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Skolkovo Medvedev unveils a hi-tech hub of innovation, research and education in the Moscow suburbs

The future starts here

Sochi builders set Olympic record As the countdown to the 2014 Winter Olypics reached the landmark 1,000 days this month, the host country has already set a new Olympic record.

Construction of facilities at the southern Russian resort of Sochi is ahead of schedule, meaning all venues are due to be fully tested a full year before the start of the Games, which has never happened before in the event’s history. Last week the head of the International Olympic Committee coordination commission for 2014, JeanClaude Killy, confirmed that Sochi was making “great progress’’ in its preparations.

Derided as a pipe-dream by some but embraced by Russia’s leader as an engine of modernisation, there’s a new brand to watch out for that might loosely be called ‘made in Skolkovo’.

Alexander Vostrov and Dmitry Rodionov Special to RN

Mammoth found by students in Siberia A group of students have discovered the remains of a giant woolly mammoth while digging in Russia’s remote Siberian republic of Yakutia. The students discovered the bones of the prehistoric animal while searching for charcoal to use in their creative metalwork course, RIA Novosti reported.

“One of the students was digging with a shovel when she hit something hard,” said a spokesman for Yakutia’s local education department. “The students began digging around to see what it was and pulled out a large section of the hip bone of a big mammal. Archaeologists and ethnographers were immediately brought to the site and confirmed that the animal bones belonged to a woolly mammoth.

Excavations of the full remains will begin in August, the spokesman said.

ria novosti

Twelve miles west of Moscow lies the bricks-and-mortar nucleus of a vision for a massive hi-tech leap, a Russian remastering of California’s Silicon Valley, exploding in a little village called Skolkovo.

“I hope that the whole world comes to know this brand, not only as the place investors should put their money, but because any big development undertaking needs to have its main engines that drive the whole process,” President Dmitry Medvedev said earlier this month when he brought more than 800 members of the global news media to Skolkovo for a question-and-answer session.

Eventually, more than 40,000 people will live and work on these 900 acres of land. Designated “Innograd” (a contraction of the Russian for “Innovation City”) it will concentrate a mass of Russian – and, if it takes off, multinational – high-technology companies.

Mr Medvedev gave the green light to the project in February 2010, and construction will take place within the framework of broader initiatives in the country. As the president told the national and foreign press at the May 18 meeting:“I don’t think we should look at modernisation within some firmly fixed time frame. I remember the time when we all counted how

News in Brief

The shape of things to come: Mr Medvedev is banking on Skolkovo to power future growth

one year had passed since perestroika began, then two or three more years, and we all know what happened in the end.”

For months, Skolkovo has mostly been a buzzword punctuating talk about the Kremlin’s modernisation programme. Apart from its newly opened Moscow School of Management, the site is largely still on the drawing board. But Russia is getting serious about spreading its wings, and moving away

from the traditional role of global energy and raw material exporter to become a hi-tech development hub.

And this is the flagship.

Mr Medvedev has visited SiliconValley to see what might or might not work for his country. True, that region became the main United States technology centre largely through defence spending (chiefly aimed at the Soviet Union) in the Seventies and Eighties. But Russia’s version is in a different era, and

Skolkovo is about making it work internationally. “This place holds special significance for me, because it is here that we are developing our new technology, here that we have established the Skolkovo university and the school [of management], and here that our innovation centre will be located,” the president said.

Beyond Mr Medvedev, there is a weighty line-up of names working to make the project a success. The former chief

executive of Intel, Craig Barrett, and the Russian billionaireViktorVekselberg co-run the Foundation Council, which includes among its members the Lukoil president Vagit Alekperov, and Anatoly Chubais, CEO of the Russian Corporation of Nanotechnologies (Rusnano). Two nobel laureates in physics and chemistry, Zhores Alferov and Roger Kornberg, head the Skolkovo Scientific Council.

“Skolkovo will become the conductor of an orchestra

consisting of start-ups and investors,” the foundation's vice-president Stanislav Naumov predicted in an interview with Russia Now. But this is not an attempt to create a Soviet-style Utopia, paid for and run by the state.

Although the state has lobbied heavily for the project, it’s exactly the government’s involvement that’s unwelcome here. Or at least any dependence on its financial

Cannes triumph for Zvyagintsev’s Elena

continued on PAGE 4

photoxpress

Business Prime minister denies new agency is a rival to Skolkovo

Migration Capital may hold 17m

Putin complements Medvedev

Moscow, the great migrant magnet

While President Dmitry Medvedev promotes his hi-tech innovation centre at Skolkovo, Prime Minister Vladmir Putin has launched an agency which he says will complement its work.

A vast influx of migrants, legal and illegal, has defeated attempts to keep track of numbers in Europe’s biggest city.

nezavisimaya gazeta

In a move guaranteed to set tongues wagging about courting the voters and a supposed rivalry with the Russian president, Prime MinisterVladimir Putin has unveiled his own business initiative.

The Agency for Strategic Initiatives (ASI) was set up as a communications channel with medium-sized businesses and is expected to start work this summer.

But while he and President Dmitry Medvedev remain silent about their intentions for the 2012 presidential race, Mr Putin warned against attempts to look for political implications in the creation of ASI as a counterbalance to the Skolkovo hi-tech hub outside Moscow.

“There is no need to look for political motives. No one is going to step on anyone’s body parts,” he said in comments

Herbert Mosmuller the moscow times

ria novosti

IGOR Naumov

reported by the Itar-Tass agency. Amid plenty of buzz generated by the Skolkovo centre, the prime minister was also quick to dismiss comparisons or overlaps with the president’s pet project, saying that they would complement each other.

“This is something different.

This means network activities across Russia,” he said when he presented the new agency at Government House on May 25.

But both entities will groom the work of innovation departments, facilitate the promotion of projects, and coordinate work through individual research and targeted programmes. So it is unclear how the agency can fail to partly duplicate the work carried out by Skolkovo.

The idea of ASI ostensibly arose after Mr Putin’s various trips around Russia, during which he talked to many entrepreneurs. Their stories merged into one continuous litany of grievances about the difficulties faced by Russian businesses struggling under the yoke of bureaucracy.

According to its architects, ASI will not seek to consoli-

Table talk: Putin’s agency will promote business networks across the country

date government programmes but will select the most promising projects in certain sectors. Citing the example of a federal programme for the development of the medical industry, Mr Putin said that was a typical situation where ASI could play a role in determining which projects needed support.

“Our market is dominated by foreign pharmaceutical companies” that earn billions of dollars in Russia, “while domestic products are scarce and

How long is a piece of string? or how large is the population of Moscow? you could equally ask without a conclusive answer.

Despite the best efforts of city planners, demographers and workers on the 2010 census, the most that can be established is that the metropolis is easily the largest in Europe. It is well ahead can be found only in the low- of London, which is in secpriced segment, and there are ond place with 7.7 million only a few hi-tech products,” residents as of 2010, according to British statistics. he said.

The agency will not be staffed The official figure for Mosby government personnel. cow currently stands at 11.5 The economic development million (an increase from a minister Elvira Nabiullina, total of 10.4 million in who will be on the supervi- 2002), but uncharted migrasory board, will be the only tion could push the real exception, because her min- number to as high as beisterial duties are seen as co- tween 13 and 17 million, acinciding with many of the is- cording to population exsues that the ASI will address. perts.

The director of the agency has The flow of migrants in recent years, legal and otheryet to be appointed.

wise, comes mainly from Russia and the former Soviet republics, with people being drawn by higher salaries and better services and living conditions.

“Everything happens in Moscow, first and foremost in economic life,” said Oleg Pachenkov, deputy head of the Centre for Independent Scientific Research. “We need to change the situation in other regions to move the flow of migrants away from the capital.”

In this vast country with nine time zones, Moscow is regarded as a desirable place to be for a growing number of individuals and key institutions. Most state bodies, including the government, the State Duma and the Supreme Court, are in Moscow, as are the headquarters of leading businesses, which prefer to be close to the authorities.

Moscow will continue to attract high numbers of migrants so long as living standards here remain far higher continued on PAGE 3

The director Andrei Zvyagintsev, one of the virtuosos of modern Russian cinema, has picked up a Special Jury Prize for his latest drama Elena, which was screened at the Cannes Film Festival.

Portraying the life of a middle-aged couple coming from different walks of society, the film is a story of moral choice and sacrifice. Written by Zvyagintsev himself, the project took off in 2010, when Elena bagged a grant prize at the Sundance Film Festival in the United States while still at the script stage.

In this issue feature

ap

Sergei Magnitsky

Inquiry into lawyer’s death takes new twist Turn to page 2

02

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opinion

Elections Will Medvedev and Putin be in the same chairs after March 2012?

Guessing game goes on

A playboy – and the usual extras – join colourful cast Georgy Bovt

Special to rn

A

Appearances by Dmitry Medvedev and Vladimir Putin suggest the election season has begun. But their actions seem designed to keep voters and pundits guessing. combined reports

Competition is vital

“I understand the motives of a party that wants to keep its influence over the country. Such an alliance is in accordance with the law and justified from an electioneering point of view,” he said in televised comments.

Mr Medvedev also speculated that United Russia could not count on a landslide in December’s State Duma elections, saying that competition was vital in a democracy.“No one political force can regard itself as a dominant one, but any force should strive for maximum success,” he said.

The president promoted his own agenda during a lengthy press conference at the

afp/east news

Russia now

Slowly but surely, the 201112 election season in Russia is getting under way. In recent weeks, both President Dmitry Medvedev and Prime MinisterVladimir Putin have made appearances that pundits regard as the beginnings of an election campaign, and analysts are watching closely to determine whether the Tandem will remain in place after March 2012.

On May 6, during a congress of the ruling United Russia party, Mr Putin announced the creation of the All-Russia Popular Front. This organisation will be made up of trade unions, business associations, youth groups and Kremlin-friendly NGOs and is intended to improve United Russia’s popularity by giving it more of a connection to ordinary people.

The new organisation will include “everyone who is united in their common desire to strengthen our country, united by the idea of finding optimal solutions to the challenges before us,” Mr Putin said.

President Medvedev immediately gave the pundits reason to speculate that there was discord between the Kremlin and the White House when he declined to endorse the concept of the Popular Front, saying in an interview only that he understood the reasons behind the move.

Picture of uncertainty: Who's next in the Kremlin hot seat?

Skolkovo Innovation Centre on May 18. Answering questions from an audience of more than 800 journalists, Mr Medvedev commented on topics ranging from modernisation to gubernatorial elec-

While Medvedev and Putin occupy different political niches, they serve a common cause tions to missile defence. His responses were mostly predictable, but the conference showed him to be comfortable, confident and in command of the issues – a man who could head a successful presidential campaign.

The press conference followed a meeting on May 10 with judicial officials in which the president again pressed for judicial reforms and a strengthening of the court system, and a spring marked by a controversial plan to remove government bureaucrats from the boards of state-owned companies.

Some analysts see Mr Medvedev’s actions as more proof that he is further distancing himself fromVladimir Putin. A process that began with his criticism of the prime minister’s comments on the prison sentences of Mikhail Khodorkovsky and Platon Lebedev, continued with the leadership’s difference of opinion over Nato intervention in Libya, and expanded with the shake-up in corporate boardrooms.

“This is a major development, marking an independent move by Medvedev, touching the interests of influential members of Putin’s team,” said analyst Dmitry Oreshkin, discussing the new policies with Bloomberg.

The theme of the president’s autonomy was noted in his reaction to the formation of Mr Putin’s Popular Front.

“Medvedev is trying to demonstrate his independence with those remarks,” Alexei Makarkin, a political analyst with the Centre for Political Technologies, said in an interview with The Moscow Times.“And it looks like the

number of similar remarks will be growing soon.”

Analysts who believe that the Tandem is indeed splitting believe that the prime minister’s creation of the Popular Front is his way of returning to the presidency.

Mr Medvedev the “modernist”and Mr Putin the“traditionalist” – in the hope that one or the other will appeal to Russia’s increasingly divided voting population.

“Like before, Putin and

Testing the Tandem

In a recent poll, 83pc of people believed that politicians work only to promote their own interests

The political scientist Grigory Golosov said:“If they [establish this new grouping], and there is no reason to think they won’t, then we can say that Vladimir Putin will be nominated precisely by this ‘popular front’ – that is, by all Russians who are for a better life.”

Alexander Venediktov of the radio station Ekho Moskvy agreed.“This story shows us again thatVladimirVladimirovich [Putin] certainly has not said ‘No’ to a third presidential term,” he told the BBC. Those who believe the Tandem will continue past 2012 say that the recent appearances have given both politicians the opportunity to define their different but complementary personas –

Medvedev tend to occupy different political niches,” the independent political analyst Stanislav Belkovsky told Interfax.“But both men continue to serve their common cause.”

The opposition politician Vladimir Ryzhkov even suggested that the Popular Front initiative was in fact intended to shore up the Tandem.

“He [Putin] is attempting to halt rapidly eroding support for the ruling Tandem and the ‘party of power’,” Mr Ryzhkov wrote in an editorial in The Moscow Times.

The television analyst

Nikolay Svanidze echoed these comments. “All this doesn’t necessarily mean it is Putin who will stand for president next year. I believe the Tandem has not yet made a final decision regarding who is going to run. If such a front is formed, the current president, Dmitry Medvedev, may use it just as easily. The new platform will make it possible for either of the two candidates to declare that he is backed by a considerable part of the people, not just one party and its voters,” he told Russia Today TV. Any candidate for the Russian presidency in 2012 may have to pay more attention to the people than previously planned. According to an Levada Centre poll in April, 75pc of Russians are interested in politics. But 83pc of respondents believe that politicians work only to promote their own interests and ignore the needs of voters.

This article combines reports

by Business New Europe, Interfax, Kommersant and RIA Novosti.

s Russia approaches the December p a r l i a m e n t a ry elections, the configuration looks roughly like this: on the political scene we continue to see two “extras” that for years have been plying the same old act.

The Communist Party headed by Gennady Zyuganov can count on winning around 15pc of the vote.

Until recently, it was thought that the traditional electorate of this party was a rapidly thinning body of pensioners who still yearn for the USSR. Though this is largely true, the Communist Party has continued to attract a steady share of the vote. Making that possible are middle-aged and younger voters who see protest potential in the Communist Party. On the other hand, the number of such voters will not grow, primarily because Zyuganov makes too many compromises for the protest electorate, and has failed to come up with any new ideas in a long time.The party has stagnated and no regeneration is expected in this election cycle.

The same is true of the Liberal Democratic Party of Russia (LDPR), which under the leadership of Vladimir Zhirinovsky has looked rather tired in recent years. It’s unclear whether Zhirinovsky has the energy to drag the LDPR over the threshold into the Duma this year, but it’s still possible.

Elsewhere, the prospects look even more dubious for A Just Russia, headed by Sergei Mironov, former Speaker of the Federation Council, the upper chamber of parliament. Opinion polls put his party’s rating at around 4-5pc, short of the 7pc threshold for gaining Duma seats. After Mr Mironov fell out with St Petersburg governor Valentina Matvienko, the leader of United Russia relieved him of his post as Speaker, the third most powerful in the country.

Paradoxically, this will only benefit A Just Russia: being “persecuted by the authorities”gives Mr Mironov and his party a more useful oppositional image. But Mr Mironov has yet to play his trump card in Dmitry Rogozin, Russia’s permanent representative to Nato

in Brussels. The party which Mr Rogozin created ahead of the last parliamentary elections, Motherland, won 15pc of the vote before it was swallowed up by A Just Russia.

At the same time, Mr Rogozin, who had alarmed many with his outspoken nationalism, was dispatched for “re-education” to the capital of European bureaucracy. He is likely to return to Russian politics this autumn as a member of A Just Russia.

The main parliamentary party, the ruling United Russia headed byVladimir Putin (he is not a member of the party, yet he is its leader), plans to go into the next elections with a renewed platform. Mr Putin announced the creation of a pre-election People’s Front to allow nonparty candidates (up to 25pc) to win election on the United Russia ticket. Ahead of the December elections, United Russia can also be expected to float a raft of new ideas.

The United Russia machin-

The ruling United Russia party plans to go into the elections with a renewed platform ery and UR-friendly analytical structures are now busily forming an ambitious campaign programme, while the popular Putin is redoubling efforts to render this all credible for the voters.

Meanwhile, on the right, the Right Cause party, the electoral prospects of which looked glum until recently, is to have a new leader in the billionaire Mikhail Prokhorov.

Prokhorov is a controversial and colourful figure, a playboy who is fond of spending torrents of cash at Alpine ski resorts and favouring steps to legalise a 60-hour working week. But he is a fresh face, unconnected with the ruling bureaucracy, is adept before the television cameras, and his emergence coincides with a vacant slot for a right-leaning liberal party in Russia.

Most interesting of all is that the current political configuration has formed almost irrespective of the key question facing the country today: who exactly – Medvedev or Putin – will be United Russia’s candidate in the presidential elections in March 2012?

Georgy Bovt is a Moscowbased political commentator.

Justice Leaked document shows commission will blame Interior Ministry officials and FSB for lawyer’s cell death

Magnitsky charges were fabricated, inquiry says Galina Masterova and Vladimir Ruvinsky russia now

The metal cage used for prisoners in courtroom No 14 at the Tverskoi regional court was empty during a recent hearing, its door wide open, when the court considered the arrest of Ivan Cherkasov, a senior executive at British investment fund Hermitage Capital.

Mr Cherkasov, who lives in London, said he has no intention of returning to face charges of tax evasion he says are false. He said his arrest was an act of revenge by members of the Russian security services.

Just days before, an independent commission set up

by P re s i d e n t D m i t ry Medvedev said that the charges in the case of Russian lawyer Sergei Magnitsky were fabricated and that Interior Ministry and FSB security service officers were at least partly responsible for Mr Magnitsky’s death in Moscow’s Butyrka prison in 2009.

The lawyer was working for Hermitage Capital when he uncovered what he claimed was a $230m (£142m) tax refund scam set up by a group of corrupt police and tax officials. He was then charged with the same crime.

The 37-year-old married father of two died after being held for 11 months in pretrial detention. He is thought to have developed a severe pancreatic condition while in custody but was denied treatment despite repeated requests for medical care.

Prison officials first attributed his death to a “rupture in the abdominal membrane” Under pressure: Magnitsky death investigator Kirill Kabanov photoxpress

In a landmark investigation into the cell death of Moscow lawyer Sergei Magnitsky, a special Kremlin commission is likely to publicly implicate members of the Interior Ministry and FSB.

and later to a heart attack.

The findings of the presidential commission are in a preliminary report leaked to the Vedomosti newspaper and then confirmed by commission members.

“When Sergei Magnitsky testified against the police officers, the same officers put him in pretrial detention, tortured and killed him,” William Browder, chief executive of Hermitage Capital, said in a telephone interview from London.

The lawyer’s death became an international cause célèbre, and President Medvedev has staked much on investigating the case.

Kirill Kabanov, head of the National Anti-corruption Committee, is working on a separate part of the report.

He said that pressure has been relentless.

“There are several officials well known in politics who have stated openly that they don’t give a damn about our

investigation,”said Mr Kabanov. “This is wild, brutish arrogance. They aren’t puppets; they are players. And the [security service] isn’t prepared to surrender its employees, partly because they know a lot and could tell people. In addition, there is huge money at stake.”

Prison officials sacked The final report is set to come out in June. Irina Dudukina, representative for the Investigative Committee of the Ministry of Internal Affairs, said: “We cannot comment on the findings until we see the official conclusion of the [presidential] commission.”

Officials from the Butyrka jail were dismissed. But there have been no arrests or direct police investigation of officials who are accused of corruption.

Hermitage Capital was once one of the most enthusiastic Kremlin cheerleaders. Since Mr Browder was refused

entry to Russia in 2005, it has become a strident critic.

Hermitage Capital has spent an enormous amount of time and money on its own investigation of the officials involved in the alleged tax fraud. A series of videos have been released, some documenting lavish purchases made by the officials.

The most recent video made by the company accused a tax official who approved the tax refund of wiring millions into a Swiss bank account opened in the name of her husband.

The video also chronicles the purchases of luxury property in Dubai and Montenegro valued at more than $20m, although the official and her husband have an annual salary of only $38,000. The Swiss authorities froze the account after complaints by Hermitage.

At the end of the recent hearing, the court supported the investigator, Lt Col Oleg

Silchenko (who was in charge of the Magnitsky case) and sanctioned the arrest of Mr Cherkasov.

The investigator refused to comment after the hearing, but he did say: “Who knows where I will be soon?”. This is a fairly common remark in a country where people are not used to planning too far in the future. But it is a question which has special resonance and poignancy in this case.

“After this report [was leaked], we started to be pressured by security officials,” said the presidential adviser Valery Borschev.“They called me and asked why we are attacking Silchenko, and I answered that we were simply laying out the facts. We are striving for real punishment for those who are guilty, and we have only touched the tip of the iceberg at this point. Important figures stand behind the investigators and tax officials.

We hope to get to them.”

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ss itar-ta

End of a lifestyle?

Russia Now journeys to the wilds of northern Siberia where communities of reindeer herders are teetering on the brink of extinction.

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Politics & Society

03

Culture Vibrant hubs of creativity spring up in Moscow’s run-down districts despite lack of state aid and chaotic Soviet legacy

Art factory boom transforms capital Veronika Dorman

special to russia now

If you leave Moscow’s Kurskaya Metro station, walk across the busy square, step over stray dogs and pass dilapidated kiosks selling cheap gadgets, you will be surprised to find a remarkable artistic oasis. Winzavod, a contemporary art centre in the city’s East Side, was born in the wake of the 2005 and 2009 Moscow Biennales of Contemporary Art and inspired by the Western model of transforming run-down factories in bleak urban areas into cultural centres.

But unlike their British and German counterparts, sites like Winzavod did not spring up as a result of post-industrial redevelopment. In Western Europe, that trend was a reaction to the decline of traditional industries, the need to rehabilitate urban areas, and the growing role of intellectual and creative production in economies.

Elena Zelentsova, director of the Creative Industries Agency in Moscow, says that despite the success of ventures like Winzavod, the Western model doesn’t apply in Russia.“It isn’t fertile ground for the growth of a cultural economy and a creative industry in the Western sense, not economically, nor socially, nor, most of all, mentally.”

The country suffers from its Soviet past and the difficult transition that followed.

When the Soviet Union fell, some cultural institutions

6

WINZAVOD Founded in 2007 in a disused brewery by Sofia Trotsenko, this contemporary art hub is dedicated to all the visual arts, showcasing them in halls, private galleries and boutiques.

GARAGE Set up by Dasha Zhukova in 2008, this contemporary culture centre boasts one of Moscow’s largest exhibition spaces and most fashionable patrons.

Opening day of the exhibition ‘Process’ at the Winzavod art centre in March 2010

showcases student work and attracts the interest of gallery owners, art experts and the media. Gathering a variety of creative profession-

The aim is to move Russia from cultural provincialism into the international art and creative scene als under the same roof, the aim of these clusters of creativity is to move Russia out of its perceived“cultural provincialism” and integrate it

into the international art and creative scene.

Last year, the Strelka Institute for Media, Architecture and Design and its director Ilya Oskolkov-Tsentsiper launched a higher education programme aimed at young professionals.“Before we can speak of an industry, it is necessary to train a solid layer of high-level professionals,” he says. “In the area of design and architecture, the Russian education system doesn’t allow for thinking globally, solving problems at a regional level or even in a city. That’s why we bring in world-renowned specialists

such as Rem Koolhaas or Reinier De Graaf.”

But training capable and modern creative talents is not enough. Senior figures in the art world believe that Russian society must change in order to create a demand for these new products.

Alina Saprykina, creative director of the Artplay design centre, says: “We must educate opinions and habits.

Contemporary art does not happen on its own. People are conservative.”Founded in 2003, Artplay occupies more than 800,000 sq ft in the former manometer factory and houses heavyweight de-

Family Traditional unit at risk as marriages fail and fewer couples want children

How cost, social stigma and working life are shrinking the family Numbers of Russian couples opting to remain childless are growing, while those with several children face entrenched discrimination.

THE numbers

4.9

Elena novikova russia now

Number of divorces in Russia per 1,000 people in 2009.

There are a million marriages a year and 700,000 divorces.

48pc

julia vishnevets

In the 1968 Soviet film Let’s Live until Monday, a schoolgirl named Nadya says in class that her idea of happiness is to become a mother of four.

This bold statement infuriates her teacher, who stands firm in her Soviet ideology of family “restraint”.

The film is now more than 40 years old; the country has transformed radically and people’s lifestyles with it.Yet mothers with several children still face a wall of public indifference and even hostility, despite plummeting demographics and government incentive programmes to produce more children.

Maria Ipatova, 25, has two sons: Oleg is almost two and Trofim is six months. She and her husband are thinking of having a third child.“My eldest son was born very weak; the doctors said he would not survive. Perhaps that was the moment we realised we would have many children. Having one child makes him an egoist; two children are rivals; but three are a family,”Ms Ipatova said.

But there are fewer families like hers every year. Only 3pc have more than two children and 48pc have none.

Mrs Vorontsova displays her unfashionably large brood

Victoria Yakovleva, 34, has been married for five years.

“It’s not that I’m a follower of the child-free movement.

On the contrary, I feel that children are pure joy and embody the entire meaning of life. But I just don’t have time for them,” she said.

Meanwhile, having several offspring is fraught with social trials, says Anna Kuleshova, 30, a Moscow mother of three daughters: “There are a good many families with lots of children in our neighbourhood of Chertanovo, and we always support each other. But when I venture outside our circle I hear torrents of abuse. People say we have no conscience,

creative clusters IN MOSCOW

ARTPLAY The first of its kind, founded in 2003 and led by Sergei Desyatov. Housed in a former factory since 2009, the centre has professionals in architecture, design, urban planning and interior design.

that we jump queues, that we are lazy and have kids in order not to have to work.”Ms Kuleshova points out that she has a doctorate in social sciences and went back to work when her youngest was three months.

“My husband and I bought an apartment in Moscow on credit,”MsYakovleva said.“We have a mortgage to pay and we work a lot. I don’t want to have a child who is raised by a nanny. I want to raise him myself, but, unfortunately, it’s very tough to be a mum in our society.”

There are no data on divorces in families with many children, but statistics show that

of married couples have no children; 34pc have one child; 15pc have two and only 3pc have three or more.

while about one million marriages are registered in Russia every year, 700,000 couples divorce.

Psychologists and sociologists have long been talking about a“crisis”and even the“extinction” of the institution of the family. It is not only about divorce statistics. More couples live together instead of marrying, and prefer this to a registered marriage, something unthinkable in Soviet times.

A recent trend among mothers is“to have a child for oneself”.More than 30pc of Russian children are born out of wedlock, the latest figures show. Add to this a sharp drop in births and the picture is

startling.The average number of children per family in Russia is 1.59, compared with 1.9 in 1990.

Russia is still a world leader in the number of abortions, with 60pc of pregnancies terminated.There are many reasons for the decline in the birth rate. According to the state polling organisation VCIOM, about 31pc of Russians do not want to have children because of financial difficulties and insufficient state support for families. Combining a career with childbirth and raising children is another problem. One in every five young women between 24 and 35 chooses not to marry or give birth for the sake of her career. This is aggravated by a shortage of nurseries and the high rates charged by nannies.

The state is trying to encourage young families to have more children, mainly by offering so-called“mother’s capital”, a certificate for 365,000 roubles (£8,000) issued at the birth of the second and third child. While this has led to a 22pc rise in the birth rate since 2006, it is still not enough to fix the demographic crisis.

Desperate measures have been proposed in the past decade.

Last year, members of the ruling United Russia party suggested reintroducing the “childless tax”that existed in the Soviet Union between 1941 and 1992. Childless men between 20 and 50 and childless married women between 20 and 45 were supposed to give up 6pc of their salary until they had (or adopted) a child.

Deputies in parliament even wanted to fine childless parents. A public outcry over the initiative scuppered it in favour of finding more humane methods of combating childlessness. But the solution to the demographic crisis has yet to be found. see article, PAGE 7

Mr Oskolkov-Tsentsiper.“The authorities understand that we must evolve and modernise, but they don’t know how to go about it, and that’s where we come in.”

As evidence of this, Strelka’s think-tank was chosen by the mayor of Moscow to oversee proposals for the redevelopment of Gorky Park, in the heart of the capital.

It will take time for Russia to learn to accept and encourage creative industries.

But as Elena Zelentsova points out, the demand for creative culture usually outpaces supply, even in times of economic hardship.

sign, architecture and urban planning agencies.

Each creative cluster, from Garage to Winzavod, embraces interactive and educational projects with the aim of becoming a centre of creativity and an open place for teaching and learning.

Even in the face of obstacles such as the 2008 economic crisis, Moscow’s art centres are proud of the progress they have made.

“We see a difference from two years ago, when we thought we were alone in needing this adventure, feeling neither society nor the authorities were particularly interested,”says

PROEKT FABRIKA Shares a site with a paper factory and has workshops and organisations representing architecture, design, cinema, music, literature, marketing, dance and theatre.

STRELKA Occupying part of the giant Red October chocolate factory, this media, architecture and design institute houses photography and art galleries, restaurants and editorial offices for magazines and online television channels.

FLAKON DESIGN FACTORY In 2009, this glass factory was transformed into a space for business and creativity, with event areas, offices, recording studios and marketing and design agencies.

Migrant waves flood the capital continued from page 1

than in the rest of the country, Mr Pachenkov added.

According to the Federal State Statistics Service, the average monthly salary in Moscow stood at 38,200 roubles (£832) last year, almost double the nationwide figure of 20,300 roubles.

The city now has more than twice as many inhabitants as St Petersburg, the country’s second-largest city with 4.7 million, and almost eight times more than Novosibirsk, which ranks third with 1.4 million. The population growth in Moscow was the biggest among all 83 regions of the country in both relative and absolute figures, said Irina Sherbakova, who heads the demography department at Moscow city statistics department.

The growth is not due to higher birth rates, which have been lower than death rates for years – although births finally outnumbered deaths by 4,000 last year.

“This is something that has not occurred since the Nineties,” Ms Sherbakova said.

In 2010 alone, 126,000 newcomers were officially registered in the city. But in the case of Moscow, there are questions about the reliability of the October census, since many people appear not to have been polled. Respondents were not asked about their legal status during the count, and many illegal immigrants probably refused to take part, said Gavkhar Dzhurayeva, head of the Migration and Law Centre.

During a recent visit to a Moscow street, two female

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were transferred into private hands, sometimes to owners who did not have the means or the desire to restore and maintain them.

Many theatres, museums, libraries and publishing houses did not survive, and professionals in the cultural sector faced a harsh leap from state employment to fierce market competition. In fact, as Ms Zelentsova points out, Russia’s cultural sector is trapped in a system filled with institutions that are unproductive and costly, while the sector suffers from inadequate financing.

And the state has yet to adopt an economic and cultural policy that would allow the term“creative industry”to be used in Russia. Such a policy would nurture small and mid-sized businesses that produce creative goods and services but are still finding it difficult to grow.

All these problems, however, have not prevented the emergence of Russia’s hybrid, multifunctional and resolutely modern cultural and artistic centres. In Moscow, Winzavod, Artplay, Garage, Proekt Fabrika and Flakon have successfully set up in former factories, taking over many thousands of square feet of hangars and warehouses in order to become, in the space of a few years, the beating heart of the city’s cultural life and a blossoming creative industry.

Huge exhibition spaces play host equally well to prestigious retrospectives (Ilya Kabakov in 2008 at Winzavod) and commercial shows for emerging artists. They include the annual Student Artfair at Artplay, which

itar-tass

Moscow’s former industrial sites are blossoming into creative centres of art and design with the potential to compete internationally.

An Uzbek worker – one of many Moscow migrants

migrants from Uzbekistan and Kyrgyzstan said they had not even heard of the census and were not polled last October. Both are legal migrants working as cleaners in an office building.

There are, of course, no hard data on illegal immigrants in Moscow, but they are believed to number several mil-

Moscow is the place to seek a partner: it boasts two million singles, split evenly between the sexes lion. Natalya Zubarevich, a social policy expert with Moscow State University, estimated their number at two to three million, while Ms Dzhurayeva said there might be as many as five million.

On top of that, about 1.5 million commuters pour into the city daily from the Moscow region, with an unknown but

probably high percentage staying in the city for at least a couple days a week.

As well as the need for development in the regions to stem the flow of migrants to the capital, the authorities must also work to improve Moscow’s infrastructure, to prevent the current suburbs from becoming slums and ghettos devoid of social life, said Mr Pachenkov of the Centre for Independent Scientific Research.

“We must prevent neighbourhoods from existing only for sleep or consumption, ensuring that they produce something – services, culture, social services – to make a living,” he said.

As well as its sheer numbers, Moscow is also noted for its gender and marital discrepancies. There were more married men than women in Moscow in 2010, the exact reverse of the situation around eight years ago, according to census data. This might be because many male migrants are married, but their wives and families reside in their home countries, experts say.

On the whole, female Muscovites outnumbered the males by 800,000 last year, up from 470,000 in 2002.This means that men only make up 46.3pc of Moscow’s population. Regardless of your gender, it happens that the Russian capital is not a bad place to search for a partner: census data show that the capital boasts two million singles, split evenly between the sexes.

A longer version of this article was originally published in The Moscow Times.

04

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section sponsored by rossiyskaya gazeta, russia Distributed with THE daily telegraph TUeSDAY_MAY 31_2011

Agriculture American cattle herders bring some Montana magic – and livestock – to the Wild East The US cowboys said cattle from Montana found southern Russia’s climate surprisingly hospitable, even in winter

A bold new venture brings Montana ranchmen to Russia, along with generations of cattle herding skills and a huge appetite for beef...

Peter Van Dyk

special to russia now

Half a dozen cowboys sit around a table in a newly built bunkhouse, waiting for lunch. They spent the morning in their usual routine – tending to a herd of 1,500 cattle – but the arriving food is a stark reminder they are not at home in Montana.

“We eat a lot of beef,” says Darrell Stevenson, the US rancher who teamed up with two Russians to set up the Stevenson-Sputnik Ranch in theVoronezh Region of southern Russia.“One of the most difficult transitions for these cowboys has been the change in diet.”

“Challenging is the best

word,” Dan Conn says, halfway through his two-month stay. “Everything has been different – from the food to the culture to the facilities.”

The land, about a two-hour drive south of the city of Voronezh, is also different.

“Some of the most fertile soil in the world is in this region,” Mr Stevenson says. “We’re talking about organic matter in excess of 12pc. That’s unheard of where I’m from.

We fight rocks; these people fight mud.”

Now, the quality of the cows matches the quality of the land. The rancher says his partners’ ambitions included importing“one of the top sets of Angus cattle in the world,” with full pedigrees going back several generations.

The imported cattle cost roughly $7m (£4.3m), and total investment in the ranch has been about $19m

(£11.8m), with around $15m (£9.3m) coming from a statesubsidised loan from Sberbank, Russia’s national savings bank. “What Russia demands is live cattle,” Mr Stevenson says.“This will be the nucleus for establishing a commercial beef cow herd in this region of Russia, and hopefully to extend further.”

Russia imports 40,000-50,000 live cattle per year, according to US statistics. The government wants to reduce that figure, and a Food Security Doctrine signed by President Dmitry Medvedev a year ago demands that Russia must produce 85pc of its meat by 2020.

Sergei Goncharov, one of the Russian partners in the venture, says cutting imports is so important to the government that it subsidises the project for one dollar to every

govvrn.ru

Home from home on the range three dollars the partners put into the project. They believe the prices the cattle will command mean the project will make money quickly.“Cattle like we have cost from $3,000 to $4,000 for cows, and for bulls, $6,000 to $8,000,”says Mr Goncharov – in part because the animals have to be flown or shipped in from Europe, Australia or the Americas.“At those prices, we can comfortably pay the bank and even make a profit [after selling the cattle].”

His company, Sputnik, which is based in the Leningrad region around St Petersburg, is already involved in cattle embryo transfer and in vitro fertilisation. The company, it turned out, needed some management expertise as well. “They wanted the best of technology and resources,” Mr Stevenson says.“But what I felt they needed was man-

agement, maybe more than the live cattle.

“The short-term goal is for full American support for two years, with the anticipation that we can then hand this over to the Russians.”

Some of the farmhands have never worked with cattle before. But they aren’t letting that hold them back. After just a month on the job, a Russian named Leonid is already calling himself a cowboy. “It’s the first time that I’ve done this work,” he says. “I’ve only done it for a month, but it’s not bad work; it’s a good team.”

The head vet, Alexander Naritsyn, admits that the task of taking care of 1,500 cattle on the half-finished ranch would have been impossible without the imported help. After all, at the start of December there was almost nothing there. Now, more than 900

Russia invests in hi-tech health http://rbth.ru/12835

calves have been born on the ranch. “A big ‘Thank you’ is due to the Americans, who brought us their horsemanship and lasso skills,”he says.

“If it wasn’t for them, we would be chasing one cow for half a day, whereas they can get them back in just 10 minutes.”

Mr Stevenson recalls that the cargo handlers at Sheremetyevo airport could have done with that kind of expertise when one shipment of cattle was flown in from Chicago.

A cow escaped when the animals were being transferred from the 747 to the truck for the drive to the ranch. The airport was closed for almost an hour until the runaway cow was caught and put on a lorry.

Some of the Stevenson-Sputnik ranchers may have started with little more knowledge of cattle herding than the staff at Sheremetyevo, but Mr Stevenson says that they were keen to learn.

“There were two or three of them on horses within minutes,” he adds. “I’m not sure if any had actually ridden a horse before.”

Teaching their Russian colleagues how to take care of the cattle is the hardest part of the job for the American cowboys. “All of us here are generational cattlemen, and to teach somebody who’s relatively new, who’s never been around more than a milk cow or a few pigs or sheep, is a big challenge,” said the rancher.

He added, with a final philosophical flick of the lasso: “This has become about more than cowboys and cattle; this has become about two countries, two cultures. It’s an opportunity to educate, to stimulate a local economy, to expand a cow herd in order to feed a region, a nation, a part of the world that has the natural resources, that is completely capable of it.”

The future starts in Skolkovo Continued from page 1

participation. The state has provided two thirds of the amount at most, says Mr Naumov, emphasising that funds borrowed to meet the projected $1bn annual development price tag will be repaid in eight years at the most.

A driving premise behind Skolkovo is the need to marry innovation with education.

The first batch of 40 young businesspeople graduated last year from the Moscow School of Management’s MBA course.

With a focus on emerging markets, the class, which included students from India, Brazil and Canada, spent months honing practical skills on work placements that took them as far afield as Chinese factory towns. The Skolkovo Technical University is expected to start post-graduate admissions by 2014.

There are naturally some doubts and contradictions. surrounding the project. Even if Russian start-ups do gravitate towards Innograd and international scientists follow, investors cannot be taken for granted. Skolkovo’s current image is still too vague, critics point out.

And, given that the odds are often stacked against bold visions at their time of inception, there is also a healthy, pragmatic concern from within. “Since 1990 there have been 980 attempts to create such centres of innovation, only 17 of which made it, and only three of these really measure up,” said Grigory Revzin, t h e respected

architecture specialist and town planning board member.“Statistically, Skolkovo’s likelihood of going under is high. But nor is there any need to kill it off artificially.”

Just as SiliconValley entered the public consciousness as an embodiment of pure innovative brilliance, so Skolkovo is looking to tap the imagination as it strives to become the brand of which the president speaks.

In one inventive, if slightly whimsical, step in the process, the foundation has hired

Linking business and research is Russia’s real chance of a technological leap forward the Russian-Kazakh director Timur Bekmambetov (Night Watch, 2004) to produce an animated television series based on stories by the Soviet science-fiction writer Kir Bulychev. His protagonist, Alisa Seleznyova, will live in modern Skolkovo and will make scientific discoveries together with her parents, Mr Naumov said.

However, back in the real world, the former Intel chief executive and Skolkovo participant Craig Barrett insists that “linking business and research is Russia’s real chance of a technological leap forward.

“It’s necessary to be confident in the righteousness of one’s cause, even if stable guarantees are lacking,” he said.

Energy British oil company still keen to break into Arctic despite Rosneft pulling out of $16bn share swap

BP’s Arctic ambitions put on ice as deal collapses BP lost another opportunity to gain access to Russia’s oil market after Rosneft pulled out of a share-swap deal. The British company’s partners in another venture opposed the deal in the courts. nikita dulnev russia now

reuters/vostock-photo

When Russia’s state-owned oil company Rosneft last week announced it was pulling out of its much trumpeted $16bn (£10bn) share swap with BP, this left many people with egg on their faces.

BP, under CEO Robert Dudley had counted on gaining coveted access to Russian Arctic oil reserves to offset damage done by last year’s disaster in the Gulf of Mexico and to keep his company in the premier league of oil majors. Mr Dudley knew about the problems that could arise with his Russian partners on TNK-BP, but he had counted on the Kremlin in this deal, said Valery Nes-

terov, an analyst at Troika Dialog.

Crucially though, for all those who in local parlance were “dividing the skin of an unslain bear”, there was no outrageous string-pulling to usher the share swap through.

In fact, the Russian government made it clear that it did not intend to act as referee or lobby anyone’s interests.

In a recent interview with Russia Now, the presidential aide Arkady Dvorkovich stressed that this conflict with shareholders of TNKBP was very much a corporate dispute that would have to be resolved by strictly legal means.

Ultimately, the deal fell through when international courts upheld the objection

by Russian partners in BP’s separate TNK-BP joint venture that the British giant was in breach of that partnership in chasing the opportunity with Rosneft.

BP’s partners in TNK-BP –

Where to now, BP’s CEO Robert Dudley might wonder?

four Russian billionaires represented by the Alfa-AccessRenova (AAR) – in January turned to the British courts to successfully block the Rosneft deal. This resulted in its collapse on May 16, despite BP’s reported last-ditch $32bn offer (including $9bn

in BP stock) to buy out AAR. So Rosneft decided to call it a day with BP and seek other partners to explore the three Arctic zones that were to be jointly worked. Observers say the writing was on the wall when the Stockholm court of arbitration last month also

Business in brief Russia to lose emerging market status Russia is no longer an emerging market, according to the European Union.

The increasingly cashstrapped EU now wants to drop the preferential trade terms which were implemented in the Nineties to support Russia’s transformation into a free-market economy.

The EU has announced plans to exclude middleincome countries such as

Russia and Brazil from special rates, under the EU’s general system of preferences (GSP). The decision to cut benefits is viewed as the most significant revamp of the trade system since the preferential scheme was first introduced.

“Global economic balances have shifted tremendously,” Karel De Gucht, the EU trade commissioner, told a press conference. “If we grant tariff preferences in this competitive environment, those countries most in need must reap the most benefits.”

The EU accounted for

49.5pc of Russia’s trade turnover in 2010 after the total volume of business increased more than fourfold that year.

Domodedovo airport plans to launch IPO DME Ltd, which operates Domodedovo airport in Moscow, has announced plans to launch an IPO, confirming rumours that have circulat ed for s ever al months.

If the listing goes ahead,

DME will be the second Russian company in recent weeks (after Yandex) to test investors’ appetite for stocks in attractive sectors, but with specific risk attached.

The holding company for Russia’s biggest airport announced plans to issue GDRs in London, although it stopped short of offering any details.

RIA Novosti news agency reported in April that DME planned to sell up to 25pc of its stock for around $1bn.

Pre-marketing for the Dom o d e d o v o o ff e r i n g i s expected to start with a roadshow this week.

blocked the share swap. It was clear after that ruling that the deal would not go through because of the TNKBP deal, said Dmitry Lyutyagin, deputy head of analysis at Alorinvest: “Rosneft was interested in a share swap with BP more than in the Arctic project and a third party is not welcomed in such a case”.

So where does that leave all the sides now?

Talks are still reportedly going on in the background between all sides, but there are still some jokers in the pack, such as the temptation for Rosneft to round on its erstwhile partner in BP and sue for compensation.

“The Stockholm arbitration court concurred that BP had behaved unscrupulously by trying to co-operate with Rosneft while going round TNK- BP,”said Moscow lawyer Artur Airapetov.“As a result, Rosneft incurred losses, at the minimum because of

GLOBAL RUSSIA BUSINESS CALENDAR ATOMEXPO 2011 International Forum June 6-8, Manezh Central Exhibition Hall, Moscow

ATOMEXPO 2011 is the first major international forum for the nuclear industry to be held after the events in Japan. Sessions will address “nuclear renaissance”, worldwide prospects and safety. › www.atomexpo.com

the project being frozen and the share swap being prohibited by a court of law. Rosneft has legal grounds to demand compensation.”

On the other hand, Rosneft still needs both the investment and technology to undertake exploration in the Arctic – something it doesn’t have and BP does.

For many people on the Russian side, it was also a matter of principle to exclude BP from slipping in through the side door.

“For Russian shareholders in this deal, it was of fundamental importance to avert a precedent of BP’s independent entry (or entry in partnership with a competitor) into Russian oil-extraction projects,” said Mr Nesterov.

But TNK-BP remains keen to break into the Arctic by some compromise route, as the joint venture has limited growth prospects due to the mainly onshore nature of its operations to date.

For BP, the Arctic shelf project remains alluring, said Mr Lyutyagin. The British company specialises in shelf deposits, and has extensive experience working in the cold waters of the Norwe-

gian and North Seas. However, it has never done any shelf drilling to speak of on Russian territory. For BP, a joint project with Rosneft is still well worth pursuing, he said. But if TNK-BP also takes part in exploiting the region, BP may be left with

only a small share of the project, which will hardly suit this global – if struggling – giant.

The market instantaneously reacted to the decision of Rosneft. The day after the deadline on the deal expired (May 17) BP shares gained almost 4 pc on LSE and continued this trend till the end of the week. Investors feared that the British company would buy a stake in TNKBP and then make a share swap with Rosneft and felt free to “buy” when understood that this won’t happen.

The shares of TNK-BP on the Russian market made a rush of 5pc on Monday – the day before the deadline – on the same speculations about the AAR stake in TNK. But the next day all the gain was lost.

Rosneft stock lost almost 2pc in the first minutes of trading on the Russian exchange Micex on May 17, but by the end of the day had narrowed the loss to 1pc.

US-Russia Business Council: THIRD Annual Russia Legal Forum

RBCC Business Forum: Russia – a Wealth of Opportunities

THE RUSSIA AND CIS CAPITAL MARKETS INVESTOR FORUM

June 9, 1 Great George St, Westminster, London

june 22-23, RAC club & institute of directors, pall mall, London

JUNE 23, GRAND CONNAUGHT ROOMS, LONDON,

The USRBC’s Annual Russia Legal Forum will cover issues related to foreign investment in Russia, the state of the Russian judiciary, minority shareholder rights and anti-corruption developments. It will feature a keynote address by Richard Alderman, director of the UK Serious Fraud Office and the man responsible for the enforcement of the UK Bribery Act, due to become law on July 1.

The forum is the annual flagship event run by the Russo-British Chamber of Commerce (RBCC) in the United Kingdom. The forum events include: • Gala reception to welcome delegates on the evening of June 22, followed by a dinner for sponsors and VIP guests.

• Conference on the morning of June 23, focusing on key issues affecting the Russian and UK economies.

• Networking lunch

The forum is a unique opportunity for Russian and CIS issuers to meet international institutional investors. Topics include the development of a local currency market, and the potential effects of the 2012 presidential election.

› www.usrbc.org/activities/calendar/ event/2078

TNK-BP remains keen to break into the Arctic by some compromise route, as the joint venture has limited growth prospects due to the onshore nature of its operations to date

›› www.rbcc.com

›› › www.euromoneyconferences. com/russiacis

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Equities Russia’s answer to Google scores a huge hit with $1.3bn IPO despite warning investors of dangers

Yandex: a risk worth taking Takeover threats and security service encroachment failed to deter foreign investors from rushing for a chunk of Russia’s vast internet market.

terview that the state had forced most ISPs to exclude opposition websites from their services.

Things took an ugly turn at the start of May when Yandex announced that the FSB had forced it to hand over user details from Yandex.Dengi, its money transfer system. Specifically, the FSB asked for information on financial contributors to the anti-corruption activist Alexei Navalny. Just over a week later, Russia’s Investigative Committee, the country’s top investigative body, opened an investigation into Mr Navalny, claiming he used his position as adviser to a regional governor to force a timber company into an unfavourable deal.

Still, investors shrugged off the risks. One fund manager, who asked for anonymity, said, ahead of the listing:“In Russia, risk is always there, so most are used to it.

As long as the pricing and strategy are right, then appetite should remain.”

Hungry for exposure to Russia’s booming internet sector, investors have been waiting for Yandex to offer up its equity for close to three years. However, they still expect a discount for taking on the risk of working in Russia, as several companies have found this year when forced to cancel IPOs on international markets.

“The political risk for Yandex is already priced in via the more general Russian discount, which we factor at 37pc to the [emerging market] aggregate,” said Otkritie Financial Company strategist Tom Mundy. “Look at

Tim Gosling

Telling investors just how dangerous it is to work in your country might seem a funny way of selling your shares, but that is what Russia’s leading search engine Yandex did ahead of its widely anticipated IPO. It didn’t seem to hurt, though, as investors this month illustrated a healthy appetite for Russian stocks offering high growth potential and decent pricing.

Yandex closed its listing on New York’s Nasdaq on May 24, having delayed the sale by a day to raise the price and reopen the bid book, after it was reported that the offer was oversubscribed by as much as 10 times.

Moving from an initial pricing range of $20-22 (£12.30£13.60) per share, “Russia’s Google” ended up selling 52 million shares at $25 each, to raise $1.3bn.

The last-minute price rise was largely driven by an accelerating wave of global sentiment for internet sector stocks. Demand for exposure rose dramatically through May on the back of hugely successful IPOs by the Chinese social media site Renren and US company LinkedIn, as well as Microsoft’s $8.5bn purchase of Skype early in the month.

However, appetite for Yandex was already rampant according to reports, with investors believing that

photoxpress

Business New Europe

Russia’s No 1 search engine came clean about investment risks, but was still oversubscribed

specific risks were already included in the price.

Announcing its IPO in early May,Yandex went out of its way in its 2,000-page prospectus to highlight political risks and the danger of a takeover bid from oligarchs close to the authorities.“High-profile businesses in Russia, such as ours, can be particularly vulnerable to politically motivated actions,”Yandex said in the prospectus.

“Other parties” may also perceiveYandex’s news service “as reflecting a political viewpoint or agenda, which could subject us to politically motivated actions”,the

document said.Yandex says it accounts for 64pc of all search traffic in Russia – compared with Google’s 22pc – and is the largest Russian-based internet company by revenue. That puts it at the top of a segment likely to develop swiftly as broadband is rolled out across the country and advertising spending grows on the back of accelerating economic recovery.

Even so, the price still offered a significant discount compared to Yandex’s peers in other emerging markets, because of the risk of investing in such a public and attractive company.

Under Russian law, all internet service providers have to allow the Federal Security Service (FSB), Russia’s main domestic intelligence agency, to attach a black box to their servers that can monitor email traffic. In April, the FSB raised the stakes, requesting bans on Skype and Gmail, claiming that they pose a serious security threat.

President Dmitry Medvedev, known for his web savvy, dismissed the request, but the discussion highlights the state’s uneasy relationship with the information highway. Opposition figure Boris Nemtsov claimed in an in-

the risk-free rates on Russian corporate debt versus sovereign – the spread between the two suggests strongly that the market is pricing ‘intangibles’ for Russian corporates.”

With those “intangibles” priced in, investors were left in no doubt that Yandex’s story is a compelling one. Alexander Vengranovich, a media and IT analyst also at Otkritie Financial, agreed.

“The investors we’ve been speaking with aren’t paying much attention to the political risk story. They’re more interested in the Yandex growth story,” he said.

The price rise was largely driven by an accelerating wave of global sentiment for internet stocks Yandex shares join Mail.ru – which in November recorded the only really impressive Russian IPO result in the past three years – as the sole names offering exposure to Russia’s internet sector segment, which is expected to show rapid and sustained growth.

Konstantin Chernyshev of Uralsib suggests that Yandex is an even better bet, however. “Unlike Mail.ru, Yandex offers a clear investment story,” he said. “Mail. ru benefited from being the first to offer exposure to the sector, and the backdoor it offered to Facebook shares.

It looks like it will lose both of those advantages in the near future.”

Banking The latest government acquisition is a prelude to further sell-offs, according to Kremlin insiders

VTB finally accounts for Bank of Moscow ben aris

business new europe

The state-owned VTB Bank, already the second biggest bank in Russia, has strengthened its hand with its takeover of Bank of Moscow, the country’s fifth largest commercial bank.

The Bank of Moscow was set up in the mid-Nineties as the pocket bank for Moscow’s city government. However, following the ousting ofYuri Luzhkov as Moscow mayor last September, the bank’s future was uncertain. In November, the Kremlin made a move: Alexei Kudrin, the deputy prime minister and finance minister, announced that VTB was interested in buying the bank.

VTB-24 (VTB’s retail operation) is already a leader in providing consumer credit and mortgages, and adding Bank of Moscow’s 500-plus

branches would putVTB just behind Sberbank, which has the lion’s share of Russia’s retail banking business.

But the Bank of Moscow deal did not go smoothly, with the bank’s management holding back on a pledge to sell their 20.3pc to VTB. Bank of Moscow president Andrei Boro-

State banks have been aggressively building their business following the 2008 crisis din then found himself implicated in a $440m (£270m) corruption investigation into sketchy loans made to a property company controlled by Mr Luzhkov’s wife, Yelena Baturina. When he was called in for questioning in April, Mr Borodin fled to London and checked into a hospital for treatment. A week later, he agreed to sell his stake at what analysts say was below market rates.

“It is clear what actually

happened,” said one source.

“The old management were not happy with being pushed out of the bank and were holding out for a high price for their stake – a price VTB was not prepared to pay. The management tried to play hardball, but bit off more than they could chew.”

The VTB acquisition follows Sberbank’s takeover of Russia’s leading investment bank Troika Dialog in February.

Both state banks have become noticeably more aggressive in building their business following the 2008 crisis, while several foreign banks have already pulled out of Russia because of the growing competition.The latest was HSBC, which announced on April 26 that it was abandoning a two-year drive to build up a retail operation in Russia.

The trend has caused concern in the sector. Oleg Vyugin, CEO of the private MDM Bank and former head of the Federal Financial Markets Service, believes the expansion of the state share is

hampering the growth of private banks. One example is how they benefit from access to considerably cheaper credit than private banks, he was cited as saying in a report this month by the Bank of Finland.

But some investors are happy to see both banks growing in size and power. “On the one hand, the state is making it more difficult for private banks to operate; but on the other we are starting to see the beginning of badly needed consolidation in the banking sector,”said Roland Nash, CIO of Verno Capital.

“The taking over of banks that are clearly not run on commercial lines but for the benefit of their owners is, when all is said and done, a good thing.”

Meanwhile, Kremlin insiders say that the increase in the state’s share of the sector is only temporary and that the state leadership is powerless to prevent it.

“Technically, this deal has increased the state’s share in the banking sector, but the

ben aris

business new europe

The US online banker PayPal is poised to stake its claim in the virtual Klondike that is Russia’s e-commerce sector. Little wonder, given that online sales rose 40pc in 2010, Sergei Plugotarenko, the director of Russian Association of Electronic Communications (RAEC), told Prime-Tass.Volumes are expected to rise another 17pc this year to 245bn roubles (£5.4bn).

However, online shopping is growing much more slowly owing to difficulties in paying for goods.“The low penetration of credit cards means that it is hard to get cash out of customers even if they want to pay for something,” said Simon Dunlop, CEO of Dream Industries, which owns Russia’s biggest online bookstore, Bookmate.ru.

“There are some Russian companies that organise online payments, such as Yandex.Dengi and WebMoney, but you have to charge your account with a bank transfer first. The only way to get instant sales is to use SMS, and that is very expensive.”

Many sites accept payment

via mobile phone: the customer sends an SMS with the order and a charge is added to the phone bill. However, phone companies charge up to 40pc of the purchase price as a fee. Credit cards draw-

Just under a quarter of all Russian internet users made online purchases in 2010, up from 17pc in 2009 ing on foreign banks rarely work on Russian sites. Still, just under a quarter of all Russian internet users made online purchases in 2010, up from 17pc in 2009, Mr Plugo-

Ben Aris

Special to Russia now

W

ith Greek sovereign default fears sweeping the market once again, it is time foreign investors woke up to the realities of emerging market fundamentals and gave them real credit for the prudent economic management that is so palpably missing in the West.

There is a kind of surreal “freaky Friday” scenario playing out in emerging markets. Here, corrupt politicians with a history of stealing from the state purse are giving way to competent central bankers who enact sensible fiscal policies. Meanwhile, in the West, those dour, charcoal-suited central bankers are morphing into mellifluous politicians who care more about quarterly returns in equity portfolios than the long-term financial health of their countries.

Politicians are charged with managing the economy, but always have an eye on the ballot box. Economies don’t work in four- or five-year election cycles; they operate on a time frame of 10 to 20 years.This disconnect is why central banks were made independent; after all, you can’t fight inflation with sound bites.

Instead of cutting costs, Western bankers have slashed interest rates. Instead of asking people to work more for less, the fix is to offer more, almost free, credit so that people can gorge themselves on more of the debt that got us into this mess in the first place. The hope is that people will borrow, buy more, drive economic growth and so spark a recovery. It’s a policy based on fantasy and it’s not working.

Greece is having problems because its politicians were not brave enough to push through reforms that would

Stephen Dalziel

Russo-british chamber of commerce

Andrei Kostin, CEO of VTB group, caught in a jocular mood at the World Economic Forum in Davos earlier this year

plan is to sell the state’s shares [inVTB and Sberbank] and increase competition in the sector,”Arkady Dvorkovich, aide to President Dmitry Medvedev, told Russia Now. “The other side of the coin is that the state can’t restrict Sberbank’s place in the market, for how can we say to the minority shareholders there is a cap on the bank’s ability to compete?”

And the state has been busily selling shares in both banks. VTB group raised

$8bn with an IPO in May 2007 by selling a 22.5pc stake, and the bank sold another 10pc in February of this year, raising a further $3bn.

The state has said that it wants to sell another 10pc as soon as possible.

Likewise, the government owns 60.25pc of Sberbank, yet shortly after the purchase of Troika Dialog, Russia’s National Banking Council signed off on a decision to sell another 7.58pc to the public, probably later this year.

PayPal ready to seek e-commerce gold Russia has one of the fastest-growing internet markets in the world, with the number of users rising rapidly in the past three years. The number connected to the internet has doubled about every 18 months and reached 57 million by the end of 2010, Mr Plugotarenko said.

Broadband connections are growing by about 3pc a month and penetration reached 29.7pc in December, a study by AC&M Consulting found. Most of the additions are in Russia’s remote regions, where residents typically see the internet as educational and a way of showing their children the rest of the world.

Emerging markets give West a lesson in prudence have benefited the country but cost them their jobs. And the United States has just received a “negative” outlook from Standard & Poor’s for the first time.The Four Horsemen of the Apocalypse are assembling.

To see a different reaction to economic troubles, take a look at Russia. The federal budget is running a deficit for the first time in years, so Alexei Kudrin, the finance minister, froze spending. After inflation began rising rapidly, the Central Bank of Russia raised interest rates – even though economic growth remains weak.

And, despite a recovery in international reserves, Prime Minister Vladimir Putin has frozen tariff rises and restarted the privatisation programme that will raise $50bn (£31bn) over the next three years.

In emerging markets, corrupt and thieving politicians are giving way to competent central bankers All the emerging market countries are constantly having to convince the financial markets that they are running their economies in a sustainable way – although this is increasingly obvious – and they pay a premium on borrowing because they are young markets. Meanwhile, countries like the US and the UK get a discount because they are mature markets that paid their debts in the past. As shown by the plight of Greece, this policy of basing current policies on past behaviour is breaking down.

At some point prices will reconnect with reality, because this is what happens to all bubbles. Then, the short-termism of the central banks in the West and the increasing professionalism of those in emerging markets will become evident – and it is likely to result in a big mess for those on the wrong side of the divide.

ABC of business is still a foreign language

Internet American giant decides it can no longer ignore Russia’s virtual Klondike as online sales soar

PayPal is breaking ranks with other US companies by entering Russia’s booming online payments market, despite fears of fraud.

MOSCOW BLOG

LONDON BLOG

getty images/fotobank

With the purchase of the Moscow city government’s former bank, state domination of the banking sector moves on apace.

05

tarenko added. Total revenue from online advertising was up 40pc last year to 26.7bn roubles.

Meanwhile, PayPal made “a strategic decision” to enter the Russian e-payments market, sources told the Russian business daily RBC in April.

It is now only waiting for laws on a national payment system to be approved before opening its office.

PayPal’s decision marks an about-face in attitude for American online companies.

In 1998, CompuServe cut off access to Russia. Too many hackers logged in on false accounts or with falsified or stolen credit card numbers, the company said at the time,

racking up massive charges on the services that connect users in those countries to CompuServe’s host computers in the United States and Western Europe.

PayPal is more confident of the market’s potential and is in talks with local internet providers and mobile phone companies.“Generally speaking, the company is interested not only in Russia, but in the CIS on the whole as well,’’ an RBC source said.

But it has some catching up to do. In 2009,Yandex.Dengi and WebMoney accounted for over 90pc of the Russian market of e-payments, according to the Electronic Money Association.

W

hatever sphere of life we move in, it’s likely that we’ll have our own special acronyms and abbreviations when mixing with“our own”people. These clusters of letters or even digits, unfathomable to the outsider, are a sign that we belong in a particular group.

When I worked in television, I would talk with my producer about where I would record my PTC (piece to camera), or head for the studio for an urgent 1+1 (presenter in the studio joined by one guest). Using such terms is like having access to a secret code, though they often mean something very ordinary.

At the end of June, the Lord Mayor of the City of London, Michael Bear, will visit Russia, and there’ll be plenty of alphabet soup on the menu: IFC, PPP and SMEs will feature prominently.

When I first heard talk of Moscow and the IFC I must admit I was confused. To me, FC always stood for football club. Which team, I wondered, was the IFC, and who would they be playing in Moscow? Ah, the joys of finding yourself in the wrong bowl of alphabet soup! I soon discovered that IFC means international financial centre: talks on how the City of London can help Moscow develop as a financial centre will be a key part of the Lord Mayor’s programme.

PPP – public-private partnership – is perhaps rather better known, as these collaborations between state institutions and private companies, especially to fund infrastructure projects, have operated successfully in the UK for the past 20

years. At least 1,000 such projects were completed.

In Russia, the concept has been harder to grasp, perhaps because the equivalent Russian abbreviation, GChP, not only doesn’t trip off the tongue as easily as PPP, but it also recalls GKChP, the farcical group of putschists which tried to seize power from then Soviet president Mikhail Gorbachev in August 1991.

Another alphabetical problem that besets Russian business is that of SMEs. Small and medium-sized enterprises, are the backbone of British business. As a rule of thumb, a small business employs fewer than 50 people; a medium one fewer than 250. Such enterprises make up over 90pc of businesses in the UK. With its high dependence on natural resourc-

From IFCs to PPPs and SMEs, the Lord Mayor will find plenty of alphabet soup on the menu in Moscow es and the Soviet legacy, Russia has yet to come to terms – psychologically or practically – with the concept that a strong SME sector should provide the bedrock for business in modern society. Small really can be beautiful.

The Lord Mayor faces some interesting challenges. No one doubts the enthusiasm of Russian businessmen to create an IFC in Moscow; to develop PPPs; or to strengthen SMEs. But, as with so many business questions in the country, there needs to be the political will to simplify the bureaucracy.

Almost 20 years after the collapse of the USSR and the Soviet system, that remains one of the biggest obstacles to Russia producing an alphabet soup that suits the taste of the most enterprising entrepreneurs.

06

Comment & Analysis

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WHO WILL BE KING OF THE CASTLE? Georgy Bovt SPECIAL to RUSSIA NOW

A

s political analysts in Russia and around the world busily deliver opinions about who will become Russia’s president in 2012, it seems as if the incumbent Dmitry Medvedev and former president and current prime minister,Vladimir Putin seem to be doing all they can to keep tensions running high.

Recently, Mr Medvedev took time out yet again to address the topic of the election, saying that he “doesn’t rule out the possibility”of running for a second term. At the same time, he made it clear that he and Mr Putin have some differences of opinion about how the country should move forward.

A few days later, the prime minister also made it clear that he “doesn’t rule out the possibility”of running again for the top job. And then he added that people should not be getting so het up over the issue anyway.

Political commentators, none the less, are creating plenty of commotion in their debates about how both potential candidates differ on any given issue. Given that both are increasingly coming out with conflicting viewpoints on various topics, there is plenty of room for discussion. To be fair, though, we should keep in mind that analysts are intent on picking apart differences that involve fairly minor issues. The speculation currently swirling

around the two figures is fuelled first and foremost by the peculiarities of Russian politics, which have been shaped over centuries. In contrast to a “lame duck” president in the United States, in Russia, a president coming to the end of his final term is not lame, but rather dead — and his corpse is liable to be kicked around unceremoniously.

Russian politics is traditionally dependent on a single leader. The country’s enormous bureaucracy is guided by this leader, his style, wishes, habits, whims, strengths and weaknesses, rather than by institutions, the law and written rules.

As soon as the leader exits from office, or makes it clear that he is leaving, he practically ceases to exist.

In the light of this situation, if Mr Medvedev were to announce that he would not be running for a second term, Russia would virtually be without a president for a year, until the next elections were held.

Likewise, should Mr Putin call it quits, the entire government hierarchy (already not very effective) would break down once and for all.

Both men understand this perfectly well, and are unwilling to take this kind of risk. Moreover, each man has his own political ambitions and visions for the presidential throne.

What isn’t clear at all is how they anticipated this situation unfolding when they laid the foundation for it in 2008. What was Mr Putin’s master plan? To have Mr Medvedev, having kept the

dmitry divin

The speculation currently swirling around Putin and Medvedev is fuelled by the peculiarities of Russian politics, which have been shaped over centuries

time, space and a permit quagmire Ben Aris

special to russia now

O

ne of the things that strikes me most about talking to first-time visitors to Russia is how surprised they are at how “normal” it is. To be fair, they arrive in Moscow, which is pretty normal compared with the regions. But even in the regions, things are becoming far more navigable and familiar.

The same thing happened to me during a recent trip to Ufa, the capital of Bashkortostan.

I was surprised at how normal the city was.Visitors, this long-term expatriate Russia resident included, labour under the impression that there are little spurts of reform and then a return to the status quo, when what is actually going on is continuous (albeit volatile) progress towards convergence with the rest of Europe.

Take, for example, an op-ed that the Swedish economist Anders Åslund recently wrote that made a typical comparison of Russia with Estonia.

The conclusion was obvious: Estonia has clearly gone a lot faster than Russia, and the implication is that the Kremlin doesn’t want to push through reforms because all the fat cats are too busy filling their pockets or locking up uppity oligarchs that get in their way.

This comparison is not fair, to the point of being useless.

The obvious difference is the size of the two countries: you can fit Estonia’s entire population of about 1.5 million people ­into my suburb of Moscow and still have space for the park. Put another way: how do you police the progress of reforms inVladivostok from Moscow when your subordinates are working seven hours out of sync with Moscow because of the time difference?

The local administration on the Pacific coast is asleep

niyaz karim

How do you police progress of reforms in Vladivostok from Moscow when your subordinates are working seven hours out of sync because of the time difference? when the Kremlin, closer to the Atlantic coast, is awake and vice versa. Is it possible to run a region bigger than most countries by e-mail?

To give you a more concrete example: I interviewed the late Estonian president Lennart Meri in 1995. He told me that he had decided that he needed to reform the bank sector, so he picked up the phone to the chairmen of the four biggest banks, all based in the capital Tallinn, and an hour later they met in the lobby of the best hotel in town and thrashed out the details over tea. Russia at the time had several thousand banks

Letters from readers, guest columns and cartoons labelled “Comments”, “Viewpoint” or appearing on the “Opinion” and “Comment & Analysis” pages of this supplement are selected to represent a broad range of views and do not necessarily represent those of the editors of Russia Now or Rossiyskaya Gazeta.

Please send letters to the editor to UK@rbth.ru

spread over 11 time zones, most of which were at best corporate treasury departments; at worst moneylaundering operations.

Geography makes a huge difference to the ease of reform, but this is probably only the second biggest problem that Russia’s reform effort faces. I had another illuminating conversation over dinner with Ruben Aganbegyan, the new chairman of the Moscow Interbank Currency Exchange (Micex): “The problem with Russia is that it has a permissive system of laws and not a preclusive system like in the West,” he observed.

This is a subtle point, but I think it strikes to the heart of why it is so difficult to cut red tape, downsize the legendary bureaucracy and make an impact on corruption in this massive country.

Central planning has bequeathed Russia a system where you have to get permission for any market-based activity. Marxism demanded that all property be communally owned, but Lenin quickly ran into trouble when he

Today, the Russian people demand progressive growth and daily change… recent polls indicate that 25pc of Russians would actually prefer to see neither man on the ballot in 2012

tried to ban money in the early Twenties, and so the Politburo reintroduced commerce.

However, this business was always seen as“temporary”until the conditions for the workers’ paradise could be created. As a result, business was an“exception”,and you needed to get a permit to do it.

In the West, we stand the idea on its head: you are allowed to do anything that is not banned by the state (like dealing drugs). Under this system, running Vladivostok is actually pretty easy: you only need to make sure you have a good police force that looks for people breaking the law.

The Russian system is a nightmare. Everything needs approval from Moscow – which is usually asleep while you work; apparatchiks have to wake up in the middle of the night to get permission from Moscow to set up a new company, invest in a new project or dig a new oil well.

I don’t pity Aganbegyan. He is charged with turning Moscow into an international financial centre, an open and freewheeling bourse where capital pursues profit in trades every few nanoseconds. And it’s just not possible unless you get rid of the paperwork.

Changing this mentality will be a titanic struggle. Former economic development and trade minister German Gref had a go at cutting permits in the early part of the 2000s.

He made good progress, according to a subsequent study by the World Bank and the economic policy think-tank Cefir. The trouble was that hundreds of regional authorities were still demanding permits that no longer existed in law out of habit and because they were making good money out of issuing them.

But deeper than the graft is the mindset. In a land where the very real wide, open spaces are such a major obstacle to change, it will probably take a generation to shake off this bureaucratic equivalent of agoraphobia.

This article was originally published in The Moscow Times.

Ben Aris is Editor-in-Chief of Business New Europe magazine.

presidential seat warm, just walk away from power by announcing that he would not run for a second term?

There had seemed to be something to the rumours circulating not long into Mr Medvedev’s tenure that he would resign from office to avoid a long existence as a lame duck. But then why would Mr Putin thus discredit the institution of the presidency, which he did so

much to strengthen and to which he presumably plans to return? Did he initially count on not serving as prime minister for long, but now being convinced that his successor is able to handle his responsibilities, wants to take a seat on the sidelines? If that is the case, then the question arises as to what a politician like Vladimir Putin, so replete with power at a relatively

young age, would go on to do with his time?

Of course, it’s possible that the dual-leadership scenario, and how to get out of it, was not thought through to the end, or that life itself has thrown Mr Putin and Mr Medvedev a curve ball. Perhaps neither of them took into account the possibility of the electorate becoming tired of the same person being at the helm, no mat-

ter how successful that person may be?

Today, the Russian people demand progressive growth and daily change, if only on a small scale. Just as people want to see new episodes of a television series, politics needs to constantly produce new themes. Tellingly, recent polls indicate that 25pc of Russians would actually prefer to see neither Mr Putin nor Mr Medvedev on the ballot in 2012. This doesn’t mean that their ratings are a lost cause; it just goes to show that the public is thirsting for change.

One way to respond to this desire for change would be to have both men run for president. Then, rather than debating who will run, the main issue in Russian politics would be each candidate’s goals and plans for a new presidential term.

Despite myriad worries, this would not cause a dangerous schism in the ruling elite and break it into two irreconcilable camps. Rather, it would provide relative stability to the entire system.

A competitive election campaign between Mr Putin and Mr Medvedev, one focused on separate, insignificant differences of opinion (for they may not have any significant ones), will ensure the country’s course for development as a whole will be safe, while at the same time preserving and relatively stabilising Russia’s social and political system.

Georgy Bovt is a Moscowbased political commentator.

gUESS WHO’S COMING TO POWER… Fyodor Lukyanov

special to Rn

T

he Western response to every Brics summit scarcely varies.

The first reaction is to dismiss it as an artificial organisation with no future, because its member countries – Brazil, Russia, India, China and South Africa – have practically nothing in common. The second reaction is anxiety, because the policies of its members are in opposition to those of the United States. These two reactions contradict each other, because if Brics is a phantom organisation, what does the West have to fear?

What has particularly raised eyebrows among Western commentators in the wake of the world financial crisis is Russia’s presence in the Brics: what can a commodity-orientated state with uncertain prospects for modernisation contribute to a group of “future leaders”? they wonder. Russia is a bit of an odd man out: its rate of growth is far below that of China and India.

More importantly, Russia faces problems that are totally different from those in other Brics countries, which, in spite of their impressive growth rates, remain developing countries. Russia is a developed country that has lived through an unprecedented period of decline and degradation and is now trying to bounce back. The challenges that the Brics face are therefore similar in some ways and different in others.

Any arguments pitched against Russia would be more legitimate if the discussion was exclusively about economics. But obviously the member countries see the Brics structure above all in political terms. This reflects the objective need

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niyaz karim

for a more diverse and less Western-looking world order. Institutions that have been functioning since the Cold War are unable to provide answers to the multiplying problems of the 21st century. New arrangements have not taken shape, and countries that are unhappy about the status quo are not trying so much to find a replacement for these institutions as to find ways around them.

A multi-polar world needs formats other than those that catered to a bipolar world. It is no accident that Brics declarations occasionally question the legitimacy of the existing system. Don’t hold your breath, however, for any reform of the UN Security Council: the current permanent members are not going to share their privileges with anyone – and this applies to Russia and China, which are also Brics members.

All five Brics feel that the West has virtually monopolised global discourse. Not only is this at odds with the

current economic and even political alignment of forces, but it also prevents new decisions from being made.

All five members are also aware that their attempts to increase their international weight and influence exclusively within the existing structures are doomed. The Brics countries are seeking to bolster their negotiating position at a time when a future world system is being created. The fact that those nations represent parts of the world that are becoming more and more significant lends more weight to their aspirations.

For Russia, which has been searching for a foreign policy identity since 1991, the Brics vehicle has come in very handy. It would be hard to find another format that would encourage a nonWestern orientation in foreign policy, remind the world of Russia’s global ambitions, and stress the country’s similarity to states that are world leaders in terms of economic growth. An additional benefit is the group’s

principle of non-confrontation; all the Brics members strongly deny that their organisation is directed against anyone.

But whatever the talk and even the thinking in the Brics capitals, it stands to reason that increasing the influence of one group of countries can only happen at the expense of diminishing another’s. Certainly that is not necessarily bad if it happens in an evolutionary way. The objective reality is that the world needs a new balance, and this means the rise of new centres must be encouraged.

If one group seeks to retain its privileges and other groups work quietly to erode them, the world will definitely experience a new upheaval. The world order that would emerge from this would depend on the outcome of that upheaval. The criteria would be clearer, but the price would be dear.

Fyodor Lukyanov is chief editor of the magazine Russia in Global Affairs.

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Comment & Analysis

ABSOLUTE BEGINNERS IN THE ART OF PRAGMATISM Dmitry Babich

SPECIAL to RN

W

riting about national character traits is always a tricky matter, but still more so in the case of Russia. In such a vast country you can find dozens of illustrations for any generalisation you choose to make.

Speak about the “willing serfdom lasting for ages”(the most usual negative stereotype about Russia) and you will have volumes of examples at your disposal. But try to remember the world’s greatest fighters against serfdom and immediately a whole bunch of Russian names will pop up in your memory. This is one of the reasons why I won’t even discuss the primitive cultural stereotypes, such as“Russians are all drunkards” or “Russians are lazy.”

Such stereotypes are untrue – not only about Russians.

Take Poles, once the primary targets of negative jokes in the Eastern bloc, who in the past 20 years built the most dynamic economy in Central Europe, outpacing the presumably more diligent East Germans.

Let’s take the stickiest points – respect for law and democratic procedures, and moral or immoral attitudes towards oneself and other people.Why do Russians care so little about elections? Why do they have so little confidence in courts and try to avoid court proceedings at all costs? The simple answers – because elections are not totally transparent and court independence is still under question – are not enough.

In our history we have had periods when there was adequate trial by jury and decent elections. But even in the early Nineties, when elections were the best in Russia’s history and you could found your own political party in sever-

al days, most of my friends did not go to vote.

I keep asking myself,“Why?” Could it be that they did not care at all? No. Most of them proved themselves to be remarkably caring parents, faithful friends, responsible professionals. What makes Russians suspicious of elections is our tendency to reach for the absolute – including absolute freedom. I remember a friend of mine who lost interest in presidential elections because he was 20 and only those over 35 years of age were eligible for the presidency. An old woman once told me: “What is the use of elections if they don’t make people better and happier?”

This kind of attitude may appear hopeless to the Western mind. In this context, one could cite the French, saying: “A person’s vices are a continuation of that same person’s virtues.” The modern Western world views a person primarily as a voter and a consumer – hence the almost religious reverence in which elections and the market economy are held. Russians are interested in a man in his entirety. Bud’ chelovekom is a typically Russian saying which can be roughly translated as“be human”,but which, in fact, means a lot more: be interesting, be humane, be free.

It is notable that no judge or lawyer has become a moral authority in Russia (Lenin being a lawyer only by education). But there have been at least four fiction writers who became such authorities in their lifetimes: Tolstoy,Turgenev, Dostoyevsky and Solzhenitsyn. The reason is probably that a writer views a human being as a person and not as a subject of law.

Do I mean that every modern Russian strives for the absolute? Of course not. However, this traditional type of Russian truth-seeker still abides. Insufficient attention paid to it on TV, in the theatre and cinema leaves a feel-

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dmitry divin

An old woman once told me: ‘What is the use of elections if they don’t make people happier?’ ing of spiritual void in many people – hence, all the talk about the “spiritless” nature of modern Russian society.

This striving for the absolute is most visible in Russian revolutionaries, including modern day dissidents. Vladimir Bukovsky, a former Soviet dissident who emigrated to the UK in the Seventies, made a typical Russian move recently in trying to have

The Brighter side of Nationalism Yevgeny Shestakov

special to Rn

R

eaders hardly need to be reminded of how “bad” nationalists are supposed to be: an aggressive crowd clamouring against the presence in their country of people of a different ethnicity, faith, or skin colour is the conventional image of this social phenomenon perpetuated by the mass media.

But how do good nationalists look? Do they even exist at all, or is this phenomenon doomed to exist forever with only a negative aura?

The Russian press, and the European press too, constantly carry stories of attacks on immigrants. The notorious phrase,“Here they come,”ever popular among the angry citizens of major Russian metropolitan areas, is clear evidence of permanently rising tensions in society regarding all kinds of newcomers. That said, many nationalistic incidents have nothing at all to do with the arrival of“aliens” in Russia – ie, citizens of former Soviet republics who come here in search of jobs.

According to the statistics, just as many nationalismrelated conflicts occur between Russian citizens of different ethnic backgrounds.

Many Russian politicians consider the latter to be the most disturbing development. The conflict between so-called native Russians, mostly perceived by public opinion to be residents of European Russia, regardless of their affiliation with a particular national republic, and

niyaz karim

people from Russia’s North Caucasus, has risen to the forefront of attention at the highest political level.

This happened several months ago when the police illegally freed a murder suspect, formerly from that area, hours after detaining him.

This sparked a mass riot among football fans from whose ranks the victim came.

The fans staged an unsanctioned rally under nationalist slogans at Manezh Square in Moscow. The country’s leaders had to intervene to ensure the suspect was rearrested and the case against him prosecuted.

In many cases, unrest is caused not so much by an abstract hatred that Russians supposedly feel towards people of other ethnicities as by an understandable indigna-

BP can still win in The long game Dmitry Simakov

Mikhail Gorbachev arrested during his recent visit to London for a gala devoted to his 80th birthday. For a pragmatic Western mind, Gorbachev’s achievements outweigh the brutal military interventions in Baku, Riga andVilnius. For Bukovsky, anything short of ideal deserves arrest and not a birthday gala.

This “merciless logic of the Russian mind” (a 19th-century expression) makes no indulgence for the West either.

This is what Bukovsky wrote about Great Britain in his book Notes of a Russian Traveller: “One of my main discoveries here was the monstrous Western bureaucracy and unbelievable submission to which it is treated on the

tion at social inequality, corruption, or lack of trust in the justice system. The implications of such reactions are disquieting, and not only

Moderate nationalism espouses the political self-determination of an entire nation, and not just part of it for Russia.The abandonment of multiculturalist policies by a number of European countries and a serious upsurge in ratings of not just national but also of far-right nationalist parties has threatened the United Europe project from within. In fact, restoring erstwhile borders

fully or partly, banning new immigrants from entry, and expelling those who are already in residence are all measures being contemplated. Judging by local election results, a considerable portion of Europeans are no longer happy with life in different ethnic and cultural “tents” under one roof in a single European home.

Certain commentators believe that the further growth of nationalist sentiment will inevitably lead to radicalisation, not only of the right, but also of the left wing of the European political spectrum – ie bringing about parties that oppose nationalists.

This will gradually squeeze moderate political parties out of power in Europe.

But is it even possible to confront nationalism in a de-

nother slap to the face was dealt to BP when its partner in the TNK-BP oil company, AAR, blocked the multinational’s share-swap deal with Rosneft. A lastditch attempt to rescue the deal by buying out the rebellious partner has failed.

This is not the first time BP has run into trouble in Russia: it has unhappy memories of its purchase of a 10pc stake in Vladimir Potanin’s Sidanco in 1997.When he was BP vice-president, John Browne had hoped that Mr Potanin and Sidanco would provide political cover. This was a mistake, Mr Browne writes in his recent memoir Beyond Business: “We were a naive foreign investor caught out by a rigged legal system.” Sidanco quickly began to lose its best assets to AAR’s Tyumen Oil. In the end, BP chose to ally itself with Alfa Group’s Mikhail Fridman and his AAR partners, and together they created a new oil major, TNK-BP, in 2003. Alas, the romance was short-lived. In 2008, AAR squeezed most of BP’s representatives out of the joint venture, not even sparing chief executive Robert Dudley, who currently chairs BP. Thus, the score in the BP vs

AAR match currently stands at 0-3. However, AAR’s wins are tactical, while BP is sticking fast to the goal it outlined back in 1997: to establish a strong foothold in Russia. “Lots of people said to me [in 1999]: ‘The wise thing, John, is to cut your losses and get out.’ But I knew if we allowed ourselves to get pushed out of Russia then we would probably never go back,” Mr Browne writes.

In the late Nineties, all BP wanted was to retain its Russian foothold, but it is now thinking of expansion. TNKBP accounts for a quarter of BP’s production and a third of its reserves. But the company cannot grow further, and it is for this reason that BP has been looking for a new partner among state-owned companies. The last two conflicts around TNK-BP were due to AAR’s desire to keep BP in its camp. As we know from WikiLeaks, the 2008 scandal followed talks about a BP alliance with Gazprom.

This time, it’s Rosneft. Given BP’s considerable flexibility, the company is certain to get what it wants, sooner or later.

It has already received €10 billion in dividends from TNK-BP. More will follow – thanks to AAR’s victory.

Originally published in Vedomosti

part of the local population...

The local officials are not afraid of complaints, since they are more independent of their superiors than the Russian ones. The pettier an official, the greater his power over you here.”

Bukovsky’s predecessor, Russia’s 19th-century political émigré Alexander Herzen, complained of “an inner policeman”lurking inside every Westerner, rendering him or her even less free than a Russian with an actual officer stood beside him.

Bukovsky’s book is full of examples of his fight against this Western bureaucracy (writing letters to the US Secretary of State in support of Russian émigrés who were

denied American visas, etc.)

A somewhat idealistic, but very Russian attitude.

There are many Bukovskys still living in Russia; the Western press makes heroes out of some of them. In many cases, it is right. Where it is wrong is the view that the modern West itself lives up to Bukovsky’s ideals. It doesn’t.

So, is it fair to hold Russia up to these ideals?

Being masters of compromise themselves, people in the West should allow some compromise for Russians, too, and stop holding us to a different standard, albeit one invented by our own idealists.

mocracy, given the obvious appeal and often sophistication of this ideology?

A number of Russians believe that the Soviet experience of promoting“friendship among peoples”at the state level can be drawn upon to fight nationalist tendencies. Those programmes were well funded and the policy of cadre rotation between representatives of various ethnic groups within the country was a normal practice.

At the same time, the state, emboldened by its ideological monopoly, suppressed any unauthorised manifestations, chiefly those of ethnic nationalism in the republics. Admittedly, friendship among peoples didn’t stop the USSR from breaking up along ethnic lines, the implication being that this experience cannot serve as a benchmark for modern states.

That said, many Russians are still unprepared to paint nationalism exclusively black as a cultural and social phenomenon. They believe the threat comes from interpretations that are capable of generating xenophobic feelings of a religious, or racial nature. Provided such pathologies are promptly nipped in the bud, moderate nationalism should remain part of any political system.

Russian researchers consider such nationalism to espouse an entire nation’s right to political self-determination, as opposed to just a part of any nation, and believe that such sentiments shape a society’s skills as a civilisation.

Fear of any manifestations of nationalism is driving this phenomenon underground.

It is also very quickly forming gangs of radical thugs who by their aggressive actions are forcing the subject of “legitimate” nationalism that exists for the benefit of the state to the margins of mainstream politics.

The Parent trap a la Russe

Yevgeny Shestakov is editor of the international politics desk at Rossiyskaya Gazeta.

Elena Zaretskaya

special to rn

he current breakdown in communication between parents and children in Russia has been festering for decades – long before perestroika. At least six generations of Russians were never taught how to bond, nor to be friends with their children. I am not referring to the kind of friendship in which there are no boundaries or control, but a friendship in which parents enjoy and respect their children, and allow for their individuality as they grow.

This kind of nurturing has, until recently, been absent from Russian parenting. We are only seeing glimpses of it now that parents travel, read parenting books and observe that there are ways to shape their children other than the way they were taught. But there is a long way to go to reach what I would call healthy, happy parenting.

As a rule, Russian parents don’t compliment their children enough. After a certain age, once the children enter school, parents are no longer affectionate in their language and tone.Yet the first step in nourishing family life is for us to praise our children in ways we were never praised as children ourselves.

Recent generations have been taught to indulge their power at the expense of their children. During Soviet times, the only way a citizen – traumatised if not spooked by the state – could“feel power”was by bossing younger people around. Children were there to be controlled. As a result, several generations were

Dmitry Simakov is deputy editor-in-chief ofVedomosti.

THE POLLS

Facing the bills DO russian families PLAN a BUDGET?

In 2009, 62pc of families polled planned their domestic budget. Today the figure is only 49pc. Heads of households said they did not plan for bills, because they saw no point in budgetary restraints, did not have a sizeable income, or spent too freely.

Dmitry Babich is a political analyst for RIA Novosti.

T

07

raised as gods and slaves. No communication was encouraged between family members, and the joy of family life was crushed.

Russian parents need to start forming a friendship as soon as their children are born, bearing in mind that they are no worse than themselves just because they weigh less or are shorter. This is the kind of respect we have to start fostering in Russia. Unfortunately, we expect our children to be better copies of ourselves, or some kind of tro-

We expect our children to be better copies of ourselves, or some kind of trophy achievers phy achievers. We have not learnt that they do not have to do what we do and like what we like. This concept of, dare I say it, God’s creation, an individual, is also almost completely absent in Russia.

What can you expect from a nation that has been deprived of its most educated people, including clergy, in the first quarter of the 20th century?

The clergy was exterminated while the“intelligentsia”were deported from the earliest days after the Revolution.

I am not sure that I can name all of the reasons behind the malaise of the modern family. But, first, it involves a great lack of trust and, second, failure to acknowledge the sacred rights of others. These same generations of people have been taught to take what belongs to others.

What did the Bolsheviks do

in 1917? They implemented a policy of pillage.They forged the sense that someone else’s property is always, potentially, yours.This is a major cause of our lost moral compass, our cynicism. Why are we failing at becoming a properly capitalist country? Capitalism rests on two giant pillars – on the recognition of the sacred right to private property and on trust. The trust element has fallen apart completely and the right to private property is simply not part of our worldview.

In Russia, some think that someone else’s husband is potentially their property, and the same goes for someone else’s wife. Even at school, girls start sizing up other people’s pockets. If a woman who is young and attractive marries to get on the upward mobility ladder, no one can expect her to be faithful and, subsequently, there can be no trust. She keeps looking for a wealthier spouse, while her partner may explore opportunities with women as objects, younger and more sexually attractive every time.

Of course, there are many wonderful exceptions to the rule, namely Russian romantics who get married in the hope of spending their lives together.This kind of love and trust occurs in Russia as it does everywhere else. But just not frequently enough. It’s time to foster trust, and to pass it on to our children. Before it’s too late.

Elena Zaretskaya is head of the Department of Social Sciences at the Russian Presidential Academy of National Economy and Public Administration.

08

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Unsung icons of Soviet design http://rbth.ru/12925

Cinema British Film Institute season launches a six-month celebration of the Russian film industry

Movie classics roll into the digital era SPECIAL TO RUSSIA NOW

The British Film Institute (BFI) is showing an unprecedented retrospective of Russian and Soviet films featuring classic and contemporary movies spanning more than a century of cinema.

Billed as КiиО (the half-Russian name given to the project is pronounced Kino, meaning cinema in Russian), the sixmonth event is big and bold, say the organisers, and brings the best of the past and present to British screens.

“Kino is huge and epic in its scope, and it covers the whole spectrum, from classic icons of Russian heritage right the way through to contemporary films,”said the BFI’s director, Amanda Nevill.

In a three-year project, the organisers of КiиО have collected, restored and brought back to life not only the gems of Russian cinematography but also the best original versions of the pictures, from the classics of early silent movies to notable works from the age of the auteur.

The flagship of the project is one of the all-time classics Sergei Eisenstein’s Battleship Potemkin (1925), which has particular resonance for its British fans: praised in Europe after its release, it was banned in Britain until 1954.

“It seems the whole British Army would crumble like a house of cards just from the single word ‘Potemkin’,” critics wrote in the Twenties as they ridiculed the government’s decision to ban Eisenstein’s masterpiece.

The restored and digitalised version of the film has been released in eight British cin-

THE CRANES ARE FLYING DIRECTOR: MIKHAIL KALATOZOV. ON SCREEN: JUNE 26 AND 27

Set in WWII and its aftermath, this tale of love and separation won the Palme d’Or in 1958.

Only one other Soviet film, Friedrich Ermler’s The Turning Point, ever scored at Cannes.

CHAPAYEV

SPRING

ALEXANDER NEVSKY

OUTSKIRTS

DIRECTORS: GEORGY AND SERGEI VASILIEV. AT BFI JUNE 12 AND 15

DIRECTOR: GRIGORI ALEKSANDROV. AT BFI JUNE 24 AND 28

DIRECTOR: SERGEI EISENSTEIN. AT BFI JUNE 21 AND 26

DIRECTOR: BORIS BARNET. AT BFI JUNE 3 AND 9

Based on the diaries of a political commissar who worked with the Red Army commander Vasili Chapayev during the Civil War, this became a “model” Soviet film of the Thirties for its vivid portrayal of heroism and leadership. Its characters spawned numerous Soviet-era jokes.

Imagine Fellini remaking Ninotchka: this last of the Aleksandrov-Orlova fantasy musicals is full of crazy charm.

Lyubov Orlova plays both a scientist and the actress due to play her; the director who falls for his subject is none other than Nikolai Cherkasov – Eisenstein’s Nevsky and Ivan.

This patriotic paean to the saintly medieval prince of Novgorod rescued Eisenstein from the chill of Stalin’s disapproval. Newly allied with Prokofiev, he created a magnificent medieval world that would influence countless later historical films (including Olivier’s Henry V).

Chronicling the impact of the Revolution and the Second World War on a sleepy town, this series of sight (and sound) gags builds into one of the best early Soviet sound films.

A rare, almost Chekhovian, celebration of everyday life, despite the obligatory heroics of socialist realism.

For more about the Russian cinema season at BFI and the full programme, visit www.bfi.org.uk/kino.html

Auction Family sells books illustrated with author’s favourite insects and given to wife and son

Butterfly effect: Nabokov’s gifts of love for sale EMANUELE NORSA

SPECIAL TO RUSSIA NOW

Thirty-three years after his death in Montreux, the work of Vladimir Nabokov returns to the spotlight in an event likely to attract the attention of scholars and collectors from all over the world. On June 13, Christie’s in London is to auction a collection of inscribed works and personal effects owned by the Russianborn writer’s family.

It includes books signed and decorated by the author with magnificent drawings of butterflies, a passion of Nabokov from the age of nine. “What makes these books special is that they are all part of Nabokov’s personal collection,” said Sven Becker, a Christie’s specialist.

He added: “The majority of the lots are early editions of his novels and poems that he personally gave to his beloved wife, Vera. The author didn’t sign copies for stran-

gers; so inscribed books by Nabokov are really rare and have a high market value.”

Nabokov, who is best known for his controversial novel of sexual obsession Lolita, collected more than 4,000 specimens of butterflies.

He drew beautiful pictures of the insects in the books he gave to Vera and their son, Dmitry. He was wary of what he considered syrupy and sentimental expressions of emotion, so Nabokov’s drawings can be seen as displaying a deep love he felt he could not express with words alone. Of particular interest are the copies given to Vera, who used to read and reread them – not the case with many signed copies of famous works, which are often left on the shelf.

Born in Russia but having lived in the United States, England, France and Switzerland, Nabokov was an international author who bridged the world’s cultural divisions during the 20th century. He wrote his first nine novels in Russian before becoming a master of English prose.

“Nabokov is certainly the only author to have written books

of such great importance in his native language and in a second tongue,” Mr Becker said.“I’ve noticed that many of the Russian writers that the Western world appreciates are actually considered less desirable by Russian collectors; Dostoyevsky and Pushkin, for example. Vladimir Nabokov, on the contrary, has a great appeal for all collectors.”

The items that are due to go under the hammer at Christie’s this month are divided into more than 80 lots and include personal effects such as a chessboard, a writing table and, appropriately, a butterfly net. Despite the large number of lots, the auction house says all of the items are rarities and that this is probably the last time that they will be seen together.

“Collectors believe this is a special event – we are offering the best possible books available related to Vladimir Nabokov,” said Mr Becker.

“Once the sale is over it is unlikely that such important examples will be seen any time soon in a public auction.”

Moreover, given the legal restrictions on exporting arte-

Royal ale returns in imperial style ALEX WINNING AND ANASTASIA DEDYUKHINA

Vladimir and Vera Nabokov on the butterfly trail

A butterfly drawn by Nabokov in a book given to Vera

facts from Russia, lots that will be acquired by Russian buyers will disappear from the international market altogether, he noted.

Both private collectors and institutions will take part at the auction, with 80pc of the items expected to go into private hands. The high number

So you’re a budding expat in Moscow. How will you approach your life there?

A few typical Moscow expats are revealed.

She imagined that the ordinary Russian would probably answer the question of whether he was happy or not as follows: “Well, ma’am, let’s first define what you mean by ‘happiness’.”

of lots has inevitably pushed down estimates for each object, making the sale an opportunity not to be missed even by collectors and investors with limited budgets.

“From a romantic point of view,” Mr Becker said, “my pick in the auction would definitely be the butterfly net.”

Catch the vibes of Moscow www.rbth.ru/blogs

come to London in November to introduce his works.

Another intriguing facet of the КiиО season is a DVD series, The Soviet Influence.

Each disc in the series will consist of a Soviet film and a handful of renowned films which were influenced and inspired by the first movie.

Judging from the buzz on the South Bank in London, the organisers of the КiиО programme are proud of what they have achieved in putting together a wide-ranging tribute to Russian cinema.

“I think the BFI is probably the only place on the planet that could have the ambition to put together a film season with such scope as this,”said Ms Nevill.

Beer Catherine’s favourite tipple sails for St Petersburg

Once a favourite tipple of Empress Catherine the Great, British stout brewed for the Imperial Court is heading for Russia once again.

COURTESY OF CHRISTIES(2)

A rare collection of personal effects to be auctioned in London sheds new light on the life of a star of Russian and international literature.

Cranes Are Flying (1957).

The second part of the КiиО programme, titled “Cosmos”, is devoted to the conquest of space by Soviet film-makers, and includes remarkable film chronicles of man’s first space flights, including the Armenian director Artavazd Peleshyan’s documentary Our Century, the stark and challenging philosophical parables of Andrei Tarkovsky’s Stalker and Solaris, and Georgi Daneliya’s satirical sci-fi film Kin-Dza-Dza. This ambitious Russian invasion of British cinema screens will conclude with the first retrospective in the United Kingdom of the films of Alexander Sokurov – who turns 60 this summer and will

SPECIAL TO RUSSIA NOW

On May 16, a 60ft clipper carrying British ale set sail from London’s West India Docks for Russia. After almost five weeks of travelling in chill and possibly stormy waters, 14 varieties of Russian Imperial Stout specially brewed by 11 British breweries will be delivered to St Petersburg for the first time in almost a century.

For Tim O’Rourke, masterbrewer, yachtsman and event organiser, the Great Baltic Adventure has a clear aim: “This adventure is about fellowship, establishing a common bond of respect between the peoples and craftsmen of Britain and Russia. Our aim is to make links through enjoyment and pleasure.”

It’s a pleasure with deep roots. Russian Imperial Stout has a pedigree dating back to the 18th century. It was delivered from Britain to Russia by boat in large volumes for consumption by Catherine and her court. A brewery later opened in Rus-

WWW.WIX.COM

MARIA PASHOLOK

emas and art centres and is accompanied by the music Edmund Meisel played at its world premiere in Berlin in 1925.“It’s what we love doing here: we like to put things together that you couldn’t get anywhere else,”the BFI director enthused.

In 2005, the Berlin Film Festival premiered the film’s restored version, which featured lost footage and captions, in particular the censored words of Leon Trotsky in the prologue and out-takes from the scene on the Potemkin Steps in Odessa, one of the most iconic in film history.

In addition, the Pioneers of Russian Film series, which will run for the first two months of the season, will show little-known Soviet films of the Twenties and Thirties, including Third Meshchanskaya Street (Ménage à Trois, 1927) by Abram Room andViktor Shklovsky. Depicting the touching story of the experience of living together in Moscow during the New Economic Policy, the film was banned in Russia and Europe for its relatively risque content.

Moviegoers can also take in the subtle comedies of Boris Barnet, including the most popular film of the Twenties, The House onTrubnaya (1928), which portrays the difficulties of life in Moscow for people from the provinces.

There are also films from a pioneer of global documentaries, DzigaVertov, including his avante-garde Man with a Movie Camera (1929), as well as less well-known work such as his first experiments with sound in film.Viewers will also be treated to a special showing of The Heir of Genghis Khan (1928) by Vsevolod Pudovkin with the original film score, and Mikhail Kalatozov’s Palme d’Or winning post-Second World War drama The

RIA NOVOSTI

From silent classics to the the age of the auteur, the best Russian films of the past 100 years are now being showcased in Britain.

The Thermopylae Clipper

sia but production stopped after the 1917 Revolution.

The distinctive flavour and high alcohol content (necessary to prevent the beer from freezing on crossing the Baltic Sea) gave the stout, or porter, some unique characteristics.“To the nose, the smell is almost vinous, to the taste, it smacks of a sweet, dry massala,” says one of the brewers.The ingredients and manner in which the stout was prepared stayed constant until production was halted in the United Kingdom in 1993 because of cost-cutting and changing tastes.

The voyage hopes to revive

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the stout-drinking tradition and pave the way for a serious business project for small- and medium-sized British breweries with Russian partners.

En route to St Petersburg, the Thermopylae Clipper will stop over in Copenhagen, Stockholm and Helsinki, its itinerary designed to coincide with local beer festivals.

After the scheduled arrival in the northern Russian city on June 15, all 14 of the stouts will be tasted and ranked by a panel of Russian brewers at the Magerfest beer festival to determine the winner.

But all of the varieties are expected to go down well, literally.

“There is plenty of beer in Russia, but very little genuine English beer,”said Viktor Spassky, the head of the Russian Trade Delegation. “The English are resurrecting old traditions and brewing good, genuine beer.”

For safety’s sake, a drinking ban was imposed on the boat and Mr O’Rourke says he’s confident the cargo will reach its destination untouched: “The ale won’t be easy to pilfer. For a start it’s stowed under my bunk!”

For latest news of the voyage see www.thegreatbalticadventure.com

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