June 2008 Archives

I saw this interesting translation of a column by Semen Novoprudskiy (Gazeta.ru) on JRL, which argues that comments made by Vladislav Surkov, the ideological author of such recent Russian innovations as sovereign democracy and the Nashi, show that the Kremlin is increasingly concerned by efforts (among the clans or outsiders or both?) to drive a wedge between Vladimir Putin and Dmitry Medvedev. The level of Surkov's influence is hotly debated among insiders, who were watching his moves before and after the elections.

The Fears of Karabas-Barabas

Commentary by Semen Novoprudskiy

If there is a rifle hanging on the stage, in act three it is sure to be fired (a dictum of the playwright Chekhov). If the country is being run by two people instead of one, they must inevitably be separated. Apparently even the designers of the deformed political system in which you and I exist as mere pawns, cogs, and nuts have begun to recognize the truth of this axiom.

The main Karabas-Barabas (puppeteer; Karabas-Barabas is the evil puppet-master in the story of Buratino, the Russian equivalent of Pinocchio) in Russian politics, First Deputy Chief of Presidential Staff Vladislav Surkov, at a meeting in the Kremlin with part of his puppet troupe -- activists from the pro-Kremlin movement Young Russia and the New People organization -- tried to prove to his puppets that the Putinjugend (Putin Youth; allusion to the Hitlerjugend, Hitler Youth, in Nazi Germany) are necessary to the authorities and will be needed even under President Medvedev. The proof went something like this: "A rather complex phase of political changes is now in store for Russia because of the growth in unfriendly pressure from abroad and the attempts by certain destructive forces within the country to drive a wedge between President Medvedev and Government Chairman Putin."

More information and commentary forthcoming. From Reuters:

New charges against Russia's Khodorkovsky

Russian prosecutors have brought new charges against jailed former oil businessman Mikhail Khodorkovsky, his legal team said on Monday.

The lawyers said they had yet to establish what the new charges were but believed they were a version of money laundering charges prosecutors have been preparing for over a year.

This news clip from Al Jazeera English has some interesting and frankly conspirational interviews regarding the recent EU-Russia summit in Siberia - the type of commentary you'd be unlikely to find on CNN. The tired, old double standards argument gets thrown out left and right. This is not the first time we have seen Russia get a free pass on human rights and authoritarianism simply for the fact that abuses have been committed in places like Iraq and Guantanamo Bay.

Conservative pundit John Laughland appears to reside on an entire other planet in this interview.

The Financial Times has a sizable, multi-part energy report out today, with plenty of interesting material on Russia, Brazil, prices, demand, etc. that we'll be cherry-picking over the next few days. Of immediate interest is an article entitled "State takes big piece of the pie" by Catherine Belton, which reports that Russia may be heading for its first decline in oil output in a decade - not because there aren't plentiful new fields to tap, but because 80% export taxes and aggressive state harassment has discouraged much needed investments:

Oil exports are likely to be further hit as Russia's continued economic boom boosts demand for fuel domestically. Twenty per cent growth by private companies such as Sibneft and Yukos in 2002 has been replaced by industry-average growth of 2.5 per cent since 2005.

The slowdown has matched a state march into the oil sector that has seen direct and indirect control of the sector leap from 28 per cent in 2003 to more than 50 per cent now. (...)

Without a bigger commitment by the government, infighting over the size of the cuts probably means "the situation will get worse before it gets better", says Chris Weafer, chief strategist at Uralsib.

For a vision of the recent past in Russia, read this account of what Yukos did to achieve such high production growth before the Kremlin took on such a dominant role in the energy sector.

Is Gazprom's strategy political? The answer is a predictable "no," at least in the eyes of Alexander Medvedev, the company's deputy chairman. The article (in full after the cut) sets its sights on knocking down the European Commission's efforts to separate gas supply and distribution companies to enhance competition in the energy market, but may in fact be part of a new series of arguments accompanying the appointment of former Prime Minister Viktor Zubkov to the chairmanship of what many are already calling the world's largest company. The selection of Zubkov, as opposed to an official with business experience, is seen as a clear expression that the company will continue to be politically influenced - indeed Zubkov said as much during his appointment speech. On the positive side, at least he answered four questions at a news conference, something that Rosneft's Igor Sechin would never do. Perhaps transparency comes with baby steps.

BP’s chief executive has warned that the era of "cheap energy" is over. The Prime Ministers of Russia and Ukraine met over the weekend and will continue to seek an agreement on what Vladimir Putin described as “excessively politicized” natural-gas prices. Both sides currently appear optimistic, with Putin praising Ukraine for making its gas payments on time this year, although other stories focus on Russia’s negative rhetoric against Ukraine regarding Nato. Today is the last working day of the state energy monopoly Unified Energy Systems. Former Prime Minister Viktor Zubkov has made his debut at Gazprom. Engineering company Power Machines has signed a $171 million contract to supply thermal equipment for a nuclear power plant. Gazprom’s planned skyscraper will have a “green fur coat”. Sibir Energy reported triple full year pre-tax profits and “hailed the imminent resolution of a dispute with Gazprom”. A handful of big new fields due to come on line in Russia in the next few years “will barely make up for rapidly declining production at existing fields in western Siberia.” Rosneft is not interested in buying a stake in rival TNK-BP. Italy’s Saipem and Nord Stream have signed a €1 billion contract for laying the Nord Stream gas pipeline.

The Other Russia is reporting on a new study by Russia’s Federal Anti-Monopoly Service, which says that state corporations and monopolies pose a threat to economic competition. Mobile phone company MegaFon announced profit advances of 51% for the first quarter on increased usage. Amtel-Vredestein has bought Sibur-Russian Tyres, creating one of Europe’s biggest tiremakers. Diamond producer Alrosa plans to sell two oil and gas assets in Western Siberia worth $400-700 million. Record prices for crops have “sparked a surge of investment interest for farmland in Russia and Ukraine” this year.

TODAY: Medvedev “charms” EU officials at summit; United Russia meeting suggests Putin’s influence will continue; traffic arrest highlights corruption; Duma to create DNA database?; bishop dismissed for criticizing the Kremlin.

The first EU-Russia summit with Dmitry Medvedev “was indeed a very good and constructive one”, according to Jose Manuel Barroso. The Russian president’s “charm campaign” reportedly included his bringing gifts for top EU officials. But the summit reportedly uncovered tensions with Estonia and Foreign Minister Sergei Lavrov says Moscow is unlikely to make compromises with the EU over a wood tariffs dispute with Finland.

At a United Russia meeting, Boris Gryzlov said that the party is opposed to gubernatorial elections, preferring the “vertical of power”. Vladimir Putin implied that the party was willing to begin accepting ideas from other parties, emphasizing “dialogue” and saying that “real political leadership doesn't mean being isolated with your own ideas and instantly rejecting those of other people.” Putin suggested that he may hold call-in shows with the populace as part of his work as chief of United Russia, just as he did in his previous role as President. Putin insists that next year’s near-doubling of Russia's minimum wage will not significantly impact inflation. Public sector wages are due to rise 30%, and pensions by 16%.

Today, as expected, Robert Mugabe cruised to a landslide victory in his "one-candidate" poll amid a chorus of international outrage, disgust, and disbelief.

In all the publications I can find defending his victory, I sense a distinct similarity with that particularly high quality of pro-authoritarianism propaganda coming out of the Kremlin - it's as though Mugabe hired Vladislav Surkov, who advised him that focusing on Western examples of double standards is the key to whitewashing to poorly faked democratic process (however Zimbabwe did not have the luxury of bottomless resources to direct toward other forces such as the Nashi).

Read below and see for yourselves. Like all good propaganda, it contains an element of rhetorical coherence: they are right to complain about the West treating Mugabe differently than a leader like Putin.

Nigeria: Zimbabwe's Endless Descent

Vanguard (Lagos)

EDITORIAL - Lagos

AFRICA has the notoriety of bearing some of the worst rulers in the world. Zimbabwe, where Robert Mugabe has been President since 1980, is not exceptional.

At 82, Mugabe is unwilling to leave power. His 28 years have ruined Zimbabwe. These statistics give a hint of the peoples' trauma -- life expectancy is 37 years (men), 34 years (women) according to the World Health Organisation, orphans make up 25 per cent of the population, says UNICEF and it has the worst inflation in the world at 1,281 per cent last month.

Mugabe is typical of African leaders. His only offence is that he is tangling with Western interests over land. Had he been an ordinary dictator, the West would not have cared about elections in the country.

Ah, there's nothing better the beginnings of a catty new fight among Russia academics. A few days ago we had the Andreas Umland smackdown of Eric Kraus, and today, Juliet Johnson of McGill University in Canada takes a few light potshots at Marshall Goldman's bloated ego in a review of his book Petrostate. [I'll eventually do my own review of Petrostate, most likely during a summer vacation.]

Getting carried away with his own prose, he asserts, "President Vladimir Putin, with his control of Gazprom [the state gas monopoly] as well as another state-owned petroleum company, Rosneft, had become a real-life Dr. No - an archetypal James Bond villain, complete with a yacht and retinue." One pictures Goldman's Putin giggling evilly and stroking a cat, à la Bond's Cold War-era nemesis Blofeld. (...)

In another slightly overwrought moment, Goldman writes, "With its natural gas and oil pipelines that tie Europe to Russia like an umbilical cord, Russia has unchecked powers and influence that in a real sense exceed the military power and influence it had in the Cold War." While East Europeans may beg to differ, the oft-made point that Russia has re-emerged on the international stage as a force to be reckoned with is well taken.

The Financial Times has an editorial today about the EU-Russia Summit held at the end of this week in Siberia, commenting that if they can begin to "treat each other with the respect they deserve," then they can finally get over the years of zero progress and establish a framework for closer political and economic competition.

I suppose this argument assumes that Europe doesn't treat Russia with respect. Since when? If anything we've seen an extremely obsequious and placating attitude in various European capitals for the Russians, rolling out the red carpet and doing our best to turn a blind eye to authoritarian abuses, when in fact the last election looked a lot more like Zimbabwe's "one candidate poll." There's a major disconnect in Europe's perception of the Russian reality, and, in many ways, our dishonesty about what's happened there in recent years in fact creates an enabling influence to worsen conditions and entrench the Kremlin in these current positions holding back the next EU-Russia partnership agreement. I agree with the editorial's optimism though - I hope that the cards fall in the right way as a result of the clan infighting, providing liberal factions within the government an opportunity to purge the hawks. We'll see.

LEADER: Hope for a thaw from Siberia

A short trip to Siberia is not usually regarded as likely to inspire good sense, even in summertime. If the temperature is not freezing, then it is plagued by ferocious mosquitoes. But there is a chance that the latest summit between leaders of Russia and the European Union, held in a booming west Siberian oil town, could prove the exception. If it marks the moment when Moscow and Brussels start to treat each other with the respect they deserve, it will have been worth it.

Jim Hoagland of the Washington Post has a column today addressing Dmitry Medvedev's foreign policy ambitions, and Russia's attempt to create a "new world order" by fundamentally changing the postwar global security architecture.

For a variety of reasons, Putin is likely to come up as short in reshaping the world as Bush did -- if the next U.S. administration is smart about handling the challenges Russia intends to mount to America's lessening but still dominant role in European security and in international financial institutions.

In Berlin, Medvedev provided few details of Russian intentions. But Foreign Minister Sergei Lavrov, in a June 20 speech and a follow-up conversation I had with him here, outlined an ambitious agenda of change in a new era of "multipolar cooperation . . . and collective leadership" in international affairs.

A "new world order" cannot be based on "an Anglo-Saxon pattern that some have tried to establish for the rest of the world," Lavrov said. It would involve doing away with "the Cold War architecture for the security of Europe."

Today the Financial Times has some good articles on Gazprom, and below the cut is the full transcript of the paper's interview with CEO Alexei Miller. He sticks to his guns on $250 oil, the futility of OPEC, and other scary sounding ideas to divert gas away from Europe unless they shape up.

In other words, more of the same.

Today the terrific blog Global Voices links to a useful map explaining the Russia-Georgia disputes over Abkhazia.

From The Reference Frame:

Look at the map. Start with the yellow disk, a global perspective. We are discussing the piece of land (blue rectangle) in between the Black Sea and the Caspian Sea. There are Caucasus Mountains over there as well as many cacophonic pairs of nations. The region is as dangerous for the peace as the Balkans on the opposite side of the Black Sea. Note that Iran would have made it to the picture, too. Moreover, there is also Armenia & Azerbaijan as well as Chechnya on the East side of North Ossetia (inside Russia). ;-)

Garry Kasparov, tireless as ever, fires another missive slamming the Kremlin for soft censorship and repression of the press, citing the willingness of Western media to help paint a positively innocent picture of today's Russia. Like many of Garry's recent articles, it would be tough to tell when exactly this could have been written - but perhaps that's due to the unchanging nature of Russia's political stasis.

How Putin Muzzled Russia's Press

By Garry Kasparov

"How come I am still alive? When I really think about it, it's a miracle." Several years back so spoke Anna Politkovskaya, the late Russian investigative journalist who for years fearlessly explored the depths of war-ravaged Chechnya.

She is now the subject of the documentary "Letter to Anna" by Swiss director Eric Bergkraut. The film premiered in the U.S. last night at the Human Rights Watch Film Festival in New York. Politkovskaya reported conversations with families ripped apart by war. She was also the voice of Russian soldiers who were ashamed of the atrocities committed in their country's name. Her work made her the enemy of many powerful people, and on Oct. 7, 2006, the 48-year-old was gunned down in the foyer of her apartment building.

In May, Dmitry Medvedev took Vladimir Putin's chair, if not his power. At the World Russian Press Congress in Moscow on June 11, Mr. Medvedev pledged to "support media freedom." But the picture remains bleak.

The Moscow Times reports that Javier Solana's late arrival to Russia for the summit cost him dearly, as the state-run media had the obligation to cover Medvedev's simultaneous arrival:

But with Solana's late arrival, his plane landed at about the same time as President Dmitry Medvedev's -- leaving just one photographer and one cameraman from the gaggle of Russian and foreign journalists waiting to greet him.

"What a disgrace. He probably won't forgive Russia for that," quipped a cameraman for a Finnish television channel.

Another journalist said: "Don't arrive at the same time as the Russian president!"

The video below contains no narration, but has plenty of interesting footage of Medvedev, Solana, and Barroso chatting and posing for photos.

In a move that is unlikely to ease UK-Russia tensions, Scotland Yard has reopened its investigation of the 1978 murder of Bulgarian émigré Georgi Markov, who was famously assassinated via a poison pellet believed to have been delivered by a spy's umbrella while walking across Waterloo Bridge in London.

The Economist has a good story comparing the level of cooperation of the Bulgarian government with that of the Kremlin following the Litvinenko murder: "Bulgaria’s co-operation contrasts sharply with Russia’s intransigence over the murder of Alexander Litvinenko, a British citizen and vociferous critic of the Kremlin, who was poisoned in London in November 2006 by a rare radioactive element, polonium. British officials are convinced that Russia’s security service, the FSB, was involved in the murder. The prime suspect, Andrei Lugovoi, is now a celebrated Russian parliamentarian. (...)

Whether or not the Soviet KGB ordered Markov’s murder, their close Bulgarian allies would certainly have shared details of such a risky operation. Bulgaria asked Russia to declassify its Markov files in 1991 but did not pursue it. If the new man in the Kremlin, Dmitry Medvedev, truly wants to thaw his country’s icy relations with Britain, he could do worse than pass on whatever the closely-guarded archives of the old KGB contain on the Markov murder."

If upheld by a court, AAR’s new accusation that a recently elected TNK-BP board is “illegal” could cripple BP's ability to manage its Russian assets and refineries. Stan Polovets says that the last straw before the current row was a dispute over an oil project in Iraq. OGK-1, majority owned by Unified Energy System, has created a joint venture with TNK-BP, which UES chief Anatoly Chubais hailed as "a sign of a positive future" for the embattled oil firm. In an interview with the FT, Gazprom chief Alexei Miller says OPEC has, effectively, “lost control of the market” and has no control over prices. He also reiterated his widely-criticized opinion that oil prices will rise “dramatically”, and said that state energy firms are poised to dominate the global fight for new resources. Gazprom plans to invest $3 billion a year exploring for gas at Russian deposits between 2008 and 2010, and is proposing opening a chain of filling stations using natural gas as an alternative car fuel across Europe.

Moscow's arbitration court upheld a $10 million tax claim against German airline Lufthansa’s Russian operator, despite its attempt to appeal. The Bank of Cyprus has clinched a deal to buy 80% of Russian bank Uniastrum for $576 million. The net worth of Oleg Deripaska’s Basic Element almost doubled last year.

TODAY: EU-Russia summit begins amid row over wood tariffs with Finland; Russia’s “image problem”; Georgia suggests splitting Abkhazia; Kremlin funding pro-government movies?

First reports from the EU-Russia summit say Dmitry Medvedev is “striking a softer pose” than predecessor Vladimir Putin, although the summit is already seen as being “overshadowed” by energy disputes and a wood trade dispute with Finland over “crippling” tariffs. A group of UK politicians have written an open letter criticizing Russia’s “bilateral hostility towards the UK”.

The Moscow Times today writes on Russia’s image problem, quoting an analyst at a Kremlin-backed think tank: “Whatever Russia is doing is reported in a stereotypical way.”

I think Sen. John McCain's (or perhaps more accurately, resurgent neocon Robert Kagan's) proposal for a "league of democracies" is both unrealistic and very interesting. It's unrealistic in that I don't really believe that the campaign is serious about this proposal in its pure form - anyone who has as much experience as McCain in the U.S. Senate has a deeper, more complex understanding of diplomacy and the importance of the United Nations in the international system - despite the frustrations and flaws of authoritarian vetoes. Countries as large and economically important as Russia and China tend not to like it when they aren't invited to dinner - after all, what good are nuclear weapons if not to serve as golden tickets to negotiating table? I do appreciate the fact that the creation of a group of democracies would put pressures on authoritarian states to carry out reforms and at least imitate some minimal democratic practices ... but ultimately, such changes are only successful when carried out by the will of the sovereign people. I believe there are better, more constructive ways to achieve these changes.

What could conceivably happen is that a "community of democracies" voting block could appear within the U.N., but that's far different from the marginalization of China and Russia as foreseen in McCain's bold words.

But I do commend McCain and Kagan for at least opening up discussion on the growing cooperation between authoritarian governments and their coordinated activities within international institutions, often with the aim of subverting grassroots liberty movements within their own countries and in neighboring territories. For the moment, the League of Democracies seems as fictional to me as the Justice League, however as soon as the conversation begins about why we might need such an exclusionary body, already we are making progress in confronting some ugly truths that have long laid unsaid and diplomatically buried.

Anyways, the whole reason for this rant is a column by Robert Skidelsky, a member of the British House of Lords, who argues that "I am all for spreading Western-style democracy, but not at the cost of making the world more warlike. Peaceful coexistence between different political systems is an attainable objective, and one to which all the world's major powers can sign up."

There is plenty I disagree with in this Skidelsky piece - and those who read this blog often enough should be able to spot what I am talking about.

...at least for a while. As I am posting this video, the final minutes are ticking away in the Euro 2008 semi-final match between Russia and Spain, which looked much more like a replay of the stinging defeat suffered by Guus Hiddink's squad two weeks ago. Up until tonight, however, Russia was basking in a long series of victories, from Zenit St. Petersburg to Eurovision up to the defeat of the formidable Dutch team in the quarterfinals. I was also pulling for the Russians, and share that devastating feeling of disappointment. Nevertheless, the semi-finals of the Euro Cup is nothing to sneeze at.

However, an important notice to Spain: We could be predicting a very cold winter in Madrid, especially if Gazprom seeks revenge for this defeat by cutting off the flow of oil and gas to the Iberian peninsula - Mazeikiu Nafta style...

We've been waiting for more news to come out following the the blockbuster accusation from the Alfa-Access-Renova consortium that BP was conspiring with the Russian government to force them out of their stake in TNK-BP - the core issue of the contentious shareholder dispute. Other than the expected denial by BP of a Kremlin link and some news about an Iraq deal, the best response comes from Yulia Latynina at the Moscow Times:

When BP first entered Russia in the '90s, it used the powerful Alfa Group to gain a foothold in the country. Now the situation has changed, with state-owned oil companies calling the shots. Shortly after the joint venture's moratorium on the sale of shares by either side expired on Jan. 1, BP started talks with Gazprom on a number of joint projects.

An AAR buyout with Gazprom's participation would create a new, profitable configuration for BP in which the state would effectively force AAR's private shareholders out of the oil and gas business using BP's money. In return, BP would gain the right to represent Gazprom in foreign markets. Put more simply, Gazprom would replace Alfa as BP's new partner.

BP would have beaten AAR to the punch if it had struck a deal with the state to use government resources to trade one Russian partner for another. But AAR shareholders are getting the last laugh by showing that they are more skillful than BP at the quintessential Russian game of "knock your partner's teeth out with the government's help."

Back in May Andreas Umland published an article entitled "Gorbachev Number Two: Dmitry Medvedev," which put forward a rare argument for the potential future of Russia's new president playing a Gorbachev-like role as a reformer. He writes: "Gorbachev´s experiences as a young man, his political rhetoric before becoming the Soviet Union´s leader, and his democratic reforms once he felt secure enough to launch them correspond with each other. A similar fit between rhetoric and action is to be expected in Medvedev´s further rise should the office of the President of the RF retain, at least, a part of its current prerogatives. (...) Nevertheless, sooner or later it is to be expected that Medvedev´s deeper political beliefs – his apparently liberal and democratic views – will come to the fore."

This argument of Medvedev-as-reformer was jumped on by Vladimir Frolov, who used it as a starting point of debate for one of his peanut galleries of pundits he frequently moderates over at Russia Profile.

Much more interesting is Umland's long-awaited qualifying retort to the various opinions voiced in the debate - containing no shortage of "fightin' words." Why bother with punditry if you're not going to predict, he asks. Umland reserves the biggest burn in the piece for Eric Kraus and his limp defense of authoritarianism, but just about everybody gets a slap in this polemic.

This is about as close as we get to a "smackdown" in the, ahem, civilized English-language debate on Russia, so take advantage...

The following is a translation from Russian of an Interfax article about Mikhail Khodorkovsky's 45th birthday today.

Chitan supporters of Khodorkovsky prepare to congratulate him with 45 years

Chita. 25 June. INTERFAX-SIBIERA

Supporters of ex-head of NK "YUKOS" Mikhail Khodorkovsky will celebrate on 26 June in Chita the day of his birth. As deputy head of the public committee for support of M.Khodorkovsky Marina Savateyeva reported to the agency "Interfax-Siberia", a picket in support of Mikhail Khodorkovsky and Platon Lebedev will take place closer to the evening on Revolution Square.

In her words, the organizers have purchased 200 greeting cards for M.Khodorkovsky. "Anyone who wishes will be able to congratulate Mikhail Khodorkovsky on his birthday. A part of the cards are already signed by representatives of the public committee", she said.

The organizers of the picket intend to pass all the congratulations on to M.Khodorkovsky.

This one comes from the Associated Press - more info available at the mbktrial.com website.

Lawyer says Khodorkovsky may appeal for early release after presidential change in Russia

The Associated Press

MOSCOW: A lawyer for the jailed founder of the Yukos oil company said Thursday he he has advised his client to appeal for early release from his Siberian prison now that Vladimir Putin is no longer Russia's president.

Yuri Schmidt said on Ekho Moskvy radio Thursday that tycoon Mikhail Khodorkovsky, who turned 45 Thursday, hasn't made up his mind on the issue yet.

It's an exciting day for Russian sports fans as the national selection takes on Spain for the semi-final of the Euro Cup. The historic achievements of the squad, led by famous Dutch coach Guus Hiddink, have riveted the public, and certainly has not gone unnoticed by the Kremlin. We've blogged in the past about the state's overlap with various sporting events for political purposes, and today the New Republic has an interesting article about how Russian politicians are doing everything possible to ride on the coattails of the team's popularity - it's sports nationalism at its best, Putin-style.

There's much to be said for healthy sports nationalism, and it's certainly not unheard of, particularly in Russia, to use sport as a means for promoting love of country. But Russian politicians are now doing it so overtly that the team seems irretrievably infused with the animating spirit of Putinism--one part inferiority complex, two parts rising superpower. Said then-prime minister Viktor Zubkov before Russia's critical October qualification match against England: "They have 11 players, and we have 11 players. They have two arms and two hands and one head each, and we have the same. But do you know what the most important thing is? We, Russians, won World War II. And we were the first in space." After Russia came from behind to win, pro-Putin parliamentarian Alexander Babakov exulted, "This victory will only boost Russia's rebirth."

One Russian report says Russian shareholders will attend an annual general meeting of TNK-BP today, despite speculation that they could boycott the meeting, or that the venture’s Russian directors would be pulled. Viktor Vekselberg says the venture’s Russian partners won’t sell their 50% stake because they expect that high oil prices and lower taxes will boost returns. Dmitry Medvedev has rejected suggestions that Gazprom had considered investing in TNK-BP, contradicting claims by Stan Polovets that BP views Gazprom as a preferable partner. An overview of "Robert Dudley and the oligarchs". Gazprom is reportedly looking into building a gas pipeline to Georgia's breakaway Abkhazia region. The company will cut its stake in Gazprombank, once its main banking arm, to 25% from 42%. The chief of Rosatom says Russia is prepared to welcome foreign investors into its civilian nuclear power sector.

Severstal entered a merger agreement with US producer Esmark after boosting its takeover offer by 13% to $775 million. Russia's iron reserves, the largest in Europe, promise “a long future for iron mining”. Rosoboronexport’s military-technical cooperation with European companies has reached $120 million a year. “The quantity of agricultural land in Russia is shrinking: 23 million hectares of arable land have been abandoned since the end of communism.” Finance Minister Alexei Kudrin says a tax cut favored by cabinet rivals could hurt Russia's ability to fund its nuclear deterrent. “Such a reduction of the VAT is an absolutely destructive decision,” he said. “Might [Russia] not use sovereign wealth, and especially giant state industries, to acquire political leverage?” Nitrogen fertiliser producer Acron is reportedly about to announce its intention to float on the London Stock Exchange. Food retailer X5 Retail Group has signed a $940 million deal to acquire Karusel hypermarket chain. Real estate empire AFI Development is looking to benefit from the credit crunch. First Deputy Prime Minister Igor Shuvalov says investment in transportation infrastructure for Moscow would require $212 billion, more than double the planned government spending for the project.

TODAY: Merkel says Germany is concerned over Abkhazia; Kremlin won’t budge on frozen conflicts; EU-Russia summit begins today; Khodorkovsky’s birthday to be marked by protests; anti-corruption plans submitted to Medvedev; Human Rights Watch focus on Ingushetia.

German Chancellor Angela Merkel says Germany shares Georgia's concerns about Russian actions in the breakaway region of Abkhazia. The EU’s External Relations Commissioner Benita Ferrero-Waldner says Russia should play a more constructive role in resolving Georgia's frozen conflicts “to ensure a stable environment for the 2014 Sochi Winter Olympics,” but the Kremlin says it won’t compromise. Dmitry Medvedev is departing for the EU-Russia summit today, to be held in Russia’s Khanty-Mansiysk region which contains 7.5% of the world's oil reserves.

Officials from the European Union are gathering over the next two days with their Russian counterparts in Khanty-Mansiysk, Siberia, holding a series of "framework discussions" to prepare for the beginning of negotiations on a partnership agreement on July 4th. Representatives were planning to run the gamut of issues, discussing everything from political cooperation and economic integration to more difficult issues, such as energy security and the Georgia issue.

However the goal of having a new EU-Russia Partnership in place by July 2009 is already looking unlikely, and the Europeans have no one to blame but themselves for the all the disorder within their own house following the failure of the Lisbon Treaty. This time we are talking about more than just veto grandstanding from Poland over banned meats, or Lithuania's small state diplomacy preventing successful negotiation. Instead we're looking at deeply fragmented Europe suffering a crisis of identity and purpose.

In the recent past, the Kremlin has feasted upon these divisions in Europe to advance their energy interests and leverage political influence among key states. But this time it might be Moscow who is hoping that the EU can get its act together and make progress on the accord.

Remember back when BP Chairman Peter Sutherland spoke with remarkable candor about the assault on TNK-BP? Back when he dismissed Alexei Miller's $250 oil prediction as an "apocalyptic" joke and then "insulted" the Russian government? It appears that when you are in the twilight of your chairmanship, you are allowed to say whatever you want - and it seems in recent weeks that Sutherland has grown tired of all the fawning compliments of Vladimir Putin and the Russian market he had uttered over the years. Now with the scheduled departure of Sutherland next March, the FT has a new job advertisement:

BP needs a chairman

Situation (still) vacant: Two or three days a week. Salary half a million quid a year. Must be willing to travel. Knighthood optional. Background in natural resources helpful. Experience of sticky situations in, say, Moscow a distinct advantage.

TNK-BP is all over the news once again today, but no story is more surprising (if not unbelievable) than a scoop picked up by the Wall Street Journal, which quotes representatives from AAR (Fridman, Vekselberg, and Blavatnik) accusing BP of conspiring along with the Russian government to force the sale of their stake. Stan Polovets, chief executive of the Alfa-Access-Renova consortium, said that BP would be "more comfortable having a state company as a partner."

That's an interesting theory... If BP was in cahoots with the siloviki to divest the poor billionaires of their property, it's odd that it was the British company, not AAR, which faced the extraordinary bureaucratic harassment, office raids, arrests, and visa denials. However, if AAR is telling the truth, then it would also make sense that the office raids against BP sought Gazprom-related documents, and how Igor Sechin has made himself a player in the dispute. This is getting really, really messy, and I'd hate to be the one to fill that job announcement...

Russia's best finance mind Alexei Kudrin is trying out a new argument in his opposition to slash value-added tax from 18% to 12%, notably pointing out that it could hurt the country's nuclear parity with the United States:

Kudrin said the cut in VAT, which accounts for about one- third of budget revenues, will require a reduction of expenditure, including on national defence and security, which currently stands at one third of budget spending.

"Russia is the only country in the world, which has a nuclear parity status with the U.S.," Kudrin told a tax conference. "The nuclear war cannot start as long as there is nuclear parity... Russia's mission is to carry this burden." (...)

Kudrin and his supporters argue the economy, currently growing at a rate of 8.4 percent, is overheated and may be heading for a hard landing as inflation is running at 15 percent. His opponents say Russia needs to cut taxes to achieve higher growth rates.

I think this is Russia's version of how Washington plays the terrorism card with regard to spending - however the smart money is on Kudrin being right on inflation.

Usually when we hear the term "Dirty War," we immediately think of dictatorial Argentina in the late 1970s and early 1980s, when the military junta dispatched its opponents with extreme prejudice, widespread fear and violence, and unimaginable cruelty (torture interrogations and dropping prisoners out of airplanes over the ocean were just a few methods). In short, it features among the very worst human rights cases in contemporary Latin American history.

Whether it is appropriate or not, Human Rights Watch has just produced a new report on the Russian government's policy in Ingushetia, which uses the term "dirty war" to describe the state's tactics in fighting the insurgency.

Russia's flag-planting stunt on the seabed of the Arctic Ocean appears to have only been the beginning. A rather shocking quote from Lt. Gen. Vladimir Shamanov, who oversees Russia's military training:

"After several countries contested Russia's rights for the resource-rich continental shelf in the Arctic, we have immediately started the revision of our combat training programs for military units that may be deployed in the Arctic in case of a potential conflict. (...) [modern] wars these days are won and lost well before they are launched."

So much for the UN Convention on the Law of the Sea - Russia appears to be going back to its earlier hostile tone on its territorial claim, which Sergei Lavrov had agreed to soften back in May. CanWest reports that Shamanov has announced that Russia will extend the "operational radius" of its northern submarine fleet, a move which has experts quite worried. Surprisingly, there is still a dispute over whether or not to take Russia's arctic games seriously. We would argue that yes, Moscow is not just working on symbolism here.

Two more videos after the cut.

The director for energy at UK Trade and Investment spoke about the potentially promising nature of energy cooperation with Russia, but avoided mentioning TNK-BP. Mikhail Fridman says TNK-BP's Russian co-owners will not sell out for at least two years and will put more pressure on BP to boost performance. Yulia Latynina says that the venture’s AAR shareholders “are getting the last laugh”. Dmitry Medvedev has commented on the TNK-BP row, saying, "I can only call illegal attempts to use the state to resolve internal corporate disputes. Neither the Russian partners nor the British partners should resort to such policies." Meanwhile AAR have again threatened legal action. Gazprom will consider inviting South Korean and Japanese partners to process gas in Russia’s Far East.

Leaders of the Russian Union of Industrialists and Entrepreneurs have complained about the Kremlin's lack of interest in establishing a real dialog with business. "Big private companies are only emerging, while the state-run firms, which enjoy 100 percent support from government bodies, don't play by the market rules," commented one. EU officials are said to be upset that Russia is barring chicken and pork imports from 70 European companies. Russia's federal anti-monopoly body has still not ruled out the possibility that charges of price collusion could be brought against Russia's major aviation fuel suppliers. Speaking at a meeting with VTB, Dmitry Medvedev said that, “in a period of global financial instability, we need to press ahead with the strategic objective of making the ruble one of the regional [reserve] currencies.” At a speech outlining Russia's 2009-2011 budget, Medvedev emphasized the need to cut inflation and reform pensions, healthcare and education without excessive budget spending.

TODAY: Medvedev interviewed by Reuters; Moscow court fines businessman over blog entry; Chavez thanks Putin; new report focuses on Russia’s “passion investments”.

In an interview with Reuters, reportedly his first with the Western media since taking power in May, President Dmitry Medvedev said that poverty and corruption are the biggest threats to security, and that Russia wants to reduce the state's role in the economy and curb government spending to combat rising inflation. Reuters has posted clips and excerpts from the interview.

The Other Russia is concerned that a Moscow court has “set a precedent” by finding a wealthy Russian businessman guilty of defamation in a blog entry and fining him roughly $1200. The Moscow Times writes on what to expect from next week’s EU-Russia summit, with the EU reportedly seeking a better relationship with the country under Medvedev. One UK journalist says the summit “presents a window of opportunity because, well, Putin won't be there.”

We used to seeing advocates of many different stripes mounting vigorous defenses of Gazprom's activities in Europe - even their partners in E.ON and EdF have joined in to bash the European Commission's unbundling proposal for its Gazprom clause. The pitch isn't hard to master: Gazprom, a "reliable" company which always meets its contract obligations, is the victim of unfair political discrimination in Europe, and is not allowed the reciprocity it deserves.

What I couldn't have predicted is that the next proponent of this victim narrative would be none other than Anatoly Chubais, the maverick liberal with uncanny political survival skills, most recently surviving a direct confrontation with Igor Sechin over the privatization of UES (not many can say that). Neil Buckley has a terrifically fascinating report on comments made by Chubais about Gazprom in tomorrow's FT, and I am left wondering who Anatoly owes a favor to... Never try to predict what this guy is going to do.

Nevertheless, the argument still has the same gigantic holes in it. Gazprom does not function like a normal company, reciprocity is a vastly misunderstood topic, and, as many officials at the European Commission have pointed out, Gazprom should consider itself lucky to be given the same treatment as a respected global titan like Microsoft. Unlike in Russia, regulatory activities in Europe aren't just instruments of intimidation.

Russian hits at EU fear of Gazprom

By Neil Buckley in Moscow

One of Russia’s leading liberal reformers has accused the European Union of trying to limit access to its natural gas market for Gazprom for political reasons, motivated by misguided fears about the Russian gas giant.

There's a very interesting op/ed in the Wall Street Journal today entitled "Genghis Putin" by Michael Auslin of AEI, focusing on the raft of business deals the Russian government is stapling down in Mongolia. Auslin's concern is that a stronger presence from Russia could do much to undermine the country's scrappy and stable democratic system.

Auslin argues "If the next American president ignores Moscow's inroads, democratic development in Asia will come under threat and the United States may soon be faced with a strategic challenge in one of the world's most resource-rich regions. (...) If Russia succeeds in blackmailing Mongolia into economic subservience, then it can try to extend this tactic to other Central Asian nations."

Strong stuff. Check it out after the cut.

The international human rights NGO Freedom House makes no attempt to hide the fact that about 80% of the funding comes from the U.S. government (as stated in each of their annual reports), something that causes many foreign governments to recoil in disgust and react with vituperative rants to any critical report the group may produce. Some say that this association with Washington affects their research choices, but does that necessarily mean that what they publish isn't true? Out there in the irascible blogosphere on Russia, Freedom House is most frequently a protagonist in the double standards narrative of human rights apologists.

Having met many senior officers and researchers from Freedom House, I have always held their professionalism and fairness in high regard, and thoroughly believe that they publish very good work and are not as tied to the presidential administration as you might suspect. Yet when I read over the country report on Russia in their latest Nations in Transition 2008 report (written by Robert W. Orttung of the Jefferson Institute), I must admit that I found parts of it spotty with unfair or unbalanced opinion.

Konstantin Sonin, who also has written some great material on resource nationalism, has a column in the Moscow Times making the case for Russia to reinstate the direct election of regional governors (after Beslan, Putin issued an authoritarian decree allowing the Kremlin to appoint these leaders directly).

Direct elections of governors would not create serious problems for the Kremlin. First, many Russians have raised their living standards not so much by the fruit of their labors, but by the luck of nature since so much of the country's wealth is from natural resources. A country dependent on natural-resource wealth needs a powerful federal center to administer and control these resources in addition to carrying out its usual government functions.

Second, with the Kremlin playing such a prominent role in the economy, there is practically no threat of governors promoting regional protectionism the way they did a decade ago. The integration of the country's economy is happening for the same reasons so many nations are moving toward globalization.

Third, the country's diverse ethnic and geographic makeup further supports the case for instituting direct elections. Of course, some ethnic regions or republics might require more control from the center than others.

Accounting group PricewaterhouseCoopers won a small decision in the Russian courts yesterday which will allow them appeal the egregious back tax ruling which they face as a result of having been involved with Yukos, "a case that several foreign courts have ruled was a politically motivated attack on its billionaire owner, Mikhail Khodorkovsky." With their operating license for Russia on the line, executives are desperately hoping to stand before a fair court in the appeals process.

Many believed that PWC withdrew their Yukos audits while under pressure from the Kremlin that the legal problems would end, but this hasn't been the case.

OPEC president Chakib Khelil has warned that oil prices “will not come down”. Lukoil will spend €1.35 billion euros ($2.1 billion) on a joint venture with Italy’s ERG that is expected to expand sales in Europe. Eni has made a new on-shore gas discovery in Pakistan. Mikhail Fridman, the Russian chairman of TNK-BP, has called on the firm's chief executive, Robert Dudley, to step down, saying that his only concern is for the interests of BP. The Moscow labor inspectorate has fined Dudley $126 for "technical" labor infractions, and threatened to strip him of his job. The Nabucco project “has long been hailed as a remedy to Europe’s growing dependency on Russian gas exports”, but Gazprom is a 50% stakeholder in the Baumgarten-based gas hub that Nabucco is supposed to feed. Gazprom’s head says an OPEC-style gas charter is not feasible. The company recently announced that it had discussed the possibility of selling gas to Israel. State-run Russian Railways has won an auction for the government's stake in TGK-14.

The Russian unit of PricewaterhouseCoopers has won the right to appeal a ruling that it illegally helped former oil company Yukos evade taxes. Oleg Deripaska is “clashing” with Czech Peter Kellner over insurer Ingosstrakh. A subsidiary of the Alor group is to be the first Russian investment company to enter the Spanish market. It is expected that $10 million worth of deals between Canadian and Russian agribusiness will be signed this week.

TODAY: Amendments to pretrial detention could see prisoners released; “financial attacks” on successful companies; pastor’s sentence suspended; EU summit this week to focus on Georgia; Russian army to be cut to 1 million by 2013.

Vedomosti has reported on new amendments to pretrial detention put forward by the chairman of the legislative committee that, if approved, could see Mikhail Khodorkovsky freed within a year. The amendments would count pretrial detention as part of a prisoner’s sentence, and could see the release of 50,000 prisoners. An article from the UK’s Guardian newspaper looks at the “financial attacks” made on successful companies in Russia. Yabloko’s new leadership could make it “more open to the idea of uniting all the liberal democratic forces into one potent force capable of capturing the 10% to 15% of voters who share their values.” The Moscow City Court has suspended the sentence of Phillip Miles, the US pastor convicted of smuggling rifle ammunition into the country.

Many of you have likely already had the opportunity to read Yulia Latynina's powerful article from Sunday's Washington Post, but I am going to repost below to make sure it is always in this blog's archives.

Back when I was regularly living and working in Moscow during the heights of the first Khodorkovsky trial, I had the honor of meeting with Latynina and sharing some very serious conversations. I know this woman to be a irrepressibly brave and reliable source, and while the tales she shares here may sound shocking if not outright surreal, this is the truth and reality of what is happening to many as the country free-falls into lawlessness and the impunity of privilege. The non-functioning status of law, police, and the courts in Russia is such that it breaks the mold of what many governments would be willing to accept, reminding us once again of the dangers of presuming regularity. Latynina, with this article, is politely asking that we wake up.

Doublespeak is not a uniquely Russian characteristic, but when they do it, it is pulled off with artistry and aplomb. Emblematic of the country's icon of the double-headed eagle, everyone from a citizen to a tourist to an investor is bound to have the experience at one point of being told one thing by the government, and then seeing the exact opposite happen.

The energy market is of course not immune to the trend. Today, reports are picking up on an interview published in Itogi magazine with Gazprom CEO Alexei Miller, in which he denies any interest in having Russia join a potential natural gas cartel: "If one day there's talk of creating a gas OPEC, these lessons should be taken into account... Right now it's not even worth talking about it."

Miller seems to strongly contrast with his boss, Vladimir Putin, who following some very chummy meetings with Iran's Ayatollah in April of 2007, said "Who told you that we turned down an offer to create a cartel? Quite the opposite, in fact. I said that it was an interesting suggestion!"

Given that even the resource speculators are hoping for a gas cartel to boost their returns, and that Miller isn't exactly the bastion of credibility after his $250 oil remark, one would be inclined to interpret the exact opposite from this statement; that Gazprom and the Kremlin are indeed working on building a gas version of OPEC. But that's almost beside the point - it's the instability of these mixed messages that creates the benefits.

As the long-awaited natural gas price liberalization slowly begins to take hold in Russia, numerous funds and investors are eagerly waiting to throw money into production - and not necessarily just at Gazprom (new independent producers are looking to breakthrough the red tape). An interesting article in the FT takes a look at the tough sell of the future Russian gas market, where we can see that there is practically no event which can make energy investors averse to risk:

This backdrop creates the perfect milieu for Pharos Financial Group’s Pharos Gas Investment Fund, which touts itself as the only equity vehicle focused on Russia and its neighbours. Fuelled by rising prices and subsequent mounting corporate profits, this long-biased fund gained 38 per cent in 12 months to May 31, 2008. Its impressive performance stands out, especially when indices tracking hedge funds are mostly flat to slightly higher for the year.

Yet the Pharos gas fund is not the hottest ticket in town. Getting prospective investors on board had so far been a tough sell for Peter Halloran, the chief executive of Moscow-based Pharos, which has total assets of $150m.

Dmitry Sidorov, the Washington D.C. Bureau Chief of Kommersant, has a new article in FrontPage Magazine which perpetuates the myth as Putin-as-all-powerful-czar, a depiction that Bob has frequently disagreed with. Rather than the "czar narrative," which we see as the frequent default in the media on Russia, we see Putin as sitting atop a rapidly shifting political scene characterized by bitter clan infighting - not a king, but a prisoner of circumstance, barely keeping his head above water. Disobedience is rife, and influence is very fragmented. The very fact that they have gone through with the election of Medvedev is not consistent with the czar narrative.

Nevertheless, Sidorov offers some interesting stories about how this perception and fear has enabled some strange behavior from Kremlin sycophants, including all manner of "stop lists" and other pandering. His opinions on the motives behind the persecution of Mikhail Khodorkovsky are also worth considering.

The impact of Vladimir Putin’s rules of the game on business has been much graver. In the best-known case, Mikhail Khodorkovsky, the former owner of the oil company YUKOS, is now serving 10-year prison term in the God-forsaken city of Chita in the Russian Far East.

There is still disagreement in the West and in Russia about why Mr. Putin and his comrades went after Mr. Khodorkovsky.

There's a new essay in Foreign Affairs on the Beijing Olympics, which although were sought after by government officials to bring international prestige to China, and celebrate her recent economic achievements. One bureaucrat told the authors that "Winning the host rights means winning the respect, trust, and favor of the world."

That might not be the case anymore, as the Olympic torch tour quickly unraveled into a public relations nightmare of criticism of human rights and authoritarian abuses. There are certain passages of this article (but certainly not all) in which the words "Russia," "Sochi," and "Putin" could be easily and logically substituted, especially the mention of "uncreative responses" to critics as underscoring "a certain political myopia." Will the Sochi Winter Games games prove to be as controversial as Beijing 2008? Well, at least Moscow has a lot more time to get ready...

Although the Chinese government excels when it comes to infrastructure projects, its record is poor when it comes to transparency, official accountability, and the rule of law. It has responded clumsily to internal and external political challenges -- by initially ignoring the international community's desire for China to play a more active role in resolving the human rights crisis in Darfur, arresting prominent Chinese political activists, and cracking down violently on demonstrators. Although there is no organized opposition unified around this set of demands, the cacophony of voices pressuring China to change its policies has taken much of the luster off of the Beijing Games. Moreover, although the Communist Party has gained domestic support from the nationalist backlash that has arisen in response to the Tibetan protesters and their supporters in the West, it also worries that this public anger will spin out of control, further damaging the country's international reputation. Already, China's coveted image as a responsible rising power has been tarnished. (...)

Deputy Prime Minister Igor Sechin, who oversees the energy sector, announced that he saw the row over TNK-BP “moving towards a resolution”, but the weekend saw further troubles for the company, with Moscow prosecutors accusing the company of violating local labour laws, and one UK newspaper is reporting that the Kremlin’s probe into TNK-BP was instigated by one of its Russian shareholders. “A quick resolution to the dispute is not being forecast by many Russia-watchers.” In an open letter to The Times, Stan Polovets of AAR insists that “the Russian investors in TNK-BP are acting like businessmen everywhere, pressing for maximum return on their investment and seeking to hold corporate managers accountable.” Another approach to the issue focuses on Alfa Group, which owns 25% of TNK-BP, and its “history of mud-slinging and controversy”. Gazprom Neft has outlined its plans to acquire more assets and expand outside Russia, including operations in Iran. Saudi Arabia may raise its oil production beyond its planned July increase if the oil market requires extra supply, despite continued protests from other OPEC members that an increase is “illogical”. Kuwait has also promised to raise output if required. The increase already made has not affected the rising oil price, and Saudi Arabia has called a brainstorming meeting to avoid taking the blame. Nigeria's state oil firm NNPC has signed a $220 million financing deal with the local arm of Exxon Mobil.

At a White House meeting, Prime Minister Vladimir Putin praised Deutsche Bank's operations in Russia, fuelling speculation that “Russian tycoons are building a stake in the bank.” President Dmitry Medvedev said about half of the textiles sold in Russia are counterfeit or contraband, and intends to take measures to reduce illegal imports. Georgia has accused MegaFon, the Russian mobile operator, of illegally expanding its network into the breakaway region of South Ossetia. A Russian billionaire is trying to set up a $10 million bet with Polyus Gold owner Mikhail Prokhorov, believing that the latter will fail as a property developer. Morgan Stanley estimates that sovereign wealth fund assets could rise to $12 trillion by 2015, a total “likely to be swelled by China and Russia”. Silver producer Polymetal is spending $219 million on a gold project in Russia’s Far East. A Russian fertilizer tycoon has bought Donald Trump’s $100 million Florida mansion.

TODAY: Yavlinsky leaves Yabloko; human rights group condemns Russia; US missile defense shield delayed; Medvedev in Belarus; regional heads election debate continues.

Grigory Yavlinsky has stepped down from his 15-year post as leader of the Yabloko party in order to allow it “to be renewed”. In his parting address, he reportedly said that Putin and Medvedev were dependent on Russia's centralized power structures to rule the country. A new report by US-based human rights group Freedom House, to be released later today, says that Russia has become the leading anti-democratic force in its region, buoyed by energy wealth.

The debate over the direct election of regional heads is “indicative of Russia's current political climate”. President Dmitry Medvedev made a brief visit to Belarus over the weekend to mark a World War II memorial day in Brest and discuss energy agreements, and took the opportunity to indirectly attack Ukraine’s “politicized approach to history”. He also spoke to law students in St Petersburg over the weekend, where he said that parts of Russia could be uninhabitable within the next three decades if the country did not take steps to address environmental issues.

Here is a book review I wrote for the New York Post. The "house style" and headline choices are quite painful for me, but beyond my control - bear with us here.

STRONG MEDICINE

By ROBERT AMSTERDAM

June 22, 2008

Putin's Labyrinth: Spies, Murder, and the Dark Heart of the New Russia - by Steve LeVine (Random House)

In 2002, when terrorists took over a Moscow theater, government troops responded by gassing the building, killing over 100 terrified hostages. On July 4, 2004, Paul Klebnikov, the American-born editor of Forbes Russia, was shot four times in the street by assailants following him in a slow-moving car. It took an hour for the ambulance to arrive at the scene, it had no oxygen bottle and when Klebnikov finally reached the hospital (still alive), the elevator taking him to the operating room broke down. Klebnikov bled to death. On Vladimir Putin's 2006 birthday another prominent Russian journalist and government critic, Anna Politkovskaya, was gunned down in the elevator of her Moscow apartment building. (This was after she survived drinking poisoned tea in 2004.) Later in 2006, in London, KGB defector Alexander Litvinenko was died from polonium in his tea.

The world was outraged. The Russians yawned.

[Here on this blog, I try when I can to bring in as many Russian voices as possible, whether it is our anonymous polittechnologist, Grigory Pasko, Stanislav Markelov, Lev Ponomarev, Oleg Kozlovsky, or one of the many others. Toward this end, today we are running the following essay contribution from Andrei Novikov, the young journalist and commentator who was interviewed by Pasko after being committed involuntary to punitive psychiatric confinement for publishing articles critical of the government. - Robert Amsterdam]

TERROR – IN FRENCH AND IN RUSSIAN?

By Andrei Novikov

It is interesting to recall the origin of the word TERROR.

It literally signifies a “horrible fright”.

It first appeared during the time of the Great French revolution. There, the word “terror” (the concept of “terrorism” didn’t exist yet) was applied for signifying STATE REVOLUTIONARY terror in order to intimidate the stratum of society whom they regarded as enemies of the people.

A “friend of the people”, the French revolutionary Jean-Paul Marat sent people by the thousands to the guillotine – and this was called terror. A thoroughly positive state practice.

We're big fans of the Swiss blog Krusenstern, and we're pleased to congratulate its writer Jürg Vollmer on winning the Swiss-Russian Journalist Award 2008 - the first time a blogger has received this reward. Read more about it here in German, with plenty of photos from the Moscow award ceremony.

Congratulations, Jürg! Keep up the good work.

Breaking news: a new survey shows that nearly 60% of Russian citizens approve of the government's efforts to censor media!!! (AFP)

Oh wait, these numbers are coming from the Kremlin controlled the Russian Centre for Public Opinion Research (VTSIOM), never mind. It never fails to take my breath away when Russia's officials succumb to such discrediting Soviet-style tactics to shape opinion. At the very least, the propagandists should publish these kinds of surveys before they choose to shut down a newspaper like the eXile - give us a little help in suspending our increasingly burdensome disbelief.

File this one under foregone conclusions: There's a new Russian study which has surprisingly identified several of the key aspects of Putinist Russia (no political competition, no free press, no demographic plan, no rule of law, and no regard for the well being of the citizens) as being the biggest obstacles to the country's economic development through 2020. It is surprising not because it is true, but rather that they were allowed to publish it.

From BusinessWeek/TOL:

A study by the New Economic School in Moscow and the Vedomosti business daily presents what leading executives see as major challenges for the country through 2020. Their responses are remarkably forthright, given the pattern of recent years to muzzle, or even jail, Kremlin critics.

The authors of the study, NES rector Sergey Guriev and Igor Feyukin, of the NES Center for Economic and Financial Research, chose representatives of private and state-owned companies with a bias against the monolithic, Kremlin-controlled energy sector. They invited 100 people to participate, but only 58 executives and economic experts did so. Guriev presented his findings at the glitzy St. Petersburg International Economic Forum on 8 June.

The study's participants believe "the lack of political competition and restrictions on political, economic and personal freedoms" are "a serious problem for the country."

Isn't it interesting that it is the Democratic, rather than Republican, candidate for the U.S. presidency who is causing the ghosts of Reaganism to stir once again? Barack Obama's simple yet revolutionary ideas of principled engagement with the leadership of the world's pariah countries is causing a backlash of caustic criticism, accusing the Senator of proposing appeasement, more often than not inappropriately mentioning the name Chamberlain. I think it was Fareed Zakaria whom I first heard talking about how these criticisms were disturbingly similar (nearly word for word) to the criticism Reagan got from his own party when he first proposed talks with Gorbachev; what would end up becoming the first steps in bringing down the Soviet Union. A new column by the peculiar Florida author Ben Bova picks up where Zakaria leaves off:

Sen. Barack Obama has made it clear that he would prefer to meet with the leaders of Iran, North Korea and other adversaries to negotiate our differences. He’d rather talk than fight.

This makes me think back a quarter of a century to 1983 and President Ronald Reagan’s approach to our Cold War adversary, Soviet Russia.

[Editor's note: Our correspondent Grigory Pasko has been writing extensively on the Nord Stream gas pipeline project for over a year already. In the spring of 2007, he filed a series of reports from northern Russia, where the approaches to the underwater pipe are being laid. That summer, he reported from Germany and Finland. For the past several months, we have been presenting his latest series about the project - from the Scandinavian perspective. To prepare these reports, Grigory traveled to Helsinki, Stockholm, and the Swedish island of Gotland, where he met with national and local politicians, environmentalists, civil engineers, academics, underwater archaeologists, fishermen, and ordinary citizens, who expressed a very wide range of opinions about this massive project that may very well alter their lives irreversibly. The last stop on Grigory's journey was the Danish island of Bornholm in the southern Baltic, where, after great efforts to coordinate schedules, he finally managed to catch up with the elusive research vessel Pollux, which is conducting the most detailed survey ever undertaken of the Baltic Sea bed for Nord Stream. The ship was scheduled leave port once again only a few hours after Grigory landed on Bornholm, but he nevertheless managed to tour the vessel, meet with the experts on board, and see for himself the work it is doing before it cast off to sea. Grigory's hosts were two management-level Nord Stream engineers: Bob Pirie (who works on board the Pollux as it surveys the sea bed) and Simon Bonnell (who flew in especially to meet with Grigory and answer his questions). Here then is Grigory Pasko's report from the Pollux - the final installment in his year-long investigative series on Nord Stream.]

The Nord Stream Chronicles

"The bottom of the Baltic is safe for the pipeline," say the specialists of the company Marin Mätteknik AB

By Grigory Pasko

A reference map hanging on the wall onboard the Pollux (photo by Grigory Pasko)

Yesterday Bob blogged about the Lithuania proposal to host the U.S. anti-ballistic missile shield as a bluff related to Vilnius's energy desperation and Washington's pressures on Poland. Today the Associated Press takes his cue:

Eastern Europe sees bluff in reports the US is eyeing Lithuania for missile defense base

As talks on building an American missile defense site in Poland have bogged down over Polish demands for massive military aid, word emerged this week that Washington is eyeing Lithuania as an alternative site.

But observers in Eastern Europe are skeptical that Washington would consider Lithuania seriously, suggesting it's a stratagem to ratchet up pressure so President George W. Bush gets a deal before he leaves office in January.

"I think it's just a political game," said Fyodor Lukyanov, editor of the magazine Russia in Global Affairs. "I think it's an attempt to show Poland that if they continue to resist, then the contract could go other places."

The presence of government-controlled business titans is largely unprecedented in history, bringing forward new questions about how their conduct can affect global markets. The OECD appears to be on the case, giving greater scrutiny to state-owned companies such as Gazprom. The Financial Times reports:

Angel Gurria, secretary-general, said state-owned enterprises were fast expanding beyond their home territories, buying up large shareholdings and companies. However, they were little understood, lacked transparency and often aroused suspicions in host states about their objectives.

The initiative follows work done by the OECD on the emerging influence on global markets of private equity, hedge funds and sovereign wealth funds.

Mr Gurria told international investors at the annual conference of the International Corporate Governance Network in Seoul these new investors played a positive role in capital markets and should not be treated differently from other investors through the creation of new laws or codes. But he highlighted the growing role of state-owned companies in global markets, which he said had "received less attention so far".

The old barriers which used to separate the Russian expatriate community in London from the rest of the citizens appear to be beginning to dissolve, as billionaires snap up high value works of art, hold elegant benefits and fund raisers, and enthusiastically dive into the wealthy socialite world in general. The Wall Street Journal has a report today about a party thrown by Alexander Lebedev which brought in the A-List figures such as Hugh Grant, U2's Bono and fashion designer Vivienne Westwood.

This picture seems distinctly different from the cloak-and-dagger snake nest of Mayfair spy agencies, as described in Steve LeVine's excellent upcoming book, but it's possible these worlds coexist.

Given that Lebedev is part owner of Novaya Gazeta, I am sure the guests to the charity event must have been buzzing with questions about the latest news in the Anna Politkovskaya trials... Right - It will be nice if one day people didn't have to check their politics at the door at any Russia-related event.

Alexander Lebedev: statesman, captain of industry, 358th richest person in the world, and now, London socialite

The Economist writes on energy security in the Baltics, suggesting that Lithuania’s potential involvement with the controversial US missile shield is related to energy politics. Royal Dutch Shell has closed the Bonga oilfield, one of Africa's biggest, after an attack by Nigerian militants. Stan Polovets, an AAR deputy chairman and TNK-BP shareholder, says the current row is being portrayed as “being driven by politics or greed -- not as an attempt by the Russian shareholders to make sure their interests are represented in the company." TMK, which makes steel pipes for the oil-and-gas sector, has mandated Barclays, UBS, ING and ABN AMRO to organize a $600 million eurobond issue. Federal Grid says it will boost its number of power lines by 58% over the next decade and eliminate a transmission deficit in Moscow by the end of the year. Saudi Arabia’s unilateral decision to increase its production is causing a “deepening rift within the Opec cartel”. Aeroflot is predicting a fall in profits this year due to the “colossal” effects of high fuel prices.

Azerbaijan, Russia, and Iran have signed the final protocol for construction of the Kazvin-Resht-Astara railroad. Severstal is still interested in acquiring US steel company Esmark Inc, despite being rebuffed in its $1.24 billion takeover offer. President Dmitry Medvedev will chair a meeting held today to discuss ways of upgrading the textile industry and raising the living standards and social protection of its employees. New statistics show that Russia’s food prices have risen 11.6% since the start of the year, compared with 3.1% in Europe. Sberbank and Alfa Bank have sold millions of bonds to international investors this week. United Company Rusal denies that it is buying up the votes of minority shareholders of Norilsk Nickel ahead of an investor meeting.

TODAY: EU-Russia Summit to be held next week; new row with Lithuania; federal programs; corruption and Russia’s “rotten” legal system.

Leading up to next week’s EU-Russia Summit, European Trade Commissioner Peter Mandelson says that Russia and the European Union must work together to prevent disputes over trade and agree on a “grand energy bargain” focused on security of supply and demand. "Let's be honest: each suspects the other of employing double standards, of using the energy weapon as an instrument of politics," he said. Mandelson denies that a new row between Russia and Lithuania over the banning of Soviet symbols will affect the summit. Ostensibly, the EU views its relations with Russia as one of its top priorities, and hopes that Russia will join the World Trade Organization by November 2009, but Russian MP Konstantin Kossachov, who chairs the Duma’s foreign policy committee, is “pessimistic” about the prospects for a new partnership treaty.

A recent Atlantic Monthly article prompted some discussion over the continuation of the clan wars, but conspicuously absent from these exchanges was any mention of the key political prisoners held in the eye of the storm: Sergei Storchak and Alexander Bulbov. To understand whose fortunes are rising and falling among the warring siloviki, sometimes the best barometer we have is to track the cases of these unfortunate hostages. Yulia Latynina has a new column in the Moscow Times picking up where we've left off, and if she is right (which she may not be), it would confirm a theory I have heard various times that an entire bureaucratic agency was created for the sole purpose of spying on other siloviki rather than fighting the drug war. Now that Putin no longer has any need for the agency, it is being purged. Check out the original Cherkesov letter here.

Discarded Like A Worn-Out Pair of Shoes

By Yulia Latynina

The Federal Drug Control Service is purging its staff. The first to go was General Viktor Rykov, head of the agency's internal affairs. Rykov is a friend and confidante of General Alexander Bulbov, a former senior officer with the drug control agency who was arrested in October on suspicion of wiretapping top-ranking siloviki.

Jeffrey Garten has an interesting post up over at Yale Global about how the U.S. presidential candidates should take their "Town Hall" format of question-and-answer sessions to international audiences, where they can get some new urgent questions that they haven't yet been made to answer by the inward-focused U.S. voters.

A possibility from Europe: “America is obsessed with challenges from the Middle East and China, but without its European partners, the US alone has little leverage in either arena, let alone on other pressing questions like climate change, currency stability or Russia’s worst authoritarian instincts. How do you envision the US-European relationship at a time when so many of the links that used to exist during the Cold War seem to have disappeared?

Because neither of the two candidates has covered these kinds of issues in any depth, Americans would likely be fascinated with the questions and riveted by the answers. For two men who aspire to occupy the world’s most important leadership position, surely it's time for this discussion.

As I have written in this space before, I am not entirely convinced that Washington's plan to install anti-ballistic missile sites in Eastern Europe, intended for technology that does not yet exist to defend against Iranian missiles which do not yet exist, is the smartest way to spend their foreign policy chutzpah. Of course, neither has the Kremlin's reaction to these moves always been very constructive in building trust. At worst, if the Washington-Moscow dialogue becomes fully consumed with discussion over only this one issue, Russia will likely come out the winner as they advance in the capture of critical energy arteries to Europe.

Despite this vocal opposition from Moscow, serious misgivings in Europe, and even an endorsement from Henry Kissinger to bring Russia into the project, the issue remains on the table. Even after all this time, it still feels like Washington and Moscow aren't seeing eye to eye. The Russians perceive the missile shield not only as a direct military threat, but also as a powerful symbolic gesture of rejection of their newly acquired geopolitical power. The shield, in their eyes, is an attempt by the Americans sew them in and prevent any role of influence in Eastern Europe. Washington, on its behalf, is rather unconvincing in its attempts to play dumb on the issue, and repeatedly express their bewilderment with Russia's opposition. After all, the generals point out, the proposed sites aren't in any position to shoot down a Russian missile - the United Kingdom would be a better position if that were the intent.

However with the decline of the Kaczynski twins in Poland, opinion has soured among government officials here, leading to refusals to begin further negotiations on the project for the time being. Lest you think that Washington would give up on the project - into the fold steps Lithuania, who is looking to squeeze some mileage out of scaring Moscow by talking about becoming the alternative site for the shield.

Driven by energy concerns, 81-year-old Lithuanian President Valdas Adamkus (photograph) is taking a big risk here - but is he just looking for a short-term concession?

There are many in Europe and Washington who downplay the rising tensions between Russia and Georgia, brushing off these exchanges as just another series of rhetorical exercises between a resurgent Kremlin and the uppity governments of former Soviet republics. German Foreign Minister Frank-Walter Steinmeier is just one example.

Those who doubt the seriousness of this situation would do well to pay close attention to the word choice of General Lieutenant Alexander Burutin, who spoke to the press yesterday regarding the arrest then release of four Russian peacekeepers by the Georgian authorities. "In the future we cannot guarantee that our servicemen will act in this patient way. Their patience is not limitless. The consequences will be grave and there could be bloodshed. Responsibility for that will be entirely on the Georgian side."

Ostensibly, before the eyes of the world, the Kremlin has announced that their peacekeepers will be authorized to engage the Georgians and that furthermore, we can expect bloodshed. What exactly is Tbilisi expected to do in response to such a statement? How is it that Moscow can get away with making such bellicose statements without the West so much as batting an eye? It's time for the international community to close this gap in perceptions of this conflict and realize how perilously close to the edge these two countries are.

Fyodor Lukyanov has a column in the Moscow Times commenting on Dmitry Medvedev's ambitious vision for a new global security alliance from "Vancouver to Vladivostok." These views are based in part on Putin's reiterated perspective of a "new, multilateral world," which was a euphemism for declaring the premature death of American hegemony. But the Russians aren't alone in this perspective, as it also seems to be the central thesis of Fareed Zakaria's new book (though I have not yet read it).

Changing global conditions create new opportunities for the concepts that Medvedev expressed in Berlin. The global situation is dictated by rigid rules, and it increasingly narrows the range of opportunities open to Europe and Russia. The United States' influence is decreasing, and it still seems unlikely that former dogmas -- especially those inherited from the Cold War -- will be revived. But what before seemed to be pointless dreams might soon turn out to be vital necessity.

Remembering all of the disappointments and failures that we experienced in international relations over the past several years, we should treat Medvedev's romantic ideal of a "Euro-Atlantic space from Vancouver to Vladivostok" as a serious new model for the new era in global affairs.

Journalist, author, and blogger Ed Lucas has a book review of Marshall Goldman's Petrostate in the Wall Street Journal today:

Standing in the nerve center of Gazprom's Moscow headquarters -- staring at a 100-foot wall that electronically displays the spiderweb of natural-gas pipelines spreading across Europe from Russia -- Mr. Goldman marvels: "What an empowering feeling! Should they choose to, those Gazprom functionaries could not only cut off natural gas from the furnaces and stoves of 40 percent of Germany's homes but also the natural gas that many German factories need for manufacturing."

In other words, Ronald Reagan's warnings in the 1980s, about the political dangers of Western Europe's dependence on Soviet gas, now seem prescient. Today Western Europe relies on Russia for half of its natural-gas imports. (...)

The unanswerable question is whether the Kremlin -- or more precisely, Vladimir Putin -- will use gas as a weapon to gain international political influence. The optimistic view is that business normalizes politics -- in this case, that Russia's need to be a dependable partner will require it to soften its political edge and conform to international standards of behavior. Pessimists fear that gas dependency will lead to the Finlandization of Europe. On the evidence so far, the pessimists have the better chance of being right.

It has been reported that BP's billionaire partners said the company was planning to “terminate at least several members of senior management that were appointed by AAR” to TNK-BP, but other reports say BP denies this. European Trade Commissioner Peter Mandelson says that the row is creating a bad image for investment in Russia. At a recent meeting at the Energy Ministry, Vladimir Putin warned new private players in the power sector to keep Russia’s interests in mind, threatening that if they did not, “I will take [the profits] from your stomach and distribute them among the poor." Germany has raised the question of Gazprom’s status as a state trade organization with a trading policy that should be regulated by the World Trade Organization. Gazprom’s asset swap talks with E.ON are progressing with difficulty due to the sharp rise in energy prices. Negotiations between Nigerian oil workers' union Pengassan and Chevron Corp. will continue in order to avert a strike.

Three unidentified Russian metals companies are hoping to announce a major investment worth more than $2 billion in Zambia next month. Current problems for farmers include lack of state regulation, the need for higher subsidies, and the cost of production. The owners of Chelyabinsk Pipe Works plan to spend $600 million building golf courses across Russia. The government is planning to set up a state agency to manage its sovereign wealth funds and make investment decisions.

TODAY: Liberal Medvedev faces “silent war”; Putin’s popularity exceeds Medvedev’s; Yabloko to convene amidst split; US may turn to Lithuania over missile shield; Anna Politkovskaya case closed.

The head of a Russian think tank says President Dmitry Medvedev faces a "silent war" from hardliners opposed to his liberal reform agenda: “If he doesn't build a coalition in this struggle, he will lose.” The Moscow Times has analyzed some of Medvedev’s foreign policy statements since taking office. A new VTsIOM survey says that Prime Minister Putin’s confidence rating exceeds that of Medvedev. The Liberal Yabloko party, apparently split over whether or not it should cooperate with radical anti-Kremlin groups, will convene this coming weekend.

Just when we thought that things couldn't get any hotter between Russia, Georgia, and the frozen conflict of Abkhazia, further events this week have sent the region toward the brink of outright war.

Earlier this week Georgian authorities arrested, then released, four Russian peace keepers near the city of Zugdidi whom they had accused of illegally transporting arms. Russia reacted sharply, and following a call between Mikheil Saakashvili and Dmitry Medvedev, the Kremlin issued a pointed statement warning against "provocations."

First Zenit St. Petersburg wins the UEFA Cup, then Russia has the honor of hosting the Champion's League final between Chelsea and Manchester United, and now, today, for the first time since the fall of the Soviet Union, the Russian national selection defeated Sweden 2-0 in the Euro Cup 2008 have advanced to the quarter finals with authoritative swagger and energy. It was a critical elimination game for Russia, which has never defeated Sweden in its 95 year history of matches, and brilliantly-worked goals by Roman Pavlyuchenko and Andrei Arshavin assured that the team is ready to play with the big boys.

Congratulations, Russia! We'll all be cheering you on against the Dutch!

An interesting article recently appeared in the French magazine Marianne - below is our exclusive translation. The original version can be downloaded here.

Russophobia is doing well

There are people for whom Russia is always wrong regardless of what it is saying or doing. The last example? The reaction to the first foreign policy speech of the new Russian president Dmitri Medvedev in Berlin. On this occasion Putin's successor explained that "Atlanticism has exhausted itself" and that is not very rational to think that Russia still poses a threat to Europe. Dmitri Medvedev proposed considering a new pact of security in order to address the impasse surrounding Nato enlargement to Eastern European countries. That shows Russia is open for a discussion without preconceived ideas.

No more complaining about silence in the Western press, right? From the Wall Street Journal:

Raucous Russian Paper Closes Amid Kremlin Scrutiny Expat's Exile Falls As Investors Retreat; Ribald Pranksters By ALAN CULLISON June 18, 2008; Page A10

MOSCOW -- An English-language newspaper in Moscow famed for lampooning Russian and Western officialdom has shut down after it fell under the scrutiny of the government for its
The Exile spoofed the election of Russia's handpicked president by reporting results in advance. Dmitry Medvedev won 70% of the March 2 vote.

The demise of Moscow's Exile newspaper is the latest sign of the homogenization of the press within Russia, where an official crackdown on dissent has led to the self-censorship of many publications.

Today the New York Sun reviews Marshall Goldman's book Petrostate. We'll have our own review up soon. For whatever reason, the Sun continues to hamper on with its conservative pro-authoritarianism bent, reminiscent of the well-known plagiarized article which sought to absolve the state of any involvement in the Litvinenko murder. Then again, Bob has also penned an article for them, so it appears the paper is interested in taking on a non-conventional perspective of Russia, which is positive. Nevertheless, Goldman (photograph) really reaches in his defense of the state's lawless tactics to take over energy, and falls victim to the frequent mistake of assuming that it is the government, not privileged individuals, who make away like bandits. Here is a very disappointing quote from the book:

In a welcome contrast to aggrieved Western press reports about Mr. Putin's economic strategy and the subsequent fall of oligarchs such as Mr. Khodorkovsky, Mr. Goldman takes an agnostic view on these developments. "In all fairness," he writes, "the way the Russian government reacts when foreign investors attempt to buy their energy resources is not that atypical of how other countries react in a similar situation. If anything, most members of OPEC, for example, are even more protective."

He does have a stern warning for Western Europe, however. The region has become dangerously dependent on Russia for natural gas, he writes. With its spreading network of pipelines, Gazprom now has the power to let Europe freeze if it so chooses.

Robert Amsterdam was on the CBC show The Current yesterday to talk about all that TNK-BP stuff, along with Steve LeVine and others. Listen to the show here (just scroll down a bit).

TNK-BP’s Russian shareholders reportedly have rejected a buyout offer from BP, accusing the British company of trying to seize control. “The TNK-BP dispute promises to define Dmitry Medvedev's presidency in the same way that the Yukos bankruptcy defined Vladimir Putin's presidency.” Analysts see the conflict as “connected with politics, by both sides”. Alexei Kudrin has called for a “civilized” end to the dispute. Kudrin’s insistence that the row will not affect investment in Russia is seen by one journalist as “an extravagant denial”. The Federal Anti-Monopoly Service is to investigate domestic fuel providers on suspicion of colluding to raise prices on aviation fuel. "The fact that domestic prices supplied by Russian oil companies in conditions of a monopolized market exceed export [prices] is evidence of a violation of anti-monopoly laws," they said. Gazprom chief Alexei Miller has backed Mosenergo's plans to spend billions of dollars to substantially boost output, after initially delaying the investment. Biotekhnologia Corp, part of state corporation Rostekhnologia, will team up with PetroVietnam and Metropol to produce bio-ethanol in Vietnam. Gazprom’s export revenue will surge 60% this year.

President Dmitry Medvedev has approved a riskier investment strategy for the country's first sovereign wealth fund. Finance Minister Alexei Kudrin “is fighting an uphill struggle to limit spending.” Property management services firm Jones Lang LaSalle will double its staff in Russia by the end of 2010. Severstal has written an open letter to its competitor, American steel-maker Esmark, accusing it of unfair practices for accepting a takeover offer from India’s Essar. France’s auto-parts maker Valeo will create a joint venture in Russia with local supplier Itelma. Highland Gold Mining, part-owned by billionaire Roman Abramovich, will spend $500-550 million launching output at its Mayskoye field by 2010. United Company RusAl rejected a proposal by Norilsk Nickel to discuss a full merger. 34% of RusAl’s sales will be in China by 2015 as the company shifts its focus to the East.

TODAY: British Council in Moscow slams “punitive” tax bill; Georgia releases troops; Russian ban likely to “infuriate” Iran; Medvedev seeks advice on corruption; Anna Politkovskaya: three men charged.

Relations between Britain and Russia have hit another low. The British Council in Moscow said it had received a "punitive and disproportionately large" tax bill from the Russian authorities. The council describes the bill as "incorrect", and will take legal action to have it overturned. Georgia says it has released four Russian peacekeeping troops detained near Abkhazia on suspicion of transporting weapons without proper documents. A Russian ban on a text by the late Iranian Supreme Leader Ayatollah Khomeini “is likely to infuriate many in Iran”.

Keep your eye on the ruble. Since the default of 1998, when the ruble collapsed and the savings of millions of ordinary Russians became worthless in a matter of days, the Central Bank of Russia has been pursuing a monetary policy known as “exchange rate targeting” – using the levers at its disposal to keep the national currency as stable as possible in relation to a given foreign benchmark currency or a basket of currencies. I’ve got to say that the CBR has done an admirable job pursuing this objective – the ruble has indeed been remarkably stable with respect to the US dollar and the euro for the better part of a decade, right on up until the dollar’s recent downward slide against all currencies, something that can’t be blamed on the Russians.

However, this exchange rate targeting has come at the cost of high inflation for Russians, in part due to the continuing fall of the dollar, but also because of the less-than-intelligent fiscal policy the Russian power has been pursuing in recent years. On 17 June, Finance Minister Alexei Kudrin declared that over the next few years, the CBR is going to switch to a different kind of monetary policy – “inflation indexing”, where the objective is to keep domestic prices stable, even at the expense of the exchange rate. It is a maxim of macroeconomics that a central bank can only pursue one objective – you can’t keep both prices and the exchange rate steady simultaneously in the face of economic pressures, so you need to make a policy choice and stick with it.

Today Henry Kissinger met with Russian President Dmitry Medvedev as part of his duties on a bilateral panel, essentially offering his approval and stamp of legitimacy for the new leader: "I have followed with great interest your becoming president and the plans you have put forward in some of your speeches. I wish you every success. It is important for Russia and important for the world."

The 85-year-old Kissinger, a proponent of old school realism in foreign relations, has taken a great interest in inserting himself into the Russia debate over the past year, lobbying for softer policy toward Moscow on behalf of, well, himself I suppose. He certainly is not having tea in Moscow in any official role with the U.S. government, but with his influential clients in his consulting practice, perhaps there isn't quite so much difference. Being an international lawyer working in business, human rights, and rule of law work, I will insert here some obligatory links toward Kissinger's controversies, but I will also admit that I am usually not bored when he talks about Russia, even if it does often remind me of the 1970s. [video interview after the cut]

From Luke Harding's latest dispatch about the British Council:

Today, Tony Blair - who was attending a private investors' conference in Moscow - admitted relations between London and Moscow had been "difficult", adding: "I've been out of office a year, but I still remember the diplomatic language."

Blair - who had dinner with Putin on Tuesday night - said the west was still coming to terms with Russia's new economic might.

"They have a pride in Russia today they didn't have ten years ago," he said. "We in countries like mine have to understand that change in psyche."

A rather useless comment, no? Sounds remarkably similar to the Kremlin line, portraying the country as a mistreated victim deserving of exceptional treatment. Why do so many people continue to ask for more respect for Russia when they already have it?

The Wall Street Journal warns of an overheating Russian economy:

But with inflation surging in recent months -- the annual rate in May was the highest in more than five years -- the worry now is that the economy is growing too fast. Inflation in May was up 15.1% from the year before.In April, the Economic Development Ministry revised its 2008 GDP growth forecast to 7.6% from 7.1% previously. The economy grew 8.1% in 2007.

Finance Minister Alexei Kudrin warned last week that the economy is showing "strong signs" of overheating, with demand growing 15% from a year ago and imports double that rate. (...)

Economists expect further monetary-policy tightening in the coming months, but Yaroslav Lissovolik, chief economist at Deutsche Bank, said inflation will remain high. He expects prices to rise 11.9% by year-end -- unchanged from last year. The official target remains below 10.5%.

"You need other measures in addition to the purview of the central bank," he said. "You need greater fiscal austerity and other structural changes, such as increased competition."

This interesting book review of Hammer and Tickle by Ben Lewis in the Telegraph comes at a particularly timely moment with the Kremlin's shuttering of the Exile tabloid... Though a few days old now, anyone needing to freshen up their stock of Soviet jokes should give it a read, and be sure to check out the video trailer for the 2006 documentary after the cut.

Poor Mr Gorbachev. Every time he met Ronald Reagan at a summit, he was subjected by the American President to a stream of Russian jokes. Or rather, to be precise, Soviet jokes - the point of which was always to satirise some aspect of life under communism. What made it worse was that some of them really were very funny.

I like the one, for example, about the man who goes to buy a car in Moscow, pays for it, and is told by the salesman that he can collect it on a particular date in 10 years' time. The buyer thinks for a moment and then asks: 'Morning or afternoon?' The salesman, astonished by the question, asks: 'What difference does it make?' And the buyer answers: 'Well, the plumber is coming in the morning.'

As Gorbachev was well aware, these jokes had not been manufactured by some sinister department of the CIA; they were real ones, as told by real Russians. He was probably also aware that although people in the West told jokes about the frustrations of ordinary life, there was no such thing as a whole category of jokes about the capitalist system as such.

If there had been, we can be sure that his aides would have been feeding them to him, contributing to an ever-escalating jokes race between the superpowers.

This was from yesterday's WSJ Environmental Capital Blog:

Russia is winning the natural gas pipeline wars because it isn’t worried about the things that Western Europe (or much of the U.S. Congress) is worried about: climate change or fussy competition rules. While European leaders fiddled for years planning the construction of a pipeline to bring gas to Europe, Russia went ahead and started its own. European gas companies can’t do infrastructure—bad for the consumer—so the pipeline builders are scrambling to find gas supplies. Russia has gas and offered top ruble for more. (...)

As the scramble for energy heats up, it’s useful to remember that the rules of the game aren’t changing—the game itself is. Energy policy isn’t a cardigan moment or a Rose Garden speech—it’s become the currency of international influence. And the countries that ruthlessly focus on one pillar, rather than trying to juggle all three, are more likely to come out ahead.

AAR, the consortium of Russian shareholders in TNK-BP, is publicly attacking what it views as BP’s “arrogance”, with Mikhail Fridman also reportedly likening BP’s chairman Peter Suthland to Nazi propaganda chief Joseph Goebbels. Saudi Arabia's offer of a further increase in production to halt the oil price has thus far failed to have any impact on the markets. Gazprom is examining plans to increase gas extraction from the Sakhalin-2 fields being developed with Royal Dutch Shell (RDS). Sakhalin-2 has obtained $5.3 billion in financing from the Japan Bank for International Cooperation, and has reportedly dropped plans to produce liquefied natural gas on the Yamal peninsula, another joint venture with RDS. The company has just opened its first African office, in Algeria, possibly “to forge closer ties with Sonatrach, the continent’s largest gas producer.” A “mystery suitor” has registered for a data room to be opened for potential buyers of OGK-1. Nuclear power agency Rosatom dismissed rumors of a radioactive leak at two plants in northwest and south Russia. Dmitry Medvedev has called for legal action to be taken against contractors who failed to meet their deadlines for the East Siberia-Pacific Ocean (ESPO) pipeline.

Russia’s economy expanded an annual 8.5% in the first quarter, higher than economists expected, as consumer demand fueled an investment boom. Austrian builder Strabag won a €1 billion ($1.5 billion) share of a contract to build an eight-lane highway around St. Petersburg. Further evidence has emerged to suggest that troubled cosmetic chain Arbat Prestige is the target “of an illegal asset grab”. The warehouse sector is set for continued, rapid growth, according to analysts. Mikhail Prokhorov’s Onexim Group has announced that he will file a lawsuit against his former business partner, Vladimir Potanin, to defend his business reputation. Russian authorities have refused to purchase Ukrainian motors for cruise missiles. Vladimir Putin has re-appointed Vladimir Yakunin president of Russian Railways.

TODAY: World Bank President visits Russia, praises economy, criticizes inflation; Putin says government funds are stalled; Russia boosts military presence in Central Asia; gifts for officials to be banned; Russians in Dubai.

Robert Zoellick, the President of the World Bank, has been in Russia, and the Moscow Times sees him as full of praise for the country’s economic performance. But according to Bloomberg, Zoellick also issued a warning, saying that growth was dependent on the curbing of inflation. Prime Minister Vladimir Putin warned against delays in allocating this year’s $30 billion fund to a series of programs aimed at solving some of the country's biggest problems. Alexei Kudrin says a new package of anti-inflationary measures will be submitted to the government this month.

What is interesting about the Kremlin's bureaucratic attack upon the caustic ex-patriot satire newspaper The Exile (it is a little exhausting to always write eXile), is not that it is simply another case of media censorship by the state, but rather the discomfort of the paper's owner and fans about being turned into a cause celeb for freedom of speech. It appears to be an unnatural role. After all, the most favorite past time of the editors was to mercilessly bash the political opposition that had been harping on and on the dangerous whims of the leviathan against freedom of expression. Irony, it seems, is alive and well inside the new authoritarian state. Of course there were also plenty of articles in Exile making a mockery of Vladimir Putin and Dmitry Medvedev, but in general the humorless wrath was best left for criticizing Western press coverage of Russia. Oh well, at least no one can complain that their plight is being ignored ... here comes the deluge of coverage in the English language media.

Associated Press: Irreverent Moscow expat newspaper shutting down under government pressure

The National: Russia Silences Tabloid

St. Petersburg Times: Barring ‘Miracle,’ Expat Paper eXile Is ‘Dead’

UPI: Moscow inspectors frighten eXile investors

And of course, Mark Ames yet again with a dispatch on Radar:

Another Western reporter told me that when he called the ministry spokesman, that the man "exploded" and barked, "Why is everyone calling me about the Exile?!" As the reporter explained, "It sounded like my call was about the 15th call he'd taken in the last hour, and he couldn't take anymore. It was kind of funny."

Perhaps. But pissed-off Russian bureaucrats don't have a bygones-be-bygones habit of popping open a Miller with people who piss them off at the end of the day. When they get angry, they have a nasty habit of...actually I'd rather not think about that right now. They already made me pay this humiliating fine for a paper that they'd taken away from me.

Tomorrow I'm to be interviewed in the anti-Kremlin media outlet New Times. Meanwhile, the story is finally getting delayed coverage in the English-language print media. I'm not sure if that's buying me some time here, or just pissing off the ministry officials even more.

We've spent a lot of energy over the years covering the pipeline race between Russia and the West, as alternatives to Kremlin-controlled energy are desperately sought and usually thwarted by adept maneuvering from Moscow. Grigory Pasko has literally traveled the entire route of the Nord Stream pipeline, we've looked at South Stream, and had plenty of blog posts about the Caspian and Central Asia. Today we're pleased to see that the Wall Street Journal is running an extensive and intelligent analysis of the Caspian/Central Asian situation, which even discusses the non-traditional bargaining tactics and incentives that Russia is bringing to the table (which we think is one of the primary reasons for their success). I'm in agreement with Steve LeVine's comment on the article that Vladimir Putin and Dmitry Medvedev have not only "out-foxed" the United States and Europe, but they have also worked much harder at it. However this begs the question: why isn't the pipeline race being taken seriously by any Western government? Are they overextended with foreign policy issues like Iraq, Iran, Afghanistan, and a dwindling global economy? The change in leadership? None of the excuses seem sufficient for this enormous oversight.

Check out some good cuts of the WSJ piece below the break.

It's not just that Gazprom has gotten used to taking things away from Royal Dutch Shell, although it may appear as such following Sakhalin and now their move toward Nigeria's troubled Ogoniland (see my recent post on Shell's withdrawal).

Today there are reports that Gazprom and several Chinese state-held firms are aggressively pursuing these gas field stakes left behind by Shell - and the government of Umaru Yar'adua has indicated that it will entertain an offer from the group bringing the best infrastructure (read corporate foreign policy) package to the table. Our guest blogger Dee Prince, a Nigerian petrochemicals professor based in Beijin, has been all over this story of SOCs diving into Africa ... Fast Company also has finally caught on.

As far back as January, Gazprom was already talking about some huge "premature contracts" they were planning for Nigeria (in the order of $7 billion), which the FT described as "one of the boldest forays in the global fight for African energy assets."

If Gazprom wins over this Shell concession, it will be bad news for Europe and the United States (more and more energy under political control, as well as Gazprom's terrible record with inefficient flaring, which is a big problem in Nigeria) - but that doesn't mean they don't deserve it. From all my contacts I've had with the Nigerian government in recent months, I continue to hear glowingly positive stories about how the Russians are playing the energy game in the Gulf of Guinea - the international super majors are having a really tough time closing this gap and understanding how to advance talks with the state.

Just as in the Caspian region, it is difficult to summon much sympathy for the failures of the West to make successful moves toward securing energy resources. I am not observing much of a learning curve.

Following on the heels of Gerhard Schröder's ridiculous award from the captured Russian Academy of Sciences, last week former French president Jacques Chirac was awarded Russia's highest state prize for "outstanding humanitarian achievement" (I include a brief translation of a blog posting from Le Figaro). Naturally he was so touched by the generous title that he took the opportunity to praise Russia's excellence in democracy with a straight face.

Critics will naturally say that these men are exceedingly undeserving of these titles, but the Kremlin is sending a clear message - work with us to promote our interests and stay quiet about human rights and authoritarianism and you will be rewarded. What's next? I suppose that we'll see former Italian PM Romano Prodi be awarded with a prestigious innovation award for his creative pipeline deals to shatter European energy unity....

From Le Figaro:

Jacques Chirac, a friend of Pushkin and Putin

On the lapel of his vest the new medal engraved with an imperial eagle is shining, presented to him yesterday by President Dmitry Medvedev in the grand palace of the Kremlin.

In response to Group of Eight nations urging oil producers to boost output, Saudi Arabia is planning to increase its output next month by about a half-million barrels a day, or 6%. The news caused the price of crude to fall for the second day running. TNK-BP’s Russian shareholders have apparently confirmed their readiness to dispose of their 50% share of the company, reportedly offering to swap their 50% share in TNK-BP for 7.6% of shares in BP. One report says the situation has descended into “outright mudslinging”. Meanwhile Mikhail Fridman, one of the Russian shareholders, said it was unwise of the oil company to "preach at" the Kremlin, referring to last week’s comments by Peter Sutherland. “We find Mr. Sutherland's comment unhelpful and, frankly, insulting to the Russian leadership,” he said. Gazprom’s Chief Executive Officer Alexei Miller believes that his company’s market value will triple to $1 trillion by 2015. Russia's foreign ministry demanded that Ukraine halt oil exploration in parts of the Black Sea because of a territorial dispute. Finance Minister Alexei Kudrin partly blames the weakening dollar for high oil prices. “The U.S. dollar depreciation was actually one of the reasons oil prices went up," he said. The rising price of airplane fuel in Russia is putting dozens of smaller airlines at risk of bankruptcy. Unified Energy System has begun construction of a new production unit at the Novy Urengoi power station.

Czech investment fund PPF and Russian businessmen Alexander Nesis and Alexander Mamut have bought large stakes in silver miner Polymetal from Suleiman Kerimov. Reports are circulating that Kerimov is interested in buying stakes in major European banks. Trade between Russia and China increased 44%, year-on-year, in 2007 to $48.2 billion. Alexei Kudrin says Russia may revise its 10.5% inflation-rate target for 2008 next month as consumer demand outpaces economic growth. Kudrin has denied that there are plans for an IPO of diamond producer Alrosa. The Moscow Times sees the fact that the International Monetary Fund, the World Bank and the government are arguing over the state of Russia’s economy as a sign of “heightened expectations for Russia's future.”

TODAY: Russia’s military “poorly equipped”; scientists focus on nanotechnology; Russian mafia arrested in Spain; OSCE makes veiled accusations about Russian elections.

Military officials openly hype the notion of a resurgent Russian power, but in reality, says one Russian journalist, “the Russian military remains underfunded and poorly equipped.” Scientists across Russia are turning to new inventions in order to net some of the billions of state dollars being poured into the field of nanotechnology.

Police have reportedly arrested 20 members of the Russian mafia in Spain. The barriers to Russian tourism are lifting and numbers of Russian tourists have almost quadrupled in the last decade. The head of the Russian region of Tatarstan has called for the removal of the president's right to name governors and a return to the election of regional leaders.

Jeffrey Tayler has an interesting new article in the Atlantic Monthly about how the clan wars within the Kremlin continue to roil, potentially upsetting the Putin-Medvedev dyarchy and leading to an emerging role of greater influence for Russia's new president:

Dyarchy has never worked in Russia. Most recently, in 1993, the standoff between President Boris Yeltsin and his vice president, Alexander Rutskoi, ended only when the former shelled the latter’s lair in the White House. (Russia has had no vice president since then.) Traditions of autocracy, in fact, extend back to the 15th-century rise of Muscovy and have left an indelible, even determining, imprint on Russian political consciousness. For many Russians, the chaos of the Yeltsin years—when the Kremlin commanded little respect and ceded powers to other branches of government, regions, and up-and-coming oligarchs—only affirmed the validity of autocratic traditions. Now, with two centers of power forming, the situation is inherently unstable. (...)

Having amassed considerable power that they could now lose, Putin’s siloviki must be feeling something other than gratitude toward their boss for choosing Medvedev (who has no ties to them) as his successor. The slighted inner circle includes, most prominently, Igor Sechin, Putin’s deputy chief of presidential administration and chairman of Rosneft (Russia’s largest oil company). Sechin leads a clan comprising FSB chief Nikolai Patrushev and Minister of Justice Vladimir Ustinov, who have at their disposal Russia’s still-formidable apparatus of espionage, arrest, and punishment. Prevailing over Sechin’s group was Medvedev’s “liberal” clan, which includes Viktor Cherkesov, chief of the Federal Drug Control Service; Viktor Zolotov, in charge of presidential security; the oligarch Roman Abramovich; and members of the “Family,” Yeltsin’s old clique.

In an environment of “legal nihilism,” Putin cannot be assured of his future should he truly relinquish power. If he were no longer atop the chain of command, he could not protect himself from persecution—especially given the recent shocking allegations in the Western press of a personal fortune in the tens of billions of dollars, including hefty blocks of shares in Russian gas and oil companies. As hard as these allegations would be to prove, they could serve as grounds for investigation and prosecution.

The Young Soviet President

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

A month has passed since Dmitry Medvedev was seated on the Russian throne. Besides the trips he is entitled to by status, he now and then pronounces some kind of speeches, having to do with the internal affairs of the country. Sometimes he’ll blurt out something all of a sudden about the necessity of an independent court; at others, he’ll express concern out of the blue about the state of the penitentiary system… The other day, he discussed the problem of complaints to the Strasbourg court with human rights ombudsman Lukin. Probably because a number that had not that long ago been officially sounded had reached him: in the year 2007, the European Court of Human Rights had issued decisions on the recovery of 4.3 million euros in claims from Russia.

Medvedev and his teacher (Source)

Chrystia Freeland of the FT talks to Nightly Business Report about the TNK-BP events in Russia. Steve LeVine also has a blog post worth reading.

JEFF YASTINE: Tonight's commentator says companies doing business overseas could learn a thing or two from a situation playing out in the Russian oil market. She's Chrystia Freeland, U.S. managing editor at the "Financial Times."

CHRYSTIA FREELAND, US MANAGING EDITOR, FINANCIAL TIMES: Especially away from home, CEOs tend to be more concerned with profits than with pluralism and the stability of dictatorships can often seem a safer bet than the chaos of young democracies. But the struggle between Russian and British shareholders at TNK-BP (ph), once the flagship western joint venture in the Russian oil sector, is a powerful reminder that the security authoritarian regimes offer is often illusory. Recently, British oil company BP has been under severe pressure from its Russian partners, possibly acting in concert with the Kremlin. The end result could well be a significant dilution of BP's stake in the Russian company in favor of the Russian shareholders and the Russian state. BP looks to be the injured party in his episode, but it is no innocent abroad. The company triumphantly sealed its deal with TNK in 2003, the year Russian oil baron and oligarch Mikhail Khodorkovsky lost his company and was jailed on politically motivated charges. But BP was confident its Kremlin ties and savvy local comrades would allow it to avoid a similar fate. Now, that no longer seems to be the case and BP is crying foul. Other western oilmen are joining the chorus, like Exxon's Rex Tillerson, who told a St. Petersburg conference a few days ago that there is no confidence in the rule of law in Russia today. That's what Russia's beleaguered political opposition has been warning for the past eight years. It's high time for western investors to understand that authoritarianism can imperil their rights, too. I'm Chrystia Freeland.

Democracy Arsenal is blogging today about Rick Davis, one of Sen. John McCain's campaign managers, and his ties to the pro-Kremlin Party of Regions in Ukraine led by Viktor Yanukovich. They refer to a new report from ABC which cites the McCain campaign's efforts to deny a 2005 story that the Senator's office had contacted Davis to ask that he stop "interfering" in regional policy.

Moira Whelan comments: "My own anecdotal conversations with people who run in the Russia and Eastern Europe circles indicate that Rick Davis was a fixture and a well-known advocate for Yanukovich. What’s interesting was that Davis never filed under the Foreign Agents Registration Act that he did work for Yanukovich and today denied he ever did it.

This story is going to be one to watch."

We have also followed the McCain-Russia story pretty closely, and find it quite ambiguous at present.

Sen. Joe Biden, chairman of the Foreign Relations Committee, oversaw a hearing yesterday entitled “Oil, Oligarchs, and Opportunity: Energy from Central Asia to Europe” to examine Russia's use of its enormous oil and gas reserves, and regional pipeline system, to expand its global political influence and economic leverage. Testimony was received from Zbigniew Brzezinski, Leon Fuerth, Zeyno Baran, and Roman Kupchinsky.

Biden commented that "We need diplomacy to forge a common strategy among energy consuming countries in Europe, a shared effort that can confront Russian dominance." Sen. Richard Lugar, who gave the opening statement, said that "Unfortunately, since Riga, the trend has moved away from European unity on energy supplies. Recently, Russia has concluded energy supply agreements with Greece, Bulgaria, Hungary, and Serbia. The Kremlin has an agreement with Germany to construct the Nord Stream pipeline and with Italy’s ENI to construct the South Stream pipeline. The current go-it-alone approach by many European nations will result in increased European dependence on Gazprom, greater vulnerability to supply disruptions, and less alliance cohesion on critical foreign policy issues. (...)

"Gazprom’s monopoly-seeking activities cannot be explained by economic motives alone. It is difficult to distinguish where the Russian Government ends and where Gazprom begins. Clearly Gazprom has sacrificed profits and needed domestic infrastructure investments to achieve Russian foreign policy goals. The Kremlin and Gazprom have shut off energy supplies to six different countries during the last several years."

A video of the hearing can be watched here, and below I have excerpted Roman Kupchinsky's testimony, which makes mention of Mikhail Khodorkovsky.

Below is an excerpt from a letter to the editor of the FT from Brook Horowitz, executive director of the International Business Leaders Forum in response to Gideon Rachman's recent column about TNK-BP. We generally agree that it is the investors who have as much work to do in demanding standards and fighting corruption and bribery as the Russian authorities.

Indeed, I would argue that much more can be done by the western business and financial community to promote responsible business practices in Russia. International investors should be more demanding in insisting on Russian companies' adherence to the best governance standards. They should resist glossing over some of the fundamentals in their interest of buying into this rapid-growth economy. They should also pay more attention to Russian companies' sustainability policies and - above all - practices. Stock markets should agree on a single corporate governance standard for prospective companies wishing to do an initial public offering - the current gap between the listing requirements in New York and London undermines the international community's position on business standards. A more rigorous approach would demonstrate the international community's own unambiguous commitment to such standards and stimulate even more rapid and widespread change within Russia and other emerging markets.

Russia has become very wealthy in recent years, and wants you to know it. We've seen bold forays into fashion and design, and even the emergence of "mobster chic" and the Kalashnikov bedside lamp. We've seen the world's first "Millionaire Fair" of jaw-droppingly expensive luxury goods, and a spate of SUVs and sports cars clogging the driveways of Moscow's elite hotels and restaurants. We've seen 17-year-old kids rent out £5,500 VIP booths at nightclubs, and well-heeled socialistas (no, the other kind) ordering $30,000 "champagne chariots" in London hotspots. So much money is being thrown around that the word "Snob" has become a compliment.

In this never ending competition among the nouveau rich, the latest and most curious trend is the costly import of well known Western pop music stars to play private concerts. The most famous of these was of course Gazprom's hiring of the aging rock band Deep Purple to play a show for Dmitry Medvedev, and other private concerts have brought over George Michael, Christina Aguilera and Beyoncé. Even Paris Hilton was once brought over for a 15-year-old's birthday.

The latest? Roman Abramovich's girlfriend Daria Zhukova has hired the trashiest British diva that money can buy to play for her ostentatious art gallery opening: Amy Winehouse.

There's just something about bringing the frequently rehabbing but talented singer to a scene overflowing with champagne, vodka, and cocaine that doesn't seem like the greatest idea in the world...

I'm not the first person to believe that the burden of history weighs heavily on the shoulders on Russia's citizens - those seeking a proud identity based upon historical achievements, yet are so often scolded and asked to feel shame (often by the West) over the dark period of Communism (an experience well captured in the East German film "Goodbye, Lenin"). There are of course hundreds of reasons in Russia's past to feel proud, but the unwillingness to confront the tragic periods appears to be the order of the day. This was perhaps Putin's political masterstroke: the embrace of the nashe, and the realization that many Russians were so eager to feel proud and bold about who they are and willing to celebrate the past ... even the barbarity of Stalinism. The current leadership has encouraged this nostalgia for empire to the point that history is becoming deeply obscured.

(Photo: an enormous Stalin poster is paraded through the streets of Moscow on Victory Day, 2007. Source)

In Russia, patriotism is complicated, but the erasure of ambiguity creates instant political credit. Almost any official commemoration, event, dramatization, or discussion about Russia's Soviet past is fraught with a delicate yet intense negotiation of memory. Just look at the level of emotional reckoning in the television program "Zhdi Menya," the quickly forgotten fiasco of the Bronze Soldier in Estonia, the politics of identity with the Solovetsky Stone, the uncomfortably bellicose Victory Day parade which brought tanks back onto Red Square, and, of course, the now famous propagandistic new school textbook of Russian history produced by the Putin administration, which has softened the legacy of Stalin's Great Terror to the point of ambiguity.

To be more succinct: the recreation of authoritarianism via ultra-nationalism requires a dangerous historical whitewash. This is precisely what we are seeing unfold, as Russians vote in a television contest poll to elect the most important historical figure in history ... and so far Stalin is leading the other candidates. The Wall Street Journal has the story after the cut:

The European Union has named Gaz de France and Germany's E.ON in connection with alleged rigging of gas markets. BP Chairman John Sutherland has accused Vladimir Putin of damaging Russia's reputation through failing to intervene in the escalating dispute over TNK-BP. "The leaders of the country seem unwilling or unable to step in and stop them. This is bad for us, bad for the company, and, of course, very bad for Russia," he said. “He has put Medvedev on the spot,” says one UK reporter. Italian engineering group Maire Tecnimont and South Korea's GS Engineering & Construction have signed a joint $900 million contract to build an oil refinery plant in Russia in connection with Tatneft. Slovenia will “probably” sign an accord this summer with Gazprom, to allow the proposed $16 billion South Stream pipeline to cross its territory. “President Chavez of Venezuela, Prime Minister Putin of Russia and King Abdullah of Saudi Arabia all might find their domestic power bases under threat if oil price fell back to, say, the $20-$30 per barrel level of the early 2000s.” Eni and Libya's state-owned National Oil Corp have signed six exploration and production sharing contracts. ExxonMobil has offered Gazprom a role in a $1 billion liquefied natural gas regasification terminal off the coast of New Jersey. The Iraqi Oil Minister says that increased production from Saudi Arabia or other OPEC producers would not ease high global oil prices because they are the result of market speculation.

Earlier this week, the State Duma passed the first reading of amendments to the minimum wage law that raise the minimum wage to the subsistence level, almost doubling the figure. Steel producer and distributor Esmark rejected a $670 million takeover offer from Russia's Severstal, calling it an inadequate and inferior bid to that of India’s Essar. The Economist reviews the St Petersburg Economic Forum. Operations in Russia and China are damaging profits for the flat-rolled products unit of aluminium producer Alcoa Inc. Mikhail Fridman says MegaFon’s initial public offering will give the mobile phone provider greater opportunities to expand.

TODAY: Medvedev’s Russia Day speech focuses on freedom and democracy; Bush and Merkel discuss Russia; Jacques Chirac given Russian award; Yushchenko reassures Russia that its NATO bid is not aimed at Moscow; NATO to discuss Georgia situation.

Yesterday was Russia Day, “when Russians celebrate their independence—from their own empire.” Speaking at the Kremlin’s celebrations to mark the occasion, Dmitry Medvedev said that Russia must ensure that the country's economic success produces higher living standards for the population, and generally reinforced Russia’s need for democracy and freedom.

As Bob reported in an earlier post on TNK-BP, BP Chairman Peter Sutherland has really started to irritate the Russians, first by dismissing Alexei Miller's "apocalyptic" forecast of $250 oil, then by calling out the "corporate raiding" by their Russian partners.

Mikhail Fridman, the billionaire founder of Alfa Bank and disgruntled shareholder in TNK-BP (photo), couldn't stay silent any longer. Reuters reports that Fridman has now made the ultimate threat:

"We find Mr (Peter) Sutherland's comment unhelpful and frankly, insulting to the Russian leadership," Fridman said in a statement emailed to reporters, adding he should not lecture the Russian government.

Still not a political problem, Mr. Granville?

I recently came across this user-generated news clip from the Current about anti-immigrant hate movements in Russia using online videos to incite and spread their distasteful messages. Along with the new article from the New York Times about the spate of online videos depicting violence against immigrants in Russia, we are reminded why the authorities often talk about new extremism laws - even though they are often misapplied to suppress ordinary dissent, there is a legitimate need to do something to provide security to the public from the ultra-nationalists.

Dmitry Medvedev just talked about this yesterday during a press conference:

The new Russian president said racism, xenophobia and extremism remained serious problems in Russian society and vowed to use law enforcement agencies and the court system to combat them.

"These threats unfortunately are not disappearing," he said.

"We face them in places where we did not expect them... If we cannot eliminate these phenomena, we must strive to reduce them radically."

The drama continues to peak in the unfortunate shareholder dispute currently unraveling with TNK-BP. We have Robert Dudley undergoing "interrogations" by the tax authorities, Gazprom first denying then expressing interest in taking over a stake, and the Russian shareholders launching a new lawsuit.

BP Chairman Peter Sutherland just kicked it up a notch: “This is just a return to the corporate raiding activities that were prevalent in Russia in the 1990s. (...) Prime minister [Vladimir] Putin has referred to these tactics as relics of the 1990s but unfortunately our partners continue to use them and the leaders of the country seem unwilling or unable to step in and stop them. (...) This is bad for us, bad for the company and of course very bad for Russia."

I couldn't agree more.

From WaPo: "What this town needs is more vodka at noon. To celebrate Russia Day, the embassy invited 2,000 friends yesterday afternoon for vodka, music, caviar . . . and did we mention vodka?"

Washington DC socialites hobnob at Ambassador Yuri Ushakov's farewell party before he heads back to Moscow to join Prime Minister Putin's new staff.

This one was published earlier this week in the Moscow Times, but I still thought it would be worth posting up. Mark H. Teeter leaps all over the recent quote by Yuri Chaika, in which he said that prosecutors who have made mistakes will have to "apologize" to their victims. From here he jumps to an imaginary encounter between Prosecutor General Vladimir Ustinov and Mikhail Khodorkovsky. It is indeed difficult to imagine this guy apologizing for anything, let alone the biggest political frame-up of post-Soviet history:

"Wait, don't tell me. You've discovered nine more Yukos tax violations and I'm looking at another five years of mitten sewing, right? But I'm curious -- Why did Chaika send you to tell me?"

"Actually, Mikhail Borisovich, I'm here to ... to ... hmm, this is harder than I thought ... to ... to ... "

"C'mon, Porky, spit it out, I've got mittens that can't wait. To kneecap me for old times' sake? To shoot me while I'm 'trying to escape'? What?"

"To ... APOLOGIZE! There, I said it. The case against you was a big political frame-up, and I'm here to apologize for it, OK? [thud!] Mikhail!! Guard! He's fainted or something! Help!"

Carl Mortished of the Times has a new piece about $250 oil and the relationship to Gazprom's output problems. He writes that although "the Russian firm enjoys scaring Westerners; it is ill at ease with its enormous wealth, and bears a grudge of embarrassment over the criticism it suffered in its clumsy handling of a dispute with Ukraine." Mortished writes that the prediction conceals nervousness that the winning streak is coming to an end.

But the key to Gazprom's warning is Russia, and its failure to continue raising its oil output. The steady rise in Russian oil output over the last decade has almost single-handedly fed the ravenous growth in demand for crude in China. Without Russia, China's economic boom would probably have stuttered to a halt several years ago. But the output growth rate is now fading fast and voices have been raised within the Russian oil fraternity that 10 million barrels per day may be as far as it can go. Russian oil production has declined for five months in a row to less than 9.5 million b/d. The IEA is still reckoning 10 million b/d for the year, an optimistic forecast given the turmoil at one of the country's biggest producers, TNK-BP, where a power struggle is being waged between BP, several oligarchs and, again, Gazprom.

In a post yesterday, Robert Amsterdam opined that Alexei Miller's prediction of $250 oil was unsupported and irresponsible, especially given the context of social tensions around petrol prices. Here is a video clip of how bad the fuel protests have become.

TNK-BP is suffering further difficulties, with its Russian oligarch partners threatening to sue BP in a Stockholm arbitration court in a bid to try and gain greater control over the venture. One UK newspaper says the struggle for control of TNK-BP matters “because the BP affiliate controls Samotlor, a big Russian oilfield, and the joint venture pumps about 1.6 million barrels per day, a big proportion of the 9.5 million bpd that Russia contributes to [the UK’s] daily global diet of crude.” The Times is running a profile of TNK’s “four oligarch shareholders”. The FT has interviewed Mikhail Fridman, “the baby-faced Russian tycoon on the warpath.” The head of BP, speaking in London, said that the world is not running out of oil, and The Economist has responded. A new BP report says global oil production fell last year for the first time in six years. The Bush administration are trying to reassure lawmakers who fear that a US-Russian deal on civil nuclear power could undermine efforts to rein in Iran's nuclear program. Vigorous demand and relatively slow growth in supply have sparked more diesel shortages across China, says PetroChina. Petrobras offers a rough sketch of how the company intends to develop vast new discoveries in the Atlantic Ocean.

Sergei Chemezov, a close Putin ally, has reportedly asked the Kremlin to transfer the state's stakes in hundreds of firms to the Russian Technologies state corporation he heads, but the plan has been opposed by a number of public voices, including Finance Minister Alexei Kudrin, who called the proposal “a hidden form of privatization”. Billionaire Oleg Deripaska has bid for the right to develop Russia's largest untapped copper field in a contest that will also include mining giant Norilsk Nickel and the state railway monopoly. Luxembourg will invest €25 billion of its capital funds in Russia’s economy.

TODAY: Medvedev speech at Moscow media conference calls for Cyrillic internet domains, media freedom and overhaul of European security; Moscow tabloid The eXile shuts down after investors pull out; Condoleezza Rice says US has no common values with Russia; racial tension; Sevastopol.

Russian President Dmitry Medvedev, speaking at a Moscow media conference, called for Russia to be assigned an Internet domain name in the Cyrillic script as part of a Kremlin drive to promote Russian as a global language. He also pledged that his administration will ensure media freedom and respect for human rights, and called for a sweeping overhaul of European security. His comments did not reassure investors of Moscow’s English-language tabloid The eXile, however. The newspaper is shutting down after its investors became “frightened” by a government inspection and withdrew their funding. A Duma group is suggesting that a new set of press regulations should be put together, as the current Act on Mass Media has remained unchanged since 1991.

The St. Petersburg Times has an interesting new article picking up where the New York Times left off with the amusing/frightening story of the Kremlin's digital censorship of television commentator Mikhail Delyagin. Perhaps the prize line of the piece: "Senior government officials deny the existence of a stop list, saying that people hostile to the Kremlin do not appear on TV simply because their views are not newsworthy." Wow.

In a still frame from video, the incomplete digital erasure of a Putin critic named Mikhail G. Delyagin from an episode of the program "The People Want to Know" can be seen. Mr. Delyagin's leg and hand remain visible, to the right of the man holding the microphone. (Photo: ATV/New York Times)

This short news clips discusses some of Russian President Dmitry Medvedev's comments on relations with Washington. One commentator remarks on Medvedev's wish to see the ruble rise as an internationally traded currency - something that she thinks won't be possible until the country achieves rule of law.

It will remain open for debate what Gazprom's and Alexei Miller's true intentions were this week when he announced the company's perspective that the price of a barrel of crude oil will rise above $250 as soon as next year, but we can see that 1) he is likely dead wrong, and that 2) this is a dramatically irresponsible and reckless sort of announcement for an industry leader to make.

Miller's projection boldly goes far beyond even the most adventurous predictions, such as that of Goldman Sach's theory of a "super spike" in demand to drive oil to $200 (Goldman, like many others, is heavily hedged into oil). Many other analysts predict maximum short-term prices rising to between $150 and $200, and others are calling it bubble phenomenon, and that prices could soon sink back to $115.

Already Gazprom's $250 oil bluff has received some harsh reactions.

Not long ago, the Financial Times did some digging around Geneva-based oil trader Gunvor, which later prompted a defensive letter to the editor from the shadowy owner Gennady Timchenko. Today we finally have the very first interview with him in the Wall Street Journal, which attempts to get a better look at arguably one of the most important individuals in the oil sector. He is believed to be worth at least $20 billion, helped certain Kremlin bureaucrats devour the assets of Yukos, and is said to be Vladimir Putin's principal oligarch operator. Timchenko vigorously denies these allegations, as well as any former role in the KGB or any privileged relationship with Putin. For the WSJ interview, he made two conditions: no photograph could be published, and the location of Gunvor's operations in Geneva must not be revealed. Enjoy the story - it's a wild one...

Secretive Associate of Putin Emerges As Czar of Russian Oil Trading

In First Interview, Timchenko Denies Ties; Rivals Face Hurdles

By ANDREW HIGGINS, GUY CHAZAN and ALAN CULLISON

GENEVA -- Gennady Timchenko, the world's most powerful independent trader of Russian oil, says he's too busy to see his old acquaintance Vladimir Putin, Russia's most powerful man.

"I don't have time to meet with him," the elusive Geneva-based businessman said in his first media interview, held early last month. "And he doesn't have time to meet with me, probably."

Five days later, Mr. Timchenko was in St. Petersburg for a private banquet attended by Mr. Putin, now Russia's prime minister after serving eight years as president. Both were guests at a party for the Yavara-Neva Judo Club, which counts Mr. Timchenko as co-founder and Mr. Putin as honorary chairman.

Russian President Dmitry Medvedev may look young and inexperienced (this is his first elected position), but he is already showing a mastery of the Kremlin's trademarked diplomatic doublespeak - making vast swings between aggressive and friendly tones in his comments.

Today he plays good cop:

Asked by a conference delegate about the presidential election in the United States this year, he said Russia would work with the winning candidate.

Former Chancellor of Germany Gerhard Schröder often catches a lot of flak for having acting in Gazprom's interests while in office, pushing through the Nord Stream gas pipeline project at the expense of Eastern Europe's energy security. At least now we how much he gets paid for it.

A report by the German magazine Focus indicates Schröder receives $390,000 annually for endorsing Nord Stream, but this business relationship is becoming complicated due to all the bad press he receives. The report states that Schröder is increasingly becoming a problem for the Nord Stream consortium due to his negative image in Germany and Eastern Europe as lobbyist for the Kremlin (we recall his recent road show to advertise Russia's democratic credentials). For some time the pipeline consortium has been planning to take Schröder out of the media focus, but this has apparently been difficult to achieve given the former chancellor's craving for recognition.

It's interesting to learn that not even his Russian masters can keep him under control, not even after they give him a completely unearned academic award. Schröder had better shape up soon, or else face replacement by a more docile former head of state ... such as Romano Prodi.

Gazprom is reportedly “in talks with holders of a few gas traders in the United States” about potential buyouts. Alexei Miller, the chief executive of Gazprom, has promised that his company would invest $30 billion by the end of the year, and predicted that oil will reach $250 per barrel “in the foreseeable future”. BP’s chairman rejected the “apocalyptic” prediction. TNK-BP head Robert Dudley said his five-hour questioning by the authorities yesterday “was a very routine meeting. There were no problems.” Tony Hayward, he head of BP, writes in today’s Financial Times that “the markets will solve the energy crisis”. Italy's Eni has started production at its Alaskan oil field.

Norilsk Nickel posted a “surprise” 12% drop in 2007 net profit after writing off nearly $2 billion on the value of newly acquired mining and power assets. Read a Moscow Times transcript of an interview with Interros chairman Vladimir Potanin. Billionaire Suleiman Kerimov has sold his stakes in Sberbank and Gazprom. It is thought that he will sell all of his Russian assets and invest the proceeds into foreign financial institutions. Atomstroyexport, Russia's state-run nuclear-reactor builder, said it is still in talks with China National Nuclear Corp. to sell two more reactors to China.

TODAY: Russia plans increased Navy presence in the Arctic; Putin promises military its budget will enable “military readiness”; Russian Press Congress; Shuvalov ‘berated’ by Putin; Medvedev ratifies agreements with Norway and the SCO.

The Defense Ministry says it plans to increase Navy presence in the Arctic, an area rich in oil and gas, “in order to protect its national interests”, and four Russian Tu-160 Blackjack strategic bombers are reportedly conducting patrol flights over the Arctic Ocean. A Russian shipyard begins construction of a new missile warship for the Indian Navy. Prime Minister Vladimir Putin has promised the military sufficient funds for the provision of “military readiness”.

The tenth World Congress of the Russian Press is being held in Moscow today to “discuss the state of Russian as a language of global information”.

It's the kind of story that I think a lot of journalists and commentators really salivate over: beleaguered President George W. Bush's final farewell tour of Europe, a grueling schedule of five countries in six days, a papal visit, debates on Iran, economy, oil, and environment, and a painful reckoning of soft power lost. I mean, how often does a reporter get permission from the editor to describe a foreign leader as a "lame duck" who is "hobbling somewhat pathetically out of the limelight" and even having sunk to such irrelevance that he "is not even popular in the role of the enemy anymore."

However it is the "indifference" with which Bush is being met in Europe that represents a sad misunderstanding of these recent events in continental geopolitics - something that John Vinocur picks up on very nicely in his column earlier today. And naturally, with this trip occurring more or less in the footsteps of Dmitry Medvedev's first European tour as President and a few visits from Vladimir Putin, who was still treated like the real power, the comparative legacies of the United States and Russia are obviously going to be on people's minds.

An article by Peter Finn in yesterday's Washington Post makes an interesting point about Yelena Valyavina's surprising confession in late May about Kremlin interference in the courts: now we're at least allowed to talk about rule of law and legal reform in Russia, which some are taking as an optimistic sign of the new Medvedev era.

As Finn writes in his article, the fact that Valyavina's boss, Anton Ivanov, is one of Medvedev's closest supporters is "not lost on anyone," and given that there is zero disagreement between Putin and Medvedev on foreign affairs or security issues, legal reform could be his "instrument" to build his own individual popularity and support, playing to the popular discontent with the corrupt and inefficient courts.

It's an interesting theory, accompanied by both supportive and damaging evidence.

[This week at the Finnish-Russian Civic Forum I finally had the opportunity to personally meet with the youth movement leader Oleg Kozlovsky, a young man of admirable courage and intelligence - the kind of person who means so much for the future of the country. We've accepted numerous contributions from Kozlovsky to this blog, and Grigory Pasko has interviewed him a number of times. His latest dispatch follows below. The state's dogged persecution of Oleg's activities - which has reached such extremes as repeated arrests and involuntary (and illegal) conscription to the Army - has turned him from an unknown entity into a celebrity dissident (he's even written for the Washington Post). It was a great pleasure to meet Oleg, and he has my full support in his peaceful resistance to authoritarianism and his demands for greater political inclusion and participation. - Robert Amsterdam]

Wish We Had Your Problems!

By Oleg Kozlovsky

There seems to be a tradition that whenever a foreign human rights organization publishes a report on Russia, Kremlin-backed politicians call it groundless and based on double standards. So, unsurprisingly, the Amnesty International World Report 2008 got cool welcome. For example, a member of Putin’s Civil Chamber, Anatoly Kucherena, immediately condemned the “wholesale criticism” and “ideological implications” of the report. However, if the “official” human rights activist had taken the time to read the report or, even better, to attend its presentation in Moscow, he wouldn’t be so upset.

After the election of new academicians and members of the Russian Academy of Sciences (among the number of new foreign members – friend of Vladimir Putin and one of the managers of the company for the construction of the underwater gas pipeline Nord Stream, former chancellor of Federal Republic of Germany Gerhard Schröder) premier Putin spoke before the general meeting, promising fundamental science fundamental support – 60 bln rubles a year, as well as housing for young specialists and equipment for laboratories.

Comrade Putin, “national leader” of Russia, head of the party «United Russia», great judo master and in general – “our everything”

Putin’s speech, as always, had a note of instruction-admonition, a slight trace of delusions of grandeur, and the stamp of moral virtue on a concerned face. That is, Vladimir Putin just can’t seem to leave the image of president behind.

French Deputy Herve Mariton, president of the France-Russia group of deputies in the National Assembly, took time to meet with the mother of Mikhail Khodorkovsky yesterday during a visit to Moscow (photographed), as reported by the French newspaper Le Figaro. Mariton told reporters that the conditions of Khodorkovsky's trial "clearly have political dimensions," and that both he and Marina Khodorkovskaya want to "take on his word" on Dmitry Medevedev's promises to bolster rule of law. Mariton told Le Figaro that "If the situation of your son, who has become a symbol, would improve, that would mean that all of Russia would be doing better."

Khodorkovsky's mother reiterated that her son has an iron will, but remains concerned about his health issues. She also states that she has never asked the government for a pardon, but would do so if Micha had ever requested it.

Yesterday Russia's opposition congregated in Helsinki for an all-day conference to do something that has become quite difficult within Russia - discuss her internal political problems and propose solutions for the future. The second annual Finnish-Russian Civic Forum was attended by both Robert Amsterdam and Yuri Schmidt (photo), described here by Helsingin Sanomat:

Russian dissidents call for tough stance from West

“Medvedev’s talk of rule of law should be taken seriously”

The West needs to take a tough line on human rights violations in Russia, said Russian defenders of human rights at a seminar held on the island of Suomenlinna in Helsinki on Monday.

They feel that the West is currently paying foremost attention to trade and energy supplies, and problems of Russia are often overlooked.

The head of TNK-BP, Robert Dudley, will be questioned today as a witness in a tax probe case, following questions yesterday over the hiring and remuneration of foreign employees, for which the company was ordered to hand over “masses of documents”. “Investors will be watching” for any plans to buy into TNK-BP at Gazprom’s strategy presentation today. The company says it is willing to supply an additional 2.5 billion cubic meters of the fuel to Poland after the country's contract with RosUkrEnergo expires at the end of 2009. It is thought that Gazprom may try to buy a US company as a way into the North American market, and the company has confirmed its interest in buying assets in France. Speaking at the Economic Forum over the weekend, the CEO of Exxon Mobil Corp said “There is no confidence in the rule of law in Russia today”. Following its purchase of production units and refineries from former oil company Yukos, Rosneft’s first-quarter profit surged sevenfold.

Using the Diva clothing store as a case study, this article looks at some of the problems facing Russia’s small businesses. Mitsubishi Motors Corp and Peugeot Citroen will initially invest €470 million euros ($730 million) in a joint venture in Russia to produce cars from 2011. Brewer SABMiller agreed to buy Vladpivo to expand in Russia's Far East region. Foreign investors are reacting with “cautious optimism” to top officials’ calls for loosening the state's grip on the economy at the St. Petersburg International Economic Forum over the weekend. “They said a lot of what we wanted to hear.” St. Petersburg’s real estate market still lags behind that of Moscow. Real estate developer PIK Group plans to spend more than $3 billion building "high-class living space" there.

TODAY: Gates says Russia is focused on developing nuclear capabilities; National Bolshevik Party “storm” Russian Railways; Putin for control over state corporations; Chaika forbids investigation of his colleague.

US Defense Secretary Robert Gates is using Russia to justify the maintenance of US nuclear arsenal, saying that they country appears focused on strengthening its nuclear capabilities rather than building up its regular armed forces. “Russia itself does not make war,” said Deputy Prime Minister Sergei Ivanov. “We earn income from wars, however cynical that may sound." A dozen activists from the banned National Bolshevik Party were detained after “storming the central Moscow headquarters of Russian Railways” in support of an independent rail union.

Gideon Rachman has a Russia-focused column running in tomorrow's FT which argues that the new president will need to do more than just offer rhetoric to repair rule of law. His point of departure: the extraordinary meekness with which Western companies respond to Russian rule breaking.

I have never taken The eXile very seriously (perhaps arguably, neither do the editors), but it appears that the Kremlin sure does. The English-language cult magazine is currently undergoing an "unplanned audit" of its editorial content as described by founding editor Mark Ames, as government authorities comb over the newspaper's past articles looking for anything of loosely defined illegality, along the lines of extremism or libel.

The harassment of The eXile is quite peculiar for a number of reasons. It isn't exactly some type of aggressive ideological press organ, and more often than not, their most sharply snarky pieces are focused on lambasting foreign coverage of Russia which the writers feel is unfair to the state. Yes, Eduard Limonov is a columnist, the paper is also a trenchant opponent of Russophobia. In the past, this paper has been an disproportionately hostile critic of Mikhail Khodorkovsky. As far as I can tell, its primary mission had always seem to achieve maximum insult through social and political lampoon. Also, we have all those nice things Medvedev said last week about protecting the practice of journalism from state interference. Strange timing.

Ames has published a very amusing and dystopic account of his experience undergoing the "unplanned audit" in Radar. Recommended reading. Welcome to the fringe, Mark.

In all my years I'd never heard of an "unplanned audit" of editorial content. The insiders whom I contacted all said, "It's ... strange." That's how my Russian lawyer reacted, it's how an American official reacted, and it's even how the head of the Glasnost Defense Fund reacted, even though his NGO focuses on problems between the Russian media and the Kremlin.

"As far as I know, there has never been a single Moscow-based media outlet which has been audited like this," Glasnost's lawyer told me. "We've seen a few of these in the far regions, but never Moscow. But really, don't worry about it, Mark, I don't think you're in any personal danger at this point."

Whenever a Russian tells me, "Don't worry, Mark," or, "It's no problem," I start to sweat.

[What follows is the latest contribution from the lawyer Anthony Rose, about whom you can read more here. - Bob Amsterdam]

Conversations with Penfold *

Weekend of June 7th and 8th 2008

I was talking to Penfold over the weekend about some things that were on my mind. He is marvellously uncritical and listens with every evidence of sympathy and agreement, even when I become hysterical.

It was said of a certain late 19th century poet that, although he tortured the language, he never succeeded in forcing it to reveal his meaning. So with Hillary Clinton, who did not lie but misspoke – a term with which I was not previously familiar. Our judges do not make mistakes: they “misdirect” themselves. With a certain amount of ingenuity, and assuming a reckless disregard for grammar, syntax and vocabulary, it should never be necessary to own up to anything – a lie, a mistake, an improper pecuniary advantage, even an outright theft.

President of the Russian Federation Dmitry Medvedev gives a private address to a roundtable of 80 CEOs of member companies of the World Economic Forum. This is the speech in which Medvedev blames the United States for the global economic slowdown. No big surprises nor tough questions here, but still very interesting. There's an excellent IHT article covering the weekend's events, which quotes Exxon CEO Rex Tillerson as saying that Russia "must improve the functioning of its judicial system, and its judiciary. There is no respect for the rule of law in Russia today."

Recently Sen. Chuck Schumer had an article in the Wall Street Journal arguing for Russia and the United States to work together on obtaining sanctions against Iran to halt their nuclear program. Opposition leader Garry Kasparov has a letter to the editor in response today.

Kremlin's Mafia-Style Foreign Policy: Show Me the Cash

Without addressing Sen. Charles Schumer's central premise that sanctions would be effective against oil-rich Iran ("Russia Can Be Part of the Answer on Iran," op-ed, June 3), I would like to address what appears to be a dangerously myopic view of Russia and Russian foreign policy.

The FT has an interesting Q&A today with Peter Elam Håkansson, chairman of East Capital, a well performing Russia fund:

Is there anything beyond the oil and gas story in Russia (which might come off sharply if a real global slowdown takes place)? Secondly, will persistent corporate governance concerns and political uncertainty mean a stock market rerating is unlikely? Vikram Aggarwal

PEH: The primary driver of the Russian economy is actually domestic demand, which benefits more domestic oriented sectors like retail, consumer goods, transportation, real estate and telecom. East Capital has been and continues to be overweight on these sectors.

Moreover, the IPO wave is dominated by non-energy firms. Economic diversification remains an important challenge and important efforts are being implemented but the incentives are arguably not the strongest with commodity prices at historically very high levels.

Corporate governance is improving in Russia, not least due to the fact that many Russian large caps are listing themselves abroad, and the perceived political uncertainty has been reduced after the election.

One report says that the weekend’s Economic Forum saw Russian leaders “wooing investors by pledging to curb corruption,” but that the still uncertain fate of TNK-BP “clouded” the meeting. At the forum, Medvedev’s economic aide complained of “limiting” foreign investments, in relation to a dispute at Vimpelcom. Gazprom is reportedly keen to buy the Russian half of TNK-BP, but a senior government source warned against this, saying it would be “the worst option”. The company ended a bid to gain control of Siberian Coal Energy Co., because of “uncertainty” in the energy market. It also reportedly wants to join a gas pipeline project in Alaska and has already made a proposal to BP and ConocoPhillips. BP CEO Tony Hayward said he is “confident” of reaching an agreement with the billionaire shareholders of TNK-BP.

Russia's antitrust regulator cannot rule on billionaire Oleg Deripaska's application to buy Russneft until the company settles claims concerning the sale of its shares. Royal Dutch Shell and Gazprom signed a preliminary agreement to study liquefied natural gas projects on Russia’s Yamal peninsula. Russia may build a nuclear reactor to supply electricity to Gazprom's offshore Shtokman project. From 2010, Russian oil firms will to receive another round of tax cuts worth up to $8.4 billion. SUEK and Gazprom have dropped plans to merger their power and coal assets valued at $16 billion, after the sides could not agree on the managing format of the joint companies. A meeting of Group of Eight energy ministers emphasized the need for domestic efficiency over than “piling pressure on a resistant OPEC to pump more crude.” The head of commodities research at Goldman Sachs has predicted that oil prices are likely to reach $150 a barrel this summer.

Dmitry Medvedev’s keynote speech at the St. Petersburg Economic Forum blamed the US’ “economic egoism” as a key factor contributing to the global crisis, and said that Russia could offer solutions. There was also significant discussion of investor fears. The Forum supposedly produced $14.6 billion in deals. The head of Sberbank and former Economy Minister German Gref warned that the Russian economy was already overheating and called on the state to cut spending, but current Economy Minister Elvira Nabiullina promptly contradicted his statements, and promised that Russia would build “an entirely new economy”. Baby food firm Nutritek consolidated 51.52% in New Zealand Dairies Limited. “As the economy slows down and Wall Street dwellers tighten their belts, many Russians in the United States are returning to Moscow, where the job market is hungry for professionals with international experience.”

TODAY: St Petersburg International Economic Forum held over the weekend; increased censorship of journalists; new nationalist coalition to improve ideology’s image; Russia to withdraw some soldiers from Abkhazia; environmentalists says Olympics threaten Sochi’s wildlife; Kudrin says NATO should be "consigned to history".

The weekend’s St Petersburg International Economic Forum, which hosted a powerful lineup of international business heavyweights, was an extravagant spectacle of “drinks, magic and a flying pig,” with many of the participants reportedly arriving on their own yachts.

“Equally insidious as government censorship is the growing self-censorship among Russian journalists. [...] News about Chechnya or Georgia or Iran now follows the government line.”

Here are the second two videos from Bob's speech at the World Affairs Council of Houston. There is a lot of discussion about the rise of state-owned firms, the loss of U.S. soft power, and the new competition gap that international energy corporations need to understand.

The year 1995 was very tragic for Nigeria: after years of starvation and exploitation, the ethnic minority in Ogoniland, an area rich in oil and gas, began mounting a peaceful civil society movement to demand a greater share of the oil wealth to fund infrastructure in their impoverished communities. Led by the political activist Ken Saro-Wiwa, the Movement for the Survival of the Ogoni People (MOSOP) began holding multitudinous protests of 300,000 people in the early 1990s, particularly targeting the activities of oil multinational Royal Dutch Shell. After several arrests and high profile human rights trials, Saro-Wiwa was executed by hanging by the military dictatorship.

Just this week, government officials have announced that Shell is being ousted from its concession in Ogoniland, which has been inactive as far back as 1993, opening the opportunity for the entrance of a new operator. Ken Saro-Wiwa Junior, the son of the famous activist, gave an important interview with Reuters, commenting on what Shell's departure means for the Ogoni people, and what kind qualities the next foreign operator will have to offer to earn the rights to the fields. The Shell ouster, says Saro-Wiwa Junior, is evidence that the government is listening.

Over the past number of months, I have become more and more immersed in Nigerian affairs on behalf of some of my clients, and my contacts in Abuja are telling me that there is currently a dramatic shift happening in the government of President Umaru Yar'adua - that the administration is serious about taking on the Delta issues head-on, something that the Obasanjo administration was never able to handle. If this is indeed the case, then we are going to see a very careful negotiation between government, communities, and international energy companies which should establish an entirely new level of engagement - closing the gap between human rights and oil that has plagued the country for so many years.

Today a senior Russian prosecutor, Alexander Bastrykin, has been quoted as claiming that corrupt state officials are bleeding the state of a whopping 1/3 of the annual budget - an equivalent of $120 billion.

This astonishing figure is hard to believe, but the very fact that the government is willing to make such a public push on these statistics is a good sign that the new president is gearing up for a much needed crackdown on the undisciplined bureaucracy.

From the Moscow Times:

There was also careful optimism at home about Medvedev's comments.

Yury Shmidt, a lawyer for Khodorkovsky, said by telephone from St. Petersburg that the statements were grounds for quiet optimism that Medvedev wanted to pursue judicial reform.

"The important thing for us is that they ensure the independence of the courts," he said, adding that this represented the real hope Khodorkovsky would be freed.

Shmidt had discussed the Khodorkovsky case with visiting German Foreign Minister Frank-Walter Steinmeier last month in St. Petersburg and said he was "very satisfied" that the subject had been broached during Medvedev's meeting with Merkel.

“The Caspian Sea Basin -- home to some of the world's largest hydrocarbon resources -- is becoming a new focal point for fierce competition.” The Russian government has approved a draft agreement to cooperate with the Lithuanian government over Baltic Sea oil pollution. Gazprom’s Chief Executive met with the chief of the administration board of Ukraine’s Naftogaz Ukrainy to discuss current gas supplies and relations. The UK papers have picked up on BP chief Tony Hayward’s comments on Russia’s rule of law, with one interpreting him as warning the Kremlin that its reputation is at risk. Hayward may meet with Mikhail Fridman, head of Alfa Group and shareholder in TNK-BP, in the midst of the shareholder dispute. Other papers are focusing on the interrogation of TNK-BP head Robert Dudley. The company says it views the interrogation “as routine and unrelated to the current debate amongst shareholders”. Russia has closed down the second of its three remaining plutonium-producing reactors. Chevron and KazMunaiGaz will build a $1.5 billion pipeline to connect with a BP Plc-led link to ship oil from Kazakhstan to international markets, bypassing Russia. BNP Paribas has agreed with Bulgaria's state-run National Electricity Co. to help raise funding for the construction of a $6.3 billion nuclear power plant along the Danube River.

The “glitzy” St Petersburg Economic Forum will take place this weekend, giving Russia an opportunity to “project its new confidence on a gloomy world economy”. Prime Minister Vladimir Putin and VTB’s president discussed the prospects for the establishment of an international financial center in Russia. The Economist focuses on Russia’s booming car market. Sergei Smirnov, a senior city financial inspector has been arrested on suspicion of demanding bribe money to turn a blind eye to a company's financial violation. Diamond miner Alrosa has offered to buy 6.54% in Polyus Gold. A survey of international countries carried out for the Russian government says Russia is the most promising market for foreign investment, surpassing China and India.

TODAY: Medvedev adopts “soft-sell” approach in Berlin; EU officials mediate between Georgia and Russia; Putin seeks museum investment; future looks bleak for tabloid The eXile.

President Dmitry Medvedev is “satisfied” with the results of his talks in Berlin, at which he reportedly adopted a “soft-sell approach” to foreign policy. At the end of his visit, he called for a "regional pact" to replace Cold War peace treaties, and warned that US and Nato military expansion could destroy relations between East and West "in a radical way, for a long time". “Medvedev singled out the same issues on which Putin [...] had repeatedly taken the United States and Europeans to task.”

It may have been Deepthroat's sage advice to "follow the money" that led Woodward and Bernstein to take down the Nixon administration, but for those seeking to understand the prolonged crisis plaguing BP with regard to subsidiary TNK-BP in Russia, the better strategy would be to "follow the assets."

So goes the question, cui bono in the TNK-BP collapse? The answer comes back unequivocally (even from some shareholders themselves), the Russian state - with either Rosneft or Gazprom taking over a sizable stake in the company. This is frequently denied by both sides (although less so today), who point simply to seemingly irreconcilable differences between the Russian billionaire shareholders and BP, with whom they split the company 50-50. However, these "differences" are acknowledged to be based upon a disagreement over who should have to give up a stake to the state - because once the Kremlin asks, it seems you cannot say no. Further, the same ones telling us that this is purely a shareholder dispute tend to also argue that the multiple office raids, arrests, and tax cases have nothing to do with it.

Yet here is the really, really frustrating part - everyone still wants to pretend that this isn't a Yukos redux right before our eyes. Perhaps the tipping point is here: TNK-BP CEO Robert Dudley has been called in for interrogation on tax invasion by the Interior Ministry, and as a result, the previously diplomatic and quiet BP head Tony Hayward dropped a bomb in today's Rosneft shareholder meeting, demanding that Russia respect rule of law. Ouch. That sounds more like a creeping expropriation problem than a shareholders' dispute.

Here are some clips from a speech recently given by Robert Amsterdam at the World Affairs Council of Houston, Texas, on the comparative energy investment environments of Nigeria and Venezuela - with special attention paid to the rise of state-owned energy and the importance of competing in the corporate foreign policy world.

I realize that I have a lot of catch up to do with a number of interesting energy developments in Europe, not least what Spanish Prime Minister Jose Luis Zapatero has been saying, but also the Nord Stream discussions during Medvedev's visit to Berlin, as well as Gazprom's moves to lock down Azeri gas supplies and the lone wolf U.S. government critic Matthew Bryza. My hands have been quite full preparing a couple of speeches and writing three new book reviews, so for the time being, I point you all to this interesting article on RFE/RL entitled "Energy: Caspian Pipeline Projects Resemble Gordian Knot."

Rovnag Abdullayev, the head of SOCAR (the State Oil Company of the Azerbaijan Republic), has indicated that he is talking with many different parties about exporting Azerbaijani gas.

"It's not only Russia. Iran, Turkey, Israel, and European countries have expressed their willingness to buy Azerbaijani gas," Abdullayev said. "We are looking for the most commercially profitable proposals and the best ways to launch the sale of gas from Phase 2 of the Shahdeniz [Caspian] field. Now we are analyzing [various offers] and talks with all parties continue. We will try to sell it for the best price possible."

Can we learn something about engaging with Russia on human rights from the way the West attempts to approach China? Today there's a very interesting commentary piece on this in the FT by Geoff Dyer which takes a look at the Kevin Rudd approach:

As diplomats scramble in search of ways to conduct this sort of conversation, a lot of attention is being paid to the speech Kevin Rudd, the new Australian prime minister, gave to students in Beijing two months ago. Mr Rudd famously charmed the Chinese when he addressed President Hu Jintao in Mandarin during his visit to Canberra last year, but he also did his masters thesis on a famous Chinese dissident who was jailed for advocating democracy in the late 1970s.

Mr Rudd used the speech to launch the idea of zhengyou, a seventh-century Chinese word for friendship. "A true friend is one who can be a zhengyou ," he said, which involves "the ability to engage in a direct, frank and ongoing dialogue about our fundamental interests and future vision." His Chinese audience lapped it up. All this may sound too clever, as if linguistic sleight-of-hand can somehow overcome deep disagreements. Yet by framing criticism in terms of Chinese tradition, Mr Rudd has established an interesting middle road between the quiet chat that gets ignored and standing on a soapbox to deliver lectures. Other governments are watching with interest.

This little nugget from Konstantin Kosachev was buried at the bottom of a WaPo story regarding the international reaction to Sen. Barack Obama's long-awaited victory over Sen. Hillary Clinton for the Democratic nomination:

And Russians have proved supremely indifferent; one poll earlier this year found that only 5 percent said they were closely watching the race. Of 40 people approached Wednesday on the streets of Moscow, only five had any opinion on the race or knew who was running. ad_icon

Still, some Russians hope that a new American president will improve strained relations between Washington and Moscow. "Barack Obama looks like the candidate that can be expected to take the greatest strides towards Russia," Konstantin Kosachev, a member of parliament, wrote in the newspaper Kommersant. "Unlike McCain he's not infected with any Cold War phobias."

Russia’s Interior Ministry has issued a summons to TNK-BP’s chief executive as part of an investigation into possible tax evasion. The EU’s external relations commissioner has discussed recent problems at TNK-BP with Deputy Prime Minister Igor Sechin, reportedly focusing on mounting pressure from authorities. The company that runs TNK-BP has filed a lawsuit against Moscow's employment service in what may be part of a shareholder dispute over how many foreign employees can work there. Meanwhile BP’s CEO, at a recent Rosneft shareholder meeting, emphasized the company’s commitment to Russia and said the country needs to respect the rule of law in order to secure the flourishing of its investment environment. Lukoil has announced a $100 million investment plan to support the Ghana’s efforts to improve on-shore oil exploration. Rosneft plans to raise its market value to $200 billion by 2020. The company is currently facing protests over small dividends.

Russia's Central Bank has withdrawn the license of Moscow-based Promkreditbank over banking legislation breaches. South Korean company Hyundai has begun construction of a $510 million car factory in Russia. In order to protect itself against potential risks incurred as a result of the law on foreign investment restrictions, Deutsche Bank has halted the issue of deposit receipts of companies classified as working in “strategic industries”.

TODAY: Putin and Medvedev “work as a team”; EU to take a “fresh look” on relations; Russia threatens Ukraine over NATO; Medvedev emphasizes ecological responsibility; actions Abkhazia "could threaten Olympics"; Gorbechev says Lenin should be buried; more pressure on the media.

A Duma speaker says President Dmitry Medvedev and Prime Minister Vladimir Putin work as a team, and are not competing for power. The EU’s external relations commissioner says Medvedev's emphasis on human rights and democracy will allow the European Union to “take a fresh look” at relations with Russia, but speculated that Moscow's recent actions in Georgia's breakaway region of Abkhazia might threaten the 2014 Sochi Olympics. The State Duma has reportedly recommended that the Kremlin consider pulling out of a friendship treaty with Ukraine if it takes further steps to join NATO.

The country has reversed its stance on the Kyoto Protocol by pledging budget funds for clean energy and calling for limits on greenhouse gas emissions. "I cannot neglect the necessity of overhauling the system of ecological responsibility," said Medvedev.

Garry Kasparov is doing his thing this week at the World Newspaper Congress in Sweden, asking world leaders to be tougher on Russia for freedom of expression and control over media.

However, among the +200 press junket, there were of course reporters from Russia's state-run news agencies, whom Garry directly confronted:

Kasparov accused one of the delegates to the newspaper meeting, editor-in-chief of the Russian state news agency RIA Novosti, Svetlana Mironyuk, of only publishing government propaganda.

That prompted Evgeny Abov, deputy chief executive of the Russian government-controlled newspaper Rossijskay Gazeta, to speak out in her defense.

"You have been unfair to Novosti," Abov said. He said opposition leaders were given a voice in the news agency's stories, and that it translates critical foreign news stories.

It is a rare defense for state-controlled media, especially in the wake of that ridiculous case of the "vanishing" television commentator...

In an remarkably simplistic and revisionist statement, former dissident and Russian journalist Aleksandr Podrabinek recently told RFE/RL: "The main feature of Russia today is a narrowing field of liberty in all spheres of life, such as the press, political parties. ... I think that this is largely due to the fact that Russia did not come to terms with its communist past. Communism was not condemned, so the communist values continue to live and are considered to be normal."

We tend to think that the underpinnings of Russia's current problems with liberty and rule of law are somewhat more complex than simple historical reckoning - after all, as Putin well knows, people want to feel pride, not shame, in the past.

But the question of how Russia should handle its history continues to pop up. Mark Medish of the Carnegie Endowment, who is pretty fair and balanced on Russia, once wrote that one of the best things Putin could do to repair his legacy would be to bury Vladimir Lenin (as well as release Khodorkovsky and invite the Pope).

Today Medish was joined in this sepulchral call by none other than Mikhail Gorbachev, who told reporters "My view is as follows -- we should not be occupied right now with grave digging. But we will necessarily come to a time when the mausoleum will have lost its meaning and we will bury Ilych, give him up to the earth as his family had wanted. (...) I think the time will come ... it will happen."

How does this presence of the embalmed former revolutionary leader become the focus of blame for all that has gone wrong over the past two presidential terms? How would removing the mausoleum from Red Square help change the popular conceptions of nation, identity, and justice? What will blossom in its place? Seems that there is a lot to talk about here...

Breakingviews has a column about the siege of TNK-BP - noting that the rise in the price of oil has eliminated any sense of security for foreign energy investors, as the state feels confident it can buy all the capital and technology inputs necessary for production:

In a country where law is at the government’s service, where a deputy prime minister is the chairman of Gazprom and another one of Rosneft, where tax inspectors, the police and the security services can always been summoned to help convince those who resist – as they were in the case of BP – there’s little that western companies can do when things suddenly turn sour. Cry, maybe.

Case in point, Uri Landesman, a senior portfolio manager at ING Investment Management and a shareholder of TNK-BP tells the Wall Street Journal today: "We're betting that they [BP] basically throw up their hands and sell their stake to the government at some point."

“Practically all” the top managers at OGK-2 have resigned, leaving the company with a severance bill of $23.51 million, supposedly “enrag[ing] its owners,” Gazprom and Unified Energy Systems. TNK-BP says its management recommended almost halving the dividend for 2007, despite a 25% increase in net operating profits. The company plans to double investment in refineries this year to improve the quality of its fuel. “South-east Europe and Hungary emerged from communism with a big electricity sector built to serve the heavy industry that slumped after 1989, leaving a surplus. But since 2000 surging growth has pushed demand above socialist-era levels.”

Saudi Arabia has given its consent for Russia to become a member of the World Trade Organisation, and the two have signed a bilateral accession deal. “Saudi Arabia has become the 60th WTO member with whom we have completed negotiations on market access,” said the Economic Development Ministry. Cellphone operator Vimpelcom signed a deal to buy the remaining 49% of Internet provider Corbina for around $404 million. A global slump in the demand for “the world’s most anti-environmental car”, the Hummer, is causing General Motors to consider selling the brand, although Russian sales of the car have risen 51% in the last year. The Economist on the battle to consolidate Russia’s metals sector.

TODAY: Yury Baluyevsky leaves his post following conflicts; Politkovskaya suspect released; Kasparov criticizes Russian press; Duma to ban Valentine’s Day.

Following reports of disagreements with Defense Minister Anatoly Serdyukov over the direction and implementation of military reforms, General Staff chief Yury Baluyevsky has left his post. Conflicting reports say he was fired by Dmitry Medvedev, and that the President “endorsed his resignation”. Another report says Baluyevsky “had become an obstacle to a campaign launched by former President Vladimir Putin to tighten control over military spending.” Medvedev is in Berlin today for talks with Chancellor Angela Merkel.

This one was just a little too random not to blog about. The British-American Tobacco group (BAT), the makers of the Kent cigarette brand, may be sued by the Russian government's anti-monopoly watchdog for false advertising - apparently because one ad promoting a tour of Japan showed a picture of the disputed South Kuril Islands, which Russia annexed after WWII.

"The ad violates legislation, which does not allow advertisers to abuse people's patriotic sentiments," said Andrei Kashevarov, the watchdog's deputy chief and head of its expert board.

How's that for nationalism and cultural politics? If anything, I would've thought the recent Smirnoff vodka ad offered a more confusing amalgam of historical contradictions and controversy... which is still better than how the Germans portray the Italians.

Here's an op/ed from Sen. Chuck Schumer on how Russia can play a role in working on the Iran problem. Although well-intentioned, I still think that Sen. Schumer takes many things about Russia's views on Iran at face value. There is much more than just missile sites at stake to get Moscow to stop obstructing on Iran, and Washington's obsession with sanctions rarely works out like they want it to, but at least we can begin talking about what the carrots and sticks are that we have to work with.

Russia Can Be Part of the Answer on Iran

By Charles Schumer

Last month, Iranian President Mahmoud Ahmadinejad announced that Iran was installing an additional 6,000 centrifuges at Iran's main nuclear enrichment complex. The Bush administration in turn needs to use every diplomatic tool in its arsenal to halt Tehran's development of nuclear weapons.

While the military option can never be taken off the table, most experts admit it would be unlikely to succeed. Because Iran has dispersed its nuclear facilities and buried some deep underground, an air strike will at best slow down, without preventing, its eventual creation of nuclear weapons. A military occupation might do so, but there are less costly solutions available.

These two types of risks seemed to be confused at times in Russia, as shown in this new FT article:

“I got tired of saying a year ago or more that what you think of as political risk in Russia doesn’t exist,” says Stephen Cohen, managing director of asset management at Troika Dialog.

“We knew what the outcome of the election was. That was blindingly obvious 12-18 months ago.”

Back in April I gave a presentation in London on something I call the "resource nationalism checklist" - which is a list of many of the areas of consideration for foreign investors in emerging markets. I had posted the paper outline over at my CFP blog, and I am reposting below for those who have been writing me looking for it...

Gazprom could become a buyer of Azeri gas as the country prepares to ramp up production and start competing with Gazprom in southern Europe. “Azerbaijan, being a big hydrocarbons producer in CIS, is a natural partner for Russia and we have common interests.” Three of Gazprom’s managers have reportedly sold $25.5 million worth of shares, “which may signal their belief the stock has reached its peak.” Hydropower producer RusHydro said that capital expenditures could reach a record $3.3 billion this year. Its chief executive commented, “The era of cheap electricity is over.” Vladimir Putin’s Putin proposed tax cuts for the oil industry to stimulate investment “may not go far enough to revive production growth.” Royal Dutch Shell has signed a $700 million deal to buy a stake in Australia's Arrow Energy to jointly produce natural gas from coal deposits. The opening of the United Nations food summit saw an attack on biofuels subsidies: “Nobody understands how $11bn-$12bn a year on subsidies and protective tariff policies had the effect of diverting 100m tonnes of cereals from human consumption, mostly to satisfy a thirst to fuel for vehicles.”

It is being reported that a new law will give Vladimir Putin the last word on foreign bids to buy Russian companies in 42 “strategic” sectors including oil, gas, media and telecoms. Finance Minister Alexei Kudrin said the law was the result of a “political consensus,” but had hoped the list of sectors designated as strategic would contain fewer industries. The head of the International Monetary Fund says Russia's inflation rate could reach 14% by the end of the year. Russia’s “landmark” children’s store Detsky Mir will soon close for a two-year refit. Shares of Polyus, the country’s leading gold producer, jumped after Onexim Group, Mikhail Prokhorov’s holding company, offered to boost his stake in the company. Metalloinvest, founded by Alisher Usmanov, plans to quadruple its iron output “with the aim of supplying over one-fifth of world output by 2015.” Russian fashion designer Denis Simachev plans to open four US outlets within a year. Russia's biggest gambling companies, Storm International and Ritzio Entertainment Group, are threatening to move their casinos, "and the taxes they generate," if anti-gambling rules aren't relaxed.

TODAY: UN environmental concerns over Sochi; Medvedev moves to withdraw bill on press restrictions; Kremlin’s “stop-list” sees public figures airbrushed off of television; Kudrin in WTO talks with Saudi Arabia; Yuri Ushakov to take senior government post; scrap missile defense and win Russia’s support on Iran?

A new summary report from the United National Environmental Program expresses concern that construction for the 2014 winter Olympic games in Sochi could have a devastating effect on the local environment, and has asked Russia to seek alternative sites.

President Dmitry Medvedev has recommended the withdrawal of a bill, previously approved by parliament, that would allow courts to close media outlets for publishing libelous material. “Political humor in general has been exiled from TV”, according to this article, which focuses on the digital erasing of public figures from television shows by the Kremlin, who supposedly keep a “so-called stop list, a roster of political opponents and other critics of the government who have been barred from TV news and political talk shows”.

This one from the International Herald Tribune:

Merkel to press Medvedev on human rights

By Judy Dempsey

BERLIN: The case of Mikhail Khodorkovsky, the imprisoned former boss of the Russian energy company Yukos, and other human rights issues will be high on the agenda when Chancellor Angela Merkel meets President Dmitri Medvedev of Russia in Berlin this week, officials confirmed Monday.

I have been watching with great interest the events unfolding recently in Colombia and Venezuela, where following a raid on a rebel camp of the Revolutionary Armed Forces of Colombia (FARC) a laptop computer was retrieved which confirmed active links between this group and the government of Venezuelan President Hugo Chávez. Among other partners and allies, this discovery presents a problematic challenge to Moscow, which has for years enjoyed a preferential relationship with Chávez while dealing millions in arms to their military.

Apparently Vladimir Putin says that he has never heard of William Browder of Heritage:

At the Group of Eight summit in St. Petersburg, Russia, in July 2006, a reporter asked Putin about Browder, a U.S.-born British citizen who runs hedge fund Hermitage Capital Management, once the largest foreign holder of Russia stocks.

“To be honest, I don’t know why this particular person has been refused entry to Russia,” Putin shot back. “I can imagine that this person has broken the laws of the country, and if others do the same, we’ll refuse them entry, too.”

But in a Friday interview with a French newspaper, Putin sang a different tune.

“I never heard of that name before,” Putin told Le Monde. “If this person thinks his rights have been violated, let him go to court.”

VIEW FROM MIDDLE ENGLAND

A Rant from Anthony Rose

Fires are being stoked under Gordon Brown, Britain’s prime minister. The surprise is that it has taken so long. He inherited a strong economy from the previous (Tory) administration : so strong, indeed, that even his bullying incompetence has taken a decade to undo the enviable position to which he was heir. It now seems an exercise in irony to have described him as “Prudence” Brown. His survival – and the slowness of the unravelling of his reputation – may in part be attributed to the lack of any credible opposition. There was a clue when he sold our gold reserves at the bottom of the market in 1999. It seems to me that the recent cloaking of David Cameron in the vestments of a Prime Minister in Waiting are borne as much of desperation as of unqualified support of Cameron.

I'm pleased to announce that my talented friend and colleague Anthony Rose, a British solicitor with whom I have worked for some 15 years, has agreed to begin contributing occasional guest articles to this blog - the first of which will follow this post.

As background, I can tell you that Anthony is married with four children and lives in Gloucestershire, England. His professional life has been spent in corporate and commercial law, with particular emphasis on insurance and reinsurance, competition law and franchising. He has spoken before the European Commission on a number of competition law investigations, including zip fasteners, fire armour, predatory pricing (the leading case of ECS v AKZO) and cinema and TV lighting.

He is the author of a number of papers on competition law and on his hobby, military history. He holds a hot air balloon pilot’s licence and plays tennis enthusiastically but badly.

There's no shortage of things that the prime minister could say about the crisis at TNK-BP, but one can't help find these comments quite discouraging for BP's interests:

From the Wall Street Journal:

In his first public comments on the conflict, Mr. Putin, who was president when TNK-BP was formed in 2003, said in an interview with France's Le Monde released by his office Saturday that he had warned both sides at that time that the 50-50 structure would be problematic.

"You shouldn't do this," he said he told them. "Work it out between yourselves so someone has a controlling stake....There needs to be a boss," he said, noting that he said the Kremlin would have accepted either BP or its Russian partners as the controlling shareholder.

"You see the result: There's always friction over who's in charge," Mr. Putin said. BP declined to comment on the interview. The Russian shareholders couldn't be reached over the weekend.

This past Saturday was the third anniversary of the sentencing of Mikhail Khodorkovsky, bringing the topic of his unjust imprisonment back into the news again.

A group of 100 people, led by Oborona and Oleg Kozlovsky, held a rally in Moscow demanding the government to release political prisoners such as Khodorkovsky, a case which they say is a “link in the chain of attacks on Russian freedom, democracy, and on the principle of independent justice.”

The big news of course is that a lawyer representing Khodorkovsky met with the German foreign minister Frank-Walter Steinmeier at a St. Petersburg hotel to discuss the possibility of working with Russian authorities to have the prisoner moved from Siberia to Moscow (which is actually required under Russian law). According to the official statement on Khodorkovsky.info, lawyer Yuri Schmidt has confirmed that the meeting took place, but that it was requested by Steinmeier, and that they did not speak about any transfer - contradicting rumors in the media.

“Steinmeier asked me many questions and since he has a legal background all the questions were of a professional nature relating to the details of the case. Among them we discussed the various ways in which Khodorkovsky and Lebedev could be released from imprisonment legally, not on exceptional grounds,” Schmidt said.

Lastly, the Moscow Times is running a very good article about Khodorkovsky's parents, and the extremely difficult conditions they must go through in order to visit their son.

Robert Dudley, TNK-BP’s CEO, has refused to step down despite demands that he do so. During his interview with Le Monde over the weekend, Vladimir Putin said that he warned BP years ago about the risks of setting up the TNK-BP partnership with a group of Russian billionaires. "Several years ago they [BP] created a joint venture splitting the firm 50-50. When they did it, and I was present at the signing ceremony, I told them: 'Don't do it. Agree to one of you having a controlling stake'". The prime minister also said that Russian oil output would rise over the next few years after the country adopts tax breaks for producers developing remote fields. While Putin has reaffirmed that he does not believe Iran is seeking nuclear arms, France has called on Iran to open its nuclear installations to international scrutiny to clear suspicions about its nuclear ambitions. Ukraine's Security and Defense Council ordered the government to rescind a decision to break off an energy exploration and extraction contract in the Black Sea with US firm Vanco Energy. Imperial Energy is today expected to announce a surprise discovery in Russia. Two US senators are seeking to curb excessive speculation in the oil market by giving the American futures regulator the power to intervene in trading activities that occur outside its own legal jurisdiction. A joint venture of Gazprom and LUKOIL has discovered a large off-shore oil and gas condensate field in the Caspian Sea.

First Deputy Prime Minister Igor Shuvalov has stressed Russia's commitment to achieving higher standards of corporate governance, both at state-owned companies and private corporations. "If Russia is to become a major financial center, we need to embrace evolving corporate standards and be very clear about the niche we want to fill," he said. The number of M&A transactions dropped by almost a third in the first quarter of this year, indicating that the country’s M&A boom has come to an end. “Funds that invest specifically in Russia have posted sizzling returns in the past 12 months, and some managers now find the nation more attractive than its BRIC counterparts.” American Airlines starts flying to Moscow today. The Moscow branch of the Federal Migration Service abruptly stopped accepting new applications for foreign work permits last week, making it impossible for companies to receive permission to hire foreign nationals.