The Moscow Times

Metro Director Gayev Leaves

2011-02-08T03:49:00.001+03:00

By Roland Oliphant

Moscow metro chief Dmitry Gayev became the latest Luzhkov-era official to fall on his sword Monday as Mayor Sergei Sobyanin seeks to remedy a growing fraud scandal and install his own team in key municipal posts.

Gayev, who had headed the Moscow metro since 1995, was relieved of his duties “at his own request,” a curtly worded statement posted on the City Hall web site said Monday.

He will be replaced by Ivan Besedin, 57, a career railwayman who has led the Kaliningrad region's railways since 2006. The city has signed a five year contract with Besedin, according to the statement.

As a long-term member of former Mayor Yury Luzhkov’s circle, rumors had been circulating about the stability of Gayev’s position following Luzhkov’s ouster in September last year.

It became clear that Gayev's time was up after the Auditing Chamber reported on Friday that Moscow transport chiefs had misspent $7.3 billion, or about 37 percent of their total budget, between 2008 and 2010. That included 3.3 billion rubles ($110 million) misspent by the Moscow metro.

Deputy Mayor for transport Nikolai Lyamov responded to Friday’s report by calling the rumors about Gayev's ouster “baseless.”

Sobyanin ordered a wide-ranging investigation into the metro's finances in November.

In mid-December, the Prosecutor General's Office asked Sobyanin to consider dismissing Gayev after it found “violations on the side of the Moscow metro management.”

Specifically, prosecutors alleged that Gayev embezzled 112 million rubles ($3.8 million) through a complex scheme of latching on to intellectual rights and royalties to technical inventions created by metro engineers and supplier companies.

The prosecutors said the metro chief patented new equipment — including automatic payment machines, video monitoring and ventilation systems, and unique technologies for building stations deep underground — as his own inventions, then earned millions in payments and royalties from partners who sold his inventions to the metro. Gayev denied the charges.

The prosecutors also accused him of “entering into contracts that adversely affected ticket prices” — a comment that suggested the metro chief could be made the fall guy for deeply unpopular annual tariff increases.

Viktor Dvurechensky, head of the city's Control and Auditing Chamber, echoed the accusation Friday when he reported that the metro had misspent 3.3 billion rubles ($1 billion), but had increased revenues by hiking ticket prices in the face of falling passenger numbers.

The latest hike, on Jan. 1, raised the price of a one-trip ticket from 26 to 28 rubles.

Dvurechensky added that a long-term exclusive contract between the metro and the Olimp advertising firm resulted in a loss of advertising revenues of 10 to 20 percent, while delays and inefficiencies had inflated the cost of building new stations by 30 percent.

It is unclear whether Gayev, who has refused to comment on “rumors,” will end up in court.

The auditors said Friday that it was too early to say whether the overspending they had uncovered constituted criminality.

But Alexei Mukhin, head of the Moscow-based Center for Political Information, said it was inevitable that someone's head would roll over the scandal, though it remains “unclear whether charges would be brought against Gayev himself, or someone in his circle.”

Besedin, who left Kaliningrad for Moscow on the 21-hour Yantar express on Saturday, told a reporter from the Regnum.ru web site who button-holed him as he embarked that “I can't yet say that I've been signed, so I'm not going to discuss it.”

Mukhin said the choice of replacement is in keeping with Sobyanin's strategy of drawing on experience from across the country.

The new metro leader will be charged with improving the inefficiencies uncovered by the Audit Chamber and delivering on Sobyanin's promised to build 53 kilometers of new track by 2014.

Besedin is not new to the capital. A graduate of the Moscow Institute of Rail Transport, he served a brief stint as a deputy head of Moscow Railways between 1999 and 2000, according to a biography on the Russian Railways web site.

He is also a former first deputy railways minister and deputy head of Russian Railways, and headed the All-Russian Railway Research Institute before moving to Kaliningrad in 2006.

In Kaliningrad he honed his international collaboration skills by successfully coordinating a complex rail service that runs through Minsk and Vilnius to link Kaliningrad to Moscow.

Grocery Chains Grow as Recovery Sets In

2011-02-08T03:45:00.008+03:00

By Khristina Narizhnaya

At the end of 2010, there were 7,439 big retail
chain outlets countrywide.

The supermarket was all abuzz, with long lines at the checkout counter and more shoppers filing in — a normal scene in an emerging market — but it was after 11 p.m.

"We need more big, quality supermarkets," said Oleg Silchenko, 29, who shops at Karousel, a hypermarket chain owned by the X5 Retail Group, near his home in northwestern Moscow. He usually has to wait in a long line, especially in supermarkets with good prices and selection.

As the country emerges from the recession, the dynamic energy of the food retail business can be felt around the clock, as more and more outlets open, while food prices continue to rise.

On top of that, Russians spend roughly 30 percent of their disposable income on food because of low wages and standard of living as well as the instability of the ruble, said Maxim Klyagin, an analyst with the investment holding Finam. Americans spend less than 10 percent.

With a total turnover in 2010 of 7.1 trillion rubles ($239 billion), the retail food market is growing at 13 percent — more than twice the rate of the economy as a whole — and leading retailers are seeing growth of 30 to 40 percent.

"Supermarkets are one of Russia's greatest success stories in the last few years," said Roland Nash, chief strategist at Verno Capital.

As outdoor markets and kiosks continue to lose space, supermarkets and hypermarkets gain from their diminishing presence.

"Retail stores near them will get their customers," said Tigran Hovhannisyan, a food retail analyst with UralSib bank.

Outdoor food markets accounted for 12.8 percent of all food sales in 2009, according to the State Statistics Service. Last year's statistics are not out yet, but Klyagin said they would probably lose more market share.

Last year saw the closing of hundreds of kiosks and more are slated to shut. Mayor Sergei Sobyanin has continued his attack on kiosks after finding them too numerous in September. The newest steps in the kiosk overhaul include trade specializations and remodeling of kiosks into three design options.

Deputy Economic Development Minister Andrei Klepach said last month that inflation in 2011 could be more than the projected 7 percent and that food prices will continue to grow.

"We were not able to stop rising food prices yet. There is still a big risk of a significant increase in grain prices this spring, which means that bread and meat prices will rise too," Klepach said.

The government may exercise its power to control food prices and impose maximum prices for some foods, including potatoes and other fruit and vegetables, Reuters reported in January.

Food prices rose 12.9 percent last year and 1.4 percent in January 2011, the State Statistics Service said.

Rising prices are the main driver for food retail growth. "No matter what, the people will always buy food," said Hovhannisyan.

The X5 Retail Group, the largest food retailer, plans to open 540 new stores all over the country. Magnit, the supermarket chain with the greatest geographic coverage, is to open 800 convenience stores and 55 hypermarkets. Discount chain Dixy hopes to open 150 convenience stores in Moscow and the regions, and intends to attract customers with a new logo, more efficient operations, sales and discount cards.

This expansion will build on last year's boom, in which X5 added 1097 new stores, including 660 stores via its acquisition of competitor Kopeika. Magnit opened 827 stores, compared with 646 openings in 2009. Dixy had 646 stores open in the end of 2010, up from 623 open the previous year. With last week's purchase of rival Victoria Group supermarket chain, Dixy will own 901 stores. Sedmoi Kontinent had 146 stores at the end of the year mostly in and around Moscow, compared with 139 a year earlier.

This brings the total number of big retail chain outlets to 7,439 nationwide, or roughly 19,000 people per supermarket.

The battle for customer mindshare is heating up. X5 opened the first retail food consumer research laboratory in Russia with the ROMIR polling agency last December. Dixy is reorganizing operations to offer more efficient service, and working to decrease storage space costs by increasing turnover rates.

Food retail chains in the country offer double-digit revenue growth potential over the long term — a rate unmatched anywhere else in the world, said Hovhannisyan, of UralSib.

"The big chains can afford to keep opening more stores because they are so big," Klyagin said.

X5's net revenue for 2010 was 341.6 billion rubles ($11.2 billion). Magnit earned 7.1 billion rubles ($241 million) for the same period.

The historical trend has been equally impressive, as domestic food retail grew by 22 percent between 2002 and 2009. For comparison, the U.S. food retail market grew by 3.2 percent over the same time period, according to the UralSib report.

But the market is highly fragmented, with none of the major players having more than 4 percent share, according to UralSib.

The country's 10 largest food retailers hold about 11 percent of the market, while the 10 largest American grocery store chains hold about 33 percent in their market.

A consolidation trend began in 2006 when X5 was formed by the merger of supermarket chains Pyatyorochka and Perekryostok. In 2009 X5 acquired the Dutch-owned Paterson hypermarkets, and in December of last year it bought the Kopeika discount chain with its nearly 700 outlets.

As the overall consumer market continues to recover, renewed growth potential leads to even more high-profile deals in the food sector.

Dixy announced last week that it would acquire the Victoria supermarket chain for about 20 billion rubles ($680 million). Sedmoi Kontinent owner Alexander Zanadvorov bought a 15 billion ruble ($497 million) stake of the Mosmart hypermarket chain, according to reports republished on the Mosmart web site in January.

Klyagin said small domestic mergers would continue for the next few years. When companies are large enough, more foreign investment will come back.

Initial public offerings, like the one in which St. Petersburg-based O'Key Group raised $420 million in London in November, will remain a vehicle for outside investment.

But other analysts think that the time for direct foreign participation has come because of the sector's strong growth.

Although market penetration is low and the business fragmented, said Nash of Verno Capital, "the natural progression" for emerging markets is consolidation and increasing foreign investment. "Russia is big, so both will probably take place simultaneously," Nash said.

Metro and Auchan are the only foreign-owned food retail chains now working in the country. French-based Auchan operates more than 30 hypermarkets in Russia, while Germany's Metro operates more than 90 stores all over the country.

Shortly after X5 announced its Kopeika deal in December, the world's largest retailer, Wal-Mart, who had also tried to acquire Kopeika, closed its Moscow office.

Wal-Mart cited the lack of a suitable merger target as the reason for leaving.

"Since we have decided to enter the market through acquisition … and since there is no clear acquisition partner in the near term, there is not a business reason to continue our Moscow representative office," Doug McMillon, chief executive of Wal-Mart International, said in a statement Dec. 14.

But analysts believe that the dearth of partners is not the only reason for Wal-Mart's departure.

There is definitely an issue of scale when it comes to foreign investment in retail, but there may be another reason why Wal-Mart left, Nash said.

"They may be squeamish to invest in Russia right now," he said.

Hovhannisyan said Wal-Mart left because of a "landscape of corruption." Many American and European companies can't risk violating their own ethics codes by giving bribes, which are frequently necessary, especially during building and development.

"You can't get ahead here without corrupt practices," Hovhannisyan said.

Liberal Party Mulls Registration

2011-02-08T03:42:00.003+03:00

By Nikolaus von Twickel

Opposition leader Nemtsov speaking at a Saturday event to form a local branch of the Party of People’s Freedom.

Liberal leaders have pledged to get a new party registered as the country prepares for the State Duma and presidential elections, but skeptics doubt if the apparently futile effort is worth it.

Leaders of the Party of People’s Freedom were adamant Monday that even if chances were slim, it was vital to file for registration to establish political credibility.

"Yes, it will be hard, but we need to demonstrate to voters that we want to work for them," party co-founder Vladimir Milov told The Moscow Times.

Current law requires political parties not represented in the State Duma to prove that they have at least 45,000 members in more than half of the country's 83 regions to be registered.

At a party convention in Moscow over the weekend, activists promised to set up organizations in 57 regions and to collect more than 50,000 members before applying for official registration with the Justice Ministry in April.

First styled under the name For a Russia Without Arbitrariness and Corruption, the coalition was revamped in December as the Party of People’s Freedom under the acronym "Parnas" — the Russian name for Mount Parnassus, home of the Muses in Greek mythology.

But analysts said Parnas was unlikely to obtain registration as no entirely new party has managed to do that since the 45,000-member threshold was introduced for the 2007 Duma elections.

"It seems that this is only possible by using existing party structures or uniting with them," Alexei Makarkin of the Center for Political Technologies said about registration for new parties.

He cited the example of Right Cause, a liberal party formed in 2009 with Kremlin support on the basis of the Union of Right Forces.

Each of the four Party of People’s Freedom founders — Mikhail Kasyanov, Boris Nemtsov and Vladimir Ryzhkov in addition to Milov — has his own political movement, but none of those are officially registered.

The Justice Ministry has also rejected registration requests from other movements created by prominent opposition leaders, including Sergei Udaltsov's Left Front and Eduard Limonov's The Other Russia.

Leading members of Nemtsov's Solidarity, the best-known of the four, have argued that filing for registration is futile because the Kremlin would never allow uncompromising political opposition to partake in elections.

"The problem is that there is practically no chance to get registration. Because of this, it is questionable why so many resources should be spent on it," said Oleg Kozlovsky, a member of Solidarity's political council.

While he said he does support People's Freedom, he would abstain from working on the task of getting political registration for it, Kozlovsky said.

Instead, he will focus on forming a new noncommercial organization to strengthen civil society. "With such a weak civil society, parties are useless. This is where we have to start," Kozlovsky said.

Another prominent Solidarity leader, former chess master Garry Kasparov, has so far refused to support Parnas publicly.

But Denis Bilunov, a co-leader of both Solidarity and Kasparov's United Civic Front, said that most of Kasparov's supporters would side with the new political party.

Another Solidarity leader, Ilya Yashin, who was chosen to head the Party of People’s Freedom's Moscow branch, said that at a Solidarity convention in December only 13 of some 200 participants voted against seeking registration for Parnas and that it was a moral duty to file for it.

"It is very important to show voters that we have the organizational capability and the moral right to criticize the government," he said by telephone Monday.

Milov, who quit Solidarity last summer, accusing it of being a "dwarfish organization", said that such arguments go down poorly with voters.

"It will be very hard to explain to them why we did not even try to take part in elections. I believe we have a duty to offer the possibility to vote for a real alternative to [Prime Minister Vladimir] Putin's regime," he said.

Makarkin of the Center for Political Technologies said that, apart from the registration issue, the movement was beset with ideological differences.

Solidarity was dominated by left-wing human rights activists, while Kasyanov, an ex-prime minister, and his former Deputy Energy Minister Milov represented the other end of the political spectrum, he said.

"This will hardly make a stable coalition," Makarkin said.

Telecoms Band Together to Sponsor Online 'Cybermilitia'

2011-02-08T03:39:00.004+03:00

By Natalya Krainova

The League for Safe Internet is formed by Mobile TeleSystems, VimpelCom, MegaFon and Rostelecom. The companies want to fulfill their "social responsibility," Malofeyev, who also sits on Rostelecom's board, said by telephone.

Four telecom giants have banded together with the government's support to sponsor a "cybermilitia" seeking to combat child pornography and promotion of extremism, violence and drugs.

The group declared no political goals, but vague wording about fighting "negative content" has prompted skeptics to warn that the new project can result in the establishment of a system of censorship similar to the one existing in China.

The League for Safe Internet is formed by Mobile TeleSystems, VimpelCom, MegaFon and Rostelecom, chairman of the group's management board, Konstantin Malofeyev, told The Moscow Times on Monday.

The companies want to fulfill their "social responsibility," Malofeyev, who also sits on Rostelecom's board, said by telephone.

Communications and Press Minister Igor Shchyogolev will head the league's board of trustees, which will oversee how nongovernmental organizations manage grants they receive from the group.

Speaking at a news conference in Moscow on Monday, Shchyogolev called on volunteers to monitor and report illegal online content, state television Vesti reported.

Another member of the trustees' board, children's ombudsman Pavel Astakhov, said at the conference that Internet users should exercise self-censorship by not posting "negative," "disgusting," "extremist" or "dangerous" information online.

"Children draw on [such content] from the Internet uncontrollably and can use it to harm themselves and other people," he said.

Child pornography will be the sole focus of the league this year, but it plans to take on other issues later, Malofeyev said.

"If we succeed in this, we can move on," he said, without elaborating.

Malofeyev refused to specify the group's budget, but said nongovernmental organizations and law enforcement agencies fighting Internet crime are often underfunded.

Prominent journalist and blogger Maxim Kononenko said on his show on Vesti FM radio Monday that Malofeyev may create a "mechanism to declare some content extremist, or promoting violence or drugs."

The mechanism may later be sold to "someone who might want to buy it ahead of [December] parliamentary elections," Kononenko said, without identifying possible purchasers.

Internet guru Anton Nosik said a "cybermilitia" is already active in China, where volunteers screen web sites for content to report to police, Gazeta.ru reported Friday.

But representatives of existing online watchdogs welcomed the new group.

"All our projects are rather costly," Yevgeny Bespalov, head of the Friendly Runet Foundation, told The Moscow Times by telephone.

He said he has accepted an offer to sit on the league's supervisory board, though the appointment was not confirmed as of late Monday.

"Our organization, which has little funding, can't inform many people about threats of the Internet," said Mark Tverdynin, who chairs the board at the Russian Public Center for Internet Technology.

The Friendly Runet Foundation has on its web site a telephone hotline for reporting crimes on the Internet and it forwards the information to the Interior Ministry.

The service is in demand, as independent watchdogs received 14,000 complaints about illegal online content last year, said the head of the Safer Internet Center, Urvan Parvfentyev, Gazeta.ru reported.

An unidentified police representative said only a small portion of calls results in criminal cases being opened, the report said.

The League for Safe Internet's supervisory board, which will distribute the grants, is headed by Alexei Soldatov, an ex-communications and press minister and a founding father of the Russian segment of the Internet.

The board of trustees also includes chief of the Mail.ru service and president of the business lobby group Delovaya Rossia, as well as representatives of the four sponsor companies, federal legislators and senior government officials.

Mascots Audition for Olympics

2011-02-08T03:36:00.003+03:00

By Anatoly Medetsky

Four athletic matryoshkas are among the contenders vying for mascot.

The potential mascots for the 2014 Winter Olympics in Sochi premiered on the air Monday night in the first public presentation of the images after months of collecting ideas and design work.

Only two of the 10 mascots — shown on Channel One — will eventually represent the Olympic and Paralympic Games. Viewers will vote for the candidates during a “grandiose” show on the channel at the end of this month, the government's Sochi 2014 Organizing Committee said.

The committee started collecting ideas for the mascot online on Sept. 1, raking in more than 24,000 images by the close of the competition on Dec. 5. Afterward, a jury, including Channel One chief executive Konstantin Ernst, theater and film directors, athletes and musicians, selected ideas for professional designers to further develop.

One powerful voter, Prime Minister Vladimir Putin, said in September 2009 that a snow leopard would make a good Olympic mascot as “a sign of the rebirth of wildlife.” He made the comment when he and Jean-Claude Killy, the International Olympic Committee's coordination commission chairman, attended an official handover of two snow leopards to a nature reserve near Sochi as a present from Turkmenistan, in an effort to breed them again in a region where they have been extinct for decades.

Alexander Vinogradov, a creative director at design company Agey Tomesh, favors the leopard as well.

“It would be superb for television promotions,” he said. “You could put it on a sled, skates or skis. The image is strong and vigorous. The others are too childish.”

Shuvalov Nominated for Exhibition Center Board

2011-02-08T03:33:00.007+03:00

By Irina Filatova

The All-Russia Exhibition Center is slated
for a $4 billion reconstruction.

First Deputy Prime Minister Igor Shuvalov could join the board of directors of the All-Russia Exhibition Center — the Soviet era complex formerly known as VDNKh — to oversee its 120 billion ruble ($4 billion) reconstruction, officials said Monday.

The exhibition center's board of directors will be re-elected at the annual shareholders meeting scheduled for June, said Vladimir Kuleshov, a spokesman for the All-Russia Exhibition Center.

"There is a list of candidates to be tapped for the new board. Apparently, a new chairman of the board will also be elected at the meeting," Kuleshov said, declining to reveal other names in the list.

Shuvalov's spokesman confirmed to The Moscow Times that the first deputy prime minister had been nominated, but didn't elaborate. It's unclear whether Shuvalov will become chairman.

The board of directors of the All-Russia Exhibition Center, whose roster changes every year, is currently chaired by Yury Medvedev, deputy head of the Federal Property Management Agency.

The federal government owns a 70 percent stake in the All-Russia Exhibition Center, with the remaining 30 percent belonging to City Hall.

If elected, Shuvalov would likely preside over reconstruction of the exhibition center, which is likely to start this year after an ambitious plan to develop the venue through 2034 gets final approval, Kuleshov said.

According to the plan, which was jointly created by the management of the exhibition center and Dutch firm TCN, a total of 120 billion rubles needs to be invested in the project.

Businessmen Zarakh Iliyev and God Nisanov, who own Yevropeisky trade center, Ukraina Hotel and other projects in Moscow, are considering a partial stake in the project, their representatives told Interfax on Monday.

Both Shuvalov's spokesman and Kuleshov said they were unaware of the businessmen's interest.

Shuvalov's role is a positive sign for the project since it "undoubtedly won't make it without the government's participation," said Georgy Dzagurov, chief executive at consulting company Penny Lane Realty.

Shuvalov's name on the project could attract foreign investors, who value strong government support, Dzagurov said, adding that the return on investment period is likely to be 12 to 15 years after completion.

The All-Russia Exhibition Center, whose total area accounts for 237 hectares, was founded more than 70 years ago as a showcase to demonstrate the mighty successes of the Soviet economy.

The reconstruction plan posted on the exhibition center's web site stipulates four directions of the venue's development, including reconstruction of the historical area, modernizing exhibition halls, improving catering services and creating a recreation zone.

Moscow already has enough exhibition venues, so it makes sense to develop the All-Russia Exhibition Center as a recreation zone, Dzagurov said.

"It's a big historical venue, which needs to be developed," he said.

Navalny's Suit Vs. Transneft Goes to Court

2011-02-08T03:32:00.001+03:00

By Olga Razumovskaya

Whistleblower Navalny, who is also a minority shareholder at the state-owned monopoly pipeline operator, filed the suit in late December, the Russian Agency of Legal and Court Information reported Monday.

The first suit was filed in April 2010 but was rejected by the court for lacking the blogger's signature, the agency reported.

In mid-November Navalny posted on his blog information related to allegations of Transneft's $4 billion fraud during the construction of the 4,857-kilometer East Siberia-Pacific Ocean pipeline in 2006.

The news was quickly picked up by bloggers and the media across Russia, prompting Prime Minister Vladimir Putin to seek a comprehensive investigation of the fraud claim in late December.

In January, Yabloko opposition party head Sergei Mitrokhin posted on his blog a letter from the Audit Chamber citing "strategic interests, defense capability and state security" as reasons to classify the results of its 2008 investigation into the fraud claim.

Last November the Audit Chamber investigator also said Transneft had misspent 3.45 billion rubles ($110 million) on the pipeline.

A Transneft spokesman declined to comment "on a court decision that has not yet taken place" when interviewed earlier in the day Monday.

Denis Yevstratenko, co-director of Prosperity Capital Management, a minority shareholder in Transneft preferred stock, called Transneft "nontransparent" in its dealings with minority shareholders.

Navalny may also be benefitting Transneft by filing lawsuits aimed at better corporate governance.

"This lawsuit is good for the company," he said.

Police, Locals Hunt for Hammer-Wielding Thief

2011-02-08T03:31:00.001+03:00

By Alexander Bratersky

Since Jan. 21, five women aged 40 to 60 were attacked at night in the area, known for its sprawling Losiny Ostrov park. All were hospitalized, and one of the victims, Margarita Shuina, died from her injuries.

The suspect, who took the women's bags and valuables, was caught on camera, but neither footage nor victims' accounts were of much use to investigators because the assailant approached the women from behind and kept his face hidden, Investigative Committee spokeswoman Viktoria Tsyplyonkova said Monday.

The victims “said they didn’t see the suspect since he was attacking from behind. It is not possible to recognize his face, since it is covered by a hat,” Tsyplyonkova said, Interfax reported.

Moscow's police chief Vladimir Kolokoltsev pledged in an interview with Ekho Moskvy radio Monday that the “maniac acting in the city's northeast will be captured.”

Meanwhile, area residents have started a group named Patrol to search for the criminal and offer protection, mainly by escorting women home.

The group has identified several suspects, none of whom turned out to be an attacker. It claims to have prevented one attack, calling police after spotting a hammer-wielding man who chased a local teenager, though the suspect fled when officers arrived, Gazeta.ru reported Monday.

The group’s representative, Maria Dudko, told Gazeta.ru that the police appreciate help, but on Monday, several members of Patrol were briefly detained when distributing leaflets about the attack.

“We were told that we are disturbing police work by forcing the attacker to lay low or go to another district,” Patrol member Maria Makhankova told Interfax on Monday.

Moscow police spokeswoman Svetlana Serkina told Komsomolskaya Pravda on Saturday that the locals are “creating panic” by spreading their leaflets.

“They lack skills required to catch criminals. They will get themselves hurt and then blame police,” Serkina said.

Another police spokeswoman told RIA-Novosti on Monday that the criminal is not a psychotic attacker, but apparently a robber, judging by the fact that he was stealing belongings of the victims.

Regardless of the motives, locals are scared.

“I asked my relatives to meet me after work,” said Natalya, an employee with a local Mosmart store who refused to give her last name without elaborating on the reasons. She told The Moscow Times that she has to walk through the park on her way home.

“We are all nervous since we all live here,” an employee of one of the schools in the area said by telephone, without providing her name.

ID, Purpose Needed to Enter Airport Premises

2011-02-08T03:13:00.000+03:00

The Moscow Times

No identification was previously required to enter an airport, and visitors only checked randomly at the doors — a policy that allowed a suicide bomber to make it to the international arrivals hall of Domodedovo Airport and blow himself up last month, killing 36.

The attack prompted the government to introduce a single set of rules on airport safety — as the previous instructions were conflicting or unclear and defined by lower-level bureaucratic directives, Kommersant said.

Prime Minister Vladimir Putin signed the decree last Tuesday, but the move was not made public before, the report said, adding that no deadline for implementing the new rules was introduced.

Visitors will have to explain the purpose of their presence at the airport at checkpoints, and motorists will also have to present documentation for their vehicles, Komsomolskaya Pravda said.

The premises will be fenced and fitted with surveillance cameras transmitting live feeds to several law enforcement agencies, including the Federal Security Service.

The new rules also define areas of responsibility for various bodies overseeing airport safety.

The Interior Ministry will guard outside perimeters of international airports, and security troops of the Transportation Ministry are made responsible for outer defenses of domestic airports. Internal security will be provided by airport security guards, though the management is allowed to use the Interior Ministry's non-departmental guards.

Foreigners Considered for Yukos Review

2011-02-08T03:12:00.001+03:00

Reuters

Khodorkovsky, in jail since 2003, was sentenced in December to six more years behind bars after what his supporters said was a politically motivated theft and money-laundering trial. The United States has sharply criticized the decision.

"A group of professionals, possibly including foreign experts with knowledge of our legal system … is now carefully being considered," council member Tamara Morshchakova told reporters.

Morshchakova said Medvedev was "pleased" when he heard the council's proposal to involve foreigners last week.

Morshchakova, a former justice at the Constitutional Court who has publicly criticized her country's legal failings, stressed that the experts' conclusions "will have no direct legal consequences" on Khodorkovsky's verdict.

Their findings will instead be used to recommend changes to the existing laws on economic crimes, she added.

Hacker Admits Guilt in $10M Theft

2011-02-08T03:11:00.000+03:00

Reuters

Investigators said 27-year-old Yevgeny Anikin was a member of an international hacking ring that copied client account information and boosted the daily maximum withdrawal limit before taking cash out of bank machines across Europe, Asia and the United States.

"I want to say that I repent and fully admit my guilt," Anikin in his final comments to the court in Novosibirsk in Siberia, where he was charged with theft.

Anikin, who was detained in 2009, bought two apartments in Novosibirsk as well as a luxury car.

Another member of the hacker ring was sentenced by a St. Petersburg court to six years in prison in September.

The judge in the case, Lyubov Nazarov, said the verdict and sentence would be announced either on Monday or Friday.

IT Market Nearing Pre-Crisis Glory Days

2011-02-07T03:04:00.006+03:00

By Olga Razumovskaya

President Dmitry Medvedev sitting in front of a computer as he browses a vacancy database in a state-run employment center in Moscow on Friday.

“Extraordinary potential” is how then-Governor Arnold Schwarzenegger described Russia’s technological future during his visit in October, encouraging investors to participate in the Skolkovo innovation hub and tap into the intellectual capital on offer.

While the hub begins to form in the suburbs of Moscow, and may someday bring research and development dividends to President Dmitry Medvedev’s hoped-for diversified economy, the ongoing business of information technology is returning to its pre-crisis glory.

In 2010, Russia's IT market value was an estimated $20 billion, according to International Data Corporation, or IDC, a prominent international IT analytics firm.

For comparison, the U.S. market is estimated at $531 billion, while BRIC leader China had $96 billion in IT business last year.

Last year was “surprisingly good” to the IT industry, said Robert Farish, regional director at IDC for Russia and the CIS, adding that the 30 percent growth was nearly twice what had been forecast.

The potential is evidenced by key industry metrics. With an installed base of 69.1 million personal computers by the end of 2010, the country achieved a penetration rate of 43.6 percent. The Communications and Press Ministry estimates that that will grow to 52 percent by the end of 2011, while last year's 66.4 million regular Internet users will grow to 80.2 million.

Though computer hardware sales returned to pre-crisis levels by mid-2010, and many mid-sized projects were ordered and completed, expected major outsourcing deals — in which companies divest themselves of their IT departments and allow external service providers to do their IT — did not materialize.

This year, industry players expect continuing growth while the government prepares to spend big to provide Internet-based services to the populace. Observers have consistently seen a direct link with Russia’s IT spending and the price of oil. So with black gold approaching $100 per barrel, the market looks good for 2011.

The “election” hiccup, which also results in deferred IT spending every time there is a major election — as government decision makers avoid big commitments prior to possible management changes — is also being factored into IT suppliers' plans in light of December's State Duma race.

But the overall mood is optimistic. “Certainly the continued mobilization of resources focused on Skolkovo and President Medvedev’s innovation agenda was a highlight of 2010,” said Ron Lewin, managing director at TerraLink, a major IT services company in Russia and Kazakhstan.

Skolkovo is trying to differentiate itself by focusing on research and development in science and technology, and not just information technology. But the local view of the project is sometimes skeptical.

“2010 has not changed anything in my perception of this project,” said Nikolai Komlev, managing director at APKIT, a Russian IT lobby. “I still view it as a dubious undertaking — or at least the kind that has little to do with the development of IT business … in Russia.”

Others call Skolkovo “a political project” and refuse to comment on it, saying that in Russia, business and politics are best not mixed.

Microsoft Russia head Nikolai Pryanishnikov called Skolkovo a long-term project with “good prospects” that might take dozens of years to create.

But Skolkovo alone is not enough to modernize the economy. Centers like it should be created across the country, Pryanishnikov said.

Almaz Capital pledged $30 million to build a cloud computing incubator, the first project to be approved. Microsoft, Cisco, Siemens and Nokia have all announced intentions to participate in Skolkovo.

Regardless of grandiose projects, the average citizen has felt the power of information technology in the palm of his hand or at his fingertips, as smart phone and personal computer sales boomed.

“The PC market and the smart phone market both grew in excess of 60 percent in 2010 in unit terms,” Farish said. “A lot of that has to do with changing patterns of consumer choices.”

The product offering has changed a lot between 2008 and 2010, and prices significantly dropped, not just for Russia.

“Now there are products for a far-broader range of potential buyers than there were before,” Farish said. This brings out first-time buyers — students and families buying computers for their children, analysts say.

Many foreign IT manufactures until recently have been running an offshore business, in which they sell their products to Russian partners’ branches abroad, leaving them to transport the products and navigate the murky waters of customs.

This resulted in vendors losing control over their pricing in the market because their products went through a lot of hands before reaching the local market, analysts say.

Shamil Shakirov, president of I-Teco, a leading systems integrator, pointed out unreliable delivery times by the vendors as one of the key problems in the relationship between foreign and Russian companies.

One reason for the missed deadlines was vendors' conservative estimates of sales for 2010 early on, which resulted in cutbacks in production capacities. Currency fluctuation is another factor putting local partners at risk.

The government has ostensibly been struggling to bring IT companies onshore for the last 10 years, as it would increase customs duty and tax revenues.

Foreign companies ignoring the reality of situation in the country, especially customs regulations, has been another problem, said Anatoly Karachinsky, president of IBS Group Holding, one of the country’s biggest IT companies.

Things began to change in 2006, when the IT market size began to become attractive to foreign companies, and the current boom helps them to want “to create equal opportunities for all,” Karachinsky said.

Some progress has been made, with Hewlett-Packard finally opening its local PC production facility, along with partner FoxConn, in St. Petersburg in April of last year, and Microsoft’s decision to switch to ruble-based contracts last month.

“In the past, most vendors worked almost exclusively through major distributors and did not have stock in Russia … Now vendors are more comfortable and established in the market, are working directly with clients more often, and are more integrated into the industry,” said Lewin, of TerraLink.

This will give manufacturers a much higher profile role in the local industry and in their relationships with customers, which could make many large Russian IT companies uncomfortable.

Market players unanimously call 2011 the year of cloud computing — in which large corporations get their information technology, or parts thereof, as a service, and don’t have to be concerned with where or on what platform the work is being done.

“Everything is going cloud,” said Owen Kemp, president of Newclouds and former vice president of Hewlett-Packard.

Kemp says it has multibillion-dollar potential in Russia and more than trillion-dollar prospects worldwide. Cloud computing will allow companies to cut IT budget spending by 10 to 30 percent, said Alexander Galitsky, an IT venture capitalist and Skolkovo board member.

As IT is becoming a service and Russia is slowly catching up with other countries, the need to use cloud computing to optimize businesses will become evident, explained Pryanishnikov, of Microsoft.

“The share of IT services in the total volume of IT market in Russia is lower than the average in the world and is significantly behind this number for Europe and the U.S. I think the time has come to change that,” he said.

Cloud services have been slow to gain acceptance on the Russian market.

A possible hindrance to the growth of IT services is “a culture of doing and owning everything yourself and not trusting something that is available to all and hosted somewhere in a intangible cloud or in a third-party’s data center,” Kemp said, pointing out that educating people about cloud computing might help the process.

With a stated goal to increase transparency overall, the government’s planned spending of 80 billion rubles ($2.6 billion) in 2011 on IT systems to provide bureaucratic services to the populace is a key element in the battle for efficiency and against corruption.

As part of this program, called “The Informatization of Society,” the Communications and Press Ministry is auditing and consulting on the IT budget of nearly every major federal agency.

Robert Farish sees “some genuine progress in improving the efficiency of the working of the central government … in the use of IT,” and the start of delivery of real IT services to the population.

Last year 227,000 citizens paid their traffic fines online, 177,000 created accounts in the pension fund, and 100,000 received passports online, Communications and Press Minister Igor Shyogolev told the Federation Council last month.

Gosuslugi.ru, the portal providing public services, had 5 million unique users in 2010. “For the first year, these are some really good numbers,” Shyogolev said.

The government might be overestimating its efforts so far to improve the quality of life of its citizens, said Karachinsky, of IBS.

Lack of coordination between ministries and government agencies remains universal across all industries, he said.

“Take our security system, for example. It looks like there are many agencies responsible for security, but it turns out that you can just walk into an airport and blow up 150 people,” Karachinsky said. “It's the same with IT.”

Doku Umarov Vows 'Year of Tears'

2011-02-07T03:01:00.007+03:00

By Alexandra Odynova

An undated still image from a video showing rebel Doku Umarov, center.

Notorious insurgent supremo Doku Umarov promised Russia a “year of blood and tears,” saying he has at his disposal 50 to 60 suicide bombers ready to strike, but stopping short of claiming responsibility for last month's Domodedovo Airport blast.

Meanwhile, Moscow faced a new wave of false bomb scares, prompting calls to step up punishment for prank calls about upcoming terrorist attacks.

Umarov's statement was made in a video released late Friday by rebel mouthpiece Kavkazcenter.com, which said it received the undated 12-minute video by e-mail earlier the same day.

Speaking in an emotionless voice, Umarov, flanked by two figures in military camouflage, said the video was recorded during his visit to a brigade of suicide bombers called Riyadus Salikhiin, or Gardens of the Pious in Arabic.

“We will make this the year of blood and tears,” Umarov said in his statement. “I won't say there are hundreds of us, but some five to six dozen can be found, and special operations will be carried out monthly and weekly.”

He identified the man on his left as “mujahed Seifullakh,” assigned to carry out an unspecified counterstrike in response to the federal government's actions in the North Caucasus.

Umarov did not elaborate and made no reference to the suicide bombing at Domodedovo, which killed 36 and injured about 180 last month, but Novaya Gazeta speculated Saturday that Umarov's statement could have been recorded ahead of the airport attack and thus referred to that bombing.

No group has claimed responsibility for the airport attack. Officials, including Prime Minister Vladimir Putin, said the masterminds of the blast were identified, but named no names.

The blast in Domodedovo was allegedly carried out by Magomed Yevloyev, 20, a native of Ingushetia, a law enforcement source told Interfax on Sunday. He also said two ethnic Ingushes, Adam Ganizhev and Islam Yevloyev, were placed on a federal wanted list as alleged accomplices of the suicide bomber.

Novaya Gazeta said “mujahed Seifullakh” in Umarov's video resembled Yevloyev, but the claim is hard to maintain because of the low quality of the footage.

The third man in the video was identified as Amir Khamzat, chief of Riyadus Salikhiin. The group was responsible for Moscow's 2002 Dubrovka hostage crisis, also involving suicide bombers, which left more than 100 civilians dead. It also claimed to have staged the deadly accident at the Sayano-Shushenskaya hydroelectric plant in 2009 as part of the “economic war” against Russia. Officials denied allegations that the accident, which killed 75, was a terrorist attack.

Meanwhile, pranksters have contributed to the chaos caused by the Domodedovo blast, as a shopping mall, a metro station and all nine main train stations in Moscow had to be searched over the weekend because of anonymous reports of explosives planted in them.

The downtown Atrium shopping mall and the Kievskaya metro station were checked by bomb squads on Saturday. The metro station scare took place on Sunday, when an anonymous caller claimed that bombs were planted at three stations, without identifying them. Only two of the nine, Leningradsky and Yaroslavsky, were evacuated.

The callers were not identified on Sunday, but police reported earlier detaining at least four people over other such reports that have poured in since the Domodedovo bombing, RIA-Novosti said.

About 20 false reports have been received in Moscow this year, police said. Shopping malls, the metro and train stations have had to be searched almost daily since the January blast, though North Caucasus terrorists never announce their attacks in advance.

Enraged officials on Friday called for stepping up punishment for false reports of terrorism. The offense currently carries a maximum sentence of three years or a fine of 300,000 rubles ($10,200), but a bill pending hearing at the State Duma proposes increasing the sentence to five years. No date for the hearing is set.

Tourists Trickle Back From Egypt

2011-02-07T03:00:00.001+03:00

By Alexander Bratersky

Egypt attempted to return to normal life Sunday after almost two weeks of political protests and street clashes, with banks briefly resuming operations and political opposition entering into talks with the government, but it remained unclear whether peace could be sustained.

More than 300 people have been killed and dozens injured since Jan. 25, when protesters took to the streets to demand the ouster of authoritarian leader Hosni Mubarak, 82, who has ruled the country since 1981.

Five leading tourist operators said they will finish bringing back their clients by Wednesday, the Russian Tourism Union reported on its web site Sunday. The five serve a combined 90 percent of Russian tourist traffic to Egypt, Er-Portal.ru said.

Smaller players have chimed in as well. “We have stopped sales [of tours to Egypt] until the situation gets back to normal,” a representative of the Moscow-based operator Elite Tours told The Moscow Times on Friday.

Only 30 percent of the tourists have agreed to cut their stay short as of Sunday, but the figure is expected to grow as operators continue their efforts to convince tourists to return, said Maya Lomidze, head of the Russian Tourism Union, Itar-Tass reported.

No state-sponsored evacuation was ordered, and the tourists are simply given the opportunity to change their return plane tickets to earlier dates.

Russian tourists unwilling to leave are influenced by the English, who keep on arriving to Red Sea resorts of Hurghada and Sharm el-Sheikh, Lomidze said.

There is no violence in resort cities, but the quality of services offered to tourists is dropping, she said, adding that some hotels have canceled all-inclusive food deals for clients.

Some Russians were still departing to Egypt over the past week, arranging their trips independently, not through tourist operators, tourism association spokeswoman Yelena Tyurina said Friday.

No estimate for the number of outbound tourists was available over the weekend.

Tour operators were offering alternative destinations, including Turkey and Thailand, to those who have booked tours to Egypt, Marina Makarkova, a representative for one of the five industry leaders, Tez Tours, said Friday.

Tyurina said the situation was “unprecedented” for the Russian tourist industry.

It remained unclear how much tourist operators will lose over the “Nile Revolution,” as the protests have been dubbed. February is a low season for tourism, and most tours sold at that time are budget deals.

Still, Egypt is the second most popular foreign destination for Russians, losing out only to Turkey. Some 2 million tourists traveled to the country in 2009, according to industry statistics.

City Hall Authorizes Day of Wrath Rally

2011-02-07T02:58:00.006+03:00

By Natalya Krainova

The move to authorize regular Day of Wrath rallies, which previously resulted in detentions, was possibly ordered by federal authorities who are looking to discredit ex-mayor Yury Luzhkov, some experts say.

City Hall authorized the regular leftist rally called Day of Wrath, which it had earlier banned seven times, but organizers said Friday that they still expect a police crackdown.

Previous Day of Wrath rallies, the first of which dates back to May, were dispersed by police, and the main organizer, Left Front leader Sergei Udaltsov, spent 15 days in jail over the event in December.

But the activists are allowed to stage a rally on the downtown Teatralnaya Ploshchad next Saturday, Udaltsov told Interfax on Friday.

Protesters also plan to march to a Kremlin public office on nearby Staraya Ploshchad to file a list of their complaints, which may result in new detentions because the march, unlike the rally, was not authorized by City Hall, Left Front said in an online statement Friday.

Moscow officials did not comment on their reasons for allowing the event. City Hall spokeswoman Gulnara Penkova did not respond to a request for comment Friday.

The move was possibly ordered by federal authorities, who are looking to discredit ex-mayor Yury Luzhkov, Yevgeny Minchenko, director of the International Institute of Political Expertise, a think tank, said Friday.

Previous Days of Wrath have mostly been focusing on city problems, linking most of them to Luzhkov, not his successor Sergei Sobyanin, who took office in October. Participants have often called for criminal charges against Luzhkov.

The decision is also in line with Sobyanin's softened stance on political protests, which already saw the City Hall authorizing another regular opposition rally that takes place on the 31st of each such month on Triumfalnaya Ploshchad.

The event, held since 2009 to commemorate Article 31 of the Constitution, which grants freedom of assembly, saw bans and crackdowns under Luzhkov, which prompted criticism from rights activists and Western politicians.

Federal authorities used Luzhkov's dismissal as a "pretext" to allow rallies on Triumfalnaya Ploshchad because they "provoked unnecessary madness in the West," Minchenko said.

The Day of Wrath on Saturday will not be limited to city issues, as participants also plan to demand free elections, lower utilities payments, crackdowns on employers who hire illegal migrants, aid to defrauded home buyers and an end to deforestation in the Moscow region town of Khimki because of a construction project.

Participants are asked to come dressed in black and carry “black marks” — any black items that can be presented to authorities as a sign of distrust of their policies, Left Front said on its web site.

The organizers have attempted to make Days of Wrath a monthly event so far, but said recently that they may switch to a quarterly schedule.

Auditors Say $7.3Bln Wasted on Transport

2011-02-07T02:58:00.001+03:00

By Roland Oliphant

Auditor Sergei Ryabukhin said the transport complex, including the Moscow metro and bus operator Mosgortrans, had misspent 215 billion rubles between 2008 and 2010 — down from a previous estimate of 232 billion rubles cited by the chamber in December.

Mayor Sergei Sobyanin ordered the investigation into the finances of five Moscow government departments as well as the Moscow metro, Mosgortrans and builder Mosmetrostroi after he took office in October.

The final figure is equivalent to more than 37 percent of the 574 billion rubles ($19.5 billion) spent on transport between 2008 and 2010.

It includes 117.8 billion rubles in mishandled public procurement contracts and 10.8 billion rubles in “misappropriated” budget spending, including subsidies to the Atlant-Soyuz airline to buy new aircraft that were never purchased, Ryabukhin said.

Another 59 billion rubles was lost to inappropriate investments, and 24 billion rubles was wasted on delayed or never completed construction projects, Ryabukhin said.

The revelations will be taken as a sign that the authorities are gearing up to prosecute Luzhkov on charges of corruption, but the chairman of the Moscow Control and Auditing Chamber, Viktor Dvurechensky, said it was too early to say whether the violations amounted to criminality.

If overspending on metro renovation projects could be accounted for by workers' salaries, it might be considered an administrative matter, Dvurechensky said. "But if part of the money went to salaries and the rest in some kind of bills, then of course there would be a criminal investigation.”

In an interview with The Financial Times last week, Luzhkov flatly rejected allegations of wrongdoing. “These are completely wild numbers. If this amount of money was truly missing it would have been easy to spot. This is nothing but an attempt at political bullying. They are trying to stun the public with such wild numbers,” he told the paper.

The report by the auditors was delivered days after City Hall said it would review as many as 100,300 investment contracts signed during Luzhkov's administration.

Deputy Mayor Andrei Sharonov said Wednesday that the city had already canceled 30 contracts out of 150 it has reviewed so far.

The auditors also questioned much-maligned annual ticket price increases on public transport, saying the authorities should either make better use of their revenues or lower prices.

Dvurechensky called for a review of pricing policy and said transport chiefs should either “increase investment in the development of the transport industry or reduce the price of the ticket."

Passenger numbers fell by 200 million from 2.5 billion to 2.3 billion journeys annually between 2008 and 2009, but revenues went up 39 percent “mostly on the back of tariff hikes,” Dvurechensky told reporters.

The cost of a single journey on the metro went up two rubles to 28 rubles (slightly less than $1) on Jan. 10.

Individual Charity Donations Increasing

2011-02-07T02:55:00.005+03:00

By Khristina Narizhnaya

At least half the population financially assisted a nonrelative in 2009, with many giving for medical procedures.

Philanthropy experts see a growing trend of Russian individuals providing charitable assistance to their countrymen.

“Volunteering is growing,” said Natalya Kamenskaya, an executive secretary at Donors Forum, a partnership of nongovernmental organizations. “People are responding. The process of civil society is growing, developing,” she said Friday on the sidelines of an international investment forum organized by Troika Dialog.

In the last 10 years, more than 300 private charity organizations have been founded throughout the country, Kamenskaya said.

In 2009, more than half the population offered some kind of financial help to a person who was not a relative, according to the most recent study of the topic by the Higher School of Economics. Only 3 percent of respondents said they helped others through government organizations or NGOs.

The most widespread form of charity is donating money for surgery, according to Olga Alexeyeva, founder of The Philanthropy Bridge Foundation. But it is more of a short-term solution that contributes to “philanthropic corruption,” because the government should be the one funding proper medical care.

More needs to be invested in learning the skills and processes of how to organize giving, American philanthropist Michael Milken said.

“It’s hard to find people to professionally conduct philanthropy,” Milken said at the Troika forum.

While there are no official statistics on domestic philanthropy, there are more than 400,000 active NGOs, according to media reports. Ten percent of large companies are involved in some kind of charity, but their activities are not being tracked, Kamenskaya said.

Parasailing Donkey Dies of Heart Attack

2011-02-07T02:55:00.000+03:00

The Moscow Times

Veterinarians were unable to say whether the death of the 40-year-old animal, Anapka, was caused by stress it suffered during its 30-minute flying stint in July or resulted from old age, a representative of the farm said.

The animal was in good condition when it arrived to the farm, Strely Yarily, or Arrows of Yarila, but suffered from occasional dizzy spells, eventually becoming unable to eat, the report said, adding that the creature had to be placed on life support.

The wildly braying Anapka was sent to the sky near the beach of Golubitskaya village in the Krasnodar region, apparently as an advertising stunt for a local parasailing business.

Outraged beachgoers filmed the airborne donkey and posted the video online, attracting the attention of media and police.

Animal rights activists, including ex-movie star Brigitte Bardot, slammed the owner, but police were unable to press any charges because only killing or maiming an animal is punishable under Russian laws.

British tabloid The Sun tried to buy Anapka in order to place it in an animal shelter in Britain, but the overseas trip was deemed too dangerous for its health, and the donkey was placed in a high-class Kremlin-owned stable in the Moscow region instead.

It was later transferred to Strely Yarily because it needed the company of other donkeys, which was not to be found in the Kremlin stable, Moskovsky Komsomolets said.

Rabbis to Teach Judaism in Moscow Jails

2011-02-07T02:54:00.000+03:00

Reuters

While the Russian Orthodox Church is the dominant faith in the country, a seventh of the country's 142 million people are Muslims, and Jewish groups say there are about one million Jews.

"This new project clearly demonstrates the increase of cultural relations between the state and believers in Russia," said Rabbi Aaron Gurevich of the Jewish federation.

While a third of all Russian inmates are Muslim, it is not clear how many are Jewish.

A Muslim prayer room was opened at Butyrka almost two weeks ago, where the Orthodox Church has operated since 1989.

Russia's crowded, poorly managed prison system has come under increased scrutiny since the 2009 death of jailed lawyer Sergei Magnitsky. The Federal Prison Service says almost half of the inmates are ill, many infected with HIV or tuberculosis.

Belgorod Bans St. Valentine's Day

2011-02-07T02:53:00.000+03:00

The Moscow Times

Yevgeny Savchenko introduced the ban last year with the blessing of the local archbishop, Ioann, the news agency reported late Thursday.

A new degree, signed this year by Savchenko's first deputy, Oleg Polukhin, reiterated the ban for the sake of “spiritual safety,” the report said.

"The society has to think about the consequences” of St. Valentine's Day celebrations, Grigory Bolotnov, a spokesman for the governor's office, told the news agency Friday.

He did not elaborate on the consequences, but added that “we could just as well have introduced a Vodka Day.”

But the ban only concerns state agencies, Bolotnov said.

The local zoo had to cancel discounts for couples ahead of the St. Valentine's Day, and a senior representative of the Belgorod university told Rusnovosti.ru on condition of anonymity that students were also banned from celebrating the holiday.

Caviar Exports Resume After 9 Years

2011-02-07T02:45:00.001+03:00

Reuters

The Federal Fisheries Agency hopes that canceling the ban will reduce wild sturgeon poaching in the Black Sea.

Official exports of sturgeon caviar to the European Union have resumed after a nine-year ban, a fishery watchdog said Friday.

Stocks of sturgeon have shrunk since the fall of the Soviet Union, and Russia banned exports of black caviar in 2002. That played into the hands of poachers, taking the illegal market to $1 billion.

Russia allows the sale of nine tons of black caviar from wild sturgeon on the domestic market each year. But the Federal Fisheries Agency has decided to begin allowing exports of caviar from farmed fish to Europe, said Alexander Savelyev, a spokesman for the agency.

He said export volumes would grow. Fish farms in the Rostov, Kaluga, Astrakhan and Novosibirsk regions will soon be able to produce up to 10 to 15 tons of caviar per year.

"It takes a sturgeon five to seven years to mature, so I expect that in the next five years we will flood both the internal and export markets with caviar," he said.

The move is expected to stop poachers, Savelyev said, but would be unlikely to lead to a drop in prices.

"You shouldn't have any illusions about it, black caviar is never going to be cheap," he said.

Illegal black caviar sells in Moscow markets for about $1,600 a kilogram and has been advertised for sale on some European Internet sites for about $5,000.

The Caspian Sea has four-fifths of wild sturgeon reserves.

Russia is in an accord with Iran, Kazakhstan, Turkmenistan and Azerbaijan, setting quotas on sturgeon fishing and banning exports.

Timchenko to Buy Murmansk Port

2011-02-07T02:43:00.002+03:00

Reuters

"The deal is expected to be closed in the first quarter," one of the sources said.

The deal was also confirmed by sources close to the buyer and the port owners.

Murmansk is Russia's leading coal export terminal and is controlled by a group of private investors. It has a monthly capacity of about 1 million tons and sends the bulk of its shipments to European destinations.

SUEK is the major supplier to the port, followed by Italy's Coeclerici and Mechel.

Timchenko has recently increased his activity in energy markets. His Volga Resources fund last year became the biggest shareholder in Russia's largest non-state gas producer, Novatek, while Swiss-based trader Gunvor, co-owned by Timchenko, started fuel oil export from the port of Ust-Luga.

Gunvor, the world's third-largest oil trader, also plans to become one of the world's top gas traders.

Patriarch Gets State Privileges, Protection

2011-02-04T04:25:00.006+03:00

By Alexander Bratersky

President Dmitry Medvedev and Russian Orthodox Patriarch Kirill attending a meeting of prominent church officials in the Kremlin on Thursday.

The church is separate from the state in Russia, the Constitution says. But the Federal Guard Service apparently has its own understanding of what that implies, as it treats Russian Orthodox Patriarch Kirill as a de-facto state official, rights activists said.

The agency, which is responsible for the security of senior officials, provided its services to Kirill free of charge, the pro-secularism group Zdravomysliye (Good Sense) reported on its web site.

The group filed an enquiry with the agency asking why the patriarch receives such treatment. A written reply dated Jan. 21 said it was made on the order of the president “in accordance with Article 80 of the Constitution.”

That article states merely that the president is the guarantor of the Constitution and does not mention privileges for religious leaders.

“This reply looks like a mockery. Bureaucrats explained a violation of the Constitution by referring to an article that says the president is the guarantor of the Constitution,” Zdravomyslie head Artyom Safronchuk told The Moscow Times.

An earlier letter from the agency, dating back to December, cited federal legislation on state security, not a presidential decree, as the reason for protecting the patriarch.

“If necessary, state-sponsored security can be provided to the third parties by decision of the president,” said the letter, signed by the service's spokesman, Alexander Ryaskov.

But the legislation in question limits “third parties” to state officials and does not cover religious leaders.

The Federal Guard Service was not available for the comment Thursday. The Kremlin has not commented on the matter.

Safronchuk, 30, a self-confessed atheist, said he took up the matter because his group is trying to combat the growing influence of religion on Russian society.

“I deeply believe that preferences given to any religious group are a threat to national security,” he said.

But Valery Streletsky, who was a senior official in the presidential security service during Boris Yeltsin's tenure in the 1990s, said the tradition of guarding the patriarch goes back to Soviet times.

“He was and will be guarded. Even though the church is separate from the state, the patriarch is seen as an instrument of state power,” Streletsky told The Moscow Times last week.

For Kirill, state-sponsored security guards are an indication that he is a part of the ruling elite, said religion expert Alexander Soldatov.

“He considers himself a business and public figure. On one hand, he portrays himself as an accessible person, but on the other, it is difficult to get access to him,” Soldatov said by telephone.

Kirill, who presides over the biggest religious community in Russia, also enjoys the right to use a car with a flashing blue light, a notorious device authorizing vehicles to ignore most traffic rules.

The usage of flashing blue lights is another privilege reserved mainly for state officials. The Orthodox patriarch is currently the only head of a major religious denomination with such privileges, as chief rabbi Berl Lazar and supreme mufti Ravil Gainutdin lost the right to it in a governmental decision several years ago.

“We are complying with orders, though the mufti sometimes gets anxious when stuck in Moscow traffic jams,” Gainutdin's spokeswoman Gulnar Gaziyeva said.

Safronchuk of Zdravomysliye said his group — which claims to have 20 core members, but also thousands of followers — will continue the fight against state privileges for Kirill, and called on supporters to file their own requests on the matter with the Kremlin and Prosecutor General's Office.

Zdravomysliye's crusade for secularism is not limited to criticizing the patriarch. Last month, the group also financed the installation on Moscow streets of a series of billboards quoting the Constitution's words on separation of church and state.

It took the group three months to have the billboards placed, as activists had to go through more than 20 outdoor advertising companies, including industry leader News Outdoor, before they found a firm willing to process their unusual order, Safronchuk said.

The project was paid for by donations from citizens “who shared our civil position,” he said.

Low Trust, High Rates Stifle Growth

2011-02-04T04:24:00.002+03:00

By Khristina Narizhnaya

The same survey revealed that developing nations seem to trust Russia more than developed ones.

Analysts see a direct link between distrust in public institutions and business growth. The country slipped 1 percent lower since last year and lags behind the world average of 58 percent — and the United States with 46 percent.

The survey revealed that Russians are also wary of their political and social institutions, with confidence ratings falling at least 14 points below the world average in each category. Nongovernmental organizations got the highest confidence vote, 42 percent. But only 39 percent of the elite trust the government, while only 37 percent believe the media.

The Edelman Trust Barometer surveyed 200 members of the Russian elite — policymakers, or people that directly or indirectly influence business. Edelman, a global public relations firm, has included Russia in the survey since 2007.

Edelman head Alan Vandermolen said Russians exhibit “a healthy skepticism” when it comes to establishments in their country, and are reluctant to “offer a high degree of trust.”

The Edelman barometer is the latest survey to highlight the poor domestic business climate. The Heritage Foundation’s annual economic freedom rating ranked Russia 143rd out of 183 at the end of last year.

According to an independent Levada Center survey from last summer, nearly half of those polled believe that big business is somehow detrimental to the country, while 21 percent believe the same about small business.

An absence of trust in business and law enforcement contributes to higher interest rates on loans, said Jason Hurwitz, senior analyst at Alfa Bank.

“As companies that need investment capital seek funds, trust obviously plays a substantial role in the interest rate that they must be willing to pay,” Hurwitz wrote in an e-mail. “A lack of trust thus pushes up costs for virtually everything.”

Higher perceived risk levels play a substantial role in determining how much a company is worth, especially risks due to perceived corporate governance issues, Hurwitz said.

Interest rates in Russia are high compared with interest rates worldwide, at 7.75 percent, while the United States and Britain have much lower rates of 0.25 and 0.50 percent respectively.

Ineffective law enforcement institutions create an environment that is conducive to mistrust and corruption, said Yana Yakovleva, head of Business Solidarity, a nongovernmental organization that protects entrepreneurs.

“Laws don’t get enforced, promises aren’t fulfilled through action — hence the low level of trust,” Yakovleva said.

Big companies have a habit of not paying smaller ones for their services, and not being punished, she said.

Small business does not trust big business, but small entrepreneurs trust one another for the most part, said Alexander Chipurenko, an economics professor at the Higher School of Economics. It is easier for entrepreneurs to assume that a business partner won’t cheat them rather than investing in the costs of checking a partner’s bona fides or reputation in advance.

But business in general does not trust the government.

“If the first thing that comes to mind is corruption, then its clear that governing institutions work very badly,” Chipurenko said. Disreputable business practices “fade in comparison with how the government behaves,” he said.

The judicial and law enforcement systems rank highest in corruption according to a survey by the Russian Union of Industrialists and Entrepreneurs, a full version of which will be published in April.

Since businesses don’t trust the courts to resolve their differences fairly and efficiently, they find it hard to trust one another, according to one industry expert.

Despite low confidence in the judicial branch, 90 percent of more than 350 companies asked by the union said they used the courts to resolve some business issues. Confidence in a successful trial depends on whom you’re suing — or who you're being sued by. If it is another business owner, then respondents believe they have a 50-50 chance of winning. But in case the conflict involves a government official, business owners believe they will probably lose.

Another reason for dismal confidence rates in Russia is that there is no clear set of national values, Chipurenko said. Forming professional norms without definite values is a difficult task.

While Russian business continues to inspire relatively low levels of trust around the world, at 38 percent on average, the good news is that countries where Russians have engaged in business show a remarkably high level of confidence. Mexico, the United Arab Emirates and Brazil all trust Russian business, at 62 to 75 percent — which is much higher than Sweden, Britain and the United States, who rank confidence toward Russian businesses from 12 to 15 percent.

Putin, Medvedev Bicker Over Blast

2011-02-04T04:14:00.009+03:00

By Natalya Krainova

Channel One deputy head Kirill Kleimyonov,
left, speaking to Putin and channel director
Konstantin Ernst.

President Dmitry Medvedev took an indirect dig at Prime Minister Vladimir Putin over the Domodedovo Airport blast, stating Thursday that officials should not speak of the attack as being "solved" yet — as Putin had done hours earlier.

Putin made his statement during a surprise visit to state-controlled Channel One television late Wednesday.

Asked by a program host, Kirill Kleimyonov, about any "clues" in the investigation of the last week's bombing, which killed 36, Putin said the investigation had progressed much further.

"Not 'clues.' We can take it that on the whole the case has been solved," the prime minister said, his web site reported.

Putin, who said he “dropped by” to congratulate the channel's head, Konstantin Ernst, on his birthday, also shared his views on terrorism, the Russian film industry, restrictions on air guns, and his own work schedule.

Medvedev said Thursday that it was "unacceptable when someone announces ahead of all investigative procedures and the indictment that a crime has been solved," Interfax reported.

You must "work, but not make publicity for yourself," Medvedev said during a meeting with Federal Security Service chief Alexander Bortnikov and Investigative Committee head Alexander Bastrykin. He did not mention any names.

Alexei Mukhin, head of the Center for Political Information, said Medvedev wanted to "prove that he is an independent politician" to prevent himself from becoming a "lame duck" ahead of the 2012 presidential elections.

"The active presidential campaign Putin has been conducting in the past year has attracted the attention of influence groups inside the country," Mukhin said.

This is not the first time Medvedev has indirectly rebuked Putin. In December, he spoke against Putin voicing his stance on jailed oil tycoon Mikhail Khodorkovsky ahead of a court ruling. Khodorkovsky, whom Putin has called a criminal, was convicted shortly thereafter.

Bortnikov also told Medvedev during the Thursday meeting that the FSB has arrested several people who have information about the masterminds of the attack. He did not identify those detained, but said relatives of the suicide bomber who carried out the blast are also under suspicion.

The Investigative Committee announced Saturday that the suspected suicide bomber at Domodedovo was a 20-year-old male from the North Caucasus, but gave no further details, citing the ongoing investigation.

Media reports said earlier that the blast could have been organized by the same terrorist group that unsuccessfully prepared an attack in downtown Moscow on New Year's Eve.

Five people were arrested and five more put on a federal wanted list in connection with the failed December blast, the National Anti-Terrorist Committee said Saturday.

The committee identified the suspects, but denied the link between December's attack plot and the Domodedovo blast.