FATHER FROST MAKES A CALL ON ALROSA

According to the Russian Christmas Day tradition, Dyed Moroz (“Father Frost”, aka St. Nicholas, Santa Claus) makes his annual visit to children to question them, before he distributes the presents. He is assisted by Snegourochka (“Snow Girl”).

It can happen that she is late. Then Dyed Moroz is obliged to ask the children to call out aloud to summon her. Those who can shout the loudest are motivated by the idea of catching the old man’s attention, and if they are lucky, first pick at his rewards. Once Snegourochka arrives, Dyed Moroz reviews who has been on his best behaviour for the past year. Asked who has been naughty, the children naturally scream their noes, and again, those who cry loudest hope to be rewarded first and best.

In Russia, it’s always been tough to deserve a reward. That’s possibly why Vyacheslav Shtirov, President of the Sakha republic and godfather of Alrosa, Russia’s dominant diamond miner — the second largest producer of diamonds in the world — is not looking forward to his interview with President Vladimir Putin. Shtirov has been summoned to the Kremlin meeting on January 28.

The last time Shtirov was summoned, Shtirov took Putin a large bouquet of red roses. The discussion was a sanguine one. Shtirov was told that he was to vacate the presidency of Alrosa, and become the president of the regional republic, replacing the two-term incumbent, Mikhail Nikolaev who was threatening to defy the electoral law, as well as the Kremlin, and offer himself for a third term. Nikolaev had been the boss of the republic since the Soviet Union had been demolished, and he had run it as a personal fiefdom by arrangement with President Boris Yeltsin in Moscow. The quid pro quo for Nikolaev was that he rigged the local vote for Yeltsin whenever that was required, and provided diamonds on demand too.

Putin offered Nikolaev immunity from prosecution with a senatorial seat on the Federation Council. Shtirov was told the fiefdom would be his on condition he shared the running with the federal authorities, led by the Finance Ministry, which is the federal agency responsible for the diamond industry; it sits on the board of directors of Alrosa, supervising the state’s 37-percent shareholding; and it runs the Gokhran, the agency in charge of the state’s stockpiles of diamonds and precious metals. However, the federal authorities have been unable to capture control of the system of exports which together, Nikolaev and Shtirov had elaborated through the regional Committee for Precious Metals and Gemstones; Alrosa mining affiliates; and near-bankrupt diamond cutting establishments in Sakha and elsewhere, which Alrosa kept on a short leash.

Knowing the Finance Minister, Alexei Kudrin, to be an obliging man, Shtirov was confident that he could control both the republic, and its principal cashcow Alrosa, much as he had done during his term as the company’s chief executive. And indeed, Kudrin has proved to be almost as obliging to his Sakha diamond constituents as he learned to be, when he was the factotum of Anatoly Chubais, Yeltsin’s Finance Minister, chief of staff, and dispenser of favours.

Putin and his Kremlin aides have proved to be tougher. They, rather than Kudrin, have been giving the orders to the mineral extraction business, starting with oil and gas, moving on to nickel, platinum, aluminium, and gold. Slowly but surely, they have been taking charge of Alrosa for the federal government. Colonel Yury Ionov was put in charge of the company’s legal affairs and cashflow security. Alexander Nichiporuk was placed as deputy CEO, and last month, he was officially promoted to be the chief executive.

Now that Putin has the new legal authority to appoint the regional governors, the interview with Shtirov is bound to focus on Putin’s intention for the future of Sakha; and for the way in which roughly $2 billion of Russia’s annual diamond production is traded and exported. There is local speculation that the Kremlin may replace Shtirov with a man whose loyalty to Moscow is judged to be greater than to the so-called Yakut clan. There is speculation in the international diamond market that the marketing of Russian diamonds will be reorganized to eliminate the price-rigging monopoly that Russian diamond-cutters have long charged against Alrosa in the domestic market, as well as the diversion of cash that has been alleged for its exports abroad. There is speculation in the mining community that Putin’s advisor on mineral resource reform, Professor Vladimir Litvinenko of St. Petersburg, intends to push through new legislation limiting single companies to mining rights of no more than 65-percent of the mineral reerves in a single region. At the moment, Alrosa holds a 100-percent monopoly in Sakha, the principal diamond province of the east, and 75-percent in Arkhangelsk, the new diamond province in the northwest.

Talk is cheap, but noone can afford to underestimate what Putin will tell Shtirov. Least of all, Lev Leviev, the Israeli diamantaire whose political access through Putin’s first chief of staff, Alexander Voioshin, and through Rabbi Berl Lazar, has given him a privileged position in the diamond supply chain. Leviev has accused Alrosa of shorting Ruis, his diamond cutting works in Moscow, of the supplies of rough his factory has the capacity to cut and polish. On the other hand, Leviev is accused of submarining rough through the Alrosa subsidiary Diamonds of Anabar on preferential terms arranged by Matvei Yevseyev, the subsidiary’s chairman. Leviev’s critics hope to persuade Putin that Leviev’s tactics are in embarrassing contradiction to the transparency which Russia’s diamond policymakers want to adopt, as they take over the chairmanship of the Kimberley Process on January 1; this is the international network of diamond producers committed to cleaning up the export trade.

If and when Alrosa is reorganized as an open shareholding company and the state proceeds with privatization, Leviev is a contender to buy a control stake. And because Alrosa is the largest unprivatized diamond mining company in the world, every major international diamond enterprise is a contender too, including De Beers – the world’s largest diamond miner – BHP Billiton, several Indian diamantaires, and Beny Steinmetz, Leviev’s Israeli rival.

Much needs to be done before that contest can get under way in earnest. The first step has been the removal of the state secrecy provisions covering Alrosa’s physical diamond production, sales, exports, and diamond reserves. After postponing the declassification for most of this year, the Kremlin allowed the Finance Ministry to release the first instalment of data last week. In 2003, the official release indicates, Russia produced 33.02 million carats of rough diamonds, which were sold for $1.7 billion, for an average of $51 per carat. In the first half of 2004, the corresponding data were 17.8 million carats produced, worth $948 million, for an average of $53 per carat. For the time being, key data on mine reserves have not been released.

The export data for 2003 issued by the Finance Ministry show that physical volume was 37.8 million carats, at a total recorded value of $883.4 million. In the first nine months of this year, exports totaled 23.6 million carats for $826.4 million in value. The average carat value of these exports was $23 in 2003, and $35 for this year.

Some Russian diamond industry leaders say they have been surprised at how high the production caratage has turned out to be, and correspondingly, how low the average carat value has fallen below expectation, Until now, Alrosa’s average carat value has been estimated in the international diamond market to be at least 30 percent higher.

Even more of a surprise is the discrepancy between the carat value of the diamonds at the minehead, and their value in export sales. The declassified data now indicate that exported diamonds fetched 53 percent less per carat on average in 2003, while this year the exports have been running 34 percent below the production value. This discrepancy is going to be hotly argued, both by those in the federal government who are urging Putin to clean up Alrosa’s export schemes; and also by the domestic diamond cutters who have long accused Alrosa of charging higher domestic prices than De Beers has been paying for the Russian goods. Alrosa has acknowledged that it charges a premium over export prices to domestic diamond manufacturers. But in selling to its own diamond-cutting subsidiary, Brillianty Alrosa, and the Sakha-based diamond-cutting group Tuimaada, the company has apparently offered discounts and preferential credit arrangements.

When Shtirov sits down with Putin in a few days’ time, he could deliver a speech about how arbitrariness in Russian government policy has been hurting the international investment climate, and threatens to damage Alrosa’s return to the Eurobond market for refinancing of its sizeable debts. But Putin isn’t Father Frost. The louder Shtirov shouts, the less convinced Putin is likely to be that he deserves a fresh New Year reward, and the more certain Putin’s advisors are that Shtirov must be brought under strict control.

NORILSK’S CATALOGUE OF CUTOUTS AND DECEPTION

MOSCOW (Mineweb.com) – Last Friday, some days ahead of deadline, Norilsk Nickel issued a terse announcement. “MMC Norilsk Nickel,” it read, “a 20% owner of Gold Fields, announced today that, in accordance with previously stated intentions, it voted against the proposed transaction with IAM-Gold.”

On the surface, this appeared to be nothing more than the public reiteration of the company’s well-known, published agreement with Harmony Gold in mid-October, supporting its bid to take over Gold Fields, blocking its lAMGold merger, and opposing any offer Gold Fields, or its allies, might have made to outbid the Harmony offer.

However, by referring to “previously stated intentions,” Norilsk Nickel raises far more questions than those responsible for the statement itself, or the Company’s senior executives, are willing to answer indeed, if the intentions of Norilsk Nickel are carefully scrutinized since March 29, when it first bought the Gold Fields stake from Anglo American, paying $1.16 billion, the trail of evidence shows one dissimulation after another, false undertaking piled on false undertaking, and intent to mislead from beginning to end.

So consistent is this record, that when all the evidence is gathered up, the intention of the company appears to be nothing less than a massive attempt to expatriate Russian assets in violation of Russian law; and when called to account for this, to deceive the shareholders of Harmony and Gold Fields, as well as the regulatory authorities of South Africa and the United States, who also have the obligation to assess the process, according to their legal codes.

This evidence is so compelling, it should have triggered by now that hoary Anglo-American legal doctrine known as “clean hands”. That states that if a party to a contract makes an undertaking or commitment that is unlawful, knowing that he is breaking the law, and attempting to conceal this, he lacks the clean hands required to make the contract lawfully binding. In short, the evidence that has accumulated for over seven months is that Norilsk Nickel’s purchase of the Gold Fields stake was unlawful, arid everything Norilsk Nickel has done since then, including the attempt to push Gold Fields out of South Africa, the “Project Golf plan drawn up with HSBC Bank, and the so-called “irrevocable undertaking” with Harmony, are unlawful, too.

The trail begins, not with Norilsk Nickel, but with Leonid Rozhetskin. Just how different these two, the company and the man, are is the key to unravelling much of the disinformation the company has been issuing. Rozhetskin is officially titled Advisor to the CEO and vice-president of the management board of Norilsk Nickel; his function is to direct the company’s financial strategy, including mergers and acquisitions, asset disposals, and borrowings. Rozhetskin was the initiator of the Russian dealings with Anglo American; he was behind the Gold Fields purchase, and everything that has happened since.

However, he is not a salaried employee, and in a pinch, the company can act or speak as if Rozhetskin represents himself, not the company. This is a loophole which Harmony executives have exploited when telling SA and US regulatory panels and courts that it has not acted on its takeover bid for Gold Fields in concert with Norilsk Nickel. The unstated premise of that claim is that Norilsk Nickel and Rozhetskin are quite different.

In fact, Rozhetskin acts for the controlling shareholders of Norilsk Nickel, Vladimir Potanin, who directs a Moscow holding called Interros, and Mikhail Prokhorov, Norilsk Nickel’s CEO. Between the two of them, they control more than 70% of the company’s shares. At present, through a company offer, they are buying out the independently owned minorities. Rozhetskin is a contractor to them, or to companies they control in registrations outside Russia; he is not their employee. A US passport holder, Rozhetskin is legally obliged to pay US taxes on his worldwide income. He is also subject to US laws governing the way the rewards of dealmaking may be sought, received, and distributed, such as the Foreign Corrupt Practices Act. Officially, Norilsk Nickel will not answer questions about Rozhetskin beyond giving his title. Rozhetskin refuses to answer questions directly.

Officially, Rozhetskin has a deputy, Dmitri Razumov, whose signature appears on legal documents Rozhetskin has negotiated. The reason for this may be that Razumov is legally an employee of Norilsk Nickel, rather than a contractor like Rozhetskin, or Rozhetskin’s employee. Razumov’s official title is Deputy to the CEO of Norilsk Nickel. It is his signature that appears on the October 16 agreement with Harmony to oppose Gold Fields’s lAMGold proposal. Razumov avoids all contact with the press.

Potanin employs several spokesmen at Interros. But they have refused to respond to questions regarding the Gold Fields deal pn the ground that the transaction was done by Norilsk Nickel. This is despite subsequent evidence from Gold Fields CEO Ian Cockerill that, on his first trip to Moscow after the March 29 transaction, he met with Potanin, and understood clearly that Potanin was as much in charge of the deal as Prokhorov. On this point, Kremlin officials have not been misdirected, or misled. When they wanted to discuss the deal, they went to Potanin.

The company’s spokesman for investment relations, Dmitri Usanov, has spent only a few weeks in the job, replacing Sergei Polikarpov. Both of them take their orders from Rozhetskin, but answer no questions about him. Usanov is so reluctant to answer questions, he has even refused to answer placebos, such as confirming the exact stake Norilsk Nickel claims to hold in Gold Fields.

Immediately after the announcement of the Gold Fields purchase, it was Polikarpov who declared that “the deal does not require Central Bank approval.” Rozhetskin had already made that claim in his negotiations with Anglo American, and with Citibank, which provided an $800 million loan to enable Norilsk Nickel to make the purchase. Polikarpov also claimed: “this deal does not require any approval from the Russian government and the Kremlin. Therefore, we have not applied and obtained such approval.”

A few days after he said this, the text of the purchase agreement and the Citibank loan agreement were released. According to the first, Norilsk Nickel declared that “all consents, concessions, approvals, filings, registrations, authorisations and orders, governmental, regulatory, corporate or other, necessary for the execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions herein contemplated and for the purchase from the Selling Shareholder of the Sale Shares in the manner set out herein, have been obtained and are in full force and effect.”

In the loan agreement, Norilsk Nickel claimed that “All Authorisations required: (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents; and (b) to make the Finance Documents admissible in evidence in its jurisdiction of incorporation have been obtained or effected and are in full force and effect.” It also averred that “any factual information provided by or on behalf of any member of the Borrower Group was true, complete and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.” According to the borrowing agreement, Norilsk Nickel claimed that there 51 were “no administrative proceedings of or before any court, arbitral body or agency which is reasonably likely to be adversely determined and, if so adversely determined, would reasonably be expected to have a Material Adverse Effect” on the Citibank loan or the Gold Fields transaction.

These claims were false. By August, Rozhetskin admitted as much in secret, e-mailing Cockerill at Gold Fields. The text of that message surfaced during document discovery by lawyers for Gold Fields and Harmony, ahead of their federal court hearing in New York last month. Cockerill has said publicly: “About two weeks prior to the [September 2] email, Norilsk had requested that Gold Fields downplay any public discourse on Norilsk’s views on the [lAMGold] transaction or possible future intentions, as Norilsk was, at the time, under scrutiny from the Russian authorities.”

In short, Rozhetskin was secretly admitting what he and his spokesman had earlier denied. But he was not admitting to Cockerill the extent of the Russian government “scrutiny”. That did not become clear for several more weeks, until Russian sources, including the Central Bank, acknowledged that the Gold Fields transaction in March had been unlawful, and that Potanin and Prokhorov had agreed to reverse it.

For weeks before then, however, as testimony in the litigation between Gold Fields and Harmony now reveals, Rozhetskin had tried to pressure Gold Fields into redomiciling at least some, if not all of its gold assets outside South Africa, as part of his plan to increase Norilsk Nickel’s stake in the new offshore company, and vesting ownership of its Russian goldmines in that entity. Rozhetskin was not shy in revealing this scheme to investment bankers, inviting them to propose their deals to him. In April, according to RIA-Novosti, the Russian state news agency, Rozhetskin told a session of the Russian Economic Forum in London that Norilsk Nickel intended to increase its shareholding of Gold Fields. Asked to clarify that, the company spokesmen refused, referring instead to Rozhetskin’s office. Rozhetskin’s secretary said he was unavailable to answer questions. “If he will find it reasonable to respond, he will do so,” she added.

By some time in July, Rozhetskin understood that he could not make his second-stage deal with Gold Fields, that is, his takeover. But it is unclear whether Potanin and Prokhorov, who knew what direction the Kremlin wanted, realized what Rozhetskin was doing. In Moscow he may have said he was fashioning a highly lucrative exit from the 20% stake he had bought, adding two to three hundred million dollars in profit on the $1.16 billion purchase price. But offshore, Rozhetskin was telling Damien Coates, an HSBC banker, and others that he wanted to expand Norilsk Nickel’s offshore stake, not liquidate it.

Disclosure of the secret HSBC plan, code-named Project Golf, reveals what Rozhetskin had been saying outside Russia. He had been discussing “reversal candidates” – foreign-listed companies into which Potanin and Prokhorov could vest some or all of their Norilsk Nickel assets – and these included Canadian goldminers, Kinross and lAMGold. He was unhappy with Gold Fields, he told HSBC, because “G[oldfields]’s shareholders will oppose all schemes, including vesting of Norilsk’s] assets, that result in N[orilsk] gaining ‘creeping control’ without paying full control premium.”

At the same time that Rozhetskin was admitting to Gold Fields that he was worried about Russian government “scrutiny”, he was telling HSBC that “a follow-up deal is highly desirable to demonstrate that the original stake purchase had real commercial synergy.” At least, that is what HSBC thought it could divulge to Harmony, once Rozhetskin and Coates had agreed that Cockerill would insist on dealings “at arms length without favour.” Exactly what “favour” the secret HSBC plan was hinting at, and for whom, remains to be uncovered. But the HSBC document leaves little doubt that Bernard Swanepoel, Harmony’s CEO, appeared to Rozhetskin and to HSBC as indicating “much more flexibility.”

Swanepoel has testified that the HSBC document was nothing more than a proposal, initiated by HSBC, which Harmony decided not to accept. What is not in doubt is that Rozhetskin was prompting HSBC at a time when he knew that both Gold Fields and the Kremlin were opposed to his scheming. Evidence about what Swanepoel knew, or should have known, about the Rozhetskin schemes, and the legality of the Norilsk Nickel transaction, has yet to be examined.

When HSBC took the Project Golf scheme to Swanepoel, indicating that Rozhetskin would back Harmony in a hostile takeover of Gold Fields, it is possible that Rozhetskin withheld the crucial information from Moscow that Norilsk Nickel was obliged to liquidate the unlawful March 29 deal. So long as the Central Bank and the Kremlin covered their investigation with secrecy, Rozhetskin could have been bluffing Swanepoel. About eight weeks elapsed between HSBC’s submission to Swanepoel and the latter’s signing of the “irrevocable undertaking” with Rozhetskin’s man, Razumov. So far, the regulatory panels and court judges who have reviewed this record have ruled only on a portion of the evidence, without determining whether the initial Norilsk Nickel transaction was a lawful one, and whether Swanepoel knew that Rozhetskin was under orders from his superiors to find a way to liquidate it.

Just how uncomfortable Rozhetskin was beginning to feel in Moscow appeared on August 3, two weeks after he warned Cockerill about the government pressure, but days after a Gold Fields executive had openly acknowledged that Norilsk Nickel might try to take over Gold Fields.

According to a company release, “MMC Norilsk Nickel would like to officially state that recent references made in the Russian and foreign press to an announcement made by a leading figure in Gold Fields Ltd concerning MMC Norilsk Nickel’s alleged offer to transfer to that company its gold mining assets in return for an increased shareholding have no basis in fact. MMC Norilsk Nickel is not planning to transfer any shares in its Russian gold mining operations nor any rights to existing or future plant or deposits on the territory of the Russian Federation to the aforementioned South African Company, and accordingly, has made no such offer to Gold Fields Limited.”

That was a lie. The truth was that Rozhetskin had demanded, and Gold Fields had refused. In its place, Rozhetskin then got HSBC to make the very same proposal to Swanepoel. Thus, Norilsk Nickel’s public statement is directly contradicted by the activities of its principal shareholders and their contractor Rozhetskin. Theirs has been a shell-game in which the truth cannot be found.

A similar shell-game is being played by Potanin and Prokhorov’s representatives in South Africa. According to South African corporate executives, Andrei Dubina introduces himself as the Norilsk Nickel representative in SA. He has also referred to himself as a former ambassador to Iraq, according to one SA source. The Russian Foreign Ministry responds that there has never been a Soviet or Russian ambassador of this name, neither to Iraq, nor to any country. At Potanin’s Interros office, the spokesman claims: “we have never heard of Andrei Dubina.” At Norilsk Nickel headquarters, the spokesman says of Dubina and an Armenian associate, also in SA: “nobody knows them. We have no information about these people.”

AFTERSHOCK OF NORD STREAM EXPLOSIONS RUMBLES WARSAW — POLISH POLITICIANS GO “NUTTERS”

By John Helmer, Moscow
  @bears_with

The Polish government in Warsaw, facing re-election in less than a year, wants all the credit from Washington for their joint operation to sabotage the Nord Stream gas pipelines on the Baltic seabed.

It also wants to intimidate the German chancellor in Berlin, and deter both American and German officials from plotting a takeover by the Polish opposition party, Civic Platform, next year.

Blaming the Russians for the attack is their cover story. Attacking anyone who doesn’t believe it, including Poles and Germans, Warsaw officials and their supporting media claim they are dupes or agents of Russian disinformation.

Their rivals, Civic Platform (PO) politicians trailing the PiS in the polls by seven percentage points,   want Polish voters to think that no credit for the Nord Stream attack should be earned by the ruling Law and Justice (PiS) party. They also want to divert  the Russian counter-attack from Warsaw to Washington.

“Thank you USA” was the first Polish political declaration tweeted hours after the blasts by Radoslaw Sikorski (lead image, left), the PO’s former defence and foreign minister, now a European Parliament deputy. In support and justification,  his old friend and PO ministerial colleague, Roman Giertych, warned Sikorski’s critics: “Would you nutters prefer that the Russians find us guilty?”

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THE BORNHOLM BLOW-UP REPEATS THE BORNHOLM BASH — POLAND ATTACKS GERMANY AND BLAMES RUSSIA

By John Helmer, Moscow
  @bears_with

The military operation on Monday night which fired munitions to blow holes in the Nord Stream I and Nord Stream II pipelines on the Baltic Sea floor, near Bornholm Island,  was executed by the Polish Navy and special forces.

It was aided by the Danish and Swedish military; planned and coordinated with US intelligence and technical support; and approved by the Polish Prime Minister Mateusz Morawiecki.

The operation is a repeat of the Bornholm Bash operation of April 2021, which attempted to sabotage Russian vessels laying the gas pipes, but ended in ignominious retreat by the Polish forces. That was a direct attack on Russia. This time the attack is targeting the Germans, especially the business and union lobby and the East German voters, with a scheme to blame Moscow for the troubles they already have — and their troubles to come with winter.

Morawiecki is bluffing. “It is a very strange coincidence,” he has announced, “that on the same day that the Baltic Gas Pipeline  opens, someone is most likely committing an act of sabotage. This shows what means the Russians can resort to in order to destabilize Europe. They are to blame for the very high gas prices”.   The truth bubbling up from the seabed at Bornholm is the opposite of what Morawiecki says.

But the political value to Morawiecki, already running for the Polish election in eleven months’ time, is his government’s claim to have solved all of Poland’s needs for gas and electricity through the winter — when he knows that won’t come true.  

Inaugurating the 21-year old Baltic Pipe project from the Norwegian and Danish gas networks, Morawiecki announced: “This gas pipeline is the end of the era of dependence on Russian gas. It is also a gas pipeline of security, sovereignty and freedom not only for Polish, but in the future, also for others…[Opposition Civic Platform leader Donald] Tusk’s government preferred Russian gas. They wanted to conclude a deal with the Russians even by 2045…thanks to the Baltic Pipe, extraction from Polish deposits,  LNG supply from the USA and Qatar, as well as interconnection with its neighbours, Poland is now secured in terms of gas supplies.”

Civic Platform’s former defence and foreign minister Radek Sikorski also celebrated the Bornholm Blow-up. “As we say in Polish, a small thing, but so much joy”.  “Thank you USA,” Sikorski added,   diverting the credit for the operation, away from domestic rival Morawiecki to President Joseph Biden; he had publicly threatened to sabotage the line in February.  Biden’s ambassador in Warsaw is also backing Sikorski’s Civic Platform party to replace  Morawiecki next year.  

The attack not only escalates the Polish election campaign. It also continues the Morawiecki government’s plan to attack Germany, first by reviving the reparations claim for the invasion and occupation of 1939-45;  and second, by targeting alleged German complicity, corruption,  and appeasement in the Russian scheme to rule Europe at Poland’s expense. .

“The appeasement policy towards Putin”, announced PISM, the official government think tank in Warsaw in June,  “is part of an American attempt to free itself from its obligations of maintaining peace in Europe. The bargain is that Americans will allow Putin to finish building the Nord Stream 2 pipeline in exchange for Putin’s commitment not use it to blackmail Eastern Europe. Sounds convincing? Sounds like something you heard before? It’s not without reason that Winston Churchill commented on the American decision-making process: ‘Americans can always be trusted to do the right thing, once all other possibilities have been exhausted.’ However, by pursuing such a policy now, the Biden administration takes even more responsibility for the security of Europe, including Ukraine, which is the stake for subsequent American mistakes.”

“Where does this place Poland? Almost 18 years ago the Federal Republic of Germany, our European ally, decided to prioritize its own business interests with Putin’s Russia over solidarity and cooperation with allies in Central Europe. It was a wrong decision to make and all Polish governments – regardless of political differences – communicated this clearly and forcefully to Berlin. But since Putin succeeded in corrupting the German elite and already decided to pay the price of infamy, ignoring the Polish objections was the only strategy Germany was left with.”

The explosions at Bornholm are the new Polish strike for war in Europe against Chancellor Olaf Scholz. So far the Chancellery in Berlin is silent, tellingly.

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LEMONS, MIMOSAS, AND STALIN’S SHOVEL

By John Helmer, Moscow
  @bears_with

The only Russian leader in a thousand years who was a genuine gardener and who allowed himself to be recorded with a shovel in his hand was Joseph Stalin (lead image, mid-1930s). Compared to Stalin, the honouring of the new British king Charles III as a gardener pales into imitativeness and pretension.   

Stalin cultivated lemon trees and flowering mimosas at his Gagra dacha  by the Black Sea in Abkhazia.  Growing mimosas (acacias) is tricky. No plantsman serving the monarchs in London or at Versailles has made a go of it in four hundred years. Even in the most favourable climates, mimosas – there are almost six hundred varieties of them — are short-lived. They can revive after bushfires; they can go into sudden death for no apparent reason. Russians know nothing of this – they love them for their blossom and scent, and give bouquets of them to celebrate the arrival of spring.

Stalin didn’t attempt the near-impossible, to grow lemons and other fruit in the Moscow climate. That was the sort of thing which the Kremlin noblemen did to impress the tsar and compete in conspicuous affluence with each other. At Kuskovo, now in the eastern district of Moscow, Count Pyotr Sheremetyev built a heated orangerie between 1761 and 1762, where he protected his lemons, pomegranates, peaches, olives, and almonds, baskets of which he would present in mid-winter to the Empress Catherine the Great and many others. The spade work was done by serfs. Sheremetyev beat the French king Louis XIV to the punch – his first orangerie at Versailles wasn’t built until 1763.

Stalin also had a dacha at Kuskovo But he cultivated his lemons and mimosas seventeen hundred  kilometres to the south where they reminded him of home in Georgia. Doing his own spade work wasn’t Stalin showing off, as Charles III does in his gardens, like Louis XIV before him. Stalin’s spade work was what he had done in his youth. It also illustrated his message – “I’m showing you how to work”, he would tell visitors surprised to see him with the shovel.  As to his mimosas, Stalin’s Abkhazian confidante, Akaki Mgeladze, claimed in his memoirs that Stalin intended them as another lesson. “How Muscovites love mimosas, they stand in queues for them” he reportedly told him.  “Think how to grow more to make the Muscovites happy!”

In the new war with the US and its allies in Europe, Stalin’s lessons of the shovel and the mimosas are being re-learned in conditions which Stalin never knew – how to fight the war for survival and at the same time keep everyone happy with flowers on the dining table.

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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.  

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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.  

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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.

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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.  

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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.  

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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.

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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.

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