Digest of headline news as of 3:30 p.m. Moscow time on July 7:
BUSINESS & FINANCE
*** NO NEED TO CHANGE FISCAL RULE - PUTIN
There's no need to change the fiscal rule, Russian President Vladimir Putin said.
"I think there's no need to change the fiscal rule right now," he said at a meeting with Economic Development Minister Alexei Ulyukayev, who gave a report on economic performance on the first half of the year.
Thus, Putin drew a line under months of discussion between ministries about whether to alter the fiscal rule.
*** RUSSIAN GDP GROWS 1.2%, INDUSTRY 2.5% IN Q2 - ULYUKAYEV
Russian GDP growth accelerated to 1.2% in the second quarter of 2014, from 0.9% in the first quarter, Economic Development Minister Alexei Ulyukayev said at a meeting with Russian President Vladimir Putin, quoting a preliminary estimate.
The economy grew an estimated 1.1% year-on-year in the first half of 2014.
Industrial output growth accelerated to 2.5% in Q2, from 1.1% in Q1 2014. Industry grew 1.8% in H1, Ulyukayev said.
*** CAPITAL OUTFLOW FROM RUSSIA AT AROUND $80 BLN FOR H1 - ULYUKAYEV
Capital outflow from Russia was around $80 billion in the first half of 2014, Economic Development Minister Alexei Ulyukayev said during a meeting with Russian President Vladimir Putin in Moscow on Monday.
"Unfortunately, we still have fairly negative results for the balance of the capital account. Our net outflow of private foreign capital is around $80 billion. This is mostly the result of the first quarter, when a large number of deposits - in both households and business - were reissued and transferred into currency deposits or even simply into foreign currency cash. This is about $20 billion," he said.
*** SOUTH STREAM GAS PIPELINE HINDERED BY LEGAL ISSUES, NOT CRIMEA - FRENCH DIPLOMAT
Issues involved in the construction of the South Stream gas pipeline are legal in nature and have no relation to Crimea's incorporation into Russia, French Ambassador to Russia Jean-Maurice Ripert said.
"As concerns the situation surrounding South Stream, there are legal issues here, which have nothing in common with the situation surrounding Crimea," Ripert said in an interview with Interfax.
The issue involves the European Union's internal problems, he said.
*** ROSNEFT ACCUMULATES ENOUGH FUNDS TO REFINANCE DEBT WITHIN A YEAR - FINANCIAL TIMES
Russia's Rosneft has accumulated enough funds to refinance debt within a year, the Financial Times reported, citing Rosneft's Vice President for Economics and Finance Svyatoslav Slavinsky.
He said that thanks to deals that were unprecedented in the history of the oil industry, Rosneft was able to build up a $20 billion safety net on its balance sheet as of end-March, the paper said.
Slavinsky said that money currently being received under prepaid transactions means that the company has enough funds on its balance sheet to cover its debt refinancing needs in the coming 12 months. This is important since some foreign banks and investors have turned away from Russia due to western sanctions, he said. This increases prices and reduces Russian companies' debt issuance to a minimum, Slavinsky added.
*** E.ON RUSSIA BOARD REELECTS KILDAHL CHAIRMAN
The board of directors of E.ON Russia has reelected Jorgen Kildahl, a member of the management board of German E.ON SE, to a second term as board chairman on Friday, the company said in a statement.
E.ON Russia CEO Maxim Shirokov was elected deputy chairman.
The new board elected by shareholders at the AGM includes two new independent directors: Tatiana Mitrova, deputy head of Russian and Global Oil and Gas Complex Department at the Energy Research Institute of the Russian Academy of Sciences (ERI RAS); and Alexei Germanovich, who sits on the boards at a number of companies, notably Bank St. Petersburg.
*** RZD INTERNATIONAL PLANNING TO WORK WITH DEUTSCHE BAHN ON RAILWAY PROJECTS IN BULGARIA
LLC RZD International is planning to participate with German concern Deutsche Bahn (DB) in projects to rebuild railroads in Bulgaria.
"We have agreed with our partners from Germany and DB that we will participate together in tenders in Bulgaria. We understand very well that such cooperation will yield results," RZD International CEO Sergei Pavlov said in an interview with the corporate television station of Russian Railways (RZD). He added that a six-year railway reconstruction program had been approved for this country.
*** TRANSPORT, FINANCE DEPUTY MINISTERS JOIN RZD BOARD OF DIRECTORS
Russian Deputy Transport Minister Oleg Belozerov and Deputy Finance Minister Andrei Ivanov have joined the new board of directors at Russian Railways (RZD) (MOEX: RZHD), according to the government's website.
Several members left the monopoly's board of directors: Vice President of Moscow Exchange (MOEX: MOEX) Vladimir Gusakov; Strategic Initiatives Agency director Artyom Avetisyan; deputy head of Deutsche Bank Group for Eastern Europe Igor Lozhevsky and President of the Russian Union of Industrialists and Entrepreneurs (RUIE) Alexander Shokhin.
*** JAPAN'S MARUBENI TO SUPPLY $60 MLN, JPY4 BLN WORTH OF EQUIPMENT TO VOSTOCHNY PORT
Japan's Marubeni Corp. will manufacture and deliver $60.363 million and JPY4.073 billion worth of equipment for the third phase of a coal loading complex at Vostochny Port, the largest stevedoring company at the port of Vostochny.
Vostochny Port said its board approved the direct purchase of the equipment supply services from a single supplier. The deal is worth 3.431 billion rubles.
*** ELENA KARTASHEVA NAMED HEAD OF ABBOT RUSSIA
Elena Kartasheva, who previously headed the Russian division of Meda Pharmaceuticals, has been named the new head of the Russian branch of American pharmaceutical company Abbott effective July 1, Abbott told Interfax.
Leonid Parshenkov, the former head of Abbott in Russia, has become the regional director for African countries at one of Abbott's units.
*** CENTRAL BANK OF RUSSIA PULLS THREE LICENSES
The Central Bank of Russia has revoked the licenses of two St. Petersburg-based banks, Fininvest and Eurosib Bank, and of one Moscow-based bank, EastCom Bank, the Central Bank said in statements.
The licenses were revoked on July 7.
All the banks were put into temporary administration.
*** SBERBANK HAS RAS NET PROFIT OF 186.4 BLN RUBLES IN H1
Russia's Sberbank had net profit to Russian Accounting Standards (RAS) of 186.4 billion rubles in January-June 2014, the bank said in a press release.
Sberbank said it was not appropriate to compare this with net profit from the same period of last year because of accounting changes made in how deferred tax is reflected. Net profit without deferred tax would be 196.8 billion rubles versus 191.8 billion rubles in the six months of 2013.
Sberbank had net profit of 155.3 billion rubles in January-May of this year. The bank therefore had net profit of 31.1 billion rubles in June.
*** TAJIK PRESIDENT REPLACES MANAGEMENT OF STATE POWER COMPANY
Tajik President Emomali Rakhmon has dismissed the management of Barki Tojik, Tajikistan's electricity monopoly, the president's press service said in a statement on Monday.
Company chairman Asliddin Gulmurod and his two deputies Sulaimon Kosim and Mirzo Makhmudzoda were dismissed by government resolutions signed by the president, stating that they were transferring to other work.
Rakhmon appointed the former head of the Zafarabad district in northern Tajikistan, Rustam Mirzo as the new head of the company. Djamshed Boboyev and Bakhrom Azimov have been appointed his deputies.
POLITICS & SOCIETY
*** PUTIN: OVERALL EXPORT ORDERS FOR RUSSIAN WEAPONS GROW TO ALMOST $50 BLN
The overall portfolio of export orders for Russian armaments and military hardware has grown to practically $50 billion, Russian President Vladimir Putin said.
"Let me say the volume of Russian arms exports stood at $5.6 billion in the first six months of the year - a very impressive and substantial sum, while the overall portfolio of export orders has grown to nearly $50 billion," Putin said at a meeting of the Commission for Russian Military-Technological Cooperation with Foreign States on Monday.
*** BULGARIAN PRESIDENT WELCOMES LAVROV, WHO ARRIVED IN SOFIA ON VISIT
The visit of Russian Foreign Minister Sergei Lavrov to Bulgaria is a landmark for Sofia, Bulgarian President Rosen Plevneliev said at a meeting with Lavrov on Monday.
"Welcome to Bulgaria. Your visit is a landmark occasion. It has coincided with the celebration of the 135th anniversary of establishing diplomatic ties between our states," Plevneliev told Lavrov.
Lavrov has met with Bulgarian Prime Minister Plamen Oresharski behind closed doors.
*** MEDVEDEV: RUSSIA MAY PROTECT ITSELF IF UKRAINE, GEORGIA RATIFY ASSOCIATION DEALS WITH EU
Protective measures may be taken in trade with Ukraine and Georgia if their parliaments ratify the association agreements with the European Union, as the Moldovan parliament has done before, Russian Prime Minister Dmitry Medvedev said.
"Of course, if the scenario in Ukraine and Georgia develops in the same way, the set of measures will be similar and, obviously, based on the scope of trade and economic relations and consequences for the Russian market," Medvedev told vice-premiers on Monday.
*** COURT SENTENCES BULGARIA SUBTENANT INYAKINA TO 11 YEARS IN COLONY
Kazan's Moscow district court has sentenced AgroRechTur General Director Svetlana Inyakina - subtenant of the Bulgaria ship, whose crash in 2011 claimed 122 lives - to 11 years in a general regime colony, the Interfax correspondent reported from the court hall.
Bulgaria first captain's aide Ramil Khametov has been sentenced to six years and six months in a general regime colony.
Former employees of the Kazan transit police of the Volga department of the Gosmorrechnadzor state maritime and river monitoring service - Irek Timergazeyev and Vladislav Semeyonov - have been sentenced to six and five years in general regime colony respectively.
Senior expert of the Perm division of the Kama branch of the Russian river registry Yakov Ivashov, sentenced to five years, has been amnestied.
*** SERGEI TSAPOK FOUND DEAD IN KRASNODAR DETENTION FACILITY - RUSSIAN INVESTIGATIVE COMMITTEE
Sergei Tsapok, convicted for banditism and murders in the village of Kushchevskaya, was found dead on Monday in the medical unit of the Krasnodar detention facility No. 1, the press office of the Russian Investigative Committee investigative department for the Krasnodar territory told Interfax.
*** NAC: FIVE MILITANTS KILLED IN DAGESTAN
The National Antiterrorism Committee (NAC) has reported the killing of five militants in a special operation in the Untsukul district of Dagestan.
"Five militants have been shot and killed; an active stage of the antiterrorism operation continues," says a NAC report seen by Interfax on Monday.
Two militants trapped by special purpose forces of the Federal Security Service and the Russian Interior Ministry opened gunfire at about 2 a.m. in an attempt to break through cordons, NAC said. They were killed in the shootout and are being identified.
*** OVER 20,000 UKRAINIAN CITIZENS SEEK ASYLUM IN RUSSIA - FMS
After the conflict in southeastern Ukraine started, over 20,000 Ukrainian citizens sought asylum in Russia, the Federal Migration Service (FMS) said.
"As of today, 20,461 people have sought refuge," FMS Deputy Head Anatoly Kuznetsov said at the Public Chamber on Monday.
*** LUHANSK HOSPITALS ADMIT 80 WOUNDED PATIENTS IN PAST 24 HOURS - LPR HEALTH MINISTRY
At least 80 people were injured in Luhansk in the past 24 hours, militia medics said.
"Some 80 persons with injuries of various degrees were admitted to Luhansk city hospitals yesterday, including 56 civilians and 24 militiamen," health minister of the self-proclaimed Luhansk People's Republic Viktor Avakian told Interfax on Monday.
"These are minimal numbers; injured persons continue to be taken to hospitals," he said.
*** FORMER GEORGIAN PRESIDENT EDUARD SHEVARDNADZE PASSES AWAY
Former Georgian President Eduard Shevardnadze passed away on Monday, his press office told Interfax.
"Shevardnadze died today," the press office said.
The former president was 86 years old.
*** PYONGYANG ONCE AGAIN OFFERS NORMALIZATION TO SEOUL
North Korea deems it necessary to abandon the hostile attitude and to alleviate tensions on the Korean Peninsula, says a statement posted by the Korean Central News Agency (KCNA) on Monday.
The statement urged Seoul not to hold new military exercises with the United States and stressed the sides "should end reckless hostility and confrontation and open up the road for reconciliation and unity."
Pyongyang offered Seoul to work on reunification ways together.
Medvedev: If Ukraine refuses to repay debts, Russia to assume tough position (Part 2)
Ukraine conflict stems from debates on choice between West, East - Belarusian foreign minister
Ukraine's partial withdrawal from rights pacts 'senseless and merciless' - Russian ombudsman
MEDVEDEV: IF UKRAINE REFUSES TO REPAY DEBTS, RUSSIA WILL ASSUME TOUGHEST POSSIBLE POSITION IN DEFENDING ITS INTERESTS
Three meetings of Trilateral Contact Group, subgroups planned for June - self-proclaimed Luhansk republic envoy (Part 2)
Consensus not reached on some political issues in Minsk - self-proclaimed Donetsk republic envoy
Russian Foreign Ministry: Eastern Partnership summit misses chance to narrow Europe split
Russian prisoners issue not raised at Ukraine Contact Group meetings - negotiator