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Russia Seeks for a New Currency

BRIC leaders will discuss new reserve currencies at the summit but called for caution in the currency debate, saying it was in no-one's interest to ruin the dollar. He said new reserve currencies were inevitable.

BRIC leaders will discuss new reserve currencies at the summit but called for caution in the currency debate, saying it was in no-one's interest to ruin the dollar. He said new reserve currencies were inevitable. Russia will advocate a cautious approach to changing the system of global reserve currencies when the world's biggest emerging economies hold their first formal summit on Tuesday, the Kremlin's top economic aide said. ussian President Dmitry Medvedev will raise the issue of a global reserve currency at the meeting, top economic aide Arkady Dvorkovich, said. "There is an understanding that the last thing we need now is turmoil on financial markets," Dvorkovich told a news briefing. "No one wants to ruin the dollar, including us." The meeting is scheduled to last about 2 hours. Dvorkovich said BRIC leaders - who control nearly $3 trillion in foreign currency reserves - would also discuss the idea of investing their reserves in each other's currencies.

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Russia May Reduce Investments in U.S Treasuries

Russia currently has about $140 billion worth of investments in U.S Treasuries. First deputy chairman of Bank Rossii, Alexei Ulyukayev, announced that some reserves were going to be moved into International Monetary Fund debt. On May 26, Finance Minister Kudrin said that Russia will purchase $10 million of IMF bonds from the reserves while China may buy about $50 billion, according to Dominique Strauss-Hahn, IMF's Managing Director.

Russia currently has about $140 billion worth of investments in U.S Treasuries. First deputy chairman of Bank Rossii, Alexei Ulyukayev, announced that some reserves were going to be moved into International Monetary Fund debt. On May 26, Finance Minister Kudrin said that Russia will purchase $10 million of IMF bonds from the reserves while China may buy about $50 billion, according to Dominique Strauss-Hahn, IMF's Managing Director. Investors are cautious about U.S assets now that the budget deficit is predicted to reach $1.75 trillion by September 30, a large jump from last year's budget deficit of $455 billion, as reported by the Congressional Budget Office, while there are no strong attempts to get the fiscal deficit under control. Ulyukayev, announced that Russia will reduce the share of U.S Treasuries now that a "window of opportunity for working with other instruments is opening," according to Interfax news wire.

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Russian GDP Shrinks 7 Percent

The Russian economy shrank by 7 percent in the first quarter according to Deputy Economic Development Minister Andrei Klepach.

The Russian economy shrank by 7 percent in the first quarter according to Deputy Economic Development Minister Andrei Klepach. "These figures are worse than we expected," Klepach said. The government has predicted that the economy will shrink by 2.2 percent in 2009 and are still holding on to that prediction after the release of the first quarter numbers. The 2.2 percent forecast takes into account multiple stimulus packages that are currently being debated to help improve domestic demand. Without the stimulus packages, Klepach said the economy could contract by 4 to 5 percent.

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Russia: Gas Output Dropped Sharply in March

Gazprom's March gas production slumped by one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall.

Gazprom's March gas production slumped by one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall. Energy Ministry data showed Thursday that the gas export monopoly's output last month was 1.24 billion cubic meters per day, down 12 percent from 1.41 bcm per day in February 2009 and 24 percent down from 1.63 bcm per day in March 2008. "Such low production levels have been unseen over the past decade, even during summer months, when Gazprom puts some wells on planned maintenance," he said.

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Russian Food Retailer to Expand Aggressively

Regional food retailer Magnit reported better-than-expected 2008 results for net income and revenue on Wednesday, and it pledged to carry its aggressive expansion plan into 2009.

Regional food retailer Magnit reported better-than-expected 2008 results for net income and revenue on Wednesday, and it pledged to carry its aggressive expansion plan into 2009. CEO Sergei Galitsky said in a statement that Magnit opened 385 new stores in 2008, bringing its total to 2,579 at the end of the year. The Krasnodar-based discounter said the openings helped it boost profits 93 percent under international financial reporting standards. Magnit, Russia's second-largest grocer after X5 Retail Group, plans to invest 5.6 billion rubles ($165 million) to open 300 stores this year as well as six to nine hypermarkets, Galitsky said later in a conference call.

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Russian Home Building on the Rise

The number of homes completed in the first two months of this year surpassed the number in the same period last year, Regional Development Minister Viktor Basargin said Monday.

The number of homes completed in the first two months of this year surpassed the number in the same period last year, Regional Development Minister Viktor Basargin said Monday. About 5.86 million square meters of housing were completed in January and February, he said, without citing an earlier figure. "We have been able to completely maintain the positive dynamic of housing construction in Russia," he said, Prime-Tass news agency reported. The situation varies around the country, however, and construction is only rising in 49 regions, he said.

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French Alstom to Buy Stake in Russian Train Maker

French engineering giant Alstom said Tuesday that it had agreed to acquire a 25 percent stake in train maker Transmashholding for an undisclosed total amount.

French engineering giant Alstom said Tuesday that it had agreed to acquire a 25 percent stake in train maker Transmashholding for an undisclosed total amount. At a news conference in Paris, Alstom chief executive Patrick Kron said the French train and power plant builder would make a down payment of 75 million euros ($99 million), with the rest of the price to be determined based on TMH's performance over the period from 2008 to 2012. Kron called the agreement "a major event for Alstom and for French-Russian cooperation."

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Central Banker Sees Interest Rate Cut in Russia

The Central Bank has been taking flak from all sides lately over its insistence on maintaining what critics call "crippling" and "bankrupting" interest rates, a policy endorsed by the prime minister to keep lenders operating above the level of inflation.

The Central Bank has been taking flak from all sides lately over its insistence on maintaining what critics call "crippling" and "bankrupting" interest rates, a policy endorsed by the prime minister to keep lenders operating above the level of inflation. But in a reversal that could mollify bankers and borrowers -- not to mention VEB chief Vladimir Dmitriyev and Mayor Yury Luzhkov, who both took digs at the Central Bank's monetary policy last week -- First Deputy Chairman Alexei Ulyukayev said Friday that the bank could begin cutting rates as soon as next quarter. The comments, made in an interview on Ekho Moskvy radio, reflect a growing confidence that inflation will begin to subside as production plummets and the devalued ruble starts to regain ground against a falling dollar. Prime Minister Vladimir Putin said earlier this month that setting interest rates below inflation would "destroy the economy" -- a position that few have publicly challenged.

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Russia: Sargut Buys 21% of MOL for $1.8 Billion

Cash rich oil producer Surgutneftegaz agreed to buy 21 percent of Hungarian refiner MOL from Austrian oil and gas company OMV for 1.4 billion euros ($1.8 billion).

Cash rich oil producer Surgutneftegaz agreed to buy 21 percent of Hungarian refiner MOL from Austrian oil and gas company OMV for 1.4 billion euros ($1.8 billion). The purchase appeared to give Surgutneftegaz a controlling stake in the refiner, which listed the largest portion of its shares, 24 percent, as belonging to "foreign investors (mainly institutional)" as of December 2008. "The purchase of an interest in MOL will be a serious basis for the start of long-term mutually beneficial cooperation between our companies," Surgutneftegaz chief Vladimir Bogdanov said in the statement.

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Russia to Double its Issue of Bonds

The Finance Ministry will sell 529 billion rubles ($15.7 billion) of treasury bonds this year and issue 50 percent to 100 percent more bonds in 2011 and 2012, Finance Minister Alexei Kudrin said Wednesday, as the government looks for ways to finance a growing budget deficit and increase liquidity in its ailing financial system.

The Finance Ministry will sell 529 billion rubles ($15.7 billion) of treasury bonds this year and issue 50 percent to 100 percent more bonds in 2011 and 2012, Finance Minister Alexei Kudrin said Wednesday, as the government looks for ways to finance a growing budget deficit and increase liquidity in its ailing financial system. The government may also change some of its capital rules in efforts to recapitalize the banking sector, while shying away from the U.S. model of a "toxic assets" fund. The bond issue amounts to nearly twice the amount of paper that the Finance Ministry sold last year, and the amount will increase each year to ease pressure on the Reserve Fund, which will cover this year's forecast 8 percent budget deficit. "This will happen every year -- it is a necessity due to the depletion of the Reserve Fund," Kudrin said in comments posted on the ministry's web site.

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Russia: Budget Slashed for Repatriation Program

The government plans to slash spending on a program aimed at attracting Russians home from abroad due to a disappointing response since the first people started to return in 2007, the Federal Migration Service said Thursday.

The government plans to slash spending on a program aimed at attracting Russians home from abroad due to a disappointing response since the first people started to return in 2007, the Federal Migration Service said Thursday. The program will be cut from 8 billion rubles ($239 million) to 1.8 billion rubles this year under the revised federal budget approved by the Cabinet recently. More than 12,000 Russians have returned under the program, which was unveiled in June 2006 by then-President Vladimir Putin in an attempt to address the country's demographic crisis by attracting Russian-speaking workers.

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Russian Government Says GAZ is too Big to Fail

GAZ, billionaire Oleg Deripaska's vehicle maker, is too big to fail, and the government will step in to prevent it from falling into bankruptcy, Deputy Prime Minister Sergei Ivanov said in an interview.

GAZ, billionaire Oleg Deripaska's vehicle maker, is too big to fail, and the government will step in to prevent it from falling into bankruptcy, Deputy Prime Minister Sergei Ivanov said in an interview. "We don't want to nationalize anything except when it's unavoidable," Ivanov said. "It's the last resort." Finance Minister Alexei Kudrin said last week that the state would not bail out all companies that it deems systemically important to the economy, and some may go bankrupt. The government plans to support GAZ, carmaker AvtoVAZ and Rosatom, the state's nuclear holding company. There are no plans to capitalize Deripaska's United Company RusAl, he said.

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Dollar Purchases Keep Ruble Down

The Central Bank intervened in the currency market for the fourth consecutive trading day on Tuesday, buying dollars to keep a lid on the ruble's rally to two-month highs, dealers said.

The Central Bank intervened in the currency market for the fourth consecutive trading day on Tuesday, buying dollars to keep a lid on the ruble's rally to two-month highs, dealers said. The ruble remained on strong footing despite a small bout of profit-taking in Russian stock markets, which hit 4 1/2-month highs on Monday, and oil prices. The ruble strengthened as far as 38.57 versus a euro/dollar basket and is now up about 4.5 percent since the start of March. "The market's a happier place again, spring has sprung and everyone is short dollar-ruble again," said a trader at a foreign bank in Moscow. "It [ruble strengthening] probably will continue as long as stocks and oil stay bid. The positioning is still quite light."

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Russia: Gazprom Set to Buy Assets from Eni, Enel

Gazprom is predicted announce the purchase of 20 percent of Gazprom Neft and former Yukos gas assets from Eni and Enel for more than $5.5 billion, and Sberbank, Gazprombank and Rosselkhozbank have offered to help finance the deal.

Gazprom is predicted announce the purchase of 20 percent of Gazprom Neft and former Yukos gas assets from Eni and Enel for more than $5.5 billion, and Sberbank, Gazprombank and Rosselkhozbank have offered to help finance the deal. The purchases are expected to be announced April 6 or 7. Gazprom Neft shares rose as much as 30 percent when the MICEX opened Wednesday before shedding some of the gains. At its peak in June, 20 percent of Gazprom Neft was worth $7.7 billion, and Gazprom's losses from revaluing the option on Oct. 1, 2008, were 42 billion rubles ($1.25 billion). The oil producer is Russia's fifth largest by output, with a capitalization of $10.9 billion. Gazprom owns 75.7 percent.

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Russia's Aeroflot Sees Summer Passengers Rise

Aeroflot predicted on Tuesday that it would carry 5.79 million passengers this summer season, slightly higher than last year's 5.77 million, even after posting a decline in February numbers.

Aeroflot predicted on Tuesday that it would carry 5.79 million passengers this summer season, slightly higher than last year's 5.77 million, even after posting a decline in February numbers. The state's flagship carrier said last week that it carried 16 percent fewer passengers in February, year on year, as Russians cut back on vacation plans and business travel. "Turbulence of the market made predicting difficult," commercial director Alexander Sidorov told reporters Tuesday. Passengers have increasingly been booking tickets only one or two weeks ahead of time, although there is evidence that sales are picking up starting from mid-April, he said. When asked why Aeroflot has such an optimistic outlook for the summer, Sidorov said the company was monitoring the market to respond quickly to changing trends.

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Russia: State Mulls Boosting Stake in AvtoVAZ

The government discussed rescuing AvtoVAZ by increasing its stake in the struggling carmaker through an additional share issue, a Cabinet official said Tuesday after a meeting of the state's anti-crisis commission.

The government discussed rescuing AvtoVAZ by increasing its stake in the struggling carmaker through an additional share issue, a Cabinet official said Tuesday after a meeting of the state's anti-crisis commission. AvtoVAZ head Boris Alyoshin said last week that the company needed 26 billion rubles ($753 million) to restructure its debt. The company used 45 billion out of 75 billion rubles of its total assets as collateral, Alyoshin said. No final decision, however, was made on the form or amount of state support that might be offered to AvtoVAZ, the official said by telephone.

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Saakashvili Says Georgia Open to Russian Firms

President Mikheil Saakashvili said he would not prevent Russian companies, including power trader Inter RAO and gas producer Itera, from investing in Georgia, rejecting criticism that their control of utilities was a threat to security.

President Mikheil Saakashvili said he would not prevent Russian companies, including power trader Inter RAO and gas producer Itera, from investing in Georgia, rejecting criticism that their control of utilities was a threat to security. "We're not going to hinder Russian companies from coming to Georgia," Saakashvili said in an interview in the Black Sea port of Batumi. "The more business interest we get, the less political pressure there will be. I've never said that Georgia doesn't need Russian business."

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Russia to Pitch New Currency

The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.

The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system. The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a "superreserve currency accepted by the whole of the international community," the Kremlin said in a statement issued on its web site.

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Russian Output Shrinks 13.2% in February

Russian industrial output posted the second-fastest contraction in the series' seven-year history in February, but the pace of the slowdown eased a little from January, State Statistics Service data showed on Monday.

Russian industrial output posted the second-fastest contraction in the series' seven-year history in February, but the pace of the slowdown eased a little from January, State Statistics Service data showed on Monday. Output fell 13.2 percent year on year last month after shrinking by a record 16 percent in January, the statistics service said. Analysts had forecast a 15 percent contraction in February output. "In itself, the [Russian] number is very bad and very big, but it is better than expected," said Yulia Tseplyayeva, chief economist for Russia and CIS at Merrill Lynch. "But it is too soon to cheer, because in manufacturing, the slowdown is much deeper than we expected. Such a serious contraction talks of a sharp slowdown in demand."

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Russia: PIK Construction Down 50%

PIK Group, one of the country's largest real estate developers, said that it finished only 813,000 square meters of housing in 2008, almost 50 percent less than the 1.54 million square meters completed a year earlier.

PIK Group, one of the country's largest real estate developers, said that it finished only 813,000 square meters of housing in 2008, almost 50 percent less than the 1.54 million square meters completed a year earlier. The country's developers have been among the hardest hit sectors in the financial crisis, with Moscow's property market coming to a near-standstill as builders have trouble financing new projects and sales of finished apartments plummet. The company's regional development program has been temporarily frozen as it devotes all of its resources toward restructuring debt, the company said. It said that it was in debt restructuring talks with the "majority" of its creditors. The company's $1.85 billion London IPO in 2006 was the biggest public offering ever in the European real estate sector.

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Bad News for Russian Billionaires

It's been a terrible year for Russia's richest, Forbes Magazine reported, and New York City overtook Moscow in terms of the number of resident billionaires.

It's been a terrible year for Russia's richest, Forbes Magazine reported, and New York City overtook Moscow in terms of the number of resident billionaires. New York City replaced Moscow as home to the most billionaires, with 55. Russia, which saw the number of super- rich soar in recent years, suffered among the biggest shocks, with the number of billionaires down to 32 from 87. The number of billionaires in the world fell by nearly a third to 793 in the past year, with large numbers dropping off the list in Russia, India and Turkey.

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Putin Says Russia Cannot Afford Low Interest Rates

Russia cannot afford to cut interests rates to lower levels than inflation, as it would represent a serious threat for the economy, Prime Minister Vladimir Putin said Thursday.

Russia cannot afford to cut interests rates to lower levels than inflation, as it would represent a serious threat for the economy, Prime Minister Vladimir Putin said Thursday. "If inflation is 13 percent, we cannot set the rates lower than that, it will destroy the economy," Putin said, Interfax reported. Many Russian companies and politicians want lower rates to make borrowing more affordable for cash-strapped companies and to help the economy through its first recession in a decade. The Finance Ministry and the Central Bank say, however, that official rates must be kept high to bring inflation under control, saying only then will banks be willing to lend again and rekindle the nearly-dead domestic credit market.

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Russia's Unemployment Rises to 2 Million

The number of Russians officially registered as unemployed has risen by more than 1 million since August to reach 2.03 million, Yury Gertsy, head of the Federal Labor and Employment Service, said Wednesday.

The number of Russians officially registered as unemployed has risen by more than 1 million since August to reach 2.03 million, Yury Gertsy, head of the Federal Labor and Employment Service, said Wednesday. The total is now at its highest level in the 10-year history of data on the State Statistics Service web site. "The number of unemployed as of today stands at 2.03 million. That is those who are registered in employment organizations and will get ... unemployment benefits," Gertsy told Prime Minister Vladimir Putin.

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Russia's Largest Steelmaker Posts $1.2Bln Loss

Severstal, Russia's largest steelmaker, posted a fourth-quarter net loss of $1.2 billion after writing down $411 million of inventories and taking an impairment charge of $1.5 billion on assets.

Severstal, Russia's largest steelmaker, posted a fourth-quarter net loss of $1.2 billion after writing down $411 million of inventories and taking an impairment charge of $1.5 billion on assets. The firm also said it planned to cut 9,000 to 9,500 jobs at its Russian steel facilities in response to weak demand and would do layoffs at its coal and iron ore mines. Severstal also said market conditions remain "challenging," though it did not provide any precise figures in its current year outlook. "Although we remain confident in the long-term prospects for the industry, we believe it would be inappropriate to provide any guidance for 2009 until visibility and global economic conditions improve," Severstal said in the statement.

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Russia Avoids Downgraded Debt-Rating by Moody's

Moody's Investor Services has reported that they have no current plans to lower their debt rating for Russia.

Moody's Investor Services has reported that they have no current plans to lower Russia's debt rating. Since December, both Standard & Poor's and Fitch Ratings have lowered their debt ratings for Russia, but Moody's has reluctantly held off, stating "Relative to where they were couple of months ago, things are looking better for Russia, they're no longer in a free fall". Although Russia has shown considerable improvement in managing their debt since last December, falling reserves still remains one of the most significant indicators for the Russian economy.

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Russian Reserves Could Be Halved

Russia's reserves could be almost halved by the end of the year as continued deterioration of the country's economy forces the central bank to use its "cash cushion" to defend the ruble, RBC Capital Markets analysts said.

Russia's reserves could be almost halved by the end of the year as continued deterioration of the country's economy forces the central bank to use its "cash cushion" to defend the ruble, RBC Capital Markets analysts said. Russia's foreign-currency stockpile, the world's third-largest after China's and Japan's, could drop to as low as $200 billion by the end of 2009 as Bank Rossii is "forced" to sell dollars and euros to prevent further devaluation of the country's currency.

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Russian Hotels See Slump in Guest Volumes

St. Petersburg's hotels saw a 10 to 30 percent decrease in occupancy in January, causing some of them to close entire floors to save money.

St. Petersburg's hotels saw a 10 to 30 percent decrease in occupancy in January, causing some of them to close entire floors to save money. The inflow of tourists has decreased by 60 percent compared to the months before the crisis began to be felt, and the volume of business trips to the city has decreased by 50 percent, said Sergei Lyaskovsky, the general director of Tekhnopark VITU, which manages Marshal mini hotel. The average occupancy of five- and four-star hotels in January has decreased by 25 to 30 percent in comparison to January last year, and that of small hotels has fallen by 15 to 17 percent, said Sergei Kovalyov, executive director of Interconsult consulting firm.

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Russian Inflation Hits 13.9% in February

Russia's inflation rate rose to a four-month high in February as the weaker ruble drove up the price of imports.

Russia's inflation rate rose to a four-month high in February as the weaker ruble drove up the price of imports. The annualized rate jumped to 13.9 percent from 13.4 percent in January, the State Statistics Service said Thursday. Consumer prices grew 1.7 percent in the month. Inflation has been sparked by the weakening ruble, which pushed up import prices, and planned tariff increases at the start of the year that raised utility costs. Russia was forced to abandon its defense of the ruble after the price of oil, the government's biggest export earner, tumbled more than two-thirds in less than six months. The ruble has lost 35 percent of its value against the dollar since August.

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Russia Accuses Ukraine of Impeding Gas Flow

Prime Minister Vladimir Putin harshly accused Ukrainian officials on Thursday of jeopardizing transit of Russian natural gas to Europe by ordering raids on Ukraine's national energy company.

Prime Minister Vladimir Putin harshly accused Ukrainian officials on Thursday of jeopardizing transit of Russian natural gas to Europe by ordering raids on Ukraine's national energy company. The National Security Service of Ukraine attempted to raid the national energy company Naftogaz Ukrainy for the second straight day. At a regular cabinet meeting, Putin described the actions as "deplorable and very unfortunate". He went on to say that if Naftogaz failed to pay for February deliveries by the end of Saturday, Gazprom would have to halt supplies to Ukraine. Moscow and Kiev have long sparred over gas trade and transit, suspending them for half of January before reaching an agreement in the face of a furious European Union.

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Russian Government Spending to Increase by $18 Billion

President Dmitry Medvedev said Wednesday that spending will be increased by 650 billion rubles ($18 billion) this year under a revised budget as the government bolsters social programs and invests in local industry in a bid to spur growth.

President Dmitry Medvedev said Wednesday that spending will be increased by 650 billion rubles ($18 billion) this year under a revised budget as the government bolsters social programs and invests in local industry in a bid to spur growth. The government will "activate" home construction, encourage the purchase of more Russian-made equipment and stimulate small and medium-sized businesses while bailing out floundering defense companies . "The most important thing now is for the state to fulfill its social obligations even as budget revenue declines," Medvedev said.

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Russian Oil Fire Halts Export Supply

An oil leak and a fire on a pipeline in central Russia have halted one-fifth of supplies of the world's second-largest oil exporter to global markets on Wednesday for at least a few days.

An oil leak and a fire on a pipeline in central Russia have halted one-fifth of supplies of the world's second-largest oil exporter to global markets on Wednesday for at least a few days. Officials at Novorossiisk said oil flows had been halted on Wednesday morning and exports were unlikely to resume for the next three to four days. Furthermore, the port has halted loading because of poor weather conditions and will not resume operations before March 8th.

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Russia'a Largest Oil Producer Drops 64%

Rosneft, Russia's largest oil producer, said profit declined 64 percent in the fourth-quarter as crude prices fell, while taxes and costs rose.

Rosneft, Russia's largest oil producer, said profit declined 64 percent in the fourth-quarter as crude prices fell, while taxes and costs rose. Net income dropped from $2.18 billion to $775 million over the same period a year earlier. Higher taxes, despite oil prices being 40 percent lower, were devastating to the company. The price of Urals blend dropped 53 percent in three months, compared with only a 38 percent decline in export duty. All oil producers across Russia, and most globally, have reported lower fourth-quarter earnings as the global economic slowdown has slowed demand for crude.

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Bank of Moscow Sees 61% Drop in Profit

Bank of Moscow, the country's fifth-largest lender by asset size, saw its profits drop 61 percent last year after it increased its loan-loss provisions and reported trading losses.

Bank of Moscow, the country's fifth-largest lender by asset size, saw its profits drop 61 percent last year after it increased its loan-loss provisions and reported trading losses. According to Russian accounting standards, net income in 2008 was 3.6 billion rubles ($99.4 million), down from 9.2 billion rubles in 2007. According to CEO Andrew Borodin, the results could have been much worse considering the bank's loan portfolio grew by 54 percent. Analysts attribute the fall in profits mainly to its large exposure to equity markets. But despite the setbacks, the bank still expects a profit in 2009.

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Russian Energy Firm Release Strong 3rd Quarter Profit

Gazprom released a 16 percent profit growth in the third quarter of 2008 thanks to record-high energy prices.

Gazprom released a 16 percent profit growth in the third quarter of 2008 thanks to record-high energy prices. However, investors are not very excited about the profit because sagging demand amid the global financial crisis overshadows the rosy, pre-crisis news. Profit rose to 131.6 billion rubles ($3.6 billion), compared with 113 billion rubles in the same period of 2007, but because of the drop in the ruble's value, figures were well below analysts expectations. Exchange rate loses accounted for 36 billion rubles.

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Medvedev Lands Energy Deal in Spain

Russia and Spain signed an energy agreement aimed at giving Spanish companies greater access to Russian oil and gas fields and could ease the way for Russian firms to buy stakes in Spanish companies.

Russia and Spain signed an energy agreement aimed at giving Spanish companies greater access to Russian oil and gas fields and could ease the way for Russian firms to buy stakes in Spanish companies. The deal, unveiled today at a new conference with Spanish Prime Minister Jose Luis Rodriguez Zapatero and President Dmitry Medvedev, covers the development of oil and natural gas as well as its transport and sale. "[This agreement] opens the door to collaboration between our country and one of the biggest energy players in the world," Zapatero told a news conference in Madrid. "The memorandum means greater security in Spain's energy supplies, and it guarantees better access for our companies to Russian energy reserves." The agreement also covers renewable energy where Russia can benefit from Spain's major positions.

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Russian State-Owned Energy Firm Sees Reserves Increase

Rosneft's oil and gas reserves rose 2.8 percent in 2008 under Petroleum Resources Management System (PRMS) rules, allowing the company to maintain top position for oil reserves despite a fall under more stringent U.S. Securities and Exchange Commission rules.

Rosneft's oil and gas reserves rose 2.8 percent in 2008 under Petroleum Resources Management System (PRMS) rules, allowing the company to maintain top position for oil reserves despite a fall under more stringent U.S. Securities and Exchange Commission rules. Under the PRMS rules, reserves in 2008 rose to 22.307 billion barrels of oil from 21.699 billion in 2007. Under the stricter SEC method, reserves fell to 14.448 billion in 2008 from 14.995 billion in 2007. The main difference between the two is that the SEC uses the year-end prices, while PRMS uses the average price for the year.

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Russia Forecasts 2010 GDP Growth

Finance Minister Alexei Kudrin says the economy could grow 2 to 3 percent next year, but the recovery will depend on a resurgence of private demand.

Finance Minister Alexei Kudrin says the economy could grow 2 to 3 percent next year, but the recovery will depend on a resurgence of private demand. This year the government is facing a 8 percent GDP drop, mainly because of falling oil revenues. The government is revamping its policy towards oil in order to stimulate some additional revenue. A new revised budget will assume the price of oil at $41 a barrel, down from an original $95. The budget it also expected to boost spending from 500 billion rubles to 9.5 trillion rubles ($262.8 billion). Attempts to boost social and defense sending will be given priority.

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Russian Job Loss Predictions Reach 500,000

The number of Russians set to lose their jobs amid the financial crisis has reached 500,000.

The number of Russians set to lose their jobs amid the financial crisis has reached 500,000. Originally the job loses were focused in the financial sector, but the loses have now spread to other industries from store clerks to construction workers. The Health and Social Development Ministry has classified 496,600 workers as "due for redundancy", meaning job cuts have been established but not yet enacted. Wages and real disposable incomes are also plummeting and wages owed to workers have almost tripled since last year.

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Russia Can Survive a Year Without Loans

As the government prepares for its first budget deficit in a decade, President Dmitry Medvedev's top economic advisor said Russia has sufficient oil funds to "live through this year without borrowing".

As the government prepares for its first budget deficit in a decade, President Dmitry Medvedev's top economic advisor said Russia has sufficient oil funds to "live through this year without borrowing". The abundance of oil will give Russia more flexibility in its financial policies. The government announced it is in "no hurry" to sell bonds. The Economy Ministry predicts a 2.2 percent contraction this year and a budget deficit of 8 percent of GDP. Russia's sovereign debt rating was cut by rating agencies to their second-lowest grade and the central bank has spent more than one-third of its foreign currency reserves since August to quell the ruble's 34 percent decline against the dollar. But the government does not expect any additional sharp changes to exchange rate or commodity prices.

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Russian VAT Cut in Jeopardy

The Economic Development Ministry may now abandon its proposal to slash the value-added tax (VAT) as budget revenues dwindle.

The Economic Development Ministry may now abandon its proposal to slash the value-added tax (VAT) as budget revenues dwindle. VAT collection accounted for a quarter of the budget in only 9 months last year. The original plan was to cut the tax from 18 percent to 12 percent to stimulate the economy. A decision has been postponed after Finance Minister Alexei Kudrin opposed the idea. Discussions have been pushed back to April, but the decision will be difficult. The economy is predicted to shrink by 2.2 percent, but at the same time the budget gap is growing. The budget deficit is predicted to be 8 percent of GDP this year.

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Russian Defense Firms Get $56 Billion

Finance Minister Alexei Kudrin announced that a government commission has approved a $56 billion loan to help prop up struggling defense firms.

Finance Minister Alexei Kudrin announced that a government commission has approved a $56 billion loan to help prop up struggling defense firms. The government is also considering purchasing additional shares in struggling firms, such as jet-maker MiG. The government sprung into action after Sergei Chemezov, head of the state-run arms maker Russian Technologies, said that one-third of Russian arms makers are of the verge of bankruptcy.

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russia

Russia's Largest Automaker Struggling

AvtoVAZ's, Russia's largest automakers, has been struggling as of late.

AvtoVAZ's, Russia's largest automakers, has been struggling as of late. In one city with a major plant, Tolyatti, 90,000 finished vehicles sit in the lot as the 100,000 employees wait for improvements. Local car dealers are considering closing up shops after sales dropped by up to 90 percent. Besides the one in seven people employed by AvtoVAZ in Tolyatti, almost all other residents are indirectly affected by the success or failure of the plant. Compared to high hopes last year, Russia automobile industry has experienced a sharp downturn. Russia was expected to become the largest car market in Europe, but instead finished fourth after Russian banks stopped handing out loans.

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russia

Russian Financial Scams on the Rise

Financial Monitors have becoming increasingly wary of financial scams throughout Russia.

Financial Monitors have becoming increasingly wary of financial scams throughout Russia. Just last year, 200 financial pyramid schemes were investigated by the Interior Ministry. A recent example was the Rubin Business Club pyramid scheme that claimed 100,000 victims. The government is also on heightened alert after the $50 billion Madoff scheme, dubbed the "American MMM" in reference to the most notorious Russian pyramid of the 1990s. The government's financial watchdogs feel that it may bring on a resurgence of homegrown swindlers.

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russia

McDonald's Plans to Open 40 Stores in Russia

McDonald's will invest $120 million to open 40 new Russian restaurants this year.

McDonald's will invest $120 million to open 40 new Russian restaurants this year. The same amount of restaurants were opened in 2008 but slightly less money was invested. Although McDonald's does not give specifics about individual stores, a spokesman said they have seen no decline in customers or profit in Russia, despite the global financial crisis. But the company is not immune and has started to offer more low price items on the menu. McDonald's is also looking to boost breakfast service as it has been one of the most successful ventures in Russia ever carried out by the company. McDonald's also says it will continue hiring and not slash paychecks, an important note considering Russia's employment and wage situation.

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russia

Chevron Quits Oil Fields In Siberia

U.S. oil leader Chevron decided to quit a joint venture with Russian firm Gazprom Neft after disappointing finds at the two oil fields they explored in Siberia.

U.S. oil leader Chevron decided to quit a joint venture with Russian firm Gazprom Neft after disappointing finds at the two oil fields they explored in Siberia. The partnership was established in 2006 with Chevron owning 25 percent of the operation. The Pyakutinsky and Aikhettinksky fields, that the venture was exploring, was expected to have at least 45 million tons of oil. There has been no word on Gazprom's status for the project, but Chevron plans to continue working in Russia and looks forward to future partnerships with Gazprom.

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russia

2,000 Possible Lay Offs for Russian Mining Firm

Evraz Group may lay off nearly 2,000 workers by April at its steel and iron ore plants in the Ural mountains city of Nizhny Tagil.

Evraz Group may lay off nearly 2,000 workers by April at its steel and iron ore plants in the Ural mountains city of Nizhny Tagil. However, part owner and billionaire Roman Abramovich, said the government projected the numbers and they only represent a worst case scenario. No final decision has been made on the matter, and the company is examining every way to preserve as many jobs as possible. As of Friday, the unemployment rate in Nizhny Tagil was only 1.34 percent, compared the national unemployment rate of 8.1 percent.

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russia

Russian State Firm Suspected of Misusing $384M

The Russian Venture Company is being accused of possibly misusing 30 billion rubles ($834 million) in government funds.

The Russian Venture Company is being accused of possibly misusing 30 billion rubles ($834 million) in government funds. The Prosecutor General's Office opened an investigation on Tuesday and also accused the Economic Development Ministry for not doing enough to oversee the funds. The state-controlled company was created two years ago with the function of funding technology startups to spur new innovations. Instead, the Russian Venture Company is being accused of depositing more than 85 percent of its capital in banks and the accounts of overseas corporations.

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russia

Russian Retail Sector Sees Foreign Investment

Major French retailer Carrerfour is seeking to buy Sedmoi Kontinent, Russia' oldest retailer.

Major French retailer Carrerfour is seeking to buy Sedmoi Kontinent, Russia' oldest retailer. The announced is significant because it will be the first foreign investment in Russia's retail sector since the beginning of the global credit crisis. Carrefour, the world's second largest retailer, offered to purchase Alexander Zanadvorov's, the principle owner, 74.8 percent stake and help him redeem $560 million in debts to Deutsche Bank. Carrefour plans to open its first Russian store this year, regardless of its outcome with Sedmoi Kontinent, to compete with Metro and the ever expanding Walmart. Sedmoi Kontinent's stock closed up 22.4 percent at 236.75 points after hearing the news.

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russia

Russian Antitrust Body Blocks Disney

The federal Anti-Monopoly Service blocked Walk Disney's local venture of providing a free-to-air channel.

The federal Anti-Monopoly Service blocked Walk Disney's local venture of providing a free-to-air channel. The anti-monopoly body said it rejected the venture after false information was given regarded the creation of Mo-Tv Holdings, the believed name of the Disney Venture. The ruling is a big setback for Disney as they have been aggressively trying to expand into the Russian and Eastern European markets. Disney had been relying on the free-to-air television channel to raise brand awareness and support local retail, theatrical distribution, licensing, mobile and Internet businesses already operating in Russia. The strategy has previously worked in similar markets in China and India, but now the venture may be in doubt. As of Monday, specific information on why the plan was rejected was not available, and no comment has been from Disney.

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russia

Russian Firm Seeks $44M Bailout From Britain

GAZ, owners of the British commercial vehicle manufacturer LDV, asked the British Government for a loan of up to $44 million.

GAZ, owners of the British commercial vehicle manufacturer LDV, asked the British Government for a loan of up to $44 million. The chairman of GAZ, Erik Eberhardson, said LDV was running out of money after it suspended service in December. LDV is not alone as the majority of the British car industry has been hit hard by the credit crisis. Compared to last year's figures, production fell 60 percent in January. The British government has already pledged 2.3 billion rubles of loans to help automakers cope with the recession, but GAZ believes more will be needed. A total of 6,050 jobs are at risk if the company goes under.

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russia

Russian President Medvedev Says Government is Too Slow

President Dmitry Medvedev criticized the government for its slow responses to the country's worst economic crisis in a decade.

President Dmitry Medvedev criticized the government for its slow responses to the country's worst economic crisis in a decade. In a meeting last week, Medvedev was quoted as saying, "We are working very slowly, which is unacceptable in a period of crisis." The president believes broader state loan guarantees for companies are needed in order to ease the access to credit. He continued by saying, "This isn't a macroeconomic problem or a consequence of the difficulties faced by the world financial system. This is simply out inability to work swiftly and efficiently."

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russia

llim Denies It Will Lay Off 5,000 Employees In Russia

St. Petersburg's largest pulp and paper corporation, llim Group, has denied allegations of a plan to lay off 5,000 of its employees as a result of the economic crisis.

St. Petersburg's largest pulp and paper corporation, llim Group, has denied allegations of a plan to lay off 5,000 of its employees as a result of the economic crisis. Yelena Kononoa, spokeswoman for llim, announced that although the crisis had seriously affected the company, the number of staff laid off would be minimized by the administration. llim also has postponed their two billion dollar investment program and must sell its secondary assets, such as repair and service shops. Paul Herbert, general director of Ilim Group said that demand for cellulose and paper products and packaging had decreased by 15-20 percent. This is "lower than the bottom".

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russia

Russia's Cash Printing May Knock 18% Off Ruble

Russia plans to increase their money supply by 3.2 trillion ruble ( $89 billion).

Russia plans to increase their money supply by 3.2 trillion ruble ( $89 billion). This increase was implemented in order to cover this year's budget deficit, however it may lead to an 18 percent devaluation in the ruble versus the dollar. The Russian Government keeps $222 billion of rainy day savings in foreign-currency accounts within the central bank. Ninety billion will be needed to cover the budget deficit. The government is working on a budget deficit assumption of 8 percent for this year, which would equal 90 billion from the $137.3 billion Reserve Fund. The Central Bank is sticking by its original forecast of 13 percent inflation this year.

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russia

Russia Faces Domestic Steel Shortage

With falling steel prices and a weakening ruble, Russian steel producers have been forced to export larger quantities of steel to keep revenues up. But as a consequence, domestic purchasers have been forced to choose from dwindling stockpiles.

With falling steel prices and a weakening ruble, Russian steel producers have been forced to export larger quantities of steel to keep revenues up. But as a consequence, domestic purchasers have been forced to choose from dwindling stockpiles. The lower supply has actually raised prices for steel, but it is believed to be short lived. The steel industry is vital for the Russian economy, accounting for 8 percent of GDP. When metal prices fell a staggering 65 percent in the fourth quarter last year, the economy and major steel conglomerates suffered tremendously. Unfortunately, the dropping supply is expected to have little effect on the recovery of steel prices.

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russia

Russian Unemployment Hits 6 Year High

According to the State Statistics Service, Russia's unemployment rate jumped to 8.1 percent in January, the highest in six years.

According to the State Statistics Service, Russia's unemployment rate jumped to 8.1 percent in January, the highest in six years. After employers dropped 300,000 jobs last month, the jobless mark reached 6.1 million, a 23 percent increase from the same month last year. However, the worst is not over as 470,000 workers and another 920,000 part-time workers face imminent layoffs. The government is worried of the growing trend and expects some action. At a recent conference, Deputy Health and Social Development Minister Maxim Topilin said, "We haven't seen this kind of trend in many years ... and this disturbing tendency forces us to re-examine our current labor market policies and our regulatory quota polices for foreign workers."

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russia

Russian President Opens LNG Plant on Sakhalin

Russia's first liquefied natural gas (LNG) plant to supply natural gas by tanker opened this week on Sakhalin Island, entering the country into a new market.

Russia's first liquefied natural gas (LNG) plant to supply natural gas by tanker opened this week on Sakhalin Island, entering the country into a new market. The plant will also be the first on Sakhalin Island and the first to access the Asian Pacific market. Gazprom will be heading up the operation after gaining control of the multi-billion dollar Sakhalin-2 joint venture. Previously, Gazprom obtained most of its revenues from the European Union. President Dmitry Medvedev voiced his delight at the ceremony by saying, "All this, beyond any doubt, strengthens our position, the position of Russia, as the biggest player on the energy market."

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russia

Russian Bank Builds $1.7 Billion Agriculture Portfolio

Prime Minister Vladimir Putin said that Vneshekonombank (VEB) has created an agriculture portfolio of 60 billion rubles ($1.7 billion), making it the third creditor to bail out the sector.

Prime Minister Vladimir Putin said that Vneshekonombank (VEB) has created an agriculture portfolio of 60 billion rubles ($1.7 billion), making it the third creditor to bail out the sector. The news comes a day after Agriculture Minister Alexei Gordeyev pledged a combined 120 billion rubles in short-term loans to help farmers prepare for the spring sowing season. The government has been rushing to make sure farmers have enough cash and resources to guarantee a successful sowing season. It will meet again in march to discuss the state of the farmers' sowing preparations. The government has been known to dictate certain prices to the industry. Last week, it said a kilogram of break should cost no more than 25 rubles ($0.75).

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russia

Lower Construction Costs in Russia Cut Olympic Bill by 15%

Government spending on venues for the 2014 Olympic Games in Sochi has dropped 15 percent on cheaper construction costs.

Government spending on venues for the 2014 Olympic Games in Sochi has dropped 15 percent on cheaper construction costs. Deputy Prime Minister Dmitry Kozak had predicted construction costs would fall because of a sharp drop in key building materials, such as cement. Due to the weakening economy in Russia, there has been some question whether the government can fund all of the projects. Fortunately, private investors have shown an increased interest in funding projects. Combined with the lower construction costs, outside investment will take a significant amount of funding pressure off the government. Possible private investment in one Olympic venue will save up to 25 billion rubles.

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russia

Russian Economy Shrinking by 2.2%

The government has forecast a 2.2 percent economic contraction based on poor numbers released Tuesday. The government slashed the forecast from minus 0.2 percent, but kept forecasts on the price of oil the same and assumed the same exchange rate against the dollar.

The government has forecast a 2.2 percent economic contraction based on poor numbers released Tuesday. The government slashed the forecast from minus 0.2 percent, but kept forecasts on the price of oil the same and assumed the same exchange rate against the dollar. This marks a strong reversal from recent years when GDP growth was 6 to 7 percent, and even from last year when GDP was 5.6 percent despite a horrid fourth quarter. Russia being heavily dependent on oil exports has been a large problem as the price of oil has plummeted, but other factors including the flight of investors and foreign direct investment due to the credit crunch have played a significant role. The 2.2 percent contraction would mark the worst downturn since the currency crash of 1998.

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russia

Russia's January Industrial Output Falls by 20%

Russia's industrial output suffered its biggest monthly fall in January.

Russia's industrial output suffered its biggest monthly fall in January. It contracted by 19.9 percent compared to December 2008 and fell 16 percent from January 2008, which was a lot more than the 11.5 percent that economists expected. The contraction is the biggest in the series' seven-year history and is blamed at slowing demand at home and abroad. The Russian economy is expected to enter its first recession in a decade this year.

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russia

Russian Ruble Rally Continues For A Fifth Straight Day

The ruble strengthened by 40 kopeks to 39.37 versus the dollar/euro basket on Thursday, extending its rally to one week.

The ruble strengthened by 40 kopeks to 39.37 versus the dollar/euro basket on Thursday, extending its rally to one week. The ruble's rally was supported by oil prices, liquidity shortages and moves by the authorities to impose informal capital controls. It is expected to continue to strengthen in the next few days amid a peak of large corporate tax payments.

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russia

Russia Revises Budget Deficit

The Russian government is planning on a budget deficit of 8 percent of GDP this year, according to top Kremlin economic aide Arkady Dvorkovich.

The Russian government is planning on a budget deficit of 8 percent of GDP this year, according to top Kremlin economic aide Arkady Dvorkovich. This was an upward revision from the 6 percent figure he gave last week. The government is determined to spend more on its social programs such as pensions, child benefits and regional budgets, incrementally raising them to keep up with inflation rates. Dvorkovich said the deficit may go up as high as 10 percent of GDP if necessary so that the government can keep its social commitments.

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russia

Russia: Record $8.35 Billion In Arms Sold Last Year

Russian President Dmitry Medvedev said Tuesday that the country has set a new post-Soviet record arms sales last year at $8.35 billion.

Russian President Dmitry Medvedev said Tuesday that the country has set a new post-Soviet record arms sales last year at $8.35 billion. Russia has come in closely behind the United States, who has been the leader in global arms sales in recent years. Expecting decreases in demand this year, Medvedev urged officials to more aggressively look for new potential markets for Russian markets. Russia currently has big weapons deals with China, India, Venezuela, Algeria and Iran.

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russia

Russia's Annual Inflation Rate Reaches 13.4%

Russia's inflation rate rose in January from 13.3 percent to 13.4 percent, the first time in five months, according to the State Statistics Service.

Russia's inflation rate rose in January from 13.3 percent to 13.4 percent, the first time in five months, according to the State Statistics Service. The increase was blamed on the weakening ruble and planned tariff increases, which pushed up the cost of imports and utility costs, respectively. In addition, the retail foods sector expect a minimum of a 20 percent rise in prices by the end of the year due to the ruble devaluation and a number of measures that limits sales of products from other regions.

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russia

Russia: Stalled Car Industry Waits For A Bailout

The Russian government is considering a bailout package for the auto industry as Russian manufacturers deal with the credit crunch and plunging sales.

The Russian government is considering a bailout package for the auto industry as Russian manufacturers deal with the credit crunch and plunging sales. In particular, it is expected that automakers GAZ and AvtoVAZ, the two largest companies in the industry, will get a bailout package. However, details about the bailout package, such as how much it will be and what kind of conditions it will have, are unclear.

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russia

Russian Banks Offered Another $14 Billion

The Russian government will offer over 500 billion rubles ($14 billion) to state and private banks in the next few months in hopes of stimulating lending.

The Russian government will offer over 500 billion rubles ($14 billion) to state and private banks in the next few months in hopes of stimulating lending. Prime Minister Vladimir Putin made the announcement, adding that VTB, one of the largest banks in Russia, will receive 200 billion rubles in Tier 1 capital. Private banks will be eligible to borrow another 100 billion rubles in subordinated loans in addition to the 225 billion rubles in such loans that are already available to them. It is not yet clear how this most recent stimulus will affect the country's budget for the year. But officials say budget spending will remain at the previously planned level, with the Reserve Fund possibly covering some of the fiscal deficit.

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russia

Russia: Kudrin Says State Preparing Capital Injection Of $40Bln

Russian Finance Minister Alexei Kudrin said that the government is preparing to put in about $40 billion in Tier 1 and Tier 2 capital into domestic banks, with the condition that they will lend some of the funds to businesses.

Russian Finance Minister Alexei Kudrin said that the government is preparing to put in about $40 billion in Tier 1 and Tier 2 capital into domestic banks, with the condition that they will lend some of the funds to businesses. Tier 1 capital, which involves equity and cash, is the primary regulatory measure of a bank's financial strength. Tier 2 capital is measured as the next most reliable measure. This plan of capital injection comes in addition to the $26.2 billion in subordinated loans that the government pledged to give to critical banks last year.

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russia

Russian Government Shifts Financial Support To Banks

First Deputy Prime Minister Igor Shuvalov said that the Russian government will now focus on helping the banking sector and will significantly scale back support to industries, regions and infrastructure projects.

First Deputy Prime Minister Igor Shuvalov said that the Russian government will now focus on helping the banking sector and will significantly scale back support to industries, regions and infrastructure projects. They are suspending a program of releasing $50 billion to give to companies who have trouble repaying foreign debts. The government is also expected to calculate the 2009 budget on an assumption that the oil price will be priced at $41 per barrel instead of the previous $95. In addition to providing support for the banking sector, the government is also likely to lend a hand to the military complex, Gazprom, Russian Railways and power firms. The Cabinet is currently analyzing a second support package for the struggling banking sector, which is valued between $27 billion and $40 billion.

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russia

Russia: Signs of Optimism In Real Estate Sector

Realtors and developers are starting to be more optimistic that investors are coming back to the market.

Realtors and developers are starting to be more optimistic that investors are coming back to the market. Analysts, however, continue to give caution, arguing that the actual sales will depend largely on the discounts being offered. The level of demand and deals in the market has returned to pre-crisis levels. It is argued that the increased demand for real estate is a result of investors wanting to hold more conservative investments because of the devaluation of the ruble, uncertainty over the U.S. Economy and fears over the euro exchange rate.

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russia

Russia: Signs of Optimism In Real Estate Sector

Realtors and developers are starting to be more optimistic that investors are coming back to the market.

Realtors and developers are starting to be more optimistic that investors are coming back to the market. Analysts, however, continue to give caution, arguing that the actual sales will depend largely on the discounts being offered. The level of demand and deals in the market has returned to pre-crisis levels. It is argued that the increased demand for real estate is a result of investors wanting to hold more conservative investments because of the devaluation of the ruble, uncertainty over the U.S. Economy and fears over the euro exchange rate.

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russia

Russia's Central Bank Promises to Defend Sinking Ruble

The Central Bank vowed to defend the floor that it set for the ruble, primarily through interest rates.

The Central Bank vowed to defend the floor that it set for the ruble, primarily through interest rates. Last week, they set a minimum level of 41 for the ruble's trading band versus a dollar/euro basket. The ruble has been allowed to gradually depreciate over one-fifth of its value since November 2008 to adjust for the decrease in commodity prices and the worst economic outlook in a decade. By raising interest rates, the Central Bank hopes to end the ruble's depreciation. But there is a worry that defending the ruble at that level might significantly deplete Russia's remaining $386.5 billion of currency reserves.

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russia

Crisis May Boost Social Problems in Russia: Medvedev

The state security service has been warmed by the President Dmitry Medvedev that the financial downturn could cause serious social problems like an increase in crime.

The state security service has been warmed by the President Dmitry Medvedev that the financial downturn could cause serious social problems like an increase in crime. According the Russian president, "The global financial crisis, of course, does not help reduce the volume of crime and it creates social problems,"

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russia

Russia Says No Blank Checks For Oligarchs

Some of Russia's oligarchs are a having hard time because of the financial economic crisis. Most of them borrowed billions of dollars in the boom of the Russian economy in recent years. But now, amid the global meltdown, they have difficulties to pay of their debt. The Russian government is no longer willing to help them out without any compensation.

Some of Russia's oligarchs are a having hard time because of the financial economic crisis. Most of them borrowed billions of dollars in the boom of the Russian economy in recent years. But now, amid the global meltdown, they have difficulties to pay of their debt. The Russian government is no longer willing to help them out without any compensation.

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russia

Russia to Be More Active in Africa

Russia is planning to increase its diplomatic involvement in African issues including Sudan's Darfur crisis. Russia had a lot of influence in the area during the Cold War but since then China has become the major player in the region.

Russia is planning to increase its diplomatic involvement in African issues including Sudan's Darfur crisis. Russia had a lot of influence in the area during the Cold War but since then China has become the major player in the region.

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russia

Russia Seeks to Keep Europe Off Its Energy Turf

Europe is trying to tap into Central Asian energy resources after two weeks of fuel shortages caused by a row between Russia and Ukraine while Russian authorities are using their influence in the area.

Europe is trying to tap into Central Asian energy resources after two weeks of fuel shortages caused by a row between Russia and Ukraine while Russian authorities are using their influence in the area.

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russia

Russia Car Sales Could Fall Up to 50 Pct in '09

Car sales in Russia may decrease by 25 percent to 50 percent in 2009 because of the global financial downturn, after two years of a significant growth.

Car sales in Russia may decrease by 25 percent to 50 percent in 2009 because of the global financial downturn, after two years of a significant growth. The falling availability of loans, growing unemployment, slower personal income growth, the devaluation of the rouble are the causes of this contraction.

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russia

Russia and Ukraine sign 10-year gas supply deal

Russia and Ukraine have signed a 10-year gas deal, which it is supposed to bring their long-running dispute to an end. The reputations of Russia, as a gas supplier, and Ukraine, as gas transit country, have been damaged by the affair.

Russia and Ukraine have signed a 10-year gas deal, which it is supposed to bring their long-running dispute to an end. The reputations of Russia, as a gas supplier, and Ukraine, as gas transit country, have been damaged by the affair. According to the deal, Ukraine will buy Russian gas at a 20 percent discount to European market prices in 2009.

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russia

Russia Offers Deal to European Firms to Restart Gas

Vladimir Putin, Russian Prime Minister, believes a deal can be reached with European firms to restart gas supplies to Europe.

Vladimir Putin, Russian Prime Minister, believes a deal can be reached with European firms to restart gas supplies to Europe. Russian authorities are proposing to share risks and create something like a consortium, invest money in it and supply the technical gas.

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russia

Russia No Longer Reliable Gas Supplier: IEA

According to the International Energy Agency (IEA), Russia has lost its status as a reliable gas supplier to Europe after European Union have been suffering a major disruption of gas supplies.

According to the International Energy Agency (IEA), Russia has lost its status as a reliable gas supplier to Europe after European Union have been suffering a major disruption of gas supplies. Russia's natural gas cutoff has affected 18 European nations, leaving tens of thousands of households in eastern and southeastern Europe without gas for heating and cooking and business have been forced to reduce production.

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russia

Russia rouble devalued again, gas row adds pressure

Russia allows ruble to drop again as a result of the downward pressure on the currency because of weak oil prices, the gas dispute with Ukraine and the global financial downturn.

Russia allows ruble to drop again as a result of the downward pressure on the currency because of weak oil prices, the gas dispute with Ukraine and the global financial downturn. Oil revenues have been the main cause of the expansion enjoyed by the Russian economy in the last years. But the fierce declines in the price of crude oil means Russia is facing economic challenges. And the central bank will try to continue to defend the rouble in order to avoid a repeat of the 1998 financial crisis, when Russians rushed to withdraw their savings as the currency plummeted.

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russia

Russia, Ukraine sign deal on gas flows

Russia and Ukraine signed a deal on Monday for a second time to help secure the resumption of Russian gas supplies to Europe, cut off for nearly a week in freezing temperatures.

Russia and Ukraine signed a deal on Monday for a second time to help secure the resumption of Russian gas supplies to Europe, cut off for nearly a week in freezing temperatures. Russia, which cut supplies for Ukraine's domestic market on January 1 due to a payments dispute, accused Ukraine of stealing gas intended for Europe. The cut in Russian gas supplies has left many people in Central and Eastern Europe struggling to keep warm during one of the harshest winters in many years. The EU gets a quarter of its gas supplies from Russia, 80% of which passes through Ukraine. Energy companies in the Balkans, where temperatures dropped as low as -17C, have switched to alternative fuels and alternative imports to restore heating to hundreds of thousands of homes.

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russia

Russia: Bahraini King Meets With Medvedev

Russia and Bahrain have agreed to strengthen economic ties and increase cooperation on nuclear energy.

Russia and Bahrain have agreed to strengthen economic ties and increase cooperation on nuclear energy. Russia expects to increase collaboration with Bahrain particularly in the areas of nuclear energy and aluminum sectors. Furthermore, both countries hope to increase joint investment programs, support for SME and trade.

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russia

Russia : Talks Resume on $25Bln China Loan

Russia has resumed talks with China regarding a $25 billion loan as part of an oil supply deal

Russia has resumed talks with China regarding a $25 billion loan as part of an oil supply deal. China will consider the loan as an exchange for 20 years of secured oil supplies. Transneft, a Russian oil company, is building a 600,000-barrel-per-day oil pipeline from Siberia to Asia.

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russia

Medvedev: Crisis Hitting Real Economy

Russian President, Dmitry Medvedev, announced yesterday that the global financial crisis has spread to the country's real economy

Russian President, Dmitry Medvedev, announced yesterday that the global financial crisis has spread to the country's real economy. Medvedev assured the public that all sectors will receive government aid. Russia is currently pushing ahead with a $200 billion state aid package and hopes to spend a total of $182.3 billion on stabilization measures.

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russia

Russia's Mortgage Agency Unveils Liquidity Plan

Russia's Agency for Housing Mortgage lending, AIZhK, unveiled a liquidity plan that includes $18.55 billion worth of guarantees offered to mortgage-backed securities.

Russia's Agency for Housing Mortgage lending, AIZhK, unveiled a liquidity plan that includes $18.55 billion worth of guarantees offered to mortgage-backed securities. This plan would allow commercial banks to attain more loans from the Central Bank at a time where other sources of funding are scarce due to the global credit crunch.

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russia

Russia-China Bridge to Help Aricom

Russia and China signed a deal for the construction of the first railway bridge between the two countries.

Russia and China signed a deal for the construction of the first railway bridge between the two countries. The bridge would create a supply route for iron ore produced by Americon, a miner company. The bridge would allow the company to save $40 million annually, while delivering its supplies to the Chinese border.

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russia

Rosneft, China Plan to Sign Oil Deal

Russia's Rosneft and China's CNPC plan to sign a oil supply deal by the end of the week.

Russia's Rosneft and China's CNPC plan to sign a oil supply deal by the end of the week. The companies' current supply deal expires in 2010. Having agreed on the price formula for the new contract, Rosneft and CNPC will continue their partnership for at least the next fifteen years.

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russia

Russian Grocers Look to Gobble Up Smaller Rivals

Supermarket chains are looking to increase their share of the market by buying out smaller rivals that have fallen on hard times.

Supermarket chains are looking to increase their share of the market by buying out smaller rivals that have fallen on hard times. Experts say that the current financial crisis will weed out weaker grocers.

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russia

Russia's State Bank Set to Put Money in Markets

The Russian stock market has dropped more than 60% since May of this year.

The Russian stock market has dropped more than 60% since May of this year. In response to this drastic decline, the state-owned Development Bank will pump $6.7 billion into the stock markets.

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russia

Lack of Staff to Fight Money Launderers in Russia

According to United States and European experts, Russia's government needs to beef up its security on money-laundering.

According to U.S. and European experts, Russia's government needs to beef up its security against money-laundering. More staff must be hired to deter illegal cross-border currency movements.

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russia

Russian Oil Reserve Could Affect Prices

According to Energy Minister Sergei Shmatko, Russia aims to influence global oil prices.

According to Energy Minister Sergei Shmatko, Russia aims to influence global oil prices. The country is the world's second leading oil producer after Saudi Arabia. As of 2007, Russia accounts for over 12% of global oil production.

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russia

Russia's Budget Sees Boosts For Arms, Housing

Russia's 2009 budget will reflect a 68% increase on spending for housing maintenance and a 59% increase on health care.

Russia's 2009 budget will reflect a 68% increase on spending for housing maintenance and a 59% increase on health care. In addition, defense spending will increase to about $50 billion, a 26% increase.

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russia

Medvedev Tops Up Market Funding in Russia

Russia's government will support sagging stock markets, banks, and oil companies with $29 billion.

Russia's government will support sagging stock markets, banks, and oil companies with $29 billion. The money will be used on measures to stabilize the country's stock markets in the midst of a global financial crisis.

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russia

Russian Bankers Get Wish For Extra Liquidity

The government has pledged to provide Russia's three largest banks with greater access to funds.

The government has pledged to provide Russia's three largest banks with greater access to funds. The Finance Ministry and the Central Bank are also planning to provide additional liquidity within the next week.

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russia

Record $47.9B Planned for Russia's Defense

According to Deputy Prime Minister Sergei Ivanov, spending on defense will increase to a record $47.9 billion in 2009.

According to Deputy Prime Minister Sergei Ivanov, spending on defense will increase to a record $47.9 billion in 2009. The government will use the defense funds on expenses in the Defense Ministry, Interior Ministry, special services, and other military organizations. Ivanov reported that prices for military goods are on the rise.

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Business In Brief

Foreign Car Sales In Russia Declined

Foreign car sales in Russia declined 12 percent last month as a effect of war with Georgia. Sales of foreign-brand cars, and Russia made, fell to 175,557 from 199,332 a month earlier.

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Kudrin Opens Door To Tax Compromise in Russia

Russian Finance Minister Alexei Kudrin is looking to cut taxes in the oil sector.

Russian Finance Minister Alexei Kudrin is looking to cut taxes in the oil sector. However, Kudrin does not desire to cut taxes in any other area. Though tax on oil may be decreased, there is no definite time frame for when this will occur.

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russia

No More Russia-EU Visas in a Few Years

Plans to eliminate Russia-EU visas in the next two or three years are in the works.

In a few years, Russia and the European Union will be ready to completely cancel visa procedures, claims chairman of the Russian State Duma Foreign Affairs Committee Konstantin Kosachev. This cancellation also requires the signing of necessary agreements on readmission with "third states," which Kosachev did not specify. At the Russia-EU summit at the end of June, Russian President Dmitry Medvedev suggested writing down the specific steps and deadlines for moving toward the cancellation of visa procedures.

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russia

Middle Class Ready to Emigrate

Research shows that roughly half of the surveyed middle class in Russia considers emigration a possibility.

Research done by the Levada Center shows half of the representatives of the middle class having doubts and skepticism about the current stability of Russia. Though on the whole the middle class believes Russia is developing rapidly and will soon become a world leader, many are afraid that the country's stability is based more on favorable oil prices rather than institutional changes. Many from the middle class, despite having experienced improvements in the small business and entrepreneurship realm, still contemplate emigration from time to time.

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Moscow Mayor Urges to Terminate Friendship Treaty with Ukraine

Moscow Mayer Yuri Luzhkov advises the termination of the Friendship Treaty Russia has with Ukraine.

The Mayor of Moscow, Yuri Luzhkov, has placed pressure on terminating Russia's-Ukranian Treaty on Friendship and Cooperation instead of extending it. The Mayor claims the development of events currently happening in Ukraine does not correspond to the Treaty on Friendship, Cooperation and Partnership of 1998 in part and in whole.

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russia

Price of Fuel Oil Tied to Petro Price

The main cause for the rise in the cost of fuel oil is claimed to be the low efficiency of Russian oil refineries.

According to the Kortes information center, one main cause for the rise in the cost of fuel oil is the low efficiency of Russian oil refineries. Kortes director Pavel Strokov claims Russian plants are surpassed by Western plants in deep processing. Kortes also suggests a connection between the rising price of fuel oil and the rising world oil prices, and it is predicted that petroleum product prices will continue to rise.

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russia

Trading Halted on Mosenergo

The MICEX stock exchange put a stop to trading in Mosenergo stock on Friday after a gain of over 10 percent.

Trading in Mosenergo stock was stopped midday on Friday after gaining more than 10 percent in the course of the day. Suggestions on the hike point to a speculative character before the exchange of RAO UES of Russia shares for ones in the generator. It is also suggested that many stocks in the sector are largely undervalued and could endure a sharp rise before the end of the year.

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The Inflation Sacrifice

Finance Minister Alexei Kudrin still hopes to contain inflation despite acknowledgment by the Central Bank of Russia that the annual inflation would be roughly 12 percent instead of the initial target of 10.5 percent.

Although the Central Bank of Russia acknowledged yesterday that the annual inflation would be closer to 12 percent instead of the initial 10.5 percent target, Finance Minister Alexei Kudrin is determined to contain inflation, even if it means sacrificing growth rates in the economy. Kudrin hopes to accomplish this by limiting the growth in money supply mainly by manipulating the interest rates, which may hamper GDP growth. The optimistic Kudrin believes the goal of matching the initial inflation target will definitely be "difficult, but possible."

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Oiling Up Construction

Extractive industries' share in Russia's GDP experiences notable increase despite stagnation of oil production and other mining activities.

Russian GDP growth in the first quarter of the year is estimated at 8.5 percent. This growth is partly attributed to an increased share in the GDP that the extractive industries obtained in the last year. Consequently, despite stagnation of oil production and other mining activities, the Russian economy's dependency on extraction has notably increased. The share of the GDP for many remaining industries fell.

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Kudrin to hold talks in Saudi Arabia on Russia's WTO bid

Alexei Kudrin, Russian Vice-Premier and Minister of Finance, is to hold talks with Saudi Arabia in El Riyadh on Tuesday on Russia's bid to join the World Trade Organisation (WTO).

Alexei Kudrin, Russian Vice-Premier and Minister of Finance, is to hold talks with Saudi Arabia in El Riyadh on Tuesday on Russia's bid to join the World Trade Organisation (WTO). A Russian delegation source has said that it is planned to make maximum headway at the bilateral talks with Saudi Arabia. "We are aiming to settle outstanding matters and it is not ruled out that understandings (to this effect) will be reached in El-Riyadh," he said.

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russia

Peugeot, Mitsubishi to launch joint venture in Russia

The French carmaker PeugeotCitroen and the Japanese car producer Mitsubishi Motors will launch a joint venture in Russia, according to a cooperation agreement signed in May.

The French carmaker PeugeotCitroen and the Japanese car producer Mitsubishi Motors will launch a joint venture in Russia, according to a cooperation agreement signed in May. Peugeot Citroen will have controlling interest in the joint venture. It will build a plant in Russia's Kaluga region, 180 kilometres from Moscow, by 2010. The groundbreaking ceremony will take place on June 10, 2008.

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russia

Brazil ready to expand technological cooperation with Russia, including on peaceful nuclear energy

Brazil wants to expand cooperation in the technological sector with Russia, in particular on biotechnology and space exploration, Brazilian Foreign Minister Celso Amorim said in an exclusive interview with Interfax

Brazil wants to expand cooperation in the technological sector with Russia, in particular on biotechnology and space exploration, Brazilian Foreign Minister Celso Amorim said in an exclusive interview with Interfax "Brazil and Russia could expand cooperation in the high-technology sector with a focus on biotechnology and space exploration, as relates to the search for solutions to energy problems, which could complicate the development process in our countries," Amorim said.

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17th International Bank Congress opens in St Petersburg

More than 600 financiers and politicians from 23 countries take part in the 17th International Bank Congress (IBC-2008) that opened in St. Petersburg on Thursday.

More than 600 financiers and politicians from 23 countries take part in the 17th International Bank Congress (IBC-2008) that opened in St. Petersburg on Thursday. During plenary meetings and the work of sections, it is planned to discuss issues of competitiveness of banks at financial markets, introduction of new bank products and technologies.

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russia

Indo-Russian Bilateral Trade Poise to touch $10 billion

Top official of the Russian Federation said that bilateral trade between Russia and India is predicted to encompass USD 10 billion by 2010.

Top official of the Russian Federation said that bilateral trade between Russia and India is predicted to encompass USD 10 billion by 2010. At this moment the bilateral trade between countries is about USD 5 billion but it is expected to double in a couple of years.

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russia

Experts Slam Gas Excise Tax Plan

The government's plan is predicted to be not as helpful as it seems.

The government's plan is predicted to be not as helpful as it seems. The plan is to differentiate gasoline excise taxes based on fuel quality. It is intended to raise the tax burden for the country's oil companies, and will benefit only a few firms with sophisticated refineries. It could raise the tax burden by USD 260 million for the oil industry, and because of this it is said that the Finance Industry is not supportive of the oil industry in doing this.

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russia

Oil Production Declines for 4th Straight Month

Russia's oil production has fallen for the fourth month in a row.

Russia's oil production has fallen for the fourth month in a row. Production is down to 9.72 million barrels per day, 2 percent lower than it was in October. The decline is said to be because of heavy taxation with rising costs.

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russia

Will meat become a luxury for Russians?

The wholesale price of pork and beef has risen by 23 percent in the last three weeks, due to uncertainty over the import policy.

The wholesale price of pork and beef has risen by 23 percent in the last three weeks, due to uncertainty over the import policy. Russia's Prime Minister has asked for measures to reduce meat imports, which the National Meat Association says could destroy the Russian meat industry.

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russia

Boom in Moscow’s commercial real estate

Commercial real estate in Moscow is offering the highest yields in Europe right now.

Commercial real estate in Moscow is offering the highest yields in Europe right now. Investor interest is growing despite the setbacks created by the global credit crisis. Aside from quickly growing rents, Russia's regions have fewer tenants, which keeps Russia as the number one market in commercial real estate.

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russia

Chinese Workers Flood into Russia

Due to changes in Russia's economy, more and more Chinese workers are going to Russia.

Due to changes in Russia's economy, more and more Chinese workers are going to Russia. These workers are unskilled, yet highly disciplined and efficient, so they are very beneficial to the Russians.

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russia

Customs: Russia’s Trade Surplus Up 59% On Year in Jan-Feb

Russia's trade surplus has risen 59.1% in the months of January and February.

Russia's trade surplus has risen 59.1% in the months of January and February. The trade itself increased 52.7% for the year so far. Russia's exports and imports also rose, and it seemed to trade with Germany and the Netherlands the most.

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russia

Extra Finnair Flights to Boost Russian Travel

Starting next year, Finnair will operate four flights daily from St. Petersburg to Helsinki.

Starting next year, Finnair will operate four flights daily from St. Petersburg to Helsinki. From Helsinki, Russian travelers can fly to 40 other places across Europe, making it a popular hub. Finnair is treating the Asian and Russian markets as top priorities for the airline right now.

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russia

Russia’s Gold and Forex Reserves Up USD 4.6bn

Russia's gold and foreign exchange reserves are up to USD 506.8 billion, which is a 0.9 percent increase from the previous week.

Russia's gold and foreign exchange reserves are up to USD 506.8 billion, which is a 0.9 percent increase from the previous week. This high level of reserves is due to the dollar's depreciation against the euro and the increased amount of foreign currency in Russia's foreign exchange market.

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russia

Possible Oil Tax Cut in Russia Gives Markets A Lift

A USD 4.2 billion cut in oil taxes for next year, proposed by Finance Minister Alexei Kudrin, provided a much-needed boost for oil stocks in Russia.

A USD 4.2 billion cut in oil taxes for next year, proposed by Finance Minister Alexei Kudrin, provided a much-needed boost for oil stocks in Russia. These proposals were in response to soaring oil prices. Even though the tax breaks are modest (they will add 5-6% to earnings), there are hopes that they will cause a more focused approach in battling the sector's taxation system. Gas producers have been making gains, even though good news for oil came with critical news for the economy as a whole.

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russia

Gazprom Says It Will Work on Iran Fields

Gazprom has agreed to invest in more phases of Iran's South Pars gas field, which is believed to be the world's largest.

Gazprom has agreed to invest in more phases of Iran's South Pars gas field, which is believed to be the world's largest.

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russia

Rosneft Eyes Indian LNG Stake

Russia's largest crude oil producer, Rosneft, may invest in a liquefied natural gas processing plant with an Indian state energy company ONGC in Mangalore.

Russia's largest crude oil producer, Rosneft, may invest in a liquefied natural gas processing plant with an Indian state energy company ONGC in Mangalore. Participation might require investment from India in projects in Siberia and the Far East.

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russia

Russia Plans Uranium Projects with Armenia

Russia and Armenia agreed to start uranium projects

Russia and Armenia agreed to start uranium projects. Russia's Rosatom will have 50 percent stake in uranium development projects in Armenia. USD 3 million will be invested for exploration. The two nations will also work on production and recycling of the product.

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russia

Uzbekistan Plan Energy Projects with Russia

Uzbekistan tightens relationship with Russia through economic agreements

Uzbekistan tightens relationship with Russia through economic agreements. So far, the two nations have 200 various agreements. In 2007, trade is up by 40 percent tipping USD 3 billon between the two nations. In Uzbekistan 40 percent of FDI is supplied by Russia. The two countries are also discussing oil and nuclear project developments.

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russia

Russia Raises Export Duty on Oil

Russia raises export duties on oil

Russian government revises export duties on bi-monthly basis. Export duties are charged based on the market prices of oil. The latest revision set the highest duties seen to US 338 per ton from the previous USD 275.4 per ton.

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russia

Russian Central Bank Fights Inflation

Russian Central Bank raises rates to slow inflation

Russian Central Bank raises rates to slow inflation. Key, deposit and refinance interest rates were raised by 25 bp. The refinance rate now stands at 10.25 percent. The action was to prevent rapidly growing inflation in the country. In 2007, inflation reached 11.9 percent, partly due to global commodity inflation and rapidly expanding domestic economy. Decision to raise rates came due to the fact that central bank sees inflation fight as a primary obstacle during a global credit crunch.

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russia

Virgin in Russia

Virgin airlines plans to expand its operations to Russia

British company Virgin airlines plans to expand its operations to Russia to take advantage of rapid growth in the region. The airline may start domestic operations within one year. Details and partnership proposals will be announced at a later date. Air travel in Russia has grown by 18 percent in 2007. Domestic airline Aeroflot currently controls 11 percent of domestic and 65 percent of international air travel. Virgin plans to offer safety and value to travelers.

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russia

Russia’s GDP Growth Exceeded Expectations

Russia's GDP has grown 8.1 percent for 2007

Russia's GDP has grown 8.1 percent for 2007 which is higher than the expected 7.5 percent. The GDP growth in 2007 was the biggest in 8 years. Russia's main export of oil and its higher prices has provided higher incomes to consumers. Wages were up 16.2 percent and retail growth is up 15.2 percent. However, the inflation rate is highest in 10 years, is at 11.9 percent. Taming inflation will be primary task for the economy in 2008.

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russia

Russian Truck Producer Raises Funds

Russian truck maker KamAz will sell shares to raise funds for expansion

Russian truck maker will sell shares to raise funds for expansion. The company will sell 5 to 10 percent of the share to the public. Currently 38 percent of the shares are owned by the state and 54 percent are owned by Troika Investment and KamAz. The funding will aid production expansion to 100,000 units annually.

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russia

Auto Sales Growth in Russia

Russia is seeing tremendous growth in auto purchases

Russia is seeing tremendous growth in auto purchases. In 2007, auto purchases were up 20 percent. The growth is not only based on volume but on the amount spent. Since 2002, the amount of money spent on cares has increased from USD 10 billion to USD 53 billion in 2007. Foreign manufacturers have seen 57 percent growth in sales; however domestic manufactures had a slide of 5 percent. Such growth also faces the requirement of infrastructure improvements which are being addressed by the government. As the car market matures in the future some of the growth will evidently wind-down.

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russia

Peugeot Comes to Russia

Peugeot will construct an assembly plant in Russia

Peugeot will construct an assembly plant in Russia, which is expected to start production by 2010. Peugeot will invest GBP 300 million. The plant is expected to produce 150,000 vehicles annually. Mitsubishi may also contribute to production at the plant.

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russia

Russia Raises Export Duties on Grain

Russian Government increases export duties on wheat and barley

Russian Government increases export duties on wheat and barley to 40 percent from current 10 percent. This action came as food inflation in 2007 reached double-digits. However, critics suggest that government should instead promote trade and competitiveness of Russian agriculture abroad. Efforts should be aimed at innovation of food production of organic products.

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russia

Russia Reports Stronger Growth

Russian Economy sees stronger growth in GDP, consumer and investments

Russian Economy sees stronger growth in GDP, consumer and investments. Ministry of Economic development announced that in 2007 investments grew 24 percent , production in the industrial sector increased 6.5 percent and construction is up 20 percent. The supporting data indicates that GDP growth for 2008 will reach 7.8 percent.

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russia

United Emirates Will Build a Refinery in Ural

Ural region in Russia signs a contract with United Emirates for an oil refinery

Ural region in Russia signs a contract with United Emirates for an oil refinery. The contract was signed with Quality energy Petro International, which is United Emirates Company whose Chairman is Sheikh Asel Al Qtaiba. The company will invest USD 4.5 billion in Ural and the project will be completed by 2010. Local government owns a 25 percent stake in the project. The refining capacity will be around 180,000 daily. Also, Sheih made a commitment to donate 30 percent for social projects.

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russia

Russian Lukoil Plans Expansion

Lukoil , Russia's largest private oil company plans to expand

Lukoil , Russia's largest private oil company plans to expand productions and innovate inputs. Last year Lukoil had a slower rate of production increase than others in the region. The company plans to invest around USD 21 billion for the next 2 years. In 2007, net income of the company was up 7 percent to USD 8 billion. However, higher oil prices in the market have led to higher taxes by the government. Taxes are charged based on the market price of oil. Also, inflation in Russia created higher operating costs for the company.

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russia

Indonesia to Diversify Export Partners

Indonesia is planning to diversify its export trade markets in 2008 according to Trade Minister Mari Elka Pangestu.

Indonesia is planning to diversify its export trade markets in 2008 according to Trade Minister Mari Elka Pangestu. This plan is driven by reduced demand from the US and will focus on exporting to China, India, Russia and the Middle East.

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russia

Russian Aluminum Giant Considers an IPO in Hong Kong

Russian aluminum giant Rusal considers IPO in Hong Kong

Russian aluminum giant Rusal considers IPO in Hong Kong. Previously Rusal planned to list in London. However, the listing in Hong Kong is more attractive due to greater demand for the IPO in the east. Stricter securities' regulations in London were also the cause for the change of venue plans. The date of the IPO has not yet been announced.

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russia

Russian Rail Builder Will Construct a Railroad in Saudi Arabia

Russian Railroad builder has won the bid to construct a rail road in Saudi Arabia

Russian railroad builder has announced a win of a tender in Saudi Arabia to construct a railway. The deal is worth USD 800 million and the company will lay 520 kilometers of rail. Further details of the deal will be announced at a later date.

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russia

Russian Company Excludes Foreigners From Board Membership

Russian company prohibits foreign citizens from board membership.

Ingosstrakh Insurance, announced that it will prohibit non-Russian citizens from the membership on the board. The action was proposed due to security issues with company's defense industry clients. Foreign minority shareholders oppose the action and may seek legal council to resolve the issue. Ingossrakh is the second largest insurance company in Russia.

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russia

Russian Energy Giant Will Purchase a Majority Stake in Serbian NIS

Russian energy giant Gazprom announced a deal with Serbian oil

Russian energy giant Gazprom announced a deal with Serbian oil. Gazprom will purchase a majority stake of 51 percent of the Serbian NIS oil. Gazprom also announced a pipeline and a storage facility to be built in Serbia. Details about the date and financing of the deal will be announced at a later date.

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russia

Russian Investors Look Beyond Blue Chips

Investors look to second-grade over blue chips in Russia

As financial market volatility roars through the world investors look to second-grade stocks over blue chips in Russia. Most global investors tend to invest into blue chips in the foreign markets. Such strategy has a great impact during times of volatility. However, Russian investors familiar with the domestic companies that are not blue chip tend not to be exposed to the sell-offs. Second-grade stocks allow domestic investors to avoid that risk and pursue the strategy of investing in the growing domestic economy.

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russia

Russia’s Budget Surplus Declines

Russia's Budget Surplus has declined almost 1 percent in 2007

Russia's Budget Surplus has declined almost 1 percent in 2007. The budget surplus currently stands at USD 70 billion. Larger government spending on social programs has contributed to the decline. Lower oil prices in the beginning of the year have also slowed the amount of tax receipts.

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russia

Russia Attracts Another Automaker

Peugeot has announced plans to build a plant in Russia

Peugeot has announced plans to build a plant in Russia. Russia's consistent economic growth has led the country to become a huge player in global auto industry. Higher incomes have spurred greater demand for autos in the country. International producer want to place operations in the areas of high demand. Peugeot along with VW, Ford and Renault will be the foreign auto manufactures in Russia. Building products domestically will allow companies to better compete for the market share.

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russia

Russian Banks Offer Mortgages in Yen

Russian mortgage borrowers will be able to get loans in Yen at lower rates

Russian Banks are beginning to offer mortgage loans in Yen. Customers will be able to benefit through a lower interest rates of around 6 percent versus the 12 percent on ruble loans. The action follows previous offers mortgage loans in Swiss Franks. Movements in currency values are a potential risk to borrowers. Proper hedging could minimize the risk. In the following quarter banks will lend around USD 35 million worth of mortgages in Yen.

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russia

Russia Proposes a Flat Tax on Wages

Russian officials proposed flat tax on Unified Social Tax

A flat rate proposal to change the Unified Social Tax paid on salaries by employers is receiving mixed reviews. The modification to the tax rate was proposed for the purpose to cover the pension fund deficit. The proposed 26 percent flat tax rate would apply to wages below USD 2,000. The present system applies 10 percent tax wages below USD 2,000 and 2 percent on anything above that sum. Critics view that the change would impact employees whose earnings come under the narrow margin of USD 2,000.

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russia

Russia Tightens Rules on Financial Transactions

Authorities in Russia increase regulations on financial transactions of foreigners

New regulations will require banks to request documented origin of the funds and TaxId numbers for foreign officials in order to process financial transactions. New rules apply to foreign government officials and their relatives. The government initiated the above regulations in order to prevent laundering and terrorism. Banks have until May 15 to implement necessary changes to facilitate regulations.

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russia

Russian Oil Companies Expand Abroad

Lukoil and Gazprom plan to expand operations abroad

Two of the major oil giants in Russia plan to expand oil discoveries abroad. Private company Lukoil own 49 percent stake in the state-run Gazprom. Both companies plan to put tenders in for international oil projects. Gazprom plans to invest USD 2.5 billion in Nigeria in order to obtain access to reserves. Moves in international operations will diversify Russian energy sector.

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russia

Russia’s Economic Update

Trade surplus, Wages and Imports rise in Russia

As global prices of oil are on the rise, Russia has seen an increase in the trade surplus. Current data indicates that surplus has reached USD 13.5 billion. Energy makes up 68 percent of Russia's exports, which stand at USD 36 billion. On the same note, wages in Russia have increased by 14.6 percent and led to increases in imports. In October, imports reached USD 22.6 billion driven by high demand. Economic growth for 2007 is expected to be at 7.6 percent.

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russia

Auto Industry Growth in Russia

Auto Industry is rapidly expanding in Russia

Auto Industry in Russia is expected to become the biggest in Europe. Kaluga region in Russia has recently attracted major international auto makers. Amongst which are Volvo, Renault and VW. Kaluga region is the breeding ground for auto industry cluster due to its location and availability of infrastructure.

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russia

Russia’s Duties on Grain are Up

Russia has once more increased duties on wheat exports

This time the duty on wheat was raised to USD 154 per metric ton from USD 30. The action is an attempt to stifle inflation. In 2007, inflation reached 12 percent up from the estimated 8 percent. However, economists believe that the last increase in export duties was an ineffective method to curb inflation. Food inflation has been experienced globally this year.

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russia

Russia Expands as a Financial Center

Moscow plans to increase its global finance center position

Robust economic growth in Russia has propped up the ruble, now Russia plans to expand its global position as a financial center. In Moscow's business district, new construction of the Federation Tower is in the works to accommodate the expansion of capital formation. Moscow is already considered the financial capital of Russia, which would help it move into the global playing field.

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russia

Russian Bank Not So Squeezed

Despite a global credit crunch Russian bank continues lending

In November, Russia's Sberbank has provided USD 13.7 billion in loans to businesses and individuals. This was a record amount of funding loaned out by a bank. Borrowers are currently faced with a global credit crunch that limited financing opportunities and increased costs of financing. State-run Sberbank has not yet been crippled by the credit crunch which allowed for lending opportunity.

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russia

Russia’s Retirement Pay To Increase

National Welfare fund will receive USD 20 billion

Russian Government will divide the Stabilization Fund into two separate funds: Reserve Fund and National Welfare Fund. The USD 150 billion Stabilization Fund was a product of taxes through oil revenues. The new National welfare Fund will receive USD 20 billion and will be invested abroad. To avoid further inflation the Reserve Fund will not circulate through the economy.

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russia

Russian MICEX Plans To Provide Financial Education

MICEX announced plans to offer financial education to private investors

MICEX plans to open a network club to provide financial education to private investors. The plans for opening the club are largely due to the lack of financial knowledge by common investors. Many of the Russian private investors tend to follow the headline news and record highs as an investment strategy. MICEX plans to address the issue in order to maintain and improve market conditions, since MICEX trades half of Russian equities in the world.

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russia

Companies in Russia May Pay Back-Taxes

Russian legislation may require companies to pay back-taxes

Russian legislation may require companies to pay taxes on profits earned in the post Soviet era. If passed, private companies will have to pay taxes for the time period of 10 years from the start of operations. The rate would be 20 percent of the 10 year earnings. Critics deem this action illegal.

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russia

New Law May Allow Russians to Trade Foreign Securities

New law may allow Russians to trade foreign securities domestically

Russia's parliament is looking into plans to allow Russians to trade foreign securities domestically. Currently, Russians are not able to locally trade foreign stock. Trading in foreign securities abroad entails double-taxation on the capital gains. Traders pay tax domestically as well as in abroad. If the legislation passes it would provide greater opportunities to Russian traders without the penalty of double taxation.

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russia

Japanese Equipment Producer Builds a Plant in Russia

Russia's construction boom invites foreign equipment producers

Komatsu plans to invest USD 61 million to build a plant in Russia. The company anticipated earnings are USD 430 million in 2011 from sales of construction equipment in Russia. Currently Komatsu has a 20 percent market share of Russia's construction equipment products. The project came as a plan to tap into Russia's construction boom that occurred as part strong economic growth in recent years.

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russia

Russian Companies are Increasing Investments Abroad

Russian investments abroad are up as global commodity prices increase

Top Russian companies were able to increase investments abroad as the global prices for their goods are up. These companies produce commodities varying from oil to metals. This year outward investments are at USD 58.7 billion up from USD 23 in 2004. Russian investments abroad are projected to reach USD 20 billion annually from the previous USD 18 billion. Russian companies expanded assets abroad as profits are increasing from sales of commodities.

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russia

Russian Steel To Acquire a US Steel Company

Russian Steel Company to acquire another US steel maker

Russian steel producer Evraz announced a purchase of a majority stake in US steel company Claymont. The price is USD 564.8 million or USD 23.5 per share , which is 19 percent above market value. The purchase has yet to be approved through antitrust clearance. Once the deal is complete Claymont will become a subsidiary of the Russian company, along with another US steel company Oregon steel mills.

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russia

Russian Stocks Rally on the Presidential Candidate Announcement

Announcement of a new presidential candidate led to Micex rally

Russian stock index, Micex has reacted positively to the announcement of a new presidential candidate Dmitry Medvedev. Gazprom led the rally for the index. Mr. Medvedev currently holds a post of first deputy PM and presides as chairman of the Board of Directors at Gazprom. As reported by political analysts, Medvedev holds a market oriented view of the economy. Analysts also believe that such a view would allow Russia to continue economic growth.

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russia

Russian Automaker Chose Renault

Russian automaker Avtovaz has chosen Renault for a partner

Russian automaker Avtovaz has chosen to sell 25 percent stake of the company to Renault. Among the bidders for Avtovaz were GM and Fiat. The deal came as a surprise to many experts, since Gm looked like a prime candidate for the stake. Renault's CEO Ghosn has reported that Avtovaz will be ran as a partner not a competitor of Renault.

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russia

Economic Projections for Russia

OECD posted economic indicator projections through 2009

OECD has posted economic projections for Russia through 2009. OECD expects inflation to subside to 8.5 percent in 2009. The data for GDP growth showed a moderate slowdown in 2009 to 6 percent from the current 7.3 percent. Fiscal and Current account balances are expected to decrease in 2009.

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russia

Production Costs Increase for Oil Companies in Russia

Russian oil companies along with the rest of the world incur cost increases

Oil companies in Russia experience higher production costs, despite of the higher prices of petrol products. The profits are not increasing at the rate of the prices. Due to the tax treatment in Russia, government has been the main beneficiary of the higher oil prices. Oil companies are taxed based on market prices not output. Smaller producer are hurt by the higher costs the most.

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russia

Russian Diamond Miner Plans for an IPO

Russia's largest diamond miner has announced plans for an IPO

Russia's biggest diamond miner, Alrosa, rolled out plans for an IPO. The company will be listed in Moscow and possibly in London or Toronto. Alrosa owns 99 percent of diamond mining in Russia and 25 percent of the world's diamonds. The IPO is planned to be rolled out in March. Alrosa also discussed a possibility of acquiring Polyus Gold, purchasing price of the gold miner has yet to be determined.

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russia

Ikea Plans to Produce in Russia

Ikea plans to invest USD 60 million for production in Russia

Ikea announced possible plans to start production in Russia. The company may invest USD 60 million to build a facility in Siberia. Ikea discussed the possibility of expanding the timber industry in the region. Ikea also plans to invest USD 2 billion by 2013 to expand operations in Russia.

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russia

Price Controls in Russia

OECD recomends to discontinue price controls.

Inflation in Russia is expected to reach 11 percent in 2007, which is higher than the previous 8 percent estimate. In an attempt to fight inflation, Russia's government has introduced various price controls, export tariffs and quotas on commodities. Thus far, the methods have not been an effective to stifle inflation. Organization for Econ Cooperation and Development (OECD) recommended ceasing of further price controls by the government. OECD suggest that intervention creates a higher level of instability and creates shortages. OECD has also lowered estimates of economic growth to 6.5 percent from 7.3 percent.

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russia

Russia Plans to Increase Debt

Russian finance minister supports plans to increase debt

Russia's state debt will reach USD 15 billion in 2008 and up to USD 20 billion by 2010. Finance minister of Russia supports the plan of debt financing. He suggests that the listed levels of debt are not astonishing. The funds would be used as means of refinancing current borrowings and would not further inflation.

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Russian Economic Brief

Russian economy continues to expand and diversify

Russian economic outlook for 2007 continues on the growth path. Wages are up 11.2 percent and retail sales are up 14.6 percent. Economic growth is estimated to reach 7.3 percent up from 6.7 in 2006. Oil products have been the star export for Russia, however this year new businesses and the service industry is seeing growth as well. Financials, telecoms and hospitality industries are among the leaders in the service sector. This data indicates progress of diversification of Russian economy.

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Russian Banks Continue to Lend

Russian banks experience positive mortgage activity

Russian Bank VTB has seen increases of 60 percent in assets and 80 percent in credit portfolio. In 2007, mortgage business in Russia has not sheared the same fate as US. The bank has lent USD 3 billion in mortgages. Presently, the president of the bank has a positive outlook for the Russian mortgage industry. The bank provides loans to businesses and individuals.

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Russia Plans to Set Quotas on Wheat Exports

Russia may set quotas for wheat exports

One of the world's largest wheat exporters may cut exports of the product in order to stifle inflation in Russia. In 2007, inflation in Russia may reach 11 percent, up from the estimates of 8 percent. Increased inflation is mostly due to global rise in food prices. The government plans to either set export quotas or raise duties on exports. Details of the decision will be announced at a later date. Recent export duties have failed to decrease export and provide increased supplies domestically.

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Russian Automaker Gets a Bid from GM

GM bids for a stake in the Russian Avtovaz

Russia may become Europe's second largest market for automobiles. Purchases of foreign cars are up 60 percent in 2007. GM plans to increase production in Russia as it expects sales to almost double in 2008. GM plans to do the opposite in the domestic markets. On the news GM plans to bid for a major stake in Russian Avtovaz. The company has seen depressed sales domestically. This gives Avtovaz additional production capacities that attracted GM. The two companies are already involved in a joint venture. Details of the deal will be announced at a later date. Previous issues between the two partners have been worked out.

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Russia and Canada Expand Trade

Russia and Canada have agreed to expand trade

Russia and Canada have made agreements to expand bilateral trade. Currently, bilateral trade amount to USD 1 billion, petroleum being the main export to Canada. The two nations have agreed to expand trade for agricultural product, financial services and invest in uranium projects.

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Russia Plans To Invest in Space and Tech

Russian government plans a rise of space, IT and nano industries.

Russian government plans to invest in science, technology, space and IT industries. Russia is currently experiencing a lack of sophistication in the field of technology. Russia has a large scientific community; however a lack of domestic companies sends them abroad. Russian government plans to invest in the space and other sectors. The issues arise form the strength of the oil industry that competes for investments fund, due to the lure of high profits. In the near future, Russian government plans to encourage investments various hi-tech sectors and build maga-parks in various regions.

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Russian Central Bank Provides Liquidity

Russian Central Bank provides USD 12 billion for the banking system

Central Bank of Russia has provided USD 12 billion for the banking system. This effort was to shield the banking system from the global credit crunch. The Central bank has previously announced that it would provide liquidity whenever necessary. Central bank was able to provide the liquidity base on the availably of reserves. Currently Russia holds close to USD 500 billion in reserves, which is its all time high, compared to USD 12 billion in 1998.

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Russia Invests in Infrastructure

Russia increases investments in infrastructure in various regions

Russia's rapidly expanding economy plans to meet the demand for improvements in infrastructure. Various construction companies and the government have made plans to invest in roads, educational and medical facilities. St. Petersburg will see USD 20 billion invested in improvements of transportation and housing. Sochi, the host of 2014 Olympics will see USD 12 billion in investments for roads, stadiums and lodging. Russia currently has close to USD 500 billion in reserves and the government plans to contribute some funds for improvements.

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Russian Sberbank with a New CEO

Sberbank has chosen Gref as a CEO.

Sberbank has elected German Gref as the CEO. German Gref is a former minister of economic development and trade. The recent success of Russia's economy is at times attributed to Gref. Sberbank is publicly traded on RTS and Micex. The stock is considered blue chip quality. Nearly 60 percent of the shares are owned by the Central Bank. Institutional investors own around 35 percent of the shares. Net profit of the bank is up 29.6 percent since last year.

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In Russia Luxury Spending is Up

Sales of luxury items in Russia have been on the rise.

Higher incomes fueled by economic expansion in Russia have created a huge potential for luxury spending. In the last five years sales of luxury items in Russia have tripled. Luxury goods' sales are expected to reach annual growth of 20 percent. Russia is world's fourth largest luxury consumer. Brands such as LVMH and Estee Lauder are expanding sales operations in the region.

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Russia Attracts Foreign Automakers

Economic expansion in Russia attracts prominent automakers

Nine solid years of economic expansion in Russia is attracting some of the world's most prominent automakers. VW has opened a plant near Moscow along with Ford and Renault, which already produce in Russia. . GM and Toyota also plan to add facilities in Russia. GM currently is involved in a joint venture with a domestic producer. Through domestic production automakers will be able to avoid a 25 percent import tariff which will transfer into savings for consumers. Companies then will be able to expand market share. VW plans to triple its market share in Russia by 2010. The company also plans to expand dealerships in the nation.

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High Rollers in Russia

Forbes releases Russia's highest paying jobs

Forbes has released data that unveils the highest paid positions in Russia. The winners in the race are investment bankers, whose incomes average UDS 3 million. Runners up are oil executives bringing home a USD 2.4 million check. Commercial bank executives came in third with a 1.8 million salary.

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Russian Employment Statistics

Russia's Employment advancement data

Since 1992, the rate Russians employed by the state or municipal agencies has steadily gone down from 69.1 percent to 33.1 percent. At the same token, those employed by the private enterprise has experienced a steady rise from 19.3 percent to 55.4 percent. The data represents an inverse relationship between the two. Since the year 2000, unemployment rate in Russia has steadily gone down from 9.5 percent to 6.5 percent in 2006. From 1995, Russia has also seen annual increase in a number of employed college graduates.

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Russia Invests Abroad

Russia's investments abroad increase twofold

In the past year, Russian investments abroad have increased twofold. Now investments abroad have reached USD 54 billion. USA was the most popular country for Russians to invest and Cyprus came in second.

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Russia and Italy Agree to Build a Pipeline

Russian Gazprom and Italian Eni have made plans to build a new pipeline linking Russia and EU

Russian Gazprom and Italian Eni have made plans to build a new pipeline. The South Stream project is expected to cost USD 15 billion and may take 3 years. The pipeline will be 900 kilometers in length and will run through Bulgaria. Various details still have to be worked out.

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Sakhalin 2 Suspended Production

Oil production in Russia is interrupted prematurely

Severe weather in the Far East was responsible for suspension of oil production at Sakhalin2. Regularly Sakhalin suspends its production during the sea freeze. However, this year the storms have damaged the plant and caused a premature shutdown. Sakhalin2 is one of the major oil projects in the world that produces 80,000 barrels daily.

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JP Morgan Is Positive About Russian Oil Giants

JP Morgan is optimistic on Russian petrol producers

JP Morgan Chase has a positive outlook on Russian oil giants. Rosneft and Gazprom were viewed as undervalued. JP Morgan expects the companies to bring some positive earnings next year amid surging oil prices. Currently these companies are undervalued compared to others in the industry.

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Domesitc Gas Prices in Russia Will Rise

Russian Gazprom will charge export prices domestically

World's largest gas producer has announced that domestic gas prices would be at par with export prices, only arbitrage would be in the cost of transport. The transition to new pricing shall be complete by 2011. Current export price is USD 110 but domestically consumers are charged around USD 55 per cubic meter. EU views lower pricing as unfair. Experts in Russia believe that higher prices could direct investments to alternative energy.

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Russian Economy Requires Diversification

World Bank advises Russian economy to diversify investments away from energy

World Bank recommends for Russia to diversify its economy away from the energy sector. Although foreighn direct investment into Russia has reached record highs in 2007 more than 60 percent will flow into energy. Such concentration of investment into one sector is risky. Improvements are required and barriers to competition need to be removed to encourage further investments into other sectors of the economy. Without further developments of various sectors of the economy the country is left too susceptible to a downturn with fluctuations of energy prices on the market. Recent events have expanded manufacturing and industrial production, there is plenty of room for growth.

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Income Tax Rate in Russia Among Lowest

Russia takes second place for most pleasant income tax environment

Russia placed second among countries with low income tax rate. Russia has a flat tax of 13 percent across all income levels. United Emirates came in first and Hong Kong came in third on the list. The survey was performed by Mercer Investments. The rest of European countries have a rather unpleasant taxation environment. For example, both US and UK came in 14th place and Belgium in 32nd with a 50.5 percent tax rate. This also places Russia the most pleasant tax environments among European nations.

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Russia May Look To Alternative Energy

Russia may start looking into alternative energy

Russia may be looking into alternative energies as the demand for innovation in the field is increasing. Some members of the energy sector propose that government should provide subsidies to develop alternative energy sector. Diversification away from traditional and toward alternative is an investment for the future of the economy.

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Russia Plans to Improve Trade with France

Russian PM travels to Paris to discuss trade issues

Russian and French PMs meet in Paris to discus and improve trade relations. Primary concern for both sides was the removal of trade barriers. France is currently a major trade partner for Russia. Russia agreed to end the embargo of French meat. Further improvements in trade relations in the legal and economic sphere are still required. However, the meeting was seen a step forward.

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French Bank Finances Imports into Russia

Russian bank for development receives a loan from French Bank

VEB bank of Russia receives a EUR 30 million loan from French BNP to finance European imports into Russia. During the visit of Russian PM to France the news of the deal were publicized. VEB functions to maintain small to medium business activities in Russia. The intention of the deal is to promote trade between the two nations.

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Europe's Reliance on Russian Energy to Decline

European reliance on Russian energy will shrink

The new pipeline will decrease European reliance on Russian energy. The pipeline link Greece and Turkey , it will also be expanded to Italy by 2010. The pipeline is 285 kilometers in length and will carry 12 billion cubic meters of gas annually from the Caspian.

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Industrial Growth in Russia

Russian is seeing growth in industrial production

So far this year, industrial production in Russia is up. In October alone production is up above the estimated 6.1 percent and is up 7.4 percent for from last year. Manufacturing sector is the leader in the expansion; it has experienced double digit growth. Natural resource production is up 34 percent this year.

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Russian Ministry of Agriculture May Ban Wheat Exports

To fight inflation Russia may ban wheat exports

Prices of commodities have been continually increasing through this year. Led by various factors such as increased demand, decreased harvest and substitution to plant more demanded grains. All of the above factors created inflationary pressure of food stuffs. Russia's inflation may reach 11 percent this year, higher than previously estimated 8 percent. Russian government has initiate actions in previous months such as higher export tariffs and lower import tariffs for various products. In January, Russia plans to initiate a ban on export of wheat or possibly raise the export duty to EUR 105 from EUR 20 per ton. Tariffs introduced so far have not been effective in curbing prices.

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Russia Approves a Silver Development Project

Irish based company will develop a silver project in Russia

Russian government has approved the development of a silver mining project by Ovaca Gold. An Irish based company will sell USD 9.2 million in shares to fund the project in Russia. Goltsovoye mining project is estimated to told about 81 million ounces of silver and 46,438 metric tons of lead.

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Russian Energy Focuses on China

Russian Energy company Lukoil looks into the Chinese market

Russian energy producer, Lukoil looks into shifting its focus into Chinese markets. Lukoil sees a potential in the world's second major user of energy. Lukoil plans to set up refining projects in China as well as shipping gas from its Uzbekistan operation. Lukoil and China National Petroleum have arranged to work together on various marketing projects.

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Russian Truck Producer Will Increase Production

Russian truck manufacturer plans to increase production capacity

Russian truck manufacturer KamAZ plans to increase operations. Expansion is largely driven by a rising demand from the domestic construction and energy producers. The company plans to invest USD 2 billion to increase capacities to current facilities. KamAZ has multiple facilities domestically and worldwide. Expected sales for 2007 are expected to see an increase of 30 percent. The manufacturer plans to increase output by 25 percent. KamAZ also plans to add light trucks and tractors to its production.

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Russia to Invest in Infrastructure

Russian official increase investments in infrastructure

Officials in Russia have approved USD 191 billion to invest into infrastructure. As the economy has expanded quickly in recent years improvements in infrastructure became a priority. Officials in Russia will invest the funds into power and rail transportation, which are requisites to ensure further economic growth. Rail transport is a necessity for trade and power is a necessity to meet the demand of consumers and growing businesses. An improved and innovated power sector will ensure the proper distribution and minimize outages caused by an outdated system.

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Russian Central Bankers Diversify

Central Bankers in Russia prefer to plan for near future currency and credit storm.

Since, Russia's revenues increase in resent years from the growth in the economy mostly from the petroleum sector. Reserves have increased as well. From the rocky period of transition in 1998 to the present, reserves have gone up from USD 12.3 billion to USD 455.2 billion. Currently 49 percent are in USD, 40 percent in Euros, 9 percent in Pounds, 1 percent in Yen and1 percent in Swiss franks. Central banker comprehend the risk of depreciation in any currency exists; therefore the reserves are diversified accordingly. Recent credit crunch had an impact on the borrowing ability of many emerging nations. Central Bankers make plans that ate more attainable in the near future.

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Merrill Sees Prospects In Russian Banking

Foreign investors seize the opportunity in expansion of Russian lending and trading

Merrill Lynch & Co. acquired a 10 percent stake in Trust Management. Trust will gain from experience and guidance from Merrill. Trust owns majority stakes in a retail and in an investment bank, which plan to merge next year. Foreign investors have been expanding in Russia to seize the opportunity of growing retail lending sector and trading.

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Russian SPBEX Wins Tender to Trade Petro Products

Ministry of economic development and trade of Russia announced the winner of the tender

Ministry of economic development and trade of Russia has declared Saint Petersburg Stock Exchange (SPBEX) as the winner for the tender to trade petroleum products. There was a total of nine bids submitted for the oil exchange tender. RTS and NAMEX were among bidders. Russian official previously decided that at least 15 percent and up to 25 percent of the state's petroleum orders have to be purchased through the exchange. Operations on the trading floor arre planned to commence in the Q1 of 2008.

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Russian Indices Decline Lead By Oil

Russian Indices decline lead by declines in oil prices this week

Expected energy demand for next year was decreased by the IEA. The news lead to crude oil price decline this week, Russian indexes has declined as well. Much of the decline was on the Micex was due to drops for oil producers Rosneft and Lukoil. RTS index felt the pinch as well.

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Russian Mutual Funds Bear USD 320 million outflows

USD 320 million in capital outflows endured by Russian mutual funds

In the months of September and October, Russian mutual funds have endured UDS 320 million in capital outflows. In October alone the outflows amounted to USD 250 million. Some analysts suggest that investors got accustomed to annual returns of 50-70 percent that were experienced in recent years. So far this year one of Russian benchmark indexes RTS, has increased by 18 percent. Analysts suggest that proper strategy is to consult clients about market conditions, in regards of the previously abnormal returns. Amateur investors need to understand the nature of the stable amount of market returns.

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Russian Oil and Sulfur Ships Sank

Environmental agencies are concerned over the damage to the environment in the Black Sea

Rescue search operations are currently in progress to find crew members of the wrecked ships. Ships carrying thousands of tonnes of fuel, sulfur and crude oil were victims of a horrible storm in the black sea. Environmental agencies will be assessing the damage caused to the environment. Presently, it is speculated that environmental recovery may take up to 15 years. Clean up of the spill in the area may be quite complex due to the stony nature of the sea floor in the region.

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Russian Investors Plan To Meet Domestic Demand

Russian Investors Plan to Invest in Russia, rather than going abroad

Russian Ruble has appreciated 9 percent against the USD due to rising prices of oil, experts say. Investors in Russia would like to see diversification of the economy away from raw materials into processed materials. If oil prices decline it would benefit the manufacturing sector that would become more competitive on the decline of the ruble. Many Russian investors plan to continue investing in Russia rather than going abroad, in order to meet the necessary demand for construction, manufacturing and infrastructure.

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Russian Expansion of a Supermarket Leads to Higher Profit

Profit for a Russian supermarket chain increase as it expands into various regions

Magnit a Russian supermarket chain sees higher profits due to higher incomes throughout various regions of the country. In the past year the chain expanded its' operations into regions outside of Moscow opening 176 stores , which lead to a 42 percent increase in profits. EBITDA was up 76 percent widening sales margins to 3.79 percent. The net income for the current period is up to USD 60 million from USD 42 million in previous year.

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Russian Energy Prepares to List on Shanghai

Russia's energy company decides to list on Shanghai Stock Exchange

Russian energy giant Gazprom prepares to list on Shanghai Stock Exchange. When the company gets listed on the exchange it will become a first company from Russia on the exchange in Asia. The exchange has had vibrant increases in the current years. The announcement of the listing boosted Gazprom's stock 1.4 percent.

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Russia's Goal to Update Technology

Russian Communication and IT Ministry makes changes to Computer in Every House Program

Computer in Every House Program has not reached the expected goals. The goal was to sell between 20,000 and 50,000 in 2007. Currently the Ministry of Communications made some changes to the implementation of the program. The Ministry proposed incentives through increases in personal lending by the banks. Presently, the Ministry is in talks with major banks to boost lending for computer purchases. Other changes include a switch from Microsoft to Linux. Some remote regions of Russia have one computer per 200 people. The necessity of updating technology to the vibrant economy is the goal of authorities.

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Russia Launches Seafood Exchange

Russian fishing industry agency plans to set up an exchange to trade seafood

Russian authorities for the fishing industry plans to launch an exchange to trade seafood. The aim is to remove middlemen and allow prices of seafood to fall by up to 40 percent through direct dealings between sellers and buyers. The site for the exchange is to be determined and will have branches near coastlines. Current fishing harvests have an annual value of USD 5 billion. The exchange will deliver anticipated price declines when it reaches sales 50 percent sales penetration rate.

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Russia To Invest in Alternative Energy

Russian Officials Plan to Invest in hydroelectric and atomic energy

Russian officials discuss a plan to invest USD 53 billion in hydroelectric and atomic energy. The plan aims to curb the use of natural gas and oil. As the prices for those commodities are on the rise exports become more profitable. By year 2020, the country expects to build 26 reactors. Russia aspires to employ hydroelectric and atomic energy for 50 percent of total power production by 2030.

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Russia and Nord Stream Prepare to Construct a Pipeline

Russian pipe producer and Nord Stream have made plans to build an undersea pipeline

Nord Stream and OMK have agreed to build a pipeline that will link Western nations and Siberia undersea. This will be the most massive undersea pipeline in the world. The project will directly benefit countries in West Europe. The pipe producer OMK has the ability to make the biggest pipes in the world. The agreement is worth EUR 250 million. The daily price tag of USD1 million is expected for the installation of the pipes. The delays on the project are expected due to political and territorial issues with Baltic nations.

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Russia’s Grade on The Global Competitiveness Index

Russia received 59th place on the Global Competitiveness Index.

Recently the World Economic Forum issued Global Competitiveness Index. The report ranks Russia in the 59th place. The factors leading to low ranking include lack of property rights, legal system and deficiency of compliance with international business practices. Improvements in those areas are required to sustain further economic growth and investments in the region. Various Russian officials spoke out on the issues and solutions.

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Investments In Various Regions of Russia Increase

In Russia, Foreign and Domestic investors are seizing the moment to invest in production and manufacturing

In Russia, Novgorod is seeing investments pour into the region at a fast pace. In the recent year, foreign and domestic investments in Novgorod total USD 25 billion. The region was previously a closed zone to visitors and investors, due to defense complex. Currently, various manufacturers are planning investments in the region. Automotive industry participants play a dominant role. Companies such as Chevrolet, Isuzu and Iveco have set up deals. Automotive suppliers are planning production in the region to complement the automotive industry. Transportation, IT and Industrial leaders are coming to Russia's Novgorod region to take advantage of the growing economy.

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Russia To Broaden Export Products

Russia plans deals with China in the fields of technology and nuclear energy

Currently Russia exports in crude account for 54 percent of the total exports to China. However, in recent developments Russia plans to broaden its export business to China to the fields of technology and nuclear energy. Russian nuclear company built two nuclear plants this year and made deals to add two more. Other nuclear companies agreed to expand nuclear enrichment projects into China. The deals amount to USD 3 billion, adding to the USD 15.75 billion in exports in 2006.

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Russia Addresses Piracy Concerns

In Russia IT industry and others are working on solutions to decrease piracy.

As Russia is waiting to enter WTO, many businesses address the issue of piracy. Currently, 80 percent of software in Russia is pirated. To attack this issue distributors in search of profits are working with various organizations. Software businesses understand the importance of a well managed distribution system that locks out the black market. The IT market stands at USD 18 billion and will put a major effort to overcome piracy. In light of WTO membership, software companies may get assistance from the government officials.

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Russia’s Economic Growth Leads to Consumer Strength

Russian Consumer goods are seeing fast paced growth.

Based on current Economic growth Russia may turn into the largest consumer market in Europe. Recent oil profits gave Russia a boost and gave purchasing power to the consumer. Oil and Energy profits lead the growth development however the economy is focused on diversification. Russian food and non-food market is expected to reach third place by 2010. Through this year consumer goods growth was 9 percent in value. Rising incomes in Russia strengthened the consumers to purchase luxury products. Luxury goods and premium foods are some of the fastest growing sectors for Russia.

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Russian IPOs Raise USD 2 Billion

This week Russian companies raised USD 2 billon through IPO offerings

Novorossiysk port raised USD 1 billion in funds last week. The port is one of the largest cargo movers in the area. Other companies were M.Video Eurasia Drilling and Bank St. Petersburg. Investors see an opportunity in retail and infrastructure in the growing economy. Bank St. Petersburg sold IPOs to expand operations in consumer lending. All the companies saw gains in the trading hours. Overall, this year Russian IPOs raised USD 31 billion up from USD 18 billion in 2006.

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Foreign Auto Makers Expand Production into Russia

Chinese among other auto makers expand production into Russia to meet local demand.

Growing economy in Russia spurred consumer spending and demand. Foreign auto makers have seen strong demand for their products in Russia. Many foreign companies are now transferring operations to Russia to meet the demand of the regional consumers. Some companies utilize factories of Russian partners others have plans to build new ones. Brilliance China Automotive plans to produce cars in Russia starting in January. This action will expand oversees sales for the Chinese company. For next year 10,000 units of output are planned.

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Russian Banks Raise Funds to Expand

Banks in Russia are raising funds to expand operations domestically

Bank Saint Petersburg came out with an IPO in which it offered 50.68 million shares and raised USD 274 million. The funds were raised to expand operations in the retail sector. Currently the bank is rated below investment grade by both Moody's and Fitch. Bank Saint Petersburg has USD 3.3 billion in assets This bank is the only company in which Russia's president owns shares. Other banks are also raising funds for the purpose of expanding domestic retail operation, which indicates a strong demand in consumer lending in Russia.

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Kazakhstan’s Inflation Increase

Kazakhstan is seeing increasing inflation due to high prices of commodities.

World's rising commodities' prices impacted inflation in Kazakhstan Inflation hit its highest record in 8 years, jumping to 15.3 percent up from 11.2 in September. In September alone consumer prices were up 4.4 percent, double from the previous month. Kazakhstan similarly to Russia has banned import duties on various food stuffs. Kazakhstan is also impacted by rises in cost of services and housing, due to rapid economic growth and demand in the region.

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Russia Focuses on Diversification of Economy

Russian top officials offer special tax breaks for business development

Russian government official are following the Chinese model of creating Special Economic Zones, in which investors will be offered various tax breaks. Special attention is given to manufacturers and technology companies. This action is an attempt to encourage business growth in various regions of the country and to diversify oil based economy of Russia. However, economists suggest that to encourage diversification of investments Special Economic Zones should be extended country-wide and terms should be more transparent.

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Russian Inflation Estimates Are Reset Upward

Russia raises inflation forecasts for 2007 to reach double-digit figures

Previously the target for Russian inflation for 2007 was set at 8 percent. However, with rising prices in commodities such as dairy, grains and oil the CPI numbers were readjusted upward. At this point, inflation is expected to hit 11 percent for 2007. Government officials have place some price controls and duties on commodities in attempts to ward off high inflation. Last year inflation stood at 9 percent.

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New Oil Futures Exchange in Russia

St. Petersburg will be the place for a new commodities exchange in Russia to open some time next year

RTS, MICEX and NYMEX are possible candidates in the running for set up of a new futures exchange in St. Petersburg. On November 10th the likely victor will be known. The exchange will trade various Russian oil product futures. The new exchange comes as a necessity for ease, efficiency and transparency for the trades in futures that specialize in Russian products. The futures will be Ruble denominated for the domestic prices. Developments in the Russian Oil industry lead to the need for such an exchange. The exchange may start its operations some time next year.

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Russian Telecom May Go International

Recent report indicates that VimpelCom may seek to expand globally

News sources indicate that VimpelCom has applied for a loan in the sum of USD 4.5 billion. VimpelCom is seeking funds from international bankers. The news indicates company's possible interest to expand outside of the domestic market. Asia is seen as a possible target to start the expansion process. VimpelCom has already positioned a deal in Vietnam. Such news is an added indicator that Russian economy is diversifying from its core business of energy.

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Russian Officials Review Bureaucratic Impediments

Russia's Economic Development Minister plans to address bureaucracy.

Recently World Bank ranked Russia in 106th place down from 96th on the list of business friendly regions. The news sparked attention of Russia's Economic Development Minister, who plans to deal with the issues that impede businesses. The Minister blames bureaucratic barriers and the lack of property rights for further business growth. Some of the issues include the lengthy process required to obtain business licenses and other documents. In order to continue strong economic growth experienced in Russia, the Minister advocates creating a business environment that invites private investment. The role of the government in her view is to invest in infrastructure of the country. The combination of solid infrastructure, property rights and reduced bureaucracy will allow for further growth. Without these ingredients economic growth may be stifled.

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Russia Opens Market to Preferential Trade

Russian markets are now open to African countries.

Russian markets are now open to African countries. Under new preferential trade agreements, products from least developed countries, like numerous in Africa, are exempt from import duties. Several African governments are taking advantage of this initiative, which corresponds with the Doha development agenda of the World Trade Organization, by informing other markets of this opportunity then promoting their markets. As the Russian Federation has this imitative, the Union of African Diplomats in the Russian Federation condones it by saying it will greatly strengthen Africa-Russia ties.

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Tamed Inflation In Russia Leads to Investments

Capital inflows into Russia are increasingly rising due to lower inflation in the region

Russia has passed its inflation target of 8 percent and expected to reach a possible 10 percent for 2007. Current increase in inflation is caused by increasing prices of commodities worldwide. However, this is good news compared to 100 percent inflation in 1995 and 36 percent in 2000. Russian Finance Minister indicated that the inflation fight and ability to decrease it has allowed for increases in foreign investment. Stability invited the business community into the region where prices were easier to determine without the hassle of sky-high inflation. Inflow of capital is expected to reach USD 70 billion in 2007 , up 75 percent from the previous year.

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Russian RTS Index Reaches a Historic Record

Russia's RTS passed the 2,200 barrier to an all time high

Russia's RTS index has reached its all time high, closing at 2,226.02 points. The record has passed the 2,200 point threshold on Monday. Oil and Gas stocks had lead the rally. RTS is the standard indicator for Russian securities. The index was established in 1995 when it combined various trading floors into a single, regulated exchange.

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Relief For Moscow Fuel Supply

Moscow based oil refinery restart production following maintenance

Moscow Oil refinery restarts operations after it underwent maintenance. The supply of fuel in Moscow has been restricted recently due to increase in exports. The output from the refinery was restricted during the maintenance period. Relief from tight supply may be seen as operations resume at the refinery. Moscow Oil & Gas removed exports from its production in the 3Q. Once production restarts the company expects a rise in output at a current annual growth rate of 9.9 percent.

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Russian Wheat Traders face Transportation Shortages

Russia's wheat traders face a shortage of rail cars required to export the comodity

As Russia is awaiting the export duties on wheat to come in effect on November 12, most traders are increasing the shipments of the commodity. The increased demand for shipments has created a shortage of rail cars used. Currently a shortage of at least 2000 rail cars exists and may prevent the exports of wheat from rising. Some traders have employed trucks for shipping. Traders have seen a gain of 64 percent on the prices of wheat so far this year. Russia holds a fourth place in exports of the grain and with adequate transportation could send abroad around 2.8 million tons in October.

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Russia’s Foreign Debt has Slightly Declined

Finance Ministry of Russia has reported a slight decline of foreign debt in the 3rd quarter of 2007

The Finance Ministry of Russia has reported a slight decline of foreign debt to USD 47.1 billion in the third quarter of 2007 from 50.7 billion in the 1st quarter. This debt includes the debt of the former USSR. Some components of the debt remained nearly identical, such as commercial debt and the bonds of the Finance Ministry. The decline resulted from the debt to the Members of the Paris Club, International organizations and Eurobonds.

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Russia Sets Funds For Investments

Russia will set up various funds to invest profits from energy

Russia will postpone expenditures on social projects; instead the oil profits will be invested through various funds. The Stabilization Fund of USD 141.1 billion will seek safe investment in foreign companies. The return of 10 percent is expected on investments in foreign bonds. The Reserve Fund will be set up to hedge against lower energy prices. The National Wellbeing fund will invest to finance future pension payments. These funds will diversity investments into blue chips, foreign bonds with minimum of AA rating. Also, equities' share of the fund will initially be low and is expected to be expanded in the future.

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Russian Economy Branches Out

Russian Economic Minister delivers data that indicates diversification in the course of the economy.

Russia's Economic Minister announced positive data to Russian and EU business community in a recent meeting. The minister indicated that GDP growth is expected to reach 7.3 percent for 2007. Foreign trade accounts for 50 percent of GDP. Development of financial markets is a prime issue and the IPO held are up 50 percent this year. The total IPOs are at USD 25 billion. Presently investments in Russia are up 21.2 percent. This growth was attributed to industrial development in diversified sectors of the economy, unlike the growth of prior years which was driven primarily by energy. The Minister's statement also identified EU as a strategic trade partner and further trade barriers would not be beneficial to either side.

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Russian Producers Arrange Price Controls

Russian food producers set up price controls to stifle headline inflation

Russia's big food producers set up price controls on dairy products. The signing of the pact to proceed with the action will happen later today and will be attended by major ministries' officials. As inflation came out at 9.4 percent above the estimates of 8 percent, government is trying various methods to stifle it. Earlier this month various export and import duties have been enacted. However, economists warn that government involvement may lead to shortages of products that are affected by the price controls. The reasons for the increases in commodity prices are not contained within Russian economy, since the prices rose due to global impacts of higher demand and other factors.

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Russia's Plans to Repay Debt

Russia will repay debt to World Bank Deputy Finance Minister announced.

Russia's Deputy Prime Minister Storchak declared that Russia will repay up to 80 percent of its USD 5 billion debt to the World Bank. Storchak stated that debts will also be repaid to the United Arab Emirates and the European Bank for Reconstruction and Development. In 1998 Russia defaulted on its debts which send contagion throughout the world. As the windfall profits flow into the economy from energy revenues Russia plans to change its role in the world. Russia will set up Stabilization Funds to conservatively invest oil profits. Russia also plans to contribute to the World Bank, USD 500 million annually was pledged for aid to developing nations. Russia aspires to play a role of a lender, not a borrower.

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Russian Artists Not Willing to Share Profits with Recording Industry

Russian recordings artists have joined a worldwide switch away from the recording industry.

Russia's artists have joined international move away from the recording industry. Recently many artists world wide have been financing records themselves. Artists have also been involved in direct to consumer music distribution through website and mobile phone downloads. A Russian artist, Zemfira, is following the movement as well. These changes may lead to extinction of recording companies that are believed to have outlived themselves in the age of technological change. Artists are no longer willing to share profits with middlemen who are unwilling to adapt to change.

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Russian Pharmaceuticals Get Interest From Investors

Pharmaceutical company in Russia gets an interest from a European distributor.

Russian pharmaceuticals are expected to reach 20 percent annual growth. Russia is a growth leader in the sector due to the distribution business. Russian companies welcome investors from around the world, partly due to possible state-run distribution. Currently, Russia's Proteck Group is in talks with Europe's Celisio for a majority stake purchase. The majority purchase is to ensure future growth in pharmaceutical distribution. Protek is a leader in distribution with a 24 percent market share.

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Russian Company to Invest USD 20 Million in Infrastructure

MIRAX Group plans to improve the infrastructure in Moscow

Congestion problems in Moscow lead MIRAX plan a USD 20 million investment into the infrastructure. The company is currently the only investor in the project, however more a planned to joined. The project is expected to be managed by a different engineering group. The group's further development in the Moscow area will require an improvement in the infrastructure. Monorail system is proposed to carry up to 3000 passengers per hour. German H-Bahn21, succeeded in the bid to provide the trains. Emergency power back-up is also included in the plan.

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Labor Legislation in Russia Lowers Age Limit to 14

Labor legislation passed to authorize employment at age of 14, with some regulatory restrictions

Russian labor legislation was passed last year to allow teenager at the age of 14 to enter into a labor contract. Prior to this legislation the age limit to enter work force was 16 years old. The code prohibits employment in unhealthy environments, on holidays and weekends. Other restrictions include adult entertainment, alcohol and toxic environments. The hours are limited to 24 per week as to not disrupt the educational process. Parents and a child welfare agency are required to sign consent for employment. Legislation also allows employment of those under 14 in the creative arts industry. Many consider younger age of employment provides early lesson in responsibility.

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Russia Reports Strong Reserves

President Vladimir Putin announced that Russia will not face defaults or banking crisis,due to large reserves build up

Vladimir Putin assured that Russia would not be faced with a banking crisis or defaults this time around. In 1998, Russia defaulted on its debts, however at the time the amount of reserves held were only USD 12 billion. Currently, Russia holds USD 434 billion in gold and foreign currency reserves. This build up was largely due to the exports of crude and natural gas, which prices have soared in recent years. The large reserves will allow central bank to provide liquidity and ability to pay back outstanding debt.

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Russia Increases Sugar Tariff

Russia introduced an import tariff on sugar, which will be active December 1 through May 31

In order to protect beet farmers Russia introduces import tax increase of 57 percent. The tariff will be active on December 1 through May 31. The tax will fluctuate based on prices of sugar traded in New York. Tariff will not be active if the price exceeds USD 0.11 per pound and highest if the price dips below USD 0.045 per pound. This action comes amid other tariff proposals that were announced earlier this month. Sugar tariff aims to encourage farmer to plant more beet crops. However, the introduction of the higher tariff led to an increase in imports of sugar for this season prior to the December 1st date of initiation.

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Russia's Official Discuss Growth with IMF

Rodrigo de Rato, IMF's managing director sees positive growth and offers advise.

In a press release on September 25, Rodrigo de Rato, IMF's managing director encouraged the economic growth in Russia and also introduced some proposals for continued economic growth. Director approved Russia's ongoing improvements and growth of the economy. De Rato recommends that Russia shall diversify its economy away from the oil industry into other sectors, reduce the exposure to oil prices. High gas and oil prices have been the main driver for the economy; therefore the economy is exposed to the fluctuations in that market. Director suggested further reforms in the investment, banking and utilities sectors.

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Russia Proposes an Import Tax Cut on Dairy

Amid growing inflation in Russia the Economy Ministry proposes to cut import duties on dairy

As inflation in Russia is expected to pass its target this year, the Economy Ministry proposes to cut import taxes charged on dairy. The proposal includes a 10 percent cut on dairy and a possible flat tax of USD 0.43 on cheese. This action may be taken in order to curb inflation in the country, as consumer prices are raising. The tax proposal coincides with the export taxes established on wheat and barley earlier this month. Both import and export duties have a time line of six months

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In Russia Wheat and Barley Export Taxes are Imposed

To curb domestic inflation Russia imposes export duties on wheat and barley.

Russia places export taxes on wheat and barley, which will be effective November 20 through April 30. The effective duties are 10 percent on wheat and 30 percent on barley. The action was taken in order to curb domestic inflation which reached 0.8 percent in September, double the expected rate. Russia is world's 4th largest exporter of wheat. The news of the duties are having an impact on the CBOT trading floor, that reported a 0.8 percent rise on wheat futures, based on a higher demand for US wheat. So far this year wheat futures are up 76 percent, due to weather conditions around the world.

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Russia’s Advertisement Regulations

Rupert Murdoch seeks to sell his ad company following new regulations on advertising industry

The advertisement industry in Russia has seen 30 percent annual growth and is currently estimated to be valued at USD 6 billion. However, Rupert Murdoch one of the biggest players is seeking a sale of his New Outdoor Group. The company presently which operates in 86 cities in Russia. Murdoch is seeking a sale due to the new regulations placed on the industry. The new regulation limits market share of each participant to 30 percent and ad space is sold at auctions. These regulations were placed under the pretence to limit monopolies and allow new entrants.

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Investments in Russia To Diversify

At the Russo-British investment forum in Moscow the topic was diversification.

At the Russo-British investment forum in Moscow the topic was diversification. Currently the energy is the strongest sector in Russia, but new opportunities are quickly arising in the growing economy. Some suggested diversification opportunities are in the IT, retail and real estate sectors. The diversification opportunities are also available in various regions of Russia as well, away from the huge centers in Moscow and St. Petersburg. Some issues such as infrastructure and bureaucracy were addressed, in order to expand in the new economy. Britain is the largest foreign investor in Russia. Russian investors are more rapidly investing and listing in Britain as well.

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Central Bank of Russia Expands Liquidity

Russia's Central bank will further increase liquidity for the bank through lowering reserve requirements

Central Bank of Russian announced that it will lower reserve requirements for banks by 1 percent, for a period of three months. This action is seen as a boost of liquidity in addition to August injections by the central bank. The additional measure of lowering of reserve requirements was partly due to the third quarter's capital outflows of USD 9.4 billion from the country.

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In Russia Automobile Sales are Up

Foreign auto makers see a 63 percent increase of car sales in Russia for this year.

Vibrant consumers in Russia influence a 63 percent rise in purchases of foreign vehicles. This year Russian consumers purchased 1.14 million automobiles. Many automakers are seeing double-digit growth in sales. However, GM has the bigger market share in the region. This year GM saw a 70 percent increase in sales. The company has a joint venture production with a Russian company AvtoVaz. The growth in sales invites other automakers such as Toyota and VW to build plants in Russia.

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Russian Aluminum Rusal to Build Power Plants

The biggest aluminum producer plans to build a new aluminum plant and 2 power plants to run it.

Auto and Aviation Industries are expected to increase the demand for aluminum. To meet this demand Rusal plans to increase its output by 65 percent. The upcoming 2011 deregulation of the electric industry may cause the costs of electricity to increase. Currently Russia's Nuclear industry is not capable of expanding, therefore Rusal will invest USD 7 billion to in power plants to ensure consistent and lower cost supply of electricity required for production.

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In Russia Barley and Wheat Face Export Duties

In the attempt to slow inflation export duties are introduced by the government.

In Russia, CPI numbers are approaching the above target rate of 8 percent for this year. The increase in inflation is mostly due to the increases of world prices and demand for grains. Shortages of crops from around the world also contributed to the lower supply/demand ratio. In September inflation rose 0.8 percent and stands at 7.5 percent for the year. Economic Trade and Development Ministry is proposing export duties that may reach 30 percent for barley and 10 percent for wheat. Other proposals include possible reductions of import duties on dairy.

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Russia, Kazakhstan and Belarus Enter a Customs Union

Kazakhstan, Russia and Belarus promote free trade through a development of a Customs Union between these nations.

The leaders from Kazakhstan, Russia and Belarus came together to from a Customs Union, in order to increase trade between their nations. The Customs Union creates a unified code for the nations and allows trade to be performed without duties. This is a small but a significant move closer to the free market economy. Kazakhstan sees a benefit for its economy, as well as for others. The new customs Union keeps its doors open to other nations, among which is Uzbekistan and Tajikistan. Elimination of Customs' stations and duties will allow a more efficient and less costly flow of goods. This will also boost exports among the nations.

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Russia’s Gazprom Reports a Gain

Gazprom reports a 14 percent gain in profit and boosted the Micex Index

Micex Index reached a new record amid Gazprom's news of a 14 percent gain in the first quarter. Russia's state-run Gazprom saw a rise in profit, even as Europe's demand was low during the mild winter. The lower demand was offset by higher prices, however. The sales were up 4.4 percent as prices rose. Gazprom profits mostly arise from exports to Europe, since domestically the government subsidizes the price of gas limit inflation. Russia recently increased gas prices to Europe and the former republics by as much as 37 percent.

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Russia's Growing Economy Inspires Increases in P&G;

P&G as an additional indicator of economic growth and higher consumer demand in Russia

As commodities' prices are rising, Russia is experiencing consistent growth in its economy. Russia is one of the biggest natural resource producers in the world. Since the fall of the Soviet Union, Russian has employed its resources in the market to stimulate economic growth. Recent political stability has also created a better environment for investors. This year alone wages in Russia are expected to increase 16 percent. Russia's constant development has attracted a multitude of foreign companies. P&G's sales in Russia have steadily increased due to higher incomes of consumers, which led to higher demand for personal products. P&G has three factories in Russia and plans to build more to meet the demand.

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Gold Field in Russia is Up For Bids

Russia offers the rights to the gold field as previous estimates of reserves are increased

Sukhoi Log gold field is now being offered to developers. The field is estimated to yield USD 30 billion in revenues and will cost USD 1.6 billion to develop. Natural resource Ministry suggests the new estimate of 2,956 metric tons of gold, which is 50 percent higher than previously estimated. The Ministry plans to offer a tender for the rights early next year. Some of the big Russian mining companies are considering the offer. Foreign bidders are welcome; however their rights would be capped below 50 percent, due to field being a strategic deposit.

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Russian Stocks are Awaiting Friday's News From the World

Russian stocks decline as investors await data reports on economic indicators from around the world

In Russia investors are scaling back their positions, after Tuesday's close reaching the highest record since July 23. The drop occurred in both Micex (Rubble-Index) and RTS (USD-Index) indices. Many in Russia are awaiting the news on the US payroll data, the interest rate decision of the Bank of England and the ECB. The international economies are interdependent on the economic direction of the major player. One of the few stocks which posted a gain was NorilskNickel , which occurred after the owners of the company settled the ownership rights of their assets.

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Russia's Lending Agency To Provide Liquidity for Mortgages

Russia's state run mortgage lending agency stands ready to provide liquidity for home-lending.

Russia's state run mortgage lending agency stands ready to provide liquidity. The agency, AIZhK stated that it will purchase portfolios from undersized lenders, who depend on international borrowing. Russia's USD 1 billion economy calls for a rise in the home loan sector. This action is placed to guarantee expansion in the mortgage sector that will reach USD 16 billion this year. The news corresponds with the promise of liquidity by the Russian president and the Central Bank. AIZhK offers refinancing service to home-borrowers at rates between 10.75 and 14 percent. Current outstanding personal loans are at 10 percent of GDP, which is an increase from 1 percent in 2002.

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Kazakhstan Invests in Power Plants

Kazakhstan announced plans to invest in energy production for thegrowing region to meet demand

As Kazakhstan's economy has been expanding 10 percent annually since 2000, the demand for energy in the country has also increased. In order to meet the increased demand, Kazakhstan plans to invest in improvements of power plants and development of new ones. The country plans to acquire stakes in coal producing companies in Kazakhstan, to supply coal for power plants. Kazakhstan also dedicated USD 2 billion for construction of hydroelectric plants to supply electricity. These announcements come as positive news for the growing region, to ensure further growth without running into problems of energy shortages that may stall production, businesses and the economy.

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Russian Stocks are Up After Putin's Statement

Positive moves in Russian stocks come after Putin's announcement to become a Prime Minister.

Russia's President Vladimir Putin announced the news that he will seek a Prime Minister position in the parliament, when his term as a president ends. The statement came after the markets in Moscow were closed, but lead to a boost in Russian stocks traded in London. Putin's announcement gave investors some indication of future stability in the administration, which some believe Putin has provided in his years as the president. Stability in the government will ensure healthy functioning businesses and the market.

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Russia’s Expected boost in Sales of Uranium

Sales of uranium from Russia are expected to increase as US will remove the tariff.

Russia is expecting a boost in sales of enriched uranium to the US, as the tariffs on the import are expected to be removed. Last week it was determined by US Court of International Trade, that the import of uranium is an enrichment service not a product, therefore, it shall not be subjected to a tariff. Presently, the tariff imposed on uranium runs 112 percent. 50 percent of US utility companies import enriched uranium from Russia. The removal of the tariff will open up trade to allow direct dealing between Russia and the utility companies in the US.

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Liquidity Debacle Arrives in Russia

Major Russian bank have stopped issuing mortgages to consumers in the brinks of the international liquidity dilemma

As banks are facing an increase in borrowing costs, some of Russia's banks will increase mortgage rate or temporarily suspend issuing home mortgages. When international borrowing cost rise 2 percentage points for the banks, the mortgage rates charged by the banks rise 1.5 percent. The increase in costs will impede the growth of the banking sector. Various banks are trying to find prices that the market can bear for home loans. Central bankers however promise to provide liquidity to the system to ensure low cost borrowing to banks.

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Big Investment Banks are Coming Back To Russia

As Russia's ecomony is growing and stabilizing big investment banks are coming back and expanding in the region.

Lehman Brothers, Goldman Sachs Group Inc. Merrill Lynch & Co. are all making a come back to once unpopular region. In 1998, when Russia defaulted on its debt an d caused a collapse LTCM hedge fund, most US investment banks scaled back or left the region. Now however the times changed. To attain their competitive edge in the market US Banks are entice some of the top executives to work in Moscow, where compensations are twice what these executives make in New York. US Investment Banks are coming back to take advantage of this new and more stable economy.

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Russian Consumer Spending Attracts Restaurateurs

Growth in Russian economy led to increased spending by consumers, preference for dining out increases-restaurateurs take an opportunity to invest in Russia

A restaurateur sought an opportunity in Russia while on visiting-when he was unable to find a dine-out facility. The lack of restaurants and an increase in consumer spending allowed one restaurateur to seek out an opportunity to fill the gap in the market and expand his company. Rosinter Restaurants Holding, which control T.G.I. Friday's and Benihana restaurant chains in Russia, are actively looking to expand the chains as the trend of dining out rises in Russia. So far the company has 200 outlets in Russia and is in process of expanding its chains. The company has raised USD 100 million in funds for expansion and acquisitions through an IPO, earlier this year. This opportunity comes at a time when Russia is expected to achieve USD 12.4 billion annual dine-out market by 2011. The entrepreneurial spirit to see and fill the void for an underserved market came at the right time.

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Russia's Economic Indicators

Russia places 10th in the ranks of world economies. Through September 2007 Russian Economy grew 7.7 percent largely due to the expanding retail and construction. GDP is expected to increase 7.3 percent for 2007. This growth is encouraged by Russian consumers and the increase in market prices of oil, which Russia exports. Worldwide credit crunch may have some effects on the construction industry, though. Disposable incomes are expected to go up 12.5 percent and wages up 15.6 percent. The rise in incomes will fuel increases in imports. Inflation was 0.4 percent in September , up from 0.1 in August â€"this is believed to be a political effect, as the country is approaching Presidential elections in March 2008.

Russia places 10th in the ranks of world economies. Through September 2007 Russian Economy grew 7.7 percent largely due to the expanding retail and construction. GDP is expected to increase 7.3 percent for 2007. This growth is encouraged by Russian consumers and the increase in market prices of oil, which Russia exports. Worldwide credit crunch may have some effects on the construction industry, though. Disposable incomes are expected to go up 12.5 percent and wages up 15.6 percent. The rise in incomes will fuel increases in imports. Inflation was 0.4 percent in September , up from 0.1 in August â€"this is believed to be a political effect, as the country is approaching Presidential elections in March 2008.

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Bank of Russia Sets Objectives

The Central Bank of Russia sets objectives to improve Russian financial and promote it into international arena.

Bank of Russia has successfully implemented various rules and regulations in the banking sector to ensure security, stability and growth. Central bankers also set up plans for future with short and long-term goals. Short-term goals include effective investments strategies for depositors' funds held at banks. Banking sector transparency to increase competitiveness in the international field and to increase protection of banks' creditors and prevent the use of credit institutions for illegal purposes are additional goals. Current objectives are to broaden horizons of Russian economy from the raw material/natural resource base into various fields. The objective for the period between for 2009-2015 is to place Russian banking into the international financial markets. The bank belives that increased confidence for investors and creditors will promote Russian financial sector into the international arena.

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Russia is Viewed as a Growth Potential for Swedbank

Western bankers pledge to follow rules and regulations to remain and expand in Russia.

Swedbank is pleased to get back in the game in Russia, after a temporary suspension of Swedbank's operations by the Bank of Russia (Central Bank). The operations were suspended due to some regulatory violations. The suspension allowed Swedbank to review its practices and take measure to comply with regulations. Currently the bank has 305 employees and operates in Moscow, St. Petersburg , and Kaliningrad. In Russia, Swedbank has approximately USD 1.2 billion in outstanding lending. Swedbank sees a Russian market as a large potential for growth. The bank also has plans to expand into Ukraine in near future.

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Bank of Russia Reports Slower Inflation

Bank of Russia reports slower inflation growth and stronger demand for national Russian currency (RUB) for first quarter of 2007.

Positive indications for the first quarter of 2007 came out Russian Central Bank , Bank of Russia. Through Q1, Core Inflation decreased and the growth in the products not included in the CPI slowed. The numbers indicate that the Consumer prices grew 3.4 percent compared to 5 percent in the Q1 of 2006-partly the decrease is attributed to the decrease in food prices by 2.4 times. An increase in economic growth rate led to stronger demand for national currency, the savings component of the currency supply was up as well-which led to a lower supply of money. As the demand to hold RUB grew it led to some de-dollarization, showing an increase in confidence for the RUB. The above data indicates slowing inflation in Russia compared to the previous year.

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Russia’s Sukhoi Aviation Holding Co., To Compete with Airbus and Boing

Sukhoi Aviation Holding Co., unveils plans to expand the factory in Komsomolsk-on-Amur to introduce the new Superjet passenger plane. Sergei Ivanov, Russia's first deputy prime minister will attend the unveiling ceremony.

Sukhoi Aviation partners with the Italian Finmeccanica Spa in plans to increase production of civil planes. Currently Sukhoi's main products are jet fighter planes ant the company only produces 5 percent civil planes. However, Sukhoi is on the market to raise its civil production to 50 percent. The company raised its sales target 100 percent, the Russian aircraft producer plans to add 120-passenger planes to its product line, among with the presently available 95-passenger units. Russia will invest USD 1.4 billion into the new SuperJet carrier in order to become a competitive player in the international market. Some analysts predict that the company has jumped the shark and is not yet ready to compete globally with the major players in the airplane industry. Presently, Sukhoi has received orders from Russia's Aeroflot and Italian discount carrier Itali Airlines. Asian airlines are seen as the next customer target for the SuperJet planes. Sukhoi's expansion is will allow the company to enter the competition rink with the tough player from the US, Canada, France and Brazil. Russia's Deputy PM, Sergei Ivanov, will attend the unveiling of the SuperJet from the production line. This may be viewed as an expansion beyond the natural-resource industry for Russia's economy.

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Russian Bank Tightens Credit

Amid the credit crunch Russian Bank joins in.

Now is the time to start reapplying the credit risk analysis. IMF suggests the Russian banks decrease the use of high-risk lending to consumers. Such banks as Standard, continue to lend in rubles while borrowing on the foreign markets. For Standard 60 percent of its financing comes from international capital markets. This also exposes the bank to the spread of the international credit crunch. Putin said that the liquidity will be ensured to the banks to decrease borrowing costs. The growth of lending to Russian consumers cannot continue to rise as it has in previous years.

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Russia's Sales of Natural-Gas to Europe decline

Nice weather, less natural-gas sold.

Nicer weather in Europe caused a reduction in consumption of natural-gas. Europe is the main consumer of Russian natural-gas and Russia is the world's biggest producer of natural-gas. Gazprom is the monopoly operating natural gas production in Russia. So far, for the first 8 months of the year exports of natural-gas to Europe are down 14 percent. Weather is one of the driving forces for supply and demand of natural-gas, as fluctuates so does the consumption for natural-gas. The output by Gazprom was also reduced 0.9 percent from the same time period last year.

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Russian Economy Minister Replaced

Putin re-shuffles the cabinet, Economy Minister is replaced.

Russia replaced its Ministers of Economy, Health, and Regional Development. Economy Minister German Gref was replaced by Elvira Nabiullina. Deputy Premier and the Finance Minister were able to retain their position. The replacement came as a way to guarantee a smooth transition for the March 2008 election, when Putin will have to step down due the term limits of the Russian Constitution. Putin's goal is to provide an effective and stable new government following his departure. As part of the assurance of stability Putin announced pension increases for the retirees which he sees as a priority, the increases will become effective October, 1.

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Russia: Increase of Tariff on Sugar is Proposed

Economic Development Ministry introduces a proposal to raise tariffs on sugar.

The Russian Economic Development Ministry proposes a 57 percent increase of a tariff on sugar. As a result of these news, the sugar futures went up 0.5 percent. So far, this year sugar was down 14 percent. Russia is world's largest importer of the commodity. Consumers of sugar and sugar-product suppliers will ultimately incur the increase in prices transpired by the tariff. The final decision is expected later this week.

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Gain in Russian Stocks

Russian stocks gain momentum and liquidity is assured.

At a meeting with the business community in Sochi on September 21, Russian President Vladimir Putin and the Finance Minister Alexei Kudrin assured the business community to support liquidity in the banking industry. Bank of Moscow closed at 1.7 percent gain.. A second day rise in the stocks were contributions of OAO Novatek, OAO GMK Norilsk Nickel and OAO Severstal. Novatek posted a 4.6 percent gain to 130.5 rubles. Novatek which is the second-largest natural-gas producer in Russia, announced its plans to build a gas-condensate terminal on the Gulf of Finland. Norilsk, the largest mining company gained 4 percent to 6,485.08 rubles, as nickel posted a 1.6 percent gain in London. The steelmaker Severstal is up 1.3 percent to 1,200 rubles. This comes as positive news for the Russia amid losses in the Central European stocks.

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Russian RusAl Will Not Participate in Tajik Dam Project

The Tajik Government had unilaterally canceled an agreement with the Russian company RusAl on the construction of the Roghun hydroelectric power plant, stating that "the fate of such a strategically important facility for the country" should not lie in the hands of only one private company.

The Tajik Government had unilaterally canceled an agreement with the Russian company RusAl on the construction of the Roghun hydroelectric power plant, stating that "the fate of such a strategically important facility for the country" should not lie in the hands of only one private company. According to Tajikistan's President Imomali Rahmon, the Russian Government had been notified about this decision a year ago already.

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North Korea Openly Invites Inspections of Nuclear Sites

According to statements made at the Asia-Pacific summit in Sydney by U.S. Assistant Secretary of State Christopher Hill, North Korea has invited experts from the U.S., China and Russia to survey disabled or soon to be disabled nuclear sites. The inspectors will travel to North Korea on September 11-15 examine the progress being made to identify and dismantle the communist country's nuclear facilities. In July, North Korea shut down its Yongbyon nuclear reactor and allowed international nuclear inspectors in the country for the first time in 5 years in exchange for energy and economic assistance.

According to statements made at the Asia-Pacific summit in Sydney by U.S. Assistant Secretary of State Christopher Hill, North Korea has invited experts from the U.S., China and Russia to survey disabled or soon to be disabled nuclear sites. The inspectors will travel to North Korea on September 11-15 to examine the progress being made to identify and dismantle the communist country's nuclear facilities. In July, North Korea shut down its Yongbyon nuclear reactor and allowed international nuclear inspectors in the country for the first time in 5 years in exchange for energy and economic assistance.

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Russian Stocks Skid for Second Consecutive Day

The Moscow Interbank Currency Exchange (Micex) Index fell 0.6 percent to 1,654 as 18 of the total 30 stocks on the ruble-dominated index retreated. The dollar-dominated Russian Trading System (RTS) Index experienced little movement as it closed at 1,905.30. Analysts view higher short-term interest rates, especially the overnight Moscow Interbank Offered Rate that added almost 0.25 percentage points to 5.48 percent, as the major culprit in weighing down Russian stocks. VTB, the bank that had the world's largest initial public offering this year, sank for a third day, slipping 0.6 percent to RUB 0.1178. Sberbank, Russia's biggest bank, fell 2 percent to 95.25 rubles on the Micex Stock Exchange. Bank of Moscow, the lender controlled by the Moscow city government, fell 1 percent to 1,225.48 rubles.

As Russian banks worried that higher borrowing cost may hurt earnings, The Moscow Interbank Currency Exchange (Micex) Index fell 0.6 percent to 1,654 as 18 of the total 30 stocks on the ruble-dominated index retreated. The dollar-dominated Russian Trading System (RTS) Index experienced little movement as it closed at 1,905.30. Analysts view higher short-term interest rates, especially the overnight Moscow Interbank Offered Rate that added almost 0.25 percentage points to 5.48 percent, as the major culprit in weighing down Russian stocks. VTB, the bank that had the world's largest initial public offering this year, sank for a third day, slipping 0.6 percent to RUB 0.1178. Sberbank, Russia's biggest bank, fell 2 percent to RUB 95.25 on the Micex Stock Exchange. Bank of Moscow, the lender controlled by the Moscow city government, fell 1 percent to RUB 1,225.48.

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Tajikistan Aborts Deal with Russia to Build Hydropower Plant

Tajikistan has said that it will complete the construction of a hydropower plant that had begun in the 1980s but stalled when the Soviet Union collapsed. The Tajik government and Russian aluminum producer United company RUSAL failed to reach agreement on multiple issues regarding the continuation of the construction. RUSAL was not informed of any changes to the previous agreement.

Tajikistan has said that it will complete the construction of a hydropower plant that had begun in the 1980s but stalled when the Soviet Union collapsed. The Tajik government and Russian aluminum producer United company RUSAL failed to reach agreement on multiple issues regarding the continuation of the construction. RUSAL was not informed of any changes to the previous agreement.

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Mongolia: Bankrupt Yukos Oil Could Be Blamed for Higher Train Ticket Prices

Ulaanbaatar Railway, jointly owned and operated by Mongolia and Russia interests, has raised hard seat and premium deluxe prices by 25 percent and grand deluxe cabin prices by 50 percent in an effort to quell operating losses on passenger travel. According to reports from the UB Post, the loss was explored to be offset by revenue generated through transporting oil from Russia to China. Unfortunately, the recent bankruptcy of Russian-based Yukos Oil has terminated any possibilities at this moment. Shipping prices for cargo freight has not been changed.

Ulaanbaatar Railway, jointly owned and operated by Mongolia and Russia interests, has raised hard seat and premium deluxe prices by 25 percent and grand deluxe cabin prices by 50 percent in an effort to quell operating losses on passenger travel. According to reports from the UB Post, the loss was explored to be offset by revenue generated through transporting oil from Russia to China. Unfortunately, the recent bankruptcy of Russian-based Yukos Oil has terminated any possibilities at this moment. Shipping prices for cargo freight have not been changed.

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Russian Economy Stable in Wake of US Subprime Crisis

The Russian central bank has sold US dollars for the first time in years to support the rouble. However, there is little to fear for the Russian economy as it is taking precautionary steps to prevent a worst case scenario. Russia maintains large foreign currency reserves and huge current-account surpluses while the economy is growing rapidly and public debt is low. This provides a nice cushion and may reduce the effects of the global credit crunch.

The Russian central bank has sold US dollars for the first time in years to support the rouble. However, there is little to fear for the Russian economy as it is taking precautionary steps to prevent a worst case scenario. Russia maintains large foreign currency reserves and huge current-account surpluses while the economy is growing rapidly and public debt is low. This provides a nice cushion and may reduce the effects of the global credit crunch.

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U.S. Businessman Aquires International Unit of Yukos In Forced Auction

U.S. businessman Stephen Lynch , the owner of the Russian company Promneftstroi, acquired the international unit of Yukos for 7.8 billion rubles (USD 305 million) in a forced auction on Wednesday.

Yukos was once one of the largest oil firms in Russia. Lynch recently acquired Promneftstroi from Rosneft. Rosneft aquired nearly all the main assets that once belonged to Yukos, to become the leading oil producer in Russia. Yukos was declared bankrupt last year, after being hit with over USD 30 billion back tax claims and the jailing of its former CEO, Mikhail Khodorkovsky. Former managers of Yukos vowed to legally challenge the sale.

U.S. businessman Stephen Lynch , the owner of the Russian company Promneftstroi, acquired the international unit of Yukos for 7.8 billion rubles (USD 305 million) in a forced auction on Wednesday.

Yukos was once one of the largest oil firms in Russia. Lynch recently acquired Promneftstroi from Rosneft. Rosneft aquired nearly all the main assets that once belonged to Yukos, to become the leading oil producer in Russia. Yukos was declared bankrupt last year, after being hit with over USD 30 billion back tax claims and the jailing of its former CEO, Mikhail Khodorkovsky. Former managers of Yukos vowed to legally challenge the sale.

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South Africa Based Bank In Talks to Aquire Majority Stake in Financial Group Antanta Pioglobal

Standard Bank, South Africa's biggest banking groups by assets, is in talks to aquire a majority sate in Russian financial group Antanta Pioglobal. The two sides have not agreed upon a price yet, and are substantially apart on their respective evaluations of Antanta Pioglobal.

Standard Bank, South Africa's biggest banking groups by assets, is in talks to aquire a majority sate in Russian financial group Antanta Pioglobal. The two sides have not agreed upon a price yet, and are substantially apart on their respective evaluations of Antanta Pioglobal.

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Shanghai Cooperation Organization Keen on Turkmenistan Membership

According to a deputy Russian foreign minister, the Shanghai Cooperation Organization (SCO) is interested in involving energy-rich Turkmenistan in its activities. The SCO has offered Turkmen President Gurbanguly Berdymukhammedov an invitation to attend Thursday's meeting in the Kyrgyzstan capital of Bishkek. The possibility of establishing an energy club will be touched upon by the heads of state from Kazakhstan, China, Russia, Tajikistan, Uzbekistan, and Kyrgyzstan. Pakistan, India, Mongolia, and Iran will be in attendance as well, considering the four nations role in the SCO, which is observer status.

According to a deputy Russian foreign minister, the Shanghai Cooperation Organization (SCO) is interested in involving energy-rich Turkmenistan in its activities. The SCO has offered Turkmen President Gurbanguly Berdymukhammedov an invitation to attend Thursday's meeting in the Kyrgyzstan capital of Bishkek. The possibility of establishing an energy club will be touched upon by the heads of state from Kazakhstan, China, Russia, Tajikistan, Uzbekistan, and Kyrgyzstan. Pakistan, India, Mongolia, and Iran will be in attendance as well, considering the four nations role in the SCO, which is observer status.

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ROK: Six Party Economic Working Group Meeting Opens

The six-party working group (South Korea, North Korea, Japan, China, Russia, and Japan) on economic and energy aid to North Korea opened in the truce village of Panmunjeom, South Korea on Tuesday. At the meeting North Korea is expected to talk about what it wants to receive in return for implementing second-phase measure to disable its nuclear facilities. North Korea will be given economic and energy aid equivalent to 950 thousand tons of heavy fuel oil if it completes the nuclear facilities' disablement under February's denuclearization agreement.

The six-party working group (South Korea, North Korea, Japan, China, Russia, and Japan) on economic and energy aid to North Korea opened in the truce village of Panmunjeom, South Korea on Tuesday. At the meeting North Korea is expected to talk about what it wants to receive in return for implementing second-phase measure to disable its nuclear facilities. North Korea will be given economic and energy aid equivalent to 950 thousand tons of heavy fuel oil if it completes the nuclear facilities' disablement under February's denuclearization agreement.

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The Bank for International Settlements’ Report: Potential Global Crisis

This report is based on the Bank for International Settlements' 77th Annual Report released June 24, 2007 in Basel, Switzerland.


The Bank for International Settlements (BIS) forecasts all manner of dismal future trends in its 77th Annual Report. The BIS telegraphs through their report that current global growth is not sustainable and there is a strong probability that the credit boom may ignite a long-lasting global crisis not unlike that of the Great Depression of the 1930s or the East Asian Financial Crisis of the 1990s.

The Bank (BIS) states that recently "real growth has been maintained around levels that are among the highest recorded" and "despite significant upward shocks to most commodity prices, underlying inflation levels have generally remained subdued." The Bank also affirms that "real interest rates and risk premia of all sorts have remained uncharacteristically low" and "global trade imbalances have thus far been easily financed and exchange rates have been generally quite stable." Although some economists believe that this exuberant growth is sustainable, the BIS addresses certain issues in the current global economy that could possibly lead to serious problems in the near future.

Although inflationary pressures are suppressed right now, the threat of global inflation is real as growth in industrialized countries is slowing and growth in developing countries is rapidly increasing. The Annual Report highlights the Chinese government's failed attempts to slow growth by tightening monetary policies perpetuating "robust broad money and credit growth" that could increase inflationary pressure and has "raised questions for some central banks about sustainable growth." Currently, lenders are increasingly willing to extend risky credit to corporations with inflated debt levels. In addition to increased sovereign, corporate and personal credit around the world, the cost of raw materials is increasing, which will only add to global inflationary pressure. Despite the signaling of these cautionary markers in the Annual Report, the long-term effects of this credit boom are unknown.

Another important uncertainty in the global market is the effect of the all-time high ratio of house prices to rents in the United States. According to the BIS, wages are not increasing sufficiently to support the increase in consumer spending and investment, citizens are increasing personal debt, and mortgage rates continue to rise. If housing prices decline there may be steep deceleration in US growth and dire consequences for social infrastructure. The United States economy still has a large impact on the world economy and any downturn in the US housing market could have significant effects on global growth. According to the United Nations' "World Economic Situation and Prospects 2007," the occurrence of a plunge in US housing prices will considerably weaken global growth and cause problems in financial markets around the world.

The Bank comments that global trade imbalances are important medium-term uncertainties. Many economists believe that the US external imbalance is unsustainable and will eventually adjust. According to the Annual Report, the uncertainty lies in the possibility of "large and perhaps abrupt movements in exchange rates" or whether "capital inflows needed to finance such deficits will be available" in the future.

The Bank asserts two reasons to explain how public sector inflows may become unreliable. First, country currencies may rise as a result of government "hands-off" policies rooted in distorted beliefs regarding effects of government intervention. Second, current holders of large reserves of US dollars may start to favor reserves in other currencies.

The Bank acknowledges that many people believe "individual asset price increases are justified and therefore more likely to be sustainable" but it also portends that "market reaction to good news might have become irrationally exuberant." If the latter is the case, purchasers of risky investments could be vulnerable in the long run. Banks, global players, and companies have been encouraged to invest in risky instruments based on low expected loss, but there is a probability of an unwelcome shock that would have massive consequences.

Based on the above excerpts from the Annual Report and the economic analysis of all the issues affecting the conclusions stated in the report, it appears that the global economy is vulnerable and growth may not be sustained.

This report is based on the Bank for International Settlements' 77th Annual Report released June 24, 2007 in Basel, Switzerland.


The Bank for International Settlements (BIS) forecasts all manner of dismal future trends in its 77th Annual Report. The BIS telegraphs through their report that current global growth is not sustainable and there is a strong probability that the credit boom may ignite a long-lasting global crisis not unlike that of the Great Depression of the 1930s or the East Asian Financial Crisis of the 1990s.

The Bank (BIS) states that recently "real growth has been maintained around levels that are among the highest recorded" and "despite significant upward shocks to most commodity prices, underlying inflation levels have generally remained subdued." The Bank also affirms that "real interest rates and risk premia of all sorts have remained uncharacteristically low" and "global trade imbalances have thus far been easily financed and exchange rates have been generally quite stable." Although some economists believe that this exuberant growth is sustainable, the BIS addresses certain issues in the current global economy that could possibly lead to serious problems in the near future.

Although inflationary pressures are suppressed right now, the threat of global inflation is real as growth in industrialized countries is slowing and growth in developing countries is rapidly increasing. The Annual Report highlights the Chinese government's failed attempts to slow growth by tightening monetary policies perpetuating "robust broad money and credit growth" that could increase inflationary pressure and has "raised questions for some central banks about sustainable growth." Currently, lenders are increasingly willing to extend risky credit to corporations with inflated debt levels. In addition to increased sovereign, corporate and personal credit around the world, the cost of raw materials is increasing, which will only add to global inflationary pressure. Despite the signaling of these cautionary markers in the Annual Report, the long-term effects of this credit boom are unknown.

Another important uncertainty in the global market is the effect of the all-time high ratio of house prices to rents in the United States. According to the BIS, wages are not increasing sufficiently to support the increase in consumer spending and investment, citizens are increasing personal debt, and mortgage rates continue to rise. If housing prices decline there may be steep deceleration in US growth and dire consequences for social infrastructure. The United States economy still has a large impact on the world economy and any downturn in the US housing market could have significant effects on global growth. According to the United Nations' "World Economic Situation and Prospects 2007," the occurrence of a plunge in US housing prices will considerably weaken global growth and cause problems in financial markets around the world.

The Bank comments that global trade imbalances are important medium-term uncertainties. Many economists believe that the US external imbalance is unsustainable and will eventually adjust. According to the Annual Report, the uncertainty lies in the possibility of "large and perhaps abrupt movements in exchange rates" or whether "capital inflows needed to finance such deficits will be available" in the future.

The Bank asserts two reasons to explain how public sector inflows may become unreliable. First, country currencies may rise as a result of government "hands-off" policies rooted in distorted beliefs regarding effects of government intervention. Second, current holders of large reserves of US dollars may start to favor reserves in other currencies.

The Bank acknowledges that many people believe "individual asset price increases are justified and therefore more likely to be sustainable" but it also portends that "market reaction to good news might have become irrationally exuberant." If the latter is the case, purchasers of risky investments could be vulnerable in the long run. Banks, global players, and companies have been encouraged to invest in risky instruments based on low expected loss, but there is a probability of an unwelcome shock that would have massive consequences.

Based on the above excerpts from the Annual Report and the economic analysis of all the issues affecting the conclusions stated in the report, it appears that the global economy is vulnerable and growth may not be sustained.

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russia

Russian Delegation Visits Pakistan’s Rawalpindi Chamber

A two-member Russian delegation visited Rawalpindi Chamber of Commerce and Industry (RCCI) to discuss enhancing trade relations between Pakistan and Russia. According to the Russian Federation for Pakistan representative, Alexander Keryoken, private sector trade companies could play a crucial role in improving trade opportunities. He went on to say that both countries business communities must work together to strengthen economic cooperation and devise comprehensive strategy to increase imports and exports between the Russia and Pakistan.

A two-member Russian delegation visited Rawalpindi Chamber of Commerce and Industry (RCCI) to discuss enhancing trade relations between Pakistan and Russia. According to the Russian Federation for Pakistan representative, Alexander Keryoken, private sector trade companies could play a crucial role in improving trade opportunities. He went on to say that both countries business communities must work together to strengthen economic cooperation and devise comprehensive strategy to increase imports and exports between the Russia and Pakistan.

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Russia Subsidizes Wheat Flour to Indonesia

The Russian Federation had subsidized wheat flour worth of USD 2 million for Indonesian children; this assistance was handed over the Indonesian government through the World Food Program (WFP). The Deputy Director of WFP said that the wheat flour would later be processed into biscuit for distribution to 216 thousand children in Indonesia under the school food aid program. The school food program goal is to encourage attendance of students and improve their concentration in the classroom.

The Russian Federation had subsidized wheat flour worth of USD 2 million for Indonesian children; this assistance was handed over the Indonesian government through the World Food Program (WFP). The Deputy Director of WFP said that the wheat flour would later be processed into biscuit for distribution to 216 thousand children in Indonesia under the school food aid program. The school food program goal is to encourage attendance of students and improve their concentration in the classroom.

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Russia's Interests in Oil and Gas blocks in Indonesia

A number of Russian oil and gas companies such as Sevitech and LukOil are interested in the oil and gas blocks, in eastern Indonesia, that will be offered in a working area auction this August. This is the first time the Russia has entered into the oil and gas industry in Indonesia. The Indonesian Department of Energy and Mineral Resources will put 25 working areas for gas and oil up for auction this month.

A number of Russian oil and gas companies such as Sevitech and LukOil are interested in the oil and gas blocks, in eastern Indonesia, that will be offered in a working area auction this August. This is the first time the Russia has entered into the oil and gas industry in Indonesia. The Indonesian Department of Energy and Mineral Resources will put 25 working areas for gas and oil up for auction this month.

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Mongolian President Hopeful about Future with Russia

Mongolian President Nambaryn Enkhbayar said that he expects Mongolia and Russia to reach an annual trade level of around USD 1 billion. President Enkhbayar went on to say that he would seek investment from Russia that could benefit both nations. President Enkhbayar made these comments in anticipation of a December meeting with Russian President Vladimir Putin that will take place in Russia.

Mongolian President Nambaryn Enkhbayar said that he expects Mongolia and Russia to reach an annual trade level of around USD 1 billion. President Enkhbayar went on to say that he would seek investment from Russia that could benefit both nations. President Enkhbayar made these comments in anticipation of a December meeting with Russian President Vladimir Putin that will take place in Russia.

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Tajik Aluminum Suing United Company Rusal Over Fraud Claims

Tajik Aluminum Co., or Talco, has alleged that Russian aluminum giant United Company Rusal (UC Rusal) defrauded them of millions of dollars, and is filing suit in the British Virgin Islands. The allegations surround a corrupt relationship between a Tajik businessman and a Talco manager that allowed UC Rusal's director to defraud the company through supply and purchase arrangements. UC Rusal "categorically" denies all charges, and is preparing for an initial public offering (IPO) later this year.

Tajik Aluminum Co., or Talco, has alleged that Russian aluminum giant United Company Rusal (UC Rusal) defrauded them of millions of dollars, and is filing suit in the British Virgin Islands. The allegations surround a corrupt relationship between a Tajik businessman and a Talco manager that allowed UC Rusal's director to defraud the company through supply and purchase arrangements. UC Rusal "categorically" denies all charges, and is preparing for an initial public offering (IPO) later this year.

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Russian Secret Service Will Monitor Foreign Investments

On Tuesday, a long awaited law regulating foreign investment was submitted to parliament for approval. Vladimir Putin ordered the drafting of this bill in 2005 and it has been rewritten several times since its conception. However, most are confident that it will pass with little objection. The bill restricts foreign ownership to less than 50 percent for 39 different types of Russian enterprises such as arms, aviation, space, and atomic energy. This bill also gives the Russian secret service veto power over deals involving foreign investment with in the 39 sectors. A specially formed unit will review each of these deals and have 6 months to either approve or deny them.

On Tuesday, a long awaited law regulating foreign investment was submitted to parliament for approval. Vladimir Putin ordered the drafting of this bill in 2005 and it has been rewritten several times since its conception. However, most are confident that it will pass with little objection. The bill restricts foreign ownership to less than 50 percent for 39 different types of Russian enterprises such as arms, aviation, space, and atomic energy. This bill also gives the Russian secret service veto power over deals involving foreign investment with in the 39 sectors. A specially formed unit will review each of these deals and have 6 months to either approve or deny them.

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Booming Russia Attracting Japanese Consumer Goods

A rapidly growing middle class and a 7 percent growth rate are turning the attention of Japanese consumer goods makers to Russia. Energy and manufacturing firms have been tapping Russia's investment potential for years, but consumer goods makers are catching on as well, targeting cities such as Moscow and St. Petersburg in particular. Bilateral trade between the two nations grew to a record USD 7.065 billion in 2006.

A rapidly growing middle class and a 7 percent growth rate are turning the attention of Japanese consumer goods makers to Russia. Energy and manufacturing firms have been tapping Russia's investment potential for years, but consumer goods makers are catching on as well, targeting cities such as Moscow and St. Petersburg in particular. Bilateral trade between the two nations grew to a record USD 7.065 billion in 2006.

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Russia Wins 2014 Winter Olympic Bid

Sochi, a Russian resort on the Black Sea has been awarded the 2014 Winter Olympic Games. The International Olympic Committee made their decision after eliminating Salzburg, Austria and Pyeongchang, South Korea. This is a major victory for Russian President Vladimir Putin who had to loby the Olimpic committee members and lead his cities final presentation to the assembly.

Sochi, a Russian resort on the Black Sea has been awarded the 2014 Winter Olympic Games. The International Olympic Committee made their decision after eliminating Salzburg, Austria and Pyeongchang, South Korea. This is a major victory for Russian President Vladimir Putin who had to loby the Olimpic committee members and lead his cities final presentation to the assembly.

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Turkmen-Russian Economic Commission to Meet

The Turkmen-Russian Economic Cooperation Commission is meeting this week to discuss further bilateral economic partnerships. They will focus especially on the oil and gas sectors, in addition to other markets. The discussions will also address legal issues and framework documents and agreements covering mutual protection and promotion of investments.

The Turkmen-Russian Economic Cooperation Commission is meeting this week to discuss further bilateral economic partnerships. They will focus especially on the oil and gas sectors, in addition to other markets. The discussions will also address legal issues and framework documents and agreements covering mutual protection and promotion of investments.

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Russian Companies Frustrated With Uzbek Currency Conversion Snags

In a documented attempt to expedite conversion of revenue from Uzbekistan financial institutions to hard currency, Russian companies have turned to the Embassy of the Russian Federation to avoid the timely delay. Aeroflot, a Russian company serviced by ABN Amro Bank is unable to convert UZS 2.2 billion with their longest delay to convert funds reaching 103 days. The Russian Federation Ministry of Trade is currently exploring in tandem with the Foreign Ministry of the Republic of Uzbekistan how best to resolve these currency conversion problems.

In a documented attempt to expedite conversion of revenue from Uzbekistan financial institutions to hard currency, Russian companies have turned to the Embassy of the Russian Federation to avoid the timely delay. Aeroflot, a Russian company serviced by ABN Amro Bank is unable to convert UZS 2.2 billion with their longest delay to convert funds reaching 103 days. The Russian Federation Ministry of Trade is currently exploring in tandem with the Foreign Ministry of the Republic of Uzbekistan how best to resolve these currency conversion problems.

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Russia's RTS Breaks 2,000

Yesterday, Russia's RTS benchmark stock index rose above the 2,000 mark. This growth represents close to a 2 percent change from Friday's close, and experts expect continued growth from this index. Alexander Razuvayev, Chief analyst at Sobinbank, sees high oil prices as the catalyst for growth, but benefits will be received by the people, not just the oil companies. He expects increased spending budgets to propel the index upward of 2,300 points.

Yesterday, Russia's RTS benchmark stock index rose above the 2,000 mark. This growth represents close to a 2 percent change from Friday's close, and experts expect continued growth from this index. Alexander Razuvayev, Chief analyst at Sobinbank, sees high oil prices as the catalyst for growth, but benefits will be received by the people, not just the oil companies. He expects increased spending budgets to propel the index upward of 2,300 points.

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Tajikistan: Russian Vice-Premier to Discuss Energy Cooperation

On Monday, Sergey Naryshkin, Russia's Deputy Prime Minister as well as Russian President Vladimir Putin's Special Representative to the Commonwealth of Independent States (CIS), arrived in Dushanbe to discuss joint energy projects with Tajik state officials. Further bilateral cooperation between Russia and Tajikistan in the energy sector is to be the touchstone of the one-day working visit. Sources report that a major focus will be a new project slated for construction involving the Roghun power plant in Tajikistan.

On Monday, Sergey Naryshkin, Russia's Deputy Prime Minister as well as Russian President Vladimir Putin's Special Representative to the Commonwealth of Independent States (CIS), arrived in Dushanbe to discuss joint energy projects with Tajik state officials. Further bilateral cooperation between Russia and Tajikistan in the energy sector is to be the touchstone of the one-day working visit. Sources report that a major focus will be a new project slated for construction involving the Roghun power plant in Tajikistan.

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Kyrgyzstan Reports Huge Leap in Foreign Direct Investment

The Kyrgyz National Statistics Committee has reported a 59.6 percent increase in the flow of foreign direct investments into the country's economy in 2006. 40.7 percent of the USD 335.6 million invested came from Kazakhstan, with another 5.9 percent coming from Russia. Uzbekistan's direct investment into Kyrgyzstan grew 8.4 times.

The Kyrgyz National Statistics Committee has reported a 59.6 percent increase in the flow of foreign direct investments into the country's economy in 2006. 40.7 percent of the USD 335.6 million invested came from Kazakhstan, with another 5.9 percent coming from Russia. Uzbekistan's direct investment into Kyrgyzstan grew 8.4 times.

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Uzbekistan Welcomes Dialogue With First Deputy PM of Russia

On Thursday, Uzbekistan President Islam Karimov and Prime Minster Shavkat Mirziyoyev welcomed the Russia Federation's First Deputy Prime Minister Sergey Ivanov to a much anticipated meeting in Tashkent. Current bilateral affairs concerning trade between both nations are slated to be discussed but much of the focus will be on both nation's perspective and position in the framework of international organizations.

On Thursday, Uzbekistan President Islam Karimov and Prime Minster Shavkat Mirziyoyev welcomed the Russia Federation's First Deputy Prime Minister Sergey Ivanov to a much anticipated meeting in Tashkent. Current bilateral affairs concerning trade between both nations are slated to be discussed but much of the focus will be on both nation's perspective and position in the framework of international organizations.

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Russian Black Sea Resort City Lands 2014 Olympic Games

Edging out South Korea's Pyeongchang by a score of 51 votes to 47, Sochi, the Russian Black Sea resort city that boasts President Putin's vacation home, has landed the hosting rights to the 2014 Winter Olympic games. The Kremlin sees this as a stellar opportunity to show how well Russia has handled rebounding economically from the 1991 collapse of the Soviet Union, as last year's opening ceremony in Turin was the year's third-most watched television program.

Edging out South Korea's Pyeongchang by a score of 51 votes to 47, Sochi, the Russian Black Sea resort city that boasts President Putin's vacation home, has landed the hosting rights to the 2014 Winter Olympic games. The Kremlin sees this as a stellar opportunity to show how well Russia has handled rebounding economically from the 1991 collapse of the Soviet Union, as last year's opening ceremony in Turin was the year's third-most watched television program.

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With Lower Costs, Russian Oil Again Going to China through Mongolia

On May 30, Russian oil company Rosneft had declared it would not be able to continue to send oil to China through Mongolia due to the high transportation cost. However, after Russian Railways granted a 22 percent tariff discount and China's UNIPEC settled for price changes, Rosneft has agreed to transport 200,000 metric tons of oil monthly to China via rail through Mongolia. The Russian-Mongolian company Ulan-Bator Railway is expected to reduce its tariff in the coming days as well, allowing Rosneft to finalize the deal.

On May 30, Russian oil company Rosneft had declared it would not be able to continue to send oil to China through Mongolia due to the high transportation cost. However, after Russian Railways granted a 22 percent tariff discount and China's UNIPEC settled for price changes, Rosneft has agreed to transport 200,000 metric tons of oil monthly to China via rail through Mongolia. The Russian-Mongolian company Ulan-Bator Railway is expected to reduce its tariff in the coming days as well, allowing Rosneft to finalize the deal.

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Tajik Industrial Production Growth Surges Past Russia and Kazakhstan

According to recently released figures from the Commonwealth of Independent States (CIS) Interstate Committee for Statistics, Tajikistan has made strides to accelerate the industrial production growth rate insofar as to place third among CIS states for the first half of the year. Azerbaijan and Ukraine have recorded industrial production growth rates at 36.1 percent and 12.1 percent, respectively; whereas Tajikistan tallied 8.4 percent from January to June 2007, the overarching figures demonstrate the industrial development occurring in Central Asia.

According to recently released figures from the Commonwealth of Independent States (CIS) Interstate Committee for Statistics, Tajikistan has made strides to accelerate the industrial production growth rate insofar as to place third among CIS states for the first half of the year. Azerbaijan and Ukraine have recorded industrial production growth rates at 36.1 percent and 12.1 percent, respectively; whereas Tajikistan tallied 8.4 percent from January to June 2007, the overarching figures demonstrate the industrial development occurring in Central Asia.

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Merrill Lynch: Strong Emerging Markets

According to Merrill Lynch, emerging markets grew 16.1 percent in the first six months of 2007 while developed markets grew 8 percent. Asia equities rose 17.3 percent and were led by China and South Korea. The industrials and material sectors were the best performers while the consumer staples and IT sectors were the worst performers.

According to Merrill Lynch, emerging markets grew 16.1 percent in the first six months of 2007 while developed markets grew 8 percent. Asia equities rose 17.3 percent and were led by China and South Korea. The industrials and material sectors were the best performers while the consumer staples and IT sectors were the worst performers.

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Turkmenistan to Increase Natural Gas Exports to Russia

Turkmen President Berdymukhamedov announced a plan to develop both the Russian favored seashore pipeline, and the U.S. backed undersea Caspian pipeline. This move was calculated to maintain neutrality and balance relations with key powers in global politics. Though the president has decided to increase exports of gas to Russia, he has made it clear that he does not wish to join any political alliances.

Turkmen President Berdymukhamedov announced a plan to develop both the Russian favored seashore pipeline, and the U.S. backed undersea Caspian pipeline. This move was calculated to maintain neutrality and balance relations with key powers in global politics. Though the president has decided to increase exports of gas to Russia, he has made it clear that he does not wish to join any political alliances.

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Russia and Azerbaijan Reach an Agreement at Economic Conference

At the Baku International conference Russia and Azerbaijan reached an agreement to cooperate in order to expand their capacity for both economies. The Parties view this cooperation as a mutually beneficial situation that will promote and protect their capital investments. Their current emphasis is focused on expanding the legal frame works to support such cooperation, and then to consider proposal made by business that they think will help to establish economic and commercial centers of growth.

At the Baku International conference Russia and Azerbaijan reached an agreement to cooperate in order to expand their capacity for both economies. The Parties view this cooperation as a mutually beneficial situation that will promote and protect their capital investments. Their current emphasis is focused on expanding the legal frame works to support such cooperation, and then to consider proposal made by business that they think will help to establish economic and commercial centers of growth.

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russia

Uzbek Authorities Monitor Remittances

In an effort to monitor tax services, the Uzbek National Security Service has revealed their ability to track all transactions carried out by international financial systems to Uzbekistan. Many Uzbek expatriates working abroad in European countries, particularly Russia, transmit earnings back to their families, which have gone untaxed in the past. Some policy analysts view the Uzbek's National Security Service's actions in tandem with efforts to maximize gross taxed income and limit the maladies of brain drain on the country.

In an effort to monitor tax services, the Uzbek National Security Service has revealed their ability to track all transactions carried out by international financial systems to Uzbekistan. Many Uzbek expatriates working abroad in European countries, particularly Russia, transmit earnings back to their families, which have gone untaxed in the past. Some policy analysts view the Uzbek's National Security Service's actions in tandem with efforts to maximize gross taxed income and limit the maladies of brain drain on the country.

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Russian Economic Expansion

Russian Finance Minister has forecasted that GDP may reach a 7 percent growth rate for 2007. Over the past year, capitalization of Russian companies that have placed their shares on domestic and foriegn markets have more than doubled, leading to its high growth rate.

Russian Finance Minister has forecasted that GDP may reach a 7 percent growth rate for 2007. Over the past year, capitalization of Russian companies that have placed their shares on domestic and foriegn markets have more than doubled, leading to its high growth rate.

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Littoral States Fail to Reach Agreement on Caspian Sea's Legal Status

In the course of meetings this week in Tehran between the foreign ministers of Azerbaijan, Russia, Kazakhstan, Iran and Turkmenistan, little progress was made on determining the legal status of the Caspian Sea. The original status of the Caspian was brokered between Iran and the Soviet Union in 1921 and 1940, and with the breakup of the Soviet Union, there has been no revision to take into account the newly independent littoral States. Iran and Russia have pushed to maintain the 1940 agreement in order to maximize their influence, while the other three States are pushing to redivide the seabed in order to facilitate petroleum exploration.

In the course of meetings this week in Tehran between the foreign ministers of Azerbaijan, Russia, Kazakhstan, Iran and Turkmenistan, little progress was made on determining the legal status of the Caspian Sea. The original status of the Caspian was brokered between Iran and the Soviet Union in 1921 and 1940, and with the breakup of the Soviet Union, there has been no revision to take into account the newly independent littoral States. Iran and Russia have pushed to maintain the 1940 agreement in order to maximize their influence, while the other three States are pushing to redivide the seabed in order to facilitate petroleum exploration.

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russia

World's Largest Titanium Producer to Set Up Indian Joint Venture

Russia's VSMPO-AVISMA, the world's largest producer of titanium, is planning a joint-venture with India's government-owned Kerala Minerals and Mining Limited for the purposes of smelting and processing titanium. The plant will process up to 10,000 tonnes of titanium sponge and supply India's Hindustan Aeronautics Ltd. The plant is expected to become operational in 2009. VSMPO-AVISMA is controlled by Russia's RosoboronExport, a State-owned arms exporter.

Russia's VSMPO-AVISMA, the world's largest producer of titanium, is planning a joint-venture with India's government-owned Kerala Minerals and Mining Limited for the purposes of smelting and processing titanium. The plant will process up to 10,000 tonnes of titanium sponge and supply India's Hindustan Aeronautics Ltd. The plant is expected to become operational in 2009. VSMPO-AVISMA is controlled by Russia's RosoboronExport, a State-owned arms exporter.

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TNK-BP Cedes Control of Kovykta Field to Russia's Gazprom

Under threat of being stripped of its license by the Russian government, BP has sold to Russian State gas monopoly Gazprom for between USD 700 and 900 million its controlling 62.9 percent stake in Russian Petroleum, which has the license to the vast Kovykta gas field. In exchange for control of the field with reserves estimated to rival those of Canada, Gazprom has entered into a joint venture with BP for an as-yet unknown project. Russia has made it clear that it will have no foreign companies controlling projects inside Russia. Gazprom's monopoly on gas transport ensured that TNK-BP would be unable to live up to the terms of its license.

Under threat of being stripped of its license by the Russian government, BP has sold to Russian State gas monopoly Gazprom for between USD 700 and 900 million its controlling 62.9 percent stake in Russian Petroleum, which has the license to the vast Kovykta gas field. In exchange for control of the field with reserves estimated to rival those of Canada, Gazprom has entered into a joint venture with BP for an as-yet unknown project. Russia has made it clear that it will have no foreign companies controlling projects inside Russia. Gazprom's monopoly on gas transport ensured that TNK-BP would be unable to live up to the terms of its license.

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russia

Russian May Unemployment Falls 1.1 Percent

Unemployment in Russia has declined by 1.1 percent in May to 6.9 percent of the labor force, or 5.14 million people. So far this year, the number of unemployed has fallen by 7.5 percent. The Russian labor force consists of 74.8 million people, or 52 percent of the population, which declined by 0.1 percent in the period between January to May of 2007.

Unemployment in Russia has declined by 1.1 percent in May to 6.9 percent of the labor force, or 5.14 million people. So far this year, the number of unemployed has fallen by 7.5 percent. The Russian labor force consists of 74.8 million people, or 52 percent of the population, which declined by 0.1 percent in the period between January to May of 2007.

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Limits on Foreign Workers Push Up Russian Inflation

Russian inflation increased to 7.8 percent from 7.6 percent in April, the highest rate in four months, due to increased food prices. Those price increases were driven by a new law that has gone into effect limiting the number of retail jobs that non-Russians can hold to 40 percent of all jobs. The government remains determined to reach its goal of 8 percent inflation this year, and experts have noted that this summer's food prices may be what determines whether that is possible. Russia relies on migrants to bolster its shrinking population.

Russian inflation increased to 7.8 percent from 7.6 percent in April, the highest rate in four months, due to increased food prices. Those price increases were driven by a new law that has gone into effect limiting the number of retail jobs that non-Russians can hold to 40 percent of all jobs. The government remains determined to reach its goal of 8 percent inflation this year, and experts have noted that this summer's food prices may be what determines whether that is possible. Russia relies on migrants to bolster its shrinking population.

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Taiwan Seeks Russian Oil

Because the Middle East is constantly plagued with instability and conflicts, Taiwan is looking for other sources for oil. Taiwan, which imports 99.8 percent of its crude oil consumption, is considering importing from Russia. However, they must overcome higher transportation costs it takes 17 days to transport oil from the Middle East and about 30 days from Russia.

Because the Middle East is constantly plagued with instability and conflicts, Taiwan is looking for other sources for oil. Taiwan, which imports 99.8 percent of its crude oil consumption, is considering importing from Russia. However, they must overcome higher transportation costs it takes 17 days to transport oil from the Middle East and about 30 days from Russia.

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Citigroup Says that BP, Gazprom May Trade Assets to Solve Kovykta Standoff

Citigroup and Alfa Bank officials have said that Britain's BP and Russia's Gazprom are negotiating a swap of assets to resolve a dispute over BP's Russian affiliate-owned Kovykta gas field in the Irkustk region. Gazprom has prevented the field from operating due to its monopoly on the transportation pipeline network, causing the Russian government to threaten to revoke BP's license to the field, which could reputedly fuel Asia for five years. The swap would include BP allowing Gazprom to participate in a number of BP's upstream and downstream projects outside of Russia in exchange for BP's expanded participation in Russian projects.

Citigroup and Alfa Bank officials have said that Britain's BP and Russia's Gazprom are negotiating a swap of assets to resolve a dispute over BP's Russian affiliate-owned Kovykta gas field in the Irkustk region. Gazprom has prevented the field from operating due to its monopoly on the transportation pipeline network, causing the Russian government to threaten to revoke BP's license to the field, which could reputedly fuel Asia for five years. The swap would include BP allowing Gazprom to participate in a number of BP's upstream and downstream projects outside of Russia in exchange for BP's expanded participation in Russian projects.

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Russian Real Disposable Incomes Rise by 12 Percent

According to Russia's Federal State Statistics Service has reported that the real disposable incomes of Russians have risen by 12 percent in the period from January to May. The service calculates real disposable income as nominal income excluding taxes and mandatory payments, adjusted for inflation using the consumer price index. Russian per capita income has risen by 21.6 percent over the last year and 1 percent in May.

According to Russia's Federal State Statistics Service has reported that the real disposable incomes of Russians have risen by 12 percent in the period from January to May. The service calculates real disposable income as nominal income excluding taxes and mandatory payments, adjusted for inflation using the consumer price index. Russian per capita income has risen by 21.6 percent over the last year and 1 percent in May.

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Russia Proposes 'Grain OPEC'

Russia's Agriculture minister has said that Russia is considering the creation of an international institution to coordinate global grain markets between producers and consumers. The proposal for the initial group would include Russia, Ukraine and Kazakhstan.

Russia's Agriculture minister has said that Russia is considering the creation of an international institution to coordinate global grain markets between producers and consumers. The proposal for the initial group would include Russia, Ukraine and Kazakhstan.

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Kazakhstan Presents Plan for Asian Energy Club

Kazakhstan has proposed a plan to create an Asian energy club to the members of the Shanghai Cooperation Organization (SCO) at its "forum of experts" meeting. The SCO is formed by Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The goal of the plan is to coordinate prices, infrastructure development and the contracts between producers and consumers among the club and externally. There are some worries that this plan will be hampered by the incentive to defect due to the huge demand from China, or that some countries will wish to have ascendancy as is postulated could be the case with Russia and Kazakhstan, which may not sit well with potential partners.

Kazakhstan has proposed a plan to create an Asian energy club to the members of the Shanghai Cooperation Organization (SCO) at its "forum of experts" meeting. The SCO is formed by Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The goal of the plan is to coordinate prices, infrastructure development and the contracts between producers and consumers among the club and externally. There are some worries that this plan will be hampered by the incentive to defect due to the huge demand from China, or that some countries will wish to have ascendancy as is postulated could be the case with Russia and Kazakhstan, which may not sit well with potential partners.

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Russian President and Malaysian PM Meet to Discuss Increased Cooperation

Malaysian Prime Minister Abdullah Ahmad Badawi met with Russian President Vladimir Putin at the Kremlin Tuesday to discuss increasing the political, economic and social ties between the countries. The meeting affirmed the countries' desire to increase cooperation between their respective State petroleum monopolies, Russia's Gazprom and Rosneft and Malaysia's Petronas with attention toward studying the formation of mechanisms to control gas prices. The two leaders expressed wishes to diversify cooperation beyond energy, emphasizing cooperation in technology including the exchange of technologies and investment in manufacture.

Malaysian Prime Minister Abdullah Ahmad Badawi met with Russian President Vladimir Putin at the Kremlin Tuesday to discuss increasing the political, economic and social ties between the countries. The meeting affirmed the countries' desire to increase cooperation between their respective State petroleum monopolies, Russia's Gazprom and Rosneft and Malaysia's Petronas with attention toward studying the formation of mechanisms to control gas prices. The two leaders expressed wishes to diversify cooperation beyond energy, emphasizing cooperation in technology including the exchange of technologies and investment in manufacture.

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Russia to Consider Huge Petroleum Investment in Far East

The Russian government is considering a program to "Develop a Unified System of Gas Production, Transportation and Supply in Eastern Siberia and Far East, Including Possible Exports to China and other Asia-Pacific Countries." The plan would demand RUB 2.4 trillion (USD 92.1 billion) in investment by 2030, and would include investment in all levels of oil production from exploration to production to transit to market. This project would be funded in part by the government but Russia's State gas monopoly Gazprom, is arguing that they should receive control of the projects.

The Russian government is considering a program to "Develop a Unified System of Gas Production, Transportation and Supply in Eastern Siberia and Far East, Including Possible Exports to China and other Asia-Pacific Countries." The plan would demand RUB 2.4 trillion (USD 92.1 billion) in investment by 2030, and would include investment in all levels of oil production from exploration to production to transit to market. This project would be funded in part by the government but Russia's State gas monopoly Gazprom, is arguing that they should receive control of the projects.

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Gazprom Asks Russian Government to Block Sakhalin Gas Exports to China

A top executive of Russian State gas monopoly Gazprom has asked Russian Prime Minister Mikhail Fradkov to block a Chinese deal with US' ExxonMobil to export 8 billion cubic meters of gas to China from their Sakhalin-1 field. Gazprom's deputy chief executive Alexander Ananenkov argues that the gas should be consumed domestically in Russia's Far Eastern regions. Demand for gas in these regions amounts to 15 billion cubic meters.

A top executive of Russian State gas monopoly Gazprom has asked Russian Prime Minister Mikhail Fradkov to block a Chinese deal with US' ExxonMobil to export 8 billion cubic meters of gas to China from their Sakhalin-1 field. Gazprom's deputy chief executive Alexander Ananenkov argues that the gas should be consumed domestically in Russia's Far Eastern regions. Demand for gas in these regions amounts to 15 billion cubic meters.

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Russia May Not Revoke Kovykta License if Gazprom Allowed to Participate

The Russian Minister of Natural Resources Yuri Trutnev has said that there is a possibility that BP's Russian division TNK-BP will not lose its license to the colossal Kovykta gas field in Russia's Irkutsk region. He said that if Gazprom, Russia's State gaz monopoly is included in the project, then there is a possibility that the license may not be revoked. Gazprom currently holds the sole rights to export Russian gas and also owns the Russian pipeline network. TNK-BP is at risk of losing its license because of its failure to produce the amount of gas stipulated in its license, which they argue is because Gazprom is preventing them from exporting what they do produce.

The Russian Minister of Natural Resources Yuri Trutnev has said that there is a possibility that BP's Russian division TNK-BP will not lose its license to the colossal Kovykta gas field in Russia's Irkutsk region. He said that if Gazprom, Russia's State gaz monopoly is included in the project, then there is a possibility that the license may not be revoked. Gazprom currently holds the sole rights to export Russian gas and also owns the Russian pipeline network. TNK-BP is at risk of losing its license because of its failure to produce the amount of gas stipulated in its license, which they argue is because Gazprom is preventing them from exporting what they do produce.

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First China-Russia Oil Pipeline Nears Completion With Plans for More

Construction of the first oil pipeline connecting Russia and China will be completed next year and will transport 10 million tons (1.37 million barrels) of oil to China annually and is expected to eventually reach its capacity of 30 million tons (4.1 million barrels) per year. In addition, there has been discussion of three new gas pipelines from Russia to China which could transport an additional 84 billion cubic meters of gas to China on completion. President Vladimir Putin has said that Russia plans on oil exports to Asia reaching 30 percent of total oil exports, and there are discussions of an additional oil pipeline being constructed between the two countries.

Construction of the first oil pipeline connecting Russia and China will be completed next year and will transport 10 million tons (1.37 million barrels) of oil to China annually and is expected to eventually reach its capacity of 30 million tons (4.1 million barrels) per year. In addition, there has been discussion of three new gas pipelines from Russia to China which could transport an additional 84 billion cubic meters of gas to China on completion. President Vladimir Putin has said that Russia plans on oil exports to Asia reaching 30 percent of total oil exports, and there are discussions of an additional oil pipeline being constructed between the two countries.

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Tajik Lawsuit Provokes Big Business

Tajikistan's largest industrial company, Tajik Aluminum (Talco), plans to sue Russian mining company, Rusal, for USD 500 million over an alleged fraud after the company was said to have sold raw materials to Talco's refining plant at inflated prices. This pits the Tajik company against some of Russia's most powerful businessmen. The company has already filed a lawsuit against another company, Ancol, over allegations of corrupt payments totaling millions of pounds, a fact which will undoubtedly hurt the Tajik industry's cause.

Tajikistan's largest industrial company, Tajik Aluminum (Talco), plans to sue Russian mining company, Rusal, for USD 500 million over an alleged fraud after the company was said to have sold raw materials to Talco's refining plant at inflated prices. This pits the Tajik company against some of Russia's most powerful businessmen. The company has already filed a lawsuit against another company, Ancol, over allegations of corrupt payments totaling millions of pounds, a fact which will undoubtedly hurt the Tajik industry's cause.

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Russia's Lukoil Plans to Quadruple Kazakh Oil Production Over Next 10 Years

According to a speech transcript by Lukoil CEO Vagit Alekperov, Russia's largest private oil company plans on increasing output from 100,000 to 400,000 barrels per day, with exports rising proportionately. Since 1996, the company has invested in excess of USD 4.5 billion in production, infrastructure, and exploration.

According to a speech transcript by Lukoil CEO Vagit Alekperov, Russia's largest private oil company plans on increasing output from 100,000 to 400,000 barrels per day, with exports rising proportionately. Since 1996, the company has invested in excess of USD 4.5 billion in production, infrastructure, and exploration.

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Russian Stocks Rise on Low US Inflation

Petroleum powers OAO Gazprom and OAO Lukoil led the ruble-denominated Micex stock index to a 0.6 percent rise on Friday, capping a week that saw the Russian index rise by 4.9 percent. Lower inflation in the United States has staved off speculation that the US Federal Reserve may raise its interest rates, and that it may even lower rates, increasing the attractiveness of riskier, albeit higher-return investments in countries such as Russia.

Petroleum powers OAO Gazprom and OAO Lukoil led the ruble-denominated Micex stock index to a 0.6 percent rise on Friday, capping a week that saw the Russian index rise by 4.9 percent. Lower inflation in the United States has staved off speculation that the US Federal Reserve may raise its interest rates, and that it may even lower rates, increasing the attractiveness of riskier, albeit higher-return investments in countries such as Russia.

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Kazakhstan to Pipe Caspian Oil to China, Bypassing Russia

Kazakhstan has announced that they are going to extend an existing pipeline to China by 435 miles to the Caspian Sea so that Caspian oil may be shipped directly to China. Currently, the existing section of the pipeline sends 100,000 barrels per day to China, but has the capacity to transport up to 400,000 barrels per day if the supply is available. This pipeline competes with another line from Russia to China. This announcement is in contrast to an announcement last month by Kazakh leaders that the country would continue to export the vast majority of its oil through Russia.

Kazakhstan has announced that they are going to extend an existing pipeline to China by 435 miles to the Caspian Sea so that Caspian oil may be shipped directly to China. Currently, the existing section of the pipeline sends 100,000 barrels per day to China, but has the capacity to transport up to 400,000 barrels per day if the supply is available. This pipeline competes with another line from Russia to China. This announcement is in contrast to an announcement last month by Kazakh leaders that the country would continue to export the vast majority of its oil through Russia.

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Gazprom Capable of Producing 15 Percent More Gas Than Expected By 2020

Russia's Gazprom has announced that, primarily due to the development of the Arctic Siberian Stokman field, which is set to begin production in 2013, the State gas monopoly will be able to produce 15 percent more natural gas than previously expected, or 670 billion cubic meters (bcm) per year by 2020. Officials emphasized that this would depend on whether there is demand for this increased production. The Stokman field, which has reserves estimated to rival those of Iraq will be able to produce up to 94 bcm per year by 2020. Currently Russia produces 556 bcm per year and previous estimates for 2020 were for between 580 and 590 bcm per year.

Russia's Gazprom has announced that, primarily due to the development of the Arctic Siberian Stokman field, which is set to begin production in 2013, the State gas monopoly will be able to produce 15 percent more natural gas than previously expected, or 670 billion cubic meters (bcm) per year by 2020. Officials emphasized that this would depend on whether there is demand for this increased production. The Stokman field, which has reserves estimated to rival those of Iraq will be able to produce up to 94 bcm per year by 2020. Currently Russia produces 556 bcm per year and previous estimates for 2020 were for between 580 and 590 bcm per year.

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Russian Economy Rose 7.9 Percent in First Quarter 2007

An unusually mild winter and increased foreign direct investment (FDI) allowed Russian construction and industry to expand in the first quarter of 2007. This combined and with continued strong consumer demand pushed Russia's economy to expand by 7.9 percent over this period, surpassing many analysts' predictions. This contrasts with a figure of 5 percent for the same period last year, which featured a much harsher winter. During this period, real wages rose 18.5 percent to RUB 12,510 (USD 480), helping boost consumption, and FDI was USD 9.8 billion, up from USD 3.8 billion over the same period in 2006.

An unusually mild winter and increased foreign direct investment (FDI) allowed Russian construction and industry to expand in the first quarter of 2007. This combined and with continued strong consumer demand pushed Russia's economy to expand by 7.9 percent over this period, surpassing many analysts' predictions. This contrasts with a figure of 5 percent for the same period last year, which featured a much harsher winter. During this period, real wages rose 18.5 percent to RUB 12,510 (USD 480), helping boost consumption, and FDI was USD 9.8 billion, up from USD 3.8 billion over the same period in 2006.

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Largest US Hedge Fund Broker Gives Russian Stocks an Upgrade

Strategists at New York-based Bear Stearns & Co. have said that Russian stocks are under-priced and investors should buy them, changing their stance on Russian stocks from 'underweight' to 'market rate.' They cite the fact that Russia's Micex Index has declined by 9.4 percent since April 16 despite indications of continued growth as a reason for stocks to become under-priced. They did, however, emphasize investing in companies outside of the petroleum investment sector. According to Bear Stearns figures, Russian stocks are valued at only 9.9 times estimated earnings compared to a multiple of 13 for emerging markets and 11 for Europe, Africa, and the Middle East.

Strategists at New York-based Bear Stearns & Co. have said that Russian stocks are under-priced and investors should buy them, changing their stance on Russian stocks from 'underweight' to 'market rate.' They cite the fact that Russia's Micex Index has declined by 9.4 percent since April 16 despite indications of continued growth as a reason for stocks to become under-priced. They did, however, emphasize investing in companies outside of the petroleum investment sector. According to Bear Stearns figures, Russian stocks are valued at only 9.9 times estimated earnings compared to a multiple of 13 for emerging markets and 11 for Europe, Africa, and the Middle East.

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'Uncertain' Outlook May Hold Up Russian Oil Production

Russia's oil production is expected to peak in 2010 at 10.6 million barrels per day (bpd) and level off to 10.5 bpd at least to 2012, according to a report published by the International Energy Agency. Currently, Russian oil production stands at 9.9 million bpd. The report cites Russia's uncertain investment climate and tight transport capacity as causing companies to exercise caution before investing. In addition, some companies cite increased Russian taxes and increasing government control over the industry as reasons for curbing investment.

Russia's oil production is expected to peak in 2010 at 10.6 million barrels per day (bpd) and level off to 10.5 bpd at least to 2012, according to a report published by the International Energy Agency. Currently, Russian oil production stands at 9.9 million bpd. The report cites Russia's uncertain investment climate and tight transport capacity as causing companies to exercise caution before investing. In addition, some companies cite increased Russian taxes and increasing government control over the industry as reasons for curbing investment.

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Russia's Lukoil Allowed to Produce in Turkmen Caspian Region

Lukoil, Russia's largest oil company, is reported to have reached a deal with Turkmenistan's government to work three oil fields in the Caspian Sea. This is yet another indication of the change in Turkmen policy toward opening up to foreign oil exploration following the death of isolationist President Saparmurat Niyazov. Lukoil would become the third company producing on the Caspian shelf along with Malaysia's Petronas and the United Arab Emirates' Dragon Oil.

Lukoil, Russia's largest oil company, is reported to have reached a deal with Turkmenistan's government to work three oil fields in the Caspian Sea. This is yet another indication of the change in Turkmen policy toward opening up to foreign oil exploration following the death of isolationist President Saparmurat Niyazov. Lukoil would become the third company producing on the Caspian shelf along with Malaysia's Petronas and the United Arab Emirates' Dragon Oil.

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Commonwealth of Independent States Still Healthy

The Commonwealth of Independent States (CIS), an organization consisting of eleven former Soviet republics created after the dissolution of the Soviet Union in 1991, recently met at a gathering held June 9-10 in St. Petersburg to discuss issues of common economic, defensive, and foreign policy collaboration. The summit dispelled rumors that the organization was near stages of collapse, as a full attendance was reported by member nations. Further conceptual review has been prepared for the next CIS Summit in Dushanbe in October of this year.

The Commonwealth of Independent States (CIS), an organization consisting of eleven former Soviet republics created after the dissolution of the Soviet Union in 1991, recently met at a gathering held June 9-10 in St. Petersburg to discuss issues of common economic, defensive, and foreign policy collaboration. The summit dispelled rumors that the organization was near stages of collapse, as a full attendance was reported by member nations. Further conceptual review has been prepared for the next CIS Summit in Dushanbe in October of this year.

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Agreement Reached in Transfer of North Korean Funds

In an effort to move nuclear talks with North Korea forward, the US has reached an agreement with Russia and Macau to transfer previously-frozen North Korean funds amounting to around USD 25 million from a Macanese bank. The money will be withdrawn from Macau's Banco Delta Asia to the US Federal Reserve Bank of New York. From there it will be transferred to Russia's central bank and on to a Russian commercial bank from which North Korea may withdraw the funds. North Korea demanded the transfer of money through a third-party country in order to increase its legitimacy.

In an effort to move nuclear talks with North Korea forward, the US has reached an agreement with Russia and Macau to transfer previously-frozen North Korean funds amounting to around USD 25 million from a Macanese bank. The money will be withdrawn from Macau's Banco Delta Asia to the US Federal Reserve Bank of New York. From there it will be transferred to Russia's central bank and on to a Russian commercial bank from which North Korea may withdraw the funds. North Korea demanded the transfer of money through a third-party country in order to increase its legitimacy.

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Chinese, Russian Businesses Sign Deals Worth USD 2 Billion

Russia and China made on the edges of an economic forum in Moscow 19 business deals adding up to about USD 2 billion. Bilateral trade in 2006 between the two countries amounted to USD 33.4 billion, a 15 percent increase from the previous year and 5 times that of 1992. Chinese and Russian officials expect the trade volume between the two countries to reach USD 60-80 billion by 2010.

Russia and China made on the edges of an economic forum in Moscow 19 business deals adding up to about USD 2 billion. Bilateral trade in 2006 between the two countries amounted to USD 33.4 billion, a 15 percent increase from the previous year and 5 times that of 1992. Chinese and Russian officials expect the trade volume between the two countries to reach USD 60-80 billion by 2010.

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Gazprom, Petronas Sign Cooperation Agreement

Russia's Gazprom and Malaysia's Petronas have signed an agreement pledging 'comprehensive' joint cooperation on oil and gas projects in Russia, Malaysia, and other countries. The two companies are looking to develop production and storage capability in Central Asia, and along with France's Total are developing fields in Iran.

Russia's Gazprom and Malaysia's Petronas have signed an agreement pledging 'comprehensive' joint cooperation on oil and gas projects in Russia, Malaysia, and other countries. The two companies are looking to develop production and storage capability in Central Asia, and along with France's Total are developing fields in Iran.

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Russian Far East Sees Precipitous Drop in Foreign Investment

In the first quarter of 2007, foreign investments into Russia's Far East have amounted to USD 1.8 billion, a 60 percent drop from the same period in 2006. Oil-producing regions attracted in excess of 95 percent of that investment. 62.9 percent of the investment is direct, with the remainder being in various forms of financial investment. The country with the largest amount of investment in the region was the Netherlands, primarily through Royal Dutch Shell's oil and gas investments.

In the first quarter of 2007, foreign investments into Russia's Far East have amounted to USD 1.8 billion, a 60 percent drop from the same period in 2006. Oil-producing regions attracted in excess of 95 percent of that investment. 62.9 percent of the investment is direct, with the remainder being in various forms of financial investment. The country with the largest amount of investment in the region was the Netherlands, primarily through Royal Dutch Shell's oil and gas investments.

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Russia Meets Kyrgyz Confederation Proposal with Skepticism

Kyrgyz opposition leader Feliks Kulov's proposed confederation with Russia has been met with skepticism in Moscow, as Russian officials feel the alliance would be more of a burden than a benefit for Russia's foreign policy. Kulov has pushed for a confederation in hopes of easing civil friction and economic frailty in Kyrgyzstan, but Russian experts say that the Kremlin seeks strong allies in Central Asia, and Kyrgyzstan is far too plagued by internal political dispute and economic stagnation to be of any real benefit.

Kyrgyz opposition leader Feliks Kulov's proposed confederation with Russia has been met with skepticism in Moscow, as Russian officials feel the alliance would be more of a burden than a benefit for Russia's foreign policy. Kulov has pushed for a confederation in hopes of easing civil friction and economic frailty in Kyrgyzstan, but Russian experts say that the Kremlin seeks strong allies in Central Asia, and Kyrgyzstan is far too plagued by internal political dispute and economic stagnation to be of any real benefit.

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Russia, India Agree to Task Force to Increase Trade to USD 10 Billion by 2010

Russian and Indian officials have decided to sign a Comprehensive Economic Partnership Agreement (CEPA), seeking to increase bilateral trade between the two countries to USD 10 billion by 2010. The CEPA will resemble a Free Trade Agreement and also include support for trade in investment and services. A joint task force will be created to review the steps taken by Russia and India to open up trade between the countries since 2006 in order to create a list of recommendations for both countries on how to increase trade and investment.

Russian and Indian officials have decided to sign a Comprehensive Economic Partnership Agreement (CEPA), seeking to increase bilateral trade between the two countries to USD 10 billion by 2010. The CEPA will resemble a Free Trade Agreement and also include support for trade in investment and services. A joint task force will be created to review the steps taken by Russia and India to open up trade between the countries since 2006 in order to create a list of recommendations for both countries on how to increase trade and investment.

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Russia, Myanmar Discuss Nuclear Research Center

Myanmar, a country ruled by a self-enriching military junta, which in April reopened diplomatic ties with North Korea, is seeking Russian assistance in building a 'research' reactor in the country. Russia has estimated that the project, including the training of Burmese technicians and construction of the facility, will cost up to USD 500 million. The junta hopes that, in addition to construction and training assistance, it can acquire outside financial assistance to construct the 10 megawatt reactor. Many outside observers view this as a ploy by Russia to compete against Chinese influence in the petroleum-rich country.

Myanmar, a country ruled by a self-enriching military junta, which in April reopened diplomatic ties with North Korea, is seeking Russian assistance in building a 'research' reactor in the country. Russia has estimated that the project, including the training of Burmese technicians and construction of the facility, will cost up to USD 500 million. The junta hopes that, in addition to construction and training assistance, it can acquire outside financial assistance to construct the 10 megawatt reactor. Many outside observers view this as a ploy by Russia to compete against Chinese influence in the petroleum-rich country.

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Russia to Anchor Floating Nuclear Plant Near Site of APEC Meeting

A floating nuclear power facility is planned to be constructed and anchored by 2011 off of Vladivostok's Russky Island, the site of the 2012 APEC summit. This would be the second of its kind to be constructed, and has drawn the interest of many foreign countries. The plant can generate up to 70 megawatts (MW) of electrical energy or 300MW of heat energy. It can also serve as a desalinization plant.

A floating nuclear power facility is planned to be constructed and anchored by 2011 off of Vladivostok's Russky Island, the site of the 2012 APEC summit. This would be the second of its kind to be constructed, and has drawn the interest of many foreign countries. The plant can generate up to 70 megawatts (MW) of electrical energy or 300MW of heat energy. It can also serve as a desalinization plant.

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Russia Encourages New Zealand to Expand Investment in Far East

The Vice-Governor of Russia's Far Eastern Primorye Region met with New Zealand's ambassador to Russia in the regional capital, Vladivostok, in order to encourage further involvement in the region's 61 projects open to foreign investment. Some of the projects include the establishment of special economic and trade zones, as well as the construction of factories in the petroleum sector. Between 1995 and 2005, trade between the region and New Zealand declined, though in the first quarter of this year it has increased by 45 percent. The Vice-Governor emphasized the need for potential investors to know about the opportunities that exist in the region.

The Vice-Governor of Russia's Far Eastern Primorye Region met with New Zealand's ambassador to Russia in the regional capital, Vladivostok, in order to encourage further involvement in the region's 61 projects open to foreign investment. Some of the projects include the establishment of special economic and trade zones, as well as the construction of factories in the petroleum sector. Between 1995 and 2005, trade between the region and New Zealand declined, though in the first quarter of this year it has increased by 45 percent. The Vice-Governor emphasized the need for potential investors to know about the opportunities that exist in the region.

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Uzbekistan Eager to Diversify Energy, Avoid Russian Stranglehold

Uzbekistan's energy partnerships with Russia are stronger than ever, which in reality is a concern for Uzbek energy officials. Russia has developed a growing influence over the Uzbek energy sector and is close to overhauling the Central Asia-Center pipeline network, which would put them in a position to become an 'international gas cartel'. Unfortunately, US and EU firms are unwilling to enter into negotiations with Uzbekistan, as relations with the two economic superpowers plunged following the Andijan events of 2005. China remains as Uzbekistan's only other viable energy partner.

Uzbekistan's energy partnerships with Russia are stronger than ever, which in reality is a concern for Uzbek energy officials. Russia has developed a growing influence over the Uzbek energy sector and is close to overhauling the Central Asia-Center pipeline network, which would put them in a position to become an 'international gas cartel'. Unfortunately, US and EU firms are unwilling to enter into negotiations with Uzbekistan, as relations with the two economic superpowers plunged following the Andijan events of 2005. China remains as Uzbekistan's only other viable energy partner.

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russia

Russia's Monetary Base Grows 20.3 Percent in Jan-May 2007

In the first five months of 2007, Russia's monetary base grew by 20.3 percent to RUB 10.8 trillion (USD 418 billion), compared to 10.7 percent over the same period last year. The monetary base (M2) has increased by 61.7 percent as of June 1 over the past year to date, compared to 42.8 percent over the same period the previous year. Much of this increase is attributed to increasing capital inflows, as much of Russia's oil revenue is sterilized into its Stabilization Fund.

In the first five months of 2007, Russia's monetary base grew by 20.3 percent to RUB 10.8 trillion (USD 418 billion), compared to 10.7 percent over the same period last year. The monetary base (M2) has increased by 61.7 percent as of June 1 over the past year to date, compared to 42.8 percent over the same period the previous year. Much of this increase is attributed to increasing capital inflows, as much of Russia's oil revenue is sterilized into its Stabilization Fund.

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SCO Summit Makes Kyrgyzstan's Boldest Economic Projects Possible

Kyrgyz government officials are confident that their participation in the upcoming Shanghai Cooperation Organization (SCO) summit will allow them to pursue considerably bolder economic projects in the near future. Kyrgyz Secretary of State Adahan Madumarov expects the summit to strengthen geopolitical, economic, and cultural ties with important neighbors, particularly the SCO's largest members, Russia and China.

Kyrgyz government officials are confident that their participation in the upcoming Shanghai Cooperation Organization (SCO) summit will allow them to pursue considerably bolder economic projects in the near future. Kyrgyz Secretary of State Adahan Madumarov expects the summit to strengthen geopolitical, economic, and cultural ties with important neighbors, particularly the SCO's largest members, Russia and China.

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Kazakh President Sees Russia as Strategic Partner on Energy Market

Kazakh President Nursultan Nazarbayev said that cooperation with Russia on oil and gas is of a "strategic nature, and mutual commitments are wide-ranging and long-term." He noted that Chinese demand for petroleum is such that there would be no need for export competition between the countries. In addition, he declared that Kazakhstan was eager to cooperate further on energy infrastructure including the laying of pipelines to transport oil products from both Kazakh and Russian fields to China and Europe.

Kazakh President Nursultan Nazarbayev said that cooperation with Russia on oil and gas is of a "strategic nature, and mutual commitments are wide-ranging and long-term." He noted that Chinese demand for petroleum is such that there would be no need for export competition between the countries. In addition, he declared that Kazakhstan was eager to cooperate further on energy infrastructure including the laying of pipelines to transport oil products from both Kazakh and Russian fields to China and Europe.

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Strategic North Korean Port to be Opened to Foreign Ships

North Korea has agreed to allow foreign ships to enter its militarily sensitive port of Najin. North Korea made the commitment when it signed a memorandum of understanding with Russia on a joint venture to develop Najin and renovate the railway linking to Khasan in Russia. North Korea is planning to set up an international consortium for the Najin-Khasan railway project. Russia, Germany, Italy, Finland, and China have shown interest in this project.

North Korea has agreed to allow foreign ships to enter its militarily sensitive port of Najin. North Korea made the commitment when it signed a memorandum of understanding with Russia on a joint venture to develop Najin and renovate the railway linking to Khasan in Russia. North Korea is planning to set up an international consortium for the Najin-Khasan railway project. Russia, Germany, Italy, Finland, and China have shown interest in this project.

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Turkmenistan to Resume CIS Cooperation

Turkmenistan's President, Gurbanguly Berdymuhammedov, has declared that the country will resume cooperation with the Commonwealth of Independent States (CIS) and is keen on reviving economic links with other CIS countries. Turkmenistan withdrew from the CIS in 1995 and became an associate member, isolating itself and only infrequently taking part in CIS functions. While there is speculation that the country may wish to rejoin the CIS, the government has not declared any such intentions. Turkmenistan is in need of foreign assistance to upgrade its petroleum infrastructure and rebuild its educational system.

Turkmenistan's President, Gurbanguly Berdymuhammedov, has declared that the country will resume cooperation with the Commonwealth of Independent States (CIS) and is keen on reviving economic links with other CIS countries. Turkmenistan withdrew from the CIS in 1995 and became an associate member, isolating itself and only infrequently taking part in CIS functions. While there is speculation that the country may wish to rejoin the CIS, the government has not declared any such intentions. Turkmenistan is in need of foreign assistance to upgrade its petroleum infrastructure and rebuild its educational system.

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World Bank Predicts Russia to Exceed Inflation, GDP Targets for 2007

The World Bank has predicted that Russia will exceed its inflation target for 2007 of 8 percent by one or two percent. In addition, top World Bank officials say that 2007 growth could exceed the government's goal of 6.5 percent and be closer to 7 percent. Continued large capital inflows have led to expectations of inflation as money supply increases. According to the bank, average Russian wages may also reach up to USD 500 from the USD 395 reached last year, and the ruble is expected to continue to appreciate.

The World Bank has predicted that Russia will exceed its inflation target for 2007 of 8 percent by one or two percent. In addition, top World Bank officials say that 2007 growth could exceed the government's goal of 6.5 percent and be closer to 7 percent. Continued large capital inflows have led to expectations of inflation as money supply increases. According to the bank, average Russian wages may also reach up to USD 500 from the USD 395 reached last year, and the ruble is expected to continue to appreciate.

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Bank of Russia Worried Over State Enterprises' Debt

The Russian Central Bank is concerned that Russian State-affiliated enterprises may be increasing their debt to worrisome levels because there is a perception that the State will bail them out in case of trouble. Some have recommended that a law be enacted that external borrowing not exceeds the central bank's reserves of gold and currency. 65 percent of Russian securities are IPO'd in Western markets, with the remainder IPO'd in Russia.

The Russian Central Bank is concerned that Russian State-affiliated enterprises may be increasing their debt to worrisome levels because there is a perception that the State will bail them out in case of trouble. Some have recommended that a law be enacted that external borrowing not exceeds the central bank's reserves of gold and currency. 65 percent of Russian securities are IPO'd in Western markets, with the remainder IPO'd in Russia.

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Russian GDP Growth at 20-Month Low in May

Weak growth in the services sector has pulled Russian GDP growth down to 6.4 percent in May. According to London-based VTB Bank Europe, this would be the seventh consecutive month that Russian growth has slowed since reaching 7.7 percent in October 2006. Russian growth remains above its long-run average of 6.1 percent and is projected to continue to do so. Despite the services sector's weakest performance since VTB began surveying in October 2001, the manufacturing sector continues to grow for the third straight month, slightly offsetting the decline in services growth.

Weak growth in the services sector has pulled Russian GDP growth down to 6.4 percent in May. According to London-based VTB Bank Europe, this would be the seventh consecutive month that Russian growth has slowed since reaching 7.7 percent in October 2006. Russian growth remains above its long-run average of 6.1 percent and is projected to continue to do so. Despite the services sector's weakest performance since VTB began surveying in October 2001, the manufacturing sector continues to grow for the third straight month, slightly offsetting the decline in services growth.

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BP's Russian Branch Sees Profit Rise By 40 Percent

BP's Russian branch, TNK-BP International Ltd., has reported that profits have increased from USD 4.74 billion last year to USD 6.63 billion, primarily due to the sale of OAO Udmurtneft to Russia's OAO Rosneft and Sinopec. TNK-BP is now behind Rosneft as Russia's third-largest oil company after selling Udmurtneft for USD 3.5 billion, realizing a USD 2 billion gain from the sale. TNK-BP is also the owner of the Siberian Kovykta field, which is reputed to have reserves comparable to that of Canada, and is at risk of losing its license to the field in a dispute over whether or not the company is meeting its production requirements.

BP's Russian branch, TNK-BP International Ltd., has reported that profits have increased from USD 4.74 billion last year to USD 6.63 billion, primarily due to the sale of OAO Udmurtneft to Russia's OAO Rosneft and Sinopec. TNK-BP is now behind Rosneft as Russia's third-largest oil company after selling Udmurtneft for USD 3.5 billion, realizing a USD 2 billion gain from the sale. TNK-BP is also the owner of the Siberian Kovykta field, which is reputed to have reserves comparable to that of Canada, and is at risk of losing its license to the field in a dispute over whether or not the company is meeting its production requirements.

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Unification with Russia Proposed by Kyrgyz Opposition Party

The United Front for a Worthy Future for Kyrgyzstan is prepared to call for a referendum regarding the formation of a confederation with Russia, which the opposition movement claims would allow Kyrgyzstan greater economic integration. A number of analysts are predicting Kyrgyzstan's desperate economic condition will see it split into two regions and cease to be a state. However, many observers argue that unification is unobtainable, and that economic integration will be better achieved through bilateral relations, as well as within regional associations such as the Eurasian Economic Community.

The United Front for a Worthy Future for Kyrgyzstan is prepared to call for a referendum regarding the formation of a confederation with Russia, which the opposition movement claims would allow Kyrgyzstan greater economic integration. A number of analysts are predicting Kyrgyzstan's desperate economic condition will see it split into two regions and cease to be a state. However, many observers argue that unification is unobtainable, and that economic integration will be better achieved through bilateral relations, as well as within regional associations such as the Eurasian Economic Community.

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US Backs Effort to Bypass Gazprom's Central Asian Monopoly

The US has declared its backing of a 'southern corridor' for Central Asian gas to cross the Caucasus Mountains to Turkey, bypassing the pipes of Russia's State gas monopoly Gazprom. A new pipeline is planned to cross the Caspian Sea from Turkmenistan to Azerbaijan and from there to Georgia, Turkey and eventually to Europe. Gazprom currently supplies a quarter of Europe's gas, and Europe would prefer an alternative to the Russian monopoly which charges more than USD300 per thousand cubic meters for gas that costs USD100 per thousand cubic meters in Central Asia.

The US has declared its backing of a 'southern corridor' for Central Asian gas to cross the Caucasus Mountains to Turkey, bypassing the pipes of Russia's State gas monopoly Gazprom. A new pipeline is planned to cross the Caspian Sea from Turkmenistan to Azerbaijan and from there to Georgia, Turkey and eventually to Europe. Gazprom currently supplies a quarter of Europe's gas, and Europe would prefer an alternative to the Russian monopoly which charges more than USD300 per thousand cubic meters for gas that costs USD100 per thousand cubic meters in Central Asia.

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Citigroup Cuts Russian Energy Stock Price Estimates

Despite rising oil prices, Citigroup has reduced its price estimates for six Russian oil companies, including market leaders Rosneft and Lukoil. Rosneft and Lukoil were downgraded from 'buy' to 'hold' on concerns that the companies are being forced to increase capital expenditure on new fields and that Russia's progressive tax system will place more pressure on them as prices rise. On the other hand, natural gas companies such as Gazprom have been upgraded on news of increasing European gas prices.

Despite rising oil prices, Citigroup has reduced its price estimates for six Russian oil companies, including market leaders Rosneft and Lukoil. Rosneft and Lukoil were downgraded from 'buy' to 'hold' on concerns that the companies are being forced to increase capital expenditure on new fields and that Russia's progressive tax system will place more pressure on them as prices rise. On the other hand, natural gas companies such as Gazprom have been upgraded on news of increasing European gas prices.

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SCO Summit Forces Kyrgyzstan to Weigh US, Regional Relations

As Kyrgyzstan prepares to host the annual Shanghai Cooperation Organization (SCO) summit on August 16, it has been forced to weigh the value of its US relations with that of its relations with regional neighbors, most notably China and Russia. A number of experts expect the SCO summit to push the issues of economic investment and joint production between Kyrgyzstan and both Russia and China, the two largest members of the SCO. However, the success of such talks may hinge on how Kyrgyzstan handles growing regional criticism of US military presence near Bishkek.

As Kyrgyzstan prepares to host the annual Shanghai Cooperation Organization (SCO) summit on August 16, it has been forced to weigh the value of its US relations with that of its relations with regional neighbors, most notably China and Russia. A number of experts expect the SCO summit to push the issues of economic investment and joint production between Kyrgyzstan and both Russia and China, the two largest members of the SCO. However, the success of such talks may hinge on how Kyrgyzstan handles growing regional criticism of US military presence near Bishkek.

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Kazakhstan, Russia Set Up Gas Joint Venture

A series of agreements between Russia and Kazakhstan has been signed to set up a joint venture for processing Kazakh natural gas. The cooperation between Russia's Gazprom and Kazakhstan's KazMunaiGaz is expected to process 16 billion cubic meters per year, extracted from Kazakhstan's natural gas fields.

A series of agreements between Russia and Kazakhstan has been signed to set up a joint venture for processing Kazakh natural gas. The cooperation between Russia's Gazprom and Kazakhstan's KazMunaiGaz is expected to process 16 billion cubic meters per year, extracted from Kazakhstan's natural gas fields.

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Kyrgyzstan to Ask Russia to Forgive 90 Percent of Debt

Kyrgyz Finance Minister Akylbek Japarov is expected to ask Russia to forgive 90 percent of the USD 190 million Kyrgyzstan owes, though he has effectively rejected a Russian proposal to re-credit Kyrgyzstan with USD 1 billion over the next 10 years. Kyrgyzstan's external debt is approximately USD 2 billion, and it insists that if it is to accept a new line of credit, it would prefer the long-term packages available through financial institutions such as the Asian Development Bank.

Kyrgyz Finance Minister Akylbek Japarov is expected to ask Russia to forgive 90 percent of the USD 190 million Kyrgyzstan owes, though he has effectively rejected a Russian proposal to re-credit Kyrgyzstan with USD 1 billion over the next 10 years. Kyrgyzstan's external debt is approximately USD 2 billion, and it insists that if it is to accept a new line of credit, it would prefer the long-term packages available through financial institutions such as the Asian Development Bank.

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Russia, Kazakhstan to Create Uranium Processing Center

Russia and Kazakhstan have announced that they will sign the founding documents creating an international center for uranium enrichment in June. The center is to be constructed in Russia's Irkutsk region. The countries are in communication with the International Atomic Energy Agency, and are looking for countries that may be interested in receiving fuel from the center. Countries who wish to pursue atomic energy could receive fuel from the complex, easing concerns over the possibility of countries building atomic weapons.

Russia and Kazakhstan have announced that they will sign the founding documents creating an international center for uranium enrichment in June. The center is to be constructed in Russia's Irkutsk region. The countries are in communication with the International Atomic Energy Agency, and are looking for countries that may be interested in receiving fuel from the center. Countries who wish to pursue atomic energy could receive fuel from the complex, easing concerns over the possibility of countries building atomic weapons.

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Russia, China Discussing Gas Pipeline

Viktor Khristenko, Russia's Minister of Industry and Energy, told the media that Russia and China are discussing the construction of a gas pipeline between the two countries in the next five to six years. He also said that there was interest in further Russian participation in oil production, refining, and marketing in China. The gas would originate in the Russian Far East, and East and West Siberia. Russia also declared that, despite the possibility of increasing gas exports, it would still be able to fulfill its European export obligations.

Viktor Khristenko, Russia's Minister of Industry and Energy, told the media that Russia and China are discussing the construction of a gas pipeline between the two countries in the next five to six years. He also said that there was interest in further Russian participation in oil production, refining, and marketing in China. The gas would originate in the Russian Far East, and East and West Siberia. Russia also declared that, despite the possibility of increasing gas exports, it would still be able to fulfill its European export obligations.

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Caspian Gas Pipeline Construction to Start in 2008

Following meetings between Russian and Kazakh Prime Ministers Mikhail Fradkov and Karim Masimov, the signing date for the official agreement to construct a new Caspian gas pipeline has been set. The pipe will run through Uzbekistan, Turkmenistan, Kazakhstan, and on to Russia. Officials first agreed on the pipe in mid-May and the official signing will take place on September 1. Construction will begin during the second half of 2008. The pipeline is expected to boost gas transit by 12 billion cubic meters by 2012.

Following meetings between Russian and Kazakh Prime Ministers Mikhail Fradkov and Karim Masimov, the signing date for the official agreement to construct a new Caspian gas pipeline has been set. The pipe will run through Uzbekistan, Turkmenistan, Kazakhstan, and on to Russia. Officials first agreed on the pipe in mid-May and the official signing will take place on September 1. Construction will begin during the second half of 2008. The pipeline is expected to boost gas transit by 12 billion cubic meters by 2012.

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Russia, Kazakhstan to Form Joint Gas Venture

Russia's Gazprom and Kazakhstan's KazMunaiGaz have signed a joint venture agreement to send Kazakh gas to a plant in the Russian city of Orenburg from nearby Kazakh fields. Kazakhstan is expected to supply 16 billion cubic feet of gas to the plant per year, with most of it sent back to Kazakhstan and some exported. The gas will be supplied to Russia at USD145 per cubic meter. Russia charges Western Europe USD250 for gas.

Russia's Gazprom and Kazakhstan's KazMunaiGaz have signed a joint venture agreement to send Kazakh gas to a plant in the Russian city of Orenburg from nearby Kazakh fields. Kazakhstan is expected to supply 16 billion cubic feet of gas to the plant per year, with most of it sent back to Kazakhstan and some exported. The gas will be supplied to Russia at USD145 per cubic meter. Russia charges Western Europe USD250 for gas.

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Russia to Complete WTO Ascension Talks With Vietnam, Cambodia

Russia expects to complete bilateral World Trade Organization (WTO) ascension talks with Vietnam and Cambodia by the end of June, according to Economic Minister German Gref. That would leave Georgia as the only other country with which Russia must complete bilateral negotiations. Russia hopes to join the WTO by the end of this year and plans to gradually open its markets a year after ascension.

Russia expects to complete bilateral World Trade Organization (WTO) ascension talks with Vietnam and Cambodia by the end of June, according to Economic Minister German Gref. That would leave Georgia as the only other country with which Russia must complete bilateral negotiations. Russia hopes to join the WTO by the end of this year and plans to gradually open its markets a year after ascension.

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Mongolian Rail Costs Hindering Russian-Chinese Oil Trade

Another major Russian oil company has announced it is unable to continue providing oil to China, as Rosneft reported that the rail costs of shipping through Mongolia are simply too high. Despite a newly imposed railway fee discount and the 22 percent slashing of Russian rail tariffs on the Mongolia route, Rosneft's Vice President for Exports says their Chinese partners must absorb the pricing difference or contractual negotiations will cease.

Another major Russian oil company has announced it is unable to continue providing oil to China, as Rosneft reported that the rail costs of shipping through Mongolia are simply too high. Despite a newly imposed railway fee discount and the 22 percent slashing of Russian rail tariffs on the Mongolia route, Rosneft's Vice President for Exports says their Chinese partners must absorb the pricing difference or contractual negotiations will cease.

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Russian-South Korean Consortium Discovers Large Oil Field in Kamchatka

A Russian-South Korean oil field off the coast of Russia's Kamchatka peninsula has been discovered to hold up to 10 billion barrels, or three times the reserves estimated in 2004 when the claim was staked. The field is located in the shallow waters of the Sea of Okhotsk and is controlled jointly by Russia's State-owned Rosneft (60 percent) and a collection of South Korean firms (40 percent). The field is large enough to supply South Korea's oil demand for more than a decade.

A Russian-South Korean oil field off the coast of Russia's Kamchatka peninsula has been discovered to hold up to 10 billion barrels, or three times the reserves estimated in 2004 when the claim was staked. The field is located in the shallow waters of the Sea of Okhotsk and is controlled jointly by Russia's State-owned Rosneft (60 percent) and a collection of South Korean firms (40 percent). The field is large enough to supply South Korea's oil demand for more than a decade.

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CIS Interstate Antimonopoly Council Held in Moscow

On Tuesday, the Commonwealth of Independent States (CIS) Interstate Antimonopoly Council adjourned their 25th meeting in Moscow. This session brought discussion regarding a system of control over compliance with competitive conditions when providing state support in the CIS member states. Also, competitive policies in developing common markets within the CIS area were assessed. Some member nations, including Tajikistan, Russia, and Azerbaijan, were praised for their considerable changes to the legal foundations of activity of their antimonopoly agencies.

On Tuesday, the Commonwealth of Independent States (CIS) Interstate Antimonopoly Council adjourned their 25th meeting in Moscow. This session brought discussion regarding a system of control over compliance with competitive conditions when providing state support in the CIS member states. Also, competitive policies in developing common markets within the CIS area were assessed. Some member nations, including Tajikistan, Russia, and Azerbaijan, were praised for their considerable changes to the legal foundations of activity of their antimonopoly agencies.

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Curbing Inflation a Priority for Russian Officials

Russian Finance Minister Alexei Kudrin has announced that curbing inflation is more important for economic growth than preventing the rise of the ruble. His argument is that lower inflation will make for greater stability in prices, which will encourage Russians to place more money into savings and will encourage the stock market to grow. He also said that the appreciation coming from the increase in investment is more stable than that from changes in oil prices and represents a "positive trend".

Russian Finance Minister Alexei Kudrin has announced that curbing inflation is more important for economic growth than preventing the rise of the ruble. His argument is that lower inflation will make for greater stability in prices, which will encourage Russians to place more money into savings and will encourage the stock market to grow. He also said that the appreciation coming from the increase in investment is more stable than that from changes in oil prices and represents a "positive trend".

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Russian Inflation Expected to Increase

Russian consumer prices are set to increase by 0.5 to 0.6 percent in May and government officials have confided that the risk of inflation is high, primarily due to to an influx of money into the economy from high oil prices, investment, and fiscal policies. Inflation in April was 7.6 percent compared to the near nine-year low in March of 7.4 percent. Officials have said that the country is likely to miss its inflation goal of 8 percent and that inflationis expected to be closer to 9 percent due to the heavy selling of shares in the banking sector, as well as the sale of OAO Yukos Oil's assets.

Russian consumer prices are set to increase by 0.5 to 0.6 percent in May and government officials have confided that the risk of inflation is high, primarily due to to an influx of money into the economy from high oil prices, investment, and fiscal policies. Inflation in April was 7.6 percent compared to the near nine-year low in March of 7.4 percent. Officials have said that the country is likely to miss its inflation goal of 8 percent and that inflationis expected to be closer to 9 percent due to the heavy selling of shares in the banking sector, as well as the sale of OAO Yukos Oil's assets.

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Russia Considering Stripping Gas Field's License

The Russian government is considering stripping TNK-BP, which is half-owned by BP, of its license to operate its huge Kovykta gas field. The field has reserves estimated to be able to supply the world's demand for gas for one year or China's national demand for three years. The government has accused the company of under-producing. TNK-BP alleges that Gazprom, Russia's gas transport monopoly, is preventing the company from exporting, primarily to China, forcing them to cut back production. Many see this as a ploy by the government to seize direct control over gas exports to China.

The Russian government is considering stripping TNK-BP, which is half-owned by BP, of its license to operate its huge Kovykta gas field. The field has reserves estimated to be able to supply the world's demand for gas for one year or China's national demand for three years. The government has accused the company of under-producing. TNK-BP alleges that Gazprom, Russia's gas transport monopoly, is preventing the company from exporting, primarily to China, forcing them to cut back production. Many see this as a ploy by the government to seize direct control over gas exports to China.

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First Bridge Linking Russia and China to be Constructed

A bridge spanning the Amur river between the Russian Far Eastern Jewish Autonomous Region and China's Northeastern Heilongjiang province is slated to be constructed by 2010. The bridge would be the first to link Russia and China and is expected to carry iron from the rich deposits in Russia's far east to steel mills in China where iron is in high demand. More than 3 million tons of iron are planned to be shipped over the bridge at substantially reduced transportation costs of USD5.00 per tonne compared to the current USD9.15.

A bridge spanning the Amur river between the Russian Far Eastern Jewish Autonomous Region and China's Northeastern Heilongjiang province is slated to be constructed by 2010. The bridge would be the first to link Russia and China and is expected to carry iron from the rich deposits in Russia's far east to steel mills in China where iron is in high demand. More than 3 million tons of iron are planned to be shipped over the bridge at substantially reduced transportation costs of USD5.00 per tonne compared to the current USD9.15.

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Oil Slide Pushes Russian Stocks to 2007 Lows

Falling crude oil prices at the New York Mercantile Exchange (down USD1.58, or 2.4 percent to USD63.62) have led Russia's oil-dominated stock indexes to 2007 lows. OAO Gazprom and OAO Novatek, Russia's first and second largest gas producers fell by 2.6 and 4.6 percent respectively. Rosneft, Russia's largest oil producer also fell by 2 percent. Oil companies make up the largest part of Russian indexes and exports, which makes the Russian market excessively vulnerable to changes in oil prices.

Falling crude oil prices at the New York Mercantile Exchange (down USD1.58, or 2.4 percent to USD63.62) have led Russia's oil-dominated stock indexes to 2007 lows. OAO Gazprom and OAO Novatek, Russia's first and second largest gas producers fell by 2.6 and 4.6 percent respectively. Rosneft, Russia's largest oil producer also fell by 2 percent. Oil companies make up the largest part of Russian indexes and exports, which makes the Russian market excessively vulnerable to changes in oil prices.

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EBRD to Expand Investment in Russian Far East

Following negotiations with the European Bank of Reconstruction and Development (EBRD), Russian officials have announced that the bank will increase its investment activity in the Russian Far East. While the region possesses 40 percent of Russia's land area it currently receives only 9 percent or 700 million euros of the EBRD's Russian investments. It is estimated that the region requires investment upward of 250 billion euros.

Following negotiations with the European Bank of Reconstruction and Development (EBRD), Russian officials have announced that the bank will increase its investment activity in the Russian Far East. While the region possesses 40 percent of Russia's land area it currently receives only 9 percent or 700 million euros of the EBRD's Russian investments. It is estimated that the region requires investment upward of 250 billion euros.

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Caspian Gas Pipeline Construction Will Begin in 2008

Kazakhstan, Russia, and Turkmenistan have agreed to work together in building the Caspian Gas pipeline. The presidents of each country have instructed their governments to draw up and sign an agreement by September 1, 2007. All three nations plan on beginning construction during the second half of 2008.

Kazakhstan, Russia, and Turkmenistan have agreed to work together in building the Caspian Gas pipeline. The presidents of each country have instructed their governments to draw up and sign an agreement by September 1, 2007. All three nations plan on beginning construction during the second half of 2008.

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Russia Interested in Investing in Mongolia's Mines

Talks between Mongolia's President Enkhbayar and a Speaker of the Federation Council of Russia, Sergei Mironov, have pointed out, that both Russia and Mongolia are interested in a cooperation to tap Mongolia's coal reserves. As Mongolia depends on investments in its mining sector, the President stated that it welcomes all mutually beneficial investments within the boundaries of Mongolian law and regulations.

Talks between Mongolia's President Enkhbayar and a Speaker of the Federation Council of Russia, Sergei Mironov, have pointed out, that both Russia and Mongolia are interested in a cooperation to tap Mongolia's coal reserves. As Mongolia depends on investments in its mining sector, the President stated that it welcomes all mutually beneficial investments within the boundaries of Mongolian law and regulations.

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Russia to Bring Nuclear Energy to Myanmar

The atomic energy agency of Russia, Rosatom, has agreed to build a nuclear research reactor in Myanmar, and will train around 350 students from Myanmar in Russian nuclear institutes. While nuclear technology in military-ruled Myanmar is very likely to garner harsh criticism, the facility will be governed by the International Atomic Energy Agency, and the power-deprived nation's current financial and technological constraints make weapons development unrealistic.

The atomic energy agency of Russia, Rosatom, has agreed to build a nuclear research reactor in Myanmar, and will train around 350 students from Myanmar in Russian nuclear institutes. While nuclear technology in military-ruled Myanmar is very likely to garner harsh criticism, the facility will be governed by the International Atomic Energy Agency, and the power-deprived nation's current financial and technological constraints make weapons development unrealistic.

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Russian Pipeline Deal Detrimental to US, EU

The presidents of Russia, Kazakhstan, and Turkmenistan reached a deal that will allow Russia access to gas from the Caspian Sea, effectively negating a rival, US-backed pipeline deal. While the deal is of significant economic benefit to Russia and the two ex-Soviet satellites, it will greatly increase the EU's dependence on Russian gas. The leverage Russia derives from its massive oil and gas reserves has long been of growing concern to EU officials.

The presidents of Russia, Kazakhstan, and Turkmenistan reached a deal that will allow Russia access to gas from the Caspian Sea, effectively negating a rival, US-backed pipeline deal. While the deal is of significant economic benefit to Russia and the two ex-Soviet satellites, it will greatly increase the EU's dependence on Russian gas. The leverage Russia derives from its massive oil and gas reserves has long been of growing concern to EU officials.

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Joint Oil Exploration Underway in Myanmar

Following the signing of a joint contract between Myanmar's state-owned energy firm and energy firms from Singapore and Russia, oil exploration has begun in Myanmar's northeast region. The contract continues the trend of foreign oil companies tapping the wealth of natural resources in Myanmar, which has been a savior for a ruling military party that continues to face economic sanctions imposed by the US and EU.

Following the signing of a joint contract between Myanmar's state-owned energy firm and energy firms from Singapore and Russia, oil exploration has begun in Myanmar's northeast region. The contract continues the trend of foreign oil companies tapping the wealth of natural resources in Myanmar, which has been a savior for a ruling military party that continues to face economic sanctions imposed by the US and EU.

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Kazakhstan Joins CPC Extension Construction Efforts

Kazakhstan announced that it has finalized an agreement to join the construction efforts of the Burgas-Alexandroupolis pipeline, an extension of the Caspian Pipeline Consortium (CPC) pipeline that currently links Kazakhstan with a terminal on the Black Sea. The new pipeline, which will avoid the inundated Bosporous strait and access US and European markets via Bulgaria and Greece, will allow for an additional capacity of 17 million tons of crude oil through the CPC pipeline per year.

Kazakhstan announced that it has finalized an agreement to join the construction efforts of the Burgas-Alexandroupolis pipeline, an extension of the Caspian Pipeline Consortium (CPC) pipeline that currently links Kazakhstan with a terminal on the Black Sea. The new pipeline, which will avoid the inundated Bosporous strait and access US and European markets via Bulgaria and Greece, will allow for an additional capacity of 17 million tons of crude oil through the CPC pipeline per year.

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Russia's Prices Rise But Still Are Controllable

Although consumer prices have increased faster in April than in the same month last year, economists believe the government still can achieve its goal to reduce the overall inflation rate to 8 percent in 2007. The reason for the rising consumer prices is the ruble's exchange rate against the dollar and the euro. Whereas the rising consumer prices are not supposed to influence the government's goal of reducing the rate of inflation, accelerating private capital inflows might threaten it.

Although consumer prices have increased faster in April than in the same month last year, economists believe the government still can achieve its goal to reduce the overall inflation rate to 8 percent in 2007. The reason for the rising consumer prices is the ruble's exchange rate against the dollar and the euro. Whereas the rising consumer prices are not supposed to influence the government's goal of reducing the rate of inflation, accelerating private capital inflows might threaten it.

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China and Russia Agree to Boost Trade

Chinese President Hu Jintao signed a series of agreements with the primary objective of boosting economic and political relations between China and Russia. Involved in these agreements is cooperation between the industries of oil transportation, technology, and banking. Investment is also expected to increase as a result. Experts see this as an example of Russia shifting away from Western powers and developing closer ties with the Far East.

Chinese President Hu Jintao signed a series of agreements with the primary objective of boosting economic and political relations between China and Russia. Involved in these agreements is cooperation between the industries of oil transportation, technology, and banking. Investment is also expected to increase as a result. Experts see this as an example of Russia shifting away from Western powers and developing closer ties with the Far East.

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Russia and Iran Dispute Over Nuclear Power Plant Contract

Russia's top civilian nuclear official urged Iran to comply with the NPP contract terms on the Bushehr nuclear power plant that Russia is building in the south of the Islamic Republic. Atomstroyexport, the Russian contractor, claims that Russia has not received any payments for the NPP construction. Iran has denied the non payment, accusing Russia of being pressured by the West, which is trying to force Tehran to end its nuclear programs.

Russia's top civilian nuclear official urged Iran to comply with the NPP contract terms on the Bushehr nuclear power plant that Russia is building in the south of the Islamic Republic. Atomstroyexport, the Russian contractor, claims that Russia has not received any payments for the NPP construction. Iran has denied the non payment, accusing Russia of being pressured by the West, which is trying to force Tehran to end its nuclear programs.

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Russia and S. Korea Strike Energy Deal

Two South Korean groups, including a state-run enterpise, have entered into an agreement with Russia to develop a project into one of the world's largest coal mines. The Elga Project in Eastern Siberia is the second largest coal deposit in the world. South Korea, a large importer of coal, is looking for more security for its energy supply after recent increases in domestic demand from its suppliers have restricted the nations access to the fuel.

Two South Korean groups, including a state-run enterpise, have entered into an agreement with Russia to develop a project into one of the world's largest coal mines. The Elga Project in Eastern Siberia is the second largest coal deposit in the world. South Korea, a large importer of coal, is looking for more security for its energy supply after recent increases in domestic demand from its suppliers have restricted the nations access to the fuel.

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Russia Aims to Increase Trade with Singapore

After growing 43% in 2006, Russia is aiming to increase bilateral trade with Singapore four-fold in the next 8 years. Minister for Economic Development and Trade, Herman Gref, announced that Russia would like to increase the trade to $5 billion by 2015. The announcement was made at the Russia-Singapore Business Forum. Both countries are eager to explore development possibilities in the tourism, healthcare, and intellectual property industries.

After growing 43% in 2006, Russia is aiming to increase bilateral trade with Singapore four-fold in the next 8 years. Minister for Economic Development and Trade, Herman Gref, announced that Russia would like to increase the trade to $5 billion by 2015. The announcement was made at the Russia-Singapore Business Forum. Both countries are eager to explore development possibilities in the tourism, healthcare, and intellectual property industries.

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Russia's Energy Battle

The Russian ministry of natural resources decided to revoke an environmental license given to the Sakhalin II project on September 19. Sakhalin II is a $20 billion project run by Royal Dutch Shell . Two other Russian energy projects run by foreign investors face similar threats. Russian prosecutors have warned that it may to curtail the Kovykta project to develop a gas field in Eastern Siberia. The venture is led by TNK-BP, an Anglo-Russian oil company. Officials want to suspend the group's exploration license on environmental grounds. Threats to revoke French energy company Total's license for the Kharyaga project to extract oil in Western Siberia have aroused further alarm.

The latest developments as to the reasons for this move are seen as a strategic move for the Russian government to regain control over its energy reserves. Three agreements signed in the 1990s give foreign companies control over some of Russia's most lucrative gas and oil fields. When Russia negotiated these agreements with Shell in 1993, oil prices were low and the government did not have much bargaining power. Today its plentiful oil reserves are powerful leverage when energy sources are low and prices are on the rise. Supposedly, the Russian ministry now expects to restructure these agreements. Officials have denied these charges. The government wants Gazprom, the largest Russian company and a provider of natural gas, to have a greater share in the Sakhalin II project. Gazprom is currently negotiating a "production-sharing agreement" for Shell to swap 25 percent of Sakhalin II shares for half of Gazprom's gas fields.

Russian energy politics have elicited censure from many members of the international community. Shinzo Abe, the chief cabinet secretary and front runner to be the next prime minister, recently expressed concern that the Sakhalin II issue would harm Russo-Japanese relations and jeopardize foreign investment. Japanese companies Mitsui and Mistubishi own 20 and 25 percent shares in the Sakhalin II venture respectively. It is estimated that Sakhalin II will supply 6 percent of Japan's natural gas. If the Sakhalin II project does not progress as expected Japan is likely to suffer losses. The Russian government claims it has no desire to end the Sakhalin I, Sakhalin II, or Total projects.

Recent government action may deter much needed foreign investment from other nations as well. Future investors may view the latest events as a government interference that is possible even in other sectors. The EU has also voiced its concerns about Russia not meeting Europe's energy demand. The EU, UK, US, and other nations fear that Putin will use coercive tactics to close its energy sector to foreign investors. There has been some discussion of a collective stance toward Russia's energy policy but heavy dependence on Russian resources may deter action. The EU wants Russia to open the energy export market to competition. Currently, Gazprom, which is 50 percent state-owned, has the monopoly.

Russia has considerable incentives for establishing control over the energy sector. Energy politics are an important political weapon for asserting its authority over the post-Soviet states. Its reserves can serve as leverage for gaining access to the WTO as well as being incorporated into global markets as an equal player.

The Russian ministry of natural resources decided to revoke an environmental license given to the Sakhalin II project on September 19. Sakhalin II is a $20 billion project run by Royal Dutch Shell . Two other Russian energy projects run by foreign investors face similar threats. Russian prosecutors have warned that it may to curtail the Kovykta project to develop a gas field in Eastern Siberia. The venture is led by TNK-BP, an Anglo-Russian oil company. Officials want to suspend the group's exploration license on environmental grounds. Threats to revoke French energy company Total's license for the Kharyaga project to extract oil in Western Siberia have aroused further alarm.

The latest developments as to the reasons for this move are seen as a strategic move for the Russian government to regain control over its energy reserves. Three agreements signed in the 1990s give foreign companies control over some of Russia's most lucrative gas and oil fields. When Russia negotiated these agreements with Shell in 1993, oil prices were low and the government did not have much bargaining power. Today its plentiful oil reserves are powerful leverage when energy sources are low and prices are on the rise. Supposedly, the Russian ministry now expects to restructure these agreements. Officials have denied these charges. The government wants Gazprom, the largest Russian company and a provider of natural gas, to have a greater share in the Sakhalin II project. Gazprom is currently negotiating a "production-sharing agreement" for Shell to swap 25 percent of Sakhalin II shares for half of Gazprom's gas fields.

Russian energy politics have elicited censure from many members of the international community. Shinzo Abe, the chief cabinet secretary and front runner to be the next prime minister, recently expressed concern that the Sakhalin II issue would harm Russo-Japanese relations and jeopardize foreign investment. Japanese companies Mitsui and Mistubishi own 20 and 25 percent shares in the Sakhalin II venture respectively. It is estimated that Sakhalin II will supply 6 percent of Japan's natural gas. If the Sakhalin II project does not progress as expected Japan is likely to suffer losses. The Russian government claims it has no desire to end the Sakhalin I, Sakhalin II, or Total projects.

Recent government action may deter much needed foreign investment from other nations as well. Future investors may view the latest events as a government interference that is possible even in other sectors. The EU has also voiced its concerns about Russia not meeting Europe's energy demand. The EU, UK, US, and other nations fear that Putin will use coercive tactics to close its energy sector to foreign investors. There has been some discussion of a collective stance toward Russia's energy policy but heavy dependence on Russian resources may deter action. The EU wants Russia to open the energy export market to competition. Currently, Gazprom, which is 50 percent state-owned, has the monopoly.

Russia has considerable incentives for establishing control over the energy sector. Energy politics are an important political weapon for asserting its authority over the post-Soviet states. Its reserves can serve as leverage for gaining access to the WTO as well as being incorporated into global markets as an equal player.

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Russia's Entry into the WTO

The US and Russia have agreed in principle on the terms for a bilateral agreement to be signed on November 18 which will facilitate Russia's joining the World Trade Organization. US approval is key to the country's admittance. Russia hopes to sign a deal at the Asia Pacific Economic Cooperation summit in Hanoi, but there are doubts as to whether President Bush could convince Congress.

The US and the international community raised a number of reservations regarding Russia's entry: its human rights record, state control over key energy resources, intellectual property rights, restrictions on activity of foreign companies, and Russian resistance to sanctions against Iran.4

Somewhat surprisingly, piracy has been one of the main points of contention between the US and Russia. Many trade economists do not even believe that a WTO agreement should address intellectual property rights. Russian President Putin says that the US is simply playing politics regarding its stipulations. He argues that Russia's economy is more open compared to other WTO nations. The Kremlin recently took measures to lift all remaining capital controls. It has also repaid much of its Paris Club debt. Putin had hoped that the government's fiscal responsibility and efforts to liberalize would be rewarded at the G8 summit in July.

Russia is the only G8 nation not yet a member of the WTO. More than 30 of the world's 50 developing nations are already members. It is considered an embarrassment to the country.

The Russian government views entry as a privilege, even stooping to political bargaining. It has tried to leverage its energy resources to pressure the international community into granting it entry. WTO membership should be a right accorded to law-abiding states.

The Russian government views entry as a privilege, even stooping to political bargaining. It has tried to leverage its energy resources to pressure the international community into granting it entry. WTO membership should be a right accorded to law-abiding states. While nations may indeed be practicing realpolitik in their dealings with Russia, It appears that Russia should make reforms accordingly and concentrate instead on strengthening those areas of its economy that will take a blow when it gains admission. Because it is already a powerful player with its energy resources, entry is not likely to boost GDP immediately.

The nation will likely face many difficulties upon entry. The Russian economy is not an open market and does not receive state support. The populace needs time to adjust to the changes. Joining the WTO will likely accelerate the efficiency of operating enterprises. Russian officials and experts predict that downsizing in some industries could result in as many as 10 million employees losing their jobs.

One belief is that protective measures are necessary to mitigate the adverse effects of such high unemployment. Some suggestions include instituting a quota on the entry of foreign workers and taking measures to preserve the social and labor rights of the working citizens.

The US and Russia have agreed in principle on the terms for a bilateral agreement to be signed on November 18 which will facilitate Russia's joining the World Trade Organization. US approval is key to the country's admittance. Russia hopes to sign a deal at the Asia Pacific Economic Cooperation summit in Hanoi, but there are doubts as to whether President Bush could convince Congress.

The US and the international community raised a number of reservations regarding Russia's entry: its human rights record, state control over key energy resources, intellectual property rights, restrictions on activity of foreign companies, and Russian resistance to sanctions against Iran.4

Somewhat surprisingly, piracy has been one of the main points of contention between the US and Russia. Many trade economists do not even believe that a WTO agreement should address intellectual property rights. Russian President Putin says that the US is simply playing politics regarding its stipulations. He argues that Russia's economy is more open compared to other WTO nations. The Kremlin recently took measures to lift all remaining capital controls. It has also repaid much of its Paris Club debt. Putin had hoped that the government's fiscal responsibility and efforts to liberalize would be rewarded at the G8 summit in July.

Russia is the only G8 nation not yet a member of the WTO. More than 30 of the world's 50 developing nations are already members. It is considered an embarrassment to the country.

The Russian government views entry as a privilege, even stooping to political bargaining. It has tried to leverage its energy resources to pressure the international community into granting it entry. WTO membership should be a right accorded to law-abiding states.

The Russian government views entry as a privilege, even stooping to political bargaining. It has tried to leverage its energy resources to pressure the international community into granting it entry. WTO membership should be a right accorded to law-abiding states. While nations may indeed be practicing realpolitik in their dealings with Russia, It appears that Russia should make reforms accordingly and concentrate instead on strengthening those areas of its economy that will take a blow when it gains admission. Because it is already a powerful player with its energy resources, entry is not likely to boost GDP immediately.

The nation will likely face many difficulties upon entry. The Russian economy is not an open market and does not receive state support. The populace needs time to adjust to the changes. Joining the WTO will likely accelerate the efficiency of operating enterprises. Russian officials and experts predict that downsizing in some industries could result in as many as 10 million employees losing their jobs.

One belief is that protective measures are necessary to mitigate the adverse effects of such high unemployment. Some suggestions include instituting a quota on the entry of foreign workers and taking measures to preserve the social and labor rights of the working citizens.

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russia

APEC's Free Trade Area Woes

The Asia Pacific Economic Cooperation (APEC) forum held in Hanoi from November 17 to 19 resulted in renewed discussions on trade. APEC leaders drafted a statement on the WTO's Doha Development Agenda and the Hanoi Action Plan. The leaders agreed on the need to continue the stalled round of Doha trade negotiations. However, they refuse to empower negotiators to execute this goal until all members are better prepared for liberalization.

The longer APEC nations put off negotiating a multilateral agreement, the more difficulties they are likely to face. It will be considerably harder to catch up with developed nations and trade blocs such as the EU. APEC will also be losing potential profits. To prevent unequal economic gains, protection of smaller, vulnerable nations is necessary. However, all will lose if Asian economies continue to interact with one another as inefficiently as they currently do. If these nations are going to remain internationally competitive, they must consolidate economic power.

The slow pace of progress invites criticism. Is APEC really as inefficient as its detractors claim? APEC allows smaller nations to balance against stronger players such China and the US, while still cooperating with them for economic gain. With the kinds of obstacles that the leaders face, some wariness is justified. A free trade area only has potential if developing countries in APEC take necessary precautions. They must be strong enough to withstand fluctuations in international markets before they open their economies to free trade. Capacity-building measures and the flexibility for leaders in determining national trade policies will prevent an agreement from benefiting members unequally.

APEC nations should not delay too long, or they risk lagging behind economically. A free trade agreement between APEC nations would facilitate trade within the bloc and internationally. These countries already control nearly half the world's trade and 56 percent of global gross domestic product. WTO negotiations had come to a halt because of disagreement on subsidies. In Hanoi, the US and Japan did not complete unfinished discussions on reductions in agricultural subsidies. China and Australia also have yet to consider further tariff cuts on industrial goods. The conference, however, did open debate for the first time since Doha and concessions are likely to follow. The Hanoi Action Plan outlines details of a multinational agreement. The agreement will streamline the negotiation process and replace 50 bilateral treaties. It proposes that members institute measures which will prepare economies for trade liberalization. The Plan also identifies corruption as an obstacle to growth. The leaders also focused on energy security. Development of renewable technologies and cleaner use of fossil fuels are among the issues of concern. The difficulties in WTO negotiations have made leaders wary.

The chances for success may be higher for a regional trade area. The EU for instance has proved more successful, but APEC will face different challenges. Singapore's Prime Minister Lee Hsien Loong thinks that the EU trade bloc was easier to create because of greater political similarities between nations. APEC includes some of the world's richest and poorest countries. The disparity in economic backgrounds also makes it difficult to find common ground. The conference agenda included discussions of pandemic diseases such as AIDS and disaster response plans. Vietnamese President Nguyen Minh Triet issued a statement on North Korea's nuclear arsenal. Some are critical of the meeting's success since no declaration was issued. APEC does provide a forum for world leaders to discuss pressing concerns, but international security is not the organization's primary focus. Those types of discussions would diffuse its main purpose which is to discuss economic development and trade.

APEC should begin negotiations much sooner than it plans. It can simultaneously help its smaller members strengthen their economies. The bloc could integrate weaker economies, seeking to strengthen vulnerable industries, at a slower pace. Other necessary measures include improving infrastructure and reforming laws. Meanwhile, nations can continue to sign bilateral or even smaller multilateral agreements. They can also provide aid to some of the lesser developing nations. APEC should also begin to develop enforcement procedures. As a trade bloc, the organization could later leverage its influence to more effectively address security and health issues.

 

The Asia Pacific Economic Cooperation (APEC) forum held in Hanoi from November 17 to 19 resulted in renewed discussions on trade. APEC leaders drafted a statement on the WTO's Doha Development Agenda and the Hanoi Action Plan. The leaders agreed on the need to continue the stalled round of Doha trade negotiations. However, they refuse to empower negotiators to execute this goal until all members are better prepared for liberalization.

The longer APEC nations put off negotiating a multilateral agreement, the more difficulties they are likely to face. It will be considerably harder to catch up with developed nations and trade blocs such as the EU. APEC will also be losing potential profits. To prevent unequal economic gains, protection of smaller, vulnerable nations is necessary. However, all will lose if Asian economies continue to interact with one another as inefficiently as they currently do. If these nations are going to remain internationally competitive, they must consolidate economic power.

The slow pace of progress invites criticism. Is APEC really as inefficient as its detractors claim? APEC allows smaller nations to balance against stronger players such China and the US, while still cooperating with them for economic gain. With the kinds of obstacles that the leaders face, some wariness is justified. A free trade area only has potential if developing countries in APEC take necessary precautions. They must be strong enough to withstand fluctuations in international markets before they open their economies to free trade. Capacity-building measures and the flexibility for leaders in determining national trade policies will prevent an agreement from benefiting members unequally.

APEC nations should not delay too long, or they risk lagging behind economically. A free trade agreement between APEC nations would facilitate trade within the bloc and internationally. These countries already control nearly half the world's trade and 56 percent of global gross domestic product. WTO negotiations had come to a halt because of disagreement on subsidies. In Hanoi, the US and Japan did not complete unfinished discussions on reductions in agricultural subsidies. China and Australia also have yet to consider further tariff cuts on industrial goods. The conference, however, did open debate for the first time since Doha and concessions are likely to follow. The Hanoi Action Plan outlines details of a multinational agreement. The agreement will streamline the negotiation process and replace 50 bilateral treaties. It proposes that members institute measures which will prepare economies for trade liberalization. The Plan also identifies corruption as an obstacle to growth. The leaders also focused on energy security. Development of renewable technologies and cleaner use of fossil fuels are among the issues of concern. The difficulties in WTO negotiations have made leaders wary.

The chances for success may be higher for a regional trade area. The EU for instance has proved more successful, but APEC will face different challenges. Singapore's Prime Minister Lee Hsien Loong thinks that the EU trade bloc was easier to create because of greater political similarities between nations. APEC includes some of the world's richest and poorest countries. The disparity in economic backgrounds also makes it difficult to find common ground. The conference agenda included discussions of pandemic diseases such as AIDS and disaster response plans. Vietnamese President Nguyen Minh Triet issued a statement on North Korea's nuclear arsenal. Some are critical of the meeting's success since no declaration was issued. APEC does provide a forum for world leaders to discuss pressing concerns, but international security is not the organization's primary focus. Those types of discussions would diffuse its main purpose which is to discuss economic development and trade.

APEC should begin negotiations much sooner than it plans. It can simultaneously help its smaller members strengthen their economies. The bloc could integrate weaker economies, seeking to strengthen vulnerable industries, at a slower pace. Other necessary measures include improving infrastructure and reforming laws. Meanwhile, nations can continue to sign bilateral or even smaller multilateral agreements. They can also provide aid to some of the lesser developing nations. APEC should also begin to develop enforcement procedures. As a trade bloc, the organization could later leverage its influence to more effectively address security and health issues.

 

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Russian Foreign Reserves Revealed

The Russian Central Bank disclosed the exact structure of its foreign currency reserves on its website on Tuesday. It keeps 51.5% of its reserves in US dollars, 38.6% in Euros, and the rest in a combination of pounds, yen, and francs. The bank is interested in further diversifying its reserves, which hit $311.2 billion in February, into the Swiss franc and Canadian, Australian, and New Zealand dollars.

The Russian Central Bank disclosed the exact structure of its foreign currency reserves on its website on Tuesday. It keeps 51.5% of its reserves in US dollars, 38.6% in Euros, and the rest in a combination of pounds, yen, and francs. The bank is interested in further diversifying its reserves, which hit $311.2 billion in February, into the Swiss franc and Canadian, Australian, and New Zealand dollars.

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Japan and Russia Work to Settle Dispute

Russia and Japan have agreed to bolster economic ties and settle a decades-long territory dispute, Russian Prime Minister Mikhail Fradkov announced Wednesday. The two countries are currently working on trade agreements as well as a settlement for the Kuril Islands, which has been disputed since WWII. Russia is seeking to develop its Eastern regions while Japan is looking to tap into Russia's natural resources. Japan has less than 6% of the amount of trade with Russia that it has with China.

Russia and Japan have agreed to bolster economic ties and settle a decades-long territory dispute, Russian Prime Minister Mikhail Fradkov announced Wednesday. The two countries are currently working on trade agreements as well as a settlement for the Kuril Islands, which has been disputed since WWII. Russia is seeking to develop its Eastern regions while Japan is looking to tap into Russia's natural resources. Japan has less than 6% of the amount of trade with Russia that it has with China.

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North Korean Pledge to Disarm Seeks Implementation

North Korea's No. 2 leader pledged his country's commitment Thursday to giving up its nuclear program in talks with a visiting high-level South Korean delegation. North Korea has also proposed that the two countries on the Korean peninsula resume economic cooperation talks in March, though Seoul was opposed to holding the talks so soon. The countries involved in the nuclear talks (the Koreas, China, Japan, Russia and the U.S.) have begun preparations for implementing the disarmament pact.

North Korea's No. 2 leader pledged his country's commitment Thursday to giving up its nuclear program in talks with a visiting high-level South Korean delegation. North Korea has also proposed that the two countries on the Korean peninsula resume economic cooperation talks in March, though Seoul was opposed to holding the talks so soon. The countries involved in the nuclear talks (the Koreas, China, Japan, Russia and the U.S.) have begun preparations for implementing the disarmament pact.

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Uncertain Future for Japan-Russia Relations

Over the past few years, Japan and Russia have made several attempts to strengthen bilateral relations, culminating in high-level talks in late January. The reasons for these talks seem straightforward. Russia sees Japan as a source of capital and a development partner for the country's Far Eastern energy resources. Tokyo wants to be less dependent on Middle Eastern oil and has looked to Russia as an alternative energy source. A shared fear of China's rapid rise has been another important motive. But although Japan and Russia have many of the same concerns, there are several obstacles that could prevent a stable, long-term alliance. The two have a long-running dispute over the Kurile Islands, and failure to reach an agreement over the Islands could hurt prospects for future energy deals. Another serious challenge is the corrupt Russian legal system. Russian President Vladimir Putin has made repeated efforts to renationalize the nation's energy sector. These moves run counter to Japan's attempts to penetrate the Far Eastern energy market. Russia has also made overtures to China in the form of arms sales and energy deals. These overtures challenge the basis for Russian-Japanese cooperation and may jeopardize future relations between the two countries.

Efforts to Improve Relations

There have been several indications of improving relations between Russia and Japan. High-level meetings have become common, and talks have yielded tangible results. In 2006, Russia agreed to construct an 850 kilometer LNG pipeline to northwest Japan through the Sea of Japan. Japan and China hotly contested the proposed route which would bypass China. Japanese companies have also become prominent investors in the Russian oil industry. Until recently, Mitsui Corporation had a 25 percent stake in the Sakhalin energy company. Mitsubishi controlled another 20 percent. These efforts are part of a broader national strategy to source up to 40 percent of its oil and gas imports from Japanese-owned concessions.1

Challenges Ahead

But there has been some bad blood between Russian and Japanese business parties. The most common complaint has to do with differences in the respective legal systems. Japan says Russia's legal system is corrupt and that Japanese businessmen are often mistreated by their Russian counterparts. Russians accuse Japan's legal system of being impenetrable and hostile to outside investment. To address these concerns, Moscow and Tokyo have established an arbitration board to mediate trade and private business disputes to create a more open, business-friendly environment.2

Another, more serious problem has to do with the long history of animosity between the two countries. Russia and Japan have several unresolved territorial disputes, and the question of borders has become linked to nationalism. The dispute centers on Kurile Islands, the four small islands that Russia has controlled since the end of World War II. Most Japanese see the problem of the islands as an obstacle to the development of a long-term alliance. Recently elected Japanese Prime Minister Shinzo Abe has taken a firm stance on the issue and said he considers the return of the Islands necessary for future cooperation.3 The border problems mean that sensitive matters involving national pride have become entangled in issues of trade and business.

Despite these challenges, the Russians' expropriation of Japanese assets represents the greatest challenge to future Russo-Japanese relations. Russia's state policy requires that the majority of ownership for all energy concessions goes to the local investors. This new regulation has led to the forced reduction of Mitsubishi and Mitsui shares in the Sakhalin oil project. This represents a major weakness in Japan's energy policy. Japan does not have a state-owned energy company or large, powerful private company and has relied on the concessions granted to smaller, privately owned companies like Mitsubishi and Mitsui.4 These smaller companies are less able to negotiate and are more vulnerable to the capricious state policy of host governments. Many Japanese firms are now more hesitant to invest in the Russian energy sector. Their reluctance undermines the basis of the Russian-Japanese relationship. Without the cooperation of private businesses, Japan's energy policy falls apart and Russia does not benefit from Japanese technology and know-how.

Moving Forward

Russia seems to have already begun a search for other energy partners. Last October, Russia agreed to sell oil from the Sakhalin energy project to China instead of to Japan as originally planned. Russia has also continued to sell military equipment to China. In February, Russia, China, and India held a conference to promote trilateral trade.5 Taken together, these events suggest that Russia may move closer to China at the expense of its relationship with Japan.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

Over the past few years, Japan and Russia have made several attempts to strengthen bilateral relations, culminating in high-level talks in late January. The reasons for these talks seem straightforward. Russia sees Japan as a source of capital and a development partner for the country's Far Eastern energy resources. Tokyo wants to be less dependent on Middle Eastern oil and has looked to Russia as an alternative energy source. A shared fear of China's rapid rise has been another important motive. But although Japan and Russia have many of the same concerns, there are several obstacles that could prevent a stable, long-term alliance. The two have a long-running dispute over the Kurile Islands, and failure to reach an agreement over the Islands could hurt prospects for future energy deals. Another serious challenge is the corrupt Russian legal system. Russian President Vladimir Putin has made repeated efforts to renationalize the nation's energy sector. These moves run counter to Japan's attempts to penetrate the Far Eastern energy market. Russia has also made overtures to China in the form of arms sales and energy deals. These overtures challenge the basis for Russian-Japanese cooperation and may jeopardize future relations between the two countries.

Efforts to Improve Relations

There have been several indications of improving relations between Russia and Japan. High-level meetings have become common, and talks have yielded tangible results. In 2006, Russia agreed to construct an 850 kilometer LNG pipeline to northwest Japan through the Sea of Japan. Japan and China hotly contested the proposed route which would bypass China. Japanese companies have also become prominent investors in the Russian oil industry. Until recently, Mitsui Corporation had a 25 percent stake in the Sakhalin energy company. Mitsubishi controlled another 20 percent. These efforts are part of a broader national strategy to source up to 40 percent of its oil and gas imports from Japanese-owned concessions.1

Challenges Ahead

But there has been some bad blood between Russian and Japanese business parties. The most common complaint has to do with differences in the respective legal systems. Japan says Russia's legal system is corrupt and that Japanese businessmen are often mistreated by their Russian counterparts. Russians accuse Japan's legal system of being impenetrable and hostile to outside investment. To address these concerns, Moscow and Tokyo have established an arbitration board to mediate trade and private business disputes to create a more open, business-friendly environment.2

Another, more serious problem has to do with the long history of animosity between the two countries. Russia and Japan have several unresolved territorial disputes, and the question of borders has become linked to nationalism. The dispute centers on Kurile Islands, the four small islands that Russia has controlled since the end of World War II. Most Japanese see the problem of the islands as an obstacle to the development of a long-term alliance. Recently elected Japanese Prime Minister Shinzo Abe has taken a firm stance on the issue and said he considers the return of the Islands necessary for future cooperation.3 The border problems mean that sensitive matters involving national pride have become entangled in issues of trade and business.

Despite these challenges, the Russians' expropriation of Japanese assets represents the greatest challenge to future Russo-Japanese relations. Russia's state policy requires that the majority of ownership for all energy concessions goes to the local investors. This new regulation has led to the forced reduction of Mitsubishi and Mitsui shares in the Sakhalin oil project. This represents a major weakness in Japan's energy policy. Japan does not have a state-owned energy company or large, powerful private company and has relied on the concessions granted to smaller, privately owned companies like Mitsubishi and Mitsui.4 These smaller companies are less able to negotiate and are more vulnerable to the capricious state policy of host governments. Many Japanese firms are now more hesitant to invest in the Russian energy sector. Their reluctance undermines the basis of the Russian-Japanese relationship. Without the cooperation of private businesses, Japan's energy policy falls apart and Russia does not benefit from Japanese technology and know-how.

Moving Forward

Russia seems to have already begun a search for other energy partners. Last October, Russia agreed to sell oil from the Sakhalin energy project to China instead of to Japan as originally planned. Russia has also continued to sell military equipment to China. In February, Russia, China, and India held a conference to promote trilateral trade.5 Taken together, these events suggest that Russia may move closer to China at the expense of its relationship with Japan.

 

This article was originally published in Asia Economic Institute Vol. 1 No. 5.

 

Tell us what you think about this issue by adding a comment.

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russia

Russia, Japan Talk About Cooperation in Energy Sector

Ministers from Russia and Japan met recently to discuss the possibilities of working together in the energy sector. Russia is looking for foreign investors interested in extracting oil from eastern Siberia and for a partner in the construction of the East Siberia-Pacific Ocean oil pipeline, which would pump oil from Siberia to Russia's far east, for distribution to other Asian countries. Russia feels that Japan is a good fit for its market strategy, and Japanese companies are said to be interested in the proposed projects.

Ministers from Russia and Japan met recently to discuss the possibilities of working together in the energy sector. Russia is looking for foreign investors interested in extracting oil from eastern Siberia and for a partner in the construction of the East Siberia-Pacific Ocean oil pipeline, which would pump oil from Siberia to Russia's far east, for distribution to other Asian countries. Russia feels that Japan is a good fit for its market strategy, and Japanese companies are said to be interested in the proposed projects.

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Economic Development Will Shift with Russia

The United States and Europe should try and form better relations with Russia in order to secure some of Russia's abundance of natural resources. If the West cannot do so, China and India will be the ones reaping the benefits of Russia's resource wealth in the future. Ultimately, Russia's decision on whether to align itself with the West will prove to be the deciding factor in the long-term economic prospects of the Western world.

 

The United States and Europe should try and form better relations with Russia in order to secure some of Russia's abundance of natural resources. If the West cannot do so, China and India will be the ones reaping the benefits of Russia's resource wealth in the future. Ultimately, Russia's decision on whether to align itself with the West will prove to be the deciding factor in the long-term economic prospects of the Western world.

 

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russia

Bank of Russia's Oversight Power Threatened

On February 19, the Duma announced a plan to strip the central bank of its oversight function. The plan was concocted at a parliamentary meeting on supervision in banking. Politicians are concerned that the current system allows the Bank of Russia to disrupt the stability of the entire banking industry, and should not have the supervisory power. While the government is backing this initiative, the majority of Russian bankers (75% in a recent poll) believe that the state bank should maintain its oversight function.

On February 19, the Duma announced a plan to strip the central bank of its oversight function. The plan was concocted at a parliamentary meeting on supervision in banking. Politicians are concerned that the current system allows the Bank of Russia to disrupt the stability of the entire banking industry, and should not have the supervisory power. While the government is backing this initiative, the majority of Russian bankers (75% in a recent poll) believe that the state bank should maintain its oversight function.

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russia

Illegal Deals Cost Russia

The Central bank announced that fictitious bank transactions in Russia amount to $30 billion annually, nearly 7% of GDP. These dealings, many of which are to avoid taxes, kept between 500 and 800 billion rubles out of the Russion budget last year. Cutting down on these deals has become a priority in the national economic policy.

The Central bank announced that fictitious bank transactions in Russia amount to $30 billion annually, nearly 7% of GDP. These dealings, many of which are to avoid taxes, kept between 500 and 800 billion rubles out of the Russion budget last year. Cutting down on these deals has become a priority in the national economic policy.

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russia

Bad Loans on Rise

Economists are warning Russian banks that bad loans could become a large problem, as their retail loan portfolio soars. Retail loans made up 7.8% of the country's GDP in 2006, with a value of over $76 billion. Experts warn that banks may be giving out too much easy credit and could be hit hard if oil prices drop and force the Russian middle class to default on many loans.

Economists are warning Russian banks that bad loans could become a large problem, as their retail loan portfolio soars. Retail loans made up 7.8% of the country's GDP in 2006, with a value of over $76 billion. Experts warn that banks may be giving out too much easy credit and could be hit hard if oil prices drop and force the Russian middle class to default on many loans.

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russia

Russia Aims Away From Fossil Fuels

President Putin sent a clear message that he wants Russia to rid itself of its dependence on fossil fuels. He encouraged businesses to invest in innovative and efficient technologies, an area in which the government is expected to invest billions. Much of the responsibility for these changes will fall on newly appointed deputy prime minister Sergei Ivanov.

President Putin sent a clear message that he wants Russia to rid itself of its dependence on fossil fuels. He encouraged businesses to invest in innovative and efficient technologies, an area in which the government is expected to invest billions. Much of the responsibility for these changes will fall on newly appointed deputy prime minister Sergei Ivanov.

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russia

Russia Working on WTO Entry

Russia still has several hurdles to overcome before it can become a part of the World Trade Organization. Russia is the last major economy to not be a part of the 150-member trade group. Among the remaining problems are the matters of clearing up intellectual property rights with the US and signing a free trade agreement with Georgia. Membership into the organization could bring Russia's economy up to $10 billion annually.

Russia still has several hurdles to overcome before it can become a part of the World Trade Organization. Russia is the last major economy to not be a part of the 150-member trade group. Among the remaining problems are the matters of clearing up intellectual property rights with the US and signing a free trade agreement with Georgia. Membership into the organization could bring Russia's economy up to $10 billion annually.

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russia

China, India, Russia Vow to Cooperate on Regional Disputes

The foreign ministers of China, India, and Russia pledged to cooperate and solve disputes ranging from energy to insurgency issues. The three foreign ministers agreed that cooperation is the right approach to regional and global affairs. They also called for strengthening the United Nations to promote the "democratisation of international relations" to build a multi-polar world.

The foreign ministers of China, India, and Russia pledged to cooperate and solve disputes ranging from energy to insurgency issues. The three foreign ministers agreed that cooperation is the right approach to regional and global affairs. They also called for strengthening the United Nations to promote the "democratisation of international relations" to build a multi-polar world.

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russia

HSBC First UK Lender to Build Presence in Russia

HSBC, the biggest European bank, has applied for a license to provide personal banking services in Russia. The lender wants to add retail banking to its growing corporate and investment banking business in the country. According to HSBC Chairman Stephen Green, the retail banking sector in Russia was crying out for good quality service from international competitors. HSBC's retail plan would boost the lender's profile in the fast-growing economy.

HSBC, the biggest European bank, has applied for a license to provide personal banking services in Russia. The lender wants to add retail banking to its growing corporate and investment banking business in the country. According to HSBC Chairman Stephen Green, the retail banking sector in Russia was crying out for good quality service from international competitors. HSBC's retail plan would boost the lender's profile in the fast-growing economy.

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russia

The Rise of Organized Crime in Asia

ORGANIZED CRIME presents a challenge to sustained economic growth for many Asian countries. Cargo theft, piracy, counterfeit currency, and corruption have become more prevalent as the region has developed and become more connected to the global economy. The failure of host governments to curb organized crime has eroded the profitability of investment in the region and seems to have discouraged prospective trade partners. In addition to the economic loss, these elements pose a broader threat as gang revenue has been used to fund terrorist groups and other non-state actors. Given these threats, the business community and host governments must collaborate to address the rise in organized crime.

Types of criminal activity vary widely . Cargo theft has been among the most common. Cargo holds are often poorly secured, and cargo containers poorly sealed. For gangs, cargo theft has proven to be less costly than the drug trade and so offers higher returns. Many former drug smugglers and established gangs have shifted their focus to ports where they siphon off cargo. Sea piracy has been another concern. In fact, Asia has the highest piracy rate worldwide. According to the International Maritime Organization, there were 266 reported cases of piracy in 2005. Southeast Asia accounted for 117 cases.1 Counterfeit currency has recently become another problem. In March 2006, the Chinese government announced an influx of counterfeit American $100 bills. The fake currency was presumably made in North Korea to be sold to Chinese and Taiwanese gangs. North Korea earns approximately $15 to $25 million each year from counterfeit currency.2

Roots of Organized Crime
There are several factors behind the growth of crime syndicates in Asia. Generally speaking, global commerce and the reduction of the state sector have presented an opportunity for criminal elements. Gangs have benefited from the deregulation of the economy. They have often stepped up activity to fill the gap left by a government scale-back.3 Furthermore, e-commerce can not yet be effectively regulated, and the reliance on the Internet as a means of growth poses problems. Gangs have used electronic communications to establish transnational ties, and the current lack of Internet oversight allows these groups to compromise the security of online transactions of legitimate businesses. Many groups have successfully hacked bank systems and online government records.4

Another component which is more specific to Asia concerns the role of labor shortages. The acute need for labor has affected the quality of the Asian workforce. To take the case of Malaysia, the need for manufacturing labor has led companies to employ foreign workers. Up to 75 percent of a factory workforce can be foreign-born.5 Many argue the prevalence of non-native workers has helped erode the quality of the regional workforce. Background checks are extremely lax, and many workers have ties to criminal gangs or come from regions hostile to American and Western business interests.

The linkage between organized crime, host governments, and legitimate businesses are also an important factor. Corruption has become common throughout the region and threatens long-term development. Organized crime has thrived in part because it can operate alongside a legitimate business. Crime exploits, rather than disrupts, a legitimate business.6 Gangs have established extensive contacts with government officials and private business and have integrated themselves with the broader economy. Gang-controlled front businesses have become more common, and many legal groups have acquiesced to gang demands. The longer gangs can operate in such a manner, the harder it will be for governments to disentangle organized crimes from legitimate businesses.

Assessing Threats
There is significant debate as to which country constitutes the greatest threat to the business community. Malaysia and Indonesia were traditionally seen as among the most severe threats. The Malaysian Mamuk gang has been the bane of the Malaysian transport system and has siphoned cargo away from legitimate businesses for over twenty years.7 China has usually been seen as comparatively crime-free and uncorrupt. However, some now argue that the extensive links between the government and Chinese Triads make China the number one threat to foreign businesses.8 Moreover, there seems to be no consensus over which type of criminal activity is most prevalent or most threatening. Asian officials are more likely to see gambling and extortion as more threatening than corruption or human smuggling.

The effects of crime on legitimate business are well documented.-studied. The United States are primarily concerned with the piracy of intellectual property . Many organized crime groups work exclusively with pirated materials. Piracy has undercut profit for players throughout the globe, making investment in the region less likely. Cargo theft and extortion have a similar deterrent effect.
A more general concern has to do with the infiltration of organized crime to legitimate sectors. Most criminal groups want to be seen as legitimate. They foster relationships with government officials and local businesses. The result is corrupt operating environment that is biased against foreign businesses and consumers.

There are several measures companies can take to counteract the effects of organized crime. Risk management firm FirstAdvantage recently conducted a multiyear study to assess the risks of operating in less developed countries.9 The study found the majority of businesses do not take adequate safeguards. Employees are not sufficiently screened hence many workers have maintained contacts to gangs. Many businesses rely on third parties for the storage of inventory, and the use of external groups can expose cargo to gang elements. The study also found many companies often misallocate security spending. Businesses have employed a cookie-cutter approach to security that does not account for differences in criminal activity.

The FirstAdvantage study offers suggestions for those companies that operate in less developed regions. Suggested measures include constant vigilance, extensive employee training to recognize security threats, and a holistic view toward security. FirstAdvantage recommends companies evaluate port security throughout the supply chain. They should become familiar with common gang tactics used during cargo heists. There are several private sector efforts to address the threats of organized crime. The Technology Asset Protection Association includes over 200 multinational corporations and mandates transportation security requirements. TAPA requirements have helped reduce losses through theft by up to 40 percent.10 These ventures help minimize the effects of organized crimes on businesses. But in the long-term, the actions of regional governments will be more important than measures taken by the private sector.

Asian organized crimes remain mostly a regional problem. Regional cooperation at the government level therefore appears to be the most effective defense against organized crimes. Right now, local law enforcement groups have been more focused on traditional criminal activities like prostitution and violence than they are on transnational crimes. But, there have been encouraging first steps towards regional cooperation. Last November, Japan, Singapore, the Philippines, and eight other countries signed a treaty to cooperate on anti-piracy measures. The Japanese Coast Guard has agreed to step up patrols, especially in the Malacca Straits, and the Japanese government has pledged to help lead regional efforts against organized crime.11

The private sector should encourage these regulatory measures and pressure governments to take more aggressive stands against organized crimes and corruption. At the government level, the United States and other countries should be more forthcoming toward Asian law enforcement groups, helping them develop effective countermeasures against organized crime. Asian local law enforcement spokesmen have complained that the United States and Western governments do not offer sufficient investment or treat Asian counterparts as equals. Without global cooperation throughout public and private sectors, organized crime will continue to expand.

ORGANIZED CRIME presents a challenge to sustained economic growth for many Asian countries. Cargo theft, piracy, counterfeit currency, and corruption have become more prevalent as the region has developed and become more connected to the global economy. The failure of host governments to curb organized crime has eroded the profitability of investment in the region and seems to have discouraged prospective trade partners. In addition to the economic loss, these elements pose a broader threat as gang revenue has been used to fund terrorist groups and other non-state actors. Given these threats, the business community and host governments must collaborate to address the rise in organized crime.

Types of criminal activity vary widely . Cargo theft has been among the most common. Cargo holds are often poorly secured, and cargo containers poorly sealed. For gangs, cargo theft has proven to be less costly than the drug trade and so offers higher returns. Many former drug smugglers and established gangs have shifted their focus to ports where they siphon off cargo. Sea piracy has been another concern. In fact, Asia has the highest piracy rate worldwide. According to the International Maritime Organization, there were 266 reported cases of piracy in 2005. Southeast Asia accounted for 117 cases.1 Counterfeit currency has recently become another problem. In March 2006, the Chinese government announced an influx of counterfeit American $100 bills. The fake currency was presumably made in North Korea to be sold to Chinese and Taiwanese gangs. North Korea earns approximately $15 to $25 million each year from counterfeit currency.2

Roots of Organized Crime
There are several factors behind the growth of crime syndicates in Asia. Generally speaking, global commerce and the reduction of the state sector have presented an opportunity for criminal elements. Gangs have benefited from the deregulation of the economy. They have often stepped up activity to fill the gap left by a government scale-back.3 Furthermore, e-commerce can not yet be effectively regulated, and the reliance on the Internet as a means of growth poses problems. Gangs have used electronic communications to establish transnational ties, and the current lack of Internet oversight allows these groups to compromise the security of online transactions of legitimate businesses. Many groups have successfully hacked bank systems and online government records.4

Another component which is more specific to Asia concerns the role of labor shortages. The acute need for labor has affected the quality of the Asian workforce. To take the case of Malaysia, the need for manufacturing labor has led companies to employ foreign workers. Up to 75 percent of a factory workforce can be foreign-born.5 Many argue the prevalence of non-native workers has helped erode the quality of the regional workforce. Background checks are extremely lax, and many workers have ties to criminal gangs or come from regions hostile to American and Western business interests.

The linkage between organized crime, host governments, and legitimate businesses are also an important factor. Corruption has become common throughout the region and threatens long-term development. Organized crime has thrived in part because it can operate alongside a legitimate business. Crime exploits, rather than disrupts, a legitimate business.6 Gangs have established extensive contacts with government officials and private business and have integrated themselves with the broader economy. Gang-controlled front businesses have become more common, and many legal groups have acquiesced to gang demands. The longer gangs can operate in such a manner, the harder it will be for governments to disentangle organized crimes from legitimate businesses.

Assessing Threats
There is significant debate as to which country constitutes the greatest threat to the business community. Malaysia and Indonesia were traditionally seen as among the most severe threats. The Malaysian Mamuk gang has been the bane of the Malaysian transport system and has siphoned cargo away from legitimate businesses for over twenty years.7 China has usually been seen as comparatively crime-free and uncorrupt. However, some now argue that the extensive links between the government and Chinese Triads make China the number one threat to foreign businesses.8 Moreover, there seems to be no consensus over which type of criminal activity is most prevalent or most threatening. Asian officials are more likely to see gambling and extortion as more threatening than corruption or human smuggling.

The effects of crime on legitimate business are well documented.-studied. The United States are primarily concerned with the piracy of intellectual property . Many organized crime groups work exclusively with pirated materials. Piracy has undercut profit for players throughout the globe, making investment in the region less likely. Cargo theft and extortion have a similar deterrent effect.
A more general concern has to do with the infiltration of organized crime to legitimate sectors. Most criminal groups want to be seen as legitimate. They foster relationships with government officials and local businesses. The result is corrupt operating environment that is biased against foreign businesses and consumers.

There are several measures companies can take to counteract the effects of organized crime. Risk management firm FirstAdvantage recently conducted a multiyear study to assess the risks of operating in less developed countries.9 The study found the majority of businesses do not take adequate safeguards. Employees are not sufficiently screened hence many workers have maintained contacts to gangs. Many businesses rely on third parties for the storage of inventory, and the use of external groups can expose cargo to gang elements. The study also found many companies often misallocate security spending. Businesses have employed a cookie-cutter approach to security that does not account for differences in criminal activity.

The FirstAdvantage study offers suggestions for those companies that operate in less developed regions. Suggested measures include constant vigilance, extensive employee training to recognize security threats, and a holistic view toward security. FirstAdvantage recommends companies evaluate port security throughout the supply chain. They should become familiar with common gang tactics used during cargo heists. There are several private sector efforts to address the threats of organized crime. The Technology Asset Protection Association includes over 200 multinational corporations and mandates transportation security requirements. TAPA requirements have helped reduce losses through theft by up to 40 percent.10 These ventures help minimize the effects of organized crimes on businesses. But in the long-term, the actions of regional governments will be more important than measures taken by the private sector.

Asian organized crimes remain mostly a regional problem. Regional cooperation at the government level therefore appears to be the most effective defense against organized crimes. Right now, local law enforcement groups have been more focused on traditional criminal activities like prostitution and violence than they are on transnational crimes. But, there have been encouraging first steps towards regional cooperation. Last November, Japan, Singapore, the Philippines, and eight other countries signed a treaty to cooperate on anti-piracy measures. The Japanese Coast Guard has agreed to step up patrols, especially in the Malacca Straits, and the Japanese government has pledged to help lead regional efforts against organized crime.11

The private sector should encourage these regulatory measures and pressure governments to take more aggressive stands against organized crimes and corruption. At the government level, the United States and other countries should be more forthcoming toward Asian law enforcement groups, helping them develop effective countermeasures against organized crime. Asian local law enforcement spokesmen have complained that the United States and Western governments do not offer sufficient investment or treat Asian counterparts as equals. Without global cooperation throughout public and private sectors, organized crime will continue to expand.

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russia

Russia to Decide on Foreign Investor Participation in Economy

Accumulated foreign capital in the Russian economy grew by 18 percent to reach 141.7 billion dollars as of late 2006, according to preliminary estimates. The share of foreign direct investments is the largest – 49.3 percent in Russia Economy. The Russian government discussed a bill to make foreign investments in Russian strategic organizations. Russia is neither going to restrict nor grant foreign investors access to strategic branches of the Russian economy through law.

Accumulated foreign capital in the Russian economy grew by 18 percent to reach 141.7 billion dollars as of late 2006, according to preliminary estimates. The share of foreign direct investments is the largest – 49.3 percent in Russia Economy. The Russian government discussed a bill to make foreign investments in Russian strategic organizations. Russia is neither going to restrict nor grant foreign investors access to strategic branches of the Russian economy through law.

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russia

Russian GDP Grew 6.7% in 2006

Russia's national statistics body estimates that the Russian GDP grew about 6.7% in 2006. The construction sector showed the largest growth, increasing 14%. Other increases were found in the manufacturing industries (4.9%), mining (2.1%), agriculture (1.7%), transport and communications (10%), the financial sector (10%), and wholesale and retail trade (8.7%).

Russia's national statistics body estimates that the Russian GDP grew about 6.7% in 2006. The construction sector showed the largest growth, increasing 14%. Other increases were found in the manufacturing industries (4.9%), mining (2.1%), agriculture (1.7%), transport and communications (10%), the financial sector (10%), and wholesale and retail trade (8.7%).

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russia

Russian Companies to Double Investment in Armenia

VimpelCom, RusAl and Gazprom, large Russian telecommunication, metal and energy firms respectively, plan on doubling their investments in Armenia. Growth in trade between the two countries has grown steadily for the past several years, and Russia is currently the second largest foreign investor in Armenia. The investments planned for the near future are expected to bring Russian investment from $800 million to $1.5 billion.

VimpelCom, RusAl and Gazprom, large Russian telecommunication, metal and energy firms respectively, plan on doubling their investments in Armenia. Growth in trade between the two countries has grown steadily for the past several years, and Russia is currently the second largest foreign investor in Armenia. The investments planned for the near future are expected to bring Russian investment from $800 million to $1.5 billion.

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russia

Fiscal Centralization and Decentralization in Russia and China

In this paper we review the fiscal evolution of China and Russia, asking how the process of creating a separate, tax-financed public sector in the two countries differed. We observe that the size of China's budget sector was consistently smaller than in Russia and that budget decentralization was consistently greater. We see both pros and cons in China's decentralization. Local governments that were allowed to keep marginal increases in local tax revenue had incentives to pursue growth-supporting policies, including support for foreign investment and export-oriented production. However, in the absence of financial markets, there were barriers to investment outside the local region, resulting in inefficient use of capital and protectionism. Fiscal deficits and rapid expansion of credit have threatened stability in both countries, but China has proved more successful than Russia in managing macroeconomic policies. Finally, we argue that Russia's status as a petro-state makes management of the public sector particularly difficult. In Russia, recentralization has been associated with expansion of state ownership of enterprises and production by territorial governments, state ministries, state banks, and the natural monopolies.

In this paper we review the fiscal evolution of China and Russia, asking how the process of creating a separate, tax-financed public sector in the two countries differed. We observe that the size of China's budget sector was consistently smaller than in Russia and that budget decentralization was consistently greater. We see both pros and cons in China's decentralization. Local governments that were allowed to keep marginal increases in local tax revenue had incentives to pursue growth-supporting policies, including support for foreign investment and export-oriented production. However, in the absence of financial markets, there were barriers to investment outside the local region, resulting in inefficient use of capital and protectionism. Fiscal deficits and rapid expansion of credit have threatened stability in both countries, but China has proved more successful than Russia in managing macroeconomic policies. Finally, we argue that Russia's status as a petro-state makes management of the public sector particularly difficult. In Russia, recentralization has been associated with expansion of state ownership of enterprises and production by territorial governments, state ministries, state banks, and the natural monopolies.

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russia

Russia's Inflation Still Takes a Toll

Last Friday Russia's Central Bank released the data of the consumer price index in 2006, a 9.7% hike, and Core inflation increased by 7.8% in December 2006. Although Russia's economic forecasts expect the inflation rate to fall in the next few years, its economy continuesto suffer from high inflation rate.

Last Friday Russia's Central Bank released the data of the consumer price index in 2006, a 9.7% hike, and Core inflation increased by 7.8% in December 2006. Although Russia's economic forecasts expect the inflation rate to fall in the next few years, its economy continuesto suffer from high inflation rate.

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russia

Russia Becomes More Attractive to Investors

Foreign direct investment (FDI) in Russia nearly doubled in 2006, reaching $28.4 billion versus $14.6 billion the previous year, according to a recent report by the United Nations Conference on Trade and Development (UNCTAD).

This makes Russia the largest FDI recipient of all the countries in southeast Europe and the Commonwealth of Independent States.

The geography of FDI is gradually expanding. The main factors behind Russia's investment attractiveness are high economic growth rates, a consumer boom, and the huge potential of the domestic market. For several years in a row, Russia's GDP has been growing by 6% annually. Growth reached 6.9% in 2006 compared with 6.4% the previous year.

Foreign direct investment (FDI) in Russia nearly doubled in 2006, reaching $28.4 billion versus $14.6 billion the previous year, according to a recent report by the United Nations Conference on Trade and Development (UNCTAD).

This makes Russia the largest FDI recipient of all the countries in southeast Europe and the Commonwealth of Independent States.

The geography of FDI is gradually expanding. The main factors behind Russia's investment attractiveness are high economic growth rates, a consumer boom, and the huge potential of the domestic market. For several years in a row, Russia's GDP has been growing by 6% annually. Growth reached 6.9% in 2006 compared with 6.4% the previous year.

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russia

Commodity Prices Remain Crucial to Russian Economy

Russia's economic growth will continue in 2007. The growth of the Russian economy extentively depends on external factors because raw materials are Russia's main export. The volume of hydrocarbons exports will remain stable, while prices of products from Russia will continue to lose heir competitive advantage.

Russia's economic growth will continue in 2007. The growth of the Russian economy extentively depends on external factors because raw materials are Russia's main export. The volume of hydrocarbons exports will remain stable, while prices of products from Russia will continue to lose heir competitive advantage.

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russia

Russia's Banks Prosper

The year 2006 has been quite a successful one for Russian banks on the individual deposits market. Between September 2005 and September 2006, the value of Russians' deposits grew by more than 30% from 2.41 trillion rubles ($91.35 billion) to 3.26 trillion rubles ($123.72 billion). Experts say that the market's potential is not exhausted yet.

 

At present, only one fourth of Russians keep their savings in bank accounts. The rest prefer to keep money at home, spend it right away or invest in more profitable tools than a bank deposit. However, experts from Tsirkon, a research group, believe that as the economic situation in the country improves and people's incomes grow, the share of people using bank deposits as a financial tool for keeping their savings will increase. So the growth in deposits is very likely to continue in 2007.

 

This is good news for Russian banks. Attracting individual deposits is a priority for them, especially those banks that are not among the top 20-30. This money is necessary for financial organizations to develop their loan activities and expand on the mortgage, consumer, car and corporate loan markets. The problem is that for banks to increase lending, they are required to increase the amount reserved for possible losses. The bigger the amount set aside for reserves, the smaller a bank's available capital becomes, threatening to fall below the capital adequacy requirement set by the Central Bank.

It is important to note that the problem is more complicated than it may seem. In order to prevent these negative developments, banks have to do one of three things: refinance their loan portfolios by attracting people's deposits, find cheaper - and, better, in the long term - borrowing on the capital market, or receive financing from their founders. The truth is that even large Russian banks sometimes cannot refinance their loan portfolios through cheap borrowing, because not all of them have the necessary credit ratings and not all of them have a chance of profitably placing their assets on the capital market. Moreover, very few banks can hope that their founders will keep increasing their capital.

So the best way for banks to avoid problems with capital adequacy is to attract deposits from private investors. The above quoted figures testifying to a bigger influx of money into bank deposits should make them happy. Yet analysts say that the situation is not as bright as it may seem. Sberbank has profited more than others from the deposit boom in 2006. Its individual deposits surged by 30.7% in one year from November 1, 2005 to November 1, 2006. This growth was likely caused by people's confidence in the successor to the Soviet Savings Bank. It also helped that Sberbank took steps to increase the competitiveness of its deposit line for the general population.

It would be fair to note that other banks, including Sberbank's direct rivals among Russian lending institutions and subsidiaries of large foreign financial groups, have also made the most of the deposit boom. However, Sberbank benefited not only from a net increase of attracted funds. The value of its long-term deposits - those made for more than three years, which are the most important ones for any bank - has surged by 45.5%.

Other banks cannot boast such achievements. Analysts acknowledge that Russians do not usually risk making long-term deposits with private banks. Although it has been eight and a half years since the latest banking crisis in Russia and a deposit insurance system has been set up, people are afraid to leave their money with banks for a long time. Sberbank is the only exception, as Russians still associate it with the highest degree of reliability.

Perhaps, the only institutions that have a chance of catching up with Sberbank in this area are the Vneshtorgbank (VTB), which is seen by private investors as a state-owned bank, and subsidiaries of foreign lending institutions that represent well-known brands and are respected by Russians as foreign banks.

 

This article provided by RIA Novastia

The year 2006 has been quite a successful one for Russian banks on the individual deposits market. Between September 2005 and September 2006, the value of Russians' deposits grew by more than 30% from 2.41 trillion rubles ($91.35 billion) to 3.26 trillion rubles ($123.72 billion). Experts say that the market's potential is not exhausted yet.

 

At present, only one fourth of Russians keep their savings in bank accounts. The rest prefer to keep money at home, spend it right away or invest in more profitable tools than a bank deposit. However, experts from Tsirkon, a research group, believe that as the economic situation in the country improves and people's incomes grow, the share of people using bank deposits as a financial tool for keeping their savings will increase. So the growth in deposits is very likely to continue in 2007.

 

This is good news for Russian banks. Attracting individual deposits is a priority for them, especially those banks that are not among the top 20-30. This money is necessary for financial organizations to develop their loan activities and expand on the mortgage, consumer, car and corporate loan markets. The problem is that for banks to increase lending, they are required to increase the amount reserved for possible losses. The bigger the amount set aside for reserves, the smaller a bank's available capital becomes, threatening to fall below the capital adequacy requirement set by the Central Bank.

It is important to note that the problem is more complicated than it may seem. In order to prevent these negative developments, banks have to do one of three things: refinance their loan portfolios by attracting people's deposits, find cheaper - and, better, in the long term - borrowing on the capital market, or receive financing from their founders. The truth is that even large Russian banks sometimes cannot refinance their loan portfolios through cheap borrowing, because not all of them have the necessary credit ratings and not all of them have a chance of profitably placing their assets on the capital market. Moreover, very few banks can hope that their founders will keep increasing their capital.

So the best way for banks to avoid problems with capital adequacy is to attract deposits from private investors. The above quoted figures testifying to a bigger influx of money into bank deposits should make them happy. Yet analysts say that the situation is not as bright as it may seem. Sberbank has profited more than others from the deposit boom in 2006. Its individual deposits surged by 30.7% in one year from November 1, 2005 to November 1, 2006. This growth was likely caused by people's confidence in the successor to the Soviet Savings Bank. It also helped that Sberbank took steps to increase the competitiveness of its deposit line for the general population.

It would be fair to note that other banks, including Sberbank's direct rivals among Russian lending institutions and subsidiaries of large foreign financial groups, have also made the most of the deposit boom. However, Sberbank benefited not only from a net increase of attracted funds. The value of its long-term deposits - those made for more than three years, which are the most important ones for any bank - has surged by 45.5%.

Other banks cannot boast such achievements. Analysts acknowledge that Russians do not usually risk making long-term deposits with private banks. Although it has been eight and a half years since the latest banking crisis in Russia and a deposit insurance system has been set up, people are afraid to leave their money with banks for a long time. Sberbank is the only exception, as Russians still associate it with the highest degree of reliability.

Perhaps, the only institutions that have a chance of catching up with Sberbank in this area are the Vneshtorgbank (VTB), which is seen by private investors as a state-owned bank, and subsidiaries of foreign lending institutions that represent well-known brands and are respected by Russians as foreign banks.

 

This article provided by RIA Novastia

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russia

Russia on the Threshold of a Normal Market

Last year was not such a bad year for Russia. Annual GDP growth continued at a higher rate (6.9%) then last year's (6.4%). In addition, inflation fell, savings are on the rise, consumption is steady, investment is growing, and the national budget is stable. Overall, Russia is in pretty good shape.

Last year was not such a bad year for Russia. Annual GDP growth continued at a higher rate (6.9%) then last year's (6.4%). In addition, inflation fell, savings are on the rise, consumption is steady, investment is growing, and the national budget is stable. Overall, Russia is in pretty good shape.

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russia

Russia's Fiscal Hawks Call for Watch on Inflation

Kurdrin, a leading Cabinte member, called on the government to watch inflationary pressures caused by capital increased inflows. Russia does not wish to be the target of speculative attacks, nonetheless , Russia may continue to allow the ruble to appreciate further.

Kurdrin, a leading Cabinte member, called on the government to watch inflationary pressures caused by capital increased inflows. Russia does not wish to be the target of speculative attacks, nonetheless , Russia may continue to allow the ruble to appreciate further.

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russia

Russia's Gold and Foreign Exchange Reserves Up by $US2bn

The Central Bank of Russia announced that Russia had increased its reserves to $US295.8bn. Russia will continue to buy foreign exchanges aggressively. Russia remains third behind China and Japan as reserve giants.

The Central Bank of Russia announced that Russia had increased its reserves to $US295.8bn. Russia will continue to buy foreign exchanges aggressively. Russia remains third behind China and Japan as reserve giants.

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Smart Investors Watch The Kremlin

As Russia's political and economic power grows and becomes more centralized within the Kremlin, invetsors must decide which sectors will be considered "strategically important" and act accordingly.

As Russia's political and economic power grows and becomes more centralized within the Kremlin, invetsors must decide which sectors will be considered "strategically important" and act accordingly.

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Russia Clears $6.5Bln for Sakhalin-1

The government has approved $6.5 billion of costs spent by the Exxon Mobil-led Sakhalin-1 group in the first phase of its major oil and gas project, the Industry and Energy Ministry said Thursday.

The government has approved $6.5 billion of costs spent by the Exxon Mobil-led Sakhalin-1 group in the first phase of its major oil and gas project, the Industry and Energy Ministry said Thursday.

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Russia's Prime Minister Breaks the Bank

Russia's new and improved Development Bank will become the "most poerful financial and political institution in Russia. PM Mikhail Fradkov will manage and expand the Bank's capital from 70 billion to 145 billion rubles and thus increase its influence.

Russia's new and improved Development Bank will become the "most poerful financial and political institution in Russia. PM Mikhail Fradkov will manage and expand the Bank's capital from 70 billion to 145 billion rubles and thus increase its influence.

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Moscow Market Traders Offer Secret Bank Databases

Copies of credit databases are being sold at Russian markets. The information of 3 million people has possibly been compromised. Bank leaks are said to be responsible. The banks being held responsible deny the database's authenticity.

Copies of credit databases are being sold at Russian markets. The information of 3 million people has possibly been compromised. Bank leaks are said to be responsible. The banks being held responsible deny the database's authenticity.

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The Central Bank of Russia's Monetary Base ( Broad Definitions)

The CBRF's updated table shows Russia's monetary base to be at 3.5 Trillion.

The CBRF's updated table shows Russia's monetary base to be at 3.5 Trillion.

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Russia Doesn't Match Global Forecasts for Crude

Crude prices are expected to decline in the next few years according to forecasts by Russia's Economic Development Minister, German Gref. However, delayed investment and increased demand points to another direction of future oil prices. Russia's crude production could be out paced by Caspian crude coming from markets in Asia.

Crude prices are expected to decline in the next few years according to forecasts by Russia's Economic Development Minister, German Gref. However, delayed investment and increased demand points to another direction of future oil prices. Russia's crude production could be out paced by Caspian crude coming from markets in Asia.

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Russia's Deputy Head of The Natural Resources Ministry Spooks Investors

Oleg Mitvol announced an investigation into environmental breaches by Peter Hambro Mining, a major player in the gold market. However, there has been no official documentation of the investigation. The company's stocks dropped significantly in response to the anouncement. CEO Peter Hambro is confident his company's stocks will bounce back despite this blemish, but investor remain weary.

Oleg Mitvol announced an investigation into environmental breaches by Peter Hambro Mining, a major player in the gold market. However, there has been no official documentation of the investigation. The company's stocks dropped significantly in response to the anouncement. CEO Peter Hambro is confident his company's stocks will bounce back despite this blemish, but investor remain weary.

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Russian and Indonesian Presidents Widen Energy and Arms Ties

Russian President Putin and Indonesian counterpart Yudyohono agreed to expand their energy ties and arms trade. Both presidents would like to strengthen cooperation between the two countries. During their talks in Moscow, both sigend several agreements including on cooperation in space technology, nuclear energy, military purchases and tourism.

Russian President Putin and Indonesian counterpart Yudyohono agreed to expand their energy ties and arms trade. Both presidents would like to strengthen cooperation between the two countries. During their talks in Moscow, both sigend several agreements including on cooperation in space technology, nuclear energy, military purchases and tourism.

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US and Asian Economies Differ Over Free Trade Bloc Process

The United States and Asian economies are at odds on how to implement a plan to set up a Asia-Pacific free trade area. The Asian economies want to start a free trade area among themselves before considering a free trade area for the Asia-Pacific. However, the US government wants to implement these plans simulataneously. Washington is pushing a prompt implementation of the Asia-Pacific plan because it would jolt non-Apec members, such as Brazil and India, to restart talks for a new global trace pact.

The United States and Asian economies are at odds on how to implement a plan to set up a Asia-Pacific free trade area. The Asian economies want to start a free trade area among themselves before considering a free trade area for the Asia-Pacific. However, the US government wants to implement these plans simulataneously. Washington is pushing a prompt implementation of the Asia-Pacific plan because it would jolt non-Apec members, such as Brazil and India, to restart talks for a new global trace pact.

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Russia's RTS Reaches Record High As Crude Climbs

Braced by consistent gains by oil giant OAO Lukoi and natural gas giant OAO Gazprom. OPEC agreed to decrease oil output by 1.2 barrels last month while cold winter weather increased demand for energy throughout the Northern Hemisphere, resulting in the highest crude oil prices since September 29th.

Braced by consistent gains by oil giant OAO Lukoi and natural gas giant OAO Gazprom. OPEC agreed to decrease oil output by 1.2 barrels last month while cold winter weather increased demand for energy throughout the Northern Hemisphere, resulting in the highest crude oil prices since September 29th.

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russia

Is Inflation Russia's Biggest Risk?

According to the OECD, one of the biggest risks to the Russian economy is inflation. Inflationary pressures are said to be affected by the huge money flows created by crude oil exports. The "Stabilization Fund" could be used to offset tax burdens on oil processing companies thus decreasing pressure on prices to rise. There are other "engines of inflation" at work like labor costs in domestic non-traded sectors.

According to the OECD, one of the biggest risks to the Russian economy is inflation. Inflationary pressures are said to be affected by the huge money flows created by crude oil exports. The "Stabilization Fund" could be used to offset tax burdens on oil processing companies thus decreasing pressure on prices to rise. There are other "engines of inflation" at work like labor costs in domestic non-traded sectors.

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Russia Threatens Ban Against EU Animal Products

Russia has threatened to force an embargo on imports of EU animal products next year, when Romania and Bulgaria join the bloc. The Russian authorities have notified the European Commission of their intention to block EU animal product exports once the two countries join the bloc. The Russian threat is centred on concerns over swine fever which remains an issue in Romania and Bulgaria.

Russia has threatened to force an embargo on imports of EU animal products next year, when Romania and Bulgaria join the bloc. The Russian authorities have notified the European Commission of their intention to block EU animal product exports once the two countries join the bloc. The Russian threat is centred on concerns over swine fever which remains an issue in Romania and Bulgaria.

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Central Bankers Upbeat Over Global Growth Next Year

The world's top central bankers discussed the future of global growth. There seems to be a consensus that the global economy was strong and sustainable, but in order to mitigate risks banks would have to fix their attention on inflation. Some hint to continued raises in interest rates to offset "overly optimistic investment".

The world's top central bankers discussed the future of global growth. There seems to be a consensus that the global economy was strong and sustainable, but in order to mitigate risks banks would have to fix their attention on inflation. Some hint to continued raises in interest rates to offset "overly optimistic investment".

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russia

APEC Shelves Free Trade Zone Plans

The Asian Pacific Economic Co-operation forum has shelved plans to create a "vast free trade area" that would aggregate the numerous bi-lateral and regional tarde agreements in the region. The ambitious proposal lost mometum to various side deals at the forum. APEC has shifted its focus to resurrecting talks on the Doha round of the WTO.

The Asian Pacific Economic Co-operation forum has shelved plans to create a "vast free trade area" that would aggregate the numerous bi-lateral and regional tarde agreements in the region. The ambitious proposal lost mometum to various side deals at the forum. APEC has shifted its focus to resurrecting talks on the Doha round of the WTO.

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No Russia-ASEAN Summit This Year

The Russian President Vladimir Putin won't be coming to Cebu, the Philippines, and that's as good as official and final. The reason is, the second Russia-ASEAN Summit that could have been organized back-to-back with an annual ASEAN Summit in that city, is not fit for a show.

Officially in any Foreign Ministry worth its salt, be it Russian or Asian ministry, you may get a comment that there was no invitation for Mr. Putin to come to the summit, so we are talking about wrong assumptions and failed expectations. Besides, the first Russia-ASEAN summit in Kuala Lumpur on December 13th last year ended with an obligation to hold "regular", not "annual", summits.

But that's very feeble explanation, because there was a lot of unofficial talk about the Cebu summit. So what really happened? First of all, the Russian leader takes Moscow's ties to Asia in general, and the ASEAN 10 in particular, very close to his heart. You may say there's a lot of expectations in Moscow from everything and anything Asia-oriented (and we shall elaborate on that a bit later). But there is one thing that Mr. Putin hates, and that is "summits for summit's sake". The style of his presidency presumes that a presidential visit is a culmination of work of a lot of people, with serious agreements signed and shown to the voters. Making a trip across the globe and delivering a speech is definitely not enough to stir Mr. Putin's juices.

A year ago in KL three documents have been signed between Russia and ASEAN. These were: the Joint Declaration on progressive & comprehensive partnership; the Program of Action for 2005-2015 (mentioning trade, industry, energy, transport, antiterrorist cooperation, natural disaster prevention, etc); finally, the agreement on Economic and Development Cooperation. But nothing much happened in these 11 or so months after that summit.

On November 3 a joint committee on cooperation between Russia and ASEAN was hold in Moscow, the co-chairmen being the department heads of the Foreign Ministries. From the Russian side that was Mr. Bakhtiar Khakimov, from the ASEAN side Mr. Luis Cruz, the Philippines. The main issue was a cooperation fund – about 1 million US Dollars that Russia has to invest into a cooperation infrastructure. E-commerce development and studies of the Russian language – that's how some of this money will be spent. But in any case the programs will start only in 2007.

Several discussion groups are agreed to be set up – like, on transnational crime and technological cooperation. Energy security will also be under discussion, as well as many other subjects. But Moscow thinks that all this is not enough to justify a summit right now. You have to start carrying out the agreements reached at the previous summit, first.

The diplomatic sources are saying that the ASEAN side understands and even "respects" Moscow maximalism on the matter. To add, a lot of blame might be put on the Russian bureaucracy, too, and nobody is denying it.

You may feel, though, Russian leadership's deep dissatisfaction with its relations with ASEAN behind all the niceties. The reasons for this can be summed up as "too little, too slow" in business, in spite of almost complete harmony in political and diplomatic contacts.

Gone are the days when the Soviet Union was causing plenty of uneasy feelings in South East Asia. 10 years ago Russia has become ASEAN's Dialogue Partner, and 1 year ago it was elevated to the status of a Summit Partner. Look who is ASEAN's Summit Partner, and especially who is not, and you will see that Moscow is very, very close to ASEAN in global diplomacy and in its views on what the world should look like.

But thinking alike is not making us big trade partners, and that's the source of Moscow's frustration, and sometimes overreaction. The trade between Russia and ASEAN 10 has reached 4 billion dollars in 2004, 5 billion in 2005 and may touch 6 billion in 2006. It's a good show if you look at the growth rate, but a very weak one if you consider that it is still less than 1% of overall trade of both ASEAN and Russia. Moscow is trailing far behind US or China or Australia in that regard.

If you look close at the model of that trade, you will see that basically Russia is supplying ASEAN countries with metals, fertilizers and chemicals in exchange for purchases of commodities like the palm oil, and foodstuffs.

But this is definitely not what Russia wanted from that part of the world. Russia's basic economic problem is not unlike what Indonesia struggled with in the 70-s and 80-s – to diversify export, to eliminate dependence on oil and gas supplies to the world, to develop hi-tech export, be it in aerospace or nuclear power stations or anything else that the Russia researchers are good at.

You cannot hope for that with partners and regions where your hydrocarbon exports are bringing as much revenue as they do now to Russia. But Asia, notably in its South East, does not need Russia oil and gas. You just have to rely on hi-tech in all the exchanges with this area.

Essentially, Moscow was pinning high hopes on Asia to help diversify the Russian economy. And so far these hopes stay almost where they were.
Being a participant in the first and second Russia-ASEAN business forums, as well as in many similar meetings, I may say that we see some measure of success only in the aircraft sales – be it fighter jets or a wonderful Be-200 forest firefighter supplied to Indonesia. That's not enough, compared to the volume of offers made by the various Russian companies.

It's worth noting that anything good that happened to the Russian-ASEAN trade happened on bilateral basis, between businessmen of Russia and some particular countries, like Singapore, Malaysia and Vietnam as leaders. While the capabilities of ASEAN as an organization in facilitation of the hi-tech cooperation may be put in serious doubt. You may even say that the Russia-ASEAN relations history is the history of declarations signed. And you cannot really blame Mr. Putin for trying to change that situation, even by some rather dramatic gestures.

The Russian President Vladimir Putin won't be coming to Cebu, the Philippines, and that's as good as official and final. The reason is, the second Russia-ASEAN Summit that could have been organized back-to-back with an annual ASEAN Summit in that city, is not fit for a show.

Officially in any Foreign Ministry worth its salt, be it Russian or Asian ministry, you may get a comment that there was no invitation for Mr. Putin to come to the summit, so we are talking about wrong assumptions and failed expectations. Besides, the first Russia-ASEAN summit in Kuala Lumpur on December 13th last year ended with an obligation to hold "regular", not "annual", summits.

But that's very feeble explanation, because there was a lot of unofficial talk about the Cebu summit. So what really happened? First of all, the Russian leader takes Moscow's ties to Asia in general, and the ASEAN 10 in particular, very close to his heart. You may say there's a lot of expectations in Moscow from everything and anything Asia-oriented (and we shall elaborate on that a bit later). But there is one thing that Mr. Putin hates, and that is "summits for summit's sake". The style of his presidency presumes that a presidential visit is a culmination of work of a lot of people, with serious agreements signed and shown to the voters. Making a trip across the globe and delivering a speech is definitely not enough to stir Mr. Putin's juices.

A year ago in KL three documents have been signed between Russia and ASEAN. These were: the Joint Declaration on progressive & comprehensive partnership; the Program of Action for 2005-2015 (mentioning trade, industry, energy, transport, antiterrorist cooperation, natural disaster prevention, etc); finally, the agreement on Economic and Development Cooperation. But nothing much happened in these 11 or so months after that summit.

On November 3 a joint committee on cooperation between Russia and ASEAN was hold in Moscow, the co-chairmen being the department heads of the Foreign Ministries. From the Russian side that was Mr. Bakhtiar Khakimov, from the ASEAN side Mr. Luis Cruz, the Philippines. The main issue was a cooperation fund – about 1 million US Dollars that Russia has to invest into a cooperation infrastructure. E-commerce development and studies of the Russian language – that's how some of this money will be spent. But in any case the programs will start only in 2007.

Several discussion groups are agreed to be set up – like, on transnational crime and technological cooperation. Energy security will also be under discussion, as well as many other subjects. But Moscow thinks that all this is not enough to justify a summit right now. You have to start carrying out the agreements reached at the previous summit, first.

The diplomatic sources are saying that the ASEAN side understands and even "respects" Moscow maximalism on the matter. To add, a lot of blame might be put on the Russian bureaucracy, too, and nobody is denying it.

You may feel, though, Russian leadership's deep dissatisfaction with its relations with ASEAN behind all the niceties. The reasons for this can be summed up as "too little, too slow" in business, in spite of almost complete harmony in political and diplomatic contacts.

Gone are the days when the Soviet Union was causing plenty of uneasy feelings in South East Asia. 10 years ago Russia has become ASEAN's Dialogue Partner, and 1 year ago it was elevated to the status of a Summit Partner. Look who is ASEAN's Summit Partner, and especially who is not, and you will see that Moscow is very, very close to ASEAN in global diplomacy and in its views on what the world should look like.

But thinking alike is not making us big trade partners, and that's the source of Moscow's frustration, and sometimes overreaction. The trade between Russia and ASEAN 10 has reached 4 billion dollars in 2004, 5 billion in 2005 and may touch 6 billion in 2006. It's a good show if you look at the growth rate, but a very weak one if you consider that it is still less than 1% of overall trade of both ASEAN and Russia. Moscow is trailing far behind US or China or Australia in that regard.

If you look close at the model of that trade, you will see that basically Russia is supplying ASEAN countries with metals, fertilizers and chemicals in exchange for purchases of commodities like the palm oil, and foodstuffs.

But this is definitely not what Russia wanted from that part of the world. Russia's basic economic problem is not unlike what Indonesia struggled with in the 70-s and 80-s – to diversify export, to eliminate dependence on oil and gas supplies to the world, to develop hi-tech export, be it in aerospace or nuclear power stations or anything else that the Russia researchers are good at.

You cannot hope for that with partners and regions where your hydrocarbon exports are bringing as much revenue as they do now to Russia. But Asia, notably in its South East, does not need Russia oil and gas. You just have to rely on hi-tech in all the exchanges with this area.

Essentially, Moscow was pinning high hopes on Asia to help diversify the Russian economy. And so far these hopes stay almost where they were.
Being a participant in the first and second Russia-ASEAN business forums, as well as in many similar meetings, I may say that we see some measure of success only in the aircraft sales – be it fighter jets or a wonderful Be-200 forest firefighter supplied to Indonesia. That's not enough, compared to the volume of offers made by the various Russian companies.

It's worth noting that anything good that happened to the Russian-ASEAN trade happened on bilateral basis, between businessmen of Russia and some particular countries, like Singapore, Malaysia and Vietnam as leaders. While the capabilities of ASEAN as an organization in facilitation of the hi-tech cooperation may be put in serious doubt. You may even say that the Russia-ASEAN relations history is the history of declarations signed. And you cannot really blame Mr. Putin for trying to change that situation, even by some rather dramatic gestures.

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russia

World Bank Reports Increasing Russian Corruption

The World Bank has published a policy recommendation titled "Administrative and Regulatory Reform in Russia: Addressing Potential Sources of Corruption".

The World Bank has published a policy recommendation titled "Administrative and Regulatory Reform in Russia: Addressing Potential Sources of Corruption".

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Tajikstan President Discusses Energy Partnerships With Gazprom

Tajik President Emomali Rahmonov met with Gazprom Deputy CEO Alexander Ryazanov to discuss future energy partnerships. Gazprom will be licenesed to develop fields with a combined recoverable reserve of 110 billion cubic meters. Ryazanov hopes to find both oil and natural gas during the upcoming exploration process.

Tajik President Emomali Rahmonov met with Gazprom Deputy CEO Alexander Ryazanov to discuss future energy partnerships. Gazprom will be licenesed to develop fields with a combined recoverable reserve of 110 billion cubic meters. Ryazanov hopes to find both oil and natural gas during the upcoming exploration process.

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Russia Inches Closer to WTO Accession

Significant progress has been made in negotiations between the United States and the Russian Federation concerning Russia's accession into the WTO. A Kommersant source inside the US State Department claims "in principle, the question is closed, although the cigars have not yet been lit [to celebrate the end of the process]."

Significant progress has been made in negotiations between the United States and the Russian Federation concerning Russia's accession into the WTO. A Kommersant source inside the US State Department claims "in principle, the question is closed, although the cigars have not yet been lit [to celebrate the end of the process]."

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Chinese and Russian Enterprises to Invest $1 Billion

Chinese and Russian enterprises have reached an agreement to invest $1 billion dollars in 10 projects, with most of these funds flowing from the Chinese to the Russian side. According to trade targets set by both China and Russia, bilateral trade turnover will reach $60-80 billion by 2010.

Chinese and Russian enterprises have reached an agreement to invest $1 billion dollars in 10 projects, with most of these funds flowing from the Chinese to the Russian side. According to trade targets set by both China and Russia, bilateral trade turnover will reach $60-80 billion by 2010.

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Chinese Direct Investment in Russia $700 Million

China's direct investment in Russia is significant while trade dynamics between the two countries has changed. Russia once exported heavy industry to China, but now the roles have reversed with China importing more to Russia. Further growth in Chinese investment and imports is expected to grow.

China's direct investment in Russia is significant while trade dynamics between the two countries has changed. Russia once exported heavy industry to China, but now the roles have reversed with China importing more to Russia. Further growth in Chinese investment and imports is expected to grow.

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Russia's Lead in Arms Exports Doubtful

Last year Russia was ranked No. 1 in the world for the export of arms to developing countries, having concluded agreements on the supply of weapons and military equipment worth $7.1 billion. These are the data supplied by the U.S. Congressional Research Service, which published the report "Conventional Arms Transfers to Developing Nations, 1998-2005." According to this document, excerpts of which appeared in The New York Times, Moscow has leapfrogged ahead of even Washington, which stayed in third place with $6.2 billion in exports. Paris, according to the report, is second. The U.S. Congress estimates that it supplied $6.3 billion worth of arms.

Also of note are some other figures cited by this "sensational" report. First, its data differ widely from the information released early this year by Russia's Federal Commission for Military-Technical Cooperation, which estimates the value of Russian arms exports in 2005 at $6.13 billion. Considering that the total for last year was a record $5.9 billion (in previous years our exporters barely reached $5 billion), the $1 billion difference between the information from the Federal Commission and the Congressional Research Service requires an explanation.

Washington was quick to provide one. In the information on Russian arms exports last year, it included several battalions of ground-based air defense equipment - the Tor-M1 surface-to-air missile system sold to Iran. The report does not say whether Moscow has delivered it or not. It merely states that the deal is worth $700 million and that apart from the missile system, Russia also sold Iran eight aerial tankers able to refuel Iranian aircraft in mid-air. In the total sum of deliveries to Iran the Congress also included the upgrading of Su-24 assault planes, T-72 tanks and MiG-29 fighters. In short, Moscow has become the arms-export champion not only thanks to China and India, but also Iran.

And this is the second thing which calls into question the reliability and accuracy of the analysis done by the Congressional Research Service. The export of military equipment and arms has always been a highly politicized area. Here is a recent example: as soon as President Hugo Chavez of Venezuela began criticizing "American imperialism," the U.S. Department of State at once clamped down an embargo on supplying Caracas with spare parts for American F-16 fighter planes, grounding the Venezuelan air force. When Chavez turned to Russia to provide him with "Su-30s, the world's best fighters" and signed a contract to purchase them, the Department of State imposed sanctions on Russia's Sukhoi aircraft company.

Today, as Vadim Kozyulin, an analyst with Moscow's PIR Center, notes, the U.S. is trying to scare the rest of the world: The Russians are selling their weapons indiscriminately, it says, fomenting ever-recurring armed conflicts. This is a rank untruth. Russia has always respected international agreements on the arms trade. And unlike certain NATO countries, which supply arms even to Georgia, a country threatening war on South Ossetia and Abkhazia, Moscow strictly abides by the requirement not to trade with countries involved in conflicts.

But political motives find expression not only in speculations on export volumes, or in imposing sanctions and exerting heavy pressure on governments that do not buy American arms or buy them at a price not suitable to American firms. The report also reflects political infighting in the U.S. While emphasizing Russia's greater arms supplies abroad, the report points to the U.S.'s sharp retreat from the lead role (by two slots, from first to third place). All this is happening ahead of Congressional elections; meanwhile, only the most complacent in the Democratic camp are not criticizing the Republicans for all their real and imagined sins, starting with the setbacks in Iraq and Afghanistan and ending with the loss of traditional arms markets.

Compared with 2004, the report claims, the U.S. has lost a considerable part of this market. In that year, the value of deals concluded by Washington to deliver arms to developing nations reached $9.4 billion. Russia, on the other hand, posted only $5.4 billion. Now the latter is ahead by $1 billion. The conclusion American voters are supposed to draw is obvious: "Vote Democratic. The Democrats will regain America's leadership in arms export, which means new jobs and more earnings ..."

Meanwhile American arms exports are not faring as badly as some claim. The selfsame New York Times notes that in 2005 the U.S. led in the total value of arms supply contracts with developed and developing countries. Washington's overall receipts totaled $12.8 billion. Although they slipped from their 2004 levels (when weapons sales fetched $13.2 billion), Boeing, Lockheed Martin, General Electric and other multinational majors did not lose out. Take as an example a planned contract to supply Turkey with fifth-generation F-35 fighter jets worth $7 billion. In comparison, the "achievements" credited to Russia by the U.S. Congress in 2005 look unimpressive.

Nor can it be forgotten that the U.S. supplies and even foists its weapons onto NATO countries, which are closed to Russian combat equipment. This is true even of former Warsaw Pact countries, where such equipment has been used for a long time. They cite diverse reasons for this: "A lack of compatibility in basic parameters, calibers, communications and control systems ..." This explanation is beneath any criticism. Greece is a NATO member, but all its air defense systems were made in Russia, which in no way interferes with its command, control or communications links. The simple truth is that not all nations can withstand Washington's pressure, its threatened sanctions, refused credits and aid, etc.

Or take Israel. Like Moscow, it has been playing up the advantages and merits of Russian-Israeli military-technical cooperation year in, year out. Many employees of the Israeli defense industry are former employees of the Soviet one. We speak the same language ... But no. The U.S. is categorically against it. Washington grants Israel $5 billion to $6 billion in annual credits exclusively for the purchase of American arms. And then it suddenly transpires that the U.S. has markedly dropped behind Russia in the arms trade, a claim that draws ironic smiles from experts.

Kozyulin, the Russian defense expert, says: "Russia should thank the U.S. for hailing its success in the arms trade." But he remarks that the methods used to assess the financial prowess of a country on the world arms market are far from perfect. One method is employed by the United Nations, another by the Stockholm SIPRI Institute, still another by the London Institute of Strategic Studies, which puts out The Military Balance publications. Moreover, politicians, experts and journalists in every country often exploit this contradictory information for their propaganda ends. This, of course, casts grave doubt on the reliability of the figures cited.

The UN General Assembly has recently decided to set up a task force to draw up international laws and regulations for arms trading. Kozyulin believes that once they are passed, the figures will hopefully no longer be as misleading as they are today.

The content of this article has been provided courtesy of Business Day.


Last year Russia was ranked No. 1 in the world for the export of arms to developing countries, having concluded agreements on the supply of weapons and military equipment worth $7.1 billion. These are the data supplied by the U.S. Congressional Research Service, which published the report "Conventional Arms Transfers to Developing Nations, 1998-2005." According to this document, excerpts of which appeared in The New York Times, Moscow has leapfrogged ahead of even Washington, which stayed in third place with $6.2 billion in exports. Paris, according to the report, is second. The U.S. Congress estimates that it supplied $6.3 billion worth of arms.

Also of note are some other figures cited by this "sensational" report. First, its data differ widely from the information released early this year by Russia's Federal Commission for Military-Technical Cooperation, which estimates the value of Russian arms exports in 2005 at $6.13 billion. Considering that the total for last year was a record $5.9 billion (in previous years our exporters barely reached $5 billion), the $1 billion difference between the information from the Federal Commission and the Congressional Research Service requires an explanation.

Washington was quick to provide one. In the information on Russian arms exports last year, it included several battalions of ground-based air defense equipment - the Tor-M1 surface-to-air missile system sold to Iran. The report does not say whether Moscow has delivered it or not. It merely states that the deal is worth $700 million and that apart from the missile system, Russia also sold Iran eight aerial tankers able to refuel Iranian aircraft in mid-air. In the total sum of deliveries to Iran the Congress also included the upgrading of Su-24 assault planes, T-72 tanks and MiG-29 fighters. In short, Moscow has become the arms-export champion not only thanks to China and India, but also Iran.

And this is the second thing which calls into question the reliability and accuracy of the analysis done by the Congressional Research Service. The export of military equipment and arms has always been a highly politicized area. Here is a recent example: as soon as President Hugo Chavez of Venezuela began criticizing "American imperialism," the U.S. Department of State at once clamped down an embargo on supplying Caracas with spare parts for American F-16 fighter planes, grounding the Venezuelan air force. When Chavez turned to Russia to provide him with "Su-30s, the world's best fighters" and signed a contract to purchase them, the Department of State imposed sanctions on Russia's Sukhoi aircraft company.

Today, as Vadim Kozyulin, an analyst with Moscow's PIR Center, notes, the U.S. is trying to scare the rest of the world: The Russians are selling their weapons indiscriminately, it says, fomenting ever-recurring armed conflicts. This is a rank untruth. Russia has always respected international agreements on the arms trade. And unlike certain NATO countries, which supply arms even to Georgia, a country threatening war on South Ossetia and Abkhazia, Moscow strictly abides by the requirement not to trade with countries involved in conflicts.

But political motives find expression not only in speculations on export volumes, or in imposing sanctions and exerting heavy pressure on governments that do not buy American arms or buy them at a price not suitable to American firms. The report also reflects political infighting in the U.S. While emphasizing Russia's greater arms supplies abroad, the report points to the U.S.'s sharp retreat from the lead role (by two slots, from first to third place). All this is happening ahead of Congressional elections; meanwhile, only the most complacent in the Democratic camp are not criticizing the Republicans for all their real and imagined sins, starting with the setbacks in Iraq and Afghanistan and ending with the loss of traditional arms markets.

Compared with 2004, the report claims, the U.S. has lost a considerable part of this market. In that year, the value of deals concluded by Washington to deliver arms to developing nations reached $9.4 billion. Russia, on the other hand, posted only $5.4 billion. Now the latter is ahead by $1 billion. The conclusion American voters are supposed to draw is obvious: "Vote Democratic. The Democrats will regain America's leadership in arms export, which means new jobs and more earnings ..."

Meanwhile American arms exports are not faring as badly as some claim. The selfsame New York Times notes that in 2005 the U.S. led in the total value of arms supply contracts with developed and developing countries. Washington's overall receipts totaled $12.8 billion. Although they slipped from their 2004 levels (when weapons sales fetched $13.2 billion), Boeing, Lockheed Martin, General Electric and other multinational majors did not lose out. Take as an example a planned contract to supply Turkey with fifth-generation F-35 fighter jets worth $7 billion. In comparison, the "achievements" credited to Russia by the U.S. Congress in 2005 look unimpressive.

Nor can it be forgotten that the U.S. supplies and even foists its weapons onto NATO countries, which are closed to Russian combat equipment. This is true even of former Warsaw Pact countries, where such equipment has been used for a long time. They cite diverse reasons for this: "A lack of compatibility in basic parameters, calibers, communications and control systems ..." This explanation is beneath any criticism. Greece is a NATO member, but all its air defense systems were made in Russia, which in no way interferes with its command, control or communications links. The simple truth is that not all nations can withstand Washington's pressure, its threatened sanctions, refused credits and aid, etc.

Or take Israel. Like Moscow, it has been playing up the advantages and merits of Russian-Israeli military-technical cooperation year in, year out. Many employees of the Israeli defense industry are former employees of the Soviet one. We speak the same language ... But no. The U.S. is categorically against it. Washington grants Israel $5 billion to $6 billion in annual credits exclusively for the purchase of American arms. And then it suddenly transpires that the U.S. has markedly dropped behind Russia in the arms trade, a claim that draws ironic smiles from experts.

Kozyulin, the Russian defense expert, says: "Russia should thank the U.S. for hailing its success in the arms trade." But he remarks that the methods used to assess the financial prowess of a country on the world arms market are far from perfect. One method is employed by the United Nations, another by the Stockholm SIPRI Institute, still another by the London Institute of Strategic Studies, which puts out The Military Balance publications. Moreover, politicians, experts and journalists in every country often exploit this contradictory information for their propaganda ends. This, of course, casts grave doubt on the reliability of the figures cited.

The UN General Assembly has recently decided to set up a task force to draw up international laws and regulations for arms trading. Kozyulin believes that once they are passed, the figures will hopefully no longer be as misleading as they are today.

The content of this article has been provided courtesy of Business Day.


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Russia and Ukraine Sign Gas Deal

Ukraine will raise the price of its natural gas from $95 per 1,000 cubic meters to $130 per 1,000 cubic meters in 2007. This is considered a victory for Ukraine whose economy is very dependent on its natural gas dealings with Russia.

Ukraine will raise the price of its natural gas from $95 per 1,000 cubic meters to $130 per 1,000 cubic meters in 2007. This is considered a victory for Ukraine whose economy is very dependent on its natural gas dealings with Russia.

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russia

Russia Government wants Control of Chevron Oil

Russia's Energy department is calling for the Russian Government to step-up state control over a Chevron oil pipeline. The Russian government is looking to capitalize off of Chevron's use of the pipeline which runs from Kazakhstan to the Black Sea. Russia would increase the fees that Chevron pays to use the pipeline to help increase it's already low profit from oil deals.

Russia's Energy department is calling for the Russian Government to step-up state control over a Chevron oil pipeline. The Russian government is looking to capitalize off of Chevron's use of the pipeline which runs from Kazakhstan to the Black Sea. Russia would increase the fees that Chevron pays to use the pipeline to help increase it's already low profit from oil deals.

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russia

Deutsche Bank Seeks to Take Over Yukos

Deutsche Bank announced Monday that it was seeking to buy the assets and liabilities of bankrupt Yukos. This purchase could mean acquiring its remaining assets at a bargain price if they manage to cancel Yuko's debt before the state.

Deutsche Bank announced Monday that it was seeking to buy the assets and liabilities of bankrupt Yukos. This purchase could mean acquiring its remaining assets at a bargain price if they manage to cancel Yuko's debt before the state.

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russia

Russia's Federal Budget Surplus at 1.7 Trillion Rubles

In the period of January-September 2006, Russia's federal budget surplus was valued at 1.686 trillion rubles (US $62.6 billion), which is the equivalent to 8.7% of its GDP. In the same period last year, Russia's federal budget surplus was only 761.7 billion rubles; less than half of the amount from this year.

In the period of January-September 2006, Russia's federal budget surplus was valued at 1.686 trillion rubles (US $62.6 billion), which is the equivalent to 8.7% of its GDP. In the same period last year, Russia's federal budget surplus was only 761.7 billion rubles; less than half of the amount from this year.

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russia

Russia Denied WTO Access for Now

Due to Russia's troubled relation with Georgia, Russia will have to wait longer to be part of the World Trade Organization. Russia has banned Georgian imports and cut off transportation and postal links with Georgia and will need to reconsider these cutoffs for WTO access.

Due to Russia's troubled relation with Georgia, Russia will have to wait longer to be part of the World Trade Organization. Russia has banned Georgian imports and cut off transportation and postal links with Georgia and will need to reconsider these cutoffs for WTO access.

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russia

Manufacturing Sector Continues to Grow in September

The Manufacturing Purchasing Manager's Index (PMI) was marked at 54.7 points for the month of September.  Though slightly lesser than the 56.1 posted in August, the score, which remains comfortably above 50, shows that the manufacturing sector is still in the process of expansion.  Manufacturing employment is up for the 10th month in a row, though in conjunction with rising input costs and increased orders, prices have been increasing steadily.

The Manufacturing Purchasing Manager's Index (PMI) was marked at 54.7 points for the month of September.  Though slightly lesser than the 56.1 posted in August, the score, which remains comfortably above 50, shows that the manufacturing sector is still in the process of expansion.  Manufacturing employment is up for the 10th month in a row, though in conjunction with rising input costs and increased orders, prices have been increasing steadily.

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russia

Russian Official says Sakhalin-2 Should be Suspended

Oleg Mitvol, deputy director of Russia's Federal Service for Natural Resources Oversight, announced at a news conference that serious environmental violations had been uncovered on the multibillion dollar Sakhalin-2 liquid natural gas project.  The project sponsor, Sakhalin Energy, will have to pay several million rubles for violating environmental regulations while constructing an oil pipeline stretch near the village of Sovetskoye on Sakhalin Island.  Mitvol did reiterate that there was no risk of the project's license being permanently withdrawn.  For related articles, see: - Japanese Anger at Threat to Sakhalin

Oleg Mitvol, deputy director of Russia's Federal Service for Natural Resources Oversight, announced at a news conference that serious environmental violations had been uncovered on the multibillion dollar Sakhalin-2 liquid natural gas project.  The project sponsor, Sakhalin Energy, will have to pay several million rubles for violating environmental regulations while constructing an oil pipeline stretch near the village of Sovetskoye on Sakhalin Island.  Mitvol did reiterate that there was no risk of the project's license being permanently withdrawn.  For related articles, see: - Japanese Anger at Threat to Sakhalin

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russia

Russian GDP up 6.7% on Year to Date

According to the Economic Development and Trade Ministry, Russia's gross domestic product grew 6.7% in the period from January through August 2006, peaking with a monthly growth rate of 7.2% in August. In the same period last year, Russia's economy grew by a slower 5.7%.

According to the Economic Development and Trade Ministry, Russia's gross domestic product grew 6.7% in the period from January through August 2006, peaking with a monthly growth rate of 7.2% in August. In the same period last year, Russia's economy grew by a slower 5.7%.

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russia

Russia Will Continue to Grow, Despite Falling Oil Prices

Russia's Finance Minister Alexei Kudrin says that Russia will continue to growth at its average pace of 6% for the next few years. Russia is the 2nd largest oil producer in the world but is still recovering from the hit the industrial sector took in the 90's. Kudrin assured members of parliament that even if oil prices continue to fall, Russia would still be able to maintain its positive growth.

Russia's Finance Minister Alexei Kudrin says that Russia will continue to growth at its average pace of 6% for the next few years. Russia is the 2nd largest oil producer in the world but is still recovering from the hit the industrial sector took in the 90's. Kudrin assured members of parliament that even if oil prices continue to fall, Russia would still be able to maintain its positive growth.

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russia

Japanese Anger at Threat to Sakhalin

The Japanese government has joined Britain's Foreign Office and the European Commission in outrage over Russia's threats to cancel Shell's permit for the $20 billion Sakhalin II gas project (see the Sept. 18th article in "Russia").  Since the the Kremlin's announcement that it will cancel crucial environmental permits for the Shell project, Mitsui & Co. shares have fallen 3.6% while Mitsubishi dropped 2.5%.  The two Japanese trading companies own 45% of the Shell project in Sakhalin, which is slated to provide vast quantities of liquid natural gas to Japan.

The Japanese government has joined Britain's Foreign Office and the European Commission in outrage over Russia's threats to cancel Shell's permit for the $20 billion Sakhalin II gas project (see the Sept. 18th article in "Russia").  Since the the Kremlin's announcement that it will cancel crucial environmental permits for the Shell project, Mitsui & Co. shares have fallen 3.6% while Mitsubishi dropped 2.5%.  The two Japanese trading companies own 45% of the Shell project in Sakhalin, which is slated to provide vast quantities of liquid natural gas to Japan.

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russia

Russia Cancels Permit for Shell's Giant Oilfield

Russia has cancelled a crucial environmental permit that has allowed a Shell-led consortium to develop the Sakhalin-2 oil and gas field located on the Sea of Okhotsk (Russia's Pacific coast).  The decision brings to a halt the $20 billion project that has been in the works for a decade now.  Reasons for the revokation include project mismanagement and ecological concern, although some experts believe it is part of a government effort to tighten its grip on energy developments throughout Russia.

Russia has cancelled a crucial environmental permit that has allowed a Shell-led consortium to develop the Sakhalin-2 oil and gas field located on the Sea of Okhotsk (Russia's Pacific coast).  The decision brings to a halt the $20 billion project that has been in the works for a decade now.  Reasons for the revokation include project mismanagement and ecological concern, although some experts believe it is part of a government effort to tighten its grip on energy developments throughout Russia.

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russia

Cleaning Up Russian Banking Is No Easy Task: Head of Russian Central Bank Assassinated

Russia's top banking official Andrei Kozlov died after being gunned down late Wednesday night.  The AP reports the attack may have been prompted by his attempt at regulating Russia's rough-and-tumble banking practices.  According to the AP, Russian businessmen and bankers are still frequent targets of mafia-style contract killings.  Kozlov's efforts to clean up Russian banking led him to become yet another victim of this kind of violence.

Russia's top banking official Andrei Kozlov died after being gunned down late Wednesday night.  The AP reports the attack may have been prompted by his attempt at regulating Russia's rough-and-tumble banking practices.  According to the AP, Russian businessmen and bankers are still frequent targets of mafia-style contract killings.  Kozlov's efforts to clean up Russian banking led him to become yet another victim of this kind of violence.

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russia

Russia to Register State-Owned Uranium Mining Company Before 2007

The "Uranium Mining Company" will begin mining uranium under its own name by the end of the year. The Uranium will be used to build up to 58 reactors throughout Russia and the world by Moscow's target date of 2030. State investment in the venture should reach $19 million by next year.

The "Uranium Mining Company" will begin mining uranium under its own name by the end of the year. The Uranium will be used to build up to 58 reactors throughout Russia and the world by Moscow's target date of 2030. State investment in the venture should reach $19 million by next year.

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russia

ASIA DEVELOPMENT OUTLOOK 2007

Despite challenges from rising oil costs, commodity costs, and interest rates, the Asia Development Bank expects 7.7% growth for 2007.

Despite challenges from rising oil costs, commodity costs, and interest rates, the Asia Development Bank expects 7.7% growth for 2007.

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russia

Japan to Potentially Invest $50 billion in Russia

At the first Russia-Japanese investment forum, which was being held in St. Petersburg this week, hundreds of business and government representatives gathered to discuss future joint-ventures between the two countries.  According to a "modest estimate" by Kirill Androsov, the potentional investment lies at $50 billion or more.  Both the Japanese and Russian economies have been in an upswing as of late, and they are prepared to participate in such direct investment opportunities with each other.  Since 2002, trade in the countries have increased from $4.2 billion to over $10 billion.

At the first Russia-Japanese investment forum, which was being held in St. Petersburg this week, hundreds of business and government representatives gathered to discuss future joint-ventures between the two countries.  According to a "modest estimate" by Kirill Androsov, the potentional investment lies at $50 billion or more.  Both the Japanese and Russian economies have been in an upswing as of late, and they are prepared to participate in such direct investment opportunities with each other.  Since 2002, trade in the countries have increased from $4.2 billion to over $10 billion.

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russia

Russia's Trade Surplus Up 27.3% in First Half

According to the Federal Customs Services, Russia's trade surplus rose 27.3% in the period from January-July 2006, hitting $100.1 billion as of August 1st.  In relation to this, Russia's exports in the same period rose 29.7% to $168.6 billion.  Imports rose 33.1% to $68.5 billion and total trade reached $237.1 billion, up 30.6% on the year.  This is very encouraging, as it becomes the second straight year in which Russia has shown strong trade growth.

According to the Federal Customs Services, Russia's trade surplus rose 27.3% in the period from January-July 2006, hitting $100.1 billion as of August 1st.  In relation to this, Russia's exports in the same period rose 29.7% to $168.6 billion.  Imports rose 33.1% to $68.5 billion and total trade reached $237.1 billion, up 30.6% on the year.  This is very encouraging, as it becomes the second straight year in which Russia has shown strong trade growth.

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russia

Russia's Energy Superpower Pipe Dream

Vladimir Milov, President of the Institute of Energy Policies, cautions that Russian's increasingly popular dream of becoming an "energy superpower" is unfeasible.  Milov states that Russia's population is too great to be supported by energy production alone, stating that Russia would have to produce 40 to 50 tons of oil per capita to maintain a PPP rate of US$20,000 ore more.  Currently, Russia exports only 3 tons of oil per capita. Also, Russia sees only 2% growth in its oil exporting sector versus its 8.5% average growth between 2001 and 2004.   Milov cautions Russian society to put more eggs in other baskets.

Vladimir Milov, President of the Institute of Energy Policies, cautions that Russian's increasingly popular dream of becoming an "energy superpower" is unfeasible.  Milov states that Russia's population is too great to be supported by energy production alone, stating that Russia would have to produce 40 to 50 tons of oil per capita to maintain a PPP rate of US$20,000 ore more.  Currently, Russia exports only 3 tons of oil per capita. Also, Russia sees only 2% growth in its oil exporting sector versus its 8.5% average growth between 2001 and 2004.   Milov cautions Russian society to put more eggs in other baskets.

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Other Important News In Russia


Russia May Reduce Investments in U.S Treasuries

Russia currently has about $140 billion worth of investments in U.S Treasuries. First deputy chairman of Bank Rossii, Alexei Ulyukayev, announced that some reserves were going to be moved into International Monetary Fund debt. On May 26, Finance Minister Kudrin said that Russia will purchase $10 million of IMF bonds from the reserves while China may buy about $50 billion, according to Dominique Strauss-Hahn, IMF's Managing Director.

Russia currently has about $140 billion worth of investments in U.S Treasuries. First deputy chairman of Bank Rossii, Alexei Ulyukayev, announced that some reserves were going to be moved into International Monetary Fund debt. On May 26, Finance Minister Kudrin said that Russia will purchase $10 million of IMF bonds from the reserves while China may buy about $50 billion, according to Dominique Strauss-Hahn, IMF's Managing Director. Investors are cautious about U.S assets now that the budget deficit is predicted to reach $1.75 trillion by September 30, a large jump from last year's budget deficit of $455 billion, as reported by the Congressional Budget Office, while there are no strong attempts to get the fiscal deficit under control. Ulyukayev, announced that Russia will reduce the share of U.S Treasuries now that a "window of opportunity for working with other instruments is opening," according to Interfax news wire.

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Russian GDP Shrinks 7 Percent

The Russian economy shrank by 7 percent in the first quarter according to Deputy Economic Development Minister Andrei Klepach.

The Russian economy shrank by 7 percent in the first quarter according to Deputy Economic Development Minister Andrei Klepach. "These figures are worse than we expected," Klepach said. The government has predicted that the economy will shrink by 2.2 percent in 2009 and are still holding on to that prediction after the release of the first quarter numbers. The 2.2 percent forecast takes into account multiple stimulus packages that are currently being debated to help improve domestic demand. Without the stimulus packages, Klepach said the economy could contract by 4 to 5 percent.

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Russia: Gas Output Dropped Sharply in March

Gazprom's March gas production slumped by one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall.

Gazprom's March gas production slumped by one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall. Energy Ministry data showed Thursday that the gas export monopoly's output last month was 1.24 billion cubic meters per day, down 12 percent from 1.41 bcm per day in February 2009 and 24 percent down from 1.63 bcm per day in March 2008. "Such low production levels have been unseen over the past decade, even during summer months, when Gazprom puts some wells on planned maintenance," he said.

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Russian Food Retailer to Expand Aggressively

Regional food retailer Magnit reported better-than-expected 2008 results for net income and revenue on Wednesday, and it pledged to carry its aggressive expansion plan into 2009.

Regional food retailer Magnit reported better-than-expected 2008 results for net income and revenue on Wednesday, and it pledged to carry its aggressive expansion plan into 2009. CEO Sergei Galitsky said in a statement that Magnit opened 385 new stores in 2008, bringing its total to 2,579 at the end of the year. The Krasnodar-based discounter said the openings helped it boost profits 93 percent under international financial reporting standards. Magnit, Russia's second-largest grocer after X5 Retail Group, plans to invest 5.6 billion rubles ($165 million) to open 300 stores this year as well as six to nine hypermarkets, Galitsky said later in a conference call.

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Russian Home Building on the Rise

The number of homes completed in the first two months of this year surpassed the number in the same period last year, Regional Development Minister Viktor Basargin said Monday.

The number of homes completed in the first two months of this year surpassed the number in the same period last year, Regional Development Minister Viktor Basargin said Monday. About 5.86 million square meters of housing were completed in January and February, he said, without citing an earlier figure. "We have been able to completely maintain the positive dynamic of housing construction in Russia," he said, Prime-Tass news agency reported. The situation varies around the country, however, and construction is only rising in 49 regions, he said.

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French Alstom to Buy Stake in Russian Train Maker

French engineering giant Alstom said Tuesday that it had agreed to acquire a 25 percent stake in train maker Transmashholding for an undisclosed total amount.

French engineering giant Alstom said Tuesday that it had agreed to acquire a 25 percent stake in train maker Transmashholding for an undisclosed total amount. At a news conference in Paris, Alstom chief executive Patrick Kron said the French train and power plant builder would make a down payment of 75 million euros ($99 million), with the rest of the price to be determined based on TMH's performance over the period from 2008 to 2012. Kron called the agreement "a major event for Alstom and for French-Russian cooperation."

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Central Banker Sees Interest Rate Cut in Russia

The Central Bank has been taking flak from all sides lately over its insistence on maintaining what critics call "crippling" and "bankrupting" interest rates, a policy endorsed by the prime minister to keep lenders operating above the level of inflation.

The Central Bank has been taking flak from all sides lately over its insistence on maintaining what critics call "crippling" and "bankrupting" interest rates, a policy endorsed by the prime minister to keep lenders operating above the level of inflation. But in a reversal that could mollify bankers and borrowers -- not to mention VEB chief Vladimir Dmitriyev and Mayor Yury Luzhkov, who both took digs at the Central Bank's monetary policy last week -- First Deputy Chairman Alexei Ulyukayev said Friday that the bank could begin cutting rates as soon as next quarter. The comments, made in an interview on Ekho Moskvy radio, reflect a growing confidence that inflation will begin to subside as production plummets and the devalued ruble starts to regain ground against a falling dollar. Prime Minister Vladimir Putin said earlier this month that setting interest rates below inflation would "destroy the economy" -- a position that few have publicly challenged.

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Russia: Sargut Buys 21% of MOL for $1.8 Billion

Cash rich oil producer Surgutneftegaz agreed to buy 21 percent of Hungarian refiner MOL from Austrian oil and gas company OMV for 1.4 billion euros ($1.8 billion).

Cash rich oil producer Surgutneftegaz agreed to buy 21 percent of Hungarian refiner MOL from Austrian oil and gas company OMV for 1.4 billion euros ($1.8 billion). The purchase appeared to give Surgutneftegaz a controlling stake in the refiner, which listed the largest portion of its shares, 24 percent, as belonging to "foreign investors (mainly institutional)" as of December 2008. "The purchase of an interest in MOL will be a serious basis for the start of long-term mutually beneficial cooperation between our companies," Surgutneftegaz chief Vladimir Bogdanov said in the statement.

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Russia to Double its Issue of Bonds

The Finance Ministry will sell 529 billion rubles ($15.7 billion) of treasury bonds this year and issue 50 percent to 100 percent more bonds in 2011 and 2012, Finance Minister Alexei Kudrin said Wednesday, as the government looks for ways to finance a growing budget deficit and increase liquidity in its ailing financial system.

The Finance Ministry will sell 529 billion rubles ($15.7 billion) of treasury bonds this year and issue 50 percent to 100 percent more bonds in 2011 and 2012, Finance Minister Alexei Kudrin said Wednesday, as the government looks for ways to finance a growing budget deficit and increase liquidity in its ailing financial system. The government may also change some of its capital rules in efforts to recapitalize the banking sector, while shying away from the U.S. model of a "toxic assets" fund. The bond issue amounts to nearly twice the amount of paper that the Finance Ministry sold last year, and the amount will increase each year to ease pressure on the Reserve Fund, which will cover this year's forecast 8 percent budget deficit. "This will happen every year -- it is a necessity due to the depletion of the Reserve Fund," Kudrin said in comments posted on the ministry's web site.

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Russia: Budget Slashed for Repatriation Program

The government plans to slash spending on a program aimed at attracting Russians home from abroad due to a disappointing response since the first people started to return in 2007, the Federal Migration Service said Thursday.

The government plans to slash spending on a program aimed at attracting Russians home from abroad due to a disappointing response since the first people started to return in 2007, the Federal Migration Service said Thursday. The program will be cut from 8 billion rubles ($239 million) to 1.8 billion rubles this year under the revised federal budget approved by the Cabinet recently. More than 12,000 Russians have returned under the program, which was unveiled in June 2006 by then-President Vladimir Putin in an attempt to address the country's demographic crisis by attracting Russian-speaking workers.

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