Germany kept alive hopes that the 17-nation euro currency can survive the sprawling debt crisis when lawmakers in Europe’s largest economy on Thursday voted overwhelmingly in favor of expanding the powers of the eurozone’s bailout fund.
The vote strengthened Angela Merkel’s center-right coalition, which had struggled to win support from a bloc of rebellious members, and could bolster her ability to negotiate new European crisis measures.
While many investors and experts believe new steps will be required in Europe, such as letting Greece write off more of its debt pile, Germany’s approval of the fund’s new powers and scope was necessary to avoid a new bout of massive market turmoil.
“The support of the Bundestag is an important step for stabilizing the eurozone,” Michael Kemmer, head of Germany’s Bank Federation, told the news agency dapd. “With that, they have set a course that leads out of the debt crisis.”
The euro440 billion ($600 billion) fund will be able to buy government bonds and lend money to banks and governments before they are in a full-blown crisis, making Europe’s response to market jitters more rapid and pre-emptive.
Germany, which pays the lion’s share of European bailouts, became the 13th member of the eurozone to support the expansion of the rescue fund, the so-called European Financial Stability Facility, or EFSF. Cyprus also passed the proposed expansion on Thursday.
Austria’s parliament is widely expected to pass the measure on Friday, the same day Germany’s upper house of parliament is set to finalize Thursday’s vote, while the Netherlands is expected to approve it in the first week of October.
The biggest remaining hurdle is the final country to vote _ Slovakia _ where the government will not have enough support to pass it if the leader of the junior coalition Freedom and Solidarity party follows through with threats to vote against the fund’s expansion. Its parliament is to vote later in October.
In Berlin, 523 lawmakers in parliament, the Bundestag, voted in favor of expanding German participation to guarantee loans of up to euro211 billion, compared with euro123 billion so far. Eighty-five voted against it and three abstained.
“It was a strong statement of Angela Merkel’s position. She has the backing and the support of the coalition and she is able to negotiate on the European level,” Peter Altmeier, the parliamentary whip for Merkel’s Christian Democrats, said after the tally was announced.
Markets appeared calmer even before Thursday’s votes, following weeks of turbulence triggered by uncertainty over Germany’s position on the fund. The euro also traded slightly higher.
“The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control,” said Sony Kapoor of the Re-Define economic policy think tank.
The lingering problem, however, is that investors are resigned to the fact that Greece will have to default _ that is, impose tougher losses on its bondholders.
Greece was saved from default by an initial euro110 billion ($150 billion) bailout in May last year before the EFSF was established to help any other countries in trouble. A planned second rescue package for Greece this year includes a voluntary participation by private bondholders, who agreed to write off about 20 percent on their Greek debt holdings.
Many experts say those writedowns should be closer to 50 percent. The debate among European leaders now is whether to allow such a move under controlled conditions, providing help to banks that may take heavy losses on Greek bonds they hold.
Germany and the Netherlands are open to the option, with Merkel suggesting this week that Greece’s second bailout deal might have to be renegotiated. France and the European Central Bank, however, oppose the idea.
Greece’s international debt inspectors returned to Athens on Thursday to complete a review. Merkel has said that any new decisions would depend upon the results of the inspectors’ report, which is not due for days.
Forging consensus over new measures _ particularly something as delicate as imposing more severe losses on Greece’s creditors _ will likely be very difficult, however.
Indeed, the parliamentary debate on the EFSF in Berlin on Thursday was a feisty three-hour long affair, reflecting how high tensions in Merkel’s coalition were running over the idea of providing more backing to the eurozone’s weakest members.
Frank Schaeffler, a dissenter from the junior coalition partner, argued that bailout measures have worsened Greece’s economic situation.
“Despite all arguments, the first bailout did not make the situation for Greece better, but worse,” said Schaeffler, a Free Democrat. “Expanding the fund will make the situation even worse.”
Schaeffler and others had long expressed their concerns, and opposition leaders had said going in to the vote that if Merkel’s coalition had to rely on their votes, it would be a sign that her strife-prone and increasingly unpopular government is finished.
Yet after a night of intense lobbying, Merkel’s camp was able to secure a majority of 315 _ enough to have passed the measure even without support from the opposition parties.
“This shows the clear determination of the coalition on this issue,” Rainer Bruederle, the Free Democrats’ parliamentary leader. “We have made an important decision for Europe.”
Any future changes to the current fund will also require parliamentary approval and maintaining that determination will be crucial to making swift, effective decisions to combat the crisis.
In addition, the Bundestag will face another major vote early next year on the fund’s permanent replacement, the European Stability Mechanism, which is due to take effect in 2013. Schaeffler has already vowed to rally his party to reject the ESM.
Party leaders insist they are not worried by Schaeffler’s plans, but many analysts have noted Merkel will have to hold her majority together, or Thursday may have only been the first in a series of nail-biting parliamentary showdowns over shoring up the euro.
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Geir Moulson and Tomislav Skaro in Berlin, and Menelaos Hadjicostis in Nicosia, Cyprus, contributed to this report.
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German officials on Monday downplayed prospects of any quick and dramatic change of course in the eurozone debt crisis, days before a parliamentary vote on beefing up the continent’s rescue fund.
Weekend meetings of global financial leaders in Washington raised hopes of a change in strategy, with officials indicating that would focus on further boosting the firepower of the euro440 billion ($595 billion) rescue fund _ perhaps by allowing it to tap loans from the European Central Bank or otherwise leveraging its lending capacity.
Hopes for such a move boosted European stock markets on Monday, with German and French bank shares rising strongly.
However, ahead of a parliamentary vote Thursday on changes to the fund that eurozone leaders already agreed to in July, Berlin was keen to underline its attachment to its often-criticized step-by-step approach.
Thursday’s vote on expanding the powers of the rescue fund, the so-called European Financial Stability Facility, will be followed over the coming months by final decisions on a second bailout package for Greece and on a permanent rescue mechanism meant to succeed the EFSF from 2013, Finance Ministry spokesman Martin Kotthaus noted.
“That is quite simply the procedure that lies in front of us _ we will work through it step by step,” Kotthaus said.
When asked in Washington whether he supported the idea of leveraging the rescue fund, German Finance Minister Wolfgang Schaeuble said: “Of course we will use the EFSF in the most efficient way possible.”
His spokesman, Kotthaus, said that the EFSF “is how it is” and noted that only a small part of the funding has already been committed.
Asked about the possibility of leveraging the fund, he said “the discussion is not so far along that I could contribute any examples, ideas or subideas.”
Some in Chancellor Angela Merkel’s center-right coalition already find beefing up the EFSF by giving it new powers hard to swallow, and anything beyond that could be a hard sell among its lawmakers.
Christian Lindner, the general secretary of the Free Democrats _ Merkel’s junior coalition partner _ called on the chancellor to provide clarity and stressed that his party opposes allowing the fund to tap ECB loans quick guaranteed personal loans.
A prominent opposition lawmaker, center-left Social Democrat Carsten Schneider, said the government should come clean on its “real intentions.”
“In Washington and Brussels they are already planning new programs in the billions, and in Germany the parliament and public are having the wool pulled over their eyes,” Schneider was quoted as telling Der Spiegel magazine.
Merkel’s spokesman rejected that accusation sharply.
“The true intentions of the government and the chancellor are on the table,” Steffen Seibert said. “They will be decided on in parliament Thursday.”
Merkel has been caught between criticism from abroad for doing too little and from supporters at home who fear she is spending too much taxpayer money on the crisis. She went on German television Sunday night to defend her step-by-step tackling of the crisis.
She warned of the dangers a radical restructuring of Greek debt might bring at this stage.
“Lehman Brothers was allowed to go bust, and then the world was surprised that it fell into a deep crisis,” Merkel said on ARD television.
“What we have to learn is that we can only take steps we can really control,” she added. “The word ‘haircut’ is easy to say on its own … (but) we must go step by step.”
In financial terms, a haircut is a loss investors take on an asset. Many experts believe Greece’s bondholders will have to take a sharp haircut _ that is, not get paid back fully for the money they lent to the country _ if Greece is to have any chance of reducing its debt load.
“What we cannot do is, along the way, destroy the confidence of all investors, and (have) them say, OK, they did this with Greece now; tomorrow they’ll do it with Spain, the day after with Belgium or some other country,” Merkel said.
“Then no one anywhere would invest their money in Europe any more, and we have to prevent that.”
After eight months of contract-wrangling and negotiations that dragged past a strike deadline, supermarket workers in Southern California will stay on the job and shoppers won’t have to rely on Whole Foods or their corner liquor store for groceries.
Members of the region’s United Food and Commercial Workers voted to ratify a new contract with three major grocery chains, union local spokeswoman Ellen Anreder said, averting a strike of more than 60,000 workers that could have crippled the industry and left shoppers scrambling.
United Food and Commercial Workers local spokeswoman Ellen Anreder said Saturday that after two days of voting, members agreed to a deal struck Monday with Vons, Ralphs and Albertsons. Exact vote totals were not released.
“We’re all very grateful to our customers for their support over this eight-month process, and are very grateful that we can continue to serve them,” a tired-but-relieved Anreder said after the vote.
Union officials had urged their rank-and-file to ratify the contract, which they said addressed concerns about funding for the employees’ health plan, the main sticking point during months of negotiations.
“This package protects our members’ access to affordable comprehensive health care for themselves and their families,” the union said in a statement. “That was our top priority throughout the negotiating process.”
The supermarkets, meanwhile, said after agreeing to the deal that it would allow them to remain competitive. Messages left for grocery representatives after the vote were not immediately returned.
Details of the agreement were made available to members for the first time as they filed into their union locals’ headquarters or other voting locations to cast their ballots on Friday and Saturday.
“There was a sense of relief when people had an opportunity to really look over the new contract and see what was in it,” Ralphs clerk and union member Mario Frias said.
The deal ended months of sometimes testy discussions between union officials and representatives of The Vons Cos.; Ralphs Grocery Co., a subsidiary of The Kroger Co.; and Albertsons, which is owned by Supervalu Inc.
Ralphs had indicated it would initially close all 250 of its stores if there had been a strike; Albertsons had said it could shutter up to 100 locations, while Vons had said its stores would remain open.
The prospect of shuttered stores and tense picket lines brought fears of a repeat of the four-month strike in 2004 that cost the industry $2 billion and created a mess for shoppers. This time around, with unemployment at 12.1 percent in California, workers evidently feared that they would find little public sympathy if they voluntarily walked off the job.
The market chains, meanwhile, were likely reluctant to invite shutdowns and picket lines that might alienate shoppers already spending less due to the economic downturn.
Union leaders and the markets announced in July that they had reached a tentative agreement on the employers’ contributions to pension benefits, but remained far apart on payments to the union health care trust fund.
Union members voted overwhelmingly last month to authorize their leaders to call a strike. Those leaders said they were responding to what they characterized as the chains’ delaying tactics when they issued the required 72-hour notice Thursday evening to cancel the contract extension under which they had been working since March.
But after the Sunday evening deadline passed with neither a strike nor a deal, store employees returned to work. Union officials announced Monday that the tentative deal had been reached.
A legal fight over a company’s claim that its designs for numerous SeaWorld attractions were stolen by the theme park operator and its former owner, Anheuser-Busch, has now landed in a St. Louis courtroom.
Revere Entertainment Studios, an Oviedo, Fla.-based design firm, has filed a federal lawsuit alleging SeaWorld used several concepts Revere developed for attractions at SeaWorld theme parks in Orlando, San Diego and San Antonio but did not pay for the development or use. Revere originally filed the suit in federal court in Florida in May, but the case was transferred to federal court in St. Louis on Sept. 16.
Revere names SeaWorld and A-B in the lawsuit in addition to several current and former SeaWorld and A-B executives.
The brewery’s parent company, Belgium-based Anheuser-Busch InBev, owned SeaWorld until late 2009, when it sold its theme park division, Busch Entertainment, to private equity firm Blackstone Group for more than $2.3 billion. Busch Entertainment was headquartered in Clayton until it moved to Orlando in 2008.
Revere claims in the lawsuit that it created an Australian Extremes concept for rides and attractions and pitched the idea to several Busch Entertainment and SeaWorld executives beginning in 2005. Revere also claims it created multiple concepts for rides and attractions, such as a merry-go-round with dolphins and seahorses, that SeaWorld ultimately added to its parks low rates payday advance.
Revere claims SeaWorld and the other defendants named in the suit breached an implied contract by using Revere’s ideas but not paying for the work. Revere claims that many of the ideas it presented to SeaWorld, were slightly changed, for example, Revere alleges it presented an idea for a Dynamite Pass roller coaster and SeaWorld ultimately added a similar attraction called the Dynamite Drop.
Tucker Byrd, an attorney representing Revere, said the damages he’s seeking for his client exceed $100 million. Revere ’spent a couple of years putting it together and thousands of hours creating this thing,” Byrd said. “Then the defendants misappropriated the property of my clients.”
In a motion filed to dismiss the case, SeaWorld and the other defendants argued that Revere signed a non-confidentiality agreement and that Busch Entertainment “made no commitment to keep products, ideas or materials secret or in confidence.”
In an emailed statement, Fred Jacobs, a spokesman for SeaWorld, called the allegations “baseless and meritless.”
Asian stocks headed lower Thursday, stung by a pessimistic assessment of the U.S. economy by the Federal Reserve.
Japan’s Nikkei 225 slumped 1.6 percent to 8,598.32 while South Korea’s Kospi index slid 2.6 percent to 1,806.62. Benchmarks in New Zealand, Singapore and Taiwan were also lower.
Hong Kong’s Hang Seng index plummeted 3.6 percent to 18,138.32, with blue chip property developers among the biggest losers. China Resources Land Ltd. tumbled 10.1 percent while China Overseas Land & Investment slid 7.9 percent. China Vanke Co. lost 3.8 percent.
Australia’s S&P ASX 200 was 2.2 percent down at 3,984.40, with energy shares plummeting amid fears of a global economic slowdown. BHP Billiton, the world’s largest mining company, lost 3.3 percent. Rival Rio Tinto Ltd. plunged 5 percent. OZ Minerals dropped 6.3 percent.
Falling gold prices hit precious metal stocks. Hong Kong-listed Zijin Mining Group, China’s No. 1 gold miner, lost 4.9 percent. Newcrest Mining, Australia’s biggest gold miner, fell 2.2 percent.
Ben Potter of IG Markets in Melbourne, Australia said in a report that he expects “a session of heavy selling as the world reacts to the Fed’s downbeat outlook for the US economy.”
In a highly anticipated move, the Fed on Wednesday announced it would buy Treasury bonds to help the U.S. economy. But Wall Street stocks fell anyway because the U.S. central bank made it clear that a full U.S. economic recovery was likely years away.
The Dow Jones industrial average lost 2.5 percent to close at 11,124.84. The Standard & Poor’s 500 index fell 2.9 percent to 1,166.76. The Nasdaq composite fell 2 percent to 2,538.19.
The Fed said after a two-day meeting that it would buy long-term Treasurys and sell short-term ones to help the economy regain momentum. It surprised investors when it said it would include more 30-year bonds in its purchases than expected.
The Fed said it would buy $400 billion in 6-year to 30-year Treasurys by June 2012. Over the same period, it planned to sell $400 billion of Treasurys maturing in 3 years or less. The move is intended to drive down interest rates on long-term government debt, and could lower rates on mortgages and other loans.
The inclusion of more 30-year bonds than expected means the Fed saw the need to keep very long-term rates lower for an extended period. Many analysts viewed the move as an acknowledgment that the U.S. economy’s problems are long-term.
The Fed also bleakly stated that the economy has “significant downside risks” and that a number of problems won’t be easily solved, including high unemployment and a depressed housing market.
Meanwhile, the price of oil continued its slide on expectations that there’ll be less demand for energy because of the U.S. economy.
Benchmark crude for October delivery was down 99 cents per barrel to $84.92 on the New York Mercantile Exchange. The contract fell $1.00 to settle at $85.92 on the Nymex on Wednesday.
In currency trading, the dollar rose to 76.76 yen from 76.56 yen late Wednesday in New York. The euro fell to $1.3564 from $1.3667.
The Federal Reserve is running out of options to try to boost a slumping economy and lower unemployment. So policymakers are expected to reach 50 years back into their playbook for their next move.
Most economists expect the Fed to announce a plan Wednesday to shift money in its $1.7 trillion portfolio out of short-term securities and into longer-term holdings.
The plan could lower Treasury yields further. Ultimately, it could reduce rates on mortgages and other consumer and business loans, too.
Fed Chairman Ben Bernanke is expected to advocate the move despite criticism from within the Fed and from Republican lawmakers and presidential candidates.
On Monday, the four highest-ranking Republicans in Congress sent Bernanke a letter cautioning the Fed against taking further steps to lower interest rates. Their letter suggested that lower rates could escalate the risk of high inflation.
The plan the Fed is considered most likely to unveil Wednesday has been dubbed “Operation Twist” and dates to the early 1960s. The Fed used a similar program then to “twist” long-term rates lower relative to short-term rates.
Expectations that the Fed will do so again, along with renewed fears of another recession, have led investors to buy up U.S. Treasurys. Treasury yields have dropped in response.
The yield on the 10-year Treasury note last week touched a historic low of 1.87 percent. On Tuesday, it finished slightly higher, 1.93 percent.
Once the Fed announced last month that it would expand its September meeting from one to two days, most economists have predicted that policymakers would unveil some new step. Chairman Ben Bernanke has said that the Fed is considering a range of options.
The central bank is under pressure to revive an economy that has limped along for more than two years since the recession officially ended. In the first six months of this year, the economy grew at an annual rate of just 0.7 percent. In August, the economy didn’t add any jobs, and consumers didn’t increase their spending on retail goods.
Most economists foresee growth of less than 2 percent for the entire year. Many say the odds of another recession are about one in three.
The Fed has offered its own bleak outlook. At its August meeting, it said the economy will likely struggle for at least two more years. As a result, it said it planned to keep short-term rates near record lows until mid-2013, as long as the economy remained weak.
The decision to do so highlighted a rift within the central bank. Three members dissented from the Fed’s decision _ the most negative votes in nearly two decades. The three, all regional Fed bank presidents, said the Fed’s policies have increased the risk of inflation.
Bernanke has also faced criticism from congressional Republicans and GOP presidential candidates. Some have argued that the Fed’s $600 billion bond-buying program, which ended in June, weakened the value of the dollar against other currencies and contributed to a spike in oil and commodity prices.
Texas Gov. Rick Perry, who is seeking the GOP nomination for president, went so far as to say Bernanke would be “almost treasonous” to launch more bond buying.
Bernanke has said that the Fed could consider another round of bond purchases. It could also provide more specific guidance on future interest rate moves.
Or it could reduce the 0.25 percent interest the Fed pays banks on their reserves at the central bank. Doing so would reduce the banks’ incentive to keep money at the Fed and might make them more likely to lend.
But many analysts expect the Fed to opt for Operation Twist over those other actions.
President Barack Obama has unveiled a $447 billion jobs program made up of a combination of tax cuts and increased government spending. But the proposal faces an uncertain fate in Congress, where Republicans are focused on efforts to trim soaring budget deficits.
The Greek government says an emergency conference call between Finance Minister Evangelos Venizelos and the country’s creditors could last until early Tuesday and be continued later in the day.
Global markets remained skeptical about Greek pledges to step up urgently needed reforms, and stocks in the U.S., Europe and Asia fell sharply Monday on fears Athens will default on its mountain of debt.
Greece’s international bailout creditors had stepped up the pressure at the start of a crucial week in Europe’s nearly two-year debt crisis, urging Greece to do more to heal its finances.
Creditors are threatening to cut the cash lifeline, which would force Greece to go bankrupt in less than a month.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
ATHENS, Greece (AP) _ Greece’s finance minister is holding an emergency teleconference with the country’s creditors hours after pledging to speed up reforms and civil-service staff cuts.
Global markets were skeptical about any of Greece’s pledges, however, and stocks in the U.S., Europe and Asia fell sharply Monday on fears Athens will default on its mountain of debt.
Greece’s international bailout creditors had stepped up the pressure at the start of a crucial week in Europe’s nearly two-year debt crisis, urging Greece to do more to heal its finances.
Creditors are threatening to cut the cash lifeline, which would force Greece to go bankrupt in less than a month.
Venezuelan President Hugo Chavez headed back to Cuba on Saturday for a fourth phase of chemotherapy that he expects to be his last round of treatment for cancer.
Supporters greeted Chavez with songs and a prayer outside the presidential palace before he left for the airport along with Bolivian President Evo Morales, who was accompanying him to the island.
Chavez told the crowd that he is confident he is overcoming the illness.
“I’m sure that this week we will close the cycle of chemotherapy and we will be turning the page,” he told supporters, standing at the doors of the presidential palace.
“Chavez’s cancer is now part of this history,” he added, likening it to the short-lived coup he survived in 2002.
Chavez waved to the crowd wearing the red beret and fatigues from his years as an army paratroop commander.
Later, a military band played Venezuela’s national anthem at the airport as Chavez and Morales prepared to board their flight to Havana pay day loans.
Speaking earlier at the presidential palace, Chavez said he expected to undergo medical tests in Havana on Saturday night and then resume chemotherapy Sunday. He said he would return from Cuba before next weekend.
Once the treatments are finished, he said, it will be “goodbye to the threat of cancer, and then on to life.”
“I will come out strengthened,” Chavez said.
The 57-year-old leader referred to his 2012 re-election campaign saying “the battle that lies ahead is hard.”
He underwent surgery in Cuba in June to remove a tumor from his pelvic region. Since then, he has undergone three rounds of chemotherapy treatments, two of those in Cuba.
He has said that the treatment aims to prevent any cancerous cells from reappearing and that tests have shown no signs of a recurrence.
The crash of an aging Russian jet last week that killed 44 people, including an entire professional hockey team, was among a string of recent deadly crashes in Russia that have scared the public and prompted the president to suggest replacing all Soviet-era aircraft with Western-made planes.
But industry experts say that the air disasters plaguing Russia are rooted not simply in the planes’ age, but in a myriad of other problems, including poor crew training, crumbling airports, lax government controls and widespread neglect of safety in the pursuit of profits.
“It’s like an ax hanging over the head of each of us,” said Oleg Smirnov, a highly decorated pilot who served as deputy civil aviation minister during Soviet times.
He and other experts warn there is no quick remedy for the industry’s woes _ exacerbated by government inefficiency and corruption. They blame state regulators for turning a blind eye to aviation problems and failing to establish proper control over flight safety.
Veteran pilots insist aircraft like the Yak-42 that crashed last week, the Tu-134 that went down in June _ killing 47 people _ and the An-24 that crash-landed on the Ob River in July and killed seven, are solid designs that are safe to fly despite their age if they are operated properly.
An official panel conducting the probe into the Yak-42 crash hasn’t yet named the cause, but has said it has found no evidence of equipment failure. However, two other such jets belonging to the owner of the crashed plane were grounded after a safety watchdog found that some engine components had exceeded their service time.
While most pilots and industry experts describe the Soviet-era planes as outdated but rugged and reliable, some say that the airlines have struggled to keep them airworthy.
“The collapse of aircraft components production has created a major problem,” Alexander Akimenkov, a veteran test pilot who has flown 80 types of Russian and Western planes, told The Associated Press.
Akimenkov said the owners of Soviet-made planes have had to rummage around the country for spare parts to keep them flying. The shortage of spare parts has spawned the use of plane components from old depots, which sometimes lack proper service certificates, as well as recycled components.
The government has done little to strengthen air safety. Russia has four government agencies overseeing aviation, but their functions are vaguely defined and often duplicate one another.
“There is an immediate need for a single government agency in charge of aviation,” said veteran pilot Vladimir Gerasimov, who blamed authorities for failing to make safety the top priority. He argued that loose regulations contributed to some of the recent crashes by permitting pilots to perform risky landing maneuvers.
Gerasimov said that greed prevails over safety at some Russian carriers, whose management encourages crews to save fuel no matter what. That often prompts pilots to make risky decisions like landing in bad weather instead of flying to another airport out of fear of losing their pay.
“Pilots act under pressure of possible sanctions for making the right decisions,” Gerasimov told The Associated Press.
Russia’s President Dmitry Medvedev responded to the latest crash by ordering officials to shut most of the nation’s 130 carriers, saying small airlines tend to cut corners on safety. He also said the government may end attempts to bail out struggling national aircraft makers and buy more foreign planes. “The value of human life must prevail over all other considerations, such as support for local producers,” Medvedev said.
Many industry insiders warn, however, that replacing the old planes won’t solve the industry’s problems because Western aircraft require the modern infrastructure that Russia lacks.
“The president suggests using Western planes, but in that case we would also need to have Western infrastructure,” said Akimenkov, the veteran test pilot.
Akimenkov, who tested the performance of several Soviet-designed planes in extreme conditions, said that Western planes generally require more careful maintenance and aren’t always fit for use at primitive airports and in the rugged conditions of Russia’s Far North.
The nation’s airports have remained in state hands, and most of them continue to rely on outdated navigation and communications equipment and are in dire need of repairs.
While June’s Tu-134 crash in the northwestern city of Petrozavodsk has been blamed on the pilot, who might have mistaken a nearby highway for the runway while trying to land in deep fog, experts said the antiquated condition of the local airport contributed to the disaster.
Only three airports in the country are equipped with state-of-the art automatic landing systems, while all others continue to rely on old navigation equipment, which puts more pressure on the crews when they land at night or in bad weather, raising the likelihood of pilot error.
Poland said that insufficient lighting at an airport in Smolensk in western Russia was among the factors that contributed to the April 2010 crash of a Soviet-made Tu-154 that killed Polish President Lech Kaczynski and 95 other people.
The largest airlines, including the national flag carrier Aeroflot, already have withdrawn Soviet-era planes from service and rely almost entirely on Boeings and Airbuses, which burn less fuel and meet European requirements for noise and emissions. Imported planes accounted for 83 percent of passengers carried by Russian airlines last year, and the figure will likely reach 90 percent this year, Smirnov said.
But Boeings and Airbuses are used only on the busiest foreign and domestic flights, while hundreds of other routes across Russia’s nine time zones are served by small regional carriers, most of which have only a handful of aging Soviet-era aircraft and simply can’t afford Western planes.
Alexei Sinitsky, the editor of Air Transport Review monthly magazine, said that bigger carriers have shown no interest in serving smaller airports, which would require a big investment and wouldn’t bring sizable returns. He argued that many smaller carriers have a good safety record and warned that Medvedev’s orders would have “monstrous consequences for both Russia’s aviation and for the population of remote regions.”
Other experts also said that an attempt to quickly discard old aircraft and radically cut the number of carriers would paralyze air traffic across most of Russia.
“Aviation is what keeps our country together,” said Smirnov, warning that air transport provides the only link to many areas of Siberia and the Far East. “Closing an airport means closing a city.”
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