Yuzhno-Sakhalinsk - Tokyo - new air route between Russia and Japan - inaugurated

Yuzhno-Sakhalinsk - Tokyo - new air route between Russia and Japan - inaugurated

28.05.2009, 07.37

YUZHNO-SAKHALINSK, May 28 (Itar-Tass) - A new air route has been inaugurated between Russia and Japan. Flights from Yuzhno-Sakhalinsk to Tokyo and back will be made by TU-204 and A-330 airliners of the Vladivostok-Avia Company (VAC). The first flight was made on May 26, the VAC press service announced on Thursday.

Airliners from Yuzhno-Sakhalinsk will land at Tokyo's Narita airport. Flights are to be made twice a week. The duration of the flight is two hours.

The VAC also carries out the transportation of people from Russia's Far East to the Japanese cities of Niigata and Narita, China's Beijing and Harbin, and South Korea's Seoul.

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Russian fighter jets worse than those of USA and Europe?
28.05.2009 Source: Pravda.Ru URL: http://english.pravda.ru/russia/economics/107643-russian_fighters-0

The failure of the deal to sell Russian IL-78 fuel tankers to India once again raised the issue of the competitive ability decrease of Russian arms and military technique on the world market. Russia’s "Оboronka" (the defense industry) is facing yet harder problems in handling export contracts and servicing clients of earlier transactions. “It is impossible to improve the situation”, our expert concludes.

According to Russian and foreign media sources, India refused to buy Russian Il-78 fuel tanker aircraft. Indian officials motivated this decision with the non-conformity of planes to the customer’s requisitions. The spare parts supply and the after-sales service were also mentioned.

“After the collapse of the Soviet Union, Russia alternated its approach to the handling of the defense business. Nowadays we are facing problems with spare parts, the support of manufacturers and the delays conditioned by the centralized structure of their defense corporations”, Fali Homi Major, the Commander-in-Chief of Indian Air Force told RIA Novosti. Instead of Russian planes India is likely to buy Airbus A330 MRTT manufactured by the European company EADS.

This is not the first juicy scandal connected with Russia’s defense exports. “The most well-known case is the scandal with Algeria when they refused to take the already procured MiG aircraft and sent them back to us. There are plenty of scandals with India in relation to various types of arms. It concerns naval weapons in the first place”, said Mr. Alexander Khramchihin of the Institute of Political and Defense Analysis in an interview to Bigness.ru.

Recollecting the year 2007 with the outbreak of scandal with 15 MiG-29CMT fighters shipped to Algeria . It appeared that the jet fighters, which were sold as brand new, contained “second-hand” parts. According to some information, the units from the planes with several hundreds of flight hours were used when assembling those aircraft.

One can recollect habitual claims from India which is one of our key partners in the field of defense cooperation. We remind the endless complaints with The Gorshkov aircraft carrier which was designed for India. The budget for its refurbishment was mounting endlessly which enormously irritated our client. Perplexity was also connected with the problems in the modernization of the ship.

Technical problems haunted Russia in the transfer of frigates, which India ordered from Russia . Air defense missile systems stubbornly failed to hit air targets. In many scandal situations (e.g. in the case of airplanes returned by Algeria) some observers incriminate the international backroom deal.

However, politically motivated relations with India could only take place in times of the Cold War, but definitely not today. “Earlier India oriented itself to Russia during the Cold War, and there were truly political factors there”, says A.Khramchihin.

“Today India can buy weapons from whoever it wants to. The market also became more abundant than before. In his words everything in this sphere is explained by the quality including India’s denial. This is the signal to us that we produce low-quality weapons”, he affirms.

Formerly, competitive advantage of the Soviet military technique was in its low price (sometimes even dumping), its simplicity and reliability. However, the Russian military hardware, still being simple, started losing its former reliability. Nevertheless, the prices on it were growing against all odds.

The answer is in the high inflation rise of the defense sphere surpassing the average price growth in the industry as well as the degradation of the military-industrial complex. Whereas the amount of the state defense contracts and foreign contracts is growing, the national defense industry still fails to regain its capability to tackle the large-scale production of military equipment.

“Old factories which produced hardware in sufficient quantities and quality in the course of many years are not coping with the assignment of today”, said Mr. Ruslan Pukhov, of the Center of Strategy and Technology Analysis told Bigness.ru.

The staff deficit still persists – “money is there but people are not”. ”The situation is impossible to amend”, grumbles A.Kramchihin.

If the situation does not change (according to military experts it will be next to impossible to reverse it) Russia will be losing its share in the market of arms and military equipment. These tendencies have already started to take shape. Thus. according to studies of Stockholm International Peace Research Institute (SIPRI) and Bonn International Converse Center (BICC) Russia is reducing its share on the world arms market.

The turnover on the world arms market in 2004-2008 has increased by 21 percent as compared to previous five-year period (1999-2003). At that time the increase in sales of Russian arms was only 14 percent. The figures testify that our share in the arms market started to curtail.

Sergey Malinin

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Russian fighter jets worse than those of USA and Europe?
28.05.2009 Source: Pravda.Ru URL: http://english.pravda.ru/russia/economics/107643-russian_fighters-0

The failure of the deal to sell Russian IL-78 fuel tankers to India once again raised the issue of the competitive ability decrease of Russian arms and military technique on the world market. Russia’s "Оboronka" (the defense industry) is facing yet harder problems in handling export contracts and servicing clients of earlier transactions. “It is impossible to improve the situation”, our expert concludes.

According to Russian and foreign media sources, India refused to buy Russian Il-78 fuel tanker aircraft. Indian officials motivated this decision with the non-conformity of planes to the customer’s requisitions. The spare parts supply and the after-sales service were also mentioned.

“After the collapse of the Soviet Union, Russia alternated its approach to the handling of the defense business. Nowadays we are facing problems with spare parts, the support of manufacturers and the delays conditioned by the centralized structure of their defense corporations”, Fali Homi Major, the Commander-in-Chief of Indian Air Force told RIA Novosti. Instead of Russian planes India is likely to buy Airbus A330 MRTT manufactured by the European company EADS.

This is not the first juicy scandal connected with Russia’s defense exports. “The most well-known case is the scandal with Algeria when they refused to take the already procured MiG aircraft and sent them back to us. There are plenty of scandals with India in relation to various types of arms. It concerns naval weapons in the first place”, said Mr. Alexander Khramchihin of the Institute of Political and Defense Analysis in an interview to Bigness.ru.

Recollecting the year 2007 with the outbreak of scandal with 15 MiG-29CMT fighters shipped to Algeria . It appeared that the jet fighters, which were sold as brand new, contained “second-hand” parts. According to some information, the units from the planes with several hundreds of flight hours were used when assembling those aircraft.

One can recollect habitual claims from India which is one of our key partners in the field of defense cooperation. We remind the endless complaints with The Gorshkov aircraft carrier which was designed for India. The budget for its refurbishment was mounting endlessly which enormously irritated our client. Perplexity was also connected with the problems in the modernization of the ship.

Technical problems haunted Russia in the transfer of frigates, which India ordered from Russia . Air defense missile systems stubbornly failed to hit air targets. In many scandal situations (e.g. in the case of airplanes returned by Algeria) some observers incriminate the international backroom deal.

However, politically motivated relations with India could only take place in times of the Cold War, but definitely not today. “Earlier India oriented itself to Russia during the Cold War, and there were truly political factors there”, says A.Khramchihin.

“Today India can buy weapons from whoever it wants to. The market also became more abundant than before. In his words everything in this sphere is explained by the quality including India’s denial. This is the signal to us that we produce low-quality weapons”, he affirms.

Formerly, competitive advantage of the Soviet military technique was in its low price (sometimes even dumping), its simplicity and reliability. However, the Russian military hardware, still being simple, started losing its former reliability. Nevertheless, the prices on it were growing against all odds.

The answer is in the high inflation rise of the defense sphere surpassing the average price growth in the industry as well as the degradation of the military-industrial complex. Whereas the amount of the state defense contracts and foreign contracts is growing, the national defense industry still fails to regain its capability to tackle the large-scale production of military equipment.

“Old factories which produced hardware in sufficient quantities and quality in the course of many years are not coping with the assignment of today”, said Mr. Ruslan Pukhov, of the Center of Strategy and Technology Analysis told Bigness.ru.

The staff deficit still persists – “money is there but people are not”. ”The situation is impossible to amend”, grumbles A.Kramchihin.

If the situation does not change (according to military experts it will be next to impossible to reverse it) Russia will be losing its share in the market of arms and military equipment. These tendencies have already started to take shape. Thus. according to studies of Stockholm International Peace Research Institute (SIPRI) and Bonn International Converse Center (BICC) Russia is reducing its share on the world arms market.

The turnover on the world arms market in 2004-2008 has increased by 21 percent as compared to previous five-year period (1999-2003). At that time the increase in sales of Russian arms was only 14 percent. The figures testify that our share in the arms market started to curtail.

Sergey Malinin

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Scientists predict men’s extinction again
26.05.2009 Source: URL: http://english.pravda.ru/science/tech/107624-men_extinction -0

An Australian scientist told the RCSI’s Annual Out­reach Lecture that the Y chromosome, which determines gender, is dying out, and men could go with it.

Prof Jennifer Graves warned the genetic make-up of the chromosome has declined significantly over the years, remarking the Y chromosome has lost all but 45 of the 1,400 genes that were on it 300 million years ago.

While the outlook is not great for the future of men, other species have survived the decline of the gender-defining Y chromosome and SRY gene.

“The good news is that certain rodent species have no Y chromosome and no SRY gene, yet there are still plenty of healthy males... some other gene must have taken over the job, and we’d like to know what that gene is.

“We already know that there are several candidate genes out there that could take over from SRY. However, which one takes over is sheer chance, imn.ie reports.

"It’s even possible that two or more different sex-determination systems based on different genes could arise two different populations,” Prof Graves said.

Pravda.Ru previously published a number of articles about male extinction.

“According to Sergey Shnurov, a frontman of the popular Russian punk group Leningrad, a real man “got balls, a stubbly chin, and he smells of tobacco and hangover. Too true, the criteria are unlikely to fit a guy with carefully manicured fingernails and conspicuously gelled haircut, the one who walks past the shop windows leaving a trail of Givenchy perfume. The guy looks like a metrosexual.

I am not talking about those who opt to get laid while traveling by metro. The term “metrosexual” is a combination of two words, metropolis (Gk – a chief city) and sexual. Not unlike any other noticeable phenomenon, metrosexuality is often accompanied by myths and speculations.

“It the good old 19th century, nobody thought a dandy could be gay.”

Click here to read the full text of the article.

In another article Pravda.Ru reported about the extinction of Russian men in some regions of Russia.

Russian Ministry for Health Care reported the statistics concerning death rate among able-bodied men in Russia. As it turned out, Russian men of this age category die 4 times oftener than women of the same age category. As for other age categories, the death rate among men is also higher than among women. The average life expectancy of Russian men makes up 58-59 years today, which is 14-15 years less than the life expectancy of Russian women or men from developed countries.

Researchers from the Moscow State University state that life expectancy in Russia at the end of the 19th – at the beginning of the 20th centuries was 15-20 years less than life expectancy in Europe. We should give the Soviet power credit for its efforts as a result of which infant mortality and mortality caused by infections reduced before WWII. The positive effect was favorable for men particularly. Indeed, although the number of newborn boys is higher than the number of newborn girls everywhere in the world, but infant mortality among boys is always higher.

Male losses caused by the Great Patriotic War have not been yet calculated precisely. By the mid-1960th, the life expectancy in the Soviet Union reached approximately the same level that in the West (Soviet men lived for 64.5 years on average and European and North American men lived for 66 years). But later the death rate among Soviet able-bodied men considerably increased because of heart diseases, cancer and other injuries.

Demographers explain the problem with the poor level of Soviet medicine and ignorance of Soviet men concerning their health. On the other hand, the Soviet Union was one of the first countries that started total clinical examination of workers, students and school pupils for the sake of successful prophylaxis. Later, the system was successfully applied in the West.

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Belarus refuses to accept Russian $0.5 bln loan in rubles
18:0628/05/2009

MINSK, May 28 (RIA Novosti) - Belarus has turned down a new loan tranche from Russia worth $500 million, insisting that it be denominated in dollars rather than Russian rubles, Finance Minister Alexei Kudrin said on Thursday.

"We offered Belarus $500 million, as a new tranche of the Russian loan, in Russian rubles, not in U.S. dollars. Belarus refused," Kudrin said, adding that Russia was still continuing talks with its ex-Soviet neighbor on the terms of the loan tranche.

Belarus received the first $1 billion of a $2 billion loan from Russia in November 2008. In March 2009, the ex-Soviet republic received another $500 million.

Kudrin said that Belarus was currently experiencing problems with its gold and foreign exchange reserves.

"Today the exchange rate of the Belarusian ruble is being maintained at a set level. For this purpose, Belarus is spending its gold and foreign exchange reserves. In the first quarter, Belarus spent over $2 billion in gold and foreign exchange reserves to keep the exchange rate stable. This is more than one third of the country's gold and foreign currency reserves," Kudrin said.

Kudrin said if Belarus spent as much in the next quarter then it would run out of foreign currency by the third quarter of 2009.

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Nissan to open car factory in Petersburg on June 2

16:2928/05/2009

MOSCOW, May 28 (RIA Novosti) - Nissan will officially open a car factory in St. Petersburg on June 2, the Japanese car giant said on Thursday.

"The official opening ceremony is planned for June 2. Nissan's plant was built in a new industrial zone in the northwestern part of St. Petersburg," Nissan said in a statement.

Investment in the Nissan factory is estimated at $200 million. The new facility will employ 750 people and have the capacity to manufacture 50,000 cars per year.

The Nissan Teana will be the first model to be produced at the St. Petersburg plant.

Nissan earlier said that the availability of a qualified workforce, a suitable location, a favorable business climate and support from the city's authorities were the factors behind the company's choice of St. Petersburg.

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Russia, Cuba agree to renew joint nuclear research

Eduard Pesov

17:4627/05/2009

MOSCOW, May 27 (RIA Novosti) - Russia and Cuba have agreed to renew their cooperation in nuclear research with Cuba's Nuclear Energy Agency, head of Rosatom Sergei Kiriyenko said on Wednesday.

The announcement came during an awards ceremony in Moscow where Cuban scientific aide Fidel Angel Castro Diaz-Balart, Fidel Castro's son, received the Russian Kurchatov Award for his work in the nuclear sphere.

"On behalf of the entire nuclear division, I present the highest award...the Kurchatov Award, to Fidel Castro Diaz-Balart. Today, we will renew our cooperation at [Cuba's] nuclear research center that will allow us to develop a number of directions in modern science," Kiriyenko said.

Russian-Cuban nuclear cooperation was halted in 1992 after the construction of an atomic plant in Cuba was frozen.

Diaz-Balart, 59, is a member of Cuba's Academy of Sciences and studied theoretical physics in the Soviet Union. He has published numerous scientific papers in Cuba, Spain and Russia.

In the 1980s, he headed Cuba's nuclear agency at the time that the Soviet Union and Cuba started the construction of a nuclear plant. The agency now works in a number of areas in nuclear physics, including biotechnology and the development of nanotechnology.

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Moldova’s rulers turn up heat on business

By Thomas Escritt

Published: May 28 2009 23:04 | Last updated: May 28 2009 23:10

For most Moldovans, last month’s political crisis is over. The ruling Communist party has been working to consolidate its election victory and the opposition demonstrators, who made headlines by storming the presidential palace and parliament, are now mostly quiet.

But for Gabriel Stati the crisis is anything but finished. The 33-year-old son of one of Moldova’s richest businessmen is languishing in jail seven weeks after his arrest at the height of the protests.

Prosecutors accuse Mr Stati of fomenting a coup and backing the violent demonstrations that caused considerable damage to public buildings and to Moldova’s international reputation.

But Anatol Stati, Gabriel’s father, claims his son was arrested as part of a campaign by Vladimir Voronin, Moldova’s veteran president, to “poach by using criminal methods the Stati family assets”.

The arrest of the flamboyant Mr Stati, who has a taste for expensive cars and restaurants, highlights the business battles that are deeply entwined with politics in Moldova. Most of the 4.4m inhabitants of Europe’s poorest country live from farming, labouring or working abroad. But a handful of entrepreneurs have made big fortunes through domestic monopolies, property deals and sometimes through trade between Chisinau and the breakaway territory of Trans Dnestr.

Political connections can be crucial, not least for putting pressure on rivals. Ion Sturza, a former prime minister who is now a business executive, believes people around Mr Voronin may be attacking the older Mr Stati through his son because they want his business. “Kids are the weakest point for parents – to attack our son is to attack everything,” he says.

Mr Voronin, who soon has to stand down as president after serving two terms, has this month attempted to ensure his successor is a political ally.

Anatol Stati’s main asset is Ascom, an oil services company with oil extraction rights in central Asia, Iraq and Sudan. He moved the business out of Moldova a year ago, blaming the political environment. Shortly afterwards he departed for neighbouring Romania and has not returned to Moldova. He said in a statement at the time: “Lately, Ascom . . . has been subject to increasingly strong pressure with the aim to destabilise its activity in the Republic of Moldova.”

But Gabriel Stati rejected his father’s pleas to join him abroad. He lived life to the full in Chisinau and attracting attention from gossip columnists, with his Hummer and Rolls-Royce and penchant for fancy restaurants and bars. A close associate of Anatol Stati says: “I asked his father, a serious businessman, why he let his son behave like a playboy and he just said: ‘I can’t control him. He’s just young and silly.’ ”

A letter allegedly sent on October 6 last year by Vladimir Voronin to Nursultan Nazabeyev, the Kazakh president, which was leaked to Moldovan opposition newspapers in March, suggests Mr Voronin was targeting Anatol Stati.

In the letter, whose authenticity has not been denied by either government, Mr Voronin allegedly urges his Kazakh counterpart to pay “serious attention” to Anatol Stati, whom he accuses of using income from Kazakh assets to carry out “blood-tainted business” in Sudan, causing “severe damage” to Moldova’s reputation. “He runs and finances propagandistic campaigns and in non-transparent ways funds political parties oppositional to the current government,” Mr Voronin allegedly writes.

Although most of Anatol Stati’s lucrative oil interests were outside Moldova and beyond the reach of state authorities, Mr Stati was concerned that his son’s presence in the country remained an Achilles’ heel, according to an associate of Mr Stati. Shortly before the elections in April, the younger Stati made himself even more prominent when he plunged into politics and urged Moldovans to vote for the opposition parties.

Just after the election on April 5, Gabriel Stati fled to the Ukrainian port of Odessa, where he was detained on a Moldovan arrest warrant. According to Vladislav Gribincea, his lawyer, a request for political asylum in Ukraine was not assessed, and within a week Mr Stati and a companion were driven to the border and handed to the Moldovan authorities.

Today, he languishes in Chisinau’s prison number 13. Mr Gribincea said: “The charges were politically motivated and manifestly unfounded. . .  Mr Stati did not commit this crime and the context of his arrest is the hostile relations between the president of Moldova and Mr Stati’s father.”

Mr Voronin’s office declined to comment, but the interior minister denied Mr Stati’s arrest was politically motivated. A justice ministry spokeswoman said the charges against Anatol Stati related to his alleged organisation of the events of April 7 – the post-election protests – and were not politically motivated.

Valeriu Prohnitchi, a consultant at Expert Group, a Chisinau think-tank, believes that a tide of state-mandated investigations into private businesses amounts to a pattern.

“There are signs of increasing pressure on businesses,” he said. “It is not just about the Stati family and Ascom.” He points to Rompetrol, the Romanian-owned petrol retailer, which was recently fined $2m for company law violations. Mr Sturza, the former prime minister, who runs its operations in Moldova, says: “We have five groups of investigators in the building from morning to evening”.

Vladimir Filat, leader of the opposition Liberal Democrat party that was runner-up in the elections, claims state authorities used the courts to gain control of a conference centre he owned until last year. “We were accused of irregularities in the privatisation 10 years ago and we lost the business through a court ruling, not even being invited to the final phase of the trial,” Mr Filat said. An appeal is pending to the European Court of Human Rights.

Three weeks ago, Anatol Cislaru, part-owner of Carmez, a meat processing business, was thrown in prison for alleged securities law violations, a claim that has given rise to scepticism. “This is a pure dispute between shareholders. Supposedly he bought too aggressively, but securities law in Moldova is non-existent,” Mr Sturza says.

Whatever Gabriel Stati’s fate, his father’s company faces an uncertain future. Ascom’s Kazakh subsidiary has some $430m (€308m, £269m) in debts due to bondholders, and has been badly hit by falling oil prices. But for the moment, Anatol Stati’s most pressing problem is trying to extract his son from jail.

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Credit Suisse begins London property sale

By Daniel Thomas

Published: May 29 2009 00:03 | Last updated: May 29 2009 00:16

Credit Suisse has begun a sale of its London property estate that could raise as much as £500m (€572m) as part of a strategy to focus on core banking operations.

The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf, with indications that its landmark tower at Cabot Square is also likely to be brought to the market before the end of the year.

In total, the sales of the two buildings – 20 Columbus Courtyard and 1 Cabot Square – could raise more than £500m, depending on the terms set by the bank on the length of its occupancy and rent.

The move comes as other banks and companies look to sell off non-core assets, with property advisers forecasting that several billion pounds of sale and leaseback deals will be completed in the next few months.

HSBC, which occupies a neighbouring building on Canary Wharf, is conducting the largest transaction, with just weeks to go before the bank is expected to pick a buyer for its $2bn global headquarters portfolio.

The sales by the banks come in spite of the slump in the property sector, which has left some advisers questioning the timing of the offerings given a drop of almost half since the peak in 2007.

The move by Credit Suisse to sell the real estate was part of a longstanding strategy to focus on core banking operations, people close to the bank said. They said the bank was under no pressure to sell if it did not find sufficient value.

Credit Suisse has a tier one capital ratio – a measure of a bank’s financial strength – of more than 14 per cent, towards the higher end of the banking sector.

Credit Suisse would not comment directly on the sale process, but added: “Credit Suisse regularly reviews its global property portfolio in order to ensure we are maximising the efficient use of capital and resources. A sale and leaseback of our Canary Wharf buildings in London is one option that we review on a regular basis.”

HSBC, meanwhile, is in talks to sell three of its office buildings in London, New York and Paris in a deal that is expected to raise about $2bn. Potential buyers are said to include a number of wealthy families, who are interested in the fixed income from the rents on offer, as well as sovereign wealth funds and other institutional buyers.

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Qatar to buy $4.1bn in real estate from banks

By Robin Wigglesworth in Abu Dhabi

Published: May 29 2009 03:00 | Last updated: May 29 2009 03:00

Qatar has offered to buy real estate investments worth up to $4.1bn from local banks, as the government steps up efforts to support the domestic financial sector against the fallout from the credit crunch.

Though Qatar's property sector is healthier than in many other Gulf countries, the market has weakened this year, and analysts expect non-performing loans to rise, weighing on banks' earnings.

The operation aims to "support the real estate sector . . . and allow banks to continue to play their vital role" in the country's development, Sheikh Hamad bin Jassem al-Thani, Qatari prime minister said yesterday. Qatar's abundant wealth - it is the world's largest supplier of liquefied natural gas - has allowed it to actively support its banks and wider economy during the financial crisis.

Qatar is expected to report one of the world's highest economic growth rates this year and next, thanks to a near doubling of gas exports and continued government spending.

The small kingdom was one of the first Gulf countries to intervene to prop up its banking system.

The Qatar Investment Authority, the sovereign wealth fund, bought 5 per cent stakes in all local banks last year and is expected to take another 5 per cent this year.

In March, the government said it would buy the local equity portfolios of banks, worth an estimated $6bn, to prevent mark-to-market investment losses from hitting banks.

Since then, the Doha Securities Market has surged 41 per cent, paring its year to date loss to 4.3 per cent.

Qatar's $78,000 gross domestic product per capita is the highest in the world, according to the International Monetary Fund, and the kingdom had, on average, reported a 15 per cent real economic growth rate for the past five years, Moody's said in a recent report.

Qatar's banking sector is the fourth largest by assets of the six Gulf Co-operation Council countries, with total assets of $110bn as of the end of March, according to Shuaa Capital, a Dubai-based investment bank.

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Kazakh Banker Goes on Lam as Defaults Hurt Investors (Update1)
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By Laura Cochrane and Emma O’Brien

May 28 (Bloomberg) -- From his secret hideaway, BTA Bank’s former Chairman Mukhtar Ablyazov says Kazakhstan’s government caused the default of the nation’s largest lender. Kazakh prosecutors want him for allegedly embezzling the bank’s money.

The biggest losers in the dispute may be investors who poured into the former Soviet state as crude oil rose to a record and the economy grew 10 percent annually for eight years. Now, with petroleum prices down and the recession starving banks of credit, Kazakhstan’s image as a beacon of rising capitalism is being shattered by three banking defaults in six weeks.

“Once you lose the confidence of investors, people don’t trust you anymore,” said Harald Oberkirch, a travel-company operator on the Spanish island of Majorca, who bought $300,000 worth of BTA’s bonds as part of a more than $1 million investment in Kazakh bank debt. “Bankruptcy is near.”

Ablyazov, 46, fled in February before the government issued an arrest warrant, alleging he stole from the bank and laundered the money through loans to fictitious companies. Bloomberg spoke to him on a call organized by his London-based public-relations firm, Hudson Sandler Financial & Corporate Communications. He wouldn’t say where he was.

“All stakeholders in BTA, including international lenders, shareholders, customers and employees, have been victims of the Kazakhstan government’s criminal recklessness,” Ablyazov said. “The tragedy is that these huge losses could and should have been avoided. All the foreign markets are closed to Kazakh companies and will remain closed to them for up to five years.”

BTA Takeover

President Nursultan Nazarbayev’s government initiated a takeover of BTA in February, using cash from the state’s National Wellbeing Fund Samruk-Kazyna to buy a 75.1 percent stake. That sparked charges and counter-charges between the administration and the bankers who were pushed out. Nikolai Galikhin, deputy head of Nazarbayev’s press office, declined to comment on Ablyazov’s allegations.

The crisis in Kazakhstan is a legacy of banks that piled on debt as the economy soared and couldn’t repay when credit dried up. Gross domestic product shrank 2.2 percent in the first quarter. Foreign investors are drawing back capital as their favorable terms with lenders evaporate, said Kieran Curtis, who helps manage $800 million in emerging-market debt at Aviva Investors Ltd. in London, including Kazakh bonds.

Ratings Report

Kazakh banks must repay almost 40 percent of their $41 billion in debt in the next 12 months, data compiled by Bloomberg show. Moody’s Investors Service said last week that it may cut the ratings of five Kazakh financial companies on concern the government won’t help stave off default. The benchmark stock index dropped 57 percent in the past year.

BTA bondholders have been waiting more than a month for details of a debt restructuring. In addition, Almaty-based Alliance Bank, Kazakhstan’s fourth-largest lender, and Astana Finance, owned in part by the government, have stopped making creditor payments.

“Kazakhstan was the great hope for pro-Western investments,” said Lauren Goodrich, a senior Eurasian analyst at Stratfor, a global intelligence company in Austin, Texas. “Now those aspirations are being picked off one by one, and the country is looking less and less like a great hope. It’s completely changing.”

Investment in Kazakhstan increased 25 percent last year, to $10.7 billion, the fifth-biggest gain among 21 developing nations tracked by New York-based CEIC Data Co. Only South Africa, Hungary, Russia and India grew faster.

Oil Play

“The appeal was simple,” said Aivaras Abromavicius, a Moscow-based portfolio manager for East Capital Asset Management, who plans to hold on to the firm’s one percent stake in BTA. “With oil at $100 and rising, it was very clear that anyone involved in the production of that commodity would benefit massively.”

And they did. Almaty-based BTA sold $350 million of U.S. dollar-denominated 10-year bonds at 4.59 percentage points over Treasuries in January 2005 compared with 3.17 percentage points for high-yield or emerging-market debt at the time, according to Merrill Lynch & Co. indexes. The company’s credit rating was lifted three times from 2000 to 2006 by Standard & Poor’s to as high as BB, two levels below investment grade. The KASE Index rose 26-fold from its creation in 2000 to the end of 2007.

Kazakhstan also benefited because its investment regulations were considered “head and shoulders” above those of regimes in other developing economies, said Ian McCall, who helps manage $800 million of emerging-market debt at Argo Capital Management Ltd. in London.

Accounting Rules

Most Kazakh banks have reported results since 2003 that conform to rules devised by the London-based International Accounting Standards Board, according to Deloitte & Touche LLP. Russia introduced such rules for commercial lenders in 2004 and has delayed a full transition to the standard until 2011, Deloitte said.

While regulations were catching up to Western standards, the country’s banks were also embracing a “culture of cheap credit,” said Chris Weafer, chief strategist in Moscow at UralSib Financial Corp., Russia’s third-biggest private bank.

“They promoted the place aggressively, they adopted these European standards and they tried to get rid of the Soviet baggage,” he said. “People were looking at Kazakhstan too superficially.”

A nation of more than 15 million people wedged between China and Russia, Kazakhstan has been ruled since Soviet days by pro-Russian Nazarbayev, 68. His Nur Otan party won 88 percent of the vote in parliamentary elections in August 2007, when not a single opposition candidate garnered a seat.

‘Pervasive Corruption’

The U.S. State Department’s report on human rights for Kazakhstan in March 2008 criticized the regime for “severe limits on citizens’ rights to change their government,” as well as “pervasive corruption.”

The Kazakh government added BTA’s former chief executive officer, Roman Solodchenko, to its wanted list in March, and prosecutors said they identified 32 suspects in the case. Ablyazov said the charges against him were fabricated.

Ainagul Shakirova, an Astana-based spokeswoman for Prime Minister Karim Masimov, declined to comment. Azamat Kenzhe, a spokesman for the Agency for Financial Supervision, wasn’t available for comment.

Ablyazov has faced government charges before. He was sent to prison in 2002 on allegations that he enriched himself as energy minister. He was pardoned 10 months later by Nazarbayev after allegedly being beaten and abused in prison, London-based Amnesty International said in a report.

Riding the Wave

Nazarbayev’s government originally sold BTA to Ablyazov for $72 million in March 1998. The banker reclaimed the helm in 2005, two years after his jail term ended. He built up the business by riding the wave of foreign money that was attracted to Kazakhstan after the discovery of the Kashagan oil field in 2000, the biggest new field found in 30 years.

Assets grew to about $25 billion in 2008, according to Kazakhstan’s financial regulator, from $7.5 billion in 2005, when BTA was known as Bank TuranAlem. It raised more than $10 billion in foreign debt from 2003 to 2008, according to data compiled by Bloomberg.

BTA became a “victim of its own P.R.,” UralSib’s Weafer said. “The problem is that Kazakhstan is still an emerging market and developing markets still have bad practices underneath the visible reforms.”

Shareholder Suits

The bank reported a loss of 261.5 billion tenge ($1.7 billion) in the first quarter. New CEO Anvar Saidenov told bondholders on a conference call April 28 that it had uncovered speculative derivatives transactions that may have overstated assets on the balance sheet.

BTA shareholders KT Asia Investment Group BV, based in Amsterdam, and Vienna-based GEM Equity Management AG filed complaints against the government with arbitration bodies of the United Nations and World Bank, alleging the state takeover violated international investment treaties and seeking $3 billion in compensation.

Marek Randma, portfolio manager at Helsinki-based Evli Fund Management Ltd., whose Evli New Republics Fund has 644 shares in BTA, says the firm holds its stake because “Kazakhstan’s main investment case -- its abundant resources -- is still intact.”

The country controls an estimated 3.2 percent of the world’s oil reserves, according to BP Plc.

Kazakhstan’s eight-stock KASE Index added 34 percent in the past month, the fifth best-performing global benchmark. S&P took the country’s credit rating off “negative” on May 8, removing the threat of a cut to a non-investment grade ranking.

Government Investment

Nazarbayev’s government has put about $5 billion into the banking system, said Kairat Kelimbetov, head of Samruk-Kazyna. The fund will await BTA’s debt-restructuring due in June before deciding whether to inject more into the lender, he said.

“Banks have clearly over-borrowed in the boom times,” Grigori Marchenko, National Bank of Kazakhstan governor, said in an interview in London. “Investors were fully aware about some problems that the Kazakh banking sector was facing, but they still pumped a record amount of money in Kazakhstan.”

Kazakhstan is seeking funds from South Korea, Abu Dhabi and Russia to stabilize its banking and energy industries, according to Samruk-Kazyna. The fund is in talks to sell part of its BTA stake to Moscow-based OAO Sberbank, Russia’s biggest lender, Kelimbetov said. Sherbank wants the fund to remain a shareholder in BTA, he said in Astana today.

BTA’s downfall is rippling through the economy.

Anargul Birzhanova, an assistant hotel manager in the capital of Astana, has held off opening a savings account because it is “very frightening to deposit money now.”

“In my neighborhood in the Astana suburbs, I haven’t heard recently about anyone who was able to get a bank loan,” said Birzhanova, 23. “We feel the panic.”

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Russia Diamond Monopoly Seeks to Avoid Market Flood (Update1)
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By Maria Kolesnikova and Ellen Pinchuk

May 28 (Bloomberg) -- Russia will avoid flooding the world diamond market, as it did in the 1990s, with the stocks it has been building up since demand slumped last year, the nation’s monopoly producer ZAO Alrosa said.

“The situation is completely different and the mentality changed a lot,” Chief Executive Officer Sergei Vybornov said in an interview. “Nobody wants to destroy the market.”

More than a decade ago, Russia began offloading rough, or uncut, diamonds as its need for hard currency became acute, leading to a rift with distributor De Beers. This time, the state and Alrosa will coordinate to avoid a repetition of events that “crushed the market for a very long time,” Vybornov said.

Polished gem values have fallen by an average 31 percent since peaking in August, according to PolishedPrices.com, as the global economic slowdown prompts consumers to curb spending on luxury goods. Gem Diamonds Ltd., the operator of the Letseng mine in Lesotho, said this month that first-quarter diamond prices collapsed 52 percent from a year earlier.

State-owned Alrosa suspended sales to the market last year, instead shipping gems to government depository Gokhran, Vybornov said on May 26. As a result, the company pared output by about 4 percent, he said, in contrast with De Beers’s 91 percent cut in the first quarter. This year, in a sign of improving conditions, it plans to offer about two-thirds of production to the state.

Other producers are also anticipating a rebound.

Resuming Sales

De Beers, the world’s biggest diamond producer, has resumed operations at a joint venture in Botswana that produces a fifth of global supply after suspending output in February. Gem Diamonds CEO Clifford Elphick said prices rose by “low single- digit percentages” at recent sales, while Petra Diamonds Ltd. chief Johan Dippenaar said declines had stopped.

Alrosa is resuming sales of rough diamonds to the market this month, Vybornov said, with as much as $1 billion going to 15 companies in Antwerp by the end of the year.

That may spur a turnaround in the Belgian city, which handles most of the world’s diamonds, after imports tumbled 45 percent in the first four months. Exports also fell 30 percent, according to the Antwerp World Diamond Centre trade group.

“Prices and sales appear to be stabilizing as consumers realize that the sky has not fallen in,” Avi Paz, president of the World Federation of Diamond Bourses, said in an e-mailed statement from Antwerp yesterday. More than 1,500 international diamond companies have their headquarters in the city in an area called the Diamond Square Mile, which has four diamond bourses.

Seeking Influence

Alrosa may gain influence over the diamond market as a result of Russia’s increased holdings of gems, and buy mining companies that aren’t able to survive independently, including some that may be listed in London and Toronto, Vybornov said.

“It would be a good time for sure to look at possible mergers and acquisitions, but we need first to get a clear vision for the sales,” he said.

“We will have these stocks, huge stocks, after the crisis,” he added. “We will play a definitely much more important role than before.”

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ECB’s 500-Euro Note Lures Cocaine Smugglers to Europe, DEA Says
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By Steve Scherer

May 28 (Bloomberg) -- Cocaine traffickers are targeting Europe because prices are higher, the currency is stronger and it’s easier to ship profits home using 500-euro ($693) bills, according to the U.S. Drug Enforcement Administration.

“There’s a big push on the part of Central and South American crime groups to increase trafficking to Europe, where they get a higher price per kilo,” Russell Benson, the DEA’s regional director for Europe and Africa, said in an interview in Rome. “The European Central Bank’s printing of the 500-euro note is an issue. It’s an attractive point for drug traffickers.”

A million dollars in $100 bills weighs about 22 pounds (10 kilograms), while $1 million in 500-euro bills at the current exchange rate of about $1.38 per euro weighs about 3.5 pounds, Benson said. The price of a kilo of cocaine in Europe can be more than double that of the more saturated U.S. market, he said. While a kilo of cocaine may cost $20,000 in California, it goes for as much as 35,000 euros ($48,543) in Europe.

The global cocaine market generates $320 billion in revenue annually, the United Nations Office of Drugs and Crime estimates. Italian anti-organized crime group Libera said in January the market may be more than triple the size of the UN figure. Cocaine is shipped to Europe, where Benson says demand is increasing, from Central and South America by organized-crime groups that operate similarly to the Sicilian Mafia.

Colombia

The purchasers then ship the cash back, often the same way the drugs were transported. The purple 500-euro notes with drawings of 20th-century architecture are increasingly surfacing on the streets of Colombia, the world’s biggest cocaine- producing country, Benson said.

“The 500-euro bill is the same size as bills that existed before the euro,” ECB Executive Board member Lorenzo Bini Smaghi said in Rome on April 3, dismissing criticism that it favored crime.

The Frankfurt-based ECB said the size of its banknotes was reviewed in 2005. It will be evaluated again “in the next few years,” though the “denominational structure of the euro banknotes will remain unchanged,” ECB spokesman Niels Buenemann said in an e-mail.

Six of the 16 nations that share the euro have always used large-denomination bills, Buenemann said. By issuing the bills, the ECB is “satisfying demand for these denominations.” Making more smaller notes to replace bigger ones would “lead to higher production and processing costs,” he said.

The number of 500-euro bills in circulation has risen 30 percent since 2006 through the first quarter of this year, compared with a 14 percent increase in the number of 50-euro bills. Of the 747 billion euros in circulation, 36 percent is in the form of 500-euro bills.

Europe’s biggest bill is turning up more and more in busts, Benson said, pointing to a 2005 raid by the DEA and Spanish police in Barcelona, Spain. Police recovered 5.5 million euros in bulk currency ready to be shipped to Mexico -- much of it in 500-euro notes.

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生産、持ち直す兆し　４月鉱工業生産5.2％プラス

　経済産業省が29日発表した4月の鉱工業生産指数（速報値、2005年＝100）は前月比5.2％上昇の74.3と、1953年3月以来、約56年ぶりの上昇率を記録した。輸出の底入れに加え、在庫調整が進んだことなどが理由。一方、総務省が同日発表した4月の完全失業率（季節調整値）は5.0％と、前月よりも0.2ポイント上昇。有効求人倍率（同）も0.46倍と前月を0.06ポイント下回って過去最低に並んだ。生産が持ち直しに向かう一方、雇用情勢の悪化は続いている。

　鉱工業生産指数は2カ月連続の上昇。生産水準は依然低いものの、5、6月もプラス予想になっており、製造業の生産活動は上向き始めている。経産省は鉱工業生産の基調判断について「持ち直しの動きがみられる」として、前月の「停滞」から変更。上方修正は07年8月以来になる。(14:20)

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4月の有効求人倍率、過去最低水準に　完全失業率は5％台に

　生産に持ち直しの動きがみえる一方で、実体経済悪化の影響が雇用に及んできた。4月の完全失業率（季節調整値）が悪化したことに加え、厚生労働省が29 日発表した4月の有効求人倍率（同）も1999年6月に記録した過去最低水準に並んだ。失業者が増える一方で、企業の雇用吸収力が弱まり、雇用情勢の悪循環が強まっている。

　失業率は15歳以上の働く意欲がある人のうちで全く職に就いていない人の割合。5％台に乗せたのは2003年11月以来、5年5カ月ぶりになる。完全失業者数は前年同月比71万人増の346万人。増加幅は過去最大だった。(14:20)

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信金・信組の区分撤廃　金融庁検討、競争通じ再編促す

　金融庁は信用金庫と信用組合の業務規制上の垣根を撤廃する方向で検討に入る。中小・零細企業などに顧客を限定しているそれぞれの枠組みを一本化したうえで、新しい金融サービスを提供できるよう規制を緩和する案が軸となる見通しだ。業態を超えた競争を通じ、経営体力の弱い信金・信組の淘汰・再編を促す。規模の拡大などで経営改善が進めば、地域経済への資金供給の円滑化を後押しすることになりそうだ。

　金融審議会（首相の諮問機関）が29日に示す、信金・信組の将来展望をまとめた報告書の素案に盛り込む。素案は信金・信組の経営環境について「他業態との競争も激しくなる可能性があり、長期的にみて信金と信組が個別業態として成立し得ない」と指摘。そのうえで「別の制度として維持する意義・必要性は必ずしも強くない」とし、業務形態を抜本的に見直す必要性を示す。(07:40)

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鋼材価格、家電向けも1.5万円下げ　パナソニック、新日鉄と大筋合意

　新日本製鉄が家電大手と進めていた2009年度の鋼材価格交渉は、08年度より1トンあたり1万5000円前後（十数％）の値下げで決着する見通しとなった。パナソニックと28日までに大筋合意したもよう。既にトヨタ自動車とも1万5000円の値下げで合意しており、自動車に続いて電機業界でも調達コストが下がる。

　家電用鋼材についてはほかの電機大手とも同水準で決まる見通し。日本鉄鋼連盟の鋼材受注統計などによると、08年度の家電用鋼材の国内出荷は約240万トン。減産幅にもよるが、これらから推計すると家電業界の国内鋼材調達コストは300億円程度減るとみられる。今回の合意は国内向けで、輸出用については交渉を続ける。(07:00)

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自動車金型のオギハラ、タイ企業の傘下に

　自動車用プレス金型大手のオギハラ（群馬県太田市、渡辺弘明社長）が、タイの自動車部品大手タイサミットの傘下に入ったことが28日までに分かった。複数の関係者によると3月に約10億円の第三者割当増資を実施し、タイサミットが84％超の株式を取得したもようだ。渡辺社長は続投するが実質的な経営権はタイサミットに移った。

　オギハラは自動車の販売不振に伴う受注減による財務の悪化で今年2月、中国での合弁事業相手のタイサミットと資本・業務提携。タイサミットは大和証券ＳＭＢＣプリンシパル・インベストメンツが保有していたオギハラの株式約46％のうち36％を取得し、筆頭株主となっていた。(07:00)

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米ヒルトン、２泊以上で半額に　アジア・太平洋の46ホテルで

　国際ホテルチェーン大手の米ヒルトン・ホテルズは、6月から2泊以上利用すると宿泊料金を半額にする。日本や豪州などを含むアジア・太平洋地域の46ホテルが対象。夏休みのレジャー客を取り込む。これまで高級ホテルは価格競争を避けていたが、世界的な不況でビジネス客が激減しているため今後、価格競争が激化しそうだ。

　自社のウェブサイトのほか、一休や楽天などを通じて予約を受け付ける。予約期間は7月末までだが、利用期間は8月まで。例えばヒルトン東京（東京・新宿）を利用する場合、1人当たりの料金が約1万7000円から。2泊しても合計金額は1泊と同じ1万7000円。3泊する場合は2万5500円となる。ただしキャンセル料は全額負担となる。(07:00)

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4月の自動車輸出64.7％減、最大の減少率に

　日本自動車工業会が29日発表した4月の国内自動車メーカーの輸出台数は20万6456台となり、前年同月に比べ64.7％減少した。前年実績を下回るのは7カ月連続で、減少幅は3月の64.3％を上回り過去最大を更新した。欧米やアジアなど有力な市場への輸出が大幅に落ち込んだ。

　生産台数も48万5405台となり、同47.1％減となった。7カ月連続で前年実績を割り込んだ。燃費性能の高い環境対応車向けの「エコカー減税」などの政策の影響は「限定的だった」としている。(16:00)

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損賠提訴：元選手「総監督から暴行」　赤星選手結成の球団

　プロ野球阪神タイガースの赤星憲広外野手（３３）が中心になって結成した硬式少年野球チームの元選手（１６）が「暴行を受けたり、高校野球の強豪校への入学内定を断られて精神的苦痛を受けた」として、チームの総監督の男性（４２）や赤星選手らを相手に、約３２０万円の損害賠償請求の訴えを大阪地裁に起こしていたことが分かった。

　赤星選手が理事長を務めているＮＰＯ法人「レッドスターベースボールクラブ」（事務局・兵庫県芦屋市）。元選手は昨年１０月に提訴し、赤星選手には監督責任を求めている。

　訴状などによると、元選手側は、総監督が０７年６月、ＪＲ新大阪駅に到着した新幹線の車内で、中学３年生だった元選手の顔を手などで殴ったうえ、みやげ物の食料品を投げつける騒動を起こしたと主張している。

　さらに同年９月、総監督から「入学の内定取り消し」を告げられたが、「総監督が勝手に高校の入学を断った」と訴えている。

　総監督側は答弁書などで暴行を一部認めたが、「教育指導の一環」と反論。「内定取り消し」については「成績が足りず条件を満たさなかった」としている。

　赤星選手は阪神タイガース広報を通じて「すべて総監督に任せています」としている。

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男子バレー：ＮＥＣ今月末で休部へ…同社発表　女子は存続

　バレーボール・プレミアリーグ男子のＮＥＣが今月末で休部することになった。同社が２９日発表した。女子は存続する。

　チームの一括譲渡を検討したが、移籍先が見つからず断念した。今後、移籍を希望する選手にはあっせんを行う。

　同社は世界同時不況で業績が大幅に落ち込み、約２万人の人員削減方針などとともに、スポーツ事業の見直しを進めていた。

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天台座主、初の高野山入り…空海・最澄の確執から１２００年

　天台宗（総本山・比叡山延暦寺、大津市）の半田孝淳・天台座主が、６月１５日に高野山真言宗総本山の金剛峯寺（和歌山県高野町、松長有慶座主）で営まれる「宗祖降誕会(ごうたんえ)」に参列する。

　天台座主が高野山へ赴いた公式記録はなく、平安時代の両宗開宗以来初めて。ともに「相互理解を深めるきっかけに」と期待している。

　半田、松長両座主はトップ就任後、法要などで同席する機会が増え、昨年夏頃から、「一度高野山へお参りしたい」「季節の良い頃にぜひ」などと話が進展した。高野山側が開祖・空海の誕生日を祝う年間最大の法要への参列を打診した。

　空海と、天台宗の開祖・最澄はともに唐で仏教を学んで親密に交流。最澄は空海から密教を学んだが、晩年は教えの違いや経典の貸し借りなどを巡って対立したとされる。

　２００５年１０月に天台開宗１２００年の法要が延暦寺であった際、当時の資延敏雄・金剛峯寺座主が法要に参加したが、天台座主が高野山へ行くのは、比叡山の公式記録「天台座主記」などにも記述がないという。

　金剛峯寺によると、半田座主は宗祖降誕会の法要に参列後に空海の御廟を参拝し、松長座主と会談する。

　天台宗務庁は「世間で言われる確執は、現代はなく、交流を深める契機になれば」とし、高野山真言宗宗務所も「手を携えて、『救い』など共通の課題に取り組む礎に」と歓迎している。

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消費者庁法が成立
2009.5.29 14:02
このニュースのトピックス：国会
参院本会議で消費者庁設置関連法が可決、成立し、笑顔で一礼する野田消費者相＝２９日午後参院本会議で消費者庁設置関連法が可決、成立し、笑顔で一礼する野田消費者相＝２９日午後

　消費者行政を一元化する消費者庁設置関連法は２９日午後の参院本会議で全会一致で可決、成立した。福田政権からの懸案だった消費者庁は今秋にも発足する。政府は近く内閣府に設立準備室を設置する方針だ。

　消費者庁の新設により、内閣府や公正取引委員会などの消費者関連の業務が集約されるほか、これまで規制法がなかった「すき間事案」といわれる消費者事故に対して、首相が企業に改善勧告や命令を出せるようになる。

　消費者庁設置構想は、悪質商法や食品偽装問題を受けて福田康夫前首相が提唱した。政府は昨年９月の臨時国会に関連法案を提出したが継続扱いになり、今年３月にようやく審議入りした。与野党は今年４月、消費者委員会の権限を強化することなどで合意。共同修正した上で、衆院本会議で全会一致で可決された。

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15:37 GMT, Thursday, 28 May 2009 16:37 UK
Trouble for French fashion house

Christian Lacroix

French fashion house Christian Lacroix SNC has launched insolvency proceedings, it has announced.

The 22-year-old brand - known for its colourful gowns - told the Paris commercial court that it could not pay its creditors.

It blamed the global financial crisis which has hit the luxury goods market.

The company, which employs 125 people, said it was seeking protection from creditors in order to allow it to continue operations.

The brand was founded by French designer Christian Lacroix, and was bought from Paris-based luxury goods group LVMH by The Falic Group, based in the US, in 2005.

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Brazil to open up vast offshore fields

By Carola Hoyos in London and Jonathan Wheatley in Sao,Paulo

Published: May 29 2009 03:00 | Last updated: May 29 2009 03:00

International oil companies will be invited to bid for concessions in Brazil's enormous "pre-salt" oil fields as early as next year, Edson Lobão, mines and energy minister, has told the Financial Times.

Brazil stopped selling concessions in the offshore pre-salt area, which oil industry executives say will rival the North Sea in size and importance, soon after their discovery in 2007.

The government has since been working on new regulations for the area, which presents enormous operational challenges but where the chances of finding large quantities of high quality crude are much greater than in other Brazilian oil fields.

The new reserves promise to turn Brazil into an important oil exporting nation and further hightlight the differences between Petrobras, Brazil's publicly traded but government-controlled oil company of growing international status, and the declining fortunes of its regional rivals Pdvsa of Venezuela and Pemex of Mexico.

Mr Lobão said Petrobras could not on its own cope with the huge task of developing the reserves, trapped under several kilometres of seawater, rock and a layer of hard-to-penetrate salt off the country's coast.

"We will certainly be holding auctions next year. This means the oil companies can begin to prepare their treasury reserves," he said.

Oil industry analysts were surprised by his statement. "It would rest on the assumption that Brasília will be able to promulgate a new regulatory framework in the near term, but there are so many stakeholders vested in the development of these fields that the legislative debate may be more arduous than expected," said -RoseAnne Franco, lead analyst for Latin America at PFC Energy in the US.

Brazil sold several concessions in the pre-salt fields before their potential became clear and has promised not to change those contracts. Analysts say Petrobras, with partners that include ExxonMobil of the US, BG of the UK, Galp of Portugal, Repsol of Spain and Anglo-Dutch Royal Dutch Shell, will be kept busy for many years exploiting those concessions.

Many observers expected the government to be in no hurry to bring in new laws, which will be controversial and seem unlikely to pass through Brazil's congress in the near future, especially as 2010 is an election year.

Mr Lobão said he favoured restrictive terms for new companies entering the pre-salt fields and the creation of a new oil company entirely under government control to oversee them. Nevertheless, he said he was aware of the dangers of alienating international oil companies, noting the bitter experience of Venezuela and Mexico.

After more than 50 years of dominance, Mexico and Venezuela are in danger of losing their positions as the continent's most -important oil exporters.

As governments from China to Washington as well as international oil companies line up to help Brazil develop its vast fields, they are shunning Mexico and its restrictive financial terms and are being put off Venezuela after years of bruising contract renegotiations.

Hugo Chávez, Venezuela's populist president, has seized fields owned by international oil groups and recently sent the military to take over the projects of oil service contractors he can no longer afford to pay.

He has damaged Pdvsa, the country's once well-regarded national oil company. This has had a profound effect on Venezuela's ability to produce oil. Output has dropped from 3.4m barrels a day just before Mr Chávez came to power in 1999 to 2.4m today.

Mexico is arguably in an even worse position. For decades Mexico has used Pemex as the nation's piggy bank, forcing it into deep debt but barring it from using foreign oil companies to help invest in its fields. As a result Pemex has been unable to halt the steep natural decline of Cantarell, the ageing field that at its peak produced more than 2m barrels of oil a day but no longer manages even half that.

In spite of recent political reforms, Mexico faces the prospect of becoming a net oil importer within a decade.

In contrast, Brazil in the past 10 years has doubled its daily oil production to 2.3m barrels and is beginning to export. Mr Lobão says the country will join Opec once exports ramp up.

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Argentina pressed to ban crop chemical after health concerns

By Jude Webber in Buenos Aires and Hal Weitzman in,Chicago

Published: May 29 2009 03:00 | Last updated: May 29 2009 03:00

Argentina's government is coming under pressure to ban the chemical used in the world's best-selling herbicide, which has helped turn the country into an important world food exporter in the past decade, after new research found that it might be harmful to human health.

A group of environmental lawyers has petitioned the Supreme Court to impose a six-month ban on the sale and use of glyphosate, which is the basis for many herbicides, including the US agribusiness giant Monsanto's Roundup product.

A ban, if approved, would mean "we couldn't do agriculture in Argentina", said Guillermo Cal, executive director of CASAFE, Argentina's association of fertiliser companies.

Argentina has become a world food-exporting powerhouse, largely through the use of genetically modified seeds that have been engineered to resist glyphosate. That has allowed soya farmers to boost yields dramatically by sowing directly without clearing the land, and then spraying the herbicide to kill weeds without affecting the new crop.

The country is the world's top exporter of soya oil and ranks second in exports of corn, third in soyabeans and seventh in wheat. Glyphosate is its most widely used herbicide and farmers spend some $450m on it a year and use 150m litres annually on their crops, Mr Cal says.

Any ban on the use of glyphosate could have dire fiscal consequences: the already cash-strapped Argentine government relies heavily on tariffs levied on agricultural exports. It is expected to rake in some $5bn this year, although that is about half the previous year's level after a longrunning conflict with farmers, a bitter drought and lower prices have slashed production of the country's main cash crop, soya.

"We know we're taking on a Goliath," said Mariano Aguilar, executive director of the Argentine Association of Environmental Lawyers, which in April filed suit before the Supreme Court seeking a nationwide ban on the sale and use of glyphosate, pending an investigation by a commission of experts set up in January by the government. No one was available to comment at the Agriculture Secretariat and the court has yet to rule.

Mr Aguilar's action followed an investigation by Andrés Carrasco, a scientist at Conicet, a government-funded research institute. According to Mr Carrasco's research, even tiny quantities of glyphosate could cause embryonic malformations in frogs and thus, by extrapolation, may have implications for humans.

"I suspect the toxicity classification of glyphosate is too low . . . in some cases this can be a powerful poison," Mr Carrasco told the Financial Times in an interview. He says residents near soya-producing areas began reporting problems from 2002, a couple of years after the first big harvests using genetically modified seeds, which were approved for use in Argentina in 1996.

Research by other Argentine scientists and evidence from local campaigners has indicated a high incidence of birth defects and cancers in people living near crop-spraying areas. One study conducted by a doctor, Rodolfo Páramo, in the northern farming province of Santa Fé reported 12 malformations per 250 births, well above the normal rate.

Mr Carrasco said his research used pure glyphosate as well as herbicide containing some 500g per litre of glyphosate - about the standard concentration in many fertilisers on the market - which he then diluted 5,000 times.

Monsanto says its Roundup preparations contain between 360g and 540g per litre, and 680g to 720g per kilo in the case of solids. It notes, however, that it has only a third of the Argentine market, since glyphosate has been off-patent for several years and other producers offer generic products with varying concentrations of the chemical.

Hugh Grant, chief executive, told the FT: "I'm not too worried about the study. I think the science is shaky."

The company maintains the chemical is safe to humans and has been used without harmful side-effects for decades.

Mr Carrasco said four people from CASAFE were sent to try to search his laboratory and he had been "seriously told off" by Lino Barrañao, Argentina's science and technology minister. "There are very many millions of dollars at stake, but the only thing I couldn't do was shut up when I found this out," he said.

Mr Carrasco acknowledged there were "too many econ-omic interests at stake" to ban glyphosate outright. But, he said, officials could start ring-fencing the problem by enforcing effective controls where crops are sprayed.