January 2008 Archives

Viktor Zubkov and Vladimir Putin are both being reported as likely to succeed Dmitry Medvedev’s role as chairman of Gazprom, a company “regularly referred to as Kremlin Inc.”

ArcelorMittal, the world's biggest steelmaker, has agreed to buy three coal mines in Russia for $720 million from OAO Severstal.

Russian stocks led by Rosneft, LUKoil and Tatneft fell on renewed concern that a recession in the United States will hurt global demand for oil and gas, the country's biggest exports.

Although he praised Russia’s economic development, Former US Federal Reserve chief Alan Greenspan said that the double-digit inflation rate was hurting Russia's economy. UBS Securities is preparing to offer stocks of its investment funds to the Russian market. Russian banks believe the stocks will be used to diversify current portfolios, rather than to rival them. Russian metals giant Norilsk Nickel is considering buying back shares worth up to $5 billion in a bid to help a top shareholder avoid a merger with a rival firm. The country's metals billionaires are moving into gold, “attracted by record prices and the prospect of carving a share of production that is forecast to rise 40% by 2015.” Russia’s Stabilization Fund currently stands at a mammoth $150 billion. Renault predicts that Russia will surpass Germany to become Europe's biggest car market within two years. AvtoVAZ, the country's biggest carmaker, may have an IPO this fall, and truck maker KAMAZ is preparing a $1.5 billion investment programme that would allow it to double annual production to 100,000 units in five years.

TODAY: New OSCE spats for March presidential election, and Putin orders FSB to prevent external meddling. Kudrin criticizes Russia’s foreign policy. Putin and Medvedev call for environmental improvements. Khodorkovsky stars hunger strike.

The Organization for Security and Cooperation in Europe has warned that they could again refuse to take part in Russia’s elections, as Russia’s restrictions are “making it impossible for them to assess the campaign.” President Vladimir Putin, meanwhile, has ordered the FSB, Russia’s Federal Security Service, to guard against “outside” interference in the presidential election. He also called on the FSB to speed up the formation of a comprehensive system of anti-terror security.

Below is the full translated text of Mikhail Khodorkovsky's letter to Chief Prosecutor Yuri Chaika announcing his hunger strike in support of former Yukos colleague Vasily Alexanyan (Alexanian).

To Procurator-General of the RF Yu.Ya. Chaika

Statement

The situation that has evolved with Alexanyan compels me to address you directly.

V.G. Alexanyan is now already found in the jurisdiction of the prosecution, and not of the investigation. S.K. Karimov, who has a direct relation to what is going on, likewise works directly in subordination to you. For the past few years, S.K. Karimov, acting in direct contact, as I have grounds to assert, with I.I. Sechin, has undertaken numerous, to put it mildly, doubtful actions with respect to the formulation of evidence of nonexistent crimes.

In a rare disagreement with the president, two liberal members of the Russian government issued warnings to the hawks that Russia's hard line foreign policy could damage foreign investment and business.

In an article running in tomorrow's FT, Anatoly Chubais said "Maybe we should ask ourselves a simple question: How much does our external policy cost Russia? We might be able to pay the price in a good world economic situation, but can we continue to pay the price now? (...) We can continue to persecute the British Council and demand the closure of its branch in St Petersburg. But we cannot make peace with this.”

Alexei Kudrin also made some reasonable points: "Our dependence on global economic ties, on our exports, is felt so strongly that in the nearest future we need to adjust our foreign policy goals to guarantee stable investment."

I am always caught off guard when Russian officials make this much sense - just as I was when Dmitri Medvedev boldly stated that "Without exaggeration, Russia is a country of legal nihilism. No European country can boast of such disregard for law."

I couldn't agree more.

In this edition of Grigory Pasko's Faces of the Opposition video series, he speaks with Olga Kurnosova, a St. Petersburg representative of Other Russia. See other video interviews from this series on our YouTube channel.

Seems that we have posted quite a lot of material lately about the arrest of mobster Semyon Mogilevich, who until this week was enjoying an open and thriving business life in Moscow, with connections to the shadowy Turkmen-Ukraine gas trader RosUkrEnergo - a Swiss-based shell company suspected of flamboyant corruption, with participation of Gazprom and even the Austrian Raifeissen Zentralank.

The sudden removal of Mogilevich's "protection" from the Kremlin is believed to form part of the same spy wars inside the Kremlin which put Sergei Storchak behind bars, Alexei Kudrin up against a wall, and sank the stock of Igor Sechin while raising that of Dmitri Medvedev's group.

Below is a graph mapping out Mogilevich's connections to key RosUkrEnergo shareholders (hat tip to IntelligenceOnline via Intellibriefs).

The debut of the Russian government's new standard history textbooks, complete with chapters softening the the legacy of Joseph Stalin's great terror to the point of ambiguity, indoctrinating the youth with Vladislav Surkov's sovereign democracy model, and providing a thoroughly revisionist history of Vladimir Putin's taming of the oligarchs, caused a great furor when they were debuted last year. We published several translated articles about the textbook, and many others in the media really teed off on the subject.

Now, thanks to a contributor at La Russophobe, we have a look at the actual text.

Calls by Ukraine’s new prime minister for Kyiv to deal directly with Gazprom over gas supplies are timely

By Tom Nicholls

Ukranian prime minister Yulia Tymoshenko wants to see greater transparency in the gas-trading arrangements between Ukraine and Russia.

At present, RosUkrEnergo, a murky entity owned on a parity basis by Gazprom and a group of Ukrainian businessmen, handles gas sales to Ukraine from Russia. Tymoshenko, who took office in December, wants to cut out RosUkrEnergo and deal directly with Gazprom – one of her chief electoral campaign pledges. During a trip to Brussels this month, she said it was time to rid Ukraine of “shadowy intermediaries”.

Today Wired.com has a story about the efforts of Ulrike Poppe, a former East German dissident, to piece together millions of shredded documents which the Stasi attempted to destroy with the fall of the Berlin Wall:

"When the wall fell, the Stasi fell with it. The new government, determined to bring to light the agency's totalitarian tactics, created a special commission to give victims access to their personal files. Poppe and her husband were among the first people in Germany allowed into the archives. On January 3, 1992, she sat in front of a cart loaded with 40 binders dedicated to "Circle 2" — her codename, it turned out. In the 16 years since, the commission has turned up 20 more Circle 2 binders on her.

The pages amounted to a minute-by-minute account of Poppe's life, seen from an unimaginable array of angles. Video cameras were installed in the apartment across the street. Her friends' bedrooms were bugged and their conversations about her added to the file. Agents investigated the political leanings of her classmates from middle school and opened all of her mail. "They really tried to capture everything," she says. "Most of it was just junk."

But some of it wasn't. And some of it ... Poppe doesn't know. No one does."

Russia has never created such a truth commission to explore the secret documents of the Soviet Union and the files of the KGB - a fact that many consider a burdensome historical hangover which requires closure.

So far the details are quite sketchy, but Steve LeVine is blogging about a possible link between the recently arrested gas mob kingpin Semyon Mogilevich and the assassinated Alexander Litvinenko.

He writes: "One can be certain that the FSB is scouring its voluminous unsolved case file for items to hang on the unsympathetic Mogilevich."

Also, a YouTube user has posted a four-part documentary about Mogilevich, which we have posted to a playlist on our channel.

From the Lex Column of the Financial Times:

Gazprom's stranglehold

Gazprom has long been the bogeyman of European energy. Whenever a rival gas supplier announces a discovery or a rise in output, it fosters hopes that the Russian group's chokehold may be on the point of loosening. But the reality is that Gazprom's position is not that fragile.

The editorial board of the New York Times just wishes that Vladimir Putin would at least pretend that he isn't manipulating the elections. They writes that Western politicians need to start resisting the natural temptation to defend Putin out of a variety of reasons, and that "the least Western democrats can do for their thwarted Russian counterparts is to frankly acknowledge this painful truth."

A radio segment on NPR's Morning Edition explores the background and early career of the presidential heir apparent, Dmitri Medvedev. They discuss his taste for high fashion, affinity for Deep Purple and other American rock 'n roll, and go back to his law school where the find stories of a harder edge. Listen to the story here.

FOR IMMEDIATE RELEASE

Mikhail Khodorkovsky on hunger strike

Mikhail Khodorkovsky, the jailed former head of Yukos, has commenced a hunger strike in protest against the treatment of jailed former Yukos general counsel and vice president Vasily Alexanyan ("Alexanian").

In a letter to Russian Prosecutor General Yury Chaika, published on his web site on Wednesday and reported by Interfax, Mr. Khodorkovsky declares his support for Mr. Alexanyan following reports that Mr. Alexanyan has been offered medical assistance if he testifies against him: “I am facing an impossible moral choice: admit to crimes I haven’t committed and save the life of a man, but destroy the fate of innocents who will be charged as my accomplices.”

Mikhail Khodorkovsky has initiated a hunger strike in support of his former Yukos colleague Vasily Alexanyan, who is currently being unlawfully held in pre-trial detention and denied life-saving medical treatment despite three separate orders from the European Court on Human Rights. Khodorkovsky's speech on the hunger strike can be read here in Russian, and below are reports from Associated Press and Reuters. A statement and more information is forthcoming immediately.

UPDATE: New reports from Bloomberg and Interfax.

Gazprom has a new office in Manchester which supplies gas to 8,000 businesses, and hopes to increase its sales from £16m to £100m over the next year. Gazprom is set to begin exploration work in Kyrgyzstan in March, where it will explore and develop two fields. Anglo-Russian TNK-BP has at last procured access to the Gazprom-controlled pipeline system for the joint venture's West Siberian gas fields.

The European Union supports Ukraine's attempt to revise its natural gas agreement with Russia, which would allow the country to sign a long-term accord, says Ukrainian Prime Minister Yulia Tymoshenko. Russia doubled the gas price for Ukraine in 2006 and raised it by 37% last year and 38% this year.

Russian mid-sized oil firm Tatneft reported a 14% rise in 2007 sales and a 27% increase in pretax profits.

TODAY: Medvedev calls on Russian lawyers. Communist Zyuganov accuses Medvedev of undermining the election. Nashi is targeted by Estonian immigration as it is reported that its activities could be wound up. Journalist who blackmailed Deripaska is arrested. An Etonian Kremlin leader?

Dmitry Medvedev, a lawyer by training, has called on the Association of Russian Lawyers to take a more prominent role in society and to battle the “legal nihilism” he says grips the country. The campaign leader of Communist Party candidate Gennady Zyuganov has accused Medvedev of undermining the election with his refusal to join televised debates and threatened that Zyuganov could follow suit. "In a democratic state, a candidate's withdrawal from debates would have meant his withdrawal from the race," he said.

Finance Minister Alexei Kudrin, “seen as a key liberal in the government,” has called for changes in Russia's foreign policy to guarantee a stable and predictable regime for investors. Kudrin also said that Russia will move to a free floating exchange rate of the rouble and introduce an inflation targeting regime within the next three years, and that the economy expanded 7.8% last year, with a potential average growth of roughly 7% through to 2010. Italian-based chocolate maker Ferrero is planning to build a chocolate factory in Russia’s Vladimir region. The country's tax authorities are seeking $4 million in back taxes from Oleg Deripaska's Basic Element holding, a claim some analysts fear may carry political overtones. One commented, “No [Russian] tax case is purely a tax case -- there is always a political background.” Renault, France's second-largest carmaker, will use its partnership with Russia's AvtoVAZ to strengthen its Lada brand. Polyus Gold plans to launch what will be Russia's largest gold mine, the $2.5 billion Natalka project, in 2012 or 2013. Prime Minister Viktor Zubkov says that the government is seeking to turn Russia’s timber industry into an advanced sector of the national economy within 12 years.

PHOTO: Russia's Finance Minister Alexei Kudrin addresses the audience during an investment conference in Moscow January 30, 2008. REUTERS/Sergei Karpukhin (RUSSIA)

Robert Amsterdam's speech in Calgary today was covered by the Financial Post:

Gazprom just an arm of the Kremlin, Khodorkovsky's lawyer warns Canadians

People should understand that OAO Gazprom, the Russian gas giant that wants to become a major supplier to North America, is not a company but an arm of the Kremlin, says Robert Amsterdam, the Canadian lawyer who counseled Mikhail Khodorkovsky, the former CEO of Yukos who was convicted of charges of tax evasion and is serving an eight-year jail sentence in Siberia.

“[Russian president Vladimir] Putin says it,” Mr. Amsterdam said in an interview before speaking to the Economic Club of Calgary on Tuesday about Russia’s resource nationalism. “We need to believe Mr. Putin when he says he thinks it’s fine for energy to be used as a weapon. And we need to clarify what that means in terms of Canada and the U.S. They are a great monopolist."

Seems that "stability" message coming out of Davos has sold fairly well to the American delegates, who have announced that Congress may vote on Russia's trade relations this year (see story after jump).

In other news, Garry Kasparov takes a moment to pose a question to the U.S. presidential candidates:

“The last opposition candidate for the March 2 Russian elections has just been forced out of the running by the Kremlin. President Putin’s handpicked successor Dmitry Medvedev has no competition. So-called engagement during the Bush years has only made the situation worse as Putin has turned my country into a police state. Hillary Clinton said recently that Putin “has no soul” and Mitt Romney referred to Putin as a dictator. John McCain has been outspoken in support of Russia’s democratic opposition. So the question is, will you pledge that as president you will work to remove un-democratic Russia from the G-8 league of great industrial democracies? Or will you continue to provide a dictator with democratic credentials?”

Actually the first thing the United States looks like they will decide is whether or not to approve Russia's entrance into the WTO - a measure that I conditionally support.

Tonight the Moscow Times is reporting that Oleg Deripaska's company Basic Element is being slapped with a $4 million claim in back taxes for allegedly using "a complex promissory-note scheme with the aid of fly-by-night companies to understate its profit." As Yevgeny Volk tells the paper, "No [Russian] tax case is purely a tax case -- there is always a political background," and others are speculating that Deripaska has been politically damaged by his confrontation with Igor Sechin, as the latter was pushing for Rosneft to assume control of Mikheil Gutseriyev's oil company Russneft - the most recent private property to suffer the Yukos experience. After the news broke recently that Deripaska has met with U.S. presidential hopeful Sen. John McCain, a fierce Russia critic, it is also possible that there are other elements in the Kremlin that are not so pleased with him.

Canadian investors in Magna should be watching these events very closely.

Former senior economic adviser to Vladimir Putin, Andrei Illarionov, gets into a rather fierce debate about Russia on BBC's HARDTalk.

What will Moscow feel like once there are no longer occasional busloads of confused teens from the regions dumped on Red Square to march and rally in support of the government? What will it be like to no longer have a sea of red-shirt-emblazoned youths attending every United Russia rally, or forming brigades to harass the opposition? Most important, how will the British Ambassador ever get used to not having any more teens throwing rotten tomatoes at him?

Big changes are afoot for the Kremlin-sponsored youth movement as it undergoes a dramatic reorganization, reports Kommersant. It is probably premature to say it, but nevertheless, surprisingly and suddenly the movement might actually be on the brink of extinction. But who dealt the deathblow?

According to Anne Applebaum, they apparently come from freer markets. Undertaking an admittedly trite question of why only today we are treated to "a parade of notably stunning tennis champions" and the "feminine pulchritude" of dozens of Russian supermodels, Applebaum finds that previously in the Soviet Union there was no market for beauty.

She writes: "This doesn't mean there weren't any beautiful women, of course, just that they didn't have the clothes or cosmetics to enhance their looks, and, far more important, they couldn't use their faces to launch international careers. Instead of gracing London drawing rooms, they stayed in Minsk, Omsk or Alma-Ata. Instead of couture, they wore cheap polyester. They could become assembly-line foremen, Communist Party bosses, even local femmes fatales, but not Vogue cover girls. They didn't even dream of becoming Vogue cover girls, since very few had ever seen an edition of Vogue."

I don't know about this one ... It's tough to compare today's Russian celebrity athletes with people like the Olympic champion sisters Tamara and Irina Press, who were actually believed to be men.

One day he overwhelmingly supports the Russian president, the next day he hosts big press events to launch an Anna Politkovskaya book. In between he shows up in Louis Vuitton luggage ads with surreptitious and ambiguous messages about the Litvinenko affair.

Say what you will about former Soviet leader Mikhail Gorbachev, but he has a unique ability to remain slippery in a political environment that tends to staple people down in either pro- or anti-government camps.

But the latest comments out of Gorby, which admittedly I am a little late in getting to, show a distinctly more harsh side. According to the New York Times, the author of perestroika was quite disgusted by the banning of Kasyanov's presidential candidacy. He said that the election’s result was “predictable from the outset” and “predetermined by the enormous role that Vladimir Putin played.”

He also took aim at Russia's flawed democratic institutions: "Something is wrong with our elections, and our electoral system needs a major adjustment."

Robert Amsterdam is interviewed by the Calgary Herald today:

Be realistic about Russia: litigator

Khodorkovsky's lawyer warns businesses of risks

Gina Teel, Calgary Herald; with files from Canwest News Service

Canadian corporate leaders need to take off the rose-coloured glasses when it comes to discussing business opportunities in Russia, international litigator Robert Amsterdam said Monday.

What's often missing from polite conversation are the difficulties of doing business in Russia, and strategies on how to mitigate risk as more Russian businesses come knocking on the door here.

The 6th Russian-Norwegian oil and gas conference on issues of the two countries’ partnership in developing the shelf will begin its work in Kaliningrad this week.

The prime minister of Ukraine, Yulia Tymoshenko, has demanded that Gazprom deal directly with RosUkrEnergo, the Ukrainian state oil and gas company rather than through an intermediary as it does now. Tymoshenko linked yesterday’s arrest of suspected crime boss Semyon Mogilevich to the need to rid the gas trade between the two countries of questionable middlemen.

Gazprom is seeking to extend its business relations with Turkey, with plans to launch new projects to enlarge its delivery area in the Middle East and Israel via Turkey in particular. A new agreement between Gazprom and OMV means that Gazprom will receive a 50% stake in the Central European Gas Hub (CEGH) located at Baumgarten which is currently wholly owned by OMV Gas International.

A new report by a Russian institute says that Russian industry is feeling the shortage of equipment and manpower. French carmaker Peugeot Citroen will sign an agreement to build an assembly plant at Kaluga in Russia. The size of the pension and mutual fund industry in Latin America, Russia and the Asian countries excluding Japan was $900 billion in 2006, up from about $200 billion in 2002, according to the Organization for Economic Cooperation and Development. OAO Magnit, Russia's second-largest supermarket chain, will hire Deutsche Bank and Morgan Stanley to underwrite a share sale that will fund expansion. Russian cellphone operator Vimpelcom has received commitment letters from banks for a $3.5 billion loan which will be used to back its acquisition of Golden Telecom. France's Societe Generale insists it will close a deal to take a controlling stake in Rosbank in the next two weeks, after analysts cautioned that the scandal-hit bank may find it difficult to complete the acquisition. August Meyer, the US co-owner of St. Petersburg-based supermarket chain Lenta, is seeking to recover his stake in the company after his Russian business partner, Oleg Zherebtsov, replaced the CEO in an apparent attempt to gain control.

TODAY: Gorbachev criticizes Putin and electoral system. Russia to limit foreign election monitors. Mogilevich to be charged this week. Russia unveils new military uniform.

Following the rejection of Mikhail Kasyanov as a presidential candidate, Mikhail Gorbachev, the former and final leader of the Soviet Union, has criticized the state of Russia’s electoral system and called for extensive reforms to a system that has secured power for President Vladimir Putin and the Kremlin’s inner circle. “Something is wrong with our elections, and our electoral system needs a major adjustment,” he said.

Russia is to limit foreign monitors at its presidential election in March to half the number that observed the last presidential poll in 2004. The Organisation for Security and Co-operation in Europe, or OSCE, will be restricted to just 70 observers, less than a quarter of its quota in 2004. Democratic candidate Andrei Bogdanov says he hopes to win as much as 25% of the vote.

How pressure on PwC and a dying prisoner serve state interests

One of the most important and essential characteristics of a well organized Soviet-style show trial is a categorical unwillingness on behalf of third parties to participate in or assist the defense in providing any evidence or testimony.

This unwillingness, perhaps the deepest perversion of justice imaginable, is not something that comes about naturally, but rather is carefully cultivated through an elaborate campaign of fear generated by high-profile examples. These are precisely the dark arts being practiced right now by certain officials within the government of the Russian Federation, which has manipulated a court decision against one of the world’s most highly respected accounting firms, PriceWaterhouseCoopers, and is on the verge of murdering former Yukos executive Vasily Alexanyan in prison by illegally denying him medical care.

Today we are pleased and honored to have been included as one of Siberian Light's top Russia blogs.

Andy Young has been doing a terrific and even-handed job over there at SL, and I am a frequent reader.

Other blogs to get Andy's nod include Sean's Russia Blog, La Russophobe, Russia Blog, and the always entertaining English Russia.

It appears that Russneft, the thriving private oil company seized from Mikhail Gutseriyev by the Kremlin, is one step closer to being passed into the hands of Oleg Deripaska's Basic Element.

The Moscow Times reports today that the company has been told it owes $800 million in back taxes, which is expected to drive the price down for the new owners:

"This is more about political, rather than legal issues," said Timur Khairullin, oil and gas analyst at Antanta Capital. "Bearing in mind what happened to Yukos, there is no guarantee that the authorities will not slap more tax claims on the company to take control of it."

It has been a long time since we have heard any further rumors of Abramovich or Mittal going after Russneft ownership, as it has been made clear that the state wants this property to fall into friendly hands. Are any shareholders going to bother coordinating a resistance to the bullying, or just hope to minimize their losses? If present trends are any indication, we can expect the latter.

[Editor’s note: We continue our publication of a series of articles from our correspondent Grigory Pasko – his prison sketches. In our opinion, the things Grigory is writing about from his own experience in the GULag are just as applicable to today’s Russia. See part 1 and part 2 of this series.]

Life Behind Bars: Captive of the Apes

By Grigory Pasko, journalist

Author’s note: Today, the Russian power, the KGB system, bluntly and doggedly, in full view of the entire world, is physically destroying Vasily Alexanyan, former lawyer and defender of M. Khodorkovsky, former executive vice-president of OAO NK «YUKOS», simply because this man chose not to bear false witness against another man, Mikhail Khodorkovsky. He refused to commit perjury. In actuality, there are many like him in Russian prisons. Because prison in Russia is an instrument for destroying the unwanted. There is no shortage of cruelty when a system of repressive power seeks to protect itself.

The text around Stalin reads “ENVOY TO RUSSIA FROM SATAN AND THE DEVIL!!!”. Stalin’s axe handle says “CPSU” and the blade says “NKVD”. He is standing on the “LENIN” mausoleum. (Photo courtesy of TATTOOirovka.com)

Below is an exclusive translation of an frightening/amusing article from Vedomosti on the perpetual power fantasies of Sergey Mironov, who hopes to see no changes in leadership for decades.

Vladimir Putin will be able to rule Russia until the year 2026

By Alexey Nikolsky

Vedomosti 12:56 21.01.2008

The chairman of the Federation Council, Sergey Mironov, did not rule this out.

In an interview with «Moskovsky komsomolets», published today, Mironov reported that in the autumn, «A Just Russia», as he had promised last year, will introduce a draft law on extending the term of presidential powers to 5-7 years. If the term will be extended to 7 years, Vladimir Putin will be able to be elected anew in the year 2012 and to lead the country until the year 2026, after which Dmitry Medvedev will once again be able to occupy the post of president.

The new book about spy defector Sergei Tretyakov and his various interviews divulging Russia's state secrets is causing quite the political tornado. RA plans to post a review of the book when time permits, but so far some people are already calling for a probe on Strobe Talbott, and fallout could be significant in Canada.

An interesting article by Parag Khanna of the New America Foundation in the New York Times Magazine sets forth a bold new geopolitical vision which sees America's influence waning, and the rise of a new power troika of the U.S., Europe, and China. Russia, in Parag Khanna's opinion, is not punching anywhere near this weight class. No shortage of controversial statements in this piece (see after the jump), and perhaps a significant overestimation of Europe's success in economically incorporating Russia.

From the New York Times Magazine:

At best, America’s unipolar moment lasted through the 1990s, but that was also a decade adrift. The post-cold-war “peace dividend” was never converted into a global liberal order under American leadership. So now, rather than bestriding the globe, we are competing — and losing — in a geopolitical marketplace alongside the world’s other superpowers: the European Union and China. This is geopolitics in the 21st century: the new Big Three. Not Russia, an increasingly depopulated expanse run by Gazprom.gov; not an incoherent Islam embroiled in internal wars; and not India, lagging decades behind China in both development and strategic appetite. The Big Three make the rules — their own rules — without any one of them dominating. And the others are left to choose their suitors in this post-American world.

The more we appreciate the differences among the American, European and Chinese worldviews, the more we will see the planetary stakes of the new global game. Previous eras of balance of power have been among European powers sharing a common culture. The cold war, too, was not truly an “East-West” struggle; it remained essentially a contest over Europe. What we have today, for the first time in history, is a global, multicivilizational, multipolar battle. (...)

EDM explores whether or not the arrest of the gas mob kingpin Semyon Mogilevich helps or hurts Dmitri Medvedev. Given that the state television stations were allowed to give the arrests wide coverage, it is assumed that this move represents the latest of the spy wars - but against whom?

Eurasia Daily Monitor:

Portnikov added: “It needs to be understood that RosUkrEnergo is not simply an accidental private structure that suddenly became a monopolist in such an operation as the export of Central Asian gas to Ukraine.” (In 2005, RosUkrEnergo took over the sale of gas from Turkmenistan to Ukraine, a multi-billion-dollar business.) “It is in fact one of the elements in the corporatization of the gas economy in Russia. And those groups that are not in agreement with the possible monopolization of power by the groups that are now bringing Dmitry Medvedev into the presidential post are simply letting their competitors know that they still have quite a number of serious levers of influence” (K2kapital.com, January 25).

Others, however, believe Mogilevich’s arrest was not an action undertaken by the siloviki to harm Medvedev, but one taken by Putin to protect him. Mogilevich and Nekrasov were reportedly detained by officers of the Interior Ministry’s economic security department, not by the FSB or the Investigative Committee. (The Investigative Committee, which is headed by Alexander Bastrykin and also associated with the Sechin camp, is conducting the criminal case against Deputy Finance Minister Sergei Storchak, who was arrested late last year for alleged embezzlement and whose boss, Finance Minister Alexei Kudrin, is associated with the Kremlin faction that includes Medvedev.) The Interior Ministry’s economic security department is headed by Yevgeny Shkolov, a trusted associate of the president who served together with Putin in the KGB in Dresden.

The Moscow District Federal Arbitration Court has ordered oil company Russneft to pay $8.1 billion in back taxes. The amount includes 17 billion rubles in tax debts for 2005 and 3 billion rubles for 2003 and the first half of 2004. The decision “could open the door for Basic Element, owned by Kremlin-friendly tycoon Oleg Deripaska, which is bidding for Russneft, to acquire the company cheaper.”

As a preliminary step to the formation of “a Gas OPEC” out of the Gas Exporting Countries Forum, Russia is preparing to create an organization of that type within the CIS following a proposal made by a lobbying group of giant Gazprom. More on a potential ‘Gas OPEC’. The countries involved will discuss the idea of forming such a group during their next meeting in June.

Gazprom is moving aggressively into retail natural-gas markets in Europe, with plans to sell gas and power directly to consumers. One newspaper believes that Gazprom managed to take control of Serbia’s state-run oil and gas company “for a bargain price.” The company has signed a cooperation agreement with Austrian oil and gas company OMV. It is being reported that the company brokered the deal to ensure that From Russia, the controversial exhibition of Russian and French paintings which features Matisse's Dance, went ahead at London's Royal Academy.

A UK website has a new method of evaluating the qualities of sovereign wealth funds, and finds that Russia’s has a higher rating than that of Abu Dhabi. Dmitry Medvedev has commented on “The Development of the Agro-Industrial Complex” project, which has improved aspects of agriculture. The interstate council of the Eurasian Economic Community met last week in Moscow. “Normative documents for the establishment of a customs union were considered.” Russian automaker GAZ Group intends to launch production of its new Siber car in March.

TODAY: Kasyanov barred from presidential election leaving just four candidates. Violence for governors and journalists. Russia to ban Indian plant imports?

The Kremlin has barred Mikhail Kasyanov, its “last liberal opposition candidate”, from the upcoming presidential election. One newspaper says Vladimir Putin “took his revenge on a former ally who had turned into a fierce critic,” and Kasyanov himself agrees that “undoubtedly the decision not to register my candidacy ... was made personally by Vladimir Putin.” One journalist says that the barring clears a path for “the Kremlin’s favorite candidate [Dmitry Medvedev] to run all but unchallenged.” Kasyanov commented: "The country has stepped onto the slippery slope towards thievish totalitarianism. Violence and dictatorship are the main ideas of this regime." Profiles four the four remaining candidates can be found here. Russia's Election Commission has begun sending out invitations to international observers for the election, although those who recall the various international fiascos caused by the last set of observer invitations will have their suspicions...

The Moscow Times has published a new compelling, powerful, and overwhelmingly urgent editorial condemning the Russian government's blackmail against Yukos prisoner Vasily Alexanyan - a crass exercise of denying life-saving medical care in order to force false testimony against Mikhail Khodorkovsky and other political prisoners. As this courageous man lies on his deathbed and the wider world remains silent, we can be sure that the procuracy is demonstrating exactly how much they can get away with. It is a categorically odious action by any humanitarian standards, regardless of one's opinion about the Yukos case or the direction of the current Russian government.

The Moscow Times:

Monday, January 28, 2008. Issue 3829. Page 10.

Abusing a Dying Man's Legal Rights

No, he has not been sentenced to life in prison. In fact, he has not even been convicted of anything. He has AIDS and is not receiving proper treatment while awaiting trial in a detention facility on fraud and tax evasion charges.

Prosecutors and judges have deemed it appropriate to keep this gravely ill man behind bars, and one prosecutor even found nothing wrong with disclosing Vasily Aleksanyan's condition, blatantly violating his right to privacy.

Newspapers have recently been awash with headlines about the dramatic arrest of the Russian mob kingpin Semyon Mogilevich, a criminal mastermind sought by Western law enforcement agents for his innovative and complex money laundering schemes, as well as other accusations of unsavory activities in arms dealing, narcotics, fraud, and prostitution. As a SWAT Team-like group of masked, armed men swarmed around to arrest Mr. Mogilevich and Vladimir Nekrasov, the owner of cosmetics retailer Arbat Prestige, it seemed like a scene pulled straight out of Hollywood. Russia again looks like the winner, taking down the internationally wanted "big fish" of organized crime.

But given that Mr. Mogilevich has lived comfortably (and arguably thrived) under Russian protection since 2003, the story is far more complex under the surface.

This weekend the Globe and Mail is reporting on accusations by the former Russian spy Sergei Tretyakov, who claims that he assisted other UN agents in helping Russia steal $500 million from the UN's oil-for-food program in Iraq.

Describing the Russian delegation to the UN, Tretyakov described it as a "nest of spies" and a fertile ground for recruiting international experts to share damaging information about the United States - including one Canadian nuclear specialist.

He stated in the interview: "I got extremely disgusted with the Russian government, and I don't see any light at the end of the tunnel. I'm not very emotional. I'm not a Boy Scout. (...) Knowing people who are running Russia, I started feeling that it's immoral to help them. And finally in my life, when I defected, I did something good in my life. Because I want to help United States."

This nobility might be very well and good, but with regard to the UN fraud, we aren't dealing with black-and-white moral absolutism, but rather entrepreneurial thievery. Wasn't it Cherkesov's challenge to the siloviki that "We must not allow warriors to turn into traders"?

His story is dramatic indeed - almost like an espionage novel. Oh wait, there is actually a book being pitched at the same time: "Comrade J.: The Untold Secrets of Russia's Master Spy in America after the End of the Cold War" by former Washington Post journalist Pete Earley.

The obvious problem with the dirt being dished by Tretyakov is determining how much is true and how much is exaggerated to sell exciting books - though from my experience, I am inclined to believe that a former spy of his stature would see no need to exaggerate.

Deals in Serbia, Austria and Bulgaria see Russian energy power march on

By Derek Brower, journalist

IF YOU needed another example of the confusion in the EU’s energy policy, events in the past week provided it. In the space of just a few days Russia signed contracts that will create an energy satellite state on the EU’s periphery, put oil exports from the Caspian under total control of Moscow, develop a natural gas hub in central Europe, and probably kill off the Nabucco pipeline project.

Friends, countrymen... give me your energy sector

The Commission has for more than two years been working to prevent Gazprom from spreading undue influence over the EU’s energy markets, seeing the company and its political masters as a threat to energy security. It has begged member states and companies to “speak with one voice” to Gazprom. The Commission’s president, Jose Manuel Barroso, and its energy chief, Andris Piebalgs, have repeatedly warned Europeans of the dangerous imbalance in the energy relationship with Russia.

So you’d expect that Commission to have been watching developments in Serbia, Bulgaria and Austria – the scenes of Gazprom’s latest triumphs – with some foreboding. Not really. Instead, Wednesday saw the Commission release yet another set of unrealistic targets for the EU’s battle against carbon emissions.

This won't do much to help those market jitters:

Financial Times:

Gas exporters set to hold ‘gas Opec’ talks

By Andrew Edgecliffe-Johnson in Davos

Leading gas producers will discuss the possible formation of “a gas Opec” at a summit in Moscow in June, Qatar’s energy minister said on Friday, raising the prospect of more co-ordination between gas exporters.

Today the Washington Post has broken a story revealing a private meeting between presidential hopeful U.S. Sen. John McCain and Russian billionaire and Kremlin loyalist Oleg Deripaska. This was apparently set up by Rick Davis, McCain's campaign manager, who previously worked as a lobbyist for several pro-Kremlin outfits.

Angola’s Opec cap is a headache for oil majors active in the country’s costly deep-water areas and will do no favours to the world oil-supply picture.

By Tom Nicholls

Earlier this month, ExxonMobil started production from the giant Kizomba C development, offshore Angola. The 0.6 billion barrel oil project – which has the capacity to produce 200,000 barrels of oil a day – is a milestone for the US supermajor, the operator, and for the country.
In technical terms, the development is a major achievement: located in more than 800 metres of water, over 145 km offshore, the resource is being produced with two floating production, storage, and offloading vessels and 36 subsea wells, making it ExxonMobil’s biggest subsea development. It is significant financially too: with its 40% equity share, even a company the size of ExxonMobil can expect some material uplift to its upstream profile.

Desidério da Costa, Angola’s oil minister. Angola’s new Opec production quota is incompatible with the major upstream investment plans under way

Below is a translation from the French newspaper Le Monde about how Gerhard Schröder is successfully exploiting Angela Merkel's difficulties with the regional elections and the sticky issue of handling immigrant youth delinquency, and may be set for a dramatic and unexpected political comeback:

Schröder's Political Comeback

By Daniel Vernet
Le Monde, Jan. 16, 2008

Angela Merkel’s easy days are over! During the two first years of her term beginning in the fall of 2005, the German chancellor has been cruising over the reforms implemented by the previous Red-Green government. In 2007, she vaulted herself to an international level with rotating presidencies of the European Union and the G8 (the largest industrial countries in the world). Again and again she breaks popularity records, far ahead of her potential competitors.

From the Economist:

The overall result is dismal. Russia tends to put countries in one of three categories: those it flatters, those it squeezes, and those it ignores. Countries can be switched with remarkable rapidity. Slovakia, the Czech Republic, Slovenia and Romania are, for now, in the “ignore” category. Estonia and Lithuania, as well as, most of all, Britain, are in the “squeeze” category. France, Germany, Italy. Bulgaria and Poland are, for now, in the “flatter” box. Latvia was there too—but this week’s news of the expulsion of a Russian embassy official, supposedly caught red-handed trying to bribe local public servants, may change things.

The result is a kind of diplomatic ratchet, which goes in one direction only. That suits the Kremlin fine—it doesn’t need to be friendly with all European countries, just enough to prevent any united European policy emerging.

When you hear about one former Soviet nation ejecting a diplomat on espionage accusations, followed by reciprocal measures in Moscow, you would probably assume we are talking about Georgia again.

Not so. Today it is Latvia who is getting the British Council treatment, with a diplomat being expelled and "declared persona non grata for activities incompatible with his status and for damaging Russia's security interests." This is largely understood to mean that Russia is saying that the diplomat is a spy - which would be a tit-for-tat response for Latvia's ejection of a individual at the Russian embassy earlier this week on similar charges. What's going on here?

Robert Amsterdam has a new opinion article running in the Washington Times today:

A cautionary tale By Robert Amsterdam January 25, 2008

Some may look into his eyes and see the soul of democrat, and others may see something far more sinister. Regardless of their general impression of President Vladimir Putin as an individual, each U.S. presidential candidate needs to make a careful reckoning of the enormous foreign policy challenge posed by Russia. Each must come forward with innovative proposals to constructively engage the former Cold War adversary on everything from terrorism and nuclear proliferation to basic adherence to the rule of law and human rights.

So far, this wide field of candidates remarkably has been disappointing and unspecific on Russian policy with advisors cautioning to speak only about foreign policy issues like Iraq and Iran.

Gazprom’s acquisition of a majority stake in NIS is Russia’s “first big reward for supporting Serbia in trying to stop Kosovo from declaring unilateral independence”.

Russian Foreign Minister Sergei Lavrov has asked Libya to release the head of oil giant Lukoil's overseas office in Libya who was detained in late 2007 and reportedly involved in a commercial spy case.

The United States agreed to join an energy summit in Kiev later this year, a move that supports Ukraine's attempts to arrange alternatives to Russian supplies of crude oil and natural gas.

Russia’s oil exports to China in 2007 amounted to 14.5 million tonnes, 9% lower than in 2006. New data from the Fuel and Energy Dispatch Cente says that Russian oil companies increased exploration drilling by 20.6% in 2007. Russia-focused Imperial Energy said its Russian-registered hydrocarbon reserves grew 229% last year to 372 million barrels of oil equivalent.

TODAY: Kasyanov harassment; Putin’s carbon footprint; Rogozin to work constructively with NATO; Japanese government withdraw claims of espionage; Moscow’s wedding boom.

The harassment of Mikhail Kasyanov’s campaign leaders was “a clear, a well-coordinated effort designed either to discredit the former prime minister or force him out of the race altogether” - and the latter now looks certain to be the case.

According to the Kremlin, Vladimir Putin's visit to Bulgaria last week was his 190th foreign trip, leading one journalist to note that “it is difficult to imagine anyone leaving a larger carbon footprint than Putin”. Russia’s new NATO representative, Dmitry Rogozin, has said that he is ready to work constructively with the alliance. On his appointment to the role, he said, “A country has the right to send either a traitor or a patriot. I am a patriot.” Russia has played down reports that a draft UN resolution on Iran's nuclear programme will call for new sanctions, although Foreign Minister Sergei Lavrov said the draft does call for countries to be vigilant in their trade with Iran.

Russia is in a strong position at the World Economic Forum, with optimism over it’s outlook prompting some investors to take a closer look at the country. "I think the emerging markets are going to be largely immune to the subprime crisis," said the CEO of Pakistan's largest private bank. The notion that Russia is the most insulated from the ill effects of a United States recession among the chief emerging-market economies offers “an extraordinary role for a country on its knees not so long ago.” The government hopes to save the sturgeon from extinction by setting up a state caviar monopoly and stiffening punishments for poachers. "In Iran, for example, they impose the death penalty for poaching sturgeon," said the government’s chief fisheries official. "I am not calling for that, God forbid, but it shows how seriously the topic is treated." Russian stocks climbed for the first time in eight days as the MICEX Index ended “its longest losing streak in three years.” The government has assigned Finance Minister Alexei Kudrin to set up a special body to combat inflation, as it seeks tools other that the rouble appreciation to stop price rises.

The latest installment of Grigory Pasko's Faces of the Opposition series features Olga Galkina of Yabloko. See our YouTube channel for much more.

Here is an audio recording of radio interview by Focus 580 with David Inge (WILL-AM radio) with Robert Amsterdam about the Yukos and Khodorkovsky cases, as well as a discussion of other contemporary Russia issues during his visit to the University of Illinois this week.

Russia's state monopoly over mainstream media? Check. Party politics? Check. Utilities? Check. Natural gas? Check. All pipeline exports? Check. Oil? Check - thanks to what was stolen from Yukos, of course. Arms? Check. Space technology, positioning systems, and satellite launches? Check. Titanium? Check. Aeronautics? Check. And now .... Sturgeon? Check!

The Kremlin is looking to establish an official state monopoly over the lucrative caviar trade, as black market traders, poachers, and unsavory criminal groups are driving the sturgeon population to the brink of extinction.

We need no reminder of how seriously the Kremlin takes fish. Last September when the new Prime Minister Viktor Zubkov (when is the last time anybody wrote about him?) was attempting to assert his new authority, he publicly ripped into the outgoing cabinet in a Soviet-style exercise in humiliation - most harshly castigating Agriculture Minister Alexei Gordeyev: "That's a reprimand for you! You are responsible for fish."

Perhaps then we should have seen the caviar monopoly coming - should the company making Putinka vodka be worried now?

A few days ago I blogged about how many problems involving the Russian government are requiring some strange solutions. A few more examples come to mind...

Problem - Russia says your country's meat is unsafe and bans its import.

Solution - Prevent the US from installing a missile defense system in your country, and the inspectors instantly declare your meat fit for consumption by Russians.

Problem - You want to see a pluralistic democracy in your country. This does not correspond to the vision the Kremlin has.

Solution - They draft you into the army, even though you've gone through reserve officer training in college and aren't eligible for the draft.

Anyone want to contribute?

We have written many times in the past about the challenge to European energy security posed by Gazprom's Nord Stream pipeline project, and our correspondent Grigory Pasko has actually traveled along the entire route of the pipeline for an extensive online series of articles and a future documentary film. In addition to the messy politics of the affair and the disgraceful hiring of former German Chancellor Gerhard Schröder, there are also considerable security and ecological risks posed by the project.

According to a rather shocking new article published in the German paper TAZ on Jan. 18, the Nord Stream joint venture is planning on flushing this Baltic pipeline with many tons of toxic cleaning fluid, which will later be dumped in the sea. What follows is an exclusive translation of the article - the original German version can be read here.

Rinse for the Gazprom Pipeline

Poisonous Brew for the Baltic Sea

The Gazprom pipeline is to be rinsed with billions of litres of a poisonous alkaline solution, which will be directed into the sea. This is lethal for fish.

By Reinhard Wolff, TAZ

STOCKHOLM - Parts of the Baltic will have to reckon with a massive toxic shock in connection with the planned pipeline between Russia and Germany. The pipeline is to be 1,200 km long. And the Nord Stream consortium, which is led by Gazprom, is planning to flush it with a poisonous “cleaning fluid” before going online, in order to clean and furbish the pipeline’s interior surfaces.

The Moscow Times offers an important and timely article today about the difficult access to AIDS treatment for prisoners held in state custody. The article notes that according to Russian law, a person diagnosed with serious health problems should not be kept in pre-trial detention, which is exactly what is being done to Vasily Alexanyan - constituting perhaps the first case in history of AIDS treatment being used as political coercive weapon to force false testimony against Yukos and Mikhail Khodorkovsky.

Some facts from the article:

Number of inmates in Russian prisons and jails with tuberculosis: 43,000
Number of inmates in Russian prisons and jails with AIDS/HIV: 42,000
Increase since 2004: 10,000
Number of 3,500 AIDS patients held in Leningrad receiving treatment: 100

The following op/ed about Vasily Alexanyan (or Alexanian, Aleksanyan if you prefer), was translated from Monday's Vedomosti. The author argues that even under Joseph Stalin, the Russian government at least provided medical care to sick zeks.

Man of the week: Heal thyself

Kirill Kharatyan

21.01.2008, №9 (2031)

Former lawyer, former head of the YUKOS legal department, former executive president of YUKOS with the powers of president, a former wealthy, educated, and, they say, sharp-witted person; now – a gaunt, nearly blind inmate, suffering concurrently from two fatal diseases, who thinks only about whether or not he’ll live to see the day of his trial. Such a fate has befallen Vasily Alexanyan.

For what, one asks? Ah, for taxes, that is for complicity in an oil company.

U.S. Secretary of State Condoleezza Rice is making some news for her comments on Russia at the World Economic Forum at Davos. As the conference organizers are at great pains to make everyone get along and sound civilized, usually most tough questions and direct engagements are avoided, by Rice managed to slip in a little "hit and run" quip at Russia, but then later made up for it by saying the talk of a new Cold War is "hyperbolic nonsense." See the video of her speech here, and some excerpted text from the transcript after the jump.

Russian state Development Bank, also known as VEB, will lend $2 billion to state oil firm Rosneft to help it modernise the Tuapse refinery on the Black Sea.

China Oilfield Services says the Russian government has blocked its bid for an oil-well drilling unit of BP’s Moscow-based venture.

Russian stocks sank for a seventh day on concern that a weakening economic outlook in the US will hurt demand in the markets, particularly for metals and energy. Oil producers Surgutneftegaz and Tatneft “led the declines”.

Russia, together with other members of the Gas Exporting Countries Forum, could announce a cartel similar to OPEC in Moscow in June, already predicted to cause tensions with the West.

TODAY: Zyuganov won’t pull out of the presidential race, although Medvedev looks set for an overwhelming victory. Lavrov speaks out on international disputes. NATO-Russia summit to go ahead in April. Kremlin wants Russian GPS system to rival the US.

Communist leader Gennady Zyuganov insists that he won’t pull out of the forthcoming presidential elections, despite reports that poor media coverage has pushed his party to consider it. The party secretary said, "The outcome [of the elections] is almost predetermined. The question is whether there is any sense in taking part in this farce." Zyuganov believes that a media campaign is being waged against him. The Liberal Democratic Party leader and presidential candidate Vladimir Zhirinovsky gave a speech in front of the British Embassy, blaming Britain for fomenting the 18th-century war between Russia and Sweden and starting World War II. “In time, Britain will be recognized as the most barbaric country on the planet,” he said. Mikhail Kasyanov has run into further problems with his bid to run for president, with authorities now claiming that 50,000 of Kasyanov’s signatures show “discrepancies”. A new poll by Levada, in any case, shows that “Kremlin front-runner” in the forthcoming election, Dmitry Medvedev, already has the backing of 82% of voters.

It is being reported that France has unfrozen one of the Russian Central Bank's accounts in French commercial banks, frozen as part of a lawsuit by Swiss trading firm Noga. Finance Minister Alexei Kudrin says that Russia, “a sufficiently stable region for investment”, and other countries with large gold and currency reserves could help the world economy weather the current crisis. He says that Russia would come to be seen as “an island of stability.” The CEO of Merrill Lynch has warned that Russia is not immune to the crisis. "Even though we do see great growth in Russia and India, China and Brazil, I think that none of those markets are immune to a global slowdown," he said. The organizers of the 11th Russian Economic Forum are rebranding the London-based event in an apparent attempt to rekindle interest in the annual gathering after many of last year’s participants pulled out at the last minute. Vimpelcom, Russia's second-largest cell phone operator, is concerned that significant deterioration in the markets could threaten a $4.3 billion planned acquisition of fixed-line compatriot Golden Telecom. Peter Hambro Mining, the second-largest producer of gold in Russia, said it will achieve annual production of 1 million ounces a year later than previously planned.

Robert Amsterdam has a new column running on the JURIST legal news website, providing an update on the latest developments in the Khodorkovsky case. He writes: "After nearly five years of arguing that the case against Khodorkovsky is political in nature, the truth of his defense counsels' position has been validated time and time again. Last week the respected Russian business paper Vedomosti reported that the complete political steering of the affair meant that there were essentially three most likely scenarios that could be played out. In any case, the judges will have little or no role determining the precise outcome. Rather, the precise outcome will depend upon the political options facing the Kremlin. By the time of trial, prosecutors will no doubt show up to court wearing jerseys from either "Team Rosneft" or "Team Gazprom". So transparent are the vested interests of the state-controlled companies in legitimizing their theft of Yukos assets that the prosecutors will themselves be little more than puppets acting out the Kremlin's orders.

The competing clans may not have agreed whether Khodorkovsky should be locked away for another five, ten or twenty years. In the meantime, the defense team, in the words of Yuri Schmidt, is left attempting to puzzle out the winds of change in the Kremlin to determine whether or not the phony trial against Khodorkovsky will be closed or open, in Siberia or in Moscow, short or long."

Read the full article here - and also see previous case updates published on JURIST here and here.

Below is a translation of an article from Khodorkovsky.ru, dated Jan. 22. It serves as a companion to the Supreme Court transcript of Vasily Alexanyan which we posted earlier.

Supreme Court decides to play god

Terminally ill Vasily Alexanyan kept in detention.

Today, three judges of the Supreme Court of the RF, having heard the arguments of the defenders of Vasily Alexanyan, the speech of Vasily Alexanyan himself, and a thirty-second appearance by the procurator, emerged from chambers with a decision based on information that had not sounded in court, and which was not known even to the lawyers and the accused.

If you are like me, you have probably read about two dozen op/eds in the past year by highly respected thought leaders about how the West should "handle" a "resurgent" Russia. Here is one more from the FT:

"How should the rest of the world deal with this resurgent Russia?

First, it should acknowledge that in many ways Russia is reasserting its “natural” national interests. For most of the 20th century, Russia pursued an abnormal foreign policy shaped by the dictates of Marxism-Leninism or – after the collapse of the Soviet Union – financial dependence on the west. Russia now has an important, independent voice in the world.

The country is clearly still yearning for acceptance in the global community. As Mikhail Gorbachev, the last general secretary of the Soviet Communist party, recently told an audience at Harvard University, Russia wants to be treated as a respected partner in the international community. “It will not accept the position of a kid brother, the position of a person who does what someone tells it to do,” he said. “We need equal co-operation. We need equitable co-operation.”

That argues for a policy of patient – but firm – engagement."

For all this talk about Russia's newfound power, few seem to be confidently able to talk about what they want to do with it, least of all those inside the Kremlin.

Reuben F. Johnson at the Weekly Standard writes about the amusing case of Sergei Zhiltsov and Vladimir Barinov of United Russia, who were fired for suspected fraud for having solicited campaign contributions for Dmitri Medvedev before he was even registered as a candidate. Johnson wonders why Medvedev, who is independently wealthy, and can rely on disproportionate television coverage, regional support, and suppression of any potential rival, would even need to waste money emulating a Western-style touring campaign.

With regard to Russia's reactions to any criticism of their democratic process, Johnson finds an excellent quote:

In an interview that the late Senator Daniel Moynihan gave to New Yorker correspondent Jeffrey Toobin in1999 he said that "Hannah Arendt had it right. She said one of the great advantages of the totalitarian elites of the Twenties and Thirties was to turn any statement of fact into a question of motive." This perfectly characterizes the response by one of Russia's leading political analysts, Sergei Markov, who is also now a newly-elected Duma member and one of the select few talking heads with the Kremlin's blessing to push the party line to the Western press..

"You can listen to everything they say, except when it comes to Russia," said Markov to the Times. "There are many Russophobes there."

Below is the exclusive English translation of the transcript of Vasily Alexanyan's comments before Russia's Supreme Court - an urgent matter reported on here at this blog and in other media (his last name is often spelled "Aleksanyan" and "Alexanian"). The former Yukos general counsel is literally dying in prison before the indifferent eyes of Russia's prosecutors and judges, and this impassioned plea below is among the more incredible expressions of what has become of the Yukos case. - Editor

Russian oil executive Vasily Alexanian is seen on a video screen during a Supreme Court hearing in Moscow January 16, 2008. (Photo: Reuters)

Vasily Alexanyan's testimony before the Supreme Court of the Russian Federation, Jan. 22, 2008

I’d like to add a few very important points. I beg your pardon for the cough. I want you to hear certain things from me that are of critical significance for understanding what is happening and for all these “patriot games” which, unfortunately, are costing me life and health.

“Gazprom has taken advantage of the disarray inside the European Union by forging ahead with its own contracts with Italy, Bulgaria, Hungary and now Serbia.” Serbia announced that Gazprom bought a 51% stake in NIS, its oil monopoly. Komi Regiongas, a wholly-owned subsidiary of Gazprom, has offered to buy all gas produced by Aladdin Oil and Gas at the Middle Sedolskoye field in Russia.

There is a “95% chance” that Russia's United Company RUSAL, the world's top primary aluminium producer, will move its initial public offering of shares from London to Hong Kong, because investors there are “more hungry”.

Sergei Lavrov, Russia’s foreign minister, says that Iran will be ready to answer all questions concerning its nuclear program within the next few weeks.

TODAY: Medvedev makes his first major campaign address, targeting corruption and pledging peaceful development. Kasyanov criminal probe continues with accusations on both sides. Putin’s naval task force exercise “farcical”.

Russia's Prosecutor-General's Office has launched a criminal probe against former Prime Minister Mikhail Kasyanov. His campaign managers have issued a statement saying that those who had signed Kasyanov’s campaign documents were being threatened with home searches, arrests and dismissal from their jobs. His spokeswoman said that the investigation was “a political decision that is made by one person. Everybody knows who that person is.” Meanwhile, Democratic Party leader Andrei Bogdanov could be registered as a presidential candidate despite the elections commission claiming that 3% of his signatures were invalid. Dmitry Medvedev has made his first major campaign address, stating his main goal as being the continuation of peaceful and stable development in Russia. Medvedev said that Russia was in the grip of “legal nihilism”, that the fight against corruption should become a national program, and that Russia will not sever relations with “problem states” - presumably such as Iran and North Korea - despite international pressure to do so.

Russia's VEB state bank for development and foreign trade plans to swap its 5% stake in EADS for a holding in Russia's state-owned aircraft maker United Aircraft Corp. Russia's Transcontainer, a unit of railway monopoly RZhD, plans to hold an initial public offering of up to 34% of its shares in early October. Andrei Kostin, chief executive officer of VTB Group, says that emerging markets led by China, India and Russia will help counter a decline in the US economy. Kostin also foresees VTB acquisitions in Ukraine and Kazakhstan, which will open its first branch in India next month. Italian cable and fibre optic giant Prysmian has about $2.9 billion for possible acquisitions, and has pinpointed Russia as an important emerging market. Russian stock markets have recovered from their “rollercoaster ride”, partly due to the US Federal Reserve’s decision to slash interest rates.

As though it weren't enough for Nabucco to have to compete against the Gazprom-Eni South Stream project, locking the EU into just one supplier from the East. Then Turkmenistan had to go and pull a move out of the Kremlin's book and cut off supply - raising additional worries that even if Europe were able to diversify and get some Central Asia gas without passing through Russia, there could still be problems anyways. Reuters reports on the Caspian problem behind European energy security:

Turkmenistan, which Brussels has been trying to lure into becoming a major Nabucco supplier, cut off supplies to Iran at the end of December, creating a domino effect that stretched to Greece and raising doubts about its reliability as a supplier.

"Last week's developments haven't exactly helped Nabucco's arguments in favour of energy security," said Jonathan Stern of the Oxford Institute for Energy Studies.

This week's big Gazprom news is that their bid to take over Serbia's national energy monopoly, NIS, at a knockdown price was successful. A Fistful of Euros has an excellent post summarizing the various motives leading to Serbia offloading the company for $2 billion less than it was worth, and a good article from Reuters quotes analyst Miroslav Prokopijevic, who argues that "I think this is a catastrophic move. ... Serbia is becoming hostage of one country and of one company that does not have a tradition of market oriented behaviour."

It is frankly astonishing to see how many countries are willing to believe that the Kremlin will make them a central distribution hub - it's the same logic that has roiled Germany, Austria, Hungary, Bulgaria and others. That's quite a few distribution points, but I can imagine how the very possibility of controlling the gas supply to Croatia, Albania, and other Southern Europe countries must seem irresistible to Serbia.

Last week Robert Amsterdam was interviewed by several Serbian media outlets about the Gazprom bid - after the jump, a translation of the most important article published. The coverage started several robust conversations on the message boards, which can be read here.

[Read part 1 of this series here]

Life Behind Bars - Part 2

By Grigory Pasko, journalist

In every barrack in a colony there is a television. Therefore, in time free from work, the prisoners have the right to watch television shows until 22:00. Inasmuch as there are practically no people with a higher education in the camps, in the main there’s youth sitting there, so they watch the shows that correspond to their level of intellectual development. As an example, they watch absolutely pointless television shows such as «House-2» [a “reality show”, somewhat racier than similar ones in the US—Trans.].

This tattoo says “CPSU – We’re going the right way, comrades!” (Photo courtesy of www.tatooirovka.com)

By now, readers have no doubt heard about how the Federal Security Service (FSB) of Russia has been inviting Russian employees of the beleaguered British Council to come down to the station for a little talk late at night. Naturally, the evil Western press organs – stooges of Anglo-American imperialism – have been spinning these innocent chats as illegal interrogations and crude efforts at intimidation of innocent Russian citizens.

Nothing could be further from the truth! In a press release dated 16 January 2008 (but, strangely, not yet available on the FSB’s own Russian-only website, which appears not to have been updated since 15 January), the Public Relations Center of the FSB of Russia explains it all, in glorious Russian officialese:

The former PM and opposition candidate Mikhail Kasyanov has been accused by the authorities of forging signatures in his registration forms for candidacy in the presidential elections. With Kasyanov removed from elections, then the shoe-in successor Dmitri Medvedev would only have to compete against nationalist Vladimir Zhirinovsky, Communist leader Gennady Zyuganov, and the democrat Andrei Bogdanov - who apparently offer as much diversity in the spectrum of opinion as the Kremlin deems necessary for the upcoming (s)elections.

The things we are asked to believe in Russia today...

Here is an interesting bit of conversation from a Financial Times round table transcript about the World Economic Forum at Davos. During last year's session, Russia's president-to-be made his international debut before the global business community with a long speech (see the video here). What might not have been apparent was how tightly controlled the discussions during the event were by the conference organizers, who were desperately afraid the Russians would walk out if asked difficult or challenging questions:

Gideon Rachman: "Politically it is much the same. You do not want to be too cynical about it - it is nice that they think they can bring peace to the Middle East and so on - but the whole sense of Davos is of glossing over conflict. They bring Iranians and Americans together for a couple of days to have a civilised sounding conversation before they go away. The downside is that some of the debates deliberately shy away from confrontation. I mentioned last year's Russia discussion with Medvedev. Davos organisers were treading on eggshells because they didn't want the Russians to walk out. So, some of the toughest questions were not asked. And that is a problem with the whole Davos format. But, having said that, you do get a lot of diverse people there and maybe that is just one of the bargains you have to strike."

TODAY: Medvedev publishes income declaration. Putin and Medvedev could “take turns” to run Russia. Kasyanov’s chief campaigner is detained. Pensions and public sector wages could be raised. Russia weighs in on Israel-Palestine conflict.

Dmitry Medvedev’s official income declaration published on the election commission website reveals that the presidential candidate does not own his own car, and was paid about $71,000 in pay per year over the past four years. “The Russian media has treated such declarations of income with much scorn.” Medvedev is now officially registered as a presidential candidate, but his touring of Russian regions already this year is perceived by some Russian journalists as the work of “President Vladimir Putin's de facto successor [rather than of] a presidential candidate”. According to one senior Kremlin official, “Putin and his favored successor Dmitry Medvedev could take turns to run Russia for another quarter of a century”.

Russia and China, both commercial partners of Iran, are continuing to resist punitive measures that Washington wants to inflict, for example on Iranian state banks, in relation to suspicions regarding Iran’s potential nuclear programme. Russia has just delivered the fifth batch of nuclear fuel to Iran’s Bushehr plant, with three more to go until the consignment is complete.

Gas export monopoly Gazprom said its reserves replacement had exceeded production for the third consecutive year in 2007 as it had discovered 585 billion cubic metres of new reserves.

Russia's United Company RUSAL, which is buying a strategic stake in metals major Norilsk Nickel, is discussing a full buyout or a merger.

Will the predicted frenzy for IPOs by Russian companies this year find investor support? Golden Telecom, the fixed-line phone and Internet provider being bought by VimpelCom for $4.3 billion, forecast annual sales of $3 billion by 2012. Falling share prices in stock markets around the world “have sent shockwaves through the Russian bourses.” The Russian Trading System (RTS) index plunged 5.83% from Monday's close to below 1,900 points in Tuesday morning trading in “the blackest day of trading in 18 months”. State-run Russian Railways has won an $800 million contract in Saudi Arabia to lay new track that includes 20 camel crossings. The Singapore government’s real estate investment in Russia’s PIK Group “will see the construction of an entire neighborhood, including 50 high-rise apartment blocks, 13 commercial buildings, five elementary schools, seven kindergartens and two hospitals.” Supermarket chain Sedmoi Kontinent said its revenues grew 32% last year, boosted by strong consumer demand and the opening of six new stores.

Below is the latest installment of Grigory Pasko's online video series, Faces of the Opposition. Visit our YouTube channel to see more interviews with leaders of the Russian political opposition. This interview features Xenia Vakhrusheva, an activist with the youth movement Oborona, whose organizer (Oleg Kozlovsky) has been in the press lately for his forced conscription to the army.

Life Behind Bars - Part 1

By Grigory Pasko, journalist

Now, when the prison and camp population of Russia is once again approaching a million (see note below), we need to realize that this number points only to the quantity of persons already convicted by a court. But those who are behind bars, but awaiting trial make up another several hundred thousand.

Interest in “behind bars” topics is reviving. Time and again, you encounter on various websites flat little jokes about “the oligarch who sews mittens”, bankers who have supposedly robbed the country blind, terrorists who are supposedly preparing their acts daily practically right under the walls of the Kremlin, and others.

Russian prisoners eating balanda – a thin tasteless gruel that forms the staple of the prison diet, day in and day out (Photo courtesy of www.ng.ru).

The FSB just wants the snooty British to be friends. That seems to be the message of this article from the Grani.ru website, which we offer below in an exclusive translation. Well, actually, it's not just friendship the chekists crave - Russia's "new nobility" also don't want to be subjected to the ignominity of having to fill out UK visa applications and come in for embarrassing interviews whenever they feel like flying in to London for a shopping spree or to catch a show.

The Kremlin continues to come up with some breathtakingly incongruous solutions to "problems" it creates out of thin air. Let's go through a partial list:

Below is a video clip of comments made by former U.S. Ambassador to Russia Thomas Pickering about the future of the relationship back in November, 2007.

Masha Lipman, ever the interesting voice on Russia affairs, has a new column running in the Washington Post about the British Council affair: "Putin's foreign policy may be aimed at capitalizing on divisions among Western countries. Thus many interpreted his belligerent speech in Munich last February as an attempt to drive a wedge between Europe and the United States. But it appears that there's more cohesion today among the Western countries vis-a-vis Russia. After the recent attacks, the European Union presidency said that "the E.U. deeply regrets . . . the harassment of British Council staff, as well as the administrative and other measures announced by the Russian authorities." France offered its own backing. Taking on Britain may have serious consequences for Russia, certainly more serious than does bullying Georgia.

Consider also the domestic perspective on this row. Angry assertions of Russia's global standing dovetail with Soviet-style isolationism, which breeds suspicion about Western values and influence. The Kremlin is increasingly wary of autonomous groups, especially those that receive Western financial backing. After Putin's notorious 2004 reference to such organizations -- "they don't bite the hand that feeds them" -- nongovernmental and human rights organizations receiving foreign grants have been consistently discredited. Harassment of such groups is growing. In Soviet times, anti-Western propaganda was an element of the totalitarian state, with its sealed borders and rigid ideology aimed at defeating capitalism. In today's Russia, a nation with free trade and free travel, where cable television and Internet access are unrestricted, such policies appear irrational and anachronistic."

Putin's visit to Bulgaria to sign the South Stream pipeline was rife with controversy and protests. Here, one Bulgarian argues for engagement: "Bulgaria has its own priorities, but turning its back on Russia would be a mistake and an absurdity, National Movement for Stability and Progress (NMSP) leader Simeon Saxe-Coburg told the Russian edition of Newsweek magazine in an interview on Bulgarian-Russian relations and on the partnership between Slavic states that had recently been accepted to the EU. The interview was called "Being a Slav is not a doctrine", Saxe-Coburg's press attache Tsvetelina Ouzounova told mediapool.bg."

And here is what the National Post wrote about it: "Remarkably, that didn't make much of a difference. When it was all over, Russia ended up with a czar. Vladimir Putin, the 21st-century czar, may be nicer than Stalin or Czar Alexander III (who reigned from 1881 to 1894) and brighter than Nicholas II (1894 to 1917). But he's still a czar, with a czar's sense of infinite entitlement. Putin believes he deserves to rule Russia, and it appears that most Russians see things his way. Freedom of speech, for instance, is no more important to Putin than to Alexander III or Stalin -- and only a small minority of Russians appear to care."

Robert Fulton also gets down to discussing Russian identity and Vladimir Nabokov - an author who has certainly been in the press lately.

Carrying posters reading "Stop Soviet Imperialism" and "Putin - Out of Bulgaria," hundreds of Bulgarians have protested against Russia's energy policy, which they fear will make their country completely dependent on Russian oil and gas sources.

Unified Energy System, which has until July 1 to sell all of its assets, has failed to auction off eight out of nine of its supply firms, casting doubt on its ambitious schedule of company sell-offs.

Stocks in Lukoil, Surgutneftegaz and Gazprom Neft all fell after oil prices sank below $90 a barrel in New York for the first time this year.

Seventh Continent, Moscow's largest grocery chain, said its revenues had jumped by 32% year-on-year. Despite news that local government have suspended the investment agreement, Finland's Ruukki will proceed with its plan to build a $1.6 billion pulp mill in Russia. The Singapore government investment fund GIC Real Estate has acquired a 25% stake in a project to build a residential complex outside Moscow from Russian developer PIK Group for $233 million. Wal-Mart Stores, the world's biggest retailer, could expand into Russia within the next two years, according to a research note from UBS. The Russian harvest in 2007 is expected to be 81 million tonnes, the best for five years, but it will not meet domestic demand.

TODAY: British Council offices are shut, and accusing of covering up spying operations. Kasyanov says his efforts to run for president are being thwarted. Mitvol’s resignation rejected. Kasparov condemns delay of investigation into activist’s death. Russia’s military chief of staff says Moscow will use pre-emptive nuclear force if necessary. Killer given government post.

Two British Council officials in St Petersburg have left Russia after being detained by security services, “raising fears that the offices may never reopen.” Two UK journalists separately blame the Kremlin’s power for the current situation, and urge the West to support Russia’s liberals. The Foreign Ministry has hinted that the British Council's regional offices might be allowed to reopen if Britain “resumed cooperation with the Federal Security Service and expressed a willingness to ease visa rules for Russians,” but a senior officer of Russia’s Federal Security Service said that “We have no doubt that British intelligence uses the council as well as other organizations to spy in Russia.”

Below is the long awaited second half of Grigory Pasko's interview with Oborona youth movement leader Oleg Kozlovsky as part of his "Faces of the Opposition" video series. The first installment can be seen here or on our YouTube channel.

Kozlovsky has been in the news lately as the Kremlin, exhausted with and intolerant of his activism, has forcefully conscripted him to the army - a measure of breathtaking illegality. Thanks to our Russia correspondent Grigory Pasko, we have posted up original writings of Kozlovsky and other interviews, and La Russophobe has certainly been carrying the torch for his cause with dozens of blog entries. Let's hope that this bright young man can stay safe and continue his courageous advocacy for non-ideological popular sovereignty.

A reader alerted me to an interesting op/ed in the Times of London by Martin Ivens who writes that "The temptation for Gordon Brown and his colleagues is to say that the business of the West is business and to forget human rights and forget our allies on the front line of democracy. That temptation must be firmly resisted."

Ivens goes on to write about Russia's unfortunate affection for conspiracy theories, paranoia, and the dangerous undertone of beligerrance stemming from the end of the Cold War. Ivens makes the case for why the UK should "make a stink" about the British Council affair in "every international forum," and why Europe should support the young democracies struggling to survive on Russia's borders.

This bit comes from Zygmunt Dzieciolowski at OpenDemocracy:

Alexei Levinson is a highly respected sociologist from Moscow's Levada Centre, who has studied Russian society for decades. He is concerned by the gradual elimination of democratic values from Russian life and politics. Yet to some degree his view of Nashi's future is similar to those of hunger-striker Kostya Goloskokov. He too thinks that even after the election season Nashi will not simply vanish. What worries him most is that nobody seems concerned about the movement's future. "(Nashi) is an important vehicle for the current administration to win the 2008 election. What will be its role and function in the future I don't know."

Levinson think that Nashi members are like soldiers: they can't just train, march and rehearse for months and end up inactive. "If you have thousands of people who are on alert to do something for years and then find they have no task to perform, it's dangerous. They have their roles, their positions, they are already organised. Nobody can just say to them, 'goodbye Nashi, thank you very much, perhaps we'll see you next time."

If Alexei Levinson is right - and many Nashi supporters would agree - the future of this movement may hold a surprise or two.

I am beginning to believe that the world is finally starting to pay attention to the horribly cruel treatment of Yukos political prisoners in Russia, but it wasn't until the prosecutors have nearly murdered a man that we all wake up.

Back on Dec. 27, we posted on this blog the first translation of the statement from Vasily Alexanyan (many media outlets are spelling it "Alexanian"), which shared a harrowing tale from this former general counsel of Yukos, who has been unlawfully imprisoned on pre-trial detention (without conviction) for two years and denied urgent, life-saving medical care. The Russian prosecutors in this case have ignored three separate orders from the European Court of Human Rights to provide this care, as a way to blackmail him into giving false testimony to help their case against Mikhail Khodorkovsky and other Yukos prisoners, he alleges.

Apparently frustrated by Alexanyan's audacity to publicly appeal for someone to help save his life, the prosecutors came forward to hold a press conference denying these allegations, and trying to claim that they offered this medical care, but the prisoner refused. To add insult to injury, the Russian Prosecutor Vladimir Khomutovsky also told the state news agency that Alexanyan had been diagnosed with AIDS.

Alexanyan's lawyer, Yelena Lvova, was outraged at this illegal disclosure, and threatened to sue. She said "The prosecutor did it intentionally in order to taint Alexanyan. ... [He is] a decent and honest man from a decent and honest family. ... He never belonged to any risk group and might have been infected in the course of multiple surgeries. He never led an immoral lifestyle. And the fact that he got infected with HIV is a horrible conversion of circumstances."

The good news is that today Amnesty International has come forward to call upon Russia to provide urgent medical care to Vasily Alexanyan. See the full news after the jump.

Below is an exclusive translation of an important article from the German press by British law professor Alan Riley about how Gazprom is putting its money in the wrong places - thus threatening their own ability to fulfill supply contracts to Europe. The original article can be found here and over on our German blog.

Süddeutsche Zeitung
Friday, 18 January 2008
Page 2

Russia is running out of gas

Important gas reserves are running dry, and Gazprom is pinning its hopes on the wrong projects – this is dangerous for Germany

By Alan Riley

Russia has delivered its third fuel shipment to the Bushehr nuclear power plant it is building in southern Iran. Russian Foreign Minister Sergei Lavrov will attend six-nation talks in Berlin aimed at solving the international dispute around Iran's nuclear program later this month.

Bulgaria and Russia will sign an agreement on a planned natural-gas pipeline from Russia to the European Union via the Black Sea. The South Stream project is a rival to the planned Nabucco pipeline, which has the backing of the EU and the US. It was predicted that Putin’s trip to Bulgaria might heighten tensions with the EU.

Israeli Foreign Minister Tzipi Livni, left Russia after a brief visit with only general assurances on the government’s stance on Iran’s nuclear policy. "We are fulfilling the wishes of our Israeli partners and are taking a firm stance," said Sergei Lavrov.

A lawyer for Swiss company Noga announced that the package of stock in the EADS aerospace corporation controlled by Vneshekonombank has been blocked by an enforcement order. Billionaire Mikhail Prokhorov, the co-owner of Norilsk Nickel, has accused the management of using the company's resources in favor of one of its shareholders and called for a new board to be appointed. Kellogg announced it has purchased United Bakers Group, Russia’s biggest breakfast cereal maker, to take almost complete control of the local market. Russia’s stock market has been plunging this week, due to concerns about the US economy, but investors are holding onto their Russian stocks. The government has made ambitious predictions for the country’s nanotechnology sector.

TODAY: British Foreign Secretary accuses Russia of “staining” its own reputation. Bulgarian co-operation with Russia. Oleg Mitvol resigns. Two activists quit over row with Kasparov. Medvedev promises: no state grab.

After officials were questioned by authorities, the British Council consented to close its offices in St. Petersburg and Yekaterinburg. One journalist details British MPs’ responses. Another looks at the popularity of British music culture in clubs across Russia. The British Foreign Secretary, David Miliband, has denounced Russia’s actions as “reprehensible” and a “stain” on its reputation. Britain has warned Russia that its actions could make it harder to strike a free trade deal with the EU or join international organizations. “Nothing impresses the great mass of the Russian electorate more than the sight of its leader taking a stand against its 19th-century imperialist rival, which is why Mr Putin has singled out Britain, rather than Germany and France, as the main object of his grandstanding exploits these past 12 months.”

The FT wonders whether Vladimir Putin realizes what kinds of Russian institutions in the UK could come under investigation as a result of the British Council spat:

"But Mr Putin should beware. The British Council has operated in Russia for many years in an open and transparent manner. By contrast, there is plenty of covert financial and lobbying activity by Russian individuals inside the UK. If Mr Putin wants to start challenging the way foreign organisations operate inside his country, he had better realise that the British have plenty of questions of their own."

In what looks like one of his most harsh and strident opinion pieces to date, Garry Kasparov launches a scathing indictment against French President Nicolas Sarkozy for his conduct vis-à-vis Russia during the elections period in tomorrow's edition of Le Monde.

The original French version can be read here, and we have some colleagues doing a full translation for us to post very soon.

As a preview, the article is titled "Sarkozy, Jealous of Putin?" and focuses on several areas of criticism, both personal and political. Kasparov writes that Sarkozy has joined the ranks of other disgraced European leaders such as Chirac and Schröder, and has sold out ethics and human rights in exchange for business deals with a thoroughly corrupt and repressive Kremlin. He also argues that Sarkozy is wrong to assume that Russia can assist on international issues like Darfur, and is wrong to always assume he is so popular. Kasparov's conclusion is the most provocative part, suggesting that Sarkozy is ashamed and would rather fill the media with news of his private life, or that he is actually jealous of Putin and wishes he could install a more convenient Russian-style sovereign democracy in France.

Stay tuned to this blog for the full translation.

The Rutgers political science professor Alexander Motyl has an interesting but not subtle op/ed in the Kyiv Post today arguing not only that Russia is quickly drifting toward becoming a fascist state, but that there is little anyone can do about it. Containment is the only feasible policy response, he argues, and says that countries like France and Germany must urgently recognize that Russia today is not democratic, and that this authoritarian mass model could have a dangerous contagion effect in neighboring countries.

Motyl also points out the weaknesses of fascism: "Leadership cults only work as long as the founding leaders are still vigorous. When supreme leaders falter — as they inevitably do — or leave the scene, successor elites engage in cutthroat competition to assume the mantle of authority. As they weaken the regime’s foundations and expose the system as brittle, the state’s image as a Leviathan worthy of official and popular veneration crumbles. The next two years will be especially difficult for Russia, as it copes with a genuinely post-Putin political system or with a seemingly post-Putin system still run by Putin.

Humiliation is a weak foundation on which to build state and leader legitimacy. Although Russians currently want the reassuring guidance of a “vozhd” (chief), sooner or later they will cease feeling humiliated. When that happens, as it surely will (once their prosperity and exposure to the world and its blandishment increases), they will eventually abandon humiliation for more satisfactory forms of self-identification. "

I am yet to be convinced that rising prosperity is in any way tied to the emergence of stronger popular pro-democracy movements.

The last we heard from journalist Lionel Beehner at HuffPo, he laid out the case for why Russia isn't nearly as important in world affairs as many make it out to be (provoking widespread and often unfriendly chatter in the blogosphere).

Today he checks in on the British Council dispute, remarking that shutting down this harmless institution is comparable to "closing down a mom-and-pops bookstore in Las Vegas for selling sinful magazines." How low, he asks, can Russia go?

While it is clearly an article written for general audiences, Beehner does put forward one interesting theory for the reasons behind the more eccentrically offensive diplomatic moves made in recent years: Russia is paranoid about becoming irrelevant in world affairs once the price of oil drops. An interesting but controversial take.

Lionel Beehner: Can Russia Sink Any Lower? (Huffington Post)

I have spent years writing and publicly speaking about the economic motives behind the Russian government's campaign of persecution against Mikhail Khodorkovsky. I argued repeatedly that the unlawful expropriation of Yukos, the market value of which was estimated to be around $200 billion, was methodically placed into government hands, in particularly the state oil company Rosneft, which is overseen by the top presidential adviser Igor Sechin (one of the architects of Khodorkovsky's show trial).

What is often under-emphasized is the extent to which this daylight robbery has contributed to Rosneft's value, turning an under-achieving, mismanaged producer into the country's #1 oil company. The impact of the Yukos theft has finally been acknowledged by Rosneft itself in a statement released yesterday, which says that profits have increased by a staggering 80% thanks to the acquisition of these assets.

Last March we reported on an boulevard in Paris that "unofficially" dedicated to the memory of slain journalist Anna Politkovskaya (right near the Russian embassy), but now the European Parliament has officially paid its respects by dedicating a new press briefing room in Brussels in her name. The Financial Times reports:

The UK's relationship with Russia has deteriorated sharply since it blamed a former KGB agent for killing dissident Alexander Litvinenko.

Now London seems to have found an ally in the European parliament.

MEPs agreed this week to name the press briefing room at their Brussels assembly after Anna Politkovskaya, the campaigning Russian journalist assassinated in 2006.

Her killer has not been caught and many believe that Moscow has done little to track him or her down. Politkovskaya's reporting of human rights abuses by Russian and Chechen government forces had made her plenty of powerful enemies.

Rosneft's profits jumped an overwhelming 80% following its purchase of Yukos assets.

Gazprom is to attend talks with Ukraine's high-level energy delegation as Ukraine's new government seeks to revise the terms of agreements with Moscow. It is thought that Prime Minister Yulia Tymoshenko, who promised to eliminate all intermediaries in gas trade with Moscow last year, will seek “tough action”.

World Energy

An economist from BP says that world oil production may peak in the coming years “because of a decline in demand for petroleum rather than constraint on supply.”

Russia’s display at Berlin’s International Green Week focuses on advanced technologies and new research and development in the agrarian sector. Russian-Chinese trade grew 44.3% year-on-year in 2007 to a record $48.16 billion. Shareholders of OOO Lenta, Russia's third-biggest grocery chain, reinstated Sergei Yuschenko as chief executive officer after he was fired by the company’s founder, Oleg Zherebtsov. OAO Magnit, Russia's second-largest supermarket chain, said sales rose 47% last year. VTB, Russia's second-largest bank, is estimated to have earned up to 25% more profit last year than in 2006.

TODAY: British Council shuts two of its offices indefinitely and the director of its St Petersburg office is detained. Medvedev a liberal? Putin heads to Bulgaria to cement energy pipeline deals. Yukos executive accuses jailers of blackmail. Russia’s freedom is downgraded. Japanese activists respond to allegations of Russian spying.

The “diplomatic war” between Russia and the UK reached “a dangerous new phase” after Russian police detained the son of the former Labour leader Neil Kinnock on drink-driving charges, in a move that British newspapers are calling “a Kremlin-backed campaign of intimidation against British Council staff.” The Council has indefinitely shut its St Petersburg and Yekaterinburg offices. Washington’s State Department has chimed in, saying it ''regrets'' the actions taken by Russia and noted that the British Council plays ''a vital role in increasing understanding between the peoples of the United Kingdom and Russia.''

BBC News has reported that with many of France’s major media outlets owned by President Nicolas Sarkozy's close friends, publicly criticizing Sarkozy is not easy. Fears have arisen that the freedom of the French press is now being stifled.

Last summer, few in France remarked that Sarkozy appeared seemingly drunk in front of television cameras at a news conference following a meeting with Vladimir Putin at the G8 Summit. When Sarkozy visited Moscow in October, he was ridiculed by major Russian media outlets for his high-heeled boots and his confusion over central Moscow landmarks. He was jokingly described as a modern Napoleon, lost in Moscow. The lampooning was all the more remarkable in that we all know that such commentary would not appear in the Russian press without the Kremlin’s approval, or instruction. In France, however, little was reported on the disrespectful treatment of their head of state.

Reuters has picked up on the Vasily Alexanyan story, first broke here on this blog. The Financial Times has also given coverage to this vitally urgent human rights crime.

Ex-Yukos Executive Tells of Blackmail By Christian Lowe Reuters

A gravely ill former Yukos executive has accused his jailers of trying to blackmail him into testifying against old associates by denying him the medical treatment he needs to stay alive.

The European Court of Human Rights in Strasbourg made the highly unusual step of issuing three requests for Vasily Aleksanyan, 36, to be transferred to a specialist hospital, but authorities have not complied.

Craig Pirrong has another great article today about Gazprom's move to take over Serbia's state energy monopoly, NIS.

The good professor writes the following: "To make the deal look a little less like an abject surrender, Gazprom has also dangled the prospect of giving Serbia a stake in a future gas venture. Word of advice, guys–DON’T BELIEVE IT, and DON’T TAKE IT. Gazprom is the master of what Bob Amsterdam calls “premature contractualization.” That is, announcing deals just in time to forestall projects that are adverse to Gazprom’s interest, and then fading the deal when the threatening competing projects are shelved in response to the Gazprom announcement. Gazprom will whisper sweet promises in anybody’s ear to get what they want, and then renege when it suits them. (Nigeria–you should take note of this, as Gazprom has been wooing you too.)"

Not to be overly self-referential, but it is important to highlight with regard to the Kremlin's siege of Serbia that the practice of premature contractualization also works to prevent the entrance into the Serbian energy sector of other competing parties. The nearly extortionate quality of Gazprom's tactics assures that when there is a real deal, the target party does not have an appropriate amount of time to assess the real economic and commercial merits, rather than just the political ones. The speed with which we are seeing Gazprom move on NIS leads one to consider the corrupting influence both over political issues (such as Kosovo independence) and the pure economics. Exactly who, it may be fair to ask, is Gazprom paying in order to pick these assets up so cheaply and quickly?

Nord Stream på Svenska
(notes from Stockholm)

By Grigory Pasko, journalist

The Russian tsar Peter the Great, as he hewed out his “Window on Europe” through the putrid marshes of St. Petersburg, was thinking: “from here we shall threaten the Swede”. They were a threat once upon a time.

We live in different times today – the times of globalism. Having agreed with Germany to build a gas pipeline along the bed of the Baltic Sea and having taken on for company – just in case – the Dutch corporation Gasunie, Russia thought that that would be the end of that, no more problems. Ah, but no! Sweden has yet to have its say about the project. A small country in contemplation. Just recently, it was visited by the executive director of Nord-Stream, Dirk von Ameln, who attempted to convince everybody that the pipeline is safe and very necessary not only for Russia and Germany, but for all of Europe – which means for Sweden too. In the fervency of his argumentation, he even blurted out that the actual pipes had already been ordered and were being fabricated. Implying that the project simply has to go ahead after all this.

There are certain parties, Vladimir Putin and Gerhard Schröder among them, who would like to see the trans-Atlantic alliance between the United States and the European Union dismantled and shattered. Unfortunately, it looks like the U.S. Secretary of Defense is only just too happy to assist them.

The outrageous comments made by Robert Gates in the Los Angeles Times about British, Canadian, and Dutch troops not being up to the cut to fight insurgency in Afghanistan sets a new standard for American stupidity in foreign policy (and believe me, that's a tough standard to set).

I thought after yesterday's post about the British Council dispute, I could safely leave the issue alone (our first post on the topic dates back to June 14, 2007). But then again, I didn't expect the Russians to start making arrests.

Today's news brings a dramatic escalation to the whole affair, with the interrogation of several British Council employees by the FSB (what on earth could they possibly tell them?), as well as the arrest the director Stephen Kinnock (pictured) on alleged charges of drunk driving. Kinnock is also the son of Labour Party leader Neil Kinnock, who chairs the organization.

Dr. Andreas Umland, one of those guys who manages to inspire vitriol as both an apologist and a russophobe, and a column running in the National Interest about anti-Americanism in Russia and how a new Cold War could come about. We happen to disagree with some of his arguments and claims, but he usually is at least interesting to read:

Right now it is unclear how this trend could be reversed or even stopped. The fear is that anti-Western sentiment in Russia may spiral out of the Kremlin’s control. A number of ideologues from the lunatic fringe are already part of Russia’s political establishment. Take Alexander Dugin, a political commentator little known in the West but prominent in Russian public and intellectual life. A rabid anti-American, Dugin openly praised the Third Reich, the SS and fascism in general in the 1990s. Nevertheless, his "International Eurasian Movement" has today among its official members Russia’s minister of culture (Alexander Sokolov), Deputy Speaker of the Federation Council (the upper house of the Russian parliament) Alexander Torshin and presidential advisor Aslambek Aslakhanov. As recently as 2006, Dugin singled out for praise the ideas of Gregor and Otto Strasser— two Germans who helped Hitler build the Nazi party in the 1920s. Yet in spite of such statements Dugin has become a well-respected participant on primetime political talk shows; some of his numerous tomes are used as textbooks in Russian schools and universities.

Now Putin’s turn to conspiracy-theorizing has given Dugin and others of his ilk a powerful push: Their ideas have been confirmed by Russia’s most popular man and entered the cultural mainstream. The president has publicly condemned U.S. foreign policy, compared Russia’s liberals to jackals skulking around foreign embassies and warned the West "to keep its nose out" of Russia’s internal affairs. This is pretty much what Moscow’s post-Soviet "ultras" have been saying since the early 1990s. If the popularization of Moscow radicals’ Manichean views continues in Russian society unabated, sooner or later we will find ourselves in another cold war.

The Streetwise Professor has put up a new interesting blog post, including a kind mention of this blog, about something that both Vladimir Putin and Joseph Stalin share - an enduring popularity in the face of repeated mistakes:

It is only fitting, then, that the cult of Stalin as a Great Leader is metastasizing in Russia. Stalin was arguably not only the greatest mass murderer in history, but the greatest blunderer. Read any account of Stalin’s policy vis a vis Germany in 1939-1941, or of the the early months of the Nazi invasion in 1941, and you will be staggered by the magnitude of Stalin’s errors large and small. (Of recent books, Niall Ferguson’s War of the World or Andrew Nagorski’s The Greatest Battle are quite good on the subject. Paul Johnson’s Modern Times is somewhat older, but also quite damning–and accurate–in its assessment of Stalin. See Liddell Hart’s, J.F.C. Fuller’s or John Keegan’s histories of WWII for indictments of Stalin’s handling of the opening phases of Barbarossa.) There were errors in tactics. Errors in strategy. Errors in personal judgment (e.g, Stalin’s quite inexplicable trust in Hitler). And these errors cost literally millions of lives–and not just Soviet lives. By dealing with Hitler, and supplying his armies with fuel and grain, Stalin freed Germany to attack west with impunity. As Ferguson puts it, all that saved the Soviet Union from Stalin’s colossal errors were Hitler’s equally colossal misjudgments. (...)

By comparison to Stalin and his stupendous mistakes, Putin is a piker in the blunder department. But there is an eerie parallel. Despite their blunders, they are viewed as visionary and effective leaders. A combination of intimidation (obviously far more extreme in Stalin’s case), relentless propaganda, and to no small degree, a willing suspension of disbelief by the Russian people, has sufficed to obscure their myriad failures with a mirage of power and brilliance.

TODAY: Medvedev’s strength is Putin? The British Council drama continues. Georgian elections; Bukovsky will not be permitted to run for President; Zubkov speaks about gas safety; Polish President warns against drive to improve relations with Russia. Khodorkovsky – lawyer’s new complaint.

Dmitri Medvedev’s “closeness to Putin”, together with the First Deputy Prime Minister’s having the President’s trust are the top two reasons why he is so popular with voters, according to a new poll. Russia’s Foreign Ministry’s complaints about the Georgian elections “pretty much sum up the Kremlin's strategy for installing […] Medvedev as the successor to Vladimir Putin.” Communist leader Gennady Zyuganov sent a 17-page statement to the Prosecutor General's Office yesterday disputing the State Duma election results in Mordovia. The Supreme Court of Russia has sustained the resolution of Central Election Commission refusing to register Vladimir Bukovsky as a presidential candidate. Today is the last day on which Russia's Central Election Commission (CEC) will be accepting registration documents from presidential candidates for the upcoming election.

Sistema, the holding company of billionaire Vladimir Yevtushenkov, announced that its Indian subsidiary, Shyam Telelink, has obtained a pan-India telecom license, a deal that analysts say will strengthen Sistema's foothold in India. A special report on the merger of West Siberian Resources with Russian refiner Alliance Oil can be found here. Coca-Cola has called off a promotion after offended Orthodox believers lodged a complaint with prosecutors that the company’s campaign posters, featuring religious sites, portrayed the sites upside down. Russia’s Ministry of Finance says it bought out all claim rights on the Russian Federation’s debt to Swiss company Noga at the end of last year. Volkswagen reported that its sales in Russia rose 67.8% in 2007.

Novatek, Russia’s largest independent gas producer, plans to raise up to $1 billion via a syndicated loan to fund organic growth and acquisitions.

Bulgaria and Russia are to sign a €4 billion ($5.95 billion) contract to build a nuclear plant in northern Bulgaria. Building will commence later this year.

Gazprom has raised its offer for 51% of NIS, the state-run Serbian oil and gas company, by €100 million in an attempt to reach an agreement by the end of the week, ahead of Serbia’s presidential elections.

In these days of bitter conflicts between the United Kingdom and Russia, it seems that many have forgotten about all the qualities these two great nations share - such as disappointing scores on the 2008 Heritage Index of Economic Freedom.

Thanks to high taxes and a ballooning state, Britain has dropped in the rankings from the elite "fully free" countries (such as Canada, the United States, and Australia) to "partly free" (sharing company with Chile, Denmark, and Estonia). Russia, on its behalf, scored lower than countries such as Bolivia, China, and Niger for its enduring problems with corruption and lack of rule of law. The report reads "The judicial system is unpredictable, corrupt, and unable to handle technically sophisticated cases. Contracts are difficult to enforce, and an ancient antipathy to them continues to impede Russian integration into the West." See excerpts from the new report after the jump.

In case you were worried that Germany had lost its sense of humor over current events in Russia. The silliness and irreverence below really don't require any commentary...

There's an interesting new analytical piece from Robert Coalson at RFE/RL which takes a look at the use of administrative resources to support the presidential campaign of Dmitri Medvedev. The Deputy Prime Minister, whom a new poll declares has already been accepted by Russians as the next president, recently made a series of visits out in the regions (Murmansk and Kaliningrad) not to give stump speeches to win over voters, but rather to establish working relationships with the Kremlin appointed governors who operate the local political machinery, argues Coalson.

He writes:

The yoking of the country's administrative resources to the goals of Unified Russia proved powerfully effective in December. In Ingushetia, for instance, the local administration claimed that 98.35 percent of voters turned out in December, and 98.72 percent of them voted for Unified Russia. In the face of these unrealistic figures, local activists began collecting statements from voters who swore that they did not go to the polls at all. Last week, the movement announced it had collected such statements from more than 87,000 voters, about 54 percent of the republic's entire electorate. The activists have said that if prosecutors refuse to investigate, they will take their complaint to the European Court of Human Rights in Strasbourg.

If I have to see one more newspaper copyeditor thinking he or she is clever by using the headline "From Russia with X", I think my head will explode. However something tells me there will be many more abusive references to the James Bond movie in the press leading up to the elections, so I had better start looking for a cliché pressure valve. Today we are treated to the headline "From Russia with Spite" - an op/ed in the Times of London:

It beggars belief that an Anglo-Russian relationship relaunched in a blaze of Blairite bonhomie eight years ago should have sunk to this. The British Council's connection to the Litvinenko affair is non-existent except insofar as its UK-appointed staff have diplomatic status. This, Moscow believes, gives grounds for reflexive attacks on the council's operations whenever any aspect of the bilateral relationship is causing irritation, without risking a full diplomatic rupture. It is true that closing libraries and cultural centres may be less dangerous than shutting embassies. It is also true that Russia's latest round of bullying is shot through with schoolyard spite, and entirely self-defeating.

Well, it's official. The UK-Russia spat over the British Council has become the story of the week, which at least in my perspective is a disappointing distraction from other issues.

I have spent a bit of time reading over the coverage of the latest tit-for-tat in this affair, and while there is very little substantive new information to share, I am left with some general impressions.

In my view, behind the British Council dispute we can see a familiar methodology, a familiar thrust of revisionist history, and a clear political expediency toward perpetual conflict with a foreign power. In other words, it should not be at all surprising that things have developed in this direction.

The Financial Times is carrying a story today on the situation of Vasily Alexanyan, the former Yukos general counsel who has been denied urgent medical care while in Russian custody. This blog first reported the story here and here.

Yukos official 'could die in prison'

By Catherine Belton in Moscow, Financial Times

Lawyers acting for a jailed senior Yukos official say their client could die in prison after Russian officials three times failed to act on a ruling by the European Court of Human Rights that he receive immediate medical treatment at a specialised clinic.

Here's a brief translation of an interesting item from Vedomosti:

Russians were delighted to find out whom they would elect as president in March, show the results of a "Levada-Center" survey.

The fact that the future president will be in fact appointed and not elected does not deprive him in any way of the opportunity to be a consistent democrat in the eyes of Russians. That same two thirds who intend to support him are convinced that the country in the event of the election as president of Medvedev will move "along the path of democracy". The risk of "loss of order and anarchy" after his election concerns 4%, the likelihood of "dictatorship" - 9%, writes «Vedomosti».

Sweden-listed oil firm West Siberian Resources has signed a preliminary agreement to buy Alliance Oil in a stock deal valuing the Russian firm at about $1.5 billion.

Gazprom is planning to boost energy cooperation with Iran, and an offer is to be made by the Russian company in mid-March. Gazprom’s plan to construct a 1,050-foot-tall skyscraper as its headquarters in St Petersburg has met opposition from 600 residents and activists.

Russian electricity producer OGK-3, controlled by metals firm Norilsk Nickel, is considering “a range of acquisitions in the power sector,” including TGK-4.

Russia’s VTB Bank says that Swiss trading company Noga has won a French court order against it to freeze company accounts. Moscow’s Foreign Ministry has issued a formal complaint to France as a result. A lawyer for the Bank of New York Mellon asked a Moscow court on Monday to dismiss a $22.5 billion money-laundering case against the bank “on a technicality.” Chrysler is the latest carmaker to express an interest in selling in Russia to cash in on its booming automobile market. Luxury armored cars made by Rolls Royce have seen a 50% jump in Russian sales. A new survey of Russian companies, taken by Deloitte, reveals that many firms are delaying company IPOs in order to leverage maximum media coverage.

TODAY: British Council row escalates, visa sanctions imposed; United Russia officials dismissed over “financial machinations”; new Berezovsky lawsuit; US and Russia to run joint anti-terror exercise; difficulties faced by Russian journalists and activists.

The row over Russia’s British Council offices has escalated further, sending the international press is in a frenzy. Russia has accused Britain of “deliberate provocation” after the latter defied orders to close two of its Russian offices. The Foreign Ministry is threatening to recover back taxes from the St Petersburg office, and says it will not renew the visas of current British Council regional staff or issue new ones. Council director James Kennedy, when asked to predict the next step, said, "All sorts of things might happen. But [Sergei] Lavrov has said that we should not expect tanks outside the British Council." Kennedy said it was too early to say what impact the visa sanctions would have. Sir Anthony Brenton, Britain's ambassador to Moscow, continues to call the order a "breach of international law". One paper, focusing on the cultural advantages offered by the British Council’s operations in Russia, points out that Lavrov’s daughter attended the London School of Economics. Another says that the row “was entirely predictable.”

This one from Alexei Pankin in the Moscow Times: "The presidential election was held in Georgia, which, in my opinion, was a major gift for the Russian authorities. Against the backdrop of the enormous scandal that surfaced there, the Kremlin even viewed the victory of the hated Mikheil Saakashvili as only a minor tactical failure. Moscow's strategy in regard to Georgia -- and Ukraine, for that matter -- has been to convince both the Russian public, and as far as possible the international community, of the senselessness of the popular political demonstrations in those countries. Throughout the former Soviet republics, the spirit of "sovereign democracy" reigns. People's votes therefore carry equal weight -- which is to say, very little -- whether or not a particular country has or has not been in the throes of a color revolution. Three different newspapers -- the pro-Kremlin Izvestia and Komsomolskaya Pravda as well as the relatively independent Moskovsky Komsomolets -- all painted more or less the same picture of election fraud in Georgia. This seems to support the Kremlin's vision."

A smart person won’t climb the mountain...

By Grigory Pasko, journalist

The complete text of the ancient Russian saying cited in the title of this essay reads thus: A smart person won’t climb the mountain; a smart person will go around the mountain. I really don’t enjoy writing about fools and roads in Russia all the time. But unfortunately, life keeps throwing such stories my way that I simply can’t not respond to them.

Here’s a recent, and in my opinion demonstrative, story. Literally a few days ago, the head of the administration for the struggle with organized crime (UBOP) of the Republic of Kabardino-Balkaria in the Caucasus, police colonel Anatoly Kyarov, was mortally wounded as the result of his official vehicle being gunned down by unknown assailants. Also killed on the spot in the ambush was a plenipotentiary of a special designation [spetsnaz] detachment of the UBOP. The driver of the car – an UBOP employee – found in the interior of the car with them received a perforating gunshot wound in the area of the ribcage.

What is noteworthy here is that the director of the Federal Security Service, Nikolai Patrushev, was found in Kabardino-Balkaria at this very time.

Nikolai Patrushev, Hero of Russia. The heading reads “The FSB is changing its image”

Here's an interesting translation of some news from Vedomosti about the upcoming second show trial of Mikhail Khodorkovsky, which due to some unexpected changes and willful delays by the Investigation Committee, could take place right during the presidential elections:

Second Khodorkovsky trial could be timed to coincide with presidential election

A sudden freak change has occurred in the so-called second "case" of the embattled ex-oligarch Mikhail Khodorkovsky. The Investigation Committee under the Prosecutor-General's Office is in no hurry to take the matter to law although it finished the investigation a long time ago.

An unnamed source at the Prosecutor-General's Office said: "the case is ready to be taken to court, but is lingering in the Investigation Committee. For some unknown reason it is not being handed over to the prosecutor's office for approval."

On Saturday night the National Book Critics Circle announced the nomination of slain Russian journalist Anna Politkovskaya for the 2007 award for best autobiography for her posthumous collection of journals "Russian Diary: A Journalist's Final Account of Life, Corruption and Death in Putin's Russia" (Random House).

Let's Joyce Carol Oates isn't showered with all the prizes this year.

The Sukhoi Superjet, upon which the future of Russia's role in civil aviation rests, was given a boost today as Vladimir Putin signed a decree approving the purchase by Italian aeronautical firm Alenia of a 25% stake in Sukhoi's civil division. The Superjet, which is a 75-90 seat regional aircraft expected to take its first test flight next week, is designed to compete with similar craft from companies like Embraer and Bombardier. The project should be greatly helped by the Italians for their marketing muscle in Western Europe, and their assistance in advising on the aircrafts compliance with European emissions and noise standards.

The Russian government has also shown an encouraging openness to to foreign investment with this deal, allowing foreign citizens to hold a blocking stake and perform managerial roles at Sukhoi (but the CEO must be Russian).

It's always good business to be part of a project that the Russian government wants to succeed.

[I am pleased to announce that my friend and colleague, the esteemed British lawyer Anthony Julius, has agreed to author a short series of book reviews to be published exclusively on this blog. I have a tremendous amount of respect for Anthony and his work, and I am proud to be able to share some of his writings here. His first book review is of Peter Oborne's "The Triumph of the Political Class" - Robert Amsterdam]

Review of Peter Oborne "The Triumph of the Political Class," Simon & Schuster, 2007, £18.99

By Anthony Julius

The political commentator Peter Oborne believes he has spotted a shift for the worse in Britain's political culture. A new political elite has emerged. This is the "Political Class," as supported by the "Media class." The Political Class is much like the old Soviet "nomeklatura." It is a menacing phenomenon. It has rejected the values and practices of the governing class that ran Britain in the 19th century. This class embraced the concept of public duty. It rejected the greed and pursuit of self-interest that characterised 18th century British politics. It insisted upon a clear division between private interests and the public interest, and it championed integrity in political office. It turned the civil service into a professional, apolitical elite. It was committed to the concept of Ministerial responsibility. This governing class, whose members were guardians of the Victorian state, could not be bribed, suborned or influenced.

RUSSIAN FESTIVALYesterday the fourth annual Russia Festival of Winter took place in Trafalgar Square in London, bringing together thousands of dancers and performers, supermodel presenters, footballer Alexey Smertin, pop star Dima Bilan, and plenty of really good food and drink. See the link for a video news clip. We think this is a nice change of pace from the abrasive political news dominating UK-Russia relations as of late.

We linked to this one from the Moscow Times in our News Blast today, but I think the story is one to follow closely. Reporting on the opening of the Russian government-sponsored "Institute of Democracy and Cooperation", journalist Alexander Osipovich writes:

Gottemoeller said it made sense for Russia to invest its newfound oil wealth in soft-power projects, which have long been used by Europe and the United States and typically include foreign-aid programs, cultural foundations and student exchanges.

"Russia historically has not been great on the soft-power front and, instead, has liked to throw its military weight around," she said. "It makes sense for any country to have a full panoply of capabilities -- a full toolbox, so to speak, to advance its own interests. That's just common sense."

Sounds like a great idea, in theory. Anatoly Kucherena also told Interfax that the main purpose of the new GO (not NGO) would be to "develop methods of perfecting civil society institutions." That must seem richly ironic to many civil society leaders in Russia.

Oh, well I suppose this is a "reassuring sign" from the London-Moscow dispute over the allegedly "illegal" operations of the British Council in Russia. The Guardian quotes James Kennedy, who heads up the St. Petersburg office of British Council:

Asked what the Russian side's next move might be, he said: "All sorts of things might happen. But Lavrov has said that we should not expect tanks outside the British Council. I think this is most unlikely."

That's really kind of Moscow to let those nefarious English teachers know that they don't have to worry about any tanks...

In her posthumously published book of journals, Anna Politkovskaya wrote of several encounters with Beslan victims' rights group, including the following:

"We, the mothers of Beslan," Marina Park says, "are guilty of having given life to children doomed to live in a country that decided it did not need them. We are guilty of having voted for a president who decided children are expendable. We are guilty of having kept silent for ten years about the war being waged in Chechnya, which has brought forth rebels like Kulaev."

Ella Kesaeva, another bereaved mother, breaks in: "The main culprit is Putin. He hides behind his presidency. He has chosen not to meet us and apologize. It is a tragedy that we live under such a president, who refuses to take responsibility for anything."

Very soon Ella Kesaeva could find herself charged with a crime for making these controversial statements. One would think that putting the victims' families of one of the most odious and deadly terrorist attacks since September 11th on trial for extremism would be an extremely bad PR move by the Russian government, especially right before a presidential election. Apparently not.

Lukoil, Russia's largest private oil producer, said full-year profit exceeded $8 billion last year, a rise of at least 7%.

Aluminum producer RusAl has secured long-term electricity supplies to insure against the tariff hike expected after power sector reforms are concluded.

Iran and Russia are to agree on the timeline of commissioning the Bushehr nuclear power plant “in the next few weeks.”

Toyota plans to begin assembly of a new budget model at its St. Petersburg plant. Accounts of the Central Bank of Russia (CBR) and of a number of Russia’s companies have been frozen in France under the Swiss Noga lawsuit - Russia’s debt to the firm reportedly amounts to $110 million. A legal representative for Bank of New York Mellon will appear for the first time in the Russian courts to defend the bank against allegations in a $22.5 billion money-laundering case. Despite the New Year business slump in the country, a new report says that Russian funds attracted $212 million of investors' money in the first two weeks of January, second only to India. The current battle for Baltic Beverages Holding, or BBH, lies behind a booming Russian beer market. US brewer Anheuser-Busch has approached British peer Scottish & Newcastle about helping it in its bid for full control of BBH. Nitol Solar, the Russia-based company that makes silicon for the solar industry, is planning a listing on the London Stock Exchange, which is expected to value the company at about $1 billion. Russian companies including Norilsk Nickel and Evraz Group bought a record $47.8 billion of foreign assets last year.

TODAY: Medvedev on tour; the British Council continues to defy orders from the Russian government and the UK ambassador has been summoned by the foreign ministry; Russia to boost overseas image; Russia and Ukraine are keen for economic cooperation; Russia’s super-rich in the UK press.

"We must revive the Navy," said First Deputy Prime Minister Dmitri Medvedev during a visit to a fishing trawler in the Barents Sea port of Murmansk, saying he hoped that Russia would become “a full-fledged naval power."

From the Sunday Herald: "But just as Bolton brought unwanted baggage with him when Bush appointed him US ambassador to the UN, so too does Rogozin go to Nato with a preconceived agenda. He's no friend of the north Atlantic alliance and like Putin he views with deep suspicion its expansion eastwards into the countries of the former Warsaw Pact. Where Western leaders see an opportunity to end centuries of European wars by bringing stability from the Atlantic to the Urals, many Russians only see an unwarranted imposition on their own doorstep. "Colonial" was the word that Rogozin used."

Full text here.

Kelly Toughill, a former Toronto Star reporter and current instructor at the School of Journalism at the University of King's College in Halifax, finds herself in some surprising discussions with Russian students about what real "freedom of the press" means back in the motherland.

A few of my students in Russia did believe in the possibility of a free press, though not all who did were sure that a free press is a good thing. When one student asked if I thought Russia should have a free press, I turned the question back on her.

"Do you want a free press?" I asked her.

She was quiet for several moments.

"It is dangerous to want a free press in Russia," she said.

"Just to want it?" I asked, "Or to actually do it?"

"It is dangerous just to want it."

Geoffrey York, a journalist from the Globe and Mail whom I know and respect greatly, had a very interesting article run in the paper on Friday about International Trade Minister David Emerson's decision to back down from making any commentary on human rights during a visit to Beijing. This discussion of Canada's dedication to promoting values in foreign policy is something we also frequently see in debates over European values with regard to relations to Russia.

Indeed, China is not alone in holding back business opportunities as way to discourage criticism of human rights or repression from international partners. We all also recall how relations between Canada and China soured after the visit of the Dalai Lama, a lesson which was likely taken to heart behind closed doors in Ottawa. Emerson himself seemed rather straightforward and honest about the purpose of his diplomatic approach during the latest visit. He told the Epoch Times: "Our general approach on human rights and democracy is to operate on two tracks. We do make our views known, we're very open and candid with our views on human rights and democracy and rule of law…we do not think that has to necessarily get in the way of carrying on trade investment and building a strong commercial relationship."

However, there was only one of these two "tracks" evident in the last visit - a focus on business, and no public comments even about the issue of harvesting organs of prisoners of conscience. As Geoffrey York writes in his report: "Mr. Emerson's decision is indicative of how the Harper government has struggled with how to promote human rights in China at a time when Canadian business leaders have urged it to tone down the rhetoric. Chinese state media have criticized Canada for "harping" on human rights, and Canadian business leaders have fretted that they could lose business opportunities because of China's unhappiness with the Harper government's emphasis on human rights."

David Emerson's conduct in China is more of an aberration than the norm for Canada. The government of Prime Minister Stephen Harper has a very strong ethical record of promoting principles and values in Canada's international relations, and we sincerely hope that the Emerson-style diplomacy is not indicative of a new future trend.

The New Year

By Grigory Pasko, journalist

2008 – the Year of the Yellow (Golden) Rat – will be met by many political prisoners of contemporary Russia in “red” colonies, that is ones that are not under control of the law, but rather the arbitrary tyranny of the administration. For many, this is their first year in camp. But no doubt not their last – not as long as the current president and his accomplices in crime remain in power.

What is it like over there, on the other side of the barbed wire, to meet the New Year? I met this holiday behind bars four times. There’s a bit written about this in my book «We sing to the deaf» («Мы поем глухим», 2000, St. Petersburg, «Blitz» publishing house).

On the eve of the “old” New Year (yes, we have such a holiday as well in Russia), I offer readers of the blog certain prison notes. They are of pressing concern for many of my countrymen.

Mikhail Khodorkovsky – one of the new political prisoners of Russia (photo from the Grigory Pasko archive)

Is the world facing an energy crisis? Not according to Pierre Noël, of Cambridge University and the European Council on Foreign Relations in a new article for the FT, who argues that we must abandon the ridiculous notion of energy independence and trust the market's ability to cope with supply disruptions. He argues that "The single biggest contribution to international gas supply security would be for the European Union to create a competitive, integrated gas market. It would also diminish Russia’s ability to leverage the bilateral gas relationships, increasing the chance for Europe to speak with one voice to Moscow."

More after the jump.

Both Deutsche Welle and Other Russia are reporting on the launch of a new content-rich web portal organized by the Russian opposition to document political repression: www.hroniki.info.

According to OR: "The main goal of the web page is to collect information on repressions against Russian political and social activists, journalists and human rights defenders. Many of them have been subjected to various forms of harassment because of their political views and activities this year. There have been cases of people being killed and beaten. Many people have been taken into custody under false charges. There have been cases of people subjected to forced psychiatric treatment. Unlawful detentions and searches are becoming routine practice.

The project is aimed at attracting attention to such incidents in particular and to the practice of repression against dissidents across Russia. The site plans to raise public awareness and to launch public campaigns to support endangered activists."

A reader has kindly pointed us toward a great article this week by Denis MacShane in the Spectator, which takes a look at the "shabby alliance" formed between Russia and Britain's Conservatives, based largely on the latter's refusal to cooperate with other center-right parties in the Council of Europe.

MacShane writes: "Instead of seeking gently to make Russian laws and practices confirm to Council of Europe norms, Moscow is investing massively in seeking to influence the Council of Europe and stop criticism of the Kremlin’s domestic and foreign policy."

And later: "Since joining in 1996, the Russians have given repeated assurances that they would respect Council of Europe rulings on Chechnya, Moldova, and above all on allowing Russian citizens to take cases to the European Court of Human Rights. Moscow has reneged on all these pledges. In December, a Russian chairman of a key committee broke the rules of neutral chairmanship himself to vote in support of the pro-Kremlin and anti-EU line on Kosovo. He was backed by the Tory MPs present."

Full text here.

Have you noticed the drought in news out of Russia over the past few weeks? According to a report in the Moscow Times, economists estimate that the extended holiday break has cost the economy 700 billion rubles ($28.5 billion), or about 2 percent of the gross domestic product.

Russia's state-owned gas giant is well known for sports marketing, from hockey to football teams. Now Gazprom is aiming for the grand prize - a role as one of the main sponsors of the London 2012 Olympic Games.

An important new alert from the Committee to Protect Journalists:

Station faces criminal charges for slang use of Putin's name

New York, January 10, 2008—Prosecutors in the northeastern Russian city of Vladimir have opened a criminal case against local television station TV-6 Vladimir for allegedly insulting President Vladimir Putin in a broadcast. The station’s staff has not yet been charged but, if indicted and convicted, they would face up to one year of corrective labor.

Today: Poland is looking more flexible on the missile defense shield, Moscow bans cigarette advertisements, a wealthy Georgian opposition leader is charged with terrorism, Serbia is warned over a Russian energy siege, and a big hockey fight.

Pressure from Russia is beginning change the diplomatic strategy of Poland and the Czech Republic in their discussions with the United States over the plans to build an anti-ballistic missile shield. Today it's been reported that the two countries are teaming up to go into the talks together to increase their bargaining leverage. However it might just be about making the Americans pay for it all, rather than calling off the project. One way to do that is for Poland to invite Russia's deputy foreign minister, Sergei Kislyak, to Warsaw to talks about the "strategic dangers" posed by the project. Tomas Valasek of CEF said "The new Polish government is prepared to drive a hard bargain because much is at stake if this system goes ahead. ... Poland wants security guarantees from the U.S. since it is not convinced NATO would provide that guarantee. This means the U.S. putting boots on the ground in Poland but also helping Poland to upgrade its air defenses."

It must get difficult to constantly think of new ways for Russia to demonstrate its new strength and independence internationally - one can run out of noses to thumb. As noted in today's news blast, the latest gesture sure to test the sensibilities of Western diplomats and provoke knee-jerk criticism from the international media is Vladimir Putin's nomination of Dmitry Rogozin of the controversial nationalist (and, as some say, xenophobic) party Rodina as Ambassador to NATO.

But is that really the case? Despite Rodina's rather odious and unsavoury anti-immigration policies and occasional hateful public comments, they could be arguably considered a persecuted political party, no matter how much many of us may disagree with their platform. Even before Yabloko's Andrei Piontkovsky was put on this absurd trial for his government critical books, the new Law on Extremism was first put to its innovative repressive use against Rodina, banning them from participation in the 2006 Moscow City elections. Freedom of expression NGO Article 19 issued a statement saying "Although the broadcast [of Rodina] was certainly offensive, the total exclusion of this party from the normal political processes was a disproportionate response."

Isn't it interesting that Russia's new Ambassador to NATO once dropped the following devastating quote on the condition of the country's democracy?

Dmitry Rogozin: "The people now in charge of the Kremlin administration are rubbing out the results of 15 years of the new, democratic Russia. Russia is ceasing to be democratic."

After we posted his recent series of articles about punitive psychiatry in Yaroslavl Oblast, Grigory Pasko received the following from a resident of Rybinsk who has been following the Novikov case closely and wanted to share his own thoughts on the subject. We have been informed that the author has personally never had any encounters with the Russian mental health system, and would very much like things to stay that way, hence he has asked that his article appear under a pseudonym. We have honored this request, and are pleased to post the article, as we believe the whole issue of the resurrection of punitive psychiatry in Russia is an alarming trend that to be urgently addressed. We hope to continue posting more material on the topic in the future.

In the past we have blogged about Gazprom's hostile offer to take control of Serbia's national energy company, which is in an especially weak position given the country's reliance on Russian support against Kosovo's independence. Today Vladimir Socor has a new article arguing the the bifurcation of the planned South Stream pipeline project, a joint venture between Gazprom and the Italian firm Eni, will greatly assist Russia's objective of acquiring control of NIS. He writes "If signed and executed, the project would set back the energy security objectives of the European Union and the United States on two major counts: First, it would preempt markets targeted by the Nabucco project, cementing a Russian monopoly on some of them and breaking into new ones, and increasing the overall level of European dependence on Russian-delivered gas. And, second, it would use this pipeline to carry gas from Central Asia via Russia, thus preempting Turkmen and other gas volumes and strengthening Russia’s monopoly on Central Asian gas, despite Western intentions to demonopolize that situation also."

Source: ENI

For quite a few years now, the Russian Business Consulting website and RBK Daily newspaper have had a well-earned reputation as a quality and unbiased source of Russian business news. Recently, though, we have noticed a palpable politicization in their articles. We have already reported one such instance recently.

Now an alert reader has brought our attention to yet another example. What should have been a lighthearted piece about a somewhat offbeat idea to help alleviate some of the world's problems was editorially turned into a vitriolic and thoroughly Soviet-sounding attack on the decadent West, combined with a bit of propaganda to encourage Russians to make more babies.

It is expected that Russian oil exploration and production company Imperial Energy will form a strategic tie up with Gazprombank this year following pressure from regulators last year.

Gazprom announced that it has increased natural gas supplies to Greece and Turkey to above previously-contracted levels.

Uzbekistan is to begin charging Russia up to 50% more for natural gas exports in 2008, according to a new report.

Gazprom “will find it hard to become a major player in Nigeria”.

Russia’s antimonopoly watchdog has initiated two cases against the Russian subsidiary of the Austrian Raiffeisen Bank and nine insurance companies over concerns about competition. A new law came into effect in Russia on January 1st this year, under which “companies are forbidden to use the official names of countries - both Russian and foreign - as well as their derivatives.” Names like 'Russia' and 'the Russian Federation' will only be allowed to be used by companies where the state owns over 75% of the shares. The Russian government will completely ban tobacco advertizing after signing up to a World Health Organization anti-smoking convention. Russia was reportedly the third-biggest importer of U.S.-made farm machinery for the first half of 2007. Siemens AG and Strabag SE will jointly bid for Russian contracts to develop infrastructure for the Black Sea resort of Sochi. Polymetal, the silver producer controlled by Russian billionaire Suleiman Kerimov, gained in Moscow trading after ending hedges that obliged it to sell metal below market prices. Japan-based SBI Holdings and Metropol, one of Russia’s largest investment financial companies, are prepared to settle a $100 million mutual fund for investments in promising Russian enterprises.

PHOTO: Russian President Vladimir Putin gestures at a cafe of an alpine ski center in Krasnaya Polyana in the southern Russian Black Sea resort of Sochi, Saturday, Jan. 5, 2008. (AP Photo/ RIA Novosti, Dmitry Astakhov, Presidential Press Service)

TODAY: Medvedev goes “campaigning”; Putin appoints controversial new NATO envoy; Zubkov to set up gambling zone; Nashi falling afoul of the law; British Council defy orders as promised; disagreements in the UN.

First Deputy Prime Minister Dmitry Medvedev met with the family of the 100,000th child born in Moscow in 2007 in a visit “that had all the trappings of a campaign event.” Medvedev has reportedly begun signing up governors to campaign for him in their regions. Opposition candidates have called the move “a blatant abuse of Kremlin powers for electoral purposes”.

Gordon Brown’s government thinks it has an answer to the twin problems of climate change and energy security

By Derek Brower in London

SOMETIMES governments make the right decision the wrong way. Tomorrow, Gordon Brown’s Labour government will do just that, when Business Secretary John Hutton announces its support for a new generation of nuclear power stations to be built in the country.

The Conservative opposition is likely to endorse the main body of the proposals, meaning that the legislation should go through the House with little trouble. But the opposition to nuclear power in the media and among protest groups in the UK is strong – so the wailing and complaining after tomorrow’s announcement will be loud and long.

Below is an exclusive English translation of an excellent article from the German newspaper Die Zeit by investigative journalist Johannes Voswinkel, which takes a look at the future of Russia's biggest company, Gazprom. Read the original full text at our German blog.

Die Zeit, 03.01.2008, no. 02

All pipes lead to Moscow

Without Gazprom, Europe would be a cold place. Perhaps it will be even with Gazprom, too. A look at the most influential corporation in the world.

By Johannes Voswinkel

Up in the north of Siberia, where the gas fields are situated, the skies are dark as night for almost half the year round. One of these gas fields is Yuzhno-Russkoe. A few days before Christmas, engineers started to pump gas there under icy wind conditions and at minus 40 degrees. The Russian-German joint project could meet Germany’s natural gas demands for more than 15 years. Yuzhno-Russkoe is therefore so important to the Federal Republic that German Foreign Minister Frank-Walter Steinmeier travelled to Gazprom headquarters in Moscow for the opening ceremony. He symbolically pressed the start button together with Supervisory Board Chairman and Vice-Premier Dmitri Medvedev. Just as meaningfully, the Russian, who will stand as the Kremlin’s candidate in the presidential elections in the spring, held his hand over that of the German visitor.

Here are the Russian
and English versions of the bankruptcy court's ruling on Yukos.

Russian stocks rose on the first trading day of the year, led by Gazprom “as investors bet that the leading candidate in the country's presidential race will support the natural-gas industry if he takes office.”

Shell’s chief officer has commented on the company’s sale of its stake in the Sakhalin-2 project to Gazprom. “What we have learned from this is that you can only work with large Russian partners in Russia."

“BP and Shell have been surpassed by Gazprom and PetroChina.” Oil supermajors now represent just 23% of the global sector’s total market capitalisation.

A review of the Russian economy in 2007 and a forecast for events in 2008 can be found here. St. Petersburg's government closed the city's slot machine halls on Jan. 1 to comply with new anti- gambling legislation. Under a new law, all gambling facilities in Russia will be relocated in four zones by July 1, 2009. AvtoVAZ, Russia's largest car maker, said it had surpassed its sales year-on-year for 2007 by 6.2%. General Motors Corp has announced that it has “very aggressive growth plans” for emerging markets this year, including Russia. British packaging firm Rexam has received permission from Russia's anti-monopoly watchdog to acquire Russian drinks can maker Rostar from billionaire Oleg Deripaska's En+ Group. The acquisition will be permitted in return for Rexam’s agreeing to limit price increases for a decade. Scottish & Newcastle is insisting that its 50% share in the Russian brewer Baltic Beverages Holdings (BBH) is worth much more than the $6.4bn implied by Carlsberg and Heineken in their bid for S&N, “yet it is struggling to demonstrate to shareholders that this value can be unlocked.” Investors from Russia have moved to take control of what is believed to be one of the biggest gold-mining operations in Armenia.

TODAY: 16-yr old activist attacked; Sarkozy defends Putin’s election; are corruption charges driving Putin’s political ambition?; Poland expects imports to be resumed; Russia tries to claim back its overseas Orthodox churches.

One Russian newspaper is reporting that a 16-year-old activist who participated in an Other Russia rally protesting the State Duma elections was beaten outside her home. French President Nicolas Sarkozy has defended his congratulation of Vladimir Putin following the recent Russian elections. "It is ridiculous to hold against Mr Putin an election when absolutely all its international observers will tell you that he is the most popular politician in Russia."

In a new Op/Ed for the recently reactivated Moscow Times, Anders Aslund points out two reasons why the president of Russia is unable to give up power: "Putin could not retire for two reasons. First, serious accusations of corruption and grand larceny have been raised against him. Therefore, he could not retire in a Russia without rule of law because no legal guarantees of amnesty could be plausible. Second, Putin's rule is a personal authoritarian system in which all power rests with the ruler. If he retires, his system is prone to collapse."

Aslund also argues that today the Chekists must despise Dmitri Medvedev for having "outwitted" them, and he wonders which Sechin proxy might have access to Marina Salye's report from 1992 on Putin's alleged corrupt foreign trade deals in St. Petersburg. Looks like 2008 shall continue where we left off.

There's an excellent column by Gideon Rachman coming out in tomorrow's Financial Times comparing the "Illiberal Capitalist" models of Russia and China:

But for all these differences, there are also increasingly strong similarities between the official ideologies of Russia and China. This is no longer because they both pay lip-service to a common set of Marxist-Leninist texts. Instead, it looks as if their ruling elites have arrived at similar ideas in reaction to similar economic and political pressures. The end product is a new, quasi-authoritarian ideology which – allied with economic success – could attract adherents. Writing in a recent edition of Foreign Affairs, Azar Gat, an Israeli academic, suggests that if western democracies run into economic problems, a “successful non-democratic Second World could then be regarded by many as an attractive alternative to liberal democracy.”

Well, this is interesting, no? From Kommersant:

French President Nicolas Sarkozy, when asked at a press conference about the fact that the OSCE declared the parliamentary elections in Russia undemocratic, stated that it was “completely ridiculous” to Russian President Vladimir Putin should not reproached for the United Russia Party's victory at the polls. “He cane be reproached for human rights and Chechnya,” the French president added.

Sarkozy said that he cannot reproach a person and then call on him to participate in the solution of world crises. He mentioned Putin's role in settling the Iranian nuclear problem.

Sarkozy made an official visit to Russia as head of state in October of last year and expressed a desire to Putin to understand Russia better. The Russian president responded with a quotation from the poet Tyutchev: “Russia cannot be understood with the mind, nor its land measured by the acre. It is a special case. You can only believe in Russia.”

Following yesterday's news that the Baltic pipeline project (Nord Stream) is expected to go over budget by 50-100%, some bloggers are catching on to the complicated political challenge posed by the German-Russian alliance. This comes from Cicero's Songs:

Germany, which has been particularly courted by both Gazprom and the official Russian government, now has a series of public conflicts concerning how Russia has used its relations with key individuals. The first and growing scandal concerns Gerhard Schroeder, the one time Chancellor, who took the job of chairman of Nord Stream, and with it some extremely large financial arrangements. As Chancellor, Schroeder had championed the scheme and drawn a veil over the gathering gloom about Russian democracy. He and his wife, indeed had adopted Russian children from the Russian city of St. Petersburg, the home city of President Vladimir Putin- an exceptionally rare occurrence to gain official sanction. As a result, Mr. Schroeder seems to have become exceptionally loyal to Russia - trying to lobby Estonia to back down, for example during the Bronze statue crisis - a crisis to a very great degree of Russia's making. If Nord Stream was trying to allay the security fears of the countries between Russia and Germany, he could hardly have done a better job- at destroying confidence.

It's hard to say who pines more for the good old days of great power intrigue and cloak and dagger espionage - the British, who knighted the spy Oleg Gordievsky, or the Russians, who posthumously awarded nuclear spy and American turncoat George Koval. What better year than 2008 for the British Royal Mail to launch a series of stamps dedicated to our most celebrated fictional spy icon, James Bond? According to the announcement, "These landscape stamp illustrates six books - featuring four different cover editions of each - beginning with the Jonathan Cape first edition of Casino Royale. The other books illustrated are Dr No, Goldfinger, Diamonds are Forever, For your Eyes Only and From Russia with Love. This is, undoubtedly, a collection to get both shaken and stirred over." If only these kinds of stories were pure fiction, the men from the real MI5 complain.

Read about it here and here, see examples below...

TODAY: Russian relations with EU could improve in wake of Slovenian presidency; Brazil meets with Russia over meat exports; Georgia leader wants to mend relations; Russia and Angola to combat drug trafficking; Russian space research is booming, says Russian Academy.

The 5th State Duma will begin its legislative work on January 9, with over 600 bills to discuss.

The new EU presidency of Slovenia could lead to a “long-delayed agreement between the EU and Russia,” according to one report. Russia considers Slovenia “a close ally,” and this, combined with its newly improved relations with Poland, could improve relations with the EU. Another report says that, on a political level, the EU and Russia “are struggling to find legislation they can agree on.”

In a modification of previous rules, foreign companies are to be permitted to participate in auctions on strategic Russian natural resource fields, according to the Ministry of Natural Resources.

Poland is pushing for talks with Germany and Russia about a controversial Baltic Sea gas pipeline project controlled by Gazprom. “We need to understand why the Russians are holding out for this project under the Baltic, which is three times more expensive than a gas pipeline crossing Poland”.

VRJ Petroleum, which includes Russia's OAO Zarubezhneft, Vietnam Oil & Gas Group, and a unit of Japan's Idemitsu Kosan, has made a commercial oil discovery off the Vietnamese coast and plans to begin production as soon as 2009.

Despite continued insistence that the British Council will not shut down its cultural offices and the subsequent risk of worsening relations with Russia, the UK remains “the largest foreign investor in Russia”. Tokyo’s Hitachi Construction, which makes giant excavators, said it may make excavator parts with a Russian company this year and plans to double annual sales in the country over the next five years. Scottish & Newcastle has commissioned an independent report into Baltic Beverages Holdings (BBH), the Russian brewer, and has also submitted a claim to an arbitration tribunal, which will decide if the company can acquire Carlsberg's 50% stake in BBH. According to VTB Bank’s latest report, the Russian economy grew 6.3% on the year in December.

Fresh from hardcore postings in Baghdad and Beirut, the Los Angeles Times sends a new reporter to Moscow. Megan K. Stack delivers some first impressions of the crushing misery of income inequality as experienced in Moscow's metro. Although we'll all miss the great reporting from Kim Murphy (who actually left Russia quite a while back), it is great to see this paper assign its top talent to a country of increasing importance in world affairs. Read more about Stack's experiences reporting from war zones here.

A disabled man begs in the Moscow Metro. “When you take that escalator down and look at those faces, get hit with all of that anxiety, all of the worry, it’s incredible,” one Russian says of the subway. (Sergei L. Loiko / Los Angeles Times)

From the article:

Since moving to Moscow seven months ago, I've been schooled in the stark realities of Russian society by daily rides to language classes and the office on the Metro. The vast sprawl of tracks and tunnels seems to offer a direct line into Moscow's soul -- a place of faded elegance and hopeless cynicism, debauchery and destitution, barely contained brutality and touches of kindness.

It's potent stuff, and some days I just don't have the stomach for it. I have to force myself to walk into the station, and spend the whole commute staring at my shoes, afraid of what I'll see if I let my eyes rove.

It appears that the controversial Nord Stream pipeline project, which aims to bring natural gas direct from Russia to Germany, is already hitting some cost overruns topping the estimated budget of $5 billion. Just how much more the project will cost will not be revealed until March, according to Nord Stream director Dirk von Ameln, who said they nevertheless intend to begin construction next year despite protests from environmental groups and complaints from other EU members left in the lurch with energy negotiations with Moscow.

Just today new Polish PM Donald Tusk, who has had more luck speaking with Moscow than his predecessors, told Newsweek "I want to launch an in-depth discussion. We need to demystify the problem. ... We need to understand why the Russians are holding out for this project under the Baltic, which is three times more expensive than a gas pipeline crossing Poland, and what the conditions would be for changing it."

The rise in cost comes as no surprise to analysts, as the consortium is headed up by one of the most inefficient pipeline builders in the world, and the undersea route is estimated to already cost three times that of an overland route. The consortium building Nord Stream includes consortium includes Russian gas giant Gazprom, Germany's BASF/Wintershall and EON Ruhrgas and Dutch group Gasunie. Former Chancellor of Germany Gerhard Schröder was infamously appointed as a chairman of the project right after leaving office, where he played an instrumental political role in pushing the project through.

See a video news report about the story here.

Here's an interesting comment by blogger Tim Newman that I found over at SRB, which in a way backs up Robert Amsterdam's arguments about "premature contractualization" with regard to the Gazprom-Nigeria deal rumors...

"I’d be interested to see how Gazprom go about developing the Nigerian reserves, given that their progress in developing their Russian reserves has advanced practically nowhere beyond announcing grand projects, promising funding, and using the force of the state to appropriate others’ projects.

I have had a meeting or two with Gazprom at the middle-management level, and it is clear that there is a rather large gap between the announcements the senior managers and politicians as to what Gazprom will do, and the managers and engineers who are tasked with making it happen.

Today Orthodox Christians celebrated Christmas - and here are some photos from the festivities in Russia.

Russia's President Vladimir Putin meets children as he visits Father Frost's palace in Veliky Ustyug in the Vologda region, about 650 km (400 miles) north of Moscow, January 7, 2008. REUTERS/Pool/Misha Japaridze (RUSSIA)

The Telegraph ran a interview with Alexander Mamut of SUP yesterday, the new Kremlin-loyalist owner of LiveJournal (which we have blogged about here and here). Mamut comes off pretty eloquently, remarking that for some Russians in the blogosphere, "worrying is modus vivendi", that blogging is for people who can't stop talking or for those who have something important to say, and that "censorship is not profitable."

The problem is that "profitability" would seem to be of least concern to the state security apparatus, and if they were to ask Mamut to do something specific with LiveJournal, what rights would he have to protect privacy? Asked if he would ever criticize the government he answered:

"I have not the slightest desire to do so," he says, "because he who criticises should not only pronounces words but be prepared to act. I am not a human rights activist. It is enough for me to run my business and in that way, I make a difference. If we look at our society now, on the whole it is happy, the mood is improving and people are confident of the future. Nobody interferes with what I do. I am responsible for my family, my business. I am not responsible for the country. It is easy to criticise when you are not in a position of responsibility."

See more good excerpts from this ambiguous and compelling Russian businessman after the cut.

Here's a clip from the Saturday U.S. presidential debates, during which New Mexico Gov. Bill Richardson remarks that one of the first things he would do if elected president would be to "seek immediate negotiations with the Soviet Union." Now that is a bold proposal. See Richardson's foreign policy proposals here.

UK gas bills could rise 17% this year, with the price increase reportedly being “blamed on Russian supplier Gazprom”.

Gazprom’s moves to tap Nigeria’s huge energy reserves “will send shivers through western governments already concerned about a shortage of global gas supplies.”

Two key Russian export projects, the East Siberia-Pacific Ocean oil pipeline controlled by Transneft and Gazprom’s Nord Stream pipeline, are facing delays and increased costs.

Russia, “the country that defaulted on its international bonds in the late 1990s,” now has $425 billion of gold and currency reserves and a $150 billion stabilization fund, built from oil and gas wealth. “Putin’s whole ethos is that if Russia can’t be a military super-power, it can project economic power. The energy weapon is not the all-encompassing thing Putin thinks it is, and in some ways Russia needs Europe more than Europe needs Russia,” said one analyst.

TODAY: Russian Christmas; Clinton on Putin; Georgian elections - Russia doubts democracy; Poland signals stronger position on missile defense shield; Russia and the Middle East; could Russia give the OSCE a hard time this year?

It is Christmas Day in Russia today. President Vladimir Putin issued Christmas greetings to Orthodox Christians and all Russian citizens, saying, “this is a holiday that has borne the light of faith, hope and love for centuries. It draws us to the true spiritual values that unite millions of people.” US presidential candidate Hillary Clinton reportedly declared, in response to a voter's question, that Putin “doesn't have a soul.”

Analysts praising Russia’s strong performance “ignore the fact that Russia's inflation demons are rearing their ugly heads and showing every sign of getting worse.” Oligarchs Vladimir Potanin and Mikhail Prokhorov, previously joint owners of Norilsk Nickel, are parting ways in a saga being dubbed as “the divorce of the century”. The Russian entrepreneur Alexander Mamut has bought the US blogging website LiveJournal. Its Russian users, who comprise 28% of the site’s global use, are worried that the “Kremlin loyalist” will use his ownership to censor the blog. Japanese carmaker Nissan Motors may join in a partnership with the French Renault and Russian AvtoVAZ, although the latter has yet to approve the move. UK Brewer Scottish & Newcastle “could accrue £1bn in benefits” from taking full ownership of its BBH Russian joint venture with Carlsberg. The UK’s Financial Services Authority could tighten listing requirements. One report links the change with the claim that listings from Russia and other countries from the former Soviet Union, “have frequently raised concerns over corporate governance.”

PHOTO: Mikhail Prokhorov and Vladimir Potanin, previously joint owners of Norilsk Nickel. (Source: http://russia-ic.com/)

A new report from the Financial Times on the potential Gazprom natural gas deal in Nigeria reveals that the company aims to control the country's LNG export market to Europe and the United States, but Russia still hasn't provided any details of their proposal:

“The Russian government wants Gazprom to anchor the expanding relationship between Nigeria and the Russian Federation,” a Nigerian oil official said. “They now have to come down to the detail of what they want to do. We are waiting for them.”

Vladimir Putin is certainly not the first Russian to nab the cover of Time Magazine. In addition to Yeltsin, Gorbachev, Sakharov, Brezhnev and many others, if we go all the way back to Dec. 16, 1935, the cover was graced by the legendary Alexei Stakhanov - the iconic Soviet worker of the Stalin era. Stakhanov, as I'm sure many of you are aware, was a miner who became an international celebrity after extracting 14 times his quota of coal single handedly in under six hours, and later set a new record by mining 227 tons of coal in a single shift. His extraordinary feats inspired the Shakhanovite movement which sought to improve productivity and bolster national pride and unity - a name synonymous with Joseph Stalin's ambitious five-year plans.

(Although a largely irrelevant detail now, in 1985 the New York Times reporter Serge Schmemann, now an editor at the International Herald Tribune, first broke the story that Stakhanov's achievement was a propaganda ploy, as he was helped by numerous other workers to break the record.)

If we were to look for the Stakhanov reincarnation in today's Russia, symbolizing in larger than life terms Russia's resurgence, strength, confidence, and national unity, we would look no further than Gazprom - an impossibly overachieving corporate behemoth that is not only the central instrument for the Kremlin to leverage its power abroad, but also a Titan-like national symbol of the new reality of Putinist Russia. But like the superhuman Ukrainian miner, are Gazprom's achievements over-emphasized to serve this purpose?

It was a fantasy come true for the Kremlin apologists. Distracted for just a moment from their diligent yet nutty work debunking the supposedly anti-Putin agenda/conspiracy in the international press (how these people reconcile that position with the Time nomination is beyond all logic), they took notice of Georgian President Mikheil Saakashvili's terrifying brutal crackdown against opposition protesters last November - the consequences of which have led to today's disputed snap election.

The scary scenes of jackboot riot police beating the peaceful marching crowds seemed like it was pulled directly from Moscow, Myanmar, or even Kenya (apart from Georgia's innovation of the Mickey Mouse gas mask for the riot police (pictured)). What exquisite hypocrisy!, exclaimed the apologists - here we have the golden boy of the West, a man who holds diplomas from Columbia, George Washington, and the International Institute of Human Rights, behaving like a tin-pot despot! Now no one can complain about a few imperfections in Russia, they concluded, and declared the so-called "color revolutions" to have been officially and definitively defeated.

A few days ago Charles Krauthammer had a column discussing the rather imperfect democratic legacy of the recently assassinated Pakistani opposition figure Benazir Bhutto. The core question, the columnist argues, is whether or not democratic forms of government can be effectively instituted in societies that remain for the most part feudal, whereby divine right to succession or simple clan power decides who leads, rather than popular sovereignty? Krauthammer furthermore points to many examples proving that economic liberalization and growth are not axiomatic to political liberalization, including of course Russia, which "acquiesces cravenly as its nascent democracy is systematically dismantled in return for a bit of great-power posturing and a measure of oil-fueled pottage doled out by Czar Vladimir."

Ouch.

Last summer when Vladimir Putin boldly declared his interest in building a new global economic “architecture,” eschewing the influence of institutions such as the World Bank and Bretton Woods system, few in the West could predict how exactly Russia would go about doing this. The rapid rise of a new, powerful energy alliance, including countries like Iran, Venezuela, Nigeria, and Bolivia, appears to be the central instrument by which Moscow hopes to accomplish their lofty goal, and already we have seen the potential for damage posed by closer relationships between authoritarian states.

Hugo Banzer Suárez (right), an authoritarian populist president of Bolivia photographed with Chilean dictator Augusto Pinochet in 1975. What leads voters in nominally democratic countries like Russia and Bolivia to support authoritarians?

Just this evening the FT has broken a story of considerable importance: According to an unnamed, high ranking official in Nigeria's energy sector, Gazprom has made an aggressive offer to make major investments in the African nation's energy infrastructure in exchange for shares in key gas fields - a move which already has critics crying foul. Described by Matthew Green as "one of the boldest forays in the global fight for African energy assets," this move by the Russians shows in no uncertain terms the Kremlin's determination to preemptively co-opt alternative natural gas sources - a familiar pattern we have seen in practice everywhere from Turkmenistan to Iran to Algeria to Bolivia.

At least now people are beginning to pay attention to the real motives behind these actions.

What is particularly interesting is how this unnamed official gives us an inside view into Gazprom's negotiating tactics: “What Gazprom is proposing is mind-boggling,” he told the FT. “They’re talking tough and saying the west has taken advantage of us in the last 50 years and they’re offering us a better deal ... They are ready to beat the Chinese, the Indians and the Americans. ... Gazprom is saying, ‘We’re better than Shell or any other company that has exploited you for the past 50 years’"

Hearing Gazprom give lectures on the evil exploitation of big oil in Nigeria must have seemed richly ironic to the petroleum ministers, who won't be buying into this paternalistic "exploitation narrative", at least privately. Anyone who has worked in Nigeria knows that the various groups and clans in control of the petroleum sector are far more sophisticated and savvy energy experts than one may expect, and most certainly know how to cut a favorable deal. However there is also good reason to think that Russia could succeed with these plans in Nigeria, especially given the attractive political incentives Mr. Putin can attach to any Gazprom offer - making competition with any normal non-state owned company laughable. President Umaru Yar’Adua (pictured) has previously made bold declarations about his plans to develop the natural gas sector in Nigeria (most of which is currently wasted by flaring - which oddly Russia recently surpassed Nigeria in this regard), and having Putin come along offering billions might just be irresistible.

However there are also several reasons for us not to jump the gun yet. We have seen other cases of Gazprom's strategic "premature contractualization" - whereby the greatest impact of a proposed deal is not the acquisition itself but rather the conduct it forces upon other parties. Some may recall how terrified the Italians were when Gazprom signed an MoU with Algeria's Sonatrach, yet after Scaroni subsequently made Eni Russia's largest gas customer and after the Kremlin somehow convinced him to purchase stolen Yukos assets that no other company would touch with a ten-foot pole, the MoU with Algeria totally dissolved into nothing. Will these promises to take over Nigeria's gas actually materialize, or is Gazprom looking for more leverage over the Europeans in other areas?

Given that I have worked in Nigeria on and off for more than 25 years, I will be following this story closely, and will offer some more comprehensive thoughts in the near future. More details after the jump.

Special thanks to Fora.tv for this short clip of Estonian PM Ansip addressing the Hoover Institution about the impressive growth of the Estonian economy.

There's an interesting post over at SRB about the Nashi's 3rd Congress, which of course featured Vladislav Surkov as the keynote speaker, and the creeping "bureaucratization" of the movement: The Nashisty argue that Russia despite its success and supposed stability is besieged from within and without. Within by what Borovikov calls “fascists in disguise”–a Nashi metonym for liberals, Other Russiaists, National Bolsheviks and other “radicals”–and shadowy forces emanating from the US State Department and British Foreign Office. If the myth of a “new Cold War” serves American pundits as fodder for proclaiming Putin’s Russia as “neo-Soviet,” Cold War rhetoric allows Nashi use “fascism” as political venom against the Russian state’s real or imagined enemies. “We’re here to protect the sovereignty of our country,” said Zaur Aminov, a 20-year-old economics student and Nashi Commissar told the LA Times as if that sovereignty is under threat. And who is the source of this threat the LA Times wondered? “The American State Department,” Aminov answered.

RFE/RL is reporting that Russia is cutting back on its contributions to the OSCE budget:

Russia's decision to reduce its payments, in a sense, fits into the ongoing debate over the OSCE's budget for 2008, which has yet to be adopted due to a lack of consensus among the 56 participating states. Individual countries are also in separate negotiations over the size of their contribution to this year's budget.

But the Russian Foreign Ministry's latest note, in which it accuses the OSCE of bias toward certain member states, leaves little doubt about the issue's political undertones.

"This is connected chiefly with the OSCE's election-monitoring activities, both in Russia and other former Soviet countries," says Yevgeny Volk, a Russian political analyst. "By reducing its contribution, I think Russia is seeking to voice its opposition to the OSCE's activities and to exert pressure on the organization."

The Daily Telegraph continues its reporting on the Belkovsky rumor over Vladimir Putin's secret fortune, this time featuring some terrific quotes from Andrei Illarionov: Illarionov, president of the Moscow-based Institute of Economic Analysis and a fellow of the Washington-based Cato Institute, claimed that the circle around Putin and his chosen successor Dmitry Medvedev, were increasingly adopting "the aggression of the street rabble" to stay in power.

"At the moment for many of the people who are in power, there is almost no other means left to them but to escalate violence and aggression in order to remain in power.

Today, and hopefully over the next several months, we are planning to do a significant amount of blogging about Russia from a comparative perspective - focusing often on the commonalities of the Russian experience and the Latin American experience. I would argue that those who study Russia can learn a lot by looking at popular movements across this distant continent.

Case in point, there is a terrific column by Enrique Krauze, the editor of the excellent Mexican magazine Letras Libres, in the IHT today about the Venezuelan student movements which makes mention of the Russian student idealist "Sashka Zhegulyov" (a character from a 1911 novel by Leonid Andreyev).

What can we learn about Vladimir Putin and Russia from the experiences of Alberto Fujimori, Hugo Chavez, Lazaro Cárdenas, and other populist authoritarians of Latin America?

Today: Russia's relations wtih UK and Ukraine in trouble; Greenpeace Russia to focus on Kyoto Protocol and possibly sue the IOC; Moscow's building boom; movie-going culture on the up.

The British Council says that its legal position in Russia is “rock solid” despite facing pressure and accusations that its continued activities are “illegal”. The council’s offices are due to reopen on January 14, after holiday closure, but Foreign Ministry spokesman Mikhail Kamynin said in a statement that Russia expects the operations to be permanently closed and “any other actions would be provocative and build up bilateral tensions.” Ukraine's government is asking the United Nations to recognize the 1932 famine as an act of genocide, “worsening already frosty relations with Russia”.

Finance Minister Alexei Kudrin says that Russia will not be affected by changes in oil prices, as it has “prepared” for fluctuations with a strong reserve.

Lukoil and Gazprom have established a Regional Development joint venture to focus on a number of development and implementation aspects, including exploration and production of hydrocarbons.

Gazprom says it wants to claim 10% of the French gas market within four to five years.

With all the hubbub in Russia's online community regarding LiveJournal and increased internet watchdogs, another frightening development has been added to the mix, this time involving Russia's campaign to establish a new Cyrillic internet. According to a report in the Guardian, the government is lobbying