Text b. Mayor's Departure Could Slow Moscow's Growth (The New York Times, September 30, 2010) by andrew e. Kramer

MOSCOW — During his two decades as mayor, Yuri M. Luzhkov transformed Moscow from a mostly low-rise city into a metropolis with its own district of gleaming glass-and-steel office towers.

For preservationists, Mr. Luzhkov’s tenure was a long nightmare. In the rush to add office space in the historic center, often only small patches of original facade were left standing at street level, while huge concrete structures rose behind them.

For developers, Mr. Luzhkov was more of a dream. They made a fortune in the post-Soviet capital in what will surely be remembered as one of the world’s great real estate gold rushes, fed in its final phase by capital from Arab sheiks and Wall Street investors.

The recession had already slowed the construction boom, but its future suddenly became an open question when Russia’s president, Dmitri A. Medvedev, abruptly fired Mr. Luzhkov on Tuesday. A day later, the federal authorities announced 24 criminal investigations of city officials, and several cases related to construction.

But developers have been most troubled by the prospect of investigations into the dealings of Mr. Luzhkov’s wife, Yelena N. Baturina, a construction magnate in her own right, and whether the investigations might unravel any number of deals.

Critics have been saying for years that the real estate boom was smoothed by corruption and nepotism on a grand scale. The development model in this epicenter of mall and office-block building blended private and public money and retained strong state control, including, in most cases, state ownership of the land. Now rudderless, the city is likely to slow development, at least until a replacement is established.

“I would expect some changes,” Aleksandr Lebedev, a billionaire businessman who ran against Mr. Luzhkov for mayor of Moscow in 2003, said of the commercial real estate market.

The growing crackdown on officials in Mr. Luzhkov’s orbit has stirred a good deal of angst among developers in what remains the largest commercial-property construction market in Europe, trailed distantly by Paris.

Mr. Luzhkov has repeatedly denied conflicts of interest with his wife’s business, and has won libel suits in city courts against news media that suggested otherwise. Ms. Baturina, who owns a large development company, is Russia’s richest woman; Forbes magazine this year estimated she was worth $2.9 billion.

Yet last month, even state television channels were pointing out the impropriety of his spouse’s business, signaling the impending dismissal. The mayor of Moscow is appointed by the Russian president.

Political analysts say Mr. Luzhkov had miscalculated by seeming to appeal in a newspaper article to Prime Minister Vladimir V. Putin for help in a dispute with Mr. Medvedev, apparently an error in Russia’s byzantine political system.

Whatever the cause of the fall from grace, the real estate sector is bracing for collateral damage.

A case in the High Court in London against Ms. Baturina, brought by a Russian developer now living in exile, has shed some light on Ms. Baturina’s interest in many projects, including one designed by the British architect Norman Foster. The suit alleges that “no major project in Moscow proceeds without her backing,” according to documents made available by Mr. Lebedev, the long-time political opponent of Mr. Luzhkov.

But James Cook, a real estate investment executive, said by telephone that the authorities would be walking a delicate path in deciding how thoroughly to investigate Mr. Luzhkov’s ties to Moscow development deals. Mr. Cook, director of Aurora Russia, an investment firm in the Russian real estate market that is listed on the London Stock Exchange, said the authorities would be concerned about deepening the real estate slump in the capital.

Mr. Medvedev is clearly seeking to dissuade Mr. Luzhkov from joining an opposition political movement by opening investigations into city government deals in real estate, Russian media and political analysts have suggested. If the political feud intensifies, development could grind to a halt, they say.

“Most people in the market assume there is corruption in the system,” Mr. Cook said. “It’s in the interest of the government to make sure things continue moving.”

As mayor of Moscow, Mr. Luzhkov blended populism and arm-twisting of businesses to contribute to pension funds, public works and church restorations. “It is a classic paternalistic model,” said Andrei V. Ryabov, scholar in residence at the Moscow Carnegie Center.

In one indication that a swift shake-up of this system is less likely, the Standard & Poor’s rating agency left the city’s credit rating unchanged. Fitch Ratings, however, put the government-controlled Bank of Moscow, a major construction finance lender, on a negative credit watch.

Goldman Sachs and Credit Suisse each own stakes of about 3 percent in Bank of Moscow. The bank is among the top three lenders to Inteko, the company of the mayor’s wife, according to a statement this spring by Inteko. Inteko’s press service did not answer calls Thursday.

Fitch said Wednesday that the Bank of Moscow ran “a risk of deterioration in the relationship between the bank and the city following the appointment of the new mayor.”

Pointing toward potential disruptions, one of Mr. Luzhkov’s deputy mayors, Aleksandr Ryabinin, resigned Wednesday, and later that day officials said they were investigating whether he accepted the title to a small building as a bribe from a developer. The building was registered in his daughter’s name, according to the Investigative Committee of the Prosecutor General’s Office, a federal body, the Interfax news agency said.

Analysts at UniCredit issued a research note saying the leadership change could prompt a fire-sale of commercial real estate by developers tied to the old government seeking to get out of the market, potentially driving down prices.

Foes of Mr. Luzhkov’s development policies, previously marginalized to the point of near irrelevance, have become emboldened. Arkhnadzor, a historical preservation society, has already called for a freeze on all new construction. So long as the fight with Mr. Luzhkov goes on, they may have the Kremlin’s ear.

Any slowdown in Moscow, meanwhile, will ripple through the wider European development market.

Moscow constitutes, by far, the largest commercial real estate market on the Continent, comparable more with the booming cities of China or the Gulf than the already densely built European capitals. Much is going up in Moscow City, the new high-rise district.

Moscow has about twice as much office space now under construction as in the second-place city, Paris, with 2.3 million square meters, or 24.6 million square feet, under development, compared with just over a million square meters in Paris, according to Cushman & Wakefield, a real estate consulting company.

For comparison, no other European city had more than a million square meters under construction in the first half of 2010.

Moscow is also far ahead in malls, part of a continuing boom in Russia that has slowed, but not abated, in the recession. The city opened 176,000 square meters of shopping center space in the first half of this year, more than any other city in Europe, according to the Cushman study, and more even than in all of Germany during the period.

Text C. The sacked mayor of Moscow: Medvedev 1, Luzhkov 0 (The Economist, September 30, 2010)

President Dmitry Medvedev’s dismissal of Yuri Luzhkov, the veteran mayor of Moscow, cements the Kremlin’s grip on power in Russia

DMITRY MEDVEDEV has been long on talk and short on action ever since he became Russia’s president in 2008. That is why some were surprised on September 28th when he dramatically fired Yuri Luzhkov, the mayor of Moscow since 1992, citing a “loss of confidence”. The 74-year-old Mr Luzhkov was one of Russia’s most powerful politicians and a senior figure in the ruling United Russia party. He is a household name all over the country; his wife, Yelena Baturina, a construction magnate, is Russia’s richest woman.

Mr Luzhkov’s departure was not itself such a shock, after a furious open fight had broken out with the Kremlin some weeks ago. A slew of programmes on state-owned television had raked over longstanding allegations of the mayor’s corruption and mismanagement. Mr Medvedev made it clear that he wanted him to step down. What was a surprise was that, after a short Kremlin-sanctioned holiday, a defiant Mr Luzhkov returned to his office on September 27th, insisting that he would not resign. This left Mr Medvedev with no alternative but to sack him.

The Kremlin has fired or replaced all the most powerful regional leaders in Russia over the past 18 months. It has the power to do this because it changed the law to abolish elections to these posts in 2004. Mr Luzhkov, who in 1999 was briefly a serious candidate for the Russian presidency instead of Vladimir Putin, is by far the biggest name to have gone so far.

He had been at odds with Mr Medvedev for some time. But it is only recently that the mayor seems to have lost the support of Mr Putin, now prime minister. Mr Putin has long been intolerant of alternative centres of power in Russia, but he owed Mr Luzhkov a favour for his backing in 1999. The last straw seems to have been a newspaper article Mr Luzhkov published in early September criticising Mr Medvedev’s decision to suspend construction of a new road between Moscow and St Petersburg. He also wrote of the need for the government to “recover its true authority,” a phrase widely interpreted as a call for Mr Putin to return as president in 2012.

Observers quickly detected a bid by the mayor to drive a wedge between Mr Medvedev and Mr Putin. Mr Medvedev’s decision to sack Mr Luzhkov was similarly hailed by some as a new assertion of independence on the part of the president. Yet the truth is that he could not have acted without Mr Putin’s approval. Mr Putin said this week that he had discussed the matter with Mr Medvedev, adding pointedly that “the mayor is subordinate to the president, not the other way round.” Indeed, that Mr Medvedev took so long to do the deed and proved unable to talk Mr Luzhkov into going quietly will be seen in some quarters as a sign of weakness, not strength.

Mr Luzhkov’s ousting is the end of an era. He oversaw Moscow’s oil-fuelled transformation from the drab capital of the Soviet Union into the glitzy showpiece of modern Russia. He delighted pensioners with handouts and rebuilt the gold-domed Christ the Saviour Cathedral, destroyed by Stalin. But he also cracked down on anti-Kremlin protests and refused to allow gay-pride marches, calling homosexuality “satanic.” He became a hate figure among architectural buffs by bulldozing hundreds of historic buildings and replacing them with hideous replicas.

He may now fear for his future (although he is said to be considering an appeal against his dismissal). To some, his sacking was reminiscent of the arrest of Mikhail Khodorkovsky, a business oligarch, in 2003. The real offence was not the accumulation of vast riches (Mr Khodorkovsky) or the stench of corruption (Mr Luzhkov), neither of which upsets the government. It was rather the challenge to the Kremlin’s “vertical of power”; in Mr Luzhkov’s case a hint that regional elections ought to be revived. Mr Luzhkov may not be pursued by prosecutors (and his wife spends most of her time in Austria). But they have already set their sights on some in his entourage. It would not be a surprise if some of the Luzhkovs’ assets find their way into the hands of Kremlin associates.

The implications of Mr Luzhkov’s sacking for Russia’s political future are less clear. Although Mr Medvedev is seen to have reasserted some of his authority, and may still have an eye on running for president again in 2012, a return by Mr Putin still seems more likely. One of Mr Luzhkov’s offences was to seem to belittle the office of the presidency itself. Whatever he thinks about the performance in the Kremlin of his erstwhile loyal lieutenant, Mr Medvedev, Mr Putin wants to uphold the dignity and power of the office—presumably because he plans to take it back.

Exercise 2. Compare separate interpretations by the media of the same event (texts A and B) and point out the similarities and differences among them. Develop an understanding of how coverage of an event by the media can vary depending on the type of media and its source.

Text A. France fingerprints Roma deportees to prevent return (BBC News, September 30, 2010, by Christian Fraser)

The French Immigration Ministry is to fingerprint Roma (Gypsies) who get financial aid after being deported.

From Friday, biometric records will be created on Roma who receive up to 300 euros (£259; $409) after they leave France.

Most of them are repatriated to Bulgaria and Romania.

Authorities say some expelled Roma make return trips to France to benefit several times from the humanitarian aid they get for going home.

In 2009 more than 15,200 return aid payments were made to immigrants, mostly Roma, who were expelled from France.

The French government classes the majority as "volunteers", who are given a cash payment of 300 euros per adult or 150 euros for each child.

The expulsion fund cost the French government 9m euros last year.

There is suspicion in France that some of the Roma flown home to eastern Europe have used the cash handouts to come back under false identities.

The French government hopes taking a biometric record of everyone who is expelled will cut back on fraud.

The decision to fingerprint the Roma has led to concerns by human rights groups, who already accuse the French government of targeting a minority group.

And France was warned by the European authorities this week that it will face disciplinary proceedings and possible court action if EU freedom of movement is not enshrined in French law by next month.

Commission officials said the onus is on Paris to prove that it is not targeting Roma as an ethnic group.

France believes it has law on its side. President Sarkozy said his country has every right to expel foreign Roma who are living in France without a job or any means to support themselves.

Roma ultimatum given to France by EU: allow free movement or face court (The Guuardian, September 29, 2010)

Brussels ups ante in row over Gypsy expulsions as European commissioners vote unanimously for action

France was warned by the European authorities today that it would face disciplinary proceedings and possible court action if EU freedom of movement is not enshrined in French law by next month.

The ultimatum from Brussels, in a letter to the French government from the European commission, upped the ante in the ferocious row over France's treatment of immigrant Gypsies, a dispute that hijacked a recent EU summit and saw insults traded over the second world war.

All 27 European commissioners decided todayto set France a deadline of 15 October to remedy the member state's failure to observe European law, namely a directive from 2004 giving all EU citizens freedom of movement across the union.

"France is not applying European law as it should," said Viviane Reding, the commissioner for justice and fundamental rights who sparked one of the worst rows in the EU for years this month by calling French treatment of Roma immigrants from Romania "a disgrace" and "appalling", reminiscent of the persecution they suffered in Vichy France during the war.

President Nicolas Sarkozy threatened to boycott an EU summit unless she retracted. An EU summit a fortnight ago descended into a slanging match. Sarkozy said Reding apologised. She denied it. She was criticised by fellow commissioners and European leaders for inappropriate language. But the commission, despite the huge pressure from Paris, insisted it would referee in the Roma row as the guardian of the European treaties and the arbiter of EU law.

Yesterday's decision singled out France for censure, although several other EU member states have not converted the 2004 directive into their national laws.

Some saw the commission's move as a minor rebuke to the Élysée Palace as it failed to rule on the more serious charge – whether the Sarkozy administration was in breach of fundamental EU rights by targeting the Roma for ethnic discrimination.

French immigration minister Eric Besson told MPs: "We should all be happy. France is emerging with its head high from its exchange with the commission. It's good news for everyone."

José Manuel Barroso, the commission president, said he did not want to go into the "very sensitive legal issues", suggesting he was keen to avoid re-igniting the row with Sarkozy. But his officials insisted there was no climbdown.

A senior EU official said: "The French have until 15 October. They will never do it by then. There will be an infringement procedure." This could end up in France being hauled before the European Court of Justice.

Since the end of July when Sarkozy ordered a clampdown against Roma or Gypsy immigrants from Romania and Bulgaria, more than 1,000 have been expelled and more than 100 camps have been demolished, a policy that has been condemned by the Vatican, the UN, the European Commission, human rights groups and the French opposition.

The argument for targeted discrimination rested on a French interior ministry paper ordering priority action specifically against the Roma. It was in circulation for five weeks until being withdrawn after being leaked to the French press.

Commission officials said that the onus was on Paris to prove that it was not targeting Gypsies as an ethnic group. Reding said: "If France has affirmed that its laws do not discriminate against certain ethnic groups compared to others, we need the proof to assure of us of that. We are asking that France supply the documents, the details of the expulsions which have taken place."