Russia 100304 Basic Political Developments

Telegraph: Lufthansa embarrassed after Russian 'Stalingrad' hijack

http://www.telegraph.co.uk/news/worldnews/europe/russia/7351647/Lufthansa-embarrassed-after-Russian-Stalingrad-hijack.html

Lufthansa, the German airline, was left embarrassed after a competition to name a new aeroplane was rigged by Russians who nominated "Stalingrad," the site of one of Nazi Germany's worst defeats.

Andrew Osborn in Moscow
Published: 8:50AM GMT 04 Mar 2010

Lufthansa launched the online poll last month in order to find a name for one of a batch of new Airbus A380s it will start using soon. It offered the person who dreamt up the winning name the "glittering prospect" of acquiring one million air miles, enough to fly round the world twice in first class.

Almost immediately, a Russian woman nominated "Stalingrad," the Russian city where Nazi Germany suffered a crushing defeat in 1943 at the hands of the Red Army with the loss of up to one million troops.

Within days, almost 10,000 people had voted for "Stalingrad" making it the favourite to win by a huge margin. The airline apparently thought Russian pranksters were behind the incongruous result, suspecting they had rigged the voting with the help of a special computer programme.

Faced with the prospect of having to name one of its planes after a city that broke the back of the Third Reich, Lufthansa quietly removed the "Stalingrad" nomination from its website.

A spokesperson later justified the decision, saying that the airline only named its planes after German cities and was looking for a name that would appeal to children. The winner of the poll will be announced at the end of this month. The current favourite is the comparatively inoffensive moniker "Sky Future."

Russia Today: 04 March, 2010 in Russian Newspapers

http://rt.com/Top_News/Press/eng.html

Rossiyskaya Gazeta: Co-authorship with Russia

The UN General Assembly in one day adopted three resolutions which were drafted by Moscow

By Vladislav Vorobyev

It rarely happens that the United Nations General Assembly adopts three resolutions that were initiated by one country, on one and the same day. March 2 (in Moscow it was already March 3) was recognized by most diplomats as the “Day of Russia” in the UN.

The resolutions initiated by Moscow and adopted by consensus were: “Sixty-Fifth Anniversary of the End of the Second World War,” “Cooperation between the United Nations and the Collective Security Treaty Organization,” and “Increasing Road Safety Throughout the World.” In an interview with Rossiyskaya Gazeta, Russia’s Permanent Representative to the UN, Vitaly Churkin, talked about how members of this key international organization are reacting to the attempts to rewrite history and what deputies can do about fatal road traffic accidents.

Vedomosti: Editorial: An account of the tears

The tragic death of seven-year-old Vanya Skorobogatov at the hands of his adoptive parents cannot but cause outrage in any normal person. The lawsuit against Mr. And Mrs. Craver, who are facing homicide charges, as well as the future fate of the dead boy’s sister, are being monitored by the Ministry of Foreign Affairs, Commissioner for Children’s Rights Pavel Astakhov, State Duma deputies and the Public Chamber.

Nezavisimaya: Beijing announced its victory over prices

Russian-Chinese natural gas negotiations are nearing completion

By Sergey Kulikov

Gazprom will be forced to fight with the Chinese for its gas price

After many years, negotiations over the price which China is willing to pay for Russia’s gas are nearing completion. Or, at least, this is what was announced yesterday by the head of China’s National Energy Administration, Zhang Guobao. Gazprom, however, is careful in its assertions, and simply notes “the achievement of mutual understanding of the basic issues.” Experts believe that price negotiations will continue -- but the strong player is currently China.

The Moscow Times: Today in Vedomosti

http://www.themoscowtimes.com/vedomosti/

Company Hits Back at Consumer Over Alleged Mouse in Nuts

By Yelena Vinogradova

The Moscow Nut Company has filed a statement of blackmail with the police against a buyer who had requested monetary compensation for allegedly finding a dead mouse in the company’s product.

Editorial: Vanya’s Tragic Death Fuels Calls for Better Child Protection

The tragic death of 7-year-old Vanya Skorobogatov at the hands of American adoptive parents can not fail to disturb any normal human being.

National Economic Trends

Bloomberg: Russian GDP Grew in February for First Time Since November 2008

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2ikDGKmUlpc

By Paul Abelsky

March 4 (Bloomberg) -- Russia’s economy grew last month on an annual basis for the first time since November 2008, an indicator derived from service and manufacturing surveys showed.

The economy of the world’s largest energy exporter expanded 0.5 percent after shrinking 0.3 percent in January, VTB Capital, which compiles the indicator, said in an e-mail today. The slump bottomed in June, when output fell 10.8 percent, according to VTB Capital data.

“The Russian economy is continuing to expand, although at a slower pace than at the end of 2009,” Aleksandra Evtifyeva, senior economist at VTB Capital in Moscow, said in the report. “The greatest cause for concern is the recent weakness in new business orders in both sectors of the economy and the worsening employment conditions in manufacturing.”

Last year’s surge in oil prices bolstered state finances as the price of Urals crude more than doubled from a low of $32.34 in December 2008. Industrial output and retail sales also boosted gross domestic product, which rose a seasonally adjusted 0.3 percent in January from the previous month, Deputy Economy Minister Andrei Klepach said on Feb. 25. GDP fell a record 7.9 percent last year.

“The first two months of 2010 suggest that marginal annual growth of gross domestic product will be achieved in the first quarter,” according to VTB Capital.

Frail investment demand and rising unemployment remain the “weak links” of the economic recovery, Klepach said. Domestic demand remains “unstable” and below pre-crisis levels even as the economy has recently posted improvements in output and real disposable incomes, the central bank said on Feb. 19.

VTB Capital calculates the indicator by using output measures from its Purchasing Managers’ Indexes, which are surveys of business conditions in manufacturing and services industries.

To contact the reporter on this story: Paul Abelsky in Moscow at [e-mail].

Last Updated: March 4, 2010 03:16 EST
Bloomberg: Russia May Lower Rates This Month on Lending Decline (Update1)

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=araEWLI5vVNg

By Maria Levitov

March 4 (Bloomberg) -- Russia’s central bank may lower the benchmark interest-rate this month after bank lending shrank in January and a “fragile” manufacturing recovery signaled businesses may continue eradicating jobs, a survey showed.

Bank Rossii will cut the refinancing rate a quarter-point to a record low 8.25 percent, according to the median estimate of 10 economists surveyed by Bloomberg. The bank has indicated it may reverse its easing cycle in the second half and it will probably bring the rate to 8 percent by year-end, the survey showed. The bank doesn’t publish a timetable for rate meetings.

“The economy must get a boost to move forward and a deeper rate cut would provide just such a boost,” Tatiana Orlova, an economist at ING Bank NV in Moscow said by telephone.

Russia’s emergence from the credit crisis is “slow and gradual” as high unemployment and slack demand for credit curb growth, Andrei Kostin, head of VTB Group, Russia’s second- largest bank, said on March 2. While Bank Rossii has cut rates 11 times since April, corporate loan books slid for a second month in January and lending to consumers posted a 12th consecutive monthly drop.

Lending is constrained by “a lack of stable growth in the real economy and, consequently, weak demand for borrowing, as well as relatively high credit risks,” the central bank said in a report on March 1.

‘Weak Links’

The economy expanded a seasonally adjusted 0.3 percent in January from the previous month, Deputy Economy Minister Andrei Klepach said on Feb. 25. Even so, unemployment and frail investment demand remain the “weak links,” he said.

Manufacturing posted only a “marginal expansion” last month as industry shed jobs at the fastest rate since August, signaling the recovery is “fragile,” according to VTB Capital’s Purchasing Managers’ Index. Service industries also cut jobs and expanded in February at the weakest pace since July, according to a separate PMI report from VTB.

Russia has lagged behind other central banks in easing monetary policy and will trail them as regulators reverse rate cuts, Bank Rossii said in January.

Australia, Norway, Israel and Vietnam have raised rates since the peak of the global crisis. China and India have increased reserve requirements for banks to avoid stoking unsustainable lending growth, while the Federal Reserve raised the rate charged to banks for direct loans, signaling an end to emergency measures to supply liquidity to financial markets.

Russian inflation has ebbed, leaving room for rate cuts. Price growth probably slowed to an annual 7.2 percent in February from 8 percent in January, “calling for further monetary easing by the central bank,” Vladimir Osakovsky, an economist at UniCredit SpA in Moscow, said in an e-mailed note today.

‘Bullets in Arsenal’

Slow inflation provides scope for cutting the benchmark rate by half a point to 8 percent, though the regulator may “save bullets in its arsenal” to relieve pressure on the ruble and cut by a quarter-point this month, ING’s Orlova said.

The ruble advanced to a six-week high against the dollar on March 3 after the price of oil, Russia’s chief export, rose above $75 a barrel. A 96 percent increase in Urals crude since February last year has boosted the currency’s appeal and the higher relative interest rate makes it a favorite carry trade.

The ruble was little changed at 40.7192 per euro at the start of trading in Moscow today and was at 29.8160 per dollar.

The banking industry “will not see any lending growth before the end of the first quarter, when demand for loans picks up,” VTB Capital analysts said in an e-mailed note on March 2.

Lenders’ investments in corporate debt instruments rose 13.2 percent in January from the previous month, indicating growth in indirect lending to companies, according to VTB.

Credit Activity

Lower interest rates on loans and improving credit worthiness may boost activity by banks in the first half, Leonid Slipchenko and Natalia Mayorova, Moscow-based analysts at UralSib Financial Corp., said in an e-mailed note. Loans are set to increase 20 percent this year, UralSib forecasts.

The economy may expand 4.5 percent, exceeding government forecast of 3.1 percent, Alexei Ulyukayev, a first deputy chairman of Bank Rossii, said in an interview in Izvestia on March 3. His comments were confirmed by a central bank official.

The central bank’s future changes to the refinancing rate “will be determined by the inflationary trends, industrial output and credit activity dynamics, the state of financial markets,” the regulator said in a report.

To contact the reporters on this story: Maria Levitov in Moscow at [e-mail]

Last Updated: March 4, 2010 03:25 EST