Business is good: RUSAL CEO Oleg Deripaska
Today the UK Financial Times newspaper confirmed what the Kommersant newspaper reported Monday - two Russian firms, SUAL and RUSAL, are being merged to create the largest aluminum producer in the world, combining for 11% of global production. The deal is reportedly worth $30 billion dollars, though the exact terms of the merger are still being negotiated, reportedly with the advice of the JP Morgan and UBS multinational investment banks. According to the Bloomberg story, RUSAL will form 75% of the combined company with SUAL getting the rest.
Russia Blog readers may recall seeing the face of Oleg Deripaska, the 38 year-old CEO of RUSAL in our post about the 32 Russians featured on Forbes's list of the 100 richest individuals on the planet. The megadeal means that Mr. Deripaska, the 6th richest man in Russia, is now a full partner with the 4th wealthiest Russian, Viktor Vekselberg. Besides acquiring state assets and taking the personal risk of competing with many rivals in the metal business, Mr. Deripaska also built up his fortune through his successful reorganization of GAZ, the old Soviet manufacturer of jeeps and Volga sedans.
However, unlike many of his other fellow oligarchs who didn't "share" and have been banished, Mr. Deripaska was able to successfully navigate the difficult transition from the roaring 1990s (Deripaska's father-in-law is married to one of Boris Yeltsin's daughters) to the new Kremlin regime. This means that Deripaska "shared" some of his wealth and did not break the iron rule that Khodorkovsky did (trying to sell the means of raw materials production to foreigners). Now Deripaska is getting his reward for playing by the rules: once the time arrived to marry Rusal's production facilities with Susal's abundant Siberian metal deposits, Putin was on hand to officiate.
Continue reading "Russia Merger Creates World's Largest Aluminum Producer" »
In 2005 Alexei Pichugin was convicted of murder and ordering contract killings
Last week the Moscow Times reported that a Moscow City Court rejected the appeal of Alexei Pichugin, the former chief of security for Yukos. Mr. Pichugin was convicted in 2005 for the murders of Sergei and Olga Gorin and two counts of attempted murder for ordering attacks on Olga Kostina and Viktor Kolesov. Mr. Pichugin was also convicted of murdering the mayor of the City of Nefteyugansk, Vladimir Petuhov, who tried to get Yukos to pay back taxes owed to the local government (Mikhail Khodorkovsky was convicted on charges of tax evasion). Alexei Pichugin will now spend twenty years of his life in a maximum security Russian penal colony.
In 2002, Sergei Gorin was a senior manager at Menatep Bank's branch in the city of Tambov, where he arranged several lucrative off-the-books deals between Yukos and local businesses. These arrangements seemed to have worked fine until Mr. Gorin got ambitious and asked Mr. Pichugin to either bring him on board as a well-compensated Yukos employee or give him $100,000 cash in severance pay.
Continue reading "Former YUKOS Security Chief Gets 20 Years for Murder" »
A sign at Uralskie Samozveti summer camp showing activities available for kids
Anapa, Russia -- In this city where the unfortunate Flight 612 departed from a few days ago, there is now another public scandal. This time the topic is so broad and common that it is hard for foreign readers to believe but easy for many Russians to dismiss: the so-called dedovschina (peer brutality and abuse). These violent habits are frequently tolerated in schoolyards and summer camps across Russia and culminate when boys grow up to be soldiers who kill and maim their comrades in the Russian army.
In this case, middle school kids from big cities were caught severely abusing their peers from small towns and suburban villages at the Uralskie Samozveti summer camp. Four teenagers were found guilty of raping 12-year-old boys, but only two teens will be held responsible. Two of the perpetrators were 14 years old; the other two are only 13! Towards the end of the session, the victimized kids were using cell phones to send SOS text messages to their parents.
One father was outraged when he first saw his son after the boy returned from three weeks at camp. The boy had lost 20 pounds in 20 days, going from 90 to 70 pounds. Some boys had visible bruises as they stepped off the train in their home towns. This time the parents will push hard for serious criminal investigations of the teenage abusers, as well as the camp counselors and administration.
ST PETERSBURG -- Today the Troitksy Cathedral, built from 1828 -- 1835, burst into flames. Evidence indicates that a cigarette butt likely left behind by a construction worker initiated the blaze, which then raced through the wooden scaffolding surrounding the Cathedral's great dome. Even under renovation, the Cathedral fits 3,000 worshipers and remains a prominent St. Petersburg landmark visible from 13 miles away.
Just three minutes after a report of flames, the first fire truck arrived. In the end, 40 fire trucks and a helicopter helped battle the blaze. Firemen, cathedral priests, and employees managed to save all the icons and furniture inside. The building, designed by Vasiliy Stasov, survived abuse from fire and water without sustaining any major structural damage. While the cathedral is a federal historic site, it is managed by the city of St. Petersburg. This raises the question of who is going to pay for major repairs.
Continue reading "St Petersburg's Cathedral on Fire; Novosibirsk Citizen Returns $750 Million; Other News of the Day" »
Today the mayor of the City of Pyatigorsk was arrested while undergoing treatment for his injuries in the emergency room. Mayor Tarasov is charged with driving recklessly and vehicular manslaughter, after the vehicle he was driving crashed head on into another car, killing five people.
While driving his Toyota Land Cruiser, Mayor Igor Tarasov sped recklessly into the oncoming lane of traffic to pass a slow-moving truck. Tarasov's SUV immediately collided with a Russian-made sedan. Of the sedan's occupants - a family of four and the son's fiancÃ© - two passengers and the driver died on impact. The other two passengers died in the local hospital a few hours later. The passengers in the Mayor's Land Cruiser fared better. After the collision, they ditched the injured Mayor, ignored the devastated family in the other car, and fled on foot.
While he is still in critical condition, the Mayor has now been charged with the worst criminal charge Russian drivers can face-- "Disobeying the traffic rules and the exploitation of the transport vehicle, causing the deaths of two or more people" (part 3 of Criminal Code article #264).
Continue reading "Pyatigorsk Mayor Charged with Reckless Driving; Five People Dead" »
Dr. Grigory Perelman
The New York Times reported yesterday that Grigory Perelman, a reclusive Russian mathematician, has solved a key piece in a century-old puzzle known as the PoincarÃ© conjecture. Dr. Perelman was one of four mathematicians awarded the Fields Medal for achievement in mathematics yesterday. The Fields Medal is known as the "Nobel Prize"
of mathematics. But as with his previous honors, Dr. Perelman refused to accept this one, and he did not attend the ceremonies at the International Congress of Mathematicians in Madrid, even though Sir John M. Ball, president of the Union, had personally flown to St Petersburg in June and asked Dr. Perelman to attend the ceremony.
Along with the award, Dr. Perelman refused one million dollars in prize money; Dr. Perelman's salary at a St Petersburg University is approximately $300 a month. Dr. Perelman's favorite activities are mathematics and picking mushrooms on his hikes in the woods outside St. Petersburg.
Please see the extended post for articles on this amazing Russian scientist and the mathematical problem he solved.
Continue reading "Russian Scientist Solves the "Problem of the Century", Refuses One Million Dollar Prize" »
MOSCOW, Russia (CNN) -- A Russian commercial jet carrying 170 people -- many of them children -- crashed in eastern Ukraine on Tuesday, killing all on board, emergency officials said.
The Tupolev Tu-154, belonging to Pulkovo Airlines, went down shortly after the pilot reported a fire on board and heavy turbulence, the Ukrainian Emergency Situations Ministry said. At least 30 bodies have been pulled from the wreckage, about 40 kilometers (25 miles) northwest of Donetsk in a hard-to-reach area, the ministry said.
UPDATE: See the extended post for more new photos and see the video of the crash in AVI format or 3GP format.
Read the rest of the CNN story or click the "extended post" link to see the Russian media's photos.
Continue reading "Russia Airliner with 170 Aboard Crashes" »
MOSCOW -- Yesterday a bombing occurred at Cherkizovsky, one of the city's largest open air marketplaces. Ten people are dead and forty injured. A little town within the big city, the Chekizovsky market sells textiles and household items. The majority of business owners leasing space at the market are immigrants from former Soviet republics, mostly people from the Caucuses; and yesterday they were targeted by skinhead terrorists.
This explosion is the first terrorist violence Moscow has suffered in many months. What is most disturbing to Russians and foreigners alike is that the attack was not work of Chechen jihadists or other Islamist terrorists. Instead, the bomb was likely placed by homegrown Slavic fascists, to target Russia's minorities.
Russia Blog has discussed the problem of neo-fascism and racist violence in Russia in several posts (see the Crime section). Last May Day, skinheads proudly marched through the streets of Moscow, chanting anti-Semitic, anti-American and anti-black slogans. Yesterday the skinheads dramatically escalated their war on Russia's minorities from racist attacks on individuals to terrorism against ethnic community landmarks.
Continue reading "Minorities Targeted at a Moscow Market" »
Recent reports about Moscow as the most expensive city in the world (24% more expensive for expat workers than New York), and stories about hundreds of new 24-hour casinos, boutiques, clubs and multi-million dollar condos bring Europeans and Americans to a simple conclusion -- Russians are getting rich only because of high oil and gas prices. This stereotype is wrong. As always, things are not quite as simple as they appear in Russia.
It is normal to assume a rising economy drives up prices for real estate and common goods; that's how it is in Western Europe and Northern America. However, consider the late 1990s in Russia: in 1998, oil prices bottomed out at $10 per barrel. Even so, castles in the Moscow suburbs and luxurious apartment complexes in the city were being built just as fast as they are today. The difference between Russian and American wealth creation is the fact that a rising economy in America means that almost everyone is a little bit better off; but this new wealth in Russia trickles down much more slowly, and the vast majority of the population sees no improvement.
Continue reading "Does Real Estate in Russia Really Track the Price of Oil?" »
Chinese investors are planning to build a huge new condo complex with an international trade center and underwater tunnel in St Petersburg; as well as a new global trade center in downtown Moscow. This month the final list of investors is being finalized for the construction of the "Baltic Diamond" complex in St. Petersburg. The complex will consist of ten million square feet of condos and four million square feet of stores. Locals are already calling this neighborhood the new "China-town". The total amount of Chinese investment into the "Baltic Diamond" is expected to top $1.5 billion.
Another project that interests Chinese investors is the construction of a major toll tunnel under the Neva River. The tunnel will connect two parts of the city. The tunnel will cost at least another billion US dollars. Both projects are the fruit of a St. Petersburg city trade delegation trip to Shanghai. Another project, which will take place in Moscow, was negotiated during Putin's latest visit to China. The Chinese are planning to build two office buildings in downtown Moscow. The buildings will be 32 and 50 stories each with two million total square feet. The complex will be surrounded by Chinese gardens with a shopping mall and small entertainment park. The estimated cost for this project is $300 million. These buildings will be mostly occupied by Chinese businessmen.
Continue reading "New Chinatowns for Moscow and St. Petersburg" »
President Putin shaking hands with Chinese President Hu Jintao
Here at Russia Blog, we have written several times about Russia's changing relationship with its prosperous and increasingly powerful neighbor, China. This past Sunday the Honolulu Star Bulletin published an excellent article summarizing the history of diplomacy and trade between Russia and China. This is not a topic American audiences are frequently exposed to, but one far more consequential in the long term for Russia's territory and natural resources than Moscow's relations with the European Union or the United States.
For the most part, with the exceptions of the so-called "unequal treaties" in the 17th, 19th centuries and the Sino-Soviet border war in the 1960s, the Russo-Chinese relationship has been marked by peaceful trade and migration. We hope that continues to be the case in the 21st century, as the ethnic Russian population in the Far East declines, and China emerges as an ambitious superpower with a historic chip on its shoulder.
One interesting fact presented in this article is that last month's Rosneft IPO was not the first time a Chinese state-owned oil company has been rebuffed in its attempts to buy access to more Russian natural resources.
Click on the extended post to read the full text of Hawaii Pacific University Adjunct Professor Bill Sharp's excellent historic analysis.
Continue reading "Russia's Far East - China's Frontier?" »
New apartment buildings in Moscow
Last year, Russia Blog wrote about Moscow's astronomically-priced real estate market. This month, the Discovery/New York Times Channel series Super Homes is showing American TV viewers a glimpse of this bizarre world, where anonymous people buy multimillion-dollar properties with grocery sacks full of cash (one grocery sack can hold about $200,000).
The first character we meet for our education in New Russian excess is Phil Bogdanov - real estate agent to Moscow's super rich. Like many Russians who came of age in the perestroika years, Bogdanov found himself in 1991 with an education but not many connections or opportunities to make money at home, so he emigrated to the United States. In the U.S., Phil worked various low-wage jobs in restaurants and other businesses until he found his true passion: real estate. Phil married an American real estate agent and brought her back to Moscow during the go-go 1990s. This was the era - Phil's wife explains on camera - when fifty Moscow businessmen would pose for pictures toasting their entrepreneurial success. Six months later, she says, half of them would be dead, the victims of business murders.
During this transition, prices for Moscow apartments and office buildings were still officially fixed by the state, but the real value was determined by negotiations and paid in cash. Even today, with the Kremlin trying to return capital to Russia, Moscow's millionaires and billionaires must remain discreet.
Continue reading "Moscow Real Estate Madness" »
A Russian army private died in the Moscow suburbs on August 4, 2006. ITAR-TASS reported that Dmitry Panteleyev came back drunk after being absent without leave. An officer on-duty overreacted and severely beat the soldier, who suffered a serious concussion. A few hours later the private died from head trauma in a local hospital.
This incident comes after a recent investigation launched in Volgogradskaya Oblast, where two officers were caught "renting" soldiers for housekeeping and construction work. This is a very common practice in Russia, when an officer on duty makes his privates change into civilian clothes and "sells" them as a cheap labor to local households. A couple of years ago, the fee was $5 a day per soldier; inflation has since boosted it up to $10. The money usually goes to the officers, but soldiers are also happy, because digging trenches in nice backyards around families is better than running laps with machine guns. Also, some households treat privates well, providing them with nice meals and drinks.
However, all this raises one big question: where is the professional Russian army?
Today Russian media outlets reported that American and British law firms are competing to represent the victims of last month's Sibir Airways plane crash in Siberia. The European aviation consortium Airbus is likely to face lawsuits on behalf of family members and survivors of the crash.
Siberian Airlines flight #778 Airbus A-310 crashed in Irkutsk a month ago. Russia is known for very small compensations being paid to the families of accident victims, that's why there aren't any Russian or foreign law firms in the country that specialize in serious torts. Foreign lawyers don't like dealing with Russian courts and companies because the laws are opaque; the courts are easy to bribe; the economy is shadowy and it is very difficult to receive any compensation even after years of litigation. If Airbus is proven to be at fault, however, then this case would set a major precedent for foreign law firms hoping to represent Russian clients in wrongful death and injury cases.
Continue reading "American, British Law Firms Competing for Clients in Irkutsk" »
Highway from Makhachkala to Buynaks
Today there were two well-executed terrorist attacks against government officials in Dagestan, a southern province of Russia. Dagestan is Russia's southernmost republic and borders the war-torn province of Chechnya. Although Chechnya is more peaceful than at any time since 1994, a few separatists still want to shatter the fragile peace in the region. Terrorist gunmen ambushed two state officials and their bodyguards in two separate roadside attacks. As a result, the General Prosecutor (prokuror) of the city of Buynaks is dead, the head of the Dagestan's police force was severely injured, and several policemen and innocent civilians were killed.
The first attack began a few minutes after Bitar Bitarov, the general prosecutor for the city of Buynaks, left home for work. Terrorists detonated a roadside bomb near Bitarov's Mercedes 600 sedan and two other cars carrying his bodyguards. After detonating the bomb, terrorists opened fire on the convoy with machine guns. The general prosecutor lost his arm in the explosion and was shot several times. Mr. Bitarov died from his wounds a few hours later in a nearby hospital. Mr. Bitarov's driver and bodyguards were also treated in the emergency room.
Continue reading "Terrorists Attack in Dagestan" »
By Michael Averko
A symbol of victory: Soviet T-34 tank on static display
Born into a culturally aware multi-ethnic family and neighborhood, I grew up in an environment where many words from different languages became part of the language in my household. Among them: tea was called "chai" (Russian) and the word understand was substituted with "kapish" (Italian). "Chochkas" (Yiddish) refers to fun and relatively inexpensive souvenirs and articles. I've a number of Russia related chochkas.
The Russian side of my family has roots in the Imperial Russian Army and United States Marine Corps. This background influenced the kind of toys I received as a child. Solido is probably the best maker of die-cast metal military vehicles. My family maintains a nice collection of these pieces. The T-34 replica is my most prized possession from that group. The real McKoysky is still revered by many Russians to this day for its legendary reliability on the battlefield, helping the Red Army crush Hitler's Wehrmacht.
Continue reading "My Favorite Russian Chochkas" »
A poem by our reader the "White Buffalo Woman"
What happened to Russia?
The Russia of 1915
The Russia of Akhmatova
And of A. Pushkin?
Wherefore art Thou,
That Andrei Rublev
The Russia that was
Of many a Saint.
Continue reading "To Russia With Love" »
By Alicia Hoffer
Alexander Sukarov's beautiful film The Russian Ark provides an encouraging counterpoint to the recent deluge of disheartening news pouring out of Russia. When a Russian film director and a French aristocrat find themselves lost in the enormous Winter Palace in St. Petersburg, the viewer begins a journey through the annals of Russian history. By the end of that journey, the Russian and the Westerner have witnessed the unfolding drama of Russia's centuries-old dance with Europe and the viewer has been caught up in the intriguing question of Russian identity.
This film has won numerous accolades for its grandiose cinematography. Sukarov attempted the impossible - and succeeded - when he captured all 96 minutes of The Russian Ark in one shot. With some 2,000 actors and extras, three live orchestras, and a flowing dialogue, this was a Herculean task. The shoot was made even more difficult by the restrictions imposed to permit use of the historic, high-profile set. The State Hermitage Museum, Saint Petersburg's repository of fine art from around the world, is one of Russia's most popular tourist attractions. The museum could only afford to turn its staterooms, corridors, and ballrooms over to Sukarov for just one precious day.
Continue reading "The Russian Ark Reviewed" »
Yekaterinburg, Russia -- A massive child sex ring was exposed in downtown Yekaterinburg this week. The accused were caught selling young boys, renting them for sexual services and routinely raping them. Their victims were over 1,000 boys, ages 12 through 17. This "business" has been operating for five years, so many of the victims were 7 to 12 years old when they were first kidnapped. Police have documented 116 cases of rape and sexual abuse and the alleged owners of the "business" have been caught. One of the suspects committed suicide in jail after he was imprisoned with common criminals. The leader of the group however, escaped. It is rumored that several powerful citizens of Yekaterinburg frequented the establishment and pressured the court to release the accused ring leader pending his trial date. Thanks to this release the lead suspect in the case has now fled the country.
It is amazing that this story, along with news about dedovshina brutality in the Russian army very rarely makes it into international media coverage of Russia. By pursuing generic, pre-written stories such as "Putin's crackdown on dissent" and "the Kremlin's centralization of power", international news outlets are neglecting their duty to report the worst human rights abuses in Russia. A good journalist or citizen can make better use of their time by asking more relevant questions. For instance: how can subsidies for Russian mothers prevent the depopulation of the country, if so many children between the ages of 7 and 17 are sexually abused, and so many young men ages 18 to 20 are tortured in the army? It is these defiled innocents who grow into psychologically wrecked adults dying from suicide, alcoholism, drug abuse and AIDS throughout Russia.
Continue reading "Boys for Sale: Russia's Forgotten Children" »
Profiting from the Middle East crisis?
The Russian business newspaper Kommersant has an article up on their website today, candidly titled Thanks to the War Machine. The article provides some historic perspective on how the USSR profited from the oil shocks after the 1973 Arab-Israeli War and the 1979 Islamic revolution in Iran. The article also notes that Russia has been the single largest beneficiary of higher global oil prices fueled by Mideast turmoil. However, Kommersant contributor Sergey Minaev's argument intersects with a view we have presented here at Russia Blog for some time: the West (not just the U.S.) has a strategic interest in developing Russian oil and gas, with the goal to expand global energy supplies from outside the Middle East.
Continue reading "The Long War in the Middle East and Russian Oil" »
Yesterday someone gave me The Wall Street Journal article from Sunday, July 29, 2006, titled "Putin Signs Law Against Slander Of Public Officials" by Alan Cullison. My first response upon reading the title was "I haven't heard of such a law or a bill being passed!" Then I searched the major Russian media outlets and didn't find anything about the bill that would provoke dire concerns about freedom of speech in Russia. That's when I went to the website of the Rossiyskaya Gazeta (Russian newspaper), which publishes all new bills passed by the Duma, and found out that the first thing the WSJ got wrong was the name of the bill. I found more errors when I read on.
First of all, the bill signed by President Putin is named "Federal Law of the Russian Federation from July 27 2006 #148-F3 On the Changes to the articles of 1 and 15 of the Federal Law 'On the Counteraction to the Extremist Activity'". The WSJ piece was primarily concerned with article 1, where the term extremist is legally defined, and article 15, part of which says that the "author of the printed, audio, visual and other materials, designated for the public broadcasting and carrying one or more of the characteristics defined by the article 1 of the Federal Law, should be accountable as a person involved in extremist activity and should be accountable according to applicable laws of the Russian Federation". Setting aside article #15, let's get into the more important controversy surrounding the bill's revisions to article #1, and see what the WSJ reporter missed.
Continue reading ""Slander" -- The Wall Street Journal Misinforms on Extremism Legislation" »