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Today in Russian Business – June 26, 2008

Severstal entered a merger agreement with US producer Esmark after boosting its takeover offer by 13% to $775 million. Russia’s iron reserves, the largest in Europe, promise “a long future for iron mining”. Rosoboronexport’s military-technical cooperation with European companies has reached $120 million a year. “The quantity of agricultural land in Russia is shrinking: 23 million hectares of arable land have been abandoned since the end of communism.” Finance Minister Alexei Kudrin says a tax cut favored by cabinet rivals could hurt Russia’s ability to fund its nuclear deterrent. “Such a reduction of the VAT is an absolutely destructive decision,” he said. “Might [Russia] not use sovereign wealth, and especially giant state industries, to acquire political leverage?” Nitrogen fertiliser producer Acron is reportedly about to announce its intention to float on the London Stock Exchange. Food retailer X5 Retail Group has signed a $940 million deal to acquire Karusel hypermarket chain. Real estate empire AFI Development is looking to benefit from the credit crunch. First Deputy Prime Minister Igor Shuvalov says investment in transportation infrastructure for Moscow would require $212 billion, more than double the planned government spending for the project.