WHEN EATING THE ADVERSARY IS NOT AFRICAN

MOSCOW (Mineweb.com)-Despite the visit this month to Moscow of a 64-person delegation of South African government and corporate officials – the largest ever to come to Russia – the outcome appears to be a cooling in mutual sentiment. One-sided lobbying by Russia’s natural resources minister, Yury allies is one of the reasons. Reluctance to challenge him on the part of his SA counterparts is another.

On the Russian side, there is unspoken frustration at the year-long campaign by President Thabo Mbeki to secure a South African seat in the expanded UN Security Council, without sufficient consensus from other UN members.

Sources in Moscow are aware that Mbeki made the admission of South Africa to a permanent seat in the UN Security Council a personal priority this year.

High-level African sources, present at the G-8 summit at Gleneagles, Scotland, in early July told Mineweb that they believed Mbeki, attending as one of several African Union observers, had asked President Vladimir Putin for Russia’s support of SA’s Security Council plan. All that Russian spokesmen would say about their conversation was that “the development of bilateral economic relations was discussed.” Regarding talk of a UN seat for SA, the Russian Foreign Ministry said they “do not have such operational information”.

Mbeki then ordered Foreign Minister Nkosazana Dlamini-Zuma, to Moscow to meet her Russian counterpart Sergei Lavrov on July 12. In no uncertain terms, she was told that Russia would not support expansion of the UN Security Council unless there were demonstrable backing from the entire UN membership, a point which Dlamini-Zuma could not demonstrate. The Russian Foreign Ministry then issued a brief communique confirming that Dlamini-Zuma had made the UN Security Council her priority. But the diplomatic language treated the SA initiative coolly.

Dlamini-Zuma returned to the same issue again, when she met Lavrov in Moscow on October 6. By then, most UN representatives had concluded that seating African states in the Security Council had been effectively stopped by US action. Why then were Mbeki and Dlamini-Zuma insistently repeating their request for Russian backing?

Lavrov’s ministry issued a new communique, acknowleding Dlamini-Zuma’s visit, and repeating that “reform of the United Nations” should be carried out “on the basis of the widest consent, and what is even better, the consensus of member states.”

There was nothing new in the Russian position, and officials at the Department of Foreign Affairs (DFA) IN Pretoria claim the Russians are “still open” on Security Council reform, adding that “the situation is changing all the time,” Dlamini-Zuma and Lavrov are reported to be personally on the best of terms.

When great powers meet, there usually is no time for senior officials to address more than a handful of priority concerns at a sitting. For several years, the South African priority in Moscow was to lift a 5% import duty penalty which South African exports to Russia were trading under, compared to rivals in South America. That penalty was finally removed in 2002.

This year, the priority has been the UN Security Council seat, and Mbeki has obliged Dlamini Zuma to expend most of her time on that, aware that other African states with Security Council ambitions were dangling the possibility of oil concessions and other inducements to Russian oil companies who have clout with the Kremlin.

Nigeria, South Africa’s leading rival for the Security Council, has clashed with Minister Lavrov over the detention in a Lagos prison for two years, without trial, of Russian seamen caught up in an oil smuggling scheme, masterminded by Nigerian officials. On the other hand, the Nigerian government recently offered an oil exploration concession to LUKoil – a name that will appear again in this story. Egypt, another candidate for a Security Council seat, has already granted LUKoil a concession.

On the South African side, sources at major mining companies express concern that South African government officials, including the new Minister of Minerals and Energy, Lindiwe Hendricks, have done too little to deal with Russian restrictions on South African mining companies investing in Russia; and perhaps too much to endorse Russian involvement in the South African mining sector.
It has been customary for the two governments to issue a detailed report on the results of their annual inter-government commission on trade and economic cooperation (ITEC). At the conclusion of the last session in Moscow in 2003, the joint communique ran for four single-spaced typed pages. In one excerpt, the two governments “undertook to encourage South African business and capital investments in the Russian economy.” There was no reference then, or since, to the most obvious restriction on South African mining investment in Russia — the statutory 49% limit on foreign control of a Russian diamond-mining venture.

A source at DFA in Pretoria claimed that the minutes of the latest round of talks in Moscow were signed, and a press conference held to discuss the results. Lasting 12 minutes, this set a speed record.

Instead, Russia’s co-chairman at ITEC, Yury Trutnev, the Minister of Natural Resources since 2003, issued a summary of his own interests as expressed at a meeting with counterpart, South Africa’s Minister of Minerals & Energy, Lindiwe Hendricks. Trutnev repeated previous promotional statements he has made on behalf of the Renova group’s plan to mine manganese in the Kalahari.

DME’s head of licensing, Jacinto Rocha, told Mineweb in August that he had issued a manganese exploration and mining licence to Pitsa ya Setshaba, Renova’s BEE partner. It is unclear, however, whether Renova, owned by Russian metals oligarch Victor Vekselberg, intends to bring significant cash into South Africa for the project, honouring its pledge to DME to bring foreign investment into the country; or else borrow funds from South African banks.

DME appears to be unaware that in recent weeks, following a spate of disclosures in the Ukrainian media and statements by Ukrainian government officials, Renova has been accused of corruption to obtain shareholding control of the Nikopol manganese processing plant in the Ukraine. Action by the Ukrainian courts has blocked Renova’s manganese investment there, at least for the time being.Following his meeting with Hendricks, Minister Trutnev also announced that he had met with a delegation from De Beers. Russian sources confirm there was such a meeting; and that it lasted for a few minutes. Neither De Beers nor Alrosa has reported publicly on the meeting, and both were surprised when Trutnev did so.

The two world leaders in diamond mining are quietly assembling a work group to consider joint exploration for diamonds in northwestern Russia. However, a significant obstacle to cooperation remains existing, as well as new Russian legislation preventing foreign diamond-miners from mining any diamonds they
discover.

Hendricks did not issue her own communique.lt appears that she failed to ask Trutnev why Russian legislation is becoming increasingly restrictive, and how South African miners could be expected to pursue exploration in Russia, if they cannot be assured of the right to mine what they find.

Trutnev has already demonstrated that he is disinclined to respond to this concern. During last year’s ITEC round in Pretoria, Trutnev was hosted at De Beers headquarters, and asked what he was willing to do to resolve a long-running dispute over the Russian refusal to transfer the mining licence for the Verkhotina project and the Grib diamond pipe in the northwestern region of Arkhangelsk. Trutnev replied that the dispute was a “commercial” one, meaning he did not intend to take any action.

De Beers’s affiliate, Archangel Diamond Corporation (ADC), discovered the pipe with its partner, Arkhangelskgeoldobycha (AGD), in 1996. But the latter then seized the development rights for itself. AGD is controlled by Vagit Alekperov, the CEO of LUKoil, one of Russia’s leading oil producers. Russian mining sources believe Alekperov promoted Trutnev to his post, replacing a minister who was more troublesome for LUKoil than Trutnev has proved to be.

Trutnev hasn’t exactly done nothing, as he implied when speaking to De Beers a year ago. A few months ago, he arranged to replace the head of the supervisory agency responsible for monitoring licence compliance, when it challenged AGD’s performance at the Verkhotina project. Alekperov then went public to defend his pet company. Trutnev’s action eliminated the danger.

According to his public statement, Trutnev claims credit for the fact that De Beers and Alrosa “have agreed upon realization of joint projects in the field of search and prospecting works in the territory of Russia and other countries.” This is false. There is negotiation, but no agreement.

Trutnev went on to claim that his ministry is “developing criteria of reference for sites of sub-soil resources as ‘strategic deposits’.” Actually, Trutnev’s ministry had been doing this for years before he arrived, and the only reason the criteria haven’t been delivered to parliament for enactment is that Russian miners and their government allies have been unable to decide how to mine the treasure themselves.

If large enough to be purportedly strategic, foreign miners will not be able to develop the deposits. In addition to all diamond deposits under the current legislation, this new measure will extend to gold deposits, such as Sukhoi Log; the Udokan copper deposit; and possibly platinum, coal, iron-ore, and other minerals as well.

US, Japanese, Chinese and other government officials have already made clear their dissatisfaction with Trutnev’s arbitrariness, particularly in the oil and gas sector. But as a leader in the hard-rock mining community, the South African government has been silent.

Although it has been one of the proponents of transparent African resource development, the Mbeki administration is well aware of Russian efforts to enter oil and mineral resource exploitation in Angola, Nigeria, Guinea, and the Democratic Republic of Congo. Why the terms of their entry should be unreciprocated by the Russian government is the question Hendricks should have raised at ITEC, but didn’t. In short, she failed to do what Russian officials expect their counterparts to do, if they are to earn reciprocity – they should state their national interest, and be serious in pursuing it.

In one of his most detailed statements on Africa this year, President Vladimir Putin had this to say, following a meeting in Moscow with UK Prime Minister Tony Blair. One of the topics discussed had been forgiveness of African state debt. Another had been human rights. Putin agreed to Blair’s position on the former. Responding to Blair’s criticism on the latter issue, Putin remarked, according to the following translation: “We all know that African countries used to have a tradition of eating their own adversaries. We do not have such a tradition or process or culture and I believe the comparison between Africa and Russia is not quite just.”

Had Putin’s attention been drawn to Alekperov’s attempt to swallow the diamond deposit he seized from ADC, or Norilsk Nickel’s part in trying to eat Gold Fields, he might have been dissuaded from employing his metaphor at the expense of Africa. In the mineral resource world, eating the adversary is a standard operating option, if not always the wisest procedure. Unless Hendricks and other SA officials demonstrate otherwise, Russians like Trutnev are bound to conclude that there is no objection in Pretoria to the Russian appetite, or their eating habits.

AN AESOP FABLE FOR RUSSIAN ALUMINIUM

MOSCOW (Mineweb.com) –Among the world’s top producers of aluminium, all are public companies regulated by the laws, securities market and anti-trust regulations, and disclosure requirements of the United States and the European Union, save one. The exception is Russian Aluminium (Rusal), which is owned by Oleg Deripaska, a young Russian.

What Deripaska allows to be known is that Rusal sells about 3 million tons of primary metal per annum for about $5 billion in revenues, and carries more than $2 billion in debt. In output volume and market value, Rusal ranks third in the global aluminium league. Alcoa of the US ranks first, with a current market capitalization of $20 billion. Alcan of Canada – which acquired Pechiney of France – ranks second with a market cap of $12 billion. Although the commodity price of aluminium has been climbing, the share price of these two companies has been falling – by roughly 30% apiece so far this year.

Rusal is privately owned by Deripaska. But when he bought out the 50% stake owned by Roman Abramovich and his friends at Millhouse, a London holding, over the past three years, the exit price (still secret) put a valuation of about $8 billion on the entire company. A year or so later, and Moscow investment bankers believe that Rusal is currently worth $10 billion, a purported gain of 25%.

How to realize this value, and enjoy it at the same time, is Deripaska’s biggest problem. How to get him to share it with Russia is the problem to which the Kremlin has been giving attention recently.

Aesop once told the fable of the man who turned his earnings into gold, and buried it. Every day he went to the spot to contemplate how rich he was. But a passing labourer spotted him, dug up the gold, and made off with it. When the owner returned and discovered his loss, he started to tear out his hair. A wise passerby told him not to despair. “When you had all that gold,” he said, “you didn’t really have it.” He advised burying a stone, and imagining it to be gold, for that would serve the same purpose. The moral of his story, Aesop thought, was that possession is nothing – without enjoyment.

Deripaska’s contemplative and recreational habits are a matter of rumour, but his financial strategy is straight out of Aesop. This was made clear by his friend, junior shareholder, and chief executive of Rusal, Alexander Bulygin. He has suggested that the best way to hang on to the gold would be to take it away from Russia, and leave a stone in its place. A few weeks ago, he told the Sunday Times of London – the city where everyone goes to bury their gold, and display their enjoyment – that Rusal is thinking of making a share flotation to foreign investors.

Exaggerating the value of the assets left behind in Russia, and minimizing their indebtedness, he claimed “we are very close to announcing that our company is fully compliant with the principles required by the stock exchanges with regard to issues such as corporate governance, transparency and accounting.”

Bulygin came closer to the truth when he added that Russian “companies are using floats to hedge against political risks. They hope foreign investors will defend them against any politically motivated tax risks.”

As show ponies go for these foreign investors, Deripaska is something of a piebald. He produces the aluminium metal in Russian smelters, but as his former spokesman, Yevgenia Harrison once admitted, most of the value (read profit) in Rusal is earned offshore. “To a very large extent,” she said, “we are processors of imported raw materials. Thus, a relatively large portion of Rusal’s value added is created outside of the Russian Federaton.”

This is done through what are known in the metals trade as tolling schemes. Tolling is a chain of contracts, according to which raw materials, such as alumina, are supplied to a smelter, which electrolyzes it into metal. This is then returned to the owner of the alumina and the trading chain. In Russia, this scheme eliminates 18% internal value-added tax and other taxes payable when the alumina enters the country, and the metal leaves it. But if the scheme is owned and secretly controlled by a single Russian owner, with the objective of avoiding tax, then, according to the letter of the law, it is illegal. The perpetrator of such a scheme could thus be vulnerable to back-tax claims, penalties, and interest.

Deripaska’s domicile and Rusal’s also have enormous tax implications because Russian law on transfer pricing and on tax residency could be interpreted and applied in such a way as find Deripaska, Rusal and Basic Element, Deripaska’s Moscow-based holding, liable for hundreds of millions, if not billions of dollars in obligations to the government. That’s what Bulygin has admitted he is afraid of.

It is possible to make a rough calculation of what Rusal avoids paying in tax through its tolling schemes by estimating the difference between the price at which Rusal aluminium is declared when it enters an import market with reliable customs statistics, like the United States; and the price it was declared at for export, when it left the shores of Russia. For the first half of 2004, for example, there was a difference of $423 per ton. Multiplying that by the 525,000 tons imported in the period to the US produces a value of $222 million. The US is not the most significant of Rusal’s export destinations, and if you were to multiply the differential by Rusal’s full export volume, you are likely to guess that the gold Deripaska is burying outside Russia may be worth about $1 billion a year.

That is a lot to gloat over, and enjoy. But it is far too much to hide from passersby. And so, a flotation in London for Rusal is only one of the two big options which Deripaska must now consider, if he is to preserve his fortune. His second option is to follow the example of his fellow oligarch Roman Abramovich, and sell Rusal to the Russian state. Selling, you should understand, is much better than having the property confiscated as the outcome of a tax and fraud claim and a federal prosecution. That has proved to be the fate of the Yukos oil company oligarch, Mikhail Khodorkovsky, and his fellow shareholders. Deripaska has been taking pains to ensure he does not follow them into exile or prison.

He has, however, acquired a residence in Belgrave Square, London, establishing himself there as England’s 6th richest man. For a time, Downing Street and the Home Office were obliged to issue Deripaska a waiver of the visa ban which had been applied by the US Government, and which, under UK visa rules, is generally applied to the same people the US blackballs. According to an Australian government official, Australia, which belongs to the US-UK intelligence-sharing network, also granted Deripaska a waiver to visit there too.

Then on October 1, Deripaska announced through a brief posting in the Financial Times that he had been granted a visa to enter the US. According to the newspaper, the restriction on Deripaska had just been raised “after the American immigration authorities lifted a long¬standing visa ban. Georgy Oganov, deputy director general of Basic Element, said yesterday US officials had not given any reasons for lifting the ban.”

Oganov should not have said this, because it implied the reasons the ban had been imposed in the first place.

Deripaska has been trying to lift this US visa ban for almost a decade, and he has employed well-known US law firms and Republican Party politicians to lobby in Washington for him. But he has never admitted there was a visa ban – until Oganov did so. This could be why for the past two weeks Oganov has refused to answer questions from Mineweb to clarify what he told the Financial Times. Oganov also ordered his deputy Eleanora Vaitsman, and everyone else in the Basic Element office in Moscow, to pretend that they were not on the receiving end of telephone-calls or emails, seeking clarification of the matter.

For if Deripaska is now free to cross the US border, he is also free to enter US legal jurisdiction to answer the charges the FBI and other investigative and law enforcement agencies have deemed credible enough to block his visa for so long. What these charges are can be found in federal US court documents stretching back for several years. Although the US courts have so far ruled that they had no jurisdiction to try the civil claims, the American press, along with the US stock market regulators, have yet to assess these charges publicly.

Just how damaging this review could be for Deripaska’s prospects of floating Rusal shares to US investors was signaled in a ruling of the federal US District Court for the District of Columbia on September 27. In that case, Deripaska’s fellow Russian oligarchs, Mikhail Fridman and Pyotr Aven, controlling shareholders of the Alfa Bank group, lost a libel suit they had waged for five years against the Center for Public Integrity, an investigative journalism group in Washington, and two journalists who had reported that Fridman and Aven had acted criminally in the acquisition of their Russian assets and fortune. The initial publication had relied on a variety of evidence, including Russian government agency documents, as well as US intelligence agents’ testimony and US government reports.

But federal judge John Bates ruled to dismiss the case without trial, and without cross-examining the documentary evidence or witnesses. In his ruling, the judge declared that, under the US constitution and decided case law, Russian businessmen like Fridman and Aven are “limited public figures for purposes of the public controversy involving corruption in post-Soviet Russia.” The very extent of Fridman’s and Aven’s effort, through media they have sought out, and public relations they have paid for, established themselves as appropriate targets for investigation, criticism, and public opinion. “Serving as the target of criticism -sometimes false — is the burden our system of laws quite consciously places on the shoulders of public figures,” the judge declared.

Now criticism is not something Deripaska tolerates. But he has also found that the best way to deflect, or inhibit criticism is not to sue for libel – he has tried that in Germany – but rather to persuade the managements of publications that Rusal can be a generous donor, sponsor, or advertiser. The effect is a demonstrable loss of editorial interest at several publications in investigating the charges against Deripaska, Rusal and their companies, which have been aired in courts around the world, or settled out of court by payments from Deripaska.

Deripaska has also tried to remove some of the reason for the criticism – the claims that have been lodged in court alleging he stole the assets currently making up Rusal’s value, or defrauded his partners on trading and import-export contracts. A few days ago, the Sunday Times began reporting the most recent case, currently before the High Court in London. “According to court documents seen by the Sunday Times, Ansol [the plaintiff] alleges that Deripaska unlawfully broke the terms of the joint venture by personally brokering a new deal with the president of Tajikistan in which Rusal was granted complete control of the lucrative smelter [in Tajikistan].” Stealing assets is not a new charge Deripaska, Bulygin, and Rusal have faced, and which they consistently deny. But they have settled the other claims, and this is the first time the charges may be tried in an English court.

The Sunday Times went further, reporting the counter-claim in the court documents which contains “serious allegations, including details of a plot by Deripaska’s office to kidnap Nazarov [the smelter’s former supplier and investor].” According to the initially talkative Oganov, “we want to develop our involvement in Tajikistan…Our lawyers are looking at the allegations in the counterclaim. It will take some time but it is a matter for the court.”

Another misspeak by Deripaska’s spokesman, for the London judge has already intimated that he has grave doubts about Rusal’s veracity. According to a court transcript of proceedings in July, Justice William Blackburne said that “on the face of it [Rusal] is as involved in all of this as is Ansol.” That being the case, he surmised, “Rusal is at the back of this and it is the pot calling the kettle black.”

Is Deripaska ready to invite the readers of a Rusal prospectus to put on Blackburne’s judicial wig, and decide whether to put their money in a black pot?

For any man to put his reputation on trial in a court of law, or in the stock market, there is always the risk of adding to his notoriety, and thus, win or lose on the legal issues, to reinforce the impression that he is the very bad man he has been made out, so wrongly, to be. After all, it is not the exoneration, or esteem, of the man in the street, or the reader of newspapers, that an oligarch is seeking when he goes to court. His target is a bankers’ head of risk, the chairman of the credit committee, the insurer of officers and directors’ liability, the independent auditor, and the legal drafter of his next prospectus for an unsecured Eurobond or American Depositary Share. That’s a small, sophisticated audience, who know the unprintable truth. They are not greatly influenced by guilty or innocent verdicts in libel cases.

Deripaska’s men can make mistakes as bad the one Aesop warned of , in the case of the man who stared too hard at the gold he had hidden. Entering the High Court in an attempt to launder the takeover of the Tajikistan aluminium smelter may be recognized as one. Instructing his spokesman to announce his US visa may be another. Both are a funny way of preparing investor sentiment for a Rusal IPO.

But there is an alternative, and it is plain that Deripaska has begun pursuing it.

A direct sale to the Kremlin – I mean the Russian state – is more straightforward to accomplish than selling an IPO to foreign investors. For one thing, there are no international regulations, no disclosure requirements, no accounting rules, no transparency required. The state buyer is also in a position to agree relatively easily to the asking price, if international lenders like Citigroup, BNP Paribas, Morgan Stanley, and so on, are willing to put up the loan money. Securing multi-billion dollar loans for a deal like this has already proved swift and uncomplicated for the banks when the state-owned oil company Rosneft recently took over Yukos; and when Gazprom proposed buying Abramovich and the Millhouse holding out of Sibneft. You might say that so long as President Vladimir Putin appears to be pledging the full value of the state’s credit, and commodity prices can be expected to remain high enough for the payback period, then the banks are only to happy to open their ATMs.

What has yet to happen, however, is that the Kremlin will decide to apply their model of state interest beyond the oil and gas sector of the economy to the metals. That, too, is what Deripaska has had reason to be afraid of, at least until now, not least of all because he is just one of two proprietors of aluminium in Russia; and it might seem to a commonwealth-minded policymaker that everyone would be better off if they were consolidated under control that was invulnerable to offshore supply manipulation, paid taxes, and complied with the law.

Kremlin officials have also noted that Deripaska has appeared to have political ambitions for himself, regionally perhaps to start with, and then perhaps nationally. Then he tried to sell two of his aluminium finishing plants to Alcoa – a deal that offended the national interest lobby in the government for months, until Deripaska found the way, and the means, to persuade officials that they could share in the transaction, and in the offtake of metal, once Alcoa took over producing it.

The cool sentiment towards Deripaska on the part of Putin’s men has also ensured that he was barred from several transactions which he tried to take over on his terms – hydro-electricity generation and heavy-machine building were two in which he has recently failed.

But that does not mean that Deripaska does not have a deal to offer for selling Rusal that would be difficult to refuse – more difficult, that is, for Russian officials than for foreign investors.

WHO PAYS WHAT TO WHOM FOR RUSSIA’S LARGEST GOLD DEPOSIT?

Sukhoi Log (in Russian the name means “Dry Gulch”) is no longer an asset in which Kremlin and other government officials see value in mining. Value for themselves, that is.

Russia’s largest unmined gold deposit, and the second largest unmined deposit in the world, Sukhoi Log is located in remote forests northeast of Lake Baikal, in Irkutsk region. The nearest habitation is the old miners’ settlement of Bodaibo, a 30-minute helicopter ride away. Equally far away are electricity, roads, and fuel.

Containing at least 33 million troy ounces of gold, distributed awkwardly underground, there is little that is not already well-known to international goldminers about the deposit. This is because it was the principal asset of the now defunct Sukhoi Log Mining Company (SLMC), which in turn was a 50/50 venture of the Australian junior, Star Mining, also defunct, and the local alluvial mining association, Lenzoloto (“Lena [River] Gold”).

At a gold price of $475/oz, Sukhoi Log’s reserves are worth almost $16 billion. But if the gold price slips below $300, for those who have studied the project carefully, the mine’s profitability begins to look chancy.

The Star group invested more than A$50 million in prospecting, drilling, and preparing a feasibility study of the Sukhoi Log project between 1993 and 1997. Having engaged SRK and other consultants, Star reported on the deposit to several stock exchanges, investors, potential mining partners, and lenders, such as Standard Bank. Star also loaned Lenzoloto US$5 million.

But in 1997 Lenzoloto backed the revocation of the mining licence which it had held in partnership with Star through the SLMC. Lenzoloto then defaulted on the Star loan, which has never been repaid. Star defaulted in turn on financing it had received from Standard Bank. Star’s shareholding in Lenzoloto was subsequently diluted for the reason, claimed by Russians involved, that Star had not met investment targets in the project. At the time, Star was partnered by JCI of Johannesburg, when it was run by Bill Nairn, now of Anglo American.

The government official who arranged Star’s exit was Boris Yatskevich. At the time he was both deputy minister — later minister – of the federal ministry of natural resources, and chairman of the board of directors of Lenzoloto. After he had evicted Star, Yatskevich awarded a temporary exploration licence to Barrick Gold, enabling the big Canadian to drill its own holes, mapping the deposit and estimating the grade. The drill-core samples which Star had obtained were shipped to the SRK consultancy in Johannesburg, where they were assessed for both their gold and platinum value.

Having drawn what value he could from Star, Yatskevich’s action devalued Star’s feasibility study, and opened up new possibilities for, and with, Barrick. However, before he was fired for reasons never disclosed by the incoming President Vladimir Putin, Barrick had turned on Yatskevich, publicly accusing him of “favouritism”. By the middle of 2000, there was no-one in charge at the federal ministry who stood to benefit from the award of the Sukhoi Log licence. Yatskevich’s fate was a signal that there was much at risk in awarding the licence to anyone at all.

For five years, the Sukhoi Log licence remained in limbo, along with the gold price, and Yatskevich was forgotten. Then in May 2004, Putin appointed Yury Trutnev, a wealthy entrepreneur who had served as governor of the central Russian region of Perm. Presidents appoint, but others promote, and also pay. In Trutnev’s case, he was lifted from obscurity by LUKoil, one of the most powerful of Russia’s commercial oil companies, and its dominant shareholder, Vagit Alekperov. His interest and financial clout overwhelmed an alternative candidate proposed by Putin’s personal advisor on mining policy, Vladimir Litvinenko.

Litvinenko is Rector of the St Petersburg Mining Institute. As an academic, Litvinenko supervised Putin’s postgraduate study of natural resource policy. He has been called upon to advise ever since. These days, as Putin moves towards the end of his term in 2008, his subordinates compete for the cash to tide them over the succession. Litvinenko may have Putin’s ear, but he does not have Alekperov’s cash. Sukhoi Log, on whose future Litvinenko has a clear opinion, contains future gold, but does not produce current cash. Litvinenko’s opinion, therefore, has been ignored, while Trutnev sought to exercise whatever decision his constituents wanted, and his ministerial authority allowed him to make.

Within days of his appointment in 2004, Vedomosti, a Moscow newspaper then part-owned by Norilsk Nickel controlling shareholder, Vladimir Potanin, reported that tender conditions were being finalized for Sukhoi Log that would bar foreign-controlled goldminers from competing for the property. This was an obvious sop for Norilsk Nickel to win the bidding. Other contenders, such as Polymetal of St Petersburg, qualified on the national criterion, but lacked the cash to bid and then develop the project. Still others, like Highland Gold, were foreign-listed and tied to foreign miners.

Among other conditions of the proposed auction for Sukhoi Log, the newspaper reported that the winner would be obliged within four years to produce not less than 10 metric tons (320,150 oz) of gold, and in three further years to ramp production up to 25 tons per annum (804,000 oz).

This upped the cash requirement for first-stage development of the mine. Total investment obligations in the project were estimated at between $800 million and $1.5 billion, according to the newspaper report. Star had calculated similar numbers eight years earlier, proposing a mining plan that would have concentrated the initial pit excavation at the site of the highest-grade ore, and used the proceeds to move across the vast tract of the deposit to the lower-grade ore bodies, keeping the initial costs down. One of the biggest up-front costs, however, remained the infrastructure of power and roads, which the site lacks.

A compensation payment was reported to be included in the tender conditions. This purported to indemnify costs of development already incurred by Lenzoloto. In fact, it had been Star, which had done that work, not Lenzoloto, which is primarily an alluvial operator. This proviso was ostensibly also a payback to Norilsk Nickel itself, which had acquired Lenzoloto in 2003 – or to any other beneficiary Norilsk Nickel and Lenzoloto had in mind. Neither Norilsk Nickel, nor Lenzoloto had any intention of compensating Star.

Vedomosti‘s press leak came from Trutnev’s new team at the Ministry of Natural Resources in Moscow, where he had evicted as many officials, cooks, and drivers as he deemed to be potentially disloyal, or who stood in the way of the patronage he intended to award. That produced disgruntlement, and it was therefore no surprise when officials at the Ministry’s licensing division refused to confirm what they were intending to do with Sukhoi Log.

For several years there had also been serious differences between this Ministry, the federal Ministry of Economic Development and Trade, and the regional government of Irkutsk over the terms of the Sukhoi Log tender. The latest press leak suggested that Trutnev was trying to force an award in Norilsk Nickel’s direction, but could not quite pull it off.

Litvinenko, for example, hinted that he did not favour Norilsk Nickel, so long as Potanin and partner Mikhail Prokhorov controlled the shareholding. Litvinenko had told Mineweb that Norilsk Nickel’s shareholding should be restructured, and a controlling “golden share” vested in the government. He was silent on how he thought to do this. The mechanism was probably a back-tax or fraud claim against Norilsk Nickel, repayable in equity and assets, along the lines of the claim the Kremlin had pursued against the Yukos oil company and its principal shareholders.

Litvinenko also told Mineweb that, since Sukhoi Log had initially been discovered during the Soviet period, it was a state asset from which foreign miners should be excluded, since they had contributed nothing to find or prove it. Litvinenko was dismissive of Star’s role in the 1990s.

A senior Irkutsk region official in charge of mineral resources suggested that the compensation provision in the tender terms was to be divvied up with the governor and his men. “Currently, the volume of the compensation is uncertain, but it is written down in the project [terms]”, he said.

In Russian licensing practice, the region where a mineral resource is located must agree with two federal government ministries, the Ministry of Natural Resources and the Ministry of Economic Development and Trade, before a tender can be officially issued, and bidding commence. Try though Trutnev might, with encouragement from the Irkutsk governor, the Ministry of Economic Development was reluctant. And behind them all, Kremlin officials were reviewing what reward they might draw from the process if they used their power to select the winner.

The “compensation” payout was far too little for them, not least because there were too many people already standing in line for it. Asked if the compensation were proposed as a fixed amount, or as a percentage of the winning bid, the Irkutsk official told Mineweb “there are too many ways to calculate, so I don’t think I can tell you now how it will be counted.” He also added that “the amount should be not more than the winner will pay for its license.” He indicated that in the draft terms agreed by the Irkutsk regional government, the starting bid price for the license would be Rb960 million (US$33 million).

Some of those who did not stand to share in the payout complained publicly. A senior official in the Ministry of Economic Development and Trade told Mineweb that his ministry has not agreed to compensation for past works at Sukhoi Log. “Currently this question is under review,” the source said. “The decision will be made by the end of the May, hopefully. Currently, we cannot announce the Ministry’s position for that question.”

A few days later, in June of 2004, Trutnev made his first public move. If the Irkutsk governor had been modest in arranging a share of a relatively low auction price, Trutnev was more ambitious. He went public, critizing the Irkutsk tender proposal for setting too low a reserve of between $10 million and $15 million in rouble equivalent. “Preliminary calculations show the lowest starting price at the auction is unlikely to be less than $150 million,” Trutnev announced.

He then proposed to change the licensing law, so as to favour the one bidder with enough cash to bid almost immediately, Norilsk Nickel. At the time, government and miners agreed, Russian law required six months between the official announcement of a tender for a mining licence award and the award itself. Accordingly, it was thought in the Russian mining community that the award of the project could not be effected until 2005. But Vladimir Sklyarov, head of the Irkutsk regional department of natural resources, told Mineweb that the six-month waiting period could be shortened to 45 days by an amendment of the law. “If the changes will be applied in July-August and results of tenders will be given not within six months but within 45 days,” Sklyarov said, “we will be able to manage the tender even this year.”

It was a clever move, but the Irkutsk men had not lined up all their ducks in Moscow. The Committee on Natural Resources of the State Duma, which has jurisdiction over mining legislation and must approve such proposed amendments before they can go to a vote in parliament, had not seen the Sukhoi Log speedup coming.. Anatoly Fedorenko, deputy chief of the committee staff, told Mineweb: “maybe it exists as a project in the Ministry of Natural Resources. But it has not come to us yet.” According to Fedorenko, his committee had been reviewing an amendment to simplify licensing procedures, and eliminate the role of the regional governments in setting tender terms. Proposed by Trutnev’s ministry, this amendment was naturally opposed by the regional governors. “There is nothing about changing the timing of tenders,” Fedorenko said. But he conceded that the timing issue could still come up. ” It depends on volume of lobbying from all sides, and the work of Duma.”

Trutnev showed how responsive he was to the lobbying when he issued a statement in July of 2004: “we cannot commission a lot of large deposits for this simple reason, that, under the current law, from the date of the announcement of tender conditions to the award, it is necessary to wait about one half-year…We want to reduce these terms to 45 days.fThere is an]other problem – the interaction between regions and the federal authority.”

But Trutnev also conceded that not everyone was agreed, and that he needed more time to persuade them. He therefore acknowledged that his proposed amendments to shorten the tender period and reduce regional involvement in mine licence awards could not be finalized by the government before “the end of this year”. Trutnev’s spokesman, Nadezhda Kleymenova, confirmed the ministry view that “the earliest realistic time for the [amended] law to start working is spring 2005.”

The timing in mid-2004 was particularly difficult for Norilsk Nickel. Although not admitted until later, it was then that Kremlin officials were reviewing the activities of Norilsk Nickel shareholders, Potanin and Prokhorov. In the forefront of the review was their acquisition of a 20-percent stake in South African miner Gold Fields on March 29 for $1.16 billion; and a bid that followed by the German firm Siemens to take a controlling stake in Potanin’s heavy engineering firm, Siloviye Mashiny [“Power Machines”]. Kremlin officials told Potanin they did not approve either, and for months Potanin was not sure how things would turn out – for his assets, or himself.

In time, Siemens was not allowed to make its takeover bid, and the state-controlled utility, Unified Energy Systems, took its place. In parallel, Kremlin officials were putting two even more valuable state takeovers in place — the takeover of the Yukos oil company by Rosneft for $9 billion, and the takeover of Sibneft by Gazprom for $13 billion.

The model for these takeovers is simple. It converts the bureaucratic power to regulate commercially owned assets into personal stakes in the current and future cashflow of state controlled assets, with commissions demanded, and paid up front for the deal arranging.

For Norilsk Nickel to win Sukhoi Log, Potanin’s and Prokhorov’s bid would also have to be approved by the Kremlin. Norilsk Nickel spokesman Elena Sherbinina has said she has no information on when the company’s management believes the Sukhoi Log tender will be issued. From this it can be understood that Norilsk Nickel, and its gold spinoff Polyus, do not have Kremlin support for the acquisition. Without that, Trutnev can do and say whatever he likes – he is impotent to make the licence award.

For Polymetal, the St Petersburg-based goldminer which has been Norilsk Nickel’s main rival for the project, the bidding is altogether too costly, and the outcome too uncertain. Polymetal is now for sale. But if Barrick and Anglo Gold Ashanti, two of the contending buyers, were to acquire Polymetal, Trutnev and Litvinenko are likely to rule them out of contention for Sukhoi Log, albeit for different reasons.

Just how powerless Trutnev is was evident from a statement made by an erstwwhiie subordinate this past March. Anatoly Ledovskikh, head of the Federal Agency on Sub-Soil Resources (Rosnedr), told Mineweb that the auction of the mining licence for Sukhoi Log will not be held this year.

Sources in his agency told Mineweb that although, bureaucratically Rosnedr is a part of Trutnev’s ministry, Ledovskikh has autonomous powers, and in this matter he was not acting as Trutnev’s subordinate. Trutnev’s spokesman, Rinat Gizatullin, was under orders from Trutnev not to respond to Mineweb questions.

The announcement from Ledovskikh indicated, not so much that Trutnev had had a change of mind regarding the future he has wanted for Sukhoi Log; but rather that, despite his ministerial rank, he lacked the power to overrule what others think best for the Russian gold sector. The move by Ledovskikh also indicated that it was higher authority in the Kremlin, which is now refusing to agree to hand the deposit over to anyone, least of all to Potanin and Prokhorov. At least not this year.

Several days ago, a reporter from Reuters was told to repeat the message. Dutifully, she claimed that “a source close to the Kremlin” had said that “officials in Putin’s office are focusing increasingly on projects linked to the 2007 parliamentary and the 2008 presidential polls – mainly in the oil, media and telecoms sectors. The Kremlin has concentrated on a number of projects that cannot be left unfinished before the election. They do not have time for other things.”

The literal and the commercial meaning of what was said are almost identical, though unprintable, with one qualification. In the sale of his stake in Power Machines, Potanin demonstrated the willingness to share his profit, and pay the price required for Kremlin approval to the buyer designated by Kremlin officials. That he and Prokhorov (gold is more Prokhorov’s line of business in their partnership) have not succeeded with Sukhoi Log, as Trutnev and the Irkutsk government wished for them, suggests that the real obstacle is the reluctance of Kremlin officials to agree on the price and conditions of the deal, and the future structure of Norilsk Nickel and Polyus.

If the obstacle were any lower in the Russian government, the deal would already have been done. But at the Ministry of Economic Development this week, the press spokesman replied to Mineweb‘s questions about the future of Sukhoi Log, saying: “we have no reply to your questions. We delivered your questions to the office of [Deputy Minister] Andrei Sharonov, who should be in charge of mineral sector decisions and business, but we received no reply.” He conceded that the decision on the Sukhoi Log licence is being taken elsewhere.

Litvinenko’s influence with Putin has been ebbing, and he has nothing to gain from making public his disagreements with Trutnev. He and Trutnev are both silent on the question of Sukhoi Log. The parliamentary Committee on Natural Resources declined to respond to the same questions for want of anything to add.

Valery Braiko, a veteran goldminer himself and head of the Russian Union of Goldminers, concedes the obvious: “The delay was expected. We are already not waiting with impatience, and if the question will wait for review until the next government [2009], then the delay could be even further. It is really difficult to identify the background for all of this, so I prefer not to form any hypotheses.”

Braiko is being understandably cautious. For the time being, there is no telling what further mining assets will be restructured for the benefit of state officials in the course of the Putin succession.

Silent though Trutnev himself has become on the subject of Sukhoi Log, his talkativeness on other mining prospects indicates how far afield his interests have ranged. Avoiding once again the questions of Mineweb, Trutnev authorized the text of the following communique to be issued, following his meetings last week with South African minister of minerals and energy, Lindiwe Hendricks.

“On October 5th the Minister of Natural Resources of the Russian Federation Yury Trutnev has held a working meeting with the Minister of Minerals and Energy of the Republic of South Africa, L[indiwe]Hendricks. During [the] meeting there have been spelled out directions of cooperation between Russia and the Republic of South Africa in the field of use of mineral resources. They include, first of all, training of professional geological staff, realization of joint projects on extraction and processing of nonferrous metals, and also an exchange of technologies. Yury Trutnev has supported active development of these directions of cooperation.

The [Russian] Minister of Natural Resources also has emphasized that interaction within the limits of the mixed Intergovernmental committee on trade and economic cooperation between the Russian Federation and the Republic of South Africa [known in Pretoria as ITEC] has allowed to realize successfully projects on investigation, extraction and processing of manganese ores in the Kalahari Manganese Field.”

This last reference is Trutnev’s endorsement of a project by the Renova company, a US-registered holding of Russian metals oligarch Victor Vekselberg. Trutnev has promoted Vekselberg’s bidding at every opportunity, acting as Renova’s lobbyist in South African to ensure that Hendricks’ ministry would issue manganese exploration and mining licences to Renova’s black empowerment partner, Pitsa ya Setshaba.

Trutnev was over-enthusiastic in his communique. The licences were issued in July, but to date there has been little exploration, and no extraction or processing. Of course, Trutnev’s reference is a reminder to Hendricks to keep up the good work.

If Hendricks were aware of the Sukhoi Log saga, there is no sign that she mentioned it to Trutnev as of interest to her constituents, such as Anglo Gold Ashanti, Gold Fields, Harmony Gold, or JCI. Her subordinates at the Department of Minerals and Energy (DME) are well aware that Trutnev has been promoting Russian entry into South African mining, at the same time as he backs the exclusion of South African mining companies from the bidding for Sukhoi Log.

The DME officials qualify their inaction on the matter by telling Mineweb that South African goldminers have not requested them to seek reciprocal access to mineral deposits from Trutnev on parity with Renova. If, however, they have been exchanging technologies with their Russian counterparts, as Trutnev’s communique suggests, then there could be another, technological explanation.

RED HAS TURNED YELLOW – THE GREEK AND CYPRIOT COMMUNISTS ARE FLYING A DIFFERENT FLAG IN THE UKRAINE WAR



By John Helmer, Moscow
  @bears_with

The Ukraine war is splitting the communist parties of Europe between those taking the US side, and those on the Russian side.

In an unusual public criticism of the Greek Communist Party (KKE) and of smaller communist parties in Europe which have endorsed the Greek criticism of Russia for waging an “imperialist” war against the Ukraine, the Russian Communist Party (KPRF) has responded this week with a 3,300-word declaration:  “The military conflict in Ukraine,” the party said, “cannot be described as an imperialist war, as our comrades would argue. It is essentially a national liberation war of the people of Donbass. From Russia’s point of view it is a struggle against an external threat to national security and against Fascism.”

By contrast, the Russian communists have not bothered to send advice, or air public criticism of the Cypriot communists and their party, the Progressive Party of Working People (AKEL). On March 2, AKEL issued a communiqué “condemn[ing] Russia’s invasion of Ukraine and calls for an immediate ceasefire and the withdrawal of the Russian troops from Ukrainian territories….[and] stresses that the Russian Federation’s action in recognising the Donetsk and Luhansk regions constitutes a violation of the principle of the territorial integrity of states.”

 To the KPRF in Moscow the Cypriots are below contempt; the Greeks are a fraction above it.

A Greek-Cypriot veteran of Cypriot politics and unaffiliated academic explains: “The Cypriot communists do not allow themselves to suffer for what they profess to believe. Actually, they are a misnomer. They are the American party of the left in Cyprus, just as [President Nikos] Anastasiades is the American party of the right.” As for the Greek left, Alexis Tsipras of Syriza – with 85 seats of the Greek parliament’s 300, the leading party of the opposition – the KKE (with 15 seats), and Yanis Varoufakis of MeRA25 (9 seats), the source adds: “The communists are irrelevant in Europe and in the US, except in the very narrow context of Greek party politics.”

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IF IT SMELLS ALLURING, IT’S RUSSIAN – IN WARTIME L’ORÉAL (FRANCE) AND ESTÉE LAUDER (US) MAKE A BAD SMELL



By John Helmer, Moscow
  @bears_with

The war plan of the US and the European allies is destroying the Russian market for traditional French perfumes, the profits of the French and American conglomerates which own the best-known brands, the bonuses of their managers, and the dividends of their shareholders. The odour  of these losses is too strong for artificial fresheners.

Givaudan, the Swiss-based world leader in production and supply of fragrances, oils and other beauty product ingredients, has long regarded the Russian market as potentially its largest in Europe; it is one of the fastest growing contributors to Givaudan’s profit worldwide. In the recovery from the pandemic of Givaudan’s Fragrance and Beauty division – it accounts for almost half the company’s total sales — the group reported “excellent double-digit growth in 2021, demonstrating strong consumer demand for these product categories.”    Until this year, Givaudan reveals in its latest financial report, the growth rate for Russian demand was double-digit – much faster than the  6.3% sales growth in Europe overall; faster growth than in Germany, Belgium and Spain.    

Between February 2014, when the coup in Kiev started the US war against Russia, and last December, when the Russian non-aggression treaties with the US and NATO were rejected,   Givaudan’s share price jumped three and a half times – from 1,380 Swiss francs to 4,792 francs; from a company with a market capitalisation of 12.7 billion francs ($12.7 billion) to a value of 44.2 billion francs ($44.2 billion). Since the fighting began in eastern Ukraine this year until now, Givaudan has lost 24% of that value – that’s $10 billion.  

The largest of Givaudan’s shareholders is Bill Gates. With his 14%, plus the 10% controlled by Black Rock of New York and MFS of Boston, the US has effective control over the company.

Now, according to the US war sanctions, trade with Russia and the required payment systems have been closed down, alongside the bans on the importation of the leading European perfumes. So in place of the French perfumers, instead of Givaudan, the Russian industry is reorganizing for its future growth with its own perfume brands manufactured from raw materials produced in Crimea and other regions, or supplied by India and China. Givaudan, L’Oréal (Lancome, Yves Saint Laurent), Kering (Balenciaga, Gucci), LVMH (Dior, Guerlain, Givenchy), Chanel, Estée Lauder, Clarins – they have all cut off their noses to spite the Russian face.

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THE WAR AGAINST FOOD – WHO IS TO BLAME



By Nikolai Storozhenko, introduced and translated by John Helmer, Moscow
  @bears_with

This week President Joseph Biden stopped at an Illinois farm to say he’s going to help the  Ukraine ship 20 million tonnes of wheat and corn out of storage into export, thereby relieving  grain shortages in the international markets and lowering bread prices around the world.  Biden was trying to play a hand in which his cards have already been clipped. By Biden.  

The first Washington-Kiev war plan for eastern Ukraine has already lost about 40% of the Ukrainian wheat fields, 50% of the barley, and all of the grain export ports. Their second war plan to hold the western region defence lines with mobile armour, tanks, and artillery  now risks the loss of the corn and rapeseed crop as well as the export route for trucks to Romania and Moldova. What will be saved in western Ukraine will be unable to grow enough to feed its own people. They will be forced to import US wheat, as well as US guns and the money to pay for both.

Biden told his audience that on the Delaware farms he used to represent in the US Senate “there are more chickens than there are Americans.”  Blaming the Russians is the other card Biden has left.  

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EXILE



By John Helmer, Moscow
  @bears_with

The problem with living in exile is the meaning of the word. If you’re in exile, you mean you are forever looking backwards, in geography as well as in time. You’re not only out of place; you’re out of time — yesterday’s man.

Ovid, the Roman poet who was sent into exile from Rome by Caesar Augustus, for offences neither Augustus nor Ovid revealed, never stopped looking back to Rome. His exile, as Ovid described it, was “a barbarous coast, inured to rapine/stalked ever by bloodshed, murder, war.” In such a place or state, he said, “writing a poem you can read to no one is like dancing in the dark.”

The word itself, exsilium in Roman law, was the sentence of loss of citizenship as an alternative to loss of life, capital punishment. It meant being compelled to live outside Rome at a location decided by the emperor. The penalty took several degrees of isolation and severity. In Ovid’s case, he was ordered by Augustus to be shipped to the northeastern limit of the Roman empire,  the Black Sea town called Tomis; it is now Constanta, Romania. Ovid’s last books, Tristia (“Sorrows”) and Epistulae ex Ponto (“Black Sea Letters”), were written from this exile, which began when he was 50 years old, in 8 AD, and ended when he died in Tomis nine years year later, in 17 AD.  

In my case I’ve been driven into exile more than once. The current one is lasting the longest. This is the one from Moscow, which began with my expulsion by the Foreign Ministry on September 28, 2010.  The official sentence is Article 27(1) of the law No. 114-FZ — “necessary for the purposes of defence capability or security of the state, or public order, or protection of health of the population.” The reason, a foreign ministry official told an immigration service official when they didn’t know they were being overheard, was: “Helmer writes bad things about Russia.”

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IN THE FOG OF WAR THERE’S THE GUTERRES CERTAINTY AND THE CADIEU CERTAINTY – GORILLA RADIO SEES THROUGH THE COVER-UP



By John Helmer, Moscow
  @bears_with

Antonio Guterres is the Secretary-General of the United Nations (UN), who attempted last month  to arrange the escape from Russian capture of Ukrainian soldiers and NATO commanders,  knowing they had committed war crimes. He was asked to explain; he refuses.   

Trevor Cadieu is a Canadian lieutenant-general who was appointed the chief of staff and head of the Canadian Armed Forces last August; was stopped in September; retired from the Army this past April, and went to the Ukraine, where he is in hiding. From whom he is hiding – Canadians or Russians – where he is hiding, and what he will say to explain are questions Cadieu isn’t answering, yet.

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DID UN SECRETARY-GENERAL GUTERRES COMMIT A WAR CRIME AT AZOVSTAL?

By John Helmer, Moscow
  @bears_with

Antonio Guterres, the United Nations Secretary-General, is refusing this week to answer questions on the role he played in the recent attempt by US, British, Canadian and other foreign combatants to escape the bunkers under the Azovstal plant, using the human shield of civilians trying to evacuate.

In Guterres’s meeting with President Vladimir Putin at the Kremlin on April 26 (lead image), Putin warned Guterres he had been “misled” in his efforts. “The simplest thing”, Putin told Guterres in the recorded part of their meeting, “for military personnel or members of the nationalist battalions is to release the civilians. It is a crime to keep civilians, if there are any there, as human shields.”  

This war crime has been recognized since 1977 by the UN in Protocol 1 of the Geneva Convention.  In US law for US soldiers and state officials, planning to employ or actually using human shields is a war crime to be prosecuted under 10 US Code Section 950t.  

Instead, Guterres ignored the Kremlin warning and the war crime law, and authorized UN officials, together with Red Cross officials,  to conceal what Guterres himself knew of the foreign military group trying to escape. Overnight from New York, Guterres has refused to say what he knew of the military escape operation, and what he had done to distinguish, or conceal the differences between the civilians and combatants in the evacuation plan over the weekend of April 30-May 1.May.

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THE LAST DITCH IS POLAND – RUSSIA’S PHASE-3 PLAN FOR WESTERN UKRAINE



By Vlad Shlepchenko, introduced & translated by John Helmer, Moscow
  @bears_with

The more western politicians announce pledges of fresh weapons for the Ukraine, the more Russian military analysts explain what options their official sources are considering to destroy the arms before they reach the eastern front, and to neutralize Poland’s role as the NATO  hub for resupply and reinforcement of the last-ditch holdout of western Ukraine.

“I would like to note,” Defense Minister Sergei Shoigu, repeated yesterday, “that any transport of the North Atlantic Alliance that arrived on the territory of the country with weapons or material means for the needs of the Ukrainian armed forces is considered by us as a legitimate target for destruction”.  He means the Ukraine border is the red line.

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THE MATLIN PLOT, THE BROWDER PLOT AND THE NEW YORK TIMES PLOT



By Lucy Komisar,  New York*
  @bears_with

Here’s a story the New York Times has just missed.

US politicians and media pundits are promoting the targeting of “enablers” of Russian oligarchs who stash their money in offshore accounts. A Times article of March 11   highlighted Michael Matlin, CEO of Concord Management as such an “enabler.” But the newspaper missed serious corruption Matlin was involved in. Maybe that’s because Matlin cheated Russia, and also because the Matlin story exposes the William Browder/Sergei Magnitsky hoax aimed at Russia.

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YELLOW COAL, THE FUEL MADE OUT OF RACE HATRED — MAY DAY MESSAGE FROM SIGIZMUND KRZHIZHANOVSKY, 1939



By John Helmer, Moscow
  @bears_with

In 1939 a little known writer in Moscow named Sigizmund Khrzhizhanovsky published his idea that the Americans, then the Germans would convert human hatred into a new source of energy powering everything which had been dependent until then on coal, gas, and oil.

Called yellow coal, this invention originated with Professor Leker at Harvard University. It was applied, first to running municipal trams, then to army weapons, and finally to cheap electrification of everything from domestic homes and office buildings to factory production lines. In Russian leker means a quack doctor.

The Harvard professor’s idea was to concentrate the neuro-muscular energy people produce when they hate each other.  Generated as bile (yellow), accumulated and concentrated into kinetic spite in machines called myeloabsorberators, Krzhizhanovsky called this globalization process the bilification of society.

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IS CAESARISM THE PROBLEM, THE SOLUTION, A FANCY DRESS COSTUME, OR A PROPAGANDA CARTOON?



By John Helmer, Moscow
  @bears_with

In imperial history there is nothing new in cases of dementia in rulers attracting homicidal psychopaths to replace them.  It’s as natural as honey attracts bees.

When US President Woodrow Wilson was incapacitated by a stroke on October 19, 1919, he was partially paralysed and blinded, and was no longer able to feed himself, sign his name, or speak normally; he was not demented.

While his wife and the Navy officer  who was his personal physician concealed his condition, there is no evidence that either Edith Wilson or Admiral Cary Grayson were themselves clinical cases of disability, delusion,  or derangement. They were simply liars driven by the ambition to hold on to the power of the president’s office and deceive everyone who got in their way.  

The White House is always full of people like that. The 25th Amendment to the US Constitution is meant to put a damper on their homicidal tendencies.

What is unusual, probably exceptional in the current case of President Joseph Biden, not to mention the history of the United States,  is the extent of the president’s personal incapacitation; combined with the clinical evidence of psychopathology in his Secretary of State Antony Blinken;  and the delusional condition of the rivals to replace Biden, including Donald Trump and Hillary Clinton.

Like Rome during the first century AD, Washington is now in the ailing emperor-homicidal legionary phase.  But give it another century or two, and the madness, bloodshed, and lies of the characters of the moment won’t matter quite as much as their images on display in the museums of their successors craving legitimacy, or of successor powers celebrating their superiority.  

Exactly this has happened to the original Caesars, as a new book by Mary Beard, a Cambridge University professor of classics, explains. The biggest point of her book, she says, is “dynastic succession” – not only of the original Romans but of those modern rulers who acquired the Roman portraits in marble and later copies in paint, and the copies of those copies, with the idea of communicating “the idea of the direct transfer of power from ancient Romans to Franks and on to later German rulers.”

In the case she narrates of the most famous English owner of a series of the “Twelve Caesars”, King Charles I — instigator of the civil war of 1642-51 and the loser of both the war and his head – the display of his Caesars was intended to demonstrate the king’s self-serving “missing link” between his one-man rule and the ancient Romans who murdered their way to rule, and then apotheosized into immortal gods in what they hoped would be a natural death on a comfortable bed.

With the American and Russian successions due to take place in Washington and Moscow in two years’ time, Beard’s “Twelve Caesars, Images of Power from the Ancient World to the Modern”,  is just the ticket from now to then.

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