Ukraine, EU Initiate Association Agreement

KIEV, Ukraine -- Ukraine and the European Union have initiated an association agreement, putting Kiev one step closer to membership in the bloc.
European officials have referred to Friday's proceeding as a technical measure similar to proofreading the lengthy document, which is the product of five years of negotiations.

The accord must now be translated into more than 20 EU languages and approved by all members before it can move forward, a process that is expected to take months.

The association agreement is not expected to be signed until after Ukraine holds parliamentary elections in October 2012.

EU officials have said they will not sign the document until they see improvements in Ukraine's adherence to the EU's "core values," which include an independent judicial system, free and fair elections and constitutional reform.

The two sides are also at odds over Ukraine's jailing of former Prime Minister Yulia Tymoshenko for abuse of power.

The EU has called for her release, saying the charges against her are politically motivated.

Ms. Tymoshenko is a political rival of Ukrainian President Viktor Yanukovych.

The former prime minister and opposition leader was convicted and sentenced to seven years in jail in October for abusing her authority in a 2009 gas deal with Russia that her opponents say was too beneficial to Russia.

She denies any wrongdoing, and has described her trial as "a political lynching" aimed at allowing President Yanukovych to rid himself of a political rival. He denies the accusation.

Tight Security Keeps DSK Speech Civil In Ukraine

KIEV, Ukraine -- Dominique Strauss-Kahn has not had very good luck giving speeches in Europe since his return from New York, but he's finally mastered the security protocols necessary to get through one in Ukraine.
The audience he addressed in Kiev on Wednesday did not protest or hit him with awkward questions, as other European crowds did last month, primarily because the security at his address was strict and the crowd carefully managed.

As Reuters' Olzhas Auyezov reports:

His lecture in Ukraine, organized by local billionaire businessman Viktor Pinchuk's charitable foundation, was carefully arranged in order to avoid embarrassment.

Security was tight to filter out uninvited guests and journalists were not allowed to ask questions, a privilege reserved for local businessmen and politicians as well as students, many of whom were on Pinchuk's fellowships.

That must have been something of a relief to him after last month's address at the Cambridge Union Society, where protests greeted him out front, and a student inside asked him to "explain" the bruises reported by his New York accuser, Nafissatou Diallo.

Strauss-Kahn canceled a second planned speech at the European Parliament later in the month after protests broke out there, too.

A Beijing address Strauss-Kahn gave in December went smoothly enough, but he's had bad luck in Europe until now.

The success of the event must be due to its heavy security and not Ukraine's general acceptance of Strauss-Kahn's persona.

The topless protesters who demonstrated outside his house in October came from a Ukrainian feminist organization called Femen.

Ukraine Vows To Cut Euro 2012 Hotel Costs

KIEV, Ukraine -- The 2012 European championships co-hosts Ukraine have promised to cut hotel costs during the event, amid concerns that prices are being cranked up to sky-high levels due to a lack of supply.
"The country's government will find ways to make the costs of staying in the country during the Euro-2012 more acceptable for our guests," Deputy Prime Minister Borys Kolesnikov said at a news conference.

"Poverty causes greed," he added.

"We forgave our hotels their debts 10 years ago to stimulate their development. We counted on their loyalty but they lifted the prices."

"However, our government has enough power to reduce their appetite," Kolesnikov promised.

Earlier this year Ukraine's media expressed deep concern over hotel capacity in some of the Euro-2012 host cities and the high cost of staying in Kiev for foreign visitors.

Estimates put the cost of rooms in Kiev at more than double that of staying in the Polish capital, Warsaw.

An overnight stay in Kiev during the tournament is expected to reach a staggering $332 (247 euros), compared with $149 in Warsaw.

Tent pitches in the Kiev suburbs will cost visiting fans about 40 euros ($54), the price of a daily stay in a hostel in Warsaw.

Kolesnikov insisted that Ukraine has enough space in inexpensive hotels in all of the host cities, although he admitted there is a lack of capacity in Donetsk.

Fans there will have the option of staying on local university campuses, he added.

Kolesnikov also said that Ukraine is set to open the country's skies for all of the world's airlines.

This initiative will allow fans who consider staying in Ukraine to be too expensive to come to Ukraine to watch the match and return home right after the showdown.

Gazprom wants to end gas transit via Ukraine

Russian gas giant Gazprom said on Feb. 22 it would aim to completely stop gas transit via Ukraine when it builds new pipelines later this decade as tensions between the two countries over gas prices and transit escalated.

Gazprom blamed Ukraine for shortages reported by its customers in Europe at the peak of a cold spell this month.

“Significant volumes of gas transhipped through Ukraine failed to reach Europe,” Gazprom Chief Executive Alexei Miller said at a meeting with Russian President Dmitry Medvedev, according to Medvedev’s office.

“On certain days, up to 40 million cubic meters of gas was kept in Ukraine and this, without doubt, incurred both financial and reputational losses on Gazprom.”

Ukrainian state energy company Naftogaz denied that. “Since the beginning of 2012, Naftogaz has not taken a single cubic metre of gas from the volumes that were shipped by Gazprom to Europe,” it said in a statement.

But citing worries over the security of transit, Medvedev ordered Gazprom to maximise the capacity of the planned South Stream pipeline across the Black Sea which will bypass Ukraine.

Gazprom plans to launch South Stream in 2015 with a capacity of 63 billion cubic metres (bcm) a year.

Coupled with Nord Stream, a pipeline through the Baltic Sea that Gazprom launched last year with plans to eventually double its capacity to 55 bcm a year, South Stream could allow Gazprom to drop Ukraine as a transit nation.

Russia shipped 104 bcm of gas through Ukrainian pipelines last year.

Moscow has accused Kyiv of siphoning gas bound for Europe in the past, most recently in early 2009, when the two ex-Soviet nations were locked in a bitter dispute over supply prices which briefly disrupted supplies to Europe.

Ukraine is also unhappy with the price of Russian gas it imports and has sought to renegotiate the price for over a year but the talks appear to have stalled.

This month, Russia said it had offered Ukraine a new gas deal, which according to media reports provides for a 10-percent price discount.

But Kyiv, which sees a fair price at $250 per thousand cubic meters, down from $416 it currently pays, has not commented on the offer.

Ukraine Hotel Deficit Worries UEFA Ahead Of Euro 2012

INNSBRUCK, Austria -- UEFA remains concerned over the lack of accommodation for fans and media in eastern Ukraine for Euro 2012, an official said Friday.
The Russian-speaking cities of Donetsk and Kharkiv have a deficit of thousands of hotel rooms required by European football's governing body of host cities, said Thomas Giordano, a UEFA spokesman.

"Accommodation in Donetsk and Kharkiv is not up to what we need. There are still hotels being built at the moment, and we are still working hard on finding additional accommodation in neighboring cities," he said at a sports media conference in Innsbruck, Austria.

Kharkiv is hosting three group matches, but Donetsk has five matches in total, including a quarterfinal and a semifinal.

UEFA regulations stipulate upwards of 5,500 hotel rooms for a semifinal venue.

Giordano said several contingency plans, including temporary camp sites, were being examined to deal with the influx of fans.

The continent's premier national team competition is in eight cities across Poland and Ukraine, starting in Warsaw on June 8 and ending with the final in Kiev on July 1.

Moscow's hotels most expensive in Europe

As of November 2011, prices in Moscow’s hotels were the highest in Europe, RIA Novosti reported citing information obtained from the Hotel.info web site. Hotel.info provides booking services for over 210,000 hotels worldwide. The research was conducted in January and announced yesterday. According to the study, prices in Moscow rose 8.35 percent in autumn to reach 7,684 rubles for a room per night. Oslo came second at the equivalent of 7,145 rubles a night.

Russians Warn Of Food Import Restrictions

KIEV, Ukraine -- Russia warned it will probably restrict imports of agricultural commodities from Ukraine after Kiev indicated it will move towards reforming its food control agency in line with the European Union standards.
The warning, made by the chief of the Russian state consumer protection agency, Gennady Onishchenko, on Sunday comes weeks after Ukraine and the European Union had successfully completed talks over the free trade agreement.

“A serious problem has emerged,” Onishchenko told on Sunday.

“Beginning in May, we will very seriously strengthen supervision [of imports from Uktraine] at the border.”

Onishcheko complained that Ukraine had decided to allow the State Veterinary Service, mostly known from handling and controlling outbreaks of diseases in livestock among other tasks, has been also appointed to supervise quality and safety of food for people across the country.

“This de-facto means that a citizen of Ukraine has been officially defined as an animal,” Onishchenko said, arguing that those are doctors that must control quality of food.

“Food accounts for 70% of health problems.”

Ukraine argued that expanding the duties of the State Veterinary Service was part of the reform that had been aimed at bringing the country closer to EU regulations.

“The creation of the single competent organ on the basis of the State Veterinary Service is anticipated by the reform of the food sector,” Viktor Korzh, a lawmaker from the governing Regions Party and a deputy head of the committee on healthcare in Parliament, said.

“The statement [Onishchenko] is a real provocation.”

Korzh said the expanded state service will have other staffers that will be recruited from healthcare agencies that will effectively supervise the food industry.
“The service will get specialists from other agencies.”

Mykhaylo Chechetov, another pro-government lawmaker, said that Onishchenko’s controversial view is not shared by the president of Russia and by the prime minister of Russia.

“I don’t think that the warning from the official is shared by Russia’s authorities – the president and the prime minister,” Chechetov said.

“So, let’s not put the stupidity of one person into the ranks of the state policy.”

The developments come less than three months that Ukraine and six other countries of the former Soviet Union signed a free trade agreement with Russia.

The agreement, however, excludes three most sensitive commodities for Ukraine, including sugar, crude oil and natural gas, allowing Russia to restrict trade in these commodities.

Prime Minister Mykola Azarov said recently that Russia had promised at some point to lift the restrictions on trade with oil and gas, but gave no other details.

Ukraine has last year refused to joint the Customs Union with Russia, Belarus and Kazakhstan, a deep level of integration that could have derailed free trade talks with the European Union.

In July 2011 Russia imposed restrictions on imports of meat and dairy products from Ukraine, warning that its steel sector may follow the suit.

The American who makes cheese in a Russian village

What makes an entrepreneur?

ay Close, an American living in a small village near Moscow

Up at 5am to milk his cows, battling bureaucracy by day and making late deliveries by night - becoming a cheese-maker in Russia has been "hard, hard work" for Jay Close.

The 48-year-old New York-born chef began his operation 18 months ago, as part of a move to establish a rural life with his new wife Valentina, 25, in Moshnitsy, a village an hour's drive from the capital, Moscow.

Jay was inspired to try making cheese after visiting a cheese-maker in Holland during their honeymoon.

But what began as an experiment has fast become a business, with an estimated turnover of 30,000 euros (US$40,300, £25,700) in 2011.

Jay started with one cow. Now he has five plus eight goats, buys extra milk from nearby farmers and employs a worker from Tajikistan.

He began making one to two kilogrammes of cheese a day, but can now make up to 30 - and 30 different varieties.

The operation has taken over the entire downstairs of the farmhouse he built himself. "I'm making cheese in my living room and my kitchen," he says.

On top of covering the couple's living costs and debt repayments, the business is delivering about US$300 a month, which they are reinvesting in materials for a separate cheese-making building.

Jay also now sells to restaurants in the capital, using connections built during many years working in their kitchens.

In addition, a recommendation by a French tennis coach he met in one restaurant has delivered a market for about two-thirds of his output, via an organisation called Lavka Lavka, which delivers high-end farm produce directly to a network of individual customers.

Lavka Lavka also helped to find four keen potential buyers who between them stumped up 3,300 euros for equipment to enable Jay to scale up production.

"Cheese futures," he jokes, adding that most of the money has now been repaid - in cheese.

The rest of the business, and the house itself, was funded from Jay's savings, some inheritance, and the proceeds from selling a houseboat he owned on the Seine River in Paris.

Jay lived in countries as diverse as Mexico, Australia, Papua New Guinea and Fiji as a child, and speaks English, French, Spanish, Italian and Russian.

His experience in catering began in California, when he ran away from home at the ago of 14 to avoid being sent back to boarding school in the UK.

He slept in the stairwell of an expensive apartment building, and washed dishes in a restaurant across the road, before eventually going with his father to Australia where he studied graphic arts.

But he later became a chef, although stints in construction and an abattoir have also brought experience which has come in useful in setting up the farm.

After visits to Moscow in 1993 and 1994, Jay moved in 1995 to work in post-Soviet Russi

"I didn't understand and I wanted to understand - how people lived, how they ate, how everybody seemed to have work but nobody had a salary. There were no shops, no advertising, no neon signs - people had very little, and no money, but they still had smiles."

Jay is constantly busy, breaking off to check batches of cheese, forgetting to eat breakfast, trying to recoup money from a truck driver and fielding calls from Lavka Lavka.

Although clearly stressed at times, he comes alive as he talks about his products, which he describes as "something that was made the way things were supposed to be made before progress stepped in and made things worse".

He believes most cheese in Moscow's supermarkets, which sells for as little as 220 roubles ($7; £4.50) a kilo, is mass produced and has vegetable fat added.

Jay uses 10 litres of milk - which he says costs 450 roubles - for each kilo of cheese.

The cheese sells for 500-600 roubles a kilo when bought directly from him, but Lavka Lavka customers pay almost twice as much.

Despite his growing success, Jay is divided as to whether he would recommend Russia as a suitable business environment.

The bureaucratic struggles are constant, and he describes lengthy difficulties in buying land and getting his cheese certified for sale.

"You've got to have some inside connections. For a foreigner thinking he's going to start something in Russia, it's too much - the culture, the people, the land... A lot of people just give up," he says. "I can't say you wouldn't regret it."

"I've had it all on my shoulders, I've worked on cruise ships with 20-30 chefs under me, making three meals a day for 250 passengers," he says.

But tired of Moscow's erratic wages, commuting, and working for others, Jay says he wanted to do something for himself.

"This is more rewarding psychologically," he says. "When you're working for yourself, you put more of yourself into it."

"It's never dull - there's always some new adventure."

Return of the five year plan?

Russian lawmakers, it seems, have been digging around in the countrys Soviet past for economic policy ideas – and are looking to reintroduce aspects of a planned economy.

The Economic Development Ministry announced last week that it had drawn up a bill on strategic planning of the economy for approval by the Duma after the forthcoming elections.

The bill aims to ensure that the regional and federal authorities coordinate their planning of strategic programs to increase the effectiveness of budgetary spending.

The ministry has been working on the bill for the past two years, but its finalization was blocked by former Finance Minister Alexei Kudrin, whose policies focused on long-term budget strategies over strategic planning.

Kudrin resigned earlier this fall after a fall out with President Dmitry Medvedev over budget spending policies.

The paper noted that the passing of the bill very much depends on who is appointed as the next finance minister after the presidential elections in March.

But as the daily points out, such measures would have very limited functionality since the private sector makes up more than 65 percent of the Russian economy (a greater share than in France.)

Are we talking here about capitalist Stakhanoviks? asked Finam chief economist Alexander Osin, with ironic reference to the Communist workers movement which overachieved state production quotas in the 1930s.

Our state has only maintained control of a few strategic sectors – like banking and oil and gas – everything else is in private hands. So if they are trying to go down the Chinese path, they should bear in mind that the state there controls around 80 percent of the economy.

Other experts say that more structural planning would be positively perceived by foreign businesses working in Russia.

Foreign investors need to see a low risk opportunity in Russia, therefore a laissez-faire economic model might be even less attractive, said Kendrick White, head of the Marchmont Capital Partners investment consultancy. The government is to plan actively, especially when it comes to infrastructural issues, but a return to five year plans is a complete contradiction to a market economy, White said.

Both experts said it is impossible to reintroduce an economic planning process without coordinating it with trends in other countries.

It will work if we see a tendency of growing role of state planning on the world level, said Osin from Finam. Developing countries are actively using state leverages, which is causing huge disproportions in growth rates between countries.

Back to basics

With his thick beard and round belly, Boris Akimov looks more like a Russian peasant than a former music critic at Rolling Stone or Afisha and even less like the creative director of jet-setter magazine Snob.

But to his new role as Russia’s guru of locally-sourced food, this image fits perfectly. Last year Akimov ditched his high-flying jobs in the journalism world to focus all of his energies on Lavka, a Moscow fresh food movement that is sprouting up faster than mushrooms in a damp forest.

The ruddy Muscovite says he founded the movement completely unintentionally and for purely selfish motives. After years of foraging around Moscow’s under-stocked supermarkets for fresh produce, Akimov and his friends decided to start sourcing their dinner ingredients by themselves and share their experiences in a blog.

“The idea to create this network first came from a desire by my friends and I to cook and eat better quality and more diverse food and provide our families with healthy products,” Akimov said.

Partly due to Akimov’s well-established name and partly because many Muscovites shared needs for sources of fresher food, word about the site quickly spread and was soon being filled with posts from many hundreds of city dwellers.

The movement has now blossomed into a full-blown business, with 50 employees, shops in Moscow and St. Petersburg and a popular Internet delivery site.

A recent publicity campaign featured celebrities dressed as farmers and brandishing pitchforks under the slogan “support local producers.”

Akimov says the biggest challenge to the movement has been in finding farmers willing to take part in the project.

In search of real Russian farmers, Akimov and his partners first tried food markets in the Moscow region, where they had little luck.

“Many people were just sub-purchasers who bought their tomatoes from the suppliers as supermarkets, others didn’t want to take us to their production sites, others just sneered at the idea of selling via the Internet,” Akimov said.

“There were some farmers who had long been trading on the markets, and for them Rizhsky market was something of a holy cow – they just didn’t want try anything else.”

However, gradually, the friends managed to rein in the support of a small handful of farmers, whose cooperation helped to convince other farmers of the project’s potential.

Lavka currently works with around 35 different farms across the Moscow, Kaluga, Lipetsk and Tambovsk regions.

And the movement’s rather professional-looking website now even features a nifty function that picks up on a visitor’s IP address when they log in and instantly brings up a list nearby production sites and farms.

But Akimov says the expansion of the project should never deter from its key principle: ensuring that all produce is locally sourced and of a high quality.

“Before we start working with anyone, we visit them and find out about their families, their daily routines and production, even how they raise their hens or grow potatoes,” Akimov says. “We believe a consumer should be able to trace the origins of his food.”

While most of the project’s sources are farmers in the traditional sense, the list also includes a varied bunch of independent producers working in niche markets, such as U.S. cheese maker Jay Close, who has set up a production base at his home in the Moscow region.

With their project, the Lavka founders have inadvertently spearheaded Russia’s very own version of the locavor movement, which has been storming developed nations for the past few years.

Akimov, himself a great lover of food, says the Lavka project has opened his eyes to a whole world of new flavors and cuisines.

His new project has encouraged him to explore pre-revolutionary Russian cook books for forgotten recipes and scourge the Russian countryside for the ingredients of exotic foreign recipes like roast pigeon.

“On finding out more about food and the ways it’s produced we’ve learned that even our everyday products are far from what you expect them to be,” Akimov told The Moscow News. “So, along with a wider assortment the project we created is aimed at delivering healthy and organic food.”

The group is now working on expanding its range of unique Russian produce, which currently includes a European Smelt fish from the lakes near Vologda and a traditional apple marshmallow from a village in Tulskaya Oblast.

“We are searching for local gastronomic treasures from various Russian regions. I believe this is the only way to protect local life, encourage local employment, and boost tourism,” Akimov said.

45,000 rubles for iPhone 4S

The new top-of-the-line 64-gigabyte iPhone 4S will retail in Russia 45,000 rubles.

The 32g and 16g will cost somewhere between 35,000-45,000 rubles, the paper reported. Currently, the previous top-of-the-line model, the 32g iPhone 4, is listed at an average price of 28,300 rubles on Yandex.ru market section. The paper’s source said that the gadget is likely to be officially released in December.

China gas deal sidelines Russia

Russia’s position in long-standing gas negotiations with China was delivered a new blow this week when China signed an agreement with Turkmenistan to increase natural gas supplies from the Central Asian country.

The agreement, signed between the presidents of the two countries on Wednesday, will more than double the gas stream through the Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline in 2012.

Reserves in Turkmenistan’s core gas field, Southern Iolotan, were recently estimated to be the second biggest in the world, with an capacity of some 13-21 trillion cubic meters (cm).

Under the deal, Turkmenistan will supply China with some 65 billion cubic meters of natural gas a year by 2014-2015, three times current volumes, the Kommersant business said on Thursday.

Russia has been negotiating a gas supply contract to China, the world’s biggest energy consumer, for five years but the sides have been unable agree on pricing.

Sources close to Wednesday’s talks told Kommersant that Turkmenistan agreed to supply gas to China for $250 per 1,000 cm, a $150 discount on Russia’s asking price.

“The deal will decrease Gazprom’s negotiating power – it will have to continue negotiations with China under less favorable conditions,” said Elena Savchik, an oil and gas analyst at Aton investment bank.

“From China’s point of view, signing a deal with Turkmenistan is a good way to push its terms to Russia and prove they have other suppliers” she added.

China has invested some $4 billion in the development of the Southern Iolotan field and says it will continue to invest further to secure its hold on supplies from Turkmenistan.

“Beijing does not want Turkmenistan to build a pipeline to the European Union, get a different gas price on the European market and then increase it for China…Beijing will do its best to make sure the Transcaspian pipeline project is not developed,” a Chinese diplomat said.

UPDATE: Russia Says Still No Gas Deal With Ukraine

MOSCOW, Russia -- Russia Wednesday denied media reports that it had agreed a new gas contract with neighboring Ukraine, but the risk of gas supply disruptions to Europe remains slim, observers say.

Ukraine--Europe's main link to Russia's natural gas supplies--is seeking to renegotiate its gas contract with Russia in order to help state gas company Naftogaz balance its books, a key stumbling block in negotiations with the International Monetary Fund.

The IMF halted a $15 billion bailout program to Ukraine earlier this year, after the government failed to take unpopular steps, such as raising the gas prices for households.

Ukrainian Prime Minister Mykola Azarov has said he will try to reach an agreement to unfreeze lending, after a new gas price deal is reached with Russia.

A previous dispute over prices between the two former Soviet republics led to a cut-off of Russian gas supplies to Europe that lasted three weeks in January 2009.

This caused severe disruptions in Central and Eastern European countries that are dependent on Russian gas delivered through Ukraine's pipeline--and sparked concern in Europe over the high reliance on Russian gas.

Europe relies on Russia for almost a quarter of its gas needs, the majority of which is shipped through Ukraine.

Ukrainian media reports this week said Russia had agreed to a sharp reduction in Ukraine's gas import price, and that the country had agreed to let Russia receive "preferences" for participating in the privatization of the country's state enterprises, including the strategically important gas transit pipeline system.

"The negotiations are continuing," a spokesman for Russian Prime Minister Vladimir Putin said, adding that a new contract will be signed when an agreement has been reached.

"Until that happens, we consider it premature to say anything."

Ukraine is seeking to renegotiate a current ten-year gas deal signed in 2009, which put pressure on Ukraine's fragile state finances.

Both Ukrainian and Russian officials have said talks to renegotiate the 2009 gas deal were at an advanced stage.

Kiev earlier this year vowed to take Russia to arbitration in Brussels, but the harsh rhetoric has been replaced by talk of cooperation and concession, said Andrew Neff, analyst at IHS Global Insight.

"Given the history, there's always a risk of transit supply disruptions via Ukraine, particularly with no new deal still, but both sides say they will abide by the existing supply and transit agreements until a new contract is completed," said Neff.

Moscow is willing to negotiate a lower price, if Ukraine gives up control of its natural gas transmission to Russia's state gas monopoly OAO Gazprom.

But Ukraine's opposition is likely to react with anger to any deal that gives Gazprom a stake in the gas transmission system, let alone control.

"So the revision of the existing Gazprom-Naftogaz contract is sure to introduce more volatility into Ukraine's domestic political environment," said Neff.

Yanukovych to visit Poland next week

Ukrainian President Viktor Yanukovych on Nov. 15 will visit Poland, where he together with Polish President Bronislaw Komorowski and President of the Federal Republic of Germany Christian Wulff will attend the celebration of the 200th anniversary of the University of Wroclaw, Head of the Presidential Administration of Ukraine Serhiy Liovochkin has said.

The University of Wroclaw is closely connected with Ukraine.

"After the World War II, Polish scientists from Lviv University became its instructors. Today Ukrainian students study at Wroclaw University, the university has partnership relations with Ivan Franko National University of Lviv," said the presidential press service.

During Yanukovych's visit, relations between Ukraine, Poland and Germany will be discussed.

Lytvyn: Ukraine, Russia should support each other

Ukraine and Russia should decide how they will interact in future, Verkhovna Rada Speaker Volodymyr Lytvyn has said.

"We need to understand how we will live in future, because we can talk a lot about percents, that our trade with Russia this year exceeded 50 billion [dollars], and still fail to solve the problem of gas," he said at the presentation of a book by former Russian Ambassador to Ukraine Viktor Chernomyrdin, entitled "Time Has Chosen Us," in Kyiv on Friday.

He said that Ukraine and Russia should support each other in bilateral cooperation and, if necessary, make concessions.

"First, we have to support each other, and I think that Viktor Stepanovich [Chernomyrdin]'s example in this regard is instructive. If we reckon we're friends, then we must try to make concessions to each other and take a step forward," Lytvyn said.

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.

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.