Russia 110706

Basic Political Developments Itar-Tass news digest for Wednesday, July 6 : 1.

o MOSCOW — Russian President Dmitry Medvedev gave instructions after a recent meeting for the run-up to an APEC summit in 2012 in Vladivostok, the Russian presidential press service reported on Wednesday. The document obliges the Defence Ministry to pass the lands in the ministry possession from federal to the Primorsky Territory’s state property and to Vladivostok’s municipal property to build summit facilities there.

o MOSCOW — A criminal case was opened against the commander and an assistant commander of the 102nd ammunition storage in Udmurtia, where the ammunition blasts went off, senior aide to the military prosecutor in the Central Military District Sergei Bogomolov told Itar-Tass on Wednesday.

o ST. PETERSBURG – Director of Russia’s Federal Security Service (FSB) Alexander Bortnikov has offered his counterparts from other countries to create a joint expert working group for the exchange of information on possible terrorist threats in the period of preparations and holding of the Olympic Games-2014 in Sochi.

o MOSCOW — An editor-in-chief of the local edition of the Moscow-based Moskovsky Komsomolets newspaper was been detained in Russia’s republic of Yakutia for corrupt business practices in respect of judges of Yakutia’s Supreme Court, a spokesman for the Russian Investigations Committee told Itar-Tass on Wednesday. A criminal case was opened against Igor Grishchenko on bribery charges, the spokesman said.

o MOSCOW — The State Duma, lower house of the parliament, will examine in the first reading a bill on lowering the passing barrier from seven to five percent at federal general elections. An appropriate initiative was put forth by the Russian president. The new bill “cuts from seven to five percent the minimum percentage of votes that is necessary to win for a list of candidates at elections to the State Duma to participate in the distribution of seats”. This rule is suggested to be applied for elections of the seventh and subsequent State Dumas.

o SOCHI — Defence Minister Anatoly Serdyukov on Wednesday will chair the 60th session of the Council of CIS Defence Ministers, a spokeswoman for the defence minister said. According to Irina Kovalchuk, “the session will consider more than 20 issues of cooperation between defence ministries of the CIS countries, including ways to implement the concept of military cooperation between the CIS countries till the year 2015.”

o MOSCOW — The Coordination Council of the heads of competent agencies on countering illicit drug trafficking of member states of the

Collective Security Treaty Organisation (CSTO) will sum up the results of joint work in Yerevan. Russian head of the Federal Drug Control Service Viktor Ivanov delivered a report on the results of the anti-drug operation “Canal-West”, Itar-Tass learnt from CSTO press secretary Vladimir Zainetdinov.

o NARYAN-MAR — The meeting of the Russian Marine Collegium, chaired by Deputy Prime Minister Sergei Ivanov, will discuss on Wednesday domestication of the Arctic and boosting shipments along the Northern Sea Route. The collegium told Itar-Tass that domestication of the Arctic would be the first question under discussion.

o MOSCOW — Russian and Armenian foreign ministers – Sergei Lavrov and Edvard Nalbandyan – will discuss on Wednesday approaches to a settlement of the Nagorno-Karabakh conflict as well expansion of trade and economic relations in Moscow. The talks of the foreign ministers will be held in the context of the tripartite meeting of the presidents of Azerbaijan, Armenia and Russia, held in Kazan on June 24. Such talks have been already held seven times over the past two years.

o YEREVAN — The 10th meeting of the Coordination Council of the heads of anti-drug agencies of CSTO member states will examine here pressing issues of struggle against illicit drug trafficking. The meeting will be attended by the organisation’s secretary-general Nikolai Bordyuzha. The chairman of the Coordination Council and director of the Russian Federal Service of control over drug trafficking Viktor Ivanov will deliver a report on the results of the local anti-drug operation “Canal-West”.

o CHISINAU — President of the European Council Herman Van Rompuy starts a visit to Moldova on Wednesday where he will inspect progress in reforms, conducted for the purpose of integration into the European community. He will hold talks with acting President and parliament speaker Marian Lupu and Premier Vlad Filat.

o KAZAN — Kazan, the capital city of Russia’s republic of Tatarstan, hosts an international conference of Shanghai Cooperation Organization (SCO) member countries dedicated to problems of the creation of a transport corridor that will link Europe and Western China, and its role in SCO integration processes, the press office of the republican ministry of transport told Itar-Tass on Wednesday.

o STRASBOURG — EU supreme representative for foreign affairs and security policy Catherine Ashton will make a statement at the European Parliament session on Wednesday on the coming general elections in Russia. The baroness will also describe deputies the situation in North African countries, including Libya.

o MOSCOW — Russia will for the first time take part in the Brunei International Defence Exhibition (BRIDEX-2011) that opens in Bandar Seri Begawan on Wednesday, a spokesman for the Russian federal service for

military and technical cooperation told Itar-Tass. “The exhibition specializes in defence-related hardware, such as armored vehicles, tanks, artillery, missile defence systems, engineering and sapper equipment, etc.,” the spokesman said.

o ASTANA – Kazakhstan marks the Day of the Capital City and birthday of its President Nursultan Nazarbayev, who proposed to move the country’s capital from Almaty to Astana.

o MOSCOW — A criminal case was opened over a crash landing of a Mi-8 helicopter in Russia’s Siberian Irkutsk region, a spokesman for the East Siberian transport investigation administration of the Russian Investigations Committee said on Wednesday.

o MAKHACHKALA — A supposed militant who opened gunfire at police was killed in the Khasavyurt district of Russia’s North Caucasian republic of Dagestan, a spokesman for Dagestan’s administration of the Russian Investigations Committee told Itar-Tass on Wednesday. Policemen received no wounds.

o MAKHACHKALA — A gunman having two powerful home-made explosive devices was detained overnight near the settlement of Kakashura in Russia’s North Caucasian republic of Dagestan, a source in the republic’s interior ministry told Itar-Tass on Wednesday.

Russia says many opportunities for security cooperation with EU - Russia and the European Union have many issues for an equitable cooperation in security and defence, chairman of the Federation Council Committee on Defence and Security Viktor Ozerov told Itar-Tass on Tuesday in the Polish Sejm on the debates over Russian-EU relations in the buildup of Transatlantic security.

Ashton to make statement on Russian polls at European Parliament - A representative of the EU supreme legislative body told Itar-Tass that “the key question on the agenda on Wednesday will be progress in preparation for the elections to the Russian State Duma, scheduled for December 2011”. “The EU is sure that the coming general and presidential elections in Russia should pass in strict compliance with the standards of the Council of Europe and the OSCE,” the representative said.

Medvedev Admits Lawyer Died From 'Criminal Actions' - Russian President Dmitry Medvedev has admitted the death in prison of a Russian lawyer who accused officials of corruption was the result of "criminal actions."

o Medvedev admits violations in Magnitsky’s caseo No grounds for Magnitsky's arrest - Russian presidential council o Investigators, prison officials implicated in Magnitsky deatho URGENT-Inefficient medical examination also behind Magnitsky death.

Bulava next test launch from Yuri Dolgoruky due in August. Bulava launch from Alexander Nevsky due before year end – source. Russia, Armenia to discuss Nagorno-Karabakh settlement in Moscow - Russian

and Armenian foreign ministers – Sergei Lavrov and Edvard Nalbandyan -- will

discuss on Wednesday approaches to a settlement of the Nagorno-Karabakh conflict as well expansion of trade and economic relations in Moscow.

Gazprom delegation in talks with N.Korea oil ministry – KCNA: "Present at the talks from the DPRK side were Minister of Oil Industry Kim Hui Yong, officials concerned, and from the Russian side, members of the delegation of Gazprom of Russia headed by Deputy Managing Chairman Alexandr Ananenkov," the Korean Central News Agency said.

Russian veg ban remains - Russia’s Chief Sanitary Inspector Gennady Onishchenko says that the safety of vegetable supplies from Poland and eight other EU countries, including Greece, is causing doubts.

Anti-drug agencies of CSTO members to sum up work in Yerevan - Russian head of the Federal Drug Control Service Viktor Ivanov delivered a report on the results of the anti-drug operation “Canal-West”, Itar-Tass learnt from CSTO press secretary Vladimir Zainetdinov.

William Brownfield: Russia‘s, U.S.‘ objectives are exactly the same on drugs in Afghanistan - U.S. Assistant Secretary of State for the Bureau of International Narcotics and Law Enforcement Affairs William Brownfield has given an interview to Interfax in which he speaks about the problem of opium poppy eradication in Afghanistan, about why the U.S. is not involved in the CSTO-led Channel operation, as well as Russia‘s domestic anti-narcotics initiatives.

Medvedev greets conference of heads of foreign security agencies - “Your meeting is dedicated to one of the most pressing problem of today, to the fight against international terrorism. The peaceful life of millions of people depends on successful cooperation in this area,” the president said in his greeting message, which was read out by director of Russia’s Federal Security Service Alexander Bortnikov. “Terrorism is the biggest threat to the present-day world.”

CIS countries facing task of modernizing armed forces – RF defence minister. o Council of CIS Defence Ministers to meet in Russia’s Sochi - “The Council

will pay particular attention to problems of the creation and improvement of joint defence-related systems,” she said. “The CIS defence ministers will discuss prospects for the development of CIS unified missile defence system and the idea of joint drills of CIS air forces and missile defence forces Combat Unity-2011. The exercises are planned to be conducted in August-September 2011.”

Russian portal speculates Moscow link in arrest of former Hungarian spy chiefs - Regnum.ru wrote the case was “clearly anti-Russian,” and the target of charges was “obviously Russia.” The piece reasons that people thought to be connected to Lajos Galambos are charged with Russian money laundering in Hungary, while the case was also connected with MOL shares getting into Russian hands.

Int’l conference in Kazan to discuss Europe-China transport corridor project - Kazan, the capital city of Russia’s republic of Tatarstan, hosts an international conference of Shanghai Cooperation Organization (SCO) member countries dedicated to problems of the creation of a transport corridor that will link

Europe and Western China, and its role in SCO integration processes, the press office of the republican ministry of transport told Itar-Tass on Wednesday.

Occupants began to build an alternative road to Roki Tunnel - According to information of the Club of Experts construction companies of Russia are restoring an old road in the Java district that runs from the village of Kvazha to the village of Zemo Cozi. This road leads to Kozi pass, which is located a few kilometres from Mamison Pass on the border between Georgia and Russia.

Kokoity regime begins expropriation of properties of Georgians Abkhazia Relies On Moscow’s Security Guarantees and Financial Backing – by

Valery Dzutsev Russia to exhibit its defence products at BRIDEX-2011 in Brunei. 9th international hi-tech hardware and armaments exhibition opens in Omsk. Russia to submit claim on expanding Arctic borders: official - "I expect that next

year we will present a well-based scientific claim about expanding the borders of our Arctic shelf," Russian news agencies quoted Ivanov as saying in the far northern town of Naryan-Mar in the Arctic Circle.

o URGENT: RF to apply to UN for expanding its Arctic borders -Ivanov. o Marine Collegium to centre on Arctic domestication & shipments there.

FC to ratify about 20 agreements laying legal basis for CES - The Federation Council will debate about 20 international agreements, which form a legal basis for the Common Economic Space, at a plenary meeting on Wednesday.

Duma to examine lower passing barrier at general election to 5pc. Medvedev ponders amnesty for economic crimes

o Medvedev talks social and economic issues in Nalchiko Medvedev praises Islamic clerics campaigning against extremism

Russia lists terrorists and their supporters acting on its soilo Russia publishes its money laundering and terrorism financing list

Medvedev gives instructions after meeting on APEC summit run-up UPDATE 1-Russian police search Novartis,Teva offices-report - Police raid Russian

offices of four drugmakers-report; Novartis confirms search took place; Investigation into carve-up of state supplies-report

Police involved in almost half of all car hijacking groups in Russia – ministry Russian-Chinese Youth Games kick off in Penza, Russia Man carrying two home-made explosive devices detained in Dagestan. Supposed gunman killed in Dagestan. Russian Muslims ask Moscow to lobby Saudis for increased haj quota to Mecca

o Russian Muslims ask for increased Haj quota Chief police officer in Tyumen region dies of sweeping burns. Chief editor of Yakutia branch of central daily detained for bribery. Criminal case opened against Udmurtia ammo depot commander(adds). Interfax Moscow press review for July 6, 2011 RIA Russian Press at a Glance, Wednesday, July 6, 2011 ITAR-TASS Russian press review.

Japan demands removal of Chinese expats from the Kuril Islands - The Japanese believe that Russians should not invite guest workers to the disputed territories By Konstantin Volkov

Finding a place in the ratings - Business conditions and corruption hinder Russia’s ability to attain a decent ranking By Taras Fomchenkov

Doubts Grow About Putin’s Front - Doubts are growing whether the All-Russia People's Front, created two months ago by Prime Minister Vladimir Putin, will help United Russia win extra votes in the State Duma elections after a series of scandals shook the group.

Matviyenko’s Rule, Future in Spotlight - The city’s business community has named Oseyevsky as a preferred future governor. By Galina Stolyarova

Transparency Bill Faces Resistance From State Firms - By Margarita Lyutova and Filipp Sterkin / Vedomosti

National Economic Trends Capital outflow decreases in 2Q11 CPI slowed to 9.4% YoY in June thanks to cheaper food, which may fall further Capital and financial account deficit moderated Russia's Economy Accelerates in May after Stumbling in April Conversations on Russia's macro situation - GDP on terra firma COMMENT: Medvedev proposals boost local stocks

Business, Energy or Environmental regulations or discussions Russia’s RTS Futures Decline on Gazprom Rating, U.S. Stock Drop Uralkali Climbs for Second Day Ahead of Increased MSCI Weighting Gas taxes and tariffs proposals from Economics Ministry Rusal Electricity Costs Grew 43% in 1st Quarter, Vedomosti Says UPDATE 1 -Gunvor, Volga Resources buy Russian coal mines Alrosa sells $11 million worth of diamonds at first electronic auction Owners of Russian Helicopters against paying dividends for 2010 Siemens opens manufacturing plant in Russia Schneider Opens Third Local Plant - The 10 million euro ($14.5 million) plant near

the small town of Kommunar in the Leningrad Oblast will turn out RM6 ring main units for Russian utility companies and property developers.

Manufacturer secures export deal with Russian partner - A CO Armagh manufacturer has secured an £800,000 export contract with a new partner in Russia.

Continental Invests $320M in Plant Arctic shipping routes unlikely to be Suez of the north – by HONOR MAHONY

Activity in the Oil and Gas sector (including regulatory) Russia Rosneft should remain in government hands: Chairman Poland's EU Presidency Will Support Shale Gas Development Russians cut export duty on oil sold to Tajiks

Russia to Invest $1.5b In Petrochem Complex - Iran and Russia agreed to construct a petrochemical complex in Assalouyeh, southern Iran, at the cost of $1.5 billion.

Energy JV authorized - The European Commission granted clearance, on 5 July, to the acquisition of joint control by ERG Renew of Italy and OOO Lukoil Ecoenergo of Russia of a newly created company constituting a joint venture - JV CO - by way of purchase of shares.

Lukoil's Odessa refinery unlikely to resume operations - Russian oil major Lukoil's Odessa Oil Refinery in Ukraine is unlikely to resume operations after repairs because the Odessa-Brody pipeline, which transported Russian oil to the refinery, has been switched to direct mode to ship Azeri oil to Belarus, RBC Daily reported today.

Gazprom Testing Gazprom’s New Arctic Jack-Up Rig Gazprom Sustainability Report 2008-09: Is the Russian Gas Giant a Puppet?

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Full Text Articles

Basic Political Developments

11:23 06/07/2011ALL NEWS

Itar-Tass news digest for Wednesday, July 6 : 1.

http://www.itar-tass.com/en/c154/180099.html

6/7 Tass 109

MOSCOW — Russian President Dmitry Medvedev gave instructions after a recent meeting for the run-up to an APEC summit in 2012 in Vladivostok, the Russian presidential press service reported on Wednesday. The document obliges the Defence Ministry to pass the lands in the ministry possession from federal to the Primorsky Territory’s state property and to Vladivostok’s municipal property to build summit facilities there.

MOSCOW — A criminal case was opened against the commander and an assistant commander of the 102nd ammunition storage in Udmurtia, where the ammunition blasts went off, senior aide to the military prosecutor in the Central Military District Sergei Bogomolov told Itar-Tass on Wednesday.

ST. PETERSBURG – Director of Russia’s Federal Security Service (FSB) Alexander Bortnikov has offered his counterparts from other countries to create a joint expert

working group for the exchange of information on possible terrorist threats in the period of preparations and holding of the Olympic Games-2014 in Sochi.

MOSCOW — An editor-in-chief of the local edition of the Moscow-based Moskovsky Komsomolets newspaper was been detained in Russia’s republic of Yakutia for corrupt business practices in respect of judges of Yakutia’s Supreme Court, a spokesman for the Russian Investigations Committee told Itar-Tass on Wednesday. A criminal case was opened against Igor Grishchenko on bribery charges, the spokesman said.

MOSCOW — The State Duma, lower house of the parliament, will examine in the first reading a bill on lowering the passing barrier from seven to five percent at federal general elections. An appropriate initiative was put forth by the Russian president. The new bill “cuts from seven to five percent the minimum percentage of votes that is necessary to win for a list of candidates at elections to the State Duma to participate in the distribution of seats”. This rule is suggested to be applied for elections of the seventh and subsequent State Dumas.

SOCHI — Defence Minister Anatoly Serdyukov on Wednesday will chair the 60th session of the Council of CIS Defence Ministers, a spokeswoman for the defence minister said. According to Irina Kovalchuk, “the session will consider more than 20 issues of cooperation between defence ministries of the CIS countries, including ways to implement the concept of military cooperation between the CIS countries till the year 2015.”

MOSCOW — The Coordination Council of the heads of competent agencies on countering illicit drug trafficking of member states of the Collective Security Treaty Organisation (CSTO) will sum up the results of joint work in Yerevan. Russian head of the Federal Drug Control Service Viktor Ivanov delivered a report on the results of the anti-drug operation “Canal-West”, Itar-Tass learnt from CSTO press secretary Vladimir Zainetdinov.

NARYAN-MAR — The meeting of the Russian Marine Collegium, chaired by Deputy Prime Minister Sergei Ivanov, will discuss on Wednesday domestication of the Arctic and boosting shipments along the Northern Sea Route. The collegium told Itar-Tass that domestication of the Arctic would be the first question under discussion.

MOSCOW — Russian and Armenian foreign ministers – Sergei Lavrov and Edvard Nalbandyan – will discuss on Wednesday approaches to a settlement of the Nagorno-Karabakh conflict as well expansion of trade and economic relations in Moscow. The talks of the foreign ministers will be held in the context of the tripartite meeting of the presidents of Azerbaijan, Armenia and Russia, held in Kazan on June 24. Such talks have been already held seven times over the past two years.

YEREVAN — The 10th meeting of the Coordination Council of the heads of anti-drug agencies of CSTO member states will examine here pressing issues of struggle against illicit drug trafficking. The meeting will be attended by the organisation’s secretary-

general Nikolai Bordyuzha. The chairman of the Coordination Council and director of the Russian Federal Service of control over drug trafficking Viktor Ivanov will deliver a report on the results of the local anti-drug operation “Canal-West”.

CHISINAU — President of the European Council Herman Van Rompuy starts a visit to Moldova on Wednesday where he will inspect progress in reforms, conducted for the purpose of integration into the European community. He will hold talks with acting President and parliament speaker Marian Lupu and Premier Vlad Filat.

KAZAN — Kazan, the capital city of Russia’s republic of Tatarstan, hosts an international conference of Shanghai Cooperation Organization (SCO) member countries dedicated to problems of the creation of a transport corridor that will link Europe and Western China, and its role in SCO integration processes, the press office of the republican ministry of transport told Itar-Tass on Wednesday.

STRASBOURG — EU supreme representative for foreign affairs and security policy Catherine Ashton will make a statement at the European Parliament session on Wednesday on the coming general elections in Russia. The baroness will also describe deputies the situation in North African countries, including Libya.

MOSCOW — Russia will for the first time take part in the Brunei International Defence Exhibition (BRIDEX-2011) that opens in Bandar Seri Begawan on Wednesday, a spokesman for the Russian federal service for military and technical cooperation told Itar-Tass. “The exhibition specializes in defence-related hardware, such as armored vehicles, tanks, artillery, missile defence systems, engineering and sapper equipment, etc.,” the spokesman said.

ASTANA – Kazakhstan marks the Day of the Capital City and birthday of its President Nursultan Nazarbayev, who proposed to move the country’s capital from Almaty to Astana.

MOSCOW — A criminal case was opened over a crash landing of a Mi-8 helicopter in Russia’s Siberian Irkutsk region, a spokesman for the East Siberian transport investigation administration of the Russian Investigations Committee said on Wednesday.

MAKHACHKALA — A supposed militant who opened gunfire at police was killed in the Khasavyurt district of Russia’s North Caucasian republic of Dagestan, a spokesman for Dagestan’s administration of the Russian Investigations Committee told Itar-Tass on Wednesday. Policemen received no wounds.

MAKHACHKALA — A gunman having two powerful home-made explosive devices was detained overnight near the settlement of Kakashura in Russia’s North Caucasian republic of Dagestan, a source in the republic’s interior ministry told Itar-Tass on Wednesday.

/Itar-Tass

Russia says many opportunities for security cooperation with EUhttp://www.bne.eu/dispatch_text16090

bneJuly 6, 2011

Russia and the European Union have many issues for an equitable cooperation in security and defence, chairman of the Federation Council Committee on Defence and Security Viktor Ozerov told Itar-Tass on Tuesday in the Polish Sejm on the debates over Russian-EU relations in the buildup of Transatlantic security.

"Russia considers the EU as its strategic partner and any proposals made by the EU are interesting for us," he noted.

"Russia is ready to cooperate with the EU in crisis situations, though some disagreements exist in this issue. The Europeans stated that they would like to participate jointly with Russia in the settlement to humanitarian problems and peacekeeping operations, but only under the EU supervision. For our part, we would like to cooperate on a partnership and equitable basis that should be reflected in joint assessments of the situation, decisions and actions," Ozerov noted. "We do not insist on Russia to take supervision, but such a type of cooperation should be developed that would envisage joint participation," he added.

"Meanwhile, we can pool efforts in the Gulf of Aden, where our warships are fighting with pirates. Probably the united command is needed to form so that Russia and the EU will exercise the command on a rotation basis," Ozerov stated. Russia and the EU states are developing joint measures of cooperation in emergency situations, man-made and natural disasters and the counteraction to drug trafficking, he said.

"We can consider the cooperation with the EU in general and on a bilateral basis. We have even more issues for bilateral negotiations and we advanced in civil and military spheres. Bilateral contacts are more productive and more filled up with concrete issues, rather than we are cooperating in the whole union," he said.

Speaking on Poland's initiative to promote the development of a common European policy in defence and security Ozerov noted that "in this issue we should have a clear-cut action plan of the EU that is to say the EU commitments and in which issues the EU will act without the United States." "We have not reached understanding on this issue yet. At the political level the debates are very active, but we would like to pass from the negotiations to practical actions and concrete steps," he added.

"The EU and Russia need each other and are interdependent," because "a new Transatlantic security architecture is based on the US, the EU and Russia," former Polish foreign minister and co-chairman of the Russian-Polish Group for Difficult Issues, Prof. of History Adam Rotfeld said. He believes that the participants in these negotiations lack

trust. "Today interdependence rather than geopolitics settles security issues. Transatlantic security should be based on common regulations and conditions, including the observance of human rights and the free market," he concluded.

04:49 06/07/2011ALL NEWS

Ashton to make statement on Russian polls at European Parliament.

http://www.itar-tass.com/en/c154/179947.html

6/7 Tass 17

STRASBOURG, July 6 (Itar-Tass) — EU supreme representative for foreign affairs and security policy Catherine Ashton will make a statement at the European Parliament session on Wednesday on the coming general elections in Russia. The baroness will also describe deputies the situation in North African countries, including Libya.

According to the tradition, parliamentary debates will be held here on the above topics; European legislators can put forth questions to the head of the European foreign policy department. The European parliament will hold voting by the results of the debates on appropriate resolutions on Thursday.

A representative of the EU supreme legislative body told Itar-Tass that “the key question on the agenda on Wednesday will be progress in preparation for the elections to the Russian State Duma, scheduled for December 2011”. “The EU is sure that the coming general and presidential elections in Russia should pass in strict compliance with the standards of the Council of Europe and the OSCE,” the representative said.

Deputies will also debate a recent decision of Russian authorities to refuse register the Party of Popular Freedom (PARNAS).

The Russian Justice Ministry made public a decision on the party back on June 22, exposing inconsistently between the Rules and registration documents. Besides, it was established that the list of party members included minors and dead citizens.

“Some influential deputies of the European Parliament, including chairman of the human rights subcommittee, Finnish legislator Heidi Hautala, believe that such actions with respect to PARNAS are illegitimate and can tell negatively on political pluralism in the country,” Strasbourg legislators noted.

“Deputies mull over a possibility of imposing sanctions on ranking officials of the Justice Ministry, including Minister Alexander Konovalov and some of his deputies, as a retaliatory measure.”

The European Parliament centres on the political situation in Russia not for the first time. In June 2011, European legislators already adopted a document, under which a procedure of registering some political parties and candidates turned to be unjust and, thus, is a hindrance in the way to free and just elections.

Lawmakers will also discuss the situation in North African countries, including Libya where the NATO military operation continues. The European Parliament hopes that Ashton will appraise “the road map” of the Libyan opposition on turning over to peace talks and a further settlement of the situation in Libya.

It was made public on Monday that meetings of the Libyan government and rebels on a ceasefire and the start of a dialogue between opposing forces took place in some European countries and Egypt. At the same time, Muammar Gaddafi’s spokesman refuted on Sunday a report by some mass media that the Libyan leader agrees to leave the presidency in exchange for security guarantees.

Medvedev Admits Lawyer Died From 'Criminal Actions' http://www.rferl.org/content/medvedev_admits_lawyer_died_from_criminal_actions/24256747.html

July 06, 2011 Russian President Dmitry Medvedev has admitted the death in prison of a Russian lawyer who accused officials of corruption was the result of "criminal actions."  

Medvedev said the case of Sergei Magnitsky who died in November 2009 after nearly a year in Russian prisons was a "sad one."  

 "Magnitsky's case is a very sad one," Medvedev said. "Ailing  people shouldn't die in prison. If they fall ill, they must be  taken out for treatment before a court decides their fate."

Medvedev made his remarks at a meeting with top Russian human rights officials in the southern city of Nalchik, the hometown of Magnitsky who worked for Russia's top equity fund Hermitage Capital.  

He was arrested by Interior Ministry officials and charged with tax evasion after accusing Interior Ministry officials of using false tax papers to steal $230 million from the state.

In a report, the human rights officials rejected claims by Russian investigators who on July 4 put blame for Magnitsky's death solely with medics.  

Valery Borshchev, one of the authors of the report, told Reuters that the panel concluded that Magnitsky died of a beating.

"The lack of medical care -- hindering medical care -- which was a violation of the right to live, are obvious in this case and the medics should be punished for this," Borshchev said.

"But the decisive thing was the beating of Magnitsky by the prison warders. I don't think that the prison warders wanted to kill him, I don't think it was their intention. I think they were following an order, this is our suggestion, but he died because of his weakened health and acute condition caused by his illness," he added.

Yelena Panfilova, another author of the report, said the official Russian investigation was tainted because people taking part in it were involved in the crimes that Magnitsky was investigating.  

"Either personal interest or negligence is involved here... it is one or the other," said Panfilova in Nalchik, the capital of the Kabardino-Balkaria in the volatile North Caucasus.  

The death of the 37-year-old Magnitsky scared foreign investors and sparked an international outcry.  

The parliament in the Netherlands has voted to request the government impose visa restrictions on Russian officials connected with Magnitsky's death.  

Russia's Foreign Ministry on July 5 called the Dutch move "unacceptable."

The United States is said to be considering similar action.

compiled from agency reports

RT News line, July 6

Medvedev admits violations in Magnitsky’s casehttp://rt.com/politics/news-line/2011-07-06/#id13757

11:18

President Medvedev admitted there have been violations in the case of Hermitage Capital lawyer Sergey Magnitsky, who died in pre-trial detention after long suffering from a series of medical complications which went untreated. “People should not die in prison, if they are sick, they should be freed,” Medvedev told a Presidential Human Rights Council meeting in Nalchik late on Tuesday. “The case of Magnitsky is very sad. The man is gone, and it appears that there were indeed some crimes which led to this

outcome,” Medvedev observed. According to the latest report prepared by the Investigative committee, the death of Magnitsky in 2009 was cause by the neglect of prison doctors.

No grounds for Magnitsky's arrest - Russian presidential councilhttp://en.rian.ru/russia/20110706/165051295.html

12:18 06/07/2011

MOSCOW, July 5 (RIA Novosti)

There were no legal grounds for the arrest of lawyer Sergei Magnitsky, the Presidential Council on Civil Society and Human Rights said in its preliminary conclusion.

Hermitage Capital investment fund lawyer Magnitsky died of heart failure after being denied medical treatment in November 2009. He had been arrested on tax evasion charges just days after claiming to have uncovered massive embezzlement of state funds on the part of law enforcement officials.

The reasons listed by Moscow's Tverskoi District Court can not be considered as grounds for the arrest in line with the Russian Criminal Code.

Russian investigators said on Monday that Magnitsky died because he did not receive medical assistance in a timely fashion.

The council said in a report that Magnitsky could allegedly have died from being beaten.

"Before his death, Magnitsky was deprived of medical care," the report reads. "In addition, there is reasonable suspicion to believe that the death was triggered by beating Magnitsky: subsequently his relatives recorded smashed knuckles and bruises on his body. In addition, there is no medical description of the last hours of his life."

The investigation into Magnitsky's death may be reopened as misinformation in the testimony of Magnitsky's doctor provides grounds to re-investigate this fact, the council said.

Russian President Dmitry Medvedev said on Tuesday that the death Magnitsky in pre-trial custody was caused by criminal actions.

Those responsible for his death will be prosecuted in the near future, Russian Investigative Committee spokesman Vladimir Markin said on Monday.

Magnitsky's death caused public outrage and an international outcry.

The Dutch parliament voted unanimously on Monday for a resolution to impose travel and economic sanctions against Russian officials allegedly involved in Magnitsky's death.

July 06, 2011 11:19

Investigators, prison officials implicated in Magnitsky deathhttp://www.interfax.com/newsinf.asp?id=257144

MOSCOW. July 6 (Interfax) - The presidential Human Rights Council has blamed investigators and penitentiary officers for failing to provide medical aid to Hermitage Capital lawyer Sergei Magnitsky while he was held in custody.

"Head of the pre-trial detention facility No. 99/1 I. Prokopenko and investigator O. Silchenko decided to move Sergei Magnitsky to the Butyrka jail a week before his routine medical examination and the operation at the hospital of the Matrosskaya Tishina pre-trial detention facility. The reason for this move was the alleged necessity to conduct renovation, which never began before Magnitsky's death. This can be seen as the deliberate worsening of Magnitsky's custody conditions and the obstruction of medical aid provision," the presidential council said in an interim report over the Magnitsky case.

kk jv

(Our editorial staff can be reached at eng.editors@interfax.ru)

12:08 06/07/2011ALL NEWS

URGENT-Inefficient medical examination also behind Magnitsky death.

http://www.itar-tass.com/en/c154/180147.html

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MOSCOW, July 6 (Itar-Tass) —— An inquiry into Sergei Magnitsky’s death case files showed that an inefficient examination of his health problems, as well as inefficient hearings into the appeals, which the lawyers lodged and did not lodge in the court, are among the reasons for this death, the Russian Presidential Council for Civil Institutions and Human Rights said in a preliminary report, which was made public on Wednesday.

“The Prosecutor General’s Office stated that Magnitsky’ s rights were not violated in reply to a substantial appeal, which the lawyer of the defendant lodged on four pages to the General Prosecutor and which contained the concrete facts of violating Magintsky’s rights. Meanwhile, most arguments, which the appeal contained, were left without any assessment, in violation of the requirements of Article 123 of the Criminal Procedure Code,” the document runs.

11:46 06/07/2011ALL NEWS

Bulava next test launch from Yuri Dolgoruky due in August.

http://www.itar-tass.com/en/c154/180130.html

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(Adds details)

NARYAN-MAR, July 6 (Itar-Tass) —— Next test launch of the Bulava sea-launched ballistic missile from the Yuri Dolgoruky nuclear submarine will be made in August, Commander in Chief of Russia’s Navy Admiral Vladimir Vysotsky said on Wednesday.

Next launch will be made before the summer ends – in early autumn, he said. At the same time he ruled out the launch may be made in July.

“It is not probable over the current month,” he added.

11:48 06/07/2011ALL NEWS

Bulava launch from Alexander Nevsky due before year end – source.

http://www.itar-tass.com/en/c154/180134.html

6/7 Tass 116

(Adds details)

NARYAN-MAR, July 6 (Itar-Tass) —— Before the year end, Russia will launch the Bulava sea-launched ballistic missile from the second strategic nuclear submarine of the 955 project – the Alexander Nevsky, Commander in Chief of Russia’s Navy Admiral Vladimir Vysotsky said on Wednesday.

During the current year, test launches of the Bulava “will be made both from the Yuri Dolgoruky and from the second order.”

“I mean the second nuclear submarine of the 955 project Borey – the Alexander Nevsky, which is being tested now,” he explained.

03:41 06/07/2011ALL NEWS

Russia, Armenia to discuss Nagorno-Karabakh settlement in Moscow.

http://www.itar-tass.com/en/c154/179939.html

6/7 Tass 6

MOSCOW, July 6 (Itar-Tass) — Russian and Armenian foreign ministers – Sergei Lavrov and Edvard Nalbandyan -- will discuss on Wednesday approaches to a settlement of the Nagorno-Karabakh conflict as well expansion of trade and economic relations in Moscow.

The talks of the foreign ministers will be held in the context of the tripartite meeting of the presidents of Azerbaijan, Armenia and Russia, held in Kazan on June 24. Such talks have been already held seven times over the past two years.

According to analysts, the summit has not yielded clear positive results, since the sides could not reach a compromise decision on some principled questions of a Nagorno-Karabakh settlement. Nevertheless, experts believe that it is too early to speak of a full collapse, since the sides agreed to continue a search for common viewpoints to bring stands closer together.

Apart from Nagorno-Karabakh, Lavrov and Nalbandyan will discuss expansion of trade, economic and investment cooperation. According to the latest data, trade between Russia and Armenia reached one billion US dollars. Analysts note that Russia confidently takes positions of the largest foreign investors in the Armenian economy.

The energy, banking, metallurgical and building sectors account for the main volume of investments. Armenia cooperates with the Rostov, Samara, Nizhny Novgorod, Sverdlovsk, Volgograd and Yaroslavl regions.

Gazprom delegation in talks with N.Korea oil ministry – KCNAhttp://af.reuters.com/article/energyOilNews/idAFL3E7I608N20110706

Wed Jul 6, 2011 3:29am GMT

SEOUL, July 6 (Reuters) - A delegation from Russia's Gazprom OAO visiting North Korea has held talks with officials from the Ministry of Oil Industry there, North Korea's central news agency reported late on Tuesday.

"Present at the talks from the DPRK side were Minister of Oil Industry Kim Hui Yong, officials concerned, and from the Russian side, members of the delegation of Gazprom of Russia headed by Deputy Managing Chairman Alexandr Ananenkov," the Korean Central News Agency said.

"At the talks, both sides discussed cooperation on oil and gas and a series of other issues of bilateral concern," KCNA said, without elaborating.

The Gazprom delegation's trip follows a reported recent visit by Russia's spy chief to the North Korean capital to discuss economic projects involving North and South Korea, the world's second-largest liquefied natural gas (LNG) buyer after Japan.

Russia and North Korea share a short border, but ties worsened and trade fell steeply after the collapse of the Communist Soviet Union in 1991. (Reporting by Cho Mee-young; Editing by Chris Lewis)

Russian veg ban remainshttp://english.ruvr.ru/2011/07/06/52838943.html

Jul 6, 2011 09:42 Moscow Time

Russia’s Rospotrebnadzor Consumer Rights Protection Service has refrained so far from lifting a ban on the supplies of Polish vegetables to Russia.

Russia’s Chief Sanitary Inspector Gennady Onishchenko says that the safety of vegetable supplies from Poland and eight other EU countries, including Greece, is causing doubts.

Russia introduced a ban on vegetable supplies from Europe at the beginning of June following an E.coli outbreak in Germany and a number of other European countries.

02:29 06/07/2011ALL NEWS

Anti-drug agencies of CSTO members to sum up work in Yerevan.

http://www.itar-tass.com/en/c154/179933.html

6/7 Tass 24

MOSCOW, July 6 (Itar-Tass) — The Coordination Council of the heads of competent agencies on countering illicit drug trafficking of member states of the Collective Security Treaty Organisation (CSTO) will sum up the results of joint work in Yerevan.

Russian head of the Federal Drug Control Service Viktor Ivanov delivered a report on the results of the anti-drug operation “Canal-West”, Itar-Tass learnt from CSTO press secretary Vladimir Zainetdinov.

According to the press secretary, the meeting will be also attended by CSTO secretary-general Nikolai Bordyuzha and secretary of the National Security Council of the Armenian Republic Artur Bagdasaryan.

The Russian Federal Drug Control Service told Itar-Tass that participants will discuss at the meeting prospects for developing the Coordination Council and the use of special forces and means of the CSTO Collective Rapid Response Forces in anti-drug measures as well as in struggle against trans-national crime.

“Illicit drug trafficking remains now a very pressing problem for CSTO member states: Trans-national drug crime increasingly joins hands with terrorist and extremist structures,” the press secretary quoted words by Bordyuzha before his departure for Yerevan.

Under these conditions, the Coordination Council should boost efforts of law enforcement structures of CSTO member states to counter illicit drug trafficking and struggle against trans-border drug business.

Besides, head of the Russian drug control agency will have a meeting with Armenian President Serge Sargsyan.

July 06, 2011

William Brownfield: Russia‘s, U.S.‘ objectives are exactly the same on drugs in Afghanistanhttp://www.interfax.com/interview.asp?id=257093

U.S. Assistant Secretary of State for the Bureau of International Narcotics and Law Enforcement Affairs William Brownfield has given an interview to Interfax in which he speaks about the problem of opium poppy eradication in Afghanistan, about why the U.S.

is not involved in the CSTO-led Channel operation, as well as Russia‘s domestic anti-narcotics initiatives.

Question: Russia says the American forces do not fight opium crops in Afghanistan actively enough. Why is it so?Answer: Obviously, I cannot explain why others would make that suggestion, what I can offer is the evidence of just the past year. In the past year, our governor-led eradication campaign, whereby we in the United States Government provide resources to local governors to do eradication, have produced substantial reductions in opium poppy cultivation in the two largest producing provinces in Afghanistan: Helmand Province and Kandahar Province. In both provinces the overall cultivation has dropped by an estimated 50%, so I would suggest to those who say we are not serious about eradication to look at those figures. Obviously, it is difficult to eradicate opium poppy, if you do not have security on the ground, if you do not have permanent state presence, if you do not have law enforcement and police presence in the communities. And I acknowledge Afghanistan remains a very complicated situation, but I do suggest, as is frequently the case, we have made substantial progress. The criticism is a year or two behind where we are today.Q.: Why does the United States refuse to join the CSTO-led Channel operation?A.: I am afraid the simple answer to that question is, to the best of my knowledge, we were not invited to join the CSTO mechanism, as we were not invited to join the SCO, Shanghai Cooperation Organization mechanism. We agree with the effort. We applaud CSTO‘s plan and strategy and initiative to attack narcotics production in Afghanistan and its trafficking through Central Asia on the way to market. And we are happy to be supportive, but obviously since we are not members of, observers of or invitees of it, we must have a different mechanism whereby we can support. Our proposal by the way is that we would support through CARICC, through the Central Asia Regional Information Coordination Center headquartered in Almaty that includes the five Central Asian nations and the Russian Federation as members of CARICC. We are an observer in that organization, so we can be supportive, but it is difficult for us to participate in initiatives by organizations of which we are not members.Q.: Some experts say that the U.S. is not interested in fighting drugs in Afghanistan, because the main drug threat comes to the U.S. from Latin America, Colombia say, but not from Afghanistan. Do you agree with that?A.: Look, obviously most of the illicit drug product consumed in the United States of America comes from Latin America, whether cocaine, which comes from, principally comes from the three Latin American nations Colombia, Peru and Bolivia, or heroin, most of the heroin that is in the United States‘ market tends to come up from Mexico and to a small extent elsewhere in Central America. I do not deny that. I also, however, would quote the President of the United States who has said publicly and repeatedly: our objectives in Afghanistan, for which we have dedicated a vast amount of blood, lives and treasure, hundreds of billions of dollars, are a democratic society, a secure and stable country, and an economically prosperous country. We cannot expect any of those objectives to be accomplished so long as Afghanistan is the world‘s leading producer of heroin and opium. So, it is obviously in our national interest as well to address the drug threat from Afghanistan. Perhaps, we have different reasons for our commitment to the

task, but our objective is exactly the same. The Russian Federation‘s objectives and the U.S. Government‘s objectives are exactly the same on drugs in Afghanistan.Q.: Talking about Russia, do you think it is capable of fighting drug trafficking from Afghanistan given that Russia has virtually transparent borders with Central Asian countries, such as Tajikistan, Uzbekistan, and so on?A.: It is more complicated. There is no question whatsoever that when you reduce your borders or, in fact, eliminate your borders, which is a good thing for trade and commerce, it is the direction of much of the world. In Europe or for that matter as free trade agreements are developed among other countries in the world, borders are gradually disappearing, but a non-existent border becomes an opportunity obviously for criminal organizations and narcotics traffickers. The challenge for the Russian Federation, its government and its law enforcement institutions is to figure the best mechanisms to account for the diminished border controls between the Russian Federation and several Central Asian countries and their need and desire to control the flow of narcotics from Afghanistan to the Russian Federation, that is a law enforcement challenge, that‘s an intelligence challenge, that‘s a challenge for the courts and the legal system, that is a challenge for community leaders to control their own communities, that is a challenge in many ways for internal law enforcement. In other words if you are not going to have border control, you need to have greater control within the country itself of the movement of traffic. It is complicated, it is not impossible.Q.: Russia plans to ban sales of codeine drugs without prescriptions. Do you think it is the right way to go and are there similar restrictions in the U.S.?A.: Obviously, that is a decision for the Russian Federation and its government. I am not precisely certain but I believe codeine in its clinical form does require a prescription in the U.S. In other words, it is legal but only if formally prescribed by a registered doctor, medical doctor, licensed to practice medicine in the United States of America. Now that works for us, although I have no doubt whatsoever that there is some abuse. There is less abuse so long as the prescription is required, because in order to abuse it on a massive scale, a licensed doctor would have to participate in the fraud and would eventually risk losing his license to practice medicine in the United States of America. Every country has its own system, and I do not suggest in any way that it would be appropriate for me to offer an opinion on how the Russian Federation chooses to control, manage, restrict or permit the sale and use of codeine in the Russian Federation.Q.: Some Russian experts say that it is necessary to introduce some laws that would make it necessary to check, examine adolescents and young people if they are on drugs, do you think that the idea is worth considering?

A.: Again, it is not my place to offer a view as to what the Russian Federation should do. The United States of America, the Russian Federation and all of the nations of the world are signatories to a number of international conventions, UN conventions that are conventions on human rights, conventions on civil and political rights, conventions on protection of minors and children. Every government has an obligation to abide by those standards, but how they then choose to apply their internal laws and policies so long as they comply with their international obligations is a sovereign decision for each individual country. In the United States of America, we actually have somewhat different policies among the 50 different states. In all of them, our law requires respect for the

rights of minors and children, and it normally requires up to a certain age the consent of the parents, or at least one parent, before their child can be subject to any law enforcement activity whatsoever. That is our system. But every country has a right to its own system so long as they comply with their global international obligations.

11:39 06/07/2011ALL NEWS

Medvedev greets conference of heads of foreign security agencies.

http://www.itar-tass.com/en/c154/180118.html

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ST. PETERSBURG, July 6 (Itar-Tass) —— Russian President Dmitry Medvedev has greeted head of foreign secret, security and law enforcements agencies from 63 countries who have gathered here for their 10th regular conference on Wednesday.

“Your meeting is dedicated to one of the most pressing problem of today, to the fight against international terrorism. The peaceful life of millions of people depends on successful cooperation in this area,” the president said in his greeting message, which was read out by director of Russia’s Federal Security Service Alexander Bortnikov. “Terrorism is the biggest threat to the present-day world.”

“Now it is necessary to look for new, more efficient ways to prevent acts of terrorism. It is necessary to offer adequate response to instigators of interethnic and inter-religious hatred, to those who propagandize violence and extremism, including in the global information networks,” the message says.

“I hope the conference’s recommendations will be useful, that they will boost the efficiency of joint activities and promote strengthening of security in our states,” the president said in the message.

12:26 06/07/2011ALL NEWS

CIS countries facing task of modernizing armed forces – RF defence minister.

http://www.itar-tass.com/en/c154/180167.html

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SOCHI, July 6 (Itar-Tass) —— CIS defence ministries are facing similar tasks, with one of the most important one being a complete modernization of their armed forces, Russian

Defence Minister Anatoly Serdyukov said on Wednesday opening the 60th session of the Council of CIS Defence Ministers.

“We are holding our regular, 60th, meeting in the year which marks the 20th anniversary of the Commonwealth of Independent States,” he said. “Over the twenty years of the existence of the Council of CIS Defence Ministers, our countries have established stable partner relations in the defence sphere.”

“To a greater extent, it is thanks to the principled position of the Council of CIS Heads of State aimed at expanding multilateral military cooperation as a factor promoting sustainable and well-balanced development of the CIS,” Serdyukov noted. “The military partnership development concept up to the year 2015 opens up new possibilities for further cooperation and enhancing security of each of the CIS state and the CIS as a whole.”

According to the Russian defence minister, it is necessary “to develop most promising areas of military cooperation, to create favourable conditions for other areas of cooperation, from improvement of coordination systems to issues of the humanities.”

“At the same time, it is vital to set and solve not only current problems but to have a clear plan for a perspective. I think it is quite obvious that the Council of CIS Defence Ministers is playing a key role in this process,” he stressed.

“Our states are responsible for ensuring peace and stability within the CIS. Its security and economic development largely depends on the level of mutually beneficial strategic partnership between its member states,” he concluded.

08:50 06/07/2011ALL NEWS

Council of CIS Defence Ministers to meet in Russia’s Sochi.

http://www.itar-tass.com/en/c154/179998.html

6/7 Tass 8

SOCHI, July 6 (Itar-Tass) —— Russian Defence Minister Anatoly Serdyukov on Wednesday will chair the 60th session of the Council of CIS Defence Ministers, a spokeswoman for the defence minister said.

According to Irina Kovalchuk, “the session will consider more than 20 issues of cooperation between defence ministries of the CIS countries, including ways to implement the concept of military cooperation between the CIS countries till the year 2015.”

“The Council will pay particular attention to problems of the creation and improvement of joint defence-related systems,” she said. “The CIS defence ministers will discuss prospects for the development of CIS unified missile defence system and the idea of joint drills of CIS air forces and missile defence forces Combat Unity-2011. The exercises are planned to be conducted in August-September 2011.”

“The agenda also includes issues of the implementation of top-priority areas of military and technical cooperation in the development of a joint communications and automation system, the implementation of a roadmap for the concept of a unified geo-informational defence-related system for the armed forces of the CIS countries,” she went on. “The ministers will consider the plan of actions to promote cooperation between engineering troops of the CIS member countries, guidelines for cooperation between CIS defence ministries in the areas of evaluation and control of the radiation, chemical and biological situation.”

“They will also study an analytical report in the area of ensuring flight safety of CIS military aircraft in 2010. It is planned that a coordination committee will be set up to ensure flight safety of CIS military aviation,” the spokeswoman noted.

“All documents that will be considered by the 60th session of the Council of CIS Defence Ministers are aimed to further improve comprehensive military cooperation, to promote mutually beneficial partner relations in the defence sphere in the CIS,” she stressed.

July 6th, 2011

Russian portal speculates Moscow link in arrest of former Hungarian spy chiefshttp://www.politics.hu/20110706/russian-portal-speculates-moscow-link-in-arrest-of-former-hungarian-spy-chiefs/

By All Hungary News

Russian news portal regnum.ru is speculating that former Socialist PM Ferenc Gyurcsány and current Russian PM Vladimir Putin are among targets of recent actions against former Hungarian secret services leaders.

Regnum.ru wrote the case was “clearly anti-Russian,” and the target of charges was “obviously Russia.” The piece reasons that people thought to be connected to Lajos Galambos are charged with Russian money laundering in Hungary, while the case was also connected with MOL shares getting into Russian hands.

The portal, which wrote there had not been such a spy case in Hungary since the Rákosi era, did not provide any sources. [origo.hu]

08:46 06/07/2011ALL NEWS

Int’l conference in Kazan to discuss Europe-China transport corridor project.

http://www.itar-tass.com/en/c154/179997.html

6/7 Tass 15

KAZAN, July 6 (Itar-Tass) —— Kazan, the capital city of Russia’s republic of Tatarstan, hosts an international conference of Shanghai Cooperation Organization (SCO) member countries dedicated to problems of the creation of a transport corridor that will link Europe and Western China, and its role in SCO integration processes, the press office of the republican ministry of transport told Itar-Tass on Wednesday.

The conference was organized by the Volga customs administration, the federal customs service and republic’s ministry of transport.

“Participants in the conference will discuss the role of transport corridors in boosting investment attractiveness of Russian regions, as well as a concept of the development of Russia’s customs service till the year 2020. The conference will also look at Tatarstan’s biggest transport and logistics projects and programs,” the press office said.

The international transport corridor Europe-Western China is a project that has no analogues across the globe. It will link Russia’s second largest city of St. Petersburg and China’s port of Lianyungang. Its total length will be 8,445 kilometres, of which 2,233 kilometres in Russia, 2,787 kilometres – in Kazakhstan, and 3,425 kilometres – in China. Its basic advantage as compared with the existing transport corridors, such as the Trans-Siberian motor way or a sea route via the Suez Canal, is a shorter travel time. Thus, its takes 45 days to get from Europe to China via the Suez Canal, 14 days – via the Tran-Siberian motor way, while it will take just ten days to reach the European border from China’s Lianyungang.

The project will ensure freight traffic along three basic routes, i.e. China-Kazakhstan, China-Central Asia, and China-Kazakhstan-Russia-Western Europe.

Occupants began to build an alternative road to Roki Tunnel http://eng.expertclub.ge/portal/cnid__9098/alias__Expertclub/lang__en/tabid__2546/default.aspx

05/07/2011 13:10

Russian occupants continue to build infrastructure in the Tskhinvali region. The main role there is played by a by-pass road which connects Tskhinvali to Russia.

According to information of the Club of Experts construction companies of Russia are restoring an old road in the Java district that runs from the village of Kvazha to the village of Zemo Cozi. This road leads to Kozi pass, which is located a few kilometres from Mamison Pass on the border between Georgia and Russia.

At present there is an old, unfit for transport movement country road which leads to the city of Alagir in North Ossetia.

Presumably, a highway which is under construction now is seen as an alternative to Roki Tunnel.

Kokoity regime begins expropriation of properties of Georgians http://eng.expertclub.ge/portal/cnid__9099/alias__Expertclub/lang__en/tabid__2546/default.aspx

05/07/2011 13:17

On the basis of a resolution adopted in 2010 by the so-called "government" of the occupied region of Tskhinvali, real estate acquired in 1991-2008 in the Akhalgori district was outlawed.

At the end of June a bailiff, together with two officials arrived in the area from Tskhinvali. Based on this latest court decision they were charged with a task to evict of 29 families from their houses and return those houses to their former owners.

According to information of the Club of Experts this caused protest in local population but in conditions of absolute lawlessness their protest was like "a voice in the wilderness". According to residents of Akhalgori, those apartments that the puppet government in Tskhinvali are going to take away, were bought by Georgians when Ossetians were leaving en masse and moving from Georgia to Russia. In reality Tskhinvali has no legal basis for their seizure, but as they say, "one cannot go against force".

Abkhazia Relies On Moscow’s Security Guarantees and Financial Backing

http://georgiandaily.com/index.php?option=com_content&task=view&id=21646&Itemid=130

July 05, 2011

Valery Dzutsev

On June 20, the Forum of the National Unity of Abkhazia issued a statement about the nomination of a candidate for the presidency in the Georgian breakaway territory of Abkhazia. It is expected that Raul Khadzhimba will become the third candidate in the Abkhaz presidential elections scheduled to take place on August 26.

Following the sudden death of the president of Abkhazia, Sergei Bagapsh in Moscow on May 29, an intriguing scramble for power is unfolding in this small, but politically important region. The two primary candidates for the presidency in this territory are Sergei Shamba, the prime minister of Abkhazia and Alexander Ankvab, the vice president and, currently, the acting interim head of Abkhazia. According to some estimates, Raul Khadzhimba may garner as much as 20 percent to 25 percent of the votes and thereby become a possible kingmaker in Abkhazia. The chances of Khadzhimba joining forces with Shamba are reportedly significantly lower than Khadzhimba’s support for Ankvab’s candidacy (www.ekhokavkaza.com, June 20).

Moscow officially recognized Abkhazia as an independent country in August 2008 after the so-called five-day Russia-Georgia war, despite fierce protests in Georgia and among western countries. Since then, Abkhazia has grown even more dependent on Russia for security guarantees and its economic survival. This puts Moscow in a comfortable position to influence the elections in this territory with relatively little extra resources.

Specific preferences in Moscow are not publicly known. Yet, there is some oblique evidence suggesting that the Kremlin may be inclined to support Sergei Shamba’s candidacy. Already, local observers in Abkhazia noted that Russian Prime Minister Vladimir Putin, who attended the funeral of Sergei Bagapsh in Abkhazia on June 2, was friendlier with Shamba, than with Ankvab. Both the main candidates share much in common, however, including their explicit pro-Russian orientation and reluctance to criticize Moscow even when it comes to defending Abkhazia’s national interests. Shamba is described as a more diplomatic and flexible political figure, while Ankvab has a reputation for his principled position on fighting corruption (Kommersant-Vlast, June 20).

Alexander Ankvab survived five attempts on his life in Abkhazia. The latest occurred in September 2010. So many attempts on a politician’s life in Abkhazia appear to indicate that there are some forces in Russia who are unhappy with him. In 2008, Moscow reportedly wanted to remove Ankvab from his post as prime minister, but Sergei Bagapsh defended him, since Ankvab enjoyed support from Abkhaz war veterans. Ankvab seems to have had uneasy relations with Moscow for some reason. But at the same time Ankvab’s spectacular early career in the interior ministry during the late Soviet era and in

particular his appointment to the political department of Georgia’s interior ministry in 1984 strongly suggest his roots in the KGB. Ankvab also spent 10 years living in Moscow, unlike the more homegrown candidate Sergei Shamba (http://lenta.ru/lib/14203516/, accessed on June 20). Thus, if there is a conflict between Alexander Ankvab and Moscow it is likely to be a tactical one, not reflecting any particular rebellious character or unruliness of Abkhazia’s acting president. Ankvab and Khadzhimba’s cooperation during the elections will make much sense as both men appear to have old ties with the Soviet and later the Russian security services.

Shamba’s biography, in contrast to Ankvab, reflects a more self-made man with an academic background that often bred nationalists across the Caucasus in the 1980s. Shamba appears to have been elevated to high positions due to his outstanding diplomatic skills as well as twists of recent rocky history of Abkhazia (http://www.lenta.ru/lib/14184058/, accessed on June 20).

According to the preliminary results of the 2011 census in Abkhazia, its population comprises 243,000 people, which is close to international estimates of 250,000 (http://www.abkhaziagov.org/ru/president/press/news/detail.php?ID=37304, accessed on June 20). Ethnic Abkhaz comprise less than half of the total population of the republic, 95,000 in 2003 (http://www.ethno-kavkaz.narod.ru/rnabkhazia.html, accessed on June 20). According to some unconfirmed reports, these proportions are even worse for the ethnic Abkhaz, but in any case, the indigenous Abkhaz are demographically vulnerable, even though they are the ruling group in Abkhazia. Over 200,000 ethnic Georgians were expelled from Abkhazia during the 1992-1993 Georgian-Abkhaz conflict that drastically shifted the ethnic balance in this territory.

Anxious about losing a shaky majority in their homeland, the Abkhaz are trying to zealously ward off possible infringements on the current ethnic balance status-quo. In 2010 this caused a scandal in Russian-Abkhaz relations as the Abkhaz government refused to return property to Russian citizens who left Abkhazia prior to the war of 1992-1993. Moreover, a short border dispute erupted between Abkhazia and Russia over a small village in the mountains that Moscow reportedly wanted for the purposes of the 2014 Winter Olympics in Sochi (Kommersant-Vlast, June 20).

The Russian Orthodox Church added further to the tensions between Moscow and Sukhumi. The split, dating back to 2005, between the more nationalist Abkhaz orthodox clergymen that introduced services in the Abkhaz language in Abkhaz churches and a more traditional head of the local church, backed by Moscow were revitalized in April 2011. The famous monastery complex in Abkhazia, Novy Afon (named after the renowned Greek Athos) is financed by the Moscow patriarchate. Yet, the new head of the monastery sent by Moscow ordered that Abkhaz language services should stop and instead be conducted in Russian and Greek. In a small society like Abkhazia, the move was bound to divide not only the religious minority, but also the general public. In fact, some observers suggest the church conflict will be a major issue in the forthcoming presidential campaign. On May 15, the Abkhaz orthodox proclaimed an independent

church that would not belong to the realm of the Russian orthodoxy (Kommersant-Vlast, June 20).

The political underpinnings of the outwardly religious conflict in Abkhazia are obvious – the Abkhaz are increasingly resentful of actual or perceived attempts by Moscow to control their country. “Moscow needs to understand that Abkhaz independence is not a sham,” Abkhaz print publication editor Inal Khashig said in an interview for Kommersant-Vlast (Kommersant-Vlast, June 20). The problem, however, is that Moscow considers Abkhazia’s independence as “a fake.” Referring to Ukraine as “not even a state” and condescendingly treating other CIS countries, Vladimir Putin is unlikely to seriously perceive Abkhazia as an equal partner for Russia, especially given the uncertain circumstances of Abkhazia’s statehood.

Source: http://www.jamestown.org/programs/edm/

07:52 06/07/2011ALL NEWS

Russia to exhibit its defence products at BRIDEX-2011 in Brunei.

http://www.itar-tass.com/en/c154/179976.html

6/7 Tass 25

MOSCOW, July 6 (Itar-Tass) —— Russia will for the first time take part in the Brunei International Defence Exhibition (BRIDEX-2011) that opens in Bandar Seri Begawan on Wednesday, a spokesman for the Russian federal service for military and technical cooperation told Itar-Tass.

“The exhibition specializes in defence-related hardware, such as armored vehicles, tanks, artillery, missile defence systems, engineering and sapper equipment, etc.,” the spokesman said.

This year 320 companies from 30 countries will take part in the exhibition. Brunei, Singapore, Turkey, the United States and Malaysia will show the largest expositions.

Russia’s exposition is organized by Russian Technologies state corporation.

Russia’s state-run arms exporter will bring amphibious infantry vehicles BMP-3M, GAZ-233036 armoured vehicles, Yak-130 trainer aircraft, Ka-226 helicopter, Tor-M2E missile systems and advertising booklets with Russia’s 120 military vehicles.

The exhibition will be held till July 9.

10:59 06/07/2011ALL NEWS

9th international hi-tech hardware and armaments exhibition opens in Omsk.

http://www.itar-tass.com/en/c154/180076.html

6/7 Tass 11

OMSK, July 6 (Itar-Tass) —— More than 120 Russian and foreign companies are taking part in the 9th international hi-tech hardware and armaments exhibition VTTV-Omsk-2011, which opens here on Wednesday.

Apart from defence-related exhibits, VTTV-Omsk-2011 will feature double-use products and technologies, and civic goods manufacture with the use of double-use technologies.

The exhibition will for the first time incorporate an interregional exchange of contracts. Within its frameworks, three councils, the council under Russia’s presidential envoy in the Siberian federal district, the council of the federal district’s lawmakers, and the council of the Siberian Agreement interregional association, will be held. The exhibition’s program also includes such forums as “High Technologies as the Base for Innovation Development of Russian Regional Economies,” and “Technologies. Innovation. Future.”

The Omsk region will present 199 prospective projects developed by local enterprises, research institutions, and educational establishments in such areas as aerospace, machine-building, innovation.

The exhibition’s organizer, Russian Technologies corporation, will have its own exhibition stall.

Within the exhibition’s framework, the Siberian Machine-building program will be presented.

The exhibition’s overall area exceeds 11,000 square meters. It will be closed on July 9 after a show of military hardware at a training testing ground near the settlement Svetly.

Russia to submit claim on expanding Arctic borders: officialhttp://www.edmontonjournal.com/news/world/Russia+submit+claim+expanding+Arctic+borders+official/5056499/story.html

 Agence France-Presse July 6, 2011 2:22 AM

MOSCOW — Russia will next year submit a claim to the United Nations on expanding its borders in the Arctic, Deputy Prime Minister Sergei Ivanov said on Wednesday.

"I expect that next year we will present a well-based scientific claim about expanding the borders of our Arctic shelf," Russian news agencies quoted Ivanov as saying in the far northern town of Naryan-Mar in the Arctic Circle.

Ivanov was speaking as Russian scientists embarked on a second expedition aimed at proving its claims to Arctic territory.

Russia had alarmed its Arctic neighbours, including Canada and Norway, when it planted a flag on the ocean floor under the North Pole in 2007 in a symbolic staking of its claim over the region.

© Copyright (c) AFP

11:46 06/07/2011ALL NEWS

URGENT: RF to apply to UN for expanding its Arctic borders -Ivanov.

http://www.itar-tass.com/en/c154/180131.html

6/7 Tass 130

NARYAN-MAR, July 6 (Itar-Tass) —— Russia will present to the United Nations Organisation in 2012 an application to expand its Arctic borders, Deputy Prime Minister Sergei Ivanov told the Sea Collegium meeting on Wednesday.

“I hope that next year we shall present to the UN commission a scientifically reasonable application to expand our off-shore borders in the Arctic,” he said.

03:15 06/07/2011ALL NEWS

Marine Collegium to centre on Arctic domestication & shipments there.

http://www.itar-tass.com/en/c154/179937.html

6/7 Tass 3

NARYAN-MAR, July 6 (Itar-Tass) — The meeting of the Russian Marine Collegium, chaired by vice-premier Sergei Ivanov, will discuss on Wednesday domestication of the Arctic and boosting shipments along the Northern Sea Route.

The collegium told Itar-Tass that domestication of the Arctic would be the first question under discussion. The agency will discuss the Strategy for the development of the Russian Arctic Zone and areas for cooperation with Russian partners in operation in that region.

Prime Minister Vladimir Putin said earlier that Russia intends firmly to defend its geopolitical interests in the Arctic. “Russia intends to expand its presence in the Arctic,” he said. The premier noted that Moscow is in constant contact with partners in developing the Arctic region. “But we shall defend firmly and consistently our own geopolitical interests,” he emphasised.

According to the premier, modern border infrastructure, weather stations and a monitoring system over the state of weather and biological resources will be developed in the region.

The second question on the agenda will be an increase in shipments along the Northern Sea Route. In the opinion of collegium participants, modern climatic conditions permit to use more actively this route, including to ship oil products or LNG. At the same time, impressive investments in port infrastructure are necessary to achieve success of this project.

For instance it is necessary to build in Russia floating factories to produce LNG and oil platforms. The use of floating factories is justified at some shelf deposits, whose development is too expensive or impossible at all by other methods.

Construction of such a factory is approved so far in the world only by the Royal Dutch Shell Company. The floating factory for the company will be built at shipyards in South Korea. Some companies of the energy sector in Russia also display interest in such factories, while the Russian Joint Shipbuilding Corporation examines a possibility of their construction at one of its shipyards.

11:43 06/07/2011ALL NEWS

FC to ratify about 20 agreements laying legal basis for CES.

http://www.itar-tass.com/en/c154/180128.html

6/7 Tass 2

MOSCOW, July 6 (Itar-Tass) —— The Federation Council will debate about 20 international agreements, which form a legal basis for the Common Economic Space, at a plenary meeting on Wednesday.

The documents set the guidelines for the harmonized macroeconomic policy, common principles and rules for the regulation of entities of natural monopolies, competition, industrial subsidies and the state support of agriculture. Meanwhile, the agreements within the Customs Union describe the status of labour migrants and lay out the procedure to counteract illegal migration from the countries, which are not members of the Customs Union.

The senators will also discuss a considerable number of social bills. For instance, high on the agenda are the amendments in the bankruptcy law and the Arbitration Procedural Code, which oblige the housing subcontractors going bankrupt to repay the funds to the shareholders first of all. The key innovation is a clause of the privileged repayment of the financial claims to the entities in construction ahead of the claims of other creditors.

Another important bill for people concerns the deadlines of compulsory installing water, heating and electric power meters moved from January 1 to July 1, 2012. The deadlines for equipping the residential houses with the most expensive gas meters are expected to be postponed from January 1, 2012 to January 1, 2015.

The Federation Council is also expected to approve the bills, under which the insurance company will have to pay a compensation to the families of servicemen, who committed suicide regardless their term of military service, rather than after six months of military service. Under the efficient legislation the insurance company is exempt of insurance compensations to the family of a serviceman, if the insurance event took place as a result of suicide without no evidence, which proved that the insured person was instigated to suicide or if the term of military service of the dead serviceman is less than six months.

Meanwhile, the senators will debate a bill, which enlarges the list of people, which are granted the priority right to pass vocational training or retraining and to raise their qualification. This list includes unemployed disabled people, who are registered at the state-run recruitment service, and people, who did not work for more than six months, servicemen dismissed from the military service and their spouses, school graduates and Russian citizens, who are looking for a job for the first time and who have no specific qualification. Now the list is offered to be added with unemployed parents of disabled children, their guardians and foster parents, who are registered in the state-run recruitment service.

The senators will also vote for a fine of 10,000 roubles for bureaucratic arbitrariness and procrastination. The efficient legislation stipulated that officials, who violated the procedure of public addresses by the state authorities, bear responsibility for this violation. However, until recently the legal provisions, which introduce concrete sanctions for these violations, were not enacted. The amendments will eliminate this loophole in the legislation.

The Federation Council is also planning to appoint the judges of the High Arbitration Court and to hear a report, which Minister of Regional Development Viktor Basargin will deliver at a question-and-answer governmental session. The minister will dwell on the measures to improve interethnic relations and to create conditions for an ethnic cultural development of the peoples in Russia.

02:00 06/07/2011ALL NEWS

Duma to examine lower passing barrier at general election to 5pc.

http://www.itar-tass.com/en/c154/179931.html

6/7 Tass 5

MOSCOW, July 6 (Itar-Tass) — The State Duma will examine on Wednesday in the first reading a bill on lowering the passing barrier from seven to five percent at federal general elections. An appropriate initiative was put forth by the Russian president.

The new bill, say accompanying documents, “cuts from seven to five percent the minimum percentage of votes that is necessary to win for a list of candidates at elections to the Russian State Duma to participate in the distribution of seats”. This rule is suggested to be applied for elections of the seventh and subsequent State Dumas.

President Dmitry Medvedev said at a meeting with Russian reporters on June 23 that the present seven-percent barrier for parties at elections to the State Duma “is already much indeed”. Medvedev promised at the time to work out a bill, changing the situation. However, in the president’s opinion, the coming federal election campaign to the legislature – next December – should pass according to old legislation. “But the next elections should pass at five percent. If it is still much, we shall make three percent,” the head of state said.

Speaking earlier with The Financial Times, Medvedev said that changes to raise political competition in Russia are ripe. “I believe that in principle these changes (higher political competition) are already ripe, since structurisation of the political system has taken place, and this, I reckon, is understandable to all, including to our biggest party United Russia,” he said.

The president expressed conviction that absence of political competition “is not for us”. “For foundations of a market economy start disappearing in absence of political competition, since political competition is to some extent a manifestation of economic competition,” he explained. “Economic approaches start disputing, and these economic approaches generate their leaders,” Medvedev added.

“It’s very bad that we don’t have right-wingers in parliament,” he noted. “I should like that the entire political range should be represented in parliament, the State Duma,” he added.

The Duma majority came out in support of the president’ s initiative and promised to vote in favour of lowering the election barrier down to five percent.

Medvedev ponders amnesty for economic crimeshttp://english.ruvr.ru/2011/07/06/52832637.html

Jul 6, 2011 00:54 Moscow Time

President Dmitry Medvedev said on Tuesday that the death of lawyer Sergei Magnitsky in pre-trial custody was caused by criminal actions, RIA Novosti news agency reports.

Speaking after a meeting with the presidential civil and human rights council in the North Caucasus city of Nalchik on Tuesday Medvedev did not rule out partial amnesty for economic crimes adding that excessive punishment for economic wrongdoing was reflecting negatively on Russia investment climate.

Medvedev talks social and economic issues in Nalchikhttp://english.ruvr.ru/2011/07/06/52838675.html

Jul 6, 2011 09:36 Moscow Time

President Dmitry Medvedev has urged Muslim organizations to support the return of non-Caucasian ethnic groups to the Caucasus.

Medvedev focused on the situation in Russia’s southern regions as he addressed a meeting of the civil and human rights council in the North Caucasus city of Nalchik on Tuesday.

Other issues discussed included the “Magnitsky case”. President Medvedev said that the death of Hermitage Capital lawyer Sergei Magnitsky in pre-trial custody was caused by criminal actions.

With regards to economic crimes, Medvedev did not rule out partial amnesty for economic crimes adding that excessive punishment for economic wrongdoing was reflecting negatively on Russia’s investment climate.

06 July 2011, 10:08

Medvedev praises Islamic clerics campaigning against extremism http://www.interfax-religion.com/?act=news&div=8567

Nalchik, July 6, Interfax - President Dmitry Medvedev counts on help from the Muslim community in the fight against extremism.

"We will fight terror consistently and without compromise," Medvedev said, addressing Russian muftis on Tuesday.

"Muslim organizations are in the vanguard, and your struggle for the purity of faith requires great personal courage," he said.

About two dozen Muslim spiritual leaders, who resisted attempts to tie extremism with Islam, have died at the hands of bandits in recent years, Medvedev said.

He acknowledged that the problem of terrorism had no quick solution, but added that "what matters is the unity of our intentions and consistency of our efforts."

Bringing those who have not committed severe crimes back to normal life is another important task, to which both the federal and regional authorities, and the Muslim community, should contribute, Medvedev said.

"If we act consistently, we will achieve this goal," he said.

A consolidated position of all our citizens and support from the international community, including the Muslim nations, is necessary, he said.

Developing friendly ties with the Islamic world is a top priority for Russia, he said.

RT News line, July 6

Russia lists terrorists and their supporters acting on its soilhttp://rt.com/politics/news-line/2011-07-06/#id13753

10:15

The Rossiyskaya Gazeta newspaper published Wednesday a list of Russian and foreign terrorists, as well as their sponsors, operating on Russian territory of the country. The

Russian part of the list was provided by the Ministry of Justice. The details pertaining to foreign individuals and organizations are based on official United Nations data obtained by the newspaper from Russia’s Foreign Ministry. The 2,000-page-long document presents the list of companies and individuals whose money laundering activity and sponsoring of terrorist activities have been proven in court. Among others, the list includes Al Qaeda, the Caucasus Emirate, and the leader of Caucasus militants Doku Umarov.

Russia publishes its money laundering and terrorism financing listhttp://en.rian.ru/russia/20110706/165046783.html

06:29 06/07/2011

MOSCOW, July 6 (RIA Novosti)

Russian government daily Rossiiskaya Gazeta on Wednesday published the list of individuals and companies involved in money laundering and terrorism financing.

The first of the document part, compiled by the Foreign Ministry on the basis of similar UN documents, lists some 600 foreign companies and individuals.

The second one, compiled by Russia's Justice Ministry, focuses on those whose activities are directly related to Russia. A total of 48 organizations and over 1,500 individuals are mentioned in the second part of the list.

Only organizations and individuals, whose illegal activities were established in court or whose activities on the Russian territory were officially ended, were listed.

"Specialists say, however, that there is a classified part of the list, where terrorism and extremism suspects are mentioned," the newspaper wrote.

10:11 06/07/2011Top News

Medvedev gives instructions after meeting on APEC summit run-up

http://www.itar-tass.com/en/c32/180052.html

MOSCOW, July 6 (Itar-Tass) — Russian President Dmitry Medvedev gave instructions after a recent meeting for the run-up to an APEC summit in Vladivostok in 2012, the Russian presidential press service reported on Wednesday.

The document obliges the Defence Ministry to pass the lands in the ministry possession from federal to the Primorsky Territory’s state property and to Vladivostok’s municipal property to build summit facilities there.

The government will also determine the amount and sources of financing the APEC summit and will make proposals to build the transport infrastructure, particularly overhaul the runway of the Knevichi airport in Vladivostok and to build a waterway to the Russky Island, where the APEC summit will be held.

UPDATE 1-Russian police search Novartis,Teva offices-reporthttp://in.reuters.com/article/2011/07/05/russia-pharma-police-idINLDE7641J120110705

12:22am IST

* Police raid Russian offices of four drugmakers-report

* Novartis confirms search took place

* Investigation into carve-up of state supplies-report (Adds Teva and industry source comments, byline)

By Maria Plis

MOSCOW, July 5 (Reuters) - Russian police searched the offices of four pharmaceutical companies in Moscow on Tuesday, including Swiss drug maker Novartis AG (NOVN.VX: Quote, Profile, Research) and Israel-based Teva (TEVA.TA: Quote, Profile, Research), the business daily Vedomosti reported, quoting a police source.

Vedomosti, in a report on its website, quoted the source as saying the searches were part of an investigation into an alleged carve-up of the market for supplying the state healthcare system with essential drugs.

The government runs a system of subsidised purchases of drugs for low-income citizens. An investigation into the system showed the bulk of state supply contracts worth over $2 billion went to six distribution firms in 2006-08.

A Novartis spokeswoman in Moscow confirmed the search took place and said the company was cooperating with the police. She declined to explain the substance of the investigation.

Teva's spokesman in Israel confirmed police were in the company's Moscow office but said the visit concerned a "matter not related to Teva," adding that "it was only for the purpose of providing testimony."

An industry source said police have been investigating suspicions over a former distributor for several drug firms, including Teva, regarding its pricing policy.

"The police came to Teva's office to examine the possibility that Teva employees who worked with the distributor would testify," the source said.

The two other firms are Russian drugmakers Valenta and Akrikhin, Vedomosti said, quoting the source.

A source close to Akrikhin confirmed the search took place, while Valenta was not available for comment.

Novartis plans to invest $500 million in Russia over the next five years and build a plant in St. Petersburg to strengthen its position in the market, which is expected to exceed $60 billion by 2020. [ID:nLDE6BJ060]

Teva, the world's largest generic drugmaker, plans to invest up to $100 million in a drug production plant in Russia as it aims to more than triple Russian sales by 2015. [ID:nLDE66S151]

Russian Prime Minister Vladimir Putin has warned international pharmaceutical companies and medical equipment makers that they will face restrictions in Russia if they fail to develop local production and transfer technology.

International pharmaceutical firms currently control about 80 percent of the Russian drugs market. Putin said the situation was threatening Russia's national security.

International drugmakers see Russia as a fast-growing emerging market to offset slowing sales in Western markets. (Reporting by Maria Plis; Additional reporting by Tova Cohen; Writing by Gleb Bryanski; Editing by Will Waterman and John Wallace)

July 06, 2011 11:03

Police involved in almost half of all car hijacking groups in Russia – ministryhttp://www.interfax.com/newsinf.asp?id=257133

MOSCOW. July 6 (Interfax) - Officers from the Russian Interior Ministry Main Directorate for Internal Security have conducted a massive special operation, which

detected about 30 organized criminal groups involved in car hijacking, almost half of them consisted of police officers.

"This operation was carried out for several months simultaneously in a number of regions. Our primary focus was on criminal schemes involving police officers, including road traffic police. Overall, we have uncovered 160 policemen, including seven senior officers, who were involved in the criminal business in one way or another," the Directorate chief, Yury Draguntsev, told Interfax.

Police have detected over 3,500 cars hijacked and stolen by organized criminal groups, almost 3,000 of them with modified identification numbers and nearly 100 with false documents.

"The operation has led to the discovery of 30 organized criminal groups which specialized in car theft and hijacking, 12 of them included police officers," Draguntsov said.

kk jv

(Our editorial staff can be reached at eng.editors@interfax.ru)

Russian-Chinese Youth Games kick off in Penza, Russia http://english.ruvr.ru/2011/07/06/52840238.html

Jul 6, 2011 10:21 Moscow Time500 athletes under 17 will compete in the Fourth Russian-Chinese Youth Games, which kick off in the city of Penza, in the Volga River basin, today. Athletes will compete in 10 events, including the traditional Chinese martial art Wu-shu. The First Games were held in Tianjin in 2006; the Second, in Moscow in 2007; the Third, in Beijing in 2009.  

09:45 06/07/2011ALL NEWS

Man carrying two home-made explosive devices detained in Dagestan.

http://www.itar-tass.com/en/c154/180032.html

6/7 Tass 78

MAKHACHKALA, July 6 (Itar-Tass) —— A gunman having two powerful home-made explosive devices was detained overnight near the settlement of Kakashura in Russia’s

North Caucasian republic of Dagestan, a source in the republic’s interior ministry told Itar-Tass on Wednesday.

The man is a resident of Dagestan’s capital city of Makhachkala. “He had a ten-litre bucket filled with sealing foam with wires. He also had a bag with ammonia nitrate and aluminium powder, also sealed in foam,” the source said.

The two devices weighed about 15 kilograms.

An investigation is underway.

09:08 06/07/2011ALL NEWS

Supposed gunman killed in Dagestan.

http://www.itar-tass.com/en/c154/180010.html

6/7 Tass 71

MAKHACHKALA, July 6 (Itar-Tass) —— A supposed militant who opened gunfire at police was killed in the Khasavyurt district of Russia’s North Caucasian republic of Dagestan, a spokesman for Dagestan’s administration of the Russian Investigations Committee told Itar-Tass on Wednesday.

“At about 07:00 a.m. Moscow time when a search operation was in progress in the village of Toturbiykala, an armed man ran out of one of the houses and opened gunfire at policemen,” the spokesman said. “Police opened fire in response and killed the man.”

The man is a local resident who is believed to have been involved in a recent shooting of a private shop in the village. The shop’s owner was wounded in the incident.

Policemen received no wounds. Investigators are trying to find out whether the man was involved in other crimes or whether he was a member of illegal armed gangs.

Russian Muslims ask Moscow to lobby Saudis for increased haj quota to Meccahttp://blogs.reuters.com/faithworld/2011/07/05/russian-muslims-ask-moscow-to-lobby-saudis-for-increased-haj-quota-to-mecca/

Jul 5, 2011 17:03 EDT

Spiritual leaders from Russia’s large minority of Muslims asked President Dmitry Medvedev on Tuesday to press Saudi Arabia to increase the number of worshippers allowed to perform the annual Haj pilgrimage. Almost three million Muslims flock to Mecca every year for Haj, a duty every able-bodied Muslim who can afford it must perform at least once in their lifetime. Riyadh allocates quotas for Muslims around the world.

Russia, home to 20 million Muslims, or around one seventh of the population, is allowed to send 20,000 Muslims a year for Haj, Mufti Ismail Berdiyev told Medvedev. They were attending a meeting with other Muslim leaders in Kabardino-Balkaria’s capital Nalchik in the mainly Muslim North Caucasus.

“So many people want to go. Maybe you could bring this up in talks with Saudi Arabia?” asked Berdiyev, who heads the Muslim community in Karachay-Cherkessia, not far from Nalchik.

Since the fall of Communism 20 years ago, Russia’s Muslims have embraced a spiritual revival after decades of Soviet authorities forcing all religions underground. Mosques across the North Caucasus are swelling in number, learning Arabic has become popular amongst the young and Muslim media outlets are sprouting up across the country. Around half of Russia’s Muslims live in the North Caucasus, a patchwork of mountainous republics on its southern fringe, also home to a growing Islamist insurgency.

Medvedev vowed to bring it up with Saudi officials next time they meet. “We have open dialogue with them on all issues,” he told Berdiyev and other muftis.

Russian Muslims ask for increased Haj quotahttp://www.trust.org/alertnet/news/russian-muslims-ask-for-increased-haj-quota05 Jul 2011 18:58

Source: reuters // Reuters

By Denis Dyomkin

NALCHIK, Russia, July 5 (Reuters) - Spiritual leaders from Russia's large minority of Muslims asked President Dmitry Medvedev on Tuesday to press Saudi Arabia to increase the number of worshippers allowed to perform the annual Haj pilgrimage.

Almost three million Muslims flock to Mecca every year for Haj, a duty every able-bodied Muslim who can afford it must perform at least once in their lifetime. Riyadh allocates quotas for Muslims around the world.

Russia, home to 20 million Muslims, or around one seventh of the population, is allowed to send 20,000 Muslims a year for Haj, Mufti Ismail Berdiyev told Medvedev.

They were attending a meeting with other Muslim leaders in Kabardino-Balkaria's capital Nalchik in the mainly Muslim North Caucasus.

"So many people want to go. Maybe you could bring this up in talks with Saudi Arabia?" asked Berdiyev, who heads the Muslim community in Karachay-Cherkessia, not far from Nalchik.

Since the fall of Communism 20 years ago, Russia's Muslims have embraced a spiritual revival after decades of Soviet authorities forcing all religions underground.

Mosques across the North Caucasus are swelling in number, learning Arabic has become popular amongst the young and Muslim media outlets are sprouting up across the country.

Medvedev vowed to bring it up with Saudi officials next time they meet. "We have open dialogue with them on all issues," he told Berdiyev and other muftis.

Around half of Russia's Muslims live in the North Caucasus, a patchwork of mountainous republics on its southern fringe, also home to a growing Islamist insurgency.

The rest live mostly in the oil and petrochemicals producing regions of Tatarstan and Bashkortostan, 2,000 km (1,242 miles) northeast of the Caucasus.

Two years ago the leader of the volatile Chechnya region in the North Caucasus, Ramzan Kadyrov, started offering free flights to Mecca for 400 Chechens a year, using state funds. (Writing by Amie Ferris-Rotman)

09:51 06/07/2011ALL NEWS

Chief police officer in Tyumen region dies of sweeping burns.

http://www.itar-tass.com/en/c154/180037.html

6/7 Tass 76

TYUMEN, July 6 (Itar-Tass) —— The chief of the Tyumen regional police department, Lieut. Gen. Pavel Nedorostov, died of sweeping thermal burns as a result of an electric shock injury on Wednesday, the press service of the police department told Itar-Tass.

Nedorostov was hospitalized with about 60% of sweeping skin thermal burns as a result of an electric shock injury on June 19.

The Tyumen regional branch of the Investigation Committee is investigating an incident, in which Nedorostov was lethally hurt.

10:41 06/07/2011ALL NEWS

Chief editor of Yakutia branch of central daily detained for bribery.

http://www.itar-tass.com/en/c154/180063.html

6/7 Tass 90

MOSCOW, July 6 (Itar-Tass) —— An editor-in-chief of the local edition of the Moscow-based Moskovsky Komsomolets newspaper was been detained in Russia’s republic of Yakutia for corrupt business practices in respect of judges of Yakutia’s Supreme Court, a spokesman for the Russian Investigations Committee told Itar-Tass on Wednesday.

A criminal case was opened against Igor Grishchenko on bribery charges, the spokesman said.

Investigators established that in June 2011, in abuse of his office Grishchenko demanded a sum of 240,000 roubles from the Supreme Court’s press secretary for not publishing detractive information about the court.

On July 5, the journalist was caught red-handed while receiving the money from a go-between.

09:50 06/07/2011ALL NEWS

Criminal case opened against Udmurtia ammo depot commander(adds).

http://www.itar-tass.com/en/c154/180036.html

6/7 Tass 75

MOSCOW, July 6 (Itar-Tass) —— A criminal case was opened against the commander and an assistant commander of the 102nd ammunition storage in Udmurtia, where the ammunition blasts went off, senior aide to the military prosecutor in the Central Military District Sergei Bogomolov told Itar-Tass on Wednesday.

“Upon results of the prosecutor’s inspection a criminal case was opened against commander of the 102nd ammunition depot Col. Yuri Banin and his assistant commander Lieut. Col. Oleg Suvorov under two articles of the Criminal Code for violation of the security rules at explosion hazardous facilities and for violation of the handling rules with ammunition, Bogomolov underlined.

He noted that the military prosecutor’s office in the Central Military District has made inspections at the 99th ammunition storage in the Iglino district of Bashkortostan near Urman and at the 102nd ammunition storage in the settlement of Pugachevo in Udmurtia for the rules of ammunition safe storage and fire safety.

“The detectives found out that the ammunition blasts were prompted by law violations, which military officials at the ammunition storages committed in the fire safety rules and the rules for safe operations,” the senior aide to the military prosecutor said.

The commander of the troops in the Central Military District was instructed to eliminate the violations.

As far as the blasts at the ammunition storage in Bashkortostan are concerned, Bogomolov noted that “upon results of an inspection carried out by the military investigation department in the Central Military District against military officials a criminal case was opened under Article 217 Part 1 for violation of the safety rules at explosion hazardous facilities.” A criminal case was opened against Private Sergei Denyayev under two articles 217 and 349 of the Criminal Code, Bogomolov said.

The incident at the ammunition storage in Pugachevo in Udmurtia broke out overnight to June 3. The fire spread on 18 ammunition depots and about 150 buildings on eight kilometres. Some 170,000 ammunitions were being kept at the ammunition storage and only a third of them remained dud. Some 28,000 people were evacuated and 100 people were injured in the blast zone. A soldier died in the fire-fighting efforts and two civilians died of heart attacks. The explosions and the blast wave destroyed 3,000 houses and social facilities. Defence Minister Anatoly Serdyukov offered to President Dmitry Medvedev to dismiss several high-ranking military officials, including a general, for the blasts at the ammunition storage in Udmurtia. Other culprits in the incident, including Deputy Defence Minister Dmitry Bulgakov, were offered to be reprimanded.

On May 26, the ammunition boxes caught fire that triggered their blasts at the 99th ammunition storage in Urman. Some 40 buildings, including 14 residential houses, burnt down. Some 2,700 people were evacuated from the dangerous zone and 46 people

remained homeless. Some 12 people were injured. The Investigation Committee reported earlier that a criminal case was opened against Private Sergei Denyayev. The detectives found out that when defusing and storing empty shells from artillery projectiles he threw a full shell to other unarmed shells in violation of the security rules that triggered the ammunition blasts.

July 06, 2011 10:10

Moscow press review for July 6, 2011http://www.interfax.com/newsinf.asp?id=257120

MOSCOW. July 6 (Interfax) - The following is a digest of Moscow newspapers published on July 6. Interfax does not accept liability for information in these stories.

VEDOMOSTI:

For the "owners" of the gas transportation system, i.e. for Gazprom (RTS: GAZP) and its subsidiaries, the mining tax rate will be increased starting from 2012. However, there are two alternatives, the Finance Ministry said. The first one is to raise the tax to 509 rubles per 1,000 cubic meters. Such a rate is necessary if Russia fails to abolish duty-free gas supplies to Turkey through the Blue Stream gas pipeline, the ministry said on its website. The second option is to set a mining tax for Gazprom at 431 rubles, if Blue Stream concessions are canceled. Currently, the standard export duty is 30% of the gas price. The ministry does not specify which rate has been set for Turkey. But considering Gazprom's production plans for 2012-2014, it will turn out that the Turkey concession could cost 41-45 billion rubles a year. ("Billions from Gazprom")

RusAl is gradually losing its main competitive advantage: cheap electricity. Its cost for RusAl's Siberian plants in the first quarter has risen by 43%, a source close to a company of RusAl co-owner and general director Oleg Deripaska and a source close to the Market Council (Sovet Rynka) supervisory board told Vedomosti. The figure was also confirmed by a RusAl spokesperson. These are total electricity costs, including the cost of electricity, capacity and power transmission services and infrastructure payments, he said. For enterprises located in the European part of Russia and in the Urals, energy costs have risen 27%, even though they account for just 15% of the company's aluminum production, the RusAl spokesman said. ("RusAl wil pay an extra $130 million for the light")

Russian Internet search leader Yandex is not developing its mobile services actively enough, such is the opinion voiced by analysts from three investment banks on Tuesday. For a more efficient competition with Google, which is increasing its market share thanks

to the Android operation system, Yandex has to follow suit, the analysts said. ("Yandex is mobilizing")

KOMMERSANT:

Kommersant has learnt details of a new reform on the Russian energy market, which is being prepared by a working group led by First Deputy Prime Minister Igor Shuvalov. An alternative model has been offered by the Market Council, but both involve the diminished role of electric power payments in the income of power generating companies, the undermining of the domineering of the largest electric energy sellers on the retail market and the priority of direct contracts between energy companies and consumers. The result should be a stronger competition that will put a cap on energy price growth. (page 1, "Energy market to be locked up in direct contracts")

A serious fight has erupted for the main asset of the bailed out KIT Finance bank (RTS: CITB) - 1 36 billion ruble mortgage portfolio. VTB 24 (RTS: GUTB) selected as the portfolio buyer in late May risks losing to Sberbank (RTS: SBER), which has unexpectedly offered a higher price. Now the KIT Finance management is facing a dilemma: whether to sell the mortgage to VTB 24 experienced in this matter, which will pay less but faster, or to Sberbank, which has never bought anyone's portfolios, which could protract the deal. (page 7, "KIT Finance is rebuilding the mortgage")

Swiss bank UBS has become the owner of 4.5% shares in the National Reserve Bank (NRB). Source told Kommersant that UBS has become a nominal shareholder of the bank controlled by ex-MP Alexander Lebedev. Such a transaction may have been undertaken by the owner in order to protect his business from political risks, experts said. (page 8, "Alexander Lebedev opens account for Swiss banks")

Russian Press at a Glance, Wednesday, July 6, 2011http://en.rian.ru/papers/20110706/165048314.html

08:22 06/07/2011

POLITICS

Outgoing St. Petersburg Governor Valentina Matviyenko, who is expected to head the Russian parliament's upper house in the near future, had a closed meeting with Federation Council members.

(Kommersant, Moskovskie Novosti, Rossiiskaya Gazeta, Izvestia, Nezavisimaya Gazeta)

NATO and Russia again failed to agree on European missile defense.

(Rossiiskaya Gazeta, Nezavisimaya Gazeta)

Russian Prime Minister Vladimir Putin said he was ready to add more projects to the list of six government-financed “megaprojects.”

(Moskovskie Novosti, Izvestia, Nezavisimaya Gazeta)

The head of the presidential administration, Sergei Naryshkin, said after his visit to Japan, the two states currently have “a more favorable atmosphere” in bilateral relations, marred by the territorial dispute over the Kuril Islands. The two countries set up a scientific commission to study “disputed issues” in Russo-Japanese relations

(Kommersant, Izvestia)

ECONOMY

Russian macroeconomic statistics gives ground for cautious optimism as capital outflow slowed from $21.3 billion in the first quarter of 2011 to $9.9 billion in the second.

(Izvestia)

POWER GENERATION

A working group led by First Deputy Prime Minister Igor Shuvalov proposed a reform aimed at curbing price growth in the Russian energy market. Meanwhile, the Russian economics ministry has already sent proposed electricity tariffs increases to the government

(Kommersant, Rossiiskaya Gazeta, Izvestia)

TELECOMS & IT

World’s largest cell phone manufacturer Nokia is set to cut its smartphone prices as its share in this market segment continues to shrink rapidly

AVIATION

Next year, Russia will ban aircraft not equipped with terrain awareness and warning systems from flying in its airspace, Russian Deputy Transport Minister Valery Okulov said.

(Rossiiskaya Gazeta)

Authorities proposed 10-year prison terms for people who direct laser pointers at airplanes after the practice went viral in recent weeks.

(The Moscow Times)

DEFENSE

Several influential members of the top brass have resigned, prompting speculations that they had to resign due to differences with the head of Russia's General Staff over his implementation of military reforms. One of them, Lt. Gen. Andrei Tretyak, former head of the General Staff Main Operations Directorate, dismissed the reports in his interview with Vedomosti.

(Rossiiskaya Gazeta, Izvestia, Vedomosti)

SOCIETY

Russian President Dmitry Medvedev met with the presidential civil and human rights council in the North Caucasus city of Nalchik, where he heard reports on the council’s probe into the death of lawyer Sergei Magnitsky in pre-trial custody.

(Kommersant, Izvestia, Vedomosti, The Moscow Times, Nezavisimaya Gazeta)

Investigators are trying to establish the causes of an attempted suicide by a high-ranking official in the Russian Prosecutor General's Office, Vyacheslav Sizov

(Kommersant, Rossiiskaya Gazeta, Nezavisimaya Gazeta)

SPORT

Some six months after winning a bid to host the 2018 FIFA World Cup, the Russian Sports Ministry has prepared a draft special law on the event, which includes free transport between the host cities, visa-free entry to Russia to all ticket holders and zero taxes for organizers(Kommersant, Vedomosti)

12:18 06/07/2011ALL NEWS

Russian press review.

http://www.itar-tass.com/en/c154/180159.html

6/7 Tass 85

MOSCOW, July 6 (Itar-Tass) ——ITAR-TASS World Service

Human rights council presents its view of the Magnitsky case to the president

Russia’s President Dmitry Medvedev ran a meeting of the presidential human rights council in Nalchik on Tuesday, where he received results of the investigation of the Sergei Magnitsky case. The results the human rights activists presented differ to an extent from those of the investigation committee, which accuses the prison’s doctors of the lawyer’s death. Preliminary results of the investigation say that detective Oleg Silchenko may be responsible for the tragedy. The president promised to hand in the expertise results to law enforcement authorities.

New persons, responsible for the death of Sergei Magnitsky, were presented to the president, the RBC daily writes. A day earlier, Russia’s Investigation Committee reported that it was the medical staff of the pre-trial prison No. 1 that was responsible for the death of the Hermitage Capital’s lawyer. But the presidential human rights council presented to Dmitry Medvedev the expertise, which states that law enforcement staff is to blame, too. The newspaper quotes Head of the council, Mikhail Fedotov, as saying that having listened to the human rights experts the president wrote an order on the report and gave instructions to the Prosecutor General’s Office and to the Investigation Committee.

A member of the council, Igor Yurgens, told the Vedomosti that the president’s reaction to the report was favourable. He recommended to the council members not to stop their activities and to publish the report. He also signed orders right on the spot to check all the information contained in the report, which refers to the entire law enforcement system. At the same time, another participant in the meeting mentioned, it was evident that Medvedev is sort of irritated with the fuss around Magnitsky and Khodorkovsky, and that he suggested the participants in the meeting also paid attention to other cases of injustice.

The Moskovsky Komsomolets reports that Mikhail Fedotov came out with an initiative: to let the council members run anti-corruption expertise of presidential orders. It appears that the federal law 172 on anti-corruption expertise does not say a word about the necessity to have expert analysis of the bills initiated by the president.

The Rossiiskaya Gazeta writes that besides the Sergei Magnitsky case the participants discussed other topics, too. The agenda included: harmonisation of inter-ethnic relations, fighting extremism and religious discord and the role of civil society there. The president is convinced that the major topic includes measures of legal character, including limitations for state employment for those with previous convictions for extremist crimes. The complex of measures, as Medvedev explained, should include information resources so that every nationality in the country could have its own media; equal access to employment at municipal services and inadmissibility of national discrimination.

X X X

Generals’ uprising turns out to be faked

Chief of the Main Operative Directorate and deputy chief of the General Staff Andrei Tretyak has filed a resignation. In April, two other generals – first Deputy Chief of Land Forces Sergei Skokov and Head of the General Staff’s Radio-Electronic Department Oleg

Ivanov filed their resignations. Media give various reasons for this “Exodus” of the generals. Some say that the general’s uprising has turned out to be faked.

The Komsomolskaya Pravda repeats the version, which the Nezavisimaya Gazeta mentioned on Monday about an outright uprising at the defence ministry. Many experts say that the uprising had been emerging for quite a time and that it was caused first of all by the methods of reforming the army, which Head of the General Staff Nikolai Makarov was using. Earlier the generals expressed their disagreement orally, and now they decided to express their protest by filing resignations. The newspaper refers to sources in the defence authority and forecasts that other high-ranking military, who do not share Makarov’s reforms, will also file a resignation soon.

At the same time, Andrei Tretyak called the version “insane” and added that the resignation he filed was caused by health aspects only, the Vedomosti writes. A source at the defence authority said that the ministerial certification commission suggests serving in the troops to officers, who have been working in Moscow for five years. About a third part of the officers, who filed a resignation following the commission, do not want to leave Moscow.

The Rossiiskaya Gazeta publishes an interview with the Defence Ministry’s Secretary of State Nikolai Pankov. He describes the situation as follows: generals Skokov and Ivanov were offered different positions. It is worth mentioning they had various options to choose from. But they preferred to quit, filed a resignation and refused from further military service. As for General Tretyak, his story is different. He quits for health reasons. Now he is in hospital. The entire story, Pankov said, has nothing to do with Makarov. All the rumours about disapproval of his methods are “absolute nonsense,” he added.

The summer heat and lack of real news often make media use “wishful thinking,” the Moskovsky Komsomolets writes. This is why regular resignations caused by rotation of the military staff were taken by reporters as some uprising of the generals. The defence ministry says that “practically every third of those who filed a resignation made so following the offer to change the location of service from the capital’s region for similar positions in the troops. Firings are painful as a rule and quite often later on they are presented as specific positions regarding the army reforms made.”

X X X

High-ranking general of the Prosecutor General’s Office attempts suicide

On Tuesday, head of the division supervising the federal security service, a key division of the Prosecutor General’s Office, Vyacheslav Sizov used a duty gun in a suicide attempt. The reason of this headline-making attempt remains a mystery.

The chief supervisor of the federal security service and a leading prosecutor fighting extremism, who initiated closing organizations like Movement Against Illegal

Immigration and the Slavic Union, made a gun shot in his head while in his own office in the Bolshaya Dmitrovka Street, the Kommersant writes. Preliminary information says that the general put the barrel into his mouth and pressed the trigger. However, at the very last moment, his hand must have shivered and the bullet got not into the brain, but right through the ear. Vyacheslav Sizov was taken to hospital, his condition was extreme. He had a surgery in the evening, but the doctors do not give forecasts whether he will live or not.

The newspaper learnt from the Prosecutor General’s Office that the staff was shocked by the decision of the department’s head to commit a suicide. The colleagues do not see any reasons for the decision. In any case, they said, he was in no way involved in the latest much spoken about scandal – the criminal case about protecting racket of gambling in the Moscow Region, provided by some ‘supervisors’ and the police.

The Prosecutor General’s Office is shocked by the incident, the Moskovsky Komsomolets reports. Sizov was considered to be a most professional manager, and it was his division that was responsible for a most complicated area of work. It was Sizov, who supervised all cases of groups uniting skinheads, nationalists, as well as piquant criminal cases involving staff of the federal security service. At the same time, Sizov never complained about difficulties. The 45 year old servant of justice has been in the position since 2006: earlier he ran the Amur Region’ s prosecution, and prior to it, he grew from a regular investigator of a Tomsk regional prosecutor’s office to the city prosecutor. Sizov is married with a grown-up son.

The Prosecutor General’s Office is turning from a quiet supervising authority, which it has become following the separation from the Investigation Committee, into a scandalous authority, the RBC daily writes. The horrors of the gambling scandal have not faded, and the authority meets another emergency situation. The Prosecutor General’s Office did its best to keep the incident secret. The security refused to let in the police, who came to the building.

“Vyacheslav Sizov is an adequate person, a professional, he is a person of the system,” the State Duma’ s deputy Alexander Khinshtein, who is close to the Prosecutor General’s Office, said. “We are at sea as to what could be the reason of this extraordinary deed, as there were no preconditions for it. Reasons for the incident should be looked for outside the service.”

“We shall check all versions, including his private life, but from my experience I can say that normally a suicide in the office is not caused by the work,” the RBC daily’s source at Russia's Investigation Committee said.

Japan demands removal of Chinese expats from the Kuril Islandshttp://rt.com/politics/press/izvestiya/japan-chinese-kuril-kunashir/en/

Published: 6 July, 2011, 05:02Edited: 6 July, 2011, 05:05

The Japanese believe that Russians should not invite guest workers to the disputed territories By Konstantin Volkov

Japan is once again showing heightened attention toward the Kuril Islands, or as they are referred to by the Japanese, the “Northern Territories.” The reason this time are Chinese farmworkers who were brought in for work by a Russian farmer on Kunashir Island.

The head of the South Kuril city district, Vasily Solomko, told Izvestia that a Chinese farmer who has acquired Russian citizenship is, indeed, employed on Kunashir Island. This year he brought five of his compatriots with him. They are all officially registered, and have the right to enter Russia and the Kuril border area.

The farmer invited some help to work in the greenhouses.

“The farm has been in existence for already two years. But so far, things have been neither good nor bad,” said Solomko. “Last year, they grew about four tons of potatoes. Next year, municipal authorities plan to help the farmer with some equipment.”

The farmer, meanwhile, explains the decision to invite guest workers with the fact that they are cheaper than Russian workers and are fully dedicated.

The Russian legislation does not make a distinction between South Kuril Islands and other regions of Russia.

Therefore, the act of bringing foreign workers on Kunashir Island, consistent with Migration Service procedures, is legal, according to the head of the Sakhalin Information Policy Department, Andrey Zapekly.

President Dmitry Medvedev’s trip to the Kuril Islands in the fall of last year and his statement about the need to develop the region were regarded by the Sakhalin region as a call to action. Already this spring, a presentation on the Sakhalin region was held in Beijing, including various business opportunities on the Kuril Islands. Various projects for the development of the agricultural sector were shown, as well as farms for the cultivation of aquatic bio-resources, and even an aquatic biotech park. Infrastructure on the islands still leaves much to be desired, but according to the economic minister of the Sakhalin region, Sergey Karpenko, new ports are already being constructed and airfields are soon to be upgraded.

The statement about the Chinese living on the “Northern Territories” was negatively perceived by Japan. Any travel by nationals from third countries to the South Kuril

Islands is inconsistent with the position of the Japanese Foreign Affairs Ministry, the counselor of the Japanese Embassy in Moscow, Miyamoto Tetsuji, told Izvestia.

The Japanese government is still thinking about whether or not its citizens are allowed to engage in business on the South Kuril Islands. According to Tetsuji, this possibility is currently being considered by the Japanese Foreign Affairs Ministry. Incidentally, following talks between the Russian and Japanese foreign affairs ministers this past February, Japanese Foreign Affairs Minister Seiji Maehara announced that “the Japanese could think about ways to develop cooperation without harming the legal position of Japan.” At the same time, it could be said that the arrival of Japanese businessmen to the Kuril Islands under the current status and on Russian terms would signify Japan’s renunciation of claims to the “Northern Territories.”

Finding a place in the ratingshttp://rt.com/politics/press/rossijskaya-gazeta/russia-progress-countries-study/en/

Published: 6 July, 2011, 03:16Edited: 6 July, 2011, 03:19

Business conditions and corruption hinder Russia’s ability to attain a decent ranking By Taras Fomchenkov

In the last five to six years, Russia has lost its positions in practically all of the well-known global rankings. A rise in corruption has been one of the main reasons.

This conclusion can be drawn from the Progress Rating, which was presented yesterday during a meeting of the FBK Economic Club. This research is the first global attempt to understand and integrate countries’ movement along the path of socioeconomic progress.

The study shows rather mediocre results for Russia. In the Progress Rating, Russia ranks 97 out of 101.

If we take the works that were used to compile the rating, then in several studies we will see that Russia demonstrated a positive trend between 2006 and 2010 – one being the UN Human Development Index. However, the upward shift is not particularly high – moving from 68th place to 65th. Meanwhile, in the ranking of economically free countries, Russia jumped 10 spots from 96th to 84th.

In all other spheres, however, there is a much stronger negative trend. The biggest contributor was the decline in the Life Quality Index (-40 points), followed by the Corruption Perceptions Index (-33 points), Business Conditions Index (-26 points), and the Economic Freedom Index (-14 points).

Among some of the reasons for the decline, according to experts, are the rise of public spending, nationalization of enterprises, increased control over foreign investors, and a lack of substantial changes aimed at developing the financial sector. A serious role in the negative assessment is also played by the rising level of corruption and an insufficient level of change in the sphere of protection of investors’ rights.

However, despite the fairly wide range of data for the study and the fact that the compilation of the ranking involved a large number of experts, participants in the meeting of the FBK Economic Club were still left with some questions regarding its objectivity.

First, it failed to include a number of countries whose ranking could have had a serious effect on their leaders – among them, Georgia, the Republic of Macedonia and the Dominican Republic. Meanwhile, the study did not include the Republic of Kazakhstan, whose most recent indicators in most of the global ratings date back to 2007. It should be noted that the study’s authors assured the gathered experts that Kazakhstan will be represented in future research and will have a direct influence on the rankings.

There are also questions regarding the weight of certain indicators. For instance, club members drew attention to the fact that China’s “zero” may be worth more than the rise of other countries, because despite its socioeconomic difficulties it is not losing its spot in the rankings. If a country holds on to its positions for five years, that may be more important than another country’s decline or rise.

The director of the Center for Post-Industrial Society Research, Vladislav Inozemtsev, noted that Georgia, which is a leader in the study, has risen across all indicators and at the same time had a declining standard of living. Meanwhile, in the case of Russia, a significant decline in the standard of living was not observed; yet at the same time, it is at the very bottom across all other indicators. Some ratings, says the expert, simply duplicate others – such as the ranking of economically free countries and the Economic Freedom Index. At the same time, according to the expert, it is striking that each of the original ratings is devoted to a separate issue.

“I would use a slightly different pallet, as the current one shows that the weight of the ratings is different,” he suggested.

According to the director of the UN Information Center in Moscow, Aleksandr Gorelik, five years is a fairly short time for a study. Therefore, it looks like the countries that are doing well and are prosperous are standing in one place and not showing any progress, whereas those that are catching up seem to be dynamic and developing. Here, says the expert, “is a cunning element.”

Overall, say experts, the Progress Rating is not an actual study, but a strategic warning. That is precisely why there is potential to further develop the study. Separate ratings for various groups of countries should be made in order to compare similar countries – by the level of GDP, for example.

Either way, experts have noted, there is another side to the study: Making it possible to identify the influence of certain institutions on a country’s socioeconomic development – and to serve those institutions a warning.

Doubts Grow About Putin’s Front http://www.themoscowtimes.com/news/article/doubts-grow-about-putins-front/440105.html

06 July 2011By Alex Chachkevitch

Doubts are growing whether the All-Russia People's Front, created two months ago by Prime Minister Vladimir Putin, will help United Russia win extra votes in the State Duma elections after a series of scandals shook the group.

In the latest embarrassment, an unfettered registration process has allowed the likes of Moammar Gadhafi to join the group, as documented by several bloggers Tuesday.

The fact that anyone can register under any name and any number of times casts doubt on reports by the All-Russia People's Front that its supporters include more than 460 organizations and millions of individuals.

Putin has put his hopes on boosting vote results for his United Russia party on the All-Russia People's Front, saying the party will reserve 150 of 600 places on its party list in the Duma elections for members of the front.

Sergei Markov, a Duma deputy with United Russia, said registration is actually just the first step.

"If [people] want to, they can sign up," he said by telephone Tuesday. "The front is not going to stop them."

But the group only counts as supporters the people and organizations who join its regional and federal councils and plan to participate in the Duma elections on its ticket, he said.

Stanislav Belkovsky, a former Kremlin insider, said the absence of organization illustrated by the fact that anyone can join the group and then leave without notification was proof of its short lifespan.

"After elections are over, the front will be forgotten," said Belkovsky, an independent political analyst.

That is if the group survives that long.

Rivals and political analysts have ridiculed the group since its inception in early May, and the latest entrant to the Duma race, billionaire Mikhail Prokhorov, joined the chorus in an interview published Tuesday.

"You know, in my opinion, it is really laughable when 38 million agricultural workers join the front in a single day," Prokhorov, elected head of the pro-Kremlin Right Cause party 10 days ago, told Kommersant. He was referring to the decision by the Russian Agrarian Movement to join the group.

Right Cause has no seats in the Duma, but Prokhorov has promised to give his party the second-biggest faction in the December elections. United Russia, meanwhile, has pledged to make the party a key target in its own election campaign.

Putin did not comment on Prokhorov's statement, but he complained last week that the front's chaotic membership drive threatened to discredit the very idea of the group.

Still, Putin said he would encourage people to join — which they are doing, but not always sincerely.

Blogger and journalist Andrei Malgin on Tuesday posted screenshots showing the confirmed registrations of Gadhafi, Libya's embattled leader, and several fake names not all fit for publication.

A Moscow Times reporter attempted to confirm the claims by making registration requests on the front's web site for U.S. first lady Michelle Obama and Winnie-the-Pooh. The web site unquestionably approved the requests.

Malgin also said the Russian Cheerleaders Union had joined the group even though none of its members are old enough to vote.

Several organizations listed as members, including the Russian Union of Architects, later balked after their members protested about not being asked first. Vladimir Volodin, a senior official at the All-Russia People's Front, said last week that organizations should hold votes on whether to join.

Complicating matters, the front does not even exist from a legal standpoint because it has never been formally registered.

Of course, not everyone is skeptical.

"The front is great idea for us," said Nikolai Dronov, head of the Anti-Cancer Movement. "It's a platform for an exchange of ideas and another way through which our cause can be heard."

Dronov said that since the organization joined the front in June, he has attended various conferences and round tables, voiced his ideas about projects, and learned about the problems of other groups that have joined the front.

"There is nothing wrong in allowing anyone to join the front and to voice their concerns and problems," he said. "It may be hard to pick out good ideas, but it's great that everyone gets a chance to be heard by the government."

The All-Russia People's Front mandate is to give a broad range of public groups a better say in politics — and thus boost support for United Russia. But the plan does not seem to be working. United Russia's popularity has continued a slow downward slide, reaching 53 percent last month compared with 57 percent in May and 60 percent in February, the independent pollster Levada Center said last week.

Dronov conceded that the All-Russia People's Front might be nothing more than an election vehicle, but he said he did not care. "They're letting us speak and are listening, and that's important," he said.

"But," he added, "I hope the government does not forget about us after the elections."

Matviyenko’s Rule, Future in Spotlighthttp://www.times.spb.ru/index.php?action_id=2&story_id=34241

The city’s business community has named Oseyevsky as a preferred future governor.

By Galina StolyarovaThe St. Petersburg TimesPublished: July 6, 2011 (Issue # 1664)

By her enemies, St. Petersburg Governor Valentina Matviyenko is ridiculed for her unorthodox proposals to employ laser rays and homeless people to clean snow from the city’s roofs, and for her pushy campaign to erect the Gazprom skyscraper that was nicknamed “Corn on the Cob” by some sarcastic locals.

By her supporters, Matviyenko, who last week accepted — somewhat reluctantly, it appeared — President Dmitry Medvedev’s “proposal” that she resign and become the speaker of the Federation Council in Moscow, will be remembered as a forceful politician, who increased the budget of St. Petersburg by 10 times during her nearly eight-year tenure, brought wealthy corporations to the city as taxpayers and helped to create an automotive cluster in the city.

This week, Matviyenko is holding meetings with the Federation Council and in St. Petersburg in order to choose a municipal district to which she will have to get elected in

order to be eligible for the post of Speaker of the Upper Chamber of the Russian Parliament.

Soon after the end of the St. Petersburg International Economic Forum last month, Matviyenko was invited by Medvedev to give up her job and lead the Federation Council instead — a tricky task, as to qualify for the position Matviyenko will have to get elected, and no elections — municipal or regional — are due to be held anywhere in Russia before September. In order to realize Medvedev’s idea, members of several municipal councils in St. Petersburg have proposed the following scheme: A certain number of members of a council should resign, and then the council automatically dissolves owing to a lack of members. A new election is promptly arranged, and here Matviyenko steps in, wins the battle and get the promotion.

The scheme, which has outraged the opposition with its undisguised cynicism, caused no protest among the pro-Kremlin camp and Matviyenko herself. “The governor is still holding negotiations with the municipalities where she might hold her election campaign,” Yevgenia Altfeld, Matviyenko’s press secretary, said Tuesday.

Officially, no candidates for Matviyenko’s replacement have yet been put forward. Several political analysts, including Alexei Makarkin, vice president of the Moscow-based Center for Political Technologies, have cautiously named Alexander Beglov, deputy head of the presidential administration. Beglov’s political career began in St. Petersburg where he was head of the Kurortny district and then progressed to the position of deputy governor before moving to Moscow.

“Valentina Matviyenko is an unpopular governor; worse, her ratings now are lower than ever — this is not a situation that United Russia is comfortable with, nearing the December elections to the State Duma,” said Makarkin, commenting on Matviyenko’s removal before the end of her term as governor.

Analysts have also mentioned the names of Justice Minister Alexander Konovalov and Sergei Naryshkin, head of the presidential administration, but these candidates are only mentioned as ones who “have been discussed.”

Some of the same analysts, including some United Russia politicians — all of the latter speaking off the record — say that Beglov has already been approved for the job.

“Alexander Beglov, if appointed, is likely to adopt a tough stance toward Matviyenko’s team and prompt significant reshuffles,” said Maria Matskevich, head of the St. Petersburg association of sociologists.

Analysts say that the local political elite desperately needs not only fresh blood, but an outsider as a manager, someone who could efficiently shake up this “marshland,” as some Moscow politicians call Russia’s second capital. Beglov fits the task as he is an experienced bureaucrat and has some knowledge of the city. He does not have the reputation of someone who is renowned for their bright ideas, but rather he will do what he is told — and apparently this is what is needed.

A similar scheme was very recently used to replace Vladislav Piotrovsky, former head of the local police, with the difference being that Piotrovsky was dismissed from his post without receiving any other offers from the Kremlin.

Members of the city’s business community name Deputy Governor Mikhail Oseyevsky as their preferred future governor, while local media commentators speak with open regret about what they describe as the “modest, bleak chances” of Oseyevsky taking the reins.

Ironically, the qualities that have earned Oseyevsky respect in the city — his competence, intelligence and simply the rare ability to be a government official without becoming a bureaucrat — are not likely to be key factors when the decision is made in Moscow. Loyalty and the ability to obey and conform are the key qualities required to make a career within the Putin-Medvedev “power vertical system,” say analysts, and party membership — just as it was a few decades ago in the Soviet Union — is a top recommendation.

When asked about his preferences or ideas concerning the person who would be most fit to replace Matviyenko, Boris Gryzlov, one of the leaders of the United Russia party, was quick and decisive in his response: “I can tell you one thing — it has to be a United Russia politician,” he said.

St. Petersburg residents, however, appear to have a very different perspective on the issue. More than sixty percent of locals polled by the Moscow-based Foundation for Public Opinion Research said that the governor should be elected to the position by city residents.

“The cynicism of the whole scheme is unthinkable; unfortunately it is the direct result of the degradation of the country’s electoral system,” Matskevich said. “It has long been an open secret that the voice of the people means nothing in Russia, but this whole absurd construction with Matviyenko having to go through openly staged “elections” in order to go where the president sees fit to put her is seen by many ordinary residents of the city as an open insult, if not a sign of ridicule.”

Transparency Bill Faces Resistance From State Firms http://www.themoscowtimes.com/business/article/transparency-bill-faces-resistance-from-state-firms/440071.html

06 July 2011By Margarita Lyutova and Filipp Sterkin / Vedomosti

Not wishing to share information about themselves with minority shareholders and board members, four major companies have complained to Deputy Prime Minister Igor Sechin about a government bill prepared at the president's initiative.

In a joint letter dated May 12, Rosneft, Transneft, Surgutneftegaz and TGK-2 expressed their dissatisfaction with a bill passed by the State Duma last week in its first reading that significantly increases minority shareholders' rights to information.

President Dmitry Medvedev instructed the government in March to come up with the new information disclosure rules.

All four companies are in conflicts with their minority shareholders. Rosneft and Transneft have gone to court with shareholder Alexei Navalny because of their unwillingness to divulge the minutes of board meetings and other documents to him. The companies are appealing two previous court decisions.

Surgutneftegaz has provided Navalny with its minutes, but not the appendices to them that he is also entitled to see.

At TGK-2, the conflict between main shareholder Sintez Group and large minority holders — including Prosperity Capital, Deutsche Bank and Clearstream Banking, which together hold more than 30 percent of the company's shares — is not directly related to information. There, the minority shareholders have not been able to place their representatives on the board of directors.

The innovations suggested by the bill would undermine the competitiveness of Russian companies and the investment attractiveness of the economy, the letter writers told Sechin.

For example, companies would be forced to disclose information about their subsidiaries to all shareholders and not exclusively holders of a 25 percent or greater stake, as is now the case.

The companies are also unhappy with the proposal that shareholders be given wider access to commercial secrets. That violates "the constitutionally significant balance of shareholders' and companies' interests," they write.

However, under the proposed law, shareholders would receive confidential information only after signing a nondisclosure agreement, said Anton Sitnikov, a partner at the Goltsblat BLP law firm.

The president gave instructions to formulate rules for access to information, but that doesn't mean the access would be unlimited, said Dmitry Peskov, press secretary for Prime Minister Vladimir Putin.

The biggest issue the companies complained about was giving board members information access equal to shareholders. But that is an important standard, and it belongs in the law, said Economic Development Ministry department head Ivan Oskolkov, adding that it will be added to the second version of the bill.

The four companies argue that board members manage a company by invitation. They do not invest in it, and their rights cannot be equated with those of its owners. Furthermore, safeguards of confidentiality in the bill are insufficient.

A source at one of the companies that signed the letter said that attitude is a reaction to the president's order to replace well-known board members with independent ones.

"Different kinds of people are going to appear on boards. Conflicts of interest or the use of information to the detriment of the company are possible," he said.

National Economic Trends

Capital outflow decreases in 2Q11 http://www.bne.eu/dispatch_text16090

Troika DialogJuly 6, 2011

The current account surplus reached $25.2 bln in 2Q11, up from $18.6 bln in 2Q10, according to Central Bank estimates. This growth was unsurprising, given the average oil price of $113.8/bbl Urals in the period, up 48% y-o-y. Russia was still a net creditor to the rest of the world, but net capital outflow fell substantially to $9.9 bln (from $21.3 bln in 1Q11). This shows that the perception of macroeconomic risks associated with Russia has been gradually improving.

We expect net capital outflow to continue falling in 2H11, perhaps turning into moderate capital inflow. Once the situation with Greece and US debt becomes clearer, global risk perception should improve. Russia, with its healthy macroeconomic performance, will attract investor attention. This will positively affect the financial market, and we could see ruble appreciation (albeit moderate) against the bi-currency basket.

Evgeny Gavrilenkov

CPI slowed to 9.4% YoY in June thanks to cheaper food, which may fall further http://www.bne.eu/dispatch_text16090

UralSibJuly 6, 2011

CPI growth decelerated to 9.4% YoY in June ... Rosstat published June CPI numbers, which showed that consumer price growth decreased to 0.2% MoM and 9.4% YoY

versus 9.6% YoY in May. The monthly figure came out below our expectations of inflation rising 0.4% MoM and the market consensus of 0.3% MoM growth. Meanwhile, core inflation was up 0.3% MoM and accelerated to 8.4% YoY from 8.3% YoY in May. Thus, the monthly growth rate of 0.2% MoM in June turned out to be the lowest since October 2009, and 9.4% YoY growth is the lowest YtD.

... due to food deflation. The primary reason behind the slowdown in inflation was a 0.2% MoM decrease in food price growth, with food price growth decelerating to 12.5% YoY from 13.4% YoY in May (for example cabbage prices fell 28.8% MoM and eggs cheapened 12.1% MoM). Food prices, excluding fruits and vegetables, grew only 0.1% MoM and were almost unchanged: 11.7% YoY versus 11.6% YoY in May. Non-food item prices added 0.4 MoM% and accelerated to 6.6% YoY from 6.3% YoY in May; while petrol prices continued to grow and added another 1.7% MoM, on average. Services grew 0.7% MoM and acceler- ated to 8.8% YoY from 8.6% YoY in May, led by 6.7% MoM growth in recreation service prices and 2.1% MoM growth in transport service prices.

Food may cheapen in the medium term. At the last board of directors' meeting at the end of June, the CBR left key rates un- changed because of the threat that a rate increase may trigger economic deceleration. The Central Bank considers that short-term inflation risks have decreased because of falling food prices. We may indeed witness falling food prices in the near term. The end of QE2 will support the dollar, thereby exerting downward pressure on commodity prices, including food prices. In addition, new global, as well as Russian, harvest expectations are very high. Global food prices have already started to fall, which affects Russia because Russia is a large food importer (food comprises 15% of Russian imports). We forecast CPI to increase 9.2% by the year- end.

Capital and financial account deficit moderated http://www.bne.eu/dispatch_text16090

CitiJuly 6, 2011

Capital and financial account (KA) deficit moderated in 2Q2011 to US$12bn compared with US$22bn in 1Q2011, in line with our forecast, but may be a positive surprise to the market.

As we expected, smaller KA deficit was due to smaller outflows through banks (halved to US$4bn in 2Q2011) and higher external borrowing (US$7bn in 1Q). Other capital outflows (net FDI, portfolio investments, unidentified operations and E&O) increased only moderately to US$15bn from US$13bn in 1Q2011. However, we will continue to monitor the outwards FDI that picked up somewhat in 2Q and can be linked to capital flight. We saw some dedollarization of cash holdings likely driven by strong domestic consumption-individuals brought in US$3bn-but we do not expect more than another US$5bn or so this year.

Current account at US$25bn in 2Q2011 is in line with our forecast (US$24bn), we expect it to moderate to US$18bn in 3Q and US$20bn in 4Q average oil price of 110 brent/105 Urals). Higher oil prices compensated for 42% US$ import growth since the beginning of the year, including of equipment and machinery.

We saw a moderate pick-up in external corporate borrowing, which improved KA by US$7bn and we expect another US$10-15bn by end-2011. Together with the strong imports of investment goods, we see it as a signal that strong investment growth in May is likely to continue (up +7.4%YoY, 26%MoM) after a very weak 1Q2011 that was dragged down by poor investment and construction in Moscow and St. Petersburg. We believe revival of domestic investment activity should attract more external borrowing as with the current negative real rates, it is the only source of longer-term financing.

Meanwhile, CPI started to moderate in June - 9.4%YoY (0.2%MoM), in line with our forecast. A fall in food prices by 0.4%MoM (as compared to an average monthly increase in June of about 0.7%MoM) compensated for the continuous growth in petrol prices (1.7%MoM) and rise in the price of services (0.7%MoM). We expect inflation to decelerate further in the coming months and to fluctuate around 8% through the end of the year.

MinEcon proposes a two-stage adjustment for the tariff growth in 2012, which suggests lower pressure on inflation coming from administrative prices next year. Russia may increase gas tariffs for all consumers in two stages in 2012, Deputy Economy Minister Andrei Klepach said (Bloomberg, 5 July 2011). The ministry is proposing to increase gas prices by 5 percent on January 1 and 9.5 percent on April 1. Electricity prices for industrial consumers should grow by 10-11% in 2012, by 7-10% in 2013, and by 9-11% in 2014. Cargo tariffs should grow by 7.4% in 2012. The main risk associated with that proposal is the possibility of decreasing the investment programs of companies. That moderate scenario of increasing natural monopoly prices was suggested instead of previous variants, where tariff growth looked either too high or too low. MinEcon forecasts inflation to reach 5-6% in 2012, 4.5-5.5% in 2013 and 4-5% in 2014.

Russia's Economy Accelerates in May after Stumbling in Aprilhttp://www.bne.eu/dispatch_text16090

UralSibJuly 5, 2011

* GDP growth accelerates to 3.8% YoY growth in May after 3.3% YoY in April. According to the Economic Ministry, GDP growth accelerated to 3.8% YoY in May from 3.3% YoY in April. We expect the economy to keep accelerating moderately in 2H11 and to grow 4.3% in 2011.

* Industry keeps decelerating. In May, industrial growth continued to decelerate, declining to 4.1% YoY growth from 4.5% YoY in April. We expect industrial growth to decelerate moderately in the next few months to 4.9% in 2011. Towards the end of the year, industrial growth may be supported by moderate depreciation of the ruble due to the oil price correcting to $90-100/bbl.

* Capital investment surges in May after poor start to the year. Capital investment surged to 7.4% YoY growth from 2.2% YoY in April, which implies that the economy is recovering from the negative tax shock. We expect capital investment to continue accelerating rapidly in 2H11, supported by the overall economic recovery and deferred investment demand.

* Capital flight slows in May. Capital outflows decreased to $5 bln in May from $7.8 bln in April. Capital outflows will persist for several months and may decelerate towards the end of the year thanks to a reduction in political uncertainty, higher rates, and the implementation of President Medvedev's key investment climate initiatives.

* Real disposable incomes dive deep in May. In May, real incomes contracted 7.0% YoY after negative 3.8% YoY growth in April. The persistent slump in real incomes has created significant risks for domestic demand. We expect real incomes to gradually rebound in 2H11, supported by moderate acceleration of economic growth.

* Budget in surplus for 5M11. The Finance Ministry reported that the federal budget surplus reached 1.8% of GDP in 5M11 thanks to high oil prices. We expect the federal budget deficit to reach 0.9% of GDP in 2011.

Capital investment surged in May to 7.4% YoY growth after modest 2.2% YoY growth in April and negative 1.5% YoY growth in 1Q11, which was a big surprise for the market, as the consensus expectation was for 4%.

Investment was on the path to recovery in 2H10 but was badly hit by the social security tax increase at the start of the year. The tax increase caused a temporary deceleration in economic activity, so that real GDP growth slowed to 3.3% YoY in April after 4.1% YoY growth in 1Q11. In May, real GDP growth accelerated to 3.8% YoY, which shows that the economy has mostly absorbed the negative tax shock.

The only significant downside risk which remains in place is the decline in real incomes, which accelerated to negative 7% YoY in May from negative 3.8% in April. Part of that decline, though, may be due to an increase in shadow incomes, which official statistics record as a contraction in legal income.

The persistent slump in real incomes creates risks for domestic demand, which is at the heart of economic growth. Nevertheless, we believe that domestic demand remains strong, so that the economy will moderately accelerate in 2H11.

Domestic demand is supported by strong retail trade growth, which has stabilized within 5-6% YoY (growth of 5.5% in May after 5.6% YoY growth in April), supported by rapid credit expansion and greater consumer confidence.

Conditions on the labor market have greatly improved since the beginning of the year, with the unemployment rate falling to 6.4% in May from 7.2% in April (and 7.8% in January). Thus, unemployment is almost back to the pre-crisis level of the summer of 2008. We expect the economy to grow 4.5% YoY in 2H11 and 4.3% in 2011.

Conversations on Russia's macro situation - GDP on terra firmahttp://www.bne.eu/dispatch_text16090

Renaissance CapitalJuly 6, 2011

During the 15th Annual Renaissance Capital Investor Conference, in Moscow (27-28 June), we met many investors and discussed a wide variety of macroeconomic topics. What struck us was the glaring need for a simple set of answers to key questions that may arise: questions that - at least at a first glance - seem intractable and hard to answer. Therefore, in an attempt to meet this well-defined demand, we will be venturing into a series of macroeconomic conversations between a fictional Russian investor and us, the Renaissance Capital Russia macroeconomics team. We aim to entertain a number of topics, including but not limited to, GDP, inflation, external competitiveness and Dutch disease, income inequality, WTO entry, and the link between the possibility of twin deficits and structural reforms. In this note, we start with GDP.

Q: The Russian economy appears to have started the year on a weak footing and last year's performance did not seem to be that great either. Is this something that worries you?

A: GDP grew 4.1% YoY in 1Q11, which was indeed a bit lower than we had expected. However, four important things need to be kept in mind. First, there are some pointed discrepancies between the macro data provided by Rosstat and the more disaggregated microeconomic indicators, which paint a more vigorous picture and suggest that the recovery has stronger legs. For example, the production of cement, bricks and cars looks very strong to us and we suspect, taking into account our conversations with the authorities, that the official GDP data for last year and 1Q11 may eventually be revised upwards. Second, what we think caught the attention of the majority of investors was the contraction of real fixed investment spending; though, we think a key explanatory factor was the 1Q11 increase in social security tax to 34% from 26%, which weighed heavily on the propensity of small and medium enterprises to invest. However, one need not forget that these payments exhibit significant seasonality, as social security tax is paid in an incremental fashion up to an annual income of RUB463,000. Therefore, we suspect that this particular output-busting factor will gradually fade away over the course of the year,

particularly as the government recently decided to bring the social security tax back to 30%. Third, in December 2010, the Ministry of Finance introduced changes to Russia's accounting principles and doubled the ceiling for maximum allowable inventories, which have better tax treatment. This led many firms to shift fixed investment to inventories, thus reducing fixed investment spending. Fourth, and what we think is key, we estimate that Russia's post-crisis speed limit is around 5%, implying to us that realised growth rates in the vicinity of 5% should be interpreted as a positive sign of an economy fulfilling its economic potential. Russia is not there yet, but we think the pent-up demand, in particular in investment spending, will support growth over the course of this year and next. We note that we have already started to see some positive investment data in May.

Q: You seem to suggest that the Russian economy should/will be growing at around 5%, but many investors, including myself, still recall the roaring pre-crisis growth rates of 7-8%. Doesn't this sound a bit discouraging?

A: We disagree. Between the two major crises, that is during 1998-2008, Russia was indeed notching up 7-8% GDP growth rates. However, we estimate that about half of this stellar economic performance was due to the multi-year, double-digit increase in oil prices. This was clearly unsustainable and we think led to an overheating economy prone to a sharp reversal in growth performance. And this is exactly what happened in 2008. In the post-crisis world, which can be characterised by much more subdued G-10 growth, and probably reduced scope for such dramatic YoY increases in oil prices, Russia will grow more modestly, in our view. However, we also believe that growth will be less volatile, as the government has embarked on a number of important reforms that we think will increase the resiliency of the economy and render Russia less vulnerable to the stop-and-go performance of the last decade. Noteworthy events include privatisations, WTO membership, the opening up of the domestic bond market to foreigners and, finally, major events such as the Sochi 2014 Winter Olympics and the 2018 FIFA World Cup, which we believe provide very important signposts for the reform agenda. Therefore, we think investors will be much happier with somewhat lower but more stable and predictable growth rates than with elevated but much more volatile and uncertain ones. We think this is actually quite encouraging. Moreover, 5% is not an absolute, fixed number. If Russia is able to halt its demographic decline (and we have started to see some encouraging signs here), and harness its modernisation drive into a palpable productivity spurt, higher rates are also possible, in our view. However, we also believe that these are probably harder to achieve in the medium term.

COMMENT: Medvedev proposals boost local stocks http://www.bne.eu/storyf2769/COMMENT_Medvedev_proposals_boost_local_stocks

Ovanes Oganisian of Renaissance Capital July 6, 2011

On July 1, following the St Petersburg Economic Forum, Russian President Dmitry

Medvedev announced seven measures – closely reflecting proposals he put forward in late March, in Magnitogorsk – to address Russia's investment climate. The measures, which were published on the presidential website, include the following:

1. Further privatisation: Medvedev has ordered a reduction of government stakes in non-strategic and non-infrastructure Russian companies, with overall state ownership falling below a controlling interest.

2. Medvedev has ordered that bureaucrats take responsibility for their mistakes in the same way CEOs and accountants are held legally responsible in private companies.

3. Medvedev wants measures implemented allowing for the immediate termination of employment for bureaucrats accused of corruption.

4. Medvedev wants better selection criteria for the appointment of judges, and wants mechanisms implemented for disciplinary procedures to be taken against them should the need arise.

5. Medvedev wants to widen the city of Moscow's borders into the Moscow Region, and to move some government offices outside the current Moscow borders.

6. Medvedev's orders to the government include the removal of barriers and limits on global depositary receipt (GDR) issuance and fungibility. He wants to create legislative measures to improve Russia's financial services infrastructure, to increase foreign investment in the country. This will include the adoption of laws on central custody and allowing international custodians to open accounts with Russian institutions. He stated that the government should also create laws to stimulate disclosure and raise overall standards and practices to an international level.

7. Other orders to the government include issuing long-term work visas to expatriates working for large international businesses.

Taking stock

The most interesting of the above points, in our view, is #6, as it has implications for the stock prices of locally listed companies with GDRs, but no fungibility between these GDRs and local listings. It seems local stocks with non-fungible programmes are reacting very positively to the above proposals. Sistema's local shares added 6% following Medvedev's announcement, and LSR's local shares gained 5.2%. Magnit was up 4.9% and MTS local shares gained 4%. These local stocks have historically traded at large discounts to their respective GDRs. For example, LSR's local/GDR discount was 27% on January 1, but it shrank to only 6% after the speech; while Sistema's discount went from 29% to 5%, and MTS's dropped from 18% to 9%. We have been awaiting this move, and believe it is very positive because, when implemented, it could ease GDR issuance by strategic companies; support the further privatisation of companies like Sberbank and Rosneft; and possibly help loosen the state's grip on strategic companies.

The discounts of local stocks to GDRs, which are still in place, are likely to disappear by September 1, the deadline for when the new GDR issuance rules are to be shaped.

The current rules for GDR issuance, introduced in autumn 2009, are strict. For stocks on the A-list (the most liquid), the maximum proportion of GDRs allowed is 25% of total shares. For stocks on the B-list, the maximum proportion is 15%, and for stocks on the (illiquid) V-and I-lists, no more than 5% is permitted. In addition, for strategic oil and gas companies that undertake exploration and production in strategically important fields, the limit is 5%, although up to 25% is allowed with specific government consent. A maximum of 50% of shares in each new placement can be offered outside Russia.

Medvedev stated that the deadline for the new rules is September 1, however we think this is likely the deadline for a new law to be developed, rather than implemented (with the new rules being enforced much later). If full fungibility is permitted, we would expect it to remove any price arbitrage between local stocks and GDRs. The new rules are unlikely to be compulsory for issuers, but as we believe that anybody can launch unsponsored programmes we would expect price arbitrage to disappear, in any case.

Business, Energy or Environmental regulations or discussions

Russia’s RTS Futures Decline on Gazprom Rating, U.S. Stock Drophttp://www.bloomberg.com/news/2011-07-05/russia-s-rts-futures-decline-on-gazprom-rating-u-s-stock-drop.html

By Halia Pavliva - Jul 6, 2011 12:24 AM GMT+0200

Russia’s RTS stock-index futures fell, signaling shares may snap their longest winning streak in seven months, after OAO Gazprom was reduced to “hold” from “buy” at Troika Dialog and as U.S. stocks declined.

Futures on the dollar-denominated index expiring in September declined 0.2 percent yesterday.

Gazprom, the world’s biggest gas producer, declined 0.7 percent to 203.62 rubles by the 6:45 p.m. close in Moscow yesterday after Troika Dialog changed its rating on the stock, citing higher taxes, the outlook for gas prices and a rise in capital spending. The American depositary receipts fell 1.2 percent, the most since June 23.

“Gazprom is the biggest stock in the market, and people expect a challenging tax environment for the company,” Yan Gloukhovski, a trader at Alforma Capital Markets, the New York branch of Russia’s Alfa Bank, said in a telephone interview. “There is some caution.”

The Finance Ministry proposed on June 15 doubling the mineral extraction tax next year for Gazprom with further increases to follow.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, gained 0.2 percent yesterday. The ADRs of OAO Lukoil, Russia’s second-largest oil producer, gained 0.3 percent.

U.S. stocks fell after a Moody’s Investors Service downgrade of Portugal’s debt rekindled concern the global economy will slow. The Standard & Poor’s 500 Index declined 0.1 percent to 1,337.88.

Emerging Markets

Emerging-market stocks fell after Moody’s said the credit outlook for China’s banking industry may decline. The MSCI Emerging Markets Index retreated for the first time in six days, declining 0.3 percent to 1,166.20.

“The Russian stock market is undervalued,” Evgeny Gavrilenkov, the Moscow-based chief economist at Troika Dialog, and Anton Strouchenevski, an economist at Troika Dialog, said in an e-mailed report yesterday. “There is a simple correlation between the RTS Index and the oil price.”

Russia is the world’s largest energy exporter. Oil and natural gas make up a quarter of its economic output. Considering current oil prices, stocks on the country’s RTS index should be trading 15 percent to 20 percent higher, Gavrilenkov and Strouchenevski said in the report.

Oil Advances

Oil rose 2.1 percent as data showed orders placed with U.S. factories increased in May, indicating manufacturing may rebound from a slowdown. China’s services industries expanded at the second-fastest pace this year as new orders and employment climbed. A purchasing managers index in China was 54.1 in June compared with 54.3 in May, HSBC Holdings Plc and Markit Economics said in a statement yesterday. A reading above 50 indicates expansion.

Crude for August delivery gained $1.95 to $96.89 a barrel on the New York Mercantile Exchange, the highest settlement price since June 14. Futures have gained 34 percent in a year.

Brent oil for August settlement advanced $2.01, or 1.8 percent, to $113.40 a barrel on the ICE Futures Europe exchange.

Russia’s Micex Index of 30 stocks rose 0.2 percent to 1,709.99 in Moscow yesterday, climbing for a sixth day, the longest winning streak since December. OAO Tatneft, the oil producer based in the Tatarstan region, gained 1.8 percent. The dollar denominated RTS Index advanced 0.2 percent to 1,953.07.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; David Papadopoulos at papadopoulos@bloomberg.net

Uralkali Climbs for Second Day Ahead of Increased MSCI Weightinghttp://www.bloomberg.com/news/2011-07-06/uralkali-climbs-for-second-day-ahead-of-increased-msci-weighting.html

By Jason Corcoran - Jul 6, 2011 9:58 AM GMT+0200

OAO Uralkali (URKA), the world’s largest potash producer by output, climbed for the second day before its weighting in MSCI’s Russia Index is increased at the close of trading today.

The shares added 1.8 percent to 261.5 rubles by 10:46 a.m. in Moscow after jumping 5.9 percent yesterday.

The decision to increase Uralkali’s weighting comes after the company acquired its competitor OAO Silvinit, MSCI Inc. said in a statement e-mailed on July 4.

“Uralkali will move from tenth to seventh-largest stock in the MSCI Russia Index,” Ovanes Oganisian, a strategist at Renaissance Capital, said in an e-mailed report today. “The change, we believe, will stimulate additional buying of Uralkali shares to the value of around $1 billion from index-benchmarking funds, including around $100 million from index-tracking funds.”

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Gas taxes and tariffs proposals from Economics Ministry

http://www.bne.eu/dispatch_text16090

CitiJuly 6, 2011

Deputy Economy Minister Andrei Klepach yesterday outlined one proposal to raise gas taxes and two to raise gas tariffs.

First, on taxes he indicated the Ministry was looking to raise the gas Mineral Excise Tax to RUB431/mcm from the current RUB237/mcm. This is actually somewhat lower than the RUB480/mcm previously indicated. However, MinFin would still get its desired RUB150bn of extra taxes from the gas sector, practically all of that from Gazprom, by eliminating the export duty exemption on sales to Turkey. Net-net, this should be in line with market expectations, and therefore neutral for the stock.

More important, however, were Mr. Klepach's two proposals on gas tariffs which take cardinally different directions. The first is an inflation-only increase of 5-6% for the coming 3 years, a variant the government was ordered to consider earlier this year by PM Vladimir Putin. However, Mr. Klepach underlined that pursuing this approach would cause a sharp curtailment of investment in the sector.

The second comes much closer to what we anticipate to actually happen. While we have been thinking that the government would still raise tariffs substantially this year, we have thought that it would put much of the increase off until after the March elections, splitting the increase into two parts of say 6% each on January and July first for a total of 12-13% year-end on year-end. In the event, Mr Klepach's second proposal suggested something better than that for gas producers: a 5% boost on January 1 followed by a 9.5% increase immediately after the election on April 1.

If tariff increases are confirmed at this level, this would indicate that the default level of domestic gas price increases remains at the currently approved 15% pa level for the 2012-14 period, and that netback parity with exports remains the goal for domestic gas prices. With all of the recent election-related uncertainty around the government's commitments to those increases, we think the market was beginning to think that 11-12% was more realistic. Also, by having 2/3 of the increase go into effect days after the March Duma and Presidential elections would send a strong signal to the market that that pre-election indications of 'inflation-level' tariff increases did not presage a fundamental policy change on the part of the government. We are convinced that netback parity remains a core goal of the Russian government for numerous solid policy reasons, and maintaining a 15% tariff increase even in an election year only solidifies our conviction.

At this point, it of course isn't clear that Mr. Klepach's proposal will indeed be accepted within the government.

Ron Smith

Rusal Electricity Costs Grew 43% in 1st Quarter, Vedomosti Sayshttp://www.bloomberg.com/news/2011-07-06/rusal-electricity-costs-grew-43-in-1st-quarter-vedomosti-says.html

By Jack Jordan - Jul 6, 2011 6:08 AM GMT+0200

United Co. Rusal’s electricity costs for its aluminum plants grew 43 percent in the first quarter of 2011, Vedomosti reported, citing a company representative.

That amounted to a rise of $130 million in the first quarter from the last quarter of 2010, the newspaper said, citing a VTB Capital analyst.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

UPDATE 1 -Gunvor, Volga Resources buy Russian coal mineshttp://af.reuters.com/article/metalsNews/idAFLDE76505320110706

Wed Jul 6, 2011 7:00am GMT

* Purchase price not disclosed

* Mines will produce 3-4 mln tonnes of coking coal per year

* Total reserves 363 mln tonnes

(Adds details)

MOSCOW, July 6 (Reuters) - Energy trader Gunvor and Volga Resources said on Wednesday they had agreed to buy a 51 percent stake in Russian coking coal mines in Yakutia with 363 million tonnes of reserves.

The Kolmar mines, originally held by billionaire Mikhail Prokhorov's Onexim group, allow Gunvor to expand its growing coal business.

"This deal marks our first entry into Russian coal mining," Gunvor chairman Torbjorn Tornqvist said in a statement.

The trader, co-owned by businessman Gennady Timchenko, is diversifying its traditional crude oil and petroleum commodities trading business into other areas.

Under the terms of the deal, the Lonestate Assets investment vehicle will acquire 51 percent of Kolmar from existing shareholders.

Lonestate will fund the purchase via a loan from Montlink, a joint venture of Gunvor and Volga Resources.

Kolmar holds four licences in the Chulmakan and Denisovsky coalfields and annual production is planned at 3-4 million tonnes of coking coal.

(Reporting by Alfred Kueppers; Editing by Jessica Bachman and Erica Billingham)

Alrosa sells $11 million worth of diamonds at first electronic auctionhttp://en.rian.ru/business/20110706/165050908.html

11:58 06/07/2011

MOSCOW, July 6 (RIA Novosti)

Russia's diamond monopoly Alrosa has held its first electronic auction and sold $11 million worth of diamonds, it said on Wednesday.

The state-owned company, which accounts for over one-quarter of international raw diamond output, offered 108 lots and invited 30 Russian and foreign companies to participate in the sale, it said in a statement.

Alrosa said the auction was successful and it now plans to hold regular auctions from the fourth quarter of 2011.

July 06, 2011 12:01

Owners of Russian Helicopters against paying dividends for 2010http://www.interfax.com/newsinf.asp?id=257165

MOSCOW. July 6 (Interfax) - Shareholders in OJSC Russian Helicopters, at their annual meeting, decided against paying dividends for 2010's results, the company said in a statement.

Russian Helicopters posted net profit of 366.02 million rubles for 2010, of which the shareholders decided to earmark 30.4 million rubles as compensation for the board of directors and 220,000 rubles in compensation for the audit committee. The remaining profit will remain undistributed.

The company said that it paid dividends for 2009's results but declined to disclose the amount.

A total of nine people were elected to the company's board of directors. Deputy Minister of Industry and Trade Denis Manturov replaced Dmitry Kolodyazhnyi, the managing director of United Engine-Building Company, on the board of directors.

` Reelected to the board of directors at Russian Helicopters were the following people: general director of Rosoboronexport Alexander Mikheev, general director of OPK Oboronprom Andrei Reus and his first deputy Dmitry Lelikov, general director of Russian Helicopters Dmitry Petrov, deputy general director for legal and corporate issues at Oboronprom Pavel Osin, deputy chairman at SUN Group Shiv Vikram Khemka, independent general director and chairman of the audit committee at Alstom and Atos Origin Jean-Paul Bechat and independent advisor on aviation and the defense industry, Jean-Loup Picard.

The shareholders also approved ten transactions with companies that are part of the helicopter-building holding. Each transaction reaches a maximum of 10 billion rubles.

In addition, transactions with LLC International Helicopter Programs with a ceiling of 3 billion rubles were approved, as well as Integrated helicopter services private ltd with a ceiling of $50 million and LLC Helicopter Systems worth $150 million.

"The transactions were approved for reserving funds so that a later shareholder meeting need not be called for their approval," a spokesperson for the company said.

OJSC Russian Helicopters is a specialized management company set up in 2006 as a wholly owned Oboronprom subsidiary. The company manages helicopter producers including OJSC Mil Moscow Helicopter Plant, OJSC Kamov (RTS: KAMO), OJSC Ulan-Ude Aviation Plant, OJSC, Kazan Helicopter Plant (RTS: KHEL), OJSC Rostvertol, among others

Ih

(Our editorial staff can be reached at eng.editors@interfax.ru)

Siemens opens manufacturing plant in Russia

http://www.steelguru.com/russian_news/Siemens_opens_manufacturing_plant_in_Russia/213096.html

Wednesday, 06 Jul 2011

Siemens Energy opened a manufacturing plant for high voltage circuit-breakers and disconnector switches for the 110 und 220 kilovolt voltage levels in Voronezh which is located approximately 500 kilometres south of Moscow.

The important growth markets for high voltage products, namely Russia and neighboring countries such as Azerbaijan, Belarus and Kazakhstan are to be served from Voronezh.

First orders have already been posted to manufacture and deliver circuit breakers and disconnector switches for the Russian transmission network for Moscow’s regional power supply network and for industry.

The demand for high voltage products will continue to rise in the course of expansion and modernization of Russia power supply network.

To strengthen its participation in this growth market Siemens has started manufacturing 110 and 220 kV dead tank and live tank circuit breakers and disconnector switches in Voronezh at a plant with a floor space of approximately 6000 square meters. The plant is designed for an annual production capacity of 500 circuit breakers.

In addition to the production of high voltage circuit breakers, the scope of services offered by the production location will also include marketing and after sales service.

Mr Udo Niehage CEO of the Power Transmission Division of Siemens Energy said “With the new production plant we’re not only expanding our global manufacturing network for high voltage products and we’re above all strengthening our market position in Russia.”

At its production location in Voronezh which is now part of the company global manufacturing network, Siemens will in the future also produce power transformers and gas-insulated high voltage switchgear.

Siemens has invested a total of five million euros in the new production facility.

Schneider Opens Third Local Planthttp://www.sptimesrussia.com/index.php?action_id=2&story_id=34259

By Roland Oliphant The St. Petersburg TimesPublished: July 6, 2011 (Issue # 1664)

KOMMUNAR, Leningrad Oblast — French electric services firm Schneider Electric has opened a third Russian factory in a bid to keep up with increasing demand for “smart-grid” technologies in Russia and the CIS.

“We reached a critical point where we had to be in-country to keep up with orders and the demands of customers,” country president Jean-Louis Stasi said at the opening ceremony.

The 10 million euro ($14.5 million) plant near the small town of Kommunar in the Leningrad Oblast will turn out RM6 ring main units for Russian utility companies and property developers.

Manufacturer secures export deal with Russian partner

Wednesday, 6 July 2011

Read more: http://www.belfasttelegraph.co.uk/business/business-news/manufacturer-secures-export-deal-with-russian-partner-16020038.html#ixzz1RJNmRG00

A CO Armagh manufacturer has secured an £800,000 export contract with a new partner in Russia.

Rapid International in Tandragee manufactures concrete production machinery.

The company established a partnership over a year ago with a new machinery dealership in Russia, after taking part in an Invest NI trade mission to Moscow and St Petersburg.

As a result of the link-up, Rapid International will now supply products to clients in the southern Russia region. The firm's sales and marketing director Jarlath Gilmore said time and money had been invested in developing the Russian market.

He said: "Our breakthrough has resulted from taking time to find the right distributor for our products, a company with a strong network of contacts and established business in the construction industry and one that we believed would fit well with us."

Invest NI trade director Dr Vicky Kell said Russia represented "one of the world's fastest developing markets", which, along with Brazil, India and China, was achieving higher growth rates than Europe and the United States of America. Dr Kell said that Rapid International had taken advantage of the country's "immense growth potential especially in terms of infrastructure projects".

The Orchard County company currently employs 50 people and has recently created two new short-term posts on the shopfloor.

Read more: http://www.belfasttelegraph.co.uk/business/business-news/manufacturer-secures-export-deal-with-russian-partner-16020038.html#ixzz1RJNrCA82

Continental Invests $320M in Plant http://www.themoscowtimes.com/business/article/continental-invests-320m-in-plant/440101.html

06 July 2011By Irina Filatova

KALUGA — Tire and auto parts maker Continental will invest an additional 226 million euros in Russia as it seeks to expand its supplies to the domestic car-manufacturing sector, the company said Tuesday.

Continental will spend 220 million euros ($318 million) to build a tire plant in Kaluga, where it already has an automotive electronics factory that will receive an additional 6 million euros of investment to support expansion.

The tire plant, whose construction will start later this year, is expected to manufacture 4 million tires annually, Continental said in a statement. Production at the facility will begin in late 2013.

"This move represents a very important milestone for our local activities … as well as for our global growth plans," said Nikolai Setzer, head of the company's passenger car and light truck tires division.

The company hopes to increase output at the plant to 8 million tires per year "when the time comes," he said in the statement.

Continental will produce summer and winter tires under the brands Continental, Gislaved, Barum and Matador, the statement said.

The company's decision to invest in tire production in Russia looks "strategically right," said Anastasia Sosnova, an analyst with Investcafe, a market research agency.

"Launching the plant will allow to decrease logistics costs and create a competitive environment," she said by telephone, adding that the local tire manufacturing industry is lead by Sibur Russian Tyres, a unit of Sibur Holding.

Sibur was considering creating a joint venture with tire manufacturer Nizhnekamskshina last year, but the holding signed a memorandum of understanding with Russian

Technologies and Italian tire maker Pirelli on creating two joint ventures — one producing premium-class tires and the other focusing on middle-class tires.

The deal, which was supposed to be closed last month, didn't go through, and Sibur said last week that it was "discussing various options of withdrawal from the tire business," Vedomosti reported.

Continental is likely to produce premium-class tires in Russia — this niche is almost unoccupied because most tires of that category are imported, said Sosnova of Investcafe.

"So the company has an opportunity to strengthen its position in this segment," she said.

Finnish tire maker Nokian Renkaat said earlier this year that it plans to install new production lines in its factory in Russia and build a new plant next to it to increase its annual car tire capacity by up to 6 million in 2012-14, Reuters reported.

According to Discovery Research Group, passenger car tire production in Russia increased from 19.2 million in 2009 to 25 million last year — almost on par with pre-crisis levels.

Continental, headquartered in Germany, also signed an agreement with the Kaluga region government to expand manufacturing at its current facility by launching an additional production line that will produce engine control units and components for fuel supply and injection systems.

The additional line will boost output of the engine control units from the current 200,000 to 1 million per year, said Christian Koegl, head of Continental Powertrain Russia, the company's local unit producing engine systems and other auto parts.

Increasing output locally is part of the company's global expansion strategy, as the domestic market is expected to demonstrate stable growth in the next 10 years, Koegl said.

Continental expects the number of vehicles per 1,000 people in Russia to reach 375 by 2020, compared with the current figure of 233. Local car sales are expected to reach 3.5 million in 2015 and 3.75 million in 2020, Koegl said.

"This is a huge indication for us to believe in this market," he told reporters in Kaluga. "With annual growth rates of 12 to 16 percent, the Russian market is one of the strongest in the world."

Continental's current local customers are primarily domestic carmakers, with AvtoVAZ accounting for 66 percent of the sales. Other Russian companies buying Continental products include UAZ, GAZ and Vologda Machinery Construction Plant.

The company plans to start supplies to foreign carmakers with local manufacturing facilities in the next four years.

To qualify for benefits, a number of foreign carmakers like Ford, Volkswagen and Fiat signed agreements with the government earlier this year in which they committed to make at least 300,000 vehicles per year domestically, with 60 percent of auto parts being sourced locally.

"This brought a new dynamic to the supply market here, and … we are going to follow our international customers," Koegl said.

Among the company's potential customers are Peugeot Citroen and Volkswagen, which have production facilities in the Kaluga region — one of the leaders in attracting foreign investment due to its generous tax breaks.

Arctic shipping routes unlikely to be Suez of the northhttp://euobserver.com/882/32483

HONOR MAHONY

Today @ 09:26 CET

EUOBSERVER / TRANSPORT - Late last year a cargo ship made maritime history. It became the first foreign bulk carrier to make a commercial trip across Russian Arctic waters.

Carrying over 40,000 tonnes of iron ore, the MV Nordic Barents left Kirkenes port in Norway on 4 September.

It sailed the North Sea route, a path that runs eastwards from northern Europe, along Russia's north coast and through the Bering Strait. Some three weeks later, it docked in Xingang, northern China.

"The whole trip went very well. There were no big delays and it was a lot cheaper. Just compared to going via the Cape of Good Hope, the savings for fuel alone was around $550,000," said Christian Bonfils, CEO of Nordic Bulk Carriers, operator of the ship.

The Russians have been using Arctic waters all year round for decades. Retreating sea ice due to global warming in recent years has seen foreign shipping companies start to look northwards for the possibility of commercial shipping routes. But until recently the area has been closed to foreign ships wanting to get to hungry Asian markets.

Instead companies use the Suez Canal - a trip which, counted from Norway, is almost twice as long.

Last year Tschudi Shipping, which owns a mine in Kirkenes, approached the Russians about the possibility of using the North Sea route to get to China, the mine's biggest customer.

"We got a very clear message from the Russians. It was: 'We want to compete with Suez'," said CEO Felix Tschudi. The Norwegian company hooked up with Nordic Bulk Carriers, who had the right type of ice ship, to make the trip.

Until then uncertainty about how much the Russians would charge for the mandatory use of their ice-breakers meant the trip was not economically viable.

"The rate we paid last year [$210,000] for ice-breaker services was very comparable with the Suez Canal," said Bonfils.

Getting Russian natural resources out

So what prompted the Russian thaw? According to Professor Lawson Brigham, an expert on Arctic policy at the University of Alaska Fairbanks, it comes down to Russia wanting to exploit natural resources in the area.

"The bottom line is that Russia's GNP is tied to Arctic natural resources development.

The real driver is building up a transport system to move the cargoes of natural resources to global markets and one of the big global markets sitting there is China," he said.

The region has a wealth of natural resources including nickel, iron ore, phosphate, copper and cobalt. There are huge reserves of gas in the Shtokman gas field, while a 2008 report by the US Geological Survey suggested oil in the Arctic circle could amount to 13 percent of the world's undiscovered supply.

Tschudi and Bonfils have an additional, more prosaic explanation. The obligation to use Russian ice-breakers is a money spinner.

"If they can employ their icebreakers in the summer season, then it's good business for them," said Bonfils.

Problems

Several more such trans-arctic trips are planned this year. According to Tschudi the North Sea route "will be important for those who are shipping from fairly high north."

"It will be quite important for mines in the Kola Peninsula [in north west Russia], mines in Finland. You can also save by shipping from Rotterdam."

But for all the buzz it has been creating - shipping companies are also thrilled at the prospect of pirate-free waters – caveats abound.

Good trade depends on predictability

Global warming has meant the North Sea route has become freer of ice. But this is the case only for about four months a year at most, sometimes only two. An impact study on Arctic marine shipping by the Arctic Council notes that the navigation season for the North Sea route is expected to be 90-100 days only by 2080.

"Despite all of the change, the Arctic Ocean is ice-covered for most of the year." said Brigham, adding: "The global maritime industry works on just-in-time cargoes and the regular nature of marine traffic."

"There is a little bit of a misperception that this is a new global regime with new global shipping lanes that will replace Panama and Suez [canals]."

In addition, businesses need to feel less that they are subject to Russia's whim when it comes to tariffs. "We need predictability [on prices] in order to plan," said Tschudi.

There are a host of other problems too. There is little infrastructure in Arctic territory. If a ship gets into trouble, help is far away. There are also no clear rules on standards for ships sailing in the area.

The waters are not as well chartered as elsewhere. More oceangraphic and meterological data is needed as well as information on icebergs. At the political level, there is a dispute over the waters. Russia considers the Northern Sea route as national territory, so it makes the rules. The US disagrees.

Environment

And then there is the environmental impact of increased shipping. More traffic means there is a greater risk of oil spill. The ships will introduce alien species through their hull water and are likely to interrupt the migratory patterns of marine mammals.

Carbon emissions could accelerate ice melting even further, and this in a region where the average temperature has risen almost twice as fast as the rest of the world's.

Other ship emissions , such as SOx and NOx, may also have unforeseen consequences on the Arctic environment.

Norwegian explorer Borge Ousland says it is vital not to forget that changes in the Polar regions could have global effects.

"It is easy to look at the Polar regions as an isolated area but any change in temperature has an effect on the rest of the world," he said recently.

"I am very worried about what I have seen in the last 20 years. When I went up to the North Pole for the first time in 1990, the ice was three to four metres thick. In 2007 we measured the ice for the Norwegian Polar Institute and the coverage of ice was now 1.7 metres thick."

Activity in the Oil and Gas sector (including regulatory)

6 Jul, 2011, 11.46AM IST,Reuters

Russia Rosneft should remain in government hands: Chairmanhttp://economictimes.indiatimes.com/news/international-business/russia-rosneft-should-remain-in-government-hands-chairman/articleshow/9122536.cms

MOSCOW: The assets of Russia's largest oil producer Rosneft are too strategic for the state to give up its ownership in the company, Rosneft's new chairman Alexander Nekipelov said in an interview.

Nekipelov, vice president of the Russian Academy of Sciences , was elected board chairman in June after Deputy Prime Minister Igor Sechin gave up his seat following a presidential order for senior government officials step down from the boards of state companies.

"To make this decision (to give up a controlling stake in the company) the government should be guided by a certain calculus, not an abstract notion that the public sector is bad and the private sector is good," he said.

According to the privatisation plan for Rosneft, which pumps nearly a quarter of the country's oil, the state will first lower its stake from 75.16 percent to 51 percent and after 2015 sell off more shares to be left with minority ownership.

06.07.2011

Poland's EU Presidency Will Support Shale Gas Developmenthttp://www.oilandgaseurasia.com/news/p/0/news/11936

As Poland assumes the rotating European Union (EU) presidency, its central objectives in the energy sphere over the next six months will be to obstruct any attempts to regulate shale gas development at a supranational level or to impose tougher climate change targets.

On 1 July Poland assumed the rotating presidency of the European Union (EU) for the first time in the country's history. The presidency rotates between EU member states

every six months (Poland inherited the role from Hungary) and incurs responsibility for the functioning of the Council of the European Union--the chamber that represents member states' governments and is the ultimate arbiter in the passage of new legislation.

Copyright 2011, Utility Products.com. All rights reserved.

Russians cut export duty on oil sold to Tajikshttp://centralasiaonline.com/cocoon/caii/xhtml/en_GB/features/caii/newsbriefs/2011/07/05/newsbrief-08

Staff ReportFor CentralAsiaOnline.com2011-07-05

MOSCOW – Russia has cut the export duty on “light” oil products it sells to Tajikistan, CA-News.org reported July 5, quoting a resolution signed by Russian Prime Minister Vladimir Putin.

Starting July 1, the duty per tonne of kerosene and diesel fuel is US $298.20, compared to the previous US $309.60. The duty per tonne of gasoline is US $400.50, down from US $415.80, according to Ukraine’s Oil News.

Export duties on crude oil and “dark” oil products also fell.

Russia began a series of duty increases March 1, citing a need to fix shortages on its domestic market. Tajikistan imports about 90% of its oil from Russia.

Russia to Invest $1.5b In Petrochem Complex http://www.zawya.com/story.cfm/sidZAWYA20110706062449/Iran_Russia_to_Invest_15b_In_Petrochem_Complex

06 Jul 2011Iran and Russia agreed to construct a petrochemical complex in Assalouyeh, southern Iran, at the cost of $1.5 billion.

After three years of negotiations, National Petrochemical Company (NPC) and a Russian oil company agreed to build a petrochemical complex in the second phase of Pars Special Economic Energy Zone (PSEEZ), Assalouyeh, Mehr News Agency reported.

Under the agreement, the Russian side will invest $1.5 billion in constructing the complex, the report said.

Urea fertilizer and ammonia will be the main products of the complex, while natural gas feedstock for the unit will be provided by the Oil Ministry and the new phases of South Pars.

At present, the joint working group from the two companies has launched studies while talks are underway on setting the price of feedstock and some legal issues pertaining to the contract, the report added.

Last month, Iranian and Russian officials held a meeting on the sidelines of 11th International Oil and Gas exhibition in Moscow to discuss ways to expand energy cooperation.

The visiting Iranian delegation, including lawmakers and energy officials, and the Russian authorities stressed on expansion of joint investment and cooperation in oil and gas sectors of both countries, IRIB reported.

"Russian companies are eager to invest in Iran's oil and gas projects and that Russia will be a reliable partner for Iran in its oil and gas fields," said Talyat Aliev, the deputy director of International Department of Russian Energy Ministry.

"We are ready to expand cooperation in Iran's oil and gas sector by removing the obstacles," Aliev said.

GECF Cooperation

Early in April, the two countries called for a greater role by the Gas Exporting Countries Forum (GECF) in establishing security in the international energy market.

The two sides also called for further cooperation between gas producing and exporting companies in GECF member states for a greater global energy security, Fars News Agency reported at the time.

The comments were made in a meeting between CEO of Russian energy giant Gazprom Alexey Miller and Ali Aqa-Mohammadi, the Iranian vice president's deputy for economic affairs, in Moscow.

The GECF was established in Tehran in 2001 and its members include Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, and Venezuela.

The organization controls 70 percent of the world's natural gas reserves and 85 percent of the world's liquefied natural gas (LNG) production.

Last year, Tehran and Moscow agreed to establish a joint bank to help fund bilateral projects and expand cooperation in natural gas deliveries and oil products.

According to Deputy Oil Minister Javad Oji, the joint bank would finance oil and gas projects and work out a mechanism for using the currencies of both countries for payments.

Mahshahr Petrochemicals

Managing director of the National Petrochemical Company has announced plans by the company to invest more than $14 billion in Mahshahr Petrochemical Special Economic Zone during the Fifth Five-Year Development Plan (2010-15).

Addressing a meeting attended by caretaker of Oil Ministry, Mohammad Aliabadi in Mahshahr south of Iran on Sunday, Bayat presented a report on the latest in petrochemical sector's activities at Mahshahr Petrochemical Special Economic Zone.

He said the installed capacity of 18 petrochemical complexes in the region stands at 25 million tons which was achieved by investing $9 billion, Shana reported.

The official remarked that based on a presidential directive, a taskforce had been formed in cooperation with the Ministry of Industries to examine the grounds for creating more jobs and value-added in petrochemicals.

A number of petrochemical complexes in Mahshahr are facing shortage of feedstock, said the official, adding there is about 10 million tons of idle capacity in the region.

"Increasing investment in the petrochemical sector as well as making use of the great potentials will transform our petrochemical industry into a more dynamic one in the near future," the official noted. © Iran Daily 2011

Energy JV authorizedhttp://www.europolitics.info/sectorial-policies/energy-jv-authorised-art309114-14.html

Tuesday 05 July 2011

The European Commission granted clearance, on 5 July, to the acquisition of joint control by ERG Renew of Italy and OOO Lukoil Ecoenergo of Russia of a newly created company constituting a joint venture - JV CO - by way of purchase of shares. ERG Renew operates in the generation and wholesale supply of electricity from renewable sources, mainly in the wind sector. Lukoil Ecoenergo is active in the renewable energy sector. JV CO will operate in the generation and wholesale supply of electricity from renewable sources in Romania, Bulgaria, Ukraine and Russia.

Lukoil's Odessa refinery unlikely to resume operations

http://www.rbcnews.com/free/20110706105837.shtml

      RBC, 06.07.2011, Moscow 10:58:37.Russian oil major Lukoil's Odessa Oil Refinery in Ukraine is unlikely to resume operations after repairs because the Odessa-Brody pipeline, which transported Russian oil to the refinery, has been switched to direct mode to ship Azeri oil to Belarus, RBC Daily reported today.

      The transportation of Azeri oil to Belarus via the Odessa-Brody pipeline has been resumed, Belarusian Ambassador to Azerbaijan Nikolay Patskevich said. The Odessa-Brody pipeline earlier operated in reverse mode and was the main route for moving oil to the Odessa refinery.

      Lukoil Vice President Valery Subbotin said in early June that the refinery was expected to resume operations before the end of 2011. A spokesperson for Lukoil said that the company expects supplies to the refinery via a pipeline to resume as other supply options are less feasible.

      The refinery's net loss escalated around 33% to RUB 2.6bn (approx. USD 93m) in 2010 and refining also dropped 33% to 1.4m tons. Experts attribute this to the fact that Ukrainian oil pipeline operator Ukrtransneft re-routed oil supplies to the refinery in 2009. It transported oil via the longer Odessa-Brody pipeline instead of the shorter Lisichansk-Kremenchug-Odessa pipeline, which pushed up the cost of crude oil by 20%.

Gazprom

06.07.2011

Testing Gazprom’s New Arctic Jack-Up Righttp://www.oilandgaseurasia.com/news/p/0/news/11929

Gazprom’s new Arkticheskaya jack-up rig is undergoing testing in the White Sea.The rig, which has been under construction at the Zvezdochka yard in Severodvinsk for more than 15 years, has set course for the White Sea where it is to undergo testing. The rig, which is built for Gazprom, is designed for operations in Arctic waters and will be used primarily in the Pechora Sea. It has a 88 meter long and 66 meter wide platform and can house 90 workers. Maximum drilling depths are 6500 meters.

The “Arkticheskaya” will be undergoing testing in a 30-day period in the White Sea. Afterwards, the rig will return to Severodvinsk for final adjustments. It will subsequently

be handed over to Gazprom, Regnum reports.

The rig is also expected in Murmansk for final testing in the course of November this year, the Murman TV station reports.

As previously reported, Gazprom has called on Zvezdochka to speed up the construction of the rig. When visiting the yard together with a 49 person delegation last year, Gazprom Deputy Aleksandr Ananenkov had the Arkticheskaya rig on top of his agenda. During the same visit, Ananenkov visited the neighboring Sevmash yard, where the oil platform Prirazlomnaya has been under construction.

The two oil and gas installations have become long-dragged construction projects, both long overdue their original time schedules.

As BarentsObserver recently reported, also the Prirazlomnaya platform is now getting ready for operations. The platform will be tugged to the Pechora Sea already in the course of August this year.

Copyright 2011, Barents Observer. All rights reserved.

Gazprom Sustainability Report 2008-09: Is the Russian Gas Giant a Puppet?http://sustainablebusinessforum.com/elainecohen/52904/gazprom-sustainability-report-2008-09-russian-gas-giants-first-public-report

Here are selected paragraphs from my review of this report (you can find the rest here, online, on Ethical Corporation's website):

Gazprom’s first sustainability report portrays a rather different story to the one told in Roman Kupchinsky’s 2009 paper: Gazprom’s European Web. This alleges secrecy around Gazprom’s potential control of the European energy landscape via nameplate gas companies throughout Europe as well as links to organised crime and political corruption. Clearly these are not activities Gazprom would relish disclosing in a sustainability report. The question is whether Gazprom is a puppet of the Russian political machine – the Russian government still holds a 50.002% controlling stake in the company and is represented by six members on the 11-strong board. Or, has Gazprom been able to transition into a western-style market competitor that plays by the rules of a sustainable market environment?

The world’s largest natural gas producer, Gazprom has been issuing environmental reports since 2002, nine years after its break from full government ownership to become an open joint stock company in Russia. This now is the company’s first full sustainability report, covering years 2008 and 2009. Gazprom’s main activities are the geological exploration, production, transportation, storage, processing and marketing of gas. It is a

giant in the Russian economy, employing nearly 400,000 people, holding 18% of global gas reserves, operating 600,000km of pipeline and supplying nearly 70% of Russian consumers and export markets with more than 400m cubic metres of gas.

The implications of Gazprom’s transformation are not trivial by any means. Establishing a global position in a competitive capitalist market and contributing to local socio-economic stability while distancing its reputation from former Kremlin political dictates will have demanded more than the average level of leadership skills. Gazprom’s report is an impressive 104 pages with no frills and no special effects, just plain, direct disclosures. It’s a rather dry read – hardly any stories, case studies or warming community photos – but it is detailed and meticulous. An example of this attention to detail is the chronicle of a safety incident. At 10.23am on July 24 2008 in Moscow, an explosion followed by a gas blaze took place at the Petrovsk to Novopskov gas trunkline. By 11.05am the following day, Gazprom teams completed repairs and resumed gas supplies to consumers. Forty-four metres of pipe were replaced during the repairs.

The report contains a comprehensive assurance statement written by the council for non-financial reporting of the Russian Union of Industrialists and Entrepreneurs. RUIE has done as good a job as any with a four-page assurance statement including recommendations for future reporting. However, a more neutral voice on assurance might have offered greater credibility. RUIE is the mouthpiece of Russian industry associations and might be expected to provide positive assurance for the member companies it represents. Overall, Gazprom presents a comprehensive, transparent picture of its operations and offers a credible picture as a global competitor in (sustainable) energy markets. Assuming of course that there is nothing hidden between the lines.

Ice cream, anyone ?