscow this week and is likely to meet with Prime Minister Vladimir Putin’s deputy, Igor Sechin, on Wednesday, said a government aide.
Dudley, who had worked for five years as CEO of the British company’s venture with a group of Russian billionaires, will be accompanied by outgoing chief Tony Hayward, Sechin’s aide, who declined to be identified, citing state policy, said by telephone Monday. He declined to comment on the agenda.
TNK-BP, Russia’s third-biggest oil company, accounts for about a quarter of BP’s production and a fifth of reserves. Two years ago, Dudley, 54, left Russia, citing “sustained harassment” during a battle for control between BP and its partners.
BP spokesman Vladimir Buyanov said the executives plan to come to Moscow to re-introduce Dudley to the government as CEO and meet with business partners, given Russia’s importance to the company.  
In March 2007, former BP CEO John Browne traveled to Moscow to introduce his then successor Hayward to Putin. 
Viktor Vekselberg, a billionaire shareholder in TNK-BP, said Thursday that Dudley was expected to arrive in the middle of this week, according to Andrei Shtorkh, a spokesman for the businessman’s Renova Group.
TNK-BP spokesman Nikolai Gorelov declined to comment.

TITLE: Manufacturing Rises on New Orders, Jobs
AUTHOR: By Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian manufacturing expanded in July at the fastest pace since April 2008 as new orders grew and companies added more jobs, VTB Capital said.
The Purchasing Managers’ Index rose to 52.7 last month, for a seventh successive expansion, from 52.6 in June, the bank said in an e-mailed statement Monday. The index, based on a survey of 300 purchasing executives, indicates contraction with a figure below 50 and growth with a figure above 50.
The pace of expansion was sustained in the manufacturing sector,’’ Dmitry Fedotkin, VTB Capital’s economist in Moscow, said in the statement. “Underpinning the overall improvement in business conditions in July was a further strong rise in new work received.”
New orders, supporting output and employment growth among manufacturers, resumed in July, according to VTB Capital. The overall jobless rate fell in June to 6.8 percent, the lowest level in 20 months, according to the Federal Statistics Service.
“Economic growth continues but it hasn’t become investment-oriented to the necessary extent,” Deputy Economy Minister Andrei Klepach said last week. “The sub-components of growth remain fairly fragile with the exception of consumer demand.”
Even so, the Economy Ministry will raise its forecast for growth this year from 4 percent, according to Klepach. The economy expanded an annual 5.4 percent in the three months through June, he said on July 27, compared with 2.9 percent in the first quarter, according to the Federal Statistics Service.
Bank Rossii, the central bank, kept its main interest rates unchanged for a second month in July after “positive trends were seen in macroeconomic indicators,” it said on July 30.
Bank lending expanded in June by the most this year, with corporate loans expanding 2.1 percent in the month and retail lending gaining 1.6 percent, according to central bank data. Annual inflation slowed to 5.8 percent in June from 6 percent the month before, the statistics office said.
Input-cost inflation in the manufacturing sector rose for the 13th month in a row, while output price inflation was “limited by competitive pressures,” according to VTB Capital. 
“Industrial production might suffer in July-August from the recent abnormal heat in Russia,” VTB Capital’s analysts including Fedotkin said in an e-mailed note Monday. “In particular, major automakers have announced summer breaks due to the extreme weather conditions.”
Russia is experiencing a heat wave with high temperatures of at least 36 degrees Celsius (96.8 degrees Fahrenheit) forecast this week for Moscow, which has already broken several heat records this season, according to Gidromettsentr, the state weather service.
AvtoVAZ, the nation’s largest automaker, suspended production from Monday through Aug. 8 because of record heat in Togliatti, southern Russia, where temperatures are expected to exceed 45 degrees Celsius.
The PMI is derived from indexes that measure changes in output, orders, employment, suppliers’ delivery times and stocks.

TITLE: Bank Earnings Bounce Back
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian banks’ earnings may surpass the pre-crisis record this year as lending increases, Troika Dialog said.
“Banks earned almost $3 billion in pre-provision revenues in June and over $8 billion in net income in the first half, putting them on target to possibly top 2007’s record earnings in ruble terms,” or 508 billion rubles ($16.82 billion), Troika said in an e-mailed note today.
Bank lending expanded in June by the most this year, according to Bank Rossii, Russia’s central bank. Corporate loans grew 2.1 percent compared with 1.9 percent in May, the central bank said. Retail lending expanded 1.6 percent, after a 1.2 percent increase the previous month.
Average corporate loan rates, excluding those charged by Russia’s biggest lender, Sberbank, rose in June, while rates paid on retail deposits continued to decline, Troika analysts Andrew Keeley and Olga Veselova in Moscow, said in the note. This, coupled with loan growth, means that “banks should have the worst of their margin concerns behind them,” they said.
The central bank left its main interest rates unchanged for a second month in July after “positive trends” in macroeconomic indicators, it said Friday. Economic recovery is signaled by the “continued dynamic growth of capital investment and retail sales, as well as a further growth of credit volume in the banking sector.”

TITLE: Crude Output Keeps Record Level
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian crude oil output in July was little changed from June’s post-Soviet record at 10.14 million barrels a day, while seasonal demand pushed down natural gas production, the Energy Ministry’s CDU-TEK unit said.
Crude oil output rose 2.3 percent from July last year according to the preliminary data distributed by e-mail in Moscow on Monday. Oil exports rose 5.5 percent from June and 5.2 percent from a year earlier. Russia produced 10.15 million barrels a day of oil in June.
Domestic output at Lukoil, Russia’s second-largest oil producer, fell 0.5 percent in the month and dropped an annual 2.8 percent to 1.82 million barrels a day.
Lukoil will focus on investing abroad because of Russia’s tax burden and seek stable output at home, Deputy Chief Executive Leonid Fedun said in March.
Rosneft, Russia’s biggest producer, pumped 2.27 million barrels a day, excluding its half of the Tomskneft unit, up 0.8 percent from June. Gazprom Neft, excluding its half of Tomskneft, raised output 0.6 percent to 610,000 barrels a day.
Bashneft, controlled by billionaire Vladimir Yevtushenkov’s AFK Sistema, increased production 0.5 percent to 290,000 barrels a day. It was up 19.2 percent on the year. 
Russian natural gas output in July fell to 1.42 billion cubic meters a day from 1.47 billion cubic meters a day in June. 
Production rose 5.2 percent from July last year, when demand was damped by the global economic crisis.
Gazprom, which accounts for about 83 percent of Russian gas output, cut production by 3.6 percent from June and raised it 2.9 percent from a year earlier.

TITLE: Uralkali Owners Trying to Create a Potash Empire
AUTHOR: By Alexandra Terentyeva, Maria Rozhkova and Nailya Asker-Zade
PUBLISHER: Vedomosti
TEXT: MOSCOW —  Suleiman Kerimov only became co-owner of Uralkali a month and a half ago, but he is already trying to use it to create the world’s largest potash company. Vedomosti has learned that he is in talks on purchasing Belaruskali and Silvinit.
Kerimov, Filaret Galchyov and Alexander Nesis bought a controlling stake in Uralkali on June 11 from Dmitry Rybolovlev. It has already become known that the partners intend to unite the company with other potash producers, and they are not wasting any time.
Kerimov recently met with Belarussian President Alexander Lukashenko and, on behalf of Uralkali, offered to buy a controlling stake in Belaruskali from the state, said a source close to one of Uralkali’s shareholders. He said Kerimov offered $7.5 billion for 51 percent of the company.
A source at a state bank that was involved in the talks on financing the deal said Kerimov is definitely interested in buying Belaruskali shares but is not considering a controlling stake. The Belarussians value the company very highly — at $20 billion to $30 billion, the source said.
Lukashenko has not recently met with either Kerimov or any other Russian businessman, said Pavel Lyogky, the president’s spokesman. Accordingly, the sale of Belaruskali has not been discussed, he added.
Belaruskali is among the world’s three biggest potash producers. This year, Belarus included the company in its privatization plans. The company has already attracted interest from Chinese investors, Lyogky said. Uralkali’s interest in the asset is also understandable, however. The two companies already sell their product on the world market through a joint venture, Belarussian Potash Company.
At the same time, Kerimov began holding talks on the purchase of a controlling stake in Silvinit from board member Pyotr Kondrashyov, a source close to Silvinit told Vedomosti. Kerimov already owns 25 percent of Silvinit, which he purchased from Rybolovlev and his partner, Vadim Shevtsov.
Talks are being held with VTB on financing the deal, said a source close to the bank. A source in the government confirmed this, adding that if the deal were to go through it would mean that all the country’s potash would be concentrated in one pair of hands.
Therefore, officials have to consider how dangerous it will be for the market to create such a monopoly. Taking into account the size of the potential company, it is necessary to understand its ownership structure, its goals and influence on the sector.
A spokesman for Nafta Moskva denied that talks were ongoing with Kondrashyov and VTB. “Neither Kerimov nor his employees have met with Kondrashyov,” he said.
Preliminary consultations are now ongoing on how to enlarge Uralkali — whether through a merger or purchase of Silvinit, or some other configuration, said a source close to Uralkali.
“No final decision has yet been made. There are many interested parties, many kinds of possible deals,” said the source close to an Uralkali shareholder. An executive at the state bank said VTB was consulting yet another company on the purchase of a Silvinit stake, declining to name the company.
Silvinit and Uralkali are the only potash producers in Russia. Both are located in the Perm region and work at the same deposit — Verkhnekamskoye. Moreover, until the mid-1980s they were a single company. Rybolovlev has also dreamed of merging the two.
If both deals were to take place, Kerimov would create the world’s largest potash company, said Alexandra Melnikova, an analyst at ING. The joint capacity of Belaruskali, Silvinit and Uralkali would be 20 million tons a year. The current world leader, Canada’s Potash Corporation, produces 15 million tons per year. Potash Corporation’s market value stood at $28.9 billion on Tuesday, and $238.5 billion at its peak in 2008.
Because of the conflict between the two countries, Uralkali is unlikely to be able to buy a stake in Belaruskali without a high-level political decision, said Marat Gabitov, an analyst at UniCredit Securities.

TITLE: Four Things Worth Talking About
AUTHOR: By Oksana Antonenko
TEXT: As the second anniversary of the August 2008 war approaches this week, Georgians, Abkhaz, Ossetians and Russians are still recovering from the conflict’s terrible legacy. On the one hand, there is a sense of exhaustion, hopelessness and cynicism on all sides. Restoring peace through a mutually agreed resolution seems a very remote possibility today — a task, perhaps, for the next generation of those who have lived side by side for centuries but will now have to endure decades of separation.
At the same time, the second anniversary is a good time to begin the long process of reconciliation that needs to take place on all levels between Georgia, Abkhazia, South Ossetia and Russia.
Georgia’s television network Imedi depicted a terrifying scenario on March 13, in which domestic political protests in Georgia escalated into a crisis triggering Russian military intervention. This broadcast caused widespread panic in Georgia, triggering security concerns along the cease-fire lines, eventually leading to strong protest from the United States, the European Union and several individual European states featured in the film. While the broadcast aimed to discredit Georgian opposition leaders who had traveled to Moscow to meet Russian leaders, it had the reverse effect. In graphic detail, it demonstrated to ordinary Georgians — and the international community — the dangers of the current state of relations between Russia and Georgia. Although a new war is unlikely, the volatile status quo is likely to persist. Thus, a serious dialogue is needed to begin developing ideas on how Russia and Georgia can peacefully coexist, while there is no agreed settlement of conflicts over the status of Abkhazia and South Ossetia.
This will not be easy. Diplomatic relations between Moscow and Tbilisi were severed after 2008. President Dmitry Medvedev and Prime Minister Vladimir Putin insist that they will not speak to the Georgian government as long as President Mikheil Saakashvili remains in power. Georgian officials have demanded that Russia withdraw its forces from the occupied territories as a precondition for any official talks.
In Georgia, many of those who openly advocate a dialogue are branded as traitors or enemies. In Russia, those wishing to speak with the current political elite in Tbilisi are criticized for being naive or foolish. Despite these reservations, Georgians and Russians are talking on many levels.
Both Russian and Georgian officials recently participated in the 11th round of the Geneva discussions under the dedicated co-chairmanship of the EU, the United Nations and the Organization for Security and Cooperation in Europe. These discussions are very valuable as the only channel for official dialogue, but achieving practical results with the Geneva discussions is painfully slow.
Proxy contacts, which were initially facilitated by Armenia and later taking place on the Georgian-Russian border, brought the first major breakthrough in relations between the two states: the opening of the mountainous Verkhni Lars border in March.
In addition, several opposition figures have taken the initiative to enter into public dialogue. On the Georgian side, the former prime minister, Zurab Nogailedi, and the former parliamentary speaker, Nino Burjanadze, have traveled to Moscow to meet Putin. On the Russian side, opposition leader Garry Kasparov has traveled to Tbilisi and was received by Saakashvili. These were portrayed as public relations gestures and have won little support within their respective societies.
But all of these forms of contact are either too limited or too politicized to make a difference. What is required is a sustained dialogue between mainstream political elites on both sides, which could begin to build confidence and shape a new environment in which a peace process could one day emerge.
To begin with, the dialogue has to address the problem that each side no longer has a good understanding of what is happening on the opposite side. In Georgia, there is a belief that Russia could be made more vulnerable by its domestic problems — mainly the economy and separatism and terrorism in the North Caucasus — and by a change of policy in Washington if U.S. President Barack Obama fails to obtain tangible benefits from the “reset” initiative. This vulnerability, it is assumed, would make Russia more open to reconsidering its recognition of Abkhazia and South Ossetia.
In Russia, there is still a prevailing view that the current government in Tbilisi has lost its popular support and could be on the way out at any moment. Russian experts and politicians were surprised by the strong show of support for pro-government forces during Tbilisi’s mayoral election.
The prevalence of myths and the lack of communication between the two sides make it virtually impossible to prevent or manage any future crises. Therefore, a confidence-building process that enhances mutual understanding, both of each other and of the shared post-war security environment, should be the most important task for the coming months and years.
The starting assumption of this new dialogue process should be that we are unlikely to see a change of the ruling elite in either country in the near future. Therefore, the process should engage those in power today, rather than exclude them.
Second, such a dialogue, while being sustained and representative, should be unofficial, flexible and forward-looking. It should include those members of the elite who can embrace such rules of engagement, while also being able to communicate their experience with the public back home. This dialogue should not be seen as undermining any official talks or contacts with nongovernmental organizations, but complement and reinforce them.
Third, the dialogue should go beyond a discussion of post-war challenges. It should also help exchange views on domestic modernization processes under way in both countries, on regional and global developments and on common economic interests.
Finally, the dialogue should initially be facilitated by a neutral third party — be it a nongovernmental entity or an international organization. It might be even helpful to place it within a wider multilateral context involving various actors from across the Caucasus, Europe, the Black Sea region or other groupings to which both Russia and Georgia belong. But the ultimate goal of the process should be that, over time, Georgians and Russians are able to speak directly without any need for the involvement of a third party.
In an ideal world, such a contact would develop into a confidence-building process to help remove the possibility of dangerous miscalculations on both sides. Such a Georgian-Russian dialogue would not mean accepting a new status quo, nor would it symbolize the failure of one side or the other to achieve its strategic objectives. Instead, talks would demonstrate to the people in the region and the outside world that a new war is inconceivable and that peace can one day come to both sides of the Caucasus Mountains.

Oksana Antonenko is a senior fellow and program director for Russia and Eurasia at the International Institute for Strategic Studies in London. She is currently directing the Georgian-Russian Dialogue on Post-War Challenges, an EU-supported project.

TITLE: New Warnings of a Return to the Brezhnev Era
PUBLISHER: Vedomosti
TEXT: Russia’s security and law enforcement agencies have a case of summer fever. Last Thursday, President Dmitry Medvedev signed a law that expands the powers of the Federal Security Service. The main provision allows the FSB to issue warnings to people whose actions “create the conditions for a crime.” The bill allows for 15-day sentences or fines of 500 rubles to 1,000 rubles ($16.50 to $33) for people who “obstruct the work” of an FSB agent.
But this is only the tip of the iceberg. Now, the government’s other security and law enforcement agencies are saying, “You gave the FSB more powers, what about us?”
For example, Vyacheslav Davydov, director of the Moscow department of the Federal Drug Control Service, wants to require nightclubs to close down after midnight. He thinks that this will help his agency battle drug use.
The traffic police are also jumping on the bandwagon. After the law regulating the minimum blood-alcohol level among drivers was annulled, police have become even more active arresting drivers on drunk-driving charges. Considering that the alcohol testers the police carry give positive results even if the only thing a driver had consumed was a bottle of kvas, it is easy to imagine what a boon this has been for the traffic police in terms of collecting bribes.
State Duma deputies are not missing this opportunity either. They have proposed a bill to allow the government to seize a person’s apartment if he is behind in payments for communal services by more than six months.
By all indications, this burst of activity is driven by two factors. First, Medvedev’s much-acclaimed initiative to limit the number of administrative barriers for businessmen — above all, lowering the number of inspections that regulatory agencies are allowed to conduct on businesses — has made a notable dent in many bureaucrats’ side business. Although they have made up for some of the losses by simply demanding a higher sum for each inspection, the bureaucrats are constantly looking for new ways to supplement their meager salaries.
The second factor is more complex. In answer to allegations that siloviki organizations are chronically negligent and ineffective, they are claiming that they need more powers to help them do their jobs properly.
During the oil-boom years, Russians signed off on an unofficial “social contract” with the government: in exchange for a higher standard of living, Russians were willing to tolerate the government gaining more control and limiting their civil rights. But now, the latest increase in government interference in people’s lives is occurring at a time when the incomes of Russians have dropped sharply. Russians are far less tolerant now of the government chipping away at their rights, and their growing discontent could easily spill into the streets.
Afraid of an increase in protests, the government, instead of relaxing its control over the people, is doing the opposite. The new FSB law is a vivid example. It is clear that one of the main motives in pushing for the power to give “warnings” to people who are “about to commit a crime” was to intimidate leaders of protest movements and convince them that it would be in their best interest to confine their complaints to the kitchen. The FSB law is just one more example of how little the country has progressed from the Brezhnev years.

This comment appeared as an editorial in Vedomosti. Richard Lourie will return to this spot in September.

TITLE: On the Trail of Moscow Funds Spent on Strays
AUTHOR: By Alexander Bratersky
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — By the numbers, the authorities care about stray dogs as much as people.
Moscow City Hall has allocated $190 per month for every stray dog that is housed in its animal shelters this year — the same amount that Prime Minister Vladimir Putin has deemed as Russia’s minimum living wage in 2010.
In addition, millions of dollars have been earmarked to construct animal shelters and to neuter strays.
But despite the cash windfall, few shelters are opening, and there has been no decrease in the 30,000 stray dogs that City Hall and animal rights activists say are roaming the streets.
Mayor Yury Luzhkov says the problem has grown so acute that hundreds of strays might need to be put to sleep.
“In good facilities, a dog can live up to 15 years,” Luzhkov said on city-controlled TV Center television last month. “We cannot take care of dogs for such a long period of time. No city budget could survive such a heavy burden.”
But animal rights activists and a former City Duma deputy say the real burden on the city budget is that money earmarked for the animals has disappeared into a black hole.
Indeed, a review of official documents obtained by The Moscow Times, the sister newspaper of The St. Petersburg Times, found that stray dogs are part of a lucrative — and extremely murky — business that has helped enrich a relative of at least one senior city official. The review also suggests that poor planning and a lack of due diligence are costing the city dearly.
Moscow’s existing 11 animal shelters can house up to 11,000 stray dogs and cats, and four additional facilities are to be built soon to care for a total of 18,000 animals, city officials said.
Luzhkov, in his televised remarks, said city authorities would spend more than $25 million to feed the dogs in shelters this year — a sum that puts the monthly expenses per dog on par with the country’s 2010 minimum living wage of 5,790 rubles ($190).
When the new shelters are built this year, the authorities will spend a total of $33 million a year feeding dogs, Luzhkov said.
The numbers mentioned by Luzhkov represent a sharp drop from the $99 million that the city earmarked for taking care of stray animals last year. That figure was mentioned in a letter sent by Luzhkov’s deputy Pyotr Biryukov to Sergei Mitrokhin, who at the time was a City Duma deputy with the opposition Yabloko party.
Mitrokhin, who lost his seat in October elections widely denounced as rigged, said he had written to Biryukov as he sought to track the “huge” funds that City Hall was spending on strays.
“Nobody has provided an answer,” Mitrokhin told The Moscow Times.

A Missing Shelter
Part of the answer might be found in a 2008 tender that City Hall held for a new dog shelter in the settlement of Severny, north of Moscow.
The tender was won by UniversStroiLyux, a construction company that has bid in several tenders to build shelters in recent years and, according to the SPARK-Interfax database of companies, is owned by Alexei Biryukov, a brother of Deputy Mayor Pyotr Biryukov.
UniversStroiLyux won the Severny tender with a bid of $2.3 million in September 2008, according to documents from the Moscow tender committee obtained by The Moscow Times.
But 18 months later, no animal shelter has been built in Severny — even though City Hall has paid 35 million rubles ($1.2 million) to a company called Profit Project to create blueprints for the shelter, according to tender documents.
Severny authorities said protests from local residents had helped block the shelter’s construction. Residents balked at the plan to build a shelter for 6,000 dogs on a five-hectare plot just 500 meters away from residential buildings, said Alexander Orlov, a Severny official.
“Can you imagine 6,000 dogs barking into the night?” he said.
The new plan is to build a facility for 2,000 dogs, and new blueprints need to be drawn up, he said.
UniversStroiLyux, for its part, accepted the money allocated for the Severny shelter and later returned part of it, said Natalya Sokolova, an official with City Hall’s communal department, which deals with the construction of dog shelters. She declined to say how much money had been returned, saying the matter was under audit.
A UniversStroiLyux official, Yury Sichev, declined to comment on the Severny shelter other than to say his company was no longer involved in it. He said dog shelters were a minor part of the company’s work.
“For us it is just a side business,” he said.
Even as a side business, UniversStroiLyux has run into a series of problems over its use of city funds to build the dog shelters, said Tatyana Pavlova, former head of the City Hall’s department for flora and fauna, who left the position for a private veterinary practice in 2006.
She said that $2 million was returned to the city from various dog shelter projects after the city’s financial control office conducted an investigation into the tenders for the shelters. She cited a letter she received from the city’s financial control office in January. No one has been punished in the case, she said.
UniversStroiLyux has built three dog shelters, Sichev said, including one in Moscow’s Southern Administrative District where Pyotr Biryukov served as prefect before being appointed deputy mayor in charge of the city’s communal sector in 2007.
Russian law does not prohibit relatives of government officials from taking part in tenders organized by government agencies.
Repeated attempts to arrange an interview with Pyotr Biryukov were unsuccessful this week. A spokesman for his brother, Alexei Biryukov, said Thursday that the businessman was on vacation and unavailable for comment.
Apart from dog shelters, UniversStroiLyux’s projects have included the construction of a replica of the wooden palace of 17th-century Tsar Alexei Mikhailovich in Kolomenskoye, also in the Southern Administrative District. The palace’s price tag was $26 million when it started in 2005, but the city department in charge of construction informed Luzhkov that it needed an extra $6 million to complete the project. In June 2009, Luzhkov refused to sign off on the additional funds, Rossiiskaya Gazeta reported at the time.

A Neutering Mystery
Critics of City Hall say another possible answer to the puzzle of how city funds have been spent on strays can be found in counting the number of strays, which has remained stable at about 30,000 dogs for the past decade.
Moscow authorities say the number has not changed — despite costly efforts to neuter dogs and keep them in shelters — because new strays wander into the city from the surrounding Moscow region and the remaining non-neutered female dogs are extremely fertile.
But critics like Pavlova, the former city official who now runs a veterinary clinic, said the city’s efforts to sterilize dogs have been haphazard at best.
Pavlova established a neutering program for City Hall that opened with Luzhkov’s blessing in 2001 but was subsequently shut down by Pyotr Biryukov. The program envisioned releasing neutered dogs back into the streets.
“It was probably not an ideal solution, but we were not looking for one. We were trying to save the dogs by the existing means,” Pavlova said.
She said the program had some pluses, including the fact that the neutered stray dogs defended their territories from aggressive newcomers.
Although supported by animal lovers and rights activists, Pavlova’s program faced criticism from some top city officials, including Moscow’s chief sanitary doctor, Nikolai Filatov, who in 2004 warned Luzhkov that returning neutered dogs to the streets could pose a danger to people if the dogs contracted and spread rabies.
Sokolova, from the city government, said her department was still neutering dogs but most existing shelters were filled. She said that under the program, the city has to neuter all caught dogs, even sick ones.
As Luzhkov suggested last month, city authorities seem to have found a cheaper solution to control the stray dog population — putting them to sleep. Under a decree signed by Biryukov in June, a copy of which was obtained by The Moscow Times, officials running dog shelters will receive the right to put down animals deemed sick or “unruly and aggressive.” The decision would be made by a commission of shelter staff, headed by the shelter’s chief veterinarian.
Pavlova plans to challenge Biryukov’s decree in court and is currently preparing papers to file the lawsuit. She said renowned rock singer Andrei Makarevich and several other prominent pet lovers would join her as plaintiffs in the case.
Under current municipal law, stray dogs can be kept in shelters at the city’s expense for up to six months and, if not collected by their owners or adopted by new families, they then become the property of the city. The law does not allow for them to be put to sleep.
Animal rights activists are furious about Biryukov’s decree. “This is an illegal decision, and this document smells like the slaughter of animals,” said Konstantin Sabinin, an activist with Vita, an animal rights group. “They have too many animals in the shelters, so they need to get rid of them to make room for new ones.”
He said that instead of fighting financing woes by putting dogs to death, City Hall should be trying to control private dog breeders who work without licenses and be demanding that the owners of house pets neuter them to help control the population.
“They are just working from the wrong end,” he said.
While Muscovites are avid pet lovers, few visit shelters to adopt dogs, said Sergei Kruchina, a professor at the Timiryazev Agricultural Academy who runs a small private shelter for stray dogs. “We don’t have a culture of adopting dogs from shelters,” he said.
In 2009, Muscovites adopted only 400 cats and dogs from shelters, Luzhkov said.
Kruchina built his shelter, which houses 35 animals, with the help of donations from businessmen and international grants. He spends $150 per month on every dog — savings from the $190 earmarked by City Hall. Kruchina said the money comes from private donations and operations to neuter dogs performed at the shelter’s clinic.
Some of his dogs have lived at the shelter for several years. “They are too aggressive, and no one wants to take them home,” Kruchina said. “But if you set them free, they might be killed.”

TITLE: Nurturing the Next Generation of Computer Geeks
AUTHOR: By Olga Razumovskaya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Anna Andreyeva seems like an average teenager at first. At 16, she’s a bit dorky and shy but already has what it takes to be a Russian beauty: long, light ash-brown hair, blue eyes and a lean physique.
Andreyeva, however, is not your typical teenager. She is the winner of 13 academic competitions, or “Olympiads,” among high-school students and was presented at a meeting of the Russian Rectors’ Union last month as the future of Russia’s IT industry.
Russian authorities, educators and employers are betting on teenagers like Andreyeva whom they believe will be the generation of intellectuals that can help transform Russia’s natural resource-based economy into one based on innovation.
In June of last year, President Dmitry Medvedev instituted the presidential commission on modernization and outlined five key priority areas for modernizing the Russian economy: medical technology and pharmaceuticals, computer technology and programming, energy efficiency and renewable resources, space technologies and communications, and nuclear technologies.
But while developing many of the sectors depends on deploying large quantities of capital for the infrastructure, facilities and technology necessary to bring them into the 21st century, modernizing the information technology sector means deploying a large amount of human capital — training an army of young, highly qualified personnel to be the innovative engines of the new economy.

Geek Shortage
In theory, Russia should have no shortage of young, IT-savvy personnel to help build an innovative economy.
Russian youth routinely dominate international technology competitions, such as the ACM International Collegiate Programming Contest, where Russian universities have won five of the last 10 contests.
Andrei Ternovsky became the darling of the tech industry last year after creating the popular video chat web site Chatroulette when he was just 17 years old. The web site, which randomly pairs strangers in a video chat, has soared in popularity, and Ternovsky has been courted by investors the world over.
But despite success stories like Ternovsky, the supply of IT specialists currently falls way behind demand.
“Russia lacks IT specialists,” said Boris Nuraliyev, director of software company 1C. “Even compared with countries where the IT industry is not a priority, we lag behind,” he said.
A much smaller percentage of Russians are employed as IT specialists than in other developed economies, according to a study by the Information & Computer Technologies Industry Association, where Nuraliyev is a committee chairman.
In 2009, Russia employed a little over 1 million IT specialists, accounting for 1.34 percent of the country’s labor force, compared with 3.74 percent in the United States, 3.16 percent in Britain and 3.14 percent in Germany, according to the study.
And while there are just enough IT jobs at the moment to place most of the trained IT specialists on the market, that will no longer be the case after the next couple of years.
Under optimistic scenarios for the development of the IT industry, “the number of specialists demanded in the coming years will exceed the number of graduates several-fold, and that shortage will be the main factor holding back the development of the country,” the study said.

Education Goals
Andreyeva’s career plans are not set in stone yet, but she says she may study information technology at Moscow State University or Moscow Institute of Physics and Technology.
Only two years ago, her parents (her father, Sergei Andreyev, is president and CEO of software firm ABBYY) encouraged her to consider going abroad for college, but recently they have turned their attention back to Russia. “Our education is no worse than theirs,” Andreyeva said.
But at the moment, only a handful of Russian institutes and universities are capable of producing the caliber of IT specialists required to compete on a global scale.
“Working at Google or Microsoft — this is the level the Russian Federation is asking from its IT specialists. Only 500 graduates a year currently satisfy these requirements,” said Vladimir Vasilyev, rector of the National Research University of Information Technologies, Mechanics and Optics. He added that only 25 Russian universities were equipped to train students of that caliber.
For the government’s modernization agenda, that just isn’t going to cut it.
“If I remember our college course in philosophy well enough, we need about 10 to 15 percent of the total population to become innovative thinkers, if we want to see a real change in society,” Education Minister Andrei Fursenko said at a recent session of the Russian Rectors’ Union.
“Five hundred leaders in the IT industry per year for all of Russia is clearly not enough,” Fursenko said.
But while with regard to policy there are limitations to what can be done to amp up the number of students, there is much that can be done to increase the quality of IT education and the number of institutions able to supply it.
One way to increase those numbers may be to bring business into the mix. Involving IT companies in the education process may also help bridge the yawning gap between the skills needed for the contemporary IT workplace and those taught in colleges and universities.
“My perception is that today many [Russian IT specialists] have this plaque hanging on them that says ‘Made in the U.S.S.R.’ The fundamentals [of the Soviet education system] stayed on, but what is really lost is the connection between colleges and companies,” said Alexander Galitsky, co-founder of Almaz Capital Partners.
While Russia’s IT talent is immense, it is dispersed and not easily harnessed for collective projects, he said.
“Russia already has an innovative environment, but it is underground. All those IT guys had been talking to each other long before talk about innovation,” he said. “It is now important to physically unite this IT community in one space with infrastructure and walls.”
Creating so-called corporate universities, such as those already in place at some oil and gas companies, may be one way to do that, said Viktor Sadovnichy, rector of Moscow State University. He added that Skolkovo, the site of Medvedev’s planned innovation hub, has the potential to host such corporate universities.

Innovation City
Medvedev has envisioned Skolkovo as a Russian “Silicon Valley” — a place for high-tech firms, investors and educators to come together, thereby fostering innovation.
And the innovation hub has already landed some high-profile partners.
International technology firms Cisco and Nokia have already agreed to set up shop in Skolkovo, and Massachusetts Institute of Technology has agreed to participate in the hub’s academic center.
During Medvedev’s visit to the United States in June, MIT signed an agreement with the Skolkovo Foundation to assess opportunities for education and research with Russia’s top universities and research institutes.
The Kremlin is ensuring that the Skolkovo project is equipped with enough incentives to attract entrepreneurs and investors as well. The State Duma has passed legislation providing a 10-year tax holiday for enterprises in Skolkovo, and the Kremlin has promised a separate legal framework and decreased levels of bureaucracy for companies operating there.
But the Skolkovo project is not without its skeptics, who point to the difficulty of implementing a top-down approach to innovation.
“When people try to recreate something forcefully, it does not really work. I think the key to the thing would be how much freedom will the individual [or] the entrepreneur have to found a company, based on his own idea and get funding to carry his own idea through,” said Klaus Komenda, a Silicon Valley-based web developer at Yahoo. “If Russia can work out a model that enables that, then this can work, I think.”
While the state has promised billions of dollars worth of tax breaks, infrastructure projects and other types of funding for the innovation city, much will depend on the availability of venture capital.
“One of the key things to Silicon Valley, I think, was the fact that starting a company in the United States is very easy in terms of admin effort,” Komenda said. “Silicon Valley not only houses tech firms, but also venture capitalists, which are crucial to funding these companies.”
In June, Almaz Capital Partners announced that it would invest 900 billion rubles ($30 million) into a business incubator in Skolkovo. The state will have a 50 percent stake in the venture, while the rest will be owned by a seed fund comprised of Almaz Capital and a number of other investors.
“We plan to start with about 30 companies and end up with about eight viable IT startups,” Alexander Galitsky, co-founder of Almaz Capital Partners, told The St. Petersburg Times.
“The business incubator will focus on research and development, which is something that Skolkovo should encourage if it wants to be successful,” Galitsky said.

From Flops to Petaflops
But Skolkovo is not the only weapon in the government’s modernization arsenal. As a whole, the modernization agenda is a diverse set of programs, created and implemented by different arms of the government, directing state funds to a wide range of projects and enterprises.
The presidential commission on modernization, created in part to fast-track government funding to key projects in the modernization of the economy, has six priority projects: the development of supercomputers to aid in the modeling of complex systems; an “electronic government,” where most state services would be offered electronically; an e-learning system, allowing for online training and professional education; online health care systems, providing for monitoring and analysis of citizens’ health care needs; high-tech security systems, such as speech-identification, biometrics and video surveillance; and supercomputer education, providing a national system for training highly qualified personnel in supercomputer technologies.
The Communications and Press Ministry is developing a program that partly overlaps with that of the presidential commission. Its 10-year “Information Society” program oversees the development of a host of state-centered high-tech projects. The program oversees many of the e-government projects, and provides for a number of other programs, including the creation of a state e-mail system; a national search engine to compete on a global level; and a national operating system that government agencies and state-owned companies would have the option of using on their systems.
But much of the state cash being diverted to projects in the name of the modernization agenda may be going toward dubious ends. Projects to create a “next generation” antivirus and a 3-D animation system are both getting funding from state-owned VTB’s venture capital fund, according to Russian Newsweek. But experts have said both projects are based on already-existing technologies and offer nothing new to the IT industry.
One project that Medvedev has taken a personal interest in is developing Russia’s portfolio of supercomputers. At a Security Council meeting a year ago, Medvedev taunted government officials for their lack of IT savvy — and their ignorance of supercomputers in particular.
“Many entrepreneurs, let alone government agency representatives, know what supercomputers are, but to them, they are something exotic, like those machines that were being created in the ‘20s to catch up with and outdo America,” he said.
With 47 supercomputer centers, and 11 computers on the list of the world’s 500 most powerful, Russia ranks 12th among countries with the most powerful supercomputers.
“Our country will obviously be investing money into producing supercomputers,” Medvedev said. “We have no choice here if we want to develop progressively.”
The government has allocated 2.5 billion rubles ($83 million) to create the first Russian supercomputer that can perform a quadrillion operations a second, or a “petaflop,” by 2011. But that will still lag behind the record, set by a U.S. supercomputer, of 1.75 petaflops.

Propaganda Needed
Ultimately, whether or not any of these short-term projects are successful, changing the face of the IT sector will require years of investing in human capital and, specifically, generating more interest among young people in the sector.
“We need more propaganda of IT in Russia,” said Natalya Kasperskaya, chairwoman at computer security firm Kasperksy Labs.
“IT propaganda” should become part and parcel of the Russian school system, as early as elementary school, she said.
“We need more Chatroulette kids, not more lawyers or economists,” Kasperskaya said.

TITLE: Risk of Disease Rises Amid Pakistan Floods
AUTHOR: By Chris Brummitt
PUBLISHER: The Associated Press
TEXT: PESHAWAR, Pakistan — Pakistan dispatched medical teams Monday to the deluged northwest amid fears that cholera could spread after the worst floods in the country’s history that have already killed up to 1,200 people, an official said.
The disaster has forced 2 million to flee their homes. Residents have railed against the government for failing to provide enough emergency assistance nearly a week after extremely heavy monsoon rains triggered raging floodwaters in Khyber-Pakhtoonkhwa province.
The government says it has deployed thousands of rescue workers who have so far saved an estimated 28,000 people and distributed basic food items. The army has also sent some 30,000 troops and dozens of helicopters, but the scale of the disaster is so vast that many residents said it seems like officials are doing nothing. Thousands more people in the province remain trapped by the floodwaters.
The anger of the flood victims poses a danger to the already struggling government, now competing with Islamist movements to deliver aid in a region with strong Taliban influence.
“We need tents. Just look around,” said flood victim Faisal Islam, sitting on the only dry ground he could find in Nowshera district — a highway median — surrounded by hundreds of people in makeshift shelters constructed from dirty sheets and plastic tarps.
Like many other residents of Pakistan’s northwest, people camped out by the highway in Kamp Koroona village waded through the water to their damaged houses to salvage their remaining possessions: usually just a few mud-covered plates and chairs.
“This is the only shirt I have. Everything else is buried,” said Islam.
The army has given them some cooking oil and sugar, but Islam complained that they needed much more.
Now people in the northwest also face the threat of waterborne disease — which could kill thousands more if health workers cannot deliver enough clean drinking water and treat and isolate any patients in crowded relief camps.
“To avert the looming threat of spread of waterborne diseases, especially cholera, we have dispatched dozens of mobile medical teams in the affected districts,” said Sohail Altaf, the top medical official in Khyber-Pakhtoonkhwa.
Officials have yet to receive concrete reports of cholera cases, but fear of an outbreak is high, said Altaf. Patients with stomach problems from dirty water are being treated in government medical camps, he said.
The disastrous flooding comes at a time when the weak and unpopular Pakistani government is already struggling to cope with a faltering economy and a brutal war against Taliban militants that has killed thousands of people in the past few years.
The death toll from the disaster has ranged from about 870 provided by the prime minister’s office to 1,200 given by Bashir Ahmed Bilour, senior minister in Khyber-Pakhtoonkhwa, who warned that it could go even higher. More than 2 million people have been displaced, he said.
Pakistan’s international partners have tried to bolster the government’s response by offering millions of dollars in emergency aid.
The United Nations and the United States announced Saturday that they would provide $10 million dollars each in emergency assistance. The U.S. has also provided rescue boats, water filtration units, prefabricated steel bridges and thousands of packaged meals that Pakistani soldiers tossed from helicopters as flood victims scrambled to catch them.
The high-profile U.S. gesture of support comes at a time when the Obama administration is trying to dampen anti-American sentiment in Pakistan and enlist the country’s support to turn around the Afghan war.
“The Pakistani people are friends and partners, and the United States is standing with them as the tragic human toll mounts from flooding in northwest Pakistan,” said Secretary of State Hillary Rodham Clinton in a statement.
The U.S. provided similar emergency assistance after Pakistan experienced a catastrophic earthquake in 2005 that killed nearly 80,000 people. The aid briefly increased support for the U.S. in a country where anti-American sentiment is pervasive.
But feelings have since shifted, and only 17 percent of Pakistanis now have a favorable view of the U.S., according to a recent poll.

TITLE: Gulf Crews  To Begin Plugging Well For Good
AUTHOR: By Greg Bluestein
PUBLISHER: The Associated Press
TEXT: NEW ORLEANS — Engineers on the Gulf of Mexico hoped to begin work Monday on a plan to to shove mud and perhaps cement into the blown-out oil well at the seafloor, making it easier to end the gusher for good.
The only thing keeping millions more gallons of oil out of the Gulf right now is an experimental cap that has held for more than two weeks but was never meant to be permanent.
The so-called “static kill” attempt carries no certainty, and BP engineers still plan to follow it up days later by sending a stream of mud and cement into the bottom of the mile-deep underground reservoir through a relief well they’ve been digging for months.
But the oil giant’s engineers and petroleum experts say it’s the clearest path yet to choke the blown-out well and make it even easier for the crews drilling the relief well to ensure oil can never again erupt from the deep-sea well, which has spewed as much as 184 million gallons since the rig connected to it blew up in April and killed 11 workers.
The developments have the makings for an interesting week.
“It could be the beginning of the end,” said Darryl Bourgoyne, director of Petroleum Engineering Research Lab at Louisiana State University.
When it begins, crews will slowly pump heavy mud through lines installed last month straight down the throat of the leaky well. 
If the mud forces the oil back into the massive underground reservoir and scientists are confident the pressure remains stable, then engineers can pump in fresh cement to seal it.
“The only thing that separates the oil from the sea now is the valve. This puts thousands of feet of mud and cement in between,” said Eric Smith, associate director of the Tulane Energy Institute. “The idea is to have as many barriers as possible between the ocean and the reservoir. We’re adding an extra level of safety.”
Officials may then begin the process of choking the underground reservoir feeding the well by pumping mud and then cement down an 18,000-foot relief well. BP officials have long said the process is the only sure way to choke the well for good — plugging up the source of the oil, not just its route to the sea.
No oil has leaked from the busted well since engineers were able to fix a tightly fitting cap over its outlet two weeks ago, and boats skimming the oil and spraying subsea dispersant have been able to contain some of the spill.
But critics have raised questions about the long-term effects of the dispersant on sea life, and congressional investigators said Saturday that the Coast Guard routinely approved BP requests for permission to use thousands of gallons of chemicals a day despite a federal directive to cut its use of such chemicals.

TITLE: Brazilian Men Swapped at Birth Live Together
AUTHOR: By Stan Lehman
PUBLISHER: The Associated Press
TEXT: SAO PAULO — Two years ago, Dimas Aliprandi and Elton Plaster didn’t know of each other’s existence. Then they learned they had been accidentally switched at birth more than 20 years ago.
The discovery didn’t bring bitterness or recrimination. Rather, it led to the creation of a bigger family.
Today, the two 25-year-olds are living and working together with both sets of parents growing vegetables and coffee on a small farm in southeastern Brazil.
The chain of events started with Aliprandi, who was always intrigued that he did not resemble the four sisters he grew up with.
“There was something different,” he said by phone. “I had blonde hair and blue eyes and my sisters had dark hair and eyes.
“I had the typical features of a descendent of German immigrants, while my sisters and parents were of Italian stock. Something did not add up”
Aliprandi said he was 14 when his suspicions intensified after watching a TV news report on babies getting switched at birth because of mistakes at hospitals.
“I told my father of my doubts and that I wanted to do a DNA test. But it was too expensive” for the family, he said.
A decade later, Aliprandi did it on his own.
“In December 2008, when I was 24, I decided I needed an answer to my doubts and paid 300 reals ($166) for a DNA test that confirmed my suspicions that I was not the birth son of the man and woman who had raised me,” he said.
It was a big shock for his parents, Zilda and Antonio Aliprandi. They at first refused to believe the results, but eventually decided to help him look for his biological parents.
The search began at the Madre Regina Protmann Hospital, where he was born.
“I showed the hospital the results of the DNA test and told them that they proved that I had been switched at birth,” Aliprandi said.
But hospital officials were skeptical, he said, and asked him to have another DNA test, which he did three months later.
Repeated calls to the hospital for comment went unanswered.
The DNA results were the same as the first — Aliprandi had been given to the wrong mother as an infant.
He said the hospital then searched its records and found Elton Plaster was born there on the same day.
The records led Aliprandi to the 35-acre (14-hectare) farm where Plaster lived with his parents, Nilza and Adelson, in the town of Santa Maria de Jetiba, about 30 miles (45 kilometers) from the Aliprandi home in Joao Neiva.
The Plasters agreed to do DNA tests.
“They discovered that Elton was the biological son of the man and woman that I had been calling Mom and Dad for 24 years,” Aliprandi said. “Meanwhile, Elton discovered that the couple he had always regarded as his biological parents were mine.”
The discovery did not cause any upset, he said.
“Instead it sparked a desire to join our families,” Aliprandi said. “Elton and I wanted to remain with those who raised us and with our birth parents. We wanted to expand our families.”
So about a year ago, Aliprandi and the parents who raised him accepted an offer from the Plasters to move to their farm, where they built a home.
“This is the way it should be,” Adelson Plaster recently told Globo TV. “We are all together and I now have two sons living and working here.”
Aliprandi and Plaster both feel blessed by their new circumstances.
“It’s not everyone who can say he has two fathers and two mothers living together with him,” Aliprandi said.

TITLE: Drunk Kills 11 In Tractor Rage
PUBLISHER: The Associated Press
TEXT: BEIJING — A drunken man went on a rampage while driving a shovel loader in northern China, smashing into shops and vehicles and killing 11 people, a government spokesman said Monday.
The incident began when 38-year-old Li Xianliang killed a customer Sunday at the Hongyuan coal depot in Hebei province’s Yuanshi county where he worked driving a shovel loader, said a news release issued by the county government.
Li, who had been drinking, then drove his loader down an adjacent road, smashing into cars, buses, motorcycles, trucks and roadside shops, the news release said. 
The tractor eventually came to a stop in a field where police subdued the man after the hour-long rampage.
The man was taken into custody and likely faces the death penalty if convicted of murder.
The news release said eight people were killed outright and 20 injured.