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RA’s Daily Russia News Blast – Oct. 22, 2007

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Former Soviet leader Mikhail Gorbachev speaks in Moscow. Gorbachev founded a new political movement aimed at fighting democratic abuses in Russia, but not at challenging President Vladimir Putin’s rule.(AFP/Alexey Sazonov)

The leader of the former Soviet Union, Mikhail Gorbachev, has founded a new political movement. At the founding congress of the Union of Social-Democrats, which will not take part in Russia’s next general elections, Gorbachev said, “We are fighting for power, but only for power over people’s minds.” The leader of A Just Russia’s youth wing has accused the pro-Kremlin party of “stupid cowardice” after being excluded from the party’s federal list. The Foreign Intelligence Service must work harder to “protect the interests of Russian companies abroad,” President Vladimir Putin said. He has appointed former Prime Minister Mikhail Fradkov as head of the spy agency, “underscor[ing] the important place foreign intelligence plays in the system of Russia’s state institutions.” Putin has meanwhile “waded into a turf war” among the security agencies over the weekend, creating a new state committee to fight illegal drugs and naming Viktor Cherkesov as its chief just a day after publicly criticizing Cherkesov in a Russian newspaper, suggesting that he is “trying to play a balancing act amid the infighting.” Putin’s view is that the media was the wrong arena in which to discuss the problems. The government plans to introduce a prohibitive tariff on wheat exports in a move analysts say could cause an abrupt rise in world prices. “A closure of Russian exports even for one month will keep 1.2 million to 2 million tons of wheat out of the world market,” said one. The average salary in Russia has risen 25% since last year. As global oil prices reached heights of $90 per barrel, Finance Minister Alexei Kudrin said that Russia would not accept restrictions from some Group of Seven countries on how it invested its oil wealth abroad. “Sovereign wealth funds should be subject to the general rules of the free movement of capital,” Kudrin said at a meeting with G7 finance ministers in Washington. Concerns have been raised in Europe and the United States that sovereign wealth funds, investment vehicles used by governments to invest their windfall funds into foreign equities, have at times been driven by political, not commercial, motives. Kudrin denied this. “This is ruled out in Russia. We have a transparent mechanism for such investments.” He also said that the global credit crisis and volatility across developed financial markets could still come to hurt Russia and hinder long-term investment, and that US officials are trying to conclude multilateral talks on Russia’s accession to the World Trade Organisation as quickly as possible. “I got the feeling that they are ready to push these negotiations forward.” Russian Industry and Energy Minister Viktor Khristenko has published his views EU energy investment, saying that plans to prevent investment by companies from countries that do not open up their own power markets could dent bilateral ties. “Will EU efforts to limit ‘objectionable’ investment have an effect on Russia-EU industrial and energy cooperation? It is difficult to predict.” Russia will continue to develop relations with the EU after presidential elections, according to Deputy Chairman of the Federation Council International Affairs Committee Vasily Likhachyov. “The strategic partnership policy will not change when the new president takes the office,” he said. “It is important for Brussels to access the Russian potential correctly.” Some reports say that Russia will join efforts to write off Liberia’s $700 million debt to the World Bank, but Kudrin said Russia’s exact contribution to Liberian debt relief has not yet been clarified. Russia dismissed concerns by Group of Seven finance ministers and central bankers over Iran, after the group rebuked the country, calling on banks worldwide to be wary of risks of doing business with the Islamic republic. Russian Foreign Minister Sergei Lavrov is in Japan to “strengthen positive dynamics of bilateral relations, to expand cooperation in practical spheres and interaction on the international scene.” Russia, already the world’s third-biggest coal exporter, plans to spend $34.4 billion expanding output in Kuzbass, its biggest coal-producing area, by about 50% by 2025. Rusal has reached an agreement with state-owned Kazakh Samruk on joint ownership of the major Bogatyr Access Komir coal asset, and is reported to be interested in Belarus’ tender next year for the construction of the country’s first nuclear power plant. Russian state railway company RZD has not ruled out the possibility of taking a stake in German state-owned railway Deutsche Bahn AG once the latter is privatised. French company Total and Russian independent natural gas producer Novatek (which is 20% owned by Gazprom) have reached an agreement on joint production. The conflict between Oleg Deripaska’s Ingosstrakh insurance company and the Czech company PPF Investments has taken on “political overtones”. The Czech Embassy in Russia is preparing to contact the Federal Financial Markets Service about the possible dilution of the foreign shareholder’s package. Western investors’ optimism about Russian markets is “unflagging.” Although the Russian market is currently “lagging behind other developing markets”, an additional $125 million has been put into funds investing in Russia, the second largest amount for the year. The Russian Soyuz space capsule has landed safely in Kazakhstan. The capsule was launched from Russian facilities in Baikonur, Kazakhstan. Following an increase in hacking, Russia has reportedly “become a leading source of Internet ills.”