Decision at last. For weeks, Russia has been gripped by the mayor of Moscow battle. The Kremlin’s choice has finally settled on Sergei Sobyanin, a close aide of premier Vladimir Putin. That says a lot about where real power in Russia lies.

The battle between Dmitry Medvedev and outgoing mayor Yuri Luzhkov was always about more than the government of Moscow. By sacking the intransigent mayor, who had criticised him in public, the Russian president showed that there were limits to how far he could be pushed. The fact that Putin was unusually silent on the matter added to the impression that Medvedev was at last beginning to take charge.

Russia’s stock market has languished this year, as investors took fright over events in Europe. While this lacklustre performance mirrors other emerging markets, Russia’s cheaper valuations mean it is better placed to bounce back.

Russia now looks like a bargain on both a historic and geographic basis. Its market is still 40 percent down on two years ago — much more than the 15 percent decline in the MSCI Emerging Markets Index. Russia is now around 40 percent cheaper than its peers on a price/earnings basis: it is trading at 6.6 times expected 2010 earnings, compared with an 11.5 average for emerging markets, reckons Renaissance Capital. This discount has widened from around 30 percent at the start of the year, not far from the long-term historic average.

Russian initial public offerings are set for a comeback. Some $20 billion of Russian share sales are forecast this year, including dozens of IPOs. With plenty of options, investors should be able to drive a hard bargain.

Following a two-year lull in activity, bankers are excited at the prospect of a return to the heady days of 2006 and 2007, when Russian companies raised some $37 billion in 42 international share issues. Media group Profmedia plans to raise $500 million in April with a London listing, while iron ore miner Metalloinvest and coal miner SUEK are mulling billion-dollar IPOs in 2010.

Tucked away on page 4 of the Moscow Times today there is a remarkable article which made me wonder whether I wasn’t hallucinating.

The report states matter-of-factly that several branch managers are being investigated for defrauding $1.2 billion from Sberbank, Russia’s largest bank. That’s according to comments made by Sberbank’s regional manager for Moscow. The Moscow Times translated the article from Thursday’s edition of the Russian newspaper Vedomosti, where it appears on page 7.

– Jason Bush is a Reuters columnist. The views expressed are his own —

Former Yukos shareholders are set to sue Russia for up to $100 billion in damages after an international court ruled in their favour. Successful claims against a sovereign state are rare. But the case is embarrassing for Russia. If successful it could even lead to the confiscation of Russian assets.

Russia has been talking up its privatisation plans. Earlier this month, Prime Minister Vladimir Putin described the sale of state assets as “one of the key tools of structural reform”. His deputy, Igor Shuvalov, has talked of privatising 5,500state enterprises over the next few years, with the first 450 to be placed on the block next year. This has led to excitable talk about Russia’s “new wave” of privatisation.But a reality check may be in order. Russia’s privatisation plans are less impressive than the exciting rhetoric suggests. If the government really wants to make an impact, it will need to be a lot bolder. Don’t hold your breath.Putin and his government have long touted the advantages of private ownership. This talk has not been matched by results. Indeed, the value of the state’s share of those companies that are publicly-traded on the stock market has actually increased from 27 percent to 52 percent over the last five years, according to Uralsib, a Moscow bank.The reason? State-controlled enterprises have been on an acquisition binge. Gazprom, for example, owns major assets in oil, electricity, media and banking, as well as its core gas business. Russian Technologies, which began life as Russia’s arms export monopoly, owns stakes in over 400 companies, including the largest car-maker AvtoVAZ.Russia should break up these unwieldy conglomerates if it wants to reform the structure of the economy. For example, there is no logical economic reason why Gazprom continues to own NTV, one of Russia’s largest commercial TV stations. The sorry state of near-bankrupt AvtoVAZ shows that arms-exporters have no business managing Russia’s car industry.In contrast with what is needed, the privatisation plans presently on the agenda look like chicken-feed. True, the target for privatisation revenues has risen from $240 million to $2.4 billion. But that’s less than 25 percent of what Poland is targeting for 2010 and represents just 0.3 percent of the total capitalisation of the Russian stock market.Selling off thousands of state enterprises may look like a big move. But Russia has been trying to sell most of these companies for years. Between 2004 and 2006, it sought to sell state stakes in around 1,500 companies each year, but only achieved about one third of its target. Most of these companies, mainly little-known Soviet relics, are probably unsellable.The government has also promised to reduce its shareholding in large state companies, by floating minority stakes. Oil company Rosneft, the banks Sberbank and VTB, telcoms operator Svyazinvest and the aviation holding company UAC are among the crown jewels eventually slated for partial privatisation.But while this may cut the state’s direct stake in listed Russia Inc, it’s only a halfsolution. The state remains determined to hang on to majority ownership. Nevertheless, a greater share for private investors would aid corporate transparency and oversight, and stimulate the growth of the capital market.But investors shouldn’t expect Russia to move fast, even with these half measures. None of these companies are on the block next year. So far, officials have named just two major assets slated for sale next year: a 13.1 percent stake in insurance company Rosgosstrakh, and a 20 percent stake in shipping company Sovcomflot.Finance minister Alexei Kudrin thinks that the government should wait at least three years before selling stakes in large strategic companies. A lot can change within three years. If oil prices continue to rise, the reform impetus in Russia could easily lose steam.

Something quite extraordinary is happening in Russia. Slowly but surely, the monolithic political system that has held together in Russia for most of the past decade is coming apartToday, in an unprecedented step, deputies from all three of the opposition parties in the Russian parliament staged a walk-out, demanding a meeting with Russian President Dmitry Medvedev. They are protesting against the results of local elections that were held in various parts of Russia on 11 October. Not for the first time, the pro-government United Russia party largely swept the board, amid widespread allegations by the opposition of vote-rigging.

The Russian Interior Ministry is about to seek the arrest of William Browder, the chief executive of Hermitage Capital Management, for illegally evading taxes. That’s according to a front-page article in the Russian newspaper Kommersant, a leading political-economic daily.Browder, a British and US citizen who resides in London, has been denied entry into Russia ever since 2005, when his visa was annulled for obscure reasons. His Hermitage Fund, managed by the British bank HSBC, was once the largest portfolio investor in Russia, but has more recently been embroiled in a series of interconnected scandals.Today’s newspaper article, based on anonymous sources within the Russian police, is evidently the latest shot in a long-running media war that has pitched Hermitage against elements of the Russian police. Over the last year and a half, the British investment fund has made a series of sensational allegations, claiming that senior Russian police officers were involved in a corruption scam designed to fleece the Russian budget of hundreds of millions of dollars.Following these claims, Russian authorities have been busy upping the pressure against the Fund. A lawyer working for Hermitage in Russia, Sergei Magnitsky, was arrested last November, and his trial in Moscow is due to begin shortly. Today’s Kommersant article lays out the case that the police intend to bring against Magnitsky, which relates to alleged underpayment of taxes by two Hermitage subsidiaries several years ago.According to the sources cited in the newspaper, Browder is also implicated, and investigators now intend to approach Interpol with a request to place him on the international wanted list. The paper quotes Hermitage’s view that the case is fabricated “to discredit Hermitage Capital”.Given the circumstances, the latest allegations against Browder will command little credibility outside Russia. According to court documents recently submitted by Hermitage in the US, the criminal case against Magnitsky was initiated by the same police officers previously accused by Hermitage.If Russia does request Browder’s arrest and extradition, legal authorities in Britain are also likely to consider the findings of a recent report into the case by the Parliamentary Assembly of the Council of Europe, which slams Russia’s criminal justice system. The report states that Hermitage was “the victim of the corruption and collusion of senior police officials and organised criminals.”In any case, this isn’t the first time that anonymous police sources have made similar claims about Browder in Kommersant. In April last year, the newspaper ran an article that alleged that a Russian arrest warrant had already been issued for the British fund manager, and an international one would be requested shortly. However, a Moscow police spokeswoman subsequently denied that any such warrant had been issued, and nothing more was heard about it.