SOURCE: The St. Petersburg Times
DATE: Issue #1598 (59), Friday, August 6, 2010
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TITLE: Chichvarkin Extradition Clouded 
By Death
PUBLISHER: The Associated Press
TEXT: MOSCOW — The high-profile extradition case of former Yevroset owner Yevgeny Chichvarkin has taken a surprise pause amid an investigation into the mysterious death of the businessman’s mother, who was found covered in blood in her Moscow apartment.
On Tuesday, Russian prosecutors announced a new probe into the April 3 death of 60-year-old Lyudmila Chichvarkina, the businessman’s lawyer in Moscow said. Chichvarkina was covered in blood and bruised when she was found, but paramedics ruled that she died of a heart attack.
The announcement came a day after a London court postponed a hearing into the extradition of Chichvarkin, who insists he should not be sent back to Russia because someone has murdered his mother and his own life is in danger.
The next hearing in the extradition proceedings will be Sept. 13.
“There was clear evidence of an attempted murder,” lawyer Vladimir Zherebenkov told The Associated Press on Tuesday, saying her body was bruised all over as if she were severely beaten.
Her clothes and shoes were drenched in blood from head to toe, he said. It would have been a natural death only if “she had struck herself in the head twice and fell to the ground twenty times.”
Chichvarkin, 35, also insists that his mother was murdered, citing his father’s visit to the crime scene and evidence in police files. He also calls Russia’s extradition request politically motivated because he has spoken out against corruption in the Interior Ministry.
The mysterious death might prove to be a major factor in the London court’s decision on whether Britain should extradite Chichvarkin back to Russia to face kidnapping charges. His lawyer says that if Chichvarkin’s suspicions are proven, Russia’s case for his extradition would collapse.
Officials tried to cover up the case, Zherebenkov said, because “if evidence that she was murdered was made public, extradition would be dismissed right away.”
A spokeswoman for Moscow prosecutors was not available to comment on the case Tuesday.
But Russian authorities appeared to have made a sharp turnaround since April, when the Investigative Committee, the country’s chief investigative body, said it would not conduct a probe because there were no signs of a violent death.
Investigators first claimed that Chichvarkina had bruised herself when she bumped her head against the edge of the kitchen table, but Moscow chief investigator Anatoly Bagmet admitted in June that she had been beaten up. He did not order a probe at the time, however, saying the beating could not have caused the death.
It was not clear why a new probe was ordered, but Britain is not likely to extradite a suspect while there are questions about a possible violent death in his immediate family.
Chichvarkin, one of Russia’s most successful entrepreneurs during the early 2000s, did not make his fortune in commodities like most Russian millionaires. He started in 1997 at age 22 selling mobile phones in a firm that later became the country’s largest mobile phone retailer.
Known for his eccentric style and colorful language, Chichvarkin made Yevroset a household name thanks to its aggressive and often risque marketing. But he was also well-known for outspoken statements against corruption in the police, which he said prompted the charges against him.
Yevroset came under attack in the fall of 2008, when one of his deputies was arrested and charged with kidnapping and extortion.
Prosecutors said a Yevroset vice president and his subordinates kidnapped a shipping agent whom they suspected of stealing a large number of handsets. They allegedly kept him in an apartment in a Moscow suburb, demanding that he pay them 10 million rubles ($334,000) — the alleged value of the handsets that he had stolen.
Chichvarkin fled Russia in December 2008. A month later, a Moscow court charged him in absentia with complicity in the kidnapping and put out an international arrest warrant.
Chichvarkin says the charges are a complete fabrication from a police department that was seeking revenge for his efforts to expose corruption.
The Yevroset kidnapping trial is due to start later this month in Moscow, and the London court will watch it closely to see whether the charges have any grounds, Chichvarkin’s lawyer said.
“There is a lot of evidence that prosecutors are trying to hide,” Zherebenkov said. “Economic and political motives behind this case are evident.”

TITLE: Heat Wave, Drought Likely to Boost Inflation
AUTHOR: By Maria Levitov
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s record heat wave and worst drought in 50 years may spur inflation and make economic growth more reliant on state support as factories suspend production and consumer demand slows.
 “The impact of the drought on harvest and grain prices will be material, causing annual 2010 inflation to reach 7 to 7.5 percent versus our previous estimate of 6.3 percent,” Natasha Zagvozdina and Ulyana Lenvalskaya, analysts at Renaissance Capital in Moscow, said in an e-mailed note Thursday.
Exports on grain and grain products will be banned from Aug. 15 through Dec. 31, the government announced Thursday (see story, page 4.)
The drought and heat are fueling fires that have killed at least 50 people and scorched 712,412 hectares, an area about three times the size of Luxembourg, the Emergency Situations Ministry said in an e-mailed statement. Emergency crews are battling 589 fires on 195,834 hectares, the ministry said.
Agriculture has been the the hardest hit part of the economy, with the government declaring states of emergency in 28 crop-producing regions and grain yields down 20 percent so far this year. Agriculture accounts for about 4 percent of gross domestic product, according to Moscow-based VTB Capital.
The Perm region in the Urals declared a drought emergency Thursday and said that as much as 40 percent of the grain crop and 45 percent of the potato harvest may be lost, according to a statement on the local government’s web site.
Companies that will be “negatively affected” include Wimm-Bill-Dann, Russia’s biggest dairy producer, Cherkizovo, the biggest poultry producer, and “to a lesser extent” vodka producers such as Synergy, Renaissance Capital said.
Prices for wheat and barley fodder jumped about 50 percent and 80 percent, respectively, last month, and if these “pressures linger, meat producers will have to defend their margins and hike prices,” VTB Capital analysts 
Alexandra Yevtifyeva and Ivan Kushch said in an e-mailed note.
Higher grain prices may add as much as 1.7 percentage points to the inflation rate this year, Natalia Orlova, chief economist at Alfa Bank, Russia’s largest private bank, said Wednesday. Annual price-growth slowed to 5.5 percent in July, the lowest level on record.
The drought, which caused the biggest jump in wheat prices since 1973, will continue this month, threatening more crops and winter-grain sowings, according to the state weather service.
Rainfall last month in central Russia and along the Volga River, the areas hardest hit by fires, was 10 percent to 30 percent of the long-term average, the center said.
The government forecasts annual inflation at 6 percent to 7 percent this year and 5 percent to 6 percent in 2011. Yaroslav Lissovolik, head of research for Deutsche Bank in Moscow, 
estimates inflation may accelerate to 8.1 percent by the end of this year.
Higher inflation will eat into real wage growth, which means lower consumer demand, Alfa’s Orlova said. The importance of government stimuli, such as financing to help people rebuild homes destroyed by fires, will increase relative to consumer demand as a driver of economic expansion, she said.
“We might not see a negative effect in terms of end-of-year growth figures,” Orlova said. “But a negative change in the structure of the economy will be obvious.”
The government has pledged 5 billion rubles ($165.7 million) to rebuild homes destroyed by the fires, in addition to paying 200,000 rubles ($6,700) to each person who loses a property, Prime Minister Vladimir Putin said on Aug. 2. Non-working pensioners affected by the blazes will receive 25,000 rubles from the Russian Pension Fund.
Putin said Wednesday that about 2,000 houses had been destroyed by fires this year and about 4,000 people had been left homeless, RIA Novosti reported.
Expansion of service industries from hotels to supermarkets slowed in July, partly because of the heat wave, according to VTB Capital’s Purchasing Managers’ Index.
Industrial output may suffer in August because of the extreme weather, especially as some automakers temporarily halt production, according to VTB Capital. AvtoVAZ, Russia’s largest carmaker, suspended operations through Aug. 8 because of extreme heat in Tolyatti, southern Russia.
Temperatures in most parts of central Russia will be 8 degrees Celsius above average through Aug. 12, rising as high as 42 degrees Celsius, according to the state weather service. “High” or “extreme” fire danger will persist in the central and Volga federal regions, where most wildfires are burning, at least until today, the service said.
“Estimates of the crop damage caused by the drought in Russia have escalated over the past two weeks,” VTB Capital said. “Adding in higher budget spending, this means that the inflation risks for 2011 have mounted.”
Federal Antimonopoly Chief Igor Artemyev ordered his agency to monitor prices more closely to avoid “unwarranted” increases in the cost of food during the drought, according to a statement Wednesday on the FAS web site.
Russia has 21.5 million tons of grain stockpiles, including 9.5 million tons of government inventories, Deputy Agriculture Minister Alexander Belyaev said on Aug. 3.
“At present, grain inventories are sufficient to restrain inflation, but it is too early to judge the extent and the cost burden” of the drought, Moscow-based Troika Dialog said Wednesday. “One thing is clear: there will be some sort of negative cost impact in the third quarter of 2010 for the consumer space.”

TITLE: Police Claim They Will Investigate ‘Animal’ Policeman
AUTHOR: By Sergey Chernov
PUBLISHER: Staff Writer
TEXT: The St. Petersburg Interior Ministry is looking into the actions of officers who beat and arrested people while dispersing a peaceful rally in defense of the right of assembly on Saturday, July 31, a police spokesman said this week. 
The statement came in the wake of a large number of reports about the actions of one officer in particular who beat people with his police baton and dragged a young woman by her hair. The officer, whose rank praporshchik is roughly equivalent to the U.S. police rank of sergeant, remains unidentified. Meanwhile, many of those who suffered violence at the hands of the police have filed complaints to police chiefs and the prosecutor, asking them to open a criminal case.
In a video widely distributed on the Internet, the officer is seen approaching people at the Strategy 31 rally held near Gostiny Dvor metro on Nevsky Prospekt, St. Petersburg’s main thoroughfare, with the words “F***ing animals, who else wants some?” A young man wearing a red T-shirt is heard asking, “Why are you swearing?” — in answer to which the officer hits him across the face with his baton and drags him roughly to a police bus, accompanied by other policemen.
The young man who was hit in the face was Dmitry Semyonov, who said he did not belong to any political group. 
“I was just walking around the city,” he said Thursday. “I knew that there would be a rally at that time and decided to head in the direction of Gostiny Dvor, saw it, stopped and started to watch.”
Semyonov said he did not realize he had been hit with a baton until he saw the video. He said he discovered a painful bump while he was at the police station and realized some of his hair had been pulled out. 
“To be honest, it was very fast, I remember he grabbed me by the hair, then hit me, a woman started to pull me aside, and while [the police] were dragging me, I remember shouting, ‘What for? What for?’” Semyonov was charged with violating the rules for holding public events.
Svetlana Pavlushina is the young woman who can be seen in videos and photos being dragged by her long hair by the same police officer. Pavlushina is an activist with White Ribbon, 
the movement for police reform headed by former policeman Alexei Dymovsky.
“I was standing and filming the detentions,” she said Thursday. “He got out of the bus, saw me, and with the words ‘You want to be there, too?’ started to drag me by my hair.” She said she was left with several bruises on her wrist from being seized.
“I started to scream to attract attention. My sister and then Eduard Balagurov from our movement came to my rescue.”
Balagurov, who was detained and taken to hospital after being beaten, said that White Ribbon activists had not taken part in the rally, but had come to observe and document the police’s actions.
He said he rushed to help Pavlushina when he heard her screaming.
“She was surrounded by a crowd of policemen who were pulling her hair, shoving her from side to side and grabbing her clothes,” Balagurov said.
“I held onto that same officer because he was being the most aggressive toward Sveta and holding her hair most firmly, and I tried to pull his arm away from Sveta.”
Balagurov was detained and badly beaten when he refused to enter the police bus. “They started to kick me and hit me with their fists, and that same sergeant tried to gouge out my eyes,” he said. “What struck me was that they were swearing and frenzied. The policemen usually say in their defense that they were only acting on orders. I feel the order was to do it in a sadistic way.”
Balagurov said he felt ill and dizzy at the police station and was taken away by ambulance with a suspected concussion. Like Semyonov, he was charged with violating the rules for holding public events.
Alexander Kormushkin, who was wearing a black T-shirt in support of the imprisoned oil tycoon and Putin opponent Mikhail Khodorkovsky, said the same sergeant hit him with his baton twice, causing his head to bleed. He said he frequently takes part in protests, but does not belong to any political group.
Kormushkin said he was dragged by several policemen, including the same sergeant, after he tried to prevent a policeman from arresting activists.
“He punched me twice from below — trying to conceal it, so no one could see — first in the jaw, then he smashed my lip. As I resisted, he tried to gouge out my eye with the other hand.”
Kormushkin said he was beaten by the same sergeant after he escaped from the police bus where detainees were being held, having climbed through a ventilation window onto the roof of the bus.
“I jumped [from the roof] and was caught for a second time,” he said. “They were putting me in the bus, then — bang! — I felt a blow on my head from behind. I turned around, and the same sergeant hit me with his baton for the second time, drawing blood. There was a lot of blood — my face and trousers were covered in blood.”
The police refused to call an ambulance to the bus, and Kormushkin was taken to hospital from the police station, one hour after being detained.  
“An investigation of the facts published in the media criticizing the police’s actions on July 31 is underway,” police spokesman Vyacheslav Stepchenko said Thursday.
He said that by law such investigations should be conducted within a month of the event in question, but did not exclude that it would be completed earlier.

TITLE: Iran Says It Has S-300 Missiles
PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran — Iran has obtained four S-300 surface-to-air missile systems despite Russia’s refusal to deliver them to Tehran under a valid contract, a semi-official Iranian news agency claimed Wednesday.
The Fars news agency, which has ties to Iran’s elite Revolutionary Guard, Iran’s most powerful military force, said Iran received two S-300s from Belarus and two others from another, unspecified source. Fars did not elaborate, and there was no official confirmation of the report.
Russia signed a 2007 contract to sell the S-300s but so far has not delivered. The powerful, long-range missiles would significantly boost Iran’s defense capability, and Israel and the United States have strongly objected to the deal.
A spokesman for Belarus’ state military trade committee, however, denied there were any missile deliveries.
“Talks with the Iranian side about the delivery of such systems have not taken place and, consequently, no deliveries to Iran have taken place, neither of these systems or elements of them,” said Vladimir Lavrenyuk. “The Belarussian side strictly observes all international agreements on export control.”
Moscow said in June that the latest round of UN sanctions would prevent it from delivering the S-300s to Iran. But last month, Russian Technologies head Sergei Chemezov said the contract to deliver the S-300s to Iran had not been annulled yet pending a decision by President Dmitry Medvedev.

TITLE: City Collects For Victims of Wildfires
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: Local residents have collected four tons of humanitarian aid for the victims of forest fires in central Russia. 
Clothes, bedding, children’s items and other necessities will be sent off to the needy on Friday.
Aid collection stations have been operating in all of the city’s districts during the past week. The humanitarian aid drive is being coordinated by the St. Petersburg Center for International Humanitarian Initiatives.
An unusually long period of abnormal heat and an absence of rain have led to a fire epidemic in Russia. At present, dozens of new forest fires are being identified in the country every day.
Twenty-one regions of Russia have been affected by the fires. According to the Russian government, at least 50 people have died in forest fires, more than 1,875 houses have been damaged, and more than 2,000 people have lost their homes. Central Russia has suffered the greatest amount of damage, with the Nizhny Novgorod region, Voronezh region and Ryazan regions being the key victims. 
The cities of Arkhangelsk, Volgograd, Vladimir, Ivanovo, Saratov, Yekaterinburg, Tula and Ulyanovsk as well as the region of Tatarstan and the Mariy El Republic have also been affected.
St. Petersburg Governor Valentina Matviyenko said City Hall is working on establishing a procedure for collecting financial donations for the victims of the fire.
The local branch of the United Russia party has joined forces with the Lenta hypermarket chain — one of the largest hypermarket chains in the country — in a charity project specifically targeted at helping victims of the fires. 
The Lenta branches in Ryazan and Nizhny Novgorod will provide the needy with food and goods for mothers and babies. The work will be coordinated from St. Petersburg, where Lenta’s headquarters are located.
The Russian Orthodox Church has also organized a collection of humanitarian aid. Although unable to collect clothes and foodstuffs, the church has been collecting financial donations through the web site www.metropolia.spb.ru.
An Emergency Situations Ministry spokesman said that the LenOblast has not been affected by wildfires, Fontanka.ru reported.

TITLE: Zenit Secures Spot In Champions League
AUTHOR: By Tobias Kuehne
PUBLISHER: The St. Petersburg Times
TEXT: “Tolko Pobeda” — “only victory” — said the pre-game posters all over the city. And, indeed, only a victory against Romania’s Unirea Urziceni would allow Zenit St. Petersburg to advance to the UEFA Champions League, Europe’s most prestigious club soccer tournament. 
Zenit, currently topping the table in the Russian Premier League and coming off an impressive 8-game winning streak, entered Wednesday’s game as the favorite. Yet, the pre-game atmosphere was tense, as the presence of hundreds of policemen and armed special forces units at the Petrovsky Stadium showed.
The first 20 minutes of the game saw two teams afraid to make the first mistake. Unirea, evidently intimidated by Zenit’s frantic supporters, played timidly and blundered several passes. Zenit played more aggressively, but just as imprecisely, which resulted in a game with few episodes inside the penalty areas. 
“It was a difficult game, from a psychological point of view,” Zenit’s head coach Luciano Spalletti told Eurosport.ru after the game. Only Zenit’s Danny was able to cause danger in front of Urziceni’s goal. The dynamic Portuguese international had some breakthroughs on the left side and played some dangerous crosses into the penalty area that found no recipient.
It was Danny who scored the game-winning goal in the 33rd minute. Zenit’s Vladimir Bystrov pulled to the center from the right side, chipped the ball toward the front of the penalty box, where it found the chest of Danny. Danny energetically shook off his defender and, with a vigorous shot from eleven meters distance into the upper right-hand corner, left Unirea goalkeeper Giedrius Arlauskis with no chance. 
Danny’s golden shot guarantees his club millions in prize money. Zenit’s participation in the group stage of the Champions League guarantees the team a minimum of 7.1 million euros ($5.5 million). For each draw and win in the group stage, Zenit is to receive an additional 400,000 euros ($308,000) and 800,000 euros ($615,000), respectively. Many more millions are to be won in the knock-out rounds beyond the group stage.
The second half saw a similarly strong Zenit squad, especially in their set pieces. Unirea struggled to maintain its composure against a clamorous crowd that booed whenever Unirea was in possession of the ball. 
After the 60th minute, however, the Romanian squad fought its way back into game, though without creating too many compelling opportunities. 
Nonetheless, nervousness was spreading among Zenit’s players and supporters, as a single goal by Unirea would have meant elimination for Zenit: The first leg in Romania ended in a goalless draw, so that a 1:1 in Petersburg would have resulted in a 1:1 aggregate score, in which case Unirea, having scored more goals away from home, would have advanced to the Champions League. Tension was rising, and in the 88th minute, police began to enter various sections in the stadium to suppress any potential brawls in the event of a last-minute elimination. However, Zenit was able to hold on to its lead and the crowd dissolved peacefully.

TITLE: In Brief
TEXT: <strong>Traffic Cop Shot</strong>
ST. PETERSBURG (SPT) — A traffic policeman was shot dead and another was seriously wounded during a document check Wednesday on Prospekt Udarnikov in St. Petersburg, Interfax reported.
The policemen came under fire after trying to check the documents of two unidentified men in a Chevrolet sedan, a law enforcement official told Interfax, adding that the assailants fled, taking both officers’ guns. 

<strong>Children Kidnapped</strong>
ST. PETERSBURG (SPT) — A 4-year-old girl and a 15-year-old boy were kidnapped in separate incidents in St. Petersburg and the Primorye region.
A man called the cell phone of the father of Alexander Matsenko, who went missing in the Primorye village of Alexandrovka on Tuesday, and demanded a ransom of $1 million for the boy’s return, local investigators said in a statement. Police are looking for the boy.
The St. Petersburg girl, who was not identified, was kidnapped Tuesday by her father, who lost custody of her to his ex-wife after a divorce, RIA-Novosti reported. The father also kidnapped the child in May, and she was only returned to her mother last week, the report said, adding that the girl was accompanied Tuesday by her uncle, who was beaten up in the attack.

<strong>Survivor Dies</strong>
MOSCOW (SPT) — Police Colonel Sergei Isakov, the only passenger to survive a plane crash in the Krasnoyarsk region this week, died in the hospital Wednesday of his injuries, which included broken bones and burns to 80 percent of his body, Interfax reported.
Isakov’s death brought the death toll in the accident, which happened in the Arctic town of Igarka early Tuesday, to 12. Three of four crew members of the An-24 twin turboprop survived but remain hospitalized.
Investigators have not said what caused the crash. The plane went down 700 meters short of the runway while trying to land in thick fog. 

<strong>Honey Spill</strong>
MOSCOW (SPT) — Motorists traveling on a highway between Kiev and Odessa got a sweet surprise Wednesday when a truck spilled 800 kilograms of honey onto the road.
The honey left a gooey mess covering three of the highway’s four lanes after a truck carrying the honey in barrels collided with another truck in Ukraine’s Odessa region, Interfax reported, citing the Emergency Situations Ministry.
The report did not say who was responsible for the accident.
The highway was temporarily closed while a ministry crew cleaned up the mess.

TITLE: State Bans Exports of Grain
AUTHOR: By Maria Levitov and Maria Kolesnikova
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia will impose an export ban on grain and grain products from Aug. 15 to Dec. 31 as the country’s worst drought in half a century cuts yields.
Prime Minister Vladimir Putin’s spokesman, Dmitry Peskov, gave the dates of the ban by telephone in Moscow on Thursday. Earlier, Putin said a ban would be “appropriate” after drought and record heat in central Russia and along the Volga River forced the government to declare a state of emergency in 28 crop-producing regions.
Wheat extended a rally to the highest price in 23 months on the ban. Wheat for December delivery, the contract with the largest open interest, advanced as much as 7.9 percent to $8.155 a bushel in Chicago on Thursday, the highest level since August 2008.
“As of today, Russia has no grain market,” said Kirill Podolsky, chief executive officer of Valars Group, the country’s third-biggest grain trader. “This will be a catastrophe for farmers and exporters alike.”
Russian companies may cancel shipments of about 600,000 metric tons of wheat to Egypt because of the ban, Podolsky said. Valars will stop exports immediately, including a pending 60,000-ton shipment to Egypt, on concerns that customs officers will hold up shipments until the ban comes into effect, he said.
The Agriculture Ministry cut its grain crop forecast to as low as 70 million metric tons compared with 97.1 million tons last year. Agriculture accounts for about 4 percent of gross domestic product, according to Moscow-based VTB Capital.
Russia has “sufficient reserves” of grain, Putin told a government meeting, “but we must prevent domestic prices from rising, preserve cattle herds and build up reserves for next year.” The government will consider what to do next after December, when this year’s harvest is tallied, he said.
Russian Grain Union President Arkady Zlochevsky earlier said a quick move to halt exports would hurt the market because traders need advance warning in order to meet contracts.
Heat and drought continue to plague Russia’s heartland. Wildfires have killed 50 people to date and scorched 712,412 hectares, the Emergency Situations Ministry said in an e-mailed statement Thursday.

TITLE: Russia Seeks Guarantee on U.S. Poultry Plants
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian veterinary authorities want a guarantee of the inspection regimen at U.S. poultry plants authorized for exports to the country before shipments can resume.
“The door will open as soon as the U.S. side provides guarantees that the authorized plants have been inspected properly,” Alexei Alekseenko, a spokesman for Russian food-safety watchdog Rosselkhoznadzor, said by phone from Moscow on Thursday.
Russia, which imported U.S. poultry worth $767 million in 2009, blocked the meat in January by slashing the amount of chlorine processors were permitted to use as a disinfectant. Officials agreed to import fowl disinfected with other substances after U.S. President Barack Obama intervened at a summit with Russian President Dmitry Medvedev in June.
The accord hit a snag last week as importers made new demands, U.S. Agriculture Secretary Tom Vilsack said Wednesday. Russians wanted to add an extra “step” to the agreement after the U.S. Department of Agriculture started sending Russia a list of facilities that could ship poultry under the new agreement, he said.
“We had poultry packed and ready to go, and then we heard of this new challenge,” when Russia asked for safety reviews of American processing plants, U.S. Trade Representative Ron Kirk told a Senate panel Wednesday. “This behavior is just not acceptable. The frustration is: There is always something new.”
Tyson Foods, the largest U.S. meat producer, was due to meet Russian veterinary officials Friday, according to the Russian watchdog’s statement.

TITLE: TNK-BP Bonds Climb On Dudley-Sechin Talks
AUTHOR: By Jason Corcoran and Denis Maternovsky
PUBLISHER: Bloomberg
TEXT: MOSCOW — Talks between Russia’s government and BP’s newly appointed Chief Executive Officer Robert Dudley are stoking the best rally in 17 months for bonds of TNK-BP on expectations asset sales will help the Moscow-based affiliate.
TNK-BP’s $1 billion of 7.5 percent bonds due 2016 rose for a 13th day Thursday, the longest rally since March 2009, according to prices on Bloomberg. The yield fell to as low as 5.536 percent Wednesday, dropping for the first time below the level before the April 20 oil disaster in the Gulf of Mexico.
The worst oil spill in U.S. history has brought Dudley back to Moscow two years after he fled Russia as the chief of TNK-BP, citing “sustained harassment” and visa difficulties. Dudley met Wednesday with Igor Sechin, Prime Minister Vladimir Putin’s deputy for energy. TNK-BP, Russia’s third-largest oil producer accounts for about 25 percent of BP’s output and a fifth of the company’s reserves, and may boost that share as BP sells projects to cover the $32.2 billion charge linked to the leak.
“Hayward’s dismissal and Dudley’s appointment” has “significantly supported TNK’s spreads,” said Sergei Dergachev, who helps oversee about $6 billion of emerging-market debt, including TNK-BP dollar bonds, at Union Investment in Frankfurt. “TNK-BP underperformed in the past, mostly due to the corporate governance disputes between Russian and BP sides.”
Dudley, who succeeds Tony Hayward on Oct. 1, will oversee as much as $30 billion of asset sales.
“Maybe in the longer term there will be some new ideas that surface that unite us further,” Sechin said during the meeting with BP’s Dudley and Hayward on Wednesday night in Moscow.
BP raised $1.9 billion from Ecopetrol and Talisman Energy for fields in Colombia, the company said Tuesday. 
London-based BP told Venezuela’s state oil company it’s interested in selling its stakes in three projects in the country to TNK-BP, Petroleos de Venezuela Vice President Eulogio del Pino said last week. Petroleos de Venezuela, the state-owned Venezuelan oil producer, has the first option to purchase BP’s local assets, the company’s president Rafael Ramirez said Wednesday.
“TNK works with us” on some local projects, Ramirez said. “We have excellent relations with them and would evaluate any request that comes from them.”
Any sale of TNK-BP shares to state-owned Gazprom, Russia’s gas monopoly, or Rosneft, the country’s biggest oil producer, could boost bond prices, according to Marina Vlasenko, the lead emerging market credit analyst at Commerzbank in London.
“For a cash-cow like TNK-BP the presence of the state in its capital would not impose a major change in credit risk,” Vlasenko said. “The shareholder change from BP to Gazprom or Rosneft would be moderately positive for the credit as it will reduce the political risk and eliminate shareholder conflict.”
“The assets in Venezuela are a tidying-up opportunity,” for TNK-BP, Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said in a phone interview. “The dialogue now taking place between BP and the Russian government is about BP’s future involvement in Russia and how the Kremlin can take advantage of BP’s problem.”

TITLE: Oligarch Feud Reaches Stalemate
AUTHOR: By Ilya Khrennikov and Yuriy Humber
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russian billionaires Vladimir Potanin and Oleg Deripaska, locked in a dispute over control of the world’s biggest nickel supplier, GMK Norilsk Nickel, have offered to buy each other out as their feud reaches stalemate.
Potanin’s Interros Holding, which gained more influence over Norilsk after a June 28 board election, is interested in raising its stake, spokesman Andrei Kirpichnikov said Wednesday by phone from Moscow. This follows Deripaska’s July 30 offer to buy out Potanin’s shares and install new management at Norilsk, Russia’s biggest mining company.
The government may need to intervene to break the deadlock as neither side plans to sell, Troika Dialog said in a report Wednesday. Russian President Dmitry Medvedev has ordered the Prosecutor General’s Office to review the situation, the state-run RIA Novosti news agency reported Tuesday.
“The resolution of the conflict is clearly going to be a drawn-out affair,” Alexander Pukhaev, an analyst at VTB Capital in Moscow, wrote Wednesday in a note. “Should either of the parties buy the other out, it would be favorable for Norilsk.”
Potanin and Norilsk directors are preparing a joint bid for the 25 percent of the company held by Deripaska’s United Co. RusAl, Vedomosti newspaper said Wednesday. Kirpichnikov said he had “nothing to add” to the report. Norilsk is able to buy out RusAl, the nickel maker’s spokeswoman Erzhena Mintasova said.
“Norilsk can easily borrow money to buy out RusAl’s stake and let the company develop without the shareholder conflict,” Mintasova said by phone from Moscow. “A pool of lenders, including state-owned banks, could be picked quickly to raise the necessary funding.”
RusAl spokeswoman Vera Kurochkina questioned how Norilsk could use funds on its balance sheet to buy out investors and reiterated that the Moscow-based aluminum company won’t sell.
“A decision on what Norilsk must do with its cash and for what purposes the company needs to obtain credit should be made by shareholders, not by the management,” Kurochkina said in reply to questions. “It’s impossible to buy something which isn’t for sale.”
Russia could take a stake in Norilsk through a state-run company to help defuse the dispute, three people familiar with the situation said last month. State-run Russian Technologies Corp. had begun talks with Norilsk investors including billionaire Alisher Usmanov, one of the people said.
“The state will have to get involved, albeit behind closed doors,” said Chris Weafer, chief strategist at UralSib Financial Corp. “The advantage of that for the state is that it will allow for an opportunity to push a resolution that suits its long-term interests.”
The fight for Norilsk flared up this year following a seven-month battle in 2008, when Deripaska sought to merge the nickel producer with RusAl, a deal Potanin opposed.

TITLE: Deripaska May Offer Assets for Strabag Stake
AUTHOR: By Anton Filatov and Bela Lyauv
PUBLISHER: Vedomosti
TEXT: MOSCOW — Oleg Deripaska does not want to lose his stake in Austrian construction firm Strabag, so he is willing to trade in his Russian assets, such as Transstroi and Glavmosstroi.
Deripaska’s Rasperia Trading bought a 30 percent stake in Strabag for 1.2 billion euros ($1.59 billion) in 2007. As a result of an initial public offering, that turned into 25 percent minus one share.
At the time, Deripaska was actively involved in infrastructure construction, in which the Austrian firm is particularly strong, and filled out his asset portfolio with Russian contractor Transstroi.
But the crisis ruined those plans: Most of his assets, including his stake in Strabag, were put up as collateral for loans and came under margin calls. Deripaska was bailed out by Strabag’s other shareholders — Raiffeisen/Uniqa Group and the family of Hans Peter Haselsteiner, the head of the holding — who lent him 500 million euros so as to retain him as a partner and hold onto its prospects in the Russian market.
Although the deadline for repayment of the loan was extended four times, Rasperia Trading was not able to repay the debt, and at the end of April 2009, Strabag shareholders took possession of the stake. Deripaska held onto a single share, two seats in the supervisory council and an option to buy back the original stake.
“We intend to exercise the option in accordance with the agreement with our partners,” a spokesman for Deripaska’s Basic Element said Monday.
According to Strabag’s financial reports, the option is valued at 19.25 euros ($25.46) per share, or 548.6 million euros for the whole stake. According to Monday’s share prices on the Viennese stock exchange, the same size stake was valued at 511 million euros.
The option expires on Oct. 15, and Rasperia Trading is already holding talks on exchanging Deripaska’s Russian assets for the Strabag stake, said a source close to the management of Deripaska’s Glavstroi. A source close to Strabag’s management confirmed the information. Transstroi and Glavmosstroi may also be included among the assets offered to Strabag shareholders, both sources said.
The talks are not yet completed and no concrete results have yet been reached, both sources said. Strabag shareholders were not available for comment Monday. Glavstroi spokesman Vitaly Korolev declined to comment, while executives at Transstroi said they were not aware of the talks.
Deripaska owns 100 percent of Transstroi and Glavstroi, which owns Glavmosstroi. Among Transstroi’s biggest projects is the new Zenit football stadium, the reconstruction of Sheremetyevo Airport and a loading port in Sochi’s Imperetinskaya Valley.
Strabag is one of a few foreign companies that has already worked in Russia for a long time. Although one of its main business directions is road construction, the company is better known here for its successful commercial real estate projects.
The quality of Strabag’s construction is much higher than that of many Russian companies, said Tatyana Palchikova, deputy CEO of Trest-1991.
Nevertheless, Strabag needs to strengthen its position in Russia. During the crisis, its orders dropped 25 percent, from 1.4 billion euros to 1 billion euros, while its total output fell more than 40 percent from 476 million euros in 2008 to 282 million euros last year.
“Theoretically, if Strabag becomes a shareholder of the Russian companies, it could influence decisions and bring its size to bear in the development of Transstroi and Glavmosstroi projects,” said Artyom Tsogoyev, managing partner of the Moscow Central Real Estate Exchange.
Mikhail Urinson, managing director of Alur, evaluated the deal ambivalently. This is an exchange of real assets for a noncontrolling stake in the company, he said, and this should interest Strabag most — it needs a lobbyist like Deripaska in Russia.
Last year was unsuccessful for the Austrian company: Renova-StroiGroup dismissed Strabag as general contractor for the Akademichesky project, and a multi-floored parking garage on Kozhevnicheskaya Ulitsa built by Strabag collapsed.

TITLE: Officials Trained to Nip Bribe Taking in the Bud
AUTHOR: By Anastasia Kornya and Maria Tsvetkova
PUBLISHER: Vedomosti
TEXT: MOSCOW — Officials who are to work in anti-corruption departments will undergo special training, which will focus on curtailing the appearance of new bribe-takers, rather than finding and punishing existing ones.
By the end of the year, about 500 officials are slated to go through a course in the Russian Academy of Civil Service to increase their qualifications for fighting corruption. This is being done in the framework of the national plan for countering corruption, said Mikhail Mizulin, first deputy director of the academy’s higher school of management.
The 36-hour training program is intended for managers and employees of new anti-corruption departments in the government, who will inspect income declarations as well as ensure that officials adhere to restrictions and inform their supervisors of attempted bribes.
President Dmitry Medvedev’s first order on the organization of such a course was given a year ago, but the government did nothing about it, a Kremlin official said. On June 29, Medvedev signed an order requiring the academy to start the course within three months.
Coordinating the program was not simple, the official said. The Kremlin insisted that the course participants be given specific skills in inspecting income declarations, but Russia has no one experienced in such training.
The curriculum includes 10 hours of lectures and 26 hours of practical work, Mizulin said. Throughout the training, officials will have to learn how to cooperate with the police, because reports of bribery attempts must be passed on to the Interior Ministry for investigation, he said.
The trainees must also receive skills in applied psychology — the academy has developed a method for determining personality types that would be more inclined toward corrupt activities.
The Kremlin official said Investigative Committee chairman Alexander Bastrykin and Audit Chamber chairman Sergei Stepashin were candidates for teaching the course, but that the final list of trainers was unknown.
The main goal of the course is not to teach civil servants to uncover and punish corruption, but to ensure that officials do not become corrupt, the source said. Trainees will be taught about criminal investigations only in the final classes, the source said.
The curriculum development is being coordinated by the civil service directorate and the Kremlin, Mizulin said. The classes should start in September.
In December, a report on the anti-corruption lessons will be presented to the presidium of the president’s Council on Fighting Corruption.

TITLE: Gazprom Delays Hinder Putin’s Plan
PUBLISHER: Bloomberg
TEXT: MOSCOW — Prime Minister Vladimir Putin’s plan to make Russia a global supplier of gas is being undermined by Gazprom’s project delays as Australia wins China contracts and U.S. supply surges.
Gazprom has put off investment decisions for liquefied natural gas projects, such as its Arctic Shtokman field. It has spent six years and counting to ponder an expansion to the $22 billion Sakhalin-2 project, Russia’s first LNG plant that started up last year.
As Russia delays, Exxon Mobil, Chevron and competing suppliers are locking up long-term deals with PetroChina from LNG projects in Australia and Southeast Asia. Royal Dutch Shell, Gazprom’s partner in Sakhalin, is seeking to expand developments to win a share of markets in China and India. It may be already too late, said Mikhail Korchemkin at East European Gas Analysis.
“The LNG market is developing too fast for Gazprom to catch up,” said Korchemkin, managing director at the consultancy. “Gazprom should rather worry about keeping its share in the European market.”
While Gazprom, the world’s biggest gas producer, supplies about a quarter of Europe’s gas needs, it has lost market share to Norway and Qatar, in part as LNG shipments to Europe rose 22 percent last year.
Shares in Gazprom have fallen 9 percent this year, compared with an 8 percent decline in the Bloomberg Europe Gas Index. Of 18 analysts tracking Gazprom, 16 rate it a “buy.”
Russia targets 25 percent of the world LNG market by mainly developing gas fields at Sakhalin-2, Shtokman and the Yamal Peninsula. In September, Putin hosted a meeting with heads of global energy companies to attract investment in Yamal, which means “end of the world” in the local Nenets language.
“There’s no chance of Gazprom getting 25 percent of the world LNG market,” said Keith Bainbridge, a partner in charge of gas at RS Platou in London, an offshore and shipping broker and investment bank. “LNG is now a global business.”
Gazprom would fare better by looking at buying an Australian project, Total’s stake in a Yemen venture, or maybe bidding for BP’s Tangguh LNG plant in Indonesia, given BP’s woes in the Gulf of Mexico, he said.
Gazprom plans to participate in LNG projects in the Middle East, Africa and Latin America, the company said in a response to questions, without giving further details.
It will need to compete for customers with Australia’s $37 billion Gorgon LNG project being developed by Chevron with Exxon and Shell. PetroChina agreed in August to buy 2.25 million tons annually from 2014, a contract worth about 50 billion Australian dollars ($44 billion).
In Papua New Guinea, Exxon is leading a $15 billion project, one of more than a dozen in the region targeting Asian buyers.
“Gazprom has ambitions, but competition and demand dynamics may have a significant impact on plans for presence in the U.S., the share of the European market and LNG sales,” Troika Dialog analyst Valery Nesterov said. “It will be very difficult to break into the market.”
Delays may cost Gazprom as much as $12 billion a year in missed sales of about 40 million tons of LNG, Nesterov estimates.
Global trade in LNG is growing as countries switch to cleaner-burning fuels to replace coal and oil. Technology developed about 40 years ago enabled the cooling of natural gas to a liquid for shipment by sea, opening up markets around the world that could not be reached by pipeline.
World LNG shipments rose 6 percent to 182 million tons in 2009, according to the International Group of Liquefied Natural Gas Importers.
Japan bought 35 percent of supply and South Korea 14 percent, the group said. China imported 3 percent of the total after purchases surged 70 percent. Production capacity is set to grow by more than 50 percent by 2013, the International Energy Agency said in June.
LNG exports from Australia rose 19 percent last year to 18 million tons. Qatar shipped 37 million tons, Malaysia 23 million tons and Indonesia 19 million tons.
Russia entered the LNG market with Sakhalin-2, which has a capacity of 9.6 million tons a year. It exported 5 million tons of LNG last year, according to the importers’ group.
Gazprom’s chief executive Alexei Miller said in February 2009 that the company would spend $45 billion to raise output of LNG to about 90 million tons a year by 2030.
Besides the competition Gazprom faces, increased LNG output and supply of U.S. shale gas extracted from rock have pushed down global gas prices. Benchmark U.S. gas prices have slumped 14 percent this year, following declines in the previous two years.
Against falling prices and more capacity coming online, Gazprom argues that there will be demand for its LNG in the market.
“Qatar has a moratorium for new LNG capacity construction until 2014, while production costs at mainly offshore projects in Australia are quite high,” Gazprom said in a response to e-mailed questions. New LNG importers such as Singapore and the Middle East will mean that there will be “enough room for everyone,” the company said.

TITLE: That ’70s Show in Russia
AUTHOR: By Aleh Tsyvinski and Sergei Guriev
TEXT: Can Russia escape the “resource curse” implied by high oil prices, or will it succumb to what we call a “70-80” scenario? That is the question confronting Russians today, and we fear that their fate will be the “70-80” scenario. If oil prices remain at $70 to $80 per barrel, Russia is likely to relive key features of the Brezhnev era of the 1970s and 1980s — with a stagnating economy and 70 percent to 80 percent approval ratings for its political leaders.
The resource curse means, of course, that Russian elites will prefer to postpone restructuring the economy and modernizing the country’s political and economic institutions. This will undermine economic performance, making it very unlikely that Russia will catch up with advanced economies in the next 10 to 15 years, as officials promise.
Fast and sustainable economic growth requires the rule of law; accountable, meritocratic and noncorrupt bureaucrats; protection of property rights; contract enforcement; and competitive markets. Such institutions are difficult to build in every society. In Russia, the task is especially problematic, because the ruling elite’s interests run counter to undertaking it.
In post-crisis Russia, the resource curse is reinforced by two factors. First, a massive renationalization since 2004 has left state-owned companies once again controlling the commanding heights of the economy. These firms have no interest in developing modern institutions that protect private property and promote the rule of law. Second, Russia’s high degree of economic inequality sustains the majority’s preference for redistribution rather than private entrepreneurship.
Russia’s leaders acknowledge the need for modernization and pay it frequent lip service, as is evidenced by President Dmitry Medvedev’s manifesto “Go, Russia!” But the incentives to escape the resource trap are weakened by the overwhelming importance of the resource rents to the wider political elite.
When the economy was near collapse during the recent crisis, we thought that the government would recognize the need to push ahead with radical reforms that would eventually lead to a diverse, de-centralized and fast-growing economy. But, while stimulus policies were mostly effective in dealing with the immediate crisis, they did not address the long-term issues that impede growth.
Still, the government continues to tout plans to boost the economy. Vertical industrial policy, horizontal industrial policy, investment in education — all have been tried in the last 10 years. Yet Russia’s public institutions remain as weak as ever (for example, corruption is as prevalent as it was 10 years ago, if not more so), and the economy is no less dependent on commodity prices.
Today’s economic silver bullet is an innovation city in Skolkovo that the government hopes will spur inflows of modern technology. But there are no magic recipes for modernization. Moreover, there is no need to reinvent the wheel. A comprehensive and consistent reform plan was already included in then-President Vladimir Putin’s own economic agenda at the beginning of his first term in 2000.
The so-called Gref program (named after former Economic Development and Trade Minister German Gref) foresaw many of the reforms that are vitally needed — privatization, deregulation, accession to the World Trade Organization and reform of the government, natural monopolies and social security. Many of these reforms are outlined in the current government’s own “Long-Term Strategy for 2020.” The problem is that — as with the Gref program in 2000— the strategy is unlikely to be fully implemented, owing to the same old weak incentives.
Even the recently announced privatization of noncontrolling stakes in the largest state-owned firms — while timely and laudable — will not create an irreversible commitment to reform. So far, the government does not want to let control over these firms get into private hands. Hence, the sales that Prime Minister Putin announced will not increase the demand for pro-market institutions. 
By contrast, the “70-80” scenario seems increasingly likely. In June, during the St. Petersburg International Economic Forum, participants in two sessions — Russian government and business leaders, as well as influential foreign players — were asked about the future of Russia’s economy. The results were drearily similar. In one session, 61 percent of participants foresaw stagnation in the next two to five years (33 percent predicted growth and 5 percent expected a crisis). In the other session, 55 percent of participants foresaw stagnation in the next 10 years (with 41 percent projecting growth and 4 percent expecting collapse).
The factors that drove the Putin era of rapid economic growth — high and rising oil prices, cheap labor, and unused production capacity — are all exhausted. Russia will thus be forced to start spending the reserves that saved the economy in the recent crisis. The “70-80” scenario will preserve the status quo, but eventually the economy will reach a dead end, at which point the only choice will be genuine economic reform or decline and dangerous civil disorder.

Aleh Tsyvinski is professor of economics at Yale University, and Sergei Guriev is rector of the New Economic School in Moscow. (c) Project Syndicate

TITLE: Putin Sang Songs While Russia Burned
AUTHOR: By Yulia Latynina
TEXT: Since the first wildfires started a month ago, 125,000 hectares of Russia’s forest have been destroyed in 17 regions, and 40 people have died.
Russia’s statistics on casualties from fires have always differed drastically from those in the West. For example, four firefighters died during wildfires in Washington state in 2001. Nine firefighters died in Colorado in 2002. Eleven firefighters died during Spain’s fires of 2005. Only one firefighter has died during this summer’s fires in Russia.
In developed countries, citizens don’t perish in fires. Firefighters perish. In Russia, it is directly the opposite, and there is a very good reason for this. In so many cases, there are no firefighters to put out the fires. Take, for example, the village of Verkhnyaya Vereya in the Nizhny Novgorod region, where all of its 341 houses burned to the ground and seven people died. There was no fire station in the village, and the two firefighting vehicles on watch drove the other way when they were called to duty.
People don’t die this way in Europe or the United States. This is how people die in Zambia and Zimbabwe.
Prime Minister Vladimir Putin visited Verkhnyaya Vereya. While wearing a neatly pressed button-down shirt, he promised to severely punish bureaucrats who did not properly fight the fires. In reality, there is really only one bureaucrat who is responsible for this tragedy — Putin himself. After all, it was Putin who signed the Forest Code in 2007. The code placed the responsibility for defending forestlands on those who had the rights to use them. What an ingenious idea. This means that the Forest Code allows the Khimki forest to be “protected” by those who are now cutting it down.
There were two main groups who lobbied Putin to pass the Forest Code: paper mill owners — one of the biggest being Oleg Deripaska — and real estate developers.
Independent analysts and environmentalists heavily criticized the Forest Code. They predicted several years ago that the code would inevitably result in an increase in wildfires. Even the most loyal United Russia members from heavily forested regions opposed the code, but it was shoved through the State Duma under strong pressure from Putin’s presidential administration.
Although Russia has been burning for a month, the army was ordered to join the firefighting battle only several days ago. Why was the army not called up three weeks ago? Because there is no fundamental system of controlling and managing the country. Putin decides everything in Russia, and he was too busy with other things during the first three weeks of the fires — for example, doing photo ops with bikers in Crimea or singing songs with the 10 spies who recently returned from captivity in U.S. detention centers.
In the modern world, there are no natural disasters but only social ones. For example, the number of victims in an earthquake depends less on its magnitude than on how effectively the state responds to the disaster. The Haiti earthquake is a case in point. And what is true for an earthquake is doubly true for forest fires.
In 2008, there were 200,386 fires in which 15,165 people died in Russia. In the United States for the same time period, there were 1,451,000 fires in which 3,320 people died. Here are the conclusions that can be drawn from these statistics: First, 99 percent of all fires in Russia are not registered. Second, the number of deaths from fires per 1,000 people is 10 times higher in Russia than in the United States.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

TITLE: Reinventing art
AUTHOR: By Kristina Aleksandrova
PUBLISHER: The St. Petersburg Times
TEXT: More than 100 artists from 22 countries will exhibit their work at the Manezh Central Exhibition Hall from Saturday for the 18th Festival of Experimental Art. 
This time, the organizers have decided to focus visitors’ attention on video art. 
“Every year we try to focus on one specific type of art, because we want to demonstrate global trends in art,” said Larisa Skobkina, the festival’s curator. 
“For example, we have already held festivals dedicated to installations and photography. Today, video art is extremely popular; it features in all the leading exhibitions and festivals of modern art. Some artists are even abandoning traditional art forms and starting to express themselves using video,” she said.
Four video artists from Italy will show their films. Torino video festival prize-winner Bena Gayan Maris will show his philosophical film “The Purpose,” Annamaria Pugliese will present “How far do you see?” and Alberto Magrin will show his “Concert.” 
The captivating video “The Mirror” by fellow Italian artist Francesca Fini is an unusual take on “The Picture of Dorian Gray” and the Greek myth about Narcissus. The heroine is an undressed woman who finds a mirror ball. She admires herself in the looking glass. While she is playing, her body becomes covered with small pieces of glass, until finally she dies. 
Another video by the same artist is “Cry me.” Described by Fini as “a radiography of the soul,” it was performed by the artist herself. She holds a screen in front of herself, and viewers see an animation showing the author’s alter-ego.
“Not everybody will understand this form of art, because viewers have to be prepared to interpret it,” said Skobkina. “Of course, these films will seem strange to some visitors. But our objective is to teach people to appreciate modern art.” 
According to Skobkina, there is a lamentable lack of homegrown talent using the medium of video art. 
“Unfortunately, video art isn’t popular in our country at the moment. Only one artist from Russia will be exhibited,” she said.
The organizers have prepared a broad performance program. The Oslo artist Ane Lan depicts female suffering in his work “Pacto feminium” (“The art of suffering,”) which consists of seven photos. Lan, dressed as a woman, shows difficult situations every woman can face: rape, prostitution, mental illness, marriage or the loss of a child. Lan will also show an unusual musical performance titled “Sirkel,” accompanied by musicians. 
The main aim of performance art is to drag the spectator into the action and liberate the audience. Monica Kokh’s dance project “VIS-A-VIS” was launched at the festival in 2008 and has already shown its program in the U.K., Austria, Bosnia and Herzegovina, Slovakia and Hungary. This year, master classes in dance have been organized, which the artists refer to as “open rehearsals.” The small hall of the Manezh will also host famous dancers from Switzerland, Italy and Finland as well as from St. Petersburg, who will hold a series of master classes.
St. Petersburg dancer Lyutsiya Khabibullina will give visitors the chance to take part in her interactive audiovisual performance-installation “Interpolation.” 
In contrast to the video artists, there will be many performers and dancers from Russia. Marina Konovalova will “write letters” to Chekhov during her dance “Three Sisters 120 Years Later,” and three Russian theaters: Plantation, Forest House and Performance Laboratory have prepared a joint appearance. 
The fact that it is a festival of experimental art does not mean that traditional art forms are excluded. The exhibition will comprise a large number of graphic works, paintings and installations by artists from Turkey, Germany, France, Iraq, Finland, Canada and other countries.

The Festival of Experimental Art runs from Saturday through Aug. 16 at the Manezh Central Exhibition Hall, 
1 St. Isaac’s Square. Tel: 314 8859. 
M: Sadovaya/Sennaya Ploshchad.

TITLE: Chernov’s choice
TEXT: Musicians and artists are demanding the immediate release of <strong>Noize MC</strong>, a hugely popular rapper sentenced to 10 days in prison after performing an anti-police song at a heavily-policed open-air festival in Volgograd. The judge found the musician, whose real name is Ivan Alexeyev, guilty of the charge of disorderly behavior.
Alexeyev performed the song and described policemen, who were present in large numbers at the show, as “beautiful animals with red emblems” after a police officer tried to stop a stage routine in which the audience was urged to throw coins into a hat, accusing the band of panhandling. 
Ironically, earlier this year Alexeyev made the list of the 50 richest Russian celebrities compiled by the Russian edition of Forbes magazine by earning $900,000 during the preceding 12 months.
Mikhail Borzykin of local band Televizor, who initiated the letter, Vadim Kurylyov of the Electric Guerillas, Tequilajazzz’s former frontman Yevgeny Fyodorov, Alexei Nikonov of Posledniye Tanki v Parizhe (PTVP) and other musicians, artists and journalists signed the letter, which was published in ru_borzykin, Borzykin’s community on Livejournal.com, on Wednesday. 
Akvarium’s Boris Grebenshchikov and Moscow band Center’s Vasily Shumov joined them on Thursday.
The letter, which had gathered 400 signatures by Thursday, also calls for the policemen responsible for the musician’s arrest to be punished and for the police to be banned from interfering in cultural events, pointing out that censorship is forbidden by the Russian constitution.
“I performed with him a month ago, I am familiar with his work and after watching the footage of this concert I came to the conclusion that this can’t be ignored,” Borzykin said by phone Thursday.
“It’s unique; I don’t remember any Russian musicians being given such sentences for behavior at a concert. From what I saw on the video, I realized it was a provocation on the part of the police.”
The person illustrating the song called ‘Throw Your Money in My Hat” by going among the audience with a hat didn’t cause any objections in any other city, Borzykin said.
He suggested Alexeyev could have been targeted for his other songs that are critical of the police and corrupt officials.
“Maybe he uses bad language in some songs, but it’s not a big deal — because the amount of bad language that we hear from policemen on a daily basis is way more than we could ever hear from the mouth of a musician,” Borzykin said.
“It has got to the stage where even police chiefs in provinces make decisions about what artists are allowed to sing or say and how they should act at their own concerts.”
Borzykin said he wanted to draw attention to the incident.
“The precedent must be visible, otherwise we’ll have to authorize our lyrics before every concert like we had to in the 1980s.”
<em>— By Sergey Chernov</em>

TITLE: Death masks give poets new voice
AUTHOR: By Kristina Aleksandrova
PUBLISHER: The St. Petersburg Times
TEXT: The death masks taken from some of Russia’s most famous poets are the centerpiece of the Language of Masks exhibition that opened Friday at Loft Project Etazhi. 
Posthumous portraits of Alexander Pushkin, Vladimir Mayakovsky and Sergei Yesenin have been created by Alexei Pakhomov, a young artist from St. Petersburg. 
“These three photographs are really huge; each one is about 2x4 meters, and this was done deliberately,” said Nikolai Kononov, the exhibition’s curator. “The aim is to exert influence on people’s emotions by giving them a chance to feel something I call ‘essence.’ It is non-material substance left after the death of the poet.” 
To heighten the effect, the poets’ voices will sound in the gallery. Composer Vladimir Rannev has created an original musical composition to which the voices of the 20th-century poets Mayakovsky and Yesenin have been applied. Naturally, there is no recording of Pushkin, who died in 1837, but Rannev’s composition imitates the rhythm of his poems, thus turning a melody into a poetic reference.
The visualization of language is a running theme at the exhibition, where visitors will also see paintings of letters from the alphabet for the deaf. According to Pakhomov, the alphabet is also a mask that people use to communicate with each other.
It is not the first time that the artist has used the death masks of writers for inspiration. Last year he created photographs of Anna Akhmatova’s death mask to mark the 120th anniversary of the poet’s birth. 
“Masks taken from dead people are artifacts of great emotional power,” said Pakhomov. “They always attract people’s attention. But I don’t want to shock visitors or make them fear death. I want to give people a chance to understand who the poet was. Now such names as Pushkin or Mayakovsky are brands. What do these surnames stand for? I want my audience to see,” he said.
Even after the death of a person, his or her mask can tell a lot about his or her personality and character. If images of three celebrated poets aren’t enough to unravel the language of the mask, visitors to Formula Gallery can watch a film about the death masks of other famous people, which will be shown at the gallery.
“This exhibition is about looking for the writer beyond his works, beyond all stereotypes and standards,” said Kononov. “I think every person will understand this form of art. These poets are dead and mute, but they need to say something, and we urge people to talk with them, to search for a special language in which to communicate.”
As well as a description of the items on display, the exhibition catalogue contains a history of making death masks. The practice started in Ancient Egypt, where the masks were made of gold. In Europe such technology was used to identify unknown corpses. Later, the tradition of commemorating famous people appeared. 
“In this way, a dead person can be worshiped forever,” said Kononov. 
Today, according to Pakhomov, not everyone can remember even a line from poems by famous authors, so the Language of Masks exhibition is “a real appeal to poetry.”

The Language of Masks runs through Sept. 30 at the Formula Gallery in Loft Project Etazhi, 74 Ligovsky Prospekt. Tel: 339 9836. M: Ligovsky Prospekt.

TITLE: Keeping It Simple
AUTHOR: By Tobias Kuehne
PUBLISHER: The St. Petersburg Times
TEXT: Flanked by the flashy signs of Carl’s Junior and a hairdresser’s salon, Limoncello can be easy to miss. We only noticed the restaurant when a jubilant traffic policeman caught our attention by signaling a reckless driver to come to a halt in front of its inconspicuous sign.
The first impression conveyed by Limoncello is one of simplicity. A geometric, rectangular main hall, decorated in earthen, non-invasive colors, can seat 60 around a dozen rustic square tables, which were evenly and pragmatically placed. Only the white tiled wall on the far end from the entrance and a bright green and red colored bench attracted more than a fleeting glance. The main room’s four tall windows were topped by Romanic arches, and abundantly decorated with flowerpots and wooden boxes containing wine bottles from France, Argentina and, unsurprisingly, Italy.
To escape the rather dim lighting of the bar area in the back (providing seating for another 60), we seated ourselves on the bright bench next to a Romanic window, which gave us a full view onto busy Liteiny Prospekt — where the traffic policeman proceeded to take down the hapless driver’s data for a full half hour — and the deserted main room. From our corner spot, we formed our second impression of Limoncello, which was one of slight bemusement at its liberal mixture of styles: Chili peppers and lemons, drawn in chalk on the walls and ceiling, recalled salsa sauce and tequila shots, while dim submarine lamps, suspended on meters of black wire, were reminiscent of an alternative art studio.
The potpourri of styles continued with the obstinately inflexible folding menu (it took a fully loaded plate to tame its expansive tendencies), which, alongside the Italian staples of pizza and pasta, offered dishes ranging from Greek salad to burgers to hot breakfast with scrambled eggs. Italian specialties such as gnocchi, lasagna and ice cream, on the other hand, were dearly missed.
Nonetheless, the appetizers raised high expectations. The Parma salad (305 rubles, $10) included a pleasantly subtle dressing on the lettuce, which was just enough to counterbalance the Parmesan’s natural dryness — all of which delicately set the stage for the excellent Parma ham to unfold its smoky flavor. The “Italian” tortilla (another instance of a nonchalant mixture of culinary dominions; 189 rubles, $6.20) — a folded quesadilla with diced chicken breast, lettuce, mushroom sauce and a small slice of onion, topped with a dab of mozzarella — was equally engaging.
The greatest asset of Limoncello is its service. The waitresses, whose white-green-red-yellow-checkered shirts and dark brown aprons matched both our colorful bench and the restaurant’s overall eccentric ambiance, were accommodating, affable and responsive. Even as the restaurant’s attendance increased during the course of the evening, orders were taken promptly, and food was served swiftly.
The main courses were decent, but not up to par with the starters. The pasta salmone (the most expensive main course on the democratically-priced menu at 365 rubles, $12), advertised its “tasty pink creamy sauce with salmon, shrimp, tomatoes, peppers, red onion, Parmesan, cheese, oregano and basil” — yet the sauce never quite got the rigatoni noodles off the ground. Every now and then, a stray shrimp would surface and lighten up the taste, but in general they were scant. The pepperoni pizza (315 rubles, $10.25) was passable, but below the standard to be expected at an Italian restaurant. It was topped with rich cheese and well-seasoned pepperoni that left a zingy, spicy aftertaste, but it was almost entirely bereft of tomato sauce, which allowed the abounding grease to monopolize the flavor.
Given the emphasis that Limoncello’s d?cor places on wine, it was no surprise to find an ample range of choices in the beverage menu. The price for a glass hovered around 160 rubles ($5.20), and our selections did not harbor any surprises. Our visit was rounded off by a decent tiramisu (135 rubles, $4.40).

TITLE: Talk of the town
TEXT: The summer always brings an influx of stars from around the world to St. Petersburg, who if they’re not treading the boards of the Mariinsky or giving rain-soaked performances on Palace Square, are no doubt simply eager to see what all the fuss is about. 
Last month saw an “incognito” visit to the city by Hollywood dinosaur Michael Douglas and his buxom Welsh wife Catherine Zeta Jones. Inevitably, the couple’s attempts to remain incognito were about at successful as that of Peter the Great when the nearly seven-foot-tall young tsar embarked on his Grand Tour of Europe under the modest moniker of Peter Romanov, accompanied by a retinue of hundreds.
Lifenews.ru reported that the glamorous couple strolled St. Petersburg unaccompanied by bodyguards, only to find fans waiting for them in the hotel lobby upon their return. At this point, the tabloid reported, Zeta Jones “created a scandal,” shouting for hotel security, while Douglas remained cool as a cucumber, simply picking up a copy of every Hollywood star’s favorite newspaper — The St. Petersburg Times — to take back to the hotel room. Lest anyone have any doubts, Lifenews ran a photo showing the veteran actor clutching the newspaper in his hand.
Hot on the heels of the Hollywood couple came a representative of a somewhat younger generation of film actors — Harry Potter star Daniel Radcliffe, who celebrated his 21st birthday while in the city. 
Radcliffe was quoted by the Daily Mail as describing the city as  “probably the most beautiful, the most incredible, wonderful place I’ve ever been in my life.”
Ginza Project restaurant group sent out a jubilant press release accompanied by a photo of the British actor pictured in the group’s swanky Tsar restaurant on Sadovaya Ulitsa, where he apparently entered into the spirit of things by ordering blini with caviar, borshch and venison with cloudberry sauce.  
In other restaurant news, the Grand Hotel Europe has a new head chef at the helm of its seven restaurants. Marco Alban has worked in the Maldives, Peru, France, Switzerland and Portugal, as well as his native Italy. The chef is interested in finding new ingredients and rediscovering those that have been forgotten, the hotel’s press service announced, adding that he enjoys devising new ways in which to use them.
Alban will run the hotel’s restaurants, which include the swanky L’Europe, under his witty motto of “fusion without confusion.”
It is a commonly heard complaint among the hardcore minority of early risers in St. Petersburg that it is difficult to get a decent breakfast before 11 a.m. Now BarAnka — another Ginza establishment, located on Ulitsa Chapaeva on the Petrograd Side — is serving a breakfast menu from 8 to 11 a.m., or 1 p.m. at weekends. The morning meals on offer include cream cheese and salmon omelette, Croque Madame and an assortment of porridge — enough reason to think about leaving the house that little bit earlier?

Send your talk of the town to tot@sptimes.ru

TITLE: Ahmadinejad Survives ‘Firecracker’ Attack
AUTHOR: By Hiedeh Farmani
PUBLISHER: Agence France Presse
TEXT: TEHRAN — Iranian President Mahmoud Ahmadinejad was unhurt on Wednesday after an explosive device, officially described as a firecracker, went off near his motorcade.
Ahmadinejad was on his way to a sports arena to make a speech in Hamedan, south of the capital, when the explosion occurred.
Conservative web site Khabaronline, the first source to report the incident, initially said a hand grenade was thrown at the hardliner’s motorcade but later in the day dropped “grenade” in its report and used the word “firecracker” instead.
“This morning a hand grenade exploded next to a vehicle carrying reporters accompanying the president,” the web site, close to parliament speaker Ali Larijani, said first.
“Ahmadinejad’s car was 100 meters  away and he was not hurt,” it said, adding that the alleged attacker was detained.
Iran’s Mehr news agency quoted witnesses as saying a “hand-made noise bomb exploded a far distance from the president’s car.”
“Nobody was hurt and several people have been arrested,” it said.
Ahmadinejad later delivered his speech, making no reference to the incident.
An official in the president’s media office told AFP the explosion was from a “firecracker.”
The ISNA and ILNA news agencies also said the blast was caused by a “firecracker,” while Fars news agency said a “hand-made grenade” had been thrown at the motorcade.
“After the president’s motorcade passed someone threw a hand-made grenade at the vehicles behind it,” Fars said.
The agency used the Farsi word “narenjak,” which means both a hand grenade of the military sort and a noisy home-made firecracker, the size of a tennis ball, that Iranians set off at festive events such as the New Year fire festival.
“Security agents arrested the person who threw it,” Fars said, adding that the incident had “irritated” well-wishers.
Iran’s official news agency IRNA said the blast was caused by a “harmless firecracker that a youth set off as a sign of joy.”
“Unfortunately some domestic media described it as a grenade or hand-made grenade which has caused ambiguities,” IRNA said.
“No-one has been hurt and it caused no damage,” an unnamed official at Hamedan governor’s office told the agency.
The incident came only two days after Ahmadinejad repeated his claim that Iran’s arch-foe Israel wants him dead.
“Stupid Zionists have hired mercenaries to assassinate me,” Ahmadinejad said in a televised speech to expatriate Iranians on Monday. 
On Tuesday, Iran’s foreign ministry spokesman also insisted that the hardliner is on Israel’s hit list. 
“It is quite evident that the Zionist forces are under state orders to assassinate different figures in the Islamic world,” Ramin Mehmanparast told reporters. 
“They may dare in their mind to assassinate Islamic world figures as soon as they have access to them and one of the greatest enemies of this regime is Dr. Ahmadinejad.” 
The animosity between Iran and Israel has steadily worsened under the presidency of Ahmadinejad, who has infuriated the world powers by dismissing the Holocaust as a “myth.” 
Israel too has never ruled out a military strike against Iran to stop its nuclear program. Iran does not acknowledge Israel.

TITLE: New Missile May Alter Status Quo In Pacific
AUTHOR: By Eric Talmadge
PUBLISHER: The Associated Press
TEXT: ABOARD THE USS GEORGE WASHINGTON — Nothing projects U.S. global air and sea power more vividly than supercarriers. Bristling with fighter jets that can reach deep into even landlocked trouble zones, America’s virtually invincible carrier fleet has long enforced its dominance of the high seas.
China may soon put an end to that. U.S. naval planners are scrambling to deal with what analysts say is a game-changing weapon being developed by China — an unprecedented carrier-killing missile called the Dong Feng 21D that could be launched from land with enough accuracy to penetrate the defenses of even the most advanced moving aircraft carrier at a distance of more than 1,500 kilometers.
Analysts say final testing of the missile could come as soon as the end of this year, though questions remain about how fast China will be able to perfect its accuracy to the level needed to threaten a moving carrier at sea.
The weapon, a version of which was displayed last year in a Chinese military parade, could revolutionize China’s role in the Pacific balance of power, seriously weakening Washington’s ability to intervene in any potential conflict over Taiwan or North Korea. It could also deny U.S. ships safe access to international waters near China’s 18,000-kilometer-long coastline.
While a nuclear bomb could theoretically sink a carrier, assuming its user was willing to raise the stakes to atomic levels, the conventionally-armed Dong Feng 21D’s uniqueness is in its ability to hit a powerfully defended moving target with pin-point precision.
The Chinese Defense Ministry did not immediately respond to a request for a comment.
Funded by annual double-digit increases in the defense budget for almost every year of the past two decades, the Chinese navy has become Asia’s largest and has expanded beyond its traditional mission of retaking Taiwan to push its sphere of influence deeper into the Pacific and protect vital maritime trade routes.
“The Navy has long had to fear carrier-killing capabilities,” said Patrick Cronin, senior director of the Asia-Pacific Security Program at the nonpartisan, Washington-based Center for a New American Security.”
Setting the stage for a possible conflict, Beijing has grown increasingly vocal in its demands for the U.S. to stay away from the wide swaths of ocean — covering much of the Yellow, East and South China seas — where it claims exclusivity.

TITLE: South Korea Launches Drills
AUTHOR: By Jin-Man Lee
PUBLISHER: The Associated Press
TEXT: ABOARD THE ROK DOKDO — South Korean troops fired artillery and dropped sonar buoys into the Yellow Sea as naval drills kicked off Thursday near the spot where a warship sank four months ago.
Some 4,500 South Korean troops aboard more than 20 ships and submarines as well as about 50 aircraft were mobilized to take part in the five days of naval exercises off the west coast, including spots near the two Koreas’ maritime border, the Joint Chiefs of Staff said.
North Korea called the drills a military provocation that threatened to re-ignite war on the Korean peninsula.
“If the puppet warmongers dare ignite a war, [North Korea] will mercilessly destroy the provokers and their stronghold by mobilizing most powerful war tactics and offensive means beyond imagination,” the ruling Committee for the Peaceful Reunification of the Fatherland said in a statement carried by North Korea’s official Korean Central News Agency.
KCNA reiterated the committee’s message in a separate report later Thursday, warning North Korea will retaliate at “even the slightest sign of attack.”
Soldiers aboard the 14,000-ton ROK Dokdo, an amphibious landing ship, patrolled the deck as Lynx helicopters dropped sonar devices into the sea in search of enemy submarines. A 1,200-ton frigate remained on standby, ready to bomb the target.
The fleet dispatched for the exercises also include three 1,800-ton submarines, a 4,500-ton destroyer, and some 50 fighter jets, Commander Won Hyung-sik of the Joint Chiefs of Staff said in Seoul.
The drills come just weeks after South Korea’s joint military exercises with the U.S. off the east coast — maneuvers held in response to the deadly March sinking of the Cheonan warship, which killed 46 South Korean sailors.
A five-nation team of investigators concluded in May that a North Korean torpedo fired from a submarine sank the 1,200-ton Cheonan as the warship carried out routine surveillance. North Korea denied sinking the ship.
The waters off the west coast have been the site of several naval clashes between the two Koreas. The three-year Korean War ended in an armistice in 1953, but North Korea disputes the western maritime border unilaterally drawn by the United Nations.
North and South have engaged in three bloody battles near the line, most recently in November 2009.
Pyongyang warned earlier in the week it would “counter the reckless naval firing projected by the group of traitors with strong physical retaliation” and advised civilian ships to stay away from the maritime border.
The North also threatened to respond to last month’s South Korea-U.S. military exercises with “nuclear deterrence” but South Korean military officials said there was no sign of unusual North Korean military activity.

TITLE: In Historic Move, U.S. Prepares To Attend Hiroshima Memorial
AUTHOR: By Eric Talmadge
PUBLISHER: The Associated Press
TEXT: HIROSHIMA, Japan — The site of the world’s first atomic attack swarmed with tens of thousands of people Thursday as Hiroshima prepared for a memorial that will for the first time have representatives from the United States and other major nuclear powers.
Washington’s decision to attend the 65th anniversary event on Friday has been welcomed by Japan’s government, but has generated complex feelings among some Japanese who see the bombing as unjustified and want the United States to apologize.
“Americans think that the bombing was reasonable because it speeded up the end of the war. They try to see it in a positive way,” Naomi Sawa, a 69-year-old former teacher, said after paying her respects to the dead. “But we were devastated.”
About 140,000 people were killed or died within months when an American B-29 bombed Hiroshima on Aug. 6, 1945. Three days later, about 80,000 people died after the United States attacked Nagasaki.
Japan surrendered on Aug. 15, ending World War II.
Concerns that attending the ceremony — an emotional event beginning with the offering of water to the dead and the ringing of a bell to soothe their souls — would reopen old wounds had until this year kept the U.S. away.
Former President Jimmy Carter visited Hiroshima’s Peace Museum in 1984, after he was out of office. The highest-ranking American to visit while in office is House Speaker Nancy Pelosi, who went in 2008.
Neither went for the annual memorial.
But to gain wider attendance, Hiroshima has taken great pains to ensure that the memorial will be a forward-looking event, a key to getting Washington to participate. Japanese officials said it is important to use the anniversary as a chance to push nuclear disarmament, not revisit history.
That message appears to have resonated.
Friday’s memorial is to be the largest gathering yet, with representatives from 75 countries and United Nations Secretary-General Ban Ki-moon. John Roos, the ambassador to Japan, will represent the U.S.
French and British dignitaries were to join for the first time as well.
The presence of the U.S. has been hailed by officials in Hiroshima and Tokyo as a breakthrough and a sign of President Barack Obama’s desire to push ahead with his ambitious goal of creating a world without nuclear weapons.
“We believe the attendance of the nuclear powers will bolster a global desire to abolish nuclear weapons,” Hiroshima Mayor Tadatoshi Akiba said in a statement.