Kiev To Blame For Worsening Of Russia-Ukraine Ties - Yanukovych

KIEV, Ukraine -- Former Ukrainian prime minister Viktor Yanukovych blamed Kiev on Wednesday for the worsening of Russian-Ukrainian ties.
"Never before have we had such unpleasant relations with the Russia as at present," the leader of Ukraine's opposition and pro-Russian Party of Regions told readers of a Kiev-based newspaper in a phone-in.He also said that Ukraine's "negligent leaders are pursuing a badly thought-out policy regarding our neighbors."In an August 11 open letter to his Ukrainian counterpart, Viktor Yushchenko, Russian President Dmitry Medvedev blamed Kiev for the deterioration in relations between the two former Soviet republics, strained in recent years by gas disputes, Ukraine's desire to join NATO, and interpretations of the Soviet-era famine in Ukraine. Russia has also accused Ukraine of supplying weapons to Georgia during last year's war between Russia and Georgia over South Ossetia.Medvedev also announced in his message that he was holding off sending Russia's new ambassador to Ukraine over Kiev's anti-Russian policies."The well-known events in South Ossetia will also remain a dark chapter in Russian-Ukrainian relations. This is a fact," Yanukovych, who is planning to run in January's presidential elections in Ukraine, said.On the issue of the Russian-Ukrainian gas dispute, the former premier said he regretted that "the entire contractual base in gas relations developed by several Ukrainian governments has been ruined."

Aksakov In Reversal On Ruble

The ruble is likely to strengthen in the medium term because of higher commodity prices, Anatoly Aksakov, a bank lobbyist known for sending the euro down earlier this year, said Tuesday.
The comments mark a sharp turnaround for Aksakov, a State Duma deputy who earlier this month proposed a 30 percent to 40 percent devaluation of the ruble, incurring the wrath of top officials of the ruling United Russia party.
“The global environment favors Russia’s economy, oil prices remain high, so now all the conditions are present for the ruble to strengthen,” Aksakov told a news conference.
He said the main issue for the Central Bank now would be how to withstand future ruble appreciation. Aksakov’s calls for a devaluation earlier this month weighed on the currency.
In February, Aksakov’s proposal for Russian debt restructuring prompted a sell-off in the euro, which fell more than 1 percent versus the dollar. He later backtracked on those comments.
The politician, who heads the Association of Regional Banks, one of the two major banking lobby groups in Russia, is now facing expulsion from the National Banking Council, which supervises the Central Bank.
“I have been appealing for a weak ruble during at least the last five years. I do not know why the reaction was so sharp now,” Aksakov said.

Gazprom Profit Falls but is Set to Rebound

Gazprom saw net profit fall in the first quarter, when it paid more for Central Asian gas and incurred foreign exchange losses, but was tipped to bounce back in the rest of 2009. Net profit at Gazprom fell to 110.18 billion rubles ($3.49 billion) in the first three months of 2009, down 61 percent from last year but well ahead of an average forecast of 84.75 billion from a Reuters poll. Operating expenses jumped almost a fifth to 648.8 billion rubles. Its profits should rebound in the second and third quarters, analysts said, after a pipeline explosion halted Russian imports of expensive gas from Turkmenistan in April. A recovery in sales volumes, down nearly 24 percent in the first quarter as a pricing dispute with Ukraine weighed, should also help offset lower gas prices in the second half of 2009. "The third quarter should be better thanks to rising gas tariffs [at home] and exports volumes," UniCredit analyst Pavel Sorokin said. The row with Kiev over gas payments in January cut supplies to Europe, which receives about 20 percent of its gas from Russia via Ukraine. But quarterly revenues rose 2.2 percent to 931.4 billion rubles as higher prices offset the decline in volumes. Gazprom said first-quarter profit was hit by the high cost of purchased gas, primarily from Central Asia, which contributed to costs rising 121 percent to 303.5 billion rubles. Total natural gas sales fell to 140 billion cubic meters. The company incurred a foreign exchange loss of 140 billion rubles due to a significant appreciation of the dollar against the ruble. Ruble weakness also hit net debt, which rose 17 percent to 1.191 trillion rubles as of March 31. Denis Borisov, an analyst with Solid brokerage, said the company was likely to incur smaller foreign exchange losses due to the stabilization of the ruble-dollar exchange rate. "I would also expect a recovery in exports, though the price will be somewhat lower," he said. Gas prices follow those of oil with a six to nine-month lag, meaning prices are only now beginning to catch up with the lows plumbed by crude in January.

Policeman in Shooting Spree Suffers 'Inferiority Complex'

A police officer who killed three and wounded six in a Moscow supermarket in April is sane but suffers from an inferiority complex, investigators said Wednesday. Major Denis Yevsyukov went on a shooting spree after quarreling with his wife at his 32nd birthday party on April 27 in a case that shocked the nation. "According to the results of a [psychological] evaluation, Yevsyukov has been found absolutely healthy," the Investigative Committee said in a statement. The statement said Yevsyukov was drunk at the time of the attack, but Investigative Committee chief Alexander Bastrykin denied that alcohol was the reason for the rampage. "Yevsyukov understood everything," Bastrykin said in an interview published Wednesday in Rossiiskaya Gazeta. Bastrykin said Yevsyukov might have been suffering from an inferiority complex for a long time. "He has a young wife, a beautiful wife, and there were some family problems, and they had a quarrel that day," Bastrykin said. Yevsyukov's wife, Karine, is a blond photo model and pop singer. Bastrykin said tests had found no evidence that Yevsyukov was a drug addict. The Investigative Committee said it was wrapping up the criminal case into the incident. If convicted of murder, Yevsyukov faces from eight years to life in prison. The shooting spree prompted President Dmitry Medvedev to fire powerful Moscow police chief Vladimir Pronin. Medvedev told reporters in Ulan Bator, Mongolia, on Wednesday that he would appoint a new police chief soon, Interfax reported. The police force is currently headed by acting police chief Alexander Ivanov, 59, who had worked as Pronin's first deputy. After the April shooting, the Interior Ministry launched a campaign highlighting its efforts to crack down on corruption and violence within the police force. But opinion polls still to show that the police force is among the country’s least trusted institutions, and cases of wrongdoing continue to surface. A 29-year-old Moscow traffic police officer has been taken into custody on suspicion of stealing goods worth 27 million rubles ($862,000), Interfax reported Tuesday. The goods came from a truck transporting items from the closed Cherkizovsky Market that traffic police stopped and forced to drive to a warehouse in the Moscow region, the report said. Another traffic police officer fatally struck a pensioner crossing the street with his car in the Moscow region on Tuesday, Interfax reported. A police source was quoted as saying the pensioner was not on a crosswalk and might have been at fault. But police officers also end up as victims. On Wednesday, a traffic police officer was hospitalized with grave head injuries after he was hit by a car belonging to the presidential administration. Further details about the accident were unavailable.

Military Seeks French Helicopter Carrier

Russia's top general said Wednesday that the military wants to buy a French helicopter carrier, has deployed advanced air defense systems on the border with North Korea and will press ahead in developing the beleaguered Bulava missile. Colonel General Nikolai Makarov, the chief of the General Staff, also said negotiations have resumed with the United States to set up a Moscow-based joint control center to track missile launches. Makarov said the Navy would buy a Mistral-class helicopter carrier capable for carrying 16 helicopters, 40 tanks or up to 900 troops and then jointly produce with France three or four additional carriers in Russian shipyards. "Before the year's end, we plan to obtain contract agreements with a French company allowing the construction and purchase of this ship," Makarov told reporters in the Mongolian capital, Ulan Bator, where he was traveling with President Dmitry Medvedev. France's Navy has two of the carriers in service, and one more is under construction at the Chantiers de Saint-Nazaire dockyards. Speculation that the military was interested in buying the helicopter carrier, which costs about $1 billion, first surfaced in Vedomosti and Kommersant last month, but Russian officials denied the reports. Several defense analysts have questioned the expediency of such a costly purchase in the name of national security. Any military conflicts likely to involve Russia would be with its neighbors, which would require land troops and equipment rather than a sea vessel. Makarov also said the military has put a division of its most advanced S-400 Triumf air defense systems in service in the Far East to intercept possible "unsuccessful launches of North Korean missiles and to guarantee that fragments of this missile don't fall on Russian territory." A S-400 division comprises four to six missile systems that can track and destroy aircraft and missiles at the range of up to 400 kilometers. North Korea caused international outrage by conducting a nuclear test in May, followed by weeks of test launches of short- and medium-range missiles. In 2006, during similar test launches, a North Korean missile veered off course and reportedly splashed into Russian coastal waters near the Far Eastern port of Nakhodka. "We are concerned that North Korea's testing field, including for nuclear devices, is located quite near the Russian border," Makarov said Wednesday.

Putin Orders Olympics Financing Overhaul

The state corporation model has made it difficult to oversee expenses for Olympics preparations, government sources say, and Prime Minister Vladimir Putin has proposed returning to the previous financing model — a federal targeted program. The Regional Development Ministry is changing the way it finances construction work for the 2014 Winter Olympic Games in Sochi, sources in the Regional Development, Finance and Economic Development ministries said. The construction program is spelled out in a government order from Dec. 29, 2007, which lists 235 sites and events that are part of the preparations. According to the Regional Development Ministry, the program's overall cost is 1.3 trillion rubles ($41.5 billion). The effort is being overseen by Olimpstroi, a state corporation created Oct. 10, 2007, whose supervisory board is led by Deputy Prime Minister Dmitry Kozak. It was transferred state assets worth 72 billion rubles in 2008. The ministry sources said Putin issued an order that would reform the program for the work in Sochi. "The order goes like this: 'Prepare a proposal on reforming the construction program for the Olympics sites and the development of Sochi as a mountain resort into a federal targeted program,'" one of the officials said. "We'll prepare such an order and get it approved with the relevant ministries and agencies," a senior regions ministry official said. Spokespeople for the Regional Development Ministry declined to comment. "Life and the crisis forced us to change legal directions," the regions ministry source said. "When we won the rights to hold the Olympics, the federal targeted program was hastily turned into a government program, and the money just kept flowing out. With the targeted program, that would have been impossible because everything was clearly spelled out with an explanation of the project's costs." When told of the proposal, Olimpstroi president Taimuraz Bolloyev said that "any experiments conducted on the Olympics project will only lead to negative consequences." Another Olimpstroi official said the building needed to start later this year or early next year. "If it doesn't happen, we won't finish," he said. "We're just the administrators," not the ones ordering all of the work, he added. After weeks of discussion, it was decided not to create a completely new targeted program, a senior Finance Ministry source said. "It would be really strange, since we already had a big targeted program to develop Sochi as a resort, and in 2007 it was wrapped up, with most of its money going to Olimpstroi." Creating a new targeted program would mean a return to the past and the closure of Olimpstroi, he said. "Olimpstroi has become something of a black box: They approve the list of sites but with no numbers." Eventually, a compromise was reached, he said. "The construction cost of each Olympic site will be determined, but the money will be deposited as equity capital, not through a federal targeted program." The arrangement is somewhat strange, the Finance Ministry official conceded. The planning element will be borrowed from the federal targeted program model, while the expenditures will continue to be made through the framework of the state corporation. "The aims justify the means. We need to strengthen oversight of the state corporation, as well as speed up, and most important, coordinate the Olympics building work." "Putting prices on the sites needs be done to make the construction more transparent," Kozak told Vedomosti. A source in the Economic Development Ministry said Kozak made the decision. Now, money will be added to Olimpstroi's equity capital gradually, as work on each project progresses, a regions ministry source said. "As before, we'll need to oversee the money," the source said. An Audit Chamber official said the changes would also strengthen oversight of other state bodies involved, including the Transportation Ministry, the Federal Road Agency and the Office for Presidential Affairs. The ensuing disagreements within the government over construction dates could put some of the projects at risk, however, a source in the Cabinet warned. "We're glad that the government has paid attention to the president's comments on the need to rethink the organizational and legal basis of the state corporations," a Kremlin official said. He said the Kremlin had not yet seen the order. "Even the partial reformation of any state corporation is a step forward and the start of the transformation of these legal entities, which people are still questioning." Another source in the Kremlin said President Dmitry Medvedev had not given orders about any specific state corporation. "The change in financing Olimpstroi is an internal matter for the White House and isn't at all connected with questions about the state corporations."

Golden games -Sochi

Russian state airline Aeroflot has signed a $100 million sponsorship deal with the organisers of the 2014 Sochi Olympics, Bloomberg reports. The package includes a number of extra flights to the Black Sea resort, including new routes, in support of the Games.