Rosneft is already in the process of merging with
Gazprom, the world's biggest gas company, a move that will see Gazprom
return to majority state-ownership.
Baikal was the surprise buyer of oil and gas giant
Yukos's main production division at a forced auction on Sunday.
"Everything was done by market methods," Mr
Putin said at his year-end press conference in Moscow.
Shedding some light on the Kremlin's motivation, Mr
Putin referred to a period of so-called "cowboy capitalism"
that followed the collapse of the Soviet Union.
He said privatisations carried out in the early 1990s
had involved trickery, including law breaking, by people seeking to
acquire valuable state property.
"Now the state, using market methods, is
safeguarding its interests. I think this is quite normal," the
Russian president said.
A Gazprom spokesman has said the acquisition is part
of its plan to build a "balanced, national energy
EC CALLS TRUCE IN DEFICIT BATTLE
The European Commission (EC) has called a truce in
its battle with France and Germany over breaching deficit limits.
The move came after France and Germany vowed to run
their budget deficits below the EU cap in 2005 — for the first time in
But, the EC did warn the two were under close
scrutiny and it would act if their fiscal situations deteriorated.
Under EU rules, member countries must keep their
deficits below 3%. France and Germany will breach that this year.
It will be the third year in a row that the two
countries have broken the European Union's Stability and Growth Pact
The eurozone's two biggest economies left the pact in
tatters in November 2003 when they persuaded fellow EU members to put
the threat of penalties for deficit breaches on hold.
The commission then took the pair to the European
Court of Human Justice — which ruled EU countries could not put the
pact "in abeyance", and confirmed the EC's right to launch
"excessive debt procedures".
After announcing its decision to erase France and
Germany from its list of deficit rule breakers, the EU said that the
time lag created by the ruling meant that 2005 should be the target year
for the pair to bring their budget's below 3%.
"The commission concludes that the two countries
appear to be on track to correct their excessive deficits by 2005,"
it said in a statement.
The EU expects the German deficit to fall to fall to
2.9% of GDP next year from 3.9% this year, while France's is forecast to
drop to 3% from an expected 3.7% this year.
The forecasts are based on EC predictions of GDP
growth of 1.5% in Germany next year and 2.2% in France.
BUSH TO GET 'TOUGH' ON DEFICIT
US president George W Bush has pledged to introduce a
"tough" federal budget next February in a bid to halve the
country's deficit in five years.
The US budget and its trade deficit are both deep in
the red, helping to push the dollar to lows against the euro and
fuelling fears about the economy.
Mr Bush indicated there would be "strict
discipline" on non-defence spending in the budget.
The vow to cut the deficit had been one of his
The federal budget deficit hit a record $412bn
(£211.6bn) in the 12 months to 30 September and $377bn in the previous
"We will submit a budget that fits the
times," Mr Bush said.
"It will provide every tool and resource to the
military, will protect the homeland, and meet other priorities of the
The US has said it is committed to a strong dollar.
But the dollar's weakness has hit European and Asian
exporters and lead to calls for US intervention to boost the currency.
DEAL STRUCK OVER TURKEY-EU TALKS
The EU and Turkey have struck a deal over an EU
demand that Turkey recognise Cyprus before membership talks begin.
The solution they found after two days of tough and
at times heated talks was for Turkey to tacitly acknowledge the Cyprus
government for the first time.
The deal clears the way for Turkey — large, poor
and overwhelmingly Muslim — to start entry talks in October 2005.
But Turkish Prime Minister Recep Tayyip Erdogan
insisted signing the protocol was not a formal recognition of Cyprus.
"We did not obtain all that we wanted
100%", he told a news conference, "but we can say that it was
EU leaders confirmed that Turkey had completed the
last of the essential changes in its laws needed to meet the EU's
democratic conditions for opening talks.
TOKYO SAYS DEFLATION 'CONTROLLED'
The Japanese government has forecast that the
country's economic growth will slow to 1.6% in the next fiscal year
starting in April 2005.
While it predicts this fall from the current 2.1%
level, it said it was making progress on ending deflation.
The figures were given by economics minister Heizo
Takenaka who said the economy would grow by 2% in 2006/07.
He said the consumer price index (CPI) would rise
0.1% in the next fiscal year, the first gain since 2000/01.
"We are attempting to make real economic
conditions better and to overcome deflation. I think we are on
track," said Mr Takenaka.
Deflation — or falling consumer prices — has
plagued Japan for more than five years.
BOEING SECURES GIANT JAPAN ORDER
Boeing is to supply Japan Airlines with up to 50 of
its forthcoming 7E7 planes in a deal that could be worth as much as $6bn
(£3.1bn) for the US giant.
Japan Airlines has made a firm order for 30 of the
aircraft, at $120m each, with the option to buy 20 more.
Asia's biggest airline joins Japanese rival All
Nippon as one of the first carriers to order the mid-size 7E7, which
Boeing says is super-economical.
Airbus last week announced the first pre-sale of its
7E7 rival — the A350.
Boeing's great European competitor is to sell 10 of
its forthcoming A350 to Spanish carrier Air Europe, which has the option
to buy two more in a deal that could be worth more than $1.8bn.
Both the 7E7 and the A350 are being designed to be as
fuel-efficient as possible in the 200 to 300-seat sector, and each will
be available in both short and long range versions.
BRUSSELS BLOW TO MICROSOFT UPHELD
A European court has turned down an appeal by
Microsoft to delay hard-hitting sanctions from the European Commission.
The US software giant went to the European Court of
First Instance to try to get the penalties for abuse of monopoly
Microsoft wanted to delay the opening up of aspects
of its Windows software system to rivals, and a record EU fine. The
court dismissed Microsoft's plea "in its entirety".
INDEPENDENT BUYS INTO INDIA PAPER
Irish publishing group Independent News & Media
is buying up a 26% stake in Indian newspaper company Jagran in a deal
worth 25m euros ($34.1m).
Jagran publishes India's top-selling daily newspaper,
the Hindi-language Dainik Jagran, which has been in circulation for 62
HOUSE PRICES DROP AS SALES SLOW
House prices fell further in November and property
sale times lengthened as rate rises took their toll, the Royal Institute
of Chartered Surveyors found.
A total of 48% of chartered surveyor estate agents
reported lower prices in the three months to November — the highest
level in 12 years.
Meanwhile the number of sales dropped 32% to an
average of 22 per surveyor.
BAE SYSTEMS GETS £160M CONTRACT
The Ministry of Defence has awarded a £160m contract
to design and develop the new Hawk trainer jet to the UK firm BAE
The work will be carried out at the arms giant's
Brough factory in East Yorkshire, helping secure the site.
A BAE spokesman said it was the perfect Christmas
present for the 2,500 staff who will work on the project.
Defence minister Lord Bach said the contract was a
"significant milestone" in the Hawk programme.
CHRISTMAS SHOPPERS FLOCK TO TILLS
Shops all over the UK reported strong sales on the
last Saturday before Christmas with some claiming record-breaking
numbers of festive shoppers.
A spokesman for Manchester's Trafford Centre said it
was "the biggest Christmas to date" with sales up 5%.
And the Regent Street Association said shops in
central London were also expecting the "best Christmas ever".
That picture comes despite reports of disappointing
festive sales in the last couple of weeks.
GANG IN '£20M' BANK RAID
More than £20m may have been stolen in a raid at a
bank's headquarters in Belfast, police have said.
The families of two Northern Bank executives were
held hostage for 24 hours.
The robbery happened at the bank's headquarters in
Donegall Square West in the city.
It is believed it could be one of the biggest cash
robberies in the UK. The bank said a "significant" amount of
money had been stolen.
VIETNAM FIGHTS BIRD FLU OUTBREAK
Some 4,000 chickens have either died or have been
culled in southern Vietnam in a bid to halt the latest outbreak of avian
flu, Vietnamese authorities say.
Farms in the Mekong Delta have been disinfected and
cordoned off and preventive measures have been boosted to prevent the
disease from spreading.
The epidemic reappeared earlier this year killing 32
people across Asia.
Experts have warned of the risk of a world pandemic
if bird flu combines with a human flu virus.
No humans are reported to have been infected so far
in the latest Vietnamese outbreak.
Farmers in Can Tho City have been urged to disinfect
their farms every week, and tests are being carried out at other farms
in the area.
EU AGREES FISHING QUOTAS FOR 2005
EU fisheries ministers have reached agreement with
the European Commission on national fishing quotas for 2005.
Under the compromise deal, the Commission agreed to
allow more fish to be caught by fishing fleets next year than it had
The Commission, which was looking for drastic
reductions, had already dropped its proposals to close depleted cod
grounds in parts of the North Sea.
The UK and other EU members with a North Sea coast
had opposed the plan.
The ministers agreed to gentler quota cuts provided
the reductions continue for several years, according to reports.
The compromise deal, reached after talks that
stretched through the night, was adopted almost unanimously. Only
Lithuania voted against, while Britain and France voiced reservations.
PUZZLE OVER GAZPROM OIL SELL-OFF
Russia's Gazprom is selling a key oil subsidiary in a
move that puzzles observers and may redraw the domestic petroleum
The unit, Gazpromneft, was expected to take part in a
state auction on Sunday but surprisingly did not place a bid for oil
Analysts blamed the threat of legal action from Yukos,
the oil giant that owned Yuganskneftegas.
INDIA'S DECCAN SEALS $1.8BN DEAL
Air Deccan has ordered 30 Airbus A320 planes in a
$1.8bn (£931m) deal as India's first low-cost airline expands in the
fast-growing domestic market.
Air Deccan was set up last year and wants to lure
travellers away from the railway network and pricier rivals.
The potential of the Indian market has attracted
attention at home and abroad.
Beer magnate Vijay Mallya recently set up Kingfisher
Airlines, while UK entrepreneur Richard Branson has said he is keen to
start a local operation.