Style is back on the catwalk

Volvo Russian Fashion Week, which is taking place October 26-31 in Gostinny Dvor was launched on Wednesday night in Moscow with a joint fashion show of Italian designer Stefano Ricci and Russian couturier Valentin Yudashkin.

Florentine fashion guru Ricci arrived in Moscow to showcase designs for the autumn-winter season and launched the Year of Italy cultural program in Russia. Ricci’s show featured classical male suits, long coats and sportswear. Formidablelooking male models aged from 30 to 60 turned the catwalk into an elegant promenade – flirting with female models and walking dogs.

Ricci’s show marked his debut in Russia. “Another male fashion brand is coming to the Russian market,” said Vlad Lisovets, fashion expert and TV anchor who visited the show. Lisovets pointed out that Ricci’s show, which aimed to present the Stefano Ricci brand by combining various key outfits from several collections, would likely appeal to younger Russians, as opposed to the more mature crowd.

Valentin Yudashkin, the man who dresses Russia’s first ladies and is the designer behind the Russian army’s new uniforms, showcased classical dresses made with airy fabrics, sequins and handmade embroidery.

Alongside the older generation of established designers, Fashion Week is a good chance to see young designers with new ideas and collections – such as Alexander Arutyunov, Konstantin Gayday and Kira Plastinina.

Meanwhile, fur is the main trend of the upcoming season, say fashion experts – and this goes for both natural and faux fur. Volvo Fashion Week participant Igor Gulyaev is particularly notable for his winter collections using fur.

“I would say this season women should get ready to wear bright but simple colors, hats with broad brims and square patterns, and of course fur,” said Lisovets. “Russians love it – and it obviously gives an outfit an added status.”

After enjoying the new collections by Stefano Ricci and Valentin Yudashkin, guests celebrated the opening of Fashion Week at the Golden Ring club in Moscow.

Luzhkov called as witness in Bank of Moscow case

ormer Moscow mayor Yury Luzhkov was called in as a witness to testify in a Bank of Moscow criminal case, according to a “senior source in the investigation,”.

Luzhkov, however, said he was unavailable as he was abroad, but was willing to cooperate with the investigation.

“We confirm that Yury Luzhkov was called in for questioning as a witness,” quoted the department’s spokeswoman Anzhela Kastuyeva as saying, without confirming the date of the questioning.

Luzhkov said that he was unable to attend, however.

“I was summoned for questioning on Monday, Oct. 24. But now I'm overseas, where I am giving a lecture. However, I shall appear before the investigator as soon as I return to Russia,” Luzhkov told Interfax.

Luzhkov stressed that he will turn up for questioning because he was “a law-abiding citizen.”

“I have reason to believe that I was called to the investigative department because of my interview to Radio Liberty,” Luzhkov said.

In the interview Luzhkov referred to, he was very critical of the Russian leadership and United Russia.

The main defendants in the criminal embezzlement case at the Bank of Moscow are ex-bank president Andrei Borodin and his former deputy, Dmitry Akulinin.

Both Borodin and Akulinin have been put on the international wanted list. Borodin previously stated that he was in London and his state of health does not allow him to come to Russia.

Luzhkov, who was in charge of Moscow for 18 years, was prematurely dismissed from his post as mayor of Moscow in September 2010 by presidential decree in connection with president’s stated loss of confidence.

EU demands Georgia let Russia into WTO

Russia is knocking at the door of the World Trade Organization (WTO) like never before, but American opponents are rocking the boat as Europe puts pressure on Georgia to accept Russia.

Europe came on side in a deal on Friday and is now lobbying Tbilisi to back down from its veto and accept Moscow’s bid to join. Russia is currently the only major economy not in the WTO.But while the US is on board for now strong voices of dissent are coming from Congress. Of the 153 countries in the WTO it takes just one to black ball Russia’s bid and Tbilisi has made it clear that Russia must drop its recognition of sovereignty for Abkhazia and South Ossetia if it wants to join the WTO club, egged on by some in Washington.

Gunnar Wiegand, EU top diplomat for Russia and Central Asia, met with Georgian counterparts Tuesday and told them that Georgia needs to toe the line and fast, the Wall Street Journal reported.

If the Georgians drag their feet then the EU would table an exemption in the WTO rule book, allowing Russia in by majority rather than by unanimous vote, a huge loss of face for Tbilisi.

But dissent could still come from other corners. John Boehner, Republican house speaker, is threatening to block Russia WTO legislation and calling for the much vaunted Russia-US reset to go on ice until Moscow cleans up its human rights act and recognizes the “territorial independence” of next door Georgia, he said in a speech to the Heritage Foundation, Bloomberg reported.

Brussels is currently drawing up formal plans for Russia to join the WTO between March and June next year.

Nor did the Democrat Oval Office give the Russians must cause for optimism. “The Obama administration remains unwavering in its commitment to Georgia’s territorial integrity,” White House spokesman Tommy Vietor said in a statement, WSJ reported.

Russians turning to online shopping more

Russians are reconsidering their shopping habits, turning from brick-and-mortar shops to online stores, as the online segment is expected to grow nearly fourfold in five years, according to experts from Higher School of Economics.

And non-store sales in general are set to double within the same period, according to a presentation prepared for the Russian Chamber of Commerce and Industry.

By 2014, non-store trade turnover is set to grow by 56 percent, HSE experts wrote, and in 2015 it is to see a further increase of 29 percent. The estimated sums are 616 billion and 793 billion rubles respectively.

The trend itself is not new -- non-store sales were on the rise even during the crisis year of 2008, although the most significant growth was before 2007. The overall non-store sales have grown by 33 percent from 2005-10, according to Rosstat and Euromonitor data.

In 2010, non-store sales were just 2.7 percent of all country’s retailing, or 394 billion rubles out of 14.4 trillion, according the presentation’s data cited by Vedomosti.

In Russia, the growth of internet retailing looks likely to continue to grow very strongly, according to Alexander Borisov, head of consumer market development committee at the Russian Chamber of Commerce and Industry.

About 50 million Russians have used the Internet at least once and 94 percent of these people bought something, Borisov said at the committee’s session in July, according to its official website.

Internet sales took 49 percent of the whole non-store retailing in 2010, leaving 24 percent each to direct sales and sales through the post, and 3 percent for sales through vending machines, according to the HSE document.

This optimism, however, isn’t shared by everyone.

“We tend to trust more a conservative prognosis of annual growth of 30 percent for e-commerce,” Mikhail Osin, a representative of Russia’s biggest online store Ozon.ru, told Vedomosti.

Another internet retailer, Yutinet.ru, also expects to see more modest results, than experts from HSE, although hopes for more than Ozon.

The Economic Development Ministry expects general retail turnover to grow by 5.3 percent in 2011, Vedomosti reported. Further increases for 2012 and 2013 are estimated at 4.9-5.5 and 4.8 – 5.3 percent respectively.

Breaking the ice

Russia is slated to invest some $224 billion into Arctic oil and gas exploration through 2030, with the government picking up the tab for $32 billion – and the profits are expected to amount to almost half a trillion dollars.

The Natural Resource Ministry is keen to bring in a slew of private and state-owned firms to invest, and profit from, the program.

“The Ministry believes it’s high time to extend the list of firms that can develop the Arctic shelf and include relevant legal entities registered in Russia and abroad,” a spokesperson for the ministry’s state policy department told The Moscow News. “The Ministry proposes to improve tax and customs systems, intended to improve the investment climate.”

According to the ministry, only two domestic companies are currently allowed to conduct continental shelf exploration – state-owned Gazprom and Rosneft.

Gazprom has applied to the ministry for eight licenses to launch future exploration projects in the Arctic.

“In April 2011 Gazprom approved a program to develop hydrocarbon resources on the continental shelf in Russia through 2030,” a Gazprom spokesperson told The Moscow News.

The Arctic shelf holds some 70 billion tons of oil and gas, the largest reservoir in Russia. Gazprom hopes to get as much as 200 billion cubic meters of natural gas and over 10 million tons of oil from the shelf annually starting in 2030. But experts point to a number of problems that need to be resolved before the exploration program gets underway.

“There is no technology to ship fossil fuels from the sea to the terminal on the coast. For instance, the Shtokman field, the most promising gas field in the Barents Sea, is 650 km away from the nearest village on the Kola Peninsula.

If the fuel is shipped with tankers, it will become simply too expensive and [not profitable],” Mikhail Khutorskoy, a geology expert with the Institute of Geology at the Russian Academy of Science, told The Moscow News.

Another option – building a pipeline on the seabed – is too risky because it could be destroyed by icebergs, Khutorskoy added. “If there is an oil or gas spill there, then the ecological consequences will be disastrous,” he said.

Khutorskoy pointed to another problem – the cost of pumping in the absence of new technologies or a modern scientific approach. “We spend a lot of money on drilling, which can cost over $30 million per operation.”

These problems, Khutorskoy said, have yet to be solved. “If Russia wants to start oil and gas exploration before 2030, then we need to do something about it now. There are 18 years to prepare the specialists in oil and gas and get the technology updated,” Khutorskoy said.

Khutorskoy warned that without proper scientific study there might be no export potential left for Russian oil and gas by 2015.

With Russia about to spend over $200 billion on the project, experts also warn that only very high oil prices can justify the program.

“Huge investments are required to develop the shelf, and this will be justified only for sufficiently high oil prices and tax breaks,”.

Russia has been keen to claim the Arctic as its own territory. Just last year, the dormant Russian Geographical Society was revamped on orders from Prime Minister Vladimir Putin to launch a new series of expeditions to the Arctic.

Putin went on to invite BP CEO Bob Dudley last summer, in a move that raised questions about whether BP had its eyes set on Russian oil and gas in the Arctic.

Russian Geographical Society was not available for a comment Thursday on whether it would be involved in the new exploration program.

Environmental concerns

The exploration program is also raising serious concern over the potential of oil spills.

“The company uses the latest developments in the field of industrial and environmental safety to minimize negative impact on the environment. Gazprom is also consulting with leading environmental organizations and implementing a number of environmental monitoring programs,” Gazprom’s press service said in emailed comments.

However, experts warn that the risk of environmental damage is very high in the Arctic and may yet incur costs on Russian companies. By involving European companies, the project will have to comply with European standards – meaning it will have to pay European environmental fines, which are much higher than in Russia. “Rosneft and Gazprom could simply go bankrupt by paying multi-billion dollar fines,” Mikhail Khutorskoy said.

Russia cool on euro bailout fund

The Kremlin gave a non-committal first response Thursday to suggestions that it might contribute to a 1.3 trillion euro investment fund being proposed by Euro-zone leaders.

Presidential aide Arkady Dvorkovich told journalists that, while Russia’s Sovereign Wealth Fund would consider taking part in the investment vehicle, it would prefer to help the eurozone through its regular payments to the International Monetary Fund.

“We are prepared to take part in a stabilization mechanism primarily through the International Monetary Fund,” Dvorkovich told the Russian Money Market forum in Moscow, a conference organized by the Prime, Dow Jones news agencies. “We are doing this at the moment and are ready to step up our efforts if necessary.”

European leaders agreed early Thursday morning on a mechanism to boost the eurozone’s main bailout fund, the European Financial Stability Facility, to around 1.3 trillion euros ($1.4 trillion) through bond issuance and by taking outside investments into a special investment fund.

While EU leaders say they expect the main investors are likely to be China and Japan, they are also approaching other emerging economies, including Russia.

VTB Capital strategist Nikolai Podguzov told The Moscow News that Russia is unlikely to make direct investments to the eurozone.

“I’m not sure that Russia will be ready to participate [in the EFSF] anytime soon in substantial amounts,” Podguzov said. “There would be a lot of difficulties in getting approval to invest such volumes so I’m not sure Russia could be one of the most active participants. It is more likely to remain a participant in the framework of the IMF or another international institution.”

The chief executive of the EFSF will travel to Beijing on Friday to discuss details of a possible Chinese investment package for the eurozone. China has also said it will contribute to the European fund through the IMF, a move that would boost its voting rights at the organization.

Dvorkovich described the agreement reached by eurozone leaders after 11 hours of talks on Wednesday night as “cautiously optimistic,” adding that the decision taken was the “minimum necessary measure.”

Shares in European markets rose sharply on news of the deal, which was aimed at preventing the sovereign debt crisis from spreading to weightier Euro-zone economies, such as Italy. The leaders also agreed that banks holding Greek debt would accept a 50 percent loss.

Ready for the crisis

Other panel speakers at Thursday’s conference reiterated official claims that Russia is better prepared for a potential fresh wave of global financial instability than it was ahead of the last crisis.

“In 2008 the government and the Central Bank had to devise support measures as they went along,” Deputy Finance Minister Alexei Savatyugin said. “This time round we wouldn’t have to think up anything new.”

Savatyugin said the main concern for Russia was a drop in the oil price due to low economic growth in the United States and Asia.

“If the price of oil falls to $90 per barrel, the Central Bank’s monetary instruments should be enough to deal with the situation,” the deputy minister said.

“If it falls to $75 or $60 per barrel, additional capitalization of system-critical banks and enterprises in the real sector of the economy would be needed,”Savatyugin added.

Deputy Economic Development Minister Andrei Klepach told the conference that Russian markets would face no liquidity deficit this year, although there is some “tightness.”

Central Bank head Sergey Ignatiyev said at the beginning of October that regulators are not excluding the possibility of a liquidity deficit in the Russian banking system due to sales of foreign currency and said he was ready to supply banks with up to 1 trillion rubles.

“There was a fairly large surplus in September and expenditures were below the monthly average for the year,” Klepach said. He said liquidity problems will likely ease by the end of the year due to higher budget spending.

Bolshoi Theater throws open its doors

Russia’s famed Bolshoi Theater has come back to life, raising the curtain on its historical stage after a six-year long restoration tonight at 7pm, Friday, Oct. 28.

The gala is to become a festival of Russian music, which will resound in the restored gold and red colored Main Hall.

International opera stars Angela Gheorghiu and Natalie Dessay have been named among those who will make their appearance in the concert staged by Dmintry Chernyakov.

The program of the opening gala has been kept secret. One of few details revealed to the public was that the concert will feature both ballet and opera pieces.

The jewels of Bolshoi’s repertoire – scenes from ballets staged by Russian great ballet masters Yury Grigorovich, Alexei Ratmansky, Pierre Lacotte – will be performed in front of the audience, according to the theater’s official press-release.

And more than two centuries of the theater’s history have become the main theme for the opening, directed by Chernyakov, best known for his controversial staging of Tchaikovsky’s Eugene Onegin in 2006 at the Bolshoi.

Sadly for Moscow-based music-lovers, no tickets to the opening were sold to mere mortals, and attendance of the event will be by invitation only.

But unless you have some strong connections with the Presidential Administration, which was said to be in charge of the guest list, the only thing you can hope for is a live broadcast in 600 cinemas, on several Russian and international TV channels and Youtube, as well as on screens outside the theater.

And since getting tickets to the rest of the season is also nearly impossible – all shows have been sold out, according to Bolshoi’s official website

Tymoshenko’s Trial And Its Consequences For Ukraine

KIEV, Ukraine -- On October 11, 2011, the Pechersk District Court of Kiev sentenced ex-prime minister Yuliya Tymoshenko to seven years in jail.

The reason for this was the misuse of powers by the ex-prime minister during the completion of the gas agreement with Russia in 2009.

The decision of the court was followed by the new trial initiated by the Security Service of Ukraine against Tymoshenko.

The basis for new criminal case was the $405.5 million debt of the company United Energy Systems of Ukraine, headed by the ex-prime minister, to the Defense Ministry of the Russian Federation.

Since the debt has not been paid yet, the Defense Ministry of the Russian Federation sent a letter to the Ukrainian government demanding to pay off the debt.

While the Russian side refused to initiate a case within the Russian Federation, the Ukrainian Security Services started proceedings.

Tymoshenko is being accused of transferring the debt of the company to the Ukrainian budget.

What Do These Proceedings Mean for Ukraine?

According to Freedom House’s recent report, Tymoshenko’s trial symbolizes the end of the open policy in Ukraine.

The policy of President Viktor Yanukovych shows that the regime has moved from democracy toward semi-authoritarianism.

One of the first steps in this direction was the abrogation of the constitutional amendments that were adopted during the Orange Revolution and came into force in January 2006.

These amendments broadened the powers of the parliament, giving Verkhovna Rada the right to appoint the prime minister and other ministers of the cabinet, as well as the general prosecutor with the president’s recommendation.

Ukraine was to become a parliamentary presidential republic.

The revocation of the amendments was initiated by the pro-presidential Party of Regions faction in the parliament.

They strengthened presidential powers, giving him the right to appoint the cabinet as well as to dismiss it, appoint one-third of the Constitutional Court of Ukraine and form other courts.

The next step was the neutralization of the opposition leaders.

Thus, in May 2011, the Pechersk Court of Kiev initiated the case against one of the leaders of the Orange Revolution, ex interior minister, Yuriy Lutsenko on the basis of the misuse of powers that is still under consideration.

The most scandalous, however, was the criminal case launched against ex-prime minister Yuliya Tymoshenko.

She was accused of misusing public finances in 2009 during gas negotiations with Russia to deliver Russian gas at artificially high prices.

The case provoked a range of responses from international actors.

The EU High Representative Catherine Ashton expressed concern about the political motivation behind the Tymoshenko trials and reminded of the necessity to respect the rule of law in the country.

U.S. Senator John McCain, Chairman of the International Republican Institute and Wilfred Martens, President of the European People’s Party, urged the allowance of Tymoshenko to travel abroad in order to participate in the session of the Parliamentary Assembly of the Council of Europe.

However, these concerns fell on death ears.

Apart from these violations, mass media reported the refusal of the law enforcement agencies to provide medical care for ex-prime minister, as well as pressure on the members of her family.

During Tymoshenko’s trial, the Bat’kivshchina faction in the Ukrainian parliament initiated a law that would de-criminalize economic offences.

However, the Party of Regions, holding the majority in the parliament, did not support the bill.

As the Ukrainian deputy from the Party of Regions Aleksandr Yefremov noted: “In this way the officials could escape the responsibility for the misuse of powers.”

The trial on the misuse of public finances in 2009 presupposes the revision of the gas agreements.

However, it can be said that the Russian party will agree on this only if Ukraine accepts two conditions: Customs Union with the Russian Federation and Naftogaz’s cooperation with Gazrom.

In this way Russia can establish the control over Ukraine that it is seeking.

Tymoshenko’s Case and the Association with the EU

One of the main arguments against Tymoshenko’s case was the future of the Association Agreement with the EU.

The level of democracy in Ukraine, violation of human rights, oppression of the opposition, and the economic orientation of Ukraine toward former Soviet republics do not let Europe see Ukraine as a trustworthy partner.

“Although the schedule of the Kiev – EU negotiations on association and the free trade zone was not changed, the completion of these agreements will depend on the changes in the Ukrainian political situation and the response to European Union’s expectations, “ stated the French Minister of Foreign Affairs.

In his turn, Viktor Yanukovysh says that Tymoshenko’s case should not be mixed up with the Ukraine-EU association partnership.

Moreover, he adds that if the European Union is not ready to include the perspective of the membership of Ukraine in the EU into the agreement, Ukraine is ready to postpone the signing of agreement.

As a response, Brussels postponed Yanukovych’s visit scheduled for October 20 – the door into the European Union for Ukraine was closed softly.

Such a confident position of the president demonstrates that Ukraine is expecting a respectful attitude from the EU as toward an equal partner, and sees Timoshenko’s trial as a more important task than the association with the EU.

In any case, Yanukovych has an alternative plan that is the Customs Union with Russia, Belarus, and Kazakhstan.

Even though Ukraine is not eager to join the Union, in which three countries are not WTO members while Ukraine is, and in which Russia is the main player, the Customs Union can have some advantages for the country, such as gas discounts.

Moreover, Yanukovych signed the free trade agreements with the CIS states.

Signed by all CIS members except Azerbaijan, Uzbekistan, and Turkmenistan on October 18, the document will abolish the export and import duties on many goods.

However, the agreement makes certain exemptions for a number of products to which the contract will not apply.

However, this is a temporary measure: the treaty establishes a specific time period during which all of these exemptions will be eliminated.

Trials: More to Come

Having sentenced Tymoshenko to seven years on the grounds of misusing of power and public finance, the Security Services launched new case.

It is related to the 2006-2007 agreements on the supply of construction materials by the United Systems of Ukraine Corporation to the Russian Defense Ministry and the exchange of Russian gas.

At the same time, Prosecutor General Viktor Pshonka said that criminal cases against Tymoshenko closed in 2005 by Sviatoslav Piskun should be revisited.

These included the assassination of the Ukrainian deputy Yevhen Shcherban’ in November 1996.

The idea of these trials is to present to Ukrainian citizens how many criminal cases ex-prime minister was engaged in, and to impose the responsibility of all economic and other crimes on the main leader of the opposition.

In conclusion, the sentence – seven years in jail plus three years in which Tymoshenko cannot occupy any official post – will not allow her to participate in the upcoming elections (parliamentary elections of 2012 and 2017, and presidential of 2015 and 2020).

It means Tymoshenko will not be an opponent for Yanukovysh during the two next presidential terms, and will not compete during the 2020 election campaign.

In addition, Tymoshenko will be discredited as a politician.

Moreover, economically, all responsibility for the economic loss of Ukraine (not only the damage of the 2009 contracts) will be imposed on Tymoshenko, although Yushchenko as an acting president in 2009 agreed to the gas contracts.

On the other hand, however, her ratings are rising.

The number of her supporters is increasing, as well as the number of foreign political figures and institutions concerned with the situation in the country.

Tymoshenko’s image as a martyr attracts ordinary people and draws their attention to Ukrainian politics.

Finally, important to note that the situation is burdened by the political-geographic division of the country, where the eastern and southern regions support incumbent President Viktor Yanukovych and central and western regions favour Yuliya Tymoshenko.

This division determines different economic orientations of the various regions of Ukraine and jeopardizes the political situation in the country.

Ukraine or Borderland?

WASHINGTON, DC -- In the Russian language, Ukraine has two meanings: one, the country of 43 million people that lies on the north coast of the Black Sea, and two, “on the border” or “borderland.”

For most of the past 20 years, Kiev’s foreign policy aimed, and largely managed, to fix on Europe’s geopolitical map the first meaning rather than the second.

Ukrainian President Viktor Yanukovich is now undoing that.

Ukraine became independent in 1991.

In 1994, as Washington contemplated the enlargement of NATO, Boris Tarasyuk, Ukraine’s deputy foreign minister, met Strobe Talbott, the U.S. deputy secretary of state. Tarasyuk noted that NATO’s enlargement to include states such as Poland and Hungary would prompt a negative reaction from Moscow — and also raise a dilemma for Kiev.

How could Ukraine avoid becoming a gray zone of insecurity, or a borderland, between an enlarged NATO and Russia?

Talbott agreed that the Ukrainians deserved a good answer to the question, and finding one became a priority task for the Clinton administration’s Europe policymakers.

Washington moved to expand its bilateral relationship with Ukraine, establishing in 1996 a strategic partnership and a bilateral commission chaired by Vice President Al Gore and President Leonid Kuchma of Ukraine.

One year later, NATO and Ukraine agreed to a distinctive partnership and set up the NATO-Ukraine Council to promote stronger links between Kiev and the alliance.

The goal was straightforward: to deepen ties between the West and Ukraine and thereby reassure Kiev that it would not find itself an isolated borderland as the enlargement of NATO and the European Union transformed Europe’s geopolitical landscape.

In 2002, Kiev adopted the goal of joining NATO.

While Ukraine’s relations with the European Union developed more slowly, they also acquired greater breadth and depth.

Following the 2004 Orange Revolution, Viktor Yushchenko made joining the Euro-Atlantic community his primary foreign policy objective and sought a membership action plan with NATO.

He was considerably ahead of the Ukrainian public on the question of NATO membership, though Ukrainians strongly supported closer E.U. links.

More critically, Yushchenko failed to address his country’s key domestic problems.

A disillusioned Ukrainian electorate turned to Yanukovich in 2010.

On assuming office, Yanukovich stated that his first foreign policy priority would be to repair a badly frayed relationship with Moscow.

He also made clear that Ukraine would balance its relationships with Russia and the West.

He stressed the importance of deepening Ukraine’s integration with the European Union, most immediately through the negotiation of an association agreement and comprehensive free trade arrangement.

He regularly brushed aside Moscow’s entreaties to join a customs union with Russia, Kazakhstan and Belarus.

While some in the West regretted that Kiev no longer sought to join NATO, a closer Ukraine-E.U. relationship seemed a good answer to the question that Tarasyuk posed in 1994 about keeping Ukraine from becoming a borderland.

This is now in danger.

The democratic backsliding that has occurred under Yanukovich, recently epitomized by the trial of opposition leader Yulia Tymoshenko, threatens Ukraine’s links with the West.

E.U. officials have canceled one planned Yanukovich visit to Brussels.

While negotiation of the association and free trade agreements may continue, their completion is in jeopardy.

Parliamentarians from E.U. states say the agreements have zero chance of ratification as long as Tymoshenko remains in prison.

As the European Union grapples with the euro-zone crisis, Yanukovich’s democratic backslide offers those Europeans who always were skeptical about E.U. engagement with Kiev a handy excuse to oppose it.

In parallel, Ukraine’s relations with individual Western countries seem headed for a freeze, as Yanukovich is increasingly viewed as another Aleksandr Lukashenko — the Belarus strongman — rather than an aspiring E.U. leader.

Yanukovich seems to recognize the risks of isolation, especially for his dealings with the Kremlin.

Ukrainians voice frustration that although Kiev in 2010 acted to address major Russian concerns, Moscow has done little on issues of importance to Ukraine.

The Russian government, for example, continues to pursue a natural gas pipeline under the Black Sea that would take gas that now travels through Ukraine.

The deterioration of Ukraine’s relations with the West will likely embolden Moscow to press Kiev harder.

Yanukovich may not intend this, but that does not matter.

He is making Ukraine into the borderland it had long sought to avoid.

MEPs Blast Kiev Over Tymoshenko Verdict

BRUSSELS, Belgium -- In a rare show of unity in the European Parliament, political groups across party lines deplored the conviction of former Prime Minister Yulia Tymoshenko as a violation of human rights and an abuse of the judiciary designed to silence Ukraine's leading opposition figure.

MEPs warned In a resolution adopted yesterday (27 October) that a failure to review Tymoshenko's conviction will jeopardise the prospects of concluding and ratifying an EU-Ukraine association agreement.

A court in Kiev sentenced Tymoshenko on 11 October to seven years in prison for abuse of office in the negotiation of a gas deal with Russia in 2009, when she was prime minister.

According to the verdict, Tymoshenko will not be able to run in a parliamentary election due next year.

Minutes after the verdict, the EU issued strong statements, calling the ruling 'politically motivated' and warning of negative consequences for Kiev's push to sign an association agreement with the EU.

After several days of discrete communication between Brussels and Kiev, EU leaders decided that a milestone visit of President Viktor Yanukovich on 20 October should be 'postponed' until conditions would be more "conducive to making progress" in bilateral relations.

Yanukovich's visit was expected to help wrap up the conclusion of an EU-Ukraine association agreement and a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU by the end of the year.

The European Parliament resolution urges Ukrainian authorities to ensure that legal proceedings in any appeal of Tymoshenko's conviction or in trials of other members of the former government are fair, transparent and impartial.

MEPs insist that Tymoshenko should be allowed to participate fully in the political process both now and in the forthcoming elections in Ukraine.

MEPs fear that the Tymoshenko trial is at odds with Ukraine’s proclaimed commitment to democracy and European values, and voice concern at signs of decline in democratic freedoms, and the possible use of state institutions for partisan purposes and political revenge.

MEPs also expressed alarm over reports of deteriorating media freedom and pluralism in Ukraine.

Door still open?

However, MEPs leave the door open for the conclusion of a trade agreement and signing the association agreement before the end of the year.

The resolution says that if the Ukrainian authorities provide a concrete plan to resolve the "unacceptable situation" around Tymoshenko, further steps in EU-Ukraine relations would be possible, depending on the implementation of such a plan.

MEPs stated that Yanukovich’s postponed visit to Brussels might have helped achieve progress over technical and political obstacles to initialling an association agreement.

They are urging the Council and Commission to reschedule the meeting so that it takes place before the planned EU-Ukraine Summit in December.

Commission to help legal reform

MEPs also called on the European Commission to support judicial reform in Ukraine by making better use of the EU's capacity-building programme and to consider setting up an advisory group to help the country fall in line with EU legislation, including in the judiciary.

Brussels is concerned over plans by Kiev to introduce new legislation on elections, ahead of the 2012 legislative ballot.

Ukrainian calls to wait for the final conclusions of the Venice Commission, the Council of Europe specialised body in assessing such legislation, were ignored, EurActiv sources said.

The President of the European People's Party (EPP) Wilfried Martens warmly welcomed the resolution.

"The EPP supports the deepening of EU-Ukraine relations as long as the country is stable and democratic and respects the principles of the social market economy, the rule of law, human rights and the protection of minorities and guarantees fundamental rights.

"The EPP recognizes that the Ukrainian authorities have chosen another way, i.e. violating human rights, breaching the European values, abusing of the judiciary for the purpose of the political suppression of opposition politicians, including former Prime Minister Yulia Tymoshenko.

"The EPP regrets that President Viktor Yanukovych has broken the promise - given to many senior EU leaders and officials, myself included – of proposing a legal solution to decriminalize the articles selectively applied against Tymoshenko that date back to the Soviet times and do not conform to European and UN standards.

"The EPP considers that, under such negative circumstances, no agreement between the EU and Ukraine can be signed and that President Yanukovich bears full responsibility for this blockade and urges President Yanukovich and his party, the Party of the Regions, to immediately end this prejudicial situation," Martens said.

Opposition TV Channel Disappears From The Airwaves

ODESSA, Ukraine -- The independent television company Krug has disappeared from the airwaves in Odessa.

Company employees are convinced that the authorities in Odessa are trying to prevent the only opposition channel from broadcasting.

Krug employees sent an appeal to a number of people: the head of the Odessa Regional State Administration, Eduard Matviychuk; the Ukrainian President, Viktor Yanukovych; the Prosecutor General of Ukraine, Viktor Pshonka; Chairman of the Antimonopoly Committee of Ukraine, Vasyl Tsushko, as well as a number of embassies of the European Union states, international human rights organizations, trade unions and unions of journalists.

The text of the appeal says that on 18 October, the signal of the only opposition TV and radio company, Krug, disappeared from cable networks of "Chorne More" and "Breeze" operators.

These operators retransmit broadcast signals to residents of Odessa who live in the Kiev and Suvorov districts of the city.

The official reason: the distribution company CTV-Odessa had no on-air signal.

CTV-Odessa engineers told Krug's editorial staff that the modulator of the distributive TRC Krug channel "burned out".

Meanwhile, the signals of all other channels were being transmitted smoothly.

CTV-Odessa employees refused to say how long it would take to fix the problem, citing the fact that the owner, Dmitry Zubov, would solve this problem.

Meanwhile, Mr. Zubov has not given an indication of the repairs necessary nor allocated funds for them.

According to the channel management, the Odessa authorities are trying to close the only opposition channel in the city.

Besides, the statement says that this is not the first time the mayor of Odessa has tried to do this.

TRC Krug employees are withstanding another attempt by the authorities to close the channel because they do not like it, with deep indignation.

Earlier, Odessa Mayor Kostusev tried to evict the team of TRC Krug from their premises.

Following this, Kostusev tried to ruin the company with two lawsuits of 100,000 Ukrainian Hryvna (approx. US$12,500) each; the cases are still under consideration.

However, before reaching the desired conclusion, the municipality forced TRC Krug off the air.

The mayor's office reported that they had no connection to the disappearance of TRC Circle from the airwaves, but confirmed the information about the lawsuits.

In September 2011, three Kharkiv TV channels - ATN, Fora and A/ TBVK - stopped broadcasting after they were pressured by the local authorities.

Crisis canceled?

Prime Minister Vladimir Putin is confident that Russia’s economy will continue growing despite the global economic crisis. Experts share Putin’s optimism about Russia’s future, given the country’s low budget deficit and significant reserve funds as well as high oil prices.

“I agree with those who think that we are emerging from the crisis,” Vladimir Putin said at the Russia Calling investment forum, sponsored by VTB Capital. “I agree that this stage will likely last long, but it is nevertheless the beginning of a recovery.”

If a second wave does strike, as Economic Development Minister Elvira Nabiullina told the forum, Russia’s economy, measured by GDP, will resume growing by 2.5%- 3.7% as early as 2012-2014.

Russia is in a more advantageous position than other countries, with a low sovereign debt level and, unlike in 2008, a financial sector in good condition, Nabiullina said on Wednesday, Oct. 5, during the Government Hour meeting in parliament. “Since then banks have significantly improved their foreign currency positions and the quality of their assets,” the minister said. Russia has also secured substantial international reserves as well as a large surplus in its current account.

Admittedly, in a worst-case scenario – say the price of oil falls to around $60 per barrel – the federal budget deficit could soar to 4.5% of GDP from the 1.6% projected in next year’s budget.

The global economic problems of 2011 were caused by the unsound monetary and fiscal policies pursued by a number of countries, said first deputy head of the Bank of Russia, Alexei Ulyukayev.

Mr. Ulyukayev believes that the crises of 2008 and 2011 are very different. In 2008, a critical amount of risk had accumulated in the system; in 2011, poor assessments of the situation and bad management led to excessive lending, a dramatic decline in market liquidity, and other shocks to the market.

“Circumstances are more favorable for Russia than they were in 2008,” Yaroslav Lissovolik of Deutsche Bank told RIA Novosti.

Businesses are in better shape than three years ago, Lissovolik said. The government’s efforts to mitigate the ill effects of the 2008 crisis have helped them cut their debt and reduce currency risks.

The country’s rainy-day funds are also encouraging. In 2008, the Central Bank’s reserves totaled $597 billion, and this year they stand at $516.8 billion. “The difference is not too big,” Lissovolik said.

In 2008, the Reserve Fund and the National Wealth Fund contained $220 billion; now there is $100 billion less. But companies and banks are stronger now and, consequently, will require less money to bail them out of another crisis, Lissovolik said.

The struggles of the EU and US seem remote to Russia. “The only link between Russia and the rest of the world is the price of oil,” Anton Struchenevsky, senior economist at the investment company Troika Dialog,. With global demand stable enough, the current price of oil is what matters. After fluctuating for a while, it finally settled at around $100 per barrel.

“If international markets remain like this, Russia won’t have any problems at all,” Struchenevsky said. “With its budget nearly balanced – and only a small deficit – and inflation going down, the Russian economy continues to grow.”

If commodity prices do not collapse, the Russian ruble will remain stable as well. “One doesn’t have to be an expert in conspiracy theories to understand the ruble rate forecasts,” said Ruslan Grinberg, head of the Russian Academy of Sciences’ Institute of Economics.

“There is only one factor that matters – the price of a barrel of crude,” he said. “If that price is around $100, the ruble will remain stable.”

Wealthy Russian top managers leave Europeans trailing

The image of the wealthy expat manager is wearing thin as their Russian counterparts’ salaries are almost two-thirds more on average, according to a recent study.

Russian high-fliers earn salaries that are 60 per cent more than their Western European counterparts and their yearly bonuses 40 percent more, says a survey from global management consulting firm the Hay Group, Vedomosti reported.

The discrepancy is huge and reasons varied but the figures bear some closer examination.

Top-rollers have more disposable income in Russia for a start and there are not the same caps on bonuses as in some European countries.

“Most of the time we find that the salaries that Russians and expats receive are actually pretty similar…Compared with Europe, the Russian flat rate of tax is lower, at 13 percent, in Sweden it is 72 percent. In Russia you can earn a hell of a lot more by being average,” Luc Jones, partner at recruitment specialists Antal Russia, told The Moscow News.

And bonuses seriously affect the picture, Russians take first place in Europe for bonuses, Irina Chernozubova, head of the Hay Group’s Russia office, told Vedomosti, and almost without exception the Russian offices that took part in survey paid their managers yearly bonuses.

In crisis-struck Europe only 60 percent of executives managed to earn their bonuses.

“There are few good international style managers [in Russia], the ones there are can command a very high price. Plus, the Russian economy is not doing that badly and it has created a bit of a bubble of late, which puts an upward pressure on salaries,” Jones said.

He added that top-notch Russians expect a pay rise of 25-30 percent when they change jobs, whereas Europeans will often settle for a similar sum to before.

And this happens with more regularity than company account departments would like, as top-level Russian employers have not yet developed ways and means of holding onto people for a long time, Sergei Lvov, general director of Axes Management.

Russian shareholders are prepared to fork out for mangers who can navigate the vicissitudes of both the international and the Russian markets.

This could be because Russians have a more difficult task ahead of them and their jobs throw up a much greater number of unexpected or ill-defined tasks, Olga Shcherbakova, a partner at recruitment specialists Ward Howell, told Vedomosti.

Students unhappy about president’s visit

One of Russia’s leading journalism schools needs a good clean-up after President Medvedev visited it yesterday, according to a group of students planning to stage a “subbotnik” flash-mob.

It comes after several students were detained or taken away when they tried to unfurl posters with some unauthorized questions, but Saturday’s flashmob organizers claim there is no political subtext behind their action.

“Just some people feel there is a need to clean up at their home,” read a message spread via social networks, Gazeta.ru reported.

The president was going to hold an open discussion with young people about nationalism, but students claimed only people from a special list were allowed in the lecture hall, including members of pro-Kremlin youth movements

Those who got in were advised to put their mobile phones on silent mode and “acclaim [Medvedev’s speech] with applause”, according to Moskovskiye Novosti.

Medvedev’s visit yesterday was announced just on the night before, according to Novaya Gazeta’s reporter who is currently studying journalism at MGU. But students were quick to prepare for the visit - tutors had to remove stickers put up inside the building asking the president about how many transport disasters it would take for him to lose trust in Igor Levitin, the current transport minister.

Several students were not allowed in the building by presidential security guards who claimed all their lectures were cancelled that day.

However, three people unfurled posters asking “Did you consult with the prime minister before coming here?”, “Why you are spending your time on twitter and why is Khodorkovsky spending time in jail?” and “Why did you fire Kudrin?”, Interfax reported. They were swiftly detained and taken to the local police station, but released after a “preventative talk.”

When the crowd occupied all the space around the main stairs, one of the men muttered “come on girls, it’s time to show your boobs”, hoping for some of Medvedev’s supporters to strip again for the president, Novaya Gazeta reported.

And one of the female students waited for the moment when Medvedev appeared after two hours of delay to take her jumper off, but only to unveil a t-shirt with “Who beat up Oleg Kashin?” on it, recalling last year’s highly-publicized case.

Five more people took out posters with a slogan protesting against pressure on the media, Novaya Gazeta reported. Interfax report suggested there were four people.

All were taken away promptly, and some of them later claimed they were threatened with expulsion from the university.

Massive police raid conducted on city market

Over 300 people were detained after special-forces police raided Sadovod, one of the city’s biggest retail markets on Friday.

Besides the market itself, the market workers’ temporary dwellings and all the cars in the area were also searched for weapons, explosives and drugs, according to the police’s press-service, which didn’t provide further details on the results.

On previous occasions various crimes including shootings and kidnappings had been investigated at the market in Moscow’s southeastern outskirts, but this raid, carried out by over 200 special-forces officers, was the biggest operation carried out on the site in recent history.

Altogether 370 people were detained after the raid, some of who were on the wanted lists on suspicion of various crimes, Interfax reported. Dozens of people were found to have broken immigration laws.

“Fifty foreign citizens have been detained who had no official registration and stayed on the Russian territory illegally,” Zalina Kornilova, an official representative of the Migration Service, told Interfax.

Various trading rules were also found to have been violated at Sadovod. “A probe was carried out into 430 trading spots on the territory of the market,” police spokesman, Alexei Bakhromeyev, was cited by Interfax as saying.

Despite rumors that Moscow official were going to close Sadovod after their clampdown on other vast markets in Moscow, Sadovod hasn’t ceased operating. Furthermore, it has become one of the capital's biggest trade areas after other markets, Cherkizovsky and Luzhniki, were closed by the authorities.

50 percent of Russians own a bank account

Over the last three years the number of Russians who have a bank account has grown from 37 percent to 52 percent of the population.

The number of citizens with bank cards of one form or another has grown from 30 percent to 40 percent of the population, Interfax reported, citing research from the Levada public opinion research center.

A further 14 percent said they planned to open a bank account, while 13 percent planned to acquire a bank card.

Russia drops out of world’s top-10 consumers of luxury

The world’s market for luxury goods will grow by 10 percent in 2011, reported on Wednesday citing research by the Bain & Co consulting company. The boost was largely fed by the Chinese appetite for luxury goods, with demand for such items up 35 percent to 12.9 billion euros. Bain & Co said that Russia’s growth in the luxury segment was slowing, with just 9 percent growth in 2010 sliding to 4 percent growth for 2011, with sales of 4.7 billion euros (of which 3.5 billion euros was in Moscow). As a result Russia slid from 10^thlargest consumer of luxury items to 11^th place worldwide, having been overtaken by Hong Kong.

Ukraine inks trade deal – but not with EU

Ukraine’s move to sign on to a free trade agreement between eight former Soviet republics Tuesday is bringing it closer to Russia, analysts said. And the agreement appears to be a direct result of souring ties with the EU over Ukraine’s jailing of former PM Yulia Tymoshenko – with a Thursday visit to Brussels by President Viktor Yanukovych cancelled.

Ukraine’s backing of the pact – which abolishes import and export duties to increase trade between countries – takes it a step closer to joining the Customs Union with Russia, Belarus and Kazakhstan.

Kyiv remains steadfast in opposing joining the Union, but by backing the free trade pact it is sending a signal that the option may be possible in the future, analysts said.

Prime Minister Vladimir Putin, who has been calling for a Eurasian Union that will effectively recreate the Soviet bloc geopolitically, has repeatedly urged Ukraine to join the Customs Union.

“Sit down, calculate, weigh it up, get rid of various political phobias from the past, and look into the future,” RIA Novosti quoted Putin as saying Wednesday after a meeting of EurAsEC leaders.

He underlined, however, that he had no intention of forcing Ukraine into the union against its will. “We are ready to open direct dialogue on Ukraine’s accession,”.

If states continue to work as “energetically” as they have on the Customs Union, a Eurasian Union could become possible by 2015, Putin said.

President Dmitry Medvedev, who visited Ukraine earlier this week, also called on Ukraine to join the Customs Union. The free trade pact came as EU President Herman Van Rompuy postponed an October 20 meeting with Yanukovych to discuss a free trade agreement with the EU – in what appeared to be a response to Ukraine’s jailing of former PM Yulia Tymoshenko over abuse of office.

“The EU is stubbornly forcing Ukraine to free Tymoshenko,” Alexander Rahr, a Russia expert at the German Council on Foreign Relations told The Moscow News. The free trade pact with Russia, he said, was a “softer” option, but still “a step towards the Customs Union.”

“It is a political sign that Ukraine is moving closer to Russia,” he said, which was clearly part of the fallout from the Tymoshenko conviction.

Tymoshenko was given a sevenyear prison sentence last week over a gas contract she brokered with Putin in 2009. Russia, the United States and EU condemned the verdict as politically motivated, and there is increasing evidence the ruling will hamper Ukraine’s EU integration efforts. Kyiv still insists on a free trade agreement with Brussels, and refuses to join the Customs Union.

Its free-trade pact with Russia was met with criticism from officials and opposition members. Prime Minister Mykola Azarov criticzed the pact for excluding commodities like oil and gas, the Ukrainian Journal reports. Former President Viktor Yushchenko said the pact would threaten EU ties.

“Just like Kharkiv agreement had shut our integration in the area of security, yesterday’s agreement shuts down our integration with the EU in the area of trade,” the Ukrainian Journal quoted Yushchenko as saying.