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Defence The US anti-ballistic missile system in Europe is proving a thorn in the side of US-Russian relations
Medvedev blasts US plan
News in Brief
Pipeline will take Arctic oil to Russia Prime MinisterVladimir Putin has approved plans for a $3.6bn (£2.3bn) pipeline to new Arctic oil fields that could produce a sizeable share of Russia’s output by the end of the decade, reports The Moscow Times. The state oil pipeline monopoly Transneft will complete the Zapolyarye-Purpe link by 2017, according to a government decree. Lukoil, TNK-BP and Gazprom Neft will use the pipeline, with a capacity of 45 million tons a year, to carry oil from fields in Yamal that they plan to develop. The fields could produce at least 74 million tons by 2020, according to Nikolai Tokarev, Transneft’s president, accounting for around 15pc of Russia’s current output of 500 million tons. The 300-mile pipeline will be linked to Russia’s pipeline network, allowing exports to Europe and Asia.
Experts have been reading between the lines of President Dmitry Medvedev’s announcement on retaliating to the US missile strategy. Igor Vyuzhny russia now
Migrant workers must speak Russian
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After unsuccessful talks with President Barack Obama in Honolulu on the deployment of the US anti-ballistic missile system (ABM) in Europe on November 23, President Dmitry Medvedev issued his toughest statement in his four years as president. The US says the ABM strategy in Eastern Europe has been prompted by the growing threat Iran poses to the European allies, and that Russia has not the slightest reason for taking any military counter-measures. Moscow wants Washington to provide at least legal guarantees that the American ABMs near Russia’s borders will not be targeted at Russia. But according to unofficial reports, Mr Obama made it clear that neither he nor any other US president could ever provide any legal guarantees. In response, Mr Medvedev warned that if the US and Nato do not heed Russia’s warnings,“Russia will deploy modern offensive weapons systems in the west and south of the country, thereby ensuring its ability to take out any part of the US missile defence system in Europe.” He listed a number of counter-measures that would be taken, including: deploying early-warning radar and Iskander missiles in Kaliningrad; reinforcing the protective cover of Russia’s strategic nuclear weapons to develop Russia’s air and space defences; installing advanced missile defence penetration systems and new highly effective warheads; and developing measures that can disable missile defence and guidance systems.
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Rocket men: Progress in the stalled ABM talks may have to wait until after elections in Russia and the US
Mr Medvedev also said that Moscow reserves the right to withdraw from Start (the Strategic Arms Reduction Tre a t y ) s i g n e d by M r Medvedev and Mr Obama in April 2010. But experts say all of the measures that Mr Medvedev has threatened to take are either already in place or due to be introduced. For example, the VoronezhDM radar is already being built near Kaliningrad and due to be working before the end of the year. And the aerospace defence system (VKO) is formally already in place, although VKO forces do not
yet have new weapons. The idea of deploying Iskanders in Kaliningrad, an enclave surrounded by Europe, is not new either. The experts do not believe that Russia is ready to withdraw from Start. Russian strategic forces are ageing and are being decommissioned. They are already down to the level at which they were to be reduced, Alexei Arbatov, head of the Russian Academy of Sciences’ Institute of International Economy and International Relations (Imemo), told The Moskovskie Novosti. Colonel-General Viktor Yesin,
former chief of staff of the strategic missile forces, says the new ballistic missiles Russia is building have the potential to penetrate any anti-missile defence for the next 20 to 30 years. Some analysts believe Mr Medvedev’s statement is a signal of displeasure, but one that invites the US to keep talking. Some military experts say it is about impressing voters. Major General Vladimir Dvorkin, chief research fellow with Imemo, says a compromise will be agreed after the Russian and US elections. But that view was challenged
by Russia’s permanent representative to Nato, Dmitry Rogozin.“The issues connected with the country’s strategic security cannot be packed into matters of electoral expedience,” he said. Washington’s reaction to Mr Medvedev’s statement has been relaxed. Tommy Vietor, the White House spokesman, said the US administration was still seeking co-operation with Russia, but the deployment of ABMs in Europe would go ahead. But political scientists think Mr Medvedev’s announcement will irritate the US. “Obama has long been
touting the reset of relations with Russia as the key achievement of his foreign policy and has defended Moscow before Congress. Now the Kremlin has dealt a blow to its partner and, what is more, it has done so at the beginning of the presidential race”,Fyodor Lukyanov, editor-in-chief of Russia in Global Affairs, told Kommersant. He added: “That provides the Republicans with more ammunition against Russia: Putin is coming back and Moscow is engaging in sabre-rattling again. Obama has nothing to trump it with.”
Migrants seeking work in the trade, house maintenance and service sectors will soon have to prove they can speak at least basic Russian. The requirement was added to the first reading of the bill on the legal status of foreign citizens approved by the Duma last week. The measure is designed to help migrants understand their rights as well as to remove the language barrier. Statistics show 20pc of migrants from Central Asia do not speak Russian and 50pc cannot complete a simple form. Meanwhile, Moscow’s new culture department head Sergei Kapkov will launch the Museums for Migrants programme next year, reports The Moscow News. Run in conjunction with the Federal Migration Service, working migrants will be taken to the city’s museums with the aim of educating them in Moscow’s cultural values.
Budget gambles on oil price stability
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International trade Belarus, Kazakhstan and Russia form an alliance
A new Eurasian union is born The new Eurasian Economic Commission brings new business opportunities and increased financial security, and paves the way for the Eurasian Economic Union. Ekaterina Shokhina
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Expert Magazine
The creation of the Common Economic Space (CES) has begun. On November 18, the presidents of Russia, Belarus and Kazakhstan signed an agreement for the establishment of a central integration body for the three countries, the Eurasian Economic Commission (EEC). The EEC will replace the Customs Union, which will cease to exist on July 1, 2012, and will be a supranational body for governing the integration effort. The commission is due to start work on January 1, 2012. The Kremlin has said that the EEC will be “a management body for integration processes in the format of the Customs Union and the CES”. The structure of the EEC is similar to the European Union, with its European
United front: the three presidents, Nursultan Nazarbayev, Alexander Lukashenko and Dmitry Medvedev
Council and European Commission. The EEC will have two tiers. The upper tier, its council, will include the deputy prime ministers of the three countries, with First Deputy Prime Minister Igor Shuvalov representing Russia.The lower level, the board, will be the EEC’s main working body, with decision-making powers over customs duties as well as sanitary, veterinary, and immigration
control. It will also oversee the allocation of industrial and agricultural subsidies. Viktor Khristenko, Russia’s industry minister, is the appointed head of the EEC. “We have taken a new and very powerful step on the path to forming a Eurasian Economic Union (EEU), an alliance which will undoubtedly determine the future of our countries,” President Medvedev said, adding that
the agreement allows the three countries to establish the CES and then the EEU, possibly before 2015. The EEC leaders are keen to avoid the mistakes of the European Union. The Russian president believes that the EEU will avoid the problems of the eurozone because its members,“starting out from a more or less level economic playing field”, share common history and have rapidly growing economies – meaning they are less likely to become a fragmented conglomerate. Nursultan Nazarbayev, the Kazakhstan president, said “the union of three”will become“the most powerful”alliance, with “the combined GDP of the three countries approaching $2trn.” Alexander Lukashenko, the Belarus president, assured the audience at the signing that “these documents will be ratified as soon as possible and will go into law in our country.”Experts see the EEC’s establishment as an continued on PAGE 3
Mission Sailors pulled from sea
Russia says ‘Thank you’ for rescue Gratitude has been expressed for British air-sea rescue efforts following the sinking of the Russiancrewed cargo ship Swanland in the Irish Sea. pavel smirnov
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The Russian Ambassador to the UK, Alexander Yakovenko, has written a letter to the Duke of Cambridge praising his role in saving the lives of two Russian seamen, following the sinking of the cargo ship Swanland in the Irish Sea off the Llyn peninsula in North Wales. Mr Yakovenko wrote: “Your Royal Highness, All day long we were anxiously following the rescue operation searching for Russian seamen from the sunk Swanland vessel. “We know that you took an active part in the rescue and that the two seamen were saved thanks to your selfless effort under the bad weather conditions. “Let me express to you and
your colleagues my deepest gratitude for saving the lives of the Russian citizens.” In his role as an RAF Search and Rescue helicopter co-pilot, the Duke was part of a crew which flew from their base in Anglesey in response to the Swanland’s distress call in the early hours of Sunday, November 27. The operation involved four helicopters and seven coast guard vessels, but their work was hampered by severe weather conditions. Two of the eight all-Russian crew were pulled from the water clinging to liferafts; a third man was recovered from the sea but pronounced dead. The 265ft Swanland was carrying 3,000 tons of limestone from Llanddulas to the Isle of Wight when it was hit by what the men described as an “enormous wave”. At the time of going to press, the operation to find the five men still missing was carrying on, although hopes for their safe recovery were beginning to fade.
The Russian federal budget for 2012 to 2014 has been passed by the State Duma last week. Spending in a range of areas has been promised with social expenditure given top priority, closely followed by national defence and law enforcement. Wage rises for public sector staff are detailed, too. The budget is based on projections that GDP will rise by 12.8pc over the period going up to 72.493 trillion roubles (£1.5trn) by 2014. The acting finance minister, Anton Siluanov, said that the budget is balanced at an oil price assumption of $100 per barrel. Some analysts say it does not factor in the possibility of a second recession.
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Elections Next week, Russians elect deputies to the Duma, the lower chamber of parliament. We look at the parties and how the political system works
Hold on to your seat
the Political parties
Ideologies, priorities and promises United Russia: a modern-style ruling party Leaders: VLADIMIR PUTIN, Dmitry Medvedev
Membership: 2,009,937 Regional branches: 83 Established on December 1, 2001 as Unity and Fatherland – United Russia. The party won 64.3pc of votes in the 2007 parliamentary elections and has 315 of the 450 seats in the State Duma. It also controls regional parliaments and local elective bodies. Declared priorities United Russia’s main goal is the modernisation and reform of the economy, as well as improvement of the investment climate. These reforms would enable the party to fulfil its promises of better health care, education and pensions. To fight corruption, the party intends to introduce public scrutiny of all government initiatives that directly affect material rights and civic freedoms. Its electoral programme promises to strengthen the judicial system, making it more independent and transparent. The longer-term priority of “an independent and reasonable foreign policy” involves the creation of a Eurasian Economic Union, an association of former Soviet republics.
The Communist Party: Back to the USSR Leader: Gennady Zyuganov
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Will any new parties make it into the Duma this year? The electorate will decide this Sunday when they cast their votes. Vladimir Stepanov
special to russia now
The parliamentary system of modern Russia is not yet 20 years old. Founded in 1993, it copied some features from more established democracies, including Britain, so the parliamentary structures have some similarities. But while in the UK, the monarch signs Bills passed by a bicameral parliament into law, in Russia this is the task of the president. There are differences of opinion as to how to describe Russia’s government system formally.When Alexei Kudrin resigned from his post as finance minister last October after a row with President Medvedev, the president asserted his authority.“We have a presidential rather than a parliamentary republic,” he said.“We have a government that implements the president’s policy.Whoever doesn’t agree must step aside.” According to Valeriy Zorkin, chairman of the Constitutional Court, a more precise definition is that Russia is a mixed presidential and parliamentary republic.
The Duma is the lower house in the Federal Assembly. Its elections are decided by proportional representation on the basis of party lists. In the past, independents could run, too, but this is no longer allowed. The incumbent administration and the opposition have argued over the threshold allowing parties to win seats. Initially a party
Current deputies have extended the term for their successors ‘in the interests of stability’ had to get at least 5pc of the popular vote to get into the Duma, but this was increased to 7pc (in order to prevent what the pro-government majority believes to be “incapable” parties from winning parliamentary office). But the 5pc threshold will return for the next election. The Duma, which convened for its last session last week, consists of 450 deputies. The pro-government United Russia party had a majority of 70pc. The Communists, the main opposition party, had around 13pc of the seats. The Liberal Democrats (in reality, a nationalist party) and A Just Russia (the socialists)
had less than 9pc each. The new Duma will meet as early as the end of December and will sit for a fiveyear term. Previous parliaments sat for only four years, but the current deputies have extended the term“in the interests of stability”. Like any other parliament, the main task of Russia’s State Duma is to pass laws. Since Russian democracy is still young and lacks an established legal framework for its society, the deputies have to consider a lot of bills. This year, the Duma looked at a monthly average of 100 bills in first, second, or third readings. Although the Duma Speaker Boris Gryzlov once said that “parliament is no place for discussion”, at times the debates became very heated, especially over economic or social bills. The disagreements were driven by both political factors, and by special interests pushed by lobby groups. But representatives of different parties tended to agree on foreign policy. It is safe to assume that the new Duma will focus its attention primarily on passing laws aimed at economic diversification, and reducing the country’s dependence on exporting energy and other natural resources.
The political system of the Russian Federation
“We need to conduct a new industrialisation of our country”,Mr Gryzlov said, describing one of the tasks facing the new parliament. He added that modernisation should also continue in the areas of education and health care, with a number of important bills to be passed. That said, investment in the hi-tech sphere must still almost exclusively come from oil and gas revenues, so the country’s energy producers are unlikely to suffer from any new legislation. It is also possible that the Russian parliament might become more hawkish in its attitude to foreign policy. All the parties likely to be represented in the Duma next month want to see a “strong Russia”,with the Communists
Countdown to the presidential poll begins The date of the presidential election has been set and the campaign has officially started, even before the State Duma elections have been held. helen dupuy
special to russia now
As head of state, the president holds the reins of power in Russia’s presidentialparliamentary system, and the next president will be in office for six years rather than four. A candidate may be president for only two successive terms: another candidacy is possible after a break. The upper chamber of the Russian parliament, the
Federation Council, consists of two members from each of the 83 federal subjects: 21 republics, 46 oblasts, nine krais, two federal cities, four autonomous okrugs and an autonomous oblast. Half are representatives of regional governments appointed by the president, half are elected by regional legislatures. The president appoints the
ministers, although his nomination for prime minister can be rejected by the Duma. The president must work with the Duma to pass laws. Bills approved by the Duma must have a second reading in the Federation Council. If it rejects a bill, the Duma can override the second chamber with a two-thirds majority.
even calling for the dissolution of Nato. Duma deputies have a lot of responsibilities besides the passing of legislation. For example, they can approve or reject the candidacy of the prime minister nominated by the president, and even impeach the president. Back in the Nineties, the Communists attempted to use this power twice in order to get rid of Boris Yeltsin. However, the president also has a power he can use against the Duma: he can disband it if it rejects his candidate for prime minister three times or passes a noconfidence vote in the government twice within three months. Even so, the Duma cannot be dissolved during the first year of its term.
The date for the presidential election was set last Friday by the Russian Parliament’s upper house, the Federation Council, for March 4, 2012. Two days l a t e r, P r i m e M i n i s t e r Vladimir Putin was nominated as United Russia’s presidential candidate at its party congress at the Luzhniki Olympic Sports Arena on Sunday. All 614 delegates from United Russia and Putin’s All-Russia People’s Front movement took part in the vote and supported their candidate. “I accept this nomination with gratitude,” said Mr Putin. Luzhniki stadium was also the venue for the“job swap” announcement in September, when President Dmitry Medvedev told United Russia members that he would stand down to allow Mr Putin to stand as president again, and Mr Putin backed Mr Medvedev to be the next prime minister. Mr Putin was barred by the constitution from seeking a third consecutive term as president, and became prime minister after his hand-picked successor, Mr Medvedev, was elected president in 2008. The Liberal Democrat Party
and the Communist Party have already announced that their leaders Vladimir Zhirinovsky and Gennady Zyuganov will stand as presidential candidates. A Just Russia will decide on its participation in the presidential poll at a party congress on December 10. Parties without seats in the Duma, such as Right Cause andYabloko, are as yet undecided on whether they will take part. To do so, if they still
Parties without Duma seats have to secure two million signatures for their candidate have no seats in the next Parliament, they will have to secure signatures of at least two million supporters for their candidate. All the candidates running must register by January 18 and the full list will be announced on January 29. While polls suggest Mr Putin’s popularity is falling slightly, he is still expected to win. Preliminary results will be given on March 5 and official results will be announced by March 15. In the 2000 elections, Mr Putin won 52.94pc of the vote and in 2004 he won 71.31pc. If he wins again, Mr Putin will have a six-year term in office, with the possibility of a further six years if re-elected in 2018.
Membership: 554,244 Regional branches: 81 The main opposition party held its first constitutional congress in February 1993 after a three-year ban on Communist activities in Russia. It considers itself to be the legal successor of the Communist Party of the Soviet Union (CPSU) and espouses the same ideology. Most of its supporters are nostalgic about the Soviet era but it also has some support in other protest circles. It won 11.57pc of the vote in 2007 and holds 57 Duma seats. Declared priorities Its main foreign policy priorities are to enhance the role of the UN, limit the influence of Nato (and eventually dissolve it), and bring the countries of the former Soviet Union closer together. It backs the Kremlin’s commitment to modernising the army, which “must be strong enough to repel any invader”. Its main economic aim is to end “the destructive sway of the wild market” by nationalising key sectors of industry, and achieving the free distribution of land for agriculture. The Communists would also like to carry out a tax reform that favours the poor.
The Liberal Democratic Party: The oldest opposition party Leader: Vladimir Zhirinovsky
Membership: 185,573 Regional branches: 83 Set up in 1990, the LDPR rejects Communist ideology and, despite its name, is on the far-right of the political spectrum. Its rhetoric is unashamedly nationalist. In the 2007 elections, it won 40 seats in the Duma (8.4pc of the vote). Declared priorities The LDPR is critical of the existing world order in general, and the Russian political system in particular. It divides the world into three groups: the first includes the United States, the UK, and their allies, which it says regards the second group – which is made up of Russia, China, India and most Asian and Latin American countries – merely as providers of resources for hi-tech industries. The third group consists of African countries, which it claims “have no place in the concept of the world order”. The LDPR believes that the main mistakes made by the Russian authorities are: engaging in partnership with the West, compromising on international issues, and hoping that “the market will put everything right”.
Just Russia: ‘The left foot’ of the two-party system Leader: Sergei Mironov
Membership: 414,558 Regional branches: 83 The party was formally set up in October 2006, bringing together several left-of-centre and patriotic political organisations. The idea of the merger came from the Russian president’s staff, who thought there should be a fully fledged two-party system. In early 2010, the party signed an agreement with United Russia for the formation of a coalition, yet co-operation never got off the ground and, in the summer of that year, Just Russia announced its opposition to the governing party. Just Russia holds 38 seats in the Duma and won 7.74pc of the votes in the 2007 elections. Declared priorities The party promises to build “21st-century socialism” in Russia by blending socialist ideas with universal democratic values. It advocates reform of the political system, notably the direct election of governors (who are now in effect appointed by the Russian president) and stronger local government. The party backs the Kremlin’s plans to modernise the economy, but wants the state to play a stronger role and stop privatisation and the movement of assets to offshore zones.
Yabloko: The democratic opposition Leader: Sergey Mitrokhin
Membership: 54,911 Regional branches: 75 The party was officially registered in 2002, but has been an electoral bloc since 1993. It advocates a socially orientated market economy, the sanctity of private property, competition in politics and economics and a strengthening of democratic institutions. It consists of several factions, which are essentially human-rights movements, and co-operates with environmental, trade union, and other non-governmental organisations. It has had no seats in the Duma since 2003. Declared priorities The party’s main agenda is to fight the influence of bureaucrats and big business. It wants to ban businessmen and their close relatives from holding government office, and make the justification of actions by Stalin and the Bolsheviks a punishable offence. Much of its programme is devoted to civil rights. It believes that Russia must guarantee the security of neighbouring states, promote co-operation with Europe and be more active in international organisations.
Patriots of Russia: Left-of-centre nationalists Leader: Gennady Semigin
Membership: 86,394 Regional branches: 79 The party was created in 2005 through a merger of several moderate left-wing and patriotic political organisations. The Patriots of Russia’s programme calls “for the unification of all the opposition forces in the country on the basis of patriotism, proceeding from socialist, social-democratic and centrist views”. The party gained less than 1pc of the votes in the previous elections and has so far failed to make it into the Duma. Declared priorities The party’s economic strategy is based on the nationalisation of “illegally privatised” industries. Its main political task is to return “to the principles of democracy and a rule-of-law state”, as well as introducing broader rights for the regions. The main social goal is to provide Russians with the same guarantees as those enjoyed by their Western European neighbours. The Patriots of Russia think Russia should not be in a hurry to join the World Trade Organisation.
Right Cause: On the road to the European Union Leader: Andrei Dunayev
Membership: 64,022 Regional branches: 77 This pro-business liberal party was established in 2008, when several political organisations with shared ideologies formed an alliance. It says: “The party considers its social base as consisting of independent-minded free citizens who have renounced the nanny state idea.” Before the start of the 2011 election campaign, billionaire Mikhail Prokhorov became the party leader, causing resentment among many party functionaries. The conflict resulted in two congresses being held simultaneously, one of which removed Mikhail Prokhorov from his post, while, at the other, he announced that he was resigning from the party. Right Cause has no seats in the present Duma. Declared priorities The party’s social and economic goals are intended to make life in Russia more comfortable. It believes these should be achieved through economic reforms that have already been launched or are being planned by the present authorities. The party wants to restore the control of society over the authorities, to ensure an equal dialogue between the authorities and civil society, and to separate the civil service from business. Right Cause seeks to rid Russian foreign policy of ideology and wants Russia to join the European Union.
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Russia-EU A visa-free regime is top of the wish list this Christmas. But will Europe want something in return?
No visas and no concessions On the eve of the Russia-EU summit, Russia Now looks at the political and economic issues that are of most concern to Russian people.
able to withstand competition from foreign manufacturers, especially European ones. And the Partnership for Modernisation (one of the new Russia-EU joint programmes) won’t help, according to some sceptics. Russian farmers were pleased with the recent ban on the import of European vegetables, seeing it as a protectionist measure by the state, and were upset when the ban was lifted. “Why get tomatoes and cucumbers from Holland? I can feed them to half of Russia,”says Nikolai, a landowner from Stavropol, a southern region in European Russia. However, he was less vocal about the problems of underdeveloped infrastructure in many rural areas and the high prices that vegetables are sold for in Russian cities.
Vladimir Babkin
For ordinary Russians (and their voices are increasingly important in the run-up to the elections), the most important issue in EU relations is the visa regime. If significant progress on this issue is not made at the December summit, other joint initiatives between Moscow and Brussels are unlikely to receive popular support. In late October, Foreign Minister Sergei Lavrov said he hoped that a joint list of steps to move towards a visa-free regime would be approved at the summit. And in a few months, when the requirements are met, Mr Lavrov wants the parties to enter into negotiations for a visa-free regime. Ordinary citizens do not share the minister’s optimism. “They can wrap fish in their road maps,” said Polina Kiseleva indignantly, referring to the agreement to create four common economic spaces from Lisbon to Vladivostok. Her scepticism is understandable. Polina’s father, a fan of the Russian biathlon team, wants to go to Sweden this month for the IBU Cup competition. Ms Kiseleva has twice travelled from Nizhny Novgorod to Moscow (more than 250 miles each way) to deliver visa documents to the Swedish consulate on his behalf. The list of joint steps and measures for moving to a visa-free regime for short-term trips by Russia and EU citizens is 99pc ready, diplomats say. But it will be difficult to
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Seller’s market: farmers oppose EU imports of fruit and vegetables because local produce fetches high prices in the cities
reach agreement on the remaining 1pc. Moscow insists that full approval of the document must automatically put into place the mechanism for abolishing visas. But Brussels says this is not yet guaranteed. Worse, in Moscow it is feared that the EU will intensify the politicisation of this issue. Some observers attribute Europe’s slow pace to a reluctance to put Russia in a more privileged position than their close (as of now) partners, Georgia, Ukraine, and Moldova. Another possible motive is that any positive decision by the EU in its relations with Russia could be construed as an endorsement of the leaders’ job reshuffle and the Kremlin’s
policy in general (both domestic and foreign). “The European Union’s main strategic concern is Russia’s domestic policy on the one hand, and Moscow’s desire to, in one form or another, reintegrate the former Soviet space,” noted Nikolai Kaveshnikov, head of the Centre of European Integration Studies at the Institute of Europe. That said, experts do not rule out Brussels or individual members of the EU making certain economic demands. Russian experts believe that the Kremlin will not make concessions. “It is inadvisable for Russia to make significant economic concessions in EU talks on transitioning to a visafree regime,” said Alexei
Kuznetsov, head of the Centre for European Studies at the Russian Academy of Sciences.“In the EU, only strong partners are respected, but weak ones are forced to make additional concessions.” There are still unresolved economic issues in relations between Moscow and Brussels, despite the successful conclusion of negotiations on Russia’s entry to the World Trade Organisation. Russians are not only concerned about politicians and big business; they are also worried about workers in the manufacturing industry and agriculture. They fear that these sectors would be damaged by the country’s new foreign economic status, and specifically that they would not be
THE QUOTE
Dmitry Medvedev president of russia
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We actually view the problem of visas as a rudiment from the past, which Europe should refuse [in order to] build fullfledged relations with Russia
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Russia is ready to move towards easing the visa regime with the European Union, with Germany, as quickly as our partners are ready for this
Differing interests No matter how many good things have been said about energy co-operation between Russia and Europe, the parties’ interests remain different. Diversification of energy in the EU is a concern not only to the major Russian oil and gas businesses, but also to millions of people whose welfare depends on the energy industry. No matter which political party they support, the majority of Russians plan to vote “for a strong Russia” in the State Duma elections on December 4. Sensing the voters’ mood, all of the parties vying for a seat in parliament have in one form or another included in their election manifestos a promise to make the country even more influential. In light of these promises, it seems unlikely that Russia will make any concessions.
Interview dr kandeh yumkellA
Growth must be green Russia could create millions of jobs by investing in
The head of the United Nations Industrial Development Organisation (Unido) gives Russia some tips on sustainability. Artem Zagorodnov russia now
What is Unido’s main focus in developing countries? We focus on a niche area of industrial development – pollution management and green industries. In today’s context of climate change and resource efficiency in an overpopulated world, these areas are important to help provide solutions to increasing production and consumption. While market forces are important, industrialisation does not occur by accident. From Singapore to the EU, it’s been determined by the leaders. We want govern-
ments to mobilise their private sectors to engage in a green transformation. How do you envisage this green transformation will take place ? Experts call it a third industrialisation based on green growth. Strong public-private partnerships in green industries are needed, where the state hedges some investment risk while allowing market forces to operate. How are Unido’s plans being realised in Russia? We’re pushing a number of projects in Russia focused on green energy and cleanup production. These include a centre for the disposal of hazardous consumer products and industrial waste in the Republic of Tatarstan, and a
$1.5m (£960,000) project to improve water quality and reduce the impact of industrial activities in the middle and lower Volga basin. We’re also promoting the production of energy-efficient refrigeration and air-conditioning systems via technology transfer. What specific green technology suggestions would you like to see in Russia? If Russian authorities were to adopt new municipal building codes and use public money to build new insulation, they could create millions of jobs. Mayors – like Michael Bloomberg of New York City – will tell you one of their biggest challenges was figuring out how to keep skyscrapers hot and cool. They’ve been thinking about
incentives for owners and tenants to be energy efficient. We’re pitching these ideas to wealthy Russians as new business opportunities. The message I brought to the Nevsky Ecological Congress in St Petersburg this year was that Russia has always been a leader in science, but there has not been enough mobilisation for it to lead the green revolution. Russian scientists who can lead this research are out there. What long-term challenges does Russia face in the context of green growth? When Russia went through rapid industrialisation, sustainability was not an issue. There are now places where accumulated pollution has killed ecosystems, and contaminated heavy-metal pro-
press photo
clean-energy technology and insulating buildings
Clean and green: Dr Yumkella says Russia can lead the way
duction sites where pollution is seeping into waterways. But technologies to clean up these problems do exist. How do you promote energy efficiency while stimulating economic growth? Japan and Denmark have shown you can grow GDP continuously while cutting energy use – the new government in Denmark is pitching green technologies as a way to stimulate economic
growth. But I don’t think this mentality has gained a foothold in Russia yet. The government has set up an energy-efficiency programme, and I have heard people ask: “What for? We have lots of energy!” The answer is that there is a high demand for that energy – what you don’t waste, you can sell to other countries. Read more at www.rbth.ru
Commission to remove trade barriers continued from page 1
extremely important development and a triumph for Russia, as well as for its partners in the commission, Belarus and Kazakhstan. Political analyst Sergei Markov said:“The signing is a very important step forward and an extraordinary success.”He believes it is part of a new trend towards integration, which is important in light of the threat of a new economic crisis, as it will help all three countries greatly re-
duce its possible impact. “We will have more opportunities to combat the crisis by relying on our domestic market,” he said. An analysis of existing economic trends in the post-Soviet space shows that the business communities of all three countries have already been actively implementing integration plans.“The main advantage for our countries’ companies is the elimination of customs barriers, which will not only lead to direct savings on customs fees, but
also to indirect benefits from the removal of bureaucratic obstacles, and accelerate trade between the member countries of the future union,” said Aleksandra Lozovaya, the head of research at Vector Securities, an investment company. For example, the Russian company Eurochem plans to invest $2bn in a large-scale project it is actively pursuing in Kazakhstan. The project involves developing phosphate deposits in the Karatau Basin in southern
Kazakhstan, and building a mining and processing plant in the city of Zhanatas, as well as production plants for phosphate, nitrogen, and mixed fertilisers in Karatau with a combined capacity of more than one million tons annually. In another example of business integration, Lukoil is successfully operating in Kazakhstan and Belarus. Kazakhstan projects make up 40pc of the largest Russian oil company’s overseas reserves. In addition, more than
half of its investments in foreign upstream projects are in Kazakhstan. This autumn, ZAO Atomstroyexport (SC Rosatom) and SA Nuclear Power Plant Construction Directorate (Belarus) signed a contractual agreement to build Belarus’s first nuclear power plant. It will be built in Astraviec in the Grodno region, where preparatory work has already begun. Belarus will thus acquire a reliable and stable source of energy, which will to some extent help it
03
OPINION
Fukushima has made the nuclear industry safer Alexander Yakovenko
Special to Rn
N
uclear power after Fukushima is a topic being discussed on many professional forums. Several governments, facing pressure from NGOs and the public, have had to declare that they will abandon nuclear energy. But for the time being, the situation is virtually unchanged: plants are still in operation and will remain so at least through the 2020s, including those in Germany and Switzerland. And nuclear plants that were being built at the time of Fukushima are still being built. Some countries (the UK, South Korea and Saudi Arabia) plan to generate a bigger proportion of their energy through nuclear power. A total of 29 countries have nuclear power.TheWorld Nuclear Association (WNA) predicts that by 2030, Russia, China, India, South Korea, the United States and France will account for about 71pc of the total number of nuclear power plants scheduled for construction by 2030 (212 of 297 reactors). In its Nuclear Fuel Market Report 2011, the WNA says the world’s nuclear capacity will nearly double by 2030. Especially notable are the 21 states that, according toWNA data, declared their intentions to build their country’s first nuclear power plants and confirmed these intentions even after the Fukushima accident. These include the United Arab Emirates, Turkey,Vietnam, Jordan and Bangladesh. New nuclear power plants aren’t just an energy project, but also a huge stimulus for infrastructure development, the construction industry and job creation, as well as a major boost for science and education. They can also help to expand international partnerships, for example the export of energy to neighbouring countries. Fukushima has had a mostly positive effect on the nuclear industry.This is because it has made the most advanced safety systems an essential requirement and virtually eliminated the supply of Generation II reactor facilities on the market (those without double containment or passive safety systems, or with incomplete systems). The accident in Japan has also led to proposals for tougher safety rules. Dmitry Medvedev, the Russian president, has suggested improvements to the international legal framework for nuclear safety, as well as to International Atomic Energy Agency (IAEA) standards. These were reflected in the action plan and resolutions adopted at the IAEA general conference in September. The general conference also affirmed that nuclear power continues to play an important role in providing for the world’s growing demand for energy. Chris Huhne, Secretary of State for Energy and Climate Change, pointed out in a recent article that a balanced approach to energy
issues is needed:“Renewables, fossil fuels, and nuclear are not mutually exclusive.” In addition, any military strikes against nuclear facilities – which in recent years have been discussed in connection with Iran’s nuclear power programme – would not only violate international law, but would also run counter to the wider interests of the international community. Russia has already taken heed of the lessons to be learned from the Fukushima accident. It conducted stress tests earlier than other countries, and Russia’s procedures proved to be even more thorough, since it has also tested stations’physical protection systems against possible terrorist attacks. It has gained experience by searching for usable sites in earthquake zones: the Armenian nuclear power plant, for example, is in one. In addition, reassessments of seismic activity in nuclear power plant regions are currently under way in Russia. After this, each power-generating unit will work on improving the stability of key facilities. In all, Russia plans to build a total of 26 new reactors as part of its programme to develop nuclear power by 2030. Taking into account the units that will be decommissioned by that time, up to 25pc of electricity consumed in Russia will be generated by
Nuclear power is still by far the safest, cleanest, and most cost-effective source of energy today 47 nuclear power units. All of the units being constructed by Russian nuclear power plant specialists – both in Russia and abroad – are the so-called Generation III+ reactors, which use a unique mixture of active and passive safety systems to withstand any possible combination of external impacts. Russia continues to participate in bids to build new nuclear power plants in foreign countries. Its competitive advantage is that Rosatom, the state atomic energy corporation, is prepared to guarantee client countries a supply of nuclear fuel for a station’s entire operating life. That’s because we are absolutely confident that nuclear power is still by far the safest, cleanest, and most cost-effective source of energy available today. In general, we must acknowledge that the past 20 years have largely been lost in terms of actively preparing the global economy for a transition to clean energy. Every nation can probably be said to be guilty of this, but it is especially the fault of countries that could show foresight and afford to implement ambitious programmes in this realm. Now we must reform our views of the immediate situation with a healthy pragmatism, and a real understanding of the world in which we now live – in the 21st century, and not in the 22nd. Alexander Yakovenko is Ambassador of the Russian Federation to the United Kingdom.
only at rbth.ru
solve its power supply problems. According to Lukoil’s CEO,Vagit Alekperov, one of the main tasks of the governments and the business community, as part of the integration process is to harmonise legislation, and to lift national as well as international legal and administrative barriers. Originally published in Expert Magazine
reuters/vostock-photo
‘Russia for Russians,’ the nationalists say. But what exactly is ‘Russian’ now? rbth.ru/13732
Pushing the boundaries with the appliance of science Can Russian researchers reinvent their former glory?
E
ISSU T X E N
December 20
04
Technology
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section sponsored by rossiyskaya gazeta, russia Distributed with THE daily telegraph TUeSDAY_November 29_2011
Angry Birds fly into Russia, but don’t Occupy Wall Street http://rbth.ru/13710
Startups Funds for foreign firms
Games industry The world is devouring mobile apps created by Russian designers but the home market is still small
Russian investors pick the winners in mobile app market
Playtime: the Apple App Store and Android Market make it easy for Russian firms to sell their games internationally
Forget Dragons’ Den: mobile app startups are finding willing investors in Russia, as well as clients and partners to boost their businesses.
alamy/legion media
Playing to win at games From Cut the Rope to Pocket Blonde, apps built by Russian developers are making serious money in the global games market.
industry has been developing for almost a decade,”says Leonid Kovalev, marketing director of DaSuppa, a Moscow-based mobile games company. “But in recent years, new-generation apps have created a new situation. Through global stores, such as the Apple App Store or the Android Market, Russian developers can easily sell everywhere in the world. Their vision and practice has become global.” The domestic market in Russia is still quite small. Smartphone sales are growing fast – more than doubling from 2010 to 2011 – but the number
Adrien Henni
East-West Digital News
almost exclusively through bank cards, which Russians are reluctant to use.” New-generation mobile applications and games generate huge revenues in the tens of millions of dollars for Russian developers, Mr Petrov estimates. Although traditional mobile content – from ringtones to Java games – still generates hundreds of milPaying is a problem Paying for services is more lions of dollars in Russia, the difficult in Russia.“Most Rus- market is expected to decline sian users are ready to pay and a number of developers for good mobile products,” are switching to new-genersays i-Free co-founder Kirill ation content. Petrov. “But Apple’s App I-Free still generates $60m Store and Google’s Android (£38m) in revenue from traMarket accept payments ditional content in Russia
and abroad, but last year it created an entire division dedicated to new apps and games. Its most significant international success to date has been Pocket Blonde. Featuring a smart personal assistant, the application has been downloaded more than a million times from the Android Market since its release in March 2011. In another move to position itself at the leading edge of innovation, i-Free has also created a fund to invest in Russian and foreign startups. Other companies, such as DaSuppa, have stopped producing traditional games,
free
69p
free
free
russia now
A Russian research engineer has designed a radiation dosimeter that can be integrated with mobile phones or added as an application. The trial version of the DO-RA mobile application (the name is an acronym of dosimeter-radiometer) is already available on the Android Market. After the Fukushima radiation leak, Vladimir Yelin, 54,
free
title: Altergeo
title: Cut the Rope
title: MewSim
title: Paradise Island
title: Pocket Blonde
Platforms: ios, Android
Platforms: ios, Android
Platforms:J2EM, iOS, Bada
Platforms: iOS, Android
Platforms: Android
Developer: Altergeo
Developer: zeptolab
Developer: Dynamic Pixels
Developer: Game Insight
Developer: i-Free
AlterGeo is a location-based social networking service for mobile devices. The app allows the user to discover new cafés, shops and other places of interest and share their opinions of them with friends. Users can benefit from discounts and be rewarded with points when “checking-in” to a venue. Launched in 2008 – before its US competitor foursquare reached the Russian market in September this year – AlterGeo now claims 800,000 registered users. Only a fraction, however, are considered active users.
Cut the Rope is arguably the biggest Russian success in mobile games. The player swipes a finger across the screen to cut ropes which hold sweets to feed the little monster Om Nom. After going on sale at Apple’s App Store in October 2010, Cut the Rope was downloaded a million times in its first 10 days. It topped the paid applications section of the Android Market a week after its launch there and won an Apple Design Award for the iPhone platform at the Apple Worldwide Developer Conference.
MewSim is a comic interactive simulator in which you can bring up a cat to be an affectionate pet or a little devil. You can choose its sex, colour and name, and give it unique characteristics. You can also exchange it with friends via Bluetooth. After initial success in traditional Java format, MewSim was made available in 2010 to iPhone and Samsung users. It topped the games and free sections of Apple’s Russian App Store and the family and simulator games section in the Polish App Store.
A high-definition role-simulation game where players turn sun, sea and beaches into a flourishing resort business. Gamers entertain rich tourists in casinos and entertainment centres, build hotels, restaurants and discos and learn to manage the business. Launched in December 2010, the game has held first place in the Top Grossing Android Market since May 2011, generating up to $1m every month for its publisher Game Insight. In September, the game reached five million players.
Monitor your nuclear risk with DO-RA the radiation explorer Alexandra Bazdenkova
touch russia
kirill rudenko
Innovation New mobile protection for the atomic age
In the wake of the Fukushima disaster, a new radiation monitoring device that works with mobile phone and satnav systems is being marketed.
and are putting all of their resources into new-generation products. Outsourcing is another promising option companies are exploring. Established offshore developers, such as Epam and DataArt, have opened dedicated departments, while dozens of smaller businesses or teams are experimenting in this new market. “These companies and teams can barely meet the demand,”Mr Petrov says. “Some Russian companies have already found additional teams or subcontractors in Belarus, Ukraine or the Baltic states.”
Russia’s top five mobile and games apps
press photo(5)
Watch out Angry Birds and Fruit Ninja: Russian companies in the booming mobile and games app markets are conquering the world with imaginative creations like Cut the Rope and MewSim. The emerging players include traditional mobile content companies such as Dynamic Pixels, HeroCraft, Game Insight and i-Free, which originally focused on social games. With Game Insight’s new Crime Story, each gamer can become a crime boss, building a criminal empire by eliminating rivals and expanding the business. Founded in Moscow in 2005 as a mobile development studio, G5 Entertainment is now a global company developing mobile and PC games on a massive scale – one release a week, according to the company’s website – with such international successes as Stand O’Food, Virtual City Playground and Supermarket Mania 2. The company is listed on the Aktie Torget equity marketplace in Stockholm, and operates from that city, as well as Moscow, San Francisco and Ukraine. But much smaller developers are also enjoying success. Tens of millions of mobile gamers across the globe are downloading Cut the Rope. Developed by a Moscow team, the game features a little monster fed with sweets, while Maxim Petrov, a Moscow programmer, has built a flourishing business with PowerAMP, praised as one of the best music players on the Android market. “The Russian mobile content
of smartphone owners is still a fraction of that in Europe and the United States, according to a TNS survey. The total number of iPhone and Android-supported smartphone owners in Russia barely reaches 1.5 million and five million, respectively, according to i-Free.
talk to Russian mobile operators (one has started testing his solutions) he also met a major Russian venture fund which could lead to mScriber’s first round of financing. “In the past few months, we Adrien Henni East-West Digital News have witnessed a sharp rise As Russia emerges as the new in the interest of Russian hotspot on the global IT investors in foreign tech scene, foreign startups are companies,” says Vasily Barflocking there to meet poten- gan, publisher of venturenews.ru, a website specialistial investors and clients. Among them is Capptain, a ing in the Russian venture Paris startup that helps mo- capital market.“In Septembile app and game develop- ber and October of this year, ers to better manage and Russian funds invested more serve their users. CEO Lau- abroad than in domestic rent Lathieyre visited Mos- companies.” cow recently to drum up The trend towards investing business. He met major app in foreign companies started and game developers, an in- in 2009, when DST acquired ternet group and three Rus- a stake in Facebook. Since sian venture funds. He hopes then, it has invested in gloto close deals soon. “There’s bal internet firms including a lack of funds for early-stage game maker Zynga, deal site investment in France, and the Groupon and Chinese online US market is so competitive marketplace Alibaba. it’s hard to get attention from Other Russian investors have venture funds. It is encour- followed suit.This year alone, aging that some renowned Yandex invested in the US Russian funds studied our mobile app startup refine.io proposition seriously and are as well as in the US search considering investing in us,” engine blekko. The American business software publisher says Mr Lathieyre. Manchester startup mScrib- BigTime, UK-based web er also made good contacts business information comon a recent business trip to pany aiHit and Vietnamese Russia. The company runs e-commerce project MJ mobile applications for se- Group, to name just a few, curing and sharing data have also received funding stored on phones. Not only from Russian investors Runa did Nicky Singh, vice presi- Capital,VTB Capital and rudent business development, Net, respectively.
who is head of the company Smart Logistic Group, was asked to write an opinion piece about the incident. This gave him the idea for the device. The DO-RA mobile application operates in four different modes. It can work as a radiometer which can display a radiation map of a given area, such as a reservoir or area of land, on a mobile phone screen. It has three levels of alert: normal (green zone), high-risk (amber zone,) and an urgent evacuation warning (red zone.) It can superimpose the map onto a downloadable world map on the screen and owners can
add their GPS/Glonass measurements to it. The dosimeter function displays the radiation level absorbed by the holder. In the event of exposure to a critical dose, the DO-RA alerts its holder with audio and visual signals. Finally, in another mode, the phone can provide relevant information on potential risks for different organs of the body associated with the absorbed radiation levels. Users or their doctors can then access the data from anywhere in the world. The very process of creating the device wasn’t smooth.“At the initial stage, assembling a team of developers was
Radiation alert: device transmits readings around the world
tricky; it took at least oneand-a-half to two months to find them. I stumbled upon a worthy team by pure luck”, recalls Mr Yelin. Another problem was obtaining finance. “Very few Russian banks are prepared to lend money for such projects. Venture funds that specialise in financing new businesses are only testing the waters in the huge Russian
market. Most don't like to risk their capital on inventions,” says the inventor. Mr Yelin decided to try his luck with the Skolkovo Innovation Centre, the muchdiscussed Russian Silicon Valley-in-the-making. He used Skolkovo’s website to create a resume and a roadmap for the project, including a detailed description of its research and development
A charming and smart girl who lives in your phone and talks to you. She wakes you in the morning, chats about recent news, makes jokes, sends out birthday reminders, delivers a morning horoscope, keeps an eye on the weather and more. Blondie also has a memory: if you change your mobile, she will remember you, so you won’t have to get acquainted again. Pocket Blonde was developed by the St Petersburg-based i-Free, as part of Brainy, a series of smart mobile aide applications.
components and a business plan. After an assessment by a panel of 10 industry experts, Mr Yelin obtained the board’s assent on the project’s compliance with Skolkovo requirements.“I have become a fully fledged participant in Russia’s innovation process, entitled to Skolkovo’s unique benefits,” he says. “As a Skolkovo resident, OAO Intersoft Eurasia, the operator of the DO-RA project, will pay only 14pc payroll tax. We will be exempt from all other taxes. One can only qualify for such exemptions under the Russian tax system by conducting R&D work as part of proprietary innovation projects with the subsequent commercialisation of the invention.” At the moment, the company representing the invention is in negotiations with mobile phone producers Sony Ericsson and Fujitsu. According to Mr Yelin, the price of the device to be integrated into the mobile phone will be around $30-$50, but if the device is to be integrated into the phone in the production process at the factory, the cost can be cut to $10.
the new free ipad app get a new perspective on this vibrAnt country
Business in brief Russia tops European online league Russia now has more internet users than any of the 18 largest countries in the European Union. It had a total of 50.8 million users in September, according to a survey by the market research company ComScore, and has now overtaken the leading economies Germany, France and Britain. The Moscow Times says that it is an encouraging milestone but not unexpected given the size of the country’s population. Half of Russia’s 142.9 million people are expected to be internet users by the end of this year, the Communications and Press Ministry said in emailed comments, citing “experts’ estimates” for the figure.
Yandex and Facebook team up for new music service Yandex, the world’s fifthlargest internet search provider, has announced the integration of its music service with the social network giant Facebook, according to The Moscow News. Yandex.Muzika was launched in September last year and allows users to listen to music free using a live-feed stream from Yandex’s catalogue of 2.6 million tracks. The new system will display the names of tracks to which aYandex. Muzika user is listening on the Facebook news feed that is displayed to friends. Friends can click on the displayed tracks and listen to the songs without any additional registration.
GLOBAL RUSSIA BUSINESS CALENDAR FOURTH international banking conference of cis countries november 30–december 3 baku, Azerbaijan
The theme of this year’s conference will be “Financial markets in the CIS: Factors of sustained growth during global instability.” The Investment Angel awards will also be presented at this year’s event. The nomination categories are: “Most dynamically developing business in the CIS” and “Most dynamically developing bank in the CIS”. ›› www.confer.fbc-cis.ru/baku2011/ index-eng.php
THIRd International Forum of Nuclear Industry Suppliers: Atomex 2011 December 6-8, world trade centre, Moscow
An international exhibition and conference with a programme that includes a series of displays by customer representatives, technical specialists and designers from major organisations in the nuclear industry. › www.atomeks.ru/en/atomex2011
Find more in the Global Calendar
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Business & Finance MOSCOW BLOG
Lending Institutions seek new loan business in regions
Banks to give credit where credit is due Vladimir Ruvinsky russia now
Ivan Svitek, chairman of Home Credit and Finance Bank, once Russia’s leading retail lending institution, recently lamented that only 24pc of Russians take out loans and only 18pc have deposits with banks. Most Europeans use two to four financial products, and some five or six, but most Russians do not use any. Home Credit is now the eighth-most successful lender and it wants to regain more market share. Mr Svitek believes that there is plenty of potential to expand the business in Russia if the bank reaches out to remote regions and embraces new technologies, in the way that McDonald’s does.
High-risk business
The statistics back Mr Svitek’s belief. According to the World Bank, Russia has a quarter of the global average number of bank branches. The International Monetary Fund says individuals’ debt to credit institutions is only 9pc of the Russian GDP (it is 85pc in the US). And, according to Rosstat, 44pc of Russians live in remote areas not reached by retail banks which focus their business in large cities. Even in cities, only 63pc of Russians use a bank service, according to polls by the Public Opinion Fund, mainly to pay for utilities and access salaries. Research from the National Agency for Financial Studies shows there are 11 million active credit cards in Russia, a country of 140 million people. Some banks claim higher figures than this, but these may include “issued” cards which are never
used, have been blocked or have expired. Russia saw a rapid growth in retail loans and credit card take up in the mid-2000s, when personal incomes began to increase. The figures peaked in 2008 before the financial crash. Private commercial banks and Russian subsidiaries of international banks were the main players in this underdeveloped market. The business was high risk, mainly because many Russians had unofficial incomes.
Beatings and threats
Focusing on gaining a bigger market share, banks were not overly concerned about their customers’ ability to pay, but included the risk in the loan rates. A popular tactic was the one employed by Russky Standart Bank, which sent out credit cards by post without even receiving applications for them. Recipients could simply open the envelope, activate the card and use it. The bank would charge up to 250pc annually, as well as undisclosed commissions, and many borrowers realised this only when they came to pay. This aggressive policy helped Russky Standart Bank secure the leading position in the Russian credit card market. The 2008 crisis entailed mass non-payment of credit card bills and forced the banks to change their tactics. They would write off smaller debts of up to 40,000 roubles (£800) if there was little chance of collecting them. But larger unrecoverable debts were sold on to debt collectors, who used illegal methods, including beatings and threats, to recover the money. In the courts, borrowers’ arguments that banks charged three or four times the original advertised rates fell on deaf ears. The banks insisted that all undisclosed payments and commissions were
indicated in the contracts, and that borrowers should simply read the contracts more carefully. The courts sided with the banks in 90pc of cases, according to Mikhail Kozlov, head of the public organisation Credit Amnesty, which seeks to protect borrowers’ rights. “We are in correspondence with an American association of borrowers. They complain that the advertised interest rate on credit cards is 7pc but it eventually turns out to be 12pc – these horribly unfair American banks. I told them we often have a declared rate of 12pc, which later turns into 200pc”, says Mr Kozlov. He adds that although western banks cannot afford to treat their domestic borrowers like that, they “have their own way” with borrowers in Russia. Since Russia has no law on personal bankruptcy to protect borrowers’ rights, for some people lending led to a loss of everything. The financial crisis brought personal tragedy to many people. According to Credit Amnesty, about 100 private borrowers commited suicide every day before the state intervened in 2008, and obliged credit institutions to reveal the full cost of their loans. While this was a welcome step forward, there are still problems – about 15 million people have difficulties in paying off credit card debts, according to Mr Kozlov.
Squeezed middle class doesn’t trust the banks Ben Aris
the moscow times
T
photoxpress
Reforms have made using a credit card safer, but attempts to make plastic more popular could be foiled by the eurozone crisis.
Sharp cards: the number of credit card users in Russia reached a peak in 2008
THE numbers
11
million active credit cards are used in Russia – out of 140 million people.
9
pc of GDP is credit debt in Russia, compared with 85pc in the US.
Credit cards used per person
287
bn roubles (nearly £6bn) is the amount owed in credit card debt.
Bank, the state-controlled banks Sberbank and VTB now have the second and third biggest shares of the market, with 14.5pc and 10.3pc respectively. Russky Standart Bank, though, is still in the lead with 18.5pc of the market.
State banks criticised
Banks improve their act
Banks, for their part, do now treat borrowers more seriously. Before lending, they run credit history checks to assess borrowers’ solvency. State banks, which offer lower loan rates than the market average, have stepped up their efforts in the credit card market to grab some of the market share from the commercial banks. According to Tinkoff Credit Systems
The average number of credit cards used per person in different countries, according to a survey by TNS Bank. The figures show there is plenty of potential to expand the credit card market in Russia.
Many experts regard the intervention of the state banks as a negative factor hampering market development, but nevertheless banks have reported an overall increase in the number of credit cards they issue. The combined portfolio of credit cards in the first half of 2011 rose by 26.1pc and now totals 287 billion roubles of credit. Most banks now provide credit cards free of charge, although some still charge issue fees of 2,000-3,000 roubles (£40 to £60) and service fees of around 600 roubles (£12) a year, although some banks waive the annual fee for the first year. Interest rates for credit card loans are higher than those
on regular loans, but the advantage of a card is that it can be obtained within 15 minutes. Sberbank offers a minimum annual rate of 17pc for credit card loans, but loans issued via a contract can be 5 or 6pc cheaper. Commercial competitors have had to reduce their rates to compete with the state-run banks, and now charge anywhere between 15pc and 50pc interest rates. If credit cards are used to withdraw cash from a cash dispenser, a commission starting from 2.5pc of the loan, or at least 200 roubles (£4) is charged. An interestfree grace period of 50-60 days on purchases is allowed. According to VTB24 vicepresident Mikhail Ioffe: “Most credit transactions with cards are completed at a zero rate.”
Growth of lending
While there is still potential to expand the Russian credit card market, the anxiety caused by the debt crisis in the eurozone prevents bankers from being too optimistic. The impressive growth of consumer lending is hardly at risk, but one cannot be certain that borrowed funds will not become more expensive. After all, these are mainly investments by private customers in deposits and bonds in Europe, where Russian banks will no longer be able to borrow at the old rates of 5-7pc.
he global financial crisis, which began in 2008, sent a tsunami of pain around the world, damaging markets and consumers. Russian consumers have not been immune. A report from the Zircon research group, entitled The Trend of the Financial Activity of the Russian Population 1998-2011, says the share of Russians identifying themselves as middle class has fallen from 54 pc to 47pc. Zircon defines the middle class as“well-off people on the whole, who only have difficulties buying durable goods, and identifies“welloff” citizens as those who can afford more expensive items such as cars and flats. The number identifying themselves as“well-off”has also shrunk from 20pc of the population before the crisis to 12pc. Russians’ economic woes were exacerbated by the Kremlin’s decision to increase social taxes at the start of this year, which cut personal incomes. Real disposable incomes were down 2.9pc in the first quarter of this year, according to the State Statistics Service, which has had a trickledown effect on other segments of the economy, depressing retail sales as prices continue to rise. According to the Zircon survey respondents, the minimum needed to live a “normal” life in Russia is 24,000 roubles (£495) a month, while the minimum cost of living needed to cover the basics is 11,500 rubles (£240) per month. But given some disposable income, they would choose to treat themselves to more of those capitalist baubles that are the hallmark of the free market. Asked what they would do with 40,000 (£825) roubles in monthly
Andrei Vaisman
itar-tass
special to russia now
Rouble rousers: demonstrators in Moscow show their support for the Russian currency
the Central Bank almost doubled its capital flight forecast for 2011 to $70bn. The underlying cause is not only the debt crisis but also the volatility of the markets. The Partner company’s director for financial market transactions, Andrey Mordavchenkov, takes a dim view of the situation:“Western investors are likely to withdraw money from Russia to patch up the holes in their countries’ economies and companies. If this happens, we may see a new wave of capital outflow.” Opinions among Russian experts vary, however. Mikhail Kozakov, financial markets director with investment company Grandis Capital, says: “In the medium term, Russia is a more attractive investment destination than the developed markets. And besides, we have a trump
card in the shape of our commodities. With the currency exchange situation as uncertain as the outlook for the economically developed countries, the commodity market is also becoming
more interesting, at least for speculative capital.” Some other positive factors will not escape investors’ notice. In spite of the overall mood of recession in Russia, the country’s economy is per-
forming in a moderately positive manner. According to the State Statistics Committee (Goskomstat), industrial output increased by 5.1pc from January to October and GDP in the third quarter is expected to grow by an estimated 4.8pc. “When times are hard, investors always look for alternative markets”, says Georgy Aksyonov, an analyst with the Net Trader company. “I think the Russian market, which is part of Brics and is still growing, albeit at a slower pace in recent years, may be promising in this situation.” Another cause for optimism is that, in the current situation, the single European currency did not go into a tailspin, as many predicted: at the time of going to press, the euro/dollar rate has not once dropped below 1.30 since January of this year. It should also be noted that the European debt crisis is
changing the attitude to protective mechanisms such as government bonds. Investors today are clearly shifting their focus from sovereign to corporate debt. This is good news for Russia, because Russian corporations are much cheaper than their Western counterparts. Russia’s financial authorities appear to be optimistic. Sergey Shevtsov, vice-president of the Central Bank, does not anticipate any serious threats to the domestic economy, though he admits that the crisis might lead to a shortage of liquidity. “We expect it to peak in midDecember and, thereafter, the budget will be disbursing actively,”he said on the fringes of an international financial conference sponsored by Sberbank. “The liquidity deficit will grow but it will not, on the whole, create problems for the banking sector and the economy in general.”
Oil price to remain calm in troubled waters The European debt crisis threatens demand for oil – but increases its value as a commodity. The two factors could result in price stability. Andrei Vaisman
special to russia now
The oil market is confusing. While the European debt crisis threatens to slow the global economy and cut demand, it is also turning commodities into protective assets, prompting capital flight into
oil. While there are conflicting predictions as to which way prices will move, many experts think the trends will balance each other out. Dmitry Dorofeyev, senior analyst with the Ursa Capital investment company, says: “Brent prices are down because Europe is virtually in recession and China has launched its ‘soft landing’ policy, reducing the demand for North Sea oil. At the same time, the light brand has been
rising fast because statistics show the US economy is on the rise. I think by the end of the year, the two brands will even out and be traded at $100-$105 a barrel.” Evgeny Tarubarov, chief asset manager of Aton Management, sees a different path leading to a similar outcome: “There is a kind of play between brands on the oil market,”he says.“Brent will cease to exist from next year and a new pricing methodology
for will be offered. I think positions in the product will gradually shrink, but alarming signals coming from the Middle East will preclude sharp price changes. “Before the end of the year and in the first quarter of next year, oil prices will remain at current levels. The spread between Brent and West Texas Intermediate (WTI) will narrow, and prices will virtually even out at about $100 per barrel.”
Russians are still very wary of banks: only 15pc of respondents had a bank account of any kind financial services, the lottery came top (46pc). But, surprisingly, mortgages came a close second (41pc), and, even more worryingly, non-state pension funds were rated third riskiest (33pc). “Russians have lost their savings so many times in the past two decades that you have to have some sympathy for their anti-bank sentiment,” said Olga Kuzina, head of the National Financial Research Agency. Indeed, financial protection for Russian consumers is still woefully inadequate. Improved regulation is required before more Russians will be persuaded to trust the banks with their money. Ben Aris is the editor and publisher of Business New Europe.
Thinking small can lead to big innovations
Euro cloud has silver lining for Russia F Russia is not immune to the effects of the eurozone crisis, but investors may see the country’s markets as a shelter from the storm.
disposable income, 54pc of the respondents said they would go shopping; 11pc said they would invest (which includes putting money on a time deposit at a bank); while another 13pc would save (in a current account). Perhaps the most surprising result of the report is how few financial services Russians use. In 2011, the most popular service was insurance policies (40pc), which is largely because of state laws that make car insurance compulsory for drivers, followed by debit cards (37pc). Only 15pc of respondents had any kind of bank account; only 14pc had taken out a loan; and a mere 2pc had used a mobile bank. About 22pc had not used a single financial service this year. These results show that Russians are still very wary of banks. When asked which were the most “dangerous”
london blog
Stephen Dalziel
Crisis Banks may be hit but analysts see strength in commodities and a growing economy
Spikes in eurobond yields have convinced investors that Greece is just the tip of the iceberg, and that major economies such as Italy and Spain may be next in line. Adding fuel to the fire are rumours that Germany might withdraw from the eurozone. Russia cannot stand apart from these problems. Russian banks will be the earliest victims, as they are partners of European banks that have already been hard hit by the debt crisis. The performance of Russian lending and financial institutions has already deteriorated markedly. And Russia is sure to suffer from the general instability caused by the European sovereign debt problem. Europe is Russia’s main trading partner. Russia’s trade with the EU amounted to $254.8bn (£163bn) from January to August 2011, representing half of the country’s foreign trade. It is easy to see the negative consequences of the inevitable drop in European purchases of Russian products, including commodities, gas above all. Market players cannot afford to ignore these factors. No wonder capital flight from Russia is increasing. It amounted to $13bn in September alone and a total of $49.4bn between January and September, according to the Central Bank.This month,
05
specIAl to russia now
or the seventh year in a row, in the chill of a Moscow autumn, the staff of the Russo-British Chamber of Commerce (RBCC) hosted RussiaTALK, the leading forum in Russia for those interested in doing business between the UK and Russia. We chose as our themes this year the “Four I’s” as enunciated a while ago by the Russian president, Dmitry Medvedev, as being key to the country’s development: Investment; Innovation; Infrastructure and Institutions. Investment into the Russian economy remains strong, despite problems such as increased capital flight from Russia this year. And it is not just foreign money coming in. As the Moscow stock exchange, Micex, can demonstrate, Russian investment continues to flow into Russian companies.Whether this investment is always wisely utilised is another matter. But at a time when the eurozone is in crisis, Russia still looks a pretty safe bet for investors. Innovation presents more challenges. Many Russian entrepreneurs continue to struggle with bureaucracy and enterprise, and new ideas do not get the support they deserve from central government. Innovation is the lifeblood of small and medium-sized enterprises (SMEs), the backbone of any developed economy. Some 90pc of companies in the UK are SMEs; in Russia it’s 20pc. If Russia is to end its long dependency on natural resources it has to encourage innovation and SMEs. Mr Medvedev has made infrastructure one of his key themes.The awarding of the 2018 World Cup to Russia
has highlighted the need for new infrastructure, including modern stadiums and the transport links between them, tourist facilities and new housing. Anyone who has flown into a provincial Russian airport or waited at a railway station will know the transport system leaves much to be desired. But agreements such as the memorandum of understanding to rebuild railway stations, signed between Russian Railways and a group of British companies, shows a determination to bring Russia’s infrastructure into the 21st century. Institutions is the most difficult of the I’s to pin down.
If Russia is to end its long dependency on natural resources, it has to encourage innovation and SMEs RBCC’s interpretation was to look at organisations such as our own, so the panel was made up of the heads of our French and Canadian counterparts in Moscow, CFIIR and Cerba; the Association of European Business and the Russian Trade Delegation in the UK. In each case, our business is about helping businesses do business, notably across national boundaries. You can never have too many contacts, and these institutions all have wide networks which facilitate this. And with the bureaucracy which sometimes engulfs business in Russia, a helping hand through that maze can be very useful. But are we“institutions”? As the session’s chairman said: “Marriage is a great institution; but who wants to live in an institution?” Stephen Dalziel is executive director of the Russo-British Chamber of Commerce.
06
Comment & Analysis
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ganov, head of the Foreign and Defence Policy Council, who chairs the Valdai Club meetings, described that path as an “incremental development” model. Some of the more fiercely anti-establishment participants in the forum tried to convince their colleagues that a revolution was inevitable. But this possibility was dismissed by the Russian participants and virtually all the foreign members. That is not to say that attempts to rock the boat will not be made by either the right or the left of the Russian political spectrum. Why do most of the political analysts gathered in Kaluga see the “incremental” model as the most realistic? Because
Yevgeny Shestakov
special to rn
F
ollowing the 2012 elections, there are any number of routes that Russia’s future development might take in the next five to eight years. Working out what these might be and coming up with an optimal model for development was the task of the Valdai International Club at its recent annual meeting in Kaluga. Political scientists and experts from 14 countries gathered to predict Russia’s future path. First, five scenarios were discussed ranging from a future hard-line authoritarian regime to a democratic revolution, accompanied by a total change of the ruling elite. In between these extremes were intermediate variants reflecting the directions the country might take under certain conditions. These included: liberal-democratic reforms; authoritarian modernisation; and an inertia model, based on preservation of the status quo and a form of stagnation. None of the proposed models, the participants concluded, was realistic. The authoritarian modernisation path, though slightly closer to reality than the other scenarios, still failed to take into account many of the factors characteristic of Russia today. Instead, a sixth scenario emerged that takes account of the most obvious trends reflecting the general direction of society. It is basically about gradual accumulation of forces for future change, which will take place simultaneously with a restructuring of society. Sergei Kara-
There is no question of a pointed freezing of relations with the European Union but diversification of international links will be a Russian policy priority for the next five years this path guarantees Russia domestic stability and predictable external relations. All the other scenarios proposed for discussion were hypothetical: they might materialise only in the event of unforeseen global events on a scale that could change the course of world history. The West’s hopes of rapid modernisation after the elections are unlikely to be met, according to experts. They believe Russia will enter a period of stagnation with a
positive trend – whereby the country, historically based on a besieged-fortress mentality, will have no need for mobilisation, either peaceful or military. The outside world, given the anticipated chaos in international relations, would not pose any obvious threats. The experts believe that this situation will give Moscow breathing space. The second most probable scenario – “authoritarian modernisation” – far from running counter to the “incremental”scenario, actually corresponds to it in many ways and may become its driving force. Both models envisage rapid economic development with high levels of political stagnation. In the “incremental” model, the political elite seeks to maintain the current rate of development and tries to defuse popular discontent through social programmes. Meanwhile, “authoritarian modernisation” implies selective economic and political reforms, carefully controlled by the ruling elite. Will the outside world permit Russia to implement the “incremental” scenario? On the one hand, in the coming years the West will be preoccupied with its systemic crisis and may simply have no time for Russia. On the other, Europe may become impatient with what it considers to be a slow evolution, with inevitable elements of stagnation. If so, will it try to isolate Russia? In this model of development, Russia may not fit into Europe’s idealistic perceptions. Whatever domestic policy strategy the Russian leadership chooses after the presidential elections, the foreign policy rapprochement with
drew tkalenko
Which path will Russia take after the 2012 election?
Asia will continue. There is no question of a pointed freezing of relations with the EU, but diversification of international links will be a Russian priority for the next five years. As one participant in the discussion said: “Orientation on Asia is not a choice of civilisation but a necessity that will enable Russia to maintain a worthy place in world politics.”
Linking Asia to Europe
In 2012, Russia will, for the first time, host an Apec (AsiaPacific Economic Co-operation) summit in Vladivostok. As its temporary president, Moscow has suggested that the region’s countries discuss, along with food security and innovation, a programme for the development of transport and logistics to link Asia to Europe and the US. Russia is interested in becoming a key transit country, tapping
THE GREAT game is to avoid war In iran Dmitry Babich special to russia now
andrey popov
N
o other sphere of Russia’s foreign policy is subject to such wide-ranging scrutiny as Moscow’s policy towards Iran. Conservative American analysts in thinktanks such as the Heritage Foundation often view Russia as a tacit ally of Iran, turning a blind eye to its dangerous nuclear programme and ignoring the Iranian regime’s aggressive form of Islamist fundamentalism. Israeli government officials, when visiting Moscow, persistently point to the divergence of Russia’s national interests with those of Iran, citing Russia’s own troubles with Islamist fundamentalism in the North Caucasus and, earlier, in Central Asia and Afghanistan. Obviously pursuing their country’s national interest, those Israeli officials believe in the possibility of a return to the very cold peace that existed between the Soviet Union and Iran in the Eighties, when Moscow was very wary of the effect of Ayatollah Khomeini’s teachings on its Muslim minorities. So what is the Russian authorities’ attitude now? And where does Russia’s national interest in the Iranian question lie? The truth is that the Kremlin has been sending out a whole array of signals on the issue, some of which are contradictory. On the one hand, Russia stopped
Analysts view Russia as a tacit ally of Iran, turning a blind eye to its dangerous nuclear programme Russia has no sympathy for Islamist fundamentalism but is keen to avoid a war on its doorstep
Letters from readers, guest columns and cartoons labelled “Comments”, “Viewpoint” or appearing on the “Opinion” and “Comment & Analysis” pages of this supplement are selected to represent a broad range of views and do not necessarily represent those of the editors of Russia Now or Rossiyskaya Gazeta. Please send letters to the editor to UK@rbth.ru
selling or transiting any kind of weapons to Iran, fulfilling UN resolution 1929, which was adopted in June 2010. This meant cancelling the contract to ship S-300 surface-to-air missiles to Iran, which could have helped the Iranians to challenge Israel’s superiority in the air. On the other hand, Russia finished the construction of the nuclear power station in Bushehr. Where is the logic? Actually, the logic is very simple: Russia is concerned about Iran’s nuclear programme. It has no sympathy for Islamist fundamentalism but, considering Iran is right next to Russia’s border and to the borders of Azerbaijan, a former Soviet republic with a several million-strong Azeri
minority in Iran, it is extremely keen to avoid a war breaking out on its doorstep. It is not too difficult to guess in which direction the Azeri minority would flee from Iran in the event of it being turned into a war zone. Azeris are already the biggest Muslim minority in Russia. Hence Russia’s strong desire to see Iran at peace with other countries and to have a peaceful nuclear programme. Incidentally, the Nuclear Non-Proliferation Treaty (NPT), of which Iran is a signatory, obliges nuclear powers to help non-nuclear countries to develop the peaceful use of atomic energy. The balancing act between Iran and the West, which Russia has to perform,
the potential of Siberia and the Far East. The Valdai Club’s forthcoming report on the challenges facing Russia and Asia suggests the agencies in Moscow be transferred to Irkutsk, east of the Urals, creating a new economic capital there. Moscow is prepared for closer links with Europe, but does not see a reciprocal attitude from Europe, which is fencing itself off from Russia through visas and prohibitive barriers to Russian business. The dialogue between Moscow and the EU shows signs of weariness, with both sides unwilling to admit they need a pause in mutual relations. How long that pause will last – six months, a year, several years – depends on when Europe stops seeing Russia as a junior partner and demonstrates the willingness and ability to launch co-opera-
tion programmes. So far, Russia-EU summits have had the same, constantly shrinking agenda. In contrast, Asia is looking for closer links with Russia and is ready to treat it as an equal partner, hoping for economic benefits.
however, is becoming more and more difficult. It should be said that Iran has shown remarkable restraint in its reaction to a number of regional wars in which Russia has been a party in recent years. Unlike certain Western circles, Iran never provided help to anti-Russian mudjaheddin in Afghanistan or to the Chechen rebels, and it stayed largely neutral in the conflict between Armenia and Azerbaijan, despite an obvious temptation to show solidarity with its Muslim brothers. Tehran’s restraint in Russiarelated issues is ever more laudable, since Iran historically has had little positive sentiment about Russia. Modern Azerbaijan had for centuries been a part of the Iranian empire, and Georgia was in its zone of influence until the Russian tsars wrestled the territories away from Iran in the early 19th century. In his childhood, Ayatollah Khomeini was a witness to the joint Soviet-British occupation of Iran in 1941. But despite the troubled history, Iran’s rhetoric on Russia is in most cases less critical than that of some members of the EU. The recent Western interventions in Iraq, and even more recently in Libya, make Russia suspicious of what lies behind Western hostility towards Iran. Iranian restraint in Afghanistan and the Caucasus makes Russians somewhat sceptical about the information on Iran’s support for extremists in the Middle East – a region which is becoming more and more distanced and estranged from Russia. Hence Russia’s unwillingness to see Iran condemned and punished by the West according to the Iraqi or Libyan scenario.
ambivalence over joining the WTO
Dmitry Babich is a political analyst at RIA Novosti.
This eight-page pull-out is produced and published by Rossiyskaya Gazeta (Russia), which takes sole responsibility for the contents. Internet address www.rbth.ru Email uK@rbth.ru Tel. +7 (495) 775 3114 fax +44 (20 3070 0020) ADDRESS 24 Pravdy STR, bldg 4, Floor 12, Moscow, Russia, 125 993 evgeny abov Editor & publisher konstantin fets executive editor alena tveritina editor Olga DMITRIEVA editor (UK edition) shauna massey guest editor (uk) Paul Carroll, sean huggins subeditors (uk) Andrey zaitsev head of photo dept milla domogatskaya head of pre-print dpt ilya ovcharenko layout e-Paper version of this supplement is available at www.rbth.ru. Vsevolod pulya online editor.
The middle-class masses
A Chinese political scientist at the Valdai Club meeting asked what role China will play in modernising Russia. Moscow does not yet have a clear answer to that question. But it is worth noting that Prime MinisterVladimir Putin’s first foreign visit after becoming a presidential candidate was to China. Paraphrasing Archimedes’ dictum, “Give me a place to stand on and I will move the Earth,”one could say that sociologists see the middle classes as a force capable of moving Russia in the next five to seven years. Accord-
Konstantin von Eggert
special to rn
T
he 18-year marathon seems to be over. Barring some extraordinary last-minute scandal, in mid-December the World Trade Organisation will agree to accept Russia as a member. Georgia was the last WTO member to object to Moscow joining the free-trade alliance. It insisted on some form of Tbilisisanctioned customs controls on the borders between Russia and Abkahazia as well as Russia and South Ossetia. The two regions unequivocally broke away from Georgia in August 2008. Moscow has since recognised them as sovereign states, while most of the world still considers them to be constituent parts of the Georgian state. Barack Obama and the European Union leaders believe that WTO membership will, in the long term, open Russia up to the world – and ease difficulties that American and European businesses experience there. Hence, Tbilisi was heavily leaned on by the EU to agree to a Swissbrokered compromise in return for some notional customs-check system on the borders. These are widely believed to be a fig leaf covering the de facto recognition of Russia’s protectorate over the breakaway republics. So, is it a political victory for the Kremlin? Yes. Is it enthused about WTO membership? Probably not. Prime
ing to a focus group study presented to the Valdai Club by Mikhail Dmitriyev, head of the Strategic Development Centre, by 2018 the middle class will account for 60pc of adults in cities and 45pc in the country as a whole. The trend towards rising incomes and the potential demographic situation were factored in. According to these calculations, by 2018, the left-wing electorate will be in the minority, greatly reducing the risk of left-wing populists winning power. Sociologists claim that, according to their surveys, the middle class today is interested in politics but is not yet an independent political force. It expects the state to deliver clear and immutable rules for doing business, but does not want government interference in the affairs of the business community. The path Russia takes will
Minister Vladimir Putin was always suspicious of WTO membership, fearing it would limit the Kremlin’s total control over the Russian economy. At the moment, the Kremlin can write its own rules for foreign investors and rewrite them when needed. The accession will introduce an independent framework of rules, regulations and dispute resolution schemes which are difficult, if not outright impossible, to bypass. This would weaken the government’s so far firm hold on the economy. As he prepares to assume the presidency once again, Putin is
Is it a political victory for the Kremlin? Yes. Is it enthused about WTO membership? Probably not in no rush to join the WTO. That is the reason for prolonged transitional periods for some of the Russian industries, allowing them to lower tariffs and open up the market for competition over the next five to 10 years. This is especially relevant for the energy industry, allowing Gazprom to continue selling gas on the domestic market at reduced prices – one of the key elements of keeping social stability. But not joining the WTO would have been a disaster for Russia’s reputation after nearly two decades of tough negotiations. The country
depend on whether the future middle class rallies under the banners of a party, and, very importantly, what its cultural level and ethnic composition will be. But the head of the Russkiy Mir fund,Vyacheslav Nikonov, says developing even the most plausible scenarios for Russia’s development makes no sense, and traps the participants in an“old-fashioned intellectual model”.The discussion needs to focus on concrete projects that determine the future of the state: the budget, prospects for reindustrialisation and innovation. These are the key parameters that will determine how Russia develops, who its partners will be, and what configuration of the political system will emerge. Yevgeny Shestakov is editor of the international desk at Rossiyskaya Gazeta.
would have become badly isolated from the world markets. The relatively lenient terms on which Russia joins the WTO may disappoint some potential investors, but the conviction in Moscow is that their numbers would always be sufficient to keep the Russian economy going. Brussels and Washington may be right about the longterm benefits for foreign investors in Russia who, from now on, will have more ammunition to defend their positions in Russia, but also to defend Russian companies abroad. Many of them have found it difficult to invest in Europe and America because of protectionist hurdles. Now, they can appeal to the WTO rules. Although, I think, that with state behemoths like Gazprom, a lot of suspicion would still linger as to their real intentions. But, funny as it may seem, Russian businesses will be able to take their own government to task – for example, if it tries to dictate their choice of foreign partners. It will be a long and messy story, no doubt, but it is to the Russian government’s credit, that having spent so much time and effort trying to keep Russia aloof and separate from the rest of the world, with the WTO it chose, against its own instincts, to tread a different path. Konstantin von Eggert is a commentator and host for radio Kommersant FM, Russia’s first 24-hour news station.
To advertise in this supplement contact Julia Golikova Advertising & PR director, on golikova@rg.ru or Toby moore on toby.moore@telegraph.co.uk © copyright 2011, ZAO “Rossiyskaya Gazeta”. All rights reserved. Alexander Gorbenko chairman of the board pavel nEgoitsa general director Vladislav Fronin Chief Editor. Any copying, redistribution or retransmission of any of the contents of this publication, other than for personal use, without the express written consent of Rossiyskaya Gazeta is expressly prohibited. To obtain permission to reprint or copy an article or photo, please phone +7 (495) 775 3114, or email uk@rbth.ru with your request. RN is not responsible for unsolicited manuscripts and photos.
Cityscapes
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07
St Petersburg With its rich historical heritage, stunning architecture and network of canals, the former capital is a truly romantic city to visit
A cultural blast from the imperial past There are plenty of ways to experience the atmosphere and beauty of St Petersburg, including canal trips, literary tours and rooftop excursions.
A haunt of princes and presidents
Julia Petrova, Pauline Narychkina and marina garina
The Hotel Europe has opulent decor, sumptuous food and a prime location close to key landmarks of Russian history and art.
Special to russia now
The name of writer Fyodor Dostoyevsky is inseparably linked with St Petersburg. Literary scholars say that the city figures in about two-thirds of Dostoyevsky’s writing – both as the setting and also as a protagonist. The homes of his characters and places associated with the writer’s life can
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Since the 19th century,VIPs, celebrities and business people visiting St Petersburg have invariably stayed at the Hotel Europe in the heart of the city. Bill Clinton and Prince Charles are two of its famous guests. Located at the intersection of Mikhailovskaya and Italyanskaya Streets, the building has a prime location and is itself a historical landmark. It was built in 1875 by the Swiss architect Ludwig Fontana after a devastating fire destroyed the hotel, inn and guest houses that previously occupied the plot. Fine art and antiques adorning the lavishly decorated hotel add to its rich historical character.The hotel boasts a caviar bar and a restaurant serving sumptuous Russian haute cuisine. Guests can look out at the Ploshchad Iskusstv, or Arts Square, which is at the heart of the city’s cultural life.
View from the bridge: the sights of the picture-postcard waterfront area include the splendid St Isaac’s Cathedral, above
First opened in 1785, Palkin’s patrons included Dostoyevsky, Leskov, Chekhov and Tchaikovsky. Gourmets can enjoy dishes that were served to the imperial court, such as crayfish tails with avocado and caviar. Restored in 2002 by the Hermitage Museum, live music and regular cultural events are all part of the experience. “This is not our first evening at Palkin’s… we sim-
press photo
A taste of the old city
ply want a repeat of the experience we usually enjoy here,” says Russian director and screen writer Valery Todorovsky.
director of Mir travel agency. Dostoyevsky tours start at his memorial apartment on Kuznechny Pereulok, where he worked on his last novel, The Brothers Karamazov. Another must-see is the mysterious Mikhailovsky Cas-
be found on city maps, and many travel firms offer Dostoyevsky-themed tours.“The writer lived here for 28 years and moved apartment 20 times, which is why so many addresses are linked to his name”, says Valery Fridman,
tle, which used to house the engineering school in which Dostoyevsky was enrolled in 1838. The castle was built between 1797 and 1800 at the behest of Emperor Paul, son of Catherine the Great, as a shelter from conspirators. Ironically, he was assassinated in the castle in 1801. Semyonovsky Platz is where Dostoyevsky was almost hanged. After he became acquainted with revolutionaries and joined their secret society, he was arrested on a tip-off, incarcerated in the Peter and Paul Fortress and sentenced to death along with other members. On December 22, 1849, he was brought to this place of public executions, along with 20 other convicts.“I have told tourists this story countless times, and each time it sends a chill down
my spine”, says Elena Yakovchenko, a guide with the Mir travel agency. “Three pillars were put up on the square and the conspirators were to be hanged in seven rounds, three at a time. Dostoyevsky, was in the second three, and while waiting his turn, a messenger arrived with a new sentence: death by hanging was commuted to four years’ hard labour.” After serving his term, Dostoyevsky lived in Moscow for a while before returning to St Petersburg and settling on Stolyarny Pereulok, where he wrote his most famous novel, Crime and Punishment.
ments, but you’ll need a sensible pair of shoes. You can scale at least four roofs on a three-hour excursion in the historic heart of the city and get a different perspective from each one. From the six-storey building on the quay of the Fontanka River, opposite the Circus, you overlook a junction where, in the evening, the winding car headlights undulate and interweave with the riverboat lights. This synchronised dance is hypnotic. Near Mokhovaya Street the landscape is quite different. On the horizon, the illuminated domes of Kazan and Saint Isaac’s Cathedrals and the Church of Our Saviour on Spilled Blood, plus the spire of the Admiralty are all aligned, like golden balls set along the tops of the roofs.
Rooftop highlights
In summer, a tour of St Petersburg’s rooftops offers magnificent views of the landscape and the monu-
press photo
A bookworm’s route
alexandra khazina
photoxpress
Peter the Great was a bit of a copycat when he built St Petersburg back in 1703. He brought the concept of a whole new city from Italy, and replicated other aspects of Europe, such as the Dutch fleet and French architecture. He wanted foreigners arriving on ships from all over the world to be struck immediately by the grandeur and beauty of his new imperial capital, which is why the waterfront is the city’s face. Often referred to as the“Venice of the North”, St Petersburg consists of a network of canals surrounding 101 islands, just 16 fewer thanVenice. “A ride along the rivers and canals is a must for every visitor to St Petersburg”,says travel agency head Yana Khrustovskaya.“Our tourists are amazed at the harmonious and magnificent view of the city from the water.” At night, the interplay of light and shadow emphasises St Petersburg’s impressive architecture. If you take a boat to the middle of the Neva River at about 2am, you can watch the world-famous sight of the drawbridges being raised to let through the huge liners that cruise here every summer night.
You’ll see people hurrying to a play, an opera or concert at the Mikhailovsky Theatre, the Musical Comedy Theatre or the Shostakovich State Philharmonic, and others heading to an exhibition at the Russian or Ethnography Museums. The square also houses the legendary Stray Dog Café, haunt of the early 20th century intellectuals after the 1917 revolution. A glittering crowd of Acmeist poets, symbolists and artists, including Anna Akhmatova, Osip Mandelshtam andVladimir Mayakovsky used to gather there and perform. It was there that they met the father of futurism, Filippo Tommaso Marinetti. Within 20 minutes’ walk of the hotel is the grand Winter Palace, the former home of the tsars that now houses the world-famous Hermitage Museum. Other landmarks include the Church of the Saviour on Spilled Blood, built at the place where Emperor Alexander II was assassinated, the Kazansky Cathedral, built to commemorate the victory over Napoleon, as well as the boutiques in the Gostinny Dvor building.
Hotel Europe: lavishly decorated with fine art and antiques
Moscow After decades of enforced atheism, members of the major faith groups are flocking back to new and restored places of worship
Resurrected: believers breathe new life into sacred buildings
The Catholic cathedral’s superb acoustics make it a good venue for secular concerts
Built in the 1880s to commemorate the victory over Napoleon, it was blown up on Stalin’s personal orders in 1931. The site was used for a public swimming pool before the cathedral was eventually rebuilt in the Nineties.
pressive monastic institutions, built in the lavish Moscow baroque style in the 16-17th centuries, the convent was declared a Unesco World Heritage Site in 2004. A large-scale restoration, completed in 2010, has returned the convent back to its former splendour, and it now attracts an ever increasing flow of visitors. Since the government began turning Orthodox property
Crosses and domes
Novodevichy Convent’s thick red-and-white walls have housed many a high-ranking
Moscow’s only Anglican church, St Andrew’s, opened its doors 127 years ago to meet the needs of Moscow’s growing British community. Seeing as the Scots were the wealthiest members of the community at the time, the church was dedicated to the patron saint of Scotland. The architect, Richard Knill Freeman, never came to Russia, sending the drawings of the building (a replica of hundreds of Victorian Anglican churches) and his recommendations by post. The first church service was
held in 1884; they continued until it was closed by the Soviets. For 70 years, the building was put to various uses: a warehouse; a hostel; it even housed a recording studio for the famed “Melodiya” label. Church services resumed in 1991, and once again St Andrew’s parish is the centre for Moscow’s British community. The church hosts a library and a children’s club, as well as Alcoholics Anonymous meetings. It also holds classical music concerts and fairs to raise money for charity.
lori/legion media
A little piece of Britain in the heart of Moscow
Stained glass and spires
Catholic churches have always been rare in Moscow. There were three before the Revolution; of these, only two remain. This year, however, Moscow’s Catholics are celebrating a double anniversary: 20 years since the Catholic Church reopened in Russia, and 100 years since the construction of the Cathedral of the Immaculate Conception of the Blessed Virgin Mary on Malaya Gruzinskaya Street. The cathedral, which is said to be inspired by Westminster Abbey, was closed in 1938, its beautiful neo-Gothic façade changed significantly, with many of its more impressive elements removed.
THE numbers
1,000 (or just under) places of worship existed in Moscow before the 1917 Revolution.
lori/legion media
When the Bolsheviks took power it became dangerous to be a practising religious believer
back to religious groups, there has been an ongoing debate over whether these precious shrines and objects should be safeguarded by the church or by museums, especially since many of them are very valuable. Before it was completely returned to the Russian Orthodox Church last year, the convent housed a branch of the State Historical Museum. Church authorities are now searching for experts to continue work on the preservation and restoration of the convent. Among other things, the convent takes care of the unique frescoes in the Assumption Cathedral, which date back to the early 16th century. Commenting on the convent’s work in preservation, its Mother Superior, Mother Margarita, told the Orthodox website taday.ru: “Over the course of centuries, the old frescoes have become accustomed to temperature fluctuations inside the cathedral.There are researchers in the cathedral who monitor the condition of the frescoes.”
1
250
places of worship remained intact in the city at the end of the Soviet era in 1990.
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functioning religious buildings exist in Moscow today, representing various world faiths.
In the Nineties, it was restored with the help of donations from charitable organisations and Catholics all over the world. The cathedral’s superb acoustics make it a good venue for concerts, which are also popular with the secular public. For instance, organist James McVinnie, who played at the wedding of Prince William and Kate Middleton, performed here this month.“You can hear a real organ not only during concerts but also at every service,” says Lyudmila, a member of the parish. “There are three of them in the cathedral, which creates a very special atmosphere. A café also opened here recently, and there are always many foreigners with children around. All this gives you the sense that you are not in Moscow but somewhere else in Europe.”
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In the early 20th century, Moscow was one of the most prayerful cities in the world. By 1917, it had nearly 1,000 churches and other places of worship, representing all the major faiths, although Orthodox Christianity was the official religion of the Russian Empire. It was in Moscow, at the Kremlin’s Assumption Cathedral, that Russian emperors were crowned, even after St Petersburg became the new capital and political centre of the country in the 18th century. When the atheist Bolsheviks took power in 1917, it became dangerous to be a practising religious believer in Russia, and the country’s centuriesold religious heritage started to be systematically destroyed. Only a quarter of
nun (not all of whom chose their vocation voluntarily), including Peter the Great’s sister Princess Sophia. Now surrounded by a picturesque little park, it is a wonderful place for peace and quiet in the heart of the city, where you can listen to the toll of bells instead of car horns, and watch ducks paddle peacefully on a tranquil pond. One of Moscow’s most im-
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Moscow’s ecclesiastical institutions survived; by 1990, just over 250 places of worship remained in the city. In the Eighties, the authorities began to gradually reopen the remaining churches and return religious property to worshippers. The rebuilding of Russia’s main and largest cathedral, the Cathedral of Christ the Saviour, symbolised this movement.
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The restoration of many religious buildings in Moscow has provided Muscovites and visitors to the city – both religious and secular – with new spiritual, cultural and architectural treasures.
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1. Novodevichy Convent and pond 2. Synagogue on Bolshaya Bronnaya 3. Memorial mosque on Minskaya Street 4. Restored Catholic Cathedral of the Immaculate Conception of the Blessed Virgin Mary, said to be inspired by Westminster Abbey
Kosher cuisine
Unlike places of worship for certain faiths, synagogues don’t have to be built according to specific architectural requirements and can be located in an ordinary room of any building. Nonetheless, synagogues in Moscow are becoming increasingly impressive, architecturally. The reconstruction by architect Sergei Estrin of the synagogue at 6 Bolshaya Bronnaya was recognised as one of Moscow’s top architectural projects in 2005. Through the five-storey building’s glass front, you can see the restored façade of the synagogue as it appeared when it first opened in 1883. The original grand building was funded through donations from Lazar Polyakov, an industrialist, banker and philanthropist. “It was then a two-storey building, a
former mansion that was redesigned as a synagogue,”explains Shlomo, a translator at the synagogue. During the Soviet years, the synagogue was closed, and it became the House of Artistic Creativity Services before being returned to the Jewish community in 1991. Today, it houses a kosher restaurant on the roof of the building, called Jerusalem, which is open to all.
Minarets and memorials
The youngest of the three Moscow mosques, the Minskaya Street memorial mosque was opened in September 1997 to celebrate the city’s 850th anniversary. It is dedicated to the memory of Muslim soldiers who died in the Second World War. This mosque is part of a larger complex called Victory Park, which also houses a
synagogue with a museum and the Orthodox Church of St George theVictorious. The idea behind the park was to commemorate all those who fought for their country, regardless of their religion. The mosque is very spacious and beautifully decorated inside. Imam Shamil Khazrat Alyautdinov explains: “Our mosque is a bit bigger than Moscow’s other mosques. We have allocated all available space for prayer.” People there are welcoming and friendly, even to those who come out of curiosity. They explain the etiquette expected in a mosque, offer tours of the building and invite you to attend the imam’s public lectures. There are about two million Muslims in Moscow and the number is growing steadily, mainly due to migration from former Soviet republics.
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Football Club owner hopes that success on the pitch will provide a step towards normality for the troubled region
Dagestan’s galacticos reach for the stars Islamist extremists which has seen almost daily attacks, mainly on Russian police. On the day Eto’o walked on to the home pitch for the first time, five people died in a series of attacks. In the past few years, more than 100 policemen have been killed each year in the republic, home to 2.6 million people. The players and their families do not live in Makhachkala – they fly to each game from Moscow. But Eto’o has dismissed any security concerns.“Plenty of people will be looking out for my security. I took this decision because I don’t consider that my life or that of my family are in any danger,” he wrote on his website. “I’ll travel there on the day or the eve of the match and then I’ll go back to Moscow.” After he was presented to fans, Eto’o – a smooth media operator who is adept at saying very little – avoided questions about the dangers of Dagestan. Journalists who were flown down in a Yak-42 – now known for the recent crash in which the LokomotivYaroslavl ice hockey squad were killed – asked Eto’o if he was worried about travelling to games in Russia. “When we sit in a plane, I always give my life up to God. It doesn’t matter whether it is a Cameroonian, Spanish or Italian airline,” he replied. German Chistyakov, the club’s general director, insisted the city was safe, but admitted that he had a different image of the republic before he came: “I thought that there was practically a war going on here, that tracer bullets fly and you have to crawl when you move about,” he told the Russian news agency, Ria Novosti. The money for Eto’o and the other players comes from one man: Suleiman Kerimov, a Dagestani. He is one of the more reclusive oligarchs, even
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Tarlan Bakhishev, 14, has queued for six hours with friends to get a ticket to watch his local football team, Anzhi Makhachkala take part in a training session. The man the crowd of 8,000 has come to see is a Cameroonian who has put the Dagestani capital on the world football map – striker Samuel Eto’o, said to be the world’s highest-paid player. In a corner of the stadium, a few dozen fans perform their evening salah, the Muslim prayer, while thousands more anticipate the arrival of the latest star, a former Real Madrid galáctico. Eto’o, 30, has signed with a club that a year ago could not attract top Russian talent, let alone the world’s best. But Eto’o, who has won the European Champions League three times, joined the Russian club in August from Inter Milan for £18.4m on a three-year contract – worth a reported £25.7m a year.
Security concerns
It is not unusual for football clubs to be transformed by a cash injection which attracts top international players: Chelsea and Manchester City are examples. Manchester City are backed by the formidable finances of the Abu Dhabi United Group and fans recently relished the 6-1 defeat of local rivals Manchester United. But Anzhi, it seems, is more than a club with a stack of cash. The football club is in Makhachkala, capital of the Dagestan Republic in Russia’s North Caucasus. There is an intense and long-running battle in the region between the authorities and
Fan club: Anzhi striker Samuel Eto’o meets a young admirer on a visit to a school in Makhachkala
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Superstar Samuel Eto’o is proof of Anzhi’s ambition to join the giants of Europe. The club’s owner believes sport can change society, too.
Anzhi’s big-money signings: a team of all the talents? Yuri Zhirkov
Balazs Dzsudzsak
Mbark Boussoufa
NAtIONALITY: russian
NAtIONALITY: hungarian
NAtIONALITY: moroccan
NAtIONALITY: Brazilian
AGE: 28
AGE: 24
AGE: 27
AGE: 23
Position: Midfielder
Position: winger
Position: Midfielder
Position: Midfielder
Neither fans nor football experts could understand Zhirkov’s move from Chelsea. They believe he simply gave up struggling for a place in the Blues’ starting lineup, which he had not managed during his two years at the west London club. Zhirkov said his move to Anzhi would guarantee him more time on the pitch. He signed for Anzhi, reportedly for around £12.8m, and it is said that the club will pay him about £4.3m a year.
One of Hungary’s most talented players, Dzsudzsak had a great career at PSV Eindhoven, so his decision to sign for Anzhi came as a surprise even to the executives of the Dutch club. Dzsudzsak could have moved to any top league. According to various sources, PSV got between £7.7m and £12m for the player. So far, Dzsudzsak has played few matches in Russia because of an injury, and is currently undergoing treatment.
Dutch-born Boussoufa played for Anderlecht, Ajax and Chelsea, and was Belgian player of the year several times. He almost signed for Terek Grozny, but the Chechen club failed to meet Boussoufa’s salary demands. According to unofficial sources, Anzhi paid Anderlecht about £8.5m for the Moroccan international, who is paid £2.1m a year. Boussoufa has become a key player and has already scored four goals in the Russian Premier League.
Constructivism London exhibition of Soviet-era art and architecture highlights its utilitarian elegance
Stark monuments to a lost Utopia A movement banned by Stalin is the focus of a show at the Royal Academy, which includes a model of the grandiose Tatlin’s Tower. phoebe taplin
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A model of Tatlin’s Tower – otherwise known as the Monument to the Third International – dominates the courtyard of the Royal Academy in London. The display complements the academy’s new exhibition, Building the Revolution: Soviet Art and Architecture 1915-1935. Designed in 1920, Tatlin’s Tower was planned to become the headquarters of the Comintern in Petrograd; the 400-metre structure was intended to dwarf the Eiffel Tower. It was to have a projector that would transmit propaganda into the clouds for the proletariat to read. But the tower was not a practical proposition, structurally, and it could only ever have been built in model form. The spiralling steel and lopsided dynamism of Tatlin’s Tower contrasts brilliantly with the symmetrical classicism and colonnaded facade of Burlington House. Reactions to the tower in the courtyard vary hugely, from couples enthusiastically photographing themselves in front of it to old women shaking their heads and muttering. These differences reflect the wider debate
Grand designs: the Tatlin’s Tower model. The original was intended to dwarf the Eiffel Tower
about the works on show inside. Constructivism, an attempt to create a utopian architecture, is an acquired taste.With their uncompromising concrete facades and deliberate lack of embellishment, these buildings are not a popular choice for preservation campaigns, but this was a time when Russia led the artistic world. Part of their appeal lies in the radical rethinking of form and function that inspired their creation. These early Soviet monuments – built before 1935 when Stalin banned constructivist architecture – were intended to support post-revolutionary life: apartments for commu-
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Constructivism, an experimental attempt to create a utopian architecture, is an acquired taste nal living, bakeries to cater to the masses and press offices to spread the good news. The RA’s celebration of the utilitarian elegance of these buildings is organised thematically by function, with separate halls dedicated to communications, industry, health and housing. The exhibition includes vintage photographs of these clubs, cafeterias, towers and turbine halls, alongside Richard Pare’s images of them
seven decades later. Pare’s poster-perfect photographs are the largest and most striking images in the show. They include the mesmerising hyperboloids ofVladimir Shukhov’s radio tower; the light-filled studio of architect Konstantin Melnikov’s house; the Sochi sunset over the palm-planted Voroshilov Sanitorium and Lenin’s tomb in a crowd-free Red Square. Achitectural expert Clementine Cecil calls Melnikov’s house “an icon of modernist design and one of the most fascinating examples in the world of an architect’s own house.” Consisting of two interlocking cylinders with diamondshaped windows, it is an ex-
traordinary space. The Rusakov Workers’ Club, also designed by Melnikov, is a fine example of form and function in harmony with lotus-like petals echoing the shape of the auditorium inside. It is harder for a lay person to understand the artistic value of a derelict factory or a crumbling apartment block, but the exhibition helps by setting the buildings in an aesthetic context. The weak point of the Building the Revolution exhibition is that the futurist paintings and drawings on show are only vaguely connected to the architecture in question.The geometric, modernist works, selected from the wonderful Kostakis Collection in Thessaloniki, certainly form an appropriate background for the buildings photographed, but co-curator MaryAnne Stevens’ promise to explore“the interplay between art and architecture during these heroic years”doesn’t really materialise: the links between them are merely described as “echoes,” or “redolent of”.Nevertheless, the images do reinforce the powerful impact of the exhibition. Building the Revolution: Soviet Art and Architecture 1915-1935 runs until January 22, 2012 in the Sackler Wing, Royal Academy of Arts, Piccadilly, London. “Tatlin’s Tower” is on display until January 29, 2012 at the
The 23 year-old played more than 100 matches for Corinthians and even made it to the Brazilian national team. The Dagestan club reportedly paid about £8.5m for him, although Russian football experts believe that the player is worth only half that. However, the Brazilian player is still young and, if he improves with age, Anzhi will be able to sell him to a European club at a significant premium.
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Title: The Hall of the Singing Caryatids Author: Victor pelevin PUBLISHER: New Directions
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n this surreal story by the Russian master of postmodern science fiction, Victor Pelevin, young Lena is employed to stand naked for hours at a time and sing. She and her fellow caryatids are greenpainted ornaments in the malachite hall of an elite underground nightclub. To enable them to keep sufficiently still for up to two days, they are given doses of a classified serum, Mantis-B, whose unusual sideeffects form the thrust of the narrative. In true postmodern style, these drug-induced episodes are interspersed with other voices: pseudo-pretentious extracts from the magazine Counterculture; a lecture from an ideologist; and encounters with other bizarre denizens of this subterranean world,
such as concept artists, girls dressed as mermaids, important clients in bathrobes and the sinister, ironic, slogantoting Uncle Pete. The caryatids come to life if a client wishes them to and no fantasy is too excessive. The hired ideologist tells the sex workers that enemies are trying to brainwash them with a sense of economic injustice by printing photos of oligarchs in the media and describing their freakish whims and revels. Pelevin has perplexed and delighted readers with his polyphonic sci-fi comedy for two decades. In his first novel, Omon Ra (1992), the hero attempts to escape the Soviet nightmare by becoming a cosmonaut, only to find himself part of a farcical mockheroic moon landing. The Russian Film Festival in London opened this month with the UK premiere of Generation P, a film adaptation of Pelevin’s book set in the chaotic Nineties as seen through the eyes of a poet turned copywriter. Pelevin’s most recent selection of sto-
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At first, few took the club seriously, even after it bought Roberto Carlos, the former Brazilan international who won the World Cup in 2002, in August. He is 38 and the assumption was that he wanted one last pay day. But the arrival of Eto’o and other stars has shown how serious the club is and more stars are expected to join.The club has sacked its Russian manager, and has been linked to the world’s top coaches, including Guus Hiddink and José Mourinho. “There has never been anything like this in Russian football,”said Boris Bogdanov, the football editor at Sport Express.“Anything is possiEscape from poverty Dagestan is one of the poor- ble if the investors are paest republics in Russia with tient and invest in infrastrucaround 40pc of the popula- ture.”The club, eighth in the tion unemployed. Club offi- Russian Premier League, will cials and Mr Kisriyev say be fighting to win a place in that Mr Kerimov’s aim is to the European competition encourage young people to when the next part of the turn away from extremism season starts. by offering them a chance to “It would be great to sign channel their energies into Cristiano Ronaldo,”Roberto football. As part of the Carlos told a Spanish televiproject, the club will set up sion station, referring to the seven football centres for the Real Madrid striker who is youth of Dagestan, bring in one of the best-paid players qualified football trainers in the world. He also revealed that he had been trying to and build a new stadium. “People are laughing and persuade other stars to join being ironical [about the him at Anzhi, adding: “Our project], but you have to un- aim is to get Anzhi on the derstand the social aspect,” same level as Real [Madrid] said Mr Kisriyev. “I’m not and Barcelona.”
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saying it is a panacea that will get rid of Dagestan’s problems, but it will create some positive movement.” Judging by the reception for Eto’o, the club can do no wrong in Dagestan. Close to 8,000 packed into the stadium just to see a training session, and more than a dozen children ran on to the pitch to try to touch Eto’o. At one point, a local Cameroonian student, who is studying medicine in Makhachkala, also ran out and dived to kiss Eto’o’s feet.
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though he has been a member of Russia’s lower house of parliament, the Duma, and is currently a senator. Mr Kerimov had tried to take control of the club for at least three years, according to Enver Kisriyev, head of the Caucasus section at an academic think-tank in Moscow. It was only possible to buy the club when the new and proactive Dagestan president, Magomedsalam Magomedov, came in. Relations between the club and the president are close, and the support of a high-ranking official can help soothe the problems in an often dysfunctional republic. “Kerimov doesn’t give interviews; he speaks to Dagestani people through the football club,” said Mr Kisriyev. Forbes magazine estimated that Mr Kerimov was worth nearly $8bn (£5bn) a fortune made through clever investments in the Nineties. He now owns one of the country’s biggest gold producers, but has so far managed to remain out of the limelight – except for when he crashed his Ferrari into a tree at high speed in Nice in 2006. He suffered severe burns and took several months to recover.
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ries, Pineapple Water for a Beautiful Lady (published last year), has been short-listed for the Nose award for new literature. Pelevin’s novels draw interesting parallels: Lena and Omon are victims of the systems they live under, duped by the authorities and kept literally and metaphorically in the dark. In the novel, the building of a secret entertainment complex for politicians and businessmen echoes the construction of Stalin’s wartime bunker beneath Izmailovo, where a sports stadium was built above ground to conceal it. Pelevin’s nightclub is built 1,000ft underground to double as“a bomb shelter for the national elite in case of war or terrorist attacks”. The Hall of the Singing Caryatids was published last month in Andrew Bromfield’s English translation. It forms part of New Directions’ series of literary pearls described as “miniature masterpieces”. The story first appeared in a 2008 collection of Pelevin’s short stories, with the surreal title: P5: Farewell songs of the political pygmies of Pindostan. Recreating this dream-like fable as a stand-alone novella possibly throws too much symbolic weight on to the story’s delicate frame. Butthis comic gem makes a perfect introduction for Englishs p e a k e r s t o Pe l e v i n ’s multi-faceted work, as well as a welcome addition to his oeuvre for existing fans. Phoebe Taplin
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