IMF Eases Ukraine Loan Conditions

KIEV, Ukraine -- The International Monetary Fund signaled Friday that Ukraine was making progress toward receiving a second crucial installment of a $16.4 billion emergency loan after the aid program was frozen earlier this month.
The IMF said it was ready to reconsider its loan requirements and allow Ukraine to run a bigger budget deficit after the financial crisis grew worse.The IMF had previously insisted that Ukraine trim the 2009 deficit from 3 percent to 1 percent of the GDP. But Ceyla Pazarbasioglu, the head of the IMF mission to Ukraine, said Friday that a balanced budget was impossible given the economy would contract by 6 percent or more this year and said the country could run a deficit as long it secures external funding."A balanced budget given a sharp decline in revenues does not seem feasible at this point in time," Pazarbasioglu told reporters in a conference call. "We are fully supportive of the authorities' efforts to raise additional funding from multilateral and bilateral creditors."Prime Minister Yulia Tymoshenko, who is reluctant to cut social spending and upset voters ahead of elections this year, has turned to G-7 countries and Russia to help close the budget gap.The IMF aid is critical to Ukraine, exposed as one of the most vulnerable to the global financial crisis.Industrial output has slumped by over one-third and Ukraine's currency has lost nearly half of its value against the dollar. The hryvna continued falling Friday, closing at 8.7 to the dollar Friday, down 46 percent from 4.9 in September.The crisis has been exacerbated by constant feuds among Ukraine's political leaders.On Friday, however, Tymoshenko, President Viktor Yushchenko, and parliament speaker Volodymyr Lytvyn pledged they would work together to come up with anti-crisis measures and policy changes in the coming days and present them to the IMF.Pazarbasioglu praised the effort. "The authorities are putting together their own anti-crisis package and measures and that is very encouraging," she told reporters.

Europe Ambassador: We Have Started A Dialog To Ease Visa Regime For Ukraine

SIMFEROPOL, Ukraine -- Head of the Delegation of the European Commission to Ukraine Jose Manuel Pinto Teixeira hopes that the Ukrainian government will manage to meet with the conditions, which will enable relaxation of visa regime between Ukraine and the European Union.
"We have started a dialog on the liberalization of visa regime, but there exists a number of conditions the Ukrainian government should fulfill. For example, those concerning the documentation and the issuance of passports as well as a number of other requirements, which are a subject to discussion in such a dialog," head of the European Commission delegation to Ukraine said at a press conference in Simferopol on Friday.At the same time, he noted that they agree that the final results will be the freedom of movement throughout the EU for Ukrainian citizens as well.German Ambassador to Ukraine Hans-Jürgen Heimsoeth, in turn, has said that the visa dialog, which has been launched between Ukraine and the EU, will ultimately lead to visa-free travel for Ukrainians.

Poetry in motion

With both the Golden Mask Festival and the Chekhov Festival lifting their respective curtains in the coming weeks and months, the choice for cultural devotees is overwhelming and dance enthusiasts especially will be hard pressed not to find something to their taste. Guests of honor at this year's Chekhov Festival are the French, so it is time to dust off your beret and perfect your ooh-la-la - not since 1812 have so many Frenchmen been seen on the Moscow horizon. This year's festival season promises an unprecedented caliber of performances from all over the world, tickets are already on sale and are selling fast. Leading the invasion in le grand style is renegade former ballet wunderkind Sylvie Guillem, who performs in the capital for the first time as part of the Golden Mask Festival.
Sylvie Guillem, one time protege of Rudolf Nureyev and the youngest ever etoile at the Paris Opera Ballet, is as known for her willfulness and defection to London as she is for her lithe limbs and inimitable flexibility. Over the years Guillem has moved further from the classical repertoire that brought her fame and leaned towards more experimental modern pieces. Her association with Sadler's Wells Theatre in London has propelled her star beyond balletic boundaries, while her collaboration with Russell Maliphant in the brilliant "Push" has earned rave reviews and several awards.
Showing for the first time in Moscow, "Push" is an exquisite show in four parts. The first, "Solo", features a lone Guillem against a score of passionate flamenco music, during which I challenge anyone to take their eyes off her perfectly sculpted limbs. Maliphant performs the second part, "Shift", another physical soliloquy, before Guillem returns to perform solo in the dazzling "Two". The final part is the eponymous "Push," which features both Guillem and Maliphant in a flawless climactic duet. The simple movements and seamless transitions throughout the pieces, together with uncommon angles and unnatural contortions, seem breathtakingly effortless when performed by these masters of motion. The pair's bold, uncomplicated movements, though detached until the final part, seem to string together to form a physical stream of consciousness. The whole is an intoxicatingly sensual visual feast, almost ritualistic at times and reminiscent of a tribal courtship.
"Push" is on stage at the Chekhov MKhAT on March 14-15, and so popular has this show proved to be, tickets are selling seriously fast. There have recently been some available for 8,250 rubles.
As well as "Push", there is a veritable smorgasbord of shows for the dance aficionado.
The Golden Mask Festival also boasts the improv-inspired dance piece "Last Touch First" by renowned Czech choreographer Jiri Kylian and performer Michael Schumacher, in association with the Holland Dance Festival. The improv-inspired dance piece is on March 27-28 at the Pyotr Fomenko Theatre. Tickets start at 3,300 rubles.
Nominated for a Golden Mask Award in the category of Best Ballerina is prima ballerina Diana Vishneva. Watch her perform in the three-act production "Diana Vishneva: Beauty in Motion" on April 5-6 at the Stanislavsky and Nemirovich-Danchenko Musical Theatre, tickets start at 5,500 rubles.
For those traditionalists among you, there is a chance to see the recently-revived revolutionary ballet "The Flames of Paris" which was said to be Stalin's personal favorite. The production is nominated in the Best Ballet category of the Golden Mask Awards and is on stage at the Bolshoi Theatre on March 19 - 20. Tickets start at 2,035 rubles. (Also, separately from the festival but still an upcoming dance highlight on Moscow's cultural calendar, the Bolshoi is to present the premiere of the comic ballet "Coppelia" on March 12. Tickets are available for 2,035 rubles.)
At the Chekhov Festival, flying the flag for contemporary dance from Taiwan are the Cloud Gate Dancers who bring together poise, meditation, martial arts and intense control in their fantastic show "Cursive", inspired by the ancient Chinese art of calligraphy and accompanied by traditional music. This is the second piece in their impressive trilogy, in which the performers breathe life into this ancient art of Eastern penmanship, transcending the boundaries of media. "Cursive" is on stage on June 3 - 5 at the Maly Theatre, with tickets from 550 rubles.
Also at the Chekhov Festival is celebrated Swedish playwright August Strindberg's surreal work "A Dream Play", which has been reworked by influential choreographer and fellow countryman Mats Ek. The discordant fantasy exploits the semi-truths of dreams to portray the harsh realities of life and is to be performed from June 9 - 11 at the Maly Theatre. Tickets are currently on sale from 550 rubles.
Meanwhile, German choreographer Pina Bausch brings her version of Kurt Weill's and Bertolt Brecht's satirical ballet chante "The Seven Deadly Sins" to the Chekhov Festival. The production runs from July 15 -18 at the Mossovet Theatre, tickets from 550 rubles.
Matthew Bourne‘s adaptation of Oscar Wilde's dark masterpiece "Dorian Gray" is at Mossovet from July 28-August 2. The British choreographer has updated the story, setting it in the image-frenzied fashion world. The show was a sell-out at the 2008 Edinburgh Festival, becoming the most attended dance performance in its history. Tickets are available from 825 rubles.
CALENDAR

Golden Mask Festival: March 27 - April 18

Highlights: n March 14 -15: "Push" at Chekhov MKhAT, 3 Kamergersky Per., 629 8760, www.mxat.ru
March 19 - 20: "The Flames of Paris" at the Bolshoi Theatre, New Stage, 1 Teatralnaya Ploshchad, 250 7317, www.bolshoi.ru
March 27-28: "Last Touch First" at the Pyotr Fomenko Theatre, 29 Naberezhnaya Tarasa Shevchenko, (499) 249 1136, www.fomenko.theatre.ru
April 5-6: "Diana Vishneva: Beauty in Motion" at the Stanislavsky and Nemirovich-Danchenko Musical Theatre, 17 Ul. Bolshaya Dmitrovka, 629 2835, www.stanislavskymusic.ru
Ticket office: 7 Mokhovaya Ul. (inside the Na Mokhovoi trading complex), open daily from noon to 8 pm.
http://www.goldenmask.ru/

The Chekhov Festival: May 26-August 2

Highlights: n June 3-5: "Cursive" at the Maly Theatre,
1/6 Teatralnaya Ploshchad, 623 2621, www.maly.ru
June 9-11: "A Dream Play" at the Maly Theatre,
1/6 Teatralnaya Ploshchad, 623 2621, www.maly.ru
July 15-18: "The Seven Deadly Sins" at the Mossovet Theatre,
16 Bolshaya Sadovaya Ul., 699 2035, mossovet.theatre.ru
July 28-August 2: "Dorian Gray" at the Mossovet Theatre,
16 Bolshaya Sadovaya Ul., 699 2035, mossovet.theatre.ru
Ticket office: 21/1 Leontyevsky Per., 223 9651, 223 9650, open weekdays from noon to 7 pm and on Saturdays from noon to 6 pm.
www.chekhovfest.ru

Caught in an import prices trap

As the world slips into recession, many governments are hoping their spending plans will boost growth and prevent deflation. In contrast, Russia is the only economy in the Group of 20 still struggling with inflation in double figures, with Finance Minister Alexei Kudrin warning that it could reach 14 per cent this year.
Contracting demand due to the financial crisis has increased deflationary pressure, but the rouble devaluation in recent months has caused imported goods to become more expensive.
"The major source for inflation now is devaluation, as rouble-denominated prices for imported goods are going up," said Katya Malofeyeva, chief economist at Renaissance Capital.
Inflation reached 2.4 per cent in January, but it is traditionally high early in the year as a surge of government budget spending takes place in December.
"Every year in December, a huge amount of liquidity comes into the system," said Yevgeny Gavrilenkov, chief economist at Troika Dialog. "This translates into high inflation in January but year-on-year inflation is not accelerating that much."
However, the prices of imported goods have not yet gone up significantly - despite the rouble losing over one-third of its value against the dollar - as many companies are slowly reducing their stockpiles to compensate for shrinking demand.
"This year [devaluation] has coincided with the phenomena working in the opposite direction: as many businesses are conducting liquidation of last years' produce, we have seen the instances of much lower rouble prices for the same goods," said Malofeyeva.
Food produce is the main sector driving inflation, with prices having increased at an annual rate of 15.9 per cent in January, according to Citibank data.
"There are many goods especially in food and agriculture that are not produced in Russia in a large enough quantity to satisfy consumption," said Ovanes Oganesian, Renaissance Capital's vice president for strategy. "Russians depend on imports of these products such as meat, milk and butter."
The Moscow city government said this week that it could release emergency stocks of fruit and vegetables at below market prices to help combat the crisis. This would particularly help people on lower incomes who tend to spend more proportionately on food and be most affected by inflation.
Although inflation is widely expected to hit double figures, prices for some goods, particularly raw materials and commodities, have fallen in recent months. Consumers have benefited from a fall in petrol prices, even though they have decreased less than that of the oil price, which collapsed from over $140 a barrel in July to around $40.
"The lack of competition at the local and regional level" has allowed petrol prices to stay high, said Yaroslav Lissovolik, chief economist at Deutsche Bank.
In the longer term inflation is likely to fall as prices adjust downwards and people substitute imported goods for cheaper domestic goods.
"People are trying to substitute (imported goods for domestic ones) but unfortunately there are some groups of consumer and industrial products which simply cannot be substituted," Citibank economists said in a note.
One example of this is cars, where many Russians are prepared to continue paying the extra money for foreign vehicles which they consider to be better quality.
"It is impossible to find a domestic vehicle with a similar quality to price ratio," Citibank commented. "The same thing is true in textiles, clothes and food."
However, the auto industry is already deflating, with many companies lowering prices to take account of declining world demand.
"The most notable example of [lower rouble prices] was the car market. One can find very good deals on new cars in Moscow," said Malofeyeva.
Inflation has been consistently high in Russia for the past 10 years, but with growth slowing, and possibly becoming negative, the urgency of tackling it has increased.
"These days high inflation will really suppress consumer lending and a lack of external borrowing won't help," said Gavrilenkov. "At some point inflation should come down."
The government is facing a tradeoff between controlling inflation or pursuing deficit spending to protect jobs and fuel growth.
"It is very difficult to ascribe a weight to the two goals but in the short term the priority will be to limit unemployment," said Lissovolik.
Focusing on saving jobs now may help ordinary Russians in the short term, but in the medium to longer term, lowering inflation will help boost growth and create more jobs in profitable sectors.
"The government cannot preserve every job," said Gavrilenkov. "That is why bringing inflation down and unlocking money markets will help to create jobs. Artificial job creation won't help."
However, the Central Bank now has an opportunity to control inflation as the financial crisis has caused interbank lending to decrease and it has become the main lender. The interbank rate in previous years was negative in real terms, but higher interest rates and lower inflation could help banks prioritise their investments.
"When money is cheap and interest rates are negative in real terms, investments don't usually go to the most efficient sectors," said Gavrilenkov.
With higher interest rates in the short term, inflation could be brought down to less than 5 per cent by 2010, he added.

Down to earth with a bump

No matter what your background, no matter how much money you have, when times are hard it's important to economise.
So perhaps it's not surprising that Roman Abramovich, Russia's second-richest man, has decided to get extra value from his connection with football coach Guus Hiddink. The Dutchman's contractual details are, of course, a private matter, but it's not too fanciful to imagine the Chelsea owner, who already pays Hiddink's salary to coach the Russian national side, concluding that inviting him to replace sacked coach Luis Felipe Scolari at Stamford Bridge represented smart value for money.
Abramovich is just one of many wealthy Russians who have been hit hard by the global economic crisis. As oil prices plummet, gas sales suffer disruption and the construction industry downs tools, the top 20 tycoons have seen their combined fortunes slump to a mere $106 billion, compared with $227 billion last year. Meanwhile 52 former billionaires have lost that exalted status and must now contend with the more down to earth world of the millionaire instead.
It seems that Russia's merchants of bling may be facing tough times ahead - an icy blast of recession reality is set to intrude on their fantasy world of conspicuous consumption.
Not that there's a huge amount of sympathy among ordinary Russians.
Eleanora Gilyova, 28, a Moscow office worker who was laid off late last year, admitted it was "difficult" to be rich in Russia, but added: "The ugly thing is that most of them are so spoiled."
Others were sarcastic: "If losing a few thousand roubles upsets me, imagine how these poor souls must feel after losing so much," said Irina Balashova, 26, currently clinging on to a secretarial job at a Moscow firm.
No wonder Troi­­ka Dialog ma­naging director Andrei Sharonov told repor­ters this week: "In terms of public opinion these guys are not heroes, so it's not something that arouses much pity."
That's hardly surprising: the likes of Oleg Deripaska may have lost 86 per cent of his personal fortune and plummeted down the prestigious league table of lucre, but with $4.9 billion to fall back on he's hardly in the same league as a ZiL plant worker facing a three-day week until August.
Deripaska himself, identified as Russia's richest man by Forbes magazine a year ago, always insisted that his status ignored the aggressive borrowing policies of his companies - and with his major interests in the hard-pressed energy, construction and metals sectors that claim seems to have been borne out by this year's events.
Mikhail Prokhorov, often de­scribed as Russia's most eligible bachelor, has leapt from the tabloid gossip columns to the top of the rich list. He may have lost about $5 billion, but with a cool $14 billion left, he looks to have made the smartest moves of all the oligarchs perhaps as the storm has engulfed his ambitious counterparts. Now the unmarried 43-year-old might be looking to his love of kickboxing as an inspiration to fight back and protect his stake in Deripaska's heavily indebted RusAl.
Abramovich himself remains in second place, despite a $9 billion loss which reduced his value to $14 billion. A side effect of that might be Chelsea's dwindling buying power in the English Premiership: the club's failure to outbid the Middle East backers of Man­ches­ter City for the services of Robinho could be a taste of things to come as Hiddink looks to lead the Blues to more trophies this season.
Yet for all the turmoil facing Russia's financial elite, the spending doesn't seem to be stopping just yet.
Less than a week after financial journalist Roger Bootle told Britain's Daily Telegraph that "even Russian oligarchs seem to be feeling the pinch" as he reflected on a property slump in the leafy squares of Kensington and Belgravia, The Observer reported the reverse.
An article at the weekend claimed that "foreign buyers" from France, Italy and - of course - Russia were leading a rise in interest in London real estate. Apparently the weak pound was inspiring a return of the half-forgotten yuppie tactic of gazumping - hijacking agreed sales with an inflated last minute bid.
And while Abra­mo­vich tries to rein in his Chelsea spen­ding and Russian-Israeli businessman Alexander Gai­da­mak is rumoured to be discreetly trying to sell Ports­mouth, Alisher Usmanov, 10th on the list at $4.5 billion, is consolidating his position in Arsenal's boardroom. His investment vehicle Red and White Holdings, based on the channel island tax haven of Jersey, announced this week that he had increased his stake in the North London club to over 25 per cent.
Along with the Russia Forbes list, which comes out in April, Finans magazine' survey is regarded as one of the most reliable indicators of the country's wealthiest tycoons.
What money can buy
Top 20 now worth $106Bln
The combined wealth of Russia's top 20 oligarchs totals $106 billion. If they were a country, they would rank 58th in the world according to GDP, nestling between Libya and Slovakia. Yet their combined losses of $227 billion is almost exactly equal to the GDP of Hong Kong.
If Deripaska's sharply reduced circumstances are forcing him to economise, things aren't looking too black for him. After laying off the chauffeur and selling the obligatory limo, his remaining $5 billion will pay for roughly 8.1 billion metro journeys across Moscow. Even taking a trio of security guards with him would still allow over 2 billion trips!
According to figures from Christian Aid, the money lost by Deripaska - $35 billion - could have built almost 10 million flood-resistant homes in India with environmentally friendly bio-gas power and running water.
His losses would also have bailed out stricken British bank HBOS more than twice over, based on their recently revealed £10 billion loss.
But the combined losses of the Russian oligarchs still wouldn't cover Barack Obama's recovery package for the U.S. economy. The $787 billion plan approved this week is almost three and a half times more expensive than the slide recorded on the latest rich list.

1. Mikhail Prokhorov - $14.1 billion, Onexim
2. Roman Abramovich - $13.9 billion, Millhouse Capital
3. Vladimir Lisin - $7.7 billion, Novolipetsk Steel
4. Vagit Alekperov - $7.6 billion, LUKoil
5. Suleiman Kerimov - $7.5 billion, Nafta-Moskva
6. Mikhail Fridman - $6.1 billion, Alfa Group
7. Vladimir Potanin - $5.0 billion, Interros
8. Oleg Deripaska - $4.9 billion, Basic Element
9. Dmitry Rybolovlyov - $4.6 billion, Uralkali
10. Alisher Usmanov - $4.5 billion, Metalloinvest
11. Leonid Fedun - $4.5 billion, LUKoil
12. Boris Ivanishvili - $4.3 billion, Unikor
13. Alexander Abramov - $4.1 billion, Evraz Group
14. Alexei Mordashov - $4.1 billion, Severstal
15. German Khan - $3.9 billion, Alfa Group
16. Alexei Kuzmichyov - $3.05 billion, Alfa Group
17. Viktor Vekselberg - $3.0 billion, Renova Group
18. Filaret Galchev - $2.8 billion, Eurocement
19. Anatoly Sedykh - $2.5 billion, OMK
20. Nikolai Tsvetkov - $2.3 billion, UralSib

Putin suggests Russia tighten doping controls

MOSCOW (RIA Novosti) - Russian Prime Minister Vladimir Putin said on Feburary 24 that a state doping control system should be established for Russian sports and tougher penalties may be introduced for those who break the rules.
"Every provision should be made and a state [doping] control mechanism established, and we should act vigorously. If necessary, let's also discuss moves to toughen penalties," Putin said at a meeting of the presidential council on sports development and arrangements for the 2014 Winter Olympics in Sochi.
Two weeks ago three Russian biathlon racers tested positive for the Russian version of the banned substance Erythropoietin (EPO) at the Biathlon World Championship in South Korea's Pyeongchang. The athletes were all disqualified and forced to leave the country.
"I request the Sports, Tourism and Youth Policy Ministry to involve the sporting public and continue a thorough analysis of the current situation and to draw practical conclusions," Putin said.
Last year with only several days before the opening of the 2008 Olympics in China, seven Russian women athletes were disqualified from the Games after they were ruled to have switched urine samples before tests for performance-enhancing drugs.
Bayern Munich interested in CSKA's Zhirkov
MOSCOW (RIA Novosti) - Bayern Munich are interested in buying CSKA Moscow's Yury Zhirkov, the German Sport Bild paper said on Feburary 25.
The paper said that the German giants saw Zhirkov, one of Russia's best players at last summer's Euro 2008, as a replacement for Philipp Lahm in the left of defense.
Lahm is expected to be moved to right back.
Neither 25-year-old Zhirkov nor CSKA have commented on the news.
Zhirkov has also been linked with a move to Chelsea, currently coached by Guus Hiddink, trainer of the Russian national team.
CSKA face Aston Villa in a second leg Round of 32 UEFA Cup tie on Feburary 24. The first leg ended 1-1.
Platini to check on Euro 2012 preparations in April
KIEV (RIA Novosti) - UEFA President Michel Platini will visit Ukraine and Poland on April 14-17 for meetings with the leadership of both countries to receive assurances on preparations for the Euro 2012 soccer tournament.
"Within the framework of the visit, the president of UEFA will meet with senior state officials in order to, obviously, obtain new signals that the authorities will go forward jointly and stably work toward the realization of the Euro 2012 project," said president of the Ukrainian Football Federation, Hryhory Surkis.
Ukraine and Poland are co-hosting the European Football Championship in 2012 but doubts have been raised over progress in renovating stadiums and improving infrastructure, with Ukraine a particular concern.
Platini went so far in December as to warn Kiev that all the games could be switched to Poland if Ukraine did not complete construction work on the capital's Olympic Stadium.
Surkis added that Platini would visit all the Ukrainian host cities at the end of July, by which time the Ukrainian Football Union expects UEFA to have confirmed which cities will host matches.
The Ukrainian government said in early February that an official UEFA delegation led by secretary general David Taylor gave a positive assessment of Ukraine's preparations during a four-day at the start of the month.
Sberbank chosen as sponsor for 2014 Olympics
MOSCOW (RIA Novosti) - Sberbank will sponsor the 2014 Winter Olympic Games in the Black Sea resort city of Sochi, a business paper reported on Wednesday.
The Sochi 2014 Organizing Committee picked Sberbank as a partner for the Olympic Games in the banking category, a government official told Vedomosti. The information was confirmed by the Tourism and Sports Ministry.
How much the deal is worth has not been revealed but it could amount to $110 million-$130 million, Vedomosti reported.
Sberbank and the organizing committee made no comment on the information yesterday.
On February 24, Russia's state-controlled crude producer Rosneft was named a main sponsor for the Sochi Olympic and the Paralympics in the oil category. Rosneft will also be a partner for the Russian Olympic Com­mittee and the Russian Olympic team until 2016, with a sponsorship contract worth $180 million, Vedomosti said.
Zaitseva wins gold at biathlon Worlds
PYEONGCHANG, South Korea (RIA Novosti) - Russia's Olga Zaitseva won a 12.5 km women's mass start biathlon race at the World Championship in Pyeongchang on Sunday.
Zaitseva crossed the finish line after 34 minutes and 18.3 seconds with just two penalties. Ex-Russian national Anastasiya Kuzmina from Slovakia was a great surprise, finishing second (7.5 seconds behind the winner) while Sweden's Helena Jonsson was third (12.3 seconds behind the winner).

A show can’t always go on

The ongoing economic downturn is having an impact on the culture and entertainment industry, with local theaters, museums and galleries adjusting their plans in response to possible problems with funding and uncertainty about the exchange rate.
Vasily Tsereteli, executive director of the city-funded Moscow Museum of Modern Art, said some of its projects had been cancelled or postponed. "The Moscow government promised to keep the funding at the previously agreed levels, but that is not enough, when it comes to major projects that involve a lot of installations, especially by international artists," he said.

According to Tsereteli, late last year the museum had to cancel its plans to run the Art Hysteria exhibition in cooperation with MoMA New York and instead organized an exhibition of video installations by Andy Warhol, while also discarding plans for a few other international projects. "But so far, the funding has been coming in as expected, and we don't see any radical changes to our program," he added.
But while big state- or city-run museums depend on their sponsors and ticket sales for revenues, smaller private art galleries have to sell art to stay in business, and that could be a problem for some of them, as collectors cut down on purchasing paintings and sculptures. "The crisis has certainly affected us," said Yelena Selina, the owner and general director of the XL gallery. "Sales have slowed."
Last summer, paintings by popular artists with a price tag of around 20,000 euros sold very quickly and collectors were practically lining up for them, but these days, such paintings sell much more slowly, Selina said. "Now, smaller and cheaper items, like graphic works as opposed to paintings, sell better," she said. "Still, as we never tried to drive up our prices too much, our situation is not dismal."
Although there may be some truth to the idea that in times of crisis people tend to turn to entertainment as a means of diversion, most contemporary theatrical performances are so expensive that ticket sales could hardly pay for them, especially when a theater's seating capacity is limited.
"We do generate some revenues from ticket sales, and our performances are normally sold out," said a spokesperson for the Bolshoi Theater. "But with the main building still under renovation, we have fewer than 900 seats at our New Stage."
Earlier this year, the Bolshoi announced that it was canceling the premiere of Giuseppe Verdi's opera "Othello," which was previously scheduled for late April 2009 and would have become the theater's most expensive performance in several decades, with a budget of more than 2 million euros. The theater decided that staging such an expensive performance would be unreasonable in the current economic climate.
But although the theater's budget for this year was curtailed by 15 percent, the Bolshoi's other four premieres scheduled for this year are expected go ahead, at least, this is where things are now, the spokesperson confirmed. "The sponsors have promised to keep their obligations but have not yet provided any money," she said. "At this point, we are ready to go ahead with our premieres, but it is not clear what the situation will be, say, by the summer."
The management of Moscow's other major theaters share this uncertainty about the future: even if the promised funding arrives, the recent devaluation of the ruble against the dollar and the euro is set to drive up production costs.
"We are especially sensitive to [the devaluation of the ruble] because we use a lot of imported materials," said Vladimir Urin, general director of the Stanislavsky and Nemirovich-Dan­chenko musical theater.
According to Urin, the theater will soon have to make decisions about how to operate in a situation when cutting costs is unavoidable. "We have to decide what to do," he said. "Shall we stop producing new plays? Or shall we make fewer of them? But people wouldn't want to watch the same performances all over again. So, we're looking for ways to keep our schedule, because if we don't produce new plays, we'll have problems keeping our soloists, as Western theaters would gladly offer contracts to them."
The ruble's weakening has also had a negative impact on performances of touring Western artists. Russian promoters say that there will definitely be fewer shows by top-level international acts this year, compared with 2008, especially those at venues with larger capacities.

Sibir Energy dumps CEO, begins probe

Midsize oil producer Sibir Energy has suspended its CEO while it investigates real estate dealings with shareholder Shalva Chigirinsky. The case has damaged the company's reputation on the London Stock Exchange and could further sour investor sentiment towards Russia.
The problems started brewing late last year, when the oil company announced plans to buy $360 million of real estate from the billionaire to prevent him having to sell his 23 per cent stake. After an outcry from investors and a plunge in Sibir's share price, the plans were dropped in January.
On February 19, Sibir's shares were frozen after the company said that Chigirinsky-linked interests owe $325 million to the company, rather than the $115 million it previously informed the LSE about.
The company suspended Henry Cameron as CEO, but he will still help recover what Chigirinsky owes. His deputy, Stuard Detmer, was named as acting CEO on Wednesday.
"Henry Cameron will continue (notwithstanding the suspension of other executive duties) to assist Sibir on an ongoing basis to recover all monies owed by any Chigirinsky interest to Sibir," the company said in a statement. Sibir said it does not know how the wrong figure was reported, but the mistake is likely to harm its reputation with international investors.
"It has been a somewhat comical development," said Carl Merling of Emeralt Investments, which invests in Russia and Eastern Europe but does not have a stake in Sibir. "For everyone who thought they invested in an oil company and ended up owning a real estate company, [the conflict of interest] is pretty plain to see."
The company refused to make any comment Thursday, citing the ongoing investigation. When asked whether this created a negative image of Sibir, a source close to the company said: "I don't think so. Everything will be OK."
"The recent events have showed that Chigirinsky is not an easy partner," said Ivan Mazalov, director of oil and gas at Prosperity Capital Management. "The second [key] shareholder, Kasayev, and the board will try to redeem the company in the eyes of investors."
London-based Sibir is listed on the London Stock Exchange's smaller AIM platform, and was considering joining the main FTSE 100 exchange in London last year. The affair has spurred a debate at the LSE about standards of corporate governance and minority shareholder rights, particularly in Russian companies.
"We've seen a number of cases in the past six months, during the latter part of 2008, where minority shareholders have not been dealt honestly with by the majorities," said Merling.
Two of the significant minority shareholders, M and G Investment Management and BlackRock Invest­ment Management, declined to comment on the investigation.
The economic crisis will now force investors to be more prudent with their investments, due to declining revenues and many companies' heavy debt burden, Merling said.
"Russia used to be a simple case where you could invest in anything and make a huge profit," said Merling. "You obviously have to be a lot more selective these days."
The investigation will be conducted by the company's lawyers, Jones Day, and its accountants, Ernst & Young.

Little comes last

The crash in commodity prices has increased the economy's dependence on its small and medium sized enterprises, or SMEs, but many of them are still not receiving the support they need either from the banking system or the government.
"We applied for some government support," said Tatyana Kalishevskaya, director of the Ecological Travel Centre, a small business in Moscow. "But we didn't receive it this year."
Like many SMEs they have suffered a reduction in demand during the crisis, with many of their bookings for tours in autumn and around New Year cancelled. Yet, despite falling revenues, many small businesses, including the Ecological Travel Centre, are still not turning to the banks for financial support.
"We did not attract any serious loans [in the past], so now there is no pressing for us from this side," said Denis Andreyuk, the director of technology firm NT-MTD. "We do not plan to get any loans - our growth is supported by our own reinvestment."
The crisis has also pushed up bank interest rates, as they are reluctant to make risky investments and can make more money on the foreign exchange market.
"Credit now is expensive if you can get it from a bank but in many cases you can get nothing and this makes your operations very difficult," said Viktor Sedov, director of the Centre for Entrepreneurship.
While many firms will suffer as a result of this and plenty will go bankrupt, the small business sector has never been overly dependent on bank loans.
"The unmet demand for SME loans was 80 percent [in 2007]," said Irina Alexeyeva, deputy director of the Russian SME Resource Centre. "About one-third of SMEs borrowed loans from banks while about 60 per cent received financing from other places, such as friends or personal loans."
However, with salaries being reduced and many people being made redundant, it is also going to be harder to receive loans from other sources, she added.
NT-MTD remains optimistic about its future as it is likely to receive government support indirectly through increasing its dealings with state-run nanotechnology corporation Rosnano.
"From 2000 to 2007 the sale volume increased 30-50 per cent annually but in 2008 it was the same as 2007," Andreyuk said. "But there is very high probability that Rosnano will support our ideas and if so, our growth will resume."
For other firms there is not always the opportunity for deals with state firms, which have more stable budgets, and the decline in industrial production by 16 percent in January alone will have a severe knock-on effect on SMEs.
"Some operations [of industrial giants] are outsourced and with the lowest industrial production in 15 years small businesses have lost tons of orders," said Sedov.
In the past the SME sector received little support and remained largely neglected as the government focused on developing the natural resources that fuelled eight years of economic growth.
"Small and medium business development was not a high priority for the government at the time of a booming resource sector which provided windfall revenues and fuelled economic growth," said Leonid Polishchuk, an economist at the Maryland-based IRIS Centre.
However, the crash of oil prices from over $140 per barrel in July to below $40, along with a fall in other commodity prices, has caused the government to reevaluate its priorities, with President Dmitry Medvedev saying that the creation of jobs in small businesses was a long-term priority in fighting unemployment, Vesti television reported.
Unemployment has shot up to a six-year high of 8.1 per cent and the government has stated that it aims to create 50,000 new jobs in small businesses, as well as offering 60,000 roubles to unemployed Russians as start up capital to open a new business.
Regional governments are also increasing the support they offer to small businesses, with Moscow Mayor Yury Luzhkov drafting new proposals to help SMEs during the crisis, including a total of 6,500 loans at reduced rates.
"The crisis has made all levels of government more appreciative of the SME sector as a possible economic shock absorber and potential source of employment and income," said Polischuk.
The SME sector has plenty of room for expansion, contributing 50 per cent of total sales and employment, which is significantly below the United States and Western Europe. However, Alexeyeva expects it to expand to 70 per cent by 2030, which will help fulfill the government's goal of diversifying the economy.
"[The government] understands that entrepreneurship is the solution in the current situation," said Sedov. "People should be employed, the economy should be diversified and to rely only on national resources is unreliable."
Increasing unemployment, in addition to more government support, could help the SME sector expand rapidly in the short term as people who have been made redundant look for alternative sources of income.
"The people who worked in the industrial and financial sectors are well educated and have lost their jobs now," said Sedov. "In years of prosperity they earned some capital so they have a chance to start their businesses and it'll be cheaper."
The main problem for small businesses remains corruption, particularly inspections, which are a method for some bureaucrats to extort money out of companies.
"Latest surveys still reveal serious concerns of small businesses over costly and arbitrary inspections by a panoply of controlling agencies, lack of fair competition, corruption, difficulties with leasing and buying premises and land," said Polishchuk.
To fight this problem the government has suspended all checks on small businesses for one year, a move that Sedov praised as stopping officials interfering and trying to get money, providing it was properly implemented.

Economy takes double hit

Twin blows hit the Russian economy this week as GDP plunged by 8.8 per cent in January compared to the same period a year before, while Gazprom pessimistically rewrote its investment budget on the basis of oil at $25 per barrel.
Natalya Orlova, chief economist at Alfa Bank, said the drop was not unexpected - given the decline in manufacturing, metal firms cutting production 30 per cent and many automakers going down to a three-day week.
"Given the 16 per cent drop in industrial output in January, the 9 per cent drop in GDP is not surprising," said Orlova, who predicts that GDP will shrink 3 per cent this year. "It can not be explained by [the January] holidays, as this figure is year-on-year."
Some economists played down the significance of January data due to the holiday at the beginning of the month, coupled with the extended leave many workers were forced to take.
"It was January so the first 10 days are off," said Ronald Smith, chief strategist at Alfa Bank. "Take that number with a grain of salt. It does not mean we are going to see that number for the whole year."
However, the fall is broadly is line with the government's own forecast, which puts the expected GDP drop at 2.2 per cent this year.
"We are in the midst of the worst economic crisis since the 1930s, so it isn't surprising that there is a bit of a crunch," said Roland Nash, chief strategist at Renaissance Capital.
Gazprom has also reacted to the negative economic environment, with Kommersant reporting Wed­nesday that the gas monopoly has rewritten its investment budget for oil at $25 per barrel. A Gazprom spokesman denied that any exact figures had been mentioned.
"We do have calculated options but it is too early to consider them by management or board. We will do that after we see the results of the first quarter," Sergei Kupriyanov said, Reuters reported.
Economists praised any potential decision to readjust to a more conservative budget, saying it was the safe option in an uncertain environment.
"If I were an oil producer I would want to use a very conservative assumption but that doesn't mean the price will be $25," said Martin Gilman, a professor at the Higher School of Economics. "If you are putting real money into the ground you want to consider a low-ball number."
Rather than $25 being Gazprom's actual forecast for oil prices this year, it is simply a planning number which is seen as a possible low in the short term.
"If it does go down to $25, I'm sure it won't be there very long," said Nash. "There is a fear that there is too much oil around but in the longer term there is definitely not enough, so the oil price will be much higher."
These prudent predictions are likely to hamper investment in the next couple of years and Kommersant reported that Gazprom will continue its core projects but reduce investment by 200 billion rubles ($5.6 billion). Lower investment in the short term could cause oil prices to soar when the global economy recovers but, due to the fall in commodity prices, the amount of projects on hold will be minimal as the monopoly will be able to make savings from its suppliers.
"They are talking about renegotiating their contracts and getting 30 per cent to 50 per cent discounts," said Smith.
Oil prices will play an important role in Russia's recovery due to its dependence on raw materials and the economy could still grow if prices exceed the government forecast of $41 per barrel.
"If oil prices don't drop, then I don't see any reason why the economy will continue to contract throughout the year," said Gilman.
President Medvedev criticised the government last week for being too slow in response to the crisis but Finance Minister Alexei Kudrin said his ministry will submit the new budget by March 8.
A proposed increase of 500 billion roubles ($14 billion) in spending, coupled with a massive fall in oil revenues, will lead to a budget deficit of around 8 per cent.
"Most of the rise in the budget deficit has to do with declining revenues," said Yaroslav Lissovolik, chief economist at Deutsche Bank. "[The deficit] was less of a decision and more of an inevitability due to low oil prices."
Prime Minister Vladimir Putin also said that spending on health, education, housing and agriculture would continue to be a priority. Lissovolik said that the government should be supporting infrastructure projects to boost growth.
"The composition of spending is the weak point of the current budget because they mostly target increases in current spending," he said. "This kind of composition is not that favourable to obtaining higher growth rates."
The deficit will be funded by money built up during the oil boom, with 2.7 trillion roubles ($75 billion) coming from the Reserve Fund and 255 billion roubles ($7 billion) from the National Welfare Fund, Kudrin said. The Reserve Fund will be depleted within two years at this rate and then Russia would be dependent on foreign capital markets if it continues to run a deficit.
However, the forecast of several economists is that the real economy will start recovering by the second half of the year, providing the rouble and oil price do not collapse further.
"I was encouraged by the exchange rate, but the policies have got to be right, money has got to be tight and they've got to bring inflation down," said Gilman.

St. Petersburg marks anniversary of siege

ST. PETERSBURG (RIA Novosti) - St. Peters­burg is marking on Tuesday the 65- year anniversary since the end of a 900-day Nazi blockade, one of the most dreadful sieges in modern world history.
"This is a tragic and yet heroic page in our history," St. Petersburg Governor Valentina Matviyenko said in a congratulatory message. "The defenders and residents of the city underwent unthinkable trials - starvation, bitter cold, bombardments. Our city lived on, fought and worked."
The Siege of Leningrad, now St. Petersburg, lasted from September 1941 to February 1944, when food and military supplies were brought to the city via Lake Ladoga, the only route named the Road of Life that connected the city with the mainland.
During the warm season people were ferried to the mainland, and in winter - carried by trucks that crossed the frozen lake under constant enemy bombardment. In february 1943, the siege was broken and a year later, on February 27, 1944 it was fully lifted.
At least 800,000 people died in Leningrad during the siege, according to official figures.
In February 1942, in the midst of an unusually cold winter, the city's food rations reached an all time low of only 125 grams (about 1/4 of a pound) of bread per person a day. In just two months, 200,000 people died in Leningrad of cold and starvation.
The date is widely celebrated in the city and across the country. Wreath-laying ceremonies are held at St. Petersburg's memorial cemeteries, attended by blockade survivors, WWII veterans and city officials. Charity concerts, exhibitions and other events are also on the program.
President Dmitry Medvedev, who was born in St. Petersburg, is on a visit to the city. On Tuesday, he laid flowers at a war monument at the Piskaryovskoy Memorial Cemetery, the resting place for over 500,000 people who perished during the siege, and attended a reenactment of the WWII battle that ended the siege. City residents will switch off electric lights at dusk (7 p.m.) and place lighted candles on windowsills as part of events to commemorate the anniversary.

Medvedev calls for justice

Calling on prosecutors and investigators to get their act together, President Dmitry Medvedev has spoken out forcefully against judicial abuses, just days after the acquittal of three suspects in the murder trial of journalist Anna Politkovskaya.
The acquittal by a jury of brothers Dzhabrail and Ibragim Makhmudov and former police officer Sergei Khadzhikurbanov on Feb. 19 sent out shock waves, and has left prosecutors scrambling to explain how the investigation to find the person who ordered Politkovskaya's assassination in October 2006 will go forward.
Medvedev's comments, at a meeting with prosecutors and investigators, are his second intervention into judicial affairs this year.
His meeting with Novaya Gazeta editor Dmitry Muratov last month - weeks after the killing of the paper's lawyer Stanislav Markelov and journalist Anastasia Baburova - sent a powerful signal that the president wanted the investigations into journalist murders given a high priority.
The acquittal of the three men accused of involvement in Polit­kovskaya's killing and Medvedev's condemnation of law enforcement failings has highlighted an unprecedented consensus among both rights activists and the government about the disarray of the country's justice system.
"We must maximally rule out factors of pressure on the courts, on the jury," Medvedev said at Wednesday's collegium meeting with prosecutors and investigators. "The situation in our country is not sterile, we know that [courts] are intimidated and given money."
Medvedev spared no one in a stern demand to get the justice system working adequately - both law enforcement and the courts should use legislation to get their act together, he said.
"All the members of the law enforcement organs that are involved in preliminary investigations should work with the jury system in mind. It's time to learn how to do this, instead of talking about how nice it was when this legal institution was not in place," Medvedev said, referring to criticism of the jury system.
Medvedev has repeatedly vowed to get tough on corruption since his inauguration in May, but Wednesday's statements suggested that both Medvedev and the prosecutors were dismayed at the judicial dead end the murder trial had encountered.
Prosecutor General Yury Chaika seemed to acknowledge the flaws in the Politkovskaya trial that until recently were mostly left to rights activists and Novaya Gazeta, the newspaper where Politkovskaya worked, to highlight. "We should really investigate this criminal case," Chaika said at Wednesday's collegium. "The Investigative Committee will begin addressing the failures of the investigation that have become apparent in the course of the hearings."
The man who prosecutors suspect of carrying out the Politkovskaya assassination, Rustam Makhmudov, is still at large, while prosecutors have not said who they suspect of ordering her murder.
After the acquittal, Judge Yevgeny Zubov ruled that the case be referred back to the Investigation Committee at the Prosecutor General's Office and said that the verdict could be appealed within a 10-day period.
On Wednesday, the head of the Investigative Committee, a semi-autonomous body under the aegis of the Prosecutor General's Office, conceded that investigators had not done their job properly.
"We have had failures that were caused by our own shortcomings," Investigative Committee head Alexander Bastrykin told Medvedev. "A good example is the investigation into the murder of Anna Politkovskaya."
Bastrykin explained that his committee had evidence proving that the Makhmudov brothers were guilty as early as August 2007. "But we failed to convince the jury," he said.
Earlier, such statements were more typical coming from Politkovskaya's son, Ilya, and Novaya Gazeta deputy editor Sergei Sokolov, who said last week that more evidence should have been presented in court.
"Those people who walked free today - I think they were involved in the murder. We continue to insist this."
During the latest Politkovskaya trial, Novaya Gazeta representatives and rights campaigners complained that links between the suspects to Federal Security Service officers were not being followed up sufficiently by prosecutors.
The Politkovskaya family lawyer, Anna Stavitskaya, said that she would not appeal the jury's verdict, adding that she trusted the jury.
Igor Trunov, chairman of the presidium of the Collegiate of Lawyers, welcomed Medvedev's comments, but said there was only so much that statements by top government officials could achieve on their own. "I can't imagine how they would affect the investigation," he said by telephone.
"It is a prolonged process - the statements should influence lawmaking, should rid legislation of gaps. But if collecting evidence could be activated by administrative means only, we would have been able to achieve a lot," he said.
"We expect action, not statements," he said, of prosecutors. "They need to provide results."

Power shortages get worse in Central Asia

ALMATY, Kazakhstan - Kazakhstan announced on Thursday it was pulling out of the Central Asian power grid to protect its energy supplies, a move that forced rolling blackouts and electricity rationing on Kyrgyzstan, its tiny, power-starved neighbour.
Kazakhstan said it had to withdraw from the power grid because Tajikistan - another small and cash-strapped Central Asian nation - was taking more energy from the grid than it was producing, threatening to disrupt supplies in Kazakhstan.
As of Feburary 26, the Tajik state energy company has made unscheduled use of 84 million kilowatt hours of electricity," the state-owned Kazakhstan Electricity Grid Operating Company said.
The Kazakh move means Kyrgyzstan must ration supplies in the northern half of the country, including the capital Bishkek, to avoid overloading the domestic grid, according to Kyrgyz power spokeswoman Ulyana Konvalova.
Failure to coordinate sharing resources is a chronic problem in the five countries of Central Asia, where Soviet-built electricity networks have been blighted in recent years by crumbling generation and distribution infrastructure.
And in tiny Kyrgyzstan, increasingly frequent power outages have caused public discontent. Kyrgyz opposition parties say government corruption is behind the mishandling of the country's power resources, which are especially strained during cold winter months.
An exceptionally cold winter last year forced authorities to generate additional electricity, leaving water levels dangerously low at a hydroelectric plant that generates 40 per cent of the country's power. Kyrgyzstan relies heavily on hydropower to generate electricity for domestic customers.
A solution to Kyrgyzstan's energy problem appears distant, especially amid the global financial meltdown.
President Kurmanbek Bakiyev recently secured $2.15 billion in aid and loans from Russia. Shortly after, lawmakers voted to close a U.S. military base near Bishkek.
However, if the base shuts down, Bishkek will forgo $150 million in rent and other payments from Washington, a sum that approaches 2 per cent of the Kyrgyz gross domestic product.
Meanwhile, Tajikistan, a mountainous country on Afghanistan's northeastern border, is already imposing severe power cuts across the country due to crippling shortages not linked to Kazakhstan's move on Thursday.
Electricity has been limited to 11 hours in the capital city, Dushanbe, and around four hours in the provinces.
State power company Barki Tojik says electricity supplies to some areas have been suspended altogether because of the energy crisis.
In October, energy-rich Turkmenistan pledged to supply Tajikistan with 1.2 billion kilowatt hours of electricity via Uzbekistan annually until 2012. But that arrangement broke down in January after Tajikistan failed to agree on a transit deal with Uzbekistan.

EBRD Ready To Help Ukraine

KIEV, Ukraine -- The European Bank for Reconstruction and Development is in talks to help recapitalize Ukraine’s banks and is ready to invest a total of 500 million euros in the country, EBRD’s president said.
Ukraine’s banks have been hit by the global credit crunch as its hryvnia currency plummeted, with three banks put in receivership last week, including the country’s seventh largest, Nadra Bank."We are in negotiations with a number of banks. The names I wouldn’t like to mention before the agreements have been found,"EBRD President Thomas Mirow told a news briefing.“The sum that is available in principle is high, meaning something like 500 million euros ($639.7 million), which we would be ready to invest in Ukraine.”There are over 180 banks operating in Ukraine, many of the larger ones foreign owned. The EBRD has said previously it is likely to focus on banks with which it already has relations.These include a unit of Hungary’s OTP Bank, Raiffeisen Bank Aval, a unit of Raiffeisen, UkrSibbank, majority owned by BNP Paribas and Ukrsotsbank, owned by UniCredit.Other banks it works with include Kreditprombank, Forum, Ukreximbank, Prosto Finance Ukraine — a consumer finance arm of Societe Generale, Megabank, Procreditbank, International Mortgage Bank, Kredo Bank and SEB Bank’s unit .Ukraine’s largest bank is privately owned Privatbank, but is then followed by Raiffeisen, UkrSibbank and Ukrsotsbank.The country’s No.5 bank, Prominvestbank, was bought by Russian state-controlled VEB bank after spending several months in receivership. Officials said a run on its deposits in October was unconnected to the financial crisis.Three other banks were placed in receivership last week — Nadra, Bank Kyiv — the country’s 39th largest bank, and Zakhidinkombank, No.72 in the country. Analysts have said that the financial crisis should spark consolidation in the sector.Chornobyl grant signedWhile visiting Kyiv on Feb. 17, Mirow signed an agreement with Yulia Tymoshenko, Ukraine’s Prime Minister, allocating 135 million euros as a grant from the EBRD’s 2008 dividends to fund construction of a new shelter over the decommissioned Chornobyl Nuclear Power Plant, site of the world’s worst nuclear disaster in 1986.The international community has been involved in the transformation of Chornobyl since the 1990s and appointed the EBRD as administrator of its funds. The EBRD is overseeing the Nuclear Safety Account, through which the nuclear decommissioning of Chornobyl reactors 1-3 is being financed, and the Chornobyl Shelter Fund which deals with the damaged reactor 4.A major milestone was achieved in September 2007 with the signing of two key contracts, one for the construction of the confinement structure that will be built over reactor 4, the second for the completion of a spent fuels storage facility.The EBRD grant will be used to support the completion of these two key projects which are currently in preparatory stages with design work nearing completion. Upon completion, the confinement will be the largest such project in the history of engineering.Final designs for both projects are scheduled in 2009 and completion of the construction works is currently planned for 2012. Further contributions, however, remain essential, according to the EBRD, which said preliminary estimates put the total cost for the new shelter alone in excess of 600 million euros.“The EBRD grant is therefore seen as a catalyst that will give additional momentum to the efforts of the international donor community,” the EBRD said in a statement.The Chornobyl Shelter Fund has so far received contributions and donations of almost $800 million from Austria, Belgium, Canada, Denmark, European Community, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Korea, Kuwait, Luxemburg, the Netherlands, Norway, Poland, Portugal, Russia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Ukraine, the United Kingdom, and the United States.The Nuclear Safety Account has received contributions close to 300 million euros from Belgium, Canada, Denmark, European community, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Russia, Sweden, Switzerland, the United Kingdom and the United States.The EBRD, owned by 61 countries and two intergovernmental institutions, is supporting the development of market economies and democracies in countries from central Europe to central Asia.

IMF Warns Ukraine On Possible Credit Halt If Loan Terms Not Obeyed

KIEV, Ukraine -- The International Monetary Fund (IMF) warned Ukraine to keep to previously-agreed loan terms or risk a loss of badly-needed credits, a senior government spokesman said Monday. "The fund is insisting all the money loaned us go to our banking system," said Oleskander Shapak, a top economic advisor for President Viktor Yushchenko
"They have told us there can be no (Ukrainian domestic) political games with the loan terms," Shapak said, citing a formal message sent from IMF Ukraine mission head Ceyla Pazarbasioglu to Yushchenko over the weekend.An IMF team, after a visit to Ukraine earlier this month, failed to approve the issuance of the second tranche of a $16.5 billion dollar loan to the former republic, which had been scheduled for February 15.Ukraine's parliament had recently refused to pass a balanced budget, and money from the initial $4.5 billion dollar tranche sent Ukraine in November was not being focused on the former Soviet republic's banking sector, IMF officials charged at the time.The IMF warning sent to Kiev by Pazarbasioglu criticised line items in Ukraine's national budget bill for not specifying IMF loan money be used only to support Ukraine's banking sector, a violation of IMF loan terms agreed to by Kiev, Shapak said.A long-running feud between President Yushchenko and Prime Minister Yulia Tymoshenko has stymied most Ukrainian efforts to respond to a dramatic economic slowdown, with Yushchenko supporting hands-off monetary policy and reductions in state spending; and Tymoshenko calling for massive government intervention in industry, and state support to the national currency the hryvna.The pair are deeply divided on Kiev's relations with the IMF, with Yushchenko calling for close Ukrainian adherence to IMF loan conditions; and Tymoshenko supporting redirection of already-received IMF money to social service programmes, and flirting with Russia as a possible creditor in case of an IMF loan halt.Ukraine has been heavily hit by the world financial crisis, with GDP expected to contract in 2009, along with spikes to inflation and unemployment. Anti-government demonstrations have accelerated as the country's economy has worsened, with 2,000 Communists gathering in the capital Kiev on Monday to demand Yushchenko quit office immediately.Independent analysts in Ukraine generally agree the government is close to default - a situation that might well go critical were the IMF to refuse further cash infusions.Ukraine's current account budget deficit is some $5.5 billion dollars. High fuel prices and delayed foreign debt now coming due is likely to worsen the situation, observers said.Ukraine Finance Minister Viktor Pinzenyk handed in his portfolio on February 12 over the government's programme to control the ballooning budget deficit, saying he "could not continue while abandoning principles of a balanced budget, deficit control, and avoiding living on credit."

EU Urges Members To Provide More Aid To Ex-Soviet Nations

BRUSSELS, Belgium -- The EU Commission has called on EU nations to provide more aid for Ukraine and four other ex-Soviet states as part of a proposed "Eastern Partnership" program aimed at making the bloc's Eastern doorstep more stable.
EU External Relations Commissioner Benita Ferrero-Waldner said on Monday, Feb. 23, that the European Union has a "crucial strategic interest" in Armenia, Azerbaijan, Georgia, Moldova and Ukraine.Unveiled by the European Commission last December, the "Eastern Partnership" foresees granting some 350 million euros ($448 million) in extra help between now and 2013 to the EU's ex-Soviet neighbors.Speaking on the sidelines of a meeting of EU foreign ministers in Brussels on Monday, Ferrero-Waldner said the bloc's so-called "Eastern Partnership" had gained urgency in the wake of the August conflict between Georgia and Russia and January's gas standoff between Russia and Ukraine."The 'Eastern Partnership' is a very timely initiative that needs to be implemented," Ferrero-Waldner said, adding that problems in Eastern Europe "affect us directly."Eastern Europe has been hard hit by the global slowdown with many countries facing rising popular anger as cash-strapped governments cut spending.Ukraine, which received billions in aid from the International Monetary Fund last year, has seen widespread demonstrations as its economy crumbles and savers rush to pull out money from banks.Democratic progressThe plan aims to promote economic and political stability in the countries and reduce Russia's influence in the region. It includes free trade agreements, visa waivers, financial aid and economic integration with the EU.In return, the eastern neighbors are expected to step up progress toward economic modernization, democracy, the rule of law and human rights.The "Eastern partnership" scheme is to be approved at an EU summit next month and launched in May.But some EU member states have expressed reservations about the proposal.France, which pushed the EU's Mediterranean Union project last year, is reported to fear that increasing funding to the bloc's eastern neighbors would shift the EU's strategic focus away from North Africa and the Middle East.

Lavrynovych: Yushchenko's Impeachment Before Next Presidential Elections Depends On The Parliament

KIEV, Ukraine -- The current parliament may initiate impeachment procedures before the presidential elections, according to the first vice speaker of the parliament of Ukraine, Oleksandr Lavrynovych.
"Ukraine needs to hold parliamentary and presidential elections as soon as possible. Does anyone still believe nowadays that the current president can take any decisions that can help Ukraine get out of crisis?" he said on Tuesday in an exclusive interview with the Interfax-Ukraine news agency.The first vice speaker also said that the impeachment procedure might not last a long time."This depends on the political responsibility and qualifications of the people working in the special commission and those who wear the judges' robes in the Constitutional and Higher Courts. It could be really fast," he said.Lavrynovych said that the law on special, temporary parliamentary commissions, which provides the mechanism for conducting an impeachment of the president, might be enacted in the nearest future.According to the first vice speaker, after that, this law may be amended to improve its quality.On January 15, parliament passed a law on temporary investigation commissions and ad hoc temporary investigation commissions.The law foresees that proceedings to impeach the president for alleged high treason be based on an appeal to be signed by a minimum parliamentary majority of 300 deputies, who would be prohibited from withdrawing their signatures from the document.The president returned the law to the Verkhovna Rada with his proposals.Yushchenko believes that the law grants overly broad powers to the parliamentary commissions, including those that pertain only to bodies of pre-trial inquiry.The head of state noted that the law endows these commissions with powers similar to those of independent law-enforcement bodies, with virtually non-restricted powers.The president said that according to the Constitution, the goal of investigation commissions is not bringing people to account, but preparing and make a preliminary examination of the issues, and the commission's conclusions don't play the key role in court decisions.

First Ukrainian President Kravchuk Urges Yushchenko To Resign

KIEV, Ukraine -- Leonid Kravchuk, the first president of an independent Ukraine, has called on incumbent President Viktor Yushchenko to resign and call early presidential elections.
"I see clearly that you are not focusing your attention on Ukraine's problems but thinking how to stay in power and are ready even to take advantage of the global financial crisis to this end," Kravchuk said in an address shown by most Ukrainian television channels on Tuesday evening."You apparently see the solution for yourself and your retinue in deliberately bringing the economic situation to the boiling point based on the 'the-worse-is-the-better' principle. Do you really see the imposition of the state of emergency as the best way to stay in power?" Kravchuk said.He denounced what he sees as Yushchenko's tactic of shifting the blame for all problems to the government."As a matter of fact, this is exactly why you, Viktor Andriyovych, are trying to bring the situation to a critical point. However, publicly distancing yourself from the government and from responsibility for the situation in the country, you have refused to perform your constitutional duties," Kravchuk said."I see early presidential elections as the only solution. Most people are demanding this. Let me remind you that I agreed to early elections in my time. Did I want to do so? Certainly not," he said.However, Kravchuk suggested that Yushchenko will act as a true patriot if he thoroughly analyzes the situation and his own position and resigns."This step could stop the tide of problems, calm society down, and give the hope for overcoming the crisis," he said.Kravchuk, who was elected president in 1992, called early elections in 1994 and lost them to Leonid Kuchma, who then served as president for the next 10 years.

Standard And Poor's Slashes Ukraine Credit Ratings

KIEV, Ukraine -- Standard and Poor's said on Wednesday it had cut Ukraine's credit ratings to a level indicating vulnerability to default, amid worries over whether Kiev will receive the next slice of a vital IMF loan.
The ratings agency said it had cut the long and short-term foreign currency sovereign credit ratings on Ukraine to CCC+/C from B/B and local currency ratings to B-/C from B+/B.It said the outlook was negative, which means the ratings could be cut again.Ukraine risks missing out on the second installment of 1.9 billion dollars (1.47 billion euros) from a 16.4-billion-dollar International Monetary Fund (IMF) loan due to concerns over its ballooning budget deficit.Standard and Poor's analyst Frank Gill said in a statement the downgrade represented an "intensifying" risk as regards whether the IMF would pay the loan installment.A downgrading of sovereign debt is a signal that the underlying economic performance of a country, and its capacity to honour payments due on its sovereign debt bonds, are weakening.According to the Standard and Poor's website, an obligation rated CCC is "vulnerable to non-payment and dependent upon favorable conditions for the obligor to meet its... commitment on the obligation."Gill complained that there was an "absence of broad political backing for necessary budgetary revisions and banking system reform" ahead of presidential elections scheduled for January 2010."We believe the precariousness of Ukraine's fiscal and economic situation is heightened by the absence of readily available external budgetary funding," he added.The IMF is still considering whether to grant Ukraine the next tranche of the loan and Ukrainian officials have said a team from the fund could hold discussions in Kiev this week.Ukrainian politics remains paralyzed by a venomous political row between one-time allies Prime Minister Yulia Tymoshenko and President Viktor Yushchenko which has brought decision making to a halt.Ukraine is one of the countries worst hit by the global economic crisis.The former Soviet republic's crucial steel sector has suffered from a sharp slowdown in global demand for the metal, its banks have been struck by the credit crunch and its currency has halved in value against the dollar.

UKRAINE: Between The Kremlin And A Hard Place

WASHINGTON, DC -- Ukraine's internal political problems and tensions with Russia threaten its path to stability and its candidacy for NATO and the EU, warns a new Council on Foreign Relations (CFR) report.
The report, "Averting Crisis in Ukraine," analyses the country’s difficulties related to both domestic conditions, including its often disorderly politics, and foreign policy, such as issues related to Ukrainian and European dependence on Russia’s natural gas.The examination concludes that the U.S. needs to improve its dialogue with Ukraine to avert a bigger crisis."A more divided Ukraine would be less able to formulate a coherent foreign policy course with which the U.S. government could engage," said report author and former U.S. ambassador to Ukraine, Steven Pifer, a visiting fellow at the Brookings Institution's Centre on the United States and Europe. "It could even be driven to reorient itself on a more Moscow-focused course."Domestically, Ukraine faces a presidential election, expected in late 2009 or early 2010, and perhaps preterm parliamentary elections in 2009 that will play out against a backdrop of economic recession and financial crisis.According to the Bloomberg News Agency, inflation in Ukraine soared to 22.3 percent last month, the highest level in Europe. Ukraine’s currency, the hyrvnia, has lost more than 50 percent against the dollar in the past six months, signaling Ukraine’s first economic contraction in a decade.President Victor Yushchenko and Prime Minister Yulia Timoshenko, who stood side by side during the 2004 Orange Revolution, have since engaged in fierce infighting, delaying decisions needed to revive the economy.Due to Ukraine’s failure to meet loan obligations, the International Monetary Fund (IMF) withheld a key second part of a 16.4-billion-dollar loan.The IMF isn’t the only one putting external pressure on Ukraine. In the aftermath of the August 2008 Russia-Georgia conflict, Kiev must cope with an increasingly assertive Russian foreign policy. Ukraine is regarded by the Kremlin as part of its sphere of privileged interests.Moscow has made clear its unhappiness with Kiev’s desire to integrate into the European and Euro-Atlantic communities, and will attempt to disrupt that course. Moscow, driven by its geopolitical aims, could fan Ukraine’s internal frictions by escalating its rhetoric against the NATO-Ukraine relationship."The Kremlin sees a messy Ukraine as a good thing," Pifer told IPS. Moscow portrays the former Soviet state as an inadequate partner for NATO and the EU.The Kremlin also capitalizes on Kiev’s political chaos in its domestic politics. The criticisms of Russians who, inspired by Ukraine’s struggle for democratic transformation, want to draw closer to the West are deflected by Moscow’s portrayal of Ukraine as an unattractive alternative political model.By pointing to Ukraine’s political problems and instability, the Russian government is saying, "Look at the turmoil - that’s what democracy is," adds Pifer.The CFR report speculates that a new gas dispute between Ukraine and Russia, similar to the most recent incident in January, could again transform into a broader European energy crisis.A Russian decision to more actively oppose Kiev’s effort to integrate into NATO could spark such a dispute, causing Moscow to cut off its gas supply, impose other economic sanctions, or make a demonstrative military move, such as redeploying army units closer to the Ukrainian border.But Yushchenko is unlikely to back down in the face of Russian threats, which may, anyhow, be in vain.According to Walter Zaryckyj, executive director of the Centre for U.S.-Ukrainian Relations, there is little Russia can do to prevent Ukraine’s entrance into NATO. "Russia is bluffing," he said. "I think Russia is willing to do a lot, but they are not in a position to."Zaryckyj contends that Russia, too, is in economic crisis, having spent much of its money on the Georgia conflict and on the recent agreement with Kyrgyzstan to close a U.S. air base in return for more than 2 billion dollars in loans and aid. The West, therefore, has an opportunity to take a hard stance against Russia."The West must say hands off (Eastern Europe) - stop playing games with gas and oil," adds Zaryckyj.Despite Russia’s opposition, NATO has signalled that it will continue to keep the door open to Ukrainian membership. According to the International Herald Tribune, before a closed-door meeting with Ukrainian Defence Minister Yury Yekhanurov and NATO defence ministers, Secretary-General Jaap de Hoop Scheffer said NATO officials were considering "ways in which the alliance can continue to support its preparations for NATO membership" for Ukraine.Also, EU Commissioner for External Relations and European Neighbourhood Policy Benita Ferrero-Waldner laid fears of the possibility of a new pro-Russian Ukrainian government to rest, telling journalist in Brussels on Tuesday that, "Whoever comes to power [in Ukraine] in the future, they will certainly want to continue the process of Ukraine's integration into the EU."According to the CFR report, since the early 1990s, the U.S. government has attached special importance to Ukraine. It has applied billions of assistance dollars to facilitate the country’s development."What happens to Ukraine will matter to Washington," says the report, recommending that the U.S. administration "should maintain the goal of Ukraine’s development as a stable, independent, democratic, and market-oriented country, increasingly integrated into European and Euro-Atlantic institutions."The report encourages the Obama administration to adopt certain strategies, including restoring regular high-level dialogue, counselling Ukrainian leadership and increasing technical assistance to promote energy security. It urges the U.S. to support continued Ukrainian integration with NATO, though it recommends waiting to back concrete steps toward membership until Kiev achieves consensus on this point.Ukraine, however, "falls fairly low on a list of priorities (for the Obama administration)," said Pifer. "The problem I think that Ukraine has as a foreign policy issue is it’s competing with lot."The report, however, points to a reawakening of the West to a potential problem in Eastern Europe. According to Zaryckyj, "the report’s title mischaracterises it. The debate is just beginning; I don’t think its ending."

Four Russian TV Channels Allowed To Broadcast In Ukraine

KIEV, Ukraine -- Ukraine's National Council on Television and Radio Broadcasting has granted four Russian TV channels permission to broadcast in the country, the council said Wednesday.
The channels allowed to broadcast are Zoopark, Ocean-TV, Feniks + Cinema and Topshop TV.Broadcasting by foreign channels whose programs had not been adapted to Ukrainian laws, including Russia's Channel One, RTR-Planeta, Ren-TV and TVts International, was suspended on November 1, 2008.Channel One and Ren-TV have since been granted temporary permission to broadcast. More than 10 other Russian TV channels were also granted permission to begin work last December.It was also reported that Ukraine's objections related mainly to advertising aired by the channels. The Ukrainian distributors of certain channels were ordered to bring the broadcasts in line with Ukrainian laws.Language has been a contentious issue in relations between Russia and Ukraine, where some political groups have opposed the "Russification" of the country.Russian is still widely spoken in Ukraine, especially in the east, the Crimea and the capital. Many people in the former Soviet republic people have never learnt to speak Ukrainian

Ukraine's Naftogaz Seeking Changes To Russia Gas Deal

KIEV, Ukraine -- Ukraine's debt-burdened company Naftogaz wants changes in a hard-won natural gas deal with Russia that ended Europe's gas cutoff, officials said Thursday, amid concerns of a renewed dispute between the two neighbours.
Naftogaz has asked Russia's gas giant Gazprom to allow Ukraine to buy less natural gas this year than previously agreed, according to Gazprom and President Viktor Yushchenko's office.The contract signed in January locks Naftogaz into buying 40 billion cubic metres of gas this year, but the company is asking to buy only 33 billion.Naftogaz representatives were not immediately available for comment.The move raises fears of a repeat gas war between Moscow and Kiev as Gazprom is unlikely to yield to Kiev's request. The January dispute left over a dozen European countries cut off in winter after Gazprom halted gas supplies through Ukraine, accusing its neighbour of stealing the fuel.A spokesman for Gazprom confirmed receiving Naftogaz's request, but declined any further comment.Naftogaz said last week it may run into arrears with Gazprom because of deep financial problems.Fresh arrears by Naftogaz could lead to a new conflict with Russia. The deal that ended January's rift stipulates that Naftogaz will have to make advance payments for gas shipments if it runs up arrears — a commitment the debt-laden company may be unable to fulfill.Naftogaz has long been plagued by financial problems. It is struggling to stay afloat with more than $4-billion (U.S.) in debt. It has twice narrowly averted technical default on its Eurobond obligations.

No Hope To Reconcile Yushchenko And Tymoshenko, Speaker Lytvyn Says

KIEV, Ukraine -- “Unfortunately, I have to admit that there is no hope to reconcile President Yushchenko and Premier Tymoshenko,” Speaker Lytvyn told his voters in the Ternopil oblast. As soon as any decision is taken by the cabinet, a counter decision follows at once. The situation in Ukraine is worsening at a catastrophic speed, Lytvyn admitted.
He stressed that the bitter stand-off [between Yushchenko and Tymoshenko] is explained by their inability to make up and shake hands.Lytvyn also commented on Pres Kravchuk’s appeal to Yushchenko to step down and call a pre-term presidential election. Kravchuk’s statement “definitely, mirrors the feelings of Ukrainians,” Lytvyn opined.“I realize that, given the circumstances, it seems impossible to reconcile Yushchenko and Tymoshenko. However, they must be forced to keep working, Lytvyn said, adding that he has always acted on the following principle: if you’re at a loss what to do, go by the law.The speaker stressed the importance to comply with the constitution. “It is not without faults, but we have to comply with it. One cannot violate it right, left and center.”The president, premier, Verkhovna Rada and the opposition must be forced to a roundtable to draw up a roadmap for Ukraine, Lytvyn added.“It is a long way to the presidential election. Calls for Yushchenko’s resignation and snap presidential election will be futile, unless the situation worsens dramatically and [Ukrainians] hit the streets,” Lytvyn warned.Lytvyn said he has to lean over backwards to keep the legislature going and thus ensure a dialog among the branches of power.“There is a plan to rock the boat in Ukraine,” he warned.

Michelle Kwan To Visit Ukraine

WASHINGTON, DC -- American Public Diplomacy Envoy Michelle Kwan will travel to Ukraine on February 28th where she will visit Kiev, Yalta, Sevastopol, Bakhchisarai and Odessa.
This eight-day trip marks the figure skating champion’s fourth tour as an American Public Diplomacy Envoy for the U.S. Department of State’s Bureau of Educational and Cultural Affairs.As a Public Diplomacy Envoy, Ms. Kwan promotes cross-cultural dialogue with international youth and increases understanding of America by sharing her story and life experiences.Kwan’s activities during her trip will include participating in a roundtable discussion with university students, visiting high schools, conducting skating clinics and meeting with alumni of other Department of State exchange programs.

Ukraine's Long-Term Prospects Depend On Germany's Relations With Russia, Says Merkel

BERLIN, Germany -- German Chancellor Angela Merkel has said that Ukraine's long-term prospects depend on the development of Germany's partnership and strategic relations with Russia.

She was speaking with foreign journalists in Berlin, Deutsche Welle reported.Merkel said that owing to its geographical position, Ukraine is obliged to stay between the European Union and Russia in all senses of the phrase."Finally, Ukraine's long-term prospects depend much on how we manage to build our partnership and strategic relations with Russia. This is fully in Ukraine's interests," she said.Speaking about Ukrainian-Russian relations, she pointed to the domestic crisis in the country and added that Ukraine's political situation is very difficult, and that it is very hard for the country's leadership to take any decisions."Of course, we would like to assist Ukraine in becoming more politically stable," she said.Merkel said that Ukraine is unambiguously in the sphere of Germany's interests, and that it also belongs to countries of the Eastern Partnership initiative.She said that a special EU summit on eastern policies is scheduled for May 7, 2009. She said that relations with Ukraine and the provision of assistance to the country to tackle the economic crisis would be discussed at the summit.As reported, EU officials will participate in a conference in Brussels on March 23 dedicated to the modernization of the Ukrainian gas transportation system.

American Chamber Of Commerce: Investors Want To See Ukraine's Successful Eurointegration

KIEV, Ukraine -- Foreign and domestic investors want to see Ukraine gaining membership of the European Union, President of the American Chamber of Commerce in Ukraine Jorge Zukoski has said.
"Both foreign and domestic investors are interested in seeing the successful integration of Ukraine with the European Union. This will significantly increase the competitiveness of Ukraine and help it find its proper place in the global community," he said at a briefing in Kyiv on Friday.Zukoski said that one of the determining factors in the country's Eurointegration would be "successful talks on its associated membership and joining an agreement on a free trade area.""The whole business community should have a sufficiently clear intention to provide all of its support to Ukraine to ensure the successful outcome of these talks," he said.

Unions in the firing line

All that Dmitry Kozhnev, a Tver locomotive plant worker, wanted to do was get his company to follow the law.
His small trade union at the Tsentrosvarmash factory would organise visits from health and safety inspectors, and, in normal times, the strategy led to some improvements in working conditions.
But these are not normal times. Kozhnev's union activities have apparently led to him being fired - although officially the company says it was for leaving his shift early. He is not the only union activist facing a tough time during the crisis.
At factories across the country, activists such as Kozhnev who stand up for workers' rights are being targeted as companies put the squeeze on wages and other conditions in harsh anti-crisis measures (see comment, page 2).
"When the crisis began, management started putting pressure on union members, they invented trumped-up charges against me and other union members," said Kozhnev, who addressed a protest rally in Moscow over the weekend, where he and fellow activists demanded that workers not be made to pay for the economic crisis.
Conditions at Tsentrosvarmash, where 600 workers make machinery for Russian Railways, amid leaking roofs and dangerous chemicals, are still far from adequate, he said.
In winter, it is frequently too cold to work in normal clothing, and employees often have to wear heavy layers, which is in violation of health and safety regulations. Holes in the roof allow water to fall onto electrical equipment, causing short circuits and breakdowns.
Like many companies across the country, Tsentrosvarmash, whose parent company is Transmash Holding, an affiliate of state-owned Russian Rail­ways, is avoiding having to declare official pay cuts or layoffs by cutting bonuses and other measures.
With employees there - as across the country - relying for about half their salaries on a bonus system, now those bonuses have been cut to next to zero, leaving workers earning just 50 per cent or 60 per cent of their pre-crisis wages.
Kozhnev said management had tried to get him fired twice before over "trumped-up" disciplinary charges, and both times he got the company to back off through court action.
Things finally came to a head on January 19, at the end of his shift, when Kozhnev was summarily fired and escorted out of the factory by security guards. They followed him into the locker room as he changed out of his work clothes, and even stood by while he took a shower, he said.
Since Kozhnev's firing, he has taken his case to court, and his union has organised pickets calling for his reinstatement, including one outside the factory on Thursday.
Asked why Kozhnev was fired, Tatyana Koptyayeva, head of the plant's human resources department, explained that Kozhnev had "repeatedly" violated disciplinary rules.
"He left the shift 40 minutes early," she said by telephone. "This was officially registered."
Kozhnev countered that he had left 20 minutes early - after he had finished his job for the day. "I was leaving because it was very cold - too cold to stay in the workshop. It was bad for my health."
By law, to fire Kozhnev, the company had first to agree on his sacking with the chairman of the factory's trade union - Kozhnev himself.
But Koptyayeva said they had received no response from the union - and so firing him was lawful. "But that doesn't matter, because the trade union was illegal - it was not properly registered," she said. "There is a ruling from the prosecutor's office saying so."
Anna-Stefania Chepik, a lawyer at Goltsblat BLP, which specialises in labour and employment practice, said a trade union could only be banned by a court order.
Grounds for a trade union being declared illegal are "violating the rights of employees, violating the constitution, and extremism," she said.
The regional prosecutor's office, which is handling the case, did not answer repeated calls.
While some independent unions - such as the Interregional Professional Unions of Automotive Workers (MPRA), to which Kozhnev's union belonged - previously succeeded in clinching deals with companies and getting them to obey the law, now workers faced with layoffs have little leverage to assert their rights. They may not be striking, but some are protesting.
In a series of small rallies organized by MPRA over last weekend, protesters called for equal pay and the end of cuts in working hours.
Boris Kagarlitsky, head of the left-leaning Institute of Globalization Studies, said that state bailout measures were ineffective because they were only helping a few select companies, based on the government's preferences. "The government should take the French approach, where it gives money only to companies that pledge not to cut pay or lay off employees," he said.
Meanwhile, other union activists are facing different kinds of pressure. Several activists involved in disputes have been subjected to violent attacks in the last few months, and one is in prison on drugs charges after what he claims was a frame-up.
In the Sakha republic, Valentin Urusov, a union leader at an Alrosa diamond plant, said police kidnapped him and planted a bag of hashish oil on him. Police denied the accusation, and in December, Urusov was convicted and sentenced to six years in a penal colony.
Although there is no proof linking companies to the attacks on activists, the coincidence is suspicious, independent unions say.
"In the last two months there have been five attacks on members of our organization," Boris Kravchenko, president of the All-Russian Confederation of Labour, said by telephone.
One of those attacked was Alexei Etmanov, an energetic union leader at Ford's car plant near St. Petersburg who is co-chairman of the MPRA. In November, he was beaten up twice by unidentified men. The attacks were followed by telephone threats to one of his colleagues.
"Of course, this is no accident, and we are seeing confirmations of this," Etmanov said by telephone. "The government's concern with creating trade organizations that are completely controlled can lead to such harsh measures against those who insist on democratic beginnings in building trade unions."
In another case, Yevgeny Ivanov, a union leader at General Motors' plant in St. Petersburg, was beaten on Feb. 8 by unknown assailants, after receiving phone threats, Ekho Moskvy radio reported. Other attacks on activists, in Togliatti and Taganrog, have been recorded by independent unions.
Kravchenko said he believed the alleged pressure on Urusov, the Alrosa worker, was local in origin.
"As I understand it, the administration of the company was using such measures to suppress any political activism," he said.
A petition signed by a slew of both well-established and independent labour organizations and left-wing movements was given to President Dmitry Medvedev at a meeting with A Just Russia leader Nikolai Levichev in January.
Tensions between "official," government-sponsored trade union organizations and independent unions are becoming more apparent, as the independents come under increased pressure.
Russia has three well-established trade union organizations.
The first and largest is the Federation of Independent Trade Unions (FNPR), which inherited a massive, Soviet-era structure and officially boasts 28 million members.
Then there is the 500,000-strong Sots-Prof, formed in 1989, and the All-Russian Con­federation of Labor (KTR), which has about 800,000 members. According to Novaya Gazeta, the presidential administration had made a number of overtures to the first two of these organisations.
Sots-Prof has recently begun collaborating with the authorities, the newspaper said, in exchange for financial support.
Kravchenko said that the presidential administration has tried to work together with KTR as well, but that union officials have resisted attempts to buy them off.
"When this is about normal consultations among partners in effort to minimise the effects of the economic crisis, we cooperate," he said. "But when there is an attempt to control trade unions to neutralize them and their leaders, we are against this. This is the basis of our disagreements with the presidential administration. It's all very simple."

Ukraine's Prime Minister Says She Is Ready To Change Budget Amid Pressure From IMF

KIEV, Ukraine -- Ukraine's Prime Minister Yulia Tymoshenko said Friday she was ready to amend this year's budget to satisfy requests by the International Monetary Fund, which has said spending must be reduced before the country can receive an emergency loan.
The IMF froze a hard-won $16.4 billion loan earlier this month after the government refused to trim the budget deficit to 1 percent of GDP from the current 3 percent.Tymoshenko, expected to run for president in an election in January 2010, is reluctant to upset voters by cutting social spending.Addressing the mayors of Ukrainian cities Friday, Tymoshenko said she was ready to amend the budget, but sounded vague about whether the changes would mean a reduction in the deficit. Her office declined to elaborate.Tymoshenko asked the mayors to come ahead with proposals to "expand" regional budgets and said the government should continue subsidizing utilities for the public. But she also told the regional leaders to cut corners and "count every last copeck."Meanwhile, her fierce political rival President Viktor Yushchenko warned that the economy was in a free fall. Yushchenko again urged Tymoshenko to trim the budget in order to continue receiving the IMF aid.Ukraine is among the countries worst hit by the global financial crisis. The economy is expected to contract by 6 percent this year, according to analysts, after years of impressive growth.Industrial output slumped by 34.1 percent in January, year-over-year, the biggest fall in the country's history.The national currency, the hryvna, lost 40 percent since the financial crisis hit in September. It continued sliding Friday, closing at 8.52 to the dollar at the foreign currency exchange Friday. The Ukrainian stock market has hit the lowest point in four years.

Ukraine Urged To Overhaul Military

KRAKOW, Poland -- NATO members have urged Ukraine's government to persevere with changes to its military that are needed in order for Kiev to join the alliance.
The appeal by the military alliance on Friday is in spite of the former Soviet nation being severely hit by the economic crisis."Allies are aware that the financial and economic crisis that has also hit Ukraine very hard is having an effect on Ukrainian reforms," Jaap de Hoop Scheffer, NATO's secretary general, said after talks with defence ministers in Krakow, Poland."Ministers encouraged Ukraine to keep up the effort including with the necessary resources, difficult as that may be, because an inefficient and antiquated defence and security sector will cost Ukraine much more in the long run," he said.The global economic downturn has seen Ukraine's industrial output sink by a third and its currency plummet in value, while political turmoil has jeopardised part of a $16.4bn loan from the International Monetary Fund (IMF).The alliance has said that Ukraine and Georgia can one day join the 26-member bloc, amid opposition from Russia over NATO's expansion into former Soviet nations.Russian oppositionScheffer said NATO officials were looking at "ways in which the alliance can continue to support its preparations for NATO membership" for Ukraine.Robert Gates, the US defence secretary, said Ukraine still had a long way to go before it could join the alliance, but that the Obama administration had no "significant quarrel" with its attempt to become a member."There is a long path in front, and frankly there has to be greater unanimity of views within the Ukrainian government itself about the next steps," he said.Bogdan Klich, Poland's defence minister and host of the two-day meeting, said his country would continue to lobby hard for the two countries to join NATO.But Ulrich Schlie, the German defence ministry's director of planning, expressed his concerns over NATO's continued expansion."The larger the alliance gets the more difficult it is to maintain cohesion," he said.Moscow, which already has strained ties with NATO, has been angered by the alliance's open-door policy in regard to Georgia and Ukraine, which both lie on Russia's southern border.

How The Financial Crisis Is Affecting Eastern Europe

KIEV, Ukraine -- Russian President Dmitry Medvedev said on Friday officials were working too slowly to ease the economic crisis. Russia's $1.7 trillion economy is set to contract this year for the first time in a decade and unemployment is soaring.
Following are some details of how the financial crisis is affecting Russia and some other countries in eastern Europe:BULGARIABulgaria's farming industry, once a main stay of the economy, has shrunk to 5 percent of GDP from 25 percent in the past decade. Cash-strapped producers suffered again in 2008 after the EU froze millions in farm aid over graft. The crisis may erase Bulgaria's gains over the past decade because its main export market, the EU has fallen into recession. Trade unions say some 50,000 people are likely to lose their jobs in 2009.CZECH REPUBLICThe economy is highly open and dependent on exports, which in gross terms account for about 70 percent of GDP. The financial system has been relatively unaffected by the initial phase of the global financial crisis, but was hit from a collapse in demand. Over 45,000 people lost their jobs in January, bringing the unemployment rate up 0.8 percentage points to 6.8 percent, the highest level since April 2007.HUNGARYHungary, which escaped the crisis by way of a $25.1 billion IMF-led loan in October, planned to cut its budget deficit below 3 percent of GDP and decided on new spending cuts worth 200 billion forints ($835 million) in 2009 to prevent an overshoot. The economy is under pressure from a collapse in demand in the euro zone, its key export market, and the economy is expected to sink into a recession of up to 3.5 percent.POLANDEconomic growth slowed to 4.8 percent in 2008 from 6.7 percent in 2007 and analysts expect it to slump to 1.4 percent in 2009.ROMANIADecides this month whether it needs to help from the EU or the IMF. The unemployment rate rose to 4.9 percent in January from 4.4 percent the previous month. Several major industrial companies announced job cuts after demand was hit.RUSSIARussia's economy is set to contract this year for the first time in a decade. About 300,000 Russians lost their jobs in January as collapsing commodities prices and months of market crisis hammered the real economy. The number of jobless jumped to 6.1 million or 8.1 percent of the workforce versus 7.7 percent the previous month. The government forecast on Tuesday the economy would contract by 2.2 percent in 2009. Growth in retail sales slowed in January to 2.4 percent year on year and a 16.3 percent increase in Jan. 2008.SERBIASerbia expects to conclude a 2 billion euro ($2.52 billion) loan with the IMF by April as growth is seen falling far short of earlier official estimates, Prime Minister Mirko Cvetkovic said on Friday. He said it will most probably grow between 0.5 and 1 percent after the fall in fiscal revenues since the beginning of the year. By contrast, last week Serbia's central bank said the economy was most probably heading into recession. Serbia's economy grew 5.5 percent in 2008.SLOVAKIASlovak industrial output fell by 16.8 percent year-on-year in December, the sharpest fall at least in 10 years. Slovakia expects its export-oriented economy to be hurt by the crisis as demand for its products slows in the West.UKRAINEIndustrial output has shrunk by over a third -- the worst drop in over a decade. Machine building and mineral production both contracted by over half year-on-year. Thousands of workers have been put on unpaid leave as a consequence of the drop. Ukraine's banks have also been hit as its hryvnia currency plummeted, with three banks put in receivership last week, including the seventh largest, the Nadra Bank.Political turmoil has delayed policy making to combat the crisis and has threatened a $16.4 billion loan from the International Monetary Fund, which failed to agree last week on disbursing a second, much-needed tranche.