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Business Watch: October 30, 2001


30 October 2001, Volume 1, Number 16
OIL & GAS
ROSNEFT AIMS TO INCREASE CAPITALIZATION (18 October)
Rosneft oil company hopes to increase its capitalization two- or threefold within two years, the deputy general director of Rosneft-Perspektiva, Olga Tankova, told RosBusiness Consulting. Foreign analysts estimate the company's current capitalization at $4 billion. "The higher the capitalization, the higher the hypothecation value of a company and, accordingly, [the higher] its potential for receiving loans and investments," Tankova stated. Rosneft-Perspektiva has worked out the main provisions of Rosneft's strategic development plan until 2020. Priority projects and their assignment to specific years are being determined. Commenting on the Russian government's decision to shift responsibility for state regulation of product-sharing to Rosneft, Tankova said that a specialized Rosneft department to regulate product-sharing agreements (PSA) is being formed. A group of managers will be formed to supervise specific projects. According to Tankova, Rosneft and Zarubezhneft, together with the government, are preparing a set of documents specifying the entire mechanism for state regulation of PSAs. (TSK)

ROSNEFT TO OPEN SALES COMPANY IN THE KHABAROVSK REGION (19 October)
Rosneft intends to open a new sales company in the Khabarovsk region, RosBusiness Consulting reported. According to Sergei Bogdanchikov, the company's CEO, the creation of a new sales network is related to successful modernization and an increase in the volume of production at Rosneft's Komsomolsky Oil Refinery. According to Bogdanchikov, in the initial stage the sales company will be able to sell 300,000-400,000 tons of oil products per year in the Khabarovsk region. In the future, Rosneft will increase capacity to 500,000 tons per year. Bogdanchikov pointed out that Rosneft intends to build 35 to 40 gas stations in that region at an investment cost of about $30 million. (TSK)

LUKOIL BUYS 85 PERCENT OF NORSI-OIL REFINERY (19 October)
Russia's top oil producer, LUKoil, bought an 85 percent stake in the Norsi-Oil refinery in a state privatization auction, Reuters reported. The starting price for the two stakes, one of 45.36 percent and another of 40 percent, was fixed at $11.6 million and $10.6 million, respectively. LUKoil bought the stakes for $13.6 million and $12.1 million, beating out six other bidders including Russia's sixth-largest oil company, Sibneft. LUKoil, which produced 78 million tons of oil in 2000, will now have four refineries in Russia, one in Ukraine, one in Bulgaria, and one in Romania. The company has repeatedly said it needs to boost refining capacities as its oil production was growing due to new acquisitions. Norsi-Oil processed some 4.5 million tons of oil in 2000 and 5 million tons in the first nine months of 2001. Most of the crude was shipped by LUKoil. (TSK)

TATNEFT SIGN COMMERZBANK CREDIT AGREEMENT (23 October)
Tatneft oil company has signed a loan agreement with Germany's Commerzbank. Tatneft will receive a two-year, $125 million credit. Commerzbank is the organizer of the loan, the press service of Tatneft reported to RosBusiness Consulting. The credit is secured by contracts with Tatneft on oil supplies. This is the first long-term credit given to Tatneft since a debt-restructuring agreement was signed in October 2001. The money will be spent on the development of the company's production facilities. (JMR)

BUSINESS ALERT
RUSSIA TO AUCTION BONDS IN NOVEMBER (23 October)
Russia will offer 12 billion rubles of OFZ bonds and six billion rubles of GKO treasury bills for auction on 21 and 28 November to swap with OFZ #25030, a Finance Ministry official said. Alexander Chumachenko, deputy domestic-debt department head, said the Finance Ministry will announce the price of the bond buyout the day before the auctions, Reuters reported. Investors would only be able to participate using funds from the buyout. The OFZ 25030, whose volume amounts to 31.8 billion rubles, matures on 15 December. Deputy Finance Minister Bella Zlatkis told reporters that the Finance Ministry plans to hold another six-month GKO auction in December. However, she said no final decision has been taken, adding that the Finance Ministry will consider the November auctions results before making a decision. (JMR)

CHEVRONTEXACO TO JOIN BTC? (23 October)
A senior official from the Turkish Energy Ministry on 23 October said ChevronTexaco is likely to join the Baku-Tbilisi-Ceyhan (BTC) pipeline project to transport 1 million barrels a day of Caspian oil to Western markets, Reuters reported. "Chevron was waiting for the merger with Texaco to be completed in order to focus on the Baku-Tbilisi-Ceyhan (BTC) pipeline project," he said. "Now that their merger has been completed, we expect the new company to enter into the sponsor group [for the project]." The two companies merged earlier this month to create the second-largest oil firm in the U.S. after Exxon Mobil and the fifth-largest oil concern in the world. "Chevron had already been interested in the pipeline project because of their huge Kazakhstan oilfield-development investment," another Turkish oil official said. Analysts said Chevron's participation in the project will secure volumes from its Kazakh Tengiz fields that will help make the pipeline project commercially viable. ChevronTexaco officials in Turkey were not immediately available for comment. The Energy Ministry source said other companies such as TotalFinaElf of France and Alberta Energy of Canada were interested in participation in the sponsor group for the $2.9 billion pipeline project. (JMR)

BASHKIRSKAYA PROJECT REVIVED (22 October)
The Russian Atomic Energy Ministry has signed a decree renewing construction of the Bashkirskaya energy plant. Construction on the project began in 1980, but was stopped in 1990. Completion is planned for 2020, while in 2010 the first power-generating unit will be finished. At present the cost of one power unit is about $750 million. The federal budget will grant funding for the project. (JMR)

RUSSIAN BUSINESS ABROAD
ARMENIA GIVES MORE COMPANIES TO RUSSIA (18 October)
Armenia is ready to give a number of its electronic and power enterprises to Russia in order to settle its debt, RosBusiness Consulting reported. The list of such enterprises includes JSC Mars, Yerevan Scientific Research Institute of Mathematical Machines, Yerevan Scientific Research Institute of Automated Management Systems, Yerevan Scientific Research Institute of Materials Science, JSC Orbita, and Razdanskaya steam power plant. Russia may also receive a stake of shares in the Armenian electrical-supply network, said the Russian Agency for Management Systems, which held negotiations on the debt payment. The issue was previously discussed during the visit of Russian President Vladimir Putin to Yerevan. According to the ARKA agency, Armenia's debt to Russia is about $94 million. (JMR)

ECONOMIC NEWS & BUSINESS STATISTICS
INVESTMENTS IN THE LENINGRAD REGION RISE (18 October)
The volume of direct investments among industrial enterprises in the Leningrad region, excluding credits, will reach $400 million by the end of this year, the deputy chief of the economy and investments committee of the Leningrad regional administration, Aleksandr Meshcherekov, told RosBusiness Consulting. This is 15 percent more than in the previous year. For the first nine months of 2001, 120 investment applications were submitted to the administration for approval, 20 of which have been signed so far. The investments were concluded mostly with Russian investors. Experts are now working on investment projects worth over $1.5 billion, Meshcherekov said. These projects mainly concern transport, machinery construction, auto manufacturing, woodworking industries, and non-ferrous metal works. At the same time, Meshcherekov stressed there is a lack of investment projects in the telecommunications industry. (TSK)

PUTIN PREDICTS 5.5-5.7 PERCENT GDP GROWTH (19 October)
Russian President Vladimir Putin predicted growth of between 5.5 percent and 5.7 percent in Russia's gross domestic product (GDP) in 2001, compared with 8 percent in 2000, Reuters reported. Speaking to business leaders on the sidelines of the Asia Pacific Economic Cooperation (APEC) forum, he said foreign-exchange and gold reserves were at a record level. Putin noted that forecast 2001 GDP growth, the broadest measure of a country's economic health, was originally put at 4 percent but has risen to 5.5 percent to 5.7 percent. Russia has benefited from higher-than-expected oil prices in 2001. (TSK)

RUSSIA'S PPI AND UNEMPLOYMENT SLIP (22 October)
The number of people unemployed in Russia stood at 5.7 million, or 8.1 percent of the workforce, at the end of September, compared with 8.2 percent in August, Reuters quoted the State Statistics Committee as saying. Russia's producer price inflation slipped 0.1 percent in September compared with unchanged prices in August, the committee said. (TSK)

UPCOMING CONFERENCES
WORLD ECONOMIC FORUM TO MEET IN MOSCOW (24 October)
The World Economic Forum will convene in Moscow at Marriott Grand Hotel on 29-30 October, Reuters reported. President Putin will address the forum on Russia's investment climate at the first major gathering of international business figures since the 11 September hijacked airliner attacks on the U.S. Russian Prime Minister Mikhail Kasyanov, Finance Minister Aleksei Kudrin, and a host of other top Russian government officials and business leaders will participate in the forum. Organizers say 300 to 400 participants and current and potential investors have pledged to attend, despite a widespread fear of air travel following the attacks in the U.S. "We have taken all security measures, as is our usual practice, to protect all the participants coming to the Moscow meeting," said Claudia Gonzalez, a spokeswoman for the forum. "But fortunately we don't expect any kind of [protest] movement, and we think in Russia nothing is likely to happen." (TSK)

POLITICAL ECONOMY
DUMA PASSES 2002 BUDGET IN SECOND READING (19 October)
The Russian State Duma voted to adopt the 2002 budget in the second of four required readings, Reuters reported. A total of 297 deputies in the 450-seat chamber voted in favor of the document, while 126 voted against, with one abstention. The draft is Russia's first budget with a surplus, set at 1.63 percent of gross domestic product, and a fund to accumulate the reserves for a 2003 foreign-debt payment peak. (TSK)

RUSSIA TO GUARANTEE 370-MILLION EUROS IN EBRD PROJECTS (18 October)
The Russian government will guarantee 370 million euros' ($411 million) worth of European Bank for Reconstruction and Development (EBRD) loans in 2002, Reuters reported. Economic, Trade and Development Minister German Gref stated that the EBRD would extend a total of 800 million euros next year. "We are guaranteeing projects which are the state's responsibility," he said. The guarantees will cover five projects, including the construction of bridges and a dam in St. Petersburg, a traffic-management system in the Baltic Sea, and the restoration of the Ostankino television tower in Moscow, which was partially destroyed by fire last year. Gref said the guarantees will be confirmed when the 2002 budget is approved. He added the EBRD plans to extend to Russia $1 billion annually starting 2003. Some 40 percent of this money will be covered by state guarantees. (TSK)

RUSSIA HOPES TO REPAY PARIS CLUB EARLY (23 October)
Russian Finance Minister Aleksei Kudrin told Reuters that Russia and the Paris Club of creditor nations could reach a deal on early repayment of some of the debt inherited by the country from the Soviet Union by the end of 2001. "I do not exclude that this could happen before the end of the year," Kudrin said. The early repayment of the roughly $40 billion debt could be paid by the deliveries of goods and investment schemes. "We have discussed the possibility of widening instruments to cut 2003 risks," Kudrin said after a meeting with Paris Club Chairman Jean-Pierre Jouyet, referring to a debt-repayment peak of about $19 billion due in 2003. "We have touched upon the question of an early repayment of the Soviet debt." (JMR)

SELEZNEV BELIEVES 2002 BUDGET IS STRONG (22 October)
Russian State Duma speaker Gennadii Seleznev said the 2002 budget is "the strongest over the last years," ITAR-TASS reported. "We must adopt it this year. Otherwise, the budget sector will not get the promised pay raise," he warned. Seleznev highlighted the following peculiarities of the 2002 budget: the financing of higher-education [institutions] will increase, the salaries of teachers will grow, [and] force and security structures will get better funding. Border guards will get additional funds to build security infrastructure on the border with Georgia and Tajikistan and to buy weapons. In addition, funds will be allocated for the development of the antiterrorist center. "The fight against terrorism is a topic for many years, and these measures should be provided for in the budget," Seleznev said. He also noted that humanitarian aid to Afghanistan "has not affected the budget unless uncontrolled flows of refugees start to pour first into Tajikistan and from there to Russia." (JMR)

BELIEVE IT OR NOT
RUSSIA'S MATRIOSHKA GETS A MUSEUM (18 October)
Russia's most famous souvenir, the rotund, rosy-cheeked matrioshka doll, now has its own museum, Reuters reported. Tucked in the back of Moscow's Museum of Popular Art, the Matrioshka Museum houses hundreds of brightly colored dolls, with dozens of smaller figures nestling inside them. Made out of lacquered birch wood, Matrioshkas traditionally portray smiling, pretty faces of scarved peasant women. In more recent years, however, matrioshkas have been painted to represent everyone from John Lennon to former Soviet President Mikhail Gorbachev. During the Cold War, the matrioshkas' hidden figures became a powerful symbol of the secretive Soviet society for many Western diplomats and commentators. The museum steers clear of unorthodox dolls depicting glum-faced Soviet leaders or popular rock bands widely available at Moscow souvenir stalls, but tourists looking to follow the changes will be able to spot numerous Father Christmases, Peter the Greats, and even a representation of the last of the Romanovs, Russia's ill-fated royal family. (TSK)

NIYAZOV HONORED AGAIN (19 October)
A Turkmen state-owned rug-weaving company has created a 300-square-yard carpet to celebrate the 10th anniversary of Turkmenistan's independence, AP reported. The carpet, called "The 21st Century: The Epoch of the Great Saparmurat Turkmenbashi," will be displayed in Ashgabat's Rug Museum. The name indicates an honor to the country and to President Saparmurat Niyazov, known as Turkmenbashi or Father of the Turkmens. Niyazov has led Turkmenistan since 1985, when the Central Asian nation of 5 million people was still part of the Soviet Union. He has resisted moves toward democracy and economic reforms. His nation remains impoverished despite vast oil and gas reserves. He has suppressed opposition and created a massive cult of personality around himself. Niyazov has built palaces, mosques, and airports bearing his name and renamed cities in his honor. His face decorates the currency, while towns and villages display many portraits and statues of the leader. Niyazov became Turkmenistan's leader for life in December 1999 after the People's Council and parliament approved an indefinite extension of his term. Earlier this year, Niyazov said he will step down by the end of the decade. (TSK)

WHO IS IN? WHO IS OUT?
NEW GAZPROM-MEDIA BOARD OF DIRECTORS APPOINTED (25 October)
A general meeting of Gazprom-Media, an arm of Russia's gas giant Gazprom, elected a new board of directors, RosBusiness Consulting reported. Aleksandr Dygal was elected chairman and Boris Jordan was appointed director general of Gazprom-Media, replacing Aleksandr Kokh, who recently resigned. According to the development strategy of Gazprom, media companies within Gazprom-Media will be sold after their price is evaluated and a decision on their method of sale is made. The latter is expected to be made before 15 January 2002. Until the media companies are sold, Gazprom will continue financing them. According to a decision of the board of directors, Jordan will manage the assets of Gazprom-Media and take measures to stabilize the financial situation of Gazprom's mass-media sources. Jordan will remain NTV's director general. (TSK)

WHAT�S UP? WHAT�S DOWN?
RUSSIA IN 81ST PLACE OF GLOBAL CORRUPTION REPORT (19 October)
"Corruption is not just a collection of criminal activities in Russia, it is a perverse system of governance," says a new report on global corruption prepared by Transparency International. The Global Corruption Report 2001's harsh assessment of Russia, which experts say may affect foreign investment, is backed by a compilation of surveys that rank levels of corruption in countries worldwide, "The St. Petersburg Times" reported. Russia's rankings vary from poor to abysmal. It takes 81st place between Pakistan and Tanzania. In Moscow alone, more than 15 percent of the 9-million-strong population had to deal with bribery in 1999, according to the International Crime Victims Survey, which looks at households' experience of crime, the police, crime prevention, and feelings of insecurity. Still, Andrew Somers, president of the American Chamber of Commerce in Russia, said the findings must be taken with a grain of salt. "Often these reports overgeneralize, contain outdated information and do not reflect the dynamics that could be under the surface that are driving corruption in one way or another." (TSK)

EXPORT DUTY ON GOLD TO BE ABOLISHED (23 October)
Russia's government commission on protective measures in foreign trade decided on 23 October to abolish the current 5 percent export duty on gold, "Futures World News" reported. The decision was made because Russian banks had been avoiding the tax, exporting gold via countries that have a duty-free trade regime with Russia, primarily Belarus. Apart from Belarus, Russia has duty-free trade regimes with Kazakhstan, Kyrgyzstan, and Tajikistan. The duty was imposed in May 1999 as a means to boost budget revenues. Russian banks have been showing a high level of interest in gold, mainly in its export. Last year, Russian banks exported about 65 to 70 tons of gold, and a further rise in the exports is expected this year. The high level of banking activity in the gold sector has stimulated Russia's gold production, which is expected to reach 153 tons this year, up from 144 tons in 2000. The decision still needs Cabinet approval. (TSK)

PROFILE
NIKOLAI AKSENENKO: OLD PLAYER ON A NEW TEAM
On 19 October, Interfax reported sensational news: the Russian Prosecutor-General's Office had charged Railway Minister Nikolai Aksenenko with abuse of office. Investigators suggested that Aksenenko stay in Russia during the investigation; Aksenenko refused to sign any of the documents, including one barring him from leaving Moscow. At the same time, rumors spread that Aksenenko would resign. In an interview with NTV television, the Railway Ministry's PR director, Aleksandr Vershinin, denied the rumors. He admitted that Aksenenko had "talks" at the prosecutor's office. However, he stressed, the conversation concerned primarily the ministry's economic activities. Prosecutor-General Vladimir Ustinov told "Kommersant" that, "Interrogation at the prosecutor's office does not prove guilt. The court will finalize the matter. I think this issue is too early to discuss." According to "Kommersant," the investigation was launched after the Audit Chamber, headed by Sergei Stepashin, sent a special report on the Railroad Ministry's activities to President Vladimir Putin and Prime Minister Mikhail Kasyanov.

The charges against Aksenenko allege that he authorized the illegal expenditure of $2.3 million in 1997, evaded some $374 million in taxes in 2000, and diverted funds to build houses and buy luxurious cars for individuals unrelated to his ministry, UPI reported. Other charges against the Railroad Ministry that frequently appeared in the Russian media include, along with misuse of funds; colossal expenditures for Transtelecom's fiber-optic communication lines; and huge discounts granted to forwarder companies including Unitrans, a business partner of Finartis, which is headed by Aksenenko's son. According to "Vremya Novostei," earlier this year, Putin told Aksenenko, "Your international tariff is used by rogues." Some 80 percent of the Railroad Ministry's profits come from cargo-transit tariffs. Half comes from the import cargo tariffs defined by the ministry itself. "Vedomosti" has reported that the Railroad Ministry first states an unrealistic tariff and then reduces it by up to 80 percent through consultations and negotiations. Some experts state that the smart use of profits from these "negotiations" could create a separate budget of close to $1 billion.

The rise of Aksenenko's star came in 1998 and 1999. With great success in commercializing the Railroad Ministry and consolidating control over its huge financial flows, Aksenenko became one of the most powerful oligarch ministers. His close ties with Boris Berezovskii and Roman Abramovich only advanced his political rise. After the resignation of then-Prime Minister Yevgenii Primakov, Aksenenko was named a potential candidate for his vacant position. Russian State Duma Speaker Gennadii Seleznev stated that in a phone call, former President Boris Yeltsin named Aksenenko as a candidate for prime minister to be introduced in the Duma. However, instead of Aksenenko, Yeltsin promoted Stepashin's candidacy in the Duma. Polit.ru speculates that the name of powerful Aksenenko was used to threaten the deputies, while Stepashin was a "more digestible" compromise. Aksenenko assumed the post of a first deputy prime minister. Using his ties with Yeltsin's "inner circle," Aksenenko formed the entire Stepashin cabinet. Later, Stepashin accused Aksenenko of expediting Stepashin's resignation. It is possible that in retaliation, Stepashin's Audit Chamber prepared a report prompting the current investigation into Aksenenko and his ministry's activities.

In 1999 and 2000, Aksenenko took part in Kremlin political events that included the pro-Unity and pro-Putin campaigns. Combining state functions with business activities, his "commercial" ministry became a gigantic holding. The Railroad Ministry promoted its activities through public-relations events. This was common for the oligarchs, but not for governmental bodies. Aksenenko showed his real power when his interests overlapped with those of German Gref, the minister of economy, trade and development. All of Gref's attempts to streamline the inefficient railroad system failed. While Gref's ministry tried to break up the monopolies of the Unified Energy Systems and Gazprom, it silently agreed to authorize the monopoly of the Railroad Ministry. Gref was not strong enough to resist Aksenenko's power.

Polit.ru offered two alternative theories concerning Aksenenko's scandal. The first is "a la Miller." According to this theory, Putin's team is trying to get rid of the unwanted oligarch minister. Under this scenario, an unknown person, most likely from St. Petersburg and with a KGB background, might replace Aksenenko. This will not imply the ministry restructuring. It will rather imply a change in management more to the Kremlin's liking. The second theory offered by polit.ru is derived from the controversies in the "oligarch pool." Recently, Aksenenko has had serious strain in his relations with aluminum companies, which are seeking to privatize the entire infrastructure of the industry. The ultimate goal of the aluminum magnates is to create an empire with electricity, transportation, and metal-processing capabilities, polit.ru stated. If the first theory is correct, Aksenenko is likely to resign within a few days. If the second scenario proves true, the prosecutors' accusations will slowly dissolve and Aksenenko will hang on to his post. Polit.ru concludes that a combination of these two scenarios is more likely. Today, other oligarch ministers from Yeltsin's "inner circle" look archaic in Russia's new political landscape. They should heed the warning given to Aksenenko.

IN FOCUS
LUKOIL-GARANT VERSUS TV-6. A NEW TWIST TO THE SCANDAL
On 23 October, LUKoil head Vagit Alekperov finally responded to self-exiled Boris Berezovskii's offer to buy LUKoil's shares in the TV-6 television network, "Kommersant" reported. Specifically, Berezovskii offered LUKoil $10 million for 15 percent of TV-6 shares. Alekperov said that, instead of selling his 15 percent, he is willing to buy Berezovskii's 75 percent in TV-6. Berezovskii called Alekperov's offer "an exquisite form of racket."

Tracking the history of the events, "Kommersant" (a Berezovkii-owned newspaper) reported that on 16 October Berezovskii addressed an open letter to a LUKoil subsidiary, supplementary pension fund LUKoil-Garant, and offered $10 million for the TV-6 shares. In this letter, Berezovskii referred to a conversation which allegedly occurred between Alekperov and a senior official in the Russian government. According to Berezovskii, Alekperov said in that conversation that the recent conflict between LUKoil-Garant and TV-6 is "exclusively economic in nature." The conflict dates back to 27 September when a Moscow arbitration court ordered the liquidation of TV-6 in accordance with a claim by minority shareholder LUKoil-Garant. Many believe that the court's decision was purely political and is aimed at strangling freedom of speech in Russia. Berezovskii quoted Alekperov as saying, "If Mr. Berezovskii pays $7 million to $8 million for our packet [of shares], this will be beneficial for LUKoil's shareholders and the conflict will be resolved." Forwarding his offer to Alekperov, Berezovskii concluded, "Any decision of yours will clarify the situation because it will answer the question of whether politics or business is behind your wish to liquidate TV-6." On 23 October, "Kommersant" asked Berezovskii if he could name that senior official. Berezovskii said only that "this person would prefer to remain unnamed until a certain moment, however, Mr. Alekperov knows very well who I am talking about."

On the same day that Berezovskii published the open letter to Alekperov, he also sent another letter to Mikhail Berezhnoy, director general of LUKoil-Garant fund. In this letter, Berezovskii called on Berezhnoy to decide by 26 October whether or not he will sell the 15 percent stake in TV-6. "If I do not receive an answer by the above stated date, I will assume the right to consider it as a rejection on your behalf," Berezovskii said in his letter. Alekperov decided not to wait until the deadline and stated on 23 October that he is ready to buy Berezovskii's 75 percent stake in TV-6. He noted that it is too early to discuss a price -- "at least until all matters on this television company are settled in court." Furthermore, by late October, TV-6 is expected to file an appeal against the decision of the Moscow arbitration court on liquidating the network. In an earlier interview with "Kommersant," Berezhnoy stated that he might change his mind and revoke his claim on TV-6's liquidation before the court decision takes effect.

Commenting on Alekperov's response not to sell his shares in TV-6, Berezovskii stated, "I believe this is not a rejection, but an exquisite form of racket on behalf of LUKoil. I am confronted by a choice: sell 75 percent of my shares or the company will be liquidated. I want to stress one more time -- to me money is not a measure of TV-6's value. And I am not going to sell my shares of TV-6 to Vagit Yusufovich [Alekperov]."

This "economic" conflict obviously smells of high politics. On the one hand, the liquidation of TV-6 will be a knockout to Berezovskii, whose political and business standing in Russia is fading. On the other hand, the liquidation of TV-6 will have a negative effect on the independent media and result in a loss for the general public. Having lost another independent TV channel, the people of Russia will have to develop their opinions based on media coverage controlled by the government. This will be a blow for the development of civil society in Russia.

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