Russia And Greater China

Tuesday, September 25, 2012

SPECIAL REPORT

RUSSIA

AND GREATER CHINA A product by

Monthly supplement from Rossiyskaya Gazeta (Moscow, Russia) which takes sole responsibility for the contents

Tycoons in battle of Britain Court cases in London expose a culture of patronage and bitter rivalry among billionaires

© DMITRY KOROBEYNIKOV_RIA NOVOSTI

PAGES 8-9

Against all odds

The leap forward

Outstanding disabled athletes show determination despite adversity Olesya Vladykina shows off the gold, silver and bronze medals she won at the London Paralympics 2012.

KOMMERSANT

PAGE 3

Nation’s defence chiefs aim to ramp-up military spending PAGE 11

2 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA ADVENTURE OF THE MONTH

BUILDING OF THE MONTH

Putin reaches new heights

Hypercube looks to a green future Alexander Vostrov Boris Bernaskoni, the architect behind Hypercube, the first building of the Skolkovo innovation hub, may or may not have been inspired by Andrzej Sekuła’s thriller of the same name, but the two share some characteristics in the deliberately ascetic look and sheer concentration of innovation.

Hypercube is the flagship project of the Skolkovo Innocity. It follows the 4E concept — economical operation, ecol-

WILDLIFE

REUTERS/VOSTOCK-PHOTO

the arctic Yamal Peninsula as part of the “Flight of Hope” project to boost the Siberian crane population.

The flights were supposed to show the birds, which were raised in captiv-

Russian President Vladimir Putin took his love of wildlife to new heights this month by flying with cranes - to lead them on a migration route.

Putin made three brief flights over

President Vladimir Putin, in a motorised deltaplane, prepares to guide young cranes on a winter migration route.

ity, the route to special winter grounds in southern Uzbekistan. Poaching in Afghanistan and Pakistan has made the trip to their traditional winter grounds in India too hazardous.

DISCOVERY OF THE MONTH

NUMBERS GAME

Mammoth step forward

US$11

ogy, ergonomics and energy efficiency.

The main feature of the building is its virtual autonomy. The only external connection is the power line. There are solar cell batteries on one wall that can light up a couple of floors. Ground energy provides heating. Water is pumped from an artesian well and waste water is treated and then used to irrigate landscaped areas. Huge windows allow for the use of natural light, while heat convectors create an air curtain that keeps the temperature stable. Light conductors let sun into interior rooms and waste is recycled and turned

Scientists are hoping to clone an ancient mammoth.

Was the debt owed to Russia by North Korea before the end of this month.

However, the two countries settled the issue. The settlement involves conversion of the debt into dollars and a discount of about 90 per cent. The remaining debt of over US$1 billion would be used in a “debt-for-aid exchange” plan to assist with joint education, health and energy projects in North Korea. The two countries had been negotiating for the last four years without result.

PRESS PHOTO

BILLION

© BOLOT BOCHKAREV_RIA NOVOSTI

Paleontologists say they have found “living” mammoth cells in remains discovered in the Far East that could be used to clone the ancient mammal.

A hundred metres under the permafrost in the Ust-Yansky district of Russia’s Sakha region, an international expedition found soft tissue, fatty tissue, fur and bone marrow of mammoths.

Head of the Korean Sooam Biotech fund Huang Vu-souk said the “living” cells could be used for cloning. An unidentified member of the expedition team said findings from the expedition would be published in authoritative scientific journals.

Hypercube follows the 4E concept – economical operation, ecology, ergonomics and energy efficiency

into gas. The front of the building is also functional. A stainless mesh front turns the building into a giant screen.

“Hypercube is the first Innocity building. It stands all alone and it is the natural environment that called for all the solutions to ensure its autonomous operation,” says Anton Yakovenko, general director of the Skolkovo administration. “We aimed to keep it ascetic, both inside and outside. It is split into clear sections; we decided against fancy finishing. The interiors of Hypercube will soon be made accessible, as we have developed a computer game, where the character walks through all the floors of the building.”

There are seven floors that include cafes, offices and a vast conference hall.

“Hypercube will be of major importance to its tenants and their promotion, as it will essentially be one giant showroom,” says Maxim Kiselev, Technopark’s development director. “Hypercube ... should become a model for building up the Skolkovo ecosystem. It is Hypercube that will welcome top-level delegations and individual visitors ... an important factor for the residents, as they will be able to meet potential investors.”

The building will be officially unveiled late this month and some tenants shared their impressions of the new workplace.

Andrei Potapov, head of OOO Sputniks, says the technology potential of Hypercube is very high and the area open to transformation offers lots of freedom for rearranging space.

“At the same time, the first Innocity building has lots of hidden reserves and surprises,” Potapov says.

The Hypercube is the brainchild of architect Boris Bernaskoni.

RUSSIA BEYOND THE HEADLINES’ SUPPLEMENTS AND SECTIONS IN ASIA: GET THE BEST STORIES FROM RUSSIA EACH MONTH IN YOUR FAVOURITE NEWSPAPER In China Business News (China) “RUSSIAN EXPERTS ON SINO-JAPANESE TENSIONS” http://ezhong.ru

In Mainichi Shimbun (Japan) “JAPAN THROUGH RUSSIAN EYES”

In The Economic Times (India) “INDIA, RUSSIA AND THE SYRIAN CRISIS”

http://roshianow.jp

http://indrus.in

SPECIAL SUPPLEMENTS AND SECTIONS ABOUT RUSSIA ARE ALSO PUBLISHED BY RUSSIA BEYOND THE HEADLINES, A DIVISION OF ROSSIYSKAYA GAZETA (RUSSIA), IN: THE WASHINGTON POST AND THE NEW YORK TIMES (UNITED STATES), THE DAILY TELEGRAPH (UNITED KINGDOM), LE FIGARO (FRANCE), SÜDDEUTSCHE ZEITUNG (GERMANY), EL PAÍS (SPAIN), LA REPUBBLICA (ITALY), LE SOIR (BELGIUM), DUMA (BULGARIA), GEOPOLITICA (SERBIA), EUROPEAN VOICE (EU), LA NATION (ARGENTINA), FOLHA DO SAO PAOLO (BRAZIL), EL OBSERVADOR (URUGUAY).

Tuesday, September 25, 2012 3

RUSSIA AND GREATER CHINA

Triumph in adversity

How Russia fared at the Paralympics

Determined people are often able to overcome their fears and whatever setbacks they face, writes Viktor Petrov Olesya Vladykina

A

s a child, O l e s ya V l a dykina was afraid of water, so her parents sent her to swimming school. She showed extraordinary ability. At 20, while travelling in Thailand, her bus crashed at 120km/h.

“I pulled myself free and saw that my left hand was missing,” Vladykina says. She thought that was the end of her swimming career.

Then she had a call from her

REUTERS/VOSTOCK-PHOTO

first coach, Sergei Zhilkin.

When Vladykina checked out of hospital, the 2008 Beijing Olympics were about five months away. In that time, she learned to swim all over again.

She says: “The hardest part was to get used to the new centre of balance. My coach did not give up on me. If I did something wrong, he would jump into the pool himself and do what I did.”

Vladykina took the Paralympic Committee by storm and was included in the team at the eleventh hour. During the Beijing Olympics, she set a Paralympic record.

“We are absolutely healthy

BRIEF FACTS

SPORT people and it is public consciousness that is handicapped,” she says. On September 1, Vladykina set a world record in the 100m breaststroke on her way to a gold medal in London.

When her mother took her child to the pool in Moscow, she only dreamed of the Olympics. Fourteen years later, her only hope was that she would survive. Six months after that, she watched her climb on to the podium and, four years later, saw her win three medals.

ONLY AT RBTH.ASIA

AP

Jessica Long Jessica Long’s story could not have been told without the many people who went out of their way to help.

It all began in Irkutsk in Siberia. Her mother Natalya was 16 when she gave birth to a girl with fibular hemimelia, a condition that left her without most of her lower legs and feet.

Natalya put her in a good care home.

A teacher at the home, Aunt Olya, couldn’t do much, but was happy when Steven Long arrived from Baltimore in the United States and started cuddling the 18-month-old girl. She thought: “This American will help cure her.”

Steven had two children and wanted a third, but his wife could not get pregnant. They decided to adopt. They brought the little girl home and named

GETTY IMAGES/FOTOBANK

Natalya Gudkova her Jessica. She underwent surgery and learned to walk on artificial legs.

Steven then took her swimming. He wanted her to feel free.

The coach at the swimming pool told Steven: “You have a talented girl. She has no legs, but she is faster than trained adult men with legs.”

Steven started reading about Paralympic sports and found a coach.

Jessica first took part in the Paralympic Games in Athens in 2004 at 12. She won three golds. She claimed four golds in Beijing and then went one better in London.

Jessica wants to go to Russia and find her mother. She also wants to win some more titles and work as a model before marrying and having children.

Natalya Gudkova smashed a world record in the javelin for one-armed athletes at the London Paralympics, only for Poland’s Katarzyna Piekart to beat her effort by 7cm. Gudkova, who was born without her right arm, is still happy. She now has a new goal.

“You know, life is so wonderful,” she says. “When I won my first Olympic silver, I used the prize money to buy a sheepskin coat ... and some winter boots. But I was happy all the same.”

That was back in 1996, in Atlanta.

Prizes for Paralympic Games winners have been elevated to match those enjoyed by Olympic champions.

“As a child, I went to a normal school, even though I didn’t have one of my hands,” Gudkova says. “The other kids

made fun of me. Now people treat me differently. People have changed.”

She did not realise that she did not have a hand until she was five. “I ran around and played with my friends, and they did not notice. I had no intention of wearing prosthetics.

“My grandma used to lament: ‘How are you going to peel potatoes, how are you going to bring up your son’?” Her son is six years old.

Asked about competing again, she says: “I wasn’t planning on it. I had a dream of retiring after winning gold and setting a world record in London. I set the record all right. But that girl threw the javelin 7cm farther than I did. I was not angry. Actually, I was happy for her.

I suppose I’ll have to go to Rio now.”

Central Asia and a new ‘great game’ RBTH.ASIA/17005

BRICS – stuck between the past and future RBTH.ASIA/17007

4 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

REUTERS/VOSTOCK-PHOTO

President Hu Jintao (right) greets Russian President Vladimir Putin during the Apec summit. It was a significant event for Russia, which is keen on establishing trade links with Asia.

Moscow’s eastern vision Vladivostok summit proves to be an unexpected triumph for country, writes Dmitry Butrin

N

o one knows for sure whether Russian authorities were expecting the success they achieved at this month’s Apec summit.

Six months ago, the Asia-Pacific Economic Co-operation forum was viewed as a “soft alternative” to the World Trade Organisation (WTO) and European Union (EU). Stronger economic contacts with Japan and the possibility of China backing Russia’s financial and political initiatives were not even on the agenda. As it turns out, however, no one is going to prevent Russia from “turning towards the East”.

Those responsible for drawing up the agenda for the 20th Apec Business Summit, from September 7 to 9, had no idea that the meetings in Vladivostok would be truly significant.

Australia spurred the creation of Apec in 1989 as an informal club of Pacific Rim countries interested in establishing a regional free trade zone. Russia, which joined in 1998, had planned the Vladivostok summit as a foreign policy event. In many respects, the idea contradicts the essence of this bloc that re-

APEC

Putin accused the EU of demanding that Russia continue ‘subsidising’ Eastern Europe by supplying cheaper gas

fers to itself in official documents as an alliance of “economies” rather than “countries” or “states”.

Several developments have changed the nature of the Apec summit.

The first is the global financial crisis that has shown no signs of ending this year.

The second is Russia joining the WTO this year, as Apec is seen as a “PacificRim club” within the WTO. A third reason is that the debt crisis in Europe has piqued the interest of China and other Southeast Asian economies in multicurrency world trade as an alternative to the euro and the dollar.

Finally, the dramatic changes that occurred in the natural gas market from 2010 to 2012, and the growing uncertainty of Russia’s position in that market, also made the summit in Vladivostok more exciting as the event drew closer, making it a meeting of Apec heads of state addressing economic issues.

The Apec summit communiqué published on September 9 makes it clear that Apec has worked primarily as an economic association.

The key achievement of the summit is the agreement of Apec economies to refrain from increasing protective import duties and cut tariffs on 54 environmental commodities from 25 to 30 per cent to 5 per cent within three years.

These include power engineering equipment and green technologies.

Another result that will benefit Russia is that the Trans-Pacific Partnership (TPP) project initiated by the United States in 2009 was all but forgotten. The initiative envisions a free trade agreement for nine developed Apec economies, but neither Russia nor China were invited. At the previous Apec summit in Honolulu, President Hu Jintao voiced his support in principle for the TPP, but nothing more was said in Vladivostok.

The Apec 2012 summit did not reveal any obvious contradictions between Russia and China, although the bilateral meeting between President Vladimir Putin and Hu had no tangible results.

Despite tense political relations between Russia and Japan caused by the disputed Kuril Islands spat, Japan’s achievements at the summit proved im-

pressive. Japan showed its readiness to become involved in a project to export liquefied natural gas from the Vladivostok LNG company. An agreement was reached between ICT Group and Mitsui and several smaller contracts were signed. Russian-Japanese negotiations during the summit were not heavily promoted, but following the talks, Putin said he discussed some of the key problems in the relationship between the two countries with Japanese Prime Minister Yoshihiko Noda, and announced that Noda would visit Russia; this alone could be considered a success from the talks in Vladivostok.

Gazprom CEO Alexey Miller commented on the positive atmosphere at the talks, declaring somewhat over-enthusiastically that Gazprom’s supplies of natural gas to the Asia-Pacific region “will exceed those to Europe in the next few years”. At the concluding press conference, Putin accused the EU of demanding that Russia continue “subsidising” Eastern Europe by supplying cheaper gas. This criticism illustrated Russia’s willingness to focus on relationships with Asia to drive future growth.

Tuesday, September 25, 2012 5

RUSSIA AND GREATER CHINA

‘We needed an investment gateway in the Far East’ and Seoul by plane, and it is slightly further from Beijing, Hong Kong and Hanoi. This provides an entirely different potential for our economy.

Alexander Gabuev Vlast magazine First Deputy Prime Minister Igor Shuvalov, who supervised preparations for the Apec Summit in Vladivostok, reveals what Russia hopes to gain through the US$21 billion event.

We do not expect any problems with oil and gas. Even if some projects are not commissioned on schedule, they will be launched eventually. For example, a gas pipeline has been built from Sakhalin to Vladivostok. It is not yet fully operational so, when it is, the surplus will certainly be exported to Asia via pipelines or in the shape of liquefied natural gas. We are already supplying oil to China.

ITAR-TASS

ITAR-TASS

The key achievement of the summit is the agreement of Apec economies to refrain from increasing protective duties and cut tariffs

But Russia has not even been able to become a normal supplier of resources to Asia. Russia’s share in regional trade is 1 per cent. And plans, such as Gazprom’s, to supply gas to the Chinese market so far exist only on paper.

Mark Zavadskiy

What mechanism for supporting investments in the Far East is preferable? Some suggest a special state corporation and others a fund under the auspices of the Bank for Development and Foreign Economic Affairs (VEB).

We also have a ministry for the development of the Far East.

What role can Russia play in Asia? Can we be anything other than a provider of raw materials?

In actual fact, we are anything but a provider of raw materials. We are already building nuclear plants in some countries in the region and selling hi-tech weaponry. In addition to this, we are taking part in student exchanges and scientific development projects with many states. Our other strength is electrical equipment, which also involves advanced technology. I think we will be able to export cars from plants under construction in the Primorye Territory.

Nevertheless, as long as humankind needs mineral resources, which are so plentiful in our land, we will supply them.

Food and water the talk of CEO Forum

Igor Shuvalov, First Deputy Prime Minister of Russia.

In 2007 Russia signed up to host the Apec summit in Vladivostok. Did it do so in order to develop the infrastructure of the Russian Far East?

Exactly. In order to strengthen Russia’s geopolitical role within Apec, we had to transform the region through federal investments. The event provided budget financing the region would otherwise have never received. On the one hand, we wanted to change people’s lives in the Primorye Territory by creating a new infrastructure for business, education, and everything that we are doing today. On the other hand, we wanted to show the world that we are working seriously in the region. To us, the Apec summit project is not just about ‘spending money’. We needed an investment gateway in the Far East.

Conducting business with Asia through Moscow alone has huge limitations, both in terms of time and energy. But Vladivostok is an hour or so from Tokyo

I think that a subsidiary of VEB would be best for financing development projects. The most important industrial facilities should be put under the Bank for Development and Foreign Economic Affairs. There are at most five projects. These should be large enterprises that cannot get by simply on commercial loans and which require cheap, long-term resources. We also need energy facilities, for example, hydroelectric stations. This is all long-term money. And one must know whether RusHydro will build it independently, or if it needs support through a development institution. Another area is constructing railways to oil and gas fields.

Is the state ready to allow foreign capital, foreign labour and technologies to come to our Far East?

It is a must. We need to attract Asian and American investors. From the economic point of view, co-operating with the United States is much more natural in the East where we are neighbours.

In that sense the Apec format opens up great opportunities. We can increase exports and attract foreign investment.

But interpenetration should be mutual. Russian investors must have favourable conditions in Asia, similar to those we are ready to provide here.

Country fails to exploit resources Alexander Gabuev Vlast magazine

Krutikhin from RusEnergy, Russia didn’t have a firm case against the Chinese.

As part of the agreement, if there was a breach of contract, Rosneft and Transneft would have to return the US$25 billion loan. In the end, Russia was forced to agree to sell oil to China, with a discount of US$1.5 per barrel.

A lack of transport infrastructure in the Russian Far East is also a problem for coal, metals and grain exporters.

Attracting Asian capital to infrastructure projects may solve the problem.

But “attracting direct investments from Asia is in its early stages”, Man says. Not long ago, Moscow tried to solve this problem with the Russian Direct Investment Fund (RFPI). Last year, RFPI and China Capital Investment Corporation agreed to create a fund of up to US$4 billion for investments in projects in Russia, but for the past few months there have not been any investments.

© SERGEY KRASNOUKHOV_RIA NOVOSTI

A “lack of vision” is costing Russia dearly in the energy and minerals sector. The country controls 70 per cent of its mineral resources, especially east of the Urals, and Asian markets are nearby.

Yet Russia’s share in trade turnover to Asia-Pacific Economic Co-operation (Apec) economies is about 1 per cent.

“There are several reasons why Russia does not use its enormous potential in the region to the full extent,” says the managing partner of Hong Kong Eurasia Capital Partners, Sergey Man. “The key players lack an integrated vision of the whole region, especially state-owned companies. Secondly, it is the lack of transport infrastructure. The third factor is the lack of infrastructure to attract foreign direct investment from the east and Southeast Asia.”

Russia and China may appear to be ideal partners in the energy sector. Beijing is trying to reduce its dependence on oil from the Middle East and Africa (90 per cent of imports), and Russia is eager to diversify its hydrocarbon exports from European markets, which account for over 80 per cent. Beijing also wants to get oil and gas through land pipelines that are out of reach of the United States navy.

After 15 years of negotiations on an oil pipeline, an agreement was reached only in 2009. Russia’s Rosneft and Transneft took out a loan of US$25 billion from Beijing and began to build a pipeline.

However, in 2010, with construction under way, the Chinese began to underpay for Russian oil, blaming unreasonably high Russian transport tariffs.

Moscow threatened Beijing with court action. However, according to Michael

Russia is boosting its exports of oil and gas to Asia after years of focusing almost entirely on Europe.

Food and water were at the heart of discussions by businessmen and officials on the first day of the CEO Forum at the Apec Summit in Vladivostok.

“A few years ago, people thought that water, earth, and air were unlimited commodities. That’s not the case. On earth, only 2.5 per cent of the total amount of water is drinkable,” said Chilean President Sebastian Pinera.

This is an area in which Russia, with its vast water resources, stands to benefit, and the idea of a “water stock exchange” may become a reality.

The same can be said for food, and Russia again could hold the key. The question of how Russia is going to combat global food shortages was put to President Vladimir Putin. “In Soviet times, a much larger territory was farmed than now, but the country back then was a net importer of grain,” he said. “It was even the case that our ports could only receive grain, not ship it.”

Russia now exports grain, has stopped almost all imports of poultry, and is actively engaged in pig breeding.

Scott Price, president of Walmart Asia, pointed out that more than one-third of all food is lost between shipment by producers and delivery to the end consumer. Russian transport companies do not know the exact figures, but admit that perishable goods suffer enormously due to drawn-out customs clearance procedures and cargo handling at the country’s ports.

Putin stressed the importance of the development of rail transport for Russia’s transformation into a fully-fledged transit state. “More is transported by rail today in Russia than at any moment in the Soviet Union,” he said, acknowledging that capacity was still woefully short.

Ziyavudin Magomedov, chairman of the Apec Business Advisory Council and head of the board of directors of the Summa Group, said: “Every percentage point of trade between Europe and Asia that passes through Russia” will earn the country about US$1 billion.

According to Russian business, Europe holds the best prospects for transport infrastructure projects in the region. It will require investments in land transport in western China and transit routes via the Trans-Siberian Railway and the North Sea. Co-ordinated action from Russia, China and other Apec member economies is essential.

Andrei Kostin, head of VTB Bank and chairman of the Apec Business Summit, said turmoil in the global economy had undermined the world’s traditional reserve currencies.

“As one of the most active participants in world trade, China has a right to promote the yuan as a global reserve currency,” he said. “In my opinion, the rouble will evolve into a regional reserve currency in the Commonwealth of Independent States and, in time, across the Asia-Pacific.”

6 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

Boost for exporters Joining WTO will benefit metals and chemicals sectors, writes Julia Sinaeva

R

BUSINESS CALENDAR

FIND MORE IN THE GLOBAL CALENDAR

at www.rbth.asia

TRADE The expected stabilisation of policy will make [the nation] more appealing to foreign investors

REUTERS/VOSTOCK-PHOTO

ussia has finally closed the book on its campaign to join the World Trade Organisation (WTO), becoming a full member after 18 years of talks.

The accession treaty was ratified despite late protests from some state Duma deputies and businessmen.

Now that it is a full member of the organisation, Russia is entitled to play its part in formulating the rules for global commerce. Bidding farewell to its inconspicuous status as observer, the country will now enjoy lower customs duties, from which Russian exporters of metals and chemicals will be the first to benefit.

“In recent years, Russian exports have not only failed to diversify, but actually deteriorated. We haven’t approved a single strategy for promoting exports,” says Natalia Volchkova, a professor at the Russian School of Economics. “The WTO accession is the first significant measure to promote Russian exports.”

The country’s accession to the WTO will also force Russian market players to adapt their conduct to the global marketplace.

“The expected stabilisation of trade policy will make Russia more appealing to foreign investors,” Volchkova says.

Troika Dialog analysts believe the consumer services sector will also benefit from Russia’s accession. Import duties for the sector are projected to drop to an average of 10.3 per cent from the current 13.3 per cent. Furthermore, import restraints will be reduced, including those on foodstuffs, but it will be a while before other sectors such as finance and telecoms see benefits.

According to a World Bank study, accession to the WTO could result in higher wages for low-paid and professional workers, as new foreign companies begin to open offices in Russia and recruit staff.

On the downside, the national budget will have to bear the brunt of losses in import duties. Andrei Belousov, the Minister for Economic Development,

Russia’s Economic Development Minister Elvira Nabiullina and WTO Director General Pascal Lamy signed Russia’s accession to the WTO.

Accession-related cuts in import duties

SURVEY Country’s longterm appeal for investment grows The long-term attractiveness of Russia as an investment destination remains positive, according to Ernst & Young’s (E&Y) second Russia Attractiveness Survey, published this month.

Natural resources, a growing domestic consumer market, a strong labour force and joining the World Trade Organisation all combine to make Russian an investment destination of choice over the next decade.

Although concerns remain around bureaucracy and infrastructure, most investors believe Russia has made considerable progress towards closing the gap on other rapid-growth markets. The country’s attractiveness has grown 8 per cent from last year, the largest increase of any region.

E&Y’s European Investment Monitor suggests the number of projects has increased more than 50 per cent in the past decade – 83 foreign direct investment (FDI) projects were recorded in 2002 and 128 this year. Russia also remains among the top 10 investment destinations in Europe, coming in seventh place, and is the premier destination in central and eastern Europe.

Investors present in Russia demonstrate their confidence in the market.

Nearly 80 per cent plan to increase or maintain operations. However, there is a wide gap in plans between the companies that already have operations in Russia and those not yet established.

About 70 per cent of companies not established have no plans to invest in the next year. This is, however, 16 percentage points lower than last year, signalling improved perceptions.

“Russia has proved to be resilient, experiencing growth in 2011 and 2012,” says Alexander Ivlev, E&Y’s managing partner in Russia. “A boost in consumption, a strong labour market and an increase in investments have been prime drivers of this growth. Russia is facing the challenges of increasing global competition.”

has said that the federal budget would lose an estimated 188 billion roubles (US$5.9 billion) next year from accession-related cuts to import duties. In 2014, the losses might increase to 257 billion roubles.

Nevertheless, Belousov said actual losses would be lower as trade volumes and the tax base grow.

The reduced tariff protection is seen as the “entrance fee” and, in any case, import duties will be reduced gradually, enabling manufacturing companies and farmers to adapt. The average tariff is 9.5 per cent at present, but it will be cut to 7.4 per cent next year, 6.9 per cent in 2014, and around 6 per cent in 2015 – by which time it will have been cut by 3.5 per cent.

The financial pessimism is partially offset by World Bank forecasts, which suggest accession could help Russia increase its gross domestic product by an additional 3.3 per cent (US$65.2 billion) within three years and 11 per cent (US$216.3 billion) within 11 years.

Russian specialists are less optimistic. Russian School of Economics experts project that membership in the WTO will only provide additional GDP growth of 0.5 per cent annually.

Still, Russia has managed to ensure some positive terms for access by foreign banks, and the issue of gas has also been resolved favourably, with the

retention of a 30 per cent duty. Russia has also successfully negotiated transition periods, with long acclimatisation times for the automotive industry, agriculture, and the insurance sector. Transition periods are from two to three years, but they may be stretched to five or seven in especially sensitive sectors.

THE SECOND ASIAN-PACIFIC FORUM

INTERNATIONAL ECONOMIC FORUM

AIRSHOW CHINA 2012

ASIAN FINANCIAL FORUM

OCTOBER 12-13, 2012, MOSCOW, RUSSIA

NOVEMBER 3-9, 2012, SEOUL, SOUTH KOREA

NOVEMBER 13-18, 2012, ZHUHAI, GUANGDONG, CHINA

JANUARY 14-15, 2013, HONG KONG

Russian International Affairs Council and Russian Apec Study Center, in co-operation with the Ministry of Foreign Affairs and Ministry for Economic Development of Russia, will hold the 2nd AsianPacific forum.

The forum is to set clear priorities for Russia after its Apec presidency in 2012 and formulate key issues for developing Russia’s relations with the Asia-Pacific region.

The International Economic Forum convenes representatives from business, the public, and political and scientific communities to analyse Russia and South Korea’s experience in innovative development. Participants will also provide recommendations after discussions focused on economic and technical upgrades, energy and resource efficiency, intellectual property, and Russia and South Korea’s investment appeal.

China International Aviation & Aerospace Exhibition (namely Airshow China) is the only international aerospace trade show in China that is endorsed by the central government.

It features the display of real-size products, trade talks, technological exchange and flying displays.

Since 1996, the show has been successfully held in Zhuhai every other year.

The Asian Financial Forum (AFF) brings together the most influential members of the global financial and business communities to discuss developments and trends in Asian markets. It has become an event the world looks to for exploring business opportunities in China and the rest of Asia. During the AFF Deal Flow event, one-on-one meetings are arranged between sources of funds and sources of deals.

WWW.RUSSIANCOUNCIL.RU/EN/U

WWW.CONF.RBC.RU/EN

WWW.AIRSHOW.COM.CN/EN

WWW.ASIANFINANCIALFORUM.COM

Full report at www.rbth.asia

Tuesday, September 25, 2012

7

RUSSIA AND GREATER CHINA

Oil giants tap Asian demand

R

osneft, Russia’s largest oil company, is planning to build a petrochemical complex in the Far East that will primarily export to China.

The project was originally drawn up before the global financial crisis, but was suspended in 2009. Rosneft has now announced plans to resume it and production is scheduled to start in early 2017, with investment estimated at US$5.4 billion and a production capacity of 3.4 million tonnes per year.

Once the plant is in operation, Rosneft expects to occupy 15 per cent of the Chinese polymer market with polypropylenes, high- and low-density polyethylenes, and monoethylene glycol manufactured at the new facility. Yet only 80 per cent of the plant’s output will be exported, with the remainder expected to cover the demand of the Russian Far East.

PROJECTS Rosneft president Igor Sechin and Primorye Territory Governor Vladimir Miklushevsky have signed an agreement under which the oil company is required to ensure uninterrupted supply of petrochemical products to the region, including polymers. The construction of a petrochemical complex forms part of

the commitments in the agreement. The idea of a petrochemical plant in the Primorye Territory dates back to 2007, when the decision to build the facility was first made. But the project did not get rolling until last year.

It is still unclear whether any Chinese partners will be involved in the construction of the plant in Nakhodka.

“As it stands, Rosneft can do without any partners in this project,” says Aleksandr Nazarov, an analyst at Gazprombank. “The required investment in the petrochemical complex is below the company’s current capital expenditure.”

This is the second major Rosneft project aimed at the Chinese market.

In 2010, the company launched the construction of an oil refinery in China with China National Petroleum Corporation (CNPC) as a partner.

At the Asia-Pacific Economic Co-operation summit in Vladivostok, China

© ALEXEY BABUSHKIN_RIA NOVOSTI

Rosneft to build Far East petrochemical plant for polymer exports to regional neighbours, writes Aleksandr Kilyakov

Rosneft’s plant in Nakhodka is the firm’s second project aimed at China. promised unprecedented privileges for its Russian partner in the project. It even pledged to give Rosneft the green light to export the output – something no foreign company has ever been allowed to do. Rosneft and CNPC agreed to create a joint venture to build a refinery in China in 2006. Although the project has been delayed, dialogue resumed after Russian state-owned companies Ros-

neft and Transneft secured a US$25 billion credit facility from China in return for guaranteed oil deliveries of 15 million tonnes per year for 20 years.

In 2010, the two corporations signed the agreement to build an oil refinery in Tianjin through their Vostok Petrochemicals joint venture – 49 per cent of which is owned by Rosneft, and 51 per cent by CNPC.

Norilsk closes in on Indonesian copper deal Aleksandr Kilyakov

PRESS PHOTO

Norilsk Nickel, the world’s largest producer of nickel and palladium, could soon be producing copper in Indonesia for export to China.

Norilsk Nickel’s general director, Vladimir Strzhalkovsky, and Indonesian President Susilo Bambang Yudhoyono reached a preliminary agreement during the Asia-Pacific Economic Co-operation forum summit in Vladivostok.

The resulting letter of intent confirmed Norilsk Nickel’s business interests in Indonesia, while Indonesia’s Ministry of Industry underlined its willingness to favour the investment.

Norilsk had been considering the idea of entering Indonesia for some time, but preferred to keep its plans close to its chest. The idea began to take shape last year when the company decided to start producing copper in Indonesia, which is one of the leading copper producers in the world.

The project will see the creation of a partnership with Indonesia’s Nusantara Smelting Corporation, which obtained a government licence last year for the construction in East Kalimantan province of a smelting plant capable of handling 400,000 tonnes of refined copper annually.

each with an output of 200,000 tonnes,” says Roman Panov, Norilsk’s director of the foreign business assets department.

“But we need to be certain about the raw material stock.”

At the meeting, Yudhoyono said his country was ready to guarantee unin-

Russia and Indonesia have agreed to produce copper.

Norilsk approached Nusantara soon afterwards to gauge the likelihood of forming a strategic partnership. Nusantara showed a similar level of interest.

The copper from the plant will be exported to China, South Korea and other Asia-Pacific countries.

The project’s viability depended on whether Norilsk would have access to raw materials, however. The issue was

settled in Vladivostok, where taxation was also discussed.

Norilsk had pointed out that uncertainty over provisions of raw materials was the only stumbling block, preventing the company from making a commitment on going ahead with the Indonesian project.

“We are considering the possibility of building a copper plant and studying the option of launching two lines,

The copper from the plant will be exported to China, South Korea and other Asia-Pacific countries terrupted supplies if the Russian company decided to invest in Indonesia’s mining industry. Agreement is yet to be reached on tax benefits. The company asked for VAT cuts on imported equipment, accelerated depreciation and tax “holidays” throughout the payback period. Yudhoyono said such measures were not unlikely for major investment activities, but did not make any firm commitments. Indonesia’s in-

terest stems from one of its strategic goals to diversify the economic use of its natural resources.

“It will be yet another step in implementing the Mining Law, which stipulates more comprehensive efforts with regard to raw materials,” says industry minister Mohamad Suleman Hidayat.

The signed letter of intent paves the way for Norilsk and Nusantra to further their discussions.

Investcafe analyst Andrei Shenk believes the Russian company has a strategic business interest in Indonesia.

“Global market development is quite beneficial for Norilsk Nickel in the long run, given that the company has faced a number of problems with purchasing new deposits recently,” Shenk says.

“Most likely, its investors will welcome the news.” Norislk has other interests in Indonesia. It is looking into the possibility of exploring the country’s coal deposits, and participating in the East Kalimantan project with Russian Railways. These projects are interrelated.

As Norilsk had previously stated, a railway would allow it to link the deposit with key industrial centres in Indonesia. The East Kalimantan project is expected to start next year and cost US$2.5 billion.

8 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

Legal battle in London takes lid off oligarch rift High Court case reveals a culture of patronage and bitter rivalry between the nation’s tycoons, writes Anastasia Gorshkova

A

commercial dispute between two famous tycoons in a British court has opened a rare window into the dealings of Russia’s mega-wealthy busi-

nessmen.

Former Russian oligarch Boris Berezovsky said that he was “amazed” and “shocked” by London’s High Court decision on August 31 to dismiss a suit he filed against tycoon Roman Abramovich for US$5.6 billion.

In a case that the British press called the commercial “trial of the century”, Berezovsky sought compensation from his erstwhile business partner, saying he had been forced to sell his stakes in oil producer and refiner Sibneft and Rusal, the world’s largest aluminium producer, owned by Oleg Deripaska.

Lawyers believe that the outcome of the case was influenced by Berezovsky’s enigmatic reputation.

“Berezovsky has in the past speculated on the geopolitical situation, insisting that [Russia’s President Vladimir] Putin’s regime hounded him out of Russia, and forced him to sell up,” said Grigory Chernyshev, a partner at the law firm White & Case.

Putin’s spokesman, Dmitry Peskov, was reportedly delighted at the ruling.

“It is always a pleasure when slander is called by its true name,” Reuters quoted him as saying.

Abramovich, 45, is well-known in Hong Kong, not only through his ownership of Premier League soccer club Chelsea, but for wealth estimated at US$12 billion, according to Forbes. Rusal was also the first Russian company to issue shares in Hong Kong, in 2010.

Abramovich was ultimately seen as the more credible witness by the court, which in turn found Berezovsky’s tes-

Boris Berezovsky Boris Berezovsky, 65, is a former Kremlin power broker and self-exiled tycoon.

He is the former owner of ORT Television Holdings and one of the men credited with helping President Vladimir Putin rise to power in the late 1990s, before falling out with him a few years later.

He is now a staunch Putin critic.

He lives in Britain, which has granted him political asylum. He has been accused of money laundering and embezzlement.

There are at least 11 criminal cases against him in Russia and six arrest warrants in Russia and Brazil. Berezovsky is married to his third wife and has five children.

timony to be “contradictory and not credible”. Berezovsky argued that he had been Abramovich’s business partner and that he and the late Badri Patarkatsishvili had owned approximately 43 per cent of Sibneft and 25 per cent of Rusal.

Berezovsky claimed Abramovich pressured and “intimidated” him into selling, and took advantage of Berezovsky’s worsening relationship with newly-elected Putin.

Justice Elizabeth Gloster took 40 minutes to summarise the court’s ruling.

She noted that the four agreements on which Berezovsky’s case hinged had been made many years earlier, which undermined the quality of the evidence.

TRIAL

[Berezovsky] regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes JUSTICE ELIZABETH GLOSTER, LONDON HIGH COURT

Gloster said “the case was one where, in the ultimate analysis, the court had to decide whether to believe Berezovsky or Abramovich”.

Gloster described Berezovsky as “an unimpressive and inherently unreliable witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes”. By comparison, she described Abramovich’s testimony as cautious, precise, and thoughtful, despite the obvious difficulties of having to follow the thread

of complex cross-examination. She said Abramovich was a “truthful and, on the whole, reliable witness”. The court concluded that there had been no oral agreement between the plaintiff and the defendant on the division of shares and income from their joint business ventures.

The trial introduced the public to the idea of krysha, which literally translates into “roof”, but is used to describe a type of protection or patronage.

The court agreed with Abramovich that all payments to Berezovsky had been made in exchange for his support and krysha, and that the US$1.3 billion that Abramovich ultimately paid was not the sale price of Berezovsky’s shares.

The judge also believed that the alleged intimidation suffered by the plaintiff at the hands of Abramovich was ultimately unproven. “Amazed” and “shocked” by the court’s ruling, Berezovsky is now discussing his next move with his lawyers, who could appeal.

Abramovich’s company, Millhouse Capital, issued a statement on his behalf, saying the case should have been heard in Russia, but adding that “Abramovich has always had great faith in the fairness of the British judicial system”.

Another case involving two Russian oligarchs is due to start in the London High Court at the end of this month.

Mikhail Chernoy is seeking recognition of his right to a 13.2 per cent stake in Rusal.

A spokesman for Deripaska said that the company welcomed the High Court’s decision to recognise the concept of krysha, and its intrusion into business affairs. “It is an important decision, because it highlights the untenable foundation of Mr Chernoy’s claims,”

Roman Abramovich Roman Abramovich, 46, is the billionaire owner of investment company Millhouse LLC. Orphaned as a child, he dropped out of college and became a toy importer. He succeeded in this line of work, enabling him to establish an oil business in Omsk.

He made a name for himself and joined the board of Sibneft, eventually taking charge and completing a merger that made it the fourthbiggest oil company in the world.

Gazprom bought Sibneft in 2005.

From 2000 to 2008, Abramovich was the governor of the distant far eastern region of Chukotka.

He owns a country estate in Sussex and Premiership side Chelsea Football Club.

Abramovich has always had great faith in the fairness of the British judicial system MILLHOUSE CAPITAL’S POST-TRIAL STATEMENT

said Deripaska’s spokesman. A Chernoy representative reported that his client was preparing for the start of proceedings with the firm belief that the Berezovsky-Abramovich ruling would not affect the outcome of his case, Kommersant Daily reported.

Tuesday, September 25, 2012 9

RUSSIA AND GREATER CHINA Billionaire to pay the price

GETTY IMAGES/FOTOBANK (3)

Financial experts believe that Boris Berezovsky could soon go bankrupt.

The dismissal of his case against Roman Abramovich in a London court means the businessman may have to pay several lawyers as much as HK$1 billion in legal fees for both sides, the Vzglyad newspaper reports.

The exact amount in legal fees remains unclear.

Berezovsky has already started selling off his assets.

In 2009, he sold his Darius yacht for US$345 million and in May he sold his estate in Surrey, which he had acquired in 2001 for US$31 million.

But the biggest blow to his wealth may have more to do with his failed love-life than failed court cases. His divorce from his wife Galina last year may have cost the one-time oligarch between US$150 million and US$350 million.

His fortune has rapidly dwindled.

In 2008, he was 29th on the Forbes list of the 100 richest Russians, with wealth estimated at US$1 billion.

In 2009, he failed to make the rich list for the first time since 2004.

Sky News has estimated that Berezovsky’s fortune is several hundred million dollars.

PHOTOSHOT/VOSTOCK-PHOTO

More talk of organised crime and protection money

Oleg Deripaska, 44, is CEO of the Basic Element Company.

A new legal battle is under way at the London High Court over the fate of the Rusal aluminium company, with the result expected next year.

Businessman Michael Cherney, who claims to be a former “business partner” and friend of Oleg Deripaska, wants 13.2 per cent of UC Rusal, the world’s largest aluminium producer, which is worth more then US$8 billion based on its current share price in Hong Kong.

Cherney filed a lawsuit in 2006, but it took several years for the court to accept this case and move towards formal hearings.

He resides in Israel, but is wanted in Spain for questioning in relation to a money-laundering investigation, so he can’t leave Israel and will be taking part

in the trial through video conference.

Deripaska denies any business co-operation with Cherney, though he admits to paying Cherney money for the “protection” of his business. He says that Cherney, along with associates Anton Malevsky and Sergei Popov, forced him to pay protection money or krysha - after threats were made in the mid-1990s and all the signed papers were a sham. Deripaska’s lawyers have described Cherney as a “criminal who regularly met with organised crime bosses and extorted millions of pounds in protection money”. Rusal’s CEO Deripaska is the 14th wealthiest man in Russia, according to the Forbes magazine 2012 ranking, with US$8.2 billion in assets.

Alexey Kovalev Snob magazine These days, London’s courts are constantly hearing cases brought by Russians – and frequently on the flimsiest of pretexts.

It’s not that English courts are somehow scrupulously fairer – although they appear to be freer from government meddling than courts in Russia. The rationale of filing civil cases instead stems from the English legal system, especially when it comes to libel, where the burden of proof rests with the defence.

Under English Common Law, there are a number of defences in a libel case, such as public interest; absolute privilege, such as testimony heard during a court case; the truth; and statements made in good faith, among others.

In the United States, by contrast, freedom of speech is protected by the First Amendment of the Constitution.

Defamation law in the US is not heavily in favour of the plaintiff as it is in Britain. In addition, the definition of libel differs in different states, and under federal law.

The result is that London has become the world’s capital of “libel tourism”. The number of libel cases heard in English courts has risen over the years. In fact, one of the most active of these legal “tourists” is Russian businessman and former government official Boris Berezovsky.

Since 2003, the list of those he’s sued on allegations of links to illegal activities includes Forbes magazine, The Guardian newspaper, the RTR-Planeta television channel and the chairman of Alfa-Bank, Mikhail Fridman.

In another case in 2007, the Icelandic bank Kaupthing contested a scathing article that had appeared in a Danish newspaper, so the bank’s lawyers filed a libel case in a London court.

Several years ago, a Ukrainian started proceedings in Britain against another Ukrainian on the basis of material written purely in Ukrainian, which had been published on a Ukrainian website.

In another case, the High Court in London heard a dispute that had arisen between The New York Times and a Greek businessman resident in Athens.

“Libel tourism” is regarded as a major threat to freedom of speech in Britain. Publications with material on contentious issues are obliged to steer clear of the

British marketplace, as the damages in a libel case could outstrip the profits of a publication.

Participation in legal compensation cases is not limited to authors and journalists, but also includes bloggers, making the situation appear to be absurd.

Bloggers can be taken to court, not only

London has become the world capital of ‘libel tourism’, and the number of cases heard in English courts has increased over the years

ALAMY/LEGION MEDIA

Michael Cherney, 60, is an Uzbekborn, Israeli-based billionaire.

‘Libel tourists’ take advantage of English laws

Russians appear to be keen on filing defamation cases in English courts.

for their own writings, but for the comments that readers leave on their site.

Civil rights campaigners, such as Freedom House, have long lobbied for the reform of Britain’s defamation laws. In August 2010, United States President Barack Obama approved legislation under which American courts may refuse to enforce British court rulings that countermand the First Amendment.

Lawyers who are experienced in defamation cases are among the most handsomely rewarded in the business community. Their fees for such work can amount to US$1,620 per hour.

Sergei Polonsky is represented by the law firm Carter-Ruck, which the Press Complaints Commission (PCC) has termed “the sworn enemy” of British journalism. Carter-Ruck has gained a reputation for pioneering the use of the draconian measure called the “superinjunction”. This legal instrument is not just a gag law to prevent journalists reporting court cases – it further prevents them from even mentioning they w e r e gagged.

A study by the University of Oxford has calculated that the costs incurred in legal cases defending wounded pride and honour in Britain are about 140 times higher than in other European countries. The high costs allow lawyers to pursue “noble ends”, permitting even those on a modest income to protect their rights in court through “no win – no fee” policies.

The plaintiff is only liable to pay lawyers’ fees if the process results in a court victory. This principle results in some law firms adding a mark-up to their fees that run as high as 100 per cent. If the defendant, such as a newspaper or magazine, or other media, loses the case, the publisher must pay all of the costs incurred in its hearings.

However, there can be cases in which the court sides with the defendants.

For example, a Ukrainian businessman named Dmytro Firtash took out a case in Britain against the Kyiv Post – an English-language newspaper based in the Ukrainian capital, Kiev.

According to the newspaper, Firtash’s case against it consisted of allegations that its journalists made it appear as if Firtash was “engaging in a massive criminal corruption”.

By way of response to the lawsuit, the Kyiv Post blocked all access to its website to internet traffic originating from Britain.

After its deliberations, the court refused to give Firtash the satisfaction that he had sought from the Kyiv Post.

The court also ruled that the case had “the most tenuous of connections” with Britain, according to the newspaper’s own report. Observers in the London courtroom reported that the judge had termed Firtash’s case against the Kyiv Post “almost an abuse of process”.

10 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

Hatred runs much deeper Dmitry Kosyerv RIA Novosti

OPINION Obama tried to establish a new relationship with the Muslim world. He needn’t have bothered.

Miller, who has spent nearly 20 years as an adviser to US presidents, secretaries of state and national security advisers, lists the reasons why no US president will change the approach to the region: the survival of Israel; the intertwining commercial and other interests between the US and Saudi Arabia and other Gulf oil monarchies. There is a sense of doom.

The situation raises questions about the Obama administration’s foreign policy, which can be seen as a “turn” from the Middle East to the Far East, that is, to containing China.

China is again at loggerheads with Japan over the Diaoyu Islands, a group of eight uninhabited islands on the southern tip of the Japanese archipelago, that are claimed by mainland

SERGEY YOLKIN

T

he mass protests by Muslims outside United States missions against the film Innocence of Muslims are not over, but the wave is subsiding. The dry residue is a clearer picture of relations between the Western civilisation, and indeed other civilisations, and the Islamic world.

For the West it is worse than before the Arab unrest. Whether other civilisations have gained anything is a big question.

But what do these protests, which have spread from Libya to Jakarta and European capitals, actually mean? This is what the media have been asking.

The film that triggered the protests has nothing to do with it. It could have been any other pretext.

It is not the ultra-right Western extremists who make films and burn the Koran that enrage the Islamic world, but what is called imperialism. The protests are thought to be inspired by the Wahhabite movement, including al-Qaeda, which was sidelined in the early weeks of the Arab riots, but is regaining the initiative.

It looks as if the hate film has little to do with all this. Hatred is much deeper, putting Islamic extremists in the foreground in many countries.

The situation was best summed up by retired US diplomat David Miller when he said that America could do nothing in the Middle East, but it could not leave either. He recalled that, at the beginning of his term, President Barack

China, Taiwan and Japan, which calls them the Senkaku Islands.

Can Obama do anything on the Arab and Japanese flanks of his foreign policy? Something, but not much.

The US has also received bad news from Afghanistan, where four servicemen were killed, not by the Taliban, but by soldiers of the Kabul regime. The reason, apparently, is that a Nato air raid on Afghan territory killed nine women who were gathering firewood in the mountains.

That brings the number of Americans killed by President Hamid Karzai’s soldiers to 51.

Afghanistan is where the “old”, mainly Middle Eastern, and “new”, Far Eastern, policies intersect. While most US troops will leave in 2014, some will stay. The idea is to make life less comfortable for China on its western borders. However, the Islamic world has reminded the US that it does not favour such strategies.

The manifestations across the Muslim world

have shown that the US and the West are the losers. Who has gained? China? That remains to be seen, but it has not lost much. Russia? Those who still think that US losses are Russia’s gains can rejoice. However, Russia can, at best, claim a moral victory. It had warned that the Arab riots would bring extremists to the forefront and the warning has come true. The Americans pretend they are happy to see “democracy” come to the region, and now they are being mocked by those storming their embassies. In this case, Russia certainly hasn’t lost.

But it is enough to recall the 1980s, when Afghanistan was the only haven for Islamic extremism (Soviet soldiers tried to oppose it), and look at what has become of the Middle East today, to lose any desire to rejoice in America’s woes.

Dmitry Kosyrev is a RIA Novosti political observer

‘Teflon President’ Putin starts to lose touch Alexei Levinson Vedomosti The buzz these days is about president Vladimir Putin’s falling approval ratings.

Yes, his approval ratings last month were down four percentage points, but only down by one point compared with June. A 63 per cent approval rating has registered more than once over the past 12 years. The index has been dubbed “the Putin rating”. It tells us nothing about Putin, of course, but rather about the state of society.

Society, which began to show signs of diversity back in the 1990s, needed a unifying symbol, and Putin has been performing this important function since 2000. This is why his ratings have been essentially different from those of most of the world’s political leaders. And accounts for

their extraordinary stability. The ratings of national leaders usually reflect the successes and failures of their respective policies. In Putin’s case, there has been no such connection, which is why the word “Teflon” has been used to describe him.

If we cut through the mystical statements made by the various individuals that this leader has been sent to us from above, then the essence of what is being said is that, in the eyes of Russians, the president does not have an earthly function. It is not about politics and economics, as is the case with all other statesmen: Russia needs such a leader for its glory. The country’s problems have nothing to do with it, as this is not his sphere of responsibility.

This has been proven by the answers to two questions that we have been asking since 2001.

One is: “Who takes the main credit for Rus-

LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELLED “COMMENTS” OR “VIEWPOINTS”, OR APPEARING IN 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 EDITORHK@RBTH.RU

sia’s successes?” Out of the five possible responses, respondents picked the answer “Putin” far more often than any other option.

The second question is: “Who bears the main responsibility for the country’s problems?” And gave the same options. Answers varied: some said the government, others Medvedev (when he was president).

But nobody ever chose Putin.

If the approval ratings are anything to go by, then the attitude to Putin has not changed. This is the conclusion that follows from the answer to the first of the two questions.

“Russia’s successes in the international arena, in economics and improving living standards”, are credited to Putin by almost 60 per cent of the country’s citizens. This result has been registered more than once.

But, last month, for the first time ever, a ma-

THIS SPECIAL REPORT IS SPONSORED AND PRODUCED BY ROSSIYSKAYA GAZETA (RUSSIA). WEB ADDRESS HTTP://RBTH.RU E-MAIL EDITORHK@RBTH.RU TEL. +7 (495) 775 3114 FAX +7 (495) 988 9213 ADDRESS 24 PRAVDY STR., BLDG. 4, FLOOR 7, MOSCOW, RUSSIA, 125 993.

EUGENE ABOV EDITOR & PUBLISHER KONSTANTIN FETS EXECUTIVE EDITOR MARK ZAVADSKIY EDITOR, RBTH PROJECT ASIA BUREAU CHIEF DEEN NAWAZ PRODUCTION EDITOR (HONG KONG) ALFRED ROMANN GUEST EDITOR (HONG KONG) ANDREI ZAITSEV HEAD OF PHOTO DEPT MILLA DOMOGATSKAYA HEAD OF PRE-PRINT DEPT IRINA PAVLOVA LAYOUT VSEVOLOD PULYA ONLINE EDITOR AN E-PAPER VERSION OF THIS SUPPLEMENT IS AVAILABLE AT HTTP://RBTH.ASIA.

jority of 51 per cent dared to say that Putin was “responsible for the problems in the country and the rising cost of living”, experts note. The number had never risen higher than 31 per cent. It was 29 per cent a year ago, with 40 per cent of respondents holding the government responsible, but not its head, and 41 per cent of respondents saying that the president at the time was accountable. Last month, three times fewer respondents placed the blame on the prime minister than on the head of state.

This probably shows that times have changed and now at least half of Russia’s citizens perceive Putin as an ordinary president who takes the credit for successes, but is also responsible for the country’s continuing problems.

Alexei Levinson is the head of socio-cultural studies at polster Levada Centre

TO ADVERTISE IN THIS SUPPLEMENT, CONTACT "ASIA TO GO LIMITED", WHICH REPRESENTS RBTH IN HK, AT SALESHK@RBTH.RU. © COPYRIGHT 2012, FSFI ‘ROSSIYSKAYA GAZETA’. ALL RIGHTS RESERVED. ALEXANDER GORBENKO CHAIRMAN OF THE BOARD. PAVEL NIGOITSA GENERAL DIRECTOR VLADISLAV FRONIN CHIEF EDITOR ANY COPYING, REDISTRIBUTION OR RETRANSMISSION OF THE CONTENTS OF THIS PUBLICATION, OTHER THAN FOR PERSONAL USE, WITHOUT THE WRITTEN CONSENT OF ROSSIYSKAYA GAZETA, IS PROHIBITED. TO OBTAIN PERMISSION TO REPRINT OR COPY AN ARTICLE OR PHOTO, PLEASE PHONE +7 (495) 775 3114 OR E-MAIL EDITORHK@RBTH.RU WITH YOUR REQUEST. RUSSIA BEYOND THE HEADLINES IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS.

Tuesday, September 25, 2012 11

RUSSIA AND GREATER CHINA

Military to leap forward Defence chiefs ramp-up spending to modernise weapons by 2020, writes Vasily Kashin

R

ARMS Exports to China begin to grow

PRESS SERVICE

ussia’s defence industry is no longer fighting to survive through global export channels. Instead, its primary task is to meet the growing demand for new and more efficient weapons and equipment at home.

The armed forces are forever in need of better equipment, which causes frequent conflict between the military and industry over costs.

Last year, the Defence Ministry alone placed orders worth more than US$17 billion. The department accounts for 83 per cent of all military procurement.

The Interior Ministry, the Federal Security Service, and other law enforcement and intelligence agencies make up the remainder. Exports, although rising, amounted to US$13 billion.

Last year, the Russian military purchased 21 aircraft, 82 helicopters, 30 intercontinental ballistic missiles and 8,600 vehicles. Orders continue to be placed for air-defence systems, tanks and tank-modernisation programmes.

This year, government procurement could increase further. The Defence Ministry alone plans to spend US$23.1 billion on weapons and equipment.

Between 2011 and 2020, the ministry plans to upgrade 70 per cent of its weapons, focusing on modern precision systems. Russia plans to spend about US$718 billion in this endeavour.

By 2020, Russia’s troops are to receive approximately 2,000 new artillery systems, 2,300 tanks, and 17,000 vehicles.

About 400 intercontinental ballistic missiles will be purchased over the coming decade. The sharp increase in procurement and military spending in the next few years is the price to be paid for the lack of spending between 1993 and 2007, when defence orders dropped off and the military squeezed everything it could from its Soviet stockpiles. Russia’s army was mostly kitted out in the 1980s and early 1990s, and the hardware is fast approaching its expiry date.

Russia’s armed forces are replacing their old equipment, and are pressuring local makers to meet their needs.

“We should carry out the same powerful, all-embracing leap forward in the modernisation of the defence industry as the one carried out in the 1930s,” Russia’s President Vladimir Putin said at an August session of the Security Council. In the 1930s, Soviet leaders transformed a country devastated by civil war into an industrial superpower. Putin

The Defence Ministry alone plans to spend US$23.1 billion in weapons and equipment

Defence spending in 2011 and since 1988

How is life in the happiest and saddest cities in Russia.

sees the sector as a new growth driver for the economy.

At the same time, Russian enterprises are having trouble meeting the growing demand for certain types of equipment, such as torpedoes and light armoured vehicles, resulting in frequent wrangling between industry and the military. The latter is also unhappy with the quality of some types of weapons made in Russia, in particular certain models of small arms, unmanned aircraft and wheeled armoured personnel carriers.

In some cases, Russian forces have resorted to buying weapons from abroad in limited quantities to put pressure on local manufacturers and fill gaps in inventories until the domestic industry can meet their requirements.

There have been significant purchases of Austrian-made Steyr Mannlicher SSG 08 sniper rifles and Italian-made Iveco LMV M65 (Lynx) armoured cars, as well as Israeli drones. Foreign-made armoured personnel carriers and heavyarmament combat vehicles are also under consideration.

Russia’s military and political leaders have no plans to expand imports of military equipment. Their main focus is to modernise a national industry.

Russian hardware is generally regarded as advanced. Proof of this can be found in the growth of exports of military equipment from aircraft to tanks and anti-ballistic shields.

Most of the equipment now produced

by Russia’s defence industry consists of radical upgrades of models first developed in the 1980s and early 1990s. For instance, the only aircraft designed from scratch in the post-Soviet era is the Yak130 lead-in fighter trainer.

In this respect, however, Russia is no different than other nations. Western countries continue to use basic modifications of military aircraft, tanks and artillery systems that appeared mostly in the 1970s and 1980s.

The national industry is focused on very large programmes to upgrade the country’s military capability. Several new armoured vehicles are on the drawing board, along with a new tank, a selfpropelled gun, a heavy infantry combat vehicle, a fifth-generation T-50 fighter, and the PAK DA strategic bomber.

October 30

Experts note a rise in Russian military exports to China, which was once considered a lost market.

According to Vyacheslav Dzirkaln, deputy director of the Russian Federal Service for Military-Technical Co-operation, last year China made up roughly 15 per cent of all Russian arms exports, slightly less than US$2 billion.

In particular, Russia is known to be increasing exports to China of various types of aircraft engines and Mi-17 medium transport helicopters.

The past two years saw the signing of a series of major contracts for the delivery of AL-31F, AL-31FN and D-30KP aircraft engines, which are used in China’s J-11B, J-10 and H-6K jets, and the future Y-20 long-range transporter.

India purchased 80 per cent of its US$12.7 billion in arms from Russia during 2007-2011, according to the Stockholm International Peace Research Institute.

Procurement Hardware Borei nuclear submarines

Quantity 8

Intercontinental ballistic missiles

400

S-400 anti-aircraft missile system

56

Pantsir-S anti-aircraft artillery system 100 S-500 anti-aircraft missile system

10

Tanks, all types

2300

Artillery systems of all types

2000

Mi-28 attack helicopters

200-300

Ka-52 attack helicopters

150

Helicopters, all types

1000

Sukhoi 35S fighter jets

48

Sukhoi T-50 fighter jets

70

Aircraft, all types

600

Warships

51

12 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

Triumphant turning point Nation lauds significance of patriotic war of 1812 against Napoleon, writes Alexander Vershinin

T

HISTORY

RG

Emperor suggested invasion of India

Explosives are used in the re-enactment of the decisive Battle of Borodino, watched by 300,000 spectators.

Of the more than 600,000 soldiers of the Grande Armée that crossed the Russian border in July 1812, 60,000 survived PHOTOXPRESS

his year Russia marks the 200th anniversary of the patriotic war of 1812, an event that played an important role in the country’s development as a world power.

The war against Napoleon is considered a key moment in world history.

Before the first world war, Napoleon’s Russian campaign and the ensuing war of 1812 to 1814 was the largest military confrontation in history.

The battlefields of the patriotic war decided the fate of many nations and peoples. Russia was the last obstacle in Napoleon’s way to control Europe and the world. By turning Russia into a satellite, the emperor would no longer be afraid of threats from Britain and could boldly plan further expansion into Asia.

The echoes of 1812 and its aftermath have spread around the world. After the defeat of the French, thousands of former Napoleonic soldiers and officers went to Latin America, where they joined the supporters of Simon Bolivar and Francisco de Miranda in the struggle for liberation.

The historical significance of the 1812 patriotic war gives a political dimension to the bicentennial. The government is particularly sensitive to historical episodes in which the country played a key role in world affairs and to ideas that formed the ideological foundation of Russian statehood: political conservatism, traditionalism and protectionism.

The war was a triumph of the Russian state, when the country took a stand against revolutionary ideas that flowed from the “baggage train” of Napoleon’s army across Europe. It was Russia that helped to preserve the world order.

Of more than 600,000 soldiers of the Grande Armée that crossed the Russian border in July 1812, just 60,000 survived.

One of the biggest battles of the war took place on September 7. Each side lost between 35,000 and 45,000 men.

The losses at Borodino, 110km west of Moscow, were more damaging for the French, who were unable to replace men and materials. By withdrawing, the Russian army under General Mikhail Kutuzov preserved its strength and was able to expel Napoleon.

Marshal Michel Ney was a hero to the French. He recovered from a neck wound to fight at Borodino and was “the last Frenchman on Russian soil”.

After the Russian retreat from Boro-

Actors playing Napoleon and Mikhail Kutuzov head a cast of thousands.

250,000 men fought in the battle of Borodino, with about 84,000 casualties from both sides

dino, which Napoleon called the “battle of giants”, the French leader captured Moscow on September 14. Entering the city, he expected the tsar to surrender.

He did not and Kutuzov’s army remained in the field. Holding an empty city and lacking supplies, Napoleon was forced to begin a long and costly retreat.

His army had, in effect, been destroyed.

The highlight of the anniversary celebrations took place at Borodino field early this month, when thousands donned Russian and French military uniforms of the era and took part in a

re-enactment of the battle, in front of 300,000 spectators.

On December 25, exactly 200 years after the tsar’s manifesto was issued announcing the expulsion of Napoleon’s troops, the main cathedral of Russia, the Cathedral of Christ the Saviour, will hold a service marking the victory in the patriotic war of 1812.

On the same day, during a gala evening at the Bolshoi Theatre, the results of the anniversary events will be summed up in honour of the 200th anniversary of the victory.

Napoleon was always drawn to the east, and researchers have considered that his expedition to Egypt was no accident. But India had a special place in his plans.

Napoleon’s actions were always based on reality. France’s main enemy was Britain. A military incursion into Asia with the ultimate aim of conquering Hindustan would lead to the total collapse of Britain and change the global geopolitical balance of power.

There would also be a special role for Russia. On assuming power, Napoleon made persistent suggestions to the Russian Emperor Paul I that they should embark on a joint campaign against India. The campaign came to nothing. After an advance of about 750km in three weeks, the newly crowned Alexander I brought the Cossacks back.

The growing differences between France and Russia after 1810 led to tensions. Napoleon decided to secure Russia’s agreement for his campaign by force. Baron Bignon, the head of French intelligence in the Duchy of Warsaw, wrote that the aim of the 1812 campaign was to prepare for an expedition into Asia. Russia would either join Napoleon’s army voluntarily, “or, as a result of the laws of victory, will be drawn into a great movement which will change the face of the world”.

In March 1812, sources at the French court informed Alexander I that Napoleon expected to defeat Russian forces within two months.

SERGEY KUKSIN_RG

Tuesday, September 25, 2012 13

RUSSIA AND GREATER CHINA

Ten days that shook the world

Estate echoes to War and Peace More than a century after his death, it is easy to see how Yasnaya Polyana inspired Tolstoy, writes Oleg Nekhaev

© RIA NOVOSTI

Y

asnaya Polyana estate is so beautiful and peaceful. You can understand the appeal the late 18th and early 19thcentury estate held for Leo Tolstoy, the acclaimed writer of War and Peace and Anna Karenina, two of the most famous novels of all-time. He was born and spent nearly 60 years of his life there before his death in 1910, likening the rural retreat 240km south of Moscow to a microcosm of Russia and stating that he couldn’t exist without it.

The well-preserved estate includes the Tolstoy house with original furniture and library, a guest wing and a house for the domestic staff. There are farm buildings, parks with cascading ponds, apple orchards and forests planted mostly by Tolstoy. It is fitting that he was buried in Stary Zakaz wood. Tolstoy inherited the estate in 1847. The manor house looks huge from the outside, though the rooms are more modest in size and the use of birch wood throughout gives it a warm glow.The spacious three-storey house with 32 rooms, where he was born in 1828, was later demolished. Upon his return from St Petersburg in 1856, Tolstoy and his family had to occupy one of the two wings which his grandfather built. As Tolstoy’s family grew, the house was extended.

Brought up in a privileged family, Tol-

Leo Tolstoy with his wife Sofya Andreyevna at Yasnaya Polyana.

Tolstoy strove for simplicity on his estate, where he quietly wrote most of his greatest works

stoy later turned his back on materialism, religion and urban society. He strove for simplicity on the estate, where he wrote most of his greatest works.

The largest room, “the parlour”, has been preserved in the old mansion.

“Many heirlooms were passed on from generation to generation. Portraits, mahogany furniture and the comfy old chairs from the old mansion – all moved together with the family,” says the estate director Vladimir Tolstoy, a decendant of the writer.

Leo Tolstoy preferred to do much of the work around the house himself, and was on good terms with the peasants.

When he was 21, the writer opened a school for peasant children and often gave classes himself.

One of the most remote alleys has Tolstoy’s favourite bench, which offers marvellous views. The Tree of Love is another attraction. Legend has it that if you go around the tree several times and make a wish, it will come true.

In 1892, according to his views, Tolstoy renounced his property and divided all he had owned among his heirs.

Yasnaya Polyana was given to his wife Sofya and their youngest son, Ivan.

There was much discord in the family in later years. On October 28, 1910, Tolstoy left his home estate for good, and returned only for his burial.

Makovitsky’s journal reads: “This morning, at 3am (October 28, 1910), LN [Lev Nikolayevich Tolstoy] in his dressing gown, in slippers and bare feet, woke me; his face was full of suffering and determination. ‘I have decided to leave.

You shall come with me. We won’t take much, only the essentials’.”

Poor Makovitsky didn’t realise that Tolstoy had decided to leave his house for good. The doctor did not take money with him. He also didn’t know that that night Tolstoy had only 50 roubles in the bank and some coins in a purse.

“We travelled to Gorbachevo in a second-class carriage. But from Gorbachevo to Kozyolsk, Tolstoy chose to go third class, with the simple folk. When he had taken his place on a wooden bench, he said: ‘How nice and free’!”

The train had one horribly smoky thirdclass carriage filled to overflowing. Tolstoy soon began gasping for breath. He put on his fur coat and stepped out onto the rear platform. But smokers were standing there. He then went to the front platform; it was very windy, but deserted, except for a woman and her child, and a peasant. Makovitsky would later call the time that Tolstoy spent on that frigid platform as “fateful”.

The train moved slowly, over 160km in almost six-and-a-half hours. “This slow travel over Russian railroads helped kill LN,” writes Makovitsky. Late in the evening of October 29, they arrived at the Shamardino Convent where Tolstoy’s sister, Marya Nikolaevna, had taken the veil two decades earlier.

Tolstoy went straight to her cell. He found her with her daughter, Elizaveta Obolenskaya. The great Tolstoy now wept on the shoulder of one woman

LITERATURE and then the other as he recounted his recent life at Yasnaya Polyana. How his wife had watched his every move, how he had hidden his secret diary in one of his boots and next morning found it missing. He told his sister and niece about his secret will, about how Sofya Andreyevna (Tolstoy’s wife) would steal into his study at night and rummage through his papers, and if she noticed that he was still awake in the bedroom next door, she would come to him and pretend that she had only come to find out how he was feeling.

Tolstoy’s daughter, Sasha, also noted her father’s sorry state. “I think papa already regrets leaving,” she told her cousin Liza Obolenskaya.

Tolstoy was extremely mercurial in his moods. To change his view was virtually impossible; it would require years.

As soon as he descended from the train at Astapovo, Makovitsky went to the station master. He told him that “Lev Tolstoy was aboard the train and had fallen ill, he needed rest and must be put to bed”. The station master had great respect and agreed to take Tolstoy in.

Tolstoy was in his death throes, tossing and gasping for breath. He also appeared tortured by the fact that the people around him could not understand something very important he was trying to say. Most of his last intelligible words were to his son, Sergei: “The truth ... I love many things, I love all people.” It was only after his last shot of morphine that his wife, Sofya, was summoned to his bedside. She walked in, got down on her knees, and said, ”forgive me”.

Excerpts from “Leo Tolstoy: Escape from Paradise” by Pavel Basinsky

DMITRY DIVIN

© RIA NOVOSTI_PAVEL BLALABANOV, LORI/LEGION MEDIA (2)

Writer Leo Tolstoy inherited the Yasnaya Polyana estate in 1847. The well-preserved country house (top) is 240km south of Moscow, open to the public, and displays his furniture (above, left) and unmarked grave.

A little more than a century ago, 82-yearold Leo Tolstoy fled his estate Yasnaya Polyana. In the middle of the night he left his house, accompanied by his personal doctor, Dushan Makovitsky. This essentially personal drama, however, shook the world. It also presaged a catastrophic 20th century, as did the sinking of the Titanic, the start of the first world war and Russia’s October Revolution. Tolstoy’s journey from Yasnaya Polyana to the now-famous station of Astapovo, and to his death and return in a plain oak coffin to Yasnaya Polyana took all of 10 days.

Leo Tolstoy consults Dushan Makovitsky at Yasnaya Polyana in 1909.

14 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA Switch to ‘banya’ to relieve aches and pains

Healer ‘serves God’ Sergey Nechayev reveals his secrets to Aleksandra Bazdenkova

Sergei Teplyakov

S

didn’t help. And then the institute worked out a method for burning nerves. But pain wouldn’t go. So I worked on alleviating those pains.

“Originally, Russia had nothing but folk medicine. Herbs were created by God. If you don’t believe in herbs, you don’t believe in God. Pills were created later by people, with their imperfect

brains. But you cannot treat diseases with drugs. You can only turn the acute phase into a chronic one.”

“European medicine regards a human being materialistically. A man is a combination of bones, muscles, blood and lymph. You cut him to observe them. What makes them work together? How can a doctor treat without

Before the second half of the 19th century, most medical treatments available in Russia was based on folk medicine. Herbal medicine, baths, cataplasm, hot steam saunas with switches, massages and bone-setting, spells and healing prayers were healers’ main tools.

A lot was borrowed from neighbours, in Europe and Central Asia. They learned to use taiga herbs such as ginseng, and how to administer first aid for snake bites from the Chinese.

Opium reached Russia as late as the 16th century, but Russian healers had long been using hallucinogenic mush-

rooms as painkillers. Russian healers were masters of “vacuum” pot massage to restore stomach and bowel functions.

The first written prescription based on medicinal herbs in Russia dates back to 1037. Later, Evpraksia, a granddaughter of Grand Prince Vladimir Monomakh, wrote a book containing prescriptions for skin and oral diseases.

By the 16th century, the trade in medicinal herbs was prospering in Moscow and other cities. The first Tsar’s apothecary was established in 1581 to service the Tsar and members of the royal family. Chemicals were used solely by the upper class.

In the late 16th century, Moscow established the Apothecary order, which

Phytotherapy, or herbal medicine, remains the most popular type of folk medicine oversaw the entire medical and pharmacy industry of Russia. Under the rule of Peter the Great, pharmacies and apothecary gardens appeared in the largest towns.

Phytotherapy, or herbal medicine,

remains the most popular type of folk medicine. Most Russian citizens, if they catch a cold, will drink tea with lime tree flowers or raspberry tea. They treat coughs by breathing steam of freshly boiled potatoes or swallowing teaspoons of freshly squeezed onion juice.

Russia has a variety of prescriptions and types of herbs. Siberian dwarf pine is used to treat rheumatism. Licorice from the Urals is an excellent remedy for respiratory diseases. Tutsan from central Russia has anti-bacterial, antifungal, spasmolytic, anti-inflammatory and vessel-strengthening properties.

Folk medicine is not limited to herbs.

Russian steam sauna, mineralogy and zootherapy are also popular.

PHOTOSHOT/VOSTOCK-PHOTO

‘Master of traditional medicine Sergey Nechayev’ is a trapeze artist by trade.

knowing this? We need to study what we already have.”

He says he always finds a common language with doctors but it is not so easy to win the trust of someone in pain.

Nechayev shows me a video in which an American businessman talks about how Nechayev saved him from complicated spinal surgery. Another video is of a doctor with 25 years’ experience telling the story of a friend delivered to Nechayev in a poor condition but who now lives happily in Luxembourg.

“I videotape all my patients, if they let me,” he says. “Why? Who would believe a healer without any proof?”

Russians often accuse healers of being charlatans. “This is why healers [can be] very secretive people,” Nechayev says.

Nechayev once saved an old man from an amputation by putting a spell on him. “They invited me to all weddings and birthday parties to put more spells on the family,” he laughs.

“Every man is a creature created by God,” Nechayev says. “I treat God’s creations, thus serving him.”

It is all about legal and moral responsibility, he says. “Have there been any failures in my practice? I wouldn’t be here, or I would be in prison if I had failed,” Nechayev explains.

Folk remedies retain their allure Aleksandra Bazdenkova

The pleasure Russians derive from having their bodies beaten with twigs while sweating in a banya (traditional sauna) has puzzled foreigners for centuries.

“You tell foreigners that it is pleasant to use a switch and that it’s good for your health,” says Maria Ivanova, who sells switches in the village of Berezovka. “But they won’t believe you – they think it is a practical joke.”

Deciding which switch to use isn’t simple. “Liquorice switches are excellent for tackling cellulite if you add herbs – tutsan and marjoram,” says another switch vendor, Lada Zyablitskaya. “The best all-round switch is birch, which is especially good for muscle aches. Oak switches are thought to stop blood pressure rising in the steam room and help calm nerves. A lime tree switch is an excellent cure for headaches and has diuretic properties, which help exercise the kidneys. It also stimulates sweating, calms nerves, heals wounds, improves airflow to the lungs and reduces fever.

“A conifer switch stimulates perspiration and increases blood circulation deep in the muscles and the internal organs. It also acts as an excellent massage tool, helping back and neuralgic pains. Eucalyptus helps cure colds and sore throats. Press it against your face and breathe it in for up to five minutes.

Nettle switches are used after exercise, when your muscles and joints are sore to make the pain subside.”

MEDICINE

KIRILL LAGUTKO

ergey Nechayev’s grandfather, a Don Cossack descended from an ancient family of healers, lived to be 116.

He once took a piece of coal from the fire and placed it in his grandson’s hand. The boy endured the pain.

His father was outraged. But the grandfather said: “Leave us alone. He’ll grow up to be my heir.”

Nechayev does not advertise. “I work with the people whom the doctors have been unable to help,” he says. “I have no other patients.”

One wall of the room where he works is covered with Oriental weapons and masks. Another features acupuncture charts and various certificates. One of them reads: “Master of traditional medicine Sergey Nechayev.”

Massage, acupuncture, herbs and ointments are his main “tools”.

“I am a trapeze artist by trade,” Nechayev says from a lotus position. Before circus school, he was an amateur boxer.

Then, in 1966, Nechayev met his first patient, an athlete with a dislocated shoulder. He understood then that his grandfather’s gift could be revived. He met his first teacher, a Chinese who showed him the basics of acupuncture, when he was a circus school student. He had to practise on himself to feel the healing effect.

Colleagues started asking for help. “I was sticking needles in those poor gymnasts and acrobats,” Nechayev says. “The only alternative for them was plaster and dressing and no healing at all.”

After his circus career, Nechayev dedicated more time to healing. He treated dancers and athletes but continued working as a stuntman for 25 years.

An important part of his life is connected with the neurosurgery institute.

“There were types of surgery that caused so much pain I was ready to chop off an arm or leg,” he says. “Medication

Birch is good for muscle aches.

Five-step route to achieve perfection 1. Pour water on the stones to heat the steam to 60-70 degrees Celsius 2. Soften your chosen switch in the boiling water 3. Whip yourself lightly with the switch or take a partner with you so that you can whip each other 4. Take a shower, wrap up in a towel and drink a mug of beer or kvass (a fermented yeast drink) in the anteroom 5. Repeat these steps until you’re exhausted

Tuesday, September 25, 2012 15

RUSSIA AND GREATER CHINA

Mind your toes in Moscow Superstitions abound in a culture of vivid friendships and secrecy, writes Ajay Kamalakaran

W

LIFESTYLE From cosmonauts to corner seats It is a well-known fact that Russian cosmonauts like to watch the classic Soviet film “White Sun of the Desert”, before flying into space. There are several stories doing rounds on the internet about Russian cosmonauts urinating on the tyre of a trailer before each launch. This is allegedly something Yuri Gagarin did before he became the first human to journey into space when his Vostok spacecraft orbited the earth on April 12, 1961.

For those who are afraid of staying single, rule number one in Russia is to avoid sitting in a corner seat.

This allegedly ensures a life of unmarried bliss. This belief was initially applied just for women, but later caught on with men, some of whom no doubt pick a corner seat on purpose.

ALEKSEI IORSH

hen I accidentally trod on a Russian friend’s foot for the first time, he returned the favour within seconds. After being questioned about the rapid response, he said it was to ensure that the two of us didn’t get into a fight in the future.

This was my entry into the world of Russian superstition. This “rationalist” insisted that he lost many a friend, simply because he stepped on their feet at some point or the other.

Coming from a country where people’s superstitious beliefs can drive a “real rationalist” insane, I laughed at his belief that a friendship of five years could be broken because I had trodden on his foot. Such superstitious beliefs are common in Russia.

Many people in Russia believe that friendships can be broken if people shake hands while their gloves are on.

Imagine removing your gloves on a bitterly cold day when temperatures fall 30 degrees below freezing just so that you can shake a friend’s hand?

Since friendship is very vivid in Russia, many people I know refuse to shake hands with their gloves on. A bit of frostbite is better than losing a real friend.

Superstitious beliefs are an essential part of Russian life and are accepted by people from all walks of life. A close friend of mine once told me that his pocket was picked because he came back to his house after forgetting something and did not look at the mirror.

“If I looked at the mirror after I came back home, I am sure that I would have had a better day,” he said. As irrational as I found this belief, I came to understand that most of my Russian friends shared such views on returning to the house after forgetting something and looking at the mirror.

Then there are those who believe that travelling on a Monday can either bring bad luck or prolong the voyage. An acquaintance going to Thailand on a Monday had to deal with a series of cancelled flights and came back home almost a week late. He insisted that flying out on Monday caused his delays. He wasn’t willing to see reason when I told him that many of those who suffered from a cancelled flight on their way home didn’t take a flight away on a Monday.

Russians also believe that shaking hands or passing an object over an open door can bring bad fortune. This doesn’t mean that Russians step outside their home to take the pizza from a delivery man, but usually, friends don’t shake hands or pass on something through doors.

The problem with such beliefs is that they affect the psyche of the most rational people. Broken friendships are often attributed to stepping on feet or shaking hands through doors.

The communists incorporated some pagan beliefs into their way of thinking.

For example, the Soviet and Russian ob-

Stepping on a friend’s foot could lead to a dispute, according to one of Russia’s many ancient superstitions.

Another includes a black cat crossing the road in front of you which could lead to bad luck.

Then there are those who believe that travelling on a Monday can either bring back luck or prolong the voyage

session with secrecy comes from a belief that revealing plans or showing too much about a place, may invite bad fortune. Russian people guard secrets as if their lives depend on it.

There is also a belief among many that revealing good plans or intentions might ruin them. The cure for this is to spit on wood three times or mimic the action three times. Russians believe this is the best way to ward off the evil eye.

Birthdays are a huge occasion in Russia, and are celebrated in great style, but generations-old beliefs call for wellwishers to wait until the day of the birthday to wish someone happy birthday.

While wishing someone happy birthday later is acceptable, congratulating them earlier may result in bad fortune

for the birthday person. Doing so even a few minutes before midnight could bring bad luck and bad health, as the legend goes.

Most Russian superstitious beliefs revolve around friendships and the dangers of losing them. I remember giving a hunter a special knife for his birthday, which took him by surprise. Giving this friend a knife would have supposedly turned him into an enemy. The prospect of having a 1.9m, 110kg person as an enemy didn’t appeal to me, but there was a solution on hand. He just had to give me a symbolic amount of 10 roubles (HK$2.4) and that was enough to prevent us becoming enemies.

Many Russians laugh at me for accepting some of these beliefs, and mock

There is a belief among many that revealing good plans or intentions might ruin them me for being more “Catholic than the Pope”. These people who have been friends for several years have stepped on my feet countless times, gifted me knives and insisted on shaking my hands with gloves on, just to disprove what some of them call “stupid myths”.

At the end of the day, it boils down to individual beliefs.

A former colleague who saw a nasty neighbour as he walked out of his apartment on his wedding day took it to heart that this was a bad sign for his marriage.

The couple were together for five years before they were married, but ended up divorced after six months of anything but marital bliss. To this day he insists that his wedding was jinxed by the mean man who lives on the fourth floor.

16 Tuesday, September 25, 2012

RUSSIA AND GREATER CHINA

Challenging conventions Art group AES+F brings critical vision in photographs and film to HK, writes Diana d’Arenberg

S

CITY Their work is overwhelming in the layering of present and historical references. Art Statements director Dominique Perregaux encountered the group in 2006, which led to an exhibition of The Last Riot 2 in Hong Kong in 2007.

“I was stunned by the new aesthetic they were bringing,” Perregaux says. In Hong Kong, the group is exhibiting The Feast of Trimalchio, a digitally animated collage of thousands of photographs backed by a dramatic score. Unfolding in a sequence of slow-motion scenes of synchronised balletic movements, at a glance the work resembles a highfashion advertisement, but on closer

PRESS PHOTO

tanding boldly among the contemporary Russian artists who have started to attract serious attention in the past couple of years are the four-artist collective known as AES+F. Consisting of Tatiana Arzamasova, Lev Evzovitch, Evgeny Svyatsky and Vladimir Fridkes, the group collaborated as AES since 1987, and with photographer Fridkes (the +F) since 1995.

Based in Moscow, the group has slowly wooed curators with their challenging works. They caused a sensation at the 52nd Venice Biennale Russian Pavilion in 2007 with a video and series of photographs, The Last Riot 2. A recent screening of Allegoria Sacra in Adelaide attracted 82,000 people over three months. This month, Art Statements gallery in Aberdeen brings AES+F’s work to Hong Kong.

The group’s digital works engage with everything from geopolitics to art history and popular culture, and navigate the constantly shifting borders of national and cultural identity.

Their films and photographs depict a dystopian collision of worlds, races, cultures and art movements, and draw on contemporary social and political issues.

The AES+F group exhibits its digital works in Aberdeen until October 6. former slave, the nouveau riche host of feasts lasting several days, appeared to us not so much as an individual as a collective image of a luxurious hotel, a temporary paradise which one has to pay to enter,” say the artists. The work

examination a different narrative emerges. Taken from Petronius’ work, Satyricon, Trimalchio is associated with wealth and luxury.

“We searched for an analogue in the third millennium and Trimalchio, the

Bolshoi lights up big screen Forget opera glasses, elegant attire and expensive tickets. Watching the world’s best-known ballet troupe can be relaxing and inexpensive.

Hong Kong audiences will be able to watch a series of recorded performances by the legendary Bolshoi Ballet at local cinemas, getting all the thrills of a live show at a fraction of the cost. Eight shows will be aired at three local cinemas from October 28 until July next year. The shows feature some of the most famous names in modern classical dance, including choreographers Yuri Grigorovich and Marius Petipa and prima ballerina Svetlana Zakharova. Five of the acts, La Sylphide, The Pharaoh’s Daughter, La Bayadère ,

The Rite of Spring, and Romeo and Juliet, will be fresh from Bolshoi’s new season.

The other three, Swan Lake, The Nutcracker and Don Quixote, were recorded in 2010 or 2011.

All the performances were shot specifically for the big screen.

Judith Kwong of Hong Kong’s Edko Film, which is helping with the showing, says the high-quality images will deliver all the thrills and excitement of a real live performance, along with the feeling that one is part of the theatre audience. “Every seat in the cinema will be better than a theatre seat as far as viewing is concerned,” Kwong says.

“There will also be some behind-thescenes features such as backstage footage and interviews, which theatre-goers don’t normally get to see.”

How will reorienting towards the East benefit the Russian economy?

Share your opinion!

facebook.com/ rbth.asia

twitter.com/ russiabeyond

Tickets range from HK$150 to HK$180, whereas a front-row ticket at the Bolshoi Theatre can cost HK$3,600.

Recorded and live art performances shown at cinemas have become increasingly popular. In Hong Kong, moviegoers have been treated to a variety of such events, but this is the first time the Bolshoi Ballet will make it to a big screen.

Founded 236 years ago, Bolshoi Ballet was last in Hong Kong in 2008 when it performed Spartacus. The 187-yearold Bolshoi Theatre is one of the world’s brightest cultural jewels. Last October, the theatre reopened its doors after a six-year renovation marred by delays and allegations of corruption. At the opening gala, then-Russian president Dmitry Medvedev said: “The Bolshoi is one of our greatest national brands.”

Discover a whole new world

ibe r c s Sub

to our weekly newsletter www.rbth.asia/subscribe

CONTACT For editorial inquiries, contact editorhk@rbth.ru For partnerships or advertising contact saleshk@rbth.ru Tel: +7 (495) 775 3114 +852 81701042

Win tickets to watch Swan Lake

PRESS PHOTO

Shirley Lau

is a critique of consumerism, surface glamour and cultural stereotyping.

Feast of Trimalchio at Art Statements Gallery until October 6, by appointment only. Contact hongkong@atstatements. com, or telephone 2696 2300.

The film ‘Bolshoi Ballet in Cinema’ is an affordable introduction to dance.

Bolshoi Ballet in Cinema will run from October 28 to July 7, 2013. Tickets can be booked on www.cinema.com.hk or www.amccinemas.com.hk. For more information, go to www.hkbolshoiballet.asia.

Russia beyond the headlines Asia

www.rbth.asia

Swan Lake is one of the most beautiful dramas in the Bolshoi theatre’s repertoire.

It’s also regularly performed at the Metropolitan Opera House in New York and London’s Covent Garden.

RBTH.Asia is delighted to give you a chance to win a pair of tickets to the recorded performance of Swan Lake in Hong Kong.

The rules are simple. Just answer three questions on our facebook (www.facebook.com/rbth.asia) or on the web-site (rbth.asia/swanlake) and you will be entered in the lucky draw, where you will have the chance to enjoy the show at Palace ifc on October 28, at 4.50 pm.

Copies are available at: Russian Consulate in Hong Kong (2106-2123, 21/F, Sun Hung Kai Centre, 30 Harbour Road, Wanchai) Russian Language Center (701, Arion Commercial Centre 2-12 Queen’s Road West Sheung Wan) Sun Studio (Unit3, GF, Westley Square, 48 Hoi Yuen Rd, KwunTong) Red Square Gallery (11 Yuk Sau Street, Happy Valley ) ATC AVIA (Room 3105, 31/F, Tower 1, Lippo Centre, 89 Queensway Please write to saleshk@rbth.ru if you want to add your company name to this list.