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.

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?”

(more…)

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.

(more…)

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.

(more…)

AND THEN THERE WERE NONE

By John Helmer, Moscow
  @bears_with

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

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

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

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

(more…)

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



By John Helmer, Moscow
  @bears_with

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

How little the Germans have changed.

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

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

(more…)

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

By John Helmer, Moscow
  @bears_with

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

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

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

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

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

(more…)

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

By John Helmer, Moscow
  @bears_with

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

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

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

(more…)

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

By John Helmer, Moscow
  @bears_with

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

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

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

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

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

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

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

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

(more…)

RUSSIAN AVIATION INDUSTRY CORRECTS YELTSIN YAW – BOEING, AIRBUS DITCHED



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

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

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

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

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

So has the Russian process of replacing foreign imports entirely.

(more…)

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



By John Helmer, Moscow
  @bears_with

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

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

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

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

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

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

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

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

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

(more…)
Categories
Archives

Copyright © 2007-2017 Dances With Bears

Copyright © 2007-2017 Dances With Bears

Education Template