June 2009 Archives

Mr Putin insists that the measure will tackle a growing problem of gambling addiction among Russians and control an industry notorious for links with criminal gangs and moneylaundering. Critics argue that it will do the reverse, and simply drive gambling underground and into criminal control. (...)

Many casino operators plan to leave Russia, arguing that Government gambling zones -- in the Baltic exclave of Kaliningrad, the Altai region of Siberia, the Far East area of Primoriye and around the Sea of Azov in southern Krasnodar region -- will need $40 billion in investment to turn them into the Russian equivalents of Las Vegas, Atlantic City or Monte Carlo.

Mr Livingstone said that Metelitsa would examine opportunities in Kazakhstan, while others are looking to Armenia and Georgia.

No villas in the south of France for Russia's top bankers this summer, if Vladimir Putin gets his way.

Russia's prime minister has sternly warned bank chiefs not to plan any holidays until they have sorted out the financing of the country's recession-hit economy.

It will take a huge effort, with output forecast to fall by about 8 per cent this year and hopes of a quick recovery fading. 

The following is the official press statement from the offices of the German MP Dr Andreas Schockenhoff, who attended the second trial of Mikhail Khodorkovsky as an observer. His conclusions, as you can read below, are sharply critical of the legal farce currently being conducted by the Russian authorities. Perhaps with statements like this from Schockenhoff and the recent Council of Europe report, Europe can finally begin to strip away the long-standing presumption of regularity and benefit of the doubt extended forward Russia's politically controlled legal system.

MP Dr. Andreas Schockenhoff, Deputy Chairman of CDU/CSU Parliamentary Faction, states:

I just observed the trial against ex-Yukos boss Mikhail Khodorkovsky and his partner, Platon Lebedev. Before, I had received a briefing on the course of the trial by Mr Vadim Klyuvgant, head of the MBK attorney team.

The reason for wanting to draw my own picture of the proceedings against Mr Khodorkovsky and Mr Lebedev is the widespread concern in Germany, especially among the German Bundestag, that the current proceedings are not congruent with the constitutional and legal norms which Russia has committed itself to. Moreover, there is concern about political influence on the proceedings and that this trial will be used for political goals.

There are two reasons why both the authoritarians of Persia and the Orinoco Belt represent a common foreign policy challenge to the United States. Firstly, they both lean upon a brand of populism that is heavily dependent upon an outdated conception of anti-Americanism. They have woven a narrative, backed only by selective scraps of facts combined with myths, that the United States is a hostile, hateful, and aggressive power which is responsible for nearly every social problem of their country. Oh yes, and they also want to invade us, so we had better arm ourselves to the teeth.

This narrative makes for efficient politics and tosses more fuel to the ever growing fires of nationalism, but becomes a harder story to sell when you have an African-American president of an immigrant father with the middle name "Hussein" who is more popular on the streets on Tehran and Caracas than their own angry leaders.

Secondly, I consider Iran and Venezuela together because of their mutually supportive and burgeoning alliance (this has also been pointed out by Moisés Naím). They are cooperating together along with Russia to build a natural gas cartel, they have unregistered flights allegedly bring scores of Hezbollah members into Latin America, Chávez happily provides Iran with Bolivian and possibly Venezuelan Uranium, while the Venezuelan government even engages in vigorous anti-Semitism to please their friends in Persia and the Middle East (see this interview we recorded with a Jewish student leader who was attacked on state television). Additionally, while Iran maintains a stable of political prisoners such as Behrooz Javid-Tehrani, Chávez is doing his best to copy these tactics with prisoners such as Eligio Cedeño - a case I am directly involved in.

During the trial, it seems the prosecutor began reading from a document.  The defense attorney objected, arguing that the contents were secret attorney-client communications.  The judge asked the prosecutor whether she was simply quoting or including her own comments.  The assistant prosecutor told the prosecutor to ignore the judge and keep reading.  The furious judge asked the assistant how she dared suggest ignoring his question, and the assistant answered that it was because people in the audience were laughing.  The judge then responded:  "Well let 'em laugh! If the convoy [Khodorkovsky's guards--Trans.] deems it necessary, it will stop them."

So not only do the prosecutors brazenly flout the judge's authority, but the judge himself admits that the police decide what happens in his courtroom.  In other words, the forces that are prosecuting (or should we say persecuting?) Khodorkovsky are in charge, not the (supposedly) impartial judge.

This is what passes for "justice" in Vladimir Putin's Russia.

Magna, with which GM signed an MoU to buy 55 per cent of Opel alongside Russia's Sberbank in May, remains in a leading position to sign a definitive sale agreement. The Canadian group has the support of the Social Democratic part of Germany's government, regional governments and unions.

However, talks have hit obstacles over future access to GM's global technology, which Magna wants to secure on behalf of its Russian partners. If the sale proceeds, Magna and Sberbank plan to build Opel-based cars in Russia with Gaz, Oleg Deripaska's car company.

Some in GM feel Magna is using its political backing to press for unfair terms. GM also wants the future right to buy back some or all of the stake.

Duties of prime ministers are certainly complex, but few apart from Putin have taken to making blitz appearances in unexpected places and performing small miracles by reviving paralyzed plants. It started in the small town of Pikalevo, Leningrad oblast earlier this month where TV crews arrived just in time to show Putin stepping out of the helicopter, making a brief tour around the empty enterprises and forcing the owners to strike a deal to re-start production, not even leaving them the pen with which the contract was signed as a souvenir (Nezavisimaya Gazeta, June 11). Then came the visit to Barnaul where the prime minister inspected the foundation of a new medical center, but the mere fact of his presence in Altai krai was enough to resolve the labor conflict at the Rubtsovsk tractor plant that suddenly saw demand from new customers (Kommersant, June 20). After the visit to Ilya Glazunov's personal art gallery where the artist was eagerly attentive to the prime-ministerial advice, some commentators started to worry about Putin's connection with reality (Ezhednevny Zhurnal, June 16). Last week he paid a surprise visit to a super-market in Moscow and expressed dissatisfaction with meat prices, accepting reassurances that they would be immediately revised down (Vremya Novostei, June 25). Yuri Kobaladze, the executive director of the company that owns the chain (and a former general from the Foreign Intelligence Service) had the nerve to clarify later that it was only light hearted, but July sales were nevertheless duly announced (Moscow Echo, June 25).

It should be noted that an international industrial group Thales is one of the world's leading manufacturers of defense products. In 2008, according to the Stockholm International Peace Research Institute, the company delivered its products to customers in the amount of more than $9.3 billion, taking tenth place among other top defense corporations in sales volume. Memo to Pentagon: Thales also actively participates in supplying technology and products to NATO countries, so how exactly will its cooperation with Moscow affect French military relationship with Washington? Especially given how much Russia and US compete on the global arms market? Anyone?

Igor Klyamkin, of the Liberal Mission Foundation in Moscow, told VOA the commission may be parroting the rhetoric of Kremlin officials, without regard for the hidden meaning of their words.

Klyamkin says what they mean is that democracy and rule of law are alien to Russia; that its values and traditions are autocratic and authoritarian rule. The activist says, by using the same words [as the Kremlin], Americans indicate agreement with that kind of Russia.

"We want to forget (the past) and resume total cooperation on all the issues on which we have decided to collaborate," Mr. Berlusconi told journalists on his arrival at the meeting. 

Former Kremlin adviser Andrei Illarionov predicted that if Russia were to take military action against Georgia, it would take place directly after Obama's visit and that Moscow would portray its decision as having been made with Washington's approval. He also said Russia doesn't want to occupy Georgia.

"The main goal is to turn Georgia into something like porridge, from a political, military and ethnic point of view," he said.

"Most important is the destruction of the political stability of Georgia," he told reporters.

The basic answer is that Moscow, after years of trying unsuccessfully to reclaim its superpower status, has concluded that a new system is needed. Of course, a greatly weakened Russia is in no position to coauthor, with the United States, a new geopolitics. But it can initiate a conversation meant to transcend the asymmetries and tensions of the past two decades -- tensions that were manageable until recently but no longer appear so.

I see that Anders Aslund from the Peterson Institute née IIE is defending Latvia's currency peg again, this time in the Moscow Times. Given the dearth of such defenders among the conventional economics wisdom crowd, and considering Russia's kabuki-like rhetoric over its own currency policy, I thought this something worth drawing attention to. Not only that, but I dare say currency peg cheerleaders are a dying breed. This is not to say that pegs are uncommon, but simply that nowadays no country is ultimately considered to be fully developed until it can float its own currency in the international foreign exchange market, somewhat like sitting for an exam without a crib sheet to consult (Hong Kong is an obvious exception, but also not technically a country).

Now, I could get all petty-nitpicky-snipey with Aslund's defense and quibble that rejecting a comparison to Russia c. 1998 and ignoring a comparison to Argentina c. 2001 while choosing to compare Latvia with Denmark and Barbados - all while contending that Latvia is a special case - is a non-sequitur, self-serving, disingenuous and lazy all wrapped up in one. Or, I could get all econo-geeky and point out that substituting the triple-whammy of wage cuts, tighter government spending and deflation for a currency devaluation is tantamount to trading six for half a dozen when faced with an asset-liability mismatch as deeply embedded as Latvia's.

But that's not what I want to do here, in part because plenty of others have already taken enough of a swat at it from an economic standpoint (and indeed, those predicting a devaluation are many: Business Monitor International, Paul Krugman, Edward Hugh, Ambrose Evans-Pritchard, Marxist theoretician Boris Kagarlitsky, and, with an Op-Ed that frankly reads as though it was penned by one of his underpaid student assistants, Nouriel Roubini). No, what I would rather do is propose the Latvia currency situation as an example of politics trumping economics.

Примите наши самые искренние поздравления по случаю Вашего дня рождения. Несмотря на те условия, в которых Вы сейчас находитесь, мы от всего сердца желаем Вам крепкого здоровья, душевного покоя и семейного согласия.
Роберт Амстердам и все сотрудники блога.

Today is Mikhail Khodorkovsky's birthday, and sadly, the sixth birthday he has been made to spend in prison, deprived of liberty and held away from family, for no reason beyond that of the caprices of an unaccountable power unrestrained by law.  Though in the middle of his second trial, there were no hearings today - in fact Mike spend the afternoon doing a Q&A with the Russian public on Gazeta.  Some 16 supporters celebrating his birthday were placed under arrest in Moscow.  For those who can, I encourage them to stop by the official trial site to drop a birthday greeting of support.  I am grateful to Jeremy Putley who published a very nice letter on A Step At A Time. 

Happy birthday, Mikhail Borisovich - let's spend the next one somewhere else.

- Robert Amsterdam

RFE/RL: Lukashenka seems to enjoy acting as though he is bringing his interviewers in on a big secret -- real or imagined. "Did you know that it was thanks to me that there was no blockade of Abkhazia under [former Georgian President Eduard] Shevardnadze?" "Did you know that Russian [Finance] Minister Aleksei Kudrin's dire forecast about the Belarusian economy was meant to create panic?" Is this a tactic, or a philosophy?

Padhol: This is not only a philosophy but a self-preservation instinct as a politician. Being a supra-authoritarian dictator, he is constantly making mistakes in the course of governing. For instance, trade with Russia resulted in the construction of over 100 new dairy plants. And what's to be done with them now?

He constantly has to conceal the fact that he's the one who's the source of these mistakes. And he's constantly inventing these conspiracy theories to create a picture of the world in which he is always the infallible one, the one who made the best decisions. This secrecy thing allows him to constantly perform his "I am the best" shtick. Why's he waging such a battle with the independent media? Because they immediately expose him: "There you said one thing, here you say another."

As the global recession deepened last winter, Russia spent about $200 billion, or a third of its precrisis foreign currency reserves, defending the ruble during a gradual devaluation. This spring the tables quietly turned as oil prices rose, and the Russian Central Bank has made back about $30 billion since March by intervening to prevent the ruble from appreciating, the report said.

Yet other factors are weighing on Russia's prospects, the World Bank report said. A swoon in domestic demand, worse-than-expected global growth, tight credit and declining infrastructure investment are taking a toll, it said.

Russia's ex-prime minister and leader of the Russian People's Democratic Union Mikhail Kasyanov has claimed he is ready to appear as a witness in the trial of former head of the defunct oil company Yukos Mikhail Khodorkovsky and his business partner Platon Lebedev.

"I am ready to appear in court for hearings in the Khodorkovsky-Lebedev case and to answer all questions," Kasyanov told Interfax on Friday, when asked to comment on claims by Khodorkovsky's defense, that several persons, among them Kasyanov, have been summoned to court as witnesses.

Kasyanov also said that, "during his tenure as prime minister he was critical of the law enforcement agencies' moves from the first day of Lebedev and Khodorkovsky's arrest." "Later, after examining individual aspects of the indictment, I declared that the case was politically motivated," he said.

One need not look further than today's edition of the Times of London to find the degeneration of dialogue between Georgia and Russia. I will let the quotes speak for themselves...

In an article headlined, "Vladimir Putin wants to see Mikheil Saakashvili hanged 'by the balls'", we have the following:

President Medvedev has set out the Kremlin's policy just as graphically, calling Mr Saakashvili a "political corpse" who "no longer exists in our eyes". He told Western analysts that his Georgian counterpart was "mentally unstable".

Same day, another article with the headline, "Mikheil Saakashvili says Russia started war to gain energy supplies":

"This is Georgian territory and this is bulls**t that we started war in our territory! We didn't attack Russia. We didn't go there and bomb Moscow," Mr Saakashvili told The Times. "If there are idiots who say we started the war, they are wrong."

"They want to do Checkpoint Charlie in my own country, exactly 20 years after the fall of the Berlin Wall."

And then Saakashvili again over here:

"I do not know what is playing out in Vladimir Putin's [the Russian Prime Minister's] head. I think everybody but him wants peace."

Pardon me, but I just can't help thinking about a certain exchange between two other adversaries of years past:

"How much is pork?" Putin asked astounded store attendants, Interfax reported.

Seeing a price tag of 335 rubles ($11) and consulting a pricing table that listed the item's purchase price as 160 rubles, Putin's calculation yielded an unhappy result.

"This is double the price. Is that normal?" the prime minister asked Yury Kobaladze, the managing director of X5.

"Is 120 percent a high markup?" Kobaladze asked.

"Very high," Putin said.

"It will be lowered tomorrow," Kobaladze said.

Neither the murderer, nor the person who ordered the contract-style killing, have been found.

"It is desirable that this case is brought to an end, it is a question of honour," Pavel Krasheninnikov, head of the parliament's civil law committee, told Interfax. "Politkovskaya was a person of conscience, it is important for everybody that her killer is found."

Karinna Moskalenko, who represented Ms Politkovskaya's family in the trial, said the murder investigation had been inadequate and the victim's rights had been violated.

"We need answers to difficult, but at the same time simple questions. "Who ordered the killing, who financed the killing and who carried it out?" she said.

On Feb. 1, 2007, a Venezuelan judge named Yuri López admitted a complaint from a defendant, denouncing the improper conduct of judicial officials who shared his case materials with third parties, and then later perjured when questioned on the topic under oath.  Though she was warned by two of her superiors to dismiss the complaint, the judge saw clear merits in the evidence and admitted the complaint which indicated the illegal conduct of judicial officers.  It was a decision that would end her career in the Venezuelan justice system.  After being violently threatened in court by one of the named judicial officials, the following day Yuri López was placed on mandatory vacation, and in going to the school to pick up her daughter, she narrowly averted a kidnapping attempt by men she suspects were linked to the political controversy at work.  She now lives in Miami under political asylum, and was recently profiled by Casto Ocando in the Nuevo Herald.

The only reason that López lost her job and had her life and her family threatened was the fact that the defendent was one Eligio Cedeño, a political prisoner of the Venezuelan government.  The story of this judge and many others who have been caught up in the crossfire of Venezuela's politically corrupt judicial apparatus are detailed in a new white paper I have published along with my colleagues Gonzalo Himiob and Antonio Rosich.

For some reason I keep coming back to the story of this judge and the attempted kidnapping of her daughter.  What possible excuse can be given for this kind of conduct?  In debriefing various individuals on the conditions of political prisoners under the Venezuelan authorities, the regime's supporters argue that such conduct is acceptable because President Hugo Chávez holds regular elections.  What is not discussed is the near absolute lack of legislative or judicial autonomy, problems of freedom of the press, or one of the many other ways that Venezuela lacks a level playing field.  There are terrible violations of human rights and due process occuring with regularity in Venezuela, and I believe it is a great pity that the political ambiguity achieved by Mr. Chávez is sufficient to have these abuses ignored. 

It is hoped that this new report, which gathers together a wealth of information about the many victims of chavista justice, can help contribute to the understanding of the judicial reality in Venezuela, and be useful in moving toward a unified call upon the Venezuelan president to observe his own laws and international commitments. 

"Russian corporates are used to handling volatility and difficult times. They can adapt quite quickly. Other countries are not used to such dramatic changes in the economic landscape. Russian firms are used to being thrown around and rebounding very quickly. They have had periods of high growth and high inflation in the past, and they have recovered. Russia is better positioned to bounce back when markets return. Russia will bounce back harder and quicker [than in 1998]."

"They still need to do a lot on cleaning of banks' balance sheets. Non-performing loan levels are rising quickly." Most estimates put the proportion of non-performing loans in the system at between 10% and 20%. "There will be a major shakeout of Russia's 900 banks. Risks are quite concentrated in the largest banks. The smallest banks don't take risks. We expect some restructuring in the banking sector."

"The country needs to produce a good-bank/bad-bank structure, but politicians appear to be shying away from the big decision." Such a lack of clarity mirrors the early reluctance of Russia's politicians to admit that the country was facing any sort of crisis.

Prosecutors accuse the ex-Yukos managers of embezzling 350 million metric tons of oil, equivalent to Yukos' entire oil output for six years. Defense lawyers and several independent legal observers have expressed bewilderment at the new claims. They note that in their previous trial, the two managers were convicted of underpaying taxes on this same output, implying that it was legal business activity. The alleged embezzlement occurred when Yukos was Russia's largest oil company and one of its most visible companies overall.

Now these concerns have been echoed by the author of the Council of Europe report, Sabine Leutheusser-Schnarrenberger, a former German Minister of Justice. "The legal justification of the new criminal cases against Mr Khodorkovsky and Mr Lebedev has me perplexed," she writes, adding that "any accusation must fulfill minimum standards of logic."

"The news about the preservation of the base was an extremely unpleasant surprise for us. We did not anticipate such a dirty trick," the foreign ministry source told Kommersant.

The source said that Russia would give a "corresponding response" and dismissed the base's new description as a "transit centre", saying that Manas would essentially remain a US military base.

"Renaming the base a centre is a cosmetic alteration. The real nature of the US military presence in Central Asia has not changed, which goes against the interests of Russia and our agreements with the Kyrgyz government."

The comments were much harsher than Russia's official reaction, which said Kyrgyzstan had the "sovereign right" to make such a decision.

The following is an exclusive translation from Novaya Gazeta, published on Monday, describing the pandemonium and absurdity which occurred during the Khodorkovsky trial on days 35-38.

"Your honor, why is the public laughing?"

Significant changes took place over the past week at the trial of Khodorkovsky and Lebedev: the judge became strict towards the procurators

Day thirty-five

...A tense situation developed in the Khamovnichesky Court on Monday [15 June] -- the procurators, despite a demand from the judge, refused to disclose the origin of one of the pieces of evidence.

The incident occurred just before evening, when the discussion turned to the law firm of "ALM-Feldmans and partners," which in the past had serviced the interests of YUKOS. In order to underscore the principality of the moment, it's worth it to remind: the only reason for the transfer of the second case to the Khamovnichesky Court -- the fact that "ALM-Feldmans" is found precisely in the jurisdiction of this court. Practically all the employees of this firm have been declared wanted. Still in the time of the first trial of Khodorkovsky and Lebedev, multitudinous searches and seizures of documents (including confidential ones) were carried out in "ALM-Feldmans" without the sanction of a court and observance of any guarantees of lawyers' activity whatsoever [i.e. attorney-client privilege--Trans.].

As countries announce their emissions targets in advance of the talks in Copenhagen this December, there's been some maneuvering on this issue. The Australian delegation has proposed a plan that would allow each country to submit its own schedule for reducing emissions, effectively allowing them to choose their own baseline year. Japan would like to use 2005, because the country's emissions have been creeping up in recent years.

All this, of course, has to do with politics. Nations that commit to emissions targets want other countries to try just as hard. It's easier for politicians to sell belt-tightening at home if it appears that everyone in the international community is shouldering an equal burden.

And on that front, Russia's plan looks like a dud.

Remember back when the Russians bribed the Kyrgyz government with a $2 billion aid package in order to kick the Americans out of the Manas airbase, severely hampering the U.S. government's ability to operate in Afghanistan?  Well it looks like those clever guys in Bishkek are double dipping, and are now taking more than three times the rent to allow NATO to continue to use the airbase.  (I wonder if the Russians got a money-back guarantee on this one.)

There also appears to be a presidential "election" next month that Kurmanbek Bakiyev is hoping that Washington will not criticize.  It makes one wonder how they assign value to all these political and strategic favors - I would think that having everybody ignore a stolen election would be worth at least one free airbase.  So at the end of the day, Bakiyev gets $2 billion from the Russians for nothing, three times the rent from the Americans while retaining the right to kick them out in another six months, and a criticism-free seizure of power.  Oh yes, and the war continues, and Obama and Medvedev have one less sticking point for the July summit.  You've got to love Central Asian politics.

Nevertheless, Obama might try to pull off something in Moscow that no other U.S. president has succeeded in doing: reaching an agreement with the Kremlin on issues of common interest and at the same time offering a different world vision to Russian society.

When it comes to China, Moscow has been developing a strong military-economic relationship with its giant neighbor for the past two decades, seeking to avoid any major internal or external component to jeopardize these ties. So its comes as a surprise that Russia has had a hand in the development of a third generation advanced fighter jet for the Republic of Taiwan - mainland China's official opponent. This was reported recently by Agence France-Presse, referring to the Chinese edition of The China Times. The information source argues that technology for the fifth generation F-35 Lightning II, which is currently being developed by the American corporation Lockheed Martin for the United States and its allies, was used in creating the Taiwanese fighter.

According to The China Times, Taiwan has begun work on a new military aircraft after appeals to the U.S. with a request for the sale of 66 fighter aircraft F-16C/D. Washington, as previously reported, denied this request, not wanting to spoil relations with Beijing. Chinese journalists also point out that the plane, developed by a public company Taiwan Aerospace Industrial Development Corporation (AIDC), has two engines and has a short take-off capability. Its development, according to The China Times, was completed only after Russia sent its experts to Taiwan - the source did not specify what Russian organization or company they represented.

When the judge ordered a recess, Kasparov confronted prosecutor Gyulchekhra Ibragimova as she walked past him on her way out.

During the brief and tense exchange, Ibragimova told Kasparov she respected him but added he should have been playing chess rather than wasting his time in court.

"You are an amateur" in the courtroom, she told him.

A smiling Kasparov accused the prosecution of seeking "to replace the force of law with the law of force," and suggested she and other prosecutors were "selling the honor of your profession" by pursuing the case against Khodorkovsky.

Der Spiegel has supposedly obtained confidential documents written by the EU team led by Ambassador Heidi Tagliavini that is investigating the war last summer. There are quite a few interesting little nuggets in Der Spiegel's write-up. Here are a few:

The confidential investigative commission documents, which SPIEGEL has obtained, show that the task of assigning blame for the conflict has been as much of a challenge for the commission members as it has for the international community. However, a majority of members tend to arrive at the assessment that Georgian President Mikhail Saakashvili started the war by attacking South Ossetia on August 7, 2008. The facts assembled on Tagliavini's desk refute Saakashvili's claim that his country became the innocent victim of "Russian aggression" on that day.

The experts found no evidence to support claims by the Georgian president, which he also mentioned in an interview with SPIEGEL, that a Russian column of 150 tanks had advanced into South Ossetia on the evening of Aug. 7. According to the commission's findings, the Russian army didn't enter South Ossetia until August 8.

But the report apparently doesn't let Russia entirely off the hook. From Hamburg-based international law expert Otto Luchterhandt, another commission member:

Georgia's attack, Luchterhandt argues, constitutes a breach of this agreement, thereby giving Russia the right to intervene. Nevertheless, he writes, the Kremlin, with its overwhelming intervention in western Georgia, can be accused of "violating the principle of proportionality."

FIRST BLOOD

Lukoil will expand Russian energy companies' push into the European market with a $725 million bid for a 45% stake in a Dutch refinery owned by France's Total.

The stake, previously owned by Dow Chemical, was slated to be purchased by US-based Valero until Total exercised its pre-emptive rights to purchase the stake and simultaneously agreed to sell the holding to Lukoil. Total will keep a 55% stake in the refinery.

The transaction coincided with President Medvedev's visit to the Netherlands.

Total officials explained the last-minute switch to Reuters:

"Russian crude oil, for which LUKOIL is one of the major suppliers, represents one of the main sources of the Vlissingen refinery," Europe's largest refiner, which retains a 55 percent stake in the plant, said in a statement.

"More broadly, this type of crude oil represents a significant portion for the supply of Total's European refineries."

Chernovik editor Nadira Isayeva told the AP that officials were seeking to close the newspaper because they were angry over its exposure of police brutality and corruption, which in turn helped swell the number of Islamic militants:

"The main reason behind the persecution of the newspaper is our journalists' opinion about the activities of law-enforcement structures, which differs from the official view."

A regional government official responded that the lawsuit was a legitimate response to what he described as the paper's attempt to justify the militants' actions, specifically:

"They can write about violations by some police officers, but they shouldn't blacken the Interior Ministry as a whole."

"The political risk is very severe and the rise of the chauvinistic, xenophobic far right is a disturbing development," said Mr Soros, in a reference to the advances made by extremist parties in the recent European parliament elections, including Jobbik in Hungary, the Slovak National Party and the Greater Romania Party.

"The EU must do more in terms of providing support, including financial support. The International Monetary Fund programmes [launched in Hungary, Ukraine, Latvia and about five other countries] are very severe in terms of cutting budgets. The EU must solidify support for EU values," said Mr Soros.

Russia plans to release 30 percent more greenhouse gases by 2020 under an emissions target scheme announced on Friday by President Dmitry Medvedev.

"Based on the current situation by 2020 we could cut emissions by about 10-15 percent," Medvedev told Russian state television, according to a copy of his comments supplied by the Kremlin.

Arkady Dvorkovich, the Kremlin's chief economic adviser, later clarified to Interfax news agency that the reduction would be from 1990 levels, before the Soviet Union fell and Russia's heavy industry collapsed.

Makhmalbaf also claimed to have information that Russia had provided high-ranking consultants to teach Iranian authorities effective ways to repress the opposition.

Russia was one of the first countries to congratulate Ahmadinejad of victory in Iran's highly contested presidential elections.  Observers noted irregularities during the vote, and Mousavi has called the June 12th election a "charade."

As result of Russia's quick support for Ahmadinejad, as well as Makhmalbaf's accusations, supporters of the Iranian opposition staged a protest outside the Russian embassy in Toronto.

The European Union will not help Ukraine pay for Russian gas imports but international financial institutions may help avert a looming crisis, European Commission President Jose Manuel Barroso said.

"That is not our responsibility, I should make that clear," Barroso told reporters when asked about EU help at a summit of leaders on Friday.

"I thought that after the August conflict, Saakashvili would come to his senses," he said. "But there have been no changes. Reserves are being enlisted, and the army is being called up. I do not want to fight against Russia, so I left."

In an interview with Echo Moskvy radio, Temuri Yakobashvili, Georgia's minister of reintegration, called the affair "a very cheap provocation."

He added, "The Georgian leadership laughs at these gimmicks by the Russian special services."

Today the defense team for Mikhail Khodorkovsky is running a letter, bearing the signature of Robert Amsterdam, in the global edition of the Financial Times.  The story has been covered by Dow Jones and some other news outlets.  Below is the full text of the letter.

An open letter to the boards of directors, management, auditors, and shareholders of Rosneft, Gazprom, Eni, Enel, and other purchasers of Yukos assets.

RE: Russia's obligation to seize your assets?

Beginning in December 2004 with the sham tax auction of Yukos's main production subsidiary Yuganskneftegaz, management and lawyers and shareholder representatives for major oil companies as well as private investors have had to evaluate the risk of purchasing Yukos assets and, subsequently, the oil produced by one of the prior production subsidiaries. This dilemma continued during the illegitimate Yukos bankruptcy where the receiver liquidated the company's assets through a series of auctions. Actions for damages resulting from the expropriation of Yukos have been filed by Yukos shareholders, e.g., the Hulley and Yukos Universal Energy Charter Treaty case and minority shareholders under bilateral investment treaty cases, as well as an action filed by ex-Yukos western management before the European Court of Human Rights and defenses asserted in other actions.

• Russia's larger interest lies in calming, not stirring up, secessionist ambitions in the Caucasus, a violently fractured part of the world that includes other restive regions like Chechnya.

• Whatever hopes the Russian-backed separatists in Abkhazia might still retain for a semblance of international legitimacy vanishes with the withdrawal of the United Nations mission.

• Abkhazia secessionists will be hard pressed to calm concerns about the treatment of minority ethnic groups when they expel the only neutral monitors from their territory.

• The fact that only Russia and Nicaragua recognized the Abkhazia's independence after last summer and that Russia voted alone on Monday further isolates it from the rest of the world on this issue.

The jury apparently is in for now - a Treasury Department official says that the $134.5 billion of treasury bonds recently seized at the Swiss-Italian border are fakes. As much as I wish there was something more to this story, sadly, there is not, and I'm generally not of the mind to conjure up conspiracy theories. I do, however, remain more than open to entertaining others' conspiratorial whims, so if anyone out there has an unsubstantiated theory that has a pig's chance of actually being something close to the truth, by all means let's hear it!

Robert Amsterdam is currently in Brazil, where he met yesterday with Senator and ex-President José Sarney, to discuss the plight of political prisoners in Venezuela, and in particular the case of Eligio Cedeño, a Venezuelan banker who has been languishing in a Caracas jail for more than two years without trial, and who has recently been committed to another two years incarceration. More detail of the visit on the Venezuela pages of the website in English and in Spanish.

"Brazil is a highly respected regional leader and shining democratic model which many Latin Americans look up to," said Amsterdam. "When it comes to these aberrant violations of human rights and imprisonment of political prisoners in Venezuela, no friend, ally, or partner can afford to remain silent."

The French newspaper L'Express also has an article on the topic.

Russia's aspiration to membership, which in turn opened up the prospect of joining the Paris-based OECD club of rich countries, demonstrated its desire for integration into the global economic system. Now the Kremlin seems to prefer being a distinct regional power that can offer alternative economic and military institutions and alliances to the West's. Mr Putin has long argued that international organisations such as the WTO and the International Monetary Fund have outlived their day and should be supplemented or even replaced by regional clubs. In the multipolar world that Russia advocates, it sees itself as a centre of regional influence. A military alliance between Russia and Uzbekistan, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan, called the Collective Security Treaty Organisation (CSTO), should be "no worse than NATO", Dmitry Medvedev, Russia's president, argued recently.

Russia sees any foreign project that touches the former Soviet Union, including the European Union's new eastern partnership, as a direct challenge. Yet the bigger threat to its ambitions to reassert regional influence lies in its own attitude towards the neighbours. Even as it was signing a customs union with Belarus, Russia imposed a ban on Belarusian milk products, which it claimed did not meet its new packaging rules (rather as it once argued that Georgian wine, fruit and mineral water were of substandard quality). But Alyaksandr Lukashenka, the autocratic president of Belarus, interpreted this (probably accurately) as a punishment for being rude about Russia and refusing to back its policy of recognising the independence of the Georgian territories of Abkhazia and South Ossetia.

Lawmakers of Russia's southern Siberian Republic of Altai have resolved to name one of the mountains on its territory after the energy giant Gazprom, the republic's official web site said on Thursday.  The initiative to name the 3,412-meter-high mountain after the Russian energy giant was put forward by the region's head, Alexander Berdnikov.

"The request will be sent to Russia's main geodesy and cartography department," the website said.  Mountain climbers are expected to ascend the mountain, the highest in the Kurai range, to install Gazprom symbols this summer.

The largest emerging markets are recovering fast and starting to think the recession may mark another milestone in a worldwide shift of economic power away from the West. Estimates for their national incomes in the first quarter were better than expected. In the year to the end of March GDP rose by around 6% in China and India. The two accounted for no less than half the world's increase in wireless-technology subscriptions in that period. In Brazil gdp fell slightly in the first quarter but it is growing faster than the Latin American average and most economists think growth will return to its pre-crisis level as early as next year. In contrast, output in most large industrial economies is still falling. The exception in the BRICs is the host: dragged down by plunging oil prices last year, Russia's economy shrank by 9.5% in the first quarter, the worst performance in the G20 after Japan.

A country that still hasn't come back home from the war

By Grigory Pasko, journalist

Once upon a time on a combat ship, where I had come on assignment from my editorial board, the commander, who was angry over something or other, said to me:  "Journalist, why have you come? I am not obligated to talk with you. There's not one word about journalists in this ship's Charter."  Naturally, I replied to him that he was mistaken, as I had come under orders from his superiors.

But the biggest similarity between the current protests and the Islamic revolution is the population's widespread confusion about what comes next.echo In a year from now, people will look back on this week and say that what happened was inevitable. Whatever happens, they will predict the outcome retroactively. Already, experts are providing rough drafts for these explanations, such as:

• A charismatic and enigmatic opposition leader is serving as a rallying point for different sectors of society, who all imagine that he shares their varied political positions; the opposition is too small and divided to pose a serious threat to the regime.
• The main leaders of the opposition movement -- presidential candidate Mir Hossein Musavi and his ally, former President Mohammad Khatami -- are not calling for a revolution, only for a resumption of the Islamic Republic's previous electoral procedures; during the violence of a revolution, moderation often gives way to more radical demands.

• Dollar bonds sold by China earned 11.4 percent in the past year, more than double the 4.6 percent for debt in yuan.
• Brazil's U.S. currency bonds returned 3.6 percent as real-based notes lost 4.9 percent
• Russia's dollar bonds outperformed with a 1.9 percent loss compared with a 7 percent drop in ruble debt

• "It's not up to politicians to determine which currency will be the world reserve currency," said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt.
• Bonds sold in dollars have beaten domestic debt in part because Russia and China manage the ruble and yuan. Those denominated in the U.S. currency can trade more freely, giving fund managers confidence they can sell the securities and get their money when they need it.
• China and India are "highly restrictive on the local debt side" and Russia has "quite an illiquid market" for foreign investors, said Cristina Panait, an emerging-market strategist at Los Angeles-based Payden & Rygel, which manages more than $50 billion. "Currency performance is a big portion of returns."

While Russian government officials parse the ins and outs of dollar diplomacy, Kazakh Central Bank Governor Grigory Marchenko said in no uncertain terms in London today that Kazakhstan is a ready buyer of dollars for at least the rest of the year. What he specifically told Reuters:

"Now we have been buying dollars in small quantities. There are more petrodollars flowing in the country, and exchange rates have been stable and we don't see any threat. Actually we believe we will be buying more dollars until the end of the year but we will maintain this medium term band of 150 tenge plus/minus 5 tenge."

This intention relies at least in part on commodity prices maintaining more or less at their current levels. Looking deeper at Kazakhstan's current economic outlook, Bloomberg's latest on the country's IMF needs, or lack thereof, seems to cover all the bases.

Two things unmentioned in all of this that jump out at me. First, Bloomberg's $43 billion quote for Kazakhstan's reserves strikes me as very high. I am assuming that includes the country's sovereign wealth fund holdings, which stood somewhere in the $25 billion range in their own right before economic crisis came to central Asia. Second, I recall watching in person Kazakhstan's Planning Minister last fall say that as long as the price of oil remains above $65, the country's sovereign wealth fund would still grow by $9 billion annually (this was when the price of oil was just above $100).

"It was incredibly surprising to us how quickly people had abandoned Russia," said Alex Turkeltaub, Frontier Strategy Group's chairman. (...)

Frontier Strategy disagrees. It says Russia's failure to diversify its economy away from oil and gas meant it didn't grow between commodity cycles. Unlike Brazil and China, there was little evidence that a broad middle class was emerging in Russia with bulging wallets and the confidence to spend. And with its declining population, Russia's demographics were less attractive than, say, those of Mexico.

But perhaps the biggest turn-off for investors was political uncertainty. People are still unsure who's really running the country - prime minister and former president Vladimir Putin, or his successor, Dmitry Medvedev. "In Russia, we don't know who's really in power and there's no consistency about policy," says Mr. Turkeltaub.

Turkeltaub is not exactly wrong here - the pattern of expropriations, clan infighting, and near total lack of rule of law demonstrated by the political prisoner cases make the country a risky bet.  But doesn't this imply somehow that China's authoritarian model is preferable to business?  Or in other words, if Vladimir Putin were to step back in with full force, retire Medvedev and the attempt to fake democracy, the investment dollars would start flowing again at least because policy would be perceived to be consistent?  Well, I suppose nobody ever said that foreign investment was necessarily encouraging of democracy.

Sergei Baidakov, the Deputy Mayor of Moscow, told reporters last week that any casino that failed to shut down by the end of the month would face legal action, and suggested that most casinos would become shops or restaurants.

The minor problem is that none of these zones is yet ready for operation. Indeed, building and construction work has not even started, according to reports. One Russian publication sent a reporter to check out progress on one of the zones, who discovered open fields filled with grazing cows.

One theory is that the ban is the result of an anti-Georgian campaign that spiralled out of control. Many casinos are rumoured to be controlled by Georgian mafia figures, and some were raided during a political spat between Russia and Georgia in 2006. It was at that time that the then-President Vladimir Putin first proposed the law.

Andrei Nekrasov is a Russian documentary filmmaker whose work has often taken a sharply critical approach to the current government in Russia (including a Cannes-award winning doc on the Litvinenko case).  He's been published several times on this blog, is a friend of Bob Amsterdam, and recently suffered the passing of his wife and co-producer Olga Konskaya.

A few days ago we heard that his home in Finland was broken into and violently vandalized - the second time such an incident has taken place.  There is fair reason to believe that the assault on the property is related to a new film he has coming out.  Anyways, without further ado, here is the brief note that Andrei sent us detailing the incident (which was also covered by the Finnish newspaper Helsingin Sanomat).

It's an interesting move for the Obama administration to propose the involvement of Russia in an alternative anti-ballistic missile shield effort, just two and a half weeks before the state visit to Moscow.  On the one hand, Washington is opening the door to a possible cancellation of the proposed sites in Poland and the Czech Republic, while on the other hand calling the bluff on the Kremlin's contention that the purpose of the entire project was directed against Russia.  Now that Moscow has been invited to play a central role (which they have at least initially rejected), the onus has been passed over to their side to figure out a reasonable and cooperative solution, while previous arguments about U.S. intentions are significantly weakened.

That said, some comments from Deputy Defense Secretary William J. Lynn are breathtakingly optimistic:  "A U.S.-Russian collaboration would have an additional benefit of a diplomatic signaling to the Iranians that this is an unacceptable course for them to pursue and that they will face a concerted international front, should they proceed down that path."  In addition, Gen. James Cartright from the Joint Chiefs of Staff said that "Probably the greatest leverage is the partnership and the message that would send. That would be very powerful."

The diplomacy is clear-cut in this case:  if the Russians want, they can get the Polish and Czech missile sites cancelled by July 6 - and if that happened, it would probably be the biggest breakthrough in U.S.-Russia relations in recent memory.  However the comments from the military brass carry some weighty assumptions, most importantly the mistaken idea that Russia is in any mood make deals right now, even if they accomplish their stated goals.

Does anyone actually think this will happen? 

[...] the Kremlin has a nightmare: That Russia's weak economy -- and the first decline in incomes in a decade -- will undermine the nation's de-facto one-party system.

"We're trying to reduce social tension," says Svetlana Polikova, a senior forestry official in Vologda, a region that's also home to Russia's answer to Santa Claus.

Even with the third-largest foreign-currency reserves in the world, Russia can't afford to toss around welfare aid like sugar plums. But "wood is something we have reserves of," says Yevgeny Trunov of Vologda's Forestry Department.

I don't typically like spending a lot of time on stories that have more coverage by blogs than actual news outlets, but this one is really too juicy to pass up and it also continues our ongoing conversation about the dollar's prominence as a global reserve currency. Two men were recently stopped by Italian authorities while trying to cross the border into Switzerland with a fake-bottomed suitcase containing $134.5 billion worth of US Treasury bonds. That's right - billion with a B. Let's take just a moment to review which of the United States' various creditors even hold that much US debt. According to the latest data from the US Treasury Department, this is what we have to work with through April of this year:

China ~ $763.5 billion
Japan ~ $685.9 billion
Caribbean Banking Centers ~ $204.7 billion
OPEC ~ $189.5 billion
United Kingdom ~ $152.8 billion
Russia ~ $137 billion

Caribbean Banking Centers include Bahamas, Bermuda, the British Virgin Islands, Cayman Islands, Netherlands Antilles and Panama.

From the above list, which is the most likely to attempt smuggling undeclared $134.5 billion in treasuries across the Italian-Swiss border? Which is LEAST likely to attempt it? Got your guesses? No cheating! Answer after the jump.

"This trial is a test case of the Russian justice system's credibility, as demanded by President Medvedev, and the respect of Council of Europe standards," the paper reads.

"There is concern that the trial will be used for political goals. If this were the case, the authorities would damage not only Russia's reputation, its economy and its diplomatic ties, but above all the legal and human rights principles that Russia itself has vowed to adhere to."

In an essay posted on Grani.ru today, Irina Pavlova points out that "the post-Soviet powers that be have done everything to revile and marginalize the liberal idea in Russia and those few liberals who were and remain the true supporters of this idea," something that the liberals themselves assisted by their involvement in the nomenklatura privatization of the 1990s.

But with the coming to power of Vladimir Putin in 2000 and his efforts to demonize that period and "strengthen the regime," the situation became even more dire for liberals as the Russian government moved in a direction which even its apologists in Russia and the West say is "little distinguished from a dictatorship."

"A year-and-a-half ago we were worrying about whether Gazprom would get Bovanenkovo done in time" to meet rising demand, said Prof. Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. "Now that's right off the agenda. The urgency has gone."

He said he had always been skeptical that Gazprom would be able to launch the field by 2011 as planned, and it was "extremely convenient" for the company to be able to attribute the delay of the project to lower demand.

Mr. Ananenkov said Gazprom planned to produce between 450 billion and 510 billion cubic meters of gas this year, rising to 523 billion cubic meters in 2012. But even that would be sharply down on last year's production figure of 550 billion cubic meters.

Furthermore, Medvedev and Kudrin would like to see Russia join the O.E.C.D. Herein lies the rub: Russia today doesn't fit the organization's criteria for property rights, transparency and the rule of law.

Corrupt Russian judges regularly take property away from foreigners, such as Norway's Telenor. Russian law enforcers seized shares of value investors, such as Hermitage Capital, and then banished its owner, William Browder, from Russia. Mikhail Khodorkovsky and his partners and staff are facing a second round of trials for made-up crimes.

"Between the BRIC countries, there is really little in common," said Yevgeny G. Yasin, head of research at the Higher School of Economics in Moscow. "Each of them has its own destiny, its own special character, and it will be much more difficult for them to agree among themselves than separately with Western countries."

Brazil and India are thriving democracies but the prime characteristic of most of the governments gathered here in the Urals is authoritarian, often of the ugliest variety. Apart from China and Russia, the SCO comprises the former Soviet states of Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. President Ahmadinejad of Iran, busy crushing protest over his "landslide" re-election, has observer status, along with India, Pakistan and Mongolia. President Karzai of Afghanistan will also be present.

The Russian leadership that Mr. Obama will meet, according to Lilia Shevtsova, a senior associate at the Carnegie Moscow Center, a think tank, is representative of "a system based on an official mechanism of anti-Americanism'.

As supplier of Iran's nuclear wherewithal, Russia can make a difference by acting to halt its drive toward a nuclear weapon.

But what's the point for Russia of delivering the United States from the grief of having to confront the mullahs, when the American anti-missile shield, which Moscow doesn't like, may fall on its own? That could come without trade-offs if Mr. Obama distances himself from this Bush administration idea, or Poland or the Czech Republic bails out from deployment of its interceptors and radar.

Andrei Illarionov, a former Putin economics adviser and now a senior fellow at the Cato Institute here, told me that he had spent considerable time trying to explain to people in the United States that "help from the Russian leadership on Iran is just impossible. It's such a naïve idea."

By way of comparison to my last post on this topic, Bloomberg, via the Moscow Times, has done its own quote-tracking exercise of Russian discussion about the dollar, surveying some analysts on how they interpret the seemingly differing stances that Dmitry Medvedev and Alexei Kudrin have taken.

I leave it to you to peruse the entire list of Bloomberg's findings but to me the two most telling statements in the article are the June 6 comment from Kudrin that even if the US sovereign rating were cut, treasuries would still be "among the most liquid investments", and UralSib's chief economist Vladimir Tikhomirov with this comment:

Talk of reducing the role of the dollar is a "double-edged sword," for Russia, Tikhomirov said. "It doesn't so much hurt America. Any hint that Russia is going to change the structure of its reserves is going to hurt Russia as well."

"The Sakaashvili regime put an end to the territorial integrity of his country, and on the world map two new states emerged, the Republic of Abkhazia and the Republic of South Ossetia."

"It is very unfortunate and alarming that the Secretariat has submitted to Russian blackmail."

Warnig's career was furthered by his alleged relationship with KGB Lieutenant-Colonel Vladimir Putin in Dresden. According to German press reports, the two men were allegedly collaborating on recruiting West German citizens to work for the KGB according to Warnig's former colleagues. Warnig has denied this accusation.

"What we have today is a justice system of which two-thirds does the bidding of the government and the rest does the bidding of corporations," Khodorkovsky wrote in the opinion article in weekly magazine Vlast. (...)

Russia's history of corrupt courts goes back to czarist times, and the country has never had a justice system that gave a "fair chance to both master and servant, the strong and the weak," Khodorkovsky wrote. "Human rights are only possible in a country where citizens can file a complaint to the court that is completely independent from the legislative and judicial powers."

The Cicero Foundation has published a new short paper entitled "Shaping Georgia's Future After the Russian Invasion."  I have not given the document a careful read yet, but I have pulled the following idea from the conclusion about what Russia can do to repair the deep-seated animosity held toward Moscow by an overwhelming majority of the Georgian population since the war - copy Obama's "over the head" style outreach:   "Russia should adopt a new Georgia policy, one that would temper Moscow's passion for "regime change" in Tbilisi and would instead employ a direct outreach to the Georgian people. (As examples of such "over-the-head" approaches, they cite President Barack Obama's video message to Iranians celebrating Nowrus and easing restrictions on travel and money transfers to Cuba)."

Interesting, but I can't think of any other example of a soft power approach in Russian foreign policy.  It's hard to imagine this government going for the warm-and-fuzzy thing.

The Financial Times has given a pretty glowing review of "Stalin's Nemesis: The Exile and Murder of Leon Trotsky" by Bertrand Patenaude

The most damning indictment that Patenaude levels against Trotsky is his intellectual dishonesty: to avoid repudiating his own achievement in the Revolution, Trotsky defended the idea of the USSR as a workers' paradise, even as it had become a totalitarian nightmare led by a man set on having him killed. At the end of his life he continued to insist that his vision of utopian revolution would be realised, even in the  ace of powerful evidence to the contrary. Such delusion could also blind Trotsky to disloyalty among his followers - he refused to believe anything that undermined his own idea of himself and his place in history.

While he offers trenchant psychological understanding and perceptive historical observations, Patenaude has a light touch. Stalin's Nemesis at times reads like a thriller. It is a captivating book that captures a complex and contradictory character and the world he had created around him.

As the newspaper writes, "it has become clear that the CSTO, which is positioned by Russia as a key instrument of guaranteeing security in the region from Belarus to Central Asia, is vulnerable itself. And the threat to the organisation's work lies within its members".

The Kremlin is not going to forgive Minsk public exhibit of this weakness. "We do not have any particular hard feelings about Belarus' behavior. It looks as if somebody has become tired of being the president of this country," a high-ranking official of the presidential administration Dmitry Medvedev said to "Kommersant".

"In the nearest future Moscow could start a new attack on Minsk. This time a gas attack," the newspaper writes. "In the end of May a counselor of the Russian Embassy in Belarus on economic issues Andrei Kuznetsov stated that Belarus pays for Russian gas not fully. "Price for gas in the first quarter was to be $210 per thousand cubic metres, however, we are paid $150," the diplomat said.

I'm a few days behind on this as I've been busy with other parts of this website, but there have been a number of developments since my post last week regarding how Russia discusses its currency maneuvers. The specific language used here is VERY important, so bear with me as I get nitpicky.

First, the facts as reported by various news outlets whose links are embedded within each bullet point:

• Bank Rossii officials announced a plan to swap $10 billion worth of US Treasury holdings.for the equivalent in the proposed IMF bond issue expected in the fourth quarter of this year.

• Brazil and China also expressed interest in buying $10 billion and $50 billion, respectively, of IMF bonds.

U.N. special representative Johan Verbeke did not discuss the chances of a deal, which diplomats say is on a knife-edge.

But he cautioned that without the mission, "you end up having a situation where there is no longer the security regime, where there are no longer the monitors, and therefore intrinsically a situation where stability is less secured than it is currently."

"You basically leave the population on its own," the Belgian diplomat told Reuters in Tbilisi.

"It (the population) has to stay there, but there is no ... international presence on which they can rely for securing a minimum environment that allows them to live normally."

The Wall Street Journal got on record Georgia's National Security Council Secretary Eka Tkeshelashvili:

A spokesman for Russia's mission to the United Nations declined to comment on continuing negotiations. Western diplomats say Russia doesn't seem to necessarily want to drive the monitors out of Abkhazia, but is digging in hard over the language.

Georgian leaders, however, say a U.N. acceptance of Russia's position on the ground would be too high a price to pay to keep an international presence. "This is all we have--a very firm international recognition of Georgia's territorial integrity, and a universal international recognition of Russia's obligation to withdraw its forces," says Ms. Tkeshelashvili. Accepting a U.N. resolution without that language would "erode the only strength we have," she said.

.

• Rosneft and Transneft are likely to have the most trouble meeting their debt obligations, though default is unlikely.
• The break-even oil price for developing hard-to-reach deposits in Russia is $75.
• Gazprom will be hard pressed to pursue all of its new projects.
• Oleg Deripaska is unlikely to be able to reschedule all of Rusal's $8 billion in deby due for repayment this year.
• The likely outcome of the various M&A discussions underway in the metals sector is a maximum 25% ownership stake by the Russian government, which will signify the first time in 15 years that the Russian government has held any significant interest in the metals or mining sectors.

Roger E. Kanet of the University of Miami has published a new 30-page paper on U.S.-Russian relations entitled "From Cooperation to Confrontation: Russia and the United States since 9/11."  He's assembled quite a laundry list of the things that upset Moscow.

The new tone promised in American foreign policy is likely to improve the environment in which Russian- U.S. interactions occur--at least at the rhetorical level.61 Moreover, there exists a substantial area of overlapping interests between the Russian Federation and the United States relating to other aspects of arms control, international terrorism, weapons of mass destruction, and now the global economic slowdown. However, there is one set of issues where U.S. and broader Western compromise would appear to be impossible, without their abandoning principle. Russia cannot be permitted to veto the continuation of the development of close ties between former Soviet republics and clients with the West. The rush to membership in the EU and NATO that began with the collapse of the external and internal Soviet empires two decades ago was not orchestrated in Washington or Brussels, but rather in the countries which had just escaped half a century, or more, of Soviet domination.

Whether Moscow's new-found assertiveness in its relations with its near neighbors will undercut prospects for improved relations will depend almost entirely on Moscow's flexibility in dealing with these countries as sovereign equals and not as a part of a revitalized 'Greater Russia.'62 What is clear is that the areas of mutual interest exist between Moscow and Washington where both sides could benefit by renewed cooperation, that the new administration in Washington seems willing to back off from some of its predecessor's policy initiatives deemed most unacceptable in Moscow, and that some in Moscow seem willing at least to test a possible return to a less assertive approach to the Russian-U.S. relationship.

Aware that it needs Russia's help, the Obama Administration has been looking for ways to persuade Moscow to support tougher sanctions. In a secret letter in March, Administration sources tell TIME, Obama promised President Dmitri Medvedev that the U.S. would freeze plans to install an anti-missile system in eastern Europe to which Russia strongly objects if Russia helped curtail the Iranian nuclear program. The U.S. has also initiated high-level nuclear-arms reduction talks with Moscow, and President Obama hopes to visit the Russian capital later this month in hopes of advancing -- or even signing -- a new nuclear pact.

The Russians appreciate all this. "We clearly value this very intense and in-depth dialogue on non-proliferation," says Ryabkov. But will it buy any help on Iran? When it comes to the missile-defense program, he answers, "We do not think that this linkage is fair," because Russia believes the anti-missile system Washington had planned to station in Poland and the Czech Republic would not help defend against a potential Iranian threat. Russia loves the revival of arms-control talks with the new Administration, but it sees Iran's nuclear program as a separate issue -- on which it's holding its cards close.

He notes that Gazprom "benefitted enormously" from the steep rise in oil and natural-gas prices in recent years, and then suffered a "huge blow" when prices fell in the middle of 2008.

Bordonaro adds that Gazprom's investment strategy "wasn't probably the best suited for them," because instead of "investing in technology and innovation, maintenance, and instead of pursuing the policy of transference" during the boom years, "they did other things" such as buying other companies.

"They increased their size; and they proceeded to [do] a series of deals that were not always very transparent. They lost credibility, they threatened crisis, and they actually got involved in the Russo-Ukrainian crisis of the beginning of this year," Bordonaro says.

It appears we Russians have been worried over nothing in Chechnya and the North Caucasus.  According to a report filed on Grani.ru quoting FSB director Alexander Bortnikov (right photo), reports of the rapidly escalating political crisis are vastly overstated:  "The situation in Chechnya after the lifting of the counterterrorist operation regime is found under control," he said, while noting the influence of siloviki agencies has risen significantly.  "By their actions, [the siloviki agencies] are contributing to the normalization of activity in the region."

Another Grani.ru story reported that that a key Chechen rebel leader, Doku Umarov, is believed to have been wounded in a recent attack.  According to State Duma Deputy Adam Delimkhanov, Umarov may have been wounded during a spetz operation on the border between Chechnya and Ingushetia.  Despite losing four bodyguards, the rebel leader was able to abscond.  After the military operation had already wiped out some 29 rebel bases, Delimkhanov was pushing for the operation to continue until the capture of Umarov.

In the midst of this violent crisis, several questions arise upon hearing these statements from Bortnikov and Delimkhanov.