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    Russian Press - Behind the Headlines, October 23

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    Public Role in War on Terror in North Caucasus \ Russians Abroad Will Be Able to Withdraw Cash at Domestic Rates \ Hard Cider and Mead to Be De-Regulated

    Nezavisimaya Gazeta

    Public Role in War on Terror in North Caucasus

    The Russian authorities have redoubled efforts against illegal armed groups in the North Caucasus. President Vladimir Putin ordered generals to coordinate pinpoint strikes last week, and the public was urged to create vigilante groups.

    Russia’s National Anti-Terrorism Committee has announced that 49 militants were killed during a special operation in the North Caucasus in September and October. But this is only a small proportion of the groups operating in the region. Chechen President Ramzan Kadyrov claims there are 40 to 50 fighters in Chechnya alone.

    A police vehicle came under fire in Makhachkala (Dagestan) yesterday. Far to the west, in Kabardino-Balkaria, a counterterrorist regime was temporarily put in place to deal with militants in the forested mountain areas of the Elbrus region.

    President Vladimir Putin recently told Defense Minister Anatoly Serdyukov and Chief of the General Staff Nikolai Makarov that the counterterrorism activity of various ministries and agencies must be coordinated. The commander of the 58th Army, Gen. Andrei Gurulyov, did not rule out the use of special forces in antiterrorist efforts. Use of armed forces, however, implies that the militant groups have become too strong for the Interior Ministry and the FSB. The public is the third force that could help fight them.

    People in Dagestan have been allowed to form armed groups to protect themselves.

    Following the murder of Sheikh Said Afandi and seven others in a suicide bombing in late August, Dagestani leader Magomedsalam Magomedov signed an order to establish vigilante groups in every town and village. The local authorities will create the conditions to make this viable, supply equipment and communication systems and also to ensure “the legal and social protection of the vigilantes.”

    Many people want to join these groups, which were first created in Dagestan in 1999 to repel an invasion of insurgents led by the notorious Shamil Basayev and Khattab. When the active phase of the operation ended, the vigilante groups were told to surrender their weapons. The law, which was adopted in Dagestan in 2004, did not provide material compensation for the vigilantes, and the September 2012 order does not mention this either. A regional official said options for paying the vigilantes - or at least compensating them in case they are injured on duty - are being considered, but Dagestan has no funds for either.

    The commissions for the socialization of former militants have been ineffective. Experts say that most of them take up arms for religious reasons, which is something the Dagestani authorities have not yet learned to deal with. Ingushetia’s Yunus-Bek Yevkurov has achieved positive results by launching a policy of “counter-terrorism with a human face.” Kabardino-Balkaria plans to draw on his experience: recently, the public supported an appeal to members of illegal armed groups to surrender their weapons and promised to mediate in the process.

    But the Chechen government is not ready for compromise. Kadyrov has reaffirmed that he will continue to wage an irreconcilable struggle against terrorists.


    Russians Abroad Will Be Able to Withdraw Cash at Domestic Rates

    Russian consumer savings giant Sberbank has found a way to attract Russians to its offices abroad: it automatic teller machines will no longer charge cash withdrawal fees. This is a costly practice for a bank, and among large international banking groups operating in Russia, fee-free withdrawals are offered only by Citibank and UniCredit Bank. However, Sberbank expects to recoup these costs with sales of other services, such as mortgage loans in the Czech Republic, Croatia and Turkey.

    Now that it has acquired Turkey’s Denizbank and the East European Volksbank International, Sberbank intends to charge its clients only domestic fees in any country where it has a presence, Sberbank Deputy Chairman Sergei Gorkov told Kommersant. He said the new rule applies both to corporate and individual customers. In particular, Sberbank debit card holders will be able to withdraw cash without extra fees not only in Russia, but also abroad. At the same time, foreign clients will pay for cash withdrawals in Russia at the same rate they pay in their own countries.

    The new approach may be beneficial for Russian Sberbank customers. There are no statistics on cash withdrawals by Russians abroad, but a pilot project launched in the CIS countries has shown that it works. “In the Crimea, for example, where there are many Russian tourists, Sberbank offices do a brisk business, where customers can access their cash without a fee or can receive or send a money order,” Gorkov said.

    The same results, he said, can be expected in Turkey, where many Russian tourists go.

    Currently, in addition to Russia, Sberbank has a presence in Turkey (through Denizbank) and in Europe (through Volksbank International): Austria, the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Bosnia and Herzegovina, and Slovenia. It also runs subsidiaries in Belarus, Kazakhstan and Ukraine, and has a branch in India and a representative office in China. There are 1,300 Sberbank offices in other countries.

    Large international banking groups operating in Russia generally do not offer Russian customers their bank services abroad at domestic rates. The exceptions are Citibank and UniCredit Bank. “For several years now, holders of our bank cards have enjoyed special rates – which are consistent in most countries where we have a presence,” said Alexander Vishnyakov, UniCredit Bank director for card business and remote services. This, he said, increases the loyalty of customers, which makes it possible to offer them other services in foreign offices.”

    Sberbank is thinking along the same lines. “We are now considering offering mortgage loans to Russian clients to buy real estate in other countries,” Gorkov said. “Both VBI and Denizbank have mortgage products and we are working out how to combine the services of these banks and the wishes of our citizens to purchase property abroad, in the Czech Republic, Croatia and Turkey, for example, where laws have been adopted allowing foreigners to own property. We’ll try to take all these things into consideration in our new strategy.”


    Hard Cider and Mead to Be De-Regulated

    A Russian government commission has approved amendments to the law on state regulation of alcohol removing naturally fermented beverages such as hard cider and mead from licensing requirements. The first reading of the bill will be considered on Wednesday.

    “The bill as a whole is not at odds with state policy aimed at reducing alcohol abuse and promoting prevention among Russians up to 2020, as approved by the order of the government,” a government review of the bill suggests.

    The amendments to the alcohol law drafted by State Duma Deputy Viktor Zvagelsky from the Committee on Economic Policy and Entrepreneurship free companies producing strong cider and mead from the need to pass a costly licensing process that applies to all alcoholic beverage companies except breweries. This summer, naturally fermented beverage makers were forced to halt production because they could not get licenses. Strong cider and mead are not currently produced in Russia.

    “We’re down about 3 to 5 million rubles in profit. If licensing requirements are cancelled, we hope to resume mead production,” said Medovarus Director General Alexei Dolzhenko.

    Attempts by cider producers to switch to other drinks have been largely unsuccessful.

    “We’re in standby mode,” said Vsevolod Datsevich, Director General of Yablochny Spas. “There is no production and no revenue, but we pay the rent, and pay wages to our employees – about 500,000 rubles per month. If we declare that we can’t pay to maintain our orchards, our apple trees will be cut down. We are talking about losses in the tens of millions of rubles.”

    The industry will not be able to fully recover until 2014.

    “The mead producers will probably recover by spring or early summer,” predicts Alexei Nebolsin, member of the Opora Russia Presidium. “But cider producers are in a more difficult situation because this year's harvest can be considered lost.” But producers expect to recover faster due to growing demand.

    The bill also proposes a tax on fermented beverages similar to taxes on wine. Zvagelsky said that cider and mead could bring in about 1.12 billion rubles to state coffers in only a few years.

    Health advocates argue that the money provides no benefit. The State Duma Committee on Health Protection is against the amendments to the law on state regulation of alcohol.

    “This is purely a lobbying bill that allows anyone, including unlicensed, individual entrepreneurs to produce any swill, and call it mead,” said Sergei Kalashnikov, chairman of the committee. “We believe that this amendment cannot be justified given the campaign against alcoholism.”

    The bill’s author anticipates that by 2020, the consumption of cider in Russia will be closer to the European average, which is about 1 liter per person per year. Consequently, the market will grow to 150 million liters per year. In 2011, the cider market was 6.5 million liters, and consumption was at about 40 grams per person per year.

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