Russia 110603

Basic Political Developments ITAR-TASS news digest of June 3: 1.

o ASHKHABAD - - The OSCE is ready to expand cooperation with Turkmenistan in all security dimensions and support the country in implementing its OSCE commitments, said the OSCE Chairperson-in-Office, Lithuanian Foreign Minister Audronius A·ubalis on Thursday following talks with Turkmen President Gurbanguly Berdymuhamedov.

o MOSCOW - - NATO forces will for the first time ever train to rescue the crew of a Russian submarine during the Bold Monarch-2011 exercise at the Spanish coast. The Russian defense ministry said on Thursday Chief-of-Staff of the armed forces Nikolai Makarov arrived in Spain to watch the world's largest submarine rescue exercise.

o MOSCOW - - The Russian State Duma will consider under the second reading on Friday a lawbill which allows Internet sites to voluntarily register as media outlets.

o MOSCOW - - The Russian State Duma will consider the amended bill on the National Payment Card System under the second reading on Friday which allows Visa and MasterCard to process domestic Russians transactions abroad.

o MOSCOW - - Prime Minister Vladimir Putin will discuss railway development in Sochi on Friday and will attend the opening ceremony of a reconstructed railway tunnel in Novorossijsk.

o MOSCOW - - Russian Foreign Minister Sergei Lavrov will leave for the Black Sea port of Odessa in Ukraine on Friday to meet his Ukrainian counterpart Konstantin Grishchenko and discuss disputed border delimitation in the Kerch Strait of the Sea of Azov.

o SINGAPORE - - Russian Deputy Prime Minister Sergei Ivanov will join delegates from 27 countries in Singapore from Friday to discuss defense and security in the Asia Pacific region.

o IZHEVSK - -Yet another amunition depots caught fire and began to explode in Russia late on Thursday in the Republic of Udmurtia. The Volga regional emergency center said 18 depots with shells are on fire as well as some 150 buildings. The territory of the unit is eight kilometers in perimeter. A week ago a munitions storage depot caught fire and exploded in the Republic of Bashkiria. Twelve people were injured, 115 remained homeless in the nearby settlement of Urman where dozens of buildings were destroyed and damaged.

o MOSCOW - - About 30 people were injured in explosions at munitions depots in Udmurtia. Eight are taken to hospital, the Russian Emergencies Ministry’s information department told Itar-Tass.

o MOSCOW - - More than 28,000 people are evacuated because of a fire and explosions at ammunition depots in Udmurtia, the Russian Emergencies Ministry's information department told Itar-Tass.

o KRASNOYARSK - - The area of wildfires in Russia’s Siberian regions has almost doubled in the past 24 hours, a spokesman for the regional emergencies centre said on Friday. As of Friday morning, he said, there were 133 wildfires on an overall area of 16,039.9 hectares.

o GORNO-ALTAISK - - At a plenary meeting of the 10th General Assembly of the Northern Forum that was held in the South Korean city of Pyeongchang, the Gangwon province, the Republic of Sakha (Yakutia) was unanimously elected the Chair Region of this international organisation for the next two-year period, the press service of the Ministry for federative relations and Foreign Affairs of Sakha reported in Yakutsk on Friday.

o ULAN-UDE - - More than 900 kilograms of hazardous chemicals stored in violation of sanitary regulations have been found by officers of the environmental prosecutor's office and the Trans-Baikal Territory and Amur region’s department of the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) in a hothouse facility near the Avdei village. Rosselkhoznadzor told Itar-Tass on Friday that the plant growth stimulators, chemicals to fight weeds and insects, made in China, were stored 100 metres from the Chita River. Mass crawfish mortality has already occurred there.

o OTTAWA - - The 8th session of the Russian-Canadian Intergovernmental Economic Commission (IEC), which ended here on Thursday, “substantively discussed issues on further promoting bilateral trade and joint participation in major economic projects,” RF First Deputy Prime Minister Viktor Zubkov told reporters after the signing of the Joint Statement of the session. “We drew up a plan of joint action in priority spheres of our cooperation,” he stressed, pointing out that both countries “have a significant untapped potential,” especially in the sphere of modernization partnership. He called the participation of Russia’s RUSNANO Corporation in Canadian venture funds the first major step in this direction.

Afghan drug production tripled while Kofi Annan headed UN – Ivanov. o RF anti-drug chief says Global Commission report drug-promoting

campaign. o Russia slams calls for legalizing illicit drugs - Some media mistakenly took

the report by the commission as an official view of the United Nations. Margelov Prepares to Visit Libya - Margelov said he would travel to the rebel

stronghold of Benghazi "in the nearest time" to meet with the rebel leadership. US backs Southern Corridor bypassing Russia - Richard Morningstar, U.S. energy

envoy for the Eurasian region, told a House Foreign Affairs subcommittee on

Thursday Azerbaijan and Turkmenia are likely to supply natural gas for the project.

Bulgarian, Russian foreign ministers hold talks in Moscow o Bulgaria considers Russia its reliable partner – foreign minister. o Belene NPP project in Bulgaria to be resumed after security criteria study. o Bulgaria to assign national significance project status to South Stream. o Bulgaria to set up political committee on Nabucco gas project. o Bulgaria FM says no idea when Bugras-Alexandroupolis project resumes.

Russia’s Ivanov to attend Singapore Shangri-La dialogues - Ivanov will meet Chinese Defense Minister Liang Guanglie and Japanese Defense Minister Toshimi Kitazawa on the sidelines of the conference.

Russia, Ukraine to discuss Kerch Strait border - Russian Foreign Minister Sergei Lavrov will leave for the Black Sea port of Odessa in Ukraine on Friday to meet his Ukrainian counterpart Konstantin Grishchenko and discuss disputed border delimitation in the Kerch Strait of the Sea of Azov.

Barents Sea border treaty enters force - Russia’s Foreign Minister Sergey Lavrov arrives in Oslo on Tuesday for the official exchange of protocols making the delimitation treaty binding.

Meeting with Vice President of China Xi Jinping - The President of Russia emphasised the high intensity of bilateral contacts in 2011 and noted that Russia awaits President of China Hu Jintao’s state visit.

Russia to increase financial support of Abkhazia - Russian Prime Minister Vladimir Putin said that Russia is ready toincrease financial support for Abkhazia. Over 10 billion rubles havebeen provided, he told Abkhaz Prime Minister Sergey Shamba.

o Prime Minister Vladimir Putin meets with Abkhazian Vice President Alexander Ankvab

Georgia says 2 Abkhazians planned terror blasto RF concerned re Georgia raiding groups acts in Abkhazia, SOssetia.

Russia will lift ban on EU vegetables import on four conditionso No lifting of EU vegetable ban until all info available - Russian chief

doctor: "The ban will be lifted when the causative agent of the infectious disease and causes of contamination, as well as [infection] transmission factors are established, outbreak of the stomach infection is taken under control and the growth in the numbers of those infected is curbed," Gennady Onishchenko said.

o Russian State Duma supports ban on European vegetables Russia bans import of Egyptian potatoes NATO To Train Rescuing Russian Submarine - The Russian defence ministry said

on Thursday Chief-of-Staff of the armed forces Nikolai Makarov arrived in Spain to watch the world's largest submarine rescue exercise.Serbian and Russian Chiefs of Staff back intensification of cooperation - During the talks, the officials confirmed that Russia's delegation would participate at the

Strategic Military Partner Conference for in Belgrade from June 13 to 15, the ministry said. As the head of the Serbian Army delegation during its visit to Russia which will end on June 3, Miletic will visit the 5th Separate Motorized Infantry Brigade in Alabino, Moscow Region.

Albania introduces a temporary visa-free regime for Russian nationals President Elbegdorj: We Make Only One Choice in Our Hard Times and This is

Our Northern Neighbor Blasts continue at Russia's Volga Region arms depot; 42 injured

o Russian arms depot blasts force mass evacuation - Explosions at military weapons depots are relatively common in Russia and are often linked to ageing equipment and lax enforcement of safety rules.

o URGENT -- Two die of heart attacks, 45 injured in ammo explosions. o Russian arms depot fire halts oil pipeline flowso Transneft shuts 161,000 bpd oil link after blastso Some rocket ammunition kept at depot, it does not explode -- DM. o EMERCOM water bombers arrive in Udmurtia to fight blaze. o Mil prosecutors begin probe into Udmurtia ammo depot fire. o Thick smoke complicates fire-fighting operation at ammunition dump. o No underground Grad missiles storage at burning depot -Defence Min.

Two militants killed in shootout in Dagestan. o Two militants killed in Dagestan

Block post fired on in Kabardino-Balkaria, no victims. Putin to discuss railway development - Prime Minister Vladimir Putin will discuss

railway development in Sochi on Friday and will attend the opening ceremony of a reconstructed railway tunnel in Novorossijsk.

Duma to consider amended bill on national payment system. One t of hazardous chemicals stored on Chita River bank confiscated. Bootleg whisky behind Russian deaths in Turkey RIA Russian Press at a Glance, Friday, June 3, 2011 ITAR-TASS Russian press review Kulikov Urges Kremlin To Create New Body To Direct All Force Structures In

Times Of Trouble – Analysis by Paul Goble A Chinese Game - Russia and China Set Aside Their Differences in Pursuit of

Greater Economic Goals. By Tai Adelaja China Increasing Reliance on Russian Coal - China will increase annual coal

imports from Russia, its fifth-biggest overseas supplier, by almost 30 percent in the next five years as energy cooperation between the countries grows, the Chinese foreign ministry said.

Future of the CIS: Is a united economic space possible? - Valdaiclub.com interview with professor Julian M. Cooper, Centre for Russian and East European Studies (CREES), University of Birmingham; Co-Director, Centre for East European Language Based Area Studies (CEELBAS) (SSEES-UCL, Oxford, CREES); Asssociate Fellow, Chatham House.

National Economic Trends Russian president signs into law amendments to 2011 budget Russian Services Expand Most Since April 2010, HSBC Says Russian Services PMI accelerates to 57.6 Banks have 496.1 bln rbs on CBR correspondent accounts on June 3. Export Grain to Go to Established Buyers First Is a Weak Dollar Good for Russia? Domestic economy to revert to Soviet standards - Independent experts have no

illusions about the five-year plans of the All-Russian People's Front Igor Naumov

Business, Energy or Environmental regulations or discussions Sberbank to submit new dividend policy to supervisory board before

privatization – Gref MICEX key exchange for Sberbank's share sale – CEO VTB Capital to kick off major international expansion Rostelecom buys 40% of Bashinformsvyaz Russia to allow Internet sites register as media outlets. China approves Uralkali and Silvinit merger deal Severstal and NLMK are competing for another coking coal deposit in Russian

North Nissan and Renault plan to invest up to $2 bln in Russia by 2015-Nikkei Polyus Gold in talks with global gold miners-Vedomosti Polyus Gold to merge with global major by year end Engineering firm SNC-Lavalin on a roll with Russian energy contract AvtoVAZ sells stake in NovikomBank to Rostechnologii: Deleveraging gradually Dixy takes over retail operator Victoria The ALROSA Road Show - The notoriously discreet company is also revealing

some of its secrets as it appears to be raising transparency levels and, it hopes, investor interest ahead of a planned initial public offering (IPO) set for 2012. The listing is highly significant and may prove revealing for the industry, too.

Activity in the Oil and Gas sector (including regulatory) REFILE-Russia's Transneft says 2010 profit fell 1 percent Transneft 2010 net profit grows 3 pct to 125.5 bln rbls Surgut oil reserves replacement at 136 pct-Ifax

Gazprom Gazprom CEO says Ukraine to remain transit country for Russian gas after

commissioning of new pipelines Gazpom chief says Nabucco pipeline to take longer than planned to be put in

service RPT-UPDATE 2-Gazprom set for more after huge India deals-source Gazprom's Miller touts China-pact progress Europe wants more gas for power generation, Gazprom says

Gazprom eyes direct gas supplies to European power plants Gazprom to Open Sochi Gas Pipeline

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Full Text Articles

Basic Political Developments

11:58 03/06/2011ALL NEWS

ITAR-TASS news digest of June 3: 1.

http://www.itar-tass.com/en/c154/157086.html

3/6 Tass 198

ASHKHABAD - - The OSCE is ready to expand cooperation with Turkmenistan in all security dimensions and support the country in implementing its OSCE commitments, said the OSCE Chairperson-in-Office, Lithuanian Foreign Minister Audronius A·ubalis on Thursday following talks with Turkmen President Gurbanguly Berdymuhamedov.

MOSCOW - - NATO forces will for the first time ever train to rescue the crew of a Russian submarine during the Bold Monarch-2011 exercise at the Spanish coast.

The Russian defense ministry said on Thursday Chief-of-Staff of the armed forces Nikolai Makarov arrived in Spain to watch the world's largest submarine rescue exercise.

MOSCOW - - The Russian State Duma will consider under the second reading on Friday a lawbill which allows Internet sites to voluntarily register as media outlets.

The lawbill triggered public fears it aims to introduce control over Internet. But media committee chairman Sergei Zheleznyak played down fears saying the registration is exclusively a voluntary undertaking.

MOSCOW - - The Russian State Duma will consider the amended bill on the National Payment Card System under the second reading on Friday which allows Visa and MasterCard to process domestic Russians transactions abroad.

MOSCOW - - Prime Minister Vladimir Putin will discuss railway development in Sochi on Friday and will attend the opening ceremony of a reconstructed railway tunnel in Novorossijsk.

In Sochi Putin will meet participants in the international railway business forum to “discuss railway transport development in Russia also in the context of preparations for Winter Olympics in 2014, prospects for Russian and foreign business participation in the

implementation of major infrastructure projects, attracting investments and high technologies into the Russian economy, and integration in the sphere of transportation and development of s single transport space in the CIS and outside it, ” the government press service said.

MOSCOW - - Russian Foreign Minister Sergei Lavrov will leave for the Black Sea port of Odessa in Ukraine on Friday to meet his Ukrainian counterpart Konstantin Grishchenko and discuss disputed border delimitation in the Kerch Strait of the Sea of Azov.

Russia proposes to recognize the strait and the sea as internal waters of both countries, delimitate the seabed and keep the surface for common use.

Ukraine insists the surface shall be divided according to the administrative border which existed between the two countries when they were constituent republics of the Soviet Union.

SINGAPORE - - Russian Deputy Prime Minister Sergei Ivanov will join delegates from 27 countries in Singapore from Friday to discuss defense and security in the Asia Pacific region.

The 10th IISS Asia Security Summit will be held at the Shangri-La Hotel.

The conference will also consider Afghanistan and drug trafficking problem in the Golden Triangle (Myanmar, Thailand, Laos), the denuclearization of the Korean Peninsula, and regional conflicts.

IZHEVSK - -Yet another amunition depots caught fire and began to explode in Russia late on Thursday in the Republic of Udmurtia.

The Volga regional emergency center said 18 depots with shells are on fire as well as some 150 buildings. The territory of the unit is eight kilometers in perimeter.

A week ago a munitions storage depot caught fire and exploded in the Republic of Bashkiria. Twelve people were injured, 115 remained homeless in the nearby settlement of Urman where dozens of buildings were destroyed and damaged.

MOSCOW - - About 30 people were injured in explosions at munitions depots in Udmurtia. Eight are taken to hospital, the Russian Emergencies Ministry’s information department told Itar-Tass.

MOSCOW - - More than 28,000 people are evacuated because of a fire and explosions at ammunition depots in Udmurtia, the Russian Emergencies Ministry's information department told Itar-Tass.

People are evacuated from residential sites in Udmurtia and Tatarstan. If necessary, up to 40,000 may be evacuated from 16 settlements, a ministry official said.

KRASNOYARSK - - The area of wildfires in Russia’s Siberian regions has almost doubled in the past 24 hours, a spokesman for the regional emergencies centre said on Friday.

As of Friday morning, he said, there were 133 wildfires on an overall area of 16,039.9 hectares.

GORNO-ALTAISK - - At a plenary meeting of the 10th General Assembly of the Northern Forum that was held in the South Korean city of Pyeongchang, the Gangwon province, the Republic of Sakha (Yakutia) was unanimously elected the Chair Region of this international organisation for the next two-year period, the press service of the Ministry for federative relations and Foreign Affairs of Sakha reported in Yakutsk on Friday.

ULAN-UDE - - More than 900 kilograms of hazardous chemicals stored in violation of sanitary regulations have been found by officers of the environmental prosecutor's office and the Trans-Baikal Territory and Amur region’s department of the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) in a hothouse facility near the Avdei village. Rosselkhoznadzor told Itar-Tass on Friday that the plant growth stimulators, chemicals to fight weeds and insects, made in China, were stored 100 metres from the Chita River. Mass crawfish mortality has already occurred there.

OTTAWA - - The 8th session of the Russian-Canadian Intergovernmental Economic Commission (IEC), which ended here on Thursday, “substantively discussed issues on further promoting bilateral trade and joint participation in major economic projects,” RF First Deputy Prime Minister Viktor Zubkov told reporters after the signing of the Joint Statement of the session.

“We drew up a plan of joint action in priority spheres of our cooperation,” he stressed, pointing out that both countries “have a significant untapped potential,” especially in the sphere of modernization partnership. He called the participation of Russia’s RUSNANO Corporation in Canadian venture funds the first major step in this direction.

12:20 03/06/2011ALL NEWS

Afghan drug production tripled while Kofi Annan headed UN – Ivanov.

http://www.itar-tass.com/en/c154/157114.html

3/6 Tass 220

MOSCOW, June 3 (Itar-Tass) — Drug production in Afghanistan tripled in the ten years when Kofi Annan was United Nations Secretary General, director of the Russian federal anti-drug authority Viktor Ivanov said on Friday.

“Over the ten years of his office drug production [in Afghanistan] tripled. Regrettably, he did not think it worthy to mention this colossal failure of the United Nations,” Ivanov told journalists.

According to Ivanov, Annan used his authority to legalize NATO’s command of the International Security Assistance Force in that country.

Ivanov’s words came in comment of the Global Commission on Drug Policy report, which called for the legalisation of some drugs and an end to the criminalisation of drug users. The panel, headquartered in Rio de Janeiro, includes former UN Secretary General Kofi Annan, the former leaders of Mexico, Colombia and Brazil, and the entrepreneur Sir Richard Branson.

He descried this report as a PR- campaign popularising the use of drugs. “Media have been widely discussing the reports by the so-called Global Commission. We should realize that this is nothing else but a global PR- campaign to popularize drugs. Directly or indirectly, this campaign is linked with the colossal revenues estimated at about 800 billion U.S. dollars,” he said.

12:08 03/06/2011ALL NEWS

RF anti-drug chief says Global Commission report drug-promoting campaign.

http://www.itar-tass.com/en/c154/157103.html

3/6 Tass 213

MOSCOW, June 3 (Itar-Tass) — Head of the Russian federal anti-drug authority Viktor Ivanov has descried the Global Commission on Drug Policy report calling for the legalisation of some drugs and an end to the criminalisation of drug users as a PR- campaign popularising the use of drugs.

“Media have been widely discussing the reports by the so-called Global Commission. We should realize that this is nothing else but a global PR- campaign to popularize drugs. Directly or indirectly, this campaign is linked with the colossal revenues estimated at about 800 billion U.S. dollars,” he told journalists on Friday.

Russia slams calls for legalizing illicit drugshttp://en.rian.ru/russia/20110603/164412819.html

12:34 03/06/2011

MOSCOW, June 3 (RIA Novosti) - Russia's Federal Drug Control Service head Viktor Ivanov criticized on Friday a recent call for legalizing some illicit drugs as "a propaganda campaign promoting the use of narcotics."

A 24-page report by the so-called Global Commission on Drug Policy suggested on Thursday that governments should consider legalizing some drugs such as marijuana to curb global drug trafficking as the decades-old "global war on drugs has failed."

Some media mistakenly took the report by the commission as an official view of the United Nations.

"We have to realize that we are dealing with a global propaganda of illicit drugs here," Ivanov said.

"This propaganda campaign is linked to the huge profits [from sales of illicit drugs] that are estimated at about $800 billion annually," he said.

The official added that Russia had already gone through the "sad" experience of temporarily legalizing drugs, especially those that contain codeine, an opiate used for its analgesic, anti-cough, and anti-diarrheal properties.

Ivanov said Russians annually consume about six metric tons of codeine, which essentially has the same properties as heroin, and the demand for this drug is growing exponentially.

Following orders by Russian President Dmitry Medvedev, codeine-related drugs will be sold only by prescription starting November this year.

According to UN data, there are 2.5 million drug addicts and more than 5.1 million drug users in Russia. Medvedev ordered in April that proposals be drafted that would introduce mandatory medical treatment as an alternative to penal measures against drug addicts.

The 19-member independent commission on drug policies was created in January 2011 with the goal to "bring to the international level an informed, science-based discussion about humane and effective ways to reduce the harm caused by drugs to people and societies."

It includes prominent international figures such as the previous UN secretary general, Kofi Annan, and the former presidents of Mexico, Brazil, Colombia, Ernesto Zedillo, Fernando Henrique Cardoso and Cesar Gaviria, who set up a similar commission for Latin America in 2008.

Margelov Prepares to Visit Libya http://www.themoscowtimes.com/news/article/margelov-prepares-to-visit-libya/438111.html

03 June 2011Bloomberg

Russia wants to mediate between the two sides in Libya's civil war as it tries to negotiate the exit from power of Colonel Moammar Gadhafi, said Mikhail Margelov, the country's envoy in the Libyan crisis.

Margelov said he would travel to the rebel stronghold of Benghazi "in the nearest time" to meet with the rebel leadership.

Foreign Minister Sergei Lavrov is in contact with Tripoli, held by Gadhafi's forces, Margelov said by telephone.

President Dmitry Medvedev said May 27 that Gadhafi had forfeited his right to govern and Russia was using its contacts with the regime's leadership to persuade him to step down.

"My trip is an attempt to help the Libyan elite find a national consensus," Margelov said. Russia "has a unique opportunity to become a bridge between those parts of the Libyan political elite which see the future of their country as one united state."

Any solution must "be acceptable to all Libyans," Lavrov said in an interview Wednesday, echoing comments South African President Jacob Zuma made after returning from Tripoli in a trip backed by the African Union.

Russia itself isn't involved in negotiating "any deals of immunity or guarantees" for Gadhafi, though the leaders of other countries involved are considering a range of options, Lavrov said.

Gadhafi's future is "the most delicate topic," said Margelov, who also heads the International Affairs Committee in the Federation Council.

"The question of guarantees or immunity, even if it's being discussed at the highest levels, isn't public information and doesn't need to be advertised," Margelov said.

04:30 03/06/2011ALL NEWS

US backs Southern Corridor bypassing Russia.

http://www.itar-tass.com/en/c154/156806.html

3/6 Tass 44

WASHINGTON, June 3 (Itar-Tass) —— The U.S. administration strongly supports the Southern Corridor project which is to deliver Caspian gas to Europe bypassing Russia while Moscow plans its own South Stream pipeline to deliver gas to Europe.

Richard Morningstar, U.S. energy envoy for the Eurasian region, told a House Foreign Affairs subcommittee on Thursday Azerbaijan and Turkmenia are likely to supply natural gas for the project.

Three pipeline consortiums are competing to bring natural gas from Azerbaijan's Shah Deniz gas field to Europe, and the investment decisions to make that possible should be made by the end of this year, Morningstar said.

Other countries are also likely to contribute, including Turkmenistan, which Morningstar said was investing in infrastructure that could export gas to the West.

He said Iraq would be able to export gas but reiterated the United States does not want the pipeline to deliver gas from Iran.

Bulgarian, Russian foreign ministers hold talks in Moscow http://www.emg.rs/en/news/region/156852.html

03. June 2011. | 06:15

Source: BNR

Bulgaria’s Foreign Minister Nikolay Mladenov has arrived on a visit in Moscow to meet with Russia’s Foreign Minister Sergey Lavrov and discuss many aspects of the bilateral relations and the opportunities for intensifying them.

Bulgaria’s Foreign Minister Nikolay Mladenov has arrived on a visit in Moscow to meet with Russia’s Foreign Minister Sergey Lavrov and discuss many aspects of the bilateral relations and the opportunities for intensifying them.

Mladenov pointed out that Bulgarian-Russian relations are of strategic interest and do not include energy issues only. During the discussion over the South Stream gas pipeline project, Minister Mladenov announced that Bulgaria had already prepared the documents for studying the underwater route of the future gas pipeline in the Black Sea.

The two ministers agreed that the difficulties that the Belene NPP project is facing should not acquire political overtones. They also discussed the issue of archives that, following the end of the Second World War, were taken outside Bulgaria and are now in Russia.

11:25 03/06/2011ALL NEWS

Bulgaria considers Russia its reliable partner – foreign minister.

http://www.itar-tass.com/en/c154/157051.html

3/6 Tass 177

MOSCOW, June 3 (Itar-Tass) — Bulgaria considers Russia as its reliable partner in the area of supplies of energy resources, Bulgarian Foreign Minister Nikolay Mladenov said on Friday.

“We have repeatedly declared that we consider Russia as a reliable partnet,” he stressed. He recalled the 2009 energy crisis. “In the long run, the impact of what had happened then was felt most of all in Bulgaria. It made us change our energy strategy,” he said.

According to Mladenov, the country’s current energy strategy aims primarily at diversifying ways of deliveries, diversifying energy sources, creating interconnects to hook up Bulgarian pipelines to those of neighbouring countries, increasing the capacity of gas holders to be on a safe side in case of a crisis, etc.

“The whole package of energy resources needs to be diversified,” he stressed. “One state must not be completely dependent on another in terms of energy supplies.”

11:29 03/06/2011ALL NEWS

Belene NPP project in Bulgaria to be resumed after security criteria study.

http://www.itar-tass.com/en/c154/157055.html

3/6 Tass 182

MOSCOW, June 3 (Itar-Tass) — The Belene nuclear plant project will be resumed after security criteria analysis is over, Bulgarian Foreign Minister Nikolay Mladenov said on Friday.

“Everything will depend on the analysis of this project,” he said. “There are a number of important aspects there. What is coming to the fore is the compliance with security criteria, including the ones that have been introduced in recent time.”

“I don’t think Russia and Bulgaria have different approaches to this problem,” he stressed. “We must not run the risk of building a nuclear plant that does not meet the highest security criteria. This work is currently underway.”

“A group of experts invited by the Bulgarian government is also thoroughly studying the economic and financial aspects of the project,” noted the Bulgarian diplomat. “When this preliminary process is over both sides will be ready for next steps.”

“This is not a political issue, it is a matter of through economic analysis, primarily of security aspects,” he stressed.

11:07 03/06/2011ALL NEWS

Bulgaria to assign national significance project status to South Stream.

http://www.itar-tass.com/en/c154/157025.html

(adds)

3/6 Tass 171

MOSCOW, June 3 (Itar-Tass) —— Bulgaria looks at assigning a national significance status to the South Stream gas project, Bulgarian Foreign Minister Nikolay Mladenov said on Friday.

“Just a few days ago tentative authorization procedures related to the exploration of the Bulgarian section of the Black Sea bottom were completed,” he said. “Although, financial assessment of how Bulgaria’s infrastructure is to be integrated into the project is yet to be done. We hope to assign to the South Stream the status of a national significance project.”

“This project is very important for us,” he stressed. “If it fails, it will not be through Bulgaria’s fault.”

According to Mladenov, when the South Stream gains the national project status, it will simplify and speed up all relevant procedures. “It would be a good option to integrate a part of Bulgaria’s gas transportation system into the South Stream,” he said.

Commenting on reports about a possible branch to Romania, he stressed that “now only a branch to Bulgaria is being considered.”

10:37 03/06/2011ALL NEWS

Bulgaria to set up political committee on Nabucco gas project.

http://www.itar-tass.com/en/c154/156994.html

3/6 Tass 169

MOSCOW, June 3 (Itar-Tass) —— An agreement on setting up a political committee responsible for the Nabucco gas project is expected to be signed in Bulgaria on June 8, Bulgarian Foreign Minister Nikolay Mladenov said on Friday.

“Next Wednesday, we expect to sign an agreement of setting up a political committee for the implementation of the Nabucco project,” he said.

In his words, Bulgaria’s energy strategy aims at diversifying ways of delivery of energy resources and diversifying gas sources. “The latter, is partially solved through the implementation of the Nabucco project,” he noted.

11:45 03/06/2011ALL NEWS

Bulgaria FM says no idea when Bugras-Alexandroupolis project resumes.

http://www.itar-tass.com/en/c154/157067.html

3/6 Tass 184

MOSCOW, June 3 (Itar-Tass) — Bulgarian Foreign Minister Nikolay Mladenov has refused to say when the Burgas-Alexandroupolis oil pipeline project will be resumed.

“I don’t know when it might happen,” he told a news conference at the Bulgarian embassy in Moscow on Friday. “Analysis of the project’s possible environmental impacts

is not yet over,” he said. In his words, “it is not Bulgaria’s fault but rather that of the company that is to submit relevant documents.”

“This project requires a thorough scrutiny. When analysis is over, we can proceed to a next phase,” he said.

07:03 03/06/2011ALL NEWS

Russia’s Ivanov to attend Singapore Shangri-La dialogues.

http://www.itar-tass.com/en/c154/156855.html

3/6 Tass 3

SINGAPORE, June 3 (Itar-Tass) —— Russian Deputy Prime Minister Sergei Ivanov will join delegates from 27 countries in Singapore from Friday to discuss defense and security in the Asia Pacific region.

The 10th IISS Asia Security Summit will be held at the Shangri-La Hotel.

The conference will also consider Afghanistan and drug trafficking problem in the Golden Triangle (Myanmar, Thailand, Laos), the denuclearization of the Korean Peninsula, and regional conflicts.

Ivanov will meet Chinese Defense Minister Liang Guanglie and Japanese Defense Minister Toshimi Kitazawa on the sidelines of the conference.

06:33 03/06/2011ALL NEWS

Russia, Ukraine to discuss Kerch Strait border.

http://www.itar-tass.com/en/c154/156851.html

3/6 Tass 4

MOSCOW, June 3 (Itar-Tass) —— Russian Foreign Minister Sergei Lavrov will leave for the Black Sea port of Odessa in Ukraine on Friday to meet his Ukrainian counterpart Konstantin Grishchenko and discuss disputed border delimitation in the Kerch Strait of the Sea of Azov.

Russia proposes to recognize the strait and the sea as internal waters of both countries, delimitate the seabed and keep the surface for common use.

Ukraine insists the surface shall be divided according to the administrative border which existed between the two countries when they were constituent republics of the Soviet Union. In that case Ukraine will take over a larger part of the Sea of Azov including the fairway through the Kerch Strait to the Black Sea.

The ministers will also discuss European security issues and settlement of the problem of the Dniester breakaway region of Moldova.

Barents Sea border treaty enters forcehttp://www.barentsobserver.com/barents-sea-border-treaty-enters-force.4928709-116320.html

2011-06-03

Russia’s Foreign Minister Sergey Lavrov arrives in Oslo on Tuesday for the official exchange of protocols making the delimitation treaty binding.

The Barents Sea delimitation treaty between Norway and Russia will enter force on July 7, one month after the exchange of documents.

In addition to once-and-forever determine the maritime border, the agreement also states the principles for cooperation on exploitation of oil and gas resources in the earlier 175 000 square kilometres large disputed part of the Barents Sea.

The agreement is a compromise of the two countries claims and splits the area in tow parts of almost the same size.

The dispute on the maritime border had been going on for almost 40 years, when a final breakthrough in the negotiations was announced when Russian President Dmitri Medvedev was on official state visit to Oslo in April last year. The agreement was signed in Murmansk on September 15 last year and then followed by ratification by the Norwegian Storting on February 8 and the Russian State Duma on March 25. Thereafter Russia’s Federation council approved it a few days later. President Medvedev signed the treaty into law on April 8.

Tuesday’s ceremony where Sergey Lavrov will exchange documents with Norway’s Foreign Minister Jonas Gahr Støre will take place at the Akershus Castle in Oslo.

Text: Thomas Nilsen

Meeting with Vice President of China Xi Jinpinghttp://eng.kremlin.ru/news/2326

June 2, 2011, 19:40 Rome

Dmitry Medvedev and Xi Jinping discussed bilateral cooperation, first and foremost trade and economic cooperation, as well as current issues on the international agenda.

The President of Russia emphasised the high intensity of bilateral contacts in 2011 and noted that Russia awaits President of China Hu Jintao’s state visit.

Dmitry Medvedev and Xi Jinping remarked that in the ten years since the signing of the Treaty of Good-Neighbourliness and Friendly Cooperation, relations of strategic partnership have reached a very high level. Dmitry Medvedev and Xi Jinping also agreed that the next ten years will be an important period in further developing relations between Russia and China.

The President of Russia and Vice President of China are in Rome attending celebrations marking the 150th anniversary of Italy’s unification.

Russia to increase financial support of Abkhaziahttp://vestnikkavkaza.net/news/politics/14473.html

Russian Prime Minister Vladimir Putin said that Russia is ready toincrease financial support for Abkhazia. Over 10 billion rubles havebeen provided, he told Abkhaz Prime Minister Sergey Shamba.

Putin took part in the funeral of Abkhaz President Sergey Bagapsh, whodied in Moscow on Sunday after lung surgery, aged 62.

Putin laid roses at the grave of Bagapsh at the city philarmonia, hestayed at the grave for some time and made a bow to it. Then heexpressed his support and condolences to Bagapsh“s daughter and had aconversation with his son.

Head of the Presidential Administration Sergey Naryshkin, Minister forRegional Development Victor Basargin and Governor of KrasnodarTerritory Alexander Tkachyov were at the ceremony.

Leaders of Ingushetia Yunus-Bek Yevkurov, Kabardino-Balkaria ArsenKanokov, North Ossetia Taymuraz Mamsurov, Karachay-Cherkessia RashidTemrezov, former Chechen President Alu Alkhanov, South OssetianPresident Eduard Kokoity and the head of TransDniestr Igor Smirnovarrived for the funeral.

The procession will travel through the central streets of Sukhumi,heading to the hometown of Bagapsh — Dzhgyarda.

The Abkhaz president died after lung surgery in Moscow on May 29.

Russian President Dmitry Medvedev took part in the mourning ceremoniesin Moscow. He expressed condolence to Abkhaz Vice-President AlexanderAnkvab, who is currently the acting president. Medvedev called Bagapsha true patriot of Abkhazia, who strengthened its independence andsocio-economic development.

Bagapsh had been in power since 2005 and won the presidential pollstwice. During his rule Abkhazia became independent, recognized byRussia and a set of other states. Medvedev signed a decree onrecognition of independence on August 26, 2008. The two statesestablished diplomatic ties and mutual support agreements.

2 june 16:03

Prime Minister Vladimir Putin meets with Abkhazian Vice President Alexander Ankvab

http://premier.gov.ru/eng/events/news/15467/

Transcript of the beginning of the meeting:

Vladimir Putin: I’m sorry we have to meet on such a sad, I would even say, tragic occasion. What happened is a complete surprise for us. It is a big loss for Abkhazia and its people and for the Russian people because Sergei Bagapsh did much for Abkhazia’s development as a self-sufficient, independent state. He did a lot for the Abkhazian people and for the development of Russian-Abkhazian relations. His name is directly linked with

Abkhazia’s independence and consolidation and with its first steps as an independent state.

We are working together on plans to restore Abkhazia’s economy and social capability. Our common duty is to continue these efforts and everything else that has been started in the past few years.

I’m confident that we’ll do all this and travel together along this road of economic recovery and the restoration of the infrastructure and the social sphere. I’m convinced the Abkhazian people will feel safe. They can be sure that Russia, as a close ally and loyal friend, will stand with them and will help them overcome past problems. We will help Abkhazia get on its feet. Everything that I know makes us confident that we’ll carry out our joint plans.

I’d like to express once again my condolences to the family and friends of Sergei Bagapsh and to all Abkhazian people.

Alexander Ankvab: Mr Putin, we appreciate you being with us at this difficult hour. On behalf of the Abkhazian people we would like to thank Russian leadership for organising the ceremony of paying last respects to Sergei Bagapsh in Moscow. We are very touched by your attitude toward our late president and the Abkhazian people. I would like to convey my gratitude to President Dmitry Medvedev and to you personally once again for being here. Thank you.

Georgia says 2 Abkhazians planned terror blasthttp://www.google.com/hostednews/ap/article/ALeqM5jAJHrIM2ZtIZ0jT-crUiXVENCQHg?docId=a8c52d649d874c4a87905403b73b51a5

(AP) – 28 minutes ago

TBILISI, Georgia (AP) — Georgian officials say they have arrested two residents of Abkhazia, alleging they were preparing a terrorist bombing for Russia.

Georgian Interior Ministry spokesman Shota Utiashvili said the man and woman were seized on Thursday carrying explosives to be set off in a market.

He added that the suspects said they were acting on the orders of Russian special services.

Russia's Federal Security Service declined immediate comment Friday. But the ITAR-Tass news agency cited Abkhazian police official Vadim Gvindzhia as saying the arrest was "a spectacle staged by Georgian special services."

Abkhazia and South Ossetia broke free of Georgian control in the 2008 war between Georgia and Russia.

22:07 02/06/2011ALL NEWS

RF concerned re Georgia raiding groups acts in Abkhazia, SOssetia.

http://www.itar-tass.com/en/c154/156667.html

2/6 Tass 295

MOSCOW, June 2 (Itar-Tass) —— Intensification of the activity of Georgian security forces on the territories of South Ossetia and Abkhazia is noted in Moscow, said Russian Foreign Ministry spokesman Alexander Lukashevich.

“A number of alarming incidents have taken place on the border of Abkhazia and South Ossetia with Georgia of late, also incidents in which people were killed,” he said. “Georgian security forces and raiding groups became more active, staging targeted operations on the territories of adjacent sovereign republics. The tendency for the worsening of the situation in borderline districts should be thoroughly analyzed and realistic ways to ensure security in the region should be found,” he said.

Russia will lift ban on EU vegetables import on four conditionsToday at 09:42 | Interfax-Ukraine http://www.kyivpost.com/news/russia/detail/105935/

Russia's ban on import of fresh vegetables from the European Union could be lifted, provided Europeans meet a number of conditions, head of the Russian consumer rights watchdog (Rospotrebnadzor) and country's chief medical officer Gennady Onischenko told Interfax.

"There are conditions under which Russia will again allow import of European vegetable products," Onischenko said.

"First, to establish the pathogen and causes that sparked the outbreak," he said.

"Second, to establish the transmission factor, the way in which the disease is being transmitted: which food products, water," Onischenko said.

"Third, to establish the place of origin of the contaminated products," the agency chief said.

"And the fourth condition, an objective confirmation that the situation is under control,

that sick rates stopped rising," Onischenko said.

Russia banned import of fresh vegetables from the EU as of Thursday. The reason is the spread of a dangerous acute intestinal infection in Europe. Over 1,000 people have fallen ill and more than ten died in Germany.

Read more: http://www.kyivpost.com/news/russia/detail/105935/#ixzz1OC1yYjaf

No lifting of EU vegetable ban until all info available - Russian chief doctorhttp://en.rian.ru/russia/20110603/164404459.html

05:51 03/06/2011

Russia will lift import ban for European vegetables only after the European Union provides all the requested information, Russia's chief sanitary official said.

The European Commission urged Russia on Thursday to lift its ban on the import of raw vegetables from EU nations over a deadly E.coli outbreak.

"The ban will be lifted when the causative agent of the infectious disease and causes of contamination, as well as [infection] transmission factors are established, outbreak of the stomach infection is taken under control and the growth in the numbers of those infected is curbed," Gennady Onishchenko said.

He said so far Russia had no reasons to lift the ban at the moment.

Media reports say at least 1,600 people in 10 EU countries have been affected by the Escherichia coli outbreak, including more than 1,000 in northern Germany. Deutsche Presse Agentur reported that 17 people have died, all in Germany except one Swede who had returned home after a recent visit to Germany.

MOSCOW, June 2 (RIA Novosti)

RT News line, June 3

Russian State Duma supports ban on European vegetableshttp://rt.com/politics/news-line/2011-06-03/#id11423

11:44

State Duma’s healthcare committee has upheld Rospotrbnadzor's decision to ban import of vegetables from the EU, which is suffering an epidemic outbreak of e.coli infection.

"The main task is to protect the health of Russian citizens, and not allow the infection to spread to Russia," the committee’s spokesperson said. On Thursday, Russia placed a full ban on imports of European vegetables, raising objections from the European Commission, which called such response disproportionate.

Russia bans import of Egyptian potatoeshttp://en.rian.ru/world/20110603/164407450.html

09:24 03/06/2011

Russia has suspended imports of potatoes from Egypt on health and sanitation grounds, the country's food safety authority said on Friday.

Rosselkhoznadzor said the Egyptian-produced potatoes could "destabilize the sanitary situation in the country."

The ban will be in place until the produce meets safety requirements, Rosselkhoznadzor spokesman Alexei Alexeyenko said.

The move comes the day after Russia banned the import of all fresh vegetables from the European Union in a bid to prevent a deadly E. coli bacterial outbreak from spreading into the country.

The outbreak, centered in Germany, has killed 18 people and left hundreds of others seriously ill.

MOSCOW, June 3 (RIA Novosti)

June 03, 2011 12:48 PM

NATO To Train Rescuing Russian Submarine

http://www.bernama.com/bernama/v5/newsworld.php?id=591217

MOSCOW, June 3 (Bernama) -- North Atlantic Treaty Organisation (NATO) forces will for the first time ever train to rescue the crew of a Russian submarine during the Bold Monarch-2011 exercise at the Spanish coast, reports Russian news agency, Itar-Tass.

The Russian defence ministry said on Thursday Chief-of-Staff of the armed forces Nikolai Makarov arrived in Spain to watch the world's largest submarine rescue exercise.

"According to the programme of the event, the participants will watch evacuation of navymen from a troubled Russian submarine by a foreign rescue craft," it said.

Russia sent Black Sea fleet warships to the exercise comprising diesel submarine Alrosa, rescue vessel Epron, rescue tugboat Shakhter, and KIL-157 ship.

The defence ministry said Russian participation was unprecedentedly big in the current 12-day exercise in which 25 countries participate.

-- BERNAMA

Serbian and Russian Chiefs of Staff back intensification of cooperationhttp://www.emg.rs/en/news/serbia/156834.html

03. June 2011. | 05:36

Source: Tanjug

Chief of Staff of the Serbian Army General Miloje Miletic and Chief of Staff of the Russian Army General Nikolai Makarov expressed mutual interest in Moscow with regard to intensification of military cooperation.

Chief of Staff of the Serbian Army General Miloje Miletic and Chief of Staff of the Russian Army General Nikolai Makarov expressed mutual interest in Moscow with regard to intensification of military cooperation.

Miletic and Makarov pointed out that there is mutual interest for intensification of cooperation, especially when it comes to military and economic issues and joint training.

The two generals exchanged views on the possibilities for continuation and further enhancement of cooperation in the areas of military education and military medicine, the Serbian Defence Ministry posted on its website.

During the talks, the officials confirmed that Russia's delegation would participate at the Strategic Military Partner Conference for in Belgrade from June 13 to 15, the ministry said. As the head of the Serbian Army delegation during its visit to Russia which will end on June 3, Miletic will visit the 5th Separate Motorized Infantry Brigade in Alabino, Moscow Region.

At the beginning of the visit, on May 31, ITAR-TASS learnt from the Russian Defence Ministry that both sides would review the situation and the perspectives of military and technical cooperation, exchange experiences in the process of reforms of national armed forces and discuss a series of questions of mutual interest.

The Serbian Defence Ministry recalled that Serbia and Russia have most intensive defence cooperation in the areas of military education and military economy.

Several expert groups and delegations of the two armies have exchanged visits so far, and a joint Serbia-Russian working group for military-technical cooperation has also been set up.

Albania introduces a temporary visa-free regime for Russian nationalshttp://www.balkans.com/open-news.php?uniquenumber=107359

Balkans.com Business News Correspondent - 03.06.2011

Albania introduces a temporary visa-free regime for Russian nationals from June 1 to October 31, announced Albanian ambassador to Moscow Sokol Gjoka, cited by ITAR-TASS. “We remove the visa regime for the summer to enable Russian nationals to freely travel in Albania. Not only tourists, but also all other categories of citizens, including businessmen and participants in international and cultural events, can take advantage of the visa-free regime,” said Gjoka reports Focus.

Our Northern Neighbor President Elbegdorj: We Make Only One Choice in Our Hard Times and This is Our Northern Neighborhttp://ubpost.mongolnews.mn/index.php?option=com_content&task=view&id=6352&Itemid=37

Written by P.Shinebayar    Friday, June 03, 2011.

The President of Mongolia Tsakhia Elbegdorj is currently in Russia for an official visit. He arrived in Sheremetyevo International Airport in Moscow on May 30th. The first place to visit by Mongolian president was Russian news agency of Itar-Tass, where he had a banquet with representatives of Russia’s leading news agencies,

televisions, radios, newspapers and magazines, including “ITAR-TASS”, “VGTRK”, Channel 1, NTV, TV-Center, Russia Today, Interfax, Izvestya, Ria Novosty, Russian Voice and many others.

During the banquet, President Elbegodorj answered questions put by Russia’s top media and press managers on bilateral cooperation in trade, agriculture, on Mongolia’s education and history, as well on biography of the president.

Afterwards, President Elbegdorj visited Lomonosov Moscow State University and gave a lecture on global climate change to professors and students. He shares views about what can be done to reduce negative impacts caused by global warming.

He talked about how nomadic lifestyle of Mongolians preserved mother-nature.

On the sidelines of Mongolian president’s visit, a Mongolia-Russia Business Forum took place at the International Trade Center in Moscow. More than eighty representatives, including government officials, businessmen and press, attended the forum.

Main speech deliveries were by Russian and Mongolian commerce chambers’ officials, Mongolian minister and ministry officials, as well as Russian business delegates.

Visiting President Elbegdorj addressed the forum. In his speech, he stressed that we, the Mongolians, make only one choice in our hard times and this is our northern neighbor.

“Mongolia confirmed its commitment to continue strategic partnership with Russia as it chose broad-gauge as the country’s key rail line, but we need to revise the 1949 railroad agreement because Mongolia wants a railway that meets modern requirements.

Currently, Mongolia has one railroad and it is 50 percent owned by “Russian railways,” the Russian state railroad company. Rest of the Ulanbator Railway is owned by Mongolian government. The railroad agreement was never revised since it was signed in 1949.

Since 1990s, Mongolian side repeatedly expressed interest to change the ownership ratio of the railway. However, Russia never backed from 50 percent ownership of the railway.

He argued the necessities of boosting the ties in infrastructure, financing and agriculture and minimizing mutual trade turnover difference which is US$40 million against $1 billion in favor of Russia.

“We want a bureaucracy-free customs and we are eager to be accountable and reliable partners with Russia” he underlined. Another issue Elbegdorj emphasized in his speech was Mongolia’s interest in ambitious infrastructure projects in the region. He stated Mongolia wants Russia’s energy and natural gas lines pass through the territory of Mongolia.

On May 31st, Mongolian President Elbegdorj and his Russian counterpart Dmitry Medvedev held a tete-a-tete at the Kremlin. The two officials discussed all of major problematic issues concerning the cooperation between the two countries.

Both sides are to blame for trade problems, Dmitry Medvedev said. “We would like goods, and not only raw materials, to be imported and exported,” he said. “ For example, we would want Mongolia to buy our equipment. For that locomotives – major projects, are needed,” he said. Cooperation on the Ulaanbaatar Railway is among such projects,

Medvedev noted. According to Medvedev, Russia is ready supply hardware to its neighbour as soon as possible, to help it “operating better”.

A Russia’s Kommersant newspaper evaluated in its op-ed the development of relations between Russia and Mongolia in general. It said after disintegration of the Soviet Union and the start of democratic transformations in Mongolia, its attitude to Russia has become ambiguous.

Trying to change the situation, which used to be in Moscow’s favour, “new democrats” expected that support of the West would help the country make a leap into a post-industrial society. However, nowadays the situation in relations between the two countries is radically changing once again, the Kommersant says.

A new geopolitical reality – swiftly expanding its influence China, makes Mongolia once again turn its face to Russia. These days it is important as never before for that country, squeezed between the Russian and Chinese borders, to find its neighbours’ balance of interests.

That is why Mongolia is extremely interested in seeing that Russia and its business form a counterbalance to the influence of a powerful southern neighbor, according to the Russian newspaper.

The Kremlin meeting as well talks with participation of Prime Minister Vladimir Putin that followed it, have not cleared up the fate of the Russian bid to participate in the exploration of Tavan Tolgoi.

A source close to negotiations said Elbegdorj gave no clear answer on Tuesday as to prospects of the Russian Railways Company to get access to the deposit.

The presidents of Mongolia and Russia signed a joint statement on the  result of their meeting, vowing to further promote ties between the two countries.

Medvedev said he believes the Russian-Mongolian trade volume should not only rely on petroleum products, calling on diversification of bilateral trade.

“We are interested in trade turnover diversification. We need new powerful projects such as nuclear projects or Tavan-Tolgoi (coal deposit), which will promote bilateral

cooperation,” Medvedev said. The two sides also discussed progresses of several joint projects.

After the meeting, the presidents also attended signing ceremony of other four documents on bilateral cooperation and ties.The documents signed on March 31 at the Kremlin include intergovernmental agreements on the protection of intellectual property obtained in the course of bilateral military and technical cooperation, and on the creation of the Uvs Lake Hollow Biosphere Reserve, a memorandum on research cooperation between the Russian and Mongolian Academies of Medical Sciences, and a protocol on amendments to the agreement of June 6, 1949 between the governments of the USSR and Mongolia on the establishment of the Ulaanbaatar Railway Soviet-Mongolian joint-stock company.

The agreement on the trans-border Uvs Lake Hollow Biosphere Reserve is geared to “preserve biological and nature diversity,” Russian Minister of Natural Resources and Ecology Yuri Trutnev said after the signing.

Russia and Mongolia also signed an agreement to boost the capital of their 50-50 joint venture, Ulaanbaatar Railways, by $250 million. Talks to increase Mongolia’s share to 51 percent will continue, a source said.

Mongolian President Elbegdorj appealed to the government of Russia to resolve the problem with petroleum products supplies, when he met with Russian Prime Minister Vladimir Putin.

“There have been failures in delivery in recent months, we have serious problems: now sowing has been delayed, production has become suspended and public transportion in cities has almost stopped,” Elbegdorj said.

Elbegdorj reported that the Mongolian energy minister will arrive in Moscow to hold talks with Russian Deputy Prime Minister Igor Sechin. “Probably once they meet, the issue will be solved,” Elbegdorj said.

Faced by fuel shortage of its own, Russia, the world’s largest oil producer, raised the fuel export tax by 44% this month. Putin has criticized Russia’s oil groups, saying there was no lack of oil but that companies had restricted supplies to keep prices high. Putin pledged to pay a special attention towards petroleum supply to Mongolia.

Blasts continue at Russia's Volga Region arms depot; 42 injuredhttp://en.rian.ru/russia/20110603/164411088.html

11:35 03/06/2011

NIZHNY NOVGOROD/MOSCOW, June 3 (RIA Novosti) - The number of injured from ongoing explosions at an artillery arsenal in Russia's Volga region Republic of Udmurtia has climbed to 42 with 19 of them hospitalized.

"In all, 19 people were treated at hospitals, while 23 received medical assistance and were released," a spokesman for the regional emergencies ministry department said.

The Defense Ministry has reported one person as missing in the incident.

At around 11:10 p.m. Moscow time [19:10 GMT] on Thursday shells began to explode in an artillery depot near the village of Pugachevo in Udmurtia. The facility belongs to the Defense Ministry's missile and artillery directorate and is tasked mainly with munitions disposal.

RELIEF OPERATION

Currently, the intensity of explosions has decreased by three times, but military officials are still unable to say when the series of explosions will stop, a spokesman for the Defense Ministry, Igor Konashenkov, said.

A group of seven aircraft from the Emergencies Ministry has arrived at the scene from Moscow to deal with the blaze and explosions, including two planes with special equipment, two firefighting planes and three helicopters.

They added to the earlier deployed 200 personnel, 30 firefighting units and three firefighting trains. A fourth train is to arrive from the neighboring republic of Tatarstan soon.

According to the Russian presidential press service, some 13,500 people were evacuated from the nearby residential areas, while the regional emergencies department says 28,000 people were evacuated.

MISSILE WARHEADS

A senior Russian military official has confirmed that missile warheads are stored at the artillery arsenal, but added that there is no threat of them exploding.

"The missile warheads did not explode. They are kept in a concrete storage unit with 70-cm (27.6 inches) thick walls," Deputy Defense Minister Dmitry Bulgakov said.

A police source said earlier that rockets for the Grad multiple rocket launching systems started to explode in underground storage facilities on Friday morning.

Eyewitnesses said fragments of the detonating shells were spotted within a two-kilometer (one-mile) zone.

The blast-hit facility stores from 5,000 to 10,000 railway carriages with various ammunition. It is believed 18 storage facilities are on fire.

The accident forced the Emergencies Ministry to temporarily close the Yelabuga-Izhevsk zone of the M7 federal highway, connecting Moscow and Ufa, the capital of the Urals republic of Bashkortostan. The nearby railway link was also closed.

Udmurtia borders the republic of Bashkortostan, where fifty houses burned to the ground, and 160 people were left homeless as a result of powerful explosions at another ammunition depot last week.

Russian arms depot blasts force mass evacuationhttp://www.google.com/hostednews/afp/article/ALeqM5jjpoud8eWW7LcG1bJL73K1MFnj9w?docId=CNG.c65e713266ca1fce157fea8c232aaa1b.661

By Anna Malpas (AFP) – 1 hour ago

MOSCOW — Authorities in central Russia were early Friday battling a fire raging through an arms depot, storing around 10,000 tonnes of shells, that forced the evacuation of more than 28,000 people.

As a result of the night-time blaze at the arms depot near the city of Izhevsk in the Volga region of Udmurtia, 28 people were injured and eight hospitalised including an 8-year-old child, media reports said.

"A total of more than 28,000 people have been evacuated," the regional emergency ministry said.

"An eight year old girl received a head injury and concussion," an emergency ministry spokesman told the RIA Novosti news agency. The eight hospitalised had shrapnel wounds, he said.

The residents of the neighbouring town of Argyz of around 19,000 people and the nearby village of Pugachyovo were evacuated in buses to nearby villages at a radius of 30 to 60 kilometres, officials said.

The defence ministry said that the military personnel at the depot did not sustain any casualties.

"According to a report from the scene at 0630 Moscow time (0230 GMT), there were no casualties as a result of the fire and exploding shells among the military personnel," the ministry said in a statement.

The fire broke out at the depot located near the village of Pugachyovo near Izhevsk just before midnight, the emergency ministry said.

"Depots storing classic artillery shells are burning. The shells are exploding over the whole area of the military unit," the ministry said.

The depot which was housing old ammunition to be destroyed, stored the equivalent of around 58,000 tonnes of TNT, Russian television reported.

Balls of fire rose up from the depot in regular explosions at night, television footage showed, while by morning a thick column of smoke poured from the site.

The munitions stored at the depot also included jet-propelled missiles, a source in the law enforcement authorities told the Interfax news agency, but said they were stored without their warheads, making them less dangerous.

"There were definitely jet-propelled missiles there. They were stored in a separate zone in concrete sections," the source said.

"At the moment they do not present a serious threat to the public."

The depot is located inside a secret underground munitions factory, the neighbouring Tatarstan regional emergency ministry said in a statement.

The force of the blast broke windows in the nearby village and the fire burnt down a two-storey building where the personnel lived, the defence ministry said.

The force of the explosions had slightly diminished early Friday, the emergency ministry. "There is no threat to nearby villages and the town of Izhevsk."

More than 100 firefighters were battling the blaze, along with water-bombing planes and robotic equipment, officials said.

Explosions at military weapons depots are relatively common in Russia and are often linked to ageing equipment and lax enforcement of safety rules.

Late last month a similar fire at a munitions depot in the region of Bashkortostan triggered explosions and forced the evacuation of thousands of residents, according to officials.

12:01 03/06/2011ALL NEWS

URGENT -- Two die of heart attacks, 45 injured in ammo explosions.

http://www.itar-tass.com/en/c154/157094.html

3/6 Tass 223

IZHEVSK, June 3 (Itar-Tass) —— Two people have died of heart attacks due to the ammunition depot explosions in Udmurtia, the republic's Health Minister Vladimir Muzlov said on Friday.

The number of injured people has increased to 45. Eighteen of them are hospitalized.

Russian arms depot fire halts oil pipeline flowshttp://af.reuters.com/article/energyOilNews/idAFLDE74T0YK20110603

Fri Jun 3, 2011 7:27am GMT

* Transneft says it has stopped receiving 161,000 bpd of oil

* 28,000 people moved out of area

MOSCOW, June 3 (Reuters) - Firefighters battled a blaze raging through an arms depot on Friday, forcing a halt to oil pipeline flows from Russia's largest crude producer and causing 28,000 residents to be moved out of the area.

The fire, the second at a munitions store in less than a week, injured at least 28 people, an Emergencies Ministry spokeswoman told Reuters.

State television showed flames colouring the night sky orange and sparking explosions overnight at the military complex near the city of Izhevsk 1,200 km (750 miles) east of Moscow.

Russia's pipeline monopoly Transneft on Friday said it had stopped receiving 161,000 barrels per day (bpd) of oil on a domestic pipeline after the blasts.

Transneft spokesman Igor Dyomin said one of its pipelines had stopped receiving 131,000 barrels per day of oil from Russia's top crude producer Rosneft. Shipments from producers LUKOIL and Russneft, equal to 30,000 barrels per day, had also been halted.

"The pipeline stopped getting oil from 0100 Moscow time on Friday. Customers are still getting oil as we have reserves," Dyomin said.

The depot near the village of Pugachyovo stored 10,000 tonnes of shells and ammunition, equivalent in power to about 58,000 tonnes of TNT, which was scheduled for disposal, Russian agencies reported. (Reporting by Vladimir Soldatkin and Alissa de Carbonnel; writing by Alissa de Carbonnel; additional reporting by Ludmila Danilova; editing by Andrew Roche)

Transneft shuts 161,000 bpd oil link after blastshttp://www.reuters.com/article/2011/06/03/transneft-blast-idUSLDE75205520110603

MOSCOW, June 3 | Fri Jun 3, 2011 2:42am EDT

(Reuters) - Russia's pipeline monopoly Transneft (TRNF_p.MM) on Friday said it had stopped receiving 161,000 barrels per day (bpd) of oil to its domestic pipeline after blasts in an arms depot 1,200 km (750 miles) east of Moscow.

Transneft spokesman Igor Dyomin said the pipeline leading to Naberezhnye Chelny had stopped receiving 131,000 barrels per day of oil from Russia's top crude producer Rosneft (ROSN.MM).

"The pipeline stopped getting oil from 0100 Moscow time on Friday. Customers are still getting oil as we have reserves," Dyomin said.

The pipeline also has not been receiving oil from LUKOIL (LKOH.MM) and Russneft.

(Reporting by Vladimir Soldatkin; editing by Lidia Kelly)

11:53 03/06/2011ALL NEWS

Some rocket ammunition kept at depot, it does not explode -- DM.

http://www.itar-tass.com/en/c154/157079.html

(updates)

3/6 Tass 161

PUGACHYOVO, Udmurtia, June 3 (Itar-Tass) — There is some rocket ammunition at Storage Depot 102 in Udmurtia. The ammunition is in concrete vaults and does not explode.

Deputy Defence Minister Dmitry Bulgakov told Itar-Tass that he had just had two flights aboard a helicopter over the depot and nearby residential localities. The fire takes place only in the technical zone of the military base, and it is accompanied by heavy smoke. Ammunition explosions have damaged, not seriously, some buildings in the nearby village of Pugachyovo. Windows are broken in some houses, he said.

An inconsiderable quantity of rocket ammunition is kept in storage dumps under a 60-cm-thick concrete cover. The ammunition has not exploded, Bulgakov said.

Earlier, the Russian Defence Ministry categorically denied the reports of some Russian media that it was an explosion of Grad rocket ammunition in underground dumps.

"The information is not true. There is no underground storage of ammunition for Grad rocket launchers in the territory of Depot 102," acting chief of the Defence Ministry's press service Igor Konashenkov told Itar-Tass on Friday.

There is only one dump with ammunition for small firearms in the ground, he said.

The ministry has also denied the information that the fire broke out as a result of work conducted at the depot at the time.

"At 23:10 Moscow time on June 2, when the fire broke out, there was nobody of the personnel in the territory of the dump and no work was conducted there," the spokesman said.

The causes of the fire will be established only after it is localized and extinguished, he noted.

The fire that caused ammunition explosions at the depot broke out on Thursday night. According to the latest information, 45 people were injured, and 18 of them were hospitalized. More than 28,000 people were evacuated from the dangerous 10-km-radius zone around the burning dumps.

The fire is continuing at the depot. The situation is complicated by heavy smoke. However, according to the EMERCOM department in Udmurtia, the intensity of explosions has weakened.

Meanwhile, the fire-fighting force is increased. Two EMERCOM Il-76 planes and three Mi-8 and Mi-26 helicopters have arrived at the site.

10:15 03/06/2011ALL NEWS

EMERCOM water bombers arrive in Udmurtia to fight blaze.

http://www.itar-tass.com/en/c154/156965.html

3/6 Tass 151

MOSCOW, June 3 (Itar-Tass) —— The Russian Emergencies Ministry's air group has arrived in Udmurtia to fight the blaze at the ammunition dump, a source at the ministry's information department told Itar-Tass.

Two Ilyushin-76 planes and three Mi-8 and Mi-26 helicopters will join in the operation soon, the source said.

All the aircraft have equipment to drop water.

In addition, 30 specialists from the Leader extra-risk operation centre, who have also arrived in Izhevsk, and robot devices, including the heavy El-10 robot that was used to fight the fire and clear the territory at the ammunition depot in Bashkiria, will also participate in the operation in Udmurtia

An EMERCOM spokesman told Itar-Tass earlier that the ministry had sent four Il-76 water bombers, two Mi-8 helicopters, a Mi-26 and four robots to fight the ammunition fire.

By the time, 534 people were working at the site.

09:25 03/06/2011ALL NEWS

Mil prosecutors begin probe into Udmurtia ammo depot fire.

http://www.itar-tass.com/en/c154/156926.html

3/6 Tass 138

MOSCOW, June 3 (Itar-Tass) — Military prosecutors have launched a probe into the fire at an ammunition depot in Udmurtia.

“In connection with the fire at arsenal No 102 of the Russian Defence Ministry in Udmurtia the prosecutor’s investigation into the observance of the fire and explosive safety rules is conducted,” the press service of the Chief Military Prosecutor’s Office told Itar-Tass.

A group of military prosecutors, headed by the First Deputy Military Prosecutor of the Central Military District is working at the incident site.

“According to preliminary data, at about 23:00 on June 2, a fire broke out in the technical area of the arsenal 40 kilometres from Izhevsk. The storages of ammunition for small arms and artillery shells are in flames. There have been no casualties among the local population,” the Chief Military Prosecutor’s Office said.

09:47 03/06/2011ALL NEWS

Thick smoke complicates fire-fighting operation at ammunition dump.

http://www.itar-tass.com/en/c154/156941.html

(updates)

3/6 Tass 129

MOSCOW, June 3 (Itar-Tass) —— Thick smoke complicates the fire-fighting operation at the burning ammunition dump near Izhevsk, acting head of the Russian Defence Ministry's press service Igor Konashenkov told Itar-Tass.

The official denied the media reports that the blaze and explosions had destroyed more than 150 buildings. "The information is untrue. Only one two-storey administrative building burned up in the fire at the depot," he said.

Deputy Defence Minister Dmitry Bulgakov with a group of officers aboard a helicopter flies over the site to monitor and assess the situation at the depot. After the flight, the operational staff will work out specific measures to localize and extinguish the blaze, the spokesman said.

09:24 03/06/2011ALL NEWS

No underground Grad missiles storage at burning depot -Defence Min.

http://www.itar-tass.com/en/c154/156925.html

(updates)

3/6 Tass 117

MOSCOW, June 3 (Itar-Tass) —— The Russian Defence Ministry has flatly denied the reports of some Russian media that it was an explosion of ammunition for Grad rocket launchers in an underground dump located near Izhevsk.

"The information is not true. There is no underground storage of ammunition for Grad rocket launchers in the territory of the 102nd munitions depot," acting chief of the Defence Ministry's press service Igor Konashenkov told Itar-Tass on Friday.

There is only one dump with ammunition for small firearms in the ground, he said.

11:06 03/06/2011ALL NEWS

Two militants killed in shootout in Dagestan.

http://www.itar-tass.com/en/c154/157023.html

3/6 Tass 134

MAKHACHKALA, June 3 (Itar-Tass) —— Two supposed militants were killed in an exchange of fire in Dagestan.

As ITAR-TASS learnt at the Interior Ministry of the republic, “on Friday, at 05.00 Moscow time, police officers tried to stop a VAZ-2107 car for checking documents 300 metres from the federal highway Kavkaz in the direction of the sanatorium Kaspy.” “Unidentified people who were in the car didn’t obey and opened fire at law enforcers. The driver and his passenger were killed in return fire,” the ministry’ spokesman said.

While examining the car, a driving licence to the name of Timur Gamzayev, 33, a resident of the Dakhadayevsky region of the republic, and a passport to the name of Damir Dzhumaliyev, 30, a resident of Astrakhan, were found there.

Two militants killed in Dagestanhttp://vestnikkavkaza.net/news/politics/14490.html

The police have killed two militants in a shootout in Dagestan this morning, RIA Novosti cites the local police as saying.

The local FSB directorate for extremism control attempted to stop a vehicle for checking

at 300 meters away from the Caucasus highway at Karabudakhkent District of Dagestan at 05.00 (Moscow time). People inside the vehicle opened fire. The police neutralized them.

A sub-machine gun was found in the car.

11:53 03/06/2011ALL NEWS

Block post fired on in Kabardino-Balkaria, no victims.

http://www.itar-tass.com/en/c154/157078.html

3/6 Tass 155

NALCHIK, June 3 (Itar-Tass) —— A police block post was fired on at the entrance to the settlement of Elbrus in Kabardino-Balkaria, ITAR-TASS learnt at the Russian Investigation Committee for Kabardino-Balkaria.

“At about midnight on Friday, a block post in the federal motor road Baksan-Azau was fired on from submachine-guns on the side of the settlement of Eelbrus,” a representative of the committee said. According to him, no traffic police officers and commandos attached to them were injured.

Criminal proceedings were instituted. Investigation is underway.

05:35 03/06/2011ALL NEWS

Putin to discuss railway development.

http://www.itar-tass.com/en/c154/156828.html

3/6 Tass 1

MOSCOW, June 3 (Itar-Tass) —— Prime Minister Vladimir Putin will discuss railway development in Sochi on Friday and will attend the opening ceremony of a reconstructed railway tunnel in Novorossijsk.

In Sochi Putin will meet participants in the international railway business forum to “discuss railway transport development in Russia also in the context of preparations for Winter Olympics in 2014, prospects for Russian and foreign business participation in the implementation of major infrastructure projects, attracting investments and high technologies into the Russian economy, and integration in the sphere of transportation

and development of s single transport space in the CIS and outside it, ” the government press service said.

Putin will then travel to Novorossijsk where a railway tunnel built yet in 1888 will be opened after a year-long reconstruction.

05:04 03/06/2011ALL NEWS

Duma to consider amended bill on national payment system.

http://www.itar-tass.com/en/c154/156818.html

3/6 Tass 6

MOSCOW, June 3 (Itar-Tass) —— The Russian State Duma will consider the amended bill on the National Payment Card System under the second reading on Friday which allows Visa and MasterCard to process domestic Russians transactions abroad.

“Payment, clearing and settlement centers should be anyway located in Russia as outsourcing is excluded. However processing centers may be located abroad,” chairman of the financial market committee Vladislav Reznik said.

“I can say we have absolutely equal competitive conditions for all payment systems. Both international payment systems and domestic ones will have to have rules and any changes approved by the regulator – the Central Bank. They will also have to provide for uninterrupted services. That means they will be unable to refuse to pay someone for any reason. That will result in suspended registration and impossibility to operate on our market,” Reznik said.

“Besides, infrastructure (of international payment systems) is localized. But as there is no ban on information (transition) they can use processing centers abroad,” he said.

However “if the principle of uninterrupted service is violated the infrastructure shall be localized in Russia.”

Initially it was suggested to ban international payment card systems from processing internal Russian transactions abroad which would make them set up processing centers in Russia.

Reznik said the bill also provides legislative grounds for mobile payments. In particular, “conditions are created for the use of a mobile phone for various payments. I believe the law is the first step that will make plastic credit cards disappear with time.”

Operations of bank payment agents have been also specified. “The bill got a separate article which describes in detail the engagement of such category of agents by banking institutions. The rules for the use of special bank accounts have been specified, as well as the list of corresponding transactions,” Reznik said.

E-money will offer a new form of non-cash payments. Reznik said e-money is described as monetary means deposited by clients in a credit institution without opening a bank account. “The Bank of Russia will issue simplified licenses to such credit institutions for operations with electronic monetary means,” he said.

10:36 03/06/2011ALL NEWS

One t of hazardous chemicals stored on Chita River bank confiscated.

http://www.itar-tass.com/en/c154/156992.html

3/6 Tass 130

ULAN-UDE, June 3 (Itar-Tass) — More than 900 kilograms of hazardous chemicals stored in violation of sanitary regulations have been found by officers of the environmental prosecutor's office and the Trans-Baikal Territory and Amur region’s department of the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) in a hothouse facility near the Avdei village. Rosselkhoznadzor told Itar-Tass on Friday that the plant growth stimulators, chemicals to fight weeds and insects, made in China, were stored 100 metres from the Chita River. Mass crawfish mortality has already occurred there.

“Pesticides have been taken for an analysis to determine their chemical composition and confiscated pending the probe completion,” Rosselkhoznadzor noted.

Agrochemicals from China have been regularly found by inspectors. Thus, in late May, a cargo of 8,000 20-litre cans with RUP herbicide was detained at the Zabaikalsk railway border checkpoint on the Russian-Chinese border. The cans had no labels or markings for dangerous goods.

Bootleg whisky behind Russian deaths in Turkey http://english.ruvr.ru/2011/06/03/51220996.html

Jun 3, 2011 11:32 Moscow Time

Russian tourists were poisoned in the Turkish city of Bodrum when treated to counterfeit whisky under the brand Mister Burdon recently. This came in a statement by an official of the Turkish Agricultural Ministry following an analysis of samples of the five liquors that the tourists consumed during the notorious yacht cruise on the night of May 26. The methyl alcohol content in the counterfeit whisky was three times above normal. The whisky in question was imported into Turkey from the Turkish Republic of Northern Cyprus and marketed by the Turkish company Birlik Gida. The company has been found to be illegal. 20 Russians were poisoned with the counterfeit alcohol, three of whom later died.      

Russian Press at a Glance, Friday, June 3, 2011http://en.rian.ru/papers/20110603/164406702.html

08:27 03/06/2011

POLITICS

Russian President Dmitry Medvedev is paying a two-day visit to Italy and attended a military parade in Rome to mark 150 years since the unification of Italy. (Kommersant, Rossiiskaya Gazeta, Izvestia)

About 450 social organizations and activist groups, have rallied to a new political coalition launched by Vladimir Putin, the prime minister's spokesman, Dmitry Peskov, said. However, sources in Russia’s three major business unions - the Russian Union of Industrialists and Entrepreneurs, Business Russia and Opora Rossii said the announcement that they joined the All-Russia People's Front was premature.(Vedomosti)

ECONOMY

The pro-Kremlin United Russia party has drafted a five-year plan, which it says is designed to lay the basis for “real competitiveness” necessary for “boosted modernization.” Some experts already described it as a return to the Soviet practice of five-year economic planning.(Kommersant, Nezavisimaya Gazeta)

METALS & MINING

Polyus Gold, Russia's top gold miner, is negotiating a merger with the world’s largest gold producers - Newmont Mining, Newcrest Mining and AngloGold Ashanti.(Vedomosti)

OIL & GAS

Russian gas giant Gazprom is preparing the largest LNG supply contracts in its history - Indian companies are set to buy 7.5 million metric tons of the fuel annually for 25 years.(Vedomosti)

Russia's oil output edged up 0.2% to 10.26 million barrels per day in May, matching a post-Soviet record seen in October, as companies ramp up production on the back of high crude prices.(The Moscow Times)

TELECOMS & IT

Google accused Chinese special services of hacking its Gmail e-mail service. (Vedomosti, Kommersant, Moskovskie Novosti, Izvestia)

CONSUMER

Russia banned the import of raw vegetables from EU nations over a deadly E.coli outbreak. European commission representatives said the measure was “excessive” and “irrelevant.” Russian vegetable sellers say there will be no deficit, but the prices may go up.(The Moscow Times, Vedomosti, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Izvestia)

DEFENSE

Russia has already cut its nuclear arsenal below the level required in an arms control treaty signed with the United States last year, according to new figures from the U.S. State Department.(The Moscow Times, Kommersant, Nezavisimaya Gazeta, Izvestia)

SOCIETY

Chechen native Rustam Makhmudov has been charged with the murder in the 2006 of journalist Anna Politkovskaya, investigators said.(The Moscow Times, Kommersant)

A report by the Global Commission on Drug Policy argues that the decades-old “global war on drugs” has failed.(Vedomosti)

A new visa agreement between Russia and Europe's Schengen zone could significantly reduce red tape and travel restrictions by next year - but only for professionals, not tourists, a European diplomat said.(The Moscow Times)

Military prosecutors recommended the dismissal of a veteran submarine commander who became an internet sensation after he was filmed confronting a superior with an eye-watering torrent of obscenities.(The Moscow Times, Nezavisimaya Gazeta)

Kyrgyz Special Forces were put on increased alert and passport control was introduced in the southern Kyrgyz city of Osh for fears that last year’s devastating ethnic clashes may once again spark in the country. President Roza Otunbayeva called on citizens to preserve inter-ethnic accord in the republic. (Nezavisimaya Gazeta)

11:35 03/06/2011ALL NEWS

Russian press review.

http://www.itar-tass.com/en/c154/157062.html

(Itar-Tass World Service)

3/6 Tass 126

The Russian chief military doctor is arrested for bribery

The law enforcers detained the chief of the main military medical department of the Defence Ministry Maj. Gen. of Medical Service Alexander Belevitin on Wednesday. He is also the chief of one of the oldest medical institutions in the country – the Kirov Higher Medical Academy in St. Petersburg. Along with Belevitin his subordinate Col. Alexei Nikitin was detained. The detention was made during the investigation into the criminal case for bribery. According to preliminary reports, they have purchased the medical equipment at the price thrice higher than the real one. The margin in dozens of millions of roubles disappeared in the unclear way.

The detectives found out that military officials lobbied a scarcely known closed joint stock company Dina International for a victory in the tender of the Philips tomography scanner supplies at the cost of 120 million roubles to the district military hospital in Podolsk for a kick-off of 120,000 euros from the former deputy health minister Alexei Vilken, the Kommersant reports. The participants in the investigation affirmed that similar medical equipment can be bought twice cheaper.

The main reason for their detention became an urgent report from the Federal Security Service that said the suspects were discussing in their telephone conversations various scenarios of the murder of the former deputy health minister Alexei Vilken, who is the

main witness in this criminal case, the newspaper notes. Vilken together with several other officials, including the chief of the social control department in the Presidential Control Directorate Andrei Voronin, were arrested in November 2010 for an attempt at a fraudulent misappropriation of one million dollars from the Russian office of the Toshiba concern.

The Komsomolskaya Pravda reports that the major-general and the colonel confessed in their crimes during the interrogations.

According to a source in the main military investigation department of the Investigation Committee cited by the Moskovsky Komsomolets, the general and his subordinate are also suspected of real estate criminal schemes.

The newspaper recalled that Belevitin was appointed on the post of the chief of the main military medical department of the Defence Ministry two years ago. He is Dr. of medical sciences, a professor, an honoured doctor of Russia and an author of more than 350 scientific papers on the problems of cardio-vascular and military field surgery.

The detectives did not specify what equipment in particular is involved in the fraud and what sums of kick-offs were paid. However, the Moskovsky Komsomolets recalled the Chief Military Prosecutor’s Office had several claims to the main military medical department in late May. In particular, Chief Military Prosecutor Sergei Fridinsky noted that the main military medical department and the state order department of the Defence Ministry agreed with the supplier to buy the medical equipment for the troops at the price that is 3.5 times higher than its real price. Meanwhile, the Russian Audit Chamber exposed several violations in the state purchases in the previous week. Major violations concerned the tomography scanners.

Russia banned to import vegetables from Europe

Russian chief sanitary doctor Gennady Onishchenko unleashed a war against ‘vegetable-killers’. Since Thursday Russia banned to import fresh vegetables from the EU states. The most dangerous vegetable is still considered European cucumber, which makes a share of about five percent in the overall cucumber imports. However, the vegetable embargo raised strong concerns on part of the European Commission, which considers Russia as its major importer. Russian vegetable retailers also sum up their losses. The European Commission called the Russian response “exaggerated and out of place.” The vegetable deficit is not in view, but the prices will certainly go up, the vegetable sellers stated.

The ban was caused by the spread of an intestinal infection (bacterium E.coli) in nine EU states, the Kommersant recalled. Some 16 people already died of it (1,400 people got infected with it). The Russian consumer rights watchdog imposed a ban on the imports of fresh vegetables (tomatoes, cucumbers and salads) from Spain and Germany on Monday, May 30. But on Thursday, the Russian consumer rights watchdog spread the ban on all vegetables from all EU states. Onishchenko acknowledged in an interview with the

newspaper that the ban is tough. “In theory, the ban can be lifted even today, if European colleagues will be able to give a clear answer, what source for the spread of infection is,” he pointed out. Gennady Onishchenko specified that the ban does not embrace potatoes.

The UN Food and Agriculture Organization stated that currently Europe accounts for 40-45% of vegetable imports in Russia that went up 37% in 2010 to reach 2.28 billion dollars. The Russian Agriculture Ministry reported that the EU states accounted for 13% and five percent of the imports of tomatoes and cucumbers, respectively, in 2010.

“If in such a tragic situation the European Union makes some ambitious claims to us to explain our actions (the ban on the vegetable imports), for our part, we will demand their explanations,” the Komsomolskaya Pravda quoted Onishchenko as saying. “Give clear explanations to us about what is going on. If it is the air, we will ban people to go there, but will resume the imports of vegetables on our market,” he elaborated.

The intestinal infection is not a respiratory disease, Gennady Onishchenko noted. “So, this is another disease. The question arouses then what you had been doing for a month,” the head of the Russian consumer watchdog added.

The European Commission took the Russian ban in a very unfavourable way, the Nezavisimaya Gazeta notes. The newspaper called it “an exaggerated and disproportionate measure” and decided to file a protest note to the Russian authorities and a repeated request to explain the current situation. This is not surprising, as, according to foreign experts, more than a fourth of vegetables exported from the EU states are imported on the Russian market.

Meanwhile, the newspaper noted that not only European agricultural producers, but also Russian retailers and wholesale suppliers are calculating their losses from the embargo. They started to remove European vegetables from the shelves of their shops and to seek for other vegetables rather than from Europe, the newspaper writes. However, it is noteworthy that far from all market entities are so pessimistic. X5 Retail Group spokeswoman Svetlana Vitkovskaya emphasized that the retailer has a less than 20% share in the imports from the EU states. Other 80% are Russian vegetables and imported vegetables not from the EU states.

The opposition is invited for the work on the Popular Front election program.

The Institute of Socio-Economic and Political Studies will draft an election program for the Russian Popular Front and the United Russia Party. The experts from the scientific community and public organizations will be involved in the drafting of the election program. Representatives of all Russian existing parties, including those from the opposition, were also invited to join this work. These parties were confused over this invitation.

The Institute of Socio-Economic and Political Studies, which the former senator Nikolai Fyodorov headed, is to draft a five-year action plan of Russian socio-economic

development in two months, the Nezavisimaya Gazeta writes. The document may include not only the proposals from United Russia and public organizations, which already joined the Russian Popular Front, but also from the opposition forces, if only they agree to cooperate. Independent experts do not have any illusions over five-year action plans of the Russian Popular Front, calling a future document as “pre- election and demonstrational.”

“I already gave instructions that we should be ready to present a five-year action plan of reforms by August. The action plan of priority measures for the improvement of the life quality,” Nikolai Fyodorov told a press conference on Thursday. So, Prime Minister Vladimir Putin instructed the Institute of Socio-Economic and Political Studies to shift to five-year action plans. The newspaper recalled that the country has lived under three-year financial and budget plans in the last few years.

To make the document of the Russian Popular Front qualitative Fyodorov pledged to provide conditions for “a civilized competition.” He noted that the Institute of Socio-Economic and Political Studies offered to all State Duma factions and members of the Russian Popular Front to table their proposals to develop a program of reforms. Fyodorov is willing to cooperate not only with Moscow experts, but also with people from the regions.

Independent experts, which the newspaper cited, do not cherish any illusions over five-year action plans of the Russian Popular Front, calling a future document as “pre- election and demonstrational.” Director of the Institute for Globalization Problems Mikhail Delyagin is convinced that a program of the Popular Front “is initially false and demonstrational product.” “It is clear that Fyodorov’s institute is to draft an election program rather than a program for country’s development. The main thing in it is to show that the Popular Front has a program on the ways for the development of the country for the next five years,” president of the Center for Current Politics Konstantin Simonov shared the opinion voiced by Delyagin.

The LDPR leader Vladimir Zhirinovsky stated to the Kommersant that he is ready to “send by mail” an election program of his party to the Institute of Socio-Economic and Political Studies, only if a final program of the Russian Popular Front will mark all the provisions that are taken from the LDPR election program. Chairman of the Fair Russia Party Nikolai Levichev pledged to the newspaper that such cooperation “at the level of political parties” is out of place. The deputy chairman of the Communist Party Central Committee and the State Duma vice-speaker Ivan Melnikov also does not see any sense in the election cooperation with a competing party United Russia. The Yabloko party leader Sergei Mitrokhin, who also received an official invitation from the Institute of Socio-Economic and Political Studies, was surprised that he was invited to draft a program of “the United Russia Party, even rather than that of the Russian Popular Front.” Therefore, the Yabloko leader is ready to send a draft program in the Institute of Socio-Economic and Political Studies with the only condition, “To disband United Russia.” Acting secretary of the United Russia General Council presidium Sergei Neverov acknowledged that he is “undecided yet how to react to it.”

See for the details: http://www.ng.ru/economics/2011-06-03/1_front.html

The materials from the websites Zagolovki.ru and Yandex.ru were cited.

Kulikov Urges Kremlin To Create New Body To Direct All Force Structures In Times Of Trouble – Analysishttp://www.eurasiareview.com/kulikov-urges-kremlin-to-create-new-body-to-direct-all-force-structures-in-times-of-trouble-analysis-03062011/

Written by: Paul Goble

June 3, 2011

Army General Anatoly Kulikov has called on the Kremlin to creqate a new body, modelled the National Counter-Terrorism Committee and centered in the military’s general staff, to coordinate the activities of all force structures during emergency situations, natural or man-made.

Kulikov made his proposal at the Military Commanders Club during a conference at the end of May on coordinating force structures during emergency situations. At that time, the general “recommended that the president and government create in the [Army’s] General Staff a permanent organ to coordinate the actions of force structures during emergency situations.”

At present, the Emergency Situations Ministry has primary responsibility for reacting to “technogenic and natural catastrophes, fires, accidents” and similar phenomena, and the Interior Ministry has responsibility for control of any demonstrations or protests. Kulikov’s ideas would give the military a major voice over both (www.ng.ru/politics/2011-05-30/3_kartblansh.html).

The general noted at the meeting that “a certain time ago, the Russian Security Countil had become the coordinating organ among the force structures, but in fact, coordination of actions is being realized only on the basis of decisions taken by the president of the country” rather than in a continuous way.

That is a mistake, Kulikov continued, arguing that “the coordinating organ must be a permanently functioning one like the National Counter-Terrorist Committee.” He added that “the General Staff has already agreed that on its base should be established an operational staff attached to the coordination committee of the Security Council.”

Once those arrangements are made, he said, “the General Staff will fulfill its basic function not only in the sphere of defense but in the sphere of security as well,” something it is “ideally” situated to do by means of the coordination “of the actions of the force structures, including the collection of information, the processing of data, the setting of tasks,” and so on.

As “Nezavisimaya gazeta” notes it its report on Kulikov’s remarks, the general’s formulation, “the General Staff has expressed agreement” is “an interesting way to put the question given that on May 6, President Dmitry Medvedev signed directive 590 which significantly broadened the purview of the Security Council.

That directive specified that the Council “is an independent subdivision of the Presidential Administration with the rights of an administration” and defined its functions as including “the guaranteeing of national security, the organization of the defense of the country, including the construction and development of the Armed Forcdes, other forces, and so on.”

Thus,, that directive means the Security Council “de jure already is playing a coordinating role in ensuring national security and the defense of the country.” What then is Kulikov talking about, especially since he calls for “an operational staff for emergency situations at the coordination committee of the Security Council. But there is no such committee.”

The Security Council has seven inter-agency commissions, “Nezavisimaya” reports, “one of which, for military security is headed by Army General Yury Baluyevsky,” an opponent of the defense ministry. Consequent, “if an operational staff for emergency situations were established” there, it would mean that the Security Council and not the General Staff would “by law play the coordinating role.”

That explains part of Kulikov’s proposal, but it also appears to reflect his rather broader understanding of emergency situations, an understanding that includes not just natural and technogenic disasters but also crimes and protests that threaten to get out of hand, possibly to the point of undermining state power.

If protests like the one in Manezh Square in December were to spread, “Nezavisimaya” continues, “then by themselves neither the interior ministry nor the emergency situations ministry would be able to cope.” But that still leaves open the question as to whether the General Staff could do so more effectively.

It is thus likely that Kulikov’s floating of this idea reflects not only the tensions that have always existed between the Russian military and other force structures but also the concerns of some in the senior officer corps and elsewhere that conditions in the Russian Federation are deteriorating to a point that they may have to play a most unfamiliar role sometime soon.

About the author:

Paul Goble

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. He has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. Mr. Goble maintains the Window on Eurasia blog and can be contacted directly at paul.goble@gmail.com .

A Chinese Gamehttp://russiaprofile.org/business/37777.html

Russia and China Set Aside Their Differences in Pursuit of Greater Economic Goals

By Tai Adelaja Russia Profile 06/02/2011

After a protracted spat that threatened to undermine otherwise booming trade relations between Russia and its southern neighbor China, business-like pragmatism prevailed this week over pesky payment problems. Over the past several months, Moscow and Beijing were locked in a dispute over oil pricing and overdue payments. Analysts say that China, the world’s number one energy consumer, is set for heady growth in the coming years, and could therefore least afford a costly trade dispute with its northern neighbor.

At issue is a loan-for-oil agreement inked in February of 2009, in which Rosneft and Transneft agreed to start shipping an annual 15 million metric tons of oil through the Eastern Siberia–Pacific Ocean (ESPO) oil pipeline, which is designed to pump crude from Siberia to Russia's Far East and then on to energy-hungry China and the Asia-Pacific region. Rosneft and Transneft borrowed an unprecedented $25 billion from China to build the pipeline as part of a broader deal to supply Beijing with 300 million tons of crude over 30 years. But since the agreement became effective early this year, China has been pressuring Russia to revise the pricing formula for its crude oil supplies. Beijing says it wants to purchase oil at a price lower than that offered at the ESPO’s Pacific Ocean terminus of Kozmino, arguing that the distance from Skovorodino, where the spur to China branches off from ESPO, to Kozmino, is 2,046 kilometers, but it’s just 60 kilometers from  Skovorodino to the Chinese border. Russia insists, however, that it applies similar tariffs to both routes and urges China to pay the ESPO’s terminus’s price at least for the first year. In April, Transneft said it had incurred a loss of more than $20 million a month due to underpayment by China for crude oil supplied via ESPO.

The spat has had chilling effects on otherwise booming and mutually beneficial trade relations between the two nations. Since March, when news of the alleged underpayments

first emerged, the dispute has escalated so much so that in April Transneft threatened to file a lawsuit against China's CNPC in a London arbitration court over what it said were underpayments for oil supplies. Suddenly this week China paid out about three-fourths of a debt owed to Russian state-controlled companies for oil deliveries. “China has started to pay up its outstanding arrears for our oil,” Transneft Spokesman Igor Demyon said Thursday. “Transneft received $33 million transferred on Monday and another $45 million on Tuesday.” Rosneft has also received $127 million from China this week, he said. However, China still pays less than the agreed sum on the oil shipments it received this year through the East Siberia-Pacific Ocean pipeline, Demyon said.

Some analysts said China’s decision to start paying off its debt shows that it may have caved in to the legal pressure. "Obviously, the legal position of Russian companies was stronger, and the Chinese chose to start paying off their debt,” said Denis Borisov, an oil analyst at Bank of Moscow.  “Like Russia, China is very much interested in expanding energy cooperation with Russia, especially in the gas sector, and therefore has incentives to make concessions." But other experts have suggested that the two may be playing shrewd political games, as they both try to save face ahead of a crucial summit next month. “Transneft’s threat to litigate is just that – a threat,” said Troika Dialog oil industry Analyst Valery Nesterov. “There is too much at stake for both nations to allow court cases to interfere in other potential trade deals.”

One potential victim of a protracted spat is a fresh landmark deal with China on natural gas supplies, which Russia has been trying to secure. For months, Russian gas monopoly Gazprom has been making futile attempts to clinch a gas deal with China, which it needed so badly to diversify its exports away from saturated European gas markets. Negotiations were stalemated, analysts say, by the wide gap in the price demanded by Moscow and the one Beijing was willing to pay. Deputy Prime Minister Igor Sechin said on Tuesday that Russia hopes to finalize a gas supply deal with China by June 10 to export 68 billion cubic meters per year for 30 years. Under a draft accord discussed at bilateral energy talks, Russia would supply 30 billion cubic meters per year of gas through a western route from Siberia into northwest China, and a further 38 billion cubic meters down its Pacific coast into the Chinese northeast, he said. The launch of gas exports to China would break Russia's almost complete export dependency on the European market, to which gas export monopoly Gazprom expects to export more than 150 billion cubic meters this year, Reuters reported.

Sechin, who was speaking after meeting his Chinese counterpart Wang Qishan, said final agreement had not yet been reached on price, but the two sides had tasked their state energy firms, Gazprom and CNPC, with finalizing terms. "We have asked Gazprom and CNPC to finish talks and prepare a package of contracts for signing before June 10," Sechin said. That would enable a deal to be finalized before a visit to Russia by President Hu Jintao, who will be the guest of honor at the St. Petersburg International Economic Forum on June 16 to 18, Sechin added. Prime Minister Vladimir Putin's Spokesman Dmitry Peskov confirmed to Russia Profile on Thursday that both sides are working hard to formulate transparent guidelines for approving gas pricing formula for a possible deal in June.

In an about-turn last week, China called off talks with Russia scheduled for May 30 to 31 to iron out disputes over the price of Russian oil and gas deliveries to China, despite earlier statements by Sechin that Moscow and Beijing would discuss the price of pipeline crude deliveries at an energy dialogue later in May. But in a sign of things to come, PetroChina Chairman Jiang Jiemin said at a May 19 briefing in Beijing that both countries have almost completed technical and commercial talks on a gas supply contract, implying that Beijing may no longer insist on changing the rules in the middle of the game.

But while the ever-rising oil and gas prices, spurred by the Fukushima nuclear accident and upheavals in the Middle East, put Russia in a much stronger position at the bargaining table with China, there has been a studied effort on both sides to avoid explosive conflicts, analysts say. Nesterov said the latest developments show that Moscow and Beijing have only been able to achieve major breakthrough under intense political pressure. "Neither side needs a conflict, however trivial, ahead of Chinese President Hu Jintao's visit in June," Nesterov said. “Some issues are still outstanding, but both sides have decided that they are negligible.”

China Increasing Reliance on Russian Coal http://www.themoscowtimes.com/business/article/china-increasing-reliance-on-russian-coal/438108.html

03 June 2011Bloomberg

China will increase annual coal imports from Russia, its fifth-biggest overseas supplier, by almost 30 percent in the next five years as energy cooperation between the countries grows, the Chinese foreign ministry said.

Russia will boost deliveries to 15 million metric tons annually in the next five years and may increase shipments to 20 million tons, the ministry said in a statement on its web site Thursday, commenting on ongoing energy talks in Moscow. The countries are also discussing a 30-year natural gas supply contract that Russia aims to sign on June 10 during a planned visit by Chinese President Hu Jintao, RIA-Novosti said May 31.

China became a net importer of coal for the first time in 2009 as a plan to consolidate mines shut thousands of unsafe pits and cut production. Coal shipments from Russia to China reached 11.6 million tons last year, costing on average $130 a ton, according to Bloomberg calculations based on customs data that didn't separate figures for power station and coking coal.

Shenhua Group, China's largest coal producer, and Russian companies have "made progress" on ventures to develop coal fields and a coal-liquefaction project, the foreign ministry said, without elaborating.

China imported a total of 165 million tons of coal last year to make steel and to burn as fuel at about 70 percent of its power plants. The world's biggest energy-consuming nation is also seeking to boost consumption of cleaner-burning gas to reduce carbon emissions.

The two countries will finalize the sale and purchase terms for a contract to supply gas to China and be ready to sign an agreement by June 10, according to the foreign ministry.

Russia and China have advanced on the gas supply talks, with "one little step" remaining on pricing, Liu Tienan, head of the Asian country's National Energy Administration, said in Moscow on May 31.

Under a worst-case scenario, Gazprom expects to sign a contract with China by the end of the year, deputy chief executive Alexander Medvedev said May 19.

China will continue to push for nuclear power cooperation with Russia, according to the foreign ministry.

Future of the CIS: Is a united economic space possible?http://en.rian.ru/valdai_op/20110603/164408721.html

10:07 03/06/2011

Julian M. Cooper

Efforts to enhance economic integration in the CIS have been complicated by the fact that Russia’s approach has been excessively political. If policy were based more on economic and commercial considerations in terms of costs and benefit for the Russian economy, more progress could be made.

Valdaiclub.com interview with professor Julian M. Cooper, Centre for Russian and East European Studies (CREES), University of Birmingham; Co-Director, Centre for East European Language Based Area Studies (CEELBAS) (SSEES-UCL, Oxford, CREES); Asssociate Fellow, Chatham House.

What prevents trade integration within the CIS? Is it possible to conclude the Treaty on a Free Trade Zone between CIS countries at all?

It is not at all surprising that it has proved difficult to develop trade integration within the CIS and the fact that no agreement was reached at the recent meeting of heads of governments in Minsk was not unexpected. The member countries may have a shared

past as former constituent republics of the USSR, but now they are all fully independent, sovereign, nations with their own distinct policies and aspirations. Some, for understandable reasons, see their future in terms of much closer economic relations with the European Union, other with Asia or the Middle East. There is also the fundamental issue of the asymmetry between Russia and the other CIS economies. In terms of GDP (World Bank, current dollar terms) the second largest economy, Ukraine, is barely one-tenth the size of Russia and eight of the remaining ten are less than 3 per cent of Russia’s size. However good political relations with Russia, this disparity of economic power inevitably makes Russia’s much smaller neighbours wary of close integration, with a fear of being overwhelmed.

How justified is the desire of some countries (eg Ukraine) to become members of the CIS Free Trade Zone and European Free Trade Zones?

Entirely justified and it is difficult to see why this should represent a problem for Moscow. If a CIS Free Trade Zone is to be established, then from the outset it must accord fully with WTO expectations and there is no reason why member countries have to make a choice. After all, once WTO accession has finally been achieved, Russia also has the prospect of negotiating a deep free trade area with the EU and no-one in Moscow appears to regard this aspiration as being incompatible with deepening CIS integration.

Will this Treaty become the first and most important step in forming the Common Economic Space in the former Soviet Union or whether it is beneficial to individual countries?

I am sceptical about prospects of forming a Common Economic Space, even on the territory of the Customs Union of Belarus, Kazakhstan and Russia. The likely economic benefits are unclear, even if it could be formed as a space with genuinely free movement of goods, labour and capital. Already, the merits of the Customs Union itself are in doubt, as indicated by the research of Lucio Vinhas de Souza of the World Bank (‘An Initial Estimation of the Economic Effects of the Creation of the EurAsEC Customs Union on its Members’, World Bank, Economic Premise, no.47, January 2011, ). Using a general equilibrium model, his provisional conclusion is that the Union will lead to a reduction of GDP growth in all three member countries (except Kazakhstan in his basic version, with limited harmonisation), with the fall being larger as greater harmonisation is pursued, including conditions in the energy sector. At the same time, current account deficits will increase, especially for Belarus, which in 2010 already had a deficit of over 15 per cent of GDP. His analysis suggests that the biggest loser will be Belarus; the least negatively affected, Kazakhstan. The reason is simple: as de Souza summarises, ‘negative trade diversion effects surpass positive trade-creation ones.’

The creation of the Customs Union could well have unintended consequences. For example, there is already some evidence that businesses are seeking to relocate to Kazakhstan, which, as the latest ranking of the Geneva-based IMD business school shows, has a better business climate than Russia – in the ranking Kazakhstan is placed 36th but Russia 49th. Furthermore, it is not at all clear how the Union will fare now that

Belarus has a potentially very serious financial-economic crisis, likely to affect trade flows and the country’s macroeconomic stability. It may well be that further institutional reform and harmonisation will be needed in  all three countries before progress can be made in forming a common economic space.

In the view of the current author, from an economic point of view it would be more rational for Russia to secure WTO accession as soon as possible and undertake serious, much-needed, institutional reforms to boost competitiveness, improve the business climate, and kick start some genuine modernisation. Prioritisation of CIS economic integration, with less modern and developed economies than those of the EU and most other G20 countries threatens to put Russia in a less favourable economic situation. The British experience may be relevant here. The phasing out of Commonwealth preferences in the 1960s helped to promote a modernisation of UK industry, boosted further by a deepening economic engagement with the forerunner of the EU, the European Economic Community, on the whole a more developed and demanding market than that of the Commonwealth.

Should Russia abandon the commercial benefits in favour of strengthening the political influence among the parties of the Treaty?

I do not accept the premise of this question. In my view, efforts to enhance economic integration in the CIS have been complicated by the fact that Russia’s approach has been excessively political. If policy were based more on economic and commercial considerations in terms of costs and benefit for the Russian economy, more progress could be made.

National Economic Trends

Russian president signs into law amendments to 2011 budgethttp://www.prime-tass.com/news/_Russian_president_signs_into_law_amendments_to_2011_budget/0/%7BAE811870-9596-49CC-8457-47A71A9A3D5D%7D.uif

MOSCOW, Jun 3 (PRIME-TASS) -- Russian President Dmitry Medvedev has signed into law amendments to revise the federal budget’s income and spending for 2011, the presidential press service said Friday.

The amendments were proposed by the Russian government and envisage increasing the total federal budget income by 1.459 trillion rubles to 10.303 trillion rubles.

Under the amendments, total federal budget expenditures are to increase by 363.9 billion rubles to 11.023 trillion rubles,

The federal budget deficit is to decrease to 719.1 billion rubles, or 1.3% of the GDP, from 1.814 trillion rubles, or 3.6% of GDP as stipulated by law for the 2011 federal budget.

(28.0419 rubles – U.S. $1)

End

03.06.2011 12:23

Russian Services Expand Most Since April 2010, HSBC Sayshttp://www.bloomberg.com/news/2011-06-03/russian-services-expand-most-since-april-2010-hsbc-says.html

By Scott Rose - Jun 3, 2011 6:24 AM GMT+0200

Russia’s services industry expanded last month at the fastest pace since April 2010 because of an increase in new business, a survey showed.

The services Business Activity Index rose to 57.6 in May from 55.8 in April, HSBC Holdings Plc said in a report today, citing data compiled by Markit Economics, a financial information services company. The survey indicates contraction when below 50 and growth above 50.

To contact the editor responsible for this story: David Whitehouse at dwhitehouse1@bloomberg.net

Russian Services PMI accelerates to 57.6

http://www.bne.eu/dispatch_text15695

VTB CapitalJune 3, 2011

News: Russian Services PMI for May rose to 57.6 from 55.8 in April, signalling the strongest expansion since April 2010. The business expectations sub-index, at 80.5, was the highest since December 2004. Companies intensified new hiring, with the employment index rising from 53.2 to 56.0, the highest in 3.5 years.

Inflationary pressures were little changed, edging up just slightly. The input prices sub-index rose to 63.4 from 62.3 while prices charged also increased (from 54.4 to 55.0).

Our View: The latest set of data is highly encouraging, both from the viewpoint of the current business activity and for the future prospects across the Russian services-based

economy. Interestingly, companies noted the upcoming elections as one of the reasons why they expected market conditions to improve over the next 12 months. Encouragingly, in May all six industry sub-sectors recorded expansion.

On a less positive note, inflationary pressures have started to pick up again, albeit at a very moderate pace, following some cooling in the previous two months. Companies noted rising fuel costs, taxes and wages as some of the key reasons for higher prices. Still, inflation remained below the year-start levels and we think the CBR will be comfortable taking a break from policy tightening over the next few months.

June 03, 2011 09:15

Banks have 496.1 bln rbs on CBR correspondent accounts on June 3.http://www.interfax.com/newsinf.asp?id=248952

MOSCOW. June 3 (Interfax) - Russian banks have 496.1 billion rubles on correspondent accounts in the Central Bank as of June 3 including 316.9 billion rubles for Moscow banks

The balance on June 2 was 560.2 billion rubles and 382.2 billion rubles, respectively.

Banks had 384.6 billion rubles on deposit accounts in the Central Bank on June 3 against 298.1 billion rubles on previous day.

Export Grain to Go to Established Buyers First http://www.themoscowtimes.com/business/article/export-grain-to-go-to-established-buyers-first/438109.html

03 June 2011Bloomberg

Russia will supply grains to the customers it lost before seeking new buyers when the grain export ban ends next month, said Pavel Skurikhin, president of Russia's Grain Producers' Union.

The country will benefit from increased output as drought in Europe boosts demand from new buyers, Skurikhin said in an interview on May 31 in Moscow. Established customers in Egypt, Tunisia, Jordan and Yemen were "seriously" affected by Russia's absence from exports since the ban in August, he said.

"It is best we come back to these markets before we start moving toward new markets," Skurikhin said.

Russia's absence from the global grain market contributed to wheat prices climbing 72 percent in the past year. Food prices rose to a record in February, according to the United Nations, helping spur protests and riots across North Africa and the Middle East and toppling leaders in Egypt and Tunisia.

Exports were banned after the worst drought in 50 years curbed production. Prime Minister Vladimir Putin ended the ban as of July 1 on improved crop prospects.

Saudi Arabia is considered a possible new market because it might need feed grain from Russia, Skurikhin said. The Grain Producers' Union represents about 3,000 Russian farms.

Russia is ready to ship stockpiled grain from the southern Black Sea ports when exports resume on July 1, Skurikhin said. It takes one day to deliver grain from the Krasnodar region, where 3.5 million tons of wheat is stored, to ports, he said.

Is a Weak Dollar Good for Russia?http://blogs.forbes.com/kenrapoza/2011/06/03/is-a-weak-dollar-good-for-russia/

Jun. 3 2011 - 12:08 am | 47 views | 0 recommendations | 0 comments

A dead president walks into a Moscow bar and sells fill ‘er up…

So the story goes. A weak dollar means strong commodities and strong commodities means high oil prices. Russia has benefited all year from oil prices over $100 a barrel and as a result, the Market Vectors Russia (RSX) exchange traded fund has outperformed its BRIC market peers and the MSCI Emerging Markets index over the last 12 months. The biggest Russian ETF traded in New York is up 26.5% year-to-date ending June 2, while the MSCI Emerging Markets index is up 24.3%. In the first five months of the year, Russia’s stock market has outperformed Brazil and India’s, and beat the MSCI Emerging Markets index. Only China has done better, but those gains have only come in the last few weeks.

“A weak dollar means buy oil and gas, and in that scenario I’d buy the Russian market through RSX,” says Vlad Signorelli, president and chief strategist at boutique investment research firm Bretton Woods Research LLC in New Jersey.

All four of Russia’s most popularly traded energy stocks — Gazprom, Lukoil, Rosneft and Novatek, were all up by double digits in late March before declining with oil prices. Still, majors like Gazprom are beating the local index, up 3.3% YTD ending June 2. Rosneft and Lukoil are both up a little more than 6%.

What makes Russia attractive given the ongoing global weak dollar phenomenon?

For starters, Russia is the world’s leading natural gas producer and is home to the largest proven natural gas reserves. It also ranks No. 8 in the top 10 oil producing nations, according to the Oil & Gas Journal, an industry trade group. Outside of Opec, of which Russia is not a member, the country is the No. 2 after Canada of non-Opec oil producers.

The big oil and gas firms account for more than half of the Russian Trading System stock index, which is the reason why the Russian trade is so highly correlated to oil futures. When oil goes up, Russia often follows.

“Russia is the most correlated equity market in the emerging universe to oil prices and many investors trade Russia as a hedge on the oil price,” says Jennifer Delaney, a strategist at UBS in New York.

“A weaker dollar that coincides with higher oil prices would therefore be good for Russia,” Delaney says. Investors would be buying Russia not because the dollar is weak, but because oil is strong, even if the two often do go hand in hand. The weak dollar leads to higher commodities and that inevitably means higher crude prices and that has some investors bullish on Russia. In the short term, the US dollar and oil have been highly correlated. However if this were to break down, the path of oil price is more important to Russia than the level of the US dollar.

“We continue to like Gazprom and Lukoil,” Delaney says. Both are in UBS Global Emerging Markets Select portfolio of their 40 best stock ideas. UBS also holds Gazprom in its $555 million Global Emerging Markets Equity fund.

Yet, while a weak dollar means higher oil prices, higher oil prices also means more dollars and euros flooding Russia to import oil and gas. That means a stronger rouble.

Tatiana Orlova, an economist at Nomura in Moscow, thinks that the weak dollar is not beneficial for oil companies because their revenues are dollar-denominated, but their costs — like wages — are mostly rouble-denominated. “A weak dollar may prompt oil and gas companies to invest less into exploration and development, which would weigh down on growth,” she says.

The weak dollar is causing problems for Russia, too, primarily through food inflation. The Bank o Russia raised the bank deposit rate last week due to 9.7% inflation as of May 23, up from 9.6% in April. The official inflation target is 7%, so with some real rates at -1.2%, cash has little to no value. Investors should expect more interest rate hikes to come, likely 25 basis points, according to Barclays Capital in Moscow.

Disposable incomes in Russia fell 6.5% in April and unemployment rose marginally to 7.25%. For all the weak dollar-strong commodity hype, one would think Russia would be awash in capital and abundance. That might be the case for Moscow’s uber-wealthy, but

average Russians seem to be muddling along, judging by the last set of lagging indicators released by Rosstat for April.

Overall macrotrends in Russia remain week despite bullish calls on oil in the markets. The government needs to raise rates to help keep inflation under control. A weak dollar is helping oil companies, but the weak dollar-strong commodity story has not been a good one this year due to home grown systemic risks to the economy. That might mean investors who don’t have to be in Russia, but like the idea of higher oil prices and a weaker dollar will turn to other ways to play this trend rather than buying RSX or the Russian energy companies.

“Without a significant boost to investments, we expect the current pace of growth of about 4% to 4.5% to be the limit of what the Russian economy can deliver in the medium term,” writes Vladimir Pantyushin, an analyst at Barclays in Russia.

Russia vs MSCI Emerging Markets                                                                       6m           1y           5yMarket Vectors Russia (RSX)        5.98%     26.53%    -2.14%Wisdom Tree India (EPI)            -10.03          7.67        -6.32iShares MSCI Brazil (EWZ)           -3.58          15.25        36.02iShares FTSE Xinhua (FXI)           -1.04          12.80       21.51iShares MSCI EM (EEM)                  2.43          24.28       15.83

Domestic economy to revert to Soviet standardshttp://rt.com/politics/press/nezavisimaya/fedorov-five-year-document-plan/en/

Published: 3 June, 2011, 07:25Edited: 3 June, 2011, 07:25

Independent experts have no illusions about the five-year plans of the All-Russian People's Front Igor Naumov

The Independent Institute of Socio-Economic and Political Studies (IISEPS), headed by Nikolay Fedorov, is expected to prepare a five-year plan for Russia’s socio-economic development in the next two months. In addition to United Russia and community organizations that are registered members of the All-Russian People’s Front (ONF), the document may incorporate proposals from the opposition forces, that is if they choose to co-operate. Independent experts have no illusions regarding the ONF’s five-year plan, calling the future document “election-driven and demonstrative.”

“I have already issued an order, to be ready to present by August, for some kind of a five-year plan for change – a plan of priority action for life arrangement,” Nikolay Fedorov, chairman of the Board of Directors of the Institute of Socio-Economic and Political Studies Fund, said during an Interfax press conference yesterday. Thus, at the suggestion

of Prime Minister Vladimir Putin, whose wishes are being implemented by the IISEPS, the domestic economy is being prescribed a transfer to a five-year plan. In recent years, the country has been guided by three-year financial and budgetary plans.

In order to make sure that the ONF document is of a high quality, Fedorov promises to create the conditions for “civilized competition.” According to him, the IISEPS has proposed that all of the State Duma factions and members of the All-Russian People’s Front submit their proposals for the development of the reform program. Instead of the experts in the capital, Fedorov wants to work together with people from the depths of the country. “It is crucial to dilute the research with viewpoints from the provinces,” he explained, as it is being proposed that we adopt the five-year plan for “Russia’s arrangement” across all domestic administrative structures: in the federal center, the regions and municipalities. And people in the constituent territories of Russia have a better understanding of what they need to do in order to improve their lives.

Fedorov’s answer to Nezavisimaya Gazeta’s (NG) question about the financial resources which the IISEPS has in order to implement the People’s Front’s pre-election program was very streamlined: “The budget is sufficient for us to perform the assigned task well.” He assured there were enough funds to hire experts – Russian and foreign. There is even enough money for Nobel laureates. These funds will be allocated from United Russia’s party bins.

Meanwhile, Fedorov himself will be working for the sake of the idea, or chairing the IISEPS Board of Directors on a voluntary basis. He refused to name the names of the council members. Staffing decisions, as it turns out, are still being made. It is known that directors will be approved for specific assignments. They include determining Russia’s strategic guidelines and priorities, quality of life (demography, healthcare, pension system, etc.), raising the competitiveness of the national economy, international relations and defense, and regional development.

For independent experts, it is clear that the enthusiast Fedorov, who is now working on a five-year plan for the ONF and the entire Russian economy, has stolen a march on Vladimir Mai and Yaroslav Kuzminov who, also at Vladimir Putin’s request, have spent the last few months improving the Strategy for the Country’s Development until 2020. Before the birth of the ONF it was believed that a revised 2020 Strategy would be United Russia’s trump card in the parliamentary and presidential election campaign.

In light of recent events, adherents of liberal economic values can consider themselves belittled and offended as their labor has become unnecessary.

However, the director of the Institute of Globalization Studies, Mikhail Delyagin, is confident that both the 2020 Strategy and the ONF program are drafted and corrected primarily for the elections. The country will not operate in accordance with any one of those documents. As for the People’s Front’s program in particular, “it is an inherently fictitious, project that is only for show,” stressed the expert.

“Clearly, Fedorov’s institute should not draft a program for the country’s development, but an election campaign program, the main goal of which is to show that the People’s Front has a vision for ways to develop the country in the next five years,” Konstantin Simonov, president of the Center for Political Conjuncture, agrees with his colleague. He recalled how much has been done to improve the 2020 Strategy.

The false impression was given that it would be a program of action for the next president – whoever it may be – in 2012. In reality, however, it was clear that no one plans to implement the policies prescribed in the document – just as no one will bother to follow the numerous sector-focused strategies today. “In Russia, there is no culture in which the leadership feels bound to strictly comply with campaign promises,” says Simonov.

Business, Energy or Environmental regulations or discussions

June 03, 2011 10:01

Sberbank to submit new dividend policy to supervisory board before privatization – Grefhttp://www.interfax.com/newsinf.asp?id=248963

MOSCOW. June 3 (Interfax) - The management at Sberbank of Russia (RTS: SBER) will be submitting to the supervisory board for consideration a new dividend policy, involves gradual dividend growth, ahead of the bank's partial privatization, Sberbank President German Gref said.

The annual Sberbank shareholders meeting, which is slated for June 3, will address putting 12% of net profits towards dividends. Previously, the bank had typically paid out 10% of profits.

Cf

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

MICEX key exchange for Sberbank's share sale – CEOhttp://www.reuters.com/article/2011/06/03/sberbank-privatisation-idUSLDE7520DL20110603

4:11am EDT

MOSCOW, June 3 (Reuters) - The Moscow Interbank Currency Exchange (MICEX) will be likely the key exchange for the expected privatisation of Sberbank's (SBER03.MM: Quote, Profile, Research, Stock Buzz) shares, the bank's Chief Executive Officer German Gref said on Friday.

"Privatisation will be carried out through public offering on the market and it's proposed that MICEX will be the base platform," Gref said.

Russia's largest lender Sberbank is planning to sell up to 7.6 percent of its shares. (Reporting by Oksana Kobzeva; Writing by Lidia Kelly; Editing by Andrey Ostroukh)

VTB Capital to kick off major international expansion

http://www.bne.eu/dispatch_text15695

bneJune 3, 2011

VTB Capital is planning to kick off a major international expansion drive this year by opening new offices in the US and Hong Kong, and launching a recruitment drive for its operations in London and Europe, whilst it is also looking at the Chinese and African markets, reports Reuters.

However, despite the voracious appetite the state bank's retail arm has shown for acquisitions in its home market recently, VTB's first deputy president Yuri Solovyov says the global roll out of the investment business will be organic. That doesn't mean of course that competitors across the world should ignore the danger of raids on their staff.

Powered by state cash through the crisis, VTB Capital has grown rapidly since it launched in 2008 by pinching a horde of bankers from Deutsche Bank's Russian business. It is now Russia's top investment bank, and accounts for around a third of VTB's profit overall, which hit RUB55bn ($1.97bn) last year.

VTB's investment arm currently has overseas offices in London, as well as Dubai, Singapore, Vienna and Kiev. "We are planning to open offices in Hong Kong and in the United States, hopefully this summer," he said, but added that no international

acquisitions are planned. Other executives told the news agency that the bank aims to grow in eastern Europe to advise Russian companies looking to enter the markets, whilst it also plans to hire staff for operations in Austria, France and Germany.

For now, the New York and Hong Kong offices will feature no more than 10 staff said Mikhail Butrin, VTB Capital's co-head of global banking, but the bank could hire more staff for its London office, where it currently employs more than 300 people, he added. "You can hire people (in London) you can't hire elsewhere," chipped in Vladimir Sokolov, head of Europe in VTB Capital, adding London is "unique" in this respect.

Sokolov also said the bank was also considering entering China as well as some African markets. While the firm has no immediate ambitions to go head to head with Western European rivals in those regions, greater international presence could lead to cross-border mandates outside Russia, he added.

"Russia's stake in the world's economy is growing," said Leonid Slipchenko of Uralsib. "I think there will be only one Russian investment bank, which might become global." With new regulations crimping pay at many Western banks, VTB Capital - powered by the Kremlin's cash - could well make a dent in their staffing levels. "The key thing in investment banking is people. I think for VTB Capital it is better to grow organically and by acquiring teams. It worked last time," Slipchenko suggests.

Rostelecom buys 40% of Bashinformsvyaz

http://www.rbcnews.com/free/20110603104840.shtml

      RBC, 03.06.2011, Moscow 10:48:40.Rostelecom announced today having acquired a 39.87% stake in telecommunications operator Bashinformsvyaz for RUB 3.64bn (approx. USD 130m).

      The price per one ordinary share was RUB 9.62 (approx. USD 0.34). The seller of the stake was Bashtelecominvest, a subsidiary of Bashinformsvyaz. The proceeds from the deal will be used to repay the debts of Bashinformsvyaz and its subsidiaries and to finance its development program.

      Bashinformsvyaz provides broadband Internet, television and fixed-line telecommunications services to corporate and household customers in the Republic of Bashkortostan. Other major shareholders of Bashinformsvyaz are the State Property Management Agency, with a 29.3% stake and the Bashkortostan government, with an 18.5% stake.

04:02 03/06/2011ALL NEWS

Russia to allow Internet sites register as media outlets.

http://www.itar-tass.com/en/c154/156798.html

3/6 Tass 5

MOSCOW, June 3 (Itar-Tass) —— The Russian State Duma will consider under the second reading on Friday a lawbill which allows Internet sites to voluntarily register as media outlets.

The lawbill triggered public fears it aims to introduce control over Internet. But media committee chairman Sergei Zheleznyak played down fears saying the registration is exclusively a voluntary undertaking.

“The situation when someone will recognize a shop or a Life Journal blog as a media outlet is ruled out,” he told Tass adding the State Duma introduced an amendment saying “a site which did not receive and has not requested registration cannot be considered a media outlet.”

However Zheleznyak said other legislation remains in force and if a non-media site is recognized as extremist it will be subject for law-envisaged responsibility.

Earlier Communications and Media Minister Igor Shchegolev said in case of registration as “a network publication” the sites will be liable for benefits envisaged for traditional media.

China approves Uralkali and Silvinit merger deal

http://www.bne.eu/dispatch_text15695

Renaissance CapitalJune 3, 2011

Event: Yesterday (2 June) Uralkali announced that the Chinese antitrust authorities had approved the Uralkali and Silvinit consolidation deal. In connection with the approval, Uralkali made certain voluntary undertakings to the Chinese Anti-Monopoly Bureau of the Ministry of Commerce, which included: 1) the combined company will continue to follow established processes and procedures relating to potash sales to China; 2) it will continue to offer the supply of all types of traditional products to China; and 3) it will continue to respect traditional negotiation procedures and take into account the historical and current trading situation with respect to Chinese customers.

Previously the merger deal was approved by the Brazilian, Polish and Ukrainian antitrust authorities, as well as the Russian Federal Antimonopoly Service.

Action: The news is positive for Uralkali, in our view.

Rationale: We believe Uralkali's undertakings will not negatively affect its operations in China. We expect Belarusian Potash Company (the international potash trader of Uralkali and Belaruskali) to negotiate a potash supply contract to China for 2H11, with sizeable price growth from the current level at $400/tonne CFR. China is one of Uralkali's main markets, and in 2010 Uralkali and Silvinit exported 21% of their combined sales volumes to China.

Mikhail Safin

Severstal and NLMK are competing for another coking coal deposit in Russian North

http://www.bne.eu/dispatch_text15695

CitiJune 2, 2011

The companies are now competing for the Usinskoe-1 deposit in the Komi Republic of the Russian federation (where Severstal already mines coal at Vorkuta). Previously, NLMK won the Usinskoe-3 deposit and now Severstal is looking to get Usinskoe-1. According to Kommersant the Severstal's CEO Aleksey Mordashov has sent a letter to PM Putin asking him to assist. The gist of the argument is that Severstal, according to newspaper, wants to bid for the entire deposit, while NLMK is prepared to bid for half of the deposit. The auction is scheduled for the beginning of 2012 and the regulator Rosnedra's decision on the outcome will likely become a litmus test of the relative lobbying power of the two companies. In any case the news may not bode well for the two stocks as a bidding war may lead to overpaying by one of the participants.

Nissan and Renault plan to invest up to $2 bln in Russia by 2015-Nikkeihttp://in.reuters.com/article/2011/06/03/nissan-russia-idINL3E7H309520110603

9:15am IST

TOKYO, Jun 3 (Reuters) - Nissan Motor and its partner Renault are planning to invest as much as $2 billion in Russia by 2015, the Nikkei business daily reported, citing the Russian government.

Nissan and Renault will tie up with Russian carmaker AvtoVAZ to boost their sales of cars by 2.3-times to 1.6 million units by 2015, the report said.

(Reporting by Junko Fujita; Editing by Joseph Radford)

Polyus Gold in talks with global gold miners-Vedomostihttp://in.reuters.com/article/2011/06/03/russia-polyus-merger-idINLDE75201820110603

10:16am IST

MOSCOW, June 3 (Reuters) - Russia's biggest gold producer Polyus Gold (PLZLq.L: Quote, Profile, Research) is in merger negotiations with the world's top gold miners, Newmont Mining Corp , Newcrest Mining and AngloGold Ashanti , the business daily Vedomosti reported on Friday.

The newspaper, citing sources close to Polyus' shareholders, reported that a merger with Newmont or Newcrest would elevate the merged company to become the world's second biggest gold miner in terms of capitalisation.

A merger with AngloGold Ashanti would create the world's third or fourth largest gold miner.

Polyus is the world's eight largest gold producer in terms of market capitalisation.

Headquartered in Denver, the United States, Newmont Mining has assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

Newcrest Mining is Australia's largest gold producer, operating seven mines in Australia, Indonesia and Papua New Guinea.

AngloGold Ashanti, headquartered in Johannesburg, South Africa, is Africa's largest gold miner and has assets and operations in 11 countries.

Late last month, Polyus said that it may merge by the end of 2011 with a global gold market player [ID:nLDE74J0GE]. (Writing by Lidia Kelly; Editing by Michael Urquhart)

Polyus Gold to merge with global major by year end

http://www.bne.eu/dispatch_text15695

Troika DialogJune 3, 2011

Polyus Gold CEO Mikhail Prokhorov yesterday commented on the company's M&A plans, saying that a deal is expected to be closed by year end and that the combined company would be the second largest gold miner globally. The shortlist apparently includes several top 10 companies, though the exact criterion (gold production, reserves/resources or market cap) was not disclosed.

We think that Polyus Gold is likely to merge with a company of equal size, with the deal completed as an equity swap (similar to the unsuccessful attempt with Gold Fields back in 2004). The company is expected to complete the long-awaited reverse takeover into Jersey-registered KazakhGold by end summer, which should naturally facilitate the use of its equity in the potential transaction. In case of an equal merger, the stakes of Prokhorov and Kerimov, controlling 40% of the company each, would be reduced to around 20% apiece (or 40% together), though this would be sufficient to control the combined entity given that the rest would be free float.

We consider Kinross Gold to be the most likely candidate, as it already has extensive operations in Russia (Kupol in Chukotka) and was reported to be in talks with Polyus Gold several years ago. Somewhat less likely candidates include Gold Fields, AngloGold Ashanti, Agnico-Eagle and Minas Buenaventura. Among global gold majors, Polyus Gold ranks eighth in terms of current production, ninth by market cap, but fifth in terms of resource base (due to Natalka). According to today's Vedomosti daily, PolyusGold is also considering Newmont Mining and Newcrest Mining, but we struggle to see this, given the difference in size with Polyus Gold.

Troika's view: Aside from the sweeping global ambitions that Polyus Gold has always cultivated, the company is potentially seeking to reduce the Russia-related political risk discount attached to it, obtain the operational expertise of a global major, decrease political risks for the two key shareholders and provide both controlling shareholders with better liquidity (it would become easier for them to monetize their investments).

We believe that while all these objectives have grounds, the risk of overpaying at the current peak of the cycle dwarfs all the pros and reduces the possibility of any value accretion. With a challenging growth pipeline, we would prefer to see Polyus Gold focus solely on its operations rather than perilous M&A.

Engineering firm SNC-Lavalin on a roll with Russian energy contracthttp://www.canadianbusiness.com/article/28701--engineering-firm-snc-lavalin-on-a-roll-with-russian-energy-contract

By Ross Marowits, The Canadian Press  | June 02, 2011

MONTREAL - SNC-Lavalin's chemical and petroleum division scored its second win this week with a multi-million dollar contract for an energy expansion project in Arctic Russia, the Canadian engineering and construction giant announced Wednesday..

The Montreal-based company said Wednesday it had been selected by Globalstroy-Engineering as the prime sub-contractor for detailed engineering and procurement for Phase III Package 4 of the Kharyaga oilfield project.

SNC-Lavalin will also provide project management support and commissioning services, the company said.

Financial details of the contract were not revealed, but analysts believe the contract is worth $40 million to $60 million for SNC, or 10-15 per cent of the US$400 million contract won by Globalstroy.

On Tuesday, SNC-Lavalin said it was awarded a contract for front-end engineering and design for an offshore gas-condensate development project in Venezuela.

No financial details were provided but analysts estimated the contract could be worth $20 million to $50 million for SNC-Lavalin.

"We believe that these two contracts, together with the recent GES+ (general engineering services plus) contract win with Saudi Aramco, provide confirmation that SNC continues to be a credible global player in the oil and gas business," wrote Pierre Lacroix of Desjardins Securities.

The Russian contract will be performed under a "service lump sum" model, which suggests low risk without construction and gross margins of 25 to 30 per cent, he added in a report.

The Kharyaga oilfield lies 60 kilometres north of the Polar Circle in the Nenets Autonomous Territory in Russia's oil-rich Timan-Pechora province.

Phase III involves developing additional reserves, sustaining a daily output of 30,000 barrels a day, achieving 95 per cent associated gas use and eliminating flaring.

The work, which will be carried out over a 23-month period, has already begun and will be handled in the Canadian company's London and Moscow offices and at its partially owned Russian design institute OAO Vnipineft in Moscow.

"We have been active in Russia and the former Soviet Union for many years, and have great confidence in this market," said Jean Beaudoin, executive vice-president of SNC-Lavalin.

"We are particularly pleased that we can benefit from Vnipineft's knowledge and experience on this challenging project."

Maxim Sytchev of Northland Capital Partners said the contract leverages SNC-Lavalin’s 48 per cent stake in oil and gas engineer OAO VNIPIneft, acquired in August 2009.

Challenges include the site's harsh environment, the fluid characteristics of paraffin and remoteness of the site.

Sytchev said the chemicals and petroleum segment is doing better than expected as contracts replenish its $841 million backlog, which represents nine per cent of SNC's total order book.

"In addition, we believe that the competitive pressures in geographies such as Venezuela and Russia are materially less severe when compared to the Middle East where Asian-based engineering companies have been very aggressive over the past 24 months," he wrote in a report.

Consequently, there is an opportunity for increased margins in the segment, Sytchev said, adding that it's an opportune time for a sizable oil and gas engineering firm acquisition.

On the Toronto Stock Exchange, SNC-Lavalin's shares lost 61 cents at C$56.42 in afternoon trading.

AvtoVAZ sells stake in NovikomBank to Rostechnologii: Deleveraging graduallyhttp://www.bne.eu/dispatch_text15695

Renaissance CapitalJune 3, 2011

Event: Vedomosti reported today (3 June), that Rostechnologii will acquire a 20% stake in NovikomBank from AvtoVAZ. The EV of the deal is reportedly RUB4.5bn, with RUB2.5bn for 20% of equity and RUB2bn for the bank's debt.

Action: Positive for AvtoVAZ, in our view.

Rationale: The valuation of the deal is attractive for AvtoVAZ, with NovikomBank being sold at a premium. With NovikomBank's book value at RUB5.1bn (as at 1Q11, according to Finmarkets and Interfax), the P/B value of the deal is 2.45x, vs 1.5x for EMEA banks in 2011E. We estimate a fair P/B multiple to be about 1x. In addition, AvtoVAZ is provided with an opportunity to get out of non-core assets and repay part of its debt. We think the deal will be implemented without direct payments, and will pay off part of AvtoVAZ's huge debt of RUB75bn provided by Rostechnologii in 2009 (currently the outstanding part is estimated at approx. RUB65bn, given that the debt was partially

repaid through the RUB2.5bn sale of non-core energy assets to Rostechnologii, without any actual payments, and partially converted into equity). AvtoVAZ plans to further deleverage from this high debt burden, partially through conversion of Rostechnologii's debt to equity and partially through paying off the debt. AvtoVAZ bought 20% of NovikomBank for RUB1.6bn during the crisis in 2009, and reportedly wrote off over RUB693mn from the impairment of the bank's assets in 1H09 soon after the purchase.

Ivan Kim

Dixy takes over retail operator Victoria

http://www.rbcnews.com/free/20110603115854.shtml

      RBC, 03.06.2011, Moscow 11:58:54.Dixy Group announced today having purchased retail chain Victoria for RUB 25.6bn (approx. USD 914m).

      The value of the deal includes Victoria's debt, cash and cash equivalent. Dixy Group could pay some of this amount using its own shares, as reported earlier. As a result of the transaction, Victoria's shareholders received less than 15% in the merged company. Dixy's controlling shareholder, Mercury Group, received a 50% plus one share stake.

The ALROSA Road Show http://www.diamonds.net/news/NewsItem.aspx?ArticleID=35959&ArticleTitle=The+ALROSA+Road+Show

Editorial Jun 2, 2011 2:55 PM   By Avi Krawitz

RAPAPORT... ALROSA has gone to great lengths to prove its worth in the industry of late. The Russian state-owned diamond miner has claimed the title of world’s largest diamond producer for the past two years. The notoriously discreet company is also revealing some of its secrets as it appears to be raising transparency levels and, it hopes, investor interest ahead of a planned initial public offering (IPO) set for 2012. The listing is highly significant and may prove revealing for the industry, too.

It was about a decade ago that De Beers delisted its shares to become a private company, after which it introduced the Supplier of Choice (SoC) program. Perhaps ironically, ALROSA has adopted a strategy to forge long-term contracts with clients in the run-up to the IPO. These agreements would guarantee a consistent supply of goods to a select group of companies, many of whom are

also DTC sightholders, and it is expected that 70 percent of ALROSA’s total sales in 2011 will be made through these contracts.

As De Beers is expected to introduce some flexibility to its SoC doctrine vis-à-vis its soon-to-be announced marketing agreement with the Botswana government, and its successful transformation from being a company focused on controlling market share to one that enables profits, it increasingly seems that ALROSA is picking up where De Beers left off.

Last week, the Russian miner published its diamond reserve and resource data for the first time. The preliminary report makes for some impressive reading and showed that the company holds estimated reserves and resources with 1.28 billion carats of diamonds.

That would enable it to maintain an average annual output of around 32 million carats over the next 40 years. It is likely to aim much higher in the short term and the company has embarked on a development strategy to increase output to around 39 million carats by 2018. Production in 2010 rose 5 percent year on year to 34.3 million carats, slightly more than that of De Beers. As part of the new strategy, ALROSA’s executive committee in May approved an exploration program that is expected to increase its resource base by 100 million carats through the next seven years.

Company president Fyodor Andreyev estimated in a recent interview that Russia has the world’s largest reserves. By volume, the country has long been the number-one producer of diamonds, although its low average prices — about $79 per carat in 2010 — generally push it to second place in the value standings, behind Botswana. De Beers does not disclose its diamond resource data.

ALROSA appears to have embarked on a public relations campaign, albeit subtle, to entrench its leadership position. While being labeled number one or two may be a trivial matter, it is important for ALROSA to show it has the longevity and growth prospects that investors seek. The company is reportedly hoping to raise over $3 billion in a listing that will make up to 25 percent of its ownership available to the public. It plans to use the funds to finance its development strategy, reduce debt, and invest in technological and equipment upgrades.

With the volumes of rough coming through, and given the strong outlook for diamond demand, the company does not appear to have a hard sell. Last year was an all-round successful one for ALROSA, as it was for most diamond mining companies, spurred by strong demand and price increases that are expected to continue in 2011. Diamond sales rose 53 percent to $3.9 billion (RUB 101.27 billion) and net profits nearly tripled to $422 million (RUB 11.73 billion), according to its recently published IFRS financial statements. Significantly, the company

reduced its diamond inventory by 20 percent, or about 5.2 million carats, to end the year with diamond stock valued at $557 million (RUB 15.84 billion).

While the numbers fall short of De Beers rough sales of $5.8 billion and earnings of $546 million in 2010, they are large enough to count, especially for a public company. As a result, from an industry perspective, the listing will offer an important gauge with which to measure the state of the market and investor sentiment toward the diamond sector.

Therefore, it is hoped that the new prospective shareholders will require a level of transparency from ALROSA that will prevent it from misusing its position in the market. There do remain concerns surrounding the company, most notably that it facilitates the Russian stockpiling of diamonds through its sales to Gokhran. In addition, as a pure mining company, ALROSA appears to be focused too squarely on its market position — a sensitive issue for an industry dominated by one player for so long.

But of course, that may just be pre-IPO talk. The listing could well mark the beginning of a new era for the diamond industry with the introduction of a second market maker on an equal playing field with De Beers. Let’s hope that ALROSA uses its growing size and importance not only to woo investors, but to enable free, market-driven trade.

The writer can be contacted at avi@diamonds.net.

This article is an excerpt from a market report that is sent to RapNet members on a weekly basis. To subscribe, go to www.rapnet.com or contact your local Rapaport office.

Copyright © 2011 by Martin Rapaport. All rights reserved. Rapaport USA Inc., Suite 100 133 E. Warm Springs Rd., Las Vegas, Nevada, USA. +1.702.893.9400. 

Disclaimer: This Rapaport Weekly Market Report is provided solely for your personal reading pleasure. Nothing published by The Rapaport Group of Companies and contained in this report should be deemed to be considered personalized industry or market advice. Any investment or purchase decisions should only be made after obtaining expert advice. All opinions and estimates contained in this report constitute Rapaport`s considered judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Thank you for respecting our intellectual property rights

Activity in the Oil and Gas sector (including regulatory)

REFILE-Russia's Transneft says 2010 profit fell 1 percenthttp://af.reuters.com/article/energyOilNews/idAFLDE75204P20110603

Fri Jun 3, 2011 6:28am GMT

(Corrects to remove superfluous apostrophe in first paragraph)

MOSCOW, June 3 (Reuters) - Russian oil pipeline monopoly Transneft (TRNF_p.MM) said on Friday its 2010 net profit attributable to shareholders fell 1 percent to 119.2 billion roubles ($4.27 billion).

Overall profit rose to 125.5 billion roubles from 121.9 billion roubles a year ago.

The company, which owns most of the oil and refined product pipelines in Russia, said its sales, under International Financial Reporting Standards (IFRS), climbed to 447.5 billion roubles from 351 billion last year. (Reporting by Vladimir Soldatkin; Editing by Lidia Kelly) ($1=27.95 Rouble)

Transneft 2010 net profit grows 3 pct to 125.5 bln rblshttp://en.rian.ru/business/20110603/164410684.html

11:18 03/06/2011

Russia's state-run oil pipeline monopoly Transneft's net profit for 2010 edged up three percent to 125.5 billion rubles ($4.48 billion) to IFRS, Transneft said on Friday.

Transneft's revenues rose 27.5 percent year-on-year to 447.532 billion rubles, the company said in a statement.

Operating costs jumped 50 percent to 280.036 billion rubles, while pre-tax profit increased 1.2 percent.

Transneft's long-term liabilities rose 11 percent from December 31, 2009 to 734.03 billion rubles as of December 31, 2010, including loans and borrowing, which grew 5.8 percent to 583.148 billion rubles.

Short-term liabilities jumped 40.5 percent to 111.168 billion rubles, including the company's accounts payable and other liabilities, which soared 53 percent to 97.966 billion rubles. Loans and borrowing fell six percent to 10.655 billion rubles.

MOSCOW, June 3 (RIA Novosti)

Surgut oil reserves replacement at 136 pct-Ifaxhttp://www.reuters.com/article/2011/06/03/russia-surgutneftegaz-idUSLDE75202N20110603

1:35am EDT

MOSCOW, June 3 (Reuters) - Oil reserves replacement ratio at Russia's fourth-largest oil company, Surgutneftegaz (SNGS.MM: Quote, Profile, Research, Stock Buzz), stood at 136 percent in 2010, Interfax news agency reported on Friday citing company report.

It said the company's extractable oil reserves rose by 81 million tonnes last year when it produced 59.5 million tonnes of oil.

(Reporting by Vladimir Soldatkin; editing by Lidia Kelly)

Gazprom

Gazprom CEO says Ukraine to remain transit country for Russian gas after commissioning of new pipelineshttp://www.kyivpost.com/news/nation/detail/105942/

Today at 10:45 | Interfax-Ukraine Ukraine will remain a transit country for Russian gas after the construction of the Nord Stream and South Stream gas pipelines, chief executive of Russia's Gazprom Alexei Miller has said.

According to him, the capacity of the Nord Stream and South Stream pipelines does not lessen the importance of gas transit through Ukraine.

Miller stressed that the target markets of the Nord Stream pipeline are Germany, France, Belgium and Britain and other countries will continue to receive gas through via the existing route.

He added that if the problems with transit countries arise, then with the introduction of new export capacities, the volume of gas could be redistributed.

Read more: http://www.kyivpost.com/news/nation/detail/105942/#ixzz1OCJ1V96b

Gazpom chief says Nabucco pipeline to take longer than planned to be put in servicehttp://www.kyivpost.com/news/russia/detail/105925/

Today at 06:26 | Interfax-Ukraine The chief executive of Russia's Gazprom has predicted that the planned Nabucco natural gas pipeline will take much longer to be put in service than scheduled.

It would be "very, very optimistic" to forecast a delay of two years, Alexei Miller told reporters.

At the same time, the South Stream gas pipeline project is following its schedule strictly, Miller said. "Everything is scheduled month by month," he said.

Feasibility studies for individual sections of South Stream are ready, and the combined feasibility study will undergo its final review in August, Miller said. After that the route would be definitively set for South Stream, as would the locations of all the points at which gas would flow into or out of the pipeline, and the total volume of investments would be named.

South Stream needs estimated investments of 15.5 billion euros, a 10-billion-euro share of this being an estimated cost of the pipeline's offshore part.

Read more: http://www.kyivpost.com/news/russia/detail/105925/#ixzz1OBmqSAj8

RPT-UPDATE 2-Gazprom set for more after huge India deals-sourcehttp://in.reuters.com/article/2011/06/03/gazprom-lng-idINSGE75200120110603

8:04am IST

(Repeats story issued late on Thursday)

* Gazprom eyeing Europe, N. America deals-source

* Three Indian buyers to get 7.5 million tonnes per year

* Indian deals could be worth over $90 bln

* Shtokman, Sakhalin upgrade, third parties to supply (Recasts, adds Indian delivery details, analyst)

By Vladimir Soldatkin

MOSCOW/NEW DELHI, June 2 (Reuters) - Russian gas exporter Gazprom (GAZP.MM: Quote, Profile, Research), having just signed a trio of deals in India that could be worth

over $90 billion, now has it sights on the markets of Europe and North America, a source close to the company said on Thursday.

Similar deals are expected to be reached in the near future with a view to selling liquid natural gas (LNG) in both markets, the source said.

"In Europe, Gazprom is looking into France and Spain," he said.

Gazprom on Wednesday signed memorandums of understanding to supply three Indian customers with an additional 7.5 million tonnes of LNG per year.

The deals could be worth more than $90 billion based on market prices of $10 per million British thermal units.

Gazprom said its Gazprom Marketing and Trading Singapore (GM&TS) was the agent in MOUs signed with GAIL (GAIL.NS: Quote, Profile, Research), Gujarat State Petroleum Company (GSPC) and Petronet LNG Limited (PLNG.NS: Quote, Profile, Research).

"GM&TS will provide LNG to its Indian partners from its current and projected Gazprom production, such as Sakhalin, and will be supplemented by its wider Russian and international supply portfolio," Gazprom said in a statement.

The source said that Gazprom is set to boost its LNG deliveries to India starting from 2016-2018. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Russia's plans to expand in LNG: [ID:nLDE75010N] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The gas is expected to come from Gazprom's new projects, including Shtokman in the Barents Sea, increased capacity planned at its existing plant on the Pacific island of Sakhalin and from volumes bought from third parties.

"By itself, I don't think it is able to tighten the European market as Russia still has a lot of spare capacity and is not a LNG supplier to Europe today. Pipe gas to Europe will continue to be their main exports," said Emmanuel Fages, head of power, gas, carbon and coal research at Societe Generale Commodities and orbeo.

"Despite the buzz about the Japanese impact on Qatar spare capacity, I think Qatar still has room and can continue being one of the main LNG suppliers to Europe. Then Australia will also kick in, adding slack."

India is seeking overseas energy deals to help cushion against global price fluctuations and to secure energy supply for a country that relies on imports for two-thirds of its oil.

Its gas demand could double by 2020 as the economy expands by around 8 percent a year and as LNG is looked to as an alternative to carbon-heavy oil and coal.

The annual volume covered by the Indian deals is equivalent to the projected annual LNG output of Shtokman, a Gazprom-led venture with France's Total (TOTF.PA: Quote, Profile, Research) and Statoil (STL.OL: Quote, Profile, Research) as partners.

LNG from Shtokman is scheduled to come on stream in 2017 though the project still lacks a final investment decision and construction has yet to start in earnest. (Additional reporting by Henning Gloystein in London; editing by Jason Neely)

June 2, 2011, 2:47 p.m. EDT

Gazprom's Miller touts China-pact progresshttp://www.marketwatch.com/story/gazproms-miller-touts-china-pact-progress-2011-06-02

By Sean Carney

(Adds details and more comments beginning with the third paragraph.)

- Gazprom gas and pipeline deal in China nearing conclusion

- Russian company seeks strategic investment in European peers, gas storage capacity in Europe

- High global demand to drive natural gas price to $500 per 1,000 cubic meters by year end

PRAGUE (MarketWatch) -- Russia's OAO Gazprom is near closing on a natural gas supply and pipeline deal with China and is also seeking ownership stakes in European utility and gas storage assets as natural gas prices rise with global demand.

"We have reached certain progress" on the planned deal with China, Alexei Miller told reporters, but didn't confirm the June 10 deadline on the deal mentioned earlier this week by Russian Deputy Prime Minister Igor Sechin.

While not confirming whether the two sides had agreed on the price at which Gazprom would sell gas to China, Miller said Gazprom would likely contribute a maximum of 30% to the cost of building the pipeline while at least 70% would be borrowed.

Apart from Asia, Gazprom seeks to invest in Europe, Miller said.

The Russian company would like to acquire gas storage capacity in Europe equal to 5% of its total deliveries to there. Such an investment could be made in Austrian gas storage facilities which are being developed and will be among Europe's largest, he said.

Gazprom would also be willing to entertain offers to make strategic investments in German utility E.ON AG (EOAN.XE) or its natural gas subsidiary, E.ON Ruhrgas, but it hasn't been approached with an offer of a stake in either company yet.

Miller said Gazprom would only consider investments for strategic purposes and not just financial investments, but he stopped short of saying Gazprom sought majority stakes in the companies.

And amid natural gas supply disruptions in North Africa and rising demand in Japan and Germany, Miller said he expects long-term natural-gas contract prices negotiated in the fourth quarter to reach $500 per 1,000 cubic meters.

He added that natural gas prices will remain tied to the price of a basket of oil products for at least the next five years.

German officials recently said the country would compensate for electricity generation capacity lost due to nuclear shutdowns by increasing power production via renewable resources. But Miller said utilities are instead quickly seeking to boost gas-fired power production.

"The heads of the European companies are coming to Gazprom and saying [they] need new volumes of gas for gas-fired electric plants," Miller said.

Go to http://blogs.wsj.com/emergingeurope/ for the new Dow Jones blog on Central and Eastern Europe, covering business, politics, society and more, written by our correspondents across the region

Europe wants more gas for power generation, Gazprom saysYesterday at 18:22 | Interfax-Ukraine Prague, June 2 (Interfax) - Europe is asking for new supplies of gas for power generation, Gazprom CEO Alexei Miller said at the European Business Congress in Prague.

"The head of the European companies and regions are coming to Gazprom and saying: we need new volumes of gas for gas-fired electric plants in Europe," he said.

"There has been a tectonic shift on the market in hydrocarbons. They are so significant that we haven't been able to appraise them and analyze them, because they are continuing, in North Africa, in Japan. Our job is to respond adequately to these challenges from the standpoint of producers and consumers," he said.

"Does Europe need another Libya for the sake of reducing dependence on Russia?" Miller said.

Read more: http://www.kyivpost.com/news/russia/detail/105882/#ixzz1OC2ND5Nc

Gazprom eyes direct gas supplies to European power plants

http://www.rbcnews.com/free/20110603103827.shtml

      RBC, 03.06.2011, Prague 10:38:27.Gazprom is interested in delivering natural gas directly to European electric power plants, especially to German facilities, the Russian gas monopoly's CEO Alexey Miller told reporters late Thursday.

      "We're especially interested in direct gas supplies to gas-powered plants. They will enable us to generate profit from this line of business and our future work in Europe will focus on this area," Miller said. Additionally, Gazprom plans to focus more on the electric power business.

      Miller also said that the demand for liquefied natural gas in the Asian region sharply rose after the disaster at Japan's Fukushima nuclear power plant. He denied rumors that Gazprom had received offers to buy stakes in German energy companies E.On or Ruhrgas.

Gazprom to Open Sochi Gas Pipeline http://www.themoscowtimes.com/business/article/gazprom-to-open-sochi-gas-pipeline/438098.html

03 June 2011Interfax

PRAGUE — Gazprom will make the Dzhubga-Lazarevskoye-Sochi gas pipeline operational on June 6.

"We will have a gala occasion on Monday, June 6 — the launch of the maritime gas pipeline Dzhubga-Lazarevskoye-Sochi," Gazprom chief executive Alexei Miller said in Prague at a meeting of the European Business Congress.

Construction of the gas pipeline began on Sept. 28, 2009. Now gas arrives in the Black Sea resort town of Sochi via the Maikop-Samurskaya trunk pipeline at a rate of 1.5 billion to 2 billion cubic meters per year.

The new pipeline runs 177 kilometers, including an underwater segment of 159.5 kilometers across the Black Sea floor about 4.5 kilometers offshore to the Kudepsta automated gas-distribution station near Sochi. The pipeline comes ashore near the towns

of Dzhubga, Novomikhailovsky, Tuapse and Kudepsta. The Dzhubga-1, Dzhubga-2, Novomikhailovskaya and Tuapse automated gas-distribution stations have already been built. The pipeline has a diameter of 530 millimeters and daily throughput of about 3.8 bcm of gas.

The pipeline will make it possible to supply energy to the capital of the 2014 Winter Olympics and provide gas to Olympic facilities. It will serve as a stimulus to the gasification of Sochi and the Tuapse area, and reduce energy shortages in the resort zone on the Caucasus coast of the Black Sea.