Tuesday, August 31, 2010

Russian Government Won’t Sell Interests in Natural Monopolies or Defense Firms Next Year

On Tuesday, Russia’s Economic Development Minister announced that the government would not sell its stakes in natural monopolies or defense firms during 2011. Last month, the government released a list of 11 state-run companies in which stakes would be privatized by 2013, but several companies, including state rail monopoly, Russian Railways, are no longer on that list. While it remains unclear exactly what stakes will be sold by 2013, privatization targets include two natural monopolies: the oil pipeline monopoly Transneft (which is currently 78.1% state-owned), and the Federal Grid Company (which is currently 79.11% state owned). Although Russia’s Finance and Economic Development Ministries have conceded that the planned sell-off is a way to patch budget deficits and to reduce the state’s “excessive“ role in the Russian economy, Tuesday's announcement signals the state's strong interest in maintaining control of these natural monopolies and defense holdings, at least in the short term.


World-Check Blacklists 60 Russians Connected to Magnitsky's Case

London-based World-Check, a risk analysis company that maintains a worldwide list of individuals potentially linked to criminal corruption, has blacklisted 60 individuals allegedly linked to the case of Sergey Magnitsky, a lawyer who leveled corruption allegations against a number of security officials shortly before dying in pre-trial detention in a Moscow prison. The names, which include those of some of Russia's most senior law enforcement officials, were taken from a list compiled earlier this year by U.S. Senator Benjamin Cardin, who called on the U.S. State Department to deny entry visas to these individuals for their alleged involvement in Magnitsky's death. World-Check's list is used by 49 out of 50 major international banks to screen potential clients.


Mystery Surrounds Massive Attack at "Tornado" Rock Festival

On 29 August, over 100 bare-chested young men, most wearing army boots and wielding batons and other weapons, entered a Chelyabinsk area rock festival and began attacking the concertgoers, injuring over 30 people, some of them severely. According to witnesses, attackers arrived together in a number of cars, carried out the attack in a well-organized fashion, and departed in the same cars as quickly as they appeared. While it was initially reported that the men were skinheads, there is little to suggest this was the case, and so mystery surrounding the identity of the attackers and their motive remains. It is also unclear why the approximately 60 policemen and private security guards on the scene did little to prevent or stop the attack.

http://vremya.ru/2010/156/46/260555.html (Russian link - Vremya Novostey, 31 August 2010)

Monday, August 30, 2010

Russia May Cut Stake in VTB To 50%

Finance Minister Aleksei Kudrin announced today that Russia may privatize a portion of its share in VTB, the country's largest bank. Last year, the state increased its ownership stake in VTB from 77% to 85% in exchange for an injection of cash intended to stabilize the bank during the financial crisis. Today, Russia's government is facing a significant budget deficit and is looking at selling off part of its vast portfolio of assets to decrease the shortfall.

http://www.themoscowtimes.com/news/article/state-may-cut-stake-in-vtb-to-50/414145.html (Moscow Times, 30 August, 2010)

Rosneft Oil Company to Invest $630M in UAE Joint Venture

Rosneft will invest $630 million in a joint project with a United Arab Emirates oil firm to drill for gas in the Middle East. Production is planned for 2013 at a field estimated to contain 70 billion cubic meters of gas and 16 million metric tons of gas condensate. This comes after last year’s consortium between Crescent Petroleum, Dana Gas, Austria’s OMV and Hungary’s MOL to pump enough gas from Iraq’s Kurdistan region to start the Nabucco pipeline to Europe via Turkey. The Nabucco pipeline will directly compete with Gazprom by lessening dependence on Russian gas.

http://www.themoscowtimes.com/business/article/rosneft-to-invest-630m-in-crescent-venture/413425.html (Moscow Times 23 August 2010)

E.On Asks Gazprom for Lower Gas Prices

German gas company E. On is seeking further price reductions from Gazprom after negotiating lower prices in the spring. E. On is requesting lower prices as a result of client demand even though it secured an agreement with Gazprom to purchase gas at spot prices until the end of 2012. Gazprom is facing the lowest gas output in its history with European exports falling by 11.5 percent. Gazprom’s biggest competitor, Norway’s Statoil, agreed to sell up to 30 percent of its gas at spot prices and has seen increasing sales.

http://www.themoscowtimes.com/business/article/eon-asks-for-lower-gas-prices/413406.html (Moscow Times 23 August 2010)

Russia’s Lukoil Gets $438M in Kazakh Deal

LUKoil will receive $438 million after filing a complaint against PetroKazakhstan in 2005 over an ownership dispute with China National Petroleum Corporation. The dispute arose when LUKoil sought to exercise a right of first refusal to buy PetroKazakhstan out from Turgai Petroleum in 2008. LUKoil and PetroKazakhstan will retain their 50 percent interests in Turgai Petroleum. PetroKazakhstan is jointly owned by state-run KazMunaiGaz and CNPC.

http://www.themoscowtimes.com/business/article/lukoil-to-get-438m-in-kazakh-settlement/413409.html (Moscow Times 23 August 2010)

Egypt’s Sawiris, Russia’s VimpelCom Said to Discuss Merger

Egyptian billionaire Naguib Sawiris is in talks to merge his telecom assets, Egypt’s Orascom and Wind Italy, with VimpelCom Ltd. The merger would make Sawiris a significant minority in the new company. The merger would also give VimpelCom, Russia’s second largest mobile phone operator, access to African and Middle Eastern markets.

http://www.themoscowtimes.com/business/article/egypts-sawiris-vimpelcom-said-to-discuss-merger/413412.html (Moscow Times 23 August 2010)

Thailand to Extradite Viktor Bout to US

An appeals court in Bangkok, Thailand ordered the extradition of Viktor Bout to the United States within three months. Bout, an accused arms trafficker nicknamed “the Merchant of Death,” was indicted by the United States for allegedly selling millions of dollars worth of weapons to Colombian guerilla group FARC. The Bangkok Criminal Court rejected a U.S. request for extradition in August of last year because it considered FARC to be a political movement and not a terrorist movement.

http://www.themoscowtimes.com/news/article/a-big-break-for-us-in-case-of-viktor-bout/413397.html(Moscow Times 23 August 2010)

Friday, August 27, 2010

Ukraine Restricts Grain Export

The State Customs of Ukraine recently issued letters changing grain export quality control procedures that in effect suspend wheat export from Ukraine. Under the new rules, the quality control testing must be performed by the Kyiv Forensic Institute. The Minister on Agrarian Policy, Nikolai Prisyazhnyuk, announced last week that in order to ensurer Ukraine's food security, the government intends to restrict grain export by the end of 2010, introducing quotas at the level of 2.5 mln. tonnes. While quotas have not yet been introduced, the new customs rules are viewed as non-tariff trade barriers. The American Chamber of Commerce in Ukraine together with the U.S.-Ukraine Business Council issued a statement addressed to various Ukrainian government officials, including President Viktor Yanukovych, condemning the “nontransparent measures and arbitrary new procedures.” According to the Ukrainian Grain Association, approximately 1.9 mln. tonnes of grain are currently awaiting export in port elevators, ships and railway cars.


Belarus Rejects Extradition of Bakiyev to Kyrgyzstan

Belarusian authorities for the second time denied an official request by the Prosecutor’s Office of Kyrgyzstan to extradite the former President of that country, Kurmanbek Bakiyev. Bakiyev has been staying in Belarus since April 19, 2010, by personal invitation of the Belarusian President, Alexander Lukashenko. In May 2010, the newly-elected President of Kyrgyzstan, Rosa Otunbayeva, signed a decree stripping Bakiyev of his immunity, based on a criminal case charging him with corruption and organization of murders.


FAS Hopes to Suppress Price Increases for Food Staples

Reacting to growing media reports of price increases for staples such as flour, bread and milk, the FAS noted signs of price gouging for these everyday products.  Despite Russia’s national drought, the FAS announced there was currently no grounds for price growth in these socially important food markets, and warned that it would impose "heavy sanctions" on any party believed to be engaging in opportunistic price collusion or gouging.

FAS To Consider Possible Merger Between Russia's Two Largest Potash Producers

The FAS announced on Thursday that it would consider a possible merger between Russia’s two largest potash producers, Uralkali and Silvinit.  Although neither company has yet filed necessary merger paperwork with the FAS, the companies have publicly discussed a possible merger or alternative joint business operation.  The FAS noted that as any merger would create a national monopoly, it would not likely be approved without restrictions.  One alternative discussed has been foreign acquisition of between a 10% and 15% stake in Uralkali, a move that would require approval of the government commission on foreign investment chaired by Prime Minister Putin.

Russians Favor Direct Election of Governors, "None of the Above" Option

Results of the latest opinion survey suggest that 59% of Russian citizens are in favor of a return to the direct election of regional governors, who for the last several years have been appointed by the central government in Moscow. Of all the possible electoral reforms, however, Russians are most in favor of a return of a "none of the above" option on the ballot. 85% of those polled though that the right to vote against everyone on the ballot, which had been taken away in recent years, should be reinstated.

http://www.vedomosti.ru/newspaper/article/244186/vse_za_protiv_vseh (Russian link, Vedomosti)

Wednesday, August 25, 2010

Turkmenistan Energy Industry Moves Away from Russia

In several recent oil and gas deals, Turkmenistan has exhibited a reorientation away from working with major Russian companies like Gazprom and Lukoil and toward a preference for partners from the United States, Europe, Asia, and the United Arab Emirates. In early August, the Turkmen government announced that it would accept bids for oil field development projects from several major Western companies and a UAE company, but Russian companies are not in the list of invited bidders. Also, Turkmen oil is being piped to China and through the Baku-Tbilisi-Ceyhan pipeline, and a possible pipeline through Afghanistan, Pakistan, and India is under discussion. Explanations offered for the shift away from Russia include a Western advantage in offshore drilling technology for deposits in the Caspian Sea, a 2009 pipeline explosion for which the Turkmen leadership blamed Gazprom, and disagreements over prices for Turkmen oil and gas and over whether Gazprom should have a right to re-export Turkmen gas.

Russian Leaders Warm Up on Climate Change

The unprecedented heat wave, drought and forest fires across Russia and around Moscow in particular are having an important effect in convincing its leaders of the reality of global climate change, which they have previously viewed with significant skepticism. President Medvedev has recently made statements acknowledging -- for the first time -- the reality of climate change. Prime Minister Putin has also remarked that this year Russia understood that climate issues are important. Putin also noted that he was shocked at the rising sea levels and disappearing coastline of northern Yakutia, which he visited on a trip this week. The Russian Meteorological Center has been ordered to prepare a new weather and climate study program by September 1, but it remains to be seen what other action Russian government officials will take to address the issue. Russia ratified the Kyoto treaty in 2004 but has yet to join its carbon trading regime; and over 40 other Kyoto-related initiatives have languished in the absence of government action.

http://www.vedomosti.ru/newspaper/article/244200/lichnyj_opyt (Russian link, Vedomosti)


Tuesday, August 24, 2010

Sberbank Exposes Dishonest Employees

In an unprecedented move among Russian banks, state savings bank Sberbank has created a new, publicly available web page naming employees fired for embezzlement and other actions that under the Labor Code are grounds for dismissal for "loss of trust." Sberbank explains that the purpose of publishing the list is to improve transparency in the bank's operations. The list, which will be periodically updated, includes 426 names from among over 200,000 Sberbank employees. Because Sberbank has included people in the list regardless of whether the propriety of the dismissals has been tested in court, legal commentators note that publication of the list could subject Sberbank to liability for violating Labor Code prohibitions on improper use of employees' personal data.


Monday, August 23, 2010

Nanotechnology Plant to Open in St. Petersburg

As Russia continues to court international participation in Skolkovo, its newly planned “Silicon Valley” near Moscow, Russia’s Corporation of Nanotechnogies, RUSNANO, announced that groundbreaking high-tech production would soon commence 300 miles to the north.  Russian-based Connector Optics finalized plans to construct a nanotech facility in the Parnas industrial area of St. Petersburg, scheduled to launch in the spring of 2011.  The plant will be the first of its kind to open in Russia, and will feature clean rooms equipped with molecular beam epitaxy, nanotechnology used in the production of optical interconnect devices for supercomputers, data centers, and optic and USB cables. 

FAS Brings Charges Against Bread Producers

On August 20, 2010, the Moscow Office of the FAS initiated a case against six bread producers, charging them with “engaging in concerted actions, which can result in restricting competition and infringing public interests.”  The charges fall under Article 11 of the Federal Law “On Protection of Competition”, and stem from a sharp increase in the price for wheat and rye bread, ranging from 10 to 20% over the past month.  As a drought has reduced Russia’s grain harvest, the FAS will likely continue to monitor what it has deemed a “socially important food” market for any further price gouging activity. 

Monday, August 16, 2010

Ukraine Litigates Rights to Paintings of Famous Ukrainian Artist

A Kiev court has ordered the Central State Archives Museum of Literature and Art to transfer possession of 50 paintings by the famous Ukrainian artist Nikolay Glushenko to his granddaughter, Larisa Glushenko. In 1979, the artist’s widow donated the paintings (currently worth approximately $2 mln.), together with the artist’s brushes, easels and other personal belongings, to the museum to create a memorial room in his honor. Larisa, a US resident, started the Kiev lawsuit in 2008, claiming ownership of the artwork. She argued that the transfer to the museum was not a gift because the transfer instrument did not specify whether the transfer was a gift or for temporary possession, and that because the transfer was for an unspecified period and without consideration, it could be rescinded. The museum argued that it was not a storage facility and that if it accepted the artwork for temporary possession, the instrument would have specified the period and other terms. The court ruled in favor of the granddaughter, and the museum’s appeal did not succeed. The museum has asked the Verkhovna Rada’s (Parliament) Committee on Justice to investigate the legality of the court’s actions.


Friday, August 13, 2010

Russian Consumers Seen As a Bright Spot For U.S. Companies

The Russian consumer has emerged as one bright spot in second-quarter earnings reports of the largest U.S. multinational companies, including PepsiCo, McDonald's and Coca Cola. Russia is the largest consumer goods market in Europe, and recent economic data suggests that Russian consumers have put the financial crisis behind them and have resumed spending, even as consumer spending in the U.S., U.K. and every other Western country remains muted compared to the pre-crisis period.


U.S. Investigating Allegations of Bribery by Hewlett-Packard in Russia

According to the Wall Street Journal, the U.S. Department of Justice has issued a subpoena to U.S. computer maker Hewlett-Packard for records of Russia-related transactions. According to the German prosecutor’s office, HP paid over $10 million in bribes to acquire a $44 million contract to sell computer technology to the office of general prosecutor of the Russian Federation. Both Russian and German prosecutors had turned to their U.S. counterparts to provide assistance on establishing the identify the ultimate beneficiaries of the funds.



Russia Admits to Deploying Missiles in Abkhazia

Russia deployed high-precision S-300 air defense systems in the breakaway Georgian region of Abkhazia, sending a defiant signal to Tbilisi and the West two years after a war with Georgia. The Russian Foreign Ministry issued a statement declaring that the deployment of the defense system does not in any way contradict Russia’s international obligations and that its main purpose is purely defensive in nature. France, an ex-intermediary in the settlement of the five-day conflict between Russian and Georgia, issued a statement declaring that the missile system deployments are harmful for stability in the region.


Wal-Mart In Preliminary Talks to Acquire Russia’s Lenta Supermarket Chain

According to Reuters, Wal-Mart is in talks to acquire Russian grocery retailer Lenta, whose equity is deemed to be worth around $500-$600 million. The retailer has announced that its sales levels have been picking up during the past months. However, in-fighting (including ongoing arbitration proceedings in London) among Lenta’s main shareholders, Svoboda and TPG, is a point of concern for the company and any potential investors.


Belarus Enjoys Normal Grain-Crop Yields, Plans to Profit on Export Sales

According to the Ministry of Agriculture and Food, Belarus anticipates close to normal grain-crop yields this year. Considering the difficult situation with wheat and other grain crops in Russia and other countries, Belarusian President Lukashenko urged officials to use this situation and make hefty profits for the state budget. Specifically, Lukashenko indicated that Belarus is ready to swap grain crops for Russian oil and gas.


Belarusian KGB Arrests Top Officials of the Committee of State Control

The Belarusian KGB reportedly revealed a large-scale corruption conspiracy in another law-enforcement agency - the Committee of State Control (KGK). KGK is a major governmental agency in Belarus that oversees state-owned property and investigates financial and commercial crimes. KGK is considered one of the most influential law-enforcement agencies in Belarus, and it has now been hit hard by the KGB’s revelation.


Former Ukrainian Minister of Economy faces criminal charges

The Prosecutor General (Attorney General) of Ukraine commenced a criminal action against former Minister of Economy Bogdan Danilishin for “abuse of power or office” under Part 2, Section 364 of the Ukrainian Penal Code. The case involves public procurement for a terminal construction project at the international airport “Borispol” (a state enterprise) in Kiev. Mr. Danilishin allegedly approved an unlawful tender with only one participant that resulted in damages to the government totaling 4.5 mln. UAH. Procurement for the terminal’s parking facility was tendered to one subcontractor because the general contractor was unable to finish the project within the allocated timeframe. The Prosecutor General is currently investigating the airport officials’ involvement in the subject tender.


Thursday, August 12, 2010

Russia Sets Stringent Terms and $603 Million Fee for Trebs and Titov Oil Fields

The Russian Federal Subsoil Resource Use Agency has settled on a starting price of 18.2 billion rubles ($603 million) for the massive Trebs and Titov oil fields, the development rights for which are scheduled to be auctioned in the fourth quarter of this year. The winning bidder must commit to selling 15 percent of the fields' crude on an exchange and refine 42 percent in Russia. Virtually all of Russia's oil companies have expressed an interest in the tender, and at least two may consider partnering with an international oil company for the bid. Foreign companies are only allowed to bid on the oil fields in a consortium led by a Russian company and would also need to be approved by the government's commission on foreign investments. These conditions are thought to make the project less attractive to potential foreign investors.


Danone Confirms Sale of $470 Million Stake In Wimm-Bill-Dann To Pursue Unimilk Merger

French-owned Danone decided to sell back its 18.4 percent stake in Russia's Wimm-Bill-Dann juice and dairy company. Earlier this year, Danone entered into a merger deal with a competitor of Wimm-Bill-Dann, Russia’s dairy producer Unimilk, as it sought to become the largest dairy producer in the CIS area. The $470 mln sale will become effective once all regulatory approvals for the Unimilk merger are met.


Russia’s VimpelCom May Buy Wind and Orascom Telecom

Russia’s second-largest mobile operator, VimpelCom Ltd., may sign a deal with Egyptian businessman Naguib Sawiris to purchase Italy's No.3 mobile operator, Wind, and 51 percent of Egypt's Orascom Telecom Holding. The acquisition would mark a major expansion into Asia, Europe, and North Africa. This deal would be beneficial to Vimpelcom in becoming a truly international player with a diversified geographical exposure, said a UniCredit Securities analyst.


PhosAgro Proposes Merger With Silvinit to Russian Authorities

OAO PhosAgro, the world’s second-largest maker of phosphate fertilizer, has submitted a proposal to the Russian government for a merger with potash producer OAO Silvinit. PhosAgro has offered the government and state-run bank OAO Sberbank a stake in the combined company, as shareholders of Silvinit and PhosAgro discuss the merger. Reports of potential potash-industry mergers have increased since billionaire Suleiman Kerimov purchased OAO Uralkali, Russia’s second-largest potash producer.


KazakhGold Disputes Are Hurting Company

Investors are getting nervous about the future of KazakhGold, Kazakhstan's largest gold producer, which was acquired last year by the much larger Russian company, Polyus Gold, owned by Russian oligarchs Mikhail Prokhorov and Suleyman Kerimov. In June, the new owners unveiled plans for a reverse takeover transaction that would allow Polyus Gold to take advantage of the London stock exchange listing of Kazakh Gold. However, the Kazakh authorities have unexpectedly denied permission for the takeover to proceed and have frozen the accounts of Kazakhaltyn, the company's main subsidiary, alleging that actions taken by the new owners violated Kazakh's legislation on subsoil assets. Meanwhile, Polyus Gold is pursuing a claim in London against KazakhGold's former owners and current minority shareholders who belong to Kazakhstan's powerful Asaubayev family.


Lukoil Resumes Sales to Iran Despite U.S. Pressure

Russian oil giant LUKOIL resumes gasoline sales to Iran in partnership with China's state-run firm Zhuhai Zhenrong, even as the U.S. issued calls to the international community to be tough on Tehran. Fear of blacklisting by the U.S. has kept many firms from doing business with Iran and, according to the Moscow Times, Lukoil operates more than 1,500 gasoline stations in the United States.


Wednesday, August 11, 2010

Russian Tycoons Clash in London Tribunal

Russian aluminum giant Rusal, controlled by Oleg Deripaska, filed a claim against private investment company Interros, controlled by Vladimir Potanin, with the London Court of International Arbitration. Rusal accuses Interros of breaching the shareholders agreement of major mining company Norilsk Nickel, in which each party holds a 25% stake. Rusal claims that at the recent general meeting, Interros took control over the board of directors, but under the shareholder agreement, the parties should be represented equally.


Tuesday, August 10, 2010

Russian Authorities Accuse Bloomberg News of Tax Evasion

Moscow's tax authorities have ordered the Bloomberg news agency to pay approximately $4 million in profit taxes for the years 2006 and 2007, but the company refuses to pay, arguing it does not maintain a permanent establishment ("postoyannoye predstavitel'stvo") in Moscow and is therefore exempt from the tax under a U.S.-Russia Tax Treaty designed to avoid double taxation. According to the Moscow Times, this is the first time a U.S. company working in Russia has been charged with tax evasion on these grounds.


Rosneft Pays $400 mln to Yukos Capital Sarl

Russian state-run oil company Rosneft complied with the judgment of a Dutch court enforcing an arbitral award in favor of Yukos Capital Sarl (Luxembourg) and transferred about $400 mln to a Yukos Capital bank account. In 2004, Yukos Capital granted a number of large loans to various YUKOS subsidiaries in Russia experiencing financial difficulties after the authorities’ attack on YUKOS. Later the subsidiaries were taken over by Rosneft, which refused to repay the loans. A Russian arbitration tribunal found for Yukos Capital, but Russian courts found the award invalid on procedural grounds. However, a Dutch court enforced the award and a British court blocked Rosneft’s assets to enforce the Dutch judgment. Facing a possible deadlock of all Russian oil exports, Rosneft was forced to comply.


Russian Prime Minister to Watch Builders

Russia’s Prime Minister, Vladimir Putin, met with citizens who lost their homes in recent disastrous wildfires; the Prime Minister promised to build new homes for them by November 1. To personally control the process, Putin ordered the installation of video surveillance cameras on the construction sites, the pictures from which will be displayed on monitors in a Government office and at Putin’s home, as well as on the Prime Minister's website.


Surveillance camera images:

Monday, August 9, 2010

Russia Accuses U.S. of Violating Arms Control Treaties

The Russian Foreign Ministry has issued a report accusing the United States of a long list of breaches of existing arms control agreements between the Russia and the U.S. For instance, the report complains that the U.S. is providing military assistance to Georgia, which is alleged to be a violation of OSCE prohibitions on supplying weapons to armed conflict zones to prevent further destabilzation and escalation of hostilities. The report's accusations also include alleged security lapses in weapons labs and failures to dismantle certain nuclear weapons. The Russian report makes use of the U.S. government's own reports to make its points. According to sources interviewed by the New York Times, the Russian report is intended to neutralize certain objections made by the U.S. against Russia's level of compliance with arms control agreements by showing that "no one is holy." The issue is particuarly timely given that the Senate is currently considering ratification of the START-2 Treaty signed by Presidents Obama and Medvedev.

http://www.nytimes.com/2010/08/08/world/europe/08russia.html?scp=13&sq=russia&st=nyt (New York Times story)

http://www.mid.ru/Brp_4.nsf/arh/D6942A5B5C23A4FCC325777800257B74?OpenDocument (Full Text of Report in Russian)

Friday, August 6, 2010

Russian President Proposes to Rename Police

President Dmitri Medvedev proposed that the Russian word used to refer to the police be changed from “militsia” to “politsia,” which is the term that was used before 1917. After the Bolshevik revolution the new law enforcement bodies were named “militsia” to emphasize their (supposedly) popular nature and the difference with the Czarist police.


Russian Police Colonel Convicted of Contract Murder

Senior criminal police investigator Colonel Dmitri Maximov was found guilty by a jury of organizing the murder of lawyer Sergey Biryukov and was sentenced by the Moscow City Court to 18 years of imprisonment. In 2008, Maximov received from an “unidentified person” an order to kill Biryukov; via his agents, Maximov found a hitman, who murdered Biryukov in an apartment Maximov normally used to meet his informers. The other murder participants were also convicted and sentenced to 13, 16 and 17 years of imprisonment, respectively.


Thursday, August 5, 2010

Russian Government Approves Investments By Danone, Fraport Under Strategic Sectors Law

The state commission responsible for review of foreign investments under the 2008 Strategic Sectors Law (Russian link: http://www.rg.ru/2008/05/07/investicii-fz-dok.html) approved applications by several large prospective investors. Danone was allowed to acquire Unimilk Holding, Russia's second largest producer of dairy products and baby food. Canadian gold producer Kinross Gold was permitted to acquire Avrelius Holding. Fraport was permitted to undertake a development project of St. Petersburg's Pulkovo airport, and the Bulgarian Aviation Group was given the green light to proceed with a deal involving the Kazan airport. Also approved was the acquisition by TNK-BP of voting shares in "Verkhnechonskneftegaz."


The Strategic Sectors Law and its implementation to date have been discussed in Russia/Eurasia Committee Year in Review publications (http://www.abanet.org/dch/committee.cfm?com=IC855000) and has been the subject of numerous posts on the Russia Monitor blog (http://therussiamonitor.com/category/strategic-industries/)

Russia Bans Grain Exports Amid Massive Heat Wave, Drought and Wildfires

Prime Minister Putin announced today that Russia would impose a temporary ban on grain exports from August 15 to December 31 in light of the decimation of wheat crops by widespread drought, combined with an unprecedented heat wave and wildfires throughout the grain-producing regions of Russia. The announcement has caused world wheat futures to spike to a two-year high. As recently as late July, Russia had said that grain reserves from previous years' harvests were sufficient to meet the country's needs, as well as to satisfy export targets.


U.S. Judge Rules Against Russia on Jewish Documents

A federal judge in Washington, D.C. has decided that the Russian Federation must return the Schneerson Collection, which contains tens of thousands of pages of Jewish texts captured during World War II. The decision, which became public on Wednesday, follows several years of litigation. In 2009, the Russian Federation ceased its participation in the proceedings, and the plaintiffs moved for the entry of default judgment. The decision, signed by Chief Judge Robert C. Lamberth of the U.S. District Court for the District of Columbia, finds that plaintiffs have met their burden of showing that the "expropriation" exception to the Foreign Sovereign Immunities Act (FSIA) applied because Russia violated international law by seizing property belonging to plaintiffs without compensation and because the Russian sovereign defendants engaged in commercial activities in the United States.

http://www.google.com/hostednews/ap/article/ALeqM5hFc7ttwQGYSosBjFQRmWjXaJVBxgD9HCUE9O3 (AP News)

http://dl.dropbox.com/u/4916135/Docket%2005-1548%20%28%2381%29.pdf (PDF of Decision)

Russian Rapper Jailed for Anti-Police Song

A court in Volgograd sentenced rap musician Ivan Alexeyev, best known as Noize MC, to “administrative arrest” (short-term imprisonment imposed for minor offences) on “hooliganism” charges. During a concert in Volgograd, Alexeyev performed his song “Kuri Bambuk,” which is highly critical of the police, and made mocking remarks in the direction of the police security guards present at the concert. Right after the concert, Alexeyev was taken into custody by the police and was sentenced to ten days in jail the next day.

See the song here (caution: offensive language):

Killer Cop Assassinated in Russia

Senior police officer Ibragim Yevloyev and his bodyguard were shot dead by an unidentified man in a café in central Nazran, the capital of Russian constituency Ingushetia.

In 2008, Ibragim Yevloyev shot dead Ingush opposition leader Magomed Yevloyev, best known as the owner of opposition web site Ingushetia.ru, which was highly critical of then Ingush President Murat Zyazikov. (Despite identical surnames, the police official and his victim were not relatives.) Magomed Yevloyev’s relatives alleged intentional murder; the police insisted that was an accident. In 2009, Ibragim Yevloyev was convicted of negligent homicide and sentenced to two years of imprisonment, but the Supreme Court of Ingushetia changed the sentence to suspended imprisonment. Ibragim Yevloyev was then restored to his position within the police department and promoted. Although experts speculate that Ibragim Yevloyev's killing might be blood feud (the tradition is alive in Ingushetia), Magomed Yevloyev’s relatives deny involvement.


Russian Prosecutor Refuses Inquiry Into Millions Allegedly Spent by Investigator of Magnitsky

According to the Moscow Times, the Prosecutor General's office has refused a petition to open an inquiry into the lavish lifestyle of Artyom Kuznetsov, the Interior Ministry investigator of Hermitage Capital lawyer, Sergey Magnitsky, who died after 11 months of pretrial detention amid allegations of physical abuse, mistreatment, and premeditated murder. Evidence gathered by Magnitsky's supporters suggests that Kuznetsov and his family spent at least $3 million (US) on real estate, cars, and a variety of luxuries around the time of Magnitsky's arrest and detention. The letter denying the petition was signed by a prosecutor who had a role in authorizing that detention. The letter stated that the petition contained "no specific data on possible crimes." The petitioner, public activist Alexei Navalny, vowed to appeal the decision.


http://www.youtube.com/watch?v=4ZB3YoAvEro (link to video)

Wednesday, August 4, 2010

Medvedev Orders Review of Norilsk Nickel Dispute, Officials Deny Seeking Government Stake

As the Norilsk Nickel shareholder dispute between Rusal (controlled by Oleg Deripaska) and Interros (owned by Vladimir Potanin) shows no sign of being resolved, President Medvedev ordered the Prosecutor General to examine the situation, according to RIA Novosti. Russian officials denied rumors that the government is seeking to obtain a stake in the company, which is considered an important strategic asset. Norilsk Nickel is the world's leading nickel producer. Rusal holds a 25% stake in the company and was involved in an earlier high-profile dispute with Interros, the other major shareholder. That dispute was resolved by an agreement reached in 2008, but in recent weeks Rusal has accused Interros of violating that agreement.



"Technical issues" delay end of Russia's ban on U.S. poultry

Despite a June 2010 agreement between President Obama and President Medvedev, Russia's poultry market remains closed to U.S. exporters. Russian officials say this is due to unspecified "technical issues," Reuters reported. Russia imposed a ban on U.S. poultry in January 2010, claiming the use of chlorine disinfectant by U.S. producers violated food safety standards. Prior to the ban, Russia was the largest export market for U.S. poultry (especially drumsticks, known as "Bush legs" in Russia).


Armenians Sue Turkey in US

American-Armenians, whose ancestors were killed or driven out of Turkey in 1915, filed a law suit in Los Angeles seeking billions of dollars for property, including businesses, bank deposits, and large amounts of land, that was appropriated from their ancestors. The case, which could potentially become a class action suit, is the first Armenian lawsuit filed directly against the Turkish government. Other named defendants are the Central Bank of Turkey and T.C. Ziraat Bankasi. Plaintiffs allege that the Turkish government promised to administer the seized property for the benefit of the owners until it could be restored to them, but instead, the government of Turkey allegedly "withheld the property and any income derived from such property."


Russia Declares Fire Emergency

President Dmitri Medvedev declared a state of emergency in seven Russian regions, including the Moscow Region, hit by disastrous wildfire caused by extraordinary summer heat. At least 40 people were killed and 77 settlements were destroyed by fire. Moscow is covered by a thick smog.


Tuesday, August 3, 2010

Ukraine and Russia are ready to begin border demarcation

Russian officials informed the Ministry for Foreign Affairs of Ukraine that all necessary procedures for implementation of the Ukrainian-Russian Border Demarcation Agreement are now complete. The countries signed the Agreement in May during President Dmitry Medvedev's visit to Ukraine. In July, Verkhovna Rada (Ukrainian parliament) ratified the Agreement, and President Viktor Yanukovych signed the law “On ratification of the Agreement between Ukraine and Russian Federation on Demarcation of Ukrainian-Russian State Border”. A joint committee on demarcation will be created to mark the border. The issue of the Ukrainian-Russian border has been open since the the first days of Ukraine's independence. Ukraine considers the Agreement to be an important step towards strengthening its sovereignty and an indication of a new development in the countries’ relations.


Monday, August 2, 2010

Freedom of Assembly Demonstration Dispersed

On July 31, Moscow opposition activists held their traditional demonstration in support of Article 31 of the Russian Constitution (freedom of assembly). The demonstration is held on the 31st of each month having 31 day. As usual, the demonstration was banned by the authorities and dispersed by the police. Dozens of demonstrators were detained.

http://echo.msk.ru/blog/varlamov_i/699758-echo/ (see photos)
http://drugoi.livejournal.com/3313961.html#cutid1 (see photos)

Sunday, August 1, 2010

Belarus Determined to Boost Tourism Industry

The Belarusian government plans to invest 430 billion Belarusian rubles (approx. $145 mln.) in developing in 2011-2015 a luxury tourist site in the Lake Naroch region. President Lukashenko has enthusiastically endorsed the plan as furthering the government's stated intention to improve the country's underdeveloped tourism industry.