March 2008 Archives

Here is a news clip from Gallup which finds that many in the Ukraine and Georgia believe that it is more important not to anger Moscow, even at the cost of damaging relations with the United States.

In the Daily Star, Anders Aslund argues that Russia deserves a fresh start and a new set of offers from the West to join NATO, the EU, and other institutions, but only after Putin has left office:

In his speech on May 9, 2007, commemorating Russia's victory in World War II, Putin compared the United States with Nazi Germany: "We have a duty to remember that the causes of any war lie above all in the mistakes and miscalculations of peacetime, and that these causes have their roots in an ideology of confrontation and extremism. It is all the more important that we remember this today, because these threats are not becoming fewer, but are only transforming and changing their appearance. These new threats, just as under the Third Reich, show the same contempt for human life and the same aspiration to establish an exclusive dictate over the world."

Serious politicians do not speak like that.

Today Russian prosecutors are beginning the extremism trial of Savva Terentyev, a young blogger from Syktyvkar who was first brought under investigation after he posted inflammatory anti-police comments on another journalist's blog which angered local authorities. We've posted several reports about the case on this blog, and we see these types of trials as a negative development for freedom of speech in Russia.

Alex Rodriguez of the Chicago Tribune writes that the heavy-handed oversight on internet and blog activity may be making some more politically active. One LiveJournal blogger wrote the following:

"Until recently, I had absolutely no opinion on the government and its policy," wrote a blogger called "bravo." "But having looked at [my] compatriots' servility, their worshiping of Putin, Medvedev, United Russia, I was horrified. I don't want a dictatorship of falsehood. I don't want corrupt bureaucrats. I don't want freedom of speech to be infringed. I don't like this at all."

In a step that could jeopardize the sale of southern Siberian power producer TGK-11, a Moscow court postponed a decision until May on splitting off one of the firm's main assets, Tomskenergo, in which Rosneft formerly controlled a blocking stake.

United Company RusAl ordered the closing of all five pits at its North Ural Bauxite Mine in the Sverdlovsk region amid reports that a strike at one pit could be spreading. Oil firm Surgutneftegas reported a 15% rise in net profit in 2007 despite falling oil production. Gazprom plans $65 billion in capital expenditures in 2009 and 2010 to help boost production.

Special report on the Russian intelligence agent who allegedly penetrated the UN Oil for Food program and diverted huge sums to Russia.

Russian oligarch Oleg Deripaska’s business methods are to be investigated by the High Court in London, as he is being sued by an alleged former associate, Michael Cherney, who is seeking a stake in Basic Element. Deripaska’s auto company GAZ, may partner with General Motors Corp. in VM Motori, an Italian diesel engine manufacturer. Deripaska’s role in Norilsk Nickel will be decided by foreign investors this week, who will vote to clear up a disagreement over control of the company’s board.

Russia could avoid the risk of an economic collapse by “diversifying”. The European Social Survey says that the number of qualified and skilled Russian employees working in industry is still very high. The cheapest mansions on Russia’s new Agalarov Estate for the super-rich are selling for $15 million. Capital flight from Russia over the first two of months this year reached $20bn. Russia’s Aeroflot is putting five Tupolev-134 jets up for sale. Leading UK pension experts are “putting their retirement savings” into Russian equities. Troika Dialog, the Russian investment bank, plans to raise $1 billion from an infrastructure fund. There is a possibility that “Russian sovereign funds will take the place of Western investments in the postcommunist sphere”.

TODAY: Putin to attend NATO summit this week, wants to build “bridge” between US and Russia, plans to become leader of United Russia. Anglo-Russian investment strong. Anna Politkovskaya’s killer identified, say Russian prosecutors.

Between Britain and Russia, poor political relations are not disrupting healthy economic relations, and British tourist numbers are “booming”. Russia believes that the British Foreign Office’s announcement of the retirement of Sir Anthony Brenton, the Moscow ambassador most disliked by the Kremlin, is a “humiliating climb-down”.

It is being reported that President Vladimir Putin plans to become the official leader of United Russia and will announce his decision to join the party at its congress next month. According to this report, Putin wants to build a 64-mile tunnel under the Bering Strait between Chukotka, in the Russian far east, and Alaska, to act as “a real bridge” between Russia and the US. The cost is of such a venture is estimated at $66 billion.

Remember Sergei Storchak? The innocent civilian deputy finance minister who was sacrificed as a pawn in the Spy Wars? Today Reuters reports that the investigator on the case is facing a probe himself - something that is highly unlikely in any other country, but given the deteriorated status of the Russian justice system, I wouldn't say this is a particularly surprising development.

Dmitry Dovgy, the head of the main investigative unit of the Investigative Committee, and members of his staff are facing an internal inquiry "related to how they handled official duties", the media quoted a committee spokesman as saying.

Dovgy's office is in charge of the case against Sergei Storchak who has been held since November on charges of attempting to embezzle $43 million in budget funds.

The spokesman at the committee, which falls under the General Prosecutor's office, did not say whether there was a link between the Storchak case and the internal inquiry.

The Washington Post reviews a Russain Army conscript's new book: In One Soldier's War, his memoir of Russian army life, Arkady Babchenko confirms that this kind of sale was rife. He describes how two new recruits were beaten, tortured and expelled from his unit for selling ammunition through the fence of their base to buy vodka. But their real mistake was not that they traded with the enemy. It was that they were new:

"We don't watch the beating. We have been beaten ourselves and it has long ceased to be of any interest. Nor do we feel particularly sorry for the gunners. They shouldn't have gotten caught. . . . They have seen too little of the war to sell bullets -- only we are entitled to do that. We know death, we've heard it whistling over our heads and seen how it mangles bodies, and we have the right to bring it upon others. And these two haven't. What's more, the new recruits are strangers in our battalion, not yet soldiers, not one of us. But most of all we are upset that we can no longer use the gap in the fence."

The decision this week from a Dutch court ordering $850 million in compensation to be paid to Yukos shareholders is just the latest in growing string of legal victories against the Kremlin - bringing not only optimism but also concern of the repercussions.

The ruling may be the first of several to return up to $2 billion worth of Yukos’s Dutch assets back to the shareholders, opening up precedent for further compensation in other jurisdictions. On top of many other legal reverses in international courts over the past year relating to the Yukos, Khodorokovsky, and Lebedev cases, the Dutch decision has defined a limit on how much Rosneft will be allowed to plunder of what was once Russia’s most dynamic and transparent energy corporation.

These defeats are piling up, and I expect we will soon see vengeful reprisals.

A word in defense of Russia’s Minister of Defense

By Grigory Pasko, journalist

In these days in Moscow and a bit in Russia on the pages of the mass information media, they’re discussing the interview of «the elected president» (that’s what they’re calling Medvedev after the elections that took place recently, thereby seeming to underscore that today’s president Putin – was not elected, but appointed in his time) in England’s Financial Times. The discussions at times get lengthy and tedious. Why? Because there’s absolutely nothing to discuss, that’s why. Zero information. Just padding. In every word-answer of Medvedev’s you can sense complete and total dependence on Putin. And even the frequent assurance – almost an incantation, really – about how he is his own man bears witness, in my view, to the exact opposite.

But let’s leave Medvedev alone – he is a person of little interest, in many senses. Let’s direct our eyes on Minister of Defense Anatoly Serdyukov. (Photo)

Recently Robert Amsterdam blogged about the corporate foreign policy implications of TNK-BP's latest snafu - that perhaps in exchange for relieve from the state's bureaucratic attack, that the Kremlin would ask BP to perform some lobbying services on their behalf with the UK government. We have heard similar first-hand accounts that Gazprom has used its relationships with other national champions to advocate for softer Russia policy and muzzle human rights criticism.

We will likely never hear the real reasons why the UK Ambassador to Russia Anthony Brenton is being withdrawn by the Foreign Office and replaced by Anne Pringle, but given that the whole British Council scandal seems to have quieted down, the timing really seems to point to pressure from BP to placate the Russians with a new face. Now we just have to see if Ambassador Pringle will put up with the same daily harassment from the Nashi as her predecessor was forced to tolerate.

Interesting news coming out of Russia today on the 2006 murder of journalist Anna Politkovskaya - the authorities have announced that they have identified the trigger man and are in the process of hunting him down for arrest ... the only thing the authorities won't disclose is this person's name.

Given the past failures (Prosecutor General Yuri Chaika once boasted the arrest of a suspect who was actually in prison at the time of the crime) and disappointing lack of progress in the investigation, Politkovskaya's former co-workers are dismissive of the prosecution's announcement. Dmitry Muratov of Novaya Gazeta told Reuters that the investigators are recycling old news - they already knew the name of the hitman last year, but they are seeking to keep FSB Colonel Pavel Ryaguzov, who is alleged to have provided Politkovskaya's address to the killers, in detention.

The likely motivation for this optimistic announcement? It could be a response to the renewed spate of journalist killings in Dagestan, which yesterday the OSCE issued a statement demanding a vigorous probe of the murders.

Interestingly, many of the wire stories covering the Politkovskaya announcement saw fit to mention Dmitry Medvedev's promises to eliminate "legal nihilism."

A Russian court has frozen the sale of shares in power producer TGK-11 as part of a second lawsuit filed by a Rosneft subsidiary.

More than 100 miners who spent the night 700 meters underground in a Sverdlovsk region bauxite mine have refused to return to the surface until their demands for better pay and working conditions are met. The mine is owned by RUSAL, who refused to recognize the strike.

“It is unlikely that TNK-BP's troubles will end despite the firm's willingness to cooperate with authorities” because “several government agencies are finding faults in what appears to be an orchestrated campaign to coerce TNK-BP into giving up whatever the government or state-controlled companies want.” The Economist says “the energy business in Russia is as murky as ever.”

An Orthodox business has suggested building “collapsible light churches” in order to fulfillthe goal of having one church for every thousand Orthodox believers. British supermarket chain Tesco plans to open its first Russian stores. Russia's state-run Sukhoi Aviation Holding Co., “plans to become the largest maker of commercial airplanes after Airbus and Boeing.” Dmitry Medvedev has called for anti-corruption steps to protect small businesses. The Ministry of Economic Development and Trade has released a list of food products whose prices may be regulated by the state. The Russian arm of Procter & Gamble has been presented with a $28 million tax claim. Caspian Sea states may impose a five-year ban on fishing for sturgeon “because the sturgeon is about to disappear”. Banks and monetary authorities will boost loans to the economy by 35-40% year-on-year to ensure 7% GDP growth this year. Raven Russia, a British property firm focused on Russian warehouses, signed a $170 million loan agreement with VTB Bank Europe to finance a logistics project in southwest Russia.

TODAY: US and Russian press respond differently to missile talks. NATO ambassadors say Russia should not fear the alliance. Abramovich to build Channel Tunnel-style link between Russia and America? Court witness accuses Khodorkovsky of murder. Schools to censor internet access.

Mixed reactions in the press today to US-Russia missile defense talks. One newspaper says “US negotiatiors” see the talks as having made progress, and the BBC has picked up this positive tone. The Russian press, however, is portraying a different view, one saying the two sides had “failed to settle differences”, quoting the Russian Deputy Foreign Minister.

The widow of Neftyugansk Mayor Vladimir Petukhov, has testified in court that ex-Yukos CEO Mikhail Khodorkovsky was behind the 1998 murder of her husband, basing her accusation on the fact that she could think of “no one else but Khodorkovsky who could have done it”.

The US ambassador to NATO says former Soviet republics will bolster stability in a trouble-prone region and that the alliance shouldn’t be seen by Russia as a “four-letter word”. NATO Secretary General Jaap de Hoop Scheffer cautioned Vladimir Putin against using “unhelpful,” anti-western rhetoric at next week's annual summit meeting. The Moscow Times has picked up on US presidential candidate John McCain’s call to exclude Russia from the G8 and accusation against Russia of "nuclear blackmail."

[Editor: This week our correspondent in Russia, Grigory Pasko, published two interviews with a leading psychiatric expert in Russia about the state's forced confinement of several political dissidents. The following is an afterword Grigory wrote to go with the articles.]

A compulsory afterword

When Yuri Sergeyevich asked me to send him the text of the interview with him so he could look it over, I wasn’t surprised: I had heard of an incident when one journalist had supposedly written something he’d said inaccurately. And more: medical terms – this isn’t my favourite topic, so I freely admit that my dictaphone and I might not have heard some word correctly (although I love my dictaphone very much and trust it implicitly).

Doctor Savenko spent a long time proofreading our conversation. He sent me his version. Imagine my surprise when I did not uncover in it the words of my interlocutor not only about today’s power, but specifically about comrade Putin. Furthermore, a bit later, the esteemed doctor sent me an addendum: “…I am sending my proofread. See to it that the places removed by me do not remain in the text.”

Following the path of Alexander Radishchev (unlike Grigory Pasko's journeys in the footsteps of Venedikt Erofeyev), a senior editor from Time Magazine sets out in a Lada hatchback with a non-drinking driver to see the "real Russia" - finding himself in strange villages, hunting for good apples, and harassed by bureaucracy. It's quite an apolitical little video diary - which seems harder and harder to achieve in Russia these days.

Watch it here.

From the Financial Times:

Dutch give hope to Yukos investors

By Neil Buckley in Moscow

More than 50,000 shareholders of Yukos may finally be able to receive some compensation for their losses after the last material creditor of the bankrupt Russian oil company was paid $850m by a Dutch subsidiary.

It's not surprising that the Russian government has laid siege to TNK-BP, argues Carl Mortished, but rather the timing. After all, one would have thought that Gazprom's appetite would have been sated for a while after the theft of the Kovykta natural gas field...

Ah, but perhaps it isn't the Gazprom clan behind this (they probably want smooth sailing as Medvedev establishes himself as president) - but rather the rival Igor Sechin and Rosneft who are seeking greater control of Russian oil with the attack on BP's assets:

The scuttlebutt in Moscow suggests that it is not Gazprom's ambition but the desire of its oil rival, Rosneft, the state-controlled company chaired by President Putin's chief of staff, Igor Sechin, to expand and control a larger patch of oil. A lock-in agreement that prevented the Russian partners in TNK-BP from selling their interest expired late last year and it is rumoured that the Kremlin would like to see a state company replace the oligarchs, but the latter - tycoons Mikhail Fridman, Len Blavatnik and Viktor Vekselberg - have denied any interest in selling.

The Federal Migration Service says its tax evasion probe into BP was not part of any “special actions” against the company.

Former Unified Energy System’s power producer OGK-1 will be bought for $7 billion by Electricite de France and a Russian firm controlled by former UES executive Mikhail Abyzov. Apparently no other bidders came forward.

WORLD ENERGY

Royal Dutch Shell is working on a process to turn sugars into a synthetic petrol, rather than ethanol, as part of a joint venture with Virent, a US biotech business.

Shareholders of the former Menatep Group (now called GML), including Leonid Nevzlin and Platon Lebedev, have won a “major victory” in their attempts to get a share of bankrupt Yukos’ assets, after a Dutch court ordered a Dutch subsidiary of Yukos to hand over $850 million, part of the proceeds of a 2006 sale. The head of Eventica, the company organizing the Russian Investment Forum in London next month, says “politics is getting in the way” of the event, which last year saw many participants pulling out over claims that the Kremlin was against it. Billionaire Mikhail Fridman's Alfa Group wants to sell its stake in MegaFon, Russia's third-largest cellular operator. BNP Paribas could begin considering acquisitions in Russia to expand in an economy “growing faster than that of France”. Russia's largest supermarket chain, X5 Retail Group, has borrowed $1.1 billion from a group of banks to refinance existing loans. Dmitry Medvedev says that red tape and excessive control of small business is stopping Russians from starting their own enterprises. Costa Coffee has opened its first branch in Moscow. Nestle forecast a 19% gain in annual sales from Russia, and said that “due to its size”, the country could be the biggest contributor to the company’s sales in Europe. Alexei Kudrin says Russia's state-controlled VTB could become an asset manager for Russia's $32 billion National Wealth Fund.

TODAY: Third Yabloko official under investigation. Anglo-Russian relations under scrutiny again after release of new report. President Bush to visit Putin in Russia.

President Bush announced that he has accepted an invitation by President Vladimir Putin to visit him in Sochi next week. “I think a lot of people in Europe would have a deep sigh of relief if we’re able to reach an accord on missile defense. And hopefully we can,” he said.

A new section of a human rights report from the British Foreign Office says that Russia has experienced “a shrinking of the democratic space” over the past year and a half. Analysts say the report is not meant to aggravate the political climate between the two countries. The current investigation into BP is causing concern among British MPs. One article looks at the Kremlin-backed Institute of Democracy and Cooperation, which is opening branches in New York and Paris.

A third Yabloko official is facing criminal investigation: Oleg Kochkin, Yabloko's top official in the Penza region and publisher of an independent weekly newspaper, has been charged with extortion and accused of trying to blackmail Penza’s governor. Investigators are now saying that “personal motives” are behind the murder of Russian journalist Ilyas Shurpaev. Marina Litvinenko is writing in the British press today, calling for a full inquest into the death of Alexander Litvinenko. Following the controversial lending of Russia’s masterpieces to Britain’s Royal Academy, Britain is to lend 110 works by JMW Turner to Moscow for a “ground-breaking” exhibition.

BOOK REVIEW: “Fujimori’s Peru: Deception in the Public Sphere,” by Catherine M. Conaghan (University of Pittsburgh Press, 2005)

Some of the most interesting comparative politics studies I’ve read take a look at the similar experiences in transitions to democracy in both former Soviet states and Latin America nations. Although academics and others have been noting these similar trends for years, it seems that now, with the conclusion of the second Putin presidency (I dare not call it the end of the Putin era, per se), there is once again a rich field of experiences and methodologies to compare and contrast.

I was particularly struck by this thought last December, as I followed the coverage of the long-awaited trial of the former dictator of Peru, Alberto Fujimori, who before sentencing angrily erupted with the following outburst: “I received a country ... almost in collapse, exhausted by hyperinflation, international financial isolation and widespread terrorism. My government rescued the human rights of 25 million Peruvians with no exceptions!” Sound familiar?

Russia's Igor Sechin (left) and Peru's Vladimiro Montesinos (right). How did these two government officials respectively use the Federal Security Service (FSB) and Servicio de Inteligencia Nacional (SIN) to seize control of the executive?

[Editor's note: yesterday we posted part 1 of Grigory Pasko's interview with Dr. Yuri Savenko, president of the Independent Psychiatric Association of Russia, and an adviser to the Russian human rights ombudsman. Below the interview picks up right where Grigory left off ... Pasko has reported on punitive psychiatry in Russia extensively for this blog.]

An interview with prominent Russian psychiatrist Yuri Savenko - Part 2

By Grigory Pasko

Q by Pasko: Recently, I met with yet another “dissenter” – a journalist from Rybinsk, Andrei Novikov.

A from Dr. Savenko: A talented journalist in his 40 years has remained flamboyantly adolescent to such a degree that he is a group 2 invalid by mental illness, but he has never represented any kind of menace to society. The texts that served as grounds for opening a criminal case against him under part 1 of Article 280 of the CC RF [Criminal Code of the Russian Federation] were never published anywhere, did not hang on his website, but were taken from a private computer, that is there was no element of a crime, but turning to psychiatry allowed more than 9 months to treat him in an inpatient facility, although he was not refusing outpatient treatment. This is very cruel.

...but also says he would kick them out of the G8 while signing up India and Brazil. Excerpts from a foreign policy speech given by Sen. John McCain to the Los Angeles World Affairs Council after the cut.

In many modern democracies, the public scandal has become the bread and butter of the system - whether it is a New York governor's peccadilloes, a bribery investigation of one of Germany's largest companies, or even high society Brits providing false testimony for Italian ex-presidents. Scandals provide a constant reminder that mechanisms of accountability are in place and functioning, able to snare down the most powerful people and satisfy the public outrage over wrongdoing.

Writing in the Moscow Times, columnist Yulia Latynina takes issue with the fact that Russia has lost almost all sense of the public scandal because of its muzzled media - we no longer hear about the various violations, shocking surprises, and odious conduct of any high-ranking official - although this same conduct has continued and deepened from the Yeltsin presidency to the Putin era. Specifically, Yulia points to the case of Anatoly Chubais accepting a $90,000 "book advance" from a publishing company belonging to Vladimir Potanin's Oneksimbank shortly before the bank won 25 percent of Svyazinvest's shares in a privatization auction - when Chubais was caught, he was forced by media pressure and public outrage to resign from his post.

Masha Lipman in WaPo:

If the team of Putin and Medvedev really means modernization, it is sure to face tough challenges. First and foremost is the question of whether modernization is even possible in a deinstitutionalized system that has eliminated public participation, cultivated paternalism and opted for heavily centralized control over political competition. Another challenge is the inevitable infringement on the more conservative Russian elites that have thrived under Putin's system of empowered bureaucracy.

Attempts at modernization would further aggravate the tensions among those who control broad swaths of Russia's power and property. Their infighting is mostly kept behind the scenes these days, but if political struggles spill out into the open, they are likely to extend to the medium-tier elites, which are currently depoliticized, or the middle classes, which will be forced to align with one or another of the feuding camps.

Last night I blogged that the Russian government was going back to its 2004-style hard power expropriation with its very un-subtle attack on TNK-BP. I complained that despite this daylight robbery, no one was willing to say anything about it. Perhaps I spoke too soon: the Wall Street Journal has quite an aggressively written editorial on the case today:

The likelier explanation is that Mr. Putin is kneecapping another private oil company to secure the goodies for his cronies. Kremlin wolves swallowed whole Russia's largest major, Yukos, and sent its boss Mikhail Khodorkovsky to rot in a Siberian jail. "Tax evasion" was the excuse. A year ago, Royal Dutch Shell got into trouble for "environmental" infractions and was forced to sell half its oil development on Sakhalin Island to Gazprom. TNK-BP, Russia's fourth-largest oil producer, is a tasty prize.

The Kremlin’s investigation into BP is dominating the news today. “Analysts see clear similarities to the way Shell was treated before being made to hand part of its Sakhalin-2 project to state-owned oil and gas group Gazprom,” says one paper. “The idea that the events of the past few weeks are all coincidental stretches credulity,” says another.

Russia’s largest coking coal producer Mechel has agreed to pay $1.5 billion in cash to acquire British-based ferro-chrome producer Oriel Resources. Russian potash miner Silvinit has offered to buy out a 25.1% stake held by managers of rival miner Uralkali. Unified Energy System has delayed an auction for its 25% stake in Russian Communal Systems by two months due to interest from a foreign investor.

Anxiety in Germany about gas and oil deliveries from Russia, its main supplier, is contributing to a new interest in coal mining.

There is a “strong chance” that Moscow will become one of the world's top financial centers in the next 10 to 15 years, which would make it second only to London in Europe. One Russian journalist calls Russia a “safe haven for investors” during US market turmoil. Read a profile of car distributor Inchcape’s buyout of a St Petersburg joint venture. Prime Minister Viktor Zubkov intensified calls for the government to boost the country's agricultural industry and raise the domestic portion of food products sold to 70% by 2012. Russia's second-largest bank, VTB, will invest $500 million and hire 400 people in the next two years to expand its investment banking business. Magnit, Russia's second-largest supermarket chain, will sell $554 million worth of new shares in London to help fund new stores.

TODAY: Anglo-Russian relations to “normalize”? Medvedev coached to look like Putin? Georgia-Russia transport links resume. Nato jets escort Russian patrols.

Britain's Ambassador to Russia will stand down at the end of the summer, and a Russian Foreign Ministry official said the departure “should be seen in the context of the readiness of the British side to normalize Russian-British relations”.

Following the Egyptian President’s remarks about the similarities between Vladimir Putin and Dmitry Medvedev, one newspaper today alleges that Medvedev has had “voice and behaviour coaching so that he imitates his mentor's speech patterns, mannerisms and slightly clenched gait.”

Following their extended interview with Russia's president-elect Dmitry Medvedev, the Financial Times is running an editorial supportive of his stated ambition to reinstate rule of law as his top priority. They write: "Mr Medvedev faces a choice. If he sticks to his plan to embed the rule of law – facing down those who want the Kremlin to keep a mono­poly on power – his election may herald a bold new start for Russia. But if he falters, his presidency will be a wasted opportunity, one whose sole legacy is to consolidate Mr Putin’s rampant authoritarianism."

The situation for British Petroleum in Russia is not looking any better, as this evening the news media is reporting that the company is recalling 148 employees because of alleged visa problems, or as we hear it from the representatives, it is "lack of clarity" about the visas which they expect to "return to normal in coming weeks."

I don't think that spokespersons from either side of the dispute could really expect anyone to believe that this sudden bureaucratic snafu isn't part and parcel of the recent office raid, arrest of an alleged corporate spy, back tax claims and a renewed environmental inspection by Oleg Mitvol as part of the state's efforts to gain control of TNK-BP - yet unfortunately that's the line I expect we will have to suffer through - kind of insults your intelligence, no?

It's a familiar situation. The Kremlin is breaking the law in full view of the wider world in order to seize control of assets, and no one will say anything about it, or even recognize what is happening. It is for this reason that the Russian government will continue to expropriate from investors with impunity, and why rule of law can't seem to take root. Buckle your seat belts for some serious spin coming soon about a new, deeper cooperation and series of asset swaps between BP and Gazprom.

An interview with prominent Russian psychiatrist Yuri Savenko - Part 1

By Grigory Pasko, journalist

[Right: Photo of Larisa Arap, a dissident held against her will in psychiatric confinement by Russian authorities]

Plato regarded creativity as “madness given us as a gift by the Gods”. Lunacharsky wrote: “In deep antiquity, the artist or poet was without fail a platonic type”. Francis Galton said that genius is a deviation from the norm…

How many different mental disorders there are today! Reading disorder, disruptive behavior disorder, disorder of written expression, mathematics disorder, caffeine intoxication, nicotine withdrawal disorder, sexual disorders…

These are but a few of the 374 mental disorders enumerated in the «Diagnostic and Statistical Manual of Mental Disorders» («DSM-IV») of the American Psychiatric Association (APA).

I recall a caricature from the distant past. Two beefy orderlies are taking away a man in a straitjacket. The man is yelling: “You can’t understand Russia with the mind”!

It’s not enough for our dear Russian power that on Russian soil – with its eternal social cataclysms and perestroikas (an unkind Chinese wish: “May you live in an epoch of changes”) there are plenty of people with mental disorders already. No, they’re also inventing their own kinds of “deviancies”.

For example: whoever criticizes the power must be mad.

I wrote up this short blog post over at my Corporate Foreign Policy (CFP) website, and I thought it might be of interest to some readers over here. To learn about what CFP means, read this post or this post. The new blog is a work in progress, but I have big plans to build upon this subject area.

In many ways, we have an ideal case study of corporate foreign policy in action with the TNK-BP situation, all unfolding before our eyes as the executives consider their options.

The irony of BP’s difficulties with the Russian government is that this joint venture was specifically designed and structured to protect against government interference by partnering with local interests. The company is 50% owned by the Russian businesses Access/Renova Group and Alfa Group - personally controlled by the influential Mikhail Fridman and Viktor Vekselberg. The presence and political clout of these two men was thought to help protect BP from the state abuses suffered by other oil companies such as Yukos, but as Gazprom and Rosneft took over more and more majority stakes in critical energy production projects (such as the maneuver pulled against Royal Dutch Shell at Sakhalin-2), trouble began to brew.

Egyptian President Hosni Mubarak said he felt like he was seeing double when he met with Vladimir Putin and Dmitry Medvedev today:

At a meeting at Putin's official residence on the outskirts of Moscow on Tuesday, 79-year-old Mubarak told Putin that the physical similarities with Medvedev were almost uncanny.

"Your appearances are very much alike," Mubarak said before heading in for talks with Putin.

"When going to meet Medvedev, I saw you on the television and felt at a loss as to who is who."

Given that Mubarak has managed to stay in power since 1981 while ruthlessly crushing any political opposition, perhaps seeing Putin's ingenuity caused him to wonder why he never thought of that...

There are many, many great excerpts from the FT's ballooning coverage of Dmitry Medvedev today. Here is just one...

The pledge to overcome “legal nihilism” became a central part of Mr Medvedev’s low-key election campaign. It seems a restatement of Mr Putin’s own promise eight years ago to establish a “dictatorship of laws”, although critics say Mr Putin delivered too much of the former and not enough of the latter. Even today, Russians quote the 19th-century satirist Mikhail Saltykov-Shchedrin’s aphorism that “the severity of Russian laws is alleviated by the lack of obligation to fulfil them”. The result is a society plagued by endemic corruption, arbitrary use of the law by the state against individuals or companies – and by companies against each other – and a judiciary that has never known genuine independence.

Finance Minister Alexei Kudrin says Russia may cut its extraction tax by $4.2 billion a year to help companies boost output.

The Turkish Energy Minister officially announced the tender for construction of the country’s first nuclear power plant, and Russia’s Atomstroiexport reportedly confirmed its interest in the project.

President Vladimir Putin is lobbying the Iraqi government on behalf of companies trying to get involved in rebuilding Iraq’s oil and gas infrastructure. "I hope the Russian business community's intent to broaden cooperation will receive appropriate support from the Iraqi leadership," he said in a letter. LUKoil chief executive Vagit Alekperov arrived in Baghdad for talks to revive a Saddam Hussein-era oil deal.

Tax authorities have opened a tax-fraud case against a subsidiary of the Ostankino Meat Processing Plant, which could give them ammunition to convict hundreds of companies still believed to be using off-the-book payment schemes as a method of tax evasion. The Ministry of Economic Development and Trade has revised its three-year federal budget to 2011, raising its inflation forecast for 2008 to 9.5%. Meanwhile, industrial inflation in Russia in recent months remains “extremely high” compared to the growth of consumer prices. Dmitry Medvedev says accelerating inflation is a price Russia is paying for becoming a member of “the club of global economic powers.'' A subsidiary of Altimo, the telecoms arm of Russian private equity group Alfa, has filed a $1 billion lawsuit against Norway's Telenor. Aricom Plc, a London-based producer of iron ore and titanium, agreed to buy two mining licenses near existing projects in Russia for $80 million in cash and shares to boost reserves. Asset managers who are focused on Eastern Europe and Russia expect “to win more international business as investors look for the next emerging-markets story.”

TODAY: Medvedev warns against Nato expansion; his campaign workers are “strongly allied with Putin”; Gorbachev says US missile defense is aimed against Russia. Russian polar bears to be protected. National Bolshevik activists sentenced.

In an interview with the Financial Times, Dmitry Medvedev has warned that granting Nato membership to the former Soviet republics of Ukraine and Georgia could threaten European security. The interview has received the majority of today’s press attention, with other journalists focusing on the Nato question, and Medvedev’s comments on the British Council, indicating he is “open to repairing relations with Britain.” Most of the people who worked on Medvedev's campaign are “more strongly allied with Putin than with the new president.”

In an interview on Czech public television, former Soviet President Mikhail Gorbachev sais that a proposed missile defense system Washington wants to place in eastern Europe is aimed against Russia and China. “Do you believe that that the whole thing is meant against Iran? That's complete nonsense,” he said.

Edward Lucas is interviewed by Charlie Gillis of Maclean's:

Q: You do, however, compare the West's view of Russia today to the one we held in the 1930s. You also draw a parallel to Neville Chamberlain's appeasement of Nazi Germany.

A: I'm trying to wake people up. I think we've been in a pretty deep sleep about Russia. There's been a lot of wishful thinking, and I use the comparisons with the Third Reich because it's important to remember that the two totalitarian empires were pretty similar before the war. Stalin was killing more people than Hitler at that time, and we tend to forget how much the Soviet totalitarian past still overshadows Russia. So I make the historical comparisons so people will remember. When Putin says the Molotov-Ribbentrop Pact [of non-aggression between Germany and the Soviet Union in 1939, which divided the potential spoils of war in eastern Europe] is legal, that would be as shocking as if a German leader said the anschluss, or the dismemberment of Czechoslovakia, was legal. It's as shocking, in a way, to have a former KGB official running Russia as it would be to have a former SS colonel running Germany.

“Mopping up” the country before Medvedev’s inauguration?

By Grigory Pasko, journalist

Forcible eviction

We have recently reported here on the blog about the search conducted by the local police of a human rights center in Chita.

In that same article, we reported on the police threats to evict coordinator of the youth movement «Oborona» Oleg Kozlovsky from an apartment.

Just a few days later, this threat was realized by the Moscow police. On Saturday, 22 March, Oleg Kozlovsky and several of his close associates were detained by employees of the Moscow police and sent off to the Division of Internal Affairs (OVD). Eyewitnesses reported that the activists of the movement «Oborona» were treated very roughly; they were pulled and dragged along the ground and the asphalt, and then seated in a police car.

A phalanx of OMONovites arresting Oleg Kozlovsky during the time of one of the «dissenters’ marches» (photo from the site www.gulyaev.ru)

Jackson Diehl has an interesting op/ed today on Georgia:

"By refusing us, [NATO] will be sending a signal to Russia of, 'Go and get them. We are not going to mind too much,' " Saakashvili said. "Russia will be emboldened. They will conclude that they are on the right track when they stir up trouble with us."

The Germans argue, weakly, that it is trouble that they are trying to avoid -- that Putin has been pushed enough by NATO's support for Kosovo's independence and U.S. missile defense bases in Europe. The trouble with that logic is that, by insisting on those Western priorities over Moscow's vehement objections while conceding on Georgia and Ukraine, NATO governments are effectively drawing a line in a still-unsettled post-Cold War European order. On one side are Kosovo and the missile bases in Poland and the Czech Republic, which Putin is powerless to tamper with; on the other are the only legitimate democracies between Poland and Turkey, where the response to aggressive Russian meddling would be de facto acquiescence.

U.S. Sen. Joe Biden (D-Del) has a column on Russia in today's Wall Street Journal:

In six weeks, Dmitry Medvedev will take over Russia's presidency. His ascension comes at a critical moment. Relations between the United States and Russia are at their lowest ebb since the end of the Cold War. Regardless of how much independence Mr. Medvedev has from his predecessor and presumptive prime minister, Vladimir Putin, the U.S. needs to use the time before he takes office to develop a new approach for managing relations with Moscow. Whatever the American strategy has been, it clearly isn't working.

OMV, Austria's leading oil and gas company, is “battling” Gazprom for control of Europe’s energy supply. “You have to deal with Gazprom and it is not a small company. What we can do is grow, expand and add value. What is the alternative? Being taken out step by step, piece by piece.”

New problems have emerged in gas relations between Russia and Belarus. Gazprom is demanding that Belarus cancel nontax deductions to its Energy Ministry, while Belarus opposes the new 7% rise in prices.

Power producer TGK-13 reported a 2007 net loss of $45.4 million as rising costs wiped out a 24% year-on-year increase in revenue.

Russia is expected to spend 4.8% of its GDP per year on a program to develop its transportation system in 2010-2015. New statistics from the Central Bank of Russia show that in January, Russia’s 30 biggest banks granted more corporate loans than the entire banking sector, signaling that smaller banks are losing their clients. MDM Bank, owned by billionaire Sergei Popov, said profit increased 66% in 2007 to $230 million. Sberbank has lowered interest rates for mortgages and retail loans while raising rates for car loans. United Aircraft Corp., Russia's state holding for aircraft producers and designers, offered to buy the half of warplane maker Irkut Corp. that it doesn't already own for about $456 million. The delivery of a new Russian SuperJet mid-range aircraft, “the centerpiece of President Vladimir Putin's drive to revive the country's airplane industry”, has been delayed due to “technical difficulties.” Concern Tractor Plants, Russia's largest tractor producer, will seek as much as $500 million in a November IPO. Lawyers for Russia's Federal Customs Service in a money-laundering lawsuit against Bank of New York Mellon could receive as much as $6.5 billion in fees if they win the case. RUSAL hasn't given Norilsk Nickel any reason or plan for a potential merger, creating uncertainty and “risk” for the nickel company's share price. The company believes it should be at the core of any potential merger with one or more privately owned Russian miners.

TODAY: Head of British Council criticizes “political chess”; electoral monitoring discussions continue; Zubkov calls for US to ease pressure on Belarus. The Party of Blondes. Sochi to displace 4,000 residents.

One US journalist writes that two crucial agreements -- the Conventional Forces in Europe (CFE) treaty and the Strategic Arms Reduction Treaty (Start) - should be a major focus for improving US-Russia relations. Russia says it backs the efforts of the Finnish presidency to continue discussions in the Organisation for Security and Cooperation in Europe (OSCE) on electoral monitoring. Prime Minister Viktor Zubkov has called on the United States to ease its pressure on Belarus, which it still refers to as “the last dictatorship in Europe”, and vowed support for its president, Alexander Lukashenko.

The head of the British Council, Lord Kinnock, has criticized Russia for playing “political chess” with the organisation by harassing its staff and closing two of its offices. Russian-born British media magnate Leonid Rozhetskin, who disappeared over a week ago, could have “faked his own death”.

The case of the state's latest triple-pronged attack on TNK-BP serves as an important reminder that Russia's investment environment remains about as stable and law-abiding as it was during the height of the Yukos theft - appeals in local courts against the charges of industrial espionage or regular procedural compliance with Oleg Mitvol's environmental watchdog can not be counted upon to be fair and impartial.

However what is happening to BP is not a uniquely Russian phenomenon, but is rather a frequent problem for investors working in emerging markets - the state often sees a foreign-owned asset or property that it desires (specifically benefiting certain officials), and bends the rules in order to obtain it, or secure a larger participation. It is what happens when a country lacks rule of law.

My law firm has worked for many years with individuals, private businesses, and corporations doing business in some of the most challenging markets, and we have seen that all too often many of these groups limit their choice of legal options to lengthy and expensive arbitration forums when confronted with an expropriatory state. However, specifically in Latin America, there are many possible avenues to pursue under international law, including human rights and constitutional legal protections to protect against the seizure of property, especially in politically sensitive cases. I was recently in contact with my colleage Dr. Douglass Cassel, a law professor at Notre Dame, who prepared a short briefing note on the potential remedies for expropriations under the Inter-American human rights system. I share Doug's paper below for those who may find it of interest.

In George Will's column about Chief Justice John Roberts's new report, we are briefly reminded of how much has changed during the Putin years:

Roberts's report recounts accompanying a Russian judge walking among Arlington National Cemetery's white headstones, at one of which the Russian placed a wreath honoring Chief Justice William Rehnquist, who had lent moral support when, during the transition from communism, Russia's legislature was impeding judicial reforms. "When foreign nations discard despotism and undertake to reform their judicial systems," Roberts wrote, "they look to the United States judiciary as the model for securing the rule of law." The problem, Roberts believes, is that we are not paying enough to acquire judicial competence commensurate with the importance of courts in our system.

It is hard to imagine a similar event today. In other news, Paul Goble blogs about the possible closure of 90% of Moscow's law schools, as the state applies more stringent accreditation requirements...

Alexander Zaslavsky and Ilya Zaslavsky, two brothers, both dual U.S.-Russian citizens, have found themselves arrested this week, prisoners of the Russian government under charges of "corporate oil espionage," and at the center of what might be the next forced partial nationalization of an oil company, pawns in the deepening UK-Russia diplomatic spat, or both or neither. What seems clear is that no one believes the government's straight story on this case, further eroding the credibility of the procuracy (not that there was too much left beforehand).

Perhaps the first sign that triggered widespread speculation and conspiracy theories was the fact that Russia's normally subservient and docile television media was allowed by the Kremlin to play up the arrests as a lead story. In such a tightly controlled and censored media market, whenever a story like this makes it to TV, it is meant to send a message - much like the arrest of the gas mobster Semyon Mogilevich or even the neat and tidy trial of Alexi Frenkel for the murder of central banker Andrei Kozlov. There is certainly far too little information available about the brothers and the state's plans to take over TNK-BP to jump to conclusions, but it is understandable why so many are floating their own theories.

From the New York Times review of Andrei Nekrasov's film "Poisoned by Polonium: The Litvinenko File": More personal essay than political diatribe, “Poisoned by Polonium” is not without its lighter moments. During a conversation with Andrei Lugovoi, the former Russian intelligence officer now charged by British authorities with Mr. Litvinenko’s murder, the filmmaker is offered tea. He politely declines.

You can see Nekrasov's 2004 film "Disbelief" here.

File this one under painful irony: after so many years of the Kremlin seizing private property and holding rigged auctions, now they get a taste of their own medicine as a German court has ruled to allow the seizure and auction of a government-owned building in Cologne, worth some $30.8 million. The Moscow Times reports that "the ruling by Cologne's higher court might open the floodgates in Germany for debt claims against the Russian government."

More after the cut.

Gazprom said methane captured from underground coal mines may provide a “serious” addition to resources as producing natural-gas fields in Siberia decline. The company has completed the acquisition of effective control in regional power utility TGK-1.

President Vladimir Putin ordered that the state's controlling stake in electricity import and export trader Inter RAO be transferred to Rosatom, the new national nuclear company. “The government of the Russian Federation is ordered to bring its documents in conformity with this decree by March 1, 2009,” according to the official statement.

Russian Railways is to spend almost $33.9 billion over the next 12 years to modernize Moscow's local railway network. The regional governor of Ulyanovsk has ordered top officials to learn English so that they can communicate more easily with potential investors. Severstal has agreed to buy ArcelorMittal's Sparrows Point steel plant in Baltimore, “betting against a prolonged economic slump in the US.” According to the Sugar Producers' Union, Russia will keep its seasonal duty on raw sugar imports at $220 a ton in May.

TODAY: Medvedev needs to create parliamentary independence; TNK-BP arrests made on grounds of “industrial espionage”. Russian TV journalist found dead. Russia “less hostile” towards US missile defense plans.

If Medvedev intends to widen the discussion on decision-making, he also needs to “create conditions in which the parliament and courts can become both independent and efficient.” The lower house of the Russian Parliament is set to discuss a draft policy statement concerning the breakaway republics of Abkhazia, South Ossetia and Transdnistria.

A timeline of Anglo-Russian relations has been compiled here. Two brothers arrested by Russia’s Federal Security Service, one employed by TNK-BP and the other the head of the British Council’s British Alumni Club, were, according to the FSB, “illegally collecting classified commercial information for a number of foreign oil and gas companies to gain advantages over Russian competitors, including in CIS countries.” They have both been charged with “industrial espionage”. Alexei Frenkel, the banker on trial for the murder of Central Bank first deputy chairman Andrei Kozlov, says he believes another deputy chairman could be behind the killing.

We're pleased to present another special exclusive guest column by the Russian political activist and youth movement coordinator, Oleg Kozlovsky.

When you chop wood, chips fly…

By Oleg Kozlovsky, exclusively for www.robertamsterdam.com

In expectation of the inauguration of Dmitry Medvedev, the Russian siloviki structures are conducting their latest “mopping up” of the opposition not under their control. The hopes of optimists for a “thaw” are being demolished by these police operations.

President-elect Dmitry Medvedev seems to be saying all the right things. ITAR-TASS is reporting a very positive speech he gave at the 85th anniversary of the Supreme Court today, in which he argued that legal nihilism is a major brake on Russia's development. He said that respect for law has to have historical roots, and that "all possible ways must be used for the legal enlightenment and education of the people - from studies of the basics of law in schools and colleges to the publication of popular legal literature and the capabilities of television and radio broadcasting."

And yesterday Reuters quotes him advocating a policy oversight role for civil society: "Our task is to create a system that would allow civic structures to participate in working out state policy and appraising its quality. ... The voice of such groups should be heard in our society. ... There should be a practical mechanism for defending their rights and interests. Only in this way can our society become truly harmonious."

Now it's all about holding him to his words.

The raid on BP's offices in Russia continues to unravel in surprising ways. Today the FSB is announcing that they have arrested a dual U.S.-Russian citizen and employee of TNK-BP as part of a "corporate oil espionage" investigation. A second dual citizen (the two are brothers) is also under investigation for the same charges, however this one apparently works for the British Council. ...and we thought we had heard the last of that one.

Not a bad question from IHT blogger Daniel Altman:

Why didn’t BP just sell off and get out years ago? There was a lesson to be learned in the cases of Mikhail Khodorkovsky and Roman Abramovich, two of the savvy investors who became energy oligarchs in Boris Yeltsin’s Russia. Under Vladimir Putin, Khodorkovsky tried to hang onto his stake in Yukos, a Russian oil giant; he lost everything through a dubious tax case and ended up as a sort of political prisoner. Abramovich willingly sold his huge stake in Sibneft, another energy colossus, to Gazprom for about $13 billion; he ended up in London as an expatriate provincial governor and owner of a prominent football club. Which fate would you prefer? If BP doesn’t make a deal soon, will it end up surrendering its assets at a bargain price, as other foreign companies already have? Or is it too late?

See Bob's BP post from last night.

Russia's 49% shareholding in the Mongolian joint venture Erdenet, which produces 25 million tons of ore every year, may be “transferred” to Gazprombank. Shareholders of Sibur Holding, Gazprom’s petrochemical unit, approved a plan to raise $10.1 billion in bonds and loans.

Evraz Group, part-owned by Roman Abramovich, has abandoned plans to merge two Siberian coal miners in a deal that would have created the world’s No. 3 producer of coking coal.

Egypt and Russia have drafted a nuclear energy deal, which could be signed next week in Moscow, to allow Russia to take part in the tender to build nuclear reactors in Egypt.

The St. Petersburg raw material and commodity exchange will start operating in May, with the government poised to promote companies working on the exchanges, according to Viktor Zubkov. Large champagne houses are “enjoying booming demand” in China and Russia. Finance Minister Alexei Kudrin sees the central bank's deposits, mandatory reserve requirements and market operations as key anti-inflation levers in 2008. Russia’s weapons exporting monopoly Rosoboronexport and Indian Hindustan Aeronautical will finalize an $8.5-million development contract in April. PepsiCo and the Pepsi Bottling Group have agreed to buy 75.53% of the juice business of Lebedyansky, Russia's leading juice producer, for $1.4 billion. Russia's foreign currency and gold reserves rose to a record $502.1 billion last week.

TODAY: EU makes provisions for Russia talks; US agrees to let Russia monitor its missile defense system. Other Russia calls for anti-Kremlin coalition; Medvedev talks about holding the government to account; priests advised to carry firearms to deter looters.

The Other Russia movement has called on Russian opposition forces this week to form a coalition, but opposition parties expressed doubts such a grouping would be viable. Dmitry Medvedev says that Russian civil society groups should have a bigger role in forming policy and holding the government to account. “At 77, Gorbachev is the most senior ex-communist leader to show an interest in God.”

Police in towns on the outskirts of Moscow have advised priests to apply for firearms licences and carry guns. Prosecutors have refused to meet a request for international legal assistance in the Mikhail Khodorkovsky-Platon Lebedev case that was submitted more than three years ago by then Russia’s Prosecutor General Vladimir Ustinov.

Remember back to those halcyon days when the Russian government would only raid the offices of primary targets like Yukos, sending teams of OMON with Kalashnikovs and balaclava masks to terrorize employees, seize confidential materials, and destroy exculpatory evidence? It seemed much more civilized back before they were flipping over desks and cabinets in other office raids of places like Open Russia and PricewaterhouseCoopers, right?

One of the problems with resource nationalism is that when one government starts breaking contracts and seizing property, many other governments observe this and wonder why they can't do the same thing too. This contagion trend takes its cues from the innovative expropriations of Russia and Venezuela, then spreads across the respective energy exporting regions, as we have seen in numerous examples. Today we have another.

"Gazprom – The New Russian Weapon" by Valery Panyushkin and Mikhail Zygar

By Grigory Pasko, journalist

Recently, the Russian mass media reported that Gazprom head Miller had met with president Putin to report about the current situation in the company Gazprom and about its prospects. The report concerned three hot topics: the fate of the pipelines leading to Europe, the increase in the price for Central Asian gas, and deliveries of the raw material to the republics of the former USSR.

For example, Miller told the President that he considers “very timely” the realization of two new gas transport projects – “Nord Stream” and “South Stream”.

About the fact that the company Gazprom has problems, the mass media did not report.

Which got me thinking: do Russian citizens even find it interesting at all to know something about Gazprom? I came to the conclusion that no, they don’t find it interesting. Because Russians have long ago accustomed themselves to the fact that Gazprom – this is not a Russian company in the sense that its assets and capital belong to all Russians, but rather a private company, belonging to a narrow circle of persons.

I am a few days behind in commenting on the signed deal between Gazprom and Bolivia's state-owned YPFB to develop gas fields in Tarija, but the relationship between these two resource nationalist states appears to be deepening (see my earlier post).

Yesterday Gazprom announced it had signed exploration deals for three fields (not just two, as was previously speculated), with an investment of up to $2 billion in 2009 which could produce as much as 300 bcm of gas. A Gazprom rep told the FT that "Due to its large gas reserves, Bolivia is the country that most interests us in the region. I consider it will be the region’s leader in gas terms and our objective is to go as far as to exploit as much as we can." ... and exploit, they might...

This exclusive translation come from RBC Daily:

Russia will recognize the unrecognized
...In half a year

Today parliamentary hearings of the committee for CIS affairs and relations with compatriots «On the state of the settlement of conflicts on the territory of the CIS and appeals to the Russian Federation on the recognition of the independence of the Republic of Abkhazia, the Republic of South Ossetia and the Trans-Dniestrian Moldavian Republic» are taking place in the State Duma of the RF. A decision will not be adopted. Experts, however, consider that just the mere fact of the examination speaks to Moscow being ready to launch the process with respect to the changing of the status of these republics.

We could see $120 a barrel oil or more as spooked investors stampede into commodities, warns Cera. But the gathering storm clouds over the US economy probably mean that, eventually, prices will ease

Oil has become the new gold – a financial asset in which investors seek refuge as inflation rises and the dollar weakens, claims Daniel Yergin, chairman of Cambridge Energy Research Associates, a consultancy.

“The credit crisis has been fuelling the flight to oil and other commodities, and that will last until the dollar strengthens or the recession becomes more pronounced,” said Yergin.

Oil prices surged yesterday in response to further declines in the dollar, as the Federal Reserve made its latest cut in US interest rates – this time by 0.75 basis points – in an effort to stave off economic crisis. Prices cooled off slightly today, but remain just a few dollars short of the all-time highs set at the start of this week: $111.80 a barrel in the case of New York light oil futures for April delivery and $107.97/b for May Brent, both substantially higher than the previous inflation-adjusted record high (for US futures) of $103.59, set in April 1980 (according to Cera’s calculations).

Lukoil doesn't plan to send pipeline oil shipments to Germany in April, citing unidentified oil traders. The company has appointed seven banks to arrange a $1 billion syndicated loan for “general corporate purposes”.

Russia's federal anti-monopoly service plans by May to draft amendments to its gas export law that would allow independent gas producers to participate in natural gas exports, which are currently exclusively controlled by Gazprom.

Safe Technologies Inc. has signed a contract with TNK-BP for design and construction of a waste treatment complex to keep in line with Kyoto Protocol.

Sergei Chemezov, a close ally of Vladimir Putin, has been buying up state assets in around 250 companies for his enterprise Russian Technologies, dubbed the new "industrial Gazprom”. Renaissance Group has raised $660 million for its first private equity fund to "pursue control and significant-influence investments" in Russia. German business magazine Handelsblatt reiterates the increasingly widely held view that Russian regions are becoming increasingly attractive for foreign investors. Australian Solagran have announced that Russian regulatory authorities had released its new prescription pharmaceutical, Ropren, for sale in Russia sooner than expected. State-controlled Sberbank will borrow $3 billion from international capital markets in 2008. A State Duma committee signaled that it could exclude telecoms firms, Internet providers and small power distribution grids from a bill that would limit foreign participation in strategic sectors.

TODAY: Russia’s relations with the West are on the decline, announces Foreign Ministry; US-Russia missile talks take positive tone, but fail to reach a solution. Rice meets with Yavlinsky over breakfast. Nevzlin case begins. Gorbachev reveals his Christian faith.

Although both sides adopted a “strikingly moderate tone after a long period of rancor”, high-level talks between Russia and the United States on missile-defense and arms treaties have ended without agreement, as predicted. In a sign of some progress, the two countries have agreed to negotiate a “strategic framework” document that would formally put in writing the basic elements of their relationship. Russia's Foreign Ministry says that the United States has so far failed to provide written missile shield proposals, despite a pledge to submit them by Tuesday evening. During her visit, Condoleezza Rice, who has “accused the Kremlin of harassing the political opposition”, met some leading liberals including Grigory Yavlinsky, but did not meet with the Kremlin's most strident critics, Garry Kasparov and Mikhail Kasyanov, who were “noticeably absent”. Subjects discussed included freedom of speech and free elections. Parties that failed to win at least 3% of the vote in the December elections are now trying to pay off debts to the federal budget, largely for television ads.

Toadies at the service of the regime

By Grigory Pasko, journalist

Two messages came to my mailbox at the same time. The first was about a search in Chita in the office of the Chita Human Rights Center. The second – about the intimidation of the leader of the youth movement «Oborona», Oleg Kozlovsky, concerning an apartment he rents.

The first thought that came to my mind was: “it’s started!”. “It” being what I had been expecting in the capacity of the first steps of Medvedevite rule. I have written and spoken about how Medvedev is a species of Putin subordinate. (It is another matter that Putin too is someone’s subordinate). Putin’s got lots of subordinates like this: all those Abramoviches, Millers, Vainshtoks, Sobyanins, Zubkovs…

Medvedev’s lucky—they appointed him as my next president. Naturally, the appointment wasn’t serious. Sort of like the way a grown-up father sometimes lets his young son hold the steering wheel of the car for a while. But in so doing, the father keeps his feet firmly on the gas and brake pedals, which the little boy’s feet can’t reach anyway: first of all, he’s not tall enough, and second, who would ever let him…? But to allow him play with the steering wheel a bit, under supervision, and not for very long – well, that’s okay.

The following is a translation from RBC Daily:

Russians for Putin

Population of RF fears regime change in country

Over the past two years, the quantity of Russians supporting the course of Vladimir Putin without reservation and considering that the new president ought not change anything in it has increased. Such are the results of a recently published VTsIOM survey. If in the year 2006, 27% of survey participants expressed unequivocal support for VVP, while in this year – already 42%. In so doing, there have also become fewer supporters of cardinal changes in the politico-economic course of the country over the past few years.

From FORA.tv: The Putin-to-X Succession - Part I with panelists Pavel Podvig, M. Steven Fish, and Kathryn Stoner-Weiss. Kenneth Jowitt moderates. This is the second panel of a three panel event on Political Succession in Russia hosted by the Hoover Institution.

It's no secret that Russia has a rampant corruption problem - something that Joschka Fischer has described as a "symptom of the disease of selective modernization." However, as an article by Jane Armstrong of the Globe and Mail shows, the culture of corruption has spread wide and far beyond the borders of government, even to have a major impact on academic life as students increasingly purchase their college degrees instead of earn them:

But it's not just the Russian economy that is affected. Countless college and university graduates, including medical students, have entered demanding professions using bogus educational credentials.

Russia's former power monopoly Unified Energy System has lowered the valuation of power supply company MosEnergoSbyt to $944.3 million. UES initially said MosEnergoSbyt was worth $1.3 billion.

Gazprom may be forced to allow other companies to use its pipeline network to export natural gas from Russia. Russia’s Federal Anti-Monopoly Service is preparing to send amendments to the law “On Gas Export” to the government in May that would grant non-state Russian gas producers access to Gazprom's export routes.

Bolivia hopes to meet its supply commitments to neighboring countries now that a natural gas prospecting deal has been signed between Gazprom and YPFB, Bolivia’s state-owned energy company. Gazprom is also increasingly looking to South American markets, with focus on cooperation talks with Brazil, Argentina and Venezuela.

“Investor trust in Russian equities is based more on the perceived security of the current Kremlin leadership than on the faith that financial institutions will somehow protect shareholders' rights.”

Russian stock markets suffered heavy losses as a lastminute deal to save US investment bank Bear Stearns from bankruptcy sparked fears of further bad news to come. Unimilk, the country's second-largest dairy company, plans to hold an initial public offering in 2009. Asbis Enterprises, a hardware and software distributor, will begin delisting from the London Alternative Investment Market, becoming the first Russian-owned company to leave the exchange voluntarily. Until recently, Russia’s Defense Ministry had fiercely opposed a project to spread 3G nets in Moscow for cell phones, as its missile warning system operates at the same frequencies required for 3G. Russian services conglomerate Sistema has sold its engine business for $190 million as part of its strategy to focus on services sector.

TODAY: Russia’s utopian social experiments...“without poor people”. Talks with US reviewed positively in the press after Putin receives letter from Bush. Lavrov blames Tibet violence on Kosovo. Authorities attempting to discredit Kasyanov?

Billionaire Araz Aglarov is thought to be behind the intimidation of villagers in Voronino, where Aglarov is planning to build a "new kind of civilization ... a kind of utopian social experiment -- but without poor people," housing hundreds of properties worth $20-30 million each. A similar development, a "super deluxe" gated housing development, is also being planned on the outskirts of Moscow.

It is thought that authorities are currently involved in a campaign to discredit former prime minister Mikhail Kasyanov following an investigation into signatures gathered by Kasyanov’s movement in support of his application to run for president.

Russian Foreign Minister Sergei Lavrov has said that the recent violence in Tibet is inextricably linked to the recognition of Kosovo's independence. Metropolitan Laurus, First Hierarch of the Russian Orthodox Church Abroad, has died in New York, aged 80. An increasing number of Russian students are joining study programs at European universities.

Despite the smiles and positive tone of their Russian hosts, when U.S. Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates arrived to their meeting today at the Kremlin, the air must have been pregnant with low expectations.

The warmth from Moscow strikes a contrast with the frustration shown by Gates, who only hours before had complained to reporters on the plane that he was tired of making overly generous offers which fell on deaf ears. But President Vladimir Putin and President-elect Medvedev could afford to both play good cop today, knowing full well that by this time next year Gates and Rice will be lucky if they can continue their complaining about Russia at sparsely attended think tank forums.

A four-part video series from the BBC brings an eclectic group together to debate a flawed question. Nevertheless, in their collective efforts to not be misunderstood, the speakers occasional raise some good points.

Parts 1-3 after the jump.

[see Part 1 here]

“Shaving into a soldier” – a method from two centuries ago
But it doesn’t scare the young oppositioneers of Russia - Part 2

By Grigory Pasko, journalist

You say “without opening a criminal case”… But they approve of this method too – the leader of the St. Petersburg «Yabloko», Maxim Reznik, has been arrested, and in relation to him a criminal case has been opened, under which he faces deprivation of liberty for a term of five years...

It is obvious that the provocation in relation to Maxim was being prepared for a long time and meticulously. He can’t be conscripted into the army – he’s got a non-conscriptional age. But it’s easy to entrap him in a fight: Maxim is an emotional person, everybody knows this. There are many in today’s Russia who dream of beating up a policeman who is exceeding his authority. No doubt they were counting on the public believing the policemen and their fairy tale about how Maxim had beat up several of the guardians of order.

The precedent with Rezink is alarming. By the way, there already was such a case, and also with a representative of «Yabloko» – when they opened a criminal case against Ivan Bolshakov. That time the case fell apart.

Quentin Peel of the FT worries that Russia could "blunder into confrontation" with its hard-line pursuit on Kosovo's separatist precedent:

Russia shows its displeasure at Kosovo

By Quentin Peel

Fall-out from the independence of Kosovo, including its recognition by the US and most of the European Union, continues to reverberate through the Balkans and all the way to the fringes of the former Soviet Union.

It now seems likely to complicate the forthcoming Nato summit in Bucharest, and aggravate already tense relations between the alliance and Russia.

Joshua Kurlantzick, one of the few to see the big picture, has a good piece in the Boston Globe on the rise and rise of authoritarian capitalist states:

As the global business momentum shifts from private companies to national governments, the implications are far reaching.

Many authoritarian governments realize that, in the post-Cold War era, a wealthy nation can extend its power very effectively without trying to build an army to compete with the US in military force in the short term. (...)

Rosneft has completed repayment of the second, $5.2 billion tranche of the short-term loan it raised last year to finance acquisitions.

After major campaigning from the World Wildlife Fund and other environmental charities, the British government will now not support Russia's Sakhalin II project.

Germany's RWE took effective control of TGK-2, one of three large Russian power producers in which stakes were sold by United Energy System, paying just under $400m.

Foreign direct investment into Russia this year could exceed last year's figure of $28 billion. The Federal Customs Service has decided not to close its Baltic and Vladivostok ports to meat imports. The closure would have forced meat prices up 5-7% and threatened the businesses of N-Trans and National Container. The leading independent director at Norilsk Nickel, the £30 billion mining giant, has urged shareholders to vote against a proposed boardroom shake-up that would see a new group of directors elected. Pepsi Bottling Group and PepsiCo have agreed to acquire Sobol-Aqua JSC, a privately held Russian bottling company. Capital International has bought a stake in Unimilk, Russia's second-biggest dairy company, to benefit from surging demand for milk and baby food. Sistema, Russian billionaire Vladimir Yevtushenkov's holding company, sold Sahles, the majority owner of Perm Motors Plant, to state-run defense company Oboronprom Corp for $190 million. Oriola-KD said it will expand into Russia after agreeing to acquire 75% stakes in Vitim & Co, and Moron Ltd, both Moscow-based pharmaceuticals companies.

TODAY: Putin assassination attempt foiled; Russia’s “destructive culture of lies; US and Russia to discuss missile defense. “Ladies” vodka fuels alcoholism fears.

Security forces are said to have foiled an attempt by a sniper to kill President Vladimir Putin near the Kremlin on the day of the presidential elections, and the FSB announced that it had prevented a number of acts of terrorism due to coincide with the elections. It was claimed that both Putin and Dmitry Medvedev could have been killed by the sniper.

Human rights activist Sergei Kovalyov, in an open letter to Putin, emphasized the "corrupting force" of the lies that Russia's leaders "are incapable of rejecting," and says that no "remotely literate citizen" believes these lies, including even the staunchest supporters of Putin and the pro-Kremlin Unified Russia party. The Russian mafia have a reportedly major presence on the Costa del Sol, “exploiting lax property laws and lack of police resources to launder millions from arms dealing, drug dealing and prostitution.”

An initiative group for the organization of a Public Tribunal to investigate crimes against humanity in the Russian Federation was established on 6 March 2008. Its members include human rights advocates Ludmilla Alexeyeva, Valery Abramkin, Andrei Babushkin, Valery Borshchev, Lev Ponomarev, Yuri Samodurov, Mikhail Trepashkin, and Ernst Cherny. The first hearing by the Tribunal is slated for April. We offer the text of the declaration of the Initiative Group and a first draft of the Rules of Procedure of the Tribunal:

RFE/RF has an interesting analytical piece about a letter sent from Sergei Kovalyov, a much respected human rights activist, to Vladimir Putin before the March 2 presidential elections. Kovalyov's letter is worth reading, as it rises above much of the typical criticism flung at Putinism, and identifies the damage done by Russia's culture of official dishonesty:

Kovalyov, addressing the leadership, speaks of a "paradoxical change" in the relationship between the public and the ruling elite. "You lie, your listeners know this and you know that they don't believe you...and they also know that you know they don't believe you. Everybody knows everything. The very lie no longer aspires to deceive anyone. From being a means of fooling people it has for some reason turned into an everyday way of life, a customary and obligatory rule for living."

"The customary lies of leaders always generate and cultivate cynicism in society and cannot achieve anything else," Kovalyov declared. "And gradually going back by the same path we came on is almost impossible, since you are doomed to lie." He said that, in such a culture, President-elect Dmitry Medvedev's statements about "freedom being better than non-freedom" and the need for independent media can only be taken as "a continuation of your untruth," rebounding against the hard wall of the public's cynicism.

Grigory Pasko has posted some dystopic tales of his experiences in Russia's healthcare system, and as we know from the medical blackmail of Vasily Alexanyan, the government has some serious problems to address in this policy area. Alex Rodriguez of the Chicago Tribune has a good report on the topic today:

Prevention and better health care can help reverse that trend. The Russian government is pumping $6.4 billion into revamping health care; much of that money is paying for the construction of eight high-tech medical centers across the country, new X-ray machines, electrocardiograms and ambulances at hospitals, and raises for family doctors.

But doctors and nurses in the Russian Far East city of Amursk are still waiting for the overhaul to reach their hospital. In January 2007, the hospital ran out of syringes and asked patients to bring their own, said Olga Cherevko, a nurse at the hospital. Even something as fundamental as keeping pharmacies stocked can prove problematic for Russia's beleaguered health-care system. A bureaucratic breakdown in late 2006 led to a severe shortage in government-supplied prescription drugs.

There is increasing chatter about the Reuters report that Yuri Petrov, a close ally of Dmitri Medvedev, has been nominated to the board of Rosneft, marking the latest blow in the so-called clan wars. Petrov formerly headed up Russia's Federal State Property Fund (RFFI), was a law professor to Medvedev at Leningrad State University, and is known as one of his close supporters in the legal community along with Pavel Krasheninnikov, Nikolai Egorov, and Vladimir Krotov. Vedomosti reports that his nomination to the Rosneft board was a move specifically designed to give Medvedev greater clout vis-à-vis Igor Sechin, who is actively working to maintain his people in key positions around the new president.

The guys over at Stratfor believe this appointment sets a dangerous precedent, and raises tensions between the competing state owned firms: "Crossing each clan’s loyal members into the other’s champion company could make things very messy for Rosneft and Gazprom technically, especially if one company’s agenda sabotages that of the other company."

I don't necessarily agree that Medvedev having a mole within Rosneft is bad thing.

Did that headline get your attention? Me too, and we're not talking about a scene from Eastern Promises ... The Times has another Ed Lucas book review today by the historian Robert Service, which argues that this "firecracker" of a book could benefit from "more shading":

The New Cold War’s purpose is to sound an alarm about the untoward consequences of allowing Russia to go on behaving badly. The chapters are a polemic against Western politicians and businessmen who turned a blind eye to the bullying tactics used by the Kremlin in Europe during the Putin presidency. The former German Chancellor Gerhard Schröder typified the corrupted condition of the European approach to Russia. Before coming to power he criticized his predecessor for indulging in “sauna diplomacy”. Then he entered the sauna himself, and was rewarded with a place on the board of Gazprom when he stepped down as Chancellor.

Actually it was the board of Nord Stream that Schröder joined, leading the recently deceased American congressmen Tom Lantos to characterize him as a prostitute. Ouch - it really doesn't get any better than that...

“Shaving into a soldier” – a method from two centuries ago

But it doesn’t scare the young oppositioneers of Russia

Part 1

By Grigory Pasko, journalist

Oleg Kozlovsky is the leader of the youth Russian movement «Oborona». On the «Oborona» website, you can read that the members of this organization consider themselves the “new, free generation”. “We”, it is said in the organization’s declaration, “grew in a free country, we are not used to being cattle, you can’t herd us into a paddock. We do not fear authority, and we are not burdened by the experience of the Soviet past… we care about the future.

Oleg Kozlovsky, shown here with the «Oborona» movement’s flag, is growing back his hair and beard after having been “shaved into a soldier” (photo by Grigory Pasko)

This Wall Street Journal editorial pretty much nails it on the recent 5,000 page State Dept. report on human rights:

The accuracy of the data can be gauged by the reactions it provoked. State described China's human rights record as "poor"; in Russia, the government's accountability to its citizens is "eroding"; and in Syria, the regime "continued to commit serious abuses." In response, China called the document "tattered and shocking"; Russia said State's "latest opus" contained a "hackneyed collection of claims"; and Syria claimed that the U.S. itself is "among the biggest human rights violators."

Justice shouldn’t wear a military uniform

By Grigory Pasko, journalist

Recently the government of Russia introduced to the State Duma a new draft law which proposes to fundamentally change the Law “On the military courts of the RF”. Judges of military courts and of the Military Collegium of the Supreme Court will no longer be members of the military service. And civilians will also start working in the back-office apparats of the military courts. It is assumed that henceforth, after the adoption of the new law, military judges and employees of the court apparats will be offered a choice: either to leave military service, or to suspend it for the duration of their term of appointment as a judge.

The military judges who judged the author of these lines in 1998-1999 (photo from the author’s archive)

Here's an interesting one from TOL, which argues that Russia is still not content with its economic expansion: Questions remain, however, whether Russian companies are content with their current success. Even with Vladimir Putin lashing out at the West at every turn, Russia still took in a record $28 billion in foreign direct investment (FDI) in 2007, and Russian companies invested almost three times that amount abroad.

But Wilson says such figures are deceptive and mask a hunger for overseas expansion. “Russia wants all sorts of downstream investment in the EU. Currently Russia has the best of both worlds. We don't insist on open markets and a rule of law on their part, but offer it to them. Russia has no need of aid, but Russian companies like IPOs and international loans. FDI is OK, but nowhere near as high as it could be.”

Former electricity monopoly United Energy System is to conclude more than $2 billion in share sales for three of its power producers today.

Enel, which is building a strong presence in Russia’s energy sector, plans to invest more than €2bn ($3.1bn) in the country over the next five years, seeking to cement its position in Europe's "largest market and largest opportunity".

Nuclear-plant operator Rosenergoatom is “tapping yesterday's military brains to develop a new generation of atomic plants,” signaling Russia’s rise as a nuclear force.

Read a special report on Norilsk Nickel at The Economist. The company has invited BHP Billiton, the world's biggest mining company, to explore the largest untapped nickel deposit in Russia, after winning the rights for it at an auction.Microsoft and Intel have formed a noncommercial partnership to create an industry alliance to help develop the country's IT sector. Evraz Group, the steelmaker part owned by billionaire Roman Abramovich, agreed to buy North American assets from Svenskt Staal worth $4.03 billion. Foreign firms seeking to make money in Russia under the Kyoto Protocol “will not have an easy time” getting approval from the Russian state. “The most correct approach is forbidding everything, but allowing certain things to go forward. The worst approach is to approve everything, but say certain things are forbidden." Russian diamond miner Alrosa plans to increase its investments in Angola. The IT and Communications Ministry estimates that investments in Russia’s IT industry are expected to surge sevenfold from $80m in 2007 to $500m-$600m in 2010. Foreign banks remain eager to enter Russia, undeterred by turbulence on global financial markets, according to the Central Bank.

TODAY: Medvedev in the Kremlin, nominates ally for Rosneft post. “Color-coded” terrorist threat system to be implemented. Inflation causing other problems. Khodorkovsky’s complaints rejected.

Dmitry Medvedev has moved into an office in the Kremlin ahead of schedule. His first Kremlin meeting involved “tough talk with State Fishery Committee chief Andrei Krainy, FSB Border Guard Service chief Vladimir Pronichev and Federal Customs Service Chief Andrei Belyaminov.” In the first sign that Medvedev is seeking to install his people in key posts, one of his close allies has been nominated for the board of state oil giant Rosneft.

The Federal Security Service is to introduce a "color-coded" system of terrorist threat levels. The Russian prosecutor's office has launched an inquiry into a paper and pulp mill suspected of polluting Lake Baikal, the world's largest freshwater reserve. Travel web site TripAdvisor has released a survey this week calling the Russian capital the third-unfriendliest city in Europe.

From Tony Barber on the FT's Brussels Blog: "It should come as no surprise that Putin played up Medvedev’s tough qualities. I vividly recall being in Moscow in 1985 when Andrei Gromyko, the long-serving Soviet foreign minister, recommended Mikhail Gorbachev for the Communist Party leadership after Konstantin Chernenko’s death. “Comrades,” Gromyko said of Gorbachev, “this man has a nice smile but he has teeth of iron.”This is not to say that Medvedev is a closet liberal whose heartfelt wish is to emulate Gorbachev.

All this supports the argument that Medvedev will introduce changes – to the Russian economy, to the Russian state’s treatment of its citizens, and in time perhaps to Russian foreign policy. But he will do it in his own, very personal, very Russian way."

Geoff Smith of Renaissance Capital in Kiev is optimistic about the new natural gas deal: "This is a big improvement for both Gazprom and Ukraine. Commonsense prevailed. Any solution that avoids a disruption of European supplies is positive, but this appears to suggest that relations between the two in the future will be much more transparent than they have been."

Any move to kick the shady middlemen at RosUkrEnergo to the curb is indeed a move toward transparency. There's much more news to read about the deal here, here, and here, but I don't think anyone has tried to connect the arrest of mobster Semyon Mogilevich to the fall of RosUkrEnergo. Or perhaps Gazprom allowed this deal to go through because of Dmytro Firtash's women troubles.

There's an interesting piece in the Economist about the recent thaw in relations between Belarus and the West, and a possible political opening driven by Gazprom's increasing reluctance to subsidize the Lukashenko regime with cheap natural gas - however "Europe's last dictator" remains hung up on one political prisoner and sanctions against the state's oil monopoly:

Politics seems to be thawing a bit inside Belarus too. The regime has responded to feelers put out by European countries, including Poland, and has released almost all political prisoners. Only one remains: Alyaksandr Kazulin, an outspoken figure who seems to have attracted Mr Lukashenka’s personal ire. American sanctions on a big Belarusian company, Belneftekhim, seem to have bitten hard too. The tempestuous Mr Lukashenka abruptly expelled the American ambassador last week.

Mr Lukashenka has flirted with the West before and it would be too early to declare a change of heart. But whether because of the country’s economic plight (Russia is driving a much harder bargain on gas) or for some other reason, some rusty wheels are in motion. The BNR’s loyal supporters hope that theirs may turn too.

Gazprom and Ukraine have agreed to remove all intermediaries in gas trade. "There is no need for them now after we agreed to supply Ukraine's industrial consumers directly with some volumes and given the upcoming rise in the Central Asian gas price," said a Gazprom spokesman.

Russian explorer Timan Oil & Gas was “very pleased” that a Moscow court had dismissed an appeal from Rosnedra, a government agency, to deny it a license.

Speaking at a timber industry conference, Prime Minister Viktor Zubkov announced that the government will back the construction of 30 new plants to produce biofuels.

$18.48 billion of Russian money was spent overseas in the last year, and $7.510 billion was received from abroad, according to new data from the Central Bank of Russia (CBR). The amount of outgoing money grew 83.4% on 2006. Lawyers of CBR and the Finance Ministry have released the accounts of French Natexis, frozen January 2, 2008, on the orders of the Paris court as a result of the suit brought by a Geneva-based Noga. The forecasted growth of sovereign funds is 1.5 times less than originally estimated by the National Economic Institute. Russia's third-largest steel producer MMK said it had paid $230.4 million to increase its stake in steel trader and coal producer Belon. Baltika Breweries, the largest Russian beer company, has agreed to make and sell Asahi Breweries’ beer. Kraft Foods is set to invest $100 million in an instant coffee factory in Russia's northwestern Leningrad region.

TODAY: No to brass Putin. Russia responds to attack on its human rights in kind. NATO criticizes Russian rhetoric. Students and professors fight to save St. Petersburg’s European University. Russia to crack down on internet freedom.

Russia has lashed back at the US State Department's “latest opus” - its condemnation of Russian human rights - saying that it reflects the “double standards of a country that uses the issue as a foreign policy tool while failing to examine its own actions.” NATO has criticized Russia’s rhetoric, particularly in relation to US plans to build a missile shield in Europe. "We have seen too much rhetoric at too high a level. We would like to see it dialled down," said a spokesman. US President Bush is sending two top foreign policy officials, including Condoleezza Rice, to Moscow next week for talks on difficult security issues.

The revolt unleashed by the closure of St. Petersburg's European University “may have exceeded authorities’ worst expectations,” with students and professors launching a large-scale campaign to save the university, incorporating Internet forums, blogs, and videos. A Russian blogger is facing up to two years in prison for an “incendiary” blog post about police officers, and the State Duma is preparing to crack down on internet freedom, with one new bill proposing tighter state control over Russian online news sites, and another restricting foreign ownership of Internet service providers. You may recall Dmitry Medvedev’s assurance last month that “media freedoms are guaranteed by the internet”.
 

There has been a lot of interesting discussion over the comments made by Vladimir Putin during the press conference following his last meeting as president with German Chancellor Angela Merkel, but what really caught everyone's attention was what he said about presidential pardons with regard to the political prisoner Mikhail Khodorkovsky. The following is a translated excerpt from a Kommersant editorial which provides an interesting interpretation of the statement.

….Nor were there any illusions concerning the independence of Kosovo. But the attention of all of progressive humanity was now riveted to the third question, that supposedly had been taken off the agenda. Mr. Putin could have not noticed it. But, as it turned out, he couldn’t:

Robert Amsterdam is quoted today in a story by Brian Whitmore of Radio Free Europe/Radio Liberty:

Robert Amsterdam, an attorney on jailed former Yukos CEO Mikhail Khodorkovsky's international defense team and the author of an influential blog on Russian affairs, says the emerging trend toward greater state control reflects an entrenched Kremlin view that managing the media is an important aspect of defending national security.

Much has been written about the closure of European University of St. Petersburg last month, one the region's largest independent academic institutions. Local authorities shut down the facilities absurdly citing fire risks, but students and activists complained that the reason for the shutdown was that the university has received a grant from the EU to study the Russian elections. Even though the university directors called off the elections study after harsh criticism directly from Vladimir Putin (he apparently accused them of foreign meddling - but when I searched Kremlin.ru for that term, I came up with 17 results), the university was shuttered, prompting a strong reaction from the academic community.

Today RFE/RL has an interesting feature on the protest actions of the EUSP students to raise awareness of the situation and prompt the government to re-open the school. The students and professors have aggressively taken to the blogosphere, and are holding rather creative public actions, such as the one displayed in the video below.

Here is an exclusive translation from Novaya Gazeta about the youth activist Oleg Kozlovsky. Below the article is a translation of a letter from Russia's Ministry of Defense to Kozlovsky's mother.

Oleg Kozlovsky turns in documents on his discharge into the reserves to Izmailovsky military commissariat

Moscow - Activist of the youth movement «Oborona» Oleg Kozlovsky, demobilized yesterday from the ranks of the Armed Forces of the Russian Federation, today turned in documents on his discharge into the reserves to the Izmailovsky military commissariat.

We will note that the coordinator of «Oborona» was demobilized practically right after the elections and the dispersal of the «Dissenters’ March» in Moscow. The decision on his mustering out was issued already on 29 January, but they reported to Kozlovsky about this only after the elections.

Move over UK and Russia, the new East vs. West diplomatic battle royale is now going down between Washington and Minsk. Today Reuters is reporting that U.S. Ambassador Karen Stewart (pictured) has been temporarily withdrawn to Washington following a recommendation from the Belarusian authorities that she return for "consultations." This confirms an earlier report from Kommersant, which quotes the Belarusian statement on their decision to suddenly pull their ambassador Mikhail Khvostov last Friday.

What is amusing and absurd about the diplomatic spat are the vast differences between each side's reasoning for pulling their ambassadors. The Americans have issued a statement laying heavy on the human rights abuses, even going so far as to state "Following the unconditional release of all political prisoners, the United States stands ready to explore steps to improve our bilateral relations."

Good luck with that - this is Alexander Lukashenko we are talking about here - he hasn't even heard about glastnost yet.

Yesterday the U.S. State Department released its 2007 Country Reports on Human Rights Practices. Below is just an excerpt regarding Mikhail Khodorkovsky and others - the complete report can be found here.

Political Prisoners and Detainees

Human rights organizations and activists have identified various individuals as political prisoners: Zara Murtazaliyeva, Valentin Danilov, Igor Sutyagin, Mikhail Khodorkovskiy, Platon Lebedev, and Svetlana Bakhmina. All remained imprisoned at the end of the year. Mikhail Trepashkin, previously identified by some observers as a political prisoner, was released this year. (...)

A report by Russian brokerage UralSib says Russian energy exports are close to reaching a milestone $1 billion per day value mark.

Gazprom, KazMunayGaz, Uzbekneftegaz and Turkmengaz officially declared their 2009 transfer to European prices for Central Asian gas. The move possibly signals that Ukraine will no longer be able to find a supplier of cheap gas. Meanwhile Ukraine's prime minister, Yulia Tymoshenko, has urged Russia to stick to gradual price rises, saying that in all previous negotiations, Russia had agreed gas prices would be raised to market levels over four years from 2008.

Russia's Energy Minister has approved a resolution allowing oil firms to switch to annual oil export plans from the previous quarterly schedules, in order to improve long-term planning. Big companies will benefit especially from these measures. Russia could halve taxes on coal production from 2009, seeking to encourage use of coal instead of gas in power generation. Russian coal producer SUEK has appointed six banks to arrange an $800 million syndicated pre-export loan.

The government has drawn up rules for foreign investors that will allow them access, under certain conditions, to large deposits of oil, gas, copper and gold. Russia insists it has the financial strength to control borrowing by its firms abroad after Standard & Poor's ratings agency cited heavy corporate debt as a key risk to the country’s economy. HSBC, Europe's biggest bank, is to invest $200 million of new capital to expand in Russia. Russian airlines will need to add 921 new airplanes by 2026 to replace their aging fleets and to meet growing demand for passenger air travel. United Company RusAl has secured a $4.5 billion loan from a group of Western banks to fund the acquisition of a blocking stake in Norilsk Nickel. The company also said social unrest near its alumina and bauxite complex in Guinea was “stabilizing” after agreed power supplies were restored to the town. Caterpillar, the world's largest maker of construction and mining equipment, will become one of the first Western countries in its industry to move production into Russia. Taiwanese electronics parts maker Hon Hai plans to build a $49.6 million plant in Russia. Metals giant Norilsk Nickel offered to sell its 1% in Russia's No.1 gold miner Polyus Gold.

TODAY: US State Department condemns Russia’s government accountability. Putin talks with Yavlinsky. Carbomb threat outside Federal Security Service. Anti-inflation bill could fail. Russian farmland going to waste.

President Vladimir Putin has held “rare closed-door talks” with Grigory Yavlinsky, the Yabloko opposition-party leader. Few details have been confirmed, but Putin has reportedly agreed to personally look into complaints about election violations and the detention of Maxim Reznik. The Central Election Commission has submitted its final accounting report on the December elections to the State Duma. The US State Department’s annual report of human rights practices around the world has condemned Russia’s “centralization of power in the executive branch, a compliant State Duma, corruption and selectivity in enforcement of the law” for eroding government accountability to its citizens. Read the full report here. A man who threatened to blow himself up in a car parked outside the Federal Security Service in Moscow explained that he was trying to draw attention to the “difficult situation in Russia”. If negotiations are completed this summer, Russia may become a full member of the World Trade Organization from January 2009.

Sometimes you MUST look a gift horse in the mouth…

Commentary by Grigory Pasko, journalist

On 8 March at a press conference on the occasion of a meeting with Bundeskanzler Angela Merkel, as is known, Putin did not respond to the question of whether or not the ex-head of YUKOS, Mikhail Khodorkovsky, sentenced to eight years of imprisonment, would be pardoned. Instead, he mumbled something indistinct about how if a certain procedure is followed, when a convict writes a petition on pardon, nothing impedes an elected president from examining this petition.

The following is an exclusive translation from Kommersant. An exclusive interview by Grigory Pasko with Mr. Kozlovsky is coming up later this week.

"Oborona" demobbed

Oppositioneer Oleg Kozlovsky returns from the army after two months

Newspaper «Kommersant» No. 37(3854) of 06.03.2008

Photo caption: While Oleg Kozlovsky was in the army, his comrades-in-arms held the Ministry of defense under siege (on the photo – picket at the public reception office of the military agency) [poster reads “FREEDOM FOR OLEG KOZLOVSKY”—Trans.]

Coordinator of the opposition movement “Oborona” Oleg Kozlovsky yesterday was demobilized from the Armed Forces of the RF. Mr. Kozlovsky, who stayed in the army since December of the year 2007, does not doubt that they had unlawfully conscripted him to serve, so that he could not participate in actions of the opposition during the time of the campaign with respect to elections of the president. He intends to sue the Ministry of Defense with a demand to compensate moral damages in an amount of 100 thsd. rub.

Remember the leaked Yekaterinburg video of prison torture? A whistleblower initially leaked the a copy of the tape to human rights activist Lev Ponomarev, who then provided it to us ... and from there everything took off. Well apparently the FSIN (Russia's penitentiary department) is planning on filing a lawsuit against the person who allowed the video to get circulated.

I'm sure Donald Rumsfeld must be wondering why he didn't think of threatening to sue Joe Darby for leaking the Abu Ghraib photos...

The following is an exclusive translation of an ITAR-TASS story from Gazeta.ru.

FSIN to file suit in connection with video recording about beating of prisoners

The Federal Service for the Execution of Punishments of Russia (FSIN) intends to file suit against the circulator of a video clip, on which is recorded how employees of the OMON are applying truncheons in relation to the inmates of one of the colonies in Sverdlovsk oblast.

Many of Gazprom's arguments and excuses that they should be the monopoly exporter of Central Asian natural gas to Europe has depended upon the low prices they have been able to secure. Europe should not worry about this, they argue, while at the same time the pull every maneuver conceivable to prevent the development of alternative export routes, from premature contracts at places like the Shtokman Field, empty MoUs with exporters like Algeria, and the mega-project noose which is on the verge of strangling Europe: The Nord Stream and South Stream pipeline projects.

However today, we see some news that should serve as one of the most compelling reasons to back the Nabucco pipeline and open up other possibilities to export Central Asian gas directly to Europe, creating once again a competitive market.

There's an interesting letter to the editor in today's Wall Street Journal, responding to a recent Garry Kasparov column. The reader argues that it would be extremely unwise for the West to question the legitimacy of Dmitry Medvedev's election, as this would cause panic among the elite, and result in a further clampdown on domestic rights and freedom. I remain unconvinced by the principle that Moscow needs to be treated any differently from any other government, and I believe that engendering authoritarian trends out of fear won't succeed in advancing East-West relations. Also, with regard to the Iran issues raised in this letter, the reader fails to consider the fact that the last thing Russia wants is a solution to the problem - yet neither will they stand for a nuclear-armed Tehran.

Garry Kasparov's op-ed ("Election Season in Russia," March 4) was well-taken, but misses the subtle difference about what the West can and should do. Is it more important to see a country governed democratically, or to conduct the practice of international relations democratically? With Russia, these currently stand in opposition. While the case of Hillary Clinton's slip-up in the Cleveland debate concerning the Russian president-elect may show that Russian domestic politics have fallen off the American radar (as Mr. Kasparov states), it would be a mistake to say that Russia's importance internationally has declined.

Russia and Ukraine are expected to resume talks today on their long-running natural gas dispute. The two countries have already partially resolved the dispute, with Ukraine agreeing to pay off about a $1 billion of its debt.

The price of Russia's export blend crude oil (REBCO) for April delivery rose 1.76% to a record $100.5 per barrel, boosted by the faltering US economy. Gazprom Neft, an oil arm of Gazprom, said it would raise capital expenditure by 36% in 2008 to $3.74 billion.

A new survey by PricewaterhouseCoopers says that Moscow and Istanbul real estate investment returns are likely to surpass Paris and London, with faster growth in emerging markets pushing up rents and fueling demand for property. Raven Russia, the UK owner of Moscow and St. Petersburg warehouses, said earnings almost tripled last year on increased property value. Russian television company CTC Media has agreed to buy DTV Group from its shareholder, Sweden's Modern Times Group, for around $395 million, hoping to increase its exposure to the Russian TV advertising market. Shareholders of Lebedyansky, Russia's biggest juicemaker, were offered $2.2 billion to $2.3 billion for a 77% stake by an unidentified bidder. Railway Stations, a subsidiary of state-owned Russian Railways, or RZD, said it would launch "more than 30 pilot projects for the reconstruction and modernization of stations across Russia."

TODAY: Putin the Theatre Critic. Music students protest eviction, factory workers protest unpaid wages. Praise for remnants of Communism. US and Poland reach agreement on missile defense. Russian relations with Georgia and South Africa.

Students at one of Russia's most prestigious music schools organized a surprise protest in one of the city's busiest shopping malls to draw attention to their being evicted from their only dormitory, accusing the school of “selling the culture of our country”. Moscow unveiled a $45 million bobsledding track earlier this week, Russia’s first to meet international standards. Dmitry Medvedev commented, “Until recently, we were poor, and we could not allow ourselves to have complexes on this global level. Now our athletes will not have to go abroad to train but can do so at home, and the home surroundings help.” A group of factory workers are on hunger strike to protest months of unpaid wages.

Vladimir Putin is in the news today as a theatre critic, after he attended a Moscow theatre and then suggested improvements for the play to its director. “A fork that Putin ate from can slay a vampire with one stab.”

Another expanded report on the recent leaked videotapes exposing human rights abuses in Russia's prisons. The dispute has moved on to the exact date of the recording - the authorities claim the video dates back to the 1990s, while others say it was actually recorded in 2006. The correspondent says that "If the images of the disputed recording are indeed recent, they suggest reemergence of the Gulag, the infamous Soviet prison system, where millions of political prisoners and criminals were subjected to beatings, forced labor, and temperatures of 40-below zero in distant isolation from the rest of the world."

Original source.

This one comes from Nina Khrushcheva:

Indeed, Russia’s liberal promises have been shattered time after time. Nikita Khrushchev’s de-Stalinization reforms ended with Leonid Brezhnev’s stagnation; Boris Yeltsin’s democratization resulted in Putin’s authoritarianism. In the sadly immortal words of Victor Chernomyrdin, Russia’s prime minister during the Yeltsin era, “We wanted for the better, but it turned out to be like always.”

From the FT: A newly resurgent Moscow, fuelled by energy money, is attempting to assert itself on the world stage once again. For the first time since Stalin’s famous Seven Sisters (the gothic/deco skyscrapers commissioned as Communism’s riposte to Manhattan) tall buildings are piercing the city’s skyline in rapid succession. Ground was broken last year on the Moscow Tower, an attenuated pyramid designed by SOM, the US corporate giants, which will stand at 612m, making it the tallest in Europe. Nearby, NBBJ, another US corporate practice, has designed the Imperia Tower that will join the Naberezhnaya Towers in defining the city’s new central business district, an intense and extremely tall cluster of construction that begins to address Moscow’s chronic office shortage.

Most astounding of all, however, is Foster & Partner’s recently unveiled proposal for the Crystal Island. A $4bn, 450m high inverted cyclone of a building that spreads from a spiky point into a flower-shaped base and envelops offices, a shopping centre, hotel and entertainment centre, this is one of the strangest of recent proposals, exemplifying the city’s drift towards the model of the architectural zoos of the Gulf.

Actually I think we knew that Russia was beginning to throw away its $100 a barrel oil like the Gulf states when we heard they were going to build fake islands in the Black Sea near Sochi. Nothing says resurgent national pride like a multi-billion dollar boondoggle...

This news item was translated from OBSHCHAYA GAZETA.RU:

Oleg Kozlovsky will demand 100,000 rubles from Ministry of Defense for unlawful conscription

Coordinator of the opposition movement “Oborona” Oleg Kozlovsky, demobilized from the ranks of the Armed Forces because of unlawful conscription, intends to sue the Ministry of Defense.

It is not just an American problem ... the following exclusive translation from News.ru reports that the Ministry of Information has announced that all telephone and internet service providers must allow unrestricted wiretapping and monitoring access for the FSB, despite the constitutional requirement of a court order. We know from experience that this system has been in place for several years, but it is just now that the Ministry is making it publicly known.

Ministry of information technologies and communication opens access for FSB to tap telephone conversations

The Ministry of information technologies and communication of the RF for the first time officially obligated all telecommunications companies, as well as internet providers, to provide the capability to the FSB to conduct unlimited and uncontrolled tapping of telephones and lifting of information. The Constitution of Russia allows this only on the basis of a court decision.
Operators admit that the document puts on record relations that have already evolved for them with the special services. But earlier these relations were regulated by semi-classified instructions of the siloviki organs, reports "Kommersant".

Newsweek has an interesting article today by Owen Matthews which takes a look at the struggles amongst the siloviki during the transition to Medvedev, reiterating much of what has been argued on this blog. According to Matthews's sources, the next president is unlikely to seek punishment for those who backed his rival Sergei Ivanov, but will rather send them into cushy state corporatist jobs, while his anti-corruption platform will claim a number of victims at lower levels... As such, there is a palpable panic in the bureaucracy, causing a swift rise in corruption.

Now many apparatchiks are trying to squeeze as much money from their positions as they can, in anticipation of Medvedev's spring anti-corruption campaign. "Almost all of my clients have reported a spike in shakedowns from bureaucrats and the police," says one top Moscow-based banker, who didn't want to be quoted discussing his clients. "Every bureaucrat in Moscow is trying to boost their retirement plan." So if Medvedev wants to wield any real power, he will have to take on the culture of bureaucratic graft that Putin created—while at the same time protecting Putin's closest friends from prosecution. At Medvedev's Inauguration, many of the guests will be wondering which group they fall into.

Also, in the same issue of the magazine, Andrew Nagorski reviews Ed Lucas's new book.

Gazprom has held talks with the International Olympic Committee (IOC) with a view to becoming one of 12 potential “global” sponsors of the 2012 London Olympics.

"I will say once again that we are firm in our intention to continue joint construction of the Nord Stream gas pipeline in line with the plans and the schedule," Vladimir Putin told journalists after a meeting with German Chancellor Angela Merkel.

Some believe that Russia’s gas row with Ukraine signals “the first failure of Gazprom’s foreign policy,” but either way most of the incendiary issues remain unresolved, according to analysts.

A collection of mainly British companies will make hundreds of millions of pounds in revenue from the Kremlin's plans for a $500 billion roadbuilding program, designed to solve the problem of Russia’s “parlous” infrastructure. Shares in Brazilian and Russian miners are trading at much lower prices than those from Japan and Australia, a disparity that presents a “buying opportunity”. India has signed a $960 million contract with Russia to upgrade the Mig-29 fighter jets inducted into the Indian Air Force in the mid-1980s.

TODAY: EU report warns of conflict with Russia over energy resources; Putin warns that Western relations with Russia will be no easier under Medvedev. The next president is already the subject of popular Russian jokes - Kasparov says power sharing will lead to disaster. Russia to abolish visas for Serbia.

A report from the EU's top two foreign policy officials to the heads of government gathering in Brussels this week says European governments should plan for an era of conflict over energy resources, with global warming likely to trigger a contest between Russia and the west for the mineral riches of the Arctic.

“Although Medvedev has been elected president, still all the levers of power -- including the people in the upper echelons of power -- are the people whom Putin has chosen for the top positions.” Medvedev is “already the brunt of jokes” in Russia about power sharing. Opposition leader Garry Kasparov says that future crises in Russia will divide Medvedev from Putin. “Trying to keep power in two spots, one in Kremlin, one in the Russian white house where the prime minister is located, will eventually fail,” he said. “I don’t think that 2008 and 2009 will be good years.” The widow of Alexander Litvinenko has made a public appeal to Medvedev to extradite Andrei Lugovoi to face trial.

From ABC Australia:

Only last month, a Russian bomber flew very low over the Nimitz and other US warships when they were in international waters near Japan.

According to Russian military analyst Pavel Felgenhauer, what Moscow is doing with these incidents is providing not a threat but a message.

"The message that we're back again, that we're still a kind of something, a chip off the Soviet Union, we have the capabilities, we have those heavy bombers that can carry nuclear weapons, which other nations do not have, and that we should be taken seriously," he told The World Today.

The following is an exclusive translation of a story from News.ru about Oleg Kozlovsky, an organizer of the youth movement Oborona (featured many times on this blog), who was unlawfully drafted into the army recently allegedly as punishment for his political activities.

“The Other Russia” activist Oleg Kozlovsky, unlawfully drafted into the army, demobilized

Coordinator of the movement “Oborona”, member of the executive committee of the coalition “The Other Russia” Oleg Kozlovsky has been demobilized from the ranks of the Armed Forces and is returning home, reports Interfax". The press service of the organization “Oborona” disseminated a statement in which is asserted that it has the necessary documents, proving the illegality of the drafting of Kozlovsky into the army and “the military commissar of the Izmailovsky military commissariat will not be able to evade responsibility and will be prosecuted to the full extent of the law.” In the report is noted that on 5 March, Kozlovsky will submit documents confirming his transfer into the reserves to the Izmailovsky military commissariat and there he will tell journalists about [his] “army adventures”.

Oleg Gordievsky, the former KGB turncoat whose James Bond-like appointment by the Queen of England raised quite a ruckus last year, has published a book review in the Times about the latest work of Yuri Felshtinsky and Vladimir Pribylovsky. Felshtinsky is most well known as Alexander Litvinenko's co-author, and Pribylovsky has been an active dissident since the 1980s, so for most Russia news junkies, you can tell where this article will be going. Nevertheless, the new book appears to offer some interesting stories, such as the following tale of how Berezovsky and Putin began their early friendship:

At that time Boris Berezovsky (the oligarch and politician) was a figure of influence, a member of President Yeltsin's extended “family”. An election campaign was in progress, and Prime Minister Yevgeny Primakov hated Berezovsky and was trying to undermine him. During a birthday party for Berezovsky's wife, Putin unexpectedly turned up with a bunch of flowers. “You're crazy,” said the astonished Berezovsky. “Primakov will find out ...” “He can go to hell,” Putin supposedly replied. “I'm not afraid of him.” Berezovsky was very impressed (but he did not know then that Putin had also visited Primakov with another bunch of flowers), and their short-lived friendship began.

The complete article contains an excerpt from the book.

A reader kindly sent us an email alerting us to the fact that the BBC is broadcasting a segment featuring clips of the Yekaterinburg prison abuse tape, which this blog first brought to public attention (on Dec. 10) on our YouTube channel. The BBC report, which can be viewed online here, includes interviews with Lev Ponomarev and a surviving paratrooper who had been paralyzed by the beatings, torture, and human rights abuses he suffered during his imprisonment in the much feared Yekaterinburg facility.

The story of this video and its exposure to a wider audience has taken some interesting turns in recent months. The video was up on this blog and YouTube for about two months before Lev Ponomarev (a Russian human rights leader frequently featured here) traveled to the United States to raise awareness of the issue, and then following a breakthrough investigative article by Bret Stephens of the Wall Street Journal including a link to the video, within days tens of thousands of people had viewed it and commented on it. After the video reached about 45,000 views in just three days, there appeared to be an organized wave of hostile comments - consistently against the victims and in support of the OMON and the Russian government. Using similar language, a variety of YouTube users attacked us for the provocation of putting this video up, and, in masse, flagged the video for "inappropriate content" and forcing the website to remove it (see Robert Amsterdam's statement on the issue here). A few weeks later, after complaints and a secondary review, the video was successfully reinstated, and the event was covered by the Wall Street Journal.

However, all is not well. Once Lev Ponomarev returned to Russia from his trip to the United States, criminal charges were filed against him for slander against General Yuri Kalinin, head of the prison system. Stay tuned for more information.

We are happy to see that this important story is finally getting covered by major media, and we hope that more people can be brought around to initiating a dialogue with Russia over human rights in its prison system.

Here is the latest from Reuters on the press conference following German Chancellor Angela Merkel's visit to Moscow:

Putin: Medvedev to decide on oil tycoon's pardon

MOSCOW, March 8 (Reuters) - Russian President Vladimir Putin said on Saturday that it would be up to his successor Dmitry Medvedev to decide whether to pardon convicted criminals, including jailed oil tycoon Mikhail Khodorkovsky.

Professor Khodnev: «What will be tomorrow – is unclear…»

By Grigory Pasko, journalist

I first met Professor Alexander Sergeyevich Khodnev in Washington several years ago. And several days ago, I met with him on the day of the elections of the president of Russia in Yaroslavl, where he teaches history. I hereby offer for your consideration my conversation with Alexander Khodnev, Doctor of Historical Sciences, Professor, Chair of the Department of Universal History at the Yaroslavl Pedagogical University Named After K. Ushinsky.

Alexander Sergeyevich, today you and I observed the elections – you at your own local precinct, I at your university. The people came actively. After voting, I asked people for whom they had voted. The majority replied that they’d voted for Medvedev. Of course, the actual result of the voting was predictable. So why, then, in your view, is the power hedging itself in every which way? It suppresses the opposition, it removed Kasyanov from the elections, it threatened civil service employees if they didn’t show up for the elections… What is the power afraid of and is it really afraid?

Just when I think I've had it up to here reading article after article about the Russian government's infamous youth group, Nashi, something comes along to make them relevant again.

This time, as The Other Russia blog reports, the pro-Kremlin group is believed to be behind a stunt distributing toilet paper bearing the logo of the independent newspaper Kommersant, and including a letter from the editor stating that they want to "attract a new audience who gives a wide berth to the newspaper."

Professor Marshall Goldman of Harvard has a letter to the editor published in today's FT, disputing Gideon Rachman's claim that Russia's build up of currency reserves is politically harmless because Moscow would never be willing to sacrifice its reputation as a supplier of energy.

Goldman writes:

I am afraid this is wishful thinking. Russian oil and natural gas have been used not only as economic but also as political weapons at least a dozen times in countries ranging from Israel, China and Yugoslavia to Lithuania and Estonia. Since we tend to have short memories and since there are not many alternative sources of supply available, especially for natural gas, you might say that the Russians have us, especially Germany (which imports 40 per cent of its gas from Russia), as well as several east European countries (which import 100 per cent of their gas from Russia) over a barrel. Vladimir Putin understood this and he encouraged Gazprom, along with other Russian energy companies, to extend their reach, even to the UK and the US.

The last-minute deal between Russia and Ukraine to restore gas supplies “appears to be little more than a temporary bandage.”

Gazprom may choose to buy a minority stake in one of five Italian power assets run by electricity company Enel in exchange for joint development of its domestic gas fields. Enel is willing to sell or swap assets in Italy for a maximum value of $200 million. Italy’s oil and gas giant Eni, together with Enel, plans to launch natural gas production at deposits in northwest Siberia in early 2010.

The construction of the second stage of an oil pipeline being built from East Siberia to the Pacific Ocean could begin in 2009. The East Siberia-Pacific Ocean (ESPO) pipeline project is set to pump up to 1.6 million barrels of crude per day from Siberia to Russia’s Far East and then on to China and the Asia-Pacific region.

The government wants foreign investors to seek its permission for buying control of mobile and landline communications companies, a measure that could hamper growth in the booming sector. At the latest government meeting, Prime Minister Viktor Zubkov “lashed out” at UES’ CEO Anatoly Chubais, and ordered the toughening of state control, ranging from the introduction of export duties on fertilizers to control over food prices. Russia is forecast to be Europe's biggest car market in four years. The prediction, from Ernst & Young, comes after car sales soared 57% last year to more than $50 billion. Russian Railways, or RZD, is considering buying a controlling stake in power generation company TGK-14 jointly with ESN-Energo.

TODAY: “Merchant of Death” arrested in Thailand. Russia’s European University shut down over elections project? Putin supports Armenian government. Reznik allegedly ends hunger strike.

The biggest story in the UK press today concerns the “Merchant of Death” - a Russian arms dealer arrested in Thailand. Viktor Bout, the former Soviet army officer also known as the “Lord of War”, has been wanted for years in several countries. Bout says the accusations against him “resemble more a script for a Hollywood thriller.”

This letter to the Moscow Times claims that the European University at St Petersburg was shut down because it had received a European Union grant to implement a project on election monitoring.

Why there wasn't much democracy to observe during Russia's elections

Grigory Pasko, journalist

As is known, many have refused to participate in the observer process for the Russian elections: the Office for Democratic Institutions and Human Rights of the OSCE, the Nordic Council, observers from the USA and certain countries of Europe… Limited observers did decide to come from the Parliamentary Assembly of the Council of Europe (PACE), as well as delegations from the parliamentary assembly of the CIS and the Shanghai Cooperation Organization (SCO).

Out of the 30-member OSCE delegation, two observers were sent to the elections in Yaroslavl. Commenting on the results of the elections that had taken place in this city, one of them – Polish Member Tadeusz Iwinski, in part, noted such shortcomings at the elections: inconvenient urns [ballot boxes—Trans.] for voting and narrow slots in them. Imagine – you can’t even stuff four ballots at a time in one…

The funeral of democracy? Ballot boxes are called “urns” in Russia (photo by Grigory Pasko)

Here is an interesting bit from the FT about a last minute "edit" made in a speech by Germany's foreign minister to soften his criticism of the irregularities in Russia's elections:

According to the manuscript of a speech Frank-Walter Steinmeier, German foreign minister, was due to present this week he had also “hoped for a freer and fairer election”. But what’s this?

When he delivered the speech in Berlin this passage had been replaced with more diplomatic language about a “wider choice” of parties being desirable at future elections.

During president Vladimir Putin’s reign Merkel played the “bad cop” towards the Russian leader while Steinmeier was the “good cop”, rarely complaining in public about democracy and human rights. Is it already business as usual under Medvedev?

I hear a lot of convincing arguments about why we shouldn't worry about the Kremlin's sovereign wealth ambitions.

After all, Russia's $150 billion stabilization fund is comparatively tiny considering the returns that Gazprom and Rosneft are bringing in (though the dire lack of transparency of these state-owned firms make any estimation of capital management difficult), and Moscow's practically silent announcement in early February that $32 billion of this fund will be carved out for some more adventurous speculative investing in equities and bonds passed through unnoticed by the media. Considering that the "scary" UAE Abu Dhabi sovereign wealth fund wields $875 billion, dwarfing any sense of threat from the Russian government managed fund, the histrionics seem unwarranted. Furthermore, some Middle Eastern sovereign wealth funds have +30 year records of non-political capital appreciation seeking conduct - and according to many brokers, there is not a sense that these guys are getting calls from the president's office about what to buy and sell.

Despite these assurances, politicians on both sides of the Atlantic are calling for more information and clearer rules - often with good reason in my opinion. However when do these calls for transparency go too far, and result in hypocritical protectionism?

A recent short academic paper by Ana Elizabeth Bastida and Paul Segal addresses the problem of the resource curse and Dutch Disease, prompting some interesting questions about how the Russian government is handling its considerable influx of dollars from the oil-and-gas trade.

Excerpt:

In 1978, in the context of the discovery of British North Sea oil, the Financial Times journalists Samuel Brittan and Barry Riley commented: “The simplest and also the wisest answer to the question ‘What should we do with the state’s oil revenues?’ is ‘Give them to the people’.” In this article I explore the potential benefits of a version of this idea that I call the people’s share proposal: instead of resource revenues accruing to governments, whether from a national oil company or from taxes and royalties on private companies, they would pass directly to all adult citizens on an equal per capita basis, in the form of an unconditional basic income. A full discussion of this proposal is most pressing for developing countries suffering from the resource curse.

The first potential benefit is the direct impact on poverty and the distribution of income. An important part of the resource curse is the economic problem known as the Dutch Disease: a natural resource export sector renders tradable goods other than the natural resource, such as manufacturing, uncompetitive. Since development and growth are typically driven by manufacturing, this makes development over time very difficult. But it also has short term costs in terms of unemployment and the distribution of income. Why? One of the core characteristics of natural resource sectors is that they employ very few people. This implies that the direct benefits of the resource go to whoever owns it, which in most cases will be the government. Unlike in manufacturing, very little of the resource revenues go to workers. There is no automatic economic mechanism, no ‘trickle down effect’, for distributing the income from the resource throughout the population. Most citizens enjoy too little of the benefits of resource wealth, and suffer too much of the burden.

Two Canadian academics have a polemic op/ed in today's Toronto Star, which calls upon the West to stop the finger-wagging over Russia's democracy and human rights record, while asking world leaders to ... well, it's not quite clear what they are asking we should do. But they do compare Russia to a drowning person which the West has callously refused to help (which seems odd given how much we hear about strength and resurgence), and trot out all the typical victim narratives and myths about Vladimir Putin the savior, rescuing Russia from chaos without once mentioning state corruption and seizure of economy, +$100 oil, or the take over of the media. (read the Economist for a refutation of the Russia myth).

Despite the kindly naive revisions and omissions of the Putin era, when it comes to talking about what Russia needs help working on, the authors do become more coherent:

Ukraine and Russia have resolved the dispute that threatened to disrupt natural-gas supplies to European markets, with Naftogaz promising to settle the $600 million debt. The announcement came just “hours after Gazprom warned European customers that Ukraine was getting ready to cut supplies to Europe.” Prime Minister Yulia Timoshenko says Ukraine is not against letting Russia into its domestic gas market.

Former Russian power monopoly UES sold its stakes in seven power supply firms for a total of $109.8 million, failing to sell only one firm.

Russia’s Federal Financial Market Service (FFMS) has suggested consolidating all Russian exchanges into a single holding, and then making an IPO of its stocks. Eldorado, one of the country's largest home-electronics retailers, is facing back tax claims of up to $624 million, which could force it to sell some assets. Government officials believe that more than $13.8 billion would be needed to develop transportation infrastructure for the 2014 Sochi Olympics. Finnish Ruukki Group has abandoned its investment project in Russia's Kostroma region. The company had planned to invest €1.1 billion to build a pulp mill and a sawmill in Northwest Russia. Russian developer LSR Group will invest around €95 million ($144.5 million) in a new brick factory to meet growing demand for building materials amid a construction boom. The director of Moscow's State Tretyakov Gallery is outlining a $150 million plan to increase exhibition space by more than half. ERG, the Italian exporter of refined oil products, is close to reaching an agreement to sell a stake in its refining unit to an unidentified Russian company. TMK, the country's largest steel pipe maker, said it expected 2007 revenues to have risen to more than $4 billion on strong demand and higher prices for pipes.

TODAY: Aleksanyan will not be released from custody. Foreign investment in internet and mass media restricted. Moscow billionaires. Russia “sacrifices growth to curb inflation”.

The Kremlin is reportedly spending “tens of millions of dollars” on various forms of public diplomacy, including new media ventures to target international audiences and boost its image. A Russian draft law on limiting foreign investment has been amended to include internet-providers, certain mass media, and fishing. The bill will require current owners of more than 5% in strategic companies to report to the government. Critics are concerned that the amendments may signal "a Kremlin step toward tighter control over the internet.” Cartoon channel 2x2 has yanked two animated programs from its rotation after receiving a warning from the federal media watchdog.

The Moscow City Court has refused to release former Yukos vice president Vasily Aleksanyan from custody while he receives treatment for lymphoma. His lawyer said that the ruling means he will likely die before his case comes to trial.

Nothing but Pig Snouts All Around

By Grigory Pasko, journalist

Let me say right from the start: that title isn’t mine. It’s not even Russian author Nikolai Gogol’s: in his «The Inspector-General», this is but a phrase by police chief in the final scene. In the given instance – this is a headline from the newspaper «Yaroslavskaya nedelya», which came out on the eve of the elections of the president of Russia.

Front page of a Yaroslavl newspaper before the elections (photo by Grigory Pasko)

Below is a translation from Echo Moskvy on the state's crackdown on protests following the presidential elections.

The following it an exclusive translation from News.ru:

OMON in Moscow did not let “Dissenters’ March” unfold. Politicians and human rights advocates detained

Several dozen persons were detained during the course of the opposition action “Dissenter’s March”, which they wanted to conduct in Moscow, in the vicinity of Chistye prudy. According to the data of "Echo Moskvy", detained without particular pretext were leader of the SPS Nikita Belykh and leader of the movement “For human rights” Lev Ponomarev. Their lot was shared by members of the OGF [United Civic Front] Alexander Ryklin, Alexander Osovtsov, Kasparov’s advisor Marina Litvinovich. More than 50 persons were detained. Officially it is said that this is the most active participants in the action. The entire vicinity of Chistye prudy is encircled by employees of the OMON and the police.

Writing in the New Republic, Alvaro Vargas Llosa of the Independent Institute points out the irony in the fact that the only way for Dmitri Medvedev to break free of Vladimir Putin's grip in order to implement his liberal reforms would be to wield illiberal "ruthless power" to set up an internal coup:

Eternal Putin

by Alvaro Vargas Llosa

The Kremlin is just as stifling now as it was 20 years ago. Can Dmitry Medvedev help? Does he want to?

As expected, Opec rolled over its oil-production quotas at its meeting in Vienna today.

With oil futures trading at over $100 a barrel, consuming countries such as the US had lobbied the producer group to release more oil onto the market.

That, though, was always unlikely: oil demand experiences a seasonal dip going into the second quarter and Opec is usually inclined to cut production to shore up prices at this time of year. The cartel has also repeatedly underlined its fears that wobbles in the US economy will soon feed through into lower oil demand.

Germany and central Europe were “bracing themselves” for cuts in gas supplies after Gazprom halved gas supplies to Ukraine. President Dmitry Medvedev has personally asked Ukrainian leader Viktor Yushchenko to settle the country’s gas debt to Moscow, saying “Russia is expecting Kiev to intensify efforts in solving its gas debt problem." Yushchenko, in turn, told Prime Minister Yulia Tymoshenko to restart talks with Moscow urgently. Meanwhile the International Energy Agency said Russia's use of supply cuts to resolve a gas payments row with Ukraine was "excessively harsh" and urged the two countries to settle the dispute in a more commercial way. The US State Department has called for the countries to resolve the dispute “transparently”.

Russia’s UN Ambassador is advising Iran that it suspend its nuclear enrichment program, and that it study the incentives to do so offered by the West. Iran labeled the latest round of UN sanctions “worthless”.

NYMEX could ultimately be crossed off the list of international oil exchange arrangers in St. Petersburg, following a meeting convened by Prime Minister Viktor Zubkov, which focused on creating an oil exchange fully owned by Russia. The head of Russia's largest lender Sberbank said it had raised its net profit by 34% to $790.3 million in January-February 2008. Russia's largest rail container operator, Transcontainer, placed in full its debut five-year bond worth $124.8 million. Russian Technologies chief Sergei Chemezov has come into conflict with First Deputy Prime Minister Sergei Ivanov over the state corporation's plans to incorporate the government's defense-industry assets. Russia plans to sell up 100 passenger jets to Iran in what would be the largest deal of its kind for Russia's aviation industry.

TODAY: World responses to the Presidency of Dmitry Medvedev. Angela Merkel to be Medvedev’s first foreign meeting. Yabloko head on hunger strike in jail.

Maxim Reznik, a Russian opposition activist and member of the Yabloko party, jailed for two months for taking part in anti-Kremlin protests, has gone on a hunger strike. An investigator in Moscow’s police's tax crime department has been arrested on suspicion of trying to extort more than $3 million from a local businessman. An article in the Russian press focuses on freedom of the press under Vladimir Putin. More speculation on who will be invited to join Dmitry Medvedev's "inner circle".

German Chancellor Angela Merkel is set to be the first foreign leader to meet with President-elect Dmitry Medvedev following his election victory.

CNN's special series on "Ruling Russia" by Matthew Chance. See more after the jump. DAXUREvcKREMLIN has a real treasure trove of Russia-related videos.

Gary Shteyngart, the Russian-American author of the comic novels "The Russian Debuntante's Handbook" and "Absurdistan" (and a personal favorite of mine) was recently interviewed about current events in Russia by La Vanguardia's Antonio Lozano. The translated extract comes courtesy of Courrier:

"Today Russia is nothing but a gigantic natural gas and oil supplier. It is a dead country. It has a very low birth rate for one thing. And yet in terms of culture, it has the best prose of the19th century, without which contemporary literature cannot be understood. ... When Absurdistan was published in Russia, I was called a traitor to the nation, on the Untied States' pay-roll, but at the same time, several critics said, 'We live in Absurdistan!' ... [Satire] has always been the best political weapon, since Jonathan Swift, and then Gogol, my reference. And it continues to be, with Vladimir Sorokin in Russia and George Saunders and others in the United States."

Matt Stone at The Global Buzz lists several reasons why an eventual rupture between Vladimir Putin and president-elect Dmitri Medvedev could lead to a genuine shift of power in Moscow:

1. Constitutionally and traditionally, the office of president confers more power to its holder than the office of prime minister.

2. Medvedev commands a lot of respect and loyalty inside Gazprom, the state-owned gas giant for which he has served as chairman. Because Gazprom is a very powerful state entity unto itself - the tail that sometimes wags the dog - Medvedev has a built-in support base to counter the former KBG cadres (the siloviki) that have remained loyal to Putin.

3. Loyalty to power and authority are very Russian qualities, stemming (probably) from a historical legacy of very powerful individual rulers. Insofar as the office of president confers status and power to Medvedev over a Prime Minister Putin, how loyal will the elite remain to Putin over Medvedev?

Jeffrey Mankoff of the Council on Foreign Relations has published an op/ed in the Boston Globe outlining how the United States can take advantage of the transition to Dmitri Medvedev to improve relations with Moscow - an argument that I expect to see echoed among many different influential sources, leading to an eventual upcoming change in Russia policy.

Mankoff lists some of the available carrots: "Washington can send a signal that it is open to renewing the relationship by abandoning the outdated Jackson-Vanik Amendment, adopted in 1974 to pressure Moscow into allowing Soviet Jews to leave for Israel. It can announce that it is willing to open negotiations about its placement of missile interceptor stations in Poland and the Czech Republic. It can signal its long-term commitment to preserving the existing arms control regime, which includes extending the START-I agreement and negotiating new rounds of verifiable mutual reductions. Each of these developments would be desirable in any case; announcing them now would allow the United States to signal its interest in improved relations while putting the ball in Moscow's court."

I largely agree with much of what Mankoff argues, however while it is important that Russia feels respected and treated normally without prejudice, the burden for improving relations cannot solely lie on the shoulders of Washington. Let's not start the Medvedev era with yet another Russia-as-victim narrative. A discussion of some of the "sticks" must accompany all the talk of these carrots.

Gazprom promised western European countries they would not be affected by the latest escalation in its ongoing row with Ukraine, as it cut supplies to the country by 25%. The company RosUkrEnergo said Gazprom’s decision to reduce gas supplies by 25% would only affect Naftogaz Ukrainy. Gazprom now says it will halve gas supplies to Ukraine from 1700 GMT on Tuesday, and that no progress has been made in talks thus far.

Total will make an initial estimate of the cost of developing Russia's giant Shtokman gas field in the coming months and make an investment decision before the end of 2009.

Russia's envoy to the UN said after a UN Security Council meeting that new sanctions imposed against Iran would give Tehran a chance to review its controversial nuclear program.

Plans by Rostekhnologii to consolidate state-controlled stakes in nearly 250 enterprises have been opposed by First Deputy Prime Minister Sergei Ivanov. Norilsk Nickel, the Russian nickel producer at the centre of a takeover battle, is the first target of Environmental Investor Services, a new activist investor group which aims to put pressure on polluting companies and industries. Russian power producer OGK-6 has sold some €4.5 million ($6.83 million) of emissions reduction credits under the Kyoto Protocol to the UK-based Clean Planet Group. A Vietnamese legislator has called on Russia to increase its investment in oil and gas, energy and machinery manufacturing in the country. France's Société Générale, which holds a controlling stake in Russia's bank Rosbank, has offered to buy the stakes of minority shareholders. "I ask you to prepare proposals on optimization of the management of the country's financial reserves, taking into account what is happening in the world economy," said President Vladimir Putin, calling for better management of the country's $484 billion gold and foreign exchange reserves.

TODAY: Opposition protesters detained; pro-Medvedev march permitted. Monitors concede that Medvedev would have “won anyway.” World leaders comment on the result.

Moscow authorities have “repeatedly refused to authorize opposition marches on the grounds that they would snarl traffic and inconvenience people.” But thousands of pro-Kremlin youths were permitted to march across central Moscow to celebrate the election of Dmitry Medvedev as president, “paralyzing” the traffic. Riot police “roughly detained” dozens of opposition protesters, including Union of Right Forces leader Nikita Belykh, for marching in central Moscow. And in St Petersburg, an opposition march was given authorisation after the organizers agreed to change the route.

Monitors of the weekend’s elections felt that Medvedev “would have won the election anyway.” Andreas Gross, the head of the Parliamentary Assembly of the Council of Europe (PACE) observer mission, which was one of the few international monitoring groups on hand for the March 2 vote, has questioned the nature of the election process and called the vote a “plebiscite”. Watch the video here.

Charlie Rose has a discussion on Russia with some of the heavy hitters. Feels like 1985, no?

Peter Finn of the Washington Post was answering questions from readers online earlier today, and fielded this one on the new administration's policy toward the Khodorkovsky case:

Harrogate, U.K.: The British Sunday Times reports that president-elect Medvedev strongly has criticized the Russian judiciary, saying it must be reformed to put an end to "legal nihilism." As a conscientious lawyer, is there a chance that as president he will call for a review of contentious cases? I am thinking particularly of the manipulation of the judicial system which led to the imprisonment, following a show trial, of Mikhail Khodorkovsky and Platon Lebedev, and the new unreal charges now being cynically brought against them.

Peter Finn: This is one of a number of broadly similar questions about Mikhail Khodorokovsky and Platon Lebedev, the Yukos Oil Co. executives who are now serving prison terms after trials that critics charged were politically motivated. It's worth remembering that Aleksandr Voloshin, former head of the presidential administration, resigned when Khodorkovsky was arrested. Medvedev replaced him. And to date Medvedev has shown no willingness to question the prosecution. Whether he might harbor private doubts and act on them, I frankly don't know. But I doubt he will do anything quickly as his first priority, if it is to be a genuinely Medvedev presidency, as distinct from Putin ruling from the prime minister's office, he will take some time before making any controversial decisions that break with the Putin era. And reexamining the Khodorkovsky case or releasing them would certainly be that. There are reports here that Voloshin has been advising Medvedev and might take a position in the new presidential administration. We'll see. But that might augur well for Khodorkovsky and Lebedev.

It is a sorry state of affairs when only one of the three leading U.S. presidential candidates issues a statement on the controversial Russian elections. After the jump is Sen. Hillary Clinton's press release. Sen. Barack Obama has only briefly commented on the elections, while Sen. John McCain has not yet said anything about Medvedev's victory - though the new president-elect has certainly said plenty about him. I don't expect this silence to last much longer...

Perhaps the worst part of the complacency with which the world has tolerated the Russia's election farce is that many other authoritarian nations will take this as precedent - an understanding that skillful manipulation of democratic processes is perfectly OK with international partners. China, for one, seems ideally poised to copy Russia's brand of sovereign democracy as though it were a counterfeit Prada handbag.

This one comes from Time Magazine's China Blog:

Anyone who is wondering what the future holds for China might take a close look at what happened in Russia over the weekend. As was widely predicted President Valdimir Putin's choice for a successor Dimitri Medvedev handily won presidential elections and will make Putin his prime minister. According to the New York Times,"The election of Mr. Medvedev, 42, a first deputy prime minister, is the culmination of Mr. Putin’s efforts to consolidate control over the government, business and the news media since taking office eight years ago. Vowing to restore stability to Russia after the upheavals of the 1990s, Mr. Putin has increasingly used his authority and popularity to create what is in many respects a one-party state".

Michael Idov of the New Republic had a hard time finding anyone who had actually voted in the Russian presidential election, apart from those who attended the polls for free food and prizes. Others he spoke with voted for Zyuganov simply because they wanted to vote for someone who was not "rammed down their throats." Idov also remarks on the sad state of the opposition, left huddling and hiding in "smoky rooms", making "hopeless jokes" like dissidents of the Khrushchev era.

Extremely few people, even Moscow's strongest supporters and defenders in the West, would attempt to argue that yesterday's elections were remotely legitimate. Even the leadership seems satisfied to absorb the criticism of the deeply flawed contest - so long as we continue to describe the proceedings yesterday as something resembling democracy. But why? Why does the Russian government even bother to go through the motions?

Anne Applebaum of the Washington Post puts forward the following theory:

Only one question remains unanswered: Why did anyone bother holding an election at all? Given that the inner circle of ex-KGB officers that controls the Kremlin also controls the country's media, its legal system, its parliament, and its major companies, why do they need elections? Why didn't Vladimir Putin just appoint Medvedev, or keep the presidency himself? The answer, I think, can lie only in the ruling clique's fundamental insecurity, odd as that sounds. Though the denizens of the Kremlin do not, cannot, seriously fear Western military attack, they do still seem to fear Western-inspired popular discontent: public questioning of their personal wealth, public opposition to their power, political demonstrations of the sort that created the Orange Revolution in Ukraine. To stave off these things, they maintain the democratic rituals that give them a semblance of legitimacy.

Speaking two days before the deadline set by Gazprom, Yulia Tymoshenko said she was certain that “there will be no cutoff of gas [...] no one is going to cut off anything.” But a deal has not yet been reached, and it was announced today that Gazprom has indeed cut supplies to Ukraine by 25% after talks failed. One research analyst from Renaissance Capital Ukraine commented, “This still doesn't represent a crisis, just a greater degree of brinkmanship. The weather is warm and forecast to stay so, and storage both in Ukraine and further west is unlikely to be depleted after another mild winter.''

Gazprom has told the European Commission that gas supplies to the European Union will not be affected by its row with Ukraine.

London-listed Russian explorer Timan Oil & Gas will almost triple the amount of wells it has this year, taking its well count to 214 and bringing it closer to a production phase.

Barclays has unveiled a $745 million deal to buy Expobank, a retail and commercial bank concentrated in Moscow and St Petersburg, saying it planned to rebrand the company over time. Russia has been “hoarding gold”, and together with Qatari demands for the precious metal, has contributed to the 240% rise in its price. Russian billionaire Alisher Usmanov's iron and steel firm Metalloinvest has bought 3-4% of shares in metals giant Norilsk Nickel, which could help it avoid a hostile takeover by Oleg Deripaska’s Rusal. Both companies are preparing rival bids this week. Russian miner and steel maker Mechel is in talks to acquire Oriel Resources, a London-listed miner with chrome assets in Russia and Kazakhstan. Russian investment bank KIT Finance may drop plans for an initial public offering this year and instead opt to sell shares to private investors due to a slump in demand. Finnish company Fortum says it will pay up to €2.7 billion ($4.1 billion) for west Siberian power generator TGK-10, should it gain full ownership of the utility.

TODAY: “Boring” and “stage-managed” elections see landslide for Medvedev. Other Russia to protest today. Russia and China re-evaluating arms trade, UK Prime Minister to offer Russia a “fresh start”. Barroso fears economic Cold War.

The elections were “boring” and “carefully stage-managed by the Kremlin”, with polling stations hosting various spectacles to draw voters - in one, “six young women clad in small white bikinis danced and cavorted for an audience of all ages in front of a Russian flag made out of red, white and blue balloons.” One district in the North Caucasus is reporting 100% voter turnout. The Election Commission measures overall voter turnout at 69.65%. With 99.45% of the votes counted, Dmitry Medvedev had 70.23% of the vote, and Communist leader Gennady Zyuganov had 17.76%. Western election monitors are expected to give the elections a “harsh poll verdict.” The White House has avoided commenting on the result thus far. United Russia won landslide victories in elections for legislative assemblies in 11 regions over the weekend.

I have just spoken by telephone with my good friend and leading Russian human rights advocate Lev Ponomarev, founder of the All-Russia Movement «For human rights» (see my earlier interview and translation).

As you have probably heard, Lev has been having quite a month. Some time back, he began telling the world about the re-emergence of “torture colonies” within the revived Russian GULag. These colonies, many of which seem to be centered in the Republic of Mordovia, have a special regime that involves unconstrained violence against inmates by prison staff and a bizarre and illegal form of violent “policing” by “grass-roots initiative groups” of privileged prisoners known as “Sections of Discipline and Order”. Naturally, all the wielders of truncheons, be they guards or prisoners, are fully confident that they act with total impunity. Prisoners who refuse to “confess” to “crimes” are brought to these camps from isolators in other regions, and within a week or two they’re singing like canaries.

As we have already covered the outcome of Russia's presidential elections a day before they were held, we are dedicating the day to human rights leader, colleague and friend, Lev Ponomarev, whose efforts to raise awareness about torture and abuse within Russia's prison system has garnered extraordinary attention in recent weeks - so much so that the authorities have filed charges against him as punishment for his advocacy.

The following exclusive interview was conducted by the editor of my blog with Ponomarev a few days before the remarkable article by Bret Stephens of the Wall Street Journal was published.

Q: In the past you have commented on the need to separate human rights work from politics – that in Russia there are times in which it is important to maintain this gap in order to achieve progress…

Following the reinstatement of our Lev Ponomarev video posted on YouTube after certain members of the community conspired to have it removed, the Russian press has reacted. The following exclusive translation come from News.ru:

Video confirms human rights advocate’s words about beatings in colony IK-2. They open case against Ponomarev, but fail to remove video from YouTube.

Yet another scandal is blazing in the domestic prison system: video evidence of the barbarities of the OMON in one of the Sverdlovsk colonies have been obtained, and namely “prophylactic beatings” of inmates, supposedly in colony IK-2. Abroad, the video clip, removed from the site YouTube due to “doubts about the context of what is taking place”, has been put back, because there are no longer doubts about its authenticity. But in Russia, a case has been opened against human rights advocate Lev Ponomarev, who has written about torture and into whose hands this video first found its way, while the chief of the Sverdlovsk UFSIN has been fired – although they do insist that it is for something else.

Last night I read a very interesting translation by Lyndon Allin of a censored article originally drafted for publication in Bolshoi Gorod, describing the author's personal disenchantment with his great country's diminishing freedoms in Nizhny Novgorod, and the mental burden of living under a managed democracy. It is a remarkably evocative and well written piece, capturing an oft-ignored side of today's political reality in Russia - the humanist perspective. I'm grateful to Lyndon for continuing to demonstrate how to properly add value to the blogosphere.

Original Source:

An Echo of Moscow
by Roman Gruzov
c. December 3, 2007

The city before the elections

In late November it was cold in [Nizhny Novgorod], and the people handing out United Russia fliers on the streets were bundled up in scarves against the chill. Nizhny covered in snow feels oppressive to a person unused to the Russian provinces. The industrial areas which die out towards the evening and the touching wooden downtown, restored in some places and lop-sided and half-abandoned in others, seemed like some sort of different, unknown, incomprehensible and thus not entirely safe country. There were campaign banners on every corner, so the word “Putin” was always visible from several angles at once.

Constant updates of fresh news on the Russian elections throughout the day over at Siberian Light. Very well done - thanks, Andy!

I'm proud to report that this blog is the very first source to report the results of Russia's 2008 presidential election a full day before the polls even open. The victor of this heated contest: Deputy Prime Minister Dmitri Medvedev, taking home his very first elective position by a landslide.*

Thanks to our international network of informants in regional government administrations, at the electoral authorities, among the media, and within the FSB, we have been fortunate to obtain the results of the election 24 hours ahead of everyone else, including the voters themselves. In our exclusive interviews with some of the bureaucrats responsible for rigging the elections, we were informed that all is proceeding according to plan. "We were worried whether or not we could get enough people to show up at the polls for the cameras in order to fake the vote," one bureaucrat told us, "but thanks to the free haircuts and medical check-ups to draw people in, we were able to pull it off!"

The results: an astonishing 84% of the vote for Medvedev, with Communist Gennady Zyuganov trailing with 10%, and Ultra-Nationalist Vladimir Zhirinovsky coming in last with 4%. There was a remarkably low 2% abstention rate, and the electoral authorities decided at the last minute not to include the liberal Andrei Bogdanov on the ballot. "The orders came from above last night that we no longer needed the legitimacy puppet," our source in the FSB vote monitoring department told us.

While most regional governments were ordered by the Kremlin to secure at least a 68%-70% voter turnout, other regional governments went above an beyond the call of duty: The overachieving regional authorities in Ingushtia and Dagestan were boasting of 112% turnout for Medvedev, while one confused mayor from Sakhalin Island accidentally sent in the actual turnout figures (15%). He was swiftly whisked away to the gulag and replaced by a more energetic young FSB officer - who quickly tabulated an 85% turnout all the way from his office in London.

The media was also busy preparing for the big day tomorrow, and reporters informed us that they just received their approved copy from the government censors, as well as convenient b-roll footage from the Kremlin depicting lines of people waiting for either the soup kitchen or their driver's license. "It isn't clear which bureaucratic incompetence these people are waiting for on the TV reel, but it looks like democracy," said one anchor to our correspondents.

Calls for Medvedev to give his victory speech on the same morning as the polls open have so far gone unanswered.

*If you even have to ask whether or not this is serious, you need to work on your sense of tragic political satire.

Among the dozens of opinion articles and editorials on the Russian elections this weekend, I would say that the Times of London takes home the prize for capturing the story with the best headline: "Putinocracy: Russia has thrived despite its leader, and because of him."

Really no need to read further...

Robert Amsterdam is briefly quoted in the election coverage by Canada's CTV:

Russia's election outcome hardly in doubt

Josh Visser, CTV.ca News

The votes in the Russian presidential election this Sunday have yet to be tallied, but it's a straight-up guarantee that Dmitry Medvedev is the nation's next president.

To many outside Russia, a pre-determined election seems like the antithesis to the wave of democracy that was supposed to flow over the former Soviet Union.

But like Russia itself, the issue at stake is large and diverse, muddled and mysterious and just plain bewildering to the casual observer.

Dan Rather has a new column this weekend expressing his disappointment with the level of debate on Russia policy among U.S. presidential candidates.

He writes: "As for the past, both Clinton and Obama criticized what they perceived as the drift and disarray in U.S. policy toward Russia under President Bush. Certainly, with the Iraq War and the war on terrorism in the foreground, relations with the one-time (and now resurgent) superpower have been on the back burner. But if last Tuesday's exchange about Russia represented a long-overdue re-engagement with Russia policy, it was a less-than-auspicious start for these two candidates, either of whom could soon be in the Oval Office."

Rather's conclusion, like many other opinion articles we shall read this weekend, is rather inconclusive, simply calling for more engagement and smarter statecraft.