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Tatar-Bashkir Report: October 5, 2004

5 October 2004
Budget-Dependent Organizations Urged To Undertake Own Business Initiatives
Education Minister Reis Sheikhelislamov said on 27 September that Tatarstan s state-owned educational institutions are currently failing to raise sufficient revenues from commercial projects of their own, RFE/RL's Kazan bureau reported the next day. Earlier this year, Prime Minister Rustam Minnikhanov tasked all budget-dependant enterprises in his republic with expanding the number of services they offer to citizens in an effort to bring in additional revenue.

According to Health Minister Kamil Ziyatdinov, his ministry is likely to be the only one to meet the task, by contributing more than 45 percent of total amount of additional revenues brought in by Tatarstan's state-owned social-sector ventures. As Finance Minister Radik Giyzatullin told the ministers, by September 2004 such ventures had earned as much as 916 million rubles ($31 million) and less than 50 percent of that amount was used to help pay back wages to budget-sector employees.

Prime Minister Rustam Minnikhanov concluded the meeting by saying that directors of the state-owned social-sector ventures should be granted more leeway in managing the additional revenues they bring in. "Otherwise," he said, "people have no motivation to seek additional profits." Most of the extra revenues are reportedly spent by the local offices of related ministries in the regions and cities of Tatarstan.

Tatneft Shareholders Offered Emergency Meeting In Absentia
Tatneft's board of directors decided on 28 September to hold an early shareholders meeting in absentia to hold a vote on paying dividends on privileged shares in full and 67 percent on regular shares, RFE/RL's Kazan bureau reported the next day. The board voted to establish a committee on staff and revenues to prepare a list of recommendations for ensuring the stimulation of the company's personnel.

Also on 28 September, the "Vechernyaya Kazan" daily cited rumors about the possible sell-off of a 30 percent stake in Tatneft to the French oil company Total, something that reportedly caused a 6 percent rise of the company's shares on the New York Stock Exchange. Total reportedly declined to comment on the rumors, which led market analysts to discuss the prospects of the deal worth approximately $1.05 billion. However, the situation was later discovered to be a trick by Total to distract public attention from its purchase of a stake in another Russian fuel-sector company, Novotek.

Chally Muslim Leader Denies Rumors Of Extremist Religious Education
The head of the Chally Muslim community, Alfas Gaifulla, told reporters on 28 September that recent allegations of extremist religious activities in Tatarstan's second city "were not sufficient enough to comment on" as there were no Muslim organizations active there without his group's consent, RFE/RL's Kazan bureau reported the next day. He said that there were 12 Muslim congregations active in Chally, along with the local branch of the Kazan-based Islamic University of Russia as well as the Aq Mechet religious school. He emphasized that the Yoldiz and Darussalyam Muslim religious schools, once notorious for offering nontraditional Muslim education, are no longer active in Chally.

Tatneft's Management Practices Scrutinized
Due to the delayed confirmation of Tatneft oil company's official financial report for 2003 by an independent auditor, which is required under U.S. GAAP accounting standards, the company has failed to publish its consolidated financial report for the first half of 2004, Intertat reported on 29 September.

As a result, the company decided to publish a report in accordance with Russian accounting standards.

Tatneft's transactions are currently being inspected by Cannadis, the independent legal counsel of the Audit Committee under the oil company's board of directors. According to "Vechernyaya Kazan" on 28 September, the Standard & Poor's rating agency recently gave Tatneft a negative long-term credit rating due to "inefficient corporate management and lack of transparency."

Constitution Court To Consider Case Of Tatar Latin Script...
Russian Constitution Court on 5 October will consider an appeal from Tatarstan s State Council questioning the legality of a ban on Latin Tatar script imposed by the Russian State Duma in 2001, republican parliament speaker Farid Mukhametshin told reporters on 30 September in Saratov, RFE/RL's Kazan bureau reported. Mukhametshin said that the federal law obliging the use of Cyrillic script by all non-Russian languages in Russia "is a topic for serious discussion, and the Constitutional Court has to comment on this." He expressed his hopes that the process "follows the provisions of the European charter on ethnic minorities," which stipulates the right of every nation to freely choose its method of expressing its native language.

...Along With Claim Against Ethnic Education In Schools
Also on 5 October the Constitutional Court will consider the suit of Kazan resident Sergei Khapugin, who is suing Tatarstan's Education Ministry for introducing obligatory Tatar lessons in republican schools, RFE/RL's Kazan bureau reported on 30 September. Tatarstan's Supreme Court earlier rejected Khapugin's suit, claiming that the Education Ministry held no responsibility for the school program drafted according to the law on state languages passed by the republican parliament. The Russian court reportedly merged this case with the one on Latin Tatar script.

New Helicopter Model Presented In Kazan
The Kazan Helicopter Plant (KVZ) presented on 1 October its new model of helicopter, Mi-38, and "Kommersant-Volga-Urals" reported on 1 and 2 October. KVZ General Director Aleksandr Lavrentev told a press conference on 1 October that the aircraft will appear on the market no later than in 2008 and will be significantly cheaper than its foreign competitors, the Euripean EH-101 and American Sikorsky S-92, at between $9 million to $12 million.

The chairman of the Russian Air Forces' General Staff Military Scientific Committee, Valerii Volodin, Industry and Power Engineering Deputy Minister Valerii Voskoboinikov, and MVZ General Director Yurii Andriyanov arrived in Kazan to take part in a 20-minute flight demonstration of the helicopter.

At a press conference the same day, Prime Minister Rustam Minnikhanov said Tatarstan has agreed to pass a state-run stake in KVZ to a vertically integrated holding. He said representatives of Tatarstan and Russia will in turn be on the KVZ board of directors.

Kazan Aviation Plant Signs $1.5 Billion Contract
Proekt 3000 head Sergei Khokhlov and Kazan Gorbunov Aviation Plant (KAPO) General Director Nail Kheirullin have signed a $1.5 billion contract in Kazan for the delivery of 100 Tu-334A aircraft beginning in 2007, "Kommersant-Volga-Urals" reported on 1 October. The deal will not be finalized until government approval. The daily quoted an unidentified source at the Tupolev company as saying that a resolution will likely appear "in two or three weeks." The source said that under the contract, 12 airliners will initially be delivered in 2007 and then KAPO will assemble 20 aircraft a year. The source also said that Proekt 3000 has signed protocols of intent with 45 airlines for the lease of a total of 170 jets, including on in which Aeroflot would lease up to 50 aircraft.

The Tu-334, which was designed in the late 1980s, was certified in June. It can handle 102 passengers and has a range of 3,150 kilometers at the speed of 820 kilometers per hour. Proekt 3000 was established in June by the Tupolev company and the Cheboksary Uniinter-M to lease Tu-334s.

Compiled by Gulnara Khasanova

Newspaper Lists Rakhimov Among Undesirables
"Versiya" published on 27 September a list of governors who are supposedly "disagreeable" to the Kremlin. The newspaper speculated that Rakhimov could face dismissal because of corruption scandals and his image problems. The daily wrote that the Kremlin is looking for a "worthy" Bashkir candidate that could replace Rakhimov.

Bashkortostan To Face Unprecedented Budget Deficit
Bashkortostan's budget deficit is expected to total 2.5 billion rubles ($85.6 million) in 2005, Prime Minister Rafael Baidavletov told a government meeting on 27 September, RIA-Novosti reported the same day. The 2005 budget will be formulated under much more complex conditions than previously seen, and "we have never had such a budget deficit," Baidavletov said. The situation results from the reduction of the amount of revenues generated from the oil-production tax and transferred to the republican budget from 14.4 percent to 5 percent, of profit taxes from 19 to 17.5 percent, and the social-tax rate from 35.6 to 26 percent. According to the forecast, budget revenues will total 49.3 billion rubles while expenses will reach 51.8 billion rubles. Deputy Prime Minister and Finance Minister Airat Geskerov said at the meeting that 3 billion rubles will be allocated in the budget for increasing salaries by 20 percent; more than 10 billion rubles will be spent on education; 6.8 billion rubles on health care; 5 billion rubles on budgetary assistance to raions and municipalities, 2.35 billion rubles on housing and municipal services; 6 billion rubles on industry, energy and construction; and 3.1 billion rubles on social-policy measures.

Ufa Aviation Engine Maker Promotes Cooperation With Strategic Partners
The correspondence vote of an Ufa Motor Building Industrial Association's (UMPO) extraordinary shareholders meeting ended on 28 September in Ufa, "Kommersant-Volga-Urals" reported on 29 September. Shareholders considered a new charter and the passage of management to UMPO-Saturn Managing Company. The daily cited unnamed experts as commenting that the latter measure might result in redistribution of "centers of gravity" in the domestic aviation-construction industry.

One of Russia's leading aviation engine producers, UMPO was established in 1993 during the privatization of a former state-run company. Its sales in the first six months of 2004 totaled 4.6 billion rubles ($158 million). Venture's major shareholders include the Bashkir Property Ministry with 25 percent and a so-called golden share, the Ufa Machine Building Plant (10 percent), Moscow Deposit Clearing Company (34 percent), and Moscow United Finances (12 percent). The outlet also cited an unidentified source at UMPO as saying the prospects for integration between UMPO and Saturn and Salyut, with which UMPO has cooperated since Soviet days in the production of Su fighter engines, will be on the agenda. UMPO Strategic Development Director Pavel Krivnoi told the daily that the voting "does not yet mean UMPO's inclusion into any holding or merger with any company." He added, however, that the company promotes integration, since "competition is ruinous for the branch."

Swiss Diplomat Apologies For July 2002 Midair Collision
Swiss Ambassador to Russia Erwin Hofer extended official apologies to the Bashkir leadership in connection with a midair collision in July 2002 involving a Bashkir Airlines jet, RIA-Novosti reported on 29 September, citing the Bashkir presidential press service. Swiss air-traffic controllers were blamed for the crash of a Bashkir Airlines Tu-154 and a cargo jet operated by DHL, resulting in the deaths of 71 people, many of them children from Bashkortostan. During his meeting with Bashkir President Murtaza Rakhimov and Prime Minister Rafael Baidavletov, Hofer said that "on behalf of the Swiss president and government, I would like to bring official apologies for this tragic event. We have taken all measures to ensure such crashes will not occur in the future. We also hope all the issues linked to this tragedy will be resolved in the nearest future and to the interest of the [victims'] parents." The ambassador expressed his condolences to relatives of the crash victims.

...Discusses Cooperation Projects With Bashkir Leaders
Negotiating issues of further development of cooperation, the sides listed bilateral projects in health care, environment protection, the use of natural resources, and youth policy, and the construction of a settlement for refugees financed by the Swiss government. Rakhimov said Bashkortostan is interested in developing cooperation in high-tech fields; specifically, in setting up joint ventures in Bashkortostan using Swiss technology in its agricultural, health care, and other sectors. Baidavletov said the sides could cooperate in developing tourism for downhill skiing in Bashkortostan. Hofer said a group of Swiss children would like to visit Bashkortostan and invited a Bashkir delegation to Switzerland. Bilateral trade turnover between the Bashkortostan and Switzerland grew from $9.5 million in 1999 to $96 million in 2002. In 2003, it totaled $70 million.

Swiss Diplomat Opens Construction Of Migrant Settlement In Ufa
Swiss Ambassador to Russia Erwin H. Hofer on 30 September took part in laying the first stone of a village for migrants in Ufa's Nagaevo residential area, Bashinform reported the same day. The project is being implemented under an agreement signed between the Swiss and Bashkir governments in late 2003. The project's senior engineer, Bahadyr Khudayarov, told the news agency that the Ufa administration allocated 3 million rubles ($103,000) for the construction while the Swiss side will contribute 500,000 francs ($400,000) to the project provided it is completely transparent. The project is to provide residence to about 550 people. The Bashkir project is the Swiss government's first in Russia and it will be repeated across Russia if it proves successful.

Supreme Mufti Skeptical About Afghan Elections
Speaking to reporters on 2 October, Ufa-based Muslim Spiritual Directorate of Russia Chairman Telget Tajetdin expressed his concern that Afghanistan remains a source of narcotics in Russia and a hotbed of international terrorism, Bashinform reported the same day. Tajetdin said that the upcoming presidential election "is predetermined beforehand" and could "result in a new...fratricidal war." Tajetdin said "elections from one side are a good thing, but from the other side, those who thrust their system of governing [on others] without taking into account customs and traditions of peoples deserve to be condemned." He called on international organizations, specifically the United Nations, to interfere in the situation. Most of all, he said, Afghanistan needs peace and concord and only then people can decide its future.

Compiled by Gulnara Khasanova

Marii El's Markelov Runs For Reelection
Marii El President Leonid Markelov joined on 28 September the republic's presidential race, Regnum reported the same day. Markelov visited the republic's Central Election Commission and presented documents for registration. Marii El presidential elections are scheduled for 19 December and the campaign began on 28 September.

State Sells Its Stake In Magnitogorsk Metallurgy Plant
Russian Prime Minister Mikhail Fradkov signed a resolution on selling this year a state-owned 17.8 percent stake in Chelyabinsk Oblast's Magnitogorsk Metallurgy Plant (MMK), and "Kommersant-Daily" reported on 4 and 5 October, respectively. An unidentified source in the Russian Economic Development Ministry told that the state can earn some $500 million from the deal. MMK General Director Viktor Rashnikov is considered to be the likely buyer, while the Mechel steel group, which owns 16 percent of MMK shares, is also expected to be interested. MMK is Russia's leading metallurgy producer.

Hostage-Taking Drama In Penza Oblast...
A 10-year-old girl, a hostage-taker, and a police officer were killed in an operation to release the girl taken hostage in Penza Oblast's Vadinsk village on 29 September, Regnum reported the next day. A local 46-year-old unemployed man, Vladimir Yurin, took his niece Lena hostage after he quarreled with relatives. After the girl's mother called the police, Yurin refused to hold negotiations and began to attack the girl with a knife. When police subsequently stormed the house, Yurin was killed along with the police officer. The girl was hospitalized and died later from her injuries.

...And In Saratov
Aleksei Bandorin, the chairman of the Gazneftbank board of directors, was killed on 3 October as he was trying to release his brother Yevgenii who had been kidnapped, ITAR-TASS and Saratovbizneskonsalting reported on 4 October, citing a source in the Saratov Oblast police department. Yevgenii Bandorin, the head of Yugtransgaz medical services, was kidnapped on 21 September in Saratov. The kidnappers demanded a $1 million ransom. In a attempt to capture the criminals during the supposed handover of the ransom, Aleksei Bandorin and a police officer were killed. The kidnappers escaped with the $1 million and Yevgenii Bandorin's body was found close to where the incident occurred.

Explosions In Yekaterinburg Said To Be Part Of Criminal War
Two explosions in Yekaterinburg on 4 October have been linked to a dispute among criminal groups, reported the same day. The first explosion occurred at 4 a.m. outside the Lotto shop and damaged its doors and broke windows. The second blast that took place half an hour later near the entrance of the Baldinini shop caused similar damage. There were no reported injuries. The shops are reportedly owned by ethnic Armenians.

Compiled by Gulnara Khasanova