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Crisis of confidence: Russia goes cool on Europe

Christmas in Moscow: the capital’s seasonal attractions

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Tuesday, December 20, 2011

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Elections The turmoil surrounding the State Duma result has changed the landscape of next year’s presidential poll

Is it still a one-horse race?

Have any of the new presidential candidates got what it takes to win the 2012 election? Russia Now examines their prospects. artem zagorodnov

AP

russia now

When Vladimir Putin announced in September that he would run for president in next year’s election, no one doubted he would return to the position he held between 2000 and 2008.The dominant figure in Russian politics for more than a decade, he had enjoyed high approval ratings as both president and prime minister.

But the poor showing of United Russia in the recent State Duma elections and subsequent street protests seem to have thrown a spanner in the works.“People are demanding more respect from the authorities,” says Andrei Ryabov of the Carnegie Centre in Moscow.

Aside from United Russia, there are six nationally registered political parties, but there are no obviously strong presidential candidates in any of them. While covering a diverse set of political viewpoints, from nationalist to liberal, none has widespread appeal among the voters.

The Communist Party of the Russian Federation (CPRF) is the most credible opposition, with a membership of more than 180,000. Its candidate has been second in every presidential election since the fall of the USSR, with the party leader Gennady Zyuganov losing the first-round vote to then-President BorisYeltsin in 1996 by a margin of just 3pc.

Though the CPRF has attracted high-profile candidates opposed to the ruling regime, they have generally lacked ideological credentials. It has also failed to modernise: unlike the Communist Party of the Soviet Union after 1956, it official-

Head to head: Vladimir Putin, right, takes issue with Gennady Zyuganov, his main rival in the 2012 presidential election

ly celebrates Stalin’s rule.

Mr Zyuganov, 67, has headed the party since 1993, but now relies mainly on protest votes for his popularity. Announcing his intention to run for president earlier this year, he said:“A gang of folks who cannot do anything in life apart from dollars, profits and mumbling, has humiliated the country.”

Just Russia, a party widely rumoured to have been set up by the Kremlin in 2006 precisely to take votes from the Communists, also appeals to a left-leaning electorate with promises of a new socialism of the 21st century.

Leader Sergei Mironov was speaker of the upper house

of the Russian parliament from 2001 to 2011. Previously a staunch Putin supporter, he also announced his intention to run for president earlier this month.

Another long-standing political heavyweight is Vladimir Zhirinovsky, head of the Liberal Democratic Party of Russia (LDPR) since its inception in 1991. While the party has positioned itself as anti-government with several nationalist slogans, it has voted in favour of practically every major government initiative.

The remaining parties – liberal-leaning Yabloko, Right Cause and Patriots of Russia – only have single-figure

approval ratings so could not be credible competition, although Yabloko will field a candidate in the shape of the economist and intellectual Grigory Yavlinsky.

“A drop in oil prices could be enough to turn these political leaders into genuine opposition [candidates],”says Mr Ryabov. “However you feel about Zyuganov, Zhirinovsky and Mironov – they’re professional politicians. They understand how society feels and know how to react. Look at Eastern Europe in the late Eighties: previously loyal political parties in East Germany and Poland split with the government, and some of them came to power.”

Cybercrime Moscow proposes code of practice to defeat the hackers

Who’s playing dirty online?

In the Digital Age, online security is a major priority.

Rather than carrying on with the blame game, Russia’s communications minister suggests a new agreement.

Peter Warren

itar-tass

special to russia now

William Hague, the British Foreign Secretary, issued what was described as a “blunt warning”to countries involved in cyber attacks against other nations at last month’s London Conference on Cyberspace. In reality, it amounted to little more than a plaintive, “Please, stop it.”

Officials said the message was aimed primarily at Russia and China, the states which are most frequently seen by the British media as the main offenders.

Indeed, the week before, Baroness Neville-Jones, Britain’s former minister for security and counter-terrorism and now the Prime Minister’s special representative to business on cyber security, ramped up the rhetoric. She said Beijing and Moscow were “certainly” involved in

Hacked off: Russia is tired of being blamed for cybercrime that occurs in other countries

that sort of activity. Mr Hague, perhaps aware of adverse political fallout from any public statement, avoided that specific issue, leaving the UK’s media to point the finger at Russia and China as chief culprits.

Nevertheless, the Russian delegation in London confessed to being taken aback by the furore, not least Igor Shchegolev, the communications and media minister.

“Not one participant raised these questions at the conference, neither in the corridors, nor during the course of the discussions,” he told Rossiyskaya Gazeta at the time of the conference.

“So, we didn’t have to answer that. For us it was a little surprising: on one hand we had been invited to the conference to discuss this important subject; then when we arrived, it turns out that

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this is some sort of pretence.

In fact, such accusations are not new to us.”

In the West, Russia is often portrayed as a global centre for cybercrime, with China seen as the main market for industrial and economic espionage – allegations vigorously denied by both countries, which say that they are frequently on the receiving end of such attacks.

Quite rightly, Russia points to the fact that in cyberspace, as in Shakespeare’s Macbeth, “Nothing is but what is not.”

Halfway-decent hackers have always been able to successfully hide their tracks: the shadowy world of the internet is purpose-built for any unscrupulous intelligence agency that wants to make it look like cyber attacks are coming from the computers of another state.

Mr Shchegolev agrees: “The British press recognises there are no specific facts proving any bad intentions by Russia.

The nature of the internet is such that anything can be continued on PAGE 3

Not everyone is waiting for the parties to modernise.

Mikhail Prokhorov – Russia’s billionaire owner of the New Jersey Nets – recently announced his desire to run for the country’s top office.

For most of the past decade, big money had stayed out of Russian politics. Maybe too many dashes. But this year Mr Prokhorov joined the Right Cause political party – designed to appeal to a liberalleaning, urban electorate – and announced his intention to take Mr Putin’s job as prime minister. Then he was voted out of the party after having spent millions of his own dollars on billboards and promotions across the country.

Mr Prokhorov’s announcement that he would be running as an independent caused a stir in the media – especially after Mr Prokhorov promised to release the jailed oil baron Mikhail Khodorkovsky if he was elected.

Another widely-circulated name is the lawyer-turnedanti-corruption blogger Alexei Navalny, described as “the only electable Russian” by the opposition journalist Yulia Latynina. Mr Navalny rose to fame after launching a popular website exposing corruption in state organisations and companies.

One of his strategies was to buy a small number of stocks in state companies and use Russian investor protection laws to obtain information.

H owe ve r, M r N ava l ny shocked both Western and Russian observers when he attended a Russian nationalist march earlier this year.

He has denied any intention to run for president, and the polls – conducted in November by the Levada Centre – show that only around 1pc of Russians trust him.

While few doubt that Mr Putin will win the top job in the end, his relationship with the newly elected parliament and society is anything from certain. United Russia recently surrendered half of the parliamentary committee chairmanships, which it had controlled for four years, to opposition parties following the election results.

“If Putin doesn’t win in the first round of elections and has to face someone in a runoff, this will be a major signal from society that things need to change,” says Dmitry Babich, a political analyst at RIA Novosti.

“But I’m sure he’ll win in the second round. There’s not a single figure to unite the opposition like in 1991; there’s not even a few single figures who could agree between themselves.”

Innovation Deal signed with IBM

New technologies lure new partners The innovation city being built in Skolkovo is still a work in progress, but it has already established partnerships with big-name international brands.

Alexander Vostrov

special to russia now

The Skolkovo innovation village, often called “Russia’s Silicon Valley”, has to date joined forces with more 200 partners. One of the latest companies to join is IBM, which has signed agreements to drive innovation in Russia and establish a science and technology centre employing up to 150 technical staff by the end of 2012.

IBM and Skolkovo plan collaborations on areas of mutual interest, including the oil and gas industries, and business analytics technologies to improve road safety.

Construction of the innovation centre only began a year ago, and there is still much work to be done. But despite it being a work in progress, the founders have

high hopes that it will become not only the engine of the Russian economy, but a major player in global research and development.

Sceptics have branded the whole concept a pipe dream, but as more and more bigname companies sign up, their criticism appears increasingly misplaced.

The place is already making its mark in the Russian consciousness. Skolkovo as a brand is widely known; it is responsible for more words with the prefix “nano” popping up in everyday language, along with the use of the buzzwords “innovation” and “modernisation”.

Skolkovo has also revived an older Russian acronym: NIOKR, which is basically the Russian equivalent of R&D. It refers to a full-cycle research centre where scientists come up with a new technology, build a pilot product, test it, and, if the test is successful, launch it continued on PAGE 4

News in Brief

Men outnumbered as population drops Russia’s population is continuing to decline, according to a report on the 2010 census in Rossiyskaya Gazeta.

In the 13 years between the last Soviet-era census of 1989 and the first Russian census of 2002, the population fell by 1.8 million.

And the population has fallen by another 500,000 over the past eight years. The biggest drop was registered among the rural population, according to Itar-Tass news agency. Russia’s population now stands at 142,857,000, and the country is ranked as the eighth-largest in the world, after China, India, the United States, Indonesia, Brazil, Pakistan, and Bangladesh. It was in seventh place in the previous census.

The average age of the Russian population is 39 and there are now 10.7 million more females than males.

Merged Micex-RTS exchange opens The first day of trading on the unified MicexRTS exchange took place yesterday. The two exchanges operate on one platform for issuers, traders and investors, which cuts costs and makes trading easier; for shareholders, the merger favours profitability, diversifies sources of revenue and allows a publicly listed company to be created.

In 2012 the Micex-RTS exchange plans to finalise work on T+n trade sessions, where the choice of technology platform will give the exchange a united trade account for spot and derivative instruments. An important stage due next year is the merger of the National Depository and the Depository-Clearing Company.

Mars spacecraft to fall back to Earth

nasa

The ill-fated Mars spacecraft Phobos-Grunt will fall to Earth in the New Year, according to Roscosmos, the federal space agency. Where and when would not be known until a few days before the event, but the spacecraft is expected to arrive between January 6 and January 19 in a zone from latitude 51.4°N to 51.4°S, which includes the cities of London and Paris.

Vladimir Popovkin, general director of Roscosmos, told RIA Novosti that the 13-ton probe would burn up during re-entry to the Earth’s atmosphere, and that no fragments were likely to hit the planet’s surface. Launched on November 9, PhobosGrunt was designed to bring back rock and soil samples from the Martian moon Phobos.

However, it has been stuck in a so-called support orbit since its engines failed to put it on course for the Red Planet.

In this issue comment & Analysis

reuters/vostock-photo

On the streets

Russian voters explore the politics of protest TURN TO PAGEs 2 and 7

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Politics & Society

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The protests No arrests at biggest Moscow rally as organisers play by the rules to make their point

A persuasive show of people power IGOR VYUZHNY

SPECIAL TO RUSSIA NOW

Russia has not seen such an upsurge of political activism since the early Nineties. In Moscow, between 25,000 and 85,000 people joined the rally on December 10 to protest against what they considered rigged State Duma elections.

Similar actions took place all over the country and abroad.

Pro-Kremlin activists held their own rallies but the turnout was much smaller.

During the protests on December 5, the day after the poll, up to 1,000 were detained, including leading opposition activists. But at the demonstration on December 10, the crowd was exceptionally peaceful and no one was arrested. There were no reports of violence.

Article 31 of the Russian Constitution guarantees freedom of assembly and a notification-based procedure for protests, but in practice organisers of demonstrations are required to obtain a written permit from the local authorities. In Moscow, the Mayor’s office is authorised to issue such permits.

The authorities say that permits are necessary because big demonstrations might inconvenience other citizens, for example by causing traffic jams.

An application for a street action must indicate the place and number of partic-

Protesters punished The police ruthlessly disperse any unsanctioned rallies, such as those organised by opposition movements on Moscow’s Triumfalnaya Square. If protesters resist, they are liable for a 1,000 rouble fine or 15 days’ arrest by court ruling. In practice, that punishment is sometimes applied even to passers-by who just happen to be in the wrong place at the wrong time, as was the case during the December 5 rally at Chistiye Prudy. According to witnesses, someone in the crowd suggested marching towards the Central Election Commission building. To do so, the marchers broke through the special forces

chain and the police started arresting everyone indiscriminately. One of those detained was Fyodor Amirov, a pianist and winner of many musical prizes, who was returning home from a concert and was, by chance, close to the protesters. He spent four days under arrest because the courts could not handle such a large number of detainees, and was only released after the musical community intervened.

Journalists linked with a particular rally are also occasionally detained by the police. They are usually later released with apologies.

Charging protesters for resisting arrest gives the police the power to detain them for up to 48 hours before the case is handed over to the courts.

Under the law, the detention cell must have at least two square metres of floor space per detainee. If people detained for more than three hours stay at the police station overnight, they must be given a bed, food and water.

In reality, these standards have not always been observed, eyewitnesses say. During the first rallies, police stations were overcrowded: many of those detained had to be driven around Moscow in circles for hours before space could be found at a police station.

The organisers of the December 10 rally expected to be arrested because, until the last moment, their permit only allowed 300 protesters.

Before the rally took place, information was posted on the internet to help ensure

the event took place safely.

There was advice about how to behave during the rally, how to help people in difficulty and where to call if problems occurred. Centres were set up to collect and spread information.

The authorities, for their part, were also preparing themselves: about 50,000 police and Interior Ministry troops were deployed during the street actions on December 10. Many people attribute the absence of disturbances and arrests, first, to the fact that the police had noticed that the protesters were not bent on rioting and were in a

peaceful mood. Second, police tend to feel more comfortable with tens of thousands of ordinary citizens rather than what they see as a group of professional trouble-makers.

In addition, some officers in the police chain said they also did not believe that the votes had been counted honestly and partly shared the protesters’ views. Most importantly, realising the rally would be exceptionally large, Prime Minister Vladimir Putin and President Dmitry Medvedev both stressed that the citizens had the right to voice their opinions.

VITALY RASKALOV

ipants. If the number of people that turns up exceeds the permitted figure, the organisers are liable to a fine. But this is likely to be a nominal sum. The first post-election protest rally held on December 5 at Chistiye Prudy was joined by 8,000 people instead of the declared 300: the organisers were fined 1,000 roubles (£20) for exceeding the number.

The venue of rallies has long been a subject for bickering between the organisers and the authorities. Moscow City Hall may simply refuse to allow the requested venue and propose another, less visible alternative, which is usually further from the city centre. Non-parliamentary opposition groups often challenge the City Hall decision, citing their legal rights under Article 31.

PHOTOSHOT/VOSTOCK-PHOTO

The December 10 rally was so well organised and free of violence that it avoided all the pitfalls that normally result in clashes with police.

Audio slide show at www.rbth.ru/protests

Power to the people: up to 85,000 protesters gathered in Moscow on December 10 to demonstrate against what they saw as a rigged State Duma election. About 50,000 police and troops were on duty but the event passed off peacefully, with no arrests

Free expression Protesters are dodging laws restricting demonstrations by staging flashmobs, once a frivolous activity with a surreal twist

In a flash: Russia learns how to protest Flashmobs in Russia have gone from being a bit of arty fun to vehicles for protest, political rallying and commercial advertising.

Class acts

DARYA GONZALES

PHOTOXPRESS

RUSSIA NOW

When flashmobs first sprung up in Russia, they were spontaneous gatherings, fun or absurd, but generally pointless.

For example, on August 16, 2003, at 5pm, a strange group of about 50 people were standing on a platform at Moskovsky railway station in St Petersburg, waiting for a train to arrive from Moscow. They held signs reading: “Tatiana Lavrukhin, Alcoholics Anonymous.”

At the same time, another group were waiting on a platform at Leningradsky railway station in Moscow, holding signs for a passenger called “NzR178qWe”. Students Dmitry Lapshin and Alexei Ikonnikov, who took part in the event, remember clutching the signs and staring into the distance with serious expressions.

Tangerine dream: a flashmob in Kaliningrad last year called for the governor to step down

They also took part in one of the first protest flashmobs, which was staged in response to a blog post from a girl who had been beaten up by security guards who found her eating a hot dog in a private courtyard. People who had read the blog decided to support her by staging a

peaceful protest. They all bought hot dogs, went to the courtyard and started to eat.

“We soon forgot about the original catalyst for the event, but the idea of gathering in certain places and doing something bizarre had taken hold – it was fun,” says Mr Lapshin. But Mr Lapshin and

Mr Ikonnikov are no longer involved in flashmobs. Once students with a lot of free time and now adults with steady jobs, they have grown tired of the phenomenon.

“These days you can’t even have a peaceful evening out at the theatre without a flashmob appearing out of no-

This year, the first flashmob ‘school’ appeared in Ekaterinburg, offering a one-day course aimed at helping people organise their own event.

The course covers the history of the movement, and looks at the pros and cons of various flashmobs. Students are taught the best ways to publicise an event. The school also employs teachers specialising in law to explain the legal ins and outs of a gathering, as well as journalists and PR experts to teach flashmobbers the best ways to interact with the media and the government.

where, and turning into some sort of political rally,” they complain.

Indeed, now, not only are flashmobs being used to stage political protests, but both the government and the opposition parties have adopted the concept as a means of furthering their political

goals. In the case of United Russia, the events are used to gain more support from young people and popular movements.

One of the reasons they have become so popular is because they are not covered by the legal restrictions on holding demonstrations in Russia.

You don’t need permission for a flashmob as a spontaneous gathering of people does not technically constitute a demonstration.

Using this loophole in the law, several thousand protestors took to Main Square in Kaliningrad on March 14, 2010, holding tangerines, which became a symbol of opposition to then-governor Georgy Boos, chanting“Boos – step down!”and“Out with the government!”Many participants covered their faces in bandages to draw attention to the lack of free speech in the country and held placards with slogans criticising United Russia.

Similarly, on January 14 this year, 20 photographers employed by photo agencies and

Consumer spending Festive shoppers seek value-for-money presents but travel spending will increase by 11pc

Crisis, what crisis? Feelgood factor means Russians will spend more on holidays Recent surveys on Christmas and New Year spending show the financial crisis has had little effect on Russians’ budgets this year.

MARIA ALEXANDROVA SPECIAL TO RUSSIA NOW

While six out of 10 Europeans believe their economies are in recession, Russian consumers do not feel the financial crisis has hit their purchasing power, and most say they had more money to spend this year than last.

This was the finding of a Deloitte survey carried out on consumers in 18 countries, mostly European. Consumers in Greece, Portugal, Italy,

Spain and France were more acutely aware of the downturn than others. While Russian consumers are not expecting an economic boom, 67pc said their purchasing power had risen in 2011 and 40pc expect a further increase in 2012.

European consumers plan to allocate an average budget of 587 euros (£490) for the festivities this year, which is just 0.8pc lower than last year. Savings will primarily be made on gifts, while spending on holiday meals, entertainment and travel will largely remain stable.

In 2011, Russian consumers plan to spend an average of

17,500 roubles (£355) on the festivities. Gifts will account for half of the budget (about £210); approximately 4,600 roubles will be spent on meals, and around 2,700 roubles will go on recreation and entertainment.

Top of Russians’ wishlists for gifts is cash (56pc), followed by travel (45pc) and laptops or desktop computers (42pc).

But their wishes may not be granted as people are becoming more discerning about what they buy as presents, with more choosing to buy useful and inexpensive gifts, such as cosmetics or perfume.

At 87pc, the share of Russian consumers preferring to buy

useful presents was higher than last year’s 79pc, putting them among the most rational shoppers in Europe. Only 34pc of respondents said that price was relatively unimportant, down from a total of 41pc last year.

Russian consumers plan to spend more on holidays, up by 11pc on last year, while Ukraine and South Africa boast the highest increase – 18.3pc and 12.4pc respectively. But the survey authors said this must be seen in the context of rampant inflation in some countries.

According to a survey by Superjob.ru, a large Russian HR company, almost half of all

working Russians plan to celebrate the NewYear at home (47pc) and only 4pc will go abroad this year. The main reason for staying at home is that the New Year festival is seen as a time to be with family, but rising prices for New Year holidays are also a factor. Still, more Russians stayed at home last year (56pc). But 11pc of survey participants said they would be working over the NewYear holidays, which last for nine days from January 1.

According to Maya Lomidze, executive director of the Association of Russian Tour Operators, the most popular foreign destinations for those

going abroad in the NewYear holidays are Thailand and Egypt, followed by France, Italy and Austria for skiing breaks, and other European countries for those who prefer cultural tourism – Germany, Spain and Italy are among the most popular.

According to Oleg Moseev, spokesman for the Russian Federal Agency for Tourism, holidaying in Russia remains popular with the locals, too.

Of the 38 million people who went on holiday last year, only 12 million went abroad.

The most popular places for cultural tourism in Russia are still the historic cities of the Golden Ring.

Russian publications organised a photo shoot on Red Square in Moscow. They took photos of each other and Lenin’s Mausoleum in protest at the photography restrictions that are in effect throughout many parts of the Russian capital.

Increasingly, the police keep a very close eye on gatherings and will demand to see participants’ documents at the first sign of trouble.

“When you take part in a flashmob in Russia, you are always told to bring your passport with you – just in case,” says Mr Ikonnikov.

“And if anyone asks anything, you just plead ignorance. It’s a case of every man for himself – no one is going to step in and save you. The cops sometimes get angry, and I have spent several nights in a cell.”

Even with artistic flashmobs, the police now maintain a heavy presence. On August 15 this year, one of the“Thrill the World” flashmobs took place at the All-Russia Exhibition Centre in Moscow,

where nearly 300 flashmobbers performed the Thriller dance in memory of Michael Jackson. They were surrounded by a ring of police officers with a ratio of approximately one policeman to every two participants.

“This is their idea of a social revolution,” grumbled one policeman.“Revolutionaries are two a penny these days.

If they want to do something positive they’d be better off joining the police.”

Like the T-Mobile flashmob that took place at Liverpool Street station in London in 2009, many commercial flashmobs have also sprouted up in Russia, where participants are paid to gather and advertise products for various companies.

Opinions vary as to the future of flashmobs in Russia, but one thing is certain: the flashmob in its original form is no longer possible. Occasionally, Mr Ikonnikov and Mr Lapshin like to take time out from their busy jobs and reminisce about the good old pointless flashmob days.

IN THE FEBRUARY ISSUE

FROM PERSONAL ARCHIVES

Philby’s secret documents revealed Kim Philby OBE, a highranking member of British intelligence, fled to the USSR in 1963 after years of spying for that country.

The Russian postal service commemorated him with a stamp, while a book by award-winning journalist and writer Nikolai Dolgopolov was published this month to coincide

with what would have been Philby’s 100th birthday in January. In the next issue, Russia Now will share previously unseen confidential foreign intelligence documents, declassified for the book, as well as reminiscences from Philby’s Russian wife Rufina and Soviet intelligence officers.

ALSO AT RBTH.RU IN JANUARY

most read Caucasian winter in South Ossetia http://rbth.ru/13937

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Politics & Society

Cybercrime: we must do more

OPINION

Reappraising our values in international relations

continued from PAGE 1

Culprits never arrested Almost exactly four years ago, following pressure from the Russian authorities, the RBN, which before then had operated openly, became a less public operation. It is still functioning, however, and, it is claimed, is still “Russian”.

Nonetheless, Russia has operated remarkably effectively in clamping down on parts of its cybercrime groups, says Mr Hynds, a process which is also under way in several other socalled global hotspots.

“The South Americans, particularly the Brazilians, are working very hard to get to grips with it. When I was at the NHTCU we had wonderful co-operation in bringing some big people to court – one person in particular who was involved in extortion was sentenced to eight years.

“But even though we caught some people, we never got to the money.We knew who they were, but the culprits were never arrested.”

This issue sits at the heart of the cybercrime problem for Russia. The nub of the West’s argument with Russia is that the country has a selective attitude to cybercrime. Russian hackers appear to enjoy a certain status, and are even, perhaps, the focus for a certain amount of national pride.

“Russia has outstanding universities with world-class specialists in mathematics, physics and computer science,”says the cyber security expert Danny Lieberman.

“The list of notable Russian

Alexander Yakovenko

Special to Rn

T

shutterstock/legion-media

claimed.”But despite this, the claims persist. Len Hynds, former head of Britain’s National Hi-Tech Crime Unit (NHTCU), which was disbanded in 2006, believes this is partly a problem of perception. Although there appears to be persistent proof that cyber attacks do come from Russia, as a nation it is by no means the only source. “You have to be fair and say that it’s not just Russia. There are signs that cybercrime is becoming an issue in Africa and in South America. However, in every meeting that you go to about cybercrime, people say it’s Russia,”says the former chief constable, who now works in the private sector.

As well as the problem of perception, Mr Hynds points to several other reasons for Russian notoriety. Chief among them is the existence of the Russian Business Network (RBN). An organisation formerly based in St Petersburg, the RBN offered the world’s cyber criminals a range of services – from bullet-proof hosting of illegal websites to the movement of illicit funds.

Screen grab: the Russian Business Network was notorious for offering a range of services to cyber criminals. It now has a lower profile, but still operates

World Wide Web: which sites are hacked and why

THE numbers

100

thousand attacks were made on corporate computer systems in 2011 by hackers with both political and patriotic motives.

80

days was the longest distributed denial-of-service attack in Russia in 2011. It defaced a tourism website but was fixed

by Kaspersky DDoS Prevention.

Source: Kaspersky Lab

mathematicians goes on and on. Put very simply, Russia has very, very good raw material for hacking. Having great talent is a great start for achieving world-class results in any field.”

According to Professor Mark Galeotti of NewYork University, the problem began immediately after the end of the Cold War, when Russia’s economic privations immediately led to a glut of talented but unemployed people, some of whom made their way into organised crime.

On the plus side, this pool of intellectual resources can and is being used to positive effect. At the London conference, Russian experts sat side by side with their Western

counterparts in discussion panels that dealt with some of the most pressing computer security issues, such as the protection of national defence systems.

The fact remains, however, that, in the West, there remains a feeling that Russia could do more to deal with the issue.

Cybercrime appears to be tolerated so long as its impact is felt outside Russia’s borders, says Professor Andrew Blyth, a computer forensics expert at the University of Glamorgan. “The Russian state has the ability to clamp down if it wants to, and it also has the laws to do that. Its legal framework is the same as in most European states. The problem is that its approach

has been fragmented until now, and it has not had a push from the centre.”This view of a piecemeal response is supported by Prof Galeotti.

“Although the Interior Ministry’s Directorate K is nominally the lead agency in dealing with the problem, there are local counterparts in regions and constituent republics; there are turf wars with the Federal Security Services Centre for Information Security and others.”

It is a picture that will only improve, according to Western experts, if Russia demonstrates a commitment to dealing with the issue, including the sharing of information and co-operation.

This is a situation Russia is

keen to address, according to Mr Shchegolev. In London, the Russian delegation proposed the creation of “rules and mechanisms. . . and instruments of interface between the states which will allow us to precisely determine where the threat is coming from and to prepare the adequate response to this threat.”

Code of practice Although this sounds fine on paper, there is a problem in practice. Russia is one of a number of non-signatory countries to the Budapest Convention (an international treaty setting laws and guidelines for dealing with cybercrime), citing concerns over violation of international law

norms and problems of national sovereignty. Instead, Russia proposes an international code of practice in cyberspace, which, according to Mr Shchegolev, would make it “seriously more difficult to misuse information technologies both against individual states and against the world as a whole”.

He adds that Russia has already worked out a package of proposals forming this code of practice with other partners within the framework of other international forums.

As such, he maintains this agreement should be set up in the form of a United Nations convention.

Events on a diplomatic level have not encouraged cooperation. The disappointment over recent attempts at a Russo-British reset, and the festering extradition wrangles between the countries have, according to many observers, led to less co-operation in hacking investigations.“To be honest it was like a wall coming down, says Mr Hynds.

“One minute everything was fine; the next, nothing.”

However, he still sees grounds for optimism:“There are more and more companies that want to do business in Russia, and that will change things because there will be more [Russian] involvement in the world economy.”

Peter Warren is a technology writer and chairman of the Cyber Security Research Institute (www.csri.info)

Diplomacy UN ambassador says jaw-jaw is always better than war-war

More talk and less action to resolve global crises Jean-Louis Turlin russia now

The reason that Russia vetoed a United Nations resolution condemning the Syrian government was because it fears that such measures have become a trigger for regime change rather than the protection of civilians, AmbassadorVitaly Churkin tells Russia Now. Mr Churkin, who has been the Russian permanent representative to the United Nations since 2006, spoke as president of the Security Council, a rotating position he currently holds for the month of December.

Earlier this year, Russia supported a resolution on Libya but later abstained on a second. According to Mr Churkin, before voting, the members of the Security Council were assured that the no-fly zone was designed to protect civilians. He felt happy that the resolution was not an ef-

fort to bring down the regime of Colonel Muammar Gaddafi. “After all those assurances… very quickly, we were told that, basically, we would have to change the regime and go after Gaddafi in order to carry out this resolution,” he says.

“We did not take that well, because it was a flagrant case of misusing the prerogatives of the Security Council, which, as you know, was un-

cil supports their yearning for liberty and human rights, and who does not,” Susan Rice, the US ambassador to the United Nations, said.

Mr Churkin rejects this criticism, saying that Russia had its own interpretation of events in Syria: “Yes, there were large peaceful protests in some parts of the country, but there was also violence used against government institutions, and that tendency

We do not accept the premise that the Assad regime cannot change, that there can be no progress

Diplomacy remains the most effective means of preventing Iran from acquiring nuclear weapons

dermining the prestige of the council, and undermining its ability to act effectively in the future.”

The Russian’s subsequent veto of the October resolution condemning Syria, which was supported by China, drew strong criticism from the United States, France and Britain. “The courageous people of Syria can now clearly see who on this coun-

was increasing as events started unfolding.”

According to Mr Churkin, Russia engaged in talks with both the Syrian authorities and the Syrian opposition, and called on the international community to push for dialogue.“We believe that in order to start dialogue, the people who really want change in Syria need to dissociate themselves from vio-

lent extremists, and the international community must call on everybody to enter into dialogue,” he says.

“We do not accept the premise that somehow the Assad regime cannot change, that there cannot be progress [through dialogue] under that regime.”

He contrasts the impatience of the Western powers over Syria with their willingness to negotiate over many months to secure the departure of Yemen president Ali Abdullah Saleh, and also with the US calls for dialogue, instead of endless protests, in Bahrain.

“We are very happy we have just had a political settlement signed inYemen after months of negotiations,”he says.“The international community was able to show patience and encouraged both parties to hold a dialogue, even though in Yemen, I think, there was more bloodshed over the past few months than in Syria.

“So we believe that in such situations, the international community should be consistently in support of a po-

reuters/vostock-photo

Are UN resolutions more about regime change than protecting civilians? Russia’s ambassador to the UN thinks this may be the case.

Right to the point: We must keep talking, says Mr Churkin

litical outcome through dialogue rather than stirring up more domestic trouble.”

Mr Churkin also reiterates Russia’s long-standing belief that diplomacy remains the most effective means of preventing Iran from acquiring nuclear weapons. He says he saw little new in the most recent International Atomic Energy Association (IAEA) report on Iran’s research and development activities: “We are analysing it. But, at first sight, it did not add anything to the general knowledge of allegations about Iran. It was played up, unfortunately, as a major PR exercise when the media started [quoting from it] well before it was published, and then it was leaked

03

from the IAEA. This is not a good thing.

“So from the outset, it was clear that the intention was to use it for some psychological and political gain rather than to deal seriously with the situation in Iran.”

Mr Churkin also says that Russia is opposed to a new round of sanctions against Iran, fearing that they will not be focused on the actual threat but on affecting the domestic situation. Previous rounds of sanctions have been expanded by the US and European Union to, in his words,“place limitations on other countries in their dealings with Iran. As a matter of principle, we think that this is wrong”.

his year has been replete with important, and sometimes historic events, globally and regionally, notably the Arab Spring and the eurozone crisis. New and ever more convincing evidence has shown that a radical transformation of global governance is taking place.

The co-ordinates of international relations have been shifting towards development issues central to world politics. At the same time, the kind of transformation that reflects the endgame of processes that began at the turn of the Seventies is gaining pace, whether we look at the Arab world or the crisis of liberal capitalism.

There is no doubt that, along with the positive effects, this shift in international relations has a downside, too.

For example, the collapse of established perceptions of values that emerged in the postwar period that were accepted as constants. But the former system of values has continued to exist by inertia among the overwhelming majority of world political elites over the past 20 years. Inertia is perhaps the most accurate reflection of that reality, which was really never anything more than wishful thinking.

One can only wonder how such self-delusion could have survived for so long after the end of the Cold War, which, as has now been brought home to many, marked the end of the old world and a deferred beginning to the new world that has come to be referred to as the“fast-changing”world.

As the American pundit Leslie Gelb wrote in Foreign Affairs magazine, many in the West had made a fundamental mistake in assessing the situation at the end of the Cold War. This is understandable because, like any event on a historic scale, it could not have been prepared for, either intellectually or politically. In effect, not only the geopolitical balance in the world had been upset, but competition between different development models and values had been eliminated, even if temporarily and only at the level of illusions. Lack of competition contributed to a sense of the“end of history” and complacency, which, in turn, engendered self-destructive trends in the domestic and foreign policies of a number of states.

As a result, there was a growing similarity between the main international players, who all saw a narrowing gap between the declared foreign policy goals and available resources for achieving them, in line with the dictum: “You must cut your coat according to your cloth.”This kind of convergence went a long way towards promoting a unifying and positive agenda in international relations.The attitude to that key trend may range from total rejection to a wish to live in one’s own world engendered by a complex of national mythologies,

instincts and prejudices.Yet I think that trend holds out a promise of overcoming the current contradictions between various countries and groups of countries, including the US and the European Union, Brics and a whole number of leading regional powers. The formats for resolving these contradictions are the UN Security Council, where many of these countries are represented, but also wider structures such as the G8 and the G20.

Another optimistic sign characterising modern international relations is the growing tendency for foreign policy to become less and less ideology-driven. This pragmatic approach is widely recognised by virtually all leading international players, including the EU, Russia and China. Britain is no exception.

I would attribute the start of normalisation of RussianBritish relations to a wish to assert pragmatic national interests – as a constant of foreign policy – and to promote them through diversified networking diplomacy.We are not talking about co-opting Russia or Great Britain into this or that system of alliances, described at one time as“European entanglements”.

Fyodor Dostoyevsky, in his Pushkin speech in 1880, said that Russia had a mission to

Another optimistic sign is that foreign policy is becoming less and less ideology-driven promote“a final resolution of European contradictions”.

During its Soviet incarnation, Russia coped with that task brilliantly with regard to the West European countries.The time has now come to tackle it on a European scale, at the level of all the Organisation for Security and Co-operation in Europe (OSCE) member states. This is the main thrust of the idea of creating a Euro-Atlantic and Eurasian security community, which was supported at the OSCE foreign ministers’ meeting in Astana a year ago. The recent OSCE foreign ministers’meeting inVilnius and, indeed, the discussion of EuroABM, has demonstrated that the aim is easier to proclaim than to accomplish.

Even so, the experience of the past 12 months, disappointing though it may be, shows that positive trends in international relations are growing stronger and the price of any alternatives, including actions outside international law, bypassing the United Nations Security Council and consensus politics in general, is growing. One need hardly be more specific than that but one might hope that the world and each country individually is on the threshold of a radical reappraisal of values in domestic and foreign policy – and that provides a solid foundation for optimism concerning the future of the world next year.

Alexander Yakovenko is ambassador of the Russian Federation to the United Kingdom.

GLOBAL RUSSIA BUSINESS CALENDAR 5th Annual Russia & Eurasia Trade & Export Finance Conference February 7, 2012 Marriott Royal Aurora Moscow

Now firmly established as the trade and export finance conference of choice for the Russian and wider Eurasian finance community, the Annual Russia & Eurasia Trade & Export Finance Conference returns to Moscow. A variety of talks on essential topics will be given by leading pioneers and practitioners of trade and export finance. The talks will cover the opportunities, demands and complexities of financing the essential trade that is crucial for regional prosperity. ›› http://www.exportagroup.com/

9th Krasnoyarsk Economic Forum february 16-18, 2012, Krasnoyarsk, Russia

The theme of next year’s forum will be “Time for strategic initiatives”. The experts will discuss the issues related to the development of Russia and its regions in the next electoral and investment cycle, focusing on the strategic initiatives that Russia needs.

The forum will start with the opening of a thematic exhibition, “Investment, innovation, infrastructure: the future of Siberia”. Included in the three-day event is a youth forum for young managers from all over the country.

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04

Innovation

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section sponsored by rossiyskaya gazeta, russia Distributed with THE daily telegraph TUeSDAY_DECEMBER 20_2011

How Steve Jobs would have built Skolkovo http://rbth.ru/13548

Technology giants bid to make ‘Silicon Valley’ dream a reality continued from PAGE 1

notes from the experts

We’re crazy enough to think we can change the culture Steven Geiger

special to rn

Future perfect: how the innovation city of Skolkovo will look. The campus will include housing for scientists

press service

into mass production. In the US, $382.6bn (£245.6bn) or 2.7pc of its GDP, is spent each year on research and development. In contrast, Russian firms currently spend just a little over $23bn, which is 1pc of GDP. Skolkovo’s ambitious managers are trying to create a framework that will attract foreign companies to carry out cutting-edge research.

Roman Romanovsky, Skolkovo’s operating director for key partners, says:“Our main task now is to create the most comfortable conditions and environment. Innovation centres are usually thought to be exclusively aimed at startups, but that’s not the case.

Nor are we committed only to corporate research. We seek to make the circulation of ideas at Skolkovo constant, so that everyone can find what they come here for.

Major companies would get young talent, start-ups would meet investors and investors would get promising new ideas, and so on.”

Many foreign companies have already signed agreements to open research centres at Skolkovo, while others have given verbal assurances of participation. In addition to IBM, the German electronics giant Siemens has signed an agreement for the phased development of its operations in Skolkovo. By 2015, it will have a staff of 150 at the centre. The total joint investments will be about $80m, with $50m to be put up by Siemens and $30m by Skolkovo Foundation grants.

“For us, [Skolkovo] is interesting as a pilot project that will transform Russia’s future,”says Alexander Averyanov, head of the Siemens project at Skolkovo. “It’s no coincidence that Siemens CEO Peter Löscher is a member of the Skolkovo Foundation Board. We are also cooperating with the foundation to promote the Skolkovo brand around the world, and are dealing with the infrastructure issues.”

Siemens has not disclosed any details of the project, but it is likely to be related to radioisotope diagnosis. The first grant of more than $4m has already been issued for the research project.

THE numbers

150

is the number of technical staff IBM hopes to have working in its new research centre due to be built at the Skolkovo city by the end of 2012.

THE QUOTE

Viktor Vekselberg President of Skolkovo Foundation

“

The agreements signed between IBM and the Skolkovo Foundation lay out a roadmap for our future collaboration, and provide a framework around which our two organisations can drive innovation in Russia. With IBM’s experience and leadership in R&D and Skolkovo’s huge focus on innovation, the partnership has great potential for Russia.

$30 $265 million – the amount the Skolkovo Foundation has committed to contribute in grants to the Siemens Skolkovo project alone.

million – the total amount to date raised by the Skolkovo Foundation from 22 business ventures and from direct investment funds.

Nokia, Finland’s mobile phone giant, has a somewhat different vision of its partnership with the foundation, with a focus on inventing and introducing inline production of everyday devices. “[Skolkovo Foundation Head Viktor] Vekselberg and I signed an agreement confirming the specific stages of the centre’s development,” says Nokia representative Tatiana Oberemova. “The centre will develop powerful mobile computing systems and offer solutions in the field of nanotechnology.

Nokia’s investments in the centre amount to a doubledigit number in the millions

of euros, which is the standard budget for Nokia’s R&D centres.”

The Nokia project is planned to develop at a dizzying pace: the construction contract was signed in June and the building was due to be completed in December. Nokia hopes to construct laboratories and also wants to develop largescale commercialisation projects involving mass production of electronic devices using nanotechnology.

Nokia’s competitor Ericsson sees Skolkovo as an excellent platform for research in the sphere of telecommunications, cloud and telematics technologies. Its first re-

search effort will be smart power supply networks designed to save energy. These smart meters installed into phones will allow users to constantly provide information to distribution companies, allowing both the company and the consumer to monitor consumption patterns more closely.

Ericsson vice-president Mikhail Podoprygalov, who specialises in work with government agencies, says: “There was a lot of talk about the need to develop our economy, non-commodity exports, and now we have a place, an ecosystem where this can be accomplished.”

But not everyone has been so positive about Skolkovo’s potential. Timofei Shatskikh, a financial analyst with RosBusinessConsulting, says: “Until the first project is implemented, in the minds of most Russians, not to mention domestic investors, it will remain just another ambitious government idea.

“People don’t see Skolkovo as a scientific institution, but rather as a political one

aimed at projecting a positive image. Even the foundation’s established partnerships with Western companies cannot dissuade them of this.

Until the first scientific idea that germinated within the walls of Skolkovo is presented, that opinion won’t change.

The creation of several R&D centres may rectify the situation. Then you can at least argue that the generation of new ideas will happen serially.”

Bright Capital fund’s Vadim Kulikov disagrees. “By attracting private investments, Skolkovo shows that not only Russia’s president, but also the market believes in the project,” he says.

According to the chief investment officer of the Skolkovo Foundation, Alexander Lupachev, the Foundation has raised $265m from 22 ventures and direct investment funds, and it has already invested $70m in a number of new ventures.

These figures are proof enough that the innovation centre is a reality and not just a concept.

I’m often asked to summarise the core mission of the Skolkovo Institute of Technology.

This requires only two words: changing culture.

Skolkovo is changing the academic culture in Russia by building a new graduate-level science institute, together with Massachusetts Institute of Technology. We believe it will be the first such institute in the world to integrate comprehensively education, research, innovation and entrepreneurship.

Students may not choose to start their own company when they graduate but they will know how to.

Corporate culture is being changed, too. We’re educating large Russian firms about the value of conducting contract research at this new institute, teaching them how to work with venture capitalists and how to embrace innovation as central to their success, if not their survival.

As for entrepreneurial culture – it’s easy to forget that not long ago, private enterprise in Russia was either illegal or strongly discouraged. It will take time to overcome this legacy and to let the innately creative Russian spirit flourish. Skolkovo is an accelerator in this transformation. By providing support, financing and preferences to startups, we hope to level the playing field. Our role is also to provide moral support to nervous young entrepreneurs who want to chase their dreams.

Finally, we are aiming to change the cultural understanding of wealth creation.

Russian commerce has long been dominated by its physical reserves of oil, gas, metals and timber. An exclusive focus on material output dominated the Soviet era, with its famous five-year plans. Even today, virtually all of the top Russian business people made their fortunes through physical resources. But for Russia to compete in the global knowledge economy, it needs to shift gear,

Academic brings business brain to Skolkovo institute itogi magazine

The Skolkovo Institute of Science and Technology (SkTech) has announced that its first president will be Massachusetts Institute of Technology (MIT) professor Edward Crawley. In making the announcement, Viktor Vekselberg, president of the Skolkovo Foundation, said that the 56-year-old American specialist in space exploration was the “number one candidate”.

According to colleagues, Prof Crawley is one of the pioneers of commercialising science. Selected for his knowledge of Russian, his connections to the Russian scientific world and his talent as a manager, he has promised to turn SkTech into a western-style university, combining theoretical and applied research with the commercialisation of scientific achievements.

The academic

Edward Crawley earned his BSc degree in aeronautics and astronautics from MIT in 1976. According to those who knew him, he had no trouble deciding to specialise in man’s relationship to space. He received his mas-

Professor Edward Crawley NATIONALITY: American AGE: 56 Study: Aeronautics

•Studied aeronautics and astronautics at Massachusetts Institute of Technology (MIT).

•An effective manager and innovator, he created a new programme at MIT to teach engineering students about management and capitalising on inventions.

•Fluent in Russian and has been a guest lecturer at the Moscow Aviation Institute.

ter’s degree in the same field in 1978, his ScD in aerospace structures in 1981 and began teaching in 1990.

Interaction with Russian scientists in the field of space exploration has played a major role in Prof Crawley’s career. In 1989, he was part of a delegation of aerospace technology specialists that visited the Moscow Aviation Institute (MAI). In September, Prof Crawley gave a report on reforms to engineering education at MAI, after which the university’s scientific council awarded him an honorary PhD. In the earliest stages of his career, he established a close relationship with Nasa, even

reaching the final selection stage of the astronaut corps in 1989. But it was too difficult to combine his scientific work with the rigid system of astronaut training. His flights were limited to amateur piloting and gliding. But as a member of the US Human Space Flight Plans Committee, Prof Crawley enthusiastically considered proposals for an expedition to Mars several years ago.

The problem solver

Over the years, Prof Crawley has co-founded multiple businesses, including the company BioScale to work towards developing biomolecular detectors. He also

took part in creating oil exploration system designs proposed by BP. His international academic endeavours are no less impressive. His first notable project was co-directing the International Space University, based in Strasbourg. In addition, Prof Crawley organised a series of lectures

by MAI professors at MIT. Under the auspices of the MIT departments of engineering and management, he created the system design and management programme.

“Despite an ability to win people over and his positive attitude, Crawley has always focused not on idle talk, but on solving specific problems so that some kind of benefit results from communication,” said MAI aerospace department dean Oleg Alifanov.

“Crawley devised the practice of design work for firstyear students, who are generally lukewarm to strict disciplines like mathematics, physics and chemistry. At the beginning they are involved in a game project [creating designs or devices], from there they begin to appreciate why they need knowledge of sciences.”

Prof Crawley’s managerial talent and potential are what attracted Russia’s interest in his candidacy. His decision to head the technical university at Skolkovo is apparently motivated by the opportunity to build a major project from scratch.

Steven Geiger is chief operating officer of the Skolkovo Foundation, the Russian government’s programme for innovation and technology.

news in brief SAP and Cisco to join Skolkovo

ap

Elena Pokatayeva, Konstantin Poltev and Nikolai Zimin

curriculum VITAE

ria novosti

The technical university at Skolkovo will be led by an American with an interest in Russia and a history of commercialising science.

and Skolkovo can make this happen. We do this by educating about intellectual property (IP); by helping entrepreneurs and startups to create, defend and commercialise their IP; by providing early and highly visible successes in monetising Russian IP on the world stage, and finally by creating entirely new IP legal frameworks which can be applied across Russia.

In short, our task is to create the mechanisms to transmit Russia’s scientific and intellectual horsepower into globally competitive knowledge-based products and services.

Culture and mentality are probably the hardest things to change. But if you are successful, your impact will be significant. Large countries are rather like supertankers: they don’t turn quickly, but move them just a few degrees in the right direction and you’ve changed their course.

Skolkovo has a number of advantages. The first is Russia’s rich scientific and technical base. In contrast, my previous assignment involved building a similar innovation city for Abu Dhabi, which has only 400,000 citizens and virtually no scientific resources. In the global race to a knowledge economy, Russia is well positioned.

Second, starting later, Russia has second-mover advantage.

We’ve studied innovation success and failure, and built what we’ve learnt into our model.

Third, in a break with Russian tradition, Skolkovo is an open platform for global co-operation in R&D. Closed science cities served their purpose, but the speed and scale of global interconnectivity dictates openness and collaboration.

So why do we do it? Steve Jobs summed it up best when he said: “Here’s to the crazy ones. Because the people who are crazy enough to think they can change the world are usually the ones who do.”

Selling science: Russians are exporting their expertise to American technology institutes

Russian scientists find winning formula abroad Scientific and technological expertise is in demand in the West, so specialist agencies are farming out Russian experts to foreign firms.

Mikhail Borispolsky special to russia now

While Western scientists are well used to developing ideas with an eye on the market, this mindset is largely absent among Russians brought up in the Soviet Union, and even among some young scientists.

However, with the skills and knowledge of Russian scientists and technologists increasingly in demand, they are now becoming quite a commodity.

Tech transfer agencies – organisations that link innovators with businesses that need their ideas and products – are cashing in on Russians’ scientific expertise.

Tech transfer happens in two ways. First, agencies place a request on behalf of a for-

eign client for a specialist with a certain skillset, or a specific person. John Neiper, Eastern European manager for the tech transfer agency Griffin, says: “The most frequent customers are American technology institutes fulfilling complex orders for industrial corporations. The leading tech transfer customer is the Massachusetts Institute of Technology (MIT).

We fulfil six to 10 orders of this kind annually. Russians are traditionally strong in physical chemistry, astronomy, quantum physics and microbiology.” Once a contract is signed, the agency earns a fee equal to a portion of the expert’s salary.

A second route to connect scientists with those who need their skills is through sabbaticals between Russian universities or corporations working in partnership with similar institutions abroad.

These allow young special-

ists to work for the overseas partner for a set term. The employee shares his or her knowledge, and has the chance to earn a higher salary than they could by working at home.

At the moment, the construction sector dominates in this kind of transfer.“Companies like ours have unique technologies for building the most complex spatial structures,” said Ilya Ruzhansky, deputy director of Mostovik, a major design and construction firm operating in Siberia and Russia’s Far East.

“Back in the Soviet era, we mostly had contracts in Africa and Asia, and partnership with the West was minimal; now graduates of the Moscow Architectural Institute who are capable of designing miles-long bridges are worth their weight in gold. They can compete for annual contracts of up to $200,000 (£128,000).”

The software giant SAP has announced a multimilliondollar investment to create a software centre at Skolkovo, the Moscow Times reports. And the US communications technology and services firm Cisco Systems plans to open a network innovation centre there in summer 2012.

Cisco’s first project will be to develop new analysis technologies that will help search for footage in large quantities of video material, notably CCTV recordings, according to the news agency RIA Novosti.

Space flights deal with Virgin Virgin Group chairman Sir Richard Branson andViktor Vekselberg, president of the Skolkovo Foundation, are to form a partnership to develop commercial cosmonautics. The idea was discussed at a business lunch in The Hague.

Mr Vekselberg said: “This agreement marks the joining of the Russian Federation as one of the leading space-faring nations to the international industry of commercial cosmonautics.

Its prosperity will not only allow thousands of people to implement their dream of taking a space flight, but will also contribute to accelerated human technological development”.

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MOSCOW BLOG

Incentives £900m worth of regional assistance

In the zone: tax cuts attract foreign firms pressed an interest: Tomsk, St Petersburg, Alabuga in Tatarstan and Zelenograd, a town outside Moscow that is formally a district of the city.

A council run by the Economic Development Ministry, made up of its officials and top executives from state-controlled banks and state corporations such as Russian Technologies, holds the ultimate power to admit companies as “residents” of Russia’s 24 zones. To be accepted, the companies must meet a range of conditions that include using advanced technology and having the potential to make products that replace imports or are

Anatoly Medetsky the moscow times

Incentives that reduce business overheads and risk are being offered to persuade big businesses to set up in Russia. The government’s Special Economic Zones company, which manages 24 business locations in various areas around the country, helps firms set up by cutting the costs involved by up to 30pc, through tax relief, customs benefits and immediate access to utilities.

It also builds plants for investors who prefer to rent the premises. Then, if the business does not take off, the construction costs are not wasted by the investor and the building can be let to another firm. This option is particularly attractive for foreign companies.

Plants are built for investors wanting to establish themselves and the premises are let out to them Investors must have the potential to make products that replace imports or are suitable for export

Ready-made rental For Nokia Siemens Networks, which set up a plant in the Tomsk zone, the rental option was essential for its Russian joint venture as, according to its chief executive for Russia, Kristina Tikhonova, the company’s policy is to avoid owning premises. The company, which is the majority owner in the joint venture, produces telecoms equipment at the new plant.

Oleg Kostin, chief executive of the Special Economic Zones company, said that the rental income for the plant could pay for construction costs within eight years. Built to a standard design, the facilities are suitable for other companies if Nokia Siemens Networks pulls out.

The ready-made rental option now operates in four of the zones where investors ex-

suitable for export. Since the Special Economic Zones were created in 2006, 272 businesses with a total declared investment of 308 billion roubles (£6.2bn) have set up in them. They are mostly Russian companies, but there are some multinational corporations, such as Japanese tyre maker Yokohama Rubber, French industrial gases producer Air Liquide, Danish construction materials manufacturer Rockwool, Swiss drugs company Novartis and US flexible display developer Plastic Logic.

Foreign companies were the inspiration for the rent-aplant proposal, according to

Mr Kostin, 36, a former investment official at the Economic Development Ministry, who assumed his chief executive role in March.

“Russian residents prevail at the moment because they are more aware of the opportunity, but we hope to have many foreign companies too,” he said.

The Special Economic Zones initiative is being promoted to foreign companies through large international consulting firms, and subscribes to a Financial Times service that alerts users to corporate announcements about Russia.

Investors will not find greater benefits anywhere else in Russia, according to Mr Kostin. Governors may offer similar tax incentives, but unlike Special Economic Zones, they have no power to cancel customs duties and lack the financial strength to build electricity and heating infrastructure and other services, he said. The government has spent more than 45 billion roubles (£913m) to develop the zones.

Other benefits include discounted payroll taxes for the four zones that specialise in research and development.

Every up-and-running Special Economic Zone also houses offices of various government agencies, should investors need to contact them quickly.“We believe the package of services we offer is unique,” said Mr Kostin.

The tax breaks, which last for at least five years, come at the expense of regional and local budgets that normally collect the taxes on land, vehicles and corporate property. For example, the profit tax, which is normally 20pc, is reduced to 15.5pc for zone residents – but the federal government will still get its full 2pc share.

Governors can also slash the regional slice of the profit tax by 4pc and reduce the cor-

Russia’s fortunes rise as West sinks into despair Ben Aris

the moscow times

T itar-tass

A government scheme offers generous tax and customs incentives that cut the cost of setting up a factory in 24 Special Economic Zones.

Hive of activity: the business centre at Noidorf Special Economic Zone near St Petersburg

Opening up the country to tourism Thirteen of the 24 Special Economic Zones, mostly in southern and eastern Russia, are dedicated to developing tourism. One of the biggest projects is the brainchild of Pyotr Shura, whose company Rusresorts wants to build a $1bn resort near Lake Baikal.

Upmarket resorts in clean and picturesque areas in the east could draw tourists from China and invite stopovers from Russians travelling from the west to warm-weather destinations

like Vietnam and Thailand, said Oleg Kostin, head of the Special Economic Zones company.

Other tourist Special Economic Zones seek to turn the restive North Caucasus region into a magnet for holidaymakers.

The Special Economic Zones company has joined with two state-controlled institutions, lenders Sberbank and VEB, to create the North Caucasus Resorts company, which aims to develop and operate six areas in the region.

porate property tax, said PavelVasin, a Moscow-based associate at the German law firm CMS. But this generally happens only if the investment is viewed as particularly significant.

clients is a neighbouring plant in the Alabuga zone – a German-Russian fibreglass producer. The firm had nothing but praise for the Alabuga Special Economic Zone where the company launched the first phase of its 35m-euro plant last year. “We are very happy,” said Dmitry Kuznetsov, director for strategic projects at the company’s Russian office. “Everything they have on paper materialises. It’s not one of those initiatives that declares one thing and results in something else.”

Air Liquide especially valued the fact that it could connect to the electricity supply for free, Mr Kuznetsov said. Outside the zones, the price could amount to hundreds of millions of roubles in the industrial regions where Air Liquide usually

Profit tax relief The benefits vary in different areas. In the Moscow region, home to two research and development Special Economic Zones, the authorities grant profit tax relief if a firm invests more than 500 million roubles (£10.1m). A lower property tax comes into play if a property’s value rises above 300 million roubles. Industrial zones require investors to spend at least 3m euros (£2.5m); port zones look for at least 10m euros.

For Air Liquide, the zones had both a financial and logistical benefit, as one of its

THE numbers

272

businesses have been set up through Special Economic Zones since 2006.

£6.2

billion is the declared total investment of the firms set up in the Special Economic Zones.

locates its energy-intensive plants, he said. Exemptions from the customs duties and the value-added tax on imports reduced the costs of components imported to build the plant, he added.

The location of the zones will not be practical for all businesses: some investors may set up the business elsewhere in Russia for logistical reasons: for example, they may need to be closer to their customers or suppliers. But next year there may be more location options as Special Economic Zones are planned for ports and airports because of pending changes in legislation, said Mr Kostin.

At the moment, businesses registered in these areas can only provide services, but after January 1, 2012, they will be allowed to set up production in these zones.

Forget the facelifts – build roads An ambitious programme to remake or modernise the crumbling Soviet-era roads, railways, bridges and ports is under way.

Ben aris

getty images/fotobank

business new europe

End of the line: transport networks built in the Soviet era are in need of modernisation

owned companies, many of which are now on the privatisation list. Over half of all infrastructure investment (3.7pc of GDP) was made by just eight large state-owned companies, while federal budget spending accounted for only 1.8pc, according to Morgan Stanley.

The real boom in infrastructure spending, though, has not even begun. A host of mega-projects are being prepared that will push the spending even higher over the next couple of years.

Among the biggest projects planned are the development of theVankor oil and gas field, the biggest find in Russia in the past 25 years; the UstLuga port in the Gulf of Finland that will be the biggest warm-water port in Russia; the reconstruction of the Black Sea resort of Sochi ahead of the 2014 Winter Ol-

ympics; and the construction of the East Siberia-Pacific Ocean (Espo) oil pipeline.

Morgan Stanley estimates that a total of $500bn worth of infrastructure projects are

underway or about to start.

“Based on our major projects database, we see a steady $60bn-$65bn [per year] flow of infrastructure capital expenditure on major projects,

and a new generation of mega-projects under development, including highspeed rail, new federal highways, the Moscow transport hub and further development of theYamal oil and gas province,” says Jacob Nell, chief economist of Morgan Stanley and author of the report.

To sustain this high level of development, Mr Nell estimates state-owned companies will have to raise another $28bn a year to finance the work – about as much as Russia attracts in foreign direct investment.

What is odd is that much of this work has gone unnoticed. This is partly because the spending has not had much impact on the country’s growth or overall investment – both are now lower than before the financial crisis began. And because the more opaque state-owned companies are in the front line, their spending is harder to see than federal budg-

et spending or privately funded investment.

But perhaps the biggest factor is that, unlike China and India, which were both largely agrarian economies, Russia inherited a lot of serviceable infrastructure from the Soviet era. In the boom years of the Seventies, when the workers’ paradise looked like it might actually happen, Kremlin spending on infrastructure averaged 40pc of GDP a year. It was only in the Nineties that it fell away to next to nothing.

“Russia inherited significant elements of a modern industrial infrastructure from the Soviet Union, including an oil and gas industry, a mining industry, a railway network, a power network, and urban transport and municipal services. However, the infrastructure was often inefficient, and there were notable gaps, particularly in telecommunications and transport,” says Mr Nell.

Full ahead for shipping on Arctic short cut A fleet of nuclear-powered ice-breakers is boosting trade by cutting the journey time for ships travelling between Europe and Asia. tim gosling

business new europe

Russia has opened up a new trade route that halves the distance between Europe and Asia.The Northern Sea Route goes round the top of Eurasia, rather than the traditional route via the Suez Canal,

passing India and China. The sea along Russia’s Arctic coast freezes solid in the winter, which has made the passage impractical for commercial traffic until recently. But as Russia expands its fleet of nuclear-powered ice-breakers, traffic is increasing.

The first complete crossing of the route was made in 1878-9 by the Finnish-Swedish explorer Adolf Erik Nordenskiöld. It was a dangerous expedition then but the

journey is becoming increasingly routine as Russia seeks to increase trade between the developed and developing worlds.

Vladimir Mikhailichenko, executive director of the public partnership on co-ordination and operation of the route, said the number of ships making the journey had tripled this year to 33 from 10 in 2010. Cargo shipments via the Russian part of the Northern Sea Route were ex-

he traditional way of measuring pain in times of crisis is to look at the misery index: inflation + unemployment. But to really capture the pain people are feeling, you need to look at the despair index: inflation + unemployment + poverty. The shocking fact is that despair in the West is now higher than in Russia.

In October, the US Census Bureau announced that one in seven Americans is living in poverty — the highest number since record-keeping began 53 years ago. Two weeks later, the UK announced that the number of people out of work has reached its highest level in 17 years, and youth unemployment has hit a historic high at well over 20pc, according to the Office for National Statistics. Spain capped the round of bad news by announcing that unemployment there is 23pc — its highest figure ever and the highest in the EU. Even with the West’s low inflation, the misery index is already very high.

But unemployment coupled with inflation alone doesn’t really tell the whole story.

What does it matter if the cost of an iPod rises by 10pc a year if you can’t even put food on the table or heat your home?

The despair index allows a direct comparison between the West and emerging markets.The surprise is that central and eastern European states are doing better than the developed economies of the West.

And thanks to record low poverty and unemployment numbers in November, Russia’s despair index score of 25.5 is now lower than that of the United States, which has a despair level of 28.1.

Russia’s score highlights the transformation the country

pected to rise to 800,000 tons in 2011 from 145,000 tons in 2010. The increase is partly due to the Kremlin’s decision to cut transport duties, which were between four and six times higher than that of the Suez Canal last year.

One of the most important cargoes is fish, shipped from Russia’s Far East to St Petersburg. “Transporting fish by sea is more efficient than by railway,” Mr Mikhailichenko quipped.

has been through since the collapse of the Soviet Union in 1991. Life for Russians at the start of the Nineties was truly horrible. Russia’s misery and despair indices were into the thousands thanks to hyperinflation, but as the decade wore on, the despair index fell steadily from around 90 in 2000 to the current level.

It is easy to blame the rising despair on the current crisis, but the US Census says poverty levels in the US have been rising since well before the current crisis began. Economists say that most American families were worse off in 2000 than they were in 1990.

There are some problems with comparing poverty across countries.With a poverty line of $11,139 (£7,160) per annum, America’s poor are a lot better off than most Russians, who earn an average of $9,600.

However, the US Census Bu-

Despair (inflation + unemployment + poverty) in the West is now higher than in Russia reau says half of those living in poverty live in “deep poverty”with incomes half of the official poverty rate, which would make them poor even

by Russian standards.The existence of poverty in the“rich” world only underscores the fact that western democracy is flawed and emphasises the increasingly desperate need for deep structural reform.

There has been a lot of talk of emerging markets overtaking the West, but for the majority of people, the Brics have already caught up. If you are rich, then you are better off living in America, but if you are poor, then the chances of your life improving are now brighter in Russia.

Ben Aris is the editor and publisher of Business New Europe.

notes from the experts

Everyone’s a winner in the Eurasian union Nikita Krichevsky

Construction Investment pours into rail, roads and pipelines but cosmetic projects miss out on cash

Between $60bn (£39bn) and $65bn (£42bn) is being invested each year on major renovation projects across the country – not that you’d notice if you visit Russia’s regional capitals, which still look drab and run-down, bar a few brightly coloured billboards. That’s because most of the money is going into transport and power systems – the lifeblood of this vast but largely empty country.

Infrastructure investment in Russia in 2010 reached $111bn (£72bn), according to a report by Morgan Stanley, a 10-fold increase from the $7bn spent in 1999.

Commentators regularly attack the Kremlin’s “spending frenzy”, claiming it has driven up the oil price needed to balance the budget to over $125 a barrel – from $21 in 2007, based on Citigroup figures. But they don’t seem to acknowledge that, rather than propping up struggling factories or paying public servants, the money is going on much-needed infrastructure projects. And, when set against the rapidly expanding economy, the spending splurge is not that much: as a share of GDP it has doubled from 3.5pc of GDP in 1999 to 7pc in 2010 – slightly ahead of India’s 6pc, but well behind China’s 11pc.

What’s more, it isn’t just the federal government making the investment, but state-

05

I

specIAl to rn

t is better to have integrated political and economic structures between neighbouring states than disunity. Political and economic unions provide many benefits, including the elimination of customs borders and simpler trade rules. They also encourage the migration of labour. United, countries can react better to global challenges and improve their financial stability.

The Eurasian Economic Commission (EEC) between Russia, Belarus and Kazakhstan, created last month, does all these things and more. It is the first time in 20 years that a new economic, not just political, entity has emerged in the former Soviet space. It provides benefits to all three countries while preserving their national identities.

The member states have decided not to create a common currency, as this would mean the loss of some national independence. But they are introducing common standards for the provision of goods and services. This will enable the member countries to move in the same direction and ultimately induces other countries to comply with their standards.

The process of harmonising technical regulation parameters takes time, though.

For a fully functioning EEC, as many as 175 national norms of the member states need to be harmonised, so considering the red tape involved, the EEC is unlikely to be up and running before January 2012. A more realistic start date would be 2015.

Nevertheless, the benefits of the union are already being felt. It is anticipated that in 2011, the annual

turnover in goods between Belarus, Russia and Kazakhstan will reach roughly $110bn (£71bn) – 40pc more than the turnover achieved last year. While Kazakhstan and Belarus will benefit from favourable gas tariffs, the Russian market will be filled with cheaper goods from Belarus and Kazakhstan.

Russian entrepreneurs also stand to gain from the formation of the EEC, because it allows them to register their enterprises in Kazakhstan, for example, where the taxes are lower, as is the perceived level of corruption.

Several hundred Russian enterprises have already been re-registered in Kazakhstan.

The union will provide an economic shield to protect its members against Chinese expansion Over time, the EEC will enable Russian businesses to hire more workers as the visa regime is abolished.

Overall, the EEC will contribute positively to Russia’s modernisation and industrialisation programmes. And, importantly, the Eurasian Union will provide an economic shield to protect its members against the expansion of China. At present, as many as 50pc of Kazakhstan’s companies co-operate to varying degrees with Chinese partners. China has penetrated deeply into the Russian economy, and the total number of Chinese immigrants in Russia – both legal and illegal – is estimated at several million.

Nikita Krichevsky is a chairman of Opora, an organisation that represents smalland medium-sized businesses. It is one of the biggest unions of entrepreneurship in Russia.

06

Comment & Analysis

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Why we have finally fallen out of love with Europe Yevgeny Shestakov

special to rn

Natalia Mikhaylenko

R

ussia no longer sees itself as part of modern Europe. The idea of creating a common European space from Vladivostok to Brest has failed. The ongoing rapid change of the European model prompts Moscow to take any long-term projects involving Europe with a big pinch of salt.

Most Russian political analysts agree that bleak times lie ahead for Europe. The financial crisis has triggered an unprecedented upsurge of national egoism in the European Union, with all the members showing they are really only concerned about their own well-being. The German-French alliance does not have enough power to rescue the economy of the whole of Europe. But regardless of whether or not the EU will become a network structure whose members only take part in those programmes that are good for their countries or whether, conversely, control of the European Union will be centralised still more, Russia will have to review its relations with that organisation.

Foreign Minister Sergei Lavrov’s recent visits to Bonn, where he attended an international conference on Afghanistan; to Vilnius, to attend the Conference of the Organisation for Security and Co-operation in Europe; and to Brussels, to attend the Russia-Nato Council, have shown that partnership between Russia and Europe is under severe strain. Moscow’s attempts to uphold its strategic interests are openly opposed by the EU states which tend to ignore these interests. The Europeans take their cue from Washington. The guiding princi-

ternational policy player makes Moscow focus more on what is happening in Washington. Such a strateThe financial crisis gy clearly goes against the has triggered an grain with some countries upsurge of national that are Russia’s traditional egoism in the EU, partners in Europe. But at with all the members the end of the day, constrained as they are by Eushowing that they ropean discipline, they are are really only unable to offer Russia anyconcerned about thing. The only project on their own well-being which Russia and Europe could be strategic partners ple “what is good for Amer- for decades to come is the ica is OK for Europe as well” European missile defence was very much in evidence system. However, under US at all of the international pressure the Europeans have meetings in which Mr Lav- refused to co-operate with rov took part.

Moscow on that issue.

The weakening of Europe The confidence crisis beand its creeping self-liqui- tween Europe and Russia is dation as an independent in- obvious and is likely to wors-

en. Many co-operation programmes that have already been launched are plagued by inertia, and hardly any new programmes are appearing. The lack of progress in key areas directly relevant to Russian security will inevitably lead to a shrinking of co-operation on the whole spectrum of bilateral relations with the West.

Even so, the scenario under which Europe will cease to be Moscow’s strategic partner and become a potential enemy is unlikely. If Putin is elected president of Russia, we may see a gradual curtailment of certain marginal areas of co-operation.

However, the main issues – the fight against terror, drug trafficking, cargo transit to

special to rn

W

hen the Russian Oscar committee decided this autumn to forward Nikita Mikhalkov’s Burnt by the Sun 2: Citadel as the country’s official submission for the best foreign language film at the 2012 awards, the resulting furore generated front-page headlines. When the film premiered in May, it became the most widely panned film in Russia since last May’s release of Burnt by the Sun 2: Exodus by the same director.

The films cost more than $50m (£32m) to make and earned less than $10m at the box office. Critics savaged both and audiences dismissed them. Most saw the films as shameless attempts to capitalise on the renewed interest in the Second World War in Russia and to promote a brand of state patriotism.

In a year that saw Andrei Zvyagintsev’s Elena win a special jury prize at Cannes and Aleksandr Sokurov’s Faust capture the Golden Lion at Venice, the committee was hardly short of good candidates for the American Academy’s final list. Yet Mikhalkov, who serves on the Oscar committee, put his own film forward. Consequently, Russian media re-

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

Andranik Migranyan

special to rn

P

niyaz karim

Stephen Norris

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

Valery Vyzhutovich

rossiyskaya gazeta

O

n December 5, President Dmitry Medvedev signed a law that makes the rotation of civil servants mandatory. Under the new law, jobs are to be rotated every three to five years to stimulate more effective work and to combat corruption.

The officials can be reappointed to other positions either in the same or in a different department.

The new salaries will be at least as high as in the previous jobs, and civil servants will also be compensated for the cost of moving house; if relocated to another city, housing will be provided.

Those who refuse to move to another position are liable to dismissal; exceptions will be made for staff who are unfit for reassignment on health grounds and those who have sick relatives to look after.

The Kremlin press service notes that the law was passed pursuant to the National Anti-Corruption Plan for 20102011. The same is true of the draft law that makes it legal to sack officials who have lost credibility, which recently passed its second reading.

However, sacking a civil servant is already easy. The Law “On Public Civil Service”and the Labour Code lists many grounds on which this can be done, including being under-qualified; frequent dereliction of duty (or gross violation) without a valid reason; disclosing state secrets; embezzlement; presenting fake documents or data when being hired or taking unreasonable decisions.

Officials can also be fired for loss of credibility, but only if they are involved in handling money or goods and are proved in court to have performed “culpable actions” – and proving this is not always easy. Officials can come under suspicion if, for exam-

ple, they obviously spend more than their official salary would allow. Mr Medvedev has proposed that civil servants suspected of corruption should be dismissed on the basis of investigation materials insufficient for bringing criminal charges. Misstating income data will also be grounds for dismissal.

Not only does the leadership not trust income declarations by its bureaucrats, but the general public trusts them even less. According to the Levada Centre, 80pc are convinced that bureaucrats declare far from everything and that the published figures are only the tip of the iceberg; ordinary Russians understand why civil servants do not want to disclose tax declarations and why they understate incomes. It’s widely held that a government job or a parliamentary seat

Ordinary Russians understand why civil servants do not want to disclose tax declarations results in capital. According to the Levada Centre, around a quarter of respondents believe that holding a government position (24pc) or a seat in parliament (26pc) is lucrative. Many believe that not even pop stars (21pc) and businessmen (15pc) can match the income of some bureaucrats and deputies.

Loss of confidence in civil servants has become a feature of modern Russia. However, if everyone suspected of unlawfully profiting from their position was sacked, departments would quickly be eroded, and rotation would be no help whatsoever.

Valery Vyzhutovich is a Moscow-based political analyst and a columnist at Rossiyskaya Gazeta.

Reset: fact and fiction

THE turkey that went to hollywood ports mostly agreed that picking Mikhalkov’s flop meant that the cronyism rampant in Russian politics had spilled over into the cultural world.

But there is some logic for the committee’s choice. Burnt by the Sun 2: Citadel is the fifth Mikhalkov movie to be selected. His track record is impressive: his 1992 Close to Eden made the final Oscar list; his 1994 Burnt by the Sun won; The Barber of Siberia, his 1998 epic, was disqualified, apparently because the print did not arrive in time; his 2007 work 12 made the final list. Mikhalkov’s movies have made the final cut more often than all other Russian films picked since 1992 combined: Sergei Bodrov’s 1996 Prisoner of the M o u n t a i n s a n d Pav e l Chukhrai’s 1997 story of hero worship The Thief were the only other finalists.

The decision also reflects the debate over what sort of film should represent Russia. The last decade’s submissions have alternated between more traditional art-house movies, which most foreign viewers see as typically Russian, and popular blockbusters that marry Hollywoodstyle effects with Russian themes. Zvyagintsev’s 2003 The Return, Andrei Kravchuk’s 2005 The Italian, and Anna Melikian’s 2008 The Mermaid were all art-house, critical successes that did not earn huge box-office returns;

Afghanistan – will not be revised. Russia will protect its geopolitical interests but, above all, will be focused on the regions that it considers to be its traditional zones of influence. By the same token, Moscow will continue its attempts to come to terms with the US on the general standards of behaviour in the world, because it no longer makes sense to discuss this topic separately with the European Union.

One cannot rule out the possibility that Russian business will see the economic weakening of the EU as a chance to expand its sphere of influence. In spite of the unfavourable political climate it will continue its investment expansion into Eu-

rope. But, obviously, such moves will be agreed with the Kremlin first. The situation will be like that between Moscow and London, where Russo-British political differences have not led to a fall in economic co-operation. It is fair to assume that a similar partnership model will be used in the event of a negative scenario in relations between Russia and the EU. Agreements on a European missile defence system may be a key decision capable of restoring Russia’s trust in the new-look European Union. Moscow believes that the West’s refusal to give legally binding security safeguards when deploying anti-ballistic missiles threatens its strategic interests. If, during the Nato summit in Chicago in 2012, the Europeans agree with the US administration on safeguards for Moscow, or at least adopt a roadmap for implementing safeguards, that could represent the starting point for other joint projects between Europe and Russia.

Another positive step is Europe’s desire for help from Russia in solving the EU’s economic problems. One way forward could be to revive the “European troika”, with Russia, France and Germany taking part.

Finally, Europe will need to renounce the artificially fomented wartime fears that “the Russians are coming”.

The integration of Russia into the economy of a renewed European Union will enable both sides to overcome their mutual mistrust and will greatly increase the number of issues on which Moscow and Brussels will be able to co-operate successfully in the future.

Bullying the Bureaucrat

none made the final list.

Timur Bekmambetov’s 2004 Night Watch and Fedor Bondarchuk’s 2005 Ninth Company are the epitome of the new Russian blockbusters that have done well in theatres and earned critical acclaim. They, too, did not make the Academy’s shortlist. Last year, Alexei Uchitel’s The Edge, set in Stalin’s

There is an ongoing debate over what sort of film should be chosen to represent Russia at the Oscars camps, was submitted. Uchitel, previously known for his art-house films such as His Wife’s Diary (2000), which the Russian committee also selected, said he deliberately made The Edge in the style of a Hollywood blockbuster.

But the last Russian film to make the Oscar shortlist was Mikhalkov’s 12, which was a commercial success with an art-house feel. While

many voices within the Russian film community believe the American Academy wants to see Hollywood-style foreign fare, the evidence suggests that the more arthouse and foreign a film, the better its chance of selection.

All three of Mikhalkov’s films that made the shortlist conform to what many believe a Russian foreign film should be like: deliberately paced and philosophical. But, of course, the same comment could also be made of films that were not selected.

It seems the committee submitted the film either because of Mikhalkov’s previous record or because of its Hollywood blockbuster genre. One or two American critics praised Burnt by the Sun 2: Citadel, stating that Russian critics had been a bit tough on their former favourite. Nevertheless, this one did not make the shortlist.

Stephen Norris is Associate Professor of History at Miami University in Ohio.

re s i d e n t B a r a c k Obama’s administration has had its fair share of criticism over the subject of the reset with Russia recently. Accusations that Russia has not upheld its part of the deal by putting more pressure on Iran are rampant, and there is speculation that the reset policy was misguided. But some of these accusations are based on misconceptions about Russian policy which need to be cleared up.

The first is the Russian stance on Iran, which has been repeatedly stated, and needs to be taken as a given. Russia is against Iran acquiring nuclear weapons. It supports the use of nuclear energy for civil purposes, which is why it engaged in the six-party talks with Iran to help it realise its ambition for peaceful nuclear energy use. Russia’s opposition to further sanctions against Iran is based on precedent: it didn’t veto the sanctions against Libya, but those snowballed into regime change with unclear consequences and factional civil war in the country. And Libya only followed in the footsteps of Iraq and Serbia when sanctions led to regime change.When it comes to Iran, Russia doesn’t want to risk having a newly unstable state close to its borders with all of the uncertainty and civil war potential that a new regime implies.

Second, efforts to portray the reset as some sort of favour to Russia and the Start (Strategic Arms Reduction Treaty) as a gift by the United

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States are misguided. If the Republicans have a problem with the Obama administration’s push for Start, it isn’t because of the reset with Russia. The most prominent opponent of Start in the US Congress, Senator Jon Kyl, affirmed to me that he opposed the treaty because he wanted the Obama administration to allocate more money for modernising the US nuclear arsenal, not because he opposed improved relations with Russia. Russian co-operation with the US on Iran and Afghanistan

Americans can somehow punish Russia by withholding co-operation, as, clearly, the US would be the only party to be punished in such a scenario.

The Obama administration has not halted plans to deploy anti-missile defences in Europe. It merely rearranged them, deploying anti-missile elements on vessels around Spain and in Romania and Turkey, instead of on Polish and Czech territory. Turkey is even closer to the Russian border than the Czech Republic, and Russian analysts

It is wishful thinking to believe that Americans can punish Russia by withholding their co-operation, as, clearly, the US would be the only one who would be punished

There’s little reason to state that Russia is occupying Georgian territory, particularly after a war which Tbilisi provoked on its own people, who now have no incentive to return

is a principled position, not a quid pro quo item to be traded in return for Start, which is merely a continuation of the US-Russian bilateral commitment to nuclear weapons reduction.

Could those who are unhappy about the reset policy propose a sensible alternative?

US troop withdrawal from the Middle East would create even greater turmoil in Afghanistan, Iraq and Pakistan, with the threat of Iran acquiring nuclear weapons in the background. The sooner American policy analysts accept that the reset is beneficial for both sides, the better. It is wishful thinking that

still believe the US anti-missile shield is aimed at countering the Russian nuclear deterrent. Nato has refused to present Russia with written guarantees that the missile shield would not threaten it. So there has been little to no reset there, and the Obama administration has not made a compromise to reassure Russia. So, accusations of wasted US goodwill are baseless.

The last point is the situation following the war with Georgia, for which the Americans are suspicious of Russia. It is noteworthy that the secessionist regions of Abkhazia and South Ossetia have

themselves placed their territories under Russian protection, and have never wanted to belong to Georgia. The regions were placed in Georgia under Stalin’s constitution but, even before the collapse of the Soviet Union, they voted for their independence from Georgia. Two successive Georgian presidents then waged war on the regions to no avail. The end of the Russia-Georgia war and the peace agreement between President Nicolas Sarkozy of France and President Dmitry Medvedev specified the withdrawal of Russian troops from the territories before they were declared (and recognised by Russia) as independent.

Their newly minted independence began with treaties: between Russia on the one hand and Abkhazia and South Ossetia on the other, under which Russia agreed to provide troops for protection. The Russian troops are stationed there under the same type of agreement that legitimises the presence of Nato troops in Kosovo.

Following the precedent of Kosovo, there is little reason to state that Russia is occupying Georgian territory, particularly after a war which Tbilisi unilaterally provoked on its own supposed people, who now have no incentive to want to return to within Georgian borders.

So despite the wishful thinking in Washington, President Obama’s team can hardly be faulted for a regional ethnic policy over which they have no control.

Andranik Migranyan is director of the Institute for Democracy and Co-operation.

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Comment & Analysis

torch passes to the PEPSI generation W

faces much bigger challenges than Putin. In today’s Russia, it is impossible to win without a positive goal, an alternative that the people can understand. The opposition has no positive alternative; it has only protest sentiments. The authorities can even afford to allow these sentiments to grow to the point beyond which destabilisation looms, and at that point the protesters will instantly lose the majority of their support.

The elections have highlighted the fact that Russia has three zones, whose populations have different attitudes.

The first is the two capitals, where protest sentiments are high and Western-style democracy remains popular.

The second zone comprises the vast regions, which are swept by protest sentiments, but lack the democratic element. The third is subject to an absolute form of rule, where the will of the local khan is law.

Can any serious reforms be carried out in a country with so many different types of mentality without resulting in a territorial split?

We don’t know the answer to that question. However,

BEWARE THE PROTEST VOTE Georgy Bovt

SPECIAL TO RN

T

Natalia Mikhaylenko

well. It could not have influenced the power structure, but the democratic intelliMOSKOVSKIE NOVosti gentsia could have regained ith the NewYear some of its confidence and holidays ap- become more active after 10 proaching, post- years of silence. That could election passions change the alignment of will soon subside. With all forces in society and potendue respect for the activists tially be a deterrent of sorts who took part in protests on for the authorities. Yabloko Triumfalnaya Square, such accomplished that task up outbursts of activity are very to a point: it failed to get sporadic. NewYear is a good into parliament but it did intime to sit back and consid- fluence the party spectrum, which now looks not like a er what may happen next.

The protest electorate will monopoly of four parties, but probably relapse into hiber- rather like 4+1. nation, because one part of When it comes to the forthit is happy with the mere fact coming presidential electhat protest has been voiced, tions, everything is crystal while the other part will soon clear. Yes, they are likely to realise that there is nothing make more noise than in to cross swords over. A Just 2004 and 2008, but everyRussia and Zhirinovsky’s body understands that so far party will promptly form a there is no challenger to coalition with United Rus- Putin. His only battle will be sia, get a few prestigious to prevent his image from posts in parliament and calm being further tarnished. down. The Communists will There are signs that the assume their habitual pose Kremlin spin doctors are at of the “eternal runners-up”, a loss as to how to best present United Russia, and nursing their grudges.

Nothing of any importance are wondering whether it has changed in parliament. would be wiser to reintroIncidentally, this was one of duce the “against all candithe reasons why it was im- dates” option on the ballot portant that Yabloko (the papers after all. democratic opposition) did The opposition, however, Grigory Melamedov

two positive trends can be discerned that could reduce the differences between the regions. The first is the politicisation of the young. For a long time the “Pepsi generation” was not interested in anything but itself, but the authorities have awakened it with their crude administrative pressure during this month’s elections.Young people who have been expressing their outrage over vote rigging have now got a taste for political struggle and are drawn towards opposition parties. That is particularly important for the democrat-

ic camp, because it has long been in need of an injection of young blood.

The second trend is the same as the one we saw in the Arab countries this year: society organising itself through social networking. The virtual community is strong enough to exert an influence on other citizens, and has even begun to smooth out the differences between the regions.

That process is likely to accelerate. The question is whether this community can only protest or whether it can throw its weight behind somebody. If so, who?

The two forces that dominate“virtual Russia”are the nationalists, who are united by their dislike of immigrants, and the resurgent democratic movement.When the two trends come out of the virtual world into the real world, they will probably oppose both each other and the president. The consequences are hard to predict, but it looks as if we have no one to count on except the “Pepsi generation”.

Grigory Melamedov is a Moscow-based political analyst.

POLITICS OF THE INTERNET Konstantin von Eggert

special to rn

niyaz karim

W

hen President Dmitry Medvedev and Prime MinisterVladimir Putin appeared on Russia’s TV screens the night after the Duma elections, their faces seemed to tell the story; smiles could not hide the disappointment. United Russia, their party, had been snubbed by the electorate. Its share of the national vote fell from nearly 64pc to 48pc – and this was the result after vote-rigging had, allegedly, been carried out across the nation. What was particularly embarrassing for the leaders was that Moscow, St Petersburg and other big cities produced the poorest results for United Russia. If it were not for fraud, some say, the party may have been in third place there.

We witnessed a return of politics to Russia when everyone thought it was nearly dead. There are several conclusions that can be drawn from events. First, this elec-

tion was a de facto referendum on United Russia’s decade in power. Even if the official results were impeccable (which it appears they were not), a very serious signal was sent to the country’s ruling class. It is not yet a clear message, as different people voted against the dominant party for different

reasons. But it was definitely a sign that the population is tired of United Russia’s political monopoly.

Second, many in Russia still believe United Russia is a bunch of bad boyars (highranking officials) at the court of the “good tsar”Vladimir Putin, and it seems clear that this election was a chance to

demonstrate their dissatisfaction. In this respect, December’s voting can be seen as a kind of “round zero” of Russia’s forthcoming presidential elections, scheduled for March 2012.

Third, this was the last election in which state-controlled TV still played a decisive role. Internet penetration in Russia has grown from 32 million monthly users in 2008 to 50 million active users in 2011. Politically minded citizens now have a free platform on which to engage in debates. Unmasking the apparent vote rigging would have been impossible without the help of smartphones, Facebook and Twitter. While real politics is always about direct interaction with people, online activism has enabled people to share their disc o n t e n t a n d o rg a n i s e effectively offline. This is why the government may attempt to introduce legislation curbing the internet, which is another development to watch out for in 2012.

This brings us to the fourth conclusion. This was the first

WTO entry: A world of opportunity

Russian election in which Russia’s nascent “middle class” – the self-sufficient, English-speaking, iPad-juggling thirtysomethings – really went out to vote. This is the generation that benefited most from the “fat decade”,Putin’s presidency from 2000 to 2008. These were oil-boom years, which made a lot of them well off. They either ignored politics or

It is not yet a clear message, as different people voted against the dominant party for different reasons backed Putin and United Russia.

But now, the economic crisis, political stagnation and corruption have turned them away from the party. The problem is, they will never come back. Losing their support, or, at least, losing their indifference to Russia’s future, is not something to be shrugged off lightly.

Dmitry Babich

A

fter 18 years of negotiations, Russia has been formally accepted into the World Trade Organisation (WTO).

While closer integration with the global trading system will undoubtedly bring economic benefits to Russia – some estimates claim it will give the economy a boost equivalent to 1pc of GDP per year – the rest of the world also stands to gain.

Although import tariff rates have been declining since Russia began its transition to a market economy 20 years ago, WTO membership will further accelerate trade liberalisation. Tariffs on more than 700 categories of product will be abolished or reduced, with the average import tariff rate expected

niyaz karim

special to Rn

to fall from 10pc to 7pc.

In the short term, this will hurt certain sectors of the Russian economy, particularly the uncompetitive light industrial and machine manufacturing sectors. But the reduction of tariff barriers will not only reduce prices for consumers but spur Russian firms to become more competitive internationally.

While the market for goods is important, the real prize for foreign investors is access to the Russian service market – an area in which Russia lags significantly behind the rest of the world. Compliance with WTO rules will open the market for a range of services, including legal, insurance and telecoms. And although overall foreign participation in the banking system will be limited to 50pc, 100pc-foreignowned banks will be allowed to open in Russia for the first time.

Fifth, the more the authorities resort to strong-arm tactics, the more opposition they will produce. With politics back on their minds, Russians still do not think there are many alternatives at the ballot box.There are no credible political forces on the centre-right who could speak effectively for moderate nationalists. This gap could become a fertile ground for populists and demagogues.

But the biggest danger for Russia is the potentially dangerous void that could open if steps to modernise and free Russia’s obsolete and inefficient political system are not taken soon. By 2016, when the next voting cycle starts, 80pc of voters may have access to the internet.

Konstantin von Eggert is a commentator and host for radio Kommersant FM. He was a diplomatic correspondent for Izvestia and later BBC Russian Service Moscow Bureau editor-inchief. He was also once vicepresident of ExxonMobil Russia.

he outcome of the parliamentary elections has disappointed that part of society known as“Internet Russia,”as distinct from the part called “Television Russia”. Many progressive-minded, educated people felt insulted by the evidence of vote-rigging reported on Russian internet sites. Particularly outrageous were the cases of electoral fraud reported in the cities of Moscow and St Petersburg, where, unlike in many other regions, the gap between the exit poll results and the final counted votes was about 15pc. All of the difference went to the United Russia party. The authorities dismissed these reports as false, claiming videos showing people stuffing ballot papers into the ballot boxes were shot at false polling stations or rented flats.

The claims about ballot rigging, including those made by observers at the elections, call for a somewhat different reaction from the ruling party – it should be seen to be investigating what happened and be prepared to give the culprits the equivalent of a public flogging.

The party made several gross miscalculations in its election campaign, and failed to structure it in such a way as to react to the more acute issues that inevitably arise in any country at times of economic difficulty. Nor did it declare forcefully enough its commitment to fight corruption – the most common accusation levelled at the ruling bureaucracy. And finally, some of the more glaring irregularities that occurred in the final stages of campaigning could have been avoided.

If it had run a more effective campaign, United Russia could have won a majority of votes anyway, a majority that would have meant an outright victory by the standards of most European elections. All the more so, since the opposition failed to come up with any persuasive slogans or to field a single colourful new personality.Their programmes were muddled and their rep-

resentatives in the debates just went through the motions because they themselves did not believe that they could win.

The increased number of votes cast for the opposition parties was not due to their own merits, but because voters were fed up with United Russia and voted to spite it.

Revolutions never grow out of protest votes against some other party. Still less are they likely to be triggered by the actions of a motley crowd of nationalists, anarchists, students, and people who just like to be in the spotlight. The anti-establishment opposition has failed to produce any charismatic leader who would appeal to the significant number of disenchanted people. The lack of such an opposition leader works against the unity of the representatives of a society long afflicted by political apathy.

Finally, there is one more circumstance that relates purely to demographics. Russia’s population is older than, for example, those of the Arab countries that recently stunned the world with the Arab Spring (whose outcome – in the shape of Islamist strengthening – may soon turn out to be not at all to the liking of the rest of the world). The average age in Egypt is a little over 20; in Russia it is closer to 40. People have no appetite for street riots when they reach the age of 40. Besides, the young generation in Russia today has vastly greater opportunities than their peers in Middle East countries such as Egypt, Syria or Yemen.

The authorities should learn, sooner rather than later, to react to the mounting discontent in the various sections of society and engage in a dialogue about the problems.

Otherwise, the situation may arise whereby the young and educated make protest votes for the Communists, and profess their love for Stalin and his methods, just to spite United Russia.

If the Communists had their way,“Internet Russia” would disappear, to say nothing of any contested elections.

Georgy Bovt is a political commentator based in Moscow.

THE POLLS

Opposition found lacking According to a Levada Centre poll carried out in November, 49pc of Russians feel that opposition parties, regardless of political background, lack a clear and coherent policy for improving the country’s wellbeing.

Only around one-fifth of Russians have confidence in one of the anti-government movements.

Nov.2011 29pc 22pc it has a program

49pc not sure

is the party really over for united russia? special to rn

Atanas Bostandjiev

07

This new market could partly offset declining demand in the EU. For too long, Russia has been considered a risky place to invest, not least because of the perception that investment rules are prone to political interference. WTO membership will introduce an independent framework of rules and dispute resolution mechanisms that will be difficult for Russian companies and the government to circumvent. Disputes will be settled by an independent body, rather than by the Russian courts – a move welcomed by foreign firms.

WTO membership will also create an expectation among politicians and business leaders that reform is expected and inevitable. WTO rules should also usher in a new

era of transparency, as the Russian government will be required to publish in advance all new legislation relating to goods, services and intellectual property rights. No longer will foreign investors be caught off guard by new rules and regulations.

While reform of the Russian economy does not end here, WTO accession should help end Russia’s undeserved reputation as a risky investment destination. The opportunity is there for foreign service industries to invest and expand into a welcoming market; it could be one of the best opportunities of the decade.

Atanas Bostandjiev is the CEO of VTB Capital’s UK and International Division.

F

or the first time since 2003, United Russia did not receive the majority of the popular vote. That doesn’t mean that United Russia won’t have the majority of seats in the State Duma; the biggest party in Russia traditionally profits from the votes cast for smaller parties that didn’t win enough votes to get into the Duma. But, psychologically, what happened is an important turning point in Russia’s domestic politics.

United Russia’s absolute domination – which began with the Duma vote of 2003 – seems to be over.

Before the elections, thinktanks predicted a fall in the electorate’s sympathy for United Russia, but none of them put the vote for United Russia as low as 48 percent. The Levada Centre, traditionally viewed as close to the opposition, predicted a

week before the poll that United Russia would receive 53pc of the vote. VCIOM, which is considered closer to the authorities, gave the same figures. The preliminary results mean that the Russian electorate is still capable of producing surprises. Despite a few scandals, it seems that there were only a few incidences of fraud or vote-rigging, since the results of the exit polls do not differ much from the initial results provided by the Central Election Commission.

“I don’t think the authorities would dare to make the final result [for United Russia] much higher than the one provided by the sociologists, since this would drastically reduce the people’s trust in the state,”said Alexei Grazhdankin, deputy director of the Levada Centre.

United Russia’s poor performance can be explained by economics. In 2007, when the last elections were held, the country was prospering.

But the effects of the global

financial crisis on the Russian economy do not tell the whole story. People are also disillusioned by unpopular reforms in education and health care. Economists agree that Medvedev’s term in office was decisive in terms of dismantling the last remnants of the Soviet social system. So Russians were put out with the ruling party, not only because of the deterio-

The period of United Russia’s absolute domination – which began in 2003 – seems to be over rating economy but also because of some government policies that were not properly explained.

Foreign policy played a marginal role in the elections. Ordinary voters seem to be more concerned with military reform or with their own income than with the country’s

place in the world and spending on the international stage.

A relatively successful war with Georgia in 2008, as well as recent successes in integration among former Soviet republics, are viewed as successes, but insignificant in the bigger picture.

The biggest intrigue of this election, however, is how the other parties fared. The political scientist Stanislav Belkovsky thinks that many Russians simply sat the election out. Mr Belkovsky views this part of the electorate as a potential base for a “national democratic” party, which has not yet been founded. Activist Alexei Navalny and opposition leader Vladimir Milov are viewed as potential leaders of such a movement, according to Mr Belkovsky. Whether such a party is feasible and would not degenerate into plain xenophobic nationalism remains to be seen.

Dmitry Babich is a political analyst at RIA Novosti.

08

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Festivities Once a Soviet trade unionist, Ded Moroz can now earn £3,000 in two hours with a little help from his attractive granddaughter

Kerr-ching… Grandfather Frost cashes in The magical character of Ded Moroz has succumbed to market forces since the end of the Soviet era, but his spirit of goodwill lives on.

modest presents (subsidised by the trade unions) such as biscuits, mandarins and sweets. The children would sing or recite for their goodies, after which Ded Moroz and Snegurochka might sneak off with the adults for a stiff drink, especially if the weather was particularly bitter. Imagine the surprise when a child peeped into the kitchen, only to see Ded Moroz lift up his beard and down a vodka – while chatting to his father on matters of industrial productivity.

When the USSR collapsed, NewYear’s Day remained the most celebrated festival, though Christmas could once again be celebrated.

OLGA DMITRIEVA, ALEXANDRA GUZEVA AND INNA LEONOVA RUSSIA NOW

Ded Moroz, or Grandfather Frost, as his name translates, was introduced as the hero of the New Year’s Festival back in the Soviet days.

When the atheist Bolsheviks took over Russia in 1917, they banned people from celebrating Christmas along with all the customs that went with it, such as decorating the fir tree. But years later, top party officials decided Russia could not do without a winter festival. They did not bring back Christmas but introduced New Year as the main festival – the first of which was celebrated in 1937.

Drawn from fairytale characters, Ded Moroz and his granddaughter Snegurochka (the Snow Maiden) were given a new lease of life as real human figures. To avoid any association with St Nicholas or Christmas, they were dressed in blue.

By the Forties, New Year’s Day had become a very popular public holiday. Restrictions on the colour of Ded Moroz and Snegurochka’s outfits were gradually lifted, and Ded Moroz was free to wear red, blue or even silver and gold.

No one could imagine a NewYear celebration without Ded Moroz and Snegurochka.They organised all the New Year festivities in schools, universities and the workplace.

In Soviet times, the local trade union committees – which were responsible for organising every aspect of workers’ lives – would convene to assign these important roles to suitable candidates. In the case of Snegurochka, it was the girl deemed to be the prettiest available.

The duo would appear on family doorsteps, bearing

Light show: the GUM shopping mall in Red Square. New Year is the biggest Russian festival

Celebrity status

Big business

Ded Moroz and Snegurochka are in great demand over the festival, which lasts until the Russian Christmas (celebrated on January 7) is over.

Companies hire them to entertain their employees or promote products.

Of course, the official pair can’t handle all these engagements, so Ded Moroz agencies have stepped in to meet the demand. The price depends how close the visit is to New Year’s Day. For a half-hour visit to a stand-

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The best of Merry Moscow

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Ded Moroz has grown in importance as the central figure of the winter festival and has even been given a permanent residence in the old Russian city of Veliky Ustyug 460 miles north of the Russian capital, where he can be visited throughout the year.

On December 24, joined by his granddaughter, he makes a grand entrance to Gorky Park in Moscow to start the New Year celebrations.

Alongside this new tradition, special postboxes now appear in Moscow parks in December so that children can send their wish lists to Ded Moroz. If they provide an address, they will receive a“personal” reply.

Cold comfort: Ded Moroz inspires the festive spirit

ard family home, the cost starts at 2,500 roubles (£50) and rises to 15,000 roubles (£300) – meaning that not all families can afford a visit.

A two-hour appearance from the couple at a corporate event can cost up to £3,000. Wealthier clients can pay more for characters to join Grandfather Frost and the Snow Maiden. These

might include a cunning fox, a grey wolf or a faint-hearted hare. If the price is right, they will even do a classical round dance around the New Year tree.

The Ded Moroz agencies claim they recruit only professional actors, with a certificate from the Ded Moroz Academy, but the characters are often students without

special qualifications. Age is not a barrier. While big agencies prefer a Ded Moroz aged 30 or over, younger people are given the role, too.

Anton, 27, was hired as Ded Moroz by a food company for a NewYear promotion when he was a final year student in Moscow who attended a drama circle. He had to persuade people in the street to buy a fizzy drink in return for prizes, such as a mobile phone – for 10 litres.“It was -20 centigrade: I had to jump and dance so as not to get cold, which greatly impressed the kids passing by – who were very happy to see me and took photos with me”, he recalls.

But a corporate event for a big sound-recording company brought his Ded Moroz career to an end. “I had to divide the evening between the ordinary employees of the firm and the top management, who celebrated in a separate hall.While the man-

London celebrations Enjoy a high-camp Nutcracker and savour traditional blini and borscht

A feast of music and the food we love Get into the Russian festive spirit with a ballet, classical concert or folk gig, and sample some eastern culinary delights.

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There is a deep-rooted connection in the British psyche between Russian classical music and Christmas. And indeed, no fewer than four very different versions of The Nutcracker are pirouetting their way around London stages this festive season.

The Coliseum, which has performed The Nutcracker every Christmas since its foundation in 1950, hosts the English National Ballet’s production until December 30. It revels in the Edwardian nostalgia of a frost-covered, enchanted Christmas Eve. H av i n g s t a g e d S e rg e i Prokofiev’s Romeo and Juliet for nearly 50,000 people over four performances at the O2 Arena last summer, the Birmingham Royal Ballet is hoping to fill this massive venue with The Nutcracker at the end of the year. The Royal Opera House is also staging The Nutcracker until January 18. It prides itself on recreating a 19th-century

Camp classic: the sequinned Sadler’s Wells Nutcracker

Christmas as well as reviving Lev Ivanov’s original choreography.

The fourth Nutcracker is a riot of sequinned high camp at Sadler’s Wells, where Matthew Bourne, artistic director of New Adventures, has created a tongue-in-cheek show for all the family. The production, which runs until January 22, begins in a Dickensian orphanage before breaking into an ice-skating routine and the journey to Sweetieland.

For musical connoisseurs, the London Philharmonic Orchestra is performing a series of lesser-known works

by Prokofiev on the South Bank and in the Royal College of Music in January.

Folk duo Mazaika celebrate Russian Orthodox Christmas Eve on January 6 in the Green Note club in Camden.

The combination of singer and accordion player Igor Outkine with violinist Sarah Harrison guarantees a night of passion and energy.

Pick your presents, from cookbooks to calendars RUSSIA ON A PLATE £14, Russkiy Mir bookshop (23 Goodge St), or the author at www.russiaonaplate.com Karina Baldry’s appealing and personal cookbook presents new and traditional recipes.

Russkiy Mir also sells Russian food, so you could even make up a hamper of ingredients when you buy the book.

MOSCOW CALENDAR £9.99, Foyles (113-119 Charing Cross Road WC2); www.foyles.co.uk These calendars from Mednyi Vsadnik make a colourful souvenir. 2012’s selection of sights includes Petrovsky Palace and MGU. Foyles also has a great selection of Russian books and New Year cards.

RUSSIAN DOLL KIT £9, www.babooshkashop.co.uk The quintessential Russian matryoshka is now available in a range of celebrity guises. The Babooshka Shop stocks everything, from pretty but basic dolls for £5 up to fine art masterpieces costing hundreds of pounds. It also sells traditional shawls, jewellery and fur hats.

A taste of Christmas While the Orthodox Russian Christmas takes place in January, Russian restaurants in London are getting into the spirit now, with menus offering everything from stews and pelmeni (meatstuffed pastry dumplings) to marinated herrings.

For an authentic Russian dining experience, try Sobranie (8 Fountain Square,Victoria.)

The owners are committed to providing Russian food “like my grandmother used to cook”.A four-course Christmas party menu is £25 per person.

Borshtch N Tears (46 Beauchamp Place, Knightsbridge) is a similarly homely restaurant, one of the oldest Russian eateries in town. Diners’ reviews are hilariously polarised. Some complain about pickled starters, slow service, dancing grannies and loud music; others love it for exactly the same reasons.

Popular for parties, Nikita’s (65 Ifield Road, Earls Court) offers traditional Russian decor, an extensive choice of drinks and a selection of themed party menus, including Rasputin and Baboushka, which generally include pies, blini, salmon and stroganov.

Trojka Restaurant (101 Regents Park Road, Primrose Hill) brings a taste of home to Eastern Europeans, although the menu also has international appeal. Details of special menus for Christmas and NewYear are on the website, www.trojka.co.uk

agers were very happy with the entertainment I put on, the employees didn’t appreciate the presence of magic at their feast: they tried to tear off my beard, asked for alcohol and proved they don’t believe in wonders. I’ve refused to act as Ded Moroz ever since”, says Anton, now a manager himself.

Charitable work

Despite the opportunity to earn good money, the spirit of goodwill lives on with Ded Moroz. Some people work for free – like Ivan, 25, who played the character in a charity action and brought presents to orphanages.“The kids were very happy to see me and Snegurochka; they read poems for us and asked us to fulfil their wishes.

“I was very surprised that taxi-drivers and even the cars passing by offered us a lift for free – Ded Moroz is really greatly respected and loved”, says Ivan.

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MUSIC • Performances include The Nutcracker at the Bolshoi Theatre and concerts at the Moscow Conservatoire and by the Moscow Philarmonic Orchestra. Stars include José Carreras, Anna Netrebko and Richard Clayderman, along with Russian female ensemble VIA Tatiana, who play retro pop.

A gem-cutter’s tale of romance and revolution TITLE: 2017 AUTHOR: OLGA SLAVNIKOVA PUBLISHER: OVERLOOK/DUCKWORTH PUBLISHING

O

lga Slavnikova’s genre-defying novel, winner of the 2006 Russian Booker Prize, has finally made it into English in Marian Schwartz’s luminous translation.

In the mythical Riphean Mountains, gem prospectors search for precious stones. On the streets of a Russian city, romance unfolds against the backdrop of the centenary of the 1917 revolution – seemingly a call to violence.

Slavnikova weaves these parallel plots and settings together in 2017, an ambitious, postmodern contribution to a revered literary tradition.

There is a great heritage of Russian sci-fi, most of it decidedly dystopian.

Russian New Year office parties must be lavish, must take place in glamorous venues, and headline famous bands or celebrity hosts.

Find out the frequencies in your area

ILLUMINATIONS • Every evening at 5.30pm, Moscow’s streets come alive with spectacular displays of festive lights. Much thought and planning goes into their design. This year, young designers and students at art colleges were invited to help create the imaginative displays.

Several recent novels have set their action in the near future to create a satirical alternative to the present: Tatyana Tolstaya’s Slynx and Dmitry Glukhovsky’s Metro 2033 both use postapocalyptic scenarios.

Slavnikova flirts with the sci-fi genre. She winks at rejuvenating nanotechnologies and flashes a few holographic toys, but a more serious prognosis is found in ecological catastrophe, which is poisoning the mineralrich Ripheans (which are reminiscent of Slavnikova’s native Urals).

The anniversary of the 1917 revolution reinforces the idea of a recurring national destiny. Many 19th-century Russian artists found inspiration in a rebirth of folk art and Slavic heroes. For Slavnikova, this stylistic nostalgia created a “historical dreaminess in their weak and impressionable heirs”. For her, history becomes a virus and then an epidemic.

Slavnikova imagines a fake

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SKATING RINKS • Skating is one of the favourite winter pastimes in Russia: the fact that the first Russian Olympic gold medal was gained in figure skating is testimony to this. More than 20 skating rinks open in Moscow during the coldest months. The most famous opens annually on Red Square, and you can even spend New Year’s Eve on it.

Other skating places, also very dear to the hearts of Muscovites, include the huge rink in Gorky Park, famous for its ice disco, and Patriarch Ponds.

ICE THEATRE • Russian Winter is not only a season, but also the name of a popular cultural festival held each year. This December, it hosted an ice theatre show, the first of its kind, performed daily on Ploschad Revolutsii (Revolution Square), 300 yards from the Kremlin. The characters of the Russian folk tale are spectacular ice sculptures, but they talk – so far in Russian only – and bring their story to life in a very lively manner.

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FAIRS • Christmas fairs are popular in Moscow. The biggest is in Theatre Square, next to the Bolshoi Theatre. Gorky Park hosts the International Christmas Fair which, alongside Russian food and souvenirs, sells Belgian waffles, French mulled wine and Italian pasta, among other delights.

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but bloody civil war, as inevitable as it is inauthentic.

The striving for authenticity, rejecting the superficial sparkle of wealth and the “culture of copies,” is a keynote of the novel.

The protagonist, a gem-cutter called Krylov, relishes the transparency of quartz; his polishing is an attempt to reveal what he sees inside. Despite this background in a lovingly depicted trade, Krylov’s aimlessness nudges him towards the ranks of Russian literature’s famous superfluous men.

The women in his life are disappointingly allegorical.

His wife, Tamara, is fleshy and glamorous, worldly and cynical, while Krylov’s lover, the mysterious Tanya, is slim and spiritual.

Krylov and Tanya’s poignant and fragile relationship recalls that of Anna and Dmitry in Chekhov’s The Lady with the Dog, mixed with a spy thriller. Tanya is a frustratingly elusive character, identified with the legendary Stone Maiden – one of the rock spirits who occasionally threatens to lead the novel into the thickets of magic realism.

Deep-rooted paganism and folklore are just two of the facets of Russian culture that the book begins to explore. 2017 is packed so full of ideas and images it sometimes threatens to explode under the pressure. Its strength is in its linguistic subtlety and ingenuity.

Phoebe Taplin

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