GLOBAL INVESTMENT REVIEW magazine by GLOBAL INVESTMENT REVIEW

W Alex Yar

e live in a challenging time in which countries and individuals throughout the world are encountering great difficulties. Military conflicts, political disagreements, sanctions, and lack of trust complicate the economical situation. However, in spite of these challenges, we continue to trade and common projects emerge… in space, as on Earth, life goes on. Thanks to business and business partnerships, new offices are created, citizens’ prosperity is fortified, and countries thrive – the world is getting better. People are starting to understand each other more, learning to trust partners, have a better understanding of their own goals and recognize the importance of working together to achieve mutually beneficial results. The Inter Invest Oklahoma Foundation was created to help and support such projects. Our magazine is possible thanks to the Foundation and its members: the Lawson Law, LLC (USA), LLC Alkor (Russian Federation) and AY Publishing House. We produce 12 issues per year: six issues in Russian and six issues in English. The publication is dedicated to sharing the latest news and reviews on investment opportunities that are available abroad (predominantly in the countries of the former Eastern bloc), the investment policies of overseas nations and the current investment climate. A particular attention will be paid to America’s EB-5 visa, which allows overseas investors to obtain permanent residence in the United States in exchange for investment in US companies. Similar offerings from alternative countries will also be reviewed and examined. The magazine will present thought-provoking articles that are written by famous economists, politicians and business professionals. The insights they

From the Editor share will allow readers to familiarize themselves with the current state of affairs in the world of investments, and help them to ensure they adhere to all legal regulations and policies in their business and investment activities. A lot of attention will be paid to innovations in science and technology as well as to the development of new ideas and projects. The articles published in this magazine will prove that the sphere of a profitable investment of funds is as important as human health, and the development of cultural and mental potential. The reader will find a range of different topics presented, including investments in culture, doctors’ and experts’ advice, interviews with popular figures and thrilling prose in every issue. We fully recognize the importance of collaborating with mass media enterprises and prominent scientists, writers and journalists from different countries. Welcome, friends! We are stronger together! Today the magazine is published in two languages, Russian and English. In the future, we also hope to pilot issues in Spanish, Chinese and Portuguese. Along with the Russian and English versions of the magazine, these issues will be distributed free of charge throughout business centers, exhibition halls, airports and stations, and on international and domestic flights and trains. In addition, readers can subscribe to the magazine. Distribution will be strategically targeted at trading chambers, offices of law, banks and the offices of medium- and large-scale businesses. We hope our efforts will pay off and that our readers will appreciate our efforts as we write and publish articles in a variety of different languages, allowing our publication to be enjoyed by people throughout the world. GOOD LUCK!

http://gir-magazine.com/

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SPECIAL GUEST EB‑5 INVESTMENT GLOBAL ECONOMY CURRENT IN RUSSIA PERSONALITY HI-TECH INTERNATIONAL PROJECTS HEALTH SCIENCE AND CULTURE MISCELLANEOUS 22

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Contents INVESTMENTS IN RUSSIAN BUSINESS PROJECTS AND THE ORGANIZATION OF PROJECT FINANCING LAWSON LAW, LLC

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THE OKLAHOMA STATE REGIONAL CENTER WESTERN INVESTMENTS IN RUSSIA

26 SEVASTOPOL — A NEW PROFITABLE INVESTMENT OPPORTUNITY 30 BUSINESS IN KAZAKHSTAN — NINE REASONS TO INVEST IN KAZAKHSTAN 34 WHO, WHEN AND WHY DID RUSSIA PART WITH CRIMEA? 42 BRICS 48 THE IMPACT OF REFUGEES ON THE EUROZONE ECONOMY 52 WHY AZERBAIJAN IS ATTRACTIVE FOR WESTERN INVESTORS

PRESIDENT OF THE CHAMBER OF COMMERCE AND INDUSTRY OF THE RUSSIAN FEDERATION, MR. SERGEY KATYRIN: THE SITUATION ITSELF STIMULATES THE STRUCTURAL TRANSFORMATIONS OF THE ECONOMY.

58 THE NEXT FALL OF THE RUBLE. WHAT THEN? 60 VADIM CHUBAROV, VP OF PROCESS ENGINEERING: THE CHAMBER IS GOING TO FURTHER DEVELOP A SYSTEM FOR ALTERNATIVE CONTROVERSY SETTLING 63 CHRISTMAS CUISINE 64 WARREN ROSS, AN INVESTOR, DEVELOPER, BUILDER 70 MEET DICK RUBIN 72 SEAN KOUPLEN — A BANKER, WRITER, LECTURER 74 DON’T TRY THIS AT HOME! 78 KIAACE — SERVICE WITH A HEART 82 IN VINO VERITAS 86 HI-TECH PARK 92 UKRAINIAN EXPERTS EXPERIENCE WILL HELP TO DEVELOP ELECTRONIC PAYMENTS TECHNOLOGIES IN THE US 97 MAKE INVESTMENTS IN CHILDREN 100 GOLDEN DREAM 106 WOMEN’S FITNESS IN THE NORTH OF RUSSIA 110 EAST MEETS WEST IN NEW MOVIE OF NELLIE BLY’S 10 DAYS IN A MADHOUSE 114 A GOOD BOOK IS A JOY 118 THE YSTIC 122 A FREESTYLE’S GOLDEN DREAM CAME TRUE 124 HOW LONG WILL THE OIL CRISIS?

GLOBAL INVESTMENT REVIEW International informational and analytical magazine Bi-monthly magazine Magazine is published since December 2015 № 1 (1) December 2015 Chief Editor – Alex Yar Editor in chief – Vitali Pischenko Executive secretary – Kanstantsin Strausau Commissioning editor – Aleksandra Sakoulevitch Design and layout – Kanstantsin Strausau Publisher and Founder – Alkor LLC 105318, Moscow city, Ibrahimova str. 35-2-14 Ph.: 985-269-82-10 with participation of AY Publishing house http://aypublishinghouse.com/ E-mail: mail@aypublishinghouse.com PR-director – Anna Shishkina (Russia) Ph.: +7985-269-82-10, anna@gir-magazine.com Head of department of advertising and distribution: Olga Massoner, ph.: +1-918-814-1837, olga@gir-magazine.com Printed by Xiamen Kiaace Paper Products Co., Ltd. No. 35 Industrial Zone, Xiahu Community, Xiamen City, China Signed to print 20.10.2015 Art paper, size 60х90 1/8 Basic font typeface DIN Pro. Offset printing. 128 pages. Circulation of 35,000 copies (installation circulation – 10,000 copies)

Distributed free of charge. Photos in the magazine: copyrights, shutterstock.com Photos of license Editorial (stated about the photo according to the agreement). The opinion of the author may be different from the view of the editorial board. Manuscripts will not be reviewed and returned. Advertisers are in charge of promotional materials. Editors reserve the right refuse advertising without explanation. Any part of this materials can not be copied or reproduced without the written permission of editors. The editorial board is looking to cooperate with professional journalists writing on economic themes, as well as those wishing to try their hand as authors. Manuscripts will not be reviewed and returned.

Subscribe to the print and electronic version of the magazine in Russian and English languages: http://gir-magazine.com/index_en.html#subscribe1

GLOBAL INVESTMENT REVIEW

DECEMBER 2015

Investments in Russian Business Projects and the Organization of Project Financing

Yegor Solyanov

[investment] [interview] [events] [round table] [business session] [Inter Invest Oklahoma Foundation] [international cooperation] [perspective]

T Anna Shishkina, CEO of Alcor Co. and managing partner of Inter Invest OklahomaÂ Foundation.

he EB-5 is an investment program that was created by the United States with the intention of attracting foreign investment into the economy. It is one of the most flexible programs of its type in the world. Investors who utilize the program are investing in the creation of new jobs (a commercial enterprise must plan to create or preserve ten full-time jobs for US workers) and, as such, 10,000 immigrant visas per year are allocated to the program with at least 3,000 visas set aside for applicants who invest through the Regional Centers. One can invest in their own business and create an enterprise in the US,

create 10 jobs and actively manage the business. Another option is to invest in a Regional Center project and enjoy the benefits of professional support by experienced specialists who will ensure the daily management of the enterprise and comply with all USCIS requirements for the project. Our knowledgeable staff will guide and support the investor throughout the entire process. As an added bonus, our employees speak Russian! EB-5 is one of the most flexible investment programs in the world. Requirements: create at least 10 jobs for US workers and contribute a minimum of $500,000 (through the Regional Center model, into projects

DECEMBER 2015

within the target areas). The result: a hassle-free immigration visa and, later, the ability to apply for US citizenship. The Oklahoma State Regional Center based in Tulsa, Oklahoma, is considered to be a hidden gem within the American Midwest. In order for it to work more effectively for its investors including Russian business professionals, the Center became a member of the Inter Invest Oklahoma Foundation, a not for profit Oklahoma company. The Foundation was created with a purpose to actively promote cooperation and development of partnerships between American businesses and entrepreneurs from other countries. The Foundation serves as a center of expertise, an investor, and a partner that brings business projects together. Inter Invest supports non-profit as well as international commercial projects through the financial support of its members and partners. In light of the deteriorating global financial stability and the difficult political and economic conditions in which Russian and American busi-

GLOBAL INVESTMENT REVIEW

nesses find themselves, establishing a solid financial structure that acts as an investment conduit operating outside of the external influences is a necessity. Today, throughout the world, there is a clear strategic shift of financial institutions towards the universal banking model, which increasingly exposes investors and depositors to high-risk operations such as the use of derivative instruments and complex financial products. Unfortunately, the probability of a universal bank facing

Todd Hudgins, managing partner, the lawyer and tax specialist in Oklahoma State Regional Center (Tulsa, USA) and Warren Ross, a developer, President of the Ross Group â&#x20AC;&#x201D; a construction-investment company (Tulsa, USA).

major difficulties or even declaring bankruptcy during the current crisis is high. In addition, as demonstrated by both Russian and American banks, neither large amounts of capital, experience, or credibility in the market guarantee market stability. Low-risk trusts operating under an agency format are virtually risk-free because they are prohibited from engaging in active operations that adopt financial risk and, therefore, are much less likely to face bankruptcy. Unwise or unsuccessful investment decisions made by its members will only result in the Trust not receiving part of its commission. The Foundation provides the means for companies to protect the basic account for the collection of revenue and helps to provide enhanced banking facilities and financial controls that meet the budgeting requirements of various divisions, subsidiaries and affiliated companies, including contractors. It also provides a channel for cash to be injected into investment projects. Goals of the Foundation: create new businesses, expand existing businesses and increase the capital of its partners. The goal of the Trust is to co-invest in projects and further develop the local economy. The Trust allocates funds, not as a creditor under a credit agreement,

GLOBAL INVESTMENT REVIEW

DECEMBER 2015

We live in difficult times: military conflicts, disillusionment with government policies, sanctions, and mutual distrust harm economic relationships. However, against all odds, the cooperation continues both in outer space and on earth. Business unites people. International business cooperation creates new jobs and empowers people to be successful. Through cooperation people learn to work together, trust partners, understand each otherâ&#x20AC;&#x2122;s goals and find opportunities.

Inter Invest Oklahoma Foundation was established to actively promote the development of partnerships between American businessmen and entrepreneurs and their colleagues from different countries. The Foundation is a non-profit and non-governmental organization serving as an expert and investor assistant to turn business projects into reality and enhance Oklahomaâ&#x20AC;&#x2122;s economic climate. The Foundation supports non-profit and commercial international projects utilizing finances of its partners.

US investment into foreign country today is more than a reality despite the current complicated political atmosphere and rhetoric between the governments. However, politicians and entrepreneurs are quite different species. Entrepreneurs are the cornerstone of our society and international cooperation of business men and women is the foundation of the global society. Practice shows that many entrepreneurs overseas create interesting and highly competitive projects but face a number of difficulties in the process of their development. Company executives come to realize that it is impossible to provide adequate funding even for the most promising projects in the post-economic crisis environment in the countries with high interest

rates. Foreign investment is one of the solutions. Foreign investment, especially US investment can help with project development and put the Company on the map internationally. American entrepreneurs and investors are always looking for opportunities to use their business acumen and experience and fund profitable projects, even if the project is risky. If you are looking to attract the attention of potential investors for your projects, find partners to work in your home country and on the US market, reach your business goals and actively cooperate with entrepreneurs from the US and other countries, Inter Invest Oklahoma Foundation will be able to help your company find business partners and attract investors.

DECEMBER 2015

but rather as an acting agent for the benefit of the client (partner). To that end, the Trust’s relationship with the client is governed by an investment agreement with the objective to create new businesses, expand existing businesses and increase the capital of its partners. Inter Invest Oklahoma Foundation offers a wide range of services from individual selection of investment projects to the provision of immigration consulting and egal services and more. The Trust may act as a collective investor, allocating the available funds of project participants in accordance with their requirements. It may also act as a mediator, bringing together partners and investors on joint projects and assisting them in their collaborative efforts. Inter Invest Oklahoma Foundation provides services for budgeting and daily management of the investment projects located on the territory of Russian Federation. The Foundation also seeks to promote the development of partnerships with universities and small innovative enterprises in the implementation of joint projects, as well as to help create suitable conditions for the syndication of venture capital investments. Inter Invest Oklahoma Foundation provides a wide range of services including the individual selection of investment projects in accordance with the objectives of the investor. The Trust also organizes business events and business tours within Russia, provides professional support with expertise for start-up companies, legal and consulting support for opening and operating a business in the US and immigration legal services. The Foundation collaborates with major investment companies and banking institutions, as well as private US

GLOBAL INVESTMENT REVIEW

Krasnov D. and Popov A. (top photo), CEO and CFO of the Drive Technique Industrial Group, talking with Alex Yar (pictured right), President of the Inter Invest Oklahoma Foundation, a member of the Union of Soviet Writers and professional business organizer.

Todd Hudgins, Dobrynina T. (the direction of the parlament center “High technologies, intellectual property”), Shishkina A., Sevostyanov V. (the direction of the parlament center “High technologies, intellectual property”) and Warren Ross.

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DECEMBER 2015

The round table with Russian entrepreneurs and experts in the construction and project management field.

investors. Investing in effective projects and developing partnerships in the USA and Russia provides an excellent opportunity for business professionals to increase their net worth and capital accumulation. The first step in a potential investment or collaboration on an innovative

project is membership in the Foundation. Current members of the Foundation include successful Oklahoma businesses such as Oklahoma State Regional Center and the Ross Group Engineering and Construction, Lawson Law, LLC and others. As a result of the international collaboration with

the Foundation, a group of American business professionals visited Moscow and attended a variety of networking events including a presentation on the EB-5 visa program and a roundtable discussion on investment opportunities into various Russian investment projects and their financing. 

Sevost’yanov V.L., Scientific Secretary of the Parliamentary Center (PC) “HTIP” Expert Assessment of Normative and Legal Regulation for Foreign Investment into the Russian Economy The most important factor in attracting investments is the creation of a favorable and uniform legal environment that ensures that the interests of all potential business partners are fairly observed. To this end, a non-profit partnership of experts, from the Federal Assembly of the Russian Federation’s “Parliamentary Center High Technologies, Intellectual Property” (PC “HTIP”), continuously monitors the current state, as well as future prospects, for the development of national legislation in this sphere. The current model of Russian legislation has affected Russia’s accession to the World Trade Organisation (WTO), whereby the conduct of investment activities is regulated by the General Agreement on Trade in Services (GATS) and the Special Agreement on Trade-Related Investment Measures (TRIMs), as well as the Convention on the Settlement of In-

vestment Disputes Between States and Nationals of Other States, 1965. Russian legislators are guided by the agreements to harmonize national standards and legal frameworks with international law. For this purpose, a number of changes and additions to the most important legal acts have been made. In 1996, for example, a provision for the legal regulation of contracts with foreign legal entities with investments in Russia was included in Chapter II of the Civil Code of the Russian Federation. Currently, investment activities in the Russian Federation are regulated by a total of 80 legal acts and standards that are administered by the authorities at various levels. A selection of the most important and relevant laws that have the most significant impact on potential foreign investors are listed below.

DECEMBER 2015

The federal law “On Foreign Investments in the Russian Federation” (№ 160-FZ, July 9, 1999, as amended and supplemented) is directly aimed at the attracting foreign material, financial resources, advanced equipment, and technology. The law provides for the adoption of a legal regime for foreign investment that complies with the norms of international law and to the international practice of investment cooperation. Requirements for foreign investors are documented and regulated (direct investments, in which a foreign investor acquires at least 10% of the capital of the commercial organization within the territory of Russia, are especially highlighted). The state grants priority status to projects that have a total investment of at least one billion Rubles, of which at least 10% comes from foreign investors. It is also stipulated that the foreign investment may include intellectual property that has a corresponding monetary value. Furthermore, the law provides guarantees to foreign investors in the privatization processes (including land and natural resources), as well as the establishment of procedures for resolving disputes with foreign investors. The federal law “On Investment Activity in the Form of Capital Investments” (№ 39-FZ, July 15, 1998, as amended and supplemented) establishes guarantees for the equal protection of the rights of investment activities regardless of ownership; in particular, it is indicated that nationalization is possible only with the compensation of losses for investors, and the requisition can be carried out only in accordance with the requirements of the Civil Code. It also provides for the annual formation of a federal investment program (including projects of particular importance to Russia which receive priority status) and the protection against deliveries to Russia of harmful or obsolete technologies and equipment. The federal law “On Investment Funds” (№156-FZ, November 29, 2001, as amended and supplemented) regulates the involvement of money and other assets through the placement of shares or by entering into trust management agreements (including the set responsibilities of the managing company). The maintenance of a register of investors is legally provided for, and the methods by which their activities are monitored is regulated. It is important to note that federal laws (in particular, the above-mentioned 160-FZ) give citizens of the Russian Federation the right to make their own regional laws in the field of investment, which supplement and add to the development of federal laws. It allows for the creation of special favorable conditions that increase the attractiveness of investments, both domestic and foreign, in a number of administrative and territorial entities; for example, in the special economic zones. For the practical implementation of Russian Federation governmental laws, a number of important decrees have been adopted, including: “On the Approval of Rules for the Formation and Implementation of Federal Targeted Investment Pro-

GLOBAL INVESTMENT REVIEW

grams” (№ 716, September 13, 2010); “On the Rules of Selection and Implementation of Priority Investment Projects” (№ 648, August 3, 2011); “On Active Measures to Attract Foreign Investment into the Russian Economy” (№ 118, September 29, 1994). In order to further develop, the Russian government has formed The Foreign Investment Advisory Council, which is chaired by the Minister for the Economic Development of the Russian Federation. The state guarantees the stability of the legal framework, which is important for participants in any investment activity and which may only be void in certain circumstances, as defined by the Russian law. This includes natural disasters, recognition of a foreign investor’s bankruptcy status, declaring a state of emergency, etc. New legislative acts have been progressively enacted to align the interests of foreign investors with the requirements of the national economy as a whole. This has lead to the recent (July 13, 2015) signing of the Federal Law “On Public-private Partnerships” (№ 224-FZ) by President Vladimir Putin, which comes into effect from January 1, 2016. The law aims to create favorable conditions that attract private investors (including foreign) to the finance and property management sector, which are normally the preserve of the state. In this case, however, foreign investors have to create a subsidiary company within Russia. Public-private partnerships are issued for a period of not less than three years and are based on the pooling of resources and sharing of risks between the contracted parties. This law attaches a list of requirements to the private partners of the Russian state, and the selection of those partners should be carried out on a competitive basis. This leaves open the possibility for the privatization of the venture (after the expiry of the agreement) if the private investor has invested no less than 50% of the total capital into the venture; this also applies to Russian «daughters» of foreign subsidiary companies. During the forthcoming fall session of 2015, the State Duma plans to make certain changes to the existing federal laws. Thus, in accordance with the principles of the indicative planning of economic development and in order to attract foreign investment into the exploration of mineral resources, the Duma may make specific provisions for favorable terms on issuing mining licenses to those foreign companies that invest in the relevant geological research. Consideration is also being given to concessions for investment activity in priority areas of the country, which would have access to finance at discounted interest rates through specially authorized banks. Provision will also be made for the Russian «Subsidiaries of the foreign Parent companies. Summarizing these facts, the experts from the PC “HTIP” concluded that there is significant progress in the Russian legal framework that facilitated the formation of an investment environment that is favorable for foreign investors. 

GLOBAL INVESTMENT REVIEW

DECEMBER 2015

[interview] [legal advice] [expert’s opinion] [visa] [investment] [regional center]

Lawson Law, LLC Denis Grebski

Lawyer Lidia Lawson answers questions about the EB-5 program Lidia, thank you for taking the time out to talk to us. Please tell us about the EB-5 Visa and how your firm, Lawson Law LLC, can help people who are interested in applying for this visa. USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth.

What does the minimal invested amount depend on under the EB-5 program? Required minimum investments are: For the general EB-5 Program, the minimum qualifying investment in the United States is $1 million. The minimum qualifying investment either within a high-unemployment area or rural area in the United States is $500,000. What areas are deemed to be target areas? A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more ac-

DECEMBER 2015

cording to the decennial census. Targeted Employment Area (TEA) designation can be incredibly important for EB-5 investors. The required EB-5 investment amount is lowered from $1 million to $500,000 dollars if the EB-5 project is conducted in a targeted employment area. In order to be designated as a TEA, the EB-5 project must be located in either a rural area or in a location that has high unemployment. Don’t such investment conditions make the project riskier? On the contrary, investment in a project located in a TEA and run by a Regional Center is often less risky. The TEAs are not always the trouble areas in terms of the economic map of the United States and it is not uncommon for such projects to turn out to be more profitable than similar opportunities that are located in more developed areas of the country. How can investors invest their money into the US enterprises under the EB-5 program? There are two ways: through independent investments into a US enterprise or through investment in the projects operated by USCIS designated Regional Centers. Which of the two approaches is the most popular? The majority of the applicants prefer the second option: investments in the programs operated by Regional Centers because of the benefits it offers such as support of the Regional Center throughout the entire process of receiving not only the conditional immigrant visa but also the permanent one and due diligence by the Regional Center to provide a worthy and less risky project. Where are the Regional Centers located? Do they have investment projects located in the TEAs you mentioned? Regional Centers are located all over the country. They do offer various investment proj-

GLOBAL INVESTMENT REVIEW

ects within rural areas or areas with high unemployment rate. The investor selects the project of their choice located anywhere in the country. Why do investors prefer the programs managed by Regional Centers to independent projects? What benefit may an investor get from applying to such a center? In a Regional Center project setting «indirect» jobs may counted to meet the minimum 10 full-time job creation requirement per investor. Additionally, if a project is located in a targeted employment area or rural area, the required amount of investment is reduced to $500,000 over $1 million. Additionally, an EB-5 investor is generally a limited partner or member in the project and does not manage the project directly. It gives an EB-5 investor an opportunity to reside anywhere in the US and engage in other legal activities, such as other business activities, school, retirement, or other activities. I see, so investors who invest via a Regional Center are not engaged in the everyday

Another benefit of using a Regional Center is the extensive and complex documentation that is already prepared for the Application by experts in economics and immigration law. management of the enterprise. Does the Regional Center provide all documentation regarding the EB-5 projects? Correct, it is a passive investment. Another benefit of using a Regional Center is the extensive and complex documentation that is already prepared for the Application by experts in economics and immigration law. Qualified professionals working with the Regional Center prepare everything from a proper business

GLOBAL INVESTMENT REVIEW

DECEMBER 2015

plan to an ROI study on the required job creation. Sometimes it is comforting for an investor to know that a Regional Center has be approved by USCIS first. Are investors able to review the project documentation prior to investment? Yes, of course. In order for an investor to make an informed decision, the Regional Center provides an opportunity to review the project documentation prior to making their final decision.

In order to qualify as an EB-5 investor, you either must have earned income over $200,000 per year for the past 3 years or have the assets over $ 1 million. Are there any requirements for the investor to qualify for the participation in a EB-5 program? Yes, most importantly, an EB-5 investor must show that the money they are investing in the United States was lawfully obtained. There are a variety of ways to prove lawful source of funds. The key is good documentation showing both the source and path of the money. Which funds relate to this category? A qualified investor can use the funds obtained from the following sources: Earned income – (investor should present proof of their salary, employment certificates, affidavits from past employers, income tax records, and bank statements showing deposits over time); Investment proceeds – the investor should show: (1) that the money used to make the initial investment were obtained lawfully; (2) that the investor owned the investment; and (3) receipt of the capital from the investment proceeds; Sale of property – the investor should show the lawful source of the money used to buy the property; Property loans: the investor

should include documentation of the loan or mortgage contract, the notation of the lien on the ownership documents, evidence of the value of the property compared to the value of the loan, and any relevant bank records; Ownership in a company – the investor should show the lawful source of the money used to buy an ownership interest in the company; Company loans – the investor must show that the company has enough assets to make the loan to the investor; and Gifts – the donor must show how they lawfully obtained the money to give the money to the investor. For example, if a parent earned money over years, the documentation described above concerning earned income would apply here to show that the parent lawfully earned the money to give it to his or her child to make an EB-5 investment Is there anything else an investor needs to be aware of? In order to qualify as an EB-5 investor, you either must have earned income over $200,000 per year for the past 3 years or have the assets over $ 1 million. Thus, if you do not have $1 million in assets, you need to show that you have earned income over $200,000 per year for the past 3 years. Also, please note that $500,000 investment into an EB-5 project is an exception to the rule for investing $1 million. This exception is valid only if the project is located within a TEA (150% over the national average of unemployment). Certain Regional Center investments will require an investor to have an accredited investor status. Rather, it is a U.S. securities law requirement, in order for the ‘issuer’ (the U.S. business selling investment opportunities to the immigrant investors) to sell those opportunities without registering the sale with the U.S. government (specifically, the Securities and Exchange Commission). For the issuer to rely on the registration exemption provided by ‘Regulation D,’ practically speaking all investors solicited to invest need to be accredited investors. This would mean each investor needs to satisfy the Regulation D requirements, either as to net worth or

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annual income. For all intents and purposes issuers relying on Regulation D will only offer their investments to prospective investors who satisfy the accredited investor definition. What conditions need to be fulfilled to obtain this status? In this context, to be an accredited investor, you must meet either one of the following requirements: (1) have an individual net worth, or joint net worth with your spouse, of more than $1million at the time you purchase an interest less the value of your primary residence (i.e. your main home), or (2) have an annual individual income of more than $200,000 or annual joint income with your spouse of more than $300,000 in each of the preceding 2 years and a reasonable expectation of the same level of individual or joint income in the current year . Let us now speak in detail about the procedure by which an investor can participate in the investment program and obtain the EB-5 Visa. What does an investor need to do first? First, he or she needs to decide between making an independent investment and establishing a new enterprise or investing money in a Regional Center program already approved by the USCIS. The decision is made. What’s next? After the investor selects the project of their choice, together with their attorney or legal representative, the investor should begin collecting the necessary set of documents required for the EB-5 Petition (CIS Form I-526). Does your firm specifically deal with the immigration of investors? Yes. We are well versed in assisting foreign investors with the entire EB-5 process: from the conditional green card to the permanent residence. Our knowledgeable staff will support and guide our clients through the muddy waters of this complex immigration process.

GLOBAL INVESTMENT REVIEW

Let’s get back to the process. An application is submitted and the investor is awaiting the adjudication. What happens next? Upon approval of the I-526 Application, the investor’s funds are released into the project and the investor either submits an Adjustment of Status Application on CIS Form I-485 or goes through a process of obtaining the green card through the US Consulate in their home country. The green conditional green card is issued for two years. Consular process includes obtaining medical clearance, police clearance, providing various background documentation to the Consulate and attending an interview. How should the investor proceed with the process of obtaining the conditional green

A total of 10,000 immigration visas are issued in total each year under the EB-5 program, and 3,000 of these are intended for applicants who invest through the Regional Centers card if they are already in the US at the time of approval? If an investor is already in the US in another legal status, the investor can file an Adjustment of Status Application with the USCIS and avoid the consular processing.

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DECEMBER 2015

How long will the application process take? At this time the processing time for EB-5 Petitions is approximately 14 months. Processing times may change and vary throughout the year. What happens upon approval of the I-526 Application and successful consular process? An investor and his/her immediate family members (spouse and unmarried children under the age of 21) are granted conditional permanent resident status for two years.

After the conditions are removed, investor and his/her immediate family members included in the application will receive the Permanent Resident Card. Is there a time limit for the investor to enter the US upon approval? If the visa is issued at a U.S. Consulate in the investor’s home country, the investor has 180 days to enter the US. What should be done upon arrival to the US? Investors should continue to comply with the EB-5 visa requirements such as job creation. For an independent project all ten jobs must be direct, but for a Regional Center project indirect employment also counts towards the requirement. Investors should also provide evidence of their intention to reside in the US as US Permanent Residents and not violate the status. Please, provide an example. What should an investor exactly do? Investor should maintain their LPR status by complying with all requirements for the investment such as job creation. Investor and their immediate family members should also obtain a US bank account, residence, pay

Federal and State taxes and otherwise comply with all state and federal laws and regulations. May an investor work abroad while living in the U.S. with the Conditional Residency status? Yes, certainly. An investor may work outside the States if this is required by his/her business or profession. What should an investor do to obtain their Permanent Resident Status when the initial two years have come to an end? 90 days before the end of the two-year visa duration, an investor should submit an Application to remove conditions on CIS Form I-829. A total of 10,000 immigration visas are issued in total each year under the EB-5 program, and 3,000 of these are intended for applicants who invest through the Regional Centers. What should be done upon approval of such an application? After the conditions are removed, investor and his/her immediate family members included in the application will receive the Permanent Resident Card. In addition, they will be entitled to submit an application for US citizenship approximately three years later. How many visas are allocated under the EB-5 program each year? A total of 10,000 immigration visas are issued each year under the EB-5 program in compliance with federal legislation, and 3,000 of these are intended for applicants who invest through the Regional Centers. Thank you for your time and for clarifying some of the complexities of the EB-5 visa. You are welcome. I hope that my answers shed some light on the EB-5 process and made it more attractive for foreign investors. While the process is complex, an experienced immigration professional can help an investor navigate the US immigration law and achieve the end goal – US Permanent Residency. 

DECEMBER 2015

GLOBAL INVESTMENT REVIEW

[interview] [legal advice] [expert’s opinion] [visa] [investment] [regional center]

DECEMBER 2015

http://www.oklahomastaterc.com/ Email: Admin@OklahomaStateRC.com Ph: 918–878-2818 Address: PO Box 690960| Tulsa OK 74137

The Oklahoma State Regional Center

Visa EB‑5 and the Regional Center Denis Grebski

ello, Mr. Hudgins and thank you for finding some time to answer our questions today.

EB-5 Investor Visa provides the fastest way to US permanent residence. Do you know of any analogous programs in other countries or is this Pilot program unique to United States? Canada has eliminated its program and the Australian program currently requires a higher investment level than the U.S. EB-5 program. We believe an investment in a project sponsored by the Oklahoma State a Regional Center is the best way for an immigrant investor to obtain permanent residency status in the United States. In general, what would an entrepreneur need to show in order to be eligible to participate in the EB5 program? The most important thing for an immigrant investor to be able to show is how he or she obtained the $500,000

DECEMBER 2015

that will be invested in the project sponsored by the regional center. The investor can show these funds were obtained from savings, the sale of a business, land or a residence, the sale of investments or a gift from a family member. That does not sound too complicated. Besides, Regional Centers such as the Oklahoma State Regional Center, do not leave the investors behind and assist them throughout the process, correct? That is correct. At the Oklahoma State Regional Center we will assist the investor through the entire process. It is our goal to ensure the investor gets his or her permanent residency status and gets their original investment paid back along with interest. It looks like the Regional Center program takes care of the day to day worries about the new EB-5 enterprise overseas as far as job creation and the investment is concerned. Yes, our Regional Center works directly with the developer and the economist to ensure the job requirements are met. We also work directly with Lawson Law, a law firm based in Tulsa, Oklahoma that has Russian speaking immigration attorneys, to ensure all filing requirements are met through the USCIS.

What projects do you currently have available for the EB-5 investors to enroll in? Currently though Oklahoma State Regional Center we have the Hampton Inn Project which is a hotel in downtown Tulsa, Oklahoma that is being developed by The Ross Group and which will be managed and operated by Promise Hotels. This hotel

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project is in an excellent location as it is directly across the street from the BOK Center which is the premier event center in Tulsa, Oklahoma. We also have the H2O apartment project, a high rise residential apartment com-

current time for receiving a Green Card is? The current processing time to receive an investors green card is 14 months. This time period will start running once an investor has invested

The EB-5 program via the Regional Center, a foreign investor must invest funds of at least $0.5 m and prove that at least ten jobs have been directly or indirectly created. plex in Oklahoma City, Oklahoma which is being developed by Glenn Ferguson. The H2O apartment project is also in an excellent location in Oklahoma City, Oklahoma.

his or her funds with the regional center and the Form I-526 is filed with the USCIS. We are hopeful this processing time comes down, but currently the processing time is 14 months.

Are there any advantages for the EB-5 investors to choose your Regional Center? We believe there are several advantages for investors to choose our regional center. These advantages include: (1) we do a tremendous amount of due diligence on projects to ensure the projects represent very safe investments as our primary goals as a regional center are to ensure each investor get his or her permanent residency status and gets all of their investment returned; (2) we provide a very personalized experience for each investor as we work with them throughout the entire process and (3) we believe there are regional centers in the market place presenting projects to investors that have a very high risk profile. All of the projects sponsored through the Oklahoma State a Regional Center have an extremely low risk profile. Could you please tell us what the

Letâ&#x20AC;&#x2122;s talk in a bit more detail about the EB-5 Pilot Program itself. Are there limits to the investment? What about the lower end of the investment? The investment for an immigrant investor can either be $500,000 or $1,000,000. It is beneficial for investors if they can achieve their goal of permanent U.S. Residency while only investing $500,000 as opposed to the $1,000,000 investment level. All of the current projects sponsored by the Oklahoma State a Regional Center are located within Target Employment Areas which allows them to qualify for the lower $500,000 investment level. Please tell us about the mechanism of obtaining a green card. How soon can an EB-5 investor become a US Citizen? Once an immigrant investor invests his or her funds with the regional center the immigration attorney will

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prepare and file his or her I-526 with the USCIS. The I-526 processing time is currently 14 months. Once the I-526 is approved the investor receives his or her temporary green card. This green card allows the investor to enter the United States and is good for two years. Prior to the expiration of the two year period we will work with the investor to ensure the I-829 is timely filed with the USCIS. The I-829 is filed to remove the condition on the green card and make it a permanent green card. Once an investor has his or her permanent green card then he or she can start the process of becoming a U.S. Citizen within 5 years; however, there is no requirement for an investor to become a U.S. Citizen – they can just keep their permanent green card. What does one need to do prior to the expiration of the temporary Green Card? Prior to the expiration of the two year temporary green card we will

DECEMBER 2015

work with each investor to ensure their Form I-829 is filed with the USCIS. The Form I-829 serves to remove the condition on the investor’s green card and make it a permanent green card. What happens to the status of the EB-5 visa holder once the I-829 is approved? Upon approval of an investor’s I-829 by the USCIS all conditions on the investor’s green card are removed and their green card becomes permanent. At this point the investor can start the process toward U.S. Citizenship or simply keep their permanent green card status. How soon after the conditions are removed, can the EB-5 investor apply for US Citizenship? An investor can become a U.S. Citizen 5 years after their green card becomes permanent. Does every family member need

to Petition for EB-5 visa? Yes each family member must apply for a green card. However, only one investment is required for an investor his or her spouse and all children 21 years of age and under. On average, how long does the EB-5 program take from enrollment of the investor in the project to receiving Permanent Residency? What determines these time frames? On average the entire process takes approximately four years from the time an investor makes an investment until he or

The EB-5 program lasts from three to five years, and the term depends on the quality of application prepared by an investor.

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she receives their permanent green card. The time frames are driven both by the processing time at the USCIS and the requirements of the EB-5 program. We hope to see processing times at the USCIS decrease in the future which may decrease the overall time required to obtain an investor’s permanent green card. Are there limitations as to the source of the investment funds? Is sponsorship required for EB-5 petitions? An investor must be able to show he or she obtained the funds necessary to make the investment in a lawful manner. The source of funds may come from savings, their job, the sale of a residence, business or investment or a gift. It is not necessary to have a sponsor in order to participate in the EB-5 program. Are there any qualifications for the investor personally? The main qualifications for investors personally are that they must not have criminal records or communicable diseases. There are several other personal qualifications

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which apply to only a small number of potential investors. We work with an investor’s immigration attorney to ensure they meet all of these qualifications prior to them making the investment. A Regional Center works within its geographical area. Does this mean that the investor must reside in the same territory as the investment project? This is a very good question. An investor can make his or her investment in a project sponsored by the Oklahoma State Regional Center and he or she may reside and travel anywhere in the United States. We feel as the risk profile of the projects sponsored by the Oklahoma State a Regional Center is very low and it is a wise decision for investors to invest in projects sponsored by our regional center in order to help them obtain their permanent green cards regardless of where in the United States they wish to live. Can an EB-5 investor use US residency benefits?

Yes, for example, an EB-5 visa holder can pay resident tuition for the US colleges and universities for their children which is a significant savings over tuition for other foreign students.. Summing up, tell me what benefits the investor receives by investing in Oklahoma State Regional Center? We believe the major benefits of investing in a project sponsored through the Oklahoma State a regional Center include the low risk profile of the projects which helps to ensure the investor obtains his or her permanent green card and their invested capital is paid back. Additionally, we personalize the relationship for each investor and work closely with them throughout the entire process. Thank you for your time, Mr. Hudgins and for addressing our questions regarding the EB-5 program. We wish much success to the Oklahoma Regional Center! 

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[investment] [analysis and researches] [economic situation] [numbers and percentages] [crisis] [perspective]

DECEMBER 2015

Western Investments in Russia Benjamin Kowalski

or the second year in a row, Russia has been omitted from the top 25 list of most attractive countries in which to invest. In 2014, Russia failed to feature for the first time in the past decade and, sadly, in 2015, the picture is no rosier. The first signs that Russia’s investment environment was deteriorating was noted prior to the Russian-Ukrainian crisis. The unpredictable policies of a government that periodically intervenes in Russia’s economic processes has been named, among other reasons, as a major contributing factor to the

current perceptions of Russia as an investment prospect. However, the majority of representatives from large and medium-sized businesses from Western countries have indicated that they will resume capital infusion into the RF economy as soon as the current sanctions are rescinded. In the meantime, Russia is forced to adjust to a new “non-investment” country status due to the lack of clear and stable business perspectives. The unfavorable situation is intensified by the Russian government’s strained relations with Western countries. However, the majority of the investors that moved their

DECEMBER 2015

ON COURSE TO STABILIZATION

According to the USA billionaire David Bonderman, investors that returned to the RF in 2015 didn’t have regrets about doing so. Despite sufficiently sharp fluctuations in ruble exchange rates, the country’s economic situation in total remains stable, and numerous branches of the national economy remain potentially attractive for investors over the medium and long term. The high level of stability against the background of the current sanctions highlights the inconsistency of the imposed restrictions. Mr. Bonderman, who appears confident that the announced sanctions have a rather declarative and political nature, and merely irritate an entrepreneurship and the RF government officials instead of having any serious

Business professionals are morally prepared to revive the business relations as soon as reasonably practical. The pharmaceutical, light industry and financial services sectors traditionally remain the most promising source of future investments.

negative impact, dwells exactly on this point. Ruben Vardanyan, a successful entrepreneur from Russia, supports Mr. Bonderman’s view, stressing confidence that the RF economy remains attractive to foreign investors. Ignoring the enormous market is extremely difficult and unbeneficial for the experienced Western entrepreneurs. Regardless of the unstable investment environment, total disinvestment in Russia is out of the question: most of the foreign corporations keep working with confidence in our country. Let’s consider which branches of the RF economy the developed Western countries invest in and how much capital they inject in these domains.

USA INVESTMENTS IN RUSSIA

Despite vigorous activity and a comparatively large amount of financial injections, according to data published by the Russian Federation State Statistics Service, the USA is only the 9th largest source of foreign investments in Russia. By the end of 2013, the amount of money US investors injected into the Russian economy amounted to $10.3 bln – direct investments amounted to only $2.83 bln, and the total annual amount of investments was $384.1 bln.

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assets out of the RF economy have not forgotten the financial strides they made in previous years. Such business professionals are morally prepared to revive the business relations as soon as reasonably practical. The pharmaceutical, light industry and financial services sectors traditionally remain the most promising source of future investments.

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The Americans, who primarily invest in domestic manufacturing enterprises, are involved in mining operations, engage in retail and wholesale, are interested in communications, transport, motorcar repair industry, real estate, and financial sector, as well as the service industry. The U.S. enterprises demonstrate specifically strong interest in the regions of Russia that have rich valuable natural resources. The Americans are also active in regions that have a high concentration of food, automotive, aerospace, metallurgy and chemical enterprises.

FRENCH INVESTMENTS IN RUSSIA

Despite the recessionary trends, all the indicators point to favorable conditions for an increase of French investments in the Russian economy. In the car industry, the enterprises that belong to Peugeot and Renault brands

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continue active operations with confidence; in the food industry, Bonduelle and Danon increase their production rate; Arselor is engaged in the metallurgy; Lafarge and Saint-Gobain work in the sector of construction materials production; Michelin in the tire industry; Auchan supermarkets continue actively working in the retail industry; the hospitality industry is represented by Accor; and Societe Generale is on firm ground in the banking sector. French investments in

Russia have a strategic impact since they exert significant influence on the modernization of the economy, in general, and the high-end fields, in particular. The Russian Government frequently expresses a desire to increase French capital share in the aerospace industry amid ever-increasing potential capability in the scientific and technological segments.

ITALIAN INVESTMENTS IN RUSSIA

Italy is not in the top decile of the most significant domestic investors; however, that is not to say that investors from this region do not have an influence on the Russian economy. Approximately 80% of Italian enterprises are small- and medium-scale businesses that are not able to develop active investing activities in the context of the sanctions and numerous

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restrictions that are currently in effect. At the same time, multinational Italian corporations follow strategies that implies foreign market expansion will exhibit stable activity in terms of financial inflows in the RF economy.

nies Marcegaglia, Danieli and Pirelli & C. are involved in the development of innovative cooperation and high technologies. The automotive industry is represented by FIAT Group. Indesit is a big name in consumer electronics

By the end of 2013, British companies had invested $18.8 bln in the domestic economy, representing an increase of 40% on the previous year. In total, British investments represented 11% of the total foreign capital injected into the RF economy in 2013. Russia receives a massive share of Italian money through the enterprises registered in the third countries. The enterprises from Italy still extensively cooperate with the Russian companies in the field of consumer electronics production, as well as in the car, hightech, construction, oil and gas, and power industries. Investment projects are also found in food manufacture and sales domains. Prior to the implementation of the sanctions, the leading financial Italian institutions were actively engaged in activities throughout the RF territory. Eni and Enel, which are involved in gas production and reservoir engineering, as well as in the sector of electric power generation, production and sale, are heavily involved in Russiaâ&#x20AC;&#x2122;s energy industry. The Italian compa-

production. Cremonini, JSC, Cremonini Group and Ferrero continue working in the food production arena. A special place in the development of the domestic economy has resulted from the expansion of the Italian insurance and financial institutions. In particular, insurance group Assicurazioni Generali, LLC, as well as the commercial banks Intesa Sanpaolo, LLC and UniCredit, work in Russia.

U.K. INVESTMENTS IN RUSSIA

The United Kingdom ranks in second place in the list of major investment partners in Russia. By the end of 2013, British companies had invested $18.8 bln in the domestic economy, representing an increase of 40% on the previous year. In total, British investments represented 11% of the total foreign capital injected into the RF economy in 2013. In terms of the structure of the financial inflows, about 87% of funds are accounted for by so-called other reverse investments, about 10% direct, and 3% through portfolio investments. In total, about 600 companies of British origin actively work within the territory of the RF, among which are giant factories like GlaxoSmithKline, AstraZeneca and Shell in Petropavlovsk, BP (holds some

DECEMBER 2015

shares in domestic Rosneft), Cadbury Sсhweppes, British American Tobacco and Unilever. In 2013, one of the most significant deals in the history of the Russia-United Kingdom relations in the field of big business took place. The oil major BP sold 50% shares in the TNK-BP to the domestic Rosneft, which resulted in a 70% reduction of UK portfolio investments in Russia. In total, financial inflows from the British economy to the Russian Federation are non-uniform. About 76% of receipts are accrued to the Central Federal District, 7% to Ural and Volga regions, and 4% to Siberian and Northwestern Federal District. The rest of the regions receive immaterial amounts of investments from the United Kingdom. Having analyzed the current situation, it’s easy to conclude that even after almost two years of sanctions and economic constraints, business relationships between Russia and the Western countries remain considerably deep and strong. Intense relations be-

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tween the RF, the USA, and the EU are purely political in nature. In this context, numerous Western business entities continue to exhibit a keen interest in the revival of active investment in the Russian market. Thus, currently, there is every indication that the situation will change for the better when the

first signs of international political stabilization start to emerge. Each and every country that is involved in the development of the RF economy, including Russia itself, is interested in making a profit; as such, commercial interests will, sooner or later, gain an advantage over political ambitions. 

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DECEMBER 2015

Why Azerbaijan is attractive for Western investors Ilya Moravski

[analysis and researches] [investment] [economic situation] [numbers and percentages] [perspective]

zerbaijan is one of few former Soviet republics, which has achieved tangible financial success. Today, the state can be the envy of Russia, Ukraine, Belarus and other countries, which aspire to join the developed international economic community. The European Bank for Reconstruction and Development — a famous financial institution — forecasts steady growth for Azerbaijan for the next two years. The GDP growth is projected at 1.5% by the end of the current year. A similar forecast has been retained for 2016. Though official Baku has a

lot of oil, the state has no raw-material economy, as against Russia.

WHAT IS THE SECRET OF THE PROSPERITY OF A SMALL POSTSOVIET STATE

In recent years, Azerbaijan started to actively integrate into the world economy and constantly worked at increasing of intensity of the process. For the period from 1995 to 2011 in state’s economy was injected more than 119 billion U.S. dollars. About 60% of the investments had foreign origin. Only 9 billion dollars came into the country until 2002, but from 2003 to 2011 volume of invest-

DECEMBER 2015

Tax system of the republic is constantly being improved, in accordance with the requirements of European and international legislation. Updated the Tax Code of the Republic of Azerbaijan has become a solid foundation for building a modern tax system.

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Main advantages of the republic for international investors: 1. High rate of foreign direct investment into the state 2. Legal guarantees for investors 3. Stable annual GDP growth 4. Growth of the market of foreign capital 5. A sufficient level of imports 6. A high level of growth in most areas of the economy 7. Tax concessions to farmers 8. A fertile land and a great number of minerals 9. A favorable geographical position 10. Active involvement in international business initiatives 11. Promotion of Good-Neighbour policy 12. Competitive specialists in the labor market Let’s look at all these factors in more detail. A favorable investment climate has emerged in Azerbaijan because of active socio-economic reforms, developed transport and communications infrastructure, as well as gas, oil and other strategic raw materials reserves. In the 2000s, the government took important specialized programs

In recent years, Azerbaijan started to actively integrate into the world economy and constantly worked at increasing of intensity of the process.

that contribute to active development of business entities in a segment of small and medium business. Tax system of the republic is constantly being improved, in accordance with the requirements of European and international legislation. Updated the Tax Code of the Republic of Azerbaijan has become a solid foundation for building a modern tax system. Also the state is actively taking steps to assist the business sector.

FEATURES OF INVESTING IN AZERBAIJAN

Specificity of investments into economy of the republic is the need for a detailed and deep study of a potential

ments has grown six-fold and amounted to 54 billion dollars. More than half of the money (37.5 billion dollars) went to development of the oil sector, but the remaining amount (25.5 billion dollars) was spent on improving non-oil industries: market, transport, construction and industrial sectors. The most part of joint venture companies are Azerbaijani-Turkish. The rest investments are distributed as follows: • UK – 11.7% • Russia – 6.8% • Iran – 6.2% • USA – 5.9% • Germany – 2.9%

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DECEMBER 2015

Active economic reforms act as the main incentive for growth of investments. A main idea of economic strategy of the state is constantly increasing inflow of foreign investments. investments object. A ticket to success is to obtain the maximum of objective information. An economic situation in the country is favorable, so a size of financial flows in the economy is increasing every month. One of the key benefits of investing in Azerbaijan is a wide range of promising areas for investment. Agriculture, manufacturing and industrial areas are well developed here, in addition to the oil sector. Dozens of successful investment projects

have been implemented in these areas. Active economic reforms act as the main incentive for growth of investments. A main idea of economic strategy of the state is constantly increasing inflow of foreign investments. Authorities have adopted simple, effective and transparent laws — “On protection of foreign investments” and “On investment activity”. It’s hard to imagine for Russians, that only two documents provide neces-

sary set of conditions for comfort and confidence of potential investors. Another advantage of the state as an object of foreign investment is active participation in international transit traffic. Importance of Azerbaijan in work in this area has significantly increased after construction of new gas pipelines Baku-Erzurum and Baku-Tbilisi-Ceyhan. Also the state’s participation in the project of transport corridor North-South cooperation – which connects Russia with India and Iran via land and sea routes – contributes to development of state’s economy. Potential investors do not ignore the fact that a republic transport system suitable for the geopolitical situation. We are talking about interaction with the international transport corridor

DECEMBER 2015

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TRACECA, which connects Asia, Caucasus and Europe.

PROMISING AREAS FOR INVESTMENT

Despite the productive work on attraction of foreign capital, nowadays the country has a number of underfunded industries — a transport sector, petrochemistry, food and light industries, chemical industry and mechanical engineering. All these and many other segments of economy are in need of comprehensive modernization by means of foreign capital. Investors like Azerbaijan for the high level labor market. When inserting money into the republic, entrepreneurs don’t have to wrestle with a problem of finding the qualified personnel to solve key strategic tasks. High concentration of highly-qualified personnel and a large number of workforce are situated in major cities. Deposits of valuable metals – copper, silver, gold, cobalt and titanium – are additional factors, that facilitate the process of investing in economy of the state. Mining industry is one of the most promising areas for investment.

PROMISING AREAS OF AGRICULTURAL DEVELOPMENT

Viticulture is one of the key areas of employment of local farmers. The region has ideal climatic conditions for the production of port wines, as well as numerous other varieties of wines that are enjoyed high popularity in the USSR and today is popular with residents of most CIS-states. In Azerbaijan there are several factories that specialize in manufacturing of wines. All of them are open to mutually beneficial cooperation with foreign investors. Local viticulture is characterized by a high level of profitability, which is

due to necessary simplicity of creating jobs, proximity to promising markets (CIS), availability of inexpensive labor and high-quality raw resources. Development of sericulture is another promising area. This branch of agriculture has centuries-old tradition, and finished products are in demand in many countries. Karabakh, Shirvan and Sheki silk was particularly popular at all times. Until recently, silkworm

growing was the main form of income for the majority of population of various areas of the country. Modern Azerbaijan is one of the most advanced republics of the former USSR for business. Unlike most of post-Soviet states, there are adequate laws and a favorable investment climate here. Hundreds of foreign entrepreneurs have already received positive experience of cooperation with official Baku. 

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DECEMBER 2015

Sevastopol â&#x20AC;&#x201C; a new profitable investment opportunity

Chamber of Commerce and Industry of the Russian Federation presents

[investment] [analysis and researches] [economic situation] [perspective] [partners]

evastopol is a new and exciting opportunity for prospective investors. Investing in tourism, goods and food industries, human services, development of transport infrastructure and other promising sectors will help this modern city to grow and develop.

TOURISM IS THE MOST PROSPECTIVE INVESTMENT SECTOR

Sevastopol is located at the seaside, in a popular resort area that attracts

thousands of tourists every year. The coastline of the city stretches 152 kilometers long and most of it is available real estate for building modern resorts, hotels, trade centers, aquaparks and other potentially profitable projects. There are 47 beaches is the city stretching 10 kilometers long. Most of these places are very popular among tourists and visitors of the city but they require strong financial support in order to develop a proper infrastructure that will meet the European standards. Besides a day at the beach, Sev-

DECEMBER 2015

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trade relations both within the country and internationally. Sevastopol’s modern seaport opens unlimited possibilities for the development of import and export of various products and raw materials. Large cities located nearby will facilitate the future development and solidification of business relationships with such cities as Simferopol (population of 353,000), Kerch (population of 148,000), Yalta (population of 134,000) and Yevpatoria (population of 120,000) as well as other large cities located on the peninsula.

FUNDAMENTAL FACTORS OF SEVASTOPOL’S INVESTMENT ATTRACTIVENESS SUPPLY OF POWER RESOURCES

Sevastopol’s investment attractiveness is distinguished by the high accumulation of natural resources on its territory. For instance, Chernorechensk water storage basin contains 45 million cubic meters of fresh water supply. In addition, the city’s 230 underground wells

astopol offers tourists a wide variety of activities. The city is a historical, cultural and religious center of the Crimean peninsula. There are many theaters, symphony and opera halls, movie theaters, museums, restaurants, night clubs and shopping centers highly popular among tourists.

TRADE AND SERVICE SECTOR DEVELOPMENT PERSPECTIVES

Because of its strategic geographical location, the city is has amazing potential in terms of development of

provide an alternative source of water supply for domestic use. Logistics and availability of the power supply continues to be addressed systematically and comprehensively on the government level. In addition, the two new modern thermal power-stations in Sevastopol and Simferopol, with total capacity of 470 megawatts each, are in the final stages of completion. Each object includes two steam-gas units capable of providing 235 megawatts of power. The launch of the first unit of Sevastopol’s thermal power-station is scheduled for September of 2017 with the second power station to follow in March of 2018. The proximity to the Black Sea guarantees no problems with providing the region with natural gas. The construction of the gas pipeline on the floor of the Kerch Strait will ensure the provision of the required raw materials to the two thermal power-stations in Sevastopol and Simferopol. Developed transportation infrastructure, actively supported with billions of rubles in investments will allow for a shorter payback period and accel-

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erating the invested foreign capital turnover rate.

TRANSPORT INFRASTRUCTURE

Developed transportation infrastructure, actively supported with billions of rubles in investments will allow for

DECEMBER 2015

by the end of 2018. Today it already received over 500 million rubles in private investor funds and 1.8 billion rubles from the federal programs. Sevastopol is both the end and a key point of the Tavrida highway. This modern highway connects Sevastopol

Developed transportation infrastructure, actively supported with billions of rubles in investments will allow for a shorter payback period and accelerating the invested foreign capital turnover rate. a shorter payback period and accelerating the invested foreign capital turnover rate. “Sevastopol” airport is currently being reconstructed and upgraded. This herculean task is set to be completed

with two other large cities – Simferopol and Kerch. The Tavrida Highway is being actively upgraded since the beginning of 2015 in order to have a 4-line highway built in accordance with European standards.

The city also has a large specialized seaport consisting of one multipurpose and two grain terminals. In addition, there is a sea terminal capable of quickly processing all kinds of wheeled vehicles. A ferry system of communication exists between such destination as Sevastopol-Novorossiysk and Sevastopol-Zonguldak (Turkey).

PRIORITY SECTORS FOR INVESTMENT

Military-industrial complex. Sevastopol was initially designed as a city for storing and maintaining war vessels. Thus, to this day its MIC infrastructure is very developed. Shipbuilding and maintenance. The process of city’s economic development through a steady flow of investments requires the use of transport and commercial ships. For instance, large commercial vessels are neces-

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DECEMBER 2015

sary for freight and other operations and passenger liners are necessary for the development of tourism. Finally, a modern maintenance complex is required in order to sustain the sea transport. Seaports and logistics. Sevastopol has great potential to become a major international port center for transporting all kinds of cargo and importing/ exporting various goods. Development of the trade sector requires opening modern, highly efficient logistics centers working in accordance with European standards. Unfortunately today this is impossible to achieve without the support of foreign investments. Sevastopol, just as any other growing and developing modern city needs high-tech manufacturing and modern information technologies. Tourism and recreation is one of the most promising sectors for foreign investment. Sevastopol is a famous resort that is popular among tourists from all CIS countries. The potential for development of this sector is nearly endless. Agriculture, wine production in particular, is another perspective sector of national economy that attracts local entrepreneurs and foreign investors alike. The major part of the city’s territory is allotted for growing well known types of grape. There is a modern wine-making factory in Sevastopol that is open to financial support from abroad. The final product is in high demand among customers from many CIS countries. What’s more, the main marketing channels are located in immediate proximity to the production line, thus maximizing the sales revenue. Significant specialized investment programs have already been implemented in the city. These programs will facilitate the development of entrepreneurial activity for small and medium-size business-

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es. The tax structure of the republic is constantly changing to meet European and International standards.

FAVORABLE TAX CLIMATE

Starting from the beginning of 2015, Sevastopol became a designated free economic zone with a very favorable tax climate and favorable conditions for investment. Main tax advantages include the tax free rates for the free economic zone participants and nominal rates for all other entrepreneurs. These attractive terms are in place for investors through 2039. Because of the free economic zone status of the city, business registration procedures and registration as a free economic zone participant are streamlined. 

Significant specialized investment programs have already been implemented in the city. These programs will facilitate the development of entrepreneurial activity for small and medium-size businesses. The tax structure of the republic is constantly changing to meet European and International standards.

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DECEMBER 2015

Business in Kazakhstan – Nine Reasons to Invest in Kazakhstan

1. [analysis and researches] [investment] [economic situation] [numbers and percentages] [perspective]

Natural Resources – Major Source of Wealth One of the main treasures of Kazakhstan is its natural resources. Kazakhstan is at the 6-th place in world reserves of natural resources. Out of 110 elements of the periodic table, 99 were discovered in the territory of modern Kazakhstan. Some of the well-known natural resources are oil, gas, uranium, zinc, tungsten, bohrium, silver, lead, ch romites, copper, fluorides, molybdenum, and gold. Mineral resources base of Kazakhstan consists of 5004 deposits, the forecasted cost of which is about $46 billion. On a global scale, Kazakhstan has established its place as one of the largest producer of tungsten, chrome, phosphate, molybdenum and iron stone, joining the world’s greatest natural resources rich countries such as after Brazil, Australia, Canada, USA, India and Russia.

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So far, only about 160 oil and gas deposits have been explored in Kazakhstan. However, not all of these deposits, not to mention the entire pools, are explored. In the event of their competent use, Kazakhstan might even compete with such countries as Saudi Arabia, Kuwait and United Arab Emirates in terms of reserves. Satellite pictures as well as ground geological surveys suggest, that currently used deposits of the West Kazakhstan oilfields that are adjacent to Caspian Sea coastline, are just an “outskirt” of the deep oil pool, the core of which lies in northern part of the Caspian Sea, where total reserves are estimated to be of impressive sizes–3-3,5 billion tons of oil and 2-2,5 trillion cubic gas meters. In modern Kazakhstan, about 300 significant gold deposits are estimated to be identified and 173 of them have already been in exploration. In case of significant capital investment, in few years time, Kazakhstan might be able to produce 100 tons of gold annually; today it produces only 1 % of its underground proven reserves, which give the right to Kazakhstan to be at 6-th place in the world in terms of proven reserves. Over 100 coal deposits have already been explored at the territory of Kazakhstan, the largest of them are Ekibastuz field, which is notable for large lignite bed thickness, and Karaganda coal pool with over 50 billion tons of proven reserves of coking coal. In the most successful years of operation, mentioned pools produced only 131 million tons of black coal. Kazakhstan is also rich in deposits of chemical raw materials: richest deposits of potash and other salts, borates, bromine compounds, sulfates, phosphate chalks, deposits of the most varied raw materials for paint and coatings industry. Huge reserves of sulfur in the composition of complex ore allow to undertake a major production of sulfuric acid and other chemical products. There are unlimited opportunities for production of almost all types of petrochemical synthesis products (especially ethylene, polypropylene and rubber material), synthetic detergents and soap production, feed microbiological protein, chemical fiber, cement, synthetic resin and plastics. Kazakhstan is also rich in material resources for glass and porcelain industry. Its soils and mountains contain the rarest jewels, various construction and facing materials. Other overwhelming wealth of Kazakh land includes mineral, medicinal, industrial and thermal waters, most of which has not been commercialized yet. The large majority of experts view extractive industries, including mining and oil and gas as having the highest

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growth potential over the next 5–10 years for Kazakhstan’s economy. This perhaps reflects a more general perception that Kazakhstan’s economic growth over the last decade has been largely driven by commodities exports, but it underlines the strategic importance of Kazakhstan’s rich resource base. It is also clear that investors find a more diverse range of sectors that are beginning to emerge as attractive investment options. Despite the efforts for diversification of Kazakhstan’s economy, the most attractive investment sector remains to be the oil and gas industry, which is the backbone of the current economy. Various economic policies has to help to capitalize on this competitive advantage and use it to develop high value-added production and supportive knowledge-based sectors. To attract strategic and technology intensive FDI projects, the country will have to develop relevant support schemes. These may include state procurement guarantees to initiate construction of high-cost plants, a predictable regulatory environment and modern infrastructure that will allow investors to localize production and reach suppliers and customers. According to numerous local surveys among foreign investors, Industry sectors with highest potential in the next 5–10 years have been chosen as follows: 1) Oil and Gas 2) Mining and Metals 3) Agriculture 4) Infrastructure – roads, highways and ports 5) Logistics 2. Political Stability – Necessary Element for Economic Growth Issues of maintaining political stability have always been at the forefront of the country’s government. Primarily was to ensure an interethnic balance in the country. As a result, of sophisticated political strategy, which provides equal rights and equal opportunities regardless of nationality, Kazakhstan has managed to turn multi-ethnicity from the force of potential risk into competitive advantage. Political stability enabled the country to create clear and transparent conditions for foreign investment attraction, which broadly predetermined economic success of the country. Since the independence in 1991, Kazakhstan had zero number of internal conflicts on the base of ethnicity. As we have seen from the experience of our neighboring countries such as Kyrgyzstan and Ukraine, the problem of maintaining a balance interethnic matter is of utmost

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importance. Kazakhstani government takes an active role in maintain this balance. 3. Sustainable Economic Growth The nominal GDP of Kazakhstan is growing at a steady pace and reached $216.3 billion in 2014. Beginning from 2000s the GDP growth amounts to 8-10% annually. Kazakhstan has one of the best indexes of GDP per capita among the CIS countries. Snapshot of the economy of Kazakhstan Credit Ratings S&P Moody’s Country Kazakhstan BBB+ Baa2 Russia BBB- Baa2 Bulgaria BBB- Baa2 Hungary BB Ba1

BBB BBB BBBBB+

Romania

BBB-

BBB- Baa3

Fitch Ratings

Global Competitiveness Index Rankings Rank Country Score 1 Switzerland 5.70 2 Singapore 5.65 3 USA 5.54 4 Finland 5.50 5 Germany 5.49 6 Japan 5.47 ... ... ... 50 Kazakhstan 4.42 53 Russia 4.37 71 India 4.21 Source: World Economic Forum, Global Competitiveness Report 2014-2015

4. Industrial and Innovative Development of Kazakhstan Kazakhstan has established core institutional entities of industrial development that serve as conduits for implementing government tasks for industrial development of the country. Some of the most important entities are: • National fund, which ensures economic stability. The fund is being managed by National Bank of Kazakhstan. Main assets come from the export revenues of oil and gas commodities. The fund is organized in the form of passive guard of assets for future generations. • JSC “FNB “Samruk-Kazyna” consolidating the potential of the state to implement cutting-edge areas. More than 40% of national GDP comes from enterprises owned and operated by Samryk-Kazyna. Samruk-Kazyna consists of almost 85 various companies that are diverse in their industry and capitalization. • Development institutions accompanying the process of economic diversification. The institutions are diverse in terms of target they have to achieve and sectors they operate. Certain fund aim to improve entrepreneurship, while others work on social issues. The “National Program of Forced Industrial and Innovative Development for 2010-2014” was adopted in 2010, main goals of this program are: creation of new export-oriented high-tech industries, infrastructure development, reinforcement of the national innovative system and enhancement of local personnel qualification. Within the frame of forced industrial and innovative development, the work is carried out to establish attractive conditions for investors who are ready to implement projects in the following priority sectors of economy: • Oil refining and infrastructure of oil and gas sector, ore mining and smelting complex, nuclear and chemical industries with subsequent transition of rough manufacture to higher processing stages • Mechanical industry, construction, pharmaceutical industry • Agricultural sector, consumer industry, tourism • Information and communication technologies, biological technology, alternative power, space activities.

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5. Investor Rights Protection by the State To attract overseas capital into the economy of the Republic of Kazakhstan, to reduce investment risks, to provide the system that guarantees the protection of foreign investments, overseas investors are given the national resident status, i.e. foreign and domestic companies have equal conditions for investment activities within the borders of Kazakhstan. Kazakhstan’s investment climate continues to improve. The following are four important factors, that provide evidence that investment climate is improving: 1. The willingness and commitment of the Government to engage in an open and constructive dialogue with investors. 2. The ability of the Government to ensure macroeconomic stability during the global economic downturn 3. Enhanced opportunities with the Customs Union and Economic Space 4. Consistent reforms, including large-scale industry specific programs and the constructive development of an FDI promotion program Business Environment: further enhancement of quality factors • Macroeconomic environment is stable: In 2009, the Government launched economic stimulus measures that included the recapitalization of domestic banks, support for the real estate and agriculture sectors, targeted support for small and medium sized enterprises and investment in industrial projects and infrastructure. The government’s response to the crisis of 2008-2009, and its ability to ensure a stable macroeconomic environment, are viewed by many residents as sound achievement. • A more transparent business environment is expected: Significant progress has been achieved in improving the transparency of the business environment, which is underpinned by the country’s steady progress in the World Bank’s Ease of Doing Business Index. As of 2015, Kazakhstan has been ranked 77th place in the rankings. Countries it surpassed are Argentina, Kuwait, China and Azerbaijan. • Entrepreneurship–develop local partners: Entrepreneurship is vital for a sustainable economy, the rise of the middle class and improvement of social and regional disparities. At the same time, it is necessary for investors to ensure there are local

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businesses with whom they can partner and help to move up the value chain. • A growing domestic market – more opportunities with the Customs Union and Common Economic Space: the single market of Belarus, Kazakhstan and Russia contains nearly 170 million people. The Customs Union and Common Economic Space is generally viewed as a stimulus to enhance the competitiveness of local businesses and develop human capital skills and increase market efficiency. To ensure that Kazakhstan gains a competitive advantage within the Customs Union and Common Economic Space, it needs to offer investors robust infrastructure, skilled human capital and a stimulating institutional environment. This would encourage businesses to start, or expand, production within Kazakhstan, using it as a launching pad for neighboring markets. • Political stability – a key factor in investor confidence: Many experts see the current government as strong and proactive. Numerous large-scale government initiatives have been announced, and it is essential that the envisaged benefits are delivered in practice. • Further reforms expected in transport and telecommunications: the level of transport and logistics infrastructure needs to be enhanced. Particular areas of concern for many foreign investors are: 1. The rail and road transportation network needs further development (including sufficient supply of railcars for cargo and enhancement of logistics centers). 2. Connectivity within the country and with key international locations needs to be enhanced. 3. Investors frequently need to develop infrastructure themselves at the sites of their operations, which is both challenging and costly. The Government acknowledges the importance of in-

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frastructure development and plans to invest around US$26b over the next decade to upgrade and expand transportation infrastructure. Since the mid-1990s, notable progress has been achieved in telecommunications infrastructure, with a stable growth rate in mobile phone coverage and internet connections. • More flexibility is expected in labor regulations: Many experts cite the fact that Kazakhstani labor regulations are not attractive for the investor community. They believe that the work permit and visa regimes require improvement, as inflow of skilled foreign labor ensures timely implementation of investment projects and contributes to local human capital development. Governemnt has taken a number of strategic initiatives in this direction. The Kazakhstani Government has been consistently implementing measures to address the rising demand in skilled labor. Government initiatives address the prospective needs of the economy and specific industries; ensure partnerships with the world’s best educational institutions and corporate sector leaders and provide students with access to the latest knowledge and new technologies. 6. Investment Preferences and Incentives Attraction and effective use of foreign investment is one of the main courses of mutually beneficial trade and economic cooperation between the Republic of Kazakhstan and other countries. Kazakhstan aims to create favorable conditions for successful operation of local and foreign investors in the re-

public and to attract investments to non-oil and gas sector. To date, Kazakhstan has created a favorable investment climate with a simplified tax regime, constantly improving legislation, extended package of investment preferences. Government of Kazakhstan have adopted specific programs on attracting foreign investments. Today Kazakhstan is one of the leaders on the volume of foreign capital invested in economy. From 2005 to 2014, Kazakhstan has attracted approximately 207.6 billion U.S. dollars in foreign direct investments. Dynamics of the last five years shows that more than $125 billion of the total investment was attracted in this period. In the year 2012, total FDI amount attracted was $28 billion, setting the absolute record in terms of FDI attracted. Thereby, even during the global financial crisis, investment climate of Kazakhstan and the macroeconomic situation of the country remained stable in the eyes of investors. Customs Union One of the key competitive advantages of Kazakhstan is its geographical location near the fast-growing markets, such as Central Asia, Russia and China. Moreover, Kazakhstan connects major transcontinental routes connecting Asia Pacific, Europe and the Middle East. Since the creation of the Customs Union, among Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan play an important role as well. Customs Union opens a common market with a combined GDP of $2 trillion and with population of about 170 million people, which creates new opportunities for investors and entrepreneurs/investors of countries in the Customs Union. Investor Ombudsman In order to protect investors’ rights a multilevel dialogue system between the state and investors was established including Foreign Investors Council under the President of Kazakhstan, Council for improvement of investment climate is chaired by the Prime Minister of Kazakhstan, a special body under the chairmanship of the Deputy Prime Minister operating as an investment ombudsman.

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Special Law on Investments and Investors’ Rights The following guarantees of investors’ rights are fixed in the Law «On Investments»: legal protection guarantees, use of income guarantees, guarantees of investors’ rights during nationalization and requisition (only in exceptional cases). Additional guarantees are provided by bilateral agreements on investment promotion and protection (47 bilateral and 1 multilateral (EurAsEC). In accordance with the Law «On investments» (from 29.12.2014) a company investing in priority sectors may receive the following preferences and privileges – exemption from customs duties on the import of equipment and raw materials needed for the project as well as state land grants. For strategic investment projects (production of a high added value high-tech products in priority industries and with the volume of investment not less than 5 million of monthly-calculated index) tax privileges (land and property taxes on a zero rate) for a period of up to 7 years are provided; industrial benefits in regions with low level of social and economic development (compensation and payment for part of expenses for gas, electricity, acquisition of the land plot, acquisition and construction of buildings). Recent changes to the legislation to make Kazakhstan even better destination for investors. In April 2014, the President stated that Kazakhstan has to attract more foreign investments. On May 2014, the Minister of Economy and Budget Planning announced the initiation of a package of laws to improve the

investment climate in Kazakhstan. The package contains a mix of initiatives of tax and non-tax nature. On June 2014, the President signed the Law on improvement of the investment climate. The changes introduced were already in force by January 1 2015, except the tax incentives, which are effective from January 1 2015. The changes are focused on foreign and local investments with capital of approximately $USD20 million. Simplification of visa regime for foreign investors First order of business concerned the issue of visas. Visa-free entrance for citizens of “most developed countries” (USA, GB, Germany, France, Italy, Malaysia, Netherlands, UAE, South Korea, Japan and USA) for the period from July 2014 until July 2016 if the stay does not exceed 15 days (general application) had been granted. On the other hand, the term of “investor visas” had been introduced, based on the investment authorities request (single for 90 days and multiple for 3 years). Simplification of work permits Additionally, since June 2014, no work permits required for foreign labor for the duration of construction under “investment projects” and one year after commissioning of the investment project. Investors have been provided with an option of “single window” principle to serve interests/permits/ needs/questions of foreign investors at the level of the Committee on Investments under the Ministry of Industry and New Technologies all from one agency, from one location. Specific Steps of State Support According to the Law of RK “On Investments” an investor can get:

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State Initiated Programs In the economic sphere, Kazakhstan has been implementing a number of strategic program documents, such as the State program on accelerated industrial and innovative development, the Concept of transition to “Green economy”. It is estimated that by 2050 up to 50% of the energy created in the country, will be supplied by alternative and renewable energy sources, which will add at least 3% to the GDP growth.

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1. Incentives for projects (including priority investment projects*): • Exemption from customs duties on the import of equipment, its components and spare parts, raw materials and supplies • Kind grants of not more than 30% of the total investment in fixed assets (land plots, buildings, machinery and equipment, computer equipment, measuring and control devices and equipment, vehicles, production and farm(agricultural implements) 2. Incentives for priority investment projects* • Tax exemptions: Corporate income tax – 0% for 10 years, Land-tax – 0% for 10 years, Property tax – 0%for 8 years. • Investment subsidies up to 30% for construction and installation works and procurement of equipment after commissioning. • Guarantee of stability of the legislation: (tax legislation and in the sphere of attraction foreign labor) • State support of investments by authorized body established by the Government of the Republic of Kazakhstan, which interacts with investors on the principle of “one stop shop“. • Assistance to investors in providing the guaranteed order from the interested legal entities according to the investment contract signed between the authorized body and the investor. One other important aspect, was the guarantee longterm purchase plan for goods/services by national holdings, national companies and state institutions. This was created to improve the matter of local content. Overall, Kazakhstan is known for the stability of tax legislation and foreign workforce attraction rules for the duration of the investment priority contract. It has been previously praised for the practice of long-term predictable tariffs and prices of regulated businesses. 7. Favorable Business Climate for Investors In Kazakhstan, close enough attention is drawn to all issues of favorable business climate for investors: the reduction of administrative barriers and simplification of procedures, enhancement of the efficiency of law and judicial systems, improvement of customs and tax administration. According to the rating of the World Bank’s the “Global Competitiveness Index Rankings” Kazakhstan taking the 50-th place in 2014 has left behind its nearest neighbors Russia and India, as well as the Czech Republic and Ukraine.

8. Historical Presence of Multinational Investors in Kazakhstan Since 1992, foreign investment companies have begun to operate actively within the Kazakh market. Such multinational companies as Chevron, Siemens, General Electric, Danone, Coca-Cola, Henkel, Toshiba, LG Electronics, Shell, Eni, Microsoft, BAE Systems and others successfully operate in Kazakhstan. Overall, since 1993, Kazakhstan has obtained foreign direct investment in the amount of 207 billion USD. What International Companies Need To Know About Investing In Kazakhstan One has no chance but be confident about the future for Kazakhstan. The country enjoys stability, economic growth and international recognition. It is a good environment for business and investment. Current law provides many advantages for making investments for foreigners, while the Government bears investment liabilities. On a macroeconomic level, the country has significant growth potential. However, the recent collapse in prices for energy resources showed that country economy needs to diversify to avoid being too dependent on energy export prices. The primary drivers of future economic growth will be diversification, industrial and innovative production and, above all, constant support of small and medium-sized businesses by the government. Private consumption is rising quickly, with double-digit growth in the last five years. This underpins the confidence for the future. We believe that an attractive investment climate in this country is essential. As a landlocked country, huge attention is being paid to logistics infrastructure. The removal of administrative barriers in trade, customs, transport and logistics would further improve the investment climate – as would liberalization of visa procedures for foreign investors, in particular for top managers. These proposals have been addressed to the Government. The geographical location of Kazakhstan, at the junction of Asia and Europe, offers unique opportunities for foreign investors. Other strengths are the potential of the people, a diverse climate, different time zones, unique wildlife parks and opportunities for employment and leisure. One of the most helpful advice to incoming investors, would be to learn both Kazakh and Russian languages, as it will help to understand the culture better.

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There is a significant perception gap between existing and prospective investors. Among investors already established in Kazakhstan, 85% see it as the most attractive destination among the CIS countries. However, among investors not established in the country, only 18% share this view, while 39% do not have sufficient awareness of the investment attractiveness of Kazakhstan in particular, and CIS countries in general. Kazakhstan’s attractiveness profile mainly relies on its cost competitiveness and macroeconomic stability: labor costs are perceived as competitive by 44% of respondents and the country’s macroeconomic stability by 39% of respondents. Investors point out the following challenges in the country’s attractiveness profile: labor skills level (35%), transport and logistics infrastructure (45%), transparency and stability of legal and regulatory environment (50%). 9. State of Infrastructure One of the key factors for effective development of economic sectors is the availability of an adequate communication and transport infrastructure, thus Kazakhstan is constantly working on the improvement of its own infrastructure. Owing to the investment attraction into various economic sectors, Kazakhstan will continue rapidly develop its infrastructure within the next five or ten years. Major projects include the construction of highways from Astana to major cities of Kazakhstan. 

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Who, When and Why Did Russia Part with Crimea? Leonid Levitsky

Chamber of Commerce and Industry of the Russian Federation presents

Crimea

[current] [analysis and researches] [background] [geopolitics] [partners]

he Russian General Prosecutor’s Office acknowledged that the transfer of Crimea to Ukraine in 1954 was illegal and that the decision of the Supreme Soviets of the USSR and the RSFSR didn’t comply with the Constitution of the USSR and the RSFSR. If you’re looking for insights into why Russia parted company with Crimea, it seems that you need look no further than the history textbooks that are distributed in Ukrainian schools. According to these

publications, Moscow was forced to transfer Crimea to the impoverished peninsula, and Ukraine was forced to accept it, for three reasons: 1. The transfer of Crimea represented an attempt to shift the moral responsibility for the deportation of the Tatar people onto Ukrainian shoulders. 2. It represented an effort to avoid the repayment of loans to Americans. 3. It forced Ukraine to attempt to restore the economic and cultural life of the peninsula.

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From the address of Vladimir Putin to the Federal Assembly, March 18, 2014. “…We were making advances to Ukraine, not only concerning Crimea. We proceeded from the premise that a good relationship is important for us, and they shouldn’t be held hostage to deadlock territorial disputes. But, at the same time, we expected Ukraine will be our good neighbor, that Russian and Russian-speaking citizens of Ukraine – especially in the southeast and Crimea – will live in a friendly, democratic, civilized state, that their legitimate interests will be provided in accordance with international law. However, the situation began to evolve in a different way. Again and again, they made efforts to deprive the Russians of their historical memory and sometimes deprive them of their native tongue, making them the object of forced assimilation.”.

In 1783, due to the victories of Russian arms and brilliant diplomacy, Crimea became a part of the Russian Empire. Russia also acquired Novorossiya, a vast territory on the northern coast of the Black Sea. At this point, the Russian progress to the southern seas was over. Ivan the Terrible had initiated the expansion to the southern seas, Peter the Great had continued his efforts, and Catherine the Great had finished it. But, the February decision of the Presidium of the CPSU Central Committee (1954) to transfer Crimea to Ukraine began the retreat of Russia from the southern seas and the loss of key strategic areas.

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Perhaps it is only a handful of parents of the current school students who remember not only the beautiful poetry of Paul Tychyna, but the speech he delivered on February 19, 1954, at the Presidium of the Supreme Soviet of the USSR, which ultimately ruled on the transfer of Crimea to Ukraine. Let me remind you of some of his powerful words: “It is impossible in any capitalist country to make such a generous act as the transfer one of the best domains of a great nation to other nation. Moreover, it is an unselfish, sincerely, voluntary transfer.” However, today, Ukraine reject all notion that Russia behaved unselfishly, with sincerity and goodwill. Until recently, they sold their own version of history to the Crimean people and forced them to adopt an ideological trident: one nation, one language, one religion. But it’s very difficult to adhere to such an ideology when, today, 125 different nationalities live on the peninsula. As the Pearl of the Black Sea, Crimea has always been a nation that many men have wanted to own.

“FOR OURSELVES AND OUR SUCCESSORS TO THE THRONE”

One can turn to the Encyclopedic Dictionary for a definition of indigenous people: “Indigenous people — an ethnic group, who digested a territory before anybody else populated it.” The discovery of 25 Paleolithic early man sites revealed that the first people on the peninsula appeared 200 thousand years ago. One era replaced another, and one people replaced another, people who had no name. The first inhabitants with a clear nationality were Cimmerians, Taurus, who left a memory: Tavria, Taurida, Tauris. Then there were Greeks, Byzantines, Romans, Venetians, Genoese, Jews, Sarmatians, Huns, Goths. In those

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days, there were Slavs in Crimea. Ancient writers often mention Rosses, Russes – the white, light people. The Arabs called Russes the Slavs, the Black Sea – Russian Sea, Kerch Strait – Russian River. Khazar Khaganate, Tmutarakan principality, the Ulus of the Golden Horde. I would like to highlight one fundamental point: After the dissolution of the Golden Horde in 1443, the Crimean Khanate appeared on the peninsula, which soon became a vassal of the Ottoman Empire. A dangerous militant neighbor challenged Russia, Poland, and South Slavs. The Wild Field ran from Perekop to Ryazan and from The Wild Field raids were to Tula and Moscow. In 1580, Crimean Tatars almost burned Moscow to the ground, and about 80 thousand people were killed. The constant threat of Turkish invasion came from Crimea. Ivan the Terrible was the first to appear on the scene. He began cleaning up the Wild Field and progressing to the southern seas. Peter the Great continued this endeavor, and Catherine the

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In the Manifesto of the Accession of Crimea, Kuban, and Taman, Catherine II promised the residents of these regions “holy and unwaveringly for ourselves and our heirs to the throne to keep them level with our natural nationals, to protect and defend their persons, property, churches, their natural religion.” Great finished the job. Russian generals and admirals forced Turkey to sign the Treaty of Kucuk Kaynarca in July 10, 1774. This agreement was, in all respects, perfect for Russia. Under the treaty, the Crimean Khanate gained independence from Turkey. In 1783, the Crimean Khan Shahin Giray filed an official request to Russia in which he asked for Crimea to be accepted as part of the Russian Empire. Nine years passed between the treaty with Turkey and the manifesto of the accession of the peninsula. Russia didn’t capture Crimea; it waited for Crimea to come to it. Shahin Giray decided to join Muscovy, bringing a gift – the Pearl of the Black Sea. Russia received both

At the Yalta Conference, leaders of the most influential states were fully aware who owned Crimea.

Crimea and an only passage (the Kerch Strait) from the Black Sea to the Sea of Azov. In return, the Empress gave her new subjects freedom of religion and freedom from conscription. The Tatar elite were granted all the rights of the Russian nobility. The Muslim clergy were released from taxes.

CRIMEA – THE VICTIM OF A POWER STRUGGLE

The Soviet government did not violate the provisions of the manifesto. Just after the Civil War, the All-Russian Central Executive Committee and the Council of People’s Commissars of the RSFSR adopted a resolution on the formation of the Crimean Autonomous Soviet Socialist Republic. According to the population census of 1939, Russians accounted for 49.6 percent of the total amount of people living in Crimea, Tatars – 19.4%, Ukrainians – 13.7%, Jews – 5.8%, and Germans – 4.6%. The Republic had two official languages: Russian and Crimean Tatar. Administrative division was based on ethnicity: Tatar, Jewish, German districts and rural councils. Children learned in their native language in national rural councils. The war, the complete depopulation of Jews, and the extermination of 80% Crimean Jews during the occupation and deportation in 1944, fundamentally changed the demographics and the administrative division, and destroyed industry and agriculture. Only former names of districts and rural councils

remained autonomous. In 1945, the Crimean Autonomous Soviet Socialist Republic became Crimean Oblast. The Federal Government obliged other republics to help Crimea – primarily to send people to Crimea for permanent residence. However, Ukraine was among the republics, and this upset the plan. The head of Ukraine, Nikita Khrushchev, the First Secretary of the Communist Party of Ukraine, often came under strong criticism thereby. Whether he couldn’t, or wouldn’t, send the required quorum of people – who knows? But, according to the recollections of some of his leader-colleagues in Moscow, he harbored plans to expand Ukraine by virtue of Crimea. Researchers often cite Khrushchev as saying: “I was almost reduced in dust because of the proposal to transfer Crimea to Ukraine. Anyway, I’ll take it!” In the Manifesto of the Accession of Crimea, Kuban, and Taman, Catherine II promised the residents of these regions “holy and unwaveringly for ourselves and our heirs to the throne to keep them level with our natural nationals, to protect and defend their persons, property, churches, their natural religion.” So Khrushchev did, indeed, take it. The death of Stalin in March 1953 changed the situation in the USSR. Khrushchev was elevated to a new height of power. In the fall of 1953, he was elected the First Secretary of the CPSU Central Committee. He was an impatient and very proud man. He wanted to assert himself as soon as possible and, in the process, he didn’t spare his recent comrades in Stalin’s Guard. He even removed George Zhukov from all power, despite the fact Zhukov had literally saved him at the meeting of the Presidium of the CPSU Central Committee. So Pavel Titov, First Secretary of the Crimean

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Regional Committee of the Communist Party of Ukraine, was more fortunate than Zhukov. George Myasnikov, the former Second Secretary of the Party Committee of Penza, recalled in Pages from the Diary (2008): I remember, when he rose (Dmitry Polanski – a major party and Soviet employee, the Chairman of the Government of the RSFSR, First Deputy Chairman of the Government of the USSR and First Secretary of the Crimean Regional Committee of the Communist Party in November 1953). Khrushchev, Titov and Polanski met in Crimea. They started talking about a transfer of Crimea to Ukraine. Titov rejected the idea without a peep, but Polanski called it brilliant. The next day, they gathered a plenum of regional committee: Titov was kicked away, and Polanski became the First Secretary… Either Titov knew something, or simply surmised about future changes. Even at the XIX Communist Party Congress, he wrote a letter to Stalin. He argued the need to return the former Russian

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name to Crimean Oblast – Tauris. According to Titov, Stalin did not answer at once. He answered at the end of January, 1953: ‘Your proposal is interesting, perhaps, it is correct. We need to discuss it.’ The discussion didn’t take place. Titov informed Khrushchev of this at the meeting in November, 1953. He argued that Russia shouldn’t leave the Crimea, it couldn’t lose the Kerch Strait. His pleas cut no ice. Pavel Titiov was demoted to Deputy Minister of Agriculture of the Russian Federation. It was a big demotion. And Russia really lost the Strait. The main port on the Kuban on the strait was given to

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Ukraine. Many years on, Konstantin Chernenko – General Secretary of the CPSU – ordered for it to be returned to Kuban. “ This was never clarified in the history of Crimea. Perhaps a lot of great people wanted it to be quickly forgotten. From that event, Khrushchev began arbitrariness and voluntarism. At that time, he only tried on the dress of a great leader; in reality, he was considered to be an old and experienced guard. Why did none of those really distinguished people reject this crazy (according to Myasnikov) idea? Politically, the transfer was framed majestically and competently – a gift to the Ukrainian people on the 300th anniversary of the Treaty of Pereyaslav. However, juristically, according to the analysis of the Supreme Soviet in May 1992, and the recent conclusion of the General Prosecutor’s Office, it was a violation of the Constitution of the RSFSR and the USSR. Despite what the experts say, Ukrainian researchers continue to argue that everything was done according to the book. Many people argue that it was good that the Ukrainians hastened; in their rush, they failed to comply with a number of important legal requirements.

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But what would have happened if they complied with all formalities and completed all necessary paperwork? A few years ago, at the Russian-Ukrainian Round Table, Valentine Goydenko, a senior fellow at the Institute of CIS, made a public appearance and announced: “I’ve got in the archives an interesting case about the transfer of the Crimean region from the RSFSR to the Ukrainian SSR. It began on February 4 and was completed on February 19, 1954. So 15 days was enough to transfer Crimea and, thereby, plant a bomb in Russian-Ukrainian relations.” She also quoted from the book Nuremberg Trial: “The original idea to take away Crimea from Russia and to pass it to Ukraine belongs to Hitler. The Fuhrer thought it was a brilliantly designed way to make two major Slavic power mortal enemies.” In 1783, due to the victories of Russian arms and brilliant diplomacy, Crimea became a part of the Russian Empire. Russia also acquired Novorossiya, a vast territory on the northern coast of the Black Sea. At this point, the Russian progress to the southern seas was over. Ivan the Terrible had initiated the expansion to the southern seas, Peter the Great had continued his

efforts, and Catherine the Great had finished it. But, the February decision of the Presidium of the CPSU Central Committee (1954) to transfer Crimea to Ukraine began the retreat of Russia from the southern seas and the loss of key strategic areas. A bomb had exploded, and it would take a very long time to eliminate the consequences. It is clear that Khrushchev could not foresee such a pace of developments. But what made him engage in the national political land management? In his speech in Crimea on March 18, immediately after the referendum, Vladimir Putin highlighted two points: “[Khrushchev] wanted to win the support of Ukrainian nomenclature or make amends for the organization of mass repressions in Ukraine in the 1930s…” That may be true, but it represents a more recent motive. Some of his contemporaries believed that the idea matured since the late ‘40s. Historian Mark Kramer is confident that Khrushchev intended to change the ethnic composition of the Ukrainian SSR by gaining control of Crimea. After all, an increase in the proportion of the Russian-speaking population would reduce the basis for

93.2% of Crimeans voted for reunification with Russia in the referendum in January 20, 1991, and in the referendum on March 16, 2014 – 96.7%.

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the development of Ukrainian nationalism. Khrushchev’s children – his son Sergei, his daughter Rada Adjoubei and her husband Alex Adjoubei – explain the transfer of Crimea as an economic necessity. Russia had no time for Crimea, so Ukraine could effectively help it to overcome the demographic and economic crisis. The majority of Ukrainian politicians uphold this version, and it is included in school textbooks. The peninsula had become the thriving Crimea, “a medal on the chest of the planet” (according to Pablo Neruda), and this happened because Crimea became Ukrainian. It would have remained neglected and impoverished In Russia. Such statements represent deft manipulation of today’s ignorance of Soviet realities. The complex, planned, strictly centralized single country’s economy developed on a single plan. Large projects, like Crimea, were implemented in unison, by the combined efforts of all republics, all outdoors under the supervision of Moscow. By this route, they created a second industrial base in the Urals and in the Kuznetsk Basin, the Second Baku in Tatarstan and Bashkortostan, the Third Baku in Western Siberia and the Baikal-Amur Mainline. I studied the primary sources to develop a better understanding of how the transformation of Crimea into the “Medal on the chest of the planet” was financed. On July 26, 1954, the Central Committee and the USSR Council of Ministers accepted the resolution “On measures for further development of agriculture, cities and resorts in the Crimean Oblast of the Ukrainian SSR.” Sometimes such documents are prepared for years, in this case, they met the deadline in a few months. Effectively, you’re the master of your destiny! By the way,

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Dmitry Polanski, First Secretary of the Crimean Regional Committee of the Communist Party, was a member of the commission that prepared a draft resolution of the Central Committee and Council of Ministers. Moscow – exactly Moscow – unveiled about five billion rubles just for three years (1954-1957). The plan was to develop about 14 hectares of gardens, 16 thousand hectares of vineyards, 900 hectares of small fruit acreages, 80 thousand square meters of greenhouses. It detailed a lot of land reclamations and a construction preparation of a giant project – the North Crimean Canal. A heavy penny-farm applied to all major ministries and allied departments. They planned to build the hydro-electric power station Novokrymskaya, power transmission lines, modern ports in Yalta, Kerch, Feodosia, roads, schools, cultural facilities and powerful processing industry. 600 million rubles was unveiled for the development of the sanatorium-resort area. We have to hand it to Nikita Khrushchev – his idea made him rich. That’s the secret of the Ukrainian miracle. After 60 years, it is impossible to understand why Nikita Khrushchev broke the territorial and adminis-

trative division. Every bullet has its billet: an irrepressible reformist itch, wounded pride, a desire to dominate, to rise above the old Moscow party nomenclature, to reach the level of the true leader, to have his sustainable “patrimony” in the struggle with Moscow and Muscovites. There’s no doubt, Crimea had become a tool and a victim of that struggle. The second time it was “a lamb to the slaughter” was in the 90s. We can’t say that Yeltsin betrayed Crimea and Crimean people, he just waved at them. He was in desperate need of the friendship and support of Leonid Kravchuk in his fight against Gorbachev and the authorities of the Soviet Union. He paid for this with a treaty with Ukraine that confirmed the inviolability of its borders – for the second time Crimea was transferred to Kiev, then the third by execution of the Belavezha Accords. Fortunately, the Crimean people did not give up and patiently lined the path to Russia. And thank God, they waited with understanding, recognition and support. Vladimir Putin did not just fix the “errors” of Khrushchev and Yeltsin. He proved that Russia is alive, and Russia doesn’t leave Russians in the lurch. 

View of gorge mariam dere and wall of chufut kale town in Crimean mountains in autumn.

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BRICS Alexei Fedorovich

RIC is an acronym for the combined developing economies of Brazil, Russia, India and China. When the term was first coined and the alliance was formed, worldwide economic experts did not attribute much importance to the coalition. Nobody suspected that it represented a serious coordination of economic efforts and the establishment of an official trade union that is comparable to the European Union. Over time, the international community has slowly started to recognize that the BRICS countries do represent a significant economic union that has the potential to strengthen the participating entitiesâ&#x20AC;&#x2122; geopolitical influence. The first meeting of foreign ministers of the BRICS countries took place in 2008 in Japan as part of the 61st session of the UN. For the first time, the BRIC leaders (without South Africa at that point) shook hands at the 34th summit of G8; then, on June 16, 2009, a full-format meeting was held in Yekaterinburg (Russia).

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One main feature of the BRICS countries is they all have large developing economies. They also have a lot of key resources and high potential. Brazil is the seventh world economy. It offers excellent agricultural products and has a chance of replicating the success demonstrated by other great powers. Russia currently features in fifth-sixth place among world economies in terms of size of GDP. It also has the largest territory in the world, is a major nuclear power, and is rich in precious minerals. India is the third world economy. It is home to vast low-cost intellectual resources, nuclear power, and a population of over one billion people. Again, the scale and size of the country gives it the potential to become a great power. China is the world’s number one economy, the world’s main exporter, has the largest foreign exchange reserves, the largest population, significant political power and nuclear power. South Africa is the 25-29th largest global economy. It is widely regarded as the main power of Africa and is rich in valuable natural resources. One of the main problems of the BRICS is that each of the countries involved have very large populations. This results in low wages and, consequently, slow economic growth. The main strategic goal of the association between the BRIC’s countries is to transform economic potential into political influence in a bid to challenge the leadership positions of Western economic elites. If this happens, the economic governance model of the entire world will change, and the need for elites may diminish.

THE ECONOMICAL PROSPECTS OF THE BRICS

In the past few years, developing countries have played a transformational role in the world economy; however, today, the situation has significantly changed, and there is now an opportunity for things to go completely in the opposite direction. Financial instabili-

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ty has led to the outflow of investment capital from the BRICS countries, a reduction in the prices of popular raw materials, a reduction in the exports of major emerging markets, and a significant increase in the loan debts of BRIC enterprises. According to expert estimates, internal problems have also undermined the positions of the BRICS countries. The economic problems of Brazil are concentrated around weak market conditions amid the prolonged social and political crisis. Chinese GDP growth is rapidly shrinking, and the local stock exchange is collapsing. South Africa and Russia are widely considered to be the most vulnerable states in the association. The main problem for the BRICS countries is the significant influence of the political will of the leaders in terms of economic decision making.

CAUSES OF THE CRISIS

Against the background of capital flight towards the markets of developed countries, the prices of stock have diminished, and foreign exchange indices have also fallen against those of developing economies. American money is rapidly leaving the once-promising BRICs markets. First of all, this is associated with plans of the US Federal Reserve System to raise the level of interest rates. Against the background of the events, the US dollar grew by 20% against the currencies of developing countries. The dollar continued to rise over the course of the last three years and reached its peak in the last decade. At the same time, the loan debts of the enterprises of

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developing countries increased. Today, this figure is estimated at 80% of the total GDP of these countries. Even in the severe crisis of 2008, this value did not exceed 60%. Against the backdrop of falling export rates, the reduction in the profits of BRICs enterprises has reduced, and the revenues of the state treasury and private households, retail trade and overall economic growth have declined.

POLITICAL PROSPECTS OF THE BRICS

Some analysts claim that Russia wants to enlist the support of the BRICS members in its opposition to a bloc of Western States. However, India and Brazil strongly oppose such a scenario. The last summit of the alliance of developing countries revealed that many of the BRICs members differ in terms of their goals and expectations. The establishment of the coalition ten years ago provided developing countries with a chance to challenge the hegemony of the Western bloc. However, at the last meeting in Ufa (Russia), all five members were like characters from the famous fable of Krylov. Each with his own interest.

As such, today, the BRICS has become very fragmented, and this fact casts serious doubt on the future of the association. South Africa, India and Brazil are chaotic democracies. They are still very far from the rule of law. Russia and China are classic autocracies. Russia has caused significant damage to the economic stability of the bloc because of its active involvement in the Ukrainian conflict. The result threatens the security of the European system. Ambitions of Chinese leaders have led to a rivalry between China and USA in the Pacific region. Meanwhile, Brazil is climbing down and refuses to become a nuclear power. Today, the BRICS eke out a living from good personal relations between the leaders of the member states. Especially warm and friendly relations have been established between the leader of South Africa, Jacob Zuma, and Russian President Vladimir Putin. However, personal feelings have not yet manifested themselves in significant progress in economic and political cooperation between the two countries. In 2014, a trade turnover between South Africa and the BRICS countries was 376 billion dollars, 222 billion dollars of which were contracts with China. At the same time, trade with Russia amounted to only 12.5 billion dollars (according to the Johannesburg Standard Bank). 

The Times writes that, today, BRICS is gradually turning into an alliance that is heavily focused on China. China’s GDP is more than 50% of the total GDP of the BRICS countries. Therefore, the role of Beijing in the BRICS is increasing at a significant rate. Despite the crisis in the economies of the BRICS countries, the association has good prospects. The main challenge involves surviving unstable times. Despite the fact that the BRICS leaders are currently concentrating on their very own domestic financial and political problems, new opportunities for economic growth and development could represent a valid means of reuniting the states.

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The Impact of Refugees on the Eurozone Economy Viktor Zuev

[world economy] [crisis] [perspective] [numbers and percentages]

ver the past few months, the European Union has encountered a massive influx of an unmanageable number of refugees, and the current migrant crisis has caused member countries significant problems. Despite all the talk about financial costs, it is much more difficult to solve all the practical issues relating to the provision of accommodation, food and heating for large numbers of migrants arriving in uncontrolled amounts. The number of people who have already crossed the borders of the Schengen Zone, and those who are still waiting to cross it, are in the hundreds of thousands. At present, it seems that the situation is getting seriously out of control. The Mediterranean Sea represents one of the most common passageways into Europe. In 2015 alone, more than 220-thousand illegal immigrants

sailed into the EU via this body of water. Unfortunately, about 1% of them succumbed to the dangers of this treacherous ocean and sadly lost their lives in pursuit of a better life. Further along the route, some 140-thousand refugees have successfully crossed the Serbian-Hungarian border. For economies of more modest means, such as those located in Eastern Europe, such vast numbers of uninvited guests have dealt a real blow to the already scarce resources. Between January and September 2015, the EU granted access to more than 500-thousand refugees who had crossed into Europe from countries located in the Middle East and North Africa. However, while these refugees may, indeed, now have their feet solidly on European ground, the extent to which the EU can accommodate these people remains to be seen. Ac-

cording to Dimitris Avramopoulos, the EU Commissioner for Migration and Home Affairs, todayâ&#x20AC;&#x2122;s immigration crisis may have dire consequences that are comparable to the movement of refugees during the Second World War. The Hungarian border has become a common gateway for migrants, and it is projected that the majority of refugees will attempt to gain access to the richer Eurozone countries through its borders.

HOW IS EUROPE DEALING WITH THE LOOMING CRISIS?

It is more cost-effective to proactively avoid any kind of chaos than it is to stop it. For this reason, a large amount of money has been allocated to solving the problem of the influx of illegal immigrants. Despite stable funding, the majority of Eurozone countries have their own individual take

GERMANY IS LOOKING FOR AN ECONOMIC BENEFIT

By the end of 2015, at least 500-thousand registered refugees will have arrived in Germany. Despite the apparent critical nature of the situation, the country, under the leadership of Angela Merkel, may not be profiting from its new arrivals; however, the government is, at least, trying to minimize losses against a background of constantly rising costs. However, Germany will, undoubtedly, be required to spend at least some money. The main burden of cost will impact budgets at every level, i.e. land, local and federal coffers. The state budget includes separate provisions for articles to cover the needs of migrants. However, as a result of the costs that are expected in 2016, this will certainly need to undergo a major revision. A total of one billion Euros has already been allocated to cover the needs of migrants until the end of 2015. It is anticipated that this sum will increase at least threefold in the forthcoming year. There are even suggestions that, before the end of 2016, the cost of providing for refugees in Berlin alone will be in the region of 10 billion euros.

HOW GERMANY STRUGGLES WITH THE REFUGEE CRISIS

The German government does not hasten to send the budget surplus to pay off public debt. Instead, the government in Berlin has channeled taxpayer funds to strengthen demand in the domestic markets. Refugees consume various goods and services in large quantities, which means that doctors and translators, bus drivers

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on the problem and are in no hurry to become cohesive parties under a single strategy that aims to deal with this troubling problem.

and companies that provide hostels and hostel maintenance services will be in great demand. In fact, in addition to the need for rental housing, the demand for craftsmen, consumer goods, and food products is set to significantly increase. Of course, the chosen method for spending this 10 billion can not be called the most effective, since such a tactical move will not bring about longterm shifts in economic development. At the same time, receiving refugees may not entail negative macroeconomic phenomena, which is also important. A positive trend is also envisaged in the labor market in Germany. Approximately one thousand jobs will be created in the Federal Office for Migration and Refugees, and about three thousand jobs will be created in the German Federal Police. Expenditures in Germany are on the rise; however, the budget remains deficit-free. The ideal financial discipline of the government and the vast majority of ordinary citizens eliminates the need to patch holes in the budget due to the increase in utility rates or taxes for entrepreneurs.

WHAT KIND OF BENEFITS WILL REFUGEES BRING TO THE ECONOMY?

Numerous economic experts in the Eurozone have long been con-

cerned about manpower shortages. The majority of Old World countries are anticipated to have an acute need for labor in the forthcoming decade. If appropriate action isnâ&#x20AC;&#x2122;t taken right now, within 15 years, the German labor market will experience a crisis point, with an estimated shortage of 10 million hired workers. Germany still doesnâ&#x20AC;&#x2122;t have a strategy for attracting such a large number of workers; as such, the surging wave of refugees may be coming at an opportune moment. If the German government and parliament can develop a joint effective plan of action expeditiously, hundreds of thousands of refugees can effectively and efficiently be transformed into skilled migrant workers who deliver a tangible economic effect and possibly halt the looming worker deficit. At the same time, the process of active refugee adaptation can solve some of the problems that are typically associated with the influx of large numbers of unplanned migrants from other countries.

THE ECONOMIC RISKS ASSOCIATED WITH THE INFLUX OF REFUGEES

A similar lack of manpower in 10-15 years time will be experienced not only in Germany but also in other European countries, in particular Hungary, which currently has a rapidly aging

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population. However, unlike its richer western neighbor, Budapest is already unable to cope with the current costs and is facing serious losses. At present, no published official economic calculations are available; however, the criticality of the situation Hungary finds itself in is visible to the naked eye. As a result of being the European gateway to hundreds of thousands of migrants, Hungary is under a very heavy economic burden. The Hungarian government currently has no budgetary provisions for the maintenance costs associated with the continual stream of refugees; as such, is it likely that almost every Hungarian family will feel the negative economic impact of this situation. Tens of millions of forints have already been spent on dealing with the problems associated with the influx of illegal immigrants; however, the cash reserves of this small Eastern European country are running out fast. Realization of the fence building project that was constructed on the border with Serbia cost Budapest 29 billion forints. According to Laszlo Parragh, the President of the Hungarian Chamber of Commerce and Industry, this unfavorable situation will clearly affect the consumer sector of the state,

and will make the already unfavorable investment climate even worse.

WHAT PROBLEMS WILL THE REFUGEES ENCOUNTER IN THE INTERMEDIATE TERM?

Expenses that Germany and other countries directed towards the adaptation of migrant workers can not be recouped if the refugees living in the EU do not want to work and, instead, rely on social assistance. In this situation, the financial burden on the state budget will increase rapidly and exponentially. It is extremely difficult to predict how events will unfold. Certainly, European officials believe that the arriving refugees, which include many young people, will want to build a career, develop professionally and live a full life within the more prosperous countries of the European Economic Area. For example, the majority of Syrian refugees were middle class in their own country. They have what is considered a good standard of education and are not against active self-realization in new conditions.

EUROPE WILL NOT SURVIVE WITHOUT A NEW LABOR FORCE

The average age of citizens in the

European Union is rapidly increasing. It is anticipated that people of pensionable age will make up almost a third of the continent’s population over the next 30-40 years. The question as to how such a large amount of senior citizens can be supported will be pertinent for every European country. Under normal conditions, the pension system is based on the principle of solidarity between generations and, for this to work, there needs to be four working men for every pensioner. Today, this proportion is still preserved; however, by 2060, there will be only two workers per pensioner. The aging population of the EU is slowing its economy down by 0.2% annually. The lack of the required number of migrant workers will inevitably lead to a deep financial crisis since the burden of pension payments will be very heavy in every sense of the word. To put a stop to this threatening tendency once and for all, Europe needs to develop a strategic plan today to identify how it will secure 42 million workers by 2020 and 257 million wage earners by 2060. To solve the problem through simple natural population growth is not possible and, therefore, the opening of borders to migrant workers may represent the only way to ensure the survival of the European Union in the near future. The number of young Germans, French, Italians, Hungarians, Poles and the representatives of additional countries who pay taxes for a generation of pensioners is declining rapidly. Young people from Africa and Middle Eastern countries may be the only candidates for the labor shortages and, as such, it is these individuals who will fund a comfortable life for future European pensioners. 

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President of the Chamber of Commerce and Industry of the Russian Federation, Mr. Sergey Katyrin: the situation itself stimulates the structural transformations of the economy.

n October 13 the Trilateral Russian-Belarusian-Austrian business forum, held in Minsk, was organized and conducted by the Chamber of Commerce and Industry of the Russian Federation, the Belarusian Chamber of Commerce and Industry and The Austrian Economic Chambers. The first forum of this kind was held last year in Austria and thanks to its resounding successes a third forum is set to be held in Moscow next year. Recent crisis developments have prompted the Russian economy into a period of restructuring, with the situation itself stimulating businesses and the government alike to implement structural reforms – Which was the thesis upon which The President of CCI Russia, Mr. Sergey Katyrin spoke at length at the recent second Russian-Belarusian-Austrian business forum held on October 13 in Minsk. In his speech, he answered the main questions that Western businesses ask their partners in Russia. It can be agreed that “Yes”, today the country is undergoing a period of difficulties, but according to the forecasts of The World Bank Group, the stabilization of world oil prices has

prevented a sharp decline in the volume of GDP in the current year. Recent crisis developments have accelerated the process of economic adjustment and structural reforms. Experts believe that by no later than 2017 growth in the Russian economy will be resumed. At the same time the level of public debt held by Russia is much lower than debts of many developed countries (in 2014 the ratio of public debt to GDP was 17.9 percent, while back in 1999 it was a staggering 99 percent). In other words, Russia still remains a stable market and has the resources to offset most of the negative external trends, according to Mr. Sergey Katyrin. Mr. Sergey Katyrin also emphasized that widespread media statements about the so-called “turn of Russia to the East and a withdrawal from Europe and the United States” does not reflect the real situation. For example at the end of 2014, 48 percent of Russia’s trade turnover was related to European countries, while 27 percent fell on the APEC countries and 12 percent was in the CIS. According to the head of CCI Russia, companies in the Russian Federation, unlike a number of other partners, are well aware that leaving the market

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CCI Russia news report

is very easy thing to do, but it will be much harder to return: with the niche sectors already being occupied. So there currently is no withdrawal of Russian businesses from Europe. Furthermore, in some areas, the opposite process is noticeable. In terms of hard currency the price of Russian products is declining and high-tech Russian manufacturers have begun to increase their presence in Western markets. A prime example of this symbiosis can be seen in the Stavropol company “Monocrystal” which produces sapphire glass, which in particular is used by the American company “Apple”. It is significant that Americans had not imposed a ban on the import of Stavropol products as it is very beneficial to them. It was summarized by Mr. Sergey Katyrin that “We could build a productive and mutually beneficial cooperation in such industries with high added value”. One of the priorities of the Russian Federation is the deepening of ties, under the framework of The Eur-

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asian Economic Union, with foreign businesses being given the opportunity to do business in the EEU under the universal and transparent rules of international trade. After the customs clearance process, which should be done just once while crossing the border into the Union, goods can move freely within the territory covered by the EEU. An important factor in the development of Russia in the coming years is import substitution. The essence here is not an attempt to close its market, but to increase the production of quality products and the use of internal resources. Russia responds to external constraints by an extension of freedom and increasing openness. While current media stories would have

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people thinking differently the evidence speaks for itself: in the last year more than 60 new companies, with foreign participation, including those tied to the EU, have started operations in Russia. There are examples of successful import substitution in high-tech industries as well, such as in the production of oilfield equipment. Here the dependence on imported components was extremely high. A company from Urals has been buying key components for the construction of drilling rigs in the United States and in Germany. Now, due to the sanctions, their partners have stopped deliveries, but the company has brought the degree of its own equipment production up to 90-95 percent. Moreover, the products proved to be in demand in foreign

markets. The most interesting thing is that there is much more attractiveness in the parameters of “price–quality” compared with that of their manufacturing counterparts from other countries. Following the opening of a factory manufacturing carbon fiber in the Special Economic Zone “Alabuga” (Tatarstan) the company now plans to supply 7 percent of the world market of this sought-after material by 2020. Today is Russia’s bid for regional development and support for local businesses. And Western businesses are realizing the serious prospects of the so-called “Russian province”. In fact Mr. Sergey Katyrin is certain that: “Those who will enter the local markets today–will win tomorrow.” 

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DECEMBER 2015

How long will the oil crisis?

[current] [economic situation] [crisis] [world economy] [numbers and percentages] [perspective]

Viktor Zuev

il market players have remembered August 2015 as a sustainable bearish trend, which is steadily supported by strengthening market positions of Iran. A few months ago the major supplier was out of the game because of sanctions. Today, this topic has already played, but the bear speculation is continuing because of so called Chinese factor. If a growth rate of Chinese economy will slow down even more and will exceed IMF and the World Bank’s forecasts, oil prices have all the chances to test a new lower limit. This scenario is possible, if Chinese GDP will grow by less than 6.5–6.8%. In this case, Chinese consumption of raw materials will be reduced, and the oil price move-

ment will continue to take down too. At the moment, it does not seem possible to trace specific dynamics in the economy of the PRC. The world community is waiting with bated breath the Chinese crisis will bring down or thoroughly shaken global financial markets with new force. Such forecasts are based on a very fragile economic situation in the country and rapid drop in foreign exchange reserves. Most of experts believe that the pressure of the Chinese factor on oil prices will continue until the end of 2016. Despite the record low prices, nobody is going to drop a rate of black gold production. The OPEC countries declared exceeding quotas. Oil exports from Russia continue to increase too. For the first half of 2015 the delivery rose by 11.8%, while export earnings fell by 1.68 times. Logic of the Russian government is clear – Russia does not want to lose its market share. The Gulf countries and leading US companies follow the same reasoning. The national currency of Russia can’t remain on the sidelines. A powerful set of destabilizing factors reduces the ruble. Natural gas doesn’t help the ruble too. In the beginning of 2015 the gas abroad delivery fell by 4%. At the same time, low oil prices reduce gas prices.

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HOW THE BANK OF RUSSIA ACTS AND WHAT IS TO BE DONE AMID THE OIL CRISIS?

When the oil vortex started to twist, Russian bankers tried to save the situation via large-scale currency interventions. But today the tactics are hopeless. Now the Bank of Russia negotiate with exporters about increasing of currency sales within the market in steady and balanced mode. September is a peak of payments on external liabilities for the corporate sector of the Russian Federation. The question is about 16 billion dollars. Part of these funds is already in accounts of companies but not in full. In this regard, it is easy to assume that the next steps of the Bank of Russia will be the expansion of foreign exchange supply in the market. However, a slight ruble strengthening in August-September will not save the national currency from other factors beyond the control of government decisions. A stabilizing element is the Federal funds rate, which was left unchanged. Increasing of the rate in September would have bashed the currencies of most developing countries, including the Russian ruble — the currency depending on exports of raw materials and energy prices.

WHEN WE SHOULD EXPECT OIL PRICE INCREASING AND RUBLE STRENGTHENING?

We shouldn’t expect a bearish trend reversal on a short-term horizon. The oversupply seriously reduces oil prices. On a conservative estimate, every day it comes on the market by 800,000 barrels per day more than importers want to buy. Somebody thinks this figure has long exceeded 2 million barrels. In addition, the slowdown of Chinese economic growth increases

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glut of raw materials. If we assume likely recovery of China and 7% Chinese GDP growth by this year’s end, throughout 2016 the market supply of oil will still exceed the demand. Add to that lifting of sanctions against Iran and its ability to saturate the market with inexpensive oil in the amount of 500,000 bpd in the coming months and 1 million bpd within 2–3 years. Thus, in the next 2–4 years the price of a barrel of oil is unlikely to rise above $70. That is, the ruble strengthening is not expected.

STABILIZATION FACTORS OF THE RUSSIAN RUBLE AGAINST BACKDROP OF THE OIL CRISIS

The oil factor is not alone in depreciation of the ruble. Oil and gas revenues generate only 50% of Russian budget, and dependence on hydrocarbon exports has been notably reduced. It is difficult to predict behavior of Western investors in the unstable economic situation. They want to continue cooperation, but they are afraid of introducing new sanction package. It is almost impossible to predict the essence of new restrictions and their consequences. There is also a positive factor under these circumstances, thanks to which the ruble’s rate to the dollar didn’t drop to a number of three ciphers. The authorities have succeeded to consolidate Russian society around the problem with the course. Consistent policy in this direction has yielded some fruit. Today it is required to keep the consolidation tendency to adapt Russian economy to the oil crisis. Today, the ruble exchange rate depends not only on oil prices, but also on people’s tranquility and businessmen’s behavior. If billions of the national currency will be converted into dollars & euro and

will be moved from the country, the ruble will fall off much faster than under the influence of the oil crisis.

WHEN AND WHY OIL WILL RISE IN PRICE?

Despite the glut in the market, the International Energy Agency forecasts a steady increase in demand for black gold. This will happen subject to activating of the markets of Asian developing countries. According to the expert forecast, this year oil demand may grow by 1.4 million barrels per day and by plus 1.2 million bpd in 2016. If the demand begins to catch up with the supply, even Iran with its 0.5 million will not be able to meet the needs of the market. On the other hand, the unstable situation in the middle East can make serious changes in the process of production of Iranian oil. Next year is expected to decline oil production in the U.S., which also indicates impossibility to satisfy the projected growing demand. In fact, Iran is the only serious player in the market, which is able to increase its production volumes at the current prices. For this reason oil prices unlikely fall to a level of 20 dollars per barrel in the near future. But there is no reason to wait for $100 per barrel in 2015–2016. According OilPrice, the price of oil could return to $60 per barrel in the next 6–12 months, even if OPEC will not reduce their quota. At the same time a slight reduction in quotas by OPEC (e.g. by 10%) can dramatically change the situation on the market and return oil prices to three-digit values. But the scenario is not favorable for Saudi Arabia. So the question of radically change the situation on the international oil market is still open. 

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DECEMBER 2015

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The next fall of the ruble. What then? Adam Novotny

he ruble has been in a sustained nosedive for a protracted period and short-term stabilization of the national currency every time a new low is reached has done nothing to alleviate its continuing decline. In order to bring economic policy in line with the current reality on the ground, and in an implicit acknowledgment of the current market situation, the government has decided to revise its earlier forecasts. The new scenario would have been called pessimistic several months ago; however, today, the majority of experts support the forecasts and, indeed, 70 rubles per dollar is the reality that Russia faces right now.

AN OFFICIAL COMMENTARY ON RUSSIA’S ECONOMIC SITUATION

Mr. Alexey Ulyukayev, Minister for Economic Development of the Russian Federation, shared his opinions on Russia’s economic situation with the news agency Interfax. Mr. Ulyukayev believes that the number of positive developments for the Russian economy in the near future will be significantly fewer than those previously expected. Economic growth is possible in 2016; however, it is unlikely to exceed 1%. The ongoing financial crisis means that government representatives have to recognize the undesirable reality of the economic situation and to exercise a great deal of caution when issuing forecasts.

In parallel with the revision to key economic forecasts, the average annual exchange rate of the national currency against the dollar was revised, as .61 Rubles per 1 US dollar is no longer relevant. Most Russian economists agree that, by the end of 2015 and into 2016, the Ruble is more likely to lose further ground. As such, it is clearly too early to contemplate strengthening the currency at this juncture. Mr. Ulyukayev also believes that the adverse scenario for the Russian economy – caused primarily by a sharp deterioration in the price of crude oil – will make it difficult to replenish the Reserve Fund in the near future. However, this news is not entirely pes-

DECEMBER 2015

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however, official documentation is also planning for the price of oil at $38.7 per barrel, while the rate of the national currency is 70 rubles per dollar.

CURRENCY FORECAST FROM LEADING RUSSIAN FINANCIERS

Alexey Ulyukayev photo http://www.kremlin.ru/

simistic, since the ability to save accumulated funds is a very real possibility at present. While it makes no sense to discuss zeroing of the fund in the next two years, it will be necessary to forget about additional incomes. The Russian Government’s Forecast According to a recent article about the Russian Federation that was published in the magazine ‘Kommersant,’ the Ministry of Economic Development believes that the Ruble could decline by a further 18.2% by the end of this year . New forecast documents prepared by the Government contain data on various indicators up to 2018, and these figures are used by the government to organize the process and planning of various budget estimates. Despite the negative forecasts of the majority of Russian experts and world financial institutions, officials still hold the central view that, by the end of 2016, the price of a barrel of oil will remain at a level above $50. This could be considered quite a cautious forecast given the average price of oil over the last decade; however, in reality, it is somewhat optimistic, and the government may indeed be preparing for a worst-case scenario. For instance, the Economic Ministry hopes that, in 2017, Russia will be able to sell oil at $55 per barrel, and in 2018 the price will increase by a further five dollars to $60 a barrel. At present,

German Gref, a well-known Russian statesman, financier and president of Sberbank, Russian’s largest bank, has a more optimistic point of view. He believes that the fair value of the ruble in 2015 is no more than 58 rubles per dollar and that active selling of dollars in the foreign exchange market will help to strengthen the national currency and help it to recover from its current low. Mr. Gref is confident that,

German Gref photo http://www.kremlin.ru/

not tighten monetary policy and the situation in the Middle East remains relatively stable. Experts at Deutsche Bank are inclined to believe that the US dollar will continue to strengthen until the end of 2015.

The ruble has been in a sustained nosedive for a protracted period and short-term stabilization of the national currency every time a new low is reached has done nothing to alleviate its continuing decline.

by the end of the year, the exchange rate will be no lower than 60 rubles per dollar and also maintains an optimistic view on the average annual price of oil. In his opinion, the average price per barrel at the end of 2015 will be $60 USD, though time is running out in which such an outcome can be achieved, with Brent crude struggling to build momentum above $50 a barrel. Natalia Orlova, chief economist at Alfa Bank, has an equally optimistic forecast. In her view, the fair value of the ruble in 2015 is 59 rubles per dollar, and the cost of a barrel of oil will range from 55 to 70 dollars. Ms. Orlova believes such a course of events is possible if the Federal Reserve does

Many countries are currently engaging in what is being termed as ‘competitive devaluation’ in a bid to stimulate their export and manufacturing sectors. The Russian Ruble’s devaluation can also be considered in the same light. The central banks of other countries do not have the ability to conduct monetary policy with the same freedom as the US authorities, due to its status as the world’s reserve currency, which provides stability for the US Dollar and gradual appreciation as interest rates rise.

HOW REAL IS THE POSSIBILITY OF DEFAULT?

Arkadiy Dvorkovich, Deputy Prime Minister of the Russian Federation,

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dismisses this scenario for the current year since Russia has enough options and resources to avoid potential problems and meet all of its obligations. However, he also believes that the situation at the corporate level is a great deal more unstable. Certain sectors could possibly experience not only technical defaults, but quite serious funding and liquidity problems. Though major strategic enterprises will survive, since they either have the scale to cope with the upcoming problems on their own or will receive assistance from the government.

INDEPENDENT ANALYSTS’ OPINION

Igor Nikolaev from CFF has warned against talk of the Ruble ‘reaching the bottom,’ since there could be no bottom whatsoever given the fact that the situation in the country and world at large is too unstable to discuss specific limits, levels or ranges. The broader geopolitical and economic situation has deteriorated rapidly and unexpectedly. The price of oil continues to stagnate, dragging down the Russian Ruble, depleting reserves and putting pressure on government budgets. Events will run their course, and this scenario will not persist forever; however, predicting when oil prices will recover is not an easy task. Sergey Romanchuk from Metallin Westbank thinks that the fall in the value of the ruble is related to the current oil market where oversupply has had a disastrous effect on prices (as far as producers are concerned). As long as oil prices remained moderately high, stability was taken for granted, and nobody expected how quickly that stability would unravel or just how negative the situation would become. The oil price collapse has been compounded by the onset of the Ukrainian conflict and the imposition of western

DECEMBER 2015

Arkadiy Dvorkovich photo http://www.kremlin.ru/

Andrey Dyachenko photo http://www.alfacapital.ru/

sanctions. Russia has been left without access to the usual credit markets to raise funds at precisely the time it needs to do so. The severe blow of rapidly falling oil prices has reduced Russia’s foreign currency earnings and, eventually, this could cause problems financing external debts of both corporations and the government. It could be some time before the Ruble regains the status and stability it enjoyed just 18 months ago. Andrey Dyachenko from “Alfa-capital” Management also thinks that the Russian Ruble is wholly dependent on oil prices and this dependency is easily demonstrable. Over the long term, it can be useful to examine the development of the American dollar and the strong connection between the price of oil, the Ruble and the US Dollar, which has been strongly negatively correlated with the price of oil since 2000. So studying ruble exchange rate fluctuations is necessary to gaining insights into both the changes in oil prices and the behavior of the American dollar and how it exerts such a strong influence on commodity prices and global markets in general.

government, Morgan Stanley analysts concluded that a fall in Russian economic growth was the most probable outcome of late 2015 and early 2016. The falling value of oil on world markets continues unabated, with no sign of relief on the horizon. This featured in the Global Macro Outlook, a popular review that is published on behalf of the financial conglomerate. American economists at Morgan Stanley predict Russia’s GDP will drop 4.2% by the end of the year, with a lackluster 1.3% rebound in 2016, rising to 1.7% in 2017. Moody’s rating agency have also revised their forecasts for Russian economic growth, albeit only slightly. Instead of zero growth, Moody’s analysts are now predicting Russian GDP to drop 0.5-1.5%, mostly because of the fall in oil prices and the weakness of the ruble. Based on these forecasts, the current impression is that, both this year and next, the Russian economy is at the mercy of international financial markets, with events mainly dependent on the future path of oil prices and the value of the Russian Ruble on foreign exchange markets. The current state of affairs may be improved if Russia can work with its international partners to at least alleviate some of the pressure. 

OPINION OF FOREIGN FINANCIAL INSTITUTIONS

Sometime before the changes to the forecasts were made by the Russian

DECEMBER 2015

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Vadim Chubarov, VP of Process Engineering: The Chamber is Going to Further Develop a System for Alternative Controversy Settling CCI of Russia Press Service

[current] [analysis and researches] [economic situation] [crisis] [expert’s opinion] [perspective]

t the last sales convention, entitled “International Arbitration and Mediation in Russia and Germany: Current Practice, Perspectives,” Vadim Chubarov, VP of Process Engineering of Russia, unveiled two bills devoted to international arbitration. These bills, which were prepared under the aegis of Russian government, have already passed first reading and are in the process of being prepared for the second. Key problems that were discussed by experts during the triennial preparation of these laws are still relevant to the business and arbitral community. In particular, many businesses are concerned about the relationship between international commercial arbitration and arbitral investigation, as well as creating arbitration courts and the possibility for retired judges to become arbiters in these courts, revealed Vadim Chubarov. At present, these opportunities are not available in Russia, despite the fact that they are currently employed by governmental judges throughout the world. During the above-mentioned conference, participants were introduced to arbitration experience, acceptance and execution of Russian decisions in

Germany. They also discussed topical questions related to the ICAC under the CCI of Russia, the arbitration of corporate disputes and the mediation procedures related to entrepreneurial disputes. Despite the fact that a number of experts view mediation in Russia pessimistically, it can work provided it is approached in a profession and controlled manner. This task is covered by the Board of Mediators, which was established in 2006, whose work is worthy of respect. Such boards work throughout the whole CCI system. A lot has been done for mediation to cover adjudicatory bodies. “Reconciliation rooms” have been opened in Moscow arbitration courts and in other entities in Russia. The Chamber of Commerce and Industry of Russia is intended to continue to open reconciliation rooms, cooperate with ombudsmen for the protection of entrepreneurs’ rights, include mediation clauses in entrepreneurs’ contracts, develop two-step systems for the adjustment of disputes and last, but not least, distribute and generalize a positive practice of mediation, added the VP of Russian CCI. Veniamin Yakovlev, Presidential Adviser, corresponding member of RAS,

retired Chairman of the Supreme Court of Arbitration of Russia, Co-chairman of the Association of Lawyers of Russia, noted that the ability to settle disputes properly can considerably reduce the number of disputes within society. Being able to solve a dispute with dignity and find a balance between two conflicting parties is of particular importance. The Russian arbitration court system was formed according to German experience, says Viniamin Yakovlev, who considers Germany to be a country that has a perfectly developed justice system. In Germany, a network of specialized courts operate alongside regular courts, and it is this model that Russia is currently lacking. Professor Vilfrid Bergmann, VP of the German-Russian forum board, ICC presidium member, said that the exchange of experience is especially significant in terms of arbitration and mediation. The important thing here is having international conferences, forums, and seminars. He said that certain complications on the political level do arise; however, these should not influence cooperation and the development of a system of arbitration. 

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[miscellaneous] [Not by Bread Alone] [cultural life] [ethnography] [background] [cooking] [Russian folk cuisine]

DECEMBER 2015

Christmas Cuisine Svyatoslav Loginov

Not by Bread Alone section Svyatoslav Vitman, who is better known by his pen name, Svyatoslav Loginov, was born on October 9, 1951. He is a famous Russian writer, lover of exquisite food and cooking, winner of Aelita, Strannik and InterPressCon awards for his fantasy and science fiction, and is well regarded for his written works on fantasy worlds and good food.

inters in Russia are long and harsh, with short days and long nights. The work in the fields is over, but there is still little rest. This frosty season is the time for logging. In spring and summer, timber is coarse-grained and useless for construction, and logs are hard to move from the forest in this quagmire season. Winter is the only time left during which this arduous task can be completed. Beside their everyday cooking chores and cattle management, women have spinning, weaving and sewing to do. Thereâ&#x20AC;&#x2122;s a

DECEMBER 2015

Три богатыря, три фантаста, три биографии. Известные российские писатели — что стоит за словом «успех»? Заказать книгу Юлии Андреевой «Богатыри Невы» можно по e-mail: books@gir-magazine.com

whole lot of work to do during the cold and dark season, and if it weren’t for the bright and festive pagan holiday, perhaps hardly anyone would make it through the winter. The joyful holiday of Christmastide has been celebrated in Russia since ancient times. The holiday was dedicated to a god called Svyatovid and was associated with the winter solstice. Later, the introduction of Christianity shifted Christmastide closer to Christmas, and now the two festivals go hand in hand. And yet, Christmastide continues to be celebrated in a pagan manner, as

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before, with mummers, koledari and fortune telling (not always as innocent as it sounds). Kutia, or sochivo, is the traditional dish of the season. Originally, kutia was made from spelt, but spelt has not been around since the time of Pushkin’s Balda, so today the dish is made from wheat, barley, or even rice. The recipes are widely known, as kutia is also served at funerals. By contrast, the main courses of Christmas and Christmas Eve are meat based. Sadly, milk-fed calves and fattened steers are slaughtered as early as Pokrov day because it would be wasteful to feed them through the New Year. Chickens don’t escape either. They are counted in autumn and sent to the cooking pot. Some are kept for breeding, so no one would kill them in the midst of winter. Hunters start chasing hares and luring bears out of their dens at this time; however, to this day, forest game harvest has a lot to do with hunting luck, which is rather elusive. As a nod of remembrance to our hunting ancestors, it is customary for someone to dress as a bear on Christmastide. Pork is the primary source of meat for Christmastide. Throughout the autumn, pigs were fed on small potatoes

and spoiled vegetables: turnip, carrots, parsnip and the beetroots damaged by wireworms and other pests. By New Year’s Eve, they have gained sufficient weight and are slaughtered. However, not everyone can slaughter a pig. It has to be done carefully so that the pig doesn’t feel a thing and simply falls dead to the ground. Once the pig has breathed its last breath, the blood is immediately drained to make blood sausage. To do this, butchers pour hot porridge into a big bowl, put it over a bonfire (usually in the backyard) and stir in the blood. After a few minutes, the blood clots. As the blood cooks, butchers cut the carcass, remove the intestines, wash them and then stuff them with the clotted blood. The sausages are then tied up with a twine in several places before being smoked or scalded in boiling water for a few minutes. Speed and accuracy are crucial in cooking blood sausages. Poles and Lithuanians use pearl barley, in some parts of Ukraine people use buckwheat, and our fellow-countrymen use barley grits. Throughout the region, genuine blood sausage requires no side dish or bread—it’s a side dish in itself. Next come the chitterlings. Old peasant households, which sometimes had

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more than fifteen members, slaughtered only one pig for Christmas. Naturally, there was no way a family this big would have a good meal with just one pig liver. Hence, the rest of the innards were consumed as well. Liver, spleen, lungs, brains and heart were

cooked in boiling water, chopped with a knife, added to minced onions and used as stuffing for rasstegay1 pies. One day, when I was a child, I asked my granny why pirozhki were stuffed with meat, and rasstegays with fish or chitterlings. “Chitterlings make pirozhki moist, but rasstegays are just perfect,” she replied. Many years have passed, and I still don’t know how to make rasstegays; Rasstegay is a baked pirozhok with an opening on the top made of “lean” fermented dough. 1

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however, I do concede that they were invented for a good reason and that there is a great depth of meaning in their existence. Today, rasstegays are typically served with meat broth; however, back in the old days, broth was only given

shchi with head meat: you could only put a pot with shchi into the stove once, and the soup had to be cooked in one attempt. To make shchi a pig’s head is first chopped with an axe, placed into a pot with shredded cabbage (be it fresh, sour or minced), sliced carrots, onions, and a few handfuls of grain. The mixture is then covered with a lid, placed into a well-preheated stove, closer to charcoal, and stewed for about ten hours. The hostess then drags the pot out, transfers the pieces

to the weakest family member, while rasstegays were accompanied by shchi with head meat. Shchi with head meat, or Ural-style shchi, is also a typical treat for Christmastide meat connoisseurs. In the old days, it took some effort to prepare

of head meat into a bowl and sorts them. The dogs get the bones, and the meat is poured into the rest of the cooked mixture. Shchi like this is so thick and hearty that a spoon would stand in it. Everyone eats from the same soup bowl using wooden spoons.

DECEMBER 2015

The head of the family taps his spoon on the edge of the bowl and orders, “Eat from the top!” If someone tries to scoop deeper to fish out a piece of meat, the head of the household licks his spoon clean and hits the offender on their head. As soon as the bowl is half empty, the head of the household taps his spoon on the edge again and orders, “Get the meat!” As for rasstegays, every member of the family gets their own from the hostess and is free to eat it with shchi

or later by itself, no rules applied. Sometimes, if weather allows, shchi is cooked with a whole head in a cauldron outside, then frozen and stored for a very long time. Frozen shchi is good for a road trip when, at a stop, a small chunk of frozen shchi is cut,

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heated in a pot and, voilà, dinner is ready. Yet, the king of the Christmastide table is aspic, of course. Pig legs with hooves, flank, and neck end (which are very chewy) are put in a cauldron, covered with water, and placed over burning coal. A bulb of onion and some carrots are also be added to the pot. Aspic is cooked either on a stove or outdoors in the yard. If mixture reaches hard boil, the coals are moved aside. Modern recipes suggest

skimming fat from aspic while cooking, but our grandfathers valued fatty aspic the most. Onions and carrots are left in the pot, too— for the lover of boiled onions in the family. Aspic cooks for about six or eight hours, or sometimes even ten. Salt is added shortly before

it is done. The hostess then transfers the meat onto a cutting board and sorts it. Meat, fat and skin are minced, placed in bowls, and a broth is poured over the top. In a few hours, the aspic thickens and the fat, which most modern families remove, rises to the surface and congeals, forming

a thin coating. Aspic is usually consumed with mustard, horseradish or crushed garlic. In the old days, bones from aspic were not disposed of, but given to the kids. When I was little, I remember being in the kitchen, sucking the delicious juice out of the pork bones. Leg bones were the best as they were used in the game of jacks. Jacks made last year had already worn out, and a new set for desperately wished for! Knuckle-

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bones were sucked out, and then dried beside the chimney, sometimes painted, and the main one, litok, was lined with lead. Winter games would start on the whey fields, which were still clear from the snow. Fields like this served as stadiums for rural people. As soon as threshing was over and the field floor was clear, local kids would start playing ball. This particular ball game was the father of field hockey. Youth games ended with the end of Christmastide, but boys would keep playing until the fields disappeared under deep snow. We have talked about the traditions surrounding the consumption of by-products, but let’s talk about the actual pork meat. In the old days, pork meat would not last long when fresh. As such, it was jerked, salted, smoked, and sausages were made. But fresh meat was valued above all. Pork pie is probably the best of the pies, yet cooking it was easier than any other pie. To make the pork pie, yeast dough was made in the same way as it was for other pies, and then the meat was cut into small pieces (not chopped or minced) and combined with cubed pork fat, fresh onions and a little salt. The dough was then placed into the stove

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over a low heat to bake for about thirty minutes. No words could describe the amazing taste of the final pork pie; one simply has to try it to believe it! Rural gammon, by the way, didn’t resemble the ham we eat today in any single way. At first, gammon was just a method of storing meat without salt. Gammon was smoked until black, so it was as firm as Spanish jamón and tasted bitter, as if burnt. In the middle of winter, when all the holidays were over, women cooked shchi with ham (ham in Russian literally means “old meat” ). A piece of gammon was cut off and boiled. The first water was discarded or given to the pigs to drink. After that, as the bitterness reduced, shchi was cooked as usual. However, shchi was never as hearty at any other time of the year as it was at Christmas. Let’s not forget about the drinks that were consumed at Christmas and Christmastide in the old days. Taverns sold “green wine”, a disgusting product of home alcohol distillation, a turbid liquid with green opalescence (hence the name: “green wine”). Consumption of this poisonous drink was

disapproved; alcohol abuse was already the bane of Russians, as it is nowadays. Men brewed beer until they ran out of malt and hops. I can’t say anything about the quality of this drink but the smell from brewing it was so bad that malt sheds were built in the backyards, behind banyas3, hay sheds, barns and other facilities. Kvass was never made in the winter. Kvass is a summer drink and, in wintertime, proper fermentation can sometimes take weeks. Instead, uzvar, a fruit drink that was made by boiling dried fruit, was made from pears and apples. I have no idea why this beautiful word has almost disappeared from the Russian language. For me, uzvar sounds much tastier than anything else. Another drink was syta, which was made of honey dissolved in hot water. Syta was also given to purebred horses. If syta was boiled in samovar with ginger, cloves and lemon peels, a sbiten was made, a drink that is known to everyone but tasted by very few. However, hot uzvar, syta and sbiten are hallmarks of all winter holidays, not only Christmastide. To this day, there’s nothing better than sipping hot steamy sbiten when it is freezing and snowing outside! 

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[personality] [interview] [success story] [construction] [business] [our authors]

DECEMBER 2015

Warren Ross,

an investor, developer, builder Oleg Lansky

s President, Mr. Ross manages the daily operations and long-term planning of Ross Group and its affi liates, Ross Engineering, Ross Group Design-Build and Westmoreland Builders. Mr. Ross works with stakeholders throughout the project lifecycle to ensure that the customer’s goals for the project are delivered in accordance with cost; health, safety and environmental; quality and schedule requirements. With this business practice in mind, Mr. Ross has guided Ross Group and its affi liates in developing ongo-

ing customer relationships throughout the nation by utilizing conventional and alternative procurement methods, so that our customer’s project specifi c needs and long term goals are attained. During his 23 years working with Ross Group, Mr. Ross has been involved with and directed the completion of over $1 billion in construction contracts. Mr. Ross received his Bachelor of Science degree in Mechanical Engineering from Massachusetts Institute of Technology (MIT) in 1995 and his Masters of Business Administration from the University of Tulsa in 2002.

Warren Ross, DBIA, LEED AP BD+C, CCP, MRICS, PMP, President

Mr. Ross holds the license for the company in all states requiring contractors licensure. Mr. Ross currently participates in the following civic and charitable organizations: Leadership Oklahoma (Director), Ross Charitable Foundation (Director), University of Oklahoma (Advisory Board for Construction Science) and University of Tulsa (Trustee). He previously has served as a Director for Cherokee Nation Industries and Advisory Board Member of Bishop Kelley High School. 

Coming up in the next issue: the experience and recommendations of Mr. Ross!

Jesse H. Ross

“Picture a small table, nestled in the corner of a simple kitchen in the back of modest house off old State Highway 33 in Catoosa, Oklahoma – the home of Jesse and Ora Mae Ross and their young children in the late-1970s. It was hard to imagine then what great things would come out of that kitchen, besides Ora Mae’s brownies, but it was there that Ross Group got its start. Jesse H. Ross founded J. Ross Acoustics and Drywall in 1979 as a small contracting company that specialized in carpentry and interior finishes. Jesse’s hard work and years of experience as a carpenter quickly

earned the company a reputation for quality work and professional excellence. As the company evolved, it established an identity as a leader in healthcare and advanced technology facility construction. One Jesse and Ora Mae’s children, Warren, joined is father in business in March 1996 with the incorporation of Ross Group. Building on one another’s strengths, the two used their knowledge and reputations to make a seamless transition from carpentry work to general contracting. Warren now serves as President of the company”. 

The Oklahoma State Regional Center JOBS. PROGRESS. INVESTMENT Call Us: 1–888–749–1146

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DECEMBER 2015

Meet Dick Rubin

[personality] [our authors] [interview] [expert’s opinion] [business incubator] [business] [success story]

Marina Stankevich

“A business plan must be realistic, understandable to non-specialists and, most importantly, it must convince investors that it is the only thing they should invest their money in.” Dick Rubin

r. Rubin’s track record is admirable and clearly illustrates his professionalism and vast experience. Between 1960 and 1963, Dick Rubin served in the army and became a communication signals analyst. He then spent a year and a half in Korea and a year in Texas. He progressed to work at Litton Industries, Inc. for six years. He was a system analyst, programmer, and sales representative. He also developed programs for enterprise development. Mr. Rubin was willingly invited to participate in various programs as a judge, trainer or

lecturer. He is most certainly a man with a story to tell. In recent years, Dick has shared his wide experience through the State University Veterans Entrepreneurship Program, which is operated by the University of Oklahoma. In 1983, Mr. Rubin created a business incubator, a consulting and business development company. Since establishing this service, he and his wife have monitored over one hundred

DECEMBER 2015

different projects at different stages of their development. Dick is a managing principal of the business incubator, which provides services in strategic, tactical and logistics planning. “There is nothing complicated about registering a legal entity,” states Rubin. “However, it is much more difficult and challenging to create a firm that delivers a solid return on investment. It is our role to keep our eyes on the ball and support our clients throughout the process, from start-up to success. We help with initial and venture financing, oversee sales growth, and so on. It’s like taking care of a child until he or she grows up to become an adult.” — Obviously, you should only talk about what you did, thinks Rubin. “It’s an easy task to retell textbooks. But People can read textbooks by themselves.”

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— How long have you been in business, Mr. Rubin? — People don’t live so long, he laughs. I have been developing and creating businesses for over forty years. I have extensive experience in this field. The business incubator my wife and I operate has helped to launch almost a hundred companies over the last ten years. So we can consider ourselves as parents of many children.

— Impressive! Tell us, what activities do you carry out? What positions do you hold? Who do you work with? — First, we control startups from creating a business plan through to selling the idea to a prospective investor. Second, we develop financing programs, design marketing activities and teach our clients and their staff how to effectively conduct business. In addition, I act as a mentor on the Oklahoma State University Veterans Entrepreneurship Program, give lectures at the University of Tulsa Entrepreneurship Program, and was a judge at the Oral Roberts University Marketing Department Sales Presentation Competition and St. Gregory’s University Business School Business Plan Competition. Dick Rubin will be sharing his vast experience of launching successful businesses with our readers in each issue of our magazine. The next issue will feature an article entitled ‘The business plan alphabet’ in which he presents a comprehensive overview of business plans. 

GLOBAL INVESTMENT REVIEW

DECEMBER 2015

Sean Kouplen — a banker, writer, lecturer Davis, KerLee

[personality] [our authors] [success story] [expert’s opinion] [banking business] [cultural life]

eet Mr. Sean Kouplen, one of Oklahoma’s favorite bankers, speakers and writers. Kouplen earned his bachelor’s degree in agriculture economics and his master’s in business administration from Oklahoma State University. He served as the youngest president of the OSU National Alumni Association. He has served on numerous boards, including the Oklahoma Bankers Association Intermediate School Board of Regents, International Trade Development Council and Oklahoma Workforce Investment Board, Tulsa Sports Commission Board of Directors, Junior Achievement, Jenks Public School Foundation and Tulsa

Zoo Board of Directors. In addition, he founded the Executive Luncheon Series, where Regent Bank brings valuable free information to area CEOs and business owners on a monthly basis. He also introduced the CEO Roundtable program through the Tulsa Metro Chamber. As an adjunct professor at OSU, Kouplen taught management, finance, marketing and communications classes. He is an author and nationwide speaker to a variety of student and young professional groups about the importance of focus and passion in our lives. His book, Out of the Blocks, is a modern parable for new college graduates going through 12 key life

DECEMBER 2015

lessons that make the difference in starting off well in the race of life. Kouplen fulfilled a longtime dream in April 2008 when he and his close friend Dow Hughes led a group of 70 investors who purchased Regent Bank, a 110-year old community bank headquartered in Nowata. Prior to that, Kouplen served as president and chief operating officer of Grand Bank and chief operating officer at Citizens Security Bank in Bixby. In August 2008, Regent Bank expanded into the Tulsa market and heightened its focus on small business banking. The bank has doubled in size in less than three years and has won numerous awards for its business and community focus. Regent Bank made more than $52 million in loans in 2010 alone. Sean Kouplen likes to stay in touch with his clients. “Most bank CEOs tend to locate their office at the back of the bank, behind walls, secretaries, etc., so that they are protected from clients. I am exactly the opposite. My office is out front, in plain view of our clients so that they can stop by and visit anytime they would like,” Kouplen said. “For the last two years, I actually functioned with no office at all. I spent all of my time out at our clients’ place of business, visiting with them and learning how we could better serve them. Now I have an office, but I am rarely there.” Kouplen also finds time to give back to his community, by serving in numerous leadership positions with the Bixby Chamber of Commerce, Rotary Club of Bixby, Daily Family YMCA, United Way and Vision 2025 campaigns. As chairman of Make it Happen Bixby, he was instrumental in his community passing the $25 million Bixby’s Future bond issue–the largest in history. His efforts helped earn him recognition by his hometown as Citizen of the Year in 2002. “In a market where most bankers’ first instinct is to say no, Sean is cre-

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ative and thinks outside the box when it comes to helping small businesses achieve their dreams. He will research ways to get them the loan that they need to grow and reach their goals, or use his vast network to help our clients make contacts that they may not have otherwise had access to,” said Danielle Conrad, Kouplen’s executive assistant.

and most of what he learned had to do with people. “Personal relationships are everything,” Kouplen said. “You must be surrounded by people you trust and believe in, and who trust and believe in you. Surround yourself with people that complement you, not people like you. I am blessed with a very strong executive team whose members have

“I’m not a novelist and I don’t tell stories,” Kouplen said. “I try to portray things that I have learned that I think will help others. It really is that simple.” “As an author and entrepreneur himself, Sean Kouplen, president of Regent Bank, knows what it takes to start a successful business and continuously works to enhance his customers’ business opportunities. His dedication to working with local businesses to help them achieve their goals sets him apart from many bank lenders in these economic times,” said Michael S. Neal, Tulsa Metro Chamber’s president and CEO. Although Kouplen had led other people’s banks, he said he learned a lot about leading his own

more experience than I do and are certainly not ‘yes’ people.” Since 2008, Regent Bank has grown rapidly under Kouplen’s leadership, primarily due to the relationships the CEO has built. Kouplen has made his position as CEO the organization’s top business developer. He hired strong

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operational leadership so he could spend his time developing relationships. He also co-hosts the Weekly Banking Update on KRMG radio, where he gives banking tips every Monday. Outside the Sooner State, he’s the author of three inspirational books that reached the New York Times self-help genre best-seller list. That success put Kouplen before more than 100 audiences on the public speaking circuit, one-third of those out-of-state. “I won’t do any more than two speaking engagements a month where I travel, but I will do as many as I can locally, because I can fit it into my schedule,” said the 41-year-old Oklahoma State University graduate. “It’s good for the bank.” Kouplen sees his publishing and speaking as marketing tools for his primary job. Regent Bank has grown threefold since his investment team bought the Nowata-based lender in 2008, expanding first into Tulsa, then Oklahoma City. “That’s the best part of the deal,” he said of his different career paths. “All of them are very enjoyable for me to do, but they all have contributed to the success of the bank, so I don’t ever feel like that I am benefiting one and taking away from the other.” “It identifies him as a thought leader in his industry,” said Mary Waller, chief operating officer and co-founder of Waller and Co. public relations. “Going out and speaking at groups or researching for his book is part of his continuing education and part of keeping him on the edge of trends, which is great for his profession and for his employer.” It also creates opportunities for the bank and Kouplen to give back to the community through shared lessons and learning, Waller said. Such experiences strengthen consumer bonds. “When you can see a person’s face, you can interact with them,” said 613

DECEMBER 2015

Marketing and Media founder Stefani Walker. “It makes people more comfortable when they’re putting their money someplace.” Kouplen’s writing career sprang from an OSU-Tulsa class he taught nearly a decade ago. As student after student sought his career insights, Kouplen decided he could save everyone time by summarizing his thoughts in a book. He self-published that edition and gave it to his students, who shared it with others. It wasn’t long before the head of OSU-Tulsa suggested that Kouplen seek a commercial publisher, which culminated in the 2007 release Out of the Blocks. Two books followed from Tulsa’s Yorkshire Publishing, 12 Life Lessons Every Graduate Should Know and The Priority Promise. He expects to publish two more with Yorkshire in 2015: a book tentatively slated An Empty Bag, although that may change to Nothing Expected in Return, and a book he’s already speaking on, Five Questions to Significance. “Our goal is to keep them all under 100 pages,” he said. “They’re all in the same kind of parable format, and they are based upon things that I have learned.” “I’m not a novelist and I don’t tell stories,” Kouplen said. “I try to portray things that I have learned that I think will help others. It really is that simple.” His speaking calendar started filling up last year, after participants at the ARMA International convention in Las Vegas ranked Kouplen’s talk first among 61 national presenters. That spurred demand with other providers. “I try to schedule them in such a way that literally I can fly out, do the speech and fly back all the same day if I can,” Kouplen said. “Last year I did 24 where I had to fly somewhere and speak. I did 105 total, the remainder either here or in Oklahoma City.” He’s increased his travel engage-

ment fee from $1,000 to $5,000 plus expenses, with a $10,000 minimum for groups of 250 people or more. But Kouplen does most local presentations for free. “I like giving that back to the community,” he said. “It’s frankly fun for me to do that.” With out-of-state events limited to vacation dates, Kouplen said none of this takes time away from the bank. Since his move into the chairman’s role six months ago, Kouplen said his focus is primarily strategic operations. “I don’t want them to ever wonder whether I am putting them first,” he said of Regent Bank’s investors. “I need them to know that they are always first.” Keeping up with all this and his typical 50-hour banking week led Kouplen to employ a ghost writer for his upcoming works. He developed an outline for the books and electronically interviewed subjects, then shared the results with the hired pen. Kouplen then goes over the manuscript and works through the editing process with Yorkshire. He has no idea how many other books lie before him. “I didn’t think I had any books in me,” he said. “Honestly, the better they do, the more I feel compelled to write. I hope we are helping people. As long as I feel like I have something to share of value, I will keep writing.” He drew faith in that from numerous reader emails, letters and phone calls. “This is just wild, and none of it was planned,” Kouplen said. “I just wrote the book so I wouldn’t have to spend so long talking to the class. It’s just kind of led to all of this. Who knows where it will all go?” 

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Donâ&#x20AC;&#x2122;t Try This at Home!

O [personality] [success story] [analysis and researches] [contemporary art] [cultural life] [investment in art] [graphic arts]

n face value, it may seem that graphic arts are more primitive than painting: the technique is simpler, viability is lower, and visual richness is poorer. However, the canvas and paint can help the artist to hide poor skills, while graphic artists are not able to hide anything: all errors, flaws and slip-ups are in full view. That is why there are so few good graphic artists around these days. However, of those that have achieved

Irina Eydelnant

critical acclaim, Mikhail Parshikov is certainly worthy of discussion. Mikhail Parshikov was born on the 9 June, 1952, in Moscow into a family of scientists: his parents were candidates of natural sciences, who, in their time, refused to keep their jobs and went to explore Siberia. Abandoned by his parents, Parshikov tried to escape loneliness by painting, developing his own world and exploring it thereafter. From his somber beginning, he

DECEMBER 2015

developed into a free spirit who dons Hawaiian shirts in the summer and wears his hair tied up in a horsetail at the crown of his head. Mikhail’s parents, especially his father, had wanted their son to follow in their footsteps and become a scientist; however, they also recognized the importance of giving him freedom, so they supported his creative endeavors as much as they could. In 1975, Mikhail Parshikov graduated from the architectural faculty of Novosibirsk State University of Architecture and Civil Engineering, and secured work at the Siberian University, where he designed apartment and community buildings for four years. The group in which he was based attempted to design standard structures that could withstand the climatic conditions of Nizhnevartovsk. On one particular project, he worked on the “Octyabr’skaya” subway station, for which he received an award. However, he soon came to the conclusion that a life in architecture and civil engineering was not for him:

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couch and enjoying his life before he finally made the decision to work at the Novosibirsk Department of the Arts Fund. He went on to enjoy ten years of productive work with close people in a creative atmosphere during the

Mikhail Parshikov’s creative activity did not end there. He took part in more than 350 exhibitions, and his personal works were exhibited in Paris, Angers, Marseille (France), Barcelona (Spain),

“golden time” of the 80s. Artistic openairs had a major influence on his work: artists received a task immediately, and the topic and perspective were established right away. Some works could have been exhibited! In 1989, Mikhail Parshikov joined the Union of Russian Artists. Ten years later, in 1999, he joined the Catalonia Artists Union. Many times he admitted his sympathy for this part of Spain.

Novosibirsk, Omsk, Krasnoyarsk and elsewhere in Siberia. Exhibiting in Spain represented a very valuable experience for him, and he describes it as an opportunity to get rid of “snobbery.” You have to pay for everything there: for exhibiting your works, for proper advertisement. As such, amateurs exhibited side by side with famous artists. When Mikhail recovered from the shock, he thought – why not? You need to be tolerant of all kinds of art.

Mikhail Parshikov’s creative activity did not end there. He took part in more than 350 exhibitions. there was work, but no satisfaction. “The beginning of the end” started in 1979, after Mikhail visited Poland. His relationships with the management team were ruined, so he quit once and for all. However, he found himself confronted with a new problem: he needed to find a job within one month in order to save himself from jail, since back in those days it was illegal not to work. He recalls how he spent three whole weeks lying on the

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Mikhail Parshikov’s works are located at the artistic fund of Russian Artists Union in Moscow; the Modern Art Museum in Birobidzhan, Russia; the Novosibirsk State Art Museum; the Tomsk Regional Art Museum; the Omsk Regional Art Museum n.a. M. Vrubel; the Ufimsk State Art Museum n.a. M. Nesterov; the Modern Art Museum in Vladivostok, Russia; the House of Humor

DECEMBER 2015

Novosibirsk, Omsk, Krasnoyarsk and other cities in Siberia. One of the most prominent features of Mikhail’s graphics is the acuteness and suddenness of an idea. Today, we are facing one oppressive tendency: quite often, graphic artists amaze us with technical complexity, while the formal side not only outshines, but replaces, content. Parshikov’s works are

His graphics contain large images, bright and clean colors, and vivid lines. Each piece is a massive idea, blazing poster and a message to viewers. and Satire in Gabvoro, Bulgaria; the Tama Art University in Tokyo, Japan; the Californian Institute of Russian Study, Los Angeles, USA; the Taller galleria forte, Berselona, Collezzione di Rho, villa Burba, Milan, Italy; Osten World Gallery of Drawings; Skopje, Macedonia; and also in private collections in Russia, Germany, Italy, USA, Canada, Spain, France, Japan and Australia. Mikhail Parshikov’s creative activity did not end there. He took part in more than 350 exhibitions, and his personal works were exhibited in Paris, Angers, Marseille (France), Barcelona (Spain),

filled with harmony: they are performed using complex and mixed techniques but, in this case, the “How it’s done” represents “What the artist wanted to express.” Mikhail has developed his own style while working with caricature and posters, book and magazine illustrations, and graphic design. His graphics contain large images, bright and clean colors, and vivid lines. Each piece is a massive idea, blazing poster and a message to viewers. One more exceptional feature of Mikhail Parshikov’s works is that they

are serial. The most famous series is that of “On chairs,” through which he depicted a “Woman – man” opposition. The images depict a series of acrobatic-like stunts: stylized figures of men and women and stylized chairs. Each work shows a couple of people who are almost tied in a knot. Each work is not only about the old topic of unity and struggle of opposites (in this case genders), but also a spicy performance “A la Cabaret,” an erotic dance with a Viennese chair. Had these works been created in a realistic manner, they would have resembled “soft porn.” The graphics help to transform ideas into symbols, to present almost descriptive formulas of gender relationships. Parishkov is currently living and working in Novosibirsk where he plays an active role in the cultural life in the region through supervising young, unskilled artists and organizing joint exhibitions. The most amazing thing is that the composition of figures is very detailed; however, at the same time, the lines are soft and weightless. Natural improvisation is presented with astronomical accuracy. Even the route of the comet is not always calculated that precisely! By the way, the comet’s tail is one of Parishkov’s favorite shapes. Another interesting work of Parishkov’s is the series called “Lines,” in which naked models become hieroglyphs, Arabic characters. Figures are depicted in spiral and spring shapes. After all, the female form is one of the most ancient painting traditions since pictograms. It is clear that Mikhail wittily rethinks traditions and ironically plays with what already exists. In addition, our graphic artist is also working in other genres: ironic variations of Malevich, almost abstract landscapes.

DECEMBER 2015

It is impossible to find direct similarities with reality in Parshikov’s works. However, this leaves a wide space through which the viewer’s own imagination can form associations. Which is, if you think about it, much more interesting, although, paid less. Parishkov is currently living and working in Novosibirsk where he plays an active role in the cultural life of the region through supervising young, unskilled artists and organizing joint exhibitions. He is a hospitable man who, from time to time, conducts open-air exhibitions for artists from Novosibirsk to showcase their work in his “family nest” in Bibih village. Mikhail considers this village to be more of a home than Novosibirsk: he has loved the countryside since he was five. “Some girl comes into my workshop,” explains Mikhail, “and she starts to look at the things I have created with a heavy mood and a face of stone… suddenly, she bursts out laughing and starts dangling her legs. She saw something there, something the artist was not even thinking about. And this is good. I’m not creating dogma, right? Besides interpretation from the artist, there are other interpretations, from viewers. My work is kind of a flaky croissant with several meanings; meanings that I have created. A viewer sees something else there. The result is very interesting and tasty.” Chaos reigns in the artist’s workshop, but this doesn’t seem to be a problem for him. The space is filled with books, albums, and exhibition catalogs. Having taken part in over 350 exhibitions, Parshikov has gathered more than just awards, but also memories, experiences, and new artistic horizons. “Just recently, I was taking part in ‘A walk through Venice: 40 etchings of a real Venetian artist and a “garnish” of Siberian works’ exhibition. Venice

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turned out to be very intimate topic for our artists. My wife has been there. And she told me a lot. This is how I started to use round paper. Why round? One time I realized that, besides my favorite A4 format, there are a lot of interesting shapes. The channel that twists around the whole of Venice can’t fit into a rectangular box. Somebody said once: ‘Beneath me Venice swam

manages to follow trends and keep up with vital demands, the one thing he knows for sure is that he would not have become such a bright and original artist had he decided to emigrate. “Artist from Novosibirsk – I am proud of it!” declares Mikhail smiling. He is not worried about the viewer, where there’s art, there’s an audience. “For the viewer to avoid disappoint-

Parishkov is currently living and working in Novosibirsk where he plays an active role in the cultural life of the region through supervising young, unskilled artists and organizing joint exhibitions. in water, a sodden pretzel made of stone…’ and after that, it all started. ‘My friend, Joan Miró’s, series includes rectangles, circles, and even triangular shapes. Just look at Miro’s portrait… typical face–turnip-shaped! She is a very joyous artist! So, my series of works are joyous as well, a hint of pop, just like I’ve ordered.” Describing the rapidly changing world and its demands, Mikhail says that the best way to “keep afloat” is to lock yourself in a workshop, and work. While he is not sure he always

ment, one should know what kind of art he or she is going to enjoy. But, in order to understand it, the viewer should be cultured, interested and educated. The viewer should also have freedom of choice. Let’s imagine a city full of galleries and museums. Our viewer is going to wander from gallery to gallery and will finally pick one that he or she wishes to visit more often. That girl, the one who was dangling her legs and laughing, she would probably pick mine.” 

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DECEMBER 2015

Kiaace â&#x20AC;&#x201D; Service with a Heart

[personality] [interview] [publishing business] [international cooperation] [success story] [partners]

Alex Yar

M Ms. Mandy Guo, Department: Director/CEO/General Manager Job Title: Sales Representative Telephone: 86-0592-8268635 Mobile Phone: 13666061374 Fax: 86-0592-8268635 Address: No. 35 Industrial Zone, Xiahu Community, Xiamen City, China Zip:361016 Country/Region: China (Mainland) Province/State:Fujian City:Xiamen

andy, please tell our readers something about yourself. I was born in a village in the central China. I came to Xiamen with my parents when I was ten years old and I studied there before going to college. I chose International Logistics as my major, and in my third year I was able to participate in the study abroad exchange program with Canada. This was the start of my international endeavors. I attended the Humber College, a technological college in Toronto, Canada. What I enjoyed about the program is that all of the subjects emphasized the practical application of the theories we studied. Toronto is a very international city with a rich, yet inclusive culture. During my study there I met lots of interesting and likeminded people and made friends with students

in the program. My professors were very helpful and kind and often took us to visit large local companies so that we could see how things work in the real world and put our theories to the test. After a year of study abroad I came back to China and graduated the following year. After years of school and studying theory, I was ready to start my career. Why did you choose Kiaace? Prior to coming to Kiaace, I worked as a sales representative for a foreign trading company. After some time working with clients I found out that I had to get the answer to every inquiry from the plant management and then add company profit margin, in order provide a quote to my client. This system was not very efficient in that the plant employees were not

DECEMBER 2015

able to provide a price quote in time, which resulted in a backlog where the sales people were not able to effectively communicate with the buyers. Thus, the trading company was not able to properly match the buyers and suppliers with suitable price and quality. Unfortunately, once the trading company placed an order to a supplier, we no longer had any control of the outcome in regards to time frames and quality of the products. Having been raised to be a person with strong moral responsibility it was very stressful for me not to be able to help my customers. I decided to find a plant that would be able to meet client requirements and deliver quality service, while giving me the flexibility of starting my own business. This is when I found Kiaace, a company providing integrated design, production, layout and printing services. They had an excellent reputation for providing high quality products such as high-end books, albums, gift boxes, calendars, file folders etc. From my experience working here, Kiaace definitely lived up to its reputation. Do you enjoy your work? Yes, very much so. I can say I am happy with where my career is and is going right now. Growing with the company is rewarding and this position keeps me busy every single day. The most important thing for me is to be able to work around professionals in my field, someone who understands the ins and outs of the work. Our Company’s mission can be summarized as: “Quality is Golden, Service provided with a heart, Affordable Price and Cooperation with integrity”. With a direct and thorough communication, incisive design, precise production process and excelsior printing we are able to provide excellent quality services on

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the most elaborate printing products. The Company has been living its slogan of “Quality is Golden, Service provided with a heart” since its establishment in 2008. During the past eight years, the company grew bigger and continues to expand every year. I chose this company to further my career because of their award winning customer service and true dedication to their clients. Today we work with customers in Europe, North America, South America and Middle East among others. It makes proud and happy to receive praise from our satisfied customers who had great experience because of our quality, logistics and customer care. Xiamen Kiaace Paper Products (Printing) Co.,Ltd is a professional printer with 8 OEM experience in Xiamen. Kiaace owns a factory with about 4000 square meters of lone Garden-style workshop. Kiaace started our foreign business on 2013. After 2 years of de-

velopment we had built business relationship with many countries such as USA, UK, Ireland, German, Italy, Spain, and South Africa. Kiaace had imported the most advanced printing machines such as 7set of German Heidelberg to match our customers’ needs. Our high tech automatic Swiss Martini adhesive binding complexes, hardcover binding complexes, saddle-stitch binding complexes help us provide excellent quality and fast printing services. For instance, the maximum binding speed is 5000pcs/h for perfect binding and 4000pcs/h for hardcover binding. We also have a line of 120 employees experienced in hand-made products and box assembly. We provide professionally printed high-class books, note-books, brochures, magazines, children books, publications, yellow-pages, paper bag, and jewelry boxes and so on. Your imagination is our limit. 

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0ur Service 8 years OEM & ODM experience Eco friendly / Recycled materials Japanese quality standard Fast delivery on time Powerful R& D team 24h online

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We provide professionally printed high-class books, note-books, brochures, magazines, children books, publications, yellow-pages, paper bag, and jewelry boxes and so on. Your imagination is our limit.

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Yes. We have a professional team having rich experience in diary book design and manufacturing. Just tell us your ideas and we will help to carry out your ideas into perfect diary book design. It does not matter if you do not have someone to complete files. Send us high resolution images, your Logo and text and tell us how you would like to arrange them. We will send you finished files for confirmation.

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What is your terms of delivery? We accept EXW, FOB, CIF, West Union etc. You can Choose the one which is the most convenient or cost effective for you.Terms of payment? We accept payment as the following, 30% TIT deposit, 70% balance before delivery. Western Union/ Paypal for small amount payment. Glossy Lamination

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Address: No. 35 Industrial Zone, Xiahu Community, Xiamen City, China Zip:361016 Country/Region: China (Mainland) Province/State:Fujian City:Xiamen

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In Vino Veritas Chiral-Natalya Munina and Meir Chernetsky [miscellaneous] [cultural life] [analysis and researches] [background] [partners]

associate the word Cognac with soft plush furniture, dark burgundy heavy velvet curtains, dim lighting and a nice golden brown drink in a round, yet elegant, crystal wine glass. I have long perceived Cognac to be the noblest of strong drinks. However, admittedly, in my younger days, I didn’t immediately appreciate the appeal of Cognac. Cognac once ranked below wine and whiskey in my personal list of preferences for alcoholic beverages. There is an old saying that states that everything happens at the right time; there’s a time for everything. That’s how

picture Victoria Maleeva

my appreciation of Cognac evolved a few years ago. One day, friends and colleagues of mine who imported strong drinks, invited me to a wine tasting event at which they exhibited their new samples. Some of these were products of Cognac houses that were less known to the general public, but that produced beverages of the highest standards. I accepted the invitation with pleasure. However, I was very conscious of the fact that I needed to brush up on my knowledge of Cognac in advance of the event given the fact that I would be sitting side by side with aficionados who appreciated fine Cognacs and were able to distinguish them from cheap brandies. * * * I started my quest for knowledge by first studying the Internet, then books, and then traveling on the roads of the French province of Poitou-Charentes. Eventually, I managed to gain a certain amount of awareness of Cognac and brandy, and I thought it would be useful to share some of my findings with our readers.

SECTION: IN VINO VERITAS Chiral-Natalya Munina and Meir Chernetsky are the section columnists, editors of http://vino2rs.com/, co-owners of Vinotours Co. (Wine Tours in Israel), bloggers (tours.blogspot.co.il - the blog about wine and alcoholic beverage), authors of several business pages on Facebook. Chiral-Natalya is a certified specialist in fashion, fashion designer, cutter. She is the owner of Bon-BonLand - a brand and webstore (high fashion for children), a specialist in products and brand promotion via social media and the Internet. Meir is a programmer and hi-tech worker, former professor. Wine and spirits is our long-standing and strong passion. Once the hobby became more than fun, and has grown into a lifestyle. We learned from winemakers and merchants in Israel, graduated the course “Technical tasting” in Ariel University (Israel), other courses at the University of Adelaide (Australia) and Dijon (France).

Cognac, by definition, is a strong alcoholic drink that is produced from certain varieties of grapes using special technology. It is a well-known fact that the Cognac beverage was named after the town of Cognac, which is situated in the region of Poitou-Charentes, in Charente, France. Charente is a river that flows mostly from the east to the west (through the city of Cognac) before eventually emptying itself into the Atlantic Ocean to the south of the city of La Rochelle. Naturally, the areas in which Cognac can be produced, the technology by which it’s produced, the alcohol content (not less than 40%) and the name itself is strictly defined, regulated and fixed by numerous legislative acts. Strong drinks of other countries that bear similarity to Cognac but that were not produced within the pre-defined area cannot be legally called Cognac, even if they were obtained by distillation of the grapes produced in the region of

DECEMBER 2015

Poitou-Charentes. These drinks are, instead, called brandy. A famous historical curiosity was associated with Nikolay Shustov, a former owner of the brandy plants in Yerevan and Odesa. After the successful presentation of the products of his plants at the World Exhibition in France in 1900, he seemed to be the only one who received the right to call his brandy Cognac. In addition to producing Cognac, this province in Western France is well known for the cities of Rochefort, La Rochelle and the Isle of Rhé, which was depicted in Dumas’ popular novel The Three Musketeers. Even before one consciously attempts to learn about the history of this land, the strong English influence is obvious, especially in terms of the economy. This influence explains why the region directly neighboring the famous wine province of Bordeaux, where grapes are traditionally grown, started specializing not in dry wine, but in its distillates. Since ancient times, this region was a center of salt trade, and the Dutch merchants would distribute salt from France to Northern European countries. In addition to salt, the Dutch also transported local wine from the Poitou vineyards. The large sales of this wine significantly aided the expansion of vineyards in the region. However, by the time the Hundred Years’ War finally came to an end in 1453, the English had been expelled from the mainland, and Charente lost a reasonably large wine selling market. At this point in history, the French wine making industry fell into decline. Moreover, wine transport by sea often resulted in the acescence of the wine. For these reasons, during

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the medieval period, the Dutch started using distilling equipment to distil local wines. They referred to the resulting strong drink as “burned wine,” or “brandwijn,” which was later shortened into brandy. At first, after transportation, this brandy was diluted with water and sold as wine. However, by the end of 17th century, enterprises of Poitou-Charentes started stably producing an ardent spirit, the taste and physical characteristics of which could endure carriage by sea. This drink was more saturated and aromatic than wine, and it was significantly cheaper to transport it. Furthermore, the technologies used to produce it gradually improved and double distillation was introduced, resulting in the production of cleaner Cognac spirits that were of a higher quality. In French, Cognac spirit is referred to as “eau de vie,” which roughly translates as “water of life.” The producers later discovered that aging the drink in oak casks essentially changed its parameters, enriching its aroma, refining its flavor and adding a pleasing goldbrown color to the drink. They also specified that the end product may, and indeed should, be drunk neat. The legislative background for Cognacs is complex. As such, it is not possible to describe all the laws and regulations that govern various varieties of Cognac within this article. However, it is worth reviewing the legal backdrop in brief. The first legislative acts were passed at the beginning of the 20th century, and active legislation persists to this day. All work on regulation and supervision is carried out by a special governmental organization named the National Interprofessional Cognac Bureau (Bureau National

Interprofessionnel du Cognac–BNIC). This organization is an Interprofessional Institute that was established within the limits of the French legal framework. It consolidates Cognac producers and professionals in related businesses such as oenologists, technologists, barrels, bottles and inventory manufacturers, merchants, negotiants, etc. By law, there are authorized areas of Cognac production that have strictly determined boundaries. These areas are referred to as appellations. An appellation, or “appellation d’origine,” is a wine classification system that controls quality in terms of the location of production (and grape growing). Literally, it means “designation of origin.” Simply stated, it is a district that meets a pre-defined criteria in terms of geography, climate, soil and other characteristics, tradition and style of wine production. The appellation system in France also applies to Cognac and Armagnac. Appellations of the Cognac region are as follows: 1. Grande Champagne. 2. Petite Champagne. 3. Borderies. 4. Fins Bois. 5. Bons Bois. 6. Bois ordinaires or Bois à Terroir (i.e. simply Cognac). The appellations themselves can be enclosed. The largest, which is simply referred to as Cognac, in-

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cludes all the other appellations. Beverages produced in Cognac will feature the Cognac label on the bottle collar. Otherwise, a name of the appellation may be indicated; for example, Borderies or Grande Champagne. It’s worth noting that, while two of the appellations include the word champagne, they are not to be confused with the wine region of the same name, which is located in the north-east of France. The locations of the six Cognac appellations are presented in Figure One. Figure One: The six Cognac appellations Note: two addition labels are considered to be acceptable: Grand Fine Champagne and Fine Petite Champagne. The first of these denotes that the Cognac was produced from the grape Grand and Petit Champagne, while the proportion of Cognac spirits from the higher appellation (Grand Champagne) is not less than half. Correspondingly, Fine Petite Champagne means that not less than 50% of spirits of the Petite Champagne appellation are included in the Cognac (the rest are from lower appellations). * * * The maximum permissible alcohol content of Cognac by volume obtained after distillation is 72% at

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15°C. The statutory prescribed last end date of distillation is March 31 of the year that follows a harvesting year. Cognac should be aged in either Limousin holm or Tronçais pedunculate oak casks in accordance with the manufacturer’s traditions. The following labeling of the Cognac spirits is specified according to aging in barrels: • Minimal–V.S. (Very Special), Selection, de Luxe, Trois Etoiles, not less than two years of aging • Superior not less than three years of aging • V.S.O.P. (Very Superior Old Pale), V.O. (Very Old), Vieux, Reserve, not less than four years of aging, • V.V.S.O.P. (Very Very Superior Old Pale), Grande Reserve not less than five years of aging (?) • X.O. (Extra Old), Extra, Napoleon, Royal, Tres Vieux, Vieille Reserve, not less than six years of aging. There are also two additional categories: • Millesime (“vintage wine”, with a harvesting year indicated) • Hors D’Age (“beyond age”) The Technology Used to Produce Cognac As mentioned previously, the process by which Cognac is produced is strictly regulated. A breach of these regulations is considered to be a violation of the law and is subject to a fine, loss of license and, in exceptional circumstances, even incarceration. The following process stages of the Cognac production are specified by law: • Process by which grapes are grown, including harvesting techniques; • process of wine production (this will be examined in detail later); • process by which the wine is dis-

tilled and the “eau de vie” Cognac spirit is obtained; • the aging of the Cognac spirit in barrels; • the production of Cognac from Cognac spirits; • presales preparation (bottling and transportation); • implementation stage. Ugni Blanc, which is more commonly known as Trebbiano, is the main variety of grape from which Cognac is produced. It is a slow-maturing grape that has high acidity and crop yield and demonstrates good resistance against diseases. In addition to Ugni Blanc, other varieties of grapes are also used, including Colombard and Montils. They result in more aromatic spirits that have a richer taste; however, they are also more difficult to grow. The grapes are usually harvested in October, and the juice is extracted from the grapes immediately following harvest. During juicing, horizontal pneumatic presses, which don’t break the berry stones, are traditionally used. Grape succus (must) is sent for fermentation. Ugni Blanc grape Fermentation, or fret, is carried out in traditional concrete reservoirs or state-of-the-art metallic tanks that

picture Victoria Maleeva

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are constructed from stainless steel. Yeast is added to the grape juice to induce fermentation. This consumes the sugar that is contained in the juice and separates it into alcohol and carbon dioxide. The gas easily flows into the atmosphere (technology options where carbon dioxide is not released allow the production of sparkling or carbonated wines, such as Champagne). The fermentation process takes approximately three weeks, and, as a result of this, wine that has a high acidity and low alcohol content is obtained (about 9%). The next step in the process is distillation. Distillation is conducted in a traditional Charente still, which includes an extraction boiler that is heated over an open fire (wood and coal were the traditional flame sources, but more modern operations now use gas), a bulbous boiler crown, and a swan neck duct leads to a coil that passes through the cooler. This apparatus is referred to as an Аlambic Сharantais or Charante-type distillatory vessel. The process of distillation consists of two stages: Stage One: The primary distillate, which is referred to as brouillis (raw spirit), is extracted. This has an alcohol content that is equal to 27–32%. Stage Two: The raw spirit is supplied to a distillation still boiler for secondary distillation. This process is referred to as “bonne chauffe.” As a result, a base high-quality Cognac spirit that has an alcohol content of 68–72% is obtained. This is poured into oak casks for aging. Barrels for Cognac with a volume of 270 to 450 liters, as well as barrels for wine aging, are produced by hand from the oak trees that grow in the forests of Limousin and Tronçais. 100-year-old trees are commonly

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chosen as the source of wood for these barrels. Tronçais oak is marked by a coarse-grained and soft tanine structure, while Limousin by medium-grained and solid and has a high tanine structure. During production, barrels are burnt from the inside in order to soften the wood structure and increase the barrel’s extractive characteristics. Depending on manufacturer demands, there are several levels of barrel burning. After burning the internal surface, a barrel is covered with a layer of burnt sugar, glucose, which is contained inside the structure of the wood and changes in response to temperature increases. After filling, barrels with upcoming Cognac are placed in the cellar for further aging or maturation. With time, Cognac becomes darker, softer and more round, and a significant number of tinges appear in terms of flavor and taste, among which there are notes of flowers, fruits, and spices. Barrels with spirits are placed for aging in the cellars. The porosity of the timber used to manufacture the barrels, and the ambient humidity of the cellar in which they are placed, define the process by which the Cognac ages and the spirits evaporate from the barrels. Aging consists of three main stages: extraction, hydrolysis, and oxidation. The Cognac extracts its color from the timber of the barrel and during the aging process it gradually changes in color from colorless to golden yellow. At this stage, a part of volatile components is evaporated and, apart from color, the taste and flavor of the drink also transform. Oak and vanilla notes appear. Upon completion of the hydro-

lysis and ox- i d a tion processes, the taste of the drink changes and becomes more round, while the oak flavor gradually gives way to flower and fruit notes with light vanilla tinges. Over years, the drink becomes increasingly smooth, while the flavor bouquet is enriched and develops notes of ripe fortified wine (so-called “rancio”). When the cellar master decides that the drink has sufficiently matured, it is poured from the barrel into a special big glass bottle, which is known as a Dames-Jeanne. This is subsequently hermetically corked. Once inside the bottle, the Cognac can be stored for decades without its properties undergoing further change. A special section of the cellar where the Dames-Jeannes are stored is known as “paradise place.” Natural evaporation of alcohol from the barrels is poetically referred to as “angel’s share.” In reality, this angel’s share accounts for approximately 2% of the total stock. This means that over 22 millions of bottles of Cognac literally evaporate into thin air on an annual basis. To get the required alcohol by volume, the spirits are diluted with distilled or demineralized water in a process known as reduction. Some masters add 1–2% water into barrels during permanent tasting while others do it before the assemblage. Interestingly, alcohol vapors act as

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a nutritional medium for microscopic fungi called torula compniacensis. This fungus covers the walls of the Cognac cellar, adding a distinctive black color to it. It also frequently appears on the exterior walls of the distillery and acts as a primary marker of buildings that house Cognac cellars. In big commercial houses, cellar masters purchase Cognac spirits from the wine-makers just after the end of distillation. They maintain strict watch and control over the process of aging by regularly tasting drinks and displacing them into another barrel or cellar in order to obtain the necessary parameters. In little houses, a cellar master works with his own spirits, or rather with

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the materials produced by himself/ herself or his/her predecessors â&#x20AC;&#x201C; father and grandfather. Making the end product with the word Cognac, completes the process of aging. In order to obtain the organoleptic drink parameters that are required for the cellar master, he/she commonly mixes several Cognacs (taking them from the Dames-Jeannes stored in the â&#x20AC;&#x153;paradise placeâ&#x20AC;?). Herewith, Cognacs of different age and region of grape origin are often used. This process is called assemblage. Cognac assemblage is the responsibility of the cellar master. Assemblage rules are very strict and are mainly set to avoid counterfeit protection. The only exception to this rule is that of Millesime

Cognac. Millesime Cognac emerges when a cellar master decides, after distillation, that the product has such outstanding characteristics that he/ she can make outstanding Cognac from it, while assemblage may only spoil it. Such Cognac is labeled Millesime and its year of harvest is indicated on its collar (Millesime or Vintage). It is considerably more expensive than other forms of Cognac because, if Cognac spirit is declared to be a Millesime Cognac, then the whole process of its production is permanently and strictly controlled by representatives from the National Institute (at a cost borne by the manufacturer), and the barrels are sealed with special red wafers. If the master needs to check some-

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thing in the barrel, he has to call the representatives of the Institute, who unseal the wafers and, upon completion of the work, seal the barrel once again. The process of Cognac production is finished by bottling, during which the drink is poured into bottles or glass or crystal decanters. It’s worth adding a few words about the process by which Cognac should be drunk. There are two methods of consumption associated with this drink. One of them claims that Cognac should be drunk from the snifter, a sphere-shaped glass with a big bowl (250 ml) and a short leg, and that it should be warmed in the hands before consumption. However, the alternative view is that Cognac is a digestive (a drink that should be consumed at the end of a meal, after dessert) and that it should be drunk from a tulip glass with a bud-shaped bowl that has a long, thin stem, in a volume of about 140 ml. This long stem of the glass

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allows the drinker to swill the contents around the edge of the glass, encouraging in to actively “breathe” and saturating it with oxygen. According to proponents of the latter method of drinking Cognac, it should be neither cooled nor warmed, but simply consumed at the room temperature at which it is served. A tulip-type glass with a tall leg Some people even claim that the best chaser for Cognac is a lemon slice. Utter gibberish! First of all, one shouldn’t generally eat after a digestive. Second, it is not advisable to combine the delicate tastes of Cognac with a dominating level of acidity and taste like lemon, which ultimately destroys all tastes and aftertastes. The French traditionally speak about three Cs: chocolate, coffee, and cigar. Cognac is a drink for meditation, and it should be nipped up, as you savor the rich complicated bouquet, beautiful trick of light in the glass and elegant mouth-filling taste. It will go perfectly with a cigar, a thimbleful of coffee or a bitter chocolate cube. Unfortunately, traditionally 97% of consumed Cognacs are young (V.S.

and V.S.O.P.), and much of them are used as cocktail ingredients. While this is acceptable, in our humble opinion, it does not showcase the best the drink has to offer. As the saying goes, less is more. It is much better to buy a high-quality Cognac less often than it is to have a low-quality drink in abundance. What’s more, this delicious tipple needs to be drunk in very small quantities so that you can truly relish the intricate characteristics of the complex flavors. Did you know that it takes almost ten liters of wine to produce one liter of Cognac? re The production of Cognac represents a labor of love for the future. Our contemporaries produce Cognac that will be sold by their children and grandchildren. One last thing. The price of Cognac depends on its age (the duration of the aging process), the vessel in which it is served—bottle, carafe, crystal carafe, etc.—and the marketing expenses. Read more: http://Cognac.ru.com/ 

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DECEMBER 2015

Hi-Tech Park Gennady Vasilevsky

[IT] [success story] [international cooperation] [business incubator] [expert’s opinion]

Valery Tsepkalo, photo park.by

he social economic development of the software development and IT-services sector, along with its accomplishments in Belarus, have been characterized by a steady growth over the past ten years. The export growth rates of software and IT services on average are from 35 to 40% per year. This percentage reaches far above the global average of 4% to 6%. Being a significant player in the international IT market, Belarus stands among the top 20 countries in terms of custom-made software development. In many regards, growth in this area has been the direct result of the gov-

ernment’s support and the creation of the High-Tech Park (HTP) in 2005.

AN OVERVIEW OF THE HTP

The HTP was created for the development and implementation of information and communications technologies, software for the republic’s industrial organizations as well as the exportation of these technologies and software offerings beyond the borders of the Republic (according to the Decree of the President of the Republic of Belarus of September 22, 2005 №12 “On the High Technologies Park”). The park is located in the north-eastern part of the capital of Belarus,

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Minsk, and covers a total area of 50 hectares. The territory is home to the offices of HTP residents and the buildings of the Belarusian Academy of Sciences Institutes. However, unlike most European and Asian parks, the

The Belarusian HighTech Park is the largest IT-cluster in Central and Eastern Europe. HTP of Belarus is also a virtual park. This means that the legal system of the HTP is valid throughout the territory of the Republic of Belarus («the principle of extraterritoriality»). A Belarusian IT-company can register as a resident and benefit from all the advantages of the HTP, regardless of where its office is located. Thus, the educational, research and development, professional and infrastructural potential of the whole country is fully optimized. The organizational and management structure of the HTP is represented by the Supervisory Board and the HTP administration. It is the function of the Supervisory Board to coordinate the efforts of the HTP, control its activities and makes decisions on the residents’

In Belarus, there are 55 universities that produce approximately 16,000 graduates in the field of ICT on an annual basis.

registration. Direct management of the park is carried out by the Administration of the HTP, a nonprofit institution that is subordinate to the President of the Republic of Belarus and accountable to the Council of Ministers of the Republic of Belarus. The Belarusian High-Tech Park is the largest IT-cluster in Central and Eastern Europe. The uniqueness of the HTP lies in the fact that it successfully combines high-quality technical education, the high professionalism of IT-specialists and the government support of the IT-sector.

According to expert estimates, the IT sector is the most promising industry in the Republic of Belarus. The HTP is empowered to grant tax benefits on a regular basis. Park residents are exempt from paying income tax, value added tax (with some exceptions), land tax, and tax on real estate that is located within the boundaries of the park. Residents are also exempt from paying import customs duties and VAT if they import technological equipment, accessories or components for use in HTP investment projects. It’s not just the tax incentives that

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make the HTP attractive. It also offers access to highly qualified Belarusian specialists who are involved in IT-projects of varying complexity, starting with system analysis, consulting, hardware selection and ending with the design

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2005, a «super optimistic forecast» was developed that claimed it would spawn revenues in advance of 300 to 350 million dollars from the IT-sphere by 2016. Valery Tsepkalo, Director of the HTP, later disclosed that, by 2014, the

During the first half of 2015 at import level of US$ 1.7 million, the net currency avails of the HTP reached US$ 315 million. and development of complex systems. The quality of Belarusian education in the sphere of the IT is well known throughout the world. There are 55 universities in Belarus that annually produce around 16,000 young ICT professionals. During his visit to the HTP, Cliff Reeves, General Manager of Microsoft New Business-Models Development said: “Belarus has a reputation of a country with a high scientific potential. This reputation is not gained overnight. It takes 50-60 years to establish a strong education system with highly qualified faculty.”

HISTORY OF SUCCESS

The contribution the HTP makes to the economy of the Republic of Belarus increases on an annual basis. When justifying the creation of the park in

park had achieved a total revenue twice that estimation: 680 million dollars. Work on the HTP started in 2006, and its first residents started to emerge in the same year. By that time, a market for Republic of Belarus IT-companies had already been established and the main players predominantly provided computer services under outsourcing schemes. In 2005, the export volume of such services was under US$ 26.4 million. In 2006, the export volume of computer and information services amounted to US$ 49.4 million (representing a 1.9 times increase on 2005). The share of the HTP amounted to US$ 17.31 million or 35% of total export volume, and that was just during the last seven months of the Park’s operation. In 2014, the export volume of the services offered by HTP resident

companies amounted to US$ 585.2 million. During the first half of 2015 at import level of US$ 1.7 million, net currency avails of the HTP reached US$ 315 million. The HTP activity has an vast positive effect on the economy of Belarus. The HTP promotes an additional influx of foreign investments and currency avails. In 2014, the park attracted US$ 34.3 million of direct foreign investment on a net basis. In addition, the HTP resident companies are actively involved in major high-tech projects and industrial upgrading Belarus. Revenues from the sales of products and services of the HTP residents in the domestic market of the Republic of Belarus for 2014 were more than US$ 80 million.

THE HTP TODAY

As of August 1, 2015, 144 residents are registered in the park, and more than 22 thousand people are working there. More than one-half of the HTP resident companies are foreign companies or joint ventures. During the first half of 2015, ten new residents were registered in the HTP and four of the

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The HTP acts as the largest and most recognized provider of IT-services in Eastern Europe and provides products and services to customers in 55 countries. existing resident companies expanded their activities. The HTP acts as the largest and most recognized provider of IT-services in Eastern Europe and currently has customers in 55 countries. The HTP residents provide services to internationally renowned corporations such as Microsoft, HP, Samsung, Philips, Bosch, Toyota, Airbus, Honeywell, Reuters, Dun & Bradstreet, SAP, Oracle, IBM, Facebook, Google, Coca-Cola, MTV, Expedia, and many others. Four of the HTP residents are among the top 100 outsourcing companies in the world.

ABOUT HTP RESIDENTS

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The Belarusian Park has become of increasing importance in the global IT-scene. Many notable companies have opened offices in the HTP. For example, in 2014, the following development centers opened in the HTP: Hynix Semiconductor (South Korea), formerly known as Hyundai Electronics, one of the five leading manufacturers of internal memory in the world; Rakuten (Japan), one of the world’s largest holding companies, combining services in the field of e-commerce, banking, credit cards, e-books, media and other areas; and IAC (USA), one of the world’s largest media and Internet companies. The first and one of the largest of the HTP residents is a Belarusian-American company called EPAM Systems. Today, EPAM Systems is the largest developer of custom-made software and one of the leading players in the field of IT-consulting in Central and Eastern Europe. In 2015, EPAM was placed in position 59 in the ranking of Fortune’s 100 Fastest-Growing Companies. In 2010, Minsk studio Game Stream, an HTP resident and one of the main development centers of the company Wargaming, created a computer game entitled the World of Tanks. In 2012, the game appeared in a major international championship, the World Cyber Games, and on the national games

in many countries, becoming a cyber discipline. In 2014, World of Tanks was named as one of the top five most profitable MMO games in the world. In 2007, the HTP resident company Apalon started out as an outsourcing services provider, before progressing to produce its own products. Today, Apalon is one of the global leaders in the development of mobile applications for the Apple App Store, Google Play, and Amazon Appstore. In 2013, many Belarusian developed applications, such as Weather Live, Notepad +, and Emoji Keypad were downloaded more than 100 million times in combination. In 2014, in a landmark move, the American company Mindspark Interactive Network (an operating company of InterActiveCorp) acquired Apalon. This was one of the few times in history an American company acquired a Belarusian entity.

BUSINESS INCUBATOR OF THE HTP

In 2015, to maintain high development rates in the IT sphere in Belarus, the HTP business incubator was established. The HTP Business Incubator is designed to provide assistance to young startup companies that create and develop their own software and hardware products. Companies are provided with office space, and start-up teams are provided with co-working offices. An acceleration

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DECEMBER 2015

Nowadays, more than 20 start-up teams are supported by the business incubator; these teams develop projects in the field of mobile and Internet services, games, applications for education, marketing, finance, and health care.

program was launched under which young IT-entrepreneurs receive expert support from specialists and top managers of successful companies, the HTP residents and leading consulting in addition to legal and venture capital firms. In addition, forums, seminars, workshops and IT/business master classes are held in the business in-

cubator on a continuing basis. «The Business Incubator is intended to become a center of attraction for the talented, ambitious and creatively thinking young people. For these purposes, we have created all the necessary conditions for the productive work and development» Yury Sudarev, the head of a Business Incubator

In the spring of 2015, the business incubator hosted the Facebook summit on marketing, which brought together leading start-ups and entrepreneurs from Central and Eastern Europe. Following that event, the Republican IT-forum was held, which gathered the best representatives of the youth start-up movement of Belarus. Some of the leaders of these teams already have experience of project management in the operating companies, including those commissioned by the world’s largest corporations. The HTP is actively promoting the development of the Belarusian IT-sector. As the research results to date demonstrate, the contribution the HTP makes to the national economy increases on an annual basis. Belarus has a huge potential for the development of the IT-industry and offers a favorable climate that attracts additional foreign investments. It allows Belarus’ hightech sector to compete on an even footing in the global arena. 

DECEMBER 2015

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Ukrainian experts experience will help to develop electronic payments technologies in the US Presented by the editorial board of the magazine Fuete

e met with Sergiy Ravnyago — a guru of electronic payments and electronic commerce — in a cozy downtown Kyiv cafe. “On the way from San Jose to San Francisco,” Sergiy spent the last 12 months in the very heart of the Silicon Valley. Sergiy agreed to tell FUETE magazine about current trends of US electronic payments market from the point of

[IT] [interview] [success story] [partners] [international cooperation] [perspective]

view of the expert with wealth of experience in development of innovative technologies in Ukraine. Sergiy, what is happening in the US in your field of expertise? First of all I would like to mention a very important and long awaited event, i.e. liability shift* in card payments to go into effect in the US October 1, 2015 (except for part of Cardholder Activated

* Liability shift is a program of major international payment systems to promote implementation of EMV standard. The key aspect of that program is introduction of the principle of shifting counterfeit fraud liability towards the party either issuer or acquirer — which has not adopted chip technology.

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Terminals). After October 1, 2015 the largest payment card market will join the rest of the world in terms of commonly accepted set of rules. In other words, the US began its journey on the same path as Ukraine did a number of years ago and which UK launched in the early 2000s: to issue EMV payment cards, to equip ATM (Automated Teller Machines) and POS (Point of Sale Terminals) with chip readers, to upgrade the hosts, etc. How is it that for years now Ukraine has been ahead of the US in electronic payments technologies? A number of reasons could be mentioned. First of all, the sheer size of the US market is mindboggling: according to the Javelin Strategy and Research consultancy and the World Bank estimates, there are around 6.5 million of POS terminals in the US, i.e. approximately 40 times as many as in Ukraine (for your reference: US population is only 7.5 higher, than the one of Ukraine). When I just began to seriously work on chip technologies (including EMV ones), which later on created the foundation for modern day systems, in Ukraine we had rather compact and highly concentrated market. In contrast to the giant US market, in

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Ukraine more than a half of POS terminals population were owned by just one player, while 10 largest acquirers covered 97% of the whole market. We just could not afford to miss a chance to implement fast and radical technological reform on the national scale! The sheer scope of work in transition from magnetic stripe technologies to the chip ones is of titanic proportions — both on issuing and acquiring sides. One must radically redevelop all of the technological threads, including

manage to resolve the problems of fraud and personal data theft, while holding to magnetic stripe technology platform. Unfortunately, their hopes did not come true. The third and probably the main reason is that Ukraine is very rich with welleducated people with huge appetite for innovative technologies. Due to that, the growth in numbers of experts in chip based electronic payments technologies domain has been explosive. While in 2003 there were around 5 of us who

A very important and long awaited event, i.e. liability shift in card payments to go into effect in the US October 1, 2015 (except for part of Cardholder Activated Terminals).

leveling up of cards personalization, upgrade of ATM and POS terminals hardware and software, beefing the processing hosts, cryptographic equipment enhancements, etc. When this mega scale project was launched, I was in charge of getting all technology elements perfectly aligned, as well as making decisions on all key issues — beginning with macro parameters, including VisaNet (which connected issuers’ hosts with acquirers’ terminal equipment) settings, and down to micro parameters of certain card products issuance like regimes of operations, etc. Even though it was a very complex endeavor, we succeeded in all aspects of implementation of absolutely new to Ukraine standards, including unique technological solutions which we had to invent, test and launch on the fly. Secondly, US market participants believed for quite a while that they would

managed to go through the 4 volumes of EMV standard and tons of ISO 8583 manuals as well as other related documents, today we have thousands of such professionals in Ukraine. Does the US have enough experts for taking on similar revolutionary tasks? Well, lack of experts in electronic payments technology domain in the US seems to be serious and getting more acute with each coming month. The market includes around 7 thousand of banks (I mean banks, not branches; the total number of bank branches is about 100 thousands) and almost 28 million of nonfinancial companies. All of them will have to redesign their systems so that they could handle chip technologies based on EMV standard. It will take thousands of experts who cannot be trained overnight. The only

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plausible solution for such a problem is to invite experts from other countries who have made the change, including Ukraine. Without a doubt, many experts from Ukraine would be extremely useful in the US. However, even the most intensive import of technology expertise as evidenced by my experience of similar endeavor in Ukraine, would not probably allow to build ubiquitous environment for EMV card acceptance in the US earlier than 2019. One of the significant complications lies in

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pivotal coordinator of the whole endeavor. We tried and tested all of the existing technologies of the day: mobile payWave, mobile PayPass, MOTAPS, etc. In addition to that, we developed a number of our own unique technologies (I even had to use one of my personal inventions, patented during my post graduate studies). Among everything else, I was involved in the design and implementation of all of the significant elements of technology. First of all, ones related to POS terminals

Lack of experts in electronic payments technology domain in the US seems to be serious and getting more acute with each coming month.

overlapping of the two major technology revolutions: implementation of EMV chip standard and migration of electronic payments functionality from plastic cards to mobile phones. What is happening in mobile payments technology domain? Well, in mobile payments technology domain Ukraine seems to be significantly ahead of the US. Which problems have you — a pioneer of mobile payments technologies — encountered while successfully taking over the Ukrainian market? In Ukraine we began to experiment with mobile devices based payments a number of years ago. We, a group of enthusiasts from several banks, processing companies and vendors where I often had to play a role not only of a technology expert but of a

for mobile payments acceptance, NFC controllers and software for mobile phones, host based solutions and lots of other — and less visible things — like HSM (Hardware Security Module) upgrades, etc. At the end of the day, all of them composed the national system of mobile payments — one of the most advanced in the world. On the issuing side, we developed the products, analogous to Apple Way and Android Pay, way ahead of the US and other countries. In addition to that we created one of the world’s most advanced environments for mobile payments acceptance: in Ukraine more than 50% of POS terminals now process NFC transactions, while in the US — around 4%. In Kyiv subway you can pay for your transit with NFC capable mobile phone there are only 5 such cities in the world. It was a gargantuan job from start to finish,

but its result was worth the efforts devoted to the nationwide project of worldwide importance. Indeed, mobile transactions are becoming ever more important part of electronic payments, since mobile devices became seemingly indispensable to daily routines of people, especially the ones, born after 1980. That is probably why, in the US the volumes (in terms of transactions numbers) grow rapidly, while the ones of practically all of other financial services decline year on year. That is why Ukrainian experts in mobile payments technology experience will be not less valuable for the US market players in coming years, then the one in EMV domain. Even more so, since there are ever more players in the electronic payments domains… Absolutely, according to AngelList web site, there are more than 4,000 financial technology startups, mostly US based, and billions of dollars have been invested into their business, while investment volumes continue to increase. They will all need to employ experts who possess knowledge and experience in implementing complex technology solutions. The pros from Ukraine would have enough challenges to take on. 

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DECEMBER 2015

Make Investments in Children [IT] [interview] [books] [projects for children]

S. Stanislavsky once said, “It is necessary to play the same way for children as for adults, but considerably better, more delicately, in a more civilized manner and more perfectly.” And you don’t want to argue with him, because there is no point. Creating any product for children is a significant responsibility. Children are our future. As such, it’s important to think seriously about taking care of them properly from the outset, before it is too late. In this article, Kanstantsin Strausau, director of the company “ActivePads” and creator of software products for young people, answers some pertinent questions about meeting children’s development needs in the modern age, and considers which investments in children are the most important.

Gennady Vasilevsky

Hello, Kanstantsin. Let’s go back to the beginning. How did everything start? How did you find yourself in the IT sphere? I first started to be interested in IT as a child when I came across some articles about programming the microcalculator MK–61, which were printed in the magazine “Science and Life” (he is laughing). I’m joking, of course, but everything started when I was very young. I was interested in analyzing the code of the programs described in the magazine and wondered how I could add new features to it without increasing the size of the code. Not long after my neighbor obtained a Sinclair computer and I spent hours playing around on that. Afterward, I had excellent teachers at school. Later there was Belorussian State University. I studied at the Faculty of Physics at university (Chair of Methodology and teaching physics and IT).

I was taught computer-based modeling of physical processes. I was very interested in the way the professors gave us a really correct “business” method by which we could solve physical problems. As it turned out, this was useful for creating my own projects. Our 90s were absolutely difficult (especially in the financial area), and it was an incomprehensible time. I could get fixed up in a job in a publishing house and work as a system administrator and a maker-up. I had to master this additional profession connected with printing trades at the same time as completing my full-time tuition. Computer mastering and programming skills allowed me to do a big majority of sums of making-up and pre-press. One of the plusses of that job was the usage of the powerful (for that moment) computers, which allowed users to work with three-dimensional graphics, edit videos, and also sometimes play perfect computer games.

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Pictures of Iryna Strausava, 7 years old.

My first book “Working on a Computer: Step-by-step” was published in 2001. As time passed, I started to run publishing projects and cooperated with large Russian publishing houses that concentrated on the publication of literature for children. In 2010, I watched a video on the Internet about the app “Alice in Wonderland” on iPad. The video seriously impressed me, and I realized I could create a similar project myself. I had to make up my mind to do it. I left my assistant director position on production in a big Belorussian publishing house and started my own business. It was an unbelievably difficult step because it was hard to walk away from a secure job into the unknown. I found myself faced with hundreds of new questions that required new administrative, economical and financial knowledge to answer. I soon realized that I couldn’t create the projects I planned without external investment. It certainly hasn’t been easy! Tell us, why did you decide to create an electronic product for tablets and sensorial screen gadgets? This statement isn’t quite correct. The projects were always developed with the intention that they would be published both electronically and on paper.

We recognized the power of publishing not only on tablets, but also as a web app (almost like a site). We realized the immense power of interactive TV and the important role it would play in the future. In addition to passively watching TV, it became apparent that children would also start to use it as a means of learning and managing their own development. As such, in reality, the content was created inclusive of all the possible types of publishing. Why have you decided to create a product that is targeted at children? Specifically, child development? My own children and my working experience with polygraphic childish projects drove me to create products for children. The lack of high-quality and educationally rich programs that are aimed at children motivated me to develop something that could help parents to facilitate their children to develop fine motor logic, creativity, and memory skills. Let’s talk about the current situation in the software market in general. Which program products would you advise our readers to avoid? Specifically those that are targeted at children. In my opinion, all offerings have some

value; however, it is important to do everything in moderation. It’s important for parents’ to know which cartoons their children watch and what games they play. It is also important that parents actively discuss these programs and games with their children, even if they are very young. This will prevent children from becoming passive observers who are nothing more than puppets in the hands of strangers. A lot of people complain about the fact that products that are targeted at children contain a lot of aggression, even those about superheroes. What do you think about this? The vogue of superheroes has been enduring. However, the heroes have changed as time has passed. A superhero usually becomes a model, someone who children look up to and imitate. It is, therefore, important that the qualities and virtues he exhibits are desirable and positive. As for a lot of characters’ increasing aggression; unfortunately, this is a sad reflection of modern-day society. It is a great pity that so many games, films, and cartoons don’t offer an alternative, unaggressive means of dealing with behavior or actions. Children are being raised to think that these behaviors

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uations in “virtual” life so that we can fit them with our real lives. Often there are negative heroes in real life… Besides, the existence of both positive and negative heroes provides children with an opportunity to acquire moral standards of behavior and to recognize the difference between kindness and misfortune, devotion and betrayal, justice and injustice.

are a standard and acceptable part of real life. But every medal has its reverse. More recent cartoons, e.g. “Frozen”, “Big Hero 6”, “Home”, etc. do not have any aggressive heroes. What are your views of these offerings? It is important to depict various sit-

What principals do you follow in your job? What purposes do you put before yourself, which problems do you solve? For what is “all of this”? To structure my own aspirations, I live by several standards. The first one is to “truthfully apply high technologies.” The programs must not only entertain, but also teach, enhance communication with the world, open vital secrets, motivate, support and also analyze child’s behavior. You must make products that motivate lagging people and give more work to smart people. You mustn’t be boring. Besides,

the books must be books, for example, but with the correct application of “additional stages of liberty” that are possible in electronic presentations. The second is to publish responsibly. One of the most frightful phrases for me is “the crowd eats this up.” Some program creators, publishers, teachers, authors and other characters lead a great number of customers to the concrete torpor. Estimate, please, what has happened to the book market, which is full of low-grade texts, poor-quality illustrations, disgusting polygraphic rendering and cheap paper. People have stopped reading. Children even don’t want to start reading. And, as soon as we voluntarily step back, only one “stupid ball” replaces the development. And then, with the lack of financial competence comes poorness, with the lack of scientific comprehension of vital processes comes obscurantism. What things will never feature in a product that you are producing? “Parp” heroes, zombies who are in abundance won’t ever exist on the screen. You mustn’t have time for it. Why have you referred to the fairy tales of Hans Andersen and not to Charles Perrault or Grimm Brothers? Is here an interior meaning? Several excellent artists applied to my company who had almost finished Andersen’s fairy tales. The works were done perfectly. We decided to use these highly artistic illustrations in electronic publications. And, from that moment, they were depicted on paper. The group of active people formed among my friends, who were professionals in different spheres: psychologists, linguists, writers, composers, art critics, interpreters, directors and

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also fairy tales admirers. My friends supported me actively during the first stage, so I am immensely grateful to them. Everything started from the fairy tale Thumbelina, which was noticed by Apple’s editorial office after it appeared in the American iBookStore. It eventually appeared in the category Editor’s Choice in the USA. We were favorites of Apple for several months. Tell us, who helps you work the most? How do you create new ideas and decisions? I constantly follow up new opportunities in industry and actively communicate with my workshop colleagues, visit exhibitions and conferences. Most of my new companions admire the quality of our products and always, especially at the start, actively offer new ideas. Some of them go on to cooperate with us on a long-term basis. However, I sincerely confess that the most active people, the most valuable helpers, are my children. They are my inspiration, and my first “testers” and critics! Quite often my programmer and I develop a concept in the morning, and my children test it in the evening. And, as they do so, the problems and disadvantages come almost immediately apparent. For example, we once worked on a

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fairytale with my daughter when she was only four years old. It started out as a simple game, and then a whole plot emerged that we were then able to realize in the form of an app. Are your children very creative? All my children are creative, and I feel that it is important that I notice and develop it. My daughter, for example, was seriously interested in art, and she has never lacked inspiration for her work. My son was recently included in technique mastery. It sounds quite perfect! Are you able to tell us what you are working on at the moment? At the moment, we are working on some new software that incorporates a diagnostic-developing complex that is targeted at children who are aged between 3 and 7 years old. It is based on Ch. Perrault “The Little Red Riding Hood”. It has been created in an interactive animated attractive playing form. It is anticipated that it will be useful for teachers, parents, kindergarten staff, psychologists, speech therapists and, of course, the children themselves. In other words, we can use this game to facilitate psychological anal-

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ysis? It sounds very interesting. But, you tell us that it is impossible to create programs such as these without investments. Is it hard to attract such investment? Definitely! In fact, it is necessary to have the whole team of specialists for working out similar software. In addition to programmers, we also need psychologists. In general, I’ll repeat, investments in children’s development are the most important investments: be it in a program product or subscription to a chess school. It is very important to give a child a basis on which he can develop and establish his own life. Our role as parents and educators is to provide our children with the qualities and skills he will need in life. Therein lies the answer to the question “what is this investment for?” ActivePads.com The whole world at your fingertips. 

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Golden Dream

Eva Teslenko

[international projects] [interview] [project exchange] [cultural life] [projects for children] [success story]

In 2016, we are hoping to run more than 15 international festivals, contests, and open-air events.

he international children’s festival “Golden Dream” has been running for 15 years, has attracted a significant amount of positive public feedback, has been received with gratitude and has become a very important and colorful part of cultural life in many countries. To celebrate the anniversary of the festival, we interviewed the Art Director of the Golden Dream Festival, Eugenia Strimovskaya. It has been 15 years since the festival first started. How did it all begin? The idea to organize the festival came

up more than 15 years ago. However, it wasn’t until the year 2000 that the first International Children’s Creativity Festival was held in Simeiz, Crimea. The following year, since a lot of people decided to take part in the festival and for technical reasons (the absence of a proper infrastructure) it wasn’t possible to host the festival in Simeiz and, instead, we moved it to the Royal Livadiya, a true pearl of Crimea. The festival itself got a new name, the “Stellar Crimea International Festival!” By 2014, Crimea was no longer big enough to host the growing festival and the international brand Golden Dream was

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first established. In 2014, the festival was run in Bulgaria and Greece and, in 2015, the list of participating countries included Ukraine, Bulgaria, Greece, USA (Las Vegas) and France (Paris). In 2016, we are hoping to run more than 15 international festivals, contests, and open-air events. In 2016, we are hoping to run more than 15 international festivals, contests, and open-air events. It is not easy to organize such a massive event. How did you achieve it? It is always hard to start something new; however, as the saying goes, you never know what you can do until you try! Our idea was to create a beautiful, honest, kind festival that is filled with friendship and creativity and run by a highly professional and fair team! This has only been made possible through top-level organization with a solid team of professionals. Tell us about your team, who are those talented people behind the scenes? Our team includes true professionals, and new, active and interesting people join us every year. Only the jury stays the same. However, they have been through certain changes too. In

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2015, the Chairman of the Art Forum, which is held in Dnepropetrovsk, was Yuriy Falesa, the producer. And other judges like Tatiana Koshkarova (Moscow), Natalia Nurmukhamedova (Moskow), Valeriy Shevchuck (Ukraine), Alla Ridosh (Ukraine), were all part of the very first festivals, as they are today. You cannot replace that level of experience, professionalism, kindness, positive attitude towards kids and teachers, and the exceptional standard of their vocal and choreography workshops. So that is why we are still together. Festivals have become very popular over the last few years. Why should people take part in the Golden Dream? Nowadays there are, indeed, a lot of festivals and competitions; hundreds or even thousands. And, on face value, it may seem that they are all the same: arrive, check in, perform, rest, go home. But in reality, I think people who have visited two or three festivals will confirm that it is difficult to find two similar competitions or festivals! It is this difference that is the festival’s “soul.” There are a few distinct areas that we need to pay attention to when we organize a festival. Our task is to create a holiday of creativity for our contestants, regardless of whether it

is a festival, contest, open-air event or creative trip. We believe that the organizer’s priority should be to create a festival that is as bright and interesting as possible. Our festivals are friendship festivals. We believe everyone should care for and support each other. A real festival is not possible with just one dim lightbulb and a single mike. The stage should be decorated and shining. The sound and lighting equipment should be professional. The hosts of the show should shine with the spirit

Our task is to create a holiday of creativity for our contestants, regardless of whether it is a festival, contest, open-air event or creative trip. We believe that the organizer’s priority should be to create a festival that is as bright and interesting as possible.

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of the event, and the organization of an international festival must be clear and welcoming. This is how we run our festivals. And last, but not least, we hope that every attendee will remember our festivals, competitions, and trips, and feel a sense of warmth and true happiness when they recall them. The festival has increasingly gained in popularity in the Ukraine; how about your festivals abroad? Are they as successful? We are continually evolving and trying to make each festival special and mem-

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orable because this is what will make people want to return time and time again. However, each festival has its own spark. For example, the festivals in Bulgaria are held in the summer and are predominantly swimming and sunshine festivals. At those festivals, attendees have an opportunity not only to work on stage but also to enjoy the sun and the sea; thereâ&#x20AC;&#x2122;s no better place to do that. Our Greece festivals have never left anybody indifferent, since it is impossible to resist the charm of Kavala and Saloniki, the wonderful Greek culture and the amazing national

cuisine. American festivals are a different thing altogether, you can speak about them forever more. In short, to really understand what we do and how unique each festival is, you need to experience every one for yourself! Our task is to create a holiday of creativity for our contestants, regardless of whether it is a festival, contest, open-air event or creative trip. We believe that the organizerâ&#x20AC;&#x2122;s priority should be to create a festival that is as bright and interesting as possible. Compared to previous years, how does the level of organization change? Has the number of festival countries become any bigger? Of course! Contestants are constantly developing, so you never know at the beginning who will take the first place; it is often hard to make the decision! A lot of different countries from around the world participate including Ukraine, Russia, Belarus, Moldova, Lithuania, Estonia, Kazakhstan, Uzbekistan, Armenia, Georgia, Poland, South Korea, USA. In 2014, China, Romania, Serbia, Greece and Mexico joined our list! And we are always open for new friends

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A lot of different countries from around the world participate including Ukraine, Russia, Belarus, Moldova, Lithuania, Estonia, Kazakhstan, Uzbekistan, Armenia, Georgia, Poland, South Korea, USA. In 2014, China, Romania, Serbia, Greece and Mexico joined our list!

from around the globe! A lot of different countries from around the world participate including Ukraine, Russia, Belarus, Moldova, Lithuania, Estonia, Kazakhstan, Uzbekistan, Armenia, Georgia, Poland, South Korea, USA. In 2014, China, Romania, Serbia, Greece and Mexico joined our list! Tell us more about the most anticipated festival, the festival in Las Vegas. This festival is the most bright and memorable one! Have you ever been to Las Vegas? Oh, it is an amazing city: beautiful sights, incredible fountains, and nice hotels… all this is only a small part of the city’s attractions! In 2016, we are planning on holding the festival for six days between the 6 and 11 of February, and we have already prepared an interesting and rich program for our contestants! Las Vegas is a city that never sleeps, and while you are there, you absolutely have to make the most of it. During the Las Vegas event, our contestants are given the chance to participate in world-class shows like “America’s got talent”. “America’s got

talent” is a major show that connects people from around the country and gives them an opportunity to showcase their talents. A separate seat of honor is given to vocal and choreography. Honestly, you should see it with your own eyes! I can assure you that you will remember this festival forever. To take a part in the festival you need to apply at our official page http://childmusicfest.com/ After that, we will contact you to discuss the requirements in more depth. How can I take a part in the festival? It is easy! You need to fill the application form at our official page: http:// childmusicfest.com/–After that we will contact you to discuss the requirements in more depth. Finally, what would you wish to the newcomers of the festival? We are planning to expand our festival to many additional countries including Spain, Italy, Japan and others. The main dream is to eventually host a Worldwide Children’s Festival!

I want festival contestants throughout the world to have an opportunity for their stars to shine brightly, warming and lighting people’s lives with their talents! 

To take a part in the festival you need to apply at our official page http:// childmusicfest. com/ After that, we will contact you to discuss the requirements in more depth.

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[health] [analysis and researches] [partners]

Women’s Fitness in the North of Russia Pros and Cons R. I. Reilanu, PhD, associate professor N. V. Reilanu, physical rehabilitation specialist “Syktyvkar State University,” Syktyvkar, Russia Supported by the Mikhail Roschevskiy Science School.

OUR AUTHORS Radu R. Reilanu, PhD, is an associate professor in biology who recently moved to the US having received his visa with the help of Lawson Law, LLC. He will be taking up a position as a lecturer at the University of Tulsa, where he will share his experience with his American colleagues and students. Natalia Reilanu, Radu’s wife, is a physical rehabilita‑ tion specialist, Thai massage master, and classic yoga school instructor..

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odern women serve different community functions, be it social, domestic, educational, or industrial. The problem with the aging population and the increasing availability of creative activity is in resistance towards involutional (age-related) changes and the boost in women’s physiological body reserves. This field of study has attracted the attention of different experts in recent years. Fitness, as a trend, is a mass physical culture form that has its own peculiarities: a wide variety of techniques and ways of adjusting workload, the availability of exercises that have different functional meaning, the possibility of implementing your own creative approach during training, etc. The variety, scope, and limitless potential of physical exercise makes it very appealing to women. Today, Russian people are paying more and more attention to health-improving forms of physical training such as cycling, aqua aerobics, aerobics, power fitness and other modern fitness training programs. However, unbeknownst to many women, non-rational training may cause more harm than good for women, and may result in long-term health problems. Modern cardiac hemodynamics diagnostics is a reliable tool that can prevent people who are engaged in physical training from developing pathological conditions of their cardiovascular systems. However, unfortunately, fitness trainers are not always aware of how different physical activities influence the heart and physical efficiency. This particular problem led to the development of research into how modern physical activity influences the cardiovascular system and basic functions in the bodies of young women. The research described in this article

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was conducted at health and sports centers in the city of Syktyvkar. The subjects involved in the research were young women who regularly engaged

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women involved in the study. However, on the other hand, the circulatory system response type can be attributed to the climatic conditions in the north or

The research conducted with a group of young women produced astonishing results: engaging in physical activity in the north of Russia is harmful to your health. in aerobics, cycling or power fitness activities, and who were aged between 20 and 26 years old. The groups observed participated in physical training two times a week, 45 minutes each, at the same time, and did not complete any additional training.

Russia, where the average temperature between November and April was -17.8ºС. This may have placed additional stress on the circulatory system. This fact must be considered when organizing health-improving activities at fitness centers.

CARDIOVASCULAR SYSTEM CONDITION

ANALYZING GENERAL PHYSICAL EFFICIENCY

To diagnose the condition of a cardiovascular system, it is necessary to calculate the recreation quality index (RQI) of the circulatory system. The research revealed that standard physical activity of any type (power, speed-power, stamina) results in a higher systolic and diastolic blood pressure in women. Moreover, this tendency lasted through the whole research (from November until April). This indicated that the CVS (cardiovascular system) of the participants reacted in a hypertonic way to physical training and, thus, their capacity to adapt to different physical activities reduced. With all this going on, it is important to mention that the central hemodynamics did not return to the original level. This means that, during the assessment period, the functional condition of the circulatory system exhibited a low adaptation status and resulted in highly stressed vasomotor regulation. On the one hand, this may have been due to the difference between training load and the fitness levels of the

The analysis of the general physical efficiency of the participants indicated that the women who took participated in the training exhibited a “below average” or “low” level of physical efficiency. During the observation process, the dynamics of physical efficiency decreased. Apparently, unstable functional condition of cardio-respiratory system appeared in the middle of January. All of this was indicative of unstable physical efficiency, insufficient myocardium strength and accumulated stress in the body. As such, the body was unable to fully recover. During the whole period of testing, the physical efficiency of the subjects was considered to be low. Basically, you see the general picture of poorly trained women but, according to the downgrading physical efficiency, it appeared that the subjects engaged in a complete de-adaptation processes! Power fitness activities had the worst effect on the cardiovascular system and the de-adaptation processes of the body.

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During the whole period of testing, the physical efficiency of the subjects was considered to be low.

These conditions gave the researchers reason to believe that, before organizing group training at health and sports fitness centers, appropriate consideration should be given to planning activities that incorporate appropriate workload with regard to age, gender, physical preparedness and climatic conditions. How to Avoid Damaging Your Body Complex body examinations represent an informative and relatively simple method of identifying women’s

suitability for exercise, and the results of such assessments can be employed to monitor and evaluate physical preparedness levels during the training process. In addition, health-improving exercises and training should include opportunities for participants to learn about the basics of psychological regulation and self-massage, as well as proper self-control and the importance of regular medical checks. It only through taking a comprehensive approach to the issues of mass physical

culture that we can ensure training activities are efficient and improve people’s health. Rationally organized training should practically eliminate the risks of sustaining an injury or overtraining, while also preventing the development of cardiovascular diseases. After an adequate “hyperactivity” period, exercisers need to create a perfect environment in which to recover. 

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[]

DECEMBER 2015

[personality] [international cooperation] [success story] [premiere] [world of cinema]

grant. Armed with an ability of superb acting talent, and sometimes serendipity, Ms. Callas came to act in American movies through years of powerful determination against a world of challenges and obstacles. Alexandra Callas, was born during the cold war in Russia (then, the USSR), to the daughter of renowned Russian Jewish sculptor of Soviet realist works, Lev Kerbel. He was the premier portraitist in the USSR. Kerbel’s creations included statues of Marx, Lenin and the first human to journey into outer space, Yuri Gagarin, as well as outstanding portraits of WWII heroes, heroes of labor and renowned artists. Lev Kerbel

East Meets West in new movie of Nellie Bly’s 10 Days In A Madhouse

“R

ussian born actress Alexandra Callas plays a challenging role as the historical figure Nurse Grupe from Nellie Bly’s book in 10 Days In A Madhouse — The Nellie Bly Story opening in US theaters September 25th, 2015.” Alexandra Callas, daughter of the most famous Russian artist of the 20th century, Lev Kerbal, plays the role of Nurse Grupe opposite, Caroline Barry, Christopher Lambert, Kelly Le Brock and Julia Chantrey in a new biopic about Nellie Bly and her undercover work in notorious Blackwell’s Asylum, 10 Days In A Madhouse — The Nellie Bly Story.

In the movie 10 Days in a Madhouse — The Nellie Bly Story, there is a character based on a real life person who is one of the primary Nurses, Miss Grupe. The historical albeit dark hearted figure is played by the daughter of one of the most famous and renowned artists in modern history, Russian born actress Alexandra Callas plays the historical albeit dark hearted figure, nurse Grupe. In the movie based on Nellie Bly’s newspaper account of atrocities in the notorious Blackwell’s Island Insane Asylum for Women, Ms. Callas plays opposite Caroline Barry as Nellie Bly, Christopher Lambert as E.C. Dent, the Superintendent of Blackwell’s Asylum, and Kelly Le Brock who plays nurse

was once called “the contemporary Michelangelo” by British art critics. Lev Kerbel’s pieces are located all around the globe, decorating squares, state and private galleries including Tretyakov Gallery in Moscow, and private collections. With such a famous father, there was a lot of pressure on Alexandra to prove herself when, at a young age, she decided to pursue a career in the public eye. And prove herself she did. There are some interesting similarities between Callas’ background and the background of journalist Nellie Bly, who wrote the book 10 Days in a Madhouse, upon which the new movie of the same title is closely based. Like Bly, Callas

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started young in a career in journalism. At the age of only 15, Alexandra was published as a reporter for one of the major youth newspapers in Moscow, and then her gift for journalism quickly led her to TV News on the established National Channel 3. At the age of 17, she was already called one of the best young TV reporters of Russia. “It was only after I had proven myself that I revealed that I was only 17. They were a bit irritated that I lied to them, but they kept me on.” They sent Alexandra to cover the weather on May 1st, 1993, but it just happened that she found herself in the midst of crowds of protesters in the time before the second putch. “I found myself in the middle of it. We ended up with a lot more then footage of clouds and sky. I was made part of the news team and my salary was instantly raised. She was still dreaming of an acting career, but just didn’t have any time to pursue acting, being an extremely busy TV reporter. Soon she was invited to host the show at the most popular FM-station in Moscow at that time — “Maximum”, where she ended up hosting MTV special daily radio news, the Morning Show, Friday night show, Sunday night show and her own exclusive author shows. By 2007, she hosted her own shows on three different radio stations. But the call of acting was in her blood and at the peak of success; Callas up and quit her radio and TV career, and completely devoted herself to her only dream — acting. Alexandra went on to earn multiple university degrees in acting and journalism as well as graduating from the Moscow State Academy of Fine Arts as an art historian. With a new career in stage and television Alexandra Callas honed her skills as a professional actress.

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Flash forward to 2013, when Alexandra came across an open casting call to play in 10 Days In A Madhouse. “When I first read about the movie, my heart nearly jumped out of my chest: I was DYING to be involved. Such a story, such a person, women-driven drama. Somehow I knew from the very beginning, that this story was going to change my life forever.” Change her life it did. Alexandra was chosen out of thousands of hopefuls to play a major role in the film and was flown to the US to act in an actual closed asylum, in Salem Oregon, where One Flew Over The Cuckoo’s Nest was filmed. When Alexandra Callas arrived in Salem, they were having a one hundred year snow and freezing weather. “I will never forget when I first saw Alexandra in her white parka,” says director Timothy Hines of Ms. Callas, “She was absolutely radiant and so upbeat. We were all freezing our brass monkeys off and she was oblivious to the cold. After all this little cold snap was nothing compared to the average sub zero winters in Moscow. The first things she said was how beautiful the weather was. She called it, ‘Christmas weather.’ There was something about her spirit that I knew we would become life long friends.” Callas concurs with her shared kindred spirit for Timothy Hines. “Timothy is an absolutely outstanding person. His knowledge of life and human nature amazes me every time. Although he is very “sharp-tongued” and has a dark sense of humor, he truly loves people and sympathizes with them. He has a rare talent to ‘jump’ into anyone’s shoes at once, immediately being able to understand a person’s mentality and values. It makes him a very tolerant person, a great, ‘character-friendly’ screenwriter and a great, actor-friendly

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director – flexible, ready to improvise, make changes, and ready to accept actors’ choices, even if they’re different from what he envisioned. Working with Timothy is a blessing. He seems...so Russian to me: strong, honest, very smart, caring, knowing how to survive in any circumstances. The one you can rely on. And, after working together for such a long time, and having been in a lot of situations, we are a true family. And I will never forget the first day he called me, from the USA to Russia, and told me personally that I was cast, and that he welcomed me on board. My heart was pounding, and I was about to faint. I will always be grateful he chose me out of contenders who were from all over the globe, that he trusts me, and then, on set, trusts my choices. He gave me that amazing chance that happens once in a lifetime.” Callas worked closely with newcomer star Caroline Barry who plays the famous reporter, Nellie Bly, in the movie. Callas says about Barry, “She is fabulous. She’s is a brilliant actor and a loving friend. I trust her very much, trust her opinion, she’s very smart, professional and tactful and has a beautiful heart. In the performance,

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she is very intelligent in her choices, and has an amazing intuition. We have spent weeks and weeks filming together in Salem, and then in LA, and every day on set I saw new dimensions of her talent.” Alexandra Callas was also taken with another co-star, superstar, Christopher Lambert, (Tarzan, Legend of Greystoke, Highlander, Mortal Kombat and the upcoming Cohen Brothers movie, Hail Caesar!). “When on set, he’s very serious and concentrated,” says Callas of Lambert, “and behind the scenes — the sweetest, and most helpful, and so fun.” But her first scenes with Christopher Lambert had an inauspicious start, Callas elaborates, “Ha ha ha, my flight

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from Moscow was delayed, so I got to the set right from the plane, after a sleepless night and busy days filming in Russia before that. So when I met

Kelly is an outstanding character actress. Just outstanding. With every take she would bring something different in her performance, and every take

The 10 Days In A Madhouseteam is thrilled to announce that they will have advance theatrical openings for Boston, New York City and Philadelphia (where Nellie Bly hails from), on November 11th, Veterans Day. Mr. Lambert for the first time, I was straggly, partly deaf from the plane ride, and nearly falling asleep on the set. I can imagine what he thought of me, but if so, he never showed it. Instead, he tactfully gave me time to take a breath and get myself together. He is a gentleman, and very... aristocratic. An amazing man. Mysterious looking, so attractive and in great physical shape. And a very thoughtful actor.” Callas had equally gushing words for Kelly Le Brock, (The Woman In Red), “She is marvelous. There are no men or women who wouldn’t turn their head when she passes by. She is a breath of fresh air. She has tremendous charisma, and is so fun and nice. Kelly, as I know now, herself has been through a lot, and she wrote a book about her life experience, which is about to be published, and I’m gonna be the first one to buy and read it because hers is such an inspiring story. Kelly is so strong, an optimist. Probably because of that she brought something very special to the dark setting of the madhouse.

was a treasure. I’d love to work with her more!” East truly has met West in Nelly Bly’s madhouse when Alexandra joined the cast of 10 Days in a Madhouse–The Nellie Bly Story. Ms. Callas will go on to bring grace to the USA as she is already in preparations for her next movie in America. Callas says, “And from the very first acquaintance with the story and the production team, I’ve been living the dream. Like Cinderella. When I was a kid, I imagined USA being a Magic Kingdom where any miracle could happen. And I always believed that. And always knew that, if I know my goals and work hard and never stop dreaming and believing, then one day I will find and follow my yellow brick road to this Magic Kingdom, and will find MY miracle, too. And now it is happening, and I am so grateful for every single moment of it!” The 10 Days In A Madhouseteam is thrilled to announce that they will have advance theatrical openings for Boston, New York City and Philadelphia (where Nellie Bly hails from), on November 11th, Veterans Day. Fans not living in these cities will be able to see the film in Theaters when10 Days In A Madhouseopens nationwide on November 20th. 

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[cultural life] [interview] [events] [book market] [international cooperation] [publishing business]

DECEMBER 2015

A Good Book is a Joy Oksana Dryabina

o say that the sky above Moscow was foreboding that day is an understatement. The windows of heaven were repeatedly flung wide open, and it seemed that the relentless drizzle was never going to come to an end. Flows of water streamed down the road, yet some people remained undeterred and struggled through the wind and rain to make it to Pavilion No.75 of VDNKh of the XXVIII Moscow International Book Fair, Russia’s oldest book fair which, this year, attracted over 400 publishers from about thirty countries. While the endless queues that we recall from the 1970/80s were not replicated, there was no doubting the tremendous feeling of joy and anticipation that visitors

and exhibitors from near and far felt as they descended on the fair. This feeling intensified as we entered the pavilion. The atmosphere was electric as volunteers in bright costumes cosplaying book characters circulated the room and writers stood high on publishers’ platforms describing their latest creations and the inspiration underpinning their writing… The stands presented the best of belles-lettres, children’s books, educational materials, popular science, reference books and encyclopedias. We struck up conversation with one of the visitors as soon as we entered the huge pavilion. The man introduced himself as Ivan Yakovlevich but refused to tell us his last name, insisting he

was first of all the Readers there (yes, with a capital R). He came to VDNKh in spite of the weather to fill his library with new books and to learn if there were any new publications planned for his favorite book series Military Adventures, which is published by Veche Publishers. It turned out our new friend valued those books primarily because of the careful selection (“They don’t publish junk”) and the publisher’s ability to rescue some good authors’ names from oblivion. “Almost complete works of Bryantsev!” Ivan Yakovlevich informed us excitedly: “And nobody else published Shpanov in one series. Besides, the new-generation writers create rather interesting texts, you can tell they know what they’re doing. Ex-

DECEMBER 2015

amples? You’re welcome—the excellent novel series by Sergei Mikhenkov has been admired by many.” After such a glowing review, we couldn’t miss the presentation of Military Adventures and it lived up to expectations. Well recognized and aspiring authors presented their new books. We also learned about some future projects, like the upcoming two-volume book by Georg Born, who died during the repression period. These books are going to consist of almost everything this unusual writer, an individual who experienced fascism and its lust for power first hand, knew. Having first launched in 1991 and, therefore, witnessed first hand the ups and downs of life in Russia, Veche Publishers predominantly describe themselves as publishers of historical books. Since their early days, the team has actively strived to preserve the relics of Russian culture, and to provide a bright and comprehensive picture of the history of Russia. Veche has published over 100 million copies so far, which includes 12,000 names and 50 different series. They now publish about 800 books on an annual basis. We tracked down the group’s Editor in Chief, Sergei Dmitriev, an honored cultural worker of the Russian Federation to learn more about the current state of the book industry and the challenges publishers face. Quite naturally, our first question was about the book fair we were at… Sergei Nikolaevich, how successful has the Moscow International Book Fair been this year? All in all, it’s been very good. Despite the smaller scale and the reduction in participants, this fair has proven that Muscovites love reading, meeting authors, browsing through books on the publishers’ stands, and searching

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for something to satisfy their curiosity. We did a couple of presentations on the Veche stand, and I can tell you they aroused a lot of interest. Just take the celebration of 300 published volumes in the popular series Military Adventures, or the Taboo Subjects of History project managed by researcher and traveler Andrey Sklyarov, or the publication of the book USSR and China Fighting Together Against the Japanese Aggression devoted to the 70th anniversary of victory over the militarist Japan, in cooperation with China as examples. I hope the readers’ interest in new books will inspire us to do even more. Russia’s Year of Literature is almost over. What has stood out for you this year in terms of reading and demand for books? Unfortunately, book sales in Russia keep falling. Slightly over 500 million books were published in 2014. This represented a significant reduction on the highest rate of 1.8 billion books that was once published for the whole Soviet Union. What does 500 million books actually look like? It equates to 3.5 books per capita of Russian population. Meanwhile, the index reaches 6 or 7 in some countries… We stopped being the world’s highest reading population a long time ago. Why did it happen? Of course, it’s mostly the result of fundamental changes to our way of life. For example, the emergence of computers, the Internet and other forms of leisure have transformed Russia from a reading nation into something completely different. A recent survey revealed that Russian people spend on average four hours a day watching TV, 1.5 hours on the Internet, nine minutes reading books and eight minutes reading magazines. And there’s more: there’s

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Sergei Dmitriev

traveling, meeting friends, and other ways to entertain oneself. Therefore, books as a focus of attention and interest have receded into the background. A huge role in this tragedy can be attributed to the collapse of the book distribution system that once covered the whole of the Soviet Union. At one point, even the most remote villages had access to books but, sadly, this is no longer the case. Many villages have no bookstores at all, which leaves 35 million people with no access to books at all. Small towns with a population under 50,000 don’t have any real bookstores either; their access to books is limited to those sold in small shops or departments in shopping malls—another 25-30 million people are cut off from books. It turns out that almost half of the Russian population doesn’t have permanent and unrestricted access to books! People often come to Moscow and St. Petersburg to buy books in the same way that they once traveled to these major cities to buy sausages! Yes, we also have online bookstores and the Books by Post service, but these services only account for 1520 % of the market, and the books sold via these channels are relatively expensive because they incorporate delivery costs. As for the libraries, they have been underfunded for many years

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than the 4.8 libraries per million people in Great Britain, 4.9 in Canada and 11.4 in Finland. At this rate, it isn’t hard to imagine a Russia with no bookstores at all; a country with no reading, hence no culture, science, or imaginative or critical thinking…

and, quite simply, they cannot provide people with access to the latest books and publications. Selling books in non-specialized stores, like supermarkets, is becoming increasingly common; however, these channels typically only sell books for the masses, which hardly enhances society on a cultural level. It seems that the only way out of this crisis is to increase the number of bookstores that are available to millions of readers. Traditional bookstores are the primary channel for readers to browse and flip through different books. But sadly hundreds of bookstores and publishing houses have gone bankrupt and closed recently. That is why Russia is finding itself in the midst of a reading crisis. As reported by the Federal Agency of Press and Mass Communications, even well-to-do Moscow has only 10.0 bookstores per million people, and St. Petersburg has 32.7. This is significantly lower than other areas of the world; for example, there are 46.8 bookstores per million people in Great Britain, 55.7 in Canada and 69.8 in Finland. The library statistics are even more abysmal: There are 0.4 libraries per 10,000 people in Moscow and 0.5 in St. Petersburg. This is drastically lower

What should the government do to help publishers and book distributors? Russian authorities are guided by “monetary inertia” and fail to understand the social importance of publishing and distributing books, especially in light of the minuscule size of the industry in Russia, which is currently valued at 70-80 million rubles per year at the most. By the way, books currently account for just 0.1 % of the average Russian’s living expenses! Any major hypermarket, like Lenta, yields several times as much, let alone X5 Retail Group or Magnit. Looks like we need a series of government measures to change the existing situation. I believe we should: 1. Apply a zero VAT rate to book publishing and retailing industries. 2. Recognize book retailing as a culture-promoting industry and grant considerable rental benefits to bookstores at all levels, including municipal. 3. Make the promotion of libraries and book retailing a permanent priority of regional cultural development, just as proposed in the Cultural Map of Russia project elaborated by the Russian Book Union. There are so many disputes now around granting 25 billion rubles to Russian Railways in order to keep EMUs in regions. Meanwhile, books are of at least the same importance for the development of the country and could, therefore, really benefit from small grants and benefits. 4. Boost financing of libraries so that they can buy new books and trans-

form from archaic, empty buildings into modern and popular cultural oases. 5. Assign national status to the Reading Support Program developed by the Russian Book Union with all that it entails, including popularization of books and reading by all possible means (we need to start at least by broadcasting TV shows devoted to books on governmental channels!). 6. Develop a set of measures to support youth creativity, individual writers and literary figures, literature associations, etc. In a nutshell, the government should treat access to books as a high priority in the same way it once was in the Soviet era. The government needs to recognize that books and reading represent an important element of the intellectual development of society. What is your publishing house doing to change the situation for the better? Veche Publishers are trying to resist the negative market trends by publishing a wide array of high-quality books that are desired and waited for, inter alia, in our popular book series Siberiade, The Great 100, Military Secrets of the 20th Century, etc. Each year, we publish a catalog of our books for libraries and distribute it throughout the country. We have observed some positive results from this. As the bookstore market shrank several years ago, we started to think about selling books through kiosk networks, not only in Moscow and St. Peters-

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burg, but on a regional basis too. We have performed some multi-volume projects (30-50 volumes) for kiosks, such as People’s Novel, Mystery Man, or The Great Mysteries. 20th Century and Collection of Historical Novels. We also launched some new virtual kiosk-oriented projects in February to celebrate the 70th anniversary of the Victory and the Year of Literature: Names of the Great Victory (memoirs of military leaders in two volumes), Complete Works of Valentin Pikul (in 28 volumes), Collection of Military Adventures (in 40 volumes) and Mysterious Places of the World (in 30 volumes). I hope they will find their readers, and the Year of Literature will make us all contemplate the important role books play in Russia. Moreover, I hope these publications will revive the Russian population’s interest in reading. What areas of book publishing do you think are the most promising? Of course, apart from preserving the stuff that’s in the highest demand, such as history-related books, we also find it appropriate to focus on the development and promotion of e-books, which could represent a viable replacement to offline books. However, e-books should be distributed legally, without copyright violations. We are now focusing on this type of activity and offer our readers over 1,000 e-books. We hope that Russia is still motivated to rejoin the list of the top reading countries in the world and that our publishing house will make a significant contribution to the achievement of this goal. Book publishing doesn’t only bring joy to those who do it, there is a good deal of problems, too—just as there is with any other business. Still, there is a feeling that Russian books will always bring joy to book lovers. Following our interview with Sergei

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Dmitriev, we wanted to introduce you to the Siberiade book series he mentioned (talking about books and having no chance to read them is the same as smelling delicious food but having no opportunity to sample it). The series is unique. It tells the story of the vast and affluent Siberian region that was discovered at different stages of history. Over 100 volumes have been published so far, including the first two books of a saga by Alexander Yarushkin and Leonid Shuvalov, The Symbol of Faith and Righteous Justice. Here’s how the author describes the inspiration behind the book. “The novel is dear to us because it was our first experience of making something big that incorporated numerous plotlines and characters. One of our readers once said he had counted more than 200 characters! We officially started work on the novel in the late 1980s; however, we explored a lot of archival documents prior to that. Some characters are purely fictional; others are based on real-life people, like my grandparents. There was no means by which a non-union member could publish such a big novel. Publishers would just tell us we were not measuring up, or accuse us of presenting the Bolshevik revolutionaries too positively or negatively. “Then came the turbulent 1990s, we didn’t have a chance… Leonid left for Sevastopol, I was in Oklahoma, and the typescript got lost. Thankfully, it was later found, and I began to polish the novel using my personal and writing experience. I completed the first chapter and sent it to Veche. They liked it. I refined the second one, and they published that too. People like it. Eventually, it was nominated for an award by the Union of Writers. “The novel was supposed to be a saga about the lives of the main

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characters from 1905 (the first two books describe this turbulent period) to 1917–1918 in Siberia (these are the three or four books I’m working on now). Leonid is busy with his own project, the marvelous Green Pyramid Gallery in Sevastopol. We’re still friends, and we see each other from time to time.” It seems that Yarushkin and Shuvalov’s hard work has paid off. Their books were not only warmly welcomed by the connoisseurs of good literature, but they were also nominated for the prestigious literary award To the Glory of Motherland. Happy reading! 

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DECEMBER 2015

The YSTIC [investment in science] [interview] [project exchange] [support program] [projects for youth] [success story]

Yegor Solyanov

he Youth Science and Technology Innovation Contest (YSTIC) is a Russian program that was first launched in 2007. It is designed to find and support young scientists who seek self-fulfillment by means of innovative activity, and to motivate youths to participate in scientific and technical activities by organizing and funding various innovative projects. During the contest, students, and post-graduates, young scientists from academic and specialized research institutes, and innovation enterprise employees go through several

tersburg State Technological Institute graduate Maksim Vasiliev is a YSTIC finalist. Today, he shares his thoughts about the contest and reveals how he has benefited from participating it in. Maksim, you have been through the selection process, and now you are among the YSTIC finalists. In your opinion, how useful are such contests for youth and entry-level engineers from Russia? In terms of applied research and new scientific intensive businesses, participation in YSTIC is a must.

The winner receives two years funding of 200,000 rubles per year toward their own research in the field of scientific and experimental development.

stages of a selection process, during which they introduce their own scientific developments to the experts. The winner receives two years funding of 200,000 rubles per year toward their own research in the field of scientific and experimental development. St. Pe-

Such contests are very interesting, since, at the final stage of scientific research work and the initial stage of experimental design, there are only a very small number of such support programs in Russia. Educational and research institutes are not so interest-

ed in the initial stage of experimental design developments, it is too early to secure investments from industrial enterprises, and to get venture capital funding you need to first introduce a prototype. I am thankful to Bortnikâ&#x20AC;&#x2122;s fund and to the YSTIC contest organizers for giving me the opportunity to advance my work and remain in science and research. What project did you bring to the contest, what was your goal? The idea of my project was the development of an energy and resource-saving device for the production of fine emulsions and nanoparticle disaggregation. We are planning for the device to be implemented in companies that are working with chemical and petrochemical technologies, refining, producing nanoparticles, food, cosmetic products, pharmaceutical drugs, etc. The main features of the device are design simplicity, portability and a tubular configuration that provides process continuity, leading to increased efficiency. The most significant advantage is that, during the production of fine emulsion, this device consumes 4.5 times less energy than the traditional

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devices that are currently used in the industry. What are the strengths and weaknesses of your project? One of the biggest strengths of my project lies in its industry orientation, scientific innovation, patent application and a number of scientific publications. In addition, there is a company that has realized the advantages of this device compared to its existing technology. The project’s weakness, as strange as it seems, appears to be the sheer number of different products I could have created. At times, this threatened to detract my focus, waste my energy and prevent me from having any products ready in time. As such, I had to commit myself to one single direction for the project and to make sure I didn’t deviate from it. What makes your development useful, how do you see the final product? The project is called “Development of an energy and resource-saving device for production of fine emulsions and nanoparticle disaggregation.” We are planning on bringing the energy-saving device to market, where it can be used to produce food products (milk, mayonnaise, sauces), cosmetic products (lotions, creams, etc.), pharmaceutical preparations, and chemical technologies.

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Speaking about the contest, how did it help you to achieve your goal? The winner gets a grant of 400.000 rubles over two years to fund their work. This is a great help. However, the expert feedback I received during the selection stage was also invaluable. After receiving the feedback, I started to focus more on the main direction of the project development and the key characteristics of my technology, both of which will be very important in terms of mass production. Maksim, what future do you think is awaiting the contest winners? Although 400.000 rubles over two years is not a huge amount of money, the winner gets the opportunity to take a part in the YSTIC START contest through which he or she can build up their own personal high-tech company. Presentations and discussions with contest experts are invaluable in preparing winners for the commercialization of their products; i.e., the actual creation of a commercial, market-orientated product. In Saint Petersburg, the YSTIC program is represented by Politechnicheskiy Industrial Park, which includes the Politechnicheskiy Business Incubator. The Politechnicheskiy Business Incubator provides practical assistance,

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arranges consultations with experts, various training, and seminars and also helps to raise funding for key projects. What advice can you give to the future contestants? I think that the technology business is one of the most interesting and fascinating career opportunities

Although 400.000 rubles for two years is not so much money, the winner gets an opportunity to take a part in the YSTIC START contest through which he or she can build up their own personal high-tech company.

out there. So, if you understand the technology and have identified real issues that can be solved by your product, and if you have confidence in yourself, don’t let this opportunity pass you by. The contest provides a perfect opportunity for you to implement your own ideas and projects while receiving expert guidance and financial support. 

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[cultural life] [success story] [projects for children] [dancing group] [international competition]

DECEMBER 2015

A Freestyleâ&#x20AC;&#x2122;s Golden Dream Came True

Catherine Siebert, Anadyr

Chukotka is an inclement land of endless snow and biting wind that is located in the farthest hinterland of Russia. Although the territory of Chukotka is several times bigger than most European countries, just 50,000 people live there. Located on the border of the US state of Alaska, Russiaâ&#x20AC;&#x2122;s new day dawns daily in Chukotka. Over time, it has brought with it the unexpected international success of a modern dance studio named Freestyle. A choreographic group from far Chukotka has beaten all odds by winning three international competitions.

DECEMBER 2015

JULIUS CAESAR IN A SKIRT

reestyle is run by a remarkable lady named Helen Hismatulina. If you have ambitions to achieve something in life and progress your goals, you should try to sit at the feet of this energetic and positive woman. From an early age growing up in Kazakhstan, Helen always knew that she wanted to be a children’s choreographer. She believed that she would be able to create a team that would gain cultural recognition and that would ultimately participate in, and win, dance contests at an international level. Even in her adolescence, this extraordinary lady was dedicated to dance and expression. In her youth, Helen attended the Department of Choreography at a Russian university in Omsk. While she was a student, she studied ballet, jazz and yoga in various studios. These experiences prepared her well for a future career in dance and choreography. Helen’s family was shocked when she informed them she was going to live in Chukotka. They couldn’t grasp why she wanted to live on the edge of the earth. Indeed, not many people could picture themselves living in such unusual conditions – the polar night, extreme winter temperatures, isolation from the mainland (there are no roads; the only transportation is by plane). But Helen’s solar energy is hotter than any cold environment could overcome. One of the graduates of Freestyle joked: “Our leader is Julius Caesar in a skirt. She can do a million things at once!” So, nine years ago in Anadyr, the capital of Chukotka, which has a population of just 12,000, Helen Hismatulina created the choreographic group Freestyle, which consists of kids of different ages, from four years old through to Linda Moon / Shutterstock.com

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teenagers. It should be noted that the parents of young dancers also make a significant contribution to the success of the studio. “Dancing is a great workout for a child’s body in the conditions of our northern sedentary lifestyle,” says Olga Nechaeva, one of the parents. “Our children are very interested in studying with Helen. She is a strict and demanding teacher, but she knows how to unlock the potential of every child. She is always looking for new, bright ideas and offers such unexpected projects that it’s hard to believe they are possible. But our children always succeed under her leadership.”

TO WIN IS REAL

The first international competition Freestyle took by storm took place in 2012 in the Italian city of Rimini. Helen Hismatulina’s fosterlings brought back the silver trophy in the category ‘Show Dance,’ along with a lot of impressions and invaluable experience. Helen believes that it is possible to win prizes at international competitions – the main thing is to choose the

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right program, train hard and believe in yourself. Helen has proven herself not only as a choreographer, but also as a talented organizer. It is very costly to take a group of children abroad;

Our leader is Julius Caesar in a skirt. She can do a million things at once!

tickets from Anadyr to Moscow alone are very expensive. But our heroine was able to convince key sponsors that Freestyle would succeed, and justified the sponsorship by exceeding even the highest expectations. A year later, a chief Chukchi newspaper published the following headline on the front page: “Gold may be easily told – Freestyle took first place in two categories of the International Competition of Children’s and Youth Creativity ‘Paris, I love you!’.” Very strong teams from Russia, CIS and France participated in this

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contest. But Freestyle won the Gold in the nomination ‘Pop Dance: Ensembles’ with Kazakh and Chukchi dances. Anya Kurilova, a ten-year-old talented artistic girl, took first place in the nomination ‘Pop Dance: Solo’. This time, Helen Hismatulina went one step further and introduced entirely new numbers that were largely unknown to the Russian audience. The Kazakh and Chukchi are popular because of their exoticism. The choreographer made national performances the highlight of the team and the audience is always delighted to watch temperamental Gypsy, Caucasian, and Oriental dances at Freestyle’s performances.

DECEMBER 2015

TO AMERICA!

As if the event in Paris wasn’t enough, Freestyle received an invitation to visit Las Vegas for the International Golden Dream Festival. Skeptics discouraged Helen: “America? What if you don’t get the visa! The flight is crazily expensive! The dollar is on an upward surge…” But Helen Hismatulina has never been one to look for easy options. Having conducted extensive preparatory work, she took two Chukchi folk numbers and two pop numbers to the festival. Experienced choreographers Vladislav Rintytegin and Liana Gaifullina helped to stage the folk part of

the performance and, in advance of the event, the team often practiced up to six days a week. So, this spring, seven children, including five-year-old Sasha Maksymenko, Helen, and accompanying adults went to America. There was a problem with yarars. Yarar is a national Chukchi tambourine that regularly features in Freestyle’s style of dancing. They can only be made by highly experienced Chukchi craftsmen and, as such, they are very expensive and capricious instruments. Water, dampness, and heat are detrimental to them. “In Anadyr, we borrowed them,” says Helen. “But it’s too much responsibility to take somebody’s instrument on a long trip. We arrived in Moscow with ready-made frames, planning to wrap them with foil or cloth. At the Moscow hotel, one of the girls came up with the idea of making paper yarars using a papier-mache technique. That worked out well! These props looked great on stage.” The dancers spent a week in Moscow making props and, never one to take it easy, Helen arranged rehearsals at a music college near the hotel. “The flight time from Moscow to Los Angeles was 14 hours. We had not anticipated it to be an easy trip for anyone, even those of us who

photo Vadim Matveichev

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are accustomed to long flights from Anadyr to Moscow. However, we were so excited we didn’t notice how we arrived in Las Vegas. In many ways, it felt like we had been traveling for just an hour,” recalls Helen. The festival organizers met our heroes at the airport and took them to the Flamingo hotel. Everyone liked the hotel, and the kids were thrilled that they had an opportunity to admire the exotic birds.

HOORAY! GRAND PRIX!

“In Chukotka, the temperature was around -30 °C. It was a stark contrast to the +20 °C we encountered in Las Vegas. It was such a ‘jump’ from winter to summer,” described Helen Hismatulina. “We went on a tour of several luxury hotels. They compete in the luxury. You can see everything there, even an exhibition of Faberge eggs. The air traffic impressed me very much – airplanes with tourists landing in Las Vegas every minute.” “The Golden Dream Festival was held on the stage of one of the libraries of Las Vegas. It was much larger than the main venue of Anadyr, and the kids had to hit the ground running. From the outset, it was clear that a dance group from Armenia was one of the leaders of the dance program. It was a very strong folk group and,

beside that, the Armenian Diaspora supported it actively,” recalled Helen. The dance competition lasted for two days. There were two rounds. Only half of the participants passed

(London), unanimously decided to give the Grand Prix in the choreography category to Freestyle. “We were very happy, shouting ‘Hooray’ and we cried with happiness,” recalled the

Gold may be easily told – Freestyle took first place in two categories of the International Competition of Children’s and Youth Creativity ‘Paris, I love you!’. to the second round. The jury, headed by Dmitry Zemskov, artist of the City Ballet, the Imperial Russian Ballet (Moscow) and the European Ballet

young dancers. Sasha Maksimenko, the smallest participant, received the People’s Choice Award. She told us, “I liked the trip. It was very beautiful in

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Las Vegas, especially at night – colored lights were everywhere, and pink flamingos were walking around at the hotel Flamingo. It was an interesting competition. And we won! I worried and even cried a little bit.” There was a triumph homecoming. The people of Chukotka, proud of their offspring’s talents, received recognition at an international level. Although the trip to America demanded a lot of effort from Helen Hismatulina, the young dancers, and their parents in terms of time, money and challenge, it was undoubtedly worth the cost. 

photo Vadim Matveichev

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