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Bridging the Gap Between Russia and San Francisco Preparations for the 2012 APEC summit transform Vladivostok’s skyline as residents ask what happens when the Kremlin turns its attention elsewhere.

and I felt it had many characteristics of Vladivostok-3000.”

Vladivostok-2012

These days Vladivostok blazes with welders’ flames and cranes dot its hilly downtown, demonstrating the billions of dollars the federal government is pumping into the city. The narrow, potholed road from the airport has been raised up to 10 feet in some areas and expanded into a modern, four-lane freeway; the new airport is scheduled to open this summer. Two Hyatt hotels are under construction; monuments, roads and facades have been repaired; and an express train link from the airport to the city center will soon open. One of the most impressive projects nearing completion is the bridge to Russky Island — the closest island to Vladivostok — and a new campus for the Far Eastern Federal University. The two-mile-long bridge, partially held up by masts standing on two artificially constructed islands, was started less than three years ago. When completed this summer, it will be the longest cablestayed bridge in the world.. “When we talk about innovation and modernization, this is it,” said Alexander Ognevsky, press secretary for the Ministry of Regional Development, as he gestured toward the bridge. “A number of international companies left the tender because they said it couldn’t be done; in the end, a firm from Omsk took on the contract. The technology and know-how they developed with this project will be applied elsewhere and even exported abroad.”

ARTEM ZAGORODNOV

RUSSIA BEYOND THE HEADLINES

In 1959, after a visit to California, Soviet leader Nikita Khrushchev called on the residents of Russia’s Pacific port of Vladivostok to make it“our San Francisco.” Half a century later, Russia’s leaders are determined to realize his dream as the city prepares to host the Asia-Pacific Economic Cooperation (APEC) summit in September. Similarities between the two cities jump in the face of any firsttime visitor to Vladivostok: the buildings and streets meandering up and down the hills surrounding Golden Horn Bay; the tramways dotting the main thoroughfares; Chinatown; a booming harbor; and the ever-present morning fog.Vladivostok even has a liberal-leaning political climate — Prime MinisterVladimir Putin garnered 47.5 percent of the vote here compared to a national average of 63.75 percent in Russia’s recent presidential election. Vasily Avchenko, the local correspondent for Russian daily Novaya Gazeta, recently co-authored a futuristic sci-fi book entitled Vladivostok-3000 with Vladivostok-born rock legend Ilya Lagutenko, who once took Russia’s pop charts by storm with his hit song, “Vladivostok-2000.” “Vladivostok-3000 is a book about two Vladivostoks,” said Avchenko. “Vladivostok-2000 is the city Ilya and I know, see and love.Vladivostok-3000 is a dream about the city I’d like to live in. I recently visited San Francisco,

The Zolotoy Rog bridge across downtown Vladivostok is nearing completion.

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NEWS IN BRIEF Alaska to Kamchatka Direct Yakutia Airlines has announced plans to revive direct flights between Anchorage, Alaska, and Petropavlosk-Kamchatksky, on Russia’s Far Eastern Kamchatka Peninsula. The flights will be scheduled weekly between July 12 and Sept. 13. Although the new service will save travelers time, at a cost of approximately $1,750 it will not be any cheaper than making the trip via Moscow. Nevertheless, researchers and adventurers praised the move. The last reguarly scheduled direct flight across the Bering Strait was shut down in 2006. Read more about Russian airlines’ plans at rbth.ru/15249

Russian Airfield to Host NATO Transit Center

Regions The Pacific port city of Vladivostok pins its hopes for revitalization on an international summit

The Kremlin has agreed to allow NATO to use an airfield in Ulyanovsk, Russia, as a transit hub for supplies coming into and out of Afghanistan.When the first reports came out in the Russian press, detractors criticized the Russian government, stating that the country’s strategic interests had been betrayed. Proponents stressed the economic benefits of hosting the center and the fact that no weapons would be deployed at the hub. Read the full article at rbth.ru/15177

RusAl Elects New Chairman Following Oligarch Duel RusAl, the world’s largest aluminum company, elected Barry Cheung its chairman of the board after oligarchViktorVekselberg quit in mid-March in a shareholder dispute with RusAl C.E.O. and largest shareholder Oleg Deripaska. Cheung, who is the chairman of the Hong Kong Mercantile Exchange, joined RusAl’s board as an independent director in 2010, the same year RusAl held an I.P.O. in Hong Kong to sell 10 percent of its shares.

Corruption Conference indicates that battle against one of Russia’s biggest challenges will continue

Not Ready to Throw in the Towel MASHA CHARNAY SPECIAL TO RBTH

Less than two months before leaving his presidential post, Dmitry Medvedev sat down with a team of experts behind Russia’s Open Government initiative to discuss measures intended to help stem Russia’s rampant corruption. There was no shortage of realism at the roundtable held at the State Road Safety Center on March 22. Four years after Medvedev became the first Russian president to emphatically condemn corruption and vow to tackle it, Russia still ranks 143rd in Transparency International’s 2011 corruption index. “It is clear that this problem cannot be solved over a set period of time,”Medvedev said in his opening remarks.“No one — not I, nor the public — was under the illusion that it would take a few years.” Among the steps Medvedev took after assuming office in

2008 was founding the Anticorruption Council and instituting a law requiring government officials and their family members to disclose their holdings. More recently, Medvedev’s crusade continued with a law that oversees purchases made by government officials, requiring that any item that costs more than triple the family income be subject to scrutiny.“For the first time in Russia’s 1,000-year history,” Medvedev said,“we have a legal framework for combatting corruption.” Preliminary results show that so far the changes have yielded meager improvement. Having crept up from 154th place in Transparency International’s 2010 ranking, Russia still scores below Sierra Leone and Niger. “I am convinced that the authorities are committed to fighting corruption,”said Ivan Nineko, deputy director at Transparency International in Russia. “But at a local level more than anywhere else.” Going forward, Medvedev said, the anticorruption strategy would rest on several cornerstones. The first one — outlined by Sergei

BRICS: Moving from Economics to Politics? RBTH.RU/15255

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As Dmitry Medevedev prepares to leave the presidency, he is working to make sure at least of one of his signature initiatives moves forward.

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Outgoing President Dmitry Medvedev seems intent on continuing his crusade against corruption in Russia.

Guriev, rector of the New Economic School — involves deregulation and privatization. “Government interference in the economy through state ownership and excessive regulation is the main way in which a corrupt official increases his control over

society and business,”Guriev said. He added that corruption is the greatest challenge for business development in Russia as it imperils the investment climate and causes massive capital flight. CONTINUED ON PAGE 2

Russian Explores Titanic 100 Years after Tragedy RBTH.RU/15262

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Parties Promised changes to have consequences for all players

A recently passed law on political parties will affect various social movements and their supporters from across the political spectrum. Dmitry Kamyshev

Kommersant-Vlast

On April 4, Russian President Dmitry Medvedev signed the Law on Political Parties, which is expected to lead to a sharp increase in the number of registered political parties in the country. The law reduces the minimum number of members for a party from the current 40,000 to 500, and an impressive list of those eager to take advantage of the relaxed requirements has already formed. The Ministry of Justice reported at the end of March that it had received 68 applications to establish new parties. Beyond the quantitative changes in the party system, however, there will inevitably be qualitative ones as well, although these will be caused not so much by the liberalization of the law as by the outcomes of the two recent federal electoral campaigns. The end result is that all parties will have to change.

The party of power

Even before the Duma elections, leaders of the ruling United Russia party began talking about the need for some fundamental changes. There is an ongoing discussion in the Russian press about scenarios for reforming the party of power. The most radical one is the total elimination of United Russia and its replacement by a different party of power. Another option that has been spreading through the media is the division of United Russia into two or three major parties with different ideological leanings. This would make some sense, as the party includes politicians with widely differing political views. Therefore, the most likely way for events to unfold around the party of power may well be a combination of several scenarios. Radical rebranding is unlikely to go beyond replacement of some of the leadership and softening of the party’s previous uncompromising attitude toward the opposition. The change of signposts will most likely involve Medvedev’s election as the new leader, while the previous one, Putin, who noticeably distanced himself from United Russia during the presidential campaign, will rely on his All-Russia Popular Front, established last year, for support. Of course the front

is not yet much of a genuine unifying force, since it has just as many irreconcilable enemies as United Russia.

The opposition

It must be said that the other parties currently represented in the Duma have just as many problems as United Russia. On the one hand, the Duma elections should have instilled a certain amount

Even before the State Duma election in December, leaders of the ruling United Russia party began talking about the need for some fundamental changes within the party of power. of optimism in these groups; on the other, the presidential election campaign showed that the leaders of these parties have no particular reason to rejoice.

New players

Despite the expected pandemonium of neophytes eager for party registration, there are only three political forces of particular interest within the ranks of those who took to the streets in protest. The first is the party of businessman Mikhail Prokhorov, which so far lacks even a name. At the very least, it is distinguished from the others by the fact that its leader officially received the votes of 5.7 million Russians in the presidential election. Under current conditions, Prokhorov’s party is quite capable of making a marks in upcoming regional elections, especially in the big cities. The People’s Freedom Party (Parnas) will attempt to become a second significant player in the party field, if it gets registered. The Yeltsin-era democrats who joined this group were no doubt inspired by sociological data indicating that most Russians have democratic sympathies. To be on the safe side, however, especially in view of the inevitable appearance of small spoiler parties on the right flank, this group will need to form a broad coalition with other prominent democrats. Liberal party Yabloko, though, has so far refused to join. Finally, there is a third force that will certainly attempt to take advantage of the liberalization of

party formation, and that is the nationalists. To date, almost all of their attempts to achieve legal status have been in vain — not counting, of course, the shortlived triumph of the Rodina party, which entered the State Duma in 2003 with Kremlin support. Today’s nationalists are kept out of the Duma and away from even the most innocuous meetings between the opposition and the president, while they are regularly rounded up at unauthorized street demonstrations. Given how widespread everyday nationalism is in the country, however, supporters of the slogan “Russia for the Russians”do have certain political prospects. Nevertheless, it seems more likely that the nationalist organizations are the ones the Ministry of Justice will persist in refusing to register, despite the relaxation of the law on party formation. At minimum, the motivation for such a position can be found in the authorities’ promise to at least constructively cooperate, if not make friends, with another recently emerged foe — the disgruntled urban population.

itar-tass

Reform to Diversify Political Landscape Many political movements, shown at this March 10 demontration, will now be able to register as parties.

Russians not enthusiastic about new political parties

source: FOM (Public Opinoin Fund)

Protestors Drift Away as Putin Takes Stock Although political protests continue to take place in Moscow, many young Russians are finding other outlets for their newfound activism. Viktor Dyatlikovich Special to RBTH

Although a few activists from political parties continue to hold protest rallies, the civic activism that fueled them is taking other forms. The opposition protests on March 17 and 18 in Moscow were smaller than those before the presidential election, and it seems unlikely that a planned “march of the millions”scheduled for May 6 will attract attract anywhere near that number of marchers. “People have realized that white balloons and ribbons are no weapons against special security units,” said author Boris Akunin, an organizer of the winter rallies.“A period of social torpor lies ahead.” Meanwhile, a recent announcement on Russian social network-

ing siteVKontakte read“Dry food for an animal shelter urgently needed.” It wasn’t an appeal by an animal welfare organization, but from the 170,000-strong “Against Putin and United Russia Party” group. Lately, calls to take to the streets have been interspersed with calls to give blood or raise money for surgeries. Many protesters have resigned themselves to Prime Minister and President-elect Vladimir Putin’s victory; even an independent vote count gave him an overall majority of the votes. What happens next depends on how Putin behaves during his third presidential term. Putin indicated in a series of opinion pieces published in various Russian papers before the elections that he was ready for a more meaningful dialogue with society. Among other things, he promised to revive the system of referendums, to make it easier for citizens to initiate legislation and strengthen public scrutiny of the executive branch.

Mikhail Dmitriyev, president of the Strategic Studies Center, noted that Putin’s problem is not legitimacy, which he now has, but how long that perception of legitimacy will last against the backdrop of growing discontent outside the big cities.“At the end of the day, it was the Russian

Putin indicated before the elections that he was ready for a more meaningful dialogue with society. hinterland that elected the president,” Dmitriyev said. “But the problem with the Russian hinterland is that it has frequent mood swings. It may happen that, in a year or 18 months, support for Putin among these social strata will change dramatically. It happened in the 1990s. In 1996, Yeltsin was elected, and by the end of the ’90s, his approval rat-

ing had plummeted to less than 10 percent. These are very real risks for Putin.” Putin’s supporters in the regions are more concerned about corruption and housing and utilities problems than political reform and have made this clear in regional elections. Putin has always conducted a cautious personnel policy without surrendering members of his team, and anticorruption trials have seldom involved top officials. But if he does not want to see the anger of the electorate shift from local bureaucrats to himself, he will be obliged to change his policies. “Putin will not stop at shaking up the ruling team. The fight against corruption will move from the lower to the middle and higher levels,”said Alexei Mukhin, director of the Center for Political Information in Moscow. Otherwise, Mukhin said, Putin will find that he is unable to keep the support of his followers simply by pursuing an active social policy. According to Dmitriyev, however, the real challenge for Putin is continuing to increase public spending on an ever-shrinking budget. Read the full version at rbth.ru/15226

Medvedev Continues to Fight Corruption continued from PAGE 1

Fighting high-level corruption is the second pillar of the strategy. Sergei Aleksashenko, Director of Macroeconomic Research at the Higher School of Economics, presenting the strategy, suggested establishing an independent body that would oversee corruption among the “highest echelons of authority.”This plan was partly rejected by Medvedev, who instead suggested an agency that would operate under the aegis of the prosecutor general’s office. Said Nineko,“There is fear that if they establish something autonomous, sooner or later they’ll have to start keepings tabs on the highest-ranking officials.” As the third cornerstone of the agenda, panelists proposed enhancing transparency in state procurement and improving corporate governance in state-owned companies.“I’ve spent eight years working for either a state company or a joint-stock company with a government share,” Medvedev said. “To be honest, there is quite a lack of transparency there.” As part of the solution, Medvedev said government officials should be removed from boards of directors of state companies. This measure would see the continuation of the overhaul of state company management

that the president launched a year ago. Increasing oversight of state procurement and creating a Web site to monitor state contracts were two other approaches Medvedev liked. Experts say that legislation and tools put in place to monitor state contracts still have loopholes, which result in kickbacks worth 2 percent of Russia’s G.D.P.“To translate that into rubles, just imagine a one with 12 zeros behind it,” Guriev said at the conference.

Is it possible to eradicate corruption in Russia?

Household corruption pervades all public services in Russia; bribes for education total $5.5 billion a year. The problem may not be how the project is structured, but simply one of scale. In a country where the size of the government apparatus is as big as Russia’s, said Ben Aris, editor-in-chief of Business New Europe, implementation is likely to be difficult.“We forget to account for geography. You can’t possibly compare the scale of what Russia has to do to what countries like Georgia or Norway have done.” Other experts say the problem is with the lack of serious punitive measures. Being found guilty of corruption rarely entails any-

source: FOM (Public Opinoin Fund)

thing beyond fines; most jail terms are suspended. And Medvedev did not address this problem, stopping short of threatening a penalty greater than losing office. “There is no will to enforce tougher penalties,” Nineko said. “And with the change of the administration, let’s just hope that the existing measures stay in place.” But Anatoly Golubev, chairman

of the Anticorruption Committee, insisted that all of the measures, including punitive ones, only served to exacerbate the problem. “The stakes of accepting a bribe grow,” he said,“as do the price of the bribe and the network of accomplices.” Last July, the Ministry of the Interior announced that the anti corruption drive had pushed the average bribe paid to a govern-

ment official up to 293,000 rubles ($10,000). Golubev, whose organization works to engage civil society in the struggle against corruption, suggested that instead of implementing “useless” ideas, authorities should facilitate public oversight through independent institutions and media. Although this was one of the approaches suggested at the conference, Golubev said that, in the absence of

public officials’ accountability, it would be ill-fated. “The hiring policy is such that public officials do not answer to you or to me,” he said. “They only answer to whoever appoints them to office.” But experts at the Open Government initiative had faith in the idea of public-government partnerships. As part of another cornerstone of the strategy, they proposed fighting household corruption by raising awareness and shifting public opinion. Household corruption pervades all of the public services sectors in Russia, according to a survey conducted by the Public Opinion Foundation (FOM). The market for corruption in the education sector — selected as one of the target areas — accounts for $5.5 billion a year. Medvedev warned of the need to take extra care not to unhinge the system. “We all understand how delicate and sensitive the [education system] is,” he said. “But let’s select several regions and try a pilot project.” The algorithm for tackling the problem is skewed, Golubev said of the efforts to implement new policies without first ensuring that public officials are accountable to the people: “We tend to start dinner by turning on the stove instead of going grocery shopping first.”

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Special Report

Vladivostok Revives Its Image as Russia’s San Francisco APEC Summit, Sept. 2–9, 2012 Russia became a part of APEC, the main forum for promoting free trade in the Pacific Rim, in 1998. At the 2006 forum in Hanoi, Vietnam, the Russian participants offered to host the organization’s annual summit in 2012 in Vladivostok, the largest Russian city on the Pacific coast. Initial plans for renovating a few downtown buildings were scrapped the following year in favor of the more expensive project to develop Russky Island, which won the support of then-President Vladimir Putin.

REUTERS/VOSTOCK-PHOTO

Russky Island will be the venue for the upcoming summit, after which the campus will be transferred to the Far Eastern Federal University. “Russia is experiencing a demographic decline, and universities nationwide are facing a shortage of students,”said Vladimir Miklushevsky, who was until recently the university’s rector. “That’s why we’re studying markets like China, Indonesia and Vietnam to attract students. We have to find our niche.” Authorities hope the impressive new campus being constructed on the island and generous state grants will attract the brightest minds from around the world. A Special Economic Zone for tourism may also be set up on the island to take advantage of the lush beaches, which students at the university will have at their disposal as well. “Our country’s higher education faces two major problems: universities don’t know how to produce what business wants, and business isn’t very interested in innovative products,” said Miklushevsky. “That’s why our university will focus on creating small start-ups in conjunction with major world businesses.” Said Avchenko,“I have to hand it to the authorities: When they started building all this stuff, nobody, including myself, believed it would be completed, especially not in time for the summit. Now it’s clear they succeeded in doing what they promised.” But the success is mostly dependent on the hordes of construction workers rebuilding the city. All contact with the mostly Central Asian workers has been strictly off limits to journalists. “They’re afraid the workers will tell you about how they’re treated,”said Bakhodir Nurakov, a young Uzbek who has been working to protect the rights of the workers in the region through a Vladivostok N.G.O. that helps immigrants and their employers. Nurakov’s complaint is not with the entire project, but with certain contractors who abuse a rule allowing them to legally employ immigrants for 90 days without providing them with a long-term

a wide margin, which came as a surprise to no one; he had promised to make transparency and fighting corruption a cornerstone of his governorship. Speaking to journalists after the vote, he announced: “We have to base our long-term development on the scientific and educational resources we have at our disposal, especially the Far Eastern branch of the Academy of Sciences and the Far Eastern Federal University. “The APEC summit will have a direct impact on the long-term development of Vladivostok. The 200 billion rubles ($7 billion) of federal funding coming here will improve infrastructure, a lack of which is a barrier to investment — not only in Russia. It also put Vladivostok on the world map and make it known throughout APEC. We can’t miss this opportunity.” Said Avchenko of Miklushevsky,“He’s a good manager and is not tied to the local business and criminal elites. But I question how much of a difference one individual can make in Russia’s current political system — a lot has to be changed in the economy, laws and especially the application of laws. On the other hand, places like Singapore show it’s possible. “But I definitely have a feeling of lost potential concerningVladivostok’s development, especially over the last two decades. This concerns the economy, cultural life and basic quality of living. I hope that we’ll stop losing people and realize the enormous potential that our city has inherited. Only time will tell how justified my hopes are.”

See slideshow at rbth.ru/15143

CONTINUED FROM PAGE 1

Vladivostok’s downtown is divided from other parts of the city by Golden Horn Bay; the new bridge is designed to relieve traffic congestion.

work permit. “They promise to pay them for the first 90 days, and then simply fire them. At that point, the workers have no legal recourse because they become illegal immigrants,”he said.“Some of them want to leave altogether, but don’t have the money for a ticket. They have to keep working so they can eat.”

Bridge to nowhere?

A dark, even less visible story has to do with the region’s demographic decline. Over the last 20 years, 300,000 people have left for more hospitable regions of Russia or abroad — half of Vladivostok’s already sparse population. “Of the students I know who are studying Chinese, no fewer than two-thirds want to pursue their careers abroad upon graduation,” said Victor Larin, director of the Institute of History, Archaelogy and Ethnology of the Peoples of the Far East.“Most of the city’s infrastructure is in shambles. Roads are falling apart; there’s nowhere I can go for a

walk with my wife. The key to getting people to want to live here doesn’t lie in building bridges to nowhere.” Said Avchenko, “Everyone’s concerned about what’s going to happen after the summit passes. We practically don’t even have a local seafood industry. This is especially sad given that not long ago local seafood factories were nationally famous. We should have lively, thriving fish markets and seafood-themed cafes. I wish

Vladivostok could be known as the ‘fishiest’ city in Russia — in a positive sense! — and people would come here to sample the local cuisine.”

A new leader for a new city

In mid-March, a crowd of eager journalists crowded in the firstfloor marble hallway of the towering white-colored State House in downtown Vladivostok amid typically dreary morning weather. They were awaiting the re-

Far Eastern Federal District

sults of the legislature’s vote on the candidacy of 44-year-old Vladimir Miklushevsky for the post of governor. The previous governor, Sergei Darkin, had been abruptly dismissed by President Dmitry Medvedev just weeks earlier after a decade in power. The news came as a shock to many locals, who credited him with lobbying for many of the federal funds now pouring into Vladivostok. Miklushevsky was voted in by

Another World So Close, Yet So Far Skepticism regarding China’s intentions has hampered economic integration in the country’s Far East, yet trade is booming. VLADIMIR BARTOV

Some Assembly Required Car giant Sollers has set up a profitable automobile factory in Russia’s Far East, manufacturing S.U.V.s for South Korea’s SsangYong brand.

IN FIGURES

$60

million has been spent on infrastructure at the plant so far, although the gas connection is still half a mile away.

MIKHAIL VOLKOV SPECIAL TO RBTH

ARTEM ZAGORODNOV

27 All of the components used in Russia are imported from South Korea.

Moving the assembly line to Vladivostok allowed Sollers to lower the price of the models it builds. respondent for the daily Novaya Gazeta.“It was part of a broader carrot-and-stick strategy for localizing car production.” But after two years of work, the project is being hailed as a success by Sollers management, which is quick to deny any political connection. “Sollers is a private company with an independent board of directors; the

government doesn’t decide our development strategy,”said Sollers Far East Director Alexander Korneychuk. At the beginning of March, Sollers Far East launched production of its fifth model, the non-diesel Actyon.The total number of cars produced at the factory is expected to hit 35,000 this year, compared to 25,000 in 2011. All of the components are imported from South Korea. Each model is assembled piece-bypiece until, at the end of the assembly line, a process that workers call “the wedding” attaches the frame to the body of the car. The autos then undergo safety

is the average age of workers at the Sollers plant. Nearly a third of the factory’s workers occupy management or training positions.

testing before being shipped by railroad to Western Russia. Fewer than five percent of the autos produced at the Vladivostok plant are purchased in the Far East. Critics point out that the operation has been profitable thanks to federal subsidies that give Sollers a huge discount on shipping the cars by rail across Russia. But Korneychuk believes the company can survive without the help.“Over the last two decades, Japanese cars have developed a certain reputation throughout all of Siberia”he said.“People know and like them so much that they don’t require any advertising, a huge savings in costs.”

Signs in Chinese and Russian give directions in Heihe, China.

side than here. A lot of locals are concerned that they’ve advanced economically at our expense.” Some Russian officials have begun to think about how they can change this economic relationship. Igor Gorevoy, the recently appointed economy minister for the Amur Region, said he would like to start attracting Chinese consumer spending as well as their cheap consumer goods. “There’s no way we’ll be able to out-manufacture the Chinese,” he said.“Their products are cheaper and better. We have to look at our competitive advantage, and offer them the one thing they can’t produce. If we set up a few Eiffel Tower mock-ups, a Big Ben and some basic infrastructure for a leisurely family vacation, they’ll be eager to visit.” Read the full version at rbth.ru/15279 LORI/LEGION MEDIA

At the peak of the economic crisis in 2009, Vladivostok erupted in protests after a decision in Moscow to raise import duties on cars. Residents took to the streets to defend a major source of revenue for the entire Far East — driving Japanese second-hand vehicles to the Western part of the country for resale at a hefty profit. The new tariffs would cause the number of cars imported annually to plummet from over 200,000 to around 60,000. As thousands of riot police were flown in from Moscow to restore order, Prime Minister Vladimir Putin pitched a solution — the cars could be assembled in the Far East, thereby making the Japanese and Korean brands domestically manufactured and not subject to the same duties. By the end of that year, Russian automobile company Sollers, which manufacturs SsangYong S.U.V.s, had moved its production facility from Tatarstan toVladivostok. “It was a political decision,”said Vasily Avchenko,Vladivostok cor-

ARTEM ZAGORODNOV

SPECIAL TO RBTH

The Far Eastern Russian city of Blagoveshchensk saw a fireworks display the night after Vladimir Putin’s latest election, but the fireworks didn’t come from Russia — they were launched on the south bank of the Amur River, which separates Blagoveshchensk from the Chinese city of Heihe. Chinese authorities celebrated Putin’s victory since his time in power, as president and prime minister, witnessed a five-fold increase in regional trade. Few places in the world offer quite as sharp a contrast between European and Asian civilizations as the five-minute bus ride across the frozen Amur River. And contacts between Russians and Chinese living there are becoming more frequent because of visafree travel for local tour groups. “I’m going to rest and buy some stuff,”saidValery, a 40-something Blagoveshchensk native as he boarded a bus to Heihe, which boasts shopping malls, saunas, restaurants and teashops, all offering their wares and services in Russian to cater to visitors. Even street signs are bilingual. Not everyone is happy with the boom on the Chinese side.“They used to have a village over there with huts and dirt roads,” said Nikolai Kukharenko, a life-long resident of Blagoveshchensk. “Now there are more s k y scrapers on that

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Tourists When Americans visit Moscow, they want both a taste of home and things that seem slightly exotic

The American View of Moscow lori/legion media

Shawn McKenna brought American-style dining to Russia’s capital. He and other American expatriates share their favorite Moscow places. eva hua

special to rbth

The Nikulin Circus was founded by famous Soviet clown Yury Nikulin.

The diner in Moscow has become an iconic place for Americans.

into one of the expensive cities in the world, McKenna’s restaurant cultivated the Russian middle class with the idea that something could be trendy and cheap at the same time. Said McKenna, “Focusing on Russians brings the success in the long term.” Starlite founder Shawn McKenna came to Russia in the early 1990s.

ing, always frustrating lack of good service in restaurants in the 1990s. “One time our delegation drove to a Georgian restaurant on Tverskaya, which turned to be closed for guests due a lunch break of their employees,”he said. “That’s when I realized how much opportunity lies here.” By the mid-1990s, he had started his own restaurant business, bringing the classic diner experience to Moscow. Initially, 95 percent of his clientele was made up of expatriates. Today, Starlite Diner serves authentic burgers and milkshakes to mostly Russian customers. The diner concept also attracted young Russians on a budget. While Moscow gradually grew

won’t find in the States. Georgian food is something most Americans have never encountered, but that everybody loves. I personally recommend Tiflisky Dvor on Ostorzhenka Street.” To get away from the city’s notorious traffic, Lee recommended night driving. “The lighting and architecture of Moscow are an amazing combination. We go up to the Sparrow Hills and Moscow State University to get a view of the city. Christ the Savior Cathedral is one of my favorite places to take guests at night. We’re a middle-aged couple with kids, so no night clubbing!” Karl Swanson of Natura Foods was on the train to Moscow’s Domodedovo airport to pick up relatives visiting for the first time when he said,“I want to give the kids a sample of typical Russian culture. The Pushkin Museum is nice, but maybe a little early for them. That’s why we’re visiting the Moscow State Puppet Theater and the Moscow Nikulin Circus — they’ll be absorbed in a Russian story and surrounded by a Russian audience.” American journalist Alec Luhn

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Shawn McKenna spends a lot of time in his own restaurant when he’s in Moscow, but still has a soft spot for the famous Izmailovo Vernisage souvenir market on the outskirts of Russia’s capital, which sells everything from old Samovars to DVDs and is home to the city’s Vodka Museum. “When family and friends come, you have to descend to the class of tourists,” he said. “I love the Izmailovo market, the whole experience of bargaining like in the old days in the epicenter of the flea-market society of Moscow, surrounded by this entrepreneurial spirit.” Chris Lee, President of C.B.S.D. Thunderbird Russia, agreed:“In addition to the kebab you can find at Izmailovo, Moscow has a wealth of foreign cuisine you

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Moscow’s first American diner was shipped to Russia in parts, much like a recycled amusement park ride. Muscovites lining up in the snow outside the Tchaikovsky Concert Hall noticed one day that a diner was appearing piece by piece, like a stampedtin and chrome Lego fortress, right in the heart of Moscow. It is hard to describe the buzz the Starlite Diner caused when it opened its doors in the mid1990s. Today, it still draws a cult of devotees with its bacon grilled cheese sandwiches, chicken pot pies and other American novelty foods that predate the term“bad cholesterol.” It took four weeks to teach the menu to the first wave of Russian waitresses, who wore uniforms straight out of the TV show “Happy Days.” Suddenly, business deals were being consummated over French fries and ketchup. As expatriate families arrived in Moscow, the restaurant became their first stop after Red Square. Those were heady days for international relations between the West and Russia, and American expats were streaming in — from brigades of consultants and businessmen, to herds of journalists and academics, as well as missionaries, students, poets and dreamers. Moscow attracted adventurous people who were taken by its energy. Shawn McKenna, one of the founders of Starlite Diner and other restaurants in Moscow, was a m o n g t h e fi r s t o f t h e s e pioneers, and also among the longest lasting. “I like the vibe and trendiness of the city, the economic development of the entire population, and that it is a melting pot of different nations and regional cultures of Russia,” McKenna said. In his earliest visits to Russia, he identified a niche. McKenna experienced the sometimes amus-

The Fountain of People’s Friendship stands at the center of VDNKh.

in fascinated by Moscow’s history. “The best place to get in contact with Soviet architecture and ideology is VDNKh [the AllUnion Exhibition Center, a park with pavilions showing the agricultural achievements of the Soviet republics] and the Sovetskiye Vremena [Soviet Times] restaurant. I like going toVDNKh because it’s a place steeped in history,” he said. “Today, the Soviet Union seems strange and archaic, but at one point its ideology completely defined the lives of millions of people, even dictating the way the buildings around them looked. VDNKh creates a physical connection with that world and helps you feel it

in a more visceral way, and it’s authentic — not some theme-park recreation.” Eric Leroy, a longtime English teacher in Moscow, appreciates the city’s inhabitants. In an interview with Afisha magazine, he said, “Moscow’s charm is in its people. I love Russians. I had so many questions before coming here, and everyone told me life in Russia would not be easy. But the opposite turned out to be true: I came here and immediately felt at home. There’s some mixture of coldness and rudeness with warmth and spontaneity here that I really love, and with my Russian wife, I’m at home here.”

Skolkovo Russia’s Silicon Valley goes on the road, taking its message of investment opportunities to California

The leadership of the Skolkovo Foundation visited California to show off and attract investors at the annual Global Technology Symposium. Anna Andrianova special to rbth

During the last week of March, a team from the Skolkovo Foundation, the group behind the Skolkovo Innovation Center, sometimes referred to as Russia’s Silicon Valley, came to the actual SiliconValley for the eighth annual Global Technology Symposium. The symposium has always had a bit of a Russia focus, and this year was no different, featuring a half-day of sessions exclusively on Russia. Another highlight of this year’s event was the inaugural meeting of the U.S.-Russia Bilateral Presidential Commission Innovation Working Group, established at last year’s G8 summit by U.S. President Barack Obama and Russian President Dmitry Medvedev. In its first session, the working group identified particular problems that the countries can work on jointly, exchanged opinions on the legal framework for innovation and discussed future commercialization of new technology. “Russia has a deep R&D [Research and Development] base,” said Lorraine Hariton, special representative for commercial and business affairs at the U.S. Department of State, “but the actual understanding on how to commercialize R&D is something that needs to be developed.” She also said that Skolkovo was a great opportunity for Russia to built its own innovative ecosystem. The Skolkovo group took advantage of the presence of major U.S. tech companies to sign agreements and road maps with

American partners. During the symposium, Cisco signed a strategy document to create an R&D presence in Skolkovo, as a part of the company’s multiyear commitment to invest $1 billion within the Russian Federation. “We are very proud and excited to initiate our R&D efforts in Russia with this agreement, particularly in Skolkovo,” said Marthin De Beer, senior vice president of Cisco’s video and collaboration group,“Now we’ll start the work specifically in

During the Global Technology Symposium, the Skolkovo Foundation signed a memorandum of understanding with Bessemer Venture Partners for a $20 million investment over two years. Russia is attractive for investors because it has both innovative technology and a large domestic market. R&D in the video area. We have two very large businesses associated with video, and video also drives a lot of networking space, so it is very important and strategic for Cisco.” The state-owned Skolkovo Foundation is only adding to its list of major international partners. I.B.M., Intel, Microsoft and General Electric are already working with the foundation. The center is interesting for big multinational corporations because a partnership with Skolkovo comes with tax breaks and other

incentives to make it easier to work in Russia. For small start-ups, however, the main value comes in access to government grants, venture capital, and a mentoring program. Russian start-up Kuznech, which was present at the Global Technology Symposium, works on technology to make it easier to search within videos and images online. When the company ran out of the initial investment it received from its founders, it applied for a Skolkovo grant and received $1 million. Through Skolkovo, Kuznech also had an opportunity to receive feedback from venture capital funds to gauge its competitiveness on the global market. “We have largely improved our business model and focused more on monetization of the technology,” said Michael Pogrebnyak, Kuznech’s C.E.O. “So the feedback has helped us a lot.” Kuznech is an example of Skolkovo’s model, which connects good ideas with the money to make them possible. The foundation searches for start-ups with innovative, marketable ideas — in Russia and abroad — and presents them to a pool of more than 30 venture capital funds. The funds decide which start-ups deserve investment, and offer grants ranging from $150,000 up to $1 million. Skolkovo was launched with a grant of $5 billion as a governmental effort to transform Russia into an innovation-based economy through partnerships with leading scientists and corporations. The goal is to create an environment for innovation. Currently, Skolkovo boasts more than 350 companies. During the Global Technology Symposium, the Skolkovo Foundation expanded its available

press photo

Russia Looks for Help in Monetizing Its Investment Potential

Skolkovo Foundation President Viktor Vekselberg (left) speaks at the Global Technology Symposium.

in figures

355

companies, including many startups, are currently operating in Skolkovo. So far, 119 companies have joined the I.T. cluster; 104 have committed to the biomedical cluster; 90 to the energy cluster; another 27 to the nuclear cluster; and 15 to the space technologies cluster.

funds significantly when it signed a memorandum of understanding with Bessemer Venture Partners for a $20 million investment in Skolkovo participants over two years. Bessemer Venture Partners has been investing in Russia-related businesses since 2005, and its list of successful investments includes KupiVIP and Parallels. “At Bessemer, we always try to follow the heat and the action, and there is certainly a lot of it in Silicon Valley,” said David Cowan, a partner at Bessemer. “But we also see it emerging in a very interesting way in Russia.” Cowan said that his company invests a lot in other emerging economies, naming India as a country with rapid and sustained

timeline

A short history of Skolkovo Nov. 12, 2009 • President Dmitry Medvedev announces his intention to create “something like Silicon Valley” in Russia to facilitate “an attractive environment for the work of leading scientists, engineers and managers.”

Sept. 28, 2010 • Dmitry Medvedev signs a federal law establishing the Skolkovo Innovation Center, following the approval of the law by the State Duma. The law provides special tax, immigration and customs benefits for Skolkovo residents.

March 19, 2010 • Out of several proposed locations across Russia, Skolkovo is chosen as the site for “an ultramodern scientific and technological complex for the elaboration and commercialization of new technologies.”

Dec. 14, 2010 • Construction on Skolkovo is started outside of Moscow.

April 27, 2010 • Roger David Kornberg, a prominent American biochemist, Nobel laureate and professor of structural biology at Stanford University, becomes the co-chair of the Science and Technology Council of the Skolkovo Innovation Center.

Oct. 22, 2011 • The Skolkovo Foundation and M.I.T. sign a partnership agreement for the Skolkovo Institute of Science and Technology. Professors at the institute will hail from M.I.T., Harvard University, Stanford University and other world-famous educational institutions.

G.D.P. growth, but that Russia is attractive for investors because it has both the innovative technology and large domestic market to support the start-ups. “When it comes to innovation

in Internet and computer networking companies and energy related companies, we expect to find a lot more interesting activity in Russia than in any other non-U.S. regions,” Cowan said.

April 21, 2011 • Skolkovo Open University begins its work.

most read Government Pushes Business Reform Law Ahead of Transition rbth.ru/15251

Russia BEYOND THE HEADLINES

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Money & Markets

MOSCOW BLOG

Securities Government offers continue to attract foreign investors

Russian Bonds Model the Concept of Supply and Demand

Beginning a Top-Down Attack on Corruption Ben Aris

special to rbth

tant for us because these investors guide others interested in investing,”Finance Minister Anton Siluanov said on the day of the issue.“Russia had very good success, and that will manifest itself in the borrowings of other staterun companies, including infrastructure ones.” The yields on the domestically traded Ministry of Finance bonds, known as O.F.Z.s, are even more

ben aris

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On March 29, Russia returned to the international capital markets with a $7 billion Eurobond issue that was more than three times oversubscribed.This sale was only the second since the Kremlin suspended debt issuances following the 1998 crisis. It followed a sale of domestic Russian bonds at the beginning of February, which was more than five times oversubscribed, with up to 80 percent of the demand coming from overseas, according to bond traders. In that sale, demand was so high that the Russian Ministry of Finance more than doubled the offering to 35 billion rubles ($1.1 billion). The success of this latest sale only reinforces Russia’s claim to be the most attractive debt market in the world. With more than $500 billion of reserves in the bank, Russia can cover its external debt dollar-for-dollar with cash. However, the solidity of Russia’s financial position is not reflected in the yields. While most developed markets have slashed interest rates to a few percent at best, the Russian sovereign yield of 5.67 percent on the longest version of the latest bond, which matures in 2042, is very attractive. The relatively low yield was key, as the government’s bond will be used as a benchmark against which to measure prices for a flood of corporate bonds that are expected to follow. “[The yield was] very impor-

While most developed markets have slashed interest rates, the latest Russian bond has a 5.67 percent yield. The state is looking for ways to raise money to finance an anticipated increase in government spending. appealing, as they carry the highest yields of all major emerging markets. Demand for the O.F.Z. has soared since the start of the year, when foreign investors were given direct access to the domestic Russian bond market following reforms that went into effect in February. The yields of 8 percent in ruble terms and 15 percent in dollar terms led to these bonds being snapped up by foreign investors. “Even though true liberalization hasn’t happened yet, you can see the effects on the market. Some foreign investors are already accessing O.F.Z.s, and local traders and investors are speculating ahead of the expected full liberalization,”said Dmit-

ryYakushin, a fixed-income trader at Renaissance Capital in Moscow. The further reforms that will give foreign traders full access to Russia’s buoyant domestic debt market still have a few more hurdles to cross, but the goal is for Russia’s Micex exchange to be hooked up to Euroclear, the main European trading platform, this summer. This will make it possible for foreign traders to buy and sell Russian issues without ever leaving their desks. “Previously, foreign investors seeking Russian sovereign exposure required local broking accounts at Micex, and they needed local custody accounts. This could take months and even years to complete,” said Martin Gregson, a spokesman for Euroclear. “That has now changed — the bonds can be bought [over the counter], and a Micex account is no longer required.This will allow many offshore investors access, and we think even more will gain access once O.F.Z.s are able to be settled through international depositaries, like Euroclear.” Reforms and Russia’s solid fundamentals are only two factors driving the booming bond market. The reluctance of domestic banks to lend to Russian companies along with the state’s policy to push borrowers to borrow at home rather than abroad are both adding to the impetus. The state is looking for more ways to raise money in anticipation of the increased government spending in the near future necessary to carry out many of President-electVladimir Putin’s campaign promises. Moscow hopes to borrow a page from Washington’s strategy book and finance gov-

Russia continues to look to international financial markets to raise capital, and so far foreign investors find the offerings very attractive.

Finance Minister Anton Siluanov is trying to create a market for debt.

Yields on domestic bonds by country

Up until now, the anticorruption campaign has been a series of ad-hoc arrests and investigations.

source: Bloomberg, VTB Capital Research

ernment spending through increased borrowing in its own currency. Heavy spending by the state means that the surpluses the government enjoyed in the last decade could soon become a thing of the past.The efforts by the Ministry of Finance to create an efficient debt market are part of a

drive to finance the expected budget deficits. Russia plans a net issuance of 1.2 trillion rubles ($41 million) in 2012, larger than the programmed 1.5 percent of G.D.P. deficit, making Russia the fastest-growing local debt market among emerging economies, according to Morgan Stanley.

Interview Esther Dyson

Reducing the Costs of Being Honest Through Technology

You speak commendable Russian; you have invested in a range of Russian companies; you often visit Russia; and you even went through cosmonaut training here. How does your personal Russia story start? In some strange way, Russia is my second country, even though I have no Russian roots. I learned Russian in high school, because my father learned it in England as a student at Cambridge, where most of his math and science professors were Russian. And then he was involved in the U.S. space program, which cooperated well with the Russian space program. So in our family we liked the Russian people, even though we

Her story POSITION: chairwoman, EDventure holdings studied: economics

A former Wall Street technology analyst, Esther Dyson today invests in and nurtures start-ups, particularly in the healthcare and aerospace sectors. She recently spent six months training as a backup cosmonaut in Star City. Dyson is an active board member for a variety of start-ups, including 23andMe, Airship Ventures, Eventful, Evernote, I.B.S. Group (advisory board) and Meetup.

Digital October

Among U.S. investment angels, Esther Dyson is probably the one who has invested the most to date in Russia. Her portfolio includes no fewer than 15 Russian startups as well as Yandex, the Russian search giant, which she advises as a member of its board of directors. In this exchange with East-West Digital News, Dyson speaks openly about her business successes and failures. She also reveals why considers Russia her“second country,” and thinks that information technologies could bring a better future to Russia by“reducing the cost of being honest.”

did not like the Soviet government. Why do so many U.S. tech companies come late to Russia, or do not come at all? Because many other markets are more attractive and easier to operate in. For foreigners, the language itself is a problem. Because there are so many Russians, fewer Russians have learned English. In this way, Russia is similar to Germany or Spain, where there is a large enough local market

that fewer people learn a second language. But second, there’s a lack of business experience. Most people don’t have parents or other relatives who ran a bookstore, worked as manager or started a restaurant. Very few have been well managed, so they themselves don’t know how to manage either.They don’t know how to write an e-mail that makes it clear what kind of response they want. It’s the simple things that Westerners take for granted that are most lacking.

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Do you see differences between Western and Russian start-ups? The big difference is that in Russia there is much more regulation and corruption, and it is hard to find experienced business managers — even though it is easy to find highly intelligent and qualified engineers. Is corruption an obstacle to innovation? Obviously, there’s a lot of corruption in Russia, but fortunately, around the world, the Internet is

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ith the presidential elections over and Vladimir Putin due to return to his old job in May, the Kremlin has turned back to the task at hand: fixing Russia, Inc. At the top of the agenda is taking on corruption, and the Kremlin has just taken the first steps toward institutionalizing the fight. This was always going to be an uphill battle. Eradicating endemic corruption is by definition an incremental process — especially in a country as large as Russia. Georgian Presdient Mikheil Saakashvili famously sacked the entire police force for taking

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changing things for the better. To the extent that an economy moves online, corruption usually diminishes. First of all, there is simply more recordkeeping, and transactions are automated, so bribery is harder to implement and harder to cover up. Separately, so much of the Internet economy empowers individuals. It may be cost-effective to bribe a manager in a large company to give you a contract you don’t deserve, but you can’t bribe millions of consumers to buy your products or use your online service. Overall, the online economy is more efficient and allows the best players to win by pleasing customers rather than bribing middlemen. And finally, in some ways online services can reduce the costs of being honest. One of the most wonderful innovations in Russia is the online kiosks that let you accomplish a variety of transactions online — including the payment of traffic fines. Now, instead of paying a cop a bribe in cash to avoid getting a fine, you can simply pay the fine online. In the old days, paying a fine instead of a bribe involved going to the traffic police office or more recently the bank, which added a lot of inconvenience to the cost of honesty. Most people would prefer to be honest; now it’s easier. What is true and what is false concerning Russia’s image in U.S. investment and financial circles? Mostly, they know very little about Russia at all. They just think of it as a place where good engineers come from.

bribes and solved the problem overnight. However, Georgia only has a few thousand traffic cops. Russia, on the other hand, has about a million “GAIshniki,” as the traffic cops are known. Firing them all at once is simply not an option. Until now, the campaign (such as it is) has been a series of ad hoc arrests and investigations into state officials from nearly every branch of government.The strategy seems to have been to fire a series of warning shots to everyone in government that they can no longer steal with impunity. The results have not been dramatic. Russia moved up slightly on Transparency International’s 2011 Corruption Perceptions Index to tie for 143 place out of 182 countries, up from 154 a year earlier. However, Russia remains the world’s most corrupt major economy, on par with Uganda and Nigeria. But in the middle of March, outgoing President Dmitry Medvedev ordered the government to prepare a draft bill that will force bureaucrats to declare excessive personal purchases of real estate, securities and vehicles — anything that costs more than three years worth of combined household income.

The fight has moved from individuals to an institutional improvement in governance. Perhaps more important, Putin attacked the utilities sector in December, calling it“highly corrupt,” and ordered the state-owned power companies to break any contract where the beneficial owner of the counterparty was unknown. In March, federal electric grid company FSK said it may break 20 billion rubles ($660 million) worth of contracts because the counterparties wouldn’t disclose their ultimate beneficiaries. Half a dozen other state-owned generating companies have followed suit.The surprise was that it was Putin who ordered this change, as anticorruption is supposed to be Medvedev’s baby. But that is the point: The fight has moved from being fought by individuals against individuals to an institutional improvement in corporate governance and transparency. In this sense, Russia has only just started on what will be a long and bitter fight to make a difference.

Surprised by Russia? Russian gerontologist Vladimir Khavinson, who heads the International Association of Gerontology and Geriatrics, is certain that the normal life span of a human being is more than 100 years.

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Opinion

Russia BEYOND THE HEADLINES

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What Kind of Capitalism Has Russia Built? rbth.ru/15160

a Gain From the Brain drain ? The Motherland of vanishing talents mon term. In the 1930s, there was an attempt to brand probability theory as a pseudoscience, but it was saved by the ingenuity of the preeminent mathematician Andrei Kolmogorov, founder of complexity theory. Most intelligent people understood, therefore, the danger inherent in the humanities and focused on the small range of exact sciences, creating the illusion of “extraordinarily talented Russian scientists and engineers.”

Stepan Pachikov

’m often asked by my Western colleagues,“Is Russia the motherland of talent?”This comes as no surprise given the number of talented Russian developers working for Western I.T. companies. Even if you discount Google co-founder Sergei Brin and PayPal founder Max Levchin, who left the Soviet Union as children when their parents decided to emigrate and did not make this move on their own volition, there are thousands of Russian computer specialists who have chosen to go and live in the United States. These include Arkady Borkovsky, who heads theYandex R&D Center in California, and Eugene Veselov, a leading programmer for Microsoft. Parascript, a leading developer of handwriting recognition solutions for mail and checks, still employs mostly Russian engineers at its headquarters in Boulder, Colorado. I have never come across comparative talent statistics by country, and I don’t believe that Russia supplies more immigrant talent than other countries; however, many have felt this way. In answer to my colleagues’ questions, I normally provide the following explanation. First of all, Russia was under the sway of an ideology-driven dictatorship throughout most of the 20th century. All intelligent people realized that, in order to minimize the ideological imprint on their lives, they should avoid studying history, philosophy, law, literary studies and politics and, instead, engage in pure science — mathematics, astronomy, physics or chemistry. Yet ideology played havoc even with exact sciences, including biology, genetics and cybernetics. One of the most prominent botanists and geneticists of the 20th century, Nikolai Vavilov, was executed during Stalin’s Great Purge. Soviet genetics was ruined and most Soviet geneticists died in the gulag. The notion of bourgeois pseudoscience, which was applied at the time to cybernetics and genetics, became a com-

Talented young Russians understand that their chances of success in their own country are limited in all areas. After Scientific Communism was abolished in 1990 and the indoctrination of society collapsed, talented young Russians hurried into fields such as business, banking, law and finance. And, on the flip side, Russian science lost much of its lifeblood. The policies of post-Soviet Russian authorities have marginalized education and science in

Stepan Pachikov founded the first Moscow computer club with Garry Kasparov. He is also the founder of the ParaGraph and Evernote companies. He lives in NewYork.

LeavE home, but don’t stay away forever Oleg Alekseev

special to rbth

he brain drain is only part of the process known as migration. According to surveys by the All-Russian Center for Public Opinion Research (VTsIOM), more than 20 percent of Russians want to go abroad. This is most clearly expressed in the younger generation, but the desire to leave exists even among people of retirement age. By no means do all of them go, but the very fact that 20 percent of the population is prepared to leave the country at the earliest opportunity says that Russia does have a drain of people in general and brains in particular. There are many reasons for this, the most common being the difficulty of self-fulfillment; corruption; the difficult social environment; and the more difficult climate. Some of these problems could be solved by internal migration, but this is poorly developed in Russia. There is a major lack of infrastructure in the regions, and there is a higher-than-usual degree of centralization of the economy. In many smaller cities, it is

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n order to follow through on its promises to the people, the Russian government needs to take a serious look at the country’s economy and make the changes necessary for sustainable longterm growth. Over the last six months, the Russian government has been concentrating on winning elections — from United Russia maintaining its majority in the State Duma to Prime Minister Vladimir Putin returning to the presidency. Now, in order to justify its resounding mandate, the political establishment has to turn its attention to delivering sustainable and long-term economic growth for the Russian people. Recent levels of capital flight suggest that investors are not entirely convinced of the government’s current economic strategy, which centers around expanding and diversifying the manufacturing base. It is time to accelerate Russia’s transition to a post-industrial economy in which highvalue knowledge and service industries play a larger role. As a middle-income country with a large public sector to support, Russia has neither low labor costs nor low taxes. Although Chinese labor costs are rising, they are still a third of those in Russia, which gives the Chinese a massive advantage in the global marketplace for manufactured goods.

A researcher or athlete is a person of the world who lives and works where he is offered the best conditions. principle. A young scientist who goes abroad relies primarily on the support of the diaspora. In the 20th century, Japan successfully implemented a model of development of science through a global diaspora. After World War II, Japanese scientists left for many countries. After becoming established there and doing various research projects, they began

to invite their young compatriots to join them. In scientific circles, work is done on a project basis: an employee is invited to work on a specific project; after it is finished, the person is without a job, unless invited for follow-up research. As a result, young Japanese people, having worked for several years on projects in the United States or Europe and having gained foreign experience, returned to their country and continued their careers, once suitable conditions had been created for them there. A similar model can be implemented in Russia. There is no point in forever trying to get scientists who left to return. We can offer them participation in specific projects, on which they would work here for three to five years. A first-rate researcher or athlete is a person of the world who lives and works where he is offered the best conditions. From a financial point of view, the Russian market is quite competitive. In recent years there has been clear demand for research from major corporations, primarily in the raw materials industry, machine building and metallurgy. Representatives of the Russian diaspora in Europe and the United States say that there is interest in working in Russia. There are many reasons for this. The most common is the possibility of self-fulfillment. Early in their careers, many of them indeed found it more comfortable and easier to work abroad, but there are hidden barriers that are almost impossible to overcome. It is not yet possible even to imagine a Russian in Europe or the United States being the head of a national laboratory or university. These are strategic posts, which are not entrusted to a foreigner, however talented he may be. And many Russians are hampered by this “ceiling,” finding they cannot continue to develop. No such limitation would exist for them in Russia. There is another reason: many remain nostalgic, with memories of their homeland, and want to work in the country where they grew up. This is especially true of successful first-generation immigrants. It is impossible to stop the brain drain; migration is an organic process in the scientific world. But Russia needs to change the dynamic — not only selling minds, but also buying them. Oleg Alekseev is vice president and chief operating officer for education and research at the Skolkovo Foundation.

Russia needs a postindustrial revolution Alexei Moiseev

difficult to find a suitable apartment; there is a lack of restaurants, theaters and clubs; and — most important — salaries are often several times lower than in Moscow or St. Petersburg. As a result, it can be easier to move abroad than to a Russian regional center. But this does not mean young émigré scientists need live abroad forever. Science, like most other areas of life, works according to the clan

niyaz karim

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state financing and, more important, in the public eye. Contemporary Russia has made it prestigious to be a banker, stockbroker, restauranteur or TV presenter, but not a scientist. There are no indications that Russian science will recover any time soon. And when it finally does so, will there be any demand for it in the world? Talented young Russians interested in science are asking themselves the same question. They understand that their chances of success in their own country are limited in virtually all areas, since the Russian economy today is driven by oil and gas, not innovation. Young Russians are also impeded by the mediocrity of the political system and the Russian authorities in general — the existing vertical of power is essentially feudal: the closer you find yourself to the authorities, the more opportunities, power and money you have. As the great actress and philanthropist Chulpan Khamatova put it, “In this country, you can’t live the way you ought to.” The future of the I.T. industry in Russia is vague because the authorities today only need people capable of pumping oil and servicing those who pump oil. They plan to buy the rest, including new talent.

The government has attempted to erode the Chinese advantage by subsidizing industries and erecting high tariff barriers. While this may be politically popular, it simply delays the necessary productivity and management reforms that would help Russian industry become more competitive. It also keeps capi-

sia is too expensive to produce low-quality, cheap goods. Some have called for a wholesale reindustrialization of the country so it can compete with China. This would be theoretically possible with major macroeconomic and institutional reforms, including significant government intervention in the economy. How-

As a middle-income country with a large public sector, Russia has neither low labor costs nor low taxes.

If the policy mix is correct, there is no reason that Russian businesses cannot modernize the economy.

tal and labor tied up in unprofitable ventures, when it could be put to better use creating the profitable industries of tomorrow. If the government wishes to base the country’s future economy on manufacturing, it is going to have to oversee a massive increase in productivity in a very short time. The current policy of subsidy and trade protectionism actively works against that. In recent years, the Russian government has attempted to overcome its structural problems by using fiscal and monetary tools to stimulate domestic demand, a tactic it has in common with many developed countries. But this has only worked to boost inflation and increase reliance on imported goods. It has not addressed the fundamental problem, which is that labor in Rus-

ever, current rates of capital flight demonstrate that Russian investors are nervous about such prospects. Therefore, they cannot be relied on to underwrite a major reindustrialization. But this is not inherently discouraging. The real prize lies not in low-value, high-volume manufacturing, but in a post-industrial economy based on highervalue knowledge industries. To achieve this, the Russian government needs to ensure that all sectors have an equal chance to thrive. This means developing policies such as creating a natural resources tax, cutting subsidies and trade protection for weaker sectors, and reducing regulatory and tax barriers for new businesses. The government also needs to ensure that investors can deploy their capital without fear of fu-

ture arbitrary government confiscations. This means that private property rights need to be taken seriously and upheld by the courts. The legal system needs to be fair and transparent, and properly separated from the government. Other areas of priority refo r m s h o u l d b e e n s u r i n g competitiveness and transparency for government investment and spending, and ensuring that monetary and fiscal policy is more consistent. These moves would go a long way toward reversing the corruption that has been holding back the economy. On top of this, the labor force needs to upgrade its skills to compete in the knowledge economy of the 21st century. Labor also needs to become more mobile, so people can move from areas of unemployment to take advantage of new opportunities. If the policy mix is correct, there is no reason that Russian businesses and investors cannot modernize the economy themselves from the bottom up, with strategic help and investment from the government where appropriate. The government has made a good start by investing in modern transport and communications infrastructure and funding the Skolkovo Innovation Center. In 2012, it should build on these initiatives in order to continue the path towards modernization. Alexei Moiseev is head of macroeconomic analysis atV.T.B. Capital.

THE POLLS

Unpack Your Bags ... When asked if they would like to live abroad permanently, RUssians said...

The desire to emigrate from Russia is at a record low despite a turbulent election season marked by a rise in protests, according to state-run pollsterVTsIOM. However, the drive to

leave is the highest among the young and the supporters of political hopeful Mikhail Prokhorov, a presidential candidate who led demonstrations. RIA Novosti

Letters from readers, guest columns and cartoons labeled “Comments” or “Viewpoint,” or appearing on the “Opinion” page of this supplement, are selected to represent a broad range of views and do not necessarily represent those of the editors of Russia beyond the headlines or Rossiyskaya Gazeta. Please send letters to the editor to US@rbth.ru This special advertising feature is sponsored and was produced by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The new york times. web address http://rbth.ru E-mail us@rbth.ru Tel. +7 (495) 775 3114 fax +7 (495) 988 9213 ADDRESS 24 Pravdy STR., bldg. 4, floor 7, Moscow, Russia, 125 993. Evgeny Abov publisher Artem Zagorodnov executive Editor elena bobrova assistant Editor lara mccoy guest editor (U.S.A.) olga Guitchounts representative (U.S.A.) andrei Zaitsev head of photo Dept Milla Domogatskaya head of pre-print dept maria oshepkova layout Vsevolod Pulya Online editor an e-Paper version of this supplement is available at http://rbth.ru. To advertise in this supplement, contact Julia Golikova, Advertising & P.R. director, at golikova@rg.ru. © copyright 2012, Rossiyskaya Gazeta. All rights reserved. alexander gorbenko chairman of the board. Pavel Negoitsa General Director Vladislav Fronin Chief Editor Any copying, redistribution or retransmission of the contents of this publication, other than for personal use, without the written consent of Rossiyskaya Gazeta is prohibited. To obtain permission to reprint or copy an article or photo, please phone +7 (495) 775 3114 or e-mail us@rbth.ru with your request. Russia beyond the headlines is not responsible for unsolicited manuscripts and photos.

MOST READ Street Art With an Intelligent Face rbth.ru/15137

Culture

RUSSIA BEYOND THE HEADLINES

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

THEATER PLUS

Music A British pianist and a Russian violinist shake up the staid classical music scene

Soviet Literature’s Passport from Ann Arbor to the World

Audio slide show at rbth.ru/15154

John Freedman

THE MOSCOW TIMES

Trapped in a Nightmare of Their Own Making AYANO HODOUCHI SPECIAL TO RBTH

ally Joo followed his friend to Vienna, and they have been collaborators ever since. In late 2010, Igudesman and Joo brought their show to the Great Philharmonic Hall in St. Petersburg. It was the first time Igudesman had returned to his native city since leaving more than three decades ago; his family emigrated to Germany when he was six. At the performance, Igudesman took every opportunity to shock the audience — which included older ladies expecting an evening of chamber music but finding themselves in

“When something goes wrong, you realize that that’s what makes people curious; there’s the sense of ‘what’s going to happen next?’” Joo said. The two get inspiration from their own mistakes on stage. what many likely considered a nightmare of their own. At the end of the concert, Igudesman spoke about how thrilled he was to come back to play in his hometown, then he said, in a serious voice, “I went back to my childhood home — or at least I think that’s where it was — and it had become a sex shop.” Despite their antics, Igudesman and Joo are excellent musicians and likely could have made a career in mainstream classical music with a bit of luck. But for them, such a staid existence didn’t feel right; they loved theater and comedy — especially in the often-humorless classical music scene. When videos of their performances went viral, what they were doing resonated with many people, including several highprofile musicians such as Emanuel Ax and Gidon Kremer, who wanted to be a part of the fun, too. Fans were astonished and delighted to see a serious musician of such stature as Ax on stage being shoved off the piano stool by Joo. The pair has not limited their collaborators to musicians either; they have done videos and concerts with Sir Roger Moore and created a show called “The Music Critic” with actor John Malkovich.

ne of the most inspirational people in my life was a scholar and publisher whom I never met. His name was Carl R. Proffer. Along with his wife Ellendea C. Proffer, he founded Ardis Publishers in the early 1970s.The Proffers began printing Soviet and Russian literature at home and selling it by mail. Here you could read the latest stories, novels and poems by contemporary writers such as Joseph Brodsky, Vasily Aksyonov and Andrei Bitov, to say nothing of banned works by Osip Mandelstam, Mikhail Bulgakov, Nikolai Erdman and others from the early Soviet period. Recently I happened to be at the University of Michigan at Ann Arbor, the very place where Carl Proffer taught and published books until his death at the age of 46 in 1984. I even had the opportunity to step inside the office once occupied by Joseph Brodsky. Brodsky came to Ann Arbor because of Proffer. It was his very first stop in the United States after he was deported from the Soviet Union in 1972. Proffer happened to be in Leningrad with Brodsky at the moment when Brodsky received news he would be allowed to emigrate. Proffer wasted no time setting the poet up with a job. He convinced the University of Michigan to grant Brodsky the status of poet in residence, the

first writer in 30 years to have that honor at the university. Important as his service to Brodsky was, bringing the poet to Ann Arbor was only one of Proffer’s many significant contributions in bringing Russian literature to America. When Vasily Aksyonov was deported from the Soviet Union in 1980, he also went straight to Ann Arbor. By that time, it was the natural, the only, destination Aksyonov could have had in America. Not New York, not Los Angeles, but Ann Arbor — where Carl and Ellendea Proffer were located.

In the early 1970s, Carl and Ellendea Proffer began printing Soviet literature at home and selling it by mail. There isn’t that much of substance about the Proffers on the Internet, and that is an injustice. You can read that Ellendea was awarded a MacArthur Fellowship in 1989, a well-deserved award for her work at Ardis. There is a paragraph about Carl on the Web page of the Slavic Department at University of Michigan. But there is definitely something missing. For those of us coming to Russian literature in the 1970s and 1980s, Carl and Ellendea Proffer were Russian literature. As long as people continue to read Joseph Brodsky, Vasily Aksyonov, Andrei Bitov and many others, their contribution will continue to affect us.

READ RUSSIA

RBTH CONTINUES ITS COLUMN ON AUTHORS WHO WILL BE FEATURED AT BOOKEXPO AMERICA. THE EVENT, SCHEDULED FOR JUNE 1–8 IN NEW YORK CITY, WILL HIGHLIGHT RUSSIAN LITERATURE.

PRESS PHOTO

Several years ago, a video began making the rounds on YouTube. In the video, a pianist and violinist play classical music and manipulate it in ways even the most astute listeners never thought possible. Russian violinist Aleksey Igudesman and British pianist Hyung-Ki Joo have been performing their show, titled “A Little Nightmare Music,”for eight years. They have performed in most major European cities, and now they are bringing their tour across the pond, appearing at Carnegie Hall on April 17. Their concerts begin with the proper decorum — the two come on stage wearing full concert dress — but it doesn’t take long for the nightmare to begin. The pair mixes Gloria Gaynor’s“I Will Survive”with phrases from Bach and Chopin, Igudesman playing like a Jewish fiddler and singing the lyrics with a heavy Russian accent. Unable to agree whether to play Mozart or the theme music to the 007 series, they end up playing both at the same time. Their skits, filled with a mix of simple humor a child can understand and witty references noticeable only by professional musicians, are crafted to make their concerts accessible to a wide audience. They call their show “A Little Nightmare Music”because it embraces the nightmares of a musician at a concert.“Very often, when we go to concerts and things go wrong, that inspires us,” said Joo.“When something goes wrong, you realize that that’s what makes people wake up and be curious; there’s the sense of ‘what’s going to happen next?’”The two get inspiration from their own trouble on stage.“In the end, our show is full of mistakes,” Joo said. “Our show is just one giant mistake.” Igudesman and Joo became friends as students at the prestigious Yehudi Menuhin School in the U.K. After graduating, Igudesman went to the Vienna State Conservatoire while Joo went to New York to attend the Manhattan School of Music. But eventu-

PRESS PHOTO

Hyung-Ki Joo (left) and Aleksey Igudesman perform their version of a musician’s worst nightmare.

Aleksey Igudesman and Hyung-Ki Joo could have been traditional chamber musicians, but instead combined their musical talents with their love for comedy.

Not Just Another Story of Unrequited Love Phoebe Taplin

SPECIAL TO RBTH

THEIR STORIES

Hyung-Ki Joo

Aleksey Igudesman

HOMETOWN: NORWICH, U.K.

HOMETOWN: ST. PETERSBURG

AGE: 38

STUDIED: PIANO

STUDIED: VIOLIN

Apart from his collaboration with Igudesman, Joo is in demand as a soloist. He has performed under the baton of many famous conductors, including Sergiu Commissiona, Daniel Raiskin and Yehudi Menuhin. Billy Joel chose Joo to arrange and record his classical piano pieces for the album Fantasies & Delusions. He also performs in the piano trio Dimensions.

In addition to his career as a musical comedian, Igudesman is a recognized composer and performer. He has published three violin sonatas that have been performed worldwide by soloists, ensembles and orchestras, as well as several books of violin duets, which Igudesman has performed with other wellknown violinists in the Violins of the World project.

In addition to their musical comedy collaborations, both have individual projects; Igudesman has worked with Hans Zimmer on several Hollywood film scores and Joo has given his own concerts as a pianist. But the two always come back to the Igudesman and Joo show. “When I’m working with Hans Zimmer for

example, I always think, ‘Oh, this is great, I can bring this back to our show,’” said Igudesman. “A Little Nightmare Music” has evolved over the eight years that it has been on the road, but this fall, the pair will come out with something new, “And Now, Mozart,”which will, fittingly, be premiered in Vienna.

TITLE: “HAPPINESS IS POSSIBLE” AUTHOR: OLEG ZAIONCHKOVSKY PUBLISHER: OTHER STORIES

t has become a cliché to describe some city or other as the main character in a novel, but in Oleg Zaionchkovsky’s “Happiness is Possible,”Moscow is alive and all-encompassing. The human characters interact with an anthropomorphized city. Zaionchkovsky writes:“The city is the arbiter of our destiny and the master of our wills,”and,“We are Muscovites, children of the metro; we seek refuge in its maternal womb.” Zaionchkovsky’s novel, which was shortlisted in 2010 for two major Russian prizes, is a series of darkly comic vignettes. The narrator is a struggling novelist whose ambitious wife has left him for another man. What the story lacks in plot, it amply repays in disheveled charm and style. He shuffles through the dacha village of Vaskovo or fills an abandoned Moscow apart-

ment with dog hair and ashtrays. The smell of the sewage works, the sound of the drill or the pangs of jealousy are the pieces of grit around which Zaionchkovsky makes his pearls of stories. The author himself was born in the city of Samara and worked until recently as a rocket engineer in a small town, but as a recent transplant to Moscow, he conveys the city’s gravitational pull; submitting to it is like joining a secret club. The deafening noise provides a “solace and reassurance that only we can understand,” but it also demands sacrifices. If everyone settled down happily, the narrator argues, the city would lose its energy. Instead of starting families, the citizens “are woven, minute by minute, into a web of countless lines of communication.” This is an unusual novel among the corpus of contemporary Russian works in translation, dealing, as it does, with neither the triumphs and terrors of history nor the prophetic horror of a dystopian future. Zaionchkovsky’s book is set in contemporary Moscow with its quotidian pressures and pleasures. It combines situational humor and philosophical reflection with a distinctively Russian edge.

Feature

Russia BEYOND THE HEADLINES

most read Twelve Russian Inventions That Changed the World rbth.ru/15089

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

Programming Russia hopes to compensate for a lack of interest in outsourcing with domestic software start-ups aimed at foreign markets

I.T. Firms Lay Out Welcome Mat Success Stories

Andrei Andreyev

David Yang

Worth: $200 million AGE: 43 Field: I.T., software development Lives in: moscow

Worth: $800 million AGE: 37 Field: Social networks Lives in: London

A native of Yerevan, Armenia, Yang founded Bit Software in 1989, while he was still a student. He later renamed it Abbyy His company’s most popular products are optical recognition system Abbyy FineReader and Abbyy Lingvo dictionaries.

Alexander Galitsky

Max Levchin

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Photoshot/Vostock-photo

Andreyev founded his first Internet project, the Web analytics service SpyLog, in 1999. Three years later, he launched Begun, an online contextual advertising firm. In 2003, Finam Holding bought an 80 percent stake in Begun.

Yevgeny Kaspersky’s Kaspersky Labs is Russia’s most successful I.T. company; 80 percent of its sales come from abroad.

Russians programmers can’t compete with India on price for outsourcing, so they are developing start-ups that appeal to foreign investors. Tino Kyuntsel

russia beyond the headlines

Some technical inventions that make life simpler start out by making the life of their inventor easier. Nikolai Abkairov’s experience is a case in point. The computer programmer from the Moscow exurb of Zelenograd was annoyed by the traffic he encountered en route to work in the Russian capital. While others opted to take the train, Abkairov decided to start working from home, collaborating with Ramu Sunkara and Bhaskar Roy, two Americans of Indian descent, who were planning to leave U.S. software giant Oracle. In early 2007, after nine months of development, the three finished the prototype for a company that became known as Qik, which aimed at increasing the functionality of mobile telephones. Qik’s program enables mobile phone owners to upload videos and make them accessible

talent than business savvy, but more and more Russia-based I.T. companies are finding commercial success. Moscow-based software manufacturer Abbyy has become known for its text recognition program FineReader and

to friends. The program, now also available as an app for mobile video chats, is currently used by more than 10 million users around the world. The start-up had a meteoric rise, and in January 2011 the company was purchased by Skype for $121 million. Today, Qik employs 50 programmers in Zelenograd. Graduates of the National Research University of Electronic Technology, which is also located there, are in the envious position of having an excellent prospective employer just around the corner. Qik demonstrates that Russian companies can compete in the global market without having to relocate to the West. Still, Qik’s success is dependent on an American company in Silicon Valley, where two dozen employees take care of marketing and sales.Without the business acumen of its partners overseas, the project would have been doomed from the start, Abkairov told Zelenograd.ru. “I would have never taken such a huge risk alone,”he said. “I’m not that courageous.” Until now, Russia has been known more for programming

Russia has been known more for programming talent than business savvy, but this may change soon. its electronic dictionary Lingvo. Now Abbyy is focusing on business solutions, as well as document and data capturing. The most successful international Russian I.T. company is without question Kaspersky Labs, which produces antivirus software. Its earnings totaled $612 million dollars last year alone, and 80 percent of this revenue came from abroad. Partially as a result of this success, an increasing number of start-ups are being tailored for international markets right from the beginning. Alexander Galitsky, co-founder

and manager of the Russian venture fund Almaz Capital, believes that Russia’s greatest advantage lies in its “excellent programming institutions,”which provide their students with a firstclass education, training software developers to be able to tackle complex problems. “Solving difficult problems, analytics, large quantities of data and algorithms are all areas where Russia can compete on a global scale,” Galitsky said. “Those are traits one can expect when working with Russians.” Galitsky proves his point by comparing two popular smartphone games. According to him, the more popular “Angry Birds,” from the Finnish Rovio Entertainment Studios, is not nearly as challenging as the similarly popular “Cut The Rope” from the Moscow-based ZeptoLab. “‘Cut The Rope’ has a completely different intellectual level,” but, he said, this intellectual ambition sometimes distracts Russian programmers. In the words of Kaspersky Labs founderYevgeny Kaspersky, Russia produces“a great deal of qual-

Worth: $100 million AGE: 56 Field: venture capital investments Lives in: moscow

Worth: $100 million AGE: 36 Field: internet services Lives in: San francisco

In 1993, Galitsky sold 10 percent of his I.T. company ELVIS+ to American computer giant Sun Microsystems. After the sale, he became a venture capitalist, founding several funds that invest money in programming start-ups.

In 1998, Levchin and his partners founded the company that became PayPal. In 2002, eBay bought the company, and Levchin started Slide. Google later bought it for $182 million, and Levchin became Google’s vice president of engineering.

ified specialists, but precious few successful businesses.” Ten years ago, many felt that Russia could be the first choice for I.T. outsourcing from the West, said Georgy Pachikov, head of Moscow-based Parallel Graphics. But, said Pachikov,“Our programmers see a piece of software and think to themselves,‘I can do better than that.’ In outsourcing, you have to stick to the regulations, which require a certain amount of discipline.” Parallel Graphics conducts most of its business abroad with Boeing and Airbus. According to

Pachikov, the interest in domestic business is minimal.“The possible savings potential generated by our software is not worth the extremely large state operating costs,”Pachikov said.“That is the difference between an extensive and intensive economy.” A better situation for Russian firms is collaboration with Western companies on developing new ideas and programs, according to Alexander Vovkula, Parallel Graphic’s technical director. “If the customer is not sure what they want,”Vovkula said, “then welcome to Russia.”

Science Experts question the benefit of handing out massive grants to foreign talent

in France; he later moved to the U.K. “I’m working on the question of interactions between light and matter in crystals. We are trying to find out how to make light carry 10,000 times more information than it can at present when it goes through a fiber-optic cable,”said Kavokin, describing his work. One of the most groundbreaking institutions in this field was Kavokin’s alma mater, which influenced the scientist to submit an application for Megagrant. In contrast to Kavokin, who is coming home to Russia, groundbreaking American astrophysicist and Megagrantee George Smoot, 67, has never been to the country, although he has worked alongside many émigré Russian scientists. Smoot is positive about the high standard of science and educational traditions in Russia, but said that Russian science is being held back.“Throughout the whole world there is a large number of outstanding Russian scientists,” he said.“But despite the high level of individual research projects in Russia, the equipment used by astrophysicists and cosmologists is out of date.”

Alexandra Guzeva

Russia Beyond the Headlines

Megagrant, the brainchild of the Russian Ministry of Education intended to revitalize Russian science, is well into its second set of awards.The program — organized in conjunction with Russian universities, laboratories and research centers — gives participating scientists grants of up to 150 million rubles ($5 million) to personally lead a research laboratory in Russia for a period of not less than four months per year over two years. The competition has attracted 517 applications from all over the globe, and many of the winners are Russian émigrés who have an interest in rejuvenating scientific research in their native land. Megagrant winner Alexei Kavokin, 41, a professor at Britain’s University of Southampton, earned his Ph.D. at the A.F. Ioffe Physico-Technical Institute in Leningrad, but after graduating, he received an offer to work

Interview Gelya Morozova

Putting Science Front and Center

press photo

State-sponsored grants of up to $5 million may not convince expert Russian émigrés to come home, but they could encourage young Russian scientists to stay.

Askar Ramazanov and Daniel Perushev founded the Web site Theory and Practice (T&P) as a way to share knowledge, to conduct lectures, seminars and master classes. Today the site is one of Russia’s most popular forms of “edutainment.” Sofia Raevskaya of Russia Beyond the Headlines talked to Gelya Morozova, who is in charge of organizing events for T&P, about the project’s popular Young Scientists seminar series.

How did you come up with the idea for the Young Scientists feature? Two-and-a-half years ago, we began to notice that the science section of our project is often empty, so we decided to close that gap. We conducted an offline lecture series on scientific research called “The Brain and Behavior.” After the series was over, we noticed that science as a topic was popular, and we just kept going. What is the audience for these lectures? Different kinds of people. Often the viewers are colleagues in related fields, or students and curious people, 25–35 years old. What was the goal of the project? The main goal was to stir up interest in science. It turned out that people in Russia are extremely interested in science; the topic is both untapped and in demand. How did the scientists benefit? It’s a good experience in public speaking. They then get calls from TV and radio stations.

photoxpress

For Megagrant, Scientists Must Go Big and Go Home

Megagrant hopes to encourage groundbreaking science in Russia.

This is not the case in the field of bioluminescence. According to Nobel laureate Osamu Shimomura, who was born in Japan but emigrated to the U.S., Russian sci-

“Working on scientific research in Russia does not mean you have to live there,” said psychologist Yulia Kovas. entists are among the best in the world in his field of interest.“People are making huge progress developing practical applications for bioluminescence in many countries of the world, but all the other countries have stopped doing fundamental research into the phenomenon itself,” Shimomura said. “All, except Russia.” According to psychologist and Megagrantee Yulia Kovas, “the main point of this grant is to integrate Russian science into the global scientific community.”The

Russian-born scientist plans to develop a research project on twins at Tomsk State University in Siberia that will dovetail with research she has done in the U.K. — but she has no plans to give up her job at the University of London.“I am planning to work with the laboratory in Tomsk for a long time, not just over the next two years,”Kovas said.“Working on scientific research in Russia does not mean you have to live there.” Alexei Kavokin understands her position. “I would be able to return [to Russia] to work, if I was given a position with conditions that matched those offered in other countries,”Kavokin said. “But it is hardly likely, as scientists just aren’t paid well in Russia.”He thinks the process of attracting Russian scientists back to Russia is happening too slowly, but Megagrant is a big step towards reinstating Russia as a global player in science and reversing the brain drain.

photoxpress

Improving Russia’s Business Climate May 9