Russia Beyond the Headlines #10 by Russia Beyond

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Agriculture: Recovering After Last Year’s Fires P.03

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Putin 2.0: Can the Prime Minister Reinvent Himself as President?

Moscow’s Metro: An Underground Museum

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News in Brief

Space Can Russia fulfill its obligation to carry crew and cargo to the International Space Station?

A Question of Time and Space

Putin Proposes “Eurasian Union” on post-Soviet Space In his first article since announcing that he will run for another term as president, Prime Minister Vladimir Putin proposed in the daily Izvestia a “supra-national union capable of becoming a pole in the modern world, and at the same time an effective connection between Europe and the dynamic Asia-Pacific Region.” Putin’s article mostly covered the economic aspects of developing the new body out of existing structures such as the Customs Union (which currently unites Belarus, Kazakhstan and Russia) to cover more of the entire post-Soviet space.

The International Space Station is now in the hands of Roskosmos, but the loss of a cargo ship has caused some experts to question the agency’s reliability. Anton Makhrov special to rbth

This year may go down as one of the most dramatic for international space exploration in decades. On July 21, NASA officially shut down the space shuttle program, leaving the job of delivering people and supplies to the International Space Station in the hands of the Russian space agency Roskosmos. In March, NASA signed an unprecedented $753 million two-year contract with Roskosmos to use Soyuz spaceships for flights to the International Space Station through 2015. The deal, however, faced some serious questioning after Aug. 24, when the cargo spaceship Progress failed to reach orbit. Fortunately the successful Oct. 3 launch of the final satellite in the Glonass navigation system (Russia’s answer to G.P.S) put some of those fears to rest. Following the Progress accident, some experts cautioned that the work of the International Space Station was under threat and suggested a temporary suspension of scientific work there. A new crew arrived at the I.S.S. on Sept. 16, and three former crewmembers returned safely to earth, but neither Roskosmos nor NASA can say when replacements will again travel to the I.S.S. A spaceship with supplies for the station was scheduled to launch on Oct. 14, followed by a manned

Read the latest opinions at rbth.ru/13556

American Scholar Awarded 2011 Liberty Prize Stephen Cohen, Professor of Russian Studies and History at New York University, has been awarded the 2011 Liberty Prize for his contribution to developing cultural ties between the U.S. and Russia. The award ceremony will take place on October 21st at the Russian Consulate in New York. Read more and watch an interview at rbth.ru/13552

Charity Organization Brings Childrens’ Artwork to NYC NASA

Soyuz craft on Oct. 28. Those launches have been postponed to Nov. 1 and 4, respectively. Russian and U.S. space officials have not ruled out the worst-case scenario.“If, for some reason, we fail to deliver the crew before the end of November, all the possibilities must be considered. This

includes running the station in unmanned mode,” Alexei Krasnov, head of manned programs at Roskosmos, said in a comment to the Interfax news agency. Some experts have said that the abortive launch of the SoyuzU rocket and the Progress cargo vehicle were not just a tragic ac-

cident. In fact, during the last year, Russia has lost six spacecraft. In addition, a series of launches were postponed“for technical reasons,” which in most cases means the malfunctioning of equipment and units at the final stage of

Russian Cosmonaut Oleg Kotov performs maintenance work on the International Space Station.

The American-Russian Childrens’ Home, a New York-based charity that raises money for children struggling with cancer, will be organizing a children’s art exihit at the Russian consulate in New York on October 26th. The artworks were collected from cancer patients in Moscow by the Russian charity “Grant Life,” founded by actress Chulpan Khamatova (known for playing the main character’s girlfriend in the 2003 film “Good Bye Lenin!”). The exhibit has already been on display at the Pushkin Art Museum in Moscow. Learn more at www.archh.org.

continued on PAGE 2

Elections What will Vladimir Putin’s likely return to the presidency mean for investors?

only at rbth.ru

Putin and Medvedev Announce a Deal Vladimir Putin has announced his plan to run in next spring’s presidential election. Experts are divided on whether this move will be good for business. Roman Vorobyov, Alexander Kilyakov

“I’m carrying on working.” This was the note that appeared on Dmitry Medvedev’s Twitter account after the United Russia party congress at which he announced that he would not be running for president in 2012.The pundits following the proceedings immediately dubbed what had happened a “swap:” Medve-

reuters

special to rbth

Medvedev and Putin have agreed to swap jobs.

dev proposed Prime Minister Vladimir Putin as a candidate for the post of president, and Putin, for his part, proposed that the current president take the post of prime minister. Political scientist Gleb Pavlovsky is sure that the decision announced at the ruling party’s congress was no surprise for those involved in the political process. “There was talk of this swap the whole of last year, from the moment when Putin started to put the pressure on and began lobbying for himself to be the candidate for 2012,” Pavlovsky said. Mikhail Remizov, president of

the National Strategy Institute, thinks that the decision by Putin and Medvedev to swap positions was driven by political necessity and in the long term“will increase the government’s stability.” Political scientist Alexander Shatilov agrees.“It was necessary to reform the tandem because of the quite complicated political and economic threats that the Russian Federation is going to experience,”he said.“The risks that have arisen required a particular consolidation of power on the one hand and a simplification on the other.” continued on PAGE 2

Anisia Boroznova

New Eco-Friendly Housing Outside Moscow Offers Model for Residential Development rbth.ru/13518

Politics & Society

Russia BEYOND THE HEADLINES

most read Finance Minister Kudrin Quits at President’s Urging http://rbth.ru/13488

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Employment Russia trades a relic of its Soviet past for Western-style résumés and references

Viewpoint

Judging Medvedev on His Own Terms Dmitry Babich

itar-tass

The employment history of Russians has traditionally been recorded in a labor book held by their employers.

From Record to Relic: Work Books to Be Abolished Russian companies will no longer maintain employment records for their workers, but many fear this will make it easier for job-seekers to lie about their experience. Olga Kalashnikova

The St. Petersburg Times

Look at the résumé of a Russian job-seeker and any mention of references will be conspicuously absent. That is because up until now, that function was reserved for the labor book (trudovaya knizhka), a record of an individual’s education, specialization, past employers and the post and duties associated with each job they have held. That may all change soon, however, with plans by the Ministry of Heath and Social Development to introduce new rules governing labor relations and the abolition of the work record in 2012. Usually, the work record is kept by the human resources department of a person’s current employer until he or she resigns from that company. Now, with the development of new technology, this archaic system of labor relations appears to be a vestige of a bygone era.The data required to calculate pensions is set by the social security system and the qualifications and professionalism of the employee can be proved by copies of their degree certificate and work experience. According to Alexander Safonov, deputy minister of the Ministry of Health and Social Development, the work record is no longer essential in a modern market economy in which labor relations are defined by contract. The labor book is a holdover from the Soviet period when the state was both the employer and the main consumer of labor.

Questions remain, however, about what life will be like without the obsolete document. For example, where will the personal information that was collated in the labor book now be kept? There is as yet no unified database available that includes complete information about the experience of a potential candidate or present employee. “Unfortunately, we still don’t have a conclusive answer to these questions,” said Svetlana Yakovleva, head of Ancor recruitment agency for northwest Russia.“As long as there is no transparency in the alternative ways of finding information about past work experience and confirmation of a person’s occupation in previous jobs, it is impossible to say that the trudovaya knizhka is a relic or unnecessary.” Said Michael Germershausen, managing director of Antal Russia recruitment agency, “From a recruiter’s point of view, the absence of the work record and other documents confirming both employment and the position held is a great disadvantage. Not every candidate can provide their new employer with a copy of their labor contract, as this information is often confidential. “There are widespread situations in which candidates claim to have held the post of marketing director at an interview when in fact they were little more than the marketing director’s deputy or assistant,” he said. “With the elimination of work records, the number of such cases will increase.” Currently, candidates provide employers with their labor book on the first day of work with the new company. The employer therefore makes a decision on the

candidate without investigating their employment record. “At the same time, the candidate realizes that they will have to hand over their work record on entering the new post,” said Yakovleva,“so it’s not in their best interests to give the wrong information.” There are many ways to find out about a candidate’s work for any organization, and the easiest one is getting oral or written recommendations. “Employers rely on the C.V., impressions from the interview and recommendations. The abolition of work records will improve the practice of recommendations,” said Germershausen. “We already verify every candidate by calling their former employers. Gathering references allows us to not only confirm the truth of the data given by a candidate, but also to corroborate the impression formed during the interview,” he said. Written recommendations, however, are more widely used in Europe than in Russia, where employees are not in the habit of asking for letters of recommendation when leaving a post. “Moreover, giving written recommendations is prohibited in some companies by their internal policy,” said Yakovleva. According to specialists at Ancor, existing work records are more useful for employees, as they allow them to confirm their work experience, which plays an important role in assessing the amount of social benefits they are due. “With the abandonment of the trudovaya knizhka,” said Yakovleva,“employees will be forced to find another way of confirming their work experience.”

in their own words

Alexander Safonov Deputy Minister of Health and Social Development of the Russian Federation

In the Soviet Union, the work book was an instrument of control over the lives of individuals. Then, there was a single list of requirements for a position, but now the employer determines how the employee fits into a specific position and the requirements for it.”

Svetlana Yakovleva head of the northwest Russia division of Ancor recruitment agency

As long as there is no transparency in the alternative ways of finding information about past work experience and confirmation of a person’s occupation in previous jobs, it is impossible to say that the labor book is a relic or unnecessary.”

Michael Germershausen managing director of Antal Russia recruitment agency

There are widespread situations in which candidates claim to have held the post of marketing director at an interview when in fact they were little more than the marketing director’s deputy or assistant. With the elimination of work records, the number of such cases will increase.”

A Question of Time and Space continued from PAGE 1

reuters/vostock-photo

preparations for the launch. The experts, however, disagree about the reasons behind the recent failures. “This is definitely a crisis. We have long been feeding off the legacy left from the Soviet times. If you step back and take a good look, you will see that the fleet of carrier rockets was modernized, but there were no new developments,”said a source in the space industry, who preferred to remain anonymous. In contrast,Voice of Russia commentator Andrei Kislyakov is sure that the age of the drawings has nothing to do with it.“The SoyuzU rocket has been launched more than 700 times. This rocket has set a record of a hundred successful launches in a row,” Kislyakov said. The statistics for Progress are even more impressive; its last accident occurred in 1978. But problems begin on Earth, and there are a host of them. Traditionally, in the Soviet Union and now in Russia, space-related enterprises fall under the umbrella of the defense industry. The overwhelming majority of Russian experts believe that a third of the enterprises in this sector are virtually broke. Russia invests only a tenth of what the Western coun-

Cosmonauts Anatoly Ivanishin (left) and Anton Shkaplerov (center) and astronaut Daniel Burbank, the next I.S.S. crew, have been delayed.

tries put into R&D and only a fifth of what they invest in fixed assets and personnel training. “More than 70 percent of the technology meeting the needs of production is physically and morally obsolete,” said retired major generalVladimir Dvorkin, who is in charge of developing technology for the Strategic Nuclear Forces. Additionally, there is a lack of young, qualified experts. The average age of people working in this field is 50. Igor Lisov, editor of the journal Novosti Kosmonavtiki (Aerospace News), is also full of pessimism:

“Over the last two decades, experienced people have retired from the industry because of age or low pay… As long as an engineer in space production and in space technology design is paid less than a vendor of mobile phones in a kiosk, he will sell mobile phones and not space technology.” There is a way out, but in Russia, as in the U.S., it requires money. NASA has already allocated $270 million to four companies to build private spaceships. The biggest, a contract worth $92 million, was signed with Boeing

to developing a capsule for a crew of seven for flights to the I.S.S. and back. Roskosmos is doing similar work. Agency headVladimir Popovkin said that the Energia Corporation is developing a six-seat spaceship expressly for supplying and servicing the I.S.S. The United States is planning to launch a new cargo spaceship around 2016, and Russia, around 2018. Ivan Safronov Jr. believes that the era of groundbreaking new carriers is still 30 or 40 years away. “The accident rate of Russian rockets began to rise in the late 1990s and is now the same as that of India, China and Japan. American and European rockets have a much lower accident rate. However, the U.S. is concentrated almost entirely on its own program and is not doing commercial launches, while Europe so far can produce only six Ariane-5 rockets a year. So the clients who need a satellite launched cheaper and faster use Russian rockets. New booster rockets are being designed,but they require new materials and technologies, which takes a lot of time and money,” Safronov said. Read more at rbth.ru/space

Special to RBTH

he plan forVladimir Putin and Dmitry Medvedev to swap positions, announced at the United Russia congress on Sept. 24., unleashed a lot of tension that had been building up in society at large. So when President Medvedev sat down on Sept. 29 with the heads of Russia’s three major television channels, his job was to soothe these passions. In his interview, the president confirmed his commitment to universal democratic values and also made clear that the deal he made with Putin should not be seen as humiliating to the people who supported him and voted him into office in 2008. Medvedev clarified that the two men had agreed to swap positions, but that the situation could change if the mood of the public changed. The president tried to make the whole operation more democratic than it has appeared. “The decisions of the United Russia congress, these are just recommendations,” Medvedev said. “Recommendations of a political party to support two people in elections — nothing more. The choice is up to the people. Any political leader can lose an election.” The president seemed to have two items on his agenda: The first was to make clear that no disagreements between himself and Mr. Putin will endanger Russia’s statehood, and the second was to reengage the people in the political process. The need to reiterate the stability of the Russian political system was very important for Medvedev, since for several years the liberal opposition and certain foreign observers have hoped that a split between Putin and Medvedev would be as devastating as the factionalization of Mikhail Gorbachev’s Politburo. This didn’t happen. In his interview, Medvedev said that the practice of two political leaders working together for the good of a single political organization was not unique to Russia, drawing parallels with Hillary Clinton and Barack Obama. Although there are some differences in the situation, in essence, Medvedev is right.These

American politicians are in agreement on such questions as who will hold the power and who will control the money. In this case, Russia is not very different. The second goal of the interview was to mobilize the electorate. This is a much more difficult goal to achieve than the first one, as Russia is far from a fully functional multiparty democracy, and Medvedev’s assertions that“nothing has yet been decided”can only go so far towards convincing voters that their opinions matter. In civilized countries, democracy is perceived as limiting unpredictability — the party that loses elections is always sure that it will not face repercussions upon ceding power, and the status quo for the people in terms of property rights and the availability of goods and service will remain more or less the same. Russia’s political system remains unstable because of the upheavals in the 1980s and 1990s when these things were not true.

Medvedev is a politician trying to pursue an agenda within the situation presented to him by history. In Russia, political stability is vital for the economic activity of society, and the Russian political elite is trying to achieve this by maintaining a close grip on political power. In general, the president’s interview showed him to be a realist. He is not a new Mahatma Gandhi or Martin Luther King, Jr. He is an average, modern politician, trying to pursue an agenda within his abilities and the situation presented to him by history. In that sense, Medvedev has done his job. Medvedev stopped the nationalistic upsurge in Russia; he launched a program of competition inside the political system. He didn’t see it through, but he tried, and I think history will appreciate that. As we know Medvedev’s presidency is entering its final months, it is possible to draw some conclusions about his time in office. Medvedev did what he could, and it is unfair to criticize him for something he was incapable of doing.

Putin and Medvedev Announce a Deal continued from PAGE 1

Experts are divided on the economic consequences of the ruling tandem’s decision. Independent analyst Alexander Trifonov believes that Putin’s return to the post of president will frighten off investors. But Ilya Gorbunov, editor in chief of the magazine Bolshoy Biznes, believes that it will be easier for major partners to operate if they can rely on Putin-style stability. “Global investors have already worked withVladimir Putin both as president and as prime minister. I think we should now expect the forecasts by the Ministry of Economic Development and the Ministry of Finance to be fulfilled and the currency rate to re-

turn to its customary parameters,” he said. While the country is in need of economic reforms and Putin has the political power to carry them out, he might lack the political will. Changes “will bring with them political risks and unpopular decisions, and that might stop Putin,”said former economic minister Yevgeny Yasin. And there is another problem: The plans put forward in the past few years to establish an innovation economy are associated with Dmitry Medvedev. Political scientist Gleb Pavlovsky thinks that by agreeing to the swap, Medvedev has weakened his position. Read more at rbth.ru/elections

Who would you like to see run for president of Russia in 2012?

Data collected by the Levada Center on September 23-27

MOST READ Food for Thought http://rbth.ru/13285

Special Report

RUSSIA BEYOND THE HEADLINES

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Agriculture In addition to the usual challenges of weather and commodity prices, Russian farming must come to terms with history

Rediscovering the Good Earth Russia’s Black Earth region should be full of productive farms, but agribusiness continues to struggle with the legacy of collectivization.

ings distribute their gains to the stockholders, so there’s no cushion for hard times. This became especially clear in the 2008 financial crisis when some holdings couldn’t pay wages for months. Agrarian experts are pushing for stability from below, encouraging small self-supporters to form medium-sized family enterprises and market their products.

The Soviet Union was the world’s largest wheat producer; Russia has struggled to match this level of output.

HEIDI BEHA

SPECIAL TO RBTH

High wages vs. rural exodus

GETTY IMAGES/FOTOBANK

IN FIGURES

$446 million

of investment into Russian agriculture in 2010 came from foreign agribusinesses.

$50.6 billion

worth of agriproducts were produced in Russia in the first half of 2011.

sia]could generate more than an additional 40 percent [of what is currently produced].” But when John and Yarovoi make visits to the Prodimex farms, they are often greeted by unpleasant surprises. Weeds sprout up in the midst of a field of beets, showing that pesticide spray truck drivers missed a row. At lunchtime, combines sit motionless for hours. Compared to Central Europe, a combine in Russia costs considerably more but only harvests half as much. Another reason for the inefficiency is the structure of Russian agribusiness: The self-supporting farms are too small, but the existing agricultural companies are too big. It’s difficult to control each division or to manage large revenue fluctuations. Furthermore, publicly traded hold-

108 million

90 million

tons of grain were harvested in 2008 — the largest harvest since 1990.

tons of grain are expected to be harvested in 2011; 20 million tons are intended for export.

7.4 million

tons of grain were exported this summer, indicating a recovery from last year’s fires.

11 million

cows graze in Russian pastures. There were 42 million cows in the country in 1991.

Between Wars and Kolkhozy: Russian Agriculture Since 1900 In 1900, Russia was the largest grain exporter in the world: Almost a third of worldwide grain exports came from the Russian Empire. But World War I, revolution and years of civil war led to a depopulation of villages and large interruptions in agricultural production. Only in the second half of the 1920s did crop yields start to increase again. In 1929, Stalin decided to collectivize the entire agriculture sector, creating giant farms known as kolkhozy or sovkhozy. But rather than handing their animals over to collectives, many farmers slaughtered their horses, cows and pigs. This resulted in a another interruption in agricultural production. In 1940, with the

increased use of machines, grain production again reached prewar levels. But then World War II cut meat and grain production in half. At the start of the 1980s, the Soviet Union was the largest producer of wheat, rye, barley and cotton worldwide, but when the Soviet Union collapsed, the state-run collective farm system went with it. In 1998, Russia produced only half as much grain as it had in 1990. The first year to yield a harvest higher than that of 1990 was 2008. Today, 10 percent of the population is employed in agribusiness, and revenues in 2009, the last year for which numbers are available, came to 1.53 billion rubles ($49 million).

RIA NOVOSTI

A lone black-and-white cow grazed beside a road in southwestern Russia, 62 miles from the central Russian city of Kursk, as farmers Klaus John and Sergei Yarovoi drove by on their way to a farm belonging to their employer, Moscow Region-based Prodimex. Pasture, sunflower fields and harvest-ready grain lined the bumpy country road. John pointed to the animal: “That’s what the Russian dairy industry looks like,” he said. A few miles away stood another cow. In local villages, children round up the cows daily in order to collectively herd them to pasture — “like Peter, the shepherd boy, shepherding the goats in the Alps,”said John.“It looks idyllic, but it doesn’t feed a country of 147 million.” That’s one of the reasons that President Dmitry Medvedev included self-sufficiency in his Food Security Doctrine. In it, he explained that by 2020, 85 percent of meat and 90 percent of milk consumed in Russia should be produced domestically. This would be a 20 percent increase over current levels. Agrarian experts believe that milk and beef will need to be imported for many years to come. Russia has 11 million cows, but that’s a big drop compared with the 42 million dairy cows in the country at the time of the Soviet collapse. There are bright spots in other sectors, however. Grain and canola are already produced in overabundance and exported. In 2009, 97 million tons of grain were harvested; in 2010, there was a major decrease in production due to drought and wildfire, but a good harvest is expected again in 2011. Farming in Russia is a challenge on many levels. “Most enterprises are inefficient,” said Sergei Yarovoi. “The Black Earth area [of Central Rus-

But many parents, like Olga Yuyukina, don’t see a future for their children on the land. Her son grew up with cows, tractors and haying. Now he’ll study in the city. “He should become a manager,” said Yuyukina. Agronomists for large companies complain about the aging of rural regions. “We can’t find enough skilled people who can work with agricultural machines and the newest technology,” said Alexander Musnik, who works for the agrarian business Soldatskaya, near Kursk. After graduation, few want to return to the land. “There aren‘t even movie theaters and only a few restaurants, and all our friends live in the city,” said Yarovoi, a college graduate. He works in Voronezh, located 130 miles from Kursk, and only returns to his hometown on weekends. Even agrarian university graduates cannot be tempted with higher pay to leave the city centers for the periphery. More and more often, farming enterprises are expanding their hiring searches for skilled workers abroad. Not all of them come for financial reasons:“I came because life is just more exciting here,” said Torbjörn Karlsson, a Swede. And Karlsson is not alone. In the evenings, agricultural professionals from Germany, South Africa and Switzerland can be found having a beer in Voronezh. Topics of conversation include grain prices, soil moisture levels and experiences with Russian police. They all work for different holdings, but there’s still an exchange. The competition is not great, so there seems to be enough land and profits for all.

Organic Eating food produced in small batches by people who love what they do has a distinct appeal for those who can afford it

Old MacDonald Has a Website and It’s Organic in green and gold fields. The images do more than illustrate the pages — they create an idyll. The kind of buyers willing to pay top prices for specially grown produce want to know where their food comes from and who raised it.They want to envision the countryside as a place out of fairytale. And some farmers who sell produce on the web sites are indeed living the dream. Four years ago, Olga and SergeiVankov went fishing in Mozhaisk, in the Moscow Region, and found themselves captivated by the local scenery. Lying in an unkempt meadow, Sergei felt as though he had come home. The next day he bought a few dozen hectares of hayfields as a present for his wife, and got a cow in the bargain. Now there are four cows on their farm, plus goats, birds and 144 pigs. For local residents, the Vankov’s pork, priced at 100 rubles ($3.14) per pound seems excessively expensive, so the Vankovs sell their produce through the online store Ferma, (http://Ferma. ru), which takes orders from customers in Moscow. The Vankovs

VASILY KORETSKY RUSSKIY REPORTER

This summer, Russia’s chief medical officer, Gennady Onishchenko, called on Russians to take their home-grown cucumbers, milk and eggs straight to the markets, avoiding the commercial middlemen. For your average Russian dacha owner this could be a good source of extra income, especially if the produce is grown using traditional methods, without pesticides or in a way that could be marketed as “organic.” But farmers are not taking Onishchenko’s advice. Produce grown locally and sold by the farmer is often too expensive for local, rural buyers, many of whom grow their own food anyway. Additionally, few Russians are willing to pay the extra price for any food labled organic. In Russia, there is no method for certifying food as organic, and as a result, the word has little meaning. So instead of meeting up with consumers at the local market, some Russian farmers are connecting with buyers through online grocery stores. These web sites peddle an alluring image of rural bliss on their pages, with happy, enthusiastic farmworkers handfeeding baby chicks or working

hope the web site will introduce their property to people who want to do more than see pictures of the place their food is grown — they are turning their farm into an ecotourism center. The Vankovs have already built a lakeside village with eight guesthouses. But life on the farm is not for everyone. “You know how I can afford all this?” Olga said. “It’s because I have another business. Making a living from this? A peasant farmer would never think of doing this: It’s 100 percent unprofitable. There is no proper way of marketing it, and so in Russia the land lies abandoned, uncultivated.” Behind Olga, through the window of the Vankov’s kitchen, a new red tractor crawls slowly out from behind a hill, swans fly over the lake as the sun goes down. Their business model relies on this idyllic image of the farmer and his wife in the countryside. Read more at rbth.ru/13370

OLIA IVANOVA

Olga Vankova

We tried making cheese for ourselves, and people liked it. Every day I produce 10 kilos of cheese and 70 kilos a week if there are a lot of orders. I want to enlarge my production; I don’t plan to give up.”

Jay Close produces about 20 different kinds of cheese.

American Says ‘Cheese’ in Moscow Region After falling in love with Russia, but tiring of the rat race in Moscow, American Jay Close decided to move to the country — and make cheese. ALEXANDRA ODYNOVA THE MOSCOW TIMES

IN HER OWN WORDS

Making a living from this? A peasant farmer would never think of doing this: It’s 100 percent unprofitable. There is no proper way of marketing it, and so in Russia the land lies abandoned, uncultivated.”

Jay Close

OLIA IVANOVA

Unable to find neighbors willing to pay extra for organic produce, some farmers have turned to the Internet to find buyers for their goods.

IN HIS OWN WORDS

Olga Vankova sits in her picturesque kitchen in a village near Mozhaisk.

Once a chef in Paris, New York native Jay Close, 48, is now fully immersed in Russian rural life, trying to succeed in a venture in which most locals fail and that experts dub“impossible”: private dairy farming. It has been about a year since Close settled in the village of Moshnitsy, about 40 miles southwest of Moscow. It is a typical settlement where old wooden shacks lie decaying next to newly built brick mansions, surrounded by broken roads. Before building his own log house here, Close traveled to and from Russia for almost two decades — enough to learn everything about local corruption and bureaucracy. But this knowledge didn’t discourage him from buying a patch of land and setting

up his own cheese production facility. “I got tired of traffic jams and employers who hire and don’t pay,” said Close. He seems to be happy with a life choice that, although rich in challenges, looks like quite a success story. “We tried making cheese for ourselves, and people liked it,”he said.“Every day I produce 10 kilos [22 lbs.] of cheese, and 70 kilos [154 lbs.] a week if there are a lot of orders.” He plans to step up production after buying more cows and acquiring new equipment from the Netherlands. Close’s farm comprises two cows, a sheep and a few goats. To produce 10 kilos of cheese, Close has to buy milk from bigger farms nearby, and he hopes to expand his herd by four cows. Close’s catalog lists about 20 kinds of cheese, among them goat cheese, blue cheese, mozzarella, and cheeses with spices, ginger, basil and garlic. He said his produce, which can be found at several venues in Moscow and the Lavka online store, is popular

among Swiss and French expatriates — people who generally know a thing or two about cheese. But Close believes Orthodox Christians are also among his clients, as he noted a decline in sales during Lent, when consumption of dairy products is restricted. “People with money buy my cheese because it’s three times above the supermarket price but it’s organic,” Close said. His prices range from 300 rubles to 450 rubles ($10 to $15) per pound, depending on the milk and additional ingredients. This is, indeed, above regular retail prices; according to the State Statistics Service, the average price of cheese is 125 rubles ($4) per pound. Close is one of the few people in Russia who have risked opening a small private dairy farm. The business, common in Western countries with deep-rooted cheese-making traditions, is still fledging in Russia, whose dairy industry is described by experts as “simply bad.” “Unlike in Europe, Russian cheese is traditionally produced by large factories in order to reduce production costs,”saidVladimir Cheverov, director of the milk-processing department with the Soyuzmoloko dairy lobby group. Expensive cheeses such as Close’s account for a tiny 1 percent to 3 percent of the market, with customers concentrated in big cities such as Moscow and St. Petersburg. The government is trying to help, increasing duties on imported cheese, but domestic producers say they need further protection. The dismal statistics do not discourage Close. “I want to enlarge my production,”he said.“I don’t plan to give up.”

Business

Russia BEYOND THE HEADLINES

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ECONOMY in brief

Airports Bigger will hopefully mean better for travelers

$3.9 Billion Plan to Turn Domodedovo Into “Aerotropolis” Roland Oliphant The moscow times

The company that runs Moscow’s only private airport, Domodedovo, announced an ambitious 10year development plan last month that would effectively result in the rise of a new city on Moscow’s Southern outskirts. The plans of private company East Line — which include a third runway, a revamped landing apron and expanded terminal facilities — are grounded in a general development concept that the airport management began working on in the late 1990s. Dmitry Kamenshchik, chairman of the airport’s board of directors, said Domodedovo forms the kernel of a “synergistic conurbation” of commercial development that could stretch up to 12 miles from the airport itself. A nine-year project to upgrade the airport’s first runway, due to be fully completed this fall, has already made Domodedovo the first Russian airport certified to receive the Airbus A380, and work on a third runway is set to begin in the first quarter of 2012.

What is an Aerotropolis? Television shows and science fiction literature from the 1960s envisaged people moving from place to place in flying cars and living in modular capsules, but the concept of an “aerotropolis,” an airport city, is somewhat different. The aerotropolis, which was developed by American academic John Kasarda, is defined as an urban form that has an airport as its center, in the same way a metropolis has a central city core. Like a metropolis, an aerotroplis

has commuters who come into the central core, but do not live there. Around the center are businesses that rely on the core — in this case, the airport — for their livelihood. Some examples are hotels, logistics centers and retail facilities. While these types of industries organically arise around an airport, they often result in bottlenecks. A planned aerotropolis can alleviate these problems by constructing appropriate transportation options and zoning areas for certain businesses.

Also next year, construction will start on a five-year, $807 million renovation of the airport apron, the area where aircraft park for loading and refueling, in a bid to increase the number of parking spaces for aircraft. The grandiose plan has firm backing from both federal and regional governments, said Kamenshchik at a press conference. “None of this would be possible without the support of all kinds of government departments and ministries,” Kamenshchik said.“Are we happy with our relationship with the federal government? Yes, we are.” But he ducked a question about the details of collabora-

tion with the state, saying only: “We think this is a great benefit to the region and the country, and so we think the government would like it.” Domodedovo’s relationship with the authorities has been strained by a collapse of services during ice storms last December and perceived security failings leading up to a suicide bomb attack there in January. In July, an investigative committee said it had failed in an effort to establish who actually owns the airport. The committee said Kamenshchik is listed as the 100 percent beneficiary owner of the company, but it refused to disclose whether there had been any ownership chang-

itar-tass (3)

Recent Tragedies at Domodedovo Airport

dec. 4, 2010 • Dagestan Airlines Flight 372 from Moscow to Makhachkala made an emergency landing at Domodedovo, skidding off the runway and killing two.

dec. 25, 2010 • Freezing rain damaged two power lines running to Domodedovo airport, causing a complete blackout and leading to major delays and cancellations.

jan. 24, 2011 • A suicide bomber detonated herself at the international arrivals hall, killing 36 Russians and foreign citizens and injuring more than 130.

lori/legion media

The enlargement of one of Moscow’s major international airports to the south and east will rival the city’s planned expansion to the southwest.

World Bank warns Russia on growth and spending

Renovations at Domodedovo will increase passenger capacity.

es since the airport rescinded its initial public offering proposal in May. Domodedovo is operated by East Line Group, which is in turn owned by FML Limited, which is registered in the Isle of Man. But “DME Limited” is the official face of Domodedovo and the company listed on the I.P.O. attempt.

Financing

Documents recently distributed by the company show that the airport’s construction projects are expected to cost $3.9 billion — while privately funded“development”projects including the hotel and the cargo village will require $420.5 million. Contributions from the federal and regional governments will include a new link to the fourth ring road and improvements to the existing rail link so that trains will be able to run every 15 minutes, rather than every half hour, as they do now. “We have four sources of investment — ourselves, the federal government, the regional government and private investors,” Kamenshchik said. “Together, these sources give us enough money to cover all our projects over the next 10 years.” The airport group itself is set to invest $3.4 billion of its own funds in upgrades by 2020, according to Kamenshchik. But he said the airport has no current plans to raise funds by

Investors The prime minister has big words, but also hedges his bets

In his speech at a recent forum, Vladimir Putin walked a fine line between promoting Russia’s economy and warning investors not to expect too much. Alexander Kilyakov Special to RBTH

At the 10th Annual Sochi Investment Forum in mid-September, Prime Minister Vladimir Putin once again stated his position that developing economies hold more promise for the future than traditional economic leaders. “It is obvious that the recent leaders are losing ground and can no longer serve as examples of a balanced economic policy, something they only recently were teaching us,” Putin said. “Moreover, the debt crisis in Europe and the United States is aggravated by their economies being virtually on the verge of recession.” According to the prime minister, Russia is poised for growth next year by virtue of the following factors: the country’s foreign debt is no more than 3 percent of G.D.P. and Russia’s reserves of gold and currency are the thirdlargest in the world. In his speech, the prime minis-

ter predicted that Russia’s growth rate in 2011 will reach 4 percent of G.D.P., and the country will recover completely from the financial crisis in 2012. According to Andrei Khazin, a professor at the Higher School of Economics in Moscow, Russia will have no problems achieving this goal. “The consequences of the 2008 crisis were less severe for Russia than one might have anticipated,” said Khazin.“Reserves created in advance helped stabilize the situation and increase public spending, even as other countries were curtailing these programs. We did not plunge so deep, and we are coping with the aftermath faster than the others.” But Putin took the opportunity to hedge his bets a little, saying that if Russia’s economy does fail to meet expectations, the blame lies with the west. “There is still no clarity regarding its recovery,”Putin said,“which is unfortunate for all of us, including for us in Russia.” Ruslan Grinberg, director of the Institute of the Economy at the Russian Academy of Sciences, agrees that Russia is too depen-

mikhail mordasov

Independent Analysis Meets Interdependent Reality

A participant in the Sochi forum walks near the meeting site.

Sochi International Investment Forum The Sochi International Investment Forum is one of three major economic forums held in Russia. Its main aim is to improve the investment climate and establish ties between Russian regions and local and foreign businesses. This year’s forum was attended by delegations and representatives from 47

countries and 55 Russian regions. Traditionally, Russian regions have used the forum as an opportunity to show foreigner investors what they have to offer. Presentations this year included a private helicopter made in the Republic of Bashkortostan and a passenger ship made in Tatarstan, among others.

selling stock in the airport, and that the situation has not changed. Kamenshchik told reporters that the land Domodedovo planned to build on was either federally owned or belonged to a company incorporated by the airport itself, meaning that there would be “no ownership disputes. “There are no residential homes in this area, so I see no problems connected with relocating,” he said. Plans to build a new runway at state-owned Sheremetyevo Airport, north of the city, ran into controversy earlier this month after facing opposition by local residents.

A New City?

The plans to expand Domodedovo have no direct link to earlier announced proposals to dramatically expand Moscow to the south and east. Kasarda said the project could generate up to a million jobs, but gave no source for the estimate. Dmitry Gurodetsky, head of the Domodedovo administrative district, said the airport already accounts for about 30,000 jobs in the area. But while admitting that residents might face some “inconvenience” from expansion, he brushed aside questions about the impact on local residents to concentrate on what he called the “benefits,” including jobs, higher-than-average wages and a thriving business area.

dent on Western economies to make reliable predictions at this point about the country’s economic future. “Unfortunately, we are hostages to the state of affairs in other countries,” said Grinberg. “Our well-being depends on their wellbeing. This is not a metaphor but a direct link. If economic growth slows down dramatically — and it has already slowed down, causing grave concern — we will immediately feel the effect because we depend on oil prices.” In addition to the challenges Russia faces due to globalization, the country’s economy also continues to suffer from its Soviet legacy “Russia inherited a dire legacy from Soviet times: More than half the G.D.P. is generated by stateowned companies. Clearly, this impedes competition, spawns corruption and causes inefficiencies in running state-owned corporations,” Khasin said.“In my opinion, we need a massive privatization of the economy, including the basic sectors. Many companies in the natural monopolies sector must be privatized.” President Dmitry Medvedev began some important reforms, such as forcing government officials off the boards of state-owned companies, and the government is planning a new round of privatizations. But political changes expected in the country next year make it difficult to predict when this will take place and to what extent moving state companies into private hands will benefit the economy.

The World Bank slashed its G.D.P. forecast for the Russian economy this year to 4 percent on worries that a global slowdown will hit oil prices and the forthcoming elections have loosened fiscal policy to too great an extent. It also warned of a 5.3 percent deficit and recession in 2012, should oil retreat to $60 and current spending plans remain unchanged. While noting the Kremlin’s push to diversify the economy, the report cautioned that Russia’s reliance on commodities remains worrisome Despite sharply higher global risks, the short-term economic and fiscal situation in Russia is favorable because of high oil prices and an almostbalanced budget this year, but the balance of macroeconomic risks has shifted toward an uncertain growth path as inflation pressures subside and external risks rise sharply.

Coca-Cola Opens 15th Production Facility in Russia On September 26th, Coca-Cola unveiled a new production facility near the southern Russian city of Rostov-on-Don. The plant has a capacity of 450 million liters of beverages a year and is equipped with Russia’s largest wastewater purification facility. Since its entry into the Russian market in 1994, Coca-Cola has invested more than $3 billion into the local economy and plans to invest the same amount over the next five years. “Today’s announcement underscores the Coca-Cola system’s long-term strategy of investing in Russia,” Coca-Cola C.E.O. Mukhtar Kent announced in a statement during the plant’s opening. Read the full article at rbth.ru/13545

GLOBAL RUSSIA BUSINESS CALENDAR The 7th Russia & CIS Hotel Investment Conference oct. 17 – oct. 19 moscow, russia

The Russia & CIS Hotel Investment Conference is one of the largest gatherings of hotel investors, operators and developers to focus on Russia & CIS, with over 400 participants, exploring new investment opportunities in the region. ›› http://www.russia-cisconference.com/

mercedes-benz Fashion week Spring/Summer 2012 oct. 21 – oct. 25 moscow, russia

On display at this year’s Russian Fashion Week in Moscow will be collections from leading and emerging designers from Russia and the post-Soviet space as well as new collections from the world’s famous fashion houses. ›› http://mercedesbenzfashionweekrussia.com/

N.Y.S.E. Russia Business and Investment Summit 2011 Oct. 27 – Oct. 28 new york stock exchange center new york, ny, u.s.a.

The summit will offer a series of panels and one-on-one meetings with institutional investors, allowing attendees to explore investment expectations. Topics will include key trends of policy making, the regulatory environment and investment valuations. ›› www.irtinc.org/NYSE_RBIS

Find more on the Global Calendar

at www.rbth.ru

Real Estate: A New Bubble in the Making? November 9

MOST READ BP to Stay in Russia http://rbth.ru/13503

RUSSIA BEYOND THE HEADLINES

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

Money & Markets

Economy Russia’s G.D.P. remains lower than it was before the crisis, but raw materials are helping it rebound

Investment Drop Leaves Economy Vulnerable to Shock Russia’s extractive industries have almost returned to precrisis levels, but a sharp drop in investment has left the country at the mercy of the global economy.

Crisis Looms, but Russia Well Prepared Ben Aris

KOMMERSANT DENGI

IN FIGURES

4.8%

is the amount Russia’s G.D.P. is expected to grow this year, according to estimates from the International Monetary Fund

50% sales of oil and gas

of Russia’s budget revenue comes from

13%

LAIF/VOSTOCK-PHOTO

of Russia’s G.D.P. comes from the high-tech and intellectual services industries

The extractive industries have kept Russia’s economy in the black, but raw materials can only do so much in the long term.

Economic Growth by Sector (%)

production of equipment, building materials and metallurgy.

Investing in the future

Industries that are yet to return to precrisis levels “are basically the investment segment,” said Vladimir Salnikov, deputy general director of TsMAKP.“The dynamics of fixed capital investment, an important indicator that determines the quality and dynamics of future development, has failed.” According to TsMAKP estimates, fixed capital investment in the manufacturing industries is 7.5 percent below 2008 levels, profitability is down one quarter, and solvency is down by one-third. The inflow of investment into the Russian economy overall has dropped significantly. Despite a nominal increase (from $102 billion in the first half of 2008 to $112 billion in the first half of 2011), there has been a decline of almost 14 percent in terms of G.D.P..“This reversal has become rather fixed,” said Salnikov.“It is unclear how long it will be before we see investment growth again.”

Now, Russia, like many other countries, has become“a hostage to the situation in Europe and the United States,” said Salnikov. With growing economic problems in these regions and China’s economic slowdown — the growth forecast for China’s G.D.P. was recently lowered, although it still remains high, at 9.3 percent — a correction in commodity prices is not out of the question. This will hurt the Russian economy, which emerged from the 2008 crisis with an even greater dependence on hydrocarbon prices. “We have absolutely no control of such potential problems as they can come from outside, from the global market,” said Salnikov. Nevertheless, he remains optimistic: “Potential growth in developed Western countries is much less than in developing countries. Investors will eventually go where there is the potential. In this sense, Russia ultimately is in a good position. In a deep world crisis, all we want is some assurance of stability in these developing countries so that investors can understand that their investment is protected.”

Banking By becoming leaner, one Russian investment bank is succeeding in the financial sector’s new reality

KIT Finance Returns From the Dead The St. Petersburg investment bank was almost a casualty of the global financial crisis, but instead used the scare to find a new niche financing SMEs.

KIT’s History Is a Whale of a Tale

BEN ARIS

BUSINESS NEW EUROPE

KIT grew rapidly in the early 2000s, but since surviving the financial crisis has opted to narrow its focus.

ITAR-TASS

It was a close call. Two days after Lehman Brothers filed for Chapter 11 on Sept. 15, 2008, the financial tsunami broke on Russian shores and the up-and-coming commercial bank KIT Finance collapsed. Bankers held their breath waiting to see if the bankruptcy would spark a repeat of 1998, when the entire top tier of the Russian banking sector was wiped out in a few days. It didn’t happen. Within hours, asset management company Leader, owned by Gazfond, the pension fund of Gazprom, stepped in and said it would acquire a controlling stake in KIT. Leader’s offer to bail out KIT stopped the fear from spreading at the crucial juncture, but eventually it was state-owned Russian Railways (RZD) that bailed the bank out with loans backed by the Russian Deposit Insurance Agency. Fast forward to 2011: While Europe is again facing calls to recapitalize its banks in anticipation of a Greek sovereign default, which the markets seem to assume is now inevitable, KIT is not only back on its feet but is flourishing. Andrei Degtyarev, the bank’s new C.E.O., says that by October it will have paid back all its bailout loans — three years ahead of schedule. The bank ran up a total of 60 billion rubles ($1.8 billion) in bailout loans, but it went into the crisis with significant stakes in state-owned diamond monop-

MOSCOW BLOG

THE MOSCOW TIMES

NADEZHDA PETROVA

Three years after the financial crisis in Russia began, the country’s G.D.P. is still short of precrisis levels. But results from the first half of 2011 show that there is not far to go. G.D.P. grew by 4.1 percent in the first quarter of the year and by 3.4 percent in the second. Other macroeconomic indicators also seem encouraging, which has prompted policymakers to declare that the country’s recovery is complete — or that it will be by early 2012. In theory, the situation in Russia indeed seems better than in other parts of the world. And yet to declare the economic crisis in Russia over is premature: The economy remains dependent on raw materials, and foreign investment has been slow to return. According to statistics, industrial production in Russia from January to July 2011 is only a fraction of a percent smaller than it was before the crisis. Raw materials extraction has grown by 4 percent, and oil extraction by 4.2 percent compared to precrisis levels. The situation in the mining industry has led to positive general industrial production indicators, reported the Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP). Russian industry owes its resurgence to the extractive industries, which have returned to precrisis levels, and investments, which have surpassed previous values, as well as decent profitability, only slightly less than before the crisis. The manufacturing industry is behind by 10 percent compared with 2008 levels, although there are exceptions. Consumer production, hydrocarbon processing and the automotive industry are relatively healthy — some because they are focused on the local market, others because of increased production, and yet others thanks to government support programs. Among the manufacturing industries that are lagging are the

“KIT is now somewhere between a corporate and an investment bank,” explained C.E.O. Andrei Degtyarev. olist Alrosa and VTB Bank’s retail arm VTB24, part of which it sold in August for about 20 billion rubles ($617 million). According to Degtyev, the plan is to sell the remaining stakes this October, which should clear the bank’s debts completely. “The plan is to pay off our debts by the end of the year, as the debt terms prevent us from doing some types of business,”Degtyarev said, sitting in the bank’s modest but

modern offices in the heart of Moscow.“Then we have a growth strategy to 2014 after which, who knows? Maybe we will sell the bank. After we pay off our loans, then the bank will be a more interesting prospect.”

New strategy for new times

After a nasty two years, Russian banks are bouncing back. According to the Central Bank of Russia, retail loans for the sector were up 19 percent in August year-on-year and there was also a sharp acceleration of corporate lending, up 13 percent, both of which are underpinning Russia’s relatively robust economic growth. Today, KIT looks very different

than it did before 2008, when the firm was expanding rapidly into many different types of banking services. Now it has been shorn of all its businesses except the private and corporate banking functions, and sold off its large St. Petersburg branch network to concentrate on servicing the needs of small- and medium-sized enterprises (SMEs).“We don’t plan to go back to the retail business. Now we concentrate on complicated deals for medium-sized companies: things like project finance, M&A deals and loans. If we are involved in a management or leveraged buyout, then sometimes we take a stake in the most interesting deals,”said Degtyarev. “KIT is now somewhere between

KIT Finance (which is Russian for whale) was typical of the Russian banks that flourished in the boom years just after 2000. Founded in St. Petersburg, KIT moved to Moscow in 2003 and began to grow rapidly, launching business after business. The company started an online brokerage for day traders, tied up with Holland’s Fortis to offer international funds to Russian retail investors, and rolled out a mortgage operation. There were even plans for a $1 billion I.P.O. in 2008, which would have made KIT the first private Russian bank to list on an international exchange. But in 2008, the bank collapsed. Thanks to a bailout from a Russian Railways lender, it survived, but is now a completely different operation.

a corporate and an investment bank.” Degtyarev believes the niche is an obvious one, since Russia’s investment banking business is increasingly dominated by a few giants. As a result, Russia’s legions of fast-growing middleweight companies are struggling to find investment banking services.“The big banks won’t work with SMEs because the risks are higher and that limits the number of deals you can do,” said Degtyarev.“But that’s our advantage: We do fewer deals, but we have excellent risk management and get very close to the deal — taking seats on the board, for example — to control these risks properly.”

ver the last two months, liquidity in the banking sector has been drying up. It was a liquidity crunch that caused the crash in 2008, and the government was forced to bail out the banks to the tune of $66 billion to keep Russia’s financial sector afloat. Happily, the Kremlin was successful, and the banking sector did survive (unlike in 1998). Hats off to the now-ousted Finance Minister Alexei Kudrin, thanks to whom Russia had about $600 billion in reserves.

Are we headed for the abyss? Certainly Russia is in a dangerous place, as confidence is fading fast. Now liquidity is drying up again. If liquidity goes negative, bankers will start worrying about who is going to go bust, and that will mean lending between banks will freeze. So, are we headed for the abyss? Certainly Russia is in a dangerous place, as confidence is clearly fading fast. It looks increasingly likely that the E.U. is going to try to ring-fence Greece and then let it default — the jolt this would provide to confidence could send Russia over the edge. But if the shock does come, Russia is better prepared than it was in 2008. Knowing a shock is coming is winning half the battle, as one of the reasons that the economy froze in 2008 and hit Russia so much harder than Western economies was that the 1998 devaluation was fresh in everyone’s mind. So they simply stopped doing business until it was clear how the crunch was going to play out; the fact that Russia’s economy has bounced back so fast will go a long way to muting the impact of this round of crisis — if it comes. Secondly, Russia is in a much stronger economic position than it was going into 2008. Most of the damage was done by the borrowing binge that preceded the 2008 collapse. Russian banks and companies had tapped international capital markets during the boom years.Worse, many companies had used their shares as collateral, which led to socalled“margin calls”during the very worst of the crisis.This time round there will be few, if any, margin calls, as the 2008 crisis squeezed all these deals out of the market. Stepping back a bit further, big companies have been starting to borrow again, but a second lesson from the crisis has been that the debt profile of Russian companies and banks is much better than two years ago: Companies have lengthened the

If the shock does come, Russia is much better prepared than it was during the last crisis in 2008. maturities of their loans to medium-term debt while swapping a lot of their foreign borrowing for ruble loans. As the Russian government has plenty of cash and the banks are dominated by the state, the government is in a stronger position to restructure debt if a company gets into trouble, as it can all be done“in house.” But everything will depend on how well the E.U. manages the Greek problem. Surely, opting for a controlled Greek default is an extremely risky strategy and one that the less robust and more nervous emerging markets such as Russia will not welcome. Banks are built on trust, and defaults are by definition a betrayal of that trust. A controlled devaluation is a logistical exercise, but the trouble is that if it is badly managed then fear could get ahead of the control mechanisms; if this fear is large enough, even healthy banks can go bust.There is plenty of room for surprises, and these could easily lead to a meltdown.

Opinion

Russia BEYOND THE HEADLINES

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most read Innovation Waits for a Sputnik Moment http://rbth.ru/13523

PUTIN 2.0: Good for Business? the likely next President will back reform Vladimir Babkin

Special to RBTH

iberal public opinion is outraged by the news that the Russian president and prime minister “have long agreed” which job each of them would take. Everything seems to be strictly constitutional, but the people’s will is not being freely expressed. However, Dmitry Medvedev and Vladimir Putin, as well as much of Russian society, don’t seem to think that’s Russia’s biggest problem. Perhaps they are afraid that if they relinquish power, the world would soon see a free but hungry and embittered people. Just one day, and a Sunday at that, passed between two important events: the announcement of the tandem swap and the resignation of Deputy Prime Minister and Finance Minister Alexei Kudrin. It’s no surprise that President Dmitry Medvedev and Prime Minister Vladimir Putin decided to waste no time in showing the political landscape how to take decisive action. One of these courses of action is to put loyal professionals in key posts. Earlier, during a trip to the United States, Alexei Kudrin voiced his opposition to the president’s decision to significantly increase the Russian defense budget, and also spoke about the growing deficit of the State Pension Fund, which is currently the only real source of pension financing in the country. The former finance minister also publicly criticized some of the president’s other economic initiatives. In Russia, the first move of the new tandem operation was enthusiastically received by the Communists. Alexei Kudrin more than once gave them good cause for advocacy when he opposed social obligations for being financially impractical. Liberal politicians are worried, seeing this as another sign of arbitrary rule. But because the now-former finance minister was by no means a liberal — on the contrary, he was a typical hawk — there is no one to defend him. And there is no

time to do it. It is more important to predict and understand what the authorities’ next actions will be and how effective and consistent they will prove. If we are to believe the repeated declarations of the president, prime minister and much of the Russian political establishment that supports them, the main task in the coming years will be modernizing and diversifying the economy.That means we can soon expect more attractive terms for investment in high-tech sectors. But modernization will mainly be financed, as before, with rev-

The main task in the coming years will be modernizing and diversifying the economy.

path has been exhausted,”Dmitry Medvedev told the International Economic Forum in St. Petersburg last summer. Some analysts believe that Vladimir Putin does not share that idea, and that once he is back in the Kremlin, he will seek to strengthen the role of the state, at least in strategic sectors. It seems that such arguments mainly serve to confirm the views of the sizable section of society that opposes the partners working in tandem. Allegedly, Putin is an advocate of a strong state more like a dictatorship, while Medvedev is more of a liberal. Compare the “steely gaze of the former K.G.B. officer” with the “thoughtful gaze” of the former university professor. That sounds nice but makes no sense politically. Russia’s policy, both domestic and foreign, will be more liberal or more reactionary regardless of the color of its leaders’ eyes. It will be determined by internal and external factors. Right now, those are very complex. Let us hope that the policy will be pragmatic enough to change things for the better. Vladimir Babkin is former deputy editor in chief of Russian daily Izvestia.

Putin is known for stability, Not reform Ian Pryde

SPecial to Rbth

fter announcing his plans to return to the Kremlin in next year’s elections, Prime Minister Vladimir Putin gave a speech highlighting Russia’s economic strengths as a way of supporting the notion that his return to the presidency was necessary to maintain economic and financial stability. The country’s G.D.P. is now the sixth largest in the world, and Putin made what amounted to a pre-election pledge to lift it into fifth place by 2015. Inflation in 2011 is lower than for many years, and Russia has the third-largest gold and foreign currency reserves in the world. But look beyond the headline figures, and things

enues from the sale of energy products. So, we shouldn’t expect any changes in that sector that could worsen the investment climate. One of the most ambitious and expensive programs is the modernization of the army. For that to happen, sacking the finance minister isn’t sufficient. In order to have enough for the army, for modernization and for social spending, the state budget will have to be revised. One of the new sources of budget revenue will apparently be the introduction of a progressive income tax that would require the rich to pay more. That measure could scare off investors, who will have to divvy up more of their profits to the Russian treasury. We can also expect a new wave of privatization of large companies, including the oil and gas industry, as well as Russian Railways and Russia’s biggest bank, Sberbank.“We are not building state capitalism. There was a period when the role of the state was intensifying. It was inevitable and necessary. Now the potential of that

The Moscow Times

o one knows yet how and when what Harvard professor Ken Rogoff calls the “great contraction” will end. Some predict a new global recession starting with Europe and the United States. Even the normally cautious International Monetary Fund has not been mincing its words, with new managing director Christine Lagarde saying we are entering a dangerous new phase. How can Russia, which is so vulnerable to oil price changes and capital flow surges, try to steer a steady policy course in the face of such uncertainty? There are no easy answers. It seems that the usual recourse to international policy coordination has faded from view, with each country trying to find its own solution. Russia, unlike fellow BRIC members Brazil, India and China, has no capital account restrictions, and the ruble is completely convertible. This is probably the main reason that the Russian economy suffered such a devastating blow relative to the others as the financial crisis erupted in late 2008. Credit fled banks almost everywhere, but in Russia, it also left the country.

It would seem that, short of backtracking on its commitment to an open economy, Russia really has no choice but to create buffers by pursuing macroeconomic policies that should be even more prudent than usual. In some ways, it has. After falling to almost $380 billion in early 2009, foreign exchange reserves are now at $545 billion. A budget deficit of almost 6 percent of gross domestic product in 2009 is likely to be about in balance this year, admittedly thanks in part to higher oil prices. And, importantly, gross public debt is less than 10 percent of G.D.P. this year, according to the I.M.F. ’s latest published data, whereas it stands at almost 18 percent in China, 80 percent in Germany and 142 percent in Greece. In one area in particular, and despite progress, the effort is insufficient. This has to do with inflation. After averaging 8.8 percent in 2009 and again in 2010, the year-on-year increase in the Russian consumer price index registered 9 percent to 10 percent between January and July. Only last month did the rate of inflation decline to 8.2 percent, and it is likely to decline further to about 6.5 percent by year’s end. But this is still just not good enough — not in this volatile global environment. The problem is that Russia’s inflation rate is

The stability Putin brought to the country came at the cost of increased corruption and bureaucracy. People are now better off than in the 1990s and are consuming, but public goods such as health, social care, education and property rights remain at low levels. Energy exports have increased as a proportion of total exports, making the country even more dependent on the vagaries of global oil and gas prices, which are totally beyond Russia’s control, as are international interest rates and thus Russia’s cost of capital. Most serious Russian and international observers have also argued that the country cannot keep spending its way out of problems and must implement thoroughgoing reform to cure its energy dependence and diversify its economy. Earlier this year, for example, a widely discussed report by The Institute of Contemporary Development (Insor) rightly stated that all of the country’s modernization was imported, and warned that without major reform Russia would lose any chance whatsoever of catching up technologically with the rest of the world.

not out of the woods yet Martin Gilman

are very far from rosy. Budget expenditures are increasing by more than 10 percent per year and will rise further as the elections approach. The political elite constantly talks of reducing corruption and bureaucracy, but both have risen dramatically since 2000, while both international and domestic investors remain very wary, despite constant promises to improve the country’s investment climate. Productivity remains low by international standards since there is little investment — quite the opposite: capital flight remains considerable, amounting to $34 billion in 2010.

still much too high in the context of a global low-inflation environment. Over time, the ruble is losing the competitive margin it gained. If an inflationary wedge continues vis-à-vis Russia’s main trading partners, the time will come when an overvalued ruble comes under speculative attack, joining the other cases of financial fragility that have been too much in evidence lately.

The problem is that Russia’s inflation rate is still much too high in the context of a global lowinflation environment. Before suggesting a policy response, we need to understand why Russia continues to have such stubbornly high rates of inflation relative to others. Analysts everywhere, in seeking to explain inflation, write reams about structural labor markets and wage conditions, infrastructure bottlenecks, industrial monopolies, as well as excess demand, say, stemming from too much government spending. All of these issues may matter at the margin in Russia, but what really matters is money growth that is excessive relative to demand. The point is simple: Russian in-

flation was running at almost 10 percent through July because the stock of money was expanding at more than 20 percent on a yearon-year basis. Inflation in other major emerging markets such as China, India and Brazil was lower because broad money was growing much more slowly in their economies. For Russia, broad money rose 22 percent in the year to August. With real G.D.P. growth of less than 5 percent in 2011, it is hardly surprising that inflation should still be so high. In fact, the rapid growth of the money stock would be consistent with an even higher inflation rate, but presumably the difference reflects a higher demand for rubles generally. In a global crisis, ruble demand could plummet as investors and savers seek safe havens such as the U.S. dollar and even gold. As in other countries, there is no inherent reason that Russia should not target an inflation rate of about 2 percent. It is a policy decision. The Central Bank must tighten its monetary policy accordingly, or Russia will remain exposed when — not if — the next global financial crisis erupts. Martin Gilman, a former I.M.F. representative in Russia, teaches at the Higher School of Economics in Moscow.

Since Putin’s announcement, Russian investment banks have been arguing that he will embrace reform, since that is what the country needs. But that view is based on common sense and economic rationality. The problem is that economic rationality is rarely the driving force in Russian politics. During Putin’s presidency, many problems dating from the Soviet period and the 1990s not only remained unresolved, but actually got worse as a direct result of government policies. The economic and political stability Putin brought to the country came at the huge cost of greatly increased corruption and bureaucracy. That now has the twin effects of hindering economic development and business, while at the same time preventing the implementation of laws and government policies. This desire for stability and the status quo within very tight limits set by the government means that it cannot pluck the low-hanging fruit and institute simple reforms, such as calling on Russians to become far more entrepreneurial and slashing bureaucracy, which could easily add a few percentage points to annual G.D.P. growth. Instead, the government remains fixated on supposedly prestigious megaprojects and large companies. Small and medium-sized enterprises account for around 20 percent of Russian G.D.P., compared to around 60–70 percent in advanced countries, so there is potentially huge scope for improvement here. But the small-business organization Opora complains that the government constantly ignores its requests to reduce bureaucracy and corruption. Under Putin’s presidency, Russia ignored countless warnings to reduce the country’s energy dependence and diversify the economy. Nor did he implement the “dictatorship of the law” that he promised. Russia was far too complacent during the commodity boom up to 2008 and thus missed the best chance it had had, literally for decades, to develop a more balanced economy. Now it must try to do so under much more difficult circumstances and a far less favorable global economic environment. It remains to be seen whether Putin can really “reinvent” himself. Ian Pryde is founder and C.E.O. of Eurasia Strategy & Communications in Moscow.

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Russians on the Economy in your opinion, will the next 12 months be good or bad for russia’s economy?

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Letters from readers, guest columns and cartoons labeled “Comments,” “Viewpoint” or appearing on the “Opinion” and “Reflections” pages of this supplement are selected to represent a broad range of views and do not necessarily represent those of the editors of Russia beyond the headlines or Rossiyskaya Gazeta. Please send letters to the editor to US@rbth.ru This special advertising feature is sponsored and was written by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The new york times. web address http://rbth.ru E-mail us@rbth.ru Tel. +7 (495) 775 3114 fax +7 (495) 988 9213 ADDRESS 24 Pravdy STR., bldg. 4, floor 7, Moscow, Russia, 125 993. Evgeny Abov Editor & publisher Artem Zagorodnov executive Editor elena bobrova assistant Editor lara mccoy guest editor (U.S.A.) olga Guitchounts representative (U.S.A.) andrei Zaitsev head of photo Dept Milla Domogatskaya head of pre-print dept maria oshepkova layout Vsevolod Pulya Online editor an e-Paper version of this supplement is available at www.rbth.ru. To advertise in this supplement contact Julia Golikova, Advertising & PR director, at golikova@rg.ru. © copyright 2011, ZAO ‘Rossiyskaya Gazeta’. All rights reserved. alexander gorbenko chairman of the board. Pavel Nigoitsa General Director Vladislav Fronin Chief Editor Any copying, redistribution or retransmission of the contents of this publication, other than for personal use, without the written consent of Rossiyskaya Gazeta is prohibited. To obtain permission to reprint or copy an article or photo, please phone +7 (495) 775 3114 or e-mail us@rbth.ru with your request. Russia Now is not responsible for unsolicited manuscripts and photos.

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Culture

Russia BEYOND THE HEADLINES

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Theater Plus

Film One director explores a painful and often overlooked reality

New Season Brings New Takes on Old Works John Freedman

the moscow times

A Russian Girl’s Road Trip Through Hell In “Cargo,” which comes to New York this month, Russian director Yan Vizenberg exposes the sextrafficking trade — and still finds room for redemption. Nora Fitzgerald

Russia Beyond the Headlines

In a compelling scene from the independent film,“Cargo,” the protagonist, Natasha, is bound with silver duct tape to the front passenger seat in a filthy van after spending at least 24 hours in a small cell in the back. The viewer has already endured Natasha’s ordeal as a prisoner of traffickers, and seen her beaten and humiliated on her brutal journey from the Mexican border to Brooklyn. She fought back every step, and created enough of a ruckus in her cell that the driver, an Egyptian transporter named Sayed (Sayed Badreya) has put her in the front. She plaintively begs him for her freedom, recalling that all she ever wanted was for her friends and family to see her on TV, or in film, and be proud: “Wow, there is Natasha from Irkutsk.” “Cargo”is a dark road trip and ultimately, a story of redemption, but it offers up a wrenching portrait of human trafficking in the United States along the way. According to the filmmakers, 17,500 women are trafficked into the United States each year. “Cargo” is a product of New York–based Persona Films, and will have its NewYork premier at Quad Cinema in Greenwich Village on Oct. 21. With 45,000 films created each year, and only 600 of them reaching U.S. cinemas, Russian director Yan Yizinberg knows that even after two years on the proj-

ect, his work is still ahead of him. “Cargo” was shown in Washington, D.C., last month and will hit the festival circuit. But the goal is to release the genre-defying independent film in theaters without a distributor. “Cargo” introduces Russian actor Natasha Rinis in a startling performance. Her character (also named Natasha) is lured from Russia to Mexico by gangsters posing as Hollywood agents. She fights her fate with almost every breath. At one point it appears that her driver — played with an eerie poignance by Sayed Badreya, a veteran of commercial films such as“Ironman”— might kill her, but instead the journey takes off in a new direction. Reached by phone Rinis said she has not yet seen the film. “It was really intense and hard to go back to it,” she said. “My job was to make it as realistic as possible, and I had a very hard time getting out of that process.” Rinis will attend the New York premiere.

Kickstarting a “Cargo” Campaign

Director Vizinberg grew up in Moscow. He started out as a reporter for NTV Television after attending film school at Boston University, and it was his work as a reporter that led him to the story of trafficking — a trafficker called him from prison in Arizona. He told Vizinberg the FBI had it all wrong, he said. According to Vizinberg, “The man in prison said, ‘Just Google my name and you can see all the articles.’ I saw that he was beating the dancers in his clubs and

taking their passports away. I had never heard of human trafficking before, but this piqued my interest.” The 36-year-old director is determined to see his film released in some theaters; to do that independently, the production team has initiated a Kickstarter campaign (Kickstarter.com). Kickstarter is a popular and competitive funding platform for creative projects, some of which have had success with small, grassroots donations. The producers hope to make enough money to fund a small release. “We spent two years making the film; at that point we did not want to give it away to a distribution company that most likely will release it only on DVD,”Vizinberg said. The production team also hopes to take the film to Russia. “We would love to show this in Moscow,”Vizinberg said.“Human trafficking is a huge problem there, as well.”

Interview yan vizinberg

Yan Vizinberg directed “Cargo,” which was made with a budget of about $500,000. The producers hope to raise enough money via Kickstarter, an Internet fundraising platform, to take it into distribution.

You were a reporter when you graduated from Boston University? I actually went to film school [Boston University] intending to be a filmmaker but got a job at a news studio as a reporter for about three years. Why are Natasha and most of the young women trafficked in the story — and their traffickers — Russian or Eastern European? Obviously I am Russian and I am exposed to this part of the story, and it is easier for me to indentify with her. But she could have been from any country. I know there were a lot of questions at the showing [at George Washington University] about why there are more women trafficked from Eastern Europe. The area is not as stable and not as protected. People, and women especially, are trying to move to better places. These women are vulnerable and are easier to attack. And why was Sayed, the driver for the traffickers, Egyptian? I made the character an Egyptian Muslim to open that gap. For Sayed, all of these women are fallen and sinners and he doesn’t separate between dancer or stripper or prostitute. We wanted to put these two together. If they were

his story

NATIONALITY: Russian AGE: 36 Studied: Film production

from the same culture it would not be that interesting. We wanted these two enemies to end up understanding each other. You chose to let the women speak Russian and use subtitles, even though you know the presence of subtitles can affect a film’s chances in American theaters. I hope when Russians see this they see she is Natasha; she is not Nicole Kidman dressed up pretending she can’t speak English. I could never identify with films where they would speak in English with a Russian accent; it’s almost a circus, like comedy. For a U.S. audience, an accent adds flavor, but then the actors have to pretend and put on a fake Russian accent. What do you want people to come away with? We tried to make a drama in which two enemies come to a certain understanding. We know that Sayed is going to take the bullet for her and that he will be changed profoundly enough to complete his mission. By the end of the trip, he is a different person. He is

The Russian tradition of director-driven theater means that many of these old texts will be dressed in new clothes. Renowned film director Sergei Solovyov has signed on to stage a dramatization of Leo Tolstoy’s “War and Peace”at the Maly Theater, while Sergei Zhenovach, the popular artistic director of the Studio of Theatrical Art, is slated to stage a dramatization of Anton Chekhov’s short prose work “A Boring Story.” Brilliant veteran Maly actor Eduard Martsevich will put on a director’s hat in order to stage Ostrovsky’s ever-popular melodrama “Without a Dowry.” Still another major event is on tap at the National Youth Theater, where artistic director Alexei Borodin unveiled Tom Stoppard’s “Rock ’n’ Roll” on Sept. 22 and 24. This is the second collaboration between Stoppard and Borodin, following the epic“Coast of Utopia.” And that’s just for starters. By season’s end, as always, it will all look completely different.

bIBLIOPHILE

Independent Directors Try Filming on Donation Why did you decide to make “Cargo” as a feature film rather than as a documentary? This is a medium that appeals to me more, and we thought a feature film would generate more interest. Anything dramatized is more interesting to the general public.

Newcomer Natasha Rinis (top) stars as the “cargo” being transported by Sayed Badreya (bottom) on the orders of Philip Willingham (center).

The film explores the indifferent environment that allows human trafficking to exist; it also looks at the fact that many of the girls who are trafficked to the United States come from Russia and Eastern Europe. It is a film striving for a teachable moment, but any success it may achieve will draw from its success as dramatic fiction.

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The producers of “Cargo” hope to fund the film’s release through Kickstarter.

ctober is the start of the new theater season in Moscow — the time of year when every future production sounds fabulous and every show is a huge success in its makers’ eyes. But I cannot remember a new season that promises to be more loaded down with age-old, or shall I say dusty, classics. Plays written from the mid19th century through the 1930s will be all over the boards in the coming months. The Maly Theater, Moscow’s oldest house, is turning to works by Emile Zola, Leo Tolstoy, Alexander Pushkin, Alexander Ostrovsky and Anton Chekhov.The Maly won’t make it out of the 19th century. The Satirikon is also going with Pushkin, while the Moscow Art Theater and the Stanislavsky Theater are taking on plays by Mikhail Bulgakov from the 1930s. The first show of the season from the Mayakovsky Theater will be a play by Ivan Turgenev from the 1850s. Even the cutting edge ARTO Theater will stage Carlo Gozzi’s“The Raven,”a fairy tale written in the 18th century. ARTO gives me a chance to say what may not be obvious, however: The Russian tradition of director-driven theater means that many of these old texts will be dressed up in very new clothes. Nikolai Roshchin’s ARTO Theater will surely provide an unexpected approach to Gozzi. Roshchin in the past has created stunning theatrical journeys based on the themes of medieval paintings or 19thcentury Russian prose. “The Raven,” a play about a cursed kingdom, is expected to open in the second half of October. Also aiming for a lateOctober opening is Konstantin Raikin’s Satirikon Theater. Raikin, working with director Viktor Ryzhakov, is currently rehearsing Pushkin’s “Little Tragedies,” three of the most

concise and artistically exhilarating verse plays written in Russian. Raikin will perform the leads in the brief tales on the themes of Mozart and Salieri, Don Juan and the Plague in medieval times. Under a new artistic director — the celebrated Lithuanianbred, Moscow-educated Mindaugas Karbauskis — the Mayakovsky Theater is set to undergo a major artistic revamp in the coming months. Karbauskis himself is not yet ready to direct his first show there, but the prolific and always interesting Alexander Ogaryov is preparing a rendition of Turgenev’s classic “A Month in the Country.”This tale, a precursor to Chekhovian drama about a constellation of family and friends wasting away in the Russian countryside, premieres Oct. 29 and 30.

An award-winning director and cinematographer with a decade of experience, Vizinberg has worked on television commercials for major international brands, such as Lufthansa, Bulova, the U.S. Army and DIRECTV. He has also served as producer and director of photography on many film and documentary projects, including “Who Gets to Call it Art?”, “Saints and Sinners,” “Khachaturian” and “Moment in Time.” “Cargo” is Vizinberg’s first feature film. He is also a co-founder of Persona Films, the New York-based production company behind “Cargo.” Born in Moscow, he splits his time between New York and London.

facing himself and he is not doing it for any other reason than the fact that he has become a shell of himself. Natasha made him face the situation and open up. What do you hope will happen from your Kickstarter campaign? Kickstarter allows you to raise awareness with your friends:You tell them, “This is what we are going to do. Would you like to help us fund it?”The people who donate money become soldiers in your promotional war. We have people donating $500. It is also a way to attract attention. We are trying to raise $23,000, and we are hoping to promote the film with posters on bus stops, and book a theater for at least a week. I think what is happening with filmmaking now is what has happened with music. Literally anyone can make a movie. Now the problem is getting to the audience. We are sort of in that marketing game before production begins. Prepared by Nora FitzGerald

A Harry Potter for the Video-Game Generation Phoebe Taplin

Special to RBTH

TITLE: metro 2033 AUTHOR: dmitry glukhovsky PUBLISHER: Orion

t’s no surprise that there is already a computer game of “Metro 2033.” Dmitry Glukhovsky’s dystopian novel, with its episodic shoot-outs and faceless mutant enemies, sometimes feels more like the product of an Xbox joystick than a literary imagination. But this post-apocalyptic, underground adventure, set in the disused tunnels of Moscow’s famous metro, also mixes action with occasional bouts of philosophy to keep more reflective readers happy. Twenty-year-old Artyom, whose quest to reach the legendary Polis is the creaking mainspring of the Odyssean plot, reacts to his experiences along the way. In the subterranean nightmare that now passes for existence, bullets have become the main currency; Artyom wonders if Kalashnikov was really proud of his invention, rather than driven mad by the ensuing carnage. Artyom falls in with a group of Jehovah’s Witnesses and, instead of being converted, becomes even more convinced that life is chaos. The novel“Metro 2033”started life online in 2002. It has since had phenomenal Internet popularity. It has also been a huge commercial success, but only recently made it into paperback in English. Natasha Randall, who has translated literary greats such as Lermontov and Zamyatin,

handles the crucial changes of register well. One of the more chilling moments involves Artyom’s temporary companion, Bourbon, suddenly switching from his usual casual speech (“you couldn’t see for shit”,“it’s full of garbage”) to halting proclamations:“the great darkness… shrouds the world and it will… dominate eternally.”Despite this stylistic control, there is often something a little stilted about the dialogues. Like many Russian books in translation,“Metro 2033” has inconsistencies of transliteration, especially in rendering of Metro names and lines, but these may bother only fellow metro nerds. There are parallels with Sergei Lukyanenko’s blockbuster“Night Watch” series, where the forces of light and dark do battle in the streets of Moscow. Glukhovsky also explores distinctively Russian extremes: corruption is still rife; faith and superstition coexist with atheism. There are also moments when “Metro 2033” reads like an underground Harry Potter, as the young, orphaned hero is flung semiwillingly from encounter to encounter. The hypnotic sound of dead voices in the pipe system is reminiscent of the basilisk’s menacing hiss in the“Chamber of Secrets.” The comparison actually highlights the weaknesses of style and structure in “Metro 2033.” There is little of J.K. Rowling’s flair for characterization or engaging sense of purpose, and female characters are virtually nonexistent. Ultimately, Glukhovsky’s novel struggles to rise above its aimless format; its success must surely lie in its appeal for serious gamers.Yet when a book has this many fans, any critic who cannot see its charm is clearly missing something.

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Subways The Moscow Metro is more than a transportation system

A Museum Hidden From Sight But Always Visible ALENA LEGOSTAYEVA SPECIAL TO RBTH

Although the Moscow Metro is the quickest and cheapest way to get around the city, convenience is far from the only reason to make a visit. The Metro is a unique underground museum of 20th-century Russian history — and it has an entrance fee of less than a dollar. The stations of the Moscow Metro range in depth from 16 feet to 262 feet, and in design from no-frills to decadent, from functional to elaborate. Underground, more than 80 years of history unfolds, carved out of marble and granite and built in iron and glass — laying bare the tastes, ideas, dreams, hopes and disappointments of the previous generations. Engineers Pyotr Balinsky and Evgeny Knorre submitted their first designs for an underground

“Architecture developed along the same lines both above and below the surface,” said Nikolai Shumakov.

Komsomolskaya Koltsevaya station won the Grand Prix award at the 1958 Brussels World’s Fair.

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development plan through 2020 envisions the construction of another 75 miles of track. The stations built before the mid-1950s were conceived and constructed as luxurious“palaces for the people”; they were great architecture for a great state. There are also allegations that there was no option but to decorate the Metro with marble, stucco work and expensive aircraft steel since, in the estimation of its builders, the country was in no position to supply enough tiles to cover the many thousands of square miles on such a tight schedule. Art historians, however, insist that the richly decorated underground was a deliberate ideological move, another way for the government to promote the young Soviet country. “Architecture developed along the same lines both above and below the surface,” said Nikolai Shumakov, chief architect of the Metro. “Anything that emerged above ground had a reflection underground. It is equally true that

transit system to the Moscow City Duma in 1902, but the city leaders did not take the overcrowded aboveground trams and were uninterested in the proposal to improve transportation. Over the next 30 years, at least five different proposals for a subway failed to move past the development stage, but in 1931, the Central Committee of the Communist Party of the Soviet Union decided that their capital needed a metro. On May 15, 1935, the Moscow Metropolitan finally threw open its doors. The first line — from Sokolniki to Dvorets Sovetov (now known as Kropotkinskaya) — was 6.8 miles long and had 13 stations.Today, the Moscow Metro has more than 186 miles of track distributed among 12 lines and connecting 182 stations. The city’s

the reverse never occurred: good architecture underground but bad architecture above the ground.” Stations built between 1935 and 1955 are characteristic of the first architectural period. Everything completed at this time is worthy of special attention. For instance, the ceilings of the Mayakovskaya and Novokuznetskaya stations feature mosaic panels based on designs by artist Alexander Deineka. The mosaics were assembled by famous mosaic artist Vladimir Frolov, who also created mosaic icons in St. Petersburg’s Church of the Savior on the Spilled Blood. The Ploshchad Revolutsii station was decorated with 76 bronze sculptures of workers, soldiers, farmers, stu-

Architectural Awards won by the Moscow Metro

ALAMY/LEGION MEDIA

A metro symbol appears above a sign indicating the way to Red Square.

Several Moscow Metro stations have achieved international recognition for their design. These include: Sokolniki station (Grand Prix, Paris World Exposition 1937); aboveground vestibule of the Krasnye Vorota station (Grand Prix, Paris World Exposition 1937); Mayakovskaya station (Grand Prix, 1939 New York Wold’s Fair); Kropotkinskaya station (Grand Prix, 1958 Brussels World’s Fair); Komsomolskaya ring line station (Grand Prix, 1958 Brussels World’s Fair).

Mayakovskaya station was featured at the 1939 New York World’s Fair.

Internet The Moscow mayor has launched an ambitious plan to cover the city with Wi-Fi

Online, Underground Covering the city with free Internet access would bring Moscow in line with other technologically savvy world capitals, such as Taipei and London. NATASHA DOFF

ITAR-TASS

THE MOSCOW NEWS

In mid-September, Moscow Mayor Sergei Sobyanin officially announced a long-heralded project to wire the entire Moscow Metro system with free Wi-Fi, a plan that could bring the Russian capital in line with some of the world’s most technologically savvy cities. The project, which would allow underground commuters to surf for free from the beginning of 2012, follows on the heels of a decision this summer to provide free Wi-Fi across Moscow’s Gorky Park. “Currently there is free Wi-Fi coverage in a relatively large number of public places in Moscow, but it is still not the main tool used for accessing the Internet,” said Konstantin Chernyshev, a telecommunications analyst at Uralsib investment bank. “Most Moscow Internet users are subscribers of fixed-line services.” As the Internet becomes more and more essential for day-to-day life, free Wi-Fi is turning into a natural development in the infrastructure plans of most big cities. Sobyanin said he hopes to intro-

Internet access in the Metro could encourage commuters to take it.

duce free Wi-Fi on all forms of public transport in Moscow in the coming years. A six-month-long pilot project was launched this year to provide free Wi-Fi on a commuter bus linking the city with satellite town of Zelenograd. If the service proves popular enough, it will be launched on transport systems across the city. Analysts say the project may encourage people to take public transport, where they can write emails on their way to the office, instead of driving on the city’s over-congested roads. The source of funding for the Metro project

is still not clear, although Chernyshev said it may be carried out in partnership with one of the“big three”Moscow cell phone providers — MTS,VimpelCom and MegaFon — which are all contributing to the bus Wi-Fi project and already have substantial fixed-line Internet services in the Metro. Although nowhere near as ambitious, the Metro proposal is reminiscent of a scheme launched by Golden Telecom in 2006, which aimed to turn the entire city into a free Wi-Fi zone. The project fizzled out after the company was taken over byVimpelCom in 2008 and the development of new tech-

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nologies such as 3G networks took precedence. Analysts, however, say Moscow may now be moving back in the direction of city-wide Wi-Fi connection. Expansive city Wi-Fi zones have been successfully set up in many U.S. cities, and the Finnish town of Oulu has managed to cover its entire city space in partnership with local universities. Taipei, Taiwan, is set to expand its free Wi-Fi network to the entire city by October, and London Mayor Boris Johnson has pledged to provide city-wide Wi-Fi in time for the 2012 Olympics. Moscow already has a relatively high number of free Wi-Fi hotspots, provided by cafes, universities and offices, but so far there has not been much discussion of linking up the space in between. Viktor Tsygankov, a senior analyst at the Moscow office of the global I.T. analysis firm International Data Corporation, said the idea was feasible, but would require heavy investment.“Moscow is around 40 kilometers (25 miles) in diameter, so it would be quite pricey to cover the whole city with free Wi-Fi,” said Tsygankov. “The high population is another factor. If just 20 percent of people were using Wi-Fi in the city simultaneously, that would constitute extremely high traffic.”

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dents and other Soviets. There is also a frontier guard with a dog whose nose people rub for good luck. Such details are present in the history of every station. But the good times for Russian architecture ended in 1955 — both underground and above ground, after the Communist Party issued a decree eliminating “extravagance in design and construction.” Stations without any stucco work, mosaics, original columns or other “unjustified”elements, were built during this time under the slogan “kilometers at the expense of architecture.”The situation was the same on the surface, where entire cities were built of identical five-story apartment blocks, nicknamed“Khrushchevkas”after

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then-leader Nikita Khrushchev. Tverskaya, Kitay-Gorod and Kolomenskaya stations are representative of this era. In 2002, with the reconstruction of the Vorobyovy Gory station, development of the Moscow Metro entered a new, third, stage, one that could be considered a renaissance. The platform of the station offers a beautiful view of the Moskva River, the Luzhniki Olympic Complex and the Academy of Sciences building. Architectural canons of the 1930s and 1940s were once again in use in the design of underground stations. By the same token, artists were again involved in decorating the stations. The Sretensky Bulvar station boasts silhouettes of the writers Alexander Pushkin and Nikolai Gogol, botanist Kliment Timiryazev and various Moscow sights; the Dostoevskaya station features black-andwhite panels featuring the main characters from Dostoyevsky’s novels “The Idiot,” “Demons,” “Crime and Punishment” and “The Brothers Karamazov.” In 2004, Russia’s first monorail began operating in the northern part of Moscow, linking the AllRussian Exhibition Center and the Timiryazevskaya station. And future development may h e r a l d ye t a n o t h e r s t a g e of design. “We want to strip the stations of everything we can,” said Shumakov.“We are trying to show the passengers their very framework, what the Metro is made of. Cast iron and concrete are beautiful.”

Tourists See a city through the eyes of locals

Tourism Trend Begun in the Big Apple Takes Off Overseas Greeter groups, founded in New York, operate on the theory that it’s better to visit a new city for the first time with a friend rather than a guide. ELENA KIRILLOVA

THE MOSCOW NEWS

For those who aren’t acquainted with any locals who can give them an insider’s view to a new place, the Global Greeter Network is a good alternative. The first program in the network, Big Apple Greeter, began in New York City in 1982 when a local named Lynn Brooks wanted to show tourists “her” New York. The idea was such a success that the Greeters, who show tourists around as they would a friend, now have chapters all over the world, including in Australia, Canada, Germany, France and Spain, among others. The rules are the same for every country: The organization is strictly nonprofit, and the tours are on foot in small groups of up to six people — any bigger, and it is too hard for the greeter to chat with the participants. The time of the meeting is negotiated, and the visitors can either choose the destinations or ask the greeters to

choose the sites themselves, according to the visitors’ wishes. Walks are generally scheduled for four hours, but it is not unusual for tours to last a whole day. The Moscow Greeter group began in November 2010. According to organizer Alexei Sotskov, Moscow Greeters get requests ranging from famous sights to “places showing the daily life of Muscovites, such as hidden courtyards, eateries, schools and markets, interesting architecture.” They like to be shown what is important to locals. They can visit venues listed in guidebooks on their own, Sotskov said, they want to see“things that tourists would not notice.” The guides are not professionals; they are mostly talkative students who enjoy strolls around the city and meeting new people. Although the greeters may not have all the answers to tourists’ questions, they excel at acquainting them with local traditions and mentality. The Greeters do not want to be seen as guides, but rather as new friends. Said one recent Moscow tourgoer ,“Guides may be professional, but greeters speak from the heart.”

Catch the vibes of Moscow Can the heroes of the Khimki forest preserve the Black Sea coastline?

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