KHODORKOVSKY IN LIMBO

MOSCOW – Mikhail Khodorkovsky has all the time in the world to practice his limbo technique. Remember the limbo? that exotic competition on the nightclub floor when Caribbean dancers would try to outdo each other as they swayed under the limbo bar to choruses of “Limbo! Limbo! How lowww can you gohhhh!”

This week, Khodorkovsky and the finest public relations machine his money can buy demonstrated that, if you sway too low beneath the limbo, you fall — and become a laughingstock. Headed by Khodorkovsky’s PR director and spokesman, Hugo Erikssen, the PR machine is facing credible charges that it plagiarized an article from a Russian website, and published it under Khodorkovsky’s name, with the sententious title “The Indisputable Crisis of Russian Liberalism”. To Khodorkovsky’s supporters and promoters of the Yukos shareholding, like Moscow investment bank Renaissance Capital, the screed is so important it deserves to be republished in full in English. It is, they reason, his mea culpa before President Vladimir Putin; his bid for release on parole. They haven’t seen the joke.

Until Khodorkovsky discovered the indisputable crisis of Russian liberalism, Erikssen spent dozens of millions of dollars feeding thousands of hurrah stories to western journals of record over the past five years. Much was published as the spoken or written gospel as it fell from Khodorkovsky’s lips on everything from the freedom to transfer prices in the oil business to the freedom for US strategy to achieve its objectives in Russia,

Today, officially, Erikssen and his team, like the senior Yukos management headed by Semyon Kukes, should have distanced themselves from Khodorkovsky and other key shareholders, who are facing credible charges of fraud, embezzlement and forgery, and who are either in prison or on the run. Officially, Erikssen ought to be serving the Yukos management, now that the latter is no longer hiding its effort to preserve the company, if necessary at Khodorkovsky’s expense. But Khodorkovsky’s letter from prison places himself again at the head of Yukos, and both together at the head of a movement Khodorkovsky has the chutzpah to identify with “the spirit of Jesus Christ who spoke rightfully, not like the scribes and Pharisees”. Did Erikssen arrange this, and to what end? When asked to clarify the circumstances of his involvement in the publication, Erikssen has declined to respond. He is not denying he had a hand in it. But he is also not claiming credit, nor accepting responsibility. For once the PR machine is opting for a silence that speaks volumes.

Let’s acknowledge that prison cells can be places of genuine inspiration, and also of the Christian redemption for which Khodorkovsky appears to be applying. Some fine philosophical n doctrines and effective political movements have sprung from the pens of political prisoners. In our time, Lenin, Gandhi, Mao Tse-tung, Ho Chi Minh, Nehru, Ben Bella, Grivas, Papandreou, and Mandela all led national liberation campaigns from jail cells, or on the run. But Khodorkovsky’s liberation campaign is an attack on all those he has funded, for the goal of liberating himself. “We must analyze our tragic mistakes”, Khodorkovsky claims to say, addressing the so-called liberal group who began by selling themselves to him, and who, like Boris Nemtsov — once President Boris Yeltsin’s designated successor — are now selling franchise restaurants to small entrepreneurs and fried chicken to the masses. Nowhere in the screed does Khodorkovsky acknowledge the mistakes that got him where he is today – violations of commercial law, fraud, and an attempt to sell a national asset to a foreign power. It isn’t just political liberalism that is in crisis, but business folly and economic treason. Can a fraudster plead guilty on the strength of admitting guilt for mistakes he has not been charged with? Is the signature of a forger to be trusted?

While Khodorkovsky has admitted to a limited list of ideological mistakes, Erikssen and the PR machine, which have been egging Khodorkovsky on, has not. Yukos first spent millions kicking up a storm of hysteria over the arrests of Lebedev and Khodorkovsky, appealing for Anglo-American help to destroy President Putin. They did that job so well that the anti-Putin, anti-Russian momentum they initiated in Washington and London can no longer be stopped. Moreover, the fact is that neither Erikssen, nor the ghostwriter behind Khodorkovsky’s byline, have tried to stop it. The newspapers in Erikssen’s stable are now paying more attention to the small print of Khodorkovsky’s screed than they did at the detailed evidence contained in the indictments brought against him. Has Renaissance Capital offered investors a full English translation of the charges against Khodorkovsky? Until it does, how can the nanve investor be faulted for believing the Erikssen-funded line that all that Khodorkovsky is suffering from is “political revenge” from “autocrats” and “siloviki”?

Khodorkovsky continues to believe that. That’s why his PR team, funded by the Yukos management, has offered to call his adversary in the Kremlin “liberal number one”, as if that’s a compliment for the recipient, and as if Khodorkovsky has the credentials to confer it. Adding that Putin “is still more liberal and democratic than 70 percent of the Russian population” is an insult to his fellow countrymen, especially poignant for a man who claims to have been proseletyzing their goodwill through his “Open Russia” charity. As for the praise for Putin for “bridling our national demons” and “preventing Zhirinovsky and Rogozin from seizing power in Russia,” Khodorkovsky cannot see he has sunk so far beneath the political realities, his words have become ludicrous. The only seizure of power, economic power, that has been attempted was Khodorkovsky’s, when he tried to sell Yukos to ExxonMobil and ChevronTexaco. Putin said no. Khodorkovsky asked George Bush for help, but he was locked up before the cavalry could arive. Khodorkovsky’s plea shows he’s still dreaming of mounted chargers outside his cell window.

Khodorkovsky, his managers, and lawyers have now spent five months poring through the tons of evidence against him. Unlike the ace reporters of the Financial Times and Vedomosti, they know that the prosecution’s case is a formidable one. For Erikssen and the spin doctors, it has been difficult to come up with an admission of seeming truth, without pleading guilty as charged. The journalists and media consultants they schmooze with, pay, and entertain lack the sources in the Kremlin to report the truth; they also lack the integrity to recognize it, if someone else does. So how to commission a story that in admitting “our guilt, both moral and historical” also acknowledges that everything that’s been published for a year was lies from the Yukos PR machine.

The Yukos management has already conceded that it has a problem with Khodorkovsky.

It needs to face the problem it has with Erikssen’s PR machine. Khodorkovsky’s screed has missed its big opportunity. It’s now a boomerang upon the Kukes management. If they don’t back Erikssen’s line, now is the time for them to say so, and combat the attacks against Russia and the Russian President appearing daily in the Anglo-American press.

If Khodorkovsky’s imprisonment suits the Yukos management, while they negotiate the restructuring of the company with the Kremlin, then Khodorkovsky’s appeal won’t do any harm, because it won’t do Khodorkovsky any good. That still leaves other shareholders, like Leonid Nevzlin in Israel, who are doing everything they can to fund the anti-R¥ssian drive. If the Yukos management wants to be convincing in its Kremlin negotiations, it’s time for them to demonstrate by action what Khodorkovsky pledged in words, Khodorkovsky is in limbo now; he probably can’t even neutralize Nevzlin if he wanted to. But at the very least, he should take his lamentable PR with him.

NORILSK NICKEL’S BILLION-DOLLAR WAGER

MOSCOW – Either way you look at it, Norilsk Nickel’s decision to spend $1.16 billion to buy 20 percent of the South African goldminer Gold Fields, much of it in borrowed funds, is a wager on President Vladimir Putin having too much to do right now to notice.

If Vladimir Potanin and Mikhail Prokhorov, the two controlling shareholders of Norilsk Nickel, imagine that, after the Kremlin vetoed their cashout projects last month, they will be permitted to leverage the Russian asset base of the company as they reverse its shares into South African ones, they are taking a risk as enormous as the one that landed Mikhail Khodorkovsky in prison last October.

If Leonid Rozhetskin, the management board’s finance strategist, imagines that he is enlarging the assets of the company before the shareholding arrangements are changed by the Kremlin, the better to keep management under his control, he should be hoping that the banks which are financing the deal don’t get cold feet. And cold feet is the symptom that, until now, has accompanied most bank lending negotiations with both Norilsk Nickel and Interros, the Potanin holding.

Lest anyone be in any doubt, whichever wager Norilsk Nickel is betting, their deal could be reversed by just two telephone calls -one from Dmitri Kozak, the chief of the government staff, to President Vladimir Putin; and a second from Kozak to Sergei Ignatyev, chairman of the Central Bank. As Potanin and Rozhetskin understand, but haven’t admitted in public, Central Bank permission must be granted for any of the transfers of funds that have supposedly been agreed for this transaction. That permission was granted, but not hastily, when Norilsk Nickel spent a fraction of the price to take control last year of Stillwater Mining Company of Colorado. But for a billion-dollar purchase of a minority stake, secured by as much as half a billion dollars in metal and other Russian assets, Central Bank permission is likely to be methodical, and to require Putin’s permission.

Anglo American has an inkling of just how uncertain this may. Sources in that company have been saying that, until the money arrives from Norilsk Nickel – and it hasn’t yet – the deal is not done. Exactly what the deadline and schedule of payments may be is also top-secret at this point. From South Africa, it is reported that Norilsk Nickel has at least a week to arrange its first instalment of cash.

For the moment, starting with the Financial Times of London, the jolly propagandist for the oligarchs, the size of the money being spent has blinded reporting of the way it has been financed, the security Norilsk Nickel has put on the table, and the justification for the deal. Since Potanin is the controlling shareholder of the Moscow Times, and together, the two newspapers control their Russian broadsheet, Vedomosti, blindfolds and rose-tinted spectacles are to be expected.

Moscow’s investment banks, for whom trading in Norilsk Nickel shares is a blue-chip revenue earner, have also been blind-sided. The acquisition has surprised analysts close to Rozhetskin, one of whom reported in February that Norilsk Nickel is “not seriously considering any offshore acquisitions, but will consider diversification within Russia.” Sources inside Norilsk Nickel have been reporting that apprehension about possible Kremlin moves against Potanin, the oligarch who controls the company, have dampened all initiative, and blocked almost all new business projects.

Christophe Charlier, who has headed mergers and acquisitions at Norilsk Nickel, but who is leaving the company at the end of this week, admits the Gold Fields deal was negotiated in just two weeks, prior to the March 29 announcement. The speed and secrecy may also explain why the borrowing has yet to be finalized, and thus remains secret; and why the payment has yet to be lodged, another secret. Norilsk Nickel executives were in South Africa last week, explaining themselves to fund managers and institutional investors. Why they did so was a puzzle to their audience then; now the intention is clear. Anglo American, Charlier confirms, is “satisfied” with the financial terms of the deal, according to which Norilsk Nickel will pay part of the purchase price in cash from what Charlier termed “working capital”; and part from the proceeds of a new bank loan. Charlier refuses to estimate these amounts, or to give precise details of the bank loan, noting only that the loan terms “are already in place. As soon as we can make the loan details public, we will.”

Sergei Polikarpov, head of investment relations at Norilsk Nickel, was asked to clarify whether payment for the Gold Fields purchase has already been made, and if not, when it is scheduled to occur. He was also asked to identify the cash and loan portions of the deal, the lenders, and the security of the loan. He has not responded. He too is leaving Norilsk Nickel shortly.

Norilsk Nickel is controlled through the Interros holding company by two shareholders, Potanin, CEO of Interros, and Mikhail Prokhorov, CEO of Norilsk Nickel. The company has made two international forays before. The first, a joint venture with an Australian junior miner to develop a nickel deposit in the South Pacific, was abandoned quickly. The second, a takeover of the Stillwater Mining Company, the leading palladium producer of the United States, was completed last year, after the US Government approved the deal. The acquisition of about 56 percent of Stillwater cost Norilsk Nickel about $150 million in cash, plus 876,000 oz. of stockpiled palladium.

The purchase from Anglo American of 98.5 million shares of Gold Fields, at an estimated share price of Rand77.60 per share, is the most costly offshore deal in Norilsk Nickel’s history. Balance-sheet details for 2003 are still the subject of estimates by investment bankers and industry analysts, who presume that until now, Potanin and Prokhorov have gathered most of the company’s after¬tax earnings in the form of dividends. According to Renaissance Capital’s Rob Edwards, gross metal sales for last year at Norilsk Nickel were $4.8 billion, while net earnings are estimated at around $910 million. Edwards has been forecasting sale revenues will rise to $6.8 billion this year, and earnings to $1.9 billion.

Sources close to the company believe that neither Norimet, the UK-registered subsidiary through which the Gold Fields transaction has been nominally executed, nor the parent company, has the ready cash to make more than a 10 percent down-payment on the purchase. But even if Anglo American has agreed to wait a week for $160 million, and then a longer period for the billion-dollar balance, the Russian government may be less than accommodating, especially if Rozhetskin is obliged to explain that Norilsk Nickel is securing the terms of its borrowing by placing up metals worth up to half a billion dollars in a foreign warehouse for the duration of the loan. The Central Bank gave its permission for Norilsk Nickel to do that once before, in 2001-2002, when 60,000 tons of nickel were pledged to secure a $320 million loan. The new transaction dwarfs that one, and it lacks a comparable justification.

Bankers are quite clear that noone is likely to lend a billion dollars to Norilsk Nickel on the security of the Gold Fields shares alone. Anglo American has sold them at a 6 percent discount to last week’s prevailing South African market price. After news of the deal hit the Johannesburg market, the share price dropped fractionally the first day. Should doubts about Norilsk Nickel persist, they may continue to decline. At best, one international banker says, Norilsk Nickel could secure between 40 and 50 percent of the transaction value with Gold Fields shares. The balance represents about $500 million, which will have to be secured by metals, either stockpiled or in current production; as well as payment guarantees. The consensus of the bankers is that Norimet’s guarantees aren’t good enough. Norilsk Nickel will have to back them. That cannot happen without the Central Bank’s say-so. And Chairman Ignatyev wasn’t picked for his job by President Putin if he was the sort of fellow who, over the dining table with Potanin or Rozhetskin, would assure him of all the permissions he needed, in advance.

Perhaps Norilsk Nickel intends to pledge a stock of palladium for the loan, just as it did with the Stillwater transaction. But stockpiles only goes so far. If another palladium stockpile deal were to materialize, that would make a liar of Norilsk Nickel’s senior managers. Since late last year they have been emphatic that the company has no palladium stockpile left unsold. Securing a loan of the required size with palladium would be almost impossible, as it would require, at palladium’s current price, about 1.8 million ounces. That is two-thirds the 2.7 million ounces which Norilsk Nickel mined last year, and which it can be expected to produce again this year. If nickel or copper stocks are to be used to collateralize the transaction, the volume required will be less. But the impact on the supply-starved international markets in those metals should be dramatic. For the time being though, the metal markets haven’t woken up.

Little wonder then that Norilsk Nickel has been so reticent on the terms of the biggest offshore transaction it has ever conducted; and why Anglo American is still crossing its fingers, waiting for the cheque to arrive.

Most international lenders have been aware of the shadow the newly reelected Putin Administration is casting over natural resources policy, and specifically over oligarchs, like Potanin, who acquired their, assets through controversial privatization schemes in the 1990s. Norilsk Nickel’s senior executive in charge of finance, Leonid Rozhetskin, had been telling associates after the completion of the Stillwater deal last year, that he would not remain in the company after his contract ran out in December. He changed his mind in January. As an independent contractor to Norilsk Nickel, his compensation is linked to deal-making and to the Norilsk Nickel share price.

The Gold Fields acquisition comes at an awkward time for the controlling shareholders, who are increasingly under Kremlin pressure, Kremlin and company sources say. A month ago, the Krermlin blocked implementation of a new law declassifying data on Norilsk Nickel’s production, sales and stocks of platinum group metals (pgm). This prevents the company listing or swapping its shares on the London or New York stock exchanges, where it already controls listings of subsidiaries, Norimet and Stillwater.

An attempt in February by Potanin and Prokhorov to raise about $1 billion in a convertible bond, issued by Interros but tied to Norilsk Nickel shares, was aborted soon after the Kremlin veto of declassification. The bond issue, which technically preserved Potanin’s and Prokhorov’s ownership of the shares, but gave them a huge cash payment, was an attempt at cashing out of Norilsk Nickel by Potanin, Moscow sources acknowledge. They also concede that Potanin was afraid of challenging the Kremlin, as the oil oligarch Mikhail Khodorkovsky had done last year with his attempt to sell a Yukos stake to an American oil company. Khodorkovsky has been in prison since last October on charges relating to his shareholding in Yukos. The management of Yukos is currently trying to save the company and themselves by dissociating Yukos from its shareholders, and placating Kremlin policy demands.

Rozhetskin’s Gold Fields deal appears to follow the Yukos precedent. The Norilsk Nickel management understands that Potanin’s convertible bond was a cashout intended for himself, and the proceeds were not intended to pay Anglo American for the Gold Fields acquisition. According to a source close to Norilsk Nickel, “the Interros bond was for Interros purposes. This Gold Fields acquisition is for Norilsk Nickel’s purposes.”

Rozhetskin, whose official title is Vice Chairman of the Management Board, has announced publicly that “Norilsk Nickel believes the purchase of a 20% stake in Gold Fields, with its world-class gold mining assets, to be an excellent investment. We think particularly highly of Gold Fields’ management. This share acquisition is wholly consistent with Norilsk Nickel’s strategy to increase our position in the gold mining industry.” Until now, sources close to Rozhetskin had been telling me that they expected his game plan was to build up gold assets and then spin them off as a separate gold mining company on a foreign exchange. For that, the sources believed, it was first of all necessary for Norilsk Nickel to win the Sukhoi Log gold deposit.

However, the Kremlin may not see the deal to Norilsk Nickel’s ^ advantage in the bidding for Sukhoi Log, which is expected to be put up for tender in a few weeks’ time. Senior Russian officials have already indicated that they are opposed to foreign mining companies participating in the tender. In addition, Vladimir Litvinenko, President Vladimir Putin’s advisor on mining policy, told Mineweb last week that he believes the government should exercise added control of resources companies through holding a “golden share”. Litvinenko, who is Rector of the St.Petersburg State Mining Institute, said he regarded this as a limit on divestment in the cases of “Gazprom, United Energy Systems, important petroleum companies, Norilsk Nickel, and many other companies.”

Several Russian goldminers have also declared themselves in the running for Sukhoi Log. The best placed of these to challenge Norilsk Nickel for the Kremlin’s support is Polymetal of St.Petersburg.

Norilsk Nickel is the world’s largest producer of nickel and palladium, and a major producer of platinum, copper and cobalt. Following a number of acquisitions in Russia in the past two years, Norilsk Nickel is the leading domestic goldminer, and one of the ten largest gold producers in the world. Gold production by Norilsk Nickel totaled 1.2 million oz. in 2003. Gold Fields produces about 4.3 million oz of gold per annum.

RUSSIA, A GOVERNMENT WITHOUT PRIVATE PARTS

MOSCOW (Mineweb.com) – There is a popular, if bawdy Russian anecdote about an over-confident rabbit in a village, on a fine day….

One morning the little fellow wakes up, stretches, and as was his custom in good weather, he goes outside his front-door to scratch his private parts. When he reaches into his pants, however, he discovers there’s nothing there. He falls down in shock. Told in rhyme, this outcome almost always produces peals of laughter from a Russian audience.

The announcement of the new Russian cabinet of ministers has produced something comparable by way of shock, if not of amusement. For these are a group of fellows who have been selected on the principle that they won’t be tempted to reach into their private parts, much less confuse them with the welfare of the state or the Russian people. If you realize that under former president Boris Yeltsin, these posts were auctioned off, obliging their incumbents to spend their terms paying off their creditors, and hiding what they could for themselves, the second-term cabinet appointed by President Vladimir Putin is a first in Russian political history.

The deftness with which Putin and his advisors have managed the appointment process has been as great as the silence in which they were able to work. But they have also taken no chances.

Mikhail Fradkov is the weakest prime minister since Yeltsin picked Sergei Kirienko to lead the country over the financial precipice of 1998 without quailing. But Fradkov is not weak in that fashion. As a man and a policymaker, he learned to keep his head down at the Trade Ministry, and avoid challenging those of his superiors, like Anatoly Chubais, who were determined to wreak havoc with the national trading interest for the benefit of their Russian and American friends. When Putin appointed Fradkov to head the economic security section of the Kremlin Security Council in 2000, he became more assertive. As Tax Minister, he accumulated all the methods and evidence that, one day perhaps, might be mobilized to break up the concentration of wealth that is now known as the oligarch system. It remains to be seen whether Fradkov will apply the same methods and evidence that have so far been mobilized against Yukos’s shareholders to the other oligarchs whose tax avoidance and offshore trading schemes are just as familiar, and just as vulnerable as Mikhail Khodorkovsky’s – those of Roman Abramovich, Oleg Deripaska, Mikhail Fridman, and Vladimir Potanin, for starters.

The transfer of Dmitri Kozak from Putin’s personal office to head the staff of the prime ministry is one of the ways the president will ensure that Fradkov isn’t intimidated in pursuit of the state’s new purpose; nor that ministers will be able to slip into legislative effect the cashout favours the oligarchs are desperate to have approved in a hurry. When he was deputy prime minister in the autumn of last year, Alexei Kudrin was able to promote an amendment to the state secrets law that would allow Norilsk Nickel to divulge its hitherto secret production numbers, as well as its unmined reserves and stockpiles. The measure was enacted in record time, and Putin signed it into law so quickly, it appeared that there hadn’t been time for the Kremlin or the prime ministry to think twice about Kudrin’s rationale, or review exactly what benefits it conveyed. Four weeks ago, the Kremlin woke up, and blocked the disclosures from occurring until Putin will get around to signing a decree that noone had thought necessary, or legally required, until then.

The hidden benefit of the measure for both Potanin and Mikhail Prokhorov, co-owners of Norilsk Nickel, is that it enables them to meet the London or New York stock exchange disclosure rules that apply, if Norilsk Nickel shares are to be floated on a foreign stock exchange, or if Potanin and Prokhorov have in mind to cash out in favour of a foreign investor, much as Mikhail Khodorkovsky was planning a year ago. A planned issue of Interros convertible bonds, worth about a billion dollars to Potanin and Prokhorov, was aborted days after the Kremlin veto, as western banks and bond-buyers realized that Norilsk Nickel shares, to which the value and security of the Interros bonds was to be tied, may be heading for a Kremlin-ordered review.
Inside Norilsk Nickel, executives report, the silent order went down the ranks – take no initiative, borrow no money, hedge no sales, keep your head down.

Kudrin has now been demoted twice in the new government lineup. He has lost his deputy prime minister’s rank, and although his Finance Ministry has been enlarged to include the old tax ministry, both have been placed under direct Kremlin supervision.

This is another of the innovations Putin has introduced – the rearrangement of the bureaucratic reporting lines so that, not only the security ministers, but also the heads of finance, economic development and trade, agriculture, natural resources, and energy and industry, report directly to the President.

For this supervision to be a powerful engine of policy initiative, and oligarch control, Putin must expand his Security Council, especially on the economic front which Fradkov once directed. The removal as Secretary of the Security Council of Vladimir Rushailo, a Yeltsin leftover and reputed conduit of oligarch lobbying, was a precondition; it has now been done. Igor Ivanov moves over from the Foreign Ministry to chair the new council.

The single-interest ministries, which catered to the special-interest lobbies, have been stripped of their independence. The oil lobby has lost its minister, Igor Yusufov, whose appointment in 2000 was intended to put distance between the government and the oil majors, and relieve the pressure for further easy privatization of state oil, gas, and pipeline assets. Yusufov proved he wasn’t up to the task. By contrast, Victor Khristenko, demoted like Kudrin, is more malleable, and he has been retained, albeit with the understanding that he’s to get up every morning and show the Kremlin what is in his constituents’ pants. Also, to signal that the President’s new economic policy is aiming to diversify away from oil, Khristenko’s portfolio will require him to balance energy against industry.

The only trace of the old Yeltsin divide-and-rule method for running the government is to pit the handful of ministers the western media like to call liberals – Kudrin, Khristenko, and German Gref- against each other, and against two newcomers, Igor Levitin and Yury Trutnyev.

Levitin, a 20-year veteran of military logistics, has been named to head a new ministry consolidating railways, other transportation, and telecommunications. He was one of the quietly effective Kremlin-appointed group which has supervised the anti-corruption drive and reorganization of the national rail system. Levitin has been quickly interpreted in the Russian press as a pawn in the hands of his most recent employer, the steel oligarch Alexei Mordashov, at whose transport unit Severstaltrans Levitin has worked since 1996. This is unlikely; but the new control system Putin has installed should remove any temptation Mordashov may have to exploit his man.

Yury Trutnyev – whose family name in Russian suggests bees rather than rabbits – has been placed in charge of the vast array of territorial licences and capital commitments through which Russia’s oil, gas and mineral companies generate their wealth. This is a subject on which Putin himself knows far more than any head of state in Russian history, having been expertly tutored by the faculty of the St.Petersburg State Mining Institute, headed by Vladimir Litvinenko. Litvinenko’s influence in combating the tactics of oil majors like Yukos, Tyumen Oil Company, and Sibneft, and his views on the future direction of Russia’s mineral and precious metal miners, are likely to remain powerful in the Security Council’s deliberations. Should Trutnyev, an oilfield engineer by training, and the former Mayor and former Governor of Perm think differently, Kozak, the new chief of the cabinet staff, is bound to set him straight on putting his public part before his private ones. In Russian terms, this is revolutionary.

SWITCH OFF CHUBAIS, LIGHT UP WASHINGTON

If Anatoly Chubais ever had scruples, or reluctance at setting them aside, he has understood the lesson offered by that arch-plotter, the Marquise de Merquise in Les Liaisons Dangereuses, the pre-revolutionary French classic, who advised: “the best way of overcoming scruples is to leave those who have them with nothing more to lose.”

In Chubais’s case, for as long as the Russian winter lasted in parallel with the parliamentary and presidential election campaigns, he has known that his own interest at the head of the national power utility, United Energy Systems (UES), was unlikely to be upset by President Vladimir Putin, Indeed, Putin signed into law the legislation Chubais had helped draft. That set out the framework for restructuring the utility into separate generating and distribution units, and for stimulating price competition in the Russian energy market. The resulting legislation is ambiguous enough to allow Chubais to continue claiming public fealty to the Kremlin’s purposes; and at the same time private preferment to those industrial interests and shareholders, in whose interest Chubais had drafted earlier versions of the framework. For the past six months, therefore, Chubais was as scrupulous in maintaining the supply of electricity to the voters, as he was in plotting to divert their votes, and assets, away from the president,as best he could.

Now that the spring has almost arrived, and there are no further national election campaigns, Putin has the opportunity to apply the Marquise’s lesson to weigh the usefulness of the man, who has had his finger on the nation’s power switch for four years, just as he had his grip on the state’s wealth for seven years before. For a man with scruples like Chubais’s, there can be no better opportunity than to despatch him as Russia’s Ambassador to Washington.

The case for replacing Chubais at UES is based on the man’s 10-year record for serving himself at the expense of everyone else; his incapacity to be believable; and the danger that the partiality of his deeds and the unreliability of his words pose for the future welfare of the country. Chubais is not simply one of the masterminds of Boris Yeltsin’s programme of corruption, which the parliamentary and presidential election results demonstrate the country wants to be rid of. Chubais continues to be Yeltsin’s political heir, as the ex-president has repeated more than once, and continues to confirm by meeting with him regularly. Chubais is thus a political challenge to the Putin presidency, now, and in four years’ time. The campaign he launched last autumn, ostensibly on behalf of the Union of Right Forces, but actually on behalf of his future presidential prospects, was a national call to vote against the energy policies of the other parties. It was also an invitation to Russian voters to decide whose finger they want on the power switch – Chubais’s, or someone else. The outcome confirmed the thumbs down for Chubais personally, and for his party associates. How can the national mandate be any clearer? Chubais didn’t add to voter support of the Union of Right Forces, which failed to surmount the 5-percent barrier to reenter the Duma. The overwhelming view of the electorate is that Chubais is unfit to Gcommand a position of public trust.

To most Russians, Chubais represents the corrupt concentration of wealth that has come to be known as the oligarch system. The privatization programme he administered for the benefit of the oligarchs between 1993 and 1998 is said, in his defence, to reflect no more than his skill at management; while the initiative, and responsibility, for the corrupt property transfers allegedly lie elsewhere. If this is to plead that Chubais was the Adolph Eichmann of Russian privatization, why then did he attempt the same game again in 2001-2003, when he proposed restructuring UES in such a way as to benefit oligarchs like Oleg Deripaska and Mihkail Khodorkovsky? The latter was busy buying up electricity generating assets until he was arrested and imprisoned last October.

According to Putin’s recent speech to a meeting of the ministries of finance and economic development, “the state of the economy and the state of public finances today is such that these transformations I mentioned should not be carried out at the people’s expense.” This is not just a standard which Chubais’s career demonstrates he has never met. It is a standard for which no verbal commitment from Chubais could ever be trusted.

But there have been occasions on which Chubais’s words seem more credible than the rest. When Khodorkovsky was arrested, for example, Chubais not only publicly took his side, but threatened Putin with a rebellion of capital. That he quickly thought the better of this ploy doesn’t make him more trustworthy or scrupulous now, when Putin is publicly enunciating the view that “the state should manage only the property it needs to carry out its public functions, ensure state power, and guarantee the country’s security and defence capacity.” If Chubais had had his way with UES, by now Russia’s electricity grid would be co-owned by foreign institutions and the offshore entities belonging to the oligarchs. Prices and supplies of electricity would be as efficiently managed as we now know Enron was able to achieve in California. Russia’s natural advantages in energy supply would have been dissipated to the benefit of its foreign competitors.

The case for Chubais to remain at UES is based on three ideas offered by those closest to him in the western investment community
– that he is the only man in Russia who can administer the electricity system;
– that Russia is a democracy in which men like Chubais are free to express their opposition to the President, and
– that the decision has already been made by the Kremlin to retain Chubais.

Those who argue the first and third points frankly admit that they had no advance idea of the choices Putin would make for his new government. Accordingly, they concede that there may be a genius for administering the nation’s electricity supplies that they haven’t heard of, yet. But as the Chubais defenders are largely tied to the US investment and strategic communities, they take for granted the extent to which keeping Chubais at UES is good for US interests. They haven’t noticed how those interests have been diverging from the Kremlin’s.

That Chubais has always been good for US interests is clear from the record of the Yeltsin period. That Putin should test his scruples and place his US relationships at the service of Russia would be an adaptation of Chubais’s skills that his defenders ought to endorse.

And so, the case for Chubais to be assigned to a fresh mission ought naturally override whatever decision may already have been taken in his case, especially as the Kremlin has begun to realize just how serious a threat anti-Russian and anti-Putin sentiment is in Washington right now, at the start of the US presidential election campaign. At this very moment, for example, at least two Russian oligarchs have sent messages to Putin assuring him that they are prepared to spend millions of dollars on lobbying in Washington – funding the US media to counteract the negative campaign, even funding US support for the release of the Russian secret service agents in Qatar, and a handful of other sensitive schemes. With friends and schemes like those afoot, Chubais is urgently needed in Washington to demonstrate his managerial skills in the only constituency where he is trusted. Let him go quickly, and return in November, when the Americans will have voted, and when winter and power outages are threatening ordinary Russians again.

USMANOV BLUFF AIMS AT CORUS STEEL DEAL

MOSCOW – Despite a threat to take “strategic and tactical steps” against Anglo-Dutch steelmaker Corus, Moscow entrepreneur Alisher Usmanov is bluffing, and not for the first time.

Usmanov made his threat in a report appearing in the March 16 issue of the Financial Times, which was characteristically impressed by the Russian bravado, and just as characteristically forgetful to report his record. A similar, if less inaccurate report appeared in the March 15 issue of Metal Bulletin, a London industry publication, quoting an executive at
Gazprominvestholding, a company controlled by Usmanov on behalf of co-investors and creditors from the old and new managements of Gazprom.

Usmanov is based in Moscow, but he has been buying into UK-based Corus, one of the world’s largest steelmakers, through a Cyprus-registered company, Gallagher Holdings. He reportedly claims that the threatened steps would be taken to increase his influence at Corus, unless he is given a seat on the board.”With a stake of more than 10 per cent, I think I can and must know what is going on in the company”, Usmanov is quoted as saying. He also hinted that one form of threat might be to “secure a special resolution at a meeting of shareholders.”

A Moscow steel industry source has responded by telling me “that sounds like a real threat. In reality, I don’t see any major angles for Usmanov to exploit.” The source believes Usmanov’s real strategy is the opposite of what he is saying in public. That is, he is positioning his Russian steelmaking interests for sale to Corus, and not for buying into Corus. “He’s not a steelmaker,’ the source says. “He is a financial investor. He’s looking for an exit venture. This could be a joint venture with Corus, with a sale option. Or it could be a direct sale.”

To date, Corus has declined to comment on Usmanov’s statements. As Usmanov’s Gallagher Holdings steadily built up his stake in Corus in the past year to just over 11% at present, Corus has consistently refused to agree to seating Usmanov on its board. Corus officials have also refused to discuss whether they have any interest in buying steel semi-fabricates, other products, or iron-ore from the Usmanov plants. They will not even respond to rumours, floating in Moscow last month, that Usmanov had met with Corus CEO Philippe Varin.

Reacting a month AGO to statements from Corus that Usmanov would not receive a board seat for his stake, Usmanov told me through his aide that “getting representation on the board of directors of Corus is not an aim in itself for Usmanov, as he has come to Corus for the long term, and wants to work without haste.” This month he’s been in a hurry to pull the Financial Times’s leg.

Usmanov has two main assets. He acquired control of the Oskol Electro-Metallurgical Plant and the Lebedinsky Iron-Ore Combine through his alliance with senior executives of Gazprom, when it was under the control of Rem Vyakhirev; it was a time when the two men were looking for a way of converting debts owed to Gazprom for gas supplies into cash-producing assets outside Gazprom’s direct control.

When the Putin administration began its reorganization of the company two years ago, many of these figures followed Vyakhirev out the door. Usmanov admitted to associates at the time that he was feeling potential pressure on his assets from the new Gazprom management, as the new CEO Alexei Miller made an inventory of what Vyakhirev had done with Gazprom’s assets and asset disposals. A Moscow source claims that that was then. The situation at Gazprom has now changed, he believes, and Usmanov is well-connected there again. An industry source adds “there is no major internal threat” from the Miller management to Usmanov.

A quick study of steel industry realities in Russia and in England demonstrates why Corus has had little to talk to Usmanov about. There is next to no prospect of sales of Oskol steel products to Corus. As for iron-ore, Lebedinsky, currently Russia’s largest iron-ore mine, is at maximum output capacity. The mine produced 20 million tonnes in 2003, up 6% on 2002; it exported about 30% of that total, according to plant data. As iron-ore supplies dwindle worldwide, mostly under pressure of demand from the Chinese steelmaking industry, Russian producers have been tempted to export. However, the domestic steelmakers are also intent on protecting Russian reserves and output from sale abroad. Vertical integration steps to bring iron-ore mines within all of Russia’s major steelmaking groups are under way. Usmanov knows enough not to fight against that tide, or he will be swept away.

“There is not enough iron ore at Lebedinsky to give Usmanov leverage,” a source told me. “They cannot increase their exports significantly. They could decrease exports for domestic sales.”

If Usmanov were to divert domestic iron-ore to Corus, that would be likely to provoke a political fight with steelmakers more influential than Usmanov. These are led by Vladimir Lisin, who controls the IMovolipetsk Steel Combine, the major domestic consumer of Lebedinsky’s iron-ore.

Usmanov has previously told me before that his share-buying strategy is aimed at acquiring control of Corus in the long run. If, however, he is aiming at reversing his Russian assets into Corus, as Moscow sources believe, the asking price is likely to be at least $1 billion for Lebedinsky alone. That is the market capitalization recently estimated in a report by Brunswick UBS in Moscow.

Political sources in Moscow do not believe that, even if Corus were interested in such a deal — there is no sign of that at present — a foreign steelmaker would be permitted by the Putin administration to buy control of a major iron-ore reserve like Lebedinsky.

The interpretation that Usmanov is moving aggressively on Corus, in order to prod the Corus board into buying him out, is reinforced by a parallel attempt Usmanov and his associates have made in the diamond sector. There Usmanov has led the attempt to prevent the De Beers-owned Archangel Diamond Corporation (ADC) from acquiring licence rights to a lucrative diamond deposit ADC discovered in Arkhangelsk region in 1996. Although Usmanov has publicly claimed that he wants to develop the mine himself, it is believed by those close to the dispute that Usmanov’s tactics are aimed at raising the price at which he can sell the asset back to De Beers, or to a rival diamond miner.

TEST OF RUSSIAN PRIME MINISTER’S METTLE

JOHANNESBURG (Mineweb.com) — Russian steelmakers are super-sensitive about this year’s European Union (EU) quota on imports of Russian steel, and for two good reasons. One is that Russian government policy may be about to change, dramatically. The other is that more than four months of negotiations between trade officials on both sides have failed to produce an agreement. The Russians so far refuse to accept that the terms, publicly identified by EU officials, are either acceptable or final. Resolving the difference between the two may be the first test of the mettle of the new prime minister, Mikhail Fradkov, who most recently served as Moscow’s ambassador to the EU, and who previously ran the Trade Ministry for several years.

According to a source at the Russian Association of Metal Exporters in Moscow, “it’s too early to speak about a final quota, because negotiations are currently running with the participation of the Ministry of Trade, the Russian government, and our assistance. Currently, in the working negotiations the aggregate quota proposed by the EU for Russia equals 1,266,000 metric tons. We insist on expanding this quota by 450,000 to 500,000 tons. This amount is approximately equal to the Russian export volume to the 10 countries joining EU in May.”

Russian steelmakers have been worried that EU negotiators will attempt a similar surprise to the one they pulled in March 2002. At that time, Brussels claimed it was agreeing to an increase in Russian imports of steel, and an expanded quota for a range of steel products in the aggregate. But in the small print, the EU enlarged the number of products covered by quotas to include boron-alloy steels, which had not been covered by a quota limitation the year before, in 2001. What one Brussels hand offered, the other promptty took away. The practical effect was that total Russian exports to the EU were cut back for the year, rather than increased.

The provision for 2003 and 2004 that was contemplated at the time was annual growth of Russian steel shipments to the EU of 2.5%. In addition, the Europeans offered to raise the quota for 2004 by 12%, if Moscow agreed in exchange to drop its 15% duty on exports of ferrous scrap. First introduced in May 1999, this duty has curbed the outflow of scrap from Russia, one of the world’s largest producers and exporters. As scrap is a vital raw material used in the production of crude steel for pipes and other products, Brussels has accused Moscow of imposing the export penalty as a way of protecting its domestic steelmaking industry. It has retaliated by cutting the volume of Russian steel imports allowed into the EU market.

Removing the duty has been rejected by Russian officials and steelmakers; the latter prefer the cost advantages of domestic scrap to the trade volumes so far offered by the EU. With support from the domestic oil and gas industry, which has been complaining about the rising cost of steel pipes, the Russian industry is now pressing for a doubling of the export duty to 30%. Because of rising steel production around the world, scrap is in very short supply, and its growing cost threatens to eat into steelmakers’ profits. The European approach has been to insist that Russia should allow unrestricted export in support of foreign steel profit margins.

Roelof Plijter, head of the steel unit in the European Commission’s trade directorate, told a steel industry conference in Rome last week that the only additional Russian steel volumes to be allowed for this year would be those for Severstal and Mechel, two leading steelmakers, which also own plants in Latvia and Lithuania. Plijter referred to 119,000 tons of rolled flat products for Severstal’s Severstallat service centre and pipemaking plant, and 42,000 tons of steel products for Mechel’s Nemuno plant for production of hardware. Severstallat has a capacity to produce about 31,000 tons of pipes annually. It is Severstal’s only production venture in Eastern Europe; the big Russian steelmaker lost a recent bid to acquire Dunaferr in Hungary, and did not compete in the privatization of Krivorozhstal in the Ukraine.

Nemuno has design capacity for output of 100,000 tons, but actual production dwindled to just 23,000 tons in 2003. Mechel, the fifth-ranked steelmaker in Russia, which also has acquired plants in Croatia and Romania, plans to boost Nemuno’s output by 50% or more this year.

According to a Severstal source, “we do not see any changes with our trading volumes after the introduction of the quota to the countries which will enter EU this year. The quota hopefully will be expanded. Severstal plans to receive the same quota as the previous year – it will be approximately 384,000 tons – plus the volume allocated to the Latvian enterprise of 119,000 tons.”

What may be good be Severstal and its oligarch-sized shareholder, Alexei Mordashov, isn’t necessarily the best thing for Russian steel as a whole. At least, that’s now the question which Fradkov must decide. If the EU allows only for the Severstal and Mechel volumes totaling 161,000 tons, then the proposed new EU quota will fall about 300,000 tons short of the Russian position. For Fradkov to agree would oblige the government to accept a cut of 65% on last year’s Russian exports to the ten new accession countries. Industry analysts who have examined projected growth of production and consumption of steel products in the expanded 25-member European Union suggest that this gap will be filled by producers from western Europe, In short, the Russian steelmakers believe they are being further shut out of the European market by lobbying from non-competitive European rivals.

A move to offset rising scrap prices by introducing a similar barrier to exports is also being considered by US steelmakers and the Bush Administration. But when asked what the EU will do if the US follows Russia into taxing scrap exports, Plijter of the EC was reticent. He claimed that it is still premature to comment on US action on scrap exports.

On this and many other issues, growing Russian hostility to the trade and strategic implications of the expanded European Union have led to a public toughening of President Vladimir Putin’s stance towards the EU. With the appointment of Fradkov, the hostility could lead to Russian trade retaliation; although during his time at the trade ministry in the 1990s, Fradkov rarely received Kremlin support for tough trade measures. When he took over the Security Council’s economic security section in 2000, under Putin, Fradkov demonstrated greater ardour in defence of national economic interests. What Fradkov does next should be revealing.

For the time being, a spokesman for the Russian trade ministry is playing down the conflict by claiming there is no final agreement yet. The source told me: “At the moment, we can’t estimate the 2004 quota from the EU. As to the negotiations, the quota will of course be not less than the previous year. We hope it will be expanded to the necessary level to satisfy Russian steel trading needs with the new EU members. I can’t tell you the exact numbers.”

He predicts that an agreement will be signed within a fortnight.

AND THEN THERE WERE NONE

By John Helmer, Moscow
  @bears_with

Agatha Christie’s whodunit entitled And Then There Were None – the concluding words of the children’s counting rhyme — is reputed to be the world’s best-selling mystery story.    

There’s no mystery now about the war of Europe and North America against Russia; it is the continuation of Germany’s war of 1939-45 and the war aims of the General Staff in Washington since 1943. Defense Minister Sergei Shoigu (left) and President Vladimir Putin (right) both said it plainly enough this week.

There is also no mystery in the decision-making in Moscow of the President and the Defense Minister, the General Staff, and the others; it is the continuation of the Stavka of 1941-45.  

Just because there is no mystery about this, it doesn’t follow that it should be reported publicly, debated in the State Duma, speculated and advertised by bloggers, podcasters, and twitterers.  In war what should not be said cannot be said. When the war ends, then there will be none.  

(more…)

RUSSIANS RAISE THEIR GLASSES – THE TOAST IS TO BEATING THE BLOCKADE OF MOSCOW



By John Helmer, Moscow
  @bears_with

Alas and alack for the Berlin Blockade of 1948-49 (Berliner Luftbrücke): those were the days when the Germans waved their salutes against the unification of Germany demilitarised and denazified; and cheered instead for their alliance with the US and British armies to fight another seventy years of war in order to achieve what they and Adolf Hitler hadn’t managed, but which they now hope to achieve under  Olaf Scholtz — the defeat of the Russian Army and the destruction of Russia.

How little the Germans have changed.

But alas and alack — the Blockade now is the one they and the NATO armies aim to enforce against Russia. “We are drawing up a new National Security Strategy,” according to Foreign Minister Annalena Baerbock. “We are taking even the most severe scenarios seriously.”  By severe Baerbock means nuclear. The new German generation — she has also declared “now these grandparents, mothers, fathers and their children sit at the kitchen table and discuss rearmament.”  

So, for Russia to survive the continuation of this war, the Germans and their army must be fought and defeated again. That’s the toast of Russian people as they salute the intrepid flyers who are beating the Moscow Blockade.  

(more…)

THE INTERNATIONAL ATOMIC ENERGY AGENCY GOES TO WAR — GORILLA RADIO GOES NUCLEAR

By John Helmer, Moscow
  @bears_with

Last week the International Atomic Energy Agency’s (IAEA) board of governors voted to go to war with Russia by a vote of 26 member countries against 9.

China, Vietnam, India, Pakistan, Egypt, Senegal and South Africa voted against war with Russia.  

The IAEA Secretary-General Rafael Grossi (lead image, left) has refused to tell the press whether a simple majority of votes (18) or a super-majority of two-thirds (23) was required by the agency charter for the vote; he also wouldn’t say which countries voted for or against. The United Nations Secretary-General Antonio Guterres then covered up for what had happened by telling the press: “I believe that [IAEA’s] independence that exists and must be preserved is essential. The IAEA cannot be the instrument of parties against other parties.” The IAEA vote for war made a liar of Guterres.

In the IAEA’s 65-year history, Resolution Number 58, the war vote of September 15, 2022,  is the first time the agency has taken one side in a war between member countries when nuclear reactors have either been attacked or threatened with attack. It is also the first time the IAEA has attacked one of its member states, Russia, when its military were attempting to protect and secure a nuclear reactor from attack by another member state, the Ukraine, and its war allies, the US, NATO and the European Union states. The vote followed the first-ever IAEA inspection of a nuclear reactor while it was under active artillery fire and troop assault.

There is a first time for everything but this is the end of the IAEA. On to the scrap heap of good intentions and international treaties, the IAEA is following the Organisation for the Prohibition of Chemical Weapons (OPCW), and the UN Secretary-General himself.  Listen to this discussion of the past history when the IAEA responded quite differently following the Iranian and Israeli air-bombing attacks on the Iraqi nuclear reactor known as Osirak, and later, the attacks on Pakistan’s nuclear weapons sites.

(more…)

INTERNATIONAL ATOMIC ENERGY AGENCY TAKES UKRAINE SIDE IN WAR IN SEPTEMBER 15 VOTE, MAKING UN SECRETARY-GENERAL GUTERRES EITHER A LIAR OR A FOOL

By John Helmer, Moscow
  @bears_with

The International Atomic Energy Agency (IAEA) decided this week to take the side of Ukraine in the current war; blame Russia for the shelling of the Zaporozhye Nuclear Power Plant (ZNPP); and issue a demand for Russia to surrender the plant to the Kiev regime “to regain full control over all nuclear facilities within Ukraine’s internationally recognized borders, including the Zaporizhzhya Nuclear Power Plant.”      

This is the most dramatic shift by the United Nations (UN) nuclear power regulator in the 65-year history of the organisation based in Vienna.

The terms of the IAEA Resolution Number 58, which were proposed early this week by the Polish and Canadian governors on the agency board, were known in advance by UN Secretary-General Antonio Guterres when he spoke by telephone with President Vladimir Putin in the late afternoon of September 14, before the vote was taken. Guterres did not reveal what he already knew would be the IAEA action the next day.  

(more…)

THE RUSSIAN SITUATION COMEDY IS NO LYING MATTER – THE JOKE IS ON THE OFFICE OF FOREIGN ASSETS CONTROL

By John Helmer, Moscow
  @bears_with

Never mind that King Solomon said proverbially three thousand years ago, “a merry heart doeth good like a medicine.”  

With seven hundred wives and three hundred concubines, Solomon realized he was the inventor of the situation comedy. If not for the sitcom as his medicine, the bodily and psychological stress Old Solly had to endure in the bedroom would have killed him long before he made it to his death bed at eighty years of age,  after ruling his kingdom for forty of them.

After the British sitcom died in the 1990s, the subsequent stress has not only killed very large numbers of ordinary people. It has culminated today in a system of rule according to which a comic king in Buckingham Palace must now manage the first prime minister in Westminster  history to be her own joke.

Even the Norwegians, the unfunniest people in Europe, have acknowledged that the only way to attract the British as tourists, was to pay John Cleese of Monty Python and Fawlty Towers to make them laugh at Norway itself.   This has been a bigger success for the locals than for the visitors, boosting the fjord boatman’s life expectancy several years ahead of the British tourist’s.  

In fact, Norwegian scientists studying a sample of 54,000 of their countrymen have proved that spending the state budget on public health and social welfare will only work effectively if the population is laughing all the way to the grave. “The cognitive component of the sense of humour is positively associated with survival from mortality related to CVD [cardio-vascular disease] and infections in women and with infection-related mortality in men” – Norwegian doctors reported in 2016. Never mind the Viking English:  the Norwegian point is the same as Solomon’s that “a sense of humour is a health-protecting cognitive coping resource” – especially if you’ve got cancer.  

The Russians understand this better than the Norwegians or the British.  Laughter is an antidote to the war propaganda coming from abroad, as Lexus and Vovan have been demonstrating.   The Russian sitcom is also surviving in its classic form to match the best of the British sitcoms, all now dead – Fawlty Towers (d. 1975), Black Adder (d. 1989), You Rang M’Lord? (d. 1988), Jeeves and Wooster (d. 1990), Oh Dr Beeching! (d.1995), and Thin Blue Line (d. 1996).

The Russian situation comedies, alive and well on TV screens and internet streaming devices across the country, are also increasingly profitable business for their production and broadcast companies – not despite the war but because of it. This has transformed the Russian media industry’s calculation of profitability by removing US and European-made films and television series, as well as advertising revenues from Nestlé, PepsiCo, Mars, and Bayer. In their place powerful  Russian video-on-demand (VOD) streaming platform companies like Yandex (KinoPoisk), MTS (Kion),  Mail.ru (VK), and Ivi (Leonid Boguslavsky, ProfMedia, Baring Vostok)  are now intensifying the competition for audience with traditional television channels and film studios for domestic audiences.  The revenue base of the VOD platforms is less vulnerable to advertisers, more dependent on telecommunications subscriptions.

Russian script writers, cameramen, actors, designers, and directors are now in shorter supply than ever before, and earning more money.  “It’s the Russian New Wave,” claims Olga Filipuk, head of media content for Yandex, the powerful leader of the new film production platforms; its  controlling shareholder and chief executive were sanctioned last year.  

(more…)

RUSSIAN AVIATION INDUSTRY CORRECTS YELTSIN YAW – BOEING, AIRBUS DITCHED



By Olga Samofalova, translated and introduced by John Helmer, Moscow
  @bears_with

It was the American humourist Mark Twain who didn’t die in 1897 when it was reported that he had. Twain had thirteen more lively years to go.

The death of the Russian aerospace and aviation industry in the present war is proving to be an even greater exaggeration – and the life to come will be much longer. From the Russian point of view, the death which the sanctions have inflicted is that of the US, European and British offensive against the Soviet-era industry which President Boris Yeltsin (lead image, left) and his advisers encouraged from 1991.

Since 2014, when the sanctions war began, the question of what Moscow would do when the supply of original aircraft components was first threatened, then prohibited, has been answered. The answer began at the Federal Aviation Administration (FAA) in 1947 when the first  Supplemental Type Certificate (STC) or Parts Manufacturing Approval (PMA) was issued by Washington officials for aircraft parts or components meeting the airworthiness standards but manufactured by sources which were not the original suppliers.   

China has been quicker to implement this practice; Chinese state and commercial enterprises have been producing PMA components for Boeing and Airbus aircraft in the Chinese airline fleets for many years.  The Russian Transport Ministry has followed suit; in its certification process and airworthiness regulations it has used the abbreviation RMA, Cyrillic for PMA. This process has been accelerating as the sanctions war has escalated.

So has the Russian process of replacing foreign imports entirely.

(more…)

FOR WANT OF A NAIL THE KINGDOM WAS LOST – ENGLISH PATHOLOGIST GUY RUTTY FACES CHALLENGE TO THE RELIABILITY OF HIS NOVICHOK EVIDENCE



By John Helmer, Moscow
  @bears_with

The weakest link in the British government’s four-year long story of Russian Novichok assassination operations in the UK – prelude to the current war – is an English medical expert by the name of Guy Rutty (lead image, standing).

A government-appointed pathologist advising the Home Office, police, and county coroners, Rutty is the head of the East Midlands Forensic Pathology Unit in Leicester,  he is the author of a post-mortem report, dated November 29, 2018,  claiming that the only fatality in the history of the Novichok nerve agent (lead image, document), Dawn Sturgess, had died of Novichok poisoning on July 8, 2018. Rutty’s finding was added four months after initial post-mortem results and a coroner’s cremation certificate stopped short of confirming that Novichok had been the cause of her death.

Rutty’s Novichok finding was a state secret for more than two years. It was revealed publicly   by the second government coroner to investigate Sturgess’s death, Dame Heather Hallett, at a public hearing in London on March 30, 2021. In written evidence it was reported that “on 17th July 2018, Professor Guy Rutty MBE, a Home Office Registered Forensic Pathologist conducted an independent post-mortem examination. He was accompanied by Dr Phillip Lumb, also an independent Home Office Registered Forensic Pathologist. Professor Rutty’s Post-Mortem Report of 29th November 2018 records the cause of death as Ia Post cardiac arrest hypoxic brain injury and intracerebral haemorrhage; Ib Novichok toxicity.”  

Hallett, Rutty, Lumb, and others engaged by the government to work on the Novichok case have refused to answer questions about the post-mortem investigations which followed immediately after Sturgess’s death was reported at Salisbury District Hospital; and a cause of death report signed by the Wiltshire Country coroner David Ridley, when Sturgess’s body was released to her family for funeral and cremation on July 30, 2018.  

After another three years, Ridley was replaced as coroner in the case by Hallett in March 2021. Hallett was replaced by Lord Anthony Hughes (lead image, sitting) in March 2022.

The cause-of-death documents remain state secrets. “As you have no formal role in the inquest proceedings,” Hallett’s and Rutty’s spokesman Martin Smith said on May 17, 2021, “it would not be appropriate to provide you with the information that you have requested.” 

Since then official leaks have revealed that Rutty had been despatched by the Home Office in London to take charge of the Sturgess post-mortem, and Lumb ordered not to undertake an autopsy or draw conclusions on the cause of Sturgess’s death until Rutty arrived. Why? The sources are not saying whether the two forensic professors differed in their interpretation of the evidence; and if so, whether the published excerpt of Rutty’s report of Novichok poisoning is the full story.   

New developments in the official investigation of Sturgess’s death, now directed by Hughes, have removed the state secrecy cover for Rutty, Lumb, and other medical specialists who attended the post-mortem on July 17, 2018. The appointment by Hughes of a London lawyer, Adam Chapman, to represent Sergei and Yulia Skripal, opens these post-mortem documents to the Skripals, along with the cremation certificate, and related hospital, ambulance and laboratory records. Chapman’s role is “appropriate” – Smith’s term – for the Skripals to cross-examine Rutty and Lumb and add independent expert evidence.

Hughes’s appointment of another lawyer, Emilie Pottle (lead image, top left), to act on behalf of the three Russian military officers accused of the Novichok attack exposes this evidence to testing at the same forensic standard. According to Hughes,  it is Pottle’s “responsibility for ensuring that the inquiry takes all reasonable steps to test the  evidence connecting those Russian nationals to Ms Sturgess’s death.” Pottle’s responsibility is to  cross-examine Rutty and Lumb.

(more…)

KILLING IS CHEAPER — THE US ARMY SPECIAL OPERATIONS COMMAND WEAPONIZES TWITTER, FACEBOOK, INSTAGRAM, WHATSAPP, TELEGRAM

By John Helmer, Moscow
  @bears_with

The US Army’s Special Operations Command (SOCOM) has been firing several hundred million dollars’ worth of cyber warheads at Russian targets from its headquarters at MacDill Airforce Base in Florida. They have all been duds.

The weapons, the source, and their failure to strike effectively have been exposed in a new report, published on August 24, by the Cyber Policy Center of the Stanford Internet Observatory.  The title of the 54-page study is “Unheard Voice: Evaluating Five Years of Pro-Western Covert Influence Operations”.

“We believe”, the report concludes, “this activity represents the most extensive case of covert pro-Western IO [influence operations] on social media to be reviewed and analyzed by open-source researchers to date… the data also shows the limitations of using inauthentic tactics to generate engagement and build influence online. The vast majority of posts and tweets we reviewed received no more than a handful of likes or retweets, and only 19% of the covert assets we identified had more than 1,000 followers. The average tweet received 0.49 likes and 0.02 retweets.”

“Tellingly,” according to the Stanford report, “the two most followed assets in the data provided by Twitter were overt accounts that publicly declared a connection to the U.S. military.”

The report comes from a branch of Stanford University, and is funded by the Stanford Law School and the Spogli Institute for Institutional Studies, headed by Michael McFaul (lead image).   McFaul, once a US ambassador to Moscow, has been a career advocate of war against Russia. The new report exposes many of McFaul’s allegations to be crude fabrications and propaganda which the Special Operations Command (SOCOM) has been paying contractors to fire at Russia for a decade.

Strangely, there is no mention in the report of the US Army, Pentagon, the Special Operations Command, or its principal cyberwar contractor, the Rendon Group.

(more…)

MARIA YUDINA OUT OF THE DARK – THE RUSSIAN CLASSICAL PIANIST PLAYS AGAIN

By John Helmer, Moscow
  @bears_with

Maria Yudina (lead image) is one of the great Russian pianists. She was not, however, one who appealed to all tastes in her lifetime, 1899 to 1970.

In a new biography of her by Elizabeth Wilson, Yudina’s belief that music represents Orthodox Christian faith is made out to be so heroic, the art of the piano is diminished — and Yudina’s reputation consigned again to minority and obscurity. Russian classical music and its performers, who have not recovered from the Yeltsin period and now from the renewal of the German-American war, deserve better than Wilson’s propaganda tune.

(more…)
Categories
Archives

Copyright © 2007-2017 Dances With Bears

Copyright © 2007-2017 Dances With Bears

Education Template